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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
February 16, 2007 (February 14, 2007)
TARGA RESOURCES PARTNERS LP
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction
of incorporation or organization)
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001-33303
(Commission
File Number)
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65-1295427
(IRS Employer
Identification No.) |
1000 Louisiana, Suite 4300
Houston, TX 77002
(Address of principal executive office)
(713) 584-1000
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 1.01 Entry Into a Material Definitive Agreement.
General
As previously reported on Form 8-K, on February 8, 2007, Targa Resources Partners LP (the
Partnership) entered into an Underwriting Agreement (the Underwriting Agreement) with Targa
Resources, Inc. (Targa), Targa Resources GP LLC (Targa GP), Targa Resources Operating LP
(Operating LP), Targa Resources Operating GP LLC (Operating GP) and the underwriters named
therein (the Underwriters) providing for the offer and sale in a firm commitment underwritten
offering of 16,800,000 common units representing limited partner interests in the Partnership
(Common Units) at a price of $21.00 per Common Unit ($19.7925 per Common Unit, net of
underwriting discount). Pursuant to the Underwriting Agreement, the Partnership granted the
Underwriters a 30-day option to purchase up to an additional 2,520,000 Common Units (the Option)
to cover over-allotments, if any, on the same terms as those Common Units sold by the Partnership.
The transactions contemplated by the Underwriting Agreement, including the Underwriters
exercise of the Option, were consummated on February 14, 2007.
Credit Agreement
On February 14, 2007, the Partnership entered into a senior secured credit agreement (the
Credit Agreement) with a syndicate of lenders and financial institutions named therein as parties
thereto and Bank of America, N.A., as Administrative Agent, Wachovia Bank, N.A., as Syndication
Agent, and Merrill Lynch Capital, Royal Bank of Canada and The Royal Bank of Scotland PLC, as
Co-Documentation Agents.
The new credit facility under the Credit Agreement consists of a five-year $500 million
revolving credit facility, of which approximately $294.5 million was drawn at closing. Borrowings
under the Credit Agreement are secured by substantially all of the Partnerships assets and are
guaranteed by the Partnerships material, domestic subsidiaries. In addition, all of the capital
stock of the domestic restricted subsidiaries has been pledged to secure the obligations under the
Credit Agreement. Under the Credit Agreement, the revolving credit facility currently bears
interest at the Partnerships option, at the higher of the lenders prime rate or the federal funds
rate plus 0.5%, plus an applicable margin ranging from 0% to 1.25% dependent on the Partnerships
total leverage ratio, or LIBOR plus an applicable margin ranging from 1.0% to 2.25% dependent on
the Partnerships total leverage ratio.
The Partnership and its subsidiaries used approximately $294.5 million advanced under the
Credit Agreement to repay intercompany indebtedness.
Under the Credit Agreement, the Partnership is subject to certain limitations, including
limitations on its ability: to incur additional debt or sell assets, to make certain investments
and acquisitions; to grant liens; and to pay dividends and distributions. The Credit Agreement
contains certain affirmative covenants to deliver capital stock of newly created subsidiaries, and
to provide guarantees from the Partnership and certain domestic subsidiaries. The Partnership is
also subject to financial covenants which include a total debt to EBITDA ratio and an interest
coverage ratio. The Credit Agreement specifies a number of events of default (many of which are
subject to applicable cure periods), including, among others, the failure to make payments when
due, defaults under other agreements or instruments of indebtedness, change of control and
noncompliance with covenants. Upon the occurrence of an event of default, the lenders may
accelerate the maturity of the Credit Agreement and exercise other rights and remedies.
This description of the Credit Agreement is qualified in its entirety by reference to the
Credit Agreement, a copy of which is filed as Exhibit 10.1 to this Form 8-K and is incorporated in
this Item 1.01 by reference.
Contribution, Conveyance and Assumption Agreement
The description of the Contribution, Conveyance and Assumption Agreement (the Contribution
Agreement) described below under Item 2.01 is incorporated in this Item 1.01 by reference. A copy
of the Contribution Agreement is filed as Exhibit 10.2 to this Form 8-K and is incorporated in this
Item 1.01 by reference.
Omnibus Agreement
On February 14, 2007, the closing date of the transactions contemplated by the Underwriting
Agreement, the Partnership
entered into an omnibus agreement (the Omnibus Agreement) with Targa, Targa GP and Targa
Resources LLC, a Delaware limited liability company. As more fully described in the Partnerships
final prospectus (the Prospectus) dated February 8, 2007 (File No. 333-138747) and filed on
February 9, 2007 with the Securities and Exchange Commission pursuant to Rule
424(b)(4) under the Securities Act of 1933, as amended (the Securities Act), the Omnibus
Agreement governs certain relationships between the Partnership and Targa, including:
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Targas obligation to provide certain general and administrative services
to the Partnership and its subsidiaries; |
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the Partnerships obligation to reimburse Targa and its affiliates for
the provision of these general and administrative services, subject to a cap of $5
million in the first year, which increases in the subsequent two years based on a
formula specified in the Omnibus Agreement; |
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the Partnerships obligation to reimburse Targa and its affiliates for
direct expenses incurred on behalf of the Partnership and its subsidiaries; and |
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Targas obligation to indemnify the Partnership for certain liabilities
and the Partnerships obligation to indemnify Targa for certain liabilities. |
This description of the Omnibus Agreement is qualified in its entirety by reference to the
Omnibus Agreement, a copy of which is filed as Exhibit 10.3 to this Form 8-K and is incorporated in
this Item 1.01 by reference.
Indemnification Agreements
On February 7, 2007, the Board of Directors of Targa GP authorized the Partnership and Targa GP to
enter into Indemnification Agreements (each, an Indemnification Agreement) with each independent
director of Targa GP (each, an Indemnitee). Each Indemnification Agreement provides that each of
the Partnership and Targa GP will indemnify and hold harmless each Indemnitee against Expenses (as
defined in the Indemnification Agreement) to the fullest extent permitted or authorized by law,
including the Delaware Revised Uniform Limited Partnership Act and
the Delaware Limited Liability Company Act in effect on the date of the
agreement or as such laws may be amended to provide more advantageous rights to the Indemnitee. If such
indemnification is unavailable as a result of a court decision and if the Partnership or Targa GP is
jointly liable in the proceeding with the Indemnitee, the Partnership and Targa GP will contribute
funds to the Indemnitee for his Expenses in proportion to relative benefit and
fault of the Partnership or Targa GP on the one hand and Indemnitee on the other in the transaction
giving rise to the proceeding.
Each Indemnification Agreement also provides that each of the Partnership and Targa GP will
indemnify and hold harmless the Indemnitee against Expenses incurred for actions taken as a director or officer of the Partnership or Targa GP, or for
serving at the request of the Partnership or Targa GP as a director or officer or another position at
another corporation or enterprise, as the case may be, but only if no final and non-appealable
judgment has been entered by a court determining that, in respect of the matter for which the
Indemnitee is seeking indemnification, the Indemnitee acted in bad faith or engaged in fraud or
willful misconduct or, in the case of a criminal proceeding, the Indemnitee acted with knowledge
that the Indemnitees conduct was unlawful. The Indemnification Agreement also provides that the
Partnership and Targa GP must advance payment of certain Expenses to the Indemnitee, including fees of counsel, subject
to receipt of an undertaking from the Indemnitee to return such advance if it is it is ultimately
determined that the Indemnitee is not entitled to indemnification.
This description of each Indemnitee Agreement is qualified in its entirety by reference to the
form of Indemnitee Agreement, a copy of which is filed as Exhibit 10.4 to this Form 8-K and is
incorporated in this Item 1.01 by reference.
Relationships.
Each of the Partnership, Targa GP, the Operating LP and the other
parties to the Credit Agreement, Contribution Agreement and Omnibus Agreement are direct or
indirect subsidiaries of Targa. As a result, certain individuals, including officers and directors
of Targa and Targa GP, serve as officers and/or directors of more than one of such entities. As
described in Item 2.01 below, Targa GP, as the general partner of the Partnership, holds
a 2% general partner interest and incentive distribution rights in the Partnership.
The Underwriters have performed from time to time and are performing investment banking and
advisory services for Targa and its affiliates for which they have received and will receive
customary fees and expenses. In addition, affiliates of Merrill Lynch, Pierce, Fenner & Smith
Incorporated own an approximate 6.6% fully diluted, indirect ownership interest in Targa.
Affiliates of
Citigroup Global Markets Inc., Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Lehman Brothers Inc., Wachovia Capital Markets, LLC and Credit Suisse Securities
(USA) LLC are lenders under Targas credit facility, a portion of which was repaid using the net
proceeds from the Partnerships initial public offering that were paid to Targa. In addition,
affiliates of some of the underwriters are lenders under the Partnerships new credit facility.
The Partnership has entered into swap transactions with affiliates of Goldman, Sachs, & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wachovia Capital Markets, LLC and Credit Suisse
Securities (USA) LLC. The Partnership has agreed to pay these counterparties a fee in an amount it
believes to be customary in connection with these transactions.
Item 2.01 Completion of Acquisition or Disposition of Assets.
Contribution, Conveyance and Assumption Agreement
On February 14, 2007,
the Partnership entered into the Contribution Agreement with Targa GP,
Operating LP, Operating GP, Targa GP Inc., a Delaware corporation (Targa GP Inc.), Targa LP Inc., a
Delaware corporation (Targa LP Inc.), Targa Regulated Holdings LLC, a Delaware limited liability
company, Targa North Texas GP LLC, a Delaware limited liability company (North Texas GP), and Targa North Texas LP,
a Delaware limited partnership (North Texas LP), as contemplated by the Prospectus. Immediately prior to the
closing of the Offering, the following transactions, among others, occurred pursuant to the
Contribution Agreement:
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the transfer of North Texas GP and North Texas LP and their subsidiary to the
Partnership; |
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the issuance of the incentive distribution rights to Targa GP and the continuation of its 2.0% general partner interest in the Partnership; |
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the Partnerships issuance of 5,449,338 Subordinated Units to Targa GP Inc.
and 6,078,893 Subordinated Units to Targa LP Inc. in exchange for the contributed assets;
and |
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the retirement of intercompany indebtedness by North Texas LP. |
These transfers and distributions were made in a series of steps outlined in the Contribution
Agreement. As noted in Item 1.01 above, the Partnership has certain relationships with certain
parties to the Contribution Agreement.
This description of the Contribution Agreement is qualified in its entirety by reference to
the Contribution Agreement, a copy of which is filed as Exhibit 10.2 to this Form 8-K and is
incorporated in this Item 2.01 by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
The description of the Credit Agreement described above under Item 1.01 is incorporated in
this Item 2.03 by reference. A copy of the Credit Agreement is filed as Exhibit 10.1 to this Form
8-K and is incorporated in this Item 2.03 by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The description in Item 2.01 above of the issuance by the Partnership on February 14, 2007 in
connection with the consummation of the transactions contemplated by the Contribution Agreement of
Subordinated Units to Targa GP Inc. and Targa LP Inc., is incorporated herein by reference. The foregoing
transactions were undertaken in reliance upon the exemption from the registration requirements of
the Securities Act afforded by Section 4(2). The Partnership believes that exemptions other than
the foregoing exemption may exist for these transactions. Each of such Subordinated Units will
convert into one Common Unit at the end of the subordination period. Unless earlier terminated
pursuant to the terms of the partnership agreement of the Partnership, the subordination period
will extend until the first day of any quarter beginning after March 31, 2010 that the Partnership
meets the financial tests set forth in the partnership agreement of the Partnership, but may end
sooner if the Partnership meets additional financial tests.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal Year.
On February 14, 2007, the Partnership amended and restated its Agreement of Limited
Partnership in connection with the closing of the Offering. A description of the First Amended and
Restated Agreement of Limited Partnership is contained in the section
entitled The Partnership Agreement of the Prospectus and is incorporated herein by
reference. A copy of the First Amended and Restated Agreement of Limited Partnership as adopted is
filed as Exhibit 3.1 to this Form 8-K and is incorporated into this Item 5.03 by reference.
Item 7.01 Regulation FD Disclosure.
On February 14, 2007, the Partnership announced that it had closed its initial public offering
of 19,320,000 Common Units, of which 2,520,000 Common Units were purchased pursuant to the full
exercise of the Option. A copy of the press release is furnished as Exhibit 99.1 hereto and is
incorporated herein by reference.
The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be
deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, and will not be incorporated by reference into any filing under the Securities Act of
1933, as amended, unless specifically identified therein as being incorporated therein by
reference.
Item 9.01 Financial Statements and Exhibits.
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Exhibit |
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Description |
Exhibit 3.1
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First Amended and Restated Agreement of Limited Partnership of Targa Resources Partners LP |
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Exhibit 10.1
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Credit Agreement, dated February 14, 2007, by and among Targa Resources Partners LP, as
Borrower, Bank of America, N.A., as Administrative Agent, Wachovia Bank, N.A., as
Syndication Agent, Merrill Lynch Capital, Royal Bank of Canada and The Royal Bank of
Scotland PLC, as Co-Documentation Agents, and the other lenders party thereto. |
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Exhibit 10.2
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Contribution, Conveyance and Assumption Agreement,
dated February 14, 2007, by and among
Targa Resources Partners LP, Targa Resources Operating LP,
Targa Resources GP LLC, Targa Resources Operating GP LLC, Targa GP Inc., Targa LP Inc., Targa
Regulated Holdings LLC, Targa North Texas GP LLC and Targa North Texas LP. |
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Exhibit 10.3
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Omnibus Agreement, dated February 14, 2007,
by and among Targa Resources Partners LP, Targa Resources, Inc., Targa
Resources LLC and Targa Resources GP LLC. |
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Exhibit 10.4
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Form of Indemnification Agreement. |
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Exhibit 99.1
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Targa Resources Partners LP Press Release dated February 14, 2007. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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TARGA RESOURCES PARTNERS LP |
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By:
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Targa Resources GP LLC
its general partner |
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Dated: February 16, 2007
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By:
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/s/ Jeffrey J. McParland |
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Jeffrey J. McParland |
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Executive Vice President, Chief Financial Officer and Treasurer |
EXHIBIT INDEX
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Exhibit |
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Number |
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Description |
Exhibit 3.1
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First Amended and Restated Agreement of Limited Partnership of Targa Resources Partners LP |
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Exhibit 10.1
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Credit Agreement, dated February 14, 2007, by and among Targa Resources Partners LP, as
Borrower, Bank of America, N.A., as Administrative Agent, Wachovia Bank, N.A., as
Syndication Agent, Merrill Lynch Capital, Royal Bank of Canada and The Royal Bank of
Scotland PLC, as Co-Documentation Agents, and the other lenders party thereto. |
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Exhibit 10.2
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Contribution, Conveyance and Assumption Agreement,
dated February 14, 2007, by and among
Targa Resources Partners LP, Targa Resources Operating LP,
Targa Resources GP LLC, Targa Resources Operating GP LLC, Targa GP Inc., Targa LP Inc., Targa
Regulated Holdings LLC, Targa North Texas GP LLC and Targa North Texas LP. |
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Exhibit 10.3
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Omnibus Agreement, dated February 14, 2007, by and among
Targa Resources Partners LP, Targa Resources, Inc., Targa
Resources LLC and Targa Resources GP LLC. |
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Exhibit 10.4
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Form of Indemnification Agreement. |
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Exhibit 99.1
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Targa Resources Partners LP Press Release dated February 14, 2007. |
exv3w1
FIRST
AMENDED AND RESTATED
AGREEMENT
OF LIMITED PARTNERSHIP
OF
TARGA
RESOURCES PARTNERS LP
TABLE OF
CONTENTS
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ARTICLE I
DEFINITIONS
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Section 1.1
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Definitions
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1
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Section 1.2
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Construction
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15
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ARTICLE II
ORGANIZATION
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Section 2.1
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Formation
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Section 2.2
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Name
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16
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Section 2.3
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Registered Office; Registered
Agent; Principal Office; Other Offices
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16
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Section 2.4
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Purpose and Business
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16
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Section 2.5
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Powers
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17
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Section 2.6
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Power of Attorney
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17
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Section 2.7
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Term
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18
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Section 2.8
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Title to Partnership Assets
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18
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ARTICLE III
RIGHTS OF LIMITED PARTNERS
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Section 3.1
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Limitation of Liability
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18
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Section 3.2
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Management of Business
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18
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Section 3.3
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Outside Activities of the Limited
Partners
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19
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Section 3.4
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Rights of Limited Partners
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19
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ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS;
REDEMPTION OF PARTNERSHIP INTERESTS
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Section 4.1
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Certificates
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20
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Section 4.2
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Mutilated, Destroyed, Lost or
Stolen Certificates
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20
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Section 4.3
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Record Holders
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21
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Section 4.4
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Transfer Generally
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21
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Section 4.5
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Registration and Transfer of
Limited Partner Interests
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21
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Section 4.6
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Transfer of the General
Partners General Partner Interest
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22
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Section 4.7
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Transfer of Incentive Distribution
Rights
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22
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Section 4.8
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Restrictions on Transfers
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23
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Section 4.9
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Citizenship Certificates;
Non-citizen Assignees
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24
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Section 4.10
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Redemption of
Partnership Interests of Non-citizen Assignees
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24
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ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
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Section 5.1
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Organizational Contributions
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25
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Section 5.2
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Contributions by the General
Partner and its Affiliates
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26
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Section 5.3
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Contributions by Initial Limited
Partners
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26
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Section 5.4
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Interest and Withdrawal
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27
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Section 5.5
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Capital Accounts
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27
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Section 5.6
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Issuances of Additional
Partnership Securities
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29
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Section 5.7
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Conversion of Subordinated Units
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30
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Section 5.8
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Limited Preemptive Right
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30
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Section 5.9
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Splits and Combinations
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30
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Section 5.10
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Fully Paid and Non-Assessable
Nature of Limited Partner Interests
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31
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Section 5.11
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Issuance of Class B Units in
Connection with Reset of Incentive Distribution Rights
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31
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ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
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Section 6.1
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Allocations for Capital Account
Purposes
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33
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Section 6.2
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Allocations for Tax Purposes
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39
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Section 6.3
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Requirement and Characterization
of Distributions; Distributions to Record Holders
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40
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Section 6.4
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Distributions of Available Cash
from Operating Surplus
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41
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Section 6.5
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Distributions of Available Cash
from Capital Surplus
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42
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Section 6.6
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Adjustment of Minimum Quarterly
Distribution and Target Distribution Levels
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43
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Section 6.7
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Special Provisions Relating to the
Holders of Subordinated Units and Class B Units
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43
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Section 6.8
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Special Provisions Relating to the
Holders of Incentive Distribution Rights
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44
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Section 6.9
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Entity-Level Taxation
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44
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ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
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Section 7.1
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Management
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45
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Section 7.2
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Certificate of Limited Partnership
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46
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Section 7.3
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Restrictions on the General
Partners Authority
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47
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Section 7.4
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Reimbursement of the General
Partner
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47
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Section 7.5
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Outside Activities
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48
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Section 7.6
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Loans from the General Partner;
Loans or Contributions from the Partnership or Group Members
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48
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Section 7.7
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Indemnification
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49
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Section 7.8
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Liability of Indemnitees
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50
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Section 7.9
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Resolution of Conflicts of
Interest; Standards of Conduct and Modification of Duties
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51
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Section 7.10
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Other Matters Concerning the
General Partner
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52
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Section 7.11
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Purchase or Sale of Partnership
Securities
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52
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Section 7.12
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Registration Rights of the General
Partner and its Affiliates
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53
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Section 7.13
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Reliance by Third Parties
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55
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ii
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|
|
|
|
|
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
|
|
Section 8.1
|
|
|
Records and Accounting
|
|
|
56
|
|
|
Section 8.2
|
|
|
Fiscal Year
|
|
|
56
|
|
|
Section 8.3
|
|
|
Reports
|
|
|
56
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE IX
TAX MATTERS
|
|
Section 9.1
|
|
|
Tax Returns and Information
|
|
|
56
|
|
|
Section 9.2
|
|
|
Tax Elections
|
|
|
57
|
|
|
Section 9.3
|
|
|
Tax Controversies
|
|
|
57
|
|
|
Section 9.4
|
|
|
Withholding
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE X
ADMISSION OF PARTNERS
|
|
Section 10.1
|
|
|
Admission of Limited Partners
|
|
|
57
|
|
|
Section 10.2
|
|
|
Admission of Successor General
Partner
|
|
|
58
|
|
|
Section 10.3
|
|
|
Amendment of Agreement and
Certificate of Limited Partnership
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
|
|
Section 11.1
|
|
|
Withdrawal of the General Partner
|
|
|
58
|
|
|
Section 11.2
|
|
|
Removal of the General Partner
|
|
|
60
|
|
|
Section 11.3
|
|
|
Interest of Departing General
Partner and Successor General Partner
|
|
|
60
|
|
|
Section 11.4
|
|
|
Termination of Subordination
Period, Conversion of Subordinated Units and Extinguishment of
Cumulative Common Unit Arrearages
|
|
|
61
|
|
|
Section 11.5
|
|
|
Withdrawal of Limited Partners
|
|
|
62
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE XII
DISSOLUTION AND LIQUIDATION
|
|
Section 12.1
|
|
|
Dissolution
|
|
|
62
|
|
|
Section 12.2
|
|
|
Continuation of the Business of
the Partnership After Dissolution
|
|
|
62
|
|
|
Section 12.3
|
|
|
Liquidator
|
|
|
63
|
|
|
Section 12.4
|
|
|
Liquidation
|
|
|
63
|
|
|
Section 12.5
|
|
|
Cancellation of Certificate of
Limited Partnership
|
|
|
64
|
|
|
Section 12.6
|
|
|
Return of Contributions
|
|
|
64
|
|
|
Section 12.7
|
|
|
Waiver of Partition
|
|
|
64
|
|
|
Section 12.8
|
|
|
Capital Account Restoration
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
iii
|
|
|
|
|
|
|
|
|
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
|
|
Section 13.1
|
|
|
Amendments to be Adopted Solely by
the General Partner
|
|
|
64
|
|
|
Section 13.2
|
|
|
Amendment Procedures
|
|
|
65
|
|
|
Section 13.3
|
|
|
Amendment Requirements
|
|
|
66
|
|
|
Section 13.4
|
|
|
Special Meetings
|
|
|
66
|
|
|
Section 13.5
|
|
|
Notice of a Meeting
|
|
|
67
|
|
|
Section 13.6
|
|
|
Record Date
|
|
|
67
|
|
|
Section 13.7
|
|
|
Adjournment
|
|
|
67
|
|
|
Section 13.8
|
|
|
Waiver of Notice; Approval of
Meeting
|
|
|
67
|
|
|
Section 13.9
|
|
|
Quorum and Voting
|
|
|
67
|
|
|
Section 13.10
|
|
|
Conduct of a Meeting
|
|
|
68
|
|
|
Section 13.11
|
|
|
Action Without a Meeting
|
|
|
68
|
|
|
Section 13.12
|
|
|
Right to Vote and Related Matters
|
|
|
69
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE XIV
MERGER, CONSOLIDATION OR CONVERSION
|
|
Section 14.1
|
|
|
Authority
|
|
|
69
|
|
|
Section 14.2
|
|
|
Procedure for Merger,
Consolidation or Conversion
|
|
|
69
|
|
|
Section 14.3
|
|
|
Approval by Limited Partners
|
|
|
70
|
|
|
Section 14.4
|
|
|
Certificate of Merger
|
|
|
71
|
|
|
Section 14.5
|
|
|
Effect of Merger, Consolidation or
Conversion
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE XV
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
|
|
Section 15.1
|
|
|
Right to Acquire Limited Partner
Interests
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE XVI
GENERAL PROVISIONS
|
|
Section 16.1
|
|
|
Addresses and Notices; Written
Communications
|
|
|
74
|
|
|
Section 16.2
|
|
|
Further Action
|
|
|
74
|
|
|
Section 16.3
|
|
|
Binding Effect
|
|
|
74
|
|
|
Section 16.4
|
|
|
Integration
|
|
|
75
|
|
|
Section 16.5
|
|
|
Creditors
|
|
|
75
|
|
|
Section 16.6
|
|
|
Waiver
|
|
|
75
|
|
|
Section 16.7
|
|
|
Third-Party Beneficiaries
|
|
|
75
|
|
|
Section 16.8
|
|
|
Counterparts
|
|
|
75
|
|
|
Section 16.9
|
|
|
Applicable Law
|
|
|
75
|
|
|
Section 16.10
|
|
|
Invalidity of Provisions
|
|
|
75
|
|
|
Section 16.11
|
|
|
Consent of Partners
|
|
|
75
|
|
|
Section 16.12
|
|
|
Facsimile Signatures
|
|
|
75
|
|
iv
FIRST
AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF TARGA RESOURCES PARTNERS LP
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF TARGA RESOURCES PARTNERS LP dated as of
February 14, 2007, is entered into by and between
Targa Resources GP LLC, a Delaware limited liability company, as
the General Partner, and Targa GP Inc., a Delaware corporation
(Targa GP), and Targa LP Inc., a Delaware
corporation (Targa LP, and together with Targa GP,
the Organizational Limited Partners), together with
any other Persons who become Partners in the Partnership or
parties hereto as provided herein. In consideration of the
covenants, conditions and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the
terms used in this Agreement.
Acquisition means any transaction in which
any Group Member acquires (through an asset acquisition, merger,
stock acquisition or other form of investment) control over all
or a portion of the assets, properties or business of another
Person for the purpose of increasing the long-term operating
capacity or earnings of the Partnership Group from the operating
capacity or revenues of the Partnership Group existing
immediately prior to such transaction.
Additional Book Basis means the portion of
any remaining Carrying Value of an Adjusted Property that is
attributable to positive adjustments made to such Carrying Value
as a result of
Book-Up
Events. For purposes of determining the extent that Carrying
Value constitutes Additional Book Basis:
(a) Any negative adjustment made to the Carrying Value of
an Adjusted Property as a result of either a Book-Down Event or
a Book-Up
Event shall first be deemed to offset or decrease that portion
of the Carrying Value of such Adjusted Property that is
attributable to any prior positive adjustments made thereto
pursuant to a
Book-Up
Event or Book-Down Event.
(b) If Carrying Value that constitutes Additional Book
Basis is reduced as a result of a Book-Down Event and the
Carrying Value of other property is increased as a result of
such Book-Down Event, an allocable portion of any such increase
in Carrying Value shall be treated as Additional Book Basis;
provided, that the amount treated as Additional Book
Basis pursuant hereto as a result of such Book-Down Event shall
not exceed the amount by which the Aggregate Remaining Net
Positive Adjustments after such Book-Down Event exceeds the
remaining Additional Book Basis attributable to all of the
Partnerships Adjusted Property after such Book-Down Event
(determined without regard to the application of this
clause (b) to such Book-Down Event).
Additional Book Basis Derivative Items means
any Book Basis Derivative Items that are computed with reference
to Additional Book Basis. To the extent that the Additional Book
Basis attributable to all of the Partnerships Adjusted
Property as of the beginning of any taxable period exceeds the
Aggregate Remaining Net Positive Adjustments as of the beginning
of such period (the Excess Additional Book
Basis), the Additional Book Basis Derivative Items
for such period shall be reduced by the amount that bears the
same ratio to the amount of Additional Book Basis Derivative
Items determined without regard to this sentence as the Excess
Additional Book Basis bears to the Additional Book Basis as of
the beginning of such period.
Adjusted Capital Account means the Capital
Account maintained for each Partner as of the end of each fiscal
year of the Partnership, (a) increased by any amounts that
such Partner is obligated to restore under the standards set by
Treasury
Regulation Section 1.704-1(b)(2)(ii)(c)
(or is deemed obligated to restore under Treasury
Regulation Sections 1.704-2(g)
and 1.704-2(i)(5)) and (b) decreased by (i) the
amount of all losses and deductions that, as of the end of such
fiscal year, are reasonably expected to be allocated to such
Partner in subsequent years under Sections 704(e)(2) and
706(d) of the Code and Treasury
Regulation Section 1.751-1(b)(2)(ii),
and (ii) the amount of all distributions that, as of the
end of such fiscal year, are reasonably expected to be made to
such Partner in subsequent years in accordance with the terms of
this Agreement or otherwise to the extent they exceed offsetting
increases to such Partners Capital Account that are
reasonably expected to occur during (or prior to) the year in
which such distributions are reasonably expected to be made
(other than increases as a result of a minimum gain chargeback
pursuant to Section 6.1(d)(i) or 6.1(d)(ii)). The foregoing
definition of Adjusted Capital Account is intended to comply
with the provisions of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith. The
Adjusted Capital Account of a Partner in respect of
a General Partner Unit, a Common Unit, a Subordinated Unit, a
Class B Unit or an Incentive Distribution Right or any
other Partnership Interest shall be the amount that such
Adjusted Capital Account would be if such General Partner Unit,
Common Unit, Subordinated Unit, Class B Unit, Incentive
Distribution Right or other Partnership Interest were the
only interest in the Partnership held by such Partner from and
after the date on which such General Partner Unit, Common Unit,
Class B Unit, Subordinated Unit, Incentive Distribution
Right or other Partnership Interest was first issued.
Adjusted Operating Surplus means, with
respect to any period, Operating Surplus generated with respect
to such period (a) less any net decrease in cash reserves
for Operating Expenditures with respect to such period not
relating to an Operating Expenditure made with respect to such
period, and (b) plus (i) any net decrease made in
subsequent periods in cash reserves for Operating Expenditures
initially established with respect to such period to the extent
such decrease results in a reduction in Adjusted Operating
Surplus in subsequent periods pursuant to clause (a) above and
(ii) any net increase in cash reserves for Operating
Expenditures with respect to such period required by any debt
instrument for the repayment of principal, interest or premium.
Adjusted Operating Surplus does not include that portion of
Operating Surplus included in clause (a)(i) of the
definition of Operating Surplus.
Adjusted Property means any property the
Carrying Value of which has been adjusted pursuant to
Section 5.5(d)(i) or 5.5(d)(ii).
Affiliate means, with respect to any Person,
any other Person that directly or indirectly through one or more
intermediaries controls, is controlled by or is under common
control with, the Person in question. As used herein, the term
control means the possession, direct or indirect, of
the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
Aggregate Quantity of Class B Units has
the meaning assigned to such term in Section 5.11.
Aggregate Remaining Net Positive Adjustments
means, as of the end of any taxable period, the sum of the
Remaining Net Positive Adjustments of all the Partners.
Agreed Allocation means any allocation, other
than a Required Allocation, of an item of income, gain, loss or
deduction pursuant to the provisions of Section 6.1,
including a Curative Allocation (if appropriate to the context
in which the term Agreed Allocation is used).
Agreed Value of any Contributed Property
means the fair market value of such property or other
consideration at the time of contribution as determined by the
General Partner. The General Partner shall use such method as it
determines to be appropriate to allocate the aggregate Agreed
Value of Contributed Properties contributed to the Partnership
in a single or integrated transaction among each separate
property on a basis proportional to the fair market value of
each Contributed Property.
Agreement means this First Amended and
Restated Agreement of Limited Partnership of Targa Resources
Partners LP, as it may be amended, supplemented or restated from
time to time.
Associate means, when used to indicate a
relationship with any Person, (a) any corporation or
organization of which such Person is a director, officer or
partner or is, directly or indirectly, the owner of 20% or more
of any class of voting stock or other voting interest;
(b) any trust or other estate in which such
2
Person has at least a 20% beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary
capacity; and (c) any relative or spouse of such Person, or
any relative of such spouse, who has the same principal
residence as such Person.
Available Cash means, with respect to any
Quarter ending prior to the Liquidation Date:
(a) all cash and cash equivalents of the Partnership Group
on hand on the date of determination of Available Cash with
respect to such Quarter, less
(b) the amount of any cash reserves established by the
General Partner to (i) provide for the proper conduct of
the business of the Partnership Group (including reserves for
future capital expenditures and for anticipated future credit
needs of the Partnership Group) subsequent to such Quarter,
(ii) comply with applicable law or any loan agreement,
security agreement, mortgage, debt instrument or other agreement
or obligation to which any Group Member is a party or by which
it is bound or its assets are subject or (iii) provide
funds for distributions under Section 6.4 or 6.5 in respect
of any one or more of the next four Quarters; provided,
however, that the General Partner may not establish cash
reserves pursuant to (iii) above if the effect of such
reserves would be that the Partnership is unable to distribute
the Minimum Quarterly Distribution on all Common Units, plus any
Cumulative Common Unit Arrearage on all Common Units, with
respect to such Quarter; and, provided further, that
disbursements made by a Group Member or cash reserves
established, increased or reduced after the end of such Quarter
but on or before the date of determination of Available Cash
with respect to such Quarter shall be deemed to have been made,
established, increased or reduced, for purposes of determining
Available Cash, within such Quarter if the General Partner so
determines.
Notwithstanding the foregoing, Available Cash
with respect to the Quarter in which the Liquidation Date occurs
and any subsequent Quarter shall equal zero.
Board of Directors means the board of
directors or managers of a corporation or limited liability
company or the board of directors or board of managers of the
general partner of a limited partnership, as applicable.
Book Basis Derivative Items means any item of
income, deduction, gain or loss included in the determination of
Net Income or Net Loss that is computed with reference to the
Carrying Value of an Adjusted Property (e.g., depreciation,
depletion, or gain or loss with respect to an Adjusted Property).
