Document:

Exhibit 10.4

 

 

AMENDED AND RESTATED

 

CREDIT AGREEMENT

 

dated as of

 

June 10, 2011

 

among

 

Southcross Energy LLC,

 

as Borrower,

 

Wells Fargo Bank, N.A.,

 

as Administrative Agent,

 

BVA Compass and SunTrust Bank,

 

as Co-Syndication Agents,

 

Citibank, N.A. and U.S. Bank National Association,

 

as Co-Documentation Agents,

 

and

 

The Lenders Party Hereto

 

 

Wells Fargo Securities, LLC

 

Sole Lead Arranger and Sole Bookrunner

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE I
    	
Definitions and Accounting Matters
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
Certain Defined Terms
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.02
    	
Types of Loans and Borrowings
    	
33
    
	
 
    	
 
    	
 
    
	
Section 1.03
    	
Terms Generally; Rules of Construction
    	
33
    
	
 
    	
 
    	
 
    
	
Section 1.04
    	
Accounting Terms and Determinations; GAAP.
    	
34
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    	
The Credits
    	
34
    
	
 
    	
 
    	
 
    
	
Section 2.01
    	
Commitments.
    	
34
    
	
 
    	
 
    	
 
    
	
Section 2.02
    	
Loans and Borrowings.
    	
35
    
	
 
    	
 
    	
 
    
	
Section 2.03
    	
Requests for Borrowings
    	
36
    
	
 
    	
 
    	
 
    
	
Section 2.04
    	
Interest Elections.
    	
37
    
	
 
    	
 
    	
 
    
	
Section 2.05
    	
Funding of Borrowings.
    	
38
    
	
 
    	
 
    	
 
    
	
Section 2.06
    	
Termination and Reduction of Commitments.
    	
39
    
	
 
    	
 
    	
 
    
	
Section 2.07
    	
Letters of Credit.
    	
40
    
	
 
    	
 
    	
 
    
	
Section 2.08
    	
Optional Increase in Revolving Loan Commitments.
    	
45
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    	
Payments of Principal and Interest; Prepayments; Fees
    	
46
    
	
 
    	
 
    	
 
    
	
Section 3.01
    	
Repayment of Loans.
    	
46
    
	
 
    	
 
    	
 
    
	
Section 3.02
    	
Interest.
    	
46
    
	
 
    	
 
    	
 
    
	
Section 3.03
    	
Alternate Rate of Interest
    	
47
    
	
 
    	
 
    	
 
    
	
Section 3.04
    	
Prepayments.
    	
47
    
	
 
    	
 
    	
 
    
	
Section 3.05
    	
Fees.
    	
51
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    	
Payments; Pro Rata Treatment; Sharing of Set-offs
    	
52
    
	
 
    	
 
    	
 
    
	
Section 4.01
    	
Payments Generally; Pro Rata Treatment; Sharing of   Set-offs.
    	
52
    
	
 
    	
 
    	
 
    
	
Section 4.02
    	
Payments by the Borrower; Presumptions by the   Administrative Agent
    	
53
    

 

i

 

	
Section 4.03
    	
Certain Deductions by the Administrative Agent
    	
53
    
	
 
    	
 
    	
 
    
	
Section 4.04
    	
Defaulting Lenders
    	
54
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    	
Increased Costs; Break Funding Payments; Taxes; Illegality
    	
55
    
	
 
    	
 
    	
 
    
	
Section 5.01
    	
Increased Costs.
    	
55
    
	
 
    	
 
    	
 
    
	
Section 5.02
    	
Break Funding Payments
    	
56
    
	
 
    	
 
    	
 
    
	
Section 5.03
    	
Taxes.
    	
57
    
	
 
    	
 
    	
 
    
	
Section 5.04
    	
Mitigation Obligations; Replacement of Lenders.
    	
59
    
	
 
    	
 
    	
 
    
	
Section 5.05
    	
Illegality
    	
60
    
	
 
    	
 
    	
 
    
	
ARTICLE VI
    	
Conditions Precedent
    	
60
    
	
 
    	
 
    	
 
    
	
Section 6.01
    	
Effective Date
    	
60
    
	
 
    	
 
    	
 
    
	
Section 6.02
    	
Each Credit Event
    	
63
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    	
Representations and Warranties
    	
64
    
	
 
    	
 
    	
 
    
	
Section 7.01
    	
Organization; Powers
    	
64
    
	
 
    	
 
    	
 
    
	
Section 7.02
    	
Authority; Enforceability
    	
64
    
	
 
    	
 
    	
 
    
	
Section 7.03
    	
Approvals; No Conflicts
    	
64
    
	
 
    	
 
    	
 
    
	
Section 7.04
    	
Financial Condition; No Material Adverse Change.
    	
65
    
	
 
    	
 
    	
 
    
	
Section 7.05
    	
Litigation
    	
66
    
	
 
    	
 
    	
 
    
	
Section 7.06
    	
Environmental Matters
    	
66
    
	
 
    	
 
    	
 
    
	
Section 7.07
    	
Compliance with the Laws and Agreements; No Defaults.
    	
67
    
	
 
    	
 
    	
 
    
	
Section 7.08
    	
Investment Company Act
    	
67
    
	
 
    	
 
    	
 
    
	
Section 7.09
    	
Taxes
    	
67
    
	
 
    	
 
    	
 
    
	
Section 7.10
    	
ERISA.
    	
68
    
	
 
    	
 
    	
 
    
	
Section 7.11
    	
Disclosure; No Material Misstatements
    	
68
    
	
 
    	
 
    	
 
    
	
Section 7.12
    	
Insurance
    	
69
    
	
 
    	
 
    	
 
    
	
Section 7.13
    	
Restriction on Liens
    	
69
    

 

ii

 

	
Section 7.14
    	
Subsidiaries
    	
69
    
	
 
    	
 
    	
 
    
	
Section 7.15
    	
Location of Business and Offices
    	
69
    
	
 
    	
 
    	
 
    
	
Section 7.16
    	
Properties; Titles, Etc.
    	
70
    
	
 
    	
 
    	
 
    
	
Section 7.17
    	
Maintenance of Properties
    	
70
    
	
 
    	
 
    	
 
    
	
Section 7.18
    	
Hedging Agreements
    	
70
    
	
 
    	
 
    	
 
    
	
Section 7.19
    	
Security Instruments.
    	
71
    
	
 
    	
 
    	
 
    
	
Section 7.20
    	
Use of Loans and Letters of Credit
    	
71
    
	
 
    	
 
    	
 
    
	
Section 7.21
    	
Solvency
    	
72
    
	
 
    	
 
    	
 
    
	
Section 7.22
    	
Common Enterprise
    	
72
    
	
 
    	
 
    	
 
    
	
Section 7.23
    	
Material Contracts
    	
72
    
	
 
    	
 
    	
 
    
	
Section 7.24
    	
Broker’s Fees
    	
72
    
	
 
    	
 
    	
 
    
	
Section 7.25
    	
Employee Matters
    	
72
    
	
 
    	
 
    	
 
    
	
Section 7.26
    	
Anti-Terrorism Laws.
    	
73
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII
    	
Affirmative Covenants
    	
74
    
	
 
    	
 
    	
 
    
	
Section 8.01
    	
Financial Statements; Ratings Change; Other Information
    	
74
    
	
 
    	
 
    	
 
    
	
Section 8.02
    	
Notices of Material Events
    	
77
    
	
 
    	
 
    	
 
    
	
Section 8.03
    	
Existence; Conduct of Business
    	
78
    
	
 
    	
 
    	
 
    
	
Section 8.04
    	
Payment of Obligations
    	
78
    
	
 
    	
 
    	
 
    
	
Section 8.05
    	
Performance of Obligations under Loan Documents
    	
78
    
	
 
    	
 
    	
 
    
	
Section 8.06
    	
Operation and Maintenance of Properties
    	
78
    
	
 
    	
 
    	
 
    
	
Section 8.07
    	
Insurance.
    	
79
    
	
 
    	
 
    	
 
    
	
Section 8.08
    	
Books and Records; Inspection Rights
    	
79
    
	
 
    	
 
    	
 
    
	
Section 8.09
    	
Compliance with Laws
    	
80
    
	
 
    	
 
    	
 
    
	
Section 8.10
    	
Compliance with Agreements
    	
80
    
	
 
    	
 
    	
 
    
	
Section 8.11
    	
Environmental Matters.
    	
80
    

 

iii

 

	
Section 8.12
    	
Further Assurances
    	
81
    
	
 
    	
 
    	
 
    
	
Section 8.13
    	
Title Information; Phase I Site Assessments; Alabama   Mortgage.
    	
81
    
	
 
    	
 
    	
 
    
	
Section 8.14
    	
Additional Collateral; Additional Guarantors.
    	
82
    
	
 
    	
 
    	
 
    
	
Section 8.15
    	
Designations with Respect to Subsidiaries.
    	
82
    
	
 
    	
 
    	
 
    
	
Section 8.16
    	
Excluded Subsidiaries
    	
83
    
	
 
    	
 
    	
 
    
	
Section 8.17
    	
ERISA Compliance
    	
83
    
	
 
    	
 
    	
 
    
	
Section 8.18
    	
Interest Rate Hedging Agreements
    	
83
    
	
 
    	
 
    	
 
    
	
Section 8.19
    	
Mandatory Equity Contributions.
    	
84
    
	
 
    	
 
    	
 
    
	
ARTICLE IX
    	
Negative Covenants
    	
84
    
	
 
    	
 
    	
 
    
	
Section 9.01
    	
Financial Covenants.
    	
84
    
	
 
    	
 
    	
 
    
	
Section 9.02
    	
Indebtedness
    	
85
    
	
 
    	
 
    	
 
    
	
Section 9.03
    	
Liens
    	
86
    
	
 
    	
 
    	
 
    
	
Section 9.04
    	
Restricted Payments
    	
86
    
	
 
    	
 
    	
 
    
	
Section 9.05
    	
Investments, Loans and Advances
    	
87
    
	
 
    	
 
    	
 
    
	
Section 9.06
    	
Nature of Business; International Operations
    	
89
    
	
 
    	
 
    	
 
    
	
Section 9.07
    	
Proceeds of Loans
    	
89
    
	
 
    	
 
    	
 
    
	
Section 9.08
    	
ERISA Compliance
    	
89
    
	
 
    	
 
    	
 
    
	
Section 9.09
    	
Sale or Discount of Receivables
    	
90
    
	
 
    	
 
    	
 
    
	
Section 9.10
    	
Mergers, Etc
    	
90
    
	
 
    	
 
    	
 
    
	
Section 9.11
    	
Sale of Properties
    	
91
    
	
 
    	
 
    	
 
    
	
Section 9.12
    	
Environmental Matters
    	
91
    
	
 
    	
 
    	
 
    
	
Section 9.13
    	
Transactions with Affiliates
    	
91
    
	
 
    	
 
    	
 
    
	
Section 9.14
    	
Subsidiaries
    	
91
    
	
 
    	
 
    	
 
    
	
Section 9.15
    	
Limitation on Issuance of Equity Interests
    	
91
    
	
 
    	
 
    	
 
    
	
Section 9.16
    	
Negative Pledge Agreements; Dividend Restrictions
    	
92
    

 

iv

 

	
Section 9.17
    	
Hedging Agreements
    	
92
    
	
 
    	
 
    	
 
    
	
Section 9.18
    	
Sale and Leaseback
    	
92
    
	
 
    	
 
    	
 
    
	
Section 9.19
    	
Amendments to Organization Documents, Material Contracts,   or Fiscal Year End; Prepayments of other Indebtedness.
    	
92
    
	
 
    	
 
    	
 
    
	
Section 9.20
    	
Limitation on Capital Expenditures
    	
93
    
	
 
    	
 
    	
 
    
	
Section 9.21
    	
Anti-Terrorism Law; Anti-Money Laundering.
    	
93
    
	
 
    	
 
    	
 
    
	
Section 9.22
    	
Embargoed Person
    	
94
    
	
 
    	
 
    	
 
    
	
ARTICLE X
    	
Events of Default; Remedies
    	
94
    
	
 
    	
 
    	
 
    
	
Section 10.01
    	
Events of Default
    	
94
    
	
 
    	
 
    	
 
    
	
Section 10.02
    	
Remedies.
    	
96
    
	
 
    	
 
    	
 
    
	
ARTICLE XI
    	
The Agents
    	
98
    
	
 
    	
 
    	
 
    
	
Section 11.01
    	
Appointment and Authority
    	
98
    
	
 
    	
 
    	
 
    
	
Section 11.02
    	
Rights as a Lender
    	
98
    
	
 
    	
 
    	
 
    
	
Section 11.03
    	
Exculpatory Provisions.
    	
98
    
	
 
    	
 
    	
 
    
	
Section 11.04
    	
Reliance by Administrative Agent
    	
99
    
	
 
    	
 
    	
 
    
	
Section 11.05
    	
Delegation of Duties
    	
99
    
	
 
    	
 
    	
 
    
	
Section 11.06
    	
Resignation of Administrative Agent
    	
99
    
	
 
    	
 
    	
 
    
	
Section 11.07
    	
Non-Reliance on Administrative Agent and Other Lenders
    	
100
    
	
 
    	
 
    	
 
    
	
Section 11.08
    	
No Other Duties, etc
    	
100
    
	
 
    	
 
    	
 
    
	
ARTICLE XII
    	
Miscellaneous
    	
101
    
	
 
    	
 
    	
 
    
	
Section 12.01
    	
Notices.
    	
101
    
	
 
    	
 
    	
 
    
	
Section 12.02
    	
Waivers; Amendments.
    	
103
    
	
 
    	
 
    	
 
    
	
Section 12.03
    	
Expenses, Indemnity; Damage Waiver.
    	
104
    
	
 
    	
 
    	
 
    
	
Section 12.04
    	
Assignments and Participations.
    	
107
    
	
 
    	
 
    	
 
    
	
Section 12.05
    	
Survival; Revival; Reinstatement.
    	
111
    
	
 
    	
 
    	
 
    
	
Section 12.06
    	
Counterparts; Integration; Effectiveness; Electronic   Execution.
    	
111
    

 

v

 

	
Section 12.07
    	
Severability
    	
112
    
	
 
    	
 
    	
 
    
	
Section 12.08
    	
Right of Setoff
    	
112
    
	
 
    	
 
    	
 
    
	
Section 12.09
    	
GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
    	
113
    
	
 
    	
 
    	
 
    
	
Section 12.10
    	
Headings
    	
114
    
	
 
    	
 
    	
 
    
	
Section 12.11
    	
Confidentiality
    	
114
    
	
 
    	
 
    	
 
    
	
Section 12.12
    	
Interest Rate Limitation
    	
115
    
	
 
    	
 
    	
 
    
	
Section 12.13
    	
EXCULPATION PROVISIONS
    	
116
    
	
 
    	
 
    	
 
    
	
Section 12.14
    	
Collateral Matters; Hedging Agreements; Treasury Management   Agreements
    	
116
    
	
 
    	
 
    	
 
    
	
Section 12.15
    	
No Third Party Beneficiaries
    	
116
    
	
 
    	
 
    	
 
    
	
Section 12.16
    	
USA Patriot Act Notice
    	
116
    
	
 
    	
 
    	
 
    
	
Section 12.17
    	
Amendment and Restatement
    	
117
    

 

vi

 

ANNEXES, EXHIBITS AND SCHEDULES

 

	
Annex   I
    	
 
    	
Commitments
    
	
 
    	
 
    	
 
    
	
Exhibit A-1
    	
 
    	
Form of   Term Note Exhibit A-2 Form of Revolving Note
    
	
Exhibit B
    	
 
    	
Form of   Borrowing Request
    
	
Exhibit C
    	
 
    	
Form of   Interest Election Request
    
	
Exhibit D-1
    	
 
    	
Form of   Compliance Certificate
    
	
Exhibit D-2
    	
 
    	
Form of   Compliance Certificate
    
	
Exhibit E
    	
 
    	
Form of   Guaranty and Collateral Agreement
    
	
Exhibit F
    	
 
    	
Form of   Assignment and Assumption
    
	
 
    	
 
    	
 
    
	
Schedule   1.01(a)
    	
 
    	
Security   Instruments
    
	
Schedule   7.03
    	
 
    	
Approvals
    
	
Schedule   7.09
    	
 
    	
Taxes
    
	
Schedule   7.14
    	
 
    	
Subsidiaries
    
	
Schedule   7.18
    	
 
    	
Hedging   Agreements
    
	
Schedule   7.19
    	
 
    	
Jurisdictions   for Security Instrument Filings
    
	
Schedule   7.23
    	
 
    	
Material   Contracts
    
	
Schedule   9.05
    	
 
    	
Existing   Investments
    

 

vii

 

THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 10, 2011, is among: Southcross Energy LLC, a Delaware limited liability company (the “Borrower”); each of the Lenders from time to time party hereto; Wells Fargo Bank, N.A. (in its individual capacity, “Wells Fargo”), as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “Administrative Agent”); BBVA Compass and SunTrust Bank, as co-syndication agents for the Lenders (in such capacity, together with their successors in such capacity, the “Co-Syndication Agents”); and Citibank, N.A. and U.S. Bank National Association, as co-documentation agents for the Lenders (in such capacity, together with their successors in such capacity, the “Co-Documentation Agents”).

 

R E C I T A L S

 

A.            The Borrower, the Administrative Agent, and each of the financial institutions from time to time party thereto as lenders (“Existing Lenders”) are parties to that certain Credit Agreement dated as of August 6, 2009 (as amended, the “Existing Credit Agreement”), pursuant to which Existing Lenders provided certain loans and extensions of credit to the Borrower (all Indebtedness arising pursuant to the Existing Credit Agreement, the “Existing Indebtedness”).

 

B.            Subject to the conditions precedent set forth herein, the parties hereto desire to amend and restate the Existing Credit Agreement in its entirety in the form of this Agreement, and the Borrower desires to obtain Loans (a) to refinance the Existing Indebtedness, and (b) for other purposes permitted herein.

 

C.            After giving effect to the amendment and restatement of the Existing Credit Agreement pursuant to the terms hereof, the Term Loan Commitment and Revolving Loan Commitment of each Lender hereunder will be as set forth on Annex I attached hereto.

 

D.            In consideration of the premises, the representations, warranties, covenants, and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and subject to the satisfaction of each condition precedent set forth in Section 6.01 hereof, the Existing Credit Agreement shall be amended and restated as of the Effective Date in the form of this Agreement.  The parties hereto further agree as follows:

 

ARTICLE I
 Definitions and Accounting Matters

 

Section 1.01          Certain Defined Terms.  As used in this Agreement, the following terms have the meanings specified below:

 

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

 

“Actual Completion Date” means, with respect to any Specified Project, the date, to be identified to the Administrative Agent by delivery of a certificate of a Responsible Officer of the Borrower, certifying that the Specified Project has reached actual capacity set forth in the projections provided to the Administrative Agent with respect to such Specified Project and is generally

 

 

generating the revenue specified in the minimum revenue contracts previously approved by the Administrative Agent as set forth in the definition of “Specified Projects”.

 

“Actual Results Period” means, with respect to a Specified Project, the period beginning on the first day after the Actual Completion Date for such Specified Project and ending on the applicable measurement date.

 

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the LIBO Rate for such Interest Period multiplied by the Statutory Reserve Rate.

 

“Administrative Agent” has the meaning assigned to such term in the introductory paragraph hereto.

 

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

 

“Affected Loans” has the meaning assigned to such term in Section 5.05.

 

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

 

“Agents” means, collectively, the Administrative Agent, the Co-Syndication Agents and the Co-Documentation Agents; and “Agent” means any one of the Administrative Agent, either Co-Syndication Agent or either Co-Documentation Agent, as the context requires.

 

“Aggregate Deficiency Charges” means, for any Imputed Results Period for any Specified Project, the aggregate amount of deficiency charges that would be payable to a Loan Party under the applicable Specified Project Contract if the  minimum guaranteed volumes for such Imputed Results Period under such Specified Project Contract exceed the actual volumes if the actual volumes delivered under such Specified Project Contract on each day during the Imputed Results Period were equal to (a) the actual volumes delivered during the Actual Results period divided  by (b) the number of days in the Actual Results Period.

 

“Agreement” means this Amended and Restated Credit Agreement, as the same may from time to time be amended, modified, supplemented or restated.

 

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.5% and (c) the Adjusted LIBO Rate for a one-month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.0%.  For the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, on such day (or the

 

2

 

immediately preceding Business Day if such day is not a day on which banks are open for dealings in dollar deposits in the London interbank market).  Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.

 

“Anti-Terrorism Law” has the meaning assigned to such term in Section 7.26(a).

 

“Applicable Margin” means, for any day, with respect to any ABR Loan or Eurodollar Loan, or with respect to the Commitment Fee Rate, as the case may be, the rate per annum set forth in the grid below based upon the current Consolidated Total Leverage Ratio then in effect:

 

	
Consolidated Total
   Leverage Ratio
    	
 
    	
Eurodollar Loans
    	
 
    	
ABR Loans
    	
 
    	
Commitment Fee
   Rate
    	
 
    
	
Less than 3.00 to 1.00
    	
 
    	
2.25
    	
%
    	
1.25
    	
%
    	
0.375
    	
%
    
	
Greater than or equal to 3.00 to 1.00 but less   than 3.50 to 1.00
    	
 
    	
2.50
    	
%
    	
1.50
    	
%
    	
0.500
    	
%
    
	
Greater than or equal to 3.50 to 1.00 but less   than 4.00 to 1.00
    	
 
    	
2.75
    	
%
    	
1.75
    	
%
    	
0.500
    	
%
    
	
Greater than or equal to 4.00 to 1.00 but less   than 4.50 to 1.00
    	
 
    	
3.00
    	
%
    	
2.00
    	
%
    	
0.500
    	
%
    
	
Greater than or equal to 4.50 but less than 5.00   to 1.00
    	
 
    	
3.25
    	
%
    	
2.25
    	
%
    	
0.500
    	
%
    
	
Greater than or equal to 5.00 to 1.00
    	
 
    	
4.25
    	
%
    	
3.25
    	
%
    	
0.500
    	
%
    

 

Each change in the Applicable Margin resulting from a change in the Consolidated Total Leverage Ratio shall become effective on and after the date on which financial statements or a compliance certificate, as applicable, is delivered to the Lenders pursuant to Sections 8.01(a), (b) or (g) and shall remain in effect until the next change to be effected pursuant to this paragraph; provided, however, that if at any time the Borrower fails to deliver any financial statements or a compliance certificate required by Sections 8.01(a), (b) or (g), as applicable, then the “Applicable Margin” means the rate per annum set forth on the grid when the Consolidated Total Leverage Ratio is at its highest level.  In the event that any financial statement or compliance certificate delivered pursuant to Sections 8.01(a), (b) or (g) is shown to be inaccurate (regardless of whether this Agreement or the Revolving Loan Commitments or Term Loan Commitments are in effect when such inaccuracy is discovered), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin for any period (an “Applicable Period”) than the Applicable Margin applied for such Applicable Period, and only in such case, then the Borrower shall immediately (a) deliver to the Administrative Agent a corrected compliance certificate for such Applicable Period, (b) determine the Applicable Margin for such Applicable Period based upon the corrected compliance certificate, and (c) pay to the Administrative Agent the accrued additional interest owing as a result of such increased Applicable Margin for such

 

3

 

Applicable Period, which payment shall be promptly applied by the Administrative Agent in accordance with Section 4.01.  The preceding sentence is in addition to rights of the Administrative Agent and Lenders with respect to Sections 3.02(c) and 10.01 and other of their respective rights under this Agreement.

 

“Applicable Percentage” means, with respect to any Lender, such Lender’s Revolving Loan Percentage and/or such Lender’s Term Loan Percentage, as applicable.

 

“Approved Counterparty” means (a) any Lender or any Affiliate of a Lender and (b) any other Person whose (or whose credit support provider’s) long term senior unsecured debt rating is A-/A3 by S&P or Moody’s (or their equivalent) or higher.

 

“Approved Force Majeure Event” means a material event that (a) can be neither reasonably anticipated nor controlled in the exercise of commercially reasonable prudence, diligence and care, including both acts of nature (e.g., floods and hurricanes) and acts of Persons other than the Loan Parties and their Related Parties (e.g., riots and wars) and (b) in each case is approved as an “Approved Force Majeure Event” by the Administrative Agent in writing in its sole discretion.

 

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

 

“Arranger” means Wells Fargo Securities, LLC, in its capacities as the sole lead arranger and sole bookrunner hereunder.

 

“Asset Sale” means any sale, transfer, assignment, conveyance or other disposition by the Borrower or any Subsidiary to any Person (including by way of redemption by such Person) of any Property (including, without limitation, any capital stock or other securities of, or Equity Interests in, another Person), but excluding (a) dispositions resulting from Casualty Events, and (b) sales of Property pursuant to Sections 9.11(a)-(c).

 

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 12.04(a)),  and accepted by the Administrative Agent, in substantially the form of Exhibit F or any other form approved by the Administrative Agent.

 

“Availability Period” means the period from and including the Effective Date to but excluding the Termination Date.

 

“Available Cash” means, for any fiscal quarter ending prior to the Maturity Date, (a) the sum of (i) Excess Cash on hand at the end of such fiscal quarter plus (ii) Excess Cash on hand on the date of determination of Available Cash with respect to such quarter resulting from Borrowings made subsequent to the end of such quarter less (b) the amount of any cash reserves that are necessary or appropriate in the reasonable discretion of the Borrower to (i) provide for the proper conduct of its business (including reserves for future Capital Expenditures and for anticipated future credit needs of the Borrower), (ii) comply with applicable law and this Agreement, any other Loan Documents, or any other loan agreement, security agreement, mortgage, debt instrument, or other agreement or obligation to which the Borrower or any of its Subsidiaries is a

 

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party, by which the Borrower or any of its Subsidiaries is bound, or to which the Property of the Borrower or any of its Subsidiaries is subject, or (iii) provide funds for distributions required by the Borrower’s Organization Documents in respect of any one or more of the next four fiscal quarters; provided, however, that the Borrower may not establish cash reserves pursuant to clause (b)(iii) of this definition if the effect of such reserves would be that the Borrower is unable to make distributions required by the Borrower’s Organization Documents with respect to such fiscal quarter; provided, further, that distributions made by the Borrower or any of its Subsidiaries or cash reserves established, increased, or reduced after the end of such fiscal quarter but on or before the date of determination of Available Cash with respect to such fiscal quarter shall be deemed to have been made, established, increased, or reduced, for purposes of determining Available Cash, within such fiscal quarter if the Borrower so determines.

 

“Board” means the Board of Governors of the Federal Reserve System of the United States of America or any successor Governmental Authority.

 

“Bonnie View Fractionator” means the fractionator near Bonnie View, Texas associated with the Refugio Processing Project, as generally described and disclosed to the Lenders in the Presentation Materials.

 

“Borrower” has the meaning assigned to such term in the introductory paragraph hereto.

 

“Borrowing” means Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

 

“Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.03.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in San Francisco, California or Dallas, Texas are authorized or required by law to remain closed; and if such day relates to a Borrowing or continuation of, a payment or prepayment of principal of or interest on, or a conversion of or into, or the Interest Period for, a Eurodollar Loan or a notice by the Borrower with respect to any such Borrowing or continuation, payment, prepayment, conversion or Interest Period, any day which is also a day on which banks are open for dealings in dollar deposits in the London interbank market.

 

“Capital Expenditures” means, in respect of any Person, for any period, the aggregate (determined without duplication) of all expenditures and costs that are capitalized on the balance sheet of such Person in accordance with GAAP, exclusive of, with respect to each Loan Party, expenditures and costs incurred by such Loan Party to the extent that an unaffiliated third Person has provided such Loan Party with funds to pay such expenditures and costs prior to incurrence.

 

“Capital Leases” means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP, recorded as capital leases on the balance sheet of the Person liable (whether contingent or otherwise) for the payment of rent thereunder.

 

“Casualty Event” means any loss, casualty or other insured damage to, or any nationalization, taking under power of eminent domain or by condemnation or similar proceeding of, any Property of the Borrower or any of its Subsidiaries.

 

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“Change in Control” means (a) the Sponsor and its Affiliates, collectively, shall cease to beneficially own and control, directly or indirectly, Equity Interests in the Borrower representing a majority of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests in the Borrower, or (b) the Borrower shall cease to beneficially own and control, directly or indirectly, all of the Equity Interests in each of the other Loan Parties.

 

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

 

“Charlesbank” means Charlesbank Capital Partners, LLC, a Massachusetts limited liability company.

 

“Class” when used in reference to any Loan or Borrowing, refers to whether such Loan or the Loans comprising such Borrowing are Term Loans (including any Delayed Draw Term Loans, if any) or Revolving Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Term Loan Commitment or a Revolving Loan Commitment.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute.

 

“Co-Documentation Agents” has the meaning assigned to such term in the introductory paragraph hereto.

 

“Collateral” means all Property of the Loan Parties that is secured by a Lien under one or more Security Instruments.

 

“Commitment” means, with respect to each Lender, such Lender’s Term Loan Commitment and/or Revolving Loan Commitment.

 

“Commitment Fee Rate” has the meaning set forth in the definition of “Applicable Margin.”

 

“Consolidated EBITDA” means, for any period of determination, the sum of (without duplication, and without giving effect to any extraordinary losses or gains or any interest income during such period) the following determined on a consolidated basis: (a) Consolidated Net Income during such period plus (b) to the extent deducted in determining Consolidated Net Income in such period: (i) income tax expense (including Permitted Tax Distributions to the extent made), (ii) franchise tax expense (including Texas margin tax expense), (iii) Consolidated Interest Expense, (iv) amortization, depreciation and other noncash and nonrecurring items

 

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during such period, (v) fees, costs and expenses incurred in connection with the preparation, negotiation, execution, delivery and closing of the First Amendment (as defined in the Existing Credit Agreement) not to exceed $800,000 for all periods, (vi) fees, costs and expenses incurred in connection with the preparation, negotiation, execution, delivery and closing of the letter amendment to the Existing Credit Agreement dated as of May 17, 2011 between the Administrative Agent, the Borrower and the other Loan Parties not to exceed $250,000 for all periods, (vii) fees, costs and expenses incurred in connection with the preparation, negotiation, execution, delivery and closing of the Loan Documents and the consummation of the Transactions, in an aggregate amount  not to exceed $2,750,000 for all periods, (viii) fees, costs and expenses incurred in connection with the preparation, negotiation, execution, delivery and closing of the First Amendment not to exceed $3,000,000 for all periods, and (ix) Permitted Management Contract Add-Backs plus (c) the Specified Add-Backs plus (d) the Permitted Force Majeure Add-Backs plus (e) the aggregate Specified Projects EBITDA Adjustments during such period; provided that the aggregate Specified Projects EBITDA Adjustments shall not exceed twenty percent (20%) of the aggregate Consolidated EBITDA for such period; provided, further, that if the Borrower or any Consolidated Subsidiary shall acquire or dispose of any Property during such period, then Consolidated EBITDA shall be calculated after giving pro forma effect to such acquisition or disposition, as if such acquisition or disposition had occurred on the first day of such period.  All calculations of Consolidated EBITDA shall be in form and substance satisfactory to the Administrative Agent.

 

“Consolidated Excess Cash Flow” means, for any period of determination, (a) Consolidated EBITDA minus (b) permitted Capital Expenditures to the extent expended, minus (c) taxes to the extent expended, minus (d) Permitted Tax Distributions and other permitted distributions, in each case, to the extent expended, minus (e) Consolidated Interest Expense, minus (f) principal payments made pursuant to Section 3.01 or Section 3.04, in each case, for such period.

 

“Consolidated Fixed Charge Coverage Ratio” means, for any period of determination, the ratio of (a) (i) Consolidated EBITDA minus (ii) permitted Maintenance Capital Expenditures to the extent expended during such period minus (iii) Permitted Tax Distributions and other permitted distributions, in each case, to the extent expended, divided by (b) the sum of (i) Consolidated Interest Expense plus (ii) to the extent not included in Consolidated Interest Expense, fixed and contingent regularly recurring lease rental payments plus (iii) scheduled principal payments pursuant to Section 3.01(a)(i), in each case, for such period, including any such scheduled principal payments made during such period, but prior to the Effective Date, pursuant to Section 3.01 (a)(i) of the Existing Credit Agreement.

 

“Consolidated Interest Expense” means, for any period, the sum (determined without duplication) of the aggregate gross interest expense of the Borrower and the Consolidated Subsidiaries for such period as determined in accordance with GAAP, including: (a) amortization of debt discount, (b) capitalized interest, and (c) the portion of any payments or accruals under Capital Leases allocable to interest expense, plus the portion of any payments or accruals under Synthetic Leases allocable to interest expense whether or not the same constitutes interest expense under GAAP.

 

“Consolidated Net Income” means, for any period of determination, the aggregate of the net income (or loss) of the Borrower and the Consolidated Subsidiaries after allowances for taxes for

 

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such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein) the following: (a) the net income of any Person, other than a Loan Party, in which the Borrower or any Consolidated Subsidiary has an interest, except to the extent of the amount of dividends or distributions actually paid in cash during such period by such other Person to the Borrower or to a Consolidated Subsidiary, as the case may be; (b) the net income (but not loss) during such period of any Consolidated Subsidiary to the extent that the declaration or payment of dividends or similar distributions or transfers or loans by that Consolidated Subsidiary is not at the time permitted by operation of the terms of its charter or any agreement, instrument or Governmental Requirement applicable to such Consolidated Subsidiary or is otherwise restricted or prohibited, in each case determined in accordance with GAAP; (c) the net income (or loss) of any Person acquired in a pooling-of-interests transaction for any period prior to the date of such transaction; (d) any extraordinary non-cash gains or losses during such period, and (e) any gains or losses attributable to writeups or writedowns of assets; provided, further, that if the Borrower or any Consolidated Subsidiary shall acquire or dispose of any Property during such period, then Consolidated Net Income shall be calculated, which calculation shall be in form and substance satisfactory to the Administrative Agent, after giving pro forma effect to such acquisition, disposition or redesignation, as if such acquisition, disposition or redesignation had occurred on the first day of such period.

 

“Consolidated Subsidiaries” means each Subsidiary of the Borrower (whether now existing or hereafter created or acquired) the financial statements of which shall be (or should have been) consolidated with the financial statements of the Borrower in accordance with GAAP.  For the avoidance of doubt, “Consolidated Subsidiaries” does not include Excluded Subsidiaries.

 

“Consolidated Total Funded Indebtedness” means, at any date, without duplication, the sum of (a) all obligations of the Borrower and its Consolidated Subsidiaries for borrowed money, including, but not limited to, senior bank Indebtedness, senior notes and subordinated Indebtedness, (b) all obligations of the Borrower and its Consolidated Subsidiaries under Capital Leases, (c) all obligations of the Borrower and its Consolidated Subsidiaries with respect to each outstanding standby letter of credit with a termination date of more than seventy-five (75) days after the date on which it was issued (but excluding any obligations under any such standby letter of credit that is issued for the account of the Borrower or any of its Subsidiaries in the ordinary course for purchases or transportation of natural gas by such Person(s) and which standby letter of credit has a termination date of one year or less after the date on which such standby letter of credit was issued), and (d) all contingent obligations of the Borrower and its Consolidated Subsidiaries with respect to the Indebtedness described in clauses (a), (b) and (c).

 

“Consolidated Total Leverage Ratio” means the ratio of Consolidated Total Funded Indebtedness as of the last day of the fiscal quarter for which such determination is being made divided by Consolidated EBITDA for the twelve (12) month period ending on the last day of such fiscal quarter.

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  For the purposes of this definition, and without limiting the generality of the foregoing, any Person that owns directly or indirectly 15% or more of the

 

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Equity Interests having ordinary voting power for the election of the directors or other governing body of a Person (other than as a limited partner of such other Person) will be deemed to “control” such other Person.  “Controlling” and “Controlled” have meanings correlative thereto.

 

“Co-Syndication Agents” has the meaning assigned to such term in the introductory paragraph hereto.

 

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

 

“Defaulting Lender” means any Lender, as determined by the Administrative Agent, that has (a) failed to fund any portion of its Loans or participations in Letters of Credit within three (3) Business Days of the date required to be funded by it hereunder, (b) notified the Borrower, the Administrative Agent, the Issuing Bank or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under other agreements in which it commits to extend credit, (c) failed, within three (3) Business Days after request by the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans and participations in then outstanding Letters of Credit, (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three (3) Business Days of the date when due, unless the subject of a good faith dispute, or (e) (i) become or is insolvent or has a parent company that has become or is insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment.

 

“Delayed Draw Availability Period” means the period from and including the Effective Date to and including the first to occur of (a) the date on which the Delayed Draw Borrowing described in Section 2.01(b) is funded and (b) September 30, 2011.

 

“Delayed Draw Borrowing” means a Borrowing comprised of Delayed Draw Term Loans.

 

“Delayed Draw Commitment” means, with respect to each Term Lender, the commitment of such Term Lender to make a Delayed Draw Term Loan to the Borrower pursuant to Section 2.01(b).  The amount of each Term Lender’s Delayed Draw Commitment is set forth on Annex I.  The aggregate amount of the Delayed Draw Commitments on the date hereof is $22,000,000.

 

“Delayed Draw Term Loan” means a Term Loan made by a Term Lender pursuant to Section 2.01(b).

 

“Disqualified Capital Stock” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event, matures or is mandatorily redeemable for any consideration other than other Equity

 

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Interests (which would not constitute Disqualified Capital Stock), pursuant to a sinking fund obligation or otherwise, or is convertible or exchangeable for Indebtedness or redeemable for any consideration other than other Equity Interests (which would not constitute Disqualified Capital Stock) at the option of the holder thereof, in whole or in part, on or prior to the date that is ninety-one (91) days after the earlier of (a) the Maturity Date and (b) the date on which there are no Loans, LC Exposure or other obligations hereunder outstanding and all of the Commitments are terminated.

 

“dollars” or “$” refers to lawful money of the United States of America.

 

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of the United States of America or any state thereof or the District of Columbia.

 

“Effective Date” means the date on which the conditions specified in Section 6.01 are satisfied (or waived in accordance with Section 12.02) and the Term Loans (excluding Delayed Draw Term Loans) are funded.

 

“Effective Date Term Loan Commitment” means, with respect to each Term Lender, the commitment of such Term Lender to make a Term Loan (excluding Delayed Draw Term Loans) on the Effective Date.  The amount of each Term Lender’s Effective Date Term Loan Commitment is set forth on Annex I hereto.  The aggregate amount of the Term Lenders’ Effective Date Term Loan Commitments as of the Effective Date is $153,000,000.

 

“Embargoed Person” has the meaning assigned to such term in Section 9.22.

 

“Enterprise Acquisition” means the acquisition by Southcross Alabama Gathering System, L.P. of all of the Equity Interests of Enterprise Alabama Intrastate, LLC, a Delaware limited liability company, for a purchase price (as defined in the purchase agreement relating thereto) of not more than $25,000,000.

 

“Environmental Laws” means any and all Governmental Requirements pertaining in any way to health, safety, the environment, the preservation or reclamation of natural resources, or the management, Release or threatened Release of any Hazardous Materials, in effect in any and all jurisdictions in which the Borrower or any Subsidiary is conducting, or at any time has conducted, business, or where any Property of the Borrower or any Subsidiary is located, including, the Oil Pollution Act of 1990 (“OPA”), as amended, the Clean Air Act, as amended, the Comprehensive Environmental, Response, Compensation, and Liability Act of 1980 (“CERCLA”), as amended, the Federal Water Pollution Control Act, as amended, the Occupational Safety and Health Act of 1970, as amended, the Resource Conservation and Recovery Act of 1976 (“RCRA”), as amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation Law, as amended, and other environmental conservation or protection Governmental Requirements.

