Document:

Exhibit 10.1

 

 

EXECUTION COPY

 

Published CUSIP Number:  ________

 

 

 

 

AMENDED AND RESTATED

TERM LOAN CREDIT AGREEMENT

 

Dated as of March 29, 2011

 

among

 

WESTERN REFINING, INC.,

as the Borrower,

 

BANK OF AMERICA, N.A.,

as Administrative Agent

 

and

 

The Lenders Party Hereto

 

 

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

Sole Lead Arranger

 

 

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

WELLS FARGO SECURITIES, LLC

Co-Book Managers

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

Syndication Agent

 

SUNTRUST BANK,

THE ROYAL BANK OF SCOTLAND PLC

Co-Documentation Agents

 

 

 

 

  

  

 

  

 

TABLE OF CONTENTS

 

	Section	 	Page
	  ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS	
1

	
1.01

	
Defined Terms

	
1

	
1.02

	
Other Interpretive Provisions

	
24

	
1.03

	
Accounting Terms

	
24

	
1.04

	
Rounding

	
25

	
1.05

	
Times of Day

	
25

	
ARTICLE II. THE COMMITMENTS AND LOANS

	
25

	
2.01

	
Loans

	
25

	
2.02

	
Borrowings, Conversions and Continuations of Term Loans

	
26

	
2.03

	
Prepayments.

	
27

	
2.04

	
Intentionally Omitted

	
30

	
2.05

	
Repayment of Loans

	
30

	
2.06

	
Interest and Principal Payments.

	
30

	
2.07

	
Fees

	
31

	
2.08

	
Computation of Interest and Fees

	
31

	
2.09

	
Evidence of Debt

	
31

	
2.10

	
Payments Generally; Administrative Agent's Clawback.

	
31

	
2.11

	
Sharing of Payments by Lenders

	
33

	
2.12

	
Security

	
33

	
2.13

	
Increase in Term Loans

	
33

	
2.14

	
Defaulting Lenders

	
35

	
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY

	
36

	
3.01

	
Taxes

	
36

	
3.02

	
Illegality

	
38

	
3.03

	
Inability to Determine Rates

	
38

 

  

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3.04

	
Increased Costs; Reserves on Eurodollar Rate Loans

	
38

	
3.05

	
Compensation for Losses

	
40

	
3.06

	
Mitigation Obligations; Replacement of Lenders

	
40

	
3.07

	
Survival

	
41

	
ARTICLE IV. CONDITIONS PRECEDENT TO LOANS

	
41

	
4.01

	
Conditions of Lending

	
41

	
ARTICLE V. REPRESENTATIONS AND WARRANTIES

	
43

	
5.01

	
Existence, Qualification and Power; Compliance with Laws

	
43

	
5.02

	
Authorization; No Contravention

	
43

	
5.03

	
Governmental Authorization; Other Consents

	
43

	
5.04

	
Binding Effect

	
44

	
5.05

	
Financial Statements; No Material Adverse Effect

	
44

	
5.06

	
Litigation

	
44

	
5.07

	
No Default

	
44

	
5.08

	
Ownership of Property; Liens

	
45

	
5.09

	
Environmental Compliance

	
45

	
5.1

	
Insurance

	
45

	
5.11

	
Taxes

	
45

	
5.12

	
ERISA Compliance

	
45

	
5.13

	
Subsidiaries; Equity Interests

	
46

	
5.14

	
Margin Regulations; Investment Company Act

	
46

	
5.15

	
Disclosure

	
46

	
5.16

	
Compliance with Laws

	
47

	
5.17

	
Intellectual Property; Licenses, etc

	
47

	
5.18

	
Solvency

	
47

	
5.19

	
Collateral Documents

	
47

 

  

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ARTICLE VI. AFFIRMATIVE COVENANTS

	
47

	
6.01

	
Financial Statements

	
47

	
6.02

	
Certificates; Other Information

	
48

	
6.03

	
Notices

	
50

	
6.04

	
Payment of Obligations

	
51

	
6.05

	
Preservation of Existence, etc

	
51

	
6.06

	
Maintenance of Properties

	
51

	
6.07

	
Maintenance of Insurance

	
51

	
6.08

	
Compliance with Laws and Contractual Obligations

	
52

	
6.09

	
Books and Records

	
53

	
6.10

	
Inspection Rights; Field Audits

	
53

	
6.11

	
Use of Proceeds

	
53

	
6.12

	
Guarantors; Additional Security Agreements

	
53

	
6.13

	
Intentionally Omitted

	
55

	
6.14

	
Further Assurances and Post-Closing Covenant

	
55

	
6.15

	
Maintenance of Ratings

	
55

	
ARTICLE VII. NEGATIVE COVENANTS

	
55

	
7.01

	
Liens

	
55

	
7.02

	
Investments

	
57

	
7.03

	
Indebtedness

	
58

	
7.04

	
Fundamental Changes

	
61

	
7.05

	
Dispositions.

	
62

	
7.06

	
Restricted Payments

	
63

	
7.07

	
Change in Nature of Business

	
64

	
7.08

	
Transactions with Affiliates

	
64

	
7.09

	
Burdensome Agreements

	
64

 

  

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7.10

	
Use of Proceeds

	
64

	
7.11

	
Intentionally Omitted.

	
64

	
7.12

	
Intentionally Omitted

	
64

	
7.13

	
Prepayment of Certain Other Indebtedness

	
64

	
7.14

	
Amendments to Revolver Loan Documents

	
65

	
7.15

	
Covenants Relating to MLP Subsidiaries

	
65

	
7.16

	
Certain Undertakings Relating to the Separateness of the MLP and MLP Subsidiaries

	
65

	
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES

	
66

	
8.01

	
Events of Default

	
66

	
8.02

	
Remedies Upon Event of Default

	
68

	
8.03

	
Application of Funds

	
68

	
ARTICLE IX. ADMINISTRATIVE AGENT

	
69

	
9.01

	
Appointment and Authority.

	
69

	
9.02

	
Rights as a Lender

	
69

	
9.03

	
Exculpatory Provisions

	
70

	
9.04

	
Reliance by Administrative Agent

	
70

	
9.05

	
Delegation of Duties

	
71

	
9.06

	
Resignation of Administrative Agent

	
71

	
9.07

	
Non-Reliance on Administrative Agent and Other Lenders

	
71

	
9.08

	
No Other Duties, etc

	
72

	
9.09

	
Administrative Agent May File Proofs of Claim

	
72

	
9.10

	
Collateral and Guaranty Matters.

	
72

	
ARTICLE X. MISCELLANEOUS

	
74

	
10.01

	
Amendments, etc

	
74

	
10.02

	
Notices; Effectiveness; Electronic Communication.

	
75

	
10.03

	
No Waiver; Cumulative Remedies; Enforcement

	
77

 

  

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10.04

	
Expenses; Indemnity; Damage Waiver.

	
78

	
10.05

	
Payments Set Aside

	
79

	
10.06

	
Successors and Assigns.

	
79

	
10.07

	
Treatment of Certain Information; Confidentiality

	
83

	
10.08

	
Right of Setoff

	
84

	
10.09

	
Interest Rate Limitation

	
84

	
10.10

	
Counterparts; Integration; Effectiveness

	
84

	
10.11

	
Survival of Representations and Warranties

	
85

	
10.12

	
Severability

	
85

	
10.13

	
Replacement of Lenders

	
85

	
10.14

	
Governing Law; Jurisdiction; etc.

	
86

	
10.15

	
Waiver of Jury Trial

	
86

	
10.16

	
No Advisory or Fiduciary Responsibility

	
87

	
10.17

	
USA Patriot Act Notice

	
87

	
10.18

	
OTHER LIENS ON COLLATERAL; TERMS OF INTERCREDITOR AGREEMENT; ETC.

	
87

	
10.19

	
ENTIRE AGREEMENT

	
88

 

  

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SCHEDULES

	  	  
	  	  	  
	
I      

	
Guarantors

	  
	
2.01

	
Commitments and Applicable Percentages

	  
	
5.06

	
Certain Litigation

	  
	
5.13

	
Subsidiaries and Other Equity Interests

	  
	
7.01

	
Existing Liens

	  
	
7.02

	
Investments

	  
	
10.02  

	
Administrative Agent's Office; Certain Addresses for Notices

	  
	  	  	  
	
EXHIBITS

	  	  
	  	
Form of

	  
	  	  	  
	
A

	
Loan Notice

	  
	
B

	
Note

	  
	
C

	
Compliance Certificate

	  
	
D

	
Assignment and Assumption

	  
	
E

	
Opinion

	  
	
F

	
[Intentionally Omitted]

	  
	
G

	
Security Agreement

	  
	
H

	
Guaranty

	  
	
I

	
Intercreditor Agreement

	  

  

-vi-

  

 

AMENDED AND RESTATED TERM LOAN CREDIT AGREEMENT

 

This AMENDED AND RESTATED TERM LOAN CREDIT AGREEMENT (“this “Agreement”) is entered into as of March 29, 2011, among WESTERN REFINING, INC., a Delaware corporation (the “Borrower”), each Lender (as hereinafter defined), and BANK OF AMERICA, N.A., as Administrative Agent and a Lender.

 

RECITALS:

 

WHEREAS, the Borrower is party to that certain Term Loan Credit Agreement, dated as of May 31, 2007, among the Borrower, Bank of America, N.A., as administrative agent (the “Existing Agent”), the lenders party thereto and Banc of America Securities LLC, as sole lead arranger and sole book manager (as amended by the First Amendment to Term Loan Credit Agreement, dated as of June 30, 2008, among the Borrower, the lenders party thereto and the Existing Agent, the Second Amendment to Term Loan Credit Agreement, dated as of May 29, 2009, among the Borrower, the lenders party thereto and the Existing Agent and the Third Amendment to Term Loan Credit Agreement, dated as of November 24, 2009, among the Borrower, the lenders party thereto and the Existing Agent, and as may be further amended prior to the date hereof, the “Existing Term Loan Credit Agreement”);

 

WHEREAS, the Borrower has requested that the Lenders amend and restate the Existing Term Loan Credit Agreement and the Lenders have indicated their willingness to do so and lend on the terms and subject to the conditions set forth herein.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

 

ARTICLE I. 

DEFINITIONS AND ACCOUNTING TERMS

 

1.01 Defined Terms.  As used in this Agreement, the following terms shall have the meanings set forth below:

 

“2014 Notes” means the Borrower’s senior secured floating rate notes due 2014, issued pursuant to the Secured Notes Indenture.

 

“2017 Notes” means the Borrower’s senior secured fixed rate notes due 2017, issued pursuant to the Secured Notes Indenture.

 

“Administrative Agent” means Bank of America, in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

 

“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule ‎10.02, or such other address or account as the Administrative Agent may from time to time provide to the Borrower and the Lenders.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

  

  

  

 

“Aggregate Commitments” means, on any date of determination, the sum of the Term Loan Commitments plus such commitments, if any, as may be made by Lenders pursuant to Sections  2.13.

 

“Agreement” means this Term Loan Credit Agreement, as the same may hereafter be renewed, extended, amended or restated from time to time.

 

“Albuquerque Terminal” means the refined products terminal and associated facilities owned and operated by Western Refining Terminals, located in or near Albuquerque, New Mexico.

 

“Applicable Class Percentage” means on any date of determination the proportion (expressed as a percentage and carried out to the ninth decimal place) that the aggregate applicable Class Outstanding Amount owed to any Lender bears to the aggregate applicable Class Outstanding Amounts owed to all Lenders at such time; provided that, if, on such date of determination, no applicable Class Outstanding Amounts then exist, then the Applicable Class Percentage shall be determined based on the Applicable Class Percentage of such Lender most recently in effect, giving effect to any subsequent assignments.

 

“Applicable Percentage” means, on any date of determination the proportion (expressed as a percentage carried out to the ninth decimal place) that the aggregate Outstanding Amount owed to any Lender bears to the aggregate Outstanding Amounts owed to all Lenders at such time; provided that, if, on any date of determination, no Outstanding Amounts then exist, then the Applicable Percentage shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments.  The initial Applicable Percentage of each lender in respect of the Term Facility is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

“Applicable Rate” means (a) with respect to Eurodollar Rate Loans, 6.00%, and (b) with respect to Base Rate Loans, 5.00%.

 

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

“Arranger” means Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), in its capacity as sole lead arranger and a co-book manager.

 

“Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

 

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section ‎10.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit D or any other form approved by the Administrative Agent.

 

“Attributable Indebtedness” means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.

 

“Audited Financial Statements” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2010, and the related consolidated statements

 

  

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of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.

 

“Available Incremental Amount” means $250,000,000, as such amount may be permanently reduced from time to time pursuant to Section 7.03(q).

 

“Bank of America” means Bank of America, N.A. and its successors.

 

“Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” (c) the ‘BBA LIBOR’ (as determined on such day) plus 1%, and (d) 2.50%.  The ‘prime rate’ is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.  Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.  The ‘BBA LIBOR’ has the meaning given such term in the definition of ‘Eurodollar Rate’.

 

“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

 

“Beneficial Owner” means the beneficial owner, for U.S. federal income tax purposes, of a payment to which any U.S. federal withholding tax relates.

 

“Bloomfield Refinery” means the refinery and associated facilities owned by San Juan, and operated by Western Refining Southwest or another Loan Party, located at or near Bloomfield, New Mexico.

 

“Bloomfield Terminal” means the terminal and associated facilities owned by San Juan, and operated by Western Refining Southwest or another Loan Party, located in or near Bloomfield, New Mexico.

 

“Borrower” has the meaning specified in the introductory paragraph hereto.

 

“Borrower Materials” has the meaning specified in Section 6.02.

 

“Borrowing” means a borrowing consisting of simultaneous Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period, made by each of the Lenders pursuant to this Agreement.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and, if such day relates to any Eurodollar Rate Loan (or any Base Rate Loan, if the Base Rate is determined by reference to ‘BBA LIBOR’), means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

 

“Capital Expenditures” means, with respect to the Borrower or any Restricted Subsidiary for any period, any expenditure in respect of the purchase or other acquisition of any fixed or capital asset (excluding normal replacements and maintenance which are properly charged to current operations).  For purposes of this definition, (a) the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment or with insurance proceeds shall be included in Capital Expenditures only

 

  

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to the extent of the gross amount by which such purchase price exceeds the credit granted by the seller of such equipment for the equipment being traded in at such time or the amount of such insurance proceeds, as the case may be, and (b) the term “Capital Expenditures” shall not include Investments.

 

“Cash Equivalents” means

 

(a)           readily marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than 360 days from the date of acquisition thereof; provided that the full faith and credit of the United States of America is pledged in support thereof;

 

(b)           time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) 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, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c) of this definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more than 180 days from the date of acquisition thereof;

 

(c)           commercial paper issued by any Person organized under the laws of any state of the United States of America and rated at least “Prime-2” (or the then equivalent grade) by Moody’s or at least “A-2” (or the then equivalent grade) by S&P, in each case with maturities of not more than 180 days from the date of acquisition thereof; provided that if any such commercial paper is not rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, then in order to be considered a permissible Investment for purposes of Section ‎7.02(a), the following limitation shall apply:  the Borrower and its Restricted Subsidiaries shall not hold more than $40,000,000 in the aggregate of such commercial paper issued by a single issuer; and

 

(d)           Investments, classified in accordance with GAAP as current assets of the Borrower or any of its Restricted Subsidiaries, in money market investment programs registered under the Investment Company Act of 1940, which are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition.

 

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

“Change of Control” means an event or series of events by which:

 

(a)           any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than the Existing Owners, becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or

 

  

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group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of 30% or more of (i) the direct or indirect Equity Interests of the Borrower or (ii) the Equity Interests of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); provided, however, that to the extent a change in “beneficial ownership” in such Equity Interests results from the issuance of new Equity Interests in the Borrower, with a corresponding payment in cash to the Borrower for the acquisition of such Equity Interests, the acquisition of up to 40% of the “beneficial ownership” of such Equity Interests shall not constitute a “Change of Control”;

 

(b)           during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or

 

(c)           any Person or two or more Persons, other than the Existing Owners, acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of the Borrower, or control over the Equity Interests of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such securities that such Person or group has the right to acquire pursuant to any option right) representing 30% or more of the combined voting power of such securities.

 

“Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan or the Loans comprising such Borrowing, are Term Loans or Incremental Term Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Term Loan Commitment or an Incremental Term Commitment.

 

“Class Outstanding Amount” means, on any date, the aggregate outstanding principal amount of all Loans of such Class after giving effect to any borrowings and prepayments or repayments of Loans of such Class occurring on such date.

 

“Closing Date” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 10.01.

 

“Code” means the Internal Revenue Code of 1986.

 

“Collateral” means all property and interests in property and proceeds thereof now owned or hereafter acquired by the Borrower or any Guarantor and their respective Subsidiaries in or upon which a Lien now or hereafter exists in favor of the Administrative Agent, for the benefit of the Lenders, whether

 

  

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under this Agreement or under any other document executed by any such Person and delivered to the Administrative Agent or the Lenders.

 

“Collateral Documents” means, collectively, (a) the Security Agreements, each Deposit Account Control Agreement, each Investment Account Control Agreement, the Guaranties and all other security agreements, mortgages, deeds of trust, patent and trademark assignments, lease assignments, guaranties and other similar agreements executed by the Borrower, any Subsidiary, or any Guarantor in favor of the Administrative Agent, for the benefit of the Lenders, now or hereafter delivered to the Administrative Agent or the Lenders pursuant to or in connection with the transactions contemplated hereby, and all financing statements (or comparable documents now or hereafter filed in accordance with the UCC or comparable law) against the Borrower, any Subsidiary or any Guarantor, as debtor, in favor of the Administrative Agent, for the benefit of the Lenders, as secured party, and (b) any amendments, supplements, modifications, renewals, replacements, consolidations, substitutions and extensions of any of the foregoing.

 

“Commitment” means, on any date of determination, as to each Lender, its obligation to make Loans to the Borrower pursuant to Section ‎2.01 in an aggregate principal amount at any one time outstanding not to exceed the sum of such Term Loan Commitment and its commitment pursuant to Section 2.13, as such amount may be adjusted from time to time in accordance with this Agreement.

 

“Competitor” means, any person actively engaged as its principal business in refining crude oil or the transportation, marketing or storage of crude oil or refined products.

 

“Compliance Certificate” means a certificate substantially in the form of Exhibit C.

 

“Consolidated Cash Interest Charges” means, for any period, Consolidated Interest Charges for such period, excluding any amount not payable in cash on a current basis.

 

“Consolidated Current Assets” means, as at any date of determination, the total assets of Company and its Subsidiaries on a consolidated basis that may properly be classified as current assets in conformity with GAAP, excluding cash and Cash Equivalents and the current portion of deferred income taxes.

 

“Consolidated Current Liabilities” means, as at any date of determination, the total liabilities of Company and its Subsidiaries on a consolidated basis that may properly be classified as current liabilities in conformity with GAAP, excluding the current portion of long term debt and the current portion of deferred income taxes.

 

“Consolidated EBITDA” means, for any period of one or more fiscal quarters, for the Borrower and its Restricted Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income for such period plus (a) the following to the extent deducted in calculating such Consolidated Net Income (without duplication): (i) Consolidated Interest Charges for such period, (ii) the provision for Federal, state, local and foreign income taxes payable by the Borrower and its Restricted Subsidiaries for such period, (iii) depreciation and amortization expenses, (iv) non-cash compensation expenses and charges, (v) charges for the shutdown and/or disposition of the Yorktown Refinery, whether or not paid in cash during such period, (vi) maintenance turnaround expenses incurred by the Borrower and its Restricted Subsidiaries during such period and (vii) other non-recurring expenses of the Borrower and its Restricted Subsidiaries reducing such Consolidated Net Income which do not represent a cash item in such period or any future period, and minus (b) the following: (i) non-cash items increasing Consolidated Net Income for such period and (ii) an amount equal to the amount that would have been deducted in respect of Recharacterized Operating Leases (as defined in the Revolving Credit Agreement) in determining

 

  

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Consolidated Net Income if such Recharacterized Operating Leases had been accounted for under GAAP as in effect without giving effect to any applicable Operating Lease Recharacterizations (as defined in the Revolving Credit Agreement).

 

“Consolidated Excess Cash Flow” means, for any period, an amount (if positive) equal to: (i) the sum, without duplication, of the amounts for such period of (a) Consolidated EBITDA, plus (b) the Consolidated Working Capital Adjustment plus (c) the sum, without duplication, of (x) extraordinary cash gains excluded from Consolidated EBITDA and (y) losses in connection with Extraordinary Receipts and Dispositions outside the ordinary course of business deducted from Consolidated EBITDA for such period, minus (ii) the sum, without duplication, of the amounts for such period of (A) scheduled repayments of Consolidated Total Indebtedness made in such period, (B) mandatory prepayments of Consolidated Total Indebtedness (other than Loans and Revolver Indebtedness) made in such period, (C) optional prepayments, redemptions or repurchases (including any tender or call premiums in connection therewith) of the 2014 Notes made in such period solely to the extent such prepayments, redemptions or repurchases are not made with the proceeds from the incurrence of issuances of indebtedness, proceeds from issuances of equity or proceeds from Dispositions), (D) Capital Expenditures of the Borrower and its Restricted Subsidiaries made in such period, (E) Consolidated Cash Interest Charges for such period, (F) provisions for current taxes of the Borrower and its Subsidiaries and payable in cash with respect to such period and (G) gains in connection with Extraordinary Receipts and Dispositions outside the ordinary course of business included in Consolidated EBITDA for such period.

 

“Consolidated Interest Charges” means, for any period, for the Borrower and its Restricted Subsidiaries on a consolidated basis, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses of the Borrower and its Restricted Subsidiaries in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, (b) the portion of rent expense of the Borrower and its Restricted Subsidiaries with respect to such period under capital leases that is treated as interest in accordance with GAAP, (c) interest expense attributable to Synthetic Lease Obligations, and (d) cash dividends to holders of preferred stock (including Convertible Preferred Securities).

 

“Consolidated Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated Total Indebtedness as of such date to (b) Consolidated EBITDA for the period of the four fiscal quarters most recently ended.

 

“Consolidated Net Income” means, for any period, for the Borrower and its Restricted Subsidiaries on a consolidated basis, the net income of the Borrower and its Restricted Subsidiaries as determined in accordance with GAAP (excluding extraordinary gains and extraordinary losses) for that period; provided, that, there shall be excluded from such net income (to the extent otherwise included therein) the income (or loss) of any entity other than a Restricted Subsidiary in which the Borrower or any Restricted Subsidiary has an ownership interest, except to the extent that any such income has been actually received by the Borrower or such Restricted Subsidiary in the form of cash dividends or similar cash distributions; and provided further if (x) the Equity Interest in a Contango Subsidiary is subject to Liens securing Indebtedness other than the Obligations or (y) a Contango Subsidiary is subject to any restrictions of the type described in clause (i) in Section 7.09, there shall be excluded from such net income (to the extent otherwise included therein) the income (or loss) of such Contango Subsidiary, except, in the case of clauses (x) and (y), to the extent that any such income has been actually received by the Borrower or a Restricted Subsidiary in the form of cash dividends or similar cash distributions.

 

“Consolidated Total Indebtedness” means, as of any date of determination, Indebtedness of the Borrower and its Restricted  Subsidiaries on a consolidated basis, other than (a) undrawn or unfunded 

 

  

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amounts under letters of credit, surety bonds and similar instruments, and (b) Indebtedness pursuant to Swap Contracts that have not been closed out or terminated.

 

“Consolidated Working Capital” means, as at any date of determination, the excess of Consolidated Current Assets as of such date over Consolidated Current Liabilities as of such date.

 

“Consolidated Working Capital Adjustment” means, for any period on a consolidated basis, the amount (which may be a negative number) by which Consolidated Working Capital as of the beginning of such period exceeds (or is less than) Consolidated Working Capital as of the end of such period.

 

“Contango Credit Facility” means a revolving credit facility entered into by the Contango Subsidiary to finance its participation in contango market opportunities with respect to Hydrocarbons.

 

“Contango Subsidiary” means a direct or indirect wholly owned Restricted Subsidiary of the Borrower whose business is limited to buying, selling and storing Hydrocarbons, and entering into Swap Contracts in connection therewith, to take advantage of contango market opportunities with respect to Hydrocarbons and whose assets consist solely of Hydrocarbons and rights and interests related thereto and Swap Contracts entered into in connection therewith, pledged to secure a Contango Credit Facility.

 

“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

 

“Control Agent” has the meaning set forth in the Intercreditor Agreement.

 

“Convertible Notes” means the Borrower’s convertible senior notes due 2014, issued pursuant to that certain Senior Indenture dated as of June 10, 2009 between the Borrower and The Bank of New York Mellon Trust Company, N.A., as Trustee, as supplemented by the Supplemental Indenture dated as of June 10, 2009 between Western Refining and The Bank of New York Mellon Trust Company, N.A., as Trustee.

 

“Convertible Preferred Securities” means preferred stock issued by the Borrower that is convertible into shares of common stock of the Borrower.

 

“Debt Issuance” means the issuance, incurrence or assumption of Indebtedness by the Borrower or any of its Subsidiaries on or after the Closing Date, other than Indebtedness permitted by (i) Sections 7.03(a) through (h) or (k) through (s) or (ii) upon the written consent of the Required Lenders, Section 7.03(i) or (j).

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

 

“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

 

  

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“Default Rate” means an interest rate equal to (a) the Base Rate, plus (b) the Applicable Rate, if any, applicable to Base Rate Loans, plus (c) 2% per annum; provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum.

 

“Defaulting Lender” means, subject to Section 2.14(b), any Lender that, as determined by the Administrative Agent, (a) has failed to perform any of its funding obligations hereunder, within three Business Days of the date required to be funded by it hereunder, (b) has notified the Borrower, or the Administrative Agent or any Lender that it does not intend to comply with its funding obligations or has made a public statement to that effect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by the Administrative Agent, to confirm in a manner satisfactory to the Administrative Agent that it will comply with its funding obligations, or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, or (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority.

 

“Deposit Account Control Agreement” means an agreement substantially in the form of Annex G to the form of Security Agreement attached as Exhibit G hereto, or any other agreement in form and substance satisfactory to the Administrative Agent serving a similar purpose, among a Loan Party, the Administrative Agent or the Control Agent, and a Depository Bank.

 

“Depository Bank” means a bank, savings bank, savings and loan association, credit union, trust company, or other depository institution that has entered into a Deposit Account Control Agreement.

 

“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, the Net Cash Proceeds of which are $1,000,000.00 or more.

 

“Disqualified Lender” has the meaning specified in Section 10.06(b)(v)(D).

 

“Dollar” and “$” mean lawful money of the United States.

 

“El Paso Refinery” means the refineries owned and operated by the Borrower or another Loan Party located at 6500 Trowbridge Drive, El Paso, Texas.

 

“El Paso Terminal” means the terminal and associated facilities owned and operated by the Borrower or another Loan Party located in or near El Paso, Texas.

 

“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section ‎10.06(b)(iii), ‎(v) and ‎(vi) (subject to such consents, if any, as may be required under Section ‎10.06(b)(iii)).

 

“Engagement Letter” means the letter agreement dated as of March 14, 2011 between the Borrower and MLPF&S.

 

  

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“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

 

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

 

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon  the Borrower or any ERISA Affiliate.

 

“Eurodollar Rate” means, (a) for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day

 

  

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of such Interest Period) with a term equivalent to such Interest Period.  If such rate is not available at such time for any reason, then the “Eurodollar Rate” for such Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period. Notwithstanding anything to the contrary contained herein, the Eurodollar Rate shall at all times at least equal or exceed the Eurodollar Rate Floor, and (b) for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to (i) BBA LIBOR, at approximately 11:00 a.m., London time determined two Business Days prior to such date for Dollar deposits being delivered in the London interbank market for a term of one month commencing that day or (ii) if such published rate is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the date of determination in same day funds in the approximate amount of the Base Rate Loan being made or maintained and with a term equal to one month would be offered by Bank of America’s London Branch to major banks in the London interbank Eurodollar market at their request at the date and time of determination..

 

“Eurodollar Rate Floor” means 1.50%.

 

“Eurodollar Rate Loan” means a Loan that bears interest at a rate based on the Eurodollar Rate.

 

“Event of Default” has the meaning specified in Section ‎8.01.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which the Borrower is located, (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 10.13), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 3.01(e)(ii), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 3.01(a), and (d) any withholding tax to the extent imposed as a result of a failure by the recipient or Beneficial Owner of the payment to satisfy the conditions for avoiding withholding under FATCA.

 

“Existing Owners” means those Persons who are owners of the Equity Interests of RHC Holdings, L.P., as of the Original Closing Date, members of their immediate families and Persons (including trusts established for estate planning purposes) that are Affiliates thereof.

 

“Existing Term Loan Credit Agreement” has the meaning set forth in the Recitals to this Agreement.

 

“Extraordinary Receipts” means any cash received by or paid to or for the account of any Person not in the ordinary course of business, including tax refunds (other than income tax refunds), pension plan reversions and proceeds of insurance (other than proceeds of business interruption insurance to the extent

 

  

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such proceeds constitute compensation for lost earnings) and condemnation awards (and payments in lieu thereof) in respect of property other than Revolver Priority Collateral, indemnity payments and any purchase price adjustment; provided, however, that an Extraordinary Receipt shall not include cash receipts from proceeds of insurance, condemnation awards (or payments in lieu thereof) or indemnity payments to the extent that such proceeds, awards or payments (a) in respect of loss or damage to equipment, fixed assets or real property are applied (or in respect of which expenditures were previously incurred) to replace or repair the equipment, fixed assets or real property in respect of which such proceeds were received in accordance with the terms of Section 2.03(b)(ii), or (b) are received by any Person in respect of any third party claim against such Person and applied to pay (or to reimburse such Person for its prior payment of) such claim and the costs and expenses of such Person with respect thereto, or (c) constitute proceeds of Revolver Priority Collateral.

 

“FATCA” means Sections 1471 through 1474 of the Code as in effect on the date hereof, and any applicable Treasury regulation promulgated thereunder or published administrative guidance implementing such sections.

 

“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided, that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

 

“Flagstaff Terminal” means the refined products terminal and associated facilities, owned and operated by Western Refining Terminals and located in or near Flagstaff, Arizona.

 

“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.  For purposes of this definition, the United States, each state thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

“FRB” means the Board of Governors of the Federal Reserve System of the United States.

 

“Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

 

“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

 

“Gallup Refinery” means the crude oil refinery and associated facilities owned and operated by Western Refining Southwest or another Loan Party and located in or near Gallup, New Mexico (formerly known as the Ciniza Refinery).

 

  

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“Gallup Terminal” means the terminal and associated facilities owned and operated by Western Refining Southwest or another Loan Party and located in or near Gallup, New Mexico.

 

“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Guarantee” means, as to any Person, any (a) obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien).  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a corresponding meaning.

 

“Guarantor” means each Subsidiary set forth on Schedule I hereto, and each other Subsidiary that now or hereafter executes a Guaranty pursuant to Section 6.12 hereof.

 

“Guaranty” means collectively, the Guaranty Agreements substantially in the form of Exhibit H hereto executed by Subsidiaries of the Borrower in favor of the Administrative Agent and the Lenders, together with each other guaranty and guaranty supplement delivered pursuant to this Agreement.

 

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

 

“Hydrocarbons” means oil, gas, casing head gas, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons, all products refined, separated, settled and dehydrated therefrom, including, without limitation, kerosene, liquefied petroleum gas, refined lubricating oils, diesel fuel, drip gasoline, natural gasoline, and all other minerals.

 

“IFRS” means the International Financial Reporting Standards.

 

“Increase Effective Date” has the meaning set forth in Section 2.13.

 

“Incremental Term Commitments” has the meaning set forth in Section 2.13.

 

  

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“Incremental Term Lender” means a Lender with an Incremental Term Commitment or an outstanding Incremental Term Loan.

 

“Incremental Term Loan” has the meaning set forth in Section 2.13.

 

“Incremental Term Facility” means any additional tranche of Incremental Term Commitments and Incremental Term Loans established pursuant to Section 2.13.

 

“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

 

(a)           all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

 

(b)           all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

 

(c)           net obligations of such Person under any Swap Contract;

 

(d)           all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and, in each case, not past due for more than 60 days after the date on which such trade account payable was created);

 

(e)           indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

 

(f)           capital leases and Synthetic Lease Obligations;

 

(g)           all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person (or, in the case of the Borrower or a Subsidiary, in any other Subsidiary) on a date prior to the date that is 90 days after the Maturity Date, or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, provided however, that neither Convertible Preferred Securities nor obligations to make dividend payments in respect of Convertible Preferred Securities shall be deemed Indebtedness; and

 

(h)           all Guarantees of such Person in respect of any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person.  The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.  The amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

  

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“Indemnitees” has the meaning specified in Section ‎10.04(b).

 

“Information” has the meaning specified in Section ‎10.07.

 

“Intercreditor Agreement” means that certain Intercreditor Agreement substantially in the form of Exhibit I hereto dated as the date hereof among the Administrative Agent, the Revolver Administrative Agent, the Control Agent, and the Loan Parties, as amended as of the Closing Date.  As used in the definition of “Loan Documents” and in Sections ‎5.19(a), ‎6.12(b), ‎9.10(a)(i), and ‎10.01(g), the term “Intercreditor Agreement” shall include the Noteholder Intercreditor Agreement.

 

“Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December and the Maturity Date.

 

“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or, subject to availability, six months thereafter (or nine or twelve months, if at the time of the relevant Borrowing, all Lenders agree to make interest periods of such length available), as selected by the Borrower in its Loan Notice; provided, that:

 

(i)           any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

 

(ii)           any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

 

(iii)           no Interest Period shall extend beyond the Maturity Date.

 

“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit or all or a substantial part of the business of such Person.  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

 

“Investment Account Control Agreement” means an agreement among a Securities Intermediary holding a securities account for a Loan Party and the Administrative Agent, in form and substance satisfactory to the Administrative Agent, evidencing that the Administrative Agent has “control” (as defined in the UCC) of such securities account.

 

“IRS” means the United States Internal Revenue Service.

 

  

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“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

 

“Lender” shall mean each financial institution listed on Schedule 2.01, as well as any person that becomes a “Lender” hereunder pursuant to Section 2.13 or Section 10.06, in each case unless such person has ceased to be a Lender pursuant to Section 10.06.

 

“Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time designate by notice to the Borrower and the Administrative Agent.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

 

“Liquidity” means at any time, the sum of (a) “Excess Availability” as defined in the Revolving Credit Agreement at such time and (b) cash and Cash Equivalents of the Borrower and its Subsidiaries at such time.

 

“Loan” means a Term Loan or Incremental Term Loan.

 

“Loan Documents” means this Agreement, each Note, the Collateral Documents, the Intercreditor Agreement and the Engagement Letter.

 

“Loan Notice” means a notice of (a) a Borrowing of Loans, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans, pursuant to Section ‎2.02(a), which, if in writing, shall be substantially in the form of Exhibit A.

 

“Loan Parties” means, collectively, the Borrower, each Guarantor and each Subsidiary that has executed a Collateral Document; and each individually, a “Loan Party”.

 

“Logistics Assets” means (i) any Terminal and its related storage tanks, pipelines, docks and wharfs and off-loading equipment and similar assets, (ii) any pipeline and related assets and (iii) any other asset that constitutes a Qualifying Asset, in each case other than any Refinery operating processing unit

 

“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of the Borrower and its Restricted Subsidiaries, taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon (i) the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party, or (ii) the perfection or priority of any Lien guaranteed under any of the Collateral Documents.

 

“Maturity Date” means March 15, 2017.

 

  

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“Minimum Liquidity Threshold” means $200,000,000.

 

“MLP” means a limited partnership with one or more classes of securities registered under the Securities Act of 1933 or the Securities Exchange Act of 1934, (a) in which the Borrower and/or one or more of its Restricted Subsidiaries has direct or indirect ownership interest, (b) whose general partner is Controlled directly or indirectly by the Borrower and (c) that is engaged in a business that generates “qualifying income” within the meaning of Section 7704(d) of the Code.  As of the Closing Date, the Borrower does not have any Subsidiary that is a MLP.

 

“MLPF&S” has the meaning set forth in the definition of “Arranger”.

 

“MLP GP” means (i) the general partner of a MLP and (ii) any direct or indirect Subsidiary of the Borrower that Controls or otherwise owns an interest in the general partner of a MLP.

 

“MLP Subsidiary” means a Subsidiary of the Borrower that (a) is an MLP or an MLP GP, and (b) each Subsidiary of each of the foregoing.

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

 

“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

 

“Multiple Employer Plan” means a Plan which has two or more contributing sponsors (including the Borrower or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

 

“Net Cash Proceeds” means:

 

(a)           with respect to any Disposition by the Borrower or any Restricted Subsidiary, or an Extraordinary Receipt received or paid to the account of the Borrower or any Restricted Subsidiary, the excess, if any, of (i) the sum of cash and cash equivalents received in connection with such transaction (including any cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (A) the principal amount of any Indebtedness that is secured by the applicable asset and that is required to be repaid in connection with such Disposition (other than Indebtedness under the Loan Documents), (B) the reasonable and customary out-of-pocket expenses incurred by any Loan Party or any Restricted Subsidiary in connection with such transaction and (C) income taxes reasonably estimated to be actually payable within two years of the date of the relevant transaction as a result of any gain recognized in connection therewith; provided that, if the amount of any estimated taxes pursuant to subclause (C) exceeds the amount of taxes actually required to be paid in cash in respect of such transaction, the aggregate amount of such excess shall constitute Net Cash Proceeds; and

 

(b)           with respect to any Debt Issuance or issuance of Equity Interests by the Borrower or any Restricted Subsidiary, the excess, if any, of (i) cash and cash equivalents received by the Borrower or any Restricted Subsidiary in connection with such issuance (including any cash received by way of deferred payment pursuant, but only as and when so received) over (ii) the reasonable and customary out-of-pocket expenses incurred by any Loan Party or any Restricted Subsidiary in connection with such issuance.

 

“Non-Operational Refineries” means the Bloomfield Refinery and the Yorktown Refinery.

 

  

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“Note” means a promissory note made by the Borrower in favor of a Lender evidencing Loans made by such Lender to the Borrower, substantially in the form of Exhibit B.

 

“Noteholder Intercreditor Agreement” means the Collateral Trust and Intercreditor Agreement dated as of June 12, 2009 among the Borrower, the other grantors party thereto, The Bank of New York Mellon Trust Company, N.A., as Collateral Trustee, the Administrative Agent and The Bank of New York Mellon Trust Company, N.A., as Initial Additional Authorized Representative.

 

“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising, in each case including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

 

“Original Closing Date” means May 31, 2007.

 

“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

 

“Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

 

“Outstanding Amount” means, on any date, the aggregate outstanding principal amount of all Loans after giving effect to any borrowings and prepayments or repayments of Loans occurring on such date.

 

“Participant” has the meaning specified in Section ‎10.06(d).

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Pension Act” means the Pension Protection Act of 2006.

 

“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

 

“Pension Plan” means any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by the Borrower and any ERISA Affiliate

 

  

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and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

 

“Permitted Joint Venture” means any Person (other than a Restricted Subsidiary) in which the Borrower owns (including ownership through its Restricted Subsidiaries) Equity Interests representing less than 100% of the total outstanding Equity Interests of such Person, provided that such Person is engaged only in the businesses that are permitted for the Borrower and its Subsidiaries pursuant to Section ‎7.07.

 

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

“Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

 

“Platform” is defined in Section ‎6.02 hereof.

 

“Property” means the Refineries and the real estate upon which the Refineries are located, other real estate owned by one or more Loan Parties, and the interests in real property created by easements or rights of way in favor of any Loan Party, together with all Loan Parties’ interests in the improvements thereon, the fixtures and equipment located thereon or located elsewhere and used in the Borrower’s and its Restricted Subsidiaries’ business.

 

“Public Lender” has the meaning specified in Section ‎6.02.

 

“Qualifying Assets” means assets that generate “qualifying income” within the meaning of section 7704(d) of the Code.

 

“Ratings” means, as of any date of determination, the Borrower’s ratings as determined by S&P and Moody’s.

 

“Refinancing Indebtedness” has the meaning set forth in Section ‎7.03(b).

 

“Refineries” means, collectively, the Bloomfield Refinery, the Gallup Refinery, the El Paso Refinery and the Yorktown Refinery.  The term “Refineries” shall also include any refinery acquired by the Borrower or a Restricted Subsidiary of the Borrower after the Closing Date.  For purposes of Section 7.05(b), the term “Refinery” shall exclude Logistics Assets located on Refinery premises.

 

“Register” has the meaning specified in Section ‎10.06(c).

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates; and “Related Party” means any one of the foregoing.

 

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

 

“Required Lenders” means, on any date of determination, Lenders holding in the aggregate more than 50% of the Outstanding Amount; provided that the Commitment of, and the portion of the 

 

  

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Outstanding Amount held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

 

“Required Regulatory Capital Expenditures” means Capital Expenditures required by any Governmental Authority.

 

“Responsible Officer” means the chief executive officer, president, chief financial officer, chief accounting officer, treasurer or assistant treasurer of a Loan Party.  Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.  With respect to documents delivered pursuant to Article IV, the term “Responsible Officer” shall also include the chief administrative officer of the Borrower.

 

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of the Borrower or any Restricted Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to the Borrower’s stockholders, partners or members (or the equivalent Person thereof), or any option, warrant or other right to acquire any such dividend or other distribution or payment. For the avoidance of doubt, (x) a payment of principal of or interest on debt securities convertible into or exchangeable, in whole or in part, for shares of capital stock of (or other ownership or profit interests in) the Borrower or any Restricted Subsidiary, or (y) a payment made in cash in satisfaction of the Borrower’s or such Restricted Subsidiary’s obligations with respect to the conversion or exchange of any such securities shall not, in either case, constitute a Restricted Payment.  In addition, payment of dividends on Convertible Preferred Securities, and payments made in cash (in lieu of fractional shares) upon the conversion of Convertible Preferred Securities, shall not constitute Restricted Payments.

 

“Restricted Subsidiary” means each Subsidiary of the Borrower that is not a MLP Subsidiary.

 

“Revolver Administrative Agent” means Bank of America in its capacity as administrative agent for the lenders under the Revolver Loan Documents (together with any successor thereto in such capacity).

 

“Revolver Collateral Documents” means the “Collateral Documents” under, and as defined in, the Revolving Credit Agreement.

 

“Revolver Indebtedness” means Indebtedness under the Revolving Credit Agreement and all refinancings, renewals and extensions thereof that are permitted by Section ‎7.03(b).

 

“Revolver Loan Documents” means the “Loan Documents” under, and as defined in, the Revolving Credit Agreement and any documents governing refinancings, renewals and extensions of the Indebtedness under the Revolving Credit Agreement that are permitted by Section ‎7.03(b).

 

“Revolver Priority Collateral” shall have the meaning set forth in the Intercreditor Agreement.

 

“Revolver Priority Liens” means the Liens of the Revolver Administrative Agent on the Revolver Priority Collateral pursuant to the Revolver Collateral Documents.

 

  

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“Revolving Credit Agreement” means that certain Revolving Credit Agreement, dated as of May 31, 2007, among the Borrower, the Revolver Administrative Agent and the lenders party thereto (as amended by the First Amendment to Revolving Credit Agreement, dated as of June 30, 2008, among the Borrower, the lenders party thereto and the Revolver Administrative Agent, the Second Amendment to Revolving Credit Agreement, dated as of May 29, 2009, among the Borrower, the lenders party thereto and the Revolver Administrative Agent, the Third Amendment to Revolving Credit Agreement, dated as of November 24, 2009, among the Borrower, the lenders party thereto and the Revolver Administrative Agent, the Fourth Amendment to Revolving Credit Agreement, dated as of February 18, 2010, among the Borrower, the lenders party thereto and the Revolver Administrative Agent, and the Fifth Amendment to Revolving Credit Agreement, dated as of December 23, 2010, among the Borrower, the lenders party thereto and the Revolver Administrative Agent).

 

“S&P” means Standard & Poor’s Financial Services LLC, a susbidiary of The McGraw Hill Companies, Inc. and any successor thereto.

 

“San Juan” means San Juan Refining Company, a New Mexico corporation.

 

“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

 

“Section 7.03(m) Indebtedness” means Indebtedness incurred by the Borrower and Guarantors pursuant to Section 7.03(m)(i) or Section 7.03(m)(ii).

 

“Section 7.03(m) Refinancing Indebtedness” has the meaning set forth in Section 7.03(m)(ii).

 

“Secured Notes Indenture” means the Indenture dated as of June 12, 2009 among the Borrower, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee, paying agent, registrar and transfer agent.

 

“Securities Intermediary” means Bank of America, N.A. and any other Person (including a bank or broker) that maintains a securities account for the Borrower in which a security interest has been created in favor of the Administrative Agent for the benefit of the Lenders to secure the Obligations, and that has entered into an Investment Account Control Agreement.

 

“Security Agreements” means, collectively, each Security Agreement substantially in the form of Exhibit G hereto, executed by the Borrower and each Subsidiary in favor of the Administrative Agent, for the benefit of the Lenders, as renewed, extended, amended or restated from time to time.

 

“Solvent” means, as to any Person at any time, that (a) the fair value of the property of such Person is greater than the total amount of such Person’s liabilities (including contingent liabilities), (b) the present fair saleable value of all of the property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute unreasonably small capital, and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business.  The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

  

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“Structured Hydrocarbon Supply Arrangement” means a transaction or series of transactions entered into by the Borrower or a Restricted Subsidiary pursuant to which one or more third parties supplies, or agrees to supply, to the Borrower and its Restricted Subsidiaries Hydrocarbons of a type that, at the time of such supply, are used or produced in the ordinary course of business of the Borrower and its Restricted Subsidiaries, including, without limitation, such transactions that include sales by the Borrower and its Restricted Subsidiaries of similar Hydrocarbons to such third parties and later purchases (or options to purchase) by the Borrower or such Restricted Subsidiaries of similar Hydrocarbons from such third parties and/or their affiliates and such transactions that include the provision by the Borrower or its Restricted Subsidiaries to such third parties of related storage and other related services or the leasing by the Borrower and its Restricted Subsidiaries of related storage facilities.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

 

“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination values determined in accordance therewith, such termination values, and (b) for any date prior to the date referenced in clause (a), the amounts determined as the mark-to-market values for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

 

“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

  

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“Term Loan Casualty Proceeds Account” has the meaning set forth in Section ‎6.07(f)

 

“Term Loan Collateral Account” means the deposit account or other account maintained by the Administrative Agent (and subject to the first priority security interest of the Administrative Agent for the benefit of the Lenders) pursuant to Section ‎2.03(f) into which Net Cash Proceeds from sales of Term Priority Collateral and other amounts held by the Administrative Agent pursuant to this Agreement shall be deposited pending final application of such proceeds in accordance with the terms of this Agreement.  The Term Loan Collateral Account shall be under the sole dominion and control of the Administrative Agent.

 

“Term Loan Commitment” means, as to any Lender, its obligation to make Term Loans to the Borrower pursuant to Section ‎2.01(a) on the Closing Date in an aggregate principal amount not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 under the caption “Term Loan Commitment.”

 

“Term Loans” has the meaning specified in Section ‎2.01(a).

 

“Term Facility” means, at any time, (a) on or prior to the Closing Date, the aggregate amount of Term Loan Commitments at such time and (b) thereafter, the aggregate principal amount of the Term Loans of all Lenders outstanding at such time.

 

“Term Priority Collateral” shall have the meaning set forth in the Intercreditor Agreement.  After repayment of the obligations under the Revolving Credit Agreement and termination of the Liens securing same, the term “Term Priority Collateral” shall mean all Collateral.

 

“Terminal” means the Flagstaff Terminal, the Albuquerque Terminal, the Yorktown Terminal, the El Paso Terminal, the Bloomfield Terminal, the Gallup Terminal and all other finished product, asphalt, crude oil, and other storage terminals, tanks and lines and facilities related thereto owned or leased by the Borrower and its Restricted Subsidiaries.

 

“Threshold Amount” means $50,000,000.

 

“Type” means, with respect to a Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

 

“UCC” means the Uniform Commercial Code, including each such provision as it may subsequently be renumbered, as enacted in the State of New York or other applicable jurisdiction, as amended at the time in question.

 

“United States” and “U.S.” mean the United States of America.

 

“Western Refining Southwest” means Western Refining Southwest, Inc., an Arizona corporation (formerly known as Giant Industries Arizona, Inc.).

 

“Western Refining Terminals” means Western Refining Terminals, Inc., an Arizona corporation (formerly known as Giant Mid-Continent, Inc.).

 

“Western Refining Yorktown” means Western Refining Yorktown, Inc., a Delaware corporation (formerly known as Giant Yorktown, Inc.).

 

  

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“Yorktown Assets” means the Yorktown Terminal, storage tanks, pipelines, docks and wharfs, off-loading equipment and similar assets located at or near the Yorktown Refinery.

 

“Yorktown Refinery” means the refinery located in or near Yorktown, Virginia, and the land and other real estate appurtenant thereto, owned and operated by Western Refining Yorktown.

 

“Yorktown Terminal” means the terminal, dock and related facilities owned and operated by Western Refining Yorktown or another Loan Party located in or near Yorktown, Virginia.

 

1.02 Other Interpretive Provisions.  With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

 

(a)  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented, amended and restated or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

(b)  In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

 

(c)  Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

 

1.03 Accounting Terms.

 

(a)  Generally.  All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except (x) as may be required by changes in GAAP, (y) as may be required by IFRS if the Borrower is required to apply IFRS as provided in Section 1.03(b), or (z) as may be otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant contained herein, Indebtedness of the Borrower

 

  

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and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.

 

(b)  Changes in GAAP; IFRS.  If (x) at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document or (y) the Borrower is required (as advised by the Borrower’s outside auditors of national recognized standing) to apply IFRS rather than GAAP and such change would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP or such application of IFRS, as the case may be (subject to the approval of the Required Lenders); provided, that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein (or prior to the application of IFRS, as applicable) and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP (or such application of IFRS, as applicable).

 

(c)  Consolidation of Variable Interest Entities.  All references herein to consolidated financial statements of the Borrower and its Restricted Subsidiaries or to the determination of any amount for the Borrower and its Restricted Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that the Borrower is required to consolidate pursuant to FASB ASC 810 as if such variable interest entity were a Subsidiary as defined herein.

 

1.04 Rounding.  Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

 

1.05 Times of Day.  Unless otherwise specified, all references herein to times of day shall be references to Central time (daylight or standard, as applicable).

 

ARTICLE II.

THE COMMITMENTS AND LOANS

 

2.01  Loans.

 

(a)  Each Lender severally agrees to make a term loan (each a “Term Loan” and collectively, the “Term Loans”) to the Borrower in an amount equal to such Lender’s Term Loan Commitment, which loans shall be disbursed in a single advance on the Closing Date in a principal amount equal to 99.0% of such Lender’s Term Loan Commitment; provided that for the avoidance of doubt, the principal amount of each Term Loan made hereunder shall be an amount equal to 100% of each Lender’s Term Loan Commitment.

 

(b)  Lenders may, but shall not be required to, agree to commit to make additional Loans if requested by the Borrower pursuant to Section 2.13.

 

(c)  Amounts borrowed under this Section ‎2.01 which are repaid or prepaid may not be reborrowed.

 

  

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2.02  Borrowings, Conversions and Continuations of Term Loans.

 

(a)  Each Borrowing, each conversion of Loans of any Class from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which may be given by telephone.  Each such notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans, and (ii) one Business Day prior to the requested date of any Borrowing of Base Rate Loans.  Each telephonic notice by the Borrower pursuant to this Section ‎2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower.  Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $10,000,000, or a whole multiple of $1,000,000 in excess thereof.  Each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $5,000,000, or a whole multiple of $1,000,000 in excess thereof.  Each Loan Notice (whether telephonic or written) shall specify (A) whether the Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (B) the Class of Loans being borrowed, converted or continued, (C) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (D) the principal amount of Loans to be borrowed, converted or continued, (E) the Type of Loans to be borrowed or to which existing Loans are to be converted, and (F) if applicable, the duration of the Interest Period with respect thereto.  If the Borrower fails to specify a Type of Loan in a Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, converted to, or continued as Eurodollar Loans having an Interest Period of one month.  Any such automatic continuation of Eurodollar Loans for an additional Interest Period shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans.  If the Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.

 

(b)  Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Class Percentage of the applicable Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection.  In the case of a Borrowing, each Lender shall make the amount of its Loan of the applicable Class available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Business Day specified in the applicable Loan Notice.  Upon satisfaction of the applicable conditions set forth in Section ‎4.01, with respect to the Term Loan advances made on the Closing Date, the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower.

 

(c)  Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan.  During the existence of a Default, no Loans may be requested as, converted to or continued as Eurodollar Rate Loans without the consent of the Required Lenders.

 

(d)  The Administrative Agent shall promptly notify the Borrower and the applicable Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate.  At any time that Base Rate Loans are outstanding, the Administrative

 

  

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Agent shall notify the Borrower and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

 

(e)  After giving effect to all Borrowings, all conversions of Term Loans from one Type to the other, and all continuations of Term Loans as the same Type, there shall not be more than twelve (12) Interest Periods in effect with respect to Term Loans.

 

2.03  Prepayments.

 

(a)  Voluntary.  The Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Loans of any Class in whole or in part without premium or penalty; provided, that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $10,000,000, or a whole multiple of $1,000,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding.  Each such notice shall specify the date and amount of such prepayment and the Type(s) and Class of Loans to be prepaid and, if Eurodollar Rate Loans are to be prepaid, the Interest Period(s) of such Loans.  The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Class Percentage of such prepayment.  If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.  Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 2.07(b) or Section ‎3.05.  Each such prepayment shall be applied to the Loans of the Applicable Class of the Lenders in accordance with their respective Applicable Class Percentages.

 

(b)  Mandatory.  Until such time as the Outstanding Amount has been repaid in full, the Outstanding Amount shall be permanently prepaid in the amounts set forth below upon the occurrence of any of the following events:

 

(i)           In the event of any Debt Issuance by the Borrower or any of its Restricted Subsidiaries on or after the Closing Date, then concurrently with receipt of Net Cash Proceeds of such Debt Issuance, the Borrower shall prepay an aggregate principal amount of the Term Loans and, if so provided in the Incremental Term Supplement applicable thereto, Incremental Term Loans, equal to 100% of such Net Cash Proceeds; provided that to the extent that (a) to the extent any Net Cash Proceeds received in connection with a Debt Issuance permitted by Section 7.03(i) are used to make a voluntarily redemption, repurchase or prepayment of the 2014 Notes or the 2017 Notes or (b) to the extent any Net Cash Proceeds received in connection with a Debt Issuance permitted by Section 7.03(j) are used to make a voluntarily redemption, repurchase or prepayment of the Convertible Notes, in each case, such Net Cash Proceeds shall not be required to prepay the Term Loans and, if so provided in the Incremental Term Supplement applicable thereto, Incremental Term Loans, pursuant to this clause (i).

 

(ii)           If Net Cash Proceeds of Extraordinary Receipts received on or after the Closing Date by the Borrower or any of its Restricted Subsidiaries exceed during any calendar year an amount equal to $25,000,000 (the portion of such Net Cash Proceeds that exceeds $25,000,000 is herein referred to as “Excess Extraordinary

 

  

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Receipts”) the Borrower shall prepay an aggregate principal amount of Term Loans and, if so provided in the Incremental Term Supplement applicable thereto, Incremental Term Loans, equal to 100% of such Excess Extraordinary Receipts immediately upon receipt thereof by the Borrower or such Restricted Subsidiary; provided, however, that with respect to any proceeds of insurance or condemnation awards (or payments in lieu thereof), for so long as no Event of Default shall have occurred and be continuing, the Borrower or a Restricted Subsidiary may reinvest such Extraordinary Receipts in assets used in the businesses of the Borrower or its Restricted Subsidiaries, and in such case any such Extraordinary Receipts that have not been reinvested within one year from the receipt thereof by the Borrower or such Restricted Subsidiary shall be immediately applied to the prepayment of the Term Loans and, if so provided in the Incremental Term Supplement applicable thereto, Incremental Term Loans.

 

(iii)           If Net Cash Proceeds received on or after the Closing Date by the Borrower or any of its Restricted Subsidiaries from one or more Dispositions (other than Dispositions to the Borrower or to a Restricted Subsidiary permitted by Section 7.05(a)(v) or 7.05(a)(vi)) or Dispositions permitted by Section 7.05(a)(iv) of property other than Revolver Priority Collateral exceed during any calendar year, an aggregate amount equal to $30,000,000 (the portion of such Net Cash Proceeds that exceeds $30,000,000 is herein referred to as “Excess Disposition Net Cash Proceeds”) the Borrower shall prepay an aggregate amount of Term Loans and, if so provided in the Incremental Term Supplement applicable thereto, Incremental Term Loans, equal to 100% of such Excess Disposition Net Cash Proceeds immediately upon receipt thereof by the Borrower or a Restricted Subsidiary, provided, however, (x) for so long as no Event of Default shall have occurred and be continuing, the Borrower or a Subsidiary may reinvest such Excess Disposition Net Cash Proceeds in assets used in the business of the Borrower or its Subsidiaries, and in such case any Excess Disposition Net Cash Proceeds that have not been reinvested within one year from the receipt thereof by the Borrower or such Subsidiary shall, upon the expiration of such one-year period, be immediately applied, as otherwise provided in this Section 2.03(b)(iii), to the prepayment of the Term Loans and, if so provided in the Incremental Term Supplement applicable thereto, Incremental Term Loans, or if clause (y) is applicable thereto, as provided in clause (y); and (y) Excess Disposition Net Cash Proceeds received from one or more Dispositions permitted by Section 7.05(a)(ix) or 7.05(a)(x) may be either (1) reinvested as provided in clause (x) above or (2)(A) used by the Borrower to make an optional prepayment of the Term Loans and, if so provided in the Incremental Term Supplement applicable thereto, Incremental Term Loans, at par in an amount equal to the Lenders’ Applicable Percentage (calculated without regard for any Outstanding Amount of any Class of Loans not entitled to share in such application) of such Excess Disposition Net Cash Proceeds or (B) used by the Borrower to make a voluntary redemption of the 2014 Notes or, if the 2014 Notes are no longer outstanding, to make an offer to the Lenders to prepay the Term Facility pursuant to Section 2.03(c) and, to the extent such offer is declined, the Borrower may retain such declined amounts.

 

(iv)           In the event that there shall be Consolidated Excess Cash Flow for any fiscal year (commencing with fiscal year ending December 31, 2011), the Borrower shall, no later than ninety days after the end of such fiscal year, prepay

 

  

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the Term Loans and, if so provided in the Incremental Term Supplement applicable thereto, Incremental Term Loans, in an aggregate amount equal to 50% of such Consolidated Excess Cash Flow less 100% of voluntary prepayments made during that fiscal year pursuant to Section 2.03(a); provided, however, that (A) in the event that the Consolidated Leverage Ratio is less than 3.00 to 1.00 but greater than or equal to 2.00:1.00 as evidenced by a Compliance Certificate provided pursuant to Section 6.02(b) as of the end of such fiscal year, the Borrower shall prepay the Term Loans and, if so provided in the Incremental Term Supplement applicable thereto, Incremental Term Loans, in an aggregate amount equal to 25% of such Consolidated Excess Cash Flow less 100% of voluntary prepayments made during that fiscal year pursuant to Section 2.03(a) and (B) in the event that the Consolidated Leverage Ratio is less than 2.00 to 1.00, as evidenced by a Compliance Certificate provided pursuant to Section 6.02(b) as of the end of such fiscal year or upon the written consent of the Required Lenders, no such prepayment shall be required.  Notwithstanding anything to the contrary contained within this subsection (iv), the Borrower shall not be required to make any payment under this subsection (iv) to the extent that such prepayment would cause Liquidity to fall below the Minimum Liquidity Threshold.

 

(c)  With respect to any offer to prepay Term Loans and, if so provided in the Incremental Term Supplement applicable thereto, Incremental Term Loans, to be made pursuant to clause (y)(2) of the proviso to Section 2.03(b)(iii) above, the Borrower shall notify the Administrative Agent by 12 Noon (New York City time) on or before the third Business Day after the Borrower is in receipt of the applicable Excess Disposition Net Cash Proceeds as to which it proposes to make such offer of the receipt of such Excess Disposition Net Cash Proceeds and its offer to prepay the Term Loans (subject to Section 2.07(b)) on the fourth Business Day following receipt of such notice by the Administrative Agent.  The Administrative Agent shall then notify each of the applicable Lenders of such offer.  Each Lender, at its option, may elect not to accept such prepayment.  Any Lender declining such prepayment shall give written notice to the Administrative Agent by 12 Noon (New York City time) on the third Business Day immediately following the date the Lenders receive notice of such prepayment.  If a Lender fails to give notice by 12 Noon as set forth in the immediately preceding sentence, such Lender shall be deemed to have accepted the offer.  Any amounts that would otherwise have been applied to prepay such declining Lender shall be retained by the Borrower.

 

(d)  Each prepayment of Term Loans and, if so provided in the Incremental Term Supplement applicable thereto, Incremental Term Loans, required to be made pursuant to subsection (b) of this Section ‎2.03 shall be applied ratably to all outstanding Term Loans and, if so provided in the Incremental Term Supplement applicable thereto, Incremental Term Loans, and the principal repayment installments thereof in reverse order of maturity.  Within the foregoing parameters, prepayments shall be applied first to Base Rate Loans and then to Eurodollar Rate Loans.

 

(e)  If the Borrower is required to make a mandatory prepayment of Eurodollar Rate Loans under this Section ‎2.03 at any time that is other than the end of the current Interest Periods, and provided that no Default shall then exist, the Borrower shall have the right, in lieu of making such prepayment in full prior to the end of an Interest Period, to instruct the Administrative Agent to hold such amount on deposit in the Term Loan Collateral Account and to apply such amount to the prepayment of the applicable Eurodollar Rate Loans at the end of the current Interest Periods applicable thereto.

 

(f)  The Term Loan Collateral Account shall be held by the Administrative Agent for the benefit of the Lenders.  The Borrower hereby grants to the Administrative Agent, for the benefit of the 

 

  

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Lenders, a first priority Lien in the Term Loan Collateral Account, to secure the Obligations, and shall execute such security agreements or control agreements as the Administrative Agent may request in order to perfect such first priority Lien in the Term Loan Collateral Account.  The Administrative Agent may invest funds in the Term Loan Collateral Account in interest-bearing deposit accounts of the Administrative Agent (and such account shall pay interest as paid on other similar accounts held by the Administrative Agent) or in Cash Equivalents.  Provided that no Default exists, the Borrower may direct the investment of funds in the Term Loan Collateral Account in such deposit accounts or Cash Equivalents.  Any interest earned on such deposit accounts or Cash Equivalents will be for the account of the Borrower, and the Borrower will deposit with the Administrative Agent the amount of any loss on any such Cash Equivalents to the extent necessary in order that the amount of the prepayment to be made with the deposited amounts may not be reduced.  The Term Loan Collateral Account shall be under the sole dominion and control of the Administrative Agent.

 

2.04  Intentionally Omitted.

 

2.05  Repayment of Loans.  The Borrower agrees to repay to the Lenders in quarterly installments of principal, each of which shall be equal to 0.25% of the initial aggregate principal amount of the Term Loans.  The first such payment shall be made on June 30, 2011 and each subsequent payment shall be made thereafter on the last Business Day of each March, June, September and December, with a final payment due in respect of any Class of Loans on the Maturity Date (in the case of Term Loans) or the maturity date in respect thereof (in the case of Incremental Term Loans) in an amount equal to the Class Outstanding Amount as of such date.  Each time that additional Loans are made pursuant to increases in Commitments pursuant to Section 2.13, the amount of the remaining installments of principal shall be adjusted so that each such remaining installment is in an amount equal to 0.25% of the principal amount of all Loans outstanding on the date that such additional Loans are made (including the amount of the additional Loans made on such date).

 

2.06  Interest and Principal Payments.

 

(a)  Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.

 

(b)  (i)           If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(ii)        If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(iii)       Upon the request of the Required Lenders, while any Event of Default exists, the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

  

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(iv)      Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

 

(c)  Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

 

2.07  Fees.  (a) The Borrower agrees to pay to the Arranger and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Engagement Letter.  Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

 

(b)      If the Term Loans and, if so provided in the Incremental Term Supplement applicable thereto, the Incremental Term Loans, are prepaid in whole or in part pursuant to Section 2.03(a) or any offer to prepay Loans pursuant to Section 2.03(b)(iii)(y)(2)(B) is made, and if any such prepayment is made (x) on or before the date that is one year after the Closing Date, the Borrower shall pay a prepayment premium equal to 2.00% of the aggregate principal amount of each such prepayment or (y) following the date that is one year after the Closing Date but on or before the date that is two years after the Closing Date, the Borrower shall pay a prepayment premium equal to 1.00% of the aggregate principal amount each such prepayment.