Book-Down Event means an event that triggers
a negative adjustment to the Capital Accounts of the Partners
pursuant to Section 5.5(d).
Book-Tax Disparity means with respect to any
item of Contributed Property or Adjusted Property, as of the
date of any determination, the difference between the Carrying
Value of such Contributed Property or Adjusted Property and the
adjusted basis thereof for federal income tax purposes as of
such date. A Partners share of the Partnerships
Book-Tax Disparities in all of its Contributed Property and
Adjusted Property will be reflected by the difference between
such Partners Capital Account balance as maintained
pursuant to Section 5.5 and the hypothetical balance of
such Partners Capital Account computed as if it had been
maintained strictly in accordance with federal income tax
accounting principles.
Book-Up
Event means an event that triggers a positive
adjustment to the Capital Accounts of the Partners pursuant to
Section 5.5(d).
Business Day means Monday through Friday of
each week, except that a legal holiday recognized as such by the
government of the United States of America or the State of Texas
shall not be regarded as a Business Day.
Capital Account means the capital account
maintained for a Partner pursuant to Section 5.5. The
Capital Account of a Partner in respect of a
General Partner Unit, a Common Unit, a Subordinated Unit, a
Class B Unit, an Incentive Distribution Right or any
Partnership Interest shall be the amount that such Capital
Account would be if such General Partner Unit, Common Unit,
Subordinated Unit, Class B Unit, Incentive Distribution
Right or other Partnership Interest were the only interest
in the Partnership
3
held by such Partner from and after the date on which such
General Partner Unit, Common Unit, Class B Unit,
Subordinated Unit, Incentive Distribution Right or other
Partnership Interest was first issued.
Capital Contribution means any cash, cash
equivalents or the Net Agreed Value of Contributed Property that
a Partner contributes to the Partnership.
Capital Improvement means any
(a) addition or improvement to the capital assets owned by
any Group Member, (b) acquisition of existing, or the
construction of new, capital assets (including, without
limitation, gathering lines, treating facilities, processing
plants, fractionation facilities, pipelines, terminals, docks,
truck racks, tankage and other storage, distribution or
transportation facilities and related or similar midstream
assets or other assets that produce qualifying
income as defined by Section 7704 of the Code) or
(c) capital contributions by a Group Member to a Person in
which a Group Member has an equity interest to fund such Group
Members pro rata share of the cost of the acquisition of
existing, or the construction of new, capital assets (including,
without limitation, gathering lines, treating facilities,
processing plants, fractionation facilities, pipelines,
terminals, docks, truck racks, tankage and other storage,
distribution or transportation facilities and related or similar
midstream assets or other assets that produce qualifying
income as defined by Section 7704 of the Code) by
such Person, in each case if such addition, improvement,
acquisition or construction is made to increase the long-term
operating capacity or earnings of the Partnership Group, in the
case of clauses (a) and (b), or such Person, in the case of
clause (c), from the operating capacity or revenues of the
Partnership Group or such Person, as the case may be, existing
immediately prior to such addition, improvement, acquisition or
construction.
Capital Surplus has the meaning assigned to
such term in Section 6.3(a).
Carrying Value means (a) with respect to
a Contributed Property, the Agreed Value of such property
reduced (but not below zero) by all depreciation, amortization
and cost recovery deductions charged to the Partners
Capital Accounts in respect of such Contributed Property, and
(b) with respect to any other Partnership property, the
adjusted basis of such property for federal income tax purposes,
all as of the time of determination. The Carrying Value of any
property shall be adjusted from time to time in accordance with
Sections 5.5(d)(i) and 5.5(d)(ii) and to reflect changes,
additions or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as
deemed appropriate by the General Partner.
Cause means a court of competent jurisdiction
has entered a final, non-appealable judgment finding the General
Partner liable for actual fraud or willful misconduct in its
capacity as a general partner of the Partnership.
Certificate means (a) a certificate
(i) substantially in the form of Exhibit A to this
Agreement, (ii) issued in global form in accordance with
the rules and regulations of the Depositary or (iii) in
such other form as may be adopted by the General Partner, issued
by the Partnership evidencing ownership of one or more Common
Units or (b) a certificate, in such form as may be adopted
by the General Partner, issued by the Partnership evidencing
ownership of one or more other Partnership Securities.
Certificate of Limited Partnership means the
Certificate of Limited Partnership of the Partnership filed with
the Secretary of State of the State of Delaware as referenced in
Section 7.2, as such Certificate of Limited Partnership may
be amended, supplemented or restated from time to time.
Citizenship Certification means a properly
completed certificate in such form as may be specified by the
General Partner by which a Limited Partner certifies that he
(and if he is a nominee holding for the account of another
Person, that to the best of his knowledge such other Person) is
an Eligible Citizen.
claim (as used in Section 7.12(d)) has
the meaning assigned to such term in Section 7.12(d).
Class B Units means a Partnership
Security representing a fractional part of the
Partnership Interests of all Limited Partners, and having
the rights and obligations specified with respect to
Class B Units in this Agreement.
4
Closing Date means the first date on which
Common Units are sold by the Partnership to the Underwriters
pursuant to the provisions of the Underwriting Agreement.
Closing Price has the meaning assigned to
such term in Section 15.1(a).
Code means the Internal Revenue Code of 1986,
as amended and in effect from time to time. Any reference herein
to a specific section or sections of the Code shall be deemed to
include a reference to any corresponding provision of any
successor law.
Combined Interest has the meaning assigned to
such term in Section 11.3(a).
Commission means the United States Securities
and Exchange Commission.
Commodity Hedge Contract means any commodity
exchange, swap, forward, cap, floor, collar or other similar
agreement or arrangement entered into for the purpose of hedging
the Partnership Groups exposure to fluctuations in the
price of hydrocarbons.
Common Unit means a Partnership Security
representing a fractional part of the Partnership Interests
of all Limited Partners, and having the rights and obligations
specified with respect to Common Units in this Agreement. The
term Common Unit does not include a Subordinated
Unit or Class B Unit prior to its conversion into a Common
Unit pursuant to the terms hereof.
Common Unit Arrearage means, with respect to
any Common Unit, whenever issued, as to any Quarter within the
Subordination Period, the excess, if any, of (a) the
Minimum Quarterly Distribution with respect to a Common Unit in
respect of such Quarter over (b) the sum of all Available
Cash distributed with respect to a Common Unit in respect of
such Quarter pursuant to Section 6.4(a)(i).
Conflicts Committee means a committee of the
Board of Directors of the General Partner composed entirely of
two or more directors, each of whom (a) is not a security
holder, officer or employee of the General Partner, (b) is
not an officer, director or employee of any Affiliate of the
General Partner, (c) is not a holder of any ownership
interest in the Partnership Group other than Common Units and
(d) meets the independence standards required of directors
who serve on an audit committee of a board of directors
established by the Securities Exchange Act and the rules and
regulations of the Commission thereunder and by the National
Securities Exchange on which the Common Units are listed or
admitted to trading.
Contributed Property means each property or
other asset, in such form as may be permitted by the Delaware
Act, but excluding cash, contributed to the Partnership. Once
the Carrying Value of a Contributed Property is adjusted
pursuant to Section 5.5(d), such property shall no longer
constitute a Contributed Property, but shall be deemed an
Adjusted Property.
Contribution Agreement means that certain
Contribution and Conveyance Agreement, dated as of the Closing
Date, among the General Partner, the Partnership, the Operating
Partnership and certain other parties, together with the
additional conveyance documents and instruments contemplated or
referenced thereunder, as such may be amended, supplemented or
restated from time to time.
Converted Common Units has the meaning
assigned to such term in Section 6.1(d)(x)(B).
Cumulative Common Unit Arrearage means, with
respect to any Common Unit, whenever issued, and as of the end
of any Quarter, the excess, if any, of (a) the sum
resulting from adding together the Common Unit Arrearage as to
an Initial Common Unit for each of the Quarters within the
Subordination Period ending on or before the last day of such
Quarter over (b) the sum of any distributions theretofore
made pursuant to Section 6.4(a)(ii) and the second sentence
of Section 6.5 with respect to an Initial Common Unit
(including any distributions to be made in respect of the last
of such Quarters).
Curative Allocation means any allocation of
an item of income, gain, deduction, loss or credit pursuant to
the provisions of Section 6.1(d)(xi).
Current Market Price has the meaning assigned
to such term in Section 15.1(a).
5
Delaware Act means the Delaware Revised
Uniform Limited Partnership Act, 6 Del C.
Section 17-101,
et seq., as amended, supplemented or restated from time to time,
and any successor to such statute.
Departing General Partner means a former
general partner from and after the effective date of any
withdrawal or removal of such former general partner pursuant to
Section 11.1 or Section 11.2.
Depositary means, with respect to any Units
issued in global form, The Depository Trust Company and its
successors and permitted assigns.
Economic Risk of Loss has the meaning set
forth in Treasury
Regulation Section 1.752-2(a).
Eligible Citizen means a Person qualified to
own interests in real property in jurisdictions in which any
Group Member does business or proposes to do business from time
to time, and whose status as a Limited Partner the General
Partner determines does not or would not subject such Group
Member to a significant risk of cancellation or forfeiture of
any of its properties or any interest therein.
Estimated Incremental Quarterly Tax Amount
has the meaning assigned to such term in Section 6.9.
Event of Withdrawal has the meaning assigned
to such term in Section 11.1(a).
Expansion Capital Expenditures means cash
expenditures for Acquisitions or Capital Improvements, and shall
not include Maintenance Capital Expenditures.
Final Subordinated Units has the meaning
assigned to such term in Section 6.1(d)(x).
First Liquidation Target Amount has the
meaning assigned to such term in Section 6.1(c)(i)(E).
First Target Distribution means
$0.3881 per Unit per Quarter (or, with respect to the
period commencing on the Closing Date and ending on
March 31, 2007, it means the product of $0.3881 multiplied
by a fraction of which the numerator is the number of days in
such period, and of which the denominator is 90), subject to
adjustment in accordance with Sections 5.11, 6.6 and 6.9.
Fully Diluted Basis means, when calculating
the number of Outstanding Units for any period, a basis that
includes, in addition to the Outstanding Units, all Partnership
Securities and options, rights, warrants and appreciation rights
relating to an equity interest in the Partnership (a) that
are convertible into or exercisable or exchangeable for Units
that are senior to or pari passu with the Subordinated Units,
(b) whose conversion, exercise or exchange price is less
than the Current Market Price on the date of such calculation,
(c) that may be converted into or exercised or exchanged
for such Units prior to or during the Quarter immediately
following the end of the period for which the calculation is
being made without the satisfaction of any contingency beyond
the control of the holder other than the payment of
consideration and the compliance with administrative mechanics
applicable to such conversion, exercise or exchange and
(d) that were not converted into or exercised or exchanged
for such Units during the period for which the calculation is
being made; provided, however, that for purposes of
determining the number of Outstanding Units on a Fully Diluted
Basis when calculating whether the Subordination Period has
ended or Subordinated Units are entitled to convert into Common
Units pursuant to Section 5.7, such Partnership Securities,
options, rights, warrants and appreciation rights shall be
deemed to have been Outstanding Units only for the four Quarters
that comprise the last four Quarters of the measurement period;
provided, further, that if consideration will be paid to
any Group Member in connection with such conversion, exercise or
exchange, the number of Units to be included in such calculation
shall be that number equal to the difference between
(i) the number of Units issuable upon such conversion,
exercise or exchange and (ii) the number of Units that such
consideration would purchase at the Current Market Price.
General Partner means Targa Resources GP LLC,
a Delaware limited liability company, and its successors and
permitted assigns that are admitted to the Partnership as
general partner of the Partnership, in its capacity as general
partner of the Partnership (except as the context otherwise
requires).
General Partner Interest means the ownership
interest of the General Partner in the Partnership (in its
capacity as a general partner without reference to any Limited
Partner Interest held by it), which is
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evidenced by General Partner Units, and includes any and all
benefits to which the General Partner is entitled as provided in
this Agreement, together with all obligations of the General
Partner to comply with the terms and provisions of this
Agreement.
General Partner Unit means a fractional part
of the General Partner Interest having the rights and
obligations specified with respect to the General Partner
Interest. A General Partner Unit is not a Unit.
Group means a Person that with or through any
of its Affiliates or Associates has any contract, arrangement,
understanding or relationship for the purpose of acquiring,
holding, voting (except voting pursuant to a revocable proxy or
consent given to such Person in response to a proxy or consent
solicitation made to 10 or more Persons), exercising investment
power or disposing of any Partnership Interests with any
other Person that beneficially owns, or whose Affiliates or
Associates beneficially own, directly or indirectly,
Partnership Interests.
Group Member means a member of the
Partnership Group.
Group Member Agreement means the partnership
agreement of any Group Member, other than the Partnership, that
is a limited or general partnership, the limited liability
company agreement of any Group Member that is a limited
liability company, the certificate of incorporation and bylaws
or similar organizational documents of any Group Member that is
a corporation, the joint venture agreement or similar governing
document of any Group Member that is a joint venture and the
governing or organizational or similar documents of any other
Group Member that is a Person other than a limited or general
partnership, limited liability company, corporation or joint
venture, as such may be amended, supplemented or restated from
time to time.
Holder as used in Section 7.12, has the
meaning assigned to such term in Section 7.12(a).
IDR Reset Election has the meaning assigned
to such term in Section 5.11.
Incentive Distribution Right means a
non-voting Limited Partner Interest issued to the General
Partner, which Limited Partner Interest will confer upon the
holder thereof only the rights and obligations specifically
provided in this Agreement with respect to Incentive
Distribution Rights (and no other rights otherwise available to
or other obligations of a holder of a Partnership Interest).
Notwithstanding anything in this Agreement to the contrary, the
holder of an Incentive Distribution Right shall not be entitled
to vote such Incentive Distribution Right on any Partnership
matter except as may otherwise be required by law.
Incentive Distributions means any amount of
cash distributed to the holders of the Incentive Distribution
Rights pursuant to Sections 6.4(a)(v), (vi) and
(vii) and 6.4(b)(iii), (iv) and (v).
Incremental Income Taxes has the meaning
assigned to such term in Section 6.9.
Indemnified Persons has the meaning assigned
to such term in Section 7.12(d).
Indemnitee means (a) the General
Partner, (b) any Departing General Partner, (c) any
Person who is or was an Affiliate of the General Partner or any
Departing General Partner, (d) any Person who is or was a
member, partner, director, officer, fiduciary or trustee of any
Group Member, the General Partner or any Departing General
Partner or any Affiliate of any Group Member, the General
Partner or any Departing General Partner, (e) any Person
who is or was serving at the request of the General Partner or
any Departing General Partner or any Affiliate of the General
Partner or any Departing General Partner as an officer,
director, member, partner, fiduciary or trustee of another
Person; provided that a Person shall not be an Indemnitee
by reason of providing, on a
fee-for-services
basis, trustee, fiduciary or custodial services, and
(f) any Person the General Partner designates as an
Indemnitee for purposes of this Agreement.
Initial Common Units means the Common Units
sold in the Initial Offering.
Initial Limited Partner means the
Organizational Limited Partners and the General Partner (with
respect to the Subordinated Units and Incentive Distribution
Rights received by them pursuant to
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Section 5.2) and the Underwriters upon the issuance by the
Partnership of Common Units as described in Section 5.3 in
connection with the Initial Offering.
Initial Offering means the initial offering
and sale of Common Units to the public, as described in the
Registration Statement.
Initial Unit Price means (a) with
respect to the Common Units and the Subordinated Units, the
initial public offering price per Common Unit at which the
Underwriters offered the Common Units to the public for sale as
set forth on the cover page of the prospectus included as part
of the Registration Statement and first issued at or after the
time the Registration Statement first became effective or
(b) with respect to any other class or series of Units, the
price per Unit at which such class or series of Units is
initially sold by the Partnership, as determined by the General
Partner, in each case adjusted as the General Partner determines
to be appropriate to give effect to any distribution,
subdivision or combination of Units.
Interim Capital Transactions means the
following transactions if they occur prior to the Liquidation
Date: (a) borrowings, refinancings or refundings of
indebtedness (other than for items purchased on open account in
the ordinary course of business) by any Group Member and sales
of debt securities of any Group Member; (b) sales of equity
interests of any Group Member (including the Common Units sold
to the Underwriters pursuant to the exercise of the
Over-Allotment Option); (c) sales or other voluntary or
involuntary dispositions of any assets of any Group Member other
than (i) sales or other dispositions of inventory, accounts
receivable and other assets in the ordinary course of business,
and (ii) sales or other dispositions of assets as part of
normal retirements or replacements; (d) capital
contributions received; or (e) corporate reorganizations or
restructurings.
Issue Price means the price at which a Unit
is purchased from the Partnership, net of any sales commission
or underwriting discount charged to the Partnership.
Limited Partner means, unless the context
otherwise requires, the Organizational Limited Partners prior to
their withdrawal from the Partnership, each Initial Limited
Partner, each additional Person that becomes a Limited Partner
pursuant to the terms of this Agreement and any Departing
General Partner upon the change of its status from General
Partner to Limited Partner pursuant to Section 11.3, in
each case, in such Persons capacity as limited partner of
the Partnership; provided, however, that when the term
Limited Partner is used herein in the context of any
vote or other approval, including Articles XIII and XIV,
such term shall not, solely for such purpose, include any holder
of an Incentive Distribution Right (solely with respect to its
Incentive Distribution Rights and not with respect to any other
Limited Partner Interest held by such Person) except as may
otherwise be required by law.
Limited Partner Interest means the ownership
interest of a Limited Partner in the Partnership, which may be
evidenced by Common Units, Class B Units, Subordinated
Units, Incentive Distribution Rights or other Partnership
Securities or a combination thereof or interest therein, and
includes any and all benefits to which such Limited Partner is
entitled as provided in this Agreement, together with all
obligations of such Limited Partner to comply with the terms and
provisions of this Agreement; provided, however, that
when the term Limited Partner Interest is used
herein in the context of any vote or other approval, including
Articles XIII and XIV, such term shall not, solely for such
purpose, include any Incentive Distribution Right except as may
otherwise be required by law.
Liquidation Date means (a) in the case
of an event giving rise to the dissolution of the Partnership of
the type described in clauses (a) and (b) of the first
sentence of Section 12.2, the date on which the applicable
time period during which the holders of Outstanding Units have
the right to elect to continue the business of the Partnership
has expired without such an election being made, and (b) in
the case of any other event giving rise to the dissolution of
the Partnership, the date on which such event occurs.
Liquidator means one or more Persons selected
by the General Partner to perform the functions described in
Section 12.4 as liquidating trustee of the Partnership
within the meaning of the Delaware Act.
Maintenance Capital Expenditures means cash
expenditures (including expenditures for the addition or
improvement to the capital assets owned by any Group Member or
for the acquisition of existing, or the
8
construction of new, capital assets) if such expenditures are
made to maintain, including over the long term, the operating
capacity or revenues of the Partnership Group.
Merger Agreement has the meaning assigned to
such term in Section 14.1.
Minimum Quarterly Distribution means
$0.3375 per Unit per Quarter (or with respect to the period
commencing on the Closing Date and ending on March 31,
2007, it means the product of $0.3375 multiplied by a fraction
of which the numerator is the number of days in such period and
of which the denominator is 90), subject to adjustment in
accordance with Sections 5.11, 6.6 and 6.9.
National Securities Exchange means an
exchange registered with the Commission under Section 6(a)
of the Securities Exchange Act.
Net Agreed Value means, (a) in the case
of any Contributed Property, the Agreed Value of such property
reduced by any liabilities either assumed by the Partnership
upon such contribution or to which such property is subject when
contributed, (b) in the case of any property distributed to
a Partner by the Partnership, the Partnerships Carrying
Value of such property (as adjusted pursuant to
Section 5.5(d)(ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such
Partner or Assignee upon such distribution or to which such
property is subject at the time of distribution, in either case,
as determined under Section 752 of the Code, and
(c) in the case of a contribution of Common Units by the
General Partner to the Partnership as a Capital Contribution
pursuant to Section 5.2(b), an amount per Common Unit
contributed equal to the Current Market Price per Common Unit as
of the date of the contribution.
Net Income means, for any taxable year, the
excess, if any, of the Partnerships items of income and
gain (other than those items taken into account in the
computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnerships items of loss and
deduction (other than those items taken into account in the
computation of Net Termination Gain or Net Termination Loss) for
such taxable year. The items included in the calculation of Net
Income shall be determined in accordance with
Section 5.5(b) and shall not include any items specially
allocated under Section 6.1(d); provided, that the
determination of the items that have been specially allocated
under Section 6.1(d) shall be made as if
Section 6.1(d)(xii) were not in this Agreement.
Net Loss means, for any taxable year, the
excess, if any, of the Partnerships items of loss and
deduction (other than those items taken into account in the
computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnerships items of income
and gain (other than those items taken into account in the
computation of Net Termination Gain or Net Termination Loss) for
such taxable year. The items included in the calculation of Net
Loss shall be determined in accordance with Section 5.5(b)
and shall not include any items specially allocated under
Section 6.1(d); provided, that the determination of
the items that have been specially allocated under
Section 6.1(d) shall be made as if Section 6.1(d)(xii)
were not in this Agreement.
Net Positive Adjustments means, with respect
to any Partner, the excess, if any, of the total positive
adjustments over the total negative adjustments made to the
Capital Account of such Partner pursuant to
Book-Up
Events and Book-Down Events.
Net Termination Gain means, for any taxable
year, the sum, if positive, of all items of income, gain, loss
or deduction recognized by the Partnership after the Liquidation
Date. The items included in the determination of Net Termination
Gain shall be determined in accordance with Section 5.5(b)
and shall not include any items of income, gain or loss
specially allocated under Section 6.1(d).
Net Termination Loss means, for any taxable
year, the sum, if negative, of all items of income, gain, loss
or deduction recognized by the Partnership after the Liquidation
Date. The items included in the determination of Net Termination
Loss shall be determined in accordance with Section 5.5(b)
and shall not include any items of income, gain or loss
specially allocated under Section 6.1(d).
9
Non-citizen Assignee means a Person whom the
General Partner has determined does not constitute an Eligible
Citizen and as to whose Partnership Interest the General Partner
has become the substituted limited partner, pursuant to
Section 4.9.
Nonrecourse Built-in Gain means with respect
to any Contributed Properties or Adjusted Properties that are
subject to a mortgage or pledge securing a Nonrecourse
Liability, the amount of any taxable gain that would be
allocated to the Partners pursuant to
Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) and 6.2(b)(iii) if
such properties were disposed of in a taxable transaction in
full satisfaction of such liabilities and for no other
consideration.
Nonrecourse Deductions means any and all
items of loss, deduction or expenditure (including any
expenditure described in Section 705(a)(2)(B) of the Code)
that, in accordance with the principles of Treasury
Regulation Section 1.704-2(b),
are attributable to a Nonrecourse Liability.
Nonrecourse Liability has the meaning set
forth in Treasury
Regulation Section 1.752-1(a)(2).
Notice of Election to Purchase has the
meaning assigned to such term in Section 15.1(b).
Omnibus Agreement means that certain Omnibus
Agreement, dated as of the Closing Date, among Targa Resources,
Inc., Targa Resources, LLC, the General Partner and the
Partnership, as such may be amended, supplemented or restated
from time to time.
Operating Expenditures means all Partnership
Group cash expenditures, including, but not limited to, taxes,
reimbursements of the General Partner in accordance with this
Agreement, interest payments, Maintenance Capital Expenditures,
non-Pro Rata repurchases of Units (other than those made with
the proceeds of an Interim Capital Transaction), subject to the
following:
(a) payments (including prepayments and prepayment
penalties) of principal of and premium on indebtedness shall not
constitute Operating Expenditures; and
(b) Operating Expenditures shall not include
(i) Expansion Capital Expenditures, (ii) payment of
transaction expenses (including taxes) relating to Interim
Capital Transactions or (iii) distributions to Partners.
Where capital expenditures consist of both Maintenance Capital
Expenditures and Expansion Capital Expenditures, the General
Partner, with the concurrence of the Conflicts Committee, shall
determine the allocation between the portion consisting of
Maintenance Capital Expenditures and the portion consisting of
Expansion Capital Expenditures and, with respect to the part of
such capital expenditures consisting of Maintenance Capital
Expenditures.
Operating Partnership means Targa Resources
Operating LP, a Delaware limited partnership, and any successors
thereto.
Operating Surplus means, with respect to any
period ending prior to the Liquidation Date, on a cumulative
basis and without duplication,
(a) the sum of (i) an amount equal to four times the
amount needed for any one Quarter for the Partnership to pay a
distribution on all Units, the General Partner Units and the
Incentive Distribution Rights at the same per Unit amount as was
distributed immediately preceding the date of determination (or
with respect to the period commencing on the Closing Date and
ending on March 31, 2007, it means the product of
(x) $1.35 multiplied by (y) a fraction of which the
numerator is the number of days in such period and the
denominator is 90 multiplied by (z) the number of Units and
General Partner Units Outstanding on the Record Date with
respect to such period), and (ii) all cash receipts of the
Partnership Group for the period beginning on the Closing Date
and ending on the last day of such period, but excluding cash
receipts from Interim Capital Transactions (except to the extent
specified in Section 6.5 and provided that cash receipts
from the termination of a Commodity Hedge Contract or interest
rate swap prior to its specified termination date shall be
included in Operating Surplus in equal quarterly installments
over the remaining scheduled life of such Commodity Hedge
Contract or interest rate swap), less
10
(b) the sum of (i) Operating Expenditures for the
period beginning on the Closing Date and ending on the last day
of such period and (ii) the amount of cash reserves
established by the General Partner to provide funds for future
Operating Expenditures; provided, however, that
disbursements made (including contributions to a Group Member or
disbursements on behalf of a Group Member) or cash reserves
established, increased or reduced after the end of such period
but on or before the date of determination of Available Cash
with respect to such period shall be deemed to have been made,
established, increased or reduced, for purposes of determining
Operating Surplus, within such period if the General Partner so
determines.
Notwithstanding the foregoing, Operating
Surplus with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal
zero.
Opinion of Counsel means a written opinion of
counsel (who may be regular counsel to the Partnership or the
General Partner or any of its Affiliates) acceptable to the
General Partner.
Option Closing Date means the date or dates
on which any Common Units are sold by the Partnership to the
Underwriters upon exercise of the Over-Allotment Option.
Organizational Limited Partners means Targa
GP Inc. and Targa LP Inc. in their capacities as the
organizational limited partners of the Partnership pursuant to
this Agreement.
Outstanding means, with respect to
Partnership Securities, all Partnership Securities that are
issued by the Partnership and reflected as outstanding on the
Partnerships books and records as of the date of
determination; provided, however, that if at any time any
Person or Group (other than the General Partner or its
Affiliates) beneficially owns 20% or more of the Outstanding
Partnership Securities of any class then Outstanding, all
Partnership Securities owned by such Person or Group shall not
be voted on any matter and shall not be considered to be
Outstanding when sending notices of a meeting of Limited
Partners to vote on any matter (unless otherwise required by
law), calculating required votes, determining the presence of a
quorum or for other similar purposes under this Agreement,
except that Units so owned shall be considered to be Outstanding
for purposes of Section 11.1(b)(iv) (such Units shall not,
however, be treated as a separate class of Partnership
Securities for purposes of this Agreement); provided,
further, that the foregoing limitation shall not apply to
(i) any Person or Group who acquired 20% or more of the
Outstanding Partnership Securities of any class then Outstanding
directly from the General Partner or its Affiliates,
(ii) any Person or Group who acquired 20% or more of the
Outstanding Partnership Securities of any class then Outstanding
directly or indirectly from a Person or Group described in
clause (i) provided that the General Partner shall
have notified such Person or Group in writing that such
limitation shall not apply, or (iii) any Person or Group
who acquired 20% or more of any Partnership Securities issued by
the Partnership with the prior approval of the Board of
Directors of the General Partner.
Over-Allotment Option means the
over-allotment option granted to the Underwriters by the
Partnership pursuant to the Underwriting Agreement.
Partner Nonrecourse Debt has the meaning set
forth in Treasury
Regulation Section 1.704-2(b)(4).
Partner Nonrecourse Debt Minimum Gain has the
meaning set forth in Treasury
Regulation Section 1.704-2(i)(2).
Partner Nonrecourse Deductions means any and
all items of loss, deduction or expenditure (including any
expenditure described in Section 705(a)(2)(B) of the Code)
that, in accordance with the principles of Treasury
Regulation Section 1.704-2(i),
are attributable to a Partner Nonrecourse Debt.
Partners means the General Partner and the
Limited Partners.
Partnership means Targa Resources Partners
LP, a Delaware limited partnership.
Partnership Group means the Partnership and
its Subsidiaries treated as a single consolidated entity.
Partnership Interest means an interest
in the Partnership, which shall include the General Partner
Interest and Limited Partner Interests.
11
Partnership Minimum Gain means that amount
determined in accordance with the principles of Treasury
Regulation Section 1.704-2(d).
Partnership Security means any class or
series of equity interest in the Partnership (but excluding any
options, rights, warrants and appreciation rights relating to an
equity interest in the Partnership), including Common Units,
Class B Units, Subordinated Units, General Partner Units
and Incentive Distribution Rights.
Per Unit Capital Amount means, as of any date
of determination, the Capital Account, stated on a per Unit
basis, underlying any Unit held by a Person other than the
General Partner or any Affiliate of the General Partner who
holds Units.
Percentage Interest means as of any date of
determination (a) as to the General Partner with respect to
General Partner Units and as to any Unitholder with respect to
Units, the product obtained by multiplying (i) 100% less
the percentage applicable to clause (b) below by
(ii) the quotient obtained by dividing (A) the number
of General Partner Units held by the General Partner or the
number of Units held by such Unitholder, as the case may be, by
(B) the total number of Outstanding Units and General
Partner Units, and (b) as to the holders of other
Partnership Securities issued by the Partnership in accordance
with Section 5.6, the percentage established as a part of
such issuance. The Percentage Interest with respect to an
Incentive Distribution Right shall at all times be zero.
Person means an individual or a corporation,
firm, limited liability company, partnership, joint venture,
trust, unincorporated organization, association, government
agency or political subdivision thereof or other entity.
Pro Rata means (a) when used with
respect to Units or any class thereof, apportioned equally among
all designated Units in accordance with their relative
Percentage Interests, (b) when used with respect to
Partners and Assignees or Record Holders, apportioned among all
Partners and Assignees or Record Holders in accordance with
their relative Percentage Interests and (c) when used with
respect to holders of Incentive Distribution Rights, apportioned
equally among all holders of Incentive Distribution Rights in
accordance with the relative number or percentage of Incentive
Distribution Rights held by each such holder.
Purchase Date means the date determined by
the General Partner as the date for purchase of all Outstanding
Limited Partner Interests of a certain class (other than Limited
Partner Interests owned by the General Partner and its
Affiliates) pursuant to Article XV.
Quarter means, unless the context requires
otherwise, a fiscal quarter of the Partnership, or, with respect
to the fiscal quarter of the Partnership which includes the
Closing Date, the portion of such fiscal quarter after the
Closing Date.
Recapture Income means any gain recognized by
the Partnership (computed without regard to any adjustment
required by Section 734 or Section 743 of the Code)
upon the disposition of any property or asset of the
Partnership, which gain is characterized as ordinary income
because it represents the recapture of deductions previously
taken with respect to such property or asset.
Record Date means the date established by the
General Partner or otherwise in accordance with this Agreement
for determining (a) the identity of the Record Holders
entitled to notice of, or to vote at, any meeting of Limited
Partners or entitled to vote by ballot or give approval of
Partnership action in writing without a meeting or entitled to
exercise rights in respect of any lawful action of Limited
Partners or (b) the identity of Record Holders entitled to
receive any report or distribution or to participate in any
offer.
Record Holder means the Person in whose name
a Common Unit is registered on the books of the Transfer Agent
as of the opening of business on a particular Business Day, or
with respect to other Partnership Interests, the Person in
whose name any such other Partnership Interest is
registered on the books that the General Partner has caused to
be kept as of the opening of business on such Business Day.
12
Redeemable Interests means any
Partnership Interests for which a redemption notice has
been given, and has not been withdrawn, pursuant to
Section 4.10.
Registration Statement means the Registration
Statement on
Form S-1
as it has been or as it may be amended or supplemented from time
to time, filed by the Partnership with the Commission under the
Securities Act to register the offering and sale of the Common
Units in the Initial Offering.
Remaining Net Positive Adjustments means as
of the end of any taxable period, (i) with respect to the
Unitholders holding Common Units, Class B Units or
Subordinated Units, the excess of (a) the Net Positive
Adjustments of the Unitholders holding Common Units,
Class B Units or Subordinated Units as of the end of such
period over (b) the sum of those Partners Share of
Additional Book Basis Derivative Items for each prior taxable
period, (ii) with respect to the General Partner (as holder
of the General Partner Units), the excess of (a) the Net
Positive Adjustments of the General Partner as of the end of
such period over (b) the sum of the General Partners
Share of Additional Book Basis Derivative Items with respect to
the General Partner Units for each prior taxable period, and
(iii) with respect to the holders of Incentive Distribution
Rights, the excess of (a) the Net Positive Adjustments of
the holders of Incentive Distribution Rights as of the end of
such period over (b) the sum of the Share of Additional
Book Basis Derivative Items of the holders of the Incentive
Distribution Rights for each prior taxable period.