 

“Environmental Permit” means any permit, registration, license, notice, approval, consent, exemption, variance, spill or response plan, or other authorization required under or issued pursuant to applicable Environmental Laws.

 

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“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such Equity Interests.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute.

 

“ERISA Affiliate” means each trade or business (whether or not incorporated) which together with the Borrower or a Subsidiary would be deemed to be a “single employer” within the meaning of section 4001 (b)( 1) of ERISA or subsections (b), (c), (m) or (o) of section 414 of the Code.

 

“ERISA Event” means (a) a “Reportable Event” described in section 4043 of ERISA and the regulations issued thereunder, (b) the withdrawal of the Borrower, a Subsidiary or any ERISA Affiliate from a Plan during a plan year in which it was a “substantial employer” as defined in section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under section 4041 of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, (e) receipt of a notice of withdrawal liability pursuant to Section 4202 of ERISA or (f) any other event or condition which could reasonably be expected to constitute grounds under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.

 

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

 

“Event of Default” has the meaning assigned to such term in Section 10.01.

 

“Excepted Liens” means: (a) Liens for Taxes, assessments or other governmental charges or levies which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP; (b) Liens in connection with workers’ compensation, unemployment insurance or other social security, old age pension or public liability obligations which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP; (c) statutory landlord’s liens, operators’, interest owners’, vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’, suppliers’, workers’, materialmen’s, construction or other like Liens arising by operation of law in the ordinary course of business or incident to the operation and maintenance of Properties each of which is in respect of obligations that are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP; (d) Liens arising solely by virtue of customary deposit account agreements with the creditor depositary institution or any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies and burdening only deposit accounts or other funds maintained with a creditor depository institution, provided that no such deposit account is a dedicated cash collateral account or is subject to restrictions against access by the depositor in excess of those set forth by regulations promulgated by the Board and no such deposit account is intended by the

 

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Borrower or any of its Subsidiaries to provide collateral to the depository institution or any other Person (other than the Secured Parties pursuant to the Security Instruments); (e) zoning and land use requirements, easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations affecting, and minor irregularities or deficiencies in title to, any real Property of the Borrower or any Subsidiary that do not secure Indebtedness and which in the aggregate do not materially impair the use of such Property for the purposes of which such Property is held by the Borrower or any Subsidiary or materially impair the value of such Property subject thereto; (f) Liens on cash or securities pledged to secure performance of tenders, surety, appeal and supersedeas bonds, government contracts, performance and return of money bonds, bids, trade contracts, leases, statutory obligations, regulatory obligations, obligations in respect of workers’ compensation, unemployment insurance or other forms of government benefits or insurance and other obligations of a like nature incurred in the ordinary course of business; (g) Liens, titles and interests of lessors of property leased by such lessors to the Borrower or any Subsidiary, restrictions and prohibitions on encumbrances and transferability with respect to such property and the Borrower’s or such Subsidiary’s interests therein imposed by such leases, and Liens and encumbrances encumbering such lessors’ titles and interests in such property and to which the Borrower’s or such Subsidiary’s leasehold interests may be subject or subordinate, in each case, whether or not evidenced by UCC financing statement filings or other documents of record; provided that such Liens do not secure Indebtedness of the Borrower or any Subsidiary and do not encumber property of the Borrower or any Subsidiary other than the property that is the subject of such leases; (h) Liens, titles and interests of licensors of software and other intangible property licensed by such licensors to the Borrower or any Subsidiary, restrictions and prohibitions on encumbrances and transferability with respect to such property and the Borrower’s or such Subsidiary’s interests therein imposed by such licenses, and Liens and encumbrances encumbering such licensors’ titles and interests in such property and to which the Borrower’s or such Subsidiary’s license interests may be subject or subordinate, in each case, whether or not evidenced by UCC financing statement filings or other documents of record; provided that such Liens do not secure Indebtedness of the Borrower or any Subsidiary and do not encumber property of the Borrower or any Subsidiary other than the property that is the subject of such licenses; and (i) judgment and attachment Liens not giving rise to an Event of Default, provided that any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceeding may be initiated shall not have expired and no action to enforce such Lien has been commenced.  Any Lien described in clauses (a) through (d) shall remain an “Excepted Lien” only for so long as (A) the appropriate Loan Party shall cause any proceeding instituted contesting such Lien to stay the sale or forfeiture of any portion of the Collateral on account of such Lien, (B) the appropriate Loan Party shall maintain adequate reserves related to such Lien to the extent required by GAAP, and (C) such Lien shall in all respects be subject and subordinate in priority to the Liens created and evidenced by the Security Instruments, except if and to the extent that the Governmental Requirements creating, permitting or authorizing such Lien provides that such Lien is or must be superior to the Liens created and evidenced by the Security Instruments; provided that no intention to subordinate the first priority Liens granted in favor of the Administrative Agent for the benefit of the Secured Parties pursuant to the Security Instruments is to be hereby implied or expressed by the permitted existence of such Excepted Liens.

 

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“Excess Cash” means the amount, if any, that (a) the sum of (i) the Borrower’s and the other Loan Parties’ cash on hand plus (ii) the aggregate amount of the Borrower’s and the other Loan Parties’ Investments of the types described in clauses (c), (d), (e) and (f) of Section 9.05 exceeds (b) the aggregate amount of the Borrower’s accounts payable and accrued expenses, liabilities or other obligations to pay the deferred purchase price of Property or services that are greater than ninety (90) days past the later of the date of invoice or the scheduled payment date unless such accounts payable, expenses or liabilities or other obligations are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP.

 

“Excluded Subsidiary” means (a) any Person designated on the Effective Date as such on Schedule 7.14 or that the Borrower has designated in writing to the Administrative Agent to be an Excluded Subsidiary pursuant to Section 8.15(a), and which has not been redesignated a Loan Party pursuant to Section 8.15(b), and (b) any Subsidiary of an Excluded Subsidiary.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower or any Guarantor hereunder or under any other Loan Document, (a) Taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income Taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower or any Guarantor is located, and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 5.04(a)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 5.03(d), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts with respect to such withholding tax pursuant to Section 5.03(a) or Section 5.03(b).

 

“Executive Order” has the meaning assigned to such term in Section 7.26(a).

 

“Existing Credit Agreement” has the meaning assigned to such term in the recitals hereto.

 

“Existing Indebtedness” has the meaning assigned to such term in the recitals hereto.

 

“Existing Lenders” has the meaning assigned to such term in the recitals hereto.

 

“Expansion Capital Expenditures” means Capital Expenditures expended by any one or more of the Loan Parties from and after (a) August 1, 2010 but on or before August 31, 2011, in connection with or by reason of one or more of (i) the SMEPA Moselle Project, in an amount not to exceed $9,000,000, (ii) the Tauber Project, in an amount not to exceed $3,000,000, and (iii) the Gregory Project, in an amount not to exceed $3,800,000; (b) the Effective Date but on or before September 30, 2012, in connection with or by reason of one or more of (i) the Refugio Processing Project, (ii) the Gregory Plant Phase II Project and (iii) the Pipeline Projects,

 

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provided, however, that the Capital Expenditures attributable to the projects referenced in this clause (b) shall not exceed $178,100,000 in the aggregate and the Capital Expenditures attributable to the Refugio Processing Project shall not exceed $100,000,000; and (c) the Effective Date but on or before October 31, 2012, in connection with or by reason of any one or more of (i) the Bonnie View Fractionator, (ii) the NGL Pipeline Projects and (iii) the Residue Pipeline Projects, provided, however, that the Capital Expenditures attributable to the projects referenced in this clause (c) shall not exceed $40,500,000 in the aggregate and the Capital Expenditures attributable to the Bonnie View Fractionator shall not exceed $28,750,000.

 

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) 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 that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

 

“Fee Letter” means collectively, each agreement concerning fees payable in connection with this Agreement as may be entered into from time to time between, among others, the Borrower and the Administrative Agent.

 

“Final Leverage Reduction Repayment Due Date” has the meaning given to such term in Section 3.04(b)(vi).

 

“Financial Officer” means, for any Person, the chief financial officer, principal accounting officer, treasurer or controller of such Person.  Unless otherwise specified, all references herein to a Financial Officer means a Financial Officer of the Borrower.

 

“Financial Statements” has the meaning assigned to such term in Section 7.04(a).

 

“First Amendment” means the First Amendment to Credit Agreement dated as of February 7, 2012 by and among the Administrative Agent, the Borrower and the Lenders.

 

“First Amendment Effective Date” means February 7, 2012.

 

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

 

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

 

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

 

“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time subject to the terms and conditions set forth in Section 1.04.

 

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“Governmental Authority” means the government of the United States of America, 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 (including any supranational bodies, such as the European Union or the European Central Bank).

 

“Governmental Requirement” means any law, statute, code, ordinance, order, determination, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, rules of common law, authorization or other directive or requirement, whether now or hereinafter in effect, of any Governmental Authority.

 

“Gregory Project” means the design and construction of improvements to expand capacity and increase recovery at the Loan Parties’ processing plant located in Gregory, Texas.

 

“Gregory Plant Phase II Project” means the design and construction of improvements to expand capacity and increase recovery at the Loan Parties’ processing plant located in Gregory, Texas, beyond the improvements included in the Gregory Project.

 

“Guarantors” means, collectively, (a) the Subsidiaries listed on Schedule 7.14, and (b) each other Subsidiary that guarantees the Secured Obligations pursuant to Section 8.14(a).  For the avoidance of doubt, “Guarantors” does not include Excluded Subsidiaries.

 

“Guaranty and Collateral Agreement” means an amended and restated agreement executed by the Guarantors in substantially the form of Exhibit E granting security interests in certain Collateral and unconditionally guarantying on a joint and several basis, payment of the Secured Obligations, as the same may be amended, modified or supplemented from time to time.

 

“Hazardous Material” means any substance regulated or as to which liability might arise under any applicable Environmental Law including: (a) any chemical, compound, material, product, byproduct, substance or waste defined as or included in the definition or meaning of “hazardous substance,” “hazardous material,” “hazardous waste,” “solid waste,” “toxic waste,” “extremely hazardous substance,” “toxic substance,” “contaminant,” “pollutant,” or words of similar meaning or import found in any applicable Environmental Law; (b) Hydrocarbons, petroleum products, petroleum substances, natural gas, oil, oil and gas waste, crude oil, and any components, fractions, or derivatives thereof; and (c) radioactive materials, explosives, asbestos or asbestos containing materials, polychlorinated biphenyls, radon, infectious or medical wastes.

 

“Hedging Agreement” means any agreement 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; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a Hedging Agreement.

 

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“Hedging Termination Value” means, in respect of any one or more Hedging Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Hedging Agreements, (a) for any date on or after the date such Hedging Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Hedging Agreements, as determined by the counterparties to such Hedging Agreements.

 

“Highest Lawful Rate” means, with respect to each Lender, the maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Loans or on other Secured Obligations under laws applicable to such Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws allow as of the date hereof.

 

“Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined or separated therefrom.

 

“Imputed Results Period” means, with respect to a Specified Project, the period beginning on the first day after the last day of the Actual Results Period and ending on the last day before the date that is twelve (12) months following the Actual Completion Date.

 

“Indebtedness” means, for any Person, the sum of the following (without duplication): (a) all obligations of such Person for borrowed money or evidenced by bonds, bankers’ acceptances, debentures, notes or other similar instruments; (b) all obligations of such Person (whether contingent or otherwise) in respect of letters of credit, surety or other bonds and similar instruments; (c) all accounts payable and all accrued expenses, liabilities or other obligations of such Person to pay the deferred purchase price of Property or services, except trade accounts payable of such Person arising in the ordinary course of business if and to the extent that such trade accounts payable are not past due by more than sixty (60) days or that are being contested in good faith by appropriate proceedings diligently pursued and for which adequate reserves have been established to the satisfaction of the Administrative Agent or are subject to an offset in favor of such Person as a result of accounts receivable owed to such Person; (d) all obligations under Capital Leases; (e) all obligations under Synthetic Leases; (f) all Indebtedness (as defined in the other clauses of this definition) of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien on any Property of such Person, whether or not such Indebtedness is assumed by such Person, provided, however, that the amount of such Indebtedness of any Person described in this clause (f) shall, for purposes of this Agreement, be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness or (ii) the fair market value of the Property encumbered, as determined by the Administrative Agent in its reasonable discretion; (g) all Indebtedness (as defined in the other clauses of this definition) of others guaranteed by such Person or in which such Person otherwise assures a creditor against loss of the Indebtedness (howsoever such assurance shall be made) to the extent of the lesser of the amount of such Indebtedness and the maximum stated amount of such guarantee or assurance against loss; (h) all obligations or undertakings of such Person to maintain or cause to be maintained the financial position or

 

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covenants of others or to purchase the Indebtedness or Property of others; (i) obligations to pay for electricity, natural gas, other Hydrocarbons and other commodities under contracts having an initial term in excess of one (1) year even if such electricity, natural gas, other Hydrocarbons, and other commodities are not actually taken, received or utilized by such Person; (j) any Indebtedness of a partnership for which such Person is liable either by agreement, by operation of law or by a Governmental Requirement but only to the extent of such liability; and (k) Disqualified Capital Stock.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Information Memorandum” means the Confidential Information Memorandum dated May 2011 relating to the Borrower and the Transactions.

 

“Interest Election Request” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.04.

 

“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of each March, June, September and December and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period.

 

“Interest Period” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, three or six months thereafter, as the Borrower may elect; provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (b) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

“Investment” means, for any Person:  (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Equity Interests of any other Person or any agreement to make any such acquisition (including, without limitation, any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale); (b) the making of any deposit with, or advance, loan or capital contribution to, assumption of Indebtedness of, purchase or other acquisition of any other Indebtedness or equity participation or interest in, or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person, but excluding any such advance, loan or extension of credit having a term not exceeding ninety (90) days representing the purchase price of inventory or supplies sold by such Person in the ordinary course of business); (c) the purchase or

 

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acquisition (in one or a series of transactions) of Property of another Person that constitutes a business unit or (d) the entering into of any guarantee of, or other contingent obligation (including the deposit of any Equity Interests to be sold) with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person.

 

“Issuing Bank” means Wells Fargo, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.07(i).  The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

 

“LC Commitment” means, at any time, $50,000,000.

 

“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter of Credit.

 

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time.  The LC Exposure of any Revolving Lender at any time shall be its Revolving Loan Percentage of the total LC Exposure at such time.

 

“Lenders” means the Persons listed on Annex I and any Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

 

“Letter of Credit” means any letter of credit issued pursuant to this Agreement.

 

“Letter of Credit Agreements” means all letter of credit applications and other agreements (including any amendments, modifications or supplements thereto) submitted by the Borrower, or entered into by the Borrower, with the Issuing Bank relating to any Letter of Credit.

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period.  In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate (rounded upwards, if necessary, to the next 1/100 of 1%) at which dollar deposits of an amount comparable to such Eurodollar Borrowing and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period.

 

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“Lien” means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including but not limited to the lien or security interest arising from a mortgage, deed of trust, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes.  The term “Lien” shall include easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations.  For the purposes of this Agreement, the Borrower and its Subsidiaries shall be deemed to be the owner of any Property which they have acquired or hold subject to a conditional sale agreement, or leases under a financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person in a transaction intended to create a financing.

 

“Liquidity” means, as of any date, the sum of (a) Revolving Loan Availability on such date (but only to the extent that the Borrower is permitted to borrow such amount under the terms of this Agreement including, without limitation, Section 6.02 hereof) plus (b) the amount of Excess Cash on such date.

 

“Loan” means a Term Loan (including a Delayed Draw Term Loan) or a Revolving Loan, and “Loans” means, collectively, the Term Loans (including the Delayed Draw Term Loans) and the Revolving Loans or one or more of them as provided herein.

 

“Loan Documents” means, collectively, this Agreement, the First Amendment, the Notes, the Letter of Credit Agreements, the Letters of Credit, the Fee Letter, and the Security Instruments.

 

“Loan Parties” means, collectively, the Borrower and the Guarantors.  For the avoidance of doubt, “Loan Parties” does not include Excluded Subsidiaries.

 

“Maintenance Capital Expenditures” means, for any period, all Capital Expenditures expended by any one or more of the Loan Parties during such period for the restoration, repair or maintenance of any fixed or capital asset.

 

“Management Contract” means that certain Corporate Development and Administrative Services Agreement, dated as of August 6, 2009, between the Borrower and Charlesbank.

 

“Material Adverse Change” means any circumstance or event that has had a Material Adverse Effect.

 

“Material Adverse Effect” means a material adverse change in, or material adverse effect on, or a material impairment of (a) the business, operations, Property or condition (financial or otherwise) of the Borrower and the Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform any of its obligations under any Loan Document, (c) the validity or enforceability of any Loan Document or (d) the rights and remedies of or benefits available to the Administrative Agent, any other Agent, the Issuing Bank or any Lender under any Loan Document.

 

“Material Contracts” means, collectively, each Material Gathering Contract, each Material Gas Sales Contract and the Management Contract.

 

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“Material Gas Sales Contract” means each gas sales contract entered into by a Loan Party that provides for aggregate payments to such Loan Party during any fiscal year of such Loan Party in excess of $5,000,000, as determined on a gross margin basis based upon weighted average gas purchase price as determined for the system in question.

 

“Material Gathering Contract” means each gathering or processing contract entered into by a Loan Party that provides for aggregate payments to such Loan Party during any fiscal year of such Loan Party in excess of $5,000,000, as determined on a gross margin basis.

 

“Material Indebtedness” means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Hedging Agreements, of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding $2,000,000.  For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Subsidiary in respect of any Hedging Agreement at any time shall be the Hedging Termination Value.

 

“Maturity Date” means June 10, 2016.

 

“Mechanicsburg Gathering Contract” means that certain Gas Gathering Agreement between the Mechanicsburg LLC and EOG Resources, Inc., dated as of January 29, 2009.

 

“Mechanicsburg LLC” means Southcross Delta Pipeline LLC, a Delaware limited liability company, formerly named SWE Mississippi Pipeline, LLC.

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency.

 

“Mortgage” means each mortgage, deed of trust or any other document creating and evidencing a Lien on real or immovable Property and other Property in favor of the Secured Parties, which shall be in a form reasonably satisfactory to the Administrative Agent, as the same may be amended, modified, supplemented or restated from time to time in accordance with the Loan Documents.

 

“Mortgaged Property” means any real Property owned by the Borrower or any of its Subsidiaries that is subject to a Mortgage.

 

“Net Cash Proceeds” means (a) for any Recovery Event requiring a reduction of the total Commitments and/or a repayment of Loans pursuant to Section 3.04(b)(v), the gross cash proceeds (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) from such Recovery Event, net of attorneys’ fees, accountants’ fees, amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset which is the subject of such Recovery Event (other than any Lien pursuant to a Security Instrument) and other customary fees and expenses actually incurred in connection therewith, and net of taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), and (b) for a Qualified Public Offering or any Other Equity Offering, the gross cash proceeds received from such Qualified Public Offering or Other Equity Offering, net

 

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of attorneys’ fees, finder’s fees, financial advisory fees, accounting fees, underwriting fees, discounts and commissions, investment banking fees, recording fees, filing fees and other customary fees and expenses (including, without limitation, printing and related expenses) actually incurred in connection therewith, and net of taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements).

 

“Net Sale Proceeds” means for any sale or other disposition of Property pursuant to an Asset Sale, the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such Asset Sale, net of (a) reasonable transaction costs (including, without limitation, any underwriting, brokerage or other customary selling commissions, reasonable legal, advisory and other fees and expenses (including title and recording expenses), associated therewith and sales, VAT and transfer taxes arising therefrom), (b) the amount of such gross cash proceeds required to be used to permanently repay any Indebtedness (other than the Secured Obligations) which is permitted hereunder and which is secured by the respective Property which was sold or otherwise disposed of, (c) the estimated net marginal increase in income taxes which will be payable by the Borrower or any Subsidiary with respect to the fiscal year of the Borrower in which the sale or other disposition occurs as a result of such sale or other disposition, and (d) the amount of all reserves required to be maintained by the Borrower or any Subsidiary in accordance with GAAP for any potential indemnity obligations that may be required to be made by the Borrower or any Subsidiary of as a result of such Asset Sale; provided, however, that (i) such gross proceeds shall not include any portion of such gross cash proceeds which the Borrower determines in good faith should be reserved for post-closing adjustments (to the extent the Borrower delivers to the Lenders a certificate signed by a Responsible Officer as to such determination), it being understood and agreed that on the day that all such post-closing adjustments have been determined (which shall not be later than thirteen (13) months following the date of the respective Asset Sale), the amount (if any) by which the reserved amount in respect of such Asset Sale exceeds the actual post-closing adjustments payable by the Borrower or any Subsidiary shall constitute Net Sale Proceeds on such date received by the Borrower and/or any Subsidiary from such Asset Sale, and (ii) at such time as the Borrower and the Subsidiaries are no longer required to maintain any indemnity reserves in accordance with GAAP as a result of any Asset Sale, the amount (if any) by which such reserved amount in respect of such Asset Sale exceeds the actual amount of indemnity payments made by the Borrower or any Subsidiary for which such reserves were required to be maintained in respect of such Asset Sale shall constitute Net Sale Proceeds at such time.

 

“NGL Pipeline Projects” means those pipeline projects in South Texas, as generally described and disclosed to the Lenders in the Presentation Materials, to expand the Borrower’s pipeline system to transport natural gas liquid volumes from the Refugio Processing Project to the Bonnie View Fractionator and from the Bonnie View Fractionator to market outlets.

 

“Notes” means the promissory notes of the Borrower described in Section 2.02(d) and being substantially in the form of Exhibit A-1 or Exhibit A-2, together with all amendments, modifications, replacements, extensions and rearrangements thereof.

 

“OFAC” has the meaning assigned to such term in Section 7.26(b)(v).

 

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“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 or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

 

“Other Equity Offering” means any public or private offering, or any private placement, or any other issuance of Equity Interests in the Borrower to any Person or Persons, the proceeds of which are received by the Borrower (or by the Administrative Agent for the account of the Borrower) on or after the First Amendment Effective Date, other than (a) a Qualified Public Offering, (b) any issuance of Equity Interests by the Borrower required pursuant to Section 8.19(a) for an aggregate amount of cash proceeds of up to $27,500,000, and (c) any issuance of Equity Interests by the Borrower to any Person or Persons, the proceeds of which are used by the Borrower solely to pay the purchase price for repurchasing Equity Interests as part of a transaction permitted by Section 9.04(f).

 

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

 

“Participant” has the meaning assigned to such term in Section 12.04(d)(i).

 

“Permitted Force Majeure Add-Backs” means amounts that may be added to Consolidated Net Income in the calculation of Consolidated EBITDA solely to the extent that (a) such amounts represent earnings that would have been reasonably expected to be realized during such period by a Loan Party under an enforceable contract entered into by a Loan Party with an unaffiliated third party with the ability to perform under such contract, but were not realized as a direct result of an Approved Force Majeure Event and (b) such amounts are approved for such purpose by the Administrative Agent in writing in its sole discretion.

 

“Permitted Management Contract Add-Backs” means fees paid by the Borrower to Sponsor during such period pursuant to the Management Contract and permitted by Section 9.04(d), but only to the extent that (a) no such fees were paid by the Borrower to Sponsor in cash during the period commencing on the First Amendment Effective Date and ending on the date on which both (x) the Refugio Processing Project is completed and (y) the Bonnie View Fractionator is fully-assembled, operational and in use by the Loan Parties in the conduct of their business with a minimum operating capacity of 11,500 barrels per day, in each case to the reasonable satisfaction of the Administrative Agent, and (b) after giving pro forma effect to any payment of such fees (and the inclusion of such Permitted Management Contract Add-Backs in the calculation of Consolidated EBITDA), (i) (A) the Borrower is in compliance with Section 9.01(a), and (B) the Borrower’s Consolidated Total Leverage Ratio is less than 3.50 to

 

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1.00, in each case calculated (1) on a pro forma basis as of the last day of the most recently ended fiscal quarter (with compliance with Section 9.01(a) to be calculated at the level required as of the end of such most recently ended fiscal quarter but based on the financial information for the most recent twelve (12) month period for which financial information has been delivered to the Administrative Agent pursuant to Sections 8.01(a), (b), or (c)), and (2) giving effect to the Borrower’s Indebtedness after giving effect to any such payment of such fees (which calculations shall be in form and substance satisfactory to the Administrative Agent), and (ii) Liquidity as of the date of any such payment is not less than five percent (5%) of the aggregate Revolving Loan Commitments then in effect.

 

“Permitted Note Indebtedness” means Indebtedness of the Borrower and/or any of its Subsidiaries resulting from the issuance by such parties of senior unsecured notes; provided that (a) such Indebtedness does not mature or require any scheduled payments of the principal amount thereof prior to the date that is one year after the Maturity Date in effect on the date of such Permitted Note Indebtedness issuance, (b) such Indebtedness bears no greater than a market interest rate as of the time of its issuance or incurrence (as determined in good faith by the Borrower), (c) no indenture or other agreement governing such Indebtedness contains (i) maintenance financial covenants or (ii) covenants or events of default that are more restrictive on the Borrower and its Subsidiaries than those contained in this Agreement are on the Borrower and its Subsidiaries, (d) after giving effect to the issuance or incurrence of such Indebtedness on a pro forma basis, the Borrower shall be in compliance with all covenants set forth in Section 9.01 in effect as of the last day of the most recently ended fiscal quarter (such covenants to be calculated at the levels in effect as of the end of the last fiscal quarter but based on the financial information for the most recent twelve (12) month period for which financial information has been delivered to the Administrative Agent pursuant to Sections 8.01 (a), (b), or (c), and calculated as if such Indebtedness, and all other Indebtedness issued or incurred since the first day of such applicable period, has been issued or incurred on the first day of such applicable period), and (e) no Default or Event of Default exists at the time of or after giving effect to the issuance or incurrence of such Indebtedness.

 

“Permitted Tax Distributions” means, for any applicable tax year of the Borrower, quarterly distributions to the holders of the Equity Interests in the Borrower in an aggregate amount equal to the product of (a) the net income of the Borrower for federal, state and local income tax purposes for such applicable tax year, multiplied by (b) the sum of (i) the higher of the maximum federal income tax rate applicable to individuals or corporations with respect to such tax year, plus (ii) the product of (A) the higher of the maximum state and local income tax rate for individuals residing in or corporations doing business in Boston, Massachusetts, multiplied by (B) the excess of 100% over the rate described in clause (i) preceding.

 

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

 

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

 

“Pipeline Projects” means those pipeline projects in South Texas, as generally described and disclosed to the Lenders in the Information Memorandum, to expand the Borrower’s pipeline system to transport additional volumes from the Eagle Ford shale area, including, without

 

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limitation, (a) an approximate 25-mile wet-gas extension from the CCNG Transmission System (“CCNG System”) to connect the Swift Energy Company (“Swift”) acreage; (b) further extension(s) to connect additional wet-gas into the South Texas wet-gas system; and (c) a pipeline to add additional capacity to transport wet-gas from the McMullen County area to the Borrower’s existing South Texas pipeline or processing assets.

 

“Plan” means any employee pension benefit plan, as defined in section 3(2) of ERISA, which (a) is currently or hereafter sponsored, maintained or contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at any time during the six (6) calendar years preceding the date hereof, sponsored, maintained or contributed to by the Borrower or a Subsidiary or an ERISA Affiliate.

 

“Presentation Materials” means the materials comprising the document styled “Southcross Bank Group Discussion January 2012” and furnished to the Administrative Agent and the Lenders at a meeting of the Lenders and posted to SyndTrak on January 11, 2012.

 

“Prime Rate” means the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in San Francisco, California; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.  Such rate is set by the Administrative Agent as a general reference rate of interest, taking into account such factors as the Administrative Agent may deem appropriate; it being understood that many of the Administrative Agent’s commercial or other loans are priced in relation to such rate, that it is not necessarily the lowest or best rate actually charged to any customer and that the Administrative Agent may make various commercial or other loans at rates of interest having no relationship to such rate.

 

“Projected Capacity” means, with respect to any Specified Project, the Borrower’s good faith estimate of the production and/or revenue capacity of such Specified Project in the first certificate delivered pursuant to Section 8.01(g) to the Administrative Agent that includes the first calculation of pro forma Specified Project EBITDA for such Specified Project, which estimate may be subsequently changed by the Borrower in accordance with Section 8.01(p).

 

“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible (including, without limitation, cash, securities, accounts, contract rights and, with respect to any Person, Equity Interests or other ownership interests of any other Person), whether now in existence or owned or hereafter acquired.

 

“Purchase Money Indebtedness” means Indebtedness, the proceeds of which are used to finance the acquisition, construction, installation, transport and/or improvement of inventory, equipment or other Property in the ordinary course of business.

 

“Qualified Public Offering” means the first underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933 covering the offering and sale of Equity Interests of the Borrower on a firm commitment basis in which the aggregate net proceeds received by the Borrower at the public offering price is at least $75,000,000.

 

“Quarterly Dates” means the last day of each March, June, September and December in each year.

 

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“Recovery Event” means the receipt by the Borrower or any Subsidiary of any cash insurance proceeds or condemnation awards payable by reason of a Casualty Event.

 

“Redemption” means with respect to any Indebtedness, the repurchase, redemption, prepayment, repayment, or defeasance or any other acquisition or retirement for value (or the segregation of funds with respect to any of the foregoing) of such Indebtedness.  “Redeem” has the correlative meaning thereto.

 

“Refugio Processing Project” means the construction of a new gas processing plant in Refugio County, Texas, as generally described and disclosed to the Lenders in the Information Memorandum and known as the “Woodsboro Project”.

 

“Register” has the meaning assigned to such term in Section 12.04(c).

 

“Regulation D” means Regulation D of the Board, as the same may be amended, supplemented or replaced from time to time.

 

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

 

“Release” means any depositing, spilling, leaking, pumping, pouring, placing, emitting, discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching, dumping, or disposing.

 

“Remedial Work” has the meaning assigned to such term in Section 8.11(a).

 

“Required Class Lenders” means (a) with respect to the Term Loans, at least two (2) Term Lenders holding greater than fifty percent (50%) of all Term Loans outstanding, and (b) with respect to the Revolving Loans, the Required Revolving Lenders.

 

“Required Lenders” means, at any time while no Loans or LC Exposure is outstanding, at least two (2) Lenders having greater than fifty percent (50%) of the aggregate Commitments; and at any time while any Loans or LC Exposure is outstanding, at least two (2) Lenders holding greater than fifty percent (50%) of the outstanding aggregate principal amount of the Loans and participation interests in Letters of Credit (without regard to any sale by a Lender of a participation in any Loan under Section 12.04(d)); provided that the Commitments and the principal amount of the Loans and participation interests in Letters of Credit of the Defaulting Lenders (if any) shall be excluded from the determination of Required Lenders.

 

“Required Revolving Lenders” means, at any time while no Revolving Loans or LC Exposure is outstanding, at least two (2) Revolving Lenders having greater than fifty percent (50%) of the Revolving Loan Commitments; and at any time while any Revolving Loans or LC Exposure is outstanding, at least two (2) Revolving Lenders holding greater than fifty percent (50%) of the outstanding aggregate principal amount of the Revolving Loans and participation interests in Letters of Credit (without regard to any sale by a Revolving Lender of a participation in any Loan under Section 12.04(d)); provided that the Revolving Loan Commitments and the principal amount of the Revolving Loans and participation interests in Letters of Credit of the Revolving

 

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Lenders that are Defaulting Lenders (if any) shall be excluded from the determination of Required Revolving Lenders.

 

“Residue Pipeline Projects” means those pipeline projects in South Texas, as generally described and disclosed to the Lenders in the Presentation Materials, to expand the Borrower’s pipeline system to transport residue natural gas volumes from the Refugio Processing Project to market outlets.

 

“Responsible Officer” means, as to any Person, the Chief Executive Officer, the President, any Financial Officer or any Vice President of such Person.  Unless otherwise specified, all references to a Responsible Officer herein shall mean a Responsible Officer of the Borrower.

 

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other Property) with respect to any Equity Interests in the Borrower or any of its Subsidiaries, or any payment (whether in cash, securities or other Property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in the Borrower or any of its Subsidiaries or any option, warrant or other right to acquire any such Equity Interests in the Borrower or any of its Subsidiaries.

 

“Revolving Borrowing” means a Borrowing comprised of Revolving Loans.

 

“Revolving Credit Exposure” means, with respect to any Revolving Lender at any time, the sum of the outstanding principal amount of such Revolving Lender’s Revolving Loans and its LC Exposure at such time.

 

“Revolving Lender” means a Lender with a Revolving Loan Commitment.

 

“Revolving Loan” means a loan made to the Borrower pursuant to Section 2.01(c).

 

“Revolving Loan Availability” means the aggregate Revolving Loan Commitments minus the aggregate Revolving Credit Exposure.

 

“Revolving Loan Commitment” means, with respect to each Revolving Lender, the commitment of such Revolving Lender to make Revolving Loans and to acquire participations in Letters of Credit hereunder, expressed as an amount representing the maximum aggregate amount of such Revolving Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a) modified from time to time pursuant to Section 2.06 and (b) modified from time to time pursuant to assignments by or to such Revolving Lender pursuant to Section 12.04(a).  The initial amount of each Revolving Lender’s Revolving Loan Commitment is set forth on Annex I hereto or in the Assignment and Assumption pursuant to which such Revolving Lender shall have assumed its Revolving Loan Commitment, as applicable.  The aggregate amount of the Revolving Lenders’ Revolving Loan Commitments on the Effective Date is $150,000,000.

 

“Revolving Loan Percentage” means, with respect to any Revolving Lender, the percentage of the aggregate Revolving Loan Commitments represented by such Revolving Lender’s Revolving Loan Commitment (or, if the Revolving Loan Commitments have terminated or expired, the percentage of the aggregate Revolving Credit Exposure represented by such Revolving Lender’s

 

26

 

Revolving Credit Exposure at such time); provided that in the case of Section 4.04 when a Defaulting Lender shall exist, “Revolving Loan Percentage” shall mean the percentage of the aggregate Revolving Loan Commitments (disregarding any Defaulting Lender’s Revolving Loan Commitments) represented by such Revolving Lender’s Revolving Loan Commitment (or, if the Revolving Loan Commitments have terminated or expired, the Revolving Loan Percentage shall be determined based upon the Revolving Loan Commitments most recently in effect, giving effect to any assignments (and disregarding any Defaulting Lender’s unfunded Revolving Loan Commitment based on the Revolving Loan Commitments most recently in effect) at the time of determination).

 

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc., and any successor thereto that is a nationally recognized rating agency.

 

“Scheduled Completion Date” means, with respect to any Specified Project, the date indicated as the Borrower’s good faith estimate of the scheduled date of the completion of such Specified Project in the first certificate delivered pursuant to Section 8.01(g) to the Administrative Agent that includes the first calculation of pro forma Specified Project EBITDA for such Specified Project, which date may not be subsequently changed by the Borrower.

 

“SEC” means the Securities and Exchange Commission or any successor Governmental Authority.

 

“Secured Hedging Agreement” means any Hedging Agreement of the Borrower or any Subsidiary with a Secured Hedging Agreement Counterparty.

 

“Secured Hedging Agreement Counterparty” means any Person that is a party to a Hedging Agreement with the Borrower or any Subsidiary that enters into such Hedging Agreement while such Person is or before such Person becomes a Lender or an Affiliate of a Lender, but if such Person at any time ceases to be a Lender or an Affiliate of a Lender, as the case may be, such Person shall no longer be a Secured Hedging Agreement Counterparty.

 

“Secured Obligations” means any and all obligations of and amounts owing or to be owing (including interest accruing at any post-default rate and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, any of its Subsidiaries or any other Loan Party, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) by the Borrower, any Subsidiary or any other Loan Party (whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising): (a) to the Administrative Agent, the Issuing Bank, any trustee or any Lender under any Loan Document; (b) to any Secured Hedging Agreement Counterparty under any Secured Hedging Agreement; (c) to any Treasury Management Counterparty under any Treasury Management Agreement; and (d) all renewals, extensions and/or rearrangements of any of the above.

 

“Secured Parties” means, collectively, the Administrative Agent, each Issuing Bank, each Lender, each Secured Hedging Agreement Counterparty and each Treasury Management Counterparty.

 

27

 

“Security Instruments” means the Guaranty and Collateral Agreement, the Mortgages, the other agreements, instruments or certificates described or referred to in Schedule 1.01(a), the Sponsor Agreement and any and all other agreements, instruments, consents or certificates now or hereafter executed and delivered by the Borrower or any other Person (other than Secured Hedging Agreements, Treasury Management Agreements or participation or similar agreements between any Lender and any other lender or creditor with respect to any Secured Obligations pursuant to this Agreement) in connection with, or as security for the payment or performance of the Secured Obligations, the Notes, this Agreement, or reimbursement obligations under the Letters of Credit, as such agreements may be amended, modified, supplemented or restated from time to time.

 

“SMEPA” means South Mississippi Electric Power Association.

 

“SMEPA Moselle Project” means that certain pipeline system consisting of approximately 8 miles of 12-inch pipeline from a centralized point within the Moselle field to an existing meter station of the Loan Parties at SMEPA’s Moselle power plant located in Jones County, Mississippi, being constructed by the Loan Parties in order to serve SMEPA in accordance with the terms of the Second Amendment to Gas Sales Agreement by and between Southcross Marketing Company Ltd. and SMEPA effective as of April 1, 2011.

 

“Solvent” means, with respect to any Person as of any date, that (a) the value of the assets of such Person (both at fair value and present fair saleable value) is, on the date of determination, greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person as of such date, (b) as of such date, such Person is able to pay all liabilities of such Person as such liabilities mature, and (c) as of such date, such Person does not have unreasonably small capital given the nature of its business.  In computing the amount of contingent or unliquidated liabilities at any time, such liabilities shall be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

“Specified Add-Backs” means the following amounts that may be added to Consolidated Net Income for the relevant period in the calculation of Consolidated EBITDA, limited in each case to the applicable amounts set forth in the Consolidated EBITDA projections prepared by the Borrower and posted to the Lenders via SyndTrak on January 19, 2012:  (a) earnings expected but not realized by the Borrower in the Borrower’s second and third fiscal quarters of 2011 resulting from the shut down of the Mississippi Delta pipeline system and damage to pipelines related thereto as a result of the Mississippi River flooding; (b) earnings expected but not realized by the Borrower in the Borrower’s third and fourth fiscal quarters of 2011 resulting from the cessation of operations at the processing plant owned by Formosa Plastics Corporation or its affiliates in Point Comfort, Texas, (c) earnings expected but not realized by the Borrower in the Borrower’s second, third and fourth fiscal quarters of 2011 resulting from the cessation of operations at the Gregory Plant, and (d) earnings expected but not realized by the Borrower in the Borrower’s third and fourth fiscal quarters of 2011 resulting from repairs or improvements to the fractionator at the Loan Parties’ processing plant located in Gregory, Texas.

 

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“Specified Project Contract” means, with respect to a Specified Project, an enforceable contract relating to such Specified Project entered into by a Loan Party with an unaffiliated third party with the ability to perform its obligations under such contract.