 

2.08  Computation of Interest and Fees.  All computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America’s “prime rate” shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed.  All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year).  Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided, that any Loan that is repaid on the same day on which it is made shall, subject to Section ‎2.10(a), bear interest for one day.  Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

 

2.09  Evidence of Debt.  The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business.  The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Loans made by the Lenders to the Borrower and the interest and payments thereon.  Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligations of the Borrower hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.  Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records.  Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), Class, amount and maturity of its Loans and payments with respect thereto.

 

2.10  Payments Generally; Administrative Agent’s Clawback.

 

(a)  General.  All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.  Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative

 

  

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Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein.  The Administrative Agent will promptly distribute to each Lender its Applicable Percentage or Applicable Class Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative Agent after 2:00 p.m. may, in the Administrative Agent’s sole discretion, be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

 

(b) (i)           Funding by Lenders; Presumption by Administrative Agent.  Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section ‎2.02 and may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the Borrower and the applicable Lender severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to the other Loans included in such Borrowing.  If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period.  If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing.  Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

 

(ii)           Payments by Borrower; Presumptions by Administrative Agent.  Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

 

(c)  Failure to Satisfy Conditions Precedent.  If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative

 

  

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Agent because the conditions to the applicable Loans set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

 

(d)  Obligations of Lenders Several.  The obligations of the Lenders hereunder to make Loans, and to make payments pursuant to Section ‎10.04(c) are several and not joint.  The failure of any Lender to make any Loan or to make any payment under Section ‎10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or to make its payment under Section ‎10.04(c).

 

(e)  Funding Source.  Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

 

2.11  Sharing of Payments by Lenders.  If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Loans made by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided, that:

 

(i)  if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

 

(ii)  the provisions of this Section shall not be construed to apply to (x) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).

 

Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.

 

2.12  Security.  All Obligations of the Borrower and the Guarantors shall be secured in accordance with the Collateral Documents.

 

2.13  Increase in Term Loans.

 

(a)            Request for Increase.  Provided that no Default or Event of Default shall have occurred and be continuing at such time or would result therefrom, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the Borrower may at any time and from time to time, request an increase in Loans (which increase may take the form of new term loan commitments

 

  

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(“Incremental Term Commitments”) and loans (“Incremental Term Loans”)) under an Incremental Term Facility in an aggregate amount not exceeding the Available Incremental Amount; provided that any such request for an increase shall be in a minimum amount of $50,000,000.  At the time of sending such notice, the Borrower (in consultation with the Administrative Agent) shall specify the time period within which each Lender is requested to respond (which shall in no event be less than ten (10) Business Days from the date of delivery of such notice to such Lenders by the Administrative Agent).  With respect to any Incremental Term Facility, the Borrower, the Administrative Agent and the Incremental Term Lenders party thereto shall enter into a supplement to this Agreement (an “Incremental Term Supplement”) and such Incremental Term Supplement shall set forth the terms and conditions relating to any Incremental Term Facility, which, to the extent that they are in the aggregate materially more adverse to the Borrower and its Restricted Subsidiaries than the terms and conditions relating to the Term Facility, shall be reasonably acceptable to the Administrative Agent (except to the extent that they are consistent with clause (e) below).

 

(b)           Lender Elections to Increase.  Each Lender shall notify the Administrative Agent within such time period whether or not it agrees to increase its Commitment, and, if so, whether by an amount equal to, greater than, or less than its ratable portion (based on such Lender’s Applicable Percentage in respect of the Term Facility) of such requested increase.  Any Lender not responding within such time period shall be deemed to have declined to increase its Commitment.  The Borrower is entitled to elect, in its discretion, Incremental Term Lenders from among the existing Lenders and any additional banks, financial institutions and other institutional lenders or investors, subject to the consent of (i) such proposed Incremental Term Lender and (ii) the Administrative Agent (which consent shall not be unreasonably withheld).  Subject to the approval of the Administrative Agent (which approval shall not be unreasonably withheld), the Borrower may also invite Eligible Assignees to become Lenders pursuant to a joinder agreement in form and substance satisfactory to the Administrative Agent and its counsel.

 

(c)           Notification by Administrative Agent; Additional Lenders.  The Administrative Agent shall notify the Borrower and each Lender of the Lenders’ responses to each request made hereunder.

 

(d)           Effective Date and Allocations.  If the Loans are increased in accordance with this Section, the Administrative Agent and the Borrower shall determine the effective date (the “Increase Effective Date”) and the final allocation of such increase.  The Administrative Agent shall promptly notify the Borrower and the Lenders, including the proposed new lenders, as applicable, of the final allocation of such increase and the Increase Effective Date.  Such amendment may be signed by the Administrative Agent on behalf of the Lenders.

 

(e)           Conditions to Effectiveness of Increase.  As a condition precedent to such increase, (1) the Borrower shall deliver to the Administrative Agent a certificate of each Loan Party dated as of the Increase Effective Date (in sufficient copies for each Lender) signed by a Responsible Officer of such Loan Party certifying that, before and after giving effect to such increase in Term Loans or Incremental Term Facility, (A) the representations and warranties contained in Article V and this Agreement are true and correct in all material respects on and as of the Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date, and except that for purposes of this Section 2.13, the representations and warranties contained in subsection (a) of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clause (a) of Section 6.01, and (B) no Default or Event of Default shall have occurred and be continuing at such time or would result from the increase in Term Loans or Incremental Term Facility on such Increase Effective Date, (2) all fees and expenses of the Administrative Agent and the Lenders in connection with such increase in Term Loans or Incremental Term Facility shall have been paid on or prior to the Increase Effective Date to the extent

 

  

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provided in the applicable Incremental Term Supplement, (3) on such Increase Effective Date, on a pro forma basis after giving effect to any such increase in Term Loans or Incremental Term Facility, the Borrower’s Consolidated Leverage Ratio shall be less than 3.00:1.00, recomputed as of the last day of  the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 6.01, (4) with respect to each Incremental Term Facility, such Incremental Term Facility shall (i) not have a final maturity date earlier than the Maturity Date applicable to the Term Facility or a weighted average life to maturity shorter than the weighted average life to maturity of the Term Facility and (ii) be secured by either a pari passu or junior lien on the Term Priority Collateral, (5) the Applicable Rate for the Incremental Term Loans shall be determined by the Borrower and the lenders thereof; provided, that (A) in the event that the applicable margin for the Incremental Term Loans under such Incremental Term Facility exceeds the applicable margin for the Term  Loans by more than 50 basis points, then the Applicable Rate for the Term Loans shall be adjusted so that the applicable margin for the Incremental Term Loans under such Incremental Term Facility does not exceed the applicable margin for the Term Loans by more than 50 basis points; provided, further, that the determination of the applicable margin for the Term Loans and Incremental Term Loans under the Incremental Term Facility shall include the following items: (x) interest rate margins and (y) OID or upfront fees (which shall be deemed to constitute like amounts of OID) payable to the Lenders in the primary syndication thereof (with OID being equated to interest based on an assumed four-year life to maturity) and shall exclude customary arrangement or commitment fees payable to the arrangers (or their affiliates) of such loans and (B) in the event that the Eurodollar Rate floor and/or Base Rate floor applicable to the Incremental Term Facility is greater than the Eurodollar Rate floor or Base Rate floor, respectively, applicable to the Term Loans, the Eurodollar Rate floor and/or Base Rate floor applicable to the Term Loans shall be adjusted to match such Eurodollar Rate floor or Base Rate floor applicable to the Incremental Term Loans, and (6) subject to clause (4)(i), the amortization schedule applicable to the Incremental Term Loans shall be determined by the Borrower and the lenders thereof.

 

(f)           On each Increase Effective Date, each applicable Lender or other bank, financial institution or other institutional lender or investor that is providing an Incremental Term Commitment shall make an Incremental Term Loan to the Borrower in a principal amount equal to such Lender’s or Person’s Incremental Term Commitment pursuant to the procedures set forth in Section 2.02.  Any Incremental Term Loan shall be a “Loan” for all purposes of this Agreement and the other Loan Documents.

 

(g)           Conflicting Provisions.  This Section shall supersede any provisions in Section 2.11 to the contrary.

 

2.14  Defaulting Lenders.  (a) Adjustments.  Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

 

(i)           Waivers and Amendments.  That Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 10.01.

 

(ii)           Reallocation of Payments.  Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 10.08), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any

 

  

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Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; third, if so determined by the Administrative Agent and the Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; sixth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; fourth, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and fifth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction.  Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.

 

(b)           Defaulting Lender Cure. If the Borrower and the Administrative Agent agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders as the Administrative Agent may determine to be necessary to cause the Loans to be held on a pro rata basis by the Lenders in accordance with their respective percentages of the initial applicable Commitment, whereupon that Lender will cease to be a Defaulting Lender; provided, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

 

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01 Taxes.

 

(a)  Payments Free of Taxes.  Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if the Borrower shall be required by applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent or Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

 

(b)  Payment of Other Taxes by the Borrower.  Without limiting the provisions of subsection (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c)  Indemnification by the Borrower.  The Borrower shall indemnify the Administrative Agent and each Lender within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent or such Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect

 

  

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thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

 

(d)  Evidence of Payments.  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(e)  Status of Lenders.  (i)  Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

 

(ii)   Without limiting the generality of the foregoing, in the event that the Borrower is a resident for tax purposes in the United States, any Foreign Lender shall deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

 

(A)           duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,

 

(B)           duly completed copies of Internal Revenue Service Form W-8ECI,

 

(C)           in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or

 

(D)           any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made.

 

(f)           Treatment of Certain Refunds.  If the Administrative Agent or any Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts

 

  

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pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority.  This subsection shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

 

3.02  Illegality.  If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, the Borrower, agrees, upon demand from such Lender (with a copy to the Administrative Agent), to prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans.  Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.

 

3.03  Inability to Determine Rates.  If the Required Lenders determine that for any reason in connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan, or (c) the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Borrower and each Lender.  Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice.  Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.

 

3.04  Increased Costs; Reserves on Eurodollar Rate Loans.

 

(a)  Increased Costs Generally.  If any Change in Law shall:

 

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Eurodollar Rate);

 

  

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(ii) subject any Lender to any tax of any kind whatsoever with respect to this Agreement, or any Eurodollar Rate Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section ‎3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender); or

 

(iii) impose on any Lender or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Rate Loans made by such Lender;

 

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Rate Loan (or of maintaining its obligation to make any such Loan), or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, the Borrower agrees to pay to such Lender, such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

 

(b)  Capital Requirements.  If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by such Lender, to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower agrees to pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

 

(c)  Certificates for Reimbursement.  A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender  or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error.  The Borrower agrees to pay such Lender, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

 

(d)  Delay in Requests.  Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s right to demand such compensation, provided, that the Borrower shall not be required to compensate a Lender  pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

 

(e)  Reserves on Eurodollar Rate Loans.  The Borrower agrees to pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower shall have received at least 10 days’ prior notice (with a

 

  

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copy to the Administrative Agent) of such additional interest from such Lender.  If a Lender fails to give notice 10 days prior to the relevant Interest Payment Date, such additional interest shall be due and payable 10 days from receipt of such notice.

 

3.05  Compensation for Losses.  Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower agrees to promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

 

(a)  any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

 

(b)  any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower; or

 

(c)  any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section ‎10.13;

 

including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained.  The Borrower agrees to also pay any customary administrative fees charged by such Lender in connection with the foregoing.

 

For purposes of calculating amounts payable by the Borrower to the Lenders under this Section ‎3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded.

 

3.06  Mitigation Obligations; Replacement of Lenders.

 

(a)  Designation of a Different Lending Office.  If any Lender requests compensation under Section ‎3.04, or the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section ‎3.01, or if any Lender gives a notice pursuant to Section ‎3.02, then such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Sections ‎3.01 or ‎3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section ‎3.02, as applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

(b)  Replacement of Lenders.  If any Lender requests compensation under Section ‎3.04, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section ‎3.01, the Borrower may replace such Lender in accordance with Section ‎10.13.

 

  

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3.07  Survival.  All of the Borrower’s obligations under this Article III shall survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder.

 

ARTICLE IV.

CONDITIONS PRECEDENT TO LOANS

 

4.01  Conditions of Lending.  The effectiveness of this Agreement, and the obligation of each Lender to fund its Term Loans, are subject to satisfaction of the following conditions precedent:

 

(a)  The Administrative Agent’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, and in the case of documents delivered by the Borrower, each properly executed by a Responsible Officer of the Borrower, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and each of the Lenders:

 

(i)  executed counterparts of this Agreement;

 

(ii)  a Note executed by the Borrower in favor of each Lender requesting a Note;

 

(iii)  a confirmation from each Guarantor that the Guaranty continues to guarantee, and from the Borrower and each Guarantor that the security interests granted pursuant to the Collateral Documents continue to secure, the Obligations after giving effect to the amendment and restatement of the Existing Credit Agreement on the Closing Date;

 

(iv)  such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is party;

 

(v)  (A) copies of the certificate of incorporation (or equivalent document) and all amendments thereto for each Loan Party, certified, if applicable, as of a recent date by the Secretary of State of the state of such Loan Party’s organization, (B) copies of each Loan Party’s bylaws and/or other constitutional documents together with all amendments thereto and (C) a good standing certificate (or equivalent document) for each Loan party from such Loan Party’s jurisdiction of organization dated a recent date on or prior to the date of this Agreement;

 

(vi)  an opinion of Davis Polk & Wardwell LLP, counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, covering the matters set forth in Exhibit E attached hereto, and such local counsel opinions relating to the Loan Parties as the Administrative Agent may reasonably request;

 

(vii)  five-year financial projections for the Borrower and its Subsidiaries, including balance sheet and statements of income and cash flow;

 

(viii)  a certificate of a Responsible Officer of the Borrower as to the matters set forth below in this clause (viii) (provided that the certificate delivered with respect to

 

  

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the matters set forth in clauses (A), (B) and (C) below shall be executed by the chief financial officer of the Borrower):

 

(A) certifying as to the Solvency of the Borrower and its Subsidiaries taken as a whole before and after giving effect to the incurrence of Indebtedness hereunder on the Closing Date;

 

(B) certifying that the representations and warranties of the Borrower and the other Loan Parties contained in Article V (other than the representations and warranties set forth in Section 5.05(b) and 5.05(c)) or in any other Loan Document are true and correct in all material respects as of the Closing Date, both before and after giving effect to the incurrence of Indebtedness hereunder on the Closing Date, except to the extent that any such representation or warranty is expressly stated to be made as of an earlier date;

 

(C) certifying that on the Closing Date, both before and after giving effect to the incurrence of Indebtedness hereunder on the Closing Date, no Default or Event of Default shall have occurred and be continuing; and

 

(D) certifying as to the accuracy of the matter set forth in subsection (c) of this Section ‎4.01;

 

(b)  the Administrative  Agent’s receipt of the following:

 

(i) certificates of insurance evidencing that insurance complying with the requirements of this Agreement is in effect;

 

(ii) a Loan Notice in accordance with the requirements hereof; and

 

(iii) the Term Facility shall have received a facility rating as determined by S&P and Moody’s as of the Closing Date.

 

(c)  no statute, rule or regulation shall have been enacted by any Governmental Authority which prohibits or makes unlawful the incurrence of Indebtedness contemplated by this Agreement;

 

(d)  there shall be no actions, suits or proceedings pending or threatened against the Borrower or any of its Subsidiaries, at law or in equity, or before or by any Governmental Authority, other than those that have not had and would not reasonably be expected to have a Material Adverse Effect, and there shall be no outstanding judgments, decrees, injunctions, awards or orders of any Governmental Authority against the Borrower or any of its Subsidiaries, other than those that have not had and would not reasonably be expected to have a Material Adverse Effect;

 

(e)  the representations and warranties of the Borrower and each other Loan Party set forth in Article V (other than the representations and warranties set forth in Section 5.05(b) and 5.05(c)) shall be true and correct in all material respects on and as of the Closing Date, except to the extent that any such representation or warranty is expressly stated to be made as of an earlier date, before and after giving effect to the making of the Term Loans on the Closing Date;

 

(f)  no Default or Event of Default shall exist or would result from the making of the Term Loans on the Closing Date, or from the application of the proceeds thereof;

 

  

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(g)  the Administrative Agent shall be reasonably satisfied that all Indebtedness under the Existing Term Loan Credit Agreement shall be repaid on the Closing Date;

 

(h)  unless waived by the Administrative Agent, the Borrower shall have paid all fees, charges and disbursements of counsel to the Administrative Agent to the extent invoiced at least one Business Day prior to the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided, that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent); and

 

(i)        any fees required to be paid on or before the Closing Date shall have been paid.

 

Without limiting the generality of the provisions of the last paragraph of Section ‎9.03, for purposes of determining compliance with the conditions specified in this Section ‎4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

 

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Administrative Agent and the Lenders that both before and after giving effect to the making of the Term Loans on the Closing Date:

 

5.01  Existence, Qualification and Power; Compliance with Laws.  Each Loan Party and each Restricted Subsidiary thereof (a) is duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, (c) is duly qualified and licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, and (d) is in compliance with all Laws; except in each case referred to in clause (b)(i), (c) or (d), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

 

5.02  Authorization; No Contravention.  The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person, or the properties of such Person or any of its Restricted Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law.  Each Loan Party and each Restricted Subsidiary thereof is in compliance with all Contractual Obligations referred to in clause (b)(i), except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

 

5.03  Governmental Authorization; Other Consents.  No approval, consent, exemption, authorization or other action by, or notice to or filing with, any Governmental Authority or any other

 

  

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Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document.

 

5.04  Binding Effect.  This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each other Loan Document when so delivered will constitute, the legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms.

 

5.05  Financial Statements; No Material Adverse Effect.

 

(a)  The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein and (ii) fairly present the financial condition of the Borrower and its Subsidiaries, as applicable, as of the dates thereof and their results of operations for the periods covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein.

 

(b)  The following representation and warranty shall be deemed made by the Borrower at the time it delivers financial statements pursuant to Section ‎6.01(b):  the most recently delivered unaudited consolidated balance sheet of the Borrower and its Subsidiaries pursuant to Section 6.01(b), and the related consolidated statements of income or operations, shareholders’ equity and cash flows for the fiscal quarters ended on such date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the periods covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.

 

(c)  The consolidated balance sheet of the MLP and its Subsidiaries most recently delivered pursuant to Sections 6.01(a)(ii) and 6.01(b)(ii), and the related consolidated statements of income or operations and cash flows for the applicable period ended on the date thereof and for the portion of the MLP’s fiscal year then ended, as applicable, (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the MLP and its Subsidiaries, as of the date thereof and their results of operations for the periods covered thereby, subject to the absence of footnotes and to normal year-end audit adjustments.

 

(d)  Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

 

5.06  Litigation.  There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Restricted Subsidiaries or against any of their properties or revenues except as disclosed on Schedule 5.06, (a) that purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) that either individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

 

5.07  No Default.  No Default exists or would be reasonably expected to result from the incurring of any Obligations by the Borrower or from the grant or perfection of the Liens of the Administrative Agent and the Lenders on the Collateral.  Neither of the Borrower nor any of its

 

  

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Subsidiaries is in default under or with respect to any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

 

5.08  Ownership of Property; Liens.  The Borrower and each Restricted Subsidiary has good record and indefeasible title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  The property of the Borrower and its Restricted Subsidiaries is subject to no Liens, other than Liens permitted by Section ‎7.01.

 

5.09  Environmental Compliance.  The Borrower and its Restricted Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and as a result thereof, the Borrower has reasonably concluded that such Environmental Laws and claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

5.10  Insurance.  The properties of the Borrower and its Restricted Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Restricted Subsidiary operates.

 

5.11  Taxes.  The Borrower and its Restricted Subsidiaries have filed all federal, state and other material tax returns and reports required to be filed, and have paid all federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP.  There is no proposed tax assessment against the Borrower or any Restricted Subsidiary that would, if made, have a Material Adverse Effect.  Neither any Loan Party nor any Restricted Subsidiary thereof is party to any tax sharing agreement.

 

5.12  ERISA Compliance.

 

(a)  Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws.  For the purposes of this Section 5.12, the term “Plan” shall not include Multiemployer Plans.  Each Pension Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service.  To the best knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status.

 

(b)  There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

 

  

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(c)  (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) the Borrower and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) as of the most recent valuation date for any applicable Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and neither the Borrower nor any ERISA Affiliate knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) neither the Borrower nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and to the knowledge of the Borrower and any ERISA Affiliate, no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.

 

5.13  Subsidiaries; Equity Interests.  As of the Closing Date, the Borrower has no Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13, and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by a Loan Party in the amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens except those created under the Collateral Documents and the Revolver Collateral Documents.  The Borrower has no equity investments in any other corporation or entity other than those specifically disclosed in Part (b) of Schedule 5.13.

 

5.14  Margin Regulations; Investment Company Act.

 

(a)  The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.  Following the application of the proceeds of each Borrowing, not more than 25% of the value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of Section ‎7.01 or Section ‎7.05 or subject to any restriction contained in any agreement or instrument between the Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of Section ‎8.01(e) will be margin stock.

 

(b)  None of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

 

5.15  Disclosure.  The Borrower has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

 

  

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5.16  Compliance with Laws.  The Borrower and each Restricted Subsidiary is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

5.17  Intellectual Property; Licenses, etc.  The Borrower and its Restricted Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person.  To the best knowledge of the Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Borrower or any Restricted Subsidiary infringes upon any rights held by any other Person.  No claim or litigation regarding any of the foregoing is pending or, to the best knowledge of the Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

5.18  Solvency.  Each Loan Party is, individually and together with its Subsidiaries on a consolidated basis, Solvent.

 

5.19  Collateral Documents.

 

(a)  The provisions of each of the Collateral Documents are effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable (i) first priority security interest in all right, title and interest of the Loan Parties in the Term Priority Collateral described therein, and (ii) second priority security interest (subject only to the Revolver Priority Liens) in all right, title and interest of the Loan Parties in the Revolver Priority Collateral described therein, in each case, subject to the terms and provisions of the Intercreditor Agreement.  Financing statements have been filed in the offices in all of the jurisdictions listed in the schedules to each Security Agreement executed by a Loan Party.

 

(b)  All representations and warranties of the Loan Parties contained in the Collateral Documents are true and correct in all material respects.

 

ARTICLE VI.

AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder or any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower shall, and shall (except in the case of the covenants set forth in Sections ‎6.01, ‎6.02, ‎6.03 and 6.12) cause each Restricted Subsidiary to:

 

6.01  Financial Statements.  Deliver to the Administrative Agent, in form and detail satisfactory to the Administrative Agent and the Required Lenders:

 

(a)  as soon as available, but in any event within 90 days after the end of each fiscal year of (x) in the case of clause (i), the Borrower or (y) in the case of clause (ii), such MLPs: (i) a consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal year, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by a report and opinion of an independent certified public accountant of nationally

 

  

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recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit; and (ii) a consolidated balance sheet of each MLP and its Subsidiaries as of the end of such fiscal year, and the related consolidated statements of income or operations and cash flows for such fiscal year, setting forth in each case in comparative form, to the extent that such MLP then existed, the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be certified by a Responsible Officer of the Borrower as fairly presenting the financial condition, results of operations and cash flows of the MLP and its Subsidiaries in accordance with GAAP; and

 

(b)  as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of (x) in the case of clause (i), the Borrower or (y) in the case of clause (ii), such MLP: (i), a consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal quarter, and the related consolidated statements of income or operations and cash flows for such fiscal quarter and the related consolidated statements of income or operations and cash flows for the portion of the Borrower’s fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year for such statement of income or operations and the corresponding portion of the previous fiscal year in the case of such statements of income or operations and cash flows, and the balance sheet as of the end of the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be certified by a Responsible Officer of the Borrower as fairly presenting the financial condition, results of operations and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and (ii) a consolidated balance sheet of each MLP and its Subsidiaries as of the end of such fiscal quarter, and the related consolidated statement of income or operations for such fiscal quarter and the related consolidated statements of income or operations and cash flows for the portion of the MLP’s fiscal year then ended, setting forth in each case in comparative form, to the extent that such MLP then existed, the figures for the corresponding fiscal quarter of the previous fiscal year for such statement of income or operations, the corresponding portion of the previous fiscal year for such statements of income or operations and cash flows and the balance sheet as at the end of the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be certified by a Responsible Officer of the Borrower as fairly presenting the financial condition, results of operations and cash flows of each MLP and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes.

 

As to any information contained in materials furnished pursuant to Section ‎6.02(d), the Borrower shall not be separately required to furnish such information under clause (a) or (b) above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in clauses (a) and (b) above at the times specified therein.

 

6.02  Certificates; Other Information.  Deliver to the Administrative Agent, in form and detail satisfactory to the Administrative Agent and the Required Lenders:

 

(a)  concurrently with the delivery of the financial statements referred to in Section ‎6.01(a), a certificate of its independent certified public accountants certifying such financial statements;

 

(b)  concurrently with the delivery of the financial statements referred to in Sections ‎6.01(a) and ‎(b), a duly completed Compliance Certificate signed by a Responsible Officer of the Borrower;

 

  

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(c)  promptly after any request by the Administrative Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors or audit committee of the board of directors (or comparable board or committee) of any Loan Party by independent accountants in connection with the accounts or books of such Loan Party, or any audit of any of them;

 

(d)  promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders, partners or members of the Borrower or public investors in any MLP, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower or any MLP may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;

 

(e)  promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section ‎6.01 or any other clause of this Section ‎6.02;

 

(f)  promptly, and in any event within five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof;

 

(g)  concurrently with any notice provided to the Revolving Administrative Agent or the lenders under the Revolving Credit Agreement, of the occurrence of a Default as therein defined;

 

(h)  promptly, such additional information regarding the business, financial or corporate affairs of the Borrower or any Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or the Required Lenders may from time to time reasonably request.

 

Documents required to be delivered pursuant to Section ‎6.01(a) or ‎(b) or Section ‎6.02‎(d) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provide a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 10.02; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided, that: (i) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents.  The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.  In the event that the Borrower furnishes to the Administrative Agent written notices or other documentation pursuant to this Section ‎6.02, the Administrative Agent shall promptly furnish a copy

 

  

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thereof to each Lender pursuant to the procedures for notices and communications set forth in Section ‎10.02.

 

The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arranger will make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities.  The Borrower hereby agrees that (i) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (ii) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Arranger and the Lenders to treat the Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent the Borrower Materials constitute Information, they shall be treated as set forth in Section ‎10.07); (iii) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor;” and (iv) the Administrative Agent and the Arranger shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Investor.”  Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC.”

 

6.03  Notices.  Promptly notify the Administrative Agent and each Lender of:

 

(a)  the occurrence of any Default;

 

(b)  any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of the Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws;

 

(c)  the (i) occurrence of any Disposition of property or assets for which the Borrower is required to make a mandatory prepayment pursuant to Section 2.03(b)(iii), (ii) incurrence or issuance of any Indebtedness for which the Borrower is required to make a mandatory prepayment pursuant to Section 2.03(b)(i), and (iii) receipt of any Extraordinary Receipt for which the Borrower is required to make a mandatory prepayment pursuant to Section 2.03(b)(ii);

 

(d)  the occurrence of any ERISA Event; and

 

(e)  any material change in accounting policies or financial reporting practices by the Borrower or any Subsidiary.

 

Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto.  Each notice pursuant to Section ‎6.03‎(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

 

  

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6.04  Payment of Obligations.  Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Restricted Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.

 

6.05  Preservation of Existence, etc.  (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section ‎7.04 or ‎7.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

 

6.06  Maintenance of Properties.  (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.

 

6.07  Maintenance of Insurance.

 

(a)  At all times, at its expense, cause to be carried and maintained with reputable insurers, insurance (including property insurance, liability insurance, business interruption insurance, and workers’ compensation insurance) of the kinds and in the amounts and with deductibles as are customarily maintained by prudent companies in similar circumstances, carrying on similar businesses or having comparable properties and reasonably acceptable to the Required Lenders.

 

(b)  All insurance required to be maintained by the Borrower shall comply with the following general requirements: (i) all insurance shall be written by insurance companies that are rated in A.M. Best’s Key Insurance Rating Guide or any successor thereto (or if there be none, an organization having a similar national reputation) with a general policyholder rating of “A-” or better and a financial rating of at least “VIII” or otherwise reasonably acceptable to the Required Lenders; (ii) liability insurance, business interruption insurance and property insurance in respect of the Collateral (other than workers’ compensation and employer’s liability insurance, and other than insurance covering costs of compliance with the Agreed Order issued in 2000 by the Texas Commission on Environmental Quality with respect to the El Paso refinery (the “Agreed Order Coverage”)) shall name the Administrative Agent (or, if required by the Intercreditor Agreement, the Control Agent) and the Lenders as additional insureds and/or as mortgagee/loss payees, as their respective interests may appear; (iii) with the exception of the Agreed Order Coverage, each policy shall provide that (A) it will not be cancelled except after not less than 30 days’ (but 10 days if for non-payment of premium) prior written notice to the Administrative Agent; (B) the interests of the Administrative Agent and the Lenders shall not be invalidated or otherwise compromised by any act or negligence of, or breach of representation or warranty by the Borrower or any Person having an interest in the Property and (C) such insurance is primary with respect to any other insurance carried by or available to the Administrative Agent and/or any Lender; and (iv) with the exception of the Agreed Order Coverage, insurers shall waive their rights of subrogation, setoff, counterclaim, or other deduction, whether by attachment or otherwise, against the Administrative Agent,

 

  

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the Control Agent and the Lenders and further the insurers shall waive any right to claim any premiums or commission against the Administrative Agent, the Control Agent or any Lender.

 

(c)  The Borrower will notify the Administrative Agent and the Lenders at least 10 days prior to any policy cancellation, reduction in policy limits, modification or amendment or other material change which would result in non-compliance with the requirements of this Section ‎6.07.

 

(d)  No provision of this Section ‎6.07 shall impose on the Administrative Agent, the Control Agent or Lenders any duty or obligation to verify the existence or adequacy of the insurance coverage maintained by the Borrower or other Loan Parties, nor shall the Administrative Agent, the Control Agent or the Lenders be responsible for any representations or warranties made by or on behalf of the Borrower to any insurance company or underwriter.  Any failure on the part of the Administrative Agent, the Control Agent or the Lenders to pursue or obtain the evidence of insurance required by this Section ‎6.07 from the Borrower or other Loan Parties and/or failure of the Administrative Agent or the Lenders to point out any non-compliance of such evidence of insurance shall not constitute a waiver of any of the insurance requirements in this Section ‎6.07.

 

(e)  Prior to the expiration dates of expiring policies, the Borrower shall deliver to the Administrative Agent evidence of insurance issued by the insurer(s) or their authorized representatives evidencing insurance required to be maintained by the Borrower pursuant to this Section ‎6.07, together with a certificate or other statement signed by an officer of the Borrower, certifying on behalf of the Borrower that the Borrower maintains insurance as required by this Section ‎6.07.

 

(f)  During the existence and continuation of an Event of Default, all insurance proceeds or condemnation proceeds received by the Borrower, any Restricted Subsidiary, the Administrative Agent or the Control Agent in respect of Term Loan Priority Collateral shall, if so directed by the Administrative Agent or the Required Lenders (i) be applied to repay the Obligations in the order set forth in Section ‎8.03 (solely following any exercise of the Administrative Agent’s remedies under Section 8.02), or (ii) held in a separate account held by the Administrative Agent for the benefit of the Lenders (the “Term Loan Casualty Proceeds Account”) or (iii) deposited into the Term Loan Collateral Account.  The Borrower hereby grants to the Administrative Agent for the benefit of the Lenders, a Lien in the Term Loan Casualty Proceeds Account to secure the Obligations, and shall execute such security agreements or control agreements as the Administrative Agent may request in order to perfect such first priority Lien in the Term Loan Casualty Proceeds Account.  The Administrative Agent may invest funds in the Term Loan Casualty Proceeds Account in a deposit account at Bank of America, N.A. (or such other institution as shall then be acting as Administrative Agent) as depository bank or, at the option of the Administrative Agent, in Cash Equivalents.

 

(g)  The Borrower, for itself and on behalf of each of its Restricted Subsidiaries, hereby irrevocably makes, constitutes and appoints the Administrative Agent, during the existence and continuation of an Event of Default, as the Borrower’s and each Restricted Subsidiary’s true and lawful agent and attorney-in-fact for the purpose of making, settling and adjusting claims under policies of “all risk” insurance with respect to the Term Loan Priority Collateral, and for endorsing the name of the Borrower and its Restricted Subsidiaries on any check or other item of payment for the proceeds of such insurance.

 

6.08  Compliance with Laws and Contractual Obligations.  Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property and all Contractual Obligations, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate

 

  

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proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

 

6.09  Books and Records.  (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Restricted Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower or such Restricted Subsidiary, as the case may be.

 

6.10  Inspection Rights; Field Audits.  Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided, however, that when an Event of Default exists, the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice; and

 

6.11  Use of Proceeds.  Use the proceeds of (a) the Term Loans to refinance the Existing Term Loan Credit Agreement and pay the costs and expenses related thereto and, to the extent the aggregate amount of such proceeds exceeds the amount required to effect such refinancing and the payment of such costs and expenses, for general corporate purposes, and (b) Incremental Term Loans made pursuant to Section 2.13, for general corporate purposes of the Borrower and its Subsidiaries.

 

6.12  Guarantors; Additional Security Agreements.

 

(a)  Notify the Administrative Agent at the time that any Person becomes a Restricted Subsidiary, and promptly thereafter (and in any event within 30 days), cause each such Restricted Subsidiary that is organized under the laws of any state in the United States of America that (i) has total assets with a book value of $5,000,000 or more or (ii) executes a guaranty agreement with respect to the Borrower’s obligations under any Indebtedness for borrowed money, to (x) become a Guarantor by executing and delivering to the Administrative Agent a Guaranty or such other document as the Administrative Agent shall deem appropriate for such purpose, and (y) deliver to the Administrative Agent such documents of the types referred to in Section 4.01(a)(iv) and Section 4.01(a)(v) and such opinions of counsel (including opinions as to the legality, validity, binding effect and enforceability of such documentation) as the Administrative Agent  requires, all in form, content and scope reasonably satisfactory to the Administrative Agent.

 

(b)  Cause each Person that becomes a Restricted Subsidiary after the date of this Agreement to (i) execute and deliver to the Administrative Agent a Security Agreement, deeds of trust or mortgages covering any real property on which a Lien is required pursuant to this Section ‎6.12, a joinder agreement to the Intercreditor Agreement and such financing statements and other documents and instruments related thereto as the Administrative Agent or the Required Lenders may require, and (ii) deliver to the Administrative Agent such documents of the types referred to in Section 4.01(a)(iv) and Section 4.01(a)(v) and  such opinions of counsel (including opinions as to the legality, validity, binding effect and enforceability of such documentation) as the Administrative Agent requires, all in form, content and scope reasonably satisfactory to the Administrative Agent.

 

  

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(c)  The Borrower will cause the Refineries, and all of the Borrower’s and its Restricted Subsidiaries’ other material real property and personal property (other than motor vehicles), including, for the avoidance of doubt, Liens over any general and limited partnership interests held by any Loan Party in any MLP Subsidiary, to be subject at all times to perfected Liens in favor of the Administrative Agent to secure the Obligations pursuant to the terms and conditions of Collateral Documents as the Administrative Agent shall reasonably request, subject in any case to Liens permitted under Section ‎7.01 and rights of lenders and agents under the Revolver Collateral Documents as provided in the Intercreditor Agreement;  provided, however, that for so long as no Default has occurred and is existing, the Borrower and its Restricted Subsidiaries shall not be required to grant Liens on (or perfect Liens on fixtures located at) real property consisting of Terminals, convenience stores, retail sale locations or card locks, or on aircraft owned by the Borrower or its Restricted Subsidiaries and used for company business. In the case of Collateral of the type described in the definition of Term Priority Collateral, such Liens shall be first priority Liens, and in the case of Collateral of the type described in the definition of Revolver Priority Collateral, such Liens shall be second in priority to the Liens of the lenders and agents under the Revolver Collateral Documents as provided in the Intercreditor Agreement.

 

With respect to real property other than real property used for operation of the Refineries, the Borrower may propose that real property be deemed not material for purposes of this Section ‎6.12, and such proposal shall be subject to the disapproval of Administrative Agent or the Required Lenders.

 

(d)  In furtherance of the foregoing provisions of this Section ‎6.12, in connection with property that becomes property owned by the Borrower or any Restricted Subsidiary after the Closing Date, if a Lien on such property is required by Section ‎6.12‎(c), the Borrower shall deliver and shall cause each of its Restricted Subsidiaries to deliver such  documentation as the Administrative Agent may deem necessary or desirable in connection with the creation of such Lien, including mortgages, deeds of trust, security agreements, UCC-1 financing statements, and real estate title insurance policies, surveys, environmental reports, landlord’s waivers, certified resolutions and other organizational and authorizing documents of the grantor of liens, favorable opinions of counsel (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to above and the perfection of the Administrative Agent’s Liens thereunder) and other items of the types required to be delivered pursuant to Section ‎4.01, all in form, content and scope reasonably satisfactory to the Administrative Agent.

 

(e)  Intentionally Omitted.

 

(f)  Notwithstanding anything to the contrary in this Agreement, (i) as long as Navajo Convenient Stores Co., LLC has total assets with a book value of less than $5,000,000 and has not guaranteed any Indebtedness, Navajo Convenient Stores Co., LLC shall not be required to execute any Collateral Documents; and (ii) with respect to each Contango Subsidiary that is a borrower under a Contango Credit Facility, (x) as long as such Contango Subsidiary has not guaranteed any Indebtedness or other obligation of any other Person (except a Contango Credit Facility), such Contango Subsidiary shall not be required to become a Guarantor, and (y) so long as such Contango Subsidiary has not granted Liens on any of its assets other than Liens to secure obligations under such Contango Credit Facility as permitted by Section 7.01(p), such Contango Subsidiary shall not be required to grant a Lien on its assets to secure the Obligations or enter into any Collateral Documents.

 

(g)  In the case of assets or properties other than the Refineries, this Agreement and the other Loan Documents shall not require the creation or perfection of Liens in particular properties or assets if and for so long as, in the reasonable judgment of the Administrative Agent, the cost of creating or perfecting such Liens in such property shall be excessive in view of the benefits to be obtained by the Lenders therefrom.  The Administrative Agent may grant extensions of time for the creation and

 

  

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perfection of Liens in particular assets or property where it determines, in consultation with the Borrower, that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required by this Agreement or the other Loan Documents.

 

6.13  Intentionally Omitted.

 

6.14  Further Assurances and Post-Closing Covenant.  (a)  Promptly upon request by the Administrative Agent or the Required Lenders, the Borrower shall (and shall cause any of its Restricted Subsidiaries to) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register, any and all such further acts, deeds, conveyances, security agreements, mortgages, assignments, estoppel certificates, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments the Administrative Agent or such Lenders, as the case may be, may reasonably require from time to time in order to (i) carry out more effectively the purposes of this Agreement or any other Loan Document, (ii) subject to the Liens created by any of the Collateral Documents as any of the properties, rights or interests covered by any of the Collateral Documents, (iii) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and the Liens intended to be created thereby, and (iv) better assure, convey, grant, assign, transfer, preserve, protect and confirm to the Administrative Agent and Lenders the rights granted or now or hereafter intended to be granted to the Lenders under any Loan Document or under any other document executed in connection therewith.

 

(b)           Upon the request of the Administrative Agent, provide the Administrative Agent with (i) amendments to the existing mortgages and deeds of trust (and the parties hereto hereby approve such amendments) and (ii) mortgage modification endorsements to each existing title insurance policy, in each case, within sixty (60) days (or such longer period as the Administrative Agent may agree in its sole discretion) following the Closing Date.

 

6.15  Maintenance of Ratings.  In the case of the Borrower, at all times use commercially reasonable efforts to maintain public ratings issued by Moody’s and S&P with respect to the Term Facility made hereunder.

 

ARTICLE VII.

NEGATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower shall not, nor shall it permit any Restricted Subsidiary to, directly or indirectly:

 

7.01  Liens.  Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following:

 

(a)  Liens pursuant to any Loan Document;

 

(b)  Liens existing on the Closing Date and listed on Schedule 7.01 and any renewals or extensions thereof, provided, that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased, and (iii) the direct or any contingent obligor with respect thereto is not changed;

 

(c)  Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

 

  

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(d)  carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;

 

(e)  pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;

 

(f)  deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety or appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

 

(g)  easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

 

(h)  Liens securing judgments for the payment of money not constituting an Event of Default under Section ‎8.01(h);

 

(i)  Liens securing Indebtedness permitted under Section 7.03(f); provided, that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition;

 

(j)  Subject to the provisions of the Deposit Account Control Agreements, Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided that (i) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Borrower, (ii) the Borrower (or applicable Restricted Subsidiary) maintains (subject to such right of set off) dominion and control over such account(s), and (iii) such deposit account is not intended by the Borrower, any Guarantor or any Restricted Subsidiary to provide cash collateral to the depository institution;

 

(k)  Intentionally Omitted;

 

(l)  Liens on cash and cash equivalents not to exceed at any time $25,000,000 in the aggregate, securing obligations of the Borrower or its Subsidiaries pursuant to Swap Contracts for commodity swap transactions;

 

(m)  Liens securing obligations under the Revolver Loan Documents or securing Refinancing Indebtedness permitted by Section 7.03(b), covering Collateral that is also subject to Liens in favor of the Administrative Agent, provided that such Liens are subject to the Intercreditor Agreement;

 

(n)  the interests of E.I. DuPont de Nemours and Company (“DuPont”) under the Ground Lease between DuPont (executed by DuPont on June 29, 2005) and Western Refining Company, L.P. (executed by Western Refining Company, L.P. on June 27, 2005);

 

(o)  Liens on Collateral securing Section 7.03(m) Indebtedness or Section 7.03(m) Refinancing Indebtedness; provided that (x) the Administrative Agent and the holders of such

 

  

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Indebtedness (directly or through an agent, trustee or other representative on their behalf) have agreed to and are bound by the Noteholder Intercreditor Agreement, and (y) the holders of such Indebtedness directly or through an agent, trustee or other representative for such holders) have agreed to and are bound by the terms of the Intercreditor Agreement as so amended;

 

(p)  Liens on Inventory, accounts receivable and related personal property intangible assets of the Contango Subsidiary and Liens on the Equity Interests in the Contango Subsidiary securing Indebtedness permitted by Section 7.03(n);

 

(q)  “protective” Liens granted in connection with sales permitted hereunder that are intended to be “true sales”, or bailment, storage or similar arrangements in which a counterparty holds title to the assets that are the subject of such transaction, including liens granted by the Borrower or a Restricted Subsidiary to the counterparty in a Structured Hydrocarbon Supply Arrangement, which Liens are intended to protect such counterparty in the event that such transaction is recharacterized as a secured financing and attach only to the assets that are subject of such transaction;

 

(r)  precautionary UCC financing statements made in respect of (i) consignments or (ii) operating leases;

 

(s)  Liens on metals and the right to receive metals arising out of a sale-leaseback of a catalyst necessary or useful for the operation of refinery assets of the Borrower and its Restricted Subsidiaries, securing obligations of the Borrower or a Restricted Subsidiary in respect of such sale-leaseback transaction, provided that (i) such Liens do not encumber any assets other than the catalyst and the related metals and proceeds of the foregoing, (ii) to the extent that the obligations secured by such Liens constitute Indebtedness, such Indebtedness shall be permitted under Section 7.03(f) or Section 7.03(l) and (iii) the foreclosure on such Liens cannot be reasonably expected to have a Material Adverse Effect on the underlying operations of the Borrower or a Restricted Subsidiary, as applicable;

 

(t)  Liens securing Indebtedness permitted under Section 7.03(o); provided that such Liens cover only (w) unearned premiums or dividends, (x) loss payments which reduce the unearned premiums, subject however, in the case of Term Priority Collateral to the interests of the Administrative Agent as mortgagee or loss payee and (y) any interest in any state guarantee fund relating to any financed policy;

 

(u)  Liens securing Indebtedness permitted under Section 7.03(r); provided that such Liens shall not be extended to additional types of assets or assets of additional obligors beyond the types of assets and obligors that had provided such Liens prior to the obligor of such Indebtedness becoming a Restricted Subsidiary; and

 

(v)  any Liens (other than Liens on the Term Priority Collateral), not otherwise described in Subsections ‎7.01(a) through 7.01(u) above securing Indebtedness or other payment obligations, provided that the Indebtedness and other obligations secured by such Liens shall not any time exceed $25,000,000 in the aggregate at any time outstanding.

 

7.02  Investments.  Make or hold any Investments, except:

 

(a)  Investments held by the Borrower or such Restricted Subsidiary in the form of Cash Equivalents;

 

(b)  advances to officers, directors and employees of the Borrower and its Restricted Subsidiaries in an aggregate amount not to exceed $3,000,000 at any time outstanding for travel, 

 

  

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entertainment, relocation and analogous ordinary business purposes, in accordance with any applicable Laws;

 

(c)  Investments (i) in a wholly-owned Restricted Subsidiary that is a Guarantor, (ii) in a Person that becomes  a wholly-owned Restricted Subsidiary and a Guarantor upon the making of such Investment or (iii) a Person that the Borrower intends to cause to become a wholly-owned Restricted Subsidiary and in whom, upon the making of such Investment, the Borrower will hold, directly or indirectly, sufficient Equity Interests to cause such Person to become a wholly-owned Restricted Subsidiary, provided that upon such Person becoming a wholly-owned Restricted Subsidiary, such Person becomes a Guarantor;

 

(d)  Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;

 

(e)  Guarantees permitted by Section ‎7.03;

 

(f)  Investments in non-wholly-owned Restricted Subsidiaries and in Permitted Joint Ventures, provided that (i) no Default exists at the time of or as a result of such Investment, (ii) the dollar amount of such Investments made during any fiscal year shall not exceed $20,000,000 (and any portion of such permitted amount that is not expended for Investments pursuant to this paragraph in the fiscal year for which it is permitted, may be carried over for expenditure as an Investment pursuant to this paragraph in the next following fiscal year or successive fiscal years) and (iii) the aggregate dollar amount of all Investments made pursuant to this paragraph during the term of this Agreement may not exceed $80,000,000;

 

(g)  Intentionally Omitted;

 

(h)  extensions of credit described in Schedule 7.02 through and including the maturity date thereof, but not any increases or renewals;

 

(i)    Investments of the type described in clause (c) of the definition of “Investment”, provided that no Default exists at the time of or as a result of such Investment;

 

(j)    subject to Sections 7.19 and 7.05(a)(x), Investments in MLP Subsidiaries;

 

(k)   Investments in Contango Subsidiaries in an aggregate amount outstanding at any time for all such Investments not to exceed $25,000,000;

 

(l)    Investments to the extent that the consideration for such Investments consists of Equity Interests of the Borrower; and

 

(m)  other Investments not exceeding $25,000,000 in the aggregate during the term of this Agreement.

 

7.03  Indebtedness.  Create, incur, assume or suffer to exist any Indebtedness, except:

 

(a)  Indebtedness of the Loan Parties under the Loan Documents;

 

  

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(b)  Indebtedness of the Borrower under the Revolver Loan Documents, any replacement revolving credit facility, and any refinancings, renewals or extensions of all or any part of the foregoing, provided that (i) the material terms (other than pricing and yield) of such refinancing, renewing, or extending Indebtedness or replacement revolving credit facility (“Refinancing Indebtedness”) or of any agreement entered into or of any instrument issued in connection therewith are not less favorable in any material respect to the Loan Parties or the Lenders than the terms of any agreement or instrument governing the Indebtedness being refinanced, renewed, extended or replaced (“Refinanced Indebtedness”); (ii) if such Refinancing Indebtedness does not contain terms pursuant to which availability thereunder is based on a borrowing base, the aggregate amount of Indebtedness available under such Refinancing Indebtedness shall not exceed $1,000,000,000; (iii) if such Refinancing Indebtedness is secured, no collateral secures the Refinancing Indebtedness other than collateral that secures the Refinanced Indebtedness; (iv) such Refinancing Indebtedness (and, if applicable the Liens securing same) do not contravene the provisions of the Intercreditor Agreement; and (v) if such Refinancing Indebtedness is secured, the holders of such Refinancing Indebtedness, or a duly authorized agent on their behalf, agree in writing to be bound by the Intercreditor Agreement or enter into a replacement intercreditor agreement containing terms that are substantially similar to those of the Intercreditor Agreement, as may be acceptable to the Administrative Agent; 

 

(c)  Intentionally Omitted;

 

(d)  Guarantees of the Borrower or any Guarantor in respect of other Indebtedness otherwise permitted hereunder of the Borrower or any Guarantor;

 

(e)  obligations (contingent or otherwise) of the Borrower or any Restricted Subsidiary existing or arising under (i) any Swap Contract entered into in the ordinary course of business of the Borrower and its Restricted Subsidiaries consisting of transactions for the purchase, sale or exchange of Hydrocarbons of the types used or produced in the ordinary course of operations of the Borrower and its Restricted Subsidiaries, and (ii) any other Swap Contract; provided that, in the case of this clause (ii), such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by the Borrower and its Restricted Subsidiaries, or changes in the value of securities issued by the Borrower and its Restricted Subsidiaries, and not for purposes of speculation or taking a “market view;” and such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;

 

(f)  Indebtedness of the Borrower or any Guarantor in respect of capital leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in Section 7.01(i); provided, however, that the aggregate amount of all such Indebtedness at any one time outstanding shall not exceed $50,000,000;

 

(g)  obligations of Western Refining Company, L.P. under the Ground Lease described in Section ‎7.01(n) and under the Sulfuric Acid Regeneration and Sulfur Gas Processing Agreement between E.I. DuPont de Nemours and Company and Western Refining Company, L.P. executed in connection therewith;

 

(h)  Indebtedness of a Restricted Subsidiary owed to the Borrower or to a Guarantor, provided that such Indebtedness (i) constitutes Collateral upon which the Administrative Agent has a perfected Lien to secure the Obligations, and (ii) in the case of Indebtedness owed to a Guarantor, is subordinated to the Obligations on subordination terms acceptable to the Administrative Agent, and (iii) is otherwise  permitted under the provisions of Section ‎7.02;

 

  

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(i)  unsecured Indebtedness of the Borrower in an aggregate principal amount not to exceed $600,000,000 at any time outstanding, provided that (A) the maturity date of such Indebtedness is no earlier than the Maturity Date or the maturity date then in effect for any secured Refinancing Indebtedness, (B) there are no scheduled repayments of principal of such Indebtedness prior to the Maturity Date, (C) the documents or instruments governing such Indebtedness do not contain any financial maintenance covenant and (D) the material terms of such Indebtedness or of any agreement entered into or of any instrument issued in connection therewith, taken as a whole, are not less favorable in any material respect to the Loan Parties or the Lenders than the terms of the Loan Documents;

 

(j)  unsecured Indebtedness of the Borrower or any Guarantor in an aggregate principal amount not to exceed $300,000,000 at any time outstanding;

 

(k)  Indebtedness of the Borrower or any Guarantor which has been subordinated to the Obligations, the Revolver Indebtedness and Section 7.03(m) Indebtedness in form and substance reasonably satisfactory to the Administrative Agent;

 

(l)  Indebtedness in connection with a sale-leaseback transaction involving a catalyst necessary or useful for the operation of refinery assets of the Borrower and its Restricted Subsidiaries in an aggregate principal amount not to exceed $25,000,000 at any time outstanding;

 

(m)  (i) The 2014 Notes and the 2017 Notes; and (ii) refinancings, renewals or extensions of all or any part of any Indebtedness incurred in accordance with the 2014 Notes and the 2017 Notes (“Section 7.03(m) Refinancing Indebtedness”), provided that (A) the maturity date of such Section 7.03(m) Refinancing Indebtedness is no earlier than the Maturity Date, (B) there are no scheduled repayments of principal of such Section 7.03(m) Refinancing Indebtedness or sinking fund payments prior to the Maturity Date, (C) the principal amount of such Section 7.03(m) Refinancing Indebtedness does not exceed the principal amount of Section 7.03(m) Indebtedness being refinanced, renewed or extended except by an amount equal to accrued and unpaid interest, prepayment premium, fees and expenses reasonably incurred in connection with such refinancing, renewal or extension and (D) the documents or instruments governing such Section 7.03(m) Indebtedness do not contain any financial maintenance covenant;

 

(n)  (i) Indebtedness of any Contango Subsidiary incurred to finance its participation in contango market opportunities with respect to Hydrocarbons not to exceed an aggregate principal amount of $100,000,000 at any time outstanding, and (ii) Indebtedness in the form of Guarantees of the Borrower and any Guarantor in respect thereof;

 

(o)  Indebtedness of the Borrower or any Restricted Subsidiary incurred in the ordinary course of business to finance the payment of premiums for a twelve-month period for insurance, provided that the aggregate outstanding principal amount of such Indebtedness shall not at any time exceed $15,000,000;

 

(p)  the Convertible Notes;

 

(q)  unsecured Indebtedness of the Borrower in an aggregate principal amount not to exceed at any time outstanding, $350,000,000 less the aggregate principal amount of Indebtedness incurred pursuant to Section 2.13, provided that (A) the maturity date of such Indebtedness is no earlier than the Maturity Date, (B) there are no scheduled repayments of principal of such Indebtedness prior to the Maturity Date, (C) the documents or instruments governing such Indebtedness do not contain any financial maintenance covenant, (D) the material terms of such Indebtedness or of any agreement entered into or of any instrument issued in connection therewith, taken as a whole, are not less favorable in any 

 

  

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material respect to the Loan Parties or the Lenders than the terms of the Loan Documents, (E) on the date of incurrence of such Indebtedness, on a pro forma basis after giving effect to any such Indebtedness, the Borrower’s Consolidated Leverage Ratio shall be less than 3.00:1.00, recomputed as of the last day of  the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 6.01 and (F) amounts incurred under this Section 7.03(q) in excess of $100,000,000 shall permanently reduce the Available Incremental Amount on a dollar-for-dollar basis;

 

(r)  (i) Indebtedness of any Person that becomes a Restricted Subsidiary of the Borrower after the date hereof in accordance with the terms of this Agreement, which Indebtedness is existing at the time such Person becomes a Restricted Subsidiary of the Borrower (other than Indebtedness incurred solely in contemplation of such Person’s becoming a Restricted Subsidiary of the Borrower) and (ii) refinancings, renewals or extensions of all or any part of any such Indebtedness, provided that (A) the maturity date of such refinancing, renewal or extension of such Indebtedness is no earlier than earlier of the Maturity Date and the maturity date then in effect for the Indebtedness being refinanced, (B) the weighted average life to maturity of such Indebtedness is not shorter than the lesser of the weighted average life to maturity of the Term Facility and the weighted average life to maturity of the Indebtedness being refinanced, (C) the principal amount of such Indebtedness does not exceed the principal amount of the Indebtedness being refinanced, renewed or extended except by an amount equal to accrued and unpaid interest, prepayment premium, fees and expenses reasonably incurred in connection with such refinancing, renewal or extension and (D) no such refinancing, renewal or extension shall have different obligors than the Indebtedness being refinanced, renewed or extended; provided that Indebtedness incurred pursuant to this clause (r) may be Guaranteed by the Borrower solely if (x) any such Guarantee is unsecured and (y) on the date of entry into such Guarantee, on a pro forma basis after giving effect to such Guarantee, such Indebtedness and the related acquisition, the Borrower’s Consolidated Leverage Ratio does not exceed 2.50:1.00, recomputed as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 6.01; and

 

(s)  Indebtedness not otherwise described in subsections 7.03(a) through 7.03(r) above in an aggregate principal amount not to exceed $25,000,000 at any time outstanding.

 

7.04  Fundamental Changes.  Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of the assets of the Borrower and its Restricted Subsidiaries, taken as a whole, (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom:

 

(a)  the Borrower may merge with any other Person, provided, that the Borrower shall be the continuing or surviving Person;

 

(b)  any Restricted Subsidiary may merge with (i) the Borrower, subject to clause (a) above, and (ii) any one or more other Subsidiaries; provided that if a Guarantor is a party to a merger referred to in this clause (ii), the continuing or surviving Person shall be a Guarantor; and

 

(c)  any Restricted Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or to another Subsidiary; provided that if the transferor in such a transaction is a Guarantor, then the transferee must either be the Borrower or a Guarantor.

 

  

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In addition to and without limiting the foregoing provisions, the Borrower shall not permit any MLP Subsidiary to merge, dissolve, liquidate, consolidate with or into another Person, except that, so long as no Default exists or would result therefrom:

 

(i)           any MLP Subsidiary may merge with any one or more other MLP Subsidiaries; and

 

(ii)           any MLP Subsidiary may consolidate or merge with another corporation or entity, and a Person may consolidate with or merge into any MLP Subsidiary, provided that (x) the MLP Subsidiary shall be the ultimate surviving entity, and (y) the surviving entity shall be after the merger a Solvent corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia.

 

7.05  Dispositions.

 

(a)  Make any Disposition or enter into any agreement to make any Disposition, except  that, subject to the terms of Section ‎7.05(b) the following shall be permitted:

 

(i)  Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;

 

(ii)  Dispositions of inventory in the ordinary course of business;

 

(iii)  Leases of property in the ordinary course of business, provided that unless otherwise agreed by the Administrative Agent, any lease of any property that constitutes Collateral must be expressly subordinate (by the terms of lease or pursuant to a subordination agreement satisfactory to the Administrative Agent containing standard subordination language and, if agreed to by the Administrative Agent, standard non-disturbance language) to the Administrative Agent’s Liens under the applicable deed of trust or mortgage;

 

(iv)  Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property;

 

(v)  Dispositions of property by the Borrower or any Restricted Subsidiary to the Borrower or to a wholly-owned Restricted Subsidiary; provided, that if the transferor of such property is a Guarantor, the transferee thereof must either be the Borrower or a Guarantor;

 

(vi)  Dispositions permitted by Section ‎7.04;

 

(vii)  Dispositions of other property in connection with scheduled turnarounds, maintenance and equipment and facility updates;

 

(viii)  Dispositions by the Borrower and its Restricted Subsidiaries not otherwise permitted under this Section ‎7.05; provided, that at the time of such Disposition, no Default shall exist or would result from such Disposition;

 

(ix)          Dispositions by the Borrower of the Yorktown Assets; provided that, at least 75% of the consideration received therefor by the Borrower shall be in the form of cash;

 

  

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(x)           Dispositions by the Borrower of Logistics Assets; provided that, with respect to (a) any Disposition of Logistics Assets to an MLP Subsidiary, the consideration received therefor by the Borrower shall be either in the form of cash or partnership interests in such MLP Subsidiary, and (b) any Disposition of Logistics Assets to any other Person, at least 75% of the consideration received therefor by the Borrower shall be in the form of cash;

 

(xi)          Dispositions of Hydrocarbons outside the ordinary course of business; and

 

(xii)         Disposition of a Non-Operational Refinery (or any assets constituting part of a Non-Operational Refinery); provided that, at least 75% of the consideration received therefor by the Borrower shall be in the form of cash;

 

provided, however, that (x) any Disposition pursuant to clauses (i) through (xii) shall be for fair market value and (y) in the case of Dispositions pursuant to clauses (i), (vii), (viii), (ix) (x) and (xii) the Borrower shall make mandatory prepayments to the extent required by Section 2.03(b)(iii).

 

(b)  Notwithstanding anything to the contrary set forth in this Section ‎7.05, neither the Borrower nor any Subsidiary shall Dispose of any Refinery, or enter into any agreement to Dispose of any Refinery (unless, on or prior to the consummation of such Disposition, the Loans shall be repaid in full), other than as permitted under Section 7.05(a)(xii).

 

7.06  Restricted Payments.  Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that:

 

(a)        so long as no Default shall have occurred and be continuing at the time of any action described below or would result therefrom:

 

(i)       each Restricted Subsidiary may make Restricted Payments to the Borrower, the Guarantors and any other Person that owns Equity Interests in such Restricted Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;

 

(ii)      the Borrower and each Restricted Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock or other common Equity Interests of such Person; and

 

(iii)     the Borrower and each Restricted Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it with the proceeds received from the substantially concurrent issue of new shares of its common stock or other common Equity Interests; and

 

(b)       the Borrower may declare and pay cash dividends to its stockholders, and purchase, redeem or otherwise acquire for cash Equity Interests issued by it, after December 31, 2011, provided that the aggregate amount paid during any fiscal year does not exceed the maximum dollar amount calculated as follows: the maximum dollar amount for fiscal year 2012 shall be $20,000,000 and the maximum dollar amount for each succeeding fiscal year shall be calculated by adding $5,000,000 to the maximum amount in effect for the prior fiscal year; and provided further that (A) no Default exists (i) at the time such dividends are declared or paid or would result from the payment thereof or (ii) at the time such Equity Interests are purchased, redeemed or otherwise acquired or would result therefrom, or (B) if such dividends are paid within 75 days of declaration thereof, no Default exists at the date of such declaration; and

 

  

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(c)        the Borrower may declare and pay cash dividends to its preferred stockholders with respect to preferred stock issued after the Closing Date; provided that no Default exists at the time such dividends are declared or paid or would result from the payment thereof.

 

7.07  Change in Nature of Business.  Engage in, or permit any MLP Subsidiary to engage in, any material line of business substantially different from those lines of business conducted by the Borrower, and its Restricted Subsidiaries on the Closing Date or any business substantially related or incidental thereto.  Ownership of a pipeline is a line of business permitted by this Section ‎7.07.

 

7.08  Transactions with Affiliates.  Enter into any transaction of any kind with any Affiliate of the Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Borrower or such Restricted Subsidiary as would be obtainable by the Borrower or such Restricted Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate; provided that the foregoing restriction shall not apply to transactions between or among the Loan Parties.

 

7.09  Burdensome Agreements.  Enter into or permit to exist any Contractual Obligation (other than this Agreement, the Revolving Credit Agreement, agreements governing Refinancing Indebtedness (subject to clause (iii) of Section 7.03(b), and agreements governing Section 7.03(m) Indebtedness (provided that the terms therein contained of the type described in this Section 7.09 are no more restrictive than the terms of this Agreement) that (a) limits the ability (i) of any Restricted Subsidiary to make Restricted Payments to the Borrower or to any Guarantor or to otherwise transfer property to the Borrower or any Guarantor, or (ii) of any Restricted Subsidiary to Guarantee the Obligations of the Borrower, or (iii) of the Borrower or any Restricted Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person securing the Obligations, provided, however, that this clause (iii) shall not prohibit any negative pledge in favor of any holder of any Lien permitted under Sections 7.01(b), (e),  (f),  (i),  (l),  (p),  (r),  (s), (t) and (u) solely to the extent any such negative pledge or other restriction on transfer of property relates to the property subject to such Lien and proceeds thereof; and provided further that clauses (i), (ii) and (iii) shall not prohibit any restrictions contained in any agreement or instrument entered into in connection with a Contango Credit Facility so long as such limitations apply only to the related Contango Subsidiary and its assets and, in the case of clause (iii), the Equity Interests in such Contango Subsidiary; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure the Obligations of such Person.

 

7.10  Use of Proceeds.  Use the proceeds of any Loan, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund Indebtedness originally incurred for such purpose.

 

7.11  Intentionally Omitted.

 

7.12  Intentionally Omitted.

 

7.13  Prepayment of Certain Other Indebtedness.  Make any voluntary, optional or other non-scheduled payment, prepayment, redemption or acquisition for value (including without limitation by way of depositing money or securities with the trustee with respect thereto before due for the purpose of paying when due but excluding any such payment, prepayment, redemption or acquisition funded with the proceeds of any refinancing, renewal or extension permitted hereunder) of any unsecured Indebtedness incurred after the Closing Date and issued pursuant to Section ‎7.03(i).

 

  

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7.14 Amendments to Revolver Loan Documents.  Amend the terms of the Revolver Loan Documents or of documents governing Refinancing Indebtedness unless the following conditions are met: (1) after giving effect to such amendment, either the availability of loans thereunder is tied to a borrowing base formula or, if there is no such borrowing base, then the aggregate commitments to lend thereunder do not exceed $1,000,000,000, (ii) such amendment shall not result in the material terms of such Indebtedness or of any agreement entered into or of any instrument issued in connection therewith to be less favorable in any material respect to the Loan Parties or the Lenders, and (iii) such amendment shall not contravene the provisions of the Intercreditor Agreement.

 

7.15 Covenants Relating to MLP Subsidiaries.  The Borrower and its Restricted Subsidiaries shall be subject to the following covenants relating to MLP Subsidiaries:

 

(a)        the Borrower shall not permit an MLP GP to engage into any business other than holding a general partnership interest in an MLP;

 

(b)        neither the Borrower nor any of its Restricted Subsidiaries shall (i) provide any Guarantee of, or any credit support for, any Indebtedness or other obligation (contingent or otherwise) of an MLP Subsidiary, or otherwise be directly or indirectly liable for any Indebtedness or other obligation (contingent or otherwise) of such MLP Subsidiary, (ii) permit any Indebtedness or other obligation (contingent or otherwise) of an MLP Subsidiary to be recourse to the Borrower or any Restricted Subsidiary, (iii) have any direct or indirect obligation to maintain or preserve the financial condition of such MLP Subsidiary or to cause any such MLP Subsidiary to achieve any specified level of operating results, and (iv) permit a Lien on any of its property to secure, or permit any of its property to be otherwise subject (directly or indirectly) to the satisfaction of, any Indebtedness or other obligation (contingent or otherwise), of any MLP Subsidiary; and

 

(c)       neither the Borrower nor any of its Restricted Subsidiaries shall permit an MLP Subsidiary to (i) own any capital stock of or other Equity Interests in the Borrower or any Restricted Subsidiary, (ii) hold any Indebtedness of the Borrower or any Restricted Subsidiary, except in the ordinary course of business but in no event Indebtedness for borrowed money, or (iii) hold any Lien on property of the Borrower or any Restricted Subsidiary, except in connection with the ordinary course of business but in no event to secure Indebtedness for borrowed money.

