Document:

Exhibit

Exhibit 10.2

THIRD AMENDMENT TO 
INVENTORY FACILITY CREDIT AGREEMENT

THIS THIRD AMENDMENT TO INVENTORY FACILITY CREDIT AGREEMENT, dated as 
of November 16, 2018 (this “Amendment”), is made by and among ANIXTER INC., a Delaware corporation, (“Anixter”), the other parties listed on the signature pages hereof as a “Loan Party” (together with Anixter, each, a “Loan Party” and collectively, the “Loan Parties”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (“Wells Fargo”), in its capacity as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, “Administrative Agent”) and the Lenders (as defined in the Credit Agreement) party hereto.

R E C I T A L S:

WHEREAS, reference is made to that certain Credit Agreement, dated as of October 5, 2015, by and among the Borrowers (as defined therein), the Lenders and the Administrative Agent (as amended by that certain First Amendment to Inventory Facility Loan Documents dated as of September 29, 2016, and by that certain Second Amendment to Inventory Facility Credit Agreement dated as of October 29, 2018, the “Existing Credit Agreement”); and

WHEREAS, the parties hereto desire to amend certain terms of the Existing Credit Agreement as hereinafter provided and the Administrative Agent and the Lenders are willing to make such modifications, subject to the terms and conditions of this Amendment;

NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, covenant and agree as follows:

1.Definitions. Defined terms used herein unless otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement (as defined below) and the rules of construction set forth in Section 1.04 of the Credit Agreement shall apply to this Amendment.

2.Amendment of Credit Agreement. Effective as of the Amendment Effective Date (as defined below), and subject to the terms and conditions set forth herein and in reliance upon representations and warranties set forth herein, the Existing Credit Agreement is hereby amended such that, after giving effect to all such amendments, it shall read in its entirety as attached hereto as Annex A, with all revisions to the Existing Credit Agreement reflected in Annex A in blacklined format (as so amended, the “Credit Agreement”).

3.Representations and Warranties. Each of the Loan Parties, by executing this Amendment, hereby certifies and confirms that as of the date hereof and after giving effect to this Amendment: (a) the execution, delivery and performance of this Amendment and any and all other documents executed and/or delivered in connection herewith (i) have been authorized by all requisite action on the part of the Loan Parties, (ii) will not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or (iii) conflict with or violate any of the Loan Parties’ respective Organization Documents; (b) the representations and warranties of the Loan Parties contained in the Credit Agreement 

and the other Loan Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on the date hereof with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which relate solely to an earlier date or time, which representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the specific dates or times referred to therein); (c) no Event of Default or Default under the Credit Agreement shall have occurred and be continuing or shall exist which will not be cured by the execution and effectiveness of this Amendment; and (d) the Credit Agreement and all other Loan Documents are and remain legal, valid, binding and enforceable obligations in accordance with the terms thereof.

4.Conditions of Effectiveness of the Amendment. This Amendment and the terms and provisions hereof shall be effective as of the first date (such date being referred to as the “Amendment Effective Date”) when each of the following conditions shall have been satisfied:

(a)    Fees and Expenses. The Loan Parties shall pay to the Administrative Agent the costs and expenses of the Administrative Agent, including reasonable fees of the Administrative Agent’s counsel in connection with this Amendment. Anixter shall pay to the Administrative Agent any fees due and payable as of the Amendment Effective Date under that certain fee letter dated as of October 24, 2018 between Anixter and the Administrative Agent and pay the upfront fees (collectively, the “Upfront Fees”) to the Administrative Agent for the account of (i) each Lender party to the Existing Credit Agreement in an amount equal to 0.15% of the principal amount of each such Lender’s commitment to participate in the Inventory Facility that are rolled over from the Existing Credit Agreement and (ii) each Lender in an amount equal to 0.25% of the amount of each Lender’s commitment to participate in the Credit Agreement in excess of such Lender’s commitment in the Existing Credit Agreement on the Amendment Effective Date (prior to giving effect to this Amendment). Such Upfront Fees shall be payable in full upon the Amendment Effective Date.

(b)    Execution and Delivery. The Loan Parties and the Lenders shall have executed and delivered to the Administrative Agent (i) counterparts to this Amendment and all agreements, documents, and certificates executed and delivered in connection herewith and therewith, and (ii) such other certificates, documents, instruments, and agreements as the Administrative Agent shall reasonably request in connection with the transactions contemplated by this Agreement and the other Loan Documents, including (A) any promissory notes requested by a Lender pursuant to Section 2.5 of the Credit Agreement payable to the order of each such requesting Lender and (B) a written opinion of the Loan Parties’ counsel.

(c)    Receivables Facility Amendment. The parties to that certain Third Amendment to Receivables Facility Credit Agreement of even date herewith shall have delivered executed counterparts thereto to the Receivables Facility Administrative Agent and all conditions to effectiveness thereto shall have been met to the satisfaction of the Receivables Facility Administrative Agent.

(d)    Officer Certificates; Certified Certificate of Incorporation; Good Standing Certificates. The Administrative Agent shall have received (i) a certificate of each Loan Party, dated the Amendment Effective Date and executed by its Secretary, Assistant Secretary, or other similar officer, 

which shall (A) certify the resolutions of its Board of Directors, members or other body authorizing the execution, delivery and performance of the Loan Documents to which it is a party, (B) identify by name and title and bear the signatures of the officers of such Loan Party authorized to sign the Amendment and other Loan Documents to which it is a party and, in the case of a Borrower, its Financial Officers, (C) certify as to a minimum Combined Availability of $150,000,000 as of the Amendment Effective Date and (D) contain appropriate attachments, including the certificate or articles of incorporation or organization of such Loan Party certified by the relevant authority of the jurisdiction of organization of such Loan Party and a true and correct copy of its by-laws or operating, management or partnership agreement, or other organizational or governing documents, and (ii) a good standing certificate for each Loan Party from its jurisdiction of organization or the substantive equivalent available in the jurisdiction of organization for such Loan Party from the appropriate governmental officer in such jurisdiction.

(e)    Field Examination. The Administrative Agent or its designee shall have conducted a field examination of the Inventory and related working capital matters and financial information of the Borrower, the results of which shall be satisfactory to the Administrative Agent in its sole discretion.

5.Force and Effect. Each Loan Party reconfirms, restates, and ratifies each of Loan Documents to which it is a party and except as amended by this Amendment each Loan Party confirms that all such Loan Documents to which it is party remain in full force and effect since the date of their execution.

6.Governing Law. This Amendment shall be governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois, but giving effect to federal laws applicable to national banks.

7.Counterparts. This Amendment may be signed in any number of counterparts each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and delivery of executed signature pages hereof by telecopy or other electronic transmission from one party to another shall constitute effective and binding execution and delivery of this Amendment by such party.

		
	8.
	Release; Indemnification.

(a)    Release. In further consideration of the Administrative Agent’s and Lenders’ execution of this Amendment, each Loan Party, individually and on behalf of its respective successors (including any trustees acting on behalf of such party, and any debtor-in-possession with respect to such party), assigns, subsidiaries and affiliates, hereby forever releases the Lenders and the Administrative Agent and their successors, assigns, parents, subsidiaries, and affiliates and their respective officers, employees, directors, agents and attorneys (collectively, the “Releasees”) from any and all debts, claims, demands, liabilities, responsibilities, disputes, causes, damages, actions and causes of actions (whether at law or in equity), and obligations of every nature whatsoever, whether liquidated or unliquidated, whether matured or unmatured, whether fixed or contingent that any Loan Party has or may have against the Releasees, or any of them, which arise from or relate to any actions which the Releasees, or any of them, have or may have taken or omitted to take in connection with the Credit Agreement or the other Loan Documents prior to the date hereof (including with respect to the Obligations, any Collateral and 

any third parties liable in whole or in part for the Obligations). This provision shall survive and continue in full force and effect whether or not the Loan Parties shall satisfy all other provisions of the Credit Agreement or the other Loan Documents.

(b)    Related Indemnity. Each Loan Party hereby agrees that its release of the Releasees set forth in Section 8(a) shall include an obligation to indemnify and hold the Releasees, or any of them, harmless with respect to any and all liabilities, obligations, losses, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever incurred by the Releasees, or any of them, whether direct, indirect or consequential, as a result of or arising from or relating to any proceeding by, or on behalf of any Person, including officers, directors, agents, trustees,  creditors, partners or shareholders of any such Loan Party or any parent, subsidiary or affiliate of any such Loan Party, whether threatened or initiated, asserting any claim for legal or equitable remedy under  any statutes, regulation, common law principle or otherwise arising from or in connection with the negotiation,  preparation,  execution,  delivery,  performance,  administration  and  enforcement  of this Amendment or any other document executed in connection herewith; provided, that no Loan Party shall be liable for any indemnification to a Releasee to the extent that any such liability, obligation, loss, penalty, action, judgment, suit, cost, expense or disbursement results from the applicable Releasee’s gross negligence or willful misconduct, as finally determined by a court of competent jurisdiction. The foregoing indemnity shall survive the payment in full of the Obligations and the termination of the Credit Agreement and the other Loan Documents.

9.Amendment as Loan Document. The parties hereto acknowledge and agree that this Amendment constitutes a Loan Document.

[SIGNATURES BEGIN ON NEXT PAGE]

IN WITNESS WHEREOF and intending to be legally bound hereby, the parties hereto have executed this Third Amendment to Inventory Facility Credit Agreement as of the date first above written.

	
		
	 
	LOAN PARTIES:

ANIXTER INC.,
a Delaware corporation

By:   /s/ Rodney A. Shoemaker      
Name:  Rodney A. Shoemaker
Title:    Vice President and Treasurer

ANIXTER INTERNATIONAL INC.,
a Delaware corporation

By:    /s/ Rodney A. Shoemaker      
Name:  Rodney A. Shoemaker
Title:    Senior Vice President and Treasurer

ACCU-TECH CORPORATION,
a Georgia corporation

By:    /s/ Rodney A. Shoemaker      
Name:  Rodney A. Shoemaker
Title:    Vice President and Treasurer

	
		
	 
	COMMUNICATION CABLES, LLC,
a Delaware limited liability company,

ANIXTER POWER SOLUTIONS INC., a
Michigan corporation

By:   /s/ Rodney A. Shoemaker      
Name:  Rodney A. Shoemaker
Title:   Vice President and Treasurer

    
    

	
		
	 
	WELLS FARGO BANK, NATIONAL
ASSOCIATION, as a Lender and as Administrative Agent

By:    /s/ Cory R. Moore         
Name:  Cory R. Moore
Title:   Authorized Signatory

 

[Signature page to Third Amendment to Inventory Facility Credit Agreement]

	
		
	 
	JPMORGAN CHASE BANK, N.A., as a Lender

By:    /s/ Stephanie A. Lis            
Name:  Stephanie A. Lis
Title:   Authorized Officer

[Signature page to Third Amendment to Inventory Facility Credit Agreement]

	
		
	 
	BANK OF AMERICA, as a Lender

By:    /s/ Andrew Finemore      
Name:  Andrew Finemore
Title:   Assistant Vice President

[Signature page to Third Amendment to Inventory Facility Credit Agreement]

	
		
	 
	SUNTRUST BANK, as a Lender

By:    /s/ Pavo Hrkac            
Name:  Pavo Hrkac
Title:   Vice President

[Signature page to Third Amendment to Inventory Facility Credit Agreement]

	
		
	 
	PNC BANK, NATIONAL ASSOCIATION, 
as a Lender

By:    /s/ James C. Simpson         
Name:  James C. Simpson
Title:   Vice President

 
[Signature page to Third Amendment to Inventory Facility Credit Agreement]

	
		
	 
	HSBC BANK USA, NATIONAL ASSOCIATION, 
as a Lender

By:    /s/ Andrew Horn         
Name:  Andrew Horn
Title:   Director

 

[Signature page to Third Amendment to Inventory Facility Credit Agreement]

Annex A

As-Amended Credit Agreement

(See attached.)

	
	
	 

CREDIT AGREEMENT 
(Inventory Facility)
by and among
WELLS FARGO BANK, NATIONAL ASSOCIATION, 
as Administrative Agent,
WELLS FARGO BANK, NATIONAL ASSOCIATION, and 
J.P. MORGAN SECURITIES LLC 
JPMORGAN CHASE BANK, N.A., and 
BANK OF AMERICA, N.A., 
as Joint Lead Arrangers and Joint Book Runners,
WELLS FARGO BANK, NATIONAL ASSOCIATION, and 
JPMORGAN CHASE BANK, N.A., 
as Co‐Syndication Agents,
BANK OF AMERICA, N.A., and SUNTRUST BANK, 
as Co‐Documentation AgentsAgent,
THE LENDERS THAT ARE PARTIES HERETO, 
as the Lenders,
ANIXTER INC. and  
EACH OF THE SUBSIDIARIES OF ANIXTER INC.  
FROM TIME TO TIME PARTY HERETO AS A “BORROWER,” 
as Borrowers
Dated as of October 5, 2015 
(as amended through October 29, 2018the Amendment No. 3 Effective Date)

	
	
	 

TABLE OF CONTENTS

Page

		
	1.
	DEFINITIONS AND CONSTRUCTION    1

		
	1.1
	Definitions    1

		
	1.2
	Accounting Terms    1

		
	1.3
	Code    2

		
	1.4
	Construction    2

		
	1.5
	Time References    3

		
	1.6
	Schedules and Exhibits    3

		
	2.
	LOANS AND TERMS OF PAYMENT    3

		
	2.1
	Revolving Loans    3

		
	2.2
	[Reserved]    4

		
	2.3
	Borrowing Procedures and Settlements    4

		
	2.4
	Payments; Reductions of Commitments; Prepayments    1112

		
	2.5
	Promise to Pay; Promissory Notes    1516

		
	2.6
	Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations    16

		
	2.7
	Crediting Payments    1718

		
	2.8
	Designated Account    1718

		
	2.9
	Maintenance of Loan Account; Statements of Obligations    18

		
	2.10
	Fees    1819

TABLE OF CONTENTS
(continued)
Page

		
	2.11
	Letters of Credit    19

		
	2.12
	LIBOR Option    2628

		
	2.13
	Capital Requirements    2931

		
	2.14
	[Reserved]    3032

		
	2.15
	Joint and Several Liability of Borrowers    3032

		
	3.
	CONDITIONS; TERM OF AGREEMENT    3234

		
	3.1
	Conditions Precedent to Closing Date    3234

		
	3.2
	Conditions Precedent to all Extensions of Credit    3638

		
	3.3
	Maturity    3738

		
	3.4
	Effect of Maturity    3738

		
	3.5
	Early Termination by Borrowers    3739

		
	4.
	REPRESENTATIONS AND WARRANTIES    3839

		
	4.1
	Organization; Powers    3839

		
	4.2
	Authorization; Enforceability    3839

		
	4.3
	Governmental Approvals; No Conflicts    3940

		
	4.4
	Financial Condition; No Material Adverse Change    3940

		
	4.5
	Properties    3940

		
	4.6
	Litigation and Environmental Matters    4041

TABLE OF CONTENTS
(continued)
Page

		
	4.7
	Compliance with Laws and Agreements; No Default    4042

		
	4.8
	Investment Company Status    4142

		
	4.9
	Taxes    4142

		
	4.10
	ERISA    4142

		
	4.11
	Disclosure    4142

		
	4.12
	Performance    4142

		
	4.13
	Solvency    4143

		
	4.14
	Insurance    4243

		
	4.15
	Capitalization and Subsidiaries; Joint Venture; Partnership    4243

		
	4.16
	Security Interest in Collateral    4243

		
	4.17
	[Reserved]    4243

		
	4.18
	Federal Reserve Regulations    4243

		
	4.19
	Use of Proceeds    4244

		
	4.20
	[Reserved]    4244

		
	4.21
	Restricted Payments to AXE    4344

		
	4.22
	OFAC; Sanctions; Anti-Corruption Laws and Sanctions    43; Anti-Money Laundering Laws    44

		
	4.23
	HD Supply Acquisition    43EEA Financial Institutions    44

TABLE OF CONTENTS
(continued)
Page

		
	4.24
	Indebtedness    4344

		
	4.25
	Eligible Inventory    4344

		
	4.26
	Location of Inventory    44

		
	4.27
	Inventory Records    44

		
	4.28
	Swap Agreements    4445

		
	5.
	AFFIRMATIVE COVENANTS    4445

		
	5.1
	Financial Statements; Borrowing Base; Other Information    4445

		
	5.2
	Notices of Material Events    47

		
	5.3
	Existence; Conduct of Business    4849

		
	5.4
	Payment of Obligations    4849

		
	5.5
	Maintenance of Properties    49

		
	5.6
	Books and Records; Inspection Rights    49

		
	5.7
	Compliance with Laws and Material Contractual Obligations    4950

		
	5.8
	Use of Proceeds    4950

		
	5.9
	[Reserved]    50

		
	5.10
	Insurance    5051

		
	5.11
	Casualty and Condemnation    5051

		
	5.12
	Depository Banks    51

TABLE OF CONTENTS
(continued)
Page

		
	5.13
	Employee Benefit Matters    51

		
	5.14
	Formation of Subsidiaries; Further Assurances    5152

		
	5.15
	Location of Inventory    5253

		
	5.16
	Post-Closing Security Perfection    5253

		
	5.17
	OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws    53

		
	6.
	NEGATIVE COVENANTS    5253

		
	6.1
	Indebtedness    5253

		
	6.2
	Liens    5455

		
	6.3
	Fundamental Changes    5657

		
	6.4
	Investments, Loans, Advances, Guarantees, and Acquisitions    5657

		
	6.5
	Asset Sales    5859

		
	6.6
	Sale and Leaseback Transactions    5960

		
	6.7
	Swap Agreements    5960

		
	6.8
	Payments to AXE; Certain Payments of Indebtedness    6061

		
	6.9
	Transactions with Affiliates    6162

		
	6.10
	Restrictive Agreements    6162

		
	6.11
	Amendment of Material Documents    6162

		
	6.12
	Employee Benefit Matters    6263

TABLE OF CONTENTS
(continued)
Page

		
	6.13
	Environmental Liabilities    6263

		
	6.14
	Minimum Fixed Charge Coverage Ratio    6263

		
	6.15
	Inventory with Bailees    6364

		
	7.
	[RESERVED]    6364

		
	8.
	EVENTS OF DEFAULT    6364

		
	9.
	RIGHTS AND REMEDIES    6667

		
	9.1
	Rights and Remedies    6667

		
	9.2
	Remedies Cumulative    6768

		
	10.
	WAIVERS; INDEMNIFICATION    6768

		
	10.1
	Demand; Protest; etc    6768

		
	10.2
	The Lender Group’s Liability for Collateral    6768

		
	10.3
	Indemnification    6769

		
	11.
	NOTICES    6870

		
	12.
	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION    6971

		
	13.
	ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS    7374

		
	13.1
	Assignments and Participations    7374

		
	13.2
	Successors    7678

		
	14.
	AMENDMENTS; WAIVERS    7778

TABLE OF CONTENTS
(continued)
Page

		
	14.1
	Amendments and Waivers    7778

		
	14.2
	Replacement of Certain Lenders    7980

		
	14.3
	No Waivers; Cumulative Remedies    7981

		
	15.
	AGENT; THE LENDER GROUP    8081

		
	15.1
	Appointment and Authorization of Administrative Agent    8081

		
	15.2
	Delegation of Duties    8182

		
	15.3
	Liability of Administrative Agent    8182

		
	15.4
	Reliance by Administrative Agent    8183

		
	15.5
	Notice of Default or Event of Default    8183

		
	15.6
	Credit Decision    8283

		
	15.7
	Costs and Expenses; Indemnification    8384

		
	15.8
	Administrative Agent in Individual Capacity    8385

		
	15.9
	Successor Administrative Agent    8485

		
	15.10
	Lender in Individual Capacity    8486

		
	15.11
	Collateral Matters    8586

		
	15.12
	Right of Setoff; Restrictions on Actions by Lenders; Sharing of Payments    8788

		
	15.13
	Agency for Perfection    8789

		
	15.14
	Payments by Administrative Agent to the Lenders    8889

TABLE OF CONTENTS
(continued)
Page

		
	15.15
	Concerning the Collateral and Related Loan Documents    8889

		
	15.16
	Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information    8890

		
	15.17
	Several Obligations; No Liability    8991

		
	15.18
	Joint Lead Arrangers, Joint Book Runners, Co‐Syndication Agents, and Co‐Documentation Agents    89Agent    91

		
	16.
	WITHHOLDING TAXES    9091

		
	16.1
	Payments    9091

		
	16.2
	Exemptions    9092

		
	16.3
	Reductions    9193

		
	16.4
	Refunds    9294

		
	17.
	GENERAL PROVISIONS    9295

		
	17.1
	Effectiveness    9295

		
	17.2
	Section Headings    9395

		
	17.3
	Interpretation    9395

		
	17.4
	Severability of Provisions    9395

		
	17.5
	Bank Product Providers    9395

		
	17.6
	Debtor-Creditor Relationship    9496

TABLE OF CONTENTS
(continued)
Page

		
	17.7
	Counterparts; Electronic Execution    9496

		
	17.8
	Revival and Reinstatement of Obligations; Certain Waivers    9496

		
	17.9
	Confidentiality    9597

		
	17.10
	Survival    9699

		
	17.11
	Patriot Act    9699

		
	17.12
	Integration    9799

		
	17.13
	Borrower Representative    9899

		
	17.14
	Acknowledgement and Consent to Bail-In of EEA Financial Institutions    100

EXHIBITS AND SCHEDULES
Exhibit A-1    Form of Assignment and Acceptance
Exhibit B-1    Form of Borrowing Base Certificate
Exhibit B-2    Form of Bank Product Provider Agreement
Exhibit D-1    Form of Compliance Certificate
Exhibit I‐1    Form of Intercreditor Agreement
Exhibit L-1    Form of LIBOR Notice
Exhibit P-1    Form of Perfection Certificate

Schedule A-1    Administrative Agent’s Account
Schedule A-2    Authorized Persons
Schedule C-1    Commitments
Schedule D-1    Designated Account
Schedule E-2    Existing Letters of Credit
Schedule 1.1    Definitions
Schedule 4.3    Governmental Approvals; No Conflicts
Schedule 4.5    Properties
Schedule 4.6    Disclosed Matters
Schedule 4.14    Insurance
Schedule 4.15    Capitalization and Subsidiaries; Joint Venture; Partnership
Schedule 5.15    Location of Inventory
Schedule 5.16    Post-Closing Security Perfection
Schedule 6.1    Existing Indebtedness
Schedule 6.2    Existing Liens
Schedule 6.4    Existing Investments
Schedule 6.10    Restrictive Agreements

CREDIT AGREEMENT 
(Inventory Facility)
THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of October 5, 2015, by and among the lenders identified on the signature pages hereof (each of such lenders, together with its successors and permitted assigns, is referred to hereinafter as a “Lender”, as that term is hereinafter further defined), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, “Administrative Agent”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, and J.P. MORGAN SECURITIES LLCJPMORGAN CHASE BANK, N.A., a national banking association, and BANK OF AMERICA, N.A., a national banking association, as joint lead arrangers (in such capacity, together with their successors and assigns in such capacity, the “Joint Lead Arrangers”) and as joint book runners (in such capacity, together with their successors and assigns in such capacity, the “Joint Book Runners”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, and JPMORGAN CHASE BANK, N.A., a national banking association, as co‐syndication agents (in such capacity, together with their successors and assigns in such capacity, the “Co‐Syndication Agents”), BANK OF AMERICA, N.A., a national banking association, and SUNTRUST BANK, a Georgia banking corporation, as co‐documentation agentsagent (in such capacity, together with theirits successors and assigns in such capacity, the “Co‐Documentation AgentsAgent”), ANIXTER INC., a Delaware corporation (“Anixter”), and each of the Subsidiaries of Anixter identified on the signature pages hereof or otherwise party hereto as a “Borrower,” including, without limitation, each Target that becomes a Domestic Subsidiary effective upon consummation of the HD Supply Acquisition” (such Subsidiaries, together with Anixter, are referred to hereinafter each individually as a “Borrower” and individually and collectively, jointly and severally, as the “Borrowers”).
The parties agree as follows:
1.DEFINITIONS AND CONSTRUCTION    .
1.1    Definitions    . Capitalized terms used in this Agreement shall have the meanings specified therefor on Schedule 1.1.
1.2    Accounting Terms    . Except as otherwise expressly provided in this Agreement, all accounting terms not specifically defined herein shall be construed in accordance with GAAP. When used herein, the term “financial statements” shall include the notes and schedules thereto. Notwithstanding anything to the contrary contained herein, the term “unqualified opinion” as used herein to refer to opinions or reports provided by accountants shall mean an opinion or report that is (i) unqualified, and (ii) does not include any explanation, supplemental comment, or other comment concerning the ability of the applicable Person to continue as a going concern or concerning the scope of the audit. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, (i) without giving effect to any election under Financial Accounting Standards Board Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to 

1

value any Indebtedness or other liabilities of the Borrowers at “fair value,” as defined therein and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Financial Accounting Standards Board Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof, and (iii) obligations relating to a lease that was accounted for by such Person as an operating lease as of the Closing Date shall be accounted for as obligations relating to an operating lease and not as obligations relating to a capital lease.
1.3    Code    . Any terms used in this Agreement that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein; provided, that to the extent that the Code is used to define any term herein and such term is defined differently in different Articles of the Code, the definition of such term contained in Article 9 of the Code shall govern.
1.4    Construction    . Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in any other Loan Document to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). 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. Any reference herein or in any other Loan Document to the satisfaction, repayment, or payment in full of the Obligations shall mean (a) the payment or repayment in full in immediately available funds of (i) the principal amount of, and interest accrued and unpaid with respect to, all outstanding Loans, together with the payment of any premium applicable to the repayment of the Loans, (i) all Lender Group Expenses that have accrued and are unpaid regardless of whether demand has been made therefor, (i) all fees or charges that have accrued hereunder or under any other Loan Document (including the Letter of Credit Fee and the Unused Line Fee) and are unpaid, (a) in the case of contingent reimbursement obligations with respect to Letters of Credit, providing Letter of Credit Collateralization, (a) in the case of obligations with respect to Bank Products (other than Swap Obligations), providing Bank Product Collateralization, (a) the receipt by Administrative Agent of cash collateral in order to secure any other contingent Obligations for which a claim or demand for payment has been made on or prior to such time or in respect of matters or circumstances known to Administrative Agent or a Lender at such time that are reasonably expected to result in any loss, cost, damage, or expense (including attorneys’ fees and legal expenses), such cash collateral to be in such amount as Administrative Agent reasonably determines is appropriate to secure such contingent Obligations, (a) the payment or repayment in full in immediately available funds of all other outstanding Obligations (including the payment of any 

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termination amount then applicable (or which would or could become applicable as a result of the repayment of the other Obligations) under Swap Agreements provided by Swap Providers) other than (i) unasserted contingent indemnification Obligations, (i) any Bank Product Obligations (other than Swap Obligations) that, at such time, are allowed by the applicable Bank Product Provider to remain outstanding without being required to be repaid or cash collateralized, and (i) any Swap Obligations that, at such time, are allowed by the applicable Swap Provider to remain outstanding without being required to be repaid, and (a) the termination of all of the Commitments of the Lenders. Any reference herein to any Person shall be construed to include such Person’s successors and assigns. Any requirement of a writing contained herein or in any other Loan Document shall be satisfied by the transmission of a Record.
1.5    Time References.     Unless the context of this Agreement or any other Loan Document clearly requires otherwise, all references to time of day refer to Central standard time or Central daylight saving time, as in effect in Chicago, Illinois, on such day. For purposes of the computation of a period of time from a specified date to a later specified date, unless otherwise expressly provided, the word “from” means “from and including” and the words “to” and “until” each means “to and including”; provided that, with respect to a computation of fees or interest payable to Administrative Agent or any Lender, such period shall in any event consist of at least one full day.
1.6    Schedules and Exhibits    . All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference.
2.LOANS AND TERMS OF PAYMENT    .
2.1    Revolving Loans    .
(a)    Subject to the terms and conditions of this Agreement, and during the term of this Agreement, each Revolving Lender agrees (severally, not jointly or jointly and severally) to make revolving loans (“Revolving Loans”) to Borrowers in an amount at any one time outstanding not to exceed the lesser of:
(i)    such Lender’s Revolver Commitment, or
(ii)    such Lender’s Pro Rata Share of an amount equal to (b) the least of (1) the Maximum Revolver Amount, (1) the Borrowing Base as of such date (based upon the most recent Borrowing Base Certificate delivered by Borrowers to Administrative Agent), and (1) at any time that any Indebtedness under the 2012 Notes Indenture remains outstanding, the Secured Debt Indenture Cap Amount as of such date (based upon the most recent Borrowing Base Certificate delivered by Borrowers to Administrative Agent), less (c) the sum of (1) the Letter of Credit Usage at such time, plus (1) the principal amount of Swing Loans outstanding at such time.
(d)    Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the terms and conditions of this Agreement, reborrowed at any time during the term of this Agreement. The outstanding principal amount of the Revolving Loans, together with interest accrued and unpaid thereon, shall constitute Obligations and shall be due and payable on the Maturity Date or, if earlier, on the date on which they are declaredotherwise become due and payable pursuant to the terms of this Agreement.

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(e)    Anything to the contrary in this Section 2.1 notwithstanding, Administrative Agent shall have the right (but not the obligation), in the exercise of its Permitted Discretion, to establish and increase or decrease (f) Bank Product Reserves and other Reserves against the Borrowing Base or the Maximum Revolver Amount, (g) Inventory Reserves against the Borrowing Base, and (h) if the Borrowing Base does not exceed the Maximum Revolver Amount, Inventory Reserves against the Maximum Revolver Amount. The amount of any Inventory Reserve, Bank Product Reserve, or other Reserve established by Administrative Agent shall have a reasonable relationship to the event, condition, other circumstance, or fact that is the basis for such reserve and shall not be duplicative of any other reserve established and currently maintained.
2.2    [Reserved].
2.3    Borrowing Procedures and Settlements    .
(a)    Procedure for Borrowing Revolving Loans. Each Borrowing shall be made by a written request by an Authorized Person delivered to Administrative Agent (which may be delivered through Agent’s electronic platform or portal) and received by Administrative Agent no later than noon (b) on the Business Day that is the requested Funding Date in the case of a request for a Swing Loan, (c) on the Business Day that is 1 Business Day prior to the requested Funding Date in the case of a request for a Base Rate Loan, and (d) on the Business Day that is 12 Business DayDays prior to the requested Funding Date in the case of all other requests, specifying (A) the amount of such Borrowing, and (B) the requested Funding Date (which shall be a Business Day); provided, that Administrative Agent may, in its sole discretion, elect to accept as timely requests that are received later than noon on the applicable Business Day. At Administrative Agent’s election, in lieu of delivering the above-described written request, any Authorized Person may give Administrative Agent telephonic notice of such request by the required time. In such circumstances, Borrowers agree that any such telephonic notice will be confirmed in writing within 24 hours of the giving of such telephonic notice, but the failure to provide such written confirmation shall not affect the validity of the requestAll Borrowing requests which are not made on-line via Agent’s electronic platform or portal shall be subject to (and unless Agent elects otherwise in the exercise of its sole discretion, such Borrowings shall not be made until the completion of) Agent’s authentication process (with results satisfactory to Agent) prior to the funding of any such requested  Revolving Loan.
(e)    Making of Swing Loans. In the case of a request for a Revolving Loan and so long as either (f) the aggregate amount of Swing Loans made since the last Settlement Date, minus all payments or other amounts applied to Swing Loans since the last Settlement Date, plus the amount of the requested Swing Loan does not exceed an amount equal to $15,000,000, or (g) Swing Lender, in its sole discretion, agrees to make a Swing Loan notwithstanding the foregoing limitation, Swing Lender shall make a Revolving Loan (any such Revolving Loan made by Swing Lender pursuant to this Section 2.3(b) being referred to as a “Swing Loan” and all such Revolving Loans being referred to as “Swing Loans”) available to Borrowers on the Funding Date applicable thereto by transferring immediately available funds in the amount of such requested Borrowing to the Designated Account. Each Swing Loan shall be deemed to be a Revolving Loan hereunder and shall be subject to all the terms and conditions (including Section 3) applicable to other Revolving Loans, except that all payments (including interest) on any Swing Loan shall be payable to Swing Lender solely for its own account. Subject to the provisions of Section 2.3(d)(ii), Swing Lender shall not make and shall not be obligated to make any Swing Loan if Swing Lender has actual knowledge that (i) one 

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or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing, or (ii) the requested Borrowing would exceed the Availability on such Funding Date. Swing Lender shall not otherwise be required to determine whether the applicable conditions precedent set forth in Section 3 have been satisfied on the Funding Date applicable thereto prior to making any Swing Loan. The Swing Loans shall be secured by Administrative Agent’s Liens, constitute Revolving Loans and Obligations, and bear interest at the rate applicable from time to time to Revolving Loans that are Base Rate Loans.
(h)    Making of Revolving Loans.
(i)    In the event that Swing Lender is not obligated to make a Swing Loan, then after receipt of a request for a Borrowing pursuant to Section 2.3(a)(i), Administrative Agent shall notify the Lenders by telecopy, telephone, email, or other electronic form of transmission, of the requested Borrowing; such notification to be sent on the Business Day that is (i) in the case of a Base Rate Loan, at least 1 Business Day prior to the requested Funding Date, or (j) in the case of a LIBOR Rate Loan, at least 2 Business Days prior to the requested Funding Date. If Administrative Agent has notified the Lenders of a requested Borrowing on the Business Day that is 1 Business Day prior to the Funding Date, then each Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to Administrative Agent in immediately available funds, to Administrative Agent’s Account, not later than noon on the Business Day that is the requested Funding Date. After Administrative Agent’s receipt of the proceeds of such Revolving Loans from the Lenders, Administrative Agent shall make the proceeds thereof available to Borrowers on the applicable Funding Date by transferring immediately available funds equal to such proceeds received by Administrative Agent to the Designated Account; provided, that, subject to the provisions of Section 2.3(d)(ii), no Lender shall have an obligation to make any Revolving Loan if (1) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived, or (1) the requested Borrowing would exceed the Availability on such Funding Date.
(ii)    Unless Administrative Agent receives notice from a Lender prior to 11:30 a.m. on the Business Day that is the requested Funding Date relative to a requested Borrowing as to which Administrative Agent has notified the Lenders of a requested Borrowing that such Lender will not make available as and when required hereunder to Administrative Agent for the account of Borrowers the amount of that Lender’s Pro Rata Share of the Borrowing, Administrative Agent may assume that each Lender has made or will make such amount available to Administrative Agent in immediately available funds on the Funding Date and Administrative Agent may (but shall not be so required), in reliance upon such assumption, make available to Borrowers a corresponding amount. If, on the requested Funding Date, any Lender shall not have remitted the full amount that it is required to make available to Administrative Agent in immediately available funds and if Administrative Agent has made available to Borrowers such amount on the requested Funding Date, then such Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to Administrative Agent in immediately available funds, to Administrative Agent’s Account, no later than noon on the Business Day that is the first Business Day after the requested Funding Date (in which case, the interest accrued on such 

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Lender’s portion of such Borrowing for the Funding Date shall be for Administrative Agent’s separate account). If any Lender shall not remit the full amount that it is required to make available to Administrative Agent in immediately available funds as and when required hereby and if Administrative Agent has made available to Borrowers such amount, then that Lender shall be obligated to immediately remit such amount to Administrative Agent, together with interest at the Defaulting Lender Rate for each day until the date on which such amount is so remitted. A notice submitted by Administrative Agent to any Lender with respect to amounts owing under this Section 2.3(c)(ii) shall be conclusive, absent manifest error. If the amount that a Lender is required to remit is made available to Administrative Agent, then such payment to Administrative Agent shall constitute such Lender’s Revolving Loan for all purposes of this Agreement. If such amount is not made available to Administrative Agent on the Business Day following the Funding Date, Administrative Agent will notify Borrowers of such failure to fund and, upon demand by Administrative Agent, Borrowers shall pay such amount to Administrative Agent for Administrative Agent’s account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Revolving Loans composing such Borrowing.
(k)    Protective Advances and Optional Overadvances.
(i)    Any contrary provision of this Agreement or any other Loan Document notwithstanding but subject to Section 2.3(d)(iv), at any time (l) after the occurrence and during the continuance of a Default or an Event of Default, or (m) that any of the other applicable conditions precedent set forth in Section 3 are not satisfied, Administrative Agent hereby is authorized by Borrowers and the Lenders, from time to time, in Administrative Agent’s sole discretion, to make Revolving Loans to, or for the benefit of, Borrowers, on behalf of the Revolving Lenders, that Administrative Agent, in its Permitted Discretion, deems necessary or desirable (1) to preserve or protect the Collateral, or any portion thereof, or (1) to enhance the likelihood of repayment of the Obligations (other than the Bank Product Obligations) (the Revolving Loans described in this Section 2.3(d)(i) shall be referred to as “Protective Advances”), so long as (x) the aggregate amount of all Protective Advances outstanding at any one time does not exceed an amount equal to 5% of the Maximum Revolver Amount, and (y) after giving effect to such Revolving Loans, the outstanding Revolver Usage (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group Expenses) does not exceed the lesser of the Maximum Revolver Amount and, at any time that any Indebtedness under the 2012 Notes Indenture remains outstanding, the Secured Debt Indenture Cap Amount. Administrative Agent’s authorization to make Protective Advances may be revoked at any time by the Required Lenders.
(ii)    Any contrary provision of this Agreement or any other Loan Document notwithstanding, but subject to Section 2.3(d)(iv), the Lenders hereby authorize Administrative Agent or Swing Lender, as applicable (which authorization may 

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be revoked at any time at the written election of the Required Lenders), and either Administrative Agent or Swing Lender, as applicable, may, but is not obligated to, knowingly and intentionally, continue to make Revolving Loans (including Swing Loans) to Borrowers notwithstanding that an Overadvance exists or would be created thereby, so long as (n) after giving effect to such Revolving Loans, the outstanding Revolver Usage does not exceed the Borrowing Base by more than an amount equal to 5% of the Maximum Revolver Amount, and (o) after giving effect to such Revolving Loans, the outstanding Revolver Usage (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group Expenses) does not exceed the lesser of the Maximum Revolver Amount and, at any time that any Indebtedness under the 2012 Notes Indenture remains outstanding, the Secured Debt Indenture Cap Amount. In the event Administrative Agent obtains actual knowledge that the Revolver Usage exceeds the amounts permitted by the immediately foregoing provisions, regardless of the amount of, or reason for, such excess, Administrative Agent shall notify the Lenders as soon as practicable (and prior to making any (or any additional) intentional Overadvances (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group Expenses) unless Administrative Agent determines that prior notice would result in imminent harm to the Collateral or its value, in which case Administrative Agent may make such Overadvances and provide notice as promptly as practicable thereafter), and the Lenders with Revolver Commitments thereupon shall, together with Administrative Agent, jointly determine the terms of arrangements that shall be implemented with Borrowers intended to reduce, within a reasonable time, the outstanding principal amount of the Revolving Loans to Borrowers to an amount permitted by the preceding sentence. In such circumstances, if any Lender with a Revolver Commitment objects to the proposed terms of reduction or repayment of any Overadvance, the terms of reduction or repayment thereof shall be implemented according to the determination of the Required Lenders. The foregoing provisions are meant for the benefit of the Lenders and Administrative Agent and are not meant for the benefit of Borrowers, which shall continue to be bound by the provisions of Section 2.4(e)(i). Each Lender with a Revolver Commitment shall be obligated to settle with Administrative Agent as provided in Section 2.3(e) (or Section 2.3(g), as applicable) for the amount of such Lender’s Pro Rata Share of any unintentional Overadvances by Administrative Agent reported to such Lender, any intentional Overadvances made as permitted under this Section 2.3(d)(ii), and any Overadvances resulting from the charging to the Loan Account of interest, fees, or Lender Group Expenses. Notwithstanding the foregoing, no intentional Overadvance made as permitted under this Section 2.3(d)(ii) may remain outstanding for more than thirty (30) days.
(i)    Each Protective Advance and each Overadvance (each, an “Extraordinary Advance”) shall be deemed to be a Revolving Loan hereunder, except that no Extraordinary Advance shall be eligible to be a LIBOR Rate Loan and, prior to Settlement therefor, all payments on the Extraordinary Advances shall be payable to Administrative Agent solely for its own account. The Extraordinary Advances shall be repayable on demand, 

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secured by Administrative Agent’s Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time to time to Revolving Loans that are Base Rate Loans. The provisions of this Section 2.3(d) are for the exclusive benefit of Administrative Agent, Swing Lender, and the Lenders and are not intended to benefit Borrowers (or any other Loan Party) in any way.
(ii)    Notwithstanding anything contained in this Agreement or any other Loan Document to the contrary: (p) no Extraordinary Advance may be made by Administrative Agent if such Extraordinary Advance would cause the aggregate principal amount of Extraordinary Advances outstanding to exceed an amount equal to 5% of the Maximum Revolver Amount; and (q) no Extraordinary Advance may be made by Administrative Agent if such Extraordinary Advance would cause the aggregate Revolver Usage to exceed the Maximum Revolver Amount.
(r)    Settlement. It is agreed that each Lender’s funded portion of the Revolving Loans is intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding Revolving Loans. Such agreement notwithstanding, Administrative Agent, Swing Lender, and the other Lenders agree (which agreement shall not be for the benefit of Borrowers) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among the Lenders as to the Revolving Loans, the (including Swing Loans, and the Extraordinary Advances) shall take place on a periodic basis in accordance with the following provisions:
(i)    Administrative Agent shall request settlement (“Settlement”) with the Lenders on a weekly basis, or on a more frequent basis if so determined by Administrative Agent in its sole discretion (1) on behalf of Swing Lender, with respect to the outstanding Swing Loans, (1) for itself, with respect to the outstanding Extraordinary Advances, and (1) with respect to Borrowers’ or any of their Subsidiaries’ payments or other amounts received, as to each by notifying the Lenders by telecopy, telephone, or other similar form of transmission, of such requested Settlement, no later noon on the Business Day immediately prior to the date of such requested Settlement (the date of such requested Settlement being the “Settlement Date”). Such notice of a Settlement Date shall include a summary statement of the amount of outstanding Revolving Loans, (including Swing Loans, and Extraordinary Advances) for the period since the prior Settlement Date. Subject to the terms and conditions contained herein (including Section 2.3(g)): (y) if the amount of the Revolving Loans (including Swing Loans, and Extraordinary Advances) made by a Lender that is not a Defaulting Lender exceeds such Lender’s Pro Rata Share of the Revolving Loans (including Swing Loans, and Extraordinary Advances) as of a Settlement Date, then Administrative Agent shall, by no later than 2:00 p.m. on the Settlement Date, transfer in immediately available funds to a Deposit Account of such Lender (as such Lender may designate), an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Revolving Loans (including Swing Loans, and Extraordinary Advances), and (z) if the amount of the Revolving Loans (including Swing Loans, and Extraordinary Advances) made by a Lender is less than such Lender’s 

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Pro Rata Share of the Revolving Loans (including Swing Loans, and Extraordinary Advances) as of a Settlement Date, such Lender shall no later than 2:00 p.m. on the Settlement Date transfer in immediately available funds to Administrative Agent’s Account, an amount such that each such Lender shall, upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share of the Revolving Loans (including Swing Loans and Extraordinary Advances). Such amounts made available to Administrative Agent under clause (z) of the immediately preceding sentence shall be applied against the amounts of the applicable Swing Loans or Extraordinary Advances and, together with the portion of such Swing Loans or Extraordinary Advances representing Swing Lender’s Pro Rata Share thereof, shall constitute Revolving Loans of such Lenders. If any such amount is not made available to Administrative Agent by any Lender on the Settlement Date applicable thereto to the extent required by the terms hereof, Administrative Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate.
(ii)    In determining whether a Lender’s balance of the Revolving Loans, (including Swing Loans, and Extraordinary Advances) is less than, equal to, or greater than such Lender’s Pro Rata Share of the Revolving Loans, (including Swing Loans, and Extraordinary Advances) as of a Settlement Date, Administrative Agent shall, as part of the relevant Settlement, apply to such balance the portion of payments actually received in good funds by Administrative Agent with respect to principal, interest, fees payable by Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral.
(iii)    Between Settlement Dates, Administrative Agent, to the extent Extraordinary Advances or Swing Loans are outstanding, may pay over to Administrative Agent or Swing Lender, as applicable, any payments or other amounts received by Administrative Agent, that in accordance with the terms of this Agreement would be applied to the reduction of the Revolving Loans, for application to the Extraordinary Advances or Swing Loans. Between Settlement Dates, Administrative Agent, to the extent no Extraordinary Advances or Swing Loans are outstanding, may pay over to Swing Lender any payments or other amounts received by Administrative Agent, that in accordance with the terms of this Agreement would be applied to the reduction of the Revolving Loans, for application to Swing Lender’s Pro Rata Share of the Revolving Loans. If, as of any Settlement Date, payments or other amounts of Borrowers or their Subsidiaries received since the then immediately preceding Settlement Date have been applied to Swing Lender’s Pro Rata Share of the Revolving Loans other than to Swing Loans, as provided for in the previous sentence, Swing Lender shall pay to Administrative Agent for the accounts of the Lenders, and Administrative Agent shall pay to the Lenders (other than a Defaulting Lender if Administrative Agent has implemented the provisions of Section 2.3(g)), to be applied to the outstanding Revolving Loans of such Lenders, an amount such that each such Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Revolving Loans. During the period between Settlement Dates, Swing Lender with respect to Swing Loans, Administrative Agent with respect to Extraordinary Advances, and 

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each Lender with respect to the Revolving Loans other than Swing Loans and Extraordinary Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the daily amount of funds employed by Swing Lender, Administrative Agent, or the Lenders, as applicable.
(iv)    Anything in this Section 2.3(e) to the contrary notwithstanding, in the event that a Lender is a Defaulting Lender, Administrative Agent shall be entitled to refrain from remitting settlement amounts to the Defaulting Lender and, instead, shall be entitled to elect to implement the provisions set forth in Section 2.3(g).
(s)    Notation. Consistent with Section 13.1(h), Administrative Agent, as a non-fiduciary agent for Borrowers, shall maintain a register showing the principal amount of the Revolving Loans owing to each Lender, including the Swing Loans owing to Swing Lender, and Extraordinary Advances owing to Administrative Agent, and the interests therein of each Lender, from time to time and such register shall, absent manifest error, conclusively be presumed to be correct and accurate.
(t)    Defaulting Lenders.
(i)    Notwithstanding the provisions of Section 2.4(b)(iii), Administrative Agent shall not be obligated to transfer to a Defaulting Lender any payments made by Borrowers to Administrative Agent for the Defaulting Lender’s benefit or any proceeds of Collateral that would otherwise be remitted hereunder to the Defaulting Lender, and, in the absence of such transfer to the Defaulting Lender, Administrative Agent shall transfer any such payments (u) first, to Agent to the extent of any Extraordinary Advances that were made by Agent and that were required to be, but were not, paid by Defaulting Lender, (v) second, to Swing Lender to the extent of any Swing Loans that were made by Swing Lender and that were required to be, but were not, paid by the Defaulting Lender, (w) secondthird, to Issuing Bank, to the extent of the portion of a Letter of Credit Disbursement that was required to be, but was not, paid by the Defaulting Lender, (x) thirdfourth, to each Non-Defaulting Lender ratably in accordance with their Commitments (but, in each case, only to the extent that such Defaulting Lender’s portion of a Revolving Loan (or other funding obligation) was funded by such other Non-Defaulting Lender), (y) fifth, in Administrative Agent’s sole discretion, to a suspense account maintained by Administrative Agent, the proceeds of which shall be retained by Administrative Agent and may be made available to be re-advanced to or for the benefit of Borrowers (upon the request of Borrowers and subject to the conditions set forth in Section 3.2) as if such Defaulting Lender had made its portion of Revolving Loans (or other funding obligations) hereunder, and (z)  sixth, from and after the date on which all other Obligations have been paid in full, to such Defaulting Lender in accordance with tier (L) of Section 2.4(b)(iii). Subject to the foregoing, Administrative Agent may hold and, in its discretion, re-lend to Borrowers for the account of such Defaulting Lender the amount of all such payments received and retained by Administrative Agent for the account of such Defaulting Lender. Solely for the purposes of voting or consenting to matters with respect to the Loan Documents (including the calculation of Pro Rata Share in connection therewith) and for the purpose of calculating the fee payable under Section 2.10(b), such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be zero; provided, that the foregoing shall not apply to any of the matters governed by Section 14.1(a)(i) through (iii). The provisions of this Section 2.3(g) shall remain effective with respect to such Defaulting Lender until the earlier of (y) the date on which all of the Non-Defaulting Lenders, Administrative Agent, Issuing Bank, and Borrowers shall have waived, in 

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writing, the application of this Section 2.3(g) to such Defaulting Lender, or (z) the date on which such Defaulting Lender makes payment of all amounts that it was obligated to fund hereunder, pays to Administrative Agent all amounts owing by Defaulting Lender in respect of the amounts that it was obligated to fund hereunder, and, if requested by Administrative Agent, provides adequate assurance of its ability to perform its future obligations hereunder (on which earlier date, so long as no Event of Default has occurred and is continuing, any remaining cash collateral held by Administrative Agent pursuant to Section 2.3(g)(ii) shall be released to Borrowers). The operation of this Section 2.3(g) shall not be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by any Borrower of its duties and obligations hereunder to Administrative Agent, Issuing Bank, or to the Lenders other than such Defaulting Lender. Any failure by a Defaulting Lender to fund amounts that it was obligated to fund hereunder shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Borrowers, at their option, upon written notice to Administrative Agent, to arrange for a substitute Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be reasonably acceptable to Administrative Agent. In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that it shall be deemed to have executed and delivered such document if it fails to do so) subject only to being paid its share of the outstanding Obligations (other than Bank Product Obligations, but including (1) all interest, fees, and other amounts that may be due and payable in respect thereof, and (2) an assumption of its Pro Rata Share of its participation in the Letters of Credit); provided, that any such assumption of the Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender Groups’ or Borrowers’ rights or remedies against any such Defaulting Lender arising out of or in relation to such failure to fund. In the event of a direct conflict between the priority provisions of this Section 2.3(g) and any other provision contained in this Agreement or any other Loan Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.3(g) shall control and govern.
(i)    If any Swing Loan or Letter of Credit is outstanding at the time that a Lender becomes a Defaulting Lender then:
(A)    such Defaulting Lender’s Swing Loan Exposure and Letter of Credit Exposure shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Pro Rata Shares but only to the extent (x) the sum of all Non-Defaulting Lenders’ Revolving Loan ExposuresPro Rata Share of Revolver Usage plus such Defaulting Lender’s Swing Loan Exposure and Letter of Credit Exposure does not exceed the total of all Non-Defaulting Lenders’ Revolver Commitments and (y) the conditions set forth in Section 3.2 are satisfied at such time;
(B)    if the reallocation described in clause (A) above cannot, or can only partially, be effected, Borrowers shall within one Business Day following notice by Administrative Agent (x) first, prepay such Defaulting Lender’s Swing Loan Exposure (after giving effect to any partial reallocation 

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pursuant to clause (A) above) and (y) second, cash collateralize such Defaulting Lender’s Letter of Credit Exposure (after giving effect to any partial reallocation pursuant to clause (A) above), pursuant to a cash collateral agreement to be entered into in form and substance reasonably satisfactory to Administrative Agent, for so long as such Letter of Credit Exposure is outstanding; provided, that Borrowers shall not be obligated to cash collateralize any Defaulting Lender’s Letter of Credit Exposure if such Defaulting Lender is also the Issuing Bank;
(C)    if Borrowers cash collateralize any portion of such Defaulting Lender’s Letter of Credit Exposure pursuant to this Section 2.3(g)(ii), Borrowers shall not be required to pay any Letter of Credit Fees to Administrative Agent for the account of such Defaulting Lender pursuant to Section 2.6(b) with respect to such cash collateralized portion of such Defaulting Lender’s Letter of Credit Exposure during the period such Letter of Credit Exposure is cash collateralized;
(D)    to the extent the Letter of Credit Exposure of the Non-Defaulting Lenders is reallocated pursuant to this Section 2.3(g)(ii), then the Letter of Credit Fees payable to the Non-Defaulting Lenders pursuant to Section 2.6(b) shall be adjusted in accordance with such Non-Defaulting Lenders’ Letter of Credit Exposure;
(E)    to the extent any Defaulting Lender’s Letter of Credit Exposure is neither cash collateralized nor reallocated pursuant to this Section 2.3(g)(ii), then, without prejudice to any rights or remedies of the Issuing Bank or any Lender hereunder, all Letter of Credit Fees that would have otherwise been payable to such Defaulting Lender under Section 2.6(b) with respect to such portion of such Letter of Credit Exposure shall instead be payable to the Issuing Bank until such portion of such Defaulting Lender’s Letter of Credit Exposure is cash collateralized or reallocated;
(F)    so long as any Lender is a Defaulting Lender, the Swing Lender shall not be required to make any Swing Loan and the Issuing Bank shall not be required to issue, amend, or increase any Letter of Credit, in each case, to the extent (x) the Defaulting Lender’s Pro Rata Share of such Swing Loans or Letter of Credit cannot be reallocated pursuant to this Section 2.3(g)(ii) or (y) the Swing Lender or Issuing Bank, as applicable, has not otherwise entered into arrangements reasonably satisfactory to the Swing Lender or Issuing Bank, as applicable, and Borrowers to eliminate the Swing Lender’s or Issuing Bank’s risk with respect to the Defaulting Lender’s participation in Swing Loans or Letters of Credit; and

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(G)    Administrative Agent may release any cash collateral provided by Borrowers pursuant to this Section 2.3(g)(ii) to the Issuing Bank and the Issuing Bank may apply any such cash collateral to the payment of such Defaulting Lender’s Pro Rata Share of any Letter of Credit Disbursement that is not reimbursed by Borrowers pursuant to Section 2.11(d). Subject to Section 17.14, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.
(aa)    Independent Obligations. All Revolving Loans (other than Swing Loans and Extraordinary Advances) shall be made by the Lenders contemporaneously and in accordance with their Pro Rata Shares. It is understood that (bb) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Revolving Loan (or other extension of credit) hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligations hereunder, and (cc) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder.
2.4    Payments; Reductions of Commitments; Prepayments    .
(a)    Payments by Borrowers.
(i)    Except as otherwise expressly provided herein, all payments by Borrowers shall be made to Administrative Agent’s Account for the account of the Lender Group and shall be made in immediately available funds, no later than 2:00 p.m. on the date specified herein. Any payment received by Administrative Agent later than 2:00 p.m. shall be deemed to have been received (unless Administrative Agent, in its sole discretion, elects to credit it on the date received) on the following Business Day and any applicable interest or fee shall continue to accrue until such following Business Day.
(ii)    Unless Administrative Agent receives notice from Borrowers prior to the date on which any payment is due to the Lenders that Borrowers will not make such payment in full as and when required, Administrative Agent may assume that Borrowers have made (or will make) such payment in full to Administrative Agent on such date in immediately available funds and Administrative Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent Borrowers do not make such payment in full to Administrative Agent on the date when due, each Lender severally shall repay to Administrative Agent on demand such amount distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each day from the date such amount is distributed to such Lender until the date repaid.

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(b)    Apportionment and Application.
(i)    So long as no Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, all principal and interest payments received by Administrative Agent shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations to which such payments relate held by each Lender) and all payments of fees and expenses received by Administrative Agent (other than fees or expenses that are for Administrative Agent’s separate account or for the separate account of Issuing Bank) shall be apportioned ratably among the Lenders having a Pro Rata Share of the type of Commitment or Obligation to which a particular fee or expense relates.
(ii)    Subject to Section 2.4(b)(iv) and Section 2.4(e), all payments to be made hereunder by Borrowers shall be remitted to Administrative Agent and all such payments, and all proceeds of Collateral received by Administrative Agent, shall be applied, so long as no Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, to reduce the balance of the Revolving Loans outstanding and, thereafter, to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.
(iii)    At any time that an Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, all payments remitted to Administrative Agent and all proceeds of Collateral received by Administrative Agent shall be applied as follows:
(A)    first, to pay any Lender Group Expenses (including cost or expense reimbursements) or indemnities then due to Administrative Agent under the Loan Documents, until paid in full,
(B)    second, to pay any fees or premiums then due to Administrative Agent under the Loan Documents until paid in full,
(C)    third, to pay interest due in respect of all Protective Advances until paid in full,
(D)    fourth, to pay the principal of all Protective Advances until paid in full,
(E)    fifth, ratably, to pay any Lender Group Expenses (including cost or expense reimbursements) or indemnities then due to any of the Lenders under the Loan Documents, until paid in full,
(F)    sixth, ratably, to pay any fees or premiums then due to any of the Lenders under the Loan Documents until paid in full,

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(G)    seventh, to pay interest accrued in respect of the Swing Loans until paid in full,
(H)    eighth, to pay the principal of all Swing Loans until paid in full,
(I)    ninth, ratably, to pay interest accrued in respect of the Revolving Loans (other than Protective Advances) until paid in full,
(J)    tenth, ratably
i.    ratably, to pay the principal of all Revolving Loans (other than Protective Advances) until paid in full,
ii.    to Administrative Agent, to be held by Administrative Agent, for the benefit of Issuing Bank (and for the ratable benefit of each of the Lenders that have an obligation to pay to Administrative Agent, for the account of Issuing Bank, a share of each Letter of Credit Disbursement), as cash collateral in an amount up to 103% of the Letter of Credit Usage (to the extent permitted by applicable law, such cash collateral shall be applied to the reimbursement of any Letter of Credit Disbursement as and when such disbursement occurs and, if a Letter of Credit expires undrawn, the cash collateral held by Administrative Agent in respect of such Letter of Credit shall, to the extent permitted by applicable law, be reapplied pursuant to this Section 2.4(b)(iii), beginning with tier (A) hereof),
iii.    ratably, up to the amount (after taking into account any amounts previously paid pursuant to this clause iii during the continuation of the applicable Application Event) of the most recently established Bank Product Reserve, which amount was established prior to the occurrence of, and not in contemplation of, the subject Application Event, to (I) the Bank Product Providers based upon amounts then certified by the applicable Bank Product Provider to Administrative Agent (in form and substance satisfactory to Administrative Agent) to be due and payable to such Bank Product Providers on account of Bank Product Obligations, and (II) with any balance to be paid to Administrative Agent, to be held by Administrative Agent, for the ratable benefit of the Bank Product Providers, as cash collateral (which cash collateral may be released by Administrative Agent to the applicable Bank Product Provider and applied by such Bank Product Provider to the payment or reimbursement of any amounts due and payable with respect to Bank Product Obligations owed to the applicable Bank Product Provider as and when such amounts first become due and payable and, if and at such time as all such Bank Product Obligations are paid or otherwise satisfied in full, the cash collateral held by Administrative Agent in respect of such Bank Product Obligations shall be reapplied pursuant to this Section 2.4(b)(iii), beginning with tier (A) hereof,
(K)    eleventh, to pay any other Obligations other than Obligations owed to Defaulting Lenders,
(L)    twelfth, ratably to pay any Obligations owed to Defaulting Lenders; and

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(M)    thirteenth, to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.
(iv)    Administrative Agent promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled to receive, subject to a Settlement delay as provided in Section 2.3(e).
(v)    In each instance, so long as no Application Event has occurred and is continuing, Section 2.4(b)(i) shall not apply to any payment made by Borrowers to Administrative Agent and specified by Borrowers to be for the payment of specific Obligations then due and payable (or prepayable) under any provision of this Agreement or any other Loan Document.
(vi)    For purposes of Section 2.4(b)(iii), “paid in full” of a type of Obligation means payment in cash or immediately available funds of all amounts owing on account of such type of Obligation, including interest accrued after the commencement of any Insolvency Proceeding, default interest, interest on interest, fee reimbursements, and expense reimbursements, irrespective of whether any of the foregoing would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.
(vii)    In the event of a direct conflict between the priority provisions of this Section 2.4 and any other provision contained in this Agreement or any other Loan Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, if the conflict relates to the provisions of Section 2.3(g) and this Section 2.4, then the provisions of Section 2.3(g) shall control and govern, and if otherwise, then the terms and provisions of this Section 2.4 shall control and govern.
(c)    Reduction of Commitments.
(i)    Revolver Commitments. The Revolver Commitments shall terminate on the Maturity Date or earlier termination thereof pursuant to the terms of this Agreement. Borrowers may reduce the Revolver Commitments, without premium or penalty, to an amount (which may be zero) not less than the sum of (d) the Revolver Usage as of such date, plus (e) the principal amount of all Revolving Loans not yet made as to which a request has been given by Borrowers under Section 2.3(a), plus (f) the amount of all Letters of Credit not yet issued as to which a request has been given by Borrowers pursuant to Section 2.11(a). Each such reduction shall be in an amount which is not less than $10,000,000 (unless the Revolver Commitments are being reduced to zero and the amount of the Revolver Commitments in effect immediately prior to such reduction are less than $10,000,000), shall be made by providing not less than 10 Business Days’ prior written notice to Administrative Agent, and shall be irrevocable. Once reduced, the Revolver 

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Commitments may not be increased. Each such reduction of the Revolver Commitments shall reduce the Revolver Commitments of each Lender proportionately in accordance with its ratable share thereof. In connection with any reduction in the Revolver Commitments prior to the Maturity Date, if any Loan Party or any of its Subsidiaries owns any Margin Stock, Borrowers shall deliver to Administrative Agent an updated Form U-1 (with sufficient additional originals thereof for each Lender), duly executed and delivered by the Borrowers, together with such other documentation as Agent shall reasonably request, in order to enable Administrative Agent and the Lenders to comply with any of the requirements under Regulations T, U or X of the Federal Reserve Board.
(i)    [Reserved].
(g)    Optional Prepayments.
(i)    Revolving Loans. Borrowers may prepay the principal of any Revolving Loan at any time in whole or in part, without premium or penalty.
(ii)    [Reserved].
(h)    Mandatory Prepayments.
(i)    Borrowing Base. Subject to Section 2.3(d), if, at any time, (i) the Revolver Usage on such date exceeds (j) the Borrowing Base reflected in the Borrowing Base Certificate most recently delivered by Borrowers to Administrative Agent, then Borrowers shall promptly (but in any event within 1 Business Day of any Borrower’s obtaining knowledge of such excess) prepay the Obligations in accordance with Section 2.4(f)(i) in an aggregate amount equal to the amount of such excess.
(i)    [Reserved].
(k)    Application of Payments.
(i)    Each prepayment pursuant to Section 2.4(e)(i) shall, (l) so long as no Application Event shall have occurred and be continuing, be applied as follows: first, to the outstanding principal amount of the Revolving Loans (without a corresponding permanent reduction in the Maximum Revolver Amount) until paid in full; and second, to cash collateralize the Letters of Credit in an amount equal to 103% of the then outstanding Letter of Credit Usage (without a corresponding permanent reduction in the Maximum Revolver Amount); and (m) if an Application Event shall have occurred and be continuing, be applied in the manner set forth in Section 2.4(b)(iii).
(i)    [Reserved].

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2.5    Promise to Pay; Promissory Notes    .
(a)    Borrowers agree to pay the Lender Group Expenses on the earlier of (b) the first day of the month following the date on which the applicable Lender Group Expenses were first incurred or (c) the date on which demand therefor is made by Administrative Agent (it being acknowledged and agreed that any charging of such costs, expenses or Lender Group Expenses to the Loan Account pursuant to the provisions of Section 2.6(d) shall be deemed to constitute a demand for payment thereof for the purposes of this subclause (ii)). Borrowers promise to pay all of the Obligations (including principal, interest, premiums, if any, fees, costs, and expenses (including Lender Group Expenses)) in full on the Maturity Date or, if earlier, on the date on which the Obligations (other than the Bank Product Obligations) become due and payable pursuant to the terms of this Agreement. Borrowers agree that their obligations contained in the first sentence of this Section 2.5(a) shall survive payment or satisfaction in full of all other Obligations.
(d)    Any Lender may request that any portion of its Commitments or the Loans made by it be evidenced by one or more promissory notes. In such event, Borrowers shall execute and deliver to such Lender the requested promissory notes payable to the order of such Lender in a form furnished by Administrative Agent and reasonably satisfactory to Borrowers. Thereafter, the portion of the Commitments and Loans evidenced by such promissory notes and interest thereon shall at all times be represented by one or more promissory notes in such form payable to the order of the payee named therein.
2.6    Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations    .
(a)    Interest Rates. Except as provided in Section 2.6(c), all Obligations (except for undrawn Letters of Credit) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest as follows:
(i)    if the relevant Obligation is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the Applicable Margin, and
(ii)    otherwise, at a per annum rate equal to the Base Rate plus the Applicable Margin.
(b)    Letter of Credit Fee. Borrowers shall pay Administrative Agent (for the ratable benefit of the Revolving Lenders), a Letter of Credit fee (the “Letter of Credit Fee”) (which fee shall be in addition to the fronting fees and commissions, other fees, charges and expenses set forth in Section 2.11(k)) that shall accrue at a per annum rate equal to the Applicable Margin for Revolving Loans that are LIBOR Rate Loans times the undrawn amount of all outstanding Letters of Credit.
(c)    Default Rate. Upon the occurrence and during the continuation of an Event of Default and at the election of Administrative Agent or the Required Lenders,
(i)    all Obligations (except for undrawn Letters of Credit) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest at a 

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per annum rate equal to 2 percentage points above the per annum rate otherwise applicable thereunder, and
(ii)    the Letter of Credit Fee shall be increased to 2 percentage points above the per annum rate otherwise applicable hereunder.
(d)    Payment. Except to the extent provided to the contrary in Section 2.10, Section 2.11(k), or Section 2.12(a), (e) all interest, all Letter of Credit Fees and all other fees payable hereunder or under any of the other Loan Documents (other than Letter of Credit Fees) shall be due and payable, in arrears, on the first day of each month, (f) all Letter of Credit Fees, and all fronting fees and all commissions, other fees, charges and expenses set forth in Section 2.11(k) shall be due and payable, in arrears, on the first Business Day of each month, and (g) all costs and expenses payable hereunder or under any of the other Loan Documents, and all other Lender Group Expenses shall be due and payable on the earlier of (x) the first day of the month following the date on which the applicable costs, expenses, or Lender Group Expenses were first incurred or (y) the date on which demand therefor is made by Administrative Agent (it being acknowledged and agreed that any charging of such costs, expenses or Lender Group Expenses to the Loan Account pursuant to the provisions of the following sentence shall be deemed to constitute a demand for payment thereof for the purposes of this subclause (y)). Borrowers hereby authorize Administrative Agent, from time to time without prior notice to Borrowers, to charge to the Loan Account (A) on the first day of each month, all interest accrued during the prior month on the Revolving Loans hereunder, (A) on the first dayBusiness Day of each month, all Letter of Credit Fees accrued or chargeable hereunder during the prior month, (A) as and when incurred or accrued, all fees and costs provided for in Section 2.10(a) or (c), (A) on the first day of each month, the Unused Line Fee accrued during the prior month pursuant to Section 2.10(b), (A) as and when due and payable, all other fees payable hereunder or under any of the other Loan Documents, (A) as and when incurred or accrued, the fronting fees and all commissions, other fees, charges and expenses provided for in Section 2.11(k), (A) as and when incurred or accrued, all other Lender Group Expenses, and (A) as and when due and payable all other payment obligations payable under any Loan Document or any Bank Product Agreement (including any amounts due and payable to the Bank Product Providers in respect of Bank Products). All amounts (including interest, fees, costs, expenses, Lender Group Expenses, or other amounts payable hereunder or under any other Loan Document or under any Bank Product Agreement) charged to the Loan Account shall thereupon constitute Revolving Loans hereunder, shall constitute Obligations hereunder, and shall initially accrue interest at the rate then applicable to Revolving Loans that are Base Rate Loans (unless and until converted into LIBOR Rate Loans in accordance with the terms of this Agreement).
(h)    Computation. All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360‐day year and actual days elapsed, other than for Base Rate Loans, which shall be calculated on the basis of a 365- or 366-day year, as applicable, and actual days elapsed. In the event the Base Rate is changed from time to time hereafter, the rates of interest hereunder based upon the Base Rate automatically and immediately shall be increased or decreased by an amount equal to such change in the Base Rate.

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(i)    Intent to Limit Charges to Maximum Lawful Rate. In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable. Borrowers and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated within it; provided, that, anything contained herein to the contrary notwithstanding, if such rate or rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall be liable only for the payment of such maximum amount as is allowed by law, and payment received from Borrowers in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess.
2.7    Crediting Payments.     The receipt of any payment item by Administrative Agent shall not be required to be considered a payment on account unless such payment item is a wire transfer of immediately available federal funds made to Administrative Agent’s Account or unless and until such payment item is honored when presented for payment. Should any payment item not be honored when presented for payment, then Borrowers shall be deemed not to have made such payment and interest shall be calculated accordingly. Anything to the contrary contained herein notwithstanding, any payment item shall be deemed received by Administrative Agent only if it is received into Administrative Agent’s Account on a Business Day on or before 2:00 p.m. If any payment item is received into Administrative Agent’s Account on a non-Business Day or after 2:00 p.m. on a Business Day (unless Administrative Agent, in its sole discretion, elects to credit it on the date received), it shall be deemed to have been received by Administrative Agent as of the opening of business on the immediately following Business Day.
2.8    Designated Account    . Administrative Agent is authorized to make the Revolving Loans, and Issuing Bank is authorized to issue the Letters of Credit, under this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Person or, without instructions, if pursuant to Section 2.6(d). Borrowers agree to establish and maintain the Designated Account with the Designated Account Bank for the purpose of receiving the proceeds of the Revolving Loans requested by Borrowers and made by Administrative Agent or the Lenders hereunder. Unless otherwise agreed by Administrative Agent and Borrowers, any Revolving Loan or Swing Loan requested by Borrowers and made by Administrative Agent or the Lenders hereunder shall be made to the Designated Account.
2.9    Maintenance of Loan Account; Statements of Obligations    . Administrative Agent shall maintain an account on its books in the name of Borrowers (the “Loan Account”) on which Borrowers will be charged with all Revolving Loans (including Extraordinary Advances and Swing Loans) made by Administrative Agent, Swing Lender, or the Lenders to Borrowers or for Borrowers’ account, the Letters of Credit issued or arranged by Issuing Bank for Borrowers’ account, and with all other payment Obligations hereunder or under the other Loan Documents, including, accrued interest, fees and expenses, and Lender Group Expenses. In accordance with Section 2.7, the Loan Account will be credited with all payments received by Administrative Agent from Borrowers or for Borrowers’ account. Administrative Agent shall make available to Borrowers monthly statements regarding the Loan Account, including the principal amount of the Revolving Loans, interest accrued hereunder, fees accrued or charged hereunder or under the other Loan Documents, and a summary itemization of all charges and expenses constituting Lender Group Expenses 

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accrued hereunder or under the other Loan Documents, and each such statement, absent manifest error, shall be conclusively presumed to be correct and accurate and constitute an account stated between Borrowers and the Lender Group unless, within 30 days after Administrative Agent first makes such a statement available to Borrowers, Borrowers shall deliver to Administrative Agent written objection thereto describing the error or errors contained in such statement.
2.10    Fees    .
(a)    Administrative Agent Fees. Borrowers shall pay to Administrative Agent, for the account of Administrative Agent, as and when due and payable under the terms of the Fee Letter, the fees set forth in the Fee Letter.
(b)    Unused Line Fee. Borrowers shall pay to Administrative Agent, for the ratable account of the Revolving Lenders, an unused line fee (the “Unused Line Fee”) in an amount equal to the Applicable Unused Line Fee Percentage per annum times the result of (c) the aggregate amount of the Revolver Commitments, less (d) the average amount of the Revolver Usage during the immediately preceding month (or portion thereof), which Unused Line Fee shall be due and payable on the first day of each month from and after the Closing Date up to the first day of the month prior to the date on which the Obligations are paid in full and on the date on which the Obligations are paid in full.
(e)    Field Examination and Other Fees. Borrowers shall pay to Administrative Agent, field examination, appraisal, and valuation fees and charges, as and when incurred or chargeable, as follows (f) a fee of $1,000 per day, per examiner, plus out-of-pocket expenses (including travel, meals, and lodging) for each field examination of any Borrower performed by personnel employed by Administrative Agent, and (g) the fees or charges paid or incurred by Administrative Agent (but, in any event, no less than a charge of $1,000 per day, per Person, plus out-of-pocket expenses (including travel, meals, and lodging)) if it elects to employ the services of one or more third Persons to perform field examinations of any Borrower or its Subsidiaries, to establish electronic collateral reporting systems, to appraise the Collateral, or any portion thereof, or to assess any Borrower’s or its Subsidiaries’ business valuation; provided, that (A) Borrowers shall be obligated to reimburse Administrative Agent for all field examinations and appraisals of Inventory conducted at any time an Event of Default shall have occurred and be continuing; (A) so long as no Event of Default shall have occurred and be continuing, Borrowers shall not be obligated to reimburse Administrative Agent during any calendar year for more than 1 field examination and more than 1 full appraisal of Inventory; and (A) without duplication or limitation of the preceding subclauses (A) and (B), so long as no Event of Default shall have occurred and be continuing, Borrowers shall not be obligated to reimburse Administrative Agent during any calendar year for any additional field examinations or appraisals of Inventory unless at any time during such calendar year the Combined Availability falls below the greater of $93,750,000 and 12.5% of the Combined Commitment, in which case, so long as no Event of Default shall have occurred and be continuing, Borrowers shall not be obligated to reimburse Administrative Agent during such calendar year for more than 1 such additional field examination and/or more than 1 such additional appraisal of Inventory, as applicable.

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2.11    Letters of Credit    .
(a)    Subject to the terms and conditions of this Agreement, upon the request of Borrowers made in accordance herewith, and prior to the Maturity Date, Issuing Bank agrees to issue a requested Letter of Credit for the account of Borrowers. By submitting a request to Issuing Bank for the issuance of a Letter of Credit, Borrowers shall be deemed to have requested that Issuing Bank issue the requested Letter of Credit. Each request for the issuance of a Letter of Credit, or the amendment, renewal, or extension of any outstanding Letter of Credit, shall be (i) irrevocable and shall be made in writing by an Authorized Person and (ii) delivered to Administrative Agent and Issuing Bank via telefacsimile or other electronic method of transmission reasonably acceptable to Administrative Agent and Issuing Bank and reasonably in advance of the requested date of issuance, amendment, renewal, or extension, and (iii) subject to Issuing Bank’s authentication procedures with results satisfactory to Issuing Bank. Each such request shall be in form and substance reasonably satisfactory to Issuing Bank and (b) shall specify (A) the amount of such Letter of Credit, (A) the date of issuance, amendment, renewal, or extension of such Letter of Credit, (A) the proposed expiration date of such Letter of Credit (which expiration date shall not be later than the earlier of  the date that is 1 year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, including any automatic renewal provision, 1 year after such renewal or extension), and (1) the date that is 5 Business Days before the Maturity Date, (A) the name and address of the beneficiary of the Letter of Credit, and (A) such other information (including, the conditions to drawing, and, in the case of an amendment, renewal, or extension, identification of the Letter of Credit to be so amended, renewed, or extended) as shall be necessary to prepare, amend, renew, or extend such Letter of Credit, and (c) shall be accompanied by such Issuer Documents as Administrative Agent or Issuing Bank may request or require, to the extent that such requests or requirements are consistent with the Issuer Documents that Issuing Bank generally requests for Letters of Credit in similar circumstances. Issuing Bank’s records of the content of any such request will be conclusive. Anything contained herein to the contrary notwithstanding, Issuing Bank may, but shall not be obligated to, issue a Letter of Credit that supports the obligations of Borrowers or one of their Subsidiaries in respect of a lease of real property or an employment contract.
(d)    Issuing Bank shall have no obligation to issue a Letter of Credit if any of the following would result after giving effect to the requested issuance:
(i)    the Letter of Credit Usage would exceed $20,000,000,30,000,000, or
(ii)    the Letter of Credit Usage would exceed (e) the least of (1) the Maximum Revolver Amount, (1) the Borrowing Base at such time, and (1) at any time that any Indebtedness under the 2012 Notes Indenture remains outstanding, the Secured Debt Indenture Cap Amount at such time, less (f) the outstanding amount of Revolving Loans (including Swing Loans).
(g)    In the event there is a Defaulting Lender as of the date of any request for the issuance of a Letter of Credit, the Issuing Bank shall not be required to issue or arrange for such Letter of Credit to the extent (h) the Defaulting Lender’s Letter of Credit Exposure with respect to such Letter of Credit may not be reallocated pursuant to Section 2.3(g)(ii), or (i) the Issuing Bank has not otherwise entered into arrangements reasonably satisfactory to it and Borrowers to eliminate the Issuing Bank’s risk with respect 

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to the participation in such Letter of Credit of the Defaulting Lender, which arrangements may include Borrowers cash collateralizing such Defaulting Lender’s Letter of Credit Exposure in accordance with Section 2.3(g)(ii). Additionally, Issuing Bank shall have no obligation to issue or extend a Letter of Credit if (A) any order, judgment, or decree of any Governmental Authority or arbitrator shall, by its terms, purport to enjoin or restrain Issuing Bank from issuing such Letter of Credit, or any law applicable to Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over Issuing Bank shall prohibit or request that Issuing Bank refrain from the issuance of letters of credit generally or such Letter of Credit in particular, (A) the issuance of such Letter of Credit would violate one or more policies of Issuing Bank applicable to letters of credit generally, or (A) if amounts demanded to be paid under any Letter of Credit will not or may not be in United States Dollars.
(j)    Any Issuing Bank (other than Wells Fargo or any of its Affiliates) shall notify Administrative Agent in writing no later than the Business Day immediately following the Business Day on which such Issuing Bank issued any Letter of Credit; provided that (k) until Administrative Agent advises any such Issuing Bank that the provisions of Section 3.2 are not satisfied, or (l) unless the aggregate amount of the Letters of Credit issued in any such week exceeds such amount as shall be agreed by Administrative Agent and such Issuing Bank, such Issuing Bank shall be required to so notify Administrative Agent in writing only once each week of the Letters of Credit issued by such Issuing Bank during the immediately preceding week as well as the daily amounts outstanding for the prior week, such notice to be furnished on such day of the week as Administrative Agent and such Issuing Bank may agree. Borrowers and the Lender Group hereby acknowledge and agree that all Existing Letters of Credit shall constitute Letters of Credit under this Agreement on and after the Closing Date with the same effect as if such Existing Letters of Credit were issued by Issuing Bank at the request of Borrowers on the Closing Date. Each Letter of Credit shall be in form and substance reasonably acceptable to Issuing Bank, including the requirement that the amounts payable thereunder must be payable in Dollars. If Issuing Bank makes a payment under a Letter of Credit, Borrowers shall pay to Administrative Agent an amount equal to the applicable Letter of Credit Disbursement on the Business Day such Letter of Credit Disbursement is made and, in the absence of such payment, the amount of the Letter of Credit Disbursement immediately and automatically shall be deemed to be a Revolving Loan hereunder (notwithstanding any failure to satisfy any condition precedent set forth in Section 3) and, initially, shall bear interest at the rate then applicable to Revolving Loans that are Base Rate Loans. If a Letter of Credit Disbursement is deemed to be a Revolving Loan hereunder, Borrowers’ obligation to pay the amount of such Letter of Credit Disbursement to Issuing Bank shall be automatically converted into an obligation to pay the resulting Revolving Loan. Promptly following receipt by Administrative Agent of any payment from Borrowers pursuant to this paragraph, Administrative Agent shall distribute such payment to Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to Section 2.11(e) to reimburse Issuing Bank, then to such Revolving Lenders and Issuing Bank as their interests may appear.
(m)    Promptly following receipt of a notice of a Letter of Credit Disbursement pursuant to Section 2.11(d), each Revolving Lender agrees to fund its Pro Rata Share of any Revolving Loan deemed made pursuant to Section 2.11(d) on the same terms and conditions as if Borrowers had requested the amount thereof as a Revolving Loan and Administrative Agent shall promptly pay to Issuing Bank the amounts so received by it from the Revolving Lenders. By the issuance of a Letter of Credit (or an amendment, renewal, or extension of a Letter of Credit) and without any further action on the part of Issuing Bank or the Revolving 

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Lenders, Issuing Bank shall be deemed to have granted to each Revolving Lender, and each Revolving Lender shall be deemed to have purchased, a participation in each Letter of Credit issued by Issuing Bank, in an amount equal to its Pro Rata Share of such Letter of Credit, and each such Revolving Lender agrees to pay to Administrative Agent, for the account of Issuing Bank, such Revolving Lender’s Pro Rata Share of any Letter of Credit Disbursement made by Issuing Bank under the applicable Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to Administrative Agent, for the account of Issuing Bank, such Revolving Lender’s Pro Rata Share of each Letter of Credit Disbursement made by Issuing Bank and not reimbursed by Borrowers on the date due as provided in Section 2.11(d), or of any reimbursement payment that is required to be refunded (or that Administrative Agent or Issuing Bank elects, based upon the advice of counsel, to refund) to Borrowers for any reason. Each Revolving Lender acknowledges and agrees that its obligation to deliver to Administrative Agent, for the account of Issuing Bank, an amount equal to its respective Pro Rata Share of each Letter of Credit Disbursement pursuant to this Section 2.11(e) shall be absolute and unconditional and such remittance shall be made notwithstanding the occurrence or continuation of an Event of Default or Default or the failure to satisfy any condition set forth in Section 3. If any such Revolving Lender fails to make available to Administrative Agent the amount of such Revolving Lender’s Pro Rata Share of a Letter of Credit Disbursement as provided in this Section, such Revolving Lender shall be deemed to be a Defaulting Lender and Administrative Agent (for the account of Issuing Bank) shall be entitled to recover such amount on demand from such Revolving Lender together with interest thereon at the Defaulting Lender Rate until paid in full.
(n)    Each Borrower agrees to indemnify, defend and hold harmless each member of the Lender Group (including Issuing Bank and its branches, Affiliates, and correspondents) and each such Person’s respective directors, officers, employees, attorneys and agents (each, including Issuing Bank, a “Letter of Credit Related Person”) (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable fees and disbursements of attorneys, experts, or consultants and all other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), which may be incurred by or awarded against any such Letter of Credit Related Person (other than Taxes, which shall be governed by Section 16) (the “Letter of Credit Indemnified Costs”), and which arise out of or in connection with, or as a result of:
(i)    any Letter of Credit or any pre-advice of its issuance;
(ii)    any transfer, sale, delivery, surrender or endorsement (or lack thereof) of any Drawing Document at any time(s) held by any such Letter of Credit Related Person in connection with any Letter of Credit;
(iii)    any action or proceeding arising out of, or in connection with, any Letter of Credit (whether administrative, judicial or in connection with arbitration), including any action or proceeding to compel or restrain any presentation or payment under any Letter of Credit, or for the wrongful dishonor of, or honoring a presentation under, any Letter of Credit;

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(iv)    any independent undertakings issued by the beneficiary of any Letter of Credit;
(v)    any unauthorized instruction or request made to Issuing Bank in connection with any Letter of Credit or requested Letter of Credit, or any error in computer or, omission, interruption or delay in such instruction or request, whether transmitted by mail, courier, electronic transmission, SWIFT, or any other telecommunication including communications through a correspondent;
(vi)    an adviser, confirmer or other nominated person seeking to be reimbursed, indemnified or compensated;
(vii)    any third party seeking to enforce the rights of an applicant, beneficiary, nominated person, transferee, assignee of Letter of Credit proceeds or holder of an instrument or document;
(viii)    the fraud, forgery or illegal action of parties other than the Letter of Credit Related Person;
(i)    any prohibition on payment or delay in payment of any amount payable by Issuing Bank to a beneficiary or transferee beneficiary of a Letter of Credit arising out of Anti-Corruption Laws, Anti-Money Laundering Laws, or Sanctions;
(ii)    (ix) Issuing Bank’s performance of the obligations of a confirming institution or entity that wrongfully dishonors a confirmation; or
(iii)    any foreign language translation provided to Issuing Bank in connection with any Letter of Credit;
(iv)    any foreign law or usage as it relates to Issuing Bank’s issuance of a Letter of Credit in support of a foreign guaranty including the expiration of such guaranty after the related Letter of Credit expiration date and any resulting drawing paid by Issuing Bank in connection therewith; or
(v)    (x) the acts or omissions, whether rightful or wrongful, of any present or future de jure or de facto governmental or regulatory authority or cause or event beyond the control of the Letter of Credit Related Person;
in each case, including that resulting from the Letter of Credit Related Person’s own negligence; provided, however, that such indemnity shall not be available to any Letter of Credit Related Person claiming indemnification under clauses (i) through (xxiii) above to the extent that such Letter of Credit Indemnified Costs may be finally determined in a final, non-appealable judgment of a court of competent jurisdiction to have resulted directly from the gross negligence or willful misconduct of the Letter of Credit Related Person claiming indemnity. Borrowers hereby agree to pay the Letter of Credit Related Person claiming indemnity on demand from time to time all amounts owing under this Section 2.11(f). If and to the extent that the 

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obligations of Borrowers under this Section 2.11(f) are unenforceable for any reason, Borrowers agree to make the maximum contribution to the Letter of Credit Indemnified Costs permissible under applicable law. This indemnification provision shall survive termination of this Agreement and all Letters of Credit.
(o)    The liability of Issuing Bank (or any other Letter of Credit Related Person) under, in connection with or arising out of any Letter of Credit (or pre-advice), regardless of the form or legal grounds of the action or proceeding, shall be limited to direct damages suffered by Borrowers that are caused directly by Issuing Bank’s gross negligence or willful misconduct in (p) honoring a presentation under a Letter of Credit that on its face does not at least substantially comply with the terms and conditions of such Letter of Credit, (q) failing to honor a presentation under a Letter of Credit that strictly complies with the terms and conditions of such Letter of Credit or (r) retaining Drawing Documents presented under a Letter of Credit. Issuing Bank shall be deemed to have acted with due diligence and reasonable care if Issuing Bank’s conduct is in accordance with Standard Letter of Credit Practice or in accordance with this Agreement. Borrowers’ aggregate remedies against Issuing Bank and any Letter of Credit Related Person for wrongfully honoring a presentation under any Letter of Credit or wrongfully retaining honored Drawing Documents shall in no event exceed the aggregate amount paid by Borrowers to Issuing Bank in respect of the honored presentation in connection with such Letter of Credit under Section 2.11(d), plus interest at the rate then applicable to Base Rate Loans hereunder. Borrowers shall take action to avoid and mitigate the amount of any damages claimed against Issuing Bank or any other Letter of Credit Related Person, including by enforcing its rights against the beneficiaries of the Letters of Credit. Any claim by Borrowers under or in connection with any Letter of Credit shall be reduced by an amount equal to the sum of (x) the amount (if any) saved by Borrowers as a result of the breach or alleged wrongful conduct complained of; and (y) the amount (if any) of the loss that would have been avoided had Borrowers taken all reasonable steps to mitigate any loss, and in case of a claim of wrongful dishonor, by specifically and timely authorizing Issuing Bank to effect a cure.
(s)    Borrowers are responsible for preparing or approving the final text of the Letter of Credit as issued by Issuing Bank, irrespective of any assistance Issuing Bank may provide such as drafting or recommending text or by Issuing Bank’s use or refusal to use text submitted by Borrowers. Borrowers understand that the final form of any Letter of Credit may be subject to such revisions and changes as are deemed necessary or appropriate by Issuing Bank, and Borrowers hereby consent to such revisions and changes not materially different from the application executed in connection therewith. Borrowers are solely responsible for the suitability of the Letter of Credit for Borrowers’ purposes. If Borrowers request Issuing Bank to issue a Letter of Credit for an affiliated or unaffiliated third party (an “Account Party”), (t) such Account Party shall have no rights against Issuing Bank; (u) Borrowers shall be responsible for the application and obligations under this Agreement; and (v) communications (including notices) related to the respective Letter of Credit shall be among Issuing Bank and Borrowers.  Borrowers will examine the copy of the Letter of Credit and any other documents sent by Issuing Bank in connection therewith and shall promptly notify Issuing Bank (not later than 3 Business Days following Borrowers’ receipt of documents from Issuing Bank) of any non-compliance with Borrowers’ instructions and of any discrepancy in any document under any presentment or other irregularity. Borrowers understand and agree that Issuing Bank is not required to extend the expiration date of any Letter of Credit for any reason. With respect to any Letter of Credit containing an “automatic amendment” to extend the expiration date of such Letter of Credit, Issuing Bank, in its sole and 

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absolute discretion, may give notice of nonrenewal of such Letter of Credit and, if Borrowers do not at any time want the then-current expiration date of such Letter of Credit to be renewedextended, Borrowers will so notify Administrative Agent and Issuing Bank at least 1530 calendar days before Issuing Bank is required to notify the beneficiary of such Letter of Credit or any advising bank of such nonrenewalnon-extension pursuant to the terms of such Letter of Credit.
(w)    Borrowers’ reimbursement and payment obligations under this Section 2.11 are absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever, including:
(i)    any lack of validity, enforceability or legal effect of any Letter of Credit or, any Issuer Document, this Agreement, or any Loan Document, or any term or provision therein or herein;
(ii)    payment against presentation of any draft, demand or claim for payment under any Drawing Document that does not comply in whole or in part with the terms of the applicable Letter of Credit or which proves to be fraudulent, forged or invalid in any respect or any statement therein being untrue or inaccurate in any respect, or which is signed, issued or presented by a Person or a transferee of such Person purporting to be a successor or transferee of the beneficiary of such Letter of Credit;
(iii)    Issuing Bank or any of its branches or Affiliates being the beneficiary of any Letter of Credit;
(iv)    Issuing Bank or any correspondent honoring a drawing against a Drawing Document up to the amount available under any Letter of Credit even if such Drawing Document claims an amount in excess of the amount available under the Letter of Credit;
(v)    the existence of any claim, set-off, defense or other right that any BorrowerLoan Party or any of its Subsidiaries may have at any time against any beneficiary or transferee beneficiary, any assignee of proceeds, Issuing Bank or any other Person;
(vi)    Issuing Bank or any correspondent honoring a drawing upon receipt of an electronic presentation under a Letter of Credit requiring the same, regardless of whether the original Drawing Documents arrive at Issuing Bank’s counters or are different from the electronic presentation;
(vii)    (vi) any other event, circumstance or conduct whatsoever, whether or not similar to any of the foregoing that might, but for this Section 2.11(i), constitute a legal or equitable defense to or discharge of, or provide a right of set-off against, any Borrower’s or any of its Subsidiaries’ reimbursement and other payment obligations 

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and liabilities, arising under, or in connection with, any Letter of Credit, whether against Issuing Bank, the beneficiary or any other Person; or
(viii)    (vii) the fact that any Default or Event of Default shall have occurred and be continuing;
provided, however, that subject to Section 2.11(g) above, the foregoing shall not release Issuing Bank from such liability to Borrowers as may be finally determined in a final, non-appealable judgment of a court of competent jurisdiction against Issuing Bank following reimbursement or payment of the obligations and liabilities, including reimbursement and other payment obligations, of Borrowers to Issuing Bank arising under, or in connection with, this Section 2.11 or any Letter of Credit.
(x)    Without limiting any other provision of this Agreement, Issuing Bank and each other Letter of Credit Related Person (if applicable) shall not be responsible to Borrowers for, and Issuing Bank’s rights and remedies against Borrowers and the obligation of Borrowers to reimburse Issuing Bank for each drawing under each Letter of Credit shall not be impaired by:
(i)    honor of a presentation under any Letter of Credit that on its face substantially complies with the terms and conditions of such Letter of Credit, even if the Letter of Credit requires strict compliance by the beneficiary;
(ii)    honor of a presentation of any Drawing Document that appears on its face to have been signed, presented or issued (y) by any purported successor or transferee of any beneficiary or other Person required to sign, present or issue such Drawing Document or (z) under a new name of the beneficiary;
(i)    acceptance as a draft of any written or electronic demand or request for payment under a Letter of Credit, even if nonnegotiable or not in the form of a draft or notwithstanding any requirement that such draft, demand or request bear any or adequate reference to the Letter of Credit;
(ii)    the identity or authority of any presenter or signer of any Drawing Document or the form, accuracy, genuineness or legal effect of any Drawing Document (other than Issuing Bank’s determination that such Drawing Document appears on its face substantially to comply with the terms and conditions of the Letter of Credit);
(iii)    acting upon any instruction or request relative to a Letter of Credit or requested Letter of Credit that Issuing Bank in good faith believes to have been given by a Person authorized to give such instruction or request;
(iv)    any errors, omissions, interruptions or delays in transmission or delivery of any message, advice or document (regardless of how sent or transmitted) or for errors in interpretation of technical terms or in translation or any delay in giving or failing to give notice to Borrowersany Borrower;

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(v)    any acts, omissions or fraud by, or the insolvency of, any beneficiary, any nominated person or entity or any other Person or any breach of contract between any beneficiary and any Borrower or any of the parties to the underlying transaction to which the Letter of Credit relates;
(vi)    assertion or waiver of any provision of the ISP or UCP that primarily benefits an issuer of a letter of credit, including any requirement that any Drawing Document be presented to it at a particular hour or place;
(vii)    payment to any paying or negotiatingpresenting bank (designated or permitted by the terms of the applicable Letter of Credit) claiming that it rightfully honored or is entitled to reimbursement or indemnity under Standard Letter of Credit Practice applicable to it;
(viii)    acting or failing to act as required or permitted under Standard Letter of Credit Practice applicable to where Issuing Bank has issued, confirmed, advised or negotiated such Letter of Credit, as the case may be;
(ix)    honor of a presentation after the expiration date of any Letter of Credit notwithstanding that a presentation was made prior to such expiration date and dishonored by Issuing Bank if subsequently Issuing Bank or any court or other finder of fact determines such presentation should have been honored;
(x)    dishonor of any presentation that does not strictly comply or that is fraudulent, forged or otherwise not entitled to honor; or
(xi)    honor of a presentation that is subsequently determined by Issuing Bank to have been made in violation of international, federal, state or local restrictions on the transaction of business with certain prohibited Persons.
(aa)    Borrowers shall pay immediately upon demand to Administrative Agent for the account of Issuing Bank as non-refundable fees, commissions, and charges (it being acknowledged and agreed that any charging of such fees, commissions, and charges to the Loan Account pursuant to the provisions of Section 2.6(d) shall be deemed to constitute a demand for payment thereof for the purposes of this Section 2.11(k)): (bb) a fronting fee which shall be imposed by Issuing Bank upon the issuance of each Letter of Credit ofequal to 0.125% per annum of the face amount thereoftimes the average amount of the Letter of Credit Usage during the immediately preceding month (or portion thereof), plus (cc) any and all other customary commissions, fees and charges then in effect imposed by, and any and all expenses incurred by, Issuing Bank, or by any adviser, confirming institution or entity or other nominated person, relating to Letters of Credit, at the time of issuance of any Letter of Credit and upon the occurrence of any other activity with respect to any Letter of Credit (including transfers, assignments of proceeds, amendments, drawings, renewals or cancellations).