 

“Specified Projects” means (a) the projects identified in the definition of the term “Expansion Capital Expenditures” set forth in this Section 1.01 (other than the Gregory Project, the Gregory Plant Phase II Project and the Bonnie View Fractionator) and (b) certain other projects of the Loan Parties (other than projects of any other Person, including, without limitation, any joint venture) (i) that have Capital Expenditures attributable thereto in excess of $5,000,000, (ii) that are identified in the certificate to be delivered pursuant to Section 8.01(g), and (iii) for which the Borrower has provided to the Administrative Agent information, as applicable, in each case in form and substance satisfactory to the Administrative Agent in its reasonable discretion, regarding (A) enforceable minimum revenue contracts that have been entered into with unaffiliated third parties and the ability of counterparties and third parties to perform under such enforceable minimum revenue contracts, (B) projected revenues from such enforceable minimum revenue contracts, other contracts or negotiated settlements, as the case may be, (C) projected capital costs and projected operating and general administrative expenses of such project, and (D) any other aspect of such project as the Administrative Agent may reasonably request.

 

“Specified Projects EBITDA Adjustment” means the amount that may be added to Consolidated Net Income in the calculation of Consolidated EBITDA attributable to a particular Specified Project as set forth in this definition, whether completed or in process.  When calculating such amount,

 

(a)                                 for any Specified Project for which the Actual Completion Date has occurred (“Completed Specified Project”), if, as of the end of the fiscal quarter for which Consolidated EBITDA attributable to such Completed Specified Project is being determined, the Borrower and its Subsidiaries do not have twelve (12) months of historical Consolidated EBITDA for such period attributable to such Completed Specified Project, the portion of the Consolidated EBITDA for such period attributable to such Completed Specified Project shall be equal to the sum of, without duplication,

 

(i)                                     (A)                               the difference between

 

(1)                                 the actual fee-based Consolidated EBITDA earned with respect to such Completed Specified Project during the Actual Results Period and

 

(2)                                 the portion of such fee-based Consolidated EBITDA earned with respect to deficiency charges paid with respect to such Completed Specified Project during the Actual Results Period

 

divided  by

 

(B)                               the number of days in the Actual Results Period

 

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divided  by

 

(C)                               the number of days in the Imputed Results Period

 

plus

 

(ii)                                  the Aggregate Deficiency Charges that would accrue and be payable to a Loan Party with respect to such Completed Specified Project under the applicable Specified Project Contract for the Imputed Results Period; and

 

(b)                                 for any Specified Project where construction has begun but the Actual Completion Date has not occurred (“In Process Specified Project”), Consolidated EBITDA for any period attributable to such In Process Specified Project will reflect the annual EBITDA related to such In Process Specified Project based on (i) the difference between enforceable minimum revenue, as determined by such In Process Specified Project’s Projected Capacity, and projected operating and general administrative expenses of such In Process Specified Project, multiplied by (ii) the ratio of actual Capital Expenditures spent through such period on such In Process Specified Project relative to the total expected Capital Expenditures for the completion of such In Process Specified Project, such amounts, in each case, approved by the Administrative Agent in its reasonable judgment, provided that the Consolidated EBITDA attributable to such In Process Specified Project for the fiscal quarter in which such In Process Specified Project’s Actual Completion Date occurs shall be calculated net of any actual Consolidated EBITDA attributable to such In Process Specified Project.  The contribution of a Specified Project to the Specified Projects EBITDA Adjustment shall be reduced in future periods if such Specified Project is not completed by, or if the estimated date by which such construction to be completed is beyond, a date that is more than 90 days beyond the Scheduled Completion Date for such Specified Project, such reduction to be reflected in the next certificate to be delivered pursuant to Section 8.01(g) to the Administrative Agent on or after the date such Specified Project is not so completed or it is determined that such Specified Project will not be so completed and to be in an amount equal to the product of (x) the applicable percentage reduction rate relating to the number of days of delay as set forth below and (y) the amount of the Specified Projects EBITDA Adjustment attributable to such Specified Project:

 

	
 
    	
Delay or Estimated Delay,
   whichever is greater
    	
 
    	
Applicable Percentage
   Reduction Rate
    	
 
    	
 
    
	
 
    	
> 90 days but < 180 days
    	
 
    	
25
    	
%
    	
 
    
	
 
    	
> 180 days but < 270 days
    	
 
    	
50
    	
%
    	
 
    
	
 
    	
> 270 days
    	
 
    	
100
    	
%
    	
 
    

 

“Sponsor” means Charlesbank Equity Fund VI, Limited Partnership, a Massachusetts limited partnership.

 

“Sponsor Agreement” means that certain Equity Contribution Agreement dated as of the First Amendment Effective Date among the Sponsor, the Borrower and the Administrative Agent.

 

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“Sponsor Agreement Satisfaction Date” means the first date following the Final Leverage Reduction Repayment Due Date on which (a) all Sponsor Covered Payments, if any, have been made to the Administrative Agent (whether by the Borrower or by the Sponsor pursuant to the Sponsor Agreement); provided that if any Sponsor Covered Payments were made by the Borrower, the Sponsor has made cash equity contributions to the Borrower pursuant to Section 8.19(b) in the amount of such Sponsor Covered Payments made by the Borrower, and (b) no future prepayments of the Loans could potentially become due pursuant to Section 3.04(b)(vi).

 

“Sponsor Covered Payments” means any prepayment of the Loans required to be made by the Borrower pursuant to Section 3.04(b)(vi).

 

“Sponsor Event of Default” means any Event of Default under Section 10.01(p).

 

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve percentages shall include those imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

 

“Subsidiary” means: (a) any Person of which at least a majority of the outstanding Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board of directors, manager or other governing body of such Person (irrespective of whether or not at the time Equity Interests of any other class or classes of such Person shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by (i) another Person, (ii) one or more of such other Person’s Subsidiaries, or (iii) collectively, such other Person and one or more of such other Person’s Subsidiaries, and (b) any partnership of which such other Person or any of such other Person’s Subsidiaries is a general partner.  Unless otherwise indicated herein, each reference to the term “Subsidiary” means a Subsidiary of the Borrower.  Notwithstanding anything to the contrary set forth herein, the term “Subsidiary” does not include any Excluded Subsidiaries.

 

“Synthetic Leases” means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP, treated as operating leases on the financial statements of the Person liable (whether contingently or otherwise) for the payment of rent thereunder and which were properly treated as indebtedness for borrowed money for purposes of U.S. federal income taxes, if the lessee in respect thereof is obligated to either purchase for an amount in excess of, or pay upon early termination an amount in excess of, 80% of the residual value of the Property subject to such operating lease upon expiration or early termination of such lease.

 

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“Tauber Project” means the acquisition by one or more of the Loan Parties from Tauber Pipeline, LLC of that certain pipeline system consisting of approximately 57.8 miles of pipeline located in San Patricio, Nueces and Refugio Counties, Texas.

 

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

 

“Term Borrowing” means a Borrowing comprised of Term Loans.

 

“Term Lender” means a Lender with a Term Loan Commitment.

 

“Term Loan” means a loan made to the Borrower pursuant to Section 2.01(a) and any loan made to the Borrower pursuant to Section 2.01(b).

 

“Term Loan Commitment” means, with respect to each Term Lender, the sum of such Term Lender’s Effective Date Term Loan Commitment plus such Term Lender’s Delayed Draw Commitment.  The amount of each Term Lender’s Term Loan Commitment is set forth on Annex I hereto.  The aggregate amount of the Term Lenders’ Term Loan Commitments as of the Effective Date is $175,000,000.  As of the earlier of (a) the effective date of the funding of the Delayed Draw Borrowing described in Section 2.01(b) and (b) September 30, 2011, the Term Loan Commitment shall be the aggregate amount of outstanding Term Loans.

 

“Term Loan Payment Amount” means (a) the sum of (i) $153,000,000 plus (ii) the total amount of the Delayed Draw Term Loans made on or prior to September 30, 2011, divided by (b) 40.

 

“Term Loan Percentage” means, with respect to any Term Lender at any time after the Effective Date, the percentage of all Term Loans then outstanding represented by such Term Lender’s Term Loans then outstanding.

 

“Termination Date” means the earlier of (a) the Maturity Date and (b) the date of termination of the Revolving Loan Commitments.

 

“Transactions” means, with respect to (a) the Borrower, the execution, delivery and performance by the Borrower of this Agreement and each other Loan Document to which it is a party, the borrowing of Loans, the use of the proceeds thereof (including, without limitation, to refinance the Existing Indebtedness), the issuance of Letters of Credit hereunder, and the grant of Liens by the Borrower on Collateral pursuant to the Security Instruments, and (b) each Guarantor, the execution, delivery and performance by such Guarantor of each Loan Document to which it is a party, the guaranteeing of the Secured Obligations and the other obligations under the Guaranty and Collateral Agreement by such Guarantor and such Guarantor’s grant of the security interests and provision of Collateral under the Security Instruments, and the grant of Liens by such Guarantor on Collateral pursuant to the Security Instruments.

 

“Treasury Management Agreement” means any agreement governing the provision of treasury or cash management services, including deposit accounts, funds transfer, automated clearinghouse, auto-borrow, zero balance accounts, returned check concentration, controlled disbursement,

 

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lockbox, account reconciliation and reporting and trade finance services provided by a Treasury Management Counterparty for the benefit of the Borrower or a Subsidiary.

 

“Treasury Management Counterparty” means each Lender or Affiliate of a Lender that enters into a Treasury Management Agreement; provided that if such Person at any time ceases to be a Lender or an Affiliate of a Lender, as the case may be, such Person shall no longer be a Treasury Management Counterparty.

 

“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.

 

“Wells Fargo” has the meaning assigned to such term in the introductory paragraph hereto.

 

“Wholly-Owned Subsidiary” means any Subsidiary of which all of the outstanding Equity Interests (other than any directors’ qualifying shares mandated by applicable law), on a fully-diluted basis, are owned by the Borrower and/or one or more of the Wholly-Owned Subsidiaries.

 

Section 1.02                             Types of Loans and Borrowings.  For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar Revolving Loan”), and Borrowings may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

 

Section 1.03                             Terms Generally; Rules of Construction.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth in the Loan Documents), (b) any reference herein to any law or regulation shall be construed, unless otherwise specified, as referring to such law or regulation as amended, modified, supplemented, codified or reenacted, in whole or in part, and in effect from time to time, (c) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to the restrictions contained in the Loan Documents), (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) with respect to the determination of any time period, the word “from” means “from and including” and the word “to” means “to and including” and (f) any reference herein to Articles, Sections, Annexes, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement.  No provision of this Agreement or any other Loan Document shall be interpreted or construed against any Person solely because such Person or its legal representative drafted such provision.

 

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Section 1.04                             Accounting Terms and Determinations; GAAP.

 

(a)                                 Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all financial statements and certificates and reports as to financial matters required to be furnished to the Administrative Agent or the Lenders hereunder shall be prepared, in accordance with GAAP, applied on a basis consistent with the Financial Statements except for changes in which the Borrower’s independent certified public accountants concur and which are disclosed to the Administrative Agent on the next date on which Financial Statements are required to be delivered to the Lenders pursuant to Section 8.01(a); provided that unless the Borrower and the Required Lenders shall otherwise agree in writing, no such change shall modify or affect the manner in which compliance with the covenants contained herein is computed such that all such computations shall be conducted utilizing financial information presented consistently with prior periods.

 

(b)                                 Notwithstanding GAAP or anything in this Agreement to the contrary, for the purposes of calculating the ratios that are the subject of Section 9.01 hereof and the components of each of them, all Excluded Subsidiaries (including the assets, liabilities, income, losses, cash flows and elements thereof) shall be excluded, except that any dividends or distributions actually paid in cash by any Person to the Borrower or any other Loan Party shall be deemed to be income to the Borrower or such other Loan Party, as applicable, when received by it whether or not constituting income in accordance with GAAP.

 

ARTICLE II
 The Credits

 

Section 2.01                             Commitments.

 

(a)                                 Effective Date Term Loan Commitments.  Subject to the terms and conditions set forth herein, each Term Lender agrees to make, on the Effective Date, a term loan to the Borrower in a principal amount of up to, but not exceeding, the amount of such Term Lender’s Effective Date Term Loan Commitment (as of the Effective Date).  Any portion of such Term Lender’s Effective Date Term Loan Commitment not utilized on the Effective Date shall be permanently cancelled.  Any Term Loans that are repaid or prepaid may not be reborrowed.

 

(b)                                 Delayed Draw Term Loan Commitments.  Subject to the terms and conditions set forth herein, each Term Lender agrees to make a single Delayed Draw Term Loan to the Borrower, at the Borrower’s option, as part of a single Delayed Draw Borrowing to be funded on a Business Day during the Delayed Draw Availability Period, in a principal amount not to exceed such Term Lender’s Delayed Draw Commitment.  Any portion of such Term Lender’s Delayed Draw Commitment not utilized during the Delayed Draw Availability Period shall be permanently cancelled.  Any Delayed Draw Term Loans that are repaid or prepaid may not be reborrowed.

 

(c)                                  Revolving Loan Commitments.  Subject to the terms and conditions set forth herein, each Revolving Lender agrees to make revolving loans to the Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in

 

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(i) such Revolving Lender’s Revolving Credit Exposure exceeding such Revolving Lender’s Revolving Loan Commitment or (ii) the total Revolving Credit Exposures exceeding the total Revolving Loan Commitments.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, repay and reborrow the Revolving Loans.

 

(d)                                 Reallocation of Loans.  After giving effect to this Agreement and any Loans made on the Effective Date, (i) each Lender who holds Revolving Loans in an aggregate amount less than its Revolving Loan Percentage (after giving effect to this Agreement) of all Revolving Loans shall advance new Revolving Loans that shall be disbursed to the Administrative Agent and used to repay Revolving Loans outstanding to each Lender who holds Revolving Loans in an aggregate amount greater than its Revolving Loan Percentage of all Revolving Loans, (ii) each Lender who holds Term Loans in an aggregate amount less than its Term Loan Percentage (after giving effect to this Agreement) of all Term Loans shall advance new Term Loans that shall be disbursed to the Administrative Agent and used to repay Term Loans outstanding to each Lender who holds Term Loans in an aggregate amount greater than its Term Loan Percentage of all Term Loans, (iii) each Lender’s participation in each Letter of Credit, if any, shall be automatically adjusted to equal its Revolving Loan Percentage (after giving effect to this Agreement), and (iv) such other adjustments shall be made as the Administrative Agent shall specify so that each Lender’s Revolving Credit Exposure equals its Revolving Loan Percentage (after giving effect to this Agreement) of the aggregate Revolving Loans of all Lenders.  For the avoidance of doubt, payments effected between or among the Lenders pursuant to this Section 2.01(d) shall not be subject to the provisions of Sections 3.04(a) and (b).

 

Section 2.02                             Loans and Borrowings.

 

(a)                                 Borrowings; Several Obligations.  Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Commitments.  The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

 

(b)                                 Types of Loans.  Subject to Section 3.03, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith.  Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

 

(c)                                  Minimum Amounts; Limitation on Number of Borrowings.  At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $1,000,000.  At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $500,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Revolving Loan Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.07(e).  Borrowings of more than one Type may be

 

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outstanding at the same time, provided that there shall not at any time be more than a total of four (4) Eurodollar Borrowings outstanding.  Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.

 

(d)                                 Notes.  The Loans made by each Lender, if requested by such Lender, shall be evidenced by a single promissory note of the Borrower for each Class of Loans made by such Lender in substantially the form of Exhibit A-1 with respect to a Term Loan and Exhibit A-2 with respect to Revolving Loans, dated, in the case of (i) any Lender party hereto as of the date of this Agreement, as of the date of this Agreement, or (ii) any Lender that becomes a party hereto pursuant to an Assignment and Assumption, as of the effective date of the Assignment and Assumption, payable to the order of such Lender in a principal amount equal to its Term Loan Commitment or Revolving Loan Commitment, as applicable, and otherwise duly completed.  In the event that any Lender’s Commitment increases or decreases for any reason (whether pursuant to Section 2.06, Section 12.04(a) or otherwise), if requested by such Lender, the Borrower shall deliver or cause to be delivered on the effective date of such increase or decrease, a new Note payable to the order of such Lender in a principal amount equal to its Term Loan Commitment or Revolving Loan Commitment, as applicable, after giving effect to such increase or decrease, and otherwise duly completed.  The date, amount, Class, Type, interest rate and, if applicable, Interest Period of each Loan made by each Lender, and all payments made on account of the principal thereof, shall be recorded by such Lender on its books for its applicable Note, and, prior to any transfer, may be endorsed by such Lender on a schedule attached to such Note or any continuation thereof or on any separate record maintained by such Lender.  Failure to make any such notation or to attach a schedule shall not affect any Lender’s or the Borrower’s rights or obligations in respect of such Loans or affect the validity of such transfer by any Lender of its Note.

 

Section 2.03                             Requests for Borrowings.  To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., Central time, three (3) Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., Central time, one Business Day before the date of the proposed Borrowing; provided that no such notice shall be required for any deemed request of an ABR Revolving Borrowing to finance the reimbursement of an LC Disbursement as provided in Section 2.07(e).  Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery, facsimile or e-mail to the Administrative Agent of a written Borrowing Request in substantially the form of Exhibit B and signed by the Borrower.  Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

 

(i)                                     the aggregate amount of the requested Borrowing;

 

(ii)                                  the date of such Borrowing, which shall be a Business Day;

 

(iii)                               whether such Borrowing is to be a Term Borrowing (or, if applicable, a Delayed Draw Borrowing) or a Revolving Borrowing;

 

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(iv)                              whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

 

(v)                                 in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;

 

(vi)                              in the case of a Revolving Borrowing, the current total Revolving Credit Exposures (without regard to the requested Borrowing) and the pro forma total Revolving Credit Exposures (giving effect to the requested Borrowing); and

 

(vii)                           the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05.

 

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.  Each Borrowing Request shall constitute a representation that (a) the amount of the requested Borrowing shall not cause (i) in the case of a Revolving Borrowing, the total Revolving Credit Exposures to exceed the total Revolving Loan Commitments, and (ii) in the case of a Term Borrowing, the aggregate amount of the Term Loans to exceed the total Term Loan Commitments, and (b) each condition precedent set forth in Section 6.02 has been satisfied with respect to such Borrowing.

 

Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

 

Section 2.04                             Interest Elections.

 

(a)                                 Conversion and Continuance.  Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.  Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.04.  The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.

 

(b)                                 Interest Election Requests.  To make an election pursuant to this Section 2.04, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election.  Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery, facsimile or e-mail to the Administrative Agent of a written Interest Election Request in substantially the form of Exhibit C and signed by the Borrower.

 

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(c)                                  Information in Interest Election Requests.  Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

 

(i)                                     the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to Sections 2.04(c)(ii) and (iii) shall be specified for each resulting Borrowing);

 

(ii)                                  the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

 

(iii)                               whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

 

(iv)                              if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

 

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one (1) month’s duration.

 

(d)                                 Notice to Lenders by the Administrative Agent.  Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

 

(e)                                  Effect of Failure to Deliver Timely Interest Election Request and Events of Default on Interest Election.  If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing: (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing (and any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective) and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

 

Section 2.05                             Funding of Borrowings.

 

(a)                                 Funding by Lenders.  Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, Central time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders.  The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent in Dallas, Texas and designated by the Borrower in the applicable Borrowing Request; provided that ABR Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.07(e) shall

 

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be remitted by the Administrative Agent to the Issuing Bank.  Nothing herein shall be deemed to obligate any Lender to obtain the funds for its Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for its Loan in any particular place or manner.

 

(b)                                 Funding by the Lenders; Presumption by the Administrative Agent.  Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.05(a) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of a payment to be made by the Borrower, the interest rate applicable to ABR Loans.  If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period.  If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing.  Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

 

Section 2.06                             Termination and Reduction of Commitments.

 

(a)                                 Scheduled Termination of Commitments.  The Effective Date Term Loan Commitments shall terminate on the Effective Date.  The Delayed Draw Commitments shall terminate concurrently with the expiration of the Delayed Draw Availability Period.  Unless previously terminated, the Revolving Loan Commitments shall terminate on the Maturity Date.  If at any time the Revolving Loan Commitments are terminated or reduced to zero, then the Revolving Loan Commitments shall terminate on the effective date of such termination or reduction.

 

(b)                                 Optional Termination and Reduction of Revolving Loan Commitments.

 

(i)                                     The Borrower may at any time terminate, or from time to time reduce, the Revolving Loan Commitments; provided that (A) each reduction of the Revolving Loan Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $1,000,000 and (B) the Borrower shall not terminate or reduce the Revolving Loan Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 3.04(a)(ii), the total Revolving Credit Exposures would exceed the total Revolving Loan Commitments.

 

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(ii)                                  The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Revolving Loan Commitments under Section 2.06(b)(i) at least three (3) Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof.  Promptly following receipt of any notice, the Administrative Agent shall advise the Revolving Lenders of the contents thereof.  Each notice delivered by the Borrower pursuant to this Section 2.06(b)(ii) shall be irrevocable.

 

(c)                                  Termination and Reductions of Revolving Loan Commitments.  Any termination or reduction of the Revolving Loan Commitments shall be permanent and may not be reinstated.  Each reduction of the Revolving Loan Commitments shall be made ratably among the Revolving Lenders in accordance with each Revolving Lender’s Revolving Loan Percentage.

 

Section 2.07                             Letters of Credit.

 

(a)                                 General.  Subject to the terms and conditions set forth herein, the Borrower may request the issuance of dollar denominated Letters of Credit for its own account or for the account of any of its Subsidiaries, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Availability Period.  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any Letter of Credit Agreement, the terms and conditions of this Agreement shall control.

 

(b)                                 Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or fax (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (not less than three (3) Business Days in advance of the requested date of issuance, amendment, renewal or extension) a notice:

 

(i)                                     requesting the issuance of a Letter of Credit or identifying the Letter of Credit to be amended, renewed or extended;

 

(ii)                                  specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day);

 

(iii)                               specifying the date on which such Letter of Credit is to expire (which shall comply with Section 2.07(c));

 

(iv)                              specifying the amount of such Letter of Credit;

 

(v)                                 specifying the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit;

 

(vi)                              specifying the current total Revolving Credit Exposures (without regard to the requested Letter of Credit or the requested amendment, renewal or extension of an outstanding Letter of Credit) and the pro forma total Revolving Credit Exposures (giving effect

 

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to the requested Letter of Credit or the requested amendment, renewal or extension of an outstanding Letter of Credit); and

 

(vii)                           specifying whether such Letter of Credit will be issued in the ordinary course for purchases or transportation of natural gas by the Borrower or any of its Subsidiaries (and as a result the obligations of the Borrower and its Consolidated Subsidiaries in respect of such Letter of Credit will be excluded from the calculation of Consolidated Total Funded Indebtedness).

 

Each notice shall constitute a representation and warranty with respect to the information set forth therein and that after giving effect to the requested issuance, amendment, renewal or extension, as applicable, (i) the LC Exposure shall not exceed the LC Commitment, (ii) the total Revolving Credit Exposures shall not exceed the total Revolving Loan Commitments, and (iii) each condition precedent set forth in Section 6.02 has been satisfied with respect to such Letter of Credit.

 

If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit.

 

(c)                                  Expiration Date.  Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one (1) year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is ten (10) Business Days prior to the Maturity Date.  Each Letter of Credit with a one (1) year term may provide for the renewal thereof for additional one (1) year periods; provided that no such period shall extend beyond the date described in clause (ii) above.

 

(d)                                 Participations.  By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Revolving Lenders, the Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Revolving Lender’s Revolving Loan Percentage of the aggregate amount available to be drawn under such Letter of Credit.  In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Revolving Lender’s Revolving Loan Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in Section 2.07(e), or of any reimbursement payment required to be refunded to the Borrower for any reason.  Each Revolving Lender acknowledges and agrees that its obligation to acquire participations pursuant to this Section 2.07(d) in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or the reduction or termination of the Revolving Loan Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

 

(e)                                  Reimbursement.  If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 11:00 a.m., Central time, on the date that such LC Disbursement is made, if the Borrower shall have received

 

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notice of such LC Disbursement prior to 9:00 a.m., Central time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 11:00 a.m., Central time, on (i) the Business Day that the Borrower receives such notice, if such notice is received prior to 9:00 a.m., Central time, on the day of receipt, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time on the day of receipt; provided that the Borrower shall, subject to the conditions to Borrowing set forth herein, be deemed to have requested, and the Borrower does hereby request under such circumstances, that such payment be financed with an ABR Revolving Borrowing in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing.  If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Revolving Lender’s Revolving Loan Percentage thereof.  Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its Revolving Loan Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.05 with respect to Revolving Loans made by such Revolving Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Revolving Lenders.  Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this Section 2.07(e), the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to this Section 2.07(e) to reimburse the Issuing Bank, then to such Revolving Lenders and the Issuing Bank as their interests may appear.  Any payment made by a Revolving Lender pursuant to this Section 2.07(e) to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans as contemplated above) shall not constitute a Revolving Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

 

(f)                                   Obligations Absolute.  The Borrower’s obligation to reimburse LC Disbursements as provided in Section 2.07(e) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, any Letter of Credit Agreement or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit or any Letter of Credit Agreement, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.07(f), constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder.  Neither the Administrative Agent, the Revolving Lenders nor the Issuing Bank, nor any of their Related Parties shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms

 

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or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised all requisite care in each such determination.  In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

(g)                                  Disbursement Procedures.  The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit.  The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by facsimile) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.

 

(h)                                 Interim Interest.  If the Issuing Bank shall make any LC Disbursement, then, until the Borrower shall have reimbursed the Issuing Bank for such LC Disbursement (either with its own funds or a Revolving Borrowing under Section 2.07(e)), the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans.  Interest accrued pursuant to this Section 2.07(h) shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to Section 2.07(e) to reimburse the Issuing Bank shall be for the account of such Revolving Lender to the extent of such payment.

 

(i)                                     Replacement of the Issuing Bank.  The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank.  The Administrative Agent shall notify the Revolving Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 3.05(a).  From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require.  After the replacement of the Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and

 

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obligations of the Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

 

(j)                                    Cash Collateralization.  If (i) any Event of Default shall occur and be continuing and the Borrower receives notice from the Administrative Agent or the Required Revolving Lenders demanding the deposit of cash collateral pursuant to this Section 2.07(j), or (ii) the Borrower is required to pay to the Administrative Agent the excess attributable to an LC Exposure in connection with any prepayment pursuant to Section 3.04(a)(ii), then the Borrower shall deposit, in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Revolving Lenders, an amount in cash equal to, in the case of an Event of Default, the LC Exposure, and in the case of a payment required by Section 3.04(a)(ii),  the amount of such excess as provided in Section 3.04(a)(ii), as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower or any Subsidiary described in Section 10.01(g) or Section 10.01(h).  The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Bank and the Revolving Lenders, an exclusive first priority and continuing perfected security interest in and Lien on such account and all cash, checks, drafts, certificates and instruments, if any, from time to time deposited or held in such account, all deposits or wire transfers made thereto, any and all investments purchased with funds deposited in such account, all interest, dividends, cash, instruments, financial assets and other Property from time to time received, receivable or otherwise payable in respect of, or in exchange for, any or all of the foregoing, and all proceeds, products, accessions, rents, profits, income and benefits therefrom, and any substitutions and replacements therefor.  The Borrower’s obligation to deposit amounts pursuant to this Section 2.07(j) shall be absolute and unconditional, without regard to whether any beneficiary of any such Letter of Credit has attempted to draw down all or a portion of such amount under the terms of a Letter of Credit, and, to the fullest extent permitted by applicable law, shall not be subject to any defense or be affected by a right of set-off, counterclaim or recoupment which the Borrower or any of its Subsidiaries may now or hereafter have against any such beneficiary, the Issuing Bank, the Administrative Agent, the Revolving Lenders or any other Person for any reason whatsoever.  Such deposit shall be held as collateral securing the payment and performance of the Borrower’s and the Guarantor’s obligations under this Agreement and the other Loan Documents.  The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account.  Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest.  Interest or profits, if any, on such investments shall accumulate in such account.  Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated, be applied to satisfy other obligations of the Borrower and the Guarantors under this Agreement or the other Loan Documents.  If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, and the Borrower is not otherwise required to pay to the Administrative Agent the excess attributable to an LC Exposure in connection with any prepayment pursuant to Section 3.04(a)(ii), then such amount (to the extent not applied as

 

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aforesaid) shall be returned to the Borrower within three (3) Business Days after all Events of Default have been cured or waived.

 

Section 2.08                             Optional Increase in Revolving Loan Commitments.

 

(a)                                 The Borrower shall have the right to increase the total Revolving Loan Commitments by obtaining additional Revolving Loan Commitments, from one or more of the Revolving Lenders and/or one or more other lending institutions, on the condition that (i) no Revolving Lender shall be obligated to increase its Revolving Loan Commitment, (ii) any such request for an increase shall be in an aggregate amount that is an integral multiple of $5,000,000 and not less than $10,000,000, (iii) the Borrower may make a maximum of two such requests  (iv) the Administrative Agent has approved the identity of any such new Revolving Lender, such approval not to be unreasonably withheld, conditioned or delayed, (v) any such new Revolving Lender assumes all of the rights and obligations of a “Revolving Lender” hereunder, and (vi) the Borrower has delivered to the Administrative Agent a certificate of each Loan Party (in sufficient copies for each Lender) signed by an authorized officer of such Loan Party (A) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and (B) in the case of the Borrower, certifying that, before and after giving effect to such increase, the conditions set forth in Sections 6.02(a) and (b) are satisfied.

 

(b)                                 Any amendment hereto in connection with an increase of the total Revolving Loan Commitments pursuant to Section 2.08(a) shall be in form and substance reasonably satisfactory to the Administrative Agent and shall only require the written signatures of the Administrative Agent, the Borrower and the Revolving Lender(s) being added or increasing their respective Revolving Loan Commitment(s), as applicable, subject only to the approval of all Lenders if any such increase would cause the aggregate Revolving Loan Commitments to exceed $185,000,000.

 

(c)                                  Within a reasonable time after the effective date of any increase in the total Revolving Loan Commitments pursuant to Section 2.08(a), the Administrative Agent shall, and is hereby authorized and directed to, revise Annex I to reflect such increase and shall distribute such revised Annex I to each of the Lenders and the Borrower, whereupon such revised Annex I shall replace the old Annex I and become part of this Agreement.  On the Business Day following any such increase, unless all Revolving Lenders have increased their Revolving Loan Commitments proportionately and there is no newly added Revolving Lender, the Revolving Lender(s) and/or the newly added Revolving Lender(s), as applicable, shall purchase a pro rata portion of the outstanding Revolving Loans (and participation interests in Letters of Credit) of each of the other Revolving Lenders (and such Revolving Lenders hereby agree to sell and to take all such further action to effectuate such sale) such that each Revolving Lender (including any newly added Revolving Lender, if applicable) shall hold its Revolving Loan Percentage of the outstanding Revolving Loans (and participation interests) after giving effect to the increase in the Revolving Loan Commitments.  Eurodollar Loans shall not be reallocated among the Revolving Lenders prior to the expiration of the applicable Interest Period in effect at the time of any such increase.

 

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ARTICLE III
 Payments of Principal and Interest; Prepayments; Fees

 

Section 3.01                             Repayment of Loans.

 

(a)                                 Repayment of Term Loans.  The Borrower hereby unconditionally promises to pay to the Administrative Agent, for the account of each Term Lender, (i) an amount equal to $2,875,000 on June 30, 2011, (ii) subject to Section 3.04(a)(ii) and Section 3.04(b)(v),  an amount equal to the Term Loan Payment Amount on each Quarterly Date, commencing with September 30, 2011, (iii) the amounts specified in Section 3.04(b)(ii) on the dates set forth therein, and (iv) if not so paid, the unpaid principal amount of each Term Loan on the Maturity Date.

 

(b)                                 Repayment of Revolving Loans.  The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Revolving Lender the then unpaid principal amount of each Revolving Loan on the Termination Date.

 

Section 3.02                             Interest.

 

(a)                                 ABR Loans.  The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Margin, but in no event to exceed the Highest Lawful Rate.

 

(b)                                 Eurodollar Loans.  The Loans comprising each Eurodollar Borrowing shall bear interest at the sum of (i) the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus (ii) the Applicable Margin, but in no event to exceed the Highest Lawful Rate.

 

(c)                                  Post-Default Rate.  Notwithstanding the foregoing, if an Event of Default has occurred and is continuing, or if any principal of or interest on any Loan or any fee or other amount payable by the Borrower or any other Loan Party hereunder or under any other Loan Document is not paid when due, whether at stated maturity, upon acceleration or otherwise, then all Loans outstanding, in the case of an Event of Default, and such overdue amount, in the case of a failure to pay amounts when due, shall bear interest, after as well as before judgment, at a rate per annum equal to two percent (2%) plus the rate applicable to ABR Loans as provided in Section 3.02(a), but in no event to exceed the Highest Lawful Rate.

 

(d)                                 Interest Payment Dates.  Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan, on the Maturity Date and, with respect to Revolving Loans, upon termination of the Revolving Loan Commitments; provided that (i) interest accrued pursuant to Section 3.02(c) shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than an optional prepayment of an ABR Revolving Loan prior to the Termination Date), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment, and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

 

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(e)                                  Interest Rate Computations.  All interest hereunder shall be computed on the basis of a year of 360 days, unless such computation would exceed the Highest Lawful Rate, in which case interest shall be computed on the basis of a year of 365 days (or 366 days in a leap year), except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error, and be binding upon the parties hereto.

 

Section 3.03                             Alternate Rate of Interest.  If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

 

(a)                                 the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate for such Interest Period; or

 

(b)                                 the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

 

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or facsimile as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective, and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made either as an ABR Borrowing or at an alternate rate of interest determined by the Required Lenders as their cost of funds.

 

Section 3.04                             Prepayments.

 

(a)                                 Optional Prepayments.

 

(i)                                     The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with Section 3.04(a)(ii).

 

(ii)                                  The Borrower shall notify the Administrative Agent by telephone (confirmed by facsimile or e-mail) of any prepayment hereunder (A) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., Central time, three (3) Business Days before the date of prepayment, or (B) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., Central time, one (1) Business Day before the date of prepayment.  Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid.  Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Borrowing shall be in an amount that would be

 

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permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02.  Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing.  Each voluntary prepayment of Term Loans pursuant to Section 3.04(a)(i) shall be applied to the remaining scheduled installments of principal required by Section 3.01(a)(i) in the inverse order of maturity.  Prepayments pursuant to Section 3.04(a) shall be accompanied by accrued interest to the extent required by Section 3.02.

 

(b)                                 Mandatory Prepayments.

 

(i)                                     If, after giving effect to any termination or reduction of the Revolving Loan Commitments pursuant to Section 2.06(b), the total Revolving Credit Exposures exceeds the total Revolving Loan Commitments, then the Borrower shall (A) prepay the Revolving Borrowings on the date of such termination or reduction in an aggregate principal amount equal to such excess, and (B) if any excess remains after prepaying all of the Revolving Borrowings as a result of an LC Exposure, pay to the Administrative Agent on behalf of the Revolving Lenders an amount equal to such excess to be held as cash collateral as provided in Section 2.07(j).

 

(ii)                                  As soon as available and in any event not later than sixty (60) days after the end of each fiscal quarter of the Borrower, commencing with the fiscal quarter ending on June 30, 2011, the Borrower shall deliver to the Administrative Agent the Borrower’s calculation of its Consolidated Excess Cash Flow for such fiscal quarter.  On or prior to the sixty-fifth (65th) day after the end of each fiscal quarter of the Borrower, commencing March 5, 2012, if (A)the Consolidated Total Leverage Ratio as of the fiscal quarter most recently ended is greater than 3.50 to 1.00, the Borrower shall prepay (by payment to the Administrative Agent for distribution to the Term Lenders) an aggregate principal amount of Term Loans (including Delayed Draw Term Loans, if any) equal to one hundred percent (100%) of Consolidated Excess Cash Flow for such fiscal quarter or (B) the Consolidated Total Leverage Ratio as of the fiscal quarter most recently ended is greater than 3.00 to 1.00, but less than or equal to 3.50 to 1.00, the Borrower shall prepay (by payment to the Administrative Agent for distribution to the Term Lenders) an aggregate principal amount of Term Loans (including Delayed Draw Term Loans, if any) equal to seventy-five percent (75%) of Consolidated Excess Cash Flow for such fiscal quarter.  Notwithstanding the foregoing, the Borrower’s obligation to provide the quarterly calculation of Consolidated Excess Cash Flow (as required by this Section 3.04(b)(ii) and Section 8.01(e)) and make the quarterly payment of Consolidated Excess Cash Flow pursuant to this Section 3.04(b)(ii) shall cease and terminate at such time as the Borrower’s Consolidated Total Leverage Ratio (as determined pursuant to Section 9.01(b)) is equal to or less than 3.00 to 1.00 for two (2) full consecutive fiscal quarters at any time after the First Amendment Effective Date (calculated as of the last day of each such fiscal quarter).

 

(iii)                               On each date on or after the Effective Date upon which the Borrower or any Subsidiary receives any cash proceeds from any Asset Sale made pursuant to Section 9.11(f), an amount equal to 100% of the Net Sale Proceeds therefrom shall be applied by the Borrower on such date as a mandatory repayment in accordance with Section 3.04(b)(vii); provided, however, that such Net Sale Proceeds shall not be required to be so applied on such date so long as no Event of Default then exists and such Net Sale Proceeds shall be used to purchase Property (other than inventory and working capital) used or to be used in the businesses

 

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permitted pursuant to Section 9.06 within 180 days following the date of such Asset Sale, and provided, further, that if all or any portion of such Net Sale Proceeds not required to be so applied as provided above in this Section 3.04(b)(iii) are not so reinvested within such 180-day period (or such earlier date, if any, as the Borrower or relevant Subsidiary determines not to reinvest the Net Sale Proceeds from such Asset Sale as set forth above), such remaining portion shall be applied on the last day of such period (or such earlier date, as the case may be) as provided above in this Section 3.04(b)(iii) without regard to the preceding proviso.

 

(iv)                              (A)                               On the date on or after the consummation of a Qualified Public Offering upon which the Borrower or any Subsidiary receives any cash proceeds therefrom, an amount equal to 100% of the Net Cash Proceeds from such Qualified Public Offering shall be applied by the Borrower on such date as a mandatory prepayment in accordance with Section 3.04(b)(iv)(C).

 

(B)                               On the date on or after the consummation of any Other Equity Offering upon which the Borrower or any Subsidiary receives Net Cash Proceeds therefrom in an amount that, in the aggregate with all other Net Cash Proceeds received by the Borrower or any Subsidiary from all Other Equity Offerings that occur from and after the First Amendment Effective Date, exceeds $75,000,000, an amount equal to 100% of such excess Net Cash Proceeds (to the extent not previously so applied pursuant to this Section 3.04(b)(iv)(B)) shall be applied by the Borrower on such date as a mandatory prepayment in accordance with Section 3.04(b)(iv)(C).

 

(C)                               All amounts required to be applied pursuant to the foregoing clauses (A) and (B) shall be applied on the date received as follows (or in such other manner as may be approved by the Required Lenders):

 

(1)                                 first as a mandatory repayment of the Term Loan in accordance with the requirements of Section 3.04(b)(vii) until the Term Loan has been repaid in full, and

 

(2)                                 second as a mandatory repayment of outstanding Revolving Borrowings on such date (without a permanent reduction in the Lenders’ Revolving Loan Commitments).

 

(v)                                 On each date on or after the Effective Date upon which the Borrower or any Subsidiary receives any cash proceeds from any Recovery Event, an amount equal to 100% of the Net Cash Proceeds from such Recovery Event shall be applied on such date as a mandatory repayment in accordance with the requirements of Section 3.04(b)(vii); provided, however, that so long as no Event of Default then exists, such Net Cash Proceeds shall not be required to be so applied on such date to the extent that such Net Cash Proceeds shall be used to replace or restore any Property in respect of which such Net Cash Proceeds were paid within 180 days following the date of the receipt of such Net Cash Proceeds, and provided, further, that if all or any portion of such Net Cash Proceeds are not so used within 180 days after the date of the receipt of such Net Cash Proceeds (or such earlier date, if any, as the Borrower or relevant Subsidiary determines not to reinvest the Net Cash Proceeds relating to such Recovery Event as set forth above), such remaining portion shall be applied on the last day of such period (or such

 

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earlier date, as the case may be) as provided above in this Section 3.04(b)(v) without regard to the proviso or the immediately preceding proviso.

