Document:

TXN - 12.31.2011 - Exhibit 10(n)

Exhibit  10(n)
 
ASSET AND STOCK PURCHASE AGREEMENT
 
dated as of
 
January 8, 2006
 
between
 
TEXAS INSTRUMENTS INCORPORATED
 
and
 
S&C PURCHASE CORP.

	
					
	TABLE OF CONTENTS

	 
	 
	 
	 

	 

	 
	 
	 
	PAGE
	

	 
	 
	 
	 

	ARTICLE 1

	DEFINITIONS

	 
	 
	 
	 

	Section   
	1.01.
	Definitions
	1
	

	Section
	1.02.
	Other Definitional and Interpretative Provisions
	13
	

	 
	 
	 
	 

	ARTICLE 2

	PURCHASE AND SALE

	 
	 
	 
	 

	Section
	2.01.
	Purchase and Sale of the Shares
	14
	

	Section
	2.02.
	Purchase and Sale of the Purchased Assets
	14
	

	Section
	2.03.
	Excluded Assets
	15
	

	
					
	Section
	2.04.
	Assumed Liabilities
	16
	

	Section
	2.05.
	Excluded Liabilities
	17
	

	Section
	2.06.
	Restructuring
	19
	

	Section
	2.07.
	Limitation on Assignment of Purchased Assets
	21
	

	Section
	2.08.
	Purchase Price; Allocation of Purchase Price
	21
	

	Section
	2.09.
	Closing
	23
	

	Section
	2.10.
	Closing Statement
	24
	

	Section
	2.11.
	Adjustment of Purchase Price
	25
	

	 
	 
	 
	 

	ARTICLE 3

	REPRESENTATIONS AND WARRANTIES OF SELLER

	 
	 
	 
	 

	Section
	3.01.
	Corporate Existence and Power
	26
	

	Section
	3.02.
	Corporate Authorization
	26
	

	Section
	3.03.
	Governmental Authorization
	27
	

	Section
	3.04.
	Noncontravention
	27
	

	Section
	3.05.
	Required Consents
	27
	

	Section
	3.06.
	Purchased Subsidiaries
	27
	

	Section
	3.07.
	Financial Statements
	28
	

	Section
	3.08.
	Absence of Certain Changes
	28
	

	Section
	3.09.
	No Undisclosed Material Liabilities
	30
	

	Section
	3.10.
	Material Contracts
	30
	

	Section
	3.11.
	Litigation
	32
	

	Section
	3.12.
	Compliance with Laws and Court Orders
	32
	

	Section
	3.13.
	Properties; Liens
	32
	

	Section
	3.14.
	Intellectual Property
	33
	

	Section
	3.15.
	Sufficiency of Purchased Assets
	34
	

	Section
	3.16.
	Permits
	34
	

	Section
	3.17.
	Finders' Fees
	35
	

	 
	 
	 
	 
	

	i

	
					
	 
	 
	 
	PAGE
	

	 
	 
	 
	 

	Section   
	3.18.
	Employee Benefit Plans
	35
	

	Section
	3.19.
	Employee and Labor Matters
	36
	

	Section
	3.20.
	Environmental Compliance
	36
	

	Section
	3.21.
	Insurance
	37
	

	Section
	3.22.
	Customer and Supplier Relationships
	37
	

	Section
	3.23.
	Product Warranty and Liability
	38
	

	 
	 
	 
	 

	ARTICLE 4

	REPRESENTATIONS AND WARRANTIES OF BUYER

	 
	 
	 
	 

	Section
	4.01.
	Corporate Existence and Power
	38
	

	Section
	4.02.
	Corporate Authorization
	38
	

	Section
	4.03.
	Governmental Authorization
	39
	

	Section
	4.04.
	Noncontravention
	39
	

	Section
	4.05.
	Financing
	39
	

	Section
	4.06.
	Litigation
	40
	

	Section
	4.07.
	Finders' Fees
	40
	

	Section
	4.08.
	Inspections; No Other Representations
	40
	

	 
	 
	 
	 

	ARTICLE 5

	COVENANTS OF SELLER

	 
	 
	 
	 

	Section
	5.01.
	Conduct of the Business
	41
	

	Section
	5.02.
	Access to Information
	41
	

	Section
	5.03.
	Non-compete
	43
	

	Section
	5.04.
	Confidentiality
	45
	

	Section
	5.05.
	Insurance
	45
	

	Section
	5.06.
	Exclusivity
	46
	

	
					
	Section
	5.07.
	Intercompany Receivables and Payables
	47
	

	 
	 
	 
	 

	ARTICLE 6

	COVENANTS OF BUYER

	 
	 
	 
	 

	Section
	6.01.
	Confidentiality
	47
	

	Section
	6.02.
	Access
	47
	

	Section
	6.03.
	Financing Matters
	48
	

	Section
	6.04.
	338(g) Election
	49
	

	 
	 
	 
	 

	ARTICLE 7

	COVENANTS OF BUYER AND SELLER

	 
	 
	 
	 

	Section
	7.01.
	Reasonable Efforts; Further Assurance
	49
	

	Section
	7.02.
	Certain Filings; Consents
	50
	

	Section
	7.03.
	Public Announcements
	50
	

	Section
	7.04.
	Notices of Certain Events
	51
	

	 
	 
	 
	 
	

	ii

	
					
	 
	 
	 
	PAGE
	

	 
	 
	 
	 

	Section   
	7.05.
	WARN Act
	51
	

	Section
	7.06.
	Non-solicit
	51
	

	Section
	7.07.
	Conflicts; Privileges
	52
	

	Section
	7.08.
	Commercial Arrangements
	53
	

	Section
	7.09.
	Accounts Receivable
	53
	

	Section
	7.10.
	Seller Trademarks and Tradenames
	53
	

	Section
	7.11.
	Certain Products
	55
	

	 
	 
	 
	 

	
					
	ARTICLE 8

	TAX MATTERS

	 
	 
	 
	 

	Section
	8.01.
	Tax Matters
	57
	

	Section
	8.02.
	Tax Cooperation; Allocation of Taxes
	57
	

	 
	 
	 
	 

	ARTICLE 9

	PERSONNEL MATTERS

	 
	 
	 
	 

	Section
	9.01.
	Business Employees
	60
	

	Section
	9.02.
	Maintenance of Compensation and Employee Benefits
	61
	

	Section
	9.03.
	Employee Communications
	71
	

	Section
	9.04.
	Acknowledgement
	71
	

	Section
	9.05.
	No Third-party Beneficiaries
	71
	

	 
	 
	 
	 

	ARTICLE 10

	CONDITIONS TO CLOSING

	 
	 
	 
	 

	Section
	10.01.
	 Conditions to Obligations of Buyer and Seller
	72
	

	Section
	10.02.
	 Conditions to Obligation of Buyer
	72
	

	Section
	10.03.
	 Conditions to Obligation of Seller
	73
	

	 
	 
	 
	 

	ARTICLE 11

	SURVIVAL; INDEMNIFICATION

	 
	 
	 
	 

	Section
	11.01.
	 Survival
	73
	

	Section
	11.02.
	 Indemnification
	74
	

	Section
	11.03.
	 Procedures
	76
	

	Section
	11.04.
	 Calculation of Damages
	81
	

	Section
	11.05.
	 Assignment of Claims
	82
	

	Section
	11.06.
	 Exclusivity
	82
	

	 
	 
	 
	 

	ARTICLE 12

	TERMINATION

	 
	 
	 
	 

	Section
	12.01.
	 Grounds for Termination
	82
	

	Section
	12.02.
	 Effect of Termination
	83
	

	
					
	 
	 
	 
	 
	

	iii

	
					
	 
	 
	 
	PAGE
	

	 
	 
	 
	 
	

	ARTICLE 13

	MISCELLANEOUS

	 
	 
	 
	 
	

	Section   
	13.01.
	Notices
	83
	

	Section
	13.02.
	Amendments and Waivers
	84
	

	Section
	13.03.
	Expenses
	85
	

	Section
	13.04.
	Successors and Assigns
	85
	

	Section
	13.05.
	Governing Law
	85
	

	Section
	13.06.
	Jurisdiction
	85
	

	Section
	13.07.
	Counterparts; Effectiveness; No Third Party Beneficiaries
	86
	

	Section
	13.08.
	Entire Agreement
	86
	

	Section
	13.09.
	Bulk Sales Laws
	86
	

	Section
	13.10.
	Severability
	86
	

	Section
	13.11.
	Specific Performance
	87
	

	Section
	13.12.
	Disclosure Schedule
	87
	

	 
	 
	 
	 
	

	DISCLOSURE SCHEDULE

	SCHEDULE 4.05    Commitment Letters

	 
	 
	 
	 
	

	EXHIBIT A
	Form of Assignment and Assumption Agreement
	 
	

	EXHIBIT B
	Form of Cross License Agreement
	 
	

	EXHIBIT C
	Form of Transition Services Agreement
	 
	

	EXHIBIT D
	Form of Opinion Regarding Employee Benefit Plan Qualification
	 
	

	 
	 
	(for Buyer and Seller)
	 
	

	EXHIBIT E
	Form of Certification Regarding VEBA (for Buyer and Seller)
	 
	

	 
	 
	 
	

	iv

ASSET AND STOCK PURCHASE AGREEMENT
     AGREEMENT (this “Agreement”) dated as of January 8, 2006 between Texas Instruments Incorporated, a Delaware corporation (“Seller”), and S&C Purchase Corp., a Delaware corporation (“Buyer”).
W I T N E S S E T H :
     WHEREAS, Buyer desires to purchase the Shares (as defined below) and the Purchased Assets (as defined below) and assume the Assumed Liabilities (as defined below) from Seller and its Subsidiaries, and Seller and its Subsidiaries desire to sell the Shares and the Purchased Assets and transfer the Assumed Liabilities to Buyer, upon the terms and subject to the conditions hereinafter set forth;
     NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
     Section 1.01. Definitions. (a) As used herein, the following terms have the following meanings:
     “Accounting Policies” means GAAP, applied in a manner consistent with the accounting policies, principles, practices and methodologies used in the preparation of the Audited Balance Sheet.
     “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such other Person. For purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have correlative meanings.
     “Applicable Law” means, with respect to any Person, any federal, state, local or foreign law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, determination, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person, as amended unless expressly specified otherwise.
     “Assignment and Assumption Agreement” means an Assignment and Assumption Agreement between Buyer and Seller in substantially the form 

attached hereto as Exhibit A with such changes as Buyer and Seller may agree upon, together with any other documents of conveyance entered into pursuant to Section 2.09(c)(vi) .
     “Audited Balance Sheet” means the audited balance sheet of the Business as of December 31, 2004.
     “Balance Sheet Date” means December 31, 2004.
     “Base Working Capital” means $199,000,000.
     “Business” means the Control Business and the Sensor Business. The Business does not include the RFID Business.
     “Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York and London, England are authorized or required by Applicable Law to close.
     “Business Employee” means any employee of Seller or any of its Subsidiaries or Affiliates who is employed primarily in connection with the Business, (i) including, for the avoidance of doubt, the individuals named in Section 1.01(a)(i) of the 

Disclosure Schedule, but (ii) excluding the individuals named in Section 1.01(a)(ii) of the Disclosure Schedule, and such employees of the Retained Businesses as Seller and Buyer may agree to treat as Business Employees prior to the Closing.
     “Business Intellectual Property Rights” means the Business Patents and the Other Business Intellectual Property Rights.
     “Business Patents” means the Patents listed in Section 2.02(h) of the Disclosure Schedule.
     “Closing Date” means the date on which the Closing occurs. The Closing shall be deemed to occur at 12:01 a.m. on the date that is the Closing Date.
     “Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
     “Competition Laws” means statutes, rules, regulations, orders, decrees, administrative and judicial doctrines, and other laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization, lessening of competition or restraint of trade.
     “Consent” means any authorization, approval, order, license, qualification, permit, franchise, certification, waiver or other consent of any third Person or any Governmental Authority. 
2

     “Control Business” means the business conducted by the Controls business unit of Seller and Seller's Subsidiaries involving the design, development, sale, manufacturing and marketing of Control Products.
     “Control Products” means (i) electromechanical products designed to control heat, current or arcing, including in commercial and residential heating and air conditioning systems, refrigeration appliances, lighting, aerospace or industrial products, and also including motor protectors, circuit breakers, lighting protection, arc-fault circuit protectors, precision switches, thermostats or semiconductor burn-in test sockets, (ii) electronic control modules or board level solutions in heating, ventilation, air conditioning or refrigeration systems, including for gas ignition, defrost control, electric heat, fan sequencing, system monitoring, or compressor control and protection or (iii) control products intended for applications addressed by products that are currently marketed or under development by the Controls business unit of Seller and its Subsidiaries.
     “Cross License Agreement” means a Cross License Agreement between Buyer and Seller in the form attached hereto as Exhibit B.
     “Current Product” means any (i) Sensor Product or Control Product, or any component thereof, that was manufactured, marketed, sold, offered for sale, distributed or otherwise transferred by the Business, or with respect to which the Business has substantially completed its development efforts, as of the Closing Date and (ii) future Sensor Product, Control Product or component that is an extension, modification, derivation, replacement or successor of such Sensor Product, Control Product or component and does not infringe or misappropriate Intellectual Property Rights of a third party in a manner that is materially different from its predecessor.
     “Disclosure Schedule” means the disclosure schedule delivered by Seller to Buyer concurrently with the execution and delivery of this Agreement and attached hereto.
     “Economic Detriment” means (i) any Tax, penalty, cost, expense or other adverse economic impact on Buyer or its Affiliates (including the Purchased Subsidiaries), except to the extent of invoiced out-of-pocket expenses for which Buyer is reimbursed by Seller on an after-tax basis, (ii) any restriction, reduction or other impairment of any Purchased Subsidiary's ability after the Closing Date directly or indirectly to dividend, distribute or otherwise repatriate cash (other than by reductions (but in any event not below zero) of statutory retained earnings accrued and available for distributions prior to the Closing Date) or (iii) prior to the Closing any change in current assets (except cash) or liabilities from those consistent with historical levels maintained in the ordinary course of business. Notwithstanding the foregoing, in connection with any transfer of Purchased Subsidiary Pre-Closing Cash pursuant to Section 2.06(a)(i) or 2.06(b)(ii), the 
3

reduction in cash by the amount transferred shall not in and of itself be deemed an Economic Detriment.
     “Employee Plan” means any “employee benefit plan”, as defined in Section 3(3) of ERISA, and any employment, severance or similar contract, plan, arrangement or policy and each other plan or arrangement providing for cash or equity compensation, profit-sharing, incentive or deferred compensation, vacation benefits, insurance (including any self-insured arrangements), health or medical benefits, disability or sick leave benefits and post-employment or retirement, or other benefits, in each case which is maintained, sponsored, administered or contributed to by Seller or any Subsidiary of Seller (or any ERISA Affiliate of Seller or any Subsidiary of Seller) and (i) covers any current or former Business Employee who is based primarily in the United States, (ii) with respect to which any Purchased Subsidiary has any material current or future Liability or (iii) which would otherwise constitute an Assumed Liability.
     “Environmental Laws” means any Applicable Law as in effect on or prior to the Closing Date relating to the environment, pollutants, contaminants, wastes or chemicals or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substances, wastes or materials or to public or workplace health or safety.
     “Environmental Liabilities” means any and all Liabilities or commitments primarily arising in connection with or relating to the Business (as currently or previously conducted), the Purchased Assets, the Purchased Subsidiaries or any activities or operations occurring or conducted at the Real Property, which arise under or relate to any Environmental Law.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
     “ERISA Affiliate” of any entity means any other entity which, together with such entity, would be treated as a single employer under Section 414 of the Code.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     “Excluded Environmental Liabilities” means any Environmental Liabilities attributable or relating to, resulting from, or caused by (i) any real property or facility now or previously owned, leased or operated by the Purchased Subsidiaries or by Seller or any Affiliate of the Seller with respect to the Business (other than (A) the Real Property, (B) except as otherwise provided in clause (ii), the Kuala Lumpur, Malaysia facility currently shared by a Retained Business and the Business, but only to the extent arising out of the operation of the Business or (C) any other Purchased Asset, but only to the extent arising out of the operation 
4

of the Business); (ii) any Retained Business (including the Known Kuala Lumpur Contamination and any other Environmental Liabilities to the extent arising from the conduct of any Retained Business at any facility currently shared by such Retained Business and the Business); and (iii) the offsite treatment, storage, disposal or arrangement for disposal of hazardous substances, wastes or materials by Seller or any Affiliate of Seller with respect to the Business (including any such hazardous substances, wastes or materials generated in connection with operations upon the Real Property) or by any Purchased Subsidiary, in each case prior to the Closing.
     “Excluded Representations” means, as to Seller or Buyer, as applicable, the representations set forth in Section 3.01 (Corporate Existence and Power), Section 3.02 (Corporate Authorization), Section 3.17 (Finders' Fees), Section 4.01 (Corporate Existence and Power), Section 4.02 (Corporate Authorization), Section 4.07 (Finders' Fees) and Section 8.01 (Tax Matters).
     “GAAP” means generally accepted accounting principles in the United States.
     “Governmental Authority” means any transnational, domestic or foreign federal, state or local, governmental authority, department, court, agency or official, including any political subdivision thereof and any arbitral body the decrees of which have the force of law.
     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
     “Identified Environmental Liability” means Environmental Liabilities arising out of those matters described in Section 3.20(b) of the Disclosure Schedule.
     “Indebtedness” means (i) all obligations for borrowed money, (ii) all obligations evidenced by notes, bonds, debentures or 

other instruments, (iii) all obligations under any hedging or swap obligation or other similar arrangement, (iv) all obligations (other than operating leases) secured by a Lien on Purchased Assets or Assets of a Purchased Subsidiary, other than a Lien described in clause (i), (iii) or (iv) of the definition of Permitted Liens, (v) all obligations for the deferred purchase price of property or services (other than current liabilities incurred in the ordinary course of business), (vi) all commitments by which a Person assures a creditor against loss (including contingent reimbursement obligations regarding letters of credit), (vii) all obligations under capitalized leases, (viii) all guarantees (other than product warranties made in the ordinary course of business), including guarantees of any items set forth in clauses (i) through (vii), and (ix) all outstanding prepayment premiums, if any, and accrued 
5

interest, fees and expenses related to any of the items set forth in clauses (i) through (ix).
     “Intellectual Property Right” means any Patent, trademark, service mark, all goodwill associated with each of such marks, trade name, trade dress, internet domain name, mask work, trade secret, copyright, know-how, software (including any registrations or applications for registration of any of the foregoing) or any other similar type of proprietary intellectual property right and the right to sue and recover for any past, present, or future infringements or misappropriations thereof.
     “International Plan” means any employment, severance or similar contract, plan, arrangement or policy and each other plan or arrangement providing for cash or equity compensation, profit-sharing, incentive or deferred compensation, vacation benefits, insurance (including any self-insured arrangements), health or medical benefits, disability or sick leave benefits and post-employment or retirement benefits, in each case which is maintained, administered or contributed to by Seller or any Subsidiary of Seller (or any Affiliate of Seller or any Subsidiary of Seller) and (i) covers any current or former Business Employee who is based primarily in a country other than the United States, (ii) with respect to which any Purchased Subsidiary has any material Liability or (iii) which would otherwise constitute an Assumed Liability, and in any event is not an Employee Plan.
     “knowledge of Seller,” “Seller's knowledge” or any other similar knowledge qualification in this Agreement means to the actual knowledge, after reasonable inquiry of appropriate personnel (including members of the legal department), of Thomas Wroe, Jr., Gene A. Carlone, Martha N. Sullivan, Robert E. Kearney, Dick Dane, Jim Armstrong or Donna Kimmel.
     “Known Kuala Lumpur Contamination” means conditions of contamination in the soil and groundwater identified prior to the date hereof at, on or under the Kuala Lumpur, Malaysia facility currently shared by a Retained Business and the Business.
     “Latest Balance Sheet” means the unaudited balance sheet of the Business as of September 30, 2005.
     “Leased Real Property” means all of Seller's and its Subsidiaries' right, title and interest in all leases, subleases, licenses, concessions and other agreements (the “Leases”), pursuant to which Seller or one of its Subsidiaries holds a leasehold or subleasehold estate in, or is granted the right to use or occupy, any land, buildings, structures, improvements, fixtures or other interest in real property used or held for use primarily by the Business, including the right to 
6

all security deposits and other amounts and instruments deposited by or on behalf of Seller or one of its Subsidiaries thereunder.
     “Leasehold Improvements” means all buildings, structures, improvements and fixtures located on any Leased Real Property which are owned by Seller or one of its Subsidiaries, regardless of whether title to such buildings, structures, improvements or fixtures are subject to reversion to the landlord or other third party upon the expiration or termination of the Lease for such Leased Real Property.
     “Liability” means any liability, debt or obligation of any kind, character, or description, and whether known or unknown, accrued, absolute, contingent or otherwise, and regardless of when asserted or by whom.

     “License Side Agreement” means the License Side Agreement dated the date hereof between Seller and Buyer.
     “Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, option, right of first refusal, right of first offer or encumbrance in respect of such property or asset.
     “Material Adverse Effect” means a material adverse effect on the business, financial condition or results of operations of the Business, except for any such effect (i) to the extent relating to any Excluded Asset or Excluded Liability and for which Buyer, its Subsidiaries and the Purchased Subsidiaries will have no Liability following the Closing in accordance with the terms of this Agreement or (ii) resulting from or arising in connection with (A) the announcement of this Agreement or the consummation of the transactions specifically contemplated hereby, (B) changes or effects affecting generally the industries in which the Business operates, (C) changes in Applicable Laws or accounting standards, principles or interpretations of general application, (D) changes in economic, regulatory or political conditions generally or (E) changes attributable to actions or omissions of Buyer or any of its Affiliates, other than any action or omission specifically contemplated by this Agreement; provided that the changes or effects described in clauses (B) through (D) shall be disregarded only to the extent that the effect or change is not disproportionately adverse to the Business compared to other Persons operating in the industries in which the Business operates, taking into account the market position and geographic scope of the Business.
     “MEMS Product” means a product integrating (i) sensors, actuators and/or micromechanical elements and (ii) electronics, on a common silicon substrate; wherein such product is fabricated using a combination of integrated circuit process sequences (e.g., CMOS, Bipolar, or BICMOS processes), and at 
7

least one substantial “micromachining” process step (wherein such “micromachining” process step is not a Semiconductor Process step).
     “1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
     “Other Business Intellectual Property Rights” means all Intellectual Property Rights (other than Patents) owned by Seller or any of its Subsidiaries and developed by, or used or held for use exclusively in, the Control Business or the Sensor Business (including any invention disclosure which is not the subject of a filing with the United States Patent and Trademark Office (or foreign equivalent) as of the Closing Date).
     “Owned Real Property” means all land, together with all buildings, structures, improvements and fixtures located thereon, and all easements and other rights and interests appurtenant thereto owned by Seller or one of its Subsidiaries and used or held for use primarily by the Business.
     “Patent” means any issued patent or pending patent application (including any provisional patent application), and any and all divisionals, continuations, continuations-in-part, reissues, renewals, reexaminations, and extensions thereof, any counterparts claiming priority therefrom, utility models, patents of importation/confirmation, supplementary protection certificates, certificates of invention and similar statutory rights.
     “Person” means an individual, corporation, partnership, limited liability company, association, joint venture, trust or other entity or organization, including a Governmental Authority.
     “Portfolio Cross-License” means a non-exclusive Patent cross-license covering at least a majority of Seller's Patent portfolio and entered into in the normal course of Seller's Patent licensing business.
     “Pre-Closing Tax Period” means (i) any Tax period ending on or before the Closing Date and (ii) with respect to a Tax period that commences before but ends after the Closing Date, the portion of such period up to and including the Closing Date.
     “Purchased Subsidiaries” means Texas Instrumentos Eletronicos do Brasil Limitada; Texas Instruments (Changzhou) Co., Ltd.; Texas Instruments (China) Company Limited; Texas Instruments Korea Limited (“TI Korea”) and Texas Instruments Italia S.p.A (“TI Italia”).
8

     “Purchased Subsidiary Liability” means any Liability of any Purchased Subsidiary which would fall within the definition of an Excluded Liability were it a Liability of the Seller or a Retained Subsidiary.
     “Replacement Guarantee” means the guarantee to be entered into by Seller or a Subsidiary of Seller prior to the Closing Date in connection with the sale by Engineered Materials Solutions, Inc. of its contacts business to a joint venture of Checon Corporation and Shivalik Bimetal Controls Ltd., such guarantee to be fully secured by collateral of such joint venture (and include reasonable mechanics for the guarantor from time to time to verify the adequacy of the collateral securing its guarantee), limit the liability of the guarantor to $5 million and otherwise be in form and substance reasonably acceptable to Buyer (it being understood that Buyer shall be entitled to participate in the discussions with respect to the form and substance of such guarantee on and after the date hereof and prior to the execution thereof).
     “Representative” means, with respect to any Person, such Person's directors, officers, employees, counsel, financial advisors, auditors, agents and other authorized representatives.
     “Retained Businesses” means all businesses now, previously or hereafter conducted by Seller or any of its Subsidiaries other than the Business. The Retained Businesses include the RFID Business.
     “Retained Subsidiaries” means all of the Subsidiaries of Seller other than the Purchased Subsidiaries.
     “RFID Business” means the business of designing, developing, licensing, manufacturing, marketing and selling radio frequency identification systems as conducted by Seller and its Subsidiaries.
     “Securities Act” means the Securities Act of 1933, as amended.
     “Semiconductor Activities” means the design, development, use and distribution of (i) design, automation, application or other software embodied in or operating on or in any way relating to the manufacture, or use of, any Semiconductor Product and (ii) application notes, reference designs, emulators, evaluation modules (EVMs), and marketing materials directly relating to the sales, marketing or use of any Semiconductor Product.
     “Semiconductor Process” means any system, method, process, software or hardware, material, structure, apparatus, device, composition, or improvement, for or relating to the manufacture, assembly or test of a semiconductor device.
9

     “Semiconductor Product” means any semiconductor product or other product made using a Semiconductor Process, such as discretes, integrated circuits, MEMS Products and radio frequency identification products. Semiconductor Product also means chipsets or combinations of discretes and/or integrated circuits which are incorporated in board-level products, or in assemblies or systems, but in any event does not mean any portion of any such board-level product, assembly or system which is not a chipset, discrete or integrated circuit. Semiconductor Products includes any software which is incorporated in, or specific to any of the foregoing which are Semiconductor Products.
     “Sensor Business” means the business conducted by the Sensor business unit of Seller and Seller's Subsidiaries involving the design, development, sale, manufacturing and marketing of Sensor Products (excluding the Tire Pressure Sensor Products).
     “Sensor Products” means (i) pressure, position, force, gas or acceleration sensors or pressure switches, in each case for transportation, industrial or heating, ventilation, air conditioning or refrigeration applications or (ii) sensor products intended for applications that are addressed by products currently marketed or under development by the Sensors business unit of Seller and its Subsidiaries.
     “Shares” means all of the outstanding shares of capital stock of, or other equity interests in, the Purchased Subsidiaries.
     “Subsidiary” means, with respect to any Person, any entity of which, and only for so long as, securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person.
     “Tax” means (i) any tax, governmental fee or other like assessment or charge of any kind whatsoever (including withholding on amounts paid to or by any Person), together with any interest, penalty, addition to tax or additional amount imposed by any Governmental Authority (a “Taxing Authority”) responsible for the imposition of any such tax (domestic or foreign), or (ii) Liability for the payment of any amounts of the type described in (i) as a result of being party to any agreement or any express or implied obligation to indemnify any other Person.

     “Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
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     “Transaction Documents” means this Agreement, the Assignment and Assumption Agreement, the Cross License Agreement, the License Side Agreement and the Transition Services Agreement.
     “Transferred Indebtedness” means the Indebtedness listed in Section 1.01(b) of the Disclosure Schedule.
     “Transition Services Agreement” means a Transition Services Agreement between Buyer and Seller in substantially the form attached hereto as Exhibit C with such changes as Buyer and Seller may agree upon.
     (b) Each of the following terms is defined in the Section set forth opposite such term:
	
		
	Term
	Section

	Accounting Referee
	2.08

	Agreement
	Preamble

	Allocation Methodology
	2.08

	Alternative Transaction
	5.06

	Apportioned Obligations
	8.02

	Apportioned Ad Valorem Obligations
	8.02

	Assumed Liabilities
	2.04

	Baskets
	11.03

	Business Covered Employees
	7.06

	Buyer
	Preamble

	Buyer Basket
	11.02

	Buyer Cap
	11.02

	Buyer Indemnified Party
	11.02

	Buyer International Retirement Plan
	9.02

	Buyer Retiree Medical Plan
	9.02

	Buyer DB Plan
	9.02

	Buyer DC Plan
	9.02

	Buyer FSA Plan
	9.02

	Buyer Welfare Plan
	9.02

	Caps
	11.03

	Certifications
	9.02

	Closing
	2.09

	Closing Statement
	2.10

	Closing Working Capital
	2.10

	Competing Business
	5.03

	Confidentiality Agreement
	6.01

	Contracts
	2.01

	Controlling Party
	11.03

	Current Representation
	7.07

	Damages
	11.02

11

	
		
	Term
	Section

	DB Participants
	9.02

	Debt Commitment Letter
	4.05

	Debt Financing
	4.05

	Designated Representative
	7.07

	Disputed Item
	2.10

	Environmental Matters
	11.03

	Equity Commitment Letters
	4.05

	Equity Financing
	4.05

	Estimated Working Capital
	2.09

	EU Employment Regulations
	9.02

	Excluded Assets
	2.03

	Excluded Liabilities
	2.05

	Final Pension Amount
	9.02

	Final Working Capital
	2.11

	Financing
	4.05

	Have Made Costs
	7.11

	Indemnified Party
	11.03

	Indemnifying Party
	11.03

	Initial Pension Amount
	9.02

	International Transfer Amount
	9.02

	Non-Controlling Party
	11.03

	Other Apportioned Obligations
	8.02

	Permitted Liens
	3.13

	Post-Closing Tax Period
	8.02

	Potential Contributor
	11.05

	PBGC
	9.02

	Purchase Price
	2.08

	Purchased Assets
	2.01

	Purchased Subsidiary Pre-Closing Cash
	2.06

	Purchased Subsidiary Securities
	3.06

	Real Property
	3.13

	Registered Business Intellectual Property Rights
	3.14

	Relevant Period
	9.02

	Required Consents
	3.05

	Restructuring
	2.06

	Sample Working Capital Calculation
	2.10

	Seller
	Preamble

	Seller Cap
	11.02

	Seller DB Plan
	9.02

	Seller DC Plan
	9.02

	Seller Environmental Basket
	11.02

	Seller FSA Plan
	9.02

	Seller General Basket
	11.02

12

	
		
	Term
	Section

	Seller Indemnified Party
	11.02

	Seller International Retirement Plan
	9.02

	Seller Retiree Medical Plan
	9.02

	Seller Trademarks and Tradenames
	2.03

	Seller Welfare Plan
	9.02

	Specified Matters
	11.02

	Specified Policy
	5.05

	Supplemental Financial Statements
	5.02

	Third Party Buyers
	11.03

	Third Party Claim
	11.03

	Tire Pressure Sensor Products
	5.03

	Transfer Taxes
	8.02

	Transferred Cash
	2.03

	Transferred Employees
	9.01

	Transferred Employees (Non-U.S.)
	9.01

	Transferred Employees (U.S.)
	9.01

	VEBA
	9.02

	WARN Act
	7.05

	Warranty Breach
	11.02

     Section 1.02. Other Definitional and Interpretative Provisions. The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified. All Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. When the words “not to be unreasonably withheld” are used in this Agreement, they shall be deemed to be followed by the phrase “, conditioned or delayed”, whether or not they are in fact followed by that phrase or a phrase of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References to any Person include the successors and permitted assigns of that Person.
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References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. References to “law” or “laws” shall be deemed to include any and all Applicable Law.

ARTICLE 2
PURCHASE AND SALE
     Section 2.01. Purchase and Sale of the Shares. Upon the terms and subject to the conditions of this Agreement, Seller agrees to, and to cause its Subsidiaries to, sell to Buyer, and Buyer agrees to purchase from Seller and its Subsidiaries, the Shares at the Closing.
     Section 2.02 . Purchase and Sale of the Purchased Assets. Except as otherwise provided below, upon the terms and subject to the conditions of this Agreement, Buyer agrees to purchase from Seller and the Retained Subsidiaries and Seller agrees to, and to cause the Retained Subsidiaries to, sell, convey, transfer, assign and deliver, or cause to be sold, conveyed, transferred, assigned and delivered, to Buyer at the Closing, free and clear of any Liens, other than Permitted Liens, all of Seller's and the Retained Subsidiaries' right, title and interest in, to and under all of the assets, rights, properties and business, of every kind and description, owned, held or used primarily in the conduct of the Business by Seller or any of the Retained Subsidiaries as the same shall exist on the Closing Date, except for the Excluded Assets (the “Purchased Assets”). The Purchased Assets include all right, title and interest of Seller and the Retained Subsidiaries in, to and under the following that are owned, held or used primarily in the conduct of the Business:
     (a) the Owned Real Property and the Leased Real Property (including all Leasehold Improvements thereon) listed in Section 3.13 of the Disclosure Schedule;
     (b) all personal property and interests therein (including machinery, equipment, furniture, office furnishings and vehicles) located at (i) the Owned Real Property and Leased Real Property described in clause (a) above or (ii) that portion of any facility used by the Business other than such Owned Real Property or Leased Real Property;
     (c) all raw materials, work-in-process, finished goods, supplies, spare parts, packaging and other inventories, except for work-in-process and finished goods produced by any Retained Business for which the Business has not yet taken ownership in accordance with the commercial arrangements relating thereto, but including work-in-process and finished goods produced by the Business for which the Retained 
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Businesses have not yet taken ownership in accordance with the commercial arrangements relating thereto;
     (d) all rights (including rights in respect of non-performance or breach) under all contracts, agreements, leases, licenses (excluding Portfolio Cross-Licenses), commitments, sales and purchase orders and other instruments, including all contracts listed in Section 3.10 of the Disclosure Schedule (collectively, the “Contracts”), including the capital lease relating to the Attleboro, Massachusetts facility;
     (e) all trade accounts receivable and other receivables;
     (f) all prepaid assets;
     (g) all of the Shares;
     (h) all Business Intellectual Property Rights;
     (i) all licenses, permits, qualifications or other governmental authorizations transferable without consent of any Governmental Authority and such other licenses, permits, qualifications, or other governmental authorizations for which consent to transfer is obtained on or prior to (or, pursuant to Section 2.07, after) the Closing Date;
     (j) all books, records, files and papers, whether in hard copy or computer format, including any information relating to any Tax imposed on the Purchased Assets or a Purchased Subsidiary;
     (k) sales and promotional literature, customer lists, and other sales and marketing-related materials; and
     (l) all claims, causes of action, judgments, reimbursements and demands.
     Section 2.03. Excluded Assets. Buyer expressly understands and agrees that the following assets and properties of Seller and the Retained Subsidiaries (the “Excluded Assets”) shall be excluded from the Purchased Assets:
     (a) all of Seller's and the Retained Subsidiaries' cash and cash equivalents on hand and in banks (except for such amounts, if 

any, as the parties may agree will be retained by the Purchased Subsidiaries and not constitute Purchased Subsidiary Pre-Closing Cash (the “Transferred Cash”));
15

     (b) insurance policies relating to the Business and all claims, credits, causes of action or rights thereunder (except for Buyer's rights under Section 5.05);
     (c) all Intellectual Property Rights (other than the Business Intellectual Property Rights), including the marks and names set forth in Section 2.03 of the Disclosure Schedule (the “Seller Trademarks and Tradenames”), and including all royalties and/or other license payments under any Portfolio Cross-License;
     (d) all books, records, files and papers, whether in hard copy or computer format, prepared in connection with this Agreement or the transactions contemplated hereby (other than confidentiality agreements with any Person relating to the Business, copies of which will be made available to Buyer at the Closing (it being understood that the portion of such copies not relating to the Business may be redacted)) and all minute books and corporate records of Seller and the Retained Subsidiaries;
     (e) the property and assets described in Section 2.03 of the Disclosure Schedule;
     (f) all rights of Seller or any of the Retained Subsidiaries arising under the Transaction Documents or the transactions contemplated thereby;
     (g) all Purchased Assets sold or otherwise disposed of in the ordinary course of business during the period from the date hereof until the Closing Date in compliance with the terms hereof; and
     (h) all of Seller's and the Retained Subsidiaries' claims for and rights to receive Tax refunds relating to the Business arising on or prior to the Closing Date.
     Section 2.04. Assumed Liabilities. Upon the terms and subject to the conditions of this Agreement, Buyer agrees, effective at the time of the Closing, to assume all contracts and Liabilities of Seller or any of the Retained Subsidiaries of any kind, character or description (whether known or unknown, accrued, absolute, contingent or otherwise) primarily relating to or arising out of the Purchased Assets or the conduct of the Business, except for the Excluded Liabilities (the “Assumed Liabilities”), including the following:
     (a) all Liabilities set forth on the Latest Balance Sheet to the extent not satisfied prior to the Closing Date;
16

     (b) subject to Section 2.07, all Liabilities of Seller or any of the Retained Subsidiaries arising under the Contracts;
     (c) all Environmental Liabilities (other than the Excluded Environmental Liabilities);
     (d) all Liabilities arising out of any action, suit, investigation or proceeding before any arbitrator or any Governmental Authority, including all actions, suits, investigations and proceedings listed in Section 3.11 of the Disclosure Schedule;
     (e) all Liabilities relating to any products manufactured or sold on or prior to the Closing Date, including warranty obligations and product Liabilities;
     (f) all Liabilities and commitments assumed by Buyer, or for which Buyer is otherwise responsible, pursuant to Section 8.02;
     (g) the Transferred Indebtedness; and
     (h) all Liabilities and commitments relating to current or former Business Employees, other than any such Liabilities and commitments that are expressly excluded pursuant to Section 2.05(d).
     Buyer's obligations under this Section 2.04 shall not be subject to offset or reduction, whether by reason of any actual or 

alleged breach of any representation, warranty or covenant contained in the Transaction Documents or any other agreement or document delivered in connection herewith or therewith or any right to indemnification hereunder or otherwise.
     Section 2.05. Excluded Liabilities. Buyer is assuming only the Assumed Liabilities from Seller and the Retained Subsidiaries and is not assuming any other Liability of Seller or any of the Retained Subsidiaries of whatever nature, whether presently in existence or arising hereafter. All such other Liabilities shall be retained by and remain Liabilities of Seller or the Retained Subsidiaries, as applicable (all such Liabilities not being assumed being herein referred to as the “Excluded Liabilities”), including the following (which shall be Excluded Liabilities):
     (a) all Liabilities to the extent arising out of or relating to the operation or conduct by Seller or any of its Subsidiaries of any Retained Business;
     (b) all Liabilities to the extent arising out of or relating to any Excluded Asset;
17

     (c) all Liabilities and commitments in respect of Taxes, other than those Liabilities and commitments for which Buyer is responsible pursuant to Section 8.02;
     (d) all Liabilities and commitments relating to (i) current or former employees of Seller, any of the Purchased Subsidiaries or any of the Retained Subsidiaries other than, in each case, Business Employees, (ii) current or former Business Employees (A) that are expressly retained by Seller pursuant to Article 9 or Section 2.05(d) of the Disclosure Schedule or (B) for which a specific prepaid asset (e.g., an insurance policy), if any, is not sold, conveyed, transferred, assigned or delivered to Buyer, subject to the terms and conditions of the applicable Employee Plan or International Plan (in the case of a Liability or commitment relating to an Employee Plan or International Plan); (iii) Business Employees who, as of the Closing Date, are on a leave of absence resulting from a reduction in force or a “bridging” of age and/or service credit for purposes of an Employee Plan; (iv) compensation deferred by Business Employees prior to the Closing Date; (v) in respect of former Business Employees, the Seller Supplemental Pension Plan and (vi) stock option and other equity-based compensation plans of Seller;
     (e) all Indebtedness (other than the Transferred Indebtedness) including all Liabilities arising out of or relating to any guarantee or consignment arrangements involving Seller and Engineered Materials Solutions, Inc., other than the Replacement Guarantee;
     (f) all obligations to any broker, finder or agent for any investment banking or brokerage fees, finders fees or commission relating to the transactions contemplated by this Agreement and any other fees and expenses for which Seller is responsible pursuant to Section 13.03;
     (g) all indemnification obligations owed to any Person who is or was an officer or director of Seller or any Subsidiary prior to the Closing in respect of actions or omissions occurring prior to the Closing;
     (h) all Liabilities incurred in connection with effecting the Restructuring (including Transfer Taxes and the cost of obtaining required consents from third parties);
     (i) all Excluded Environmental Liabilities;
     (j) all obligations under employee benefit arrangements, employment agreements or other similar arrangements which come due as a result of the transactions contemplated hereby, including any stay or transaction bonus; and
18

     (k) all Liabilities arising out of intentional violations of Applicable Law that are punishable by a material criminal fine or imprisonment.
     Section 2.06 . Restructuring. (a) Prior to the Closing, Seller shall cause:
     (i) each Purchased Subsidiary to convey, transfer, assign and deliver to Seller or a Retained Subsidiary all of such 

Purchased Subsidiary's right, title and interest in, to and under (A) the assets, properties and business, of every kind and description, that are not owned, held or used primarily in the conduct of the Business by such Purchased Subsidiary, including all right, title and interest of such Purchased Subsidiary in, to and under the assets and properties listed in Section 2.06(a)(i) of the Disclosure Schedule and (B) all cash and cash equivalents on hand and in banks as of the close of business on the Business Day immediately prior to the Closing Date except for any Transferred Cash (the “Purchased Subsidiary Pre-Closing Cash”). All such assets, properties and business shall be deemed to be Excluded Assets for all purposes of this Agreement. Notwithstanding anything to the contrary in this Section or elsewhere in this Agreement, prior to the Closing Seller shall not, and shall cause its Subsidiaries not to, directly or indirectly convey, transfer, assign or deliver, nor enter into any transaction or series of transactions having the purpose or effect of directly or indirectly transferring, dividending, distributing or otherwise repatriating, any Purchased Subsidiary Pre-Closing Cash, in each case to the extent such action or transaction would have any Economic Detriment; 
     (ii) all contracts and Liabilities of each Purchased Subsidiary of any kind, character or description (whether known or unknown, accrued, absolute, contingent or otherwise) that do not primarily relate to or arise out of the conduct of the Business or which are Purchased Subsidiary Liabilities, including all contracts and Liabilities listed in Section 2.06(a)(ii) of the Disclosure Schedule, to be assumed by Seller or a Retained Subsidiary. All of such contracts and Liabilities shall be deemed to be Excluded Liabilities for all purposes of this Agreement; and
     (iii) each Purchased Subsidiary to transfer to Seller or a Retained Subsidiary (or otherwise terminate the employment of) any employee who is not a Business Employee. For the avoidance of doubt, all Liabilities and commitments relating to such employees shall be deemed to be Excluded Liabilities for all purposes of this Agreement.
     (b) If the transactions contemplated by Section 2.06(a) (the “Restructuring”) are not completed on or prior to the Closing Date, then
19

     (i) the Closing shall nonetheless be consummated (unless the Restructuring has not been consummated with respect to TI Korea, in which case the Closing shall not be consummated until the Restructuring with respect to TI Korea has been completed) and the Shares transferred to Buyer, but if the Restructuring has not been completed with respect to TI Italia, then the Shares of TI Italia shall be retained by Seller and shall not be transferred to Buyer at the Closing;
     (ii) each of Buyer and Seller shall, and shall cause its Subsidiaries to, use its reasonable efforts (but without the payment of money by Buyer) to complete the Restructuring as soon as reasonably practicable following the Closing Date, including Buyer causing the Purchased Subsidiaries to implement arrangements (such as, for example, payment of dividends or the making of intercompany loans) to facilitate the transfer of any remaining Purchased Subsidiary Pre-Closing Cash to Seller; provided that Buyer and its Affiliates (including the Purchased Subsidiaries) will not be required to take any action that would have an Economic Detriment. In addition, following the Closing Buyer shall, and shall cause the Purchased Subsidiaries to, hold all Purchased Subsidiary Pre-Closing Cash in segregated accounts (and provide Seller with monthly statements for such accounts promptly following receipt thereof) and take reasonable steps to ensure that other cash of the Business will not be comingled with the Purchased Subsidiary Pre-Closing Cash;
     (iii) Seller shall receive the benefits of each Excluded Asset and bear the burdens of ownership of each Excluded Liability with respect to which the Restructuring has not been completed prior to the Closing from and including the Closing Date to and including the date on which the Restructuring is completed thereto (with any costs or expense associated with such arrangements incremental to what Buyer would bear had the Restructuring occurred at Closing to be borne by Seller);
     (iv) if the Shares of TI Italia are not transferred to Buyer at the Closing in accordance with clause (i) above, (A) Buyer shall receive the benefits and bear the burdens of ownership of the Business to the extent conducted by TI Italia from and including the Closing Date to and including the date on which such Shares are so transferred to Buyer (with any costs or expense associated with such arrangements incremental to what Buyer would bear had the Restructuring occurred at the Closing to be borne by Seller) and (B) Seller shall transfer such Shares to Buyer (in the manner contemplated by Section 2.09(c)(v)) without the payment by Buyer of any additional consideration therefor promptly following the completion of the Restructuring with respect to TI Italia; and
20