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(dd)    If by reason of (x) any Change in Law, or (y) compliance by Issuing Bank or any other member of the Lender Group with any direction, request, or requirement (irrespective of whether having the force of law) of any Governmental Authority or monetary authority including, Regulation D of the Board of Governors as from time to time in effect (and any successor thereto):
(i)    any reserve, deposit, or similar requirement is or shall be imposed or modified in respect of any Letter of Credit issued or caused to be issued hereunder or hereby, or any Loans or obligations to make Loans hereunder or hereby, or
(ii)    there shall be imposed on Issuing Bank or any other member of the Lender Group any other condition regarding any Letter of Credit, Loans, or obligations to make Loans hereunder,
and the result of the foregoing is to increase, directly or indirectly, the cost to Issuing Bank or any other member of the Lender Group of issuing, making, participating in, or maintaining any Letter of Credit or to reduce the amount receivable in respect thereof, then, and in any such case, Administrative Agent may, at any time within a reasonable period after the additional cost is incurred or the amount received is reduced, notify Borrowers, and Borrowers shall pay within 30 days after demand therefor, such amounts as Administrative Agent may specify to be necessary to compensate Issuing Bank or any other member of the Lender Group for such additional cost or reduced receipt, together with interest on such amount from the date of such demand until payment in full thereof at the rate then applicable to Base Rate Loans hereunder; provided, that (A) Borrowers shall not be required to provide any compensation pursuant to this Section 2.11(l) for any such amounts incurred more than 180 days prior to the date on which the demand for payment of such amounts is first made to Borrowers, and (ee) if an event or circumstance giving rise to such amounts is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. The determination by Administrative Agent of any amount due pursuant to this Section 2.11(l), as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error, be final and conclusive and binding on all of the parties hereto.
(a)    Each standby Letter of Credit shall expire not later than the date that is 12 months after the date of the issuance of such Letter of Credit; provided, that any standby Letter of Credit may provide for the automatic extension thereof for any number of additional periods each of up to one year in duration; provided further, that with respect to any Letter of Credit which extends beyond the Maturity Date, Letter of Credit Collateralization shall be provided therefor on or before the date that is 5 Business Days prior to the Maturity Date. Each commercial Letter of Credit shall expire on the earlier of (i) 120 days after the date of the issuance of such commercial Letter of Credit and (i) 5 Business Days prior to the Maturity Date.
(b)    If (i) any Event of Default shall occur and be continuing, or (i) Availability shall at any time be less than zero, then on the Business Day following the date when Borrower Representative receives notice from Administrative Agent or the Required Lenders (or, if the maturity of the Obligations has been accelerated, Revolving Lenders with Letter of Credit Exposure representing greater than 50% of the total Letter Credit Exposure) demanding Letter of Credit Collateralization pursuant to this Section 2.11(n) upon such demand, Borrowers shall provide Letter of Credit Collateralization with respect to the then existing Letter of Credit Usage. If Borrowers fail to provide Letter of Credit Collateralization as required by this Section 2.11(n), the Revolving Lenders may (and, upon direction of Administrative Agent, shall) advance, 

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as Revolving Loans the amount of the cash collateral required pursuant to the Letter of Credit Collateralization provision so that the then existing Letter of Credit Usage is cash collateralized in accordance with the Letter of Credit Collateralization provision (whether or not the Revolver Commitments have terminated, an Overadvance exists, or the conditions in Section 3 are satisfied).
(c)    (m) Unless otherwise expressly agreed by Issuing Bank and Borrowers when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the ISP and the UCP shall apply to each standby Letter of Credit, and (d) the rules of the UCP shall apply to each commercial Letter of Credit.
(e)    Issuing Bank shall be deemed to have acted with due diligence and reasonable care if Issuing Bank’s conduct is in accordance with Standard Letter of Credit Practice or in accordance with this Agreement.
(f)    (n) In the event of a direct conflict between the provisions of this Section 2.11 and any provision contained in any Issuer Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.11 shall control and govern.
(g)    The provisions of this Section 2.11 shall survive the termination of this Agreement and the repayment in full of the Obligations with respect to any Letters of Credit that remain outstanding.
(h)    At Borrowers’ costs and expense, Borrowers shall execute and deliver to Issuing Bank such additional certificates, instruments and/or documents and take such additional action as may be reasonably requested by Issuing Bank to enable Issuing Bank to issue any Letter of Credit pursuant to this Agreement and related Issuer Document, to protect, exercise and/or enforce Issuing Banks’ rights and interests under this Agreement or to give effect to the terms and provisions of this Agreement or any Issuer Document. Each Borrower irrevocably appoints Issuing Bank as its attorney-in-fact and authorizes Issuing Bank, without notice to Borrowers, to execute and deliver ancillary documents and letters customary in the letter of credit business that may include but are not limited to advisements, indemnities, checks, bills of exchange and issuance documents. The power of attorney granted by the Borrowers is limited solely to such actions related to the issuance, confirmation or amendment of any Letter of Credit and to ancillary documents or letters customary in the letter of credit business. This appointment is coupled with an interest.
2.12    LIBOR Option    .
(a)    Interest and Interest Payment Dates. In lieu of having interest charged at the rate based upon the Base Rate, Borrowers shall have the option, subject to Section 2.12(b) below (the “LIBOR Option”) to have interest on all or a portion of the Revolving Loans be charged (whether at the time when made (unless otherwise provided herein), upon conversion from a Base Rate Loan to a LIBOR Rate Loan, or upon continuation of a LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (b) the last day of the Interest Period applicable thereto; provided, that, subject to the following clauses (ii) and (iii), in the case of any Interest Period greater than 3 months in duration, interest shall be payable at 3‐month intervals after the commencement of the applicable Interest Period and on the last day of such Interest Period), (c) the date on 

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which all or any portion of the Obligations are accelerated pursuant to the terms hereof, or (d) the date on which this Agreement is terminated pursuant to the terms hereof. On the last day of each applicable Interest Period, unless Borrowers have properly exercised the LIBOR Option with respect thereto, the interest rate applicable to such LIBOR Rate Loan automatically shall convert to the rate of interest then applicable to Base Rate Loans of the same type hereunder. At any time that an Event of Default has occurred and is continuing, at the written election of the Required Lenders, Borrowers no longer shall have the option to request that Revolving Loans bear interest at a rate based upon the LIBOR Rate.
(e)    LIBOR Election.
(i)    Borrowers may, at any time and from time to time, so long as Borrowers have not received a notice from Administrative Agent (which notice Administrative Agent may elect to give or not give in its discretion unless Administrative Agent is directed to give such notice by the Required Lenders, in which case, it shall give the notice to Borrowers), after the occurrence and during the continuance of an Event of Default, to terminate the right of Borrowers to exercise the LIBOR Option during the continuance of such Event of Default, elect to exercise the LIBOR Option by notifying Administrative Agent prior to noon at least 3 Business Days prior to the commencement of the proposed Interest Period (the “LIBOR Deadline”); provided, that Administrative Agent may, in its sole discretion, elect to accept as timely exercises of the LIBOR Option that are received later than noon on the applicable Business Day. Notice of Borrowers’ election of the LIBOR Option for a permitted portion of the Revolving Loans and an Interest Period pursuant to this Section shall be made by delivery to Administrative Agent of a LIBOR Notice received by Administrative Agent before the LIBOR Deadline, or by telephonic notice received by Administrative Agent before the LIBOR Deadline (to be confirmed by delivery to Administrative Agent of a LIBOR Notice received by Administrative Agent prior to 5:00 p.m. on the same day). Promptly upon its receipt of each such LIBOR Notice, Administrative Agent shall provide a copy thereof to each of the affected Lenders.
(ii)    Each LIBOR Notice shall be irrevocable and binding on Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend, and hold Administrative Agent and the Lenders harmless against any loss, cost, or expense actually incurred by Administrative Agent or any Lender as a result of (f) the payment or required assignment of any principal of any LIBOR Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (g) the conversion of any LIBOR Rate Loan other than on the last day of the Interest Period applicable thereto, or (h) the failure to borrow, convert, or continue, or prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered pursuant hereto (such losses, costs, or expenses, “Funding Losses”). A certificate of Administrative Agent or a Lender delivered to Borrowers setting forth in reasonable detail any amount or amounts that Administrative Agent or such Lender is entitled to receive pursuant to this Section 2.12 shall be conclusive absent manifest error. Borrowers shall pay such amount to Administrative Agent or the Lender, as applicable, within 30 days of the date of its receipt of such certificate. 

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If a payment of a LIBOR Rate Loan on a day other than the last day of the applicable Interest Period would result in a Funding Loss, Administrative Agent may, in its sole discretion at the request of Borrowers, hold the amount of such payment as cash collateral in support of the Obligations until the last day of such Interest Period and apply such amounts to the payment of the applicable LIBOR Rate Loan on such last day, it being agreed that Administrative Agent has no obligation to so defer the application of payments to any LIBOR Rate Loan and that, in the event that Administrative Agent does not defer such application, Borrowers shall be obligated to pay any resulting Funding Losses.
(i)    Unless Administrative Agent, in its sole discretion, agrees otherwise, Borrowers shall have not more than 8 LIBOR Rate Loans in effect at any given time. Borrowers may only exercise the LIBOR Option for proposed LIBOR Rate Loans of at least $1,000,000.
(i)    Conversion; Prepayment. Borrowers may convert LIBOR Rate Loans to Base Rate Loans or prepay LIBOR Rate Loans  at any time; provided, that in the event that LIBOR Rate Loans are converted or prepaid on any date that is not the last day of the Interest Period applicable thereto, including as a result of any prepayment through the required application by Administrative Agent of any payments or proceeds of Collateral in accordance with Section 2.4(b) or for any other reason, including early termination of the term of this Agreement or acceleration of all or any portion of the Obligations pursuant to the terms hereof, each Borrower shall indemnify, defend, and hold Administrative Agent and the Lenders and their Participants harmless against any and all Funding Losses in accordance with Section 2.12(b)(ii).
(j)    Special Provisions Applicable to LIBOR Rate.
(i)    The LIBOR Rate may be adjusted by Administrative Agent with respect to any Lender on a prospective basis to take into account any additional or increased costs to such Lender of maintaining or obtaining any eurodollar deposits or increased costs (other than Taxes, which shall be governed by Section 16), in each case, due to changes in applicable law occurring subsequent to the commencement of the then applicable Interest Period, including any Changes in Law (including any changes in tax laws (except changes of general applicability in corporate income tax laws)) and changes in the reserve requirements imposed by the Board of Governors, which additional or increased costs would increase the cost of funding or maintaining loans bearing interest at the LIBOR Rate. In any such event, the affected Lender shall give Borrowers and Administrative Agent notice of such a determination and adjustment and Administrative Agent promptly shall transmit the notice to each other Lender and, upon its receipt of the notice from the affected Lender, Borrowers may, by notice to such affected Lender (k) require such Lender to furnish to Borrowers a statement setting forth in reasonable detail the basis for adjusting such LIBOR Rate and the method for determining the amount of such adjustment, or (l) repay the LIBOR Rate Loans of such Lender with respect to which such adjustment is made (together with any amounts due under Section 2.12(b)(ii)).

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(i)    In the event that any change in market conditions or any Change in Law shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to determine or charge interest rates at the LIBOR Rate, such Lender shall give notice of such changed circumstances to Administrative Agent and Borrowers and Administrative Agent promptly shall transmit the notice to each other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are outstanding, the date specified in such Lender’s notice shall be deemed to be the last day of the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate then applicable to Base Rate Loans, and (z) Borrowers shall not be entitled to elect the LIBOR Option until such Lender determines that it would no longer be unlawful or impractical to do so.
(m)    No Requirement of Matched Funding. Anything to the contrary contained herein notwithstanding, neither Administrative Agent, nor any Lender, nor any of their Participants, is required actually to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues at the LIBOR Rate.
2.13    Capital Requirements    .
(a)    If, after the date hereof, Issuing Bank or any Lender determines that (b) any Change in Law regarding capital, liquidity, or reserve requirements for banks or bank holding companies, or (c) compliance by Issuing Bank or such Lender, or their respective parent bank holding companies, with any guideline, request or directive of any Governmental Authority regarding capital adequacy or liquidity requirements (whether or not having the force of law), has the effect of reducing the return on Issuing Bank’s, such Lender’s, or such holding companies’ capital or liquidity as a consequence of Issuing Bank’s or such Lender’s commitments, Loans, participations, or other obligations hereunder to a level below that which Issuing Bank, such Lender, or such holding companies could have achieved but for such Change in Law or compliance (taking into consideration Issuing Bank’s, such Lender’s, or such holding companies’ then existing policies with respect to capital adequacy or liquidity requirements and assuming the full utilization of such entity’s capital) by any amount deemed by Issuing Bank or such Lender to be material, then Issuing Bank or such Lender may notify Borrowers and Administrative Agent thereof. Following receipt of such notice, Borrowers agree to pay Issuing Bank or such Lender on demand the amount of such reduction of return of capital as and when such reduction is determined, payable within 30 days after presentation by Issuing Bank or such Lender of a statement in the amount and setting forth in reasonable detail Issuing Bank’s or such Lender’s calculation thereof and the assumptions upon which such calculation was based (which statement shall be deemed true and correct absent manifest error). In determining such amount, Issuing Bank or such Lender may use any reasonable averaging and attribution methods. Failure or delay on the part of Issuing Bank or any Lender to demand compensation pursuant to this Section shall not constitute a waiver of Issuing Bank’s or such Lender’s right to demand such compensation; provided that Borrowers shall not be required to compensate Issuing Bank or a Lender pursuant to this Section for any reductions in return incurred more than 180 days prior to the date that Issuing Bank or such Lender notifies Borrowers of such Change in Law giving rise to such reductions and of such Lender’s intention to claim compensation therefor; 

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provided further that if such claim arises by reason of the Change in Law that is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
(d)    If Issuing Bank or any Lender requests additional or increased costs referred to in Section 2.11(l) or Section 2.12(d)(i) or amounts under Section 2.13(a) or sends a notice under Section 2.12(d)(ii) relative to changed circumstances (such Issuing Bank or Lender, an “Affected Lender”), then, at the request of Borrower Representative, such Affected Lender shall use reasonable efforts to promptly designate a different one of its lending offices or to assign its rights and obligations hereunder to another of its offices or branches, if (e) in the reasonable judgment of such Affected Lender, such designation or assignment would eliminate or reduce amounts payable pursuant to Section 2.11(l), Section 2.12(d)(i), or Section 2.13(a), as applicable, or would eliminate the illegality or impracticality of funding or maintaining LIBOR Rate Loans and (f) in the reasonable judgment of such Affected Lender, such designation or assignment would not subject it to any material unreimbursed cost or expense and would not otherwise be materially disadvantageous to it. Borrowers agree to pay all reasonable out-of-pocket costs and expenses incurred by such Affected Lender in connection with any such designation or assignment. If, after such reasonable efforts, such Affected Lender does not so designate a different one of its lending offices or assign its rights to another of its offices or branches so as to eliminate Borrowers’ obligation to pay any future amounts to such Affected Lender pursuant to Section 2.11(l), Section 2.12(d)(i), or Section 2.13(a), as applicable, or to enable Borrowers to obtain LIBOR Rate Loans, then Borrowers (without prejudice to any amounts then due to such Affected Lender under Section 2.11(l), Section 2.12(d)(i), or Section 2.13(a), as applicable) may, unless prior to the effective date of any such assignment the Affected Lender withdraws its request for such additional amounts under Section 2.11(l), Section 2.12(d)(i), or Section 2.13(a), as applicable, or indicates that it is no longer unlawful or impractical to fund or maintain LIBOR Rate Loans, may designate a different Issuing Bank or substitute a Lender or prospective Lender, in each case, reasonably acceptable to Administrative Agent to purchase the Obligations owed to such Affected Lender and such Affected Lender’s commitments hereunder (a “Replacement Lender”), and if such Replacement Lender agrees to such purchase, such Affected Lender shall assign to the Replacement Lender its Obligations and commitments, and upon such purchase by the Replacement Lender, which such Replacement Lender shall be deemed to be “Issuing Bank” or a “Lender” (as the case may be) for purposes of this Agreement and such Affected Lender shall cease to be “Issuing Bank” or a “Lender” (as the case may be) for purposes of this Agreement.
(g)    Notwithstanding anything herein to the contrary, the protection of Sections 2.11(l), 2.12(d), and 2.13 shall be available to Issuing Bank and each Lender (as applicable) regardless of any possible contention of the invalidity or inapplicability of the law, rule, regulation, judicial ruling, judgment, guideline, treaty or other change or condition which shall have occurred or been imposed, so long as it shall be customary for issuing banks or lenders affected thereby to comply therewith. Notwithstanding any other provision herein, neither Issuing Bank nor any Lender shall demand compensation pursuant to this Section 2.13 if it shall not at the time be the general policy or practice of Issuing Bank or such Lender (as the case may be) to demand such compensation in similar circumstances under comparable provisions of other credit agreements, if any.
2.14    [Reserved]    .

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2.15    Joint and Several Liability of Borrowers    .
(a)    Each Borrower is accepting joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by the Lender Group under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the undertakings of the other Borrowers to accept joint and several liability for the Obligations.
(b)    Each Borrower, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations (including any Obligations arising under this Section 2.15), it being the intention of the parties hereto that all the Obligations shall be the joint and several obligations of each Borrower without preferences or distinction among them.
(c)    If and to the extent that any Borrower shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event the other Borrowers will make such payment with respect to, or perform, such Obligation until such time as all of the Obligations are paid in full.
(d)    The Obligations of each Borrower under the provisions of this Section 2.15 constitute the absolute and unconditional, full recourse Obligations of each Borrower enforceable against each Borrower to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of the provisions of this Agreement (other than this Section 2.15(d)) or any other circumstances whatsoever.
(e)    Except as otherwise expressly provided in this Agreement, each Borrower hereby waives notice of acceptance of its joint and several liability, notice of any Revolving Loans or Letters of Credit issued under or pursuant to this Agreement, notice of the occurrence of any Default, Event of Default, or of any demand for any payment under this Agreement, notice of any action at any time taken or omitted by Administrative Agent or Lenders under or in respect of any of the Obligations, any requirement of diligence or to mitigate damages and, generally, to the extent permitted by applicable law, all demands, notices and other formalities of every kind in connection with this Agreement (except as otherwise provided in this Agreement). Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by Administrative Agent or Lenders at any time or times in respect of any default by any Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by Administrative Agent or Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations or the addition, substitution or release, in whole or in part, of any Borrower. Without limiting the generality of the foregoing, each Borrower assents to any other action or delay in acting or failure to act on the part of any Administrative Agent or Lender with respect to the failure by any Borrower to comply with any of its respective Obligations, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, 

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which might, but for the provisions of this Section 2.15 afford grounds for terminating, discharging or relieving any Borrower, in whole or in part, from any of its Obligations under this Section 2.15, it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of each Borrower under this Section 2.15 shall not be discharged except by performance and then only to the extent of such performance. The Obligations of each Borrower under this Section 2.15 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any other Borrower or any Administrative Agent or Lender.
(f)    Each Borrower represents and warrants to Administrative Agent and Lenders that such Borrower is currently informed of the financial condition of Borrowers and of all other circumstances that a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Borrower further represents and warrants to Administrative Agent and Lenders that such Borrower has read and understands the terms and conditions of the Loan Documents. Each Borrower hereby covenants that such Borrower will continue to keep informed of Borrowers’ financial condition and of all other circumstances that bear upon the risk of nonpayment or nonperformance of the Obligations.
(g)    The provisions of this Section 2.15 are made for the benefit of Administrative Agent, each member of the Lender Group, each Bank Product Provider, and their respective successors and assigns, and may be enforced by it or them from time to time against any or all Borrowers as often as occasion therefor may arise and without requirement on the part of Administrative Agent, any member of the Lender Group, any Bank Product Provider, or any of their successors or assigns first to marshal any of its or their claims or to exercise any of its or their rights against any Borrower or to exhaust any remedies available to it or them against any Borrower or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 2.15 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied. If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by Administrative Agent or any Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the provisions of this Section 2.15 will forthwith be reinstated in effect, as though such payment had not been made.
(h)    Each Borrower hereby agrees that it will not enforce any of its rights of contribution or subrogation against any other Borrower with respect to any liability incurred by it hereunder or under any of the other Loan Documents, any payments made by it to Administrative Agent or Lenders with respect to any of the Obligations or any collateral security therefor until such time as all of the Obligations have been paid in full in cash. Any claim which any Borrower may have against any other Borrower with respect to any payments to any Administrative Agent or any member of the Lender Group hereunder or under any of the Bank Product Agreements are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before 

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any payment or distribution of any character, whether in cash, securities or other property, shall be made to any other Borrower therefor.
(i)    Each Borrower hereby agrees that after the occurrence and during the continuance of any Default or Event of Default, such Borrower will not demand, sue for or otherwise attempt to collect any indebtedness of any other Borrower owing to such Borrower until the Obligations shall have been paid in full in cash. If, notwithstanding the foregoing sentence, such Borrower shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by such Borrower as trustee for Administrative Agent, and such Borrower shall deliver any such amounts to Administrative Agent for application to the Obligations in accordance with Section 2.4(b).
3.    CONDITIONS; TERM OF AGREEMENT    .
3.1    Conditions Precedent to Closing Date    . The obligations of the Lenders to make Loans and of each Issuing Bank to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 14.1):
(a)    Credit Agreement and Other Loan Documents. Administrative Agent (or its counsel) shall have received (b) from each party hereto either (A) a counterpart of this Agreement signed on behalf of such party or (A) written evidence satisfactory to Administrative Agent (which may include facsimile or other electronic transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement, (c) either (A) a counterpart of each other Loan Document signed on behalf of each party thereto or (A) written evidence satisfactory to Administrative Agent (which may include facsimile or other electronic transmission of a signed signature page thereof) that each such party has signed a counterpart of such Loan Document, (d) a completed Perfection Certificate for Anixter and its applicable Subsidiaries, and (e) such other certificates, documents, instruments and agreements as Administrative Agent shall reasonably request in connection with the transactions contemplated by this Agreement and the other Loan Documents, including any promissory notes requested by a Lender pursuant to Section 2.5(b) payable to the order of each such requesting Lender and a written opinion of the Loan Parties’ counsel, addressed to Administrative Agent, each Issuing Bank, and the Lenders, all in form and substance satisfactory to Administrative Agent and its counsel.
(f)    Financial Statements and Projections.[Reserved].
(i)    The Lenders shall have received a pro forma consolidated balance sheet, income statement and cash flow statement (“Pro Forma Opening Statements”) giving effect to the HD Supply Acquisition, together with such information as the Lenders may reasonably request to confirm the tax, legal, and business assumptions made in such Pro Forma Opening Statements.
(ii)    The Lenders shall have received  unaudited interim consolidated financial statements of Anixter for each fiscal quarter ended subsequent to March 31, 2015, and such financial statements shall not, in the reasonable judgment of Administrative Agent, reflect any material adverse change in the consolidated financial condition of Anixter, as reflected in the audited, consolidated financial statements of the last 

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fiscal year of Anixter, and  satisfactory projections beginning July 1, 2015, and ending December 31, 2016, on a quarterly basis.
(g)    Officer Certificates; Certified Certificate of Incorporation; Good Standing Certificates. Administrative Agent shall have received (h) a certificate of each Loan Party, dated the Closing Date and executed by its secretary, assistant secretary, or other similar officer, which shall (A) certify the resolutions of its Board of Directors, members or other body authorizing the execution, delivery and performance of the Loan Documents to which it is a party, (A) identify by name and title and bear the signatures of the officers of such Loan Party authorized to sign the Loan Documents to which it is a party and, in the case of the Anixter and each other Borrower, its Financial Officers, and (A) contain appropriate attachments, including the certificate or articles of incorporation or organization of such Loan Party certified by the relevant authority of the jurisdiction of organization of such Loan Party and a true and correct copy of its by-laws or operating, management or partnership agreement, or other organizational or governing documents, and (i) a good standing certificate for each Loan Party from its jurisdiction of organization or the substantive equivalent available in the jurisdiction of organization for such Loan Party from the appropriate governmental officer in such jurisdiction.
(j)    Closing Certificate. Administrative Agent shall have received a certificate, signed by a Financial Officer of Anixter, dated as of the Closing Date stating that upon giving effect to the initial extension of credit under this Agreement (k) no Default has occurred and is continuing, (l) each of the Specified Representations are true and correct as of such date, and (m) certifying that each of the conditions set forth this Section 3.1 have been (or substantially simultaneously with the closing of the Transactions, will be) satisfied.
(n)    Fees. The Lenders and Administrative Agent shall have received all fees required to be paid, and all expenses for which invoices have been presented (including the reasonable fees and expenses of legal counsel), on or before the Closing Date. All such amounts will be paid with proceeds of Loans made on the Closing Date and will be reflected in the funding instructions given by the Borrowers to Administrative Agent on or before the Closing Date.
(o)    Lien Searches. Administrative Agent shall have received the results of a recent lien search in the jurisdiction where each Loan Party is organized and such search shall reveal no Liens on any of the assets of any Loan Party or any assets being transferred to any Loan Party except for Liens permitted by Section 6.2 and under the Receivables Facility Transaction Documents, as applicable, or discharged on or prior to the Closing Date pursuant to a pay-off letter or other documentation satisfactory to Administrative Agent.
(p)    Pay-Off Letter. Administrative Agent shall have received satisfactory pay-off letters for all existing Indebtedness (including Indebtedness (q) under a Second Amendment and Incremental Facility Agreement, dated as of August 27, 2014, by and among Anixter, certain subsidiaries of Anixter, the guarantors party thereto, and Wells Fargo, as administrative agent, and (r) under the 2011 Receivables Purchase Agreement to be repaid from the proceeds of the initial Loans, confirming that all Liens upon any of the property of the Loan Parties constituting Collateral will be terminated concurrently with such payment and all letters of credit issued or guaranteed as part of such Indebtedness shall have been cash collateralized or supported by a Letter of Credit.
(s)    [Reserved].

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(t)    [Reserved].
(u)    Solvency. Administrative Agent shall have received a solvency certificate signed by a Financial Officer of Anixter dated the Closing Date.
(v)    Borrowing Base Certificate. Administrative Agent shall have received a Borrowing Base Certificate which calculates the Borrowing Base (on a pro forma basis after giving effect to the HD Supply Acquisition) as of the end of the Fiscal Month immediately preceding the Closing Date and includes customary supporting documentation and supplemental reporting satisfactory to Administrative Agent.
(w)    Closing Combined Availability. After giving effect to all Borrowings to be made on the Closing Date, the issuance of any Letters of Credit on the Closing Date, and the payment of all fees and expenses due hereunder, and with all of the Loan Parties’ indebtedness, liabilities, and obligations current, Combined Availability shall not be less than $250,000,000.
(x)    Filings, Registrations and Recordings. Each document (including any Uniform Commercial Code financing statement) required by the Collateral Documents or under law or reasonably requested by Administrative Agent to be filed, registered or recorded in order to create in favor of Administrative Agent, for the benefit of itself and the Lenders, a perfected Lien on the Collateral described therein, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 6.2), shall be in proper form for filing, registration or recordation; provided that notwithstanding the foregoing, to the extent any Collateral is not provided on the Closing Date after the Loan Parties’ use of commercially reasonable efforts to do so (other than (y) the filing of UCC financing statements, (z) the filing of intellectual property security agreements for intellectual property that is registered as of the Closing Date, and (aa) the delivery of stock certificates), the providing of such Collateral shall not be required as a condition to the closing hereunder.
(bb)    HD Supply Acquisition. Administrative Agent shall be satisfied with the HD Supply Acquisition Documents (it being acknowledged that Administrative Agent is satisfied with the HD Supply Purchase Documents provided on or prior to July 22, 2015) and shall have received a true, correct and complete copy of the same. None of the Targets nor the HD Supply Sellers have  announced that it will oppose the HD Supply Acquisition or  commenced any action which alleges that the HD Supply Acquisition will violate applicable law. No injunction or temporary restraining order shall exist which, in the judgment of the applicable Administrative Agent, would prohibit the making of the Loans or the consummation of the HD Supply Acquisition. Administrative Agent shall have received evidence that each of the items described in Section 2.8 of the HD Supply Acquisition Agreement will be delivered, each of the conditions precedent set forth in Sections 7.1 and 7.2 of the HD Supply Acquisition Agreement will be satisfied (or, with the written approval of Administrative Agent, waived) and the HD Supply Acquisition will be consummated, in each case, substantially simultaneously with the closing of the Transactions contemplated hereunder and no other provision of the HD Supply Acquisition Documents shall have been waived, amended, supplemented, or otherwise modified in any material and adverse respect without approval of Administrative Agent.[Reserved].
(cc)    Receivables Facility. Administrative Agent shall have received evidence that the Receivables Facility has closed (or will be closing substantially concurrently with the closing hereunder) on terms and conditions reasonably satisfactory to Administrative Agent.

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(dd)    Issuance of Senior Notes. Anixter shall have issued up to $500,000,000 of new senior unsecured notes for the purpose of financing a portion of the purchase price of the HD Supply Acquisition, on terms and conditions reasonably satisfactory to Administrative Agent.[Reserved].
(ee)    Insurance. Administrative Agent shall have received evidence of insurance coverage in form, scope, and substance reasonably satisfactory to Administrative Agent and otherwise in compliance with the terms of Section 5.10.
(ff)    Compliance with Regulations. This Agreement and the other Loan Documents shall not violate applicable requirements of Regulations T, U, and X.
(gg)    Letter of Credit Application. If a Letter of Credit (other than the Existing Letters of Credit) is requested to be issued on the Closing Date, Administrative Agent shall have received a properly completed letter of credit application (whether standalone or pursuant to a master agreement, as applicable).
(hh)    Field Examination; Inventory Appraisal. [Reserved]. 
(i)    Administrative Agent or its designee shall have conducted a field examination of the accounts receivable and related working capital matters and financial information of the Targets and of the related data-processing and other systems, the results of which shall be satisfactory to Administrative Agent in its sole discretion.
(ii)    Administrative Agent shall have received an appraisal of the Net Recovery Percentage applicable to Borrower’s and its Subsidiaries’ (other than Targets’) Inventory, the results of which shall be satisfactory to Administrative Agent in its sole discretion.
(ii)    Legal Due Diligence. Administrative Agent and its counsel shall have completed all legal due diligence, the results of which shall be satisfactory to Administrative Agent in its sole discretion.
(jj)    Patriot Act, etc. Administrative Agent and the Lenders shall have received all documentation and other information as is reasonably requested by Administrative Agent as least five (5) business days before the Closing Date under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act, for each Loan Party.
(kk)    Anixter Canada Loan. Anixter Canada shall have borrowed (or will be borrowing substantially concurrently with the closing hereunder) a term loan in an original principal amount of up to CAD 300,000,000 for the purpose of financing a portion of the purchase price of the HD Supply Acquisition, on terms and conditions reasonably satisfactory to Administrative Agent.[Reserved]. 
(ll)    AXE. Administrative Agent shall have received all documentation and information as is reasonably requested at least five (5) Business Days before the Closing Date about AXE, its Subsidiaries, and each Target mutually agreed to be required by U.S. regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act.[Reserved].
(mm)    Receivables Facility Transaction Documents. Administrative Agent shall have received a true, correct and complete copy of the Receivables Facility Transaction Documents, each in form and substance reasonably satisfactory to Administrative Agent.

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(nn)    Termination of Existing Receivables Arrangements. Administrative Agent shall have received satisfactory evidence of the termination of each existing arrangement under which Accounts of any Originator have been or are transferred to any entity (including any affiliate of Anixter) other than ARC (including the 2011 Receivables Purchase Agreement); and release or transfer, as applicable, of all liens, if any, granted under each such existing arrangement; and return transfer to ARC by each such ultimate transferee and any intermediate transferee under any such existing arrangement of all accounts receivable of Anixter or such Originator transferred to such transferee thereunder.
(oo)    Other Debt Instruments. The material debt instruments and governing documents of the Loan Parties after the HD Supply Acquisition shall be reasonably acceptable to Administrative Agent.[Reserved]. 
(pp)    Other Events. There has not occurred any event, development, or circumstances that has had or could reasonably be expected to have a material adverse effect on the business, operations, property, or condition (financial or otherwise) of any Borrower or Anixter and its Subsidiaries, taken as a whole.
(qq)    No Material Adverse Effect. Since February 1, 2015, no “Material Adverse Effect” under and as defined in the HD Supply Acquisition Agreement has occurred.[Reserved].
(rr)    Other Documents. Administrative Agent shall have received such other documents as Administrative Agent, any Issuing Bank, any Lender, or their respective counsel may have reasonably requested.
3.2    Conditions Precedent to all Extensions of Credit    . The obligation of the Lender Group (or any member thereof) to make any Revolving Loans hereunder (or to extend any other credit hereunder) at any time shall be subject to the following conditions precedent:
(a)     as of the Closing Date, each of the HD Supply Acquisition Agreement Representations and the Specified Representations shall be true, correct, and complete, in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof); and  at and as of the date of each extension of credit made after the Closing Date, each of the representations and warranties of each Borrower or its Subsidiaries contained in this Agreement or in the other Loan Documents shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date);
(b)     as of the Closing Date, no Default or Event of Default (other than an Event of Default described in clause (c) of Section 8 (or a related Default) not in respect of the Specified Representations or the “Specified Representations” under and as defined in the Receivables Facility Credit Agreement) shall have occurred and be continuing, nor shall either result from the making of any extension of credit to be made on the Closing Date; and  at and as of the date of each extension of credit made after 

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the Closing Date, no Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof; and
(c)    Administrative Agent shall have received (including, without limitation or duplication, pursuant to Section 5.1(f)) a Borrowing Base Certificate which calculates the Borrowing Base as of the end of the Fiscal Month most recently ended before the requested Funding Date (or, if an Enhanced Reporting Trigger Period is then in effect, as of the end of the week most recently ended before the requested Funding Date).
3.3    Maturity    . This Agreement shall continue in full force and effect for a term ending on the Maturity Date.
3.4    Effect of Maturity    . On the Maturity Date, all commitments of the Lender Group to provide additional credit hereunder shall automatically be terminated and all of the Obligations immediately shall become due and payable without notice or demand and Borrowers shall be required to repay all of the Obligations in full. No termination of the obligations of the Lender Group (other than payment in full of the Obligations and termination of the Commitments) shall relieve or discharge any Loan Party of its duties, obligations, or covenants hereunder or under any other Loan Document and Administrative Agent’s Liens in the Collateral shall continue to secure the Obligations and shall remain in effect until all Obligations have been paid in full and the Commitments have been terminated. When all of the Obligations have been paid in full and the Lender Group’s obligations to provide additional credit under the Loan Documents have been terminated irrevocably, Administrative Agent will, at Borrowers’ sole expense, execute and deliver any termination statements, lien releases, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary to release, as of record, Administrative Agent’s Liens and all notices of security interests and liens previously filed by Administrative Agent.
3.5    Early Termination by Borrowers    . Borrowers have the option, at any time upon 10 Business Days prior written notice to Administrative Agent, to terminate this Agreement and terminate the Commitments hereunder by repaying to Administrative Agent all of the Obligations in full. The foregoing notwithstanding, (a) Borrowers may rescind termination notices relative to proposed payments in full of the Obligations with the proceeds of third-party Indebtedness if the closing for such issuance or incurrence does not happen on or before the date of the proposed termination (in which case, a new notice shall be required to be sent in connection with any subsequent termination), and (b) Borrowers may extend the date of termination at any time with the consent of Administrative Agent (which consent shall not be unreasonably withheld or delayed).
4.    REPRESENTATIONS AND WARRANTIES    .
In order to induce the Lender Group to enter into this Agreement, each Borrower makes the following representations and warranties to the Lender Group which shall be true, correct, and complete, in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), as of the Closing Date, and shall be true, correct, and complete, in all material respects (except that such materiality qualifier shall not be 

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applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), as of the Amendment No. 3 Effective Date and as of the date of the making of each Revolving Loan (or other extension of credit) made thereafter, as though made on and as of the date of such Revolving Loan (or other extension of credit) (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement:
4.1    Organization; Powers    . Each of AXE, Anixter, and the Subsidiaries of Anixter is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization; has all requisite power and authority to own, operate, and encumber its property and assets to carry on its business as now conducted and proposed to be conducted in connection with and following the consummation of the Related Transactions; and, except where the failure to do so, individually or in the aggregate, has not resulted in and could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business, and is in good standing, in every jurisdiction where it owns or leases real property or where such qualification is required.
4.2    Authorization; Enforceability    . Each of AXE, Anixter, and the Subsidiaries of Anixter party to any of the Related Transactions Documents has the requisite organizational power and authority to execute, deliver, and perform its obligations under each of the Related Transactions Documents executed by it or to be executed by it. The execution, delivery, and performance (or filing or recording, as the case may be) by AXE, Anixter, and each Subsidiary of Anixter of each Related Transactions Document to which such Person is a party and the consummation of the transactions contemplated thereby have been duly authorized by all necessary organizational actions and no other organizational proceedings on the part of any such Person are necessary to consummate the such transactions. Each Related Transactions Document to which AXE, Anixter, or a Subsidiary of Anixter is a party has been duly executed and delivered by such Person and constitutes a legal, valid, and binding obligation of such Person, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
4.3    Governmental Approvals; No Conflicts    . The execution, delivery, and performance by each of AXE, Anixter, and each Subsidiary of Anixter of each Related Transactions Document to which it is party and each of the transactions contemplated thereby, do not and will not (a) except for any filings to perfect the security interests granted pursuant to the Loan Documents, require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (a) conflict with or violate such Person’s Organization Documents, (a) except as set forth on Schedule 4.3, conflict with, result in a breach of, or constitute (with or without notice or lapse of time or both) a default under any Requirement of Law or Contractual Obligation of any such Person, or require termination of any Contractual Obligation of any such Person, in each case, which could reasonably be expected to have a Material Adverse Effect, (a) conflict with any Contractual Obligation of any such Person, any liability resulting from which has resulted in or could be reasonably expected to result 

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in a Material Adverse Effect, (a) result in or require the creation or imposition of any Lien on any asset of any such Person, except Liens permitted by Section 6.2, or (a) require any approval of stockholders of any such Person, unless such approval has been obtained.
4.4    Financial Condition; No Material Adverse Change    .
(a)    As of the Closing Date, all quarterly and annual financial statements of Anixter or of Anixter and any of its Subsidiaries delivered to Administrative Agent and the Lenders were prepared in conformity with GAAP (except as otherwise noted therein) and fairly present in all material respects the financial position of Anixter or the consolidated financial position of Anixter and such Subsidiaries, as the case may be, as at the respective dates thereof and the results of operations and changes in cash flows for each of the periods covered thereby, subject, in the case of any unaudited interim financial statements, to changes resulting from audit and normal year-end adjustments.
(b)    All quarterly and annual financial statements of Anixter or of Anixter and any of its Subsidiaries delivered to Administrative Agent on or prior to the date this representation is made or deemed made were prepared in conformity with GAAP (except as otherwise noted therein) and fairly present in all material respects the financial position of Anixter or the consolidated financial position of Anixter and such Subsidiaries, as the case may be, as at the respective dates thereof and the results of operations and changes in cash flows for each of the periods covered thereby, subject, in the case of any unaudited interim financial statements, to changes resulting from audit and normal year-end adjustments.
(c)    With respect to each of AXE, Anixter, and Anixter and its Subsidiaries taken as a whole, no event has occurred since the Friday closest to December 31, 2014,2017, that has resulted in or could reasonably be expected to result in a Material Adverse Effect.
4.5    Properties    .
(a)    As of the date of this Agreement, Schedule 4.5 sets forth the address of each parcel of real property that is owned or leased by Anixter or any of its Subsidiaries and that (b) is a chief executive office of such Person, (c) maintains such Person’s books and records, and/or (d) maintains Inventory with a value of $5,000,000 or greater at any time. Each of such leases and subleases is valid and enforceable in accordance with its terms and is in full force and effect, and no default by any party to any such lease or sublease exists which could reasonably be expected to have a Material Adverse Effect. Each of AXE, Anixter, and each Subsidiary of Anixter has good title to all of its personal property, except for imperfections of title (including Liens to the extent permitted by Section 6.2) which in the aggregate could not reasonably be expected to have a Material Adverse Effect. All such assets are free and clear of all Liens, except as otherwise specifically permitted by the terms and provisions of this Agreement and the other Loan Documents. Substantially all of the assets and properties owned by, leased to, or used by Anixter or any Domestic Subsidiary of Anixter are in good repair, working order and condition, excepting ordinary wear and tear and are free and clear of any known defects except such defects as do not substantially interfere with the continued use thereof in the conduct of normal operations.
(e)    Anixter and each other Loan Party owns, is licensed to use, or otherwise has the lawful right to use or has all permits and other approvals of Governmental Authorities, all trademarks, tradenames, copyrights, patents and other intellectual property necessary to its business as currently conducted and proposed to be conducted in connection with and following the consummation of the Related Transactions which are material to its financial condition, business, operations, assets and prospects, 

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individually or taken as a whole. A correct and complete list of all trademarks, tradenames, copyrights, and patents owned by Anixter or any other Loan Party referred to in the preceding sentence, as of the date of this Agreement, is set forth on Schedule 4.5. The use of such intellectual property by Anixter and its Subsidiaries does not infringe in any material respect upon the rights of any other Person, subject to such claims and infringements the existence of which do not have or could not reasonably be expected to have a Material Adverse Effect.
4.6    Litigation and Environmental Matters    .
(a)    There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of any Loan Party, threatened in writing against or affecting any of AXE, Anixter, or any Subsidiary (b) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (c) that challenges the enforceability of any of the Related Transactions Documents.
(d)    None of AXE, Anixter, and the Subsidiaries of Anixter are subject to or in default with respect to any final judgment, writ, injunction, decree, order, rule or regulation of any court or Governmental Authority which has had or could reasonably be expected to have a Material Adverse Effect.
(e)    Except for the Disclosed Matters and except as could not reasonably be expected to have a Material Adverse Effect, (f) each of the operations of AXE, Anixter, and the Subsidiaries of Anixter comply with all applicable Environmental Laws and all Requirements of Law (relating to health and safety matters); (g) each of AXE, Anixter, and the Subsidiaries of Anixter has obtained all Permits (as such term is used in the definition of “Environmental Laws”) necessary for its operations, all such Permits are in good standing and AXE, Anixter and the Subsidiaries of Anixter are in compliance with all terms and conditions of such Permits; and (i)(A) neither AXE, Anixter, nor any Subsidiary of Anixter, nor any of their present Property or operations and (A) to the knowledge of Anixter, none of AXE’s, Anixter’s, or any Subsidiary’s previously owned Property or past operations is subject to any Remedial Action or other liabilities and costs arising from the Release or threatened Release of a Hazardous Material into the environment.
4.7    Compliance with Laws and Agreements; No Default    . Except where the failure to do so, individually or in the aggregate, has not resulted in and could not reasonably be expected to result in a Material Adverse Effect, each of AXE, Anixter, and the Subsidiaries of Anixter is in compliance with (i) all Requirements of Law applicable to it or its business and (i) all indentures, agreements, and other instruments binding upon it or its property. No Default or Event of Default has occurred and is continuing.
4.8    Investment Company Status    . No Loan Party or any Subsidiary is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.
4.9    Taxes    . Each of AXE, Anixter, and the Subsidiaries of Anixter has timely filed or caused to be filed all U.S. federal income and other material Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which such Person has set aside on its books adequate reserves with respect thereto in accordance with GAAP, (a) Taxes which are not yet delinquent, (a) Taxes which are payable in installments so long as paid before any penalty accrues with respect thereto, and (a) Taxes which do not exceed $500,000 in the aggregate. Except as set forth in clauses (a) through (d) 

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above, no such Person has any knowledge of any proposed tax assessment against Anixter or any of Anixter’s Subsidiaries which could reasonably be expected to result in a Material Adverse Effect. No tax liens have been filed and no claims are being asserted with respect to any such taxes except for Taxes not exceeding $500,000 in the aggregate.
4.10    ERISA    . No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. As of each date that this representation is made or deemed made, the present value of all “accumulated projected benefit obligations” (as determined for purposes of AXE’s Form 10-K) of all underfunded Pension Plans (based on the assumptions used by the Plans to determine benefit obligations on an ongoing basis) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $75,000,000 the fair market value of the assets of all such underfunded Plans.
4.11    Disclosure    . Subject to changes in facts or conditions which are required or permitted under this Agreement, none of the reports, financial statements, certificates or other information furnished by or on behalf of any of AXE, Anixter, and the Subsidiaries of Anixter to Administrative Agent or any Lender in connection with the negotiation of this Agreement or any other Loan Document (as modified or supplemented by other information so furnished), taken as a whole, 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.
4.12    Performance    . None of AXE, Anixter, and the Subsidiaries of Anixter is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Contractual Obligation applicable to it the effect of which could reasonably be expected to result in a Material Adverse Effect, and no condition exists which, with the giving of notice or the lapse of time or both, would constitute a default under any such Contractual Obligation, except where the consequences, direct or indirect, of such default or defaults, if any, have not resulted in and could not reasonably be expected to result in a Material Adverse Effect.
4.13    Solvency    . Anixter and its Subsidiaries are Solvent after giving effect to the transactions contemplated by this Agreement and the other Related Transactions Documents.
4.14    Insurance    . Schedule 4.14 sets forth a description of all insurance maintained by or on behalf of Anixter and its Subsidiaries as of the Closing Datedate of this Agreement. As of the Closing Datedate of this Agreement, all premiums in respect of such insurance have been paid. Anixter maintains, and has caused each Subsidiary to maintain, with financially sound and reputable insurance companies, insurance on all their real and personal property in such amounts, subject to such deductibles and self-insurance retentions and covering such properties and risks as are adequate and customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations.
4.15    Capitalization and Subsidiaries; Joint Venture; Partnership    .
(a)    As of the Closing Datedate of this Agreement, Schedule 4.15 sets forth (b) a correct and complete list of the name each Subsidiary of Anixter, (c) a true and complete listing of each class of 

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each of such Person’s authorized Equity Interests, all of which issued Equity Interests are owned beneficially and of record by the Persons identified on Schedule 4.15, and (d) the type of entity of each such Person. All of the issued and outstanding Equity Interests of each such Subsidiary have been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and issued and are fully paid and non-assessable. There are no outstanding commitments or other obligations of Anixter or any such Subsidiary to issue, and no options, warrants or other rights of any Person to acquire, any shares of any class of capital stock or other equity interests of Anixter or any such Subsidiary.
(e)    Anixter has no Subsidiaries other than those described in Schedule 4.15 and those, if any, which are permitted by Section 6.4(a) to be created after the Closing Date.
(f)    Except as set forth in Schedule 4.15 or as otherwise permitted in this Agreement, none of AXE, Anixter, and the Subsidiaries of Anixter is engaged in any material partnership or material joint venture with any other Person.
4.16    Security Interest in Collateral    . The provisions of this Agreement and the other Loan Documents create legal and valid Liens on all of the Collateral in favor of Administrative Agent, for the benefit of each member of the Lender Group and each of the Bank Product Providers, and such Liens constitute perfected and continuing Liens on the Collateral, securing the Obligations, enforceable against the applicable Loan Party and all third parties, and having priority over all other Liens on the Collateral except in the case of (a) Permitted Encumbrances and Liens permitted by Section 6.2(c), Section 6.2(d), Section 6.2(e), Section 6.2(f), and Section 6.2(j), to the extent any such Permitted Encumbrances or any such Liens would have priority over Administrative Agent’s Liens pursuant to any applicable law, and (a) Liens perfected only by possession (including possession of any certificate of title), to the extent Administrative Agent has not obtained or does not maintain possession of such Collateral.
4.17    [Reserved]    .
4.18    Federal Reserve Regulations    . No part of the proceeds of any Loan or Letter of Credit has been used or will be used, whether directly or indirectly, for any purpose that entails a violation of Regulation T, U, or X.
4.19    Use of Proceeds    . The proceeds of the Loans have been used and will be used, whether directly or indirectly as set forth in Section 5.8.
4.20    [Reserved]    .
4.21    Restricted Payments to AXE    . On or after the Closing Date, none of Anixter and its Subsidiaries has directly or indirectly declared, ordered, paid or made or set apart any sum or property for any payment, distribution, or contribution to or investment in AXE (whether in cash or otherwise) or agreed to do so, except to the extent permitted pursuant to Section 6.8(a).
4.22    Anti-Corruption Laws and SanctionsOFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws    . Each of AXE, Anixter, and the Subsidiaries of Anixter has implemented and maintains in effect policies and procedures designed to ensure compliance by such Person, its Subsidiaries, and their respective directors, officers, employees and agents with Anti-Corruption Laws and 

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applicable Sanctions, and such Person, its Subsidiaries, and their respective officers and employees and, to the knowledge of such Person, its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects and are not knowingly engaged in any activity that would reasonably be expected to result in any of AXE, Anixter, and the Subsidiaries of Anixter being designated as a Sanctioned Person . None of  AXE, Anixter, and the Subsidiaries of Anixter or, to the knowledge of any such Person, any of their respective directors, officers or employees, or  to the knowledge of any such Person, any agent of such Person that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Borrowing or Letter of Credit, use of proceeds, Transaction, or other transaction contemplated by this Agreement or the other Loan Documents will violate Anti-Corruption Laws or applicable Sanctions.No Loan Party or any of its Subsidiaries is in violation of any Sanctions.  No Loan Party nor any of its Subsidiaries nor, to the knowledge of such Loan Party, any director, officer, employee, agent or Affiliate of such Loan Party or such Subsidiary (a) is a Sanctioned Person or a Sanctioned Entity, (b) has any assets located in Sanctioned Entities, or (c) derives revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities.  Each of the Loan Parties and its Subsidiaries has implemented and maintains in effect policies and procedures designed to ensure compliance with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.  Each of the Loan Parties and its Subsidiaries, and to the knowledge of each such Loan Party, each director, officer, employee, agent and Affiliate of each such Loan Party and each such Subsidiary, is in compliance with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.  No proceeds of any Loan made or Letter of Credit issued hereunder will be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity, or otherwise used in any manner that would result in a violation of any Sanction, Anti-Corruption Law or Anti-Money Laundering Law by any Person (including any Lender, Bank Product Provider, or other individual or entity participating in any transaction).
4.23    HD Supply Acquisition    .EEA Financial Institutions. No Loan Party is an EEA Financial Institution.
(a)    Anixter has delivered to Administrative Agent a complete and correct copy of the HD Supply Acquisition Documents, including all schedules and exhibits thereto. The execution, delivery and performance of each HD Supply Acquisition Document has been duly authorized by all necessary action on the part of Anixter and each Subsidiary of Anixter that is a party thereto. Each HD Supply Acquisition Document is the legal, valid and binding obligation of Anixter or each Subsidiary of Anixter who is a party thereto, enforceable against each such Person in accordance with its terms, in each case, except  as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors' rights and  the availability of the remedy of specific performance or injunctive or other equitable relief is subject to the discretion of the court before which any proceeding therefor may be brought. As of the Closing Date, all representations and warranties made by of Anixter and its Subsidiaries in the HD Supply Acquisition Documents and in the certificates delivered in connection therewith are true and correct in all material respects.
(b)    As of the Closing Date, after giving effect to the transactions contemplated by the HD Supply Acquisition Documents, one or more of Anixter and its Subsidiaries will have good title to the Equity Interests and assets acquired pursuant to the HD Supply Acquisition Agreement, free and clear of all Liens other than Permitted Encumbrances and Liens permitted by Section 6.2(f) and Section 6.2(i).

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4.24    Indebtedness    . Set forth on Schedule 6.1 is a true and complete list of all Indebtedness of each Loan Party and each of its Subsidiaries outstanding immediately as of October 5, 2015, that is to remain outstanding after giving effect to the closing hereunder on the Closing Date and such schedule accurately sets forth the aggregate principal amount of such Indebtedness as of the Closing Date.
4.25    Eligible Inventory    . As to each item of Inventory that is identified by Borrowers as Eligible Inventory in a Borrowing Base Certificate submitted to Administrative Agent, such Inventory is (i) of good and merchantable quality, free from known defects, and (i) not excluded as ineligible by virtue of one or more of the excluding criteria (other than any Administrative Agent‐discretionary criteria) set forth in the definition of “Eligible Inventory.”
4.26    Location of Inventory    . The Inventory of Borrowers and their Subsidiaries is not stored with a bailee, warehouseman, or similar party and is located only at, or in-transit between, the locations identified on Schedule 5.15 (as such schedule may be updated pursuant to Section 5.15).
4.27    Inventory Records    . Each Loan Party keeps correct and accurate records itemizing and describing the type, quality, and quantity of its and its Subsidiaries’ Inventory and the book value thereof.
4.28    Swap Agreements    . On each date that any Swap Agreement is executed by any Swap Provider, each Borrower and each other Loan Party satisfy all eligibility, suitability, and other requirements under the Commodity Exchange Act (7 U.S.C. § 1, et seq., as in effect from time to time) and the Commodity Futures Trading Commission regulations.
5.    AFFIRMATIVE COVENANTS    .
Each Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations:
5.1    Financial Statements; Borrowing Base; Other Information    . Anixter or the Borrowers, as applicable, will furnish (or will caused to be furnished) to Administrative Agent:
(a)    within ninety (90) days after the end of each Fiscal Year, on a consolidated basis for AXE, a balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all reported on by Ernst & Young LLP or other firm of independent public accountants of recognized national standing regularly retained by AXE and reasonably acceptable to Administrative Agent (without a “going concern” or like qualification, commentary, or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of AXE on a consolidated basis in accordance with GAAP consistently applied;
(b)    within forty-five (45) days after the end of each Fiscal Quarter (other than the last Fiscal Quarter of a Fiscal Year, which shall be delivered within sixty (60) days after the end of such Fiscal Quarter), on a consolidated basis for AXE, a balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such Fiscal Quarter and the then elapsed portion of such Fiscal Year, setting forth in each case in comparative form the figures for the corresponding period or periods of 

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(or, in the case of the balance sheet, as of the end of) the previous Fiscal Year, all certified by a Financial Officer of AXE as presenting fairly in all material respects the financial condition and results of operations of AXE on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;     
(c)    concurrently with any delivery of a Borrowing Base Certificate under clause (f) below or financial statements under clause (a) or (b) above, a certificate of a Financial Officer of AXE in substantially the form of Exhibit D‐1 (i) certifying, in the case of the financial statements delivered under clause (b), as presenting fairly in all material respects the financial condition and results of operations of AXE on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes, (i) certifying as to whether a Default or an Event of Default has occurred and, if a Default or an Event of Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (i) setting forth, in the case of each such certificate delivered concurrently with the delivery of financial statements under clauses (a) and (b) above, reasonably detailed calculations of the financial covenants contained in this Agreement for or as of the end of each Fiscal Quarter then ended (regardless of whether a Financial Covenant Trigger Period is then in effect), and (i) at any time that any Indebtedness under the 2012 Notes Indenture remains outstanding, setting forth, in the case of each such certificate delivered concurrently with the delivery of financial statements under clauses (a) and (b) above (and in the case of each such certificate delivered concurrently with the delivery of a Borrowing Base Certificate under clause (f) below after the end of any Fiscal Month in which Availability was less than 50% of the aggregate Revolver Commitments), a reasonably detailed calculation of the Secured Debt-to-CTNA Ratio;
(d)    as soon as available but in any event within forty‐five (45) days after the end of each Fiscal Year and at such other times as may be reasonably requested by Administrative Agent, a Perfection Certificate or a supplement to the Perfection Certificate;[reserved];
(e)    as soon as available but in any event no later than ninety (90) days after the end of each Fiscal Year, for AXE on a consolidated basis, a copy of the plan and forecast (including a projected balance sheet, income statement and cash flow statement) of AXE and its Subsidiaries, taken as a whole, for the upcoming period of four Fiscal Quarters (the “Projections”), all in form customarily prepared by Anixter’s management and reasonably satisfactory to Administrative Agent, to be accompanied by a certificate of a Financial Officer of Anixter to the effect that such Projections have been prepared on a basis believe by Anixter to be reasonable, which Projections shall include projected Availability, projected Combined Availability, and, at any time that any Indebtedness under the 2012 Notes Indenture remains outstanding, projected Senior Debt-to-CTNA Ratio for or as of the end of each of the four Fiscal Quarters covered by such Projections;
(f)    as soon as available (but in any event (A) within thirty (30) days after the end of each Fiscal Quarter, (B) within thirty (30) days after the end of each Fiscal Month in which any Revolving Loans were outstanding or a Borrowing occurred, and (C) during an Enhanced Reporting Trigger Period, weekly, no later than the second Business Day of each week for the prior week), in connection with each request for a Borrowing (without limitation or duplication of any other delivery requirement under this Section 5.1(f)) further to the condition set forth in Section 3.2(c), and at such other times as may be necessary to re-determine Availability and/or Combined Availability or as may be reasonably requested by Administrative Agent, as of the period then ended, a Borrowing Base Certificate and supporting information in connection therewith (including (g) at any time that any Indebtedness under the 2012 Notes Indenture 

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remains outstanding, a calculation of the Secured Debt Indenture Cap Amount as of the end of the applicable period then ended, and (h) in respect of any Borrowing Base Certificate delivered for a Fiscal Quarter, a calculation of Average Quarterly Combined Availability for such quarter then ended and an indication of what the Applicable Rate is as a result of such Average Quarterly Combined Availability), together with any additional reports with respect to the Borrowing Base as Administrative Agent may reasonably request;
(i)    as soon as available (but in any event (A) within thirty (30) days after the end of each Fiscal Quarter, (B) within thirty (30) days after the end of each Fiscal Month in which any Revolving Loans were outstanding or a Borrowing occurred, and (C) during an Enhanced Reporting Trigger Period, weekly, no later than the second Business Day of each week for the prior week) and at such other times as may be requested by Administrative Agent, the following as of the period then ended, all delivered electronically in a text formatted file reasonably acceptable to Administrative Agent:
(i)    a detailed Inventory system/perpetual report together with a reconciliation to Borrowers’ general ledger accounts (delivered electronically in an acceptable format, if Borrower has implemented electronic reporting),
(ii)    a detailed calculation of Inventory categories that are not eligible for the Borrowing Base, if Borrowers have not implemented electronic reporting,
(iii)    a reconciliation of Inventory of Borrowers’ general ledger accounts to its monthly financial statements including any book reserves related to each category; and
(iv)    a reconciliation of the loan balance per the Borrowers’ general ledger to the loan balance under this Agreement;
(j)    as soon as available but in any event within thirty (30) days after the end of each Fiscal Month and at such other times as may be reasonably requested by Administrative Agent, the following as of the period then ended, all delivered electronically in a text formatted file reasonably acceptable to Administrative Agent: 
(i)    a schedule and aging of the Borrowers’ accounts payable; and
(ii)    a gross Inventory report;
(k)    promptly upon Administrative Agent’s reasonable request during an Enhanced Reporting Trigger Period, a written update report, in form and substance reasonably acceptable to Administrative Agent, relating to the trademarks, tradenames, copyrights, patents and other intellectual property (including intellectual property licenses) necessary to each Loan Party’s business which are material to such Loan Party’s financial condition, business, operations, assets and prospects, individually or taken as a whole;
(l)    promptly upon Administrative Agent’s reasonable request:
(i)    copies of invoices issued by the Borrowers in connection with any Accounts, credit memos, shipping and delivery documents, and other information related thereto;
(ii)    copies of purchase orders, invoices, and shipping and delivery documents in connection with any Inventory purchased by any Loan Party; and

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(iii)    a schedule detailing the balance of all intercompany accounts of AXE, Anixter, and the Subsidiaries of Anixter;
(m)    [reserved];
(n)    promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by AXE or Anixter with the SEC, or any Governmental Authority succeeding to any or all of the functions of the SEC, or with any national securities exchange, or distributed by AXE to its shareholders generally; and
(o)    promptly following any request therefor, such other information regarding the operations, business affairs, or financial condition of Anixter or any Subsidiary of Anixter, the Collateral, or compliance with the terms of this Agreement, as Administrative Agent or any Lender may reasonably request.
5.2    Notices of Material Events    . Anixter or the Borrowers, as applicable, will furnish (or will cause to be furnished) to Administrative Agent prompt (but in any event within any time period that may be specified below) written notice of the following:
(a)    the occurrence of any Default or Event of Default;
(b)    (c) receipt of any notice of any investigation by a Governmental Authority or any litigation or proceeding commenced or threatened against Anixter or any Subsidiary of Anixter that seeks damages in excess of $35,000,000 except where the same is fully covered (other than any applicable co-insurance or deductible) by insurance (other than insurance in the nature of retro-premium insurance or other self-insurance programs); (i) receipt of any notice of any investigation or any proceeding before or by any Governmental Authority, the effect of which might be (d) to limit, prohibit, or restrict materially the manner in which Anixter or any Subsidiary of Anixter currently conducts its business and proposes to conduct its business in connection with and following the consummation of the Related Transactions, if such investigation or proceeding has resulted in or could reasonably be expected to result in a Material Adverse Effect, or (e) to declare any substance contained in the products manufactured or distributed by it to be dangerous, if such investigation or proceeding has resulted in or could reasonably be expected to result in a Material Adverse Effect; or (i) receipt of any notice of any investigation by a Governmental Authority or any litigation or proceeding commenced or threatened against Anixter or any Subsidiary of Anixter that (f) seeks injunctive relief, if such investigation or proceeding has resulted in or could reasonably be expected to result in a Material Adverse Effect, (g) is asserted or instituted against any Plan, its fiduciaries or its assets, if such investigation or proceeding has resulted in or could reasonably be expected to result in a Material Adverse Effect, (h)(1) alleges criminal misconduct by Anixter or any other Loan Party, or (1) alleges criminal misconduct by any Subsidiary of Anixter not described in subclause (1) of this clause (C), if such misconduct has resulted in or could reasonably be expected to result in a Material Adverse Effect, or (i) asserts liability on the part of Anixter or any Subsidiary of Anixter in excess of $7,500,000 in respect of any tax, fee, assessment, or other governmental charge, or (j) involves any product recall, if such investigation or proceeding has resulted in or could reasonably be expected to result in a Material Adverse Effect;
(k)    any of the following that, alone or together, could reasonably be expected to result in a Material Adverse Effect: (l) notice that any Property of Anixter or any Subsidiary of Anixter is subject to an Environmental Lien, or (m) notice to Anixter or any Subsidiary of Anixter or awareness by Anixter or 

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any Subsidiary of Anixter of a condition that could reasonably be expected to result in (A) a notice of violation of any health or safety Requirement of Law or any Environmental Law, or (A) any Environmental Liability;
(n)    any Lien or claim made or asserted against any of the Collateral, other than Permitted Encumbrances and Liens permitted by Section 6.2;
(o)    at any time that any Indebtedness under the 2012 Notes Indenture remains outstanding, at least five (5) Business Days before the effectiveness of any material involuntary accounting writedown of assets included in Consolidated Tangible Net Assets, written notice of such proposed accounting writedown and a certificate of a Financial Officer of Anixter attaching and certifying pro forma computations of the Secured Debt‐to‐CTNA Ratio before and after giving effect to such proposed involuntary accounting writedown;
(p)    within two (2) Business Days of receipt thereof, any and all default notices received under or with respect to any leased location or public warehouse for which (q) a chief executive office is maintained, (r) books and records are maintained, or (s) Collateral with a value of $5,000,000 or greater in the aggregate is located;
(t)    the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect;
(u)    as soon as available, but not less than ten (10) days prior to the consummation of any acquisition or Investment proposed to be permitted by Section 6.4(a)(v), (v) notice of such proposed acquisition or proposed Investment, and (w) a copy of all business and financial information reasonably requested by Administrative Agent including pro forma financial statements, statements of cash flow, and Availability projections; and
(x)    any other development that results, or could reasonably be expected to result, in a Material Adverse Effect.
Each notice delivered under this Section 5.2 shall be accompanied by a statement of a Financial Officer or other executive officer of Anixter setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

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5.3    Existence; Conduct of Business    . Anixter will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, qualifications, licenses, permits, franchises, governmental authorizations, intellectual property rights, licenses and permits material to the conduct of its business, and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted, except in those jurisdictions where the failure to do so could not reasonably be expected to result in a Material Adverse Effect and provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.3. Following the end of each Fiscal Quarter, Anixter shall promptly provide Administrative Agent and each of the Lenders with a complete list of its Subsidiaries, including any changes in the list set forth on Schedule 4.15 with respect to Subsidiaries having assets in excess of $1,000,0005,000,000 individually or $5,000,00020,000,000 in the aggregate.
5.4    Payment of Obligations    . Anixter will, and will cause each of its Subsidiaries to, pay or discharge (a) all material Taxes imposed upon it or any of its properties or assets or in respect of any of its franchises, business, income, or property before any penalty or interest accrues thereon, and (a) all material claims (including claims for labor, services, materials and supplies) for sums which have become due and payable and which by law have or may become a Lien (other than a Customary Permitted Lien) upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided, however, that (i) no such Taxes referred to in clause (a) above or no such claim referred to in clause (b) above need to be paid or discharged where the validity or amount thereof is being contested in good faith by appropriate proceedings and such Person has set aside on its books adequate reserves with respect thereto in accordance with GAAP, and (i) Anixter will, and will cause each of its Subsidiaries to, remit withholding taxes and other payroll taxes to appropriate Governmental Authorities as and when claimed to be due, notwithstanding the foregoing exceptions.
5.5    Maintenance of Properties    . Anixter will, and will cause each of its Subsidiaries to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted.
5.6    Books and Records; Inspection Rights    . Anixter will, and will cause each of its Subsidiaries to, (a) keep proper books of record and account with respect to the Collateral (including a system of accounting established and administered in accordance with sound business practices and consistent with past practice to permit preparation of financial statements in conformity with GAAP and, if required by the terms of this Agreement, in conformity with Agreement Accounting Principles, and each of the financial statements described in Section 5.1 shall be prepared from such system and records), in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities, and (a) permit any representatives designated by Administrative Agent or any Lender (including employees of Administrative Agent, any Lender or any consultants, accountants, lawyers, agents and appraisers retained by Administrative Agent), upon reasonable prior notice, to visit and inspect its properties, to conduct at such Person’s premises field examinations of such Person’s assets, liabilities, books and records, including examining and making extracts from its books and records, environmental assessment reports, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested. Anixter, for itself and on behalf of each of its Subsidiaries, acknowledges 

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that Administrative Agent, after exercising its rights of inspection, may prepare and distribute to the Lenders certain Reports pertaining to such Person’s assets for internal use by Administrative Agent and the Lenders.
5.7    Compliance with Laws and Material Contractual Obligations    . Anixter will, and will cause each of its Subsidiaries to, (a) comply with each Requirement of Law and Environmental Law applicable to it or its property and (a) perform in all material respects its obligations under material agreements to which it is a party, except, in each case, where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Borrower will, and Anixter will and will cause each of its Subsidiaries to, maintain in effect and enforce policies and procedures designed to ensure compliance by such Person, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.
5.8    Use of Proceeds    .
(a)    The proceeds of the Loans and the Letters of Credit will be used only for general corporate purposes of the Borrowers in the ordinary course of business and to pay a portion of the consideration payable in connection with the consummation of the HD Supply Acquisition (as defined in this Agreement as in effect immediately before the Amendment No. 3 Effective Date). No part of the proceeds of any Loan and no Letter of Credit will be used, whether directly or indirectly, for any purpose that entails a violation of Regulation T, U, or X.
(b)    The Borrowers will not request any Borrowing or Letter of Credit, and none of Anixter and its Subsidiaries shall use, and Anixter shall procure that Anixter and its Subsidiaries and its and their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Letter of Credit (c) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws or Anti-Money Laundering Laws, (d) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (e) in any manner that would result in the violation of any Sanctions applicable to any party hereto.
5.9    [Reserved]    .
5.10    Insurance    .
(a)    Anixter will and will cause each of its Subsidiaries to maintain with financially sound and reputable carriers having a financial strength rating of at least A- by A.M. Best Company (b) insurance in such amounts (with no greater risk retention) and against such risks (including loss or damage by fire and loss in transit; theft, burglary, pilferage, larceny, embezzlement, and other criminal activities; business interruption; and general liability) and such other hazards, as is customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations and (c) all insurance required pursuant to the Collateral Documents. Anixter will furnish to the Lenders, upon request of Administrative Agent, information in reasonable detail as to the insurance so maintained. If Anixter or its Subsidiaries fails to maintain such insurance, Administrative Agent may arrange for such insurance, but at the expense and without any responsibility on Administrative Agent’s part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims

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(d)    All property insurance policies covering the Collateral are to name Administrative Agent as lenders loss payee for the benefit of Administrative Agent and the Lenders, as their interests may appear, in case of loss, pursuant to a standard loss payable endorsement with a standard non-contributory “lender” or “secured party” clause. All certificates of property and general liability insurance are to be delivered to Administrative Agent, with the loss payable (but only in respect of Collateral) and additional insured endorsements in favor of Agent and shall provide for not less than thirty (30) days’ (ten (10) days’ in the case of non-payment) prior written notice to Administrative Agent of the exercise of any right of cancellation.
(e)    Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent shall have the sole right, subject to the Intercreditor Agreement, to file claims under any property and general liability insurance policies in respect of the Collateral, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise, or settlement of any claims under any such insurance policies.
5.11    Casualty and Condemnation    . Anixter will (a) furnish to Administrative Agent prompt written notice of any casualty or other insured damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of any material portion of the Collateral or interest therein under power of eminent domain or by condemnation or similar proceeding and (a) subject to Section 5.10(c), ensure that the net proceeds of any such event (whether in the form of insurance proceeds, condemnation awards or otherwise) are collected and applied in accordance with the applicable provisions of this Agreement and the Collateral Documents to the extent applicable.
5.12    Depository Banks    . Each Borrower will maintain one or more of the Lenders as its principal depository bank, including for the maintenance of operating, administrative, cash management, collection activity and other deposit accounts for the conduct of its business.
5.13    Employee Benefit Matters    . Anixter will, and will cause each of its Subsidiaries to, establish, maintain and operate, all Plans in all material respects in compliance with the applicable provisions of ERISA, the IRC, and all other applicable laws, and the regulations and interpretations thereunder, and the respective requirements of the governing documents for such Plans. Anixter will, and will cause each of its Subsidiaries and other ERISA Affiliates to, establish, maintain and operate all Foreign Employee Benefit Plans to comply in all material respects with all laws, regulations and rules applicable thereto and the respective requirements of the governing documents for such Foreign Employee Benefit Plans.
5.14    Formation of Subsidiaries; Further Assurances    .
(a)    Each Borrower will, at the time that any Loan Party forms any direct or indirect Subsidiary (other than an Excluded Subsidiary), acquires any direct or indirect Subsidiary (other than an Excluded Subsidiary) after the Closing Date, or causes any existing direct or indirect Subsidiary to become party to a Receivables Transfer Agreement, within 20 days of such formation, acquisition, or other applicable qualifying event (or such later date as permitted by Administrative Agent in its sole discretion) (b) cause such new Subsidiary to provide to Administrative Agent a joinder to this Agreement and/or to the Guaranty and Security Agreement, together with such other security agreements, as well as appropriate financing statements, all in form and substance reasonably satisfactory to Administrative Agent (including being 

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sufficient to grant Administrative Agent a first-priority Lien (subject to Permitted Encumbrances and Liens permitted by Section 6.2(d), Section 6.2(e), Section 6.2(f), and Section 6.2(j)) in and to the assets of such newly formed or acquired Subsidiary), (c) provide, or cause the applicable Loan Party to provide, to Administrative Agent a pledge agreement (or an addendum to the Guaranty and Security Agreement) and appropriate certificates and powers or financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary in form and substance reasonably satisfactory to Administrative Agent, (d) if such Subsidiary becomes or is intended to become party to a Receivables Transfer Agreement, cause such Subsidiary to provide to Administrative Agent a joinder to the Intercreditor Agreement in substantially the form attached to the Intercreditor Agreement, and (e) provide to Administrative Agent all other documentation, including one or more opinions of counsel reasonably satisfactory to Administrative Agent, which, in its opinion, is appropriate with respect to the execution and delivery of the applicable documentation referred to above. Any document, agreement, or instrument executed or issued by a Loan Party (including any Subsidiary that becomes a Loan Party) pursuant to this Section 5.14(a) shall constitute a Loan Document.
(f)    Each Borrower will, and will cause each of the other Loan Parties to, at any time upon the reasonable request of Administrative Agent, execute or deliver to Administrative Agent any and all financing statements, security agreements, pledges, assignments, and all other similar documents that Administrative Agent may reasonably request in form and substance reasonably satisfactory to Administrative Agent, to create, perfect, and continue perfected or to better perfect Administrative Agent’s Liens in substantially all of the assets of Anixter and its Subsidiaries (other than Excluded Subsidiaries, and subject to other exceptions and limitations contained in the Loan Documents), and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents. To the maximum extent permitted by applicable law, if any Borrower or any other Loan Party refuses or fails to execute or deliver any reasonably requested financing statement or other similar ministerial document within a reasonable period of time following the request to do so, each Borrower and each other Loan Party hereby authorizes Administrative Agent to execute any such financing statement or other similar ministerial document in the applicable Loan Party’s name and authorizes Administrative Agent to file such executed financing statement or other similar ministerial document in any appropriate filing office. In furtherance of, and not in limitation of, the foregoing, each Loan Party shall take such actions as Administrative Agent may reasonably request from time to time to ensure that the Obligations are guaranteed by the Guarantors and are secured by substantially all of the assets of Anixter and its Subsidiaries (other than Excluded Subsidiaries, and subject to other exceptions and limitations contained in the Loan Documents).
5.15    Location of Inventory    . Each Borrower will, and will cause each of the other Loan Parties to, keep its Inventory only at the locations identified on Schedule 5.15; provided, that Borrowers may amend Schedule 5.15 so long as (i) such amendment occurs by written notice to Administrative Agent not less than 10 days prior to the date on which such Inventory is moved to such new location, (i) such new location is within the continental United States, and (i) at the time of such written notification, either (A) the applicable Loan Party provides Administrative Agent a Collateral Access Agreement with respect thereto or (A) if the applicable Loan Party does not so provide Administrative Agent a Collateral Access Agreement with respect thereto, Administrative Agent has the option, in its discretion, to institute a reserve for rent in accordance with Section 2.1(c) hereof.
5.16    Post-Closing Security Perfection    . The Borrowers will, and Anixter will and will cause each of its Subsidiaries to, deliver or cause to be delivered such documents and instruments, and take 

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or cause to be taken such other actions as may be reasonably necessary to provide the perfected security interests described in Section 3.1(m) that are not so provided on the Closing Date, and in any event to provide such perfected security interests and to satisfy such other conditions within the applicable time periods set forth on Schedule 5.16, as such time periods may be extended by Administrative Agent, in its sole discretion.
OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws    . Each Borrower will, and will cause each of its Subsidiaries and the other Loan Parties to, comply with all applicable Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. Each of the Borrowers and its Subsidiaries shall implement and maintain in effect policies and procedures designed to ensure compliance by the Loan Parties and their Subsidiaries and their respective directors, officers, employees, agents, and Affiliates with all Sanctions, Anti-Corruption Laws, and Anti-Money Laundering Laws. Each Borrower shall, and shall cause each of its Subsidiaries and the other Loan Parties to, comply with all Sanctions, Anti-Corruption Laws, and Anti-Money Laundering Laws.
6.    NEGATIVE COVENANTS    .
Each Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations:
6.1    Indebtedness    .
(a)    No Loan Party will, and Anixter will not permit any member of the Consolidated Group to, create, incur, assume or suffer to exist any Indebtedness, except:
(i)    the Obligations;
(ii)    Indebtedness existing on the date hereof and set forth in Schedule 6.1 and any extensions, renewals, refinancings and replacements of any such Indebtedness in accordance with clause (xiii) of this Section 6.1;
(iii)    Indebtedness in respect of Accommodation Obligations permitted by Section 6.4(b);
(iv)    (b) Indebtedness of ARC to Anixter arising under Receivables Facility Transactions, provided that such Indebtedness shall be subordinated to the Receivables Facility Secured Obligations on terms reasonably satisfactory to the Receivables Facility Administrative Agent; and (A) unsecured Indebtedness of Anixter to any Subsidiary of Anixter (other than ARC) and of any Subsidiary of Anixter (other than ARC) to Anixter or any other Subsidiary of Anixter (other than ARC), provided that (c) Indebtedness of any Subsidiary that is not a Loan Party to Anixter or any other Loan Party shall be subject to clause (ix) of Section 6.4(a), and (d) Indebtedness of any Loan Party to any Subsidiary of Anixter that is not a Loan Party shall be subordinated to Obligations on terms reasonably satisfactory to Administrative Agent;
(i)    other unsecured debt of Anixter subordinated in right of payment with the Obligations on terms and conditions satisfactory to Administrative Agent;
(ii)    other unsecured Indebtedness of Anixter’s Subsidiaries that are Guarantors subordinated on terms and conditions satisfactory to Administrative Agent in right of payment with the Obligations;

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(iii)    Indebtedness of Anixter or any of its Subsidiaries incurred to finance the acquisition, construction or improvement of any fixed or capital assets (whether or not constituting purchase money Indebtedness), including obligations under Capital Leases and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness in accordance with clause (xiii) of this Section 6.1(a); provided that (e) such Indebtedness is incurred prior to or within ninety (90) days after such acquisition or the completion of such construction or improvement and (f) the aggregate principal amount of Indebtedness permitted by this clause (vii) together with any Refinance Indebtedness in respect thereof permitted by clause (xiii) of this Section 6.1(a), shall not exceed $50,000,00075,000,000 at any time outstanding;
(i)    Indebtedness of one or more of Anixter and its Subsidiaries under the Receivables Facility;
(ii)    unsecured Indebtedness of Anixter in an aggregate principal amount of up to $500,000,000 evidenced by certain senior unsecured notes and incurred in connection with, and for the purpose of financing a portion of the consideration payable in connection with, the consummation of the HD Supply Acquisitionthe 5.50% Senior Notes due 2023 issued pursuant to the 2015 Notes Indenture;
(iii)    Indebtedness of Anixter Canada in an aggregate principal amount of up to CAD 300,000,000 in the form of a term loan incurred in connection with, and for the purpose of financing portion of the consideration payable in connection with, the consummation of the HD Supply Acquisition;[reserved];
(iv)    Indebtedness (including Indebtedness represented by letters of credit) of Anixter Canada in an aggregate principal amount of up to CAD 50,000,000150,000,000 in the form of a revolving credit facility incurred for working capital and other general corporate purposes;
(v)    Indebtedness (including Indebtedness represented by letters of credit) of Foreign Subsidiaries of Anixter (other than Anixter Canada) in an aggregate principal amount of up to $150,000,000200,000,000 incurred for working capital and other general corporate purposes;
(vi)    Indebtedness which represents extensions, renewals, refinancing or replacements (such Indebtedness being so extended, renewed, refinanced or replaced being referred to herein as the “Refinance Indebtedness”) of any of the Indebtedness described in clauses (ii) and (vii) of this Section 6.1(a) (such Indebtedness being referred to herein as the “Original Indebtedness”); provided that (g) such Refinance Indebtedness does not increase the principal amount (except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder) or interest rate of the Original Indebtedness, (h) any Liens securing such Refinance Indebtedness are not extended to any additional property of Anixter or any of its Subsidiaries, (i) neither Anixter nor any Subsidiary of Anixter, as the case may be, that was not originally obligated with respect to repayment of such Original Indebtedness is required to become obligated with respect to such Refinance Indebtedness, (j) such Refinance Indebtedness does not result in a shortening of the average weighted maturity of such Original Indebtedness, (k) the terms of such Refinance Indebtedness are not materially less favorable to the obligor thereunder than the original terms of such Original Indebtedness (other than changes in the interest rates applicable thereto to reflect current market conditions), and (l) if such Original Indebtedness was subordinated in right of payment to the Obligations, then the terms and conditions of such Refinance Indebtedness must include subordination 

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terms and conditions that are at least as favorable to Administrative Agent and the Lenders as those that were applicable to such Original Indebtedness;
(i)    Indebtedness under Swap Agreements permitted under Section 6.7;
(ii)    Indebtedness of Anixter and any other member of the Consolidated Group owing to Bank Mendes Gans N.V. (or any successor thereto) in an aggregate amount not at any time to exceed the aggregate amount on deposit by the Consolidated Group with Bank Mendes Gans N.V. (or any successor thereto) at such time; and
(iii)    Indebtedness of Anixter evidenced by the certain Senior Notes due 2025 issued under the 2019 Notes Indenture in an aggregate principal amount of up to $300,000,000, which Indebtedness will be used for the repayment in one or more transactions of a portion of the 5.625% Senior Notes due 2019 issued under the 2012 Notes Indenture.
(m)    Notwithstanding anything to the contrary contained in Section 6.1(a), at any time that any Indebtedness under the 2012 Notes Indenture remains outstanding, Anixter will not, and will not permit any of its applicable Subsidiaries to, create or incur any Specified Secured Debt unless (i) after giving effect to the creation or incurrence of such Specified Secured Debt, the pro forma Secured Debt‐to‐CTNA Ratio would not be 10% or greater, and (i) not later than five (5) Business Days prior to any proposed creation or incurrence of Specified Secured Debt, Anixter furnishes (or causes to be furnished) to Administrative Agent written notice of such proposed creation or incurrence of Specified Secured Debt and a certificate of a Financial Officer of Anixter certifying compliance with this Section 6.1(b) and attaching pro forma computations of the Secured Debt‐to‐CTNA Ratio before and after giving effect to such proposed creation or incurrence of Specified Secured Debt.
6.2    Liens    . No Loan Party will, and Anixter will not permit any member of the Consolidated Group to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues or rights in respect of any thereof, except:
(a)    Liens created pursuant to any Loan Document;
(b)    Permitted Encumbrances;
(c)    any Lien on any property or asset of Anixter or any of its Subsidiaries existing on the date hereof and set forth in Schedule 6.2; provided that (d) such Lien shall not apply to any other property or asset of Anixter or such Subsidiary and (e) such Lien shall secure only those obligations which it secures on the date hereof, and extensions, renewals, and replacements thereof that do not increase the outstanding principal amount thereof;
(f)    Liens on fixed or capital assets acquired, constructed or improved by Anixter or any of its Subsidiaries; provided that (g) such Liens secure Indebtedness permitted by clause (vii) of Section 6.1(a), (h) such Liens and the Indebtedness secured thereby are incurred prior to or within ninety (90) days after such acquisition or the completion of such construction or improvement, (i) such Liens shall not apply to any other property or assets of Anixter or any of its Subsidiaries, and (j) the value of the Property securing such Indebtedness approximates the amount of such Indebtedness;
(k)    any Lien existing on any property or asset prior to the acquisition thereof by Anixter or any of its Subsidiaries or existing on any property or asset of any Person that is acquired in an acquisition 

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permitted by Section 6.4(a)(v) that is consummated after the date hereof; provided that (l) such Lien is not created in contemplation of or in connection with such acquisition, (m) such Lien shall not apply to any other property or assets (other than additions, accessions, and improvements thereto and the proceeds and products thereof), and (n) such Lien shall secure only those obligations which it secures on the date of such acquisition and extensions, renewals, and replacements thereof that do not increase the outstanding principal amount thereof;
(o)    Liens in favor of the Receivables Facility Administrative Agent arising in connection with and securing the Indebtedness under the Receivables Facility permitted by clause (viii) of Section 6.1(a);
(p)    Liens arising in connection with and securing Indebtedness permitted by clauses (x), (xi), and (xii) of Section 6.1(a);
(q)    Liens on assets of any joint venture described in clause (vi) of Section 6.4(a);
(r)    Liens on the assets of Foreign Subsidiaries of Anixter; provided that the aggregate amount of Indebtedness secured by such Liens shall not exceed the amounts set forth in clauses (x), (xi), and (xii) of Section 6.1(a);
(s)    (t) Liens in favor of ARC granted by Anixter arising in connection with the Receivables Facility Transactions, and (i) Liens in favor of Anixter granted by ARC arising in connection with the Receivables Facility Transactions and securing the Indebtedness permitted by clause (iv)(A) of Section 6.1(a);
(u)    Liens not otherwise permitted hereunder in an aggregate principal amount not to exceed $10,000,000 at any time outstanding; and
(v)    (w) Liens securing Swap Obligations; and (i) Liens securing obligations under other Swap Agreements permitted by Section 6.7, so long as the underlying assets securing such obligations are assets of one or more Foreign Subsidiaries.
6.3    Fundamental Changes    .
(a)    No Loan Party will, and Anixter will not permit any member of the Consolidated Group to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, except (b) subject to, and as required by, Section 5.16, (c) as otherwise permitted under Section 6.5, and (d) that, if at the time thereof and immediately after giving effect thereto no Event of Default shall have occurred and be continuing, any Subsidiary of Anixter (other than ARC) may merge into Anixter or another Subsidiary of Anixter (other than ARC); provided that any such merger involving a Person that is not a wholly owned Subsidiary immediately prior to such merger shall not be permitted unless also permitted by Section 6.4(a).
(e)    No Loan Party will, and Anixter will not permit any member of the Consolidated Group to, acquire by purchase or otherwise any property or assets of, or stock or other evidence of beneficial ownership of, any Person, except in the ordinary course of its business or to the extent permitted pursuant to Section 6.4(a).
(f)    No Loan Party will, and Anixter will not permit any member of the Consolidated Group to, engage to any material extent in any business other than businesses of the type conducted by the Borrower and its Subsidiaries on the date hereof, business of the type proposed to be conducted in connection 

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with and following the consummation of the Related Transactions, and businesses in substantially similar or related business thereto and reasonable extensions thereof.
(g)    No Loan Party will, and Anixter will not permit any member of the Consolidated Group to, change its fiscal year from the basis in effect on the Closing Date, except that any Subsidiary of Anixter may conform its fiscal year to Anixter’s Fiscal Year.
6.4    Investments, Loans, Advances, Guarantees, and Acquisitions    .
(a)    No Loan Party will, and Anixter will not permit any member of the Consolidated Group to, directly or indirectly make or commit to make any advance, loan, extension of credit or capital contribution, or purchase of any stock, bonds, notes, debentures or other securities or evidences of indebtedness of, or make any other investment in, any Person, including any Affiliate (each such transaction, an “Investment”), except:
(i)    Investments by Anixter or any of its Subsidiaries in Cash Equivalents;
(ii)    Investments in existence on the date hereof and described in Schedule 6.4;
(iii)    Investments arising from sales in the ordinary course of business on customary trade terms;
(iv)    Investments constituting loans by Anixter or any Subsidiary of Anixter to its employees not in excess of an aggregate amount of $10,000,000 outstanding at any one time;
(v)    the acquisition (in any transaction or series of related transactions) by Anixter or any of its Subsidiaries of substantially all of the assets or all of the Equity Interests of any Person, and Investments in connection with any such acquisition, in each case so long as (b) such acquisition is not a hostile or contested acquisition, (c) the business acquired in connection with such acquisition is not engaged, directly or indirectly, in any line of business other than the businesses in which Anixter or any of its Subsidiaries are engaged on the Effective Date and any business activities that are substantially similar or related thereto and reasonable extensions thereof, (d) no Event of Default exists or would result therefrom, and (e) the Payment Conditions are satisfied;
(i)    Investments in any joint ventures and Investments in connection with the purchase of any other Person’s interest in any such joint ventures, which do not exceed $50,000,000 in the aggregate outstanding at any one time;
(ii)    Investments (other than those set forth on Schedule 6.4) in notes receivable received in connection with transactions permitted pursuant to Section 6.4(a)(iv);
(iii)    Investments by Anixter in any Subsidiary of Anixter that is a Loan Party or by any Subsidiary of Anixter in Anixter;
(iv)    Investments by Anixter in any Subsidiary of Anixter that is not a Loan Party (other than ARC), in each case so long as (f) no Event of Default exists or would result therefrom, and (g) after giving effect to the proposed Investment as if it occurred on the first day of the Pro Forma Period, pro forma Combined Availability would be greater than 15% of the Combined Commitment at all times during the Pro Forma Period;

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(i)    Investments constituting loans permitted by clause (iv) of Section 6.1(a) or Accommodation Obligations permitted under Section 6.4(b); and
(ii)    Investments in the form of Swap Agreements permitted by Section 6.7;
(iii)    investments of any Person existing at the time such Person becomes a Subsidiary of Anixter or consolidates or merges with Anixter or any of its Subsidiaries (including in connection with an acquisition permitted by Section 6.4(a)(v)) so long as such investments were not made in contemplation of such Person becoming a Subsidiary or of such merger;
(iv)    investments constituting deposits described in clause (c) of the definition of the term “Customary Permitted Liens”;
(v)    Investments constituting Accommodation Obligations permitted by Section 6.4(b); and
(vi)    Investments by any non-Loan Party in any other non-Loan Party.
(h)    No Loan Party will, and Anixter will not permit any member of the Consolidated Group to, directly or indirectly, create or become or be liable with respect to any Accommodation Obligation involving Indebtedness of AXE or any Affiliate of AXE which is not a Subsidiary of Anixter. In addition, No Loan Party will, and Anixter will not permit any member of the Consolidated Group to, directly or indirectly, create or become or be liable with respect to any Accommodation Obligation except:
(i)    guaranties resulting from endorsement of negotiable instruments for collection in the ordinary course of business;
(ii)    Accommodation Obligations arising in connection with the Related Transactions Documents;
(iii)    Accommodation Obligations by Anixter with respect to lessees’ obligations to third-party lessors under leases of Property purchased from Anixter and its Subsidiaries, in an aggregate amount not to exceed $10,000,000;
(iv)    Accommodation Obligations of Anixter and its Subsidiaries arising in connection with Swap Agreements permitted by Section 6.7;
(v)    Accommodation Obligations of Anixter and its Subsidiaries of Indebtedness permitted by Section 6.1(a); and
(vi)    other Accommodation Obligations by Anixter and its Subsidiaries, so long as (i) the aggregate amount of Indebtedness outstanding in respect of which such Accommodation Obligations have been given does not at any time exceed $175,000,000,300,000,000, and (j) the Payment Conditions are satisfied; provided, however, that no such Accommodation Obligations shall be entered into or incurred after the occurrence and during the continuance of an Event of Default.