 

(vi)                              (A)                               If the Consolidated Total Leverage Ratio is greater than or equal to 6.50 to 1.00 as of September 30, 2012, then the Borrower shall make a mandatory prepayment of the Loans in an amount not less than $5,000,000 within 10 Business Days following the earlier to occur of (1) the date on which a compliance certificate with respect to the Borrower’s fiscal quarter ending on September 30, 2012 is delivered to the Administrative Agent pursuant to Section 8.01(g) and (2) November 29, 2012 and (B) if the Consolidated Total Leverage Ratio is greater than or equal to 5.75 to 1.0 as of December 31, 2012, then the Borrower shall make a prepayment of the Loans in an amount not less than $5,000,000 within 10 Business Days following the earlier to occur of (1) the date on which a compliance certificate with respect to the Borrower’s fiscal quarter ending on December 31, 2012 is delivered to the Administrative Agent pursuant to Section 8.01(g) and (2) March 1, 2013 (the tenth Business Day following such earlier date, the “Final Leverage Reduction Repayment Due Date”).  If a Sponsor Event of Default occurs at any time, the Borrower shall immediately make a mandatory prepayment of the Loans in an amount not less than the maximum potential amount of remaining prepayments that could be required under this Section 3.04(b)(vi) as of the date such Sponsor Event of Default occurs.  All mandatory prepayments of Loans required under this Section 3.04(b)(vi) (including any amounts paid directly by the Sponsor pursuant to the Sponsor Agreement) shall be applied as follows:  first, as a mandatory repayment of outstanding Revolving Borrowings on such date (without a permanent reduction in the Lenders’ Revolving Loan Commitments) until the outstanding Revolving Borrowings are reduced to zero, then second as a mandatory repayment of the Term Loan in accordance with the requirements of Section 3.04(b)(vii) until the Term Loan has been repaid in full.

 

(vii)                           Each prepayment of Borrowings pursuant to this Section 3.04(b) shall be applied ratably to the Loans included in the prepaid Borrowings.  Each prepayment (A) pursuant to Section 3.04(b)(i) shall be applied to any outstanding Revolving Borrowings and the LC Exposure as described in Section 3.04(b)(i), and (B) pursuant to Sections 3.04(b)(ii) through (vi), to the extent such prepayment is applied as a mandatory repayment of the Term Loan, shall be applied to the remaining scheduled installments of principal required by Section 3.01(a)(i) in the inverse order of maturity.  Prepayments pursuant to Section 3.04(b) shall be accompanied by accrued interest to the extent required by Section 3.02.  Each prepayment of Borrowings pursuant to Section 3.04(b) shall be applied, first, ratably to any ABR Borrowings of the applicable Class then outstanding, and, second, to any Eurodollar Borrowings of the applicable Class then outstanding, and if more than one Eurodollar Borrowing of the applicable Class is then outstanding, to each such Eurodollar Borrowing in order of priority beginning with the Eurodollar Borrowing with the least number of days remaining in the Interest Period applicable thereto and ending with the Eurodollar Borrowing with the most number of days remaining in the Interest Period applicable thereto.

 

(viii)                        If the Borrower is required to make a mandatory prepayment of Eurodollar Borrowings under this Section 3.02, the Borrower shall have the right, in lieu of making such prepayment in full, to deposit an amount equal to such mandatory prepayment with the Administrative Agent in a cash collateral account maintained (pursuant to documentation reasonably satisfactory to the Administrative Agent) by and in the sole dominion and control of

 

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the Administrative Agent.  Any amounts so deposited shall be held by the Administrative Agent as collateral for the prepayment of such Eurodollar Rate Loans and shall be applied to the prepayment of the applicable Eurodollar Rate Loans at the end of the current Interest Periods applicable thereto.  At the request of the Borrower, amounts so deposited shall be invested by the Administrative Agent in Cash Equivalents maturing prior to the date or dates on which it is anticipated that such amounts will be applied to prepay such Eurodollar Rate Loans; any interest earned on such Cash Equivalents will be for the account of the Borrower and the Borrower will deposit with the Administrative Agent the amount of any loss on any such Cash Equivalents to the extent necessary in order that the amount of the prepayment to be made with the deposited amounts may not be reduced.

 

(c)                                  No Premium or Penalty.  Prepayments permitted or required under this Section 3.04 shall be without premium or penalty, except as required under Section 5.02.

 

Section 3.05                             Fees.

 

(a)                                 Commitment Fees.  The Borrower agrees to pay to the Administrative Agent (i) for the account of each Revolving Lender a commitment fee, which shall accrue at the applicable Commitment Fee Rate on the average daily amount of the unused amount of the Revolving Loan Commitment of such Revolving Lender during the period from and including the date of this Agreement to but excluding the Termination Date, and (ii) for the account of each Term Lender a commitment fee, which shall accrue at the applicable Commitment Fee Rate on the unused amount of the Delayed Draw Commitment of such Term Lender during the Delayed Draw Availability Period.  Accrued commitment fees shall be payable in arrears on the last day of March, June, September and December of each year and on the Termination Date, commencing on the first such date to occur after the date hereof.  All commitment fees shall be computed on the basis of a year of 360 days, unless such computation would exceed the Highest Lawful Rate, in which case interest shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  For avoidance of doubt, (A) the “unused amount” of the Revolving Loan Commitment of any Revolving Lender shall be determined by subtracting such Revolving Lender’s Revolving Credit Exposure on the date of determination from such Revolving Lender’s Revolving Loan Commitment on such date of determination, and (B) the “unused amount” of the Delayed Draw Commitment of any Term Lender shall be the Delayed Draw Commitment of such Term Lender until such Term Lender makes a Delayed Draw Term Loan or such Delayed Draw Commitment terminates in accordance with Section 2.06(a).

 

(b)                                 Letter of Credit Fees.  The Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Margin used to determine the interest rate applicable to Eurodollar Loans on the average daily amount of such Revolving Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the date of this Agreement to but excluding the later of the date on which such Revolving Lender’s Revolving Loan Commitment terminates and the date on which such Revolving Lender ceases to have any LC Exposure, (ii) to the Issuing Bank, for its own account, a fronting fee equal to 0.125% of the stated amount of each Letter of Credit payable on the date of issuance of such Letter of Credit, provided that in no

 

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event shall such fronting fee be less than $750.00 for any Letter of Credit, and (iii) to the Issuing Bank, for its own account, its standard fees with respect to the issuance, amendment, transfer, renewal or extension of any Letter of Credit or processing of drawings thereunder payable upon the effectiveness thereof.  Participation fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third (3rd) Business Day following such last day, commencing on the first such date to occur after the date of this Agreement; provided that all such fees shall be payable on the Termination Date and any such fees accruing after the Termination Date shall be payable on demand.  Any other fees payable to the Issuing Bank pursuant to this Section 3.05(b) shall be payable within ten (10) days after demand.  All participation fees and fronting fees shall be computed on the basis of a year of 360 days, unless such computation would exceed the Highest Lawful Rate, in which case interest shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

 

(c)                                  Administrative Agent Fees.  The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times set forth in the Fee Letter.

 

ARTICLE IV
 Payments; Pro Rata Treatment; Sharing of Set-offs

 

Section 4.01                             Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

 

(a)                                 Payments by the Borrower.  The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 5.01, Section 5.02, Section 5.03 or otherwise) prior to 11:00 a.m., Central time, on the date when due, in immediately available funds, without defense, deduction, recoupment, set-off or counterclaim.  Fees, once paid, shall be fully earned and shall not be refundable under any circumstances.  Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to the Administrative Agent at its offices specified in Section 12.01, except payments to be made directly to the Issuing Bank as expressly provided herein and except that payments pursuant to Section 5.01, Section 5.02, Section 5.03 and Section 12.03 shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.  All payments hereunder shall be made in dollars.

 

(b)                                 Application of Insufficient Payments.  If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such

 

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parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

 

(c)                                  Sharing of Payments by Lenders.  If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender receiving payment of a proportion of the aggregate amount of its Loans and other such obligations greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (i) notify the Administrative Agent of such fact, and (ii) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that (A) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (B) the provisions of this Section 4.01 shall not be construed to apply to (1) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or (2) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant.  Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Loan Party in the amount of such participation.

 

Section 4.02                             Payments by the Borrower; Presumptions by the Administrative Agent.  Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the Issuing Bank, with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

Section 4.03                             Certain Deductions by the Administrative Agent.  If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.05(a), Section 2.07(d), Section 2.07(e), Section 4.02 or otherwise hereunder then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), (a) apply any amounts thereafter received by the Administrative Agent for the account of such Lender and for the benefit of the Administrative Agent or the Issuing Bank to satisfy such Lender’s obligations hereunder until all such unsatisfied obligations are fully paid and/or (b) hold any such amounts in a segregated

 

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account as cash collateral for, and application to, any future funding obligations of such Lender hereunder, in the case of each of (a) and (b) above, in any order as determined by the Administrative Agent in its discretion.

 

Section 4.04                             Defaulting Lenders.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(a)                                 fees shall cease to accrue on the unfunded portion of the Revolving Loan Commitment of such Defaulting Lender pursuant to Section 3.05(a);

 

(b)                                 the Commitment, the Revolving Credit Exposure and the outstanding Term Loans of such Defaulting Lender shall not be included in determining whether all Lenders or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 12.02), provided that any waiver, amendment or modification requiring the consent of all Lenders or each adversely affected Lender which affects such Defaulting Lender differently than all other Lenders or all other adversely affected Lenders, as the case may be, shall require the consent of such Defaulting Lender;

 

(c)                                  if any LC Exposure exists at the time a Lender becomes a Defaulting Lender then:

 

(i)                                     all or any part of such LC Exposure shall be reallocated among the non-Defaulting Lenders in accordance with their respective Revolving Loan Percentages but only to the extent (A) the sum of all non-Defaulting Lenders’ Revolving Credit Exposures plus such Defaulting Lender’s LC Exposure does not exceed the total of all non-Defaulting Lenders’ Revolving Loan Commitments and (B) the conditions set forth in Section 6.02 are satisfied at such time; and

 

(ii)                                  if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within one (1) Business Day following notice by the Administrative Agent cash collateralize such Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.07(j) for so long as such LC Exposure is outstanding;

 

(iii)                               if the Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to this Section 4.04(c), the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 3.05(b) with respect to such Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized;

 

(iv)                              if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to this Section 4.04(c), then the fees payable to the Lenders pursuant to Section 3.05(a) and Section 3.05(b) shall be adjusted in accordance with such non-Defaulting Lenders’ Revolving Loan Percentages; or

 

(v)                                 if any Defaulting Lender’s LC Exposure is neither cash collateralized nor reallocated pursuant to this Section 4.04(c), then, without prejudice to any

 

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rights or remedies of the Issuing Bank or any Lender hereunder, all commitment fees that otherwise would have been payable to such Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s Revolving Loan Commitment that was utilized by such LC Exposure) under Section 3.05(a) and letter of credit fees payable under Section 3.05(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Bank until such LC Exposure is cash collateralized and/or reallocated; and

 

(d)                                 so long as any Lender is a Defaulting Lender, the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure will be 100% covered by the Revolving Loan Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 4.04(c), and participating interests in any such newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 4.01(c)(i) (and any Defaulting Lender shall not participate therein).

 

In the event that the Administrative Agent, the Borrower and the Issuing Bank each agrees that a Defaulting Lender has adequately remedied all matters that caused such Defaulting Lender to be a Defaulting Lender, then the LC Exposure of the non-Defaulting Lenders shall be readjusted to reflect the inclusion of such Defaulting Lender’s Revolving Loan Commitment and on such date such Defaulting Lender shall purchase at par such of the Revolving Loans of the other Revolving Lenders as the Administrative Agent shall determine may be necessary in order for such Defaulting Lender to hold such Revolving Loans in accordance with its Revolving Loan Percentage.

 

ARTICLE V
 Increased Costs; Break Funding Payments; Taxes; Illegality

 

Section 5.01                             Increased Costs.

 

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

 

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

 

(ii)                                  subject any Lender or the Issuing Bank to any Tax of any kind whatsoever with respect to this Agreement, any Letter of Credit , any participation in a Letter of Credit or any Eurodollar Loan made by it, or change the basis of taxation of payments to such Lender or the Issuing Bank in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 5.03 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the Issuing Bank); or

 

(iii)                               impose on any Lender or the Issuing Bank or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;

 

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and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or any other amount), then, upon request of such Lender or the Issuing Bank, the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

 

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

 

(c)                                  Certificates for Reimbursement.  A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in Sections 5.01(a) or (b) and delivered to the Borrower shall be conclusive absent manifest error.  The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.

 

(d)                                 Effect of Failure or Delay in Requesting Compensation.  Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section 5.01 shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section 5.01 for any increased costs incurred or reductions suffered more than 365 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor; provided, further, that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 365-day period referred to above shall be extended to include the period of retroactive effect thereof.

 

Section 5.02                             Break Funding Payments.  In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan into an

 

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ABR Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 5.04(a), then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event.  In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market.

 

A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 5.02 shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

 

Section 5.03                             Taxes.

 

(a)                                 Payments Free of Taxes.  Any and all payments by or on account of any obligation of the Borrower or any Guarantor under any Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes; provided that if the Borrower or any Guarantor shall be required by applicable law to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 5.03(a)), the Administrative Agent, Lender or Issuing Bank, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower or such Guarantor shall make such deductions and (iii) the Borrower or such Guarantor shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

 

(b)                                 Payment of Other Taxes by the Borrower.  Without limiting the provisions of Section 5.03(a), the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c)                                  Indemnification by the Borrower.  The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 5.03) paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such

 

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payment or liability under this Section 5.03 delivered to the Borrower by a Lender or the Issuing Bank (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error.

 

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

 

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

 

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

 

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

 

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

 

(iii)                               in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (A) a certificate to the effect that such Foreign Lender is not (1) a “bank” within the meaning of section 881 (c)(3)(A) of the Code, (2) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (3) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (B) duly completed copies of Internal Revenue Service Form W-8BEN, or

 

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

 

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(f)                                   Treatment of Certain Refunds.  If the Administrative Agent, a Lender or the Issuing Bank determines, in its sole discretion, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 5.03, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 5.03 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of- pocket expenses of the Administrative Agent, such Lender or the Issuing Bank, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of the Administrative Agent, such Lender or the Issuing Bank, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, such Lender or the Issuing Bank in the event the Administrative Agent, such Lender or the Issuing Bank is required to repay such refund to such Governmental Authority.  This Section 5.03 shall not be construed to require the Administrative Agent, any Lender or the Issuing Bank to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

 

Section 5.04                             Mitigation Obligations; Replacement of Lenders.

 

(a)                                 Designation of Different Lending Office.  If any Lender requests compensation under Section 5.01, or requires the Borrower to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 5.03,  then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 5.01 or Section 5.03, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

(b)                                 Replacement of Lenders.  If any Lender requests compensation under Section 5.01, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 5.03, or if any Lender is a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 12.04(a)), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 12.04(b)(iv), (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 5.02), from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts), (iii) in the case of

 

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any such assignment resulting from a claim for compensation under Section 5.01 or payments required to be made pursuant to Section 5.03, such assignment will result in a reduction in such compensation or payments thereafter, and (iv) such assignment does not conflict with applicable law.  A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

 

Section 5.05                             Illegality.  Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Lender or its applicable lending office to honor its obligation to make or maintain Eurodollar Loans either generally or having a particular Interest Period hereunder, then (a) such Lender shall promptly notify the Borrower and the Administrative Agent thereof and such Lender’s obligation to make such Eurodollar Loans shall be suspended (the “Affected Loans”) until such time as such Lender may again make and maintain such Eurodollar Loans and (b) all Affected Loans which would otherwise be made by such Lender shall be made instead as ABR Loans (and, if such Lender so requests by notice to the Borrower and the Administrative Agent, all Affected Loans of such Lender then outstanding shall be automatically converted into ABR Loans on the date specified by such Lender in such notice) and, to the extent that Affected Loans are so made as (or converted into) ABR Loans, all payments of principal which would otherwise be applied to such Lender’s Affected Loans shall be applied instead to its ABR Loans.

 

ARTICLE VI
 Conditions Precedent

 

Section 6.01                             Effective Date.  The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective until the Business Day on which each of the following conditions is satisfied (or waived in accordance with Section 12.02):

 

(a)                                 The Administrative Agent, the Arranger and the Lenders shall have received all commitment, facility and agency fees and all other fees and amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder (including, without limitation, the fees and expenses of Vinson & Elkins L.L.P., counsel to the Administrative Agent).

 

(b)                                 The Borrower shall have deposited $16,500 with Vinson & Elkins L.L.P., counsel for the Administrative Agent, to be held by such counsel and applied toward payment of costs and expenses for recordation of certain Security Instruments, as provided pursuant to Section 12.03(a).  If such deposit exceeds the amount of such costs and expenses, the excess shall be returned to the Borrower.  If such deposit is less than such costs and expenses, the deficit shall be paid by the Borrower pursuant to Section 12.03(a).

 

(c)                                  The Administrative Agent shall have received a certificate of the Secretary or an Assistant Secretary of each Loan Party setting forth (i) resolutions of its board of directors (or its equivalent) with respect to the authorization of such Loan Party to execute and deliver the Loan Documents to which it is a party and to enter into the Transactions contemplated in those

 

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documents, (ii) the officers of such Loan Party (A) who are authorized to sign the Loan Documents to which such Loan Party is a party and (B) who will, until replaced by another officer or officers duly authorized for that purpose, act as its representative for the purposes of signing documents and giving notices and other communications in connection with this Agreement and the Transactions contemplated hereby, (iii) specimen signatures of such authorized officers, and (iv) the Organization Documents of such Loan Party, certified as being true and complete.  The Administrative Agent and the Lenders may conclusively rely on such certificate until the Administrative Agent receives notice in writing from such Loan Party to the contrary.

 

(d)                                 The Administrative Agent shall have received certificates of the appropriate state agencies with respect to the existence, qualification and good standing of each Loan Party.

 

(e)                                  The Administrative Agent shall have received a compliance certificate substantially in the form of Exhibit D-1, duly and properly executed by a Financial Officer of the Borrower and dated as of the Effective Date.

 

(f)                                   The Administrative Agent shall have received from each party hereto counterparts (in such number as may be requested by the Administrative Agent) of this Agreement signed on behalf of such party.

 

(g)                                  The Administrative Agent shall have received duly executed Notes payable to the order of each Lender that has requested a Note in a principal amount equal to its Term Loan Commitment or Revolving Loan Commitment, as applicable, dated as of the date hereof.

 

(h)                                 The Administrative Agent shall have received from each party thereto duly executed counterparts (in such number as may be requested by the Administrative Agent) of the Security Instruments.  In connection with the execution and delivery of the Security Instruments, the Administrative Agent shall:

 

(i)                                     be reasonably satisfied that the Security Instruments create first priority, perfected Liens (subject only to Excepted Liens identified in clauses (a) through (c) and (e) of the definition thereof, but subject to the provisos at the end of such definition) on all of the tangible and intangible Property of the Loan Parties (other than de minimis Property excluded in the Administrative Agent’s sole discretion); and

 

(ii)                                  have received certificates, together with undated, blank stock powers for each such certificate, representing all of the issued and outstanding Equity Interests of each of the Loan Parties, to the extent certificated.

 

(i)                                     The Administrative Agent shall have received an opinion of (i) Gardere Wynne Sewell LLP, special counsel to the Borrower, and (ii) local counsel in Alabama and Mississippi and any other jurisdictions requested by the Administrative Agent, in each case, in form and substance satisfactory to the Administrative Agent.

 

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(j)                                    The Administrative Agent shall have received certificates of insurance coverage of the Borrower evidencing that the Borrower is carrying insurance in accordance with Section 7.12.

 

(k)                                 The Administrative Agent shall have received title information as the Administrative Agent may reasonably require satisfactory to the Administrative Agent setting forth the status of title to at least 90% of the total value of the pipeline and processing Properties of the Borrower and its Subsidiaries.

 

(l)                                     The Administrative Agent shall be reasonably satisfied with the environmental condition of the Properties of the Borrower and its Subsidiaries.

 

(m)                             The Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower certifying that the Borrower has received all consents and approvals required by Section 7.03.

 

(n)                                 The Administrative Agent shall have received (i) the Financial Statements, and (ii) projections for the Borrower and its Consolidated Subsidiaries for each fiscal year of the Borrower through the fiscal year ending 2016.

 

(o)                                 The Administrative Agent shall have received appropriate UCC search certificates reflecting no prior Liens encumbering the Properties of the Borrower and the Subsidiaries for Delaware, Texas, Alabama, and Mississippi, as applicable, and any other jurisdiction requested by the Administrative Agent; other than those being assigned or released on or prior to the Effective Date or Liens permitted by Section 9.03.

 

(p)                                 The Administrative Agent shall have received appropriate termination statements, mortgage releases and such other documentation as shall be necessary to terminate, release or assign to the Administrative Agent all Liens encumbering the Properties of the Borrower and the Subsidiaries, other than Liens permitted by Section 9.03, in each case, in proper form for filing, registration or recordation in the appropriate jurisdictions.

 

(q)                                 The Administrative Agent shall have received a solvency certificate from a Financial Officer, in form and substance satisfactory to the Administrative Agent and the Lenders, certifying that after giving effect to the Transactions on the Effective Date, (i) each of the Loan Parties, on an individual basis, is Solvent, and (ii) the Loan Parties, taken as a whole, are Solvent.

 

(r)                                    Each document (including any Uniform Commercial Code financing statement) required by this Agreement or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Lenders, a perfected Lien on the Collateral described therein, prior and superior in right to any other Person (other than Excepted Liens), shall be in proper form for filing, registration or recordation.

 

(s)                                   The Administrative Agent shall be satisfied in its sole discretion with the legal, corporate and capital structure of the Loan Parties on the Effective Date and after giving

 

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effect to the Transactions (including the initial funding of Loans hereunder) and the equity infusion described in Section 6.01(t).

 

(t)                                    Since December 31, 2010, no Material Adverse Change has occurred with respect to the Loan Parties, taken as a whole.

 

(u)                                 After May 1, 2011 the Borrower shall have received at least $15,000,000 in net equity proceeds from the holders of Equity Interests in the Borrower, and such equity investment shall have been consummated on terms and conditions satisfactory to the Administrative Agent.

 

(v)                                 The Administrative Agent shall have received such other documents as the Administrative Agent or special counsel to the Administrative Agent may reasonably request.

 

The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding.  Notwithstanding the foregoing, the obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 12.02) at or prior to 1:00 p.m., Central time, on June 30, 2011 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

 

Section 6.02                             Each Credit Event.  The obligation of each Lender to make a Loan on the occasion of any Borrowing (including the initial funding), and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:

 

(a)                                 At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing.

 

(b)                                 The representations and warranties of the Borrower and the Guarantors set forth in this Agreement and in the other Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, such representations and warranties shall continue to be true and correct in all material respects as of such specified earlier date.

 

(c)                                  The receipt by the Administrative Agent of a Borrowing Request in accordance with Section 2.03 or a request for a Letter of Credit and related Letter of Credit Agreement in accordance with Section 2.07(b), as applicable.

 

Each request for a Borrowing and each request for the issuance, amendment, renewal or extension of any Letter of Credit and each acceptance of the foregoing shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in Sections 6.02(a) through (c).

 

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ARTICLE VII
 Representations and Warranties

 

The Borrower (on behalf of itself and its Subsidiaries), and each Guarantor by its execution of a Guaranty and Collateral Agreement, represents and warrants to the Administrative Agent, the Issuing Bank and the Lenders that:

 

Section 7.01                             Organization; Powers.  Each of the Borrower and its Subsidiaries is a legal entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority, and has all material governmental licenses, authorizations, consents and approvals necessary, to own its assets and to carry on its business as now conducted, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where failure to have such power, authority, licenses, authorizations, consents, approvals and qualifications could not reasonably be expected to have a Material Adverse Effect.

 

Section 7.02                             Authority; Enforceability.  The Transactions are within each Loan Party’s corporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action (including, without limitation, any action required to be taken by any class of directors of the Borrower or any other Person, whether interested or disinterested, in order to ensure the due authorization of the Transactions).  Each Loan Document to which a Loan Party is a party has been duly executed and delivered by such Loan Party and constitutes a legal, valid and binding obligation of such Loan Party, as applicable, 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.

 

Section 7.03                             Approvals; No Conflicts.  The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any other third Person (including shareholders or any class of directors, whether interested or disinterested, of the Borrower or any other Person), nor is any such consent, approval, registration, filing or other action necessary for the validity or enforceability of any Loan Document or the consummation of the transactions contemplated thereby, except such as have been obtained or made and are in full force and effect other than (i) the recording and filing of the Security Instruments as required by this Agreement and (ii) those third party approvals or consents which, if not made or obtained, would not cause a Default hereunder, could not reasonably be expected to have a Material Adverse Effect or do not have an adverse effect on the enforceability of the Loan Documents, (b) will not violate any applicable law or regulation or any Organization Documents of the Borrower or any Subsidiary, or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture or other agreement regarding Indebtedness of the Borrower or any Subsidiary or give rise to a right thereunder to require any payment to be made by the Borrower or such Subsidiary, (d) will not violate or result in a default under any other agreement or other instrument binding upon the Borrower or any Subsidiary, or its Properties, or give rise to a right thereunder to require any payment to be made by the Borrower or such Subsidiary, other than such violations or defaults which would not cause a Default or Event of Default hereunder, could not reasonably be expected to have a Material Adverse Effect, or do not have an adverse effect on the

 

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enforceability of any Loan Documents, and (e) will not result in the creation or imposition of any Lien on any Property of the Borrower or any Subsidiary (other than the Liens created by the Loan Documents).

 

Section 7.04                             Financial Condition; No Material Adverse Change.

 

(a)                                 The Borrower has heretofore furnished to the Lenders the Borrower’s audited consolidated balance sheet and related statements of income or operations, stockholders’ equity and cash flows as of and for the fiscal year ending December 31, 2010.  Such financial statements fairly present in all material respects the financial position and results of operations and cash flows of the Borrower and its Consolidated Subsidiaries as of such date and for such period.  The Borrower has heretofore furnished to the Lenders the Borrower’s unaudited pro forma consolidated balance sheet as of the date hereof, and pro forma statements of income, Consolidated EBITDA and other operating data for the fiscal year ended December 31, 2010, and as of and for the three (3) month period ending March 31, 2011, in each case after giving effect to the Transactions as if they had occurred on such date in the case of the balance sheet and as of the beginning of all periods presented in the case of the statements of income, Consolidated EBITDA and other operating data (collectively, the “Financial Statements”).  Such pro forma financial statements have been prepared in good faith by the Borrower, based on the assumptions stated therein (which assumptions are believed by the Borrower on the date hereof and on the Effective Date to be reasonable in light of current conditions and facts then known to the Borrower), are based on the best information available to the Borrower as of the date of delivery thereof, accurately reflect all adjustments required to be made to give effect to the Transactions, and present fairly in all material respects the pro forma consolidated financial position and results of operations of the Borrower and its Consolidated Subsidiaries as of such date and for such periods, assuming that the Transactions had occurred at such dates.

 

(b)                                 Since December 31, 2010, there has been no event, development or circumstance that has had or could reasonably be expected to have a Material Adverse Effect.

 

(c)                                  Neither the Borrower nor any Subsidiary has, on the date hereof after giving effect to the Transactions, any Material Indebtedness (including Disqualified Capital Stock) or any contingent liabilities, off-balance sheet liabilities or partnerships, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments, except as referred to or reflected or provided for in the Financial Statements.

 

(d)                                 The projections regarding the financial performance of the Borrower and its Consolidated Subsidiaries furnished to the Lenders have been prepared in good faith by the Borrower and based upon assumptions believed by the Borrower to be reasonable at the time such projections were provided (and on the Effective Date in the case of forecasts provided prior to the Effective Date) (it being recognized by the Lenders, however, that projections as to future events are not to be viewed as facts and that actual results during the period(s) covered by such projections may differ from the projected results and that such differences may be material and that neither the Borrower nor any Subsidiary makes any representation that such projections will be realized).

 

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Section 7.05                             Litigation.  There are no actions, suits, investigations or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary or any of their Properties (a) not fully covered by insurance (except for normal deductibles) as to which there is a reasonable possibility of an adverse determination that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, or (b) that involve any Loan Document or the Transactions.

 

Section 7.06                             Environmental Matters.  Except for such matters that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

(a)                                 the Borrower and the Subsidiaries and each of their respective Properties and operations thereon are, and within all applicable statute of limitation periods have been, in compliance with all applicable Environmental Laws;

 

(b)                                 the Borrower and the Subsidiaries have obtained all Environmental Permits required for their respective operations and each of their Properties, with all such Environmental Permits being currently in full force and effect, and none of the Borrower or the Subsidiaries has received any written notice or otherwise has knowledge that any such existing Environmental Permit will be revoked or that any application for any new Environmental Permit or renewal of any existing Environmental Permit will be protested or denied;

 

(c)                                  there are no claims, demands, suits, orders, inquiries, investigations, requests for information or proceedings concerning any violation of, or any liability (including as a potentially responsible party) under, any applicable Environmental Law that is pending or, to the Borrower’s knowledge, threatened against the Borrower or any Subsidiary or any of their respective Properties or as a result of any operations at such Properties;

 

(d)                                 none of the Properties of the Borrower or any Subsidiary contain or have contained any: (i) underground storage tanks; (ii) asbestos-containing materials; (iii) landfills or dumps; (iv) hazardous waste management units as defined pursuant to RCRA or any comparable state law; or (v) sites on or nominated for the National Priority List promulgated pursuant to CERCLA or any state remedial priority list promulgated or published pursuant to any comparable state law;

 

(e)                                  there has been no Release or, to the Borrower’s knowledge, threatened Release of Hazardous Materials at, on, under or from the Borrower’s or any Subsidiary’s Properties, there are no investigations, remediations, abatements, removals, or monitorings of Hazardous Materials required under applicable Environmental Laws at such Properties and, to the knowledge of the Borrower, none of such Properties are adversely affected by any Release or threatened Release of a Hazardous Material originating or emanating from any other real property;

 

(f)                                   neither the Borrower nor any Subsidiary has received any written notice asserting an alleged liability or obligation under any applicable Environmental Laws with respect to the investigation, remediation, abatement, removal, or monitoring of any Hazardous Materials at, under, or Released or threatened to be Released from any real properties offsite the

 

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Borrower’s or any Subsidiary’s Properties and, to the Borrower’s knowledge, there are no conditions or circumstances that could reasonably be expected to result in the receipt of such written notice;

 

(g)                                  there has been no exposure of any Person or Property to any Hazardous Materials as a result of or in connection with the operations and businesses of any of the Borrower’s or the Subsidiaries’ Properties that could reasonably be expected to form the basis for a claim for damages or compensation, and, to the Borrower’s knowledge, there are no conditions or circumstances that could reasonably be expected to result in the receipt of notice regarding such exposure; and

 

(h)                                 the Borrower has provided, or has caused its Subsidiaries to provide, to the Lenders complete and correct copies of all environmental site assessment reports, investigations, studies, analyses, and correspondence on environmental matters (including matters relating to any alleged non-compliance with or liability under Environmental Laws) that are in any of the Borrower’s or the Subsidiaries’ possession or control and relating to their respective Properties or operations thereon.

 

Section 7.07                             Compliance with the Laws and Agreements; No Defaults.

 

(a)                                 Each of the Borrower and each Subsidiary is in compliance with all Governmental Requirements applicable to it or its Property and all agreements and other instruments binding upon it or its Property, and possesses all licenses, permits, franchises, exemptions, approvals and other governmental authorizations necessary for the ownership of its Property and the conduct of its business, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

(b)                                 Neither the Borrower nor any Subsidiary is in default nor has any event or circumstance occurred which, but for the expiration of any applicable grace period or the giving of notice, or both, would constitute a default or would require the Borrower or a Subsidiary to Redeem or make any offer to Redeem under any indenture, note, credit agreement or instrument pursuant to which any Material Indebtedness is outstanding or by which the Borrower or any Subsidiary or any of their Properties is bound.

 

(c)                                  No Default has occurred and is continuing.

 

Section 7.08                             Investment Company Act.  Neither the Borrower nor any Subsidiary is an “investment company” or a company “controlled” by an “investment company,” within the meaning of, or subject to regulation under, the Investment Company Act of 1940, as amended.

 

Section 7.09                             Taxes.  Except as set forth on Schedule 7.09, each of the Borrower and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed.  Each of the Borrower and its Subsidiaries has paid or caused to be paid all Taxes required to have been paid by it, except Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves in accordance with GAAP.  The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of Taxes and other governmental charges are, in the reasonable opinion of the Borrower, adequate.  No Tax Lien has

 

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been filed against the Borrower, any of the Subsidiaries, or any of their respective Properties, and, to the knowledge of the Borrower, no claim is being asserted against the Borrower, any of the Subsidiaries, or any of their respective Properties with respect to any such Tax or other such governmental charge.

 

Section 7.10                             ERISA.

 

(a)                                 The Borrower, the Subsidiaries and each ERISA Affiliate have complied in all material respects with ERISA and, where applicable, the Code regarding each Plan.

 

(b)                                 Each Plan is, and has been, established and maintained in compliance with its terms, ERISA and, where applicable, the Code, except where the failure to so establish and maintain such Plan could not reasonably be expected to have a Material Adverse Effect.

 

(c)                                  No act, omission or transaction has occurred which could result in imposition on the Borrower, any Subsidiary or any ERISA Affiliate (whether directly or indirectly) of (i) either a civil penalty assessed pursuant to subsections (c), (i), (l) or (m) of section 502 of ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty liability damages under section 409 of ERISA.

 

(d)                                 Full payment when due has been made of all amounts which the Borrower, the Subsidiaries or any ERISA Affiliate is required under the terms of each Plan or applicable law to have paid as contributions to such Plan as of the date hereof.

 

(e)                                  Neither the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains, or contributes to an employee welfare benefit plan, as defined in section 3(1) of ERISA, including, without limitation, any such plan maintained to provide benefits to former employees of such entities, with respect to which its sponsorship of, maintenance of or contribution to may not be terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its sole discretion at any time without any material liability.

 

(f)                                   Neither the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains or contributes to, or has at any time in the six-year period preceding the date hereof sponsored, maintained or contributed to, any employee pension benefit plan, as defined in section 3(2) of ERISA, including a multiemployer plan as defined in section 3(37) or 4001(a)(3) of ERISA, that is subject to Title IV of ERISA, section 302 of ERISA or section 412 of the Code.

 

Section 7.11                             Disclosure; No Material Misstatements.  The Borrower has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  Neither the Information Memorandum nor any of the other reports, financial statements, certificates or other information furnished by or on behalf of the Borrower or any Subsidiary to the Administrative Agent or any Lender or any of their Affiliates in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or under any other Loan Document (as modified or supplemented by other information so furnished) contains any material misstatement of fact or, when taken as a whole, omits to state any material fact

 

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necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.  There is no fact peculiar to the Borrower or any Subsidiary which could reasonably be expected to have a Material Adverse Effect or in the future is reasonably likely to have a Material Adverse Effect and which has not been set forth in this Agreement or the Loan Documents or the other documents, certificates and statements furnished to the Administrative Agent or the Lenders by or on behalf of the Borrower or any Subsidiary prior to, or on, the date hereof in connection with the transactions contemplated hereby.

 

Section 7.12                             Insurance.  The Borrower has, and has caused all of its Subsidiaries to have, (a) all insurance policies sufficient for the compliance by each of them with all material Governmental Requirements and all material agreements and (b) insurance coverage in at least amounts and against such risk (including, without limitation, public liability) that are usually insured against by companies similarly situated and of comparable size and engaged in the same or a similar business for the assets and operations of the Borrower and its Subsidiaries.  The Administrative Agent and the Lenders have been named as additional insureds in respect of such liability insurance policies, and the Administrative Agent has been named as loss payee with respect to Property loss insurance.

 

Section 7.13                             Restriction on Liens.  Neither the Borrower nor any of the Subsidiaries is a party to any material agreement or arrangement (other than (a) Capital Leases creating Liens permitted by Section 9.03(c), but then only on the Property that is the subject of such Capital Lease, (b) documents evidencing or securing Purchase Money Indebtedness creating Liens permitted by Section 9.03(c), but then only on the Property that is the subject of such Purchase Money Indebtedness, and (c) documents creating Liens which are described in clauses (g) or (h) of the definition of “Excepted Liens”, but then only on the Property that is the subject of the applicable lease or license described in such clause (g) or (h)), or subject to any order, judgment, writ or decree, which either restricts or purports to restrict its ability to grant Liens to the Administrative Agent and the Lenders on or in respect of their Properties to secure the Secured Obligations and the Loan Documents.

 

Section 7.14                             Subsidiaries.  Except as set forth on Schedule 7.14 or as disclosed in writing to the Administrative Agent (which shall promptly furnish a copy to the Lenders, which shall be a supplement to Schedule 7.14), the Borrower has no Subsidiaries.  Each Person on Schedule 7.14 is a Wholly-Owned Subsidiary unless otherwise identified thereon as an Excluded Subsidiary.  The Borrower has no Foreign Subsidiaries.  All of the outstanding Equity Interests of each Subsidiary has been validly issued, is fully paid, is nonassessable and has not been issued in violation of any preemptive or similar rights.

 

Section 7.15                             Location of Business and Offices.  The Borrower’s jurisdiction of organization is Delaware; the name of the Borrower as listed in the public records of its jurisdiction of organization is Southcross Energy LLC; and the organizational identification number of the Borrower in its jurisdiction of organization is 4693747 (or, in each case, as set forth in a notice delivered to the Administrative Agent pursuant to Section 8.01(m) in accordance with Section 12.01).  The Borrower’s principal place of business and chief executive offices are

 

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located at the address specified in Section 12.01 (or as set forth in a notice delivered pursuant to Section 8.01(m) and Section 12.01(c)).

 

Section 7.16                             Properties; Titles, Etc.

 

(a)                                 Each of the Borrower and the Subsidiaries has good and valid title to, valid leasehold interests in, or valid easements, rights of way or other property interests in all of its real and personal Property free and clear of all Liens except Liens permitted by Section 9.03.

 

(b)                                 All leases, easements, rights of way and other agreements necessary for the conduct of the business of the Borrower and the Subsidiaries are valid and subsisting, in full force and effect, and there exists no default or event or circumstance which with the giving of notice or the passage of time or both would give rise to a default under any such lease or leases, which could reasonably be expected to have a Material Adverse Effect.

 

(c)                                  The rights and Properties presently owned, leased or licensed by the Borrower and the Subsidiaries including, without limitation, all easements and rights of way, include all rights and Properties necessary to permit the Borrower and the Subsidiaries to conduct their business in all material respects in the same manner as its business has been conducted prior to the date hereof.

 

(d)                                 The Borrower and each Subsidiary owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual Property material to its business, and the use thereof by the Borrower and such Subsidiary does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

Section 7.17                             Maintenance of Properties.  Except for such acts or failures to act as could not be reasonably expected to have a Material Adverse Effect, the offices, plants, gas processing plants, platforms, pipelines, improvements, fixtures, equipment, and other Property owned, leased or used by the Borrower and its Subsidiaries in the conduct of their businesses are (a) being maintained in a state adequate to conduct normal operations, (b) structurally sound with no known defects, (c) in good operating condition and repair, subject to ordinary wear and tear, (d) not in need of maintenance or repair except for ordinary, routine maintenance and repair, (e) sufficient for the operation of the businesses of the Borrower and its Subsidiaries as currently conducted, and (f) in conformity with all Governmental Requirements relating thereto.