 

7.16 Certain Undertakings Relating to the Separateness of the MLP and MLP Subsidiaries.

 

(a)        Separate Records; Separate Assets.  The Borrower shall, and shall cause the MLP Subsidiaries to, (i) maintain their respective books and records and their respective accounts separate from those of the Borrower and its Restricted Subsidiaries, and (ii) maintain their respective financial and other books and records showing their respective assets and liabilities separate and apart from those of the Borrower and its Restricted Subsidiaries.  The Borrower shall not commingle or pool, and shall cause the MLP Subsidiaries not to commingle or pool, their respective funds or other assets with those of any other Person, except their respective consolidated Subsidiaries, and shall maintain their respective assets in a manner that is not costly or difficult to segregate, ascertain or otherwise identify as separate from those of any other Person.

 

(b)        Separate Name; Separate Credit.  The Borrower shall, and shall cause the MLP Subsidiaries to, (i) conduct their respective businesses in their respective own names or in the names of their respective Subsidiaries, and (ii) generally hold themselves as entities separate from the Borrower and its Restricted Subsidiaries.  The Borrower shall, and shall cause the MLP Subsidiaries to, (x) pay

 

  

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their respective obligations and liabilities from their respective own funds (whether on hand or borrowed) and (y) maintain adequate capital in light of their respective business operations.

 

(c)        Separate Formalities.  The Borrower shall cause the MLP Subsidiaries to observe all limited liability company or partnership formalities and other formalities required by their respective organizational documents and applicable Law.

 

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

 

8.01  Events of Default.  Any of the following shall constitute an Event of Default:

 

(a)  Non-Payment.  The Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan or (ii) within three days after the same becomes due, any interest on any Loan or any fee due hereunder, or (iii) within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

 

(b)  Specific Covenants.  The Borrower fails to perform or observe any term, covenant or agreement contained in any of Section ‎6.03(a), ‎6.05(a), ‎6.11 or Article VII; or

 

(c)  Other Defaults.  Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or

 

(d)  Representations and Warranties.  Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or

 

(e)  Cross-Default.

 

(i)  The Borrower or any Subsidiary (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder, Indebtedness under Swap Contracts, Revolver Indebtedness and Section 7.03(m) Indebtedness (including, for the avoidance of doubt, Section 7.03(m) Refinancing Indebtedness) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or

 

  

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(ii)  There occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which the Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount; or

 

(iii)  An Event of Default as defined in the Revolving Loan Credit Agreement, the agreements governing Refinancing Indebtedness or the agreements governing Section 7.03(m) Indebtedness (including, for the avoidance of doubt, the agreements governing Section 7.03(m) Refinancing Indebtedness) shall occur; or

 

(f)  Insolvency Proceedings, etc.  Any Loan Party or any of its Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or the Borrower or any of its Subsidiaries shall take any corporate, partnership or company action in furtherance of the foregoing; or

 

(g)  Inability to Pay Debts; Attachment.  (i) The Borrower or any Restricted Subsidiary becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or

 

(h)  Judgments.  There is entered against the Borrower or any Restricted Subsidiary (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer has been notified of the potential claim and does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 10 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

 

(i)   ERISA.  (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

 

  

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(j)   Invalidity of Loan Documents.  Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in writing the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or

 

(k)  Change of Control.  There occurs any Change of Control; or

 

(l)   Collateral.

 

(i)       Any material provision of any Collateral Document shall for any reason cease to be valid and binding on or enforceable against the Borrower or any Subsidiary party thereto or the Borrower or any Subsidiary shall so state in writing or bring an action to limit its obligations or liabilities thereunder; or

 

(ii)       Any Collateral Document shall for any reason (other than pursuant to the terms thereof) cease to create a valid security interest in the Collateral purported to be covered thereby or such security interest shall for any reason cease to be a perfected security interest with the priority required pursuant to this Agreement; or

 

(iii)      Any holders of the Revolver Priority Collateral (or the Revolving Administrative Agent) fail to comply with the terms of the Intercreditor Agreement (with respect to the Revolver Priority Collateral) in any respect materially adverse to the Lenders.

 

8.02  Remedies Upon Event of Default.  If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

 

(a)  declare the commitment of each Lender to make Loans to be terminated, whereupon such commitments and obligation shall be terminated;

 

(b)  declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived by the Borrower; and

 

(c)  exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents;

 

provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, in each case without further act of the Administrative Agent or any Lender.

 

8.03  Application of Funds.  After the exercise of remedies provided for in Section ‎8.02 (or after the Loans have automatically become immediately due and payable as set forth in the provision to Section ‎8.02), any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order:

 

  

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First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;

 

Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including fees, charges and disbursements of counsel to the respective Lenders and amounts payable under Article III), ratably among them in proportion to the amounts described in this clause Second payable to them;

 

Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and other Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;

 

Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans ratably among the Lenders in proportion to the respective amounts described in this clause Fourth held by them; and

 

Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.

 

ARTICLE IX.

ADMINISTRATIVE AGENT

 

9.01  Appointment and Authority.

 

(a)  Each of the Lenders hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and neither Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions.

 

(b)  The Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto.  In this connection, the Administrative Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section ‎9.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Article IX and Article X (including Section ‎10.04(c), as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto.

 

9.02  Rights as a Lender.  The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept

 

  

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deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

 

9.03  Exculpatory Provisions.  The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, the Administrative Agent:

 

(a)  shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

 

(b)  shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided, that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law; and

 

(c)  shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

 

The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections ‎10.01 and ‎8.02) or (ii) in the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrower or a Lender.

 

The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

 

9.04  Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may 

 

  

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presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

9.05  Delegation of Duties.  The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

 

9.06  Resignation of Administrative Agent.  The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders appoint a successor Administrative Agent meeting the qualifications set forth above; provided, that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section).  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Section ‎10.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

 

9.07  Non-Reliance on Administrative Agent and Other Lenders.  Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based

 

  

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upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

 

9.08  No Other Duties, etc.  Anything herein to the contrary notwithstanding, none of the book managers, arrangers or agents, if any, listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.

 

9.09  Administrative Agent May File Proofs of Claim.  In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise

 

(a)  to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, and the Administrative Agent under Sections ‎2.07 and ‎10.04) allowed in such judicial proceeding; and

 

(b)  to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections ‎2.07 and ‎10.04.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

 

9.10  Collateral and Guaranty Matters.

 

(a)  The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion:

 

(i)       to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (A) upon termination of the Commitments and payment in full of all Obligations (other than contingent indemnification obligations), (B) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, or (C) subject to Section ‎10.01, if approved, authorized or ratified in writing by the Required Lenders;

 

  

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(ii)       to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document (A) to the holder of any Lien on such property that is permitted by Sections ‎7.01(i), (s) or (t), (B) to the holders of any Lien on such property as may be required pursuant to the Intercreditor Agreement and (C) at such time as the Intercreditor Agreement is no longer in effect, to the holder of any Lien on such property that is permitted by Sections 7.01(o) or (u); and

 

(iii)       to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.

 

Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of Collateral, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section ‎9.10.

 

(b)  Upon the occurrence and continuance of an Event of Default, the Lenders agree to promptly confer in order that the Required Lenders or the Lenders, as the case may be, may agree upon a course of action for the enforcement of the rights of the Lenders; and the Administrative Agent shall be entitled to refrain from taking any action (without incurring any liability to any Person for so refraining) unless and until the Administrative Agent shall have received instructions from the Required Lenders.  All rights of action under the Loan Documents and all rights to the Collateral, if any, hereunder may be enforced by the Administrative Agent and any suit or proceeding instituted by the Administrative Agent in furtherance of such enforcement shall be brought in its name as the Administrative Agent without the necessity of joining as plaintiffs or defendants any other the Lender, and the recovery of any judgment shall be for the benefit of the Lenders subject to the expenses of the Administrative Agent.

 

(c)  Each Lender authorizes and directs the Administrative Agent to enter into the Collateral Documents for the benefit of the Lenders.  Except to the extent unanimity is required hereunder, each Lender agrees that any action taken by the Required Lenders in accordance with the provisions of the Loan Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders.

 

(d)  The Administrative Agent is hereby authorized on behalf of all of the Lenders, without the necessity of any notice to or further consent from any Lender, from time to time to take any action with respect to any Collateral or Collateral Documents which may be necessary to perfect and maintain perfected the Liens upon the Collateral granted pursuant to the Collateral Documents.

 

(e)  The Administrative Agent shall have no obligation to any Lender or to any other Person to assure that the Collateral exists or is owned by any Loan Party or is cared for, protected, or insured or has been encumbered or that the Liens granted to the Administrative Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected, or enforced, or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure, or fidelity, or to continue exercising, any of the rights granted or available to the Administrative Agent in this Section ‎9.10 or in any of the Collateral Documents; it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, the Administrative Agent may act in any manner it may deem appropriate, in its sole discretion, and that the Administrative Agent shall have no duty or liability to any Lender, other than to act without gross negligence or willful misconduct.

 

  

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(f)  In furtherance of the authorizations set forth in this Section ‎9.10, each Lender hereby irrevocably appoints the Administrative Agent its attorney-in-fact, with full power of substitution, for and on behalf of and in the name of each such Lender, (i) to enter into Collateral Documents (including, without limitation, any appointments of substitute trustees under any Collateral Document), (ii) to take action with respect to the Collateral and Collateral Documents to perfect, maintain, and preserve the Lender’s Liens, and (iii) to execute instruments of release or to take other action necessary to release Liens upon any Collateral to the extent authorized in clause (a) hereof.  This power of attorney shall be liberally, not restrictively, construed so as to give the greatest latitude to the Administrative Agent’s power, as attorney, relative to the Collateral matters described in this Section ‎9.10.  The powers and authorities herein conferred on the Administrative Agent may be exercised by the Administrative Agent through any Person who, at the time of the execution of a particular instrument, is an officer of the Administrative Agent.  The power of attorney conferred by this Section ‎9.10‎(f) is granted for valuable consideration and is coupled with an interest and is irrevocable so long as the Obligations, or any part thereof, shall remain unpaid or the Lenders have any Commitments under the Loan Documents.

 

ARTICLE X.

MISCELLANEOUS

 

10.01  Amendments, etc.  No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:

 

(a)       waive any condition set forth in Section ‎4.01 without the written consent of each Lender;

 

(b)       extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section ‎8.02) without the written consent of such Lender;

 

(c)       postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender to whom such a payment is to be made;

 

(d)       reduce the principal of, or the rate of interest specified herein on, any Loan, or (subject to clause (ii) of the second proviso to this Section ‎10.01) any fees or other amounts payable hereunder or under any other Loan Document, without the written consent of each Lender entitled to such amount; provided, however, that only the consent of the Required Lenders shall be necessary to amend (i) the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default Rate or (ii) any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or to reduce any fee payable hereunder;

 

(e)       change Section ‎2.11 or Section ‎8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender; provided that an extension of the maturity date of any Loan, and a waiver of Section ‎2.11 by the holders of Loans whose maturity date is so extended with respect to payments received on the maturity of Loans whose maturity date has not been extended shall not require the consent of any Lender whose Loans are not subject to such extension;

 

  

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(f)        change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;

 

(g)       except as provided in Section ‎9.10 and except as required pursuant to the Intercreditor Agreement, release all or substantially all of the Collateral in any transaction or series of related transactions, without the written consent of each Lender; or

 

(h)       release all or substantially all of the value of the Guaranty, without the written consent of each Lender, except to the extent the release of any Subsidiary from the Guaranty is permitted pursuant to Section ‎9.10 (in which case such release may be made by the Administrative Agent acting alone);

 

and, provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (ii) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto.  Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.

 

If any Lender does not consent to a proposed amendment, waiver, consent or release with respect to any Loan Document that requires the consent of each Lender and that has been approved by the Required Lenders, the Borrower may replace such non-consenting Lender in accordance with Section ‎10.13; provided that such amendment, waiver, consent or release can be effected as a result of the assignment contemplated by such Section (together with all other such assignments required by the Borrower to be made pursuant to this paragraph).

 

10.02  Notices; Effectiveness; Electronic Communication.

 

(a)       Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

 

(i)       if to a Loan Party or the Administrative Agent, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.02, or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such Person in writing to the other parties; and

 

(ii)      if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire, or to such 

 

  

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other address, facsimile number, electronic mail address or telephone number as shall be designated by such Person in writing to the other parties.

 

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).  Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).

 

(b)       Electronic Communications.  Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided, that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.  The Administrative Agent or the Borrower may, in their own discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided, that approval of such procedures may be limited to particular notices or communications.

 

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided, that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

 

(c)       The Platform.  THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.”  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM.  In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to the Borrower, any Lender or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).

 

(d)       Change of Address, Etc.  The Borrower and the Administrative Agent may change its address, telecopier or telephone number for notices and other communications hereunder by 

 

  

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notice to the other parties hereto.  Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.

 

Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.

 

(e)       Reliance by Administrative Agent and Lenders.  The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.  The Borrower agrees to indemnify the Administrative Agent, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower.  All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

 

10.03  No Waiver; Cumulative Remedies; Enforcement.  No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents or (b) any Lender from exercising setoff rights in accordance with Section 10.08 (subject to the terms of Section 2.11); and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.11, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

 

 

  

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10.04  Expenses; Indemnity; Damage Waiver.

 

(a)        Costs and Expenses.  The Borrower agrees to pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by the Administrative Agent or any Lender (including the fees, charges and disbursements of any counsel for the Administrative Agent or any Lender) in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.

 

(b)       Indemnification by the Borrower.  The Borrower agrees to indemnify the Administrative Agent (and any sub-agent thereof), each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable fees, charges and disbursements of any counsel for any Indemnitee) incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNITEE; provided, that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

 

(c)   Reimbursement by Lenders.  To the extent that the Borrower for any reason fail to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by them to the Administrative Agent (or any sub-agent thereof), or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), or such Related Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided, that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in 

 

  

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connection with such capacity.  The obligations of the Lenders under this subsection (c) are subject to the provisions of Section ‎2.10(d).

 

(d)       Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof.  No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

 

(e)       Payments.  All amounts due under this Section shall be payable not later than ten Business Days after written demand therefor accompanied by reasonably detailed supporting information.

 

(f)        Survival.  The agreements in this Section shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

 

10.05  Payments Set Aside.  To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent, or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

 

10.06  Successors and Assigns.

 

(a)       Successors and Assigns Generally.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section ‎10.06, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section ‎10.06, and (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section ‎10.06 (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section ‎10.06, and, to the extent expressly contemplated hereby, the Related Parties 

 

  

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of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)       Assignments by Lenders.  Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:

 

(i)       Minimum Amounts.

 

(A)       in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

 

(B)       in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $1,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided, however, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met;

 

(ii)       Proportionate Amounts.  Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned;

 

(iii)      Required Consents.  No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

 

(A)       the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided, that, the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five Business Days after having received notice thereof; and

 

(B)       the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender.

 

  

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(iv)       Assignment and Assumption.  The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however,  that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment.  The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

(v)       No Assignment to Borrower, Competitors or Defaulting Lenders.  No such assignment shall be made (A) to the Borrower or any of the Borrower’s Affiliates or Subsidiaries, (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), (C) to any Competitor or (D) to any institution identified in writing by the Borrower to the Administrative Agent prior to the Closing Date or any Affiliate of such institution (each such institution or Affiliate of such institution, a “Disqualified Lender” and collectively, the “Disqualified Lenders”), it being understood and agreed that upon the request of any Lender on or following the Closing Date, the Administrative Agent may inform such Lender as to the identity of such Disqualified Lenders which have been so identified by the Borrower.

 

(vi)       No Assignment to Natural Persons.  No such assignment shall be made to a natural person.

 

(vii)       Representations of Assignee.  By agreeing to an assignment or transfer of rights or obligations under this Agreement, any assignee Lender shall be deemed (x) to have represented and warranted to the Borrower, the Administrative Agent and the assigning Lender that the assignee Lender is not a Competitor of the Borrower or a Disqualified Lender, and (y) to have agreed that, if the assignee is in breach of such representation and warranty and without otherwise limiting the Borrower’s rights under applicable law, the assignee Lender’s access to any Borrower Materials that are not marked “PUBLIC” pursuant to Section 6.02 will irreparably harm the Borrower.  It is further acknowledged and agreed that the Administrative Agent and the assigning Lender may rely exclusively on the representations of such assignee Lender without any duty of inquiry or investigation and the Administrative Agent and assigning Lender shall not be liable for any action taken or not taken by them upon reliance on such representations.

 

(viii)      Certain Additional Payments.  In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Term Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon).  Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

 

  

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Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections ‎3.01, ‎3.04, ‎3.05, and ‎10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

 

(c)        Register.  The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  In addition, the Administrative Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender.  The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(d)       Participations.  Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person, a Defaulting Lender, a Competitor or the Borrower, a Disqualified Lender or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans; provided, that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.

 

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any  provision of this Agreement; provided, that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section ‎10.01 that affects such Participant.  Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections ‎3.01, ‎3.04 and ‎3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section ‎10.08 as though it were a Lender, provided such Participant agrees to be subject to Section ‎2.11 as though it were a Lender.

 

(e)       Limitations upon Participant Rights.  A Participant shall not be entitled to receive any greater payment under Sections ‎3.01 or ‎3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign 

 

  

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Lender if it were a Lender shall not be entitled to the benefits of Section ‎3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 3.01(e) as though it were a Lender.

 

(f)        Certain Pledges.  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided, that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

(g)       Electronic Execution of Assignments.  The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

10.07  Treatment of Certain Information; Confidentiality.  Each of the Administrative Agent and the Lenders agree to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or any Eligible Assignee invited to be a Lender pursuant to Section 2.13, (ii) any pledge referred to in Section ‎10.06(f), or (iii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower.

 

For purposes of this Section, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary, provided, that, in the case of information received from the Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 

Each of the Administrative Agent and the Lenders acknowledge that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) 

 

  

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it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States Federal and state securities Laws.

 

10.08  Right of Setoff. If an Event of Default shall have occurred and be continuing, Administrative Agent and each Lender, and each of their respective Affiliates, is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by Administrative Agent, such Lender, or any such Affiliate to or for the credit or the account of the Borrower or any other Loan Party against any and all of the obligations of the Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to Administrative Agent, such Lender, or any such Affiliate, irrespective of whether or not Administrative Agent or such Lender or shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of Administrative Agent, such Lender or different from the branch or office holding such deposit or obligated on such indebtedness; provided, that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.14 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff.  The rights of Administrative Agent and each Lender, and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that Administrative Agent, such Lender, or their respective Affiliates may have.  Administrative Agent and each Lender agree to notify the Borrower, and each Lender shall notify the Administrative Agent, promptly after any such setoff and application, provided, that the failure to give such notice shall not affect the validity of such setoff and application.

 

10.09  Interest Rate Limitation.  Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”).  If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Term Loans or, if it exceeds such unpaid principal, refunded to the Borrower.  In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

 

10.10  Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section ‎4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.

 

  

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Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

 

10.11  Survival of Representations and Warranties.  All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Loan, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied.

 

10.12  Severability.  If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  Without limiting the foregoing provisions of this Section 10.12, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, then such provisions shall be deemed to be in effect only to the extent not so limited.

 

10.13  Replacement of Lenders.  If any Lender requests compensation under Section ‎3.04, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section ‎3.01, or if any Lender is a Defaulting Lender, or if the Borrower has the right to replace a Lender pursuant to Section ‎10.01 or if any other circumstance exists hereunder that gives the Borrower the right to replace a Lender as a party hereto, then the Borrower may, at its expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section ‎10.06), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided, that:

 

(a)       the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section ‎10.06(b);

 

(b)       such Lender shall have received payment of an amount equal to the outstanding principal of its Loans accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section ‎3.05) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

 

(c)       in the case of any such assignment resulting from a claim for compensation under Section ‎3.04 or payments required to be made pursuant to Section ‎3.01, such assignment will result in a reduction in such compensation or payments thereafter; and

 

(d)       such assignment does not conflict with applicable Laws.

 

  

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A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

 

10.14  Governing Law; Jurisdiction; etc.

 

(a)       GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

(b)       SUBMISSION TO JURISDICTION.  THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK, NEW YORK AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)       WAIVER OF VENUE.  THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)       SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION ‎10.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

10.15  Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS 

 

  

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REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

10.16  No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent and the Arranger are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent and the Arranger, on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent and the Arranger each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B) neither the Administrative Agent nor the Arranger has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent and the Arranger and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent nor the Arranger has any obligation to disclose any of such interests to the Borrower or its Affiliates.  To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent and the Arranger with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

 

10.17  USA Patriot Act Notice.  Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Act.

 

10.18  OTHER LIENS ON COLLATERAL; TERMS OF INTERCREDITOR AGREEMENT; ETC.

 

(a)       EACH LENDER PARTY HERETO UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT LIENS MAY BE CREATED ON THE COLLATERAL PURSUANT TO THE REVOLVING LOAN DOCUMENTS, WHICH LIENS ON THE TERM PRIORITY COLLATERAL SHALL BE REQUIRED TO BE SUBORDINATED AND JUNIOR TO THE LIENS CREATED PURSUANT TO THE LOAN DOCUMENTS IN ACCORDANCE WITH THE TERMS OF THE INTERCREDITOR AGREEMENT.  NOTWITHSTANDING ANYTHING HEREIN OR IN ANY LOAN DOCUMENT TO THE CONTRARY, THE LIENS AND SECURITY INTEREST GRANTED TO THE ADMINISTRATIVE AGENT PURSUANT TO THE VARIOUS LOAN DOCUMENTS AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE ADMINISTRATIVE AGENT PURSUANT TO THE LOAN DOCUMENTS ARE SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT.  THE INTERCREDITOR AGREEMENT ALSO CONTAINS CERTAIN PROVISIONS PROVIDING FOR RELEASES OF COLLATERAL PURSUANT TO THE LOAN DOCUMENTS IN 

 

  

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THE EVENT THAT SUCH COLLATERAL IS RELEASED PURSUANT TO THE REVOLVING LOAN DOCUMENTS.  PURSUANT TO THE TERMS OF THE INTERCREDITOR AGREEMENT, IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE INTERCREDITOR AGREEMENT AND ANY OF THE LOAN DOCUMENTS, THE PROVISIONS OF THE INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL.

 

(b)       EACH LENDER AUTHORIZES AND INSTRUCTS THE ADMINISTRATIVE AGENT TO ENTER INTO THE INTERCREDITOR AGREEMENT ON BEHALF OF THE LENDERS, AND TO TAKE ALL ACTIONS (AND EXECUTE ALL DOCUMENTS) REQUIRED (OR DEEMED ADVISABLE) BY IT IN ACCORDANCE WITH THE TERMS OF THE INTERCREDITOR AGREEMENT.

 

(c)       THE PROVISIONS OF THIS SECTION ‎10.18 ARE NOT INTENDED TO SUMMARIZE ALL RELEVANT PROVISIONS OF THE INTERCREDITOR AGREEMENT, THE FORM OF WHICH IS ATTACHED AS AN EXHIBIT TO THIS AGREEMENT.  REFERENCE MUST BE MADE TO THE INTERCREDITOR AGREEMENT ITSELF TO UNDERSTAND ALL THE TERMS AND CONDITIONS THEREOF.  EACH LENDER IS RESPONSIBLE FOR MAKING ITS OWN ANALYSIS AND REVIEW OF THE INTERCREDITOR AGREEMENT AND THE TERMS AND PROVISIONS THEREOF, AND NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF ITS AFFILIATES MAKES ANY REPRESENTATION TO ANY LENDER AS TO THE SUFFICIENCY OR ADVISABILITY OF THE PROVISIONS CONTAINED IN THE INTERCREDITOR AGREEMENT.

 

(d)       Administrative Agent shall notify the Lenders of any amendment, modification or waiver of the Intercreditor Agreement.

 

(e)       EACH LENDER (I) CONSENTS TO THE TERMS OF THE NOTEHOLDER INTERCREDITOR AGREEMENT AND AGREES TO BE BOUND THEREBY, AND (II) AUTHORIZES AND INSTRUCTS THE ADMINISTRATIVE AGENT TO (A) ENTER INTO THE NOTEHOLDER INTERCREDITOR AGREEMENT ON BEHALF OF THE LENDERS, AND (B) TAKE ALL ACTIONS AND EXECUTE ALL DOCUMENTS REQUIRED OR DEEMED ADVISABLE BY THE ADMINISTRATIVE AGENT IN CONNECTION THEREWITH.  THE TERMS OF THE NOTEHOLDER INTERCREDITOR AGREEMENT SHALL BE BINDING ON EACH LENDER AND ITS SUCCESSORS AND ASSIGNS.

 

(f)       From and after the effective date of the Noteholder Intercreditor Agreement and for so long as the Noteholder Intercreditor Agreement is in effect, all references in the Credit Agreement to Liens in favor of the Administrative Agent shall be deemed to include Liens in favor of the Collateral Trustee acting pursuant to the Noteholder Intercreditor Agreement.  Subject to Section 10.01 of the Credit Agreement, the Lenders authorize the Administrative Agent to direct the Collateral Trustee to take action (or refrain from taking action) under the Collateral Documents and to instruct the Collateral Trustee to take (or refrain from taking) any and all actions that the Administrative Agent is authorized to take pursuant to the Credit Agreement with respect to Collateral and matters incidental thereto.

 

10.19 ENTIRE AGREEMENT.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

 

	
WESTERN REFINING, INC.,

	  
	
a Delaware corporation, as Borrower

	  
	  	  	  
	  	  	  
	  	  	  
	
By:

	 /s/ Gary Dalke	  
	  	
Name: Gary Dalke

	  
	  	
Title:   Chief Financial Officer

	  

  

  

  

	
BANK OF AMERICA, N.A.,

	  
	
as Administrative Agent,

	  
	  	  	  
	  	  	  
	  	  	  
	
By:

	 /s/ Alan Tapley	  
	  	
Name: Alan Tapley

	  
	  	
Title:    Assistant Vice President

	  

  

  

  

	
BANK OF AMERICA, N.A.,

	  
	
as a Lender

	  
	  	  	  
	  	  	  
	  	  	  
	
By:

	 /s/ Benjamin E. Sauter	  
	  	
Name: Benjamin E. Sauter

	  
	  	
Title:   Vice President

	  

 

 

  

  

  

 

EXHIBIT A

FORM OF LOAN NOTICE

Date:  _____________

	
To:

	
Bank of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Term Loan Credit Agreement dated as of March 29, 2011 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement;” the terms defined in the Credit Agreement being used herein as therein defined), among Western Refining, Inc., a Delaware corporation, (the “Borrower”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and a Lender.

The undersigned hereby requests (select one):

	  	
 

	
    A Borrowing of Loans 

	
 

	
    A conversion or continuation of Loans

	  	
1.

	
On 

	
 

	
   (must be a Business Day).

	  	
2.

	
In the amount of $ 

	  	
 .

	  	
3.

	
Comprised of 

	  	
 .

	  	  	  	
[Type of Loan requested]

	  

	  	
4.

	
For Eurodollar Rate Loans:  with an Interest Period of  

	  	
 months.

 

	  	
BORROWER:

	  
	  	  	  	  
	  	
WESTERN REFINING, INC.,

	  
	  	
a Delaware corporation

	  
	  	  	  	  
	  	  	  	  
	  	
By:

	  	  
	  	
 

	
Name:

	  
	  	
 

	
Title:

	  

 

 

 

Exhibit A – Page 1

Form of Loan Notice

  

  

  

EXHIBIT B

FORM OF NOTE

 

FOR VALUE RECEIVED, WESTERN REFINING, INC., a Delaware corporation (“Borrower”), hereby promises to pay to _____________________ or its registered assigns (the “Lender”), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of the Loans made by the Lender to the Borrower under that certain Amended and Restated Term Loan Credit Agreement dated as of March 29, 2011 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement”; the terms defined therein being used herein as therein defined), among the Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent for the Lenders.

The Borrower promises to pay interest on the unpaid principal amount of the Loan from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement.  All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds to the Administrative Agent’s Office in accordance with the terms of the Credit Agreement.  If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement.

This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein.  This Note is also entitled to the benefits of the Guaranty and is secured by the Collateral.  Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement.  The Loan made by the Lender may be evidenced by a loan account or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of the Loan and payments with respect thereto.

The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of intent to accelerate, notice of acceleration, notice of protest, demand, dishonor and non-payment of this Note.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

- Signature Page to Follow -

 

Exhibit B – Page 1

Form of Note

  

  

  

	  	
BORROWER:

	  
	  	  	  	  
	  	
WESTERN REFINING, INC.,

	  
	  	
a Delaware corporation

	  
	  	  	  	  
	  	  	  	  
	  	
By:

	  	  
	  	
Name:

	  	  
	  	
Title:

	  	  

 

 

Exhibit B – Page 2

Form of Note

  

  

  

EXHIBIT C

FORM OF COMPLIANCE CERTIFICATE

(Pursuant to Section 6.02(b) of the Credit Agreement)

Financial Statement Date:  ___________, ____

To:           Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Term Loan Credit Agreement dated as of March 29, 2011 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement”; the terms defined therein being used herein as therein defined), among Western Refining, Inc., a Delaware corporation (the “Borrower”), the various financial institutions that are, or may from time to time become, parties thereto (each individually a “Lender,” and collectively, the “Lenders”), and Bank of America, N.A., as Administrative Agent for the Lenders (the “Administrative Agent”).

The undersigned Responsible Officer hereby certifies as of the date hereof that he is a Responsible Officer of the Borrower, and that, as such, he is authorized to execute and deliver this Certificate to the Administrative Agent on the behalf of the Borrower, and that:

[Use following paragraph 1 for fiscal year-end financial statements]

1.           The Borrower has delivered the year-end audited financial statements required by Section 6.01(a) of the Credit Agreement for the fiscal year of the Borrower ended as of the above date, together with the report and opinion of an independent certified public accountant required by such section.

[Use following paragraph 1 for fiscal quarter-end financial statements]

1.           The Borrower has delivered the unaudited financial statements required by Section 6.01(b) of the Credit Agreement for the fiscal quarter of the Borrower ended as of the above date.  Such financial statements fairly present the financial condition, results of operations and cash flows of the Borrower and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.

2.           The undersigned has reviewed and is familiar with the terms of the Credit Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of the Borrower during the accounting period covered by such financial statements.

[select one:]

3.           [To the best knowledge of the undersigned, as of the date hereof, no Default has occurred and is continuing.]

--or—

 

Exhibit C – Page 1

Form of Compliance Certificate

  

  

  

3.           [To the best knowledge of the undersigned, the following is a list of each Default that has occurred and is continuing as of the date hereof, and its nature and status:]

4.           [Insert the follow to the extent applicable: Pursuant to Section 5(c) of the Security Agreement, the following information is hereby provided:__________].  To the best knowledge of the undersigned, the Borrower and each of its Subsidiaries are in compliance with their notice and reporting obligations under Section 5 of each Security Agreement to which they are parties [add if applicable:  except as follows: _____________].

Remainder of Page Intentionally Blank

Signature Page to Follow

 

 

 

 

 

Exhibit C – Page 2

Form of Compliance Certificate

  

  

  

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of ______________, ________.

	  	  	  	  
	  	
WESTERN REFINING, INC.,

	  
	  	
a Delaware corporation

	  
	  	  	  	  
	  	  	  	  
	  	
By:

	  	  
	  	
 

	
Name:

	  
	  	
 

	
Title:

	  

 

 

 

Exhibit C – Page 3

Form of Compliance Certificate

  

  

  

EXHIBIT D

 

FORM OF ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [the][each]1 Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each]2 Assignee identified in item 2 below ([the][each, an] “Assignee”).  [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees]3 hereunder are several and not joint.]4  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the credit facility identified below and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “Assigned Interest”).  Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.

	  	  	  	 
	
1.

	
Assignor:  

	
 

	 

 

 

 

1  For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language.  If the assignment is from multiple Assignors, choose the second bracketed language.

2 For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language.  If the assignment is to multiple Assignees, choose the second bracketed language.

3 Select as appropriate.

4 Include bracketed language if there are either multiple Assignors or multiple Assignees.

 

Exhibit D – Page 1

Form of Assignment and Assumption

  

  

  

 

	
2.

	
Assignee:  

	
 

	
   [for each Assignee, indicate [Affiliate] 

	 	 	[Approved Fund] of [identify Lender]]	 

	
3.

	
Borrower:  

	
Western Refining, Inc., a Delaware corporation

	
4.

	
Administrative Agent:  

	
Bank of America, N.A., as the administrative agent under the Credit Agreement

	
5.

	
Credit Agreement:  

	
Amended and Restated Term Loan Agreement dated as of March 29, 2011, among Western Refining, Inc., as the Borrower, the Lenders parties thereto, and Bank of America, N.A., as Administrative Agent

	
6.

	
Assigned Interest:

	  

	
Assignor[s]5

	
Assignee[s]6

	
Aggregate

Amount of

Commitment/Loans

for all Lenders7

	
Amount of

Commitment/Loans

Assigned

	
Percentage

Assigned of

Commitment/

Loans8

	
CUSIP

 Number

	  	  	  	  	  	  
	  	  	
$________________

	
$_________

	
____________%

	  
	  	  	
$________________

	
$_________

	
____________%

	  
	  	  	
$________________

	
$_________

	
____________%

	  

	
[7.

	
Trade Date:

	
__________________]9

Effective Date: __________________, 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR

[NAME OF ASSIGNOR]

	  	  	  
	
By:

	
 

	  
	  	
Title:

	  
	  	  	  
	  	  	  
	
ASSIGNEE

	  

 

 

 

5  List each Assignor, as appropriate.

6  List each Assignee, as appropriate.

7 Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

8  Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

9  To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.

 

Exhibit D – Page 2

Form of Assignment and Assumption

  

  

  

	  	  	  
	
[NAME OF ASSIGNEE]

	  
	  	  	  
	  	  	  
	
By:

	
 

	  
	  	
Name:

	  
	  	
Title:

	  
	  	  	  
	  	  	  
	
[Consented to and]10 Accepted:

	  
	  	  	  
	
BANK OF AMERICA, N.A.,

	  
	
as Administrative Agent

	  
	  	  	  
	  	  	  
	
By:

	
 

	  
	  	
Name:

	  
	  	
Title:

	  
	  	  	  
	  	  	  
	
[Consented to:]11

	  
	  	  	  
	  	  	  
	
WESTERN REFINING, INC.,

	  
	
a Delaware corporation

	  
	  	  	  
	  	  	  
	
By:

	  	
 

	
 

	
Name:

	  
	
 

	
Title:

	  

 

 

 

10  To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

11  To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.

Exhibit D – Page 3

Form of Assignment and Assumption

  

  

  

 

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1.              Representations and Warranties.

1.1.           Assignor.  [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][[the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2.           Assignee.  [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it is not a Disqualified Lender and it meets all the other requirements to be an assignee under Section 10.06(b)(v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under Section 10.06(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2.           Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.

 

Exhibit D – Page 4

Form of Assignment and Assumption

  

  

  

 

3.           General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

 

 

Exhibit D – Page 5

Form of Assignment and Assumption

  

  

  

EXHIBIT E

FORM OF LEGAL OPINION OF BORROWER’S COUNSEL

[TO BE SEPARATELY NEGOTIATED]

 

 

Exhibit E – Page 

Form of Opinion

  

  

  

EXHIBIT F

[Intentionally Omitted]

 

 

 

 

 

Exhibit F

  

  

  

EXHIBIT G

FORM OF SECURITY AGREEMENT

[SEE ATTACHED, AS SEPARATELY EXECUTED]

 

 

 

Exhibit G – Page 1

Form of Security Agreement

  

  

  

EXHIBIT H

FORM OF CONTINUING GUARANTY

 

This Guaranty Agreement (this “Guaranty”) is executed effective as of [●], FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged, and in consideration of credit and/or financial accommodation heretofore or hereafter from time to time made or granted to WESTERN REFINING, INC. (the “Borrower”) or any other Loan Party pursuant to that certain Amended and Restated Term Loan Credit Agreement, dated as of March 29, 2011, by and between Borrower, the financial institutions party thereto (collectively, the “Lenders”), and Bank of America, N.A., as administrative agent for the Lenders (“Administrative Agent”) (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement”), each of the Persons now or hereafter signatories hereto (each a “Guarantor,” and, collectively, the “Guarantors”) hereby furnishes in favor of Administrative Agent and the Lenders (each a “Guaranteed Party” and collectively, the “Guaranteed Parties”) its joint and several guaranty of the Guaranteed Obligations (as hereinafter defined) as follows:

 

1.           Reference to Credit Agreement.  Reference is hereby made to the representations, warranties and covenants of the Loan Parties set forth in Articles V, VI, and VII of the Credit Agreement.  Each Guarantor (i) reaffirms that each such representation and warranty is true and correct in every material respect with respect to such Guarantor to the extent that such representation and warranty refers to such Guarantor, and (ii) agrees, with respect to the covenants, to take, or refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by such Guarantor or any of its Subsidiaries.  If the Credit Agreement shall cease to remain in effect for any reason whatsoever during any period and any part of the Guaranteed Obligations (as hereinafter defined) remain unpaid, then the terms, covenants, and agreements set forth therein applicable to the Guarantors shall nevertheless continue in full force and effect as obligations of each Guarantor under this Guaranty.  All capitalized terms used but not defined herein shall have the meaning assigned to such term in the Credit Agreement.

 

2.           Guaranty.  Each Guarantor hereby, jointly and severally, absolutely and unconditionally guarantees, as a guaranty of payment and performance and not merely as a guaranty of collection, the prompt payment in full in Dollars when due, whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at all times thereafter, of any and all existing and future indebtedness and liabilities of every kind, nature and character, direct or indirect, absolute or contingent, liquidated or unliquidated, voluntary or involuntary and whether for principal, interest, premiums, fees indemnities, damages, costs, expenses or otherwise, of any Loan Party arising under any Loan Document or otherwise with respect to any Loan (in each case, including all renewals, extensions, amendments, refinancings and other modifications thereof and all costs, attorneys’ fees and expenses incurred by any Guaranteed Party in connection with the collection or enforcement thereof), and whether recovery upon such indebtedness and liabilities may be or hereafter become unenforceable or shall be an allowed or disallowed claim under any proceeding or case commenced by or against such Guarantor, the Borrower or any other Loan Party under the Bankruptcy Code (Title 11, United States Code), any successor statute or any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally (collectively, “Debtor Relief Laws”), and including interest that accrues after the commencement by or against the Borrower or any other Loan Party of any proceeding under any Debtor Relief Laws whether or 

 

 

 

Exhibit H – Page 1

Form of Continuing Guaranty

  

  

  

not the claim for such interest is allowed in such proceeding (collectively, the “Guaranteed Obligations”).  The books and records of the Guaranteed Parties showing the amount of the Guaranteed Obligations shall be admissible in evidence in any action or proceeding, and shall be binding upon the Guarantors and conclusive for the purpose of establishing the amount of the Guaranteed Obligations.  This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Guaranteed Obligations or any instrument or agreement evidencing any Guaranteed Obligations, or by the existence, validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the Guaranteed Obligations which might otherwise constitute a defense to the obligations of any Guarantor under this Guaranty, and each Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to any or all of the foregoing.  Notwithstanding anything contained herein to the contrary, (i) the obligations of each Guarantor hereunder shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the Bankruptcy Code (Title 11, United States Code) or any comparable provisions of any applicable state law.

 

3.           No Setoff or Deductions; Taxes; Payments.  Each Guarantor represents and warrants that it is organized and resident in the United States of America.  Each Guarantor shall make all payments hereunder without setoff or counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein unless such Guarantor is compelled by law to make such deduction or withholding.  If any such obligation (other than one arising with respect to taxes based on or measured by the income or profits of the Guaranteed Parties) is imposed upon any Guarantor with respect to any amount payable by it hereunder, such Guarantor will pay to the Administrative Agent, on behalf of the Guaranteed Parties, on the date on which such amount is due and payable hereunder, such additional amount in U.S. dollars as shall be necessary to enable the Guaranteed Parties to receive the same net amount which the Guaranteed Parties would have received on such due date had no such obligation been imposed upon such Guarantor.  Each Guarantor will deliver promptly to the Administrative Agent, on behalf of the Guaranteed Parties, certificates or other valid vouchers for all taxes or other charges deducted from or paid with respect to payments made by such Guarantor hereunder.  The obligations of each Guarantor under this paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty.

 

4.           Rights of Guaranteed Parties.  Each Guarantor consents and agrees that the Guaranteed Parties may, at any time and from time to time, without notice or demand, and without affecting the enforceability or continuing effectiveness hereof:  (a) amend, extend, renew, compromise, discharge, accelerate or otherwise change the time for payment or the terms of the Guaranteed Obligations or any part thereof; (b) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any security for the payment of this Guaranty or any Guaranteed Obligations; (c) apply such security and direct the order or manner of sale thereof as the Guaranteed Parties in their sole discretion may determine; and (d) release or substitute one or more of any endorsers or other guarantors of any of the Guaranteed Obligations.  Without limiting the generality of the foregoing, each Guarantor consents to the taking of, or failure to take, any action which might in any manner or to any extent vary the risks of such Guarantor under this Guaranty or which, but for this provision, might operate as a discharge of such Guarantor.

 

5.           Certain Waivers.  Each Guarantor waives (a) any defense arising by reason of any disability or other defense of the Borrower, any other Loan Party or any other guarantor, or the cessation from any cause whatsoever (including any act or omission of the Guaranteed Parties) of the liability of the Borrower or any other Loan Party; (b) any defense based on any claim that such Guarantor’s obligations exceed or are more burdensome than those of the Borrower or any other Loan Party; (c) the benefit of any 

 

Exhibit H – Page 2

Form of Continuing Guaranty

  

  

  

statute of limitations affecting such Guarantor’s liability hereunder; (d) any right to require the Guaranteed Parties to proceed against the Borrower or any other Loan Party, proceed against or exhaust any security for the Indebtedness, or pursue any other remedy in the Guaranteed Parties’ power whatsoever; (e) any benefit of and any right to participate in any security now or hereafter held by the Guaranteed Parties; and (f) to the fullest extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by applicable law limiting the liability of or exonerating guarantors or sureties.  Each Guarantor expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the Guaranteed Obligations, and all notices of acceptance of this Guaranty or of the existence, creation or incurrence of new or additional Guaranteed Obligations.

 

6.           Obligations Independent.  The obligations of each Guarantor hereunder are those of primary obligor, and not merely as surety, and are independent of the Guaranteed Obligations and the obligations of any other guarantor, and a separate action may be brought against such Guarantor to enforce this Guaranty whether or not the Borrower, any other Loan Party or any other person or entity is joined as a party.

 

7.           Subrogation.  Each Guarantor shall not exercise any right of subrogation, contribution, indemnity, reimbursement or similar rights with respect to any payments it makes under this Guaranty until all of the Guaranteed Obligations and any amounts payable under this Guaranty have been indefeasibly paid and performed in full in cash and the Commitments of the Lenders under the Credit Agreement and the other Loan Documents are terminated.  If any amounts are paid to a Guarantor in violation of the foregoing limitation, then such amounts shall be held in trust for the benefit of the Guaranteed Parties and shall forthwith be paid to the Administrative Agent, on behalf of the Guaranteed Parties, to reduce the amount of the Guaranteed Obligations, whether matured or unmatured.

 

8.           Termination; Reinstatement.  This Guaranty is a continuing and irrevocable guaranty of all Guaranteed Obligations now or hereafter existing and shall remain in full force and effect until all Guaranteed Obligations and any other amounts payable under this Guaranty are indefeasibly paid in full in cash and the Commitments of the Lenders under the Credit Agreement and the other Loan Documents are terminated.  Notwithstanding the foregoing, this Guaranty (a) may be released by an instrument in writing signed by the Administrative Agent as provided in the Credit Agreement; and (b) shall continue in full force and effect or be revived, as the case may be, if any payment by or on behalf of the Borrower, any other Loan Party or any Guarantor is made, or a Guaranteed Party exercises its right of setoff, in respect of the Guaranteed Obligations and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by such Guaranteed Party in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Laws or otherwise, all as if such payment had not been made or such setoff had not occurred and whether or not such Guaranteed Party is in possession of or has released this Guaranty and regardless of any prior revocation, rescission, termination or reduction.  The obligations of each Guarantor under this paragraph shall survive termination of this Guaranty.

 

9.           Subordination.  Each Guarantor hereby subordinates the payment of all obligations and indebtedness of the Borrower or any other Loan Party owing to such Guarantor, whether now existing or hereafter arising, including but not limited to any obligation of the Borrower or any other Loan Party to such 

 

 

Exhibit H – Page 3

Form of Continuing Guaranty

  

  

  

Guarantor as subrogee of a Guaranteed Party or resulting from such Guarantor’s performance under this Guaranty, to the indefeasible payment in full in cash of all Guaranteed Obligations.  If the Guaranteed Parties so request, any such obligation or indebtedness of the Borrower or any Loan Party to such Guarantor shall be enforced and performance received by such Guarantor as trustee for the Guaranteed Parties and the proceeds thereof shall be paid over to the Administrative Agent, on behalf of the Guaranteed Parties, on account of the Guaranteed Obligations, but without reducing or affecting in any manner the liability of such Guarantor under this Guaranty.  No payments on such obligations or indebtedness shall be made to Guarantor during the continuation of a Default.

 

10.           Stay of Acceleration.  In the event that acceleration of the time for payment of any of the Guaranteed Obligations is stayed, in connection with any case commenced by or against any Guarantor, the Borrower or any Loan Party under any Debtor Relief Laws, or otherwise, all such amounts shall nonetheless be payable by the Guarantor immediately upon demand by the Guaranteed Parties.

 

11.           Expenses.  Each Guarantor shall pay, jointly and severally, on demand all out-of-pocket expenses (including attorneys’ fees and expenses and the allocated cost and disbursements of internal legal counsel) in any way relating to the enforcement or protection of the Guaranteed Parties’ rights under this Guaranty or in respect of the Guaranteed Obligations, including any incurred during any “workout” or restructuring in respect of the Guaranteed Obligations and any incurred in the preservation, protection or enforcement of any rights of the Guaranteed Parties in any proceeding any Debtor Relief Laws.  The obligations of each Guarantor under this paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty.

 

12.           Miscellaneous. No amendment or waiver of any provision of this Guaranty, nor consent to any departure by any Guarantor herefrom, shall in any event be effective unless the same shall be in writing and signed, in the case of amendments, by the Guarantor(s) affected thereby and by Administrative Agent, and, in the case of consents or waivers, by Administrative Agent, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which made or given.  No failure by the Guaranteed Parties to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy or power hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law or in equity.  The unenforceability or invalidity of any provision of this Guaranty shall not affect the enforceability or validity of any other provision herein.  Unless otherwise agreed by the Guaranteed Parties and each Guarantor in writing, this Guaranty is not intended to supersede or otherwise affect any other guaranty now or hereafter given by any Guarantor for the benefit of the Guaranteed Parties or any term or provision thereof.  Notwithstanding anything herein to the contrary, no Guarantor shall be released from this Guaranty without the consent of the Administrative Agent and each Lender.

 

13.           Condition of Borrower.  Each Guarantor acknowledges and agrees that it has the sole responsibility for, and has adequate means of, obtaining from the Borrower, the other Loan Parties and any other guarantor such information concerning the financial condition, business and operations of the Borrower, the other Loan Parties and any such other guarantor as such Guarantor requires, and that the Guaranteed Parties have no duty, and such Guarantor is not relying on the Guaranteed Parties at any time, to disclose to such Guarantor any information relating to the business, operations or financial condition of the Borrower, the other Loan Parties or any other guarantor (the guarantor waiving any duty on the part of the Guaranteed Parties to disclose such information and any defense relating to the failure to provide the same).

 

14.           Setoff. If and to the extent any payment is not made when due hereunder, each Guarantor authorizes each Guaranteed Party at any time and from time to time, to the fullest extent permitted by law, to set-off and apply any and all deposits (general or special, time or demand, 

 

 

Exhibit H – Page 4

Form of Continuing Guaranty

  

  

  

provisional or final) at any time held and other indebtedness at any time owing by such Guaranteed Party to or for the credit or the account of such Guarantor against any and all of the Guaranteed Obligations, without prior notice to such Guarantor or demand under this Guaranty, all of which are hereby waived, and although such Guaranteed Obligations may be contingent and unmatured.  Each Guaranteed Party which sets-off pursuant to this Paragraph 14 shall give prompt notice to such Guarantor affected thereby following the occurrence thereof; provided that the failure to give such notice shall not affect the validity of the set-off.  Any payment obtained pursuant to this Paragraph 14 (or in any other manner directly from the Guarantors, or any of them) by any Guaranteed Party shall be remitted to Administrative Agent and distributed among the Guaranteed Parties in accordance with the provisions of Paragraph 18 below.

 

15.           Representations and Warranties.  Each Guarantor represents and warrants that (a) it is duly organized and in good standing under the laws of the jurisdiction of its organization and has full capacity and right to make and perform this Guaranty, and all necessary authority has been obtained; (b) this Guaranty constitutes its legal, valid and binding obligation enforceable in accordance with its terms; (c) the making and performance of this Guaranty does not and will not violate the provisions of any applicable law, regulation or order, and does not and will not result in the breach of, or constitute a default or require any consent under, any material agreement, instrument, or document to which it is a party or by which it or any of its property may be bound or affected; and (d) all consents, approvals, licenses and authorizations of, and filings and registrations with, any governmental authority required under applicable law and regulations for the making and performance of this Guaranty have been obtained or made and are in full force and effect.

 

16.           Indemnification and Survival.  Without limitation on any other obligations of the Guarantors or remedies of the Guaranteed Parties under this Guaranty, each Guarantor shall, to the fullest extent permitted by law, indemnify, defend and save and hold harmless each Guaranteed Party from and against, and shall pay, jointly and severally, on demand, any and all damages, losses, liabilities and expenses (including attorneys’ fees and expenses and the allocated cost and disbursements of internal legal counsel) that may be suffered or incurred by such Guaranteed Party in connection with or as a result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of the Borrower or the other Loan Parties enforceable against the Borrower or the other Loan Parties in accordance with their terms.  The obligations of each Guarantor under this paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty.

 

17.           Assignment.  This Guaranty shall (a) bind each Guarantor and its successors and assigns, provided that such Guarantor may not assign its rights or obligations under this Guaranty without the prior written consent of the Administrative Agent and each Lender (and any attempted assignment without such consent shall be void), and (b) inure to the benefit of the Guaranteed Parties and their respective successors and assigns and the Administrative Agent and each Lender may, without notice to any Guarantor and without affecting any Guarantor’s obligations hereunder, assign, sell or grant participations in the Guaranteed Obligations and this Guaranty, in whole or in part.  Each Guarantor agrees that each Guaranteed Party may disclose to any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations of all or part of the Guaranteed Obligations any and all information in the Guaranteed Party’s possession concerning such Guarantor, this Guaranty and any security for this Guaranty.

 

18.           Application of Payments.  Any payment received by Administrative Agent from any Guarantor (or from any Lender pursuant to Paragraph 14 above), shall be applied by Administrative Agent in accordance with the Credit Agreement.

 

Exhibit H – Page 5

Form of Continuing Guaranty

  

  

  

19.           Further Assurances.  Each Guarantor agrees that at any time and from time to time, at the expense of such Guarantor, to promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that Administrative Agent may reasonably request, to enable Administrative Agent to protect and to exercise and enforce the rights and remedies of the Guaranteed Parties hereunder.

 

20.           Addition of Guarantors.  The initial Guarantors hereunder shall be each of the Subsidiaries of Borrower that are signatories hereto and that are listed on Schedule 1 attached hereto.  From time to time subsequent to the time hereof, additional Subsidiaries of Borrower may become parties hereto as additional Guarantors (each an “Additional Guarantor”) by executing a counterpart of this Guaranty Agreement in the form of Exhibit A attached hereto (or such other form as may be satisfactory to the Administrative Agent).  Upon delivery of any such counterpart to Administrative Agent, notice of which is hereby waived by Guarantors, each such Additional Guarantor shall be a Guarantor and shall be a party hereto as if such Additional Guarantor were an original signatory hereof.  Each Guarantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Guarantor hereunder, or by any election by Administrative Agent or any Lenders not to cause any Subsidiary of Borrower to become an Additional Guarantor hereunder.  This Guaranty Agreement shall be fully effective as to any Guarantor that is or becomes a party hereto regardless of whether any such person becomes or fails to become or ceases to be a Guarantor hereunder.

 

21.           Notices.  All notices, requests and other communications provided for hereunder shall be in writing and given to Administrative Agent as provided in Section 10.02 of the Credit Agreement.  All communications and notices hereunder to the Guarantors shall be given to the Guarantors at their respective addresses set forth on Schedule 10.02 of the Credit Agreement or at such other address as shall be designated by Guarantors in a written notice to Administrative Agent.

 

22.           Joint and Several Obligations.  Each Guarantor acknowledges that (i) this Guaranty is a master Guaranty pursuant to which other Subsidiaries of the Borrower now or hereafter may become parties, and (ii) the guaranty obligations of each of the Guarantors hereunder are joint and several.

 

23.           Right of Contribution.  Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment.  Each Guarantor’s right of contribution shall be subject to the terms and conditions of Paragraph 7 above.  The provisions of this Paragraph 23 shall in no respect limit the obligations and liabilities of any Guarantor to the Guaranteed Parties, and each Guarantor shall remain liable to the Guaranteed Parties for the full amount guaranteed by such Guarantor hereunder.

 

24.           GOVERNING LAW.  THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.

 

25.           SUBMISSION TO JURISDICTION.  EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK, NEW YORK AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH 

 

Exhibit H – Page 6

Form of Continuing Guaranty

  

  

  

GUARANTOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH GUARANTOR HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS GUARANTY OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY GUARANTEED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT AGAINST ANY GUARANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

26.           WAIVER OF VENUE.  EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH 25 ABOVE.  EACH GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

27.           SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02 OF THE CREDIT AGREEMENT.  NOTHING IN THIS GUARANTY WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

28.           WAIVER OF JURY TRIAL.  EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH GUARANTOR (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER GUARANTORS HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

29.           ENTIRE AGREEMENT. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

Remainder of Page Intentionally Blank.

Signature(s) Page to Follow.

 

 

 

Exhibit H – Page 7

Form of Continuing Guaranty

  

  

  

 

[INSERT GUARANTOR]

 

 

 

Signature Page to Continuing Guaranty

  

  

  

SCHEDULE 1

INITIAL GUARANTORS

 

 

 

 

Exhibit H – Page 9

Form of Continuing Guaranty

Schedule 1 to Continuing Guaranty

  

  

  

EXHIBIT A

COUNTERPART TO CONTINUING GUARANTY

The Counterpart to Continuing Guaranty is dated as of _________ and is made by ___________ (“Additional Guarantor”) in favor of Bank of America, N.A., as Administrative Agent and the other Guaranteed Parties as defined in the Guaranty Agreement hereinafter referenced.  All capitalized terms not defined herein shall have the meaning ascribed to them in the Guaranty hereinafter referenced or in the Credit Agreement hereinafter referenced.

Recitals

WHEREAS, WESTERN REFINING, INC. (the “Borrower”), Bank of America, N.A., as administrative agent (“Administrative Agent”), and certain financial institutions (collectively, the “Lenders”) have entered in to that certain Amended and Restated Term Loan Credit Agreement dated as of ____________ (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement”); and

WHEREAS, in connection with the Credit Agreement, certain Subsidiaries of the Borrower (each a “Guarantor,” and, collectively, the “Guarantors”) entered into a Continuing Guaranty agreement (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Guaranty Agreement”);

WHEREAS, the Credit Agreement requires Additional Guarantor to become a party to the Guaranty Agreement; and

WHREAS, Additional Guarantor has agreed to execute and deliver this Counterpart to Continuing Guaranty in order to become a party to the Guaranty Agreement;

NOW THEREFORE IT IS AGREED:

By executing and delivering this Counterpart to Continuing Guaranty, Additional Guarantor hereby becomes a party to the Guaranty Agreement as a Guarantor thereunder with the same force and effect as if originally named therein as a Guarantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor thereunder.  Additional Guarantor hereby represents and warrants that each of the representations and warranties contained in the Guaranty Agreement is true and correct on and as of the date thereof (after giving effect to this Counterpart to Continuing Guaranty) as if made on and as of such date.

In witness whereof, the undersigned Additional Guarantor has caused this Guaranty to be duly executed and delivered by its officer thereunto duly authorized as of the date first set forth above.

	 	 	 
	  	
[NAME OF ADDITIONAL GUARANTOR]

	  
	  	  	  	  
	  	  	  	  
	  	
By:

	  	  
	  	
 

	
Name:

	  
	  	
 

	
Title:

	  

 

 

 

Exhibit G – Page 1

Form of Security Agreement

  

  

  

 

EXHIBIT I

FORM OF INTERCREDITOR AGREEMENT

[SEE ATTACHED, AS SEPARATELY EXECUTED]

 

 

 

 

 

 

 

  

Exhibit I – Page 2

Form of Intercreditor Agreement

Exhibit A to Intercreditor AgreementUnassociated Document

EXHIBIT 4.20

 

EXECUTION COPY

 

PURCHASE AND SALE AGREEMENT

 

by and among

 

J.P. MORGAN VENTURES ENERGY CORPORATION,

 

SEMPRA ENERGY TRADING LLC,

 

RBS SEMPRA COMMODITIES LLP,

 

SEMPRA ENERGY

 

and

 

THE ROYAL BANK OF SCOTLAND PLC

 

Dated as of February 16, 2010

 

  

  

  

 

	
Table of Contents

	
Page

	
ARTICLE I.

	
DEFINITIONS AND USAGE

	
Section 1.1.

	
Definitions

	
2

	
Section 1.2.

	
Usage

	
26

	
ARTICLE II.

	
PURCHASE AND SALE; CLOSING

	 	 	 
	
Section 2.1.

	
Purchase and Sale of the Transferred Equity Interests and Transferred Assets

	
27

	
Section 2.2.

	
Assumption of Assumed Liabilities; Retention of Retained Liabilities

	
29

	
Section 2.3.

	
Payment for Combined Business

	
31

	
Section 2.4.

	
Accounting

	
32

	
Section 2.5.

	
Closing

	
32

	
Section 2.6.

	
Closing Obligations

	
32

	
Section 2.7.

	
Final Balance Sheet; Payments; Disputes

	
34

	 
	
ARTICLE III.

	
REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES

	 	 	 
	
Section 3.1.

	
Organization and Good Standing

	
37

	
Section 3.2.

	
Enforceability; Authority; No Conflict

	
37

	
Section 3.3.

	
Transferred Equity Interests; Title; Sufficiency of Assets

	
38

	
Section 3.4.

	
No Combined Business Material Adverse Effect

	
40

	
Section 3.5.

	
Employee Benefits

	
40

	
Section 3.6.

	
Compliance with Legal Requirements; Governmental Authorizations

	
42

	
Section 3.7.

	
Legal Proceedings; Orders

	
43

	
Section 3.8.

	
Taxes

	
44

	
Section 3.9.

	
Brokers or Finders

	
45

	
Section 3.10.

	
Environmental Compliance and Liability

	
46

	
Section 3.11.

	
Partnership Financial Statements; No Undisclosed Liabilities

	
47

	
Section 3.12.

	
Contracts

	
47

	
Section 3.13.

	
Affiliate Agreements

	
51

	
Section 3.14.

	
Insurance

	
51

	
Section 3.15.

	
Intellectual Property; IT Systems

	
52

	
Section 3.16.

	
Material Financial Support Arrangements

	
52

	
Section 3.17.

	
Improper Payments

	
53

	
Section 3.18.

	
Books and Records

	
53

	
Section 3.19.

	
Inventory

	
53

	
Section 3.20.

	
No Other Representation

	
53

 

  

i

  

 

	
ARTICLE IV.

	
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

	 	 	 
	
Section 4.1.

	
Organization and Good Standing

	
54

	
Section 4.2.

	
Enforceability; Authority; No Conflict

	
54

	
Section 4.3.

	
Bank Holding Company Act Status

	
55

	
Section 4.4.

	
Legal Proceedings

	
55

	
Section 4.5.

	
Brokers or Finders

	
55

	
Section 4.6.

	
Available Funds

	
55

	
Section 4.7.

	
No Other Representation

	
55

	 
	
ARTICLE V.

	
CONDITIONS PRECEDENT TO THE PURCHASER’s OBLIGATION TO CLOSE

	 	 	 
	
Section 5.1.

	
Conditions to the Obligations of the Purchaser

	
55

	
Section 5.2.

	
Frustration of Closing Conditions

	
57

	 
	
ARTICLE VI.

	
CONDITIONS PRECEDENT TO THE SELLER PARTIES’ OBLIGATION TO CLOSE

	 	 	 
	
Section 6.1.

	
Conditions to the Obligations of the Sellers

	
57

	
Section 6.2.

	
Frustration of Closing Conditions

	
58

	 
	
ARTICLE VII.

	
ADDITIONAL COVENANTS

	 	 	 
	
Section 7.1.

	
Conduct of the Combined Business

	
58

	
Section 7.2.

	
Information and Access

	
65

	
Section 7.3.

	
Filings; Reasonable Best Efforts to Close

	
66

	
Section 7.4.

	
Partnership Financial Statements

	
67

	
Section 7.5.

	
Employees and Employee Benefits

	
67

	
Section 7.6.

	
Retention of and Access to Records; Confidentiality

	
78

	
Section 7.7.

	
Further Assurances

	
81

	
Section 7.8.

	
No Shop

	
82

	
Section 7.9.

	
Commodities Trading Services Agreement

	
82

	
Section 7.10.

	
Other Agreements

	
82

	
Section 7.11.

	
Transition Plans; Novation; Credit Support

	
83

	
Section 7.12.

	
Termination or Amendment of Certain Agreements

	
88

	
Section 7.13.

	
Use of Certain Intellectual Property

	
89

	
Section 7.14.

	
[Intentionally left blank]

	
91

	
Section 7.15.

	
Distributions

	
91

	
Section 7.16.

	
Non-Solicit and Non-Hire

	
91

	
Section 7.17.

	
Notices of Certain Events

	
91

	
Section 7.18.

	
Cooperation

	
92

	
Section 7.19.

	
Run-Off Insurance

	
93

	
Section 7.20.

	
Lehman Payable

	
93

	
Section 7.21.

	
Freight Book Valuation

	
94

 

  

ii

  

 

	
Section 7.22.

	
Releases

	
94

	
Section 7.23.

	
Repayment of Combined Business Debt

	
94

	
Section 7.24.

	
Restricted Collateral Transactions

	
96

	 
	
ARTICLE VIII.

	
TERMINATION

	 	 	 
	
Section 8.1.

	
Termination

	
97

	
Section 8.2.

	
Termination Awards

	
98

	
Section 8.3.

	
Effect of Termination

	
99

	 
	
ARTICLE IX.

	
INDEMNIFICATION

	 	 	 
	
Section 9.1.

	
Survival

	
99

	
Section 9.2.

	
Indemnification and Reimbursement by the Seller Parents

	
100

	
Section 9.3.

	
Indemnification and Reimbursement by the Purchaser

	
102

	
Section 9.4.

	
Limitations; Exclusive Remedy

	
102

	
Section 9.5.

	
Third-Party Claims

	
107

	
Section 9.6.

	
Other Claims

	
108

	
Section 9.7.

	
Duty to Mitigate

	
108

	 
	
ARTICLE X.

	
GENERAL PROVISIONS

	 	 	 
	
Section 10.1.

	
Expenses

	
109

	
Section 10.2.

	
Public Announcements and Confidentiality

	
109

	
Section 10.3.

	
Tax Matters

	
109

	
Section 10.4.

	
Notices

	
115

	
Section 10.5.

	
Submission to Jurisdiction; Waiver of Jury Trial

	
117

	
Section 10.6.

	
Waiver; Remedies Cumulative

	
118

	
Section 10.7.

	
Entire Agreement and Modification

	
118

	
Section 10.8.

	
Assignments, Successors and no Third-Party Rights

	
118

	
Section 10.9.

	
Severability

	
119

	
Section 10.10.

	
Construction

	
119

	
Section 10.11.

	
Governing Law

	
120

	
Section 10.12.

	
Execution of Agreement

	
120

	
Section 10.13.

	
Specific Performance

	
120

	
Section 10.14.