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6.5    Asset Sales    .
(a)    No Loan Party will, and Anixter will not permit any member of the Consolidated Group to, sell, transfer, lease, or otherwise Dispose of any asset, including any Equity Interest owned by it, or any income or profits therefrom, except:
(i)    sales, transfers and dispositions of (b) Inventory in the ordinary course of business and (c) disposition of obsolete equipment in the ordinary course of business;
(i)    sales by Anixter of Equity Interests of a Subsidiary held by it, in any transaction or series of related transactions not constituting a Material Transaction, individually or taken together;
(ii)    sales, assignments, transfers, leases, conveyances or other dispositions of other assets, other than Equity Interests of any Subsidiary, for cash consideration and for not less than fair market value which do not constitute a Material Transaction individually or in the aggregate (together with all sales of Equity Interests of any Subsidiary under clause (ii) above);
(iii)    sales, assignments, transfers, leases, conveyances or other Dispositions of assets to Anixter or a Subsidiary of Anixter that is a Loan Party;
(iv)    transfers of assets to any Affiliate for less than fair market value to the extent such transfer constitutes a permitted Investment pursuant to Section 6.4(a);
(v)    Receivables Facility Transactions; 
(vi)    sales, assignments, transfers, leases, conveyances, and other Dispositions among Foreign Subsidiaries; and
(vii)    Sale and Leaseback Transactions permitted by Section 6.6.
(d)    Notwithstanding anything to the contrary contained in Section 6.5(a), at any time that any Indebtedness under the 2012 Notes Indenture remains outstanding, Anixter will not, and will not permit any of its applicable Subsidiaries to, Dispose of any assets (whether in a Material Transaction or otherwise) if, after giving effect to such Disposition, the pro forma Secured Debt‐to‐CTNA Ratio would be 10% or greater. No later than five (5) Business Days prior to any proposed Disposition of assets, in excess of $25,000,000, Anixter will furnish (or will caused to be furnished) to Administrative Agent and each Lender written notice of such proposed Disposition and a certificate of a Financial Officer of Anixter certifying compliance with this Section 6.5(b) and attaching pro forma computations of the Secured Debt‐to‐CTNA Ratio before and after giving effect to such proposed Disposition.
(e)    Notwithstanding anything to the contrary contained in this Agreement (including in Section 6.5(a)), at any time that any Indebtedness under the 2012 Notes Indenture remains outstanding, Anixter will not, and will not permit any of its applicable Subsidiaries to, effect a material voluntary accounting writedown of assets included in Consolidated Tangible Net Assets if, after giving effect to such voluntary accounting writedown, the pro forma Secured Debt‐to‐CTNA Ratio would be 10% or greater. No later than five (5) Business Days prior to any proposed material voluntary accounting writedown of assets included in Consolidated Tangible Net Assets at any time that any Indebtedness under the 2012 Notes Indenture remains outstanding, Anixter will furnish (or will caused to be furnished) to Administrative Agent and each Lender written notice of such proposed voluntary accounting writedown and a certificate of a Financial Officer of Anixter certifying compliance with this Section 6.5(c) and attaching pro forma 

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computations of the Secured Debt‐to‐CTNA Ratio before and after giving effect to such proposed voluntary accounting writedown.
6.6    Sale and Leaseback Transactions    . No Loan Party will, and Anixter will not permit any member of the Consolidated Group to, enter into any arrangement, directly or indirectly, whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred (a “Sale and Leaseback Transaction”), except for any such sale of any fixed or capital assets by Anixter or any Subsidiary that is made for cash consideration in an amount not less than the fair value of such fixed or capital asset and is consummated within 365 days after Anixter or such Subsidiary acquires or completes the construction of such fixed or capital asset.
6.7    Swap Agreements    . No Loan Party will, and Anixter will not permit any member of the Consolidated Group to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which such Person has actual exposure (other than those in respect of Equity Interests of any Subsidiary), and (a) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from floating to fixed rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of such Person.
6.8    Payments to AXE; Certain Payments of Indebtedness    .
(a)    No Loan Party will, and Anixter will not permit any member of the Consolidated Group to, declare or make, directly or indirectly, make any payment, distribution or contribution to or investment in AXE (whether in cash or otherwise), except:
(i)    Anixter and its Subsidiaries may declare and make payments to AXE so that AXE may pay any directors’ fees and reasonable allocated expenses in an aggregate amount not to exceed $7,500,000 during any Fiscal Year;
(ii)    Anixter and its Subsidiaries may make payments to AXE (b) that are applied by AXE to pay its actual income tax liabilities in respect of income earned by Anixter and its Subsidiaries, or (c) that are applied by AXE to make any cash settlements to management or employees under equity awards consistent with its past practice not in excess of $7,500,000 in the aggregate during any calendar year; and
(i)    Anixter and its Subsidiaries may make any other payment, distribution or contribution to or investment in AXE (whether in cash or otherwise), in each case so long as (d) no Event of Default exists or would result therefrom, and (e) the Payment Conditions are satisfied.
(f)    No Loan Party will, and Anixter will not permit any Loan Party to, make or agree to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Indebtedness, or any payment or other distribution (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 Indebtedness, except:
(i)    payment of Indebtedness created under the Loan Documents;

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(ii)    (g) payments of interest and principal (including prepayments) in respect of the Indebtedness under the Receivables Facility and permitted under clause (viii) of Section 6.1(a), (A) payments of interest and principal (including prepayments) by ARC to Anixter in respect of the Indebtedness of ARC to Anixter arising under Receivables Facility Transactions and permitted under clause (iv)(A) of Section 6.1(a), and (A) payment of regularly scheduled interest and principal payments as and when due in respect of any other Indebtedness permitted under Section 6.1, other than payments in respect of the Subordinated Indebtedness prohibited by the subordination provisions thereof;
(ii)    (h) refinancings of Indebtedness to the extent permitted by Section 6.1, and (A) payments in respect of the 5.625% Senior Notes due 2019 issued under the 2012 Notes Indenture with the proceeds of the Indebtedness permitted by Section 6.1(a)(xvi);
(ii)    payment of secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness to the extent such sale or transfer is permitted by the terms of Section 6.5; and
(iii)    any other payments in respect of any Indebtedness, in each case so long as (i) no Event of Default exists or would result therefrom, and (j) the Payment Conditions are satisfied.
6.9    Transactions with Affiliates    . No Loan Party will, and Anixter will not permit any Loan Party to, directly or indirectly enter into or permit to exist any transaction (including, without limitation, any sale, lease, or other transfer of any property or assets, any purchase, lease, or other acquisition of any property or assets, or the rendering of any service) with any Affiliate of Anixter that is not a Loan Party that involves one or more payments to such Affiliate in excess of $5,000,000 for any single transaction or series of related transactions on terms that are less favorable to it than those fair and reasonable terms that might be obtained in a comparable arms-length transaction at the time (other than payments to AXE permitted pursuant to Section 6.8(a)); provided that the foregoing shall not restrict transactions among Foreign Subsidiaries.
6.10    Restrictive Agreements    . No Loan Party will, and Anixter will not permit any Loan Party to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of such Person to create, incur, or permit to exist any Lien upon any of its property or assets, or (a) the ability of any Subsidiary of Anixter to pay dividends or other distributions with respect to any of its Equity Interests or to make or repay loans or advances to Anixter or any other Subsidiary or to guarantee Indebtedness of Anixter or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by any Requirement of Law or by any Loan Document or by any “Loan Document” (as defined in the Receivables Facility Credit Agreement), (i) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 6.10 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (i) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided that such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (i) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness, and (i) clause (a) of the foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof.

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6.11    Amendment of Material Documents    . 
(a)    No Loan Party will, and Anixter will not permit any member of the Consolidated Group to, amend, modify or waive any of its rights under (b) any agreement relating to any Subordinated Indebtedness, or (c) the Revolving Subordinated Note, or  the HD Supply Acquisition Agreement, in each case without five (5) Business Days’ prior written notice or to the extent any such amendment, modification, or waiver would be adverse to the Lenders.
(d)    Notwithstanding anything to the contrary contained in this Section 6.11, none of the Loan Parties will, amend, modify or waive any of its rights under (e) its Organization Documents or (f) any Receivables Facility Transaction Documents, in each case, without five (5) Business Days’ prior written notice or to the extent any such amendment, modification or waiver would impair its ability to comply with the terms or provisions of any of the Receivables Facility Loan Documents, including Section 6.19 of the Receivables Facility Credit Agreement, or any of the Receivables Facility Transaction Documents as in effect on the ClosingAmendment No. 3 Effective Date.
6.12    Employee Benefit Matters    . No Loan Party will, and Anixter will not permit any ERISA Affiliates (including ARC) to, do any of the following which, individually, or in the aggregate, could reasonably be expected to result in a Material Adverse Effect:
(a)    engage in any prohibited transaction described in Section 406 of ERISA or 4975 of the IRC for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the U.S. Department of Labor;
(b)    permit any failure to make “minimum required contributions” (as defined in Sections 302 of ERISA and 412 of the IRC), whether or not waived;
(c)    fail to pay timely required contributions or annual installments due with respect to any waived funding deficiency to any BenefitPension Plan;
(d)    terminate any BenefitPension Plan in a distress termination under Section 4041(c) of ERISA which would result in any liability to Anixter or any ERISA Affiliates;
(e)    fail to make any contribution or payment to any Multiemployer Plan which Anixter or any ERISA Affiliates may be required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto;
(f)    fail to pay any required installment or any other payment required under Section 412 or 430 of the IRC on or before the due date for such installment or other payment;
(g)    amend a Pension Plan resulting in an increase in the “adjusted funding target attainment percentage” (as defined in Section 436 of the IRC) for the plan year such that Anixter or any ERISA Affiliates is required to provide security to such Pension Plan under Section 436 of the IRC;
(h)    permit any unfunded liabilities with respect to any Foreign Pension Plan to exist; or
(i)    fail to pay any required contribution or payment to a Foreign Pension Plan on or before the date for such required installment or payment.

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6.13    Environmental Liabilities    . No Loan Party will, and Anixter will not permit any member of the Consolidated Group to, become subject to any Environmental Liability which could reasonably be expected to result in a Material Adverse Effect.
6.14    Minimum Fixed Charge Coverage Ratio    . Anixter will not permit the Consolidated Fixed Charge Coverage Ratio, calculated as of the end of any Fiscal Quarter for the period of four Fiscal Quarters then most recently ended, commencing on the date that a Financial Covenant Trigger Period first begins and measured as of the end of the Fiscal Quarter ending immediately preceding the date on which such Financial Covenant Trigger Period first began and as of the end of each Fiscal Quarter thereafter during such Financial Covenant Trigger Period, to be less than 1.0 to 1.0. The Consolidated Fixed Charge Coverage Ratio will be calculated after the elimination of the minority interest in any Subsidiaries that are not wholly owned Subsidiaries.
6.15    Inventory with Bailees    . Each Borrower will not, and will not permit any other Loan Party to, store its Inventory at any time with a bailee, warehouseman, consignee, or similar party, unless either (i) the applicable Loan Party has provided Administrative Agent a Collateral Access Agreement with respect thereto or (ii) if the applicable Loan Party does not so provide Administrative Agent a Collateral Access Agreement with respect thereto, Administrative Agent has the option, in its discretion, to institute a reserve for rent in accordance with Section 2.1(c) hereof.
7.    [Reserved]    .
8.    EVENTS OF DEFAULT    .
Any one or more of the following events shall constitute an event of default (each, an “Event of Default”) under this Agreement:
(a)    any Borrower shall fail to pay any principal of any Obligation when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;
(b)    any Borrower shall fail to pay any interest on any Obligation or any fee or any other amount (other than an amount referred to in clause (a) of this Section 8) payable under this Agreement or any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three (3) Business Days;
(c)    any representation or warranty made or deemed made by or on behalf of any Loan Party, Anixter, or any of their respective Subsidiaries in, or in connection with, this Agreement, any other Loan Document, or any Receivables Facility Transaction Document, or any amendment or modification hereof or thereof or waiver hereunder or thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement, any other Loan Document, or any Receivables Facility Transaction Document, or any amendment or modification hereof or thereof or waiver hereunder or thereunder, shall prove to have been false or misleading in any material respect (or, if such representation or warranty is already qualified or modified by materiality in the text thereof, in any respect) when made or deemed made;

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(d)    any Loan Party, Anixter, or any of their respective Subsidiaries shall fail to observe or perform any covenant, condition, or agreement contained in Section 5.1 (other than clauses (b) (but only with respect to the last Fiscal Quarter of a Fiscal Year), (i), (j), (l), and (m)), 5.2(a), 5.3 (with respect to a Loan Party’s existence), 5.8, or 5.10 or in Section 6 (other than Section 6.12);
(e)    (f) any Loan Party, Anixter, or any of their respective Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in Section 5.1(b) (but only with respect to the last Fiscal Quarter of a Fiscal Year), 5.1(j), 5.1(l), 5.1(m), 5.2 (other than clause (a)), 5.3 (other than with respect to a Loan Party’s existence), 5.4, 5.5, 5.6 (solely if Anixter of any its Subsidiaries refuses to permit any representative designated by the Administrative Agent or any Lender to visit and inspect such Person’s properties, to conduct at such Person’s premises field examinations of such Person’s assets, liabilities, books and records, including examining and making extracts from its books and records, environmental assessment reports, and to discuss its affairs, finances and condition with its officers and independent accountants, in each case subject to and in accordance with Section 5.6), 5.7, or 5.14, and such failure shall continue unremedied for a period of fifteen (15) days after the earlier of knowledge of such breach by any Loan Party, Anixter, or any of their respective Subsidiaries or notice thereof from Administrative Agent (which notice will be given at the request of any Lender); provided that, with respect to Section 5.1(b) as set forth in this clause (i), the grace period shall be the shorter of fifteen (15) days and the date such deliveries required thereunder were delivered or required to be delivered to the SEC; or (i) any Loan Party, Anixter, or any of their respective Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in this Agreement or any other Loan Document (unless a specific cure and/or grace period relating to such covenant, condition or agreement is referenced in such Loan Document) or any Receivables Facility Transaction Document (other than those which constitute a default under another clause of this Section 8), and such failure shall continue unremedied for a period of thirty (30) days after the earlier of knowledge of such breach by any Loan Party, Anixter, or any of their respective Subsidiaries or notice thereof from Administrative Agent (which notice will be given at the request of any Lender);
(g)    AXE, Anixter or any Subsidiary of Anixter shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness when and as the same shall become due and payable (beyond any applicable grace period);
(h)    (i) any “Amortization Event” occurs under the Receivables Facility Credit Agreement; or (i) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof;
(j)    an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (k) liquidation, reorganization or other relief in respect of any Loan Party, AXE, Anixter, or any Subsidiary of Anixter with assets in excess of $35,000,000 or any such Person’s debts, or of a substantial part of any such Person’s assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (l) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party, AXE, Anixter, or any Subsidiary of Anixter with assets in excess of $35,000,000 or for a substantial part of any such Person’s assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered;

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(m)    any Loan Party, AXE, Anixter, or any Subsidiary of Anixter with assets in excess of $35,000,000 shall (n) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (o) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Section 8, (p) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Person or for a substantial part of its assets, (q) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (r) make a general assignment for the benefit of creditors, or (s) take any action for the purpose of effecting any of the foregoing;
(t)    any Loan Party, AXE, Anixter, or any Subsidiary of Anixter with assets in excess of $35,000,000 shall become unable, admit in writing its inability, or publicly declare its intention not to, or fail generally to pay its debts as they become due;
(u)    (v) an Enforceable Judgment (other than an Enforceable Judgment described in the proviso contained in the definition of the term “Enforceable Judgment”) for the payment of money in excess of $35,000,000 shall be rendered against Anixter, any Subsidiary of Anixter, or any combination thereof and the same shall remain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to enforce any such Enforceable Judgment; or (i) any Enforceable Judgment described in the proviso contained in the definition of the term “Enforceable Judgment” shall be rendered against any Borrower;
(w)    any order, judgment, or decree shall be entered against any Loan Party, AXE, Anixter, or any Subsidiary of Anixter with assets in excess of $35,000,000 decreeing its involuntary dissolution or split-up and such order shall remain undischarged and unstayed for a period in excess of thirty (30) days, or any Loan Party, AXE, Anixter, or any Subsidiary of Anixter with assets in excess of $35,000,000 shall otherwise dissolve or cease to exist, in each case except as expressly permitted pursuant to Section 6.3(a) or 6.3(b);
(x)    (y) any one or more Termination Events occur which could reasonably be expected to subject Anixter or an ERISA Affiliate to a liability to pay more than $75,000,000 in the aggregate, or (z) the plan administrator of any Plan applies under Section 412(c) of the IRC for a waiver of the minimum funding standards of Section 412(a) of the IRC and the substantial business hardship upon which the application for the waiver is based could reasonably be expected to subject either Anixter or any ERISA Affiliate to a liability of more than $75,000,000 in the aggregate;
(aa)    (bb) a Change in Control shall occur, (i) Anixter shall cease to own directly or indirectly all of the capital stock of each other Borrower (other than director’s qualifying shares); (i) except as permitted in Section 6.5(a), Anixter shall cease to own directly or indirectly at least 51% of the outstanding stock of each class of the capital stock of each Subsidiary of Anixter; or (i) AXE shall cease to own at least 51% of the outstanding stock of each class of the capital stock of Anixter;
(cc)    any breach or other violation by any holder of the Revolving Subordinated Note of the subordination or enforcement restrictions applicable thereto shall occur;
(dd)    the guaranty provisions of the Guaranty and Security Agreement or any other guarantee of the Obligations shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of the guaranty provisions of the Guaranty and Security 

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Agreement or any other guarantee of the Obligations, or any Guarantor shall fail to comply with the guaranty provisions of the Guaranty and Security Agreement or any other guarantee of the Obligations to which it is a party, or any Guarantor shall deny that it has any further liability under the guaranty provisions of the Guaranty and Security Agreement or any other guaranty of the Obligations to which it is a party, or shall give notice to such effect;
(ee)    except as permitted by the terms of this Agreement, any Collateral Document, or the Intercreditor Agreement, (ff) any Collateral Document shall for any reason fail to create a valid security interest in any Collateral with a value of $1,000,000 or greater in the aggregate purported to be covered thereby, or (gg) any Lien securing any Obligation shall cease to be a perfected, first-priority Lien;
(hh)    any Collateral Document shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of any Collateral Document;
(ii)    any material provision of any Loan Document or any Receivables Facility Transaction Document for any reason ceases to be valid, binding and enforceable in accordance with its terms (or any Person party thereto shall challenge the enforceability of any Loan Document or any Receivables Facility Transaction Document or shall assert in writing, or engage in any action or inaction that evidences its assertion, that any provision of any of the Loan Documents or any of the Receivables Facility Transaction Documents has ceased to be or otherwise is not valid, binding and enforceable in accordance with its terms);
(jj)    (kk) the Indebtedness evidenced by the 5.625% Senior Notes due 2019 issued under the 2012 Notes Indenture is not repaid in full or refinanced or replaced on terms mutually satisfactory to Anixter and Administrative Agent (including, as to any Indebtedness refinancing or replacing such notes, such Indebtedness having a maturity date not earlier than ninety (90) days after the Maturity Date) by January 31, 2019, which is the date that is ninety (90) days before the stated maturity date of such notes as of the ClosingAmendment No. 3 Effective Date; (i) the Indebtedness evidenced by the 5.125% Senior Notes due 2021 issued under the 2012 Notes Indenture is not repaid in full or refinanced or replaced on terms mutually satisfactory to Anixter and Administrative Agent (including, as to any Indebtedness refinancing or replacing such notes, such Indebtedness having a maturity date not earlier than ninety (90) days after the Maturity Date) by July 1, 2021, which is the date that is ninety (90) days before the stated maturity date of such notes as of the Amendment No. 3 Effective Date; and (i) the Indebtedness evidenced by the 5.50% Senior Notes due 2023 issued under the 2015 Notes Indenture is not repaid in full or refinanced or replaced on terms mutually satisfactory to Anixter and Administrative Agent (including, as to any Indebtedness refinancing or replacing such notes, such Indebtedness having a maturity date not earlier than ninety (90) days after the Maturity Date) by December 1, 2022, which is the date that is ninety (90) days before the stated maturity date of such notes as of the Amendment No. 3 Effective Date; or
(ll)    at any time that any Indebtedness under the 2012 Notes Indenture remains outstanding, any requirement arises under the 2012 Notes Indenture to grant liens upon any Collateral to secure any Indebtedness issued under the 2012 Notes Indenture.
9.    RIGHTS AND REMEDIES    .
9.1    Rights and Remedies    . Upon the occurrence and during the continuation of an Event of Default, Administrative Agent may, and, at the instruction of the Required Lenders, shall (in each case under clauses (a) or (b) by written notice to Borrowers), in addition to any other rights or remedies provided for hereunder or under any other Loan Document or by applicable law, do any one or more of the following:

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(a)    (b) declare the principal of, and any and all accrued and unpaid interest and fees in respect of, the Loans and all other Obligations (other than the Bank Product Obligations), whether evidenced by this Agreement or by any of the other Loan Documents to be immediately due and payable, whereupon the same shall become and be immediately due and payable and Borrowers shall be obligated to repay all of such Obligations in full, without presentment, demand, protest, or further notice or other requirements of any kind, all of which are hereby expressly waived by each Borrower, and (c) direct Borrowers to provide (and Borrowers agree that upon receipt of such notice Borrowers will provide) Letter of Credit Collateralization to Administrative Agent to be held as security for Borrowers’ reimbursement obligations for drawings that may subsequently occur under issued and outstanding Letters of Credit;
(d)    declare the Commitments terminated, whereupon the Commitments shall immediately be terminated together with (e) any obligation of any Revolving Lender to make Revolving Loans, (f) the obligation of the Swing Lender to make Swing Loans, and (g) the obligation of Issuing Bank to issue Letters of Credit; and
(h)    exercise all other rights and remedies available to Administrative Agent or the Lenders under the Loan Documents, under applicable law, or in equity.
The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default described in clauses (h) or (i) of Section 8, in addition to the remedies set forth above, without any notice to Borrowers or any other Person or any act by the Lender Group, the Commitments shall automatically terminate and the Obligations (other than the Bank Product Obligations), inclusive of the principal of, and any and all accrued and unpaid interest and fees in respect of, the Loans and all other Obligations (other than the Bank Product Obligations), whether evidenced by this Agreement or by any of the other Loan Documents, shall automatically become and be immediately due and payable and Borrowers shall automatically be obligated to repay all of such Obligations in full (including Borrowers being obligated to provide (and Borrowers agree that they will provide) (1) Letter of Credit Collateralization to Administrative Agent to be held as security for Borrowers’ reimbursement obligations in respect of drawings that may subsequently occur under issued and outstanding Letters of Credit and (2) Bank Product Collateralization to be held as security for Borrowers’ or their Subsidiaries’ obligations in respect of outstanding Bank Products), without presentment, demand, protest, or notice or other requirements of any kind, all of which are expressly waived by Borrowers.
9.2    Remedies Cumulative    . The rights and remedies of the Lender Group under this Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver. No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it.
10.    WAIVERS; INDEMNIFICATION    .
10.1    Demand; Protest; etc    . Each Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, 

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settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which any Borrower may in any way be liable.
10.2    The Lender Group’s Liability for Collateral    . Each Borrower hereby agrees that: (a) so long as Administrative Agent complies with its obligations, if any, under the Code, the Lender Group shall not in any way or manner be liable or responsible for: (i) the safekeeping of the Collateral, (i) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (i) any diminution in the value thereof, or (i) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (a) all risk of loss, damage, or destruction of the Collateral shall be borne by Borrowers.
10.3    Indemnification    . Each Borrower shall pay, indemnify, defend, and hold Administrative Agent-Related Persons, the Lender-Related Persons, the Issuing Bank, and each Participant (each, an “Indemnified Person”) harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable fees and disbursements of attorneys, experts, or consultants and all other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution and delivery (provided that Borrowers shall not be liable for costs and expenses (including attorneys’ fees) of any Lender (other than Wells Fargo) incurred in advising, structuring, drafting, reviewing, administering or syndicating the Loan Documents), enforcement, performance, or administration (including any restructuring or workout with respect hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby or the monitoring of the Loan Parties’ and their Subsidiaries’ compliance with the terms of the Loan Documents (provided, that the indemnification in this clause (a) shall not extend to (i) disputes solely between or among the Lenders that do not involve any acts or omissions of any Loan Party, or (i) disputes solely between or among the Lenders and their respective Affiliates that do not involve any acts or omissions of any Loan Party; it being understood and agreed that the indemnification in this clause (a) shall extend to Administrative Agent (but not the Lenders, unless the dispute involves an act or omission of a Loan Party) relative to disputes between or among Administrative Agent, in its capacity as such, on the one hand, and one or more Lenders, or one or more of their Affiliates, on the other hand, or (i) any Taxes or any costs attributable to Taxes, which shall be governed by Section 16, other than Taxes which relate to primarily non-Tax claims), (a) with respect to any actual or prospective investigation, litigation, or proceeding related to this Agreement, any other Loan Document, the making of any Loans or issuance of any Letters of Credit hereunder, or the use of the proceeds of the Loans or the Letters of Credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto, and (a) in connection with or arising out of any presence or release of Hazardous Materials at, on, under, to or from any assets or properties owned, leased or operated by any Borrower or any of its Subsidiaries or any Environmental Liabilities or remedial actionsRemedial Actions under or in respect of Environmental Laws related in any way to any such assets or properties of any Borrower or any of its Subsidiaries (each and all of the foregoing, the “Indemnified Liabilities”). The foregoing to the contrary notwithstanding, no Borrower shall have any obligation to any Indemnified Person under this Section 10.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person or 

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its officers, directors, employees, attorneys, or agents. This provision shall survive the termination of this Agreement and the repayment in full of the Obligations. If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability as to which Borrowers were required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by Borrowers with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
11.    NOTICES    .
Unless otherwise provided in this Agreement, all notices or demands relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as a party may designate in accordance herewith), or telefacsimile. In the case of notices or demands to any Borrower or Administrative Agent, as the case may be, they shall be sent to the respective address set forth below:

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	If to any Borrower:
	Anixter Inc. 
2301 Patriot Boulevard 
Glenview, Illinois 60026 
Attn: David JohnsonKevin Burns 
Fax No.: (224) 521‐8990      

	 
	 

	with copies to:
	Schiff Hardin LLP 
233 South Wacker Drive, Suite 6600
Chicago, Illinois 60606-6473 
Attn: Kevin C. Knohl 
Fax No.: (312) 258-5600

	 
	 

	If to Administrative Agent:
	Wells Fargo Bank, National Association 
10 South Wacker Drive, 1326th Floor 
MAC N8405-131261 
Chicago, Illinois 60606 
Attn: Loan Portfolio Manager (Anixter) 
Fax No.: (312) 332-0424

	 
	 

	with copies to:
	McGuireWoods LLP 
77 West Wacker Drive, Suite 4100 
Chicago, Illinois 60601
Attn: Philip J. Perzek 
Fax No.: (312) 698-4555

Any party hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other party. All notices or demands sent in accordance with this Section 11, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail; provided, that (a) notices sent by overnight courier service shall be deemed to have been given when received, (b) notices by facsimile 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) and (c) notices by electronic mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return email or other written acknowledgment).
12.    CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION.    
(a)    THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, THE RIGHTS OF THE 

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PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO, AND ANY CLAIMS, CONTROVERSIES OR DISPUTES ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
(b)    THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF COOK, STATE OF ILLINOIS; PROVIDED, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT ADMINISTRATIVE AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE ADMINISTRATIVE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b).
(c)    TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS, IF ANY, TO A JURY TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS (EACH A “CLAIM”). EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
(d)    EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF COOK AND THE STATE OF ILLINOIS, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT. 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 ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ADMINISTRATIVE AGENT MAY OTHERWISE HAVE TO 

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BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(e)    NO CLAIM MAY BE MADE (f) BY ANY LOAN PARTY AGAINST ADMINISTRATIVE AGENT, THE SWING LENDER, ANY OTHER LENDER, ISSUING BANK, OR ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, REPRESENTATIVE, AGENT, OR ATTORNEY-IN-FACT OF ANY OF THEM, OR (g) BY ANY MEMBER OF THE LENDER GROUP AGAINST ANY LOAN PARTY OR ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, REPRESENTATIVE, AGENT, OR ATTORNEY-IN-FACT OF ANY OF THEM, IN EACH CASE FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OR LOSSES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH LOAN PARTY AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
(h)    IN THE EVENT ANY LEGAL PROCEEDING IS FILED IN A COURT OF THE STATE OF CALIFORNIA (THE “COURT”) BY OR AGAINST ANY PARTY HERETO IN CONNECTION WITH ANY CLAIM AND THE WAIVER SET FORTH IN CLAUSE (c) ABOVE IS NOT ENFORCEABLE IN SUCH PROCEEDING, THE PARTIES HERETO AGREE AS FOLLOWS:
(i)    WITH THE EXCEPTION OF THE MATTERS SPECIFIED IN SUBCLAUSE (ii) BELOW, ANY CLAIM SHALL BE DETERMINED BY A GENERAL REFERENCE PROCEEDING IN ACCORDANCE WITH THE PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1. THE PARTIES INTEND THIS GENERAL REFERENCE AGREEMENT TO BE SPECIFICALLY ENFORCEABLE. VENUE FOR THE REFERENCE PROCEEDING SHALL BE IN THE COUNTY OF LOS ANGELES, CALIFORNIA.
(ii)    THE FOLLOWING MATTERS SHALL NOT BE SUBJECT TO A GENERAL REFERENCE PROCEEDING: (i) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN REAL OR PERSONAL PROPERTY, (j) EXERCISE OF SELF-HELP REMEDIES (INCLUDING SET-OFF OR RECOUPMENT), (k) APPOINTMENT OF A RECEIVER, AND (l) TEMPORARY, PROVISIONAL, OR ANCILLARY REMEDIES (INCLUDING WRITS OF ATTACHMENT, WRITS OF POSSESSION, TEMPORARY RESTRAINING ORDERS, OR PRELIMINARY INJUNCTIONS). THIS 

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AGREEMENT DOES NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS AND REMEDIES DESCRIBED IN CLAUSES (A) THROUGH (D) AND ANY SUCH EXERCISE OR OPPOSITION DOES NOT WAIVE THE RIGHT OF ANY PARTY TO PARTICIPATE IN A REFERENCE PROCEEDING PURSUANT TO THIS AGREEMENT WITH RESPECT TO ANY OTHER MATTER.
(i)    UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL SELECT A SINGLE REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE. IF THE PARTIES DO NOT AGREE UPON A REFEREE WITHIN 10 DAYS OF SUCH WRITTEN REQUEST, THEN, ANY PARTY SHALL HAVE THE RIGHT TO REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 640(B). THE REFEREE SHALL BE APPOINTED TO SIT WITH ALL OF THE POWERS PROVIDED BY LAW. PENDING APPOINTMENT OF THE REFEREE, THE COURT SHALL HAVE THE POWER TO ISSUE TEMPORARY OR PROVISIONAL REMEDIES.
(ii)    EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE REFEREE SHALL DETERMINE THE MANNER IN WHICH THE REFERENCE PROCEEDING IS CONDUCTED INCLUDING THE TIME AND PLACE OF HEARINGS, THE ORDER OF PRESENTATION OF EVIDENCE, AND ALL OTHER QUESTIONS THAT ARISE WITH RESPECT TO THE COURSE OF THE REFERENCE PROCEEDING. ALL PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE, EXCEPT FOR TRIAL, SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT WHEN ANY PARTY SO REQUESTS A COURT REPORTER AND A TRANSCRIPT IS ORDERED, A COURT REPORTER SHALL BE USED AND THE REFEREE SHALL BE PROVIDED A COURTESY COPY OF THE TRANSCRIPT. THE PARTY MAKING SUCH REQUEST SHALL HAVE THE OBLIGATION TO ARRANGE FOR AND PAY THE COSTS OF THE COURT REPORTER, PROVIDED THAT SUCH COSTS, ALONG WITH THE REFEREE’S FEES, SHALL ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED BY THE REFEREE.
(iii)    THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING CONFERENCES. THE PARTIES HERETO SHALL BE ENTITLED TO DISCOVERY, AND THE REFEREE SHALL OVERSEE DISCOVERY IN ACCORDANCE WITH THE RULES OF DISCOVERY, AND SHALL ENFORCE ALL DISCOVERY ORDERS IN THE SAME MANNER AS ANY TRIAL COURT JUDGE IN PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA.
(iv)    THE REFEREE SHALL APPLY THE RULES OF EVIDENCE APPLICABLE TO PROCEEDINGS AT LAW IN THE STATE OF 

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CALIFORNIA AND SHALL DETERMINE ALL ISSUES IN ACCORDANCE WITH CALIFORNIA SUBSTANTIVE AND PROCEDURAL LAW. THE REFEREE SHALL BE EMPOWERED TO ENTER EQUITABLE AS WELL AS LEGAL RELIEF AND RULE ON ANY MOTION WHICH WOULD BE AUTHORIZED IN A TRIAL, INCLUDING MOTIONS FOR DEFAULT JUDGMENT OR SUMMARY JUDGMENT. THE REFEREE SHALL REPORT HIS OR HER DECISION, WHICH REPORT SHALL ALSO INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW. THE REFEREE SHALL ISSUE A DECISION AND PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE, SECTION 644, THE REFEREE’S DECISION SHALL BE ENTERED BY THE COURT AS A JUDGMENT IN THE SAME MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT. THE FINAL JUDGMENT OR ORDER FROM ANY APPEALABLE DECISION OR ORDER ENTERED BY THE REFEREE SHALL BE FULLY APPEALABLE AS IF IT HAS BEEN ENTERED BY THE COURT.
(v)    THE PARTIES RECOGNIZE AND AGREE THAT ALL CLAIMS RESOLVED IN A GENERAL REFERENCE PROCEEDING PURSUANT HERETO WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH PARTY HERETO KNOWINGLY AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT AGREES THAT THIS REFERENCE PROVISION SHALL APPLY TO ANY DISPUTE BETWEEN THEM THAT ARISES OUT OF OR IS RELATED TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
13.    ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS    .
13.1    Assignments and Participations    .
(a)    (b) Subject to the conditions set forth in clause (a)(ii) below, any Lender may assign and delegate all or any portion of its rights and duties under the Loan Documents (including the Obligations owed to it and its Commitments) to one or more assignees (each, an “Assignee”), with the prior written consent (such consent not be unreasonably withheld or delayed) of:
(A)    Borrowers; provided, that no consent of Borrowers shall be required (1) if an Event of Default has occurred and is continuing, or (2) in connection with an assignment to a Person that is a Lender or an Affiliate (other than natural persons) of a Lender; provided further, that Borrowers shall be deemed to have consented to a proposed assignment unless they object thereto by written notice to Administrative Agent within 10 Business Days after having received notice thereof; and
(B)    Administrative Agent, Swing Lender, and Issuing Bank.

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(ii)    Assignments shall be subject to the following additional conditions:
(A)    no assignment may be made to a natural person,
(B)    no assignment may be made to a Loan Party, an Affiliate of a Loan Party, or any Sponsor Affiliated Entity,
(C)    the amount of the Commitments and the other rights and obligations of the assigning Lender hereunder and under the other Loan Documents subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to Administrative Agent) shall be in a minimum amount (unless waived by Administrative Agent) of $5,000,000 (except such minimum amount shall not apply to (I) an assignment or delegation by any Lender to any other Lender, an Affiliate of any Lender, or a Related Fund of such Lender or (II) a group of new Lenders, each of which is an Affiliate of each other or a Related Fund of such new Lender to the extent that the aggregate amount to be assigned to all such new Lenders is at least $5,000,000),
(D)    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,
(E)    the parties to each assignment shall execute and deliver to Administrative Agent an Assignment and Acceptance; provided, that Borrowers and Administrative Agent may continue to deal solely and directly with the assigning Lender in connection with the interest so assigned to an Assignee until written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been given to Borrowers and Administrative Agent by such Lender and the Assignee,
(F)    unless waived by Administrative Agent, the assigning Lender or Assignee has paid to Administrative Agent, for Administrative Agent’s separate account, a processing fee in the amount of $5,000,
(G)    the assignee, if it is not a Lender, shall deliver to Administrative Agent an Administrative Questionnaire in a form approved by Administrative Agent (the “Administrative Questionnaire”), and
(H)    each assignment must be accompanied by an assignment of a proportionate part of all of the assigning Lender’s rights and obligations under the Receivables Facility Credit Agreement (including a 

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proportionate part of the Receivables Facility Secured Obligations owed to such assigning Lender and a proportionate part of such assigning Lender’s “Commitment” under and as defined in the Receivables Facility Credit Agreement).
(c)    From and after the date that Administrative Agent receives the executed Assignment and Acceptance and, if applicable, payment of the required processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall be a “Lender” and shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to Section 10.3) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto); provided, that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Section 15 and Section 17.9(a).
(d)    By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto, (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower or the performance or observance by any Borrower of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto, (iii) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such Assignee will, independently and without reliance upon Administrative Agent, such assigning Lender 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 this Agreement, (v) such Assignee appoints and authorizes Administrative Agent to take such actions and to exercise such powers under this Agreement and the other Loan Documents as are delegated to Administrative Agent, by the terms hereof and thereof, together with such powers as are reasonably incidental thereto, and (vi) such Assignee agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.
(e)    Immediately upon Administrative Agent’s receipt of the required processing fee, if applicable, and delivery of notice to the assigning Lender pursuant to Section 13.1(b), this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto.

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(f)    Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Persons (a “Participant”) participating interests in all or any portion of its Obligations, its Commitment, and the other rights and interests of that Lender (the “Originating Lender”) hereunder and under the other Loan Documents; provided, that (i) the Originating Lender shall remain a “Lender” for all purposes of this Agreement and the other Loan Documents and the Participant receiving the participating interest in the Obligations, the Commitments, and the other rights and interests of the Originating Lender hereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and the Originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrowers, Administrative Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender’s rights and obligations under this Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant any participating interest under which the Participant has the right to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend the final maturity date of the Obligations hereunder in which such Participant is participating, (B) reduce the interest rate applicable to the Obligations hereunder in which such Participant is participating, (C) release all or substantially all of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Obligations hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the amount of, the interest or fees payable to such Participant through such Lender (other than a waiver of default interest), or (E) decreases the amount or postpones the due dates of scheduled principal repayments or prepayments or premiums payable to such Participant through such Lender, (v) no participation shall be sold to a natural person, (vi) no participation shall be sold to a Loan Party, an Affiliate of a Loan Party, or any Sponsor Affiliated Entity, and (vii) all amounts payable by Borrowers hereunder shall be determined as if such Lender had not sold such participation, except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. The rights of any Participant only shall be derivative through the Originating Lender with whom such Participant participates and no Participant shall have any rights under this Agreement or the other Loan Documents or any direct rights as to the other Lenders, Administrative Agent, Borrowers, the Collateral, or otherwise in respect of the Obligations. No Participant shall have the right to participate directly in the making of decisions by the Lenders among themselves.
(g)    In connection with any such assignment or participation or proposed assignment or participation or any grant of a security interest in, or pledge of, its rights under and interest in this Agreement, a Lender may, subject to the provisions of Section 17.9, disclose all documents and information which it now or hereafter may have relating to any Borrower and its Subsidiaries and their respective businesses.
(h)    Any other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. 

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Treasury Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law.
(i)    Administrative Agent (as a non-fiduciary agent on behalf of Borrowers) shall maintain, or cause to be maintained, a register (the “Register”) on which it enters the name and address of each Lender as the registered owner of the Revolving Loans and/or Obligations (and the principal amount thereof and stated interest thereon) held by such Lender (each, a “Registered Loan”). Other than in connection with an assignment by a Lender of all or any portion of its portion of the Revolving Loans and/or Obligations to an Affiliate of such Lender or a Related Fund of such Lender (i) a Registered Loan (and the registered note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each registered note shall expressly so provide) and (ii) any assignment or sale of all or part of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register, together with the surrender of the registered note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such registered note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new registered notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s). Prior to the registration of assignment or sale of any Registered Loan (and the registered note, if any evidencing the same), Borrowers shall treat the Person in whose name such Registered Loan (and the registered note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding notice to the contrary. In the case of any assignment by a Lender of all or any portion of its Revolving Loans and/or Obligations to an Affiliate of such Lender or a Related Fund of such Lender, and which assignment is not recorded in the Register, the assigning Lender, on behalf of Borrowers, shall maintain a register comparable to the Register.
(j)    In the event that a Lender sells participations in the Registered Loan, such Lender, as a non-fiduciary agent on behalf of Borrowers, shall maintain (or cause to be maintained) a register on which it enters the name of all participants in the Registered Loans held by it (and the principal amount (and stated interest thereon) of the portion of such Registered Loans that is subject to such participations) (the “Participant Register”). A Registered Loan (and the registered note, if any, evidencing the same) may be participated in whole or in part only by registration of such participation on the Participant Register (and each registered note shall expressly so provide). Any participation of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by the registration of such participation on the Participant Register.
(k)    Administrative Agent shall make a copy of the Register (and each Lender shall make a copy of its Participant Register in the extent it has one) available for review by Borrowers from time to time as Borrowers may reasonably request.
13.2    Successors    . This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided, that no Borrower may assign this Agreement or any rights or duties hereunder without the Lenders’ prior written consent and any prohibited assignment shall be absolutely void ab initio. No consent to assignment by the Lenders shall release any Borrower from its 

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Obligations. A Lender may assign this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder pursuant to Section 13.1 and, except as expressly required pursuant to Section 13.1, no consent or approval by any Borrower is required in connection with any such assignment.
14.    AMENDMENTS; WAIVERS    .
14.1    Amendments and Waivers    .
(a)    No amendment, waiver or other modification of any provision of this Agreement or any other Loan Document (other than Bank Product Agreements or the Fee Letter), and no consent with respect to any departure by any Loan Party therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by Administrative Agent at the written request of the Required Lenders) and the Loan Parties that are party thereto and then any such waiver or consent shall be effective, but only in the specific instance and for the specific purpose for which given; provided, that no such waiver, amendment, or consent shall, unless in writing and signed by all of the Lenders directly affected thereby and all of the Loan Parties that are party thereto, do any of the following:
(i)    increase the amount of or extend the expiration date of any Commitment of any Lender or amend, modify, or eliminate the last sentence of Section 2.4(c)(i);
(ii)    postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other Loan Document or amend, modify, or eliminate the definition of “Maturity Date”;
(iii)    reduce the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any other Loan Document (except (y) in connection with the waiver of applicability of Section 2.6(c) (which waiver shall be effective with the written consent of the Required Lenders), and (z) that any amendment or modification of defined terms used in the financial covenants in this Agreement shall not constitute a reduction in the rate of interest or a reduction of fees for purposes of this clause (iii));
(iv)    amend, modify, or eliminate this Section 14.1 or any provision of this Agreement providing for consent or other action by all Lenders;
(v)    amend, modify, or eliminate Section 3.1 or 3.2;
(vi)    amend, modify, or eliminate Section 15.11;
(vii)    other than as permitted by Section 15.11, release Administrative Agent’s Lien in and to any of the Collateral;

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(viii)    amend, modify, or eliminate the definitions of “Required Lenders” or “Pro Rata Share”;
(ix)    contractually subordinate any of Administrative Agent’s Liens (other than to provide, with respect to any Lien that has priority over Administrative Agent’s Liens pursuant to any applicable law, an acknowledgment or other similar ministerial confirmation of the priority of such Lien relative to Administrative Agent’s Liens);
(x)    other than in connection with a merger, liquidation, dissolution or sale of such Person expressly permitted by the terms hereof or the other Loan Documents, release any Borrower or any Guarantor from any obligation for the payment of money or consent to the assignment or transfer by any Borrower or any Guarantor of any of its rights or duties under this Agreement or the other Loan Documents; or
(xi)    amend, modify, or eliminate any of the provisions of Section 2.4(b)(i), (ii), or (iii) or Section 2.4(e) or (f).
(b)    No amendment, waiver, modification, or consent shall amend, modify, waive, or eliminate:
(i)    the definition of, or any of the terms or provisions of, the Fee Letter, without the written consent of Administrative Agent and Borrowers (and shall not require the written consent of any of the Lenders); or
(ii)    any provision of Section 15 pertaining to Administrative Agent, or any other rights or duties of Administrative Agent under this Agreement or the other Loan Documents, without the written consent of Administrative Agent, Borrowers, and the Required Lenders.
(c)    No amendment, waiver, modification, elimination, or consent shall, without written consent of Administrative Agent, Borrowers, and each Lender (other than any Defaulting Lender), do any of the following: (d) amend, modify, or eliminate the definition of “Borrowing Base” or any of the defined terms (including, without limitation, the definition of “Eligible Inventory”) that are used in such definition, to the extent that any such change results in more credit being made available to Borrowers based upon the Borrowing Base, but not otherwise; (e) amend, modify, or eliminate the definition of “Maximum Revolver Amount”; or (f) change Section 2.1(c).
(g)    No amendment, waiver, modification, elimination, or consent shall amend, modify, or eliminate clause (t) of Section 8 without the written consent of Administrative Agent, Borrowers, and each Lender (other than any Defaulting Lender).
(h)    No amendment, waiver, modification, elimination, or consent shall amend, modify, or waive any provision of this Agreement or the other Loan Documents pertaining to Issuing Bank, or any other rights or duties of Issuing Bank under this Agreement or the other Loan Documents, without the written consent of Issuing Bank, Administrative Agent, Borrowers, and the Required Lenders.

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(i)    No amendment, waiver, modification, elimination, or consent shall amend, modify, or waive any provision of this Agreement or the other Loan Documents pertaining to Swing Lender, or any other rights or duties of Swing Lender under this Agreement or the other Loan Documents, without the written consent of Swing Lender, Administrative Agent, Borrowers, and the Required Lenders.
(j)    Anything in this Section 14.1 to the contrary notwithstanding, (i) any amendment, modification, elimination, waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among themselves, and that does not affect the rights or obligations of any Loan Party, shall not require consent by or the agreement of any Loan Party, and (ii) any amendment, waiver, modification, elimination, or consent of or with respect to any provision of this Agreement or any other Loan Document may be entered into without the consent of, or over the objection of, any Defaulting Lender other than any of the matters governed by Section 14.1(a)(i) through (iii) that affect such Lender.
14.2    Replacement of Certain Lenders    .
(a)    If (i) any action to be taken by the Lender Group or Administrative Agent hereunder requires the consent, authorization, or agreement of all Lenders or all Lenders affected thereby and if such action has received the consent, authorization, or agreement of the Required Lenders but not of all Lenders or all Lenders affected thereby, or (ii) any Lender makes a claim for compensation under Section 16, then Borrowers or Administrative Agent, upon at least 5 Business Days prior irrevocable notice, may permanently replace any Lender that failed to give its consent, authorization, or agreement (a “Non-Consenting Lender”) or any Lender that made a claim for compensation (a “Tax Lender”) with one or more Replacement Lenders, and the Non-Consenting Lender or Tax Lender, as applicable, shall have no right to refuse to be replaced hereunder. Such notice to replace the Non-Consenting Lender or Tax Lender, as applicable, shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given.
(b)    Prior to the effective date of such replacement, the Non-Consenting Lender or Tax Lender, as applicable, and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Non-Consenting Lender or Tax Lender, as applicable, being repaid in full its share of the outstanding Obligations (without any premium or penalty of any kind whatsoever, but including (i) all interest, fees and other amounts that may be due in payable in respect thereof, and (ii) an assumption of its Pro Rata Share of participations in the Letters of Credit), and (iii) Funding Losses. If the Non-Consenting Lender or Tax Lender, as applicable, shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, Administrative Agent may, but shall not be required to, execute and deliver such Assignment and Acceptance in the name or and on behalf of the Non-Consenting Lender or Tax Lender, as applicable, and irrespective of whether Administrative Agent executes and delivers such Assignment and Acceptance, the Non-Consenting Lender or Tax Lender, as applicable, shall be deemed to have executed and delivered such Assignment and Acceptance. The replacement of any Non-Consenting Lender or Tax Lender, as applicable, shall be made in accordance with the terms of Section 13.1. Until such time as one or more Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other rights and obligations of the Non-Consenting Lender or Tax Lender, as applicable, hereunder and 

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under the other Loan Documents, the Non-Consenting Lender or Tax Lender, as applicable, shall remain obligated to make the Non-Consenting Lender’s or Tax Lender’s, as applicable, Pro Rata Share of Revolving Loans and to purchase a participation in each Letter of Credit, in an amount equal to its Pro Rata Share of participations in such Letters of Credit.
14.3    No Waivers; Cumulative Remedies    . No failure by Administrative Agent or any Lender to exercise any right, remedy, or option under this Agreement or any other Loan Document, or delay by Administrative Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by Administrative Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by Administrative Agent or any Lender on any occasion shall affect or diminish Administrative Agent’s and each Lender’s rights thereafter to require strict performance by Borrowers of any provision of this Agreement. Administrative Agent’s and each Lender’s rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy that Administrative Agent or any Lender may have.
15.    AGENT; THE LENDER GROUP    .
15.1    Appointment and Authorization of Administrative Agent    . Each Lender hereby designates and appoints Wells Fargo as its agent under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to designate, appoint, and authorize) Administrative Agent to execute and deliver each of the other Loan Documents on its behalf and to take such other action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Administrative Agent by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Administrative Agent agrees to act as agent for and on behalf of the Lenders (and the Bank Product Providers) on the conditions contained in this Section 15. Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein or in the other Loan Documents, nor shall Administrative Agent have or be deemed to have any fiduciary relationship with any Lender (or Bank Product Provider), and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Administrative Agent. Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement or the other Loan Documents with reference to Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only a representative relationship between independent contracting parties. Each Lender hereby further authorizes (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to authorize) Administrative Agent to act as the secured party under each of the Loan Documents that create a Lien on any item of Collateral. Except as expressly otherwise provided in this Agreement, Administrative Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that Administrative Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan 

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Documents that provides rights or powers to Administrative Agent, Lenders agree that Administrative Agent shall have the right to exercise the following powers as long as this Agreement remains in effect: (a) maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, payments and proceeds of Collateral, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents, or to take any other action with respect to any Collateral or Loan Documents which may be necessary to perfect, and maintain perfected, the security interests and Liens upon Collateral pursuant to the Loan Documents, (c) make Revolving Loans, for itself or on behalf of Lenders, as provided in the Loan Documents, (d) exclusively receive, apply, and distribute payments and proceeds of the Collateral as provided in the Loan Documents, (e) open and maintain such bank accounts and cash management arrangements as Administrative Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes, (f) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to any Borrower or its Subsidiaries, the Obligations, the Collateral, or otherwise related to any of same as provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Administrative Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents.
15.2    Delegation of Duties    . Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects as long as such selection was made without gross negligence or willful misconduct.
15.3    Liability of Administrative Agent    . None of Administrative Agent-Related Persons shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders (or Bank Product Providers) for any recital, statement, representation or warranty made by any Borrower or any of its Subsidiaries or Affiliates, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Administrative Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Borrower or its Subsidiaries or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Administrative Agent-Related Person shall be under any obligation to any Lenders (or Bank Product Providers) to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the books and records or properties of any Borrower or its Subsidiaries. No Agent-Related Person shall have any liability to any Lender, and Loan Party or any of their respective Affiliates if any request for a Loan, Letter of Credit or other extension of credit was not authorized by the applicable Borrower. Administrative Agent shall not be required to take any action that, in its opinion or in the opinion 

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of its counsel, may expose it to liability or that is contrary to any Loan Document or applicable law or regulation.
15.4    Reliance by Administrative Agent    . Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telefacsimile or other electronic method of transmission, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrowers or counsel to any Lender), independent accountants and other experts selected by Administrative Agent. Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless Administrative Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Administrative Agent shall act, or refrain from acting, as it deems advisable. If Administrative Agent so requests, it shall first be indemnified to its reasonable satisfaction by the Lenders (and, if it so elects, the Bank Product Providers) against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders (and Bank Product Providers).
15.5    Notice of Default or Event of Default    . Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Administrative Agent for the account of the Lenders and, except with respect to Events of Default of which Administrative Agent has actual knowledge, unless Administrative Agent shall have received written notice from a Lender or Borrowers referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a “notice of default.” Administrative Agent promptly will notify the Lenders of its receipt of any such notice or of any Event of Default of which Administrative Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Administrative Agent of such Event of Default. Each Lender shall be solely responsible for giving any notices to its Participants, if any. Subject to Section 15.4, Administrative Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Section 9; provided, that unless and until Administrative Agent has received any such request, Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable.
15.6    Credit Decision    . Each Lender (and Bank Product Provider) acknowledges that none of Administrative Agent-Related Persons has made any representation or warranty to it, and that no act by Administrative Agent hereinafter taken, including any review of the affairs of any Borrower and its Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Administrative Agent-Related Person to any Lender (or Bank Product Provider). Each Lender represents (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to represent) to Administrative Agent that it has, independently and without reliance upon any Administrative Agent-Related Person and 

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based on such due diligence, documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of each Borrower or any other Person party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrowers. Each Lender also represents (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to represent) that it will, independently and without reliance upon any Administrative Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of each Borrower or any other Person party to a Loan Document. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Administrative Agent, Administrative Agent shall not have any duty or responsibility to provide any Lender (or Bank Product Provider) with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any Borrower or any other Person party to a Loan Document that may come into the possession of any of Administrative Agent-Related Persons. Each Lender acknowledges (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that Administrative Agent does not have any duty or responsibility, either initially or on a continuing basis (except to the extent, if any, that is expressly specified herein) to provide such Lender (or Bank Product Provider) with any credit or other information with respect to any Borrower, its Affiliates or any of their respective business, legal, financial or other affairs, and irrespective of whether such information came into Administrative Agent’s or its Affiliates’ or representatives’ possession before or after the date on which such Lender became a party to this Agreement (or such Bank Product Provider entered into a Bank Product Agreement).
15.7    Costs and Expenses; Indemnification    . Administrative Agent may incur and pay Lender Group Expenses to the extent Administrative Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including court costs, attorneys’ fees and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not Borrowers are obligated to reimburse Administrative Agent or Lenders for such expenses pursuant to this Agreement or otherwise. Administrative Agent is authorized and directed to deduct and retain sufficient amounts from payments or proceeds of the Collateral received by Administrative Agent to reimburse Administrative Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders (or Bank Product Providers). In the event Administrative Agent is not reimbursed for such costs and expenses by Borrowers or their Subsidiaries, each Lender hereby agrees that it is and shall be obligated to pay to Administrative Agent such Lender’s ratable share thereof. Whether or not the transactions contemplated hereby are consummated, each of the Lenders, on a ratable basis, shall indemnify and defend Administrative Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrowers and without limiting the obligation of Borrowers to do so) from and against any and all Indemnified Liabilities; provided, that no Lender shall be liable for the payment to any Administrative Agent-Related Person of any portion of such 

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Indemnified Liabilities resulting solely from such Person’s gross negligence or willful misconduct nor shall any Lender be liable for the obligations of any Defaulting Lender in failing to make a Revolving Loan or other extension of credit hereunder. Without limitation of the foregoing, each Lender shall reimburse Administrative Agent upon demand for such Lender’s ratable share of any costs or out of pocket expenses (including attorneys, accountants, advisors, and consultants fees and expenses) incurred by Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any other Loan Document to the extent that Administrative Agent is not reimbursed for such expenses by or on behalf of Borrowers. The undertaking in this Section 15.7 shall survive the payment of all Obligations hereunder and the resignation or replacement of Administrative Agent.
15.8    Administrative Agent in Individual Capacity    . Wells Fargo and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, provide Bank Products to, acquire Equity Interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with any Borrower and its Subsidiaries and Affiliates and any other Person party to any Loan Document as though Wells Fargo were not Administrative Agent hereunder, and, in each case, without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, pursuant to such activities, Wells Fargo or its Affiliates may receive information regarding a Borrower or its Affiliates or any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of such Borrower or such other Person and that prohibit the disclosure of such information to the Lenders (or Bank Product Providers), and the Lenders acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Administrative Agent will use its reasonable best efforts to obtain), Administrative Agent shall not be under any obligation to provide such information to them. The terms “Lender” and “Lenders” include Wells Fargo in its individual capacity.
15.9    Successor Administrative Agent    . Administrative Agent may resign as Administrative Agent upon 30 days (10 days if an Event of Default has occurred and is continuing) prior written notice to the Lenders (unless such notice is waived by the Required Lenders) and Borrowers (unless such notice is waived by Borrowers) and without any notice to the Bank Product Providers. If Administrative Agent resigns under this Agreement, the Required Lenders shall be entitled, with (so long as no Event of Default has occurred and is continuing) the consent of Borrowers (such consent not to be unreasonably withheld, delayed, or conditioned), appoint a successor Administrative Agent for the Lenders (and the Bank Product Providers). If, at the time that Administrative Agent’s resignation is effective, it is acting as Issuing Bank or the Swing Lender, such resignation shall also operate to effectuate its resignation as Issuing Bank or the Swing Lender, as applicable, and it shall automatically be relieved of any further obligation to issue Letters of Credit, or to make Swing Loans. If no successor Administrative Agent is appointed prior to the effective date of the resignation of Administrative Agent, Administrative Agent may appoint, after consulting with the Lenders and Borrowers, a successor Administrative Agent. If Administrative Agent has materially breached or failed to perform any material provision of this Agreement or of applicable law, the Required Lenders may agree in writing to remove and replace Administrative Agent with a successor Administrative 

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Agent from among the Lenders with (so long as no Event of Default has occurred and is continuing) the consent of Borrowers (such consent not to be unreasonably withheld, delayed, or conditioned). In any such event, upon the acceptance of its appointment as successor Administrative Agent hereunder, such successor Administrative Agent shall succeed to all the rights, powers, and duties of the retiring Administrative Agent and the term “Administrative Agent” shall mean such successor Administrative Agent and the retiring Administrative Agent’s appointment, powers, and duties as Administrative Agent shall be terminated. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Section 15 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. If no successor Administrative Agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Administrative Agent hereunder until such time, if any, as the Lenders appoint a successor Administrative Agent as provided for above.
15.10    Lender in Individual Capacity    . Any Lender and its respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, provide Bank Products to, acquire Equity Interests in and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with any Borrower and its Subsidiaries and Affiliates and any other Person party to any Loan Documents as though such Lender were not a Lender hereunder without notice to or consent of the other members of the Lender Group (or the Bank Product Providers). The other members of the Lender Group acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, pursuant to such activities, such Lender and its respective Affiliates may receive information regarding a Borrower or its Affiliates or any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of such Borrower or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver such Lender will use its reasonable best efforts to obtain), such Lender shall not be under any obligation to provide such information to them.
15.11    Collateral Matters    .
(a)    The Lenders hereby irrevocably authorize (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to authorize) Administrative Agent to release any Lien (b) on any Collateral upon the termination of the Commitments and payment and satisfaction in full by Borrowers of all of the Obligations, (c) on any Collateral constituting property being sold or disposed of if a release is required or desirable in connection therewith and if Borrowers certify to Administrative Agent that the sale or disposition is permitted under Section 6.5 (and Administrative Agent may rely conclusively on any such certificate, without further inquiry), (d) on any Collateral constituting property in which none of Borrowers and their Subsidiaries owned any interest at the time Administrative Agent’s Lien was granted nor at any time thereafter, (e) on any Collateral constituting property leased or licensed to a Borrower or its Subsidiaries under a lease or license that has expired or is terminated in a transaction permitted under this Agreement, (f) on any Collateral in connection with a credit bid or purchase authorized under this Section 15.11, (g) in Administrative Agent’s discretion, in addition to any Collateral released as authorized under 

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clauses (i) through (v) above and clause (vii) below, on any other Collateral valued in the aggregate not in excess of $5,000,000 during any calendar year (it being agreed that Administrative Agent may rely conclusively on one or more certificates of Borrowers as to the value of any Collateral to be so released, without further inquiry), or (h) in Administrative Agent’s discretion, in addition to any Collateral released as authorized under clauses (i) through (vi) above, on any other Collateral valued in the aggregate not in excess of $10,000,000 during any calendar year, so long as before and after giving effect to any such release authorized under this clause (vii) the Borrowing Base exceeds the Maximum Revolver Amount (it being agreed that Administrative Agent may rely conclusively on one or more Borrowing Base Certificates and other certificates of Borrowers as to the amount of the Borrowing Base and/or the value of any Collateral to be so released, as applicable, without further inquiry). The Loan Parties and the Lenders hereby irrevocably authorize (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to authorize) Administrative Agent, based upon the instruction of the Required Lenders, to (A) consent to the sale of, credit bid, or purchase (either directly or indirectly through one or more entities) all or any portion of the Collateral at any sale thereof conducted under the provisions of the Bankruptcy Code, including Section 363 of the Bankruptcy Code, (B) credit bid or purchase (either directly or indirectly through one or more entities) all or any portion of the Collateral at any sale or other disposition thereof conducted under the provisions of the Code, including pursuant to Sections 9-610 or 9-620 of the Code, or (C) credit bid or purchase (either directly or indirectly through one or more entities) all or any portion of the Collateral at any other sale or foreclosure conducted or consented to by Administrative Agent in accordance with applicable law in any judicial action or proceeding or by the exercise of any legal or equitable remedy. In connection with any such credit bid or purchase, (i) the Obligations owed to the Lenders and the Bank Product Providers shall be entitled to be, and shall be, credit bid on a ratable basis (with Obligations with respect to contingent or unliquidated claims being estimated for such purpose if the fixing or liquidation thereof would not impair or unduly delay the ability of Administrative Agent to credit bid or purchase at such sale or other disposition of the Collateral and, if such contingent or unliquidated claims cannot be estimated without impairing or unduly delaying the ability of Administrative Agent to credit bid at such sale or other disposition, then such claims shall be disregarded, not credit bid, and not entitled to any interest in the Collateral that is the subject of such credit bid or purchase) and the Lenders and the Bank Product Providers whose Obligations are credit bid shall be entitled to receive interests (ratably based upon the proportion of their Obligations credit bid in relation to the aggregate amount of Obligations so credit bid) in the Collateral that is the subject of such credit bid or purchase (or in the Equity Interests of the any entities that are used to consummate such credit bid or purchase), and (ii) Administrative Agent, based upon the instruction of the Required Lenders, may accept non-cash consideration, including debt and equity securities issued by any entities used to consummate such credit bid or purchase and in connection therewith Administrative Agent may reduce the Obligations owed to the Lenders and the Bank Product Providers (ratably based upon the proportion of their Obligations credit bid in relation to the aggregate amount of Obligations so credit bid) based upon the value of such non-cash consideration; provided, that Bank Product Obligations not entitled to the application set forth in Section 2.4(b)(iii)(J) shall not be entitled to be, and shall not be, credit bid, or used in the calculation of the ratable interest of the Lenders and Bank Product Providers in the Obligations which are credit bid. Except as provided above, Administrative Agent will not execute and deliver a release of any Lien on any Collateral without the prior written authorization of (y) if the release is of all or substantially all of the Collateral, all of the Lenders (without requiring the authorization of the Bank Product Providers), or (z) otherwise, the Required Lenders (without requiring the authorization of the Bank Product Providers). Upon request by Administrative Agent or Borrowers at any time, the Lenders will (and if so requested, the Bank Product Providers will) confirm in writing Administrative Agent’s authority to release any such Liens on particular types or items 

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of Collateral pursuant to this Section 15.11; provided, that (1) anything to the contrary contained in any of the Loan Documents notwithstanding, Administrative Agent shall not be required to execute any document or take any action necessary to evidence such release on terms that, in Administrative Agent’s opinion, could expose Administrative Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly released) upon (or obligations of Borrowers in respect of) any and all interests retained by any Borrower, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral. Each Lender further hereby irrevocably authorize (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to irrevocably authorize) Administrative Agent, at its option and in its sole discretion, to subordinate any Lien granted to or held by Administrative Agent under any Loan Document to the holder of any Lien permitted by this Agreement on such property if such permitted Lien secures purchase money Indebtedness permitted by this Agreement.
(i)    Administrative Agent shall have no obligation whatsoever to any of the Lenders (or the Bank Product Providers) (i) to verify or assure that the Collateral exists or is owned by Borrowers or their Subsidiaries or is cared for, protected, or insured or has been encumbered, (ii) to verify or assure that Administrative Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, (iii) to verify or assure that any particular items of Collateral meet the eligibility criteria applicable in respect thereof, (iv) to impose, maintain, increase, reduce, implement, or eliminate any particular reserve hereunder or to determine whether the amount of any reserve is appropriate or not, or (v) 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, authorities and powers granted or available to Administrative Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Administrative Agent may act in any manner it may deem appropriate, in its sole discretion given Administrative Agent’s own interest in the Collateral in its capacity as one of the Lenders and that Administrative Agent shall have no other duty or liability whatsoever to any Lender (or Bank Product Provider) as to any of the foregoing, except as otherwise expressly provided herein.
15.12    Right of Setoff; Restrictions on Actions by Lenders; Sharing of Payments    .
(a)    If an Event of Default shall have occurred and be continuing, each Lender and each of its 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 such Lender or such Affiliate, to or for the credit or the account of any Borrower or any other Loan Party against any and all of the obligations of such Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or such Affiliate, irrespective of whether or not such Lender such or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of such Borrower or such Loan Party may be unmatured; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (b) all amounts so set off shall be paid over immediately to Administrative Agent for further application in accordance with the provisions of Section 2.3(g) and, pending such payment, shall be segregated by such Defaulting Lender from its other 

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funds and deemed held in trust for the benefit of Administrative Agent, each Issuing Bank, and the Lenders, and (c) such Defaulting Lender shall provide promptly to 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 each Lender under this Section 15.12(a) are in addition to other rights and remedies (including other rights of setoff) that such Lender may have. Each Lender agrees to notify the Borrower Representative and 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 under this Section 15.12(a). 
(d)    Each of the Lenders agrees that it shall not, unless specifically requested to do so in writing by Administrative Agent, take or cause to be taken any action, including, the commencement of any legal or equitable proceedings to enforce any Loan Document against any Borrower or any Guarantor or to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.
(e)    If, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations, except for any such proceeds or payments received by such Lender from Administrative Agent pursuant to the terms of this Agreement, or (ii) payments from Administrative Agent in excess of such Lender’s Pro Rata Share of all such distributions by Administrative Agent, such Lender promptly shall (A) turn the same over to Administrative Agent, in kind, and with such endorsements as may be required to negotiate the same to Administrative Agent, or in immediately available funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (B) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided, that to the extent that such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment.
15.13    Agency for Perfection    . Administrative Agent hereby appoints each other Lender (and each Bank Product Provider) as its agent (and each Lender hereby accepts (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to accept) such appointment) for the purpose of perfecting Administrative Agent’s Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the Code can be perfected by possession or control. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Administrative Agent thereof, and, promptly upon Administrative Agent’s request therefor shall deliver possession or control of such Collateral to Administrative Agent or in accordance with Administrative Agent’s instructions.
15.14    Payments by Administrative Agent to the Lenders    . All payments to be made by Administrative Agent to the Lenders (or Bank Product Providers) shall be made by bank wire transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Administrative Agent. Concurrently with each such payment, Administrative Agent shall 

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identify whether such payment (or any portion thereof) represents principal, premium, fees, or interest of the Obligations.
15.15    Concerning the Collateral and Related Loan Documents    . Each member of the Lender Group authorizes and directs Administrative Agent to enter into this Agreement and the other Loan Documents. Each member of the Lender Group agrees (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to agree) that any action taken by Administrative Agent in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Administrative Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders (and such Bank Product Provider).
15.16    Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information    . By becoming a party to this Agreement, each Lender:
(a)    is deemed to have requested that Administrative Agent furnish such Lender, promptly after it becomes available, a copy of each field examination report respecting any Borrower or its Subsidiaries (each, a “Report”) prepared by or at the request of Administrative Agent, and Administrative Agent shall so furnish each Lender with such Reports;
(b)    expressly agrees and acknowledges that Administrative Agent does not (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information contained in any Report;
(c)    expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Administrative Agent or other party performing any field examination will inspect only specific information regarding Borrowers and their Subsidiaries and will rely significantly upon Borrowers’ and their Subsidiaries’ books and records, as well as on representations of Borrowers’ personnel;
(d)    agrees to keep all Reports and other material, non-public information regarding Borrowers and their Subsidiaries and their operations, assets, and existing and contemplated business plans in a confidential manner in accordance with Section 17.9; and
(e)    without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold Administrative Agent and any other Lender preparing a Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrowers, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of Borrowers, and (ii) to pay and protect, and indemnify, defend and hold Administrative Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys’ fees and costs) incurred by Administrative Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender other than in accordance with Section 17.9.

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(f)    In addition to the foregoing, (x) any Lender may from time to time request of Administrative Agent in writing that Administrative Agent provide to such Lender a copy of any report or document provided by any Borrower or its Subsidiaries to Administrative Agent that has not been contemporaneously provided by such Borrower or such Subsidiary to such Lender, and, upon receipt of such request, Administrative Agent promptly shall provide a copy of same to such Lender, (y) to the extent that Administrative Agent is entitled, under any provision of the Loan Documents, to request additional reports or information from any Borrower or its Subsidiaries, any Lender may, from time to time, reasonably request Administrative Agent to exercise such right as specified in such Lender’s notice to Administrative Agent, whereupon Administrative Agent promptly shall request of Borrowers the additional reports or information reasonably specified by such Lender, and, upon receipt thereof from such Borrower or such Subsidiary, Administrative Agent promptly shall provide a copy of same to such Lender, and (z) any time that Administrative Agent renders to Borrowers a statement regarding the Loan Account, Administrative Agent shall send a copy of such statement to each Lender.
15.17    Several Obligations; No Liability    . Notwithstanding that certain of the Loan Documents now or hereafter may have been or will be executed only by or in favor of Administrative Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of Administrative Agent (if any) to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their respective Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Commitments. Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely responsible for notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender. Except as provided in Section 15.7, no member of the Lender Group shall have any liability for the acts of any other member of the Lender Group. No Lender shall be responsible to any Borrower or any other Person for any failure by any other Lender (or Bank Product Provider) to fulfill its obligations to make credit available hereunder, nor to advance for such Lender (or Bank Product Provider) or on its behalf, nor to take any other action on behalf of such Lender (or Bank Product Provider) hereunder or in connection with the financing contemplated herein.
15.18    Joint Lead Arrangers, Joint Book Runners, Co‐Syndication Agents, and Co‐Documentation Agents    ‐‐Agent    ‐. Each of the Joint Lead Arrangers, Joint Book Runners, Co‐Syndication Agents, and Co‐Documentation AgentsAgent, in such capacity, shall not have any right, power, obligation, liability, responsibility, or duty under this Agreement other than those applicable to it in its capacity as a Lender, as Administrative Agent, as Swing Lender, or as Issuing Bank. Without limiting the foregoing, each of the Joint Lead Arrangers, Joint Book Runners, Co‐Syndication Agents, and Co‐Documentation AgentsAgent, in such capacities, shall not have or be deemed to have any fiduciary relationship with any Lender or any Loan Party. Each Lender, Administrative Agent, Swing Lender, Issuing Bank, and each Loan Party acknowledges that it has not relied, and will not rely, on the Joint Lead Arrangers, Joint Book Runners, Co‐Syndication Agents, and Co‐Documentation AgentsAgent in deciding to enter into this Agreement or in taking or not taking action hereunder. Each of the Joint Lead Arrangers, Joint Book 

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Runners, Co‐Syndication Agents, and Co‐Documentation AgentsAgent, in such capacity, shall be entitled to resign at any time by giving notice to Administrative Agent and Borrowers.
16.    WITHHOLDING TAXES    .
16.1    Payments.     All payments made by Borrowers hereunder or under any note or other Loan Document will be made without setoff, counterclaim, or other defense. In addition, all such payments will be made free and clear of, and without deduction or withholding for, any present or future Indemnified Taxes, and in the event any deduction or withholding of Indemnified Taxes is required, Borrowers shall comply with the next sentence of this Section 16.1. If any Indemnified Taxes are so levied or imposed, Borrowers agree to pay the full amount of such Indemnified Taxes and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement, any note, or Loan Document, including any amount paid pursuant to this Section 16.1 after withholding or deduction for or on account of any Indemnified Taxes, will not be less than the amount provided for herein. Borrowers will furnish to Administrative Agent as promptly as possible after the date the payment of any Indemnified Tax is due pursuant to applicable law, certified copies of tax receipts evidencing such payment by Borrowers. Borrowers agree to pay any present or future stamp, value added or documentary taxes or any other excise or property taxes, charges, or similar levies that arise from any payment made hereunder or from the execution, delivery, performance, recordation, or filing of, or otherwise with respect to this Agreement or any other Loan Document.
16.2    Exemptions.    
(a)    If a Lender or Participant is entitled to claim an exemption or reduction from United States withholding tax, such Lender or Participant agrees with and in favor of Administrative Agent, to deliver to Administrative Agent (or, in the case of a Participant, to the Lender granting the participation only) one of the following before receiving its first payment under this Agreement:
(i)    if such Lender or Participant is entitled to claim an exemption from United States withholding tax pursuant to the portfolio interest exception, (A) a statement of the Lender or Participant, signed under penalty of perjury, that it is not a (I) a “bank” as described in Section 881(c)(3)(a) of the IRC, (II) a 10% shareholder of any Borrower (within the meaning of Section 871(h)(3)(b) of the IRC), or (III) a controlled foreign corporation related to Borrowers within the meaning of Section 864(d)(4) of the IRC, and (B) a properly completed and executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or Form W-8IMY (with proper attachments);
(ii)    if such Lender or Participant is entitled to claim an exemption from, or a reduction of, withholding tax under a United States tax treaty, a properly completed and executed copy of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable;
(iii)    if such Lender or Participant is entitled to claim that interest paid under this Agreement is exempt from United States withholding tax because it is 

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effectively connected with a United States trade or business of such Lender, a properly completed and executed copy of IRS Form W‐8ECI;
(iv)    if such Lender or Participant is entitled to claim that interest paid under this Agreement is exempt from United States withholding tax because such Lender or Participant serves as an intermediary, a properly completed and executed copy of IRS Form W-8IMY (with proper attachments); or
(v)    a properly completed and executed copy of any other form or forms, including IRS Form W-9, as may be required under the IRC or other laws of the United States as a condition to exemption from, or reduction of, United States withholding or backup withholding tax.
(b)    Each Lender or Participant shall provide new forms (or successor forms) upon the expiration or obsolescence of any previously delivered forms and promptly notify Administrative Agent (or, in the case of a Participant, the Lender granting the participation only) of any change in circumstances which would modify or render invalid any claimed exemption or reduction.
(c)    If a Lender or Participant claims an exemption from withholding tax in a jurisdiction other than the United States, such Lender or such Participant agrees with and in favor of Administrative Agent, to deliver to Administrative Agent (or, in the case of a Participant, to the Lender granting the participation only) any such form or forms, as may be required under the laws of such jurisdiction as a condition to exemption from, or reduction of, foreign withholding or backup withholding tax before receiving its first payment under this Agreement, but only if such Lender or such Participant is legally able to deliver such forms, or the providing of or delivery of such forms in the Lender’s reasonable judgment would not subject such Lender to any material unreimbursed cost or expense or materially prejudice the legal or commercial position of such Lender (or its Affiliates); provided, that nothing in this Section 16.2(c) shall require a Lender or Participant to disclose any information that it deems to be confidential (including without limitation, its tax returns). Each Lender and each Participant shall provide new forms (or successor forms) upon the expiration or obsolescence of any previously delivered forms and promptly notify Administrative Agent (or, in the case of a Participant, the Lender granting the participation only) of any change in circumstances which would modify or render invalid any claimed exemption or reduction.
(d)    If a Lender or Participant claims exemption from, or reduction of, withholding tax and such Lender or Participant sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of Borrowers to such Lender or Participant, such Lender or Participant agrees to notify Administrative Agent (or, in the case of a sale of a participation interest, the Lender granting the participation only) of the percentage amount in which it is no longer the beneficial owner of Obligations of Borrowers to such Lender or Participant. To the extent of such percentage amount, Administrative Agent will treat such Lender’s or such Participant’s documentation provided pursuant to Section 16.2(a) or 16.2(c) as no longer valid. With respect to such percentage amount, such Participant or Assignee may provide new documentation, pursuant to Section 16.2(a) or 16.2(c), if applicable. Borrowers agree that each Participant shall be entitled to the benefits of this Section 16 with respect to its participation in any portion of the Commitments and the 

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Obligations so long as such Participant complies with the obligations set forth in this Section 16 with respect thereto.
(e)    If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable due diligence and reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the IRC, as applicable), such Lender shall deliver to Administrative Agent (or, in the case of a Participant, to the Lender granting the participation only) at the time or times prescribed by law and at such time or times reasonably requested by Administrative Agent (or, in the case of a Participant, the Lender granting the participation) such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the IRC) and such additional documentation reasonably requested by Administrative Agent (or, in the case of a Participant, the Lender granting the participation) as may be necessary for Administrative Agent or Borrowers to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender's obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this Section 16.2(e), “FATCA” shall include any amendments made to FATCA after the Amendment No. 3 Effective Date.
16.3    Reductions.    
(a)    If a Lender or a Participant is subject an applicable withholding tax, Administrative Agent (or, in the case of a Participant, the Lender granting the participation) may withhold from any payment to such Lender or such Participant an amount equivalent to the applicable withholding tax. If the forms or other documentation required by Section 16.2(a) or 16.2(c) are not delivered to Administrative Agent (or, in the case of a Participant, to the Lender granting the participation), then Administrative Agent (or, in the case of a Participant, the Lender granting the participation) may withhold from any payment to such Lender or such Participant not providing such forms or other documentation an amount equivalent to the applicable withholding tax.
(b)    If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that Administrative Agent (or, in the case of a Participant, the Lender granting the participation) did not properly withhold tax from amounts paid to or for the account of any Lender or any Participant due to a failure on the part of the Lender or any Participant (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify Administrative Agent (or such Participant failed to notify the Lender granting the participation) of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify and hold Administrative Agent harmless (or, in the case of a Participant, such Participant shall indemnify and hold the Lender granting the participation harmless) for all amounts paid, directly or indirectly, by Administrative Agent (or, in the case of a Participant, the Lender granting the participation), as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to Administrative Agent (or, in the case of a Participant, to the Lender granting the participation only) under this Section 16, together with all costs and expenses (including attorneys’ fees and expenses). The obligation of the Lenders and the Participants under this subsection shall survive the payment of all Obligations and the resignation or replacement of Administrative Agent.

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16.4    Refunds.     If Administrative Agent or a Lender determines, in its sole discretion, that it has received a refund of any Indemnified Taxes for which Borrowers have paid additional amounts pursuant to this Section 16, so long as no Default or Event of Default has occurred and is continuing, it shall pay over such refund to Borrowers (but only to the extent of payments made, or additional amounts paid, by Borrowers under this Section 16 with respect to Indemnified Taxes giving rise to such a refund), net of all out-of-pocket expenses of Administrative Agent or such Lender and without interest (other than any interest paid by the applicable Governmental Authority with respect to such a refund); provided, that Borrowers, upon the request of Administrative Agent or such Lender, agrees to repay the amount paid over to Borrowers (plus any penalties, interest or other charges, imposed by the applicable Governmental Authority, other than such penalties, interest or other charges imposed as a result of the willful misconduct or gross negligence of Administrative Agent hereunder as finally determined by a court of competent jurisdiction) to Administrative Agent or such Lender in the event Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. Notwithstanding anything in this Agreement to the contrary, this Section 16 shall not be construed to require Administrative Agent or any Lender to make available its tax returns (or any other information which it deems confidential) to Borrowers or any other Person or to require Administrative Agent or any Lender to pay any amount to an indemnifying party pursuant to Section 16.4, the payment of which would place Administrative Agent or such Lender (or their Affiliates) in a less favorable net after-Tax position than such Person would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid.
17.    GENERAL PROVISIONS    .
17.1    Effectiveness    . This Agreement shall be binding and deemed effective when executed by each Borrower, Administrative Agent, and each Lender whose signature is provided for on the signature pages hereof.
17.2    Section Headings    . Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.
17.3    Interpretation    . Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against the Lender Group or any Borrower, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.
17.4    Severability of Provisions    . Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.
17.5    Bank Product Providers    . Each Bank Product Provider in its capacity as such shall be deemed a third-party beneficiary hereof and of the provisions of the other Loan Documents for purposes of any reference in a Loan Document to the parties for whom Administrative Agent is acting. Administrative 

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Agent hereby agrees to act as agent for such Bank Product Providers and, by virtue of entering into a Bank Product Agreement, the applicable Bank Product Provider shall be automatically deemed to have appointed Administrative Agent as its agent and to have accepted the benefits of the Loan Documents. It is understood and agreed that the rights and benefits of each Bank Product Provider under the Loan Documents consist exclusively of such Bank Product Provider’s being a beneficiary of the Liens and security interests (and, if applicable, guarantees) granted to Administrative Agent and the right to share in payments and collections out of the Collateral as more fully set forth herein. In addition, each Bank Product Provider, by virtue of entering into a Bank Product Agreement, shall be automatically deemed to have agreed that Administrative Agent shall have the right, but shall have no obligation, to establish, maintain, relax, or release reserves in respect of the Bank Product Obligations and that if reserves are established there is no obligation on the part of Administrative Agent to determine or insure whether the amount of any such reserve is appropriate or not. In connection with any such distribution of payments or proceeds of Collateral, Administrative Agent shall be entitled to assume no amounts are due or owing to any Bank Product Provider unless such Bank Product Provider has provided a written certification (setting forth a reasonably detailed calculation) to Administrative Agent as to the amounts that are due and owing to it and such written certification is received by Administrative Agent a reasonable period of time prior to the making of such distribution. Administrative Agent shall have no obligation to calculate the amount due and payable with respect to any Bank Products, but may rely upon the written certification of the amount due and payable from the applicable Bank Product Provider. In the absence of an updated certification, Administrative Agent shall be entitled to assume that the amount due and payable to the applicable Bank Product Provider is the amount last certified to Administrative Agent by such Bank Product Provider as being due and payable (less any distributions made to such Bank Product Provider on account thereof). Borrowers may obtain Bank Products from any Bank Product Provider, although Borrowers are not required to do so. Each Borrower acknowledges and agrees that no Bank Product Provider has committed to provide any Bank Products and that the providing of Bank Products by any Bank Product Provider is in the sole and absolute discretion of such Bank Product Provider. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, no provider or holder of any Bank Product shall have any voting or approval rights hereunder (or be deemed a Lender) solely by virtue of its status as the provider or holder of such agreements or products or the Obligations owing thereunder, nor shall the consent of any such provider or holder be required (other than in their capacities as Lenders, to the extent applicable) for any matter hereunder or under any of the other Loan Documents, including as to any matter relating to the Collateral or the release of Collateral or Guarantors.
17.6    Debtor-Creditor Relationship    . The relationship between the Lenders and Administrative Agent, on the one hand, and the Loan Parties, on the other hand, is solely that of creditor and debtor. No member of the Lender Group has (or shall be deemed to have) any fiduciary relationship or duty to any Loan Party arising out of or in connection with the Loan Documents or the transactions contemplated thereby, and there is no agency or joint venture relationship between the members of the Lender Group, on the one hand, and the Loan Parties, on the other hand, by virtue of any Loan Document or any transaction contemplated therein.
17.7    Counterparts; Electronic Execution    . This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, 

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shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis.
17.8    Revival and Reinstatement of Obligations; Certain Waivers    . If any member of the Lender Group or any Bank Product Provider repays, refunds, restores, or returns in whole or in part, any payment or property (including any proceeds of Collateral) previously paid or transferred to such member of the Lender Group or such Bank Product Provider in full or partial satisfaction of any Obligation or on account of any other obligation of any Loan Party under any Loan Document or any Bank Product Agreement, because the payment, transfer, or the incurrence of the obligation so satisfied is asserted or declared to be void, voidable, or otherwise recoverable under any law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent transfers, preferences, or other voidable or recoverable obligations or transfers (each, a “Voidable Transfer”), or because such member of the Lender Group or Bank Product Provider elects to do so on the reasonable advice of its counsel in connection with a claim that the payment, transfer, or incurrence is or may be a Voidable Transfer, then, as to any such Voidable Transfer, or the amount thereof that such member of the Lender Group or Bank Product Provider elects to repay, restore, or return (including pursuant to a settlement of any claim in respect thereof), and as to all reasonable costs, expenses, and attorneys’ fees of such member of the Lender Group or Bank Product Provider related thereto, (i) the liability of the Loan Parties with respect to the amount or property paid, refunded, restored, or returned will automatically and immediately be revived, reinstated, and restored and will exist and (ii) Administrative Agent’s Liens securing such liability shall be effective, revived, and remain in full force and effect, in each case, as fully as if such Voidable Transfer had never been made. If, prior to any of the foregoing, (A) Administrative Agent’s Liens shall have been released or terminated or (B) any provision of this Agreement shall have been terminated or cancelled, Administrative Agent’s Liens, or such provision of this Agreement, shall be reinstated in full force and effect and such prior release, termination, cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligation of any Loan Party in respect of such liability or any Collateral securing such liability.
17.9    Confidentiality    .
(a)    Administrative Agent and Lenders each individually (and not jointly or jointly and severally) agree that they shall maintain the confidentiality of the Confidential Information (as defined below) and shall not disclose the Confidential Information to Persons who are not parties to this Agreement, except: (b) to attorneys for and other advisors, accountants, auditors, and consultants to any member of the Lender Group and to employees, directors and officers of any member of the Lender Group (the Persons in this clause (i), “Lender Group Representatives”) on a “need to know” basis in connection with this Agreement and the transactions contemplated hereby and on a confidential basis, (c) to Subsidiaries and Affiliates of any member of the Lender Group (including the Bank Product Providers), provided that any such Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to the terms of this Section 17.9, 

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(d) as may be required by regulatory authorities so long as such authorities are informed of the confidential nature of such information, (e) as may be required by statute, decision, or judicial or administrative order, rule, or regulation; provided that (x) prior to any disclosure under this clause (iv), the disclosing party agrees to provide Borrowers with prior notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing party is permitted to provide such prior notice to Borrowers pursuant to the terms of the applicable statute, decision, or judicial or administrative order, rule, or regulation and (y) any disclosure under this clause (iv) shall be limited to the portion of the Confidential Information as may be required by such statute, decision, or judicial or administrative order, rule, or regulation, (f) as may be agreed to in advance in writing by Borrowers, (g) as requested or required by any Governmental Authority pursuant to any subpoena or other legal process, provided, that, (x) prior to any disclosure under this clause (vi) the disclosing party agrees to provide Borrowers with prior written notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing party is permitted to provide such prior written notice to Borrowers pursuant to the terms of the subpoena or other legal process and (y) any disclosure under this clause (vi) shall be limited to the portion of the Confidential Information as may be required by such Governmental Authority pursuant to such subpoena or other legal process, (h) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by Administrative Agent or the Lenders or the Lender Group Representatives), (i) in connection with any assignment, participation or pledge of any Lender’s interest under this Agreement, provided that prior to receipt of Confidential Information any such assignee, participant, or pledgee shall have agreed in writing to receive such Confidential Information either subject to the terms of this Section 17.9 or pursuant to confidentiality requirements substantially similar to those contained in this Section 17.9 (and such Person may disclose such Confidential Information to Persons employed or engaged by them as described in clause (i) above), (j) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents; provided, that, prior to any disclosure to any Person (other than any Loan Party, Administrative Agent, any Lender, any of their respective Affiliates, or their respective counsel) under this clause (ix) with respect to litigation involving any Person (other than any Borrower, Administrative Agent, any Lender, any of their respective Affiliates, or their respective counsel), the disclosing party agrees to provide Borrowers with prior written notice thereof, and (k) in connection with, and to the extent reasonably necessary for, the exercise of any secured creditor remedy under this Agreement or under any other Loan Document. As used in this Section 17.9(a), “Confidential Information” means all information received from AXE or any Subsidiary of AXE relating to AXE or any Subsidiary of AXE or its business, other than any such information that is available to Administrative Agent, the Issuing Bank, or any Lender on a non-confidential basis prior to disclosure by AXE or any Subsidiary of AXE and other than information pertaining to this Agreement routinely provided by arrangers to data service providers, including league table providers, that serve the lending industry.
(l)    Anything in this Agreement to the contrary notwithstanding, Administrative Agent may disclose information concerning the terms and conditions of this Agreement and the other Loan Documents to loan syndication and pricing reporting services or in its marketing or promotional materials, with such information to consist of deal terms and other information customarily found in such publications or marketing or promotional materials and may otherwise use the name, logos, and other insignia of any 

105

Borrower or the other Loan Parties and the Commitments provided hereunder in any “tombstone” or other advertisements, on its website or in other marketing materials of Administrative Agent.
(m)    The Loan Parties hereby acknowledge that Administrative Agent or its Affiliates may make available to the Lenders materials or information provided by or on behalf of Borrowers hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks, SyndTrak or another similar electronic system (the “Platform”) and. The Platform is provided “as is” and “as available.” Administrative Agent does not warrant the accuracy or completeness of the Borrower Materials, or the adequacy of the Platform and expressly disclaim liability for errors or omissions in the communications. 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 Administrative Agent in connection with the Borrower Materials or the Platform. In no event shall Agent or any of the Agent-Related Persons have any liability to the Loan Parties, any Lender or any other person for damages of any kind, including direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Loan Party’s or Administrative Agent’s transmission of communications through the Internet, except to the extent the liability of such person is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from such person’s gross negligence or willful misconduct. Each Loan Party further agrees that certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Loan Parties or their securities) (each, a “Public Lender”). The Loan Parties shall be deemed to have authorized Administrative Agent and its Affiliates and the Lenders to treat Borrower Materials marked “PUBLIC” or otherwise at any time filed with the SEC as not containing any material non-public information with respect to the Loan Parties or their securities for purposes of United States federal and state securities laws. All Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as “Public Investor” (or another similar term). Administrative Agent and its Affiliates and the Lenders shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” or that are not at any time filed with the SEC as being suitable only for posting on a portion of the Platform not marked as “Public Investor” (or such other similar term).
17.10    Survival    . All representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that Administrative Agent, Issuing Bank, or any Lender may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of, or any accrued interest on, any Loan or any fee or any other amount payable under this Agreement is outstanding or unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or been terminated.
17.11    Patriot Act    . Each Lender that is subject to the requirements of the Patriot Act hereby notifies Borrowers that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies each Borrower, which information includes the name and address of each Borrower 

106

and other information that will allow such Lender to identify each Borrower in accordance with the Patriot Act. In addition, if Administrative Agent is required by law or regulation or internal policies to do so, it shall have the right to periodically conduct (a) Patriot Act searches, OFAC/PEP searches, and customary individual background checks for the Loan Parties and (b) OFAC/PEP searches and customary individual background checks for the Loan Parties’ senior management and key principals, and each Borrower agrees to cooperate in respect of the conduct of such searches and further agrees that the reasonable costs and charges for such searches shall constitute Lender Group Expenses hereunder and be for the account of Borrowers.
17.12    Integration    . This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof. The foregoing to the contrary notwithstanding, all Bank Product Agreements, if any, are independent agreements governed by the written provisions of such Bank Product Agreements, which will remain in full force and effect, unaffected by any repayment, prepayments, acceleration, reduction, increase, or change in the terms of any credit extended hereunder, except as otherwise expressly provided in such Bank Product Agreement.
17.13    Borrower Representative    . Each Borrower hereby irrevocably appoints Anixter as the borrowing agent and attorney-in-fact for all Borrowers (the “Borrower Representative”) which appointment shall remain in full force and effect unless and until Administrative Agent shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Borrower has been appointed Borrower Representative. Each Borrower hereby irrevocably appoints and authorizes the Borrower Representative (a) to provide Administrative Agent with all notices with respect to Revolving Loans and Letters of Credit obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and the other Loan Documents (and any notice or instruction provided by Borrower Representative shall be deemed to be given by Borrowers hereunder and shall bind each Borrower), (b) to receive notices and instructions from members of the Lender Group (and any notice or instruction provided by any member of the Lender Group to the Borrower Representative in accordance with the terms hereof shall be deemed to have been given to each Borrower), and (c) to take such action as the Borrower Representative deems appropriate on its behalf to obtain Revolving Loans and Letters of Credit and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement. It is understood that the handling of the Loan Account and Collateral in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that Lender Group shall not incur liability to any Borrower as a result hereof. Each Borrower expects to derive benefit, directly or indirectly, from the handling of the Loan Account and the Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group. To induce the Lender Group to do so, and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify each member of the Lender Group and hold each member of the Lender Group harmless against any and all liability, expense, loss or claim of damage or injury, made against the Lender Group by any Borrower or by any third party whosoever, arising from or incurred by reason of (i) the handling of the Loan Account and Collateral of Borrowers as herein provided, or (ii) the Lender Group’s relying on any instructions of the Borrower Representative, except that Borrowers will have no liability to the relevant 

107

Administrative Agent-Related Person or Lender-Related Person under this Section 17.13 with respect to any liability that has been finally determined by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of such Administrative Agent-Related Person or Lender-Related Person, as the case may be.
17.1    Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: 
(a)    the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
(b)    the effects of any Bail-in Action on any such liability, including, if applicable:
(i)    a reduction in full or in part or cancellation of any such liability;
(ii)    a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii)    the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.
[Signature pages to follow.]