 

Section 7.18                             Hedging Agreements.  Schedule 7.18, as of the date hereof, and after the date hereof, each report required to be delivered by the Borrower pursuant to Section 8.01(h),  sets forth, a true and complete list of all Hedging Agreements of the Borrower and each Subsidiary, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark to market value thereof, all credit support agreements relating thereto (including any margin required or supplied) and the counterparty to each such agreement.

 

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Section 7.19                             Security Instruments.

 

(a)                                 Guaranty and Collateral Agreement.  The provisions of the Guaranty and Collateral Agreement are effective to create, in favor of the Administrative Agent for the benefit of the Secured Parties, a legal, valid and enforceable Lien on, and security interest in, all of the Collateral described therein, and (i) when financing statements and other filings in appropriate form are filed in the offices specified in the Guaranty and Collateral Agreement and (ii) upon the taking of possession or control by the Administrative Agent of the Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Administrative Agent to the extent possession or control by the Administrative Agent is required by the Guaranty and Collateral Agreement), the Liens created by the Guaranty and Collateral Agreement shall constitute fully perfected first priority Liens on, and security interests in, all right, title and interest of the Loan Parties in the Collateral covered thereby (other than such Collateral in which a Lien or a security interest cannot be perfected by filing, possession or control under the Uniform Commercial Code as in effect at the relevant time in the relevant jurisdiction), in each case free of all Liens other than Excepted Liens, and prior and superior to all other Liens other than Excepted Liens.

 

(b)                                 Mortgages.  Each Mortgage is effective to create, in favor of the Administrative Agent (or such other trustee as may be required or desired under local law) for the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, all of the Mortgaged Property thereunder, subject only to Excepted Liens, and when the Mortgages are filed in the offices specified on Schedule 7.19 (or, in the case of any Mortgage executed and delivered after the date thereof in accordance with the provisions of Section 8.12 and Section 8.14, when such Mortgage is filed in the appropriate offices), the Mortgages shall constitute fully perfected first priority Liens on, and security interests in, all right, title and interest of the Loan Parties in that portion of the Mortgaged Property constituting real property and fixtures affixed or attached to such real property, in each case prior and superior in right to any other person, other than Excepted Liens.

 

(c)                                  Valid Liens.  Each Security Instrument delivered pursuant to Section 8.12 or Section 8.14, upon execution and delivery thereof, is effective to create in favor of the Administrative Agent, for the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, all of the Collateral thereunder, and (i) when financing statements and other filings in appropriate form are filed or recorded in the appropriate offices as are required by the Guaranty and Collateral Agreement and Schedule 7.19, and (ii) upon the taking of possession or control by the Administrative Agent of the Collateral with respect to which a security interest may be perfected only by possession or control, the Liens created by such Security Instrument will constitute fully perfected first priority Liens on, and security interests in, all right, title and interest of the Loan Parties in such Collateral (other than such Collateral in which a Lien or security interest cannot be perfected by filing, possession or control under the Uniform Commercial Code as in effect at the relevant time in the relevant jurisdiction), in each case with no other Liens except for applicable Excepted Liens.

 

Section 7.20                             Use of Loans and Letters of Credit.  The proceeds of the Loans (excluding the Delayed Draw Term Loans) and the Letters of Credit shall be used to refinance the Existing Indebtedness, to provide funding for, and to pay fees and expenses in connection with, the Transactions, permitted Capital Expenditures and permitted Investments, and for general corporate, working capital, limited liability company or partnership purposes, as the case may be,

 

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of the Borrower and its Subsidiaries.  The proceeds of the Delayed Draw Term Loans shall be used by the Borrower solely to consummate the Enterprise Acquisition.  The Borrower and its Subsidiaries are not engaged principally, or as one of its or their important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying margin stock (within the meaning of Regulation T, U or X of the Board).  No part of the proceeds of any Loan or Letter of Credit will be used for any purpose which violates the provisions of Regulations T, U or X of the Board.

 

Section 7.21                             Solvency.  Each Loan Party is Solvent.  No Loan Party is planning to take any action described in Section 10.01(h) or Section 10.01(i).

 

Section 7.22                             Common Enterprise.  Each of the Borrower and its Subsidiaries and their business operations are closely integrated with one another into a single, interdependent and collective, common enterprise so that any benefit received by any one of them from the financial accommodations provided under this Agreement will be to the direct benefit of the others.  The Borrower and its Subsidiaries intend to render services to or for the benefit of each other, to purchase or sell and supply goods to or from or for the benefit of each other, to make loans, advances and provide other financial accommodations to or for the benefit of each other and to provide administrative, marketing, payroll and management services to or for the benefit of each other (in each case, except as may be prohibited by this Agreement).

 

Section 7.23                             Material Contracts.  Schedule 7.23 hereto contains a complete list, as of the Effective Date, of all Material Contracts of the Borrower and each Subsidiary, including all amendments thereto.  All Material Contracts are in full force and effect, neither the Borrower nor any Subsidiary is in default under any Material Contract, and to the knowledge of the Borrower and each Subsidiary after due inquiry, no other Person that is party thereto is in default under any Material Contract.  None of the Material Contracts prohibits the transactions contemplated under the Loan Documents.  Each of the Material Contracts is currently in the name of, or has been assigned to, a Loan Party (with the consent or acceptance of each other party thereto if and to the extent that such consent or acceptance is required thereunder), each of the Material Contracts is assignable to the Administrative Agent as collateral, and each of the Material Contracts (other than the Mechanicsburg Gathering Contract) is assignable, unless waived by the Administrative Agent in its reasonable discretion, by the Administrative Agent to a reasonably acceptable transferee if an Event of Default were to occur.  The Borrower and its Subsidiaries have delivered to the Administrative Agent a complete and current copy of each of their Material Contracts existing on the Effective Date.

 

Section 7.24                             Broker’s Fees.  No broker’s or finder’s fee, commission or similar compensation will be payable by the Borrower or any Subsidiary with respect to the Transactions.

 

Section 7.25                             Employee Matters.  As of the Effective Date, (a) neither the Borrower nor any Subsidiary, nor any of their respective employees, is subject to any collective bargaining agreement, (b) no petition for certification or union election is pending or, to the knowledge of the Borrower or any Subsidiary, contemplated with respect to the employees thereof and no union or collective bargaining unit has sought such certification or recognition with respect to the employees of the Borrower or any Subsidiary, and (c) there are no strikes, slowdowns, work

 

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stoppages or controversies pending or, to the knowledge of the Borrower or any Subsidiary after due inquiry, threatened between the Borrower or any Subsidiary and its respective employees.

 

Section 7.26                             Anti-Terrorism Laws.

 

(a)                                 The Borrower is not, and to the knowledge of the Borrower, none of the Borrower’s Affiliates, officers or directors is in violation of any Governmental Requirement relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, and the Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., in each case, as amended from time to time.

 

(b)                                 The Borrower is not, and to the knowledge of the Borrower, no Affiliate, officer, director, broker or other agent of the Borrower acting or benefiting in any capacity in connection with the Loans is any of the following:

 

(i)                                     a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;

 

(ii)                                  a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;

 

(iii)                               a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

 

(iv)                              a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order; or

 

(v)                                 a Person that is named as a “specially designated national and blocked Person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control (“OFAC”) at its official website or any replacement website or other replacement official publication of such list.

 

(c)                                  No Loan Party and, to the knowledge of the Borrower, no broker or other agent of any Loan Party acting in any capacity in connection with the Loans (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in paragraph (b) above, (ii) deals in, or otherwise engages in any transaction relating to, any Property or interests in Property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

 

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ARTICLE VIII
 Affirmative Covenants

 

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder and all other amounts payable under the Loan Documents shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower (on behalf of itself and its Subsidiaries) and each Guarantor by its execution of the Guaranty and Collateral Agreement, covenants and agrees with the Administrative Agent, the Issuing Bank and the Lenders that:

 

Section 8.01                             Financial Statements; Ratings Change; Other Information.  The Borrower will furnish to the Administrative Agent and each Lender:

 

(a)                                 Annual Financial Statements.  As soon as available, but in any event in accordance with then applicable law and not later than the earlier to occur of the fifth (5th) Business Day after delivery thereof to the board of directors of the Borrower and the date that is one hundred twenty (120) days after the end of each fiscal year of the Borrower, (i) its audited consolidated balance sheet and related statements of income or operations (and, as to balance sheets and statements of income or operations, accompanied by consolidating schedules), 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 PricewaterhouseCoopers LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification 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 the Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, and (ii) a management report in form and substance reasonably acceptable to the Administrative Agent setting forth (A) a statement of income items of the Borrower and its Consolidated Subsidiaries for such fiscal year, showing variance (by dollar amount) from amounts in the projections most recently delivered to the Administrative Agent and the Lenders pursuant to Section 8.01(d) for such fiscal year, and (B) a discussion and analysis of the results of operations of the Borrower and its Consolidated Subsidiaries for such fiscal year, as compared to the projected amounts for such fiscal year set forth in the projections most recently delivered to the Administrative Agent and the Lenders pursuant to Section 8.01(d).

 

(b)                                 Quarterly Financial Statements.  As soon as available, but in any event in accordance with then applicable law and not later than sixty (60) days after the end of each fiscal quarter of each fiscal year of the Borrower, (i) its consolidated 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 the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes, and (ii) a management report in form and substance reasonably acceptable to the Administrative Agent setting forth (A) a statement of income items of the Borrower and its Consolidated

 

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Subsidiaries for such fiscal quarter and for the then elapsed portion of the fiscal year, showing variance (by dollar amount) from amounts for the comparable periods in the projections most recently delivered to the Administrative Agent and the Lenders pursuant to Section 8.01(d) for such fiscal year, and (B) a discussion and analysis of the results of operations of the Borrower and its Consolidated Subsidiaries for such fiscal quarter and the then elapsed portion of the fiscal year, as compared to the projected amounts for such comparable periods in such fiscal year set forth in the projections most recently delivered to the Administrative Agent and the Lenders pursuant to Section 8.01(d).

 

(c)                                  Monthly Financial Statements.  As soon as available, but in any event not later than forty-five (45) days after the end of each month of each fiscal year of the Borrower, its consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such month and the then elapsed portion of the fiscal year, along with operating reports representing last quarter throughput volumes for the last three (3) months, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes.

 

(d)                                 Financial Projections.  Concurrently with any delivery of financial statements under Section 8.01(a), projections for the Borrower and its Consolidated Subsidiaries for each fiscal year of the Borrower through the end of the fiscal year in which the Maturity Date occurs, and which such projections shall include (i) volumes and pricing assumptions and (ii) itemized budget forecasts set forth on a quarterly basis in form and substance reasonably satisfactory to the Administrative Agent for each of the four fiscal quarters of the Borrower ending during the first such fiscal year reflected in such projections.

 

(e)                                  Quarterly Consolidated Excess Cash Flow Certificate.  As soon as available, but in any event not later than sixty (60) days after the end of each fiscal quarter, a quarterly Consolidated Excess Cash Flow calculation as required pursuant to Section 3.04(b)(ii).

 

(f)                                   Monthly Accounts Receivable Aging Reports.  As soon as available, but in any event not later than forty-five (45) days after the end of each month, a monthly accounts receivable aging report in form and substance satisfactory to the Administrative Agent.

 

(g)                                  Certificate of Financial Officer — Compliance.  Concurrently with any delivery of financial statements under Section 8.01(a), Section 8.01(b) or Section 8.01(c), a certificate of a Financial Officer in substantially the form of Exhibit D-2 hereto (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) if such certificate is delivered concurrently with the delivery of financial statements under Section 8.01(a) or Section 8.01(b), setting forth reasonably detailed calculations demonstrating compliance with Section 9.01, including, without limitation, reasonably detailed calculations of the Specified Projects EBITDA Adjustment for each Specified Project (including a reasonably detailed summary of the terms of the applicable Specified Project Contract that are a component of such

 

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calculation), each Specified Project’s Scheduled Completion Date, and each Specified Project’s Projected Capacity (and, if applicable, any changes to such Projected Capacity and supporting information as required), and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the financial statements referred to in Section 7.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate.

 

(h)                                 Certificate of Financial Officer — Hedging Agreements.  Concurrently with any delivery of financial statements under Section 8.01(a), Section 8.01(b) and Section 8.01(c), a certificate of a Financial Officer, in form and substance satisfactory to the Administrative Agent, setting forth as of the last Business Day of such month, fiscal quarter or fiscal year, a true and complete list of all Hedging Agreements of the Borrower and each Subsidiary, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark-to-market value therefor, any new credit support agreements relating thereto, any margin required or supplied under any credit support document, and the counterparty to each such agreement.

 

(i)                                     Certificate of Insurer — Insurance Coverage.  Concurrently with any delivery of financial statements under Section 8.01(a), a certificate of insurance coverage from each insurer with respect to the insurance required by Section 8.07, in form and substance satisfactory to the Administrative Agent, and, if requested by the Administrative Agent or any Lender, all copies of the applicable policies.

 

(j)                                    Other Accounting Reports.  Promptly upon receipt thereof, a copy of each other report or letter submitted to the Borrower or any of its Subsidiaries by independent accountants in connection with any annual, interim or special audit made by them of the books of the Borrower or any such Subsidiary, and a copy of any response by the Borrower or any such Subsidiary, or the board of directors of the Borrower or any such Subsidiary, to such letter or report.

 

(k)                                 SEC and Other Filings; Reports to Shareholders.  Promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the SEC, or with any national or foreign securities exchange, or required by applicable law to be distributed by the Borrower to its members generally, as the case may be.

 

(l)                                     Notices Under Material Instruments.  Promptly after the furnishing thereof, copies of any financial statement, report or notice furnished to or by any Person pursuant to the terms of any preferred stock designation, indenture, loan or credit or other similar agreement, other than the Loan Documents, and not otherwise required to be furnished to the Lenders pursuant to any other provision of this Section 8.01.

 

(m)                             Information Regarding Loan Parties.  Prior written notice of any change (i) any Loan Party’s corporate name or in any trade name used to identify such Person in the conduct of its business or in the ownership of its Properties, (ii) in the location of any Loan Party’s chief executive office or principal place of business, (iii) in any Loan Party’s identity or corporate structure or in the jurisdiction in which such Person is incorporated or formed, (iv) in

 

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any Loan Party’s jurisdiction of organization or such Person’s organizational identification number in such jurisdiction of organization, and (v) in any Loan Party’s federal taxpayer identification number.

 

(n)                                 Notices of Certain Changes.  Promptly, but in any event within five (5) Business Days after the execution thereof, copies of any amendment, modification or supplement to the certificate or articles of incorporation, by-laws, any preferred stock designation or any other Organization Document of the Borrower or any Subsidiary.

 

(o)                                 Certificate of Financial Officer — Consolidating Information.  If, at any time, there exist any Excluded Subsidiaries of the Borrower, then concurrently with any delivery of financial statements under Section 8.01(a), Section 8.01(b), and Section 8.01(c) a certificate of a Financial Officer setting forth consolidating spreadsheets that show all Excluded Subsidiaries and the eliminating entries, in such form as is reasonably acceptable to the Administrative Agent.

 

(p)                                 Changes to Projected Capacity.  Promptly, but in any event within five (5) Business Days after the Borrower receives notice of a material change in the Projected Capacity of a Specified Project, the Borrower shall provide an officer’s certificate of a Responsible Officer of the Borrower, in form and substance satisfactory to the Administrative Agent, certifying the following: (A) recalculations of the amounts set forth in clauses (a) and (b) of the definition of “Specified Projects EBITDA Adjustment” as of the most recently ended fiscal quarter but giving effect to the revised Projected Capacity, (B) updates to the information previously delivered to the Administrative Agent in accordance with the definition of “Specified Projects” with respect to such Specified Project, (C) any additional information with respect to such Specified Project and such material change in Projected Capacity reasonably requested by the Administrative Agent, and (D) computations of the covenants set forth in Section 9.01 as of the most recently ended fiscal quarter but giving effect to the revised Projected Capacity.  Specified Projects EBITDA Adjustment shall thereafter be calculated in accordance with the revised Projected Capacity of such Specified Project.  In the event of a change in the Projected Capacity of a Specified Project that is not material, the Specified Projects EBITDA Adjustment shall thereafter reflect such change in the Projected Capacity of such Specified Project.

 

(q)                                 Other Requested Information.  Promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary (including, without limitation, any Plan and any reports or other information required to be filed with respect thereto under the Code or under ERISA), or compliance with the terms of this Agreement or any other Loan Document, as the Administrative Agent or any Lender may reasonably request.

 

Section 8.02                             Notices of Material Events.  The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following:

 

(a)                                 the occurrence of any Default;

 

(b)                                 the filing or commencement of, or the threat in writing of, any action, suit, proceeding, investigation or arbitration by or before any arbitrator or Governmental Authority against or affecting the Borrower or any Affiliate thereof not previously disclosed in writing to

 

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the Lenders or any material adverse development in any action, suit, proceeding, investigation or arbitration (whether or not previously disclosed to the Lenders) that, in either case, if adversely determined, could reasonably be expected to result in liability in excess of $1,000,000, not fully covered by insurance, subject to normal deductibles;

 

(c)                                  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 liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $500,000; and

 

(d)                                 any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

 

Each notice delivered under this Section 8.02 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

 

Section 8.03                             Existence; Conduct of Business.  The Borrower will, and will cause each Subsidiary 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, licenses, permits, consents, privileges and franchises material to the conduct of its business and maintain, if necessary, its qualification to do business in each other jurisdiction in which its Properties are located or the ownership of its Properties requires such qualification, except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 9.10.

 

Section 8.04                             Payment of Obligations.  The Borrower will, and will cause each Subsidiary to, pay its obligations, including Tax liabilities of the Borrower and all of its Subsidiaries before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect or result in the seizure or levy of any Property of the Borrower or any Subsidiary.

 

Section 8.05                             Performance of Obligations under Loan Documents.  The Borrower will repay the Loans according to the reading, tenor and effect thereof, and the Borrower will, and will cause each Subsidiary to, do and perform every act and discharge all of the obligations to be performed and discharged by them under the Loan Documents, including, without limitation, this Agreement, at or within the time or times and in the manner specified.

 

Section 8.06                             Operation and Maintenance of Properties.  The Borrower, at its own expense, will, and will cause each Subsidiary to:

 

(a)                                 operate its Properties or cause such Properties to be operated in a careful and efficient manner in accordance with the practices of the industry and in compliance with all applicable contracts and agreements and in compliance with all Governmental Requirements, including, without limitation, applicable Environmental Laws, except, in each case, where the failure to comply could not reasonably be expected to have a Material Adverse Effect;

 

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(b)                                 preserve, maintain and keep in good repair, condition, working order and efficiency (ordinary wear and tear excepted) all of its Properties, including, without limitation, all equipment, machinery and facilities, except, in each case, where the failure to comply could not reasonably be expected to have a Material Adverse Effect;

 

(c)                                  promptly perform or make reasonable and customary efforts to cause to be performed, in accordance with industry standards, the obligations required by each and all of the assignments, deeds, leases, sub-leases, contracts and agreements affecting its interests in its Properties, except, in each case, where the failure to comply could not reasonably be expected to have a Material Adverse Effect; and

 

(d)                                 to the extent the Borrower is not the operator of any Property, the Borrower shall use reasonable efforts to cause the operator to comply with this Section 8.06.

 

Section 8.07                             Insurance.

 

(a)                                 The Borrower will, and will cause each Subsidiary to, maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies of similar size engaged in the same or similar businesses operating in the same or similar locations (including hazard insurance).  The loss payable clauses or provisions in said insurance policy or policies insuring any of the Collateral for the Loans shall be endorsed in favor of and made payable to the Administrative Agent as its interests may appear and such policies shall name the Administrative Agent as an “additional insured” and “loss payee” and provide that the insurer will give at least thirty (30) days’ prior notice of any cancellation to the Administrative Agent.

 

(b)                                 With respect to each portion of the real Property (other than pipelines) of the Borrower or any Subsidiary on which improvements are located, the Borrower will, and will cause each Subsidiary to, obtain flood insurance in such total amount as the Administrative Agent or the Required Lenders may from time to time require, if at any time the area in which any improvements located on any such real property is designated a “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as amended from time to time.

 

Section 8.08                             Books and Records; Inspection Rights.  The Borrower will, and will cause each Subsidiary to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities.  The Borrower will, and will cause each Subsidiary to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice and during normal business hours, to visit and inspect its Properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its Responsible Officers and independent accountants, all at such reasonable times and as often as reasonably requested (provided that the Administrative Agent shall give the Borrower reasonable advance notice of any proposed discussion with such accountants and permit the Borrower and its representatives to be present during such discussions, and provided, further, that, so long as no Default has

 

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occurred and continues to exist, no more than one such visitation with the Borrower’s independent public accountants shall be conducted during any calendar year).

 

Section 8.09                             Compliance with Laws.  The Borrower will, and will cause each Subsidiary to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its Property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

Section 8.10                             Compliance with Agreements.  The Borrower will, and will cause each Subsidiary to, comply with all agreements, contracts and instruments binding on it or affecting its Properties or business, except to the extent that such noncompliance could not reasonably be expected to have a Material Adverse Effect.

 

Section 8.11                             Environmental Matters.

 

(a)                                 The Borrower shall at its sole expense: (i) comply, and shall cause its Properties and operations and each Subsidiary and each Subsidiary’s Properties and operations to comply, with all applicable Environmental Laws, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; (ii) not Release or threaten to Release, and shall cause each Subsidiary not to Release or threaten to Release, any Hazardous Material on, under, about or from any of the Borrower’s or its Subsidiaries’ Properties or any other property offsite the Property to the extent caused by the Borrower’s or any of its Subsidiaries’ operations except in compliance with applicable Environmental Laws, if the Release or threatened Release could reasonably be expected to have a Material Adverse Effect; (iii) timely obtain, file or prepare, and shall cause each Subsidiary to timely obtain, file or prepare, all Environmental Permits, if any, required under applicable Environmental Laws to be obtained or filed in connection with the operation or use of the Borrower’s or its Subsidiaries’ Properties, except where such failure to obtain or file could not reasonably be expected to have a Material Adverse Effect; (iv) promptly commence and diligently prosecute to completion, and shall cause each Subsidiary to promptly commence and diligently prosecute to completion, any assessment, evaluation, investigation, monitoring, containment, cleanup, removal, repair, restoration, remediation or other remedial obligations (collectively, the “Remedial Work”) in the event any Remedial Work is required or reasonably necessary under applicable Environmental Laws because of or in connection with the actual or suspected past, present or future Release or threatened Release of any Hazardous Material on, under, about or from any of the Borrower’s or its Subsidiaries’ Properties, if failure to commence and diligently prosecute to completion could reasonably be expected to have a Material Adverse Effect; (v) conduct, and cause its Subsidiaries to conduct, their respective operations and businesses in a manner that will not expose any Property or Person to Hazardous Materials that could reasonably be expected to form the basis for a claim for material damages or compensation; and (vi) establish and implement, and shall cause each Subsidiary to establish and implement, such procedures as may be necessary to continuously determine and assure that the Borrower’s and its Subsidiaries’ obligations under this Section 8.11(a) are timely and fully satisfied, which failure to establish and implement such procedures could reasonably be expected to have a Material Adverse Effect.

 

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(b)                                 The Borrower will promptly notify the Administrative Agent and the Lenders in writing of any threatened action, investigation or inquiry by any Governmental Authority or any threatened demand or lawsuit by any Person against the Borrower or its Subsidiaries or their Properties of which the Borrower has knowledge in connection with any Environmental Laws if the Borrower could reasonably anticipate that such action will result in liability (whether individually or in the aggregate) in excess of $1,000,000, not fully covered by insurance, subject to normal deductibles;

 

(c)                                  The Borrower will, and will cause each Subsidiary to, provide environmental assessments, audits and tests in accordance with the most current version of the American Society of Testing Materials standards upon request by the Administrative Agent and the Lenders, but no more than once per year in the absence of any Event of Default (or as otherwise required to be obtained by the Administrative Agent or the Lenders by any Governmental Authority), in connection with any future acquisitions of Properties.

 

Section 8.12                             Further Assurances.  The Borrower at its sole expense will, and will cause each Subsidiary to, promptly execute and deliver to the Administrative Agent all such other documents, agreements and instruments reasonably requested by the Administrative Agent to comply with, cure any defects or accomplish the conditions precedent, covenants and agreements of the Borrower or any Subsidiary, as the case may be, in the Loan Documents, including the Notes, or to further evidence and more fully describe the Collateral intended as security for the Secured Obligations, or to correct any omissions in this Agreement or the Security Instruments, or to state more fully the obligations secured therein, or to perfect, protect or preserve any Liens created pursuant to this Agreement or any of the Security Instruments or the priority thereof, or to make any recordings, file any notices or obtain any consents, all as may be reasonably necessary or appropriate, in the sole discretion of the Administrative Agent, in connection therewith.

 

Section 8.13                             Title Information; Phase I Site Assessments; Alabama Mortgage.

 

(a)                                 If the Borrower or any Subsidiary acquires any new pipeline and processing Properties for consideration in excess of $500,000, individually or in the aggregate, the Borrower shall, or shall cause such Subsidiary to, provide promptly title information regarding such new pipeline and processing Properties to the Administrative Agent such that the Administrative Agent shall have satisfactory title information for at least 90% of the value of all pipeline and processing Properties of the Borrower and its Subsidiaries at all times.  The Borrower shall, within sixty (60) days of notice from the Administrative Agent that title defects or exceptions exist with respect to such additional Properties, either (i) cure any such title defects or exceptions (including defects or exceptions as to priority) which are not permitted by Section 9.03 raised by such information, or (ii) deliver title information in form and substance acceptable to the Administrative Agent so that the Administrative Agent shall have received, together with title information previously delivered to the Administrative Agent, satisfactory title information on at least 90% of the value of the pipeline and processing Properties of the Borrower and its Subsidiaries.

 

(b)                                 If the Borrower or any Subsidiary desires to acquire fee simple title to any new real Property for a consideration in excess of $1,000,000, individually or in the aggregate, 

 

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the Borrower shall, or shall cause such Subsidiary to, provide to the Administrative Agent the results of a current phase I site assessment regarding such real Property in form and substance satisfactory to the Administrative Agent prior to the acquisition of such Property.

 

(c)                                  If at any time after the Effective Date the aggregate value of the Mortgaged Property located in the State of Alabama exceeds $4,000,000, the Borrower shall, or shall cause the appropriate Subsidiary to, promptly (i) execute and deliver to the Administrative Agent any Mortgage amendments or supplements and mortgage tax affidavits reasonably requested by the Administrative Agent to evidence the increase in the amount of Secured Obligations secured by the Mortgages recorded in the State of Alabama, in each case, in form and substance satisfactory to the Administrative Agent and in proper form for filing, registration or recordation in the appropriate jurisdictions, and (ii) pay any applicable mortgage tax required by the State of Alabama or jurisdictions therein related to such increase in the amount of Secured Obligations secured by the Mortgages recorded in the State of Alabama.

 

Section 8.14                             Additional Collateral; Additional Guarantors.

 

(a)                                 In the event that the Borrower or any Subsidiary acquires or forms a Subsidiary, subject to Section 8.15 the Borrower or its Subsidiary shall promptly, but in any event within 30 days, cause such Subsidiary to guarantee the Secured Obligations pursuant to the Guaranty and Collateral Agreement.  In connection with any guaranty, the Borrower shall, or shall cause such Subsidiary to, (i) execute and deliver to the Administrative Agent a supplement to the Guaranty and Collateral Agreement and such other Security Instruments (in proper form for filing, registration or recordation, as applicable) as are requested by the Administrative Agent, and take such actions necessary or advisable to grant to the Administrative Agent for the benefit of the Secured Parties a first priority, perfected Lien (subject only to Excepted Liens identified in clauses (a) through (h) of the definition thereof, but subject to the provisos at the end of such definition) on all of the tangible and intangible Property of such Subsidiary (other than de minimis Property excluded in the Administrative Agent’s sole discretion), (ii) cause the owner of the Equity Interests in such Subsidiary to pledge such Equity Interests (including, without limitation, delivery of original stock certificates evidencing the Equity Interests of such Subsidiary, together with an appropriate undated stock powers for each certificate duly executed in blank by the registered owner thereof) and (iii) execute and deliver such other additional closing documents, certificates and legal opinions as shall reasonably be requested by the Administrative Agent.

 

(b)                                 The Borrower will at all times cause the other tangible and intangible Property of the Borrower and each Subsidiary not covered by clause (a) above to be subject to a Lien pursuant to the Security Instruments.

 

Section 8.15                             Designations with Respect to Subsidiaries.

 

(a)                                 Within 30 days of the acquisition or formation of a new Subsidiary, the Borrower may designate such Subsidiary as an Excluded Subsidiary by written notification thereof to the Administrative Agent, provided that (i) no Default or Event of Default exists at the time of or after giving effect to such designation, (ii) such designation is deemed to be an Investment in such Excluded Subsidiary in an amount equal to the fair market value as of the 

 

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date of such designation of the Borrower’s direct or indirect ownership interest in such Excluded Subsidiary and such Investment would be permitted to be made at the time of such designation under Section 9.05(k).  No Loan Party may be redesignated as an Excluded Subsidiary.

 

(b)                                 If the Borrower desires to designate an Excluded Subsidiary to be a Loan Party after the date hereof, and all of such Excluded Subsidiary’s outstanding Equity Interests (other than any directors’ qualifying shares mandated by applicable law), on a fully-diluted basis, are owned by the Borrower and/or one or more of the Wholly-Owned Subsidiaries, the Borrower shall cause such Excluded Subsidiary to comply with Section 8.14(a), at which time such Person shall cease to be an “Excluded Subsidiary” and shall become a “Wholly-Owned Subsidiary” for purposes of this Agreement and the other Loan Documents without any amendment, modification or other supplement to any of the foregoing.

 

Section 8.16                             Excluded Subsidiaries.  The Borrower:

 

(a)                                 will cause the management, business and affairs of each of the Borrower and its Subsidiaries to be conducted in such a manner (including, without limitation, by keeping separate books of account) so that each Excluded Subsidiary will be treated as an entity separate and distinct from the Borrower and its Subsidiaries; provided that the foregoing will not prohibit payments under expense sharing agreements with such Excluded Subsidiaries that are consistent with past practices and/or required by any applicable Governmental Authority.

 

(b)                                 will not, and will not permit any of its Subsidiaries to, assume, guarantee or be or become liable for any Indebtedness of any of the Excluded Subsidiaries.

 

(c)                                  will not permit any Excluded Subsidiary to hold any Equity Interest in the Borrower or any other Loan Party.

 

Section 8.17                             ERISA Compliance.  The Borrower will promptly furnish and will cause the Subsidiaries and any ERISA Affiliate to promptly furnish to the Administrative Agent (a) promptly after the filing thereof by the Borrower or any Subsidiary with the United States Secretary of Labor or the Internal Revenue Service (or if filed by a third party, promptly after the Borrower or a Subsidiary becomes aware of such filing), copies of each annual and other report with respect to each Plan or any trust created thereunder, and (b) promptly upon becoming aware of the occurrence of any “prohibited transaction,” as described in section 406 of ERISA or in section 4975 of the Code, in connection with any Plan or any trust created thereunder, a written notice signed by the President or the principal Financial Officer, the Subsidiary or the ERISA Affiliate, as the case may be, specifying the nature thereof, what action the Borrower, the Subsidiary or the ERISA Affiliate is taking or proposes to take with respect thereto, and, when known, any action taken or proposed by the Internal Revenue Service or the Department of Labor with respect thereto.

 

Section 8.18                             Interest Rate Hedging Agreements.  As of the last day of each fiscal quarter of the Borrower, commencing with the fiscal quarter ending March 31, 2012, the Borrower shall have entered into Hedging Agreements for the purpose of hedging the Borrower’s exposure to variable interest rates, the notional amounts of which (when aggregated with all other Hedging Agreements of the Loan Parties then in effect in respect of interest rates) 

 

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shall not be less than fifty percent (50%) of the then outstanding principal amount of the Loan Parties’ Indebtedness for borrowed money for which interest payable on such Indebtedness is variable during the term of such Indebtedness.  Such Hedging Agreements shall be in the form of floating-to-fixed rate swaps, the purchase of interest rate caps, or any similar hedging instrument designed to mitigate interest rate risk, in each case approved by the Administrative Agent.

 

Section 8.19                             Mandatory Equity Contributions.

 

(a)                                 The Borrower shall cause one or more of the holders of Equity Interests in the Borrower to contribute cash to the Borrower and/or shall cause other Persons to acquire for cash Equity Interests in the Borrower in one or more public or private offerings, private placements or other issuances of Equity Interests in the Borrower so that (a) an aggregate amount of not less than $20,000,000 of cash is contributed by such holders and/or received from such other Persons to or by the Borrower, as applicable, during the period from the First Amendment Effective Date through March 31, 2012 and (b) an aggregate amount of not less than $27,500,000 of cash is contributed by such holders and/or received from such other Persons to or by the Borrower, as applicable, during the period from the First Amendment Effective Date through June 30, 2012.

 

(b)                                 In addition to any equity contribution required under Section 8.19(a), in the event that any mandatory prepayment is required to be made by the Borrower under Section 3.04(b)(vi), the Borrower shall cause one or more of the holders of Equity Interests in the Borrower (and/or other Persons) to contribute cash to the Borrower (and/or to acquire for cash Equity Interests in the Borrower in one or more public or private offerings, private placements or other issuances of Equity Interests in the Borrower) during the period commencing on the tenth (10th) Business Day preceding the date on which any such required prepayment is due and owing and ending on the date on which such required prepayment is due and owing in amounts not less than the amounts of any such mandatory prepayments; provided that any payment made by Sponsor directly to the Administrative Agent pursuant to the Sponsor Agreement shall be deemed to satisfy this Section 8.19(b) to the extent of such payment.

 

ARTICLE IX
 Negative Covenants

 

Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder and all other amounts payable under the Loan Documents have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower (on behalf of itself and its Subsidiaries) and each Guarantor by its execution of the Guaranty and Collateral Agreement) covenants and agrees with the Administrative Agent, the Issuing Bank and the Lenders that:

 

Section 9.01                             Financial Covenants.

 

(a)                                 Consolidated Fixed Charge Coverage Ratio.  The Borrower will not, as of the last day of any fiscal quarter commencing with the quarter ending December 31, 2011, permit its Consolidated Fixed Charge Coverage Ratio to be less than the ratio set forth below for 

 

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the twelve (12) month period ending as of the last day of any fiscal quarter ending during the corresponding period set forth below:

 

	
Period Ending
    	
 
    	
Consolidated Fixed Charge
   Coverage Ratio
    
	
December   31, 2011 through March 31, 2012
    	
 
    	
1.25 to 1.00
    
	
June   30, 2012 through September 30, 2012
    	
 
    	
1.00 to 1.00
    
	
December   31, 2012
    	
 
    	
1.10 to 1.00
    
	
March   31, 2013 and thereafter
    	
 
    	
1.25 to 1.00
    

 

(b)                                 Consolidated Total Leverage Ratio.  The Borrower will not, as of the last day of any fiscal quarter commencing with the quarter ending December 31, 2011, permit its Consolidated Total Leverage Ratio to exceed the ratio set forth below for the twelve (12) month period ending as of the last day of any fiscal quarter ending during the corresponding period set forth below:

 

	
Period Ending
    	
 
    	
Consolidated Total
   Leverage Ratio
    
	
December   31, 2011
    	
 
    	
5.25 to 1.00
    
	
March   31, 2012
    	
 
    	
6.00 to 1.00
    
	
June   30, 2012
    	
 
    	
7.00 to 1.00
    
	
September   30, 2012
    	
 
    	
6.75 to 1.00
    
	
December   31, 2012
    	
 
    	
6.00 to 1.00
    
	
March   31, 2013
    	
 
    	
5.50 to 1.00
    
	
June   30, 2013 and thereafter
    	
 
    	
4.50 to 1.00
    

 

; provided, that, notwithstanding the foregoing to the contrary, the Borrower will not, as of the last day of any fiscal quarter ending after the consummation of a Qualified Public Offering, permit its Consolidated Total Leverage Ratio to exceed 4.50 to 1.00 for the twelve (12) month period ending as of the last day of any such fiscal quarter.

 

Section 9.02                             Indebtedness.  The Borrower will not, and will not permit any Subsidiary to, incur, create, assume or suffer to exist any Indebtedness, except:

 

(a)                                 the Secured Obligations arising under the Loan Documents or the Secured Hedging Agreements, any guaranty of or suretyship arrangement for the Secured Obligations arising under the Loan Documents;

 

(b)                                 Indebtedness under Capital Leases or that constitutes Purchase Money Indebtedness; provided that the aggregate amount of all Indebtedness described in this Section 9.02(b) at any one time outstanding shall not to exceed $2,000,000 in the aggregate;

 

(c)                                  Indebtedness associated with performance bonds, bid bonds, surety bonds, appeal bonds or customs bonds required in the ordinary course of business or in connection with the enforcement of rights or claims of the Borrower or any Subsidiary or in connection with 

 

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judgments that do not result in a Default or an Event of Default; provided that the aggregate outstanding amount of all such bonds permitted by this Section 9.02(c) shall not at any time exceed $2,000,000;

 

(d)                                 intercompany Indebtedness between the Borrower and any Subsidiary or between Subsidiaries to the extent permitted by Section 9.05(g); provided that such Indebtedness is not held, assigned, transferred, negotiated or pledged to any Person other than the Borrower or one of its Wholly-Owned Subsidiaries, and, provided, further, that any such Indebtedness owed by a Loan Party shall be subordinated to the Secured Obligations on terms set forth in the Guaranty and Collateral Agreement;

 

(e)                                  Indebtedness constituting a guaranty by any Loan Party of Indebtedness permitted to be incurred by any other Loan Party under this Section 9.02;

 

(f)                                   endorsements of negotiable instruments for deposit or collection in the ordinary course of business;

 

(g)                                  Permitted Note Indebtedness; and

 

(h)                                 other unsecured Indebtedness not to exceed $4,000,000 in the aggregate at any one time outstanding.

 

Section 9.03                             Liens.  The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any of its Properties (now owned or hereafter acquired), except:

 

(a)                                 Liens securing the payment of any Secured Obligations pursuant to the Security Instruments;

 

(b)                                 Excepted Liens;

 

(c)                                  Liens securing Capital Leases and Purchase Money Indebtedness permitted by Section 9.02(b) but only on the Property under lease or the Property purchased with such Purchase Money Indebtedness, as applicable; and

 

(d)                                 Liens on proceeds of Letters of Credit permitted to be posted in connection with Hedging Agreements permitted by Section 9.17.