     (v) Seller and Buyer shall cooperate in a mutually agreeable manner and enter into such amendments to the Transaction Documents and additional agreements as may be reasonably necessary so as to implement the foregoing.
     Section 2.07. Limitation on Assignment of Purchased Assets. Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign any Purchased Asset or any right thereunder as to which the transfer or attempted assignment, without obtaining any Consent of, or other action by, any third party or any Governmental Authority, would constitute a breach or in any way adversely affect the rights of Buyer or Seller or any of their respective Affiliates thereunder or subject any of the foregoing to civil or criminal liability. Seller and Buyer will use their reasonable efforts (but without any payment of money by Buyer) to obtain the Consent of the other parties to any such Purchased Asset or any claim or right or any benefit arising thereunder for the assignment thereof to Buyer as Buyer may request. If such Consent is not obtained, or if an attempted assignment thereof would be ineffective or would adversely affect the rights of Seller or its Affiliates thereunder so that Buyer would not in fact receive all such rights, Seller and Buyer will cooperate in an arrangement reasonably acceptable to both parties under which Buyer would obtain the benefits and assume the obligations thereunder in accordance with this Agreement in the same manner as if such Purchased Asset were transferred to Buyer at the Closing, including subcontracting, sub-licensing, or sub-leasing to Buyer, or under which Seller would enforce for the benefit of Buyer, with Buyer assuming Seller's obligations, any and all rights of Seller or its Affiliates against a third party thereto (with any out-of-pocket incremental costs or expenses associated with such arrangements to be borne by Seller). Seller will promptly pay to Buyer when received all monies received by Seller under any Purchased Asset or any claim or right or any benefit arising thereunder, except to the extent the same represents an Excluded Asset. Seller will continue to use its reasonable efforts to obtain any such required Consent or approval, and promptly upon receipt of such Consent will transfer and assign such Purchased Asset and such rights therein to Buyer without the payment by Buyer of any additional consideration.
     Section 2.08. Purchase Price; Allocation of Purchase Price. (a) The purchase price for the Purchased Assets and the Shares (the “Purchase Price”) is $3,000,000,000 (three billion dollars) in cash. The Purchase Price shall be paid as provided in Section 2.09 and shall be subject to adjustment as provided in Sections 2.09 and 2.11. Seller shall be treated as receiving a portion of the Purchase Price as agent for its Affiliates actually selling the Purchased Assets and the Shares consistent with the allocation of the Purchase Price pursuant to the Allocation Statement.
21

     (b) As soon as practicable after the Closing, Buyer shall deliver to Seller a statement (the “Allocation Statement”), allocating the Purchase Price (plus Assumed Liabilities, to the extent properly taken into account under Section 1060 of the Code) among the Purchased Assets and the Shares in accordance with Section 1060 of the Code and the principles and methodology set forth and illustrated in Section 2.08 of the Disclosure Schedule (the “Allocation Methodology”); provided that the parties may agree to amend or adjust such methodology to the extent that the parties mutually determine necessary to properly reflect the fair market value of the Purchased Assets and the Shares. If within 10 days after the delivery of the Allocation Statement Seller notifies Buyer in writing that Seller objects to the allocation set forth in the Allocation Statement because it is inconsistent with the Allocation Methodology, Buyer and Seller shall use their best efforts to revise the allocation specified in the Allocation Statement to the mutual satisfaction of Buyer and Seller within 20 days. In the event that Buyer and Seller are unable to resolve such dispute within 20 days, Buyer and Seller shall jointly retain Deloitte & Touche LLP (the “Accounting Referee”) to resolve the disputed items and the Accounting Referee shall determine an allocation that is most consistent with the Allocation Methodology. Upon resolution of the disputed items, the allocation reflected on the Allocation Statement shall be adjusted to reflect such resolution. The costs, fees and expenses of such Accounting Referee shall be borne equally by Buyer and Seller. If any Taxing Authority or other Governmental Authority requires a third party appraisal of all or part of the Purchased Assets or the Shares, Buyer shall bear the responsibility for obtaining such appraisal and the allocation set forth on the Allocation Statement shall be adjusted to the extent necessary to reflect the results of such appraisal.
     (c) Seller and Buyer agree to (i) be bound by the Allocation Statement (as it may be adjusted as provided in Section 2.08(b)) and (ii) act in accordance with the allocation established pursuant to Section 2.08(b) in the preparation, filing and audit of any Tax return (including filing Form 8594 with its federal income Tax return for the taxable year that includes the date of the Closing).
     (d) If an adjustment is made with respect to the Purchase Price pursuant to Section 2.11, the Allocation Statement shall be 

adjusted by mutual agreement of the parties in accordance with Section 1060 of the Code and the Allocation Methodology. In the event that an agreement is not reached within 20 days after the determination of Final Working Capital, any disputed items shall be resolved in the manner described in Section 2.08(b) . Buyer and Seller agree to file any additional information return required to be filed pursuant to Section 1060 of the Code and to treat the Allocation Statement as adjusted in the manner described in Section 2.08(b).
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     (e) Not later than 30 days prior to the filing of their respective Forms 8594 relating to this transaction, each party shall deliver to the other party a copy of its Form 8594.
     Section 2.09. Closing. (a) The closing (the “Closing”) of the purchase and sale of the Shares and the Purchased Assets and the assumption of the Assumed Liabilities hereunder shall take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York, as soon as possible, but in no event later than five Business Days, after satisfaction (or, to the extent permitted by Applicable Law, waiver) of the conditions set forth in Article 10 (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or, to the extent permitted by Applicable Law, waiver of those conditions), or at such other time or place as Buyer and Seller may agree.
     (b) At least five Business Days prior to the Closing Date, Seller shall deliver to Buyer a certificate setting forth Seller's good faith estimate of Closing Working Capital (such estimate, the “Estimated Working Capital”); provided that Estimated Working Capital shall not in any event exceed $200,000,000.
     (c) At the Closing:
     (i) Buyer shall deliver to Seller, in immediately available funds by wire transfer to an account or accounts designated by Seller by notice to Buyer not later than two Business Days prior to the Closing Date, an amount equal to the Purchase Price (A) plus, as an adjustment to the Purchase Price, if Estimated Working Capital exceeds Base Working Capital, the amount of such excess or (B) minus, as an adjustment to the Purchase Price, if Base Working Capital exceeds Estimated Working Capital, the amount of such excess;
     (ii) Seller and Buyer shall enter into the Transaction Documents (other than this Agreement and the License Side Agreement);
     (iii) Seller shall, or shall cause its Subsidiaries to, deliver to Buyer certificates for the Shares (to the extent that the Shares are represented by certificates) duly endorsed or accompanied by stock powers duly endorsed in blank, with any required transfer stamps affixed thereto; 
     (iv) Seller shall deliver certificates, in form and substance reasonably satisfactory to Buyer, from Seller and its relevant Subsidiaries, duly executed and acknowledged, certifying that the transactions contemplated by this Agreement are exempt from withholding under Section 1445 of the Code;
23

     (v) Seller shall deliver an opinion of its internal counsel, which opinion shall be in customary form, subject to customary assumptions and exceptions and otherwise reasonably acceptable to Buyer, with respect to the corporate existence of Seller and the corporate authorization of Seller and non-contravention of Seller's organizational documents with respect to the execution, delivery and performance by Seller of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby; and
     (vi) Seller shall, or shall cause its Subsidiaries to, deliver to Buyer such deeds, bills of sale, endorsements, consents, assignments and other good and sufficient instruments of conveyance and assignment as the parties and their respective counsel shall deem reasonably necessary to vest in Buyer all right, title and interest in, to and under the Purchased Assets and to evidence Buyer's assumption of the Assumed Liabilities.
     Section 2.10. Closing Statement. (a) As promptly as practicable, but no later than 75 days, after the Closing Date, Seller will 

cause to be prepared and delivered to Buyer a closing statement (the “Closing Statement”) prepared in accordance with the Accounting Policies, with such adjustments as are set forth in Section 2.10(a) of the Disclosure Schedule, and setting forth the current portion of a balance sheet for the Business as of the Closing and Seller's calculation of Closing Working Capital as of the close of business on the date immediately preceding the Closing Date. “Closing Working Capital” means, with respect to the Business, the excess of (i) Transferred Cash, accounts receivable, inventory and prepaid expenses and other current assets of the Business that constitute either Purchased Assets or assets of the Purchased Subsidiaries that are not Excluded Assets, less (ii) accounts payable, accrued expenses and other current liabilities of the Business that constitute (A) Assumed Liabilities, (B) payables, expenses or liabilities of the Purchased Subsidiaries that are not Excluded Liabilities or Purchased Subsidiary Liabilities or (C) payables, expenses or Liabilities for social security and other employee taxes and value added, sale and use taxes of the Purchased Subsidiaries, excluding the effect (including the Tax effect) of any act, event or transaction after the Closing not in the ordinary course of business of the Business and any provision for deferred income Tax assets or liabilities. Section 2.10(a) of the Disclosure Schedule (the “Sample Working Capital Calculation”) sets forth, for illustrative purposes only, an example of the calculation of Closing Working Capital as of December 31, 2004.
     (b) If Buyer disagrees with Seller's calculation of Closing Working Capital delivered pursuant to Section 2.10(a), Buyer may, within 45 days after delivery of the documents referred to in Section 2.10(a), deliver a notice to Seller disagreeing with such calculation and which specifies Buyer's calculation of such amount and, in reasonable detail, Buyer's grounds for such disagreement. Any such notice of disagreement shall specify those items or amounts as to which 
24

Buyer disagrees (each, a “Disputed Item”), and Buyer shall be deemed to have agreed with all other items and amounts contained in the Closing Statement and the calculation of Closing Working Capital delivered pursuant to Section 2.10(a).
     (c) If a notice of disagreement shall be duly delivered pursuant to Section 2.10(b), Buyer and Seller shall, during the 15 days following such delivery, use their reasonable efforts to reach agreement on the Disputed Items or amounts in order to determine Closing Working Capital. If Buyer and Seller are unable to reach such agreement during such period, they shall promptly thereafter jointly retain the Accounting Referee and cause the Accounting Referee promptly to review this Agreement and the Disputed Items for the purpose of calculating Closing Working Capital. In making such calculation, the Accounting Referee shall consider only the Disputed Items, and the determination of the Accounting Referee with respect to each Disputed Item shall be an amount within the range established with respect to such Disputed Item by Seller's calculation delivered pursuant to Section 2.10(a), on the one hand, and Buyer's calculation delivered pursuant to Section 2.10(b), on the other hand. The Accounting Referee shall deliver to Buyer and Seller, as promptly as practicable, a report setting forth such calculation. Such report shall be final and binding upon Buyer and Seller (absent manifest error). The cost of such review and report shall be borne (i) by Seller if the difference between Final Working Capital and Closing Working Capital as set forth in Seller's calculation of Closing Working Capital delivered pursuant to Section 2.10(a) is greater than the difference between Final Working Capital and Closing Working Capital as set forth in Buyer's calculation of Closing Working Capital delivered pursuant to Section 2.10(b), (ii) by Buyer if the first such difference is less than the second such difference and (iii) otherwise equally by Buyer and Seller.
     (d) Buyer and Seller agree that they will cooperate and assist in the preparation of the Closing Statement and the calculation of Closing Working Capital and in the conduct of the reviews referred to in this Section 2.10, including by making available to the other party and its Representatives, to the extent reasonably requested, reasonable access to books, records, work papers, personnel and Representatives in connection with such party's review and preparation of the Closing Statement. If Seller fails to substantially comply in a timely manner with requests made by Buyer pursuant to the immediately preceding sentence, the 45-day objection period referred to in Section 2.10(b) shall be extended for such period of time as is reasonably necessary to enable Buyer to complete its review of the Closing Statement.
     Section 2.11. Adjustment of Purchase Price. (a) If Estimated Working Capital exceeds Final Working Capital, Seller shall pay to Buyer, as an adjustment to the Purchase Price, in the manner and with interest as provided in Section 2.11(b), the amount of such excess. If Final Working Capital exceeds Estimated Working Capital, Buyer shall pay to Seller, in the manner and with 
25

interest as provided in Section 2.11(b), the amount of such excess. “Final Working Capital” means Closing Working Capital (i) as shown in Seller's calculation delivered pursuant to Section 2.10(a) if no notice of disagreement with respect thereto is duly delivered pursuant to Section 2.10(b); or (ii) if such a notice of disagreement is delivered, (A) as agreed by Buyer and Seller pursuant to Section 2.10(c) or (B) in the absence of such agreement, as shown in the Accounting Referee's calculation delivered pursuant to Section 2.10(c); provided that in no event shall Final Working Capital be more than Seller's calculation of Closing Working Capital delivered pursuant to Section 2.10(a) or less than Buyer's calculation of Closing Working Capital delivered pursuant to Section 2.10(b).
     (b) Any payment pursuant to Section 2.11(a) shall be made at a mutually convenient time and place within 10 days after Final Working Capital has been determined by delivery by Buyer or Seller, as the case may be, by wire transfer of immediately available funds to such account or accounts of such other party as may be designated by such other party. The amount of any payment to be made pursuant to this Section 2.11 shall bear interest from and including the Closing Date to but excluding the date of payment at a rate per annum equal to the Prime Rate as published in The Wall Street Journal in effect as of the Closing Date. Such interest shall be payable at the same time as the payment to which it relates and shall be calculated on the basis of a year of 365 days and the actual number of days elapsed.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
     Except as set forth in the Disclosure Schedule, Seller represents and warrants to Buyer, as of the date hereof and as of the Closing, that:
     Section 3.01. Corporate Existence and Power. Seller is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate powers and all material governmental licenses, authorizations, permits, consents and approvals required to carry on the Business as now conducted.
     Section 3.02. Corporate Authorization. The execution, delivery and performance by Seller of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby are within Seller's corporate powers and authority and have been duly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly and validly executed and delivered by Seller and constitutes a valid and binding agreement of Seller. Each other Transaction Document will be duly and validly executed by Seller at or prior to the Closing and, upon such execution and delivery by Seller 
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and the due and valid execution and delivery of such Transaction Document by each other party thereto, will constitute a valid and binding agreement of Seller, enforceable against Seller in accordance with its terms.
     Section 3.03. Governmental Authorization. The execution, delivery and performance by Seller of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby require no action by or in respect of, or filing with, any Governmental Authority other than (i) compliance with any applicable requirements of the HSR Act, any other Competition Laws and the 1934 Act and (ii) any such action or filing as to which the failure to make or obtain would not be material to the Business.
     Section 3.04. Noncontravention. The execution, delivery and performance by Seller of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby do not and will not (i) violate the certificate of incorporation or bylaws of Seller or any Subsidiary, (ii) assuming compliance with the matters referred to in Section 3.03, violate any Applicable Law in any material respect, (iii) assuming the obtaining of all Required Consents, constitute a default under or give rise to any right of termination, cancellation or acceleration of any right or obligation or to a loss of any benefit relating to the Business to which Seller or any of its Subsidiaries is entitled under any provision of any agreement or other instrument binding upon Seller or any of its Subsidiaries, except for such matters as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or (iv) result in the creation or imposition of any Lien on any Purchased Asset, except for Permitted Liens.
     Section 3.05. Required Consents. Section 3.05 of the Disclosure Schedule sets forth each agreement required to be set forth in Section 3.10(a) of the Disclosure Schedule requiring a consent or other action by any Person as a result of the execution, delivery and performance of this Agreement (the “Required Consents”).

     Section 3.06 . Purchased Subsidiaries. (a) Each Purchased Subsidiary is duly organized and validly existing under the laws of its jurisdiction of organization and has all organizational powers and all material governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted.
     (b) All of the Shares are owned beneficially and of record by Seller and its Subsidiaries, free and clear of any Lien, and Seller or its Subsidiaries, as applicable, will transfer and deliver to Buyer at the Closing valid title to the Shares free and clear of any Lien. There are no outstanding (i) securities of Seller or any Subsidiary convertible into or exchangeable for shares of capital stock or voting securities of any Purchased Subsidiary or (ii) options or other rights to 
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acquire from Seller or any Purchased Subsidiary, or other obligation of Seller or any Subsidiary to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of any Purchased Subsidiary (the items in clauses 3.06(b)(i) and 3.06(b)(ii) being referred to collectively as the “Purchased Subsidiary Securities”). There are no outstanding obligations of Seller or any Subsidiary to repurchase, redeem or otherwise acquire any outstanding Purchased Subsidiary Securities. No applicable securities law was violated in connection with the offering, sale or issuance of the Shares to Seller or any of its Subsidiaries. None of the Shares have been issued in violation of, and none are subject to, any purchase option, call, right of first refusal, preemptive, subscription, or other similar right. Neither the Seller nor any of its Subsidiaries is party to any arrangement granting to any Person any stock appreciation, phantom stock or other similar right with respect to the Shares or the Purchased Subsidiaries.
     Section 3.07. Financial Statements. The audited balance sheets as of December 31, 2003 and December 31, 2004 and the related audited statements of income and cash flows for the years ended December 31, 2003 and December 31, 2004, and the unaudited interim balance sheet as of September 30, 2005 and the related unaudited interim statements of income and cash flows for the nine months ended September 30, 2005 for the Business, true and complete copies of which are set forth in Section 3.07 of the Disclosure Schedule, together with the Supplemental Financial Statements delivered pursuant to Section 5.02(a), fairly present, in conformity with GAAP applied on a consistent basis and the books and records of the Business (except as may be indicated in the notes thereto), the financial position of the Business as of the dates thereof and its results of operations and cash flows for the periods then ended (subject to normal year-end adjustments and the absence of notes in the case of any unaudited interim financial statements, none of which would be, individually or in the aggregate, material).
     Section 3.08. Absence of Certain Changes. Since the Balance Sheet Date, the Business has been conducted in the ordinary course consistent with past practices and there has not been:
     (a) any event, occurrence or development which, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect;
     (b) any incurrence, assumption or guarantee by Seller or any of its Subsidiaries of any Indebtedness with respect to the Business other than in the ordinary course of business consistent with past practices;
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     (c) any creation or other incurrence of any Lien on any material Purchased Asset or any material asset of any Purchased Subsidiary other than Permitted Liens;
     (d) any transaction or commitment made, or any contract or agreement entered into, by Seller or any of its Subsidiaries relating to and material to the Business, other than transactions and commitments in the ordinary course of business consistent with past practices and those contemplated by the Transaction Documents;
     (e) any material change in any method of accounting or accounting practice by Seller or any of its Subsidiaries with respect to the Business except for any such change required by reason of a concurrent change in GAAP; 
     (f) any (i) employment, deferred compensation, severance, retirement or other similar agreement entered into with any (A) executive Business Employee or (B) any non-executive Business Employee whose annual base salary exceeds $125,000 (or any amendment to any such existing agreement), (ii) grant of any severance or termination pay to any such Business Employee 

or (iii) increase in compensation payable to any such Business Employee, in each case for non-executive Business Employees other than in the ordinary course of business consistent with past practices;
     (g) any material damage, casualty, or loss with respect to any of the Purchased Assets in excess of $3,000,000, other than those covered by insurance;
     (h) any sale, transfer, lease, license, or other disposal of any assets of the Business or of any Purchased Subsidiary for an amount in excess of $3,000,000, other than the sale of inventory and obsolete equipment in the ordinary course of business consistent with past practice;
     (i) any material reduction in capital expenditures relative to the capital expenditure budget in a manner inconsistent with past practices;
     (j) any acceleration of collection of accounts receivable or delaying of payment of accounts payable, in each case in any material respect and other than in the ordinary course of business consistent with past practice;
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     (k) any extension of Indebtedness to any Person in connection with the Business in excess of $5,000,000 in the aggregate other than the creation of accounts receivable in the ordinary course of Business; or
     (l) any amendment, termination, cancellation, or compromise or any material claims relating to the Business, or waiver of any right that is material to the Business.
     Section 3.09. No Undisclosed Material Liabilities. There are no Liabilities of the Seller or its Subsidiaries (including the Purchased Subsidiaries) relating to or arising out of the Purchased Assets or the conduct of the Business, that in each case would constitute Assumed Liabilities at the Closing or any Purchased Subsidiary Liability, of any kind, other than:
     (a) Liabilities provided for in the Latest Balance Sheet or disclosed in the notes thereto;
     (b) Liabilities disclosed in the Disclosure Schedule;
     (c) Liabilities arising in the ordinary course of business in accordance with the terms of any contract or agreement binding upon the Business;
     (d) Liabilities (other than for tort) incurred in the ordinary course of business since the date of the Latest Balance Sheet; and
     (e) other undisclosed Liabilities which, individually or in the aggregate, are not material to the Business;
provided that Seller shall have no liability under this Section 3.09 with respect to any subject matter as to which another Section in this Article 3 (other than Section 3.11) contains a specific representation.
     Section 3.10. Material Contracts. (a) With respect to the Business, neither Seller nor any of its Subsidiaries is a party to or bound by:
     (i) any lease (whether of real or personal property) requiring (A) annual rentals of $5,000,000 or more or (B) aggregate payments by or to Seller and its Subsidiaries of $10,000,000 or more, in the case of each of clauses (A) and (B) that cannot be terminated on not more than 120 days' notice without payment by any of Seller or its Subsidiaries of any material penalty;
     (ii) except for the agreements described in clause (iii) below, any agreement for the purchase of materials, supplies, goods, services, equipment or other assets, or any other agreement under which either (A)
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since January 1, 2005 there have been payments to or by Seller or any of its Subsidiaries of $5,000,000 or more or (B) aggregate payments to or by Seller or any of its Subsidiaries of $10,000,000 or more are required, in each case that cannot be terminated on not more than 120 days' notice without payment by Seller or any of its Subsidiaries of any material penalty;

     (iii) except for the agreements described in clause (ii) above, any sales, distribution or other similar agreement providing for the sale to or by Seller or any of its Subsidiaries of materials, supplies, goods, services, equipment or other assets under which since January 1, 2005 there have been payments by or to Seller or any of its Subsidiaries of $5,000,000 or more;
     (iv) any material partnership, joint venture or other similar agreement or arrangement;
     (v) any agreement relating to the acquisition or disposition of any business (whether by merger, sale of stock, sale of assets or otherwise) or any assets involving consideration in excess of $5,000,000, except for purchases of inventory, capital expenditures or sales of inventory or obsolete equipment, in each case in the ordinary course of business consistent with past practices;
     (vi) any agreement relating to the incurrence of Indebtedness, except any such agreement (A) with an aggregate outstanding principal amount not exceeding $5,000,000 or (B) entered into subsequent to the date of, and not in violation of, this Agreement;
     (vii) any material agreement between the Business on the one hand, and other business units of Seller or any Affiliate of Seller, on the other hand, that will not be terminated at or prior to the Closing without creation of any liability that would be an Assumed Liability;
     (viii) any employment, deferred compensation, severance, retirement or other similar agreement entered into with any executive Business Employee or any other Business Employee whose annual base salary exceeds $125,000;
     (ix) any agreement relating to the extension of Indebtedness to, or the making of an equity investment in, any Person, in each case in excess of $5 million in the aggregate, other than the creation of accounts receivable in the ordinary course of business;
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     (x) any agreement that limits in any material respect the freedom of the Business to compete in any line of business or with any Person or in any area, other than confidentiality agreements entered into in the ordinary course of business consistent with past practice; or
     (xi) any other agreement not required to be disclosed pursuant to clauses (i) through (x) above the termination or lapse of which would reasonably be expected to have a Material Adverse Effect.
     (b) Each Contract required to be set forth in Section 3.10 of the Disclosure Schedule is a valid and binding agreement of Seller or its applicable Subsidiary, and, to the knowledge of Seller, the other parties thereto and is in full force and effect. None of Seller or any of its Subsidiaries or, to the knowledge of Seller, any other party thereto is in default or breach in any respect under the terms of any such Contract, except for any such defaults or breaches which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
     Section 3.11. Litigation. There is no action, suit, investigation or proceeding pending by or against, or to the knowledge of Seller, threatened by or against or affecting, the Business or any Purchased Asset or asset of a Purchased Subsidiary before any arbitrator or any Governmental Authority, which would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and neither Seller nor its Subsidiaries is bound by any outstanding material order, injunction, judgment, arbitration award, or ruling that is material to the Business.
     Section 3.12. Compliance with Laws and Court Orders. Neither Seller nor any of its Subsidiaries is in, or has during the previous three years been in, violation of any Applicable Law relating to the Purchased Assets, the Purchased Subsidiaries or the conduct of the Business, except for violations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
     Section 3.13. Properties; Liens. (a) Section 3.13 of the Disclosure Schedule lists the street addresses of all Owned Real Property and all Leased Real Property (the “Real Property”).
     (b) Seller or a Subsidiary of Seller, as the case may be, has good and, subject to Permitted Liens, marketable title to all Owned Real Property and all Leasehold Improvements and a valid leasehold interest in all Leased Real Property. Seller or a Subsidiary of Seller, as the case may be, has good and marketable title, or a valid leasehold interest in, all Purchased Assets and all assets of the Purchased Subsidiaries which constitute personal property, except for properties and assets sold since the 

Balance Sheet Date in the ordinary course 
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of business consistent with past practices or where the failure to have such good title or valid leasehold interests would not, be material to the Business.
     (c) No Purchased Asset or asset of a Purchased Subsidiary is subject to any Lien, except for:
     (i) Liens disclosed in Section 3.13 of the Disclosure Schedule;
     (ii) Liens disclosed on the Latest Balance Sheet or notes thereto or securing liabilities reflected on the Latest Balance Sheet or notes thereto;
     (iii) Liens for Taxes, assessments and similar charges that are not yet due or are being contested in good faith;
     (iv) mechanic's, materialman's, carrier's, repairer's and other similar Liens arising or incurred in the ordinary course of business for amounts that are not yet due and payable or are being contested in good faith; or
     (v) other Liens that do not materially interfere with the use of any Owned Real Property or any other asset that is material to the Business (clauses (i) - (v) of this Section 3.13(c) are, collectively, the “Permitted Liens”).
     (d) All of the Purchased Assets and all assets of the Purchased Subsidiaries are in good operating condition and repair, ordinary wear and tear excepted, other than such states of disrepair which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
     Section 3.14. Intellectual Property. (a) Section 3.14(a) of the Disclosure Schedule contains a list of all registrations and applications for registration included in the Business Intellectual Property Rights (the “Registered Business Intellectual Property Rights”) and all material licenses (other than the Portfolio Cross-Licenses) or other material agreements relating to the Business Intellectual Property Rights that are included in the Purchased Assets.
     (b) (i) Seller or a Subsidiary of Seller owns or has a valid right to use the Business Intellectual Property Rights, (ii) no proceedings have been instituted, are pending or, to the knowledge of Seller, threatened which challenge any rights in respect of any of the Business Intellectual Property Rights or the validity thereof or assert that the operation of the Business infringes the Intellectual Property Rights of any other Person, and (iii) none of the Business Intellectual Property Rights, as used by Seller or its Subsidiaries, or the conduct of the Business as it is currently conducted by Seller or its Subsidiaries infringes upon 
33

the Intellectual Property Rights (other than Patents) of others or, to the knowledge of Seller, the Patents of others.
     (c) No Business Intellectual Property Right is subject to any outstanding judgment, injunction, order, decree or agreement restricting the use thereof by Seller (or Buyer, to Seller's knowledge) with respect to the Business or restricting the licensing (except for such restrictions as exist by reason of the Portfolio Cross-Licenses and the Cross-License Agreement) thereof by Seller (or Buyer, to Seller's knowledge) to any third party.
     (d) The Business Intellectual Property Rights together with the Intellectual Property Rights licensed to Buyer pursuant to the Cross License Agreement constitute all of the Intellectual Property Rights other than Patents and, to the knowledge of Seller, all Patents, used by the Business as currently conducted by Seller and its Subsidiaries and, together with those rights and services to be provided by Seller to Buyer pursuant to the Transition Services Agreement, are Intellectual Property Rights other than Patents and, to the knowledge of Seller, Patents sufficient for Buyer to conduct the Business as currently conducted.
     Section 3.15. Sufficiency of Purchased Assets. The Purchased Assets together with the property and assets of the Purchased Subsidiaries (other than those that Seller contemplates transferring out of a Purchased Subsidiary pursuant to Section 2.06(a)(i)) constitute all of the property and assets (tangible and intangible, but excluding all Intellectual Property Rights) used or held for use primarily in the conduct of the Business by Seller or any of its Subsidiaries as it is conducted as of the date hereof except 

for the Excluded Assets, and, together with the services, occupancy and other rights to be provided to Buyer pursuant to the Transition Services Agreement, are adequate in all material respects for Buyer to conduct the Business as currently conducted by Seller and its Subsidiaries. No representations or warranties are made under this Section 3.15 with respect to Intellectual Property Rights, which are exclusively the subject of Section 3.14. For purposes of Article 11, the accuracy of the representations and warranties in Section 3.14(d) and this Section 3.15 shall be determined without exception or carve-out for the failure to obtain any Consent from any third party or Governmental Authority, whether or not the requirement therefor is disclosed in the Disclosure Schedule; provided that Buyer shall have complied in all material respects with its obligations pursuant to Sections 2.07 and 7.01 with respect to the obtaining of such Consent.
     Section 3.16. Permits. Seller and its Subsidiaries possess all material permits, approvals, orders authorizations, consents, licenses, certificates, franchises, exemption of, or filings or registrations with, or issued by, any Governmental Authority necessary for the operation of the Business as currently conducted.
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     Section 3.17. Finders' Fees. Except for Morgan Stanley & Co. Incorporated and Lazard Frères & Co. LLC, each of whose fees will be paid by Seller, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Seller who might be entitled to any fee or commission in connection with the transactions contemplated by the Transaction Documents for which Buyer or any of its Affiliates would be responsible.
     Section 3.18. Employee Benefit Plans. (a) Seller has made available to Buyer copies of (i) each material Employee Plan together with the most recent annual report (Form 5500 including, if applicable, Schedule B thereto) and Form 990, if applicable, prepared in connection with any such plan and (ii) each material International Plan. Section 3.18 of the Disclosure Schedule sets forth a list of all the material Employee Plans and material International Plans.
     (b) None of Seller, any Subsidiary of Seller, any of their ERISA Affiliates or any predecessor thereof, maintains, administers or contributes to, or has in the past maintained, administered or contributed to, any Employee Plan subject to Title IV of ERISA.
     (c) None of Seller, any Subsidiary of Seller, any of their ERISA Affiliates or any predecessor thereof contributes to, or has in the past contributed to, any multiemployer plan, as defined in Section 3(37) of ERISA.
     (d) Each Employee Plan which is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter, or has pending or has time remaining in which to file, an application for such determination from the Internal Revenue Service, and to the knowledge of Seller there is no reason why any such determination letter should be revoked or not be reissued. Seller has made available to Buyer copies of the most recent Internal Revenue Service determination letters with respect to each such Employee Plan. Each Employee Plan has been maintained, funded and administered in compliance with its terms and with any Applicable Law, except for instances of non-compliance as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. With respect to each Employee Plan, all contributions and premium payments that are due have been made within the time periods prescribed by ERISA and the Code, except for any such contribution or payment which the failure to make would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No events have occurred with respect to any Employee Plan that could result in payment or assessment by or against the Business, any Purchased Asset or any Purchased Subsidiary, or Buyer or any of its Affiliates of any excise taxes under Sections 4972, 4975, 4976, 4977, 4979, 4980B, 4980D, 4980E or 5000 of the Code, except for excise taxes as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
35

     (e) No Purchased Subsidiary has any material Liability under Section 302 or Title IV of ERISA or Section 412 of the Code. None of Seller, any Retained Subsidiary or any of their ERISA Affiliates has any material Liability under Section 302 or Title IV of ERISA or Section 412 of the Code that could become a material Liability of Buyer, any Purchased Subsidiary or any of their Affiliates.

     (f) Seller has (or has caused its Subsidiaries to have) performed all obligations required with respect to each International Plan, except for any such obligation as to which the failure to perform would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each International Plan has been maintained in compliance with its terms and with any Applicable Law, except for instances of non-compliance as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. All payments (including premiums due) and all employer and employee contributions required to have been collected in respect of each International Plan have been paid when due, or if applicable, accrued on the balance sheet of Seller and its Affiliates, except for any such payment, contribution or accrual as to which the failure to make would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
     Section 3.19 . Employee and Labor Matters. (a) To the knowledge of Seller, no Business Employee whose annual base salary exceeds $125,000 (i) has any present intention to terminate his or her employment with the Business within 12 months of the Closing Date, or (ii) is a party to any confidentiality, non-competition, proprietary rights or other such agreement with any other Person besides the Seller or any of its Subsidiaries, as applicable, that would be material to the performance of his or her employment duties.
     (b) (i) Neither the Seller nor any of its Subsidiaries is party to any collective bargaining agreement with respect to the Business or any Business Employee; (ii) no union organizing efforts are underway or, to the knowledge of the Seller, threatened, and no other question concerning labor representation exists with respect to the Business or any Business Employee; and (iii) no material labor dispute has occurred in the past three years, and no material labor dispute is underway or, to the knowledge of the Seller, threatened, in each case with respect to the Business.
     Section 3.20. Environmental Compliance. Except as to matters that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect:
     (a) (i) no written notice, order, request for information, complaint or penalty has been received by Seller or any of its Subsidiaries, and (ii) there are no judicial, administrative or other actions, suits or 
36

proceedings pending or threatened, in the case of each of (i) and (ii), which allege a violation of any Environmental Law or allege the existence of any Environmental Liabilities and relate to the Purchased Assets, the Business or the assets of the Purchased Subsidiaries; and
     (b) Seller and its Subsidiaries have obtained or caused to be obtained all environmental permits necessary for the operation of the Purchased Assets, the Business and the assets of the Purchased Subsidiaries to comply with all applicable Environmental Laws and Seller and its Subsidiaries are in compliance, and have for the previous three years been in compliance, with the terms of such permits and, with respect to the operation of the Purchased Assets, the Business and the assets of the Purchased Subsidiaries, with all other applicable Environmental Laws;
     (c) With respect to the Purchased Assets, the Business, or the assets of the Purchased Subsidiaries, none of Seller or its Subsidiaries has at any time prior to the Closing treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, released, or exposed any Person to, any hazardous substance, material or waste, and no hazardous substances, waste or material at any time prior to the Closing has been released at, on, under or from any Real Property, in each case so as to give rise to any material Liability, including any such liability for response costs, corrective action costs, personal injury, property damage, natural resources damages or attorney fees or material investigative, corrective or remedial obligations, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or any other Environmental Law; and
     (d) Seller has furnished to Buyer all environmental audits and other written assessments and reports bearing on material environmental liabilities, in each case relating to the current operations and facilities of the Business and which are in its or its Subsidiaries' possession or under its or their reasonable control.
     Section 3.21. Insurance. Section 3.21 of the Disclosure Schedule lists and briefly describes the material components of the insurance coverage maintained and owned by Seller with respect to the Business. All of such insurance policies are in full force and effect, and the Seller and its Subsidiaries are not in default in any material respect with respect to their obligations under any such insurance policies.
     Section 3.22. Customer and Supplier Relationships. To Seller's knowledge, Section 3.22 of the Disclosure Schedule contains a complete and accurate list of the top ten customers (by revenue) ranked by ability to ultimately direct the purchasing 

decision of the Control Business, the top ten customers (by
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revenue) ranked by ability to ultimately direct the purchasing decision of the Sensor Business, the top ten suppliers (by purchases) of the Control Business, and the top ten suppliers (by purchases) of the Sensor Business, in each case for the period from January 1, 2005 to the date hereof. No such customer or supplier within the last twelve months has canceled or otherwise terminated, or to the knowledge of the Seller, threatened to cancel or terminate, its relationship with the Business, and no such customer or supplier has during the last twelve months decreased materially or, to the knowledge of Seller, threatened to decrease or limit materially its business with the Business, in each case whether as a result of the transactions contemplated hereby or otherwise.
     Section 3.23. Product Warranty and Liability. All products made, assembled, or sold by the Business in the previous three years have been in conformity with all applicable contractual commitments, Applicable Law, and all express and implied warranties, with only such exceptions as would not reasonably be expected to be material to the Business. Neither Seller nor any of its Subsidiaries has been notified of any claims for, and Seller has no knowledge of any threatened claims for, any product returns, warranty obligations or product services that would reasonably be expected to be material to the Business.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
     Buyer represents and warrants to Seller, as of the date hereof and as of the Closing, that:
     Section 4.01. Corporate Existence and Power. Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware and has all corporate powers and all material governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted.
     Section 4.02. Corporate Authorization. The execution, delivery and performance by Buyer of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby are within the corporate powers and authority of Buyer and have been duly authorized by all necessary corporate action on the part of Buyer. This Agreement has been duly and validly executed and delivered by Buyer and constitutes a valid and binding agreement of Buyer. Each other Transaction Document will be duly and validly executed by Buyer at or prior to the Closing and, upon such execution and delivery by Buyer and the due and valid execution and delivery of such Transaction Document by each other party thereto, will constitute a valid and binding agreement of Buyer, enforceable against Buyer in accordance with its terms.
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     Section 4.03. Governmental Authorization. The execution, delivery and performance by Buyer of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby require no material action by or in respect of, or material filing with, any Governmental Authority other than compliance with any applicable requirements of the HSR Act and other Competition Laws.
     Section 4.04. Noncontravention. The execution, delivery and performance by Buyer of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby do not and will not (i) violate the certificate of incorporation or bylaws of Buyer, (ii) assuming compliance with the matters referred to in Section 4.03, violate any Applicable Law, (iii) require any consent or other action by any Person under, constitute a default under or give rise to any right of termination, cancellation or acceleration of any material right or obligation or to a loss of any material benefit to which Buyer is entitled under any provision of any agreement or other instrument binding upon Buyer or (iv) result in the creation or imposition of any material Lien on any asset of Buyer.
     Section 4.05. Financing. Schedule 4.05 hereto contains true and complete copies of (a) an executed commitment letter (the “Equity Commitment Letters”) from Bain Capital Fund VIII, L.P. confirming its commitment to provide Buyer with equity financing in an aggregate amount of up to $975,000,000 (nine hundred seventy-five million dollars) (the “Equity Financing”) and designating Seller as a third party beneficiary thereof (subject to the limitations set forth therein) and (b) an executed 

commitment letter (the “Debt Commitment Letter”) from Morgan Stanley Senior Funding, Inc., Bank of America, N.A., Bank of America Bridge LLC, Banc of America Securities LLC and Goldman Sachs Credit Partners L.P. confirming their commitment to provide Buyer with up to $2.125 billion in debt financing (the “Debt Financing” and together with the Equity Financing, the “Financing”). Except as previously disclosed to Seller in writing, Buyer has not entered into any agreement not set forth in the Debt Commitment Letter pursuant to which any Person has the right to modify or amend the terms of the Debt Financing described in the Debt Commitment Letter. Each of the Equity Commitment Letters is in full force and effect, is a valid and binding obligation of each of the parties thereto and has not been amended or modified in any respect. The Debt Commitment Letter is a valid and binding obligation of Buyer and, to the knowledge of Buyer, the other parties thereto and, as of the date hereof, has not been amended or modified in any respect. No event has occurred which, with or without notice, lapse of time or both, would constitute a default or breach on the part of Buyer under any term or condition of the Equity Commitment Letters or the Debt Commitment Letter, and Buyer has no reason to believe that it will be unable to satisfy on a timely basis any term or condition of closing to be satisfied by it pursuant to the Equity Commitments Letters or the Debt Commitment Letter. Buyer has fully paid any 
39

and all commitment or other fees required by the Debt Commitment Letter to be paid on or before the date hereof. The Financing, when funded in accordance with, and subject to the terms and conditions of, the Equity Commitment Letters and the Debt Commitment Letter will provide Buyer with funds sufficient to pay the Purchase Price and any other amounts to be paid by it under the Transaction Documents.
     Section 4.06. Litigation. There is no action, suit, investigation or proceeding pending against, or to the knowledge of Buyer threatened against or affecting, Buyer before any arbitrator or any Governmental Authority, except for such actions, suits, investigations or proceedings as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Buyer to consummate the transactions contemplated by the Transaction Documents.
     Section 4.07. Finders' Fees. There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Buyer who might be entitled to any fee or commission in connection with the transactions contemplated by this Agreement for which Seller or any of its Affiliates would be responsible.
     Section 4.08. Inspections; No Other Representations. Buyer is an informed and sophisticated purchaser, and has engaged expert advisors, experienced in the evaluation and purchase of property and assets such as the Purchased Assets and the Shares as contemplated hereunder. Buyer has undertaken such investigation and has been provided with and has evaluated such documents and information as it has deemed necessary to enable it to make an informed decision with respect to the execution, delivery and performance of this Agreement. Buyer acknowledges that Seller has given Buyer access to the key employees, documents and facilities of the Business. Buyer will undertake prior to Closing such further investigation and request such additional documents and information as it deems necessary. Buyer agrees to accept the Purchased Assets and the Business in the condition they are in on the Closing Date based on its own inspection, examination and determination with respect to all matters and without reliance upon any express or implied representations or warranties of any nature made by or on behalf of or imputed to Seller, except as expressly set forth in this Agreement. Nothing in this paragraph will in any way affect Buyer's ability to rely on the representations and warranties contained in Articles 3 and 8, nor affect Buyer's rights to indemnification under Article 11.
ARTICLE 5
COVENANTS OF SELLER
     Seller agrees that:
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     Section 5.01. Conduct of the Business. From the date hereof until the Closing Date, except as set forth on Section 5.01 of the Disclosure Schedule or as specifically contemplated by any of the Transaction Documents, Seller shall, and shall cause its Subsidiaries to, conduct the Business in the ordinary course consistent with past practice and shall use its reasonable efforts to 

preserve intact the business organizations and relationships with third parties and to keep available the services of the current Business Employees. Without limiting the generality of the foregoing, from the date hereof until the Closing Date, except as set forth in Section 5.01 of the Disclosure Schedule or as specifically contemplated by any of the Transaction Documents, with respect to the Business Seller will not and will cause its Subsidiaries not to:
     (a) acquire assets from any other Person (including by merger or consolidation) for consideration in excess of $5,000,000 in the aggregate except (i) pursuant to existing contracts or commitments disclosed to Buyer as of the date hereof or (ii) purchases of inventory or capital expenditures in the ordinary course of business consistent with past practice;
     (b) sell, lease, license or otherwise dispose of any Purchased Assets or assets of the Purchased Subsidiaries (including by merger or consolidation) except (i) pursuant to existing contracts or commitments disclosed to Buyer as of the date hereof or (ii) sales of inventory or obsolete equipment in the ordinary course of business consistent with past practice;
     (c) agree or commit to do any of the foregoing;
     (d) take any action that would make any representation or warranty of Seller in Section 3.08 of this Agreement inaccurate in any material respect at the Closing Date or which would require disclosure pursuant to Section 3.08 if taken after the Balance Sheet Date and prior to the date hereof; or
     (e) with respect to the Purchased Subsidiaries, make or change any Tax election, change an annual accounting period, adopt or change any accounting method, file any amended Tax Return, settle any Tax claim or assessment, or take any other similar action relating to the filing of any Tax Return or the payment of any Tax, if such election, adoption, change, amendment, settlement, or other action would have the effect of increasing the liability for Taxes of any Purchased Subsidiary for any Tax period ending after the Closing Date.
     Section 5.02. Access to Information. (a) From the date hereof until the Closing Date, Seller will, and will cause its Subsidiaries to, (i) give Buyer, its 
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Representatives and financing sources reasonable access to the offices, properties, books and records of Seller and its Subsidiaries relating to the Business, (ii) furnish to Buyer and its Representatives such financial and operating data (including (A) audited annual financial statements with respect to 2005, which shall be furnished as soon as available but in any event no later than February 28, 2006, (B) unaudited quarterly financial statements with respect to the first quarter of 2006, which shall be furnished as soon as available but in any event no later than April 30, 2006 (such annual and quarterly financial statements, collectively, the “Supplemental Financial Statements”) and (C) monthly management reports in a form consistent with the monthly management reports customarily prepared by the Business, each such monthly management report to be furnished as soon as available but in any event no later than 15 days after the end of the applicable month) and other information relating to the Business as such Persons may reasonably request and (iii) instruct the employees, counsel, financial advisors and other Representatives of Seller and its Subsidiaries to cooperate with Buyer in its investigation of the Business. Any investigation pursuant to this Section shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of Seller. Notwithstanding the foregoing, (A) Buyer shall not have access (1) to personnel records of Seller or its Affiliates relating to individual performance or evaluation records, medical histories or other information which in Seller's good faith opinion is sensitive or the disclosure of which could subject Seller or its Affiliates to risk of liability, (2) for purposes of conducting any environmental sampling or testing or (3) to any information to the extent relating to any Retained Business and (B) Seller may, unless Buyer cooperates in any reasonably satisfactory protective arrangement, withhold, as and to the extent necessary to avoid contravention or waiver, any document or information the disclosure of which would violate any agreement or any Applicable Law or would result in the waiver of any legal privilege or work-product privilege.
     (b) Seller shall, and shall cause its Subsidiaries to, provide such cooperation as may be reasonably requested by Buyer in connection with obtaining the financing contemplated by the Debt Commitment Letter (or any replacement thereof), including: (i) participation in meetings, drafting sessions, and due diligence sessions, and otherwise assisting Buyer in the preparation of offering materials and materials for rating agency presentations; (ii) reasonably cooperating with the marketing efforts of Buyer, its Subsidiaries, and their financing sources for any of the financing contemplated by the Debt Commitment Letter (or any replacement thereof), including participation in management presentation sessions, “road shows”, and sessions with rating agencies; (iii) furnishing Buyer, its Subsidiaries, and their financing sources with financial and other pertinent information regarding the Business as may be reasonably requested by Buyer, including all financial statements (but excluding any pro forma financial statements, which shall be prepared by Buyer with the 