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IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be executed and delivered as of the date first above written.
ANIXTER INC., 
as a Borrower and as the initial Borrower Representative
By:                         
Name:                         
Title:                        
ACCU-TECH CORPORATION, 
a Georgia corporation,  
as a Borrower
By:                         
Name:                         
Title:                        
TRI-NORTHERN HOLDINGS, INC., 
a Delaware corporation,  
as a Borrower
By:                         
Name:                         
Title:                        
TRI-NORTHERN ACQUISITION, INC., 
a Delaware corporation,  
as a Borrower
By:                         
Name:                         
Title:                        
NORTHERN VIDEO SYSTEMS, INC., 
a California corporation,  
as a Borrower
By:                         
Name:                         
Title:                        

Signature page to Credit Agreement (Anixter | Inventory Facility)

SR DISTRIBUTION, INC., 
a Delaware corporation,  
as a Borrower
By:                         
Name:                         
Title:                        
TRI-ED DISTRIBUTION INC., 
a California corporation,  
as a Borrower
By:                         
Name:                         
Title:                        
COMMUNICATION CABLES, LLC, 
a Delaware limited liability company,  
as a Borrower
By:                         
Name:                         
Title:                        

Signature page to Credit Agreement (Anixter | Inventory Facility)

Effective upon consummation of  
the HD Supply Acquisition:
ANIXTER POWER SOLUTIONS, LLC, 
a Florida limited liability company f/k/a  
HD Supply Power Solutions, Ltd.,  
a Florida limited partnership,  
as a Borrower
By:                         
Name:                         
Title:                        

Signature page to Credit Agreement (Anixter | Inventory Facility)

Effective upon consummation of  
the HD Supply Acquisition:
ANIXTER POWER SOLUTIONS INC., 
a Michigan corporation f/k/a HDS Power Solutions, Inc.,  
as a Borrower
By:                         
Name:                         
Title:                        

Signature page to Credit Agreement (Anixter | Inventory Facility)

WELLS FARGO BANK, NATIONAL ASSOCIATION, 
as Administrative Agent and as a Lender
By:                         
Name:                         
    Its Authorized Signatory

Signature page to Credit Agreement (Anixter | Inventory Facility)

JPMORGAN CHASE BANK, N.A., 
as a Lender
By:                         
Name:                         
    Its Authorized Signatory

Signature page to Credit Agreement (Anixter | Inventory Facility)

BANK OF AMERICA, N.A., 
as a Lender
By:                         
Name:                         
    Its Authorized Signatory

Signature page to Credit Agreement (Anixter | Inventory Facility)

SUNTRUST BANK, 
as a Lender
By:                         
Name:                         
    Its Authorized Signatory

Signature page to Credit Agreement (Anixter | Inventory Facility)

PNC BANK, NATIONAL ASSOCIATION, 
as a Lender
By:                         
Name:                         
    Its Authorized Signatory

Signature page to Credit Agreement (Anixter | Inventory Facility)

HSBC BANK USA, NATIONAL ASSOCIATION, 
as a Lender
By:                         
Name:                         
    Its Authorized Signatory

Signature page to Credit Agreement (Anixter | Inventory Facility)

EXHIBIT A-1
Form of Assignment and Acceptance Agreement
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (“Assignment Agreement”) is entered into as of              between                  (“Assignor”) and                  (“Assignee”). Reference is made to the Agreement described in Annex I hereto (the “Credit Agreement”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Credit Agreement.
1.In accordance with the terms and conditions of Section 13 of the Credit Agreement, the Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, that interest in and to the Assignor’s rights and obligations under the Loan Documents as of the date hereof with respect to the Obligations owing to the Assignor, and Assignor’s portion of the Commitments, all to the extent specified on Annex I.
2.The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim and (ii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment Agreement and to consummate the transactions contemplated hereby; (b) makes no representation or warranty and assumes no responsibility with respect to (i) any statements, representations or warranties made in or in connection with the Loan Documents, or (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any other instrument or document furnished pursuant thereto; (c) makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower [or any Guarantor] or the performance or observance by any Borrower [or any Guarantor] of any of [its] [their respective] obligations under the Loan Documents or any other instrument or document furnished pursuant thereto, (d) represents and warrants that the amount set forth as the Purchase Price on Annex I represents the amount owed by Borrower to Assignor with respect to Assignor’s share of the Revolving Loans assigned hereunder, as reflected on Assignor’s books and records; and (e) represents and warrants that concurrently with this Assignment Agreement and pursuant to an “Assignment and Assumption” under and as defined in the Receivables Facility Credit Agreement, the Assignor is assigning to the Assignee a proportionate part of all of the Assignor’s rights and obligations under the Receivables Facility Credit Agreement (including a proportionate part of the Receivables Facility Secured Obligations owed to the Assignor and a proportionate part of the Assignor’s “Commitment” under and as defined in the Receivables Facility Credit Agreement).
3.The Assignee (a) confirms that it has received copies of the Credit Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement; (b) agrees that it will, independently and without reliance upon Administrative Agent, Assignor, or any other Lender, based upon such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under the Loan 

Exhibit A-1
1
69377988_13
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Documents; (c) appoints and authorizes Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (d) agrees that 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; [and (e) attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee’s status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Credit Agreement or such other documents as are necessary to indicate that all such payments are subject to such rates at a rate reduced by an applicable tax treaty.]
4.Following the execution of this Assignment Agreement by the Assignor and Assignee, the Assignor will deliver this Assignment Agreement to Administrative Agent for recording by Administrative Agent. The effective date of this Assignment (the “Settlement Date”) shall be the latest to occur of (a) the date of the execution and delivery hereof by the Assignor and the Assignee, (b) the receipt by Administrative Agent for its sole and separate account a processing fee in the amount of $5,000 (if required by the Credit Agreement), (c) the receipt of any required consent of Administrative Agent, and (d) the date specified in Annex I.
5.As of the Settlement Date (a) the Assignee shall be a party to the Credit Agreement and, to the extent of the interest assigned pursuant to this Assignment Agreement, have the rights and obligations of a Lender thereunder and under the other Loan Documents, and (b) the Assignor shall, to the extent of the interest assigned pursuant to this Assignment Agreement, relinquish its rights and be released from its obligations under the Credit Agreement and the other Loan Documents, provided, however, that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Section 15 and Section 17.9(a) of the Credit Agreement.
6.Upon the Settlement Date, Assignee shall pay to Assignor the Purchase Price (as set forth in Annex I). From and after the Settlement Date, Administrative Agent shall make all payments that are due and payable to the holder of the interest assigned hereunder (including payments of principal, interest, fees and other amounts) to Assignor for amounts which have accrued up to but excluding the Settlement Date and to Assignee for amounts which have accrued from and after the Settlement Date. On the Settlement Date, Assignor shall pay to Assignee an amount equal to the portion of any interest, fee, or any other charge that was paid to Assignor prior to the Settlement Date on account of the interest assigned hereunder and that are due and payable to Assignee with respect thereto, to the extent that such interest, fee or other charge relates to the period of time from and after the Settlement Date.
7.This Assignment Agreement may be executed in counterparts and by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. This Assignment Agreement may be executed and delivered by telecopier or other facsimile transmission all with the same force and effect as if the same were a fully executed and delivered original manual counterpart.

Exhibit A-1
2
69377988_13
108980638_8

8.THIS ASSIGNMENT AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN SECTION 12 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE MUTATIS MUTANDIS.
[Signature pages to follow.]

Exhibit A-1
3
69377988_13
108980638_8

IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement and Annex I hereto to be executed by their respective officers, as of the first date written above.
[NAME OF ASSIGNOR], 
as Assignor
By:                         
Name:                         
Title:                        
[NAME OF ASSIGNEE] , 
as Assignee
By:                         
Name:                         
Title:                        
ACCEPTED THIS [*] DAY OF 
[*]
WELLS FARGO BANK, NATIONAL ASSOCIATION,  
a national banking association, as Administrative Agent
By:                         
Name:                         
Title:                        

Exhibit A-1
4
69377988_13
108980638_8

ANNEX FOR ASSIGNMENT AND ACCEPTANCE 
 
ANNEX I

		
	1.
	Borrowers: Anixter Inc., a Delaware corporation (“Anixter”), and certain Subsidiaries of Anixter

		
	2.
	Name and Date of Credit Agreement:

Credit Agreement, dated as of October 5, 2015, by and among Borrowers, the lenders party thereto as “Lenders”, and Wells Fargo Bank, National Association, a national banking association, as administrative agent for each member of the Lender Group and the Bank Product Providers

3.    Date of Assignment Agreement:                            

4.    Amounts:

		
	(i)
	Assigned Amount of Revolver Commitment        $        

		
	(ii)
	Assigned Amount of Revolving Loans            $        

5.    Settlement Date:                                

6.    Purchase Price                            $____________

7.    Notice and Payment Instructions, etc.

Assignee:    Assignor:
	
		
	                                    

	                                    

Exhibit A-1
5
69377988_13
108980638_8

EXHIBIT B-1
Form of Borrowing Base Certificate
See attached.

Exhibit B-1
1

108980638_8

EXHIBIT B-2
Form of Bank Product Provider Agreement
[Letterhead of Specified Bank Products Provider]
[Date]
		
	To:
	Wells Fargo Bank, National Association 
10 South Wacker Drive, 1326th Floor 
MAC N8405-131261 
Chicago, Illinois 60606 
Attn: Loan Portfolio Manager (Anixter)

Reference hereby is made to that certain Credit Agreement dated as of October 5, 2015 (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”), by and among Anixter Inc., a Delaware corporation (“Anixter”), the Subsidiaries of Anixter party thereto as “Borrowers” (collectively, with Anixter, “Borrowers”), the lenders party thereto as “Lenders,” and Wells Fargo Bank, National Association, a national banking association (“Wells Fargo”), as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.
Reference is also made to that certain [describe the Bank Product Agreement or Agreements] ([each, a][the] “Specified Bank Product Agreement”) dated as of __________, by and between [Lender or Affiliate of Lender] (the “Specified Bank Products Provider”) and [identify the Loan Party].
1.Appointment of Administrative Agent. The Specified Bank Products Provider hereby designates and appoints Administrative Agent, and Administrative Agent by its signature below hereby accepts such appointment, as its agent under the Credit Agreement and the other Loan Documents. The Specified Bank Products Provider hereby acknowledges that it has reviewed Sections 15.1 through 15.15 and Sections 15.17, 15.18, and 17.5 (collectively such sections are referred to herein as the “Agency Provisions”), including, as applicable, the defined terms used therein. Specified Bank Products Provider and Administrative Agent each agree that the Agency Provisions which govern the relationship, and certain representations, acknowledgements, appointments, rights, restrictions, and agreements, between Administrative Agent, on the one hand, and the Lenders or the Lender Group, on the other hand, shall, from and after the date of this letter agreement also apply to and govern, mutatis mutandis, the relationship between Administrative Agent, on the one hand, and the Specified Bank Product Provider with respect to the Bank Products provided pursuant to the Specified Bank Product Agreement[s], on the other hand.
2.Acknowledgement of Certain Provisions of Credit Agreement. The Specified Bank Products Provider hereby acknowledges that it has reviewed the provisions of Sections 2.4(b)(iii), 14.1, 15, and 17.5 

Exhibit B-2
1

108980638_8

of the Credit Agreement, including, as applicable, the defined terms used therein, and agrees to be bound by the provisions thereof. Without limiting the generality of any of the foregoing referenced provisions, Specified Bank Product Provider understands and agrees that its rights and benefits under the Loan Documents consist solely of it being a beneficiary of the Liens and security interests granted to Administrative Agent and the right to share in proceeds of the Collateral to the extent set forth in the Credit Agreement.
3.Reporting Requirements. Administrative Agent shall have no obligation to calculate the amount due and payable with respect to any Bank Products. On a monthly basis (not later than the 10th Business Day of each calendar month) or as more frequently as Administrative Agent shall reasonably request in writing, the Specified Bank Products Provider agrees to provide Administrative Agent with a written report, in form and substance reasonably satisfactory to Administrative Agent, detailing Specified Bank Products Provider’s reasonable determination of the liabilities and obligations (and mark-to-market exposure) of Borrowers and the other Loan Parties in respect of the Bank Products provided by Specified Bank Products Provider pursuant to the Specified Bank Products Agreement[s]. If Administrative Agent does not receive such written report within the time period provided above, Administrative Agent shall be entitled to assume that the reasonable determination of the liabilities and obligations of Borrowers and the other Loan Parties with respect to the Bank Products provided pursuant to the Specified Bank Products Agreement[s] is either the amount of such reasonable determination of such liabilities and obligations most recently reported by the Specified Bank Products Provider or, if no such reporting has ever been made, zero.
4.Bank Product Reserve Conditions. Specified Bank Products Provider further acknowledges and agrees that Administrative Agent shall have the right (to the extent permitted pursuant to the Credit Agreement), but shall have no obligation to establish, maintain, relax, or release reserves in respect of any of the Bank Product Obligations and that if reserves are established there is no obligation on the part of Administrative Agent to determine or insure whether the amount of any such reserve is appropriate or not (including whether it is sufficient in amount). If Administrative Agent chooses to implement a reserve, Specified Bank Products Provider acknowledges and agrees that Administrative Agent shall be entitled to rely on the information in the reports described above to establish the Bank Product Reserve Amount.
5.Bank Product Obligations. From and after the delivery to Administrative Agent of this agreement duly executed by Specified Bank Product Provider and the acknowledgement of this agreement by Administrative Agent and Borrower Representative, the obligations and liabilities of Borrowers and the other Loan Parties to Specified Bank Product Provider in respect of Bank Products evidenced by the Specified Bank Product Agreement[s] shall constitute Bank Product Obligations (and which, in turn, shall constitute Obligations), and Specified Bank Product Provider shall constitute a Bank Product Provider until such time as Specified Bank Products Provider or its Affiliate is no longer a Lender. Specified Bank Products Provider acknowledges that other Bank Products (which may or may not be Specified Bank Products) may exist at any time.
6.Notices. All notices and other communications provided for hereunder shall be given in the form and manner provided in Section 11 of the Credit Agreement, and, if to Administrative Agent, shall be mailed, sent, or delivered to Administrative Agent in accordance with Section 11 in the Credit Agreement, if to Borrower, shall be mailed, sent, or delivered to Borrower in accordance with Section 11 in the Credit 

Exhibit B-2
2

108980638_8

Agreement, and, if to Specified Bank Products Provider, shall be mailed, sent, or delivered to the address set forth below, or, in each case as to any party, at such other address as shall be designated by such party in a written notice to the other party.
	
		
	If to Specified Bank Products Provider:
	_________________________ 
_________________________ 
_________________________ 
Attn: ____________________ 
Fax No. __________________

	 
	 

7.Miscellaneous. This agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties hereto (including any successor agent pursuant to Section 15.9 of the Credit Agreement); provided, that Borrower may not assign this agreement or any rights or duties hereunder without the other parties’ prior written consent and any prohibited assignment shall be absolutely void ab initio. Unless the context of this agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” This agreement may be executed in any number of counterparts and by different parties on separate counterparts. Each of such counterparts shall be deemed to be an original, and all of such counterparts, taken together, shall constitute but one and the same agreement. Delivery of an executed counterpart of this letter by telefacsimile or other means of electronic transmission shall be equally effective as delivery of a manually executed counterpart.
8.Governing Law, Etc. THIS AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN SECTION 12 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE MUTATIS MUTANDIS.
[Signature pages to follow.]

Exhibit B-2
3

108980638_8

Sincerely,
[SPECIFIED BANK PRODUCTS PROVIDER]
By:                         
Name:                         
Title:                        
Acknowledged, accepted, and agreed  
as of the date first written above:
ANIXTER INC., a Delaware corporation, 
as Borrower Representative on behalf of Borrowers
By:                         
Name:                         
Title:                        
Acknowledged, accepted, and agreed  
as of _______________, 20____:
WELLS FARGO BANK, NATIONAL ASSOCIATION, 
a national banking association, as Administrative Agent
By:                         
Name:                         
Title:                        

Exhibit B-2
4

108980638_8

EXHIBIT D-1
Form of Compliance Certificate
See attached.

Exhibit D-1
1

EXHIBIT I-1
Form of Intercreditor Agreement
See attached.

Exhibit I-1
1

108980638_8

EXHIBIT L-1
Form of LIBOR Notice
Wells Fargo Bank, National Association, as Administrative Agent 
10 South Wacker Drive, 1326th Floor 
MAC N8405-131261 
Chicago, Illinois 60606 
Attn: Loan Portfolio Manager (Anixter)
Ladies and Gentlemen:
Reference hereby is made to that certain Credit Agreement dated as of October 5, 2015 (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”), by and among Anixter Inc., a Delaware corporation (“Anixter”), the Subsidiaries of Anixter party thereto as “Borrowers” (collectively, with Anixter, “Borrowers”), the lenders party thereto as “Lenders,” and Wells Fargo Bank, National Association, a national banking association (“Wells Fargo”), as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.
This LIBOR Notice represents Borrowers’ request to elect the LIBOR Option with respect to outstanding Revolving Loans in the amount of $[_____] (the “LIBOR Rate Advance”)[, and is a written confirmation of the telephonic notice of such election given to Administrative Agent].
The LIBOR Rate Advance will have an Interest Period of [1, 2, 3, or 6] month(s) commencing on [_____].
This LIBOR Notice further confirms Borrowers’ acceptance, for purposes of determining the rate of interest based on the LIBOR Rate under the Credit Agreement, of the LIBOR Rate as determined pursuant to the Credit Agreement.
Borrower Representative, on behalf of Borrowers, represents and warrants that (i) as of the date hereof, the representations and warranties of Borrowers or their Subsidiaries contained in this Agreement and in the other Loan Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date)), (ii) each of the covenants and agreements contained in any Loan Document have been performed (to the extent required to be performed on or before the date 

Exhibit L-1
1

hereof or each such effective date), and (iii) no Default or Event of Default has occurred and is continuing on the date hereof, nor will any thereof occur after giving effect to the request above.
Dated:                          
 
 
ANIXTER INC.,
a Delaware corporation 
as Borrower Representative

By:                         
Name:                         
Title:                        

Acknowledged by:
WELLS FARGO BANK, NATIONAL ASSOCIATION, 
a national banking association, as Administrative Agent
By:                         
Name:                         
Title:                        

Exhibit L-1
2

EXHIBIT P-1
Form of Perfection Certificate
See attached.

Exhibit P-1
1

SCHEDULE A-1
Administrative Agent’s Account
An account at a bank designated by Administrative Agent from time to time as the account into which Borrowers shall make all payments to Administrative Agent for the benefit of the Lender Group and into which the Lender Group shall make all payments to Administrative Agent under this Agreement and the other Loan Documents; unless and until Administrative Agent notifies Borrower Representative and the Lender Group to the contrary, Administrative Agent’s Account shall be that certain deposit account bearing account number 4124923723, reference Anixter Inc., and maintained by Administrative Agent with Wells Fargo Bank, N.A., 420 Montgomery Street, San Francisco, CA, ABA #121-000-248.

Schedule A-1
1

SCHEDULE A-2
Authorized Persons
Kevin Burns
Rod Shoemaker  
W David Johnson 
Yolanda Garcia 
Julia Symons 
Jose Lozano 
Zeeshan Tejani 
Tracy Garrison

Schedule A-2
1

SCHEDULE C-1
Commitments 
(as of the Amendment No. 3 Effective Date)
	
			
	Lender
	Revolver  
Commitment
	Total  
Commitment

	Wells Fargo Bank, National Association
	$42,500,00038,000,000
	$42,500,00038,000,000

	JPMorgan Chase Bank, N.A.
	$42,500,00038,000,000
	$42,500,00038,000,000

	Bank of America, N.A.
	$30,000,00026,000,000
	$30,000,00026,000,000

	SunTrust Bank
	$20,000,000
	$20,000,000

	PNC Bank, National Association
	$15,000,00014,000,000
	$15,000,00014,000,000

	HSBC Bank USA, National Association
	$14,000,000
	$14,000,000

	All Lenders
	$150,000,000
	$150,000,000

Schedule C-1
1

SCHEDULE D-1
Designated Account
Account number 8188612928 of Anixter maintained with Anixter’s Designated Account Bank, or such other deposit account of a Borrower (located within the United States) that has been designed as such, in writing, by Borrower Representative to Administrative Agent.
“Designated Account Bank” means Bank of America, N.A., whose office is located at 540 W. Madison Street, Chicago, Illinois 60061, and whose ABA number is 026009593.

Schedule D-1
1

SCHEDULE E-2
Existing Letters of Credit
		
	1.
	Standby Letter of Credit No. IS0269212u dated January 23, 2015, in an original (and current) face amount of $36,510.30 issued by Wells Fargo on behalf of Anixter for the benefit of Otecel S.A. (expires November 7, 2018)

		
	2.
	Standby Letter of Credit No. IS0277944u dated February 25, 2015, in an original (and current) face amount of $586,041 issued by Wells Fargo on behalf of Anixter for the benefit of Cobra Thermosolar Plants (expires November 7, 2018)

		
	3.
	Standby Letter of Credit No. IS0011832 dated June 1, 2012, in an original (and current) face amount of $33,642 issued by Wells Fargo on behalf of Anixter for the benefit of The Home Insurance Company (expires November 28, 2015)

		
	4.
	Standby Letter of Credit No. IS0011834 dated June 1, 2012, in an original face amount of $800,000 and a current face amount of $300,000 issued by Wells Fargo on behalf of Anixter for the benefit of Zurich American Insurance Company (expires November 28, 2015)

		
	5.
	Standby Letter of Credit No. IS0013064 dated July 10, 2012, in an original face amount of $6,090,000 and a current face amount of $7,740,000 issued by Wells Fargo on behalf of Anixter for the benefit of The Travelers Indemnity Insurance Company (expires April 8, 2016)

		
	6.
	Standby Letter of Credit No. IS0022420u dated February 25, 2013, in an original (and current) face amount of $296,564.50 issued by Wells Fargo on behalf of Anixter for the benefit of Cobra Thermosolar Plants (expires April 8, 2016)

		
	7.
	Standby Letter of Credit No. IS0023071u dated February 13, 2013, in an original face amount of $11,000,000 and a current face amount of $6,000,000 issued by Wells Fargo on behalf of Anixter for the benefit of HSBC Bank Argentina, S.A. (expires November 11, 2015)

		
	8.
	Standby Letter of Credit No. IS0049252u dated June 26, 2013, in an original (and current) face amount of $19,186.20 issued by Wells Fargo on behalf of Anixter for the benefit of Cobra Thermosolar Plants (expires March 31, 2016)

		
	9.
	Standby Letter of Credit No. IS0049258u dated June 26, 2013, in an original (and current) face amount of $98,209 issued by Wells Fargo on behalf of Anixter for the benefit of Cobra Thermosolar Plants (expires March 31, 2016)

		
	10.
	Standby Letter of Credit No. IS0251665u dated October 7, 2014, in an original (and current) face amount of $314,800 issued by Wells Fargo on behalf of Anixter for the benefit of Bariven, S.A. (expires December 10, 2015)

		
	11.
	Standby Letter of Credit No. IS0261515u dated December 8, 2014, in an original (and current) face amount of $12,938.11 issued by Wells Fargo on behalf of Anixter for the benefit of Otecel S.A. (expires January 6, 2016)

Schedule E-2
1

Schedule E-2
2

SCHEDULE 1.1
Definitions
As used in the Agreement, the following terms shall have the following definitions:
“2011 Receivables Purchase Agreement” means that certain Second Amended and Restated Receivables Purchase Agreement, dated as of May 31, 2011, by and among ARC, as the seller, Anixter, as the initial servicer, Chariot Funding LLC, as a conduit and the financial institutions from time to time party thereto, and Chase, as the agent, as the same has been amended, restated, amended and restated, modified or supplemented from time to time.
“2012 Notes Indenture” means an Indenture dated as of April 30, 2012, between Anixter, AXE, and Wells Fargo, as trustee, as the same may be amended or replaced from time to time.
“2015 Notes Indenture” means an Indenture dated as of August 18, 2015, between Anixter, AXE, and Wells Fargo, as trustee, as the same may be amended or replaced from time to time.
“2019 Notes Indenture” means an Indenture dated on or about November 12,13, 2018, between Anixter Inc., Anixter International Inc., AXE, as guarantor, and Wells Fargo, as trustee, as the same may be amended or replaced from time to time.
“Accommodation Obligation” means, as applied to any Person, any contractual obligation, contingent or otherwise, of that Person with respect to any Indebtedness or other obligation or liability of another, including any such Indebtedness, obligation or liability directly or indirectly guaranteed, supported by letter of credit, endorsed (otherwise than for collection or deposit in the ordinary course of business), co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable, including Contractual Obligations (contingent or otherwise) arising through any agreement to purchase, repurchase, or otherwise acquire such Indebtedness, obligation or liability or any security therefor, or to provide funds for the payment or discharge thereof (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, or other financial condition, or to make payment other than for value received. For purposes of interpreting any provision of this Agreement which refers to the amount of Accommodation Obligations of any Person, such provision shall be deemed to mean the maximum amount of such Accommodation Obligations or, in the case of an Accommodation Obligation to maintain solvency, assets, level of income or other financial condition, the amount of Indebtedness to which such Accommodation Obligation relates, or if less, the stated maximum, if any, in the documents evidencing such Accommodation Obligation. Notwithstanding anything to the contrary contained herein, the term “Accommodation Obligation” shall not be 

interpreted to include any letter of credit Obligations or any other Obligations hereunder guaranteed by AXE or any other guarantor hereof.
“Administrative Agent” has the meaning specified therefor in the preamble to the Agreement.
“Administrative Agent-Related Persons” means Administrative Agent, together with its Affiliates, officers, directors, employees, attorneys, and agents.
“Administrative Agent’s Account” means the Deposit Account of Administrative Agent identified on Schedule A-1 to this Agreement (or such other Deposit Account of Administrative Agent that has been designated as such, in writing, by Administrative Agent to Borrowers and the Lenders).
“Administrative Agent’s Liens” means the Liens granted by each Loan Party or its Subsidiaries to Administrative Agent under the Loan Documents and securing the Obligations.
“Administrative Questionnaire” has the meaning specified therefor in Section 13.1(a) of the Agreement.
“Affected Lender” has the meaning specified therefor in Section 2.13(b) of the Agreement.
“Affiliate” means, as to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to be “controlled by” any other Person if such other Person possesses, directly or indirectly, power (a) to vote 33% or more (or, in the case of an Affiliate of a Lender, 20% or more) of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners; or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
“Agreement” means the Credit Agreement to which this Schedule 1.1 is attached.
“Agreement Accounting Principles” means GAAP as of the date of this Agreement together with any changes in GAAP after the date hereof which are not Material Accounting Changes (as defined below). If any changes in GAAP are hereafter required or permitted and are adopted by AXE or Anixter with the agreement of its independent certified public accountants and such changes result in a material change in the method of calculation of any of the financial covenants, restrictions or standards herein or in the related definitions or terms used therein (“Material Accounting Changes”), the parties hereto agree to enter into negotiations, in good faith, in order to amend such provisions in a credit neutral manner so as to reflect equitably such changes with the desired result that the criteria for evaluating Anixter’s consolidated financial condition shall be the same after such changes as if such changes had not been made; provided, however, that no Material Accounting Change shall be given effect in such calculations until such provisions are amended in a manner reasonably 

satisfactory to the Required Lenders. If such amendment is entered into, all references in this Agreement to Agreement Accounting Principles shall mean GAAP as of the date of such amendment together with any changes in GAAP after the date of such amendment which are not Material Accounting Changes.
“Amendment No. 3” means the Third Amendment to Credit Agreement dated as of November 16, 2018, and effective as of the Amendment No. 3 Effective Date between the Borrowers, Administrative Agent, and the Lenders party thereto.
“Amendment No. 3 Effective Date” means the effective date of Amendment No. 3, which effective date is November 16, 2018.
“Anixter” has the meaning specified therefor in the preamble to the Agreement.
“Anixter Canada” means Anixter Canada Inc., a Canada corporation.
“Anti-Corruption Laws” means the FCPA, the U.K. Bribery Act of 2010, as amended, and all other applicable laws and regulations or ordinances concerning or relating to bribery, money laundering or corruption in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business.
“Anti-Money Laundering Laws” means the applicable laws or regulations in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto.
“Applicable Margin” means, as of any date of determination and with respect to Base Rate Loans or LIBOR Rate Loans, as applicable, the applicable margin set forth in the following table that corresponds to the Average Quarterly Combined Availability of Borrowers for the most recently completed Fiscal Quarter; provided, that for the period from the Closing Date through and including December 31, 2015, the Applicable Margin shall be set at the margin in the row styled “Level II”:
	
				
	 
	 
	Applicable Margin

	Level
	Average Quarterly Combined Availability
	Base  
Rate Loans
	LIBOR Rate Loans

	I
	Greater than or equal to $500,000,000
	0.25%
	1.25%

	II
	Less than $500,000,000 
but greater than or equal to $250,000,000
	0.50%
	1.50%

	III
	Less than $250,000,000
	0.75%
	1.75%

The Applicable Margin shall be re-determined by Administrative Agent as of the first day of each fiscal quarter of Borrowers.

“Applicable Unused Line Fee Percentage” means, as of any date of determination, the applicable percentage set forth in the following table that corresponds to the Average Revolver Usage of Borrowers for the most recently completed month as determined by Administrative Agent in its Permitted Discretion:
	
			
	Level
	Average Revolver Usage
	Applicable Unused  
Line Fee Percentage

	I
	Greater than or equal to  
50% of the aggregate Revolver Commitments
	0.250%

	II
	Less than 50% of the aggregate Revolver Commitments
	0.375%

The Applicable Unused Line Fee Percentage shall be re-determined by Administrative Agent as of the first day of each month of Borrowers0.250%.
“Application Event” means the occurrence of (a) a failure by Borrowers to repay all of the Obligations in full on the Maturity Date, or (b) an Event of Default and the election by Administrative Agent or the Required Lenders to require that payments and proceeds of Collateral be applied pursuant to Section 2.4(b)(iii) of the Agreement.
“ARC” means Anixter Receivables Corporation, a Delaware corporation and a Subsidiary of Anixter.
“ARC Subordinated Documents” means the ARC Subordinated Note, that certain Security Agreement by ARC in favor of Anixter, and any other agreements, documents, and instruments executed and delivered in connection therewith.
“ARC Subordinated Note” means that certain Third Amended and Restated Subordinated Note executed by ARC and payable to the order of Anixter, as the same may be amended, modified or supplemented from time to time.
“ARC Subordination Agreement” means that certain Subordination and Intercreditor Agreement by and among Anixter, as the subordinated creditor, the Receivables Facility Administrative Agent, and ARC, as the same may be amended, modified or supplemented from time to time.
“Assignee” has the meaning specified therefor in Section 13.1(a) of the Agreement.
“Assignment and Acceptance” means an Assignment and Acceptance Agreement substantially in the form of Exhibit A-1 to the Agreement.

“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.
“Authorized Person” means any one of the individuals identified on Schedule A-2 to the Agreement, as such schedule is updated from time to time by written notice from Borrowers to Administrative Agent.
“Availability” means, as of any date of determination, the amount that Borrowers are entitled to borrow as Revolving Loans under Section 2.1 of the Agreement (after giving effect to the then outstanding Revolver Usage).
“Average Quarterly Combined Availability” means, for any Fiscal Quarter, an amount equal to the average daily Combined Availability during such Fiscal Quarter.
“Average Revolver Usage” means, with respect to any period, the sum of the aggregate amount of Revolver Usage for each Business Day in such period (calculated as of the end of each respective Business Day) divided by the number of Business Days in such period.
“AXE” means Anixter International Inc., a Delaware corporation.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.
“Bank Product” means any one or more of the following financial products or accommodations extended to a Borrower or its Subsidiaries by a Bank Product Provider: (a) credit cards (including commercial cards (including so-called “purchase cards”, “procurement cards” or “p-cards”)), (b) credit card processing services, (c) debit cards, (d) stored value cards, (e) Cash Management Services, (f) transactions under Swap Agreements, or (g) Supply Chain Finance Arrangements.
“Bank Product Agreements” means those agreements entered into from time to time by a Borrower or its Subsidiaries with a Bank Product Provider in connection with the obtaining of any of the Bank Products.

“Bank Product Collateralization” means providing cash collateral (pursuant to documentation reasonably satisfactory to Administrative Agent) to be held by Administrative Agent for the benefit of the Bank Product Providers (other than the Swap Providers) in an amount determined by Administrative Agent as sufficient to satisfy the reasonably estimated credit exposure with respect to the then existing Bank Product Obligations (other than Swap Obligations).
“Bank Product Obligations” means (a) all obligations, liabilities, reimbursement obligations, fees, or expenses owing by each Borrower and its Subsidiaries to any Bank Product Provider pursuant to or evidenced by a Bank Product Agreement and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, (b) all Swap Obligations, and (c) all amounts that Administrative Agent or any Lender is obligated to pay to a Bank Product Provider as a result of Administrative Agent or such Lender purchasing participations from, or executing guarantees or indemnities or reimbursement obligations to, a Bank Product Provider with respect to the Bank Products provided by such Bank Product Provider to a Borrower or its Subsidiaries; provided, in order for any item described in clauses (a), (b), or (c) above, as applicable, to constitute “Bank Product Obligations”, if the applicable Bank Product Provider is any Person other than Wells Fargo or its Affiliates, then (1) the applicable Bank Product must have been (A) provided before (and been outstanding as of) the Closing Date or (B) first provided after the Closing Date and (2) Administrative Agent shall have received a Bank Product Provider Agreement (A) within 10 days after the Closing Date, if the applicable Bank Product was provided before (and was outstanding as of) the Closing Date, or (B) within 10 days after the date of the provision of the applicable Bank Product to a Borrower or its Subsidiaries, if such Bank Product was first provided after the Closing Date.
“Bank Product Provider” means any Lender or any of its Affiliates, including each of the foregoing in its capacity, if applicable, as a Swap Provider; provided, that no such Person (other than Wells Fargo or its Affiliates) shall constitute a Bank Product Provider with respect to a Bank Product unless and until Administrative Agent receives a Bank Product Provider Agreement from such Person and with respect to the applicable Bank Product within 10 days after the provision of such Bank Product to a Borrower or its Subsidiaries; provided further, that if, at any time, a Lender ceases to be a Lender under the Agreement, then, from and after the date on which it ceases to be a Lender thereunder, neither it nor any of its Affiliates shall constitute Bank Product Providers and the obligations with respect to Bank Products provided by such former Lender or any of its Affiliates shall no longer constitute Bank Product Obligations.
“Bank Product Provider Agreement” means an agreement in substantially the form attached hereto as Exhibit B-2 to the Agreement, in form and substance satisfactory to Administrative Agent, duly executed by the applicable Bank Product Provider, Borrowers, and Administrative Agent.
“Bank Product Reserves” means, as of any date of determination, those reserves that Administrative Agent deems necessary or appropriate to establish (based upon the Bank Product 

Providers’ determination of the liabilities and obligations of each Borrower and its Subsidiaries in respect of Bank Product Obligations) in respect of Bank Products then provided or outstanding.
“Bankruptcy Code” means Title 11 of the United States Code, as in effect from time to time.
“Bankruptcy Event” means, with respect to any Person, when such Person becomes the subject of a voluntary or involuntary bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors, or similar Person charged with the reorganization or liquidation of its business, appointed for it, or, in the good faith determination of Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment or has had any order for relief in such proceeding entered in respect thereof; provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, unless such ownership interest results in or provides such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permits such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow, or disaffirm any contracts or agreements made by such Person.
“Base Rate” means the greatest of (a) the Federal Funds Rate plus 1⁄2%, (b) the LIBOR Rate (which rate shall be calculated based upon an Interest Period of 3 months and shall be determined on a daily basis), plus 1 percentage point, and (c) the rate of interest announced, from time to time, within Wells Fargo at its principal office in San Francisco as its “prime rate”, with the understanding that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo may designate (and, if any such announced rate is below zero, then the rate determined pursuant to this clause (c) shall be deemed to be zero).
“Base Rate Loan” means each portion of the Revolving Loans that bears interest at a rate determined by reference to the Base Rate.
“Benefit Plan” means a defined benefit plan as defined in Section 3(35) of ERISA (other than a Multiemployer Plan) in respect of which Anixter or any ERISA Affiliate is, or within the immediately preceding six (6) years was, an “employer” as defined in Section 3(5) of ERISA.
“Board of Directors” means, as to any Person, the board of directors (or comparable managers) of such Person, or any committee thereof duly authorized to act on behalf of the board of directors (or comparable managers).

“Board of Governors” means the Board of Governors of the Federal Reserve System of the United States (or any successor).
“Borrower” and “Borrowers” have the respective meanings specified therefor in the preamble to the Agreement.
“Borrower Materials” has the meaning specified therefor in Section 17.9(c) of the Agreement.
“Borrower Representative” has the meaning specified therefor in Section 17.13 of the Agreement.
“Borrowing” means a borrowing consisting of Revolving Loans made on the same day by the Lenders (or Administrative Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or by Administrative Agent in the case of an Extraordinary Advance.
“Borrowing Base” means, as of any date of determination, the result of
(a)    with respect to Eligible Inventory for which an appraisal (in each case, reasonably satisfactory to Administrative Agent) has been completed, the lesser of:
(i)    the product of 75% multiplied by the value (calculated at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices) of such Eligible Inventory at such time; and
(ii)    the product of 85% multiplied by the most recently determined Net Recovery Percentage identified in the most recent Inventory appraisal ordered and obtained by Administrative Agent multiplied by the value (calculated at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices) of such Eligible Inventory (such determination may be made as to different categories of such Eligible Inventory based upon the Net Recovery Percentage applicable to such categories) at such time, plus
(b)    with respect to Eligible Inventory for which an appraisal (in each case, reasonably satisfactory to Administrative Agent) has not been completed, the product of 40% multiplied by the value (calculated at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices) of such Eligible Inventory at such time, minus
(c)    the aggregate amount of reserves, if any, established by Agent under Section 2.1(c) of the Agreement.

“Borrowing Base Certificate” means a certificate in the form of Exhibit B-1.
“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close in the state of Illinois, except that (i) if a determination of a Business Day shall relate to a LIBOR Rate Loan, the term “Business Day” also shall exclude any day on which banks are closed for dealings in Dollar deposits in the London interbank market, and (ii) any day that is not a “Business Day” under and as defined in the Receivables Facility Credit Agreement will not be a Business Day under the Agreement.
“Capital Expenditures” means, without duplication, any expenditure or commitment to expend money for any purchase or other acquisition of any asset which would be classified as a fixed or capital asset on a consolidated balance sheet of the Consolidated Group prepared in accordance with Agreement Accounting Principles.
“Capital Lease” means, as applied to any Person, any lease of any property (whether real, personal, or mixed) by that Person as lessee which, in conformity with Agreement Accounting Principles, is or should be accounted for as a capital lease on the balance sheet of that Person.
“Cash Dominion Trigger Period” has the meaning specified therefor in the Guaranty and Security Agreement.
“Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the government of the United States or issued by an agency thereof and backed by the full faith and credit of the United States, in each case maturing within ninety (90) days after the date of acquisition thereof, (b) money market funds consisting primarily of marketable direct obligations issued by any state or local government of the United States maturing within ninety (90) days after the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, then from such other nationally recognized rating services acceptable to Administrative Agent) and not listed in “Credit Watch” published by S&P (or a similar publication of S&P or another nationally recognized rating service), (c) commercial paper (other than commercial paper issued by AXE, Anixter, or any Subsidiary of Anixter or any of their Affiliates), domestic and Eurodollar certificates of deposit, time deposits or bankers’ acceptances, in any such case maturing no more than ninety (90) days after the date of acquisition thereof and, at the time of the acquisition thereof, the issuer’s rating on its commercial paper is at least A-1 or P-1 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, then the highest rating from other nationally recognized rating services acceptable to Administrative Agent); and (d) commercial paper (other than commercial paper issued by AXE, Anixter, or any Subsidiary of Anixter or any of their Affiliates), domestic and Eurodollar certificates of deposit, time deposits or bankers’ acceptances, in any such case maturing no more than ninety (90) days after the date of acquisition thereof and, at the time of the acquisition thereof, the issuer is a Lender and has a rating on its 

commercial paper of at least A-2 or P-2 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, then the equivalent rating from other nationally recognized rating services acceptable to Administrative Agent), provided the amount of Cash Equivalents under this clause (d) shall not at any time exceed $5,000,000.
“Cash Management Services” means any cash management or related services including treasury, depository, return items, overdraft, controlled disbursement, merchant store value cards, e-payables services, electronic funds transfer, interstate depository network, automatic clearing house transfer (including the Automated Clearing House processing of electronic funds transfers through the direct Federal Reserve Fedline system) and other cash management arrangements.
“Change in Control” shall occur if:
(a)    any “person,” as such term is defined in Section 13(d)(3) of the Securities Exchange Act, other than the Samuel Zell Group, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act), directly or indirectly, of 33% or more of the combined voting power of AXE’s or Anixter’s outstanding securities ordinarily having the right to vote at elections of directors, and such person at such time owns more of such combined voting power than the Samuel Zell Group; or
(b)    individuals who, at the beginning of any period of twenty-four (24) consecutive months, constitute AXE’s board of directors (together with any new directors whose election by AXE’s board of directors or whose nomination for election by AXE’s shareholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination was previously so approved) cease for any reason (other than death, disability or mandatory retirement) to constitute a majority of AXE’s board of directors then in office.
“Change in Law” means the occurrence after the date of the Agreement of: (a) the adoption or effectiveness of any law, rule, regulation, judicial ruling, judgment or treaty, (b) any change in any law, rule, regulation, judicial ruling, judgment or treaty or in the administration, interpretation, implementation or application by any Governmental Authority of any law, rule, regulation, guideline or treaty, or (c) the making or issuance by any Governmental Authority of any request, rule, guideline or directive, whether or not having the force of law; provided that notwithstanding anything in the Agreement to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives concerning capital adequacy promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities shall, in each case, be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued.

 “Chase” means JPMorgan Chase Bank, N.A., a national banking association.
“Closing Date” means the date of the making of the initial Revolving Loan (or other extension of credit) under the Agreement.
“Code” means the Illinois Uniform Commercial Code, as in effect from time to time.
“Collateral” means all assets and interests in assets and proceeds thereof now owned or hereafter acquired by any Loan Party or its Subsidiaries in or upon which a Lien is granted by such Person in favor of Administrative Agent or the Lenders under any of the Loan Documents.
“Collateral Access Agreement” means a landlord waiver, bailee letter, or acknowledgement agreement of any lessor, warehouseman, processor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in any Borrower’s or its Subsidiaries’ books and records, Equipment, or Inventory, in each case, in form and substance reasonably satisfactory to Administrative Agent.
“Collateral Documents” means, collectively, the Guaranty and Security Agreement and any other agreements, instruments and documents executed in connection with this Agreement that are intended to create, perfect or evidence Liens to secure the Obligations, including all other security agreements, pledge agreements, mortgages, deeds of trust, loan agreements, notes, guarantees, subordination agreements, pledges, powers of attorney, consents, assignments, contracts, fee letters, notices, leases, financing statements and all other written matter whether theretofore, now or hereafter executed by any Loan Party and delivered to Administrative Agent.
“Combined Availability” means, at any time, an amount equal to (i) Receivables Facility Availability plus (ii) Availability, in each case at such time.
“Combined Commitment” means, at any time, an amount equal to (i) the Receivables Facility Commitment plus (ii) the aggregate Revolver Commitments, in each case at such time.
“Commitment” means, with respect to each Lender, its Revolver Commitment, and, with respect to all Lenders, their Revolver Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule C-1 to the Agreement or in the Assignment and Acceptance pursuant to which such Lender became a Lender under the Agreement, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 13.1 of the Agreement.
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

“Confidential Information” has the meaning specified therefor in Section 17.9(a) of the Agreement.
“Consolidated EBITDA” means, for any period, for the Consolidated Group calculated in accordance with Agreement Accounting Principles, (a) Consolidated Net Income for such period taken as a single accounting period plus (b) the sum of the following, without duplication, to the extent deducted in determining Consolidated Net Income for such period: (i) the provision for depreciation and amortization expense of the Consolidated Group for such period, (ii) income taxes of the Consolidated Group for such period, and (iii) net interest expense of the Consolidated Group for such period; provided that there shall be excluded from Consolidated EBITDA any non-cash, non-operating gains or losses (including, without limitation, extraordinary or unusual gains or losses, gains or losses arising from the sale of capital assets or the sale of owned buildings and properties and other non-recurring gains or losses) during such period.
“Consolidated Fixed Charge Coverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated EBITDA minus Unfinanced Capital Expenditures to (b) the Consolidated Fixed Charges, in each case determined in accordance with Section 6.14 of the Agreement for the period of four (4) consecutive Fiscal Quarters ending on or immediately prior to such determination date.
“Consolidated Fixed Charges” means, for any period, without duplication, cash Interest Expense of the Consolidated Group, plus scheduled principal payments on Indebtedness actually made, plus consolidated yield or discount accrued on the outstanding aggregate investment or principal amount of claims held by purchasers, assignees or other transferees of (or of interests in) receivables of Anixter and its Subsidiaries in connection with any Receivables Facility Transaction (regardless of the accounting treatment of such Receivables Facility Transaction), plus expenses for taxes paid in cash, plus Capital Lease payments for such period, all calculated in accordance with Agreement Accounting Principles.
“Consolidated Group” means Anixter and each of its Subsidiaries.
“Consolidated Net Income” means, for any period, for the Consolidated Group on a consolidated basis, the net income of the Consolidated Group for that period, determined in accordance with Agreement Accounting Principles.
“Consolidated Tangible Net Assets” has the meaning attributed to that term in in the 2012 Notes Indenture.
“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.

“Customary Permitted Liens” means:
(a)    Liens (other than Environmental Liens, Liens imposed under ERISA or Enforceable Judgments) for Taxes not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP;
(b)    statutory Liens of landlords, bankers, carriers, warehousemen, mechanics, materialmen and other Liens (other than Environmental Liens, Liens imposed under ERISA, or Enforceable Judgments) imposed by law, arising in the ordinary course of business and for amounts which (A) are not yet due, (B) are not more than thirty (30) days past due as long as no notice of default has been given or other action taken to enforce such Liens, or (C)(1) are not more than thirty (30) days past due and a notice of default has been given or other action taken to enforce such Liens, or (2) are more than thirty (30) days past due, and, in the case of clause (1) or (2), are being contested in good faith by appropriate proceedings which are sufficient to prevent imminent foreclosure of such Liens and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP;
(c)    Liens (other than Environmental Liens, Liens imposed under ERISA, or Enforceable Judgments) incurred or deposits made in the ordinary course of business (including, without limitation, surety bonds and appeal bonds) in connection with workers’ compensation, unemployment insurance and other types of employment benefits or to secure the performance of tenders, bids, leases, contracts (other than for the repayment of Indebtedness), statutory obligations and other similar obligations or arising as a result of progress payments under government contracts;
(d)    easements (including, without limitation, reciprocal easement agreements and utility agreements), rights-of-way, covenants, consents, rights of landlords, reservations, encroachments, variations and other restrictions, charges or encumbrances (whether or not recorded) affecting the use of real property, which do not materially interfere with the ordinary conduct of the business of Anixter or any Subsidiary of Anixter;
(e)    Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; and
(f)    precautionary filings of financing statements in connection with assets that are not owned by Anixter or its Subsidiaries (including in connection with Operating Leases entered into in the ordinary course of business).

“Default” means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of Default.
“Defaulting Lender” means any Lender that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Swing Loans or (iii) pay over to any member of the Lender Group any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular Default, if any) has not been satisfied; (b) has notified any Loan Party or any member of the Lender Group in writing, or has made a public statement, to the effect that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular Default, if any) to funding a Loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit; (c) has failed, within three (3) Business Days after request by a member of the Lender Group, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit and Swing Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt by such member of the Lender Group of such certification in form and substance satisfactory to it and Administrative Agent; or (d) has become, or has a direct or indirect parent that has become, the subject of (i) a Bankruptcy Event or (ii) a Bail-In Action.
“Defaulting Lender Rate” means (a) for the first 3 days from and after the date the relevant payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to Revolving Loans that are Base Rate Loans (inclusive of the Applicable Margin applicable thereto).
“Deposit Account” means any deposit account (as that term is defined in the Code).
“Designated Account” means the Deposit Account of Anixter identified on Schedule D-1 to the Agreement (or such other Deposit Account of a Borrower located at Designated Account Bank that has been designated as such, in writing, by Borrowers to Administrative Agent).
“Designated Account Bank” has the meaning specified therefor in Schedule D-1 to the Agreement (or such other bank that is located within the United States that has been designated as such, in writing, by Borrowers to Administrative Agent).
“Disclosed Matters” means the actions, suits, proceedings and environmental matters disclosed in Schedule 4.6.

“Disposition” or “Dispose” means the sale, transfer, license, 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.
“Dollars” or “$” means United States dollars.
“Domestic Subsidiary” means a Subsidiary organized under the laws of a jurisdiction located in the United States.
“Drawing Document” means any Letter of Credit or other document presented for purposes of drawing under any Letter of Credit, including by electronic transmission such as SWIFT, electronic mail, facsimile or computer generated communication.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Eligible Inventory” means Inventory of a Borrower that complies with each of the representations and warranties respecting Eligible Inventory made in the Loan Documents, and that is not excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided, that such criteria may be revised from time to time by Administrative Agent in Administrative Agent’s Permitted Discretion to address the results of any field examination or appraisal performed by Administrative Agent from time to time after the Closing Date. In determining the amount to be so included, Inventory shall be valued at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices. An item of Inventory shall not be included in Eligible Inventory if:
(a)    a Borrower does not have good, valid, and marketable title thereto,
(b)    a Borrower does not have actual and exclusive possession thereof (either directly or through a bailee or agent of a Borrower),

(c)    it is not located at one of the locations in the continental United States set forth on Schedule 5.15 to the Agreement (or in-transit from one such location to another such location),
(d)    it is in-transit to or from a location of a Borrower (other than in-transit from one location set forth on Schedule 5.15 to the Agreement to another location set forth on Schedule 5.15 to the Agreement),
(e)    it is located on real property leased by a Borrower or in a contract warehouse, in each case, unless (i) either (A) it is subject to a Collateral Access Agreement executed by the lessor or warehouseman, as the case may be, or (B) if it is not subject to a Collateral Access Agreement executed by the lessor or warehouseman, as the case may be, Administrative Agent has the option, in its discretion, to institute a reserve for rent in accordance with Section 2.1(c) of the Agreement, and (ii) it is segregated or otherwise separately identifiable from goods of others, if any, stored on the premises,
(f)    it is the subject of a bill of lading or other document of title,
(g)    it is not subject to a valid and perfected first-priority Administrative Agent’s Lien (other than as the result of the existence of a Lien on such Inventory of the kind described in clause (a) or (b) of the definition of the term “Customary Permitted Liens” that is the subject of a reserve established in accordance with Section 2.1(c) of the Agreement);
(h)    it consists of goods returned or rejected by a Borrower’s customers,
(i)    it consists of goods that are obsolete or slow moving, restrictive or custom items, work-in-process, raw materials, or goods that constitute spare parts, packaging and shipping materials, supplies used or consumed in Loan Parties’ business, bill and hold goods, defective goods, “seconds,” or Inventory acquired on consignment,
(j)    it is subject to third-party trademark, licensing or other proprietary rights, unless Administrative Agent is satisfied that such Inventory can be freely sold by Administrative Agent on and after the occurrence of an Event of a Default despite such third-party rights,
(k)    it was acquired in connection with an acquisition permitted by Section 6.4(a)(v) of the Agreement, until the completion of an appraisal and field examination of such Inventory, in each case, reasonably satisfactory to Administrative Agent (which appraisal and field examination may be conducted prior to the closing of such acquisition), or
(l)    it consists of goods acquired from any Sanctioned Person.

“Enforceable Judgment” means a judgment or order as to which (a) Anixter has not demonstrated to the reasonable satisfaction of the Required Lenders that Anixter and its Subsidiaries, as applicable, are covered by third-party insurance (other than retro-premium insurance) therefor and (b) the period, if any, during which the enforcement of such judgment or order is stayed shall have expired, it being understood that a judgment or order which is under appeal or as to which the time in which to perfect an appeal has not expired shall not be deemed an “Enforceable Judgment” so long as enforcement thereof is effectively stayed pending the outcome of such appeal or the expiration of such period, as the case may be; provided that if enforcement of a judgment or order has been stayed on condition that a bond or collateral equal to or greater than $35,000,000 be posted or provided, such judgment or order shall immediately be an “Enforceable Judgment.”
“Enhanced Reporting Trigger Period” means a period (a) commencing (i) automatically upon the occurrence of a Specified Event of Default, (ii) at the written election of Required Lenders upon the occurrence of any other Event of Default, or (iii) when Combined Availability is less than the greater of (A) $75,000,000 and (B) 10% of the Combined Commitment and (b) continuing until (i) no Event of Default is then continuing, and (ii) Combined Availability remains in excess of the greater of (A) $75,000,000 and (B) 10% of the Combined Commitment for thirty (30) consecutive days. An Enhanced Reporting Trigger Period may be discontinued no more than five (5) times during the term of the Agreement.
“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, binding agreements issued, promulgated or entered into by any Governmental Authority applicable to any Loan Party or any Loan Party’s operations, relating to the environment, preservation or reclamation of natural resources, the management, Release or threatened Release of any Hazardous Material, and all Permits issued in connection therewith.
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of Anixter or any Subsidiary of Anixter incurred as a result of (a) any violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) the Release or threatened Release of any Hazardous Materials into the environment, or (d) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Environmental Lien” means a Lien in favor of any Governmental Authority for any Environmental Liability.
“Equity Interest” means, with respect to a Person, all of the shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in such Person, whether voting or nonvoting, including capital stock (or other ownership or profit interests or units), 

preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Securities Exchange Act).
“ERISA” means the Employee Retirement Income Security Act of 1974, and any regulations issued pursuant thereto, as amended from time to time, and the rules and regulations promulgated thereunder.
“ERISA Affiliate” means any (i) corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the IRC) as Anixter or any of its Subsidiaries, (ii) partnership or other trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under common control (within the meaning of Section 414(b) or (c) of the IRC) with Anixter or any of its Subsidiaries, and (iii) member of the same affiliated service group (within the meaning of Section 414(m) of the IRC) as Anixter or any of its Subsidiaries, any corporation described in clause (i) above or any partnership or trade or business described in clause (ii) aboveSection 4001(a)(14) of ERISA or, solely for purposes of Section 302 of ERISA and Section 412 of the IRC, is treated as a single employer under Section 414 of the IRC.
“ERISA Event” means (a) any Reportable Event with respect to any Pension Plan; (b) the failure to makesatisfy the “minimum required contributions” underfunding standard” (as defined in Section 412 or 430 of the IRC or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(c) of the IRC or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Pension Plan; (d) the incurrence by Anixterthe Borrower or any ERISA AffiliatesAffiliate of any liability under Title IV of ERISA with respect to the termination of any Pension Plan; (e) any Termination Event; or (f) the receipt by Anixterthe receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Pension Plan or Pension Plans or to appoint a trustee to administer any Pension Plan; (f) the incurrence by the Borrower or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal of the Borrower or any ERISA Affiliate from any Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from Anixterthe Borrower or any ERISA Affiliate of any notice, concerning the imposition of withdrawal liabilityupon the Borrower or any ERISA Affiliate of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent, in critical status or in reorganization, within the meaning of Title IV of ERISA.
“Event of Default” has the meaning specified therefor in Section 8 of the Agreement.
“Excluded Subsidiary” means (a) ARC, (b) Anixter Financial Inc., a Delaware corporation and a Subsidiary of Anixter, and each of its Subsidiaries, (c) subject to Section 5.16 of the Agreement, APSGP, LLC, a Florida limited liability company and a Subsidiary of Anixter, (d) each other Domestic Subsidiary of Anixter that owns no assets other than, and engages in no business other 

than owning, the Equity Interests of one or more Foreign Subsidiaries of Anixter, and (e) each Foreign Subsidiary of Anixter.
“Excluded Swap Obligation” means, with respect to any Loan Party, any Swap Obligation if, and to the extent that, all or a portion of the guaranty of such Loan Party of (including by virtue of the joint and several liability provisions of Section 2.15), or the grant by such Loan Party of a security interest to secure, such Swap Obligation (or any guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guaranty of such Loan Party or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guaranty or security interest is or becomes illegal. 
“Excluded Taxes” means (i) any tax imposed on the net income or net profits of any Lender or any Participant (including any branch profits taxes), in each case imposed by the jurisdiction (or by any political subdivision or taxing authority thereof) in which such Lender or such Participant is organized or the jurisdiction (or by any political subdivision or taxing authority thereof) in which such Lender’s or such Participant’s principal office or applicable lending office is located, in each case as a result of a present or former connection between such Lender or such Participant and the jurisdiction or taxing authority imposing the tax (other than any such connection arising solely from such Lender or such Participant having executed, delivered or performed its obligations or received payment under, or enforced its rights or remedies under the Agreement or any other Loan Document); (ii) taxes resulting from a Lender’s or a Participant’s failure to comply with the requirements of Section 16.2 of the Agreement, (iii) any United States federal withholding taxes that would be imposed on amounts payable to a Foreign Lender based upon the applicable withholding rate in effect at the time such Foreign Lender becomes a party to the Agreement (or designates a new lending office), except that Taxes shall include (A) any amount that such Foreign Lender (or its assignor, if any) was previously entitled to receive pursuant to Section 16.1 of the Agreement, if any, with respect to such withholding tax at the time such Foreign Lender becomes a party to the Agreement (or designates a new lending office), and (B) additional United States federal withholding taxes that may be imposed after the time such Foreign Lender becomes a party to the Agreement (or designates a new lending office), as a result of a change in law, rule, regulation, order or other decision with respect to any of the foregoing by any Governmental Authority, and (iv) any United States federal withholding taxes imposed under FATCA.
“Existing Letters of Credit” means those letters of credit described on Schedule E-2 to the Agreement.

“Extraordinary Advances” has the meaning specified therefor in Section 2.3(d)(iii) of the Agreement.
“FATCA” means Sections 1471 through 1474 of the IRC, as of the date of the Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and (a) any current or future regulations or official interpretations thereof, (b) any agreements entered into pursuant to Section 1471(b)(1) of the IRC, and (c) any intergovernmental agreement entered into by the United States (or any fiscal or regulatory legislation, rules, or practices adopted pursuant to any such intergovernmental agreement entered into in connection therewith).
“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.
“Fee Letter” means that certain fee letter, dated as of even date with the Agreement, among Borrowers and Administrative Agent, in form and substance reasonably satisfactory to Administrative Agent.
“Federal Funds Rate” means, for any period, the greater of (a) 0% and (b) a fluctuating interest rate per annum equal to, for each day during such period, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Administrative Agent from three Federal funds brokers of recognized standing selected by it (and, if any such rate is below zero, then the rate determined pursuant to this definition shall be deemed to be zero).
“Financial Covenant Trigger Period” means a period (a) commencing (i) automatically upon the occurrence of a Specified Event of Default, (ii) at the written election of Required Lenders upon the occurrence of any other Event of Default, or (iii) when Combined Availability is less than the greater of (A) $75,000,000 and (B) 10% of the Combined Commitment and (b) continuing until (i) no Event of Default is then continuing, and (ii) Combined Availability remains in excess of the greater of (A) $75,000,000 and (B) 10% of the Combined Commitment for thirty (30) consecutive days. A Financial Covenant Trigger Period may be discontinued no more than five (5) occasions during the term of the Agreement.
“Financial Officer” means, with respect to any Person, any of the chief financial officer, controller or treasurer of such Person and, with respect to Anixter shall include its Vice President-Finance and the Assistant Treasurer.

“Fiscal Month” means a four- or five-week monthly accounting period of Anixter ending on or about the last day of a calendar month.
“Fiscal Quarter” means a 13-week (or, as the case may be, periodically a 14-week) accounting period of Anixter ending on or about March 31, June 30, September 30 or December 31 of any Fiscal Year.
“Fiscal Year” means the fiscal year of Anixter, which shall be the annual accounting period of Anixter ending on or about December 31 of each year.
“Foreign Employee Benefit Plan” means any plan, program, policy, agreement or contract maintained or contributed to or for the benefit of employees or Anixter, any of its Subsidiaries, or any ERISA Affiliate which is governed by the laws of a jurisdiction outside the United States.
“Foreign Lender” means any Lender or Participant that is not a United States person within the meaning of Section 7701(a)(30) of the IRC.
“Foreign Pension Plan” means any pension plan or other deferred compensation plan, program or arrangement maintained or contributed to or for the benefit of employees of Anixter, any of its Subsidiaries, or any ERISA Affiliate, which, under the applicable local law, is required to be funded through a trust or other funding vehicle and which is governed by the laws of a jurisdiction outside the United States.
“Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.
“Funding Date” means the date on which a Borrowing occurs.
“Funding Losses” has the meaning specified therefor in Section 2.12(b)(ii) of the Agreement.
“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.
“Governmental Authority” means the government of the United States, any other nation, or 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.

“Guarantor” means (a) AXE, (b) each Subsidiary of Anixter (other than a Borrower) that is signatory to the Guaranty and Security Agreement as of the date hereof, and (c) each other Person that becomes a guarantor after the Closing Date pursuant to Section 5.14 of the Agreement.
“Guaranty and Security Agreement” means a guaranty and security agreement, dated as of even date with the Agreement, in form and substance reasonably satisfactory to Administrative Agent, executed and delivered by each of the Borrowers and each of the Guarantors to Administrative Agent.
“Hazardous Materials” means: (a) any substance, material, or waste that is included within the definitions of “hazardous substances,” “hazardous materials,” “hazardous waste,” “toxic substances,” “toxic materials,” “toxic waste,” or words of similar import in any Environmental Law; (b) those substances listed as hazardous substances by the U.S. Department of Transportation (or any successor agency) (49 C.F.R. 172.101 and amendments thereto) or by the Environmental Protection Agency (or any successor agency) (40 C.F.R. Part 302 and amendments thereto); and (c) any substance, material, or waste that is petroleum or a petroleum by-product, friable asbestos, polychlorinated biphenyls, radioactive or freon gas.
“HD Supply Acquisition” means the purchase by Anixter of the outstanding Equity Interests of each of HDS PS, HDS Power Solutions, and Pro Canadian Holdings I, ULC, a Nova Scotia unlimited liability company (“Pro Canadian” and, together with HDS PS and HDS Power Solutions, each, a “Target”), and certain assets used in or held for use in the power solutions business of the Targets but owned by one or more affiliates of the Targets (which assets are the “Purchased Assets” under and as defined in the HD Supply Acquisition Agreement).
“HD Supply Acquisition Agreement” means a Purchase Agreement dated as of July 15, 2015, by and among the HD Supply Sellers, as sellers, and Anixter, as buyer.
“HD Supply Acquisition Agreement Representations” means those representations and warranties made by any of the sellers and their Subsidiaries in the HD Supply Acquisition Agreement, to the extent Anixter has a right under the HD Supply Acquisition Agreement (a) not to consummate the transactions contemplated by the HD Supply Acquisition Agreement or (b) to terminate Anixter’s obligations under the HD Supply Acquisition Agreement, in each case, as a result of a breach of such representation or warranty made by any of the sellers and their Subsidiaries in the HD Supply Acquisition Agreement.
“HD Supply Acquisition Documents” means (a) the HD Supply Acquisition Agreement, and (b) all other agreements, instruments, documents, and certificates required to be executed and delivered as conditions precedent to the effectiveness of the HD Supply Acquisition Agreement or to the consummation of the HD Supply Acquisition.

“HD Supply Sellers” means HD Supply, Inc., HD Supply Holdings, LLC, HD Supply GP & Management, Inc., HD Supply Power Solutions Group, Inc., and BRAFASCO Holdings II, Inc.
“HDS PS” means HD Supply Power Solutions, Ltd., a Florida limited partnership. Substantially concurrently with the consummation of the HD Supply Acquisition, HDS PS will convert into a Florida limited liability company and change its name to “Anixter Power Solutions, LLC.”
“HDS Power Solutions” means HDS Power Solutions, Inc., a Michigan corporation. Substantially concurrently with the consummation of the HD Supply Acquisition, HDS Power Solutions will change its name to “Anixter Power Solutions Inc.”
“Indebtedness” means, as to any Person at a particular time, all of the following (without duplication):
(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)    any direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), banker’s acceptances, bank guaranties, surety bonds and similar instruments;
(c)    net obligations under any Swap Agreement in an amount equal to (i) if such Swap Agreement has been closed out, the termination value thereof, or (ii) if such Swap Agreement has not been closed out, the mark-to-market value thereof determined on the basis of readily available quotations provided by any recognized dealer in such Swap Agreement;
(d)    whether or not so included as liabilities in accordance with GAAP, all obligations of such Person to pay the deferred purchase price of property or services, and 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;
(e)    Capital Leases and Synthetic Lease Obligations;
(f)    the outstanding aggregate investment or principal amount of claims held by purchasers, assignees or transferees of (or of interests in) receivables of such Person in connection with any Receivables Facility Transaction; and

(g)    all Accommodation Obligations 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 in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person except for customary exceptions acceptable to the Required Lenders. 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 Liabilities” has the meaning specified therefor in Section 10.3 of the Agreement.
“Indemnified Person” has the meaning specified therefor in Section 10.3 of the Agreement.
“Indemnified Taxes” means any Taxes other than Excluded Taxes.
“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.
“Intercreditor Agreement” means that certain Intercreditor Agreement dated as of the date of this Agreement between Chase, as the Receivables Facility Administrative Agent, and Wells Fargo, as Administrative Agent, and acknowledged and agreed to by the Loan Parties and ARC, substantially in the form of Exhibit I-1 to the Agreement, as the same may be amended or replaced from time to time.
“Interest Expense” means, for any period, total interest expense (including that attributable to Capital Lease Obligations, Synthetic Lease Obligations and commitment fees) of the Consolidated Group for such period with respect to all outstanding Indebtedness of the Consolidated Group (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptances and net costs under Swap Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with Agreement Accounting Principles), calculated on a consolidated basis for the Consolidated Group for such period in accordance with Agreement Accounting Principles.
“Interest Period” means, with respect to each LIBOR Rate Loan, a period commencing on the date of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending 1, 2, 3, or 6 months thereafter; provided, that (a) interest shall accrue at the applicable rate based upon the LIBOR Rate from and 

including the first day of each Interest Period to, but excluding, the day on which any Interest Period expires, (b) any Interest Period that would 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, (c) with respect to an 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), the Interest Period shall end on the last Business Day of the calendar month that is 1, 2, 3, or 6 months after the date on which the Interest Period began, as applicable, and (d) Borrowers may not elect an Interest Period which will end after the Maturity Date.
“Inventory” means inventory (as that term is defined in the Code).
“Inventory Reserves means, as of any date of determination, (a) Landlord Reserves, and (b) those reserves that Administrative Agent deems necessary or appropriate, in its Permitted Discretion and subject to Section 2.1(c) of the Agreement, to establish and maintain (including reserves for slow moving Inventory and Inventory shrinkage) with respect to Eligible Inventory or the Maximum Revolver Amount.
“Investment” has the meaning assigned to such term in Section 6.4(a) of the Agreement.
“IRC” means the Internal Revenue Code of 1986, as amended, and any successor statutes, and all regulations and guidance promulgated thereunder. Any reference to a specific section of the IRC shall be deemed to be a reference to such section of the IRC and any successor statutes, and all regulations and guidance promulgated thereunder.
“ISP” means, with respect to any Letter of Credit, the International Standby Practices 1998 (International Chamber of Commerce Publication No. 590) and any subsequentversion or revision thereof adopted by the International Chamber of Commerce on the date such Letter of Credit is issuedaccepted by Issuing Bank for use.
“Issuer Document” means, with respect to any Letter of Credit, a letter of credit application, a letter of credit agreement, or any other document, agreement or instrument entered into (or to be entered into) by a Borrower in favor of Issuing Bank and relating to such Letter of Credit.
“Issuing Bank” means Wells Fargo or any other Lender that, at the request of Borrowers and with the consent of Administrative Agent, agrees, in such Lender’s sole discretion, to become an Issuing Bank for the purpose of issuing Letters of Credit pursuant to Section 2.11 of the Agreement, and Issuing Bank shall be a Lender.
“Joint Book Runners” has the meaning set forth in the preamble to the Agreement.
“Joint Lead Arrangers” has the meaning set forth in the preamble to the Agreement.

“JPMorgan” means JPMorgan Chase Bank, N.A., a national banking association.
“Landlord Reserve” means, as to each location at which a Borrower has Inventory or books and records located and as to which a Collateral Access Agreement has not been received by Administrative Agent, a reserve in an amount equal to the greater of (a) the number of months’ rent for which the landlord will have, under applicable law, a Lien in the Inventory of such Borrower to secure the payment of rent or other amounts under the lease relative to such location, or (b) 3 months’ rent under the lease relative to such location.
“Lender” has the meaning set forth in the preamble to the Agreement, shall include Issuing Bank and the Swing Lender, and shall also include any other Person made a party to the Agreement pursuant to the provisions of Section 13.1 of the Agreement and “Lenders” means each of the Lenders or any one or more of them.
“Lender Group” means each of the Lenders (including Issuing Bank and the Swing Lender) and Administrative Agent, or any one or more of them.
“Lender Group Expenses” means, without duplication, all (a) 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 syndication and distribution (including, without limitation, via the internet or through the Platform) of the credit facilities provided for in the Agreement, the preparation and administration of the Loan Documents, and any amendments, modifications, or waivers of the provisions of the Loan Documents (whether or not the transactions contemplated by the Agreement or thereby are consummated); (b) reasonable out-of-pocket expenses incurred by Issuing Bank in connection with the issuance, amendment, renewal, or extension of any Letter of Credit or any demand for payment thereunder; (c) out-of-pocket expenses incurred by the Lender Group (including the fees, charges, and disbursements of any counsel for the Lender Group) in connection with the enforcement, collection, or protection of the Lender Group’s rights in connection with the Loan Documents, or in connection with the Loans made or Letters of Credit issued under the Agreement, including all such out-of-pocket expenses incurred during any workout, restructuring, or negotiations in respect of such Loans or Letters of Credit; and (d) Administrative Agent’s reasonable out‐of‐pocket costs and expenses (including the fees, charges, and disbursements of any counsel for Administrative Agent) relative to third-party claims or any other lawsuit or adverse proceeding paid or incurred, whether in enforcing or defending the Loan Documents or otherwise in connection with the transactions contemplated by the Loan Documents, Administrative Agent’s Liens in and to the Collateral, or the Lender Group’s relationship with AXE, Anixter, or any of Anixter’s Subsidiaries. The fees and expenses of counsel that shall constitute Lender Group Expenses shall in any event be limited to one primary counsel, one local counsel in each reasonably necessary jurisdiction, one specialty counsel in each reasonably necessary specialty area, and one or more additional counsel if one or more conflicts of interest arise. Lender Group Expenses include, without limiting the generality of the foregoing, fees, costs, and 

expenses incurred in connection with the following: (i) appraisals and insurance reviews; (ii) field examinations and the preparation of Reports based on the fees charged by a third party retained by Administrative Agent or the internally allocated fees for each Person employed by Administrative Agent with respect to each field examination; (iii) background checks regarding senior management and/or key investors, as deemed necessary or appropriate in the sole discretion of Administrative Agent; (iv) Taxes, fees, and other charges for (A) lien and title searches and title insurance and (B) recording the mortgages, filing financing statements and continuations, and taking other actions to perfect, protect, and continue Administrative Agent’s Liens; (v) sums paid or incurred to take any action required of any of the Loan Parties under the Loan Documents that the Loan Parties fail to pay or take; and (vi) forwarding loan proceeds, collecting checks and other items of payment, and establishing and maintaining the accounts and lock boxes, and costs and expenses of preserving and protecting the Collateral.
“Lender Group Representatives” has the meaning specified therefor in Section 17.9 of the Agreement.
“Lender-Related Person” means, with respect to any Lender, such Lender, together with such Lender’s Affiliates, officers, directors, employees, attorneys, and agents.
“Letter of Credit” means a letter of credit (as that term is defined in the Code) issued by Issuing Bank.
“Letter of Credit Collateralization” means either (a) providing cash collateral (pursuant to documentation reasonably satisfactory to Administrative Agent (including that Agent has a first priority perfected Lien in such cash collateral), including provisions that specify that the Letter of Credit Fees and all commissions, fees, charges and expenses provided for in Section 2.11(k) of the Agreement (including any fronting fees) will continue to accrue while the Letters of Credit are outstanding) to be held by Administrative Agent for the benefit of the Revolving Lenders in an amount equal to 103% of the then existing Letter of Credit Usage, (b) delivering to Administrative Agent documentation executed by all beneficiaries under the Letters of Credit, in form and substance reasonably satisfactory to Administrative Agent and Issuing Bank, terminating all of such beneficiaries’ rights under the Letters of Credit, or (c) providing Administrative Agent with a standby letter of credit, in form and substance reasonably satisfactory to Administrative Agent, from a commercial bank acceptable to Administrative Agent (in its sole discretion) in an amount equal to 103% of the then existing Letter of Credit Usage (it being understood that the Letter of Credit Fee and all fronting fees set forth in the Agreement will continue to accrue while the Letters of Credit are outstanding and that any such fees that accrue must be an amount that can be drawn under any such standby letter of credit).
“Letter of Credit Disbursement” means a payment made by Issuing Bank pursuant to a Letter of Credit.

“Letter of Credit Exposure” means, as of any date of determination with respect to any Lender, such Lender’s Pro Rata Share ofparticipation in the Letter of Credit Usage pursuant to Section 2.11(e) on such date.
“Letter of Credit Fee” has the meaning specified therefor in Section 2.6(b) of the Agreement.
“Letter of Credit Indemnified Costs” has the meaning specified therefor in Section 2.11(f) of the Agreement.
“Letter of Credit Related Person” has the meaning specified therefor in Section 2.11(f) of the Agreement.
“Letter of Credit Usage” means, as of any date of determination, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit, plus (b) the aggregate amount of outstanding reimbursement obligations with respect to Letters of Credit which remain unreimbursed or which have not been paid through a Revolving Loan.
“LIBOR Deadline” has the meaning specified therefor in Section 2.12(b)(i) of the Agreement.
“LIBOR Notice” means a written notice in the form of Exhibit L-1 to the Agreement.
“LIBOR Option” has the meaning specified therefor in Section 2.12(a) of the Agreement.
“LIBOR Rate” means the rate per annum as reported on Reuters Screen LIBOR01 pagepublished by ICE Benchmark Administration Limited (or any successor page) or other commercially available source as Administrative Agent may designate from time to time) as of 11:00 a.m., London time, 2 Business Days prior to the commencement of the requested Interest Period, for a term, and in an amount, comparable to the Interest Period and the amount of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrowers in accordance with thethis Agreement (and, if any such published rate is below zero, the LIBOR Ratethen the rate determined pursuant to this clause (b) shall be deemed to be zero), which. Each determination of the LIBOR Rate shall be made by Administrative Agent and shall be conclusive in the absence of manifest error..
“LIBOR Rate Loan” means each portion of a Revolving Loan that bears interest at a rate determined by reference to the LIBOR Rate.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), Environmental Lien, Enforceable Judgment, charge, or preference, priority or other security interest or preferential arrangement of any kind or nature 

whatsoever (including any conditional sale or other title retention agreement, the interest of a lessor under a Capital Lease, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable laws of any jurisdiction), including the interest of a purchaser of accounts receivable.
“Loan” shall mean any Revolving Loan, Swing Loan, or Extraordinary Advance made (or to be made) hereunder.
“Loan Account” has the meaning specified therefor in Section 2.9 of the Agreement.
“Loan Documents” means the Agreement, any Borrowing Base Certificate, the Fee Letter, the Collateral Documents, the Intercreditor Agreement, any Issuer Documents, the Letters of Credit, any note or notes executed by Borrowers in connection with the Agreement and payable to any member of the Lender Group, and any other instrument or agreement entered into, now or in the future, by any Loan Party or any of its Subsidiaries and any member of the Lender Group in connection with the Agreement.
“Loan Party” means any Borrower or any Guarantor.
“Margin Stock” as defined in Regulation U of the Board of Governors as in effect from time to time.
“Material Accounting Changes” has the meaning specified therefor in the definition of “Agreement Accounting Principles.”
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, assets, liabilities (actual or contingent), business, properties, financial condition or prospects of AXE, Anixter, and their Subsidiaries taken as a whole; (b) a material impairment of the ability of the Loan Parties (taken as a whole) to perform the obligations of the Loan Parties under the Loan Documents; (c) a material impairment of the ability of the Receivables Facility Loan Parties (taken as a whole) to perform the obligations of all Receivables Facility Loan Parties under the Receivables Facility; (d) a material adverse effect upon the legality, validity, binding effect, or enforceability against any Loan Party of any Loan Document to which it is a party or the rights and remedies of Administrative Agent or the Lenders under the Loan Documents; or (e) a material adverse effect on the Collateral or Administrative Agent’s Liens (on behalf of itself and the Lenders) on the Collateral or the priority of such Liens.
“Material Indebtedness” means (a) the Indebtedness under the Receivables Facility; (b) the Indebtedness in respect of Swap Agreements to the extent included as “Bank Product Obligations.” (c) Indebtedness under the 2012 Notes Indenture, and (d) other Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements, 

of any one or more of Anixter and its Subsidiaries in an aggregate principal amount exceeding $50,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of Anixter or any Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that Anixter or such Subsidiary would be required to pay if such Swap Agreement were terminated at such time.
“Material Transaction” means any sale, assignment, transfer, conveyance or other disposition of (a) assets of any member of the Consolidated Group or (b) capital stock of any member of the Consolidated Group which, when combined with all such other sales, assignments, transfers, conveyances or other dispositions in the immediately preceding twelve Fiscal Months represents the disposition of an amount which is greater than ten percent (10.0%) of the Consolidated Group’s (1) assets or (2) revenues.
“Maturity Date” means October 5, 2020.November 16, 2023.
“Maximum Revolver Amount” means $150,000,000, decreased by the amount of reductions in the Revolver Commitments made in accordance with Section 2.4(c) of the Agreement.
“Moody’s” means Moody’s Investors Service, Inc.
“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years was, contributed to by Anixter or any ERISA Affiliate.
“Net Recovery Percentage” means, as of any date of determination, the percentage of the book value of Borrowers’ Inventory that is estimated to be recoverable in an orderly liquidation of such Inventory net of all associated costs and expenses of such liquidation, such percentage to be determined as to each category of Inventory and to be as specified in the most recent appraisal received by Administrative Agent from an appraisal company selected by Administrative Agent.
“Non-Consenting Lender” has the meaning specified therefor in Section 14.2(a) of the Agreement.
“Non-Defaulting Lender” means each Lender other than a Defaulting Lender.
“Obligations” means (a) all loans (including the Revolving Loans (inclusive of Extraordinary Advances and Swing Loans)), debts, principal, interest (including any interest that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), reimbursement or indemnification obligations with respect to Letters of Credit (irrespective of whether contingent), premiums, liabilities (including all amounts charged to the Loan Account pursuant to the Agreement), obligations (including indemnification obligations), fees (including the fees provided for in the Fee Letter), 

Lender Group Expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), guaranties, and all covenants and duties of any other kind and description owing by any Loan Party arising out of, under, pursuant to, in connection with, or evidenced by the Agreement or any of the other Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all other expenses or other amounts that Borrowers are required to pay or reimburse by the Loan Documents or by law or otherwise in connection with the Loan Documents, and (b) all Bank Product Obligations; provided that, anything to the contrary contained in the foregoing notwithstanding, the Obligations shall exclude any Excluded Swap Obligation. Without limiting the generality of the foregoing, the Obligations of Borrowers under the Loan Documents include the obligation to pay (i) the principal of the Revolving Loans, (ii) interest accrued on the Revolving Loans, (iii) the amount necessary to reimburse Issuing Bank for amounts paid or payable pursuant to Letters of Credit, (iv) Letter of Credit commissions, fees (including fronting fees) and charges, (v) Lender Group Expenses, (vi) fees payable under the Agreement or any of the other Loan Documents, and (vii) indemnities and other amounts payable by any Loan Party under any Loan Document. Any reference in the Agreement or in the Loan Documents to the Obligations shall include all or any portion thereof and any extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.
“OFAC” means the Office of Foreign Assets Control of the U.S. Department of the Treasury.
“Operating Lease” means, as applied to any Person, any lease of any Property by that Person as lessee which is not a Capital Lease.
“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-US jurisdiction), (b) with respect to any limited liability company, the certificate, memorandum and articles of association 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, in each case as amended from time to time.
“Originating Lender” has the meaning specified therefor in Section 13.1(e) of the Agreement.
“Originator” means each “Originator” under and as defined in the Receivables Facility Credit Agreement.

“Overadvance” means, as of any date of determination, that the Revolver Usage is greater than any of the limitations set forth in Section 2.1 or Section 2.11 of the Agreement.
“Participant” has the meaning specified therefor in Section 13.1(e) of the Agreement.
“Participant Register” has the meaning set forth in Section 13.1(i) of the Agreement.
“Patriot Act” has the meaning specified therefor in Section 4.13 of the Agreement.
“Payment Conditions” means, with respect to any proposed event that is subject to satisfaction of the Payment Conditions, that either (a) after giving effect to the proposed event as if it occurred on the first day of the Pro Forma Period, pro forma Combined Availability would be greater than 2017.5% of the Combined Commitment at all times during the Pro Forma Period, or (b) after giving effect to the proposed event as if it occurred on the first day of the Pro Forma Period, (i) pro forma Combined Availability at all times during the Pro Forma Period would be greater than 1512.5% of the Combined Commitment and (ii) the pro forma Consolidated Fixed Charge Coverage Ratio would be greater than 1.1 to 1.
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
“Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by Anixter or any ERISA Affiliate or to which Anixter or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five plan years.
“Perfection Certificate” means a certificate in the form of Exhibit P-1 to the Agreement.
“Permit” means any permit, approval, consent, authorization, license, variance, or permission required from a Governmental Authority under an applicable Requirement of Law.
“Permitted Discretion” means a determination made in good faith and in the exercise of reasonable (from the perspective of a secured asset-based lender) business judgment.
“Permitted Encumbrances” means:
(a)    Customary Permitted Liens; and
(b)    judgment Liens in respect of judgments that do not constitute an Event of Default under clause (k) of Section 8 of the Agreement.

provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness, except with respect to clause (b) above.
“Person” means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, Governmental Authorities, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof.
“Plan” means an employee benefit plan defined in Section 3(3) of ERISA in respect of which either Anixter or any ERISA Affiliate is, or within the immediately preceding six (6) years was, an “employer” as defined in Section 3(5) of ERISA.
“Platform” has the meaning specified therefor in Section 17.9(c) of the Agreement.
“Pro Forma Period” means the period commencing thirty (30) days prior to the date an event is proposed by Anixter to occur.
“Pro Rata Share” means, as of any date of determination:
(a)    with respect to a Lender’s obligation to make all or a portion of the Revolving Loans, with respect to such Lender’s right to receive payments of interest, fees, and principal with respect to the Revolving Loans, and with respect to all other computations and other matters related to the Revolver Commitments or the Revolving Loans, the percentage obtained by dividing (i) the Revolving Loan Exposure of such Lender by (ii) the aggregate Revolving Loan Exposure of all Lenders,
(b)    with respect to a Lender’s obligation to participate in the Letters of Credit, with respect to such Lender’s obligation to reimburse Issuing Bank, and with respect to such Lender’s right to receive payments of Letter of Credit Fees, and with respect to all other computations and other matters related to the Letters of Credit, the percentage obtained by dividing (i) the Revolving Loan Exposure of such Lender by (ii) the aggregate Revolving Loan Exposure of all Lenders; provided, that if all of the Revolving Loans have been repaid in full and all Revolver Commitments have been terminated, but Letters of Credit remain outstanding, Pro Rata Share under this clause shall be determined as if the Revolver Commitments had not been terminated and based upon the Revolver Commitments as they existed immediately prior to their termination,
(c)    [reserved],
(d)    with respect to all other matters and for all other matters as to a particular Lender (including the indemnification obligations arising under Section 15.7 of the Agreement), the percentage obtained by dividing (i) the Revolving Loan Exposure of such 

Lender by (ii) the aggregate Revolving Loan Exposure of all Lenders, in any such case as the applicable percentage may be adjusted by assignments permitted pursuant to Section 13.1 of the Agreement; provided, that if all of the Loans have been repaid in full, all Letters of Credit have been made the subject of Letter of Credit Collateralization, and all Commitments have been terminated, Pro Rata Share under this clause shall be determined as if the Revolving Loan Exposures had not been repaid, collateralized, or terminated and shall be based upon the Revolving Loan Exposures as they existed immediately prior to their repayment, collateralization, or termination.
“Projections” has the meaning specified therefor in Section 5.1(e) of the Agreement.
“Property” means with respect to any Person, any real or personal property, plant, building, facility, structure, equipment or unit, or other asset (tangible or intangible) owned, leased or operated by such Person.
“Protective Advances” has the meaning specified therefor in Section 2.3(d)(i) of the Agreement.
“Public Lender” has the meaning specified therefor in Section 17.9(c) of the Agreement.
“Receivables Facility” means the financing arrangement pursuant to the Receivables Facility Credit Agreement.
“Receivables Facility Administrative Agent” means Chase, in its capacity as the “Administrative Agent” under and as defined in the Receivables Facility Credit Agreement, and any successor to Chase in that capacity.
“Receivables Facility Availability” means, at any time, “Availability” under and as defined in the Receivables Facility Credit Agreement.
“Receivables Facility Commitment” means, at any time, the “Aggregate Revolving Commitment” under and as defined in the Receivables Facility Credit Agreement.
“Receivables Facility Credit Agreement” means the Credit Agreement dated as of October 5, 2015, among ARC, the other Receivables Facility Loan Parties party thereto, the Receivables Facility Administrative Agent, and the other financial institutions named therein, as the same may be amended or replaced from time to time.
“Receivables Facility Loan Party” means each “Loan Party” under and as defined in the Receivables Facility Credit Agreement.