 

Section 9.04                             Restricted Payments.  The Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, return any capital to its stockholders or make any distribution of its Property to its Equity Interest holders, except:

 

(a)                                 the Borrower may declare and pay dividends with respect to its Equity Interests payable solely in additional shares of its Equity Interests (other than Disqualified Capital Stock);

 

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(b)                                 Subsidiaries may declare and pay dividends to other Loan Parties ratably with respect to their Equity Interests;

 

(c)                                  the Borrower may, so long as no Default or Event of Default exists at the time of the declaration or payment of such Restricted Payment or would result from such declaration or payment, pay Permitted Tax Distributions in accordance with its Organization Documents;

 

(d)                                 the Borrower may, so long as no Default or Event of Default exists at the time of the declaration or payment of such Restricted Payment or would result from such declaration or payment, pay fees to Charlesbank (and reimburse Charlesbank for costs and expenses) in accordance with the Management Contract;

 

(e)                                  after a Qualified Public Offering is consummated, the Borrower may declare and pay quarterly cash dividends to the holders of any Equity Interests of the Borrower in an amount not to exceed the Borrower’s Available Cash as of the end of the immediately preceding fiscal quarter; provided that (i) after giving effect to such Restricted Payment, the Borrower shall be in compliance with all covenants set forth in Section 9.01 (calculated on a pro forma basis and in a manner acceptable to the Administrative Agent), and (ii) no Default or Event of Default exists at the time of or after giving effect to such Restricted Payment; and

 

(f)                                   the Borrower may repurchase its Equity Interests owned directly or indirectly by HRI-Estrella, L.P., a Delaware limited partnership, and/or one or more of its Affiliates, provided that (i) no Default or Event of Default exists or results therefrom, (ii) such repurchase occurs substantially contemporaneously with, and solely with the proceeds of, an equity contribution to the Borrower by one or more of the holders of Equity Interests in the Borrower (and/or with the Net Cash Proceeds received by the Borrower from one or more public or private offerings, private placements or other issuances of Equity Interests in the Borrower occurring substantially contemporaneously with such repurchase) in a cash amount not less than the cash amount paid by the Borrower as part of such repurchase, and (iii) the aggregate amount of such repurchases do not exceed $16,000,000  during the term of this Agreement.

 

Section 9.05                             Investments, Loans and Advances.  The Borrower will not, and will not permit any Subsidiary to, make or permit to remain outstanding any Investments in or to any Person, except that the foregoing restriction shall not apply to:

 

(a)                                 Investments which are disclosed to the Lenders in Schedule 9.05;

 

(b)                                 accounts receivable arising in the ordinary course of business;

 

(c)                                  direct obligations of the United States or any agency thereof, or obligations guaranteed by the United States or any agency thereof, in each case maturing within one (1) year from the date of creation thereof;

 

(d)                                 commercial paper maturing within one year from the date of creation thereof rated in one of the two highest grades by S&P or Moody’s;

 

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(e)                                  deposits maturing within one (1) year from the date of creation thereof with, including certificates of deposit issued by, any Lender or any office located in the United States of any other bank or trust company which is organized under the laws of the United States or any state thereof, has capital, surplus and undivided profits aggregating at least $100,000,000 (as of the date of such bank or trust company’s most recent financial reports) and has a short term deposit rating of no lower than A2 or P2, as such rating is set forth from time to time, by S&P or Moody’s, respectively;

 

(f)                                   deposits in money market funds investing exclusively in Investments described in Section 9.05(c), Section 9.05(d) or Section 9.05(e);

 

(g)                                  Investments (i) made by the Borrower in or to the Guarantors, and (ii) made by any Subsidiary in or to the Borrower or any Guarantor;

 

(h)                                 Investments in stock, obligations or securities received in settlement of debts arising from Investments permitted under this Section 9.05 owing to the Borrower or any Subsidiary as a result of a bankruptcy or other insolvency proceeding of the obligor in respect of such debts or upon the enforcement of any Lien in favor of the Borrower or any of its Subsidiaries; provided that the Borrower shall give the Administrative Agent prompt written notice in the event that the aggregate amount of all Investments held at any one time under this Section 9.05(h) exceeds $500,000;

 

(i)                                     Investments constituting Indebtedness permitted under Section 9.01;

 

(j)                                    credit provided to new or existing customers of the Loan Parties for the costs and expenses of extending service to such customers and for which such customers are contractually obligated to reimburse the Loan Party providing such credit; provided that, with respect to any calendar year, the aggregate amount of all Investments made pursuant to this Section 9.05(j) during such calendar year shall not exceed $5,000,000;

 

(k)                                 Investments in joint ventures or other Persons (other than a natural person) with one or more third parties, including, without limitation, in any Excluded Subsidiary, provided that (i) after giving effect to the incurrence of any such Investment, the Borrower shall be in compliance with all covenants set forth in Section 9.01 (calculated on a pro forma basis as of the last day of the most recently ended fiscal quarter, with such covenants to be calculated at the levels in effect as of the end of such last fiscal quarter but based on the financial information for the most recent twelve (12) month period for which financial information has been delivered to the Administrative Agent pursuant to Sections 8.01(a), (b), or (c), but giving effect to the Borrower’s Indebtedness after giving effect to such Investment, and in a manner acceptable to the Administrative Agent), (ii) no Default or Event of Default exists at the time of or after giving effect to such Investment, (iii) prior to and after giving effect to such Investment, Liquidity on the date such Investment is made is not less than ten percent (10%) of the aggregate Revolving Loan Commitments then in effect, calculated on a pro forma basis as if all consideration (other than Equity Interests) which are required to be paid in connection with such Investment are to be paid in cash at the time such Investment is made, and (iv) the joint venture or other Person (other than a natural person) is not engaged, directly or indirectly, in any line of business other than the 

 

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line of business in which the Borrower and its Subsidiaries are engaged on the Effective Date and any business activities that are substantially similar, related or incidental thereto;

 

(l)                                     Investments resulting from the making of Capital Expenditures permitted under, and made in accordance with, Section 9.20; and

 

(m)                             other Investments not to exceed $2,000,000 in the aggregate at any time.

 

Section 9.06                             Nature of Business; International Operations.  The Borrower will not, and will not permit any Subsidiary to, engage (directly or indirectly) in any business other than those businesses in which the Borrower and its Subsidiaries are engaged on the Effective Date (or which are reasonably related thereto or are reasonable extensions thereof) allow any material change to be made in the character of its business as a midstream company engaged in gas gathering and processing.  From and after the date hereof, the Borrower and its Subsidiaries will not acquire or make any other expenditure (whether such expenditure is capital, operating or otherwise) in or related to, any real Property not located within the geographical boundaries of the United States.

 

Section 9.07                             Proceeds of Loans.  The Borrower will not permit the proceeds of the Loans to be used for any purpose other than those permitted by Section 7.20.  Neither the Borrower nor any Person acting on behalf of the Borrower has taken or will take any action which might cause any of the Loan Documents to violate Regulations T, U or X or any other regulation of the Board or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or regulation thereunder, in each case as now in effect or as the same may hereinafter be in effect.  If requested by the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form U-1 or such other form referred to in Regulation U, Regulation T or Regulation X of the Board, as the case may be.

 

Section 9.08                             ERISA Compliance.  The Borrower will not, and will not permit any Subsidiary to, at any time:

 

(a)                                 engage in, or permit any ERISA Affiliate to engage in, any transaction in connection with which the Borrower, a Subsidiary or any ERISA Affiliate could be subjected to either a civil penalty assessed pursuant to subsections (c), (i), (l) or (m) of section 502 of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code;

 

(b)                                 fail to make, or permit any ERISA Affiliate to fail to make, full payment when due of all amounts which, under the provisions of any Plan, agreement relating thereto or applicable law, the Borrower, a Subsidiary or any ERISA Affiliate is required to pay as contributions thereto;

 

(c)                                  contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute to (i) any employee welfare benefit plan, as defined in section 3(1) of ERISA, including, without limitation, any such plan maintained to provide benefits to former employees of such entities, that contributions to or the obligation to contribute to may not be terminated by such entities in their sole discretion at any time without any material liability, or (ii) any employee pension benefit plan, as defined in 

 

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section 3(2) of ERISA, including a multiemployer plan as defined in section 3(37) or 4001(a)(3) of ERISA, that is subject to Title IV of ERISA, section 302 of ERISA or section 412 of the Code; and

 

(d)                                 acquire, or permit any ERISA Affiliate to acquire, an interest in any Person that causes such Person to become an ERISA Affiliate with respect to the Borrower or a Subsidiary or with respect to any ERISA Affiliate of the Borrower or a Subsidiary if such Person sponsors, maintains or contributes to, or at any time in the six year period preceding such acquisition has sponsored, maintained, or contributed to, any employee pension benefit plan, as defined in section 3(2) of ERISA, (i) that is a multiemployer plan as defined in section 3(37) or 4001(a)(3) of ERISA or (ii) that is subject to Title IV of ERISA under which the actuarial present value of the benefit liabilities under such plan exceeds the current value of the assets (computed on a plan termination basis in accordance with Title IV of ERISA) of such plan allocable to such benefit liabilities.

 

Section 9.09                             Sale or Discount of Receivables.  Except for receivables obtained by the Borrower or any Subsidiary out of the ordinary course of business or the settlement of joint interest billing accounts in the ordinary course of business or discounts granted to settle collection of accounts receivable or the sale of defaulted accounts arising in the ordinary course of business in connection with the compromise or collection thereof and not in connection with any financing transaction, the Borrower will not, and will not permit any Subsidiary to, discount or sell (with or without recourse) any of its notes receivable or accounts receivable.

 

Section 9.10                             Mergers, Etc.  The Borrower will not, and will not permit any Subsidiary to, merge into or with or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its Property to any other Person (whether now owned or hereafter acquired) (any such transaction, a “consolidation”), or liquidate or dissolve; provided that the Borrower or any Subsidiary may participate in a consolidation with any other Person; provided, further, that:

 

(a)                                 (i) no Default is continuing, (ii) any such consolidation would not cause a Default hereunder, (iii) if the Borrower consolidates with any Person, the Borrower shall be the surviving Person, and (iv) if any Subsidiary consolidates with any Person (other than the Borrower or another Subsidiary) and such Subsidiary is not the surviving Person, such surviving Person shall expressly assume in writing (in form and substance satisfactory to the Administrative Agent) all obligations of such Subsidiary under the Loan Documents;

 

(b)                                 any Subsidiary may participate in a consolidation with the Borrower (provided that the Borrower shall be the continuing or surviving corporation) or any other Subsidiary and if one of such Subsidiaries is a Wholly-Owned Subsidiary, then the surviving Person shall be a Wholly-Owned Subsidiary; and

 

(c)                                  a Subsidiary may wind-up, dissolve, liquidate or sell or transfer its assets if (i) all of its Property is transferred to the Borrower or a Wholly-Owned Subsidiary and (ii) the Loan Party acquiring such Property promptly complies with its obligations under Sections 8.12 and 8.14.

 

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Section 9.11                             Sale of Properties.  The Borrower will not, and will not permit any Subsidiary to, sell, assign, farm-out, convey or otherwise transfer any Property except for:

 

(a)                                 the sale of inventory in the ordinary course of business;

 

(b)                                 the sale or transfer of equipment that is no longer necessary for the business of the Borrower or such Subsidiary or is replaced by equipment of at least comparable value and use;

 

(c)                                  the transfer of Property to another Loan Party;

 

(d)                                 the transfer of Property occurring in connection with a transaction permitted by, and made in compliance with the provisions of, Section 9.10(a)(iv);

 

(e)                                  Asset Sales having, in the aggregate for all Asset Sales by the Borrower or any Subsidiary, a fair market value not to exceed $2,000,000 during any fiscal year of the Borrower; and

 

(f)                                   other Asset Sales, subject to Section 3.04(b)(v).

 

Section 9.12                             Environmental Matters.  Except for such matters that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, with respect to the Properties and any operations thereat or associated therewith, the Borrower will not, and will not permit any Subsidiary to, be in violation of Environmental Law, have any Release or threatened Release of Hazardous Materials other than those that are in compliance with Environmental Law, allow any exposure to Hazardous Materials that could reasonably be expected to form the basis for a claim for damages or compensation, or be required under Environmental Law to perform any Remedial Work.

 

Section 9.13                             Transactions with Affiliates.  The Borrower will not, and will not permit any Subsidiary to, enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property or the rendering of any service, with any Affiliate (other than the Borrower or any Guarantor), except (a) Restricted Payments permitted by Section 9.04 and (b) transactions that are otherwise permitted under this Agreement and are upon fair and reasonable terms no less favorable to it than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate.

 

Section 9.14                             Subsidiaries.  The Borrower will not, and will not permit any Subsidiary to, create or acquire any additional Subsidiary unless the Borrower gives prior written notice to the Administrative Agent of such creation or acquisition and complies with Section 8.14(a).  The Borrower shall not, and shall not permit any Subsidiary to, sell, assign or otherwise dispose of any Equity Interests in any Subsidiary except in compliance with Section 9.11(c), Section 9.11(e) or Section 9.15.  Neither the Borrower nor any Subsidiary shall have any Foreign Subsidiaries.

 

Section 9.15                             Limitation on Issuance of Equity Interests.  The Borrower shall not permit any Subsidiary to issue any Equity Interest (including by way of sales of treasury stock) or any options or warrants to purchase, or securities convertible into, any Equity Interest, except for Equity Interests issued to another Loan Party or to another Person in accordance with a merger or 

 

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other transaction permitted by Section 9.10(a).  The Borrower and the Subsidiaries shall comply with Section 8.12, Section 8.14 and, if applicable, Section 9.10(a) with respect to any such issued Equity Interests.

 

Section 9.16                             Negative Pledge Agreements; Dividend Restrictions.  The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or suffer to exist any contract, agreement or understanding (other than (a) the Loan Documents, (b) Capital Leases creating Liens permitted by Section 9.03(c), but then only on the Property that is the subject of such Capital Lease, (c) documents evidencing or securing Purchase Money Indebtedness creating Liens permitted by Section 9.03(c), but then only on the Property that is the subject of such Purchase Money Indebtedness, and (d) documents creating Liens which are described in clauses (g) or (h) of the definition of “Excepted Liens”, but then only on the Property that is the subject of the applicable lease or license described in such clause (g) or (h)) that in any way prohibits or restricts the granting, conveying, creation or imposition of any Lien on any of its Property in favor of the Administrative Agent and the Lenders, or that requires the consent of or notice to other Persons in connection therewith, or that restricts any Subsidiary from paying dividends or making distributions to the Borrower or any Guarantor, or that requires the consent of or notice to other Persons in connection therewith.

 

Section 9.17                             Hedging Agreements.  The Borrower will not, and will not permit any Subsidiary to, enter into any Hedging Agreements with any Person other than Hedging Agreements in respect of commodities or interest rates (i) with an Approved Counterparty and (ii) that are entered into for the purpose of hedging exposure to interest rates or commodity prices and that are not for speculative purposes.  In no event shall any Hedging Agreement contain any requirement, agreement or covenant for the Borrower or any Subsidiary to post collateral or margin to secure their obligations under such Hedging Agreement or to cover market exposures, other than Letters of Credit (and the proceeds thereof) the face amounts of which do not exceed $5,000,000 in the aggregate at any time.

 

Section 9.18                             Sale and Leaseback.  The Borrower shall not, and shall not permit any Subsidiary to, enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any Property, whether now owned or hereafter acquired, and thereafter rent or lease such Property which it intends to use for substantially the same purpose or purposes as the Property being sold or transferred.

 

Section 9.19                             Amendments to Organization Documents, Material Contracts, or Fiscal Year End; Prepayments of other Indebtedness.

 

(a)                                 The Borrower shall not, and shall not permit any Subsidiary to, amend, supplement or otherwise modify (or permit to be amended, supplemented or modified) its Organization Documents; provided that (i) the Borrower may change its organizational form in connection with its preparations for a Qualified Public Offering, subject, however, to five (5) Business Days prior written notice and (ii) the Borrower or any Subsidiary may amend, supplement or otherwise modify any of its Organization Documents in any manner that (A) is not adverse to the Lenders in any respect and (B) does not conflict with any of the Loan Documents, subject, in the case of each of the foregoing clauses (i) and (ii), to compliance with the provisions of Sections 8.01(m), 8.01(n) and 8.12 to the full extent applicable.

 

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(b)                                 The Borrower shall not, and shall not permit any Subsidiary to, amend, supplement or otherwise modify (or permit to be amended, supplemented or modified) (i) any Material Contract (other than the Management Contract) in a manner that would be adverse to the Lenders in any material respect or (ii) the Management Contract.

 

(c)                                  The Borrower shall not, and shall not permit any Subsidiary to, change the last day of its fiscal year from December 31 of each year, or the last days of the first three fiscal quarters in each of its fiscal years from March 31, June 30 and September 30 of each year, respectively.

 

(d)                                 The Borrower shall not, and shall not permit any Subsidiary to, make (or give any notice in respect of) any voluntary or optional payment or prepayment on or redemption or acquisition for value of, or any prepayment or redemption as a result of any asset sale, change of control or similar event of, any outstanding subordinated Indebtedness, except as otherwise permitted by this Agreement.

 

Section 9.20                             Limitation on Capital Expenditures.  The Borrower shall not, and the Borrower shall not permit its Subsidiaries to, make Capital Expenditures, other than (a) Expansion Capital Expenditures; and (b) additional Capital Expenditures (exclusive of Expansion Capital Expenditures), provided that (i) after giving effect to any such additional Capital Expenditure, the Borrower shall be in compliance with all covenants set forth in Section 9.01 (calculated on a pro forma basis as of the last day of the most recently ended fiscal quarter, with such covenants to be calculated at the levels in effect as of the end of the fiscal quarter in which such Capital Expenditure is made, but based on the financial information for the most recent twelve (12) month period for which financial information has been delivered to the Administrative Agent pursuant to Sections 8.01(a), (b), or (c), but giving effect to the Borrower’s Indebtedness after giving effect to such Capital Expenditure, and in a manner acceptable to the Administrative Agent), (ii) no Default or Event of Default exists at the time of or after giving effect to such additional Capital Expenditure, and (iii) prior to and after giving effect to such additional Capital Expenditure, Liquidity on the date such Capital Expenditure is made is not less than five percent (5%) of the aggregate Revolving Loan Commitments then in effect.

 

Section 9.21                             Anti-Terrorism Law; Anti-Money Laundering.

 

(a)                                 The Borrower shall not, and shall not permit any Subsidiary to, directly or indirectly, (i) knowingly conduct any business or engage in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in Section 7.26, (ii) knowingly deal in, or otherwise engage in any transaction relating to, any Property or interests in Property blocked pursuant to the Executive Order or any other Anti-Terrorism Law, or (iii) knowingly engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law (and the Borrower shall deliver to any Lender any certification or other evidence requested from time to time by such Lender confirming the Borrower’s and the Subsidiaries’ compliance with this Section 9.21(a)).

 

(b)                                 The Borrower shall not, and shall not permit any Subsidiary to, cause or permit any of the funds of the Borrower or any Subsidiary that are used to repay the Loans to be 

 

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derived from any unlawful activity with the result that the making of the Loans would be in violation of any Governmental Requirement.

 

Section 9.22                             Embargoed Person.  The Borrower shall not, and shall not permit any Subsidiary to, permit (a) any of the funds or Properties of the Borrower or any Subsidiary that are used to repay the Loans to constitute Property of, or be beneficially owned directly or indirectly by, any Person subject to sanctions or trade restrictions under United States law (“Embargoed Person” or “Embargoed Persons”) that is identified on (i) the “List of Specially Designated Nationals and Blocked Persons” maintained by OFAC and/or on any other similar list maintained by OFAC pursuant to any authorizing statute including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Order or Governmental Requirement promulgated thereunder, with the result that the investment in the Borrower or any Subsidiary (whether directly or indirectly) is prohibited by a Governmental Requirement, or the Loans would be in violation of a Governmental Requirement, or (ii) the Executive Order, any related enabling legislation or any other similar Executive Orders or (b) any Embargoed Person to have any direct or indirect interest, of any nature whatsoever in the Borrower or any Subsidiary, with the result that the investment in the Borrower or any Subsidiary (whether directly or indirectly) is prohibited by a Governmental Requirement or the Loans are in violation of a Governmental Requirement.

 

ARTICLE X
 Events of Default; Remedies

 

Section 10.01                      Events of Default.  One or more of the following events shall constitute an “Event of Default”:

 

(a)                                 The Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof, by acceleration or otherwise.

 

(b)                                 The Borrower shall fail to pay any interest on any Loan or any fee or other amount (other than an amount referred to in Section 10.01(a)) payable under any 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 or any Subsidiary of the Borrower in or in connection with any Loan Document or any amendment or modification of any Loan Document or waiver under such Loan Document, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed made.

 

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(d)                                 The Borrower or any Subsidiary shall fail to observe or perform any covenant, condition or agreement contained in Section 8.01(l), Section 8.01(m), Section 8.02, Section 8.03, Section 8.07, Section 8.14, Section 8.16, Section 8.19 or in Article IX.

 

(e)                                  Any Loan Party or any Subsidiary of the Borrower shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in Section 10.01(a), Section 10.01(b) or Section 10.01(d)) or any other Loan Document, and such failure shall continue unremedied for a period of thirty (30) days after the earlier to occur of (i) notice thereof from the Administrative Agent to the Borrower (which notice will be given at the request of any Lender) or (ii) a Responsible Officer of the Borrower or such Subsidiary otherwise becoming aware of such default.

 

(f)                                   The Borrower or any Subsidiary shall fail to make any payment of principal of or interest on any Material Indebtedness, when and as the same shall become due and payable, and such failure to pay shall extend beyond any applicable period of grace.

 

(g)                                  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 such Material Indebtedness or any trustee or agent on its or their behalf to cause such Material Indebtedness to become due, or to require the Redemption thereof or any offer to Redeem to be made in respect thereof, prior to its scheduled maturity or require the Borrower or any Subsidiary to make an offer in respect thereof.

 

(h)                                 An involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of its 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.

 

(i)                                     The Borrower or any Subsidiary shall (i) 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, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in Section 10.01(g), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, or (vi) take any limited liability company or other action for the purpose of effecting any of the foregoing.

 

(j)                                    The Borrower or any Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due.

 

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(k)                                 (i) One or more judgments for the payment of money in an aggregate amount in excess of $2,000,000 (to the extent not covered by independent third party insurance as to which the insurer does not dispute coverage and is not subject to an insolvency proceeding) or (ii) any one or more non-monetary judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, shall be rendered against the Borrower, any Subsidiary or any combination thereof and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within thirty (30) days from the entry thereof.

 

(l)                                     The Loan Documents after delivery thereof shall for any reason, except to the extent permitted by the terms thereof, cease to be in full force and effect and valid, binding and enforceable in accordance with their terms against any Loan Party party thereto or shall be repudiated by any of them, or cease to create a valid and perfected Lien of the priority required thereby on any of the Collateral purported to be covered thereby, except to the extent permitted by the terms of this Agreement, or any Loan Party or any of their Affiliates shall so state in writing.

 

(m)                             An ERISA Event shall have occurred that, in the opinion of the Required Lenders, when together with all other ERISA Events that have occurred, could reasonably be expected to result in the liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $1,000,000 in the aggregate.

 

(n)                                 A Material Adverse Change shall occur.

 

(o)                                 A Change in Control shall occur.

 

(p)                                 (i) Sponsor shall fail to observe or perform any covenant, condition or agreement contained in the Sponsor Agreement, and such failure shall continue beyond any applicable period of grace; (ii) any representation or warranty made or deemed made by or on behalf of Sponsor in or in connection with the Sponsor Agreement or any amendment or modification of the Sponsor Agreement or waiver under the Sponsor Agreement, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with the Sponsor Agreement or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed made; (iii) any event of the types described in Sections 10.01(h), 10.01(i) or 10.01(j) occur with respect to Sponsor prior to the Sponsor Agreement Satisfaction Date; or (iv) the Sponsor Agreement after delivery thereof shall for any reason, except to the extent permitted by the terms thereof, cease to be in full force and effect and valid, binding and enforceable in accordance with its terms against Sponsor or shall be repudiated by Sponsor, or any Loan Party, Sponsor or any of their Affiliates shall so state in writing.

 

Section 10.02                      Remedies.

 

(a)                                 In the case of an Event of Default other than one described in Section 10.01(h) or Section 10.01(i), at any time thereafter during the continuance of such Event of Default, the Administrative Agent may, and at the request of the Required Lenders, shall, by notice to the Borrower, take either or both of the following actions, at the same or different 

 

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times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower and the Guarantors accrued hereunder and under the Loan Documents (including, without limitation, the payment of cash collateral to secure the LC Exposure as provided in Section 2.07(j)), shall become due and payable immediately, without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other notice of any kind, all of which are hereby waived by the Borrower and each Guarantor; and in case of an Event of Default described in Section 10.01(h) or Section 10.01(i), the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and the other obligations of the Borrower and the Guarantors accrued hereunder and the other Loan Documents (including, without limitation, the payment of cash collateral to secure the LC Exposure as provided in Section 2.07(j)), shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower and each Guarantor.

 

(b)                                 In the case of the occurrence of an Event of Default, the Administrative Agent and the Lenders will have all other rights and remedies available at law and equity.

 

(c)                                  All proceeds realized from the liquidation or other disposition of Collateral or otherwise received after maturity of the Loans, whether by acceleration or otherwise, shall be applied:

 

(i)                                     first, to payment or reimbursement of that portion of the Secured Obligations constituting fees, expenses and indemnities payable to the Administrative Agent in its capacity as such;

 

(ii)                                  second, pro rata to payment or reimbursement of that portion of the Secured Obligations constituting fees, expenses and indemnities payable to the Lenders;

 

(iii)                               third, pro rata to payment of accrued interest on the Loans;

 

(iv)                              fourth, pro rata to payment of (A) principal outstanding on the Loans, (B) Secured Obligations referred to in clause (b) of the definition of Secured Obligations owing to a Secured Hedging Agreement Counterparty, (C) Secured Obligations referred to in clause (c) of the definition of Secured Obligations owing to a Treasury Management Counterparty and (D) any other Secured Obligations;

 

(v)                                 fifth, to serve as cash collateral to be held by the Administrative Agent to secure the LC Exposure; and

 

(vi)                              sixth, any excess, after all of the Secured Obligations shall have been indefeasibly paid in full in cash, shall be paid to the Borrower or as otherwise required by any Governmental Requirement.

 

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ARTICLE XI
 The Agents

 

Section 11.01                      Appointment and Authority.  Each of the Lenders and the Issuing Bank hereby irrevocably appoints Wells Fargo to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof and thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article XI are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Bank, and neither the Borrower nor any Subsidiary shall have any rights as a third party beneficiary of any such provisions.

 

Section 11.02                      Rights as a Lender.  The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

 

Section 11.03                      Exculpatory Provisions.

 

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

 

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

 

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

 

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

 

(b)                                 The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe 

 

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in good faith shall be necessary, under the circumstances as provided in Section 12.02 and Section 10.02) or (ii) in the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrower, a Lender or the Issuing Bank.

 

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

 

Section 11.04                      Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

Section 11.05                      Delegation of Duties.  The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article IX shall apply to any such sub agent and to the Related Parties of the Administrative Agent and any such sub agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

 

Section 11.06                      Resignation of Administrative Agent.  The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Bank and the Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in 

 

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consultation with the Borrower, to appoint a bank as a successor.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent meeting the qualifications set forth above, provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (a) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the Issuing Bank under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (b) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the Issuing Bank directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section 11.06.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this paragraph).  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article XI and Section 12.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

 

Section 11.07                      Non-Reliance on Administrative Agent and Other Lenders.  Each Lender and the Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender and the Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

 

Section 11.08                      No Other Duties, etc.  The Arranger, the Co-Syndication Agents and the Co-Documentation Agents shall have no duties, responsibilities or liabilities under this Agreement and the other Loan Documents other than, with respect to the Co-Syndication Agents and the Co-Documentation Agents, their duties, responsibilities and liabilities in their capacity as Lenders hereunder.

 

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ARTICLE XII
 Miscellaneous

 

Section 12.01                      Notices.

 

(a)                                 Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to Section 12.01(b)),  all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile, as follows:

 

	
(i)         if   to the Borrower, to it at the following:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Southcross   Energy LLC
    
	
 
    	
 
    	
1700   Pacific Ave., Suite 2900
    
	
 
    	
 
    	
Dallas, TX 75201
    
	
 
    	
 
    	
Attn:
    	
David   Biegler and David Mueller
    
	
 
    	
 
    	
Fax:
    	
214.393.7504
    
	
 
    	
 
    	
Email:
    	
biegler@southcrossenergy.com   and 

mueller@southcrossenergy.com
    
	
 
    	
 
    	
 
    	
 
    
	
and   to:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Charlesbank   Equity Fund VI, Limited Partnership
    
	
 
    	
 
    	
200   Clarendon Street, 54th Floor
    
	
 
    	
 
    	
Boston,   MA 02116
    
	
 
    	
 
    	
Attn:
    	
Jon   Biotti
    
	
 
    	
 
    	
Fax:
    	
617.619.5402
    
	
 
    	
 
    	
Email:
    	
jbiotti@charlesbank.com
    
	
 
    	
 
    	
 
    	
 
    
	
with   a copy to (which shall not constitute notice):
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Gardere   Wynne Sewell LLP
    
	
 
    	
 
    	
1061   Elm Street
    
	
 
    	
 
    	
Suite   3000
    
	
 
    	
 
    	
Dallas,   TX 75201
    
	
 
    	
 
    	
Attn:
    	
Robert   Sarfatis
    
	
 
    	
 
    	
Fax:
    	
214.999.3245
    
	
 
    	
 
    	
Email:
    	
rsarfatis@gardere.com
    
	
 
    	
 
    	
 
    	
 
    
	
(ii)        if   to the Administrative Agent, to it at the following:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Wells   Fargo Bank, N.A.
    
	
 
    	
 
    	
1445   Ross Ave., Suite 4500
    
	
 
    	
 
    	
MAC:   T5303-452
    
	
 
    	
 
    	
Dallas,   TX 75202
    
	
 
    	
 
    	
Attn:
    	
David   C. Brooks
    
	
 
    	
 
    	
Fax:
    	
214.721.8215
    

 

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Email:
    	
brooksdc@wellsfargo.com
    
	
 
    	
 
    	
 
    	
 
    
	
with   a copy to:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Wells   Fargo Bank, N.A.
    
	
 
    	
 
    	
1700   Lincoln St. 3rd Floor
    
	
 
    	
 
    	
MAC:   C7300-035
    
	
 
    	
 
    	
Denver,   CO 80203
    
	
 
    	
 
    	
Attn:
    	
Amira   Bahloul
    
	
 
    	
 
    	
Fax:
    	
303.863.5533
    
	
 
    	
 
    	
Email:
    	
amira.a.bahloul@wellsfargo.com
    
	
 
    	
 
    	
 
    	
 
    
	
with   a copy to (which shall not constitute notice):
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Vinson   & Elkins L.L.P.
    
	
 
    	
 
    	
2001   Ross Ave., Suite 3700
    
	
 
    	
 
    	
Dallas,   TX 75201-2975
    
	
 
    	
 
    	
Attn:
    	
Erec   Winandy
    
	
 
    	
 
    	
Fax:
    	
214-999-7756
    
	
 
    	
 
    	
Email:
    	
ewinandy@velaw.com
    
	
 
    	
 
    	
 
    	
 
    
	
(iii)       if   to the Issuing Bank, to it at the following:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Wells   Fargo Bank, N.A.
    
	
 
    	
 
    	
1445   Ross Ave., Suite 4500
    
	
 
    	
 
    	
MAC:   T5303-452
    
	
 
    	
 
    	
Dallas,   TX 75202
    
	
 
    	
 
    	
Attn:
    	
David   C. Brooks
    
	
 
    	
 
    	
Fax:
    	
214.721.8215
    
	
 
    	
 
    	
Email:
    	
brooksdc@wellsfargo.com
    
	
 
    	
 
    	
 
    	
 
    
	
with   a copy to:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Wells   Fargo Bank, N.A.
    
	
 
    	
 
    	
1700   Lincoln St. 3rd Floor
    
	
 
    	
 
    	
MAC:   C7300-035
    
	
 
    	
 
    	
Denver,   CO 80203
    
	
 
    	
 
    	
Attn:
    	
Amira   Bahloul
    
	
 
    	
 
    	
Fax:
    	
303.863.5533
    
	
 
    	
 
    	
Email:
    	
amira.a.bahloul@wellsfargo.com
    
	
 
    	
 
    	
 
    	
 
    
	
(iv)       if to any other Lender, to it at its address (or facsimile number) set   forth in its Administrative Questionnaire.
    

 

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by 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 

 

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recipient).  Notices delivered through electronic communications to the extent provided in Section 12.01(b) below, shall be effective as provided in Section 12.01(b).

 

(b)                                 Electronic Communications.

 

(i)                                     Notices and other communications to the Lenders and the Issuing Bank hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender or the Issuing Bank pursuant to Article II, Article III, Article IV and Article V if such Lender or the Issuing Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article(s) by electronic communication.  The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

 

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

 

(c)                                  Change of Address, Etc.  Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.

 

Section 12.02                      Waivers; Amendments.

 

(a)                                 No failure on the part of the Administrative Agent, the Issuing Bank or any Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege, or any abandonment or discontinuance of steps to enforce such right, power or privilege, under any of the Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under any of the Loan Documents preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by Section 12.02(b), and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the 

 

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Administrative Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.

 

(b)                                 Neither this Agreement nor any provision hereof nor any Security Instrument nor any provision thereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, or reduce any other Secured Obligations hereunder or under any other Loan Document, without the written consent of each Lender adversely affected thereby, (iii) postpone the scheduled date of payment or prepayment (other than a prepayment required under Section 3.04(b)(iv)) of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or any other Secured Obligations hereunder or under any other Loan Document, or reduce the amount of, waive or excuse any such payment, or postpone or extend the Termination Date or Maturity Date without the written consent of each Lender adversely affected thereby, (iv) release any Guarantor (except as permitted pursuant to the Guaranty and Collateral Agreement) or release all or substantially all of the Collateral, without the written consent of each Lender (other than any Defaulting Lender), (v) change any of the provisions of this Section 12.02(b), Section 10.02(c),  or the definitions of “Required Lenders” or “Required Revolving Lenders” or “Required Class Lenders” or any other provision hereof specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights hereunder or under any other Loan Documents or make any determination or grant any consent hereunder or any other Loan Documents, without the written consent of each Lender (or each Lender of such Class, as the case may be) other than any Defaulting Lender, or (vi)change the application of prepayments as among or between Classes under Section 3.04(b)(vii), without the written consent of the Required Class Lenders of each Class that is being allocated a lesser prepayment as a result thereof (it being understood that the Required Lenders may waive, in whole or in part, any prepayment so long as the application, as between the Classes, of any such prepayment that is still required to be made is not changed); provided, further, that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, any other Agent, or the Issuing Bank hereunder or under any other Loan Document without the prior written consent of the Administrative Agent, such other Agent or the Issuing Bank, as the case may be.  Notwithstanding the foregoing, any supplement to Schedule 7.14 (Subsidiaries) shall be effective simply by delivering to the Administrative Agent a supplemental schedule clearly marked as such and, upon receipt, the Administrative Agent will promptly deliver a copy thereof to the Lenders.

 

Section 12.03                      Expenses, Indemnity; Damage Waiver.

 

(a)                                 Costs and Expenses.  The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel and other outside consultants for the Administrative Agent) in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration (both before and after the execution hereof and including advice of counsel to the Administrative Agent as to the rights 

 

104

 

and duties of the Administrative Agent and the Lenders with respect thereto) of this Agreement and the other Loan Documents and any amendments, modifications or waivers of or consents related to the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all costs, expenses, Taxes, assessments and other charges incurred by any Agent or any Lender in connection with any filing, registration, recording or perfection of any security interest contemplated by this Agreement or any Security Instrument or any other document referred to therein, (iii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (iv) all out-of-pocket expenses incurred by any Agent, the Issuing Bank or any Lender (including the fees, charges and disbursements of any counsel for any Agent, the Issuing Bank or any Lender) in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents, including its rights under this Section 12.03 or in connection with the Loans made or Letters of Credit issued hereunder, including, without limitation, all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.  Notwithstanding anything to the contrary contained in this Section 12.03(a) or elsewhere in any of the Loan Documents, neither the Borrower nor any Subsidiary shall be obligated to pay or reimburse any Person for any costs, expenses, fees, taxes or other charges of any nature whatsoever that are incurred or payable by any Person in connection with any assignment referred to in Section 12.04(b), any participation referred to in Section 12.04(d) or any pledge or security interest referred to in Section 12.04(f).

 

(b)                                 INDEMNIFICATION BY THE BORROWER.  THE BORROWER SHALL INDEMNIFY EACH AGENT (AND ANY SUB-AGENT THEREOF), THE ARRANGER, THE ISSUING BANK AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND DEFEND AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, PENALTIES, LIABILITIES AND RELATED EXPENSES, INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY ANY INDEMNITEE OR ASSERTED AGAINST ANY INDEMNITEE BY A THIRD PARTY OR BY THE BORROWER OR ANY SUBSIDIARY ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, (ii) THE FAILURE OF THE BORROWER OR ANY SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT, (iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION, (A) ANY REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A 

 

105

 

LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT, OR (B) THE PAYMENT OF A DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH, (v) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND ITS SUBSIDIARIES BY THE BORROWER AND ITS SUBSIDIARIES, (vii) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR ANY OF THEIR PROPERTIES OR OPERATIONS, INCLUDING, THE PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF HAZARDOUS MATERIALS ON OR AT ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE BORROWER OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY, (x) THE PAST OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY, (xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL, GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR ARRANGEMENT FOR DISPOSAL OF HAZARDOUS MATERIALS ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE BORROWER OR ANY SUBSIDIARY OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, (xii) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR (xiii) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xiv) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY THE BORROWER OR ANY SUBSIDIARY, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY SHALL EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES (x) ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILFUL 

 

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MISCONDUCT OF SUCH INDEMNITEE OR (y) RESULT FROM A CLAIM BROUGHT BY THE BORROWER OR ANY SUBSIDIARY AGAINST ANY INDEMNITEE FOR BREACH IN BAD FAITH OF SUCH INDEMNITEE’S OBLIGATIONS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT, IF THE BORROWER OR SUCH SUBSIDIARY HAS OBTAINED A FINAL AND NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION.

 

(c)                                  Reimbursement by Lenders.  To the extent that the Borrower for any reason fails to pay indefeasibly any amount required under Sections 12.03(a) or (b) to be paid by it to any Agent (or any sub-agent thereof), the Arranger, the Issuing Bank or any Related Party of any of the foregoing, each Lender severally agrees to pay to such Agent (or any such sub-agent), the Arranger, the Issuing Bank or such Related Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against such Agent (or any such sub-agent), the Arranger or the Issuing Bank in its capacity as such, or against any Related Party of any of the foregoing acting for the Agent (or any such sub-agent), the Arranger or the Issuing Bank in connection with such capacity.

 

(d)                                 Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.  No Indemnitee referred to in Section 12.03(b) shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the Transactions.

 

(e)                                  Payments.  All amounts due under this Section 12.03 shall be payable promptly after written demand therefor.

 

Section 12.04                      Assignments and Participations.

 

(a)                                 Successors and Assigns Generally.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues a Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender, and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except (A) to an assignee in accordance with the provisions of Section 12.04(b), (B) by way of participation in accordance with the provisions of Section 12.04(d), or (C) by way of pledge or assignment of a security interest subject to the restrictions of Section 12.04(f) (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate 

 

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of the Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in Section 12.04(d)) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

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

 

(i)                                     Minimum Amounts.

 

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

 

(B)                               in any case not described in Section 12.04(b)(i)(A), the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed).  No Term Lender may assign its Delayed Draw Commitment, or any portion thereof, except in connection with an assignment of a proportionate share of its outstanding Term Loans that otherwise satisfies the requirements of this Section.

 

(ii)                                  Proportionate Amounts.  Each partial assignment shall be made as an assignment of a proportionate part of all of the assigning Lender’s rights and obligations under this Agreement and with respect to the Loan or the Commitment assigned, except that this clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate Classes on a non-pro rata basis.