Required Allocations means (a) any
limitation imposed on any allocation of Net Losses or Net
Termination Losses under Section 6.1(b) or
Section 6.1(c)(ii) and (b) any allocation of an item
of income, gain, loss or deduction pursuant to
Section 6.1(d)(i), Section 6.1(d)(ii),
Section 6.1(d)(iv), Section 6.1(d)(vii) or
Section 6.1(d)(ix).
Residual Gain or Residual
Loss means any item of gain or loss, as the case may
be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of
a Contributed Property or Adjusted Property, to the extent such
item of gain or loss is not allocated pursuant to
Section 6.2(b)(i)(A) or Section 6.2(b)(ii)(A),
respectively, to eliminate Book-Tax Disparities.
Reset MQD has the meaning assigned to such
term in Section 5.11.
Reset Notice has the meaning assigned to such
term in Section 5.11.
Retained Converted Subordinated Unit has the
meaning assigned to such term in Section 5.5(c)(ii).
Second Liquidation Target Amount has the
meaning assigned to such term in Section 6.1(c)(i)(F).
Second Target Distribution means
$0.4219 per Unit per Quarter (or, with respect to the
period commencing on the Closing Date and ending on
March 31, 2007, it means the product of $0.4129 multiplied
by a fraction of which the numerator is equal to the number of
days in such period and of which the denominator is 90), subject
to adjustment in accordance with Section 5.11,
Section 6.6 and Section 6.9.
Securities Act means the Securities Act of
1933, as amended, supplemented or restated from time to time and
any successor to such statute.
Securities Exchange Act means the Securities
Exchange Act of 1934, as amended, supplemented or restated from
time to time and any successor to such statute.
Share of Additional Book Basis Derivative
Items means in connection with any allocation of
Additional Book Basis Derivative Items for any taxable period,
(i) with respect to the Unitholders holding Common Units,
Class B Units or Subordinated Units, the amount that bears
the same ratio to such Additional Book Basis Derivative Items as
the Unitholders Remaining Net Positive Adjustments as of
the end of such period bears to the Aggregate Remaining Net
Positive Adjustments as of that time, (ii) with respect to
the General Partner (as holder of the General Partner Units),
the amount that bears the same ratio to such Additional Book
Basis Derivative Items as the General Partners Remaining
Net Positive Adjustments as of the end of such period bears to
the Aggregate Remaining Net Positive Adjustment as of that time,
and (iii) with respect to the Partners holding Incentive
Distribution Rights, the amount that bears the same ratio to
such Additional Book Basis Derivative Items as the Remaining Net
Positive
13
Adjustments of the Partners holding the Incentive Distribution
Rights as of the end of such period bears to the Aggregate
Remaining Net Positive Adjustments as of that time.
Special Approval means approval by a majority
of the members of the Conflicts Committee acting in good faith.
Subordinated Unit means a Partnership
Security representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees
and having the rights and obligations specified with respect to
Subordinated Units in this Agreement. The term
Subordinated Unit does not include a Common Unit or
Class B Unit. A Subordinated Unit that is convertible into
a Common Unit shall not constitute a Common Unit until such
conversion occurs.
Subordination Period means the period
commencing on the Closing Date and ending on the first to occur
of:
(a) the first day of any Quarter beginning after
March 31, 2010 in respect of which
(i)(A) distributions of Available Cash from Operating
Surplus on each of the Outstanding Common Units, Subordinated
Units and General Partner Units and any other Outstanding Units
that are senior or equal in right of distribution to the
Subordinated Units with respect to each of the three
consecutive, non-overlapping four-Quarter periods immediately
preceding such date equaled or exceeded the sum of the Minimum
Quarterly Distribution on all Outstanding Common Units,
Subordinated Units and General Partner Units and any other
Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units during such periods and
(B) the Adjusted Operating Surplus generated during each of
the three consecutive, non-overlapping four-Quarter periods
immediately preceding such date equaled or exceeded the sum of
the Minimum Quarterly Distribution on all of the Common Units,
Subordinated Units and General Partner Units and any other Units
that are senior or equal in right of distribution to the
Subordinated Units that were Outstanding during such periods on
a Fully Diluted Basis and (ii) there are no Cumulative
Common Unit Arrearages;
(b) the first date on which there are no longer outstanding
any Subordinated Units due to the conversion of Subordinated
Units into Common Units pursuant to Section 5.7 or
otherwise; and
(c) the date on which the General Partner is removed as
general partner of the Partnership upon the requisite vote by
holders of Outstanding Units under circumstances where Cause
does not exist and Units held by the General Partner and its
Affiliates are not voted in favor of such removal.
Subsidiary means, with respect to any Person,
(a) a corporation of which more than 50% of the voting
power of shares entitled (without regard to the occurrence of
any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one
or more Subsidiaries of such Person or a combination thereof,
(b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of
determination, a general or limited partner of such partnership,
but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the
partnership as a single class) is owned, directly or indirectly,
at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or
(c) any other Person (other than a corporation or a
partnership) in which such Person, one or more Subsidiaries of
such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority
ownership interest or (ii) the power to elect or direct the
election of a majority of the directors or other governing body
of such Person.
Surviving Business Entity has the meaning
assigned to such term in Section 14.2(b).
Target Distribution means, collectively, the
First Target Distribution, Second Target Distribution and Third
Target Distribution.
Third Liquidation Target Amount has the
meaning assigned to such term in Section 6.1(c)(i)(G).
Third Target Distribution means $0.50625 per
Unit per Quarter (or, with respect to the period commencing on
the Closing Date and ending on March 31, 2007, it means the
product of $0.50625
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multiplied by a fraction of which the numerator is equal to the
number of days in such period and of which the denominator is
90), subject to adjustment in accordance with
Sections 5.11, 6.6 and 6.9.
Trading Day has the meaning assigned to such
term in Section 15.1(a).
transfer has the meaning assigned to such
term in Section 4.4(a).
Transfer Agent means such bank, trust company
or other Person (including the General Partner or one of its
Affiliates) as shall be appointed from time to time by the
General Partner to act as registrar and transfer agent for the
Common Units; provided, that if no Transfer Agent is
specifically designated for any other Partnership Securities,
the General Partner shall act in such capacity.
Underwriter means each Person named as an
underwriter in Schedule I to the Underwriting Agreement who
purchases Common Units pursuant thereto.
Underwriting Agreement means that certain
Underwriting Agreement dated as of February, 2007 among the
Underwriters, the Partnership, the General Partner, the
Operating Partnership and other parties thereto, providing for
the purchase of Common Units by the Underwriters.
Unit means a Partnership Security that is
designated as a Unit and shall include Common Units,
Class B Units and Subordinated Units but shall not include
(i) General Partner Units (or the General Partner Interest
represented thereby) or (ii) Incentive Distribution Rights.
Unit Majority means (i) during the
Subordination Period, at least a majority of the Outstanding
Common Units (excluding Common Units owned by the General
Partner and its Affiliates), voting as a class, and at least a
majority of the Outstanding Subordinated Units, voting as a
class, and (ii) after the end of the Subordination Period,
at least a majority of the Outstanding Common Units and
Class B Units, if any, voting as a single class.
Unitholders means the holders of Units.
Unpaid MQD has the meaning assigned to such
term in Section 6.1(c)(i)(B).
Unrealized Gain attributable to any item of
Partnership property means, as of any date of determination, the
excess, if any, of (a) the fair market value of such
property as of such date (as determined under
Section 5.5(d)) over (b) the Carrying Value of such
property as of such date (prior to any adjustment to be made
pursuant to Section 5.5(d) as of such date).
Unrealized Loss attributable to any item of
Partnership property means, as of any date of determination, the
excess, if any, of (a) the Carrying Value of such property
as of such date (prior to any adjustment to be made pursuant to
Section 5.5(d) as of such date) over (b) the fair
market value of such property as of such date (as determined
under Section 5.5(d)).
Unrecovered Initial Unit Price means at any
time, with respect to a Unit, the Initial Unit Price less the
sum of all distributions constituting Capital Surplus
theretofore made in respect of an Initial Common Unit and any
distributions of cash (or the Net Agreed Value of any
distributions in kind) in connection with the dissolution and
liquidation of the Partnership theretofore made in respect of an
Initial Common Unit, adjusted as the General Partner determines
to be appropriate to give effect to any distribution,
subdivision or combination of such Units.
U.S. GAAP means United States generally
accepted accounting principles consistently applied.
Withdrawal Opinion of Counsel has the meaning
assigned to such term in Section 11.1(b).
Section 1.2 Construction.
Unless the context requires otherwise: (a) any
pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of
nouns, pronouns and verbs shall include the plural and vice
versa; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; (c) the terms
include, includes, including
or words of like import shall be deemed
15
to be followed by the words without limitation; and
(d) the terms hereof, herein or
hereunder refer to this Agreement as a whole and not
to any particular provision of this Agreement. The table of
contents and headings contained in this Agreement are for
reference purposes only, and shall not affect in any way the
meaning or interpretation of this Agreement.
ARTICLE II
ORGANIZATION
Section 2.1 Formation.
The General Partner and the Organizational Limited Partners have
previously formed the Partnership as a limited partnership
pursuant to the provisions of the Delaware Act and hereby amend
and restate the original Agreement of Limited Partnership of
Targa Resources Partners LP in its entirety. This amendment and
restatement shall become effective on the date of this
Agreement. Except as expressly provided to the contrary in this
Agreement, the rights, duties (including fiduciary duties),
liabilities and obligations of the Partners and the
administration, dissolution and termination of the Partnership
shall be governed by the Delaware Act. All
Partnership Interests shall constitute personal property of
the owner thereof for all purposes.
Section 2.2 Name.
The name of the Partnership shall be Targa Resources
Partners LP. The Partnerships business may be
conducted under any other name or names as determined by the
General Partner, including the name of the General Partner. The
words Limited Partnership, LP,
Ltd. or similar words or letters shall be included
in the Partnerships name where necessary for the purpose
of complying with the laws of any jurisdiction that so requires.
The General Partner may change the name of the Partnership at
any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the
Limited Partners.
Section 2.3 Registered
Office; Registered Agent; Principal Office; Other Offices
Unless and until changed by the General Partner, the registered
office of the Partnership in the State of Delaware shall be
located at 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801, and the registered agent for
service of process on the Partnership in the State of Delaware
at such registered office shall be The Corporation Trust
Company. The principal office of the Partnership shall be
located at 1000 Louisiana, Suite 4300, Houston,
Texas 77002, or such other place as the General Partner may
from time to time designate by notice to the Limited Partners.
The Partnership may maintain offices at such other place or
places within or outside the State of Delaware as the General
Partner shall determine necessary or appropriate. The address of
the General Partner shall be 1000 Louisiana,
Suite 4300, Houston, Texas 77002, or such other place as
the General Partner may from time to time designate by notice to
the Limited Partners.
Section 2.4 Purpose
and Business.
The purpose and nature of the business to be conducted by the
Partnership shall be to (a) engage directly in, or enter
into or form, hold and dispose of any corporation, partnership,
joint venture, limited liability company or other arrangement to
engage indirectly in, any business activity that is approved by
the General Partner and that lawfully may be conducted by a
limited partnership organized pursuant to the Delaware Act and,
in connection therewith, to exercise all of the rights and
powers conferred upon the Partnership pursuant to the agreements
relating to such business activity, and (b) do anything
necessary or appropriate to the foregoing, including the making
of capital contributions or loans to a Group Member;
provided, however, that the General Partner shall not
cause the Partnership to engage, directly or indirectly, in any
business activity that the General Partner determines would
cause the Partnership to be treated as an association taxable as
a corporation or otherwise taxable as an entity for federal
income tax purposes. To the
16
fullest extent permitted by law, the General Partner shall have
no duty or obligation to propose or approve, and may decline to
propose or approve, the conduct by the Partnership of any
business free of any fiduciary duty or obligation whatsoever to
the Partnership or any Limited Partner and, in declining to so
propose or approve, shall not be required to act in good faith
or pursuant to any other standard imposed by this Agreement, any
Group Member Agreement, any other agreement contemplated hereby
or under the Delaware Act or any other law, rule or regulation
or at equity.
Section 2.5 Powers.
The Partnership shall be empowered to do any and all acts and
things necessary or appropriate for the furtherance and
accomplishment of the purposes and business described in
Section 2.4 and for the protection and benefit of the
Partnership.
Section 2.6 Power
of Attorney.
(a) Each Limited Partner hereby constitutes and appoints
the General Partner and, if a Liquidator shall have been
selected pursuant to Section 12.3, the Liquidator (and any
successor to the Liquidator by merger, transfer, assignment,
election or otherwise) and each of their authorized officers and
attorneys-in-fact,
as the case may be, with full power of substitution, as his true
and lawful agent and
attorney-in-fact,
with full power and authority in his name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (A) all
certificates, documents and other instruments (including this
Agreement and the Certificate of Limited Partnership and all
amendments or restatements hereof or thereof) that the General
Partner or the Liquidator determines to be necessary or
appropriate to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited
liability) in the State of Delaware and in all other
jurisdictions in which the Partnership may conduct business or
own property; (B) all certificates, documents and other
instruments that the General Partner or the Liquidator
determines to be necessary or appropriate to reflect, in
accordance with its terms, any amendment, change, modification
or restatement of this Agreement; (C) all certificates,
documents and other instruments (including conveyances and a
certificate of cancellation) that the General Partner or the
Liquidator determines to be necessary or appropriate to reflect
the dissolution and liquidation of the Partnership pursuant to
the terms of this Agreement; (D) all certificates,
documents and other instruments relating to the admission,
withdrawal, removal or substitution of any Partner pursuant to,
or other events described in, Article IV, Article X,
Article XI or Article XII; (E) all certificates,
documents and other instruments relating to the determination of
the rights, preferences and privileges of any class or series of
Partnership Securities issued pursuant to Section 5.6; and
(F) all certificates, documents and other instruments
(including agreements and a certificate of merger) relating to a
merger, consolidation or conversion of the Partnership pursuant
to Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and
record all ballots, consents, approvals, waivers, certificates,
documents and other instruments that the General Partner or the
Liquidator determines to be necessary or appropriate to
(A) make, evidence, give, confirm or ratify any vote,
consent, approval, agreement or other action that is made or
given by the Partners hereunder or is consistent with the terms
of this Agreement or (B) effectuate the terms or intent of
this Agreement; provided, that when required by
Section 13.3 or any other provision of this Agreement that
establishes a percentage of the Limited Partners or of the
Limited Partners of any class or series required to take any
action, the General Partner and the Liquidator may exercise the
power of attorney made in this Section 2.6(a)(ii) only
after the necessary vote, consent or approval of the Limited
Partners or of the Limited Partners of such class or series, as
applicable.
Nothing contained in this Section 2.6(a) shall be construed
as authorizing the General Partner to amend this Agreement
except in accordance with Article XIII or as may be
otherwise expressly provided for in this Agreement.
17
(b) The foregoing power of attorney is hereby declared to
be irrevocable and a power coupled with an interest, and it
shall survive and, to the maximum extent permitted by law, not
be affected by, the subsequent death, incompetency, disability,
incapacity, dissolution, bankruptcy or termination of any
Limited Partner and the transfer of all or any portion of such
Limited Partners Limited Partner Interest and shall extend
to such Limited Partners heirs, successors, assigns and
personal representatives. Each such Limited Partner hereby
agrees to be bound by any representation made by the General
Partner or the Liquidator acting in good faith pursuant to such
power of attorney; and each such Limited Partner, to the maximum
extent permitted by law, hereby waives any and all defenses that
may be available to contest, negate or disaffirm the action of
the General Partner or the Liquidator taken in good faith under
such power of attorney. Each Limited Partner shall execute and
deliver to the General Partner or the Liquidator, within
15 days after receipt of the request therefor, such further
designation, powers of attorney and other instruments as the
General Partner or the Liquidator may request in order to
effectuate this Agreement and the purposes of the Partnership.
Section 2.7 Term.
The term of the Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the
Delaware Act and shall continue in existence until the
dissolution of the Partnership in accordance with the provisions
of Article XII. The existence of the Partnership as a
separate legal entity shall continue until the cancellation of
the Certificate of Limited Partnership as provided in the
Delaware Act.
Section 2.8 Title
to Partnership Assets.
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by
the Partnership as an entity, and no Partner, individually or
collectively, shall have any ownership interest in such
Partnership assets or any portion thereof. Title to any or all
of the Partnership assets may be held in the name of the
Partnership, the General Partner, one or more of its Affiliates
or one or more nominees, as the General Partner may determine.
The General Partner hereby declares and warrants that any
Partnership assets for which record title is held in the name of
the General Partner or one or more of its Affiliates or one or
more nominees shall be held by the General Partner or such
Affiliate or nominee for the use and benefit of the Partnership
in accordance with the provisions of this Agreement;
provided, however, that the General Partner shall use
reasonable efforts to cause record title to such assets (other
than those assets in respect of which the General Partner
determines that the expense and difficulty of conveyancing makes
transfer of record title to the Partnership impracticable) to be
vested in the Partnership as soon as reasonably practicable;
provided, further, that, prior to the withdrawal or
removal of the General Partner or as soon thereafter as
practicable, the General Partner shall use reasonable efforts to
effect the transfer of record title to the Partnership and,
prior to any such transfer, will provide for the use of such
assets in a manner satisfactory to the General Partner. All
Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name
in which record title to such Partnership assets is held.
ARTICLE III
RIGHTS OF
LIMITED PARTNERS
Section 3.1 Limitation
of Liability.
The Limited Partners shall have no liability under this
Agreement except as expressly provided in this Agreement or the
Delaware Act.
Section 3.2 Management
of Business.
No Limited Partner, in its capacity as such, shall participate
in the operation, management or control (within the meaning of
the Delaware Act) of the Partnerships business, transact
any business in the
18
Partnerships name or have the power to sign documents for
or otherwise bind the Partnership. Any action taken by any
Affiliate of the General Partner or any officer, director,
employee, manager, member, general partner, agent or trustee of
the General Partner or any of its Affiliates, or any officer,
director, employee, manager, member, general partner, agent or
trustee of a Group Member, in its capacity as such, shall not be
deemed to be participation in the control of the business of the
Partnership by a limited partner of the Partnership (within the
meaning of
Section 17-303(a)
of the Delaware Act) and shall not affect, impair or eliminate
the limitations on the liability of the Limited Partners under
this Agreement.
Section 3.3 Outside
Activities of the Limited Partners.
Subject to the provisions of Section 7.5, which shall
continue to be applicable to the Persons referred to therein,
regardless of whether such Persons shall also be Limited
Partners, any Limited Partner shall be entitled to and may have
business interests and engage in business activities in addition
to those relating to the Partnership, including business
interests and activities in direct competition with the
Partnership Group. Neither the Partnership nor any of the other
Partners shall have any rights by virtue of this Agreement in
any business ventures of any Limited Partner.
Section 3.4 Rights
of Limited Partners.
(a) In addition to other rights provided by this Agreement
or by applicable law, and except as limited by
Section 3.4(b), each Limited Partner shall have the right,
for a purpose reasonably related to such Limited Partners
interest as a Limited Partner in the Partnership, upon
reasonable written demand stating the purpose of such demand,
and at such Limited Partners own expense:
(i) to obtain true and full information regarding the
status of the business and financial condition of the
Partnership;
(ii) promptly after its becoming available, to obtain a
copy of the Partnerships federal, state and local income
tax returns for each year;
(iii) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
(iv) to obtain a copy of this Agreement and the Certificate
of Limited Partnership and all amendments thereto, together with
copies of the executed copies of all powers of attorney pursuant
to which this Agreement, the Certificate of Limited Partnership
and all amendments thereto have been executed;
(v) to obtain true and full information regarding the
amount of cash and a description and statement of the Net Agreed
Value of any other Capital Contribution by each Partner and that
each Partner has agreed to contribute in the future, and the
date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs
of the Partnership as is just and reasonable.
(b) The General Partner may keep confidential from the
Limited Partners, for such period of time as the General Partner
deems reasonable, (i) any information that the General
Partner reasonably believes to be in the nature of trade secrets
or (ii) other information the disclosure of which the
General Partner in good faith believes (A) is not in the
best interests of the Partnership Group, (B) could damage
the Partnership Group or its business or (C) that any Group
Member is required by law or by agreement with any third party
to keep confidential (other than agreements with Affiliates of
the Partnership the primary purpose of which is to circumvent
the obligations set forth in this Section 3.4).
19
ARTICLE IV
CERTIFICATES;
RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS;
REDEMPTION OF
PARTNERSHIP INTERESTS
Section 4.1 Certificates.
Upon the Partnerships issuance of Common Units,
Subordinated Units or Class B Units to any Person, the
Partnership shall issue, upon the request of such Person, one or
more Certificates in the name of such Person evidencing the
number of such Units being so issued. In addition, (a) upon
the General Partners request, the Partnership shall issue
to it one or more Certificates in the name of the General
Partner evidencing its General Partner Units and (b) upon
the request of any Person owning Incentive Distribution Rights
or any other Partnership Securities other than Common Units,
Subordinated Units or Class B Units, the Partnership shall
issue to such Person one or more certificates evidencing such
Incentive Distribution Rights or other Partnership Securities
other than Common Units, Subordinated Units or Class B
Units. Certificates shall be executed on behalf of the
Partnership by the Chairman of the Board, Chief Executive
Officer, President or any Executive Vice President, Senior Vice
President or Vice President and the Secretary or any Assistant
Secretary of the General Partner. No Common Unit Certificate
shall be valid for any purpose until it has been countersigned
by the Transfer Agent; provided, however, that if the
General Partner elects to issue Common Units in global form, the
Common Unit Certificates shall be valid upon receipt of a
certificate from the Transfer Agent certifying that the Common
Units have been duly registered in accordance with the
directions of the Partnership. Subject to the requirements of
Section 6.7(c) and Section 6.7(e), the Partners
holding Certificates evidencing Subordinated Units may exchange
such Certificates for Certificates evidencing Common Units on or
after the date on which such Subordinated Units are converted
into Common Units pursuant to the terms of Section 5.7.
Subject to the requirements of Section 6.7(e), the Partners
holding Certificates evidencing Class B Units may exchange
such Certificates for Certificates evidencing Common Units on or
after the period set forth in Section 5.11(f) pursuant to
the terms of Section 5.11.
Section 4.2 Mutilated,
Destroyed, Lost or Stolen Certificates.
(a) If any mutilated Certificate is surrendered to the
Transfer Agent (for Common Units) or the General Partner (for
Partnership Securities other than Common Units), the appropriate
officers of the General Partner on behalf of the Partnership
shall execute, and the Transfer Agent (for Common Units) or the
General Partner (for Partnership Securities other than Common
Units) shall countersign and deliver in exchange therefor, a new
Certificate evidencing the same number and type of Partnership
Securities as the Certificate so surrendered.
(b) The appropriate officers of the General Partner on
behalf of the Partnership shall execute and deliver, and the
Transfer Agent (for Common Units) shall countersign, a new
Certificate in place of any Certificate previously issued if the
Record Holder of the Certificate:
(i) makes proof by affidavit, in form and substance
satisfactory to the General Partner, that a previously issued
Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate before the
General Partner has notice that the Certificate has been
acquired by a purchaser for value in good faith and without
notice of an adverse claim;
(iii) if requested by the General Partner, delivers to the
General Partner a bond, in form and substance satisfactory to
the General Partner, with surety or sureties and with fixed or
open penalty as the General Partner may direct to indemnify the
Partnership, the Partners, the General Partner and the Transfer
Agent against any claim that may be made on account of the
alleged loss, destruction or theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by
the General Partner.
20
If a Limited Partner fails to notify the General Partner within
a reasonable period of time after he has notice of the loss,
destruction or theft of a Certificate, and a transfer of the
Limited Partner Interests represented by the Certificate is
registered before the Partnership, the General Partner or the
Transfer Agent receives such notification, the Limited Partner
shall be precluded from making any claim against the
Partnership, the General Partner or the Transfer Agent for such
transfer or for a new Certificate.
(c) As a condition to the issuance of any new Certificate
under this Section 4.2, the General Partner may require the
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the
Transfer Agent) reasonably connected therewith.
Section 4.3 Record
Holders.
The Partnership shall be entitled to recognize the Record Holder
as the Partner with respect to any Partnership Interest
and, accordingly, shall not be bound to recognize any equitable
or other claim to, or interest in, such
Partnership Interest on the part of any other Person,
regardless of whether the Partnership shall have actual or other
notice thereof, except as otherwise provided by law or any
applicable rule, regulation, guideline or requirement of any
National Securities Exchange on which such
Partnership Interests are listed or admitted to trading.
Without limiting the foregoing, when a Person (such as a broker,
dealer, bank, trust company or clearing corporation or an agent
of any of the foregoing) is acting as nominee, agent or in some
other representative capacity for another Person in acquiring
and/or
holding Partnership Interests, as between the Partnership
on the one hand, and such other Persons on the other, such
representative Person shall be the Record Holder of such
Partnership Interest.
Section 4.4 Transfer
Generally.
(a) The term transfer, when used in this
Agreement with respect to a Partnership Interest, shall be
deemed to refer to a transaction (i) by which the General
Partner assigns its General Partner Units to another Person or
by which a holder of Incentive Distribution Rights assigns its
Incentive Distribution Rights to another Person, and includes a
sale, assignment, gift, pledge, encumbrance, hypothecation,
mortgage, exchange or any other disposition by law or otherwise
or (ii) by which the holder of a Limited Partner Interest
(other than an Incentive Distribution Right) assigns such
Limited Partner Interest to another Person who is or becomes a
Limited Partner, and includes a sale, assignment, gift, exchange
or any other disposition by law or otherwise, including any
transfer upon foreclosure of any pledge, encumbrance,
hypothecation or mortgage.
(b) No Partnership Interest shall be transferred, in
whole or in part, except in accordance with the terms and
conditions set forth in this Article IV. Any transfer or
purported transfer of a Partnership Interest not made in
accordance with this Article IV shall be null and void.
(c) Nothing contained in this Agreement shall be construed
to prevent a disposition by any stockholder, member, partner or
other owner of the General Partner of any or all of the shares
of stock, membership interests, partnership interests or other
ownership interests in the General Partner.
Section
4.5 Registration and Transfer of Limited Partner
Interests.
(a) The General Partner shall keep or cause to be kept on
behalf of the Partnership a register in which, subject to such
reasonable regulations as it may prescribe and subject to the
provisions of Section 4.5(b), the Partnership will provide
for the registration and transfer of Limited Partner Interests.
The Transfer Agent is hereby appointed registrar and transfer
agent for the purpose of registering Common Units and transfers
of such Common Units as herein provided. The Partnership shall
not recognize transfers of Certificates evidencing Limited
Partner Interests unless such transfers are effected in the
manner described in this Section 4.5. Upon surrender of a
Certificate for registration of transfer of any Limited Partner
Interests evidenced by a Certificate, and subject to the
provisions of Section 4.5(b), the appropriate officers of
the General Partner on behalf of the Partnership shall execute
and deliver, and in the case of Common Units, the Transfer Agent
shall countersign and deliver, in the name of the holder or the
21
designated transferee or transferees, as required pursuant to
the holders instructions, one or more new Certificates
evidencing the same aggregate number and type of Limited Partner
Interests as was evidenced by the Certificate so surrendered.
(b) Except as otherwise provided in Section 4.9, the
General Partner shall not recognize any transfer of Limited
Partner Interests until the Certificates evidencing such Limited
Partner Interests are surrendered for registration of transfer.
No charge shall be imposed by the General Partner for such
transfer; provided, that as a condition to the issuance
of any new Certificate under this Section 4.5, the General
Partner may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed with
respect thereto.
(c) Subject to (i) the foregoing provisions of this
Section 4.5, (ii) Section 4.3,
(iii) Section 4.8, (iv) with respect to any class
or series of Limited Partner Interests, the provisions of any
statement of designations or an amendment to this Agreement
establishing such class or series, (v) any contractual
provisions binding on any Limited Partner and
(vi) provisions of applicable law including the Securities
Act, Limited Partner Interests (other than the Incentive
Distribution Rights) shall be freely transferable.
(d) The General Partner and its Affiliates shall have the
right at any time to transfer their Subordinated Units,
Class B Units and Common Units (whether issued upon
conversion of the Subordinated Units or otherwise) to one or
more Persons.
Section 4.6 Transfer
of the General Partners General Partner Interest.
(a) Subject to Section 4.6(c) below, prior to
December 31, 2016, the General Partner shall not transfer
all or any part of its General Partner Interest (represented by
General Partner Units) to a Person unless such transfer
(i) has been approved by the prior written consent or vote
of the holders of at least a majority of the Outstanding Common
Units (excluding Common Units held by the General Partner and
its Affiliates) or (ii) is of all, but not less than all,
of its General Partner Interest to (A) an Affiliate of the
General Partner (other than an individual) or (B) another
Person (other than an individual) in connection with the merger
or consolidation of the General Partner with or into such other
Person or the transfer by the General Partner of all or
substantially all of its assets to such other Person.
(b) Subject to Section 4.6(c) below, on or after
December 31, 2016, the General Partner may transfer all or
any of its General Partner Interest without Unitholder approval.
(c) Notwithstanding anything herein to the contrary, no
transfer by the General Partner of all or any part of its
General Partner Interest to another Person shall be permitted
unless (i) the transferee agrees to assume the rights and
duties of the General Partner under this Agreement and to be
bound by the provisions of this Agreement, (ii) the
Partnership receives an Opinion of Counsel that such transfer
would not result in the loss of limited liability of any Limited
Partner under the Delaware Act or cause the Partnership to be
treated as an association taxable as a corporation or otherwise
to be taxed as an entity for federal income tax purposes (to the
extent not already so treated or taxed) and (iii) such
transferee also agrees to purchase all (or the appropriate
portion thereof, if applicable) of the partnership or membership
interest of the General Partner as the general partner or
managing member, if any, of each other Group Member. In the case
of a transfer pursuant to and in compliance with this
Section 4.6, the transferee or successor (as the case may
be) shall, subject to compliance with the terms of
Section 10.3, be admitted to the Partnership as the General
Partner immediately prior to the transfer of the General Partner
Interest, and the business of the Partnership shall continue
without dissolution.
Section 4.7 Transfer
of Incentive Distribution Rights.
Prior to December 31, 2016, a holder of Incentive
Distribution Rights may transfer any or all of the Incentive
Distribution Rights held by such holder without any consent of
the Unitholders to (a) an Affiliate of such holder (other
than an individual) or (b) another Person (other than an
individual) in connection with (i) the merger or
consolidation of such holder of Incentive Distribution Rights
with or into such other Person, (ii) the transfer by such
holder of all or substantially all of its assets to such other
Person or
22
(iii) the sale of all the ownership interests in such
holder. Any other transfer of the Incentive Distribution Rights
prior to December 31, 2016 shall require the prior approval
of holders of at least a majority of the Outstanding Common
Units (excluding Common Units held by the General Partner and
its Affiliates). On or after December 31, 2016, the General
Partner or any other holder of Incentive Distribution Rights may
transfer any or all of its Incentive Distribution Rights without
Unitholder approval. Notwithstanding anything herein to the
contrary, (i) the transfer of Class B Units issued
pursuant to Section 5.11, or the transfer of Common Units
issued upon conversion of the Class B Units, shall not be
treated as a transfer of all or any part of the Incentive
Distribution Rights and (ii) no transfer of Incentive
Distribution Rights to another Person shall be permitted unless
the transferee agrees to be bound by the provisions of this
Agreement.
Section 4.8 Restrictions
on Transfers.
(a) Except as provided in Section 4.8(d) below, and
notwithstanding the other provisions of this Article IV, no
transfer of any Partnership Interests shall be made if such
transfer would (i) violate the then applicable federal or
state securities laws or rules and regulations of the
Commission, any state securities commission or any other
governmental authority with jurisdiction over such transfer,
(ii) terminate the existence or qualification of the
Partnership under the laws of the jurisdiction of its formation,
or (iii) cause the Partnership to be treated as an
association taxable as a corporation or otherwise to be taxed as
an entity for federal income tax purposes (to the extent not
already so treated or taxed).
(b) The General Partner may impose restrictions on the
transfer of Partnership Interests if it receives an Opinion
of Counsel that such restrictions are necessary to avoid a
significant risk of the Partnership becoming taxable as a
corporation or otherwise becoming taxable as an entity for
federal income tax purposes. The General Partner may impose such
restrictions by amending this Agreement; provided,
however, that any amendment that would result in the
delisting or suspension of trading of any class of Limited
Partner Interests on the principal National Securities Exchange
on which such class of Limited Partner Interests is then listed
or admitted to trading must be approved, prior to such amendment
being effected, by the holders of at least a majority of the
Outstanding Limited Partner Interests of such class.
(c) The transfer of a Subordinated Unit that has converted
into a Common Unit shall be subject to the restrictions imposed
by Section 6.7(c).
(d) The transfer of a Class B Unit that has converted
into a Common Unit shall be subject to the restrictions imposed
by Section 6.7(e).
(e) Nothing contained in this Article IV, or elsewhere
in this Agreement, shall preclude the settlement of any
transactions involving Partnership Interests entered into
through the facilities of any National Securities Exchange on
which such Partnership Interests are listed or admitted to
trading.