42

cooperation of Seller and its Subsidiaries), and assisting Buyer in the preparation of business projections and other financial data of the type required by Regulation S-X and Regulation S-K under the Securities Act and of the type and form customarily included in offering memoranda, private placement memoranda, prospectuses and similar documents; (iv) providing and executing documents as may be reasonably requested by Buyer, including a certificate of the chief financial officer of (or person performing equivalent function for) the Business with respect to solvency matters and consents of accountants for use of their reports in any materials relating to the Debt Commitment Letter; (v) reasonably facilitating the pledging of collateral; and (vi) using reasonable efforts to obtain accountants' comfort letters, legal opinions, surveys and title insurance as reasonably requested by Buyer. All reasonable out-of-pocket expenses incurred by Seller or any of its Subsidiaries in connection with the foregoing sentence shall be paid, or reimbursed promptly following demand therefor, by Buyer.
     (c) On and after the Closing Date, Seller will, and will cause its Subsidiaries to, afford promptly to Buyer, its Subsidiaries and their respective Representatives reasonable access to its books of account, financial and other records (including accountant's work papers), information, employees and auditors to the extent necessary or useful for any such Persons in connection with any audit, investigation, dispute or litigation or any other reasonable business purpose relating to the Business or the transactions contemplated hereby (including the preparation by Buyer of an initial filing under the Securities Act with respect to the financing contemplated by the Debt Commitment Letter and periodic reports under the Exchange Act); provided that any such access by any such Persons shall not unreasonably interfere with the conduct of the business of Seller. In addition, Seller will use reasonable efforts to provide, or to cause its accountants or other Representatives to provide, such consents, letters or other documents as Buyer may reasonably request in connection with the preparation by Buyer of such filing under the Securities Act and such reports under the Exchange Act. Buyer shall bear all of the out-of-pocket costs and expenses (including attorneys' fees, but excluding reimbursement for general overhead, salaries and employee benefits) reasonably incurred in connection with the foregoing.
     Section 5.03. Non-compete. (a) For a period of six years following the Closing Date, Seller shall not, and shall not permit any of its Subsidiaries or Affiliates to, engage in or participate in any business which engages in, the design, development, manufacture, marketing, license or sale of Sensor Products or Control Products; provided that for purposes of this Section 5.03(a), the phrases “or under development” in clause (iii) of the definition of Control Products and “or under development” in clause (ii) of the definition of Sensor Products shall be disregarded. The term “participate in” shall mean, with respect to any Person, (i) owning, managing or having any direct or indirect interest in such Person, whether as owner, stockholder, partner or joint venturer or (ii)
43

having any officer or other senior management employee, at the direction of Seller, act as a director, officer, employee, agent, consultant or independent contractor of any Person.
     (b) Notwithstanding the foregoing, nothing in this Agreement shall restrict in any way:
     (i) the right of Seller or any of its Subsidiaries to (A) design, develop, manufacture, market, license or sell Semiconductor Products (including any Semiconductor Products which are designed to sense physical phenomena, condition signals from sensors or both), (B) engage in any Semiconductor Activities or (C) license any Intellectual Property Rights (other than the Business Intellectual Property Rights, except as expressly described in the Cross License Agreement);
     (ii) the right of Seller or any of its Subsidiaries to design, develop, manufacture, market, license or sell any tire pressure sensor application currently under development or manufactured or sold by Seller or any of the Retained Subsidiaries and described in Section 5.03 of the Disclosure Schedule or any extension, modification, derivative, replacement or successor thereof (collectively, the “Tire Pressure Sensor Products”);
     (iii) the acquisition or ownership by Seller or any of its Subsidiaries of up to 20% of the outstanding equity securities of any Person whose revenues attributable to a business in which Seller or such Subsidiary would otherwise not be permitted to engage or participate pursuant to this Section 5.03 (a “Competing Business”) do not at any time exceed $50 million (based on the last annual financial statements of such Person preceding the date of determination), so long as neither Seller nor any of its 

Subsidiaries has any active participation in the business or management of the business conducted by such Person (which active participation would include appointing a representative to serve on the board of directors or equivalent governing body of such Person or having the right to effectively control or materially restrict, through veto rights or otherwise, the management or policies of such Person other than with respect to customer supply or product development arrangements); or
     (iv) the acquisition by Seller or any of its Subsidiaries of a majority interest in a Person who conducts a Competing Business; provided that if the Competing Business has annual revenues in excess of $5 million (based on the last annual financial statements of such Person preceding the date of determination) during the last full fiscal year preceding the consummation of such acquisition or any subsequent full fiscal year, then
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     (A) Seller shall, or shall cause its relevant Subsidiary to, as soon as it may reasonably do so on commercially reasonable terms and in any event within eighteen months following (1) if the Competing Business' annual revenues exceeded such threshold for its last full fiscal year preceding the acquisition, the consummation of such acquisition and (2) otherwise, the end of the first full fiscal year in which the Competing Business' annual revenues exceed such threshold, divest such Person's interest in the Competing Business or terminate such Competing Business; and
     (B) with respect to any such divestiture, Seller shall, or shall cause its relevant Subsidiary to, provide Buyer with the exclusive opportunity to negotiate with Seller or such Subsidiary for a period of 60 days with respect to the possible acquisition by Buyer of the Competing Business prior to entering into negotiations with another Person with respect to such divestiture.
     Section 5.04. Confidentiality. Seller will not, and will cause its controlled Affiliates and Representatives not to, for a period of three years after the Closing Date, directly or indirectly, without the prior written consent of Buyer, disclose to any third party (other than each other and their respective Representatives) any confidential or proprietary information included in the Purchased Assets; provided that the foregoing restriction will not (a) apply to any information to the extent (i) relating to Intellectual Property Rights, the disclosure of which shall be governed by the Cross-License Agreement, (ii) generally available to, or known by, the public (other than as a result of disclosure in violation of this Section 5.04), (iii) that such information relates to Semiconductor Products or (iv) independently developed by Seller or any of its Affiliates (other than by the Business prior to the Closing) or (b) prohibit any disclosure (i) required by any applicable legal requirement or (ii) made to the extent necessary, in the reasonable judgment of Seller, in connection with the enforcement of any right or remedy relating to any of the Transaction Documents or the transactions contemplated hereby or thereby, so long as, in the case of each of the foregoing clauses (i) and (ii), to the extent legally permissible, Seller provides Buyer with reasonable prior notice of such disclosure and a reasonable opportunity to seek an appropriate protective order.
     Section 5.05. Insurance. (a) Except as set forth in this Section 5.05, coverage of the Purchased Assets and Purchased Subsidiaries under any insurance policy of Seller or its Affiliates shall cease as of the Closing Date.
     (b) Seller shall and shall cause its Affiliates to use reasonable efforts (including using reasonable efforts to cause Buyer and its Subsidiaries to be listed as “Additional Insureds”) to ensure that the Purchased Assets and Purchased 
45

Subsidiaries shall, to the extent covered as of the date hereof or the Closing Date, continue to have coverage under each insurance policy in effect with respect thereto at any time prior to the Closing (each, a “Specified Policy”) in accordance with the terms and conditions thereof from and after the Closing Date for any loss, liability or damage suffered with respect to any incident or event occurring prior to the Closing. Seller shall indemnify Buyer for the costs and expenses referred to in this Section 5.05(b) to the extent, if any, that Seller is required to do so pursuant to Article 11.
     (c) In the case of any Specified Policy that is a “claims made basis” policy, from the Closing Date until the policy expiration date (including any renewal thereof) of such policy (if later than the Closing Date), and in the case of any Specified Policy that is an “occurrence basis” policy, after the Closing Date, the Seller shall, and shall cause its Affiliates to, use their reasonable efforts to assist Buyer or its Subsidiaries in asserting claims for any loss, liability or damage suffered with respect to any Purchased Assets and Purchased Subsidiaries after the Closing with respect to any incident or event occurring prior to the 

Closing, to the extent such loss, liability or damage is covered by the terms of such Specified Policy; provided that (i) all of the Seller's and its Affiliates' reasonable out-of-pocket costs and expenses incurred in connection with the foregoing are promptly paid by Buyer or its Subsidiaries as directed by the Sellers, (ii) such claims will be subject to (and recovery thereon will be reduced by the amount of) any applicable deductibles, retentions, gaps or self-insurance provisions, (iii) such claims will be subject to exhaustion of per claim and applicable limits, and (iv) in the event that any legal action, arbitration, negotiation or other proceedings are required for coverage to be asserted against any insurer or a claim to be perfected, Buyer shall do so solely at its own expense. For the avoidance of doubt, in no event shall Buyer be entitled to assert any claim with respect to an occurrence with a date of loss occurring after the Closing. None of the Seller or its Affiliates will bear any liability for the failure of an insurance carrier to pay any claim under any Specified Policy. This Section 5.05(c) shall not affect Seller's indemnification obligations pursuant to Article 11.
     (d) Notwithstanding any provision of this Agreement, Seller shall not be required to comply with this Section 5.05 or any portion thereof if so doing would (i) be materially adverse to Seller or its Subsidiaries or (ii) require Seller or its Subsidiaries to incur any significant costs not reimbursable by Buyer.
     Section 5.06 . Exclusivity. Until the date upon which this Agreement is terminated, Seller shall not, and shall cause each of its Subsidiaries, Affiliates and Representatives not to, directly or indirectly, solicit or initiate or enter into discussions or transactions with, or encourage, or provide any information to any Person or group of Persons (other than Buyer and its Representatives) concerning, any sale, lease, or license of all or any portion of the Business or the Purchased Assets or Purchased Subsidiaries (other than sales of obsolete equipment or 
46

inventory in the ordinary course of business and sales expressly permitted by this Agreement or with respect to assets or liabilities of the Purchased Subsidiaries that are deemed Excluded Assets or Excluded Liabilities pursuant to Section 2.06(a)) or any other alternative to the transactions contemplated by this Agreement (an “Alternative Transaction”); provided that Seller shall be entitled, by notice to Buyer delivered not later than April 10, 2005, to terminate its obligations pursuant to this Section 5.06 if Buyer does not deliver to Seller on March 31, 2005 a letter that describes in reasonable detail the status of Buyer's efforts to consummate the Debt Financing and reasonably demonstrate that the Debt Financing is reasonably likely to be consummated, except that, notwithstanding such termination, Seller shall not be permitted to enter into negotiations with respect to the terms of any Alternative Transaction until the date upon which this Agreement is terminated.
     Section 5.07. Intercompany Receivables and Payables. At or prior to the Closing, Seller shall, and shall cause its Subsidiaries to, eliminate all intercompany receivables and payables between the Business, on the one hand, and any Retained Business, on the other hand, incurred in the ordinary course of business. For the avoidance of doubt, any Taxes of the Purchased Subsidiaries arising from such elimination shall be treated as a Purchased Subsidiary Liability for purposes of this Agreement.
ARTICLE 6
COVENANTS OF BUYER
     Buyer agrees that:
     Section 6.01. Confidentiality. All information provided or made available to Buyer, its Affiliates or any of their respective Representatives or potential sources of financing (except for any such Representatives or financing sources who are party to a confidentiality agreement with Seller with respect to the transactions contemplated hereby) pursuant to any of the Transaction Documents or in connection with the transactions contemplated thereby will be subject to the confidentiality agreement dated September 28, 2005 between Buyer and Seller (the “Confidentiality Agreement”), which agreement shall remain in full force and effect for the benefit of Seller and shall survive the Closing (with respect to information concerning the Retained Businesses) or any termination of this Agreement.
     Section 6.02. Access. On and after the Closing Date, Buyer will afford promptly to Seller and its Representatives reasonable access to its properties, books, records, employees and auditors to the extent necessary to permit Seller to determine any matter relating to its rights and obligations hereunder or to any period ending on or before the Closing Date; provided that any such access by 
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Seller shall not unreasonably interfere with the conduct of the business of Buyer. Seller shall bear all of the out-of-pocket costs and expenses (including attorneys' fees, but excluding reimbursement for general overhead, salaries and employee benefits) reasonably incurred in connection with the foregoing.
     Section 6.03. Financing Matters. Buyer shall comply with its obligations under the Debt Commitment Letter and shall use its reasonable efforts to consummate the Debt Financing on the terms and conditions described in the Debt Commitment Letter, including using its reasonable efforts to (i) negotiate definitive agreements with respect to the Financing on the terms and conditions contained in the Debt Commitment Letter and (ii) satisfy all conditions to the Debt Financing to the extent the satisfaction of such conditions is within the control of Buyer. If any portion of the Debt Financing becomes unavailable on the terms and conditions contemplated in the Debt Commitment Letter, Buyer will seek in good faith to arrange to obtain such portion from alternative sources on terms and conditions that are equivalent or more favorable to Buyer as promptly as practicable. Subject to the satisfaction by Seller of its obligations pursuant to Section 5.02, the conditions set forth in Section 10.01 and 10.02 (other than Section 10.02(e)) and the conditions to funding set forth in the Debt Commitment Letter (other than conditions the nonsatisfaction of which is solely the result of the failure of the Equity Financing to be consummated), Buyer will draw down on the Bridge Loans, the Senior Bridge Loans and the Senior Subordinated Bridge Loans (in each case, as defined in the Debt Commitment Letter) if adequate funding has not been obtained through the issuance of the Subordinated Notes and the Notes (in each case, as defined in the Debt Commitment Letter) and the senior secured portion of the Debt Financing, in each case, as necessary to enable the Debt Financing to be funded on or prior to the later of (A) May 31, 2006 and (B) the earlier of (1) June 30, 2006 and (2) the 30th day after the first date on which both (x) Seller shall have provided Buyer with all financial information reasonably necessary to complete an offering memorandum for the Subordinated Notes and Notes financing (it being understood that such requirement shall not be satisfied if such information would go “stale” within such 30-day period) and (y) the conditions set forth in Section 10.01(a), 10.01(b), 10.01(c), 10.02(b) and 10.02(c) have been satisfied and the parties reasonably expect that the condition set forth in Section 10.01(e) will be satisfied within 30 days. Buyer will give Seller prompt notice of any material breach by any party of the Debt Commitment Letter or any termination of the Debt Commitment Letter. To the extent reasonably requested by Seller, Buyer will keep Seller informed on a current basis in reasonable detail of the status of its efforts to consummate the Financing. Buyer will not agree to any material amendment or modification to, or grant or seek any waiver under, the Debt Commitment Letter without first consulting with Seller and, if such amendment, modification or waiver would or would reasonably be expected to adversely affect or delay in any material respect 
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Buyer's ability to consummate the Debt Financing or the Closing, receiving Seller's prior written consent.
     Section 6.04. 338(g) Election. Buyer agrees to make, upon Seller's written request received by Buyer no later than 30 days after the Closing Date, an effective and irrevocable election under Section 338(g) of the Code with respect to each Purchased Subsidiary, to file each such election within the time limit set forth in Treasury Regulation Section 1.338 -2(d), and to provide Seller or its relevant Subsidiary with a notice of each such election pursuant to Treasury Regulation Section 1.338 -2(e)(4).
ARTICLE 7
COVENANTS OF BUYER AND SELLER
     Buyer and Seller agree that:
     Section 7.01. Reasonable Efforts; Further Assurance. (a) Subject to the terms and conditions of this Agreement, Buyer and Seller will use their reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under Applicable Law to consummate the transactions contemplated by the Transaction Documents. Seller and Buyer agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by the Transaction Documents, to vest in Buyer or its Subsidiaries ownership of the Purchased Subsidiaries and good title to the Purchased Assets and to confirm the assumption by Buyer or its Subsidiaries of the Assumed Liabilities.

     (b) In furtherance and not in limitation of the foregoing, each of Buyer and Seller shall make appropriate filings pursuant to applicable Competition Laws, including an appropriate filing of a Notification and Report Form pursuant to the HSR Act and any applicable filings in the European Union, Korea and, to the extent required by Applicable Law, Brazil, China, Japan and Mexico, with respect to the transactions contemplated by the Transaction Documents as promptly as reasonably practicable and, in the case of such Notification and Report Form pursuant to the HSR Act, in any event within 10 Business Days of the date hereof. Each of Buyer and Seller shall supply as promptly as reasonably practicable any additional information and documentary material that may be requested pursuant to the HSR Act and any other Competition Laws and shall take all other actions reasonably necessary to cause the expiration or termination of the applicable waiting periods under the HSR Act and any other Competition Laws as soon as practicable.
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     (c) If any objections are asserted with respect to the transactions contemplated by any of the Transaction Documents under any Competition Law or if any suit or proceeding is instituted or threatened by any Governmental Authority or any private party challenging any of the transactions contemplated by any of the Transaction Documents as violative of any Competition Law, each of Buyer and Seller shall use its reasonable best efforts to promptly resolve such objections. In furtherance of the foregoing, Buyer shall, and shall cause its Subsidiaries and controlled Affiliates to, take all actions, including agreeing to hold separate or to divest any of the businesses or properties or assets of Buyer or any of its Affiliates (including any Purchased Assets and any assets of any Purchased Subsidiary) and to terminate any existing relationships and contractual rights and obligations, as may be required (i) by the applicable Governmental Authority in order to resolve such objections as such Governmental Authority may have to such transactions under any Competition Law or (ii) by any domestic or foreign court or other tribunal, in any action or proceeding brought by a private party or Governmental Authority challenging such transactions as violative of any Competition Law, in order to avoid the entry of, or to effect the dissolution, vacating, lifting, altering or reversal of, any order that has the effect of restricting, preventing or prohibiting the consummation of the transactions contemplated by the Transaction Documents; provided that Buyer and its Subsidiaries and controlled Affiliates will not have any obligation to take any such action that has or would reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of Buyer and its Subsidiaries (including, after the Closing, the Business), taken as a whole, or of such controlled Affiliate.
     Section 7.02. Certain Filings; Consents. Seller and Buyer shall cooperate with one another (i) in determining whether any action by or in respect of, or filing with or Consent of, any Governmental Authority is required, or any actions or Consents are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated by the Transaction Documents and (ii) in taking such actions or making any such filings, furnishing information required in connection therewith and seeking to obtain any such actions or Consents in a timely manner. Seller shall pay any commercially reasonable amounts required in order to obtain such actions or Consents; provided that the filing fees required pursuant to the HSR Act or other Competition Laws will be borne by the party required to pay such fees under Applicable Laws.
     Section 7.03. Public Announcements. The initial press release relating to the Transaction Documents and the transactions contemplated hereby or thereby will be a joint release agreed upon by the parties, except for any press releases or public statements the making of which may be required by Applicable Law or any listing agreement with any national securities exchange (which, to the extent practicable, shall not be issued prior to the other party being given a reasonable opportunity to review and comment). The parties agree to consult with each other 
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before issuing any further press release or making any other public statement with respect to any Transaction Document or the transactions contemplated hereby or thereby which differs substantially from previously agreed upon press releases or public statements and, except for any press releases and public statements the making of which may be required by Applicable Law or any listing agreement with any national securities exchange, neither party will issue any such press release or make any such public statement unless the content of such press release or public statement shall have been agreed upon by the parties.
     Section 7.04. Notices of Certain Events. Each of Seller and Buyer shall promptly notify the other party of:

     (a) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by the Transaction Documents;
     (b) any notice or other communication from any Governmental Authority in connection with the transactions contemplated by the Transaction Documents; and
     (c) any actions, suits, claims, investigations or proceedings commenced that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to, in the case of Seller, Section 3.11 or, in the case of Buyer, Section 4.06.
Each of Seller and Buyer shall use reasonable efforts to notify the other party of any event or state of facts which makes the representations and warranties of such party contained herein untrue in any material respect or which makes the satisfaction of any condition or performance of any obligation of such party contained herein impossible or reasonably unlikely.
     Section 7.05. WARN Act. Buyer shall assume all obligations and Liabilities for the provision of notice or payment in lieu of notice or any applicable penalties under the Worker Adjustment and Retraining Notification Act (the “WARN Act”) or any similar law arising as a result of the transactions contemplated by this Agreement. Buyer hereby indemnifies Seller and its Affiliates against and agrees to hold each of them harmless from any and all Damages incurred or suffered by Seller or any of its Affiliates with respect to WARN or any similar law arising as a result of the transactions contemplated by the Transaction Documents.
     Section 7.06. Non-solicit. (a) For a period of three years following the Closing Date, Seller shall not, and shall not permit any of its controlled Affiliates to, (i) directly solicit (or cause to be directly solicited) any of the individuals listed
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in Section 7.06(a) of the Disclosure Schedule or any individual that may be added thereto prior to the Closing (A) to reflect new hires of officers, management employees, key technical employees or key sales employees and departures from the Business occurring after the date hereof or (B) by agreement of Seller and Buyer (the “Business Covered Employees”), except pursuant to generalized solicitations by use of advertising or which are not specifically targeted at the Business Covered Employees, or (ii) hire any of the Business Covered Employees; provided that the foregoing shall not restrict the solicitation or hiring of any Person who was not employed by Buyer for the six month period prior to such Person's solicitation or hiring.
     (b) Until the third anniversary of the last date on which services are provided by Seller pursuant to the Transition Services Agreement, Buyer shall not, and shall not permit any of its controlled Affiliates (including, after the Closing, the Purchased Subsidiaries) to, (i) directly solicit (or cause to be directly solicited) any officer, management employee or other key employee of Seller or any of Seller's Subsidiaries who provided services to Buyer pursuant to the Transition Services Agreement, except pursuant to generalized solicitations by use of advertising or which are not specifically targeted at such employees, or (ii) hire any such employee; provided that the foregoing shall not restrict the solicitation or hiring or any Person who was not employed by Seller or any of Seller's Subsidiaries for the six month period prior to such Person's solicitation or hiring.
     (c) For a period of six months following the Closing Date, neither Seller nor Buyer shall, nor shall either Seller or Buyer permit any of its controlled Affiliates (including, with respect to Buyer after the Closing, the Purchased Subsidiaries) to, (i) directly solicit (or cause to be directly solicited) any employee of the other party who is employed by or contracted to Texas Instruments Malaysia Sdn. Bhd., Texas Instruments de Mexico, S. de R.L. de C.V., Texas Instruments (China) Company Limited, Texas Instruments (Changzhou) Co., Ltd., Texas Instruments Hong Kong Limited or Texas Instruments Semiconductor Technologies (Shanghai) Co., Ltd. as of the Closing Date, except pursuant to generalized solicitations by use of advertising or which are not specifically targeted at such employees, or (ii) hire any such employee.
     Section 7.07. Conflicts; Privileges. (a) Buyer waives and will not assert, and agrees to cause its Subsidiaries (including, after the Closing, the Purchased Subsidiaries) to waive and not to assert, any conflict of interest arising out of or relating to the representation after the Closing of Seller, any Retained Subsidiary or any shareholder, officer, employee or director of Seller or any Retained Subsidiary in any matter involving any Transaction Document or the transactions contemplated thereby, by any legal counsel or accountant currently representing Seller, any Retained Subsidiary or any Purchased Subsidiary in connection with the Transaction Documents or the transactions contemplated thereby (the 
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“Current Representation”) and listed in Section 7.07 of the Disclosure Schedule (the “Designated Representatives”).
     (b) It is the intent of Seller and Buyer that all rights to any evidentiary privilege, including any attorney-client, work product or federally authorized tax practitioner privilege, with respect to any communication between any Designated Representative, on the one hand, and Seller, any Subsidiary of Seller (including any Purchased Subsidiary) or any shareholder, officer, employee or director of Seller or any Subsidiary of Seller, on the other hand, relating to (i) the Current Representation or (ii) any Excluded Asset, Excluded Liability or Retained Subsidiary shall, in the case of each of clauses (i) and (ii), be retained by Seller. Accordingly, Buyer waives and will not assert, and agrees to cause its Affiliates (including, after the Closing, the Purchased Subsidiaries) to waive and not to assert, including in connection with any dispute with Seller, any evidentiary privilege with respect to any such communication.
     (c) Seller and Buyer agree to take, and to cause their respective Affiliates to take, all steps reasonably necessary to implement the intent of this Section 7.07. 
     Section 7.08. Commercial Arrangements. Buyer and Seller shall use their reasonable efforts in good faith to enter into written agreements prior to the Closing with respect to the purchase and supply of products that are the subject of existing arrangements (whether written or oral) between the Business, on the one hand, and any Retained Business, on the other hand, such agreements to be on the standard terms and conditions used by the Business or the relevant Retained Business, as applicable, in similar agreements with non-Affiliated third parties.
     Section 7.09. Accounts Receivable. Following the Closing, if Buyer or Seller (or their respective Affiliates) receives payment with respect to an account receivable that is owned by the other party pursuant to the terms of this Agreement, such party shall promptly (and in any event within ten Business Days) remit such payment to the other party.
     Section 7.10. Seller Trademarks and Tradenames. (a) Subject to the terms and conditions of this Section 7.10, Seller grants to Buyer and its Subsidiaries a nonexclusive, worldwide, fully-paid and royalty-free license under any rights Seller may have in the Seller Trademarks and Tradenames, to reproduce and affix:
     (i) in perpetuity, the Seller Trademark and Tradename “TI bug” to the inventory included in the Purchased Assets or manufactured in compliance with this Section 7.10;
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     (ii) Sensor Products and Control Products manufactured within a period of twelve months following the Closing Date using the molds in which the Seller Trademark and Tradename “TI bug” is embedded and exists as of the Closing Date, provided that Buyer's manufacture of inventory using such molds during such twelve month period shall be in amounts substantially consistent with past practices;
     (iii) for a period of nine months following the Closing Date, the Seller Trademark and Tradename “TI” in price lists, literature and advertising for Current Products; and
     (iv) for a period of nine months following the Closing Date, the Seller Trademark and Tradename “TI” and “TI bug” on the device packaging (i.e., outer and inner carton) for the Current Products.
Any such use of the Seller Trademarks and Tradenames will be in substantially the same manner of current use by Seller or its Subsidiaries, unless otherwise agreed to by Seller in writing.
     (b) Buyer agrees to cease using the Seller Trademarks “TI” and “TI bug” logo and distributing Current Product units, literature and advertising for the Current Product that bear such “TI” and “TI bug” logo Seller Trademarks as soon as practicable, notwithstanding the specified time periods set forth above. Buyer shall not, however, be required to recall or destroy price lists, literature or advertising for the Current Product bearing Seller Trademarks and Tradenames.
     (c) If reasonably requested by Seller, at Seller's cost, Buyer shall cooperate to enable Seller to register the Seller Trademarks and Tradenames, or to register Buyer as a user of the Seller Trademarks and Tradenames, in countries where the Seller Trademarks and Tradenames are then currently used by Buyer.
     (d) Buyer agrees that to the extent any Seller Trademarks and Tradenames are used on or in connection with Sensor 

Products and Control Products after Closing, such Sensor Products and Control Products shall be of a quality commensurate in all material respects with specifications used by Seller, any of its Subsidiaries or any other Person currently manufacturing Sensor Products and Control Products for Seller or any of its Subsidiaries. If Seller notifies Buyer in writing that such specifications are not being met with respect to any Sensor Products or Control Products that (i) were manufactured after the Closing Date and (ii) which use any Seller Trademark and Tradename in a manner not substantially consistent with the manner in which such Seller Trademark and Tradename was used by the Business with respect to such Sensor Products or Control Products prior to the Closing Date, Buyer shall have 30 days after receipt of such notice to implement measures to correct, or to take reasonable steps toward correcting, the nonconformance. If Buyer fails to correct
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the nonconformance within such 30-day period (or to take reasonable steps toward correcting the nonconformance within such 30-day period and correct the nonconformance within 45 days after Buyer's receipt of such notice), Buyer agrees to stop all use of the Seller Trademarks and Tradenames on such nonconforming Sensor Products and Control Products as soon as reasonably possible after requested by Seller to do so.
     (e) As soon as reasonably practicable following the Closing, Buyer shall change the name of each Purchased Subsidiary so that it does not include any of the Seller Trademarks and Tradenames.
     (f) Except as set forth in this Section 7.10, after the Closing, Buyer shall not use any of the Seller Trademarks and Tradenames, except for a period of six months following the Closing Date to the extent necessary to communicate that the Business was formerly owned by Seller.
     Section 7.11. Certain Products. (a) If Buyer reasonably believes or receives written notice that the manufacture, use, sale, offer for sale, or import of any Current Product infringes or is likely to infringe any claim of any Patent owned by any other Person anywhere in the world, then, as a condition to Seller's obligations under Sections 11.02(a)(vi) and 11.02(a)(vii), Buyer shall use its reasonable efforts to obtain such Current Product from a Person (including Seller under subsection (b) below) that has sufficient ownership, rights or licenses to manufacture and sell such Current Product to Buyer without infringing any claim of any Patent owned by any other Person anywhere in the world; provided that any royalty or other increase in the per unit price or cost paid or incurred by Buyer for such Current Product (relative to the price or cost that Buyer demonstrates in reasonable detail it would have paid in the absence of such infringement, such price or cost to be based on the average price or cost per unit that Buyer paid or incurred during the preceding twelve month period for such Current Product (if applicable)) shall be deemed Damages for purposes of Sections 11.02(a)(vi) and 11.02(a)(viii) to the extent that such Sections apply in accordance with Article 11. In addition, if Buyer arranges to obtain a Current Product from a Person who does not provide such Current Product to the Business as of the Closing Date (including with respect to a Current Product that is not marketed or sold by the Business as of the Closing Date), then, as a condition to Seller's obligations under Sections 11.02(a)(vi) and 11.02(a)(vii), Buyer shall use its reasonable efforts to obtain such Current Product from a reputable and established source, including Seller under Section 7.11(b) (it being understood that for this purpose current suppliers of Current Products shall be considered reputable and established sources) that Buyer reasonably believes has sufficient ownership, rights or licenses to manufacture and sell such Current Product to Buyer without infringing any claim of any Patent owned by any other Person anywhere in the world.
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     (b) Upon a request of Buyer made prior to the third anniversary of the Closing Date or if Seller makes the election referred to in paragraph (C) of Section 11.02(a)(vii) of the Disclosure Schedule, Buyer and Seller shall enter into mutually agreeable, commercially reasonable arrangements pursuant to which Seller shall make, have made, sell, offer for sale or import, in each case for Buyer, any Current Product that is alleged to infringe any Intellectual Property Rights of a third party, provided that Seller has the capability to do so and has sufficient ownership, rights or licenses to do so without resulting in such infringement or breach of any applicable license agreement. The price paid by Buyer to Seller with respect to any such arrangement (the “Have Made Costs”) shall be:

     (i) if such arrangement is entered into upon a request of Buyer made on or prior to April 30, 2007 or because Seller makes the election referred to in paragraph (C) of Section 11.02(a)(vii) of the Disclosure Schedule, the greater of (A) the product of (1) the price or cost per unit that Buyer demonstrates in reasonable detail it would have paid in the absence of such infringement, such price or cost to be based on the average price or cost per unit that Buyer paid or incurred during the preceding twelve month period for such Current Product, multiplied by (2) the number of units of such Current Product manufactured by or for Seller and delivered to Buyer or Buyer's designee, and (B) all of Seller's reasonable manufacturing, selling and related costs and expenses (including appropriate allocations for overhead, depreciation and amortization) associated with Seller's performance under this Section 7.11(b) in respect of such Current Product, determined in accordance with generally accepted accounting principles in the United States, consistently applied; or
     (ii) if such arrangement is entered into upon a request of Buyer made after April 30, 2007 and prior to the third anniversary of the Closing Date, a commercially reasonable amount.
Seller shall invoice Buyer within 60 days after each shipment of such Current Product for the applicable Have Made Costs for the Current Products included in such shipment. Payment of such invoice shall be made within 30 days after delivery to Buyer of such invoice, except to the extent that Buyer may dispute any such Have Made Costs in good faith. Within sixty days after the end of each calendar quarter, Seller shall, if applicable, provide Buyer with reasonable detail and documentation backup to support the calculation of and bases for Have Made Costs with respect to Current Products shipped in such quarter.
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ARTICLE 8
TAX MATTERS
     Section 8.01. Tax Matters. Except as set forth in the Disclosure Schedule, Seller hereby represents and warrants, as of the date hereof and as of the Closing Date, to Buyer that:
     (a) Seller and its Subsidiaries have timely paid all Taxes required to be paid, the non-payment of which would result in a Lien on any Purchased Asset or Share.
     (b) Seller and its Subsidiaries have established, in accordance with GAAP applied on a consistent basis with that of preceding periods, adequate reserves for the payment of, and will timely pay, all (i) Taxes due and payable (A) which arise from or with respect to the Purchased Assets, the Shares or the operation of the Business or (B) of the Purchased Subsidiaries, in each case which are incurred in or attributable to the Pre-Closing Tax Period and (ii) all Taxes arising out of the Restructuring.
     (c) Each Purchased Subsidiary has timely filed all material Tax Returns that it was required to file. All such Tax Returns were correct and complete in all material respects and were prepared in substantial compliance with all applicable laws and regulations. All material Taxes owed and due by Purchased Subsidiaries have been paid. There are no Liens on any of the assets of the Purchased Subsidiaries that arose in connection with any failure (or alleged failure) to pay any material Tax.
     (d) There is no dispute or claim concerning any material Tax liability of any Purchased Subsidiary either (i) claimed or raised by any authority in writing or (ii) as to which any directors and officers (and employees responsible for Tax matters) of Seller or any Purchased Subsidiary has knowledge based upon personal contact with any agent of such authority.
     (e) No Purchased Subsidiary has waived any statute of limitations in respect of any material Taxes or agreed to any extension of time with respect to a material Tax assessment or deficiency.
     Section 8.02. Tax Cooperation; Allocation of Taxes. (a) Buyer and Seller agree to furnish or cause to be furnished to each other, upon request, as promptly as practicable, such information and assistance relating to the Business, the Purchased Assets and the Purchased Subsidiaries (including access to books and records) as is reasonably necessary for the filing of all Tax returns, the making of any election relating to Taxes, the preparation for any audit by any Taxing Authority, and the prosecution or defense of any claim, suit or proceeding relating
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to any Tax. Buyer and Seller shall retain all books and records with respect to Taxes pertaining to the Purchased Assets or Purchased Subsidiaries for a period of at least seven years following the Closing Date. On or after the end of such period, each party shall provide the other with at least 10 days prior written notice before destroying any such books and records, during which period the party receiving such notice can elect to take possession, at its own expense, of such books and records. Seller and Buyer shall cooperate with each other in the conduct of any audit or other proceeding relating to Taxes involving the Purchased Assets, the Purchased Subsidiaries or the Business.
     (b) All real property taxes, personal property taxes and similar ad valorem obligations levied with respect to the Purchased Assets or the Purchased Subsidiaries for a taxable period which includes (but does not end on) the Closing Date (collectively, the “Apportioned Ad Valorem Obligations”) shall be apportioned between Seller and Buyer based on the number of days of such taxable period included in the Pre-Closing Tax Period and the number of days of such taxable period after the Closing Date (any such portion of such taxable period, the “Post-Closing Tax Period”). All other Taxes with respect to the Purchased Assets or the conduct of the Business (including Taxes of the Purchased Subsidiaries) for such a taxable period (the “Other Apportioned Obligations”) shall be apportioned between Buyer and Seller as if such period ended on the Closing Date. Seller shall be liable for the proportionate amount of Apportioned Ad Valorem Obligations and Other Apportioned Obligations (together, the “Apportioned Obligations”) that is attributable to the Pre-Closing Tax Period, except to the extent such Taxes were taken into account as a liability in calculating Final Working Capital, and Buyer (or its Subsidiaries) shall be liable for the proportionate amount of such taxes that is attributable to the Post-Closing Tax Period.
     (c) All excise, sales, use, value added (except for value added taxes that will be recoverable by Buyer or its Subsidiaries after the Closing Date), registration stamp, recording, documentary, conveyancing, franchise, property, transfer, gains and similar Taxes, levies, charges and fees (collectively, “Transfer Taxes”) incurred in connection with the transactions contemplated by this Agreement shall be shared equally by Buyer and Seller. Value added taxes incurred in connection with the transactions contemplated by this Agreement that will be recoverable by Buyer or its Subsidiaries after the Closing Date shall be invoiced by Seller to Buyer, paid by Buyer to Seller and remitted by Seller to the relevant Taxing Authority in accordance with Applicable Law; provided that Seller shall simultaneously with Buyer's payment of such taxes to Seller advance to Buyer (i) 100% of the aggregate amount by which all such value added taxes exceed $5 million but are less than or equal to $10 million and (ii) 50% of the aggregate amount of all such value added taxes in excess of $10 million and, in the case of each of clauses (i) and (ii), within 10 Business Days of Buyer's recovery of such value added taxes (or any portion thereof) from the applicable 
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Taxing Authorities, Buyer shall reimburse Seller for Seller's pro rata portion (determined based on the proportion that the total amount advanced by Seller to Buyer under clauses (i) and (ii) bears to the total amount of such recoverable value added taxes paid by Buyer to Seller) of the amount so recovered. Buyer and Seller shall cooperate in providing each other with any appropriate resale exemption certifications and other similar documentation.
     (d) Apportioned Obligations and Taxes described in Section 8.02(c) shall be timely paid, and all applicable filings, reports and returns shall be filed, as provided by Applicable Law. The paying party shall be entitled to reimbursement from the non-paying party in accordance with Section 8.02(b) or (c), as the case may be. Upon payment of any such Apportioned Obligation or Tax, the paying party shall present a statement to the non-paying party setting forth the amount of reimbursement to which the paying party is entitled under Section 8.02(b) or (c), as the case may be together with such supporting evidence as is reasonably necessary to calculate the amount to be reimbursed. Except with respect to Taxes of a Purchased Subsidiary that are being paid by Seller to Buyer in accordance with Section 8.02(e), the non-paying party shall make such reimbursement promptly but in no event later than 10 days after the presentation of such statement. Any payment not made within such time shall bear interest on a daily basis, at the rate per annum set forth in Section 2.11(b), for each day until paid.
     (e) Buyer shall prepare, or cause to be prepared, all Returns required to be filed by any Purchased Subsidiary after the Closing Date with respect to any Pre-Closing Tax Period. Buyer shall timely file, or cause to be timely filed, all such Returns. Any such Return shall be prepared in a manner consistent with past practice and without a change of any election or any accounting method, except as otherwise required by law, and shall be submitted by Buyer to Seller (together with schedules, statements and, to the extent reasonably requested by Seller, supporting documentation) at least 20 days prior to the due date (including extensions) of such Return. If Seller, within 10 Business Days after delivery of any such Return, notifies Buyer in writing that it objects to any items in such Return, the disputed items shall be resolved by mutual agreement between Buyer and Seller. Seller will pay to Buyer the amount of Taxes shown on such Return no later than two days prior to the date such Return is required to be filed, except to the extent such Taxes were taken into account as a liability in calculating Final Working 

Capital.
     (f) Buyer shall promptly pay or cause to be paid to Seller all refunds of Taxes and interest thereon received by any Purchased Subsidiary attributable to Taxes paid by any Purchased Subsidiary with respect to any Pre-Closing Tax Period, except to the extent such refund is taken into account as an asset in calculating Final Working Capital or is attributable to the carryback of a Tax attribute arising in a Post-Closing Tax Period or a later Tax Period. If, in lieu of receiving such refund, any Purchased Subsidiary reduces a Tax Liability or 
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increases a tax asset relating to a taxable period (or portion thereof) ending after the Closing Date, Buyer shall promptly pay or cause to be paid to Seller the amount of such reduction in Tax Liability or, when realized, the amount of any benefit resulting from such increase in tax assets, as the case may be. Any amount required to be paid by Buyer to Seller pursuant to this Section 8.02(f) shall be reduced by the amount of any increase in Taxes of a Purchased Subsidiary as a result of the receipt of such refund, reduction in Tax Liability or increase in tax assets.
ARTICLE 9
PERSONNEL MATTERS
     Section 9.01. Business Employees. Buyer shall (or will cause one of its Subsidiaries to) (i) continue the employment on and after the Closing Date of each Business Employee who is currently employed by a Purchased Subsidiary and (ii) on or prior to the Closing Date, make an offer of employment to each other current Business Employee, in both cases on the terms set forth in this Section 9.01. For the avoidance of doubt, current Business Employees include any Business Employee who is, immediately prior to the Closing, absent from work on account of paid time-off, vacation, sick or personal leave (but not short-term disability or long-term disability), worker's compensation or leave of absence (other than a leave of absence resulting from a reduction in force or a “bridging” of age and/or service credit for purposes of an Employee Plan) and any Business Employee for whom an obligation to recall, rehire or otherwise return to employment exists under a contractual obligation or law (such as, without limitation, the Family and Medical Leave Act, the Uniformed Services Employment and Reemployment Rights Act and any Applicable Law that requires employers to permit the return of their employees following a leave of absence (e.g., maternity leave)). Any U.S. Business Employee who is, immediately prior to the Closing, absent from work on account of short-term disability shall receive an offer of employment from Buyer (or one of its Subsidiaries) on the terms set forth in this Section 9.01 when he or she is able and willing to return to active employment; provided that such individual so returns within six months following the Closing Date (in this regard, Buyer or such Subsidiary shall make any reasonable accommodation required under Applicable Law to accommodate the disability that resulted in such individual being on such short-term disability). Unless a written acceptance of an offer of employment is required by Applicable Law, a Business Employee who continues employment or who has received an offer shall be deemed to have accepted such continuance or offer, unless such Business Employee specifically declines such continuance or offer. Business Employees described in clause (i) who continue such employment and Business Employees described in clause (ii) (including in each case any Business Employees returning from short-term disability) who accept such offer 
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of employment shall collectively be the “Transferred Employees”. Transferred Employees who are based primarily in the United States shall collectively be the “Transferred Employees (U.S.)”. Transferred Employees who are based primarily outside of the United States shall collectively be the “Transferred Employees (Non-U.S.)”. Buyer and Seller agree to utilize, or cause their respective Affiliates to utilize, the standard procedure set forth in Revenue Procedure 2004-53 with respect to wage reporting for Transferred Employees (U.S.).
     Section 9.02. Maintenance of Compensation and Employee Benefits. (a) Subject to the penultimate sentence of this Section 9.02(a), Buyer agrees that for a period of 12 months after the Closing Date (the “Relevant Period”), it will provide (or will cause to be provided) each Transferred Employee with an annual base salary and non-equity based incentive compensation opportunity that are at least equal to his or her annual base salary and non-equity based incentive compensation opportunity in effect immediately prior to the Closing. In addition, Buyer agrees that during the Relevant Period, it will provide (or will cause 

to be provided) Transferred Employees with benefits that are, in the aggregate, substantially comparable to the benefits provided to Transferred Employees immediately prior to the Closing (other than any equity-based benefits). Notwithstanding the foregoing, the parties acknowledge and agree that the transactions contemplated by this Agreement with respect to any Member State of the European Community is a “relevant transfer” within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 1981, as amended from time to time and the regulations and/or laws implementing the European Council Directive of March 12, 2001 (2001/23/EC) relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses and any country implementing legislation under such Directive as amended (“EU Employment Regulations”), and the parties shall cooperate in good faith to (i) satisfy, or cause to be satisfied, the information and consultation requirements of the EU Employment Regulations as they apply to the transactions contemplated by this Agreement and (ii) to comply with, or cause the compliance with, any other Applicable Law relating to the continuation of employment of employees or the offering of employment to individuals. Without limiting the generality of this Section 9.02(a), Section 9.02(b) through Section 9.02(l) shall apply to Transferred Employees, to the extent described therein.
     (b) Buyer agrees that during the Relevant Period it will provide (or will cause to be provided) reasonable relocation benefits for any Transferred Employee (U.S.) whose principal location of employment is relocated to a location greater than 35 miles from his or her location of employment immediately prior to the Closing.
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     (c) With respect to each Employee Plan subject to Title IV of ERISA (each, a “Seller DB Plan”):
     (i) effective on the Closing Date, Seller shall take all necessary actions to cause such Seller DB Plan to be amended (if required) to provide for the direct trust-to-trust transfer of assets and liabilities as contemplated in this Section 9.02(c);
     (ii) as soon as reasonably practicable after the Closing Date, Buyer shall establish or designate, effective as of the Closing Date, a defined benefit pension plan and trust which shall be qualified under Section 401(a) of the Code (the “Buyer DB Plan”) and shall cover Transferred Employees who are participants of the Seller DB Plan immediately prior to the Closing (“DB Participants”), and the parties shall cooperate in good faith to effect such establishment or designation as soon as reasonably practicable after the Closing Date. As soon as practicable following the establishment of the Buyer DB Plan, Seller and Buyer, if necessary, shall file with the Internal Revenue Service proper notice on IRS Form 5310A regarding the transfer of assets and liabilities from the Seller DB Plan to the Buyer DB Plan;
     (iii) as soon as practicable after the date that is four months after the Closing Date (or if later, as soon after such date as the Certifications, as hereinafter defined, are received), Seller will cause the trustees of the Seller DB Plan to transfer the Initial Pension Amount, as hereinafter defined, to the Buyer DB Plan. As soon as practicable after the date that is six months after the Closing Date (or if later, as soon after such date as the Certifications, if not previously received, are received), the Seller will cause the trustees of the Seller DB Plan to transfer the Final Pension Amount, as hereinafter defined, to the Buyer DB Plan.
     For purposes of this section, the “Final Pension Amount” shall mean (x) an amount of assets of the Seller DB Plan that would be allocated to DB Participants if the Seller DB Plan were terminated on the Closing Date and assets were allocated to participants in accordance with Section 4044 of ERISA
     (A) using the methodology of the Pension Benefit Guaranty Corporation (“PBGC”) for plan terminations,
     (B) using the interest rate and mortality tables used by the PBGC and effective on the Closing Date for valuing annuities,
     (C) assuming participants not in pay status will retire and elect a lump sum under the Seller DB Plan payable at 
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expected retirement age, as determined in accordance with Appendix D of PBGC Regulation Part 4044,
     (D) using for purposes of determining the lump-sum value the interest rate and mortality table specified in the Seller DB Plan for valuing lump sums and effective for lump sums made on the Closing Date,