 

(iii)                               Required Consents.  No consent shall be required for any assignment except to the extent required by Section 12.04(b)(i)(B) and, in addition:

 

(A)                               the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof;

 

(B)                               the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of (1) a 

 

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Revolving Loan Commitment or Revolving Credit Exposure if such assignment is to a Person that is not a Lender with a Revolving Loan Commitment, an Affiliate of such Lender or an Approved Fund with respect to such Lender, (2) a Delayed Draw Commitment if such assignment is to a Person that is not a Lender with a Delayed Draw Commitment, an Affiliate of such Lender or an Approved Fund with respect to such Lender, or (3) Term Loans to a Person who is not a Lender, an Affiliate of a Lender or an Approved Fund; and

 

(C)                               the consent of the Issuing Bank (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in LC Exposure (whether or not then outstanding).

 

(iv)                              Assignment and Assumption.  The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 (unless the assignment is to a Lender or an Approved Fund), and the assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

(v)                                 No Assignment to Borrower.  No such assignment shall be made to the Borrower or any of the Borrower’s Affiliates or Subsidiaries.

 

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

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 12.04(c), from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Section 5.01, Section 5.02, Section 5.03 and Section 12.03 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 12.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 12.04(d).

 

(c)                                  Register.  The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the 

 

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Borrower, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.  In connection with any changes to the Register, if necessary, the Administrative Agent will reflect the revisions on Annex I and forward a copy of such revised Annex I to the Borrower, the Issuing Bank and each Lender.

 

(d)                                 Participations.

 

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

 

(ii)                                  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the proviso to Section 12.02 that affects such Participant.  In addition such agreement must provide that the Participant be bound by the provisions of Section 12.03.  Subject to Section 12.04(e), the Borrower agrees that each Participant shall be entitled to the benefits of Section 5.01, Section 5.02 and Section 5.03 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 12.04(b).  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 12.08 as though it were a Lender, provided that such Participant agrees to be subject to Section 4.01(c) as though it were a Lender.

 

(e)                                  Limitations upon Participant Rights.  A Participant shall not be entitled to receive any greater payment under Section 5.01 or Section 5.03 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 5.03 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 5.03(e) as though it were a Lender

 

(f)                                   Certain Pledges.  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including, without limitation, any pledge or assignment to secure obligations to a Federal Reserve Bank, and Section 12.04(e) shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a

 

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Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

(g)                                  Restrictions if Registration Required.  Notwithstanding any other provisions of this Section 12.04, no transfer or assignment of the interests or obligations of any Lender or any grant of participations therein shall be permitted if such transfer, assignment or grant would require the Borrower and the Guarantors to file a registration statement with the SEC or to qualify the Loans under the “Blue Sky” laws of any state.

 

Section 12.05                      Survival; Revival; Reinstatement.

 

(a)                                 All covenants, agreements, representations and warranties made by the Borrower herein 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 this Agreement 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 the Administrative Agent, any other Agent, the Issuing Bank or any Lender may have had notice or knowledge of any 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 and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated.  The provisions of Section 5.01, Section 5.02, Section 5.03 and Section 12.03 and Article XI shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement, any other Loan Document or any provision hereof or thereof.

 

(b)                                 To the extent that any payments on the Secured Obligations or proceeds of any Collateral are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy law, common law or equitable cause, then to such extent, the Secured Obligations so satisfied shall be revived and continue as if such payment or proceeds had not been received and the Administrative Agent’s and the Lenders’ Liens, security interests, rights, powers and remedies under this Agreement and each Loan Document shall continue in full force and effect.  In such event, each Loan Document shall be automatically reinstated and the Borrower shall take such action as may be reasonably requested by the Administrative Agent and the Lenders to effect such reinstatement.

 

Section 12.06                      Counterparts; Integration; Effectiveness; Electronic Execution.

 

(a)                                 Counterparts.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.

 

(b)                                 Integration.  This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire

 

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contract among the parties relating to the subject matter hereof and thereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof and thereof.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

(c)                                  Effectiveness.  Except as provided in Section 6.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

 

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

 

Section 12.07                      Severability.  Any provision of this Agreement or any other Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof or thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

Section 12.08                      Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Bank and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (of whatsoever kind, including, without limitations obligations under Hedging Agreements, and in whatever currency) at any time owing by such Lender, the Issuing Bank or any such Affiliate to or for the credit or the account of the Borrower or any Subsidiary against any and all of the obligations of the Borrower or any Subsidiary now or hereafter existing under this Agreement or any other Loan Document to such Lender or the Issuing Bank, irrespective of whether or not such Lender or the Issuing Bank shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower or such Subsidiary may be contingent or unmatured or are owed to a branch or office of such Lender or the Issuing Bank different from the branch or office holding such deposit or obligated on such Indebtedness.  The rights of each Lender, the Issuing Bank and their respective Affiliates under this Section 12.08 are in addition to other

 

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rights and remedies (including other rights of setoff) that such Lender, the Issuing Bank or their respective Affiliates may have.  Each Lender and the Issuing Bank agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

 

Section 12.09                      GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.

 

(a)                                 THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE, RESERVE OR TAKE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH LENDER IS LOCATED.  CHAPTER 346 OF THE TEXAS FINANCE CODE (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR THE NOTES.

 

(b)                                 ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS SHALL BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.  THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER ANOTHER PARTY IN ANY COURT OTHERWISE HAVING JURISDICTION.

 

(c)                                  EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.

 

(d)                                 EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL

 

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ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) AND FOR ANY COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.09.

 

Section 12.10                      Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

 

Section 12.11                      Confidentiality.  Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement or any other Loan Document, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 12.11, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any Hedging Agreement relating to the Borrower and its obligations, (g) with the consent of the Borrower, or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section 12.11 or (ii) becomes available to the Administrative Agent, the Issuing Bank, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower.  For purposes of this Section 12.11, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrower or a Subsidiary; provided that, in the case of information received from the Borrower or any Subsidiary after the date hereof, such information is clearly identified

 

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at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section 12.11 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 

Section 12.12                      Interest Rate Limitation.  It is the intention of the parties hereto that each Lender shall conform strictly to usury laws applicable to it.  Accordingly, if the Transactions contemplated hereby would be usurious as to any Lender under laws applicable to it (including the laws of the United States of America and the State of Texas or any other jurisdiction whose laws may be mandatorily applicable to such Lender notwithstanding the other provisions of this Agreement), then, in that event, notwithstanding anything to the contrary in any of the Loan Documents or any agreement entered into in connection with or as security for the Secured Obligations, it is agreed as follows: (a) the aggregate of all consideration which constitutes interest under law applicable to any Lender that is contracted for, taken, reserved, charged or received by such Lender under any of the Loan Documents or agreements or otherwise in connection with the Loans shall under no circumstances exceed the maximum amount allowed by such applicable law, and any excess shall be canceled automatically and if theretofore paid shall be credited by such Lender on the principal amount of the Secured Obligations (or, to the extent that the principal amount of the Secured Obligations shall have been or would thereby be paid in full, refunded by such Lender to the Borrower); and (b) in the event that the maturity of the Loans is accelerated by reason of an election of the holder thereof resulting from any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest under law applicable to any Lender may never include more than the maximum amount allowed by such applicable law, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically by such Lender as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by such Lender on the principal amount of the Secured Obligations (or, to the extent that the principal amount of the Secured Obligations shall have been or would thereby be paid in full, refunded by such Lender to the Borrower).  All sums paid or agreed to be paid to any Lender for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to such Lender, be amortized, prorated, allocated and spread throughout the stated term of the Loans until payment in full so that the rate or amount of interest on account of any Loans hereunder does not exceed the maximum amount allowed by such applicable law.  If at any time and from time to time (i) the amount of interest payable to any Lender on any date shall be computed at the Highest Lawful Rate applicable to such Lender pursuant to this Section 12.12 and (ii) in respect of any subsequent interest computation period the amount of interest otherwise payable to such Lender would be less than the amount of interest payable to such Lender computed at the Highest Lawful Rate applicable to such Lender, then the amount of interest payable to such Lender in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to such Lender until the total amount of interest payable to such Lender shall equal the total amount of interest which would have been payable to such Lender if the total amount of interest had been computed without giving effect to this Section 12.12.  To the extent that Chapter 303 of the Texas Finance Code is relevant for the purpose of determining the Highest Lawful Rate applicable to a Lender, such Lender elects to determine the applicable rate ceiling under such Chapter by the weekly ceiling from time to time

 

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in effect.  Chapter 346 of the Texas Finance Code does not apply to the Borrower’s obligations hereunder.

 

Section 12.13                      EXCULPATION PROVISIONS.  EACH OF THE PARTIES HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY.  EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”

 

Section 12.14                      Collateral Matters; Hedging Agreements; Treasury Management Agreements.  The benefit of the Security Instruments and of the provisions of this Agreement relating to any Collateral securing the Secured Obligations shall also extend to and be available to Secured Hedging Agreement Counterparties and Treasury Management Counterparties on a pro rata basis in respect of any obligations of the Borrower or any of its Subsidiaries which arise under any such Secured Hedging Agreement or Treasury Management Agreements.  No Lender or Affiliate of a Lender shall have any voting rights under any Loan Document as a result of the existence of obligations owed to it under any such Secured Hedging Agreements or Treasury Management Agreements.

 

Section 12.15                      No Third Party Beneficiaries.  This Agreement, the other Loan Documents, and the agreement of the Lenders to make Loans and the Issuing Bank to issue, amend, renew or extend Letters of Credit hereunder are solely for the benefit of the Borrower, and no other Person (including, without limitation, any Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier or materialman) shall have any rights, claims, remedies or privileges hereunder or under any other Loan Document against the Administrative Agent, any other Agent, the Issuing Bank or any Lender for any reason whatsoever.  There are no third party beneficiaries.

 

Section 12.16                      USA Patriot Act Notice.  Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “USA Patriot Act”), it is required to obtain, verify and record information that identifies the Borrower and its Subsidiaries, which information includes the

 

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name and address of the Borrower and its Subsidiaries and other information that will allow such Lender to identify the Borrower and its Subsidiaries in accordance with the USA Patriot Act.

 

Section 12.17                      Amendment and Restatement.  It is the intention of the Borrower, the Administrative Agent, and the Lenders, and such parties hereby agree, from and after the Effective Date, this Agreement supersedes and replaces the Existing Credit Agreement in its entirety, and that (a) such amendment and restatement shall operate to renew, amend and modify certain of the rights and obligations of the parties under the Existing Credit Agreement as provided herein, but shall not act as a novation thereof, and (b) the Liens securing the “Secured Obligations” under and as defined in the Existing Credit Agreement shall not be extinguished, but shall be carried forward and shall secure such obligations and Indebtedness as renewed, amended, restated, and modified hereby.  Unless specifically amended hereby, each of the Loan Documents, the Exhibits and the Schedules shall continue in full force and effect and, from and after the Effective Date, all references to the “Credit Agreement” contained therein shall be deemed to refer to this Agreement.

 

[SIGNATURES BEGIN NEXT PAGE]

 

117

 

The parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 

	
BORROWER:
    	
SOUTHCROSS   ENERGY LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Biegler
    
	
 
    	
 
    	
David   W. Biegler
    
	
 
    	
 
    	
Chairman   and Chief Executive Officer
    

 

[Signature Page]

AMENDED AND RESTATED CREDIT AGREEMENT

SOUTHCROSS ENERGY LLC

 

 

	
ADMINISTRATIVE   AGENT,
    	
 
    
	
ISSUING   BANK AND LENDER:
    	
WELLS   FARGO BANK, N.A.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Charles D. Kirkham
    
	
 
    	
 
    	
Charles   D. Kirkham
    
	
 
    	
 
    	
Managing   Director
    

 

[Signature Page]

AMENDED AND RESTATED CREDIT AGREEMENT

SOUTHCROSS ENERGY LLC

 

 

	
CO-SYNDICATION   AGENT
    	
 
    
	
AND   LENDER:
    	
COMPASS   BANK
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Spencer Stasney
    
	
 
    	
 
    	
Spencer   Stasney
    
	
 
    	
 
    	
Vice   President
    

 

[Signature Page]

AMENDED AND RESTATED CREDIT AGREEMENT

SOUTHCROSS ENERGY LLC

 

 

	
CO-SYNDICATION   AGENT
    	
 
    
	
AND   LENDER:
    	
SUNTRUST   BANK
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   J. Haynes Gentry III
    
	
 
    	
 
    	
J.   Haynes Gentry III
    
	
 
    	
 
    	
Vice   President
    

 

[Signature Page]

AMENDED AND RESTATED CREDIT AGREEMENT

SOUTHCROSS ENERGY LLC

 

 

	
CO-DOCUMENTATION   AGENT
    	
 
    
	
AND   LENDER:
    	
CITIBANK,   N.A.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   John Miller
    
	
 
    	
 
    	
John   Miller
    
	
 
    	
 
    	
Vice   President
    

 

[Signature Page]

AMENDED AND RESTATED CREDIT AGREEMENT

SOUTHCROSS ENERGY LLC

 

 

	
CO-DOCUMENTATION   AGENT
    	
 
    
	
AND   LENDER:
    	
U.S.   BANK NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark E. Thompson
    
	
 
    	
 
    	
Mark   E. Thompson
    
	
 
    	
 
    	
Senior   Vice President
    

 

[Signature Page]

AMENDED AND RESTATED CREDIT AGREEMENT

SOUTHCROSS ENERGY LLC

 

 

	
LENDER:
    	
AMEGY   BANK NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David T. Helffrich, III
    
	
 
    	
 
    	
David   T. Helffrich, III
    
	
 
    	
 
    	
Assistant   Vice President
    

 

[Signature Page]

AMENDED AND RESTATED CREDIT AGREEMENT

SOUTHCROSS ENERGY LLC

 

 

	
LENDER:
    	
BRANCH   BANKING AND TRUST COMPANY
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Parul June
    
	
 
    	
 
    	
Parul   June
    
	
 
    	
 
    	
Assistant   Vice President
    

 

[Signature Page]

AMENDED AND RESTATED CREDIT AGREEMENT

SOUTHCROSS ENERGY LLC

 

 

	
LENDER:
    	
COMERICA   BANK
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   John S. Lesikar
    
	
 
    	
 
    	
John   S. Lesikar
    
	
 
    	
 
    	
Assistant   Vice President
    

 

[Signature Page]

AMENDED AND RESTATED CREDIT AGREEMENT

SOUTHCROSS ENERGY LLC

 

 

	
LENDER:
    	
TEXAS   CAPITAL BANK, N.A.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   John E. Davis
    
	
 
    	
 
    	
John   E. Davis
    
	
 
    	
 
    	
Senior   Vice President
    

 

[Signature Page]

AMENDED AND RESTATED CREDIT AGREEMENT

SOUTHCROSS ENERGY LLC

 

 

	
LENDER:
    	
MIDFIRST   BANK
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Steve A. Griffin
    
	
 
    	
 
    	
Steve   A. Griffin
    
	
 
    	
 
    	
Senior   Vice President
    

 

[Signature Page]

AMENDED AND RESTATED CREDIT AGREEMENT

SOUTHCROSS ENERGY LLC

 

 

	
LENDER:
    	
RAYMOND   JAMES BANK, FSB
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Garrett McKinnon
    
	
 
    	
 
    	
Garrett   McKinnon
    
	
 
    	
 
    	
Senior   Vice President
    

 

[Signature Page]

AMENDED AND RESTATED CREDIT AGREEMENT

SOUTHCROSS ENERGY LLC

 

 

	
LENDER:
    	
CAPITAL   ONE, N.A.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Matthew L. Molero
    
	
 
    	
 
    	
Matthew   L. Molero
    
	
 
    	
 
    	
Vice   President
    

 

[Signature Page]

AMENDED AND RESTATED CREDIT AGREEMENT

SOUTHCROSS ENERGY LLC

 

 

ANNEX I
 LIST OF COMMITMENTS

 

	
Name of Lender
    	
 
    	
Effective Date
   Term Loan
   Commitment
    	
 
    	
Delayed Draw
   Commitment
    	
 
    	
Total Term
   Loan
   Commitment
    	
 
    	
Term Loan
   Percentage
    	
 
    	
Revolving Loan
   Commitment
    	
 
    	
Revolving Loan
   Percentage
    	
 
    
	
Wells   Fargo Bank, N.A.
    	
 
    	
$
    	
23,538,459.00
    	
 
    	
$
    	
3,384,618.00
    	
 
    	
$
    	
26,923,077.00
    	
 
    	
15.38461540646
    	
%
    	
$
    	
23,076,923.00
    	
 
    	
15.38461540646
    	
%
    
	
Compass   Bank
    	
 
    	
16,006,154.00
    	
 
    	
2,301,538.00
    	
 
    	
18,307,692.00
    	
 
    	
10.46153847640
    	
%
    	
15,692,308.00
    	
 
    	
10.46153847640
    	
%
    
	
SunTrust   Bank
    	
 
    	
16,006,154.00
    	
 
    	
2,301,538.00
    	
 
    	
18,307,692.00
    	
 
    	
10.46153847640
    	
%
    	
15,692,308.00
    	
 
    	
10.46153847640
    	
%
    
	
Citibank,   N.A.
    	
 
    	
16,006,154.00
    	
 
    	
2,301,538.00
    	
 
    	
18,307,692.00
    	
 
    	
10.46153847640
    	
%
    	
15,692,308.00
    	
 
    	
10.46153847640
    	
%
    
	
U.S.   Bank National Association
    	
 
    	
16,006,154.00
    	
 
    	
2,301,538.00
    	
 
    	
18,307,692.00
    	
 
    	
10.46153847640
    	
%
    	
15,692,308.00
    	
 
    	
10.46153847640
    	
%
    
	
Amegy   Bank National Association
    	
 
    	
12,946,154.00
    	
 
    	
1,861,538.00
    	
 
    	
14,807,692.00
    	
 
    	
8.46153847355
    	
%
    	
12,692,308.00
    	
 
    	
8.46153847355
    	
%
    
	
Branch   Banking and Trust Company
    	
 
    	
12,946,154.00
    	
 
    	
1,861,538.00
    	
 
    	
14,807,692.00
    	
 
    	
8.46153847355
    	
%
    	
12,692,308.00
    	
 
    	
8.46153847355
    	
%
    
	
Comerica   Bank
    	
 
    	
9,415,385.00
    	
 
    	
1,353,846.00
    	
 
    	
10,769,231.00
    	
 
    	
6.15384616259
    	
%
    	
9,230,769.00
    	
 
    	
6.15384616259
    	
%
    
	
Texas   Capital Bank, N.A.
    	
 
    	
9,415,385.00
    	
 
    	
1,353,846.00
    	
 
    	
10,769,231.00
    	
 
    	
6.15384616259
    	
%
    	
9,230,769.00
    	
 
    	
6.15384616259
    	
%
    
	
Midfirst   Bank
    	
 
    	
7,532,308.00
    	
 
    	
1,083,077.00
    	
 
    	
8,615,385.00
    	
 
    	
4.92307693007
    	
%
    	
7,384,615.00
    	
 
    	
4.92307693007
    	
%
    
	
Raymond   James Bank, FSB
    	
 
    	
7,532,308.00
    	
 
    	
1,083,077.00
    	
 
    	
8,615,385.00
    	
 
    	
4.92307693007
    	
%
    	
7,384,615.00
    	
 
    	
4.92307693007
    	
%
    
	
Capital   One, N.A.
    	
 
    	
5,649,231.00
    	
 
    	
812,308.00
    	
 
    	
6,461,539.00
    	
 
    	
3.69230755554
    	
%
    	
5,538,461.00
    	
 
    	
3.69230755554
    	
%
    
	
TOTAL
    	
 
    	
$
    	
153,000,000.00
    	
 
    	
$
    	
22,000,000.00
    	
 
    	
$
    	
175,000,000.00
    	
 
    	
100.00
    	
%
    	
$
    	
150,000,000.00
    	
 
    	
100.00
    	
%Exhibit 10.86(a)

 

THIRD AMENDED AND RESTATED

TREE.COM, INC.

2008 STOCK AND ANNUAL INCENTIVE PLAN

 

Section 1. Purpose; Definition

 

The Company’s Board originally adopted the Plan effective as of August 20, 2008 and the Plan was originally approved by Company stockholders on August 20, 2008.   The Plan has been subsequently amended and restated by the Board on two previous occasions with such restatements also approved by Company stockholders.  The Board’s most recent restatement of the Plan, the Third Amended and Restated Tree.com, Inc. 2008 Stock and Annual Incentive Plan (the “Third Plan Restatement”), was effected on February 22, 2012 (the “Board Approval Date”).  This Third Plan Restatement is conditioned upon and subject to obtaining Company stockholder approval before the first anniversary of the Board Approval Date.  The Third Plan Restatement and all of its terms shall become effective upon the date the Company stockholders approve the Third Plan Restatement, as long as such date is within twelve months of the Board Approval Date.   If Company stockholder approval is not obtained before the first anniversary of the Board Approval Date, the Third Plan Restatement shall be null and void.

 

The purpose of this Plan is (a) to give the Company a competitive advantage in attracting, retaining and motivating officers, employees, directors and/or consultants and to provide the Company and its Subsidiaries and Affiliates with a stock and incentive plan providing incentives directly linked to stockholder value and (b) to assume and govern other awards pursuant to the adjustment of awards granted under any IAC Long Term Incentive Plan (as defined in the Employee Matters Agreement) in accordance with the terms of the Employee Matters Agreement (“Adjusted Awards”).

 

Certain terms used herein have definitions given to them in the first place in which they are used. In addition, for purposes of this Plan, the following terms are defined as set forth below:

 

(a)  “Affiliate” means a corporation or other entity controlled by, controlling or under common control with, the Company.

 

(b)  “Applicable Exchange” means Nasdaq or such other securities exchange as may at the applicable time be the principal market for the Common Stock.

 

(c)  “Award” means an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, or Bonus Award or other stock based award granted or assumed pursuant to the terms of this Plan, including Adjusted Awards.

 

(d)  “Award Agreement” means a written or electronic document or agreement setting forth the terms and conditions of a specific Award.

 

(e)  “Beneficial Ownership” shall have the meaning given in Rule 13d-3 promulgated under the Exchange Act.

 

(f)  “Board” means the Board of Directors of the Company.

 

(g)  “Bonus Award” means a bonus award made pursuant to Section 9.

 

(h)  “Cause” means, unless otherwise provided in an Award Agreement, (i) “Cause” as defined in any Individual Agreement to which the applicable Participant is a party, or (ii) if there is no such Individual Agreement or if it does not define Cause: (A) the willful or gross neglect by a Participant of his employment duties; (B) the plea of guilty or nolo contendere to, or conviction for, the commission of a felony offense by a Participant; (C) a material breach by a Participant of a fiduciary duty owed to the Company or any of its subsidiaries; (D) a material breach by a Participant of any nondisclosure, non-solicitation or non-competition obligation owed to the Company or any of its Affiliates; or (E) before a Change in Control, such other events as shall be determined by the Committee and set forth in a Participant’s Award Agreement. Notwithstanding the general rule of Section 2(c), following a Change in Control, any determination by the Committee as to whether “Cause” exists shall be subject to de novo review.  The Board or Committee may in its discretion determine that a Participant’s employment with, or performance of services for, the Company and any of its Subsidiaries or Affiliates may be deemed to have been terminated for Cause if, after the Participant’s employment and/or service has terminated, facts and circumstances are discovered that would have justified a termination for Cause, including, without limitation, violation of material Company policies or breach of confidentiality or other restrictive covenants that may apply to the Participant.

 

(i)   “Change in Control” has the meaning set forth in Section 10(c).

 

Annex A-1

 

(j)  “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto, the Treasury Regulations thereunder and other relevant interpretive guidance issued by the Internal Revenue Service or the Treasury Department. Reference to any specific section of the Code shall be deemed to include such regulations and guidance, as well as any successor provision of the Code.

 

(k)  “Commission” means the Securities and Exchange Commission or any successor agency.

 

(l)  “Committee” has the meaning set forth in Section 2(a).

 

(m)  “Common Stock” means common stock, par value $0.01 per share, of the Company.

 

(n)  “Company” means Tree.com, Inc., a Delaware corporation, or its successor.

 

(o)  “Disability” means (i) “Disability” as defined in any Individual Agreement to which the Participant is a party, or (ii) if there is no such Individual Agreement or it does not define “Disability,” (A) permanent and total disability as determined under the Company’s long-term disability plan applicable to the Participant, or (B) if there is no such plan applicable to the Participant or the Committee determines otherwise in an applicable Award Agreement, “Disability” as determined by the Committee. Notwithstanding the above, with respect to an Incentive Stock Option, Disability shall mean Permanent and Total Disability as defined in Section 22(e)(3) of the Code and, with respect to each Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, the foregoing definition shall apply for purposes of vesting of such Award, provided that such Award shall not be settled until the earliest of: (i) the Participant’s “disability” within the meaning of Section 409A of the Code, or (ii) the Participant’s “separation from service” within the meaning of Section 409A of the Code and (iii) the date such Award would otherwise be settled pursuant to the terms of the Award Agreement.

 

(p)  “Disaffiliation” means a Subsidiary’s or Affiliate’s ceasing to be a Subsidiary or Affiliate for any reason (including, without limitation, as a result of a public offering, or a spinoff or sale by the Company, of the stock of the Subsidiary or Affiliate) or a sale of a division of the Company and its Affiliates.

 

(q)  “EBITA” means for any period, operating profit (loss) plus (i) amortization, including goodwill impairment, (ii) amortization of non-cash distribution and marketing expense and non-cash compensation expense, (iii) restructuring charges, (iv) non-cash write-downs of assets or goodwill, (v) charges relating to disposal of lines of business, (vi) litigation settlement amounts and (vii) costs incurred for proposed and completed acquisitions.

 

(r)  “EBITDA” means for any period, operating profit (loss) plus (i) depreciation and amortization, including goodwill impairment, (ii) amortization of non-cash distribution and marketing expense and non-cash compensation expense, (iii) restructuring charges, (iv) non-cash write-downs of assets or goodwill, (v) charges relating to disposal of lines of business, (vi) litigation settlement amounts and (vii) costs incurred for proposed and completed acquisitions.

 

(s)  “Eligible Individuals” means directors, officers, employees and consultants of the Company or any of its Subsidiaries or Affiliates, and prospective employees and consultants who have accepted offers of employment or consultancy from the Company or its Subsidiaries or Affiliates.

 

(t)  “Employee Matters Agreement” means the Employee Matters Agreement by and among IAC, Ticketmaster, Interval Leisure Group, Inc., HSN, Inc. and Tree.com, Inc.

 

(u)  “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto.

 

(v)  “Fair Market Value” means, unless otherwise determined by the Committee, the closing price of a share of Common Stock on the Applicable Exchange on the date of measurement, or if Shares were not traded on the Applicable Exchange on such measurement date, then on the next preceding date on which Shares were traded, all as reported by such source as the Committee may select. If the Common Stock is not listed on a national securities exchange, Fair Market Value shall be determined by the Committee in its good faith discretion, taking into account, to the extent appropriate, the requirements of Section 409A of the Code.

 

(w)     “Free-Standing SAR” has the meaning set forth in Section 5(b).

 

(x)      “Grant Date” means (i) the date on which the Committee by resolution selects an Eligible Individual to receive a grant of an Award and determines the number of Shares to be subject to such Award or the formula for earning a number of shares or cash

 

Annex A-2

 

amount, (ii) such later date as the Committee shall provide in such resolution or (iii) the initial date on which an Adjusted Award was granted under the IAC Long Term Incentive Plan.

 

(y)        “Group” shall have the meaning given in Section 13(d)(3) and 14(d)(2) of the Exchange Act.

 

(z)        “IAC” means IAC/InterActiveCorp, a Delaware corporation.

 

(aa)      “Incentive Stock Option” means any Option that is designated in the applicable Award Agreement as an “incentive stock option” within the meaning of Section 422 of the Code, and that in fact so qualifies.

 

(bb)      “Individual Agreement” means an employment, consulting or similar agreement between a Participant and the Company or one of its Subsidiaries or Affiliates.

 

(cc)       “Nasdaq” means the National Association of Securities Dealers Inc. Automated Quotation System.

 

(dd)       “Nonqualified Option” means any Option that is not an Incentive Stock Option.

 

(ee)       “Option” means an Award granted under Section 5.

 

(ff)        “Participant” means an Eligible Individual to whom an Award is or has been granted.

 

(gg)       “Performance Goals” means the performance goals established by the Committee in connection with the grant of Restricted Stock, Restricted Stock Units or Bonus Awards or other stock-based awards. In the case of Qualified Performance-Based Awards, (i) such goals shall be based on the attainment of one or any combination of the following: specified levels of earnings per share from continuing operations, net profit after tax, EBITDA, EBITA, gross profit, cash generation, unit volume, market share, sales, asset quality, earnings per share, operating income, revenues, return on assets, return on operating assets, return on equity, profits, total stockholder return (measured in terms of stock price appreciation and/or dividend growth), cost saving levels, marketing-spending efficiency, core non-interest income, change in working capital, return on capital, and/or stock price, with respect to the Company or any Subsidiary, Affiliate, division or department of the Company and (ii) such Performance Goals shall be set by the Committee within the time period prescribed by Section 162(m) of the Code and related regulations. Such Performance Goals also may be based upon the attaining of specified levels of Company, Subsidiary, Affiliate or divisional performance under one or more of the measures described above relative to the performance of other entities, divisions or subsidiaries.

 

(hh)       “Plan” means this Tree.com, Inc. 2008 Stock and Annual Incentive Plan, as set forth herein and as hereafter amended from time to time.

 

(ii)        “Plan Year” means the calendar year or, with respect to Bonus Awards, the Company’s fiscal year if different.

 

(jj)        “Qualified Performance-Based Award” means an Award intended to qualify for the Section 162(m) Exemption, as provided in Section 11.

 

(kk)      “Restricted Stock” means an Award granted under Section 6.

 

(ll)       “Restricted Stock Units” means an Award granted under Section 7.

 

(mm)   “Resulting Voting Power” shall mean the outstanding combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors (or equivalent governing body, if applicable) of the entity resulting from a Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries).

 

(nn)      “Retirement” means retirement from active employment with the Company, a Subsidiary or Affiliate at or after the Participant’s attainment of age 65.

 

(oo)      “Section 162(m) Exemption” means the exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C) of the Code.

 

(pp)     “Separation” has the meaning set forth in the Employee Matters Agreement.

 

Annex A-3

 

(qq)      “Share” means a share of Common Stock.

 

(rr)       “Specified Employee” shall mean any individual who is a “key employee” (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) with respect to the Company and its Affiliates, as determined by the Company (or the Affiliate, in the event that the Affiliate and the Company are not considered a single employer under Sections 414(b) or 414(c) of the Code) in accordance with its uniform policy with respect to all arrangements subject to Section 409A of the Code, based upon the twelve (12) month period ending on each December 31st. All individuals who are determined to be key employees under Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (without regard to paragraph (5) thereof) on December 31st shall be treated as Specified Employees for purposes of the Plan during the twelve (12) month period that begins on the following April 1st.

 

(ss)       “Stock Appreciation Right” has the meaning set forth in Section 5(b).

 

(tt)       “Subsidiary” means any corporation, partnership, joint venture, limited liability company or other entity during any period in which at least a 50% voting or profits interest is owned, directly or indirectly, by the Company or any successor to the Company.

 

(uu)     “Tandem SAR” has the meaning set forth in Section 5(b).

 

(vv)     “Term” means the maximum period during which an Option or Stock Appreciation Right may remain outstanding, subject to earlier termination upon Termination of Employment or otherwise, as specified in the applicable Award Agreement.

 

(ww)  “Termination of Employment” means the termination of the applicable Participant’s employment with, or performance of services for, the Company and any of its Subsidiaries or Affiliates. Unless otherwise determined by the Committee, if a Participant’s employment with, or membership on a board of directors of the Company and its Affiliates terminates but such Participant continues to provide services to the Company and its Affiliates in a non-employee director capacity or as an employee, as applicable, such change in status shall not be deemed a Termination of Employment. A Participant employed by, or performing services for, a Subsidiary or an Affiliate or a division of the Company and its Affiliates shall be deemed to incur a Termination of Employment if, as a result of a Disaffiliation, such Subsidiary, Affiliate, or division ceases to be a Subsidiary, Affiliate or division, as the case may be, and the Participant does not immediately thereafter become an employee of (or service provider for), or member of the board of directors of, the Company or another Subsidiary or Affiliate. Temporary absences from employment because of illness, vacation or leave of absence and transfers among the Company and its Subsidiaries and Affiliates shall not be considered Terminations of Employment. Notwithstanding the foregoing, with respect to any Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, “Termination of Employment” shall mean a “separation from service” as defined under Section 409A of the Code. For the avoidance of doubt, the Separation shall not constitute a Termination of Employment for purposes of any Adjusted Award.  However, for purposes of determining whether an employee’s outstanding Incentive Stock Options are eligible to continue to qualify as Incentive Stock Options (and not become Nonqualifed Options), an employee’s employment and/or services will be treated as terminating three (3) months after such employee went on leave, unless such employee’s right to return to active work is guaranteed by law or by a contract.

 

(xx)     “10-Percent Shareholder” means an individual who owns more than ten percent (10%) of the total combined voting power of all classes of outstanding stock of the Company, its parent corporation or any of its Subsidiaries.  In determining stock ownership, the attribution rules of Section 424(d) of the Code shall be applied.

 

Section 2. Administration

 

(a)  Committee.  The Plan shall be administered by the Compensation Committee of the Board or such other committee of the Board as the Board may from time to time designate (the “Committee”), which shall be composed of not less than two directors, and shall be appointed by and serve at the pleasure of the Board. The Committee shall, subject to Section 11, have plenary authority to grant Awards pursuant to the terms of the Plan to Eligible Individuals. Among other things, the Committee shall have the authority, subject to the terms and conditions of the Plan and the Employee Matters Agreement (including the original terms of the grant of the Adjusted Award):

 

(i)                                     to select the Eligible Individuals to whom Awards may from time to time be granted;

 

Annex A-4

 

(ii)                                  to determine whether and to what extent Incentive Stock Options, Nonqualified Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, other stock-based awards, or any combination thereof, are to be granted hereunder;

 

(iii)                               to determine the number of Shares to be covered by each Award granted hereunder;

 

(iv)                              to determine the terms and conditions, including Performance Goals (if any) and their degree of satisfaction, of each Award granted hereunder, based on such factors as the Committee shall determine;

 

(v)                                 subject to Section 12, to modify, amend or adjust the terms and conditions of any Award;

 

(vi)                              to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall from time to time deem advisable;

 

(vii)                         subject to Section 11, to accelerate the vesting or lapse of restrictions of any outstanding Award, based in each case on such considerations as the Committee in its sole discretion determines;

 

(viii)                      to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any agreement relating thereto);

 

(ix)                                to establish any “blackout” period that the Committee in its sole discretion deems necessary or advisable;

 

(x)                                 to determine whether, to what extent, and under what circumstances cash, Shares, and other property and other amounts payable with respect to an Award under this Plan shall be deferred either automatically or at the election of the Participant;

 

(xi)                                to decide all other matters that must be determined in connection with an Award; and

 

(xii)                             to otherwise administer the Plan.

 

(b)  Procedures.

 

(i)                                   The Committee may act only by a majority of its members then in office, except that the Committee may, except to the extent prohibited by applicable law or the listing standards of the Applicable Exchange and subject to Section 11, allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it.

 

(ii)                                Subject to Section 11(c), any authority granted to the Committee may also be exercised by the full Board. To the extent that any permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control.

 

(c)  Discretion of Committee.  Subject to Section 1(h), any determination made by the Committee or by an appropriately delegated officer pursuant to delegated authority under the provisions of the Plan with respect to any Award shall be made in the sole discretion of the Committee or such delegate at the time of the grant of the Award or, unless in contravention of any express term of the Plan, at any time thereafter. All decisions made by the Committee or any appropriately delegated officer pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company, Participants, and Eligible Individuals.

 

(d)  Award Agreements.  The terms and conditions of each Award, as determined by the Committee, shall be set forth in an Award Agreement, which shall be delivered to the Participant receiving such Award upon, or as promptly as is reasonably practicable following, the grant of such Award. The effectiveness of an Award shall not be subject to the Award Agreement’s being signed by the Company and/or the Participant receiving the Award unless specifically so provided in the Award Agreement. Award Agreements may be amended only in accordance with Section 12 hereof. Notwithstanding any provision of the Plan or an Award Agreement to the contrary, in the event that any term of an Award Agreement conflicts with any provision of the Plan that specifically pertains to Section 409A of the Code, the provision of the Plan shall govern.

 

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Section 3. Common Stock Subject to Plan

 

(a)  Plan Maximums.  The maximum number of Shares that may be delivered pursuant to Awards under the Plan shall be the sum of (a) the number of Shares that may be issuable upon exercise or vesting of the Adjusted Awards and (b) 3,350,000. The maximum number of Shares that are permitted to be issued pursuant to the exercise of Incentive Stock Options granted under the Plan as described in Section 5 shall be 1,833,333Shares. Shares subject to an Award under the Plan may be authorized and unissued Shares or may be treasury Shares.

 

(b)  Individual Limits.  No Participant may be granted Awards covering in excess of  1,833,333  Shares during the term of the Plan (i.e., August  20, 2008 — August 20, 2018); provided that Adjusted Awards shall not be subject to this limitation.

 

(c)  Rules for Calculating Shares Delivered.

 

(i)                                     With respect to Awards other than Adjusted Awards, to the extent that any Award is forfeited, or any Option and the related Tandem SAR (if any) or Free-Standing SAR terminates, expires or lapses without being exercised (specifically including the Award contemplated by clause (iii) below), or any Award is settled for cash, (A) the Shares subject to such Awards not delivered as a result thereof shall again be available for Awards under the Plan and (B) other than with respect to any Awards settled for cash, such Shares shall no longer be counted when calculating the respective Participant’s individual limit set forth in Section 3(b).

 

(ii)                               With respect to Awards other than Adjusted Awards, if the exercise price of any Option and/or the tax withholding obligations relating to any Award are satisfied by delivering Shares to the Company (by either actual delivery or by attestation), only the number of Shares issued net of the Shares delivered or attested to shall be deemed delivered for purposes of the limits set forth in Section 3(a). To the extent any Shares subject to an Award are withheld to satisfy the exercise price (in the case of an Option) and/or the tax withholding obligations relating to such Award, such Shares shall not be deemed to have been delivered for purposes of the limits set forth in Section 3(a).

 

(iii)                            Notwithstanding anything in this Plan to the contrary (including Sections 5(d) and 12(c) hereof), Douglas R. Lebda may surrender for cancellation an option to purchase 589,500 shares of Common Stock with an exercise price of $25.43 per share awarded on August 21, 2008 and the Shares subject to such Option shall be available for future Awards under the Plan (including to Mr. Lebda) immediately following such surrender.

 

(iv)                              Any dividend equivalents distributed under the Plan shall count against the Share limits set forth in Sections 3(a) and (b).  Dividend equivalents will not be paid (or accrue) on unexercised Options or unexercised Stock Appreciation Rights.