(f) Each certificate evidencing Partnership Interests
shall bear a conspicuous legend in substantially the following
form:
THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF
TARGA RESOURCES PARTNERS LP THAT THIS SECURITY MAY NOT BE
SOLD, OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IF SUCH
TRANSFER WOULD (A) VIOLATE THE THEN APPLICABLE FEDERAL OR
STATE SECURITIES LAWS OR RULES AND REGULATIONS OF THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY
OTHER GOVERNMENTAL AUTHORITY WITH JURISDICTION OVER SUCH
TRANSFER, (B) TERMINATE THE EXISTENCE OR QUALIFICATION OF
TARGA RESOURCES PARTNERS LP UNDER THE LAWS OF THE STATE OF
DELAWARE, OR (C) CAUSE TARGA RESOURCES PARTNERS LP TO
BE TREATED AS AN ASSOCIATION TAXABLE AS A CORPORATION OR
OTHERWISE TO BE TAXED AS AN ENTITY FOR FEDERAL INCOME TAX
PURPOSES (TO THE EXTENT NOT ALREADY SO TREATED OR TAXED). TARGA
RESOURCES GP LLC, THE GENERAL PARTNER OF TARGA RESOURCES
PARTNERS LP, MAY IMPOSE ADDITIONAL
23
RESTRICTIONS ON THE TRANSFER OF THIS SECURITY IF IT RECEIVES AN
OPINION OF COUNSEL THAT SUCH RESTRICTIONS ARE NECESSARY TO AVOID
A SIGNIFICANT RISK OF TARGA RESOURCES PARTNERS LP BECOMING
TAXABLE AS A CORPORATION OR OTHERWISE BECOMING TAXABLE AS AN
ENTITY FOR FEDERAL INCOME TAX PURPOSES. THE RESTRICTIONS SET
FORTH ABOVE SHALL NOT PRECLUDE THE SETTLEMENT OF ANY
TRANSACTIONS INVOLVING THIS SECURITY ENTERED INTO THROUGH THE
FACILITIES OF ANY NATIONAL SECURITIES EXCHANGE ON WHICH THIS
SECURITY IS LISTED OR ADMITTED TO TRADING.
Section 4.9 Citizenship
Certificates; Non-citizen Assignees.
(a) If any Group Member is or becomes subject to any
federal, state or local law or regulation that the General
Partner determines would create a substantial risk of
cancellation or forfeiture of any property in which the Group
Member has an interest based on the nationality, citizenship or
other related status of a Limited Partner, the General Partner
may request any Limited Partner to furnish to the General
Partner, within 30 days after receipt of such request, an
executed Citizenship Certification or such other information
concerning his nationality, citizenship or other related status
(or, if the Limited Partner is a nominee holding for the account
of another Person, the nationality, citizenship or other related
status of such Person) as the General Partner may request. If a
Limited Partner fails to furnish to the General Partner within
the aforementioned
30-day
period such Citizenship Certification or other requested
information or if upon receipt of such Citizenship Certification
or other requested information the General Partner determines
that a Limited Partner is not an Eligible Citizen, the Limited
Partner Interests owned by such Limited Partner shall be subject
to redemption in accordance with the provisions of
Section 4.10. In addition, the General Partner may require
that the status of any such Limited Partner be changed to that
of a Non-citizen Assignee and, thereupon, the General Partner
shall be substituted for such Non-citizen Assignee as the
Limited Partner in respect of the Non-citizen Assignees
Limited Partner Interests.
(b) The General Partner shall, in exercising voting rights
in respect of Limited Partner Interests held by it on behalf of
Non-citizen Assignees, distribute the votes in the same ratios
as the votes of Partners (including the General Partner) in
respect of Limited Partner Interests other than those of
Non-citizen Assignees are cast, either for, against or
abstaining as to the matter.
(c) Upon dissolution of the Partnership, a Non-citizen
Assignee shall have no right to receive a distribution in kind
pursuant to Section 12.4 but shall be entitled to the cash
equivalent thereof, and the Partnership shall provide cash in
exchange for an assignment of the Non-citizen Assignees
share of any distribution in kind. Such payment and assignment
shall be treated for Partnership purposes as a purchase by the
Partnership from the Non-citizen Assignee of his Limited Partner
Interest (representing his right to receive his share of such
distribution in kind).
(d) At any time after he can and does certify that he has
become an Eligible Citizen, a Non-citizen Assignee may, upon
application to the General Partner, request that with respect to
any Limited Partner Interests of such Non-citizen Assignee not
redeemed pursuant to Section 4.10, such Non-citizen
Assignee be admitted as a Limited Partner, and upon approval of
the General Partner, such Non-citizen Assignee shall be admitted
as a Limited Partner and shall no longer constitute a
Non-citizen Assignee and the General Partner shall cease to be
deemed to be the Limited Partner in respect of the Non-citizen
Assignees Limited Partner Interests.
Section 4.10 Redemption
of Partnership Interests of Non-citizen Assignees.
(a) If at any time a Limited Partner fails to furnish a
Citizenship Certification or other information requested within
the 30-day
period specified in Section 4.9(a), or if upon receipt of
such Citizenship Certification or other information the General
Partner determines, with the advice of counsel, that a Limited
Partner is not an Eligible Citizen, the Partnership may, unless
the Limited Partner establishes to the satisfaction of the
General Partner that such Limited Partner is an Eligible Citizen
or has transferred his Partnership Interests to a Person
who is an Eligible Citizen and who furnishes a Citizenship
24
Certification to the General Partner prior to the date fixed for
redemption as provided below, redeem the Limited Partner
Interest of such Limited Partner as follows:
(i) The General Partner shall, not later than the
30th day before the date fixed for redemption, give notice
of redemption to the Limited Partner, at his last address
designated on the records of the Partnership or the Transfer
Agent, by registered or certified mail, postage prepaid. The
notice shall be deemed to have been given when so mailed. The
notice shall specify the Redeemable Interests, the date fixed
for redemption, the place of payment, that payment of the
redemption price will be made upon surrender of the Certificate
evidencing the Redeemable Interests and that on and after the
date fixed for redemption no further allocations or
distributions to which the Limited Partner would otherwise be
entitled in respect of the Redeemable Interests will accrue or
be made.
(ii) The aggregate redemption price for Redeemable
Interests shall be an amount equal to the Current Market Price
(the date of determination of which shall be the date fixed for
redemption) of Limited Partner Interests of the class to be so
redeemed multiplied by the number of Limited Partner Interests
of each such class included among the Redeemable Interests. The
redemption price shall be paid, as determined by the General
Partner, in cash or by delivery of a promissory note of the
Partnership in the principal amount of the redemption price,
bearing interest at the rate of 5% annually and payable in
three equal annual installments of principal together with
accrued interest, commencing one year after the redemption date.
(iii) Upon surrender by or on behalf of the Limited
Partner, at the place specified in the notice of redemption, of
the Certificate evidencing the Redeemable Interests, duly
endorsed in blank or accompanied by an assignment duly executed
in blank, the Limited Partner or his duly authorized
representative shall be entitled to receive the payment therefor.
(iv) After the redemption date, Redeemable Interests shall
no longer constitute issued and Outstanding Limited Partner
Interests.
(b) The provisions of this Section 4.10 shall also be
applicable to Limited Partner Interests held by a Limited
Partner as nominee of a Person determined to be other than an
Eligible Citizen.
(c) Nothing in this Section 4.10 shall prevent the
recipient of a notice of redemption from transferring his
Limited Partner Interest before the redemption date if such
transfer is otherwise permitted under this Agreement. Upon
receipt of notice of such a transfer, the General Partner shall
withdraw the notice of redemption, provided the
transferee of such Limited Partner Interest certifies to the
satisfaction of the General Partner that he is an Eligible
Citizen. If the transferee fails to make such certification,
such redemption shall be effected from the transferee on the
original redemption date.
ARTICLE V
CAPITAL
CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
Section 5.1 Organizational
Contributions.
In connection with the formation of the Partnership under the
Delaware Act, the General Partner made an initial Capital
Contribution to the Partnership in the amount of $20.00, for a
2% General Partner Interest in the Partnership and has been
admitted as the General Partner of the Partnership, and each of
the Organizational Limited Partners made an initial Capital
Contribution to the Partnership in the amount of $490.00 for a
49% Limited Partner Interest in the Partnership and have been
admitted as Limited Partners of the Partnership. As of the
Closing Date, the interest of the Organizational Limited
Partners shall be redeemed as provided in the Contribution
Agreement; and the initial Capital Contribution of the
Organizational Limited Partners shall thereupon be refunded.
Ninety-eight percent of any interest or other profit that may
have resulted from the investment or other use of such initial
Capital Contributions shall be allocated and distributed to the
Organizational Limited Partners, and the balance thereof shall
be allocated and distributed to the General Partner.
25
Section 5.2 Contributions
by the General Partner and its Affiliates.
(a) On the Closing Date and pursuant to the Contribution
Agreement: (i) the General Partner shall contribute to the
Partnership, as a Capital Contribution, a 4% interest in Targa
North Texas GP LLC, a Delaware limited liability company
(North Texas GP), in exchange for
(A) 578,127 General Partner Units representing a
continuation of its 2% General Partner Interest, subject to
all of the rights, privileges and duties of the General Partner
under this Agreement and (B) the Incentive Distribution
Rights; (ii) Targa GP Inc. shall contribute to the
Partnership, as a Capital Contribution, a 96% interest in
North Texas GP, in exchange for 5,475,052 Subordinated
Units, and (iii) Targa LP Inc. shall contribute to the
Partnership, as a Capital Contribution, all of its interest in
Targa North Texas LP, a Delaware limited partnership, in
exchange for 6,053,179 Subordinated Units.
(b) Upon the issuance of additional Common Units pursuant
to the Over-Allotment Option, the Partnership will issue to the
General Partner that number of additional General Partner Units
equal to
2/98ths of
the number of Common Units so issued pursuant to the
Over-Allotment Option, and the General Partner shall not be
obligated to make any additional Capital Contribution to the
Partnership in exchange for such issuance.
(c) Upon the issuance of any additional Limited Partner
Interests by the Partnership (other than the Common Units issued
in the Initial Offering, the Common Units issued pursuant to the
Over-Allotment Option, the Subordinated Units issued pursuant to
Section 5.2(a), any Class B Units issued pursuant to
Section 5.11 and any Common Units issued upon conversion of
Class B Units), the General Partner may, in exchange for a
proportionate number of General Partner Units, make additional
Capital Contributions in an amount equal to the product obtained
by multiplying (i) the quotient determined by dividing
(A) the General Partners Percentage Interest by
(B) 100 less the General Partners Percentage Interest
times (ii) the amount contributed to the Partnership by the
Limited Partners in exchange for such additional Limited Partner
Interests. Except as set forth in Article XII, the General
Partner shall not be obligated to make any additional Capital
Contributions to the Partnership.
Section 5.3 Contributions
by Initial Limited Partners.
(a) On the Closing Date and pursuant to the Underwriting
Agreement, each Underwriter shall contribute to the Partnership
cash in an amount equal to the Issue Price per Initial Common
Unit, multiplied by the number of Common Units specified in the
Underwriting Agreement to be purchased by such Underwriter at
the Closing Date. In exchange for such Capital Contributions by
the Underwriters, the Partnership shall issue Common Units to
each Underwriter on whose behalf such Capital Contribution is
made in an amount equal to the quotient obtained by dividing
(i) the cash contribution to the Partnership by or on
behalf of such Underwriter by (ii) the Issue Price per
Initial Common Unit.
(b) Upon the exercise of the Over-Allotment Option, each
Underwriter shall contribute to the Partnership cash in an
amount equal to the Issue Price per Initial Common Unit,
multiplied by the number of Common Units to be purchased by such
Underwriter at the Option Closing Date. In exchange for such
Capital Contributions by the Underwriters, the Partnership shall
issue Common Units to each Underwriter on whose behalf such
Capital Contribution is made in an amount equal to the quotient
obtained by dividing (i) the cash contributions to the
Partnership by or on behalf of such Underwriter by (ii) the
Issue Price per Initial Common Unit.
(c) No Limited Partner Interests will be issued or issuable
as of or at the Closing Date other than (i) the Common
Units issuable pursuant to subparagraph (a) hereof in
aggregate number equal to 16,800,000, (ii) the Option
Units as such term is used in the Underwriting Agreement
in an aggregate number up to 2,520,000 issuable upon exercise of
the Over-Allotment Option pursuant to
subparagraph (b) hereof, (iii) the 11,528,231
Subordinated Units issuable to Targa GP Inc. and Targa LP Inc.
pursuant to Section 5.2 hereof and (iv) the Incentive
Distribution Rights.
26
Section 5.4 Interest
and Withdrawal.
No interest shall be paid by the Partnership on Capital
Contributions. No Partner or Assignee shall be entitled to the
withdrawal or return of its Capital Contribution, except to the
extent, if any, that distributions made pursuant to this
Agreement or upon termination of the Partnership may be
considered as such by law and then only to the extent provided
for in this Agreement. Except to the extent expressly provided
in this Agreement, no Partner shall have priority over any other
Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses or distributions. Any
such return shall be a compromise to which all Partners agree
within the meaning of
Section 17-502(b)
of the Delaware Act.
Section 5.5 Capital
Accounts.
(a) The Partnership shall maintain for each Partner (or a
beneficial owner of Partnership Interests held by a nominee
in any case in which the nominee has furnished the identity of
such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable
to the General Partner) owning a Partnership Interest a
separate Capital Account with respect to such
Partnership Interest in accordance with the rules of
Treasury
Regulation Section 1.704-1(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount
of all Capital Contributions made to the Partnership with
respect to such Partnership Interest and (ii) all
items of Partnership income and gain (including income and gain
exempt from tax) computed in accordance with Section 5.5(b)
and allocated with respect to such Partnership Interest
pursuant to Section 6.1, and decreased by (x) the
amount of cash or Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such
Partnership Interest and (y) all items of Partnership
deduction and loss computed in accordance with
Section 5.5(b) and allocated with respect to such
Partnership Interest pursuant to Section 6.1.
(b) For purposes of computing the amount of any item of
income, gain, loss or deduction which is to be allocated
pursuant to Article VI and is to be reflected in the
Partners Capital Accounts, the determination, recognition
and classification of any such item shall be the same as its
determination, recognition and classification for federal income
tax purposes (including any method of depreciation, cost
recovery or amortization used for that purpose),
provided, that:
(i) Solely for purposes of this Section 5.5, the
Partnership shall be treated as owning directly its
proportionate share (as determined by the General Partner based
upon the provisions of the applicable Group Member Agreement or
governing, organizational or similar documents) of all property
owned by any other Group Member that is classified as a
partnership for federal income tax purposes and (y) any
other partnership, limited liability company, unincorporated
business or other entity classified as a partnership for federal
income tax purposes of which a Group Member is, directly or
indirectly, a partner.
(ii) All fees and other expenses incurred by the
Partnership to promote the sale of (or to sell) a
Partnership Interest that can neither be deducted nor
amortized under Section 709 of the Code, if any, shall, for
purposes of Capital Account maintenance, be treated as an item
of deduction at the time such fees and other expenses are
incurred and shall be allocated among the Partners pursuant to
Section 6.1.
(iii) Except as otherwise provided in Treasury
Regulation Section 1.704-1(b)(2)(iv)(m),
the computation of all items of income, gain, loss and deduction
shall be made without regard to any election under
Section 754 of the Code which may be made by the
Partnership and, as to those items described in
Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without
regard to the fact that such items are not includable in gross
income or are neither currently deductible nor capitalized for
federal income tax purposes. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to
Section 734(b) or 743(b) of the Code is required, pursuant
to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the
amount of such adjustment in the Capital Accounts shall be
treated as an item of gain or loss.
27
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as
if the adjusted basis of such property as of such date of
disposition were equal in amount to the Partnerships
Carrying Value with respect to such property as of such date.
(v) In accordance with the requirements of
Section 704(b) of the Code, any deductions for
depreciation, cost recovery or amortization attributable to any
Contributed Property shall be determined as if the adjusted
basis of such property on the date it was acquired by the
Partnership were equal to the Agreed Value of such property.
Upon an adjustment pursuant to Section 5.5(d) to the
Carrying Value of any Partnership property subject to
depreciation, cost recovery or amortization, any further
deductions for such depreciation, cost recovery or amortization
attributable to such property shall be determined as if the
adjusted basis of such property were equal to the Carrying Value
of such property immediately following such adjustment.
(vi) If the Partnerships adjusted basis in a
depreciable or cost recovery property is reduced for federal
income tax purposes pursuant to Section 48(q)(1) or
48(q)(3) of the Code, the amount of such reduction shall, solely
for purposes hereof, be deemed to be an additional depreciation
or cost recovery deduction in the year such property is placed
in service and shall be allocated among the Partners pursuant to
Section 6.1. Any restoration of such basis pursuant to
Section 48(q)(2) of the Code shall, to the extent possible,
be allocated in the same manner to the Partners to whom such
deemed deduction was allocated.
(c) (i) A transferee of a Partnership Interest
shall succeed to a pro rata portion of the Capital Account of
the transferor relating to the Partnership Interest so
transferred.
(ii) Subject to Section 6.7(c), immediately prior to
the transfer of a Subordinated Unit or of a Subordinated Unit
that has converted into a Common Unit pursuant to
Section 5.7 by a holder thereof (other than a transfer to
an Affiliate unless the General Partner elects to have this
subparagraph 5.5(c)(ii) apply), the Capital Account
maintained for such Person with respect to its Subordinated
Units or converted Subordinated Units will (A) first, be
allocated to the Subordinated Units or converted Subordinated
Units to be transferred in an amount equal to the product of
(x) the number of such Subordinated Units or converted
Subordinated Units to be transferred and (y) the Per Unit
Capital Amount for a Common Unit, and (B) second, any
remaining balance in such Capital Account will be retained by
the transferor, regardless of whether it has retained any
Subordinated Units or converted Subordinated Units
(Retained Converted Subordinated
Units). Following any such allocation, the
transferors Capital Account, if any, maintained with
respect to the retained Subordinated Units or Retained Converted
Subordinated Units, if any, will have a balance equal to the
amount allocated under clause (B) hereinabove, and the
transferees Capital Account established with respect to
the transferred Subordinated Units or converted Subordinated
Units will have a balance equal to the amount allocated under
clause (A) hereinabove.
(d) (i) In accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv)(f),
on an issuance of additional Partnership Interests for cash
or Contributed Property, the issuance of
Partnership Interests as consideration for the provision of
services or the conversion of the General Partners
Combined Interest to Common Units pursuant to
Section 11.3(b), the Capital Account of all Partners and
the Carrying Value of each Partnership property immediately
prior to such issuance shall be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss attributable to
such Partnership property, as if such Unrealized Gain or
Unrealized Loss had been recognized on an actual sale of each
such property immediately prior to such issuance and had been
allocated to the Partners at such time pursuant to
Section 6.1 in the same manner as any item of gain or loss
actually recognized during such period would have been
allocated. In determining such Unrealized Gain or Unrealized
Loss, the aggregate cash amount and fair market value of all
Partnership assets (including cash or cash equivalents)
immediately prior to the issuance of additional
Partnership Interests shall be determined by the General
Partner using such method of valuation as it may adopt;
provided, however, that the General Partner, in arriving
at such valuation, must take fully into account the fair market
value of the Partnership Interests of all Partners at such
time. The General Partner shall allocate such aggregate
28
value among the assets of the Partnership (in such manner as it
determines) to arrive at a fair market value for individual
properties.
(ii) In accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv)(f),
immediately prior to any actual or deemed distribution to a
Partner of any Partnership property (other than a distribution
of cash that is not in redemption or retirement of a
Partnership Interest), the Capital Accounts of all Partners
and the Carrying Value of all Partnership property shall be
adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as if
such Unrealized Gain or Unrealized Loss had been recognized in a
sale of such property immediately prior to such distribution for
an amount equal to its fair market value, and had been allocated
to the Partners, at such time, pursuant to Section 6.1 in
the same manner as any item of gain or loss actually recognized
during such period would have been allocated. In determining
such Unrealized Gain or Unrealized Loss the aggregate cash
amount and fair market value of all Partnership assets
(including cash or cash equivalents) immediately prior to a
distribution shall (A) in the case of an actual
distribution that is not made pursuant to Section 12.4 or
in the case of a deemed distribution, be determined and
allocated in the same manner as that provided in
Section 5.5(d)(i) or (B) in the case of a liquidating
distribution pursuant to Section 12.4, be determined and
allocated by the Liquidator using such method of valuation as it
may adopt.
Section 5.6 Issuances
of Additional Partnership Securities.
(a) The Partnership may issue additional Partnership
Securities and options, rights, warrants and appreciation rights
relating to the Partnership Securities for any Partnership
purpose at any time and from time to time to such Persons for
such consideration and on such terms and conditions as the
General Partner shall determine, all without the approval of any
Limited Partners.
(b) Each additional Partnership Security authorized to be
issued by the Partnership pursuant to Section 5.6(a) may be
issued in one or more classes, or one or more series of any such
classes, with such designations, preferences, rights, powers and
duties (which may be senior to existing classes and series of
Partnership Securities), as shall be fixed by the General
Partner, including (i) the right to share in Partnership
profits and losses or items thereof; (ii) the right to
share in Partnership distributions; (iii) the rights upon
dissolution and liquidation of the Partnership;
(iv) whether, and the terms and conditions upon which, the
Partnership may redeem the Partnership Security;
(v) whether such Partnership Security is issued with the
privilege of conversion or exchange and, if so, the terms and
conditions of such conversion or exchange; (vi) the terms
and conditions upon which each Partnership Security will be
issued, evidenced by certificates and assigned or transferred;
(vii) the method for determining the Percentage Interest as
to such Partnership Security; and (viii) the right, if any,
of each such Partnership Security to vote on Partnership
matters, including matters relating to the relative rights,
preferences and privileges of such Partnership Security.
(c) The General Partner shall take all actions that it
determines to be necessary or appropriate in connection with
(i) each issuance of Partnership Securities and options,
rights, warrants and appreciation rights relating to Partnership
Securities pursuant to this Section 5.6, (ii) the
conversion of the General Partner Interest (represented by
General Partner Units) or any Incentive Distribution Rights into
Units pursuant to the terms of this Agreement, (iii) the
issuance of Class B Units pursuant to Section 5.11 and
the conversion of Class B Units into Common Units pursuant
to the terms of this Agreement, (iv) reflecting admission
of such additional Limited Partners in the books and records of
the Partnership as the Record Holder of such Limited Partner
Interest and (v) all additional issuances of Partnership
Securities. The General Partner shall determine the relative
rights, powers and duties of the holders of the Units or other
Partnership Securities being so issued. The General Partner
shall do all things necessary to comply with the Delaware Act
and is authorized and directed to do all things that it
determines to be necessary or appropriate in connection with any
future issuance of Partnership Securities or in connection with
the conversion of the General Partner Interest or any Incentive
Distribution Rights into Units pursuant to the terms of this
Agreement, including compliance with any statute, rule,
regulation or guideline of any federal,
29
state or other governmental agency or any National Securities
Exchange on which the Units or other Partnership Securities are
listed or admitted to trading.
(d) No fractional Units shall be issued by the Partnership.
Section 5.7 Conversion
of Subordinated Units.
(a) All of the Subordinated Units shall convert into Common
Units on a
one-for-one
basis on the second Business Day following the distribution of
Available Cash to Partners pursuant to Section 6.3(a) in
respect of the final Quarter of the Subordination Period.
(b) Notwithstanding Section 5.7(a) above, the
Subordination Period shall terminate and all Outstanding
Subordinated Units shall convert into Common Units on a
one-for-one
basis on the second Business Day following the distribution of
Available Cash to Partners pursuant to Section 6.3(a) in
respect of any Quarter ending on or after March 31, 2008 in
respect of which:
(i) distributions of Available Cash from Operating Surplus
under Section 6.4 in respect of all Outstanding Common
Units. Subordinated Units and General Partner Units and any
other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units with respect to the
four-Quarter period immediately preceding such date equaled or
exceeded the sum of the Third Target Distribution on all of the
Outstanding Common Units, Subordinated Units and General Partner
Units and any other Outstanding Units that are senior or equal
in right of distribution to the Subordinated Units during such
period;
(ii) the Adjusted Operating Surplus generated during the
four-Quarter period immediately preceding such date equaled or
exceeded the sum of the Third Target Distribution on all of the
Common Units, Subordinated Units and General Partner Units and
any other Units that are senior or equal in right of
distribution to the Subordinated Units that were Outstanding
during such period on a Fully Diluted Basis; and
(iii) there are no Cumulative Common Unit Arrearages.
(c) Notwithstanding any other provision of this Agreement,
all the then Outstanding Subordinated Units will automatically
convert into Common Units on a
one-for-one
basis as set forth in, and pursuant to the terms of,
Section 11.4.
(d) A Subordinated Unit that has converted into a Common
Unit shall be subject to the provisions of Section 6.7(b)
and Section 6.7(c).
Section 5.8 Limited
Preemptive Right.
Except as provided in this Section 5.8 and in
Section 5.2, no Person shall have any preemptive,
preferential or other similar right with respect to the issuance
of any Partnership Security, whether unissued, held in the
treasury or hereafter created. The General Partner shall have
the right, which it may from time to time assign in whole or in
part to any of its Affiliates, to purchase Partnership
Securities from the Partnership whenever, and on the same terms
that, the Partnership issues Partnership Securities to Persons
other than the General Partner and its Affiliates, to the extent
necessary to maintain the Percentage Interests of the General
Partner and its Affiliates equal to that which existed
immediately prior to the issuance of such Partnership Securities.
Section 5.9 Splits
and Combinations.
(a) Subject to Section 5.9(d), Section 6.6 and
Section 6.9 (dealing with adjustments of distribution
levels), the Partnership may make a Pro Rata distribution of
Partnership Securities to all Record Holders or may effect a
subdivision or combination of Partnership Securities so long as,
after any such event, each Partner shall have the same
Percentage Interest in the Partnership as before such event, and
any amounts calculated on a per Unit basis (including any Common
Unit Arrearage or Cumulative Common Unit
30
Arrearage) or stated as a number of Units (including the number
of Subordinated Units that may convert prior to the end of the
Subordination Period) are proportionately adjusted.
(b) Whenever such a distribution, subdivision or
combination of Partnership Securities is declared, the General
Partner shall select a Record Date as of which the distribution,
subdivision or combination shall be effective and shall send
notice thereof at least 20 days prior to such Record Date
to each Record Holder as of a date not less than 10 days
prior to the date of such notice. The General Partner also may
cause a firm of independent public accountants selected by it to
calculate the number of Partnership Securities to be held by
each Record Holder after giving effect to such distribution,
subdivision or combination. The General Partner shall be
entitled to rely on any certificate provided by such firm as
conclusive evidence of the accuracy of such calculation.
(c) Promptly following any such distribution, subdivision
or combination, the Partnership may issue Certificates to the
Record Holders of Partnership Securities as of the applicable
Record Date representing the new number of Partnership
Securities held by such Record Holders, or the General Partner
may adopt such other procedures that it determines to be
necessary or appropriate to reflect such changes. If any such
combination results in a smaller total number of Partnership
Securities Outstanding, the Partnership shall require, as a
condition to the delivery to a Record Holder of such new
Certificate, the surrender of any Certificate held by such
Record Holder immediately prior to such Record Date.
(d) The Partnership shall not issue fractional Units upon
any distribution, subdivision or combination of Units. If a
distribution, subdivision or combination of Units would result
in the issuance of fractional Units but for the provisions of
this Section 5.9(d), each fractional Unit shall be rounded
to the nearest whole Unit (and a 0.5 Unit shall be rounded
to the next higher Unit).
Section 5.10 Fully
Paid and Non-Assessable Nature of Limited Partner Interests.
All Limited Partner Interests issued pursuant to, and in
accordance with the requirements of, this Article V shall
be fully paid and non-assessable Limited Partner Interests in
the Partnership, except as such non-assessability may be
affected by
Section 17-607
of the Delaware Act.
Section 5.11 Issuance
of Class B Units in Connection with Reset of Incentive
Distribution Rights.
(a) Subject to the provisions of this Section 5.11,
the holder of the Incentive Distribution Rights (or, if there is
more than one holder of the Incentive Distribution Rights, the
holders of a majority in interest of the Incentive Distribution
Rights) shall have the right, at any time when there are no
Subordinated Units outstanding and the Partnership has made a
distribution pursuant to Section 6.4(b)(v) for each of the
four most recently completed Quarters and the amount of each
such distribution did not exceed Adjusted Operating Surplus for
such Quarter, to make an election (the IDR
Reset Election) to cause the Minimum Quarterly
Distribution and the Target Distributions to be reset in
accordance with the provisions of Section 5.11(e) and, in
connection therewith, the holder or holders of the Incentive
Distribution Rights will become entitled to receive their
respective proportionate share of a number of Class B Units
derived by dividing (i) the average amount of cash
distributions made by the Partnership for the two full Quarters
immediately preceding the giving of the Reset Notice (as defined
in Section 5.11(b)) in respect of the Incentive
Distribution Rights by (ii) the average of the cash
distributions made by the Partnership in respect of each Common
Unit for the two full Quarters immediately preceding the giving
of the Reset Notice (the number of Class B Units determined
by such quotient is referred to herein as the
Aggregate Quantity of Class B
Units). Upon the issuance of such Class B
Units, the Partnership will issue to the General Partner that
number of additional General Partner Units equal to the product
of (x) the quotient obtained by dividing (A) the
Percentage Interest of the General Partner immediately prior to
such issuance by (B) a percentage equal to 100% less such
Percentage Interest by (y) the number of such Class B
Units, and the General Partner shall not be obligated to make
any additional Capital Contribution to the Partnership in
exchange for such issuance. The making of the IDR Reset Election
in the manner specified in Section 5.11(b) shall cause the
Minimum Quarterly Distribution and the Target Distributions to
be reset in accordance with the provisions of
Section 5.11(e) and, in connection therewith, the holder or
holders of
31
the Incentive Distribution Rights will become entitled to
receive Class B Units and General Partner Units on the
basis specified above, without any further approval required by
the General Partner or the Unitholders, at the time specified in
Section 5.11(c) unless the IDR Reset Election is rescinded
pursuant to Section 5.11(d).
(b) To exercise the right specified in
Section 5.11(a), the holder of the Incentive Distribution
Rights (or, if there is more than one holder of the Incentive
Distribution Rights, the holders of a majority in interest of
the Incentive Distribution Rights) shall deliver a written
notice (the Reset Notice) to the
Partnership. Within 10 Business Days after the receipt by
the Partnership of such Reset Notice, as the case may be, the
Partnership shall deliver a written notice to the holder or
holders of the Incentive Distribution Rights of the
Partnerships determination of the aggregate number of
Class B Units that each holder of Incentive Distribution
Rights will be entitled to receive.
(c) The holder or holders of the Incentive Distribution
Rights will be entitled to receive the Aggregate Quantity of
Class B Units and related additional General Partner Units
on the fifteenth Business Day after receipt by the Partnership
of the Reset Notice, and the Partnership shall issue
Certificates for the Class B Units to the holder or holders
of the Incentive Distribution Rights; provided, however,
that the issuance of Class B Units to the holder or holders
of the Incentive Distribution Rights shall not occur prior to
the approval of the listing or admission for trading of the
Common Units into which the Class B Units are convertible
pursuant to Section 5.11(f) by the principal National
Securities Exchange upon which the Common Units are then listed
or admitted for trading if any such approval is required
pursuant to the rules and regulations of such National
Securities Exchange.
(d) If the principal National Securities Exchange upon
which the Common Units are then traded have not approved the
listing or admission for trading of the Common Units into which
the Class B Units are convertible pursuant to
Section 5.11(f) on or before the 30th calendar day
following the Partnerships receipt of the Reset Notice and
such approval is required by the rules and regulations of such
National Securities Exchange, then the holder of the Incentive
Distribution Rights (or, if there is more than one holder of the
Incentive Distribution Rights, the holders of a majority in
interest of the Incentive Distribution Rights) shall have the
right to either rescind the IDR Reset Election or elect to
receive other Partnership Securities having such terms as the
General Partner may approve, with the approval of the Conflicts
Committee, that will provide (i) the same economic value,
in the aggregate, as the Aggregate Quantity of Class B
Units would have had at the time of the Partnerships
receipt of the Reset Notice, as determined by the General
Partner, and (ii) for the subsequent conversion of such
Partnership Securities into Common Units within not more than
12 months following the Partnerships receipt of the
Reset Notice upon the satisfaction of one or more conditions
that are reasonably acceptable to the holder of the Incentive
Distribution Rights (or, if there is more than one holder of the
Incentive Distribution Rights, the holders of a majority in
interest of the Incentive Distribution Rights).
(e) The Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target
Distribution shall be adjusted at the time of the issuance of
Common Units or other Partnership Securities pursuant to this
Section 5.11 such that (i) the Minimum Quarterly
Distribution shall be reset to equal to the average cash
distribution amount per Common Unit for the two Quarters
immediately prior to the Partnerships receipt of the Reset
Notice (the Reset MQD), (ii) the
First Target Distribution shall be reset to equal 115% of the
Reset MQD, (iii) the Second Target Distribution shall be
reset to equal to 125% of the Reset MQD and (iv) the Third
Target Distribution shall be reset to equal 150% of the Reset
MQD.