     (E) without regard to any assets or liabilities associated with any account under the Seller DB Plan maintained pursuant to Section 401(h) of the Code and
     (F) without any provisions for expenses as defined under ERISA Regulation 4044.3(a) and Part 4044, Appendix C,
adjusted to reflect (y) earnings on the balance of the amount described in clause (x) above outstanding (i.e., not theretofore transferred in accordance with this section) from time to time at the rate of earnings on assets of the Seller DB Plan during the period from the Closing Date to the last day of the month ending prior to the actual date(s) of transfer, minus a portion of expenses paid from the trust proportional to the amount of assets to be transferred in relation to the total amount of assets of the Seller DB Plan prior to the transfer, and further reduced by any benefit payments made in respect of DB Participants (and their alternate payees, if any) prior to the actual date(s) of transfer,
less (z) the Initial Pension Amount;
the “Initial Pension Amount” shall be 85% of the amount described in clause (x) of the definition of Final Pension Amount, as estimated in the reasonable discretion of the enrolled actuary for the Seller DB Plan and agreed by the actuary for the Buyer DB Plan, such agreement not to be unreasonably withheld or delayed; and
the “Certifications” shall mean Buyer's certification to Seller, and Seller's certification to Buyer, in substantially the form attached hereto as Exhibit D, that the Buyer DB Plan and Seller DB Plan are qualified under the applicable provisions of the Code.
     Notwithstanding the foregoing, the transfer of assets and liabilities from the Seller DB Plan to the Buyer DB Plan shall be required to satisfy the requirements of Section 414(l) of the Code. Buyer and Seller shall each use reasonable efforts to effect the asset and liability transfers contemplated in this Section 9.02(c) as soon as reasonably practicable; provided that the Initial Pension Amount and the Final Pension Amount 
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shall be transferred no later than the date that is eight months following the Closing Date;
     (iv) all Liabilities associated with any participants of the Seller DB Plan (other than Liabilities associated with DB Participants upon the asset and liability transfers contemplated in this Section 9.02(c)) shall remain the responsibility of Seller;
     (v) Buyer shall cause the Buyer DB Plan to credit each DB Participant with full past service credit for eligibility, vesting, benefit accrual and all other purposes from his or her date of employment (adjusted to reflect breaks in service in accordance with the provisions of the Seller DB Plan) with Seller and its Affiliates to the extent such service was credited on behalf of such DB Participant under the Seller DB Plan; and
     (vi) Seller shall provide Buyer with all information requested by Buyer with respect to DB Participants and up to 10 other participants in the Seller DB Plan that is reasonably necessary to verify the calculation of the liabilities for such DB Participants used to determine the amount of assets transferred from the Seller DB Plan to the Buyer DB Plan as contemplated in Section 9.02(c)(iii).
     (d) (i) As soon as reasonably practicable after the Closing Date, Buyer shall cover (or will cause to be covered), effective as of the Closing Date and for the Relevant Period, each Transferred Employee (U.S.) under one or more other defined contribution plans and trusts intended to qualify under Section 401(a) of the Code (collectively, the “Buyer DC Plan”) on the same basis as similarly situated employees of Buyer and its Subsidiaries (provided that to the extent that Buyer and its Subsidiaries do not have similarly situated employees, the basis on which Transferred Employees (U.S.) shall participate in the Buyer DC Plan as of the Closing Date shall be substantially comparable to the basis on which they participated in any defined contribution plan and trust intended to qualify under Section 401(a) of the Code that is sponsored by Seller or any of its Affiliates as in effect immediately prior to the Closing (the “Seller DC Plan”)) and on terms that reflect the service credit provisions of Section 9.02(f) . Effective as of the Closing Date or any subsequent date reasonably requested by Buyer (no later than the 60th day following the Closing Date), Transferred Employees (U.S.) shall be eligible to effect a “direct rollover” (as described in Section 401(a)(31) of the Code) of their account balances (including participant loans) under the Seller DC Plan to the Buyer DC Plan in the form of cash and participant loan notes; provided that any such direct rollover shall be subject to the terms and conditions of the Buyer DC Plan applicable to rollover contributions. Prior to the Closing Date, Seller shall amend and take any other action, or cause to be amended or have any other action taken, including requesting the approval of the Board of Directors or a 

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committee thereof, if necessary, to vest any account balances in respect of Transferred Employees (U.S.) in the Seller DC Plan that are unvested as of the Closing Date and make to the Seller DC Plan the pro rata portion of employer contributions, if any, in respect of Transferred Employees (U.S.) through the date immediately prior to the Closing; and
     (ii) all Liabilities associated with any participants of the Seller DC Plan (other than Liabilities associated with Transferred Employees (U.S.) who elect a direct rollover of account balances as contemplated in this Section 9.02(d) and for whom such direct rollover is effected) shall remain the responsibility of Seller.
     (e) With respect to each International Plan which provides retirement benefits (each, a “Seller International Retirement Plan”):
     (i) effective on the Closing Date, each Transferred Employee (Non-U.S.) who is an active participant in a Seller International Retirement Plan shall be vested in his or her accrued benefit earned through the Closing Date;
     (ii) effective on the Closing Date, each Transferred Employee (Non-U.S.) who is an active participant in a Seller International Retirement Plan shall cease to be an active participant under such International Retirement Plan and shall become a participant in one or more retirement plans established or designated by Buyer (collectively, the “Buyer International Retirement Plan”);
     (iii) as soon as practicable after the Closing, Seller shall cause the transfer from each Seller International Retirement Plan to the Buyer International Retirement Plan of assets and liabilities which are attributable to the Transferred Employees (Non-U.S.) who are participants as of the Closing Date in a Seller International Retirement Plan, where permissible by Applicable Law. Subject to Section 9.02(e)(iv), the amount of assets to be transferred (the “International Transfer Amount”) shall be the amount determined as of the Closing Date, using service and compensation as of the Closing Date, and on the basis of the actuarial assumptions and valuations most recently used to determine employer contributions to such Seller International Retirement Plan. Such determination of the amount to be transferred shall be made by Seller's actuary and verified by Buyer's actuary (such verification not be unreasonably withheld). Buyer's actuary may comment with respect to the determination of the amount to be so transferred, and any such comments shall, in good faith, be taken into account by Seller's actuary. Within a reasonable period of time before the transfer, Seller's actuary shall provide such other information as may be reasonably necessary to 
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permit Buyer's actuary to comment with respect to the determination of such amount. In the event that the trustee of the Seller International Retirement Plan is precluded from Applicable Law from transferring an amount equal to the International Transfer Amount, the transfer from the Seller International Retirement Plan to the Buyer International Retirement Plan shall be limited as required by Applicable Law, and Seller shall separately pay to Buyer any difference between the Transfer Amount and the maximum asset transfer as subsequently determined under Applicable Law;
     (iv) where the Seller International Retirement Plan is a defined contribution plan, the Transfer Amount shall be equal to the account balances on the Closing Date of the Transferred Employees (Non-U.S.);
     (v) Buyer agrees to enroll the Transferred Employees (Non-U.S.) who are participants in a Seller International Retirement Plan in a Buyer International Retirement Plan, and the Buyer International Retirement Plan shall be liable for benefits with respect to such Transferred Employees (Non-U.S.) accrued under the Seller International Retirement Plan prior to the Closing Date; and
     (vi) if a transfer in accordance with Section 9.02(e)(iii) is not permissible, and a Transferred Employee (Non-U.S.) transfers his or her pension rights to a Buyer International Retirement Plan following the Closing Date, the amount of assets to be 

transferred (or any additional amount required to be transferred by Seller as a result of a shortfall) with respect to him or her shall be determined by this Section 9.02(e); provided that the amount so transferred shall not be less than the amount required to be transferred under Applicable Law.
     (f) Buyer shall grant (or will cause to be granted) each Transferred Employee credit for years of prior service with the Seller or any of its Affiliates or their respective predecessors for all purposes (other than for any purpose under any equity-based plan or arrangement) to the extent and for the purposes credited under an analogous Employee Plan or International Plan prior to the Closing Date; provided that no service credit shall be granted to the extent any duplication of benefits results.
     (g) Effective as of the Closing Date (or such later date as may be provided pursuant to the Transition Services Agreement; provided that Buyer cooperates in good faith with Seller in the establishment, effective as of the Closing Date, of mirror health and welfare benefit plans by Buyer and its Subsidiaries), each Transferred Employee shall cease participation in the health and welfare benefit plans of Seller and any of its Affiliates (other than a Purchased Subsidiary and its Subsidiaries to the extent such health and welfare 
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benefit plan is maintained solely for the employees of a Purchased Subsidiary or one of its Subsidiaries) (each, a “Seller Welfare Plan”) and commence participation in the health and welfare benefit plans maintained, administered or contributed to by Buyer and its Subsidiaries (each, a “Buyer Welfare Plan”). Seller and its Affiliates (other than the Purchased Subsidiaries and their Subsidiaries) shall be responsible for claims incurred under a Seller Welfare Plan for Transferred Employees prior to the Closing Date. All claims incurred under a Buyer Welfare Plan for Transferred Employees on or after the Closing Date shall be the responsibility of Buyer and its Subsidiaries. For purposes of this Section 9.02(g), the following claims shall be deemed to be incurred as follows: (i) life, accidental death and dismemberment and business travel accident insurance benefits, upon the death or accident giving rise to such benefits; (ii) health or medical, dental, vision care and/or prescription drug benefits, upon provision of such services, materials or supplies; and (iii) short- and long-term disability benefits, upon the event that gives rise to the disability. Notwithstanding the foregoing and subject to the provisions of Section 9.01 pertaining to U.S. Business Employees on short-term disability, Seller and Buyer hereby agree that (A) any Business Employee who as of the Closing Date is receiving short-term or long-term disability benefits (or who has satisfied the requirements for receiving such benefits), shall become eligible or continue to be eligible, as applicable, to receive such benefits under Seller's short-term or long-term disability plan, as applicable, unless and until such individual is no longer disabled, and (B) Seller shall be solely liable for any other liabilities, obligations or commitments arising in connection with any Business Employee who is receiving long-term disability benefits (or who has satisfied the requirements for receiving such benefits) as of the Closing Date.
      (h) Buyer shall (or will cause one of its Subsidiaries to):
     (i) where reasonably possible during the plan year in which the Closing Date occurs, waive all limitations as to pre-existing conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to the Transferred Employees (U.S.) under any health and welfare plans in which such Transferred Employees (U.S.) are eligible to participate after the Closing Date to the extent that such limitations were waived under the applicable Employee Plan; and
     (ii) where reasonably possible, provide each Transferred Employee (U.S.) with credit during the plan year in which the Closing Date occurs for any co-payments and deductibles paid prior to the Closing Date in satisfying any applicable deductible or out-of-pocket requirements under any health and welfare plans that such Transferred Employees (U.S.) are eligible to participate in after the Closing Date.
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     (i) As of the Closing Date, Seller shall transfer from medical and dependent care account plans of Seller and any of its Affiliates (other than a Purchased Subsidiary and its Subsidiaries) (each, a “Seller FSA Plan”) to one or more medical and 

dependent care account plans established or designated by Buyer (collectively, the “Buyer FSA Plan”) the account balances in respect of 2006 (provided that the Closing Date occurs in 2006) of Transferred Employees (U.S.), and Buyer shall be responsible for the obligations of the Seller FSA Plans to provide benefits to Transferred Employees (U.S.) with respect to such transferred account balances on or after the Closing Date. Each Transferred Employee (U.S.) shall be permitted to continue to have payroll deductions made as most recently elected by him or her under the applicable Seller FSA Plan. Buyer shall reimburse Seller for benefits paid by the Seller FSA Plans in respect of claims incurred in 2006 (provided that the Closing Date occurs in 2006) to any Transferred Employee (U.S.) prior to the Closing Date to the extent in excess of the payroll deductions made in respect of such Transferred Employee (U.S.) on or prior to the Closing Date, but only to the extent of the amount that such Transferred Employee (U.S.) continues to contribute to the Buyer FSA Plan.
     (j) Any Transferred Employee (U.S.) who (A) is terminated other than for cause during the Relevant Period, or (B) rejects an offer of employment from Buyer or one of its Affiliates at Closing (which offer of employment did not meet the requirements of Section 9.02(a) or required that the Transferred Employee (U.S.) relocate his or her principal location of employment to a location greater than 35 miles from his or her location of employment immediately prior to the Closing) and does not otherwise accept another offer of employment from Buyer or one of its Affiliates at Closing, shall be entitled to severance from Buyer in an amount equal to what he or she would have received under the severance plan of Seller or its Affiliates (as in effect on the date hereof, other than immaterial changes made to avoid or minimize the effect of the application of Section 409A of the Code and the Treasury regulations and guidance promulgated thereunder) applicable to such Transferred Employee (U.S.) (taking into account any post-Closing service with Buyer or any of its Subsidiaries), assuming for purposes of this Section 9.02(j) that such Transferred Employee (U.S.) had satisfied any requirements for the receipt of severance under such plan or policy; provided that in order to receive an enhanced severance benefit such Transferred Employee (U.S.) executes, delivers and does not revoke a general release in favor of Seller, Buyer and their respective Affiliates.
     (k) Any Transferred Employee (U.S.) shall carry over to Buyer or one of its Affiliates any “banked” time that he or she has accrued as of immediately prior to the Closing under the policy of Seller and its Affiliates with respect to paid time-off. With respect to any such Transferred Employee (U.S.) whose accrued “banked” time at the end of the calendar year in which the Closing occurs is in excess of the amount of “banked” time that such Transferred Employee (U.S.) would have been entitled to accrue during an 18-month period under the 
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policy of Seller and its Affiliates with respect to paid time-off (as in effect immediately prior to the Closing), Buyer may, at its election, pay (or may cause to be paid) cash to such Transferred Employee (U.S.) in lieu of such excess accrued “banked” time in accordance with the policy of Seller and its Affiliates with respect to the cash-out of excess “banked” time (as in effect immediately prior to the Closing), and any such excess accrued “banked” time that is not so cashed out shall continue to be carried over. With respect to any such Transferred Employee (U.S.) whose employment terminates for any reason, Buyer shall pay cash to such Transferred Employee (U.S.) in lieu of any accrued “banked” time that he or she has accrued as of the effective date of such termination in accordance with the policy of Seller and its Affiliates with respect to the cash-out of accrued time “banked” by terminated employees (as in effect immediately prior to the Closing). The treatment of any accrued but unused vacation, sick or personal leave or time-off in respect of any Transferred Employee (Non-U.S.) shall be in accordance with Applicable Law.
     (l) With respect to each Employee Plan that provides retiree medical benefits to Business Employees and that is funded through a voluntary employee's beneficiary association (“VEBA”) and an account under Section 401(h) of the Code (collectively, the “Seller Retiree Medical Plan”):
     (i) effective as of the Closing Date, Seller shall take all necessary actions to cause the appropriate plan and trust documents to be amended (if and to the extent necessary) to provide for the direct trust-to-trust transfer of assets and liabilities as contemplated in this Section 9.02(l), including requesting the approval of the Board of Directors or a committee thereof, if necessary;
     (ii) as soon as reasonably practicable after the Closing Date, Buyer shall establish or designate, effective as of the Closing Date, a retiree medical plan and a VEBA or VEBAs which shall be qualified under Section 501(c)(9) of the Code (collectively, 

the “Buyer Retiree Medical Plan”) on behalf of Transferred Employees (U.S.), and the parties shall cooperate in good faith to effect such establishment or designation as soon as reasonably practicable after the Closing Date;
     (iii) as soon as practicable after the later of (x) four months after the Closing Date and (y) the dates of receipt by Buyer and Seller of Buyer's certification to Seller and Seller's certification to Buyer, in substantially the form attached hereto as Exhibit E, that the Buyer's VEBA(s) and Seller's VEBA(s) are qualified under the applicable provisions of the Code, the assets and liabilities associated with all Transferred Employees (U.S.) (and their spouses and other dependents, if any) shall be transferred from the Seller's VEBA(s) to the Buyer's VEBA(s). The amount of assets accumulated to provide retiree medical 
69

benefits in the Seller's account VEBA(s) that will be transferred shall be the aggregate amount of assets in the Seller's VEBA(s), multiplied by a fraction, the numerator of which is the accumulated postretirement benefit obligation (APBO) in the Seller Retiree Medical Plan for the Transferred Employees (U.S.) (and their spouses and other dependents, if any) immediately prior to the Closing Date, and the denominator of which is the APBO for all participants and their spouses and other dependents (if any) in the Seller Retiree Medical Plan, including Transferred Employees (U.S.) (and their spouses and other dependents, if any) at such date. The plan provisions, census data, valuation methods and actuarial assumptions used to determine the APBO shall be the same as those used by Seller to determine the SFAS 106 curtailment charge for the transactions contemplated hereby. The assets to be transferred shall be credited with earnings on the balance outstanding from time to time at the rate of earnings of the entire trust on assets of the Seller's VEBA(s) during the period from the Closing Date to the last day of the month ending prior to the actual date(s) of transfer, minus a portion of expenses paid from the trust proportional to the amount of assets to be transferred in relation to the total amount of assets of the Seller's VEBA(s) prior to the transfer, and further reduced by any benefit payments made in respect of Transferred Employees (U.S.) (and their spouses and other dependents, if any) prior to the actual date(s) of transfer. Buyer and Seller shall each use reasonable efforts to effect the asset and liability transfers contemplated in this Section 9.02(l) as soon as reasonably practicable;
     (iv) all Liabilities associated with any participants of the Seller Retiree Medical Plan (other than Liabilities associated with Transferred Employees (U.S.) and their spouses and other dependants, if any, upon the asset and liability transfers contemplated in this Section 9.02(l)) shall remain the responsibility of Seller;
     (v) Buyer shall cause the Buyer Retiree Medical Plan to credit each Transferred Employee (U.S.) with full past service credit for eligibility, vesting, benefit accrual and all other purposes from his or her date of employment (adjusted to reflect breaks in service in accordance with the provisions of the Seller Retiree Medical Plan) with Seller and its Affiliates to the extent such service was credited on behalf of such Transferred Employee (U.S.) under the Seller Retiree Medical Plan. 
     (vi) Seller shall provide Buyer with all information requested by Buyer with respect to Transferred Employees (U.S.) and up to 10 other participants in the Seller Retiree Medical Plan that is reasonably necessary to verify the calculation of the liabilities for such Transferred Employees used to determine the amount of assets transferred from the Seller Retiree 
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Medical Plan to the Buyer Retiree Medical Plan as contemplated by Section 9.02(l)(iii);
     (vii) the assets transferred pursuant to Section 9.02(l)(iii) plus all future investment earnings thereon shall be exclusively used to pay for retiree medical benefits and related administration costs for Transferred Employees (U.S.) (and their spouses or other dependents, if any) and, for so long as the provisions of the Buyer Retiree Medical Plan are substantially the same as those of the Seller Retiree Medical Plan (as of the Closing Date) for other employees (including spouses and other dependents thereof) of the Business to the extent permitted by Applicable Law; and
     (viii) for the avoidance of doubt, effective as of the Closing Date, Transferred Employees (U.S.) shall be eligible to receive benefits under the Buyer Retiree Medical Plan and shall not be eligible to receive benefits under the Seller Retiree Medical 

Plan.
     Section 9.03 . Employee Communications. The initial communication with Business Employees relating to the transactions contemplated by the Transaction Documents shall be agreed upon by the parties. Thereafter, until the Closing, the parties agree to consult with each other before making any further communication with Business Employees of a similar widely disseminated nature, and neither party shall make any such further communication that is inconsistent with communications previously agreed upon unless the content thereof shall have been agreed upon by the other party (it being understood that Seller may respond to questions from Business Employees on matters within the scope of the initial communication and not inconsistent therewith).
     Section 9.04 . Acknowledgement. Buyer and Seller acknowledge and agree that nothing contained in this Article 9 shall be construed to limit in any way the ability of Buyer or its Affiliates to terminate the employment of any Transferred Employee from and after the Closing Date; provided that such termination is in accordance with Applicable Law.
     Section 9.05 . No Third-party Beneficiaries. Without limiting the generality of Section 13.07, nothing in this Article 9, express or implied, is intended to confer any rights, benefits, remedies, obligations or liabilities under this Agreement upon any Person, including any current or former Business Employee (including any Transferred Employee), other than the parties to this Agreement and their respective successors and assigns.
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ARTICLE 10
CONDITIONS TO CLOSING
     Section 10.01. Conditions to Obligations of Buyer and Seller. The obligations of Buyer and Seller to consummate the Closing are subject to the satisfaction (or, to the extent permitted by Applicable Law, waiver by each party) of the following conditions:
     (a) any applicable waiting period under the HSR Act relating to the transactions contemplated hereby shall have expired or been terminated;
     (b) all approvals pursuant to Competition Laws listed on Section 10.01(b) of the Disclosure Schedule shall have been obtained;
     (c) all approvals of Governmental Authorities listed on Section 10.01(c) of the Disclosure Schedule shall have been obtained;
     (d) no provision of any Applicable Law shall prohibit the consummation of the Closing or subject the Buyer or Seller to any penalty or other condition that would reasonably be expected to have a Material Adverse Effect; and
     (e) the Restructuring with respect to TI Korea shall have been completed.
     Section 10.02. Conditions to Obligation of Buyer. The obligation of Buyer to consummate the Closing is subject to the satisfaction (or, to the extent permitted by Applicable Law, waiver by Buyer) of the following further conditions:
     (a) (i) Seller shall have performed in all material respects all of its obligations hereunder required to be performed by it on or prior to the Closing Date, (ii) the representations and warranties of Seller contained in this Agreement (disregarding all materiality and Material Adverse Effect qualifications) shall be true when made and at and as of the Closing Date, as if made at and as of such date, with only such exceptions as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect and (iii) Buyer shall have received a certificate signed by an officer of Seller to the foregoing effect; 
     (b) all consents of third parties required by the agreements listed in Section 10.02(b) of the Disclosure Schedule shall have been obtained;
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     (c) all governmental licenses, authorizations, permits, consents and approvals required to carry on the Business as now conducted shall have been transferred to or otherwise obtained by Buyer on or before the Closing Date, with only such exceptions as would not reasonably be expected to have a Material Adverse Effect;
     (d) Buyer shall have received all documents it may reasonably request relating to (i) the existence of Seller and its Subsidiaries (including the Purchased Subsidiaries) and (ii) the authority of Seller for this Agreement, all in form and substance reasonably satisfactory to Buyer; and
     (e) The proceeds of the Debt Financing shall have been received by Buyer, or shall be fully available to Buyer, on substantially the terms and conditions set forth in the Debt Commitment Letter (including after giving effect to any changes pursuant to the “market flex” provisions thereof); provided that Buyer shall not be entitled to assert the failure of the condition set forth in this Section 10.02(e) if the failure of the Debt Financing to be consummated has resulted solely from the failure of the Equity Financing to be consummated.
     Section 10.03. Conditions to Obligation of Seller. The obligation of Seller to consummate the Closing is subject to the satisfaction (or, to the extent permitted by Applicable Law, waiver by Seller) of the following further conditions:
     (a) (i) Buyer shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing Date, (ii) the representations and warranties of Buyer contained in this Agreement shall be true in all material respects when made and at and as of the Closing Date, as if made at and as of such date and (iii) Seller shall have received a certificate signed by an officer of Buyer to the foregoing effect; and
     (b) Seller shall have received all documents it may reasonably request relating to the existence of Buyer and the authority of Buyer for this Agreement, all in form and substance reasonably satisfactory to Seller.
ARTICLE 11
SURVIVAL; INDEMNIFICATION
     Section 11.01. Survival. The representations and warranties of the parties hereto contained in this Agreement shall survive the Closing until April 30, 2007; provided that (i) the representations and warranties contained in Sections 3.17
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(Finders' Fees) and 4.07 (Finders' Fees) shall survive indefinitely or until the latest date permitted by law, (ii) the representations and warranties contained in Section 3.20 (Environmental Compliance) shall survive until the fifth anniversary of the Closing Date and (iii) the representations and warranties contained in Article 8 (Tax Matters) shall survive until 30 days after the expiration of the applicable statute of limitations (giving effect to any waiver, mitigation or extension thereof). The covenants and agreements of the parties hereto contained in this Agreement shall survive the Closing indefinitely or for the shorter period explicitly specified therein, except that for such covenants and agreements that survive for such shorter period, breaches thereof shall survive indefinitely or until the latest date permitted by law. Notwithstanding the preceding two sentences, any breach of covenant, agreement, representation or warranty in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to the preceding two sentences, if notice of the inaccuracy thereof giving rise to such right of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time.
     Section 11.02. Indemnification. (a) Effective at and after the Closing, Seller indemnifies Buyer and its Subsidiaries (including the Purchased Subsidiaries) and each of their respective Affiliates, officers, directors, employees, agents and Representatives (each, a “Buyer Indemnified Party”) against and agrees to hold each of them harmless from any and all damage, loss, Liability and expense (including reasonable expenses of investigation and reasonable attorneys' fees and expenses in connection with any action, suit or proceeding whether involving a third party claim or a claim solely between the parties hereto) (“Damages”) incurred or suffered by a Buyer Indemnified Party arising out of:
     (i) subject to the terms of Section 11.03(g)(v), any misrepresentation or breach of warranty (each such misrepresentation and breach of warranty, a “Warranty Breach”) or breach of covenant or agreement made or to be performed by Seller 

pursuant to this Agreement;
     (ii) any Excluded Liability (other than an Identified Environmental Liability);
      (iii) any Purchased Subsidiary Liability;
     (iv) the matters described in item 1 or 2 of Section 3.11 of the Disclosure Schedule (the “Specified Matters”);
      (v) any Identified Environmental Liability;
     (vi) any of the matters described in Section 11.02(a)(vi) of the Disclosure Schedule; 
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     (vii) any of the matters described in Section 11.02(a)(vii) of the Disclosure Schedule; or
     (viii) the restructuring described in item 8 of Section 3.08(f) of the Disclosure Schedule and item 1 of Section 3.09 of the Disclosure Schedule to the extent that the amount of such Damages exceeds the reserve reflected in Final Working Capital with respect to such restructuring;
provided that (A) Seller shall not be liable for Warranty Breaches, Specified Matters, Infringement Claims (as defined in Section 11.02(a)(vii) of the Disclosure Schedule) or TSA Consequential Damages (as defined in the Transition Services Agreement) unless the aggregate amount of Damages with respect to all Warranty Breaches, the Specified Matters, Infringement Claims and TSA Consequential Damages exceeds $30,000,000 and then only to the extent of such excess (the “Seller General Basket”), (B) Seller's maximum aggregate liability for all Warranty Breaches, the Specified Matters, the Identified Environmental Liabilities, all Infringement Claims and all TSA Consequential Damages shall not exceed $300,000,000 (the “Seller Cap”) and (C) with respect to Infringement Royalty/Cover Damages (as defined in Section 11.02(a)(vii) of the Disclosure Schedule) under clause (vii) above that are indemnifiable after exhaustion of the Seller General Basket, Seller's liability under this Agreement shall be limited to 80% of such Infringement Royalty/Cover Damages in excess of the Seller General Basket (and subject, for the avoidance of doubt, to the Seller Cap); and provided further that (1) Seller shall not be liable with respect to any single claim or group of related claims with respect to a Warranty Breach or an Infringement Claim that results in Damages of $100,000 or less (and such Damages shall not be applied to the Seller General Basket), (2) with respect to indemnification by Seller for Identified Environmental Liabilities, Seller shall not be liable unless the aggregate amount of Damages with respect to all such Identified Environmental Liabilities exceeds $497,000 and then only to the extent of such excess (the “Seller Environmental Basket”) and (3) the Seller General Basket, the Seller Cap and clause (1) of this proviso shall not apply with respect to Warranty Breaches related to the Excluded Representations. For the avoidance of doubt, Seller shall not be liable for any Damages relating to a Warranty Breach of Section 3.07 or 8.01(a) to the extent a Buyer Indemnified Party has been compensated for such Damages pursuant to Seller's performance of its obligations to pay Taxes to the relevant Taxing Authority or reimburse Buyer pursuant to Article 8.
     (b) Effective at and after the Closing, Buyer indemnifies Seller and its Subsidiaries and each of their respective Affiliates, officers, directors, employees, agents and Representatives (each, a “Seller Indemnified Party”) against and agrees to hold each of them harmless from any and all Damages incurred or suffered by Seller or any of its Affiliates arising out of:
75

     (i) any Warranty Breach or breach of covenant or agreement made or to be performed by Buyer pursuant to this Agreement; or
     (ii) any Assumed Liability (except, with respect to the Specified Matters, any Identified Environmental Liability, any Warranty Breach or any Infringement Claim, to the extent that Seller is required to indemnify the Buyer Indemnified Parties pursuant to Section 11.02(a)); 

provided that (A) Buyer shall not be liable for Warranty Breaches or TSA Consequential Damages unless the aggregate amount of Damages with respect to all Warranty Breaches and TSA Consequential Damages exceeds $30,000,000 and then only to the extent of such excess (the “Buyer Basket”) and (B) Buyer's maximum liability for all such Warranty Breaches and TSA Consequential Damages shall not exceed $300,000,000 (the “Buyer Cap”); and provided further that (1) Buyer shall not be liable with respect to any single claim or group of related claims with respect to a Warranty Breach that results in Damages of $100,000 or less (and such Damages shall not be applied to the Buyer Basket) and (2) the Buyer Basket, the Buyer Cap and clause (1) of this proviso shall not apply with respect to Warranty Breaches related to the Excluded Representations.
     (c) All Warranty Breaches (except for Warranty Breaches with respect to Section 3.08(a) or Section 3.10(a)(xi)) shall, for purposes of Sections 11.02(a) and 11.02(b), be determined without giving effect to any qualification in the representations and warranties of Seller or Buyer as to materiality, in all material respects, Material Adverse Effect, material adverse effect or words of similar effect.
     Section 11.03. Procedures. (a) Any party(ies) entitled to indemnification under Section 11.02 (the “Indemnified Party”) agrees to give prompt notice to the party from whom the Indemnified Party is entitled to seek indemnification (the “Indemnifying Party”) of the assertion of any claim, or the commencement of any suit, action or proceeding in respect of which the Indemnified Party is entitled to seek indemnification under Section 11.02 (it being understood that a party's entitlement to indemnification shall be determined without regard to the application of (i) the Seller General Basket, Seller Environmental Basket and Buyer Basket (collectively, the “Baskets”) and (ii) the Seller Cap and Buyer Cap (collectively, the “Caps”)) and will provide the Indemnifying Party such information with respect thereto that the Indemnifying Party may reasonably request. The failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent such failure shall have adversely prejudiced the Indemnifying Party.
     (b) Seller shall control and appoint lead counsel for the defense of any claim asserted by any third party (a “Third Party Claim”) that is an Excluded Liability. In addition, the Indemnifying Party shall be entitled to control and 
76

appoint lead counsel for the defense of any Third Party Claim or any Environmental Matter if (i) it is reasonably expected that indemnification payments to be made by the Indemnifying Party in respect of such Third Party Claim or Environmental Matter in accordance with Section 11.02 (taking into account the Baskets and the Caps) will be greater than the harm suffered by the Indemnified Party as a result of such Third Party Claim, including any injunctive, equitable or other non-monetary relief sought by such third party, (ii) the Indemnifying Party shall acknowledge in writing its obligation to indemnify the Indemnified Party for any Damages relating to such Third Party Claim or Environmental Matter (subject to the limitations on indemnification set forth in this Article 11, including the Baskets and the Caps) and (iii) the Indemnifying Party shall notify the Indemnified Party that it has elected to assume such defense promptly but in any event within 30 days after receipt of the notice with respect to such Third Party Claim referred to in Section 11.02(a) or, with respect to Environmental Matters, in a timely manner given the facts and circumstances and changes thereto or development thereof over time (it being understood that the Indemnified Party shall be entitled to take such actions as may be required to defend such Third Party Claim, including if necessary seeking extensions of time to respond to pleadings and the like, prior to the receipt of such acknowledgement within the 30-day period referred to above). The Indemnified Party shall be entitled to control and appoint lead counsel for the defense of any Third Party Claim if the Indemnifying Party is not entitled to, or fails to, elect to assume the defense of such claim pursuant to the foregoing sentence, or thereafter if the Indemnifying Party fails or ceases to prosecute such claim with reasonable diligence.
     (c) The party controlling the defense of any Third Party Claim or Environmental Matter in accordance with the provisions of this Section 11.03 (the “Controlling Party”) (i) shall pay all the costs of such defense (including attorneys' fees), provided that if the Indemnified Party is the Controlling Party, then such costs shall be considered Damages arising out of such Third Party Claim for purposes of Section 11.02, and (ii) shall obtain the prior written consent of the other party (the “Non-Controlling Party”) before entering into any settlement of such Third Party Claim or Environmental Matter, such consent not to be unreasonably withheld (A) if the settlement does not impose injunctive or other equitable relief against the Non-Controlling Party or (B) with respect to Environmental Matters, if the settlement is consistent with the terms of Section 11.03(g) . The Non-Controlling Party shall be entitled to participate in the defense of such Third Party Claim and to employ separate counsel of its choice for such purpose. The fees and expenses of such separate counsel shall be paid by the Non-Controlling Party, unless in the reasonable judgment of counsel to the Non-Controlling Party there is a conflict of interest between the Controlling Party and the Non-Controlling Party, in which case such fees and expenses shall be paid by the Controlling Party 

(provided that if the Indemnified Party is the Controlling 
77

Party, then such fees and expenses shall be considered Damages arising out of such Third Party Claim for purposes of Section 11.02) . In any Third Party Claim where an Indemnified Party is the Non-Controlling Party and which involves any material customer or supplier of the Indemnified Party or its Affiliates, such participation shall in any event include the right of the Non-Controlling Party to engage in direct discussions with the other parties to such Third Party Claim, including discussions concerning the claim and the potential resolution thereof; provided that (1) such participation right shall not alter the rights of the Controlling Party to control and direct the defense of such Third Party Claim, including the right to reject or accept any resolution proposed by the Non-Controlling Party in such Controlling Party's sole discretion, and (2) the Non-Controlling Party shall disclose to such other parties that in conducting any such discussions, the Non-Controlling Party is acting on its own behalf and not as a Representative of the Controlling Party and the Non-Controlling Party is not authorized to agree to any settlement with respect to such Third Party Claim. With respect to any Third Party Claim relating to the Specified Matters, the Controlling Party shall retain the legal counsel identified in Section 11.03(c) of the Disclosure Schedule with respect thereto and shall not replace or discharge such counsel absent good cause.
     (d) Each party shall cooperate, and cause their respective Affiliates to cooperate, in the defense or prosecution of any Third Party Claim and shall furnish or cause to be furnished such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith. In furtherance and not in limitation of the foregoing, in connection with the defense of any Infringement Claim, Buyer shall, to the extent requested by Seller, assert (or, in Buyer's sole discretion, allow Seller to assert on its behalf) against the Person making such Infringement Claim any claims for infringement or misappropriation of Business Intellectual Property Rights for which there is a reasonable basis in law and fact. A Controlling Party shall, to the extent requested by the Non-Controlling Party, (i) keep the Non-Controlling Party reasonably informed relating to the progress of any significant matter (including providing the Non-Controlling Party with periodic summaries of the status of such Third Party Claim and the amounts spent with respect thereto and copies of all material plans, reports and external correspondence and notifying the Non-Controlling Party of, and giving the Non-Controlling Party the opportunity to attend, scheduled voice or in-person conferences with regulators or other third parties) and (ii) provide the Non-Controlling Party with a reasonable period of time, given the specific circumstances, to permit such party to comment on any material proposed actions, and to consider in good faith any such comments.
     (e) Each Indemnified Party must mitigate as required by Applicable Law any loss for which such Indemnified Party seeks indemnification under this Agreement. If such Indemnified Party mitigates its loss after the Indemnifying 
78

Party has paid the Indemnified Party under any indemnification provision of this Agreement in respect of that loss, the Indemnified Party must notify the Indemnifying Party and pay to the Indemnifying Party the extent of the value of the benefit to the Indemnified Party of that mitigation (less the Indemnified Party's reasonable costs of mitigation) within two Business Days after the benefit is received.
     (f) Each Indemnified Party shall use its reasonable efforts to collect any amounts available under insurance coverage, or from any other Person alleged to be responsible, for any Damages payable under Section 11.02.
     (g) In addition to the provisions set forth in Section 11.03(a), 11.03(b), 11.03(c), 11.03(e) and 11.03(f) above, with respect to any matter for which Buyer or its Affiliates seek indemnification relating to a Warranty Breach of Section 3.20, an Excluded Environmental Liability, an Identified Environmental Liability or any other environmental matter otherwise subject to indemnification under the terms of this Agreement (“Environmental Matters”):

     (i) Except as set forth in Section 11.03(b), Buyer will retain the defense, control and resolution of any Environmental Matters, including disclosure, investigation, negotiation, performance and settlement of such matters. With respect to any Environmental Matters, the Controlling Party shall, to the extent requested by the Non-Controlling Party, (1) keep the other party reasonably informed relating to the progress of any significant matter (including providing the Non-Controlling Party with copies of all material plans, reports and external correspondence and notifying the other party of, and giving the Non-Controlling Party the opportunity to attend, scheduled voice or in-person conferences with regulators or other third parties), (2) provide the other party with a reasonable period of time, given the specific circumstances, to permit such party to comment on any material proposed actions, and to consider in good faith any such comments and (3) not unreasonably interfere with the ordinary course operation of the business at any Real Property or with the continuing use of the Real Property in the manner being used as of the Closing Date;
     (ii) Buyer agrees to, and shall cause its Affiliates to, cooperate with Seller in providing all necessary and reasonably requested access to properties, facilities, employees and records and timely providing Seller with copies of all communications relating to such matter received from any Governmental Authority or third party;
     (iii) Each party agrees to cooperate, and to cause their respective Affiliates to cooperate, in the defense or prosecution of any Environmental Matter and shall provide to the other party with copies of 
79

any and all material environmental audits, studies, action plans, tests and communications with any Governmental Agency or third party relating to investigatory, remedial or other activities with respect to any property which may be subject to a claim for indemnification for any Environmental Matters;
     (iv) Seller's obligation to indemnify Buyer or any of its Affiliates shall be limited to those Damages which must be incurred, based upon (1) the use of a reasonable and cost-effective method available under the circumstances and (2) the industrial or commercial use of the property as of the Closing Date, to meet, in a reasonably cost-effective manner, the requirements of any applicable Environmental Law or to meet the demands of any applicable Governmental Authority or as required by any judicial or administrative resolution, order or settlement agreement of a Third Party Claim otherwise complying with the terms of this Agreement. To the extent necessary to achieve the purposes set forth in this Section, Buyer and its Affiliates agree that engineering or institutional controls and a deed or other restriction are each a reasonable cost-effective method, so long as such control or restriction does not materially limit the industrial or commercial activities being performed on the applicable property as of the Closing Date.
     (v) Seller shall have no liability under this Agreement for any Damages relating to Environmental Matters to the extent arising out of any sampling of the soil or groundwater or any disclosure, report, or communication to any Governmental Authority or third party by Buyer or any of its Affiliates (or by a Third Party Buyer of any Real Property as described in clause (B) below), or out of the initiation or encouragement by Buyer or any of its Affiliates of any action by any Governmental Authority or third party unless:
     (A) Buyer or any of its Affiliates reasonably believes it must investigate, take action, initiate or encourage any such action due to (1) the requirements of any applicable law, including any Environmental Law, (2) a need to respond to any Third Party Claim against Buyer or its Affiliates, (3) the discovery of a condition first identified as a result of construction activities which would have been undertaken in the ordinary course of operating the site in the manner in which it is operating as of the Closing Date, in the absence of an indemnity or (4) the discovery of a condition in the ordinary course of operating the site in the manner in which it is operating as of the Closing Date which condition, if unaddressed, would reasonably be expected to result in a material Third Party Claim or imminent and substantial risk to human health;
80

     (B) Buyer or any of its Affiliates reasonably believes that it (or any Third Party Buyer) must investigate, take action, initiate 

or encourage any such action to meet the demands of a reasonable third party buyer or its financing parties (collectively, “Third Party Buyers”) in connection with the sale of the applicable Real Property to such third party or any other transaction involving the direct or indirect transfer of, or related encumbrance on, the applicable Real Property; provided that the liability of Seller under this Agreement for any Damages for any Environmental Matters triggered by such Third Party Buyer requirement shall be limited to 50% of any Damages incurred by Buyer or its Affiliates, to be determined after the application of the Baskets and Caps; and
     (C) Buyer or any of its Affiliates investigates, takes action, initiates or encourages any such action other than as described above, in which case the liability of Seller under this Agreement for any Damages relating to Environmental Matters triggered by such investigation, action, initiation or encouragement shall be limited to 20% of any Damages incurred by Buyer or its Affiliates, to be determined after the application of the Baskets and Caps.
     Section 11.04. Calculation of Damages. (a) The amount of any Damages payable under Section 11.03 by the Indemnifying Party shall be net of any (i) amounts actually recovered by the Indemnified Party under applicable insurance policies, or from any other Person alleged to be responsible therefor and (ii) Tax benefit actually realized by the Indemnified Party arising from the incurrence or payment of any such Damages (taking into account any current or future Tax costs). In computing the amount of any such Tax benefit, the Indemnified Party shall be deemed to fully utilize, at the highest applicable marginal tax rate then in effect, all Tax items arising from the incurrence or payment of any indemnified Damages, with such Tax items to be the last items taken into account. If the Indemnified Party receives any amounts under applicable insurance policies, or from any other Person alleged to be responsible for any Damages, subsequent to an indemnification payment by the Indemnifying Party, then such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or expense incurred by such Indemnifying Party in connection with providing such indemnification payment up to the amount received by the Indemnified Party, net of any expenses incurred by such Indemnified Party in collecting such amount.
     (b) The Indemnifying Party shall not be liable under Section 11.02 for any (i) Damages to the extent that the Liability relating thereto has been taken into account as a liability in calculating Final Working Capital pursuant to the 
81

Purchase Price adjustment under Section 2.11 or (ii) punitive Damages (other than any punitive Damages payable to a third party).
     (c) Any indemnification payment made pursuant to this Agreement shall be treated by Buyer and Seller as an adjustment to the Purchase Price for Tax purposes.
     Section 11.05. Assignment of Claims. If the Indemnified Party receives any payment from an Indemnifying Party in respect of any Damages pursuant to Section 11.02 and the Indemnified Party could have recovered all or a part of such Damages from a third party (a “Potential Contributor”) based on the underlying Claim asserted against the Indemnifying Party, the Indemnified Party shall assign such of its rights to proceed against the Potential Contributor as are necessary to permit the Indemnifying Party to recover from the Potential Contributor the amount of such payment; provided that the Indemnified Party shall not be required to assign any right to proceed against a Potential Contributor if the Indemnified Party determines in its reasonable discretion that such assignment would be materially detrimental to its reputation, future business prospects or customer, supplier, or employee relationships.
     Section 11.06. Exclusivity. Except as specifically set forth in this Agreement or any other Transaction Document, Buyer waives any rights and claims Buyer may have against Seller, whether in law or in equity, relating to the pre-Closing conduct of the Business or the transactions contemplated hereby. The rights and claims waived by Buyer include claims for contribution or other rights of recovery arising out of or relating to any Environmental Law (whether now or hereinafter in effect), claims for breach of contract, breach of representation or warranty, negligent misrepresentation and all other claims for breach of duty, but shall not include claims for fraud. After the Closing, Section 7.05, Article 11 and Section 13.11 will provide the exclusive remedy for any misrepresentation, breach of warranty, covenant or other agreement or other claim arising out of this Agreement or the transactions contemplated hereby.
ARTICLE 12
TERMINATION
     Section 12.01. Grounds for Termination. This Agreement may be terminated at any time prior to the Closing:

      (a) by mutual written agreement of Seller and Buyer;
     (b) by either Seller or Buyer if the Closing shall not have been consummated on or before June 30, 2006; provided that neither Buyer nor Seller shall be able to terminate this Agreement pursuant to this clause (b)
82

if the failure of the Closing to be consummated by such date is caused by its breach of its obligations hereunder; or
     (c) by either Seller or Buyer if consummation of the transactions contemplated hereby would violate any nonappealable final order, decree or judgment of any Governmental Authority having competent jurisdiction.
The party desiring to terminate this Agreement pursuant to clauses 12.01(b) or 12.01(c) shall give notice of such termination to the other party.
     Section 12.02. Effect of Termination. If this Agreement is terminated as permitted by Section 12.01, such termination shall be without liability of either party (or any stockholder or Representative of such party) to the other party to this Agreement; provided that if such termination shall result from the willful (i) failure of either party to fulfill a condition to the performance of the obligations of the other party, (ii) failure to perform a covenant of this Agreement or (iii) breach by either party hereto of any representation or warranty or agreement contained herein, such party shall be fully liable for any and all Damages incurred or suffered by the other party as a result of such failure or breach. The provisions of Sections 6.01, 13.02, 13.03, 13.04, 13.05, 13.06, 13.07, 13.08 and 13.10 shall survive any termination hereof pursuant to Section 12.01.
ARTICLE 13
MISCELLANEOUS
     Section 13.01. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission) and shall be given,
      if to Buyer, to:
	
			
	 
	S&C Purchase Corp.

	 
	c/o Bain Capital

	 
	Partners, LLC

	 
	745 Fifth Avenue

	 
	New York, New York 10151

	 
	Attention:
	Ed Conard

	 
	 
	Paul Edgerley

	 
	 
	Stephen M. Zide

	 
	Facsimile No.: 
	(212) 421-2225

83

	
			
	      with a copy to: 

	 
	 
	 

	 
	Kirkland & Ellis LLP   

	 
	200 E. Randolph Drive   

	 
	Chicago, Illinois 60601   

	 
	Attention: 
	Jeffrey C. Hammes, P.C. 

	 
	 
	Matthew E. Steinmetz, P.C. 