	
Group Relief

	
120

	
Section 10.15.

	
VAT

	
121

	
Section 10.16.

	
Withholding Taxes

	
123

	
Section 10.17.

	
Regulated Utilities

	
123

 

  

iii

  

 

	
Exhibits

	
Exhibit A - Term Sheet for Commodities Trading and Services Agreement

	
Exhibit B - Form of RBS/Sempra Collateralized Total Return Swap Agreement

	
Exhibit C - Form of RBS/Sempra Financial Assurances Reimbursement and Indemnity Agreement

	
Exhibit D - I through D-V - Forms of Standard Financial Assurances

	  
	
Schedules

	
Schedule 1 - Reorganization Plan

	
Schedule 1.1(a) - Relocation Costs

	
Schedule 1.1(b) - Tax Reserves

	
Schedule 1.1(c) - Freight Book Valuation Methodology

	
Schedule 1.1(d)(i) - Assigned Real Estate Leases

	
Schedule 1.1(d)(ii) - Assigned Warehouse Agreements

	
Schedule 1.1(e) - Accounting Principles

	
Schedule 1.1(f) - Assigned IP Contracts

	
Schedule 1.1(g) - Company Risk Policies and Limits

	
Schedule 1.1(h) - Indemnity Share

	
Schedule 1.1(i) – RBS Bilateral Facilities

	
Schedule 1.1(k) - Indicative Master Agreements

	
Schedule 1.1(l) – Lehman Receivables

	
Schedule 1.1(m) - Macquarie and ABN NA Power and Gas Assets

	
Schedule 1.1(n) – Palabora Assets

	
Schedule 1.1(q) - Transferred Companies

	
Schedule 1.1(r)(i) - Transferred Company Real Estate Leases

	
Schedule 1.1(r)(ii) - Transferred Company Warehouse Agreements

	
Schedule 1.1(s) - Transferred Holding Companies

	
Schedule 2.1(a) - Disclosed Encumbrances

	
Schedule 2.1(b)(ii)(C) - Transferred Intellectual Property

	
Schedule 2.1(b)(ii)(I) - IT Systems

	
Schedule 3.1(a) - Organization and Good Standing

	
Schedule 3.2(c) - Seller Party Consents

	
Schedule 3.3(a) - Transferred Equity Interests

	
Schedule 3.3(b)(ii) - No Other Equity Interest or Equity Commitments

	
Schedule 3.3(c) - Sufficiency of Assets

	
Schedule 3.4 - Material Adverse Effect Disclosures

	
Schedule 3.5(a)(i) - Employee Plans

	
Schedule 3.5(a)(ii) - Post-Employment Liabilities

	
Schedule 3.5(a)(iii) – Section 75 of the UK Pensions Act

	
Schedule 3.5(a)(iv) - Approved UK Compensation Arrangements

	
Schedule 3.5(b)(ii) - Employee Plan Qualifications

	
Schedule 3.5(c) - Employee Plan Proceedings

	
Schedule 3.5(d) - Employee Equity

	
Schedule 3.5(e) - Restricted Employee Plans

	
Schedule 3.5(f) - Collective Bargaining; Employee Proceedings

 

  

iv

  

 

	
Schedule 3.5(i) - Bonus, Incentive, Retention, Change-In-Control and Deferred Compensation Awards

	
Schedule 3.6 - Compliance with Legal Requirements; Governmental Authorizations

	
Schedule 3.6(c)(i) - Governmental Authorizations

	
Schedule 3.6(c)(ii) - Governmental Authorizations Not Issued to a Transferred Company

	
Schedule 3.7(a) - Proceedings

	
Schedule 3.7(b) - Orders

	
Schedule 3.7(c) - Certain Disputes

	
Schedule 3.8 - Taxes

	
Schedule 3.10 - Environmental Compliance

	
Schedule 3.11(a) - Combined Business Reference Balance Sheet

	
Schedule 3.11(b) - Undisclosed Liabilities

	
Schedule 3.12(a) - Company Contracts

	
Schedule 3.12(b)(v) - Transferred Companies’ Third-Party IP Contracts

	
Schedule 3.12(c) - Company Contract Validity, Defaults and Prepayments

	
Schedule 3.12(c)(iv) - Real Estate Encumbrances

	
Schedule 3.12(d) - Company Contract Negotiation Status

	
Schedule 3.12(e) - Security Interests; Collateral

	
Schedule 3.12(f) - Sampling Methodology

	
Schedule 3.12(g) - Vessels

	
Schedule 3.13 - Affiliate Agreements

	
Schedule 3.14(a) - Policies

	
Schedule 3.14(b) - Policy Claims

	
Schedule 3.15(a) - Transferred Combined Business Intellectual Property

	
Schedule 3.15(d) - Intellectual Property Infringement Claims

	
Schedule 3.15(g) - IT Systems Rights

	
Schedule 3.16 - Financial Support Arrangements

	
Schedule 3.19 - Commodities Inventory Amounts

	
Schedule 4.2(b) - No Conflicts

	
Schedule 4.2(c) - Purchaser Third Party Consents

	
Schedule 7.1 - Interim Operations; Combined Business Employees

	
Schedule 7.1(a)(vii) - Specified Amounts

	
Schedule 7.1(a)(vii)(3) – Bonus Confirmation Letter

	
Schedule 7.1(a)(xv) - VAR Limits

	
Schedule 7.2(b) - Secondee Rights and Limitations

	
Schedule 7.3(b)(iii) - Landlord Consent

	
Schedule 7.4 - Information Delivery

	
Schedule 7.5(a) - Combined Business Employees

	
Schedule 7.5(k)(iv) - Severance Terms

	
Schedule 7.5(r) - Expatriate Combined Business Employees

	
Schedule 7.7(c) - Transition Planning

	
Schedule 7.11(c) – Modifications to Form Financial Assurances

	
Schedule 7.12(a) - Surviving Affiliate Agreements

	
Schedule 7.12(b) - Certain Expiring Leases

	
Schedule 7.13 – Trademarks

	
Schedule 8.2 - Termination Award Allocation

 

  

v

  

 

	
Schedule 9.2 - Specified Matters

	
Schedule 9.4(b)(iii) - Tax Allocations (Indemnity)

	
Schedule 10.3(a)(i) - Certain Pre-Closing Tax Returns

	
Schedule 10.14(c) - Group Tax Relief

 

  

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PURCHASE AND SALE AGREEMENT

 

This Purchase and Sale Agreement, dated as of February 16, 2010, is entered into by and among J.P. Morgan Ventures Energy Corporation, a Delaware corporation (“Purchaser”), Sempra Energy, a California corporation (“Sempra Energy”), The Royal Bank of Scotland plc, a public limited company incorporated in Scotland (“RBS,” and together with Sempra Energy, the “Seller Parents”), Sempra Energy Trading LLC, a Delaware limited liability company (“SET”), and RBS Sempra Commodities LLP, a limited liability partnership constituted under the Limited Liability Partnership Act of 2000 of the United Kingdom and the regulations made thereunder (the “Partnership” and, together with SET, the “Sellers” and each individually a “Seller” and, together with the Seller Parents, the “Seller Parties” and each individually, a “Seller Party”).  RBS also shall be considered a “Seller” in relation to the RBS Related Assets and Liabilities (as defined below).  The Sellers, the Seller Parents and the Purchaser each may be referred to herein individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, each of the Seller Parents is party to the Master Formation and Equity Interest Purchase Agreement, dated as of July 9, 2007, as amended on April 1, 2008 (the “Formation Agreement”), pursuant to which the Seller Parents and certain affiliates of Sempra Energy collectively acquired, directly or indirectly, all of the Equity Interest in the Partnership.

 

WHEREAS, the Sellers directly and through certain of their direct and indirect Subsidiaries (including the Transferred Companies) are currently engaged in the global oil (including the related freight transactions), global metals, global coal, global emissions (other than emissions related to North American Power) (including carbon credits and emissions credits), global plastics, global agricultural Commodities and global concentrates Commodities trading and marketing business (including trading in any Commodities listed on the London Metal Exchange), the European power and gas business and the investor products business, including the businesses of the Transferred Companies (collectively, the “Combined Business”).

 

WHEREAS, prior to the Closing, the Sellers intend to effect the reorganization described on Schedule 1 (the “Reorganization”).

 

WHEREAS, the Sellers desire to sell (and to cause to be sold by the Subsidiaries of the Partnership) to the Purchaser, and the Purchaser desires to purchase from the Sellers, the Transferred Assets and the Transferred Holding Company Equity Interests (each as defined below), and to assume the Assumed Liabilities by the Purchaser in each case upon the terms and subject to the conditions set forth in this Agreement.

 

WHEREAS, concurrently with the execution of this Agreement, and as a condition of the willingness of the Seller Parties to enter into this Agreement, JPMorgan Chase & Co. (“Guarantor”) is entering into a guarantee in favor of the Seller Parties (the “Guaranty”) pursuant to which the Guarantor is guaranteeing obligations of the Purchaser and/or any of its Affiliates under this Agreement and, to the extent set forth therein, any Related 

 

  

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Agreement except to the extent that the Purchaser has delegated such obligations in accordance with, and such Guaranty is not required under, Section 10.8.

 

NOW, THEREFORE, the Parties, in consideration of the mutual promises and intending to be legally bound, agree as follows:

 

ARTICLE I.

DEFINITIONS AND USAGE

 

Section 1.1. Definitions.  For purposes of this Agreement, the following terms and variations thereof have the meanings specified or referred to in this Section 1.1:

 

“Accounting Expert” – as defined in Section 2.7(c).

 

“Acquired Permits” – all permits, licenses, approvals, qualifications and other similar Governmental Authorizations issued to any of the Seller Parties or any of their Subsidiaries (other than the Transferred Companies) by any Governmental Body in each case which exclusively relate to the Transferred Assets, but excluding any such permits, licenses, approvals, qualifications or similar Governmental Authorizations if the transfer thereof (A) is not permitted under Legal Requirements or the rules of any applicable licensing or permitting body (whether or not such body is a Governmental Body) or (B) would adversely affect, other than an inconsequential effect, a Seller or its ability to perform its obligations under any Related Agreement, in each case of clauses (A) and (B), in the reasonable judgment of the relevant Seller.

 

“Active Business Transferred Employees” – as defined in Section 7.5(a)(ii)(z)(A).

 

“Adjusted Estimated Closing RBS/SET Debt” – as defined in Section 7.23(a).

 

“Adjusted Final Closing RBS/SET Debt” – as defined in Section 7.23(d).

 

“Affiliate” – a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, a specified Person.  A Person shall be deemed to control another Person if such first Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise; provided, that for purposes of this Agreement, the Transferred Companies shall not be deemed to be Affiliates of any of the Seller Parties from and after the Closing.

 

“Affiliate Agreement” and “Affiliate Agreements”  – as defined in Section 3.13.

 

“Agreed Adjustments” – the following balance sheet adjustments (to the extent not otherwise reflected on the applicable balance sheet and without duplication):

 

(a)           the increase of assets thereon by the aggregate amount of the costs associated with the relocation as described on Schedule 1.1(a);

 

  

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(b)           the elimination of the amount of goodwill and any other intangible assets;

 

(c)           the elimination of any reserves in respect of Taxes reflected on Schedule 1.1(b);

 

(d)           if the mark to market value of the freight book as of the date of the Final Closing Balance Sheet exceeds the mark to market value of the freight book as of the date of the Combined Business Reference Balance Sheet as determined pursuant to Section 7.21, in each case determined in accordance with the methodology set forth in Schedule 1.1(c), an adjustment to increase the assets by 50% of such excess and, if such value as of the date of the Final Closing Balance Sheet is less than such value as of the date of the Combined Business Reference Balance Sheet as determined pursuant to Section 7.21, an adjustment to reduce the assets by 50% of such difference;

 

(e)           to the extent not otherwise required by IFRS, the accrual of any applicable penalties, interest, fees and expenses associated with the repayment of the Combined Business Debt; and

 

(f)           except as contemplated by clause (e) above, the elimination of any adjustments required under IFRS solely as a result of the transactions contemplated hereby.

 

“Agreement” – this Purchase and Sale Agreement, as the same may be amended, restated, modified or supplemented from time to time in accordance with its terms, and the Exhibits (so long as they are Exhibits), Schedules, the Seller Disclosure Letter and the Purchaser Disclosure Letter hereto.

 

“Allocation Notice of Objection” – as defined in Section 10.3(h)(ii).

 

“Assignment and Assumption Agreement” – the Assignment and Assumption Agreement, to be dated as of the Closing Date, by and among the Sellers and the Purchaser, in form and substance as reasonably agreed by the Parties prior to the Closing.

 

“Assigned Contracts” – (a) the SET Assigned Trading Agreements, (b) the Assigned Real Estate Leases, (c) the Assigned Warehouse Agreements, (d) the Assigned IP Contracts, and (e) all other Contracts (other than Trading Agreements and real property, Intellectual Property, information technology or communication systems Contracts) to which any SET Company (other than a Transferred Company) is a party to the extent exclusively relating to the Combined Business.

 

“Assigned IP Contract” – any Intellectual Property, information technology or communication systems Contract that is exclusively used in the Combined Business if such Contract may be transferred to the Purchaser and/or the Transferred Companies without any payment by the Seller Parties in excess of $5,000 per Contract, including the Contracts set forth on Schedule 1.1(f) (or, if a greater payment is required, the Parties will negotiate in good faith the proper allocation of payment among the Parties, and, upon the Parties’ agreement regarding allocation, such Contract will be deemed an Assigned IP Contract).

 

  

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“Assigned Real Estate Lease” – any Lease set forth on Schedule 1.1(d)(i).

 

“Assigned Trading Agreements” – the Trading Agreements that are included in the RBS Related Assets and the SET Assigned Trading Agreements.

 

“Assumed Liabilities” – as defined in Section 2.2(a).

 

“Assigned Warehouse Agreement” – any Warehouse Agreement set forth on Schedule 1.1(d)(ii).

 

“BNP Facility” – the Amended and Restated Credit Agreement dated as of September 29, 2005 (as amended, restated, supplemented or otherwise modified and in effect from time to time) among Sempra Energy Trading LLC, RBS Sempra Metals & Concentrates LLC, RBS Sempra Energy Europe Limited and RBS Sempra Commodities SARL, the several lenders from time to time party thereto, BNP Paribas, as Lead Arranger, Administrative Agent, Collateral Agent, Swing Line Lender and Issuing Lender, ABN AMRO Bank N.V., as Co-Syndication Agent and Issuing Lender, and Standard Chartered Bank, as Co-Syndication Agent and Issuing Lender and Fortis Capital Corp., as Co-Documentation Agent and Issuing Lender and Societe Generale, as Co-Documentation Agent and Issuing Lender.

 

“Books and Records” – books of account, ledgers, general, financial, accounting and personnel records, files, invoices, customers’ and counterparty lists, documents, agreements, mailing lists, catalogues, brochures, sales data and information, advertising material, other distribution lists, billing records, sales and promotional literature, manuals, material client, counterparty and supplier correspondence (in all cases, in any form or medium, including computerized media).

 

“Burdensome Condition” – as defined in Section 7.3(b)(ii).

 

“Business Day” – a day other than Saturday, Sunday and any day on which banks located in the State of New York or in London are authorized or obligated to close.

 

“Canada Competition Act Approval” – (a) the Commissioner shall have issued an advance ruling certificate pursuant to Section 102 of the Competition Act (Canada), as amended (including the regulations promulgated thereunder) (the “Competition Act”) in respect of the transactions contemplated by this Agreement and such advance ruling certificate shall not have been rescinded prior to Closing; or (b)(i) the applicable waiting period has expired, been terminated pursuant to Section 123 of the Competition Act or compliance with Part IX of the Competition Act has been waived pursuant to Section 113(c) of the Competition Act, and (ii) the Commissioner or his/her authorized representative shall have advised the Purchaser in writing that the Commissioner does not at that time intend to make an application under Section 92 of the Competition Act with respect to the transactions contemplated by this Agreement, and neither the Commissioner nor any of his/her authorized representatives shall have rescinded or amended such advice.

 

“Cap Increase Request” – as defined in Section 7.11(c)(iii).

 

  

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“Cap Increase Transaction” – as defined in Section 7.11(c)(iii).

 

“Cash” – all cash and cash equivalents computed in accordance with IFRS.

 

“Chosen Courts” – as defined in Section 10.5.

 

“Claimant Employee” - as defined in Section 7.5(t)(ii).

 

“Closing” – as defined in Section 2.5.

 

“Closing Date” – as defined in Section 2.5.

 

“Closing Payoff Combined Business Debt” – the Third-Party Debt other than the RBS/SET Debt.

 

“Code” – the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, in each case as in effect from time to time.  References to sections of the Code shall be construed also to refer to any successor sections.

 

“Collateralized TRS Agreements” – the RBS Collateralized TRS and the SET Collateralized TRS.

 

“Combined Business” – as defined in the Recitals.

 

“Combined Business Cap Usage Amount” – as defined in Section 7.11(c)(iii).

 

“Combined Business Confidential Information” – as defined in Section 7.6(b).

 

“Combined Business Data” – as defined in Section 2.1(b)(ii)(C)(1).

 

“Combined Business Debt” – as of any date, an amount equal to, without duplication, (a) all outstanding Indebtedness (including, for purposes of this definition, any obligations of the Combined Business with respect to repurchase agreements, any reimbursement obligations under letters of credit and any other amounts in the nature of and reflected as short-term borrowings) of the Combined Business on such date, including, without duplication, (i) Indebtedness of the Transferred Companies owed to RBS, the Partnership or any of their respective Affiliates (other than the Transferred Companies, (ii) intracompany Indebtedness of RBS related to the Combined Business and reflected as short-term borrowings and (iii) Indebtedness of the Combined Business (including Indebtedness of RBS in respect of the Combined Business) to Third Parties, in each case, together with all interest, fees and expenses associated with the repayment of such Indebtedness (in accordance with the terms thereof) on such date, and (b) (i) the excess, if any, of the amount of intercompany payables of the Combined Business due to the Partnership or any of the SET Companies (other than the Transferred Companies), other than intercompany payables arising under Trading Agreements that are Affiliate Agreements and that will not be terminated under Section 7.12, on such date over the amount of intercompany receivables of the Combined Business due from the Partnership or any of the SET Companies (other than the Transferred Companies), other than

 

  

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intercompany receivables arising under Trading Agreements that are Affiliate Agreements and that will not be terminated under Section 7.12, on such date and (ii) the excess, if any, of the amount of intercompany payables (including any “gold leases”) of the Combined Business due to RBS and its Subsidiaries (other than the Partnership and the SET Companies), other than intercompany payables arising under Trading Agreements that are Affiliate Agreements and that will not be terminated under Section 7.12, on such date over the amount of intercompany receivables of the Combined Business due from RBS and its Subsidiaries (other than the Partnership and the SET Companies), other than intercompany receivables arising under Trading Agreements that are Affiliate Agreements and that will not be terminated by Section 7.12, on such date, in each case in clauses (a) and (b) to the extent such item would have been reflected if the Combined Business Reference Balance Sheet had been prepared on such date.

 

“Combined Business Employee” – as defined in Section 7.5(h).

 

“Combined Business Leased Real Estate” – any real property subject to a Combined Business Real Estate Lease or the subject of a Combined Business Warehouse Agreement.

 

“Combined Business Material Adverse Effect” – any material adverse effect on (a) the business, assets, liabilities, operations or financial condition of the Combined Business, taken as a whole, or (b) the ability of the Seller Parties to perform their material obligations under this Agreement and any Related Agreement or to consummate the transactions contemplated hereby and thereby; provided, that any such effect shall, to the extent resulting from the following, be disregarded in determining whether a “Combined Business Material Adverse Effect” has occurred or would reasonably be expected to occur: (i) any changes in Legal Requirements (or official interpretations thereof) applicable to the Combined Business, including its Commodities trading businesses; (ii) changes in general economic, monetary, market or financial conditions, including changes in prevailing interest rates, currency exchange rates, capital markets, Commodities prices or the Commodities markets in general, whether in the United States or any other country or international market; (iii) acts of God, calamities, national or international political or social conditions, including the engagement in or escalation by any country or any non-state actor in hostilities, whether commenced before or after the date hereof, and whether or not pursuant to a formal declaration of emergency or war, or the occurrence of any military or terrorist attack; (iv) changes in IFRS, generally accepted accounting principles in the United States of America or regulatory accounting principles applicable to the Combined Business (whether in the United States or any other jurisdiction or market); (v) changes in the composition, number or identity of the employees of the Combined Business; (vi) any failure by the Combined Business to meet any estimates of revenues, profit or net income for any period; provided, that the exception in this clause shall not prevent or otherwise affect a determination that any change, effect, circumstance or occurrence underlying such failure has resulted in, or contributed to, a Combined Business Material Adverse Effect; (vii) actions or omissions of any of the Seller Parties or their respective Subsidiaries expressly required by the terms of this Agreement or taken with the prior written consent of the Purchaser; (viii) the announcement of, or to the extent reflected in the Final Closing Book Value, the

 

  

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pendency of, the transactions contemplated by this Agreement or the Related Agreements, including by reason of the identity of the Purchaser or any communication by the Purchaser regarding the plans or intentions of the Purchaser with respect to the conduct of the Combined Business and (ix) any adverse change or effect to the extent resulting from (A) the Purchaser’s refusal to consent to any action requiring its consent pursuant to Section 7.1 and with respect to which its consent has been requested by the Sellers in writing pursuant to Section 7.1, or (B) the Purchaser’s material breach of its obligations under this Agreement; except, in the case of each of the foregoing clauses (i)-(iii) to the extent the same has had or would reasonably be expected to have a disproportionate effect on the Combined Business relative to the effect generally on other companies operating in any of the Combined Core Businesses.

 

“Combined Business Real Estate Lease” – any Assigned Real Estate Lease or Transferred Company Real Estate Lease.

 

“Combined Business Reference Balance Sheet” – the consolidated and combined balance sheet of the Combined Business, a copy of which is attached as Schedule 3.11(a), setting forth the total assets, liabilities and consolidated equity of the Combined Business as of November 30, 2009, including the components thereof, and prepared in accordance with IFRS on a basis consistent with past practice of the Combined Business, including the valuation and other conventions and principles thereunder, including RBS’, the Partnership’s and the SET Companies’ methodologies based on past practice, certain principles of which are set forth on Schedule 1.1(e).

 

“Combined Business Warehouse Agreement” – any Assigned Warehouse Agreement or Transferred Company Warehouse Agreement.

 

“Combined Core Businesses” – Commodity Transactions with respect to oil (and byproducts thereof), electricity, natural gas, liquefied natural gas, base metals, coal, liquefied petroleum gas, biofuels, carbon credits and emissions credits, but excluding Commodity Transactions in respect of the Excluded Business.

 

“Commodities Trading and Services Agreement” – one or more agreements among the Parties, and reflecting the terms, set forth in the Summary of Principal Terms and Conditions attached hereto as Exhibit A, in such form and together with such other terms and conditions as are not inconsistent with the terms and conditions set forth on such Summary, as shall be reasonably satisfactory to each of the Parties, which reasonableness shall be judged in the context of the overall transactions contemplated by this Agreement.

 

“Commodity” – the meaning assigned to such term in the United States Commodity Exchange Act as in effect on the date of this Agreement.

 

“Commodity Transactions” – (a) spot, forward, futures, option, deposit, consignment, loan, lease, swap, exchange, sale, purchase and repurchase (including reverse repurchase and prepaid forward transactions) transactions, hedge transactions, allocated transactions, unallocated transactions, forward rate agreements, cap agreements,

 

  

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floor agreements, collar agreements, or any combination thereof or option or derivative thereon or similar transaction, in any case involving any Commodity or indices on, or comprised of, any Commodity; (b) dealing, market-making, clearing, brokering, trading, marketing, pre-pays, buying, selling or distributing Commodities or transactions of the type described in clause (a) of this definition; and (c) refining, processing, blending, tolling, otherwise altering, producing, marketing, distributing (at wholesale and retail), storing, shipping, transporting and generating Commodities through agreements with Third Parties.

 

“Company Contracts” – as defined in Section 3.12(b).

 

“Company Risk Policies and Limits” – the written policies of the Partnership and the SET Companies and, if and to the extent applicable to the Combined Business, RBS, that are intended to mitigate, reduce or otherwise manage the risk profile of the Combined Business, in the form set forth on Schedule 1.1(g), as the same may be amended from time to time, subject to Section 7.1(a)(xvi).

 

“Consent” – any approval, consent, ratification, waiver or other authorization.

 

“Continuing Employees” – as defined in Section 7.5(h).

 

“Contract” – any contract, Lease, license, evidence of Indebtedness, mortgage, indenture, security agreement or other commitment, undertaking or agreement (whether written or oral) that is legally binding.

 

“Credit Rating Event” – as of any date after the date hereof, Guarantor’s senior unsecured long-term indebtedness ceases to be rated at least the Requisite Rating by at least two of Standard & Poor’s, Fitch or Moody’s Investor Service, Inc., with the “Requisite Rating” being “A” in the case of Standard & Poor’s and Fitch and “A1” in the case of Moody’s Investor Service, Inc.

 

“Credit Support Replacement Action” – as defined in Section 7.11(c)(i)(A)(1).

 

“CTA Master Agreement” – the Commodities Trading Activities Master Agreement, dated as of April 1, 2008, by and between RBS, the Partnership and the SET Companies.

 

“Damages” – subject to the duty to mitigate, any and all actual and incurred damages, losses, claims, penalties, liabilities, costs and expenses (including all fines, interest, reasonable legal fees and expenses and amounts paid in settlement, but (a) excluding punitive damages and (b) also excluding lost profits or consequential, special or indirect damages but, in the case of (b), only to the extent such lost profits or damages are (i) based on any special circumstances of the Indemnified Person or (ii) not the natural, probable and reasonably foreseeable result of the event that gave rise thereto or the matter for which indemnification is sought hereunder and, with respect to indemnification by Seller Parents for Taxes (including any representation or warranty with respect to Taxes), without limitation or duplication, Damages shall include the utilization or set-off of any Relief available to any of the Section 9.2 Indemnified Persons

 

  

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or the Transferred Companies, where such Relief was either treated as an asset in the Final Closing Balance Sheet or arose or accrued on or after Closing.  Damages shall be determined on a net after-Tax basis, taking into account reduction of Tax Liability resulting from the Damages, if any, and the effect of any indemnity payment related to the Damages, if the indemnity payment is not treated as a reduction in the Purchase Price under Section 10.3(f) hereof or is otherwise treated as a taxable payment.

 

“De Minimis Damages” – any single claim (or series of claims arising from the same or similar facts, events or circumstances) for Damages in an amount that is equal to or less than $2,000,000.

 

“Designated Related Employees” – as defined in Section 7.5(b).

 

“Designated Scheduled Transition Employees” – as defined in Section 7.5(c).

 

“Determination Date” – as defined in the definition of “Mandatory Governmental Approvals.”

 

“Effective Hire Date” – as defined in Section 7.5(g).

 

“Eligible Inactive Business Employees” – as defined in Section 7.5(d).

 

“Employee Plans” – as defined in Section 3.5(a).

 

“Encumbrance” – any lien, option, pledge, assessment, Lease, adverse claim, levy, charge, security interest, mortgage, right of way, easement, encroachment, servitude, right of first option, conditional sale Contract, right of first refusal or similar restriction or Contract to grant any of the foregoing.

 

“Environmental Laws” – Legal Requirements relating to contamination, pollution or the protection of human health (as it relates to exposure to any Hazardous Material or substance), natural resources or the environment.

 

“Environmental Permits” – as defined in Section 3.10(a)(ii).

 

“Equity Commitment” – (a) options, warrants, convertible securities, exchangeable securities, subscription rights, conversion rights, exchange rights, or other Contracts that could require a Person to issue any of its Equity Interests or to sell any Equity Interests it owns in another Person; (b) any other securities convertible into, exchangeable or exercisable for, or representing the right to subscribe for any Equity Interest of a Person or owned by a Person; (c) statutory pre-emptive rights or pre-emptive rights granted under a Person’s Governing Documents; and (d) stock appreciation rights, phantom stock, profit participation, or other similar rights with respect to a Person.

 

“Equity Interest” – (a) with respect to a corporation, any and all shares of capital stock; (b) with respect to a partnership (including a limited liability partnership constituted under the Limited Liability Partnership Act 2000 of the United Kingdom and the regulations made thereunder), limited liability company, trust or similar Person, any

 

  

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and all membership interests, units, ownership interests or other partnership/limited liability company interests; and (c) any other direct or indirect equity ownership, participation or voting right or interest in a Person (including any Contract in the nature of a voting trust or similar agreement or understanding or indebtedness having general voting rights).

 

“ERISA” – as defined in Section 3.5(a).

 

“ERISA Affiliate” – with respect to any Person, each business or entity which is a member of a “controlled group of corporations,” under “common control” or a member of an “affiliated service group” with such Person within the meaning of Sections 414(b), (c) or (m) of the Code, or required to be aggregated with such Person under Section 414(o) of the Code, or under “common control” with such Person within the meaning of Section 4001(a)(14) of ERISA.

 

“Estimated Closing Balance Sheet” – a consolidated and combined balance sheet of the Combined Business setting forth the Sellers’ good faith estimate of the total assets, liabilities and consolidated equity of the Combined Business as of the Closing Date based on the balance sheets of the Transferred Companies and balance sheet and other available data regarding the Transferred Assets and Assumed Liabilities, in each case as of the last day of the most recently completed month and other available data regarding the then-current month (but prior to the repayment of any of the Combined Business Debt outstanding on the Closing Date) prepared by the Sellers in accordance with IFRS and on a basis consistent with the Combined Business Reference Balance Sheet (including identification on the Estimated Closing Balance Sheet of an estimate of the Estimated Closing Book Value, the Estimated Closing Combined Business Debt and, without duplication, the Estimated Closing RBS/SET Debt), except that the Agreed Adjustments shall be made thereon.

 

“Estimated Closing Book Value” – the consolidated and combined equity of the Combined Business on the Closing Date as set forth on the Estimated Closing Balance Sheet.

 

“Estimated Closing Combined Business Debt” – the outstanding balance of all Combined Business Debt as of immediately prior to the Closing as set forth on the Estimated Closing Balance Sheet.

 

“Estimated Closing RBS/SET Debt” – as defined in Section 7.23(a).

 

“Estimated Purchase Price” – as defined in Section 2.3.

 

“Excluded Assets” – as defined in Section 2.1(c)(i).

 

“Excluded Business” – to the extent currently or historically operated by any of the Sellers or any of their Subsidiaries (other than the Transferred Companies), power and gas Commodities and marketing businesses operating in the United States, Canada and Mexico, the U.S. emissions (including carbon credits and emissions credits) trading and marketing business and the commercial and industrial electricity business of the

 

  

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Sellers or any of their Subsidiaries (other than the Transferred Companies) (including the business of Sempra Energy Solutions LLC).

 

“Excluded Employee” as defined in Section 7.5(f).

 

“FCPA” – the Foreign Corrupt Practices Act of 1977, as amended.

 

“Final Allocation Schedule” – as defined in Section 10.3(h)(ii).

 

“Final Closing Amount” – as defined in Section 2.7(b).

 

“Final Closing Balance Sheet” – as defined in Section 2.7(b).

 

“Final Closing Book Value” – as defined in Section 2.7(b).

 

“Final Closing RBS/SET Debt” – as defined in Section 2.7(b).

 

“Final Termination Date” – as defined in Section 7.5(a)(iv).

 

“Financial Assurance” – as defined in Section 7.11(c)(i).

 

“Financial Assurance Beneficiary” – as defined in Section 7.11(c)(i).

 

“Financial Assurance Reimbursement and Indemnity Agreements” – as defined in Section 7.11(c)(v).

 

“Financial Support Arrangements” – as defined in Section 3.16.

 

“Formation Agreement” – as defined in the Recitals.

 

“FSA” – the United Kingdom Financial Services Authority.

 

“Full Recourse Reference Transaction” – as defined in Section 7.11(b).

 

“Governing Documents” – with respect to any particular entity, (a) if a corporation, the articles or certificate of incorporation and the bylaws; (b) if a general partnership or limited liability partnership, the partnership agreement and any statement of partnership; (c) if a limited partnership, the limited partnership agreement and the certificate of limited partnership; (d) if a limited liability company, the certificate of formation and limited liability company agreement; (e) if another type of Person, any charter or similar document adopted or filed in connection with the creation, formation or organization of the Person; (f) all equityholders’ agreements, voting agreements, voting trust agreements or other similar agreements or documents relating to the organization, management or operation of such entity; and (g) any amendment or supplement to any of the foregoing.

 

“Governmental Authorization” – any Consent, license, qualification, certificate, franchise, confirmation, registration, clearance, Order or permit issued, granted, given or

 

  

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otherwise made available by or under the authority of, or any required notification to, any Governmental Body or pursuant to any Legal Requirement.

 

“Governmental Body” – any international, federal, state, local, municipal, foreign or other governmental or quasi-governmental authority or self-regulatory organization of any nature of competent authority (including any agency, branch, department, board, commission, court, tribunal or other entity exercising governmental or quasi-governmental powers) or exercising, or entitled or purporting to exercise, any administrative, executive, judicial, legislative, enforcement, regulatory or taxing authority or power.

 

“Group Tax Relief” – any right to reallocate Tax and Reliefs between members of a group or consortium or other association for Tax purposes including by way of (a) the surrender of losses, (b) the surrender of Tax refunds, (c) the surrender of relievable Tax, (d) the ability to reallocate a profit, gain or loss for Tax purposes, (e) the ability to reallocate any Tax arising as a result of any Transferred Company ceasing to be a member of a group or consortium or other association for Tax purposes with the Sellers, (f) the ability to rollover a gain on the assets of one member into the cost (for Tax purposes) of the assets of another, (g) the ability to reallocate any liability to settle Tax, (h) the ability to disregard entities for Tax purposes with the consequence that the Tax liability falls on a different entity and (i) the ability to transfer any other Relief between members of a group or consortium or other association for Taxation purposes, whether in the United Kingdom or any other jurisdiction.

 

“Guaranty” – as defined in the Recitals.

 

“Guarantor” – as defined in the Recitals.

 

“Hazardous Materials” – all hazardous, dangerous or toxic materials or substances, including natural gas, petroleum and petroleum products (including crude oil or any fraction thereof), asbestos and asbestos-containing materials, mold, polychlorinated biphenyls, radiation, lead-containing paint and any other material that is regulated pursuant to any Environmental Laws or that could reasonably be expected to result in Liability under any Environmental Laws.

 

“HB Ordinary Course Matters” – all acts and omissions otherwise restricted hereunder and pertaining to (i) any Real Estate Lease in respect of warehouses and any Warehouse Agreement, where the total rents or payments over the contract term is $2 million or less, provided that the total number of such Real Estate Leases or such Warehouse Agreements in any calendar quarter does not exceed ten, or (ii) Warehouse Agreements in respect of pay-as-use space.

 

“HMRC” – as defined in Section 10.15(b).

 

“HSR Act Approval” – the approval of the U.S. Department of Justice or the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, including the regulations promulgated thereunder, or the expiration or early termination of the applicable waiting period thereunder.

 

  

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“IFRS” – the International Financial Reporting Standards promulgated by the International Accounting Standards Board (which includes standards and interpretations approved by the International Accounting Standards Board and International Accounting Standards issued under previous constitutions), together with its pronouncements thereon from time to time, as adopted by the European Union, and applied on a basis consistent with the Partnership’s and the SET Companies’ historic accounting principles and practices.

 

“Inactive Business Employees” – as defined in Section 7.5(d).

 

“Indebtedness” – with respect to any Person, any obligations of such Person (a) for borrowed money, (b) evidenced by notes, bonds, debentures or similar instruments, (c) for the deferred purchase price of goods or services (other than payables or accruals incurred in the Ordinary Course of Business, including in connection with any trades, hedges or other transactions entered into in connection with the Partnership’s and/or the SET Companies’ trading activities), (d) under capital leases, or (e) in the nature of guarantees of the obligations described in clauses (a) through (d) above of any other Person (but does not include any Cash collateral or any obligation under any credit support agreement to return any posted collateral (including Cash collateral) in each case relating to the Trading Agreements).

 

“Indemnified Person” – as defined in Section 9.3.

 

“Indemnifying Person” – as defined in Section 9.5(a).

 

“Indemnity Share” – as to RBS and Sempra Energy, the percentage set forth next to such Seller Parent’s name on Schedule 1.1(h), which schedule may be updated by RBS and Sempra Energy acting jointly at any time before or at the time of the identification of the specified accounts for payment pursuant to Section 2.3 so long as (a) no percentage for either of RBS or Sempra Energy set forth in any such updated Schedule 1.1(h) differs from the percentage for such Seller Parent set forth on Schedule 1.1(h) as delivered on the date hereof by more than ten percent (10%) and (b) the percentages set forth on the updated schedule, together, equal 100%.

 

“Intellectual Property” – any or all of the following in any jurisdiction throughout the world and all rights in or arising out of: (a) all patents and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof; (b) all inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, know how, technology, technical data and customer lists, and all documentation relating to any of the foregoing; (c) all copyrights, mask works and all registrations and applications relating to any of the foregoing, and all other rights corresponding thereto; (d) all computer software, including all source code, object code, firmware, development tools and files; (e) all industrial designs and any registrations and applications therefor; (f) all Trademarks; (g) all databases and data collections and all rights therein; (h) all moral rights of authors and inventors, however denominated, and (i) any similar or equivalent rights to any of the foregoing anywhere in the world.

 

  

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“IT Systems” – as defined in Section 2.1(b)(ii)(I).

 

“JPM Bank” – as defined in Section 10.8.

 

“Knowledge” – with respect to the Seller Parties, the actual knowledge as of the date hereof of the Persons employed by such Seller Party or its Subsidiaries directly responsible for the oversight of the Partnership and the SET Companies (after reasonable inquiry and reasonable consultation by such Persons with Persons employed by the Partnership and the SET Companies directly responsible for the applicable information) and, with respect to the Purchaser, the actual knowledge as of the date hereof of the persons employed by the Purchaser directly responsible for the negotiation of the transactions contemplated by this Agreement (after reasonable inquiry and reasonable consultation with Persons employed by Purchaser or its Affiliates responsible for the applicable information), in each case as of the date hereof.

 

“Lease” – any ground lease, lease or rental agreement pertaining to the occupancy of any real property or any lease or rental agreement, license, Contract, right to use or installment and conditional sale agreement pertaining to the leasing or use of any Tangible Personal Property; provided that gold leases shall not be deemed to be Leases for purposes hereof.

 

“Legal Requirement” – any laws, statutes, treaties, rules, regulations, ordinances, judgments, decrees, principles of common law, codes, orders and other pronouncements having the effect of law of any Governmental Bodies, including all Governmental Authorizations.

 

“Lehman” – as defined in Section 7.20.

 

“Lehman Payable” –  the principal amount of the outstanding payable of RBS Sempra Commodities S.à r.l. (formerly known as Sempra Oil Trading S.à r.l). to Lehman, as reflected on the Final Closing Balance Sheet.

 

“Lehman Receivables” – the receivables of the Combined Business from Lehman described in Schedule 1.1(l).

 

“Lehman Remaining Amount” – as defined in Section 7.20.

 

“Liability” – with respect to any Person, any Indebtedness, liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not the same is required by IFRS to be accrued on the financial statements of such Person.

 

“LLP Agreement” – the Limited Liability Partnership Agreement of the Partnership, dated as of April 1, 2008, as amended.

 

  

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“Macquarie and ABN NA Power and Gas Assets” – (a) the North American power and gas trades of the Combined Business in the "Macquarie Book", along with related hedges and reserves, as described in the notes to the Combined Business Reference Balance Sheet and more particularly described in Schedule 1.1(m), and (b) the North American power and gas trades of the Combined Business in the "ABNLEG Book", along with related hedges and reserves, as described in the notes to the Combined Business Reference Balance Sheet and more particularly described in Schedule 1.1(m).

 

“Mandatory Governmental Approvals” – the (i) the approval of the FSA (with respect to change of controller), (ii) HSR Act Approval, (iii) Canada Competition Act Approval, (iv) the Swiss Approval, and (v) the non-objection or approval in respect of competition or merger control of the Governmental Bodies in each of the jurisdictions that any Party reasonably determines is required for the consummation of the transactions contemplated by this Agreement, which determination shall be made not later than five (5) Business Days after all relevant information reasonably necessary to make such determination is provided to the Purchaser by the Seller Parties (such date, the “Determination Date”).

 

“Market Rate Swap Agreements” – (a) the Index Swap agreements, each dated April 1, 2008, between RBS, on the one hand, and each of (i) RBS Sempra Energy Europe D.O.O., (ii) RBS Sempra Energy Europe KFT, (iii) RBS Sempra Metals & Concentrates LLC, (iv) RBS Sempra Plastics LLC, (v) RBS Sempra Commodities Sarl (formerly Sempra Oil Trading Sarl), (vi) RBS Sempra Energy Europe Limited, (vii) RBS Sempra Energy Europe S.R.O., (viii) RBS Sempra Metals Limited and (ix) SET, on the other hand and (b) any other swaps, including back-to-back swaps, between RBS, on the one hand, and any Transferred Company, on the other, entered into for the same purpose as the foregoing that have been identified to the Purchaser by the Seller Parties no later than five (5) Business Days prior to the Closing.

 

“Master Agreement” – any master trading agreements, including Contracts of the type set forth on Schedule 1.1(k), (a) under which the Partnership, any SET Company or RBS executes transactions as part of the Combined Business or is otherwise employed in the Combined Business or (b) with respect to which the Partnership, any SET Company or RBS is a credit support provider or guarantor in respect of the Combined Business.

 

“Net Trading Revenue” – for any period, the total realized gains, unrealized mark-to-market gains and fee and interest income generated by trading activities, net of interest expense and transaction fees and expenses for such period, in each case determined in accordance with IFRS.

 

“No-Offer Notice” – as defined in Section 7.5(a)(iii).

 

“Non-Disclosure Agreement” – the non-disclosure agreement dated December 16, 2009, by and among the Purchaser, RBS and Sempra Energy.

 

“Notice of Objection” – as defined in Section 2.7(b).

 

  

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“Order” – any order, writ, injunction, judgment, decree, ruling, assessment or arbitration award of any Governmental Body or arbitrator (in each case, whether preliminary or final).

 

“Ordinary Course of Business” – the ordinary course of business of a Person, provided, that an action taken by a Person will be deemed to have been taken in the ordinary course of business if that action is substantially consistent with the past practices of such Person; provided, further, that the ordinary course of business of the Combined Business shall refer to the ordinary course of business of (i) the Transferred Companies, (ii) the Partnership and the SET Companies (other than the Transferred Companies) in respect of the Transferred Assets and Assumed Liabilities (other than the RBS Related Assets and Liabilities), and (iii) RBS, solely in respect of the RBS Related Assets and Liabilities.

 

“Other Business Cap Usage Amount” – as defined in Section 7.11(c)(iii).

 

“Other Payroll Taxes” –  payroll taxes, including National Insurance Contributions, but excluding UK Bank Payroll Tax.

 

“Outside Date” – the date that is ninety (90) calendar days from the Determination Date, subject to extension one or more times upon the mutual written agreement of the Purchaser and any Seller Parent upon written notice to the other Parties prior to the termination of this Agreement, which notice shall set forth a new Outside Date that is two (2) calendar months after the then-current Outside Date; provided that, (x) the Purchaser or any Seller Parent shall each have the right (exercisable (i) only once by the Purchaser, and (ii) one or more times by any Seller Parent), prior to receipt of a valid written notice of termination pursuant to Section 8.1(b), to extend the Outside Date by two (2) calendar months if at such time all of the closing conditions set forth in Sections 5.1 and 6.1 have been satisfied or waived (or are reasonably capable of being satisfied) other than those conditions in Section 5.1(a) and Section 6.1(a), and (y) the Purchaser shall have the right (exercisable no more than three (3) times), prior to receipt of a valid written notice of termination pursuant to Section 8.1(b), and subject to compliance with Section 7.3(a) in respect thereof, to extend the Outside Date by one (1) calendar month following any extension under clause (x) of this definition or a prior extension under this clause (y) if at the time of the relevant extension all of the closing conditions set forth in Sections 5.1 and 6.1 have been satisfied or waived other than the condition relating to receipt of the Swiss Approval if the Swiss Approval condition is still in existence; provided further that, if the Purchaser is the extending Party, then prior to exercising such extension the Purchaser shall have made a good faith determination that, in the case of clause (x), the conditions set forth in Sections 5.1(a) and 6.1(a) are, or in the case of clause (y), the condition relating to receipt of the Swiss Approval is, reasonably capable of being satisfied prior to the end of such extension period; provided, further, that, in no event shall the Outside Date be later than (A) December 2, 2010, in the case of any extension under clause (x), and (B) October 2, 2010, in the case of any extension under clause (y), and any extension that would otherwise extend to a date that is later than such date shall be deemed an extension to such date.

 

  

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“Overprovision” – as defined in Section 10.3(g)(i).

 

“Palabora Assets” – means the trading agreement of the Combined Business with Palabora Mining Company Ltd, along with related hedges and reserves, that are more particularly described in Schedule 1.1(n).

 

“Partnership” – as defined in the preamble.

 

“Partnership Financial Statements” – collectively, (a) the audited consolidated balance sheet of the Partnership and its Subsidiaries as of December 31, 2008, and the audited consolidated statements of income and cash flows of the Partnership and its Subsidiaries for the year ended December 31, 2008, including any notes thereto, and (b) the unaudited consolidated balance sheet and unaudited consolidated statement of income of the Partnership and its Subsidiaries as of and for the eleven months ended November 30, 2009.

 

“Party” and “Parties” – as defined in the preamble.

 

“Permissible Trading Activities” – the conduct of any aspect of the Commodities-related trading businesses comprising part of the Combined Business in the Ordinary Course of Business, including, in the case of the trader guidelines referred to in Schedule 1.1(g), the application or modification of, or deviation from, such guidelines in the Ordinary Course of Business.

 

“Permitted Encumbrance” – (a) any Encumbrance for Taxes, assessments, government charges or levies not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with IFRS and reflected on the Combined Business Reference Balance Sheet, the Estimated Closing Balance Sheet or the Final Closing Balance Sheet, as applicable, (b) any statutory Encumbrance arising in the Ordinary Course of Business by operation of Legal Requirements with respect to a Liability that is not yet due or delinquent or that is being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with IFRS and reflected on the Combined Business Reference Balance Sheet, the Estimated Closing Balance Sheet or the Final Closing Balance Sheet, as applicable, (c) Encumbrances of vendors, suppliers, carriers, warehousemen, mechanics, materialmen and repairmen incurred in the Ordinary Course of Business that are not material in nature, (d) pledges or deposits to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations, (e) minor survey exceptions, reciprocal easement agreements and other customary encumbrances on titles to real property that (i) were not incurred in connection with any Indebtedness, (ii) do not render title to the property encumbered thereby unmarketable and (iii) do not, individually or in the aggregate, materially adversely affect the value or use of such property for its current and anticipated purposes, (f) Encumbrances incurred in the Ordinary Course of Business to secure Combined Business Debt that will be discharged pursuant to Section 7.23 or in respect of which the Transferred Companies will be released as borrowers, pledgors or account beneficiaries pursuant to Section 7.22, in each case following the Closing, (g) Encumbrances incurred

 

  

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in the Ordinary Course of Business to secure any obligations under Trading Agreements that are Assigned Trading Agreements or to which a Transferred Company is a party (but neither the Partnership nor any other SET Company is a party following the Closing but subject to Sections 2.2(c) and 7.11), (h) other Encumbrances incurred in the Ordinary Course of Business that are not material in respect of the relevant asset, (i) liens granted to a broker, bank, exchange, clearing organization or other financial institution securing obligations (including fees, expenses, service charges and margin requirements) owing to such broker, bank, exchange, clearing organization or other financial institution as a matter of law or under any account agreement entered into in the Ordinary Course of Business with such broker, bank, exchange, clearing organization or other financial institution, provided that (i) a Transferred Company (but neither the Partnership nor any other SET Company following the Closing but subject to Sections 2.2(c) and 7.11) is a party to such account agreement or (ii) such account agreement is in respect of an Assigned Trading Agreement, and (j) Encumbrances that will be discharged following the Closing but subject to Sections 7.11 and 7.23(c).

 

“Person” – any natural person, corporation, general partnership, limited partnership, limited liability partnership, limited liability company, joint venture, trust, union, proprietorship, Governmental Body or other entity, association or organization of any nature, however and wherever organized or constituted.

 

“Physical Energy Infrastructure Assets” – physical assets used for the generation, production, transmission, storage, refining, distribution or similar or related handling or processing of electricity, oil, coal, natural gas or other energy related products or Commodities, including power plants, electric and gas distribution or transmission facilities, pipelines, storage fields, gas gathering and processing facilities, exploration and production equipment, liquefied natural gas liquefaction and regasification terminals and liquefied natural gas ships and tankers.

 

“Policies” – as defined in Section 3.14(a).

 

“Post-Closing Business” – as defined in Section 7.6(i).

 

“Post-Closing RBS Tax Returns” – as defined in Section 10.3(a)(v).

 

“Pre-Closing Period” – any taxable year or other taxable period ending on or before the Closing Date.

 

“Pre-Closing RBS Tax Returns” – as defined in Section 10.3(a)(ii).

 

“Pre-Closing Tax Returns” – as defined in Section 10.3(a)(i).

 

“Prior Closing Date” – April 1, 2008, the date of the closing under the Formation Agreement.

 

“Prior Closing Straddle Period” – any taxable period that begins before and ends after the Prior Closing Date.

 

  

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“Proceeding” – any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, judicial or investigative, whether public or private) commenced, brought, conducted or heard by or before any Governmental Body or arbitrator.

 

“Proposed Allocation Schedule” – as defined in Section 10.3(h)(ii).

 

“Proposed Final Closing Amount” – as defined in Section 2.7(a).

 

“Proposed Final Closing Balance Sheet” – as defined in Section 2.7(a).

 

“Proposed Final Closing Book Value” – as defined in Section 2.7(a).

 

“Proposed Final Closing RBS/SET Debt” – as defined in Section 2.7(a).

 

“Purchase Price” – as defined in Section 2.3.

 

“Purchaser” – as defined in the preamble.

 

“Purchaser Disclosure Letter” – as defined in the introductory paragraph to Article IV.

 

“Purchaser Financial Assurance” – as defined in Section 7.11(a)(A)(1).

 

“Purchaser Material Adverse Effect” – any material adverse effect on the ability of the Purchaser to perform its obligations under this Agreement and the Related Agreements or to consummate the transactions contemplated hereby and thereby.

 

“Purchaser Termination” – as defined in Section 7.5(l)(ii)(1).

 

“Purchaser Welfare Plans” – as defined in Section 7.5(k)(iii).

 

“RBS” – as defined in the preamble.

 

“RBS Bilateral Facilities” – means the facilities set forth in Schedule 1.1(i).

 

“RBS Collateralized TRS” – the 1992 ISDA Master Agreement, together with the schedule, credit support annex and confirmation thereto, to be dated as of the Closing Date, by and between the Purchaser or an Affiliate of the Purchaser and RBS in substantially the form set forth as Exhibit B, where there may be several such ISDA Master Agreements but in every case, the relevant Affiliate of Purchaser must either be JPM Bank or be guaranteed by a permitted guarantor as described in the “Guaranties” section of the term sheet for the Commodity Trading And Services Agreement attached as Exhibit A.

 

“RBS/SET Debt” – at any time, (i) the Combined Business Debt other than the Third-Party Debt and (ii) the Third-Party Debt owed by RBS or any of its Subsidiaries (other than the Partnership and the SET Companies).

 

  

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“RBS Financial Assurances Reimbursement and Indemnity Agreement” – the Financial Assurances Reimbursement and Indemnity Agreement, to be dated as of the Closing Date, between the Purchaser and RBS in substantially the form set forth on Exhibit C.

 

“RBS Related Assets and Liabilities” – the RBS Related Assets and the Liabilities of RBS and its Subsidiaries (other than the Partnership and the SET Companies) included in the Assumed Liabilities.

 

“RBS Related Assets” – all right, title and interest of RBS or any of its Subsidiaries (other than the Partnership and the SET Companies) in the assets (including Contracts whether in the money or out of the money) reflected in the Combined Business Reference Balance Sheet, adjusted to reflect:

 

(a) any assets of the same type as such assets acquired for the Combined Business in the Ordinary Course of Business for the account of RBS or any of its Subsidiaries (other than the Partnership and the SET Companies) after November 30, 2009 and prior to the Closing by any of the SET Companies in accordance with the CTA Master Agreement; and

 

(b) any disposition in the Ordinary Course of Business of such assets or such other assets referred to in clause (a) prior to the Closing.

 

“RBS Tax Damages” – any Damages subject to indemnification under Section 9.2(a) as a result of a breach of the representations and warranties of the Sellers set forth in Section 3.8(e), under Section 9.2(e)(vi) if RBS or any of its Affiliates is the party whose failure resulted in such Damages or under any of Section 9.2(h) or (i).

 

“Real Estate Lease” – any Lease in respect of real property.

 

“Receiving Party” – as defined in Section 7.6(d).

 

“Registered” – issued by, registered with, renewed by or the subject of a pending application before any Governmental Body or domain name registrar, including (a) in respect of patents, all divisions, continuations, continuations-in-part, extensions and reissues, and (b) in respect of copyrights, all extensions, restorations and reversions thereof.

 

“Rejecting Employee” – as defined in Section 7.5(a)(ii).

 

“Rejection Notice” – as defined in Section 7.5(a)(iii).

 

“Related Agreements” – the following agreements:

 

(a)           the Commodities Trading and Services Agreements;

 

(b)           the RBS Financial Assurances Reimbursement and Indemnity Agreement;

 

  

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(c)           the Sempra Financial Assurances Reimbursement and Indemnity Agreement;

 

(d)           the Collateralized TRS Agreements;

 

(e)           Guarantees from Guarantor in respect of the obligations of the Purchaser and its delegees under the other Related Agreements, substantially in the form of the Guaranty; and

 

(f)           Assignment and Assumption Agreement by and among Sellers and Purchaser, in form and substance as reasonably agreed by the Parties.

 

“Relief” – any relief, loss, allowance, exemption, set-off, deduction or credit in computing or against profits or Tax.

 

“Reorganization” – as defined in the Recitals.

 

“Representative” – with respect to a particular Person, any director, officer, manager, employee, agent, consultant, advisor, accountant, financial advisor, legal counsel or other representative of that Person.

 

“Requested Amount” – as defined in Section 7.11(c)(iii).

 

“Requisite Exposure Rating” – as defined in Section 7.11(c)(v).

 

“Requisite Rating” – as defined in the definition of “Credit Rating Event.”

 

“Restricted Collateral Transaction” – as defined in Section 7.24.

 

“Retained Liabilities” – as defined in Section 2.2(b).

 

“Retained Rejected Employee” – as defined in Section 7.5(a)(iii).

 

“Retained Materiality Representations” – means the representations and warranties contained in Sections 3.2(b)(iii), 3.2(c), 3.3(b)(i) (but only the second sentence thereof), 3.3(c), 3.4, 3.5(a), 3.5(i), 3.6(c) (first sentence), 3.10(a)(ii), 3.11(a), 3.12(b), 3.12(c)(i) (except for clause (B)), 3.12(c)(ii) (in the third line), 3.14(b) and 3.15(a).

 

“Saving” – as defined in Section 10.3(g)(iii).

 

“Schedule” – each schedule provided by the Sellers or the Purchaser, as applicable, in accordance with this Agreement.

 

“Scheduled Transition Employees” – as defined in Section 7.5(c).

 

“Section 9.2 Indemnified Persons” – as defined in Section 9.2.

 

“Section 9.3 Indemnified Persons” – as defined in Section 9.3.

 

  

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“Seller” and “Sellers” – as defined in the preamble.

 

“Seller 401(k) Plan” – as defined in Section 7.5(p)(i).

 

“Seller Confidential Information” – as defined in Section 7.6(c).

 

“Seller Disclosure Letter” – as defined in the introductory paragraph to Article III.

 

“Seller Financial Assurance” – as defined in Section 7.11(c)(i).

 

“Seller Financial Assurances Credit Rating Event” – as defined in Section 7.11(c)(v).

 

“Seller Parent” and “Seller Parents” – as defined in the preamble.

 

“Seller Parent Marks” – as defined in Section 7.13(a).

 

“Seller Party” and “Seller Parties” – as defined in the preamble.

 

“Seller Plans” – as defined in Section 3.5(a).

 

“Sempra Energy” – as defined in the preamble.

 

“Sempra Financial Assurances Reimbursement and Indemnity Agreement” – the Financial Assurances Reimbursement and Indemnity Agreement, to be dated as of the Closing Date, by and among the Purchaser and Sempra Energy, Pacific Enterprises and Enova Corporation, and for the benefit of each other Affiliate of Sempra Energy that issues any Financial Assurances in respect of the Combined Business, in substantially the form set forth on Exhibit C.

 

“Sempra Tax Damages” – any Damages subject to indemnification under Section 9.2(a) as a result of a breach of any of the representations and warranties of the Sellers set forth in Section 3.8(a), 3.8(b), 3.8(c), 3.8(f), 3.8(g), 3.8(h), 3.8(j), 3.8(k) or 3.8(o) hereof, or under Section 9.2(e) (other than Section 9.2(e)(vi)), 9.2(f), or 9.2(g) to the extent such Damages relate to periods (or portions thereof) ending on or prior to the Prior Closing Date, and Damages subject to indemnification under Section 9.2(e)(vi) if Sempra Energy or any of its Affiliates is the party whose failure resulted in such Damages.

 

“Sempra Utility” – each of Southern California Gas Company, San Diego Gas & Electric Company, Sempra Pipelines & Storage Corp. and Ecogas Mexico S. de R.L. de C.V., Energy South, Inc., Gasaducto Bajanorte S. de R.L. del C.V., Mobile Gas, and each of their respective Subsidiaries, but in no event shall include any Seller Party.

 

“SET” – as defined in the preamble.

 

“SET Assigned Trading Agreements” – the Trading Agreements to which a Seller (other than RBS) or a Subsidiary (other than a Transferred Company) of such a Seller is a

 

  

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party or is bound and reflected on the Combined Business Reference Balance Sheet adjusted to reflect (a) any Trading Agreements of the same type reflected on the Combined Business Reference Balance Sheet entered into by the Combined Business in the Ordinary Course of Business after November 30, 2009 and, with respect to any Trading Agreements entered into after the date hereof, in accordance with this Agreement and prior to the Closing by any of the Sellers (other than RBS) or any of their Subsidiaries (other than a Transferred Company) and (b) any termination or other disposition of such a Trading Agreement after November 30, 2009, but prior to the Closing.

 

“SET Collateralized TRS” – the 1992 ISDA Master Agreement, together with the schedule, credit support annex and confirmation thereto, to be dated as of the Closing Date, by and between the Purchaser or an Affiliate of the Purchaser and SET in substantially the form set forth as Exhibit B, where there may be several such ISDA Master Agreements but in every case, the relevant Affiliate of Purchaser must either be JPM Bank or be guaranteed by a permitted guarantor as described in the “Guaranties” section of the term sheet for the Commodity Trading And Services Agreement attached Exhibit A.

 

“SET Companies” – the Subsidiaries of the Partnership, including the Transferred Companies.

 

“Severance Liabilities” –  as defined in Section 7.5(a)(iv)(y).

 

“Shared Tax Damages” – any Damages (other than Sempra Tax Damages and RBS Tax Damages and Damages subject to indemnification under Section 9.2(a) as a result of a breach of the representations and warranties of the Sellers set forth in Section 3.8(d)) subject to indemnification under Section 9.2(a) as a result of a breach of any of the representations and warranties of the Sellers set forth in Section 3.8 or under Section 9.2(e), 9.2(f), or 9.2(g).

 

“Shared Trading Guarantee” – as defined in Section 7.11(c)(iii).

 

“Shared Trading Guarantee Cap” – as defined in Section 7.11(c)(iii).

 

“Specified Matters” – the matters specified in Schedule 9.2 of the Purchaser Disclosure Letter.

 

“Straddle Period” – any taxable period that begins before and ends after the Closing Date.

 

“Subsidiary” – with respect to any Person, means another Person (other than a natural person), of which such first Person is entitled, directly or indirectly through one or more Subsidiaries, through the ownership or control of voting securities, other voting ownership or voting partnership interests or otherwise, to elect at least a majority of its board of directors or other managing authority or to otherwise, directly or indirectly, control the management of such Person.

 

  

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“Swiss Approval” – only with respect to any Closing prior to October 2, 2010 and to the extent reasonably deemed necessary by the Purchaser, (a) the issuance by the Swiss Financial Market Supervisory Authority (FINMA) to RBS Sempra Commodities s.a.r.l. of an appropriate license, or the approval by FINMA of an amendment to an existing license held by the Purchaser or any of its Affiliates that would permit the Purchaser or such Affiliate (including RBS Sempra Commodities s.a.r.l.), to conduct the Combined Business in and from Switzerland in all material respects as it has been conducted prior to the date hereof or (b) the obtaining of such other reasonably necessary Governmental Authorizations to conduct the Combined Business in and from Switzerland as it has been conducted prior to the date hereof, whichever can be effected in the most expeditious manner in the reasonable judgment of the Purchaser after consultation with the Seller Parties and subject in any event to Section 7.3(a).

 

“Tangible Personal Property” – all office equipment, computer hardware, vehicles and other similar material items of tangible personal property of every kind, together with any express or implied warranty by the Third Party manufacturers or sellers or lessors of any item or component part thereof and all maintenance records and other documents relating thereto.

 

“Tax” – any income, corporation, gross receipts, license, payroll, employment, excise, capital gains or corporation tax on capital gains, severance, stamp, stamp duty reserve tax, stamp duty land tax, occupation, premium, property, environmental, climate change, windfall profit, imports, customs, vehicle, airplane, boat, vessel or other title or registration, capital stock, franchise, employees’ income withholding, foreign or domestic withholding, social security, national insurance contribution, unemployment, disability, real property, personal property, sales, use, transfer, documentary, value added, alternative, add on minimum, bank payroll tax and other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever and any interest, penalty, surcharge, addition or additional amount thereon imposed, assessed or collected by or under the authority of any Governmental Body.

 

“Tax Laws” – the Legal Requirements of any Governmental Body relating to any Tax.

 

“Tax Repayment” – as defined in Section 10.3(g)(ii).

 

“Tax Return” – any return (including any information return), report, statement, schedule, notice, form, declaration, or claim for refund (including any amended return, report, statement, schedule, notice, form, declaration, or claim for refund) filed with or submitted to, or required to be filed with or submitted to, any Governmental Body with respect to Taxes, including intrastat and EC Sales List filing.

 

“Third Party” – a Person other than the Parties, the Transferred Companies or any of their respective Affiliates.

 

“Third-Party Claim” – any claim subject to indemnification under this Agreement against any Indemnified Person by a Third Party, whether or not involving a Proceeding.

 

  

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“Third-Party Debt” – Combined Business Debt owed to Third Parties.

 

“Trademarks” – all worldwide trademarks, service marks, brand names, Internet domain names, logos, designs, symbols, trade dress and other indicia of origin, all applications and registrations for the foregoing, and all goodwill associated therewith and symbolized thereby.

 

“Trading Agreement” – any Contract, agreement or other document (whether or not documented on a Master Agreement) to effect any Commodity Transaction to which the Partnership or any SET Company or, solely with respect to Contracts, agreements or documents included as part of the RBS Related Assets and Liabilities, RBS, is party with respect to the purchase, sale, transfer of, transportation, storage, transmission, hedging with respect to, or price of, any Commodity or any similar good, article, service, right, or interest and any transaction thereunder entered into to effect any Commodity Transaction; provided that, any transaction under a Trading Agreement included in the Excluded Business shall not constitute a part of such Trading Agreement.

 

“Transferred Asset Employees” – as defined in Section 7.5(a)(ii)(z).

 

“Transferred Assets” – as defined in Section 2.1(b).

 

“Transferred Books and Records” – Books and Records held by the Seller Parties, to the extent relating to the Transferred Assets, the Assumed Liabilities or the Transferred Companies (including all Books and Records of the Combined Business Employees), excluding Books and Records (i) relating to Taxes that do not relate exclusively to the Combined Business (but including, for the avoidance of doubt, the portions thereof that do relate to the Combined Business) and (ii) to the extent any Legal Requirement prohibits their transfer or any transfer thereof would otherwise subject any Seller Party or any of its Affiliates to any material Liability.

 

“Transferred Combined Business Intellectual Property” – all Transferred Intellectual Property and all Intellectual Property owned by the Transferred Companies.

 

“Transferred Companies” – the Transferred Holding Companies and the entities listed as Transferred Companies on Schedule 1.1(q).

 

“Transferred Company Employees” – as defined in Section 7.5(a)(ii)(y).

 

“Transferred Company Real Estate Lease” – any Lease in respect of which a Transferred Company is the tenant or subtenant, which Leases are set forth on Schedule 1.1(r)(i).