“Receivables Facility Secured Obligations” means the “Secured Obligations” under and as defined in the Receivables Facility Credit Agreement.
“Receivables Facility Transactions” means any sale, assignment, or other transfer to ARC by Anixter or any Subsidiary of accounts receivable, lease receivables, or other payment obligations owing to Anixter or such Subsidiary or any interest in any of the foregoing, together in each case with any collections and other proceeds thereof, any collection or deposit accounts related thereto, and any collateral, guaranties or other property or claims in favor of Anixter or such Subsidiary supporting or securing payment by the obligor thereon of, or otherwise related to, any such receivables.
“Receivables Facility Transaction Documents” means the Receivables Sale Agreement, each Receivables Transfer Agreement, the ARC Subordinated Documents and each of the other material agreements, instruments, and documents executed and delivered in connection with the Receivables Facility Transactions.
“Receivables Sale Agreement” means that certain Third Amended and Restated Receivables Sale Agreement, dated as of the date of this Agreement, by and between Anixter, as seller, and ARC, as buyer, as the same may be amended, restated or otherwise modified from time to time.
“Receivables Transfer Agreement” means (a) any Subsidiary Originator Transfer Agreement, and (b) any other receivables transfer agreement entered into from time to time by and between Anixter, as the buyer, and any other Originator, as the seller, in each case as the same may be amended, restated or otherwise modified from time to time.
“Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
“Refinance Indebtedness” has the meaning specified therefor in Section 6.1(a)(xiii) of the Agreement.
“Register” has the meaning set forth in Section 13.1(h) of the Agreement.
“Regulation T, U, or XD” means Regulation T, U, or X, respectively,D of the Board of Governors, as in effect from time to time in effect and any successor to all or a portionand all official rulings and interpretations thereunder, or thereof.
“Regulation T” means Regulation T of the Board of Governors, as in effect from time to time and all official rulings and interpretations thereunder or thereof.
“Regulation U” means Regulation U of the Board of Governors, as in effect from time to time and all official rulings and interpretations thereunder or thereof.

“Regulation X” means Regulation X of the Board of Governors, as in effect from time to time and all official rulings and interpretations thereunder or thereof. 
“Registered Loan” has the meaning set forth in Section 13.1(h) of the Agreement.
“Related Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course and that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender.
“Related Transactions” means, collectively, (a) the Transactions, (b) the “Transactions” under and as defined in the Receivables Facility Credit Agreement, and (c) the HD Supply Acquisition, and (d) the Receivables Facility Transactions.
“Related Transactions Documents” means, collectively, (a) the Loan Documents, (b) the Revolving Subordinated Note, (c) the “Loan Documents” under and as defined in the Receivables Facility Credit Agreement, (d) the ARC Subordinated Documents, (e) the Receivables Sale Agreement, (f) the Receivables Transfer Agreements, and (g) all other material agreements, instruments, and documents executed and delivered in connection with the Receivables Facility Transactions.
“Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing, or dumping into the environment.
“Remedial Action” means any action required by a Governmental Authority or an Environmental Law to (a) clean up, remove, treat or in any other way address Hazardous Materials; (b) prevent a Release or minimize the further Release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the environment; or (c) perform pre-remedial studies and investigations or post-remedial monitoring and care.
“Replacement Lender” has the meaning specified therefor in Section 2.13(b) of the Agreement.
“Report” has the meaning specified therefor in Section 15.16 of the Agreement.
“Reportable Event” means any of the events set forth in Section 4043 of ERISA (other than an event for which the 30-day notice period is waived).
“Required Lenders” means, at any time, Lenders having or holding more than 50% of the aggregate Revolving Loan Exposure of all Lenders; provided, that (i) the Revolving Loan Exposure of any Defaulting Lender shall be disregarded in the determination of the Required Lenders, and 

(ii) at any time there are 2 or more Lenders (who are not Affiliates of one another or Defaulting Lenders), “Required Lenders” must include at least 2 Lenders (who are not Affiliates of one another).
“Requirement of Law” means, as to any Person, the Organization Documents or other organizational or governing documents of such Person, and any law, rule or regulation (excluding Environmental Laws), Permit (excluding any Permit issued pursuant to an Environmental Law), or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its property is subject, including the Securities Act, the Securities Exchange Act, and Regulation T, U, or X, and any certificate of occupancy, zoning ordinance, building, or land use, law, rule, regulation, ordinance or Permit or occupational safety or health law, rule or regulation.
“Reserves” means, as of any date of determination, those reserves (other than Receivable Reserves, Bank Product Reserves, and Inventory Reserves) that Administrative Agent deems necessary or appropriate, in its Permitted Discretion and subject to Section 2.1(c) of the Agreement, to establish and maintain (including reserves with respect to (a) sums that Anixter or its Subsidiaries are required to pay under any Section of the Agreement or any other Loan Document (such as taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and has failed to pay, and (b) amounts owing by Anixter or its Subsidiaries to any Person to the extent secured by a Lien on, or trust over, any of the Collateral (other than a Permitted Encumbrance), which Lien or trust, in the Permitted Discretion of Administrative Agent likely would have a priority superior to Administrative Agent’s Liens (such as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes where given priority under applicable law and/or any potential priority Liens or trust claims under any applicable wage lien laws) in and to such item of the Collateral) with respect to the Borrowing Base or the Maximum Revolver Amount.
“Revolver Commitment” means, with respect to each Revolving Lender, its Revolver Commitment, and, with respect to all Revolving Lenders, their Revolver Commitments, in each case as such Dollar amounts are set forth beside such Revolving Lender’s name under the applicable heading on Schedule C-1 to the Agreement or in the Assignment and Acceptance pursuant to which such Revolving Lender became a Revolving Lender under the Agreement, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 13.1 of the Agreement.
“Revolver Usage” means, as of any date of determination, the sum of (a) the amount of outstanding Revolving Loans (inclusive of Swing Loans and Protective Advances), plus (b) the amount of the Letter of Credit Usage.
“Revolving Lender” means a Lender that has a Revolver Commitment or that has an outstanding Revolving Loan Exposure or Letter of Credit Exposure.

“Revolving Loan Exposure” means, with respect to any Revolving Lender, as of any date of determination (a) prior to the termination of the Revolver Commitments, the amount of such Lender’s Revolver Commitment, and (b) after the termination of the Revolver Commitments, the aggregate outstanding principal amount of the Revolving Loans of such Lender.
“Revolving Loans” has the meaning specified therefor in Section 2.1(a) of the Agreement.
“Revolving Subordinated Note” means the demand promissory note from Anixter to AXE dated October 6, 2000, as the same may be amended, modified or supplemented.
“Samuel Zell Group” means Samuel Zell or any of his affiliates (as such term is defined in Rule 12b‐2 of the Securities Exchange Act) or associates (as such term is defined in Rule 12b-2 of the Securities Exchange Act), and his heirs and beneficiaries.
“Sanctioned CountryEntity” means, at any time, a country or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, Cuba, Iran, North Korea, Sudan, and Syria) (a) a country or territory or a government of a country or territory, (b) an agency of the government of a country or territory, (c) an organization directly or indirectly controlled by a country or territory or its government, or (d) a Person resident in or determined to be resident in a country or territory, in each case of clauses (a) through (d) that is a target of Sanctions, including a target of any country sanctions program administered and enforced by OFAC.
“Sanctioned Person” means, at any time, (a) any Person listed in anynamed on the list of Specially Designated Nationals and Blocked Persons maintained by OFAC, OFAC’s consolidated Non-SDN list or any other Sanctions-related list of designated Persons maintained by OFAC or the U.S. Department of State or by the United Nations Security Council, the European Union, or any European Union member state, (bany Governmental Authority, (b) a Person or legal entity that is a target of Sanctions, (c) any Person operating, organized or resident in a Sanctioned CountryEntity, or (cd) any Person directly or indirectly owned or controlled by(individually or in the aggregate) by or acting on behalf of any such Person or Persons described in the foregoing clauses (a) orthrough (bc) above.
“Sanctions” means individually and collectively, respectively, any and all economic orsanctions, trade sanctions, financial sanctions or, sectoral sanctions, secondary sanctions, trade embargoes anti-terrorism laws and other sanctions laws, regulations or embargoes, including those imposed, administered or enforced from time to time by :  (a) the U.S. governmentUnited States of America, including those administered by OFAC or, the U.S. Department of State, orthe U.S. Department of Commerce, or through any existing or future executive order, (b) the United Nations Security Council, (c) the European Union, or any European Union member state, or(d) Her Majesty’s Treasury of the United Kingdom., or (e) any other Governmental Authority with jurisdiction over any member of Lender Group or any Loan Party or any of their respective Subsidiaries or Affiliates.   

“S&P” has the meaning specified therefor in the definition of “Cash Equivalents.”
“SEC” means the United States Securities and Exchange Commission and any successor thereto.
“Secured Debt” has the meaning assigned to that term in the 2012 Notes Indenture.
“Secured Debt Indenture Cap Amount” means, at any time any Indebteness under the 2012 Notes Indenture remains outstanding, an amount equal to (a) 10% of Consolidated Tangible Net Assets, minus (b) the aggregate amount of Specified Secured Debt then outstanding (other than the Revolver Usage), minus (c) an amount equal to 5% of the aggregate Revolver Commitments.
“Secured Debt‐to‐CTNA Ratio” means, at any time, the ratio of (a) the sum of (i) the aggregate amount of Specified Secured Debt then outstanding (other than the Revolver Usage), plus (ii) an amount equal to 5% of the aggregate Revolver Commitments, plus (iii) the Revolver Usage, to (b) Consolidated Tangible Net Assets.
“Securities Act” means the Securities Act of 1933.
“Securities Exchange Act” means the Securities Exchange Act of 1934.
“Settlement” has the meaning specified therefor in Section 2.3(e)(i) of the Agreement.
“Settlement Date” has the meaning specified therefor in Section 2.3(e)(i) of the Agreement.
“Solvent” means, when used with respect to any Person, that at the time of determination:
(a)    the fair value of its assets (both at fair valuation and at present fair saleable value) is equal to or in excess of the total amount of its liabilities, including contingent liabilities;
(b)    it is then able and expected to be able to pay its debts as they mature; and
(c)    it has capital sufficient to carry on its business as conducted and as proposed to be conducted.
With respect to contingent liabilities (such as litigation, guarantees and pension plan liabilities), such liabilities shall be computed at the amount which, in light of all the facts and circumstances existing at the time, represent the amount which can reasonably be expected to become an actual or matured liability.
“Specified Event of Default” means (a) any Event of Default described in clause (a), (b), (d) (with respect to any failure to observe or perform any covenant, condition, or agreement contained 

in Section 5.3 (with respect to the existence of any Loan Party), 6.1, 6.2, 6.3(a), 6.4, 6.5, 6.11, or 6.14 of the Agreement), (h), (i), or (j) of Section 8 of the Agreement, or (b) any “Specified Amortization Event” under and as defined in the Receivables Facility Credit Agreement.
“Specified Representations” means the representations and warranties set forth in Sections 4.1, 4.2, 4.3(a), 4.3(b), 4.3(c) (with respect to Requirements of Law), 4.8, 4.13, 4.16 (as to perfection (insofar as perfection is achieved by the filing of UCC financing statements, intellectual property security agreements, or delivery of Equity Interest certificates and undated Equity Interest powers)), 4.18, 4.19, and 4.22 of the Agreement.
“Specified Secured Debt” means Secured Debt issued after April 30, 2012, other than Secured Debt permitted to be secured under subparagraphs (a) through (l), inclusive, of Section 1005 of the 2012 Notes Indenture.
“Standard Letter of Credit Practice” means, for Issuing Bank, any domestic or foreign law or letter of credit practices applicable in the city in which Issuing Bank issued the applicable Letter of Credit or, for its branch or correspondent, such laws and practices applicable in the city in which it has advised, confirmed or negotiated such Letter of Credit, as the case may be, in each case, (a) which letter of credit practices are of banks that regularly issue letters of credit in the particular city, and (b) which laws or letter of credit practices are required or permitted under ISP or UCP, as chosen in the applicable Letter of Credit.
“Subordinated Indebtedness” of a Person means any Indebtedness of such Person the payment of which is subordinated to payment of the Obligations to the written satisfaction of Administrative Agent.
“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 the context requires otherwise, “Subsidiary” means a Subsidiary of Anixter.
“Subsidiary Originator” means each “Subsidiary Originator” under and as defined in the Receivables Facility Credit Agreement.
“Subsidiary Originator Receivable” means a Receivable originated by a Subsidiary Originator and sold by a Subsidiary Originator to Anixter pursuant to a Subsidiary Originator Transfer Agreement.

“Subsidiary Originator Transfer Agreement” means any receivables transfer agreement entered into from time to time by and between Anixter, as the buyer, and any Subsidiary Originator, as the seller, in each case as the same may be amended, restated or otherwise modified from time to time.
“Supply Chain Finance Arrangement” means any arrangement entered into by a Borrower or its Subsidiaries with a Bank Product Provider pursuant to which such Bank Product Provider finances open accounts payable of any of such Borrower and its Subsidiaries owing to its vendors, including, without limitation, any such arrangement facilitated through the PrimeRevenue system.
“Swap Agreement” means a “swap agreement” as that term is defined in Section 101(53B)(A) of the Bankruptcy Code.
“Swap Obligations” means any and all obligations or liabilities, whether absolute or contingent, due or to become due, now existing or hereafter arising, of Anixter and its Subsidiaries arising under, owing pursuant to, or existing in respect of Swap Agreements entered into with one or more of the Swap Providers.
“Swap Provider” means any Lender or any of its Affiliates; provided, that no such Person (other than Wells Fargo or its Affiliates) shall constitute a Swap Provider unless and until Administrative Agent receives a Bank Product Provider Agreement from such Person and with respect to the applicable Swap Agreement within 10 days after the execution and delivery of such Swap Agreement with Anixter or its Subsidiaries; provided further, that if, at any time, a Lender ceases to be a Lender under the Agreement, then, from and after the date on which it ceases to be a Lender thereunder, neither it nor any of its Affiliates shall constitute Swap Providers and the obligations with respect to Swap Agreements entered into with such former Lender or any of its Affiliates shall no longer constitute Swap Obligations.
“Swing Lender” means Wells Fargo or any other Lender that, at the request of Borrowers and with the consent of Administrative Agent agrees, in such Lender’s sole discretion, to become the Swing Lender under Section 2.3(b) of the Agreement.
“Swing Loan” has the meaning specified therefor in Section 2.3(b) of the Agreement.
“Swing Loan Exposure” means, as of any date of determination with respect to any Lender, such Lender’s Pro Rata Share of the Swing Loans on such date.
“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).
“Target” has the meaning specified therefor in the definition of “HD Supply Acquisition.”
“Taxes” means any taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein, and all interest, penalties or similar liabilities with respect thereto.
“Tax Lender” has the meaning specified therefor in Section 14.2(a) of the Agreement.
“Termination Event” means a (a) Reportable Event with respect to any BenefitPension Plan; (b) the withdrawal of Anixter or any ERISA Affiliate from a BenefitPension Plan during a plan year in which Anixter or such ERISA Affiliate was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (c) the imposition of an obligation of Anixter or any ERISA Affiliate under Section 4041 of ERISA to provide affected parties written notice of intent to terminate a BenefitPension Plan in a distress termination described in Section 4041(c) of ERISA; (d) the institution by the PBGC or any similar foreign governmental authority of proceedings to terminate a BenefitPension Plan or a Foreign Pension Plan, (e) any event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any BenefitPension Plan; (f) a foreign governmental authority shall appoint or institute proceedings to appoint a trustee to administer any Foreign Pension Plan; or (g) the partial or complete withdrawal of Anixter of any ERISA Affiliate from a Multiemployer Plan or a Foreign Pension Plan.
“Transactions” means the execution, delivery and performance by Anixter, the Subsidiaries of Anixter (as applicable), and the other Loan Parties of this Agreement and the other Loan Documents, the borrowing of Loans and other credit extensions, the use of the proceeds thereof, and the issuance of Letters of Credit hereunder.
“UCP” means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits 2007 Revision, International Chamber of Commerce Publication No. 600 and any subsequent version or  revision thereof adopted by the International Chamber of Commerce on the date such Letter of Credit is issuedaccepted by Issuing Bank for use.
“Unfinanced Capital Expenditures” means, for any period, Capital Expenditures made during such period which are not financed from the proceeds of any Indebtedness (other than the Revolving Loans; it being understood and agreed that, to the extent any Capital Expenditures are financed with Revolving Loans, such Capital Expenditures shall be deemed Unfinanced Capital Expenditures).
“United States” means the United States of America.

“Unused Line Fee” has the meaning specified therefor in Section 2.10(b) of the Agreement.
“Voidable Transfer” has the meaning specified therefor in Section 17.8 of the Agreement.
“Wells Fargo” means Wells Fargo Bank, National Association, a national banking association.
“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

CH2\21542580.2Exhibit

PURCHASE AND SALE AGREEMENT
between
QEP ENERGY COMPANY,
QEP MARKETING COMPANY,
and
QEP OIL & GAS COMPANY,
as “Seller”
and
AETHON III BR LLC
as “Buyer”
dated
November 16, 2018

TABLE OF CONTENTS
	
				
	 
	 
	Page
	

	ARTICLE I DEFINITIONS AND INTERPRETATION
	1
	

	1.1
	Defined Terms
	1
	

	1.2
	References and Rules of Construction
	1
	

	 
	 
	 

	ARTICLE II PURCHASE AND SALE
	2
	

	2.1
	Purchase and Sale
	2
	

	2.2
	Upstream Assets
	2
	

	2.3
	Upstream Excluded Assets
	5
	

	2.4
	Revenues and Expenses
	5
	

	2.5
	Midstream Interests Adjustment Procedures
	7
	

	 
	 
	 

	ARTICLE III PURCHASE PRICE
	9
	

	3.1
	Purchase Price
	9
	

	3.2
	Deposit
	9
	

	3.3
	Adjustments to Purchase Price
	9
	

	3.4
	Preliminary Settlement Statement
	13
	

	3.5
	Final Settlement Statement
	13
	

	3.6
	Disputes
	14
	

	3.7
	Allocation of Purchase Price/Allocated Values
	14
	

	3.8
	Allocation of Consideration for Tax Purposes
	14
	

	3.9
	Allocation for Imbalances
	15
	

	3.10
	Withholding Taxes
	15
	

	 
	 
	 

	ARTICLE IV BUYER’S CONDITIONS TO CLOSING
	16
	

	4.1
	Representations
	16
	

	4.2
	Performance
	16
	

	4.3
	No Legal Proceedings
	16
	

	4.4
	Hard Consents, Title Defects and Environmental Defects
	16
	

	4.5
	HSR Act
	17
	

	4.6
	Closing Certificate
	17
	

	4.7
	Closing Deliverables
	17
	

	4.8
	FERC Waivers
	17
	

	 
	 
	 

	ARTICLE V SELLER'S CONDITIONS TO CLOSING
	18
	

	5.1
	Representations
	18
	

	5.2
	Performance
	18
	

	5.3
	No Legal Proceedings
	18
	

	5.4
	Hard Consents, Title Defects and Environmental Defects
	18
	

	5.5
	HSR Act
	18
	

	5.6
	Closing Certificate
	18
	

	5.7
	Closing Deliverables
	18
	

	5.8
	FERC Waivers
	19
	

	 
	 
	 

	ARTICLE VI CLOSING
	19
	

	6.1
	Date of Closing
	19
	

	6.2
	Place of Closing
	19
	

	6.3
	Closing Obligations
	19
	

i

	
				
	6.4
	Records
	21
	

	 
	 
	 

	ARTICLE VII TERMINATION; DEFAULT AND REMEDIES
	22
	

	7.1
	Right of Termination
	22
	

	7.2
	Effect of Termination
	22
	

	7.3
	Return of Documentation and Confidentiality
	24
	

	 
	 
	 

	ARTICLE VIII ASSUMPTION; INDEMIFICATION; SURVIVAL
	24
	

	8.1
	Assumption by Buyer
	24
	

	8.2
	Indemnities of Seller
	25
	

	8.3
	Indemnities of Buyer
	26
	

	8.4
	Limitation on Liability
	26
	

	8.5
	Express Negligence
	27
	

	8.6
	Exclusive Remedy
	28
	

	8.7
	Indemnification Procedures
	28
	

	8.8
	Survival
	30
	

	8.9
	Waiver of Right to Rescission
	31
	

	8.10
	Insurance; Mitigation
	31
	

	8.11
	Non-Compensatory Damages
	32
	

	 
	 
	 

	ARTICLE IX REPRESENTATIONS AND WARRANTIES OF SELLER
	33
	

	9.1
	Organization, Existence and Qualification
	33
	

	9.2
	Authorization, Approval and Enforceability
	33
	

	9.3
	No Conflicts
	34
	

	9.4
	Consents
	34
	

	9.5
	Bankruptcy
	34
	

	9.6
	Foreign Person
	34
	

	9.7
	Litigation
	34
	

	9.8
	Material Contracts
	35
	

	9.9
	No Violation of Laws
	37
	

	9.10
	Preferential Purchase Rights
	37
	

	9.11
	Burdens
	37
	

	9.12
	Imbalances
	37
	

	9.13
	Current Commitments; Drilling Obligations
	37
	

	9.14
	Environmental Matters
	38
	

	9.15
	Taxes
	38
	

	9.16
	Brokers' Fees
	40
	

	9.17
	Advance Payments
	40
	

	9.18
	Employee Matters
	40
	

	9.19
	The Partnership
	41
	

	9.20
	Certain Midstream Assets
	41
	

	9.21
	Intellectual Property
	42
	

	9.22
	Regulatory Status
	43
	

	9.23
	Balance Sheet; No Undisclosed Liabilities; Absence of Changes
	43
	

	9.24
	Well Status
	44
	

	9.25
	Non-Consent Operations
	44
	

	9.26
	Insurance
	44
	

	9.27
	FCC Matters
	44
	

	9.28
	Credit Support Instruments
	44
	

	9.29
	Suspense Funds
	44
	

ii

	
				
	9.30
	Bank Accounts; Powers of Attorney
	45
	

	9.31
	Affiliate Relationships
	45
	

	9.32
	Permits
	45
	

	 
	 
	 

	ARTICLE X REPRESENTATIONS AND WARRANTIES OF BUYER
	45
	

	10.1
	Organization, Existence and Qualification
	45
	

	10.2
	Authorization, Approval and Enforceability
	46
	

	10.3
	No Conflicts
	46
	

	10.4
	Consents
	46
	

	10.5
	Bankruptcy
	46
	

	10.6
	Litigation
	46
	

	10.7
	Financing
	47
	

	10.8
	Regulatory
	47
	

	10.9
	Independent Evaluation
	47
	

	10.10
	Brokers’ Fees
	47
	

	10.11
	Securities Laws
	47
	

	 
	 
	 

	ARTICLE XI CERTAIN AGREEMENTS
	48
	

	11.1
	Conduct of Business
	48
	

	11.2
	Successor Operator
	53
	

	11.3
	HSR Act
	53
	

	11.4
	Credit Support 
	53
	

	11.5
	Record Retention
	54
	

	11.6
	Amendment of Schedules
	54
	

	11.7
	Notifications
	55
	

	11.8
	Removal of Name
	55
	

	11.9
	FCC Filings
	55
	

	11.10
	Employee Matters
	55
	

	11.11
	Partnership Excluded Assets
	58
	

	11.12
	Permitting and Drilling Activities
	58
	

	11.13
	Information Technology
	58
	

	11.14
	Conversion
	59
	

	11.15
	Financing Cooperation
	59
	

	11.16
	Firm Transportation Contracts
	60
	

	11.17
	Reaffirmation of Mutual Releases
	61
	

	11.18
	Title Insurance
	62
	

	11.19
	Control of the Scheduled Concursus Matters; Cooperation Regarding Conveyed Rights
	62
	

	11.20
	Existing Hedge Contracts
	63
	

	 
	 
	 

	ARTICLE XII ACCESS; DISCLAIMERS
	64
	

	12.1
	Access
	64
	

	12.2
	Confidentiality
	66
	

	12.3
	Disclaimers
	67
	

	 
	 
	 

	ARTICLE XIII TITLE MATTERS; CASUALTY; TRANSFER RESTRICTIONS
	69
	

	13.1
	Seller’s Title
	69
	

	13.2
	Notice of Title Defects; Defect Adjustments
	70
	

	13.3
	Casualty Loss
	77
	

	13.4
	Consents; Preferential Rights
	78
	

	 
	 
	 

iii

	
				
	ARTICLE XIV ENVIRONMENTAL MATTERS
	80
	

	14.1
	Notice of Environmental Defects
	80
	

	14.2
	NORM, Wastes and Other Substances
	86
	

	 
	 
	 

	ARTICLE XV MISCELLANEOUS
	86
	

	15.1
	Exhibits, Schedules and Appendices
	86
	

	15.2
	Expenses and Taxes
	86
	

	15.3
	Assignment
	90
	

	15.4
	Preparation of Agreement
	90
	

	15.5
	Publicity
	90
	

	15.6
	Notices
	91
	

	15.7
	Further Cooperation
	92
	

	15.8
	Filings, Notices and Certain Governmental Approvals
	93
	

	15.9
	Entire Agreement; Conflicts
	93
	

	15.10
	Parties in Interest
	94
	

	15.11
	Amendment
	94
	

	15.12
	Waiver; Rights Cumulative
	94
	

	15.13
	Conflict of Law Jurisdiction, Venue; Jury Waiver
	94
	

	15.14
	Severability
	95
	

	15.15
	Counterparts
	96
	

	15.16
	No Recourse
	96
	

iv

LIST OF APPENDICES AND EXHIBITS
	
			
	APPENDICES
	 
	 

	Appendix A
	-
	Defined Terms

	 
	 
	 

	EXHIBITS:
	 
	 

	Exhibit A-1
	-
	Leases

	Exhibit A-2
	-
	Fee Minerals

	Exhibit A-3
	-
	Gas Plants

	Exhibit A-4
	-
	Gathering Systems

	Exhibit B-1
	-
	Wells

	Exhibit B-2
	-
	Well Locations

	Exhibit B-3
	-
	Other Wells

	Exhibit C
	-
	Upstream Inventory

	Exhibit D-1
	-
	Communication Equipment

	Exhibit D-2
	-
	Assigned FCC Leases

	Exhibit D-3
	-
	Mitigation Credits

	Exhibit E
	-
	Vehicles

	Exhibit F-1
	-
	Upstream Easements

	Exhibit F-2
	-
	Upstream Surface Fee

	Exhibit F-3
	-
	Upstream Surface Leases

	Exhibit G-1
	-
	Form of Upstream Assignment

	Exhibit G-2
	-
	Form of Deed

	Exhibit G-3
	-
	Form of Interests Assignment

	Exhibit G-4
	-
	Form of Mitigation Credits Quitclaim

	Exhibit H
	-
	Excluded Assets

	Exhibit I
	-
	Form of Transition Services Agreement

	Exhibit J-1
	-
	Form of Mutual Release (Entity)

	Exhibit J-2
	-
	Form of Mutual Release (Individual)

	Exhibit K
	-
	Form of Novation Instruments

v

LIST OF SCHEDULES
	
			
	SCHEDULES:
	 
	 

	 
	 
	 

	Schedule 1.1A
	-
	Seller Knowledge Persons

	Schedule 1.1B
	-
	Buyer Knowledge Persons

	Schedule 1.1C
	-
	Permitted Encumbrances

	Schedule 2.5(b)(i)
	-
	Unpaid Refunds and Insurance Proceeds

	Schedule 3.7A
	-
	Allocated Values - Midstream Interests & Upstream Assets

	Schedule 3.7B
	-
	Allocated Values - Wells

	Schedule 3.7C
	-
	Allocated Values - Well Locations

	Schedule 9.4
	-
	Consents

	Schedule 9.7
	-
	Litigation

	Schedule 9.8(a)
	-
	Material Contracts

	Schedule 9.8(b)
	-
	Material Contract Matters

	Schedule 9.9
	-
	Violation of Laws

	Schedule 9.11
	-
	Burdens

	Schedule 9.12(a)
	-
	Imbalances - Upstream Assets

	Schedule 9.12(b)
	-
	Imbalances - Midstream Business

	Schedule 9.13(a)
	-
	Current Commitments

	Schedule 9.13(b)
	-
	Drilling Obligations

	Schedule 9.14
	-
	Environmental Matters

	Schedule 9.15
	-
	Taxes

	Schedule 9.18
	-
	Employee Matters

	Schedule 9.21
	-
	Intellectual Property Matters

	Schedule 9.22
	-
	Regulatory Matters

	Schedule 9.25
	-
	Non-Consent Operations

	Schedule 9.26
	-
	Insurance

	Schedule 9.27
	-
	FCC Matters

	Schedule 9.28
	-
	Credit Support Instruments

	Schedule 9.29
	-
	Suspense Funds

	Schedule 9.32
	-
	Permits

	Schedule 11.1
	-
	Conduct of Business

	Schedule 11.10
	-
	Permitted Employees

	Schedule 11.16
	-
	Firm Transportation Agreements

	Schedule 11.20
	-
	Existing Hedge Contracts

vi

PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this “Agreement”) is executed as of November 16, 2018 (the “Execution Date”), by and among QEP ENERGY COMPANY, a Delaware corporation (“QEP Energy” or “Upstream Seller”), QEP MARKETING COMPANY, a Utah corporation (“QEP Marketing”), and QEP OIL & GAS COMPANY, a Delaware corporation (“QEP Oil & Gas” and, together with QEP Energy and QEP Marketing, collectively referred to herein as “Seller”), on the one hand, and AETHON III BR LLC, a Delaware limited liability company (“Buyer”), on the other hand.  Seller and Buyer are each a “Party”, and collectively the “Parties”.
RECITALS
WHEREAS, (a) QEP Marketing is the owner of 1.0% of the issued and outstanding Partnership Interests (as hereinafter defined) of Haynesville Gathering LP, a Delaware limited partnership (the “Partnership”); and (b) QEP Oil & Gas is the owner of 99.0% of the issued and outstanding Partnership Interests of the Partnership (all such Partnership Interests, collectively, the “Midstream Interests”); and
WHEREAS, (a) QEP Energy desires to sell and assign, and Buyer desires to purchase and pay for, the Upstream Assets (as hereinafter defined), and (b) QEP Marketing and QEP Oil & Gas (collectively, “Midstream Seller”) desire to sell and assign, and Buyer desires to purchase and pay for, the Midstream Interests; and
WHEREAS, on or prior to December 31, 2018, (a) QEP Oil & Gas intends to convert its corporate form from a Delaware corporation to a Delaware limited liability company, (b) QEP Marketing intends to convert its corporate form from a Utah corporation to a Utah limited liability company and (c) QEP Energy intends to convert its corporate form from a Delaware corporation to a Delaware limited liability company (collectively, the “Conversion”); and
WHEREAS, the Partnership, each of the Officers (as hereinafter defined) and Managers (as hereinafter defined) and Seller have executed and delivered to Buyer, and the Partnership and Buyer have executed and delivered to each of the Officers and Managers and Seller, an applicable Mutual Release simultaneously with the execution of this Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises contained herein, the benefits to be derived by each Party hereunder, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION

1.1    Defined Terms.  Capitalized terms used herein have the meanings set forth in Appendix A, unless the context otherwise requires.

1.2    References and Rules of Construction.  All references in this Agreement to Exhibits, Schedules, Appendices, Articles, Sections, subsections and other subdivisions refer to the corresponding Exhibits, Schedules, Appendices, Articles, Sections, subsections and other subdivisions of or to this Agreement unless expressly provided otherwise.  Titles appearing at the beginning of any Articles, Sections, subsections and other subdivisions of this Agreement are for convenience only, do not constitute any part of this Agreement, and shall be disregarded in construing the language hereof.  The words “this Agreement,” “herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer to this Agreement as a 

1

whole and not to any particular Article, Section, subsection or other subdivision unless expressly so limited.  The words “this Article,” “this Section” and “this subsection,” and words of similar import, refer only to the Article, Section or subsection hereof in which such words occur.  Wherever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limiting the foregoing in any respect.” All references to “$” or “dollars” shall be deemed references to United States dollars.  Each accounting term not defined herein will have the meaning given to it under GAAP as interpreted as of the Execution Date.  Pronouns in masculine, feminine or neuter genders shall be construed to state and include any other gender, and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. The words “shall” and “will” are used interchangeably throughout this Agreement and shall accordingly be given the same meaning, regardless of which word is used. Except as expressly provided otherwise in this Agreement, references to any Law or agreement means such Law or agreement as it may be amended from time to time.  References to any date means such date in Denver, Colorado and for purposes of calculating the time period in which any notice or action is to be given or undertaken hereunder, such period shall be deemed to begin at 12:01 a.m. on the applicable date in Denver, Colorado. The word “extent” in the phrase “to the extent” means the degree or proportion to which a subject or other thing extends, and such phrase shall not mean simply “if”. With respect to all dates and time periods in this Agreement, time is of the essence.  

ARTICLE II
PURCHASE AND SALE

2.1    Purchase and Sale.  Subject to the terms and conditions of this Agreement:

(a)    Upstream Seller agrees to sell, and Buyer agrees to purchase and pay for the Upstream Assets and to assume the Upstream Assumed Obligations; and

(b)    Midstream Seller agrees to sell, and Buyer agrees to purchase and pay for, the Midstream Interests.

2.2    Upstream Assets.  As used herein, “Upstream Assets” means, collectively, all of Upstream Seller’s right, title and interest in and to the following (other than the Excluded Assets):

(a)    all oil and gas leases described in Exhibit A-1 and mineral fee interests described in Exhibit A-2 (“Fee Minerals”) (together with any overriding royalty interests and all other right, title and interest of Upstream Seller in and to the leasehold and mineral estates created thereby and subject to the terms, conditions, covenants and obligations set forth in the applicable instruments, in Exhibit A-1, and/or in Exhibit A-2, collectively, the “Leases”), together with any and all other rights, titles and interests of Seller in and to the lands covered or burdened thereby;

(b)    all rights and interests in, under or derived from all unitization, communitization and pooling orders, declarations and agreements in effect with respect to any of the Leases and the units created thereby (the “Units”);

(c)    all oil and gas wells located on any of the Leases or Units, whether such wells are producing, non-producing, temporarily abandoned, shut-in, plugged and abandoned, or otherwise (such interest in such wells, including the wells set forth in Exhibit B-1, the “Wells”);

(d)    all water wells, observation wells, disposal wells and injection wells located on, or primarily used in connection with, any of the Leases or Units (other than the Wells), whether temporarily 

2

abandoned, shut-in, plugged and abandoned, or otherwise, and all real property rights associated therewith, including the wells set forth in Exhibit B-3 (the “Other Wells”);

(e)    all Upstream Applicable Contracts, except to the extent transfer is (i) restricted by Hard Consents and the necessary Consents to transfer are not obtained pursuant to Section 13.4(a), or (ii) subject to payment of a fee or other consideration under any agreement with a Person other than an Affiliate of Seller and for which Buyer has not agreed in writing to pay the fee or other consideration, as applicable;

(f)    all equipment, machinery, fixtures and other personal and mixed property, operational and nonoperational, known or unknown, in each case, that are (i) described on Exhibit C (to the extent described on Exhibit C and not sold or put to use in the ordinary course of business prior to the Closing, the “Upstream Inventory”) or (ii) located on any of the Leases, Wells, Other Wells or Units, in each case, including pipelines, gathering systems, water disposal equipment, water pipelines, well equipment, casing, tubing, pumps, motors, fixtures, machinery, compression equipment, flow lines, processing and separation facilities, structures, materials and other items primarily used in the ownership, operation or development of the Leases, Well, Other Wells or Units (the foregoing, including the Upstream Inventory, collectively, the “Upstream Personal Property”);

(g)    the personal computers, SCADA equipment, software licenses (to the extent they may be assigned), servers, network equipment and associated peripherals and telephone equipment, and associated data, in each case, described on Exhibit D-1 (the “Communication Equipment”); 

(h)    those licenses granted by the Federal Communications Commission that are held by Seller and its Affiliates and described in Exhibit D-2 (the “Assigned FCC Licenses”); 

(i)    subject to Section 11.1(h), the mitigation credits and related rights described on Exhibit D-3 (the “Mitigation Credits”); 

(j)    (i) all Hydrocarbons attributable to the Leases, Wells and/or Units to the extent such Hydrocarbons were produced from and after the Effective Time and proceeds thereof, and (ii) all Effective Time Hydrocarbons as set forth in Section 3.3(a)(i); 

(k)    all Imbalances relating to the Upstream Assets;

(l)    the vehicles and rolling stock described in Exhibit E (the “Vehicles”);

(m)    all Upstream Easements, including those set forth on Exhibit F-1, except to the extent transfer is (i) restricted by Hard Consents and the necessary Consents to transfer are not obtained pursuant to Section 13.4(a), or (ii) subject to payment of a fee or other consideration under any agreement with a Person other than an Affiliate of Seller and for which Buyer has not agreed in writing to pay the fee or other consideration, as applicable;

(n)    to the extent they may be assigned, all Permits that are primarily used or held for use in connection with the ownership or operation of the other Upstream Assets;

(o)    the surface fee property and associated offices, warehouses, laydown yards and similar assets owned by Upstream Seller and described on Exhibit F-2 (the “Upstream Surface Fee”);

3

(p)    the leased real property and leased offices, warehouses, and other personal property, in each case, described in Exhibit F-3 (the “Upstream Surface Leases”), except to the extent transfer is (i) restricted by Hard Consents and the necessary Consents to transfer are not obtained pursuant to Section 13.4(a), or (ii) subject to payment of a fee or other consideration under any agreement with a Person other than an Affiliate of Seller and for which Buyer has not agreed in writing to pay the fee or other consideration, as applicable;

(q)    all geophysical, seismic and related technical data, cores and logs (in each case) that (i) are held by Upstream Seller or its Affiliates, (ii) are transferable without payment of a fee or other penalty to any Third Party under any Contract (unless Buyer has separately agreed in writing to pay such fee or other penalty), and (iii) primarily relate to the Leases, Wells or Units;

(r)    those files, records and data, that (i) primarily relate to the ownership, operation or development of the other Upstream Assets, and (ii) that are in Upstream Seller’s or its Affiliates’ possession, including:  (A) land and title records (including abstracts of title, title opinions and title curative documents); (B) Upstream Applicable Contract files; (C) correspondence with Governmental Authorities; (D) operations, environmental, health and safety, pipeline safety, production, accounting and Asset Tax records (other than those that relate to the business of Seller generally); and (E) facility and well records (the foregoing items, in such format(s) as the same are maintained by Upstream Seller or its Affiliates, less and except the Excluded Records, collectively, the “Upstream Records”);

(s)    except to the extent pertaining to any indemnity obligation paid by Seller hereunder or to the Excluded Assets, all claims, rights, demands, causes of action, suits, actions, judgments, damages, awards, recoveries, settlements, indemnities, warranties, rights to insurance proceeds, refunds, reimbursements, audit rights, duties, obligations, liabilities and other intangible rights in favor of or owed to Seller and either (i) relating to any Upstream Assumed Obligation or (ii) other than in connection with any matter for which, and solely to the extent which, Seller provides indemnity under Section 8.2, arising or attributable to the period of time from and after the Effective Time and related to any Upstream Asset described in clauses (a)-(r) above or the ownership or operation thereof, and, in each case, insofar and only insofar as such matters are not already applied as an adjustment to the Purchase Price;

(t)    all JIB Receivables;

(u)    the Conveyed Rights; and 

(v)    all (i) accounts receivable attributable to the Upstream Assets and periods of time from and after the Effective Time, other than any applicable JIB Receivables, and (ii) other rights of Seller to receive or recoup, by offset or netting against production from the Upstream Assets and the proceeds thereof, amounts owed by Persons other than Seller and its Affiliates with respect to the Upstream Assets whether attributable to periods of time prior to or from and after the Effective Time (the “Assigned Receivables”).

2.3    Upstream Excluded Assets.  Upstream Seller shall reserve and retain, on its own behalf or on behalf of certain of its Affiliates, all of its and its Affiliates’ right, title and interest in and to the Excluded Assets.

2.4    Revenues and Expenses.

(a)    For purposes of determining the amount of the adjustment to the Purchase Price provided for in Section 3.3, the principles set forth in this Section 2.4 shall apply except as expressly provided 

4

otherwise in this Agreement. Subject to the preceding sentence, (i) Upstream Seller shall be entitled to all of the rights of ownership attributable to the Upstream Assets (including the right to all production, proceeds of production and other proceeds) and shall remain responsible for all Upstream Operating Expenses, in each case, attributable to the period of time prior to the Effective Time, and (ii) Midstream Seller shall be entitled to all of the rights of ownership attributable to the Midstream Interests and shall remain responsible for all Midstream Operating Expenses, in each case, attributable to the period of time prior to the Effective Time.  Subject to the occurrence of the Closing, Buyer shall be entitled to all of the rights of ownership attributable to the Upstream Assets (including the right to all production, proceeds of production and other proceeds) and Midstream Interests, and shall be responsible for all Operating Expenses attributable thereto, in each case, from and after the Effective Time.  Subject to the occurrence of Closing and subject to Section 2.4(b), Section 2.4(c), Section 2.4(d), Section 2.4(e) and Section 15.2(b), all Operating Expenses that are: (i) incurred with respect to operations conducted or production prior to the Effective Time shall be paid by or allocated to Seller; and (ii) incurred with respect to operations conducted or production from and after the Effective Time shall be paid by or allocated to Buyer.  Such amounts that are received or paid prior to Closing shall be accounted for in the Preliminary Settlement Statement or Final Settlement Statement as applicable.  After Closing, each Party shall be entitled to participate in all joint interest audits and other audits of Operating Expenses for which such Party is entirely or in part responsible under the terms of this Section 2.4; provided, that Buyer shall control any such joint audit on behalf of the Parties and shall not agree to any adjustments to previously assessed costs for which Seller is liable, or any compromise of any audit claims to which Seller would be entitled, without the prior written consent of Seller, which consent shall not be unreasonably withheld, conditioned or delayed. Any expenses from such audit shall be borne by Buyer and Seller in the same proportion as the Operating Expenses at issue are or would be borne by Buyer and Seller.  Buyer shall provide Seller with a copy of all applicable audit reports and written audit agreements received by Buyer or its Affiliates and relating to periods for which Seller is wholly or partially responsible.

(b)    Such amounts that are received or paid after Closing but prior to the date of the Final Settlement Statement shall be accounted for in the Final Settlement Statement.  After the agreement of Buyer and Seller upon the Final Settlement Statement (or determination thereof), but prior to the two-year anniversary of the Closing Date (the “Cut-Off Date”), (i) if any Party receives monies that would belong to any other Party pursuant to this Section 2.4, including proceeds of production, then such amount shall, within 60 days after the end of the calendar month in which such amounts were received, be paid by such receiving Party to the proper Party, (ii) if any Party pays monies for Operating Expenses which are the obligation of any other Party pursuant to this Section 2.4, then such other Party shall, within 60 days after the end of the calendar month in which the applicable invoice and proof of payment of such invoice were received by such other Party, reimburse the Party which paid such Operating Expenses, (iii) if a Party receives an invoice of an Upstream Operating Expense which is owed by another Party pursuant to this Section 2.4, such Party receiving the invoice shall promptly forward such invoice to the Party obligated to pay the same, (iv) if Seller receives an invoice of a Midstream Operating Expense which is owed by Buyer or the Partnership pursuant to this Section 2.4, Seller shall promptly forward such invoice to Buyer and the Partnership, (v) if Buyer or the Partnership receives an invoice of a Midstream Operating Expense which is owed by Seller pursuant to this Section 2.4, Buyer or the Partnership shall pay the applicable invoice in accordance with its terms and following such payment forward a request for reimbursement of such paid amount to Seller, and Seller shall thereafter reimburse Buyer or the Partnership, as applicable, within 30 days of Seller’s receipt of the same, and (vi) if an invoice for Operating Expenses is received by a Party, which is partially an obligation of two or more Parties pursuant to this Section 2.4, then the relevant Parties shall consult with each other, and each shall promptly pay (or reimburse to Buyer or the Partnership, as applicable, in the event Seller owes any Midstream Operating Expense) its portion of such Operating Expenses.

5

(c)    For the avoidance of doubt, the date an item or work is ordered is not the date of a transaction for settlement purposes in the Preliminary Settlement Statement or Final Settlement Statement and otherwise under this Agreement, as applicable, but rather the date on which the item ordered is delivered to the job site, or the date on which the work ordered is performed, is the relevant date, regardless of when the applicable invoice was sent.  “Earned” and “incurred”, as used in this Agreement, shall be interpreted in accordance with GAAP and COPAS standards, as applied by Seller in the ordinary course of business consistent with past practice, subject to the other provisions of this Section 2.4.  For purposes of allocating production (and accounts receivable with respect thereto), under this Section 2.4, (i) liquid Hydrocarbons shall be deemed to be “from or attributable to” the Wells when they pass through the pipeline connecting into the storage facilities into which they are transported from the lands covered by the applicable Well, or if there are no storage facilities, when they pass through the LACT meter or similar meter at the entry point into the pipelines through which they are transported from such lands, and (ii) gaseous Hydrocarbons shall be deemed to be “from or attributable to” the Wells when they pass through the production meters, flare meters, fuel use equipment, venting, or delivery point sales meters or similar meters at the entry point into the pipelines through which they are transported from such lands.  Liquid Hydrocarbons in storage shall be measured by gauging of tanks at the Effective Time.  Seller shall utilize reasonable interpolative procedures to arrive at an allocation of production when exact meter readings (including gas production meters or sales meters) or gauging data is not available.

(d)    Notwithstanding anything to the contrary in this Section 2.4, (i) Seller shall be entitled to offset any amounts owed by Seller or its Affiliates to Buyer or its Affiliates under this Agreement or any of the Transaction Documents against any amounts owed by Buyer or its Affiliates to Seller or its Affiliates under this Agreement or any of the Transaction Documents and (ii) Buyer shall be entitled to offset any amounts owed by Buyer or its Affiliates to Seller or its Affiliates under this Agreement or any of the Transaction Documents against any amounts owed by Seller its Affiliates to Buyer or its Affiliates under this Agreement or any of the Transaction Documents.

(e)    For the avoidance of doubt, the Parties agree that, notwithstanding anything in this Section 2.4, Section 8.2 or otherwise in this Agreement to the contrary, from and after the Cut-Off Date, Buyer shall be responsible for all Operating Expenses and, shall be entitled to all proceeds, in each case, related to the Upstream Assets and Midstream Interests, regardless of when such Operating Expenses were incurred or paid or when such proceeds of production were earned or received. Notwithstanding anything in this Section 2.4, Section 8.2 or otherwise in this Agreement to the contrary, from and after the Cut-Off Date, Seller shall (i) not be responsible for, or otherwise required to pay, any Operating Expenses, regardless when the same were incurred or paid, and (ii) not be entitled to any amounts received by Buyer or its Affiliates after the Cut-Off Date.

2.5    Midstream Interests Adjustment Procedures.  For the avoidance of doubt, no item that is included in or taken into account in the calculation of Effective Time Working Capital shall be subject to any other adjustment to the Purchase Price.

(a)    In making the adjustments contemplated under Section 3.3(a)(vii) or Section 3.3(b)(x), as applicable, the provisions of this Section 2.5 shall be taken into account; provided, the remainder of this Section 2.5, other than Section 2.5(d), shall in no way be construed as a limitation to the definition of any of Effective Time Working Capital, Working Capital Assets and Working Capital Liabilities.

(b)    The following shall be deemed to constitute Working Capital Assets (without duplication):

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(i)    all (A) Cash and Cash Equivalents of the Partnership at the Effective Time, and (B) unpaid refunds payable to the Partnership on account of deposits, prepayments or similar items as set forth on Schedule 2.5(b)(i), and all insurance proceeds receivables of the Partnership attributable to periods prior to the Effective Time as set forth on Schedule 2.5(b)(i);

(ii)    the amount of all pre-paid or deposited Midstream Operating Expenses and all other costs and expenses (other than Taxes) paid by or on behalf of the Partnership prior to the Effective Time that are attributable to the ownership of the Midstream Interests after the Effective Time, including bond and insurance premiums and deductibles paid or borne by or on behalf of the Partnership with respect to any period after the Effective Time (prorated as applicable);

(iii)    all current Tax assets (other than Income Tax assets) of the Partnership related to prepaid deposits and refunds attributable to periods prior to the Effective Time; and

(iv)    unpaid proceeds, receivables and amounts earned as of the Effective Time and any other unpaid amounts earned by the Partnership, in each case during any period before the Effective Time, excluding (i) all Pre-ET Intercompany Receivables and (ii) any receivables and other amounts that are more than 90 days past due except to the extent a corresponding allowance for doubtful accounts is included as a Working Capital Liability).

(c)    The following shall be deemed to constitute Working Capital Liabilities (without duplication):

(i)    the amount of all Midstream Operating Expenses that are unpaid as of the Effective Time that are attributable to the ownership of the Midstream Interests prior to the Effective Time, including bond and insurance premiums and deductibles paid or borne by or on behalf of Seller or its Affiliates with respect to any period after the Effective Time (prorated as applicable);

(ii)    all current Tax liabilities (other than Income Tax liabilities) attributable to periods prior to the Effective Time;

(iii)    all capital expenditures of the Partnership accrued but not paid as of the Effective Time;

(iv)    Transaction Costs incurred but not yet paid by the Partnership at the Effective Time; and

(v)    any Liabilities incurred or paid by the Partnership from and after the Effective Time until the Closing Date that (A) constitute Seller Obligations or Indebtedness or (B) were not so incurred or paid in the ordinary course of business, consistent with past practice, whether such Liabilities relate to pre- or post-Effective Time periods.

(d)    The following shall be excluded from the calculation of Effective Time Working Capital (and shall not be included as a Working Capital Asset or Working Capital Liability):

(i)    all Excluded Assets held by the Partnership, including all Partnership Excluded Assets;

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(ii)    all pre-Effective Time accounts receivable of the Partnership and any other obligations owed by any of Midstream Seller or its Affiliates to the Partnership, including all applicable accounts receivable evidencing Indebtedness, accounts, and obligations (collectively, “Pre-ET Intercompany Receivables”);

(iii)    all Indebtedness, accounts, and Liabilities owed by the Partnership to any of Midstream Seller or its Affiliates (“Intercompany Payables”); and

(iv)    all Third Party Debt and other Indebtedness of the Partnership.

ARTICLE III
PURCHASE PRICE

3.1    Purchase Price.  The aggregate purchase price for the Upstream Assets and Midstream Interests shall be $735,000,000.00 (the “Purchase Price”), adjusted in accordance with this Agreement and payable by Buyer to Seller at Closing by wire transfer in immediately available funds to the account(s) of Seller (the details of which shall be provided to Buyer in the Preliminary Settlement Statement).

3.2    Deposit.  Within two Business Days after the Execution Date Buyer shall deposit with the Escrow Agent for deposit into the Escrow Account, by wire transfer in immediately available funds, an amount equal to 5% of the Purchase Price (such amount, the “Deposit”).  The Deposit will be held by the Escrow Agent pursuant to the Escrow Agreement and the terms of this Section 3.2 and Section 7.2.  If Closing occurs, the Deposit shall be applied toward the Purchase Price in accordance with Section 6.3(f) and the Parties shall execute and deliver a joint instruction to the Escrow Agent in accordance with Section 6.3(g).  If this Agreement is terminated without a Closing, then the distribution of the Deposit from the Escrow Account shall be governed by the provisions of Section 7.2.

3.3    Adjustments to Purchase Price.  The Purchase Price shall be adjusted as follows, and the resulting amount shall be herein called the “Adjusted Purchase Price”:

(a)    The Purchase Price shall be adjusted upward by the following amounts (without duplication):

(i)    to the extent the proceeds thereof are not received by Seller as of the Closing Date, an amount equal to the value of all Effective Time Hydrocarbons, with such value to be based upon the Contract price in effect as of the Effective Time (or if no such Contract is in effect, the market value in the area as of the Effective Time), less Burdens attributable to such Effective Time Hydrocarbons;

(ii)    an amount equal to all Upstream Operating Expenses and all other costs and expenses (other than (x) Overhead Costs which are covered in Section 3.3(a)(v) below, (y) amounts incurred or paid with respect to any Seller Obligations and (z) amounts incurred or paid to cure or correct any Environmental Defect or Title Defect) incurred by Upstream Seller or its Affiliates that are attributable to the ownership or operation of the Upstream Assets from and after the Effective Time up to Closing (whether paid before or after the Effective Time), including (A) Burdens (including prepayments thereof, specifically including the deposit of estimated Burdens with the ONRR), (B) rentals and other lease maintenance payments, (C) costs of Lease renewals and/or extensions of Leases, and (D) costs of acquiring Upstream Easements;

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(iii)    to the extent that Upstream Seller is underproduced as shown with respect to the net Well Imbalances set forth in Schedule 9.12(a), as complete and final settlement of all Well Imbalances attributable to the Upstream Assets, an amount equal to the product of (A) the underproduced volumes, times (B) $2.00/MMBTU for gaseous Hydrocarbons;

(iv)    to the extent that Upstream Seller has overdelivered any Hydrocarbons as shown with respect to the net Pipeline Imbalances set forth in Schedule 9.12(a), as complete and final settlement of all Pipeline Imbalances attributable to the Upstream Assets, an amount equal to the product of (A) the overdelivered volumes, times (B) $2.00/MMBTU for gaseous Hydrocarbons;

(v)    Overhead Costs attributable to the period from the Effective Time up to the Closing;

(vi)    the amount of all Asset Taxes prorated to Buyer in accordance with Section 15.2(c) but paid or payable by Upstream Seller;

(vii)    to the extent the Effective Time Working Capital is a positive amount, by an amount equal to the Effective Time Working Capital;

(viii)    Intentionally Omitted.

(ix)    by an amount equal to the aggregate amount, if any, of all cash capital contributions made after the Effective Time to the Partnership by Seller or any of its Affiliates (including any and all Midstream Operating Expenses paid by Seller or any of its Affiliates (other than the Partnership) on behalf of the Partnership);

(x)    the amount of all Income Taxes payable by the Partnership and prorated to Buyer in accordance with Section 15.2(c) and paid or payable by Seller or paid by the Partnership prior to the Effective Time;

(xi)    the amount of JIB Receivables as of the Closing Date;

(xii)    Intentionally Omitted;

(xiii)    the amount of the EHC Aggregate Value if the Existing Hedge Contracts, in the aggregate and on a net basis, is a positive value as to Seller as of the Execution Date, as provided in Section 11.20(a); and

(xiv)    any other amount provided for elsewhere in this Agreement or otherwise agreed upon by Seller and Buyer.

(b)    The Purchase Price shall be adjusted downward by the following amounts (without duplication):

(i)    an amount equal to all proceeds actually received by Upstream Seller or its Affiliates attributable to the sale of Hydrocarbons produced from or allocable to the Upstream Assets during the period from and after the Effective Time, net of Burdens, transportation, and marketing and other post-production expenses (which expenses shall, for the avoidance of doubt, include all amounts payable by Upstream Seller pursuant to the QEP Gas Services Agreement for periods from and after the Effective Time 

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until Closing) attributable to such Hydrocarbons paid or borne by Upstream Seller or its Affiliates and not reimbursed by a Third Party (and such adjustment shall be Buyer’s sole remedy with respect to the proceeds of such Hydrocarbons for which such adjustment is made);

(ii)    subject to Section 13.2(i) and Section 13.2(j), if the Parties have elected (or are deemed to have elected) Section 13.2(d)(i), the Title Defect Amount with respect to such uncured Title Defect;

(iii)    subject to Section 14.1(e) and Section 14.1(f), if the Parties have elected (or are deemed to have elected) Section 14.1(c)(i), the Remediation Amount with respect to such uncured Environmental Defect;

(iv)    the Allocated Value of any Assets excluded from the transactions contemplated hereby pursuant to Section 12.1(b), Section 13.2(d)(iii), Section 13.4 or Section 14.1(c)(iii);

(v)    the amount of all Asset Taxes prorated to Upstream Seller in accordance with Section 15.2(c) but paid or payable by Buyer;

(vi)    the amount of all Income Taxes payable by the Partnership and prorated to Seller in accordance with Section 15.2(c) and paid by Buyer or paid after the Effective Time by the Partnership;

(vii)    to the extent that Upstream Seller is overproduced as shown with respect to the net Well Imbalances set forth in Schedule 9.12(a), as complete and final settlement of all Well Imbalances attributable to the Upstream Assets, an amount equal to the product of (A) the overproduced volumes, times (B) $2.00/MMBTU for gaseous Hydrocarbons;

(viii)    to the extent that Upstream Seller has underdelivered any Hydrocarbons as shown with respect to the net Pipeline Imbalances set forth in Schedule 9.12(a), as complete and final settlement of all Pipeline Imbalances attributable to the Upstream Assets, an amount equal to the product of (A) the underdelivered volumes, times (B) $2.00/MMBTU for gaseous Hydrocarbons;

(ix)    an amount equal to the Suspense Funds as of the Closing Date;

(x)    to the extent the Effective Time Working Capital is a negative amount, by an amount equal to the absolute value of the Effective Time Working Capital;

(xi)    by an amount equal to the aggregate amount, if any, of any Cash or Cash Equivalent or non-cash dividends or distributions made after the Effective Time by the Partnership to Seller, other than pre-Effective Time accounts receivable (including Pre-ET Intercompany Receivables) and Partnership Excluded Assets excluded from the calculation of Effective Time Working Capital pursuant to Section 2.5(d);

(xii)    by an amount equal to the Transaction Costs incurred by the Partnership from and after the Effective Time;

(xiii)    to the extent not already included in Section 3.3(b)(xi), an amount equal to the amounts payable by Upstream Seller to the Partnership pursuant to the QEP Gas Services Agreement for periods from and after the Effective Time until Closing;

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(xiv)    by an amount equal to any Prepaid JOA Funds as of the Closing Date;

(xv)    Intentionally Omitted;

(xvi)    the amount of the EHC Aggregate Value if the Existing Hedge Contracts, in the aggregate and on a net basis, is a negative value as to Seller as of the Execution Date, as provided in Section 11.20(a); and

(xvii)    any other amount provided for elsewhere in this Agreement (including Section 13.2(j) and Section 14.1(f)) or otherwise agreed upon by Seller and Buyer.

3.4    Preliminary Settlement Statement.  Not less than five Business Days prior to the Scheduled Closing Date, Seller shall prepare and submit to Buyer for review a draft settlement statement (the “Preliminary Settlement Statement”) that shall set forth the Adjusted Purchase Price, reflecting each adjustment made in accordance with this Agreement as of the date of preparation of such Preliminary Settlement Statement and the itemized calculation and reasonable supporting documentation of the adjustments used to determine such amount, together with the designation of Seller’s account(s) for the wire transfers of funds as set forth in Section 6.3(f).  When available, actual figures will be used for the determination of the Adjusted Purchase Price at Closing.  To the extent actual figures are not available, good faith estimates will be used subject to final adjustments in accordance with Section 3.5 and Section 3.6.  Within two Business Days of receipt of the Preliminary Settlement Statement, Buyer will deliver to Seller a written report containing all changes with the explanation therefor that Buyer proposes to be made to the Preliminary Settlement Statement.  The Preliminary Settlement Statement, as agreed upon by the Parties, will be used to adjust the Purchase Price at Closing; provided that if the Parties do not agree upon an adjustment set forth in the Preliminary Settlement Statement, then the amount of such adjustment used to adjust the Purchase Price at Closing shall be that amount set forth in the draft Preliminary Settlement Statement delivered by Seller to Buyer pursuant to this Section 3.4.

3.5    Final Settlement Statement.  On or before 180 days after the Closing, a final settlement statement (the “Final Settlement Statement”) will be prepared by Seller based on actual income and expenses during the period from and after the Effective Time until Closing and which takes into account all final adjustments made to the Purchase Price and shows the resulting final Adjusted Purchase Price.  The Final Settlement Statement shall set forth the actual proration of the amounts required by this Agreement.  As soon as practicable, and in any event within 30 days after receipt of the Final Settlement Statement, Buyer shall return to Seller a written report containing any proposed changes to the Final Settlement Statement and an explanation of any such changes and the reasons therefor (the “Dispute Notice”).  Buyer’s failure to deliver to Seller a Dispute Notice detailing proposed changes to the Final Settlement Statement by such date shall be deemed to be an acceptance by Buyer of the Final Settlement Statement delivered by Seller and any changes to the Final Settlement Statement as initially prepared by Seller that are proposed or requested by Buyer and not included in the Dispute Notice shall be deemed waived, and Seller’s determinations with respect to all such adjustments in the Final Settlement Statement that are not addressed in the Dispute Notice shall prevail.  If the final Purchase Price set forth in the Final Settlement Statement is mutually agreed upon by Seller and Buyer or deemed agreed pursuant to the foregoing (or determined by the Accounting Arbitrator pursuant to Section 3.6), the Final Settlement Statement and such final Adjusted Purchase Price (the “Final Price”), shall be final and binding on the Parties.  Any difference in the Adjusted Purchase Price as paid at Closing pursuant to the Preliminary Settlement Statement and the Final Price shall be paid by the owing Party on or before the date that is ten Business Days following agreement or deemed agreement (or determination by the Accounting Arbitrator, as applicable) (such date, the “Final Payment Date”) to the owed Party.  All amounts paid or transferred pursuant to this Section 3.5 shall be delivered in United States 

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currency by wire transfer of immediately available funds to the account specified in writing by the relevant Party.

3.6    Disputes.  If Seller and Buyer are unable to resolve the matters addressed in the Dispute Notice, each of Buyer and Seller shall within 25 Business Days after the delivery of such Dispute Notice, summarize its position with regard to such dispute in a written document of 20 pages or less and submit such summaries to the Denver office of KPMG US LLP or such other Person as the Parties may mutually select (the “Accounting Arbitrator”), together with the Dispute Notice, the Final Settlement Statement, this Agreement and any other documentation such Party may desire to submit.  Within 20 Business Days after receiving the Parties’ respective submissions, the Accounting Arbitrator shall determine such items of the calculation of the Adjusted Purchase Price after the dispute is submitted to it, based on the materials described above.  To the extent that a value has been assigned by Buyer or Seller to any item subject to dispute that is submitted to the Accounting Arbitrator, the Accounting Arbitrator shall not assign a value to objection that is greater than the greatest value for such objection claimed by either Party or less than the smallest value for such objection claimed by either Party. Any decision rendered by the Accounting Arbitrator pursuant hereto shall be final, conclusive and binding on Seller and Buyer and will be enforceable against any of the Parties in any court of competent jurisdiction.  Each Party shall bear its own costs with respect to any matters addressed in this Section 3.6.  In the event that the Denver office of KPMG US LLP declines to serve as the Accounting Arbitrator, then each of Buyer and Seller may deliver to each other a list of up to three independent national accounting firms and the Accounting Arbitrator shall be selected by lot from among the independent national accounting firms submitted by the Parties.  The costs of the Accounting Arbitrator shall be borne one-half by Buyer and one-half by Seller; provided, however, that the Accounting Arbitrator shall have the discretion to allocate all or a portion of its costs to the “losing” Party in connection with any such dispute. The Accounting Arbitrator shall be authorized to resolve only the specific disputed aspects of the Final Settlement Statement submitted by the Parties as provided above and, subject to the immediately preceding sentence, may not award damages, interest or penalties to any Party with respect to any matter.

3.7    Allocation of Purchase Price / Allocated Values.  Buyer and Seller agree that (a) the unadjusted Purchase Price shall be allocated among the Upstream Assets and Midstream Interests as set forth in Schedule 3.7A, (b) the unadjusted Purchase Price attributable to the Upstream Assets as set forth on Schedule 3.7A shall be allocated among the Wells and the Well Locations as set forth in Schedule 3.7B and Schedule 3.7C, as applicable (for the Midstream Interests and each such Well and Well Location, its “Allocated Value”), (c) the Allocated Values shall be used in calculating adjustments to the Purchase Price as provided herein, (d) the Allocated Values, as adjusted, shall be used by Seller and Buyer as the basis for reporting asset values and other items for purposes of this Section 3.7, and (e) subject to Section 3.8, neither Party nor their Affiliates will take positions inconsistent with such Allocated Values in notices to Governmental Authorities, in audit or other proceedings with respect to Taxes, in connection with Preferential Purchase Rights or in other documents or notices relating to the transactions contemplated by this Agreement.

3.8    Allocation of Consideration for Tax Purposes.  Seller and Buyer agree that the portion of the Purchase Price, as adjusted, and other amounts treated for Tax purposes as consideration (to the extent known at such time) (collectively, the “Allocable Amount”) shall be allocated among the Upstream Assets and the Midstream Assets for Tax purposes.  The initial draft of such allocations shall be prepared by Buyer in a manner consistent with Section 1060 of the Code and the Treasury Regulations promulgated thereunder, and such initial draft shall be provided to Seller no later than 120 days after the Closing for Seller’s review and comment.  Seller and Buyer shall then cooperate in good faith to prepare a final schedule of the Allocable Amount among the Assets (as adjusted, the “Allocation Schedule”).  The Allocation Schedule shall be updated to reflect any adjustments to the Allocable Amount.  The allocation of the Allocable Amount shall be reflected on a completed Internal Revenue Service Form 8594 (Asset Acquisition Statement under Section 1060), 

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which Form will be timely filed separately by Seller and Buyer with the Internal Revenue Service pursuant to the requirements of Section 1060(b) of the Code.  Seller and Buyer agree not to take any position inconsistent with the allocations set forth in the Allocation Schedule unless required to do so by a determination as defined in Section 1313(a) of the Code (or any other similar provision of state or local law) or with the consent of the other Parties (such consent not to be unreasonably withheld, conditioned or delayed); provided, however, that neither Party shall be unreasonably impeded in its ability and discretion to concede, negotiate, compromise and/or settle any Tax audit, claim or similar proceeding in connection with the allocation set forth on the Allocation Schedule.

3.9    Allocation for Imbalances.  Notwithstanding anything to the contrary in this Agreement, if, prior to Closing, any Party discovers an error in the Imbalances set forth in Schedule 9.12(a) and Schedule 9.12(b), then, notwithstanding anything to the contrary herein, as the applicable Party’s sole remedy in respect of such error, the Purchase Price shall be further adjusted at Closing pursuant to Section 3.3(a)(iii), Section 3.3(a)(iv), Section 3.3(a)(vii), Section 3.3(b)(vii), Section 3.3(b)(viii), or Section 3.3(b)(x), as applicable, and Schedule 9.12(a) and Schedule 9.12(b) will be deemed amended immediately prior to the Closing to reflect the Imbalances for which the Purchase Price is so adjusted.  If, after the Closing, any Party discovers an error in the Imbalances set forth in Schedule 9.12(a) and Schedule 9.12(b) on or before the date of the delivery of the Final Settlement Statement pursuant to the provisions of Section 3.5, then the Party discovering such error shall notify the other Parties and, notwithstanding anything to the contrary herein, as the applicable Party’s sole remedy in respect of such error, the Parties shall settle such Imbalances based on the formula set forth in Section 2.5(b)(iv), Section 2.5(c)(ii), Section 3.3(a)(iii), Section 3.3(a)(iv), Section 3.3(a)(vii), Section 3.3(b)(vii), Section 3.3(b)(viii), or Section 3.3(b)(x), as applicable, as part of the process described in Section 3.5.

3.10    Withholding Taxes.  Seller, Buyer and the Partnership shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement such amounts as are required to be deducted or withheld therefrom under applicable Law.  Seller, Buyer, or the Partnership, as the case may be, shall provide written notice to Buyer or Seller, as applicable, at least five (5) days prior to any such withholding, which notice shall include an explanation and calculation of the proposed withholding, and the Parties shall use reasonable efforts to take any actions as may be necessary to reduce or otherwise minimize such withholding.  To the extent that amounts are so deducted or withheld and paid over to the appropriate Governmental Authority, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such deduction and withholding were made.

ARTICLE IV
BUYER'S CONDITIONS TO CLOSING

The obligations of Buyer to consummate the transactions provided for herein are subject, at the option of Buyer, to the fulfillment by Seller or waiver by Buyer, on or prior to the Closing, of each of the following conditions:
4.1    Representations.

(a)    Each of the representations and warranties of Seller set forth in Section 9.19(a) and Section 9.19(c) shall be true and correct in all respects on and as of the Execution Date and on and as of the Closing Date, with the same force as though such representations and warranties had been made or given on and as of the Closing Date.

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(b)    Each of the representations and warranties of Seller set forth in Article IX (other than Seller’s representations and warranties set forth in Section 9.19(a) and Section 9.19(c)) shall be true and correct in all respects on and as of the Execution Date and on and as of the Closing Date, with the same force and without giving effect to any qualifiers as to materiality, Material Adverse Effect or material adverse effect, as though such representations and warranties had been made or given on and as of the Closing Date (other than representations and warranties that refer to a specified date, which need only be true and correct on and as of such specified date), except for those breaches, if any, of such representations and warranties that in the aggregate would not have a Material Adverse Effect.

4.2    Performance.  Seller shall have performed or complied with, in all material respects, all obligations, agreements and covenants contained in this Agreement as to which performance or compliance by Seller is required prior to or at the Closing Date.

4.3    No Legal Proceedings.  No statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction, judgment or other order shall have been enacted, entered, promulgated, enforced or issued by any Governmental Authority preventing the consummation of the transactions contemplated by this Agreement.

4.4    Hard Consents, Title Defects and Environmental Defects.  The sum of (a) the Allocated Value of Upstream Assets excluded pursuant to Section 13.4(a)(i) on account of Hard Consents, plus (b) subject to the Individual Title Defect Threshold and (without duplication of any amount thereof as applied with respect to Environmental Defects) the Defect Deductible, all Title Defect Amounts for Title Defects timely asserted by Buyer pursuant to Section 13.2(a) (as each such Title Defect Amount is agreed by the Parties, or otherwise as determined by the proviso of this Section 4.4), plus (c) subject to the Individual Environmental Defect Threshold and (without duplication of any amount thereof as applied with respect to Title Defects) the Defect Deductible, all Remediation Amounts for Environmental Defects timely asserted by Buyer pursuant to Section 14.1(a) (as each such Remediation Amount is agreed by the Parties, or otherwise as determined by the proviso of this Section 4.4; provided if the Remediation Amount of any Environmental Defect is greater than the Allocated Value(s) of the applicable Environmental Defect Property and the Parties (or Upstream Seller, as permitted under Section 14.1(c)) have elected for Upstream Seller to retain such Environmental Defect Property pursuant to Section 14.1(c)(iii), then the Allocated Value of such Environmental Defect Property shall be used in lieu of the Remediation Amount for purposes of this Section 4.4), less (d) the sum of all Title Benefit Amounts for Title Benefits which are timely asserted by Seller pursuant to Section 13.2(b) (as each such Title Benefit Amount is agreed by the Parties, or otherwise as determined by the proviso of this Section 4.4), shall not exceed 20% of the Purchase Price; provided that if (i) any Title Dispute and/or Environmental Dispute remains outstanding as of the Outside Date and the condition in this Section 4.4 or in Section 5.4 would not be satisfied based on (x) the Title Defect Amounts and Remediation Amounts asserted by Buyer after giving effect to any efforts by Seller to cure such Title Defect or Environmental Defect, as applicable, as determined in good faith by Buyer and (y) Title Benefit Amounts as agreed to by Buyer in good faith, (ii) such Title Disputes and/or Environmental Disputes, if resolved wholly in favor of either Party, would cause the condition in this Section 4.4 or in Section 5.4 to be satisfied, and (iii) all other conditions in Article IV and Article V (other than, for the avoidance of doubt, Section 5.4) are satisfied or waived (other than those conditions that by their nature cannot be satisfied until Closing), then either Party may, by delivering written notice to the other Party on or before the Outside Date, elect to submit such disputes to the Title Arbitrator or Environmental Arbitrator for the purpose of resolving such disputes pursuant to the procedures set forth in Section 13.2(j) and Section 14.1(f), as applicable, mutatis mutandis, and the Outside Date (and any termination of this Agreement) shall be deferred for a period of time not to exceed the lesser of (A) 45 days after the Outside Date or (B) three Business Days following such 

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resolution; provided further, that if the Closing thereafter occurs Seller shall retain the right to attempt to cure any Title Defect during the Cure Period as provided in Section 13.2.

4.5    HSR Act.  If applicable, (a) the waiting period under the HSR Act applicable to the consummation of the transactions contemplated hereby shall have expired or (b) notice of early termination shall have been received.

4.6    Closing Certificate.  Each of QEP Energy, QEP Marketing and QEP Oil & Gas shall have executed and delivered to Buyer an officer’s certificate, dated as of the Closing Date, certifying that the conditions set forth in Section 4.1 and Section 4.2 have been fulfilled with respect to such Person and, if applicable, any exceptions to such conditions that have been waived by Buyer.

4.7    Closing Deliverables.  Seller shall be ready, willing and able to deliver to Buyer at the Closing the documents and items required to be delivered by Seller under Section 6.3.

4.8    FERC Waivers.  FERC shall have granted the waivers discussed in Section 11.16 to facilitate the transfer of the Firm Transportation Agreements from Seller to Buyer or its designated Affiliate.

ARTICLE V
SELLER'S CONDITIONS TO CLOSING

The obligations of Seller to consummate the transactions provided for herein are subject, at the option of Seller, to the fulfillment by Buyer or waiver by Seller on or prior to the Closing of each of the following conditions:
5.1    Representations.  Each of the representations and warranties of Buyer set forth in Article X shall be true and correct in all material respects on and as of the Execution Date and on and as of the Closing Date, with the same force and without giving effect to any qualifiers as to materiality or material adverse effect, as though such representations and warranties had been made or given on and as of the Closing Date (other than representations and warranties that refer to a specified date, which need only be true and correct on and as of such specified date).

5.2    Performance.  Buyer shall have performed or complied with, in all material respects, all obligations, agreements and covenants contained in this Agreement as to which performance or compliance by Buyer is required prior to or at the Closing Date.

5.3    No Legal Proceedings.  No statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction, judgment or other order shall have been enacted, entered, promulgated, enforced or issued by any Governmental Authority preventing the consummation of the transactions contemplated by this Agreement.

5.4    Hard Consents, Title Defects and Environmental Defects.  The condition in Section 4.4 shall be satisfied, after giving effect to the proviso thereof, if applicable; provided Buyer may at any time elect to limit the amount of any Purchase Price adjustment resulting from Title Defects (net of Title Benefits as determined as provided in Section 4.4) and Environmental Defects and if the effect of such limitation is to cause the aggregate amount of the Purchase Price adjustments calculated in accordance with Section 4.4 to be equal to or less than 20% of the Purchase Price the condition in this Section 5.4 shall be satisfied.

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5.5    HSR Act.  If applicable, (a) the waiting period under the HSR Act applicable to the consummation of the transactions contemplated hereby shall have expired or (b) notice of early termination shall have been received.

5.6    Closing Certificate.  Buyer shall have executed and delivered to Seller an officer’s certificate, dated as of the Closing Date, certifying that the conditions set forth in Section 5.1 and Section 5.2 have been fulfilled and, if applicable, any exceptions to such conditions that have been waived by Seller.

5.7    Closing Deliverables.  Buyer shall be ready, willing and able to deliver to Seller at the Closing the documents and items required to be delivered by Buyer under Section 6.3.

5.8    FERC Waivers.  FERC shall have granted the waivers discussed in Section 11.16 to facilitate the transfer of the Firm Transportation Agreements from Seller to Buyer or its designated Affiliate.

ARTICLE VI
CLOSING

6.1    Date of Closing.  Subject to the conditions set forth in this Agreement, the sale by Seller and the purchase by Buyer of the Assets pursuant to this Agreement (the “Closing”) shall occur on or before 2:00 p.m. (Central Time) on January 10, 2019 (the “Scheduled Closing Date”), or such other date as Buyer and Seller may agree upon in writing; provided that if the conditions to Closing in Article IV and Article V have not yet been satisfied or waived by the Scheduled Closing Date, then the Closing shall occur three Business Days after such conditions have been satisfied or waived, or such earlier time as the Parties may agree.  The date Closing actually occurs shall be the “Closing Date”.

6.2    Place of Closing.  The Closing shall be held at the Houston offices of Latham & Watkins LLP, located at 811 Main Street, Suite 3700, Houston, Texas 77002.

6.3    Closing Obligations.  At the Closing, the following documents shall be delivered and the following events shall occur, the execution of each document and the occurrence of each event being a condition precedent to the others and each being deemed to have occurred simultaneously with the others:

(a)    Upstream Seller and Buyer shall execute, acknowledge and deliver the Upstream Assignment, in sufficient counterparts to facilitate recording in the applicable parishes where the Upstream Assets are located.

(b)    Midstream Seller, Buyer and the Buyer Designee shall execute, acknowledge and deliver the Interests Assignment.

(c)    Upstream Seller and Buyer shall execute, acknowledge and deliver the Deed, in sufficient counterparts to facilitate recording in the applicable parishes where the Fee Minerals and Upstream Surface Fee are located.

(d)    Upstream Seller and Buyer shall execute and deliver assignments, on appropriate forms, of Federal, state and other Leases and Upstream Easements of Governmental Authorities included in the Upstream Assets in sufficient counterparts to facilitate filing with the applicable Governmental Authorities.

(e)    Seller and Buyer shall acknowledge the Preliminary Settlement Statement.

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(f)    Buyer shall deliver (i) to Seller, to the account(s) designated in the Preliminary Settlement Statement, by direct bank or wire transfer in same day funds, an amount equal to (A) the Adjusted Purchase Price (reduced by (x) the Deposit and (y) the Escrow Earnings) as determined pursuant to the Preliminary Settlement Statement and Section 3.4, minus (B) the Closing Date Title Escrow Amount, if applicable, minus (C) the Closing Date Environmental Escrow Amount, if applicable, and (ii) to the Escrow Agent, an amount equal to (A) the Closing Date Title Escrow Amount pursuant to Section 13.2(j), if applicable, plus (B) the Closing Date Environmental Escrow Amount pursuant to Section 14.1(f), if applicable.

(g)    Seller and Buyer shall execute and deliver a joint instruction to the Escrow Agent to deliver the Deposit and all interest and earnings thereon, as the same are calculated as of the second Business Day immediately prior to the Closing Date (such interest and earnings, the “Escrow Earnings”) to Seller.

(h)    Upstream Seller shall deliver letters in lieu of transfer orders, prepared by Seller and in form reasonably satisfactory to Buyer, directing all purchasers of production to make payment to Buyer of proceeds attributable to production from the Upstream Assets from and after the Effective Time, for delivery by Buyer to the purchasers of production.

(i)    QEP Energy, QEP Marketing and QEP Oil & Gas shall each deliver an executed statement described in Treasury Regulation §1.1445-2(b)(2) (in substance and form reasonably acceptable to Buyer), certifying that it is not a foreign person within the meaning of Section 1445 of the Code.

(j)    Upstream Seller shall deliver executed, acknowledged and recordable releases in a form reasonably acceptable to Buyer of all Encumbrances and financing statements, in each case, securing indebtedness for borrowed money that were created by, through or under Seller or its Affiliates that encumber the Upstream Assets.

(k)    Midstream Seller shall deliver executed, acknowledged and recordable releases in a form reasonably acceptable to Buyer of all Encumbrances and financing statements, in each case, securing indebtedness for borrowed money that were created by, through or under Seller or its Affiliates that encumber the Midstream Assets or the Midstream Interests.

(l)    Buyer shall deliver evidence reasonably satisfactory to Seller that it (i) has obtained the Credit Support and other bonds, letters of credit and guarantees required to be obtained by Closing pursuant to Section 11.4, (ii) has, to the extent required by any applicable Laws, filed any and all required reports necessary for the ownership and operation of the Upstream Assets and Midstream Interests with all Governmental Authorities having jurisdiction over such ownership and operation, and (iii) is duly licensed or qualified to do business in all jurisdictions in which the Assets are located.

(m)    To the extent required under any applicable Law or Governmental Authority, Upstream Seller and Buyer shall deliver federal and state change of operator forms designating Buyer as the operator of the applicable Wells and the Leases currently operated by Upstream Seller or any of its Affiliates.

(n)    Upstream Seller and Buyer shall execute and deliver forms prescribed by the applicable Governmental Authorities for Buyer to assume Liability for any Burdens payable by Upstream Seller or its Affiliates to any Governmental Authority with respect to the ownership or operation of the Upstream Assets.

(o)    Upstream Seller and Buyer shall execute and deliver such title transfer documentation as is necessary to effect the transfer of title to the Vehicles to Buyer.

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(p)    Seller and Buyer shall execute and deliver the Transition Services Agreement.

(q)    Seller and Buyer shall reaffirm as of the Closing Date the Mutual Release executed by such Person in accordance with the terms of such Mutual Release.

(r)    Upstream Seller and Buyer shall execute and deliver the Mitigation Credits Quitclaim.

(s)    Seller shall execute and deliver to Buyer and the Existing Hedge Contract counterparties for counter signature the EHC Novation Instruments substantially in the form attached to this Agreement as Exhibit K as may be required to novate each Existing Hedge Contract to Buyer.

(t)    Buyer shall execute and deliver to Seller and the Existing Hedge Contract counterparties the EHC Novation Instruments substantially in the form attached to this Agreement as Exhibit K as may be required to novate each Existing Hedge Contract to Buyer.

(u)    Seller and Buyer shall execute and deliver any other agreements, instruments and documents which are required by other terms of this Agreement to be executed and/or delivered at the Closing.

6.4    Records.  In addition to the obligations set forth under Section 6.3 above, but notwithstanding anything herein to the contrary, as soon as reasonably practicable after the Closing Date, but in no event later than 30 Business Days following the expiration of the Transition Services Agreement, Seller shall make the Records available to Buyer at Seller’s offices for Buyer to pick-up at Buyer’s sole expense.  Notwithstanding anything to the contrary herein, Buyer acknowledges and agrees that Seller will not be required to manipulate, reconfigure or in any way change the format of any of the Records prior to making the same available to Buyer hereunder. Until the occurrence of the physical and/or electronic delivery of the Records to Buyer, Seller shall make available to Buyer all such Records during normal business hours as are reasonably requested by Buyer upon three days’ prior written notice. 

ARTICLE VII
TERMINATION; DEFAULT AND REMEDIES

7.1    Right of Termination.  This Agreement and the transactions contemplated herein may be terminated at any time prior to the Closing:

(a)    by the mutual written agreement of the Parties;

(b)    by delivery of written notice from Buyer to Seller if any of the conditions set forth in Article IV (other than the conditions set forth in Section 4.3, Section 4.4, Section 4.5 and Section 4.8) have not been satisfied by Seller (or waived by Buyer) by the Outside Date;

(c)    by delivery of written notice from Seller to Buyer if any of the conditions set forth in Article V (other than the conditions set forth in Section 5.3, Section 5.4, Section 5.5 and Section 5.8) have not been satisfied by Buyer (or waived by Seller) by the Outside Date;

(d)    by either Party delivering written notice to the other Party if any of the conditions set forth in Section 4.3, Section 4.4, Section 4.5, Section 5.3, Section 5.4, or Section 5.5 are not satisfied or waived by the applicable Party as of the Outside Date, subject to the proviso in Section 4.4 in respect of Section 4.4 and Section 5.4;

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(e)    by either Seller or Buyer, at such Party’s option, at any time following ten Business Days after the Outside Date, subject to the proviso in Section 4.4; provided further, that, either Seller or Buyer shall have the option to extend the Outside Date, by delivering written notice to the other Party on or before the Outside Date, for a period of time not to exceed the lesser of (A) 30 days after the Outside Date or (B) two Business Days following the expiration of the initial waiting period under the HSR Act (or early termination thereof), in each case, if all other conditions to the Closing are satisfied at the time of such written notice or capable of then being satisfied and the sole reason the Closing has not been consummated is that the conditions set forth in Section 4.4, Section 4.5, Section 5.4, or Section 5.5 have not been satisfied; and

(f)    by Buyer pursuant to Section 13.3(c); and

(g)    by seller if the Deposit has not been delivered to the Escrow Agent within two Business  Days after the Execution Date.

provided, however, that no Party shall have the right to terminate this Agreement pursuant to clause (b), (c), (d), (e) or (f) above if such Party or its Affiliates are at such time in material breach of any provision of this Agreement.
7.2    Effect of Termination.  If this Agreement is terminated pursuant to any provision of Section 7.1, then, except as provided in this Section 7.2 and except for the provisions of Article I, Section 7.3, Section 8.11, Sections 12.1(d) through (f), Section 12.2, Section 12.3, Article XV (other than Section 15.2(b), Section 15.2(c)(i), Section 15.7, Section 15.8, Section 15.15 and Section 15.16) and Appendix A, this Agreement shall forthwith become void and of no further force or effect and the Parties shall have no liability or obligation hereunder.  Each Party agrees that, to the fullest extent permitted by Law, such Party’s rights set forth in this Section 7.2 shall be its sole and exclusive remedies (other than with respect to those provisions that survive termination pursuant to the preceding sentence) if the Closing does not occur as a result of the termination of this Agreement pursuant to Section 7.1.

(a)    If Seller has the right to terminate this Agreement pursuant to Section 7.1(c) because of (i) the Willful Breach by Buyer of this Agreement, or (ii) the failure of Buyer to close the transactions contemplated by this Agreement in the instance where, as of the Outside Date, (A) all of the conditions in Article IV (excluding conditions that, by their terms, cannot be satisfied until the Closing) have been satisfied (or waived by Buyer), (B) Seller is ready, willing and able to perform its obligations under Section 6.3, and (C) Buyer nevertheless elects not to close the transactions contemplated by this Agreement, then, in either such event Seller shall be entitled to terminate this Agreement pursuant to Section 7.1(c) and be entitled to receive the Deposit and the Escrow Earnings as liquidated damages as Seller’s sole and exclusive remedy, and not as a penalty, for such termination, free and clear of any claims thereon by Buyer.  The Parties agree that the foregoing described liquidated damages are reasonable considering all of the circumstances existing as of the Execution Date and constitute the Parties’ good faith estimate of the actual damages reasonably expected to result from such termination of this Agreement by Seller. If Seller is entitled to receive the Deposit and the Escrow Earnings pursuant to this Section 7.2(a), within five Business Days of the date this Agreement is terminated, Seller and Buyer shall execute and deliver a joint instruction to the Escrow Agent to deliver all of the funds in the Escrow Account to Seller.

(b)    If Buyer has the right to terminate this Agreement pursuant to Section 7.1(b) because of (i) the Willful Breach by Seller of this Agreement, or (ii) the failure of Seller to close the transactions contemplated by this Agreement in the instance where, as of the Outside Date, (A) all of the conditions in Article V (excluding conditions that, by their terms, cannot be satisfied until the Closing) have been satisfied 

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(or waived by Seller), (B) Buyer is ready, willing and able to perform its obligations under Section 6.3, and (C) Seller nevertheless elects not to close the transactions contemplated by this Agreement, then, in either such event, Buyer shall be entitled to (1) terminate this Agreement pursuant to Section 7.1(b) and be entitled to receive the Deposit and the Escrow Earnings, free and clear of any claims thereon by Seller, and seek to recover actual, direct damages (subject to Section 8.11) from Seller up to but not exceeding the aggregate amount of the Deposit and the Escrow Earnings or (2) seek to obtain the specific performance of Seller hereunder.  If Buyer is entitled to receive the Deposit and the Escrow Earnings pursuant to this Section 7.2(b), within five Business Days of the date this Agreement is terminated, Seller and Buyer shall execute and deliver a joint instruction to the Escrow Agent to deliver all of the funds in the Escrow Account to Buyer.  Nothing herein shall be construed to prohibit Buyer from first seeking specific performance, but thereafter terminating this Agreement and receiving the Deposit and the Escrow Earnings and seeking to recover actual, direct damages (as limited by Section 8.11) from Seller up to but not exceeding the amount of the Deposit.  Each Party acknowledges and agrees that the remedies at Law of Buyer for a breach or threatened breach of this Agreement by Seller as contemplated pursuant to Section 7.2(b)(i) or Section 7.2(b)(ii) are likely inadequate and, in recognition of this fact, Buyer, without posting any bond or the necessity or proving the inadequacy as a remedy of monetary damages, and in addition to all other remedies that may be available, shall be entitled to seek to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction and/or any other equitable remedy that may then be available.

(c)    If this Agreement is terminated for any reason other than as set forth in Section 7.2(a) or Section 7.2(b), then the Parties shall have no liability or obligation hereunder as a result of such termination, and Buyer and Seller shall, within five Business Days of the date this Agreement is terminated, provide joint written instructions to the Escrow Agent to release all of the funds in the Escrow Account to Buyer free and clear of any claims thereon by Seller.

(d)    Subject to the foregoing, upon the termination of this Agreement neither Party shall have any other liability or obligation hereunder.