	 
	 
	Jeffrey W. Richards 

	 
	Facsimile No.: 
	(312) 861-2200 

	 
	 
	 

	        if to Seller, to:    

	 
	 
	 

	 
	Texas Instruments Incorporated   

	 
	12500 TI Boulevard   

	 
	Dallas, Texas  75266 

	 
	Attention: General Counsel   

	 
	Facsimile No.: 
	(214) 480-5061 

	 
	 
	 

	 
	and 
	 

	 
	 
	 

	 
	Texas Instruments Incorporated   

	 
	7839 Churchill Way MS 3995   

	 
	Dallas, Texas  75251 

	 
	Attention: Vice President of Corporate Development 

	 
	Facsimile No.: 
	(972) 917-3804 

	 
	 
	 

	        with a copy to:    

	 
	 
	 

	 
	Davis Polk & Wardwell   

	 
	450 Lexington Avenue   

	 
	New York, New York 10017   

	 
	Attention: Paul R. Kingsley   

	 
	Facsimile No.: 
	(212) 450-3800 

or such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.
     Section 13.02. Amendments and Waivers. (a) Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this 
84

Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective.
     (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
     Section 13.03. Expenses. Except as otherwise provided herein, all costs and expenses incurred in connection with this Agreement (a) by Seller or any of its Subsidiaries (including, for costs incurred prior to the Closing, the Purchased Subsidiaries) shall be paid by Seller and (b) by Buyer or any of its Affiliates (including, for costs incurred following the Closing, the Purchased Subsidiaries) shall be paid by Buyer.
     Section 13.04. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party hereto. Notwithstanding the foregoing, Buyer shall have the right to assign all or certain provisions of this Agreement, or any interest herein, and may delegate any duty or obligation hereunder, without the consent of Seller, to (i) any Affiliate of Buyer, (ii) any purchaser of any or all of the assets or equity interests (whether by merger, recapitalization, reorganization or otherwise) of Buyer or the Business or (iii) any of Buyer's financing sources as collateral; provided that, in the case of each of clauses (i)-(iii), no such assignment or delegation shall relieve Buyer of any of its obligations hereunder; and provided further that between the date hereof and the Closing Date, Buyer intends to form or cause to be formed one or more Subsidiaries or Affiliates, and in connection therewith Buyer may on or prior to the Closing assign and delegate any or all of its interest herein and duties and obligations hereunder (including to make payments, acquire assets, and assume Liabilities at the Closing) to and among such Subsidiaries and Affiliates, but no such assignment or delegation shall relieve Buyer of any of its obligations hereunder (other than its obligation to assume an Assumed Liability relating to the operation of the Business to the extent such obligation was so assigned to a Subsidiary or Affiliate of Buyer).
     Section 13.05. Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of New York, without regard to the conflicts of law rules of such state.
     Section 13.06. Jurisdiction. The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated 
85

hereby shall be brought in the United States District Court for the Southern District of New York or any New York State court sitting in New York City, so long as one of such courts shall have subject matter jurisdiction over such suit, action or proceeding, and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of New York, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 13.01 shall be deemed effective service of process on such party.
     Section 13.07. Counterparts; Effectiveness; No Third Party Beneficiaries. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other party hereto. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). Except as set forth in Section 11.02, no provision of this Agreement is intended to confer any rights, benefits, remedies or Liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns.
     Section 13.08. Entire Agreement. The Transaction Documents and the Confidentiality Agreement constitute the entire 

agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.
     Section 13.09. Bulk Sales Laws. Buyer and Seller each hereby waive compliance by Seller with the provisions of the “bulk sales,” “bulk transfer” or similar laws of any state in connection with the sale of the Purchased Assets.
     Section 13.10. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so 
86

long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
     Section 13.11. Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement to be performed following the Closing were not performed in accordance with the terms thereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches of any such provision or to enforce specifically the performance of any such provision in the United States District Court for the Southern District of New York or any New York State court sitting in New York City, in addition to any other remedy to which they are entitled at law or in equity.
     Section 13.12. Disclosure Schedule. The parties acknowledge and agree that (i) the inclusion of any items or information in the Disclosure Schedule that are not required by this Agreement to be so included is solely for the convenience of Buyer, (ii) the disclosure by Seller of any matter in the Disclosure Schedule shall not be deemed to constitute an acknowledgement by Seller that the matter is required to be disclosed by the terms of this Agreement or that the matter is material, (iii) if any section of the Disclosure Schedule lists an item or information in such a way as to make its relevance to the disclosure required by or provided in another section of the Disclosure Schedule or the statements contained in any Section of Article 3 reasonably apparent, such information shall be deemed to have been disclosed in or with respect to such other section, notwithstanding the omission of an appropriate cross-reference to such other section or the omission of a reference in the particular representation and warranty to such section of the Disclosure Schedule, (iv) except as provided in clause (iii) above, headings have been inserted in the Disclosure Schedule for convenience of reference only, (v) the Disclosure Schedule is qualified in their entirety by reference to specific provisions of this Agreement and (vi) the Disclosure Schedule and the information and statements contained therein are not intended to constitute, and shall not be construed as constituting, representations or warranties of Seller except as and to the extent provided in this Agreement.
[The remainder of this page has been intentionally left blank; the next page is the signature page.]
87

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

	
				
	 
	TEXAS INSTRUMENTS

	 
	      INCORPORATED

	 
	 
	 
	 

	 
	 
	 
	 

	 
	By:
	 /s/ Kevin P. March

	 
	 
	 

	 
	 
	Name:
	Kevin P. March

	 
	 
	Title:
	Senior Vice President and

	 
	 
	 
	Chief Financial Officer

	 
	 
	 
	 

	 
	 
	 
	 

	 
	S&C PURCHASE CORP.

	 
	 
	 
	 

	 
	 
	 
	 

	 
	By:
	 /s/ Edward Conard

	 
	 
	 

	 
	 
	Name:
	Edward Conard

	 
	 
	Title:
	Vice Presidentexhibit10a.htm

 

 

Exhibit 10(a)

Execution Version

 

CREDIT AGREEMENT

 

dated as of February 23, 2012

 

by and among

 

TRUNKLINE LNG HOLDINGS LLC

as the Borrower

 

PANHANDLE EASTERN PIPE LINE COMPANY, LP

as a Guarantor

 

TRUNKLINE LNG COMPANY, LLC

as a Guarantor

 

THE BANKS NAMED HEREIN

as the Banks

 

and

 

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.

as the Administrative Agent

 

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.

PNC CAPITAL MARKETS LLC

and

MIZUHO CORPORATE BANK (USA)

as the Joint Lead Arrangers and the Joint Bookrunners

 

PNC BANK, NATIONAL ASSOCIATION

MIZUHO CORPORATE BANK (USA)

as the Syndication Agents

 

JPMORGAN CHASE BANK, N.A.

 ROYAL BANK OF CANADA

as the Documentation Agents

 

 

 

\36398601.11

  

  

  

TABLE OF CONTENTS

 

 

	
1.

	
CERTAIN DEFINITIONS 

	
1

 

	
  

	
1.1

	
Defined Terms 

	
1

	
  

	
1.2

	
Computation of Time Periods; Other Definitional Provisions 

	
17

	
  

	
1.3

	
Accounting Terms 

	
17

 

	
2.

	
AMOUNTS AND TERMS OF THE LOANS 

	
17

 

	
  

	
2.1

	
The Loans 

	
17

	
  

	
2.2

	
Making of the Loans 

	
17

	
  

	
2.3

	
Repayment of Loans 

	
18

	
  

	
2.4

	
Termination of the Commitments 

	
18

	
  

	
2.5

	
Prepayments 

	
18

	
  

	
2.6

	
Interest 

	
19

	
  

	
2.7

	
Fees 

	
19

	
  

	
2.8

	
Conversion of Loans 

	
20

	
  

	
2.9

	
Increased Costs, Etc. 

	
20

	
  

	
2.10

	
Payments and Computations 

	
22

	
  

	
2.11

	
Taxes 

	
24

	
  

	
2.12

	
Sharing of Payments, Etc. 

	
28

	
  

	
2.13

	
Use of Proceeds 

	
28

	
  

	
2.14

	
Evidence of Debt 

	
28

	
  

	
2.15

	
Replacement of Banks 

	
30

	
  

	
2.16

	
Defaulting Banks 

	
30

 

	
3.

	
REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES 

	
31

 

	
  

	
3.1

	
Organization and Qualification.  Such Loan Party: 

	
31

	
  

	
3.2

	
Authorization, Validity, Etc. 

	
31

	
  

	
3.3

	
Conflicting or Adverse Agreements or Restrictions 

	
32

	
  

	
3.4

	
No Consents Required 

	
32

	
  

	
3.5

	
Financial Statements. 

	
32

	
  

	
3.6

	
Litigation 

	
33

	
  

	
3.7

	
Default 

	
33

	
  

	
3.8

	
Compliance 

	
33

	
  

	
3.9

	
Title to Assets 

	
33

	
  

	
3.10

	
Payment of Taxes 

	
33

	
  

	
3.11

	
Investment Company Act Not Applicable 

	
33

	
  

	
3.12

	
Regulations T, U and X 

	
33

	
  

	
3.13

	
ERISA 

	
34

	
  

	
3.14

	
No Financing of Certain Security Acquisitions 

	
34

	
  

	
3.15

	
Franchises, Co-Licenses, Etc. 

	
34

	
  

	
3.16

	
Environmental Matters 

	
35

	
  

	
3.17

	
Disclosure 

	
35

	
  

	
3.18

	
Insurance 

	
35

	
  

	
3.19

	
Subsidiaries. 

	
35

 

	
4.

	
CONDITIONS TO FUNDING 

	
35

 

	
  

	
4.1

	
Representations True and No Defaults 

	
35

	
  

	
4.2

	
Intentionally Omitted 

	
36

	
  

	
4.3

	
Compliance With Law 

	
36

	
  

	
4.4

	
Notice of Borrowing and Other Documents. 

	
36

	
  

	
4.5

	
Payment of Fees and Expenses 

	
36

	
  

	
4.6

	
Repayment of Debt 

	
36

	
  

	
4.7

	
Loan Documents Satisfactory 

	
36

	
  

	
4.8

	
Loan Documents, Opinions and Other Instruments 

	
36

 

	
5.

	
AFFIRMATIVE COVENANTS OF THE LOAN PARTIES 

	
37

 

	
  

	
5.1

	
Financial Statements and Information. 

	
37

	
  

	
5.2

	
Books and Records 

	
39

	
  

	
5.3

	
Insurance 

	
39

	
  

	
5.4

	
Maintenance of Property 

	
39

	
  

	
5.5

	
Inspection of Property and Records. 

	
39

	
  

	
5.6

	
Existence, Laws, Obligations, Taxes 

	
39

	
  

	
5.7

	
Notice of Certain Matters 

	
39

	
  

	
5.8

	
ERISA 

	
40

	
  

	
5.9

	
Compliance with Environmental Laws 

	
41

 

	
6.

	
NEGATIVE COVENANTS OF PANHANDLE 

	
41

 

	
  

	
6.1

	
Financial Covenant 

	
41

	
  

	
6.2

	
Liens, Etc. 

	
41

	
  

	
6.3

	
Debt 

	
42

	
  

	
6.4

	
Change in Nature of Business 

	
42

	
  

	
6.5

	
Mergers, Consolidation 

	
42

	
  

	
6.6

	
Sale of Assets 

	
43

	
  

	
6.7

	
Restricted Payments 

	
43

	
  

	
6.8

	
Sales and Leasebacks 

	
43

	
  

	
6.9

	
Transactions with Related Parties 

	
44

	
  

	
6.10

	
Hazardous Materials 

	
44

 

	
7.

	
NEGATIVE COVENANTS OF THE BORROWER 

	
44

 

	
  

	
7.1

	
Liens, Etc. 

	
44

	
  

	
7.2

	
Debt 

	
45

	
  

	
7.3

	
Merger, Consolidation 

	
45

	
  

	
7.4

	
Sale of Assets 

	
45

	
  

	
7.5

	
Restricted Payment 

	
46

	
  

	
7.6

	
Securities Credit Regulations; Investment Company Act 

	
46

	
  

	
7.7

	
Nature of Business 

	
46

	
  

	
7.8

	
Transactions with Related Parties 

	
46

	
  

	
7.9

	
Hazardous Materials 

	
47

	
  

	
7.10

	
Use of Proceeds 

	
47

	
  

	
7.11

	
Other Documents 

	
47

 

	
8.

	
EVENTS OF DEFAULT; REMEDIES 

	
47

 

	
  

	
8.1

	
Failure to Pay Obligations When Due 

	
47

	
  

	
8.2

	
Intentionally Omitted. 

	
47

	
  

	
8.3

	
Failure to Pay Other Debt 

	
47

	
  

	
8.4

	
Misrepresentation or Breach of Warranty 

	
48

	
  

	
8.5

	
Violation of Certain Covenants 

	
48

	
  

	
8.6

	
Violation of Other Covenants, Etc. 

	
48

	
  

	
8.7

	
Bankruptcy and Other Matters 

	
48

	
  

	
8.8

	
Dissolution. 

	
48

	
  

	
8.9

	
Undischarged Judgment 

	
48

	
  

	
8.10

	
Loan Documents 

	
49

	
  

	
8.11

	
Change of Control. 

	
49

	
  

	
8.12

	
Other Remedies 

	
49

	
  

	
8.13

	
Remedies Cumulative. 

	
49

 

	
9.

	
THE AGENT 

	
49

 

	
  

	
9.1

	
Authorization and Action 

	
49

	
  

	
9.2

	
Agent’s Reliance, Etc. 

	
50

	
  

	
9.3

	
Defaults 

	
50

	
  

	
9.4

	
BTMU and Affiliates 

	
50

	
  

	
9.5

	
Non-Reliance on Agent and Other Banks 

	
51

	
  

	
9.6

	
Indemnification 

	
51

	
  

	
8.7

	
Successor Agent 

	
52

	
  

	
9.8

	
Agent’s Reliance 

	
52

	
  

	
9.9

	
Exculpatory Provisions 

	
53

 

	
10.

	
GUARANTY 

	
53

 

	
  

	
10.1

	
Guaranty 

	
53

	
  

	
10.2

	
Guaranty Absolute 

	
53

	
  

	
10.3

	
Waivers and Acknowledgments 

	
54

	
  

	
10.4

	
Subrogation 

	
55

	
  

	
10.5

	
Subordination 

	
55

	
  

	
10.6

	
Continuing Guaranty 

	
56

	
  

	
10.7

	
General Limitation on Guarantee Obligations 

	
56

 

	
11.

	
MISCELLANEOUS 

	
56

 

	
  

	
11.1

	
Amendments, Waivers, Etc. 

	
57

	
  

	
11.2

	
Reimbursement of Expenses 

	
57

	
  

	
11.3

	
Notices 

	
58

	
  

	
11.4

	
Governing Law 

	
60

	
  

	
11.5

	
Waiver of Jury Trial 

	
60

	
  

	
11.6

	
Consent to Jurisdiction 

	
61

	
  

	
11.7

	
Survival of Representations, Warranties and Covenants 

	
61

	
  

	
11.8

	
Counterparts 

	
61

	
  

	
11.9

	
Severability 

	
61

	
  

	
11.10

	
Descriptive Headings 

	
61

	
  

	
11.11

	
Accounting Terms 

	
61

	
  

	
11.12

	
Limitation of Liability 

	
61

	
  

	
11.13

	
Set-Off 

	
62

	
  

	
11.14

	
Sale or Assignment 

	
62

	
  

	
11.15

	
Interest 

	
67

	
  

	
11.16

	
Indemnification 

	
68

	
  

	
11.17

	
Payments Set Aside 

	
69

	
  

	
11.18

	
Loan Agreement Controls 

	
69

	
  

	
11.19

	
Obligations Several 

	
69

	
  

	
11.20

	
Final Agreement 

	
69

	
  

	
11.21

	
PATRIOT Act 

	
69

 

Annex I                                Commitments

 

 

Exhibit A                                Note

Exhibit B                                Assignment and Acceptance

Schedule 3.1                        Subsidiaries

Schedule 3.10                      Tax Matters

Schedule 3.16                      Environmental Matters

\36398601.11

  

  

  

CREDIT AGREEMENT

 

CREDIT AGREEMENT dated as of February 23, 2012, among TRUNKLINE LNG HOLDINGS LLC, a limited liability company organized under the laws of Delaware (the “Borrower”), PANHANDLE EASTERN PIPE LINE COMPANY, LP, a limited partnership organized under the laws of Delaware (“Panhandle”), TRUNKLINE LNG COMPANY, LLC, a limited liability company organized under the laws of Delaware (“TLNG”), the financial institutions listed on the signature pages hereof and any other Person that shall have become a party hereto pursuant to an Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance  (collectively, the “Banks” and, individually, a “Bank”), and THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. (“BTMU”), in its capacity as administrative agent (the “Agent”) for the Banks hereunder.

 

PRELIMINARY STATEMENTS:

 

1.           The Borrower desires to obtain from the Banks a senior term loan financing (the “Financing”) in an aggregate principal amount of $455,000,000, the proceeds of which will be used by the Borrower solely to repay in full the March 2007 Credit Agreement (as defined below).

 

2.           The Banks have indicated their willingness to provide the Financing, subject to the terms and conditions of this Agreement, including the guaranty set forth herein.

 

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

 

	
1.  

	
CERTAIN DEFINITIONS.

 

1.1 Defined Terms.  As used in this Agreement, the following terms shall have the following meanings:

 

“Administrative Questionnaire” shall mean an administrative questionnaire in a form supplied by the Agent.

 

“Affiliate” shall mean any Person controlling, controlled by or under common control with any other Person.  For purposes of this definition, “control” (including “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or otherwise.  If any Person shall own, directly or indirectly, beneficially or of record, twenty percent (20%) or more of the voting equity (whether outstanding capital stock, partnership interests or otherwise) of another Person, such Person shall be deemed to be an Affiliate.

 

“Agent” shall have the meaning set forth in the preamble hereto.

 

“Agreement” shall mean this Credit Agreement, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

 

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greatest of: (a) the Prime Rate in effect on such day; (b) 1/2 of 1% per annum above the Federal Funds Rate in effect on such day; and (c) the Eurodollar Rate plus 1%.  The Alternate Base Rate is an index rate and is not necessarily intended to be the lowest or best rate of interest charged to other customers in connection with extensions of credit or to other banks.  Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Rate or the Eurodollar Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Rate or the Eurodollar Rate, respectively.

 

“Alternate Base Rate Loan” shall mean any Loan which bears interest as described in Section 2.6(a)(i) (Interest).

 

“Applicable Lending Office” shall mean, with respect to each Bank, such Bank’s (a) Domestic Lending Office in the case of an Alternate Base Rate Loan; and (b) Eurodollar Lending Office in the case of a Eurodollar Rate Loan.

 

“Applicable Margin” shall mean with respect to (a) Alternate Base Rate Loans, a percentage per annum set forth below under the caption “Alternate Base Rate Loan” and (b) Eurodollar Rate Loans, subject to the provisos set forth below, a percentage per annum set forth below under the caption “Eurodollar Rate Loan,” in each case determined by reference to the rating of Panhandle’s unsecured, non-credit enhanced Senior Funded Debt (effective from and after the date the applicable change of such a debt rating is first announced by the applicable rating agency):

 

	
Rating of Panhandle’s unsecured, non-credit enhanced Senior Funded Debt

	
Eurodollar Rate Loan

	
Alternate Base Rate Loan

	
Equal to or higher than Baa1 by Moody’s Investors Service, Inc. / Equal to or higher than BBB+ by Standard and Poor’s Ratings Group

	
1.125%

	
0.125%

	
Baa2 by Moody’s Investors Service, Inc. / BBB by Standard and Poor’s Ratings Group

	
1.375%

	
0.375%

	
Baa3 by Moody’s Investors Service, Inc. / BBB- by Standard and Poor’s Ratings Group

	
1.625%

	
0.625%

	
Ba1 by Moody’s Investors Service, Inc. / BB+ by Standard and Poor’s Ratings Group

	
1.875%

	
0.875%

	
Below Ba1 by Moody’s Investors Service, Inc. / Below BB+ by Standard and Poor’s Ratings Group

	
2.25%

	
1.25%

	  	  	  

Notwithstanding the foregoing provisions, in the event that ratings of Panhandle’s unsecured, non-credit enhanced Senior Funded Debt under Standard & Poor’s Ratings Group and under Moody’s Investors Service, Inc. fall within different rating categories which are not functional equivalents, the Applicable Margin shall be based on the higher of such ratings if there is only one category differential between the functional equivalents of such ratings, and if there is a two category differential between the functional equivalents of such ratings, the component of pricing from the grid set forth above shall be based on the rating category which is then in the middle of or between the two category ratings which are then in effect, and if there is greater than a two category differential between the functional equivalents of such ratings, the component of pricing from the grid set forth above shall be based on the rating category which is then one rating category below the higher of the two category ratings which are then in effect. Additionally, in the event that Panhandle withdraws from having its unsecured, non-credit enhanced Senior Funded Debt being rated by Moody’s Investors Service, Inc. or Standard and Poor’s Ratings Group, so that one or both of such ratings services fails to rate Panhandle’s unsecured, non-credit enhanced Senior Funded Debt, (a) if there is only one rating, then such rating shall apply, and (b) if there is no rating, then the Agent and the Borrower shall negotiate in good faith to amend the definition of Applicable Margin to reflect such change in circumstances, and until such time as the Agent and the Borrower shall reach agreement with respect thereto, the Applicable Margin for all Eurodollar Rate Loans for all Interest Periods commencing thereafter shall be 2.25% and the Applicable Margin for all Alternate Base Rate Loans shall be 1.25% effective immediately.

 

“Approved Fund” shall mean any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Bank, (b) an Affiliate of a Bank or (c) an entity or an Affiliate of an entity that administers or manages a Bank.

 

“Assignment and Acceptance” shall mean an Assignment and Acceptance substantially in the form of Exhibit B hereto or any other form approved by the Agent.

 

“Attributable Indebtedness” shall mean, with respect to any Sale-Leaseback Transaction, the present value (discounted at the rate set forth or implicit in the terms of the lease included in such Sale-Leaseback Transaction) of the total obligations of the lessee for rental payments (other than amounts required to be paid on account of taxes, maintenance, repairs, insurance, assessments, utilities, operating and labor costs and other items that do not constitute payments for property rights) during the remaining term of the lease included in such Sale-Leaseback Transaction (including any period for which such lease has been extended).  In the case of any lease that is terminable by the lessee upon payment of a penalty, the Attributable Indebtedness shall be the lesser of the (a) Attributable Indebtedness determined assuming termination on the first date such lease may be terminated (in which case the Attributable Indebtedness shall also include the amount of the penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date on which it may be so terminated) and (b) the Attributable Indebtedness determined assuming no such termination.

 

“Bank” shall have the meaning set forth in the preamble hereto and shall include the Agent, in its individual capacity.

 

“Borrower” shall have the meaning set forth in the preamble hereto.

 

“Borrowing” shall mean the borrowing of Loans on the Funding Date pursuant to Section 2.1 (The Loans).

 

“BTMU” shall have the meaning set forth in the preamble.

 

“Business Day” shall mean a day when the Agent is open for business, provided that, if the applicable Business Day relates to any Eurodollar Rate Loan, it shall mean a day when the Agent is open for business and banks are open for business in the London interbank market and in New York City.

 

“Capital Lease” shall mean any lease of any Property (whether real, personal, or mixed) which, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of the lessee.

 

“Capitalized Lease Obligations” shall mean, for any Person, any of their obligations that should, in accordance with GAAP, be recorded as Capital Leases.

 

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.A. § 9601 et seq.), as amended from time to time, and any and all rules and regulations issued or promulgated thereunder.

 

“Change in Law” shall mean (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after such date or (c) compliance by any Bank with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after such date; 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.

 

“Closing Date” shall mean the date hereof.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended, as now or hereafter in effect, together with all regulations, rulings and interpretations thereof or thereunder issued by the Internal Revenue Service.

 

“Commitment” shall mean, with respect to any Bank, the commitment of such Bank to make a Loan on the Funding Date, in the amount set forth opposite such Bank’s name on Annex I hereto, and the aggregate amount of all the Commitments is $455,000,000.

 

“Consolidated” shall refer to the consolidation of accounts in accordance with GAAP.

 

“Consolidated EBITDA” shall mean, for any period, for Panhandle and its Subsidiaries on a Consolidated basis, an amount equal to Consolidated Net Income for such period plus (a) the following to the extent deducted in calculating such Consolidated Net Income:  (i) Consolidated Interest Charges for such period, (ii) the provision for Federal, state, local and foreign income taxes payable by Panhandle and its Subsidiaries for such period (including any franchise taxes to the extent based upon net income), (iii) depreciation and amortization expense (including amortization of intangible assets), (iv) other extraordinary and non-recurring expenses of Panhandle and its Subsidiaries reducing such Consolidated Net Income which do not represent a cash item in such period or any future period and (v) any other non-cash charges or losses of Panhandle and its Subsidiaries (including any non-cash losses resulting from the impairment of long-lived assets, goodwill or intangible assets) and minus (b) the following to the extent included in calculating such Consolidated Net Income:  (i) Federal, state, local and foreign income tax credits of Panhandle and its Subsidiaries for such period and (ii) all non-cash items increasing Consolidated Net Income for such period.  Consolidated EBITDA shall be subject to the following adjustment:

 

If, since the beginning of the four fiscal quarter period ending on the date for which Consolidated EBITDA is determined, Panhandle or any Subsidiary thereof shall have made any disposition or acquisition of assets, shall have consolidated or merged with or into any Person (other than a Subsidiary of Panhandle), or shall have made any disposition of Equity Interests or an acquisition of Equity Interests, Consolidated EBITDA shall be calculated giving pro forma effect thereto as if the disposition, acquisition, consolidation or merger had occurred on the first day of such period.  Such pro forma effect shall be determined (A) in good faith by the chief financial officer, principal accounting officer or treasurer of Panhandle and (B) giving effect to any anticipated or proposed cost savings related to such disposition, acquisition, consolidation or merger, to the extent approved by Agent, such approval not to be unreasonably withheld or delayed.

 

“Consolidated Funded Debt”  shall mean, as of any date, the sum of the following (without duplication):  (a) all Debt which is classified as “long-term indebtedness” on a Consolidated balance sheet of Panhandle and its Subsidiaries prepared as of such date in accordance with GAAP and any current maturities and other principal amount in respect of such Debt due within one year but which was classified as “long-term indebtedness” at the creation thereof, (b) Debt for borrowed money of Panhandle and its Subsidiaries outstanding under a revolving credit or similar agreement, notwithstanding the fact that any such borrowing is made within one year of the expiration of such agreement, (c) Capitalized Lease Obligations of Panhandle and its Subsidiaries, and (d) all Debt in respect of any Guaranty by Panhandle or any of its Subsidiaries of Debt of any Person other than Panhandle or any of its Subsidiaries.  The calculation of Consolidated Funded Debt will not give effect to any fair value adjustments to Debt under purchase accounting principles in connection with the Transactions.

 

“Consolidated Interest Charges” shall mean, for any period, for Panhandle and its Subsidiaries on a Consolidated basis, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses of Panhandle and its Subsidiaries in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, and (b) the portion of rent expense of Panhandle and its Subsidiaries with respect to such period under capital leases that is treated as interest in accordance with GAAP.

 

“Consolidated Net Income” shall mean, for any period, for Panhandle and its Subsidiaries on a Consolidated basis, the net income of Panhandle and its Subsidiaries (excluding extraordinary gains and extraordinary losses) for that period.

 

“Consolidated Net Tangible Assets” shall mean, at any date of determination, the total amount of assets of Panhandle and its Subsidiaries after deducting therefrom:

 

(a)           all current liabilities (excluding (i) any current liabilities that by their terms are extendable or renewable at the option of the obligor thereon to a time more than 12 months after the time as of which the amount thereof is being computed, and (ii) current maturities of Long-Term Debt); and

 

(b)           the value (net of any applicable reserves) of all goodwill, trade names, trademarks, patents and other like intangible assets,

 

all as set forth on the Consolidated balance sheet of Panhandle and its Subsidiaries for Panhandle’s most recently completed fiscal quarter, prepared in accordance with GAAP.

 

“Conversion”, “Convert” and “Converted” each shall refer to a conversion of Loans of one Type into Loans of the other Type pursuant to Section 2.8 (Conversion of Loans).

 

“Debt” shall mean (without duplication), for any Person, indebtedness for money borrowed determined in accordance with GAAP but in any event including (a) indebtedness of such Person for borrowed money or arising out of any extension of credit to or for the account of such Person (including, without limitation, extensions of credit in the form of reimbursement or payment obligations of such Person relating to letters of credit issued for the account of such Person) or for the deferred purchase price of property or services, except indebtedness which is owing to trade creditors in the ordinary course of business; (b) indebtedness of the kind described in clause (a) of this definition which is secured by (or for which the holder of such Debt has any existing right, contingent or otherwise, to be secured by) any Lien upon or in Property (including, without limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such indebtedness or obligations; (c) Capitalized Lease Obligations of such Person; and (d) obligations under direct or indirect Guaranties.  Whenever the definition of Debt is being used herein in order to compute a financial ratio or covenant applicable to the consolidated business of Panhandle and its Subsidiaries, Debt which is already included in such computation by virtue of the fact that it is owed by a Subsidiary of Panhandle will not also be added by virtue of the fact that Panhandle has executed a guaranty with respect to such Debt that would otherwise require such guaranteed indebtedness to be considered Debt hereunder.  Nothing contained in the foregoing sentence is intended to limit the other provisions of this Agreement which contain limitations on the amount and types of Debt which may be incurred by any Loan Party.

 

“Debtor Laws” shall mean all applicable liquidation, conservatorship, bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization, or similar laws, or general equitable principles from time to time in effect affecting the rights of creditors generally.

 

“Default” shall mean any of the events specified in Section 8 (Events of Default; Remedies), whether or not there has been satisfied any requirement in connection with such event for the giving of notice, or the lapse of time, or the happening of any further condition, event or act.

 

“Defaulting Bank” shall mean, subject to Section 2.16 (Defaulting Banks), any Bank that (a) has failed to (i) fund all or any portion of its Loan within two Business Days of the date such Loan was required to be funded hereunder unless such Bank notifies the Agent and the Borrower in writing that such failure is a result of such Bank’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Agent or any other Bank any other amount required to be paid by it hereunder within two Business Days of the date when due, (b) has notified the Borrower or the Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Bank’s obligation to fund its Loan hereunder and states that such position is based on such Bank’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Agent or the Borrower, to confirm in writing to the Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Bank shall cease to be a Defaulting Bank pursuant to this clause (c) upon receipt of such written confirmation by the Agent and the Borrower), (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Laws, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Bank shall not be a Defaulting Bank solely by virtue of the ownership or acquisition of any equity interest in that Bank or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Bank with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Bank (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Bank.  Any determination by the Agent that a Bank is a Defaulting Bank under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Bank shall be deemed to be a Defaulting Bank (subject to Section 2.16 (Defaulting Banks)) as of the date established therefor by the Agent in written notice of such determination, which shall be delivered by the Agent to the Borrower and each Bank promptly following such determination.

 

“Dollars” and “$” shall mean lawful currency of the United States of America.

 

“Domestic Lending Office” shall mean, with respect to each Bank, such office of such Bank as shall be specified in its Administrative Questionnaire or such other office of such Bank as such Bank may from time to time specify to the Borrower and the Agent.

 

“Eligible Assignee” shall mean: (i) any Bank, or any Affiliate of any Bank, any Approved Fund, or any institution 100% of the voting stock of which is directly or indirectly owned by such Bank or by the immediate or remote parent of such Bank; or (ii) a commercial bank, a foreign branch of a United States commercial bank, a domestic branch of a foreign commercial bank or other financial institution having in each case assets in excess of $1,000,000,000.  None of the Borrower or any of the Borrower’s Affiliates or Subsidiaries, any Defaulting Bank or any of its Subsidiaries or any Person who, upon becoming a Bank hereunder, would constitute a Defaulting Bank or a Subsidiary of a Defaulting Bank, or a natural Person shall be an Eligible Assignee.

 

“Environmental Law” shall mean (a) CERCLA; (b) the Resource Conservation and Recovery Act (as amended by the Hazardous and Solid Waste Amendment of 1984, 42 U.S.C.A. § 6901 et seq.), as amended from time to time, and any and all rules and regulations promulgated thereunder (“RCRA”); (c) the Clean Air Act, 42 U.S.C.A. § 7401 et seq., as amended from time to time, and any and all rules and regulations promulgated thereunder; (d) the Clean Water Act of 1977, 33 U.S.CA § 1251 et seq., as amended from time to time, and any and all rules and regulations promulgated thereunder; (e) the Toxic Substances Control Act, 15 U.S.C.A. § 2601 et seq., as amended from time to time, and any and all rules and regulations promulgated thereunder; or (f) any other federal or state law, statute, rule, or emulation enacted in connection with or relating to the protection or regulation of the environment (including, without limitation, those laws, statutes, rules, and regulations regulating the disposal, removal, production, storing, refining, handling, transferring, processing, or transporting of Hazardous Materials) and any rules and regulations issued or promulgated in connection with any of the foregoing by any governmental authority, and “Environmental Laws” shall mean each of the foregoing.

 

“EPA” shall mean the Environmental Protection Agency or any successor organization.

 

“Equity Interests” shall mean, with respect to any Person, shares of capital stock of (or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of such shares (or such other interests), and other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or non-voting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and all rules, regulations, rulings and interpretations thereof issued by the Internal Revenue Service or the Department of Labor thereunder.

 

“Eurocurrency Liabilities” shall have the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

 

“Eurodollar Lending Office” shall mean, with respect to each Bank, such office of such Bank as shall be specified in its Administrative Questionnaire or such other office of such Bank as such Bank may from time to time specify to the Borrower and the Agent.

 

“Eurodollar Rate” shall mean, (a) for any Interest Period in effect for each Eurodollar Rate Loan, an interest rate per annum equal to (i) the rate determined by the Agent to be the offered rate which appears on the display designated as page “Libor01” on the Bloomberg service  (“Libor01 Rate”) (or on any successor or substitute page of such display, or any successor to or substitute for such display, providing rate quotations comparable to those currently provided on such page of such screen, as determined by the 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 Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period; or (ii) in the event that such rate is not available at such time for any reason, then the “Eurodollar Rate” with respect to such Eurodollar Rate Loans for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period; and (b) for any interest calculation with respect to an Alternate Base Rate Loan on any date, the interest rate per annum equal to (i) the Libor01 Rate at approximately 11:00 a.m., London time, two Business Days prior to such date for dollar deposits being delivered in the London interbank market for a term of one month; or (ii) in the event that such rate is not available at such time for any reason, then the “Eurodollar Rate” with respect to such Alternate Base Rate Loan shall be the rate at which dollar deposits of $5,000,000 and for a term of one month are offered by the principal London office of the Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to such date.

 

“Eurodollar Rate Loan” shall mean a Loan that bears interest as provided in Section 2.6(a)(ii) (Interest).

 

“Event of Default” shall mean any of the events specified in Section 8 (Events of Default; Remedies), provided that there has been satisfied any requirement in connection with such event for the giving of notice, or the lapse of time, or the happening of any further condition, event or act.

 

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof.

 

“Federal Funds Rate” shall mean, 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 Agent from three federal funds brokers of recognized standing selected by it.

 

“Fee Letter” shall mean that certain fee letter dated as of January 25, 2012, by and between the Borrower and BTMU.

 

“Funded Debt” shall mean all Debt of a Person which matures more than one year from the date of creation or matures within one year from such date but is renewable or extendible, at the option of such Person, by its terms or by the terms of any instrument or agreement relating thereto, to a date more than one year from such date or arises under a revolving credit or similar agreement which obligates Banks to extend credit during a period of more than one year from such date, including, without limitation, all amounts of any Funded Debt required to be paid or prepaid within one year from the date of determination of the existence of any such Funded Debt.

 

“Funding Date” shall mean the date on which each of the conditions precedent set forth in Section 4 (Conditions to Funding) shall have been satisfied or waived by the Banks; provided that the Funding Date shall be no later than March 13, 2012.

 

“GAAP” shall mean generally accepted accounting principles, as in effect from time to time, applicable to the circumstances as of the date of determination, applied consistently with such principles as applied in the preparation of the audited financial statements referred to in Section 5.1 (Financial Statements and Information).

 

“Governmental Authority” shall mean any (domestic or foreign) federal, state, county, municipal, parish, provincial, or other government, or any department, commission, board, court, agency (including, without limitation, the EPA), or any other instrumentality of any of them or any other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory, or administrative functions of, or pertaining to, government, including, without limitation, any arbitration panel, any court, or any commission (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Governmental Requirement” shall mean any order, permit, law, statute (including, without limitation, any Environmental Protection Statute), code, ordinance, rule, regulation, certificate, or other direction or requirement of any Governmental Authority.

 

“Guaranteed Obligations” shall have the meaning set forth in Section 10.1.

 

“Guarantor” shall mean each of Panhandle and TLNG.

 

“Guaranty” shall mean, with respect to any Person, any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt of another Person, including, without limitation, by means of an agreement to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or to maintain financial covenants, or to assure the payment of such Debt by an agreement to make payments in respect of goods or services regardless of whether delivered or to purchase or acquire the Debt of another, or otherwise, provided that the term “Guaranty” shall not include endorsements for deposit or collection in the ordinary course of business.

 

“Hazardous Materials” shall mean any substance which, pursuant to any Environmental Laws, requires special handling in its collection, use, storage, treatment or disposal, including but not limited to any of the following: (a) any “hazardous waste” as defined by RCRA; (b) any “hazardous substance” as defined by CERCLA; (c) asbestos; (d) polychlorinated biphenyls; (e) any flammables, explosives or radioactive materials; and (f) any substance, the presence of which on any of Loan Parties’ properties is prohibited by any Governmental Authority.

 

“Highest Lawful Rate” shall mean, with respect to each Bank, the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged, or received with respect to the Notes or on other amounts, if any, due to such Bank pursuant to this Agreement, under laws applicable to such Bank 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 non-usurious interest rate than applicable laws now allow.

 

“Indemnified Parties” shall have the meaning set forth in Section 11.16 (Indemnification).

 

“Indemnified Taxes” shall have the meaning set forth in Section 2.11(a) (Taxes).

 

“Interest Period” shall mean, for each Eurodollar Rate Loan, the period commencing on the date of such Eurodollar Rate Loan or the date of the Conversion of any Alternate Base Rate Loan into such Eurodollar Rate Loan, and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below.  The duration of each such Interest Period shall be one, two, three or six months (or, if available to each Bank, nine or twelve months), as the Borrower may, upon notice received by the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided that:

 

(a)           whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and

 

(b)           whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

 

“Inventory” shall mean, with respect to the Borrower or any Subsidiary, all of such Person’s now owned or hereafter acquired or created inventory in all of its forms and of every nature, wherever located, whether acquired by purchase, merger, or otherwise, and all raw materials, work in process therefor and finished goods thereof, and all supplies, materials, and products of every nature and description used, usable, or consumed in connection with the manufacture, packing, shipping, advertising, selling, leasing, furnishing, or production of such goods, and shall include, in any event, all “inventory” (within the meaning of such term in the Uniform Commercial Code in effect in any applicable jurisdiction), whether in mass or joint, or other interest or right of any kind in goods which are returned to, repossessed by, or stopped in transit by such Person, and all accessions to any of the foregoing and all products of any of the foregoing.

 

“Investment” of any Person shall mean any investment so classified under GAAP, and, whether or not so classified, includes (a) any direct or indirect loan advance made by it to any other Person; (b) any direct or indirect Guaranty for the benefit of such Person; (c) any capital contribution to any other Person; and (d) any ownership or similar interest in any other Person; and the amount of any Investment shall be the original principal or capital amount thereof (plus any subsequent principal or capital amount) minus all cash returns of principal or capital thereof.

 

“Lead Arrangers” shall mean BTMU, PNC Capital Markets LLC and Mizuho Capital Bank (USA).

 

“Leverage Ratio” shall mean, as of any date of determination, the ratio of (a) the aggregate amount of outstanding Consolidated Funded Debt of Panhandle and its Subsidiaries as of such date to (b) Consolidated EBITDA of Panhandle and its Subsidiaries for the period of the four fiscal quarters most recently ended.

 

“Lien” shall mean any mortgage, deed of trust, pledge, security interest, encumbrance, lien (including, without limitation, any such interest arising under any Environmental Law), or similar charge of any kind (including, without limitation, any agreement to give any of the foregoing, any conditional sale or other title retention agreement or any lease in the nature thereof), or the interest of the lessor under any Capital Lease.

 

“Loan” or “Loans” shall mean a loan or loans, respectively, from the Banks to the Borrower made under Section 2.1 (The Loans).

 

“Loan Document” shall mean this Agreement, any Note, the Fee Letter and any other document, agreement or instrument now or hereafter executed and delivered by any Loan Party in connection with any of the transactions contemplated by any of the foregoing, as any of the foregoing may hereafter be amended, restated, amended and restated, supplemented or otherwise modified from time to time, and “Loan Documents” shall mean, collectively, each of the foregoing.

 

“Loan Party” shall mean TLNG, Panhandle, the Borrower and its Subsidiaries.

 

“Long-Term Debt” shall mean any Debt that, in accordance with GAAP, constitutes (or, when incurred, constituted) a long-term liability.

 

“Majority Banks” shall mean at any time Banks holding more than 50% of the unpaid principal amounts outstanding under the Loans, or, if no such amounts are outstanding, more than 50% of the Pro Rata Percentages.  The Loan held by and the Pro Rata Percentage of any Defaulting Bank shall be disregarded in determining Majority Banks at any time.

 

“March 2007 Credit Agreement” shall mean the Credit Agreement dated as of March 13, 2007, by and among the Borrower, as the borrower, Panhandle, as a guarantor, TLNG, as a guarantor, the financial institutions party thereto, and Bayerische Hypo- Und Vereinsbank AG, New York Branch, as the administrative agent, as amended, restated, amended and restated, supplemented or otherwise modified and in effect on the Funding Date.

 

“Material Adverse Effect” shall mean any material adverse effect on (a) the financial condition, business, properties, assets or operations of Panhandle and its Subsidiaries, taken as a whole, or (b) the ability of Panhandle, the Borrower or TLNG to perform its obligations under this Agreement, any Note or any other Loan Document on a timely basis.

 

“Maturity Date” shall mean February 23, 2015.

 

“Non-Defaulting Bank” shall mean, at any time, each Bank that is not a Defaulting Bank at such time.

 

“Note” or “Notes” shall mean a promissory note or notes, respectively, of the Borrower, executed and delivered under this Agreement.

 

“Notice of Borrowing” shall have the meaning set forth in Section 2.2(a) (Making the Loans).

 

“Obligations” shall mean all obligations of Panhandle, the Borrower and TLNG to the Banks under this Agreement, the Notes and all other Loan Documents to which any of them is a party.

 

“Officer’s Certificate” shall mean a certificate signed in the name of the applicable Loan Party, by either its President, one of its Vice Presidents, its Treasurer, its Secretary, or one of its Assistant Treasurers or Assistant Secretaries.

 

“Other Taxes” shall have the meaning set forth in Section 2.11(b) (Taxes).

 

“Panhandle” shall have the meaning set forth in the preamble hereto.

 

“Participant Register” shall have the meaning set forth in Section 11.14(f) (Sale or Assignment).

 

“Permitted Liens” shall mean any of the following Liens:

 

(a)           Any Lien:

 

(i)           arising by reason of deposits with or the giving of any form of security to any Governmental Authority in connection with the financing of the acquisition or construction of property to be used in the business of a Loan Party;

 

(ii)           for current taxes and assessments or taxes and assessments not at the time delinquent and for which adequate reserves have been established to the extent required by GAAP; or

 

(iii)           for taxes and assessments which are delinquent but the validity of which is being contested at the time by a Loan Party in good faith and by appropriate proceedings and for which adequate reserves have been established to the extent required by GAAP;

 

(b)           Leases, whether now or hereafter existing, in the ordinary course of business, of property and assets now and hereafter owned by a Loan Party (excluding Capitalized Leases) and any renewals or extensions thereof;

 

(c)           Liens reserved in leases, or arising by operation of law, for rent and for compliance with the terms of the lease in the case of the leasehold estates;

 

(d)           Liens arising by reason of deposits with or the giving of any form of security to any Governmental Authority or any other governmental body created or approved by law or governmental regulation for any purpose at any time as required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege or license, or to enable a Loan Party to maintain self-insurance or to participate in any fund for liability on any insurance risks or in connection with workmen’s compensation, unemployment insurance, old age pensions or other social security or to share in the privileges or benefits required for companies participating in such arrangements;

 

(e)            (i) Mechanics’, materialmen’s, warehousemen’s, landlord’s or similar Liens or any Lien arising by reason of pledges or deposits to secure payment of workmen’s compensation or other insurance or social security legislation, (ii) good faith deposits or downpayments in connection with tenders or leases of real estate, bids or contracts (other than contracts for the payment of money), including contracts for the acquisition of machinery and equipment, (iii) deposits to secure public or statutory obligations, (iv) deposits to secure or in lieu of surety, stay or appeal bonds, (v) margin deposits (provided that all such margin deposits shall not exceed $2,000,000 in the aggregate at any time) and (vi) deposits as security for the payment of taxes or assessments or other similar charges;

 

(f)           Liens of any judgments not constituting an Event of Default under Section 8.9 (Undischarged Judgment);

 

(g)           Any obligation or duties, affecting the property of a Loan Party, to any Governmental Authority with respect to any franchise, grant, lease, license, permit or similar arrangement with such Governmental Authority;

 

(h)           Rights reserved to or vested in any Governmental Authority by the terms of any right, power, franchise, grant, license or permit or by any provision of law, to terminate or to require annual or other periodic payments as a condition to the continuance of such right, power, franchise, grant, license or permit;

 

(i)           Rights reserved to or vested in any Governmental Authority to control or regulate any property of a Loan Party, or to use such property in any manner which does not materially impair the use of such property for the purpose for which it is held by a Loan Party;

 

(j)           Zoning laws and ordinances;

 

(k)           Restrictive covenants, easements on, exceptions to or reservations in respect of any property of a Loan Party granted or reserved for the purpose of electric lines, fiber optic lines, water and sewer lines, pipelines, other utilities, roads, streets, alleys, highways, railroad purposes, the removal of oil, gas, hydrocarbon, coal or other minerals, and other like purposes, or for the use of real property or interests therein, facilities and equipment, which do not materially impair the use thereof for the purposes for which it is held by a Loan Party, and any and all rents, royalties, reservations, Liens and rights or interests of third parties, in each case not securing any Debt, arising in the ordinary course of business of a Loan Party by virtue of any lease or exploration, development, drilling, unitization, communitization or operating agreement relating to or affecting any oil, gas, hydrocarbon, coal or other mineral properties in which a Loan Party has an interest;

 

(l)           Defects or irregularities of title, and inaccuracies of legal descriptions, affecting any portion of the property of a Loan Party or any of its Subsidiaries that individually or in the aggregate do not materially interfere with the operation, value of use of the properties of such Loan Party or such Subsidiaries taken as a whole;

 

(m)           Liens securing Debt with respect to Debt of any Person that becomes a Subsidiary of a Loan Party, provided that such Liens were in existence prior to the date on which such Person becomes a Subsidiary of such Loan Party and were not created in contemplation of such Person becoming a Subsidiary of such Loan Party;

 

(n)           Liens on any office equipment, data processing equipment (including computer and computer peripheral equipment), or motor vehicles purchased in the ordinary course of the applicable Loan Party’s business; and

 

(o)           Liens created in the ordinary course of business in favor of banks and other financial institutions over credit balances or any bank accounts of a Loan Party held at such banks or financial institutions.