 

“Transferred Company Warehouse Agreement” – any Warehouse Agreement in respect of which a Transferred Company is a party, which Warehouse Agreements are set forth on Schedule 1.1(r)(ii).

 

“Transferred Equity Interests” – the Equity Interests in the Transferred Companies.

 

  

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“Transferred Holding Companies” – the entities listed as Transferred Holding Companies on Schedule 1.1(s).

 

“Transferred Holding Company Equity Interests” – as defined in Section 2.1(a).

 

“Transferred Intellectual Property” – as defined in Section 2.1(b)(ii)(C)(2).

 

“Transfer Regulations” – the Transfer of Undertakings (Protection of Employment) Regulations 2006 and any analogous or similar legislation in any jurisdiction, implementing EC Council Directive 2001/23/EC.

 

“Transfer Taxes” – as defined in Section 10.3(e).

 

“Transition Financial Assurance Period” – as defined in Section 7.11(c)(i).

 

“UK Bank Payroll Tax” – the bank payroll tax announced at the United Kingdom Pre-Budget Report on December 9, 2009.

 

“USRPI Schedule” – as defined in Section 2.6(a)(xiv).

 

“VAR Limits” – as defined in Section 7.1(b).

 

“VAT” – value added tax, sales, use and any similar Tax imposed by any Governmental Body, including the United Kingdom.

 

“Warehouse Agreement” – as defined in Section 3.12(b)(xvii).

 

Section 1.2. Usage

 

(a) Interpretation.  In this Agreement, unless a clear contrary intention appears:

 

(i) the singular number includes the plural number and vice versa;

 

(ii) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are not prohibited by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually;

 

(iii) reference to either gender includes the other gender;

 

(iv) reference to any agreement, document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof;

 

(v) reference to any Legal Requirement means such Legal Requirement as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder, and reference to any section or other provision of any

 

  

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Legal Requirement means that provision of such Legal Requirement from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such section or other provision;

 

(vi) “hereunder,” “hereof,” “hereto,” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Article, Section or other provision hereof;

 

(vii) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term;

 

(viii) with respect to the determination of any period of time, “from” means “from and including” and “to” means “to but excluding”;

 

(ix) “made available to the Purchaser” means made available to the Purchaser in the electronic dataroom at http://datasite.merrillcorp.com/bidder/check.do?projectID=66299/  the physical dataroom located at the New York office of counsel to RBS, or other permanent physical or electronic media, in each case, as set forth on the indices provided to counsel to Purchaser prior to the date hereof;

 

(x) references to “$” or “dollars” shall be to U.S. Dollars; and

 

(xi) references to documents, instruments or agreements shall be deemed to refer as well to all addenda, exhibits (other than exhibits constituting agreements, which shall only become legally binding upon execution and delivery by the parties thereto), schedules or amendments thereto.

 

(b) Accounting Terms and Determinations.  Unless otherwise specified herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with IFRS.

 

(c) Legal Representation of the Parties.  This Agreement was negotiated by the Parties with the benefit of legal representation, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any Party shall not apply to any construction or interpretation hereof.

 

ARTICLE II.

PURCHASE AND SALE; CLOSING

 

Section 2.1. Purchase and Sale of the Transferred Equity Interests and Transferred Assets. Upon the terms and subject to the satisfaction or waiver, if permissible, of the conditions set forth in this Agreement and subject to the exclusions set forth in Section 2.1(c), at the Closing, each of the Sellers shall (and, as applicable, shall cause its respective Subsidiaries to) sell, assign, transfer, convey and deliver to the Purchaser, and the Purchaser shall purchase, accept and acquire from each of the Sellers, all of each such Seller’s (and, as applicable, its respective Subsidiaries’) right, title and interest in and to (i) such Seller’s (and, as applicable, its respective Subsidiaries’) Equity Interests in the Transferred Holding

 

  

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Companies (the “Transferred Holding Company Equity Interests”) and (ii) subject to Section 2.2(c), the Transferred Assets, in the case of (i) and (ii), free and clear of any and all Encumbrances other than (v) with respect to the Transferred Assets, any Permitted Encumbrances, (w) those set forth on Schedule 2.1(a), (x) restrictions on transfer of securities arising under applicable Legal Requirements, (y) those created by the Purchaser or any of its delegees or arising out of the ownership of the Transferred Holding Company Equity Interests or the Transferred Assets by the Purchaser or its delegees or (z) as specifically assumed by the Purchaser pursuant to Section 2.2(a) hereof.

 

(b) “Transferred Assets” means all the right, title and interest, in each case as of the Closing, of (i) RBS in, to and under the RBS Related Assets, and (ii) the Sellers (other than RBS) and their Subsidiaries (other than the Transferred Companies) in, to and under the following assets:

 

(A)           the Assigned Contracts, including any rights, claims, credits, causes of action, rights to indemnification or contribution, rights of set-off, rights to refunds or rights to recoupment thereunder;

 

(B)           all physical Commodities to the extent being risk-managed by the employees of or engaged in the Combined Business and all original cargo documents related thereto (which shall include all bills of lading, inspection reports, certificates of origin and letters of indemnity) to the extent such documents are in, or come into, the possession of the Sellers and/or their Affiliates;

 

(C)           (1) all data (including market data, financial data, historical data, and fundamental data) owned by Sellers and their Subsidiaries (other than the Transferred Companies) and exclusively used in the Combined Business (“Combined Business Data”) and (2) Intellectual Property owned by Sellers and their Subsidiaries (other than the Transferred Companies) and exclusively used in the Combined Business, including the Registered Intellectual Property and material unregistered Intellectual Property set forth on Schedule 2.1(b)(ii)(C) (the “Transferred Intellectual Property”);

 

(D)           leasehold interests in the Assigned Real Estate Leases and all fixtures located on the premises that are the subject of the Combined Business Leased Real Estate and all other tangible personal property and interests therein located on the premises that are the subject of the Combined Business Leased Real Estate and that is not owned by any Transferred Company, and the leasehold interest in the equipment leased by the Sellers that are on such premises;

 

(E)           subject to Section 10.3(c), the Transferred Books and Records;

 

(F)           the Acquired Permits;

 

(G)           all rights, claims, credits and causes of action of the Sellers and any of their respective Subsidiaries (other than the Transferred Companies) against any Third Party to the extent relating to the Transferred Assets (only to the

 

  

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extent the Liability to which it relates is an Assumed Liability) or the Assumed Liabilities (including rights to indemnification or contribution, rights of set-off, rights to refunds and rights of recoupment from or against any such Third Party);

 

(H)           other than Seller Financial Assurances, all guarantees, warranties, indemnities and similar rights in favor of any of the Sellers or any of their respective Subsidiaries (other than the Transferred Companies) in respect of any Transferred Asset (only to the extent the Liability to which it relates is an Assumed Liability) or Assumed Liability (but not with respect to any Excluded Asset or Retained Liability or otherwise) (only to the extent the Liability to which it relates is an Assumed Liability);

 

(I)           all information technology and communication systems owned by Sellers and their Subsidiaries (other than the Transferred Companies) and exclusively used in the Combined Business, including those set forth on Schedule 2.1(b)(ii)(I) (“IT Systems”);

 

(J)           all goodwill of the Combined Business;

 

(K)            all tangible and intangible assets (excluding Intellectual Property, information technology and communication systems) exclusively used or held for use in the conduct of the Combined Business or otherwise used exclusively by the Combined Business Employees; and

 

(L)           all other tangible assets and intangible assets reflected on the Final Closing Balance Sheet.

 

(c) Notwithstanding anything in this Agreement to the contrary, (i) the Sellers and their respective Subsidiaries (other than the Transferred Companies), as applicable, shall retain their respective right, title and interest in and to (A) all assets other than the Transferred Assets and the Transferred Holding Company Equity Interests and (B) the Palabora Assets, the Lehman Receivables and the Macquarie and ABN NA Power and Gas Assets (collectively, the “Excluded Assets”), and (ii) any North American power and gas Commodities Transactions originated or risk managed by Transferred Asset Employees or Transferred Company Employees (other than those specifically referred to in clause (B) above) shall be considered Transferred Assets and not Excluded Assets.

 

Section 2.2. Assumption of Assumed Liabilities; Retention of Retained Liabilities. Upon the terms and subject to the satisfaction or waiver, if permissible, of the conditions set forth in this Agreement and subject to the exclusions set forth in Section 2.2(b), at the Closing, in connection with the sale of the Transferred Assets, the Sellers shall assign (or shall cause to be assigned) and the Purchaser shall assume and thereafter pay, perform and discharge in accordance with their terms, solely the following Liabilities of the Seller Parties or any of their Subsidiaries (other than the Transferred Companies) (collectively, the “Assumed Liabilities”):

 

(i) all Liabilities to the extent arising out of or relating to the use of the Transferred Assets on or after the Closing Date;

 

  

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(ii) all Liabilities under the Assigned Contracts and any Contracts included in the RBS Related Assets, whether arising prior to or after the Closing;

 

(iii) all other Liabilities expressly assumed by the Purchaser or for which the Purchaser expressly has agreed to be liable, in any case, pursuant to this Agreement; and

 

(iv) all Liabilities to the extent reflected on the Final Closing Balance Sheet.

 

(b) Subject to the terms of this Agreement, the Sellers shall retain and shall be fully responsible for paying, performing and discharging when due, and none of the Purchaser or any of its Affiliates (including, after the Closing, the Transferred Companies) shall assume or be deemed to have assumed, any and all Liabilities of the Sellers or any of their respective Affiliates (other than the Transferred Companies) other than the Assumed Liabilities (collectively, the “Retained Liabilities”).  Without limiting the generality of the foregoing, Retained Liabilities include:

 

(i) without prejudice to Sections 9.3, 10.15 and 10.16, all Liabilities for Taxes imposed on the Sellers arising out of or relating to the Transferred Assets of the Business or otherwise for all periods, or portions of periods, ending before the Closing Date except as otherwise provided in this Agreement;

 

(ii) all Liabilities arising out of or in connection with Contracts that are neither Assigned Contracts nor Contracts included in the RBS Related Assets;

 

(iii) all Indebtedness of the Sellers and the Seller Parties, other than amounts included in the Combined Business Debt and other than Indebtedness of any Transferred Company to another Transferred Company;

 

(iv) any Liabilities to the extent arising out of or relating to Excluded Assets, the Excluded Business or any other business of the Seller Parties other than the Combined Business, except as otherwise specifically provided in this Agreement or any Related Agreement;

 

(v) other than any Assumed Liability, any Liabilities (including as a result of any actual or alleged noncompliance with or violation of Legal Requirements or Environmental Laws) arising from or based on events or conditions occurring or existing prior to the Closing Date, whether threatened or actual, and connected with, arising out of or relating to any Transferred Asset; and

 

(vi) Liabilities of the Sellers and their Affiliates (other than the Transferred Companies following the Closing) arising under this Agreement and the Related Agreements (including Section 10.1).

 

(c) If any of the Transferred Assets or Assumed Liabilities are not assignable or transferable to the Purchaser without a Governmental Authorization, Third Party Consent or as a result of Legal Requirements restricting such assignment and transfer, notwithstanding

 

  

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anything to the contrary contained herein, this Agreement shall not constitute an assignment or transfer thereof unless and until such barriers to transfer are resolved.  In such case, (i) whether or not such assignment and transfer is permitted on or prior to the Closing Date, the Purchaser (x) shall remain obligated to consummate the transactions contemplated by this Agreement and make all payments required under this Article II, subject only to the other terms and conditions hereof, and (y) other than the Assigned Real Estate Leases, shall assume, pay, perform and discharge when due the Liabilities of the Sellers and their respective Subsidiaries included in the Transferred Assets and Assumed Liabilities that would otherwise be applicable to the Purchaser if such Transferred Assets and Assumed Liabilities had been transferred and assigned and/or assumed pursuant to Sections 2.1(a) and 2.2(a) hereof; and (ii) the Sellers and the Purchaser shall cooperate with each other and shall use commercially reasonable efforts to (x) consummate such assignment and/or assumption and transfer as soon as practicable after the date hereof, including, as applicable, in accordance with Section 7.11; and (y) provide the Purchaser the benefit of such Transferred Assets to the same extent as if they had been transferred and assigned to the Purchaser pursuant to Section 2.1(a), unless (A) such benefit cannot be provided as a matter of Legal Requirement or the rules of a permitting or licensing body (whether or not such body is a Governmental Body) or (B) provision of such benefit would adversely affect, other than an inconsequential effect, a Seller or its ability to perform its obligations under any Related Agreement, in each case of clause (A) and (B), in such Seller’s reasonable judgment and until such impediment is removed, including by promptly paying to the Purchaser (and in any event within five (5) Business Days of receipt) any amounts received in respect of such Transferred Assets in respect of periods following the Closing.  Upon the removal of relevant restrictions on transfer of any Transferred Assets not assigned at the Closing, such Transferred Assets shall, without any further action on the part of the Purchaser or the Sellers and without additional consideration, be deemed to have been assigned to the Purchaser by the applicable Sellers or the applicable Seller’s Subsidiaries, as the case may be.  Notwithstanding the foregoing provisions of this Section 2.2, (i) other than as expressly provided in this Agreement or in any Related Agreement, none of the Sellers or any of their Affiliates shall have any obligation to pay any money or other consideration to any Third Party or to initiate any Proceeding against any Third Party in order to consummate the assignment and transfer of any such Transferred Assets, (ii) nothing in this Section 2.2 shall limit the provisions of (x) the Related Agreements, including the provisions of the Collateralized TRS Agreements, in respect of any Assigned Trading Agreements or (y) Section 7.11 of this Agreement, (iii) the Assigned Trading Agreements will be transferred to Purchaser by way of novation as provided under Section 7.11 and until such novation occurs the rights and Liabilities under any such Assigned Trading Agreement will be borne by the Parties as provided under one of the Collateralized TRS Agreements and, (iv) to the extent that any of the provisions of this Section 2.2 conflict with or are duplicative of any of the provisions of any Related Agreement, Section 7.11 or Section 7.3(b)(iii) of this Agreement, the provisions of the Related Agreement, Section 7.11 or Section 7.3(b)(iii) of this Agreement, as the case may be, shall control.

 

Section 2.3. Payment for Combined Business.  The Purchaser shall, in addition to the assumption of the Assumed Liabilities in connection with the sale of the Transferred Assets, pay, at the times and in the manner set forth in this Section 2.3 and, if applicable, in Section 2.7(d), an aggregate purchase price equal to the sum of (i) $468,000,000 plus (ii) the Final Closing Book Value ((i) and (ii), collectively, the “Purchase Price”) in consideration for the Transferred Holding Company Equity Interests and the Transferred Assets. 

 

  

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At the Closing, the Purchaser shall pay, on account of the Purchase Price, the sum of (x) $468,000,000 plus (y) the Estimated Closing Book Value ((x) and (y), collectively, the “Estimated Purchase Price”), to the Partnership (on behalf of the sellers of the Transferred Holding Company Equity Interests and the Transferred Assets) by wire transfer of immediately available funds to such accounts as identified by the Partnership to the Purchaser in writing at least two (2) Business Days prior to the Closing.

 

Section 2.4. Accounting.  To the extent that, after the Closing, (a) the Purchaser or any of its Subsidiaries receives any payment or instrument that is for the account of the Seller Parties or any of their Subsidiaries (other than the Transferred Companies) according to the terms of this Agreement, the Purchaser shall promptly deliver such amount or instrument to the Sellers, and (b) any Seller Party or any Subsidiary of a Seller Party (other than the Transferred Companies) receives any payment or instrument that is for the account of the Purchaser or any of its Subsidiaries (including the Transferred Companies) according to the terms of this Agreement, such Seller Party shall promptly deliver such amount or instrument to the Purchaser.  To the extent that this Section 2.4 conflicts with or is duplicative of any of the provisions of any Related Agreement or Section 7.11 of this Agreement, the provisions of the Related Agreement or Section 7.11 of this Agreement, as the case may be, shall control.

 

Section 2.5. Closing.  The consummation of the transactions provided for in Sections 2.1, 2.2, 2.3 and 7.23 of this Agreement (the “Closing”) shall be held on the first day that is both (a) the first day of a calendar month, and (b) at least ten (10) Business Days after each of the conditions set forth in Articles V and VI has been satisfied or waived (other than conditions to be satisfied at Closing; provided, that all conditions are also satisfied or waived at Closing), or at such other time as the Parties shall all agree in writing.  The Closing shall be deemed to occur at 12:01 a.m. (local time in New York) on the date of the Closing (the “Closing Date”).  Notwithstanding the foregoing, the Parties agree that, in the event the Closing were otherwise scheduled to occur on (i) May 1, 2010, the Parties shall effect the Closing at 11:59 p.m. (local time in New York)  on April 30, 2010 but the Closing shall be deemed to occur at 12:01 a.m. (local time in New York) on May 1, 2010 or (ii) August 1, 2010, the Parties shall effect the Closing at 11:59 p.m. (local time in New York) on July 30, 2010 but the Closing shall be deemed to occur at 12:01 a.m. (local time in New York) on August 1, 2010..  The Closing shall be held at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017, or at such other place outside of the United Kingdom as the Parties shall all agree in writing.

 

Section 2.6. Closing Obligations.  In addition to any other documents to be delivered under other provisions of this Agreement, at the Closing:

 

(a) Each of the relevant Seller Parties shall, and shall cause their Subsidiaries to, deliver to the Purchaser, as applicable:

 

(i) each Related Agreement to which such Seller Party or any of its Subsidiaries is a party, duly executed and delivered by the applicable signatory concurrently with the Closing;

 

  

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(ii) instruments of transfer and conveyance, properly executed and acknowledged by the Sellers and their respective Subsidiaries, as applicable, in such form as is reasonably acceptable to the Purchaser, that are necessary to transfer to and vest in the Purchaser (or its Affiliates) all of the Sellers’ and their respective Subsidiaries’ right, title and interest in and to the Transferred Assets (in each case, free and clear of all Encumbrances other than Encumbrances permitted by the last sentence of Section 2.1(a));

 

(iii) certificates representing the Transferred Holding Company Equity Interests, duly endorsed in blank or accompanied by stock or unit powers duly endorsed in blank in proper form for transfer or other appropriate instruments of transfer for the Transferred Holding Company Equity Interests;

 

(iv) subject to Section 10.3(c), all Transferred Books and Records;

 

(v) (A) a copy of the Combined Business Data in a reasonable format, to the extent that the Transferred Companies do not already possess a copy, and (B) if Purchaser reasonably requests such data in any other reasonable format, the Seller Parties shall, and shall cause their Subsidiaries to, at Purchaser’s sole expense, use commercially reasonable efforts to provide such data in such other format by the Closing Date, provided that if such delivery is not completed by the Closing Date, the Seller Parties shall continue to use commercially reasonable efforts after Closing to deliver such data as soon as is reasonably practicable;

 

(vi) a copy of the current and historical source code of each of the IT Systems, to the extent that Sellers or their Subsidiaries currently have a copy or can reasonably obtain a copy without any payment by the Seller Parties, provided that if a payment is required, the Parties will negotiate in good faith the proper allocation of payment among the Parties for such delivery;

 

(vii) evidence, reasonably satisfactory to the Purchaser, that the Reorganization has occurred;

 

(viii) if applicable, executed resignations of each of the directors of the Transferred Companies effective as of the Closing, in form reasonably satisfactory to the Purchaser;

 

(ix) the Estimated Closing Balance Sheet (which shall have been delivered to the Purchaser at least five (5) Business Days prior to the Closing Date), including therewith a calculation of the Estimated Closing Book Value and the Estimated Closing Combined Business Debt;

 

(x) certificates executed by each Seller Party, to be dated as of the Closing Date, in accordance with Section 5.1(e);

 

(xi) an executed receipt for the Estimated Purchase Price;

 

  

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(xii) an executed receipt for the repayment of the Estimated Closing RBS/SET Debt and an acknowledgment of the repayment and discharge of the Estimated Closing RBS/SET Debt, in each case as provided in Section 7.23;

 

(xiii) such other customary instruments, or documents, in form and substance reasonably satisfactory to the Parties, as may reasonably be required to give effect to the transactions contemplated by this Agreement; and

 

(xiv) a “FIRPTA” compliance certificate (x) from the Partnership and SET certifying that none of the Transferred Companies and none of the Transferred Assets (other than any RBS Related Assets and Liabilities) is a “U.S. real property interest” within the meaning of section 897 of the Code  and (y) from RBS certifying that none of the RBS Related Assets and Liabilities is a “U.S. real property interest” within the meaning of Section 897 of the Code, except in each case as provided in a schedule to the FIRPTA compliance certificate (a “USRPI Schedule”).

 

(b) The Purchaser shall deliver to the Seller Parties:

 

(i) each Related Agreement to which the Purchaser, any of its Subsidiaries, or any Transferred Company is a party, duly executed and delivered by the applicable signatory concurrently with the Closing;

 

(ii) a payoff letter or letters, in commercially reasonable form, in respect of the Closing Payoff Combined Business Debt at the Closing Date evidencing the repayment of all obligations thereunder on the Closing Date concurrently with the Closing;

 

(iii) evidence of the receipt of each of the Mandatory Governmental Approvals;

 

(iv) such other customary instruments, or documents, in form and substance reasonably satisfactory to the Parties, as may reasonably be required to give effect to the transactions contemplated by this Agreement; and

 

(v) a certificate executed by the Purchaser, to be dated as of the Closing Date, in accordance with Section 6.1(g).

 

Section 2.7. Final Balance Sheet; Payments; Disputes. (a) As promptly as practicable after the Closing Date, but no later than ninety (90) days thereafter, the Purchaser shall prepare (with such assistance as it may reasonably request from the Sellers) and deliver to the Seller Parties a consolidated and combined balance sheet of the Combined Business, together with a Schedule specifying each tax asset and tax liability (broken down by entity, type of tax and taxable period, and to an equivalent level of detail as that contained in items 16.10.2, 16.10.5, 1.16.123.38.18 and 1.16.123.38.20 in the electronic dataroom at http://datasite.merrillcorp.com/bidder/check.do?projectID=66299/) taken into account in any provision or reserve for tax therein, (the “Proposed Final Closing Balance

 

  

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Sheet”) as of the Closing Date.  In preparing the Proposed Final Closing Balance Sheet, the Purchaser shall be entitled to reasonable access to all relevant Books and Records and personnel of the Seller Parties and their respective Representatives.  The Proposed Final Closing Balance Sheet shall reflect the total assets, liabilities (including the outstanding balance of the Combined Business Debt (prior to the repayment of any of the Combined Business Debt on the Closing Date), including the RBS/SET Debt (the “Proposed Final Closing RBS/SET Debt”)) and combined equity (the “Proposed Final Closing Book Value” and, together with the Proposed Final Closing RBS/SET Debt, the “Proposed Final Closing Amount”) of the Combined Business as of 12:01 a.m. Eastern Standard Time on the Closing Date and shall be prepared in accordance with IFRS (except with respect to the Agreed Adjustments) and on a basis consistent with the Combined Business Reference Balance Sheet, including in accordance with Schedule 1.1(e).

 

(b) Each Seller Parent will have ninety (90) days following delivery of the Proposed Final Closing Balance Sheet during which to notify the Purchaser in writing (the “Notice of Objection”) of any objections to the preparation of the Proposed Final Closing Balance Sheet or the calculation of the Proposed Final Closing Amount, setting forth in reasonable detail the basis of its objections and, if practical, the U.S. dollar amount of each objection.  Matters as to which the Seller Parents may disagree shall be limited to whether the Proposed Final Closing Balance Sheet delivered by the Purchaser is accurate and was prepared in accordance with IFRS (except with respect to the Agreed Adjustments) and in a manner consistent with the Combined Business Reference Balance Sheet, including in accordance with Schedule 1.1(e), and Seller Parents shall not be entitled to submit disagreements on any other basis.  In reviewing the Proposed Final Closing Balance Sheet, each of the Seller Parents shall be entitled to reasonable access to all relevant books, records and personnel of the Purchaser (and any of its permitted assignees hereunder), Partnership and the Transferred Companies and their respective Representatives to the extent any Seller Parent reasonably requests such information and reasonable access to complete its review of the Proposed Final Closing Balance Sheet.  If the Seller Parents fail to deliver a Notice of Objection in accordance with this Section 2.7(b), the Proposed Final Closing Balance Sheet, together with the Purchaser’s calculation of the Proposed Final Closing Book Value and the Proposed Final Closing RBS/SET Debt reflected thereon, shall be conclusive and binding on all Parties and they shall become the “Final Closing Balance Sheet”, “Final Closing Book Value” and the “Final Closing RBS/SET Debt” (and the Final Closing Book Value and Final Closing RBS/SET Debt, collectively, the “Final Closing Amount”).  Matters included in the calculations in the Proposed Final Closing Balance Sheet to which no Seller Parent objects in any Seller Parent’s Notice of Objection shall be deemed accepted by the Seller Parents and shall not be subject to further dispute or review.  If any Seller Parent submits a Notice of Objection, then (i) for twenty (20) Business Days after the date upon which the Purchaser receives the Notice of Objection, the Purchaser and the Seller Parents will each use their commercially reasonable efforts to agree on the calculation of the Final Closing Amount and (ii) failing such agreement within twenty (20) Business Days of such notice, the matter shall be resolved in accordance with Section 2.7(c).

 

(c) If the Purchaser and the Seller Parents have not agreed on the Final Closing Amount within twenty (20) Business Days after delivery of a Notice of Objection, then the Purchaser and the Seller Parents, acting jointly, shall have the right to deliver notice to the other Parties of the intent to refer the matter for resolution to Ernst & Young LLP or such other international accounting firm as the parties shall otherwise agree (the “Accounting Expert”).

 

  

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Within ten (10) Business Days of the selection of the Accounting Expert, the Purchaser and the Seller Parents shall each deliver to the other Parties hereto and to the Accounting Expert a notice setting forth in reasonable detail their calculation of the Final Closing Amount.  The Parties shall instruct the Accounting Expert to consider only those items and amounts set forth in the Proposed Final Closing Balance Sheet to which any Seller Parent has disagreed pursuant to a Notice of Objection and for which the Purchaser and the Seller Parents have not resolved their disagreement.  Within fifteen (15) Business Days after receipt thereof, the Accounting Expert shall determine its best estimate of the calculation of the Final Closing Amount and provide a written description of the basis for such determination; provided, that if the Accounting Expert requests a hearing before making a determination, such hearing shall be held within twenty (20) Business Days of the Parties’ delivery of their respective calculation notices and the determination of the Final Closing Amount shall be made within ten (10) Business Days after such hearing.  The Accounting Expert’s determination of the Final Closing Amount shall be final and binding on each of the Parties hereto.  The fees and expenses of the Accounting Expert shall be paid pro rata among the Purchaser, Sempra Energy and RBS in accordance with the percentage of the disputed amounts awarded to the Purchaser or the Seller Parents as a result of the Accounting Expert’s decision.  Each Party shall bear the costs of its own counsel, witnesses (if any) and employees.

 

(d) If the Final Closing Book Value exceeds the Estimated Closing Book Value, the Purchaser shall pay, within two (2) Business Days of the determination of the Final Closing Amount, an amount equal to such excess by wire transfer in immediately available funds to the Partnership (on behalf of the sellers of the Transferred Holding Company Equity Interests and the Transferred Assets) and to such accounts as may be specified by the Partnership.  If the Final Closing Book Value is less than the Estimated Closing Book Value, the Partnership (on behalf of the sellers of the Transferred Holding Company Equity Interests and the Transferred Assets) shall (and Seller Parents shall cause the Partnership to) pay, within two (2) Business Days of the determination of the Final Closing Amount, an amount equal to such deficit to the Purchaser by wire transfer in immediately available funds to an account or accounts specified by the Purchaser.  Any payment in respect of the Final Closing Book Value made under this Section 2.7(d) shall be made by way of an adjustment to the consideration paid by each Party under Section 2.3, and such consideration shall be deemed to have been reduced or increased, as the case may be, by the amount of such payment and such adjustment shall be allocated in accordance with Section 10.3.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES

 

Except as set forth in the disclosure letter delivered to the Purchaser by the Seller Parties on or prior to the date hereof (the “Seller Disclosure Letter”), each of the Seller Parties makes to the Purchaser, as of the date hereof and, for purposes of Section 9.2(a) only, as of the Closing, each of the representations and warranties contained in this Article III; provided, that any representation and warranty made with respect to “such Seller Party” shall only be made by such Seller Party; provided, further that subject to Section 9.4(b), each of the representations and warranties of the Seller Parties contained in this Article III shall be deemed to have been made severally and not jointly and that the Parties agree that disclosure of any item in any section or

 

  

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subsection of the Seller Disclosure Letter shall also be deemed disclosed with respect to any other section or subsection to which the relevance of such item is readily apparent.

 

Section 3.1. Organization and Good Standing.

 

(a) Except as set forth on Schedule 3.1(a), such Seller Party is duly organized, validly existing and in good standing under the laws of the jurisdiction in which such entity is organized, with full corporate, partnership or similar power and authority to conduct its business as it is now being conducted.  Each of the Transferred Companies is duly organized, validly existing and in good standing under the laws of the jurisdiction in which such entity is organized.

 

(b) The Sellers and the SET Companies have full corporate power and authority to conduct the Combined Business as it is now being conducted and to own or use the properties and assets of the Transferred Companies and the Transferred Assets, except where the failure to have such power and authority would not have or reasonably be expected to have a Combined Business Material Adverse Effect.

 

(c) The Seller Parties have made available to the Purchaser complete and correct copies of the Governing Documents of each Transferred Company, each as amended, supplemented or otherwise modified through and including the date hereof.

 

Section 3.2. Enforceability; Authority; No Conflict.

 

(a) This Agreement constitutes the legal, valid and binding obligation of such Seller Party enforceable against such Seller Party in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer or similar laws affecting the enforcement of creditors’ rights generally and general principles of equity (whether considered in a proceeding at law or in equity).  If and to the extent applicable, upon the execution and delivery by such Seller Party and any of its Subsidiaries of the Related Agreements to which each is a party, each of such Related Agreements will constitute the legal, valid and binding obligation of such Seller Party and such respective Subsidiaries, enforceable against each in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer or similar laws affecting the enforcement of creditors’ rights generally and general principles of equity (whether considered in a proceeding at law or in equity).  Such Seller Party and its Subsidiaries has the requisite right, power and authority to execute and deliver this Agreement and each of the Related Agreements to which each is a party, and to perform their obligations and consummate the transactions contemplated hereby and thereby, and such action has been duly authorized by all necessary corporate action.  No Default or Event of Default (as such terms are defined in the BNP Facility) has occurred or is continuing under the BNP Facility (other than as a result of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby).

 

(b) The execution, delivery and performance by such Seller Party of this Agreement or the execution and delivery by such Seller Party or any of its Subsidiaries of any of the Related Agreements to which each is a party, and the consummation of the transactions contemplated hereby and thereby, does not and will not:  (i) violate any provision of such Seller

 

  

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Party’s or any of its respective Subsidiaries’ Governing Documents, or any resolution adopted by its board of directors or shareholders (or similar management group); (ii) assuming the receipt of all approvals set forth in Schedules 3.2(c) and 4.2(c), violate or conflict with any provisions of any Legal Requirements or any Order to which such Seller Party, its Subsidiaries or the Transferred Assets may be subject; (iii) violate, conflict with, result in a breach of, constitute (with due notice or lapse of time or both) a default or cause any obligation, penalty or premium (including any consideration, royalties or other amounts to any Third Party in excess of those amounts owed immediately prior to the Closing) to arise or accrue under any Contract to which a Transferred Company is a party, by which any Transferred Company is bound or to which a Transferred Company’s assets are subject, such Seller Party or any of its Subsidiaries is a party or by which it or any of its Subsidiaries is bound or to which any of such Seller Party’s or any of its Subsidiaries’ respective properties or assets, or the Transferred Assets, is subject; or (iv) result in the creation or imposition of any Encumbrance except Permitted Encumbrances upon any of the properties or assets of the Combined Business (including the Transferred Assets), including any non-compete, exclusivity obligation or other restriction on the operation of the Combined Business, except, with respect to clauses (ii), (iii) and (iv) above, as would not have and would not reasonably be expected to have a Combined Business Material Adverse Effect.  Without limiting the generality of the foregoing, each Seller Parent has waived any provision of the Partnership Agreement (including Section 16.3 thereof) that would restrict or be inconsistent with the transactions contemplated hereby.

 

(c) Except as set forth in Schedule 3.2(c), no Consent, approval, authorization of, declaration, filing, or registration with, any Governmental Body (including any Governmental Authorization or Mandatory Governmental Approval), stockholder or other Person (whether a Third Party or otherwise) is required to be made or obtained by such Seller Party or any of its Subsidiaries (including the Transferred Companies) in connection with such Seller Party’s execution, delivery, and performance of this Agreement and, as applicable, such Seller’s or its Subsidiaries’, execution and delivery of the Related Agreements or the consummation of the transactions contemplated hereby and thereby, except any Consent, approval, authorization of, declaration, filing, or registration the failure of which to make or obtain would not reasonably be expected to have a material adverse effect on the ability of the Combined Business to conduct the Combined Core Businesses.

 

Section 3.3. Transferred Equity Interests; Title; Sufficiency of Assets.

 

(a) Sellers collectively own, directly or indirectly, all of the outstanding Transferred Holding Company Equity Interests, and (except as required by applicable Legal Requirements with respect to the nominal holders set forth on Schedule 3.3(a)) the Transferred Holding Companies collectively own, directly or indirectly, all of the outstanding Transferred Equity Interests other than the Transferred Holding Company Equity Interests.  After giving effect to the Reorganization, the Transferred Equity Interests will represent, collectively, all of the issued and outstanding Equity Interests of the Transferred Companies and there are no other Equity Interests or Equity Commitments issued by the Transferred Companies.  Except as otherwise indicated on Schedule 3.3(a), the Transferred Equity Interests: (i) have been duly authorized and are validly issued and outstanding, and, if applicable, are fully paid and nonassessable, (ii) were issued in compliance with all applicable securities laws, (iii) were not issued in breach of any Equity Commitments, and (iv) except as required by applicable Legal

 

  

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Requirements with respect to the nominal holders set forth on Schedule 3.3(a), are held of record and owned beneficially by the Sellers and/or one or more of the Sellers’ Subsidiaries.  Except as set forth on Schedule 3.3(a), (A) no Contracts exist with respect to the voting or transfer of any of the Transferred Equity Interests, (B) no Person is obligated to redeem or otherwise acquire any of the Transferred Equity Interests and (C) the Sellers or one or more of the Sellers’ Subsidiaries, as the case may be, have good and marketable title to the Transferred Equity Interests set forth next to its name on Schedule 3.3(a), in each case free and clear of all Encumbrances except as set forth on Schedule 3.3(a) and for Encumbrances in favor of the Sellers or their Affiliates that will be discharged prior to the Closing Date.

 

(b) (i)  Sellers collectively have good and marketable title to or have valid Leases, licenses or rights to use all of the Transferred Assets, free and clear of any and all Encumbrances except for Permitted Encumbrances and for Encumbrances in favor of the Sellers or its Affiliates that will be discharged prior to the Closing Date.  The Transferred Companies have good and marketable title to or have valid Leases, licenses or rights to use all of their assets, properties and rights, free and clear of any and all Encumbrances except for Permitted Encumbrances, Encumbrances in favor of the Sellers or its Affiliates that will be discharged prior to the Closing Date and Encumbrances that are not material to the Combined Business.

 

(ii) There are no Equity Interests or Equity Commitments included in the Transferred Assets or the Assumed Liabilities (including Equity Interests held by the Transferred Companies other than the Transferred Equity Interests), except as set forth on Schedule 3.3(b)(ii).  The Transferred Companies do not own any real property and are not party to any Real Estate Leases or Warehouse Agreements other than the Combined Business Real Estate Leases and Combined Business Warehouse Agreements and no interest in real property other than the Combined Business Real Estate Leases and Combined Business Warehouse Agreements is included in the Transferred Assets or Assumed Liabilities.

 

(iii) All Commodities Transactions reflected on the Combined Business Reference Balance Sheet and the Final Closing Balance Sheet shall have been risk managed by employees of or engaged in the Combined Business and such Commodity Transactions will include only transactions of the type that would reasonably be expected to be managed by such employees.

 

(c) Except as set forth on Schedule 3.3(c), the Transferred Assets, including for the avoidance of doubt those that are not assigned or transferred as provided in Section 2.2(c), Section 7.11 or any Related Agreement, and the assets, properties and rights of the Transferred Companies conveyed to the Purchaser upon acquisition of the Transferred Equity Interests (other than Cash and access to credit), together with those assets, properties or rights to be provided to the Purchaser or the Transferred Companies pursuant to Section 2.2(c), Section 7.11 or the Related Agreements: (i) will constitute all of the assets, properties and rights that are necessary to conduct the Combined Business immediately following the Closing in all material respects as conducted on the date of this Agreement, except as is otherwise the result of the conduct of the Combined Business in the Ordinary Course of Business following the date hereof or otherwise in compliance with this Agreement; and (ii) include all of the assets, properties and rights reflected on the Combined Business Reference Balance Sheet, except as

 

  

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such assets, properties and rights have changed after the date hereof in accordance with the terms of this Agreement and as reflected on the Final Closing Balance Sheet.

 

Section 3.4. No Combined Business Material Adverse Effect.  Except as described in Schedule 3.4, (a) since November 30, 2009, and through the date hereof, the Partnership and the SET Companies, as applicable, have conducted the Combined Business in the Ordinary Course of Business and, (b) since November 30, 2009, and through the date hereof, there has not been any event or circumstance in respect of the Combined Business which has had or would reasonably be expected to have a Combined Business Material Adverse Effect.

 

Section 3.5. Employee Benefits.

 

(a) The term “Employee Plan” as used herein refers to each “employee benefit plan” (within the meaning of Section 3(3) of Employee Retirement Income Security Act of 1974, as amended from time to time, as well as any rules and regulations promulgated thereunder (“ERISA”)), and all retirement benefit plans, equity, equity-based or equity incentive, severance, employment, change-in-control, collective bargaining, bonus, incentive, retention, compensation, deferred compensation, employee loan, profit sharing, consulting, insurance coverage, disability benefit, medical benefit, supplemental unemployment benefit, vacation benefit, personal time off (PTO) and all other material employee benefit plans, agreements, programs, policies or other arrangements, whether written or oral, (i) that are sponsored or maintained by the Sellers, the Transferred Companies or any of their Subsidiaries, or to which the Seller Parties, the Transferred Companies or any of their Subsidiaries has an obligation to contribute, and in which (A) any current or former employee of the Transferred Companies or (B) one or more of the Transferred Asset Employees participates and/or (ii) with respect to which the Transferred Companies has or may have any Liability.  The term “Seller Plan” as used herein refers to an Employee Plan sponsored by any Seller Party or an Affiliate of any Seller Party other than the Transferred Companies.  Schedule 3.5(a)(i) contains a true and complete list of each material Employee Plan and in each case identifies the sponsoring entity thereof.  With respect to each material Employee Plan, the Seller Parties have provided to the Purchaser a copy or a description thereof.  No Transferred Company has incurred or reasonably expects to incur any liability under Title I or IV of ERISA or the penalty, excise tax or joint and several liability provisions of Sections 406, 409, 502(i), 502(l), 4069 or 4212(c) of ERISA or Sections 4971, 4975 or 4976 of the Code with respect to any Employee Plan.  No Employee Plan is or has been subject to Title IV of ERISA or Section 412 of the Code.  Neither the Partnership, the Transferred Companies nor any of their ERISA Affiliates contributes, or has contributed in the prior six (6) years, to a “multiemployer plan” (as such term is defined in Section 3(37) of ERISA) or a “multiple employer plan” (as described in Section 413(c) of the Code).  Except as disclosed on Schedule 3.5(a)(ii), none of the Seller Parties, the Transferred Companies or any of their Subsidiaries is obligated to provide any post-employment health, other welfare benefits or unfunded liabilities to any Combined Business Employees (or dependents or beneficiaries thereof) except as otherwise required by the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, or any other Legal Requirement.  Except as disclosed on Schedule 3.5(a)(iii), neither the Partnership nor any of the Transferred Companies has participated in any defined benefit pension plans to which Section 75 of the UK Pensions Act 1995 could apply, and no contribution notices have been issued by the UK Pensions Regulator in respect of any Employee Plan.  The FSA has approved the compensation arrangements for the Combined Business

 

  

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Employees as detailed on Schedule 3.5(a)(iv), these arrangements have been or are in the course of being implemented in accordance with such approvals and all necessary consents of any Combined Business Employee have been obtained in connection with such implementation or potential implementation.

 

(b) (i) Each Employee Plan has been established and administered in all material respects in accordance with its terms and in substantial compliance with the applicable provisions of Legal Requirements (including ERISA and the Code), except where the failure to so comply would not have or reasonably be expected to have a Combined Business Material Adverse Effect; and (ii) except as set forth on Schedule 3.5(b)(ii), each Employee Plan which is intended to be a “qualified plan” within the meaning of Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service as to its qualification, and to the Knowledge of the Seller Parties there is no existing fact or circumstance that could reasonably be expected to cause the revocation of such letter or the loss of such qualification.

 

(c) Except as disclosed on Schedule 3.5(c), with respect to the Combined Business Employees, no material Proceedings (other than routine claims for benefits) are pending or, to the Knowledge of the Seller Parties, threatened.

 

(d) Except as disclosed on Schedule 3.5(d), none of the Seller Parties, the Transferred Companies or any of their respective Subsidiaries maintains any plan, program or arrangement or is a party to any Contract that provides any benefits or provides for payments to any Combined Business Employee, based on or measured by the value of, any equity security of, or interest in, the Seller Parties, the Transferred Companies or any of their respective Subsidiaries.

 

(e) Except as disclosed on Schedule 3.5(e), with respect to the Combined Business Employees, the execution of this Agreement or the consummation of the transactions contemplated by this Agreement (whether alone or in connection with any other event(s)), will not result in: (i) any obligation to pay severance or increase the amount of severance pay upon any termination of employment, (ii) acceleration of the time of payment or vesting, or any payment (through a grantor trust or otherwise) of any compensation or benefits, or an increase of the amount payable, or (iii) any limitation or restriction on the right of the Purchaser or any Affiliate of the Purchaser to merge, amend or terminate any of the Employee Plans.

 

(f) Except as disclosed on Schedule 3.5(f), (i) none of the Partnership, the Transferred Companies or their respective Subsidiaries are party to any collective bargaining agreement or other Contract or agreement with any labor organization or other representative of any of the Combined Business Employees, nor has any labor organization or group of Combined Business Employees made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions seeking a representation currently pending; and (ii) none of the Combined Business Employees is represented by any labor organization nor is any action on behalf of any Combined Business Employee pending or, to the Knowledge of the Seller Parties, threatened against any of the Partnership, the Transferred Companies or their Subsidiaries which would have or reasonably be expected to have a Combined Business Material Adverse Effect.  There are no organizing activities, strikes, work stoppages, slowdowns, lockouts, material arbitrations or material grievances or other material

 

  

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labor disputes pending or to the Knowledge of the Seller Parties, threatened against or involving the Transferred Companies.  The Partnership, the Transferred Companies and the employer of any Combined Business Employees are in compliance in all material respects with all Legal Requirements applicable to Combined Business Employees with respect to employment and employment practices, terms and conditions of employment, classification of workers, wages and hours and occupational safety and health.

 

(g) As soon as practicable following the date hereof, but in no event later than the Closing Date, the Seller Parties shall provide the Purchaser a schedule that sets forth for each Combined Business Employee the amount of unused vacation, paid time off and sick leave accrued by the Partnership, the Transferred Companies or the employer of such Combined Business Employee as of the date on which such schedule is provided.

 

(h) With respect to any Combined Business Employee, (i) each nonqualified deferred compensation plan (as defined under Sections 409A or 457A of the Code) and each award thereunder satisfies, in form and operation, the applicable requirements of Sections 409A or 457A of the Code, respectively; and (ii) no such plan or  any awards thereunder would subject any Combined Business Employee to Tax pursuant to Sections 409A(a)(1) or 457A(c) of the Code as a result of participation in any such plan or holding of any award thereunder.  None of the Seller Parties, the Transferred Companies or any of their respective Subsidiaries is required to gross up or reimburse a payment to any Combined Business Employee for Tax incurred under Sections 409A or 457A of the Code.

 

(i) Schedule 3.5(i) separately discloses each material bonus, incentive, retention, change-in-control, severance and deferred compensation agreement, program or award between any of the Seller Parties, the Transferred Companies or any of their respective Subsidiaries and any Combined Business Employee entered into as of the date hereof.  The Seller Parties shall update Schedule 3.5(i) to include any such arrangements which are not material prior to the Closing Date.

 

(j) With respect to any Person who provides personal services to the Seller Parties, the Transferred Companies or any of their respective Subsidiaries in respect of the Combined Business, (1) the Transferred Companies or their respective Subsidiaries, as applicable, have classified each service provider as either an “employee” or an “independent contractor” and has determined that it is more likely than not that such characterization would be sustained if challenged; (2) such classification has been consistent among service providers who provide similar services and are otherwise similarly situated; (3) all such Persons have been properly treated under all Employee Plans; and (4) there are no complaints, actions, claims or proceedings pending or, to the Knowledge of the Seller Parties, threatened to be brought by any such Person or any Governmental Body to reclassify such Person.

 

Section 3.6. Compliance with Legal Requirements; Governmental Authorizations.  Except as set forth on Schedule 3.6:

 

(a) To the Knowledge of the Seller Parties, the Partnership, the SET Companies and, in the case of the RBS Related Assets, RBS, are not and have not been in violation of, or failed to comply with, any Legal Requirements (which term for this purpose shall

 

  

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not include Environmental Laws, which are addressed in Section 3.10, or Legal Requirements relating to Taxes) applicable to the ownership or operation of the Combined Business, except any such violations or failure that would not have or reasonably be expected to have a material adverse effect on the ability of the Combined Business to conduct the Combined Core Business.

 

(b) To the Knowledge of the Seller Parties, as of the date hereof, none of the Partnership,  SET Companies or, in the case of the RBS Related Assets, RBS, has received any written notice or other notice from any Governmental Body regarding any actual, alleged, possible or potential violation of, or failure to comply with, any Legal Requirement (which term for this purpose shall not include Environmental Laws, which are addressed in Section 3.10, or Legal Requirements relating to Taxes) applicable to it in connection with the conduct or operation of the Combined Business, except any such violations or failure to comply that would not have or reasonably be expected to have a material adverse effect on the ability of the Combined Business to conduct the Combined Core Business.

 

(c) Schedule 3.6(c)(i) contains a complete and accurate list of each material Governmental Authorization required for the conduct of the Combined Business as conducted on the date hereof.  Each suchGovernmental Authorization:  (i) has been issued to a Transferred Company, except as set forth on Schedule 3.6(c)(ii), and is in full force and effect except where the failure to be so issued and in full force and effect would not have or reasonably be expected to have a material adverse effect on the ability of the Combined Business to conduct the Combined Core Business, (ii) is not subject to any pending or, to the Knowledge of such Seller Party, threatened Proceeding for the purpose of revoking or amending any such Governmental Authorization, except where such revocation or amendment has not had and would not reasonably be expected to have a material adverse effect on the ability of the Combined Business to conduct the Combined Core Business; and (iii) as of the date hereof, none of the Partnership, the SET Companies or, in the case of the RBS Related Assets, RBS, have received written notice or, to the Knowledge of such Seller Party, other notice from any applicable Governmental Body that (A) any such existing Governmental Authorization will be revoked or (B) any pending application for any such new Governmental Authorization or renewal of any existing Governmental Authorization will be denied except, in each case, where such revocation or denial has not had and would not reasonably be expected to have a material adverse effect on the ability of the Combined Business to conduct the Combined Core Business.

 

Section 3.7. Legal Proceedings; Orders.

 

(a) Except as set forth in Schedule 3.7(a), there is no pending or, to the Knowledge of such Seller Party, threatened Proceeding by or against the Seller Parties or the SET Companies relating to the Combined Business that would have or would reasonably be expected to have a Combined Business Material Adverse Effect or that otherwise would reasonably be expected to materially delay the transactions contemplated by this Agreement.

 

(b) Except as set forth in Schedule 3.7(b), there is no Order in regard to the Combined Business (other than orders of general applicability not specific to any of the Partnership or the SET Companies) that would have or would reasonably be expected to have a Combined Business Material Adverse Effect or that otherwise would reasonably be expected to materially delay the transactions contemplated by this Agreement.

 

  

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(c) Schedule 3.7(c) sets forth a true and complete list as of the date hereof of all payment disputes with counterparties under Trading Agreements reflected on the Combined Business Reference Balance Sheet for which the matter under dispute has a value of $5,000,000 or greater and in respect of which a written demand for payment has been received.

 

Section 3.8. Taxes.  Except as set forth on Schedule 3.8:

 

(a) The Sellers, their Subsidiaries and all of the Transferred Companies have filed or caused to be filed all material Tax Returns that are or were required to be filed by the Transferred Companies, either separately or as a member of a group of corporations, pursuant to applicable Legal Requirements, and all such Tax Returns are complete and correct in all material respects to the extent they relate to the Transferred Companies.  Such Seller, its Subsidiaries and the Transferred Companies have paid, or made provisions for the payment of, all material Taxes that have or may have become due pursuant to such Tax Returns or otherwise, except such Taxes, if any, as are being contested in good faith and except such Taxes that do not relate to any of the Transferred Companies.

 

(b) No Governmental Body is operating any special arrangement (being an arrangement which is not based on relevant legislation or any published practice) in relation to the Tax affairs of any Transferred Company.

 

(c) There are no Tax liens, charges or powers of sale in respect of Taxes upon (i) any of the assets or properties of the Transferred Companies or (ii) the Transferred Assets, other than with respect to Taxes not yet due and payable or Taxes being contested in good faith by appropriate proceedings.

 

(d) There is no tax sharing, tax allocation, indemnity, or other agreement that will require any payment by any Transferred Company to any Person that is not a Transferred Company after the Closing Date except as reflected on the Estimated Closing Balance Sheet.

 

(e) None of the Transferred Companies is or has ever been a member of a group of companies for any UK Tax purpose where such group also includes RBS or any of its Subsidiaries or Affiliates.

 

(f) No deficiencies for any Taxes have been proposed or assessed in writing against or with respect to any Taxes or Tax Returns of the Transferred Companies.  There are no outstanding disputes, investigations, enquiries, audits or assessments relating to any Taxes of the Transferred Companies and no written notice of any proposed investigation, enquiry, audit or assessment has been received by or in respect of the Transferred Companies in the last twelve (12) months.

 

(g) None of the Sellers, its Subsidiaries or the Transferred Companies has waived any statute of limitations in respect to the Transferred Companies or agreed to any extension of time with respect to a Tax assessment or deficiency related to the Transferred Companies.

 

(h) The Transferred Companies have complied with their obligations under (i) U.S. Treasury regulation section 1.6011-4 in respect of “reportable transactions,” (ii) Part 7 of

 

  

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the United Kingdom Finance Act 2004 and (iii) any similar or equivalent provision of any other state, local or foreign law and Schedule 3.8 contains a list of all such transactions or arrangements that have been reported to applicable tax authorities.

 

(i) None of the Transferred Companies has been either a “distributing corporation” or a “controlled corporation” in a distribution occurring during the last two years in which the parties to such distribution treated the distribution as one to which Section 355 of the Code is applicable.

 

(j) No material closing agreement pursuant to Section 7121 of the Code (or any similar provision of any state, local or foreign law) has been entered into by or with respect to any of the Transferred Companies.

 

(k) None of the Transferred Companies will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any period (or portion thereof) ending after the Closing Date (where such inclusion or exclusion is not offset by a matching inclusion of an item of deduction or a matching exclusion of an item of income, respectively) as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date, (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign  income Tax Law) executed on or prior to the Closing Date, (iii) installment sale or open transaction disposition made on or prior to the Closing Date, or (iv) prepaid amount received on or prior to the Closing Date, in each case, not including any items reported on the Estimated Closing Balance Sheet.

 

(l) The execution and delivery of this Agreement or any of the Related Agreements by the Sellers or any of their respective Subsidiaries, or the consummation of the transactions contemplated hereby, will not result in any Tax becoming payable by any Transferred Company as a result of such entity ceasing to be a member of a group as defined from time to time for any Tax purpose.

 

(m) The Transferred Companies have in their records all necessary material documentation, including material exemption certificates, to support any material claimed “sale for resale” exemptions from sales taxes and to support material exemptions from VAT, Climate Change Levy, transfer and other indirect Taxes.

 

(n) All Transferred Companies are treated as “disregarded entities” within the meaning of sections 301.7701-1, 301.7701-2 and 301.7701-3 of the regulations promulgated by the U.S. Department of the Treasury pursuant to the Code.

 

(o) Except for such failures to satisfy, maintain or retain as are de minimis, each of the Transferred Companies has satisfied all of the statutory and procedural requirements and has maintained and retained all appropriate or necessary documents and records to support, justify or defend its position as regards any material liabilities to customs and excise duties in respect of physical movements and supplies made to or by them.

 

Section 3.9. Brokers or Finders.  None of such Seller Party or Subsidiary of such Seller Party or any of their Representatives has incurred any obligation or liability,

 

  

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contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payments in connection with the transactions contemplated hereby for which the Purchaser or the Transferred Companies could be liable.

 

Section 3.10. Environmental Compliance and Liability.  Except as set forth on Schedule 3.10 or as would not have or reasonably be expected to have a Combined Business Material Adverse Effect:

 

(a) (i) the Transferred Companies are, and for the last five years were, and insofar as it affects the Combined Business, such Seller Party and the SET Companies are, and during the term of applicable statutes of limitations at all prior times were, in compliance with all applicable Environmental Laws, (ii) such Seller Party and the SET Companies, insofar as it affects the Combined Business, possess and are in compliance with all Governmental Authorizations under or relating to any material Environmental Law (the “Environmental Permits”), (iii) all applications necessary to renew or obtain any Environmental Permit have been made in a timely fashion so as to allow such Seller Party and the SET Companies to continue to operate in compliance with all applicable Environmental Laws as the Combined Business is presently conducted, (iv) to the Knowledge of the Seller Parties, the SET Companies do not expect any new or renewed Environmental Permits to include any terms or conditions that would reasonably be expected to have an adverse impact on the Combined Business, and (v) the Seller Parties and the SET Companies, insofar as it affects the Combined Business, and the Transferred Companies are in compliance with all applicable limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in any Environmental Permit, applicable Environmental Laws or contained in any Order issued, entered, promulgated or approved thereunder by any Governmental Body.

 

(b) To the Knowledge of the Seller Parties, no Hazardous Material is present in a condition that would reasonably be expected to result in a Liability under Environmental Law at, and no Hazardous Material has been disposed of, arranged to be disposed of, released or threatened to be released at or from, any of the properties or facilities currently or formerly owned, leased or operated by any of the Transferred Companies or otherwise included in the Transferred Assets in a manner or condition that would reasonably be expected to result in Liability to it under or relating to any Environmental Law.  None of the Transferred Companies, nor such Seller Party nor any of its Subsidiaries insofar as it affects the Combined Business, has at any other location disposed of, arranged to dispose of, released or threatened to release any Hazardous Material in a manner or condition that, to the Knowledge of such Seller Party, would reasonably be expected to result in Liability to it under or relating to any Environmental Law.

 

(c) None of the Transferred Companies, such Seller Party or any of its Subsidiaries insofar as it would adversely affect the Combined Business, has assumed or provided, and no Contract that would be a Transferred Asset contains, any express environmental indemnity for the benefit of any other Person under or relating to any Environmental Laws, other than indemnities that otherwise would arise as a matter of Legal Requirement in any event.

 

  

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Section 3.11. Partnership Financial Statements; No Undisclosed Liabilities.

 

(a) The Seller Parties have made available to the Purchaser true and complete copies of the Partnership Financial Statements and the Combined Business Reference Balance Sheet.  The Partnership Financial Statements and the Combined Business Reference Balance Sheet have been prepared in conformity with IFRS (except in each case as described in the notes to the Partnership Financial Statements or the Combined Business Reference Balance Sheet) and fairly present, in all material respects, in the case of the Partnership Financial Statements, the consolidated financial position and results of operations of the Partnership and the Partnership’s Subsidiaries, and in the case of the Combined Business Reference Balance Sheet, the combined financial position of the Combined Business, in each case, as of the respective dates thereof and for the respective periods indicated therein (subject in the case of the unaudited statements and the Combined Business Reference Balance Sheet, to normal year-end audit adjustments, which are not, in the aggregate, material in nature or amount to the Combined Business, taken as a whole, and except for the absence of any footnotes).

 

(b) (i) The Combined Business has no Liabilities that would be required by IFRS and the methodology set forth on Schedule 1.1(e) to be reflected or reserved against on the Combined Business Reference Balance Sheet and (ii) to the Knowledge of the Seller Parties, the Transferred Companies have no Liabilities whether or not required by IFRS or the methodologies set forth on Schedule 1.1(e) to be reflected or reserved against on the Combined Business Reference Balance Sheet, except (A) as reflected or reserved against on the Combined Business Reference Balance Sheet (or the notes thereto), (B) as set forth on Schedule 3.11(b), or (C) as incurred in the Ordinary Course of Business since November 30, 2009.

 

Section 3.12. Contracts.

 

(a) Except (i) as set forth on Schedule 3.12(a) and (ii) for multiple agreements that are substantially similar to a standard form, in which case only such form and any material additions to, elections with respect to or deviations from such form have been made available, the Seller Parties have made available to the Purchaser accurate and complete execution copies of each such Company Contract in existence as of the date hereof.

 

(b) For purposes of this Agreement, “Company Contract” shall mean any of the following Contracts (x) to which any of the Transferred Companies is a party or by which any of the Transferred Companies (or any of their respective businesses, assets or properties) is bound or (y) constituting an Assigned Contract or a Contract included in the RBS Related Assets:

 

(i) Contracts for any outstanding Indebtedness exceeding $50,000,000 individually;

 

(ii) any (A) material Contract of surety, guarantee or indemnification by a Seller Party, any Transferred Company or any other SET Company entered into in connection with a disposition of material assets, properties or rights, or

 

  

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otherwise in a manner outside of the Ordinary Course of Business or (B) general partnership interest;

 

(iii) any Contract containing a covenant not to compete with respect to the Combined Business or any Transferred Company that is currently in full force and effect;

 

(iv) any Affiliate Agreement that will survive the Closing;

 

(v) any material Contract involving the license, or grant of rights, to the Transferred Companies of any Intellectual Property owned by a Third Party (other than for commercially available, off-the-shelf software), including as set forth on Schedule 3.12(b)(v), and any Assigned IP Contract;

 

(vi) any Contract (A) that has historically or could reasonably be expected to result in the payment to any Combined Business Employee of total annual compensation in excess of $750,000 or annual bonus compensation in excess of $300,000 or (B) committing to give any Combined Business Employee the right or possibility to earn a share of the Net Trading Revenues (or other revenue, income or margin metric) generated by such employee (directly or through the results of a group of employees);

 

(vii) other than the Trading Agreements, any Contract which may not be terminated by the Partnership or the SET Companies without penalty on 90 days or fewer notice and which could reasonably be expected either to (A) commit the Partnership or any SET Company to aggregate expenditures of more than $5,000,000 in any calendar year or (B) give rise to anticipated receipts of more than $5,000,000 in any calendar year;

 

(viii) any written Contract (A) in respect of an equity investment or relating to rights and obligations with respect to a formal written partnership agreement or a material contractual joint venture or (B) pursuant to which a Commodity Transaction, or a Contract to effect a Commodity Transaction was transferred to any Transferred Company by a Seller Party or an Affiliate of a Seller Party;

 

(ix) other than customary provisions included in Trading Agreements, agreements with respect to the sharing, allocation or indemnities of Taxes or Tax costs that will survive the Closing (other than any agreements which are described in Sections 3.12(b)(i) – (vii) or 3.12(b)(xii) – (xviii), or would be so described in Section 3.12(b)(i) but for the $50,000,000 threshold, or would be so described in Section 3.12(b)(vii) but for the limitations in Section 3.12(b)(vii)(A) or (B));

 

(x) other than in the Ordinary Course of Business, agreements for the purchase or sale of any material assets, property or rights or for the receipt or grant of any options or preferential rights to purchase any material assets, property or rights;

 

  

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(xi) documents granting any power of attorney with respect to the material affairs of any Transferred Company (except as would not survive the Closing);

 

(xii) other than those that are not material, any Contracts evidencing settlement of litigation with outstanding obligations;

 

(xiii) tolling (financial and/or physical), load serving or energy/asset management Contracts;

 

(xiv) any Contract with respect to a Commodity Transaction (A) for which there are obligations that extend beyond sixty (60) months following the date hereof, (B) would have a mark-to-market value, based on then-current prices, the absolute value of which is in excess of $50,000,000, or (C) which has a notional exposure of greater than $100,000,000 or, if there are fewer than 100 such Contracts, the 100 Contracts having the greatest notional exposure, in each case as of February 9, 2010.  For these purposes, “then current prices” means current prices (which, for purpose of the representations in this Section 3.12(b)(xiv) only, were determined as of the close of business on February 8, 2010), and in the case of (1) a physical Commodity Transaction that provides for a fixed purchase or sales price, the U.S. dollar present value of such price, (2) a physical Commodity Transaction that provides for an index purchase or sales price, the U.S. dollar present value of the forward prices for such index during the term of such transaction that are utilized by such Seller Party or SET Company, as applicable, to determine the mark-to-market valuation for such transaction, and (3) a Commodity Transaction that is a derivative, the net settlement amount for each settlement date during the term of such transaction, based on the U.S. dollar present value of the applicable forward prices during the term of such transaction that are utilized such Seller Party or SET Company, as applicable, to determine the mark-to-market valuation for such transaction;

 

(xv) all storage or charterer (time or voyage) Contracts or any transport Contracts having demand charges, in any case which are greater than fifty million dollars ($50,000,000);

 

(xvi) all Master Agreements with, as of the date hereof, the 25 largest counterparties measured by the total number of ticketed Commodity Transactions;

 

(xvii) (A) any ownership interest in real property or Real Estate Leases (other than de minimis Real Estate Leases for office space), and (B) any Contracts for any warehouse services, logistics services or other similar Contracts in respect of storage and handling cargo at warehouse facilities where such Contract covers ongoing services for the operations of a warehouse facility (and for the avoidance of doubt, excluding ad hoc or spot Contracts for the same or similar services entered into form time to time, but including all Combined Business Warehouse Agreements) (each Contract under (B), a “Warehouse Agreement”);

 

  

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(xviii) any material amendments, modifications, extensions or renewals of any of the foregoing or any exercise of any option in respect of any of the foregoing.

 

(c) Except as set forth in Schedule 3.12(c), to the Knowledge of each Seller Party:

 

(i) each material Company Contract and material Trading Agreement included in the Transferred Assets or by which any Transferred Company is bound as of the Closing will as of the Closing be in full force and effect and will as of the Closing be a valid and enforceable obligation in accordance with its terms of the SET Companies or the Seller Parties, as applicable, that is a party thereto except (A) as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer or similar laws affecting the enforcement of creditors’ rights generally and general principles of equity (whether considered in a proceeding at law or in equity) and (B) any failure to be in full force and effect, valid or enforceable, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the Combined Business taken as a whole;

 

(ii) no event or condition exists that constitutes or, after notice or a lapse of time or both, will constitute, a default on the part of the SET Companies or the Seller Parties, as applicable, under any such material Company Contract or material Trading Agreement included in the Transferred Assets or by which any Transferred Company is bound as of the Closing, except for any default as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Combined Business taken as a whole;

 

(iii) with respect to Company Contracts for outstanding Indebtedness exceeding $50,000,000 individually, there are no material prepayment penalties; and

 

(iv) Except as set forth on Schedule 3.12(c)(iv), each Company Contract that is a Real Estate Lease is a valid and existing leasehold interest, free and clear of all Encumbrances (except Permitted Encumbrances).

 

(d) Except for such of the following matters as, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the ability of the Purchaser and the Transferred Companies to conduct the Combined Business taken as a whole, and except for the matters set forth on Schedule 3.12(d), to the Knowledge of such Seller Party (i) there are no pending renegotiations of any amounts paid or payable under any Company Contracts or material Trading Agreements included in the Transferred Assets or by which any Transferred Company is bound as of the Closing with any Person having the contractual or statutory right to require such renegotiation and (ii) no such Person has made written demand for such renegotiation.

 

  

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(e) Except as set forth in Schedule 3.12(e), as of the Closing, (i) the relevant Transferred Company or, in respect of the Assigned Trading Agreements, RBS, the Partnership or any of their respective Subsidiaries, as the case may be, will have a perfected security interest in any collateral pledged to it under the Trading Agreements, and (ii) no collateral pledged to any counterparty in respect of the Combined Business will secure any Liabilities retained by the Seller Parties following the Closing other than in connection with the Commingled Trades (as defined in the Collateralized TRS) under the Collateralized TRS.

 

(f) The Commodity Transactions of the Combined Business identified by the Seller Parties for review by Purchaser prior to the date hereof were selected in accordance with the sampling methodology set forth on Schedule 3.12(f).