(f) Any holder of Class B Units shall have the right
to elect, by giving written notice to the General Partner, to
convert all or a portion of the Class B Units held by such
holder, at any time following the first anniversary of the
issuance of such Class B Units, into Common Units on a
one-for-one
basis, such conversion to be effective on the second Business
Day following the General Partners receipt of such written
notice.
32
ARTICLE VI
ALLOCATIONS
AND DISTRIBUTIONS
Section 6.1 Allocations
for Capital Account Purposes.
For purposes of maintaining the Capital Accounts and in
determining the rights of the Partners among themselves, the
Partnerships items of income, gain, loss and deduction
(computed in accordance with
Section 5.5(b))
shall be allocated among the Partners in each taxable year (or
portion thereof) as provided herein below.
(a) Net Income. After giving effect to
the special allocations set forth in
Section 6.1(d),
Net Income for each taxable year and all items of income, gain,
loss and deduction taken into account in computing Net Income
for such taxable year shall be allocated as follows:
(i) First, 100% to the General Partner, in an amount equal
to the aggregate Net Losses allocated to the General Partner
pursuant to
Section 6.1(b)(iii)
for all previous taxable years until the aggregate Net Income
allocated to the General Partner pursuant to this
Section 6.1(a)(i)
for the current taxable year and all previous taxable years is
equal to the aggregate Net Losses allocated to the General
Partner pursuant to
Section 6.1(b)(iii)
for all previous taxable years;
(ii) Second, 100% to the General Partner and the
Unitholders, in accordance with their respective Percentage
Interests, until the aggregate Net Income allocated to such
Partners pursuant to this
Section 6.1(a)(ii)
for the current taxable year and all previous taxable years is
equal to the aggregate Net Losses allocated to such Partners
pursuant to
Section 6.1(b)(ii)
for all previous taxable years; and
(iii) Third, the balance, if any, 100% to the General
Partner and the Unitholders, in accordance with their respective
Percentage Interests.
(b) Net Losses. After giving effect to
the special allocations set forth in
Section 6.1(d),
Net Losses for each taxable period and all items of income,
gain, loss and deduction taken into account in computing Net
Losses for such taxable period shall be allocated as follows:
(i) First, 100% to the General Partner and the Unitholders,
in accordance with their respective Percentage Interests, until
the aggregate Net Losses allocated pursuant to this
Section 6.1(b)(i)
for the current taxable year and all previous taxable years is
equal to the aggregate Net Income allocated to such Partners
pursuant to
Section 6.1(a)(iii)
for all previous taxable years, provided that the Net
Losses shall not be allocated pursuant to this
Section 6.1(b)(i)
to the extent that such allocation would cause any Unitholder to
have a deficit balance in its Adjusted Capital Account at the
end of such taxable year (or increase any existing deficit
balance in its Adjusted Capital Account);
(ii) Second, 100% to the General Partner and the
Unitholders, in accordance with their respective Percentage
Interests; provided, that Net Losses shall not be
allocated pursuant to this
Section 6.1(b)(ii)
to the extent that such allocation would cause any Unitholder to
have a deficit balance in its Adjusted Capital Account at the
end of such taxable year (or increase any existing deficit
balance in its Adjusted Capital Account); and
(iii) Third, the balance, if any, 100% to the General
Partner.
(c) Net Termination Gains and
Losses. After giving effect to the special
allocations set forth in
Section 6.1(d),
all items of income, gain, loss and deduction taken into account
in computing Net Termination Gain or Net Termination Loss for
such taxable period shall be allocated in the same manner as
such Net Termination Gain or Net Termination Loss is allocated
hereunder. All allocations under this
Section 6.1(c)
shall be made after Capital Account balances have been adjusted
by all other allocations provided under this Section 6.1
and after all distributions of Available Cash provided under
Section 6.4 and Section 6.5 have been made;
provided, however, that solely for purposes of
this
Section 6.1(c),
Capital Accounts shall not be adjusted for distributions made
pursuant to Section 12.4.
33
(i) If a Net Termination Gain is recognized (or deemed
recognized pursuant to
Section 5.5(d)),
such Net Termination Gain shall be allocated among the Partners
in the following manner (and the Capital Accounts of the
Partners shall be increased by the amount so allocated in each
of the following subclauses, in the order listed, before an
allocation is made pursuant to the next succeeding subclause):
(A) First, to each Partner having a deficit balance in its
Capital Account, in the proportion that such deficit balance
bears to the total deficit balances in the Capital Accounts of
all Partners, until each such Partner has been allocated Net
Termination Gain equal to any such deficit balance in its
Capital Account;
(B) Second, (x) to the General Partner in accordance
with its Percentage Interest and (y) to all Unitholders
holding Common Units, Pro Rata, a percentage equal to 100% less
the percentage applicable to subclause (x) of this
clause (B), until the Capital Account in respect of each
Common Unit then Outstanding is equal to the sum of (1) its
Unrecovered Initial Unit Price, (2) the Minimum Quarterly
Distribution for the Quarter during which the Liquidation Date
occurs, reduced by any distribution pursuant to
Section 6.4(a)(i)
or Section 6.4(b)(i) with respect to such Common Unit for
such Quarter (the amount determined pursuant to this
clause (2) is hereinafter defined as the Unpaid
MQD) and (3) any then existing Cumulative
Common Unit Arrearage;
(C) Third, if such Net Termination Gain is recognized (or
is deemed to be recognized) prior to the conversion of the last
Outstanding Class B Unit, (x) to the General Partner
in accordance with its Percentage Interest and (y) to all
Unitholders holding Class B Units, Pro Rata, a percentage
equal to 100% less the percentage applicable to
subclause (x) of this clause (C), until the
Capital Account in respect of each Class B Unit then
Outstanding equals the sum of (1) its Unrecovered Initial
Unit Price, and (2) the Minimum Quarterly Distribution for
the Quarter during which the Liquidation Date occurs, reduced by
any distribution pursuant to
Section 6.4(b)(i)
with respect to such Class B Unit for such Quarter;
(D) Fourth, if such Net Termination Gain is recognized (or
is deemed to be recognized) prior to the conversion of the last
Outstanding Subordinated Unit, (x) to the General Partner
in accordance with its Percentage Interest and (y) to all
Unitholders holding Subordinated Units, Pro Rata, a percentage
equal to 100% less the percentage applicable to
subclause (x) of this clause (D), until the
Capital Account in respect of each Subordinated Unit then
Outstanding equals the sum of (1) its Unrecovered Initial
Unit Price, determined for the taxable year (or portion thereof)
to which this allocation of gain relates, and (2) the
Minimum Quarterly Distribution for the Quarter during which the
Liquidation Date occurs, reduced by any distribution pursuant to
Section 6.4(a)(iii)
with respect to such Subordinated Unit for such Quarter;
(E) Fifth, 100% to the General Partner and all Unitholders
in accordance with their respective Percentage Interests, until
the Capital Account in respect of each Common Unit then
Outstanding is equal to the sum of (1) its Unrecovered
Initial Unit Price, (2) the Unpaid MQD, (3) any then
existing Cumulative Common Unit Arrearage, and (4) the
excess of (aa) the First Target Distribution less the
Minimum Quarterly Distribution for each Quarter of the
Partnerships existence over (bb) the cumulative per
Unit amount of any distributions of Available Cash that is
deemed to be Operating Surplus made pursuant to
Section 6.4(a)(iv)
and
Section 6.4(b)(ii)
(the sum of (1), (2), (3) and (4) is hereinafter
defined as the First Liquidation Target
Amount);
(F) Sixth, (x) to the General Partner in accordance
with its Percentage Interest, (y) 13% to the holders of the
Incentive Distribution Rights, Pro Rata, and (z) to all
Unitholders, Pro Rata, a percentage equal to 100% less the sum
of the percentages applicable to subclause (x) and
(y) of this clause (F), until the Capital Account in
respect of each Common Unit then Outstanding is equal to the sum
of (1) the First Liquidation Target Amount, and
(2) the excess of (aa) the Second Target Distribution
less the First Target Distribution for each Quarter of the
Partnerships existence over (bb) the cumulative per
Unit amount of any distributions of Available Cash that is
deemed to be Operating Surplus made pursuant to
Section 6.4(a)(v)
and
Section 6.4(b)(iii)
(the sum of (1) and (2) is hereinafter defined as the
Second Liquidation Target Amount);
34
(G) Seventh, (x) to the General Partner in accordance
with its Percentage Interest, (y) 23% to the holders of the
Incentive Distribution Rights, Pro Rata, and (z) to all
Unitholders, Pro Rata, a percentage equal to 100% less the sum
of the percentages applicable to subclause (x) and
(y) of this clause (G), until the Capital Account in
respect of each Common Unit then Outstanding is equal to the sum
of (1) the Second Liquidation Target Amount, and
(2) the excess of (aa) the Third Target Distribution
less the Second Target Distribution for each Quarter of the
Partnerships existence over (bb) the cumulative per
Unit amount of any distributions of Available Cash that is
deemed to be Operating Surplus made pursuant to
Section 6.4(a)(vi)
and
Section 6.4(b)(iv)
(the sum of (1) and (2) is hereinafter defined as the
Third Liquidation Target
Amount); and
(H) Finally, (x) to the General Partner in accordance
with its Percentage Interest, (y) 48% to the holders of the
Incentive Distribution Rights, Pro Rata, and (z) to all
Unitholders, Pro Rata, a percentage equal to 100% less the sum
of the percentages applicable to subclause (x) and
(y) of this clause (H).
(ii) If a Net Termination Loss is recognized (or deemed
recognized pursuant to
Section 5.5(d)),
such Net Termination Loss shall be allocated among the Partners
in the following manner:
(A) First, if such Net Termination Loss is recognized (or
is deemed to be recognized) prior to the conversion of the last
Outstanding Subordinated Unit, (x) to the General Partner
in accordance with its Percentage Interest and (y) to all
Unitholders holding Subordinated Units, Pro Rata, a percentage
equal to 100% less the percentage applicable to
subclause (x) of this clause (A), until the
Capital Account in respect of each Subordinated Unit then
Outstanding has been reduced to zero;
(B) Second, (x) to the General Partner in accordance
with its Percentage Interest and (y) to the Class B
Unitholders, Pro Rata, a percentage equal to 100% less the
percentage applicable to subclause (x) of this
clause (B) until the Capital Account in respect of
each Class B Unit then Outstanding has been reduced to zero;
(C) Third, (x) to the General Partner in accordance
with its Percentage Interest and (y) to all Unitholders,
Pro Rata, a percentage equal to 100% less the percentage
applicable to subclause (x) of this
clause (B) until the Capital Account in respect of
each Unit then Outstanding has been reduced to zero; and
(D) Fourth, the balance, if any, 100% to the General
Partner.
(d) Special Allocations. Notwithstanding
any other provision of this Section 6.1, the following
special allocations shall be made for such taxable period:
(i) Partnership Minimum Gain
Chargeback. Notwithstanding any other provision
of this Section 6.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period,
each Partner shall be allocated items of Partnership income and
gain for such period (and, if necessary, subsequent periods) in
the manner and amounts provided in Treasury
Regulation Sections 1.704-2(f)(6),
1.704-2(g)(2)
and
1.704-2(j)(2)(i),
or any successor provision. For purposes of this
Section 6.1(d),
each Partners Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any
other allocations pursuant to this
Section 6.1(d)
with respect to such taxable period (other than an allocation
pursuant to
Section 6.1(d)(vi)
and Section 6.1(d)(vii)). This
Section 6.1(d)(i)
is intended to comply with the Partnership Minimum Gain
chargeback requirement in Treasury
Regulation Section 1.704-2(f)
and shall be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum
Gain. Notwithstanding the other provisions of
this Section 6.1 (other than Section 6.1(d)(i)),
except as provided in Treasury
Regulation Section 1.704-2(i)(4),
if there is a net decrease in Partner Nonrecourse Debt Minimum
Gain during any Partnership taxable period, any Partner with a
share of Partner Nonrecourse Debt Minimum Gain at the beginning
of such taxable period shall be allocated items of Partnership
income and gain for such period (and, if necessary, subsequent
periods) in the manner and amounts provided in Treasury
35
Regulation Sections 1.704-2(i)(4)
and
1.704-2(j)(2)(ii),
or any successor provisions. For purposes of this
Section 6.1(d),
each Partners Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any
other allocations pursuant to this
Section 6.1(d),
other than
Section 6.1(d)(i)
and other than an allocation pursuant to
Section 6.1(d)(vi)
and
Section 6.1(d)(vii),
with respect to such taxable period. This
Section 6.1(d)(ii)
is intended to comply with the chargeback of items of income and
gain requirement in Treasury
Regulation Section 1.704-2(i)(4)
and shall be interpreted consistently therewith.
(iii) Priority Allocations.
(A) If the amount of cash or the Net Agreed Value of any
property distributed (except cash or property distributed
pursuant to Section 12.4) to any Unitholder with respect to
its Units for a taxable year is greater (on a per Unit basis)
than the amount of cash or the Net Agreed Value of property
distributed to the other Unitholders with respect to their Units
(on a per Unit basis), then (1) there shall be allocated
income and gain to each Unitholder receiving such greater cash
or property distribution until the aggregate amount of such
items allocated pursuant to this
Section 6.1(d)(iii)(A)
for the current taxable year and all previous taxable years is
equal to the product of (aa) the amount by which the
distribution (on a per Unit basis) to such Unitholder exceeds
the distribution (on a per Unit basis) to the Unitholders
receiving the smallest distribution and (bb) the number of Units
owned by the Unitholder receiving the greater distribution; and
(2) the General Partner shall be allocated income and gain
in an aggregate amount equal to the product obtained by
multiplying (aa) the quotient determined by dividing
(x) the General Partners Percentage Interest at the
time in which the greater cash or property distribution occurs
by (y) the sum of 100 less the General Partners
Percentage Interest at the time in which the greater cash or
property distribution occurs times (bb) the sum of the amounts
allocated in clause (1) above.
(B) After the application of
Section 6.1(d)(iii)(A),
all or any portion of the remaining items of Partnership income
or gain for the taxable period, if any, shall be allocated
(1) to the holders of Incentive Distribution Rights, Pro
Rata, until the aggregate amount of such items allocated to the
holders of Incentive Distribution Rights pursuant to this
Section 6.1(d)(iii)(B)
for the current taxable year and all previous taxable years is
equal to the cumulative amount of all Incentive Distributions
made to the holders of Incentive Distribution Rights from the
Closing Date to a date 45 days after the end of the current
taxable year; and (2) to the General Partner an amount
equal to the product of (aa) an amount equal to the quotient
determined by dividing (x) the General Partners
Percentage Interest by (y) the sum of 100 less the General
Partners Percentage Interest times (bb) the sum of the
amounts allocated in clause (1) above.
(iv) Qualified Income Offset. In the
event any Partner unexpectedly receives any adjustments,
allocations or distributions described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5),
or
1.704-1(b)(2)(ii)(d)(6),
items of Partnership income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations
promulgated under
Section 704(b)
of the Code, the deficit balance, if any, in its Adjusted
Capital Account created by such adjustments, allocations or
distributions as quickly as possible unless such deficit balance
is otherwise eliminated pursuant to
Section 6.1(d)(i)
or
Section 6.1(d)(ii).
(v) Gross Income Allocations. In the
event any Partner has a deficit balance in its Capital Account
at the end of any Partnership taxable period in excess of the
sum of (A) the amount such Partner is required to restore
pursuant to the provisions of this Agreement and (B) the
amount such Partner is deemed obligated to restore pursuant to
Treasury
Regulation Sections 1.704-2(g)
and
1.704-2(i)(5),
such Partner shall be specially allocated items of Partnership
income and gain in the amount of such excess as quickly as
possible; provided, that an allocation pursuant to this
Section 6.1(d)(v)
shall be made only if and to the extent that such Partner would
have a deficit balance in its Capital Account as adjusted after
all other allocations provided for in this Section 6.1 have
been tentatively made as if this
Section 6.1(d)(v)
were not in this Agreement.
36
(vi) Nonrecourse Deductions. Nonrecourse
Deductions for any taxable period shall be allocated to the
Partners in accordance with their respective Percentage
Interests. If the General Partner determines that the
Partnerships Nonrecourse Deductions should be allocated in
a different ratio to satisfy the safe harbor requirements of the
Treasury Regulations promulgated under Section 704(b) of
the Code, the General Partner is authorized, upon notice to the
other Partners, to revise the prescribed ratio to the
numerically closest ratio that does satisfy such requirements.
(vii) Partner Nonrecourse
Deductions. Partner Nonrecourse Deductions for
any taxable period shall be allocated 100% to the Partner that
bears the Economic Risk of Loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable in accordance with Treasury
Regulation Section 1.704-2(i).
If more than one Partner bears the Economic Risk of Loss with
respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or
among such Partners in accordance with the ratios in which they
share such Economic Risk of Loss.
(viii) Nonrecourse Liabilities. For
purposes of Treasury
Regulation Section 1.752-3(a)(3),
the Partners agree that Nonrecourse Liabilities of the
Partnership in excess of the sum of (A) the amount of
Partnership Minimum Gain and (B) the total amount of
Nonrecourse Built-in Gain shall be allocated among the Partners
in accordance with their respective Percentage Interests.
(ix) Code Section 754
Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to
Section 734(b)
or 743(b) of
the Code is required, pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the
amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such
basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner
in which their Capital Accounts are required to be adjusted
pursuant to such Section of the Treasury Regulations.
(x) Economic Uniformity.
(A) At the election of the General Partner with respect to
any taxable period ending upon, or after, the termination of the
Subordination Period, all or a portion of the remaining items of
Partnership income or gain for such taxable period, after taking
into account allocations pursuant to
Section 6.1(d)(iii),
shall be allocated 100% to each Partner holding Subordinated
Units that are Outstanding as of the termination of the
Subordination Period (Final Subordinated
Units) in the proportion of the number of Final
Subordinated Units held by such Partner to the total number of
Final Subordinated Units then Outstanding, until each such
Partner has been allocated an amount of income or gain that
increases the Capital Account maintained with respect to such
Final Subordinated Units to an amount equal to the product of
(A) the number of Final Subordinated Units held by such
Partner and (B) the Per Unit Capital Amount for a Common
Unit. The purpose of this allocation is to establish uniformity
between the Capital Accounts underlying Final Subordinated Units
and the Capital Accounts underlying Common Units held by Persons
other than the General Partner and its Affiliates immediately
prior to the conversion of such Final Subordinated Units into
Common Units. This allocation method for establishing such
economic uniformity will be available to the General Partner
only if the method for allocating the Capital Account maintained
with respect to the Subordinated Units between the transferred
and retained Subordinated Units pursuant to
Section 5.5(c)(ii)
does not otherwise provide such economic uniformity to the Final
Subordinated Units.
(B) At the election of the General Partner with respect to
any taxable period ending upon, or after, the conversion of the
Class B Units pursuant to
Section 5.11(f),
all or a portion of the remaining items of Partnership income or
gain for such taxable period, after taking into account
allocations pursuant to
Section 6.1(d)(iii)
and
Section 6.1(d)(x)(A),
shall be allocated 100% to the holder or holders of the Common
Units resulting from the conversion pursuant to
Section 5.11(f) (Converted Common Units)
in the proportion of the number of the Converted Common
Units held by such holder or holders to the total number of
Converted Common Units then Outstanding, until each such
37
holder has been allocated an amount of income or gain that
increases the Capital Account maintained with respect to such
Converted Common Units to an amount equal to the product of
(A) the number of Converted Common Units held by such
holder and (B) the Per Unit Capital Amount for a Common
Unit. The purpose of this allocation is to establish uniformity
between the Capital Accounts underlying Converted Common Units
and the Capital Accounts underlying Common Units held by Persons
other than the General Partner and its Affiliates immediately
prior to the receipt of Common Units pursuant to
Section 5.11(f).
(xi) Curative Allocation.
(A) Notwithstanding any other provision of this
Section 6.1, other than the Required Allocations, the
Required Allocations shall be taken into account in making the
Agreed Allocations so that, to the extent possible, the net
amount of items of income, gain, loss and deduction allocated to
each Partner pursuant to the Required Allocations and the Agreed
Allocations, together, shall be equal to the net amount of such
items that would have been allocated to each such Partner under
the Agreed Allocations had the Required Allocations and the
related Curative Allocation not otherwise been provided in this
Section 6.1. Notwithstanding the preceding sentence,
Required Allocations relating to (1) Nonrecourse Deductions
shall not be taken into account except to the extent that there
has been a decrease in Partnership Minimum Gain and
(2) Partner Nonrecourse Deductions shall not be taken into
account except to the extent that there has been a decrease in
Partner Nonrecourse Debt Minimum Gain. Allocations pursuant to
this
Section 6.1(d)(xi)(A)
shall only be made with respect to Required Allocations to the
extent the General Partner determines that such allocations will
otherwise be inconsistent with the economic agreement among the
Partners. Further, allocations pursuant to this
Section 6.1(d)(xi)(A)
shall be deferred with respect to allocations pursuant to
clauses (1) and (2) hereof to the extent the General
Partner determines that such allocations are likely to be offset
by subsequent Required Allocations.
(B) The General Partner shall, with respect to each taxable
period, (1) apply the provisions of
Section 6.1(d)(xi)(A)
in whatever order is most likely to minimize the economic
distortions that might otherwise result from the Required
Allocations, and (2) divide all allocations pursuant to
Section 6.1(d)(xi)(A)
among the Partners in a manner that is likely to minimize such
economic distortions.
(xii) Corrective Allocations. In the
event of any allocation of Additional Book Basis Derivative
Items or any Book-Down Event or any recognition of a Net
Termination Loss, the following rules shall apply:
(A) In the case of any allocation of Additional Book Basis
Derivative Items (other than an allocation of Unrealized Gain or
Unrealized Loss under Section 5.5(d) hereof), the General
Partner shall allocate additional items of income and gain away
from the holders of Incentive Distribution Rights to the
Unitholders and the General Partner, or additional items of
deduction and loss away from the Unitholders and the General
Partner to the holders of Incentive Distribution Rights, to the
extent that the Additional Book Basis Derivative Items allocated
to the Unitholders or the General Partner exceed their Share of
Additional Book Basis Derivative Items. For this purpose, the
Unitholders and the General Partner shall be treated as being
allocated Additional Book Basis Derivative Items to the extent
that such Additional Book Basis Derivative Items have reduced
the amount of income that would otherwise have been allocated to
the Unitholders or the General Partner under the Partnership
Agreement (e.g., Additional Book Basis Derivative Items taken
into account in computing cost of goods sold would reduce the
amount of book income otherwise available for allocation among
the Partners). Any allocation made pursuant to this
Section 6.1(d)(xii)(A)
shall be made after all of the other Agreed Allocations have
been made as if this
Section 6.1(d)(xii)
were not in this Agreement and, to the extent necessary, shall
require the reallocation of items that have been allocated
pursuant to such other Agreed Allocations.
(B) In the case of any negative adjustments to the Capital
Accounts of the Partners resulting from a Book-Down Event or
from the recognition of a Net Termination Loss, such negative
adjustment
38
(1) shall first be allocated, to the extent of the
Aggregate Remaining Net Positive Adjustments, in such a manner,
as determined by the General Partner, that to the extent
possible the aggregate Capital Accounts of the Partners will
equal the amount that would have been the Capital Account
balance of the Partners if no prior
Book-Up
Events had occurred, and (2) any negative adjustment in
excess of the Aggregate Remaining Net Positive Adjustments shall
be allocated pursuant to
Section 6.1(c)
hereof.
(C) In making the allocations required under this
Section 6.1(d)(xii),
the General Partner may apply whatever conventions or other
methodology it determines will satisfy the purpose of this
Section 6.1(d)(xii).
Section 6.2 Allocations
for Tax Purposes.
(a) Except as otherwise provided herein, for federal income
tax purposes, each item of income, gain, loss and deduction
shall be allocated among the Partners in the same manner as its
correlative item of book income, gain, loss or
deduction is allocated pursuant to Section 6.1.
(b) In an attempt to eliminate Book-Tax Disparities
attributable to a Contributed Property or Adjusted Property,
items of income, gain, loss, depreciation, amortization and cost
recovery deductions shall be allocated for federal income tax
purposes among the Partners as follows:
(i)(A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in
the manner provided under
Section 704(c)
of the Code that takes into account the variation between the
Agreed Value of such property and its adjusted basis at the time
of contribution; and (B) any item of Residual Gain or
Residual Loss attributable to a Contributed Property shall be
allocated among the Partners in the same manner as its
correlative item of book gain or loss is allocated
pursuant to Section 6.1.
(ii)(A) In the case of an Adjusted Property, such items
shall (1) first, be allocated among the Partners in a
manner consistent with the principles of
Section 704(c)
of the Code to take into account the Unrealized Gain or
Unrealized Loss attributable to such property and the
allocations thereof pursuant to
Section 5.5(d)(i)
or
Section 5.5(d)(ii),
and (2) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in a
manner consistent with
Section 6.2(b)(i)(A);
and (B) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be allocated among
the Partners in the same manner as its correlative item of
book gain or loss is allocated pursuant to
Section 6.1.
(iii) The General Partner shall apply the principles of
Treasury
Regulation Section 1.704-3(d)
to eliminate Book-Tax Disparities, except with respect to
goodwill contributed to the Partnership upon formation.
(c) For the proper administration of the Partnership and
for the preservation of uniformity of the Limited Partner
Interests (or any class or classes thereof), the General Partner
shall (i) adopt such conventions as it deems appropriate in
determining the amount of depreciation, amortization and cost
recovery deductions; (ii) make special allocations for
federal income tax purposes of income (including gross income)
or deductions; and (iii) amend the provisions of this
Agreement as appropriate (x) to reflect the proposal or
promulgation of Treasury Regulations under
Section 704(b)
or
Section 704(c)
of the Code or (y) otherwise to preserve or achieve
uniformity of the Limited Partner Interests (or any class or
classes thereof). The General Partner may adopt such
conventions, make such allocations and make such amendments to
this Agreement as provided in this
Section 6.2(c)
only if such conventions, allocations or amendments would not
have a material adverse effect on the Partners, the holders of
any class or classes of Limited Partner Interests issued and
Outstanding or the Partnership, and if such allocations are
consistent with the principles of Section 704 of the Code.
(d) The General Partner may determine to depreciate or
amortize the portion of an adjustment under
Section 743(b)
of the Code attributable to unrealized appreciation in any
Adjusted Property (to the extent of the unamortized Book-Tax
Disparity) using a predetermined rate derived from the
depreciation or
39
amortization method and useful life applied to the
Partnerships common basis of such property, despite any
inconsistency of such approach with Treasury
Regulation Section 1.167(c)-l(a)(6)
or any successor regulations thereto. If the General Partner
determines that such reporting position cannot reasonably be
taken, the General Partner may adopt depreciation and
amortization conventions under which all purchasers acquiring
Limited Partner Interests in the same month would receive
depreciation and amortization deductions, based upon the same
applicable rate as if they had purchased a direct interest in
the Partnerships property. If the General Partner chooses
not to utilize such aggregate method, the General Partner may
use any other depreciation and amortization conventions to
preserve the uniformity of the intrinsic tax characteristics of
any Limited Partner Interests, so long as such conventions would
not have a material adverse effect on the Limited Partners or
the Record Holders of any class or classes of Limited Partner
Interests.
(e) In accordance with Treasury
Regulation Section 1.1245-1(e),
any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall, to the
extent possible, after taking into account other required
allocations of gain pursuant to this Section 6.2, be
characterized as Recapture Income in the same proportions and to
the same extent as such Partners (or their predecessors in
interest) have been allocated any deductions directly or
indirectly giving rise to the treatment of such gains as
Recapture Income.
(f) All items of income, gain, loss, deduction and credit
recognized by the Partnership for federal income tax purposes
and allocated to the Partners in accordance with the provisions
hereof shall be determined without regard to any election under
Section 754 of the Code that may be made by the
Partnership; provided, however, that such allocations,
once made, shall be adjusted (in the manner determined by the
General Partner) to take into account those adjustments
permitted or required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and
deduction, for federal income tax purposes, shall be determined
on an annual basis and prorated on a monthly basis and shall be
allocated to the Partners as of the opening of the National
Securities Exchange on which the Partnership Interests are
listed or admitted to trading on the first Business Day of each
month; provided, however, such items for the period
beginning on the Closing Date and ending on the last day of the
month in which the Option Closing Date or the expiration of the
Over-Allotment Option occurs shall be allocated to the Partners
as of the opening of the National Securities Exchange on which
the Partnership Interests are listed or admitted to trading
on the first Business Day of the next succeeding month; and
provided, further, that gain or loss on a sale or other
disposition of any assets of the Partnership or any other
extraordinary item of income or loss realized and recognized
other than in the ordinary course of business, as determined by
the General Partner, shall be allocated to the Partners as of
the opening of the National Securities Exchange on which the
Partnership Interests are listed or admitted to trading on
the first Business Day of the month in which such gain or loss
is recognized for federal income tax purposes. The General
Partner may revise, alter or otherwise modify such methods of
allocation to the extent permitted or required by
Section 706 of the Code and the regulations or rulings
promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited
Partner under the provisions of this Article VI shall
instead be made to the beneficial owner of Limited Partner
Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in
accordance with
Section 6031(c)
of the Code or any other method determined by the General
Partner.
Section 6.3 Requirement
and Characterization of Distributions; Distributions to Record
Holders.
(a) Within 45 days following the end of each Quarter
commencing with the Quarter ending on March 31, 2007, an
amount equal to 100% of Available Cash with respect to such
Quarter shall, subject to
Section 17-607
of the Delaware Act, be distributed in accordance with this
Article VI by the Partnership to the Partners as of the
Record Date selected by the General Partner. All amounts of
Available Cash distributed by the Partnership on any date from
any source shall be deemed to be Operating Surplus until the sum
of all amounts of Available Cash theretofore distributed by the
Partnership to the Partners
40
pursuant to Section 6.4 equals the Operating Surplus from
the Closing Date through the close of the immediately preceding
Quarter. Any remaining amounts of Available Cash distributed by
the Partnership on such date shall, except as otherwise provided
in Section 6.5, be deemed to be Capital
Surplus. All distributions required to be made under this
Agreement shall be made subject to
Section 17-607
of the Delaware Act.
(b) Notwithstanding Section 6.3(a), in the event of
the dissolution and liquidation of the Partnership, all receipts
received during or after the Quarter in which the Liquidation
Date occurs shall be applied and distributed solely in
accordance with, and subject to the terms and conditions of,
Section 12.4.
(c) The General Partner may treat taxes paid by the
Partnership on behalf of, or amounts withheld with respect to,
all or less than all of the Partners, as a distribution of
Available Cash to such Partners.
(d) Each distribution in respect of a
Partnership Interest shall be paid by the Partnership,
directly or through the Transfer Agent or through any other
Person or agent, only to the Record Holder of such
Partnership Interest as of the Record Date set for such
distribution. Such payment shall constitute full payment and
satisfaction of the Partnerships liability in respect of
such payment, regardless of any claim of any Person who may have
an interest in such payment by reason of an assignment or
otherwise.
Section 6.4 Distributions
of Available Cash from Operating Surplus.
(a) During Subordination
Period. Available Cash with respect to any
Quarter within the Subordination Period that is deemed to be
Operating Surplus pursuant to the provisions of Section 6.3
or 6.5 shall, subject to
Section 17-607
of the Delaware Act, be distributed as follows, except as
otherwise contemplated by Section 5.6 in respect of other
Partnership Securities issued pursuant thereto:
(i) First, to the General Partner and the Unitholders
holding Common Units, in accordance with their respective
Percentage Interests, until there has been distributed in
respect of each Common Unit then Outstanding an amount equal to
the Minimum Quarterly Distribution for such Quarter;
(ii) Second, to the General Partner and the Unitholders
holding Common Units, in accordance with their respective
Percentage Interests, until there has been distributed in
respect of each Common Unit then Outstanding an amount equal to
the Cumulative Common Unit Arrearage existing with respect to
such Quarter;
(iii) Third, to the General Partner and the Unitholders
holding Subordinated Units, in accordance with their respective
Percentage Interests, until there has been distributed in
respect of each Subordinated Unit then Outstanding an amount
equal to the Minimum Quarterly Distribution for such Quarter;
(iv) Fourth, to the General Partner and all Unitholders, in
accordance with their respective Percentage Interests, until
there has been distributed in respect of each Unit then
Outstanding an amount equal to the excess of the First Target
Distribution over the Minimum Quarterly Distribution for such
Quarter;
(v) Fifth, (A) to the General Partner in accordance
with its Percentage Interest; (B) 13% to the holders of the
Incentive Distribution Rights, Pro Rata; and (C) to all
Unitholders, Pro Rata, a percentage equal to 100% less the sum
of the percentages applicable to subclauses (A) and
(B) of this clause (v) until there has been
distributed in respect of each Unit then Outstanding an amount
equal to the excess of the Second Target Distribution over the
First Target Distribution for such Quarter;
(vi) Sixth, (A) to the General Partner in accordance
with its Percentage Interest, (B) 23% to the holders of the
Incentive Distribution Rights, Pro Rata; and (C) to all
Unitholders, Pro Rata, a percentage equal to 100% less the sum
of the percentages applicable to subclauses (A) and
(B) of this subclause (vi), until there has been
distributed in respect of each Unit then Outstanding an amount
equal to the excess of the Third Target Distribution over the
Second Target Distribution for such Quarter; and
41
(vii) Thereafter, (A) to the General Partner in
accordance with its Percentage Interest; (B) 48% to the
holders of the Incentive Distribution Rights, Pro Rata; and
(C) to all Unitholders, Pro Rata, a percentage equal to
100% less the sum of the percentages applicable to
subclauses (A) and (B) of this clause (vii);
provided, however, if the Minimum Quarterly Distribution,
the First Target Distribution, the Second Target Distribution
and the Third Target Distribution have been reduced to zero
pursuant to the second sentence of
Section 6.6(a),
the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made
solely in accordance with
Section 6.4(a)(vii).