 

“Person” shall mean an individual, partnership, joint venture, corporation, joint stock company, bank, trust, unincorporated organization and/or a government or any department or agency thereof.

 

“Plan” shall mean any plan subject to Title IV of ERISA and maintained for employees of any Loan Party or of any member of a “controlled group of corporations,” as such term is defined in the Code, of which a Loan Party is a member, or any such plan to which a Loan Party thereof is required to contribute on behalf of its employees.

 

“Prime Rate” shall mean, on any day, the rate determined by the Agent and announced to its customers as being its prime rate for that day.  Without notice to the Borrower or any other Person, the Prime Rate shall change automatically from time to time as and in the amount by which said Prime Rate shall fluctuate, with each such change to be effective as of the date of each change in such Prime Rate.  The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer.  The Agent may make commercial or other loans at rates of interest at, above or below the Prime Rate.

 

“Priority Obligations Amount” shall mean the sum (without duplication) of (i) all Attributable Indebtedness with respect to any Sale-Leaseback Transaction entered into by Panhandle or any of its Subsidiaries, (ii) all Debt of Panhandle or any of its Subsidiaries secured by a Lien (other than Liens permitted by clauses (a) through (c) of Section 6.2 (Liens, Etc.)) and (iii) all Debt of Subsidiaries of Panhandle (other than the Borrower or TLNG), other than such Debt owed to Panhandle or another Subsidiary.

 

“Pro-Rata Percentage” shall mean with respect to any Bank, a fraction (expressed as a percentage), the numerator of which shall be the amount of such Bank’s outstanding Loans (or Commitment) and the denominator of which shall be the aggregate amount of all the outstanding Loans (or Commitments) of the Banks, as adjusted from time to time in accordance herewith.

 

“Property” shall mean any interest or right in any kind of property or asset, whether real, personal, or mixed, owned or leased, tangible or intangible, and whether now held or hereafter acquired.

 

“Register” shall have the meaning set forth in Section 11.14(d).

 

“Release” shall mean a “release”, as such term is defined in CERCLA.

 

“Restricted Payment” shall mean a Person’s declaration or payment of any dividends, the purchase, redemption, retirement, defeasance or other acquisition for value of any of its Equity Interests now or hereafter outstanding, return any capital to its stockholders, partners or members (or the equivalent Persons thereof) as such, making any distribution of assets, Equity Interests, obligations or securities to its stockholders, partners or members (or the equivalent Persons thereof) as such or making of any interest payment on any Debt owing to its direct or indirect parent (or any equity owner thereof).

 

“Required Banks” shall mean at any time Banks holding more than 66-2/3% of the unpaid principal amounts outstanding under the Loans, or, if no such amounts are outstanding, more than 66-2/3% of the Pro Rata Percentages.  The Loan held by and the Pro Rata Percentage of any Defaulting Bank shall be disregarded in determining Required Banks at any time.

 

“Sale-Leaseback Transaction” has the meaning set forth in Section 6.8 (Sales and Leasebacks).

 

“Senior Funded Debt” shall mean Funded Debt of Panhandle excluding Debt that is contractually subordinated in right of payment to any other Debt of Panhandle.

 

“Southern Union” shall mean Southern Union Company.

 

“Subsidiary” of any Person shall mean any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors (or similar board) of such Person (irrespective of whether at the time capital stock of any other class or classes of such Person shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

 

 “Taxes” shall have the meaning set forth in Section 2.11(a) (Taxes).

 

“TLNG” shall have the meaning set forth in the preamble hereto.

 

“Transactions” shall mean, collectively, (a) the merger of Southern Union with and into Sigma Acquisition Corporation, a wholly-owned subsidiary of Energy Transfer Equity, L.P., with Southern Union surviving as a subsidiary of Energy Transfer Equity, L.P. in accordance with the terms of that certain Second Amended and Restated Agreement and Plan of Merger dated as of July 19, 2011, by and among Energy Transfer Equity, L.P., Sigma Acquisition Corporation and Southern Union, as amended by Amendment No. 1 thereto dated as of September 14, 2011; (b) the merger of Cross Country Energy, LLC with and into Citrus ETP Acquisition, L.L.C. in accordance with the terms of that certain Amended and Restated Agreement and Plan of Merger dated as of July 19, 2011, by and between Energy Transfer Equity, L.P. and Energy Transfer Partners, L.P., as amended by Amendment No. 1 thereto dated as of September 14, 2011; (c) the contribution by Southern Union, immediately prior to the merger described in clause (b) above, of its 99% interest in Panhandle and its 100% membership interest in Southern Union Panhandle, LLC to PEPL Holdings, LLC, a wholly owned subsidiary of CCE Acquisition, LLC; and (d) the guarantee by PEPL Holdings, LLC of payment, on a contingent recourse basis, of up to $2,000,000,000 of Debt of Energy Transfer Partners, L.P. related to the merger described in clause (b) above.

 

“Type” shall mean, with respect to any Loan, any Alternate Base Rate Loan or any Eurodollar Rate Loan.

 

1.2 Computation of Time Periods; Other Definitional Provisions.  In this Agreement and the other Loan Documents in the computation of periods of time from a specified date to a later specified date, the word “from” shall mean “from and including” and the words “to” and “until” each shall mean “to but excluding”.  References in the Loan Documents to any agreement or contract “as amended” shall mean and be a reference to such agreement or contract as amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with its terms.

 

1.3 Accounting Terms.   Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP; provided that, if the Borrower notifies the Agent that the Borrower requests to eliminate the effect of any change in GAAP occurring after the date hereof or to eliminate the application of such change on the operation of such provision (or if the Agent notifies the Borrower that the Required Banks request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application of such change, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision  amended in accordance herewith.

 

	
2.  

	
AMOUNTS AND TERMS OF THE LOANS

 

2.1 The Loans.  Each Bank severally agrees, on the terms and conditions hereinafter set forth, to make a single Loan (a “Loan”) to the Borrower on the Funding Date in an amount equal to such Bank’s Commitment at such time.  The Borrowing shall consist of Loans made simultaneously by the Banks ratably according to their Commitments.  Amounts borrowed under this Section 2.1 and repaid or prepaid may not be reborrowed.

 

2.2 Making of the Loans.

 

(a)           The Borrowing shall be made on notice, given not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the Borrowing if the Borrowing consists of Eurodollar Rate Loans, or not later than 9:00 A.M. (New York City time) on the date of the Borrowing if Borrowing consists of Alternate Base Rate Loans, by the Borrower to the Agent, which shall give to each Bank prompt notice thereof.  The notice of the Borrowing (the “Notice of Borrowing”) shall be in writing, in form and substance satisfactory to the Agent, specifying therein the requested (i) date of the Borrowing, (ii) Type of Loans comprising the Borrowing, (iii) aggregate amount of the Borrowing, which shall not exceed the aggregate amount of the Commitments and (iv) if the Borrowing consists of Eurodollar Rate Loans, initial Interest Period for each such Loan.  Each Bank shall, before 11:00 A.M. (New York City time) on the date of the Borrowing, make available for the account of its Applicable Lending Office to the Agent at the Agent’s account, in same day funds, such Bank’s portion of the Borrowing in accordance with Section 2.1 (The Loans).  After the Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Section 4 (Conditions to Funding), the Agent will make such funds available to the Borrower by electronic transfer of same day funds to the Borrower’s account.

 

(b)           The Notice of Borrowing shall be irrevocable and binding on the Borrower.  If the Notice of Borrowing specifies the Borrowing is to be comprised of Eurodollar Rate Loans, the Borrower shall indemnify each Bank against any loss, cost or expense incurred by such Bank as a result of any failure to fulfill on or before the date specified in the Notice of Borrowing the applicable conditions set forth in Section 4 (Conditions to Funding), including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Bank to fund the Loan to be made by such Bank as part of the Borrowing when such Loan, as a result of such failure, is not made on such date.

 

(c)           Unless the Agent shall have received written notice from a Bank prior to the time of the Borrowing that such Bank will not make available to the Agent such Bank’s ratable portion of the Borrowing, the Agent may assume that such Bank has made such portion available to the Agent on the date of the Borrowing in accordance with clause (a) of this Section 2.2 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount.  If and to the extent that such Bank shall not have so made such ratable portion available to the Agent, such Bank and the Borrower severally agree to repay or pay to the Agent forthwith on demand such corresponding amount and to pay interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid or paid to the Agent, at (i) in the case of the Borrower, the interest rate applicable at such time under Section 2.6 (Interest) to Loans comprising the Borrowing and (ii) in the case of such Bank, the Federal Funds Rate.  If such Bank shall pay to the Agent such corresponding amount, such amount so paid shall constitute such Bank’s Loan as part of the Borrowing for all purposes.

 

(d)           The failure of any Bank to make the Loan to be made by it as part of the Borrowing shall not relieve any other Bank of its obligation, if any, hereunder to make its Loan on the date of the Borrowing, but no Bank shall be responsible for the failure of any other Bank to make the Loan to be made by such other Bank on the date of the Borrowing.

 

2.3 Repayment of Loans.  The Borrower shall repay to the Agent for the ratable account of the Banks the aggregate outstanding principal amount of the Loans on the Maturity Date.

 

2.4 Termination of the Commitments.  The Commitment of each Bank shall be automatically and permanently reduced to $0 on the Funding Date.

 

2.5 Prepayments.  The Borrower may, upon at least three Business Days’ notice in the case of Eurodollar Rate Loans and at least one Business Day’s notice in the case of Alternate Base Rate Loans, in each case to the Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding aggregate principal amount of the Loans in whole or ratably in part, together with accrued interest to the date of such prepayment on the aggregate principal amount prepaid; provided that (i) each partial prepayment shall be in an aggregate principal amount of $1,000,000 in the case of Eurodollar Rate Loans and $1,000,000 in the case of Alternate Base Rate Loans, or in each case an integral multiple of $1,000,000 in excess thereof and (ii) if any prepayment of a Eurodollar Rate Loan is made on a date other than the last day of an Interest Period for such Loan, the Borrower shall also pay any amounts owing pursuant to Section 11.2(b) (Reimbursement of Expenses-breakage expenses).  The Agent shall promptly notify each Bank of any notice received from the Borrower pursuant to this Section 2.5.

 

2.6 Interest.

 

(a)           The Borrower shall pay interest on the unpaid principal amount of each Loan owing to each Bank from the date of such Loan until such principal amount shall be paid in full, at the following rates per annum:

 

(i)           During such periods as such Loan is an Alternate Base Rate Loan, a rate per annum equal at all times to the sum of (a) the Alternate Base Rate in effect from time to time plus (b) the Applicable Margin in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Alternate Base Rate Loan shall be Converted or paid in full.

 

(ii)           During such periods as such Loan is a Eurodollar Rate Loan, a rate per annum equal at all times during each Interest Period for such Loan to the sum of (a) the Eurodollar Rate for such Interest Period for such Loan plus (b) the Applicable Margin in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Loan shall be Converted or paid in full.

 

(b)           To the fullest extent permitted by applicable law, the amount of any principal, interest, fee or other amount payable under this Agreement or any other Loan Document to any Agent or any Bank that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid, in the case of principal or interest, on the Type of Loan relating to such principal or interest pursuant to clause (i) or (ii) of clause (a) above, as applicable, and, in all other cases, on Alternate Base Rate Loans pursuant to clause (i) of clause (a) above.

 

(c)           Promptly after receipt of the Notice of Borrowing pursuant to Section 2.2(a) (Making of the Loans), a notice of Conversion pursuant to Section 2.8 (Conversion of Loans) or a notice of selection of an Interest Period pursuant to the terms of the definition of “Interest Period”, the Agent shall give notice to the Borrower and each Bank of the applicable Interest Period and the applicable interest rate determined by the Agent for purposes of clause (a)(i) or (a)(ii) above.  If the Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Loans in accordance with the provisions contained in the definition of “Interest Period”, the Agent will forthwith so notify the Borrower and the Banks, whereupon the Borrower shall be deemed to have selected a one-month Interest Period for each such Eurodollar Rate Loan.

 

2.7 Fees.

 

(a)           Each of the Borrower and the Guarantors agrees, jointly and severally, to pay to the Agent and the Lead Arrangers fees in such amounts and at such times as are specified in the Fee Letter.

 

(b)           All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Agent.  Fees paid shall not be refundable under any circumstances.

 

2.8 Conversion of Loans.

 

(a)           The Borrower may on any Business Day, upon notice given to the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Section 2.6 (Interest) and 2.9 (Increased Costs), Convert all or any portion of the Loans of one Type into Loans of the other Type; provided that any Conversion of Eurodollar Rate Loans into Alternate Base Rate Loans shall be made only on the last day of an Interest Period for such Eurodollar Rate Loans and each Conversion of Loans shall be made ratably among the Banks in accordance with their Pro Rata Percentages; and also provided that, upon giving effect to such Conversions, no more than five Interest Periods shall be in effect.  Each such notice of Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Loans to be Converted and (iii) if such Conversion is into Eurodollar Rate Loans, the duration of the initial Interest Period for such Loans.  Each notice of Conversion shall be in writing and shall be irrevocable and binding on the Borrower.  The Agent shall promptly notify each Bank of any notice received from the Borrower pursuant to this Section 2.8.

 

(b)           Upon the occurrence and during the continuation of any Default and if the Required Banks shall so direct, (i) each Eurodollar Rate Loan will automatically, on the last day of the then existing Interest Period therefor, Convert into an Alternate Base Rate Loan and (ii) the obligation of the Banks to make, or to Convert Loans into, Eurodollar Rate Loans shall be suspended.

 

2.9 Increased Costs, Etc.

 

(a)           If, due to a Change in Law, there shall be any increase in the cost to any Bank of agreeing to make or of making, funding or maintaining Loans the interest on which is determined by reference to the Eurodollar Rate (excluding, for purposes of this Section 2.9, any such increased costs resulting from (i) Taxes or Other Taxes (as to which Section 2.11 (Taxes) shall govern), (ii) changes in the rate of taxation or basis of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which such Bank is organized or has its principal office or Applicable Lending Office or any political subdivision thereof and (iii) reserve requirements contemplated by clause (c) of this Section 2.9), then the Borrower shall from time to time, within 10 days of receipt of a certificate from such Bank setting forth in reasonable detail a calculation of the amount necessary to compensate such Bank (with a copy of such certificate to the Agent), pay to the Agent for the account of such Bank additional amounts sufficient to compensate such Bank for such increased cost; provided that a Bank claiming additional amounts under this Section 2.9(a) agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Applicable Lending Office if the making of such a designation would avoid the need for, or reduce the amount of, such increased cost that may thereafter accrue and would not, in the reasonable judgment of such Bank, be otherwise disadvantageous to such Bank.  A certificate as to the amount of such increased cost, submitted to the Borrower by such Bank, shall be conclusive and binding for all purposes, absent manifest error.

 

(b)           If any Bank determines that any Change in Law affecting such Bank or any Applicable Lending Office of such Bank or such Bank’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Bank’s capital or on the capital of such Bank’s holding company, if any, as a consequence of this Agreement, the Commitment of such Bank or the Loans made by such Bank to a level below that which such Bank or such Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Bank’s policies and the policies of such Bank’s holding company with respect to capital adequacy), then the Borrower shall, from time to time, pay to such Bank such additional amount or amounts as will compensate such Bank or such Bank’s holding company for any such reduction suffered within 10 days of receipt of a certificate from such Bank setting forth in reasonable detail a calculation of the amount necessary to compensate such Bank (with a copy of such certificate to the Agent) for such reduction; provided that a Bank claiming additional amounts under this Section 2.9(b) agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Applicable Lending Office if the making of such a designation would avoid the need for, or reduce the amount of, such increased cost that may thereafter accrue and would not, in the reasonable judgment of such Bank, be otherwise disadvantageous to such Bank.  A certificate as to the amount of such increased cost, submitted to the Borrower by such Bank, shall be conclusive and binding for all purposes, absent manifest error.

 

(c)           The Borrower shall pay to each Bank, as long as such Bank shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency Liabilities”), additional interest on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Bank (as determined by such Bank in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided that the Borrower shall have received at least 10 days’ prior notice (with a copy to the Agent) of such additional interest from such Bank (which notice shall contain a calculation of such additional interest in reasonable detail).  If a Bank fails to give notice 10 days prior to the relevant date on which interest is payable, such additional interest shall be due and payable 10 days from receipt of such notice.

 

(d)           If, with respect to any Eurodollar Rate Loans, the Majority Banks notify the Agent that the Eurodollar Rate for any Interest Period for such Loans will not adequately reflect the cost to the Banks of making, funding or maintaining their Eurodollar Rate Loans for such Interest Period, the Agent shall forthwith so notify the Borrower and the Banks, whereupon (i) each such Eurodollar Rate Loan will automatically, on the last day of the then existing Interest Period therefor, Convert into an Alternate Base Rate Loan and (ii) the obligation of the Banks to make, or to Convert Loans into, Eurodollar Rate Loans shall be suspended until the Agent shall notify the Borrower that the Banks have determined that the circumstances causing such suspension no longer exist.

 

(e)           Notwithstanding any other provision of this Agreement, if the introduction or effectiveness of or any change in or in the interpretation of any law or regulation shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Bank or its Eurodollar Lending Office to perform its obligations hereunder to make or to continue to fund or maintain Loans whose interest is determined by reference to the Eurodollar Rate hereunder, then, on notice thereof and demand therefor by such Bank to the Borrower through the Agent, (i) each Eurodollar Rate Loan will automatically, upon such demand, Convert into an Alternate Base Rate Loan, (ii) the obligation of the Banks to make, or to Convert Loans into, Eurodollar Rate Loans shall be suspended and (iii) if such notice asserts the illegality of such Bank making or maintaining Alternate Base Rate Loans the interest rate on which is determined by reference to the Eurodollar Rate component of the Alternate Base Rate, the interest rate on which Alternate Base Rate Loans of such Bank shall, if necessary to avoid such illegality, be determined by the Agent without reference to the Eurodollar Rate component of the Alternate Base Rate, in each case of clauses (ii) and (iii), until the Agent shall notify the Borrower that such Bank has determined that the circumstances causing such suspension no longer exist; provided that, before making any such demand, such Bank agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Eurodollar Lending Office if the making of such a designation would allow such Bank or its Eurodollar Lending Office to continue to perform its obligations to make or to continue to fund or maintain Loans whose interest is determined by reference to the Eurodollar Rate and would not, in the judgment of such Bank, be otherwise disadvantageous to such Bank.

 

(f)           A Bank shall only be entitled to recover increased costs pursuant to this Section 2.9 to the extent such costs were incurred during any time or period commencing not more than 120 days prior to the date on which such Bank notifies the Agent and the Borrower that it proposes to demand such compensation and identifies to the Agent and the Borrower the statute, regulation or other basis upon which the claimed compensation is or will be based; provided that, if the Change in Law giving rise to such increased costs is retroactive, then the 120-day period referred to above shall be extended to include the period of retroactive effect thereof.

 

2.10 Payments and Computations.

 

(a)           The Borrower shall make each payment hereunder and under the Notes, irrespective of any right of counterclaim or set-off, not later than 12:00 P.M. (New York City time) on the day when due in U.S. dollars to the Agent at the Agent’s account in same day funds, with payments being received by the Agent after such time being deemed to have been received on the next succeeding Business Day.  The Agent will promptly thereafter cause like funds to be distributed (x) if such payment by the Borrower is in respect of principal, interest or any other Obligation then payable hereunder and under the Notes to more than one Bank, to such Banks for the account of their respective Applicable Lending Offices ratably in accordance with the amounts of such respective Obligations then payable to such Banks and (y) if such payment by the Borrower is in respect of any Obligation then payable hereunder to one Bank, to such Bank for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement.  Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 11.14(d) (Sale or Assignment), from and after the effective date of such Assignment and Acceptance, the Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Bank assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

 

(b)           The Borrower hereby authorizes each Bank and each of its Affiliates, if and to the extent payment owed to such Bank is not made when due hereunder or, in the case of a Bank, under the Note held by such Bank, to charge from time to time, to the fullest extent permitted by law, against any or all of the Borrower’s accounts with such Bank or such Affiliate any amount so due.

 

(c)           All computations of interest based on the Prime Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate or the Federal Funds Rate shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable.  Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

 

(d)           Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest; provided that if such extension would cause payment of interest on or principal of Eurodollar Rate Loans to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

 

(e)           Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to any Bank hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each such Bank on such due date an amount equal to the amount then due such Bank.  If and to the extent the Borrower shall not have so made such payment in full to the Agent, each such Bank shall repay to the Agent forthwith on demand such amount distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to the Agent, at the Federal Funds Rate.

 

(f)           If the Agent receives funds for application to the Obligations of the Loan Parties under or in respect of the Loan Documents under circumstances for which the Loan Documents do not specify the Loans to which, or the manner in which, such funds are to be applied, the Agent may, but shall not be obligated to, elect to distribute such funds to each of the Banks in accordance with such Bank’s pro rata share of the aggregate principal amount of all Loans outstanding at such time.

 

2.11 Taxes.

 

(a)           Any and all payments by any Loan Party to or for the account of any Bank or any Agent hereunder or under the Notes or any other Loan Document shall be made, in accordance with Section 2.10 (Payments and Computations) or the applicable provisions of such other Loan Document, if any, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto (“Taxes”), except as required by applicable law.  If any Loan Party shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note or any other Loan Document to any Bank or any Agent, excluding, (i) in the case of each Bank and each Agent, taxes that are imposed on its overall net income by the United States (and franchise taxes imposed in lieu thereof) and taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction under the laws of which such Bank or such Agent, as the case may be, is organized or any political subdivision thereof and, in the case of each Bank, taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction of such Bank’s principal office or Applicable Lending Office or any political subdivision thereof and (ii) any United States federal withholding Taxes imposed pursuant to FATCA (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as “Indemnified Taxes”), (x) the sum payable by such Loan Party shall be increased as may be necessary so that after such Loan Party and the Agent have made all required deductions (including deductions applicable to additional sums payable under this Section 2.11) such Bank or such Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (y) such Loan Party shall make all such deductions and (z) such Loan Party shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.

 

(b)           In addition, a Loan Party shall pay any present or future stamp, documentary, excise, property or similar taxes, charges or levies that arise from any payment made by such Loan Party hereunder or under any Notes or any other Loan Documents or from the execution, delivery or registration of, performance under, or otherwise with respect to, this Agreement, the Notes or the other Loan Documents (hereinafter referred to as “Other Taxes”).

 

(c)           Panhandle, the Borrower and TLNG shall indemnify each Bank and each Agent for and hold them harmless against the full amount of Indemnified Taxes and Other Taxes, imposed on or paid by such Bank or such Agent (as the case may be) with respect to any payment by or on account of any obligation of the Loan Parties hereunder (including Indemnified Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 2.11) and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto.  This indemnification shall be made within 30 days from the date such Bank or such Agent (as the case may be) makes written demand therefor.  Each Bank shall severally indemnify the Agent, within 30 days of written demand therefor, for any Indemnified Taxes attributable to such Bank (but only to the extent that any Loan Party has not already indemnified the Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Bank’s failure to comply with the provisions of Section 11.14(f) relating to the maintenance of a Participant Register and (iii) any Taxes other than Indemnified Taxes attributable to such Bank, in each case, that are payable or paid by the Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the appropriate Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Loan Party by any Bank (with a copy to the Agent) or by the Agent or to any Bank by the Agent shall be conclusive absent manifest error.  Each Bank hereby authorizes the Agent to set off and apply any and all amounts at any time owing to such Bank under any Loan Document or otherwise payable by the Agent to the Bank from any other source against any amount due to the Agent under this clause (c).

 

(d)           Within 30 days after the date of any payment of Taxes, the appropriate Loan Party shall furnish to the Agent, at its address referred to in Section 11.3 (Notices), the original or a certified copy of a receipt evidencing such payment, to the extent such a receipt is issued therefor, or other written proof of payment thereof that is reasonably satisfactory to the Agent.  In the case of any payment hereunder or under the Notes or the other Loan Documents by or on behalf of a Loan Party through an account or branch outside the United States or by or on behalf of a Loan Party by a payor that is not a United States person, if such Loan Party determines that no Taxes are payable in respect thereof, such Loan Party shall furnish, or shall cause such payor to furnish, to the Agent, at such address, an opinion of counsel reasonably acceptable to the Agent stating that such payment is exempt from Taxes.  For purposes of subsections (d) and (e) of this Section 2.11, the terms “United States” and “United States person” shall have the meanings specified in Section 7701 of the Internal Revenue Code.

 

(e)           Any Bank that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Agent, at the time or times reasonably requested by the Borrower or the Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Bank, if reasonably requested by the Borrower or the Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Agent as will enable the Borrower or the Agent to determine whether or not such Bank is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in the remainder of this clause (e) or Section 2.11(g)), shall not be required if, in the Bank’s reasonable judgment, such completion, execution or submission would subject such Bank to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Bank.  Each Bank organized under the laws of the United States shall, on or prior to the date of its execution and delivery of this Agreement or on the date of the Assignment and Acceptance pursuant to which it becomes a Bank, as the case may be, and from time to time thereafter as reasonably requested in writing by a Loan Party or the Agent, deliver to the Borrower and the Agent executed originals of IRS Form W-9 certifying that such Bank is exempt from United States federal backup withholding tax.  Each Bank organized under the laws of a jurisdiction outside the United States shall, on or prior to the date of its execution and delivery of this Agreement or on the date of the Assignment and Acceptance pursuant to which it becomes a Bank, as the case may be, and from time to time thereafter as reasonably requested in writing by a Loan Party (but only so long thereafter as such Bank remains lawfully able to do so), or upon the obsolescence or invalidity of any form previously provided, provide each of the Agent and such Loan Party with two original Internal Revenue Service Forms W-8BEN or W-8ECI, as appropriate, or any other form prescribed by the Internal Revenue Service, certifying that such Bank is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or the Notes or any other Loan Document, or (in the case of a Bank that is claiming exemption from U.S. federal withholding with respect to payments of “portfolio interest” and has certified in writing to the Agent that it is not (i) a “bank” as defined in Section 881(c)(3)(A) of the Internal Revenue Code, (ii) a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of such Loan Party or (iii) a controlled foreign corporation related to such Loan Party (within the meaning of Section 864(d)(4) of the Internal Revenue Code)) Internal Revenue Service Form W-8BEN, or any successor or other form prescribed by the Internal Revenue Service, or, in the case of a Bank that has certified that it is not a “bank” as described above, certifying that such Bank is a foreign corporation, partnership, estate or trust.  If the forms provided by a Bank at the time such Bank first becomes a party to this Agreement indicate a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Indemnified Taxes unless and until such Bank provides the appropriate forms certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Indemnified Taxes for periods governed by such forms; provided that if, at the effective date of the Assignment and Acceptance pursuant to which a Bank becomes a party to this Agreement, the Bank assignor was entitled to payments under subsection (a) of this Section 2.11 in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Indemnified Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Bank assignee on such date.  If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service Form W-8BEN or W-8ECI or the related certificate described above, that the applicable Bank reasonably considers to be confidential, such Bank shall give notice thereof to the applicable Loan Party and shall not be obligated to include in such form or document such confidential information.

 

(f)           For any period with respect to which a Bank has failed to provide a Loan Party with the appropriate form, certificate or other document described in subsection (e) above (other than if such failure is due to a change in law, or in the interpretation or application thereof, occurring after the date on which a form, certificate or other document originally was required to be provided or if such form, certificate or other document otherwise is not required under subsection (e) above), such Bank shall not be entitled to indemnification under subsection (a) or (c) of this Section 2.11 with respect to Taxes imposed by the United States by reason of such failure; provided that should a Bank become subject to Taxes because of its failure to deliver a form, certificate or other document required hereunder, the Loan Parties shall, at the sole expense of such Bank, take such steps as such Bank shall reasonably request to assist such Bank to recover such Taxes.

 

(g)           If any payment made to a Bank under any Loan Document would be subject to United States federal withholding tax imposed by FATCA if such Bank were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Bank shall deliver to the Borrower and the Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Agent as may be necessary for the Borrower and the Agent to comply with their obligations under FATCA and to determine that such Bank has complied with such Bank’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (g), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

(h)           Any Bank claiming any additional amounts payable pursuant to this Section 2.11 agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office or assign its rights and obligations under this Agreement to another of its offices, branches or Affiliates if the making of such a change or assignment would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Bank, be otherwise disadvantageous to such Bank.

 

(i)           If a Bank or Agent actually receives a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by a Loan Party or with respect to which a Loan Party has paid additional amounts pursuant to this Section 2.11, it shall pay over such refund to the Loan Party (but only to the extent of indemnity payments made, or additional amounts paid, by the Loan Party under this Section 2.11 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Agent or such Bank or Agent and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Loan Party, upon the request of the Agent or such Bank or Agent, agrees to repay the amount paid over to the Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Agent or such Bank or Agent in the event the Agent or such Bank or Agent is required to repay such refund to such Governmental Authority. This Section 2.11(i) shall not be construed to require the Agent or any Bank or Agent to claim a refund or make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Loan Parties or any other Person.

 

(j)           Each party’s obligations under this Section 2.11 shall survive the resignation or replacement of the Agent or any assignment of rights by, or the replacement of, a Bank, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

 

2.12 Sharing of Payments, Etc.  If any Bank shall obtain at any time any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise, other than as a result of an assignment pursuant to Section 11.14 (Sale and Assignment)) (a) on account of Obligations due and payable to such Bank hereunder and under the Notes and the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Bank at such time to (ii) the aggregate amount of the Obligations due and payable to all Banks hereunder and under the Notes and the other Loan Documents at such time) of payments on account of the Obligations due and payable to all Banks hereunder and under the Notes at such time obtained by all the Banks at such time or (b) on account of Obligations owing (but not due and payable) to such Bank hereunder and under the Notes and the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing to such Bank at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Banks hereunder and under the Notes and the other Loan Documents at such time) of payments on account of the Obligations owing (but not due and payable) to all Banks hereunder and under the Notes at such time obtained by all of the Banks at such time, such Bank shall forthwith purchase from the other Banks such interests or participating interests in the Obligations due and payable or owing to them, as the case may be, as shall be necessary to cause such purchasing Bank to share the excess payment ratably with each of them; provided that if all or any portion of such excess payment is thereafter recovered from such purchasing Bank, such purchase from each other Bank shall be rescinded and such other Bank shall repay to the purchasing Bank the purchase price to the extent of such Bank’s ratable share (according to the proportion of (i) the purchase price paid to such Bank to (ii) the aggregate purchase price paid to all Banks) of such recovery together with an amount equal to such Bank’s ratable share (according to the proportion of (i) the amount of such other Bank’s required repayment to (ii) the total amount so recovered from the purchasing Bank) of any interest or other amount paid or payable by the purchasing Bank in respect of the total amount so recovered; provided, further that, so long as the Obligations under the Loan Documents shall not have been accelerated, any excess payment received by any Bank shall be shared on a pro rata basis only with other Banks.  The Borrower agrees that any Bank so purchasing an interest or participating interest from another Bank pursuant to this Section 2.12 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such interest or participating interest, as the case may be, as fully as if such Bank were the direct creditor of the Borrower in the amount of such interest or participating interest, as the case may be.

 

2.13 Use of Proceeds.   The Borrower agrees that the proceeds of the Loans shall be used by it solely to repay in full the March 2007 Credit Agreement on the Funding Date.

 

2.14 Evidence of Debt.

 

(a)           (i)  Each Bank shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Bank resulting from each Loan owing to such Bank from time to time, including the amounts of principal and interest payable and paid to such Bank from time to time hereunder.  The Borrower agrees that upon request by any Bank to the Borrower (with a copy of such request to the Agent) to the effect that a promissory note or other evidence of indebtedness is required or appropriate in order for such Bank to evidence (whether for purposes of pledge, enforcement or otherwise) the Loans owing to, or to be made by, such Bank, the Borrower shall promptly execute and deliver to such Bank, with a copy to the Agent, a Note payable to the order of such Bank in a principal amount equal to the Loans of such Bank.  All references to Notes in the Loan Documents shall mean Notes, if any, to the extent issued hereunder.

 

(b)           The Register maintained by the Agent pursuant to Section 11.14(d) (Sale and Assignment) shall include a control account, and a subsidiary account for each Bank, in which accounts (taken together) shall be recorded (i) the date and amount of the Borrowing, the Type of Loans comprising the Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Bank hereunder, and (iv) the amount of any sum received by the Agent from the Borrower hereunder and each Bank’s share thereof.

 

(c)           Entries made in good faith by the Agent in the Register pursuant to subsection (b) above, and by each Bank in its account or accounts pursuant to subsection (a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to, in the case of the Register, each Bank and, in the case of such account or accounts, such Bank, under this Agreement, absent manifest error; provided that the failure of the Agent or such Bank to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement.

 

2.15 Replacement of Banks.  If (a) any Bank requests compensation under Section 2.9 (Increased Costs) or asserts, pursuant to Section 2.9(e) that it is unlawful for such Bank to make Loans the interest on which is determined by reference to the Eurodollar Rate, (b) the Borrower is required to pay any additional amount to any Bank or any Governmental Authority for the account of any Bank pursuant to Section 2.11 (Taxes), (c) any Bank is a Defaulting Bank, or (d) with respect of any Bank that does not approve any amendment or waiver of any provision of any Loan Document that requires the unanimous consent of all of the Banks pursuant to Section 11.1 (Amendments; Waivers, Etc.), if such amendment or waiver is agreed to by the Required Banks, then the Borrower may, at its sole expense, upon prior notice to such Bank and the Agent, require such Bank to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 11.14 (Sale and Assignment)), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Bank, if a Bank accepts such assignment); provided that (i) to the extent required under Section 11.14 (Sale and Assignment), the Borrower shall have received the prior written consent of the Agent, which consent shall not unreasonably be withheld, (ii) such Bank shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, 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) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.9 (Increased Costs) or payments required to be made pursuant to Section 2.11 (Taxes), such assignment will result in a reduction in such compensation or payments.  A Bank shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Bank or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

 

2.16 Defaulting Banks.

 

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

 

(i) Waivers and Amendments.  Such Defaulting Bank’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definitions of “Majority Banks” and “Required Banks” and Section 11.1 (Amendments, Waivers, Etc.).

 

(ii) Defaulting Bank Waterfall.  Any payment of principal, interest, fees or other amounts received by the Agent for the account of such Defaulting Bank (whether voluntary or mandatory, at maturity, pursuant to Section 8 (Events of Default; Remedies) or otherwise) or received by the Agent from a Defaulting Bank pursuant to Section 11.13 (Set-Off) shall be applied at such time or times as may be determined by the Agent as follows: first, to the payment of any amounts owing by such Defaulting Bank to the Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Bank has failed to fund its portion thereof as required by this Agreement, as determined by the Agent; third, if so determined by the Agent and the Borrower, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Bank’s potential future funding obligations with respect to Loans under this Agreement; fourth, to the payment of any amounts owing to the Banks as a result of any judgment of a court of competent jurisdiction obtained by any Bank against such Defaulting Bank as a result of such Defaulting Bank’s breach of its obligations under this Agreement; fifth, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Bank as a result of such Defaulting Bank’s breach of its obligations under this Agreement; and sixth, to such Defaulting Bank or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans in respect of which such Defaulting Bank has not fully funded its appropriate share, and (y) such Loans were made at a time when the conditions set forth in Section 4 (Conditions to Funding) were satisfied or waived, such payment shall be applied solely to pay the Loans of all Non-Defaulting Banks on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Bank until such time as all Loans are held by the Banks pro rata in accordance with the Commitments hereunder.  Any payments, prepayments or other amounts paid or payable to a Defaulting Bank that are applied (or held) to pay amounts owed by a Defaulting Bank pursuant to this Section 2.16(a)(ii) shall be deemed paid to and redirected by such Defaulting Bank, and each Bank irrevocably consents hereto.

 

(b) Defaulting Bank Cure.  If the Borrower and the Agent, agree in writing that a Bank is no longer a Defaulting Bank, the Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Bank will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Banks or take such other actions as the Agent may determine to be necessary to cause the Loans to be held on a pro rata basis by the Banks in accordance with their Pro-Rata Percentages, whereupon such Bank will cease to be a Defaulting Bank; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Bank was a Defaulting Bank; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Bank to Bank will constitute a waiver or release of any claim of any party hereunder arising from that Bank’s having been a Defaulting Bank.

 

	
3.  

	
REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES

 

Each of Panhandle, the Borrower and TLNG represents and warrants that:

 

3.1 Organization and Qualification.  Such Loan Party:

 

(a)           is duly organized, validly existing, and in good standing under the laws of its state of organization;

 

(b)           has the corporate or organizational power to own its properties and to carry on its respective businesses as now conducted; and

 

(c)           is duly qualified as a foreign limited partnership or limited liability company, as applicable, to do business and is in good standing in every jurisdiction where such qualification is necessary except when the failure to so qualify would not or does not have a Material Adverse Effect.

 

The Borrower has the Subsidiaries as applicable listed on Schedule 3.1 attached hereto and made a part hereof for all purposes, and no others, each of which is a Delaware limited liability company unless otherwise noted on Schedule 3.1.

 

3.2 Authorization, Validity, Etc.  Each such Loan Party has the limited liability company or limited partnership power and authority to make, execute, deliver and perform under this Agreement and the other Loan Documents to which it is a party and the transactions contemplated herein and therein, and all such action has been duly authorized by all necessary limited partnership or limited liability company proceedings on its part.  Each Loan Document to which a Loan Party is a party has been duly and validly executed and delivered by such Loan Party and constitutes the valid and legally binding agreement of such Loan Party enforceable against such Loan Party in accordance with its terms, except as limited by Debtor Laws.

 

3.3 Conflicting or Adverse Agreements or Restrictions.  No Loan Party is a party to any contract or agreement or subject to any restriction which would have a Material Adverse Effect.  Neither the execution and delivery of this Agreement or any other Loan Document by any Loan Party that is or is to become a party thereto, nor the consummation of the transactions contemplated hereby or thereby, nor the fulfillment of and compliance with the respective terms, conditions and provisions hereof or thereof or of any instruments required hereby will conflict with or result in a breach of any of the terms, conditions or provisions of, or constitute a default under, or result in any violation of, or result in the creation or imposition of any lien (other than as contemplated or permitted by this Agreement) on any of the property of such Loan Party pursuant to (a) the charter or bylaws or similar organizational documents applicable to such Loan Party; (b) any law or any regulation of any Government Authority; (c) any order, writ, injunction or decree of any court; or (d) the terms, conditions or provisions of any agreement or instrument to which such Loan Party is a party or by which it is bound or to which it is subject, except in the case of clauses (b), (c) and (d) for conflicts, breaches, defaults, violations or the creation or imposition of liens that could not be reasonably expected to have a Material Adverse Effect.

 

3.4 No Consents Required.  No action, approval, consent, waiver, exemption, variance, franchise, order, permit, authorization, right or license of or from a Governmental Authority, and no notice to or filing with, any Governmental Authority or any other third party is required for (a) the due execution, delivery or performance by any Loan Party of any Loan Document to which it is or is to be a party, or for the consummation of the transactions contemplated hereby, including without limitation the incurrence of Debt under this Agreement and the borrowing and repayment of Loans hereunder; or (b) the exercise by any Agent or any Bank of its rights under the Loan Documents, except for those authorizations, approvals, actions, notices and filings (A) which have been duly obtained or made or which are not required under the terms of the Loan Documents to have been obtained or made on or prior to such date or (B) with respect to the consummation of the transactions contemplated hereby, the failure of which to be obtained or made would not reasonably be expected to have a Material Adverse Effect.

 

3.5 Financial Statements.

 

(a)           Panhandle has furnished the Banks with its audited financial report as of the fiscal year ending December 31, 2010.  These statements are complete and correct and present fairly, in all material respects, in accordance with GAAP, consistently applied throughout the periods involved, the Consolidated financial position of Panhandle and its Subsidiaries and the results of their operations as at the dates and for the periods indicated.

 

(b)           The Borrower has furnished the Banks with the Borrower’s unaudited financial report as of the fiscal year ending December 31, 2010.  These statements are complete and correct and present fairly, in all material respects, in accordance with GAAP, consistently applied throughout the periods involved, the Consolidated financial position of the Borrower and its Subsidiaries and the results of their operations as at the dates and for the periods indicated.

 

(c)           Since December 31, 2010, there has not occurred any event or condition which, individually or in the aggregate, has resulted in, or could reasonably be expected to have, a Material Adverse Effect respecting Panhandle, the Borrower or TLNG.

 

3.6 Litigation.  Except as disclosed pursuant to Section 3.16 (Environmental Matters), there is no: (a) action or proceeding pending or, to the knowledge of Panhandle, the Borrower or TLNG, threatened against any Loan Party before any court, administrative agency or arbitrator which is reasonably expected to have a Material Adverse Effect; (b) unsatisfied judgment outstanding against such Loan Party for the payment of money which may reasonably be expected to have a Material Adverse Effect; or (c) other outstanding judgment, order or decree affecting such Loan Party before or by any administrative or governmental authority, compliance with or satisfaction of which could reasonably be expected to have a Material Adverse Effect.

 

3.7 Default.  No Loan Party is in default under or in violation of the provisions of any instrument evidencing any Debt or of any agreement relating thereto or any judgment, order, writ, injunction or decree of any court or any order, regulation or demand of any administrative or governmental instrumentality, which default or violation could reasonably be expected to have a Material Adverse Effect.

 

3.8 Compliance.  Each Loan Party is in compliance with all laws, 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, would not reasonably be expected to result in a Material Adverse Effect.

 

3.9 Title to Assets.  Each Loan Party has good title to its respective assets, subject to no Liens except those permitted in Section 6.2 (Liens, Etc.), Section 7.1 (Liens, Etc.) and Permitted Encumbrances.  For purposes of this Section 3.9, “Permitted Encumbrances” shall mean easements, rights-of-way, restrictions, minor defects or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the ordinary conduct of the business of such Loan Party.

 

3.10 Payment of Taxes.  Each Loan Party has filed all material tax returns required to be filed and has paid all taxes shown on said returns and all assessments which are due and payable (except such as are being contested in good faith by appropriate proceedings for which adequate reserves for their payment have been provided in a manner consistent with the accounting practices followed by the applicable Loan Party as of December 31, 2010).  No Loan Party is aware of any pending investigation by any taxing authority or of any claims by any Governmental Authority for any unpaid taxes in excess of $6,500,000.  Except as disclosed on Schedule 3.10, no Loan Party is party to any tax sharing agreement or arrangement.

 

3.11 Investment Company Act Not Applicable.  No Loan Party is an “investment company” or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.

 

3.12 Regulations T, U and X.  No Loan shall be a “purpose credit secured directly or indirectly by margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (“margin stock”); none of the proceeds of any Loan will be used by any Loan Party to extend credit to others for the purpose of purchasing or carrying any margin stock, or for any other purpose which would constitute this transaction a “purpose credit secured directly or indirectly by margin stock” within the meaning of said Regulation U, as now in effect or as the same may hereafter be in effect.  No Loan Party will take or permit any action which would involve the Banks in a violation of Regulation T, Regulation U, Regulation X or any other regulation of the Board of Governors of the Federal Reserve System or a violation of the Securities Exchange Act of 1934, in each case as now or hereafter in effect.

 

3.13 ERISA.  (i) No Reportable Event (as defined in § 4043(c) of ERISA) has occurred with respect to any Plan, (ii) each Plan complies in all material respects with applicable provisions of ERISA and the Code, and each Loan Party has filed all reports required by ERISA and the Code to be filed with respect to each Plan, (iii) no Loan Party has any knowledge of any event which could result in a liability of a Loan Party to the Pension Benefit Guaranty Corporation (other than for the payment of premiums, and there are no premium payments which have become due that are unpaid) and (iv) each Loan Party has met all requirements with respect to funding the Plans imposed by ERISA or the Code, subject to §412 of the Code and §302 of ERISA, other than contributions in an aggregate amount not exceeding $10,000,000, and no application for a funding waiver pursuant to §412 of the Code has been made with respect to any Plan.  Since the effective date of Title IV of ERISA, there have not been any, nor are there now existing any, events or conditions that would permit any Plan to be terminated under circumstances which would cause the lien provided under § 4068 of ERISA to attach to any property of a Loan Party.

 

3.14 No Financing of Certain Security Acquisitions.  None of the proceeds of any Loan will be used to acquire any security in any transaction that is subject to §13 or §14 of the Securities Exchange Act of 1934, as amended.

 

3.15 Franchises, Co-Licenses, Etc.  Each Loan Party owns or has obtained all the material governmental permits, certificates of authority, leases, patents, trademarks, service marks, trade names, copyrights, franchises and licenses, and rights with respect thereto, required or necessary (or, in the sole and independent judgment of the Borrower, prudent) in connection with the conduct of their respective businesses as presently conducted or as proposed to be conducted, except where the failure to have any of the foregoing could not be reasonably expected to have a Material Adverse Effect.

 

3.16 Environmental Matters.  Except as disclosed in Schedule 3.16, (a) all facilities and property owned or leased by a Loan Party have been and continue to be, owned or leased and operated by such Loan Party in material compliance with all Environmental Laws; (b) there has not been (during the period of such Loan Party’s ownership or lease) any Release of Hazardous Materials at, on, under or from any property now (or, to such Loan Party’s knowledge, previously) owned or leased by such Loan Party (i) that required, or may reasonably be expected to require, such Loan Party to expend funds on remediation or cleanup activities pursuant to any Environmental Law except for remediation or clean-up activities that would not be reasonably expected to have a Material Adverse Effect, or (ii) that otherwise, singly or in the aggregate, has, or may reasonably be expected to have, a Material Adverse Effect; (c) each Loan Party has been issued and is in material compliance with all permits, certificates, approvals, orders, licenses and other authorizations relating to environmental matters necessary for the conduct of its businesses; (d) there are no polychlorinated biphenyls (PCB’s) or asbestos-containing materials or surface impoundments in any of the facilities now (or, to the knowledge of such Loan Party, previously) owned or leased by such Loan Party, except for PCB’s and asbestos-containing materials of the type and in quantities that, to the knowledge of such Loan Party, do not currently require remediation, and if remediation of such PCB’s and asbestos-containing materials is hereafter required for any reason, such remediation activities would not reasonably be expected to have a Material Adverse Effect; (e) Hazardous Materials have not been generated, used, treated, recycled, stored or disposed of at, on, under or from any of the facilities or property now (or, to the knowledge of such Loan Party, previously) owned or leased by such Loan Party during the time of such Loan Party’s ownership or lease of such property that may require remediation or clean-up activities that would be reasonably expected to have a Material Adverse Effect; and (f) all underground storage tanks located on the property now (or, to the knowledge of such Loan Party, previously) owned or leased by such Loan Party have been (and to the extent currently owned or leased are) operated in material compliance with all applicable Environmental Laws.