(e)    Seller’s retention of the Deposit and the Escrow Earnings pursuant to Section 7.2(a) shall be the sole and exclusive remedy of Seller against Buyer, the Financing Sources and their respective Affiliates for any and all losses, claims, expenses, liabilities or damages suffered or incurred by Seller or any other Person in connection with this Agreement, the Financings (and the termination thereof), the transactions contemplated hereby and thereby (and the abandonment or termination thereof) or any matter forming the basis of such termination and none of the Financing Sources shall have any further liability or obligation relating to or arising out of this Agreement or the Financings or the transactions contemplated hereby or thereby (or the abandonment or termination thereof) or any matters forming the basis for such termination upon payment of such amount.  

7.3    Return of Documentation and Confidentiality.  Upon termination of this Agreement, Buyer shall return to Seller all title, engineering, geological and geophysical data, environmental assessments and/or reports, maps, documents and other information furnished by Seller to Buyer or prepared by or on behalf of Buyer in connection with its due diligence investigation of the Assets and an officer of Buyer shall certify same to Seller in writing.

ARTICLE VIII
ASSMPTION; INDEMNIFICATION; SURVIVAL

8.1    Assumption by Buyer.  Without limiting Buyer’s rights to indemnity under this Article VIII and any Title Indemnity Agreement or Environmental Indemnity Agreement, from and after the Closing, 

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Buyer assumes and hereby agrees to fulfill, perform, pay and discharge (or cause to be fulfilled, performed, paid and discharged) all obligations and Liabilities, known or unknown, with respect to the Upstream Assets, regardless of whether such obligations or Liabilities arose prior to, on or after the Effective Time, including obligations and Liabilities relating in any manner to the use, ownership or operation of the Upstream Assets, including obligations to (a) furnish makeup gas and/or settle Imbalances according to the terms of applicable Hydrocarbon sales, processing, gathering or transportation Upstream Applicable Contracts, (b) pay Working Interests, Burdens and other interest owners’ revenues or proceeds attributable to sales of Hydrocarbons, including the Suspense Funds, that are attributable to the Upstream Assets, (c) properly plug and abandon any and all wells and pipelines, including inactive wells or temporarily abandoned wells, drilled or otherwise located on the Upstream Assets, (d) to re-plug any well, wellbore or previously plugged well on the Upstream Assets to the extent required or necessary under applicable Laws or under Upstream Applicable Contracts, (e) dismantle or decommission and remove any Upstream Personal Property and other property of whatever kind located on the Upstream Assets related to or associated with operations and activities conducted by whomever on the Upstream Assets, (f) clean up and/or Remediate the Upstream Assets in accordance with any Upstream Applicable Contracts and applicable Laws, including all Environmental Laws, (g) assume all Scheduled Concursus Matters, and (h) perform all obligations applicable to or imposed on the lessee, owner, or operator under the Leases and the Upstream Applicable Contracts (including obligations arising under minimum volume commitments, take-or-pay requirements or other similar provisions), or as required by Laws (all of said obligations and Liabilities herein being referred to as the “Upstream Assumed Obligations”); provided that, notwithstanding the foregoing, for so long as Seller’s indemnity obligations in Section 8.2(d) survive pursuant to Section 8.8(c), the Upstream Assumed Obligations shall not include, and Buyer shall not assume, any individual Liability included in the Seller Obligations that relates to the Upstream Assets, but after the expiration (if applicable) of each portion of Seller’s indemnity obligation in Section 8.2(d) as it pertains to a specified Seller Obligation, the Upstream Assumed Obligations shall be deemed to include, without any further action by the Parties related thereto, all such Seller Obligations that are related to the Upstream Assets and for which Seller’s indemnity obligations in Section 8.2(d) have expired pursuant to Section 8.8(c).

8.2    Indemnities of Seller.  Effective as of the Closing, subject to the limitations set forth in Section 8.4 and Section 8.8 or otherwise in this Agreement, Seller, on a joint and several basis, shall be responsible for, shall pay on a current basis and hereby defends, indemnifies and holds harmless Buyer and its Affiliates (including the Partnership), and all of its and their respective equity holders, partners, members, directors, officers, managers, employees, agents and representatives (collectively, “Buyer Indemnified Parties”) from and against any and all Liabilities, arising from, based upon, related to or associated with:

(a)    any failure of (i) any of Seller’s representations or warranties contained in Article IX to be true and correct as of the Execution Date and as of the Closing Date or (ii) the certifications contained in the certificate delivered at Closing by Seller pursuant to Section 4.6 (to the extent related to the condition in Section 5.1) to be true and correct;

(b)    any (i) breach by Seller of any of its covenants or agreements under this Agreement or (ii) failure of the certifications contained in the certificate delivered at Closing by Seller pursuant to Section 4.6 (to the extent related to the condition in Section 5.2) to be true and correct;

(c)    any Seller Taxes; 

(d)    the Seller Obligations; or  

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(e)    any Loss incurred by Seller’s failure to obtain the reaffirmation of a Mutual Release at the Closing.

8.3    Indemnities of Buyer.  Effective as of the Closing, Buyer and its successors and assigns shall assume, be responsible for, shall pay on a current basis and hereby defend, indemnify, hold harmless and forever release Seller and its Affiliates, and all of its and their respective equity holders, partners, members, directors, officers, managers, employees, agents and representatives (collectively, “Seller Indemnified Parties”) from and against any and all Liabilities arising from, based upon, related to or associated with:

(a)    any failure of (i) any of Buyer’s representations or warranties contained in Article X to be true and correct as of the Execution Date and as of the Closing Date or (ii) the certifications contained in the certificate delivered at Closing by Buyer pursuant to Section 5.6 (to the extent related to the condition in Section 4.1) to be true and correct;

(b)    any (i) breach by Buyer of any of its covenants or agreements under this Agreement or (ii) failure of the certifications contained in the certificate delivered at Closing by Buyer pursuant to Section 5.6 (to the extent related to the condition in Section 4.2) to be true and correct;

(c)    the Upstream Assumed Obligations; or 

(d)    any action, case, suit, arbitration, hearing, investigation, charge, claim, litigation or other proceeding in which a Seller Indemnified Party is a party and involving or relating to the ownership of the Midstream Interests or the operation of the business of the Partnership after the Closing Date.

8.4    Limitation on Liability.

(a)    Seller shall not have any liability for any indemnification under Section 8.2(a) (other than Liabilities with respect to (x) the breach of any of the Fundamental Representations, (y) the breach of any the representations and warranties set forth in Section 9.15 or (z) a failure of the certificate delivered at Closing by Seller pursuant to Section 4.6 (to the extent related to the Fundamental Representations or the representations and warranties set forth in Section 9.15) to be true and correct), in each case, for any individual Liability unless the amount of such Liability exceeds $100,000 (the “Individual Indemnity Threshold”).  In addition, Seller shall not have any liability for any indemnification under Section 8.2(a) (other than Liabilities with respect to (x) the breach of any of the Fundamental Representations, (y) the breach of any the representations and warranties set forth in Section 9.15 or (z) a failure of the certificate delivered at Closing by Seller pursuant to Section 4.6 (to the extent related to the Fundamental Representations or the representations and warranties set forth in Section 9.15) to be true and correct) until and unless the aggregate amount of all Liabilities (that exceed the Individual Indemnity Threshold and for which Claim Notices are timely delivered by Buyer pursuant to Section 8.7) exceeds the Indemnity Deductible and then only to the extent such Liabilities exceed the Indemnity Deductible.

(b)    Notwithstanding anything to the contrary contained in this Agreement, Seller shall not be required to indemnify the Buyer Indemnified Parties under (i) Section 8.2(a) (other than with respect to the breach of any of the Fundamental Representations or any of the representations and warranties set forth in Section 9.15) or (ii) Section 8.2(d) to the extent relating to the indemnities with respect to subpart (k) of the definition of “Seller Obligations,” for aggregate Liabilities (taken together for all Liabilities described in the foregoing clauses (i) and (ii) of this Section 8.4(b) (other than Liabilities with respect to the breach of any of the Fundamental Representations or any of the representations and warranties set forth in Section 9.15)) in excess of 20% of the unadjusted Purchase Price.  Without limiting the foregoing, Seller 

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shall never be required to indemnify the Buyer Indemnified Parties under the terms of this Agreement for aggregate Liabilities in excess of 100% of the Adjusted Purchase Price (inclusive of the aggregate Liabilities for which the Buyer Indemnified Parties may be indemnified pursuant to the immediately preceding sentence, which are limited to 20% of the unadjusted Purchase Price).

(c)    An Indemnified Party’s right to indemnification hereunder shall not be affected or deemed waived by any reason of any investigation made by or on behalf of such Indemnified Party or by reason of any knowledge acquired by such Indemnified Party at any time.

(d)    Notwithstanding anything to the contrary contained in this Agreement, Seller shall not be required to indemnify Buyer under Section 8.2(a) for any Asset Tax (or portion thereof) allocable to Buyer under Section 15.2 as a result of a breach of any representation or warranty set forth in Section 9.15, except to the extent the amount of such Asset Tax (or portion thereof) exceeds the amount that would have been due absent such breach.

(e)    For purposes of Section 8.2(a), in calculating Liabilities arising from, based upon, related to or associated with any breach of any of Seller’s representations and warranties in Article IX, any and all materiality, Material Adverse Effect, material adverse effect, de minimis or similar qualification in the representations or warranties shall be disregarded.

8.5    Express Negligence.  THE DEFENSE, INDEMNIFICATION, HOLD HARMLESS, RELEASE AND ASSUMPTION OF THE UPSTREAM ASSUMED OBLIGATIONS AND RETENTION OF THE SELLER OBLIGATIONS PROVISIONS PROVIDED FOR IN THIS AGREEMENT SHALL BE APPLICABLE WHETHER OR NOT THE LIABILITIES, LOSSES, COSTS, EXPENSES AND DAMAGES IN QUESTION AROSE OR RESULTED SOLELY OR IN PART FROM THE GROSS, SOLE, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF LAW OF OR BY ANY INDEMNIFIED PARTY.  BUYER AND SELLER ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.

8.6    Exclusive Remedy.

(a)    Notwithstanding anything to the contrary contained in this Agreement, from and after the Closing, except for (x) Buyer’s rights under the Special Warranty, (y) the terms and conditions of any Title Indemnity Agreement or Environmental Indemnity Agreement and (z) claims based on actual fraud by a party, Section 3.5, Section 8.2, Section 8.3, Section 11.4(c), Section 11.12(c), Section 11.15, Section 11.16, Section 12.1(c), Section 13.2(j), Section 13.4(a), Section 13.4(b) and Section 14.1(f) contain the Parties’ exclusive remedy against each other with respect to the transactions contemplated hereby and the sale of the Assets, including breaches of the representations, warranties, covenants and agreements of the Parties contained in this Agreement or in any document delivered pursuant to this Agreement.

(b)    Except for the remedies specified in Section 8.6(a) and subject to Section 8.9, effective as of Closing, Buyer, on its own behalf and on behalf of its Affiliates, hereby releases, remises and forever discharges the Seller Indemnified Parties from any and all suits, legal or administrative proceedings, claims, demands, damages, losses, costs, Liabilities, interest or causes of action whatsoever, in Law or in equity, known or unknown, which Buyer or its Affiliates might now or subsequently may have, based on, relating to or arising out of the ownership, use or operation of any of the Assets prior to the Closing or the condition, quality, status or nature of any of the Assets prior to the Closing, including rights to contribution under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, breaches 

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of statutory or implied warranties, nuisance or other tort actions, rights to punitive damages, common Law rights of contribution and rights under insurance maintained by any Seller Indemnified Party.

8.7    Indemnification Procedures.  All claims for indemnification under this Agreement shall be asserted and resolved as follows:

(a)    The term “Indemnifying Party” when used in connection with particular Liabilities means the Party or Parties having an obligation to indemnify another Party or Parties with respect to such Liabilities pursuant to this Article VIII, Section 11.4(c), Section 11.12(c), Section 11.15, Section 11.16, Section 12.1(c), Section 13.4(a) or Section 13.4(b), and the term “Indemnified Party” when used in connection with particular Liabilities means the Party or Parties having the right to be indemnified with respect to such Liabilities by another Party or Parties pursuant to Article VIII, Section 11.4(c), Section 11.12(c), Section 11.15, Section 11.16, Section 12.1(c), Section 13.4(a) or Section 13.4(b).

(b)    To make claim for indemnification under Section 8.2, Section 8.3, Section 11.4(c), Section 11.12(c), Section 11.15, Section 11.16, Section 12.1(c), Section 13.4(a) or Section 13.4(b) an Indemnified Party shall notify the Indemnifying Party of its claim under this Section 8.7, including the material details of and basis under this Agreement for its claim (the “Claim Notice”).  In the event that the claim for indemnification is based upon a claim by a Third Party against the Indemnified Party (a “Claim”), the Indemnified Party shall provide its Claim Notice promptly after the Indemnified Party has actual knowledge of the Claim and shall enclose a copy of all papers (if any) served with respect to the Claim; provided that the failure of any Indemnified Party to give notice of a Claim as provided in this Section 8.7 shall not relieve the Indemnifying Party of its obligations under Section 8.2, Section 8.3, Section 11.4(c), Section 11.12(c), Section 11.15, Section 11.16, Section 12.1(c), Section 13.4(a) or Section 13.4(b) (as applicable) except to the extent (and then only to the extent) such failure materially prejudices the Indemnifying Party’s ability to defend against the Claim.  In the event that the claim for indemnification is based upon an inaccuracy or breach of a representation, warranty, covenant or agreement, the Claim Notice shall specify the representation, warranty, covenant or agreement that was inaccurate or breached.

(c)    In the case of a claim for indemnification based upon a Claim, the Indemnifying Party shall have 30 days from its receipt of the Claim Notice to notify the Indemnified Party whether it admits or denies its liability to defend the Indemnified Party against such Claim at the sole cost and expense of the Indemnifying Party.  The Indemnified Party is authorized, prior to and during such 30 day period, to file any motion, answer or other pleading that it shall deem necessary or appropriate to protect its interests or those of the Indemnifying Party and that is not prejudicial to the Indemnifying Party.

(d)    If the Indemnifying Party admits its liability, it shall have the right and obligation to diligently defend, at its sole cost and expense, the Claim.  The Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof unless the compromise or settlement includes the payment of any amount by (because of the Indemnity Deductible or otherwise), the performance of any obligation by or the limitation of any right or benefit of, the Indemnified Party, in which event such settlement or compromise shall not be effective without the consent of the Indemnified Party, which shall not be unreasonably withheld or delayed.  If requested by the Indemnifying Party, the Indemnified Party agrees to cooperate, at the sole cost and expense of the Indemnifying Party, in contesting any Claim which the Indemnifying Party elects to contest.  The Indemnified Party may participate in, but not control, any defense or settlement of any Claim controlled by the Indemnifying Party pursuant to this Section 8.7(d).  An Indemnifying Party shall not, without the written consent of the Indemnified Party, (i) settle any Claim or consent to the entry of any judgment with respect thereto which does not include an unconditional written release of the Indemnified Party from all liability in respect of such Claim or (ii) settle any Claim or consent 

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to the entry of any judgment with respect thereto in any manner that may materially and adversely affect the Indemnified Party (other than as a result of money damages covered by the indemnity).

(e)    If the Indemnifying Party does not admit its liability (which it will be deemed to have so done if it fails to timely respond) or admits its liability but fails to diligently prosecute or settle the Claim, then the Indemnified Party shall have the right to defend against the Claim at the sole cost and expense of the Indemnifying Party, with counsel of the Indemnified Party’s choosing, subject to the right of the Indemnifying Party to admit its liability and assume the defense of the Claim at any time prior to settlement or final determination thereof.  If the Indemnifying Party has not yet admitted its liability for a Claim, the Indemnified Party shall send written notice to the Indemnifying Party of any proposed settlement and the Indemnifying Party shall have the option for ten days following receipt of such notice to (i) admit in writing its liability for the Claim and (ii) if liability is so admitted, reject, in its reasonable judgment, the proposed settlement.

(f)    In the case of a claim for indemnification not based upon a Claim, the Indemnifying Party shall have 30 days from its receipt of the Claim Notice to (i) cure the Liabilities complained of, (ii) admit its liability for such Liability or (iii) dispute the claim for such Liabilities.  If the Indemnifying Party does not notify the Indemnified Party within such 30 day period that it has cured the Liabilities or that it disputes the claim for such Liabilities, then the Indemnifying Party shall be deemed to be disputing the claim for such Liabilities.

(g)    Notwithstanding anything in this Section 8.7 to the contrary, with respect to the Retained Litigation: (i) Seller shall have full control of any defense and proceedings relating to such Retained Litigation, including any compromise or settlement thereof, unless such compromise or settlement (A) includes or results in the payment of any amount by any Buyer, the Partnership or any other Affiliate of Buyer that will not be paid by Seller on behalf of such Person, (B) includes or results in the performance of any obligation by, or the limitation of any right or benefit of, Buyer, the Partnership or any other Affiliate of Buyer, (C) includes or results in any Protected Outcome to any affected Upstream Asset, (D) materially and adversely affects Buyer, the Partnership or any other Affiliate of Buyer (other than as a result of money damages covered by Seller), (E) adversely affects, in any material respect, the ability of the Partnership to conduct the Midstream Business with respect to any Gathering System or Gas Plant in the ordinary course of business consistent with past practice, (F) includes, or results in any payment based on, any change in the methodology or principles used in calculating and royalty under any Lease from the methodology or principles historically used by Seller, or (G) does not include an unconditional written release of the Buyer Indemnified Parties from each claimant and/or plaintiff under such Retained Litigation with respect to the period from and after the Effective Time, in which event such settlement or compromise shall not be effective without the consent of Buyer, which shall not be unreasonably withheld or delayed; (ii) if requested by Seller, Buyer agrees to cooperate, at the sole cost and expense of Seller, in the defense, settlement and resolution of any Retained Litigation; and (iii) Buyer may participate in, at Buyer’s sole cost and expense, but not control, any defense, settlement and resolution of any Retained Litigation.

8.8    Survival.

(a)    The (i) representations and warranties of Seller in Article IX (other than the Fundamental Representations and the representations and warranties of Seller in Section 9.6, Section 9.15, Section 9.20(a) and Section 9.20(b)), (ii) the covenants and agreements of Seller contained herein to be performed on or prior to the Closing (other than the covenants contained in Section 3.7, Section 3.8 and Section 15.2), shall, in the case of each of (i) and (ii), survive the Closing for a period of 12 months after the Closing Date, and (iii) the covenants and agreements of Seller contained herein to be performed after the 

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Closing (other than the covenants contained in Section 3.7, Section 3.8 and Section 15.2), shall, in each case, survive the Closing until fully performed.  The representations and warranties of Seller in Section 9.6 and Section 9.15 and the covenants contained in Section 3.7, Section 3.8 and Section 15.2 shall survive the Closing until 30 days after the applicable statute of limitations has expired.  The representations and warranties of Seller in Section 9.20(a) and Section 9.20(b) shall survive the Closing for a period of 18 months after the Closing Date. The Fundamental Representations shall, in each case, survive the Closing without time limit. The Special Warranty shall survive the Closing for a period of three years.  The certifications contained in the certificate delivered at Closing by Seller pursuant to Section 4.6 shall survive the Closing for the duration of the survival period of the representation and warranty or covenant or agreement to which such certification relates.

(b)    Subject to Section 8.8(a) and except as set forth in Section 8.8(c), the remainder of this Agreement shall survive the Closing without time limit.  Representations, warranties, covenants and agreements shall be of no further force and effect after the date of their expiration; provided that there shall be no termination of any bona fide claim asserted pursuant to this Agreement with respect to such a representation, warranty, covenant or agreement prior to its expiration date.

(c)    The indemnities in Section 8.2(a), Section 8.2(b), Section 8.3(a) and Section 8.3(b) shall terminate as of the termination date of each respective representation, warranty, covenant or agreement that is subject to indemnification, except, in each case, as to matters for which a written claim for indemnity has been delivered to the Indemnifying Party on or before such termination date. The indemnities in Section 8.2(c) and Section 8.2(e) shall survive the Closing until 30 days after the applicable statute of limitations has expired. The indemnities in Section 8.3(c), Section 8.3(d), Section 11.4(c), Section 11.12(c), Section 11.15, Section 11.16, Section 12.1(c) and Section 13.4 shall survive the Closing without time limit.  With respect to the indemnities in Section 8.2(d), such indemnities shall survive Closing as follows with respect to the specific subparts of the definition of “Seller Obligations”: with respect to (i) subparts (a), (d), (e), (g), and (h) of such definition, such indemnities shall survive Closing for a period of two years; (ii) subparts (b), (c), (f), (i), and (j) of such definition, such indemnities shall survive Closing without time limit; and (iii) subpart (k) of such definition, such indemnities shall survive Closing for a period of 18 months.

8.9    Waiver of Right to Rescission.  Seller and Buyer acknowledge that, following the Closing, the payment of money, as limited by the terms of this Agreement, shall be adequate compensation for breach of any representation, warranty, covenant or agreement contained herein or for any other claim arising in connection with or with respect to the transactions contemplated by this Agreement.  As the payment of money shall be adequate compensation, following the Closing, Buyer and Seller waive any right to rescind, reform, cancel, terminate, revoke or void this Agreement or any of the transactions contemplated hereby; provided, however, each Party shall have the non-exclusive right to seek specific performance and other equitable remedies available at law or equity (including injunctive relief) for the breach or failure of the other Party to perform is obligations hereunder required to be performed after the Closing.

8.10    Insurance; Mitigation.

(a)    The amount of Liabilities for which any Buyer Indemnified Party is entitled to indemnity under this Article VIII shall be reduced by the amount of insurance or other Third Party proceeds, reimbursements or claims actually realized by the Buyer Indemnified Parties under the relevant insurance arrangements with respect to such Liabilities in excess of (i) the deductible of the relevant insurance arrangement, (ii) all costs and expenses incurred by Buyer in connection with Buyer’s efforts to realize such proceeds and (iii) the amount of the Indemnity Deductible, if any, applied against such Liability to reduce the amount of such Liability for which any Buyer Indemnified Party is entitled to indemnity under this Article 

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VIII.  In the event that any Buyer Indemnified Party receives any such funds or proceeds from any insurance carrier or any other Third Party with respect to any such Liabilities, Buyer shall, regardless of when received by such Buyer Indemnified Party, promptly pay to Seller such funds or proceeds to the extent of any funds previously paid by Seller or any of its Affiliates with respect to such Liabilities.  This Section 8.10(a) shall not require any Buyer Indemnified Party to seek recovery under any policy of insurance as a condition to indemnification hereunder.

(b)    Subject to the terms hereof, each Indemnified Party shall make reasonable efforts to mitigate or minimize all Liabilities upon and after becoming aware of any event or condition which would reasonably be expected to give rise to any Liabilities that are indemnifiable hereunder.  If an Indemnified Party fails to so mitigate any indemnifiable Liabilities under the preceding sentence, such Indemnified Party shall have no right to indemnity hereunder with respect to such Liabilities and the Indemnifying Party shall have no liability for any portion of such Liabilities that reasonably could have been avoided, reduced or mitigated had the Indemnified Party made such reasonable efforts.

8.11    Non-Compensatory Damages.  NONE OF THE BUYER INDEMNIFIED PARTIES NOR SELLER INDEMNIFIED PARTIES SHALL BE ENTITLED TO RECOVER FROM SELLER OR BUYER, OR THEIR RESPECTIVE AFFILIATES, ANY (a) PUNITIVE, EXEMPLARY, REMOTE OR SPECULATIVE DAMAGES, (b) SPECIAL OR CONSEQUENTIAL DAMAGES OR (c) DAMAGES FOR LOST PROFITS OF ANY KIND, IN EACH CASE, ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, EXCEPT (x) IN THE CASE OF CLAUSES (a), (b) OR (c), TO THE EXTENT ANY SUCH PARTY SUFFERS SUCH DAMAGES (INCLUDING COSTS OF DEFENSE AND REASONABLE ATTORNEY’S FEES INCURRED IN CONNECTION WITH DEFENDING OF SUCH DAMAGES) TO A THIRD PARTY, (y) IN THE CASE OF CLAUSE (b) ONLY, TO THE EXTENT ANY SUCH PARTY SUFFERS SPECIAL OR CONSEQUENTIAL DAMAGES THAT (1) ARE FOUND BY A COURT OF COMPETENT JURISDICTION TO BE ACTUAL, DIRECT DAMAGES, AND (2) WERE NOT DETERMINED BY SUCH COURT TO BE ACTUAL, DIRECT DAMAGES BASED ON ANY SPECIAL CIRCUMSTANCES OR CHARACTERISTICS OF SUCH PARTY, OR (z) IN THE CASE OF CLAUSE (c) ONLY, TO THE EXTENT ANY SUCH PARTY SUFFERS DAMAGES FOR LOST PROFITS THAT ARE FOUND BY A COURT OF COMPETENT JURISDICTION TO BE ACTUAL, DIRECT DAMAGES.  SUBJECT TO THE PRECEDING SENTENCE, BUYER, ON BEHALF OF EACH OF THE BUYER INDEMNIFIED PARTIES, AND SELLER, ON BEHALF OF EACH OF THE SELLER INDEMNIFIED PARTIES, WAIVE ANY RIGHT TO RECOVER ANY SPECIAL, CONSEQUENTIAL, PUNITIVE, EXEMPLARY, REMOTE OR SPECULATIVE DAMAGES, OR DAMAGES FOR LOST PROFITS OF ANY KIND, ARISING IN CONNECTION WITH OR WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyer, on a joint and several basis, the following as of the Execution Date and the Closing Date:
9.1    Organization, Existence and Qualification.

(a)    QEP Energy is a corporation duly formed, validly existing and in good standing under the Laws of the State of Delaware, and following the Conversion will be a limited liability company duly formed and validly existing under the Laws of the State of Delaware.  QEP Energy (i) has all requisite power 

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and authority to own and operate the Upstream Assets and to carry on its business with respect to the Upstream Assets as now conducted and (ii) is duly licensed or qualified to do business as a foreign corporation and is in good standing in all jurisdictions in which the Upstream Assets are located and such qualification is required by Law, in each case, except for such failures as would not have a Material Adverse Effect.

(b)    QEP Marketing is a corporation duly formed, validly existing and in good standing under the Laws of the State of Utah, and following the Conversion will be a limited liability company duly formed and validly existing under the Laws of the State of Utah.  QEP Marketing (i) has all requisite power and authority to own the Midstream Interests held by it and to carry on its business with respect to such Midstream Interests as now conducted and (ii) is duly licensed or qualified to do business as a foreign corporation and is in good standing in all jurisdictions in which the Midstream Assets are located and such qualification is required by Law, in each case, except for such failures as would not have a Material Adverse Effect.

(c)    QEP Oil & Gas is a corporation duly formed, validly existing and in good standing under the Laws of the State of Delaware, and following the Conversion will be a limited liability company duly formed and validly existing under the Laws of the State of Delaware.  QEP Oil & Gas (i) has all requisite power and authority to own the Midstream Interests held by it and to carry on its business with respect to such Midstream Interests as now conducted and (ii) is duly licensed or qualified to do business as a foreign corporation and is in good standing in all jurisdictions in which the Midstream Assets are located and such qualification is required by Law, in each case, except for such failures as would not have a Material Adverse Effect.

(d)    The Partnership is a limited partnership duly formed and validly existing under the Laws of the State of Delaware. The Partnership (i) has all requisite power and authority to own and operate the Midstream Assets and to carry on its business as now conducted and (ii) is duly licensed or qualified to do business as a foreign limited partnership in all jurisdictions in which the Midstream Assets are located and such qualification is required by Law.

9.2    Authority, Approval and Enforceability.  Each Person comprising Seller has full power and authority to enter into and perform this Agreement and the Transaction Documents to which it is a party and the transactions contemplated herein and therein.  The execution, delivery and performance by each Person comprising Seller of this Agreement and the Transaction Documents to which each Person comprising Seller is a party have been duly and validly authorized and approved by all necessary corporate action on the part of each Person comprising Seller.  This Agreement is, and the Transaction Documents to which each Person comprising Seller is a party when executed and delivered by such Person comprising Seller will be, the valid and binding obligation of such Person comprising Seller and enforceable against Seller in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar Laws, as well as to principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law).

9.3    No Conflicts.  Assuming the receipt of all Consents and the waiver of or compliance with all applicable Preferential Purchase Rights, the execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated herein will not (a) conflict with or result in a breach of any provisions of the organizational or other governing documents of Seller or the Partnership, (b) give rise to any right of termination, cancellation, default (other than as to any Consent requirement), Encumbrance or acceleration under any of the terms, conditions or provisions of any Lease, Material Contract or other material agreement to which Seller or the Partnership is a party or by which Seller, the Partnership, or the Assets may be bound, in each case, that would materially and adversely impact Seller, the Assets or the 

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Partnership, or (c) violate any Law applicable to Seller, the Partnership, or any of the Assets in each case, that would materially and adversely impact Seller, the Assets or the Partnership.

9.4    Consents.  Schedule 9.4 contains a true and correct list of (a) all Hard Consents and (b) all Material Contracts that contain any Consent.  There are no requirements for consents or approvals from any Third Party that Seller is required to obtain in connection with the transfer of the (A) Upstream Assets by Upstream Seller to Buyer, (B) Midstream Interests by Midstream Seller to Buyer and Buyer Designee, or (C) the consummation of the transactions contemplated by this Agreement by Seller (each, less and except any Customary Post-Closing Consents and Preferential Purchase Rights, “Consent”) except (i) for compliance with the HSR Act, (ii) as set forth in Schedule 9.4, (iii) Consents that are not Hard Consents and do not affect a Material Contract, (iv) for Customary Post-Closing Consents, (v) Preferential Purchase Rights, and (vi) under Contracts that are terminable by their terms upon 90 days or less notice without payment of any fee,

9.5    Bankruptcy.  There are no bankruptcy, reorganization or receivership proceedings pending, being contemplated by or, to Seller’s Knowledge, threatened in writing against Seller or any Affiliate of Seller (including the Partnership).

9.6    Foreign Person.  Seller is not a “foreign person” within the meaning of Section 1445 of the Code.

9.7    Litigation.  Except as set forth in Schedule 9.7, there is no suit, action or litigation by any Person before any Governmental Authority that is pending, or, to the Knowledge of Seller, threatened in writing, (a) against the Partnership, (b) against Midstream Seller or an Affiliate of Seller with respect to the Midstream Interests, (c) against Upstream Seller or an Affiliate of Seller with respect to the Upstream Assets, to the extent such suit, action or litigation described in this subpart (c) (x) would materially impact the ownership or operation of the Upstream Assets as currently owned and operated, (y) asserts or alleges any violation of any ROW Interest or the failure to have a valid ROW Interest with respect to any portion of the Gathering Systems or (z) asserts or alleges any non-payment or underpayment of any Burdens, or (d) against Seller or an Affiliate of Seller that would be reasonably likely to materially and adversely affect the consummation of the transactions contemplated by this Agreement.

9.8    Material Contracts.

(a)    Schedule 9.8(a) sets forth all Applicable Contracts of the type described below as of the Execution Date (the Contracts contained on such Schedule, collectively, the “Material Contracts”):

(i)    any Applicable Contract (other than a unit agreement or operating or joint operating agreement regarding the Upstream Assets) that can reasonably be expected to result in aggregate payments of more than $250,000 during the current or any subsequent fiscal year (based solely on the terms thereof and current volumes, without regard to any expected increase in volumes or revenues);

(ii)    any Applicable Contract (other than a unit agreement or operating or joint operating agreement regarding the Upstream Assets) that can reasonably be expected to result in aggregate revenues of more than $250,000 during the current or any subsequent fiscal year (based solely on the terms thereof and current volumes, without regard to any expected increase in volumes or revenues);

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(iii)    any Applicable Contract that is a Hydrocarbon purchase and sale, gathering, treatment, storage, transportation, processing or similar Applicable Contract and that is not terminable without penalty upon 90 days or less notice;

(iv)    any Applicable Contract evidencing (A) Indebtedness for borrowed money in respect of the Upstream Assets, or (B) Third Party Debt;

(v)    any Applicable Contract that constitutes a lease under which Seller or the Partnership is the lessor or the lessee of real or personal property which lease (A) cannot be terminated by Seller or the Partnership without penalty upon 90 days or less notice and (B) involves an annual base rental of more than $250,000;

(vi)    any Applicable Contract that is a farmin or farmout agreement, participation agreement, exploration agreement, development agreement, drilling commitment (other than Leases), joint venture or similar Applicable Contract (but specifically excluding any unit agreement or operating or joint operating agreement regarding the Upstream Assets);

(vii)    any Applicable Contract that (A) requires the Partnership to purchase its total requirements of any product or service from a Third Party, (B) contains “take or pay” provisions, (C) contains any dedication provisions either in respect of the Upstream Assets or in favor of the Partnership, (D) contains any “minimum volume commitment” or “minimum revenue commitment” or similar obligations in respect of the Upstream Assets or in favor of the Partnership or (E) contains calls upon or options to purchase production from the Upstream Assets;

(viii)    any Applicable Contract relating to the pending acquisition (by merger, purchase of equity or assets or otherwise) by the Partnership of any operating business or Equity Interests of any other Person;

(ix)    any Applicable Contract pursuant to which the Partnership has (A) acquired or disposed of any material assets and (B) continuing indemnification obligations;

(x)    any Applicable Contract in respect of stockholders’ rights, investors’ rights, or registration rights;

(xi)    any Applicable Contract granting any Person an option, preferential purchase right, or a right of first refusal or first offer or similar right to purchase or acquire any Asset or any Equity Interests of the Partnership;

(xii)    any Applicable Contract between Seller or any of its Affiliates (other than the Partnership), on the one hand, and the Partnership, on the other hand;

(xiii)    any Applicable Contract that (A) contains or constitutes an existing area of mutual interest agreement or an agreement to enter into an area of mutual interest agreement in the future or (B) includes non-competition restrictions or other similar restrictions on doing business in any line of business or with any Person or in any geographic area or during any period of time; and

(xiv)    any Applicable Contract relating to any material settlement or compromise of any action, case, suit, arbitration, hearing, investigation, charge, claim, litigation or other proceeding involving or relating to the Assets or the Partnership.

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(b)    Except as set forth in Schedule 9.8(b), (i) each of the Material Contracts, with respect to (A) Upstream Seller or the Partnership, as applicable, is valid, binding and (subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar Laws, as well as to principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law)) enforceable against Upstream Seller or the Partnership, as applicable, and (B) each other party thereto, to Seller’s Knowledge, is valid, binding and (subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar Laws, as well as to principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law)) enforceable against such Person, and (ii) there exists no breach of or default (including, to Seller’s Knowledge, any breach of or default by Upstream Seller or the Partnership that with the lapse of time or the giving of notice, or both, would cause a breach of default) under any Material Contract in any material respect by Upstream Seller or the Partnership or, to Seller’s Knowledge, by any other Person that is a party to such Material Contract.  As of the Execution Date, Seller has made available to Buyer true and complete copies of all Material Contracts, including all amendments thereto.

9.9    No Violation of Laws.  To Seller’s Knowledge, except as set forth in Schedule 9.9, (a) Upstream Seller is in compliance in all material respects with all applicable Laws with respect to its ownership and operation of the Upstream Assets, (b) Midstream Seller is in compliance in all material respects with all applicable Laws with respect to its ownership of the Midstream Interests, and (c) the Partnership is in compliance in all material respects with all applicable Laws with respect to its ownership and operation of the Midstream Assets.  This Section 9.9 does not include any matters with respect to (i) Environmental Laws or any other environmental matter, such matters being addressed exclusively in Section 9.14, or (ii) Tax matters, such matters being addressed exclusively in Section 9.15.

9.10    Preferential Purchase Rights.  There are no Preferential Purchase Rights affecting any portion of the Assets that are applicable to the transfer the (a) Upstream Assets by Upstream Seller to Buyer, or (b) Midstream Interests by Midstream Seller to Buyer and Buyer Designee.

9.11    Burdens.  Except (a) for the Suspense Funds and (b) as set forth in Schedule 9.11, Upstream Seller has properly and timely paid, or caused to be paid, in all material respects, all Burdens due by Seller with respect to the Upstream Assets in accordance with the applicable Leases and applicable Laws.

9.12    Imbalances.

(a)    With respect to Wells operated by Upstream Seller, and to Seller’s Knowledge as to Wells not operated by Upstream Seller, except as set forth in Schedule 9.12(a), there are no Imbalances associated with the Upstream Assets as of the Effective Time.

(b)    Except as set forth in Schedule 9.12(b), there are no Imbalances owed to or from Third Parties associated with the Midstream Business as of the Effective Time.

9.13    Current Commitments; Drilling Obligations.

(a)    Schedule 9.13(a) sets forth, as of the Execution Date, all authorities for expenditures (“AFEs”) received by Upstream Seller in writing or which Upstream Seller has generated that (i) relate to the Upstream Assets and to drilling, reworking or conducting another material operation with respect to a Well, (ii) are in excess of $500,000, net to Upstream Seller’s interest in the Upstream Assets, and (iii) for which all of the activities anticipated in such AFEs have not been completed by the Execution Date.

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(b)    Except as set forth on Schedule 9.13(b) or to the extent those obligations are previously fulfilled, none of the Leases or other Material Contracts contain express provisions obligating Upstream Seller to drill any wells on the Upstream Assets (other than provisions requiring optional drilling as a condition of maintaining or earning all of a portion of a presently non-producing Upstream Asset).

9.14    Environmental Matters.  Except as set forth in Schedule 9.14, as of the Execution Date:

(a)    with respect to the Upstream Assets, Upstream Seller has not entered into any agreements with, and is not party under any consents, orders, decrees or judgments of, any Governmental Authority based on any prior violations of Environmental Laws that relate to the future use of any of the Upstream Assets;

(b)    the Partnership has not entered into any agreements with, and is not party under any consents, orders, decrees or judgments of, any Governmental Authority based on any prior violations of Environmental Laws that relate to the future use of any of the Midstream Assets;

(c)    neither Seller nor the Partnership has received written notice from any Person of any and, to Seller’s Knowledge, there has been no release or disposal of any Hazardous Substance concerning any land, facility, asset or property included in the Assets which would reasonably be expected to: (i) interfere with or prevent compliance by Seller or the Partnership, as applicable, with any Environmental Law or the terms of any license or permit issued pursuant thereto; or (ii) give rise to or result in any material Remediation obligations or material Liabilities of Seller or the Partnership;

(d)    the operations of the Partnership and to Seller’s Knowledge, the operations of the Upstream Assets are and have been during Seller’s period of ownership thereof, in material compliance with Environmental Laws; and

(e)    the Partnership has not entered into any Contract to assume or undertake any Liability or responsibility of any Third Party for (i) Remediation of any actual or alleged presence or release of Hazardous Substances or any (ii) other material Liability under Environmental Laws.

9.15    Taxes.  Except as disclosed in Schedule 9.15:

(a)    all material amounts of Asset Taxes that have become due and payable have been properly and timely paid in full;

(b)    all material Tax Returns required to have been filed with respect to Asset Taxes have been duly and timely filed (taking into account applicable filing extensions), and all such Tax Returns are true and correct in all material respects;

(c)    neither Seller nor the Partnership has received notice of, nor is there threatened, any claim of audit by any applicable Taxing Authority for the assessment of any Taxes that could result in an Encumbrance on the Assets and all Taxes imposed on Seller or the Partnership that could result in an Encumbrance or other claim against any of the Assets that have become due and payable have been properly paid;

(d)    none of the Assets is subject to any tax partnership agreement (other than the Partnership) or provisions requiring a partnership income tax return to be filed under Subchapter K of Chapter 1 of Subtitle A of the Code or any similar state statute (a “Tax Partnership”);

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(e)    from the date of its formation until the Conversion, the Partnership was properly classified and treated as a partnership for federal income tax purposes and subsequent to the Conversion, the Partnership was properly classified and treated as a disregarded entity under Treasury Regulations Section 301.7701-3(b)(1)(ii);

(f)    the Partnership has timely filed all income and other material Tax Returns necessary to be filed by it (taking into account applicable filing extensions) and all such Tax Returns are true and correct in all material respects;

(g)    the Partnership has timely paid all material amounts of Taxes that have been incurred or are due from it other than Taxes that are not yet due and payable or for which adequate reserves have been established in accordance with GAAP on the financial statements of the Partnership;

(h)    the Partnership has timely withheld and paid all Taxes required to have been withheld and paid by it in connection with amounts paid or owing to any employee, former employee, partner, independent contractor, creditor, stockholder, member, Affiliate, customer, supplier or other third party;

(i)    the Partnership (i) has never been a member of an affiliated, consolidated, combined, unitary or similar Tax group and (ii) does not have a current liability for Taxes of any other Person under Treasury Regulation Section 1.1502-6 (or any predecessor or successor thereof or any analogous or similar provision under Law), or as a successor or transferee or otherwise by operation of law;

(j)    the Partnership is not a party to any tax sharing, allocation, indemnity or similar agreement or arrangement (whether or not written) pursuant to which it will have any obligation to make any payments after the Closing, except for customary provisions of commercial agreements entered into in the ordinary course the primary focus of which is not Taxes;

(k)    in the last three years, no written claim has been made by a Taxing Authority in a jurisdiction in which the Partnership does not file Tax Returns such that it is or may be subject to taxation by such jurisdiction in respect of Taxes that would be covered by or the subject of such Tax Return;

(l)    Buyer has received correct and complete copies of any audit or examination report issued within the last five years relating to any Taxes (other than U.S. federal income Taxes) due from or with respect to the Partnership;

(m)    the Partnership (i) is not subject to any private letter ruling of the Internal Revenue Service or comparable rulings of other Taxing Authorities, (ii) has not participated in any “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b) (or any corresponding or similar provision of state, local or foreign Tax law) and (iii) has not executed or entered into any closing agreement pursuant to Section 7121 of the Code or any similar provision of state, local or foreign Law; and

(n)    for purposes of this Section 9.15, any reference to the Partnership shall be deemed to include any Person that merged with or was liquidated or converted into the Partnership.

9.16    Brokers’ Fees.  Neither Seller or any Affiliate of Seller (including the Partnership) has incurred any liability, contingent or otherwise, for brokers’ or finders’ fees relating to the transactions contemplated by this Agreement for which Buyer or any Affiliate of Buyer (including, following the Closing, the Partnership) shall have any responsibility.

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9.17    Advance Payments.  To Seller’s Knowledge, except for any throughput deficiencies attributable to or arising out of any Applicable Contract or other marketing Contract and except for any Imbalances, Upstream Seller is not obligated by virtue of any take or pay payment, advance payment or other similar payment (other than Burdens), to deliver Hydrocarbons, or proceeds from the sale thereof, attributable to the Upstream Assets at some future time without receiving full payment therefor at or after the time of delivery.

9.18    Employee Matters.

(a)    The Partnership does not have, and has never had, any employees or been treated as an employer of employees since the date of its formation and does not have any officers or managers.

(b)    The Partnership does not and since the date of its formation has never sponsored, maintained or contributed to any “employee benefit plan” (within the meaning of Section 3(3) of ERISA).

(c)    Except as set forth on Schedule 9.18, Seller has no Liabilities with respect to non-compliance with employment Laws with respect to any employee of Seller that has performed work at or in connection with the Assets and that could reasonably be expected to become a Liability of Buyer or its Affiliates (including, following the Closing, the Partnership) in connection with the transactions contemplated by this Agreement.  Seller does not have any Liability with respect to any Employee Benefit Plan that could reasonably be expected to become a Liability of Buyer or its Affiliates (including, following the Closing, the Partnership) in connection with the transactions contemplated by this Agreement.  The Partnership does not have any ERISA Liability that will be or remain a Liability of the Partnership after the Closing, and the transactions contemplated in this Agreement will not result in ERISA Liability to the Partnership.  No union or similar organization represents any Permitted Employee, and, to Seller’s Knowledge, no other organization is attempting to organize any Permitted Employees.

9.19    The Partnership.

(a)    Midstream Seller owns all of the Midstream Interests free and clear of any Encumbrances (other than any Encumbrances arising under the organizational documents of the Partnership or any state or federal securities Laws). All of the Midstream Interests are duly authorized and validly issued.  The Midstream Interests are all of the Equity Interests of the Partnership held or owned, either of record or beneficially, by any Person.

(b)    All of the Midstream Interests were issued in compliance with applicable Laws. None of the Midstream Interests were issued in violation of any Contract or commitment to which the Partnership or Midstream Seller is a party or is subject to or in violation of any preemptive or similar rights of any Person.

(c)    There are no outstanding or authorized options, warrants, convertible or exchangeable securities or other rights, agreements, arrangements or commitments of any character relating to the Interests or obligating the issuance or sale of any Equity Interests in the Partnership.  The Partnership has no outstanding or authorized equity appreciation, phantom equity, profit participation or similar rights.  Other than the governing documents of the Partnership, there are no voting trusts, member agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Midstream Interests.

(d)    The Partnership does not hold any direct or indirect Equity Interest in any Person.

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(e)    A true and complete copy of the Partnership LPA has been delivered to Buyer on or prior to the Execution Date.

9.20    Certain Midstream Assets.

(a)    The Partnership holds Good and Defensible Title to the Gathering Systems, the ROW Interests, the Gas Plants, and Midstream Real Property, other than any ROW Interests held by Seller and included in the Upstream Assets, as to which ROW Interests Seller holds Good and Defensible Title.

(b)    There is not (i) any breach or event of default on the part of the Partnership under any instrument creating an interest in any Midstream Real Property, (ii) to Seller’s Knowledge, any breach or event of default on the part of any other party to any such instrument creating an interest in any Midstream Real Property, or (iii) to Seller’s Knowledge, any event that, with the giving of notice or lapse of time or both, would constitute such breach or event of default on the part of the Partnership with respect to any such instrument creating an interest in any Midstream Real Property, or on the part of any other party thereto, in the case of each of clauses (i), (ii) or (iii), to the extent any such breach or event of default, individually or in the aggregate, would not adversely affect in any material respect the ability of the Partnership to own, operate or maintain the Midstream Assets in the ordinary course of business consistent with past practice.  The Gas Plants are either located within the boundaries of the Midstream Real Property or located on real property to which the Partnership has the legal right to place, maintain and operate the Gas Plants.  The Gathering Systems and all pipelines and related pipeline equipment comprising a part of the Gathering Systems are, in all material respects, (A) either located within the boundaries of the ROW Interests or located on real property to which Seller or the Partnership has the legal right to place, maintain and operate the Gathering Systems (which real property, in the case of that held by Seller, is included in the Upstream Assets), and (B) in conformity with the specifications (including pipeline size limits) of the applicable ROW Interests.  With respect to the Gathering Systems, there are no gaps (including any gap arising as a result of any breach by the Partnership or Upstream Seller of the terms of any such ROW Interests) in any material respect in the ROW Interests for any pipeline and related facilities comprising a part of the Gathering System.

(c)    All of the personal property, equipment and other tangible assets owned or leased by the Partnership in connection with the ownership and operation of the Midstream Business, specifically including the Gathering Systems and Gas Plants, are, in all material respects, in a condition sufficient for use as currently used by the Partnership, except for ordinary wear and tear and routine maintenance.

(d)    Other than the Policies, the Midstream Assets and the Upstream Assets, collectively, constitute all of the assets, rights and properties, tangible or intangible, real or personal, that are used by Seller and the Partnership in the operation of the Midstream Business in the ordinary course consistent with past practice as of the Execution Date.

9.21    Intellectual Property.

(a)    The Partnership does not have any material Intellectual Property except as set forth on Schedule 9.21.  The Partnership is not required to pay royalties to any Third Parties in respect of its ownership or use of any Intellectual Property other than payments in the ordinary course of business for so-called “off-the-shelf” products or “shrink wrap” software or as set forth on Schedule 9.21.

(b)    Except as set forth on Schedule 9.21, the Partnership owns or possesses sufficient legal rights to use all Intellectual Property, if any, necessary for or used in the Midstream Business as conducted as of the date hereof, and such Intellectual Property shall remain with the Partnership at Closing.  To Seller’s 

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Knowledge, in conducting the Midstream Business neither Seller nor the Partnership have violated or infringed, or are violating or infringing, any Intellectual Property of any Person, and, to Seller’s Knowledge, as of the date hereof there has not been a violation or infringement by any Person of any Intellectual Property.  Neither Seller nor the Partnership has received written notice from any Person claiming a violation or infringement of a Person’s Intellectual Property rights by the operation of the Midstream Business.

(c)    Upstream Seller does not have any material Intellectual Property related to or used in connection with the ownership or operation of the Upstream Assets except as set forth on Schedule 9.21.

9.22    Regulatory Status.  The Partnership (a) does not have, and is not required to have, a tariff on file with the Federal Energy Regulatory Commission, and (b) is not nor has been within the last 10 years, subject to regulation by, the Federal Energy Regulatory Commission as (i) a natural gas company under the Natural Gas Act of 1938, as amended, and the regulations promulgated thereunder, transporting natural gas in interstate commerce; (ii) an intrastate pipeline under the Natural Gas Policy Act of 1978, as amended, and the regulations promulgated thereunder, transporting natural gas in interstate commerce; or (iii) a common carrier under the Interstate Commerce Act of 1887, as amended, and the regulations promulgated thereunder, transporting oil or Hydrocarbon liquids in interstate commerce. Except as set forth on Schedule 9.22, the Partnership has not operated as a common carrier or acquired rights or interests via eminent domain or under the threat of eminent domain.

9.23    Balance Sheet; No Undisclosed Liabilities; Absence of Changes.

(a)    The Partnership has delivered to Buyer a true and complete copy of the unaudited balance sheet (the “Balance Sheet”) of the Partnership as of June 30, 2018 (the “Balance Sheet Date”).

(b)    The Balance Sheet is consistent with the books and records of the Partnership, was prepared in accordance with GAAP and presents fairly the financial position of the Partnership as of the Balance Sheet Date in accordance with GAAP.

(c)    As of the Effective Time, the Partnership did not have (i) any Third Party Debt or other Indebtedness or (ii) any other Liabilities other than (A) Liabilities reflected or reserved against in the Balance Sheet, (B) Liabilities under the express terms of Midstream Applicable Contracts that were not as of the Effective Time past due or delinquent (other than Liabilities which Seller or the Partnership is disputing in good faith by appropriate proceedings with adequate reserves therefor established on the books and records of the Partnership), or (C) Liabilities (other than Third Party Debt or other Indebtedness) that have been incurred since the Balance Sheet Date in the ordinary course of business consistent with past practice.

(d)    Since the Effective Time up to the Execution Date, the Partnership has not (i) incurred or paid any Seller Obligations or Indebtedness, (ii) incurred any other Liabilities other than (A) Liabilities reserved against in the Balance Sheet, (B) Liabilities under the express terms of Midstream Applicable Contracts, or (C) Liabilities incurred since the Balance Sheet Date in the ordinary course of business consistent with past practice, (iii) made any cash or non-cash dividends or distributions other than those, if made after the Execution Date, would have been in accordance with Section 11.1(g) or Section 11.11 or (iv) taken any other action that, if taken after the Execution Date, would have been prohibited by Section 11.1(b).

(e)    The Partnership does not have any Liability for any Change of Control Amounts or Severance Obligations.

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9.24    Well Status.  As of the Execution Date, there are no Wells operated by Upstream Seller, and, to Seller’s Knowledge, operated by a Third Party, that: (a) Upstream Seller or such Third Party is obligated by applicable Law or Contract to plug and abandon that have not been plugged and abandoned in accordance in all material respects with all applicable Laws; (b) have been plugged and abandoned but have not been plugged and abandoned in accordance in all material respects with all applicable Laws; or (c) have been drilled that are not in material compliance with the Leases or applicable Laws.

9.25    Non-Consent Operations.  Except as set forth on Schedule 9.25, as of the Execution Date, no operations are being conducted or have been conducted with respect to the Upstream Assets as to which Upstream Seller has elected to be a non-consenting party under the terms of the applicable operating agreement and with respect to which Upstream Seller has not yet recovered its full participation.

9.26    Insurance.  Schedule 9.26 sets forth a schedule of all policies of insurance to which (a) any of the Upstream Assets is covered in effect as of the Execution Date and (b) the Partnership is a party or under which any of the Midstream Assets is covered in effect as of the Execution Date ((a) and (b), collectively, the “Policies”) and sets forth the term, maximum limits and policyholder for each Policy.  All Policies are, to Seller’s Knowledge, valid, outstanding and in full force and effect.  Seller or its applicable Affiliates have paid all related premiums due, and have otherwise performed all material obligations under, each Policy.  There is no material claim by any of Seller or the Partnership pending under any Policy as to which coverage has been questioned, denied or disputed by the underwriters of such policies.  Neither Seller nor the Partnership has received any notice, which remains outstanding, of cancellation or termination with respect to any material Policy.

9.27    FCC Matters.  Schedule 9.27 sets forth a true and complete list of all FCC Licenses held by the Partnership or held by Seller or any Affiliate of Seller primarily for use in connection with the ownership or operation of the Upstream Assets or the Midstream Assets (the “Applicable FCC Licenses”).  For each Applicable FCC License, Schedule 9.27 sets forth (a) name of the licensee, (b) the FCC call sign, (c) the authorized channel(s), (d) the geographic area of authorization and (e) the date of original issuance or, if applicable, last renewal.  Except for Permitted Encumbrances, all FCC Licenses are owned by the applicable licensee free and clear of all Encumbrances.  There is no proceeding pending before the FCC or, to Seller’s Knowledge, threatened, with respect to any Applicable FCC License.

9.28    Credit Support Instruments.  Schedule 9.28 lists all Credit Support instruments posted by Seller and the Partnership with any Governmental Authority that relate to the ownership or operation of the Assets.

9.29    Suspense Funds.  To Seller’s Knowledge, Schedule 9.29 lists all Suspense Funds as of the Effective Time and the reason they are being held in suspense and the name or names of the Persons claiming the Suspense Funds or to whom the Suspense Funds are owed.  To Seller’s Knowledge, all proceeds from the sale of Hydrocarbons produced from the Upstream Assets (except to the extent related to the Assets subject to the Scheduled Concursus Matters) are being received by Upstream Seller in a timely manner and are not being held in suspense.

9.30    Bank Accounts; Powers of Attorney.  The Partnership has no bank accounts.  There are no valid powers of attorney issued by the Partnership that remain in effect.

9.31    Affiliate Relationships.  Except for the QEP Gas Services Agreement, there are no contracts or agreements between the Partnership, on the one hand, and any Related Party (other than the Partnership), on the other hand, and no Related Party (other than the Partnership) is a party to any transactions with the 

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Partnership.  There are no outstanding loans, advances or guarantees of Indebtedness by the Partnership to or for the benefit of any Related Party (except normal advances for business expenses in the ordinary course of business through journal entry accounting in which no cash or assets of the Partnership are actually paid or advanced).

9.32    Permits.  Except as set forth on Schedule 9.32, Upstream Seller has obtained and maintained, in all material respects, all necessary Permits with regard to the ownership or operation of the Upstream Assets and, to Seller’s Knowledge, no violations exist in respect of such Permits. The Partnership has obtained and maintained, in all material respects, all necessary Permits with regard to the ownership or operation of the Midstream Assets and, to Seller’s Knowledge, no violations exist in respect of such Permits.

ARTICLE X
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller the following as of the Execution Date and the Closing Date:

10.1    Organization, Existence and Qualification.

(a)    Buyer is a Delaware limited liability company duly formed, validly existing and in good standing under the Laws of the jurisdiction of its formation and has all requisite power and authority to own and operate its property and to carry on its business as now conducted.  Buyer is duly licensed or qualified to do business as a foreign limited liability company and is in good standing in all jurisdictions in which it carries on business or owns assets and such qualification is required by Law.

(b)    As of the Closing Buyer Designee will be a Delaware limited liability company duly formed, validly existing and in good standing under the Laws of the jurisdiction of its formation and will have all requisite power and authority to own and operate its property and to carry on its business as now conducted.  As of the Closing Buyer Designee will be duly licensed or qualified to do business as a foreign limited liability company and is in good standing in all jurisdictions in which it carries on business or owns assets and such qualification is required by Law.

10.2    Authority, Approval and Enforceability.  Buyer and Buyer Designee each have full power and authority to enter into and perform this Agreement and the Transaction Documents to which it is a party and the transactions contemplated herein and therein.  The execution, delivery and performance by Buyer of this Agreement and the Transaction Documents to which Buyer (and Buyer Designee, as applicable) is a party have been duly and validly authorized and approved by all necessary limited liability company action on the part of Buyer.  This Agreement is, and the Transaction Documents to which Buyer (and Buyer Designee, as applicable) is a party when executed and delivered by Buyer (and Buyer Designee, as applicable) will be, the valid and binding obligation of Buyer (and Buyer Designee, as applicable) and enforceable against Buyer (and Buyer Designee, as applicable) in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar Laws, as well as to principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law).

10.3    No Conflicts.  The execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated herein will not (a) conflict with or result in a breach of any provisions of the organizational or other governing documents of Buyer, (b) give rise to any right of termination, cancellation, default, Encumbrance or acceleration under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license or other agreement to which Buyer is a party or by which Buyer or any of its property may be bound or (c) violate any Law applicable to Buyer or any of its 

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property, except (in the case of clauses (b) and (c)) where the failure of the foregoing to be true and correct, individually or in the aggregate, would not reasonably be expected to adversely affect the ability of Buyer to enter into and consummate the transactions contemplated by this Agreement and perform its obligations hereunder.

10.4    Consents.  Except for compliance with the HSR Act, there are no requirements for consents or approvals from any Person that Buyer is required to obtain in connection with the transfer of the Upstream Assets and Midstream Interests from Seller to Buyer (and Buyer Designee, as applicable) or the consummation of the transactions contemplated by this Agreement by Buyer.

10.5    Bankruptcy.  There are no bankruptcy, reorganization or receivership proceedings pending, being contemplated by or, to Buyer’s Knowledge, threatened in writing against Buyer or any Affiliate of Buyer.

10.6    Litigation.  There is no suit, action or litigation by any Person before any Governmental Authority that is pending, or to Buyer’s Knowledge, threatened in writing, against Buyer or an Affiliate of Buyer that would adversely affect the ability of Buyer to consummate the transactions contemplated by this Agreement or perform its obligations hereunder.

10.7    Financing.  As of the Scheduled Closing Date and the Closing Date, Buyer will have, immediately available funds (through cash on hand and funds available under credit facilities) with which to pay the Purchase Price, consummate the transactions contemplated by this Agreement and perform its other obligations under this Agreement and the Transaction Documents.

10.8    Regulatory.  Immediately prior to the Scheduled Closing Date and immediately following the Closing Date, Buyer will be qualified to own and assume operatorship of (a) oil, gas and mineral leases in all jurisdictions where the Upstream Assets are located, and (b) midstream assets and systems in all jurisdictions where the Midstream Assets are located, and the consummation of the transactions contemplated by this Agreement will not cause Buyer to be disqualified as such an owner or operator.

10.9    Independent Evaluation.  Buyer is sophisticated in the evaluation, purchase, ownership and operation of oil and gas upstream and midstream properties and related facilities.  In making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, Buyer has (a) relied on the representations and warranties of Seller set forth in Article IX and in the other Transaction Documents and (b) relied on its own independent investigation and evaluation of the Assets and Midstream Interests and the advice of its own legal, Tax, economic, environmental, engineering, geological and geophysical advisors and not, in any case, on any comments, statements, projections or other material made or given by Seller, Seller’s Affiliates (including the Partnership) or any Representative, consultant or advisor of Seller or any of its Affiliates (including the Partnership).  Buyer, either alone or through its Representatives, has evaluated the merits and risks of the investment in the Midstream Interests and is able to bear the economic risk and lack of liquidity inherent in holding the Midstream Interests.  Buyer acknowledges and affirms that on or prior to Closing, Buyer will have completed its independent investigation, verification, analysis, and evaluation of the Assets and Midstream Interests and made all such reviews and inspections of the Assets as it has deemed necessary or appropriate to consummate the transaction contemplated hereunder pursuant to the terms of this Agreement. Buyer understands and acknowledges that neither the Securities and Exchange Commission nor any federal, state, or foreign agency has passed upon the Midstream Interests, the Partnership, and the Assets or made any finding or determination as to the fairness of an investment in the Midstream Interests, the Partnership, and the Assets or the accuracy or adequacy of the disclosures made to Buyer.

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10.10    Brokers’ Fees.  Neither Buyer or any Affiliate of Buyer has incurred any liability, contingent or otherwise, for brokers’ or finders’ fees relating to the transactions contemplated by this Agreement for which Seller or Seller’s Affiliates (including the Partnership) shall have any responsibility.

10.11    Securities Laws.  Buyer is an “accredited investor,” as such term is defined in Regulation D of the Securities Act of 1933, as amended, and will acquire the Upstream Assets and Midstream Interests for its own account and not with a view to a sale or distribution thereof in violation of the Securities Act of 1933, as amended, and the rules and regulations thereunder, any applicable state blue sky Laws or any other applicable securities Laws. Buyer acknowledges that the Midstream Interests are not registered pursuant to the Securities Act of 1933, as amended, and that none of the Midstream Interests may be transferred, except pursuant to an effective registration statement or an applicable exemption from registration under the Securities Act of 1933, as amended.

ARTICLE XI
CERTAIN AGREEMENTS

11.1    Conduct of Business.

(a)    Except (w) as set forth in Schedule 11.1, (x) for the operations covered by the AFEs applicable to Seller or its Affiliates (including the Partnership), the Midstream Assets, and/or the Upstream Assets, as applicable, that are executed and outstanding as of the Execution Date, including those set forth on Schedule 9.13(a), (y) as required in the event of an emergency or as required to perpetuate any Lease, or (z) as contemplated by this Agreement or as consented to in writing by Buyer (which consent may be granted or withheld in Buyer’s sole discretion), Seller shall, and shall cause the Partnership to, from and after the Execution Date until the Closing:

(i)    subject to (A) Seller’s right to comply with the terms of the Leases, any Contracts applicable to Seller or its Affiliates and the Upstream Assets, applicable Laws and requirements of Governmental Authorities (including Seller’s right to make adjustments with respect to pre-Effective Time periods regarding Burdens paid to Governmental Authorities in order to comply with applicable Laws and the terms of the Leases and relevant Contracts) and (B) interruptions resulting from force majeure, mechanical breakdown and planned maintenance, in each case, operate or, in the case of those Upstream Assets not operated by Seller, use its commercially reasonable efforts to cause to be operated, the Upstream Assets (1) in the usual, regular and ordinary manner consistent with past practice, and (2) as a reasonably prudent operator;
(ii)    other than with respect to any funds being held in suspense by Upstream Seller, pay all Burdens under the Leases related to the Upstream Assets to the extent (A) such Burdens relate to production of Hydrocarbons from the Upstream Assets prior to the Closing, and (B) the gross proceeds attributable to such Hydrocarbons out of which such Burdens are payable have been received by Upstream Seller (rather than such Burdens being paid (or proceeds withheld for payment) by the purchaser of such Hydrocarbons or any other Person).

(iii)    pay all Taxes that become due on or prior to the Closing Date that could result in the imposition of an Encumbrance or other claim against any of the Assets or the Partnership;

(iv)    subject to (A) the Partnership’s right to comply with the terms of any Contracts applicable to the Partnership, applicable Laws and requirements of Governmental Authorities and (B) interruptions resulting from force majeure, mechanical breakdown and planned maintenance, in each case, operate the Midstream Assets (1) in the usual, regular and ordinary manner consistent with past practice, 

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(2) in compliance in all material respects with all applicable Laws and requirements of Governmental Authorities and (3) as a reasonably prudent operator;

(v)    maintain, or cause to be maintained, the books of account and Upstream Records relating to the Upstream Assets in the usual, regular and ordinary manner and in accordance with the usual accounting practices of Seller;

(vi)    cause the Partnership to maintain, or cause to be maintained, the books of account and Midstream Records relating to the Partnership in the usual, regular and ordinary manner and in accordance with the usual accounting practices of the Partnership;

(vii)    keep in full force and effect present insurance policies or other comparable insurance coverage with limits not less than as provided in the present insurance policies with respect to the Assets and the Partnership’s operations; and

(viii)    provide written notice to Buyer as soon as practicable, but in any event within five Business Days after Seller acquires Knowledge thereof, of the receipt by Seller or the Partnership of any written notice of violation or alleged default or material breach of any Law, Material Contract or Permit.

(b)    Except (w) as set forth in Schedule 11.1, (x) for the operations covered by the AFEs applicable to Seller or its Affiliates (including the Partnership), the Midstream Assets, and/or the Upstream Assets, as applicable, that are executed and outstanding as of the Execution Date, including those set forth on Schedule 9.13(a), (y) as required in the event of an emergency or as required to perpetuate any Lease, or (z) as contemplated by this Agreement or as consented to in writing by Buyer (which consent may be granted or withheld in Buyer’s sole discretion), Seller shall not, and shall cause the Partnership not to, from and after the Execution Date until the Closing:

(i)    terminate (unless the term thereof expires pursuant to the provisions existing therein) or surrender any rights under any Lease or Upstream Easement (except for any Upstream Asset that terminates in accordance with its terms);

(ii)    transfer, sell, mortgage, pledge, grant an Encumbrance or dispose of any interest in any Lease or Well or any other material Asset other than the (A) sale and/or disposal of Hydrocarbons in the ordinary course of business, (B) use of or sales of inventory in the ordinary course of business and (C) sales of equipment that is no longer necessary in the operation of the Assets or for which replacement equipment has been obtained;

(iii)    (A) enter into any Contract that, if such Contract had been entered into as of the date hereof, would have constituted a Material Contract, (B) amend or modify any Contract that, if such Contract had been so amended or modified as of the date hereof, would have constituted a Material Contract or (C) terminate (unless such Material Contract terminates in accordance with its terms) or materially amend the terms of any Material Contract or waive any material right;

(iv)    grant or create any Preferential Purchase Rights with respect to the Assets;

(v)    voluntarily resign as operator of any of the Wells;

(vi)    with respect to the Partnership, (A) incur or pay any Liabilities that constitute Seller Obligations or Indebtedness or, except in the ordinary course of business consistent with past practice, 

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any other Liabilities, in each case, except to the extent any such Liabilities are to be taken into account as Working Capital Liabilities in the calculation of Effective Time Working Capital pursuant to Section 2.5(c)(v), or (B) pay any Intercompany Payable (other than through journal entry accounting in which no cash or assets of the Partnership are actually paid or distributed);

(vii)    issue, encumber or otherwise dispose of any of the Midstream Interests or issue any option, warrant or right relating to the Midstream Interests;

(viii)    amend or modify the organizational documents of the Partnership, including the Partnership LPA;

(ix)    with respect to the Partnership, change business lines, enter into a new business segment or activity outside the scope of the Partnership’s business as it is conducted on the Execution Date;

(x)    split, combine or reclassify the outstanding Equity Interests of the Partnership,

(xi)    with respect to the Partnership, other than in accordance with Section 11.1(g) or Section 11.11, declare, set aside or pay any cash or non-cash distribution dividend or other distribution of any kind in respect of the outstanding Midstream Interests (with the exception of the settlement of Intercompany Receivables and Intercompany Payables through journal entry accounting in which no cash or assets of the Partnership are actually paid or distributed) or assign to an Affiliate of the Partnership or Seller or any Third Party all or any part of the Mitigation Credits;

(xii)    repurchase, redeem, retire or otherwise acquire any Midstream Interests;

(xiii)    adopt a plan of complete or partial liquidation or resolutions providing for or authorizing a liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Partnership;

(xiv)    with respect to the Partnership, make any change in accounting principles, methods or policies (except as may be required to comply with applicable Law or changes in GAAP);

(xv)    with respect to the Partnership and Asset Taxes imposed on the Upstream Assets, (A) make, change or revoke any Tax election (other than in connection with the Conversion), (B) file any amended Tax Return, (C) enter into any closing agreement, (D) settle or compromise any material Tax claim or assessment, or (E) except as in the ordinary course of business, consent to any extension or waiver of the limitation period applicable to any material claim or assessment with respect to Taxes; in each case to the extent such action could reasonably be expected to adversely affect Buyer or the Partnership after the Closing Date;

(xvi)    with respect to the Partnership, acquire or agree to acquire (A) by merger or consolidating with, by purchasing Equity Interests in or substantially all of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or (B) any material assets of any Person;

(xvii)    with respect to the Partnership, (A) cancel or compromise any material claim or right of the Partnership, except the resolution of amounts payable or operational obligations in the ordinary course of business, or (B) cancel, terminate, relinquish, waive or release any material right of the Partnership, whether under a Material Contract or otherwise;

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(xviii)    with respect to the Partnership, make or commit to make any capital expenditures in excess of $100,000 individually or $250,000 in the aggregate;

(xix)    with respect to the Upstream Assets, except pursuant to Section 11.1(e) or Section 11.12 and subject to Section 11.1(b)(xx), propose, agree to, or commence any individual operation on the Upstream Assets anticipated to cost in excess of $250,000, net to Seller’s interest; provided, however, that no approval by Buyer hereunder shall be required with respect to cost overruns (or supplemental authorizations for expenditure for cost overruns) relating to operations in which Upstream Seller has agreed to participate in writing as of the Execution Date or in which Upstream Seller agrees to participate after the Execution Date in compliance with this Section 11.1 or otherwise make or commit to make any capital expenditures or issue any new AFEs, in either case in excess of $250,000 individually or $500,000 in the aggregate;

(xx)    with respect to the Upstream Assets, except pursuant to Section 11.1(e) or Section 11.12, propose or agree to any operation to plug and abandon any Well; or

(xxi)    commit to do any of the foregoing.

(c)    Without expanding any obligations which Seller may have to Buyer, it is expressly agreed that Seller shall never have any Liability to Buyer with respect to any breach or failure of Section 11.1(a)(i) or Section 11.1(a)(iv), to the extent such breach relates to the physical operation of the Assets, greater than that which it might have as the operator to a non-operator under the applicable operating agreement (or, in the absence of such an agreement, under the AAPL 610 (1989 Revision) form Operating Agreement), IT BEING RECOGNIZED THAT, UNDER SUCH AGREEMENTS AND SUCH FORM, THE OPERATOR IS NOT RESPONSIBLE FOR ITS OWN NEGLIGENCE, AND HAS NO RESPONSIBILITY OTHER THAN FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

(d)    Buyer acknowledges Seller owns undivided interests in certain of the properties comprising the Upstream Assets that it is not the operator thereof, and Buyer agrees that the acts or omissions of the other interest owners (including the operators) who are not Seller or any Affiliates of Seller shall not constitute a breach of the provisions of this Section 11.1, nor shall any action required by a vote of Working Interest owners constitute such a breach so long as Seller has voted its interest in a manner that complies with the provisions of this Section 11.1.

(e)    With respect to any AFE or similar request received by Upstream Seller that is estimated to cost in excess of $250,000 in respect of the Upstream Assets, Upstream Seller shall forward such AFE to Buyer as soon as is reasonably practicable, together with Upstream Seller’s recommendation as to whether Upstream Seller should participate in such operation and materials in Upstream Seller’s possession on which such recommendation is based, and thereafter the Parties shall consult with each other regarding whether or not Upstream Seller should elect to participate in such operation.  Buyer agrees that it will use commercially reasonable efforts to timely respond to any written request for consent pursuant to this Section 11.1(e) or Section 11.1(a) or Section 11.1(b).  In the event the Parties are unable to agree within five days (unless a shorter time is reasonably required by the circumstances or the applicable joint operating agreement) of Buyer’s receipt of any consent request as to whether or not Upstream Seller should elect to participate in such operation, Upstream Seller’s decision with respect thereto shall control; provided Upstream Seller (i) will act as a reasonably prudent oil and gas operator in making elections under each Lease, operating agreement, unit agreement, contract for development and other similar instrument or agreement (including 

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all determinations with respect to pooling and unitization, elections concerning abandonment of any Well or release of any Lease or Well) and (ii) will in good faith consult with Buyer and consider any reasonable alternative proposed by Buyer to achieve the desired result of each of the Parties with respect to the applicable operation.  Notwithstanding the provisions of this Section 11.1, in the event of an emergency, Seller may take such action as reasonably necessary in accordance with prudent industry practices and shall notify Buyer of such action promptly thereafter.

(f)    From and after the Closing Date, Buyer agrees that, notwithstanding anything in this Agreement to the contrary (i) Upstream Seller shall have the right to control and make adjustments with respect to Burdens paid by Seller to Governmental Authorities, to the extent the same relate to pre-Effective Time periods, in order to comply with applicable Laws and the terms of the Leases and any relevant Contracts, and (ii) Buyer shall use its commercially reasonable efforts to cooperate with Seller’s efforts and actions in connection therewith.

(g)    Notwithstanding anything in this Agreement to the contrary, without limiting the provisions of Section 2.4 and Section 3.3, Midstream Seller shall (i) have the right at any time to cause the Partnership to distribute (or make dividends or distribution with respect to) cash of the Partnership and (ii) cause the Partnership to distribute all pre-Effective Time accounts receivables of the Partnership to Midstream Seller or its Affiliates at any time prior to Closing; provided, that such right shall not include the right to declare dividends or distributions prior to the Closing that are payable after the Closing (with the exception of the settlement of Intercompany Receivables and Intercompany Payables through journal entry accounting in which no cash or assets of the Partnership are actually paid or distributed).

(h)    Notwithstanding anything in this Agreement to the contrary, Seller shall have the right at any time prior to Closing to, or to cause the Partnership to, utilize all or part of the Mitigation Credits in the operation of the Upstream Assets and/or Midstream Assets.

11.2    Successor Operator.  While Buyer acknowledges that it desires to succeed Upstream Seller as operator of those Upstream Assets or portions thereof that Upstream Seller may presently operate, Buyer acknowledges and agrees that Seller cannot and does not covenant or warrant that Buyer shall become successor operator of such Upstream Assets since the Upstream Assets or portions thereof may be subject to operating or other agreements that control the appointment of a successor operator. Upstream Seller agrees, however, that, as to the Upstream Assets it operates, it shall use its commercially reasonable efforts to support Buyer’s efforts to become successor operator of such Upstream Assets (to the extent permitted under any applicable joint operating agreement or other applicable agreement) effective as of Closing (at Buyer’s sole cost and expense) and to designate and/or appoint, to the extent legally possible and permitted under any applicable joint operating agreement or other applicable agreement, Buyer as successor operator of such Assets effective as of Closing.

11.3    HSR Act.  If applicable, within ten Business Days following the Execution Date, Buyer and Seller will each prepare and simultaneously file with the DOJ and the FTC the notification and report form required for the transactions contemplated by this Agreement by the HSR Act and request early termination of the waiting period thereunder.  Buyer and Seller agree to respond promptly to any inquiries from the DOJ or the FTC concerning such filings and to comply in all material respects with the filing requirements of the HSR Act.  Buyer and Seller shall cooperate with each other and, subject to the terms of the Confidentiality Agreement, shall promptly furnish all information to the other Party that is necessary in connection with Buyer’s and Seller’s compliance with the HSR Act.  Buyer and Seller shall keep each other fully advised with respect to any requests from or communications with the DOJ or FTC concerning such filings and shall consult with each other with respect to all responses thereto.  Each of Seller and Buyer shall use its 

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commercially reasonable efforts to take all actions reasonably necessary and appropriate in connection with any HSR Act filing to consummate the transactions consummated hereby; provided, however, that neither Party will be required to (a) sell or otherwise dispose of, hold separate, or agree to sell or otherwise dispose of any of the Assets or any other assets of Seller or its Affiliates or Buyer or its Affiliates, (b) terminate existing relationships or contractual rights and obligations, including any joint venture or other arrangement, or (c) effectuate any change or restructuring of any Person.  Buyer shall bear 100% of the filing fees of the HSR Act filings.

11.4    Credit Support.

(a)    Buyer acknowledges that none of the bonds, letters of credit and guarantees, if any, posted by Seller or its Affiliates (other than the Partnership) with Governmental Authorities or any other Third Party and relating to the Upstream Assets or Midstream Business (collectively, the “Credit Support”) are transferable to Buyer. On or before the Closing Date, Buyer shall obtain, or cause to be obtained in the name of Buyer or the Partnership, as applicable, replacements for the Credit Support to the extent such replacements are necessary (i) to consummate the transactions contemplated by this Agreement and (ii) to permit the cancellation of the Credit Support with respect to the Upstream Assets and/or Midstream Business; provided Buyer shall not be required to provide bonds, letters of credit and guarantees in amounts pursuant to this Section 11.4(a)(ii) in excess of the Credit Support items set forth on Schedule 9.28.

(b)    In addition, at or prior to Closing, Buyer shall deliver to Seller evidence of the posting of bonds or other security with all applicable Governmental Authorities and all applicable Third Parties, including those set forth on Schedule 9.28, meeting the requirements of such Governmental Authorities and such Third Parties to (i) own and, if applicable, operate the Upstream Assets as of the Closing Date, (ii) own the Midstream Interests as of the Closing Date, and (iii) operate the Midstream Business as of the Closing Date.

(c)    In the event that any Governmental Authority or any Third Party does not permit the cancellation of any Credit Support posted by Seller and/or any Affiliate of Seller (other than the Partnership), then, from and after Closing, Buyer shall indemnify the Seller Indemnified Parties against all Liabilities incurred by the Seller Indemnified Parties under such Credit Support (and all Liabilities incurred in connection with such Credit Support).  At the Closing, Buyer shall reasonably cooperate with Seller in Seller’s efforts to obtain the return to Seller or its applicable Affiliate of any cash deposits constituting Credit Support that are provided, funded, or otherwise supported by any Seller or any of its Affiliates with respect to the Upstream Assets or Midstream Business and, to the extent any such amounts are released to Buyer, Buyer shall promptly pay such amounts to Upstream Seller.

11.5    Record Retention.  Buyer, for a period of seven years following the Closing, will, and will cause the Partnership to, as applicable, (a) retain the Records, (b) provide Seller, its Affiliates and its and their officers, employees and Representatives with access to the Records (to the extent that Seller has not retained the original or a copy) during normal business hours for review and copying at Seller’s expense, and (c) provide Seller, its Affiliates and its and their officers, employees and Representatives with access, during normal business hours, to materials received after the Closing that would have constituted “Records” (and not “Excluded Records”) if the same were in existence as of the Closing Date and that relate to any indemnity claim made under Section 8.2 for review and copying at Seller’s expense.  If Buyer desires to destroy any Records within such seven year period, Buyer shall notify Seller in writing at least ten (10 Business Days in advance prior to such destruction and provide Seller the opportunity to take possession of the same at Seller’s sole cost and expense, after which time Buyer shall have no obligation under this Section 11.5.

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11.6    Amendment of Schedules.  Buyer agrees that, with respect to the representations and warranties of Seller contained in this Agreement, Seller shall have the continuing right until Closing to add, supplement or amend the Schedules to its representations and warranties with respect to any matter.  For all purposes of and notwithstanding anything contained in this Agreement, including for purposes of determining whether the conditions set forth in Article IV (except Section 4.6, as related to Section 4.1, but without affecting the conditions set forth in Section 4.1 or Buyer’s rights with respect thereto) have been fulfilled and Buyer’s rights under Article VIII, Article XIII and Article XIV, the Schedules to Seller’s representations and warranties contained in this Agreement shall be deemed to include only that information contained therein on the Execution Date and shall be deemed to exclude all information contained in any addition, supplement or amendment thereto.

11.7    Notifications.  Each Party shall provide prompt written notice to the other Party following receipt by such Party or its Affiliates (including the Partnership) of any written notice of any lawsuit or action from any Third Party that seeks to restrain the transactions contemplated by this Agreement.

11.8    Removal of Name.  As promptly as practicable, but in any case within 90 days after the Closing Date, Buyer shall eliminate the names “QEP” and “Questar”, and any variants thereof, from the Upstream Assets and Midstream Assets acquired pursuant to this Agreement and, except with respect to such grace period for eliminating existing usage, shall have no right to use any logos, trademarks or trade names belonging to Seller or any of its Affiliates.

11.9    FCC Filings.  Seller and Buyer shall, and Seller shall cause its Affiliates to, as applicable, prepare, as soon as is practical following the Execution Date, any necessary filings in connection with the transactions contemplated by this Agreement that may be required to be filed by the Parties or any Affiliate thereof with the Federal Communications Commission with respect to transfer of the Assigned FCC Licenses.  Any fees associated with the transfer of the Assigned FCC Licenses or payable to the Federal Communications Commission with respect to the transactions contemplated under this Agreement or the Transaction Documents shall be the sole responsibility of Buyer, and Buyer shall reimburse Seller for any such fees incurred by Seller and its Affiliates prior to Closing.  Seller and Buyer shall, and Seller shall cause its Affiliates to, as applicable, promptly furnish each other with copies of any notices, correspondence or other written communication from the FCC, shall promptly make any appropriate or necessary subsequent or supplemental filings and shall cooperate in the preparation of such filings as is reasonably necessary and appropriate. In addition, at or prior to, or as soon as practical after, the Closing, Buyer shall deliver evidence to Seller of its Federal Registry Number with respect to the Assigned FCC Licenses and its designation of an applicable contact person with respect to the Assigned FCC Licenses.  Promptly following Closing, Buyer and Seller shall, and Seller shall cause its Affiliates to, as applicable, execute and deliver the forms and documents required by the applicable Governmental Authority to transfer the Assigned FCC Licenses to Buyer.

11.10    Employee Matters.

(a)    On or after the Execution Date and at reasonable times approved by Seller, Buyer or its Affiliate may interview and/or make offers of employment (each an “Offer”) to those employees of Seller set forth on Schedule 11.10 (each a “Permitted Employee”) and conduct such lawful, standard employee screening and eligibility procedures with regard to the potential employment of any Permitted Employee as Buyer or any such Affiliate typically conducts with respect to candidates for employment in its ordinary course of business; provided, however, that Buyer shall not require any Permitted Employee to submit an application as a predicate for being considered for an Offer (though any such Offer may be conditioned upon Buyer’s standard pre-employment screenings, including background checks).  Buyer and its Affiliates may 

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conduct interviews and screening of the Permitted Employees from the Execution Date until 20 days before the Scheduled Closing Date (such date, which may be extended in the sole discretion of Seller, the “Offer Period End Date”); provided that such interviewing and screening shall not unreasonably interfere with the business of Seller or its Affiliates.  Seller may supplement Schedule 11.10 at any time within 10 days after the Execution Date in order to add or remove additional individuals to Schedule 11.10, as determined in Seller’s sole discretion.

(b)    Until the Offer Period End Date, Buyer may make Offers of employment to such Permitted Employees as Buyer determines in its sole discretion, which Offers (i) shall be conditioned upon the Closing occurring and be effective as of the Closing Date or, in the case of a Permitted Employee who will be performing services under the Transition Services Agreement (a "TSA Employee"), as of the date of the expiration or early termination under the Transition Services Agreement of the group(s) of services such Permitted Employee will perform (his or her applicable "TSA Service Termination Date") and (ii) may be on terms and conditions as Buyer may determine; provided that each Offer to a Permitted Employee must, unless otherwise agreed by Seller, not result in a reduction in the Permitted Employee’s base salary or base wages as compared to the base salary or base wages provided by Seller in writing to Buyer prior to the Execution Date, provided if the base salary or base wages for a Permitted Employee is not so provided to Buyer prior to the Execution Date such Permitted Employee’s base salary or base wages as offered by Buyer shall be as Buyer may determine.

(c)    Buyer shall, not later than the Offer Period End Date, deliver to Seller a final written list containing the name, base salary and location of the principal place of employment of each Permitted Employee to whom Buyer or any of its Affiliates has made an Offer. In addition, Buyer shall provide to Seller, not later than 20 days prior to the Scheduled Closing Date, the names of each Permitted Employee who has then accepted an Offer from Buyer as of such date or any of its Affiliates (each Permitted Employee who accepts such an offer being a “Continuing Employee”) and the names of the Permitted Employees who have then declined an Offer from Buyer or its Affiliates (and shall provide an updated list as of Closing if any additional Permitted Employees accept or decline such Offer). Each Continuing Employee shall, as of the Closing Date or, in the case of a TSA Employee, as of their applicable TSA Services Termination Date (if he or she is still employed by Seller or its Affiliate), be terminated by Seller or its Affiliate (and Seller shall and shall cause its Affiliates to release such Continuing Employee from all non-compete or similar restrictions that would restrict or be violated in any way by, such Continuing Employee’s activities as an employee of Buyer or its Affiliate) and become an employee of Buyer or its Affiliate.

(d)    As of the Closing Date, or in the case of a TSA Employee, as of their applicable TSA Services Termination Date, each Continuing Employee (and the covered dependents thereof, as applicable) shall cease participation as active participants in all Employee Benefit Plans maintained or sponsored by Seller and its Affiliates.  Buyer or its Affiliate, as applicable, shall be responsible for all compensation and benefits for or owing to Continuing Employees arising on or after their hiring by Buyer or such Affiliate (including on and after the Closing Date).  Seller shall be responsible and pay for any obligation arising out of the Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign Laws (the “WARN Act”) with respect to any employee of Seller or any of its Affiliates (including any Permitted Employees laid off on or prior to the Closing Date or, as applicable, their applicable TSA Services Termination Date); provided that Buyer or its Affiliate, as applicable, shall be responsible and pay for any obligation arising out of the WARN Act with respect to any Continuing Employees laid off on or after the commencement of their employment with Buyer or Affiliates. Nothing herein shall require Buyer to continue to employ any Continuing Employee for any specified period of time; provided, however, that, if Seller timely provides to Buyer a list of applicable employees terminated by Seller in connection with or within 90 days prior to the Closing and, as a direct result of Buyer’s action to terminate or lay off any Continuing Employee on or after 

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the Closing other than for cause, Seller or any of its Affiliates incur any Liability under the WARN Act, Buyer shall promptly reimburse Seller or its Affiliate, as applicable, for any such Liability.

(e)    Buyer hereby agrees not to, and to cause its Affiliates or anyone acting on its or any of its Affiliates’ behalf not to, for a period of two years after the Execution Date, directly or indirectly (other than as permitted by Section 11.10(a) and Section 11.10(b) with respect to Permitted Employees): solicit or contact with a view to the engagement or employment of, any employee of Seller or its Affiliates; provided, however, that it shall not be a violation of this Section 11.10(e) to engage in solicitations incidental to general advertising or other general solicitation in the ordinary course not specifically targeted at any employee or group of employees of Seller and its Affiliates or to employ any Person not solicited in violation hereof; and provided, further, however, that, except pursuant to an Offer extended to a Permitted Employee prior to the Closing in accordance with Section 11.10(a) and Section 11.10(b), for a period of six months following the Closing Date, if Buyer or any of its Affiliates hires or otherwise employs any Permitted Employee that was terminated or laid off by Seller or its Affiliates and to which Seller or an Affiliate of Seller made or provided a severance payment or severance benefits to such employee upon being terminated or laid off, Buyer shall promptly reimburse Seller or its applicable Affiliate an amount equal to 50% of the severance payment and cost of severance benefits made or provided to such Permitted Employee (together with 50% of the employer portion of any employment, payroll or similar Taxes paid by Seller or its Affiliates in connection therewith).

(f)    Notwithstanding anything herein to the contrary, no provision in this Agreement shall create any third-party beneficiary or other right in any Person (including any beneficiary or dependent thereof) for any reason in respect of continued employment or new employment with Seller or its Affiliates or Buyer or its Affiliates or in respect of any benefits or compensation that may be provided, directly or indirectly, under any plan or arrangement maintained by Seller or Buyer or their Affiliates. Nothing in this Section 11.10, express or implied, shall be deemed an amendment of any Employee Benefit Plan of Buyer or Seller or their Affiliates providing benefits to any Permitted Employee or any other employee of Seller or its Affiliates or any other Person.

11.11    Partnership Excluded Assets.  Prior to the Scheduled Closing Date, Seller shall cause the Partnership to convey (whether by assignment, spin-off, dividend or otherwise) all of its right, title and interest in and to the Excluded Assets to Seller or Seller’s designee (collectively, “Partnership Excluded Assets”).

11.12    Permitting and Drilling Activities.

(a)    Prior to Closing, upon the written request of Buyer, Upstream Seller shall make such filings as reasonably requested by Buyer to obtain, and shall take such other action as reasonably requested by Buyer or otherwise necessary to obtain and maintain, Permits with respect to operations for up to ten refractures and the drilling of up to ten new wells with respect to the Upstream Assets proposed to be performed by Buyer after the Closing.  Buyer shall prepare all necessary applications and filings and pay all filing fees with respect to the filing of such applications, and shall pay all out of pocket expenses incurred by Upstream Seller in performing its obligations under this Section 11.12(a). Upstream Seller shall not be required to post any bonds or incur any Liabilities (other than as provide or paid by Buyer) in performing its obligations under this Section 11.12(a).  

(b)    Prior to Closing, upon the request of Buyer Upstream Seller shall issue AFE’s to the applicable Persons regarding operations for up to ten refractures and the drilling of up to ten new wells proposed to be performed with respect to the Upstream Assets by Buyer following the Closing.  Buyer shall prepare such AFE’s and all necessary supplemental information, and the Parties shall consult with each other 

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with respect to the issuance of such AFE’s.  To the extent Upstream Seller receives any prepayments on account of AFEs issued pursuant to this Section 11.12(b), Upstream Seller shall deliver such proceeds to Buyer at Closing (or promptly after receipt by Upstream Seller thereof if received after Closing) and there shall be no adjustment to the Purchase Price on account of such prepayments or the delivery thereof to Buyer.

(c)    Whether or not Closing occurs, Buyer shall (i) promptly upon request by Seller, reimburse Seller and its Affiliates for all costs and expenses incurred by such Persons in connection with the cooperation contemplated by this Section 11.12 (including reasonable legal costs and expenses), and (ii) indemnify and hold harmless the Seller Indemnified Parties from and against any and all Liabilities suffered or incurred by such Persons arising from the cooperation provided pursuant to this Section 11.12 (other than to the extent such Liabilities arise from the willful misconduct or gross negligence of any Seller Indemnified Party).

11.13    Information Technology.  Prior to the Closing, Seller shall be entitled to erase any and all data, software and other information from any desktop, laptop, smart phone, tablet or other mobile computing device, network gear, data center gear and any other information technology equipment held by the Partnership, in each case, to the extent such data, software or other information contains any (a) proprietary information of Seller or (b) Excluded Records.

11.14    Conversion.  On or prior to the earlier of (a) December 31, 2018, and (b) five (5) days prior to Closing, Seller shall cause the Conversion to occur, and Buyer expressly consents to the same occurring.