(b) After Subordination Period. Available
Cash with respect to any Quarter after the Subordination Period
that is deemed to be Operating Surplus pursuant to the
provisions of Section 6.3 or Section 6.5, subject to
Section 17-607
of the Delaware Act, shall be distributed as follows, except as
otherwise required by Section 5.6(b) in respect of
additional Partnership Securities issued pursuant thereto:
(i) First, 100% to the General Partner and the Unitholders
in accordance with their respective Percentage Interests, until
there has been distributed in respect of each Unit then
Outstanding an amount equal to the Minimum Quarterly
Distribution for such Quarter;
(ii) Second, 100% to the General Partner and the
Unitholders in accordance with their respective Percentage
Interests, until there has been distributed in respect of each
Unit then Outstanding an amount equal to the excess of the First
Target Distribution over the Minimum Quarterly Distribution for
such Quarter;
(iii) Third, (A) to the General Partner in accordance
with its Percentage Interest; (B) 13% to the holders of the
Incentive Distribution Rights, Pro Rata; and (C) to all
Unitholders, Pro Rata, a percentage equal to 100% less the sum
of the percentages applicable to subclauses (A) and
(B) of this clause (iii), until there has been distributed
in respect of each Unit then Outstanding an amount equal to the
excess of the Second Target Distribution over the First Target
Distribution for such Quarter;
(iv) Fourth, (A) to the General Partner in accordance
with its Percentage Interest; (B) 23% to the holders of the
Incentive Distribution Rights, Pro Rata; and (C) to all
Unitholders, Pro Rata, a percentage equal to 100% less the sum
of the percentages applicable to subclause (A) and
(B) of this clause (iv), until there has been
distributed in respect of each Unit then Outstanding an amount
equal to the excess of the Third Target Distribution over the
Second Target Distribution for such Quarter; and
(v) Thereafter, (A) to the General Partner in
accordance with its Percentage Interest; (B) 48% to the
holders of the Incentive Distribution Rights, Pro Rata; and
(C) to all Unitholders, Pro Rata, a percentage equal to
100% less the sum of the percentages applicable to
subclauses (A) and (B) of this clause (v);
provided, however, if the Minimum Quarterly Distribution,
the First Target Distribution, the Second Target Distribution
and the Third Target Distribution have been reduced to zero
pursuant to the second sentence of
Section 6.6(a),
the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made
solely in accordance with
Section 6.4(b)(v).
Section 6.5 Distributions
of Available Cash from Capital Surplus.
Available Cash that is deemed to be Capital Surplus pursuant to
the provisions of
Section 6.3(a)
shall, subject to
Section 17-607
of the Delaware Act, be distributed, unless the provisions of
Section 6.3 require otherwise, 100% to the General Partner
and the Unitholders in accordance with their respective
Percentage Interests, until a hypothetical holder of a Common
Unit acquired on the Closing Date has received with respect to
such Common Unit, during the period since the Closing Date
through such date, distributions of Available Cash that are
deemed to be Capital Surplus in an aggregate amount equal to the
Initial Unit Price. Available Cash that is deemed to be Capital
Surplus shall then be distributed to the General Partner and all
Unitholders holding Common Units, in accordance with their
respective Percentage Interests, until
42
there has been distributed in respect of each Common Unit then
Outstanding an amount equal to the Cumulative Common Unit
Arrearage. Thereafter, all Available Cash shall be distributed
as if it were Operating Surplus and shall be distributed in
accordance with Section 6.4.
Section 6.6 Adjustment
of Minimum Quarterly Distribution and Target Distribution
Levels.
(a) The Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution, Third Target
Distribution, Common Unit Arrearages and Cumulative Common Unit
Arrearages shall be proportionately adjusted in the event of any
distribution, combination or subdivision (whether effected by a
distribution payable in Units or otherwise) of Units or other
Partnership Securities in accordance with Section 5.9. In
the event of a distribution of Available Cash that is deemed to
be from Capital Surplus, the then applicable Minimum Quarterly
Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution, shall be adjusted
proportionately downward to equal the product obtained by
multiplying the otherwise applicable Minimum Quarterly
Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution, as the case may be,
by a fraction of which the numerator is the Unrecovered Initial
Unit Price of the Common Units immediately after giving effect
to such distribution and of which the denominator is the
Unrecovered Initial Unit Price of the Common Units immediately
prior to giving effect to such distribution.
(b) The Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target
Distribution, shall also be subject to adjustment pursuant to
Section 5.11 and Section 6.9.
Section 6.7 Special
Provisions Relating to the Holders of Subordinated Units and
Class B Units.
(a) Except with respect to the right to vote on or approve
matters requiring the vote or approval of a percentage of the
holders of Outstanding Common Units and the right to participate
in allocations of income, gain, loss and deduction and
distributions made with respect to Common Units, the holder of a
Subordinated Unit shall have all of the rights and obligations
of a Unitholder holding Common Units hereunder; provided,
however, that immediately upon the conversion of
Subordinated Units into Common Units pursuant to
Section 5.7, the Unitholder holding a Subordinated Unit
shall possess all of the rights and obligations of a Unitholder
holding Common Units hereunder, including the right to vote as a
Common Unitholder and the right to participate in allocations of
income, gain, loss and deduction and distributions made with
respect to Common Units; provided, however, that such
converted Subordinated Units shall remain subject to the
provisions of
Sections 5.5(c)(ii),
6.1(d)(x)(A),
6.7(b) and
6.7(c).
(b) A Unitholder shall not be permitted to transfer a
Subordinated Unit or a Subordinated Unit that has converted into
a Common Unit pursuant to Section 5.7 (other than a
transfer to an Affiliate) if the remaining balance in the
transferring Unitholders Capital Account with respect to
the retained Subordinated Units or Retained Converted
Subordinated Units would be negative after giving effect to the
allocation under
Section 5.5(c)(ii)(B).
(c) The Unitholder holding a Common Unit that has resulted
from the conversion of a Subordinated Unit pursuant to
Section 5.7 shall not be issued a Common Unit Certificate
pursuant to Section 4.1, and shall not be permitted to
transfer such Common Units to a Person that is not an Affiliate
of the holder until such time as the General Partner determines,
based on advice of counsel, that each such Common Unit should
have, as a substantive matter, like intrinsic economic and
federal income tax characteristics, in all material respects, to
the intrinsic economic and federal income tax characteristics of
an Initial Common Unit. In connection with the condition imposed
by this
Section 6.7(c),
the General Partner may take whatever steps are required to
provide economic uniformity to such Common Units in preparation
for a transfer of such Common Units, including the application
of
Sections 5.5(c)(ii),
6.1(d)(x)
and 6.7(b);
provided, however, that no such steps may be taken that
would have a material adverse effect on the Unitholders holding
Common Units represented by Common Unit Certificates.
(d) Except with respect to the right to vote on or approve
matters requiring the vote or approval of a percentage of the
holders of Outstanding Common Units and the right to participate
in allocations of income, gain, loss and deduction and
distributions made with respect to Common Units, the holders of
43
Class B Units shall have all the rights and obligations of
a Unitholder holding Common Units; provided, however,
that immediately upon the conversion of Class B Units into
Common Units pursuant to Section 5.11, the Unitholders
holding a Class B Unit shall possess all the rights and
obligations of a Unitholder holding Common Units hereunder,
including the right to vote as a Common Unitholder and the right
to participate in allocations of income, gain, loss and
deduction and distributions made with respect to Common Units;
provided, however, that such converted Class B Units
shall remain subject to the provisions of
Sections 6.1(d)(x)(B)
and 6.7(e).
(e) The holder or holders of Common Units resulting from
the conversion pursuant to
Section 5.11(f)
of any Class B Units pursuant to Section 5.11 shall
not be issued a Common Unit Certificate pursuant to
Section 4.1, and shall not be permitted to transfer such
Common Units until such time as the General Partner determines,
based on advice of counsel, that each such Common Unit should
have, as a substantive matter, like intrinsic economic and
federal income tax characteristics, in all material respects, to
the intrinsic economic and federal income tax characteristics of
an Initial Common Unit. In connection with the condition imposed
by this
Section 6.7(d),
the General Partner may take whatever steps are required to
provide economic uniformity to such Common Units, including the
application of
Section 6.1(d)(x)(B);
provided, however, that no such steps may be taken
that would have a material adverse effect on the Unitholders
holding Common Units represented by Common Unit Certificates.
Section 6.8 Special
Provisions Relating to the Holders of Incentive Distribution
Rights.
Notwithstanding anything to the contrary set forth in this
Agreement, the holders of the Incentive Distribution Rights
(a) shall (i) possess the rights and obligations
provided in this Agreement with respect to a Limited Partner
pursuant to Article III and Article VII and
(ii) have a Capital Account as a Partner pursuant to
Section 5.5 and all other provisions related thereto and
(b) shall not (i) be entitled to vote on any matters
requiring the approval or vote of the holders of Outstanding
Units, except as provided by law, (ii) be entitled to any
distributions other than as provided in Sections 6.4(a)(v),
(vi) and (vii),
Section 6.4(b)(iii),
(iv) and (v), and Section 12.4 or (iii) be
allocated items of income, gain, loss or deduction other than as
specified in this Article VI.
Section 6.9 Entity-Level Taxation.
If legislation is enacted or the interpretation of existing
language is modified by a governmental taxing authority so that
a Group Member is treated as an association taxable as a
corporation or is otherwise subject to an entity-level tax for
federal, state or local income tax purposes, then the General
Partner may reduce the Minimum Quarterly Distribution, the First
Target Distribution, the Second Target Distribution and the
Third Target Distribution by the amount of income taxes that are
payable by reason of any such new legislation or interpretation
(the Incremental Income Taxes), or any portion
thereof selected by the General Partner, in the manner provided
in this Section 6.9. If the General Partner elects to reduce the
Minimum Quarterly Distribution, the First Target Distribution,
the Second Target Distribution and the Third Target Distribution
for any Quarter with respect to all or a portion of any
Incremental Income Taxes, the General Partner shall estimate for
such Quarter the Partnership Groups aggregate liability
(the Estimated Incremental Quarterly Tax
Amount) for all (or the relevant portion of) such
Incremental Income Taxes; provided that any difference
between such estimate and the actual tax liability for
Incremental Income Taxes (or the relevant portion thereof) for
such Quarter may, to the extent determined by the General
Partner be taken into account in determining the Estimated
Incremental Quarterly Tax Amount with respect to each Quarter in
which any such difference can be determined. For each such
Quarter, the Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target
Distribution, shall be the product obtained by multiplying
(a) the amounts therefor that are set out herein prior to
the application of this Section 6.9 times (b) the
quotient obtained by dividing (i) Available Cash with
respect to such Quarter by (ii) the sum of Available Cash
with respect to such Quarter and the Estimated Incremental
Quarterly Tax Amount for such Quarter, as determined by the
General Partner. For purposes of the foregoing, Available Cash
with respect to a Quarter will be deemed reduced by the
Estimated Incremental Quarterly Tax Amount for that Quarter.
44
ARTICLE VII
MANAGEMENT
AND OPERATION OF BUSINESS
Section 7.1 Management.
(a) The General Partner shall conduct, direct and manage
all activities of the Partnership. Except as otherwise expressly
provided in this Agreement, all management powers over the
business and affairs of the Partnership shall be exclusively
vested in the General Partner, and no Limited Partner shall have
any management power over the business and affairs of the
Partnership. In addition to the powers now or hereafter granted
a general partner of a limited partnership under applicable law
or that are granted to the General Partner under any other
provision of this Agreement, the General Partner, subject to
Section 7.3, shall have full power and authority to do all
things and on such terms as it determines to be necessary or
appropriate to conduct the business of the Partnership, to
exercise all powers set forth in Section 2.5 and to
effectuate the purposes set forth in Section 2.4, including
the following:
(i) the making of any expenditures, the lending or
borrowing of money, the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the
issuance of evidences of indebtedness, including indebtedness
that is convertible into Partnership Securities, and the
incurring of any other obligations;
(ii) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other
agencies having jurisdiction over the business or assets of the
Partnership;
(iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the
assets of the Partnership or the merger or other combination of
the Partnership with or into another Person (the matters
described in this clause (iii) being subject, however, to
any prior approval that may be required by Section 7.3 and
Article XIV);
(iv) the use of the assets of the Partnership (including
cash on hand) for any purpose consistent with the terms of this
Agreement, including the financing of the conduct of the
operations of the Partnership Group; subject to
Section 7.6(a), the lending of funds to other Persons
(including other Group Members); the repayment or guarantee of
obligations of any Group Member; and the making of capital
contributions to any Group Member;
(v) the negotiation, execution and performance of any
contracts, conveyances or other instruments (including
instruments that limit the liability of the Partnership under
contractual arrangements to all or particular assets of the
Partnership, with the other party to the contract to have no
recourse against the General Partner or its assets other than
its interest in the Partnership, even if same results in the
terms of the transaction being less favorable to the Partnership
than would otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including
employees having titles such as president,
vice president, secretary and
treasurer) and agents, outside attorneys,
accountants, consultants and contractors and the determination
of their compensation and other terms of employment or hiring;
(viii) the maintenance of insurance for the benefit of the
Partnership Group, the Partners and Indemnitees;
(ix) the formation of, or acquisition of an interest in,
and the contribution of property and the making of loans to, any
further limited or general partnerships, joint ventures,
corporations, limited liability companies or other relationships
(including the acquisition of interests in, and the
contributions of property to, any Group Member from time to
time) subject to the restrictions set forth in Section 2.4;
45
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the bringing and
defending of actions at law or in equity and otherwise engaging
in the conduct of litigation, arbitration or mediation and the
incurring of legal expense and the settlement of claims and
litigation;
(xi) the indemnification of any Person against liabilities
and contingencies to the extent permitted by law;
(xii) the entering into of listing agreements with any
National Securities Exchange and the delisting of some or all of
the Limited Partner Interests from, or requesting that trading
be suspended on, any such exchange (subject to any prior
approval that may be required under Section 4.8);
(xiii) the purchase, sale or other acquisition or
disposition of Partnership Securities, or the issuance of
options, rights, warrants, appreciation rights and tracking and
phantom interests relating to Partnership Securities;
(xiv) the undertaking of any action in connection with the
Partnerships participation in any Group Member; and
(xv) the entering into of agreements with any of its
Affiliates to render services to a Group Member or to itself in
the discharge of its duties as General Partner of the
Partnership.
(b) Notwithstanding any other provision of this Agreement,
any Group Member Agreement, the Delaware Act or any applicable
law, rule or regulation, each of the Partners and the Assignees
and each other Person who may acquire an interest in Partnership
Securities hereby (i) approves, ratifies and confirms the
execution, delivery and performance by the parties thereto of
this Agreement and the Group Member Agreement of each other
Group Member, the Underwriting Agreement, the Omnibus Agreement,
the Contribution Agreement, the Natural Gas Purchase Agreement,
the NGL and Products Purchase Agreement, any Group Member
Agreement and the other agreements described in or filed as
exhibits to the Registration Statement that are related to the
transactions contemplated by the Registration Statement;
(ii) agrees that the General Partner (on its own or through
any officer of the Partnership) is authorized to execute,
deliver and perform the agreements referred to in
clause (i) of this sentence and the other agreements, acts,
transactions and matters described in or contemplated by the
Registration Statement on behalf of the Partnership without any
further act, approval or vote of the Partners or the Assignees
or the other Persons who may acquire an interest in Partnership
Securities; and (iii) agrees that the execution, delivery
or performance by the General Partner, any Group Member or any
Affiliate of any of them of this Agreement or any agreement
authorized or permitted under this Agreement (including the
exercise by the General Partner or any Affiliate of the General
Partner of the rights accorded pursuant to
Article XV) shall not constitute a breach by the
General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partners or any other Persons under
this Agreement (or any other agreements) or of any duty stated
or implied by law or equity.
Section 7.2 Certificate
of Limited Partnership.
The General Partner has caused the Certificate of Limited
Partnership to be filed with the Secretary of State of the State
of Delaware as required by the Delaware Act. The General Partner
shall use all reasonable efforts to cause to be filed such other
certificates or documents that the General Partner determines to
be necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a
partnership in which the limited partners have limited
liability) in the State of Delaware or any other state in which
the Partnership may elect to do business or own property. To the
extent the General Partner determines such action to be
necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate of Limited
Partnership and do all things to maintain the Partnership as a
limited partnership (or a partnership or other entity in which
the limited partners have limited liability) under the laws of
the State of Delaware or of any other state in which the
Partnership may elect to do business or own property. Subject to
the terms of Section 3.4(a), the General Partner shall
46
not be required, before or after filing, to deliver or mail a
copy of the Certificate of Limited Partnership, any
qualification document or any amendment thereto to any Limited
Partner.
Section 7.3 Restrictions
on the General Partners Authority.
Except as provided in Article XII and Article XIV, the
General Partner may not sell, exchange or otherwise dispose of
all or substantially all of the assets of the Partnership Group,
taken as a whole, in a single transaction or a series of related
transactions (including by way of merger, consolidation, other
combination or sale of ownership interests of the
Partnerships Subsidiaries) without the approval of holders
of a Unit Majority; provided, however, that this
provision shall not preclude or limit the General Partners
ability to mortgage, pledge, hypothecate or grant a security
interest in all or substantially all of the assets of the
Partnership Group and shall not apply to any forced sale of any
or all of the assets of the Partnership Group pursuant to the
foreclosure of, or other realization upon, any such encumbrance.
Without the approval of holders of a Unit Majority, the General
Partner shall not, on behalf of the Partnership, except as
permitted under Section 4.6, 11.1 and Section 11.2,
elect or cause the Partnership to elect a successor general
partner of the Partnership.
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Section 7.4
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Reimbursement
of the General Partner.
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(a) Except as provided in this Section 7.4 and
elsewhere in this Agreement, the General Partner shall not be
compensated for its services as a general partner or managing
member of any Group Member.
(b) Subject to the limitations contained in the Omnibus
Agreement, the General Partner shall be reimbursed on a monthly
basis, or such other basis as the General Partner may determine,
for (i) all direct and indirect expenses it incurs or
payments it makes on behalf of the Partnership Group (including
salary, bonus, incentive compensation and other amounts paid to
any Person, including Affiliates of the General Partner to
perform services for the Partnership Group or for the General
Partner in the discharge of its duties to the Partnership
Group), and (ii) all other expenses allocable to the
Partnership Group or otherwise incurred by the General Partner
in connection with operating the Partnership Groups
business (including expenses allocated to the General Partner by
its Affiliates). The General Partner shall determine the
expenses that are allocable to the Partnership Group.
Reimbursements pursuant to this Section 7.4 shall be in
addition to any reimbursement to the General Partner as a result
of indemnification pursuant to Section 7.7.
(c) The General Partner, without the approval of the
Limited Partners (who shall have no right to vote in respect
thereof), may propose and adopt on behalf of the Partnership
employee benefit plans, employee programs and employee practices
(including plans, programs and practices involving the issuance
of Partnership Securities or options to purchase or rights,
warrants or appreciation rights or phantom or tracking interests
relating to Partnership Securities), or cause the Partnership to
issue Partnership Securities in connection with, or pursuant to,
any employee benefit plan, employee program or employee practice
maintained or sponsored by the General Partner, Group Member or
any Affiliates in each case for the benefit of employees and
directors of the General Partner or any of its Affiliates, in
respect of services performed, directly or indirectly, for the
benefit of the Partnership Group. The Partnership agrees to
issue and sell to the General Partner or any of its Affiliates
any Partnership Securities that the General Partner or such
Affiliates are obligated to provide to any employees and
directors pursuant to any such employee benefit plans, employee
programs or employee practices. Expenses incurred by the General
Partner in connection with any such plans, programs and
practices (including the net cost to the General Partner or such
Affiliates of Partnership Securities purchased by the General
Partner or such Affiliates from the Partnership to fulfill
options or awards under such plans, programs and practices)
shall be reimbursed in accordance with Section 7.4(b). Any
and all obligations of the General Partner under any employee
benefit plans, employee programs or employee practices adopted
by the General Partner as permitted by this Section 7.4(c)
shall constitute obligations of the General Partner hereunder
and shall be assumed by any successor General Partner approved
pursuant to Section 11.1 or Section 11.2 or the
transferee of or successor to all of the General Partners
General Partner Interest (represented by General Partner Units)
pursuant to Section 4.6.
47
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Section 7.5
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Outside
Activities.
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(a) After the Closing Date, the General Partner, for so
long as it is the General Partner of the Partnership
(i) agrees that its sole business will be to act as a
general partner or managing member, as the case may be, of the
Partnership and any other partnership or limited liability
company of which the Partnership is, directly or indirectly, a
partner or member and to undertake activities that are ancillary
or related thereto (including being a limited partner in the
Partnership) and (ii) shall not engage in any business or
activity or incur any debts or liabilities except in connection
with or incidental to (A) its performance as general
partner or managing member, if any, of one or more Group Members
or as described in or contemplated by the Registration Statement
(B) the acquiring, owning or disposing of debt or equity
securities in any Group Member or (C) the guarantee of, and
mortgage, pledge, or encumbrance of any or all of its assets in
connection with, any indebtedness of Targa Resources, Inc., any
of its successors or permitted assigns or any other Affiliate of
the General Partner.
(b) Each Indemnitee (other than the General Partner) shall
have the right to engage in businesses of every type and
description and other activities for profit and to engage in and
possess an interest in other business ventures of any and every
type or description, whether in businesses engaged in or
anticipated to be engaged in by any Group Member, independently
or with others, including business interests and activities in
direct competition with the business and activities of any Group
Member, and none of the same shall constitute a breach of this
Agreement or any duty expressed or implied by law to any Group
Member or any Partner or Assignee. None of any Group Member, any
Limited Partner or any other Person shall have any rights by
virtue of this Agreement, any Group Member Agreement, or the
partnership relationship established hereby in any business
ventures of any Indemnitee. Notwithstanding anything to the
contrary in this Agreement, (i) the engaging in competitive
activities by any Indemnitees (other than the General Partner)
in accordance with the provisions of this Section 7.5 is
hereby approved by the Partnership and all Partners,
(ii) it shall be deemed not to be a breach of any fiduciary
duty or any other obligation of any type whatsoever of any
Indemnitee for the Indemnitees (other than the General Partner)
to engage in such business interests and activities in
preference to or to the exclusion of the Partnership and
(iii) the Indemnitees shall have no obligation hereunder or
as a result of any duty expressed or implied by law to present
business opportunities to the Partnership. Notwithstanding
anything to the contrary in this Agreement, the doctrine of
corporate opportunity, or any analogous doctrine, shall not
apply to any Indemnitee (including the General Partner). No
Indemnitee (including the General Partner) who acquires
knowledge of a potential transaction, agreement, arrangement or
other matter that may be an opportunity for the Partnership,
shall have any duty to communicate or offer such opportunity to
the Partnership, and such Indemnitee (including the General
Partner) shall not be liable to the Partnership, to any Limited
Partner or any other Person for breach of any fiduciary or other
duty by reason of the fact that such Indemnitee (including the
General Partner) pursues or acquires for itself, directs such
opportunity to another Person or does not communicate such
opportunity or information to the Partnership; provided such
Indemnitee does not engage in such business or activity as a
result of or using confidential or proprietary information
provided by or on behalf of the Partnership to such Indemnitee.
(c) The General Partner and each of its Affiliates may
acquire Units or other Partnership Securities in addition to
those acquired on the Closing Date and, except as otherwise
provided in this Agreement, shall be entitled to exercise, at
their option, all rights relating to all Units or other
Partnership Securities acquired by them. The term
Affiliates when used in this Section 7.5(d)
with respect to the General Partner shall not include any Group
Member.
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Section 7.6
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Loans
from the General Partner; Loans or Contributions from the
Partnership or Group Members.
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(a) The General Partner or any of its Affiliates may lend
to any Group Member, and any Group Member may borrow from the
General Partner or any of its Affiliates, funds needed or
desired by the Group Member for such periods of time and in such
amounts as the General Partner may determine; provided,
however, that in any such case the lending party may not
charge the borrowing party interest at a rate greater than the
rate that would be charged the borrowing party or impose terms
less favorable to the
48
borrowing party than would be charged or imposed on the
borrowing party by unrelated lenders on comparable loans made on
an arms-length basis (without reference to the lending
partys financial abilities or guarantees), all as
determined by the General Partner. The borrowing party shall
reimburse the lending party for any costs (other than any
additional interest costs) incurred by the lending party in
connection with the borrowing of such funds. For purposes of
this Section 7.6(a) and Section 7.6(b), the term
Group Member shall include any Affiliate of a Group
Member that is controlled by the Group Member.
(b) The Partnership may lend or contribute to any Group
Member, and any Group Member may borrow from the Partnership,
funds on terms and conditions determined by the General Partner.
No Group Member may lend funds to the General Partner or any of
its Affiliates (other than another Group Member).
(c) No borrowing by any Group Member or the approval
thereof by the General Partner shall be deemed to constitute a
breach of any duty, expressed or implied, of the General Partner
or its Affiliates to the Partnership or the Limited Partners by
reason of the fact that the purpose or effect of such borrowing
is directly or indirectly to (i) enable distributions to
the General Partner or its Affiliates (including in their
capacities as Limited Partners) to exceed the General
Partners Percentage Interest of the total amount
distributed to all partners or (ii) hasten the expiration
of the Subordination Period or the conversion of any
Subordinated Units into Common Units.
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Section 7.7
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Indemnification.
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(a) To the fullest extent permitted by law but subject to
the limitations expressly provided in this Agreement, all
Indemnitees shall be indemnified and held harmless by the
Partnership from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest,
settlements or other amounts arising from any and all claims,
demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnitee may be
involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as an Indemnitee;
provided, that the Indemnitee shall not be indemnified
and held harmless if there has been a final and non-appealable
judgment entered by a court of competent jurisdiction
determining that, in respect of the matter for which the
Indemnitee is seeking indemnification pursuant to this
Section 7.7, the Indemnitee acted in bad faith or engaged
in fraud, willful misconduct or, in the case of a criminal
matter, acted with knowledge that the Indemnitees conduct
was unlawful; provided, further, no indemnification
pursuant to this Section 7.7 shall be available to the
General Partner or its Affiliates (other than a Group Member)
with respect to its or their obligations incurred pursuant to
the Underwriting Agreement, the Omnibus Agreement or the
Contribution Agreement (other than obligations incurred by the
General Partner on behalf of the Partnership). Any
indemnification pursuant to this Section 7.7 shall be made
only out of the assets of the Partnership, it being agreed that
the General Partner shall not be personally liable for such
indemnification and shall have no obligation to contribute or
loan any monies or property to the Partnership to enable it to
effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses
(including legal fees and expenses) incurred by an Indemnitee
who is indemnified pursuant to Section 7.7(a) in defending
any claim, demand, action, suit or proceeding shall, from time
to time, be advanced by the Partnership prior to a determination
that the Indemnitee is not entitled to be indemnified upon
receipt by the Partnership of any undertaking by or on behalf of
the Indemnitee to repay such amount if it shall be determined
that the Indemnitee is not entitled to be indemnified as
authorized in this Section 7.7.
(c) The indemnification provided by this Section 7.7
shall be in addition to any other rights to which an Indemnitee
may be entitled under any agreement, pursuant to any vote of the
holders of Outstanding Limited Partner Interests, as a matter of
law or otherwise, both as to actions in the Indemnitees
capacity as an Indemnitee and as to actions in any other
capacity (including any capacity under the Underwriting
Agreement), and shall continue as to an Indemnitee who has
ceased to serve in such capacity and shall inure to the benefit
of the heirs, successors, assigns and administrators of the
Indemnitee.
49
(d) The Partnership may purchase and maintain (or reimburse
the General Partner or its Affiliates for the cost of)
insurance, on behalf of the General Partner, its Affiliates and
such other Persons as the General Partner shall determine,
against any liability that may be asserted against, or expense
that may be incurred by, such Person in connection with the
Partnerships activities or such Persons activities
on behalf of the Partnership, regardless of whether the
Partnership would have the power to indemnify such Person
against such liability under the provisions of this Agreement.
(e) For purposes of this Section 7.7, the Partnership
shall be deemed to have requested an Indemnitee to serve as
fiduciary of an employee benefit plan whenever the performance
by it of its duties to the Partnership also imposes duties on,
or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed
on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute fines
within the meaning of Section 7.7(a); and action taken or
omitted by it with respect to any employee benefit plan in the
performance of its duties for a purpose reasonably believed by
it to be in the best interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose
that is in the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited
Partners to personal liability by reason of the indemnification
provisions set forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in
whole or in part under this Section 7.7 because the
Indemnitee had an interest in the transaction with respect to
which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.7 are for the
benefit of the Indemnitees, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights for
the benefit of any other Persons.
(i) No amendment, modification or repeal of this
Section 7.7 or any provision hereof shall in any manner
terminate, reduce or impair the right of any past, present or
future Indemnitee to be indemnified by the Partnership, nor the
obligations of the Partnership to indemnify any such Indemnitee
under and in accordance with the provisions of this
Section 7.7 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of
when such claims may arise or be asserted.
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Section 7.8
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Liability
of Indemnitees.
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(a) Notwithstanding anything to the contrary set forth in
this Agreement, no Indemnitee shall be liable for monetary
damages to the Partnership, the Limited Partners, or any other
Persons who have acquired interests in the Partnership
Securities, for losses sustained or liabilities incurred as a
result of any act or omission of an Indemnitee unless there has
been a final and non-appealable judgment entered by a court of
competent jurisdiction determining that, in respect of the
matter in question, the Indemnitee acted in bad faith or engaged
in fraud, willful misconduct or, in the case of a criminal
matter, acted with knowledge that the Indemnitees conduct
was criminal.
(b) Subject to its obligations and duties as General
Partner set forth in Section 7.1(a), the General Partner
may exercise any of the powers granted to it by this Agreement
and perform any of the duties imposed upon it hereunder either
directly or by or through its agents, and the General Partner
shall not be responsible for any misconduct or negligence on the
part of any such agent appointed by the General Partner in good
faith.
(c) To the extent that, at law or in equity, an Indemnitee
has duties (including fiduciary duties) and liabilities relating
thereto to the Partnership or to the Partners, the General
Partner and any other Indemnitee acting in connection with the
Partnerships business or affairs shall not be liable to
the Partnership or to any Partner for its good faith reliance on
the provisions of this Agreement.
(d) Any amendment, modification or repeal of this
Section 7.8 or any provision hereof shall be prospective
only and shall not in any way affect the limitations on the
liability of the Indemnitees under this
50
Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of
when such claims may arise or be asserted.
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Section 7.9
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Resolution
of Conflicts of Interest; Standards of Conduct and Modification
of Duties.
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(a) Unless otherwise expressly provided in this Agreement
or any Group Member Agreement, whenever a potential conflict of
interest exists or arises between the General Partner or any of
its Affiliates, on the one hand, and the Partnership, any Group
Member or any Partner, on the other, any resolution or course of
action by the General Partner or its Affiliates in respect of
such conflict of interest shall be permitted and deemed approved
by all Partners, and shall not constitute a breach of this
Agreement, of any Group Member Agreement, of any agreement
contemplated herein or therein, or of any duty stated or implied
by law or equity, if the resolution or course of action in
respect of such conflict of interest is (i) approved by
Special Approval, (ii) approved by the vote of a majority
of the Common Units (excluding Common Units owned by the General
Partner and its Affiliates), (iii) on terms no less
favorable to the Partnership than those generally being provided
to or available from unrelated third parties or (iv) fair
and reasonable to the Partnership, taking into account the
totality of the relationships between the parties involved
(including other transactions that may be particularly favorable
or advantageous to the Partnership). The General Partner shall
be authorized but not required in connection with its resolution
of such conflict of interest to seek Special Approval of such
resolution, and the General Partner may also adopt a resolution
or course of action that has not received Special Approval. If
Special Approval is sought, then it shall be presumed that, in
making its decision, the Conflicts Committee acted in good
faith, and if Special Approval is not sought and the Board of
Directors determines that the resolution or course of action
taken with respect to a conflict of interest satisfies either of
the standards set forth in clauses (iii) or
(iv) above, then it shall be presumed that, in making its
decision, the Board of Directors acted in good faith, and in
either case, in any proceeding brought by any Limited Partner or
by or on behalf of such Limited Partner or any other Limited
Partner or the Partnership challenging such approval, the Person
bringing or prosecuting such proceeding shall have the burden of
overcoming such presumption. Notwithstanding anything to the
contrary in this Agreement or any duty otherwise existing at law
or equity, the existence of the conflicts of interest described
in the Registration Statement are hereby approved by all
Partners and shall not constitute a breach of this Agreement.