 

3.17 Disclosure.  No written information (other than any projections) concerning any Loan Party and the transactions contemplated hereby furnished by or on behalf of such Loan Party to the Agent or any Bank in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished), taken as a whole, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein not misleading in any material respect in light of the circumstances under which such statements were or are made.  The projections were prepared by or on behalf of each Loan Party in good faith based upon assumptions that such Loan Party believes to be reasonable as of the Closing Date and the Funding Date (it being understood that such projections are subject to significant uncertainties and contingencies, many of which are beyond such Loan Party’s control, and accordingly no assurance can be given and no representations are made that the assumptions are correct or that the projections will be realized).

 

3.18 Insurance.  Each Loan Party has insurance with a responsible and reputable insurer covering its assets against loss or damage of the kinds customarily insured against by companies similarly situated in the industry in which such Person conducts its business, in such amounts and with such deductibles as are customary for similarly situated companies; and such Person (a) has not received notice from any insurer or agent of such insurer that any material capital improvements or other material expenditures are required or necessary to be made in order to continue such insurance or (b) does not have any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage at commercially available rates from similar insurers as may be necessary to continue its business.

 

3.19 Subsidiaries.  TLNG is wholly owned by the Borrower.  The Borrower is wholly owned, directly or indirectly, by Panhandle.

 

	
4.  

	
CONDITIONS TO FUNDING

 

The obligation of the Banks to make any Loans is subject to the following conditions:

 

4.1 Representations True and No Defaults.

 

(a)           The representations and warranties contained in Section 3 (Representations and Warranties of the Loan Parties) shall be true and correct on and as of the Funding Date as though made on and as of such date;

 

(b)           None of Panhandle, the Borrower or TLNG shall be in default in the due performance of any covenant on its part contained in this Agreement;

 

(c)           No event shall have occurred with respect to (i) Panhandle reflected in the Consolidated annual financial statements of Panhandle dated December 31, 2010, (ii) the Borrower reflected in the Consolidated annual financial statements of the Borrower dated December 31, 2010 or (iii) TLNG reflected in the Consolidated annual financial statements of TLNG dated December 31, 2010 that, in each case, has had a Material Adverse Effect; and

 

(d)           At the time of and immediately after giving effect to the Borrowing, no Event of Default or Default shall have occurred and be continuing.

 

4.2 Intentionally Omitted.

 

4.3 Compliance With Law.  The business and operations of each Loan Party as conducted at all times relevant to the transactions contemplated by this Agreement to and including the close of business on the Funding Date shall have been and shall be in compliance in all material respects with all applicable State and Federal laws, regulations and orders affecting such Loan Party and the business and operations of any of them.

 

4.4 Notice of Borrowing and Other Documents.  The Banks shall have received (a) the Notice of Borrowing; and (b) such other documents and certificates relating to the transactions herein contemplated as the Banks may reasonably request.

 

4.5 Payment of Fees and Expenses.  The Borrower shall have paid (a) all expenses of the type described in Section 11.2 (Reimbursement of Expenses) through the date of such Loan and (b) all closing, structuring and other invoiced fees owed as of the Funding Date to the Agent or any of the Banks by the Borrower under this Agreement or any other written agreement between a Loan Party and the Agent, the applicable Bank(s), or any of their Affiliates.

 

4.6 Repayment of Debt.  Simultaneously with the funding of the Loans, the Borrower shall cause to be repaid in full all of the obligations under the March 2007 Credit Agreement and the obligations of the Borrower thereunder shall be extinguished.

 

4.7 Loan Documents Satisfactory.  The Agent shall have received a copy of each of the Loan Documents, each of which shall be in form and substance reasonably satisfactory to the Agent.

 

4.8 Loan Documents, Opinions and Other Instruments.  As of the Funding Date, the Loan Parties shall have delivered to the Agent the following:

 

(a)           this Agreement, each of the Notes and all other Loan Documents required by the Agent and the Banks to be executed and delivered by the applicable Loan Parties in connection with this Agreement;

 

(b)           a certificate from the Secretary of State of the State of Delaware as to the continued existence and good standing of Panhandle, the Borrower and TLNG in the State of Delaware;

 

(c)           a certificate from Secretary of State of each State in which such certification is necessary as to the good standing of TLNG and each Loan Party as a foreign entity to do business in such State;

 

(d)           a Secretary’s Certificate executed by the duly elected Secretary or a duly elected Assistant Secretary of Panhandle, the Borrower and TLNG, in a form acceptable to the Agent, whereby such Secretary or Assistant Secretary certifies that (i) the attached copies of such Loan Party’s certificate of formation and operating or limited liability company agreement or limited partnership agreement, as applicable, are true and complete and in full force and effect, without amendment except as shown, and (ii) one or more resolutions adopted by the Board of Managers of such Loan Party (or, in the case of Panhandle, the Board of Managers of its general partner) remain in full force and effect authorizing such Loan Party to enter into the transactions contemplated hereby and perform its obligations under the Loan Documents; and

 

(e)           a legal opinion from in house counsel for the Borrower and each Guarantor, and New York counsel to the Agent, each dated as of the Funding Date, addressed to the Agent and the Banks and otherwise acceptable in all respects to the Agent in its discretion.

 

	
5.  

	
AFFIRMATIVE COVENANTS OF THE LOAN PARTIES

 

Each of Panhandle, the Borrower and TLNG covenants and agrees that, so long as the Borrower may borrow hereunder and until payment in full of the Obligations, each of Panhandle, the Borrower and TLNG, as applicable, will:

 

5.1 Financial Statements and Information.

 

 Deliver to the Banks:

 

(a)           as soon as available, and in any event within 120 days after the end of each fiscal year of Panhandle, a copy of the annual audit report of Panhandle and its Subsidiaries for such fiscal year containing a balance sheet, statement of income and stockholders equity and a cash flow statement, all in reasonable detail and certified by PriceWaterhouseCoopers or another independent certified public accountant of recognized standing reasonably satisfactory to the Banks accompanied by a report and opinion of such independent certified public accountant of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit; and

 

(b)           as soon as available, and in any event within 120 days after the end of each fiscal year of the Borrower, an unaudited financial report of the Borrower and its Subsidiaries for such fiscal year containing a balance sheet, statement of income and stockholders equity and cash flow statement, all in reasonable detail and certified by a financial officer of such Loan Party to have been prepared in accordance with GAAP, except as may be explained in such certificate; and

 

(c)           as soon as available, and in any event within 60 days after the end of each quarterly accounting period in each fiscal year of Panhandle and the Borrower (excluding the fourth quarter), an unaudited financial report of Panhandle and its Subsidiaries and the Borrower and its Subsidiaries as at the end of such quarter and for the period then ended, containing a balance sheet, statements of income and stockholders equity and a cash flow statement, all in reasonable detail and certified by a financial officer of such Loan Party to have been prepared in accordance with GAAP, except as may be explained in such certificate;

 

(d)           such additional financial or other information as the Banks may reasonably request; and

 

(e)           copies of all regular, periodic and special reports, and all registration statements, that such Loan Party files with the SEC or any governmental authority that may be substituted therefor, or with any national securities exchange.

 

All financial statements specified in clauses (a), (b) and (c) above shall be furnished in Consolidated form for Panhandle and its Subsidiaries and the Borrower and its Subsidiaries with comparative Consolidated figures for the corresponding period in the preceding year.  Together with each delivery of financial statements required by clauses (a), (b) and (c) above, each of Panhandle and the Borrower, as applicable, will deliver to the Banks an Officer’s Certificate stating that there exists no Event of Default or Default, or, if any such Event of Default or Default exists, stating the nature thereof, the period of existence thereof and what action the Borrower has taken or proposes to take with respect thereto.  Together with each delivery of financial statements required by clauses (a) and (c) above, Panhandle will deliver to the Banks an Officer’s Certificate demonstrating compliance with the covenant set forth in Section 6.1 (Financial Covenant). The Banks are authorized to deliver a copy of any financial statement delivered to it to any regulatory body having jurisdiction over them, and to disclose same to any prospective assignees or participant Banks.  Documents required to be delivered pursuant to this Section 5.1 may be delivered electronically; provided that the Loan Parties shall deliver paper copies of such documents to the Agent or any Bank upon its request to the Loan Parties to deliver such paper copies until a written request to cease delivering paper copies is given by the Agent or such Bank.  The Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event, shall have no responsibility to monitor compliance by the Loan Parties with any such request by a Bank for delivery, and each Bank shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

 

Each Loan Party hereby acknowledges that (a) the Agent may, but shall not be obligated to, make available to the Banks materials and/or information provided by or on behalf of the Loan Parties hereunder (collectively, the “Borrower Materials”) by posting the Borrower Materials on Debt Domain, IntraLinks, Syndtrak or another similar electronic system (the “Platform”) and (b) certain of the Banks (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Loan Parties or their respective Affiliates, or the respective securities of any of the foregoing, and who may be engaged in the investment and other market-related activities with respect to such Persons’ securities.  Each Loan Party hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC,” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” such Loan Party shall be deemed to have authorized the Agent and the Banks to treat such Borrower Materials as not containing any material non-public information with respect to such Loan Party or its securities for purposes of the United States Federal and state securities laws; (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”  The Platform is provided “as is” and “as available.”  The Agent does not warrant the accuracy or completeness of the Borrower Materials or the adequacy of the Platform, and expressly disclaims liability for errors in or omissions from the Borrower Materials.  No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by the Agent in connection with the Borrower Materials or the Platform.  In no event shall the Agent, any of its Affiliates or any of the partners, directors, officers, employees or representatives of the Agent or its Affiliates have any liability to any Loan Party, any Bank or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of any Loan Party’s or the Agent’s transmission of Borrower Materials through the Internet.

 

5.2 Books and Records.  Maintain, and cause each of its Subsidiaries to maintain, proper books of record and account in accordance with sound accounting practices in which true, full and correct entries will be made of all their respective dealings and business affairs.

 

5.3 Insurance.  Maintain, and cause each of its Subsidiaries to maintain, insurance with financially sound, responsible and reputable companies in such types and amounts and against such casualties, risks and contingencies as is customarily carried by owners of similar businesses and properties.

 

5.4 Maintenance of Property.  Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in accordance with such Loan Party’s established maintenance plan as in effect from time to time consistent with past practices.

 

5.5 Inspection of Property and Records.  Permit any officer, director or agent of the Agent or any Bank, on written notice and at such Bank’s expense, to visit and inspect during normal business hours any of the properties, corporate books and financial records of each Loan Party and discuss their respective affairs and finances with their principal officers, all at such times as the Agent or any Bank may reasonably request.

 

5.6 Existence, Laws, Obligations, Taxes.  Maintain, and cause each of its Subsidiaries to maintain, its corporate existence and franchises, and any license agreements and tariffs that permit the recovery of a return that such Loan Party considers to be fair (and as to licenses, franchises, and tariffs that are subject to regulatory determinations of recovery of returns, such Loan Party has presented or is presenting favorable defense thereof); and to comply, and cause each of its Subsidiaries to comply, with all statutes and governmental regulations noncompliance with which might have a Material Adverse Effect, and pay, and cause each of its Subsidiaries to pay, all taxes, assessments, governmental charges, claims for labor, supplies, rent and other obligations which if unpaid might become a lien against the property of such Loan Party and its Subsidiaries except liabilities being contested in good faith.

 

5.7 Notice of Certain Matters.  Notify the Agent promptly upon acquiring knowledge of the occurrence of any of the following events:

 

(a)           the institution or threatened institution of any lawsuit or administrative proceeding affecting a Loan Party that is not covered by insurance (less applicable deductible amounts) and which, if determined adversely to such Loan Party, could reasonably be expected to have a Material Adverse Effect;

 

(b)           the occurrence of any event that has had a Material Adverse Effect, or of any event that in the good faith opinion of such Loan Party is likely to result in having a Material Adverse Effect, affecting such Loan Party;

 

(c)           the occurrence of any Event of Default or any Default;

 

(d)           a change by Moody’s Investors Service, Inc. or by Standard and Poor’s Ratings Group in the rating of the Funded Debt of Panhandle; and

 

(e)           such other information respecting the business, financial condition, operations or assets of the Loan Parties as any Agent, or any Bank through the Agent, may from time to time reasonably request.

 

5.8 ERISA.  At all times:

 

           (a)           to the extent required of a Loan Party under applicable law, maintain and keep in full force and effect each Plan, subject to a Loan Party’s right, in accordance with applicable legal requirements, (i) to amend any such Plans, (ii) to merge any such Plans, and to (iii) cease benefit accruals under any such Plans;

 

           (b)           to the extent required of a Loan Party under applicable law, make contributions to each Plan in a timely manner and in an amount sufficient to comply with the minimum funding standards requirements of ERISA and the Code;

 

(c)           promptly after acquiring knowledge of any “reportable event” or of any “prohibited transaction” (as such terms are defined in § 4043 and § 406 of ERISA) in connection with any Plan, furnish the Banks with a statement executed by the president or chief financial officer of a Loan Party setting forth the details thereof and the action which the Borrower proposes to take with respect thereto and, when known, any action taken by the Internal Revenue Service or any other Governmental Authority with respect thereto;

 

(d)           notify the Banks promptly upon receipt by a Loan Party or any member of a “controlled group of corporations,” as such term is defined in the Code, of which a Loan Party is a member of any notice of the institution of any proceeding or other action which may result in the termination of any Plan and furnish to the Banks copies of such notice;

 

(d)           to the extent required of a Loan Party under applicable law, acquire and maintain Pension Benefit Guaranty Corporation employer liability coverage insurance required under ERISA;

 

(e)           furnish the Banks with copies of the summary annual report for each Plan filed with the Internal Revenue Service as the Agent or the Banks may request; and

 

(f)           furnish the Banks with copies of any request for waiver of the funding standards or extension of the amortization periods required by §§ 302, 303, 304 and 305 of ERISA or §§ 412, 430, 431, 432 or 436 of the Code promptly after the request is submitted to the Secretary of the Treasury, the Department of Labor or the Internal Revenue Service, as the case may be.

 

5.9 Compliance with Environmental Laws.  At all times:

 

(a)            (i) use and operate, and cause each of its Subsidiaries to use and operate, all of their respective facilities and properties in material compliance with all Environmental Laws; (ii) keep, and cause each of its Subsidiaries to keep, all necessary permits, approvals, orders, certificates, licenses and other authorizations relating to environmental matters in effect and remain in material compliance therewith; (iii) handle, and cause each of its Subsidiaries to handle, all Hazardous Materials in material compliance with all applicable Environmental Laws; and (iv) dispose, and cause each of its Subsidiaries to dispose, of all Hazardous Materials with carriers that maintain valid permits, approvals, certificates, licenses or other authorizations for such disposal in material compliance with applicable Environmental Laws;

 

(b)           promptly notify the Agent and provide copies upon receipt of all written claims, complaints, notices or inquiries relating to the condition of the facilities and properties of such Loan Party under, or their respective compliance with, applicable Environmental Laws wherein the condition or the noncompliance that is the subject of such claim, complaint, notice, or inquiry involves, or could reasonably be expected to involve, liability of or expenditures of (1) in the case of the Borrower or any of its Subsidiaries, $25,000,000 or more, and (2) in the case of Panhandle and its Subsidiaries taken as a whole, $50,000,000 or more, to the extent in each case that such matters are not reflected in the financial statements provided pursuant to Sections 3.5 (a) and (b) hereof for the period ended December 31, 2010; and

 

(c)           provide such information and certifications which the Banks may reasonably request from time to time to evidence compliance with this Section 5.9.

 

	
6.  

	
NEGATIVE COVENANTS OF PANHANDLE

 

So long as the Borrower may borrow hereunder and until payment in full of the Obligations, except with the written consent of the Banks:

 

6.1 Financial Covenant.  Panhandle will not permit its Leverage Ratio as of the last day of any fiscal quarter to be greater than 5.00 to 1.00.

 

6.2 Liens, Etc. Panhandle will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien on or with respect to any of its Property, or sign or file or suffer to exist, under the Uniform Commercial Code of any jurisdiction, a financing statement that names Panhandle or any of its Subsidiaries as debtor, or sign or suffer to exist any security agreement authorizing any secured party thereunder to file such financing statement, or assign any accounts or other right to receive income, except:

 

(a)           Permitted Liens for Panhandle and its Subsidiaries;

 

(b)           Liens existing on the date hereof and any replacement, extension or renewal of the indebtedness secured by such Lien, provided that the amount of Debt or other obligations secured thereby is not increased and is not secured by any additional assets; and

 

(c)           Liens arising in connection with Capitalized Leases, provided that no such Lien shall extend to or cover any assets other than the assets subject to such Capitalized Leases, and purchase money Liens upon or in real property, equipment or other fixed or capital assets acquired or held by Panhandle or any of its Subsidiaries to secure the purchase price of such property, equipment or other fixed or capital assets or to secure Debt incurred for the purpose of financing the acquisition, construction or improvement of any such property, equipment or other fixed or capital assets, or Liens existing on any such property, equipment or other fixed or capital assets at the time of acquisition, or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount (provided that no such Lien shall extend to or cover any property other than the property, equipment or other fixed or capital assets being acquired, constructed or improved, and no such extension, renewal or replacement shall extend to or cover any property not theretofore subject to the Lien being extended, renewed or replaced); provided that the aggregate principal amount of the Debt secured by Liens permitted by this clause (c) shall not exceed $50,000,000 at any time outstanding;

 

provided that Panhandle or any of its Subsidiaries may create or assume any other Lien securing Debt if, after giving effect to such Debt, the Priority Obligations Amount does not exceed 10% of the Consolidated Net Tangible Assets.

 

6.3 Debt.  Panhandle will not, and will not permit any Subsidiary (other than the Borrower or TLNG) to, create, incur, assume or suffer to exist any Debt, unless if after giving effect to such Debt, the Priority Obligations Amount does not exceed 15% of the Consolidated Net Tangible Assets.

 

6.4 Change in Nature of Business.  Panhandle will not make any material change in the nature of Panhandle’s business as carried on at the date hereof.

 

6.5 Mergers, Consolidation.  Panhandle will not merge into or consolidate with any Person or permit any Person to merge into it, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or permit any of its Subsidiaries to do so, except that:

 

(a)           any Subsidiary of Panhandle may merge into or consolidate with Panhandle, provided that Panhandle is the continuing or surviving Person;

 

(b)           any Subsidiary of Panhandle may merge into or consolidate with any other Subsidiary of Panhandle; provided that if such Subsidiary is the Borrower, such transaction shall comply with Section 7.3(c);

 

(c)           any Subsidiary of Panhandle may be liquidated or dissolved if Panhandle determines in good faith that such liquidation or dissolution is in the best interest of Panhandle and is not materially disadvantageous to the Banks;

 

(d)           any Subsidiary of Panhandle may merge into or consolidate with any other Person or permit any other Person to merge into or consolidate with it; provided that either (i) the Person surviving such merger shall be a Subsidiary of Panhandle or (ii) such transaction complies with Sections 6.6(b), 7.3 and 7.4; and

 

(e)           Panhandle may merge with any Person; provided that if Panhandle is not the surviving entity, the surviving entity agrees to assume and be bound by the terms and conditions of this Agreement pursuant to documentation satisfactory to the Agent to such effect;

 

provided that in each case, immediately before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing and such transaction shall not cause or have caused a Material Adverse Effect.

 

6.6 Sale of Assets.  Panhandle will not, and will not permit any of its Subsidiaries to, sell, lease, transfer or otherwise dispose of, in one transaction or in a series of transactions, assets representing all or substantially all of the Consolidated assets of Panhandle, except:

 

(a)           sales or other dispositions of assets to third parties in total amounts not to exceed $65,000,000 in aggregate;

 

(b)           in a transaction authorized by Section 6.5 (Mergers);

 

(c)            sale, transfer or disposition of all of the stock or all of or substantially all of the assets of Sea Robin Pipeline Company; and

 

(b)           sales, transfers or other dispositions of assets among Panhandle and its Subsidiaries.

 

6.7 Restricted Payments.  Panhandle will not, and will not permit any of its Subsidiaries to, pay or declare any Restricted Payment, except that, (a) any of its Subsidiaries may make Restricted Payments to Panhandle or another Subsidiary of Panhandle and (b) so long as no Default under Sections 8.1, 8.7 and 8.9 or any Event of Default has occurred and is continuing or will result after giving effect to such Restricted Payments, Panhandle may make distributions to the holders of its Equity Interests.

 

6.8 Sales and Leasebacks.  Panhandle will not enter into any arrangement with any Person (other than Subsidiaries of Panhandle) providing for the leasing by Panhandle or any Subsidiary of real or personal property that has been or is to be sold or transferred by Panhandle or such Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of Panhandle or such Subsidiary (each a “Sale-Leaseback Transaction”), unless if after giving effect to such Sale-Leaseback Transaction, the Priority Obligations Amount does not exceed 10% of the Consolidated Net Tangible Assets.

 

6.9 Transactions with Related Parties.  Panhandle will not, and will not permit any Subsidiary to, enter into any transaction or agreement with any officer, director or holder (other than Southern Union and its Subsidiaries) of ten percent (10%) or more of any class of the outstanding capital stock of Panhandle or any Subsidiary (or any Affiliate of any such Person) unless the same is upon terms substantially similar to those obtainable from wholly unrelated sources.

 

6.10 Hazardous Materials.  Panhandle will not, and will not permit any Subsidiary to, (a) cause or permit any Hazardous Materials to be placed, held, used, located, or disposed of on, under or at any of such Person’s property or any part thereof by any Person in a manner which could reasonably be expected to have a Material Adverse Effect; (b) cause or permit any part of any of such Person’s property to be used as a manufacturing, storage, treatment or disposal site for Hazardous Materials, where such action could reasonably be expected to have a Material Adverse Effect; or (c) cause or suffer any liens to be recorded against any of such Person’s property as a consequence of, or in any way related to, the presence, remediation, or disposal of Hazardous Materials in or about any of such Person’s property, including any so-called state, federal or local “superfund” lien relating to such matters, where such recordation could reasonably be expected to have a Material Adverse Effect.

 

	
7.  

	
NEGATIVE COVENANTS OF THE BORROWER

 

So long as the Borrower may borrow hereunder and until payment in full of the Obligations, except with the written consent of the Banks:

 

7.1 Liens, Etc.  The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or suffer to exist any Lien on or with respect to any of its Property, or sign or file or suffer to exist, under the Uniform Commercial Code of any jurisdiction, a financing statement that names the Borrower or any of its Subsidiaries as debtor, or sign or suffer to exist any security agreement authorizing any secured party thereunder to file such financing statement, or assign any accounts or other right to receive income, except:

 

(a)           Permitted Liens for the Borrower and its Subsidiaries;

 

(b)           Liens existing on the date hereof and any replacement, extension or renewal of the indebtedness secured by such Lien, provided that the amount of Debt or other obligations secured thereby is not increased and is not secured by any additional assets; and

 

(c)           Liens arising in connection with Capitalized Leases, provided that no such Lien shall extend to or cover any assets other than the assets subject to such Capitalized Leases, and purchase money Liens upon or in real property, equipment or other fixed or capital assets acquired or held by the Borrower or any of its Subsidiaries to secure the purchase price of such property, equipment or other fixed or capital assets or to secure Debt incurred for the purpose of financing the acquisition, construction or improvement of any such property, equipment or other fixed or capital assets, or Liens existing on any such property, equipment or other fixed or capital assets at the time of acquisition, or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount (provided that no such Lien shall extend to or cover any property other than the property, equipment or other fixed or capital assets being acquired, constructed or improved, and no such extension, renewal or replacement shall extend to or cover any property not theretofore subject to the Lien being extended, renewed or replaced); provided that the aggregate principal amount of the Debt secured by Liens permitted by this clause (c) shall not exceed $20,000,000 at any time outstanding.

 

7.2 Debt.  The Borrower will not, and will not permit any Subsidiary to, incur or permit to exist any Debt, except:

 

(a)           Debt under this Agreement;

 

           (b)           Debt of TLNG to the Borrower;

 

(c)           endorsements in the ordinary course of business of negotiable instruments in the course of collection;

 

(d)           Debt of TLNG or any other Subsidiary of the Borrower subordinated to the Loans on terms and pursuant to documentation satisfactory to the Agent;

 

(e)           Unsecured Debt of the Borrower; and

 

(f)           Capitalized Leases of the Borrower with Subsidiaries as permitted pursuant to 7.1(c).

 

7.3 Merger, Consolidation.  The Borrower will not, and will not permit any Subsidiary to, merge or consolidate with any other Person or sell, lease, transfer or otherwise dispose of (whether in one transaction or a series of transactions) all or a substantial part of its assets or acquire (whether in one transaction or a series of transactions) all or a substantial part of the assets of any Person, except that:

 

(a)           any Subsidiary of the Borrower may merge or consolidate with the Borrower (provided that the Borrower shall be the continuing or surviving corporation) or with any one or more Subsidiaries of the Borrower;

 

(b)           any Subsidiary of the Borrower may sell, lease, transfer or otherwise dispose of any of its assets to the Borrower or another Subsidiary of the Borrower;

 

(c)           the Borrower may acquire the assets of or merge with any Person, provided that if the Borrower is not the surviving entity, the surviving entity agrees to assume and be bound by the terms and conditions of this Agreement pursuant to documentation satisfactory to the Agent; and

 

(d)           the Borrower or any Subsidiary of the Borrower may sell, lease, assign or otherwise dispose of assets as otherwise permitted under Section 7.4 (Sale of Assets), which shall include without limitation the transfer of assets to a Subsidiary and the subsequent sale of the equity interests in such Subsidiary;

 

provided that, after giving effect to any such transaction, no Default or Event of Default shall have occurred and be continuing and such transaction shall not cause or have caused a Material Adverse Effect.

 

7.4 Sale of Assets.  The Borrower will not, and will not permit any Subsidiary to, except as permitted under this Section 7.4, sell, assign, lease, or otherwise dispose of (whether in one transaction or in a series of transactions) all or any part of its Property (whether now owned or hereafter acquired); provided that

 

(a)           the Borrower or any Subsidiary may in the ordinary course of business dispose of (i) Property consisting of Inventory; and (ii) Property consisting of goods or equipment that are, in the opinion of the Borrower or any Subsidiary of the Borrower, obsolete or unproductive, but if in the good faith judgment of the Borrower or any Subsidiary of the Borrower such disposition without replacement thereof would have a Material Adverse Effect, such goods and equipment shall be replaced, or their utility and function substituted, by new or existing goods or equipment; and

 

(b)           the Borrower or any Subsidiary may dispose of Property other than Inventory (in consideration of such amount as in the good faith judgment of the Borrower or such Subsidiary represents a fair consideration therefor), provided that the aggregate value of such property disposed of (determined after depreciation and in accordance with GAAP) after the Funding Date does not exceed ten percent (10%) of the aggregate value of all of the Borrower’s and its Subsidiaries’ real property and tangible personal property other than Inventory considered on a Consolidated basis and determined after depreciation and in accordance with GAAP, as of December 31, 2006.

 

7.5 Restricted Payment.  The Borrower will not pay or declare any Restricted Payment to any Person other than to Panhandle (which may be paid indirectly through distributions to a Subsidiary of Panhandle).  The Borrower will not permit any Subsidiary to pay or declare any Restricted Payment to any Person other than the Borrower.

 

7.6 Securities Credit Regulations; Investment Company Act.  Neither the Borrower nor any Subsidiary will take or permit any action which might cause the Loans or this Agreement to violate Regulation T, Regulation U, Regulation X or any other regulation of the Board of Governors of the Federal Reserve System or a violation of the Securities Exchange Act of 1934, in each case as now or hereafter in effect.  None of the Borrower, any Person “controlling” the Borrower or any Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940, as amended.

 

7.7 Nature of Business.  The Borrower will not, and will not permit any Subsidiary, to, make any material change in the nature of the Borrower’s business as carried on at the date hereof.

 

7.8 Transactions with Related Parties.  The Borrower will not, and will not permit any Subsidiary to, enter into any transaction or agreement with any officer, director or holder (other than Southern Union and its Subsidiaries) of ten percent (10%) or more of any class of the outstanding capital stock of the Borrower or any Subsidiary (or any Affiliate of any such Person) unless the same is upon terms substantially similar to those obtainable from wholly unrelated sources.

 

7.9 Hazardous Materials.  The Borrower will not, and will not permit any Subsidiary to, (a) cause or permit any Hazardous Materials to be placed, held, used, located, or disposed of on, under or at any of such Person’s property or any part thereof by any Person in a manner which could reasonably be expected to have a Material Adverse Effect; (b) cause or permit any part of any of such Person’s property to be used as a manufacturing, storage, treatment or disposal site for Hazardous Materials, where such action could reasonably be expected to have a Material Adverse Effect; or (c) cause or suffer any liens to be recorded against any of such Person’s property as a consequence of, or in any way related to, the presence, remediation, or disposal of Hazardous Materials in or about any of such Person’s property, including any so-called state, federal or local “superfund” lien relating to such matters, where such recordation could reasonably be expected to have a Material Adverse Effect.

 

7.10 Use of Proceeds.  The Borrower will not, and will not permit any Subsidiary to, use the proceeds of any Loan for any purpose other than for purposes set forth in Section 2.13 (Use of Proceeds); or use any such proceeds in a manner which violates or results in a violation of any law or regulation.

 

7.11 Other Documents.  The Borrower will not, and will not permit any Subsidiary to, amend, restate or otherwise modify or waive any provision or condition of any instrument or agreement relating to any secured Debt of such Person if the effect of such modification or waiver is to increase the obligations of such Person in a manner that is adverse to the Banks without the consent of the Majority Banks.

 

	
8.  

	
EVENTS OF DEFAULT; REMEDIES

 

If any of the following events shall occur, then the Agent shall at the request, or may with the consent, of the Majority Banks, declare the Notes and all interest accrued and unpaid thereon, and all other amounts payable under the Notes, this Agreement and the other Loan Documents, to be forthwith due and payable, whereupon the Notes, all such interest and all such other amounts, shall become and be forthwith due and payable without presentment, demand, protest, or further notice of any kind (including, without limitation, notice of default, notice of intent to accelerate and notice of acceleration), all of which are hereby expressly waived by the Borrower; provided that with respect to any Event of Default described in Sections 8.7 (Bankruptcy) or 8.8 (Dissolution) hereof, the entire unpaid principal amount of the Notes, all interest accrued and unpaid thereon, and all such other amounts payable under the Notes, this Agreement and the other Loan Documents, shall automatically become immediately due and payable, without presentment, demand, protest, or any notice of any kind (including, without limitation, notice of default, notice of intent to accelerate and notice of acceleration), all of which are hereby expressly waived by the Borrower:

 

8.1 Failure to Pay Obligations When Due.  The Borrower fails to pay, repay or prepay any principal on the date when due, or any other Obligation within five Business Days after the date when due.

 

8.2 Intentionally Omitted.

 

8.3 Failure to Pay Other Debt.   (a) The Borrower or any Subsidiary of the Borrower fails to pay principal or interest on any unsecured Debt aggregating more than $10,000,000 or any secured Debt when due and any related grace period has expired, or the holder of any of such Debt declares such Debt due prior to its stated maturity because of the Borrower’s or any Subsidiary’s default thereunder and the expiration of any related grace period; or (b) Panhandle or any of its Subsidiaries fails to pay principal or interest on any Debt aggregating more than $50,000,000 when due and any related grace period has expired, or the holder of any of such Debt declares such Debt due prior to its stated maturity because of Panhandle’s or any such Subsidiary’s default thereunder and the expiration of any related grace period.

 

8.4 Misrepresentation or Breach of Warranty.  Any representation or warranty made by any Loan Party herein or otherwise furnished to the Bank in connection with this Agreement or any other Loan Document shall be incorrect, false or misleading in any material respect when made.

 

8.5 Violation of Certain Covenants.  Any Loan Party violates any covenant, agreement or condition contained in Sections 5.6 (Existence), 5.7(c) (Notice of Defaults), 6.1 (Financial Covenant), 6.2 (Liens), 6.3 (Debt), 6.5 (Merger), 6.6 (Sale of Assets), 6.7 (Restricted Payments), 7.1 (Liens), 7.2 (Debt), 7.3 (Merger, Consolidation), 7.4 (Sale of Assets) or 7.5 (Restricted Payments).

 

8.6 Violation of Other Covenants, Etc.  Any Loan Party violates any other covenant, agreement or condition contained herein (other than the covenants, agreements and conditions set forth or described in Sections 8.1 (Failure to Pay Obligations When Due), 8.3 (Cross Default), 8.4 (Representations), and 8.5 (Certain Covenants) above) or in any other Loan Document and such violation shall not have been remedied within (30) days after the earlier of (i) actual discovery by a Loan Party of such violation or (ii) written notice has been received by the Borrower from the Bank or the holder of the Note.

 

8.7 Bankruptcy and Other Matters.  Any Loan Party or Southern Union (a) makes an assignment for the benefit of creditors; or (b) admits in writing its inability to pay its debts generally as they become due; or (c) generally fails to pay its debts as they become due; or (d) files a petition or answer seeking for itself, or consenting to or acquiescing in, any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any applicable Debtor Law (including, without limitation, the Federal Bankruptcy Code); there is appointed a receiver, custodian, liquidator, fiscal agent, or trustee of any Loan Party or Southern Union or of the whole or any substantial part of their respective assets; or any court enters an order, judgment or decree approving a petition filed against any Loan Party or Southern Union seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any Debtor Law and either such order, decree or judgment so filed against it is not dismissed or stayed (unless and until such stay is no longer in effect) within thirty (30) days of entry thereof or an order for relief is entered pursuant to any such law.

 

8.8 Dissolution.  Any order is entered in any proceeding against any Loan Party or Southern Union decreeing the dissolution, liquidation, winding-up or split-up of any Loan Party, or Southern Union, and such order remains in effect for thirty (30) days.

 

8.9 Undischarged Judgment.  (a) A final judgment or judgments in the aggregate, that might be or give rise to Liens on any property of the Borrower or any of its Subsidiaries, for the payment of money in excess of $10,000,000 shall be rendered against the Borrower or any of its Subsidiaries and the same shall remain undischarged for a period of sixty (60) days during which execution shall not be effectively stayed or (b) a final judgment or judgments in the aggregate, that might be or give rise to Liens on any property of Panhandle or any of its Subsidiaries, for the payment of money in excess of $50,000,000 shall be rendered against Panhandle or any of its Subsidiaries and the same shall remain undischarged for a period of sixty (60) days during which execution shall not be effectively stayed.

 

8.10 Loan Documents.  Any material provision in any Loan Document shall for any reason cease to be valid and binding on any party thereto except upon fulfillment of such party’s obligations thereunder (or any such party shall so state in writing), or shall be declared null and void, or the validity or enforceability thereof shall be contested by any party thereto (other than the Agent and the Banks) or any Governmental Authority, or any such party shall deny in writing that it has any liability or obligation thereunder, except upon fulfillment of its obligations thereunder.

 

8.11 Change of Control.  Any of the following events shall occur:

 

(a)           Panhandle shall cease to own or control, directly or indirectly, 100% of the Equity Interests and voting power of each of the Borrower and TLNG; or

 

(b)           Southern Union shall cease to own, or control, directly or indirectly, at least 51% of the Equity Interests and voting power of Panhandle.

 

8.12 Other Remedies.  In addition to and cumulative of any rights or remedies expressly provided for in this Section 8, if any one or more Events of Default shall have occurred, the Agent shall at the request, and may with the consent, of the Majority Banks proceed to protect and enforce the rights of the Banks hereunder by any appropriate proceedings.  The Agent shall at the request, and may with the consent, of the Majority Banks also proceed either by the specific performance of any covenant or agreement contained in this Agreement or by enforcing the payment of the Notes or by enforcing any other legal or equitable right provided under this Agreement or the Notes or otherwise existing under any law in favor of the holder of the Notes.

 

8.13 Remedies Cumulative.  No remedy, right or power conferred upon the Banks is intended to be exclusive of any other remedy, right or power given hereunder or now or hereafter existing at law, in equity, or otherwise, and all such remedies, rights and powers shall be cumulative.

 

	
9.  

	
THE AGENT

 

9.1 Authorization and Action.  Each Bank hereby appoints BTMU as its Agent under and irrevocably authorizes the Agent (subject to this Section 9.1 and Section 9.7 (Successor Agent)) to take such action as the Agent on its behalf and to exercise such powers under this Agreement, the Loan Documents and the Notes as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto.  Without limitation of the foregoing, each Bank expressly authorizes the Agent to execute, deliver, and perform its obligations under this Agreement and the Loan Documents, and to exercise all rights, powers, and remedies that the Agent may have hereunder and thereunder.  As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Notes), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act, or to refrain from acting (and shall be fully protected in so acting or refraining from acting), upon the instructions of the Majority Banks, and such instructions shall be binding upon all the Banks and all holders of any Note; provided that the Agent shall not be required to take any action which exposes the Agent to personal liability or which is contrary to this Agreement or applicable law.  The Agent agrees to give to each Bank prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement.

 

9.2 Agent’s Reliance, Etc.  Neither the Agent nor any of its directors, officers, agents, or employees shall be liable to any Bank for any action taken or omitted to be taken by it or them under or in connection with this Agreement, the Notes and the other Loan Documents, except for its or their own gross negligence or willful misconduct.  Without limitation of the generality of the foregoing, the Agent: (a) may treat the original or any successor holder of any Note as the holder thereof until the Agent receives notice from the Bank which is the payee of such Note concerning the assignment of such Note; (b) may employ and consult with legal counsel (including counsel for the Borrower), independent public accountants, and other experts selected by it and shall not be liable to any Bank for any action taken, or omitted to be taken, in good faith by it or them in accordance with the advice of such counsel, accountants, or experts received in such consultations and shall not be liable for any negligence or misconduct of any such counsel, accountants, or other experts; (c) makes no warranty or representation to any Bank and shall not be responsible to any Bank for any opinions, certifications, statements, warranties, or representations made in or in connection with this Agreement; (d) shall not have any duty to any Bank to ascertain or to inquire as to the performance or observance of any of the terms, covenants, or conditions of this Agreement or any other instrument or document furnished pursuant thereto or to satisfy itself that all conditions to and requirements for any Loan have been met or that the Borrower is entitled to any Loan or to inspect the property (including the books and records) of the Borrower or any Subsidiary; (e) shall not be responsible to any Bank for the due execution, legality, validity, enforceability, genuineness, sufficiency, or value of this Agreement or any other instrument or document furnished pursuant thereto; and (f) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate, or other instrument or writing believed by it to be genuine and signed or sent by the proper party or parties.

 

9.3 Defaults.  The Agent shall not be deemed to have knowledge of the occurrence of a Default (other than the nonpayment of principal of or interest hereunder) unless the Agent has received notice from a Bank or the Borrower specifying such Default and stating that such notice is a Notice of Default.  In the event that the Agent receives such a notice of the occurrence of a Default, the Agent shall give prompt notice thereof to the Banks (and shall give each Bank prompt notice of each such nonpayment).  The Agent shall (subject to Section 9.7 (Successor Agent)) take such action with respect to such Default as shall be instructed by the Majority Banks; provided that, unless and until the Agent shall have received the directions referred to in Sections 9.1 (Authorization and Action) or 9.7 (Successor Agent), the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable and in the best interest of the Banks.

 

9.4 BTMU and Affiliates.  With respect to its Commitment, any Loan made by it, and the Note issued to it, BTMU shall have the same rights and powers under this Agreement as any other Bank and may exercise the same as though it were not the Agent; and the term “Bank” or “Banks” shall, unless otherwise expressly indicated, include BTMU in its individual capacity.  BTMU and its respective Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower, any of its respective Affiliates and any Person who may do business with or own securities of the Borrower or any such Affiliate, all as if BTMU were not the Agent and without any duty to account therefor to the Banks.

 

9.5 Non-Reliance on Agent and Other Banks.  Each Bank agrees that it has, independently and without reliance on the Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Borrower and each Subsidiary and its decision to enter into the transactions contemplated by this Agreement and that it will, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement.  The Agent shall not be required to keep itself informed as to the performance or observance by the Borrower of this Agreement or to inspect the properties or books of Panhandle, the Borrower or any Subsidiary.  Except for notices, reports, and other documents and information expressly required to be furnished to the Banks by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the affairs, financial condition, or business of Southern Union, Panhandle, the Borrower or any Subsidiary (or any of their Affiliates) which may come into the possession of the Agent or any of its Affiliates.

 

9.6 Indemnification.  Notwithstanding anything to the contrary herein contained, the Agent shall be fully justified in failing or refusing to take any action hereunder unless it shall first be indemnified to its satisfaction by the Banks against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, and disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of its taking or continuing to take any action.  Each Bank agrees to indemnify the Agent (to the extent not reimbursed by the Borrower), according to such Bank’s Pro Rata Percentage, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, and disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or the Notes or any action taken or omitted by the Agent under this Agreement or the Notes; provided that no Bank shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements resulting from the gross negligence or willful misconduct of the person being indemnified; and provided, further, that it is the intention of each Bank to indemnify the Agent against the consequences of the Agent’s own negligence, whether such negligence be sole, joint, concurrent, active or passive.  Without limitation of the foregoing, each Bank agrees to reimburse the Agent promptly upon demand for its Pro Rata Percentage of any out-of-pocket expenses (including attorneys’ fees) incurred by the Agent in connection with the preparation, administration, or enforcement of, or legal advice in respect of rights or responsibilities under, this Agreement and the Notes, to the extent that the Agent is not reimbursed for such expenses by the Borrower.

 

9.7 Successor Agent.  The Agent may resign at any time as Agent under this Agreement by giving written notice thereof to the Banks and the Borrower and may be removed at any time with or without cause by the Majority Banks.  Upon any such resignation or removal, the Majority Banks shall have the right to appoint a successor Agent.  If no successor Agent shall have been so appointed by the Majority Banks or shall have accepted such appointment within thirty (30) days after the retiring Agent’s giving of notice of resignation or the Majority Banks’ removal of the retiring Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $500,000,000.  Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement.  After any retiring Agent’s resignation or removal hereunder as Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.

 

9.8 Agent’s Reliance.  The Borrower shall notify the Agent in writing of the names of its officers and employees authorized to request a Loan on behalf of the Borrower and shall provide the Agent with a specimen signature of each such officer or employee.  The Agent shall be entitled to rely conclusively on such officer’s or employee’s authority to request a Loan on behalf of the Borrower until the Agent receives written notice from the Borrower to the contrary.  The Agent shall have no duty to verify the authenticity of the signature appearing on any Notice of Borrowing, and, with respect to any oral request for a Loan, the Agent shall have no duty to verify the identity of any Person representing himself as one of the officers or employees authorized to make such request on behalf of the Borrower.  Neither the Agent nor any Bank shall incur any liability to the Borrower in acting upon any telephonic notice referred to above which the Agent or such Bank believes in good faith to have been given by a duly authorized officer or other Person authorized to borrow on behalf of the Borrower or for otherwise acting in good faith.

 

9.9 Exculpatory Provisions.  (a)  The Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature.  Without limiting the generality of Section 9.2 and of the foregoing, the 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 Agent is required to exercise as directed in writing by the Majority Banks (or such other number or percentage of the Banks as shall be expressly provided for herein or in the other Loan Documents), provided that the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Law or that may effect a forfeiture, modification or termination of property of a Defaulting Bank in violation of any Debtor 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 Agent or any of its Affiliates in any capacity.

 

(b) The Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Majority Banks (or such other number or percentage of the Banks as shall be necessary, or as the Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 11.1 (Amendments, Waivers, Etc.) and 8 (Events of Default; Remedies) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment.

 

	
10.  

	
GUARANTY

 

10.1 Guaranty.  Each Guarantor hereby absolutely, unconditionally and irrevocably guarantees the punctual payment when due, whether at scheduled maturity or by acceleration, demand or otherwise, of all Obligations of the Borrower now or hereafter existing under or in respect of the Loan Documents (including, without limitation, any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing Obligations), whether direct or indirect, absolute or contingent, and whether for principal, interest, premiums, fees, indemnities, contract causes of action, costs, expenses or otherwise (such Obligations being the “Guaranteed Obligations”).

 

10.2 Guaranty Absolute.  Each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Bank with respect thereto.  The Obligations of each Guarantor under or in respect of this Guaranty are independent of any Obligations of the Borrower under or in respect of the Loan Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the Borrower or whether the Borrower is joined in any such action or actions.  The liability of each Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following:

 

(a)           any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto;

 

(b)           any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other Obligations of the Borrower under or in respect of the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Loan Party or any of its Subsidiaries or otherwise;

 

(c)           any taking, exchange, release or non-perfection of any collateral, or any taking, release or amendment or waiver of, or consent to departure from, any other guaranty, for all or any of the Guaranteed Obligations;

 

(d)           any manner of application of any collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any collateral for all or any of the Guaranteed Obligations or any other Obligations of any Loan Party under the Loan Documents or any other assets of any Loan Party or any of its Subsidiaries;

 

(e)           any change, restructuring or termination of the corporate structure or existence of any Loan Party or any of its Subsidiaries;

 

(f)           any failure of any Bank to disclose to any Loan Party any information relating to the business, operations, financial condition, assets or prospects of any other Loan Party now or hereafter known to such Bank (each Guarantor waiving any duty on the part of the Banks to disclose such information);

 

(g)           the failure of any other Person to execute or deliver any other guaranty or agreement or the release or reduction of liability of any other guarantor or surety with respect to the Guaranteed Obligations; or

 

(h)           any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by any Bank that might otherwise constitute a defense available to, or a discharge of, any Loan Party or any other guarantor or surety.