 

(g) With respect to time charters, all of the vessels set forth on Schedule 3.12(g) are chartered or subchartered to, or as appropriate sublet by, a Transferred Company.  With respect to all other vessels used in the Combined Business, such vessels are chartered or subchartered to, or as appropriate sublet by, a Transferred Company.

 

Section 3.13. Affiliate Agreements.  Schedule 3.13 sets forth a true, correct and complete list of all written Contracts (excluding Trading Agreements and any Contract relating to RBS/SET Debt) to which any Transferred Company is a party or that are included in the Transferred Assets, in each case, to which the Sellers or any director, officer, member or other Subsidiary or Affiliate of the Seller Parties (other than the Transferred Companies) is a party (each referred to herein as an “Affiliate Agreement” and collectively the “Affiliate Agreements”) that are in effect on the date hereof.  Except as indicated on Schedule 3.13, each of the Affiliate Agreements was entered into on an arm’s length basis and on terms and conditions that in the aggregate were no less favorable to the Partnership, RBS (in the case of Contracts that are included in RBS Related Assets) or any SET Company (in the case of Assigned Contracts) or any Transferred Company than could have been obtained from unrelated Persons.

 

Section 3.14. Insurance.

 

(a) Schedule 3.14(a) sets forth a true and complete list of all current policies of property and casualty insurance (including liability, errors or omissions, and business interruption insurance) insuring the properties, assets, employees, members and/or operations of the Combined Business (collectively, the “Policies”), along with the entities covered by such Policies, aggregate coverage amount and type of each of the Policies.

 

(b) All Policies are in full force and effect and all premiums with respect to Policies covering all periods up to and including the Closing Date have been paid and no notice of cancellation or termination has been received with respect to any such Policy.  None of the Seller Parties or the SET Companies is in default under any material provisions of the Policies, and, except as set forth on Schedule 3.14(b), there is no material claim by the Seller Parties or the SET Companies or any other Person pending under any of the Policies as to which coverage has been questioned, denied or disputed by the underwriters or issuers of such Policies.

 

  

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Section 3.15. Intellectual Property; IT Systems.

 

(a) Schedule 3.15(a) sets forth a complete and accurate list of all Registered Intellectual Property and any material unregistered Intellectual Property that are included in the Transferred Combined Business Intellectual Property, in each case listing, as applicable, (i) the application and registration numbers, (ii) the jurisdictions where such Intellectual Property is registered or where applications have been filed and (iii) the name of the current owner.

 

(b) The Transferred Companies, or the Sellers, are the sole and exclusive owners of all right, title and interest in and to each item of the Transferred Combined Business Intellectual Property, free and clear of all Encumbrances (except Permitted Encumbrances).

 

(c) The Seller Parties and the Transferred Companies have taken commercially reasonable efforts to maintain and protect the Transferred Combined Business Intellectual Property.

 

(d) Except as set forth in Schedule 3.15(d), (i) neither the use of any Transferred Combined Business Intellectual Property by the Sellers or their Subsidiaries, nor the conduct of the Combined Business by the Seller Parties or any of their respective Subsidiaries (as conducted prior to the date hereof and until the Closing) infringes, violates, or misappropriates in any material respect the Intellectual Property of any Person, and (ii) within the past six (6) years, (x) no written claims alleging such infringement, violation or misappropriation have been asserted against the Seller Parties or their Subsidiaries that have not be resolved and (y) none of the Seller Parties nor the Transferred Companies have received any written notice or, to the Knowledge of the Seller Parties, any other notice or been party to any Proceeding alleging such claims.

 

(e) To the Knowledge of the Seller Parties, as of the date hereof, no Third Party is infringing, violating, or misappropriating in any material respect any Transferred Combined Business Intellectual Property and no such claims are pending or threatened by the Sellers or their Subsidiaries against any Third Party.

 

(f) The execution, delivery or performance of this Agreement or any of the Related Agreements by the Seller Parties or any of their respective Subsidiaries or the consummation of the transactions contemplated hereby will not result in the material loss or impairment of any of the Transferred Combined Business Intellectual Property or the Transferred Companies’ right to use the Transferred Combined Business Intellectual Property after the Closing Date.

 

(g) Except as set forth on Schedule 3.15(g), the Sellers or a Transferred Company has all necessary licenses, sub-licenses or other rights to use all IT Systems in the manner currently used by the Combined Business.

 

Section 3.16. Material Financial Support Arrangements.  Schedule 3.16 contains a complete list as of the date hereof of all of the guarantees, letters of credit, comfort letters, “keep whole” agreements, bonds or other financial security arrangements or other credit support arrangements of any type or kind whatsoever, whether or not accrued, absolute, contingent or otherwise other than with respect to Trading Agreements (“Financial Support

 

  

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Arrangements”) under which any Transferred Company or, if related to the Transferred Assets or Assumed Liabilities, any Seller Party or SET Company is obligated or would reasonably be expected to be obligated for an amount in excess of $50,000,000 (which shall include, for the avoidance of doubt, any Financial Support Arrangements that are not limited in amount), and the amount of each (including any amount drawn or used) as of November 30, 2009, in each case to the extent such Financial Support Arrangements have been provided to or for the benefit of any creditor or counterparty of the Combined Business.

 

Section 3.17. Improper Payments.  None of the Transferred Companies (or, to the Knowledge of any Seller Party, any of the officers, directors, employees or agents of the Transferred Companies or any other Combined Business Employee) or the Seller Parties, by or on behalf of the Combined Business, has violated any provisions of the FCPA, or the rules and regulations promulgated thereunder, or any other applicable bribery and corruption Legal Requirements in any relevant jurisdiction in connection with the Transferred Assets, Assumed Liabilities or Transferred Companies.

 

Section 3.18. Books and Records.  To the Knowledge of such Seller, all Transferred Books and Records (excluding all Contracts) are accurate and complete in all material respects and are maintained in all material respects in accordance with good business practices and all applicable Legal Requirements.  The Partnership and the SET Companies with respect to the Transferred Books and Records of the Combined Business (and, solely with respect to Transferred Books and Records to the extent relating to the RBS Related Assets and Liabilities, RBS and its Subsidiaries) maintain appropriate and sufficient systems of internal accounting controls.

 

Section 3.19. Inventory.  Schedule 3.19 sets forth a true and complete statement of the worldwide physical inventory and tolling capacity payments of the Combined Business, as of the date that is two (2) Business Days prior to the date hereof (except for oil inventory which is as of January 31, 2010), and, subject to revision as provided in Section 7.17(c), as of the date that is two (2) Business Days prior to the Closing Date (except for oil inventory, which will be as of the most recent date prior to the Closing Date for which such data is available).

 

Section 3.20. No Other Representation.  Except for the representations and warranties contained in this Article III, none of the Seller Parties or any other Person acting on behalf of the Seller Parties or their Affiliates makes any representation or warranty, express or implied, regarding the Seller Parties or any of their Affiliates (including the Partnership and the SET Companies).

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

Except as set forth in the disclosure letter delivered by the Purchaser to the Seller Parties on or prior to the date hereof (the  “Purchaser Disclosure Letter”), the Purchaser hereby makes to the Seller Parties, as of the date hereof and, unless otherwise specified, as of the Closing, each of the representations and warranties contained in this Article IV; provided, that the Parties agree that disclosure of any item in any section or subsection of the Purchaser

 

  

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Disclosure Letter shall also be deemed disclosed with respect to any other section or subsection to which the relevance of such item is readily apparent.

 

Section 4.1. Organization and Good Standing.  The Purchaser is duly organized and validly existing under the laws of Delaware, with full corporate power and authority to conduct its business as it is now being conducted.

 

Section 4.2. Enforceability; Authority; No Conflict.

 

(a) This Agreement constitutes the legal, valid and binding obligation of the Purchaser enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer or similar laws affecting the enforcement of creditors’ rights generally and general principles of equity (whether considered in a proceeding at law or in equity).  Upon the execution and delivery by the Purchaser of the Related Agreements to which it is a party, each of such Related Agreements will constitute the legal, valid and binding obligation of the Purchaser, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer or similar laws affecting the enforcement of creditors’ rights generally and general principles of equity (whether considered in a proceeding at law or in equity).  The Purchaser has the requisite right, power and authority to execute and deliver this Agreement and each of the Related Agreements to which it is a party, and to perform its obligations and consummate the transactions contemplated hereby, and such action has been duly authorized by all necessary corporate action.

 

(b) Except as set forth on Schedule 4.2(b), the execution, delivery and performance by the Purchaser of this Agreement or any of the Related Agreements to which it is a party, and the consummation of the transactions contemplated hereby, does not and will not: (i) violate any provision of the Governing Documents of the Purchaser or its Subsidiaries, or any resolution adopted by the board of directors or shareholders (or similar management group) of the Purchaser or its Subsidiaries; (ii) assuming the receipt of all approvals set forth in Schedules 3.2(c) and 4.2(c), violate or conflict with any provisions of any Legal Requirements or any Order to which the Purchaser or its Subsidiaries may be subject; or (iii) violate, conflict with, result in a breach of, constitute (with due notice or lapse of time or both) a default or cause any obligation, penalty or premium to arise or accrue under any Contract to which the Purchaser or any of its Subsidiaries is a party or by which any of them is bound or to which any of their respective properties or assets is subject, except, with respect to clauses (ii) and (iii) above, as would not constitute a Purchaser Material Adverse Effect.

 

(c) Except as set forth in Schedule 4.2(c), and subject to the Seller Parties’ (i) representations and warranties in Section 3.19 being true and correct in all material respects, and (ii) compliance in all material respects with Section 7.1(a)(vi)(A), no material Consent, approval, authorization of, declaration, filing, or registration with, any Governmental Body (including any Governmental Authorization or Mandatory Governmental Approval), stockholder or other Person (whether a Third Party or otherwise) is required to be made or obtained by the Purchaser or any of its Subsidiaries in connection with the execution, delivery, and performance of this Agreement and the Related Agreements or the consummation of the transactions contemplated hereby and thereby.

 

  

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Section 4.3. Bank Holding Company Act Status.  Guarantor is a financial holding company under the Bank Holding Company Act of 1956, as amended, and the Purchaser is not aware of any contemplated or threatened change (by Guarantor or by any Governmental Body) to that status.

 

Section 4.4. Legal Proceedings.  Except for such of the following matters as, individually or in the aggregate, have not resulted in, and would not reasonably be expected to result in, a Purchaser Material Adverse Effect, there is no pending, or, to the Knowledge of the Purchaser, threatened, Proceeding by or against the Purchaser or that could reasonably be expected to prevent, materially delay, make illegal or otherwise materially interfere with, any of the transactions contemplated hereby.  Prior to the date of this Agreement, the Purchaser has informed the Seller Parties in a true and complete manner of the progress of material discussions with the FSA with respect to the transactions contemplated under this Agreement and the Related Agreements, including any material issues relating to filings to be made to, or authorizations or orders to be sought from, the FSA.

 

Section 4.5. Brokers or Finders.  None of the Purchaser or its Subsidiaries or any of their Representatives has incurred any obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payments in connection with the transactions contemplated hereby for which the Seller Parties, the Partnership or the SET Companies (other than the Transferred Companies) could be liable.

 

Section 4.6. Available Funds.  The Purchaser will have available to it at the Closing all funds necessary for its payments required under this Agreement, including those payments required by Article II hereof.

 

Section 4.7. No Other Representation.  Except for the representations and warranties contained in this Article IV, neither the Purchaser nor any other Person acting on behalf of the Purchaser makes any representation or warranty, express or implied, regarding the Purchaser or any of its Subsidiaries.

 

ARTICLE V.

CONDITIONS PRECEDENT TO THE PURCHASER’S OBLIGATION TO CLOSE

 

Section 5.1. Conditions to the Obligations of the Purchaser.  The obligation of the Purchaser to purchase the Transferred Holding Company Equity Interests and the Transferred Assets and to assume the Assumed Liabilities and to take the other actions required to consummate the transactions provided for in this Agreement is subject to the satisfaction, as of the Closing, of the following conditions (any of which may be waived in whole or in part in a writing signed by the Purchaser):

 

(a) Mandatory Governmental Approvals.  Each of the Mandatory Governmental Approvals shall have been obtained without the imposition of any Burdensome Condition and shall be in full force and effect and not be subject to any unfulfilled conditions to their effectiveness except to the extent the condition (other than any Burdensome Condition) is required by its terms to be effected following the Closing.

 

  

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(b) No Prohibition.  No Governmental Body shall have (i) issued an order or injunction that is in effect and prohibits the transactions contemplated by this Agreement or (ii) enacted, issued, promulgated, enforced or entered any Legal Requirement which is then in force and has the effect of making illegal or otherwise preventing or prohibiting the consummation of the transactions contemplated by this Agreement.

 

(c) Representations and Warranties.  Each of the representations and warranties of the Seller Parties:

 

(i) set forth in Section 3.3(a) (solely with respect to ownership of the Transferred Equity Interests) shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made on such dates;

 

(ii) set forth in Sections 3.1, 3.2(a), 3.2(b)(i), 3.2(b)(ii), 3.2(b)(iv), 3.3(b)(i) (in the first sentence), 3.4, 3.11(a) and 3.19 shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on such dates (except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations need only be true and correct on and as of such earlier date); and

 

(iii) set forth in Article III and not referenced in clauses (i) or (ii) above, shall be true and correct as of the date of this Agreement (except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations need only be true and correct on and as of such earlier date);

 

interpreted (x) in the case of each of clauses (ii) and (iii), without regard to any materiality, materially, material respects, material adverse effect, Combined Business Material Adverse Effect or similar materiality qualifiers set forth therein (other than with respect to the Retained Materiality Representations), except, in the case of clauses (ii) and (iii), where the failure of such representations and warranties to be true and correct as so made, individually or in the aggregate, would not have or be reasonably expected to have a Combined Business Material Adverse Effect, and (y) in the case of clause (ii), with respect to Sections 3.4 and 3.11(a), without regard to any events occurring after the date hereof.

 

(d) Covenants.

 

(i) Each of the covenants and agreements of the Seller Parties set forth in Sections 7.1(a)(ii), 7.1(a)(iv), 7.1(a)(v), 7.1(a)(vi), 7.1(a)(xxiii), 7.8 and 7.22 shall have been duly performed or complied with (or any nonperformance shall have been cured and any Damages attributable thereto shall have been remedied) in all material respects;

 

(ii) each of the covenants and agreements of the Seller Parties set forth in Sections 7.1(a)(ix)(A), 7.1(a)(x), 7.1(a)(xii), 7.1(a)(xiv), 7.1(a)(xv), 7.1(a)(xvi), Section 7.1(b) and 7.2(b) shall have been duly performed or complied with (or any

 

  

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nonperformance shall have been cured and any Damages attributable thereto shall have been remedied), except where the failure to so perform or comply would not be material to the Combined Business; provided, however, in the case of a breach of Section 7.1(a)(xiv), Section 7.1(a)(xv) or Section 7.1(a)(xvi), the Seller Parties may cure such breach by offering to treat the underlying trade or transaction that resulted in such breach as an Excluded Asset or, if such trade or transaction was entered into by a Transferred Company, to remove the relevant transaction from such Transferred Company prior to the Closing; and

 

(iii) each of the other covenants and agreements of the Seller Parties to be performed or complied with prior to the Closing shall have been duly performed or complied with (or any nonperformance shall have been cured and any Damages attributable thereto shall have been remedied) except where the failure to so perform and comply, individually or in the aggregate, would not have or reasonably be expected to have a Combined Business Material Adverse Effect.

 

(e) Certificate.  The Purchaser shall have received a certificate, signed by a duly authorized officer of each of the Seller Parties and dated as of the Closing Date confirming that the conditions set forth in Sections 5.1(c) and 5.1(d) have been satisfied.

 

(f) Additional Documents.  Each of the Related Agreements shall have been executed and delivered by each of the Parties or their Subsidiaries, as applicable.

 

(g) Receipt of Payoff Letters.  The Purchaser shall have received payoff letters, in customary form, with respect to the repayment of the Estimated Closing Payoff Combined Business Debt.

 

Section 5.2. Frustration of Closing Conditions.  The Purchaser may not rely on the failure of any condition set forth in this Article V to be satisfied if such failure was caused by a material breach of this Agreement by the Purchaser.

 

ARTICLE VI.

CONDITIONS PRECEDENT TO THE SELLER PARTIES’ OBLIGATION TO CLOSE

 

Section 6.1. Conditions to the Obligations of the Sellers.  The obligation of the Seller Parties to sell the Transferred Holding Company Equity Interests and the Transferred Assets and assign the Assumed Liabilities and to take the other actions required to consummate the transactions provided for in this Agreement is subject to the satisfaction, as of the Closing, of each of the following conditions (any of which may be waived in whole or in part in a writing signed by both RBS and Sempra Energy):

 

(a) Mandatory Governmental Approvals.   Each of the Mandatory Governmental Approvals shall have been obtained and shall be in full force and effect and not be subject to any unfulfilled conditions to their effectiveness except to the extent the condition (other than any Burdensome Condition) is required by its terms to be effected following the Closing.

 

  

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(b) No Prohibition.  No Governmental Body shall have (i) issued an order or injunction that is in effect and prohibits the transactions contemplated by this Agreement or (ii) enacted, issued, promulgated, enforced or entered any Legal Requirement which is then in force and has the effect of making illegal or otherwise preventing or prohibiting the consummation of the transactions contemplated by this Agreement.

 

(c) Representations and Warranties.  Each of the representations and warranties of the Purchaser set forth in Article IV shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on such dates (except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations shall be true and correct on and as of such earlier date), in each case without regard to any references to materiality, materially, material respects, material adverse effect, Purchaser Material Adverse Effect, or similar materiality qualifiers set forth therein; except, in each case, where the failure of such representations and warranties to be true and correct as so made, individually or in the aggregate, would not have a Purchaser Material Adverse Effect.

 

(d) Covenants.  Each of the covenants and agreements of the Purchaser to be performed or complied with at or prior to the Closing shall have been duly performed or complied with (or any nonperformance shall have been cured and any Damages attributable thereto shall have been remedied), except where the failure to so perform and comply, individually or in the aggregate, would not have a Purchaser Material Adverse Effect.

 

(e) Additional Documents.  Each of the Related Agreements shall have been executed and delivered by each of the Parties or their Subsidiaries, as applicable.

 

(f) Receipt of Payoff Letters.  The Sellers shall have received payoff letters, in customary form, with respect to the repayment of the Closing Payoff Combined Business Debt.

 

(g) Certificate.  The Seller Parties shall have received a certificate, signed by a duly authorized officer of the Purchaser and dated as of the Closing Date confirming that the conditions set forth in Section 6.1(c) and 6.1(d) have been satisfied.

 

(h) Credit Rating Event.  There shall not have occurred and be continuing a Credit Rating Event.

 

Section 6.2. Frustration of Closing Conditions.  None of the Seller Parties may rely on the failure of any condition set forth in this Article VI to be satisfied if such failure was caused by a material breach of this Agreement by any of the Seller Parties.

 

ARTICLE VII.

ADDITIONAL COVENANTS

 

Section 7.1. Conduct of the Combined Business.

 

  

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(a) Except:  (v) any actions taken in connection with the relocation described in Schedule 1.1(a) or the Reorganization, (w) as set forth on Schedule 7.1, (x) as required by Legal Requirement, (y) as required (including by virtue of being an express condition to Closing) or explicitly permitted by the terms of this Agreement or the Related Agreements, or (z) with the prior written consent of the Purchaser (such consent not to be unreasonably withheld or delayed), from and after the date hereof until the Closing, the Seller Parties shall (and shall cause their respective Subsidiaries, including the SET Companies to) (a) continue to take such action necessary to operate the Combined Business, including the Transferred Companies, only in the Ordinary Course of Business and use commercially reasonable efforts to continue to maintain the material assets, properties and rights in accordance with past practice, and (b):

 

(i) not amend or otherwise alter (or propose any amendment or alteration to) the Governing Documents of any of the Transferred Companies;

 

(ii) not permit the Partnership or any Transferred Company to create or issue any Equity Interests or Equity Commitments in respect of the Transferred Companies, including any Equity Commitments related to the employment of the Combined Business Employees, or redeem any Equity Interest of any Transferred Company;

 

(iii)  not change any method of accounting or accounting principle that relates to the Combined Business, the Partnership or the SET Companies, except such changes (A) as are required by a change in IFRS or (B) that do not, and could not be reasonably expected to, impact the Estimated Closing Balance Sheet or the Final Closing Balance Sheet (or any portion thereof) or restrict or have a material adverse effect in any manner on the post-Closing accounting or accounting principles of the Combined Business or the Transferred Companies;

 

(iv) not permit the Partnership or any SET Company to cease to operate any of the Combined Core Businesses;

 

(v) not permit any Transferred Company to enter into any new material business line that is not directly related to any portion of the existing Combined Core Businesses;

 

(vi) not permit (A) the value of the physical inventory of Commodities (other than base and precious metals) of the Combined Business to exceed, as of the Closing, the value of such physical inventory as it appeared on the Combined Business Reference Balance Sheet by an amount equal to or greater than $500,000,000, or (B) the Transferred Companies to acquire, or the Partnership or any SET Company to acquire in respect of the Combined Business, (1) any material assets other than in the Ordinary Course of Business in connection with any Trading Agreements included in the Combined Business, whether in one transaction or a series of related transactions, for an aggregate purchase price exceeding $5,000,000 for a single transaction or $20,000,000 in total, (2) any Physical Energy Infrastructure Assets that would be included in the Combined Business, or (3) any business (or portion thereof) that provides electricity or natural gas to commercial or industrial customers and that would be included in the Combined Business;

 

  

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(vii) except as disclosed on Schedule 7.1(a)(vii) and other than as may be required by any Legal Requirement or Employee Plan, not:

 

(1) except as otherwise permitted under this Section 7.1(a)(vii), increase the total annual compensation including base salary, hourly wage or commission rate, bonus, severance or termination payments or similar rights to current or former directors, managers, officers and employees of the Transferred Companies or any Transferred Asset Employees, other than in the Ordinary Course of Business, and provided that any such increase would not reasonably be expected to result in the increase of the total annual compensation for any such director, manager, officer or employee by more than $250,000 on an individual basis;

 

(2) authorize, guarantee or pay any bonuses or other special payments to any current or former directors, managers, officers and employees of the Transferred Companies or any Transferred Asset Employees, other than in the Ordinary Course of Business, and provided that any such bonus or special payment would not reasonably be expected to result in the increase of the total annual compensation for any such director, manager, officer or employee by more than $250,000 on an individual basis;

 

(3) commit to giving the right or possibility to earn a share of the Net Trading Revenue (or other revenue, income or margin metric) generated by a Combined Business Employee (directly or through the results of a group of employees) to such Combined Business Employee (other than an allocation of amounts among a group of employees that are already committed to one or more employees with respect to bonuses for fiscal year 2009 disclosed on Schedule 3.5(i)) or confirm in writing any such right or possibility in respect of 2010 that was previously communicated to any such Combined Business Employee other than pursuant to a confirmation letter in any of the forms attached as Schedule 7.1(a)(vii)(3);

 

(4) amend the current terms of any Employee Plan to the extent applicable to a Combined Business Employee, in a manner that would materially increase the cost or obligations of the Purchaser under Section 7.5 of this Agreement;

 

(5) adopt or enter into any new contract, plan or arrangement providing potential compensation or employee benefits to Combined Business Employees that would be considered an employee benefit plan, except to the extent reasonably necessary to replace any service providers under an existing health, welfare or benefit plan or as otherwise permitted under clause (7) of this subsection as set forth below;

 

  

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(6) transfer the employment of any Combined Business Employee to or from the Partnership or the Transferred Companies (including transfers of employment to or from any of the Seller Parties’ other Affiliates) or otherwise materially change the job functions of any employee of the Partnership or any of its Subsidiaries so as to either (A) cause such employee to cease to be a Combined Business Employee or (B) cause any employee of the Seller Parties or their Affiliates who is not a Combined Business Employee to become a Combined Business Employee; and

 

(7) hire or terminate the employment of (other than for cause) any Person who is or would be a Combined Business Employee whose employment is or would be on terms that (A) could reasonably be expected to result in the payment to any employee of the Partnership or the Transferred Companies of total annual compensation in excess of $750,000 and/or annual bonus compensation in excess of $300,000, or (B) commits to giving the right or possibility to earn a share of the Net Trading Revenues (or other revenue, income or margin metric) generated by such Combined Business Employee (directly or through the results of a group of employees) to such Combined Business Employee;

 

provided that the Seller Parties may, and may cause the Transferred Companies to, take any of the actions otherwise prohibited by clauses (2) and (3) of this Section 7.1(a)(vii) if (I) the amount of such arrangements is accrued on the Final Closing Balance Sheet or is paid by the Seller Parties prior to the Closing or (II) the payment of such amounts either does not exceed the amount set forth in Schedule 7.1(a)(vii) or does not otherwise obligate the Purchaser or the Transferred Companies following the Closing and (III) to the extent applicable, such arrangements have been implemented in accordance with the FSA approvals disclosed on Schedule 3.5(a)(iv);

 

(viii) not make any sale, assignment, transfer, abandonment, or other conveyance of any asset used in the Combined Business or any Contract included in the Combined Business (other than any Trading Agreement included in the Combined Business), in each case unless (i) such asset or Contract is not material to the Combined Business or, if material, such transaction was in the Ordinary Course of Business or (ii) such transaction is a sale or other disposition of minority Equity Interests held by the Partnership or any of the SET Companies for investment purposes;

 

(ix) not enter into or materially amend, modify, extend, renegotiate or terminate (A) any Company Contract of the type described in Section 3.12(b)(xiii) or 3.12(b)(xv) or (B) other than in the Ordinary Course of Business, any other Company Contract;

 

  

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(x) not enter into or materially amend, modify, extend, renegotiate or terminate any Contract with respect to a Commodity Transaction (A) for which there are obligations that extend beyond thirty six (36) months following the date hereof, (B) would have a mark-to-market value, based on then-current prices, the absolute value of which is in excess of $50,000,000, or (C) other than gold leases or base metal repurchase agreements, which has a notional exposure of greater than $100,000,000.  For these purposes, “then current prices” means current prices, in the case of (1) a physical Commodity Transaction that provides for a fixed purchase or sales price, the U.S. dollar present value of such price, (2) a physical Commodity Transaction that provides for an index purchase or sales price, the U.S. dollar present value of the forward prices for such index during the term of such transaction that are utilized by such Seller Party or SET Company, as applicable, to determine the mark-to-market valuation for such transaction, and (3) a Commodity Transaction that is a derivative, the net settlement amount for each settlement date during the term of such transaction, based on the U.S. dollar present value of the applicable forward prices during the term of such transaction that are utilized such Seller Party or SET Company, as applicable, to determine the mark-to-market valuation for such transaction;

 

(xi) not create or permit to be created (A) any Encumbrance on the Transferred Equity Interests or (B) any Encumbrance (other than a Permitted Encumbrance) on any asset of the Combined Business other than in the Ordinary Course of Business or that would not materially and adversely affect the ability of the Purchaser and the Transferred Companies to conduct the Combined Business as currently conducted consistent with past practices after the Closing Date or as contemplated in this Agreement or any of the Related Agreements (provided that, notwithstanding the foregoing, none of the Partnership and the SET Companies shall have any obligation under this Agreement in respect of this clause (xi), it being understood that this proviso does not limit the obligations of the Seller Parents in respect of this clause (xi));

 

(xii) not materially change the credit policies used by the Partnership or the SET Companies in respect of the Combined Business, except as consistent with past practice or as reasonably required due to changes in market conditions;

 

(xiii) with respect to the Partnership or any SET Company, not make or change any Tax election, change an annual accounting period, adopt or change any accounting method with respect to Taxes, file any amended material Tax Return, settle or compromise any proceeding with respect to any claim for material Taxes, surrender any right to claim a refund of material Taxes or consent to any extension or waiver of the limitations period applicable to any material Tax claim, except with respect to any of the foregoing in this Section 7.1(a)(xiii), such changes or actions that would not be reasonably expected to materially adversely impact the Taxes, Tax refunds, claims or assessments, or Tax accounting or reporting of the Purchaser, the Transferred Companies or the Transferred Assets, in each case solely for a taxable period that begins on or after the Closing Date or for the portion of a Straddle Period that begins on or after the Closing Date;

 

  

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(xiv) not permit any trading-related activities in respect of the Combined Business other than Permissible Trading Activities that are in accordance with Company Risk Policies and Limits;

 

(xv) not agree, consent to or otherwise permit an increase in or modification to, or grant exceptions to, the VAR Limits for the Combined Business set forth on Schedule 7.1(a)(xv), which individually or together constitute an increase in permitted VAR Limits for the Combined Business of 20% or more above those limits set forth on Schedule 7.1(a)(xv), except for such increase, modification or exception permitted or granted on a temporary basis consistent with past practice or as reasonably required due to changes in market conditions; it being understood that nothing herein shall require the Sellers to change or dispose of any existing Commodities Transactions; and it being further understood that if the VAR Limits are exceeded at any time, past practices shall include that the Sellers thereafter take no affirmative action to increase the risk and develop and adhere to a plan to reduce the risk in an economically prudent manner;

 

(xvi) not permit or consent to any material amendment, modification or termination of, or deviation from, any of the Company Risk Policies and Limits, other than consistent with clause (xv) of this Section 7.1(a);

 

(xvii) not permit the Transferred Companies to declare, set aside or pay any dividends or make any other distributions to any of the Seller Parties or their respective Affiliates, except as expressly provided in Section 7.15, or to assign any accounts receivables of the Combined Business;

 

(xviii) except for HB Ordinary Course Matter, not permit the Transferred Companies to enter into any new Real Estate Lease, sublease or other occupancy agreement in respect of real property or any new Warehouse Agreement (or permit the Sellers or the SET Companies to do any of the foregoing if such new Real Estate Lease, sublease or other occupancy agreement or Warehouse Agreement would be a Combined Business Real Estate Lease or a Combined Business Warehouse Agreement, as the case may be);

 

(xix) not grant any Lease, sublease, license, sublicense or other occupancy rights under or with respect to any property that is Combined Business Leased Real Estate, provided that, in the event HB desires to do any of the foregoing listed in this clause (xix), it should submit a request for consent to the Purchaser, including the terms of such proposed lease, sublease or license and clearly stating in ALL CAPS that failure by the Purchaser to respond within 7 calendar days will be deemed a grant of consent to the proposed transaction; provided further that in the event the Purchaser has failed to respond within 4 calendar days, HB shall submit a second request for consent clearly stating in ALL CAPS that failure by the Purchaser to affirmatively grant or withhold consent within 3 calendar days will be deemed a grant of consent; provided further that, if the request for consent expressly states that the request is urgent

 

  

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and specifies a date certain prior to such 7th calendar day, the Purchaser will attempt to accelerate its consent process (but shall not have any Liability or other obligation if it fails to do so and any such failure shall not be deemed a grant of consent);

 

(xx) except for HB Ordinary Course Matters, not amend, modify or extend any Combined Business Real Estate Lease or Combined Business Warehouse Agreement in any material respect or in any manner which would impose on the lessee or customer any material financial obligation thereunder that does not currently exist or terminate or surrender or agree to a release of any such Combined Business Real Estate Lease or Combined Business Warehouse Agreement, in whole or in part;

 

(xxi) not incur any Encumbrance on any Combined Business Leased Real Estate, other than Permitted Encumbrances;

 

(xxii) continue to provide all services previously provided to the Transferred Companies in accordance with the Ordinary Course of Business;

 

(xxiii) not (A) permit any Transferred Company to enter into any Third Party credit facility (other than a repurchase facility for precious or base metals), (B) incur Indebtedness of the Combined Business (other than in respect of the precious or base metals business or letters of credit outstanding as of the date hereof) such that the Indebtedness of the Combined Business, as of the Closing, would exceed the Indebtedness of the Combined Business reflected on the Combined Business Reference Balance Sheet by more than $3,000,000,000 in the aggregate; provided that, no more than $750,000,000 of any increase in Indebtedness above the amount reflected in the Combined Business Reference Balance Sheet shall be attributable to reasons other than increases in Commodity prices, or changes in per Contract margin requirements by any exchange (it being understood that any borrowing in respect of replacing letters of credit with cash or for purposes of the $750,000,000 restriction only, borrowing due to the reduction of existing cash margin received in cases where such cash margin has been converted to a letter of credit does not constitute the incurrence of Indebtedness), or (C) otherwise incur any additional Indebtedness of the Combined Business other than to the extent necessary to fund cash dividends (including Tax distributions pursuant to the LLP Agreement) in respect of earnings of the Combined Business or to fund bonuses payable to employees in accordance with this Agreement; or

 

(xxiv) not enter into any Contract or take any other action to do or engage (or commit to do or engage) in any of the foregoing.

 

(b) In the event there is a significant change of circumstances in the commodities or financial markets generally following the date hereof (e.g., Lehman Brothers bankruptcy, hurricane Katrina, war, an act of terrorism or another significant event leading to a material change in Commodity prices), and the Purchaser in good faith and in its reasonable

 

  

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judgment (acting as if it were a prudent manager of the Combined Business on a stand-alone basis) has determined that it would be prudent for the risk positions of the Combined Business to be reduced, subject to any Legal Requirements, (i) the Seller Parties shall, upon the Purchaser’s request, consult with the Purchaser regarding any modifications proposed by the Purchaser to the 95% one day “value at risk” limits for the Combined Business in effect from time to time (in accordance with Section 7.1(a)(xv) (the “VAR Limits”) in respect of the Combined Business to achieve such a reduction in risk, and (ii) if, after such consultation, the Purchaser requests the Sellers to lower the VAR Limits in respect of the Combined Business, the Seller Parties shall amend the Company Risk Policies and Limits with respect to the Combined Business so as to lower the VAR Limits to the prudent level the Purchaser requests in good faith and after taking into account Sellers’ views and, to the extent that such reduced VAR Limits have been exceeded, shall use their commercially reasonable efforts to pursue a planned decrease in the risk profile of the Combined Business over time in a prudent and economically sound manner; it being understood that nothing herein shall require any Seller or any of its Subsidiaries to change or dispose of any existing Commodities Transactions.

 

(c) For the avoidance of doubt, the Purchaser shall exercise the rights given to it under this Section 7.1 and under Section 7.2 consistent with and to the extent permitted by all applicable Legal Requirements.

 

Section 7.2. Information and Access.

 

(a) Prior to Closing, the Seller Parties shall (and shall cause their Subsidiaries to), subject to the Non-Disclosure Agreement, (a) permit the Purchaser and its Representatives to have reasonable access during normal business hours, and in a manner so as not to interfere with the normal operations, to all premises, properties, personnel, accountants, Transferred Books and Records, contracts and documents of the Transferred Companies or relating to the Transferred Assets and Assumed Liabilities; and (b) furnish to the Purchaser and its Representatives all such information and data concerning the Combined Business as the Purchaser or its Representatives reasonably may request in connection with their review of information in accordance with subsection (a) of this Section 7.2, except to the extent that such information is subject to attorney-client privilege or furnishing any such information or data would violate any Legal Requirement or Order applicable to the Seller Parties or any of its Affiliates or by which any of Transferred Assets or the assets of the Transferred Companies are bound; provided, that the Seller Parties shall (and shall cause their controlled Affiliates to) use commercially reasonable efforts to remove any limitation or restriction on access to the Purchaser and its Representatives.  Notwithstanding anything in this Section 7.2, subject to Section 10.3, the Seller Parties shall not be required to permit access to or furnish Tax Returns, books, records, contracts, documents, information or data relating to Taxes that do not exclusively relate to the Combined Business.

 

(b) In furtherance and not in limitation of the foregoing Section 7.2(a), at any time after the date hereof, the Purchaser shall have the right, subject to the Non-Disclosure Agreement and subject to Legal Requirements, to appoint an individual who, in addition to exercising any of the rights granted to the Purchaser pursuant to Section 7.2(a), shall also have the rights, and be subject to the limitations, set forth on Schedule 7.2(b).  Each Seller Parent shall have the right, upon two (2) Business Days prior written notice to each other Party, to remove such individual if, in such Seller Parent’s reasonable opinion, (i) such individual has become

 

  

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disruptive to the Combined Business or the other business of the Partnership and the SET Companies or otherwise has violated the limitations set forth in Schedule 7.2(b) or (ii) such removal is required by Legal Requirements; provided that, in the event of such a removal, the Purchaser shall have the right to appoint another individual to take the place of the removed individual, subject to Legal Requirements.

 

Section 7.3. Filings; Reasonable Best Efforts to Close.

 

(a) The Seller Parties and the Purchaser shall (and shall cause their respective Subsidiaries to), as soon as reasonably practicable and, subject to the Seller Parties timely providing all information reasonably required by Purchaser in respect of the Combined Business and, in the case of Mandatory Governmental Approvals (other than the Swiss Approval), in no event more than twenty-five (25) Business Days following the Determination Date and in the case of the Swiss Approval no more than twenty-five (25) Business Days following the date hereof, prepare and file with each applicable Governmental Body requests for, or notices with respect to, such Governmental Authorizations as may be necessary for the consummation of the transactions contemplated hereby and by the Related Agreements in accordance with the terms of this Agreement and the Related Agreements, including all Mandatory Governmental Approvals and any additional Governmental Authorizations deemed advisable by the Purchaser.  The Seller Parties and the Purchaser shall (and shall cause their respective Subsidiaries to) diligently pursue and use their reasonable best efforts to obtain such Governmental Authorizations and will cooperate with each other in seeking such Governmental Authorizations.  With respect to the Swiss Approval and without limiting the generality of the foregoing, (x) the Purchaser shall reasonably determine the most expeditious manner to effect the Swiss Approval and shall use its reasonable best efforts to obtain the Swiss Approval promptly following the date hereof (and the Seller Parties shall cooperate with the Purchaser in doing so), (y) the Purchaser and Seller Parties shall use their reasonable best efforts, subject to Legal Requirements, promptly following the date hereof to attempt to fashion an expeditious alternative that would eliminate the need for the Swiss Approval and (z) to the extent that all the conditions to Closing have been satisfied (other than those that are to be satisfied at the Closing) other than the Swiss Approval, the Purchaser and the Seller Parties shall use their commercially reasonable efforts at such time to attempt to effect the Closing at the next Closing Date without the transfer of the Swiss business included in the Combined Business but in a manner so as to provide the Purchaser with all the benefits of the non-transferred business if doing so, in the reasonable judgment of each of the Parties, would be feasible and comply with Legal Requirements.  Until the Closing Date, the Seller Parties and the Purchaser shall (and shall cause their respective Subsidiaries to), as promptly as practicable, (i) provide such information and communications to any such Governmental Body or other Persons as such Governmental Body or other Persons may reasonably request in connection with the activities listed in this Section 7.3; and (ii) provide reasonable cooperation to the other Parties in connection with the performance of their obligations under this Section 7.3.  The Parties will promptly notify each other when any such Governmental Authorizations or related filing or notice referred to in this Section 7.3(a) is obtained, taken, made, or given, as applicable, will keep each other reasonably and promptly informed as to the progress of any such actions and will promptly advise each other of any communications (and, unless precluded by any Legal Requirement, promptly provide copies of any such communications that are in writing) with any Governmental Body or other Person

 

  

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regarding any of the transactions contemplated by this Agreement or any of the Related Agreements.

 

(b) (i)           Upon the terms and subject to the conditions set forth in this Agreement, each of the Parties shall, and shall cause their respective Subsidiaries to, use their reasonable best efforts (except to the extent a different standard is expressly provided for in this Agreement) to consummate the transactions contemplated by this Agreement.

 

(ii) Nothing in this Agreement shall be deemed to require the Purchaser and its Subsidiaries to, and the Seller Parties (in respect of the Combined Business) shall not agree without the Purchaser’s consent to, any sale, divestiture or other disposition of Equity Interests or of any business, assets or property, or the imposition of any limitation on the ability of any of them to conduct their respective businesses or to own or exercise control of such Equity Interests, businesses, assets or properties if such actions reasonably would be expected to have a material adverse effect on (A) the Combined Business, taken as a whole or (B) the operations of the business of the Purchaser and its Affiliates (including, for these purposes, the Transferred Companies and taking into account the transfer of the Transferred Assets and the Assumed Liabilities), assuming for purposes of this determination that the Purchaser and its Affiliates (as so defined) are of equivalent size to the Combined Business, taken as a whole (any such sale, divestiture, disposition, or limitation, a “Burdensome Condition”).

 

(iii) Except as set forth on Schedule 7.3(b)(iii), nothing in this Agreement shall require the Seller Parties or any of their Affiliates to (or to agree to) pay Cash or give any other material consideration to a Third Party to obtain the Consent or other action of any Governmental Body or other Person in connection with the transactions contemplated by this Agreement or any Related Agreements.

 

Section 7.4. Partnership Financial Statements.  From the date of this Agreement through the Closing Date, the Seller Parents shall provide the Purchaser with a copy of information of the type and on the basis set forth in Schedule 7.4 of the Purchaser Disclosure Letter.

 

Section 7.5. Employees and Employee Benefits.

 

(a) (i) Employees.  The Seller Parties shall provide the Purchaser in writing Schedule 7.5(a) setting forth as of the date of this Agreement all persons who are Transferred Company Employees and who, as of such date, constitute Transferred Asset Employees.  The Seller Parties shall update such Schedule 7.5(a) as of the Closing to reflect any changes (x) permitted hereunder, (y) arising from any voluntary termination of employment, death or disability or (z) consented to by the Purchaser.  Following the date hereof, the Purchaser shall have an opportunity to review Schedule 7.5(a) and the Seller Parties and Purchaser will cooperate in good faith to verify that those individuals listed on Schedule 7.5(a) satisfy the definition of Transferred Asset Employee as defined herein and will make such modifications, if any, to Schedule 7.5(a) on which they may mutually agree.

 

  

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(ii)           For purposes of this Agreement, (y)  “Transferred Company Employees” shall mean all individuals who are employed by the Transferred Companies, whether or not active and (z) “Transferred Asset Employees” shall mean each of the following:

 

(A)           at least 134 individuals who are substantially employed, whether or not active, directly in connection with the Transferred Assets (but not employed directly by the Transferred Companies and not otherwise an Inactive Business Employee) (the “Active Business Transferred Employees”);

 

(B)           individuals designated as Designated Related Employees in Section 7.5(b);

 

(C)           individuals designated as Designated Scheduled Transition Employees in Section 7.5(c); and

 

(D)           individuals designated as Eligible Inactive Business Employees in Section 7.5(d);

 

provided that any Transferred Asset Employee who rejects Purchaser’s offer of employment as of his or her Effective Hire Date pursuant to Section 7.5(g) (a “Rejecting Employee”) shall not constitute a Transferred Asset Employee for purposes of this Agreement.

 

(iii)           The Purchaser shall identify to the Seller Parties in writing (w) on the Closing Date, the names of each Excluded Employee (a “No-Offer Notice”) and (x) within 3 Business Days of any individual becoming a Rejecting Employee, the name of such Rejecting Employee (a “Rejection Notice”). The Seller Parties shall terminate the employment of the Rejecting Employees within 30 days following the later of (y) the Closing Date and (z) the Seller Parties’ receipt of the applicable Rejection Notice unless otherwise agreed by the Purchaser in writing (any Rejecting Employee retained with consent of the Purchaser being “Retained Rejected Employee”).

 

(iv)           The Purchaser shall have no Liability with respect to such Rejecting Employee or with respect to an Excluded Employee (as defined in Section 7.5(f) below); provided that, if the employment of a Rejecting Employee or Excluded Employee is terminated by the Seller Parties within 30 days following (x) with respect to an Excluded Employee, the later of (A) the Closing Date and (B) the Seller Parties’ receipt of the No-Offer Notice and (y) with respect to a Rejecting Employee, the later of (A) the Closing Date and (B) the date of the Seller Parties’ receipt of the Rejection Notice (as applicable, the “Final Termination Date”), then the Purchaser and the Transferred Companies shall assume and have sole responsibility liability and indemnify the Seller Parties on a net-after Tax basis with respect to, and the Seller Parties shall have no responsibility or liability with respect to:

 

  

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(x)           Liabilities with respect to such Rejecting Employee or Excluded Employee to the extent accrued on the Final Closing Balance Sheet; and

 

(y)           Liabilities (i) with respect to any severance or termination payments or benefits which become payable to such Rejecting Employee (following the procedures set forth below) or which the Seller Parties reasonably determine become payable to such Excluded Employee under any severance or termination agreement or policy of the Seller Parties in effect on the Closing Date; (ii) incurred by the Seller Parties in connection with the termination of any such Rejecting Employee’s or Excluded Employee’s employment and failure of the Purchaser to offer employment to any Excluded Employee (other than claims relating to actions or events not contemplated by this Agreement which occurred prior to such Rejecting Employee’s or Excluded Employee’s termination of employment); and (iii) incurred in contesting or defending any Proceeding relating to any of the matters described in sub-clauses (y)(i) or (y)(ii) above (such Liabilities described in sub-clauses (y)(i), (y)(ii) and (y)(iii) collectively, the “Severance Liabilities”).

 

The Seller Parties shall notify the Purchaser in the event a Retained Rejected Employee (notice not being required with respect to any other Rejecting Employees) or Excluded Employee is terminated by the Seller Parties by the applicable Final Termination Date, such notice to be provided within 10 Business Days following such termination of employment and, unless consented to by the Purchaser, the Seller Parties shall not pay or be responsible for, with respect to any Rejecting Employee whose employment is terminated by the Seller Parties on or prior to his or her Final Termination Date, any Severance Liabilities unless otherwise provided below.  In the event it is determined through judicial adjudication or arbitration (or settlement with the consent of the Purchaser) that any Severance Liabilities arise as a result of such termination of employment of a Rejecting Employee, then the Seller Parties shall permit the Purchaser to participate in any proceeding relating to such claim relating to Severance Liabilities; provided, however, that the Purchaser shall bear and pay directly all reasonable costs and expenses incurred in connection with such contest and, for the avoidance of doubt, but without duplication of clause (y)(ii) above, shall indemnify and hold the Seller Parties harmless, on a net after-Tax basis, from any Tax imposed as a result of such adjudication, arbitration or settlement and payment of costs and expense.  Without limiting the foregoing the Purchaser shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable judicial authority in respect of such claim and may, at its sole option, either direct Seller Parties to pay the Severance Liabilities or contest the claim in any permissible manner, and the Seller Parties agree to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Purchaser shall determine and direct.

 

  

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(b) Related Employees.  Prior to the Closing, the Seller Parties and the Purchaser shall cooperate in good faith to identify those individuals who provide services in connection with the Transferred Assets, but who are not Transferred Company Employees or Active Business Transferred Employees.  The Purchaser shall notify the Seller Parties within a reasonable period prior to the Closing whether it consents to permit any of such employees to be designated as Transferred Asset Employees (such employees, the “Designated Related Employees”).

 

(c) Transition Employees.  In respect of any of the Persons who provide to the Purchaser and its Affiliates services pursuant to the Commodities Trading and Services Agreements, the Purchaser and the Seller Parties shall at least 30 days in advance of the conclusion of the term of the applicable Commodities Trading and Services Agreements identify any such employees  the Purchaser wishes to continue to employ (the “Scheduled Transition Employees”).  The Seller Parties shall notify the Purchaser within a reasonable period and at least 15 days prior to the conclusion of the term of the applicable Commodities Trading and Services Agreements whether it consents to permit the Purchaser and its Affiliates to continue to employ to some or all of the Scheduled Transition Employees (such employees, the “Designated Scheduled Transition Employees”).

 

(d) Inactive Business Employees.  With respect to each individual who otherwise would meet the definition of Transferred Asset Employee in Section 7.5(a)(i), (ii) or (iii) above but who, as of the Closing, is not actively employed and is participating in Seller Plans providing disability coverage (the “Inactive Business Employees”), (i) any such employee on long-term disability leave shall remain on the Seller Parties’ long-term disability plan and (ii) any such employee on short-term disability leave shall remain on the Seller Parties’ short-term disability plan for the period of disability, in accordance with the terms of the plan and if the period of short-term disability expires and any such Inactive Business Employee is entitled to receive long-term disability coverage, such employee shall continue to participate in the Seller Parties’ disability plan; provided that the Purchaser shall, or shall cause the Transferred Companies to, reimburse the Seller Parties in respect of premiums, claims or benefits and related costs that otherwise would have been charged directly or indirectly to the applicable employer in accordance with past practice until the earlier of (x) such individual’s Effective Hire Date (as defined below) or (y) 180 days after the Closing.  Any such Inactive Business Employee who returns to active employment with the Seller Parties or their Affiliates on or prior to 180 days after Closing shall be designated an “Eligible Inactive Business Employee.”

 

(e) Transferred Company Employees.  Transferred Company Employees shall continue to be employed by the Transferred Companies as of, and immediately after, the Closing, in accordance with the terms set forth in this Section 7.5.

 

(f) Transferred Asset Employees.  Prior to the Closing (or with respect to Designated Scheduled Transition Employees, prior to the expiration, cancellation or termination of the applicable Commodities Trading and Services Agreement), the Purchaser shall provide employment as of the applicable Effective Hire Date to each Transferred Asset Employee, excluding, however, only those Transferred Asset Employees who, as of their Effective Hire Date, are on disciplinary probation, official disciplinary warning or other formal disciplinary action with their current employer as reflected in the personnel records of the applicable

 

  

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employer or who fail the Purchaser’s criminal background check by virtue of having committed a felony or other crime which could reasonably be expected to prevent them from, or the Purchaser from, complying with any regulatory rules, regulations or guidelines applicable to them or the Purchaser (the “Excluded Employees” and which Excluded Employees shall not be deemed to constitute Transferred Asset Employees for purposes of this Agreement), with employment terms consistent with those set forth in this Section 7.5 and which do not impose any restrictive covenants (other than those currently applicable to such Transferred Asset Employees pursuant to contractual agreements assumed by Purchaser or the Transferred Companies pursuant to this Agreement) and honoring any contractual commitments applicable to such Transferred Asset Employees as contemplated by Section 7.5(l).  Prior to the Closing, the Purchase shall provide written communication materials to the Transferred Asset Employees, reasonably acceptable to the Seller Parties, conveying the material terms and conditions of such employment consistent with the provisions of this Section 7.5(f)).

 

(g) Effective Hire Date.  “Effective Hire Date” shall mean:

 

(i) with respect to Active Transferred Business Employees, Designated Related Employees and Transferred Company Employees,  the Closing Date;

 

(ii) with respect to Designated Scheduled Transition Service Employees, immediately following the expiration, cancellation or termination of the applicable Commodities Trading and Services Agreement (Services to Purchaser); and

 

(iii) with respect to Eligible Inactive Business Employees the date of their return to active employment with the Seller or its Affiliates, provided that such return is no later than 180 days following the Closing Date.

 

(h) Combined Business Employees and Continuing Employees.  Transferred Company Employees and Transferred Asset Employees are collectively, together with former employees of the Transferred Companies and any current or former independent contractors of the Transferred Companies, referred to as the “Combined Business Employees”.  Transferred Company Employees and Transferred Asset Employees who accept and commence employment with the Purchaser are referred to as the “Continuing Employees.”

 

(i) Limitations on the Purchaser’s Obligations To Employee.  None of the Purchaser, the Transferred Companies or their Subsidiaries shall have any obligation pursuant to this Agreement to continue employing Continuing Employees for any length of time following their Effective Hire Date.

 

(j) No Separation from Service Under Section 409A of the Code.  The Parties agree that the Transferred Asset Employees that become Continuing Employees will not experience a “separation from service” within the meaning of Treasury Regulation §1.409A-1(h), as permitted under Treasury Regulation §1.409A-1(h)(4), as a result of the transactions contemplated by this Agreement.

 

  

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(k) For Continuing Employees, on or after their Effective Hire Date, the Purchaser will, or will cause the Transferred Companies to, provide such Continuing Employees, with:

 

(i) during the period beginning immediately following the Closing Date and ending eighteen (18) months thereafter, a base wage rate or salary that is, for each Continuing Employee, at least as favorable as was provided to such employee immediately prior to the Closing Date;

 

(ii) eligibility for bonus and other incentive opportunities to each Continuing Employee that are at least as favorable as the bonus and other incentive opportunities provided to similarly situated employees of the Purchaser and its Affiliates;

 

(iii) eligibility to participate in employee benefit plans, programs, policies and similar arrangements (whether or not subject to ERISA) that are substantially comparable in the aggregate to those employee benefit plans, programs, policies and similar arrangements provided to similarly situated employees of the Purchaser and its Affiliates (any such employee health and welfare benefit plans of the Purchaser, the Transferred Companies or their Subsidiaries in which Continuing Employees become eligible to participate after the Closing Date shall be referred to hereinafter as “Purchaser Welfare Plans”); and

 

(iv) during the period beginning immediately following the Closing Date and ending twelve (12) months thereafter, severance payments to each eligible Continuing Employee in accordance with the terms set forth regarding severance on Schedule 7.5(k)(iv); provided,  that in no event shall any severance be paid to any Combined Business Employee who experiences a termination of employment for cause or due to a voluntary termination of employment, and provided, further, that such Combined Business Employee signs a release in form and substance satisfactory to the Purchaser (which release shall not cover claims to any contractual rights, vested benefits, or rights of indemnification).

 

(l) Employee Benefits; General.

 

(i) As of the Closing Date, except as set forth in Section 7.5(a) or Section 7.5(d), the Seller Parties shall retain and have sole responsibility and liability, and the Purchaser shall have no responsibility or liability, in respect of any employee who is not a Combined Business Employee for all claims incurred and benefits or compensation earned, or to be earned, under any Employee Plan (including any severance or other termination benefits which become payable to any such individual as a result of or following the transactions contemplated by this Agreement) and any claims or causes of action under Legal Requirements with respect to employment, wages and all other compensation and working condition matters.

 

  

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(ii) Except as provided in Section 7.5(d) and Section 7.5(o), as of the Closing Date, the Purchaser and the Transferred Companies shall:

 

(1) assume and have sole responsibility and liability, and the Sellers shall have no responsibility or liability, in respect of Combined Business Employees for all claims incurred and benefits or compensation earned, or to be earned (whether related to periods before, on or after, the Closing) under any Employee Plan (including any severance or other termination benefits which become payable to any Combined Business Employees as a result of or following the transactions contemplated by this Agreement), any claims or causes of action under Legal Requirements with respect to employment, wages and all other compensation and working condition matters and, for the avoidance of doubt, any liability (including severance or other termination benefits or claims for such benefits) arising out of the Purchaser’s or a Transferred Company’s termination of employment of any Transferred Company Employee or Transferred Asset Employee on or after the Closing Date (a “Purchaser Termination”) (other than claims relating to actions or events not contemplated by this Agreement which occurred prior to (x) with respect to Transferred Company Employees, the Closing Date and (y) with respect to Transferred Asset Employees, the date of their commencement of employment with Purchaser and its Affiliates) (and the Purchaser and the Transferred Companies shall indemnify the Seller Parties on a net after-Tax basis for any such liabilities and for any costs incurred in contesting or defending any Proceeding relating to any Purchaser Termination); provided, that the Purchaser shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable judicial authority in respect of such claim and may, at its sole option, contest the claim in any permissible manner; and

 

(2) promptly reimburse the Seller Parties and their Affiliates for any compensation and benefit paid to any Eligible Inactive Business Employee who returns to active employment pursuant to Section 7.5(g)(iii) on or after the Closing but prior to his or her Effective Hire Date.

 

Without limiting the foregoing, and for the avoidance of doubt, the Purchaser or the Transferred Companies, shall assume and honor in accordance with its terms, with respect to each Combined Business Employee, any Bonus Plan and any applicable employment letter or offer letter or other compensatory arrangement applicable to such Combined Business Employee, to the extent set forth on Schedule 3.5(a) or Schedule 3.5(i); provided, except as set forth in Section 7.5(k), nothing contained herein shall (x) constitute a commitment or obligation on the part of the Purchaser, the Seller Parties, the Transferred Companies or their respective Subsidiaries to continue any such Employee Plan after the Closing Date or (y) prevent any amendment of the foregoing arrangements by the

 

  

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Purchaser or the Transferred Companies to the extent such arrangements may be amended in accordance with their terms.

 

(iii) As of the Closing Date, the Transferred Companies shall cease to be participating employers under each Seller Plan.  The Seller Parties shall or shall cause the Transferred Companies or their Subsidiaries to notify Combined Business Employees that, except as provided in Sections 7.5(d) and 7.5(o), as of their Effective Hire Date (and with respect to former employees of the Transferred Companies, as of the Closing Date), Combined Business Employees shall cease to accrue any further benefits as active participants and shall have no rights to continue as active participants under the Seller Plans (without derogation of their rights as vested, terminated participants).  Any responsibility or liability retained or assumed by the Purchaser, its Subsidiaries and the Transferred Companies in respect of the Seller Plans which are medical plans shall be limited to reimbursement to the Seller Parties in respect of premiums, claims or benefits and related costs that otherwise would have been charged directly or indirectly to the applicable employer in accordance with past practice.

 

(iv) With respect to medical benefits provided pursuant to Seller Plans, for any Combined Business Employee, the Seller Parties shall retain all Liability for all medical claims incurred before, or incurred pursuant to a course of treatment initiated prior to, the Closing Date, and the Purchaser and its Affiliates (including, following the Closing Date, the Transferred Companies) shall have no such Liability, except that the Purchaser shall, or shall cause the Transferred Companies to, reimburse the Seller Parties in respect of premiums, claims or benefits and related costs that otherwise would have been charged directly or indirectly to the applicable employer in accordance with past practice.

 

(v) The Purchaser shall, or shall cause the Transferred Companies to, cause any employee benefit plans in which the Continuing Employees are eligible to participate on or after the Closing Date to take into account for purposes of eligibility, vesting and benefit accrual thereunder (except for benefit accrual under any defined benefit pension plan that a Continuing Employee becomes eligible to participate in on or after the Closing Date, for purposes of qualifying for subsidized retirement benefits or to the extent it would result in a duplication of benefits), service by such Continuing Employees with the Seller Parties or any of their Subsidiaries or with the Transferred Companies as if such service were with the Purchaser, to the same extent such service was credited under a comparable Employee Plan as of the Closing Date.

 

(m) Welfare Benefits.  With respect to the Purchaser Welfare Plans, except to the extent otherwise prohibited under Legal Requirements, the Purchaser shall, or shall cause the Transferred Companies to, use commercially reasonable efforts to:

 

(i) with respect to each such plan that is a medical or health plan, to waive, or cause the waiver of, any exclusions for pre-existing conditions and waiting periods for each Continuing Employee, from and after the applicable

 

  

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Effective Hire Date, and his/her dependents to the extent that such pre-existing condition exclusions and waiting periods were previously satisfied under the comparable Employee Plan in which the Continuing Employee participated or was eligible to participate prior to the Closing Date for the plan year that includes such transfer; and

 

(ii) with respect to each such plan that is a medical or health plan, to provide each Continuing Employee, from and after the applicable Effective Hire Date, upon presentation of evidence satisfactory to such plans, with credit for any deductibles and out-of-pocket expenses paid or incurred by such Continuing Employee (and any enrolled dependents) for the current plan year under the applicable Employee Plan, prior to such Continuing Employee’s transfer to the Purchaser Welfare Plan (to the same extent such credit was given under the comparable Employee Plan) in satisfying any applicable deductible or out-of-pocket requirements under such Purchaser Welfare Plan for the plan year that includes such transfer.

 

(n) Vacation and Sick Leave.  The Purchaser shall, or shall cause the Transferred Companies to, honor each Continuing Employee’s unused vacation, paid time off and sick leave accrued as of the Closing Date, under the relevant Employee Plan.

 

(o) Continuation of Health Care.  The Purchaser shall, or shall cause the Transferred Companies to, be responsible for all legally mandated continuation of health care coverage for all Combined Business Employees and any of their covered dependents who experience a qualifying event on or prior to the Closing, provided that with respect to any such legally mandated continuation of health coverage that is provided under a Seller Plan on or prior to the Closing Date, the liabilities and responsibilities of the Purchaser and the Transferred Companies shall be limited to reimbursing the Seller Parties in respect of premiums, claims or benefits and related costs that otherwise would have been charged directly or indirectly to the applicable employer in accordance with past practice.  The Purchaser and the Transferred Companies shall be responsible for all legally mandated continuation of healthcare coverage for all Combined Business Employees and any of their covered dependents who experience a qualifying event occurring following the Closing.

 

(p) Retirement Plans.  (i) With respect to the Sempra Energy Trading LLC Retirement Savings Plan and any other 401(k) plan in which the Continuing Employees participate (all such plans, the “Seller 401(k) Plan”) and the Retirement Savings Plan for the Active Employees of Sempra Energy Trading (Canada) Limited, on or prior to the applicable Effective Hire Date, the Seller Parties shall cause all Continuing Employees participating in such plans to be fully vested in their respective accounts thereunder.  In the event that a Continuing Employee makes a voluntary election pursuant to Section 401(a)(31) of the Code to rollover such Continuing Employee’s account balance in the Seller 401(k) Plan to a tax-qualified defined contribution plan sponsored by the Purchaser or any of its Subsidiaries, the Purchaser agrees to cause such tax-qualified defined contribution plan to accept such rollover to the extent permitted by Legal Requirement.  The Seller Parties shall use commercially reasonable efforts to cooperate with the Purchaser to effect the rollover of such account balances.  The Seller Parties shall or shall cause the Transferred Companies to notify Continuing Employees that the active

 

  

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participation of Continuing Employees in the Seller Plans shall terminate on the applicable Effective Hire Date as of which date such Continuing Employees shall be eligible to participate in benefit programs provided by the Purchaser.

 

(ii)           With regard to the occupational pension scheme known as the Royal Bank of Scotland Group Pension Fund, each of RBS and Sempra Energy, severally, but not jointly, and in accordance with such applicable Seller Party’s Indemnity Share, will indemnify and hold harmless the Purchaser and each of its Affiliates from and against any and all losses and Liabilities on a net after-Tax basis, to be paid within 30 days of a request in writing from the Purchaser to do so, which arise wholly and directly from the participation of RBS Sempra Metals Limited in the Royal Bank of Scotland Group Pension Fund, including all losses and Liabilities arising under Section 75 of the UK Pensions Act 1995 or pursuant to the rules of the Royal Bank of Scotland Group Pension Fund or as a result of action taken by the UK Pensions Regulator under Part 1 of the Pensions Act 2004.

 

(q) Subject to Legal Requirements, the Purchaser shall, or shall cause the Transferred Companies to, assume the obligation to pay, and shall, or shall cause the Transferred Companies to, pay to the Combined Business Employees, the amounts specified in Schedule 3.5(i) applicable to each such Combined Business Employee, in accordance with the terms set forth in the applicable plan, program or arrangement in which such Combined Business Employees participate, as such plans, programs or arrangements may be amended from time to time.

 

(r) Expatriates.  From and after the Closing Date, the Purchaser shall, with respect to the expatriate Combined Business Employees listed on Schedule 7.5(r) honor and assume the terms and conditions currently applicable to such expatriate Combined Business Employees pursuant to the expatriate policy listed on Schedule 7.5(r).  Such terms and conditions shall include, with respect to each expatriate Combined Business Employee listed on Schedule 7.5(r), repatriation on or before the repatriation date agreed upon between the Seller Parties and such Combined Business Employee and listed on Schedule 7.5(r), or such later date as such Combined Business Employee agrees upon with the Purchaser.

 

(s) No Third Party Beneficiary Rights.  Nothing contained herein, whether express or implied shall be treated as an amendment or other modification of any employee benefit plan, program, arrangement or agreement.  This Section 7.5 shall inure exclusively to the benefit of, and be binding solely upon, the Parties to this Agreement and their respective successors, permitted assigns, executors and legal representatives.  Nothing in this Section 7.5, expressed or implied, shall be construed to create any third-party beneficiary rights in any present or former employee, service provider or any such Person’s alternate payees, dependents or beneficiaries, whether in respect of continued employment or resumed employment, compensation, employee benefits or otherwise.  Nothing herein shall prevent the Purchaser or the Transferred Companies from entering into an agreement with any Combined Business Employee, inconsistent with any obligation to the Seller Parties hereunder, to make a payment or provide any employee any benefit hereunder; provided that the Seller Parties shall have no Liability with respect thereto, or as a result thereof (any such Liabilities being expressly assumed by, and retained by, the Purchaser and the Transferred Companies).

 

  

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(t) Transfer of Undertakings (Protection of Employment) Regulations 2006.

 

(i) The Parties intend and agree amongst themselves that the sale and purchase of the Transferred Assets or the RBS Related Assets and Liabilities pursuant to this Agreement shall not be a “Relevant Transfer” for the purposes of the Transfer Regulations and that accordingly no person’s employment shall transfer from any of the Sellers or any of their Affiliates to the Purchaser or any of its Affiliates as a result of the sale and purchase of the Transferred Assets or the RBS Related Assets and Liabilities pursuant to this Agreement.