(b) Whenever the General Partner makes a determination or
takes or declines to take any other action, or any of its
Affiliates causes it to do so, in its capacity as the general
partner of the Partnership as opposed to in its individual
capacity, whether under this Agreement, any Group Member
Agreement or any other agreement contemplated hereby or
otherwise, then, unless another express standard is provided for
in this Agreement, the General Partner, or such Affiliates
causing it to do so, shall make such determination or take or
decline to take such other action in good faith and shall not be
subject to any other or different standards imposed by this
Agreement, any Group Member Agreement, any other agreement
contemplated hereby or under the Delaware Act or any other law,
rule or regulation or at equity. In order for a determination or
other action to be in good faith for purposes of
this Agreement, the Person or Persons making such determination
or taking or declining to take such other action must believe
that the determination or other action is in the best interests
of the Partnership.
(c) Whenever the General Partner makes a determination or
takes or declines to take any other action, or any of its
Affiliates causes it to do so, in its individual capacity as
opposed to in its capacity as the general partner of the
Partnership, whether under this Agreement, any Group Member
Agreement or any other agreement contemplated hereby or
otherwise, then the General Partner, or such Affiliates causing
it to do so, are entitled to make such determination or to take
or decline to take such other action free of any fiduciary duty
or obligation whatsoever to the Partnership, any Limited
Partner, and the General Partner, or such Affiliates causing it
to do so, shall not be required to act in good faith or pursuant
to any other standard imposed by this Agreement, any Group
Member Agreement, any other agreement contemplated hereby or
under the Delaware Act or any other law, rule or regulation or
at equity. By way of illustration and not of limitation,
whenever the phrase, at the option of the General
Partner, or some
51
variation of that phrase, is used in this Agreement, it
indicates that the General Partner is acting in its individual
capacity. For the avoidance of doubt, whenever the General
Partner votes or transfers its Partnership Interests, or
refrains from voting or transferring its
Partnership Interests, it shall be acting in its individual
capacity. The General Partners organizational documents
may provide that determinations to take or decline to take any
action in its individual, rather than representative, capacity
may or shall be determined by its members, if the General
Partner is a limited liability company, stockholders, if the
General Partner is a corporation, or the members or stockholders
of the General Partners general partner, if the General
Partner is a partnership.
(d) Notwithstanding anything to the contrary in this
Agreement, the General Partner and its Affiliates shall have no
duty or obligation, express or implied, to (i) sell or
otherwise dispose of any asset of the Partnership Group other
than in the ordinary course of business or (ii) permit any
Group Member to use any facilities or assets of the General
Partner and its Affiliates, except as may be provided in
contracts entered into from time to time specifically dealing
with such use. Any determination by the General Partner or any
of its Affiliates to enter into such contracts shall be at its
option.
(e) Except as expressly set forth in this Agreement,
neither the General Partner nor any other Indemnitee shall have
any duties or liabilities, including fiduciary duties, to the
Partnership or any Limited Partner and the provisions of this
Agreement, to the extent that they restrict, eliminate or
otherwise modify the duties and liabilities, including fiduciary
duties, of the General Partner or any other Indemnitee otherwise
existing at law or in equity, are agreed by the Partners to
replace such other duties and liabilities of the General Partner
or such other Indemnitee.
(f) The Unitholders hereby authorize the General Partner,
on behalf of the Partnership as a partner or member of a Group
Member, to approve of actions by the general partner or managing
member of such Group Member similar to those actions permitted
to be taken by the General Partner pursuant to this
Section 7.9.
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Section 7.10
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Other
Matters Concerning the General Partner.
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(a) The General Partner may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
(b) The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment
bankers and other consultants and advisers selected by it, and
any act taken or omitted to be taken in reliance upon the
opinion (including an Opinion of Counsel) of such Persons as to
matters that the General Partner reasonably believes to be
within such Persons professional or expert competence
shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of
any of its powers or obligations hereunder, to act through any
of its duly authorized officers, a duly appointed attorney or
attorneys-in-fact
or the duly authorized officers of the Partnership or any Group
Member.
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Section 7.11
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Purchase
or Sale of Partnership Securities.
|
The General Partner may cause the Partnership to purchase or
otherwise acquire Partnership Securities; provided that,
except as permitted pursuant to Section 4.10, the General
Partner may not cause any Group Member to purchase Subordinated
Units during the Subordination Period. Such Partnership
Securities shall be held by the Partnership as treasury
securities unless they are expressly cancelled by action of an
appropriate officer of the General Partner. As long as
Partnership Securities are held by any Group Member, such
Partnership Securities shall not be considered Outstanding for
any purpose, except as otherwise provided herein. The General
Partner or any Affiliate of the General Partner may also
purchase
52
or otherwise acquire and sell or otherwise dispose of
Partnership Securities for its own account, subject to the
provisions of Articles IV and X.
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Section 7.12
|
Registration
Rights of the General Partner and its Affiliates.
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(a) If (i) the General Partner or any Affiliate of the
General Partner (including for purposes of this
Section 7.12, any Person that is an Affiliate of the
General Partner at the date hereof notwithstanding that it may
later cease to be an Affiliate of the General Partner) holds
Partnership Securities that it desires to sell and
(ii) Rule 144 of the Securities Act (or any successor
rule or regulation to Rule 144) or another exemption
from registration is not available to enable such holder of
Partnership Securities (the Holder) to
dispose of the number of Partnership Securities it desires to
sell at the time it desires to do so without registration under
the Securities Act, then at the option and upon the request of
the Holder, the Partnership shall file with the Commission as
promptly as practicable after receiving such request, and use
commercially reasonable efforts to cause to become effective and
remain effective for a period of not less than six months
following its effective date or such shorter period as shall
terminate when all Partnership Securities covered by such
registration statement have been sold, a registration statement
under the Securities Act registering the offering and sale of
the number of Partnership Securities specified by the Holder;
provided, however, that the Partnership shall not be
required to effect more than three registrations pursuant to
this Section 7.12(a) and Section 7.12(b); and
provided further, however, that if the Conflicts
Committee determines in good faith that the requested
registration would be materially detrimental to the Partnership
and its Partners because such registration would
(x) materially interfere with a significant acquisition,
reorganization or other similar transaction involving the
Partnership, (y) require premature disclosure of material
information that the Partnership has a bona fide business
purpose for preserving as confidential or (z) render the
Partnership unable to comply with requirements under applicable
securities laws, then the Partnership shall have the right to
postpone such requested registration for a period of not more
than six months after receipt of the Holders
request, such right pursuant to this Section 7.12(a) or
Section 7.12(b) not to be utilized more than once in any
twelve-month period. In connection with any registration
pursuant to the first sentence of this Section 7.12(a), the
Partnership shall (i) promptly prepare and file
(A) such documents as may be necessary to register or
qualify the securities subject to such registration under the
securities laws of such states as the Holder shall reasonably
request; provided, however, that no such qualification
shall be required in any jurisdiction where, as a result
thereof, the Partnership would become subject to general service
of process or to taxation or qualification to do business as a
foreign corporation or partnership doing business in such
jurisdiction solely as a result of such registration, and
(B) such documents as may be necessary to apply for listing
or to list the Partnership Securities subject to such
registration on such National Securities Exchange as the Holder
shall reasonably request, and (ii) do any and all other
acts and things that may be necessary or appropriate to enable
the Holder to consummate a public sale of such Partnership
Securities in such states. Except as set forth in
Section 7.12(d), all costs and expenses of any such
registration and offering (other than the underwriting discounts
and commissions) shall be paid by the Partnership, without
reimbursement by the Holder.
(b) If any Holder holds Partnership Securities that it
desires to sell and Rule 144 of the Securities Act (or any
successor rule or regulation to Rule 144) or another
exemption from registration is not available to enable such
Holder to dispose of the number of Partnership Securities it
desires to sell at the time it desires to do so without
registration under the Securities Act, then at the option and
upon the request of the Holder, the Partnership shall file with
the Commission as promptly as practicable after receiving such
request, and use commercially reasonable efforts to cause to
become effective and remain effective for a period of not less
than six months following its effective date or such shorter
period as shall terminate when all Partnership Securities
covered by such shelf registration statement have been sold, a
shelf registration statement covering the
Partnership Securities specified by the Holder on an appropriate
form under Rule 415 under the Securities Act, or any
similar rule that may be adopted by the Commission; provided,
however, that the Partnership shall not be required to
effect more than three registrations pursuant to
Section 7.12(a) and this Section 7.12(b); and
provided further, however, that if the Conflicts
Committee determines in good faith that any offering under, or
the use of any prospectus forming a part of, the shelf
registration statement would be materially detrimental to the
Partnership and its Partners because such
53
offering or use would (x) materially interfere with a
significant acquisition, reorganization or other similar
transaction involving the Partnership, (y) require
premature disclosure of material information that the
Partnership has a bona fide business purpose for preserving as
confidential or (z) render the Partnership unable to comply
with requirements under applicable securities laws, then the
Partnership shall have the right to suspend such offering or use
for a period of not more than six months after receipt of the
Holders request, such right pursuant to
Section 7.12(a) or this Section 7.12(b) not to be
utilized more than once in any twelve-month period. In
connection with any shelf registration pursuant to this
Section 7.12(b), the Partnership shall (i) promptly
prepare and file (A) such documents as may be necessary to
register or qualify the securities subject to such shelf
registration under the securities laws of such states as the
Holder shall reasonably request; provided, however, that
no such qualification shall be required in any jurisdiction
where, as a result thereof, the Partnership would become subject
to general service of process or to taxation or qualification to
do business as a foreign corporation or partnership doing
business in such jurisdiction solely as a result of such shelf
registration, and (B) such documents as may be necessary to
apply for listing or to list the Partnership Securities subject
to such shelf registration on such National Securities Exchange
as the Holder shall reasonably request, and (ii) do any and
all other acts and things that may be necessary or appropriate
to enable the Holder to consummate a public sale of such
Partnership Securities in such states. Except as set forth in
Section 7.12(d), all costs and expenses of any such shelf
registration and offering (other than the underwriting discounts
and commissions) shall be paid by the Partnership, without
reimbursement by the Holder.
(c) If the Partnership shall at any time propose to file a
registration statement under the Securities Act for an offering
of equity securities of the Partnership for cash (other than an
offering relating solely to an employee benefit plan), the
Partnership shall notify all Holders of such proposal and use
all reasonable efforts to include such number or amount of
securities held by the Holder in such registration statement as
the Holder shall request; provided, that the Partnership
is not required to make any effort or take any action to so
include the securities of the Holder once the registration
statement is declared effective by the Commission or otherwise
becomes effective, including any registration statement
providing for the offering from time to time of securities
pursuant to Rule 415 of the Securities Act. If the proposed
offering pursuant to this Section 7.12(c) shall be an
underwritten offering, then, in the event that the managing
underwriter or managing underwriters of such offering advise the
Partnership and the Holder in writing that in their opinion the
inclusion of all or some of the Holders Partnership
Securities would adversely and materially affect the success of
the offering, the Partnership shall include in such offering
only that number or amount, if any, of securities held by the
Holder that, in the opinion of the managing underwriter or
managing underwriters, will not so adversely and materially
affect the offering. Except as set forth in
Section 7.12(d), all costs and expenses of any such
registration and offering (other than the underwriting discounts
and commissions) shall be paid by the Partnership, without
reimbursement by the Holder.
(d) If underwriters are engaged in connection with any
registration referred to in this Section 7.12, the
Partnership shall provide indemnification, representations,
covenants, opinions and other assurance to the underwriters in
form and substance reasonably satisfactory to such underwriters.
Further, in addition to and not in limitation of the
Partnerships obligation under Section 7.7, the
Partnership shall, to the fullest extent permitted by law,
indemnify and hold harmless the Holder, its officers, directors
and each Person who controls the Holder (within the meaning of
the Securities Act) and any agent thereof (collectively,
Indemnified Persons) from and against
any and all losses, claims, damages, liabilities, joint or
several, expenses (including legal fees and expenses),
judgments, fines, penalties, interest, settlements or other
amounts arising from any and all claims, demands, actions, suits
or proceedings, whether civil, criminal, administrative or
investigative, in which any Indemnified Person may be involved,
or is threatened to be involved, as a party or otherwise, under
the Securities Act or otherwise (hereinafter referred to in this
Section 7.12(d) as a claim and in
the plural as claims) based upon,
arising out of or resulting from any untrue statement or alleged
untrue statement of any material fact contained in any
registration statement under which any Partnership Securities
were registered under the Securities Act or any state securities
or Blue Sky laws, in any preliminary prospectus (if used prior
to the effective date of such registration statement), or in any
summary or final prospectus or any free writing prospectus or in
any amendment or supplement thereto (if used during the period
the Partnership is required to keep the
54
registration statement current), or arising out of, based upon
or resulting from the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements made therein not misleading;
provided, however, that the Partnership shall not be
liable to any Indemnified Person to the extent that any such
claim arises out of, is based upon or results from an untrue
statement or alleged untrue statement or omission or alleged
omission made in such registration statement, such preliminary,
summary or final prospectus or any free writing prospectus or
such amendment or supplement, in reliance upon and in conformity
with written information furnished to the Partnership by or on
behalf of such Indemnified Person specifically for use in the
preparation thereof.
(e) The provisions of Section 7.12(a),
Section 7.12(b) and Section 7.12(c) shall continue to
be applicable with respect to the General Partner (and any of
the General Partners Affiliates) after it ceases to be a
general partner of the Partnership, during a period of two years
subsequent to the effective date of such cessation and for so
long thereafter as is required for the Holder to sell all of the
Partnership Securities with respect to which it has requested
during such two-year period inclusion in a registration
statement otherwise filed or that a registration statement be
filed; provided, however, that the Partnership shall not
be required to file successive registration statements covering
the same Partnership Securities for which registration was
demanded during such two-year period. The provisions of
Section 7.12(d) shall continue in effect thereafter.
(f) The rights to cause the Partnership to register
Partnership Securities pursuant to this Section 7.12 may be
assigned (but only with all related obligations) by a Holder to
a transferee or assignee of such Partnership Securities,
provided (i) the Partnership is, within a reasonable time
after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the Partnership
Securities with respect to which such registration rights are
being assigned; and (ii) such transferee or assignee agrees
in writing to be bound by and subject to the terms set forth in
this Section 7.12.
(g) Any request to register Partnership Securities pursuant
to this Section 7.12 shall (i) specify the Partnership
Securities intended to be offered and sold by the Person making
the request, (ii) express such Persons present intent
to offer such Partnership Securities for distribution,
(iii) describe the nature or method of the proposed offer
and sale of Partnership Securities, and (iv) contain the
undertaking of such Person to provide all such information and
materials and take all action as may be required in order to
permit the Partnership to comply with all applicable
requirements in connection with the registration of such
Partnership Securities.
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Section 7.13
|
Reliance
by Third Parties.
|
Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume
that the General Partner and any officer of the General Partner
authorized by the General Partner to act on behalf of and in the
name of the Partnership has full power and authority to
encumber, sell or otherwise use in any manner any and all assets
of the Partnership and to enter into any authorized contracts on
behalf of the Partnership, and such Person shall be entitled to
deal with the General Partner or any such officer as if it were
the Partnerships sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies that may be available against such
Person to contest, negate or disaffirm any action of the General
Partner or any such officer in connection with any such dealing.
In no event shall any Person dealing with the General Partner or
any such officer or its representatives be obligated to
ascertain that the terms of this Agreement have been complied
with or to inquire into the necessity or expedience of any act
or action of the General Partner or any such officer or its
representatives. Each and every certificate, document or other
instrument executed on behalf of the Partnership by the General
Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming
thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person
executing and delivering such certificate, document or
instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (c) such certificate,
document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and
is binding upon the Partnership.
55
ARTICLE VIII
BOOKS,
RECORDS, ACCOUNTING AND REPORTS
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|
Section 8.1
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Records
and Accounting.
|
The General Partner shall keep or cause to be kept at the
principal office of the Partnership appropriate books and
records with respect to the Partnerships business,
including all books and records necessary to provide to the
Limited Partners any information required to be provided
pursuant to Section 3.4(a). Any books and records
maintained by or on behalf of the Partnership in the regular
course of its business, including the record of the Record
Holders of Units or other Partnership Securities, books of
account and records of Partnership proceedings, may be kept on,
or be in the form of, computer disks, hard drives, punch cards,
magnetic tape, photographs, micrographics or any other
information storage device; provided, that the books and
records so maintained are convertible into clearly legible
written form within a reasonable period of time. The books of
the Partnership shall be maintained, for financial reporting
purposes, on an accrual basis in accordance with U.S. GAAP.
The fiscal year of the Partnership shall be a fiscal year ending
December 31.
(a) As soon as practicable, but in no event later than
120 days after the close of each fiscal year of the
Partnership, the General Partner shall cause to be mailed or
made available, by any reasonable means (including posting on or
accessible through the Partnerships or the SECs
website) to each Record Holder of a Unit as of a date selected
by the General Partner, an annual report containing financial
statements of the Partnership for such fiscal year of the
Partnership, presented in accordance with U.S. GAAP,
including a balance sheet and statements of operations,
Partnership equity and cash flows, such statements to be audited
by a firm of independent public accountants selected by the
General Partner.
(b) As soon as practicable, but in no event later than
90 days after the close of each Quarter except the last
Quarter of each fiscal year, the General Partner shall cause to
be mailed or made available, by any reasonable means (including
posting on or accessible through the Partnerships or the
SECs website) to each Record Holder of a Unit, as of a
date selected by the General Partner, a report containing
unaudited financial statements of the Partnership and such other
information as may be required by applicable law, regulation or
rule of any National Securities Exchange on which the Units are
listed or admitted to trading, or as the General Partner
determines to be necessary or appropriate.
ARTICLE IX
TAX MATTERS
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|
Section 9.1
|
Tax
Returns and Information.
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The Partnership shall timely file all returns of the Partnership
that are required for federal, state and local income tax
purposes on the basis of the accrual method and the taxable year
or years that it is required by law to adopt, from time to time,
as determined by the General Partner. In the event the
Partnership is required to use a taxable year other than a year
ending on December 31, the General Partner shall use
reasonable efforts to change the taxable year of the Partnership
to a year ending on December 31. The tax information
reasonably required by Record Holders for federal and state
income tax reporting purposes with respect to a taxable year
shall be furnished to them within 90 days of the close of
the calendar year in which the Partnerships taxable year
ends. The classification, realization and recognition of income,
gain, losses and deductions and other items shall be on the
accrual method of accounting for federal income tax purposes.
56
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|
Section 9.2
|
Tax
Elections.
|
(a) The Partnership shall make the election under
Section 754 of the Code in accordance with applicable
regulations thereunder, subject to the reservation of the right
to seek to revoke any such election upon the General
Partners determination that such revocation is in the best
interests of the Limited Partners. Notwithstanding any other
provision herein contained, for the purposes of computing the
adjustments under Section 743(b) of the Code, the General
Partner shall be authorized (but not required) to adopt a
convention whereby the price paid by a transferee of a Limited
Partner Interest will be deemed to be the lowest quoted closing
price of the Limited Partner Interests on any National
Securities Exchange on which such Limited Partner Interests are
listed or admitted to trading during the calendar month in which
such transfer is deemed to occur pursuant to Section 6.2(g)
without regard to the actual price paid by such transferee.
(b) Except as otherwise provided herein, the General
Partner shall determine whether the Partnership should make any
other elections permitted by the Code.
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Section 9.3
|
Tax
Controversies.
|
Subject to the provisions hereof, the General Partner is
designated as the Tax Matters Partner (as defined in the Code)
and is authorized and required to represent the Partnership (at
the Partnerships expense) in connection with all
examinations of the Partnerships affairs by tax
authorities, including resulting administrative and judicial
proceedings, and to expend Partnership funds for professional
services and costs associated therewith. Each Partner agrees to
cooperate with the General Partner and to do or refrain from
doing any or all things reasonably required by the General
Partner to conduct such proceedings.
Notwithstanding any other provision of this Agreement, the
General Partner is authorized to take any action that may be
required to cause the Partnership and other Group Members to
comply with any withholding requirements established under the
Code or any other federal, state or local law including pursuant
to Sections 1441, 1442, 1445 and 1446 of the Code. To the
extent that the Partnership is required or elects to withhold
and pay over to any taxing authority any amount resulting from
the allocation or distribution of income to any Partner or
Assignee (including by reason of Section 1446 of the Code),
the General Partner may treat the amount withheld as a
distribution of cash pursuant to Section 6.3 in the amount
of such withholding from such Partner.
ARTICLE X
ADMISSION OF
PARTNERS
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Section 10.1
|
Admission
of Limited Partners.
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(a) Upon the issuance by the Partnership of Common Units,
Subordinated Units and Incentive Distribution Rights to the
General Partner, Targa GP Inc., Targa LP Inc. and the
Underwriters as described in Article V in connection with
the Initial Offering, the General Partner shall admit such
parties to the Partnership as Initial Limited Partners in
respect of the Common Units, Subordinated Units or Incentive
Distribution Rights issued to them.
(b) By acceptance of the transfer of any Limited Partner
Interests in accordance with Article IV or the acceptance
of any Limited Partner Interests issued pursuant to
Article V or pursuant to a merger or consolidation pursuant
to Article XIV, and except as provided in Section 4.9,
each transferee of, or other such Person acquiring, a Limited
Partner Interest (including any nominee holder or an agent or
representative acquiring such Limited Partner Interests for the
account of another Person) (i) shall be admitted to the
Partnership as a Limited Partner with respect to the Limited
Partner Interests so transferred or issued to such Person when
any such transfer, issuance or admission is reflected in the
books and records of the
57
Partnership and such Limited Partner becomes the Record Holder
of the Limited Partner Interests so transferred, (ii) shall
become bound by the terms of this Agreement,
(iii) represents that the transferee has the capacity,
power and authority to enter into this Agreement,
(iv) grants the powers of attorney set forth in this
Agreement and (v) makes the consents and waivers contained
in this Agreement, all with or without execution of this
Agreement by such Person. The transfer of any Limited Partner
Interests and the admission of any new Limited Partner shall not
constitute an amendment to this Agreement. A Person may become a
Limited Partner or Record Holder of a Limited Partner Interest
without the consent or approval of any of the Partners. A Person
may not become a Limited Partner without acquiring a Limited
Partner Interest and until such Person is reflected in the books
and records of the Partnership as the Record Holder of such
Limited Partner Interest. The rights and obligations of a Person
who is a Non-citizen Assignee shall be determined in accordance
with Section 4.9 hereof.
(c) The name and mailing address of each Limited Partner
shall be listed on the books and records of the Partnership
maintained for such purpose by the Partnership or the Transfer
Agent. The General Partner shall update the books and records of
the Partnership from time to time as necessary to reflect
accurately the information therein (or shall cause the Transfer
Agent to do so, as applicable). A Limited Partner Interest may
be represented by a Certificate, as provided in Section 4.1
hereof.
(d) Any transfer of a Limited Partner Interest shall not
entitle the transferee to share in the profits and losses, to
receive distributions, to receive allocations of income, gain,
loss, deduction or credit or any similar item or to any other
rights to which the transferor was entitled until the transferee
becomes a Limited Partner pursuant to Section 10.2(a).
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Section 10.2
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Admission
of Successor General Partner.
|
A successor General Partner approved pursuant to
Section 11.1 or Section 11.2 or the transferee of or
successor to all of the General Partner Interest (represented by
General Partner Units) pursuant to Section 4.6 who is
proposed to be admitted as a successor General Partner shall be
admitted to the Partnership as the General Partner, effective
immediately prior to the withdrawal or removal of the
predecessor or transferring General Partner, pursuant to
Section 11.1 or 11.2 or the transfer of the General Partner
Interest (represented by General Partner Units) pursuant to
Section 4.6, provided, however, that no such
successor shall be admitted to the Partnership until compliance
with the terms of Section 4.6 has occurred and such
successor has executed and delivered such other documents or
instruments as may be required to effect such admission. Any
such successor shall, subject to the terms hereof, carry on the
business of the members of the Partnership Group without
dissolution.
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Section 10.3
|
Amendment
of Agreement and Certificate of Limited Partnership.
|
To effect the admission to the Partnership of any Partner, the
General Partner shall take all steps necessary or appropriate
under the Delaware Act to amend the records of the Partnership
to reflect such admission and, if necessary, to prepare as soon
as practicable an amendment to this Agreement and, if required
by law, the General Partner shall prepare and file an amendment
to the Certificate of Limited Partnership, and the General
Partner may for this purpose, among others, exercise the power
of attorney granted pursuant to Section 2.6.
ARTICLE XI
WITHDRAWAL
OR REMOVAL OF PARTNERS
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|
Section 11.1
|
Withdrawal
of the General Partner.
|
(a) The General Partner shall be deemed to have withdrawn
from the Partnership upon the occurrence of any one of the
following events (each such event herein referred to as an
Event of Withdrawal);
58
(i) The General Partner voluntarily withdraws from the
Partnership by giving written notice to the other Partners;
(ii) The General Partner transfers all of its rights as
General Partner pursuant to Section 4.6;
(iii) The General Partner is removed pursuant to
Section 11.2;
(iv) The General Partner (A) makes a general
assignment for the benefit of creditors; (B) files a
voluntary bankruptcy petition for relief under Chapter 7 of
the United States Bankruptcy Code; (C) files a petition or
answer seeking for itself a liquidation, dissolution or similar
relief (but not a reorganization) under any law; (D) files
an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against the General
Partner in a proceeding of the type described in
clauses (A)-(C) of this Section 11.1(a)(iv); or (E)
seeks, consents to or acquiesces in the appointment of a trustee
(but not a
debtor-in-possession),
receiver or liquidator of the General Partner or of all or any
substantial part of its properties;
(v) A final and non-appealable order of relief under
Chapter 7 of the United States Bankruptcy Code is entered
by a court with appropriate jurisdiction pursuant to a voluntary
or involuntary petition by or against the General
Partner; or
(vi) (A) in the event the General Partner is a
corporation, a certificate of dissolution or its equivalent is
filed for the General Partner, or 90 days expire after the
date of notice to the General Partner of revocation of its
charter without a reinstatement of its charter, under the laws
of its state of incorporation; (B) in the event the General
Partner is a partnership or a limited liability company, the
dissolution and commencement of winding up of the General
Partner; (C) in the event the General Partner is acting in
such capacity by virtue of being a trustee of a trust, the
termination of the trust; (D) in the event the General
Partner is a natural person, his death or adjudication of
incompetency; and (E) otherwise in the event of the
termination of the General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv),
(v) or (vi)(A), (B), (C) or (E) occurs, the withdrawing General
Partner shall give notice to the Limited Partners within
30 days after such occurrence. The Partners hereby agree
that only the Events of Withdrawal described in this
Section 11.1 shall result in the withdrawal of the General
Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership
upon the occurrence of an Event of Withdrawal shall not
constitute a breach of this Agreement under the following
circumstances: (i) at any time during the period beginning
on the Closing Date and ending at 12:00 midnight, Central Time,
on December 31, 2016, the General Partner voluntarily
withdraws by giving at least 90 days advance notice
of its intention to withdraw to the Limited Partners;
provided, that prior to the effective date of such
withdrawal, the withdrawal is approved by Unitholders holding at
least a majority of the Outstanding Common Units (excluding
Common Units held by the General Partner and its Affiliates) and
the General Partner delivers to the Partnership an Opinion of
Counsel (Withdrawal Opinion of
Counsel) that such withdrawal (following the
selection of the successor General Partner) would not result in
the loss of the limited liability of any Limited Partner or any
Group Member or cause any Group Member to be treated as an
association taxable as a corporation or otherwise to be taxed as
an entity for federal income tax purposes (to the extent not
already so treated or taxed); (ii) at any time after
12:00 midnight, Central Time, on December 31, 2016,
the General Partner voluntarily withdraws by giving at least
90 days advance notice to the Unitholders, such
withdrawal to take effect on the date specified in such notice;
(iii) at any time that the General Partner ceases to be the
General Partner pursuant to Section 11.1(a)(ii) or is
removed pursuant to Section 11.2; or
(iv) notwithstanding clause (i) of this sentence, at
any time that the General Partner voluntarily withdraws by
giving at least 90 days advance notice of its
intention to withdraw to the Limited Partners, such withdrawal
to take effect on the date specified in the notice, if at the
time such notice is given one Person and its Affiliates (other
than the General Partner and its Affiliates) own beneficially or
of record or control at least 50% of the Outstanding Units. The
withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall also constitute the
withdrawal of the General Partner as general partner or managing
member, if any, to the extent applicable,
59
of the other Group Members. If the General Partner gives a
notice of withdrawal pursuant to Section 11.1(a)(i), the
holders of a Unit Majority, may, prior to the effective date of
such withdrawal, elect a successor General Partner. The Person
so elected as successor General Partner shall automatically
become the successor general partner or managing member, to the
extent applicable, of the other Group Members of which the
General Partner is a general partner or a managing member. If,
prior to the effective date of the General Partners
withdrawal, a successor is not selected by the Unitholders as
provided herein or the Partnership does not receive a Withdrawal
Opinion of Counsel, the Partnership shall be dissolved in
accordance with Section 12.1. Any successor General Partner
elected in accordance with the terms of this Section 11.1
shall be subject to the provisions of Section 10.3.
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Section 11.2
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Removal
of the General Partner.
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The General Partner may be removed if such removal is approved
by the Unitholders holding at least 662/3% of the Outstanding
Units (including Units held by the General Partner and its
Affiliates) voting as a single class. Any such action by such
holders for removal of the General Partner must also provide for
the election of a successor General Partner by the Unitholders
holding a majority of the outstanding Common Units and
Class B Units, if any, voting as a single class and a
majority of the outstanding Subordinated Units (if any
Subordinated Units are then Outstanding) voting as a class
(including, in each case, Units held by the General Partner and
its Affiliates). Such removal shall be effective immediately
following the admission of a successor General Partner pursuant
to Section 10.3. The removal of the General Partner shall
also automatically constitute the removal of the General Partner
as general partner or managing member, to the extent applicable,
of the other Group Members of which the General Partner is a
general partner or a managing member. If a Person is elected as
a successor General Partner in accordance with the terms of this
Section 11.2, such Person shall, upon admission pursuant to
Section 10.3, automatically become a successor general
partner or managing member, to the extent applicable, of the
other Group Members of which the General Partner is a general
partner or a managing member. The right of the holders of
Outstanding Units to remove the General Partner shall not exist
or be exercised unless the Partnership has received an opinion
opining as to the matters covered by a Withdrawal Opinion of
Counsel. Any successor General Partner elected in accordance
with the terms of this Section 11.2 shall be subject to the
provisions of Section 10.3.
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Section 11.3
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Interest
of Departing General Partner and Successor General
Partner.
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(a) In the event of (i) withdrawal of the General
Partner under circumstances where such withdrawal does not
violate this Agreement or (ii) removal of the General
Partner by the holders of Outstanding Units under circumstances
where Cause does not exist, if the successor General Partner is
elected in accordance with the terms of Section 11.1 or
Section 11.2, the Departing General Partner shall have the
option, exercisable prior to the effective date of the departure
of such Departing General Partner, to require its successor to
purchase its General Partner Interest (represented by General
Partner Units) and its general partner interest (or equivalent
interest), if any, in the other Group Members and all of its
Incentive Distribution Rights (collectively, the
Combined Interest) in exchange for an
amount in cash equal to the fair market value of such Combined
Interest, such amount to be determined and payable as of the
effective date of its departure. If the General Partner is
removed by the Unitholders under circumstances where Cause
exists or if the General Partner withdraws under circumstances
where such withdrawal violates this Agreement, and if a
successor General Partner is elected in accordance with the
terms of Section 11.1 or Section 11.2 (or if the
business of the Partnership is continued pursuant to
Section 12.2 and the successor General Partner is not the
former General Partner), such successor shall have the option,
exercisable prior to the effective date of the departure of such
Departing General Partner (or, in the event the business of the
Partnership is continued, prior to the date the business of the
Partnership is continued), to purchase the Combined Interest for
such fair market value of such Combined Interest of the
Departing General Partner. In either event, the Departing
General Partner shall be entitled to receive all reimbursements
due such Departing General Partner pursuant to Section 7.4,
including any employee-related liabilities (including severance
liabilities), incurred in connection with the termination of any
employees employed by the
60
Departing General Partner or its Affiliates (other than any
Group Member) for the benefit of the Partnership or the other
Group Members.
For purposes of this Section 11.3(a), the fair market value
of the Departing General Partners Combined Interest shall
be determined by agreement between the Departing General Partner
and its successor or, failing agreement within 30 days
after the effective date of such Departing General
Partners departure, by an independent investment banking
firm or other independent expert selected by the Departing
General Partner and its successor, which, in turn, may rely on
other experts, and the determination of which shall be
conclusive as to such matter. If such parties cannot agree upon
one independent investment banking firm or other independent
expert within 45 days after the effective date of such
departure, then the Departing General Partner shall designate an
independent investment banking firm or other independent expert,
the Departing General Partners successor shall designate
an independent investment banking firm or other independent
expert, and such firms or experts shall mutually select a third
independent investment banking firm or independent expert, which
third independent investment banking firm or other independent
expert shall determine the fair market value of the Combined
Interest of the Departing General Partner. In making its
determination, such third independent investment banking firm or
other independent expert may consider the then current trading
price of Units on any National Securities Exchange on which
Units are then listed or admitted to trading, the value of the
Partnerships assets, the rights and obligations of the
Departing General Partner and other factors it may deem relevant.