 

This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by any Bank or any other Person upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as though such payment had not been made.

 

10.3 Waivers and Acknowledgments.

 

(a)           Each Guarantor hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that any Bank protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against any Loan Party or any other Person or any collateral.

 

(b)           Each Guarantor hereby unconditionally and irrevocably waives any right to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.

 

(c)           Each Guarantor hereby unconditionally and irrevocably waives (i) any defense arising by reason of any claim or defense based upon an election of remedies by any Bank that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of each Guarantor or other rights of such Guarantor to proceed against the Borrower, any other guarantor or any other Person and (ii) any defense based on any right of set-off or counterclaim against or in respect of the Obligations of such Guarantor hereunder.

 

(d)           Each Guarantor hereby unconditionally and irrevocably waives any duty on the part of any Bank to disclose to any Guarantor any matter, fact or thing relating to the business, operations, financial condition, assets or prospects of the Borrower or any of its Subsidiaries now or hereafter known by such Bank.

 

(e)           Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Loan Documents and that the waivers set forth in Section 10.2 (Guaranty Absolute) and this Section 10.3 are knowingly made in contemplation of such benefits.

 

10.4 Subrogation.  Each Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against the Borrower that arise from the existence, payment, performance or enforcement of such Guarantor’s Obligations under or in respect of this Guaranty or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Bank against the Borrower or any other insider guarantor, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash and the Commitments shall have expired or been terminated.  If any amount shall be paid to any Guarantor in violation of the immediately preceding sentence at any time prior to the later of (a) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty and (b) the Maturity Date, such amount shall be received and held in trust for the benefit of the Banks, shall be segregated from other property and funds of such Guarantor and shall forthwith be paid or delivered to the Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents or other amounts payable under this Guaranty thereafter arising.  If (i) any Guarantor shall make payment to any Bank of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash and (iii) the Maturity Date shall have occurred, the Banks will, at such Guarantor’s request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment made by such Guarantor pursuant to this Guaranty.

 

10.5 Subordination.  Each Guarantor hereby subordinates any and all debts, liabilities and other Obligations owed to such Guarantor by the Borrower (the “Subordinated Obligations”) to the Guaranteed Obligations to the extent and in the manner hereinafter set forth in this Section 10.5:

 

(a)           Except during the continuance of a Default (including the commencement and continuation of any proceeding under any Debtor Law relating to the Borrower), a Guarantor may receive regularly scheduled payments from the Borrower on account of the Subordinated Obligations.  After the occurrence and during the continuance of any Default (including the commencement and continuation of any proceeding under any Debtor Law relating to the Borrower), however, unless the Agent otherwise agrees, no Guarantor shall demand, accept or take any action to collect any payment on account of the Subordinated Obligations.

 

(b)           In any proceeding under any Debtor Law relating to the Borrower, each Guarantor agrees that the Banks shall be entitled to receive payment in full in cash of all Guaranteed Obligations (including all interest and expenses accruing after the commencement of a proceeding under any Debtor Law, whether or not constituting an allowed claim in such proceeding (“Post Petition Interest”)) before any Guarantor receives payment of any Subordinated Obligations.

 

(c)           After the occurrence and during the continuance of any Default (including the commencement and continuation of any proceeding under any Debtor Law relating to the Borrower), each Guarantor shall, if the Agent so requests, collect, enforce and receive payments on account of the Subordinated Obligations as trustee for the Banks and deliver such payments to the Agent on account of the Guaranteed Obligations (including all Post Petition Interest), together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of such Guarantor under the other provisions of this Guaranty.

 

(d)           After the occurrence and during the continuance of any Default (including the commencement and continuation of any proceeding under any Debtor Law relating to the Borrower), the Agent is authorized and empowered (but without any obligation to so do), in its discretion, (i) in the name of a Guarantor, to collect and enforce, and to submit claims in respect of, Subordinated Obligations and to apply any amounts received thereon to the Guaranteed Obligations (including any and all Post Petition Interest), and (ii) to require each Guarantor (A) to collect and enforce, and to submit claims in respect of, Subordinated Obligations and (B) to pay any amounts received on such obligations to the Agent for application to the Guaranteed Obligations (including any and all Post Petition Interest).

 

10.6 Continuing Guaranty.  This Guaranty is a continuing guaranty and shall remain in full force and effect until the later of (a) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty and (b) the Maturity Date.

 

10.7 General Limitation on Guaranteed Obligations.  In any action or proceeding involving any state corporate law, or any state or Federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of TLNG under Section 10.1 (Guaranty) would otherwise be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 10.1 (Guaranty), then, notwithstanding any other provision hereof to the contrary, the amount of such liability shall, without any further action by TLNG, any Bank or any other Person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

 

	
11.  

	
MISCELLANEOUS

 

11.1 Amendments, Waivers, Etc.  No amendment or waiver of any provision of any Loan Document, nor consent to any departure by a Loan Party therefrom, shall in any event be effective unless the same shall be in writing and signed by the Borrower, the Guarantors and the Majority Banks, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no amendment, waiver or consent shall, unless in writing and signed by each Bank, do any of the following:

 

(a)           waive any of the conditions specified in Section 4 (Conditions to Funding);

 

(b)           increase the Commitment of any Bank or alter the term thereof, or subject any Bank to any additional or extended obligations;

 

(c)           change the principal of, or decrease the rate of interest on, the Loans or any Note, or any fees or other amounts payable hereunder;

 

(d)           postpone any date fixed for any payment of principal of, or interest on, the Loans or any Note, or any fees (including, without limitation, any fee) or other amounts payable hereunder;

 

(e)           change the definition of “Majority Banks” or “Required Banks” or the number of Banks which shall be required for Banks, or any of them, to take any action hereunder;

 

(f)           amend this Section 11.1; or

 

(g)           reduce or limit the obligations of any Guarantor under the Loan Documents or release any Guarantor from its obligations under the Loan Documents;

 

and provided, further, that no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to each Bank, affect the rights or duties of the Agent under any Loan Document.  Notwithstanding anything to the contrary herein, no Defaulting Bank shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Banks or each affected Bank may be effected with the consent of the applicable Banks other than Defaulting Banks), except that (x) the Commitment of any Defaulting Bank may not be increased or extended without the consent of such Bank and (y) any waiver, amendment or modification requiring the consent of all Banks or each affected Bank that by its terms affects any Defaulting Bank disproportionately adversely relative to other affected Banks shall require the consent of such Defaulting Bank.  No failure or delay on the part of any Bank or the Agent in exercising any power or right hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  No course of dealing between the Borrower and any Bank or the Agent shall operate as a waiver of any right of any Bank or the Agent.  No modification or waiver of any provision of this Agreement or the Note nor consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.

 

11.2 Reimbursement of Expenses.

 

(a)           The Borrower agrees to pay on demand (and whether or not the Funding Date occurs) (1) all reasonable and documented out-of-pocket costs and expenses of the Agent and the Lead Arrangers, including reasonable and documented fees and expenses of a single counsel for the Agent and the Lead Arrangers in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement or any amendments, modifications or waivers of the provisions hereof, and (2) all costs and expenses of the Agent and each Bank in connection with the enforcement of the Loan Documents, whether in any action, suit or litigation, or any bankruptcy, insolvency or other similar proceeding affecting creditors’ rights generally (including, without limitation, the reasonable fees and expenses of counsel for the Agent and each Bank with respect thereto).  The Borrower further agrees to pay any stamp or other taxes that may be payable in connection with the execution or delivery of any Loan Document.

 

(b)           If any payment of principal of, or Conversion of, any Eurodollar Rate Loan is made by the Borrower to or for the account of a Bank other than on the last day of the Interest Period for such Loan, as a result of a payment or Conversion pursuant to Section 2.5 (Prepayments), 2.8 (Conversion of Loans) or 2.9(e) (Increased Costs, Etc.), acceleration of the maturity of the Notes pursuant to Section 8 (Events of Default; Remedies) or for any other reason, or by an Eligible Assignee to a Bank other than on the last day of the Interest Period for such Loan upon an assignment of rights and obligations under this Agreement pursuant to Section 11.14 (Sale or Assignment) as a result of a demand by the Borrower pursuant to Section 11.14(a), or if the Borrower fails to make any payment or prepayment of a Loan for which a notice of prepayment has been given, whether pursuant to Section 2.3 (Repayment of Loans), 2.5 (Prepayments) or Section 8 (Events of Default; Remedies) or otherwise, the Borrower shall, upon demand by such Bank (with a copy of such demand to the Agent), pay to the Agent for the account of such Bank any amounts required to compensate such Bank for any additional losses, costs or expenses reasonably incurred by such Bank as a result of such payment or Conversion or such failure to pay or prepay, as the case may be, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Bank to fund or maintain such Loan.

 

(c)           The obligations of the Borrower under this Section 11.2 shall survive the termination of this Agreement and/or the payment of the Notes.

 

11.3 Notices.  Any communications between the parties hereto or notices provided herein to be given shall be given to the following addresses:

 

(a)           If to Panhandle, to:                                Panhandle Eastern Pipe Line Company, LP

c/o Southern Union Company

5051 Westheimer Road

Houston, Texas  77056

	
  

	
Attn:

	
_________________

	
  

	
Chief Financial Officer

Phone: (713) 989-7000

Fax: (713) 989-1213

 

with copies to:                                           Southern Union Company

5051 Westheimer Road

Houston, Texas  77056

Attn:           General Counsel

Phone: (713) 989-7567

Fax: (713) 989-1213

 

 (b)           If to the Borrower, to:                                           Trunkline LNG Holdings LLC

c/o Southern Union Company

5051 Westheimer Road

Houston, Texas  77056

	
  

	
Attn:

	
_________________

	
  

	
Chief Financial Officer

Phone: (713) 989-7000

Fax: (713) 989-1213

 

with copies to:                                           Southern Union Company

5051 Westheimer Road

Houston, Texas  77056

	
  

	
Attn:

	
__________________

	
  

	
General Counsel

Phone: (713) 989-7567

Fax: (713) 989-1213

 

(c)           If to TLNG, to:                                           Trunkline LNG Company, LLC

c/o Southern Union Company

5051 Westheimer Road

Houston, Texas  77056

	
  

	
Attn:

	
__________________

	
  

	
Chief Financial Officer

Phone: (713) 989-7000

Fax: (713) 989-1213

 

with copies to:                                           Southern Union Company

5051 Westheimer Road

Houston, Texas  77056

	
  

	
Attn:

	
General Counsel

Phone: (713) 989-7567

Fax: (713) 989-1213

 

(d)           If to the Agent, to:                                           The Bank of Tokyo-Mitsubishi UFJ, Ltd.

1251 Avenue of the Americas

New York, New York 10020-1104

Attn:  Andrew Douglas

          Lawrence Blat

Email: adouglas@us.mufg.jp

            lblat@us.mufg.jp

and if to any Bank, at the address specified in its Administrative Questionnaire, or as to the Borrower or the Agent, to such other address as shall be designated by such party in a written notice to the other party and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Agent.  All notices or other communications required or permitted to be given hereunder shall be in writing and shall be considered as properly given (a) if delivered in person, (b) if sent by overnight delivery service (including Federal Express, UPS, ETA, Emery, DHL, AirBorne and other similar overnight delivery services), (c) if mailed by first class United States Mail, postage prepaid, registered or certified with return receipt requested or (d) if sent by facsimile or other electronic transmission.  Notice so given shall be effective upon receipt by the addressee, except that communication or notice so transmitted by direct written electronic means shall be deemed to have been validly and effectively given on the day (if a Business Day and, if not, on the next following Business Day) on which it is transmitted if transmitted before 4:00 p.m. (New York time), recipient’s time, and if transmitted after that time, on the next following Business Day; provided that if any notice is tendered to an addressee and the delivery thereof is refused by such addressee, such notice shall be effective upon such tender.  Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by giving of 30 days’ notice to the other parties in the manner set forth above.

 

11.4 Governing Law.  This Agreement, and any instrument or agreement required hereunder (to the extent not otherwise expressly provided for therein), shall be governed by, and construed under, the laws of the State of New York, without reference to conflicts of laws (other than Section 5-1401 and Section 5-1402 of the New York General Obligations Law).

 

11.5 Waiver of Jury Trial.  THE AGENT, THE BANKS AND EACH LOAN PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OR CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS, OF THE AGENT, THE BANKS OR THE LOAN PARTIES.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANKS TO ENTER INTO THIS AGREEMENT.

 

11.6 Consent to Jurisdiction.  The Agent, the Banks and each Loan Party agree that any legal action or proceeding by or against any Loan Party or with respect to or arising out of this Agreement or any other Loan Document may be brought in or removed to the Supreme Court of the State of New York, in and for the County of New York, or the United States District Court for the Southern District of New York, and any court of appeals from either therefrom as the Agent may elect.  By execution and delivery of the Agreement, each of the Banks, the Agent and each Loan Party accepts, for themselves and in respect of their property, generally and unconditionally, the jurisdiction of the aforesaid courts.  The Agent, the Banks and each Loan Party irrevocably consent to the service of process out of any of the aforementioned courts in any manner permitted by law.  Nothing herein shall affect the right of the Agent and the Banks to bring legal action or proceedings in any other competent jurisdiction.  The Agent, the Banks and each Loan Party further agree that the aforesaid courts of the State of New York and of the United States of America shall have exclusive jurisdiction with respect to any claim or counterclaim of any Loan Party based upon the assertion that the rate of interest charged by the Banks on or under this Agreement, the Loans and/or the other Loan Documents is usurious. The Agent, the Banks and each Loan Party hereby waive any right to stay or dismiss any action or proceeding under or in connection with this Agreement or any other Loan Document brought before the foregoing courts on the basis of an inconvenient forum.

 

11.7 Survival of Representations, Warranties and Covenants.  All representations, warranties and covenants contained herein or made in writing by any Loan Party in connection herewith shall survive the execution and delivery of the Loan Documents and the Notes, and will bind and inure to the benefit of the respective successors and assigns of the parties hereto, whether so expressed or not, provided that the undertaking of the Banks to make the Loans to the Borrower shall not inure to the benefit of any successor or assign of the Borrower.  No investigation at any time made by or on behalf of the Banks shall diminish the Banks’ rights to rely on any representations made herein or in connection herewith.  All statements contained in any certificate or other written instrument delivered by any Loan Party or by any Person authorized by the Borrower under or pursuant to this Agreement or in connection with the transactions contemplated hereby shall constitute representations and warranties hereunder as of the time made by such Loan Party.

 

11.8 Counterparts.  This Agreement may be executed in several counterparts, and by the parties hereto on separate counterparts, and each counterpart, when so executed and delivered, shall constitute an original instrument and all such separate counterparts shall constitute but one and the same instrument.

 

11.9 Severability.  Should any clause, sentence, paragraph or section of this Agreement be judicially declared to be invalid, unenforceable or void, such decision shall not have the effect of invalidating or voiding the remainder of this Agreement, and the parties hereto agree that the part or parts of this Agreement so held to be invalid, unenforceable or void will be deemed to have been stricken herefrom and the remainder will have the same force and effectiveness as if such part or parts had never been included herein.  Each covenant contained in this Agreement shall be construed (absent an express contrary provision herein) as being independent of each other covenant contained herein, and compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with one or more other covenants.  Without limiting the foregoing provisions of this Section 11.9, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Banks shall be limited by Debtor Laws, as determined in good faith by the Agent, then such provisions shall be deemed to be in effect only to the extent not so limited.

 

11.10 Descriptive Headings.  The section headings in this Agreement have been inserted for convenience only and shall be given no substantive meaning or significance whatsoever in construing the terms and provisions of this Agreement.

 

11.11 Accounting Terms.  All accounting terms used herein which are not expressly defined in the Agreement, or the respective meanings of which are not otherwise qualified, shall have the respective meanings given to them in accordance with GAAP.

 

11.12 Limitation of Liability.  No claim may be made by any Person for any special, indirect, consequential, or punitive damages in respect to any claim for breach of contract arising out of or related to the transactions contemplated by this Agreement, or any act, omission, or event occurring in connection herewith and the parties hereto hereby waive, release, and agree not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

 

11.13 Set-Off.  Each Loan Party hereby gives and confirms to each Bank a right of set-off of all moneys, securities and other property of such Loan Party (whether special, general or limited) and the proceeds thereof, now or hereafter delivered to remain with or in transit in any manner to such Bank, its Affiliates, correspondents or agents from or for such Loan Party, whether for safekeeping, custody, pledge, transmission, collection or otherwise or coming into possession of such Bank, its Affiliates, correspondents or agents in any way, and also, any balance of any deposit accounts and credits of such Loan Party with, and any and all claims of security for the payment of the Loans and of all other liabilities and obligations now or hereafter owed by any Loan Party to such Bank, contracted with or acquired by such Bank, whether such liabilities and obligations be joint, several, absolute, contingent, secured, unsecured, matured or unmatured, and each Loan Party hereby authorizes each Bank, its Affiliates, correspondents or agents at any time or times, without prior notice, to apply such money, securities, other property, proceeds, balances, credits of claims, or any part of the foregoing, to such liabilities in such amounts as it may select, whether such liabilities be contingent, unmatured or otherwise, and whether any collateral security therefor is deemed adequate or not; provided that in the event that any Defaulting Bank shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Agent for further application in accordance with the provisions of Section 2.16 (Defaulting Banks) and, pending such payment, shall be segregated by such Defaulting Bank from its other funds and deemed held in trust for the benefit of the Agent and the Banks, and (y) the Defaulting Bank shall provide promptly to the Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Bank as to which it exercised such right of setoff.  The rights described herein shall be in addition to any collateral security, if any, described in any separate agreement executed by any Loan Party.

 

11.14 Sale or Assignment.

 

(a)           Each Bank may assign and, so long as no Default shall have occurred and be continuing pursuant to Section 8.1 (Failure to Pay Obligations When Due) or 8.7 (Bankruptcy and Other Matters), if demanded by the Borrower (pursuant to Section 2.15 (Replacement of Banks)) upon at least five Business Days’ notice to such Bank and the Agent, a Bank will assign, to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement and the other Loan Documents (including, without limitation, all or a portion of the Loans owing to it and the Note or Notes held by it); provided that

 

(i)           each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations under and in respect of the Loan Agreement;

 

(ii)           except in the case of an assignment of all of a Bank’s rights and obligations under this Agreement or any assignment to any Bank, an Affiliate of any Bank or an Approved Fund, the aggregate amount of the Loans being assigned to such assignee pursuant to such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $5,000,000;

 

(iii)           except in the case of an assignment to a Person that, immediately prior to such assignment, was a Bank, an Affiliate of any Bank or an Approved Fund, such assignment shall be approved by the Agent, and so long as no Default shall have occurred and be continuing pursuant to Section 8.1 (Failure to Pay Obligations When Due) or 8.7 (Bankruptcy and Other Matters) at the time of effectiveness of such assignment, the Borrower (in each case such approvals not to be unreasonably withheld or delayed); provided that no Borrower approval shall be required for any assignment made by BTMU to any Eligible Assignee from the Closing Date through and including the two-month anniversary of the Funding Date; provided, further, that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Agent within five Business Days after having received notice thereof;

 

(iv)           each such assignment made as a result of a demand by the Borrower pursuant to this Section 11.14 shall be made in accordance with Section 2.15 (Replacement of Banks);

 

(v)           no Bank shall be obligated to make any such assignment as a result of a demand by the Borrower pursuant to this Section 11.14 unless and until such Bank shall have received one or more payments from either the Borrower or one or more assignees in an aggregate amount at least equal to the aggregate outstanding principal amount of the Loans owing to such Bank, together with accrued interest thereon to the date of payment of such principal amount and all other amounts payable to such Bank under this Agreement;

 

(vi)           the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any Note or Notes subject to such assignment and a processing and recordation fee of $3,500 (provided that for each such assignment made as a result of a demand by the Borrower pursuant to this Section 11.14, the Borrower shall pay to the Agent the applicable processing and recordation fee);

 

(vii)           the assignee, if it shall not be a Bank, shall deliver to the Agent an Administrative Questionnaire; and

 

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

 

(b)           Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance,

 

(i)           the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Bank hereunder, and

 

(ii)           the Bank assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (other than its rights under Sections 2.9 (Increased Costs), 2.11 (Taxes) and 11.2 (Reimbursement of Expenses)) to the extent any claim thereunder relates to an event arising prior to such assignment) and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the remaining portion of an assigning Bank’s rights and obligations under this Agreement, such Bank shall cease to be a party hereto); provided that, except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Bank will constitute a waiver or release of any claim of any party hereunder arising from that Bank’s having been a Defaulting Bank.

 

(c)           By executing and delivering an Assignment and Acceptance, each Bank assignor thereunder and each assignee thereunder confirm to and agree with each other and the other parties thereto and hereto as follows:

 

(i)           other than as provided in such Assignment and Acceptance, such assigning Bank makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with any Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant thereto;

 

(ii)           such assigning Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by any Loan Party of any of its obligations under any Loan Document or any other instrument or document furnished pursuant thereto;

 

(iii)           such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements most recently delivered hereunder and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance;

 

(iv)           such assignee will, independently and without reliance upon any Agent, such assigning Bank or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement;

 

(v)           such assignee confirms that it is an Eligible Assignee;

 

(vi)           such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to such Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto; and

 

(vii)           such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Bank.

 

(d)           The Agent shall maintain at its address a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Banks and the principal amount of the Loans owing to, each Bank from time to time (the “Register”).  The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Agent and the Banks may treat each Person whose name is recorded in the Register as a Bank hereunder for all purposes of this Agreement.  The Register shall be available for inspection by the Borrower or any Agent or any Bank at any reasonable time and from time to time upon reasonable prior notice.

 

(e)           Upon its receipt of an Assignment and Acceptance executed by an assigning Bank and an assignee, together with any Note or Notes subject to such assignment, the Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit C hereto, (1) accept such Assignment and Acceptance, (2) record the information contained therein in the Register and (3) give prompt notice thereof to the Borrower.  In the case of any assignment by a Bank, within five Business Days after its receipt of such notice, the Borrower, at its own expense, shall execute and deliver to the Agent in exchange for the surrendered Note or Notes a new Note to the order of such Eligible Assignee in an amount equal to the Loans assumed by it pursuant to such Assignment and Acceptance and, if any assigning Bank has retained any Loans hereunder, a new Note to the order of such assigning Bank in an amount equal to the Loans retained by it hereunder.  Such new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes and shall be dated the effective date of such Assignment and Acceptance.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this Section 11.14.

 

(f)           Each Bank may sell participations to one or more Persons (other than a natural Person, a Defaulting Bank or any Loan Party or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Loans owing to it and the Note or Notes (if any) held by it); provided that (1) such Bank’s obligations under this Agreement shall remain unchanged, (2) such Bank shall remain solely responsible to the other parties hereto for the performance of such obligations, (3) such Bank shall remain the holder of any such Note for all purposes of this Agreement, (4) the Borrower, the Agent and the other Banks shall continue to deal solely and directly with such Bank in connection with such Bank’s rights and obligations under this Agreement and (5) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of any Loan Document, or any consent to any departure by any Loan Party therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or release any Guarantor.  Subject to the last two sentences of this clause (f), the Borrower agrees that each participant shall be entitled to the benefits of Section 2.9 (Increased Costs), 2.11 (Taxes) and 11.2(b) (Breakage Expenses) to the same extent as if it were a Bank and had acquired its interest by assignment.  To the extent permitted by law, each participant also shall be entitled to the benefits of Section 11.13 (Set-Off) as though it were a Bank, provided that such participant agrees to be subject to Section 2.12 (Sharing of Payments, Etc.) as though it were a Bank.  A participant shall not be entitled to receive any greater payment under Section 2.9 (Increased Costs) or 2.11 (Taxes) than the applicable Bank 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 is organized under the laws of a jurisdiction outside the United States shall not be entitled to the benefits of Section 2.11 (Taxes) 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 2.11(e) as though it were a Bank.  Each Bank that sells a participation shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participants interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Bank shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any commitments, loans or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Bank shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining the Participant Register.

 

(g)           Any Bank may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 11.14, disclose to the assignee or participant or proposed assignee or participant any information relating to the Borrower furnished to such Bank by or on behalf of the Borrower; provided that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any confidential information received by it from such Bank.

 

(h)           Notwithstanding any other provision to the contrary set forth in this Agreement, any Bank may at any time create a security interest in all or any portion of its rights under this Agreement and the other Loan Documents (including, without limitation, the Loans owing to it and the Note or Notes held by it) in favor of any Federal Reserve Bank.

 

(i)           Notwithstanding anything to the contrary contained herein, any Bank that is a fund that invests in bank loans may create a security interest in all or any portion of the Loans owing to it and the Note or Notes held by it to the trustee for holders of obligations owed, or securities issued, by such fund as security for such obligations or securities, provided that unless and until such trustee actually becomes a Bank in compliance with the other provisions of this Section 11.14, (1) no such pledge shall release the pledging Bank from any of its obligations under the Loan Documents and (2) such trustee shall not be entitled to exercise any of the rights of a Bank under the Loan Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise.

 

11.15 Interest.  All agreements between a Loan Party, the Agent or any Bank, whether now existing or hereafter arising and whether written or oral, are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of demand being made on any Note or otherwise, shall the amount paid, or agreed to be paid, to the Agent or any Bank for the use, forbearance, or detention of the money to be loaned under this Agreement or otherwise or for the payment or performance of any covenant or obligation contained herein or in any document related hereto exceed the amount permissible at the Highest Lawful Rate.  If, as a result of any circumstances whatsoever, fulfillment of any provision hereof or of any of such documents, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by applicable usury law, then, ipso facto, the obligation to be filled shall be reduced to the limit of such validity, and if, from any such circumstance, the Agent or any Bank shall ever receive interest or anything which might be deemed interest under applicable law which would exceed the amount permissible at the Highest Lawful Rate, such amount which would be excessive interest shall be applied to the reduction of the principal amount owing on account of the Notes or the amounts owing on other obligations of the Borrower to the Agent or any Bank under this Agreement or any document related hereto and not to the payment of interest, or if such excessive interest exceeds the unpaid principal balance of the Notes and the amounts owing on other obligations of the Borrower to the Agent or any Bank under this Agreement or any document related hereto, as the case may be, such excess shall be refunded to the Borrower. All sums paid or agreed to be paid to the Agent or any Bank for the use, forbearance, or detention of the indebtedness of the Borrower to the Agent or any Bank shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full term of such indebtedness until payment in full of the principal thereof (including the period of any renewal or extension thereof) so that the interest on account of such indebtedness shall not exceed the Highest Lawful Rate.  The terms and provisions of this Section 11.15 shall control and supersede every other provision of all agreements between the Borrower and the Banks.

 

11.16 Indemnification.  THE BORROWER AGREES TO INDEMNIFY, DEFEND, AND SAVE HARMLESS THE AGENT, EACH BANK AND THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND ATTORNEYS, AND EACH OF THEM (THE “INDEMNIFIED PARTIES”), FROM AND AGAINST ALL CLAIMS, ACTIONS, SUITS, AND OTHER LEGAL PROCEEDINGS, DAMAGES, COSTS, INTEREST, CHARGES, TAXES, COUNSEL FEES, AND OTHER EXPENSES AND PENALTIES (INCLUDING WITHOUT LIMITATION ALL ATTORNEY FEES AND COSTS OR EXPENSES OF SETTLEMENT) WHICH ANY OF THE INDEMNIFIED PARTIES MAY SUSTAIN OR INCUR BY REASON OF OR ARISING OUT OF (a) THE MAKING OF ANY LOAN HEREUNDER, THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE NOTES AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THE EXERCISE OF ANY OF THE BANKS’ RIGHTS UNDER THIS AGREEMENT AND THE NOTES OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, DAMAGES, COSTS, AND EXPENSES INCURRED BY ANY OF THE INDEMNIFIED PARTIES IN INVESTIGATING, PREPARING FOR, DEFENDING AGAINST, OR PROVIDING EVIDENCE, PRODUCING DOCUMENTS, OR TAKING ANY OTHER ACTION IN RESPECT OF ANY COMMENCED OR THREATENED LITIGATION UNDER ANY FEDERAL SECURITIES LAW OR ANY SIMILAR LAW OF ANY JURISDICTION OR AT COMMON LAW OR (b) ANY AND ALL CLAIMS OR PROCEEDINGS (WHETHER BROUGHT BY A PRIVATE PARTY, GOVERNMENTAL AUTHORITY OR OTHERWISE) FOR BODILY INJURY, PROPERTY DAMAGE, ABATEMENT, REMEDIATION, ENVIRONMENTAL DAMAGE, OR IMPAIRMENT OR ANY OTHER INJURY OR DAMAGE RESULTING FROM OR RELATING TO THE RELEASE OF ANY HAZARDOUS MATERIALS LOCATED UPON, MIGRATING INTO, FROM, OR THROUGH OR OTHERWISE RELATING TO ANY PROPERTY OWNED OR LEASED BY THE BORROWER OR ANY SUBSIDIARY (WHETHER OR NOT THE RELEASE OF SUCH HAZARDOUS MATERIALS WAS CAUSED BY THE BORROWER, ANY SUBSIDIARY, A TENANT, OR SUBTENANT OF THE BORROWER OR ANY SUBSIDIARY, A PRIOR OWNER, A TENANT, OR SUBTENANT OF ANY PRIOR OWNER OR ANY OTHER PARTY AND WHETHER OR NOT THE ALLEGED LIABILITY IS ATTRIBUTABLE TO THE HANDLING, STORAGE, GENERATION, TRANSPORTATION, OR DISPOSAL OF ANY HAZARDOUS MATERIALS OR THE MERE PRESENCE OF ANY HAZARDOUS MATERIALS ON SUCH PROPERTY; PROVIDED THAT THE BORROWER SHALL NOT BE LIABLE TO THE INDEMNIFIED PARTIES WHERE THE RELEASE OF SUCH HAZARDOUS MATERIALS OCCURS AT ANY TIME AT WHICH THE BORROWER OR ANY SUBSIDIARY CEASES TO OWN OR LEASE SUCH PROPERTY); AND PROVIDED, FURTHER, THAT NO INDEMNIFIED PARTY SHALL BE ENTITLED TO THE BENEFITS OF THIS SECTION 11.16 TO THE EXTENT (i) ITS OWN BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT CONTRIBUTED TO ITS LOSS OR (ii) DIRECTLY RESULTING FROM ANY BREACH OF MATERIAL OBLIGATIONS OF SUCH INDEMNIFIED PARTY UNDER THE LOAN DOCUMENTS, IN EACH CASE AS DETERMINED BY A FINAL, NONAPPEALABLE JUDGMENT OF A COURT OF COMPETENT JURISDICTION; AND PROVIDED, FURTHER, THAT IT IS THE INTENTION OF THE BORROWER TO INDEMNIFY THE INDEMNIFIED PARTIES AGAINST THE CONSEQUENCES OF THEIR OWN NEGLIGENCE.  THIS AGREEMENT IS INTENDED TO PROTECT AND INDEMNIFY THE INDEMNIFIED PARTIES AGAINST ALL RISKS HEREBY ASSUMED BY THE BORROWER.  THE OBLIGATIONS OF THE BORROWER UNDER THIS SECTION 11.16 SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT AND THE REPAYMENT OF THE NOTES.

 

11.17 Payments Set Aside.  To the extent that the Borrower makes a payment or payments to the Agent or any Bank or the Agent or any Bank exercises its right of set off, and such payment or payments or the proceeds of such set off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other Person under any Debtor Law or equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all rights and remedies therefor, shall be revived and shall continue in full force and effect as if such payment had not been made or set off had not occurred.

 

11.18 Loan Agreement Controls.  If there are any conflicts or inconsistencies among this Agreement and any other document executed in connection with the transactions connected herewith, the provisions of this Agreement shall prevail and control.

 

11.19 Obligations Several.  The obligations of each Bank under this Agreement and the Note to which it is a party are several, and no Bank shall be responsible for any obligation or Commitment of any other Bank under this Agreement and the Note to which it is a party.  Nothing contained in this Agreement or the Note to which it is a party, and no action taken by any Bank pursuant thereto, shall be deemed to constitute the Banks to be a partnership, an association, a joint venture, or any other kind of entity.

 

11.20 Final Agreement.  THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT’S OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

11.21 PATRIOT Act.  Each Bank hereby notifies the Loan Parties that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), such Bank may be required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of the Loan Parties and other information that will allow such Bank to identify the Loan Parties in accordance with said Act.

 

 

 

[Signature pages follow]

 

  

  

  

IN WITNESS WHEREOF, the parties hereto, by their respective officers thereunto duly authorized, have executed this Agreement on the dates set forth below to be effective as of the date hereof.

 

TRUNKLINE LNG HOLDINGS LLC,

as the Borrower

By:                                                                           

Name:                      Richard N. Marshall

Title:           Vice President & Chief Financial Officer

 

 

PANHANDLE EASTERN PIPE LINE COMPANY, LP, as a Guarantor

By:                                                                           

Name:                      Richard N. Marshall

Title:           Vice President & Chief Financial Officer

 

 

TRUNKLINE LNG COMPANY, LLC, as a Guarantor

By:                                                                           

Name:                      Richard N. Marshall

Title:           Vice President & Chief Financial Officer

CREDIT AGREEMENT

(Trunkline LNG Holdings LLC)

Signature Page

\36398601.11

  

  

  

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., for itself and as Agent for the Banks

By:                                                                           

Name:                                                                           

Title:                                                                           

CREDIT AGREEMENT

(Trunkline LNG Holdings LLC)

Signature Page

\36398601.11

  

  

  

BANKS:

[                                                                 ]

By:                                                                           

Name:                                                                           

Title:                                                                           

CREDIT AGREEMENT

(Trunkline LNG Holdings LLC)

Signature Page

\36398601.11

  

  

  

ANNEX I

COMMITMENTS

[See definition of “Commitment” in Section 1.1 (Definitions)]

	
Name of Bank

	  	  	
Commitment ($)

	
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

	  	
$

	
46,500,000.00

	
Mizuho Corporate Bank (USA)

	  	
$

	
46,500,000.00

	
PNC Bank, National Association

	  	
$

	
46,500,000.00

	
JPMorgan Chase Bank, N.A.

	  	
$

	
40,500,000.00

	
Royal Bank of Canada

	  	
$

	
40,500,000.00

	
UBS Loan Finance LLC

	  	
$

	
35,000,000.00

	
Fifth Third Bank

	  	
$

	
35,000,000.00

	
U.S. Bank National Association

	  	
$

	
30,000,000.00

	
First Commercial Bank

	  	
$

	
25,000,000.00

	
Branch Banking & Trust Company

	  	
$

	
20,000,000.00

	
Comerica Bank

	  	
$

	
19,500,000.00

	
Bank of Taiwan

	  	
$

	
15,000,000.00

	
Chang Hwa Commercial Bank, Ltd., New York Branch

	  	
$

	
15,000,000.00

	
UMB Bank N.A.

	  	
$

	
15,000,000.00

	
E. Sun Commercial Bank, Ltd.

	  	
$

	
10,000,000.00

	
Hua Nan Commercial Bank, Ltd. Los Angles Branch

	  	
$

	
10,000,000.00

	
Chinatrust Commercial Bank

	  	
$

	
5,000,000.00

	
Total

	  	
$

	
455,000,000.00

 

 

\36398601.11

  

  

  

EXHIBIT A

 

NOTE

 

$___________ ____________, 20__

 

FOR VALUE RECEIVED, the undersigned, TRUNKLINE LNG HOLDINGS LLC, a limited liability company organized under the laws of Delaware (the “Borrower”), HEREBY PROMISES TO PAY to the order of ___________________________________ (the “Bank”), on or before the Maturity Date, the principal sum of ________________ Million and No/ 100ths Dollars ($_,000,000) in accordance with the terms and provisions of that certain Credit Agreement dated as of February 23, 2012, by and among the Borrower, Panhandle Eastern Pipe Line Company, LP and Trunkline LNG Company, LLC, as Guarantors, the Bank, the other banks parties thereto, and THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as Agent (as same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Credit Agreement.

 

The outstanding principal balance of this Note shall be payable at the Maturity Date.  The Borrower promises to pay interest on the unpaid principal balance of this Note from the date of any Loan evidenced by this Note until the principal balance thereof is paid in full.  Interest shall accrue on the outstanding principal balance of this Note from and including the date of any Loan evidenced by this Note to but not including the Maturity Date at the rate or rates, and shall be due and payable on the dates, set forth in the Credit Agreement.  Any amount not paid when due with respect to principal (whether at stated maturity, by acceleration or otherwise), costs or expenses, or, to the extent permitted by applicable law, interest, shall bear interest from the date when due to and excluding the date the same is paid in full, payable on demand, at the rate provided for in Section 2.6(b) of the Credit Agreement.

 

Payments of principal and interest, and all amounts due with respect to costs and expenses, shall be made in lawful money of the United States of America in immediately available funds, without deduction, set off or counterclaim to the account of the Agent at the principal office of The Bank of Tokyo-Mitsubishi UFJ, Ltd. in New York, New York (or such other address as the Agent under the Credit Agreement may specify) not later than noon (New York time) on the dates on which such payments shall become due pursuant to the terms and provisions set forth in the Credit Agreement.

 

If any payment of interest or principal herein provided for is not paid when due, then the owner or holder of this Note may at its option, by notice to the Borrower, declare the unpaid, principal balance of this Note, all accrued and unpaid interest thereon and all other amounts payable under this Note to be forthwith due and payable, whereupon this Note, all such interest and all such amounts shall become and be forthwith due and payable in full, without presentment, demand, protest, notice of intent to accelerate, notice of actual acceleration or further notice of any kind, all of which are hereby expressly waived by the Borrower.

 

If any payment of principal or interest on this Note shall become due on a Saturday, Sunday, or public holiday on which the Agent is not open for business, such payment shall be made on the next succeeding Business Day and such extension of time shall in such case be included in computing interest in connection with such payment.

 

In addition to all principal and accrued interest on this Note, the Borrower agrees to pay (a) all reasonable costs and expenses incurred by the Agent and all owners and holders of this Note in collecting this Note through any probate, reorganization bankruptcy or any other proceeding and (b) reasonable attorneys’ fees when and if this Note is placed in the hands of an attorney for collection after default.

 

All agreements between the Borrower and the Bank, whether now existing or hereafter arising and whether written or oral, are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of demand being made on this Note or otherwise, shall the amount paid, or agreed to be paid, to the Bank for the use, forbearance, or detention of the money to be loaned under the Credit Agreement and evidenced by this Note or otherwise or for the payment or performance of any covenant or obligation contained in the Credit Agreement or this Note exceed the amount permissible at Highest Lawful Rate.  If as a result of any circumstances whatsoever, fulfillment of any provision hereof or of the Credit Agreement at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by applicable usury law, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any such circumstance, the Bank shall ever receive interest or anything which might be deemed interest under applicable law which would exceed the amount permissible at the Highest Lawful Rate, such amount which would be excessive interest shall be applied to the reduction of the principal amount owing on account of this Note or the amounts owing on other obligations of the Borrower to the Bank under the Credit Agreement and not to the payment of interest, or if such excessive interest exceeds the unpaid principal balance of this Note and the amounts owing on other obligations of the Borrower to the Bank under the Credit Agreement, as the case may be, such excess shall be refunded to the Borrower.  In determining whether or not the interest paid or payable under any specific contingencies exceeds the Highest Lawful Rate, the Borrower and the Bank shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof and (c) prorate, allocate and spread in equal parts during the period of the full stated term of this Note, all interest at any time contracted for, charged, received or reserved in connection with the indebtedness evidenced by this Note.

 

This Note is one of the Notes provided for in, and is entitled to the benefits of, the Credit Agreement, which Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events, for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions and with the effect therein specified, and provisions to the effect that no provision of the Credit Agreement or this Note shall require the payment or permit the collection of interest in excess of the Highest Lawful Rate.  It is contemplated that by reason of prepayments or repayments hereon prior to the Maturity Date, there may be times when no indebtedness is owing hereunder prior to such date; but notwithstanding such occurrence this Note shall remain valid and shall be in full force and effect as to Loans made pursuant to the Credit Agreement subsequent to each such occurrence.

 

Except as otherwise specifically provided for in the Credit Agreement, the Borrower and any and all endorsers, guarantors and sureties severally waive grace, demand, presentment for payment, notice of dishonor or default, protest, notice of protest, notice of intent to accelerate, notice of acceleration and diligence in collecting and bringing of suit against any party hereto, and agree to all renewals, extensions or partial payments hereon and to any release or substitution of security hereof, in whole or in part, with or without notice, before or after maturity.

 

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

 

IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and delivered by its officer thereunto duly authorized effective as of the date first above written.

 

	  	
TRUNKLINE LNG HOLDINGS LLC

 

	  	
By:

	  
	  	
Name:

	  
	  	
Title:

	  
	  	  

\36398601.11

  

  

  

EXHIBIT B

 

ASSIGNMENT AND ACCEPTANCE

 

_______________, 20__

[NAME AND ADDRESS OF ASSIGNING BANK]

________________

________________

________________

________________

 

Re:   Trunkline LNG Holdings Credit Agreement

 

Ladies and Gentlemen:

 

We have entered into a Credit Agreement dated as of February 23, 2012 (as same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among certain banks (including us), The Bank of Tokyo-Mitsubishi UFJ, Ltd. (the “Agent”), Trunkline LNG Holdings LLC (the “Company”) and the Guarantors parties thereto.  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Credit Agreement.

 

Each reference to the Credit Agreement, the Notes or any other document evidencing or governing the Loans (all such documents collectively, the “Financing Documents”) includes each such document as amended, restated, amended and restated, supplemented or otherwise modified from time to time.  All times are New York times.

 

1. Assignment.  We hereby sell and assign to you without recourse, and you hereby unconditionally and irrevocably acquire for your own account and risk, a ___ percent (__%) undivided interest (“your assigned share”) in our Note and all Loans and interest thereon as provided in Section 2 of the Credit Agreement [, except that interest shall accrue on your assigned share in the principal of Alternate Base Rate Loans and Eurodollar Rate Loans at an annual rate equal to the rate provided in the Credit Agreement minus _____%] (collectively, the “Assigned Obligations”).

 

2. Materials Provided Assignee

 

a. We will promptly request that the Company issue new Notes to us and to you in substitution for our Note to reflect the assignment set forth herein.  Upon issuance of such substitute Notes, (i) you will become a Bank under the Credit Agreement, (ii) you will assume our obligations under the Credit Agreement to the extent of your assigned share, and (iii) the Company will release us from our obligations under the Credit Agreement to the extent, but only to the extent, of your assigned share.  [The Company consents to such release by signing this Agreement where indicated below.]  As a Bank, you will be entitled to the benefits and subject to the obligations of a “Bank”, as set forth in the Credit Agreement, and your rights and liabilities with respect to the other Banks and the Agent will be governed by the Credit Agreement, including without limitation Section 9 (The Agent) thereof.  We [are] [are not] a Defaulting Bank.

 

b. We have furnished you copies of the Credit Agreement, our Note and each other Financing Document you have requested.  We do not represent or warrant (i) the priority, legality, validity, binding effect or enforceability of any Loan Document or any security interest created thereunder, (ii) the truthfulness and accuracy of any representation contained in any Loan Document, (iii) the filing or recording of any Loan Document necessary to perfect any security interest created thereunder, (iv) the financial condition of the Company or any other Person obligated under any Loan Document, any financial or other information, certificate, receipt or other document furnished or to be furnished under any Loan Document or (v) any other matter not specifically set forth herein having any relation to any Loan Document, your interest in one Note, the Company or any other Person.  You represent to us that you are able to make, and have made, your own independent investigation and determination of the foregoing matters, including, without limitation, the creditworthiness of the Company and the structure of the transaction.

 

3. Governing Law; Jurisdiction.  This Agreement, and any instrument or agreement required hereunder (to the extent not otherwise expressly provided for therein), shall be governed by, and construed under, the laws of the State of New York, without reference to conflicts of laws (other than Section 5-1401 and Section 5-1402 of the New York General Obligations Law).

 

4. Notices.  All notices and other communications given hereunder to a party shall be given in writing (including bank wire, telecopy, telex or similar writing) at such party’s address set forth on the signature pages hereof or such other address as such party may hereafter specify by notice to the other party.  Notice may also be given by telephone to the Person, or any other officer in the office, listed on the signature pages hereof if confirmed promptly by telex or telecopy.  Notices shall be effective immediately, if given by telephone; upon transmission, if given by bank wire, electronic mail, telecopy; five days after deposit in the mails, if mailed; and when delivered, if given by other means.

 

5. Authority.  Each of us represents and warrants that the execution and delivery of this Agreement have been validly authorized by all necessary corporate action and that this Agreement constitutes a valid and legally binding obligation enforceable against it in accordance with its terms.

 

6. Counterparts.  This Agreement may be executed in one or more counterparts, and by each party on separate counterparts, each of which shall be an original but all of which taken together shall be but one instrument.

 

7. Amendments.  No amendment modification or waiver of any provision of this Agreement shall be effective unless in writing and signed by the party against whom enforcement is sought.

 

\36398601.11

  

  

  

If the foregoing correctly sets forth our agreement, please so indicate by signing the enclosed copy of this Agreement and returning it to us.

 

	  	
Very truly yours,

	  	  
	  	
By:

	  
	  	
Name:

	  
	  	
Title:

	  
	  	
[Street Address]

	  
	  	
[City, State, Zip Code]

	  
	  	
Telephone:

	  
	  	
Telecopy:

	  
	
AGREED AND ACCEPTED:

	  
	
By:

	  	  
	  	  	  
	  	  	  
	  	  	  
	
Attention:

	  	  
	
Telephone:

	  	  
	
Telecopy:

	  	  
	
Account for Payments:

	  	  
	  	  

ASSIGNMENT APPROVED PURSUANT TO SECTION 11.14 (SALE OR ASSIGNMENT) OF THE CREDIT AGREEMENT AND RELEASE APPROVED IN SECTION 2 OF THIS AGREEMENT:

 

	  	
TRUNKLINE LNG HOLDINGS LLC

 

	  	
By:

	  
	  	
Name:

	  
	  	
Title:

	  
	  	  

\36398601.11

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