 

(ii) If, notwithstanding Section 7.5(t)(i), any Person who is not a Combined Business Employee, excluding for the purposes of this Section 7.5(t) any former employee of a Transferred Company and any former or current independent contractor of the Transferred Company (a “Claimant Employee”) claims that his employment or any Liability in relation to his employment, has transferred from any of the Seller Parties or any of their Affiliates to the Purchaser or any of its Affiliates as a result of the Transfer Regulations, subject to Section 7.5(t)(iii) each of RBS and Sempra Energy, severally, but not jointly, and in accordance with such applicable Seller Party’s Indemnity Share (except as otherwise provided in Section 9.4(b)), will indemnify and hold harmless the Purchaser and each of its Affiliates from and against any and all losses and Liabilities on a net after-Tax basis (including all reasonable legal charges and expenses together with any applicable amount in respect of VAT) suffered or incurred by any of them in relation to the employment of the Claimant Employee, the termination of the Claimant Employee’s employment, and any breach of the Seller Parties’ (or any Seller Party’s), the Purchaser’s or any of their respective Affiliates’ obligations in respect of the Claimant Employee under Regulations 11 and 13 of the Transfer Regulations.

 

(iii) In order to be able to rely on the indemnity in Section 7.5(t)(ii), the Purchaser must terminate or procure the termination of the employment of any Claimant Employee as soon as reasonably practicable after discovering that such Claimant Employee has transferred to the Purchaser (or any of its Affiliates) pursuant to the Transfer Regulations or alleges that he/she has so transferred, but in any event such termination must occur no later than three (3) months following the Closing Date.

 

(iv) The Purchaser undertakes that, in the event that the Purchaser or any of its Affiliates terminates or procures the termination of the employment of any Claimant Employee pursuant to Section 7.5(t)(iii), it shall offer such Claimant Employee such terms for termination of their employment as are the more favorable of (A) any sums lawfully due to such Claimant Employee on the termination of their employment (including as to notice periods and the statutory redundancy for such termination of employment or similar amount) or (B) the terms that the Seller would have offered such Claimant Employee upon termination of their employment under the policy (or in accordance with the

 

  

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customs and practices) of the Claimant Employee’s employer prior to the Closing Date.

 

Section 7.6. Retention of and Access to Records; Confidentiality.

 

(a) From the Closing Date until the seventh (7th) anniversary thereof, the Seller Parties shall (and shall cause their respective Subsidiaries to) retain those Books and Records relating to the Combined Business other than the Transferred Books and Records (which shall be delivered to the Purchaser pursuant to Section 2.6(a)(iv)) and shall provide the Purchaser, the Transferred Companies, their respective Subsidiaries and their Representatives reasonable access to inspect and copy such Books and Records relating to the Combined Business in connection with matters relating to or affected by operations of the Combined Business prior to the Closing Date (other than Books and Records relating to Taxes, access to which is governed exclusively by Section 10.3(c)), during normal business hours and on reasonable notice, for any reasonable business purpose, including to enable them to prepare financial statements or tax returns, respond to tax audits or as they may otherwise reasonably request, except to the extent that furnishing any such information or data would violate any Legal Requirement or Order.

 

(b) From and after the date hereof until the fourth (4th) anniversary of the Closing, without limitation of the Seller Parties’ obligations under Section 7.13(d), each of the Seller Parties shall (and shall cause their respective Subsidiaries to) treat as confidential and shall safeguard any and all information, knowledge and data relating to (i) the Combined Business or (ii) the Acquired Commodities Business Portfolio (as defined in Exhibit A) and including for the avoidance of doubt information obtained pursuant to Section 7.6(g), except in each case to the extent that it relates to the Excluded Business (it being understood that confirmations and related data in respect of the Assigned Trading Agreements and the Trading Agreements to which a Transferred Company is a party shall not be deemed to relate to the Excluded Business) (the “Combined Business Confidential Information”), in each case, in their respective possession by using the same degree of care, but no less than a reasonable standard of care, to prevent the unauthorized use, dissemination or disclosure of such information, knowledge and data as such Seller Party used with respect thereto prior to the date hereof.  The Parties agree that any Seller Party may only disclose such information (A) to the extent counsel to such Seller Party advises that disclosure is required to comply with Legal Requirements (provided that such Seller Party shall provide prior written notice to the Purchaser of such disclosure (unless prohibited by any Legal Requirement) as promptly as practical under the circumstances and shall seek to limit any such disclosure and to protect from public disclosure by way of protective order or otherwise, in each case, to the extent permitted by Legal Requirements), and (B) to its directors, officers, employees, agents and professional advisers who reasonably need to know such information for purposes of this Agreement or any Related Agreement or any other purposes expressly contemplated hereby or thereby (provided that such Seller Party shall instruct any such director, officer, employee, agent or professional to keep such information confidential in accordance with this Agreement).  In no event shall any Seller Party use, or permit any other Person to use, the Combined Business Confidential Information for any purposes other than as expressly contemplated under this Agreement or any Related Agreement.

 

  

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(c) From and after the date hereof until the fourth (4th) anniversary of the Closing, the Purchaser shall (and shall cause its Subsidiaries, including the Transferred Companies to) treat as confidential and shall safeguard any and all information, knowledge and data relating to the businesses of the Seller Parties and their respective Affiliates that is not Combined Business Confidential Information (the “Seller Confidential Information”), in each case, that has become known or becomes known to the Purchaser as a result of the transactions contemplated by this Agreement by using the same degree of care, but no less than a reasonable standard of care, to prevent the unauthorized use, dissemination or disclosure of such information, knowledge and data as the Purchaser uses with respect to its own information, knowledge and data.  The Parties agree that the Purchaser may disclose such information (A) to the extent counsel to the Purchaser advises that disclosure is required to comply with Legal Requirements (provided that the Purchaser shall provide prior written notice to the Seller Parties of such disclosure (unless prohibited by any Legal Requirement) as promptly as practical under the circumstances and shall seek to limit any such disclosure and to protect from public disclosure by way of protective order or otherwise, in each case, to the extent permitted by Legal Requirements), and (B) to its directors, officers, employees, agents and professional advisers who reasonably need to know such information for purposes of this Agreement or any Related Agreement or any other purposes expressly contemplated hereby or thereby (provided that the Purchaser shall instruct any such director, officer, employee, agent or professional to keep such information confidential in accordance with this Agreement).  In no event shall Purchaser use, or permit any other Person to use, the Seller Confidential Information for any purpose other than as expressly contemplated under this Agreement or any Related Agreement.

 

(d) The Parties acknowledge that the confidentiality obligations set forth in this Section 7.6 shall not extend to information, knowledge and data that (i) is or becomes publicly available through no act or omission of a Party owing a confidentiality obligation imposed by this Section 7.6 in respect of such information, knowledge and data (a “Receiving Party”), (ii) is or becomes available to a Receiving Party on a non-confidential basis from a source other than the Party to which such information, knowledge and data relates; provided that the source of such information, knowledge and data was not known to the Receiving Party to be bound by confidentiality obligations to the Party to which such information, knowledge and data relates, or (iii) the Receiving Party can establish that it independently developed such information, knowledge and data without reference to information, knowledge and data provided to such Receiving Party in connection with the transactions contemplated hereby.

 

(e) After the seventh (7th) anniversary of the Closing Date (or such later date as may be required under Legal Requirements applicable to the Purchaser, the Partnership or any of their Subsidiaries), the Seller Parties or their respective Subsidiaries may elect to destroy any Books and Records described in Section 7.6(a), upon thirty days’ prior written notice of such determination being given to the Purchaser; provided, that at the request (made prior to the end of such thirty-day period) and expense of the Purchaser, the Seller Parties or their respective Subsidiaries (as applicable) shall deliver such Books and Records to the Purchaser in lieu of destroying them.  The Purchaser, the Transferred Companies and any of their respective Subsidiaries shall, prior to the seventh anniversary of the Closing Date or thereafter during the effective term of the requirements under this Section 7.6(e), advise the Seller Parties as to the Legal Requirements referred to in the immediately preceding sentence.  Notwithstanding anything in this Section 7.6(e), the Seller Parties shall only be required to deliver to the

 

  

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Purchaser the portions of such Books and Records that relate to the Combined Business or the Transferred Companies and may redact any statements or other information on the portions of such Books and Records that do not relate to the Combined Business or the Transferred Companies.

 

(f) The Parties acknowledge that the Non-Disclosure Agreement remains in full force and effect; provided that after the Closing Date, (i) Purchaser’s confidentiality obligations thereunder shall terminate and be of no further force or effect only as to the Combined Business Confidential Information, and (ii) the restrictions on solicitation and hiring thereunder shall terminate and be of no further force or effect only as to the Combined Business Employees.

 

(g) From the Closing Date until the seventh (7th) anniversary thereof, the Purchaser shall (and shall cause its Subsidiaries, including the Transferred Companies, to) provide the Seller Parties and their respective Subsidiaries and their Representatives reasonable access to inspect and copy the Transferred Books and Records (other than books and records relating to Taxes, access to which is governed exclusively by Section 10.3(c)) in respect of matters relating to or affected by operations of the Combined Business prior to the Closing Date, for any reasonable business purpose, or to enable them to prepare financial statements or tax returns, respond to tax audits or as they may otherwise reasonably request, except to the extent that furnishing any such information or data would violate any Legal Requirement or Order.  From the Closing Date until such time as all obligations of the Seller Parties and their Affiliates under the Seller Financial Assurances have been fully and unconditionally released or otherwise terminated with no possibility of further liabilities on the part of the Seller Parties or their Affiliates, the Purchaser shall (and shall cause its Subsidiaries, including the Transferred Companies, to) provide the Seller Parents and their Representatives reasonable access to such information, including the relevant portions of the underlying Contracts (other than books and records relating to Taxes, access to which is governed exclusively by Section 10.3(c)) (i) as is reasonably necessary for any Seller Parent to determine its potential exposure under its outstanding Seller Financial Assurances or whether any Third Party Claim in respect of a Seller Financial Assurance is proper and to enforce, (ii) to permit its Affiliate to enforce any rights it may have under, or defend any claim under, any Seller Financial Assurance, (iii) for regulatory purposes or (iv) to enable them to prepare financial statements.  Any such access shall be during normal business hours and on reasonable notice, and shall only apply to the extent that furnishing any such information or data would not violate any Legal Requirement or Order (except that, with respect to the immediately preceding sentence, the Parties shall use commercially reasonable efforts to remove any such restriction or otherwise share such information in a manner that does not violate the relevant Legal Requirement or Order).

 

(h) In the event that the Seller Parties discover or are aware of any computer, word processor or data storage device that is part of the Excluded Assets contains any Combined Business Confidential Information, subject to applicable Legal Requirements, the Seller Parties will use commercially reasonable efforts to expunge or delete such information except to the extent and only for so long as, such information (i) is being used by such Seller Party in a manner expressly contemplated by the Related Agreements or (ii) is being retained by the legal department provided such Seller Party maintains the confidentiality of such information in accordance with Section 7.6(b) for so long as such information is retained.

 

  

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(i) The parties acknowledge that the Commodities Trading and Services Agreements shall set forth specific provisions regarding access to records, confidentiality, use restrictions, and similar matters in relation to the provision and receipt of Portfolio Services (as defined in Exhibit A) (including Trading Activities) in relation to the operation of the Acquired Commodities Business Portfolio after the Closing (the “Post-Closing Business”).  Any provision of the Commodities Trading and Services Agreements which expressly addresses matters described in this Section 7.6 in relation to the Post-Closing Business shall, as between the parties to the Commodities Trading and Services Agreements and in relation to such Post-Closing Business, supersede the provisions of this Section 7.6.

 

Section 7.7. Further Assurances.

 

(a) The Parties shall (and shall cause their respective Subsidiaries to) cooperate reasonably with each other and with their respective Representatives in connection with any steps required to be taken as part of their respective obligations under this Agreement, and shall furnish upon request to each other such further information as the other Parties may reasonably request for the purpose of carrying out the intent of this Agreement and the transactions contemplated hereby.

 

(b) Subject to the terms and conditions of this Agreement (including Section 7.3(b)) and to the extent applicable, any Related Agreements, at any time or from time to time after the date of this Agreement, at any Party’s reasonable request and without further consideration, each Party shall do all acts and things as may be reasonably necessary and are within its control to carry out the intent of this Agreement and the Related Agreements, including executing and delivering further instruments of sale, transfer, conveyance, assignment, novation, confirmation or other documents that may be reasonably required, and providing additional materials and information related thereto.

 

(c) Without limiting the generality of the foregoing, prior to the Closing the Sellers shall cooperate with Purchaser’s reasonable requests in transition and integration planning for the Combined Business (including the matters set forth on Schedule 7.7(c) and with respect to regulatory matters), subject to the Non-Disclosure Agreement and compliance with applicable Legal Requirements and with each Party bearing its own expenses related thereto, except that the Purchaser shall reimburse the Sellers for any expenses necessary to accommodate the specific needs of the Purchaser, provided that the Sellers consult with Purchaser prior to incurring any such expenses.

 

(d) If, at any time within twelve (12) months after the Closing, any Party discovers any material right, service, property, or asset used or held for use by any Seller (other than RBS) or any of its respective Subsidiaries in connection with owning and operating the Combined Business prior to the Closing was not transferred or provided to the Purchaser as of the Closing, but subject to any proscriptions in Section 2.2(c), (i) if such right, service, property or asset was used or held for use by such Seller and its respective Subsidiaries prior to the Closing exclusively in connection with owning and operating the Combined Business (or with respect to Intellectual Property and information technology and communications systems exclusively used in the Combined Business), the Parties shall take all commercially reasonable actions to effect the transfer thereof to the Purchaser and (ii) in all other cases, the Parties shall

 

  

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use commercially reasonable efforts to arrange for such Seller and its respective Subsidiaries to provide the Purchaser the benefit of such right, service, property or asset for use in the Combined Business following the Closing pursuant to the terms of the Commodities Trading and Services Agreements to the extent necessary for the conduct of the Combined Business as it was conducted immediately prior to the Closing except as may have otherwise been provided under the Commodities Trading and Services Agreements; provided that (x) upon the transfer to Purchaser under clause (i) above of any right, service, property or asset, Purchaser shall assume any corresponding Liability, and (y) neither the Purchaser nor any Seller or Subsidiary of a Seller shall be obligated to make any payment or deliver anything of value to any Third Party out of pocket in order to effect any transfer described in this sentence.

 

Section 7.8. No Shop.  Each of the Seller Parties agrees that, between the date of this Agreement and the date this Agreement is terminated, it shall not, directly or indirectly, through any Subsidiary, Affiliate, Representative, consortium or otherwise, initiate, solicit or encourage, participate in discussions with respect to, or enter into negotiations of any type, directly or indirectly, provide to any Person non-public information or enter into a confidentiality agreement, letter of intent or purchase agreement or other similar agreement with respect to (a) except with respect to the Reorganization and any transfers of assets from RBS, the Partnership or the SET Companies to the Transferred Companies in furtherance of the transactions contemplated by this Agreement, any sale, lease or other transfer (in whole or part) of any interest in the Combined Business or the Transferred Companies (other than pursuant to Permissible Trading Activities (including the granting of Encumbrances described in clause (f) of the definition of “Permitted Encumbrances” made in connection with Permissible Trading Activities), (b) any merger, consolidation or business combination involving the Combined Business or the Transferred Companies, other than any internal reorganization involving a Seller Party and its Subsidiaries but not involving the Transferred Companies, the Transferred Assets or Assumed Liabilities or (c) the purchase of all or any substantial portion of the assets used in the conduct of the Combined Business (including the Transferred Assets), or (d) any similar extraordinary transaction with respect to the Combined Business or the Transferred Companies.  Each of the Seller Parties agrees that, between the date of this Agreement and the earlier to occur of (i) the Closing or (ii) the date this Agreement is terminated, it shall not terminate, amend, waive or fail to enforce any rights under any confidentiality, non-solicitation or non-hire or similar agreements between any Seller Party (or any of its Affiliates) and a Third Party, which relates to the Combined Business.

 

Section 7.9. Commodities Trading Services Agreement.  The Parties shall negotiate in good faith and use their reasonable best efforts to agree to the final terms of the Commodities Trading and Services Agreements in accordance with the standards of reasonableness set forth in the definition thereof promptly following the date hereof.

 

Section 7.10. Other Agreements.  The Purchaser and the Seller Parties will, and will cause their respective Subsidiaries and the Transferred Companies (in each case, as appropriate) to, enter into, at or prior to the Closing, each of the Related Agreements to which they are a party substantially in accordance with the attached form agreements or, if no form agreement is attached, in a form reasonably satisfactory to each of the Parties.

 

  

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Section 7.11. Transition Plans; Novation; Credit Support

 

(a) Within fifteen (15) days after the execution date of this Agreement, the Sellers and the Purchaser shall form one or more joint transition teams (including, as appropriate, members selected from the Transferred Companies) to plan for and perform various activities set forth in this Section 7.11, as well as other activities to be performed between the date of this Agreement and the Closing.

 

(b) From the date of this Agreement until completed, the Sellers and the Purchaser shall (and shall cause their respective Affiliates to) cooperate in good faith and use their reasonable best efforts (which, subject to Section 7.3(b)(iii), shall not (I) require the Purchaser to pay any additional amounts, renegotiate collateral or credit terms in a manner adverse to the Purchaser or to amend material terms in a manner that would be adverse to Purchaser or otherwise out of the ordinary course in the marketplace in any material respect, or (II) require any Seller Party to pay any additional amounts or do anything adverse to such Seller Party), to conduct a program consistent with this Section 7.11 to secure (i) Consents, if any are required, from Third Parties to assign to Purchaser and its Affiliates the Assigned Contracts and any Contracts included in the RBS Related Assets (other than any transaction that has been designated as a Full Recourse Reference Transaction under the relevant Collateralized TRS Agreement or Section 7.24), including by novation (except as otherwise expressly provided in Section 7.12) and (ii) any Governmental Authorizations (it being understood that each Party shall only be required to use its reasonable best efforts to secure Governmental Authorizations required by such Party) in order for the Purchaser to assume all rights and obligations under these contractual arrangements, and for the Sellers to be released therefrom, as soon as possible on or after Closing.  For the avoidance of doubt, for purposes of the reasonable best efforts obligations of the parties under this Section 7.11(b) and Section 7.11(c)(i) below, the fact that a Trading Agreement or Financial Assurance with respect to which an assignment or novation to or replacement by Purchaser or its Affiliates is to be effected has a positive market value to a Seller Party shall not be deemed to be “adverse” to Seller, and the fact that a Trading Agreement or Financial Assurance with respect to which an assignment or novation to or replacement by Purchaser or its Affiliates is to be effected has a negative market value to a Seller Party shall not be deemed to be “adverse” to Purchaser.

 

(c) (i)           The Purchaser shall use its reasonable best efforts (without the obligation to pay any additional amounts, renegotiate collateral or credit terms in a manner adverse to the Purchaser or to amend material terms in a manner that would be adverse to Purchaser or otherwise out of the ordinary course in the marketplace in any material respect), and each Seller Party shall use its reasonable best efforts (without the obligation to pay any additional amounts or do anything adverse to such Seller Party) to assist the Purchaser, to procure that the Credit Support Replacement Actions shall occur with respect to all guarantees, letters of credit (including any letters of credit issued by RBS or under the RBS Bilateral Facilities or any other letters of credit where any Seller Party is a credit party or account party, and to the extent not replaced at the Closing as provided in Section 7.23(c)), indemnities, surety bonds and other forms of credit support issued or guaranteed by such Seller Party or any of its Affiliates (or with respect to which a Seller Party or any of its Affiliates is a credit party or account party) (a “Financial Assurance”) in connection with an obligation of the Transferred Companies or of any other Person who is a Seller or an Affiliate of a Seller immediately prior to

 

  

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the Closing in respect of the Transferred Assets and/or Assumed Liabilities (or any Financial Assurances which otherwise constitute Assumed Liabilities) except (A) any Financial Assurance provided by a Seller Party as a “credit support document” for the benefit of the Purchaser under the Collateralized TRS Agreements, (B) any Financial Assurance that has terminated by its terms such that no Seller Party or any of its Affiliates can have any further liability or obligation thereunder or (C) any Financial Assurance which is a credit support annex or similar collateral posting arrangement under a Trading Agreement that is included in the Transferred Assets or held by a Transferred Company (each, such Financial Assurance, excluding any described in clauses (A) through (C),  a “Seller Financial Assurance”), in each case in favor of a Third Party (each, a “Financial Assurance Beneficiary”),

 

“Credit Support Replacement Actions” means:

 

(A) (1) (x) with respect to any Seller Financial Assurance which is a guarantee, issuance of a new replacement guarantee of Guarantor (or in the case of the replacement of any guarantee of a Combined Business Real Estate Lease, a guarantee of any other Subsidiary of Guarantor that provides leasing guarantees in connection with real estate related businesses of Guarantor’s Affiliates, unless the relevant Financial Assurance Beneficiary will not accept such a guarantee) in substitution of the Seller Financial Assurance; and (y) with respect to any other form of Seller Financial Assurances, issuance of reasonably equivalent substitute financial assurances in replacement of the Seller Financial Assurance, such form of financial assurance to include letters of credit, indemnities (it being understood that indemnities shall not be a reasonably equivalent substitute for a letter of credit), surety bonds and other forms of credit support (each of (x) and (y), a “Purchaser Financial Assurance”), or

 

(2) novation of any Trading Agreement underlying a Seller Financial Assurance to an Affiliate of Purchaser on terms such that no replacement of the relevant Seller Financial Assurance is required; and

 

(B) full and unconditional release by each Financial Assurance Beneficiary of the Seller Parties and their Affiliates under each Seller Financial Assurance to the extent it relates to the Combined Business and redelivery by each Financial Assurance Beneficiary to such Seller Party or such Affiliate (as the case may be) each original copy of each guarantee, letter of credit or other Contract or instrument constituting or evidencing such Seller Financial Assurance (with respect to redelivery, unless such Seller Financial Assurances also applies to obligations other than obligations of the Combined Business) (in each case, whether or not notice of termination has been delivered with respect to such Seller Financial Assurance).

 

Any Purchaser Financial Assurances that replace guarantees shall be in a form reasonably acceptable to the Purchaser; provided that for purposes of this sentence, each of (I) the standard forms of guarantees currently used by Affiliates of Seller Parties provided in Exhibits D-I through D-III (with any modifications expressly set forth on Schedule 7.11(c)) and (II) the standard forms of guarantees provided in Exhibits D-IV and D-V currently used by Affiliates of Purchaser, with such modifications  as Purchaser’s Affiliates would typically make in response to counterparty requests in the ordinary course of business, shall be considered reasonably

 

  

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acceptable to Purchaser (with Purchaser able to elect among such forms, but if the relevant Financial Assurance Beneficiary does not accept the use of any of the standard forms in (II), the standard forms in (I) shall be considered reasonably acceptable to Purchaser as to such Financial Assurance Beneficiary, and vice versa).   Notwithstanding the foregoing, it shall not be considered a default or breach of the Purchaser’s obligations under this Section 7.11 if Purchaser is unable to procure that any of the Credit Support Replacement Actions take place as set forth above, so long as Purchaser has used its reasonable best efforts as required by this Section 7.11.  For the avoidance of doubt, each party shall bear its own costs associated with the novation process and Credit Support Replacement Actions contemplated by the foregoing provisions of this Section 7.11.

 

(ii)           The Parties acknowledge the importance of the Seller Financial Assurances in the conduct of the Combined Business.  The Purchaser agrees to commence the foregoing process promptly after the date hereof and use its reasonable best efforts to complete the arrangements for the replacement of Seller Financial Assurances with Purchaser Financial Assurances prior to the Closing, but it is understood that so replacing all Seller Financial Assurances is not likely to occur prior to the Closing.  The Sellers Parties agree (A) prior to the Closing, not to (and to cause their Affiliates not to), materially amend, modify, renegotiate or terminate any Seller Financial Assurance other than in the Ordinary Course of Business or with the prior written consent of the Purchaser (such consent not to be unreasonably withheld or delayed) and (B) not to (and to cause their Affiliates not to) terminate any Seller Financial Assurance outstanding on the Closing in whole or in part (other than such a partial termination of a Shared Trading Guarantee (as defined below), where such termination relates solely to obligations other than obligations of the Combined Business) without the prior written consent of the Purchaser during the Trading Activity Period as defined in the term sheet for the Commodities Trading and Services Agreements (such Trading Activity Period, except as provided in (vii) below, the “Transition Financial Assurance Period”), it being understood that during the Transition Financial Assurance Period the Purchaser and its Affiliates shall be permitted to enter into new Commodity Transactions that are supported by such Seller Financial Assurance in accordance with the provisions of this Section 7.11, including the limitations in Section 7.11(d).

(iii)           In addition to the foregoing limitations, the Purchaser acknowledges that Seller Parties and their Affiliates will not issue any new Seller Financial Assurances after the Closing; provided, however, that if the Purchaser or an Affiliate thereof proposes to enter into any Commodity Transaction that would be covered by such Shared Trading Guarantee and the applicable counterparty with respect to such Commodity Transaction requires an increase in the Shared Trading Guarantee Cap as a condition to entry into such proposed Commodity Transaction (a “Cap Increase Transaction”), then the Purchaser may, by written notice to the applicable Seller Party, request (a “Cap Increase Request”) that such Seller Party enter into (or cause its Affiliate to enter into, as applicable) an amendment to such Shared Trading Guarantee to raise the amount of the relevant Shared Trading Guarantee Cap to an amount that does not exceed the lesser of (1) the amount necessary such that, after giving effect to the Requested Amount, the Combined Business Cap Usage Amount (giving effect to the proposed Cap Increase Transaction but otherwise determined as of the date of the relevant Cap Increase Request) will equal the Other Business Cap Usage Amount (determined as of the date of the relevant Cap Increase Request) and (2) the Requested Amount (as defined below), and such Seller Party agrees to enter into (or cause its Affiliate to enter into, as applicable) such an amendment within

 

  

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5 Business Days after its receipt of such request.  Any such amendment shall be in a form produced by, or reasonably acceptable to, the applicable Seller Party.  Any request from Purchaser as contemplated above shall (a) represent that the Combined Business covered by the applicable Shared Trading Guarantee, including the proposed Commodity Transaction, is within the historical trading activity of the Combined Business covered by the applicable Shared Trading Guarantee (measured over the 52 week period immediately preceding the date of this Agreement), (b) set forth the amount of the Shared Trading Guarantee Cap required by the applicable counterparty to enter into such proposed Commodity Transaction (the “Requested Amount”) and (3) set forth the values as reported to Purchaser by the relevant counterparty as contemplated by the “Combined Business Cap Usage Amount” and “Other Business Cap Usage Amount” definitions below.  A “Shared Trading Guarantee” is a Seller Financial Assurance that (1) is a guarantee, (2) applies to both obligations of the Combined Business and obligations other than obligations of the Combined Business and (3) provides that the aggregate liability of the relevant Seller Party or Affiliate thereof under such Seller Financial Assurance is limited to a maximum capped amount (a “Shared Trading Guarantee Cap”).  “Combined Business Cap Usage Amount” means the aggregate net value of the Commodity Transactions which are obligations of the Combined Business (including for the avoidance of doubt any Commodity Transactions entered into after the Closing Date that would be included as Covered Payment Obligations under the relevant Financial Assurance Reimbursement and Indemnity Agreement) as such value is determined by the relevant counterparty (subject to any terms of the Shared Trading Guarantee) for purposes of determining the remaining capacity under the Shared Trading Guarantee Cap.  “Other Business Cap Usage Amount” means the aggregate net value of the Commodity Transactions which are not obligations of the Combined Business, as such value is determined by the relevant counterparty (subject to any terms of the Shared Trading Guarantee) for purposes of determining the remaining capacity under the Shared Trading Guarantee Cap.

 

(iv)           It is acknowledged and agreed that the relevant Seller Party may send notice of termination of the Seller Financial Assurance after the end of the Transition Financial Assurance Period; provided, however, that such termination (I) must be properly executed in accordance with the terms of the Seller Financial Assurance, and (II) in no event shall such termination be effective with respect to any transactions entered into prior to the effective date of the termination of the Seller Financial Assurance; provided, that such transaction existed at the time of Closing or arose under a transaction entered into in accordance with the provisions of this Section 7.11, including the limitations in Section 7.11(d); and provided, further that no termination shall be permitted, if terminating such Seller Financial Assurance would result in a default or breach or a right to terminate or accelerate an amount payable under, or exercise of a pre-emptive right pursuant to, any Assigned Contract or Commodity Transaction which is a Covered Payment Obligation (as defined in the relevant Financial Assurance Reimbursement and Indemnity Agreement) and is outstanding at the end of the Transition Financial Assurance Period.

 

(v)           On any date after the first anniversary of the Closing Date on which a Seller Financial Assurances Credit Rating Event shall have occurred and be continuing with respect to Guarantor, the Purchaser shall maintain for the benefit of the relevant Seller Party or Affiliate thereof (unless at such time the relevant Seller Party and its Affiliate do not have and could not thereafter have any exposure under any Seller Financial Assurance), cash collateral pledged to

 

  

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the Seller Parties and/or their relevant Affiliates under the RBS Financial Assurance Reimbursement and Indemnity Agreement and the Sempra Financial Assurance Reimbursement and Indemnity Agreement (the “Financial Assurance Reimbursement and Indemnity Agreements”) in an amount (without duplication of amounts previously provided in respect of letters of credit as provided in Section 7.23(c)) equal to 102% of the most recently determined mark-to-market exposure of such Seller Party or its Affiliate thereunder, such exposure to be determined and reported to the relevant Seller Party or Affiliate thereof in accordance with the terms of the RBS Financial Assurance Reimbursement and Indemnity Agreement or Sempra Financial Assurance Reimbursement and Indemnity Agreement, as applicable, pursuant to a collateral and security agreement with a third party collateral agent (reasonably acceptable to the Purchaser and the relevant Seller Party) which shall provide for the  posting of funds, return of collateral in excess of exposure or where a Seller Financial Assurances Credit Rating Event ceases to be continuing, payment to Purchaser of interest on funds posted, and other terms customary and reasonably acceptable to Purchaser and the relevant Seller Parent and shall be entered into not later than the 300 days after the Closing Date (but shall not be effective until the first date (after the first anniversary of the Closing Date) on which a Seller Financial Assurances Credit Rating Event has occurred).  For purposes of such arrangement the relevant Seller Party or Affiliate in relation to a Seller Financial Assurance provided pursuant to a transaction which constitutes a Reference Transaction (as defined in the Collateralized TRS Agreements) under the Collateralized TRS Agreements shall be deemed to have no exposure to Purchaser (in view of the inclusion of such Reference Transaction in the credit support arrangements under the Collateralized TRS Agreements).

 

“Seller Financial Assurances Credit Rating Event” means on any relevant date of determination that Guarantor’s senior unsecured long-term indebtedness is not rated at least the Requisite Exposure Rating by at least two of Standard & Poor’s, Fitch or Moody’s Investor Service, Inc., with the “Requisite Exposure Rating” being “A-” in the case of Standard & Poor’s and Fitch and “A3” in the case of Moody’s Investor Service, Inc. on such date.

 

(vi)           The Purchaser will enter into the RBS Financial Assurance Reimbursement and Indemnity Agreement and Sempra Financial Assurance Reimbursement and Indemnity Agreement, as applicable, to provide, among other things, for the Purchaser’s obligation to reimburse, pay and indemnify the Sellers in respect of any amounts such Seller Party or Affiliates is required to pay under any Seller Financial Assurance.

 

(vii)           Notwithstanding the foregoing, the Seller Parties may immediately terminate the Transition Financial Assurance Period as to the relevant Seller Financial Assurance by written notice to the Purchaser in the event that (A) the Purchaser or any of its applicable Affiliates (including any Transferred Company) is in default of any payment or delivery obligations with respect to any obligation that is the subject of a Seller Financial Assurance (other than with respect to documentary letters of credit), where such default has resulted in (X) a claim (other than with respect to documentary letters of credit) being made under such Seller Financial Assurance (other than any default that is being disputed by the Purchaser in accordance with Section 1.02(d) of the relevant Financial Assurance Reimbursement and Indemnity Agreement), and (Y) an Indemnitor Failure to Pay (as defined in the Financial Assurance Reimbursement and Indemnity Agreements) in relation to such Seller Financial Assurance under the Financial Assurance Reimbursement and Indemnity Agreements, or with respect to any documentary

 

  

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letters of credit, an Indemnitor Failure to Pay has occurred in relation to the obligation to reimburse the Seller pursuant to the applicable Financial Assurance Reimbursement and Indemnity Agreements; provided that if the obligation in respect of which the default occurs is not in respect of a Trading Agreement, then the termination under this clause (A) may only be made with respect to the Seller Financial Assurance covering such obligation; or (B) RBS or SET, as applicable, has designated an Early Termination Date (as defined in the Collateralized TRS Agreements) under the relevant Collateralized TRS Agreement;

 

(viii)           Notwithstanding anything in this Agreement to the contrary, following the date hereof and through the Closing Date, the Purchaser shall have the right to contact and have discussions with each Financial Assurance Beneficiary to the extent reasonably necessary to satisfy its obligations under this Section 7.11; provided that the initial contacts with any such Financial Assurance Beneficiary shall be coordinated in advance between the Purchaser and the Seller Parties and thereafter, Purchaser shall use commercially reasonable efforts to copy Seller Parties on any such contact by writing and to give the relevant Seller Parties reasonable prior notice of any discussion or meeting with a Financial Assurance Beneficiary that is initiated by Purchaser prior thereto, and upon request any Seller Party shall be permitted to participate in any such discussion or meeting with any such Financial Assurance Beneficiary.

 

(d) Notwithstanding anything to the contrary contained herein, Purchaser shall not (i) enter into any transactions after Closing that would be covered by a Seller Financial Assurance (x) after the end of the Transition Financial Assurance Period and (y) unless such transaction would be permitted to be entered into as a Trading Activity at such time (including as a result of there being no termination or suspension of the applicable Trading Activity at such time) if transacted by the Purchaser or its Affiliates under (and as such terms are defined in) the Commodities Trading and Services Agreement (whether or not the obligations covered by such Seller Financial Assurance are in fact subject to the Commodities Trading and Services Agreement) or (ii) after the end of the Transition Financial Assurance Period,  amend, modify extend or renegotiate any material term of any obligation that is covered by a Seller Financial Assurances in any manner that increases or extends the potential exposure of a Seller Party under a Seller Financial Assurance.

 

Section 7.12. Termination or Amendment of Certain Agreements.

 

(a) With effect as of the Closing Date, the Seller Parties shall, and shall cause their Subsidiaries to, terminate (without any default, charge, cost, liability or penalty of any kind to the Purchaser or its Subsidiaries or the Transferred Companies) all Contracts between (i) any Transferred Company, and (ii) any Seller Party or any of their directors, officers, members or Subsidiaries or Affiliates (other than any Transferred Company), including the Contracts set forth on Schedule 3.13, other than (w) any Trading Agreements (other than the Market Rate Swap Agreements, which are being terminated at the Closing only in respect of the Combined Business), including the CTA Master Agreement, (x) the Related Agreements, (y) any Seller Financial Assurances that remain in place after the Closing Date, subject to the provisions of Section 7.11, and (z) those set forth on Schedule 7.12(a).  In addition, the Sellers will amend the CTA Master Agreement at Closing to terminate (without any default, charge, cost, liability or penalty of any kind to the Purchaser or its Subsidiaries or the Transferred Companies) the agency of each Transferred Company (and each employee thereof) and each employee of the SET

 

  

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Companies transferring to the Purchaser in accordance herewith and will also terminate at Closing any related power of attorney.

 

(b) Prior to the Closing, the Seller Parties shall, and shall cause the Partnership and the SET Companies to not renew or extend any of the Leases in respect of any single hulled vessel set forth on Schedule 7.12(b).

 

Section 7.13. Use of Certain Intellectual Property.

 

(a) The Purchaser agrees that the Purchaser and the Transferred Companies will have no right, title, or interest in or right to use any Trademarks listed on Schedule 7.13 hereto and any Trademark that comprises or includes such Trademarks or is confusingly similar thereto (collectively, the “Seller Parent Marks”); provided, that such restrictions shall not apply to the use of “energy,” “energy trading” or “metals.”  The Parties acknowledge that certain of the Transferred Assets and materials and assets of the Transferred Companies (including, but not limited to, signage, stationery and promotional materials) currently bear the Seller Parent Marks.  Within ninety (90) days after the Closing Date, the Purchaser shall, and shall cause the Transferred Companies to (i) cease all use of Seller Parent Marks, (ii) take all necessary actions to either remove, conceal, cover, redact and/or replace all Seller Parent Marks from such materials and assets or destroy such materials and assets in the possession or control of the Purchaser or the Transferred Companies and (iii) make all necessary filings and use commercially reasonable efforts to cause all applicable Governmental Bodies to change all applications, registrations and filings, including, but not limited to, corporate names, seals and certificates, such that they will not include any Seller Parent Marks (provided, that if the applicable Governmental Bodies do not make such changes within one hundred and twenty (120) days after the Closing, the Purchaser and/or the Transferred Companies shall request from Sellers renewable extensions of additional ninety (90) day periods for the Governmental Bodies to effect such changes, consent for which shall be considered in good faith and not be unreasonably withheld, provided that the Purchaser and the Transferred Companies shall continue to use commercially reasonable efforts to cause all applicable Governmental Bodies to make such changes as soon as practicable).  For ninety (90) days after Closing, on condition that the Purchaser and the Transferred Companies use reasonable efforts to wind down use of the Seller Parent Marks and in any event cease all use upon the expiration of the ninety (90) day period (or such other period solely as permitted by Section 7.13(a)(iii)), Seller Parties hereby grant to the Purchaser and Transferred Companies, effective as of the Closing Date, a worldwide, royalty-free, fully paid-up, non-exclusive, non-transferable, non-assignable right and license to use any and all Seller Parent Marks: (i) in connection with the operation of the Combined Business solely in a manner consistent with past practice, or (ii) in substantially the same manner as used in the Combined Business prior to the Closing Date.  The Purchaser shall, and shall cause the Transferred Companies to, take all necessary actions to ensure that the use of the Seller Parent Marks is either properly notified or registered with the FSA and in accordance with Applicable Laws for the period permitted by Section 7.13(a).

 

(b) As soon as reasonably practicable after the Closing, but in no event later than ninety (90) days after the Closing Date, the Purchaser shall amend the Governing Documents of each of the Transferred Companies, and shall cause each of the Transferred Companies to (i) take all actions and make all filings  to cause their names to be

 

  

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changed to such other name that does not include the Seller Parent Marks, and (ii) deliver to the Seller Parents evidence of such change in such names within a reasonable period of time after the Seller Parents’ reasonable request.

 

(c) The Purchaser hereby acknowledges and agrees that neither it nor any of its Affiliates (including, as of the Closing, the Transferred Companies) shall acquire any goodwill, rights or benefits arising from the Seller Parent Marks and that all such goodwill, rights and benefits shall accrue absolutely to the Seller Parents.

 

(d) After the Closing Date, the Seller Parties shall not, and shall cause each of their respective Affiliates not to, exploit or make use of, or authorize any Third Party to exploit or make use of, any of the Transferred Combined Business Intellectual Property, except as permitted under this Agreement or by any Related Agreement.  After the Closing Date, nothing in this Agreement shall give the Purchaser or the Transferred Companies or any of their respective Affiliates the right to exploit or make use of, or authorize any Third Party to exploit or make use of, any Intellectual Property owned by the Seller Parties or their Subsidiaries (other than the Transferred Companies) included in the Excluded Assets, except with respect to the trademark license under this Agreement or except as provided in any Related Agreement.

 

(e) Effective as of the Closing Date, subject to the last sentence of this Section 7.13(e), the Seller Parties and their respective Subsidiaries (other than the Transferred Companies) covenant to the Purchaser and the Transferred Companies that, after the Closing Date, the Seller Parties shall not bring or threaten to bring a Proceeding against the Purchaser or the Transferred Companies that alleges that the Purchaser’s or the Transferred Companies’ conduct of the Combined Business after the Closing Date in a manner consistent with such conduct prior to the Closing Date or a reasonable evolution of the Combined Business, including its integration with the Purchaser (provided that this covenant shall not extend to any other businesses of the Purchaser), infringes, violates or misappropriates any Intellectual Property (other than Seller Parent Marks) owned by the Seller Parties or their Subsidiaries (other than the Transferred Companies) as of the Closing Date.  The Purchaser and the Transferred Companies may grant the benefits of this covenant to (i) any immediate or successive successors or assignees of the Combined Business or any portion thereof, and (ii) to their clients, customers, vendors, and business partners, solely as relates to their activities with the Combined Business.  Any successor or assignee to any of the Intellectual Property covered by the foregoing covenant is deemed automatically bound by the terms hereof.  This covenant shall be subject to any terms with respect to the Intellectual Property owned by the Seller Parties or their Subsidiaries and the covered activities of the Purchaser and the Transferred Companies after the Closing Date, as may be set forth in this Agreement or any Related Agreement.  For the avoidance of doubt, notwithstanding anything to the contrary contained in this Section 7.13, but subject to Section 7.7, nothing herein shall grant to the Purchaser or any other Person any rights to, and the covenant not to sue shall not apply to, any Intellectual Property of the Sellers or any of their Subsidiaries included in the Excluded Assets that is the subject of a Related Agreement, including the source code and applications that are the subject of the Commodities Trading and Services Agreement.

 

(f) To the extent that any of the Transferred Combined Business Intellectual Property and Combined Business Data is necessary for the Seller Parties or their Subsidiaries to

 

  

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perform services to the Purchaser or the Transferred Companies pursuant to the Commodities Trading and Services Agreements, the Seller Parties and their Subsidiaries shall have a nonexclusive right to use such Transferred Combined Business Intellectual Property and Combined Business Data for the purpose of and during the term of the Commodities Trading and Services Agreements.

 

Section 7.14. [Intentionally left blank].

 

Section 7.15. Distributions.  Notwithstanding anything in this Agreement to the contrary, the Seller Parents shall have the right to cause the Transferred Companies to pay cash dividends and make cash distributions to any of the Seller Parents or their respective Subsidiaries at any time prior to the Closing and to make such distributions as are necessary to effect the Reorganization.

 

Section 7.16. Non-Solicit and Non-Hire.  Each Seller Party agrees that, effective as of the Closing Date and for a period of two years thereafter, neither such Seller Party nor any of its Affiliates shall, without the prior written consent of the Purchaser, solicit or hire, directly or indirectly any Combined Business Employee or any current officer or director of a Transferred Company; provided, however, that no Seller Party shall be prohibited from (i) soliciting or employing any such Person whose employment has been terminated or will be terminated, in each case, pursuant to a notice of termination by or from the Purchaser or any of its Subsidiaries following the Closing (other than if such termination was in connection with a violation of this Section 7.16), or (ii) making general advertisements for employment and hiring individuals who respond to such general advertisements; provided that this clause (ii) shall not permit such Seller Party or its Affiliates to hire any Person not otherwise permitted under this Section 7.16.

 

Section 7.17. Notices of Certain Events.

 

(a) Prior to the Closing, each of the Seller Parties, on the one hand, and the Purchaser, on the other hand, shall (and shall cause their Subsidiaries to) promptly notify the each other of:

 

(i) any written notice or other written communication from any Person alleging that the Consent of such Person is or may be required in connection with the transactions contemplated by this Agreement or the Related Agreements; and

 

(ii) any material written notice or other material written communication to or from any Governmental Body in connection with the transactions contemplated by this Agreement or the Related Agreements.

 

  

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(b) Prior to the Closing, the Seller Parties shall (and shall cause their Subsidiaries, including the Transferred Companies, to) promptly notify (and with respect to subsections (i) and (ii) below, consult to the extent reasonably practicable, with) the Purchaser regarding:

 

(i) the resignation, or the termination of employment of, any Combined Business Employee holding the position of senior managing director (or any more senior position) or any Combined Business Employee who (A) has historically or could reasonably be expected to earn at least total annual compensation in excess of $750,000 or annual bonus compensation in excess of $300,000 or (B) has the right or possibility of earning a share of the Net Trading Revenues (or other revenue, income or margin metric) generated by such Combined Business Employee (directly or through the results of a group of employees);

 

(ii) any material disputes (including litigation or written notice threatening litigation) with counterparties to Trading Agreements that following Closing would be Assigned Trading Agreements involving alleged damages, or loss or diminution of Net Trading Revenue in excess of $5,000,000 per applicable Trading Agreement (or series of related Trading Agreements with the same or related counterparties); and

 

(iii) any change to the valuation and other conventions and principles set forth on Schedule 1.1(e).

 

(c) The Sellers shall provide to the Purchaser two (2) Business Days prior to the Closing an updated Schedule 3.19 as of the Closing.

 

Section 7.18. Cooperation.

 

(a) In the event and for so long as any Party actively is contesting or defending any Proceeding by a Third Party (and to which none of the other Parties is a party having an interest adverse to that of such Party) in connection with any transaction contemplated under this Agreement or any Related Agreements at the reasonable request of such Party to any other Party, the requested Party shall, and shall cause its Subsidiaries and controlled Affiliates to, cooperate reasonably with the requesting Party and its counsel in the contest or defense of such Third-Party Claim, reasonably cooperate with requests to make available its personnel and provide reasonable access to its books and records during normal business hours (subject to appropriate confidentiality protections) as shall be reasonably necessary in connection with such contest or defense.  This Section 7.18(a) shall not apply to any Third-Party Claim to which Section 9.5(c) applies.

 

(b) At the reasonable request of any Party, the other Party shall, and shall cause its Subsidiaries and controlled Affiliates to, cooperate reasonably with the requesting Party and its accountants in (i) the preparation of any financial statements or tax returns and (ii) the response to or conduct of any tax audit or other audit (including by making available its personnel and providing testimony and reasonable access to its books and records during normal

 

  

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business hours, subject to appropriate confidentiality protections, as may be reasonably requested by such Party in connection therewith).

 

(c) In the case of each of clause (a) and (b), the requesting Party shall pay the reasonable expenses incurred in providing such cooperation (including legal fees and disbursements) by the Party providing such cooperation and by its officers, directors, employees and agents.

 

Section 7.19. Run-Off Insurance.

 

(a) Prior to the Closing, RBS shall obtain a quote for a dedicated directors and officers liability run-off insurance policy for an aggregate coverage amount of $100 million, covering the individuals serving as directors and officers of any of the Transferred Companies with respect to matters existing or occurring at or prior to the Closing Date, for a period of six years after the Closing Date, on terms and conditions substantially similar, excluding coverage amounts, as RBS’s directors and officers liability insurance covering the SET Company directors and officers.  RBS shall notify the Purchaser of such quote and, upon the request of the Purchaser, RBS shall bind such policy, effective as of the Closing Date, and the Purchaser shall pay (or reimburse RBS for) (i) one-half of the first $2,000,000 of the cost of such policy, and (ii) any cost thereof in excess of $2,000,000.

 

(b) The Seller Parties shall (i) promptly notify Purchaser and the appropriate insurance company of any claims arising under the Policies prior to the Closing, (ii) maintain all Policies in full force and effect at all times prior to the Closing.

 

Section 7.20. Lehman Payable.

 

From and after the Closing, (a) the Purchaser shall not (and it shall cause its Subsidiaries not to) pay, discharge, settle, bargain, compromise or otherwise dispose of the Lehman Payable, unless (i) approved or instructed in writing by RBS or (ii) otherwise required by Legal Requirements or an Order, and (b) subject to clause (a)(ii), RBS shall have the sole and exclusive right (i) to pay, discharge, settle, bargain, compromise or otherwise dispose of the Lehman Payable, including by negotiating any such matter with Lehman Brothers Holdings, Inc. and its Subsidiaries (“Lehman”) and (ii) to conduct any claim by or against Lehman in respect of the Lehman Payable.  The Purchaser agrees that the provisions of Section 7.18(a) shall apply in respect of RBS’s rights under this Section 7.20.  If RBS notifies the Purchaser that Lehman has released and discharged the Lehman Payable, in full or in part, which release and discharge is confirmed in writing by Lehman to the Purchaser, (1) the Purchaser shall (or shall cause its Subsidiaries to) pay to RBS promptly after receipt of such notice, (x) in the case of a full release and discharge, an amount equal to the Lehman Payable, or (y) in the case of a partial release and discharge, an amount equal to the amount of the Lehman Payable that was released and discharged, less any interest payable on the remaining balance of the Lehman Payable that is then due to Lehman (the “Lehman Remaining Amount”), in each case, by wire transfer of immediately available funds to an account(s) specified in writing by RBS, and (2) concurrently, the Purchaser shall pay (or cause its Subsidiaries to pay) to Lehman any Lehman Remaining Amount, plus any interest payable thereon.  If RBS notifies the Purchaser that Lehman will not release or discharge any portion of the Lehman Payable, then, promptly after receipt of such

 

  

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notice, the Purchaser shall pay (or cause its Subsidiaries to pay) to Lehman the Lehman Payable, plus any interest payable thereon, and RBS shall pay to the Purchaser (or any Subsidiary designated by Purchaser) the amount of such interest, by wire transfer of immediately available funds to an account(s) specified in writing by the Purchaser.

 

Section 7.21. Freight Book Valuation.

 

As promptly as practicable after the date hereof, the Parties shall cooperate to determine an appropriate valuation for the freight book reflected in the Combined Business Reference Balance Sheet, such valuation to be determined in accordance with the principles and methodology for such book set forth on Schedule 1.1(c).  If the Parties are unable to agree on such valuation within 45 days following the date hereof, then either the Purchaser or the Seller Parents, acting jointly, shall have the right to refer the matter for resolution to the Accounting Expert in accordance with the procedures set forth in Section 2.7(c), with such procedures applying mutatis mutandis.

Section 7.22. Releases.

 

The Seller Parties will procure the release (without any continuing Liability to any Transferred Company), effective as of the Closing Date, of the Transferred Companies as borrowers, pledgors or account beneficiaries under any credit facility to which any of the Seller Parties (or any of their respective Subsidiaries (other than the Transferred Companies)) is a party and shall be permitted to replace letters of credit with cash collateral and take other necessary or appropriate actions in connection therewith, but subject to the obligations of the Purchaser pursuant to Section 7.23.

 

Section 7.23. Repayment of Combined Business Debt.

 

(a) At the Closing, the Purchaser shall pay (on behalf of the relevant debtors) to (i) RBS (on account of RBS and its relevant Subsidiaries) and/or to its designated Subsidiaries by wire transfer of immediately available funds to such account(s) as identified to the Purchaser in writing at least two (2) Business Days prior to the Closing by RBS, an amount equal to the portion of the good faith estimate of the RBS/SET Debt included in the Combined Business Debt as of the Closing Date as set forth on the Estimated Closing Balance Sheet (the “Estimated Closing RBS/SET Debt”) excluding any RBS/SET Debt that constitutes reimbursement obligations in respect of outstanding letters of credit (the Estimated Closing RBS/SET Debt, excluding such reimbursement obligations, the “Adjusted Estimated Closing RBS/SET Debt”) that is owed to or by RBS or any of its Subsidiaries (other than the Partnership and the SET Companies) and (ii) the Partnership (on account of the Partnership and its relevant Subsidiaries (other than the Transferred Companies)) by wire transfer of immediately available funds to such accounts(s) as identified to the Purchaser in writing at least two (2) Business Days prior to the Closing by the Partnership, an amount equal to the portion of the Adjusted Estimated Closing RBS/SET Debt owed to the Partnership or any SET Company.  Upon payment of such amounts, each of RBS, the Partnership, and in respect of clause (i) of this Section 7.23(a), any Third Party, if applicable, shall acknowledge (in writing, in a form reasonably satisfactory to the Purchaser) on behalf of itself and each relevant Subsidiary the repayment and discharge of (including the release of all Encumbrances relating to) the relevant portions of all such outstanding Combined

 

  

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Business Debt included in the Adjusted Estimated Closing RBS/SET Debt (including the discharge, notwithstanding anything herein to the contrary, of all intercompany payables and receivables described in clause (b) of the definition of “Combined Business Debt”).  All payments pursuant to this Section 7.23(a) in respect of the RBS/SET Debt shall be subject to adjustment pursuant to Section 7.23(d) hereunder.

 

(b) At the Closing, the Purchaser shall repay (on behalf of the relevant debtors) by wire transfer of immediately available funds an amount equal to the Closing Payoff Combined Business Debt (including, for the avoidance of doubt, any penalties, fees and expenses payable in accordance with the terms thereof but excluding any reimbursement obligation in respect of outstanding letters of credit) included in the Estimated Closing Balance Sheet in full satisfaction thereof.

 

(c) With respect to any Closing Payoff Combined Business Debt or RBS/SET Debt that constitutes a reimbursement obligation in respect of letters of credit outstanding at the Closing, the Purchaser shall (i) use its reasonable best efforts to cause all such letters of credit to be replaced (with a new comparable letter of credit or cash) as of the Closing and, together with the Seller Parties shall cause the original letters of credit to be returned for cancellation to the issuing institution as of the Closing in each case as provided in Section 7.11 and (ii) with respect to any such letters of credit that cannot be replaced as of the Closing as provided in clause (i) notwithstanding Purchaser’s reasonable best efforts, provide the Partnership and RBS, as applicable, with sufficient cash by wire transfer of immediately available funds to the accounts provided above to cash collateralize the reimbursement obligations in an amount equal to 100% of the outstanding amount of each such letter of credit (or such greater percentage of cash collateral as is required under the terms of the Closing Payoff Combined Business Debt or RBS/SET Debt), with such cash collateral to be held and, to the extent not used to reimburse drawings and pay related fees and expenses under the applicable letter of credit, returned to Purchaser in accordance with customary documentation to be reasonably agreed upon by the Parties. With respect to any funds delivered pursuant to the foregoing clause (ii), the Partnership and/or RBS, as the case may be, shall promptly upon receipt of such funds (and in any event within one Business Day) use such funds to fully cash collateralize the reimbursement obligations of any such letters of credit as required by and pursuant to the terms of the applicable Closing Payoff Combined Business Debt or RBS/SET Debt.

 

(d) If the Final Closing RBS/SET Debt excluding any RBS/SET Debt that constitutes reimbursement obligations in respect of outstanding letters of credit (the “Adjusted Final Closing RBS/SET Debt”) exceeds the Adjusted Estimated Closing RBS/SET Debt, the Purchaser shall pay (on behalf of the relevant debtors), within two (2) Business Days of determination of the Final Closing RBS/SET Debt, (i) to RBS (on behalf of itself and each relevant Subsidiary) an amount equal to the portion of such excess attributable to the RBS/SET Debt that is owed to or by RBS or any of its Subsidiaries (other than the Partnership and the SET Companies) by wire transfer in immediately available funds to such account(s) as may be specified by RBS and (ii) to the Partnership (on behalf of itself and its Subsidiaries) an amount equal to the portion of such excess attributable to the RBS/SET Debt that is owed to the Partnership or any SET Company (other than the Transferred Companies) by wire transfer in immediately available funds to such account(s) as may be specified by the Partnership.  If the Adjusted Final Closing RBS/SET Debt is less than the Adjusted Estimated Closing RBS/SET

 

  

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Debt, (i) RBS (on behalf of itself and each relevant Subsidiary) shall repay, within two (2) Business Days of the determination of the Final Closing RBS/SET Debt, an amount equal to the portion of such deficit attributable to the RBS/SET Debt that is owed by RBS or any of its Subsidiaries (other than the Partnership and the SET Companies) by wire transfer in immediately available funds to an account or accounts specified by the Purchaser and (ii) the Partnership (on behalf of itself and its Subsidiaries) shall (and Seller Parents shall cause the Partnership to) repay, within two (2) Business Days of the determination of the Final Closing RBS/SET Debt an amount equal to the portion of such deficit attributable to the RBS/SET Debt that is owed by the Partnership or any SET Company (other than the Transferred Companies) by wire transfer in immediately available funds to an account or accounts specified by the Purchaser.  If the Adjusted Final Closing RBS/SET Debt is greater than the Adjusted Estimated Closing RBS/SET Debt but either the portion of the RBS/SET Debt owed to or by RBS or any of its Subsidiaries (other than the Partnership or any of its Subsidiaries) is less than the estimated amount of the same or the portion of the RBS/SET Debt owed to the Partnership or any of its Subsidiaries (other than the Transferred Companies) is less than the estimated amount of the same, then RBS or the Partnership, as applicable, shall pay over to the other the amount by which its portion of the RBS/SET Debt was less than the estimated amount of the same.  If the Adjusted Final Closing RBS/SET Debt is less than the Adjusted Estimated Closing RBS/SET Debt but either the portion of the RBS/SET Debt owed to or by RBS or any of its Subsidiaries (other than the Partnership or any of its Subsidiaries) is greater than the estimated amount of the same or the portion of the RBS/SET Debt owed to the Partnership or any of its Subsidiaries (other than the Transferred Companies) is greater than the estimated amount of the same, then RBS or the Partnership, as applicable, shall pay over to the other the amount by which the other’s portion of the RBS/SET Debt exceeds the estimated amount of the same.

 

Section 7.24. Restricted Collateral Transactions.  If any Party that is a party to a Collateralized TRS Agreement determines that any Reference Transaction (as defined in the applicable Collateralized TRS Agreement) other than an existing Full Recourse Reference Transaction (as defined in the applicable Collateralized TRS Agreement) is a Restricted Collateral Transaction, then the Seller Party that is a party to such Collateralized TRS Agreement agrees either to (i) designate such Restricted Collateral Transaction as a Full Recourse Reference Transaction under such Collateralized TRS Agreement effective as of the Closing Date or (ii) enter into another arrangement to afford the Purchaser all economic benefits associated with the relevant collateral satisfactory to the Purchaser in its good faith discretion following consultation in good faith with the other party.  “Restricted Collateral Transaction” means, with respect to a Collateralized TRS Agreement, any Reference Transaction with respect to which, for reasons of (a) the relevant Seller’s contractual obligations or commitments to the relevant Reference Counterparty or other creditors of such Reference Counterparty, (b) any restriction or subordination of security over such collateral to liens of a lending syndicate or other creditors or (c) similar material and substantial restrictions, it will be commercially impracticable for the relevant Seller to transfer the collateral securing such Reference Transaction to the Purchaser or its Affiliates in connection with a novation of the relevant Reference Transaction pursuant to Section 7.11.

 

  

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ARTICLE VIII.

TERMINATION

 

Section 8.1. Termination.  This Agreement may be terminated at any time prior to the Closing solely as follows:

 

(a) by mutual written consent of all of the Parties;

 

(b) on or after the Outside Date:

 

(i) by mutual agreement of the Seller Parents by notice to the Purchaser if the condition to Closing set forth in Section 6.1(h) has not been satisfied or waived as of such date;

 

(ii) on or after December 2, 2010, by RBS or Sempra Energy by notice to the other Parties if the condition to Closing set forth in Section 6.1(h) has not been satisfied or waived as of such date;

 

(iii) by mutual agreement of the Seller Parents, on the one hand, so long as no Seller Party is then in material breach of this Agreement, which breach has caused the Closing not to occur prior to such date, or the Purchaser, on the other hand, so long as Purchaser is not then in material breach of this Agreement, which breach has caused the Closing not to occur prior to such date, by notice to the other Parties, if the Closing has not occurred on or before the date such notice is given;

 

(iv) on or after December 2, 2010, by RBS or Sempra Energy, so long as no Seller Party is then in material breach of this Agreement, which breach has caused the Closing not to occur prior to such date, by notice to the other Parties, if the Closing has not occurred on or before the date such notice is given;

 

(v) by mutual agreement of the Seller Parties by notice to the Purchaser if either of the conditions to Closing set forth in Section 6.1(a) or Section 6.1(b) has not been satisfied or waived as of such date and is not reasonably capable of satisfaction prior to December 2, 2010, so long as no Seller Party is then in material breach of this Agreement, which breach has caused the failure of such condition;

 

(vi) on or after December 2, 2010, by RBS or Sempra Energy by notice to the other Parties if either of the conditions to Closing set forth in Section 6.1(a) or Section 6.1(b) has not been satisfied or waived as of such date, so long as no Seller Party is then in material breach of this Agreement, which breach has caused the failure of such condition; or

 

(vii) by the Purchaser by notice to the other Parties if either of the conditions to the Closing set forth in Section 5.1(a) or Section 5.1(b) has not been satisfied or waived as of such date and is not reasonably capable of

 

  

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satisfaction prior to December 2, 2010, so long as Purchaser is not then in material breach of this Agreement, which breach has caused the failure of such condition.

 

Section 8.2. Termination Awards.

 

(a) In the event that this Agreement is terminated by either or both of RBS and Sempra Energy pursuant to Section 8.1(b)(iii) or (iv), and (i) the failure to satisfy any of the conditions set forth in Article V and/or Article VI (disregarding in any case any condition on which the Purchaser is not entitled to rely pursuant to Section 5.2) by the date of such termination is the result of or is based upon the underlying basis of the material breach of any provision of this Agreement by the Purchaser or (ii) all conditions set forth in Articles V (disregarding any condition on which the Purchaser is not entitled to rely pursuant to Section 5.2) and VI were satisfied prior to such termination (or, in respect of conditions to be performed on the Closing Date, were capable of being satisfied prior to such termination) but the Purchaser fails to comply with its Closing obligations hereunder then, in each case and in addition to any other remedy provided in this Agreement or at law or in equity, the Purchaser shall pay to the Seller Parents, as promptly as possible following such termination (and in any event within five (5) Business Days of receipt of notice of such termination), by wire transfer of immediately available funds to the accounts designated in writing by the Seller Parents, an amount equal in the aggregate to $200,000,000 allocated among the Seller Parents in the manner set forth on Schedule 8.2.

 

(b) In the event that this Agreement is terminated by the Purchaser pursuant to Section 8.1(b)(iii) and (i) the failure to satisfy any of the conditions set forth in Article V and/or Article VI (disregarding in any case any condition on which any Seller Party is not entitled to rely pursuant to Section 6.2) by the date of such termination is the result of or is based upon the underlying basis of the material breach of the covenants and other agreements contained in Section 7.3 (including the failure to make any necessary filings in respect of the Mandatory Governmental Approvals; it being understood that a failure to make a filing in respect of an immaterial Governmental Authorization shall not be deemed a material breach) or Section 7.8 by any Seller Party or (ii) all conditions set forth in Articles V and VI (disregarding any condition on which any Seller Party is not entitled to rely pursuant to Section 6.2) were satisfied prior to such termination (or, in respect of conditions to be performed on the Closing Date, were capable of being satisfied prior to such termination) but any Seller Party fails to comply with its Closing obligations hereunder, then, in addition to any other remedy provided in this Agreement or at law or in equity, each of the Seller Parents, severally (in accordance with its allocated share as set forth on Schedule 8.2) and not jointly, pay to the Purchaser, as promptly as possible following such termination (and in any event within five (5) Business Days of receipt of notice of such termination), by wire transfer of immediately available funds to the accounts designated in writing by the Purchaser, an amount equal in the aggregate to $50,000,000.

 

(c) The Purchaser, on the one hand, and the Seller Parties, on the other hand, acknowledge that the agreements contained in this Section 8.2 are an integral part of the transactions contemplated by this Agreement, that without these agreements the Parties would not have entered into this Agreement, and that any amounts payable pursuant to this Section 8.2 do not constitute a penalty.  If any amounts due pursuant to this Section 8.2 are not paid within

 

  

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the time period specified in this Section 8.2, the Party (or Parties) that fail to make such payment shall pay the costs and expenses (including reasonable legal fees and expenses) incurred by the recipient Party in connection with any action, including the filing of any lawsuit, taken to collect payment of such amounts, together with interest on such unpaid amounts at the prime lending rate prevailing during such period as published in The Wall Street Journal, calculated on a daily basis from the date such amounts were required to be paid until the date of actual payment.

 

Section 8.3. Effect of Termination.  In the event this Agreement is terminated pursuant to Section 8.1, all further obligations of the Parties hereunder shall terminate and this agreement shall become null and void and of no further force and effect, except for the agreements and obligations set forth in Section 8.2, this Section 8.3 and Article X, and except that such termination shall not relieve any Party of any Liability for any knowing breach of this Agreement or fraud prior to such termination.

 

ARTICLE IX.

INDEMNIFICATION

 

Section 9.1. Survival.  All covenants and other agreements in this Agreement to be performed after the Closing shall survive the Closing and the consummation of the transactions contemplated hereby until so performed.  All representations and warranties in this Agreement shall survive the Closing and the consummation of the transactions contemplated hereby for a period of twelve (12) months from the Closing Date, except that

 

(a) the representations and warranties contained in Sections 3.1, 3.2(a) (other than the last sentence), 3.2(b)(i), 3.2(b)(ii), 3.3(a), 3.3(b)(i) (but only the first sentence thereof), 3.9, 4.1, 4.2 and 4.5 shall survive indefinitely,

 

(b) the representations and warranties contained in Sections 3.5(h) and 3.8 shall survive until thirty (30) days after the expiration of the applicable statute of limitations (which, for the avoidance of doubt, in the case of the United Kingdom expires six (6) years after the filing of the applicable Tax Return or twenty-one (21) years after the filing of the applicable Tax Return in cases of fraud or negligence),

 

(c) the representations and warranties contained in Sections 3.5 (other than Section 3.5(h)), 3.10 and 3.15 shall survive the Closing and the consummation of the transactions contemplated hereby for a period of three (3) years following the Closing Date, and

 

(d) the representations and warranties contained in Section 3.6 shall survive the Closing and the consummation of the transactions contemplated hereby for a period of twenty-four (24) months following the Closing Date.