11.15    Financing Cooperation.  Seller agrees use its commercially reasonable efforts to provide, and to cause the Partnership and their respective Representatives to provide, such assistance as is reasonably requested by Buyer in connection with any financing that may be arranged by Buyer to the extent necessary to fund any portion of the Adjusted Purchase Price (“Financings”), including (a) assisting with (and providing information for) the preparation of materials for bank information memoranda and similar documents in each case to the extent required in connection with the Financing, (b) all documentation and other information which any lender providing or arranging the Financing has reasonably determined is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act, (c) providing customary evidence of the repayment of existing Indebtedness of the Partnership required to be repaid pursuant to the terms of this Agreement and releasing any liens securing such indebtedness, in each case, to the extent applicable and to take effect at the Closing, (d) permitting the Financing Sources and other prospective lenders involved in the Financings to conduct reasonable due diligence with respect to the Partnership and the Assets (and provide all relevant information or documentation reasonably requested in connection therewith); provided that any such diligence conducted by the Financing Sources shall be conducted upon (and limited to) the same terms, and subject to the same restrictions and obligations, as Buyer’s due diligence rights and obligations contained herein, (e) facilitating the pledging of collateral required by the Financing effective as of and contingent upon the Closing, (f) assisting with the preparation of and executing and delivering any pledge and security documents and other definitive financing documents on terms reasonably satisfactory to Buyer to the extent necessary in connection with the Financing, or other requested certificates or documents as may be reasonably requested by Buyer, in each case effective as of and contingent upon the Closing, and (g) providing customary available title documents and information (including title opinions and drilling title opinions).  Notwithstanding anything to the contrary contained in this Section 11.15, (i) nothing in this Section 11.15 shall require any such cooperation to the extent that it would (A) require Seller or its Affiliates (including the Partnership) or any of their respective Representatives, as applicable, to waive or amend any terms of this Agreement or agree to pay any commitment or other fees or reimburse any expenses prior, or incur any Liability or give any indemnities or otherwise commit to take any similar action, in each case except, in the case of the Partnership, but only to the extent that the same is 

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(1) only put in place as of Closing, (2) expressly contingent upon the Closing Date occurring, and (3) does not relate to, or effective with respect to, any period of time prior to the Closing Date, (B) unreasonably interfere with the ongoing business or operations of Seller or its Affiliates (including the Partnership) or any of their respective Representatives, (C) require Seller or its Affiliates (including the Partnership) or any of their respective Representatives to provide any information that is not reasonably available to Seller, the Partnership or such Representative, (D) require Seller or its Affiliates (including the Partnership) or any of their respective Representatives to take any action that will conflict with or violate such Persons’ organizational documents, as applicable, or any Laws or result in a violation or breach of, or default under, any Contract which such Person, as applicable, is a party, result in any officer or director of any such Person incurring any personal liability with respect to any matters relating to the Financing or (E) require Seller or its Affiliates (other than the Partnership) or any of their respective Representatives or, except for agreements that (1) are only put in place as of Closing, (2) are expressly contingent upon the Closing Date occurring, and (3) do not relate to, or are effective with respect to, any period of time prior to the Closing Date, the Partnership, to enter into any agreement in connection with the Financing, and (ii) no Liability or obligation of the Partnership under any agreement entered into in connection with the Financing (other than with respect to customary authorization letters) shall be effective until the Closing Date.  Buyer shall, promptly upon request by Seller, reimburse Seller and its Affiliates (including the Partnership) and each of their respective Representatives for all reasonable and documented out-of-pocket costs incurred by such Persons in connection with the cooperation contemplated by this Section 11.15 (including reasonable legal costs and expenses); and shall indemnify and hold harmless Seller and its Affiliates (including the Partnership) and each of their respective Representatives from and against any and all Liabilities suffered or incurred by such Persons arising from the cooperation provided by such persons pursuant to this Section 11.15 (other than to the extent such Liabilities arise from the willful misconduct or gross negligence of Seller or its Affiliates (including the Partnership) or any of their respective Representatives as determined in a final, non-appealable judgment of a court of competent jurisdiction) and any information utilized in connection therewith; provided however, with respect to the Partnership, such reimbursement or indemnification shall only be required if this Agreement is terminated pursuant to Section 7.1 (other than pursuant to Section 7.1(b) in only those circumstances where Buyer is entitled to the remedies set forth in Section 7.2(c)). Notwithstanding anything to the contrary set forth in this Section 11.15, (x) all of the information provided by Seller and its Affiliates (including the Partnership) and their respective Representatives pursuant to this Section 11.15 is given without any representation or warranty, express or implied, and (y) in no event will Seller or its Affiliates (including the Partnership) or any of their respective Representatives have any Liability of any kind or nature to the Buyer Indemnified Parties, Buyer’s Financing Sources or any other Person arising or resulting from the cooperation provided in this Section 11.15 or any use of any information provided by Seller or its Affiliates (including the Partnership) or any of their respective Representatives pursuant to this Section 11.15.

11.16    Firm Transportation Contracts.

(a)    Promptly following the Execution Date, Seller shall prepare and file (and Buyer shall cooperate with Seller in connection therewith) with the Federal Energy Regulatory Commission (“FERC”) a joint petition for temporary waivers of all applicable capacity release regulations and related policies and requirements under, and of the related tariff requirements of the interstate pipelines providing transportation service pursuant to, the Contracts set forth on Schedule 11.16 (such Contracts, or any renewals, extensions or replacements thereof, collectively the “Firm Transportation Agreements”), in each case, as may be reasonably necessary to facilitate transfer from Seller to Buyer or its designated Affiliate of the Firm Transportation Agreements on rates, terms and conditions identical to those currently in effect for Seller prior to the contemplated transfer.

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(b)    Upon issuance of an order by FERC granting such waivers, at Closing, Seller shall assign or permanently release to Buyer or its designated Affiliate the interests in the Firm Transportation Agreements.

(c)    Notwithstanding anything in Section 13.4(a) to the contrary, (i) the Parties shall work cooperatively to obtain, on or prior to the Closing, the Consent to the (A) assignment to Buyer of, and (B) the permanent release of Seller from, the Firm Transportation Agreements, in each case, from or by the counterparties to each Firm Transportation Agreement, and (ii) Buyer shall satisfy all creditworthiness requirements of each counterparty to the Firm Transportation Agreements as set forth in such Firm Transportation Agreements for such purposes, such that Seller shall be relieved from any further obligation or liability pursuant to the Firm Transportation Agreements from and after Closing.

(d)    If the waivers contemplated above in this Section 11.16 have not been received from FERC on or prior to the Scheduled Closing Date, the Parties agree to use their commercially reasonable efforts to take such actions as either Party deems in good faith to be necessary or desirable to attempt to expedite FERC’s review of the joint petition described in Section 11.16(a) and the granting by FERC of the waivers sought thereby.

(e)    If the waivers contemplated above in this Section 11.16 have not been received from FERC on or prior to January 25, 2019, the Parties agree to use their commercially reasonable efforts to negotiate in good faith to agree on such alternative arrangements with respect to the Firm Transportation Agreements as may be reasonably necessary to give effect to the transactions contemplated by this Agreement and preserve for each Party the benefit of the transactions contemplated by this Agreement with respect to the Firm Transportation Agreements (notwithstanding the fact that such waivers have not been obtained), and should such alternative arrangements be mutually agreed by the Parties prior to March 1, 2019, each of Buyer and Seller shall thereafter waive their respective rights to the conditions to Closing set forth in Section 4.8 and Section 5.8, as applicable.

(f)    If the (i) waivers contemplated above in this Section 11.16 have not been received from FERC, and (ii) the Parties have not been able to come to mutual agreement on such alternative arrangements described in Section 11.16(e), in each case, on or prior to March 1, 2019, then (A) without any further action by the Parties, the conditions to Closing set forth in Section 4.8 and Section 5.8 will be deemed waived by the respective Parties, and (B) from and after Closing, Buyer and its successors and assigns shall assume, be responsible for, shall pay on a current basis and hereby defend, indemnify, hold harmless and forever release the Seller Indemnified Parties from and against any and all Liabilities arising from, based upon, related to or associated with the failure to receive the waivers contemplated above in this Section 11.16, including any such Liabilities resulting from Seller’s retention of the Firm Transportation Agreements or the transfer of such Firm Transportation Agreements to Buyer, as applicable. 

11.17    Reaffirmation of Mutual Releases.  Seller shall use its commercially reasonable efforts to cause (a) each Mutual Release executed and delivered by an Officer or Manager prior to Closing to be reaffirmed at Closing by each such Officer and Manager and (b) to the extent there is any Officer or Manager after the Execution Date who has not executed and delivered to Buyer as of the Closing a Mutual Release, each such Officer or Manager to execute and deliver to Buyer at Closing a Mutual Release.

11.18    Title Insurance.  In the event that Buyer elects, in its sole discretion, to purchase one or more title insurance policies insuring title to any of the Assets, issued by a title company acceptable to Buyer (the “Title Company”), Buyer shall pay directly to the Title Company the cost of all title insurance policy premiums and related rundown, photocopy and other Title Company costs and charges, and all Uniform Commercial 

51

Code search fees and filing fees. Any costs and expenses associated with such efforts shall be Buyer’s sole responsibility.  In addition, Buyer may, but shall not be obligated to, cause to be prepared by one or more surveyors or engineers acceptable to Buyer, current or updated ALTA/ACSM or state law-equivalent surveys with respect to such Asset (“Surveys”).  Any costs and expenses associated with any such Surveys shall be Buyer’s sole responsibility.  Subject to Section 12.1, and the following sentence, Seller shall reasonably cooperate with Buyer in connection with the procurement of such Surveys, including providing access to such Asset, in accordance with Section 12.1, in order to permit Buyer’s surveyors and engineers to perform the work necessary to produce such Surveys.  Notwithstanding the foregoing, Seller and its Affiliates shall not be required to execute or deliver any affidavits (relating to tile, non-imputation or other matters), any evidence of authority, or any ancillary or other closing documents.

11.19    Control of the Scheduled Concursus Matters; Cooperation Regarding Conveyed Rights.

(a)    Prior to Closing Seller shall (i) through Seller’s designated counsel and at Seller’s sole cost and expense, control the defense of the Scheduled Concursus Matters, provided that Seller shall not settle, compromise, consent to the entry of any Order with respect thereto or otherwise resolve any  Scheduled Concursus Matters or agree to any amendment or modification to the ASA JOAs without the prior written consent of Buyer, such consent not to be unreasonably withheld, conditioned or delayed, and (ii) cooperate with Buyer in preparing to assume the defense, prosecution and/or participation as a party in the Scheduled Concursus Matters, including providing to Buyer copies of all pleadings in the Scheduled Concursus Matters and such other information related to the Conveyed Rights as reasonably requested by Buyer and in Seller’s possession and instructing Seller’s counsel in the Scheduled Concursus Matters to cooperate with Buyer in the defense of the Scheduled Concursus Matters from and after Closing.

(b)    If any of the Scheduled Concursus Matters are not resolved by Final Resolution as of Closing, from and after Closing Buyer shall, through Buyer’s designated counsel and at Buyer’s sole cost and expense, control the defense, prosecution and/or resolution of  such Scheduled Concursus Matters (as to the Assets subject to the Scheduled Concursus Matters).  Buyer shall have the right to settle, compromise or otherwise resolve such Scheduled Concursus Matters by Final Resolution at Buyer’s sole discretion.

(c)    For a period of two (2) years from and after Closing, Seller shall extend reasonable cooperation to Buyer in connection with the defense, settlement and resolution of the Scheduled Concursus Matters, including but not limited to (A) executing such pleadings as requested by Buyer to substitute Buyer for Seller as a party to the Scheduled Concursus Matters, or consenting to Buyer’s intervention as an additional party thereto, as appropriate; (B) permitting Seller’s existing counsel of record to represent Buyer as a substituted or additional party if permissible under the ethics rules applicable to such counsel and the court; (C) making relevant documents and records available to Buyer without need for subpoena or compulsory process; and (D) making witnesses under Seller’s control available for consultation, interviews, and depositions, and for testimony or assistance at conferences, proceedings, hearings, trials or appeals as may be reasonably requested by Buyer. Buyer shall reimburse Seller for all documented out of pocket costs incurred by Seller and Persons under Seller’s control in complying with Seller’s obligations in the preceding sentence.

(d)    For a period of two (2) years from and after Closing, Seller shall extend reasonable cooperation to Buyer in connection with pursuing or prosecuting any claim with respect the Conveyed Rights, including but not limited to, upon Buyer’s request, making relevant documents and records available to Buyer without need for subpoena or compulsory process; and making Persons under Seller’s control available for consultation, interviews, and depositions, and for testimony or assistance at conferences, proceedings, hearings, trials or appeals as may be reasonably requested by Buyer.  Buyer shall reimburse Seller for all 

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documented out of pocket costs incurred by Seller and Persons under Seller’s control in complying with Seller’s obligations in the preceding sentence.    

11.20    Existing Hedge Contracts.

(a)    In addition to the foregoing, at Closing, Seller or its applicable Affiliate and Buyer shall each execute and deliver to the counterparties to the Hedge Contracts listed on Schedule 11.20 (the “Existing Hedge Contracts”) novation instruments substantially in the forms attached to this Agreement as Exhibit K (the “EHC Novation Instruments”). Buyer shall execute an ISDA agreement with each applicable counterparty of the Existing Hedge Contracts prior to such novation (to the extent such agreement is needed to effect the applicable novation) and pay to Seller any fees paid by Seller or its applicable Affiliate to a counterparty that were necessary to effect any novation contemplated by this Section 11.20(a).  For the avoidance of doubt, such fees shall not include any amount payable to any counterparty relating to the mark-to-market value of the Existing Hedge Contracts. Seller shall consult with Buyer regarding any such fee prior to agreeing to pay such fee. If Seller or its applicable Affiliate has executed and delivered any EHC Novation Instrument in accordance with this Section 11.20(a) and the proposed counterparty thereto or Buyer fails to execute and deliver such EHC Novation Instrument, Seller shall not be in breach of this Section 11.20(a) for such counterparty’s or Buyer’s failure to execute and deliver such EHC Novation Instrument.

(b)    At Closing, the Purchase Price shall be increased or decreased, as applicable, by the amount the Existing Hedge Contracts, on an aggregate net basis, have a positive value or a negative value, respectively, to Seller or its applicable Affiliate, in each case as of the Execution Date (such amount, the “EHC Aggregate Value”). The EHC Aggregate Value attributable to each Existing Hedge Contract shall be determined based on the mid-market value with respect to such Existing Hedge Contract provided by the applicable counterparty to such Existing Hedge Contract on the Execution Date, and Seller agrees to request such value attributable to such Existing Hedge Contract from each such counterparty prior to, but as of, the Execution Date; provided that if a counterparty does not provide any such amount, or if Seller or Buyer both believe that any such amount with respect to an Existing Hedge Contract so provided does not represent a commercially reasonable estimate of the value of such Existing Hedge Contract as of the Execution Date, then Buyer and Seller shall, prior to the delivery of the Final Settlement Statement, cooperate to obtain three mid-market quotations of the value of such Existing Hedge Contract as of the Closing Date from leading dealers in the relevant hedge product, and the EHC Aggregate Value with respect to such Existing Hedge Contract shall be determined based upon the average of the bids received.  If no such bids are received, Buyer and Seller shall cooperate in good faith to determine the value of the applicable Existing Hedge Contract as of the Execution Date prior to the delivery of the Final Settlement Statement.

ARTICLE XII
ACCESS; DISCLAIMERS

12.1    Access.

(a)    From and after the Execution Date and up to and including the Defect Claims Date (or earlier termination of this Agreement), but subject to the other provisions of this Section 12.1 and obtaining any required consents of Third Parties, including Third Party operators of the Assets (which consents Seller shall use commercially reasonable efforts to obtain but shall not be required to incur any Liabilities with respect thereto), Seller shall, and shall cause the Partnership to, afford to Buyer and its Representatives (“Buyer’s Representatives”) reasonable access, during normal business hours, to (i) the Upstream Assets and Midstream Assets and (ii) all Records in Seller’s or any of its Affiliates’ (including the Partnership’s) 

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possession.  All investigations, due diligence and Survey activities conducted by Buyer or any Buyer’s Representative shall be conducted at Buyer’s sole cost, risk and expense and any conclusions made from any examination done by Buyer or any Buyer’s Representative shall result from Buyer’s own independent review and judgment.

(b)    Buyer shall be entitled to conduct a Phase I Environmental Site Assessment with respect to the Assets, subject to the other provisions of this Section 12.1 and obtaining any required consents of Third Parties, including Third Party operators of the Assets (which consents Seller shall use commercially reasonable efforts to obtain but shall not be required to incur any Liabilities with respect thereto), but such inspection rights shall be limited to conducting a Phase I Environmental Site Assessment of the Upstream Assets and Midstream Assets and Buyer and the Buyer’s Representatives shall not conduct any Phase II Environmental Site Assessment or operate any equipment or conduct any testing, boring, sampling, drilling or other invasive investigation activities (in each case) on or with respect to any of the Assets without the prior written consent of Seller, which consent may be withheld in Seller’s sole discretion.  Seller may approve Buyer’s request to conduct said Phase II Environmental Site Assessment activities, in whole or in part, and Buyer shall not have the right to conduct any activities set forth in such request until such time that Seller has approved such activities in writing.  Seller or its designee shall have the right to accompany Buyer and Buyer’s Representatives whenever they are on site on the Assets (including in connection with any Survey related activities) and also to collect split test samples if any are permitted to be collected.  Notwithstanding anything herein to the contrary (including the provisions of this Section 12.1(b)), Buyer shall not have access to, and shall not be permitted to conduct, any environmental due diligence (including any Phase I Environmental Site Assessment or Phase II Environmental Site Assessment) with respect to any Assets where Seller does not have the authority to grant access for such due diligence (provided, however, Seller shall use its commercially reasonable efforts to obtain permission from any Third Party to allow Buyer and Buyer’s Representatives such access but shall not be required to incur any Liabilities with respect thereto).  If (i) any Phase I Environmental Site Assessment reflects a reasonable basis for Buyer to conduct Phase II Environmental Site Assessment activities and (ii) Seller rejects or otherwise declines or fails to approve Buyer’s request to conduct Phase II Environmental Site Assessment activities proposed by Buyer with respect to any Upstream Asset where Seller has authority to grant access for such due diligence, then Buyer shall have the right, exercisable by written notice to Seller on or before the Defect Claims Date, to exclude from the transactions contemplated by this Agreement such Upstream Asset, and any such excluded Upstream Asset shall be deemed Excluded Assets hereunder and the Purchase Price shall be adjusted downward by the aggregate of the Allocated Value thereof pursuant to Section 3.3(b)(iv).

(c)    Buyer shall coordinate its environmental property assessments, physical inspections of the Assets and Survey related activities with Seller and all Third Party operators to minimize any inconvenience to or interruption of the conduct of business by Seller or such Third Party operators.  Buyer shall abide by Seller’s, and any Third Party operator’s, safety rules, regulations and operating policies while conducting its due diligence evaluation of, and Survey activities relating to, the Assets, including any environmental or other inspection or assessment of the Assets, and to the extent required by any Third Party operator, execute and deliver any required bonding or access agreement of such Third Party operator or provide evidence that Buyer maintains insurance as may be required by such Third Party operator.  Buyer hereby releases, defends, indemnifies and holds harmless each of the operators of the Assets and the Seller Indemnified Parties from and against any and all Liabilities (i) for any personal injury, death, loss or damage arising out of such entry that may occur to Buyer or any Buyer’s Representatives arising out of, resulting from or relating to any field visit, environmental property assessment, Survey activity, or other due diligence activity conducted by Buyer or any Buyer’s Representative with respect to the Assets or (ii) reasonably arising out of or resulting from any field visit, environmental property assessment, Survey activity, or other due diligence activity conducted by Buyer or any Buyer’s Representative with respect to the Assets, even if such 

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Liabilities arise out of or result from, SOLELY OR IN PART, the sole, active, passive, concurrent or comparative negligence, strict liability or other fault or violation of Law of or by a member of THE Seller Indemnified Parties, excepting only IN THE CASE OF THIS SECTION 12.1(c) Liabilities actually resulting on the account of the gross negligence or willful misconduct of a member of THE Seller Indemnified Parties; provided, however, that Buyer shall have no indemnification obligations to the Seller Indemnified Parties pursuant to this Section 12.1(c) for any losses that arise from the identification of any preexisting Environmental Conditions or noncompliance with Environmental Laws that are discovered by Buyer or any Buyer’s Representative during such due diligence investigation.

(d)    Buyer agrees to promptly provide Seller, no later than the Defect Claims Date, copies of all (i) Surveys prepared by Buyer and/or any of Buyer’s Representatives if related to any Environmental Defect Property, and (ii) final environmental reports and environmental test results prepared by Buyer and/or any of Buyer’s Representatives which contain environmental data collected or generated from Buyer’s environmental due diligence with respect to the Assets and/or Midstream Business (including any drafts thereof).  None of Buyer, any of Buyer’s Representatives or Seller shall be deemed by Seller’s receipt of said documents, or otherwise, to have made any representation or warranty, expressed, implied or statutory, as to the condition of the Assets or the Midstream Business or to the accuracy of said documents or the information contained therein.

(e)    Upon completion of Buyer’s due diligence and Survey activities, Buyer shall at its sole cost and expense and without any cost or expense to Seller or its Affiliates (including the Partnership), (i) repair all damage done to the Assets (including the real property and other assets associated therewith) in connection with Buyer’s or Buyer’s Representatives’ due diligence and/or Survey activities, (ii) restore the Assets (including the real property and other assets associated therewith) to at least the approximate same or better condition than they were prior to commencement of Buyer’s due diligence and/or Survey activities and (iii) remove all equipment, tools or other property brought onto the Assets in connection with Buyer’s or Buyer’s Representatives’ due diligence and/or Survey activities.  Any disturbance to the Assets (including the leasehold associated therewith) resulting from Buyer’s or Buyer’s Representatives’ due diligence and/or Survey activities will be promptly corrected by Buyer.

(f)    During all periods a Buyer and/or any Buyer’s Representatives are on the Assets or any lands underlying such Assets, Buyer shall maintain, at its sole expense, policies of insurance of types and in amounts sufficient to cover the obligations and Liabilities of such Buyer under Section 12.1(c) and Section 12.1(e).  Upon request by Seller, Buyer shall provide evidence of such insurance to Seller prior to entering the Assets or any lands underlying the Assets.

12.2    Confidentiality.  Buyer acknowledges that, pursuant to its right of access to the Records and the Assets, Buyer will become privy to confidential and other information of Seller and the Partnership and that such confidential information shall be held confidential by Buyer and Buyer’s Representatives in accordance with the terms of the Confidentiality Agreement.  If the Closing should occur, the foregoing confidentiality restriction on Buyer, including the Confidentiality Agreement, shall terminate (except as to (a) such portion of the Upstream Assets that are not conveyed to Buyer pursuant to the provisions of this Agreement, (b) the Excluded Assets and (c) information related to assets other than the Assets).

12.3    Disclaimers.

(a)    EXCEPT AS AND TO THE LIMITED EXTENT SET FORTH IN ARTICLE IX AND THE CERTIFICATES TO BE DELIVERED BY SELLER AT CLOSING PURSUANT TO SECTION 4.6 AND EXCEPT FOR THE SPECIAL WARRANTY WITH RESPECT TO THE 

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UPSTREAM ASSETS (I) SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS, STATUTORY OR IMPLIED, AND (II) SELLER EXPRESSLY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT OR INFORMATION MADE OR COMMUNICATED (ORALLY OR IN WRITING) TO BUYER OR ANY OF ITS AFFILIATES, EMPLOYEES, AGENTS, CONSULTANTS OR REPRESENTATIVES (INCLUDING, ANY OPINION, INFORMATION, PROJECTION OR ADVICE THAT MAY HAVE BEEN PROVIDED TO BUYER BY ANY OFFICER, DIRECTOR, EMPLOYEE, AGENT, CONSULTANT, REPRESENTATIVE OR ADVISOR OF SELLER OR ANY OF ITS AFFILIATES).

(b)    EXCEPT AS AND TO THE LIMITED EXTENT SET FORTH IN ARTICLE IX AND THE CERTIFICATES TO BE DELIVERED BY SELLER AT CLOSING PURSUANT TO SECTION 4.6 AND EXCEPT FOR THE SPECIAL WARRANTY WITH RESPECT TO THE UPSTREAM ASSETS, SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, AS TO (I) TITLE TO ANY OF THE MIDSTREAM INTERESTS, UPSTREAM ASSETS OR MIDSTREAM ASSETS, (II) THE CONTENTS, CHARACTER OR NATURE OF ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT OR ANY ENGINEERING, GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING TO THE ASSETS, (III) THE QUANTITY, QUALITY OR RECOVERABILITY OF HYDROCARBONS IN OR FROM THE ASSETS, (IV) ANY ESTIMATES OF THE VALUE OF THE ASSETS OR THE MIDSTREAM INTERESTS OR FUTURE REVENUES GENERATED BY THE ASSETS, (V) THE PRODUCTION OF HYDROCARBONS FROM THE ASSETS, (VI) THE MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS, (VII) THE CONTENT, CHARACTER OR NATURE OF ANY INFORMATION MEMORANDUM, REPORTS, BROCHURES, CHARTS OR STATEMENTS PREPARED BY SELLER OR THIRD PARTIES WITH RESPECT TO THE ASSETS OR THE MIDSTREAM BUSINESS, (VIII) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE TO BUYER OR ITS AFFILIATES OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO AND (IX) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT.  EXCEPT AS AND TO THE LIMITED EXTENT SET FORTH IN ARTICLE IX AND THE CERTIFICATES TO BE DELIVERED BY SELLER AT CLOSING PURSUANT TO SECTION 4.6 AND EXCEPT FOR THE SPECIAL WARRANTY WITH RESPECT TO THE UPSTREAM ASSETS, SELLER FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, OF MERCHANTABILITY, FREEDOM FROM LATENT VICES OR DEFECTS, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY OF THE ASSETS OR THE MIDSTREAM BUSINESS, RIGHTS OF A PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR RETURN OF THE PURCHASE PRICE, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES THAT, WITHOUT LIMITING BUYER’S RIGHTS UNDER THIS AGREEMENT AND THE SPECIAL WARRANTY, BUYER SHALL BE DEEMED TO BE OBTAINING THE UPSTREAM ASSETS AND, INDIRECTLY THROUGH THE ACQUISITION OF THE MIDSTREAM INTERESTS, THE MIDSTREAM ASSETS, IN EACH CASE, IN THEIR PRESENT STATUS, CONDITION AND STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS OR DEFECTS (KNOWN OR UNKNOWN, LATENT, DISCOVERABLE OR UNDISCOVERABLE), AND THAT BUYER HAS MADE OR CAUSED TO BE MADE (OR WILL MAKE OR CAUSE TO BE MADE) SUCH INSPECTIONS OF THE ASSETS AND MIDSTREAM BUSINESS AS BUYER DEEMS APPROPRIATE.

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(c)    EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY REPRESENTED OTHERWISE IN SECTION 9.14 AND THE CERTIFICATES TO BE DELIVERED BY SELLER AT CLOSING PURSUANT TO SECTION 4.6 INSOFAR AS THEY ARE RELATED TO SUCH REPRESENTATION AND WARRANTY, SELLER HAS NOT AND WILL NOT MAKE ANY REPRESENTATION OR WARRANTY REGARDING ANY MATTER OR CIRCUMSTANCE RELATING TO ENVIRONMENTAL LAWS, THE RELEASE OF HAZARDOUS SUBSTANCES INTO THE ENVIRONMENT OR THE PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT, OR ANY OTHER ENVIRONMENTAL CONDITION OF THE ASSETS, AND NOTHING IN THIS AGREEMENT OR OTHERWISE SHALL BE CONSTRUED AS SUCH A REPRESENTATION OR WARRANTY, AND SUBJECT TO BUYER’S LIMITED RIGHTS AS EXPRESSLY SPECIFIED IN THIS AGREEMENT FOR A BREACH OF SELLER’S REPRESENTATIONS SET FORTH IN SECTION 9.14 OR THE CERTIFICATES TO BE DELIVERED BY SELLER AT CLOSING PURSUANT TO SECTION 4.6 INSOFAR AS THEY ARE RELATED TO SUCH REPRESENTATION AND WARRANTY, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES THAT, WITHOUT LIMITING BUYER’S RIGHTS UNDER THIS AGREEMENT AND THE SPECIAL WARRANTY, BUYER SHALL BE DEEMED TO BE OBTAINING THE UPSTREAM ASSETS AND, INDIRECTLY THROUGH THE ACQUISITION OF THE MIDSTREAM INTERESTS, THE MIDSTREAM ASSETS, IN EACH CASE, “AS IS” AND “WHERE IS” WITH ALL FAULTS FOR PURPOSES OF THEIR ENVIRONMENTAL CONDITION AND THAT BUYER HAS MADE OR CAUSED TO BE MADE (OR WILL MAKE OR CAUSE TO BE MADE) SUCH ENVIRONMENTAL INSPECTIONS OF THE ASSETS AND MIDSTREAM BUSINESS AS BUYER DEEMS APPROPRIATE.

(d)    Seller and Buyer agree that, to the extent required by applicable law to be effective, the disclaimers of certain representations and warranties contained in this Section 12.3 are “conspicuous” disclaimers for the purpose of any applicable law.

ARTICLE XIII
TITLE MATTERS; CASUALTY; TRANSFER RESTRICTIONS

13.1    Seller’s Title.

(a)    General Disclaimer of Title Warranties and Representations.  Without limiting (i) Buyer’s remedies for Title Defects set forth in this Article XIII, (ii) Buyer’s rights under the Special Warranty, (iii) Buyer’s remedies for breaches of the representations and warranties of Seller set forth in Section 9.20 and (iv) Buyer’s remedies for breaches of the covenants of Seller set forth in Section 11.1(b)(ii), Seller makes no warranty or representation, express, implied, statutory or otherwise, with respect to title to any of the Assets and, Buyer acknowledges and agrees that Buyer has not relied upon any such representation or warranty and that Buyer’s sole and exclusive remedy for (A) any defect of title, including any Title Defect, with respect to any of the Upstream Assets (1) before Closing, shall be as set forth in Section 13.2 and (2) after Closing, shall be pursuant to the Special Warranty, subject to the provisions of Section 13.1(c), and Section 8.2(b) (as related to the covenants of Seller set forth in Section 11.1(b)(ii)) and Section 8.2(d) (as related to the Retained Litigation) and (B) any failure by Seller to obtain any Consents or waivers of Preferential Purchase Rights as contemplated by Section 13.4 shall be as set forth in Section 13.4.

(b)    Special Warranty of Title.  The Upstream Assignment and the Deed delivered at Closing will contain a special warranty of Defensible Title to the Wells and Well Locations by Upstream Seller, subject, however, to the provisions of Section 13.1(c) (the “Special Warranty”).

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(c)    Recovery on Special Warranties.  Buyer shall furnish Upstream Seller a notice meeting the requirements of Section 13.2(a) setting forth any matters which Buyer intends to assert as a breach of the Special Warranty contained in the Upstream Assignment.  Upstream Seller shall have a reasonable opportunity, but not the obligation, to cure any breach of the Special Warranty asserted by Buyer.  Buyer agrees to reasonably cooperate with any attempt by Upstream Seller to cure same.  For purposes of the Special Warranty contained in the Upstream Assignment, the value of the Wells and Well Locations set forth in Schedule 3.7B and Schedule 3.7C, as applicable, shall be deemed to be the Allocated Value thereof, as adjusted pursuant to this Agreement.  Recovery on the Special Warranty shall be limited to an amount (without any interest accruing thereon) equal to the reduction in the Purchase Price to which Buyer would have been entitled had Buyer asserted the defect giving rise to such breach of the Special Warranty as a Title Defect prior to the Defect Claims Date pursuant to Section 13.2, excluding and without regard to the application of the Individual Title Defect Threshold or the Defect Deductible and Buyer hereby expressly waives any and all other recovery under the Special Warranty with respect thereto.  Buyer is not entitled to protection under Upstream Seller’s Special Warranty, as described above and contained in the Assignment, against (i) any matter reported by Buyer under Section 13.2(a), (ii) any matter reported to Upstream Seller after the three-year anniversary of the Closing Date, and/or (iii) any matter that would not otherwise be a Title Defect under this Agreement. Seller shall be entitled to offset any amount owed by Seller for breach of the Special Warranty with respect to any Upstream Asset by the amount (without duplication of any amounts previously applied as an offset against any Title Defect Amount or any claim under the Special Warranty) of any Title Benefits with respect to such Upstream Asset as to which Seller give Buyer notice after the Defect Claims Date; provided that, Buyer shall be entitled to object to any such Title Benefit and/or the Title Benefit Amount of any such Title Benefit and if the Parties cannot agree on the validity or amount of any such Title Benefit, such matters shall be resolved in accordance with Section 13.2(j), mutatis mutandis.

13.2    Notice of Title Defects; Defect Adjustments.

(a)    Title Defect Notices.  Buyer must deliver to Upstream Seller, on or before 5:00 p.m. (Central Time) on December 31, 2018 (the “Defect Claims Date”), claim notices meeting the requirements of this Section 13.2(a) (collectively the “Title Defect Notices” and individually a “Title Defect Notice”) setting forth any matters which, in Buyer’s reasonable opinion, constitute Title Defects and which Buyer intends to assert as a Title Defect pursuant to this Section 13.2.  For all purposes of this Agreement and notwithstanding anything herein to the contrary, but without limiting (x) Buyer’s rights under the Special Warranty (subject to Section 13.1(c)) and (y) Buyer’s remedies for breaches of the covenants of Seller set forth in Section 11.1(b)(ii), Buyer shall be deemed to have waived, and Seller shall have no liability for, any Title Defect that Buyer fails to assert as a Title Defect by a Title Defect Notice meeting the requirements of this Section 13.2(a) that is received by Upstream Seller on or before the Defect Claims Date.  To be effective, each Title Defect Notice shall be in writing and shall include (i) a reasonably identifiable description of the alleged Title Defect and the Well or Well Location (including a reasonable description of such Well or Well Location, the Leases(s) contributing to such Well or Well Location, and the affected Subject Formation(s) with respect to such Well or Well Location), or portions thereof, affected by such Title Defect (each a “Title Defect Property”), (ii) the Allocated Value of each Title Defect Property, (iii) the amount by which Buyer reasonably believes the Allocated Value of each Title Defect Property is reduced by such Title Defect and Buyer’s computations with respect thereto and (iv) supporting documents reasonably available to Buyer and reasonably necessary for Upstream Seller to verify the existence of such Title Defect and Buyer’s computations with respect thereto.  To give Upstream Seller an opportunity to commence reviewing and curing Title Defects, Buyer agrees to use reasonable efforts to give Upstream Seller, on or before the end of each calendar week prior to the Defect Claims Date, written notice of all Title Defects discovered by Buyer during the preceding calendar week, which notice may be preliminary in nature and supplemented prior to 

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the Defect Claims Date; provided that, the failure to provide any such notices of a Title Defect shall not prejudice Buyer’s right to assert such Title Defect hereunder on or before the Defect Claims Date.

(b)    Title Benefit Notices.  Upstream Seller shall have the right, but not the obligation, to deliver to Buyer on or before the Defect Claims Date with respect to each Title Benefit a notice (a “Title Benefit Notice”) including (i) a description of the Title Benefit and the Wells (including the legal description of such Well or Well Location, the Leases(s) contributing to such Well or Well Location, and the affected Subject Formation(s) with respect to such Well or Well Location), or portions thereof, affected by such Title Benefit (each a “Title Benefit Property”), (ii) the amount by which Upstream Seller reasonably believes the Allocated Value of such Assets is increased by the Title Benefit and Upstream Seller’s computations with respect thereto and (iii) supporting documents reasonably necessary for Buyer to verify the existence of such Title Benefit and Seller’s computations with respect thereto. Notwithstanding anything in this Agreement, Seller may not assert any Title Benefit with respect to any Well or Well Location that is subject to any Scheduled Concursus Matter.

(c)    Upstream Seller’s Right to Cure.  Upstream Seller shall have the right, but not the obligation, to attempt, at its sole cost, to cure, at any time prior to 120 days after Closing (the “Cure Period”), any Title Defects of which Upstream Seller has been advised by Buyer.  During the period of time from Closing to the expiration of the Cure Period, Buyer agrees to afford Upstream Seller and its officers, employees and other authorized Representatives reasonable access, during normal business hours, to the Upstream Assets and all Upstream Records in Buyer’s or any of its Affiliates’ possession or control, together with a right to copy such Upstream Records at Upstream Seller’s sole cost, in order to facilitate Upstream Seller’s attempt to cure any such Title Defects.  The Purchase Price will be reduced at Closing as provided in Section 13.2(j) with respect to any Title Defect for which Upstream Seller has provided notice to Buyer prior to or on the Closing Date that Upstream Seller intends to attempt to cure during the Cure Period and that is not cured to Buyer’s satisfaction as of Closing and, subject to Section 13.2(d), the applicable Title Defect Property shall be conveyed to Buyer at Closing.  An election by Upstream Seller to attempt to cure a Title Defect shall be without prejudice to its rights under Section 13.2(j) and shall not constitute an admission against interest or a waiver of Upstream Seller’s right to dispute the existence, nature or value of, or cost to cure, the alleged Title Defect.

(d)    Remedies for Title Defects.  Subject to (x) Upstream Seller’s continuing right to dispute the existence of a Title Defect and/or the Title Defect Amount asserted with respect thereto, (y) Upstream Seller’s cure rights pursuant to Section 13.2(c), and (z) the rights of the Parties pursuant to Section 7.1(d), in the event that any Title Defect properly asserted by Buyer in accordance with Section 13.2(a) is not waived in writing by Buyer or cured on or before the Cure Period, then, subject to the Individual Title Defect Threshold and the Defect Deductible, then the Parties shall mutually elect to:

(i)    reduce the Purchase Price by the Title Defect Amount determined pursuant to Section 13.2(g) or Section 13.2(j);

(ii)    have Upstream Seller indemnify Buyer against all Liability resulting from such Title Defect with respect to the Title Defect Property (up to the Allocated Value of the Title Defect Property) pursuant to an indemnity agreement in form and substance reasonably satisfactory to the Parties (each, a “Title Indemnity Agreement”); or

(iii)    exclude the entirety of the Title Defect Property that is subject to such Title Defect, together with all associated Upstream Assets to the extent required to produce Hydrocarbons from such Title Defect Property, from the Upstream Assets in which event the Purchase Price shall be reduced by 

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an amount equal to the Allocated Value of such Title Defect Property and associated Upstream Assets and such Title Defect Property and the associated Upstream Assets shall be treated as Excluded Assets under this Agreement.

In the event that the Parties do not agree in writing by the Closing on an election of alternative (i), (ii) or (iii) above with respect to any Title Defect, the Parties shall be deemed to have elected alternative (i) with respect to such Title Defect, subject to Section 13.2(j); provided that if the Title Defect Amount associated with any Title Defect Property as asserted by Buyer (after giving effect to any reduction thereof as agreed to by Buyer or determined by the Title Arbitrator, if applicable, due to efforts by Seller prior to Closing to cure such Title Defect) equals or exceeds 100% of the Allocated Value of such Title Defect Property, then Upstream Seller may elect alternative (iii) with respect to such Title Defect Property.

(e)    Remedies for Title Benefits.  With respect to each Title Benefit Property reported under Section 13.2(b), the aggregate Title Defect Amounts attributable to all Title Defects properly raised pursuant to Section 13.2(a) and uncured shall be decreased by an amount (the “Title Benefit Amount”) equal to the increase in the Allocated Value for such Title Benefit Property caused by such Title Benefit, as determined pursuant to Section 13.2(h) or Section 13.2(j), and Seller shall not be entitled to any remedy with respect to any Title Benefit Amounts in excess of the aggregate Title Defect Amounts raised hereunder.

(f)    Exclusive Remedy.  Except for Buyer’s (i) rights under the Special Warranty, subject to the provisions of Section 13.1(c), (ii) rights to terminate this Agreement pursuant to Section 7.1(d), (iii) rights under Section 8.2(a) (as related to the representations and warranties of Seller set forth in Section 9.20) and (iv) rights under Section 8.2(b) (as related to the covenants of Seller set forth in Section 11.1(b)(ii)) and Section 8.2(d) (as related to the Retained Litigation), the provisions set forth in Section 13.2(d) shall be the sole and exclusive right and remedy of Buyer with respect to Upstream Seller’s failure to have Defensible Title or any other title matter with respect to any Upstream Asset.

(g)    Title Defect Amount.  The amount by which the Allocated Value of the affected Title Defect Property is reduced as a result of the existence of a Title Defect shall be the “Title Defect Amount” and shall be determined in accordance with the following terms and conditions:

(i)    if Buyer and Upstream Seller agree on the Title Defect Amount, then that amount shall be the Title Defect Amount;

(ii)    if the Title Defect is an Encumbrance that is undisputed and liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to remove the Title Defect from the Title Defect Property; provided that if such Encumbrance affects more than one Title Defect Property, the Title Defect Amount shall be the aggregate amount necessary to be paid to remove the Title Defect from all such Title Defect Properties (and not counted in duplicate as to each Title Defect Property);

(iii)    if (I) the Title Defect represents a negative discrepancy between (A) Upstream Seller’s Net Revenue Interest for the Subject Formation of any Well or Well Location and (B) Upstream Seller’s Net Revenue Interest for the Subject Formation of such Well or Well Location as set forth in Exhibit B-1 or Exhibit B-2, as applicable, and (II) Upstream Seller’s Working Interest in such Well or Well Location is proportionately decreased from the amount as set forth on Exhibit B-1 or Exhibit B-2, as applicable, then the Title Defect Amount shall be the product of (1) the Allocated Value of such Title Defect Property, multiplied by (2) a fraction, the (x) numerator of which is the Net Revenue Interest decrease for the applicable Subject Formation of such Well or Well Location, and (y) denominator of which is the Net Revenue Interest for the applicable Subject Formation of such Well or Well Location as set forth in Exhibit B-1 or Exhibit B-2;

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(iv)    if the Title Defect represents an obligation, Encumbrance upon or other defect in title to the Title Defect Property of a type not described above, then the Title Defect Amount shall be determined by taking into account the Allocated Value of the Title Defect Property, the portion of the Title Defect Property affected by the Title Defect, the legal effect of the Title Defect, the potential economic effect of the Title Defect over the life of the Title Defect Property, the values placed upon the Title Defect by Buyer and Upstream Seller and such other reasonable factors as are necessary to make a proper evaluation; provided, however, that if such Title Defect is reasonably capable of being cured, the Title Defect Amount shall not be greater than the reasonable cost and expense of curing such Title Defect;

(v)    the Title Defect Amount with respect to a Title Defect Property shall be determined without duplication of any costs or losses included in another Title Defect Amount hereunder;

(vi)    if a Title Defect does not affect a Title Defect Property throughout the entire remaining productive life of such Title Defect Property, such fact shall be taken into account in determining the Title Defect Amount; and

(vii)    notwithstanding anything to the contrary in this Article XIII, the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any single Title Defect Property (whether related to an adjustment to the Purchase Price or any other remedy provided by Seller hereunder or any claim for any breach of the Special Warranty) shall not exceed the lesser of: (A) the actual cost and expense of curing such Title Defect (if such Title Defect is actually capable of being cured) and (B) the Allocated Value of such Title Defect Property; provided that this Section 13.2(i)(vii) shall not apply to limit the Title Defect Amount with respect to any Title Defect as described in Section 13.2(g)(ii).

(h)    Title Benefit Amount.  The Title Benefit Amount resulting from a Title Benefit shall be determined in accordance with the following methodology, terms and conditions:

(i)    if Buyer and Upstream Seller agree on the Title Benefit Amount, then that amount shall be the Title Benefit Amount;

(ii)    if (I) the Title Benefit represents a positive discrepancy between (A) Upstream Seller’s Net Revenue Interest for the Subject Formation of any Well or Well Location, and (B) Upstream Seller’s Net Revenue Interest for the Subject Formation of such Well or Well Location as set forth in Exhibit B-1 or Exhibit B-2, as applicable, and (II) Upstream Seller’s Working Interest in such Well or Well Location is proportionately increased from the amount as set forth on Exhibit B-1 or Exhibit B-2, as applicable, then the Title Benefit Amount shall be the product of (1) the Allocated Value of the affected Well or Well Location, as applicable, multiplied by (2) a fraction, the (x) numerator of which is the Net Revenue Interest increase for the applicable Subject Formation of such Well or Well Location, as applicable, and (y) denominator of which is the Net Revenue Interest for the applicable Subject Formation of such Well or Well Location as set forth in Exhibit B-1 or Exhibit B-2, as applicable; and

(iii)    if the Title Benefit is of a type not described above, then the Title Benefit Amounts shall be determined by taking into account the Allocated Value of the Upstream Asset affected by such Title Benefit, the portion of such Upstream Asset affected by such Title Benefit, the legal effect of the Title Benefit, the potential economic effect of the Title Benefit over the life of such Asset, the values placed upon the Title Benefit by Buyer and Upstream Seller and such other reasonable factors as are necessary to make a proper evaluation.

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(i)    Threshold and Deductible.  Notwithstanding anything to the contrary, (i) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any individual Title Defect for which the Title Defect Amount does not exceed $75,000 (“Individual Title Defect Threshold”), provided that if a Title Defect (or the facts or circumstances resulting in or giving rise to a Title Defect) is applicable to or affects multiple Title Defect Properties, the Title Defect Amount for each affected Title Defect Property shall be aggregated for purposes of determining if the Individual Title Defect Threshold is met; and (ii) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any Title Defect that exceeds the Individual Title Defect Threshold unless (A) the sum of (1) the Title Defect Amounts of all such Title Defects that exceed the Individual Title Defect Threshold (excluding any Title Defects cured by Seller or retained by Seller pursuant to Section 13.2(d)(iii)), plus (2) all Remediation Amounts of all Environmental Defects that exceed the Individual Environmental Defect Threshold (excluding any Environmental Defects Remediated by Seller or retained by Seller pursuant to Section 14.1(c)(iii)), minus (3) all Title Benefit Amounts, exceeds (B) the Defect Deductible, after which point Buyer shall be entitled to adjustments to the Purchase Price or other remedies only with respect to Title Defects relating to Title Defect Amounts in excess of such Defect Deductible.  For avoidance of doubt, the Individual Title Defect Threshold is a threshold and shall not be applied as a deductible if the Individual Title Defect Threshold is exceeded by the applicable Title Defect Amount. For the avoidance of doubt, if Seller indemnifies Buyer with respect to any Title Defect Property pursuant to a Title Indemnity Agreement or retains any Title Defect Property pursuant to Section 13.2(d)(iii), then, in each case the Title Defect Amount related to such Title Defect Property will not be counted towards the Defect Deductible. This Section 13.2(i) shall be applied in this Agreement without giving duplicative effect to its application under this Section 13.2 and Section 14.1.

(j)    Title Dispute Resolution/Escrow.

(i)    Upstream Seller and Buyer shall undertake commercially reasonable efforts to agree on (A) all Title Defects, Title Benefits, Title Defect Amounts and Title Benefit Amounts prior to Closing and (B) whether or not any Title Defect that Upstream Seller elects to cure pursuant to Section 13.2(c) has been cured (or if not so cured the Title Defect and/or Title Defect Amount applicable thereto) by the expiration of the Cure Period (each such matter to which the Parties do not agree, a “Title Dispute”).  If Upstream Seller and Buyer are so unable to agree by the Closing Date on any Title Dispute (including any efforts by Seller prior to the Closing to cure any Title Defect), or if any Title Defect that Upstream Seller elects to cure pursuant to Section 13.2(c) has been not cured to Buyer’s satisfaction as of the Closing Date, then, in either such case, (1) such Title Dispute shall be exclusively and finally resolved pursuant to this Section 13.2(j), subject to the proviso of Section 4.4 and Seller’s continuing right to cure the Title Defect giving rise to such Title Dispute until the expiration of the Cure Period, (2) an amount equal to the sum of (x) if the Parties had elected (or were deemed to have elected) the remedies set forth in Section 13.2(d)(i) or Section 13.2(d)(ii) with respect to the applicable Title Defect, the Title Defect Amount claimed by Buyer in good faith in the applicable Title Defect Notice applicable to such Title Defect, and (y) if the Parties (or Upstream Seller, as permitted under Section 13.2(d)) had elected the remedy set forth in Section 13.2(d)(iii) with respect to the applicable Title Defect, the Allocated Value of the Upstream Assets subject to such Title Dispute, as limited by Section 13.2(i) (such amount, as determined in the aggregate with respect to all applicable Title Disputes, the “Closing Date Title Escrow Amount”) will be deposited by Buyer with the Escrow Agent to be held pursuant to the Escrow Agreement and Section 13.2(j)(iv) and (3) the Purchase Price will be reduced at the Closing by the Closing Date Title Escrow Amount.  For the avoidance of doubt, unless the Parties elect (or Upstream Seller, as permitted under Section 13.2(d)) elects) the remedy set forth in Section 13.2(d)(iii) with respect to any Title Dispute, in which case such Upstream Assets shall be retained by Upstream Seller at Closing, the Upstream Assets subject to any such Title Dispute shall be conveyed to Buyer at Closing pursuant to the Assignment.

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(ii)    There shall be a single arbitrator, who shall be a title attorney with at least ten years’ experience in oil and gas titles involving properties in the regional area in which the Title Defect Properties are located, as selected by mutual agreement of Buyer and Upstream Seller within 15 days after the end of the Cure Period (the “Title Arbitrator”).  In the event the Parties are unable to mutually agree upon the Title Arbitrator within such time period, then either Party may petition the AAA to select a neutral party who has never been an officer, director or employee of or performed material work for the Parties or any of their Affiliates within the preceding five year period as Title Arbitrator, with due regard given to the selection criteria above and input from the Parties.  In the event the AAA should fail to select the Title Arbitrator within 90 days from initiation of arbitration, then either party to the Title Dispute may petition any United States District Judge for the District of Colorado to select the Title Arbitrator.  The arbitration proceeding shall be held in Denver, Colorado.

(iii)    Within ten Business Days after the selection of the applicable Title Arbitrator, the Parties shall provide to such Title Arbitrator the documents and materials described in this Section 13.2(j)(iii), as applicable:  (A) each Title Defect Notice and all documentation provided therewith with respect to each disputed Title Defect; (B) each Title Benefit Notice and all documentation provided therewith with respect to each disputed Title Benefit; (C) such evidence as Upstream Seller deems appropriate to explain and dispute the existence, waiver and cure of each disputed Title Defect or the Title Defect Amount assigned thereto by Buyer in any Title Defect Notice, together with Upstream Seller’s good faith estimate of the Title Defect Amount, if any, with respect to each such disputed Title Defect; and (D) such evidence as Buyer deems appropriate to dispute the existence of any disputed Title Benefit or the Title Benefit Amount assigned thereto in any Title Benefit Notice with respect any such disputed Title Benefit, together with Buyer’s good faith estimate of the disputed Title Benefit Amount, if any, with respect to each such disputed Title Benefit.  Each of Buyer and Seller also shall furnish to the Title Arbitrator such workpapers and other documents and information relating to each Title Dispute as the Title Arbitrator may request and are available to that Party or its Affiliates, and each of Buyer and Seller will be afforded the opportunity to present to the Title Arbitrator any material relating to each Title Dispute as such Party shall deem appropriate to support its position with respect to each such matter and to discuss such determination with the Title Arbitrator prior to any written notice of determination hereunder being delivered by the Title Arbitrator.

(iv)    The Title Arbitrator’s determination shall be in writing and shall be made within 20 days after submission of the matters in dispute and shall be final and binding upon both Parties, without right of appeal. In making his determination, the Title Arbitrator shall be bound by the rules set forth in Section 13.2(g) and Section 13.2(h) and, subject to the foregoing, may consider only those materials described in Section 13.2(j)(iii), and shall choose either Upstream Seller’s position or Buyer’s position with respect to each matter addressed in a Title Dispute, based on the materials described above.  The Title Arbitrator shall act as an expert for the limited purpose of determining the specific disputed Title Defect, Title Benefit, Title Defect Amounts, Title Benefit Amounts, and/or curative efforts submitted by either Party and may not award damages, interest or penalties to either Party with respect to any matter. Upstream Seller and Buyer shall each bear its own legal fees and other costs of presenting its case.  Each of Upstream Seller and Buyer shall bear one-half of the costs and expenses of the Title Arbitrator.

(v)    Upon the later of the Title Arbitrator’s determination of all Title Disputes submitted to the Title Arbitrator for determination or the Parties’ agreement as to the resolution of such Title Dispute and the Environmental Arbitrator’s determination of all Environmental Disputes submitted to the Environmental Arbitrator for determination or the Parties’ agreement as to the resolution of such Environmental Disputes, then, with respect to the Title Defect Property subject to such Title Dispute, if (A) the Parties had elected (or were deemed to have elected) the remedy in Section 13.2(d)(i), then within ten Business Days after the Title Arbitrator delivers written notice to Buyer and Upstream Seller of its award 

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with respect thereto (or the Parties otherwise agree as to the resolution of such Title Dispute), and subject to Section 13.2(i), Buyer and Upstream Seller shall deliver joint written instructions to the Escrow Agent to deliver out of the applicable Closing Date Title Escrow Amount (1) to Upstream Seller the amount, if any, so awarded by the Title Arbitrator to Upstream Seller with respect to such Title Dispute (or as agreed by the Parties with respect thereto) and (2) to Buyer the amount, if any, so awarded by the Title Arbitrator to Buyer with respect to such Title Dispute (or as agreed by the Parties with respect thereto), (B) the Parties had elected the remedy in Section 13.2(d)(ii), then the Parties shall use commercially reasonable efforts to enter into the applicable Title Indemnity Agreement within ten Business Days after the Title Arbitrator delivers written notice to Buyer and Upstream Seller of his decision with respect thereto (or the Parties otherwise agree as to the resolution of such Title Dispute) and upon execution of such Title Indemnity Agreement Buyer and Upstream Seller shall deliver joint written instructions to the Escrow Agent to deliver out of the Closing Date Title Escrow Amount to Upstream Seller an amount equal to the Allocated Value of the applicable Title Defect Property the Title Defect Amount claimed by Buyer in good faith in the applicable Title Defect Notice applicable to such Title Defect, or (C) the Parties (or Upstream Seller, as permitted under Section 13.2(d)) had elected the remedy in Section 13.2(d)(iii), then within ten Business days after the Title Arbitrator delivers written notice to Buyer and Upstream Seller of his decision with respect thereto (or the Parties otherwise agree as to the resolution of such Title Dispute), the Parties (or Upstream Seller, as permitted under Section 13.2(d), as applicable) shall once against elect between the remedies in Section 13.2(d) pursuant to the terms thereof, mutatis mutandis, and (1) clause (A) or (B) of this Section 13.2(j)(v) shall apply, as applicable, or (2) if Section 13.2(d)(iii) is applicable with respect to such Title Defect Property, Buyer and Upstream Seller shall deliver joint written instructions to the Escrow Agent to deliver out of the Closing Date Title Escrow Amount to Buyer an amount equal to the Allocated Value of the applicable Title Defect Property and Seller shall continue to retain the applicable Title Defect Property and associated Upstream Assets. Disbursements from the Environmental Escrow Amount pursuant to this Section 13.2(j)(v) shall be made giving effect to Section 13.2(j)(ii) and Section 14.1(e)(ii) so as to achieve the same result as if the matters submitted to the Environmental Arbitrator for determination and to the Title Arbitrator for determination had been resolved prior to Closing on the same basis as resolved pursuant to this Section 13.2(j) and Section 14.1(f).

(vi)    Except as provided in the proviso of Section 4.4, nothing herein shall operate to cause the Closing to be delayed on account of any arbitration hereunder and to the extent any adjustments are not agreed upon by the Parties as of the Closing, the Purchase Price shall be adjusted therefor as of the Closing by the Closing Date Title Escrow Amount as provided in this Section 13.2(j) and subsequent adjustments thereto will be made pursuant to Section 3.5 and this Section 13.2.

13.3    Casualty Loss.

(a)    Notwithstanding anything herein to the contrary from and after the Effective Time, if Closing occurs, Buyer shall assume all risk of loss with respect to (i) production of Hydrocarbons through normal depletion (including watering out of any Well, collapsed casing or sand infiltration of any Well) and (ii) the depreciation of personal property due to ordinary wear and tear, in each case, with respect to the Assets.

(b)    If, after the Execution Date but prior to the Closing Date, subject to Section 13.3(c), any portion of the Assets is damaged or destroyed or otherwise impaired by fire, explosion, tornado, hurricane, earthquake, earth movement, flood, water damage or other similar casualty or is taken in condemnation or under right of eminent domain (in each case, a “Casualty Loss”), then Buyer shall nevertheless be required to close the transactions contemplated by the Agreement and Seller shall elect by written notice to Buyer prior to Closing either to (i) cause the Assets affected by such Casualty Loss to be repaired or restored to at least its condition prior to such Casualty Loss, at Seller’s sole cost, as promptly as reasonably practicable 

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(which work may extend after the Closing Date) or (ii) pay to Buyer all sums paid to Seller by Third Parties by reason of such Casualty Loss affecting the Assets and assign, transfer and set over to Buyer or subrogate Buyer to (in the case of any such rights held by Seller outside of the Partnership) all of Seller’s right, title and interest (if any) in insurance claims, unpaid awards and other rights against Third Parties (excluding any Liabilities, other than insurance claims, of or against any Seller Indemnified Parties) arising out of such Casualty Loss affecting the Assets; provided, however, that if the Casualty Loss affected the Upstream Assets, Seller shall reserve and retain (and Buyer shall assign to Seller) all rights, title, interests and claims against Third Parties for the recovery of Seller’s costs and expenses incurred prior to the Closing in pursuing or asserting any such insurance claims or other rights against Third Parties with respect to any such Casualty Loss.  If Seller elects the option in item (i) above, Seller shall retain (or, if such rights are held by the Partnership, Seller and Buyer shall cause the Partnership to assign to Seller) all rights to insurance, condemnation awards and other claims against Third Parties with respect to the casualty or taking except to the extent the Parties otherwise agree in writing.

(c)    If, after the Execution Date but prior to the Closing Date, (i) all or any portion of the Gas Plants are destroyed or damaged by fire, explosion, tornado, hurricane, earthquake, earth movement, flood, water damage, sabotage, accident or other casualty (all of which are herein called “Midstream Casualty Loss”), (ii) the Gas Plants (or portions thereof) affected thereby have not, prior to the Closing Date, been replaced or repaired in all material respects to the condition of such Midstream Assets immediately prior to such Midstream Casualty Loss and placed into such operational condition and capability as such Midstream Assets were in immediately prior to such Midstream Casualty Loss, and (iii) such Midstream Casualty Loss could reasonably be expected to materially and adversely affect the ability of Buyer and the Partnership following the Closing to operate the Midstream Business in the ordinary course of business consistent with past practice for a period that is longer than 120 days after the Closing, then Buyer may terminate this Agreement pursuant to Section 7.1(f).

(d)    Seller shall give Buyer prompt notice of any Casualty Loss or Midstream Casualty Loss of which Seller becomes aware.  Seller shall not voluntarily compromise, settle or adjust any amounts payable by reason of any Casualty Loss or Midstream Casualty Loss without first obtaining the written consent of Buyer, which consent may not be unreasonably withheld or delayed.

13.4    Consents; Preferential Rights.

(a)    Seller, on or prior to the later of (x) ten Business Days after the Execution Date, and (y) five Business Days after the Assignment Drop Dead Date, shall send to each holder of a Consent set forth in Schedule 9.4 a notice seeking such holder’s consent to the transactions contemplated hereby.  With respect to any Consent that is not set forth on Schedule 9.4 (including those Consents not required to be set forth on such Schedule) but is discovered by any Party prior to Closing, Seller shall send to the holder of each such Consent a notice seeking such holder’s consent to the transactions contemplated hereby as soon as reasonably practicable after discovery of such Consent.  Seller shall use its commercially reasonable efforts to obtain all Consents pursuant to the terms of this Agreement (provided that Seller shall not be obligated to incur any Liability to obtain any such Consent), and Buyer agrees to use its commercially reasonable efforts to cooperate with any such efforts (provided that Buyer shall not be obligated to incur any Liability (other than, as of the Closing, the Upstream Assumed Obligations) to obtain any such Consent; provided, further, however, that such restriction shall not be viewed to limit Buyer’s obligation to post any credit support or other similar consideration that may be expressly contemplated and/or called for pursuant to the terms of any Applicable Contract, Lease or Upstream Easement, including the Firm Transportation Agreements).

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(i)    If Seller fails to obtain a Hard Consent, then, in each such case, the affected Upstream Asset(s) shall be excluded from the Upstream Assets to be acquired by Buyer at Closing hereunder, and the Purchase Price shall be reduced by the Allocated Value of the Upstream Asset(s) so excluded.  Following Closing, Seller shall use its commercially reasonable efforts to obtain each such Hard Consent (provided that Seller shall not be obligated to incur any Liabilities to obtain any such Consent).  In the event that a Hard Consent (with respect to any applicable Upstream Asset(s) excluded pursuant to this Section 13.4(a)(i)) that was not obtained prior to Closing is obtained within 180 days following Closing, Seller shall promptly notify Buyer of such fact, and Buyer shall purchase, within ten days after such notification, such Upstream Asset(s) so excluded from Upstream Seller under the terms of this Agreement for the amount by which the Purchase Price was reduced at Closing due to the exclusion of such Upstream Asset(s) (as such amount is appropriately adjusted in accordance to Section 3.3 with respect to such Upstream Asset(s)), and Upstream Seller shall assign to Buyer such Upstream Asset(s) pursuant to an assignment in form substantially similar to the Upstream Assignment.

(ii)    If Seller fails to obtain a Consent other than a Hard Consent prior to the Closing, then (x) the Upstream Asset(s) subject to such un-obtained Consent shall nevertheless be acquired by Buyer at Closing as part of the Upstream Assets or indirectly through the acquisition of the Midstream Interests, (y) Buyer shall have no claim against, and hereby releases and indemnifies the Seller Indemnified Parties from any Liability for, the failure to obtain such Consent, and (z) Buyer shall be solely responsible from and after the Closing for any and all Liabilities arising from the failure to obtain such Consent as part of the Upstream Assumed Obligations hereunder.

(b)    With respect to each Preferential Purchase Right set forth on Schedule 9.4, Seller, on or prior to the later of (x) ten Business Days after the Execution Date, and (y) five Business Days after the Assignment Drop Dead Date, shall send to the holder of each such Preferential Purchase Right a notice in compliance with the contractual provisions applicable to such Preferential Purchase Right requesting a waiver of such right. With respect to each Preferential Purchase Right that is not set forth on Schedule 9.4 but is discovered by any Party prior to Closing, Seller shall send to the holder of each such Preferential Purchase Right a notice in compliance with the contractual provisions applicable to such Preferential Purchase Right requesting a waiver of such right as soon as reasonably practicable after discovery of any such Preferential Purchase Right.  Any Preferential Purchase Right must be exercised subject to all terms and conditions set forth in this Agreement, and the consideration payable under this Agreement for the purposes of all Preferential Purchase Right notices shall be the Allocated Value of the applicable Upstream Asset (as adjusted herein).

(i)    If, prior to Closing, any holder of a Preferential Purchase Right has consummated the acquisition of the Upstream Assets to which its Preferential Purchase Right applies, then the Upstream Assets subject to such Preferential Purchase Right shall be excluded from the Upstream Assets to be assigned to Buyer at Closing (and shall be considered Excluded Assets hereunder, but only to the extent of the portions of such Upstream Assets affected by the Preferential Purchase Right), and the Purchase Price shall be reduced by the Allocated Value of such Upstream Assets (or portions thereof) so excluded.  Seller shall be entitled to all consideration given by any Person consummating the acquisition of any Upstream Assets subject to any Preferential Purchase Right prior to Closing.

(ii)    If, as of Closing, (A) any holder of a Preferential Purchase Right has not waived such Preferential Purchase Right, (B) the period to exercise such Preferential Purchase Right has not expired without exercise or waiver thereof, or (C) any holder of a Preferential Purchase Right has not consummated the acquisition of the Upstream Assets to which its Preferential Purchase Right applies, then, in each case, the Upstream Assets subject to such Preferential Purchase Right shall be excluded from the Upstream Assets to be assigned to Buyer at Closing (and shall be considered Excluded Assets hereunder, but only to the extent 

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of the portions of such Upstream Assets affected by the Preferential Purchase Right), and the Purchase Price shall be reduced by the Allocated Value of such Upstream Assets (or portions thereof) so excluded.

(iii)    If, following the Closing, any holder of a Preferential Purchase Right with respect to assets excluded from the Upstream Assets to be assigned to Buyer pursuant to Section 13.4(b)(ii) fails to validly exercise such right prior to the expiration of the exercise period applicable to such Preferential Purchase Right or fails to consummate the acquisition of the Upstream Assets to which such holder’s Preferential Purchase Right was exercised (prior to or after the Closing), Seller shall promptly notify Buyer of such failure, and Buyer shall purchase, within ten days after such notification, such Upstream Asset(s) so excluded from Upstream Seller under the terms of this Agreement for the amount by which the Purchase Price was reduced at Closing due to the exclusion of such Upstream Asset(s) (as such amount is appropriately adjusted in accordance to Section 3.3 with respect to such Upstream Asset(s)), and Upstream Seller shall assign to Buyer such Upstream Asset(s) pursuant to an assignment in form substantially similar to the Upstream Assignment and deliver any other instruments and documents that would have been required under the terms of this Agreement to be delivered at the Closing with respect to such Upstream Asset(s).

ARTICLE XIV
ENVRIONMENTAL MATTERS

14.1    Notice of Environmental Defects.

(a)    Environmental Defect Notices.  If Buyer discovers any Environmental Condition which, in its reasonable opinion, Buyer determines constitutes an Environmental Defect, Buyer shall promptly notify Upstream Seller within five Business Days of such discovery and, in any event, on or before the Defect Claims Date.  To be effective, notice of an Environmental Defect (an “Environmental Defect Notice”) shall be in writing and shall include (i) a reasonable description of the Environmental Condition constituting, in Buyer’s reasonable opinion, Environmental Defect(s), (ii) the identity of the Upstream Asset(s) (including, with respect to a Well or Well Location, a reasonable description of such Well or Well Location and the Leases(s) contributing to such Well or Well Location) or portions thereof, affected by the asserted Environmental Defect (each, an “Environmental Defect Property”), (iii) supporting documentation available to Buyer reasonably necessary for Seller to verify the existence of the alleged Environmental Defect, including, to the extent permitted by Seller under Section 12.1, any physical measurements or lab analyses or photographs, (iv) the Allocated Value of each Environmental Defect Property, (v) the Remediation Amount (itemized in reasonable detail) that Buyer asserts is attributable to such Environmental Defect and the computations and information upon which Buyer’s belief is based, (vi) a reasonable description of the Remediation proposed for the Environmental Condition that gives rise to the asserted Environmental Defect, and (vii) a reasonable description of the violation of Environmental Law that gives rise to such Environmental Defect.  For all purposes of this Agreement but subject to Buyer’s remedy for a breach of Seller’s representation contained in Section 9.14 and Buyer’s remedies for breaches of the covenants of Seller set forth in Section 11.1(a)(i) (as so limited by Section 11.1(c)), Buyer shall be deemed to have waived, and Seller shall have no liability for, any Environmental Defect which Buyer fails to assert as an Environmental Defect by an Environmental Defect Notice meeting the requirements of this Section 14.1(a) that is received by Upstream Seller on or before the Defect Claims Date.

(b)    Upstream Seller’s Right to Remediate.  Upstream Seller shall have the right, but not the obligation, to attempt, at its sole cost, to Remediate, at any time prior to the Closing, any Environmental Defects of which Upstream Seller has been advised by Buyer.  An election by Upstream Seller to Remediate an Environmental Defect shall be without prejudice to its rights under Section 14.1(f) and shall not constitute 

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an admission against interest or a waiver of Upstream Seller’s right to dispute the existence, nature or value of, or cost to Remediate, the alleged Environmental Defect.

(c)    Remedies for Environmental Defects.  Subject to (x) Upstream Seller’s continuing right to dispute the existence of an Environmental Defect and/or the Remediation Amount asserted with respect thereto, (y) Upstream Seller’s remediation rights pursuant to Section 14.1(b), and (z) the rights of the Parties pursuant to Section 7.1(d), in the event that any Environmental Defect properly asserted by Buyer in accordance with Section 14.1(a) is not waived in writing by Buyer or Remediated on or before the Closing, then, subject to the Individual Environmental Defect Threshold and the Defect Deductible, the Parties shall mutually agree to resolve Environmental Defects as follows:

(i)    reduce the Purchase Price by the Remediation Amount determined pursuant to Section 14.1(f) or other provision of this Agreement;

(ii)    Upstream Seller shall retain responsibility for the Remediation of such Environmental Defect and Upstream Seller shall indemnify Buyer against all Liability resulting from such Environmental Defect pursuant to an indemnity agreement in form and substance reasonably satisfactory to the Parties (each, an “Environmental Indemnity Agreement”);

(iii)    Upstream Seller shall retain the entirety of such Environmental Defect Property and all associated Upstream Assets, in which event the Purchase Price shall be reduced at Closing by an amount equal to the Allocated Value of such Environmental Defect Property and such associated Upstream Assets, and such Environmental Defect Property and associated Upstream Assets shall be treated as Excluded Assets under this Agreement; or

(iv)    Buyer shall assume the responsibility for the Remediation of the Environmental Defect, and Upstream Seller shall indemnify Buyer against all Liability resulting from such Environmental Defect up to the Allocated Value of the applicable Environmental Defect Property pursuant to an Environmental Indemnity Agreement;

In the event that the Parties do not agree in writing by Closing on an election of alternative (i), (ii), (iii) or (iv) above with respect to any Environmental Defect, the Parties shall be deemed to have elected alternative (i) with respect to such Environmental Defect, subject to Section 14.1(f); provided that if the Remediation Amount associated with an Environmental Defect Property as asserted by Buyer (after giving effect to any reduction thereof as agreed to by Buyer due to efforts by Seller prior to Closing to cure such Environmental Defect) equals or exceeds the Allocated Value of such Environmental Defect Property, then Upstream Seller may elect alternative (iii) with respect to such Environmental Defect Property.

If the Parties elect (or are deemed to have elected) alternative (i) above, Buyer shall be deemed to have assumed responsibility for all of the costs and expenses attributable to the Remediation of the Environmental Condition attributable to such Environmental Defect and such responsibility of Buyer shall be deemed to constitute part of the Upstream Assumed Obligations hereunder.  If the Parties elect alternative (ii) above, Upstream Seller shall use reasonable efforts to implement such Remediation in a manner which is consistent with the requirements of Environmental Laws in a timely fashion for the type of Remediation that Seller elects to undertake and Buyer, effective as of the Closing, grants to Seller and its Representatives, access to the Upstream Assets and all utilities located on the Upstream Assets as may be reasonably required in order to conduct such Remediation.

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(d)    Exclusive Remedy.  Except for Buyer’s rights (i) under Section 8.2(a) for a breach of Seller’s representations and warranties set forth in Section 9.14, (ii) under Section 8.2(b) for a breach of the covenants of Seller set forth in Section 11.1(a)(i) and (iii) to terminate this Agreement pursuant to Section 7.1(d), the provisions set forth in Section 14.1(c) shall be the exclusive right and remedy of Buyer with respect to any Environmental Defect or any other environmental matter with respect to any Asset.

(e)    Threshold and Deductible.  Notwithstanding anything to the contrary, (i) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any individual Environmental Defect for which the Remediation Amount does not exceed $100,000 (“Individual Environmental Defect Threshold”); and (ii) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any Environmental Defect for which the Remediation Amount exceeds the Individual Environmental Defect Threshold unless (A) the sum of (1) the Remediation Amounts of all such Environmental Defects that exceed the Individual Environmental Defect Threshold (excluding any Environmental Defects Remediated by Upstream Seller or retained by Upstream Seller pursuant to Section 14.1(c)(iii))), plus (2) all Title Defect Amounts of all Title Defects that exceed the Individual Title Defect Threshold (excluding any Title Defects cured by Upstream Seller or retained by Upstream Seller pursuant to Section 13.2(d)(iii))), minus (3) all Title Benefit Amounts, exceeds (B) the Defect Deductible, after which point Buyer shall be entitled to adjustments to the Purchase Price or other remedies only with respect to such Environmental Defects relating to Remediation Amounts in excess of the Defect Deductible.  For the avoidance of doubt, the Individual Environmental Defect Threshold is a threshold and shall not be applied as a deductible if the amount of such Individual Environmental Defect Threshold is exceeded by the applicable Remediation Amount.  For the avoidance of doubt, if Upstream Seller indemnifies Buyer with respect to any Environmental Defect Property pursuant to an Environmental Indemnity Agreement or retains any Environmental Defect Property pursuant to Section 14.1(c)(iii), then, in each case, after such election, the Remediation Amount relating to such Environmental Defect Property will not be counted towards the Defect Deductible.  This Section 14.1(e) shall be applied in this Agreement without giving duplicative effect to its application under this Section 14.1 and Section 13.2.

(f)    Environmental Dispute Resolution.

(i)    Upstream Seller and Buyer shall undertake commercially reasonable efforts to agree (A) to all Environmental Defect and Remediation Amounts prior to Closing and (B) whether or not any Environmental Defect that Upstream Seller elects to Remediate prior to Closing pursuant to Section 14.1(b) has been Remediated (or if not so cured the Remediation Amount applicable thereto) by the Closing (each such matter to which the Parties do not agree, an “Environmental Dispute”).  If Upstream Seller and Buyer are unable to agree by the Closing Date on any Environmental Dispute (including any efforts by Seller prior to Closing to Remediate any Environmental Defect), then (1) such Environmental Dispute shall be exclusively and finally resolved by arbitration pursuant to this Section 14.1(f), subject to the proviso of Section 4.4, (2) an amount equal to the sum of (x) if the Parties had elected (or were deemed to have elected) the remedies set forth in Section 14.1(c)(i), Section 14.1(c)(ii), or Section 14.1(c)(iv) with respect to the applicable Environmental Defect, the Remediation Amount claimed by Buyer in good faith in the applicable Environmental Defect Notice applicable to such Environmental Dispute, and (y) if the Parties (or Upstream Seller, as permitted under Section 14.1(c)) had elected the remedy set forth in Section 14.1(c)(iii) with respect to the applicable Environmental Defect, the Allocated Value of the Upstream Assets subject to such Environmental Dispute, subject to Section 14.1(e) (such amount, as determined in the aggregate with respect to all applicable Environmental Disputes, the “Closing Date Environmental Escrow Amount”) will be deposited by Buyer with the Escrow Agent to be held pursuant to the Escrow Agreement and Section 14.1(f)(v) and (3) the Purchase Price will be reduced at Closing by the Closing Date Environmental Escrow Amount.  For the avoidance of doubt, the Upstream Assets subject to any Environmental Dispute shall be 

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conveyed to Buyer at Closing pursuant to the Assignment unless (X) the Parties (or Upstream Seller, as permitted under Section 14.1(c)) elect the remedy set forth in Section 14.1(c)(iii) with respect to any Environmental Dispute or (Y) the Remediation Amount asserted by Buyer in the applicable Environmental Defect Notice applicable to such Environmental Dispute equals or exceeds the Allocated Value of such Environmental Defect Property such that the Parties (or Upstream Seller, as permitted under Section 14.1(c)) may, upon final determination of the Environmental Dispute, elect the remedy set forth in Section 14.1(c)(iii) with respect to such Environmental Dispute if, as determined by the Environmental Arbitrator, the Remediation Amount equals or exceeds the Allocated Value of such Environmental Defect Property, in either case of (X) or (Y), such Upstream Assets shall be retained by Upstream Seller at Closing.

(ii)    There shall be a single arbitrator, who shall be an environmental consultant with at least ten years’ experience in environmental matters involving oil and gas producing properties in the regional area in which the affected Upstream Assets are located, as selected by mutual agreement of Buyer and Upstream Seller within 15 days after the Closing Date (the “Environmental Arbitrator”).  In the event the Parties are unable to mutually agree upon the Environmental Arbitrator within such time period, then either Party may petition the AAA to select a neutral party who has never been an officer, director or employee of or performed material work for the Parties or any of their Affiliates within the preceding five year period as Environmental Arbitrator, with due regard given to the selection criteria above and input from the Parties. In the event the AAA should fail to select the Environmental Arbitrator within 90 days from initiation of arbitration, then either party to the Environmental Dispute may petition any United States District Judge for the District of Colorado to select the Environmental Arbitrator.  The arbitration proceeding shall be held in Denver, Colorado.

(iii)    Within ten Business Days after the selection of the applicable Environmental Arbitrator, the Parties shall provide to such Environmental Arbitrator (A) each Environmental Defect Notice and all documentation provided therewith with respect to each disputed Environmental Defect; and (B) such evidence as Seller deems appropriate to explain and dispute the existence, waiver and cure of each disputed Environmental Defect or the Remediation Amount assigned thereto by Buyer in any Environmental Defect Notice, together with Seller’s good faith estimate of the Remediation Amount, if any, with respect to each such disputed Environmental Defect.  Each of Buyer and Seller also shall furnish to the Environmental Arbitrator such workpapers and other documents and information relating to each Environmental Dispute as the Environmental Arbitrator may request and are available to that Party or its Affiliates, and each of buyer and Seller will be afforded the opportunity to present to the Environmental Arbitrator any material relating to each Environmental Dispute as such Party shall deem appropriate to support its position with respect to each such matter and to discuss such determination with the Environmental Arbitrator prior to any written notice of determination hereunder being delivered by the Environmental Arbitrator.

(iv)    The Environmental Arbitrator’s determination shall be in writing and shall be made within 20 days after submission of the matters in dispute and shall be final and binding upon both Parties, without right of appeal.  In making his determination, the Environmental Arbitrator shall be bound by the rules set forth in this Section 14.1 and, subject to the foregoing, may consider only those materials described in Section 14.1(f)(iii), and shall choose either Upstream Seller’s position or Buyer’s position with respect to each matter addressed in an Environmental Dispute, based on the materials described above.  The Environmental Arbitrator shall act as an expert for the limited purpose of determining the specific disputed Environmental Defects, Remediation Amounts, and/or curative efforts submitted by either Party and may not award damages, interest or penalties to either Party with respect to any matter. Upstream Seller and Buyer shall each bear its own legal fees and other costs of presenting its case.  Each of Upstream Seller and Buyer shall bear one-half of the costs and expenses of the Environmental Arbitrator.

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(v)    Upon the later of the Environmental Arbitrator’s determination of all Environmental Disputes submitted to the Environmental Arbitrator for determination or the Parties’ agreement as to the resolution of such Environmental Disputes and the Title Arbitrator’s determination of all Title Disputes submitted to the Title Arbitrator for determination or the Parties’ agreement as to the resolution of such Title Dispute, then, with respect to the Environmental Defect Property subject to such Environmental Dispute, if (A) the Parties had elected (or were deemed to have elected) the remedy in Section 14.1(c)(i), then within ten Business Days after the Environmental Arbitrator delivers written notice to Buyer and Seller of his decision with respect thereto (or the Parties otherwise agree as to the resolution of such Environmental Dispute), and subject to Section 14.1(e), Buyer and Upstream Seller shall deliver joint written instructions to the Escrow Agent to deliver out of the Closing Date Environmental Escrow Amount (1) to Upstream Seller the amount, if any, so awarded by the Environmental Arbitrator to Upstream Seller with respect to such Environmental Dispute (or as agreed by the Parties with respect thereto) and (2) to Buyer the amount, if any, so awarded by the Environmental Arbitrator to Buyer with respect to such Environmental Dispute (or as agreed by the Parties with respect thereto), (B) the Parties had elected the remedy in Section 14.1(c)(ii) or Section 14.1(c)(iv), then the Parties shall use commercially reasonable efforts to enter into the applicable Environmental Indemnity Agreement within ten Business Days after the Environmental Arbitrator delivers written notice to Buyer and Upstream Seller of his decision with respect thereto (or the Parties otherwise agree as to the resolution of such Environmental Dispute), and after entering into such Environmental Indemnity Agreement the applicable Party shall assume responsibility to Remediate the applicable Environmental Defect and Buyer and Upstream Seller shall deliver joint written instructions to the Escrow Agent to deliver out of the Closing Date Environmental Escrow Amount to Upstream Seller an amount equal to the Remediation Amount claimed by Buyer in good faith in the applicable Environmental Defect Notice applicable to such Environmental Dispute, or (C) the Parties (or Upstream Seller, as permitted under Section 14.1(c)) had elected the remedy in Section 14.1(c)(iii), then within ten Business Days after the Environmental Arbitrator delivers written notice to Buyer and Upstream Seller of his decision with respect thereto (or the Parties otherwise agree as to the resolution of such Environmental Dispute), Upstream Seller and Buyer shall once again elect between the remedies in Section 14.1(c) pursuant to the terms thereof, mutatis mutandis, and (1) clause (A) or (B) of this Section 14.1(f)(v) shall apply, as applicable, or (2) if Section 14.1(c)(iii) is applicable with respect to such Environmental Defect Property, Buyer and Upstream Seller shall deliver joint written instruction to the Escrow Agent to deliver out of the Closing Date Environmental Escrow Amount to Buyer an amount equal to the Allocated Value of the applicable Environmental Defect Property and Upstream Seller shall continue to retain the applicable Environmental Defect Property and associated Upstream Assets. Disbursements from the Environmental Escrow Amount pursuant to this Section 14.1(f)(v) shall be made giving effect to Section 13.2(j)(ii) and Section 14.1(e)(ii) so as to achieve the same result as if the matters submitted to the Environmental Arbitrator for determination and to the Title Arbitrator for determination had been resolved prior to Closing on the same basis as so resolved pursuant to this Section 14.1(f) and Section 13.2(j).

(vi)    Except as provided in the proviso of Section 4.4, nothing herein shall operate to cause the Closing to be delayed on account of any arbitration hereunder and to the extent any adjustments are not agreed upon by the Parties as of the Closing, the Purchase Price shall be adjusted therefor as of the Closing by the Closing Date Environmental Escrow Amount as provided in this Section 14.1(f) and subsequent adjustments thereto will be made pursuant to Section 3.5 and this Section 14.1.

14.2    NORM, Wastes and Other Substances.  Buyer acknowledges that the Assets have been used for exploration, development, production, gathering and transportation of oil and gas and there may be petroleum, produced water, wastes or other substances or materials located in, on or under the Assets or associated with the Assets.  Equipment and sites included in the Assets may contain asbestos, NORM or other Hazardous Substances.  NORM may affix or attach itself to the inside of wells, pipelines, materials 

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and equipment as scale, or in other forms.  The wells, materials and equipment located on the Assets or included in the Assets may contain NORM and other wastes or Hazardous Substances.  NORM containing material and/or other wastes or Hazardous Substances may have come in contact with various environmental media, including, water, soils or sediment.  Special procedures may be required for the assessment, remediation, removal, transportation or disposal of environmental media, wastes, asbestos, NORM and other Hazardous Substances from the Assets.  Except for Environmental Conditions that form the basis of an Environmental Defect (which Environmental Defect shall be treated as provided in Article XIV) or a breach of the representations and warranties in Section 9.14, with respect to Assets actually acquired by Buyer at Closing, Buyer assumes all Liability for the assessment, remediation, removal and disposal of these materials.

ARTICLE XV
MISCELLANEOUS

15.1    Exhibits, Schedules and Appendices.  All of the Exhibits, Schedules and Appendices referred to in this Agreement constitute a part of this Agreement.  Seller and Buyer and their respective counsel have received a complete set of Exhibits, Schedules and Appendices prior to and as of the execution of this Agreement.

15.2    Expenses and Taxes.

(a)    Except as otherwise specifically provided, all fees, costs and expenses incurred by Seller or Buyer in negotiating this Agreement or in consummating the transactions contemplated by this Agreement shall be paid by the Person incurring the same, including, legal and accounting fees, costs and expenses.

(b)    All required documentary, filing and recording fees and expenses in connection with the filing and recording of the assignments (including the Assignment), conveyances or other instruments required to convey title to the Assets and Partnership Interests to Buyer shall be borne by Buyer.  Buyer shall assume responsibility for, and shall bear and pay, all state sales and use Taxes and transfer and similar Taxes (including any applicable interest or penalties) incurred or imposed with respect to the transactions described in this Agreement other than the Conversion (the “Transfer Taxes”).  Seller and Buyer shall reasonably cooperate in good faith to minimize, to the extent permissible under applicable Law, the amount of any such Transfer Taxes.

(c)    Allocation of Tax Responsibility.

(i)    Seller shall be allocated and bear all Asset Taxes attributable to (A) any Tax period ending prior to the Effective Time and (B) the portion of any Straddle Period ending immediately prior to the Effective Time;

(ii)    Seller shall be allocated and bear all Income Taxes payable by the Partnership attributable to (A) any Tax period ending on the Closing Date and (B) the portion of any Straddle Period ending on the Closing Date;

(iii)    Buyer shall be allocated and bear all Asset Taxes attributable to (A) any Tax period beginning at or after the Effective Time and (B) the portion of any Straddle Period beginning at the Effective Time; and

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(iv)    Buyer shall be allocated and bear all Income Taxes payable by the Partnership attributable to (1) any Tax period beginning after the Closing Date and (2) the portion of any Straddle Period beginning after the Closing Date.

(d)    For purposes of determining the allocations described in Section 15.2(c), (i) Asset Taxes that are attributable to the severance or production of Hydrocarbons (other than such Asset Taxes described in clause (iii), below) shall be allocated to the period in which the severance or production giving rise to such Asset Taxes occurred, (ii) Asset Taxes that are based upon or related to sales or receipts or imposed on a transactional basis (other than such Asset Taxes described in clause (i) or (iii)), shall be allocated to the period in which the transaction giving rise to such Asset Taxes occurred, (iii) Asset Taxes that are ad valorem, property or other Asset Taxes imposed on a periodic basis pertaining to a Straddle Period shall be allocated between the portion of such Straddle Period ending immediately prior to the Effective Time and the portion of such Straddle Period beginning at the Effective Time by prorating each such Asset Tax based on the number of days in the applicable Straddle Period that occur before the date on which the Effective Time occurs, on the one hand, and the number of days in such Straddle Period that occur on or after the date on which the Effective Time occurs, on the other hand, and (iv) Income Taxes payable by the Partnership shall be allocated between the portion of such Straddle Period ending on the Closing Date and the portion of such Straddle Period beginning after the Closing Date as if the taxable year of the Partnership ended on the Closing Date. To the extent the Partnership is included in a combined Texas franchise tax report with Seller or an Affiliate of Seller, the allocation provided in this Section 15.2(d) shall be calculated as if the Partnership left the combined group immediately after the Closing Date.

(e)    To the extent the actual amount of an Asset Tax or Income Tax payable by the Partnership is not known at the time an adjustment is to be made with respect to such Asset Tax or Income Tax pursuant to Section 3.3, Section 3.4 and Section 3.5, as applicable, the Parties shall utilize the most recent information available in estimating the amount of such Asset Tax or Income Tax for purposes of such adjustment. To the extent the actual amount of an Asset Tax or Income Tax payable by the Partnership (or the amount thereof paid or economically borne by a Party) is ultimately determined to be different than the amount (if any) that was taken into account in the Final Settlement Statement as finally determined pursuant to Section 3.5, timely payments will be made from one Party to the others to the extent necessary to cause each Party to bear the amount of such Asset Tax or Income Tax that is allocable to such Party under this Section 15.2.

(f)    Subject to Buyer’s right to reimbursement pursuant to Section 15.2(e), Buyer shall (i) pay any Asset Taxes relating to any Tax period that ends before or includes the Closing Date that become due and payable after the Closing Date and file with the appropriate Taxing Authority any and all Tax Returns required to be filed after the Closing Date with respect to such Asset Taxes, (ii) submit each such Tax Return to Seller for its review and comment reasonably in advance of the due date therefor, and (iii) timely file any such Tax Return, incorporating any comments received from Seller prior to the due date therefor.  The Parties agree that (x) this Section 15.2(f) is intended to solely address the timing and manner in which certain Tax Returns relating to Asset Taxes are filed and the Asset Taxes shown thereon are paid to the applicable Taxing Authority, and (y) nothing in this Section 15.2(f) shall be interpreted as altering the manner in which Asset Taxes are allocated to and economically borne by the Parties (except for any penalties, interest or additions to Tax imposed as a result of any breach by Buyer of its obligations under this Section 15.2(f), which shall be borne by Buyer).

(g)    Seller shall prepare and file all Tax Returns of the Partnership for any period ending on or before the Closing Date.  Buyer shall prepare and file all Tax Returns of the Partnership for any Straddle Period that are due after the Closing Date.  The Party preparing any such Tax Return (other than any Tax 

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Return with respect to Income Taxes of the Partnership for any period ending on or before the Closing Date) shall (1) submit to the other Party each such Tax Return for its review and comment reasonably in advance of the due date therefor, (2) consider, in good faith, any comments to such Tax Return and (3) shall pay any Taxes shown as due and payable thereon subject to its right to reimbursement pursuant to Section 15.2(e).

(h)    The amount of any refunds or credits of (i) Income Taxes of the Partnership for any Tax period ending on the Closing Date, or the portion of any Straddle Period ending on the Closing Date and (ii) other Taxes of the Partnership for any Tax period ending before the Effective Time or the portion of any Straddle Period ending immediately before the Effective Time, shall in each case be for the account of Seller except to the extent such refunds or credits were taken into account as an adjustment to the Purchase Price pursuant to Section 3.3, Section 3.4 and Section 3.5, as applicable.  The amount of any refunds or credits of (A) Income Taxes of the Partnership for any Tax period beginning after the Closing Date, or the portion of any Straddle Period beginning after the Closing Date and (B) other Taxes of the Partnership for any Tax period beginning at the Effective Time or the portion of any Straddle Period beginning at the Effective, Time shall in each case be for the account of Buyer. The amount of any refund or credit of Taxes of the Partnership for any Straddle Period shall be equitably apportioned between Buyer and Seller in accordance with the principles set forth in Section 15.2(c), as applicable. Each Party shall forward, and shall cause its Affiliates to forward, to the Party entitled to receive a refund or credit of Tax pursuant to this Section 15.2(h) the amount of such refund within 30 days after such refund is received or credit is realized, net of any reasonable third-party costs or expenses incurred by such Party or its Affiliates in procuring such refund or credit.

(i)    Any payments made to any Party pursuant to this Agreement after the Closing Date shall constitute an adjustment of the Purchase Price for Tax purposes and shall be treated as such by Buyer and Seller on their Tax Returns to the extent permitted by applicable Law.