 

(d)  Adjustment Provision.  In the event of a merger, consolidation, acquisition of property or shares, stock rights offering, liquidation, Disaffiliation, or similar event affecting the Company or any of its Subsidiaries (each, a “Corporate Transaction”), the Committee or the Board may in its discretion make such substitutions or adjustments as it deems appropriate and equitable to (i) the aggregate number and kind of Shares or other securities reserved for issuance and delivery under the Plan, (ii) the various maximum limitations set forth in Sections 3(a) and 3(b) upon certain types of Awards and upon the grants to individuals of certain types of Awards, (iii) the number and kind of Shares or other securities subject to outstanding Awards; and (iv) the exercise price of outstanding Options and Stock Appreciation Rights. In the event of a stock dividend, stock split, reverse stock split, separation, spinoff, reorganization, extraordinary dividend of cash or other property, share combination, or recapitalization or similar event affecting the capital structure of the Company (each, a “Share Change”), the Committee or the Board shall make such substitutions or adjustments as it deems appropriate and equitable to (i) the aggregate number and kind of Shares or other securities reserved for issuance and delivery under the Plan, (ii) the various maximum limitations set forth in Sections 3(a) and 3(b) upon certain types of Awards and upon the grants to individuals of certain types of Awards, (iii) the number and kind of Shares or other securities subject to outstanding Awards; and (iv) the exercise price of outstanding Options and Stock Appreciation Rights. In the case of Corporate Transactions, such adjustments may include, without limitation, (1) the cancellation of outstanding Awards in exchange for payments of cash, property or a combination thereof having an aggregate value equal to the value of such Awards, as determined by the Committee or the Board in its sole discretion (it being understood that in the case of a Corporate Transaction with respect to which stockholders of Common Stock receive consideration other than publicly traded equity securities of the ultimate surviving entity, any such determination by the Committee that the value of an Option or Stock Appreciation Right shall for this purpose be deemed to

 

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equal the excess, if any, of the value of the consideration being paid for each Share pursuant to such Corporate Transaction over the exercise price of such Option or Stock Appreciation Right shall conclusively be deemed valid); (2) the substitution of other property (including, without limitation, cash or other securities of the Company and securities of entities other than the Company) for the Shares subject to outstanding Awards; and (3) in connection with any Disaffiliation, arranging for the assumption of Awards, or replacement of Awards with new awards based on other property or other securities (including, without limitation, other securities of the Company and securities of entities other than the Company), by the affected Subsidiary, Affiliate, or division or by the entity that controls such Subsidiary, Affiliate, or division following such Disaffiliation (as well as any corresponding adjustments to Awards that remain based upon Company securities). The Committee may adjust in its sole discretion the Performance Goals applicable to any Awards to reflect any Share Change and any Corporate Transaction and any unusual or non-recurring events and other extraordinary items, impact of charges for restructurings, discontinued operations, and the cumulative effects of accounting or tax changes, each as defined by generally accepted accounting principles or as identified in the Company’s financial statements, notes to the financial statements, management’s discussion and analysis or the Company’s other SEC filings, provided that in the case of Performance Goals applicable to any Qualified Performance-Based Awards, such adjustment does not violate Section 162(m) of the Code. Any adjustment under this Section 3(d) need not be the same for all Participants.  Any adjustment of Shares pursuant to this Section 3(d) shall be rounded down to the nearest whole number of Shares.  Under no circumstances shall the Company be required to authorize or issue fractional shares.  To the extent permitted by applicable law, no consideration shall be provided as a result of any fractional shares not being issued or authorized.

 

(e)  Section 409A.  Notwithstanding the foregoing: (i) any adjustments made pursuant to Section 3(d) to Awards that are considered “deferred compensation” within the meaning of Section 409A of the Code shall be made in compliance with the requirements of Section 409A of the Code; (ii) any adjustments made pursuant to Section 3(d) to Awards that are not considered “deferred compensation” subject to Section 409A of the Code shall be made in such a manner as to ensure that after such adjustment, the Awards either (A) continue not to be subject to Section 409A of the Code or (B) comply with the requirements of Section 409A of the Code; and (iii) in any event, neither the Committee nor the Board shall have the authority to make any adjustments pursuant to Section 3(d) to the extent the existence of such authority would cause an Award that is not intended to be subject to Section 409A of the Code at the Grant Date to be subject thereto as of the Grant Date.

 

Section 4. Eligibility

 

Awards may be granted under the Plan to Eligible Individuals and, with respect to Adjusted Awards, in accordance with the terms of the Employee Matters Agreement; provided, however, that Incentive Stock Options may be granted only to employees of the Company and its subsidiaries or parent corporation (within the meaning of Section 424(f) of the Code) and, with respect to Adjusted Awards that are intended to qualify as incentive stock options within the meaning of Section 421 of the Code, in accordance with the terms of the Employee Matters Agreement.

 

Section 5. Options and Stock Appreciation Rights

 

With respect to Adjusted Awards, the provisions below will be applicable only to the extent that they are not inconsistent with the Employee Matters Agreement and the terms of the Adjusted Award assumed under the Employee Matters Agreement:

 

(a)  Types of Options.  Options may be of two types: Incentive Stock Options and Nonqualified Options. The Award Agreement for an Option shall indicate whether the Option is intended to be an Incentive Stock Option or a Nonqualified Option.  An employee who is a 10-Percent Shareholder shall not be eligible for the grant of an Incentive Stock Option unless the requirements set forth in Section 422(c)(5) of the Code are satisfied.  If and to the extent that any Shares are issued under a portion of any Option that exceeds the $100,000 limitation of Section 422 of the Code, such Shares shall not be treated as issued under an Incentive Stock Option notwithstanding any designation otherwise. Certain decisions, amendments, interpretations and actions by the Company or Committee and certain actions by a Participant may cause an Option to cease to qualify as an Incentive Stock Option pursuant to the Code and by accepting an Option, the Participant agrees in advance to such disqualifying action(s).

 

(b)  Types and Nature of Stock Appreciation Rights.  Stock Appreciation Rights may be “Tandem SARs,” which are granted in conjunction with an Option, or “Free-Standing SARs,” which are not granted in conjunction with an Option. Upon the exercise of a Stock Appreciation Right, the Participant shall be entitled to receive an amount in cash, Shares, or both, in value equal to the product of (i) the excess of the Fair Market Value of one Share over the exercise price of the applicable Stock Appreciation Right, multiplied by (ii) the number of Shares in respect of which the Stock Appreciation Right has been exercised. The applicable Award Agreement shall specify whether such payment is to be made in cash or Common Stock or both, or shall reserve to the Committee or the Participant the right to make that determination prior to or upon the exercise of the Stock Appreciation Right.

 

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(c)  Tandem SARs.  A Tandem SAR may be granted at the Grant Date of the related Option. A Tandem SAR shall be exercisable only at such time or times and to the extent that the related Option is exercisable in accordance with the provisions of this Section 5, and shall have the same exercise price as the related Option. A Tandem SAR shall terminate or be forfeited upon the exercise or forfeiture of the related Option, and the related Option shall terminate or be forfeited upon the exercise or forfeiture of the Tandem SAR.

 

(d)  Exercise Price.  The exercise price per Share subject to an Option or Free-Standing SAR shall be determined by the Committee and set forth in the applicable Award Agreement, and shall not be less than the Fair Market Value of a Share (or less than 110% for 10-Percent Shareholders in the case of Incentive Stock Options) on the applicable Grant Date. In no event may any Option or Free-Standing SAR granted under this Plan be amended, other than pursuant to Section 3(d), to decrease the exercise price thereof, be cancelled in conjunction with the grant of any new Option or Free-Standing SAR with a lower exercise price or otherwise be subject to any action that would be treated, for accounting purposes, as a “repricing” of such Option or Free-Standing SAR, unless such amendment, cancellation, or action is approved by the Company’s stockholders.

 

(e)  Term.  The Term of each Option and each Free-Standing SAR shall be fixed by the Committee, but shall not exceed ten years from the Grant Date.  Notwithstanding anything to the contrary, an Incentive Stock Option that is granted to a 10-Percent Shareholder shall have a maximum term of five years.

 

(f)  Vesting and Exercisability.  Except as otherwise provided herein, Options and Free-Standing SARs shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee. If the Committee provides that any Option or Free-Standing SAR will become exercisable only in installments, the Committee may at any time waive such installment exercise provisions, in whole or in part, based on such factors as the Committee may determine. In addition, the Committee may at any time accelerate the exercisability of any Option or Free-Standing SAR.

 

(g)  Method of Exercise.  Subject to the provisions of this Section 5, Options and Free-Standing SARs may be exercised, in whole or in part, at any time during the applicable Term by giving written notice of exercise to the Company or through the procedures established with the Company’s appointed third-party Option administrator specifying the number of Shares as to which the Option or Free-Standing SAR is being exercised; provided, however, that, unless otherwise permitted by the Committee, any such exercise must be with respect to a portion of the applicable Option or Free-Standing SAR relating to no less than the lesser of the number of Shares then subject to such Option or Free-Standing SAR or 100 Shares. In the case of the exercise of an Option, such notice shall be accompanied by payment in full of the purchase price (which shall equal the product of such number of Shares multiplied by the applicable exercise price) by certified or bank check or such other instrument as the Company may accept. If approved by the Committee, payment, in full or in part, may also be made as follows:

 

(i)          Payments may be made in the form of unrestricted Shares (by delivery of such Shares or by attestation) of the same class as the Common Stock subject to the Option already owned by the Participant (based on the Fair Market Value of the Common Stock on the date the Option is exercised); provided, however, that, in the case of an Incentive Stock Option, the right to make a payment in the form of already owned Shares of the same class as the Common Stock subject to the Option may be authorized only at the time the Option is granted.

 

(ii)          To the extent permitted by applicable law, payment may be made by delivering a properly executed exercise notice to the Company, together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds necessary to pay the purchase price, and, if requested, the amount of any federal, state, local or foreign withholding taxes. To facilitate the foregoing, the Company may, to the extent permitted by applicable law, enter into agreements for coordinated procedures with one or more brokerage firms. To the extent permitted by applicable law, the Committee may also provide for Company loans to be made for purposes of the exercise of Options.

 

(iii)        Payment may be made by instructing the Company to withhold a number of Shares having a Fair Market Value (based on the Fair Market Value of the Common Stock on the date the applicable Option is exercised) equal to the product of (A) the exercise price multiplied by (B) the number of Shares in respect of which the Option shall have been exercised.

 

(h)  Delivery; Rights of Stockholders.  No Shares shall be delivered pursuant to the exercise of an Option until the exercise price therefor has been fully paid and the Participant has satisfied any applicable withholding or tax obligations relating to the Option. The applicable Participant shall have all of the rights of a stockholder of the Company holding the class or series of Common Stock

 

Annex A-8

 

that is subject to the Option or Stock Appreciation Right (including, if applicable, the right to vote the applicable Shares and the right to receive dividends), when the Participant (i) has given written notice of exercise, (ii) if requested, has given the representation described in Section 14(a), (iii) in the case of an Option, has paid in full for such Shares, and (iv) has satisfied any applicable withholding or tax obligations relating to the Option or Stock Appreciation Right.

 

(i)  Terminations of Employment.  Subject to Section 10, a Participant’s Options and Stock Appreciation Rights shall be forfeited upon such Participant’s Termination of Employment, except as set forth below:

 

(i)           Upon a Participant’s Termination of Employment by reason of death, any Option or Stock Appreciation Right held by the Participant that was exercisable immediately before the Termination of Employment may be exercised at any time until the earlier of (A) the first anniversary of the date of such death and (B) the expiration of the Term thereof;

 

(ii)         Upon a Participant’s Termination of Employment by reason of Disability or Retirement, any Option or Stock Appreciation Right held by the Participant that was exercisable immediately before the Termination of Employment may be exercised at any time until the earlier of (A) the first anniversary of such Termination of Employment and (B) the expiration of the Term thereof;

 

(iii)        Upon a Participant’s Termination of Employment for Cause, any Option or Stock Appreciation Right held by the Participant shall be forfeited, effective as of such Termination of Employment;

 

(iv)        Upon a Participant’s Termination of Employment for any reason other than death, Disability, Retirement or for Cause, any Option or Stock Appreciation Right held by the Participant that was exercisable immediately before the Termination of Employment may be exercised at any time until the earlier of (A) three months following such Termination of Employment and (B) expiration of the Term thereof; and

 

(v)         Notwithstanding the above provisions of this Section 5(i), if a Participant dies after such Participant’s Termination of Employment but while any Option or Stock Appreciation Right remains exercisable as set forth above, such Option or Stock Appreciation Right may be exercised at any time until the later of (A) the earlier of (1) the first anniversary of the date of such death and (2) expiration of the Term thereof and (B) the last date on which such Option or Stock Appreciation Right would have been exercisable, absent this Section 5(i)(v).

 

Notwithstanding the foregoing, the Committee shall have the power, in its discretion, to apply different rules concerning the consequences of a Termination of Employment; provided, however, that if such rules are less favorable to the Participant than those set forth above, such rules are set forth in the applicable Award Agreement. If an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Option will thereafter be treated as a Nonqualified Option.

 

(j)  Nontransferability of Options and Stock Appreciation Rights.  No Option or Free-Standing SAR shall be transferable by a Participant other than (i) by will or by the laws of descent and distribution, or (ii) in the case of a Nonqualified Option or Free-Standing SAR, pursuant to a qualified domestic relations order or as otherwise expressly permitted by the Committee including, if so permitted, pursuant to a transfer to the Participant’s family members or to a charitable organization, whether directly or indirectly or by means of a trust or partnership or otherwise. For purposes of this Plan, unless otherwise determined by the Committee, “family member” shall have the meaning given to such term in General Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933, as amended, and any successor thereto. A Tandem SAR shall be transferable only with the related Option as permitted by the preceding sentence. Any Option or Stock Appreciation Right shall be exercisable, subject to the terms of this Plan, only by the applicable Participant, the guardian or legal representative of such Participant, or any person to whom such Option or Stock Appreciation Right is permissibly transferred pursuant to this Section 5(j), it being understood that the term “Participant” includes such guardian, legal representative and other transferee; provided, however, that the term “Termination of Employment” shall continue to refer to the Termination of Employment of the original Participant.

 

Section 6. Restricted Stock

 

With respect to Adjusted Awards, the provisions below will be applicable only to the extent that they are not inconsistent with the Employee Matters Agreement and the terms of the Adjusted Award assumed under the Employee Matters Agreement:

 

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(a)   Nature of Awards and Certificates.  Shares of Restricted Stock are actual Shares issued to a Participant, and shall be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of one or more stock certificates. Any certificate issued in respect of Shares of Restricted Stock shall be registered in the name of the applicable Participant and, in the case of Restricted Stock, shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, substantially in the following form, in addition to any other legend the Committee determines appropriate:

 

“The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the Tree.com, Inc. 2008 Stock and Annual Incentive Plan and an Award Agreement. Copies of such Plan and Agreement are on file at the offices of Tree.com, Inc., 11115 Rushmore Drive, Charlotte, NC 28277.”

 

The Committee may require that the certificates evidencing such shares be held in custody by the Company until the restrictions thereon shall have lapsed and that, as a condition of any Award of Restricted Stock, the applicable Participant shall have delivered a stock power, endorsed in blank, relating to the Common Stock covered by such Award.

 

(b)   Terms and Conditions.  Shares of Restricted Stock shall be subject to the following terms and conditions:

 

(i)          The Committee shall, prior to or at the time of grant, condition the vesting or transferability of an Award of Restricted Stock upon the continued service of the applicable Participant or the attainment of Performance Goals, or the attainment of Performance Goals and the continued service of the applicable Participant. In the event that the Committee conditions the grant or vesting of an Award of Restricted Stock upon the attainment of Performance Goals or the attainment of Performance Goals and the continued service of the applicable Participant, the Committee may, prior to or at the time of grant, designate such an Award as a Qualified Performance-Based Award. The conditions for grant, vesting, or transferability and the other provisions of Restricted Stock Awards (including without limitation any Performance Goals) need not be the same with respect to each Participant.

 

(ii)         Subject to the provisions of the Plan and the applicable Award Agreement, during the period, if any, set by the Committee, commencing with the date of such Restricted Stock Award for which such vesting restrictions apply and until the expiration of such vesting restrictions (the “Restriction Period”), the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Shares of Restricted Stock.

 

(iii)        Except as provided in this Section 6 and in the applicable Award Agreement, the applicable Participant shall have, with respect to the Shares of Restricted Stock, all of the rights of a stockholder of the Company holding the class or series of Common Stock that is the subject of the Restricted Stock, including, if applicable, the right to vote the Shares and the right to receive any cash dividends. If so determined by the Committee in the applicable Award Agreement and subject to Section 14(e), (A) cash dividends on the class or series of Common Stock that is the subject of the Restricted Stock Award shall be automatically deferred and reinvested in additional Restricted Stock, held subject to the vesting of the underlying Restricted Stock, and (B) subject to any adjustment pursuant to Section 3(d), dividends payable in Common Stock shall be paid in the form of Restricted Stock of the same class as the Common Stock with which such dividend was paid, held subject to the vesting of the underlying Restricted Stock.

 

(iv)         Except as otherwise set forth in the applicable Award Agreement, upon a Participant’s Termination of Employment for any reason during the Restriction Period, all Shares of Restricted Stock still subject to restriction shall be forfeited by such Participant without consideration (except for repayment of any amounts the Participant had paid to the Company to acquire unvested Shares underlying the forfeited Awards); provided, however, that subject to Section 11(b), the Committee shall have the discretion to waive, in whole or in part, any or all remaining restrictions with respect to any or all of such Participant’s Shares of Restricted Stock.

 

(v)          If and when any applicable Performance Goals are satisfied and the Restriction Period expires without a prior forfeiture of the Shares of Restricted Stock for which legended certificates have been issued, unlegended certificates for such Shares shall be delivered to the Participant upon surrender of the legended certificates.

 

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Section 7. Restricted Stock Units

 

With respect to Adjusted Awards, the provisions below will be applicable only to the extent that they are not inconsistent with the Employee Matters Agreement and the terms of the Adjusted Award assumed under the Employee Matters Agreement:

 

(a)   Nature of Awards.  Restricted Stock Units are Awards denominated in Shares that will be settled, subject to the terms and conditions of the Restricted Stock Units, in an amount in cash, Shares or both, based upon the Fair Market Value of a specified number of Shares.

 

(b)   Terms and Conditions.  Restricted Stock Units shall be subject to the following terms and conditions:

 

(i)            The Committee shall, prior to or at the time of grant, condition the grant, vesting, or transferability of Restricted Stock Units upon the continued service of the applicable Participant or the attainment of Performance Goals, or the attainment of Performance Goals and the continued service of the applicable Participant. In the event that the Committee conditions the grant or vesting of Restricted Stock Units upon the attainment of Performance Goals or the attainment of Performance Goals and the continued service of the applicable Participant, the Committee may, prior to or at the time of grant, designate such Awards as Qualified Performance-Based Awards. The conditions for grant, vesting or transferability and the other provisions of Restricted Stock Units (including without limitation any Performance Goals) need not be the same with respect to each Participant. Except as otherwise provided in Section 7(b)(iv) or in the applicable Award Agreement, an Award of Restricted Stock Units shall be settled if and when the Restricted Stock Units vest(but in no event later than two and a half months after the end of the fiscal year in which the Restricted Stock Unit vest).

 

(ii)           Subject to the provisions of the Plan and the applicable Award Agreement, during the period, if any, set by the Committee, commencing with the date of such Restricted Stock Units for which such vesting restrictions apply and until the expiration of such vesting restrictions (the “Restriction Period”), the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Restricted Stock Units.

 

(iii)          The Award Agreement for Restricted Stock Units shall specify whether, to what extent and on what terms and conditions the applicable Participant shall be entitled to receive current or deferred payments of cash, Common Stock or other property corresponding to the dividends payable on the Common Stock (subject to Section 14(e) below).

 

(iv)          Except as otherwise set forth in the applicable Award Agreement, upon a Participant’s Termination of Employment for any reason during the Restriction Period, all Restricted Stock Units still subject to restriction shall be forfeited by such Participant; provided, however, that subject to Section 11(b), the Committee shall have the discretion to waive, in whole or in part, any or all remaining restrictions with respect to any or all of such Participant’s Restricted Stock Units, provided, however, if any of such Participant’s Restricted Stock Units constitute a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, settlement of such Restricted Stock Units shall not occur until the earliest of (1) the date such Restricted Stock Units would otherwise be settled pursuant to the terms of the Award Agreement or (2) the Participant’s “separation of service” within the meaning of Section 409A of the Code.

 

Section 8. Other Stock-Based Awards

 

Other Awards of Common Stock and other Awards that are valued in whole or in part by reference to, or are otherwise based upon or settled in, Common Stock, including (without limitation), unrestricted stock, performance units, dividend equivalents, and convertible debentures, may be granted under the Plan.

 

Section 9. Bonus Awards

 

(a)  Determination of Awards.  The Committee shall determine the total amount of Bonus Awards for each Plan Year or such shorter performance period as the Committee may establish in its sole discretion. Prior to the beginning of the Plan Year or such shorter performance period as the Committee may establish in its sole discretion (or such later date as may be prescribed by the

 

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Internal Revenue Service under Section 162(m) of the Code), the Committee shall establish Performance Goals for Bonus Awards for the Plan Year or such shorter period; provided, that such Performance Goals may be established at a later date for Participants who are not “covered employees” (within the meaning of Section 162(m)(3) of the Code). Bonus amounts payable to any individual Participant with respect to a Plan Year will be limited to a maximum of $10 million. For performance periods that are shorter than a Plan Year, such $10 million maximum may be prorated if so determined by the Committee.

 

(b)  Payment of Awards.  Bonus Awards under the Plan shall be paid in cash or in shares of Common Stock (valued at Fair Market Value as of the date of payment) as determined by the Committee, as soon as practicable following the close of the Plan Year or such shorter performance period as the Committee may establish. Bonus Awards under the Plan that are paid in shares of Common Stock shall count against the limits set forth in Sections 3(a) and (b) of the Plan.  It is intended that a Bonus Award will be paid no later than the fifteenth (15th) day of the third month following the later of: (i) the end of the Participant’s taxable year in which the requirements for such Bonus Award have been satisfied by the Participant or (ii) the end of the Company’s fiscal year in which the requirements for such Bonus Award have been satisfied by the Participant. The Committee may at its option establish procedures pursuant to which Participants are permitted to defer the receipt of Bonus Awards payable hereunder. The Bonus Award for any Plan Year or such shorter performance period to any Participant may be reduced or eliminated by the Committee in its discretion.

 

Section 10. Change in Control Provisions

 

(a)  Adjusted Awards.  With respect to all Adjusted Awards, subject to Sections 3(d), 3(e), 10(e) and 14(k) unless otherwise provided in the applicable Award Agreement, notwithstanding any other provision of this Plan to the contrary, upon a Participant’s Termination of Employment, during the two-year period following a Change in Control, by the Company other than for Cause or Disability or by the Participant for Good Reason (as defined below):

 

(i)            Any Options outstanding as of such Termination of Employment which were outstanding as of the date of such Change in Control (and were not cancelled, substituted, assumed or replaced in connection with such Change in Control) shall be fully exercisable and vested and shall remain exercisable until the later of (i) the last date on which such Option would be exercisable in the absence of this Section 10(a) and (ii) the earlier of (A) the first anniversary of such Change in Control and (B) expiration of the Term of such Option;

 

(ii)           The restrictions and deferral limitations applicable to any Restricted Stock shall lapse, and such Restricted Stock outstanding as of such Termination of Employment which were outstanding as of the date of such Change in Control shall become free of all restrictions and become fully vested and transferable; and

 

(iii)          All Restricted Stock Units outstanding as of such Termination of Employment which were outstanding as of the date of such Change in Control shall be considered to be earned and payable in full, and any restrictions shall lapse and such Restricted Stock Units shall be settled as promptly as is practicable in the form set forth in the applicable Award Agreement; provided, however, that with respect to any Restricted Stock Unit that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, the settlement of each such Restricted Stock Unit pursuant to this Section 10(a)(iii) shall not occur until the earliest of (1) the Change in Control if such Change in Control constitutes a “change in the ownership of the corporation,” a “change in effective control of the corporation” or a “change in the ownership of a substantial portion of the assets of the corporation,” within the meaning of Section 409A(a)(2)(A)(v) of the Code, (2) the date such Restricted Stock Units would otherwise be settled pursuant to the terms of the Award Agreement and (3) the Participant’s “separation of service” within the meaning of Section 409A of the Code, subject in all cases to Section 14(k).

 

(b)  Impact of Event on Awards other than Adjusted Awards.  Subject to paragraph (e) of this Section 10, and paragraph (d) of Section 12, unless otherwise provided in any applicable Award Agreement and except as otherwise provided in paragraph (a) of this Section 10, in connection with a Change of Control, the Committee may make such adjustments and/or settlements of outstanding Awards as it deems appropriate and consistent with the Plan’s purposes, including, without limitation, the acceleration of vesting of Awards either upon a Change of Control or upon various terminations of employment following a Change of Control. The Committee may provide for such adjustments as a term of the Award or may make such adjustments following the granting of the Award.

 

(c)  Definition of Change in Control.  For purposes of the Plan, unless otherwise provided in an option agreement or other agreement relating to an Award, a “Change in Control” shall mean the happening of any of the following events:

 

Annex A-12

 

(i)            The acquisition by any individual, entity or Group (a “Person”), other than the Company, of Beneficial Ownership of equity securities of the Company representing more than 50% of the voting power of the then outstanding equity securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that any acquisition that would constitute a Change in Control under this subsection (i) that is also a Business Combination shall be determined exclusively under subsection (iii) below; or

 

(ii)           Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date, whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the Incumbent Directors at such time shall become an Incumbent Director, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

 

(iii)          Consummation of a reorganization, merger, consolidation, sale or other disposition of all or substantially all of the assets of the Company, the purchase of assets or stock of another entity, or other similar corporate transaction (a “Business Combination”), in each case, unless immediately following such Business Combination, (A) more than 50% of the Resulting Voting Power shall reside in Outstanding Company Voting Securities retained by the Company’s stockholders in the Business Combination and/or voting securities received by such stockholders in the Business Combination on account of Outstanding Company Voting Securities, and (B) at least a majority of the members of the board of directors (or equivalent governing body, if applicable) of the entity resulting from such Business Combination were Incumbent Directors at the time of the initial agreement, or action of the Board, providing for such Business Combination; or

 

(iv)          Consummation of a complete liquidation or dissolution of the Company.

 

Notwithstanding the foregoing, the Separation shall not constitute a Change in Control. For the avoidance of doubt, with respect to Adjusted Awards, any reference in an Award Agreement or the applicable IAC Long Term Incentive Plan to a “change in control,” “change of control” or similar definition shall be deemed to refer to a Change of Control hereunder.

 

(d)  For purposes of this Section 10, “Good Reason” means (i) “Good Reason” as defined in any Individual Agreement or Award Agreement to which the applicable Participant is a party, or (ii) if there is no such Individual Agreement or if it does not define Good Reason, without the Participant’s prior written consent: (A) a material reduction in the Participant’s rate of annual base salary from the rate of annual base salary in effect for such Participant immediately prior to the Change in Control, (B) a relocation of the Participant’s principal place of business more than 35 miles from the city in which such Participant’s principal place of business was located immediately prior to the Change in Control or (C) a material and demonstrable adverse change in the nature and scope of the Participant’s duties from those in effect immediately prior to the Change in Control. In order to invoke a Termination of Employment for Good Reason, a Participant shall provide written notice to the Company of the existence of one or more of the conditions described in clauses (A) through (C) within 90 days following the Participant’s knowledge of the initial existence of such condition or conditions, and the Company shall have 30 days following receipt of such written notice (the “Cure Period”) during which it may remedy the condition. In the event that the Company fails to remedy the condition constituting Good Reason during the Cure Period, the Participant must terminate employment, if at all, within 90 days following the Cure Period in order for such Termination of Employment to constitute a Termination of Employment for Good Reason.

 

(e)  Notwithstanding the foregoing, if any Award is subject to Section 409A of the Code, this Section 10 shall be applicable only to the extent specifically provided in the Award Agreement and as permitted pursuant to Section 14(k).

 

Section 11. Qualified Performance-Based Awards; Section 16(b)

 

(a)  The provisions of this Plan are intended to ensure that all Options and Stock Appreciation Rights granted hereunder to any Participant who is or may be a “covered employee” (within the meaning of Section 162(m)(3) of the Code) in the tax year in which such Option or Stock Appreciation Right is expected to be deductible to the Company qualify for the Section 162(m) Exemption, and all such Awards shall therefore be considered Qualified Performance-Based Awards and this Plan shall be interpreted

 

Annex A-13

 

and operated consistent with that intention (including, without limitation, to require that all such Awards be granted by a committee composed solely of members who satisfy the requirements for being “outside directors” for purposes of the Section 162(m) Exemption (“Outside Directors”)). When granting any Award other than an Option or Stock Appreciation Right, the Committee may designate such Award as a Qualified Performance-Based Award, based upon a determination that (i) the recipient is or may be a “covered employee” (within the meaning of Section 162(m)(3) of the Code) with respect to such Award, and (ii) the Committee wishes such Award to qualify for the Section 162(m) Exemption, and the terms of any such Award (and of the grant thereof) shall be consistent with such designation (including, without limitation, that all such Awards be granted by a committee composed solely of Outside Directors).

 

(b)  Each Qualified Performance-Based Award (other than an Option or Stock Appreciation Right) shall be earned, vested and payable (as applicable) only upon the achievement of one or more Performance Goals (as certified in writing by the Committee, except if compensation is attributable solely to the increase in the value of the Common Stock) (but in no event shall such Award be payable later than two and a half months after the end of the Company’s fiscal year in which the Qualified Performance-Based Award becomes earned and vested (as applicable)), together with the satisfaction of any other conditions, such as continued employment, as the Committee may determine to be appropriate, and no Qualified Performance-Based Award may be amended, nor may the Committee exercise any discretionary authority it may otherwise have under this Plan with respect to a Qualified Performance-Based Award under this Plan, in any manner that would cause the Qualified Performance-Based Award to cease to qualify for the Section 162(m) Exemption; provided, however, that (i) the Committee may provide, either in connection with the grant of the applicable Award or by amendment thereafter, that achievement of such Performance Goals will be waived upon the death or Disability of the Participant or under any other circumstance with respect to which the existence of such possible waiver will not cause the Award to fail to qualify for the Section 162(m) Exemption as of the Grant Date, and (ii) the provisions of Section 10 shall apply notwithstanding this Section 11(b).

 

(c)  The full Board shall not be permitted to exercise authority granted to the Committee to the extent that the grant or exercise of such authority would cause an Award designated as a Qualified Performance-Based Award not to qualify for, or to cease to qualify for, the Section 162(m) Exemption.

 

(d)  The provisions of this Plan are intended to ensure that no transaction under the Plan is subject to (and not exempt from) the short-swing recovery rules of Section 16(b) of the Exchange Act (“Section 16(b)”). Accordingly, the composition of the Committee shall be subject to such limitations as the Board deems appropriate to permit transactions pursuant to this Plan to be exempt (pursuant to Rule 16b-3 promulgated under the Exchange Act) from Section 16(b), and no delegation of authority by the Committee shall be permitted if such delegation would cause any such transaction to be subject to (and not exempt from) Section 16(b).

 

Section 12. Term, Amendment and Termination

 

(a)  Effectiveness.  The Plan shall be effective as of August 20, 2008 (the “Effective Date”).

 

(b)  Termination.  The Plan will terminate on August 20, 2018 and may be terminated on any earlier date pursuant to Section 12(c). Awards outstanding as of such termination date shall not be affected or impaired by the termination of the Plan.

 

(c)  Amendment of Plan.  The Board may amend, alter, or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which would materially impair the rights of the Participant with respect to a previously granted Award without such Participant’s consent, except such an amendment made to comply with applicable law, including without limitation Section 409A of the Code, stock exchange rules or accounting rules. In addition, no such amendment shall be made without the approval of the Company’s stockholders to the extent such approval is required by applicable law or the listing standards of the Applicable Exchange.

 

(d)  Amendment of Awards.  Subject to Section 5(d), the Committee may unilaterally amend the terms of any Award theretofore granted, but no such amendment shall cause a Qualified Performance-Based Award to cease to qualify for the Section 162(m) Exemption or without the Participant’s consent materially impair the rights of any Participant with respect to an Award, except such an amendment made to cause the Plan or Award to comply with applicable law, stock exchange rules or accounting rules.

 

Annex A-14

 

Section 13. Unfunded Status of Plan

 

It is presently intended that the Plan constitute an “unfunded” plan for incentive and deferred compensation. Solely to the extent permitted under Section 409A, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Common Stock or make payments; provided, however, that the existence of such trusts or other arrangements is consistent with the “unfunded” status of the Plan. Notwithstanding any other provision of this Plan to the contrary, with respect to any Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, no trust shall be funded with respect to any such Award if such funding would result in taxable income to the Participant by reason of Section 409A(b) of the Code and in no event shall any such trust assets at any time be located or transferred outside of the United States, within the meaning of Section 409A(b) of the Code.

 

Section 14. General Provisions

 

(a)  Conditions for Issuance.  The Committee may require each person purchasing or receiving Shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the Shares without a view to the distribution thereof. The certificates for such Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer. Notwithstanding any other provision of the Plan or agreements made pursuant thereto, the Company shall not be required to issue or deliver any certificate or certificates for Shares under the Plan prior to fulfillment of all of the following conditions: (i) listing or approval for listing upon notice of issuance, of such Shares on the Applicable Exchange; (ii) any registration or other qualification of such Shares of the Company under any state or federal law or regulation, or the maintaining in effect of any such registration or other qualification which the Committee shall, in its absolute discretion upon the advice of counsel, deem necessary or advisable; and (iii) obtaining any other consent, approval, or permit from any state or federal governmental agency which the Committee shall, in its absolute discretion after receiving the advice of counsel, determine to be necessary or advisable.

 

(b)  Additional Compensation Arrangements.  Nothing contained in the Plan shall prevent the Company or any Subsidiary or Affiliate from adopting other or additional compensation arrangements for its employees.

 

(c)  No Contract of Employment.  The Plan shall not constitute a contract of employment, and adoption of the Plan shall not confer upon any employee any right to continued employment, nor shall it interfere in any way with the right of the Company or any Subsidiary or Affiliate to terminate the employment of any employee at any time.

 

(d)  Required Taxes.  No later than the date as of which an amount first becomes includible in the gross income of a Participant for federal, state, local or foreign income or employment or other tax purposes with respect to any Award under the Plan, such Participant shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. If determined by the Company, withholding obligations may be settled with Common Stock, including Common Stock that is part of the Award that gives rise to the withholding requirement. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to such Participant. The Committee may establish such procedures as it deems appropriate, including making irrevocable elections, for the settlement of withholding obligations with Common Stock.

 

(e)  Limitation on Dividend Reinvestment and Dividend Equivalents.  Reinvestment of dividends in additional Restricted Stock at the time of any dividend payment, and the payment of Shares with respect to dividends to Participants holding Awards of Restricted Stock Units, shall only be permissible if sufficient Shares are available under Section 3 for such reinvestment or payment (taking into account then outstanding Awards). In the event that sufficient Shares are not available for such reinvestment or payment, such reinvestment or payment shall be made in the form of a grant of Restricted Stock Units equal in number to the Shares that would have been obtained by such payment or reinvestment, the terms of which Restricted Stock Units shall provide for settlement in cash and for dividend equivalent reinvestment in further Restricted Stock Units on the terms contemplated by this Section 14(e).

 

(f)  Designation of Death Beneficiary.  The Committee shall establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable in the event of such Participant’s death are to be paid or by whom any rights of such eligible Individual, after such Participant’s death, may be exercised.

 

(g)  Subsidiary Employees.  In the case of a grant of an Award to any employee of a Subsidiary of the Company, the Company may, if the Committee so directs, issue or transfer the Shares, if any, covered by the Award to the Subsidiary, for such lawful consideration as the Committee may specify, upon the condition or understanding that the Subsidiary will transfer the Shares to

 

Annex A-15

 

the employee in accordance with the terms of the Award specified by the Committee pursuant to the provisions of the Plan. All Shares underlying Awards that are forfeited or canceled should revert to the Company.

 

(h)  Governing Law and Interpretation.  The Plan and (unless otherwise provided in the Award Agreement) all Awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws. The captions of this Plan are not part of the provisions hereof and shall have no force or effect.

 

(i)  Non-Transferability.  Except as otherwise provided in Section 5(j) or by the Committee, Awards under the Plan are not transferable except by will or by laws of descent and distribution.

 

(j)  Foreign Employees and Foreign Law Considerations.  The Committee may grant Awards to Eligible Individuals who are foreign nationals, who are located outside the United States or who are not compensated from a payroll maintained in the United States, or who are otherwise subject to (or could cause the Company to be subject to) legal or regulatory provisions of countries or jurisdictions outside the United States, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan, and, in furtherance of such purposes, the Committee may make such modifications, amendments, procedures, or subplans as may be necessary or advisable to comply with such legal or regulatory provisions.

 

(k)  Section 409A of the Code.  It is the intention of the Company that no Award shall be “deferred compensation” subject to Section 409A of the Code, unless and to the extent that the Committee specifically determines otherwise as provided in this Section 14(k), and the Plan and the terms and conditions of all Awards shall be interpreted accordingly. Any payment made pursuant to any Award shall be considered a separate payment and not one of a series of payments for purposes of Section 409A of the Code.  Notwithstanding any other provision of the Plan or an Award Agreement to the contrary, with respect to any Award that constitutes a “nonqualified deferred compensation plan” subject to Section 409A of the Code and if the Participant is a “specified employee” within the meaning of Section 409A of the Code, any payments (whether in cash, Shares or other property) to be made with respect to the Award upon such Participant’s Termination of Employment shall be delayed until the earlier of (A) the first day of the seventh month following the Participant’s Termination of Employment and (B) the Participant’s death.  Any such delayed payments shall be made without interest.  In no event whatsoever shall the Company be liable for any additional tax, interest or penalties that may be imposed on a Participant by Section 409A of the Code or any damages for failing to comply with Section 409A of the Code.

 

(l)  Employee Matters Agreement.  Notwithstanding anything in this Plan to the contrary, to the extent that the terms of this Plan are inconsistent with the terms of an Adjusted Award, the terms of the Adjusted Award shall be governed by the Employee Matters Agreement, the applicable IAC Long-Term Incentive Plan and the award agreement entered into thereunder.

 

(m)  Suspension or Termination of Awards.  If at any time (including after a notice of exercise has been delivered) the Committee (or the Board), reasonably believes that a Participant has committed an act of Cause (which includes a failure to act), the Committee (or Board) may suspend the Participant’s right to exercise any Award (or vesting or settlement of any Award) pending a determination of whether there was in fact an act of Cause.  If the Committee (or the Board) determines a Participant has committed an act of Cause, neither the Participant nor his or her estate shall be entitled to exercise any outstanding Award whatsoever and all of Participant’s outstanding Awards shall then terminate without consideration.  Any determination by the Committee (or the Board) with respect to the foregoing shall be final, conclusive and binding on all interested parties.

 

(n)  Successor Provision.  Any reference to a statute, rule or regulation, or to a section of a statute, rule or regulation, is a reference to that statute, rule, regulation, or section as amended from time to time, both before and after the Effective Date and including any successor provisions.

 

(o)  Clawback Policy.  The Company may (i) cause the cancellation of any Award, (ii) require reimbursement of any Award by a Participant and (iii) effect any other right of recoupment of equity or other compensation provided under this Plan or otherwise in accordance with Company policies as may be adopted and/or modified from time to time by the Company and/or applicable law (each, a “Clawback Policy”).  In addition, a Participant may be required to repay to the Company certain previously paid compensation, whether provided under this Plan or an Award Agreement or otherwise, in accordance with the Clawback Policy.  By accepting an Award, a Participant is also agreeing to be bound by the Company’s Clawback Policy which may be amended from time to time by the Company in its discretion (including without limitation to comply with applicable laws or stock exchange requirements) and is further agreeing that all of the Participant’s Awards (and/or Adjusted Awards) may be unilaterally amended by the Company to the extent needed to comply with the Clawback Policy.

 

Annex A-16

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