 

The right to indemnification, reimbursement or other remedy based upon such representations, warranties, covenants and agreements shall not be affected by any investigation conducted with respect to, or any knowledge actually acquired at any time, whether before or after the execution and delivery of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or compliance with any such representation, warranty, covenant or agreement.

 

  

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Section 9.2. Indemnification and Reimbursement by the Seller Parents.  From and after the Closing Date and subject to the limitations set forth in Section 9.4, each of RBS and Sempra Energy, each severally, but not jointly, and in accordance with such applicable Seller Parent’s Indemnity Share (except as otherwise provided in Section 9.4(b)), will indemnify and hold harmless, without duplication, the Purchaser and its Affiliates, and each of their members, officers, agents, employees and other Representatives (collectively, the “Section 9.2 Indemnified Persons”), from and against any and all Damages, including any Damages to the Combined Business, resulting from or attributable to:

 

(a) any breach of any representation or warranty made by a Seller Party in Article III of this Agreement (as made as of the date hereof and as if made as of the Closing), excluding De Minimis Damages unless the De Minimis Damages resulted from a breach of a representation or warranty contained in Section 3.8;

 

(b) any material breach of or failure to perform or comply with any covenant or agreement of the Seller Parties in this Agreement;

 

(c) any of the Specified Matters and with respect to the matters and on the basis set forth on Schedule 9.2(c) of the Purchaser Disclosure Letter;

 

(d) any Retained Liability (other than Taxes indemnifiable under Sections 9.2(e), (f), (g), (h) or (i));

 

(e)  any Taxes (other than Taxes related to the UK Bank Payroll Tax) imposed (i) on or with respect to the Transferred Companies or the Transferred Assets for a Pre-Closing Period or for the portion of any Straddle Period prior to and ending on the Closing Date, (ii) otherwise than by reference to a taxable year or other taxable period, in respect of any event or transaction relating to the Combined Business occurring on or before Closing, (iii) as a result of the Reorganization or any step thereof, (iv) on or with respect to the Transferred Companies in the form of Other Payroll Taxes, to the extent that liability for such Other Payroll Taxes would fall within Section 9.2(f) if the words "UK Bank Payroll Tax" were replaced by "Other Payroll Taxes"; (v) in connection with the acquisition of the Transferred Companies and the Transferred Assets contemplated hereby (other than Transfer Taxes described in Section 10.3(e), VAT described in Section 10.15 and, with respect to the Transferred Assets, any Taxes the cost of which is expressly to be borne by a party under the Related Agreements), and (vi) on any Transferred Company for any taxable period as a result of the failure by any Seller Party or any Affiliate of any Seller Party (other than the Transferred Companies) to discharge when due any Tax properly assessed on it for which it is primarily liable (other than any Tax the cost of which would fall to be borne by the Purchaser or a Transferred Company under any other provision of this Agreement or any Related Agreement).  To the extent necessary to determine the liability for Taxes for a Straddle Period or a Prior Closing Straddle Period, the determination of the Taxes for the portion of the year or period ending on, and the portion of the year or period beginning after, the Closing Date or the Prior Closing Date, as the case may be, shall be determined by assuming that the taxable year or period ended as of the close of business on the Closing Date or the Prior Closing Date, as the case may be, except that any property taxes, exemptions, allowances or

 

  

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similar taxes or deductions that are calculated on an annual basis shall be prorated on a time basis;

 

(f) any liability for UK Bank Payroll Tax payable by a Transferred Company in relation to the Combined Business:

 

(i) that is directly attributable to any arrangements entered into, or remuneration (in any form, whether under any bonus arrangements, retention plans or otherwise) awarded or paid, in respect of the calendar year 2009 or previous years or any other period beginning and ending on or prior to the Closing Date;

 

(ii) that is directly attributable to any arrangements which are entered into between the date of this Agreement and the Closing Date, or remuneration which is awarded or paid between the date of this Agreement and the Closing Date (other than pursuant to any arrangements entered into on or before the date of this Agreement), by a Transferred Company, a Seller Party or an Affiliate of a Seller Party other than in accordance with Section 7.1 and without the written consent of the Purchaser, to the extent that such UK Bank Payroll Tax exceeds the amount of UK Bank Payroll Tax that would have been payable if Section 7.1 had been complied with; or

 

(iii) that is directly attributable to any arrangements entered into, or remuneration (in any form, whether under any bonus arrangements, retention plans or otherwise) awarded or paid, in respect of any period beginning prior to but ending after the Closing Date but only to the extent such UK Bank Payroll Tax relates to the part of such period up to (and including) the Closing Date, save that no UK Bank Payroll Tax shall be subject to indemnification under this Section 9.2(f)(iii) to the extent that both (x) such UK Bank Payroll Tax is payable in respect of arrangements entered into, or remuneration paid or awarded by a Transferred Company, either after Closing or prior to Closing at the request of the Purchaser or an Affiliate of the Purchaser or by the Purchaser or an Affiliate of the Purchaser at any time, and (y) the amount of such UK Bank Payroll Tax exceeds the amount of UK Bank Payroll Tax that would have been payable if such arrangements had been entered into, or such remuneration had been paid or awarded, at a time and in an amount substantially consistent with past practice in relation to the Combined Business pursuant to any of the agreements, programmes or awards disclosed or required to be disclosed in Schedule 3.5(i); and for the purpose of this Section 9.2(f)(iii) the extent to which any UK Bank Payroll Tax attributable to arrangements or remuneration in respect of a period beginning prior to but ending after the Closing Date shall be treated as relating to the part of such period up to (and including) the Closing Date shall be determined by multiplying the amount of the UK Bank Payroll Tax  by a fraction of which the denominator is the number of days in the relevant period and the numerator is the number of the days in the period up to (and including) the Closing Date;

 

  

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(g) the loss, non-availability or reduction in the amount of any Relief that was treated as an asset in the Final Closing Balance Sheet;

 

(h) the loss in whole or in part of the right to receive any payment for any surrender of Reliefs by way of Group Tax Relief, or the liability to repay in whole or in part a payment for any such surrender, in each case to the extent that the payment or right to receive such payment has been reflected in the Final Closing Balance Sheet; or

 

(i) any liability to make any payment for the receipt of any surrender of Reliefs by way of Group Tax Relief, to the extent that the receipt of such surrender for no payment has been reflected in the Final Closing Balance Sheet.

 

Section 9.3. Indemnification and Reimbursement by the Purchaser.  From and after the Closing and subject to the limitations set forth in Section 9.4, the Purchaser will indemnify and hold harmless the Seller Parties and their Affiliates, as the Seller Parties shall direct in writing, and each of their respective members, officers, agents, employees and other Representatives (collectively, the “Section 9.3 Indemnified Persons” and, together with the Section 9.2 Indemnified Persons, the “Indemnified Persons”) from and against any and all Damages, resulting from or attributable to:

 

(a) any breach of any representation or warranty made by the Purchaser in Article IV of this Agreement, excluding De Minimis Damages;

 

(b) any material breach of or failure to perform or comply with, any covenant or agreement of the Purchaser in this Agreement;

 

(c) any Assumed Liability;

 

(d) any Tax for which a Seller Party or any Affiliate of a Seller Party (other than the Transferred Companies) becomes liable by virtue of a failure by the Purchaser or any of its Affiliates, including any of the Transferred Companies to pay when due any Tax properly assessed on it for which it is primarily liable except to the extent that such Tax would, ignoring any financial or time limitations, be (and has not been) indemnified under Section 9.2; or

 

(e) any liability for UK Bank Payroll Tax payable by a Seller Party or an Affiliate of a Seller Party (other than a Transferred Company) in relation to the Combined Business, other than any such UK Bank Payroll Tax that, if it were payable by a Transferred Company, would (ignoring any financial or time limitations) fall to be indemnified by the Seller Parents under Section 9.2(f) (and has not been so indemnified).

 

Section 9.4. Limitations; Exclusive Remedy.

 

(a) (i)  The Seller Parents shall have no liability with respect to claims under Section 9.2(a) (excluding any breach of any representations or warranty under Sections 3.1, 3.2(a) (other than the last sentence), 3.2(b)(i), 3.2(b)(ii), 3.3(a), 3.3(b)(i) (but only the first sentence thereof), 3.5(h), 3.8, or 3.9) in all cases until the total of all Damages (other than De Minimis Damages) with respect to such matters exceeds sixty million dollars

 

  

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($60,000,000) and then only for the amount in excess of twenty-five million dollars ($25,000,000).  In no event shall the Seller Parents’ aggregate collective liability for indemnification under Section 9.2(a) (other than in respect of breaches of any of the representations and warranties in Sections 3.1, 3.2(a) (other than the last sentence), 3.2(b)(i), 3.2(b)(ii), 3.3(a), 3.3(b)(i) (but only the first sentence thereof), 3.5(h), 3.8, and 3.9) exceed, in the aggregate, $500,000,000.

 

(ii) The Seller Parents shall have liability under Section 9.2(a), 9.2(b) (solely with respect to any breach of or failure to perform or comply with the covenants and agreements in Section 7.1), 9.2(e), 9.2(f), 9.2(g), 9.2(h) and 9.2(i) only if the Seller Parents receive notice of any claim from the Indemnified Person, specifying the factual basis of the claim in reasonable detail and specifying, if known, the amount claimed, (A) within the applicable survival period as defined in Section 9.1 for claims under Section 9.2(a), (B) within twelve (12) months following the Closing Date for claims under Section 9.2(b) (solely with respect to any breach or failure to perform or comply with the covenants and agreements in Section 7.1), and (C) within thirty (30) days after the expiration of the applicable statute of limitations, for claims under Sections 9.2(e), 9.2(f), 9.2(g), 9.2(h) and 9.2(i).

 

(b) The aggregate liability of any Seller Parent with respect to a particular claim for indemnification pursuant to Section 9.2 shall not exceed such Seller Parent’s Indemnity Share of the total Damages payable with respect to such claim, except as follows:

 

(i) In respect of claims for indemnification pursuant to Section 9.2(a), for a breach of a representation or warranty made solely by such Seller Parent or solely in respect of such Seller Parent, such Seller Parent shall have sole liability for such portion of the Damages attributable to such breach under the following representations and warranties:  (A) with respect to Sempra Energy or RBS, such representations and warranties under Section 3.1(a), Section 3.2(a) (only with respect to the enforceability, right, power or authority as to such Seller Parent), Section 3.2(b)(i) and (ii) (only with respect to such Seller Parent’s Governing Documents or resolutions, and Legal Requirements and Orders as applicable solely to such Seller Parent or its properties (as opposed to the Partnership, its Subsidiaries or all Sellers (or their properties)), Section 3.9 (only with respect to such Seller Parent and not the Partnership or any of its Subsidiaries) and, (B) with respect to RBS only, such representations and warranties under Section 3.3(b) (only with respect to Encumbrances on RBS Related Assets and Liabilities to the extent such Encumbrances secure obligations of RBS or its Affiliates (other than the Partnership and the SET Companies) unrelated to the Combined Business) and Section 3.5 (only with respect to any Seller Plan sponsored by RBS or its Affiliates (other than the Partnership or its Subsidiaries)), it being understood that, in each case under this Section 9.4(b)(i), any representations and warranties given in respect of the Combined Business or any component thereof or given by the Partnership or SET are deemed not to be made solely by such Seller Parent or solely in respect of such Seller Parent;

 

  

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(ii) In respect of claims for indemnification pursuant to Section 9.2(b), for a breach of or failure to comply with or perform any covenants or agreements of any Seller Parent solely by such Seller Parent (it being understood that any covenants or other agreements of the Seller Parents given in respect of the Combined Business, including in connection with the RBS Related Assets and Liabilities, or any portion thereof, are deemed not to be covenants and agreements solely of such Seller Parent), such Seller Parent shall have sole liability for such portion of the Damages attributable to such breach; and

 

	
(iii)  

	
(A)           Sempra Energy shall have sole Liability for Sempra Tax Damages.

 

	
  

	
(B)

	
RBS shall have sole Liability for RBS Tax Damages.

 

(C)           Shared Tax Damages shall be allocated severally but not jointly between RBS on the one hand and Sempra Energy on the other hand, in accordance with the allocation of profits among the Seller Parents in their capacities as members of the Partnership as set forth on Schedule 9.4(b)(iii) for the periods in which the events giving rise to such breach occurred.

 

(D)           Damages subject to indemnification under Section 9.2(a) as a result of a breach of the representations and warranties of the Sellers set forth in Section 3.8(d) shall be allocated on the same basis as Shared Tax Damages unless the tax sharing, tax allocation, indemnity or other agreement giving rise to the breach benefited one or more (but not all) of the Seller Parties, in which case Damages shall be allocated to the Seller Party or Seller Parties who obtained such benefit, and where there is more than one such Seller Party such allocation shall be made severally but not jointly pro rata to their respective  allocation of profits of the Partnership during the periods in which the events giving rise to such breach occurred.

 

The benefit of (i) any Overprovision, Repayment or Saving in accordance with Section 10.3(g) shall, to the extent possible, be allocated in the same way as Shared Tax Damages as set out in (C) above save to the extent the matter giving rise to such repayment or set-off relates to periods (or portions thereof) ending on or prior to the Prior Closing Date, in which case such set-off or repayment shall be allocated to Sempra Energy; and (ii) a reduction in the amount of a claim by virtue of a surrender of Reliefs by RBS or a Subsidiary of RBS to any SET Company by way of Group Tax Relief for no consideration pursuant to Section 10.14 shall first reduce the portion of the Damages for which RBS is liable to the extent possible.

 

(c) The Purchaser shall have no liability with respect to claims under Section 9.3(a) (excluding any breach of any representation or warranty under Sections 4.1, 4.2 or 4.5)

 

  

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until the total of all Damages (other than De Minimis Damages) with respect to such matters exceeds sixty million dollars ($60,000,000), and then only for the amount in excess of twenty-five million dollars ($25,000,000).  In no event shall the Purchaser’s aggregate liability for indemnification under Section 9.3(a) (other than in respect of breaches of any of the representations and warranties in Sections 4.1, 4.2 and 4.5) exceed $500,000,000.  The Purchaser shall have liability under Section 9.3(a) only if the Purchaser receives notice of any claim from the Indemnified Person, specifying the factual basis of the claim in reasonable detail and specifying, if known, the amount claimed, within the applicable survival period as defined in Section 9.1.

 

(d) For purposes of any indemnity obligation under this Article IX (i) with respect to any breach of any covenant or obligation, or any representation or warranty (with respect to the Retained Materiality Representations only, solely for purposes of calculating Damages), contained in this Agreement, any express qualifications or limitations set forth in such covenant or obligation, or representation or warranty, as to materiality or “Combined Business Material Adverse Effect” (or other similar materiality qualifier) contained therein, shall be disregarded and (ii) with respect to any breach of any representation or warranty contained in Section 3.6, 3.7, 3.10 or 3.17, any qualification or limitation set forth in such representation or warranty as to “Knowledge,” or any other knowledge qualification contained therein, shall be disregarded.

 

(e) Notwithstanding anything herein to the contrary, no Indemnified Person shall be entitled to indemnification or reimbursement under any provision of this Agreement for any amount to the extent such Person or its Affiliates has been indemnified or reimbursed for such amount under any other provision of this Agreement or any Related Agreement.

 

(f) Except in the case of fraud, from and after the Closing, the exclusive remedy for any Indemnified Person for Damages or other monetary damages arising from a breach of this Agreement shall be the indemnification provided under this Article IX.  There shall be no remedy at law for De Minimis Damages arising out of the events or circumstances described in Sections 9.2(a) or 9.3(a).  Nothing in this Section 9.4(f) or elsewhere in this Agreement shall interfere with or impede the operations of Sections 7.16 or 10.13 or the remedies available under this Agreement or the Related Agreements or a Party’s right to seek equitable remedies (including specific performance or injunctive relief) to enforce any covenant in this Agreement to be performed after the Closing.

 

(g) In no event shall Damages be subject to indemnification under Section 9.2 or 9.3 to the extent such Damages were included as liabilities (including any reserves in respect of such Damages) in the Final Closing Balance Sheet; provided, that any Damages in excess of the amounts so included as liabilities (including any reserves in respect of such Damages) in the Final Closing Balance Sheet shall be subject to indemnification hereunder in accordance with and subject to the terms, conditions and limitations of this Article IX.

 

(h) In no event shall Damages be subject to indemnification under Section 9.2(a) (in respect of any breach of any representation or warranty contained in Section 3.8) or Section 9.2(e), (f), (g), (h) or (i) to the extent that the matter, act, omission or circumstances giving rise to such Damages would not have arisen but for any act carried out prior to Closing by

 

  

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a Seller Party or any of its Subsidiaries outside the Ordinary Course of Business at the written request of the Purchaser.

 

(i) In no event shall Damages be subject to indemnification under Section 9.2(a) (in respect of any breach of any representation or warranty contained in Section 3.8) or Sections 9.2(e), (f), (g), (h) or (i) to the extent that the Damages arise by reason of a voluntary disclaimer by any Transferred Company (otherwise than at the request of any Seller Party under Section 10.3) after Closing of the whole or part of any allowance to which it is entitled under Part 2 of the Capital Allowances Act 2001 or by reason of the revocation by any Transferred Company (otherwise than at the request of any Seller Party under Section 10.3) after Closing of any claim for Relief made (whether provisionally or otherwise) by it prior to Closing, in each case where such allowance or Relief was taken into account in, or in computing a provision for Tax in, the Final Closing Balance Sheet.

 

(j) In no event shall Damages be subject to indemnification under Section 9.2(a) (in respect of any breach of any representation or warranty contained in Section 3.8) or Sections 9.2(e), (f), (g), (h) or (i) to the extent that the matter giving rise to such Damages would not have arisen but for a voluntary act carried out by the Purchaser or any of its Subsidiaries or a Transferred Company after Closing outside the Ordinary Course of Business of the relevant entity in circumstances where the Purchaser knew, or would have known if it had made reasonable inquiries of Continuing Employees with relevant Tax expertise employed or engaged by any Transferred Company at the time of the voluntary act in question that such a voluntary act would create a material risk of the matter giving rise to such Damages arising; provided that this limitation shall not apply to any act which is carried out in fulfillment of a legally binding commitment entered into on or before Closing or in order to comply with, or to rectify any breach of, any Legal Requirement.

 

(k) In no event shall Damages be subject to indemnification under Section 9.2(a) (in respect of any breach of any representation or warranty contained in Section 3.8) or Sections 9.2(e), (f), (g), (h) or (i) to the extent that the matter giving rise to such Damages would not have arisen or is increased as a consequence of any change (including, for the avoidance of doubt, any change with retrospective effect) after Closing in any accounting policy or practice adopted by any Transferred Company in relation to any accounting period beginning prior to Closing, except where such change is necessary to rectify a breach of applicable financial reporting or accounting standards or practice existing on or prior to Closing, or to comply with or to rectify any breach of any Legal Requirement.

 

(l) In no event shall Damages be subject to indemnification under Sections 9.2(g) or (h) to the extent that the matter giving rise to such Damages arises as a consequence of a cessation of any trade or business carried on by a Transferred Company where the Purchaser knew (or should have known if it had made reasonable enquiries of the Continuing Employees with relevant tax expertise who were employed by any of the Transferred Companies at the time of such cessation) that the cessation would create a material risk of the matter giving rise to such Damages arising.

 

(m) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL AN INDEMNIFYING PERSON BE LIABLE FOR

 

  

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(A) ANY PUNITIVE DAMAGES OR (B) ANY LOST PROFITS OR CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES, EXCEPT, IN THE CASE OF (B), TO THE EXTENT SUCH LOST PROFITS OR DAMAGES ARE (X) NOT BASED ON ANY SPECIAL CIRCUMSTANCES OF THE INDEMNIFIED PERSON AND (Y) THE NATURAL, PROBABLE AND REASONABLY FORESEEABLE RESULT OF THE EVENT THAT GAVE RISE THERETO OR THE MATTER FOR WHICH INDEMNIFICATION IS SOUGHT HEREUNDER; provided, however, that if an Indemnified Person is held liable to a Third Party based on any final judgment of a court of competent jurisdiction for any such Damages and the applicable indemnifying party is obligated to indemnify such Indemnified Person for the matter that gave rise to such Damages, then such indemnifying party shall be liable for, and obligated to reimburse such Indemnified Person for such Damages.

 

Section 9.5. Third-Party Claims.

 

(a) Promptly (and in any event within thirty (30) days) after receipt by a Person entitled to indemnification under Section 9.2 or 9.3 of notice of the assertion of a Third-Party Claim, such Indemnified Person shall give notice to the Person or Persons obligated to indemnify under such Section (each, an “Indemnifying Person”) of the assertion of such Third-Party Claim; provided, that the failure to notify the Indemnifying Person shall not relieve the Indemnifying Person of any liability that it may have to any Indemnified Person, except to the extent that the Indemnifying Person demonstrates that the defense of such Third-Party Claim is actually and materially prejudiced by the Indemnified Person’s failure to give such notice.

 

(b) If an Indemnified Person gives notice to the Indemnifying Person pursuant to Section 9.5(a) of the assertion of a Third-Party Claim, the Indemnifying Person shall be entitled to participate in the defense of such Third-Party Claim and, to the extent that it wishes (unless (i) the Indemnifying Person is also a Person against whom the Third-Party Claim is made and the Indemnified Person determines in good faith that joint representation would be inappropriate, (ii) greater than 50% of the Damages are reasonably anticipated to be incurred by the Indemnified Person because such Damages constitute De Minimis Damages or exceed the applicable maximum limit (if any) for indemnification contained in Section 9.4, (iii) material equitable or other non-monetary relief is sought from any Indemnified Person pursuant to such Third-Party Claim or (iv) the claim is brought by a Governmental Body(except for Claims relating to Taxes)) to assume the defense of such Third-Party Claim.  Notwithstanding the foregoing, in the case of a Third Party Claim for Taxes relating to a Straddle Period, the Party that prepared the Tax Return relating to such Straddle Period shall control the Third Party Claim; provided that the Indemnified Person and the Indemnifying Person shall jointly control such Third Party Claim if and to the extent that there is a material risk of the Indemnified Person and the Indemnifying Person incurring material Damages.  After notice from the Indemnifying Person to the Indemnified Person of its election to assume the defense of such Third-Party Claim, the Indemnifying Person shall not, so long as it diligently conducts such defense, be liable to the Indemnified Person under this Article IX for any fees of other counsel or any other expenses with respect to the defense of such Third-Party Claim, in each case subsequently incurred by the Indemnified Person in connection with the defense of such Third-Party Claim, other than reasonable costs of investigation. If the Indemnifying Person assumes the defense of a Third-Party Claim, (i) such assumption will, unless additional information at the time of the assumption emerges to change this conclusion, conclusively establish for purposes of this

 

  

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Agreement that the claims made in that Third-Party Claim are within the scope of and subject to indemnification (but no such assumption shall affect the applicability of any limit on indemnification contained in Section 9.4), and (ii) no compromise or settlement of such Third-Party Claims may be effected by the Indemnifying Person without the Indemnified Person’s consent (which consent shall not be unreasonably withheld or delayed) unless (A) there is no finding or admission of any material violation of Legal Requirement and (B) the sole relief provided is monetary damages that are paid in full by the Indemnifying Person.  The Indemnified Person shall have no liability with respect to any compromise or settlement of such Third-Party Claims effected without its consent if required pursuant to the immediately preceding sentence.  If notice is given to an Indemnifying Person of the assertion of any Third-Party Claim and the Indemnifying Person does not, within twenty (20) days after the Indemnified Person’s notice is given, give notice to the Indemnified Person of its election to assume the defense of such Third-Party Claim, the Indemnifying Person will be bound by any determination made in such Third-Party Claim or any compromise or settlement effected by the Indemnified Person.

 

(c) With respect to any Third-Party Claim subject to indemnification under this Article IX (including any Specified Matters): (i) both the Indemnified Person and the Indemnifying Person, as the case may be, shall keep the other Person reasonably informed of the status of such Third-Party Claim and any related Proceedings at all stages thereof where such Person is not represented by its own counsel, and (ii) the Parties agree to render to each other such assistance as they may reasonably require of each other and to cooperate in good faith with each other in order to ensure the proper and adequate defense of any Third-Party Claim; provided, that the Indemnifying Party shall pay the reasonable Third-Party out-of-pocket expenses incurred in providing such cooperation (including reasonable legal fees and disbursements) by the Party providing such cooperation but shall not be required to compensate such Party for time spent by its officers, directors, employees or agents in such cooperation.

 

Section 9.6. Other Claims.  A claim for indemnification to the extent not resulting from a Third-Party Claim may be asserted by written notice to the Party from whom indemnification is sought and, unless disputed by the Indemnifying Person by delivery of a written dispute notice to the Party seeking indemnification within 60 days after receipt by the Indemnifying Person of claim for indemnification, shall be deemed agreed by all Parties, final and undisputed and shall be paid by any such Indemnifying Party promptly, but in no event more than 45 days after receipt of such undisputed claim for indemnification.

 

Section 9.7. Duty to Mitigate.  Nothing herein shall relieve a Party of its common-law duty to mitigate Damages.  Without limiting the foregoing, each Party shall (and shall, to the extent it has authority and is permitted to do so, cause each other Section 9.2 Indemnified Person to, with respect to the Purchaser, and each other Section 9.3 Indemnified Person to, with respect to the Seller Parents) take commercially reasonable steps to mitigate all Damages after becoming aware of any event which could reasonably be expected to give rise to any Damages that are indemnifiable hereunder, including, as applicable, pursuing any counterclaim, offset, insurance settlement or other claim which could result in a recovery that would reduce the Indemnifying Person’s liability under this Agreement.

 

  

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ARTICLE X.

GENERAL PROVISIONS

 

Section 10.1. Expenses.  Except as otherwise expressly provided in this Agreement, each of the Parties shall bear its own costs and expenses (and the Seller Parents shall bear the costs and expenses of the Combined Business to the extent incurred or related to periods prior to the Closing Date) in connection with the preparation, negotiation and execution of this Agreement and the Related Agreements and the consummation of the transactions contemplated hereby and thereby.

 

Section 10.2. Public Announcements and Confidentiality.  None of the Parties nor their respective Subsidiaries or Affiliates shall issue or cause the publication of this Agreement, any Related Agreement or any press release or other public announcement or communication with respect to the transactions contemplated hereby without the prior written consent of each of the other Parties hereto (which consent shall not be unreasonably withheld or withdrawn) except to the extent a Party’s counsel deems necessary or advisable in order to comply with the requirements of any Legal Requirement or the regulations or policies of any securities exchange or other similar regulatory body (in which case the disclosing Party shall give the other Parties notice as promptly as is reasonably practicable of any required disclosure to the extent permitted by applicable Legal Requirements), shall limit such disclosure to the information required to comply with such Legal Requirement or regulations, and shall use reasonable efforts to accommodate any suggested changes to such disclosure from the other Parties to the extent reasonably practicable.

 

Section 10.3. Tax Matters.

 

(a) (i) Except to the extent clause (iii) or (iv) of this Section 10.3(a) applies, in the case of (i) any Tax Returns that are required to be filed by or with respect to any Transferred Company for taxable years or periods beginning before the Closing Date (including any Straddle Period) (“Pre-Closing Tax Returns”) that have not been prepared prior to the Closing Date and which, if prepared prior to the Closing Date would have been prepared by any Continuing Employees or external advisers and (ii) any Tax Returns that, contrary to the expectation of the Parties, are not required or permitted to be filed by RBS but instead are required to be filed by any Transferred Company in relation to the UK Bank Payroll Tax, the Purchaser shall procure that the Transferred Companies shall timely prepare and file, or procure the timely preparation and filing of, such Tax Returns together with associated documents, in a manner consistent with past practices (or, in the case of Tax Returns in relation to the UK Bank Payroll Tax, consistent with any provision or reserve in respect thereof in the Final Closing Balance Sheet or as otherwise agreed with RBS); provided, that RBS shall be consulted in relation to, and shall, prior to the timely filing thereof, be permitted to review and comment upon such Pre-Closing Tax Returns (including, for the avoidance of doubt, Tax Returns related to the UK Bank Payroll Tax) that are listed in Schedule 10.3(a)(i) or that show an amount of Tax due that is materially in excess of the reserve for such Tax on the Closing Balance Sheet, and the Transferred Companies shall reflect all reasonable comments of RBS in such Pre-Closing Tax Returns; provided, further that, in respect of Pre-Closing Tax Returns that are required to be filed by or with respect to any Transferred Company for taxable years or periods beginning before the Prior Closing Date, Sempra Energy shall be consulted in relation to, and shall prior to the timely filing thereof be

 

  

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permitted to review and comment upon, such Pre-Closing Tax Returns that are listed in Schedule 10.3(a)(i) or that show an amount of Tax due that is materially in excess of the reserve for such Tax on the Closing Balance Sheet, and the Transferred Companies shall reflect all reasonable comments of Sempra Energy in such Pre-Closing Tax Returns.  Within ten (10) Business Days after the filing of such Pre-Closing Tax Returns, the Purchaser shall provide, or cause to be provided, to RBS or, as the case may be, Sempra Energy, copies of such Pre-Closing Tax Returns and any associated documents relating to the preparation of such Pre-Closing Tax Returns.

 

(ii) In the case of any Tax Returns that are required to be filed by RBS with respect to the Combined Business for taxable years or periods beginning before the Closing Date (including any Straddle Period) (“Pre-Closing RBS Tax Returns”) that have not been prepared prior to the Closing Date and which, if prepared prior to the Closing Date would have been prepared by Continuing Employees or external advisers (including any Tax Returns that are required to be filed by RBS in respect of the Combined Business in relation to climate change levies, registered dealership in controlled oil, intrastat and EC sales lists reporting and US sales and use tax), the Purchaser shall procure that the Transferred Companies shall timely prepare and deal with, or procure the timely preparation of and dealing with, such Tax Returns together with associated documents, in a manner consistent with past practices and reflecting the procedure that was set out in CTA Master Agreement; provided, that RBS shall be consulted in relation to the preparation of the Pre-Closing RBS Tax Returns, and the Transferred Companies shall reflect all reasonable comments of RBS in such Pre-Closing RBS Tax Returns.

 

(iii) In the case of any Pre-Closing Tax Returns for taxable years or periods beginning after the Prior Closing Date or for Prior Closing Straddle Periods that relate to United States federal, state or local Taxes and that have not been prepared prior to the Closing Date, RBS shall timely prepare and file, or procure the timely preparation and filing of, such Tax Returns in a manner consistent with past practices.  RBS shall provide the Purchaser with copies of all such Tax Returns prepared by RBS or prepared at their direction.  RBS shall be permitted to retain copies of such Pre-Closing Tax Returns and any associated documents relating to the preparation of such Pre-Closing Tax Returns.

 

(iv) In the case of any Pre-Closing Tax Returns for periods beginning and ending before the Prior Closing Date and that have not been prepared prior to the Closing Date, Sempra Energy shall prepare and file, or procure the preparation and filing of, such Tax Returns in a manner consistent with past practices.  Sempra Energy shall be permitted to retain copies of such Pre-Closing Tax Returns and any associated documents relating to the preparation of such Pre-Closing Tax Returns.

 

(v) In the case of any Tax Returns that are required to be filed by RBS which relate to the RBS Related Assets and Liabilities which are not novated, assigned or transferred pursuant to Section 2.1, for the Straddle Period or taxable

 

  

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years or periods beginning after the Closing Date (“Post-Closing RBS Tax Returns”), the Purchaser shall procure that, in circumstances where such Tax Returns would have been prepared by any Continuing Employees (or by external advisors appointed by a Transferred Company) in the absence of a sale of the Combined Businesses pursuant to the Agreement, the Transferred Companies shall timely prepare and deal with such Tax Returns together with associated documents (or appoint an external advisor to do so), in a manner consistent with past practices and reflecting the procedure set out in the CTA Master Agreement; provided, that RBS will be consulted in relation to the preparation of Post-Closing RBS Tax Returns and all reasonable comments of RBS shall be reflected in such Post-Closing Tax Returns.

 

(vi) The Seller Parties shall reimburse the Purchaser for reasonable fees and expenses of external advisors used by the Purchaser pursuant to this Section 10.3(a) in preparing and filing any Pre-Closing Tax Returns for a period which is not a Straddle Period.  The fees and expenses of external advisors used by the Purchaser in preparing and filing any Pre-Closing Tax Return pursuant to this Section 10.3(a) for a Straddle Period shall be borne by the Purchaser and the Seller Parties pro rata, based on the number of days in such Straddle Period before and after the Closing Date.

 

(vii) For periods during which Continuing Employees of a Transferred Company are engaged in the preparation and filing of Pre-Closing Tax Returns or Pre-Closing RBS Tax Returns pursuant to Section 10.3(a)(i) or Section 10.3(a)(ii), the Seller Parents shall reimburse the Purchaser for the reasonable costs of such Continuing Employees in a manner consistent with the sharing of costs of employees provided for in the Commodities Trading and Services Agreements.

 

(b) The Purchaser shall cause each Transferred Company, as applicable, to prepare (or cause to be prepared) and file or cause to be filed when due all Tax Returns and associated documents that are required to be filed by or with respect to such Transferred Company for taxable years or periods beginning after the Closing Date and shall cause the Transferred Companies, as applicable, to remit any Taxes due in respect of such Tax Returns.

 

(c) The Parties shall, and shall cause their Subsidiaries to, cooperate fully, as and to the extent reasonably requested by any other party, in connection with the filing of Tax Returns (including, for the avoidance of doubt, any Tax Returns of RBS relating to UK Bank Payroll Tax and any Post-Closing RBS Tax Returns) and any audit, litigation or other proceeding with respect to Taxes (including any Tax Returns to be filed by the Seller Parties).  Such cooperation shall include the retention and (upon such other party’s request) the provision of records and information reasonably relevant to any such audit, litigation, or other proceeding (to the extent relating to the Transferred Companies or the Combined Business) and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

 

  

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(d) Where provision or reserve is made in the Final Closing Balance Sheet in respect of any Tax (including VAT, climate change levy, any other indirect Tax and UK Bank Payroll tax) which is primarily a liability of a Seller Party or an Affiliate of any Seller Party (other than any Transferred Company), the Purchaser shall procure that, to the extent it has not already done so prior to Closing, the relevant Transferred Company shall pay to the relevant Seller Party or Affiliate an amount equal to the Tax in question (up to the amount of the provision or reserve) on the date falling two Business Days before the date on which the relevant Seller Party or Affiliate is required to pay the Tax in question to the relevant tax authority (or would be but for the availability of any Relief) or at such other time as is consistent with past practice, save in circumstances where the Transferred Company itself is required to pay such Tax directly to the relevant tax authority (in which case, for the avoidance of doubt, the Transferred Company shall make such payment to the relevant tax authority).  Any Seller Party to which a payment is made hereunder (or to whose Affiliate a payment is made hereunder) shall (or shall procure that the Affiliate shall) apply the amount received as soon as reasonably practicable in paying the Tax in question to the relevant tax authority.

 

(e) Notwithstanding any provision of this Agreement to the contrary, all Transfer Taxes incurred in connection with this Agreement and the transactions contemplated hereby shall be borne fifty percent (50%) by the Purchaser and fifty percent (50%) by the Seller Parties.  The Parties shall, and shall cause their Subsidiaries to, cooperate in timely making all filings, Tax Returns, reports and forms as may be required to comply with the provisions of applicable Tax Laws relating to such Transfer Taxes.  For purposes of this Agreement, “Transfer Taxes” shall mean all transfer, stamp duty, stamp duty reserve tax, stamp duty land tax, documentary, registration and other such taxes (including all applicable real estate transfer taxes).  “Transfer Taxes” shall also include interest and penalties, provided that any interest and penalties that arise due to the unreasonable delay or default of one of the Parties shall be borne entirely by the relevant Party. The Parties shall take all commercially reasonable steps to minimize Transfer Taxes and agree to cooperate to minimize the Transfer Taxes due in connection with this Agreement and the transactions contemplated hereby.

 

(f) The Parties agree to treat any indemnification payment made pursuant to Article VII or Article IX as an adjustment to the Purchase Price hereunder for all Tax purposes, unless otherwise required by a Legal Requirement.

 

(i) The Parties acknowledge for this purpose that any indemnification given pursuant to an indemnity obligation of a Seller or any of its Affiliates under Article VII or Article IX is given by the Seller Parents on behalf of the relevant Seller to the Purchaser or (if applicable) to the assignee of the Purchaser’s right to acquire the relevant Transferred Company, Transferred Asset or Assumed Liability. Where the loss or damage giving rise to the indemnity payment under Article VII or Article IX is suffered or incurred by any UK tax resident Transferred Company, any indemnification shall be given to the Purchaser (or the applicable assignee) and not to the Transferred Company.

 

(ii) The Parties acknowledge for this purpose that any indemnification given pursuant to an indemnity obligation of a Purchaser under Article VII or Article IX is given by the Purchaser, or where applicable, by the Purchaser on

 

  

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behalf of the assignee of the Purchaser’s right to acquire the relevant Transferred Company, Transferred Asset or Assumed Liability, to the relevant Seller Party or its Affiliate.  Where the loss or damage giving rise to the indemnity payment under Article VII or Article IX is suffered or incurred by any UK tax resident Transferred Company, any indemnification shall be given to the relevant person designated in writing by the Seller Parties (such person to be designated to the extent reasonably possible so as to avoid or minimize any Tax payable in respect of such indemnification).

 

(g) If the auditors for the time being of a Transferred Company certify in writing (at the request and expense of the Seller Parties) to the Seller Parties and the Purchaser that:

 

(i) any provision for Tax in the Final Closing Balance Sheet is found to be an overprovision (the amount of such over-provision being referred to as an “Overprovision”); or

 

(ii) a repayment of Tax which is obtained after Closing but relates to a Pre-Closing Period or the portion of any Straddle Period prior to and ending on the Closing Date (other than any repayment of Tax which was treated as an asset in the Final Closing Balance Sheet or which arises due to an estimated Tax payment prior to the Closing proving to be an overpayment as a result of events following the Closing) is actually obtained in cash by a Transferred Company or is actually used by the Purchaser, a Transferred Company or any of their Affiliates to reduce or eliminate Tax for which the Seller Parties are not liable under Section 9.2 of this Agreement (a “Tax Repayment”); or

 

(iii) as a result of any Tax which has resulted in a payment by the Seller Parties falling due pursuant to Section 9.2, a Transferred Company or the Purchaser is relieved in whole or part of a liability to make some other payment of Tax which it would otherwise have been liable to make which would not have been indemnified under Section 9.2 or obtains a right to repayment of Tax which would not otherwise have been available (a “Saving”);

 

then the amount of each Overprovision and each Tax Repayment or, in the case of a Saving, the amount of Tax saved (less any reasonable costs incurred in respect thereof), shall be carried forward until the amounts of all Taxes in the Final Closing Balance Sheet have been finally determined and paid, then set off against any payment then due from the Seller Parties under Section 9.2(a) (in respect of a breach of any representation or warranty under Section 3.8 only), Section 9.2(e) or Section 9.2(f), (g), (h) or (i) hereof and, to the extent the aggregate amount of such Overprovisions, Tax Repayments or Savings is not so set off, repaid to the Seller Parties, save that any Tax Repayments or Savings shall also be capable of being offset against any payment that may be due from the Seller Parties (or repaid to the Seller Parties to the extent of any previous payments made by the Seller Parties) prior to the final determination and payment of all Taxes in the Final Closing Balance Sheet under Section 9.2(a) (in respect of a breach of any representation or warranty under Section 3.8 only) or Sections 9.2(e), (f), (g), (h) or (i).  If any Transferred Company or the Purchaser discovers that there is an Overprovision,

 

  

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Tax Repayment or Saving, the Purchaser shall, or shall procure that the Transferred Company concerned shall, as soon as reasonably practicable give full details thereof to the Seller Parties and the Purchaser shall, or shall procure that the Transferred Company concerned shall, supply to the Seller Parties such information as they may reasonably require to verify the amount of the Tax Repayment or Saving.

 

(h) (i)           The Parties hereto will agree to allocate the Purchase Price over all of the Transferred Companies and Transferred Assets, pursuant to this Section 10.3(h).  The Parties shall use commercially reasonable efforts to agree on such allocation within forty-five (45) Business Days of date of this Agreement, subject to (iv) and (v) below.

 

(ii) In the event the Parties are unable to agree on such allocation within forty-five days of date of this Agreement, as promptly as practicable after such forty-five-day period, but no later than ten (10) days thereafter, the Purchaser shall prepare and deliver (with reasonable assistance as requested from the Seller Parties) to the Seller Parties, an allocation schedule allocating the Purchase Price in a manner consistent with the relative fair market value of the Transferred Companies, the Transferred Assets and the Assumed Liabilities (the “Proposed Allocation Schedule”).  Each Seller will have twenty (20) Business Days following delivery of the Proposed Allocation Schedule during which to notify the Purchaser and each other Party in writing (an “Allocation Notice of Objection”) of any objections to the Proposed Allocation Schedule, setting forth in reasonable detail the basis of its objections.  In reviewing the Proposed Allocation Schedule, each Seller shall be entitled to reasonable access to all relevant books, records and personnel of the Transferred Companies and its Representatives to the extent such Seller reasonably requests such information and reasonable access to complete its review of the Proposed Allocation Schedule.  If no Seller delivers an Allocation Notice of Objection in accordance with this Section 10.3(h)(ii), the Proposed Allocation Schedule shall be conclusive and binding on all Parties and shall become the “Final Allocation Schedule”.  If any Seller submits an Allocation Notice of Objection, then (A) for twenty (20) Business Days after the date the Purchaser receives the Allocation Notice of Objection, the Parties will use their commercially reasonable efforts to agree on the allocations and (B) failing such agreement within twenty (20) Business Days of such notice, the matter will be resolved in accordance with Section 10.3(h)(iii).

 

(iii) If the Parties have not agreed on the Final Allocation Schedule within twenty (20) Business Days after delivery of an Allocation Notice of Objection, then the Parties shall each have the right to deliver notice to the other Party (the “Allocation Dispute Notice”) of its intent to refer the matter for resolution to the Accounting Expert.  The Parties will each deliver to the other and to the Accounting Expert a notice setting forth in reasonable detail their proposed allocations.  Within thirty (30) Business Days after receipt thereof, the Accounting Expert will deliver the Final Allocation Schedule and provide a written description of the basis for its determination of the allocations therein; provided that if the Accounting Expert requests a hearing before making a

 

  

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determination, such hearing shall be held within twenty (20) Business Days of the Parties’ delivery of their respective proposed allocations and the delivery of the Final Allocation Schedule shall be made within ten (10) Business Days of such hearing.  The fees and expenses of the Accounting Expert shall be apportioned among the Parties as the Accounting Expert shall determine; provided that Purchaser shall not bear any fees and expenses attributable to a disparity between the positions of the Sellers.  Each Party will bear the costs of its own counsel, witnesses (if any) and employees.

 

(iv) The Parties agree to act in accordance with the Final Allocation Schedule for all Tax purposes (including for purposes of the filing of any Tax Return), subject to any Legal Requirement to the contrary.  The Parties will revise the Final Allocation Schedule to the extent necessary to reflect any payment made pursuant to Section 2.7(d).  In the case of any such payment, the Purchaser shall promptly prepare and deliver (with reasonable assistance as requested from the Sellers) to the Sellers a revised Final Allocation Schedule, and the Parties shall follow the procedures outlined above with respect to review, dispute and resolution in respect of such revision.

 

(v) If an allocation of the Purchase Price attributable to a Transferred Company or a Transferred Asset is required at a time, or to a level of detail, which is not practicable in accordance with the above procedure (including for the purposes of any Transfer Tax or VAT), the Purchaser and the Seller Parents shall cooperate to agree such allocation in a timely manner by reference to the fair market value of the relevant asset.

 

Section 10.4. Notices.  All notices, Consents, waivers and other communications required or permitted by this Agreement shall be in writing and shall be deemed given to a Party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid), (b) sent by facsimile or e-mail with confirmation of transmission by the transmitting equipment, or (c) received or rejected by the addressee, if sent by certified mail, return receipt requested, in each case to the following addresses, facsimile numbers or e-mail addresses and marked to the attention of the person (by name or title) designated below (or to such other address, facsimile number, e-mail address or person as a Party may designate by notice to the other Parties):

 

If to the Purchaser:

 

J.P. Morgan Ventures Energy Corporation

383 Madison Avenue, 10th Floor

New York, New York  10017

Attention:  Daniel Hines, President

Telephone: (212) 270-6000

Facsimile: (212) 834-6554

 

  

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With copies to:

 

J.P. Morgan Ventures Energy Corporation

245 Park Avenue, 11th Floor

New York, New York  10167

Attention:  Legal Department

Telephone: (212) 648-2323

Facsimile: (646) 534-6307

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, New York  10006

Attention:  Christopher E. Austin

      Glenn P. McGrory

Telephone: (212) 225-2000

Facsimile: (212) 225-3999

Email: caustin@cgsh.com

gmcgrory@cgsh.com

 

If to Sempra Energy:

 

Sempra Energy

101 Ash Street

San Diego, California  92101

Attention:  Mark Snell, Chief Financial Officer

Telephone:  (619) 696-4694

Facsimile:  (619) 696-4611

Email:  msnell@sempra.com

With copies to:

 

Sempra Energy

101 Ash Street

San Diego, California  92101

Attention:  Javade Chaudhri, General Counsel

Telephone:  (619) 696-4641

Facsimile:  (619) 696-6878

Email:  jchaudhri@sempra.com

 

  

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Sullivan & Cromwell LLP

125 Broad Street

New York, New York  10004

Attention:  Alexandra D. Korry

      Joseph B. Frumkin

Telephone:  (212) 558-4000

Facsimile:  (212) 558-3588

Email:  korrya@sullcrom.com

frumkinj@sullcrom.com

If to RBS:

 

The Royal Bank of Scotland plc

House G

RBS Gogarburn

Edinburgh

EH12 1HQ

Attention:  Group General Counsel

Telephone:  +44 131 523 2223

Facsimile:  +44 131 626 2997

With a copy to:

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York  10017

Attention:  Mark D. Pflug

Telephone:  (212) 455-2500

Facsimile:  (212) 455-2502

Email:  mpflug@stblaw.com

If to the Partnership or SET:

 

c/o RBS Sempra Commodities LLP

600 Washington Boulevard

Stamford, Connecticut  06901

Attention:  Michael Goldstein

Telephone:  (203) 897-5510

Facsimile:  (203) 355-5410

Email:  michael.goldstein@rbssempra.com

Section 10.5. Submission to Jurisdiction; Waiver of Jury Trial.  Each Party agrees that it shall bring any action or proceeding in respect of any questions, claims, disputes, remedies or Damages arising out of or related to this Agreement or the Related Agreements or the transactions contained in or contemplated hereby or thereby exclusively in the United States District Court for the Southern District of New York or any New York State court sitting in New

 

  

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York County (the “Chosen Courts”), and, solely in connection with claims arising under this Agreement or the Related Agreements or the transactions that are the subject hereof and thereof (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives and agrees not to assert any objection to laying venue in any such action or proceeding in the Chosen Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any Party, (iv) agrees that service of process upon such Party in any such action or proceeding shall be effective if notice is given in accordance with Section 10.4 and (v) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in any other jurisdictions by suit on the judgment or in any other manner provided by applicable Legal Requirements.  This Section 10.5 shall not limit the jurisdiction of the Accounting Expert set forth in Section 2.7(c), although claims may be asserted in the Chosen Courts for purposes of enforcing the jurisdiction and judgments of the Accounting Expert.  EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 10.6. Waiver; Remedies Cumulative.  The rights and remedies of the Parties to this Agreement are cumulative and not alternative.  Neither any failure nor any delay by any Party in exercising any right, power or privilege under this Agreement or any of the documents referred to in this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege.  To the maximum extent permitted by applicable Legal Requirements, (a) no claim or right arising out of this Agreement or any of the documents referred to in this Agreement can be discharged by one Party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other Party; (b) no waiver that may be given by a Party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one Party will be deemed to be a waiver of any obligation of that Party or of the right of the Party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.

 

Section 10.7. Entire Agreement and Modification.  This Agreement supersedes all prior agreements, whether written or oral, between the Parties with respect to its subject matter (including any letter of intent between the Parties related to the subject matter of this Agreement) and constitutes (together with the Schedules, Exhibits, the Seller Disclosure Letter, the Purchaser Disclosure Letter and other documents delivered pursuant to this Agreement including the Related Agreements and the Guaranty) a complete and exclusive statement of the terms of the agreement between the Parties with respect to its subject matter; provided, that this Section 10.7 shall not apply to the Non-Disclosure Agreement, which shall remain in full force and effect in accordance with its terms except as provided by Section 7.6(f).  This Agreement may not be amended, supplemented, or otherwise modified except by a written agreement executed by all Parties.

 

Section 10.8. Assignments, Successors and no Third-Party Rights.  No Party may, in whole or in part, assign any of its rights or interests or delegate any of its

 

  

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obligations under this Agreement without the prior written consent of each of the other Parties, and any attempt to do so will be void; provided, that without prior written consent any Party may assign any of its or its Subsidiaries’ rights or interests or delegate any of its obligations under this Agreement to any Subsidiary so long as the assigning or delegating Party retains its obligations under this Agreement; provided, further, that (so long as such assignment or delegation could not reasonably be expected to delay the consummation of any of the transactions contemplated hereby or by any Related Agreement or to have an adverse effect on any Seller Party or any of its Affiliates) the Purchaser shall be permitted to, upon written notice to the Seller Parties but without their prior consent, assign any of its rights and delegate any of its obligations under this Agreement to (i) any Subsidiary of Guarantor if and for so long as the obligations of such Subsidiary are subject to the Guaranty or (ii) (x) J.P. Morgan Chase Bank, N.A.(“JPM Bank”) if it then has a senior unsecured long-term indebtedness rating that is at least the Requisite Rating by at least two of Standard & Poor’s, Fitch or Moody’s Investor Service, Inc. or (y) any Subsidiary of JPM Bank if and for so long as the obligations of such Subsidiary are guaranteed by JPM Bank pursuant to a guarantee in favor of Sellers substantially in the form of the Guaranty, in which case, under either clause (i) or (ii), the Purchaser shall be released for such time as the obligations delegated are subject to the Guaranty (in the case of the Guarantor or any such delegee of JPM Bank) or the guarantee substantially in the form of the Guaranty (in the case of any such delegee of JPM Bank) from any liability hereunder in respect of any such delegated obligations to such Subsidiary or JPM Bank or such Subsidiary of JPM Bank, as applicable, upon such Subsidiary or JPM Bank or such Subsidiary of JPM Bank, as applicable, entering into an agreement with the Seller Parties, in form reasonably acceptable to the Seller Parties, assuming all such obligations delegated to such Person.  Subject to the preceding sentence, and except as otherwise expressly provided in Sections 9.2 and 9.3, this Agreement shall apply to, be binding in all respects upon and inure to the benefit of the successors and permitted assigns of the Parties.  Nothing expressed or referred to in this Agreement shall be construed to give any Person other than the Parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement, except such rights as shall inure to a successor or permitted assignee pursuant to this Section 10.8 and except for such rights of any Indemnified Person under Article IX.

 

Section 10.9. Severability.  If any provision (or part thereof) of this Agreement is held illegal, invalid or unenforceable under any present or future Legal Requirement, (i) the Parties shall negotiate in good faith to replace such provision with a suitable and equitable substitute therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such illegal, invalid or unenforceable provision, and to the extent such substitution would not be valid or enforceable, (ii)(a) such provision (or part thereof) shall be fully severable, (b) this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision (or part thereof) had never comprised a part hereof, and (d) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision (or part thereof) or by its severance herefrom.

 

Section 10.10. Construction.  The headings of Articles and Sections in this Agreement are provided for convenience only and shall not affect its construction or interpretation.  All references to “Articles,” “Sections” and “Schedules” refer to the corresponding Articles, Sections and Schedules of this Agreement.

 

  

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Section 10.11. Governing Law.  This Agreement shall be governed by and construed in accordance with the substantive laws of the State of New York.

 

Section 10.12. Execution of Agreement.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original copy of this Agreement and all of which, when taken together, shall be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile or other electronic transmission shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes.  Signatures of the Parties transmitted by facsimile or other electronic means shall be deemed to be their original signatures for all purposes.

 

Section 10.13. Specific Performance.  Without intending to limit the remedies available to the Parties hereunder, each Party acknowledges that a breach of, conflict with, or failure to perform or comply with, any of the covenants contained in this Agreement may result in material irreparable injury to the other Parties or their respective Affiliates for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of such a breach or threat thereof, to the fullest extent permitted by any Legal Requirement, each Party shall be entitled to seek a temporary restraining order and/or a preliminary or permanent injunction restraining the activities prohibited hereby or such other relief as may be required to specifically enforce any of the covenants contained herein, and to the fullest extent permitted by law, such Party agrees not to oppose the granting of such injunctive relief on the basis that monetary damages are an adequate remedy.  Each Party hereby agrees and consents that such injunctive relief may be sought in accordance with Section 10.5 hereto.

 

Section 10.14. Group Relief.

 

(a) If RBS so requires, RBS and/or any Subsidiary of RBS shall be entitled to surrender Reliefs relating to any Pre-Closing Period or any part of the Straddle Period prior to the Closing Date to the Transferred Companies by way of Group Tax Relief to the extent it has not been possible to finalize such surrenders of Reliefs prior to the Closing Date.  The Purchaser shall procure that the relevant Transferred Company or Companies shall take without delay (and in any event within any applicable statutory time limit) all such steps as may reasonably be required by RBS to effect such surrender.

 

(b) The Purchaser shall, save as provided below, procure payment by the Transferred Company or Companies concerned to RBS or the relevant RBS Subsidiary of a sum equal to the amount of Tax which the relevant Transferred Company would, but for the surrender, have had to pay.  Such payment shall be made on the first date on which the relevant Transferred Company does not have to make the payment of Tax that it would, but for the surrender, have had to make. If a payment has been made under this Section 10.14(b) and the surrender to which it relates is subsequently determined to have been invalid or ineffective to any extent, then the payment so made (or so much of it as relates to such part of the surrender found to be invalid or ineffective) shall be refunded as soon as practicable thereafter.  Any such refund shall include any interest and penalties required to be paid as a result of the late payment of the applicable Tax due to the invalid or ineffective surrender save to the extent that such interest and

 

  

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penalties are attributable to the unreasonable delay by the Purchaser or, following the Closing, any Transferred Company.  The Purchaser shall not be required to procure any payment for a surrender under this Section 10.14 where the Tax which would have otherwise have arisen but for the surrender would (ignoring any financial or time limitations) have been indemnified under Section 9.2 and any claim under Section 9.2 shall be extinguished to that extent.

 

(c) The Purchaser shall procure that no voluntary action is taken by any Transferred Company after the Closing (whether by withdrawing or revoking any claim or consent or otherwise) which would prejudice the availability of any Group Tax Relief surrendered by RBS or a Subsidiary of RBS to a Transferred Company either (i) where the surrender is or was made prior to the Closing Date and is described on Schedule 10.14(c) or (ii) where the surrender is made pursuant to this Section 10.14.

 

Section 10.15. VAT.

 

(a) Subject to the other provisions of this Section 10.15, if any payment under this Agreement including in respect of the transfer of any Transferred Assets or Assumed Liabilities by any of the Sellers (whether or not by way of novation) as contemplated hereby constitutes the consideration for a taxable supply for VAT purposes, then in addition to, and at the same time as that payment, or if later upon presentation of a valid VAT invoice, the payer shall pay an amount equal to the VAT chargeable on that supply.

 

(b) The Parties shall use all reasonable endeavors and shall co-operate to secure that, where feasible, the transfer or novation of any Transferred Assets or Assumed Liabilities is not treated as a taxable supply for VAT purposes in any relevant jurisdiction. In particular, in respect of the RBS Related Assets and Liabilities, RBS shall have the right to seek, and the Purchaser shall be entitled to request RBS to seek, a ruling from HM Revenue & Customs in the United Kingdom (“HMRC”) to the effect that the transfer or novation of such assets and liabilities, so far as they relate to a business or businesses carried on in the United Kingdom, should be treated as neither a supply of goods nor a supply of services for the purposes of the United Kingdom laws governing VAT.  The Sellers agree to not charge (or to charge) VAT to the Purchaser in accordance with any applicable ruling received (including, but not limited to, any ruling received from HMRC in respect of the RBS Related Assets and Liabilities).  The Parties shall use all reasonable endeavors to ensure that any applicable ruling is obtained prior to the Closing Date.

 

(c) If any VAT ruling is sought in respect of the transfer or novation of any Transferred Assets or Assumed Liabilities (including, but not limited to, any ruling sought from HMRC in respect of the RBS Related Assets and Liabilities) but such ruling is not obtained prior to the date falling three Business Days before the latest date on which the relevant Seller would be obliged to account for the VAT chargeable to the relevant tax authority in order to avoid incurring any penalty, surcharge or interest expense (if the transfer had been ruled to be a chargeable supply), then the Purchaser shall, if so directed by the Sellers on or after such date and upon presentation of a valid VAT invoice, procure the payment of an amount equal to VAT in respect of the applicable transfer or novation.

 

  

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(d) In advance of seeking a ruling in respect of the transfer or novation of any Transferred Assets or Assumed Liabilities (including, but not limited to, any ruling sought from HMRC in respect of the RBS Related Assets and Liabilities), the Purchaser shall provide confirmation in a form reasonably satisfactory to the Sellers that any applicable conditions are or will be satisfied by it or the person to whom the transfer or novation is made hereunder (the “Transferee”) in order for such transfer or novation not to be treated as a taxable supply for VAT purposes in the relevant jurisdiction.  For the purposes of obtaining a ruling of the kind described in Section 10.15(b) from HMRC, the relevant confirmations to be provided by the Purchaser shall be: (i) that at all material times, the RBS Related Assets and Liabilities will be used by the Transferee in carrying on the same kind of business as a going concern as that carried on by the Sellers; (ii) that the Transferee is or will at all material times be a taxable person for the purposes of United Kingdom Value Added Tax Act 1994 and regulations thereunder; and (iii) that the transfer or novation of the RBS Related Assets and Liabilities hereunder will not include a grant of the kind described in Regulation 5(2) Value Added Tax (Special Provisions) Order 1995.

 

(e) If at any time after the Closing Date any tax authority indicates in writing that any sale, transfer or novation carried out pursuant to this Agreement is chargeable to VAT (in circumstances where no such VAT was initially charged), the Purchaser shall (against production of a valid VAT invoice or equivalent, if any) in addition to any amounts expressed in this Agreement to be payable by the Purchaser pay the amount of any VAT (excluding any penalties or surcharge other than penalties or surcharge arising solely from any unreasonable delay on the part of the Purchaser or any Transferee in performing any obligations under this Section 10.15) which as a result of that indication may be chargeable on any sale, transfer or novation carried out pursuant to this Agreement. Any such amounts shall be paid in cleared funds on the later of (i) the date falling five (5) Business Days after receipt by the Purchaser of a copy of the indication from the tax authority and (ii) the date falling three (3) Business Days prior to the latest date on which the relevant Seller is obliged to account for such amounts to the relevant tax authority in order to avoid incurring any penalty, surcharge or interest expense in respect of such amounts.

 

(f) If any amount paid by the Purchaser to any Seller in respect of VAT pursuant to this Agreement is subsequently found to have been paid in error (including as a result of a late receipt by the Sellers of a ruling sought from the applicable tax authority under Section 10.15(b), or as a result of an indication in writing from a tax authority that the Transferee is unable to recover all or part of the relevant VAT on the ground that the VAT was not properly chargeable) that Seller shall (if such Seller has not yet accounted for such VAT to the relevant tax authority) promptly repay such amount to the Purchaser and, if that Seller has already so accounted, then such Seller shall use all reasonable endeavors to obtain repayment thereof from the relevant tax authority and shall pay to the Purchaser the amount so repaid.

 

(g) The Sellers shall not send any correspondence to, or enter into any other material written communication with, a tax authority in respect of a VAT ruling without providing a draft thereof to the Purchaser in advance and providing the Purchaser with an opportunity to comment thereon.  The Sellers shall promptly notify the Purchaser upon receipt of any correspondence or other communication from a tax authority in respect of a ruling.  The Sellers shall also promptly notify the Purchaser upon receipt of any other indication from any tax authority that any sale, transfer or novation carried out pursuant to this Agreement is chargeable

 

  

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to VAT.  The Purchaser shall promptly notify the Sellers upon receipt of any indication from a tax authority that the Transferee is unable to recover all or part of any VAT on the ground that the VAT was not properly chargeable. If the Sellers receive any relevant written correspondence from a tax authority, they shall promptly provide copies to the Purchaser.  If the Purchaser or any Transferee receives any relevant written correspondence from a tax authority, the Purchaser shall promptly provide copies to the Sellers.  The Purchaser shall keep confidential any documents or information provided to it pursuant to this Section 10.15.

 

Section 10.16. Withholding Taxes.

 

(a) The Purchaser shall not be entitled to withhold or deduct any amount for or on account of Tax from the Purchase Price, except as provided by Section 10.16(b) or otherwise required by law.  The Purchaser shall notify the Sellers as soon as practicable and in any event reasonably in advance of Closing if the Purchaser has reason to believe that it would be required by law to withhold or deduct any amount from the Purchase Price, and the Parties shall negotiate in good faith and cooperate in taking all reasonable steps (including taking into account whether any Affiliate of the Purchaser which would otherwise acquire any Transferred Company or any of the Transferred Assets is resident or carrying on business in a jurisdiction which would impose on that Affiliate an obligation to withhold or deduct any amount in respect of the Purchase Price) to avoid or minimize any such obligation to withhold or deduct any amount from the Purchase Price, which steps may include, where the obligation to withhold or deduct relates to any Transferred Asset, entering into a total return swap in respect of such asset rather than transferring or novating such asset; provided that such total return swap does not give rise to any material adverse consequences for the Purchaser.  For the avoidance of doubt, neither Section 10.16(a) nor Section 10.16(b) shall prejudice the rights of the Purchaser to indemnification under Section 9.2(e)(v) in respect of any withholding Taxes relating to the Purchase Price or any portion thereof.

 

(b) Notwithstanding anything to the contrary in this Agreement, the Purchaser shall withhold from payments of the Purchase Price made by it to the Sellers with respect to the assets listed on a USRPI Schedule delivered pursuant to Section 2.6(a)(xiv) any amounts required to be withheld pursuant to Section 1445 of the Code and the Treasury Regulations promulgated thereunder, or any comparable provision of state or local law, and shall promptly pay any amounts so withheld to the relevant tax authority, with the Sellers to receive the applicable payments net of any such withholding; provided, however, that the Parties agree that no withholding under this Section 10.16(b) shall be made with respect to any asset listed on a USRPI Schedule to the extent that RBS reasonably determines that the asset has no value.  The Parties shall cooperate in good faith in order to minimize such withholding tax under section 1445 of the Code.

 

Section 10.17. Regulated Utilities.  Notwithstanding any provision hereof or of any Related Agreement, no covenant or restriction set forth herein or therein shall require any Sempra Utility (or any other Person now owned by Sempra Energy or any of its Affiliates or hereafter acquired that is subject to cost-based rate regulation and regulation as to service by any state, federal or foreign governmental regulation and owns or operates facilities used for (i) the generation, transmission, or distribution of electric energy for sale, (ii) the distribution of natural or manufactured gas for heat, light, or power or (iii) the collection, treatment and distribution of water for sale) to take or refrain from taking any action.

 

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, the Parties have executed this Agreement, all as of the date first above written.

 

 

	
J.P. MORGAN VENTURES ENERGY CORPORATION

	 
	 	 
	 	 
	
By:

	/s/ Daniel F. Hinds 	 
	 	
Name:

	Daniel F. Hinds	 
	 	
Title:

	CEO & President	 

 

Signature Page – Purchase and Sale Agreement

  

  

  

 

	

THE ROYAL BANK OF SCOTLAND PLC

	 
	 	 
	 	 
	
By:

	/s/ Bruce Van Saun	 
	 	
Name:

	Bruce Van Saun	 
	 	
Title:

	Group Finance Director	 

 

Signature Page – Purchase and Sale Agreement

  

  

  

 

	

RBS SEMPRA COMMODITIES LLP

	 
	 	 
	 	 
	
By:

	/s/ Bob McKillip	 
	 	
Name:

	Bob McKillip	 
	 	
Title:

	Managing Director	 

 

 

	

SEMPRA ENERGY TRADING LLC

	 
	 	 
	 	 
	
By:

	/s/ Michael R. Kirby	 
	 	
Name:

	Michael R. Kirby	 
	 	
Title:

	Chief Operating Officer	 

 

 

 Signature Page – Purchase and Sale Agreement

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