(j)    After the Closing, Buyer shall control the conduct of any audit, adjustment, claim, examination, assessment, contest, or other proceeding with respect to Asset Taxes or any Taxes payable by the Partnership (each a “Tax Audit”).  In the case of a Tax Audit after the Closing that could reasonably be expected to result in a liability to Seller under this Agreement or otherwise, (A) Buyer shall keep Seller reasonably informed and consult with Seller with respect to any material issue relating to such Tax Audit, (B) Buyer shall provide Seller copies of all correspondence, notices and other written material received from any Governmental Authority with respect to such Tax Audit, (C) Buyer shall provide Seller with a copy of, and an opportunity to review and comment on, all submissions made to a Governmental Authority in connection with such Tax Audit, and (D) Buyer shall not agree to a settlement or compromise thereof without the consent of Seller, which consent shall not be unreasonably withheld, delayed or conditioned.  Notwithstanding the foregoing, the Parties expressly agree that any Tax Audit relating to U.S. federal income taxes of the Partnership conducted with respect to the taxable period ending on or prior to the date of the Conversion shall be controlled by Seller; provided, however, that in the event Buyer or its Affiliates or the Partnership would be subject to Liability (taking into account the Conversion) as a result of such Tax Audit, then (1) Seller shall not agree to compromise or settlement thereof without the prior written consent of Buyer (such consent not be unreasonable withheld, conditioned or delayed) and (2) Seller and the Partnership shall take all actions that may be reasonably necessary or appropriate to prevent the Partnership from having any liability for an “imputed underpayment” (within the meaning of Section 6225 of the Code) or any interest or penalty related thereto that is attributable to any adjustment of any item of income, gain, loss, deduction or credit of the Partnership for any taxable period or portion thereof ending on or prior to the date of the Conversion.

(k)    The Parties acknowledge and agree that following the Conversion, the Partnership will be classified as a disregarded entity under Section 301.7701-3(b)(1)(ii) of the Treasury Regulations, and 

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both Buyer and Seller agree to report, for all applicable Tax reporting and compliance purposes, the transfer and sale of the Midstream Interests as a deemed asset sale for U.S. federal income tax purposes.

(l)    The Parties shall cooperate fully, as and to the extent reasonably required in connection with the filing of any Tax Returns, the qualification for any exemption or reduction in Tax that may be available, State and Federal regulatory reports, royalty payments including related deduction and any audit, litigation or other proceeding with respect to these matters for the Assets.  Such cooperation shall include the retention of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.  Buyer agrees to allow access (upon request) to the Assets by Seller, Seller’s Representatives, auditors and State or Federal representatives relevant to any such audit, litigation or other proceeding.

15.3    Assignment.  This Agreement may not be assigned by Buyer or Seller without the prior written consent of the non-assigning Party; provided that (a) without the consent of Seller, but only upon prior written notice to Seller delivered on or before ten Business Days following the Execution Date (such date, or such earlier date as Buyer delivers such written notice (or written notice that it will not utilize such Affiliate assignment rights), the “Assignment Drop Dead Date”), Buyer may assign all or part of this Agreement to one or more Affiliates of Buyer, or (b) without the consent of Seller, Buyer may collaterally assign its rights under this agreement to the Financing Sources; provided that any such assignment shall not relieve Buyer of its obligations hereunder without Seller’s written consent.  In the event the non-assigning Party consents to any such assignment, such assignment shall not relieve the assigning Party of any obligations and responsibilities hereunder.  Any assignment or other transfer by Buyer or its successors and assigns of any of the Assets shall not relieve Buyer or its successors or assigns of any of their obligations (including indemnity obligations) hereunder, as to the Assets so assigned or transferred.  Any assignment made in contravention of the terms of this Section 15.3 shall be void ab initio.

15.4    Preparation of Agreement.  Seller, Buyer and their respective counsel participated in the preparation of this Agreement.  In the event of any ambiguity in this Agreement, no presumption shall arise based on the identity of the draftsman of this Agreement.

15.5    Publicity.

(a)    If Buyer desires to make or issue any public announcement concerning the transactions contemplated by this Agreement, it shall first give Seller 24 hours written notification of its desire to make such a public announcement.  The written notification shall include a written draft of the text of such public announcement.  Seller shall be given the right to provide comments to the proposed public announcement, and Buyer shall use its reasonable efforts to incorporate such comments into such public announcement.  Notwithstanding the foregoing, Buyer shall not make or issue any such public announcement within three Business Days after the Closing.

(b)    If Seller desires to make a public announcement, it shall first give Buyer 24 hours written notification of its intention to make a public announcement.  The written notification shall include a written draft of the text of such public announcement.  Buyer shall be given the right to provide comments to the proposed public announcement, and Seller shall use its reasonable efforts to incorporate such comments into such public announcement.  Subject to the Parties’ rights and obligations discussed in Section 15.5(c), in no event shall Seller disclose the identity of Buyer without the express written consent of Buyer.

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(c)    Nothing in this Section 15.5 shall prohibit any Party from issuing or making a public announcement or statement if such Party deems it necessary to do so in order to comply with any applicable Law or the rules of any stock exchange upon which the Party’s or a Party’s Affiliate’s capital stock is traded; provided, however, that to the extent not inadvisable in such Party’s reasonable discretion, prior written notification shall be given to the other Parties prior to any such announcement or statement.

(d)    Notwithstanding anything to the contrary in this Section 15.5, from and after the date that Seller or its Affiliate makes a public announcement concerning the transactions contemplated by this Agreement, this Section 15.5 will not preclude or prevent or otherwise restrict the activities of the Financing Sources in connection with the Financings. 

15.6    Notices.  All notices and communications required or permitted to be given hereunder shall be in writing and shall be delivered personally, or sent by bonded overnight courier, or mailed by U.S. Express Mail or by certified or registered United States Mail with all postage fully prepaid, or sent by e-mail transmission (provided that the acknowledgment of the receipt of such e-mail is requested and received, excluding automatic responses, with the receiving Person affirmatively obligated to promptly acknowledge receipt) addressed to Seller or Buyer, as appropriate, at the address for such Person shown below or at such other address as Seller or Buyer shall have theretofore designated by written notice delivered to the other Parties:

If to Seller:
QEP Energy Company
1050 17th Street, Suite 800
Denver, CO 80265
Attention:  Chris Longwell, GM Eastern Region
Email: chris.longwell@qepres.com

With a copy to:
QEP Energy Company
1050 17th Street, Suite 800
Denver, CO 80265
Attention:  Chris Woosley, Senior Vice President and General Counsel
Email: chris.woosley@qepres.com

and

Latham & Watkins LLP
811 Main Street, Suite 3700
Houston, Texas 77002
Attention:  Stephen Szalkowski
Email: stephen.szalkowski@lw.com

If to Buyer:
Aethon III BR LLC
12377 Merit Drive, Suite 1200
Dallas, Texas 75251
Attention:  Preston Phillips

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Email: pphillips@aethonenergy.com

With a copy to:

Weil, Gotshal & Manges LLP
200 Crescent Court, Suite 300
Dallas, Texas  75201
Attention:  Rodney L. Moore
Email: rodney.moore@weil.com

Any notice given in accordance herewith shall be deemed to have been given only when delivered to the addressee in person, or by courier, during normal business hours on a Business Day (or if delivered or transmitted after normal business hours on a Business Day or on a day other than a Business Day, then on the next Business Day), or upon actual receipt by the addressee during normal business hours on a Business Day after such notice has either been delivered to an overnight courier or deposited in the United States Mail or sent by e-mail transmission (provided that delivery of such e-mail is confirmed by written confirmation), as the case may be (or if delivered after normal business hours on a Business Day or on a day other than a Business Day, then on the next Business Day).  Seller or Buyer may change the address to which such communications are to be addressed by giving written notice to the other Parties in the manner provided in this Section 15.6.  If a date specified herein for giving any notice or taking any action is not a Business Day (or if the period during which any notice is required to be given or any action taken expires on a date which is not a Business Day), then the date for giving such notice or taking such action (and the expiration date of such period during which notice is required to be given or action taken) shall be the next day which is a Business Day.

15.7    Further Cooperation.  After the Closing, Seller and Buyer shall (and Buyer shall cause the Partnership to, as applicable) execute and deliver, or shall cause to be executed and delivered, from time to time such further instruments of conveyance and transfer, and shall take such other actions as Seller or Buyer may reasonably request, to convey and deliver the Upstream Assets to Buyer and the Midstream Interests to Buyer, to perfect Buyer’s title thereto and to accomplish the orderly transfer of the Upstream Assets and Midstream Interests to, and assumption of liabilities by, Buyer in the manner contemplated by this Agreement.

15.8    Filings, Notices and Certain Governmental Approvals.  Promptly after the Closing, Buyer shall (a) record all assignments of Leases executed at the Closing in the records of the applicable Governmental Authority, (b) if applicable, send notices, in forms reasonably acceptable to Seller, to vendors supplying goods and services for the Assets or the Midstream Business and to the operator of such Assets of the direct or indirect assignment of such Assets to Buyer, (c) actively pursue the unconditional approval of all applicable Governmental Authorities of the assignment of the Assets and Midstream Interests to Buyer and (d) actively pursue all other consents and approvals that may be required in connection with the assignment of the Assets and Midstream Interests to Buyer and the assumption of the Liabilities assumed by Buyer hereunder, that, in each case, shall not have been obtained prior to the Closing (including Customary Post-Closing Consents).  Buyer obligates itself to take any and all action required by any Governmental Authority in order to obtain such unconditional approval, including the posting of any and all bonds or other security that may be required in excess of its existing lease, pipeline or area-wide bond.

15.9    Entire Agreement; Conflicts.

(a)    THIS AGREEMENT, THE EXHIBITS, SCHEDULES AND APPENDICES HERETO, THE TRANSACTION DOCUMENTS AND THE CONFIDENTIALITY AGREEMENT 

77

COLLECTIVELY CONSTITUTE THE ENTIRE AGREEMENT AMONG SELLER AND BUYER PERTAINING TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL PRIOR AGREEMENTS, UNDERSTANDINGS, NEGOTIATIONS AND DISCUSSIONS, WHETHER ORAL OR WRITTEN, OF SELLER AND BUYER PERTAINING TO THE SUBJECT MATTER HEREOF.

(b)    The Parties expressly acknowledge and agree that, in the event that the Closing occurs, the Confidentiality Agreement shall be terminated in its entirety effective as of the Closing Date.

(c)    THERE ARE NO WARRANTIES, REPRESENTATIONS OR OTHER AGREEMENTS AMONG SELLER AND BUYER RELATING TO THE SUBJECT MATTER HEREOF EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE TRANSACTION DOCUMENTS OR THE CONFIDENTIALITY AGREEMENT, AND NEITHER SELLER NOR BUYER SHALL BE BOUND BY OR LIABLE FOR ANY ALLEGED REPRESENTATION, PROMISE, INDUCEMENT OR STATEMENTS OF INTENTION NOT SO SET FORTH.

(d)    IN THE EVENT OF A CONFLICT BETWEEN THE TERMS AND PROVISIONS OF THIS AGREEMENT AND THE TERMS AND PROVISIONS OF ANY EXHIBIT HERETO, THE TERMS AND PROVISIONS OF THIS AGREEMENT SHALL GOVERN AND CONTROL; PROVIDED, HOWEVER, THAT THE INCLUSION IN ANY OF THE EXHIBITS HERETO OF TERMS AND PROVISIONS NOT ADDRESSED IN THIS AGREEMENT SHALL NOT BE DEEMED A CONFLICT, AND ALL SUCH ADDITIONAL PROVISIONS SHALL BE GIVEN FULL FORCE AND EFFECT, SUBJECT TO THE PROVISIONS OF THIS SECTION 15.9.

15.10    Parties in Interest.  The terms and provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.  Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, expressed or implied, is intended to confer on any Person other than Seller and Buyer and their respective successors and permitted assigns, or the Parties’ respective related Indemnified Parties hereunder, any rights, remedies, obligations or liabilities under or by reason of this Agreement; provided that only a Party and its respective successors and permitted assigns will have the right to enforce the provisions of this Agreement on its own behalf or on behalf of any of its related Indemnified Parties (but shall not be obligated to do so). The Financing Sources are hereby made express third party beneficiaries of Section 7.2(e), Section 15.10, Section 15.11, Section 15.13 and Section 15.16.

15.11    Amendment.  This Agreement may be amended only by an instrument in writing executed by each of the Parties. Notwithstanding anything to the contrary in this Agreement, Section 7.2(e), Section 15.10, this sentence of this Section 15.11, Section 15.13 and Section 15.16 may not be amended, modified, waived or terminated in a manner that is materially adverse in any respect to the Financing Sources without the prior written consent of the Financing Sources, such consent not to be unreasonably withheld, delayed or conditioned.

15.12    Waiver; Rights Cumulative.  Any of the terms, covenants, representations, warranties or conditions hereof may be waived only by a written instrument executed by or on behalf of the Party waiving compliance.  No course of dealing on the part of Seller or Buyer, or their respective officers, employees, agents or representatives or any failure by Seller or Buyer to exercise any of its rights under this Agreement shall operate as a waiver thereof or affect in any way the right of such Person at a later time to enforce the performance of such provision.  No waiver by Seller or Buyer of any condition or any breach of any term, covenant, representation or warranty contained in this Agreement, in any one or more instances, shall be 

78

deemed to be or construed as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of any breach of any other term, covenant, representation or warranty.  The rights of Seller and Buyer under this Agreement shall be cumulative, and the exercise or partial exercise of any such right shall not preclude the exercise of any other right.

15.13    Conflict of Law Jurisdiction, Venue; Jury Waiver    THIS AGREEMENT AND THE LEGAL RELATIONS AMONG SELLER AND BUYER AND ALL CLAIMS OR CAUSES OF ACTION (IN CONTRACT OR IN TORT) THAT MAY BE BASED ON, ARISE OUT OF OR RELATE TO THIS AGREEMENT OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT WOULD REQUIRE THE APPLICATION OF ANY OTHER LAW.  EACH OF SELLER AND BUYER CONSENT TO THE EXERCISE OF JURISDICTION IN PERSONAM BY THE COURTS OF THE STATE OF COLORADO FOR ANY ACTION ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.  ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS SHALL BE EXCLUSIVELY LITIGATED IN COURTS HAVING SITES IN DENVER, DENVER COUNTY, COLORADO.  EACH OF SELLER AND BUYER WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABL LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDIG ARISING OUT OF OR RELATING TO THS AGREEMENT, THE FINANCINGS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY; PROVIDED HOWEVER, IN CONNECTION WITH ANY MATTERS RELATING TO CONVEYANCING OF OR TITLE TO ASSETS PROPERTY, THE LAWS OF THE STATE OR COMMONWEALTH WHERE THE APPLICABLE ASSETS ARE LOCATED SHALL GOVERN AND CONTROL SUCH DETERMINATION.  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, (A) THE PARTIES AGREE THAT ANY CLAIM, CONTROVERSY OR DISPUTE ANY KIND OR NATURE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) INVOLVING A FINANCING SOURCE THAT IS IN ANY WAY RELATED TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, INCLUDING ANY DISPUTE ARISING OUT OF OR RELATING IN ANY WAY TO THE FINANCINGS OR THE COMMITMENT LETTERS, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; (B)  EACH OF THE PARTIES HEREBY AGREES THAT IT WILL NOT BRING OR SUPPORT ANY ACTION, CAUSE OF ACTION, CLAIM, CROSS-CLAIM OR THIRD-PARTY CLAIM OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR IN EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE FINANCING SOURCES IN ANY WAY RELATING TO THIS AGREEMENT, THE COMMITMENT LETTERS, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, INCLUDING ANY DISPUTE ARISING OUT OF OR RELATING IN ANY WAY TO THE FINANCINGS OR THE PERFORMANCE THEREOF, IN ANY FORUM OTHER THAN THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK, OR, IF UNDER APPLICABLE LAW EXCLUSIVE JURISDICTION IS VESTED IN THE FEDERAL COURTS, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK (AND THE APPELLATE COURTS THEREOF); AND (C) EACH OF THE PARTIES HERETO HEREBY AGREES THAT THE PROVISIONS OF THIS SECTION 15.13 RELATING TO THE WAIVER OF JURY TRIAL SHALL APPLY TO ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, CROSS-CLAIM OR THIRD-PARTY CLAIM.

15.14    Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement 

79

shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any adverse manner to any of Seller or Buyer.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

15.15    Counterparts.  This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all of such counterparts shall constitute for all purposes one agreement.  Any signature hereto delivered by a Party by e-mail transmission via PDF attachment shall be deemed an original signature hereto.

15.16    No Recourse.  Notwithstanding anything to the contrary contained in this Agreement, the Parties hereby agree that none of the Financing Sources shall have any liability to the Seller or any other Person (other than Buyer and its permitted assigns in respect of the Financings) relating to or arising out of this Agreement, the Transaction Documents, the transactions contemplated hereby and thereby or the Financings, whether at law or equity, in contract or in tort or otherwise, and neither Seller nor any other Person (other than Buyer and its permitted assigns in respect of the Financings) shall have any rights or claims against any of the Financing Sources under this Agreement or the Financings, whether at law or equity, in contract or in tort, or otherwise, and Seller hereby waives any such rights or claims that it has or may have on its behalf and on behalf of the Seller Indemnified Parties.  Seller hereby agrees that it will not bring or support any action, claim, cause of action or similar claims or assertions of any kind or description arising out of or relating to this Agreement, whether at law or in equity, whether in contract or tort or otherwise, against the Financing Sources with respect to any dispute arising out of or relating in any way to the Financing contemplated hereby or the performance thereof or the transactions contemplated hereunder.  No Financing Source shall be subject to any special, consequential, punitive or indirect damages.

[Signature page follows.]

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IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of the date first written above.
	
		
	 
	SELLER:

	 
	 

	 
	QEP ENERGY COMPANY

	 
	 

	 
	 

	By:
	/s/ Michael C. Puchalski

	Name:
	Michael C. Puchalski

	Title:
	Vice President of Business Development

	
		
	 
	QEP MARKETING COMPANY

	 
	 

	 
	 

	By:
	/s/ Michael C. Puchalski

	Name:
	Michael C. Puchalski

	Title:
	Vice President of Business Development

	 
	 

	 
	 

	
		
	 
	QEP OIL & GAS COMPANY

	 
	 

	 
	 

	By:
	/s/ Michael C. Puchalski

	Name:
	Michael C. Puchalski

	Title:
	Vice President of Business Development

	 
	 

	 
	 

	
		
	 
	BUYER:

	 
	 

	 
	AETHON III BR LLC

	 
	 

	By:
	/s/ Gordon Huddleston

	Name:
	Gordon Huddleston

	Title:
	Co-President

	 
	 

	 
	 

Appendix A
DEFINED TERMS
“AAA” means the American Arbitration Association.

“Accounting Arbitrator” has the meaning set forth in Section 3.6.

“Adjusted Purchase Price” has the meaning set forth in Section 3.3.

“AFE” has the meaning set forth in Section 9.13(a).

“Affiliate” means any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with, another Person.  The term “control” and its derivatives with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.  For the avoidance of doubt, the Partnership shall be deemed to be an Affiliate of Midstream Seller prior to Closing, and from and after Closing the Partnership shall be deemed to be an Affiliate of Buyer.

“Agreement” has the meaning set forth in the introductory paragraph herein.

“Allocable Amount” has the meaning set forth in Section 3.8.

“Allocated Value” has the meaning set forth in Section 3.7.

“Allocation Schedule” has the meaning set forth in Section 3.8.

“Appeal” means request for stay, motion or petition for reconsideration or rehearing, applications or request for review, or notice of appeal or other administrative or judicial petition for review or reconsideration.

“Applicable Contracts” means all Upstream Applicable Contracts and Midstream Applicable Contracts, collectively or individually as the context requires.

“Applicable FCC Licenses” has the meaning set forth in Section 9.27.

“ASA JOAs” means the Operating Agreement A0339 by and between the State Mineral and Energy Board of the State of Louisiana and QEP Energy Company, dated as of October 8, 2014, the Operating Agreement A0340 by and between the State Mineral and Energy Board of the State of Louisiana and QEP Energy Company, dated as of October 8, 2014, Operating Agreement A0341 by and between the State Mineral and Energy Board of the State of Louisiana and QEP Energy Company, dated as of October 8, 2014, Operating Agreement A0342 by and between the State Mineral and Energy Board of the State of Louisiana and QEP Energy Company, dated as of October 8, 2014, Operating Agreement A0343 by and between the State Mineral and Energy Board of the State of Louisiana and QEP Energy Company, dated as of October 8, 2014, and Operating Agreement A0344 by and between the State Mineral and Energy Board of the State of Louisiana and QEP Energy Company, dated as of October 8, 2014. 

“Assets” means the Upstream Assets and/or the Midstream Assets, as the context requires.

Appendix A - 1

“Asset Taxes” means ad valorem, property, excise, sales, use, severance, production or similar Taxes (including any interest, fine, penalty or additions to Tax imposed by a Governmental Authority in connection with such Taxes) based upon acquisition, operation or ownership of the Assets or the production of Hydrocarbons therefrom but excluding, for the avoidance of doubt, (a) Income Taxes, and (b) Transfer Taxes.

“Assigned FCC Licenses” has the meaning set forth in Section 2.2(h).

“Assigned Receivables” has the meaning set forth in Section 2.2(t).

“Assignment Drop Dead Date” has the meaning set forth in Section 15.3.

“Balance Sheet” has the meaning set forth in Section 9.23(a).

“Balance Sheet Date” has the meaning set forth in Section 9.23(a).

“Burden” means any and all rentals, royalties (including lessor’s royalty), overriding royalties, production payments, net profits interests, excess royalties, minimum royalties, shut-in royalties, net profits interests, bonuses and other burdens upon, measured by or payable out of production (excluding, for the avoidance of doubt, any Taxes).

“Business Day” means a day (other than a Saturday or Sunday) on which commercial banks in Denver, Colorado are generally open for business.

“Buyer” has the meaning set forth in the introductory paragraph of this Agreement.

“Buyer Assumed Obligations” means the Upstream Assumed Obligations (as limited by the provisions of Section 8.1), to the extent and only to the extent the Upstream Assumed Obligations represent obligations and Liabilities, known or unknown, of Seller and its Affiliates with respect to the Upstream Assets, regardless of whether such obligations or Liabilities arose prior to, on or after the Effective Time.

“Buyer Designee” means a Delaware limited liability company entity to be designated by Buyer at least five Business Days prior to Closing, which entity shall be a wholly owned subsidiary of Buyer.

“Buyer Indemnified Parties” has the meaning set forth in Section 8.2.

“Buyer’s Representatives” has the meaning set forth in Section 12.1(a).

“Cash and Cash Equivalents” means (a) money, currency or a credit balance in a deposit account at a financial institution, net of checks outstanding as of the time of determination and other Restricted Cash, (b) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, (c) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, (d) commercial paper issued by any bank or any bank holding company owning any bank, and (e) certificates of deposit or bankers’ acceptances issued by any commercial bank organized under the applicable Laws of the United States of America.

“Casualty Loss” has the meaning set forth in Section 13.3(b).

Appendix A - 2

“Change of Control Amounts” means any obligation of the Seller, the Partnership or their Affiliates for any bonus, retention bonus, change in control fee, compensation or other similar payments or benefits (including the employee’s portion of any Medicare, Social Security or unemployment Taxes in respect of such payments), pursuant to Contracts or arrangements that exist as of immediately prior to the Closing, in each case, to the extent arising as a result of the consummation of the transactions contemplated by this Agreement, whether alone or in combination with any other event (contingent or otherwise), regardless of whether such amounts are payable at or after Closing.

“Claim” has the meaning set forth in Section 8.7(b).

“Claim Notice” has the meaning set forth in Section 8.7(b).

“Closing” has the meaning set forth in Section 6.1.

“Closing Date” has the meaning set forth in Section 6.1.

“Closing Date Environmental Escrow Amount” has the meaning set forth in Section 14.1(f)(i).

“Closing Date Title Escrow Amount” has the meaning set forth in Section 13.2(j)(i).

“Code” means the Internal Revenue Code of 1986, as amended.

“Commitment Letters” means (a) that certain commitment letter, dated as of November 16, 2018, from Bank of Montreal to Buyer, and (b) that certain commitment letter, dated as of November 16, 2018, from EIG Credit Management Company to Buyer, in each case regarding the Financings. 

“Communication Equipment” has the meaning set forth in Section 2.2(g).

“Confidentiality Agreement” means that certain Confidentiality and Nondisclosure Agreement, dated as of August 17, 2018, by and between Upstream Seller and Aethon Energy Operating LLC.

“Consent” has the meaning set forth in Section 9.4.

“Continuing Employee” has the meaning set forth in Section 11.10(c).

“Contract” means any written contract; agreement; mortgage; license agreement; farmin and/or farmout agreement; participation, exploration or development agreement; crude oil, condensate or natural gas purchase and sale, gathering, processing, transportation, marketing, disposal or injection agreement; operating agreement; balancing agreement; unitization, pooling and communitization agreements; facilities or equipment lease; production handling agreement; or other similar contract, but, in each case, specifically excluding any Lease, Upstream Easement, Permit or other instrument creating or evidencing an interest in any Asset or any real property related to or used or held for use in connection with the operation of any Asset, including the Midstream Real Property.

“Conversion” has the meaning set forth in the recitals to this Agreement.

“Conveyed Rights” means all (a) rights to amounts, held in suspense (including amounts held in a court registry) or otherwise, attributable to Seller’s ownership or purported ownership interest (including working interests) in the Assets or any other assets, in each case, that are subject to the Scheduled Concursus 

Appendix A - 3

Matters, (b) claims for reimbursement, credits and rights to recoupment with respect to or arising out of any of the Assets or any other assets, in each case, that are subject to the Scheduled Concursus Matters, and (c) claims, rights, demands, causes of action, suits, actions, judgments, damages, awards, recoveries, settlements, indemnities, warranties, rights to insurance proceeds, refunds, reimbursements, audit rights, duties, obligations, liabilities and other intangible rights in favor of or owed to Seller and relating to the reimbursement of well costs and other expenses paid by Seller in connection with the Assets or any other assets, in each case, that are subject to the Scheduled Concursus Matters, in each of the foregoing cases, whether the same relate to periods prior to, on or after the Effective Time; provided that the Conveyed Rights shall not affect or limit the right of Seller to receive amounts to which Seller is entitled under Section 2.4 to the extent related to any interest of Seller in the Assets that are subject to the Scheduled Concursus Matters which is not subject to the title disputes underlying the Scheduled Concursus Matters.

“COPAS” means Council of Petroleum Accountants Societies.

“Cotton Valley Formation” means the interval shown by the open-hole log in the Conly SR 27H 1-ALT (API No. 17013219520000) with the top at 9,451 feet measured depth (equivalent to subsea -9,170 feet, the top of the Cotton Valley Formation) and the bottom at 10,220 feet measured depth (equivalent to subsea -9,939 feet, the top of the Haynesville Formation) or the stratigraphic equivalents thereof, recognizing that actual depths may vary across the relevant Leases and Units.

“Credit Support” has the meaning set forth in Section 11.4(a).

“Cure Period” has the meaning set forth in Section 13.2(c).

“Customary Post-Closing Consents” means those consents and approvals from Governmental Authorities that are customarily obtained after Closing in connection with a transaction similar to the transactions contemplated by this Agreement.

“Cut-Off Date” has the meaning set forth in Section 2.4(b).

“Deed” means the Mineral and Surface Deed from Upstream Seller to Buyer pertaining to the Fee Minerals and Upstream Surface Fee in substantially the form of Exhibit G-2 attached hereto.

“Defect Claims Date” has the meaning set forth in Section 13.2(a).

“Defect Deductible” means 2.75% of the unadjusted Purchase Price.

“Defensible Title” means such title of Upstream Seller, with respect to the Wells set forth on Exhibit B-1 and the Well Locations set forth on Exhibit B-2, that, as of the Effective Time and immediately prior to the Closing, is deducible of record or evidenced by Contracts or other agreements (or elections thereunder):

(a)    with respect to each Well set forth on Exhibit B-1 or Well Location set forth on Exhibit B-2, as applicable (in each case, limited only to the applicable Subject Formation(s)), entitles Upstream Seller to receive not less than the Net Revenue Interest set forth on Exhibit B-1 or Exhibit B-2, as applicable, for all Hydrocarbons produced, saved and marketed from such Well or Well Location, as applicable, throughout the duration of the productive life of such Well or Well Location, as applicable, except for (i) decreases in connection with those operations in which Upstream Seller or its successors or assigns may from and after the Execution Date be a non-consenting co-owner, (ii) decreases resulting from the establishment or 

Appendix A - 4

amendment from and after the Execution Date of pools or units, (iii) decreases required to allow other Working Interest owners to make up past underproduction or pipelines to make up past under deliveries, (iv) decreases resulting from changes in tract or production allocations resulting from elections to participate or not participate in operations after the Execution Date, and (v) as otherwise expressly set forth in Exhibit B-1 or Exhibit B-2, as applicable;

(b)    with respect to each Well set forth on Exhibit B-1 or Well Location set forth on Exhibit B-2, as applicable (in each case, limited only to the applicable Subject Formation(s)), obligates Upstream Seller to bear not more than the Working Interest set forth in Exhibit B-1 or Exhibit B-2 for such Well or Well Location, as applicable, throughout the productive life of such Well or Well Location, as applicable, except for (i) increases resulting from contribution requirements with respect to defaulting co-owners from and after the Execution Date under applicable operating agreements, communitization agreements or pooling orders, (ii) increases resulting from the carrying of non-participating interest owners or co-tenants in Leases with respect to the drilling of any Well from and after the Execution Date, (iii) increases to the extent that such increases are accompanied by a proportionate increase in Upstream Seller’s Net Revenue Interest with respect to such Well as set forth on Exhibit B-1 or as set forth on Exhibit B-2 for such Well Location, (iv) increases resulting from the establishment or amendment from and after the Execution Date of pools or units and (v) as otherwise expressly set forth in Exhibit B-1 or Exhibit B-2, as applicable; and

(c)    is free and clear of all Encumbrances, other than Permitted Encumbrances.

“Deposit” has the meaning set forth in Section 3.2.

“Dispute Notice” has the meaning set forth in Section 3.5.

“DOJ” means the Department of Justice.

“Effective Time” means 12:01 a.m. (Prevailing Central Time) on July 1, 2018.

“Effective Time Hydrocarbons” means all Hydrocarbons attributable to the Upstream Assets in storage or existing in pipelines, plants and/or tanks (including inventory and line fill) that are, as of the Effective Time (a) upstream of the pipeline connection or above the relevant outlet flange or (b) upstream of the sales meter.

“Effective Time Working Capital” means the positive or negative amount of the remainder of (a) the Working Capital Assets, minus (b) the Working Capital Liabilities.

“EHC Aggregate Value” has the meaning set forth in Section 11.20(b).

“EHC Novation Instruments” has the meaning set forth in Section 11.20(a).

“Employee Benefit Plan” means an “employee benefit plan” within the meaning of Section 3(3) of ERISA, and any other bonus, incentive compensation, deferred compensation, profit-sharing, stock-option, stock-appreciation right, stock-bonus, stock-purchase, employee-stock-ownership, savings, severance, change in control, supplemental unemployment, layoff, salary-continuation, retirement, pension, health, life-insurance, disability, accident, group-insurance, vacation, holiday, sick-leave, fringe-benefit, or welfare plan, and any other employee compensation or benefit plan, contract (including any collective bargaining agreement), policy, practice, commitment or understanding (whether qualified or non-qualified, currently effective or terminated, written or unwritten) and any trust, escrow or other agreement related thereto.

Appendix A - 5

“Encumbrance” means any lien, mortgage, security interest, pledge, charge, or deed of trust.

“Environmental Arbitrator” has the meaning set forth in Section 14.1(f)(ii).

“Environmental Condition” means (a) a condition existing on or after the Execution Date with respect to the air, soil, subsurface, surface waters and/or ground waters with respect to the Leases or Wells that causes Upstream Seller not to be in compliance with any Environmental Law, or (b) the existence, with respect to the Upstream Assets or the operation thereof, on or after the Execution Date of any environmental pollution, contamination or degradation where Remediation is presently required under Environmental Laws, in each case, other than any such event or condition to the extent disclosed to Buyer on Schedule 9.14 as of the Execution Date (for clarity, excluding any event or matter disclosed pursuant to Section 11.6).  For the avoidance of doubt, (i) the fact that a Well is no longer capable of producing sufficient quantities of oil or gas to continue to be classified as a “producing well”, (ii) Plugging and Abandonment Obligations, (iii) the flaring of natural gas or other gaseous Hydrocarbons, (iv) except with respect to the presence of NORM in violation of Environmental Law, the presence or absence of NORM, (v) any condition, matter, event or Liability disclosed in the Schedules, (vi) the fact that a Well or any Upstream Personal Property is temporarily not in use, and (vii) except with respect to equipment, the use or condition of which is a violation of Environmental Law, the physical condition of any surface or subsurface production equipment or Upstream Personal Property, including water or oil tanks, separators or other ancillary equipment, shall not, in any of the foregoing cases, form the basis of an Environmental Condition.

“Environmental Defect” means any Environmental Condition with respect to any Upstream Asset.

“Environmental Defect Notice” has the meaning set forth in Section 14.1(a).

“Environmental Defect Property” has the meaning set forth in Section 14.1(a).

“Environmental Dispute” has the meaning set forth in Section 14.1(f)(i).

“Environmental Indemnity Agreement” has the meaning set forth in Section 14.1(c)(ii).

“Environmental Laws” means all applicable Laws as in effect as of the Execution Date relating to pollution, pollution control or the protection of the environment or natural resources, including those Laws relating to the generation, storage, handling, use, treatment, transportation, disposal or other management of Hazardous Substances.  The term “Environmental Laws” does not include good or desirable operating practices or standards that may be voluntarily employed or adopted by other oil and gas well operators or recommended, but not required, by a Governmental Authority or the Occupational Safety and Health Act of 1970, 29 U.S.C. § 651 et seq., as amended, or any analogous state Law.

“Equity Interest” means, with respect to any Person: (a) capital stock, membership interests, partnership interests, other equity interests, rights to profits or revenue and any other similar interest of such Person; (b) any security or other interest convertible into or exchangeable or exercisable for any of the foregoing; and (c) any rights (contingent or otherwise) to acquire any of the foregoing.

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

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Partnership or any of its subsidiaries is treated as a single employer under Section 414 of the Code.

Appendix A - 6

“ERISA Liability” means any and all Liabilities of the Partnership or its subsidiaries or their respective ERISA Affiliates (i) under Title IV of ERISA, (ii) under Sections 302 or 303 of ERISA, (iii) under Sections 412, 430, 431 or 4971 of the Code or (iv) as a result of the failure to comply with the continuation of coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the Code.

“Escrow Account” means the account maintained by the Escrow Agent pursuant to the Escrow Agreement.

“Escrow Agent” means US Bank, N.A., and includes its successors and assigns. 

“Escrow Agreement” means that certain Escrow Agreement, dated as of the Execution Date, by and among Buyer, Seller and the Escrow Agent.

“Escrow Earnings” has the meaning set forth in Section 6.3(g).

“Excluded Assets” means:

(a)    all of Seller’s corporate minute books, and, other than the Midstream Records and the Upstream Records (as the same are limited by the Excluded Records), financial and tax records and other business records that relate to Seller’s business generally;

(b)    other than the Assigned Receivables or any of the following constituting Conveyed Rights, all trade credits, all accounts, rights to amounts held in suspense and attributable to Upstream Seller’s ownership interest in the Upstream Assets, receivables and all other proceeds, income or revenues, in each case, attributable to the Upstream Assets with respect to any period of time prior to the Effective Time; 

(c)    other than the Assigned Receivables or any of the following constituting Conveyed Rights, all rights, claims and causes of action of Seller or its Affiliates (including the Partnership) arising under or with respect to any Leases or Applicable Contracts that are attributable to periods of time prior to the Effective Time (including rights to, and claims for, adjustments, recoupments, credits or refunds);

(d)    subject to Section 13.3(b), all rights and interests relating to the Assets or Midstream Business:

(i)    under any existing policy or agreement of insurance;

(ii)    under any Credit Support; or

(iii)    to any insurance or condemnation proceeds or awards arising, in each case, from acts, omissions or events, or damage to or destruction of property;

(e)    all Hydrocarbons produced and sold from the Upstream Assets with respect to all periods prior to the Effective Time and, to the extent the proceeds thereof are received by Seller as of the Closing Date, all Effective Time Hydrocarbons;

(f)    all claims of Seller or its Affiliates (other than the Partnership) for refunds of or loss carry forwards with respect to:

Appendix A - 7

(i)    Asset Taxes paid by Seller or its Affiliates (other than the Partnership) attributable to any period prior to the Effective Time;

(ii)    Income Taxes paid by Seller or its Affiliates (other than the Partnership); or

(iii)    any Taxes attributable to the Excluded Assets;

(g)    all personal computers, software licenses, servers and the contents thereof, SCADA equipment, network equipment and associated peripherals and telephone equipment, and all associated data held by Seller, in each case, other than the Communication Equipment (but the same held by the Partnership shall explicitly be part of the Midstream Assets);

(h)    all of Seller’s proprietary computer software, patents, trade secrets, copyrights, names, trademarks, logos and other intellectual property;

(i)    all Excluded Records;

(j)    all audit rights in respect of:

(i)    subject to Buyer’s rights under Section 2.4(a) and Section 15.2, the Assets or Midstream Business with respect to any period prior to the Effective Time; or

(ii)    Excluded Assets;

(k)    all geophysical and other seismic and related technical data and information relating to the Upstream Assets to the extent that such geophysical and other seismic and related technical data and information is:

(i)    proprietary; or

(ii)    not transferable without payment of a fee or other penalty to any Third Party under any Contract (unless Buyer has separately agreed in writing to pay such fee or other penalty);

(l)    except for the Upstream Surface Leases and Upstream Surface Fee, any offices, office leases, warehouses, laydown yards and similar assets and any inventory, office furniture or office supplies located in or on such excluded offices and/or office leases, in each case, held by Seller (but the same held by the Partnership shall explicitly be part of the Midstream Assets);

(m)    any assets that are excluded pursuant to the provisions of this Agreement;

(n)    any master service agreements, blanket agreements or similar Contracts of Seller;

(o)    Hedge Contracts, other than the Existing Hedge Contracts novated to Buyer pursuant to Section 11.20;

(p)    any debt instruments;

(q)    other than the Vehicles, all drilling rigs, and all trucks, cars, vehicles and other rolling stock; and

Appendix A - 8

(r)    the assets set forth in Exhibit H.

“Excluded Records” means any items referenced in the definition of “Upstream Records” that are (a) subject to a disclosure or confidentiality restriction in favor of a Third Party (provided Seller shall use commercially reasonable efforts to obtain waivers of such restrictions, but shall not be obligated to incur any Liability in such efforts), (b) not transferable without payment of additional consideration (unless Buyer has agreed in writing to pay such additional consideration) or that Seller and its Affiliates would not be able to otherwise compile and prepare for transfer using commercially reasonable efforts, (c) e-mails or other electronic files on Seller’s or its Affiliates’ servers and networks, (d) employee files and personnel records, (e) legal records and legal files of Seller, including all work product of and attorney-client communications with Seller’s legal counsel or any other documents or instruments that may be protected by an attorney-client privilege (but excluding any title opinions), (f) reserve reports, valuations, and estimates of any quantities of Hydrocarbons or the valuation thereof with respect to the Upstream Assets, and any Hydrocarbon or other Hydrocarbon pricing assumptions, forward Hydrocarbon or other pricing estimates, Hydrocarbon or price decks, or Hydrocarbon or pricing studies related thereto, (g) economic projections with respect to the Partnership and the Midstream Business, (h) data, correspondence, materials, documents, descriptions, or records relating to the auction, marketing, sales negotiation, or sale of any of the Assets, including the existence or identities of any prospective inquirers, bidders, or prospective purchasers of any of the Upstream Assets, any bids received from and records of negotiations with any such prospective purchasers and any analyses of such bids by any Person, (i) Tax Records that relate to the business of Seller generally, or (j) originals of the Upstream Records that relate to both the Upstream Assets and any Excluded Assets (subject to Buyer’s right under Section 6.4 to copies of such Upstream Records) and copies of all other Upstream Records.

“Execution Date” has the meaning set forth in the introductory paragraph of this Agreement.

“Existing Hedge Contracts” has the meaning set forth in Section 11.20(a).

“FCC” means the Federal Communications Commission.

“FCC Licenses” means any licenses, permits, certificates, approvals, franchises, consents, waivers, registrations or other authorizations issued by the FCC.

“Fee Minerals” has the meaning set forth in Section 2.2(a).

“FERC” has the meaning set forth in Section 11.16(a).

“Final Order” means an Order: (a) which has not been reversed, stayed, enjoined, set aside, annulled or suspended; (b) in relation to which no Appeal is pending or has been granted; and (c) as to which the prescribed time for filing an Appeal, and for the entry of orders staying, reconsidering, or reviewing the applicable Governmental Authority’s own motion has expired.

“Final Payment Date” has the meaning set forth in Section 3.5.

“Final Price” has the meaning set forth in Section 3.5.

“Final Resolution” means, with respect to any claim, (a) a Final Order or (b) the resolution by joint written agreement of the parties to such claim with respect to such claim.

Appendix A - 9

“Final Settlement Statement” has the meaning set forth in Section 3.5.

“Financings” has the meaning set forth in Section 11.15.

“Financing Sources” means the financial institutions that have committed to provide, or otherwise entered into agreements in connection with the Financings in connection with the transactions contemplated by this Agreement, including pursuant to the Commitment Letters, together with their Affiliates, officers, directors, employees, agents, advisors, and representatives and their respective successors and assigns.

“Firm Transportation Agreements” has the meaning set forth in Section 11.16(a).

“FTC” means the Federal Trade Commission.

“Fundamental Representations” means the representations and warranties of Seller set forth in Section 9.1, Section 9.2, Section 9.3(a), Section 9.16 and Section 9.19.

“GAAP” means generally accepted accounting principles in the United States, consistently applied.

“Gas Plants” means the gas processing plants and related equipment and facilities owned by the Partnership and described on Exhibit A-3.

“Gathering Systems” means the gathering systems, pipelines and related facilities owned by the Partnership and generally described on Exhibit A-4.

“Good and Defensible Title” means, as to each (a) Gathering System and the ROW Interests used or held for use in the ownership, operation or maintenance of such Gathering System, such record title or interest (or as to any such assets that are not real property, such title or interest) that is free and clear of any Encumbrance or defect in title (other than a Permitted Encumbrance) as is sufficient to enable the Partnership to own, operate and maintain such Gathering System and conduct the Midstream Business with respect thereto in all material respects in the ordinary course of business consistent with past practice, and (b) Gas Plant and the Midstream Real Property used or held for use in the ownership, operation or maintenance of such Gas Plant (other than ROW Interests used or held for use in the ownership, operation or maintenance of the Gathering Systems), such record title or interest (or as to any such assets that are not real property, such title or interest) as is free and clear of any Encumbrance or defect in title (other than a Permitted Encumbrance) that (i) causes the Partnership’s (or Seller’s, as applicable) title in any such asset not to constitute good and valid title or (ii) adversely affects in any material respect the ability of the Partnership to own, operate or maintain such Gas Plant and conduct the Midstream Business with respect thereto in the ordinary course of business consistent with past practice.

“Governmental Authority” means any federal, state, local, municipal, tribal or other government; any governmental, quasi-governmental regulatory or administrative agency, commission, body or other authority exercising or entitled to exercise any administrative, executive, judicial, arbitral, legislative, regulatory or taxing authority or power, and any court or governmental tribunal, including any tribal authority having or asserting jurisdiction.

“Hard Consent” means any Consent, (A) the failure to obtain would cause (x) the assignment of the Lease or Upstream Applicable Contract affected thereby to Buyer to be void, or (y) the termination of a Lease or Upstream Applicable Contract under the express terms thereof, or (B) which may be withheld, conditioned or delayed in such holder’s sole discretion pursuant to the terms or conditions of the Lease or Upstream 

Appendix A - 10

Applicable Contract containing such consent or approval requirement, other than, in the case of clause (B), any Customary Post-Closing Consents; provided that a Consent described in clause (B) shall cease to a Hard Consent if as of Closing, after notice is given to such counterparty in accordance with Section 13.4, such counterparty shall not have responded to such notice and denied or otherwise refused to provide such Consent.

“Haynesville Formation” means the interval shown by the open-hole log in the Conly SR 27H 1-ALT well (API No. 17013219520000) with the top at 10,220 feet measured depth (equivalent to subsea -9,939 feet, the top of the Haynesville Formation) and the bottom at 12,447 feet measured depth (equivalent to subsea -12,165 feet, the top of the Smackover Formation) or the stratigraphic equivalents thereof, recognizing that actual depths may vary across the relevant Leases and Units.

“Hazardous Substances” means any pollutants, contaminants, toxics or hazardous or extremely hazardous substances, materials, wastes, constituents, compounds or chemicals that are regulated by, or may form the basis of liability under, any Environmental Laws.

“Hedge Contract” means any Contract to which Seller or any of its Affiliates (including the Partnership) is a party with respect to any swap, forward, future or derivative transaction or option or similar agreement, whether exchange traded, “over-the-counter” or otherwise, involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions.

“Historical Partnership Assets” means all assets owned by the Partnership prior to the Effective Time and no longer held by the Partnership as of the Effective Time.

“Hosston Formation” means the interval shown by the open-hole log in the Conly SR 27H 1-ALT (API No. 17013219520000) with the top at 6,493 feet measured depth (equivalent to subsea -6,213 feet, the top of the Hosston Formation) and the bottom at 9,451 feet measured depth (equivalent to subsea -9,170 feet, the top of the Cotton Valley Formation) or the stratigraphic equivalents thereof, recognizing that actual depths may vary across the relevant Leases and Units.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder.

“Hydrocarbons” means oil, gas and other hydrocarbons (including casinghead gas and condensate) produced or processed in association therewith (whether or not such item is in liquid or gaseous form), including all crude oils, condensates and natural gas liquids at atmospheric pressure and all gaseous hydrocarbons (including wet gas, dry gas and residue gas) or any combination thereof, and sulphur, carbon dioxide and any other minerals extracted from, attributable to or produced in association therewith.

“Imbalances” means all Well Imbalances and Pipeline Imbalances.

“Income Taxes” means any income, capital gains, franchise (including Texas franchise tax) and similar Taxes.

“Indebtedness” means, with respect to any Person, at any date, without duplication,(a) all obligations of such Person for borrowed money, including all principal, interest, premiums, fees, expenses, overdrafts and, to the extent required to be carried on a balance sheet prepared in accordance with GAAP with respect thereto, whether short-term or long-term, and whether secured or unsecured, or with respect to deposits or 

Appendix A - 11

advances of any kind (other than deposits and advances of any Person relating to the purchase of products or services from the Partnership in the ordinary course of business), (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments or debt securities, (c) all obligations of such Person to reimburse any bank or other Person in respect of amounts paid under a letter of credit or bankers’ acceptances or similar instruments, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (e) all guarantees, whether direct or indirect, by such Person of indebtedness of others or indebtedness of any other Person secured by any assets of such Person, and (f) all other obligations of a Person which would be required to be shown as indebtedness on a balance sheet of such Person prepared in accordance with GAAP.

“Indemnified Party” has the meaning set forth in Section 8.7(a).

“Indemnifying Party” has the meaning set forth in Section 8.7(a).

“Indemnity Deductible” means 1.0% of the unadjusted Purchase Price.

“Individual Environmental Defect Threshold” has the meaning set forth in Section 14.1(e).

“Individual Indemnity Threshold” has the meaning set forth in Section 8.4(a).

“Individual Title Defect Threshold” has the meaning set forth in Section 13.2(i).

“Intellectual Property” means the following intellectual property rights, both statutory and under common law: (a) works of authorship and copyrights, registrations and applications for registration thereof and all associated renewals; (b) trademarks, service marks, trade names, slogans, domain names, logos, trade dress, and registrations and applications for registrations thereof; (c) inventions and patents, as well as any reissued and reexamined patents and extensions corresponding to the patents, and any patent applications and disclosures, as well as any related continuation, continuation in part and divisional applications and patents issuing therefrom; (d) trade secrets, including ideas, designs, concepts, compilations of information, methods, techniques, procedures, processes and other know-how, whether or not patentable; (e) mask works and registrations and applications therefor; (f) rights in industrial and other protected designs and any registrations and applications therefor; and (g) goodwill associated with any of the foregoing.

“Intercompany Payables” has the meaning set forth in Section 2.5(d)(iii).

“Interests Assignment” means the Partnership Interests Assignment from Midstream Seller to Buyer and Buyer Designee pertaining to the Midstream Interests and substantially in the form of Exhibit G-3.

“JIB Receivables” means rights of Seller and its Affiliate to obtain or recoup from joint interest owners amounts equal to the costs and expenses paid by Seller or its Affiliate, in their capacity as operator under an operating agreement or pooling order covering any Upstream Asset, on behalf of other joint interest owners of such Upstream Asset, whether related to pre- or post-Effective Time periods.

“Knowledge” means with respect to (a) Seller, the actual knowledge (without investigation or inquiry of any kind) of the Persons set forth in Schedule 1.1A, and (b) Buyer, the actual knowledge (without investigation or inquiry of any kind) of the Persons set forth in Schedule 1.1B.

“LACT” means Lease Automatic Custody Transfer.

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“Law” means any applicable statute, law (including common law), rule, regulation, ordinance, order, code, ruling, writ, injunction, decree or other official act of or by any Governmental Authority and any binding judicial or administrative interpretation thereof.

“Leases” has the meaning set forth in Section 2.2(a).

“Liabilities” means any and all claims, causes of action, payments, charges, judgments, assessments, losses, damages, penalties, fines, costs and expenses, Taxes, interest obligations deficiencies, debts, obligations, costs and expenses and other liabilities (whether absolute, accrued, contingent, fixed or otherwise, or whether known or unknown, or due or to become due or otherwise), including any attorneys’ fees, legal or other expenses incurred in connection therewith and including liabilities, costs, losses and damages for personal injury or death or property damage or environmental damage or remediation.

“Lowest Cost Response” means the Remediation of the identified Environmental Condition in the most cost-effective manner (considered as a whole) as compared to any other response that is required or allowed under Environmental Laws. The Lowest Cost Response may specifically include taking no action, leaving the condition unaddressed, periodic monitoring, the use of institutional controls or the recording of notices in lieu of remediation, if such responses are allowed under Environmental Laws. The Lowest Cost Response shall not include (a) any costs or expenses relating to the assessment, remediation, removal, abatement, transportation and disposal of any asbestos, asbestos containing materials or NORM (unless and to the extent required to remedy a violation of Environmental Law related thereto); (b) the costs of Buyer’s or any of its Affiliate’s employees or attorneys; (c) expenses for matters that are costs of doing business (e.g., those costs that would ordinarily be incurred in the day-to-day operations of the Upstream Assets, or in connection with Permit renewal/amendment activities); (d) overhead costs of Buyer or its Affiliates; (e) costs or expenses incurred in connection with remedial or corrective action that is designed to achieve standards that are more stringent than those required for similar facilities or that fail to reasonably take advantage of applicable risk reduction or risk assessment principles permitted under applicable Environmental Laws; or (f) any costs or expenses relating to any Plugging and Abandonment Obligations with respect to wells located on or comprising part of the Upstream Assets.

“Manager” means each manager or director of the Partnership or the General Partner serving in such capacity as of the Execution Date, any successor to any of them serving in such capacity prior to the Closing Date, and any other manager or director of the Partnership or the General Partner serving in such capacity between the Execution Date and the Closing Date, in each case, only in such person’s capacity as such.

“Material Adverse Effect” means an event, occurrence or circumstance that, individually or in the aggregate, has resulted in or reasonably could be expected to result in a material adverse effect on (a) the ownership, operation or value of the Upstream Assets and Midstream Business taken as a whole and as currently operated as of the Execution Date, or (b) Seller’s ability to consummate the transactions contemplated hereby; provided, however, that a Material Adverse Effect shall not include any material adverse effect resulting from:  (i) entering into this Agreement or the announcement of the transactions contemplated by this Agreement; (ii) any action or omission of Seller taken with the prior written consent of Buyer or that is otherwise prescribed hereunder; (iii) changes in general market, economic, financial or political conditions (including changes in commodity prices, fuel supply or transportation markets, interest or rates, or general market prices in the Hydrocarbon exploration, production, development, processing, gathering and/or transportation industry generally) in the area in which the Assets are located, the United States or worldwide; (iv) changes in conditions or developments applicable to the oil and gas industry in the United States, whether generally or in the area where the Assets are located; (v) acts of God, including hurricanes, tornadoes, storms or other naturally occurring events; (vi) orders, acts or failures to act of Governmental Authorities; (vii) civil 

Appendix A - 13

unrest, any outbreak of disease or hostilities, terrorist activities or war or any similar disorder; (viii) matters that are cured or no longer exist by the earlier of Closing and the termination of this Agreement; (ix) a change in or modification of, or a promulgation, adoption, issuance, repeal or replacement of, or a change in the enforcement of, Laws or GAAP and any interpretations thereof by any Governmental Authority from and after the Execution Date; (x) any reclassification or recalculation of reserves in the ordinary course of business; (xi) changes in the prices of Hydrocarbons; (xii) changes in service costs applicable to the oil and gas industry in the United States, whether generally or in the area where the Assets are located; (xiii) strikes and labor disturbances; (xiv) natural declines in well performance; (xv) any condition, matter, event or Liability disclosed in the Schedules; (xvi) any failure to meet internal or Third Party projections or forecasts or revenue, earnings or reserve forecasts; (xvii) matters as to which a Purchase Price adjustment is provided under Section 3.3, (xviii) any effect resulting from any action taken by Buyer, any Buyer’s Representative or any Affiliate of Buyer, and (xix) any Casualty Loss, except, in the cases of clauses (iii), (iv), (vii), (ix) and (xii) above, to the extent the items described in such clauses disproportionately affect the Partnership or the Assets, as applicable, as compared with other Persons or assets engaged in the oil and gas industry in the area where the Assets are located, in which case such changes, effects, conditions, developments, occurrences, events and/or circumstances (to the extent and only to the extent of such disproportionate effect) may be deemed to constitute, and shall be taken into account in determining, whether a Material Adverse Effect has occurred or would be reasonably likely to occur.

“Material Contract” has the meaning set forth in Section 9.8(a).

“Midstream Applicable Contracts” means all Contracts to which the Partnership is a party (or is a successor or assign of a party) or that will be binding on the Partnership or the Midstream Assets after the Closing.

“Midstream Assets” means all assets owned by the Partnership (other than the Excluded Assets).

“Midstream Business” means the ownership of the Midstream Interests and the ownership and operation of the business of the Partnership.

“Midstream Casualty Loss” has the meaning set forth in Section 13.3(c).

“Midstream Interests” has the meaning set forth in the recitals to this Agreement.

“Midstream Operating Expenses” means all operating expenses (including costs of insurance, overhead charged to the Partnership on account of the Midstream Assets under any Midstream Applicable Contracts, extension payments, renewal payments, rentals and other Midstream Real Property maintenance payments, and title examination and curative actions (other than expenses of curing any Title Defect or Environmental Defect after the Effective Time)) and capital expenditures (including bonuses, broker fees, and other Midstream Real Property acquisition costs, and costs of acquiring equipment) incurred in the ownership and operation of the Business; but excluding (in all cases) Liabilities attributable to (a) personal injury or death, property damage, torts, breach of contract or violation of any Law, (b) Plugging and Abandonment Obligations, closing trenches and restoring the surface around the Gathering Systems, Gas Plants and other facilities, (c) obligations with respect to Imbalances, (d) obligations with respect to Hedge Contracts, (e) obligations with respect to Taxes, and (f) claims for indemnification or reimbursement from any Third Party with respect to costs of the types described in the preceding clauses (a) through (e), whether such claims are made pursuant to Contract or otherwise.

“Midstream Policies” has the meaning set forth in Section 9.26.

Appendix A - 14

“Midstream Real Property” means all permits, licenses, servitudes, easements, surface use agreements, surface fee, surface leases and rights-of-way primarily used or held for use by the Partnership in connection with the ownership or operation of the Gathering Systems and Gas Plants, other than Permits and FCC Licenses. For the avoidance of doubt, and notwithstanding anything in this definition to the contrary, all ROW Interests held by the Partnership constitute “Midstream Real Property”.

“Midstream Records” means, all books, records and files of the Partnership relating to the Midstream Assets, including: (a) Contract and land files and title opinions; (b) operations, production, environmental and engineering records; (c) facility and pipeline records; and (d) accounting, Imbalance, and operating statements and files.

“Midstream Seller” has the meaning set forth in the recitals to this Agreement.

“Mitigation Credits” has the meaning set forth in Section 2.2(i).

“Mitigation Credits Quitclaim” means a Quitclaim Assignment in the form attached hereto as Exhibit G-4 pursuant to which Upstream Seller shall quitclaim its interest in the Mitigation Credits to Buyer. 

“Mutual Release” means a document in substantially the form attached hereto as Exhibit J-1 or Exhibit J-2, as applicable, executed concurrently with the execution and delivery of this Agreement, but to be effective and reaffirmed as of the Closing, by Seller, each Officer and each Manager, on one hand, and the Partnership and Buyer, on the other hand.

“Net Revenue Interest” means, with respect to each Well or Well Location set forth on Exhibit B-1 or Exhibit B-2, as applicable (in each case, limited only to the applicable Subject Formation(s)), the interest in and to all Hydrocarbons produced, saved and sold from or allocated to such Well or Well Location (in each case, limited only to the applicable Subject Formation(s)), after giving effect to all Burdens.

“NORM” means naturally occurring radioactive material.

“Offer” has the meaning set forth in Section 11.10(a).

“Offer Period End Date” has the meaning set forth in Section 11.10(a).

“Officer” means each officer of the Partnership or the General Partner serving in such capacity as of the Execution Date, any successor to any of them serving in such capacity prior to the Closing Date, and any other officer of the Partnership or the General Partner serving in such capacity between the Execution Date and the Closing Date, in each case, only in such person’s capacity as such.

“ONRR” means the Office of Natural Resources Revenue, or any applicable successor agency.

“Operating Expenses” means the Upstream Operating Expenses and/or the Midstream Operating Expenses, as the context requires.

“Order” means any order, charge, judgment, injunction, ruling, writ, award or decree by any Governmental Authority.

“Other Wells” has the meaning set forth in Section 2.2(d).

Appendix A - 15

“Outside Date” means March 11 , 2019, as the same may be extended pursuant to the proviso in Section 4.4 and Section 7.1(e). 

“Overhead Costs” means an amount equal to $1,000,000 per month, prorated for the number of days within the applicable month.

“Partnership” has the meaning set forth in the recitals to this Agreement.

“Partnership Excluded Assets” has the meaning set forth in Section 11.11.

“Partnership Interests” means the “Percentage Interest” as defined in the Partnership LPA.

“Partnership LPA” means the Agreement of Limited Partnership of the Partnership, dated as of September 30, 2014, as the same may have been amended, modified or supplemented from time to time prior to the Execution Date.

“Party” and “Parties” have the meanings set forth in the introductory paragraph of this Agreement.

“Permit” means any permits, licenses, authorizations, registrations, certificates, orders, franchises, consents or approvals granted or issued by any Governmental Authority, but specifically excluding the FCC Licenses; provided, that for the avoidance of doubt, the term “Permit” shall not include any Mitigation Credits.

“Permitted Employee” has the meaning set forth in Section 11.10(a).

“Permitted Encumbrances” means:

(a)    the terms and conditions of all Leases, Upstream Easements, Midstream Real Property (including ROW Interests) and all Burdens if the net cumulative effect of such Leases, Upstream Easements, Midstream Real Property and Burdens does not (i) cause a Protected Outcome to occur or (ii) adversely affect in any material respect the ability of the Partnership to conduct the Midstream Business with respect to any Gathering System or Gas Plant in the ordinary course of business consistent with past practice;

(b)    (i) preferential rights to purchase, consents to assignment and other similar restrictions, and (ii) Customary Post-Closing Consents and any required notices to, or filings with, Governmental Authorities in connection with the consummation of the transactions contemplated by this Agreement;

(c)    liens for Taxes or assessments not yet due or delinquent or, if delinquent, that are being contested in good faith and which are disclosed on Schedule 1.1C;

(d)    conventional rights of reassignment upon final intention to abandon or release any of the Assets;

(e)    those Title Defects that Buyer waives in writing or is deemed to have waived pursuant to the terms of this Agreement and those Title Defects that are asserted pursuant to any Title Defect Notice delivered by Buyer pursuant to this Agreement but that are not remedied on account of the application of the provisions of Section 13.2(i);

Appendix A - 16

(f)    all applicable Permits and Laws and all rights reserved to or vested in any Governmental Authority:  (i) to control or regulate any Asset in any manner; (ii) by the terms of any right, power, franchise, grant, license or permit, or by any provision of Law, to terminate such right, power, franchise, grant, license or permit or to purchase, condemn, expropriate or recapture or to designate a purchaser of any of the Assets; (iii) to use such property in a manner which would not reasonably be expected to materially impair the use of such property for the purposes for which it is currently owned and operated; or (iv) to enforce any obligations or duties affecting the Assets to any Governmental Authority with respect to any franchise, grant, license or permit;

(g)    rights of a common owner of any interest in Upstream Easements, Midstream Real Property or Permits held by Seller or the Partnership and such common owner as tenants in common or through common ownership, provided that such rights do not (i) cause a Protected Outcome to occur or (ii) adversely affect in any material respect the ability of the Partnership to conduct the Midstream Business with respect to any Gathering System or Gas Plant in the ordinary course of business consistent with past practice ;

(h)    any obligations or duties affecting the Assets to any municipality or public authority;

(i)    easements, conditions, covenants, restrictions, servitudes, permits, rights-of-way, surface leases and other rights in the Assets for the purpose of operations, facilities, pipelines, transmission lines, transportation lines, distribution lines and other like purposes, or for the joint or common use of rights-of-way, facilities and equipment;

(j)    vendors, carriers, warehousemen’s, repairmen’s, mechanics’, workmen’s, materialmen’s, construction or other like liens arising by operation of Law in the ordinary course of business or incident to the construction or improvement of any property in respect of obligations which are not yet due or delinquent or, if delinquent, that are being contested in good faith or that are otherwise described in Schedule 1.1C;

(k)    liens created under Leases, Applicable Contracts, Upstream Easements, or Midstream Real Property included in the Assets and/or operating agreements or production sales contracts or by operation of Law in respect of obligations that are not yet due or delinquent;

(l)    (i) failure of the records of any Governmental Authority to reflect Upstream Seller as the owner of any Upstream Asset, provided that the instruments evidencing the conveyance of such title to Upstream Seller from its immediate predecessor in title are recorded in the real property, conveyance, or other records of the applicable county or parish; (ii) failure to record Leases, Upstream Easements, or Midstream Real Property issued by any Governmental Authority in the real property, conveyance, or other records of the county or parish in which such Leases, Upstream Easements, or Midstream Real Property are located, provided that the instruments evidencing the conveyance of such title to Upstream Seller from its immediate predecessor in title are recorded with the Governmental Authority that issued any such Lease, Upstream Easement, or Midstream Real Property or (iii) delay or failure of any Governmental Authority to approve the assignment of any Upstream Asset to Upstream Seller or any predecessor in title to Upstream Seller unless such approval has been expressly denied or rejected in writing by such Governmental Authority;

(m)    lack of a division order or an operating agreement covering any Upstream Asset (including portions of an Upstream Asset that were formerly within a unit but which have been excluded from the unit as a result of a contraction or replacement of the unit);

Appendix A - 17

(n)    failure to obtain waivers of maintenance of uniform interest, restriction on zone transfer, or similar provisions in operating agreements with respect to assignments in Seller’s chain of title to the Upstream Asset;

(o)    failure of any communitization agreement, unit agreement, or similar type of agreement to have been finally approved by any Governmental Authority;

(p)    any Encumbrance affecting the Assets or Midstream Interests that is discharged by Seller at or prior to Closing;

(q)    the terms and conditions of this Agreement or any Transaction Document and any matters referenced in any Exhibit or Schedule to this Agreement;

(r)    the terms and conditions of the Applicable Contracts to the extent that the same do not, in the aggregate, cause a Protected Outcome to occur;

(s)    in the case of any Well Location, lack of any permits, licenses, servitudes, easements, surface use agreements, surface leases, rights-of-way, unit designations, or production or drilling units not yet obtained, formed, or created;

(t)    any calls on production under Applicable Contracts;

(u)    zoning and planning ordinances and municipal regulations; and

(v)    all other Encumbrances, instruments, obligations, defects and irregularities affecting the Assets that, individually or in the aggregate, do not cause a Protected Outcome to occur, would be acceptable to a reasonably prudent owner and operator of assets similar to the Assets in the geographic location where the Assets are located, and would not reasonably be expected to materially impair the use of such property for the purposes for which it is currently owned and operated.

“Person” means any individual, firm, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Authority or any other entity.

“Phase I Environmental Site Assessment” means an environmental site assessment performed pursuant to ASTM Standard E1527, or any similar environmental assessment, including any environmental compliance audit, that does not involve any invasive, sampling or testing activities.

“Phase II Environmental Site Assessment” means an environmental site assessment performed pursuant to ASTM Standard E1903, or any similar environmental site assessment that includes surficial soil and water sampling, sub-surficial soil borings, and/or groundwater monitoring well installation, sampling and analysis.

“Pipeline Imbalance” means any marketing imbalance between the quantity of Hydrocarbons attributable to the Upstream Assets or Midstream Assets required to be delivered by or to Seller or the Partnership, as applicable, under any Contract or Law relating to the purchase and sale, gathering, transportation, storage, processing or marketing of such Hydrocarbons and the quantity of Hydrocarbons attributable to the Upstream Assets or Midstream Assets actually delivered by or to Seller or the Partnership, as applicable, pursuant to the relevant Contract or at Law, together with any appurtenant rights and obligations 

Appendix A - 18

concerning production balancing at the delivery point into the relevant sale, gathering, transportation, storage or processing facility, including cash settlement obligations.

“Plugging and Abandonment Obligations” means any Liabilities associated with the permanent or temporary plugging and/or abandonment of any wells or dismantling or decommissioning of any gathering systems, plants, facilities or other assets.

“Policies” has the meaning set forth in Section 9.26.

“Preferential Purchase Right” means each preferential purchase right, right of first refusal or similar right pertaining to an Upstream Asset, Midstream Interest or Midstream Asset and the consummation of the transactions contemplated hereby with respect thereto.

“Preliminary Settlement Statement” has the meaning set forth in Section 3.4.

“Prepaid JOA Funds” means any funds held by Seller or its Affiliates that were received by such Persons (a) in the capacity as operator under an operating agreement or pooling order covering any Upstream Asset, and (b) as prepayments by Third Parties for operations on the Upstream Assets under operating or similar agreements for which a payable has not been incurred by Seller or its Affiliates as of the Closing Date.

“Pre-ET Intercompany Receivables” has the meaning set forth in Section 2.5(d)(ii).

“Protected Outcome” means (a) a reduction in the Net Revenue Interest of Upstream Seller (or, after Closing for purposes of the Special Warranty, Buyer) with respect to each Well or Well Location set forth on Exhibit B-1 or Exhibit B-2, as applicable (in each case, limited only to the applicable Subject Formation(s)), to an amount less than the Net Revenue Interest set forth in Exhibit B-1 or Exhibit B-2, as applicable, or (b) the obligation of Upstream Seller (or, after Closing for purposes of the Special Warranty, Buyer) to bear a Working Interest with respect to each Well or Well Location set forth on Exhibit B-1 or Exhibit B-2, as applicable (in each case, limited only to the applicable Subject Formation(s)), in an amount greater than the Working Interest set forth in Exhibit B-1 or Exhibit B-2, as applicable (unless the Net Revenue Interest for such Subject Formation is greater than the Net Revenue Interest set forth in Exhibit B-1 or Exhibit B-2, as applicable, for such Subject Formation(s), as applicable, and such increase is in the same proportion as any increase in such Working Interest).

“Purchase Price” has the meaning set forth in Section 3.1.

“QEP Energy” has the meaning set forth in the introductory paragraph of this Agreement.

“QEP Gas Services Agreement” means that certain Gas Services Agreement, dated as of August 26, 2010, by and between Upstream Seller and the Partnership (as successor in interest to QEP Field Services Company), as the same may have been amended, modified or supplemented prior to the Execution Date.

“QEP Marketing” has the meaning set forth in the introductory paragraph of this Agreement.

“QEP Oil & Gas” has the meaning set forth in the introductory paragraph of this Agreement.

“Records” means the Midstream Records and/or the Upstream Records, as the context requires.

Appendix A - 19

“Related Party” means (a) each Seller and the Partnership, (b) any Affiliate of any Seller (other than the Partnership) and (c) any officer, manager or director of any Seller or any Affiliate of any Seller (including the Partnership).

“Remediation” means, with respect to an Environmental Condition, the response required or allowed under Environmental Laws that addresses (for current and future use in the same manner as being currently used) the identified Environmental Condition at the Lowest Cost Response.  The word “Remediate” and other variations thereof shall have correlative meanings.

“Remediation Amount” means, with respect to an Environmental Condition, the cost (net to Upstream Seller’s interest) of the Remediation of such Environmental Condition.

“Representatives” of any Person means the officers, directors, managers, employees, independent contractors, consultants, advisors, agents, counsel, accountants, investment bankers and other representatives of such Person or the Affiliates of such Person or the Affiliates of such Person.

“Restricted Cash” shall mean the amount of Cash and Cash Equivalents of the Partnership that would be deemed to be “restricted” in accordance with GAAP; provided, however, that the amount so determined shall (whether or not in compliance with GAAP) include the following: (a) amounts held in escrow, (b) restricted balances, (c) the proceeds of any Casualty Loss with respect to any Asset (to the extent any such Asset has not been repaired or replaced or the liability for the repair or replacement of such Asset has not been paid or accrued as a current liability) and (d) proceeds of indemnification settlements to the extent that the indemnified losses have not been paid or accrued as current liabilities.

“Retained Litigation” has the meaning set forth in the definition of “Seller Obligations”.

“Rodessa Formation” means the interval shown by the open-hole log in the Conly SR 27H 1-ALT (API No. 17013219520000) with the top at 5,086 feet measured depth (equivalent to subsea -4,806 feet, the top of the Rodessa Formation) and the bottom at 6,033 feet measured depth (equivalent to subsea -5,753 feet, the top of the Sligo Formation) or the stratigraphic equivalents thereof, recognizing that actual depths may vary across the relevant Leases and Units.

“ROW Interests” means all rights-of-way and other leases, reservations, crossing rights and other easements, servitudes, franchises, permits, licenses, condemnation judgments or awards, surface leases and other rights to, or interests in, real property and other similar real property interests held by Seller or the Partnership, to the extent and only to the extent used or held for use in connection with the ownership, operation or maintenance of the Gathering Systems and, in each case, other than Permits and FCC Licenses.

“Scheduled Closing Date” has the meaning set forth in Section 6.1.

“Scheduled Concursus Matters” means those suits, actions or proceedings that are set forth on Part I of Schedule 9.7. 

“Seller” has the meaning set forth in the introductory paragraph of this Agreement.

“Seller Indemnified Parties” has the meaning set forth in Section 8.3.

“Seller Obligations” means:

Appendix A - 20

(a)    any Liability arising out of, in connection with or attributable to personal injury or death resulting from Upstream Seller’s operation of the Upstream Assets or the Partnership’s ownership or operation of the Midstream Assets prior to the Closing Date; 

(b)    any Liability to the extent arising out of the ownership, operation or disposition of any Historical Partnership Assets by the Partnership;

(c)    all Liabilities arising out of, in connection with or attributable to the (i) Excluded Assets described in subparts (l), (m), (n), (p), (q), (r) or (t) of the definition of “Excluded Assets”, or (ii) the Partnership Excluded Assets;

(d)    all Liabilities arising out of, in connection with or attributable to the disposal or transportation of any Hazardous Substances by Upstream Seller that were produced from any Upstream Assets to any location not on the Upstream Assets or lands unitized therewith, in each case, to the extent attributable to periods prior to the Closing Date;

(e)    all Liabilities arising out of, in connection with or attributable to any Third Party Claim related to the gross negligence or willful misconduct of Upstream Seller or any of its Affiliates in connection with the operation of any of the Upstream Assets prior to the Closing Date;

(f)    any Change of Control Amounts and Severance Obligations;

(g)    any fines or penalties levied by any Governmental Authorities that arise as a result of any violation by Upstream Seller with respect to the Upstream Assets or the Partnership of any Laws prior to the Closing Date (provided, for clarity, this clause (g) shall not cover any costs or expenses to Remediate any Environmental Condition giving rise to any such fine or penalty);

(h)    any Liabilities arising out of, in connection with or attributable to the failure to pay or report, or mispayment, by Upstream Seller of any Working Interests, Burdens and other interest owners’ revenues or proceeds attributable to sales of Hydrocarbons produced from or attributable to the Upstream Assets, in each case, to the extent and only to the extent related to periods prior to the Effective Time; 

(i)    all Third Party Debt and other Indebtedness (if any) of the Partnership as of the Closing;

(j)    all Liabilities arising out of, in connection with, attributable to, or related to the suits, actions, claims and proceedings set forth on Schedule 9.7, other than the Scheduled Concursus Matters (such matters, the “Retained Litigation”); and

(k)    any Liabilities arising out of, in connection with, or attributable to a breach or event of default on the part of the Partnership under any ROW Interest, to the extent and only to the extent such breach or event of default results from any claim (i) of trespass against the Partnership in respect of such ROW Interest, or (ii) that any pipe installed by the Partnership or Upstream Seller in such ROW Interest was (A) located outside of the area permitted by such ROW Interest for such pipe to be installed, (B) larger than the size of pipe permitted to be installed in such ROW Interest or (C) a type of pipeline prohibited to be installed in such ROW Interest.

“Seller Taxes” means (a) any and all Income Taxes imposed on the Partnership for any Tax period ending on or before the Closing Date, or the portion of any Straddle Period ending on the Closing Date (determined in accordance with Section 15.2), (b) any and all Taxes (other than Income Taxes) imposed on 

Appendix A - 21

the Partnership for any Tax period ending prior to the Effective Time and the portion of any Straddle Period ending immediately prior to the Effective Time, (c) any Taxes imposed on or with respect to the ownership or operation of the Excluded Assets or that are attributable to any asset or business of Seller that is not part of the Upstream Assets or Midstream Interests, (d) Asset Taxes (other than Asset Taxes described in clause (b) above) allocable to Seller pursuant to Section 15.2 and (e) any and all liabilities of Seller in respect of any Taxes, in each case, (i) without duplication, (ii) excluding Taxes allocable to Buyer pursuant to Section 15.2 and (iii) taking into account Taxes effectively borne by Seller as a result of (A) the adjustments to the Purchase Price made pursuant to Section 3.3, Section 3.4 or Section 3.5, as applicable, and (B) any payments made from one Party to the other in respect of Taxes pursuant to Section 15.2(e).

“Severance Obligations” means any severance payment or similar obligations of the Partnership to any director, officer, manager, employee, or any other consultant, independent contractor or other service provider employed or engaged by the Partnership, Seller or any of their respective Affiliates pursuant to any Contract with such Person existing as of or prior to the Closing (but specifically excluding any arrangement entered into upon the Closing or in connection with the transactions contemplated by this Agreement by or at the direction of Buyer or its Affiliates) that would arise from the termination (including termination with or without cause and voluntary termination) of the position, office, employment or engagement of such Person upon or at any time after the Closing, or that exists as of the Closing as a result of any such termination prior to the Closing, including any severance, bonus or tax indemnification obligations or other similar payments and the portion of any Medicaid, Social Security or unemployment Taxes in respect of such payments for which the Partnership, Seller or any of their respective Affiliates is liable.

“Sligo Formation” means the interval shown by the open-hole log in the Conly SR 27H 1‐ALT (API No. 17013219520000) with the top at 6,033 feet measured depth (equivalent to subsea -5,753 feet, the top of the Sligo Formation) and the bottom at 6,493 feet measured depth (equivalent to subsea -6,213 feet, the top of the Hosston Formation) or the stratigraphic equivalents thereof, recognizing that actual depths may vary across the relevant Leases and Units.

“Smackover Formation” means the interval shown by the open-hole log in the Bricker #2 (API No. 17119202480000) with the top at 11,316 feet measured depth (equivalent to subsea ‐11,062 feet, the top of the Smackover Formation) and a base depth undefined by this well (12,400 feet measured depth, equivalent to subsea -12,146 feet, well TD), or the stratigraphic equivalents thereof, recognizing that actual depths may vary across the relevant Leases and Units.

“Special Warranty” has the meaning set forth in Section 13.1(b).

“Straddle Period” means (a) with respect to any Income Tax, any Tax period that begins on or before and ends after the Closing Date and (b) with respect to any other Tax, any Tax period that begins before and ends after the Effective Time.

“Subject Formation(s)” means, with respect to each (a) Well, the currently producing formation with respect to such Well, and (b) Well Location, the Cotton Valley Formation, the Haynesville Formation, the Hosston Formation, the Rodessa Formation, the Sligo Formation and/or the Smackover Formation, in each case, as set forth on Exhibit B-2 for such Well Location.

“Survey” has the meaning set forth in Section 11.18.

Appendix A - 22

“Suspense Funds” means all amounts controlled by Upstream Seller and its Affiliates in suspense that are attributable to the Upstream Assets (including any such amounts attributable to other working interest owners’ interests in such assets).

“Tax” or “Taxes” means all (a) taxes, assessments, duties, levies, imposts or other similar charges imposed by a Governmental Authority, including all income, franchise, profits, capital gains, capital stock, transfer, gross receipts, sales, use, transfer, service, occupation, ad valorem, property, excise, severance, windfall profit, premium, stamp, license, payroll, employment, social security, unemployment, disability, environmental, alternative minimum, add-on, value-added, withholding (including backup withholding) and other taxes, assessments, duties, levies, imposts or other similar charges of any kind whatsoever including all escheat and unclaimed property obligations (whether payable directly or by withholding and whether or not requiring the filing of a Tax Return), and all estimated taxes, deficiency assessments, additions to tax, additional amounts imposed by any Governmental Authority, penalties and interest and (b) any liability in respect of any item described in the foregoing clause (a) that arises by reason of contract, assumption, transferee or successor liability, operation of Law (including by reason of being a member of a consolidated, combined or unitary group) or otherwise.

“Tax Audit” has the meaning set forth in Section 15.2(j).

“Tax Partnership” has the meaning set forth in Section 9.15(d).

“Tax Returns” means any report, return, election, document, estimated Tax filing, declaration or other filing provided to any Taxing Authority, including any amendments thereto.

“Taxing Authority” means, with respect to any Tax, the Governmental Authority that imposes such Tax, and the Governmental Authority (if any) charged with the collection of such Tax, including any Governmental Authority that imposes, or is charged with collecting, social security or similar charges or premiums.

“Third Party” means any Person other than a Party to this Agreement or an Affiliate of a Party to this Agreement.

“Third Party Debt” means all (a) outstanding Indebtedness for borrowed money of the Partnership from any Person other than the Partnership and (ii) outstanding Indebtedness of any Person other than the Partnership that is secured by an Encumbrance on any Midstream Assets or Midstream Interests of the Partnership or guaranteed by the Partnership.

“Title Arbitrator” has the meaning set forth in Section 13.2(j)(ii).

“Title Benefit” means, with respect to each Well or Well Location set forth on Exhibit B-1 or Exhibit B-2, as applicable (in each case, limited only to the applicable Subject Formation(s)), any right, circumstance or condition existing immediately prior to Closing that operates to:

(a)    increase the Net Revenue Interest of Upstream Seller with respect to the Subject Formation in any Well or Well Location, as applicable, above that shown for such Subject Formation in Exhibit B-1 or Exhibit B-2, as applicable, to the extent the same does not cause a greater than proportionate increase in Upstream Seller’s Working Interest with respect to such Subject Formations; or

Appendix A - 23

(b)    obligates Upstream Seller to bear a Working Interest with respect to the Subject Formation in any Well or Well Location, as applicable, that is less than that shown for such Subject Formation in Exhibit B-1 or Exhibit B-2, as applicable, to the extent the same does not cause any decrease in the Upstream Seller’s Net Revenue Interest with respect to such Subject Formation.

“Title Benefit Amount” has the meaning set forth in Section 13.2(e).

“Title Benefit Notice” has the meaning set forth in Section 13.2(b).

“Title Benefit Property” has the meaning set forth in Section 13.2(b).

“Title Company” has the meaning set forth in Section 11.18.

“Title Defect” means any Encumbrance, defect or other matter that causes Upstream Seller not to have Defensible Title to any Well or Well Location; provided that the following shall not be considered Title Defects:

(a)    defects arising out of lack of corporate or other entity authorization unless Buyer provides affirmative evidence in a Title Defect Notice that such corporate or other entity action was not authorized and has resulted, or is reasonably be expected to result, in another Person’s superior claim of title to the relevant Upstream Asset;

(b)    any gap in the chain of title, unless such gap is affirmatively shown to exist in such records by an abstract of title, title opinion or landman’s title chain or runsheet which is included in a Title Defect Notice, or Buyer otherwise provides affirmative evidence in a Title Defect Notice of such gap and that such gap has resulted, or is reasonably be expected to result, in another Person’s superior claim of title to the relevant Upstream Asset;

(c)    defects arising from any prior oil and gas lease relating to the lands covered by the Leases or Units not being surrendered of record unless Buyer provides affirmative evidence in a Title Defect Notice that such prior oil and gas lease is still in effect and has resulted, or is reasonably be expected to result, in another Person’s superior claim of title to the relevant Upstream Asset;

(d)    defects that affect only which Person has the right to receive Burden payments (rather than the amount of such Burden payment);

(e)    defects based solely on: (i) lack of information in Seller’s files, (ii) references to an unrecorded document to which neither Seller nor any Affiliate of Seller is a party; or (iii) any Tax assessment, Tax payment or similar records or the absence of such activities or records;

(f)    any Encumbrance, defect, or other loss of title specifically resulting from (i) Seller’s conduct of business as required under this Agreement, (ii) Seller’s conduct of business as directed, or consented to, by Buyer under this Agreement, or (iii) omissions or failures to act of Seller where such omissions or failures to act (A) are required under this Agreement, (B) occurred at the direction of Buyer, or (C) occurred due to Buyer’s failure to consent to any activity;

(g)    Encumbrances created under deeds of trust, mortgages, and similar instruments by the lessor under a Lease or otherwise created by the applicable mineral owner that (i) have not been subordinated to the lessee’s interest, (ii) would customarily be accepted in taking or purchasing such Leases 

Appendix A - 24

and (iii) for which a reasonably prudent lessee in the same geographic area where the Upstream Assets are located would not customarily seek a subordination of such Encumbrance to the oil and gas leasehold estate prior to conducting drilling activities on the Lease, except to the extent the same is, subject to a proceeding to enforce said Encumbrance; 

(h)    all Encumbrances, defects or irregularities that have been cured or remedied by applicable statutes of limitation or statutes of prescription;

(i)    all defects or irregularities resulting from lack of survey or lack of metes and bounds descriptions unless required by Law;

(j)    all Encumbrances, defects or irregularities resulting from the failure to record releases of liens, production payments or mortgages that have expired on their own terms unless Buyer provides affirmative evidence in a Title Defect Notice that such Encumbrance, defect or irregularity has resulted, or is reasonably be expected to result, in another Person’s superior claim of title to the relevant Upstream Asset;

(k)    the absence of any lease amendment or consent by any Burden or mineral interest holder authorizing the pooling of any leasehold interest, Burden or mineral interest;

(l)    defects arising from any Lease having no pooling provision (provided that the applicable lessors have ratified unit or pooling declarations, if required);

(m)    with respect to any interest in the Upstream Assets acquired through compulsory or forced pooling, failure of the records of any Governmental Authority to reflect Upstream Seller or any of its Affiliates as the owner of an Upstream Asset;

(n)    defects in the chain of title consisting of the failure to recite marital status in a document or the omissions of (i) affidavits or similar instruments reflecting heirship or (ii) estate proceedings, unless Buyer provide affirmative evidence in a Title Defect Notice that such failure has resulted, or is reasonably be expected to result in another Person’s superior title to the relevant Upstream Asset;

(o)    defects arising from any change in Laws after the Execution Date, including changes that would raise the minimum landowner royalty;

(p)    defects asserting that non-consent, carried non-participating, or before and after-payout interests do not transfer leasehold title or have not been recorded in the county or parish records;

(q)    defects or irregularities resulting from or related to probate proceedings or the lack thereof, which defects or irregularities have been outstanding for seven and a half years or more;

(r)    defects arising out of errors or omissions related to riparian legal descriptions;

(s)    any Encumbrance, defect or loss of title affecting ownership interests in formations other than any applicable Subject Formation applicable to the relevant Upstream Assets; or

(t)    defects or irregularities that would customarily be acceptable to a reasonably prudent owner or operator of oil and gas properties in the same geographic area where the Upstream Assets are located, unless Buyer provides affirmative evidence in a Title Defect Notice that such defect or irregularity 

Appendix A - 25

has resulted, or is reasonably be expected to result, in another Person’s superior claim of title to the relevant Upstream Asset.

“Title Defect Amount” has the meaning set forth in Section 13.2(g).

“Title Defect Notice” and “Title Defect Notices” have the meanings set forth in Section 13.2(a).

“Title Defect Property” has the meaning set forth in Section 13.2(a).

“Title Dispute” has the meaning set forth in Section 13.2(j)(i).

“Title Indemnity Agreement” has the meaning set forth in Section 13.2(d)(ii).

“Transaction Costs” means all investment banking fees, costs and expenses and legal fees, costs and expenses incurred by the Partnership in connection with the preparation for, negotiating or consummation of the transactions contemplated by this Agreement and the other Transaction Documents, including any fees, costs and expenses of accountants or other advisors and service providers.

“Transaction Documents” means those documents executed and delivered pursuant to or in connection with this Agreement.

“Transfer Taxes” has the meaning set forth in Section 15.2(b).

“Transition Services Agreement” means a document in substantially the form attached hereto as Exhibit I. 

“Treasury Regulations” means the regulations promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code.  All references herein to sections of the Treasury Regulations shall include any corresponding provision or provisions of succeeding, similar, substitute, proposed or final Treasury Regulations.

“TSA Employee” has the meaning set forth in Section 11.10(b).

“TSA Service Termination Date” has the meaning set forth in Section 11.10(b).

“Units” has the meaning set forth in Section 2.2(b).

“Upstream Applicable Contracts” means all Contracts (a) to which Upstream Seller is a party (or is a successor or assign of a party), (b) that pertain to any of the Upstream Assets and (c) that will be binding on Buyer or the Upstream Assets after the Closing, but exclusive of any master service agreements, blanket agreements or similar Contracts.

“Upstream Assets” has the meaning set forth in Section 2.2.

“Upstream Assignment” means the Assignment and Bill of Sale from Upstream Seller to Buyer pertaining to the Upstream Assets (other than the Mitigation Credits, Fee Minerals and Upstream Surface Fee) and substantially in the form of Exhibit G-1.

“Upstream Assumed Obligations” has the meaning set forth in Section 8.1.

Appendix A - 26

“Upstream Easements” means all permits, licenses, servitudes, easements, surface use agreements, surface leases and rights-of-way primarily used or held for use in connection with the ownership or operation of the other Upstream Assets, other than Permits and FCC Licenses.

“Upstream Inventory” has the meaning set forth in Section 2.2(f).

“Upstream Operating Expenses” means all operating expenses (including costs of insurance, overhead charged to the Upstream Assets under any Upstream Applicable Contracts, extension payments, renewal payments, rentals and other lease maintenance payments, shut-in payments, and title examination and curative actions (other than expenses of curing any Title Defect after the Effective Time)) and capital expenditures (including bonuses, broker fees, and other Lease acquisition costs, costs of drilling and completing wells, and costs of acquiring equipment) incurred in the ownership and operation of the Upstream Assets; but excluding (in all cases) Liabilities attributable to (a) personal injury or death, property damage, torts, breach of contract or violation of any Law, (b) Plugging and Abandonment Obligations, closing pits and restoring the surface around the Wells or such facilities and pits, (c) Liabilities caused by Environmental Conditions, (d) obligations with respect to Imbalances, (e) obligations to pay Burdens or other interest owners revenues or proceeds attributable to sales of Hydrocarbons relating to the Upstream Assets, including Suspense Funds, (f) obligations with respect to Hedge Contracts, (g) obligations with respect to Taxes, and (h) claims for indemnification or reimbursement from any Third Party with respect to costs of the types described in the preceding clauses (a) through (g), whether such claims are made pursuant to contract or otherwise.

“Upstream Personal Property” has the meaning set forth in Section 2.2(f).

“Upstream Records” has the meaning set forth in Section 2.2(r).

“Upstream Seller” has the meaning set forth in the introductory paragraph of this Agreement.

“Upstream Surface Fee” has the meaning set forth in Section 2.2(o).

“Upstream Surface Leases” has the meaning set forth in Section 2.2(p).

“Vehicles” has the meaning set forth in Section 2.2(l).

“WARN Act” has the meaning set forth in Section 11.10(d).

“Well Imbalance” means any imbalance at the wellhead between the amount of Hydrocarbons produced from a Well and allocable to the interests of Upstream Seller therein and the shares of production from the relevant Well to which Upstream Seller is entitled, together with any appurtenant rights and obligations concerning future in kind and/or cash balancing at the wellhead.

“Well Location” means each potential well location shown on Exhibit B-2, limited to the applicable Subject Formation(s) shown on Exhibit B-2 for such well locations.

“Wells” has the meaning set forth in Section 2.2(c).

Appendix A - 27

“Willful Breach” means, with respect to any Party, such Party knowingly and intentionally breaches in any material respect (by refusing to perform or taking an action prohibited) any material covenant under this Agreement applicable to such Party.

“Working Capital Assets” shall mean, subject to Section 2.5, the current assets of the Partnership as of the Effective Time (including all Cash and Cash Equivalents), each determined in accordance with GAAP and COPAS, as applicable, but excluding any Income Tax assets.

“Working Capital Liabilities” shall mean, subject to Section 2.5, the current liabilities of the Partnership as of the Effective Time, each determined in accordance with GAAP and COPAS, as applicable, but excluding any asset retirement obligations or Income Tax related Liabilities.

“Working Interest” means, with respect to each Well or Well Location set forth on Exhibit B-1 or Exhibit B-2, as applicable (in each case, limited only to the applicable Subject Formation(s)), the interest that is burdened with the obligation to bear and pay costs and expenses of maintenance, development and operations on or in connection with such Well or Well Location (in each case, limited only to the applicable Subject Formation(s)), but without regard to the effect of any Burdens.

Appendix A - 28

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