(b) If the Combined Interest is not purchased in the manner
set forth in Section 11.3(a), the Departing General Partner
(or its transferee) shall become a Limited Partner and its
Combined Interest shall be converted into Common Units pursuant
to a valuation made by an investment banking firm or other
independent expert selected pursuant to Section 11.3(a),
without reduction in such Partnership Interest (but subject
to proportionate dilution by reason of the admission of its
successor). Any successor General Partner shall indemnify the
Departing General Partner (or its transferee) as to all debts
and liabilities of the Partnership arising on or after the date
on which the Departing General Partner (or its transferee)
becomes a Limited Partner. For purposes of this Agreement,
conversion of the Combined Interest of the Departing General
Partner to Common Units will be characterized as if the
Departing General Partner (or its transferee) contributed its
Combined Interest to the Partnership in exchange for the newly
issued Common Units.
(c) If a successor General Partner is elected in accordance
with the terms of Section 11.1 or Section 11.2 (or if
the business of the Partnership is continued pursuant to
Section 12.2 and the successor General Partner is not the
former General Partner) and the option described in
Section 11.3(a) is not exercised by the party entitled to
do so, the successor General Partner shall, at the effective
date of its admission to the Partnership, contribute to the
Partnership cash in the amount equal to the product of the (x)
quotient obtained by dividing (A) the Percentage Interest
of the General Partner Interest of the Departing General Partner
by (B) a percentage equal to 100% less the Percentage
Interest of the General Partner Interest of the Departing
General Partner and (y) the Net Agreed Value of the
Partnerships assets on such date. In such event, such
successor General Partner shall, subject to the following
sentence, be entitled to its Percentage Interest of all
Partnership allocations and distributions to which the Departing
General Partner was entitled. In addition, the successor General
Partner shall cause this Agreement to be amended to reflect
that, from and after the date of such successor General
Partners admission, the successor General Partners
interest in all Partnership distributions and allocations shall
be its Percentage Interest.
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Section 11.4
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Termination
of Subordination Period, Conversion of Subordinated Units and
Extinguishment of Cumulative Common Unit Arrearages.
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Notwithstanding any provision of this Agreement, if the General
Partner is removed as general partner of the Partnership under
circumstances where Cause does not exist and Units held by the
General Partner and its Affiliates are not voted in favor of
such removal, (i) the Subordination Period will end and all
Outstanding Subordinated Units will immediately and
automatically convert into Common Units on a
one-for-one
basis, (ii) all Cumulative Common Unit Arrearages on the
Common Units will be extinguished
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and (iii) the General Partner will have the right to
convert its General Partner Interest (represented by General
Partner Units) and its Incentive Distribution Rights into Common
Units or to receive cash in exchange therefor in accordance with
Section 11.3.
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Section 11.5
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Withdrawal
of Limited Partners.
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No Limited Partner shall have any right to withdraw from the
Partnership; provided, however, that when a transferee of
a Limited Partners Limited Partner Interest becomes a
Record Holder of the Limited Partner Interest so transferred,
such transferring Limited Partner shall cease to be a Limited
Partner with respect to the Limited Partner Interest so
transferred.
ARTICLE XII
DISSOLUTION
AND LIQUIDATION
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Section 12.1
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Dissolution.
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The Partnership shall not be dissolved by the admission of
additional Limited Partners or by the admission of a successor
General Partner in accordance with the terms of this Agreement.
Upon the removal or withdrawal of the General Partner, if a
successor General Partner is elected pursuant to
Section 11.1 or Section 11.2, the Partnership shall
not be dissolved and such successor General Partner shall
continue the business of the Partnership. The Partnership shall
dissolve, and (subject to Section 12.2) its affairs shall
be wound up, upon:
(a) an Event of Withdrawal of the General Partner as
provided in Section 11.1(a) (other than
Section 11.1(a)(ii)), unless a successor is elected and an
Opinion of Counsel is received as provided in
Section 11.1(b) or 11.2 and such successor is admitted to
the Partnership pursuant to Section 10.3;
(b) an election to dissolve the Partnership by the General
Partner that is approved by the holders of a Unit Majority;
(c) the entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Delaware
Act; or
(d) at any time there are no Limited Partners, unless the
Partnership is continued without dissolution in accordance with
the Delaware Act.
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Section 12.2
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Continuation
of the Business of the Partnership After Dissolution.
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Upon (a) dissolution of the Partnership following an Event
of Withdrawal caused by the withdrawal or removal of the General
Partner as provided in Section 11.1(a)(i) or (iii) and the
failure of the Partners to select a successor to such Departing
General Partner pursuant to Section 11.1 or
Section 11.2, then within 90 days thereafter, or
(b) dissolution of the Partnership upon an event
constituting an Event of Withdrawal as defined in
Section 11.1(a)(iv), (v) or (vi), then, to the maximum
extent permitted by law, within 180 days thereafter, the
holders of a Unit Majority may elect to continue the business of
the Partnership on the same terms and conditions set forth in
this Agreement by appointing as a successor General Partner a
Person approved by the holders of a Unit Majority. Unless such
an election is made within the applicable time period as set
forth above, the Partnership shall conduct only activities
necessary to wind up its affairs. If such an election is so
made, then:
(i) the Partnership shall continue without dissolution
unless earlier dissolved in accordance with this
Article XII;
(ii) if the successor General Partner is not the former
General Partner, then the interest of the former General Partner
shall be treated in the manner provided in
Section 11.3; and
(iii) the successor General Partner shall be admitted to
the Partnership as General Partner, effective as of the Event of
Withdrawal, by agreeing in writing to be bound by this
Agreement;
62
provided, that the right of the holders of a Unit
Majority to approve a successor General Partner and to continue
the business of the Partnership shall not exist and may not be
exercised unless the Partnership has received an Opinion of
Counsel that (x) the exercise of the right would not result
in the loss of limited liability of any Limited Partner and
(y) neither the Partnership nor any Group Member would be
treated as an association taxable as a corporation or otherwise
be taxable as an entity for federal income tax purposes upon the
exercise of such right to continue (to the extent not already so
treated or taxed).
Section 12.3 Liquidator.
Upon dissolution of the Partnership, unless the business of the
Partnership is continued pursuant to Section 12.2, the
General Partner shall select one or more Persons to act as
Liquidator. The Liquidator (if other than the General Partner)
shall be entitled to receive such compensation for its services
as may be approved by holders of at least a majority of the
Outstanding Common Units and Subordinated Units voting as a
single class. The Liquidator (if other than the General Partner)
shall agree not to resign at any time without 15 days
prior notice and may be removed at any time, with or without
cause, by notice of removal approved by holders of at least a
majority of the Outstanding Common Units, Class B Units (if
any), and Subordinated Units voting as a single class. Upon
dissolution, removal or resignation of the Liquidator, a
successor and substitute Liquidator (who shall have and succeed
to all rights, powers and duties of the original Liquidator)
shall within 30 days thereafter be approved by holders of
at least a majority of the Outstanding Common Units,
Class B Units (if any), and Subordinated Units voting as a
single class. The right to approve a successor or substitute
Liquidator in the manner provided herein shall be deemed to
refer also to any such successor or substitute Liquidator
approved in the manner herein provided. Except as expressly
provided in this Article XII, the Liquidator approved in
the manner provided herein shall have and may exercise, without
further authorization or consent of any of the parties hereto,
all of the powers conferred upon the General Partner under the
terms of this Agreement (but subject to all of the applicable
limitations, contractual and otherwise, upon the exercise of
such powers, other than the limitation on sale set forth in
Section 7.3) necessary or appropriate to carry out the
duties and functions of the Liquidator hereunder for and during
the period of time required to complete the winding up and
liquidation of the Partnership as provided for herein.
Section 12.4 Liquidation.
The Liquidator shall proceed to dispose of the assets of the
Partnership, discharge its liabilities, and otherwise wind up
its affairs in such manner and over such period as determined by
the Liquidator, subject to
Section 17-804
of the Delaware Act and the following:
(a) The assets may be disposed of by public or private sale
or by distribution in kind to one or more Partners on such terms
as the Liquidator and such Partner or Partners may agree. If any
property is distributed in kind, the Partner receiving the
property shall be deemed for purposes of Section 12.4(c) to
have received cash equal to its fair market value; and
contemporaneously therewith, appropriate cash distributions must
be made to the other Partners. The Liquidator may defer
liquidation or distribution of the Partnerships assets for
a reasonable time if it determines that an immediate sale or
distribution of all or some of the Partnerships assets
would be impractical or would cause undue loss to the Partners.
The Liquidator may distribute the Partnerships assets, in
whole or in part, in kind if it determines that a sale would be
impractical or would cause undue loss to the Partners.
(b) Liabilities of the Partnership include amounts owed to
the Liquidator as compensation for serving in such capacity
(subject to the terms of Section 12.3) and amounts to
Partners otherwise than in respect of their distribution rights
under Article VI. With respect to any liability that is
contingent, conditional or unmatured or is otherwise not yet due
and payable, the Liquidator shall either settle such claim for
such amount as it thinks appropriate or establish a reserve of
cash or other assets to provide for its payment. When paid, any
unused portion of the reserve shall be distributed as additional
liquidation proceeds.
63
(c) All property and all cash in excess of that required to
discharge liabilities as provided in Section 12.4(b) shall
be distributed to the Partners in accordance with, and to the
extent of, the positive balances in their respective Capital
Accounts, as determined after taking into account all Capital
Account adjustments (other than those made by reason of
distributions pursuant to this Section 12.4(c)) for the
taxable year of the Partnership during which the liquidation of
the Partnership occurs (with such date of occurrence being
determined pursuant to Treasury
Regulation Section 1.704-1(b)(2)(ii)(g)),
and such distribution shall be made by the end of such taxable
year (or, if later, within 90 days after said date of such
occurrence).
Section 12.5 Cancellation
of Certificate of Limited Partnership.
Upon the completion of the distribution of Partnership cash and
property as provided in Section 12.4 in connection with the
liquidation of the Partnership, the Certificate of Limited
Partnership and all qualifications of the Partnership as a
foreign limited partnership in jurisdictions other than the
State of Delaware shall be canceled and such other actions as
may be necessary to terminate the Partnership shall be taken.
Section 12.6 Return
of Contributions.
The General Partner shall not be personally liable for, and
shall have no obligation to contribute or loan any monies or
property to the Partnership to enable it to effectuate, the
return of the Capital Contributions of the Limited Partners or
Unitholders, or any portion thereof, it being expressly
understood that any such return shall be made solely from
Partnership assets.
Section 12.7 Waiver
of Partition.
To the maximum extent permitted by law, each Partner hereby
waives any right to partition of the Partnership property.
Section 12.8 Capital
Account Restoration.
No Limited Partner shall have any obligation to restore any
negative balance in its Capital Account upon liquidation of the
Partnership. The General Partner shall be obligated to restore
any negative balance in its Capital Account upon liquidation of
its interest in the Partnership by the end of the taxable year
of the Partnership during which such liquidation occurs, or, if
later, within 90 days after the date of such liquidation.
ARTICLE XIII
AMENDMENT OF
PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
Section 13.1 Amendments
to be Adopted Solely by the General Partner.
Each Partner agrees that the General Partner, without the
approval of any Partner, may amend any provision of this
Agreement and execute, swear to, acknowledge, deliver, file and
record whatever documents may be required in connection
therewith, to reflect:
(a) a change in the name of the Partnership, the location
of the principal place of business of the Partnership, the
registered agent of the Partnership or the registered office of
the Partnership;
(b) admission, substitution, withdrawal or removal of
Partners in accordance with this Agreement;
(c) a change that the General Partner determines to be
necessary or appropriate to qualify or continue the
qualification of the Partnership as a limited partnership or a
partnership in which the Limited Partners have limited liability
under the laws of any state or to ensure that the Group Members
will not be treated as associations taxable as corporations or
otherwise taxed as entities for federal income tax purposes;
64
(d) a change that the General Partner determines,
(i) does not adversely affect the Limited Partners
(including any particular class of Partnership Interests as
compared to other classes of Partnership Interests) in any
material respect, (ii) to be necessary or appropriate to
(A) satisfy any requirements, conditions or guidelines
contained in any opinion, directive, order, ruling or regulation
of any federal or state agency or judicial authority or
contained in any federal or state statute (including the
Delaware Act) or (B) facilitate the trading of the Units
(including the division of any class or classes of Outstanding
Units into different classes to facilitate uniformity of tax
consequences within such classes of Units) or comply with any
rule, regulation, guideline or requirement of any National
Securities Exchange on which the Units are or will be listed or
admitted to trading, (iii) to be necessary or appropriate
in connection with action taken by the General Partner pursuant
to Section 5.9 or (iv) is required to effect the
intent expressed in the Registration Statement or the intent of
the provisions of this Agreement or is otherwise contemplated by
this Agreement;
(e) a change in the fiscal year or taxable year of the
Partnership and any other changes that the General Partner
determines to be necessary or appropriate as a result of a
change in the fiscal year or taxable year of the Partnership
including, if the General Partner shall so determine, a change
in the definition of Quarter and the dates on which
distributions are to be made by the Partnership;
(f) an amendment that is necessary, in the Opinion of
Counsel, to prevent the Partnership, or the General Partner or
its directors, officers, trustees or agents from in any manner
being subjected to the provisions of the Investment Company Act
of 1940, as amended, the Investment Advisers Act of 1940, as
amended, or plan asset regulations adopted under the
Employee Retirement Income Security Act of 1974, as amended,
regardless of whether such are substantially similar to plan
asset regulations currently applied or proposed by the United
States Department of Labor;
(g) an amendment that the General Partner determines to be
necessary or appropriate in connection with the authorization of
issuance of any class or series of Partnership Securities
pursuant to Section 5.6, including any amendment that the
General Partner determines is necessary or appropriate in
connection with (i) the adjustments of the Minimum
Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution pursuant to the
provisions of Section 5.11, (ii) the implementation of
the provisions of Section 5.11 or (iii) any
modifications to the Incentive Distribution Rights made in
connection with the issuance of Partnership Securities pursuant
to Section 5.6, provided that, with respect to this
clause (iii), the modifications to the Incentive
Distribution Rights and the related issuance of Partnership
Securities have received Special Approval;
(h) any amendment expressly permitted in this Agreement to
be made by the General Partner acting alone;
(i) an amendment effected, necessitated or contemplated by
a Merger Agreement approved in accordance with Section 14.3;
(j) an amendment that the General Partner determines to be
necessary or appropriate to reflect and account for the
formation by the Partnership of, or investment by the
Partnership in, any corporation, partnership, joint venture,
limited liability company or other entity, in connection with
the conduct by the Partnership of activities permitted by the
terms of Section 2.4;
(k) a merger, conveyance or conversion pursuant to
Section 14.3(d); or
(l) any other amendments substantially similar to the
foregoing.
Section 13.2 Amendment
Procedures.
Except as provided in Section 13.1 and Section 13.3,
all amendments to this Agreement shall be made in accordance
with the requirements contained in this Section 13.2.
Amendments to this Agreement may be proposed only by the General
Partner; provided, however, that the General Partner
shall have no duty or obligation to propose any amendment to
this Agreement and may decline to do so free of any fiduciary
duty or obligation whatsoever to the Partnership or any Limited
Partner and, in declining to propose an
65
amendment, to the fullest extent permitted by law shall not be
required to act in good faith or pursuant to any other standard
imposed by this Agreement, any Group Member Agreement, any other
agreement contemplated hereby or under the Delaware Act or any
other law, rule or regulation or at equity. A proposed amendment
shall be effective upon its approval by the General Partner and
the holders of a Unit Majority, unless a greater or different
percentage is required under this Agreement or by Delaware law.
Each proposed amendment that requires the approval of the
holders of a specified percentage of Outstanding Units shall be
set forth in a writing that contains the text of the proposed
amendment. If such an amendment is proposed, the General Partner
shall seek the written approval of the requisite percentage of
Outstanding Units or call a meeting of the Unitholders to
consider and vote on such proposed amendment. The General
Partner shall notify all Record Holders upon final adoption of
any such proposed amendments.
Section 13.3 Amendment
Requirements.
(a) Notwithstanding the provisions of Section 13.1 and
Section 13.2, no provision of this Agreement that
establishes a percentage of Outstanding Units (including Units
deemed owned by the General Partner) required to take any action
shall be amended, altered, changed, repealed or rescinded in any
respect that would have the effect of reducing such voting
percentage unless such amendment is approved by the written
consent or the affirmative vote of holders of Outstanding Units
whose aggregate Outstanding Units constitute not less than the
voting requirement sought to be reduced.
(b) Notwithstanding the provisions of Section 13.1 and
Section 13.2, no amendment to this Agreement may
(i) enlarge the obligations of any Limited Partner without
its consent, unless such shall be deemed to have occurred as a
result of an amendment approved pursuant to
Section 13.3(c), or (ii) enlarge the obligations of,
restrict in any way any action by or rights of, or reduce in any
way the amounts distributable, reimbursable or otherwise payable
to, the General Partner or any of its Affiliates without its
consent, which consent may be given or withheld at its option.
(c) Except as provided in Section 14.3, and without
limitation of the General Partners authority to adopt
amendments to this Agreement without the approval of any
Partners or Assignees as contemplated in Section 13.1, any
amendment that would have a material adverse effect on the
rights or preferences of any class of Partnership Interests
in relation to other classes of Partnership Interests must
be approved by the holders of not less than a majority of the
Outstanding Partnership Interests of the class affected.
(d) Notwithstanding any other provision of this Agreement,
except for amendments pursuant to Section 13.1 and except
as otherwise provided by Section 14.3(b), no amendments
shall become effective without the approval of the holders of at
least 90% of the Outstanding Units voting as a single class
unless the Partnership obtains an Opinion of Counsel to the
effect that such amendment will not affect the limited liability
of any Limited Partner under applicable partnership law of the
state under whose laws the Partnership is organized.
(e) Except as provided in Section 13.1, this
Section 13.3 shall only be amended with the approval of the
holders of at least 90% of the Outstanding Units.
Section 13.4 Special
Meetings.
All acts of Limited Partners to be taken pursuant to this
Agreement shall be taken in the manner provided in this
Article XIII. Special meetings of the Limited Partners may
be called by the General Partner or by Limited Partners owning
20% or more of the Outstanding Units of the class or classes for
which a meeting is proposed. Limited Partners shall call a
special meeting by delivering to the General Partner one or more
requests in writing stating that the signing Limited Partners
wish to call a special meeting and indicating the general or
specific purposes for which the special meeting is to be called.
Within 60 days after receipt of such a call from Limited
Partners or within such greater time as may be reasonably
necessary for the Partnership to comply with any statutes,
rules, regulations, listing agreements or similar requirements
governing the holding of a meeting or the solicitation of
proxies for use at such a meeting, the General Partner shall
send a notice of the meeting to the Limited Partners either
directly or indirectly through the Transfer Agent. A meeting
shall be held at a time and place determined by the General
66
Partner on a date not less than 10 days nor more than
60 days after the time notice of the meeting is given as
provided in Section 16.1. Limited Partners shall not vote
on matters that would cause the Limited Partners to be deemed to
be taking part in the management and control of the business and
affairs of the Partnership so as to jeopardize the Limited
Partners limited liability under the Delaware Act or the
law of any other state in which the Partnership is qualified to
do business.
Section 13.5 Notice
of a Meeting.
Notice of a meeting called pursuant to Section 13.4 shall
be given to the Record Holders of the class or classes of Units
for which a meeting is proposed in writing by mail or other
means of written communication in accordance with
Section 16.1. The notice shall be deemed to have been given
at the time when deposited in the mail or sent by other means of
written communication.
Section 13.6 Record
Date.
For purposes of determining the Limited Partners entitled to
notice of or to vote at a meeting of the Limited Partners or to
give approvals without a meeting as provided in
Section 13.11 the General Partner may set a Record Date,
which shall not be less than 10 nor more than 60 days
before (a) the date of the meeting (unless such requirement
conflicts with any rule, regulation, guideline or requirement of
any National Securities Exchange on which the Units are listed
or admitted to trading, in which case the rule, regulation,
guideline or requirement of such National Securities Exchange
shall govern) or (b) in the event that approvals are sought
without a meeting, the date by which Limited Partners are
requested in writing by the General Partner to give such
approvals. If the General Partner does not set a Record Date,
then (a) the Record Date for determining the Limited
Partners entitled to notice of or to vote at a meeting of the
Limited Partners shall be the close of business on the day next
preceding the day on which notice is given, and (b) the
Record Date for determining the Limited Partners entitled to
give approvals without a meeting shall be the date the first
written approval is deposited with the Partnership in care of
the General Partner in accordance with Section 13.11.
Section 13.7 Adjournment.
When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting and a new Record Date
need not be fixed, if the time and place thereof are announced
at the meeting at which the adjournment is taken, unless such
adjournment shall be for more than 45 days. At the
adjourned meeting, the Partnership may transact any business
which might have been transacted at the original meeting. If the
adjournment is for more than 45 days or if a new Record
Date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given in accordance with this
Article XIII.
Section 13.8 Waiver
of Notice; Approval of Meeting.
The transactions of any meeting of Limited Partners, however
called and noticed, and whenever held, shall be as valid as if
it had occurred at a meeting duly held after regular call and
notice, if a quorum is present either in person or by proxy.
Attendance of a Limited Partner at a meeting shall constitute a
waiver of notice of the meeting, except when the Limited Partner
attends the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened; and
except that attendance at a meeting is not a waiver of any right
to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if
the disapproval is expressly made at the meeting.
Section 13.9 Quorum
and Voting.
The holders of a majority of the Outstanding Units of the class
or classes for which a meeting has been called (including
Outstanding Units deemed owned by the General Partner)
represented in person or by proxy shall constitute a quorum at a
meeting of Limited Partners of such class or classes unless any
such action by the Limited Partners requires approval by holders
of a greater percentage of such Units, in which
67
case the quorum shall be such greater percentage. At any meeting
of the Limited Partners duly called and held in accordance with
this Agreement at which a quorum is present, the act of Limited
Partners holding Outstanding Units that in the aggregate
represent a majority of the Outstanding Units entitled to vote
and be present in person or by proxy at such meeting shall be
deemed to constitute the act of all Limited Partners, unless a
greater or different percentage is required with respect to such
action under the provisions of this Agreement, in which case the
act of the Limited Partners holding Outstanding Units that in
the aggregate represent at least such greater or different
percentage shall be required. The Limited Partners present at a
duly called or held meeting at which a quorum is present may
continue to transact business until adjournment, notwithstanding
the withdrawal of enough Limited Partners to leave less than a
quorum, if any action taken (other than adjournment) is approved
by the required percentage of Outstanding Units specified in
this Agreement (including Outstanding Units deemed owned by the
General Partner). In the absence of a quorum any meeting of
Limited Partners may be adjourned from time to time by the
affirmative vote of holders of at least a majority of the
Outstanding Units entitled to vote at such meeting (including
Outstanding Units deemed owned by the General Partner)
represented either in person or by proxy, but no other business
may be transacted, except as provided in Section 13.7.
Section 13.10 Conduct
of a Meeting.
The General Partner shall have full power and authority
concerning the manner of conducting any meeting of the Limited
Partners or solicitation of approvals in writing, including the
determination of Persons entitled to vote, the existence of a
quorum, the satisfaction of the requirements of
Section 13.4, the conduct of voting, the validity and
effect of any proxies and the determination of any
controversies, votes or challenges arising in connection with or
during the meeting or voting. The General Partner shall
designate a Person to serve as chairman of any meeting and shall
further designate a Person to take the minutes of any meeting.
All minutes shall be kept with the records of the Partnership
maintained by the General Partner. The General Partner may make
such other regulations consistent with applicable law and this
Agreement as it may deem advisable concerning the conduct of any
meeting of the Limited Partners or solicitation of approvals in
writing, including regulations in regard to the appointment of
proxies, the appointment and duties of inspectors of votes and
approvals, the submission and examination of proxies and other
evidence of the right to vote, and the revocation of approvals
in writing.
Section 13.11 Action
Without a Meeting.
If authorized by the General Partner, any action that may be
taken at a meeting of the Limited Partners may be taken without
a meeting if an approval in writing setting forth the action so
taken is signed by Limited Partners owning not less than the
minimum percentage of the Outstanding Units (including Units
deemed owned by the General Partner) that would be necessary to
authorize or take such action at a meeting at which all the
Limited Partners were present and voted (unless such provision
conflicts with any rule, regulation, guideline or requirement of
any National Securities Exchange on which the Units are listed
or admitted to trading, in which case the rule, regulation,
guideline or requirement of such National Securities Exchange
shall govern). Prompt notice of the taking of action without a
meeting shall be given to the Limited Partners who have not
approved in writing. The General Partner may specify that any
written ballot submitted to Limited Partners for the purpose of
taking any action without a meeting shall be returned to the
Partnership within the time period, which shall be not less than
20 days, specified by the General Partner. If a ballot
returned to the Partnership does not vote all of the Units held
by the Limited Partners, the Partnership shall be deemed to have
failed to receive a ballot for the Units that were not voted. If
approval of the taking of any action by the Limited Partners is
solicited by any Person other than by or on behalf of the
General Partner, the written approvals shall have no force and
effect unless and until (a) they are deposited with the
Partnership in care of the General Partner, (b) approvals
sufficient to take the action proposed are dated as of a date
not more than 90 days prior to the date sufficient
approvals are deposited with the Partnership and (c) an
Opinion of Counsel is delivered to the General Partner to the
effect that the exercise of such right and the action proposed
to be taken with respect to any particular matter (i) will
not cause the Limited Partners to be deemed to be taking part in
the management and control of the business and affairs of the
Partnership so as to jeopardize the Limited Partners
limited
68
liability, and (ii) is otherwise permissible under the
state statutes then governing the rights, duties and liabilities
of the Partnership and the Partners.
Section 13.12 Right
to Vote and Related Matters.
(a) Only those Record Holders of the Units on the Record
Date set pursuant to Section 13.6 (and also subject to the
limitations contained in the definition of
Outstanding) shall be entitled to notice of, and to
vote at, a meeting of Limited Partners or to act with respect to
matters as to which the holders of the Outstanding Units have
the right to vote or to act. All references in this Agreement to
votes of, or other acts that may be taken by, the Outstanding
Units shall be deemed to be references to the votes or acts of
the Record Holders of such Outstanding Units.
(b) With respect to Units that are held for a Persons
account by another Person (such as a broker, dealer, bank, trust
company or clearing corporation, or an agent of any of the
foregoing), in whose name such Units are registered, such other
Person shall, in exercising the voting rights in respect of such
Units on any matter, and unless the arrangement between such
Persons provides otherwise, vote such Units in favor of, and at
the direction of, the Person who is the beneficial owner, and
the Partnership shall be entitled to assume it is so acting
without further inquiry. The provisions of this
Section 13.12(b) (as well as all other provisions of this
Agreement) are subject to the provisions of Section 4.3.
ARTICLE XIV
MERGER,
CONSOLIDATION OR CONVERSION
Section 14.1 Authority.
The Partnership may merge or consolidate with or into one or
more corporations, limited liability companies, statutory trusts
or associations, real estate investment trusts, common law
trusts or unincorporated businesses, including a partnership
(whether general or limited (including a limited liability
partnership)) or convert into any such entity, whether such
entity is formed under the laws of the State of Delaware or any
other state of the United States of America, pursuant to a
written plan of merger or consolidation (Merger
Agreement) or a written plan of conversion
(Plan of Conversion), as the case may
be, in accordance with this Article XIV.
Section 14.2 Procedure
for Merger, Consolidation or Conversion.
(a) Merger, consolidation or conversion of the Partnership
pursuant to this Article XIV requires the prior consent of
the General Partner, provided, however, that, to the
fullest extent permitted by law, the General Partner shall have
no duty or obligation to consent to any merger, consolidation or
conversion of the Partnership and may decline to do so free of
any fiduciary duty or obligation whatsoever to the Partnership,
any Limited Partner and, in declining to consent to a merger,
consolidation or conversion, shall not be required to act in
good faith or pursuant to any other standard imposed by this
Agreement, any other agreement contemplated hereby or under the
Act or any other law, rule or regulation or at equity.
(b) If the General Partner shall determine to consent to
the merger or consolidation, the General partner shall approve
the Merger Agreement, which shall set forth:
(i) name and state of domicile of each of the business
entities proposing to merge or consolidate;
(ii) the name and state of domicile of the business entity
that is to survive the proposed merger or consolidation (the
Surviving Business Entity);
(iii) the terms and conditions of the proposed merger or
consolidation;
(iv) the manner and basis of exchanging or converting the
equity securities of each constituent business entity for, or
into, cash, property or interests, rights, securities or
obligations of the Surviving Business Entity; and (i) if
any general or limited partner interests, securities or rights
of any constituent business entity are not to be exchanged or
converted solely for, or into, cash, property or
69
general or limited partner interests, rights, securities or
obligations of the Surviving Business Entity, the cash, property
or interests, rights, securities or obligations of any general
or limited partnership, corporation, trust, limited liability
company, unincorporated business or other entity (other than the
Surviving Business Entity) which the holders of such general or
limited partner interests, securities or rights are to receive
in exchange for, or upon conversion of their interests,
securities or rights, and (ii) in the case of securities
represented by certificates, upon the surrender of such
certificates, which cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving
Business Entity or any general or limited partnership,
corporation, trust, limited liability company, unincorporated
business or other entity (other than the Surviving Business
Entity), or evidences thereof, are to be delivered;
(v) a statement of any changes in the constituent documents
or the adoption of new constituent documents (the articles or
certificate of incorporation, articles of trust, declaration of
trust, certificate or agreement of limited partnership,
operating agreement or other similar charter or governing
document) of the Surviving Business Entity to be effected by
such merger or consolidation;
(vi) the effective time of the merger, which may be the
date of the filing of the certificate of merger pursuant to
Section 14.4 or a later date specified in or determinable
in accordance with the Merger Agreement (provided, that
if the effective time of the merger is to be later than the date
of the filing of such certificate of merger, the effective time
shall be fixed at a date or time certain at or prior to the time
of the filing of such certificate of merger and stated
therein); and
(vii) such other provisions with respect to the proposed
merger or consolidation that the General Partner determines to
be necessary or appropriate.
(c) If the General Partner shall determine to consent to
the conversion, the General Partner shall approve the Plan of
Conversion, which shall set forth:
(i) the name of the converting entity and the converted
entity;
(ii) a statement that the Partnership is continuing its
existence in the organizational form of the converted entity;
(iii) a statement as to the type of entity that the
converted entity is to be and the state or country under the
laws of which the converted entity is to be incorporated, formed
or organized;
(iv) the manner and basis of exchanging or converting the
equity securities of each constituent business entity for, or
into, cash, property or interests, rights, securities or
obligations of the converted entity;
(v) in an attachment or exhibit, the certificate of limited
partnership of the Partnership; and
(vi) in an attachment or exhibit, the certificate of
limited partnership, articles of incorporation, or other
organizational documents of the converted entity;
(vii) the effective time of the conversion, which may be
the date of the filing of the articles of conversion or a later
date specified in or determinable in accordance with the Plan of
Conversion (provided, that if the effective time of the
conversion is to be later than the date of the filing of such
articles of conversion, the effective time shall be fixed at a
date or time certain at or prior to the time of the filing of
such articles of conversion and stated therein); and
(viii) such other provisions with respect to the proposed
conversion that the General Partner determines to be necessary
or appropriate.
Section 14.3 Approval
by Limited Partners.
(a) Except as provided in Section 14.3(d), the General
Partner, upon its approval of the Merger Agreement or the Plan
of Conversion, as the case may be, shall direct that the Merger
Agreement or the Plan of Conversion, as applicable, be submitted
to a vote of Limited Partners, whether at a special meeting
70
or by written consent, in either case in accordance with the
requirements of Article XIII. A copy or a summary of the
Merger Agreement or the Plan of Conversion, as the case may be,
shall be included in or enclosed with the notice of a special
meeting or the written consent.
(b) Except as provided in Section 14.3(d), the Merger
Agreement or Plan of Conversion, as the case may be, shall be
approved upon receiving the affirmative vote or consent of the
holders of a Unit Majority.
(c) Except as provided in Section 14.3(d), after such
approval by vote or consent of the Limited Partners, and at any
time prior to the filing of the certificate of merger or
articles of conversion pursuant to Section 14.4, the
merger, consolidation or conversion may be abandoned pursuant to
provisions therefor, if any, set forth in the Merger Agreement
or Plan of Conversion, as the case may be.
(d) Notwithstanding anything else contained in this
Article XIV or in this Agreement, the General Partner is
permitted, without Limited Partner approval, to convert the
Partnership or any Group Member into a new limited liability
entity, to merge the Partnership or any Group Member into, or
convey all of the Partnerships assets to, another limited
liability entity that shall be newly formed and shall have no
assets, liabilities or operations at the time of such
conversion, merger or conveyance other than those it receives
from the Partnership or other Group Member if (i) the
General Partner has received an Opinion of Counsel that the
conversion, merger or conveyance, as the case may be, would not
result in the loss of the limited liability of any Limited
Partner or cause the Partnership to be treated as an association
taxable as a corporation or otherwise to be taxed as an entity
for federal income tax purposes (to the extent not previously
treated as such), (ii) the sole purpose of such conversion,
merger, or conveyance is to effect a mere change in the legal
form of the Partnership into another limited liability entity
and (iii) the governing instruments of the new entity
provide the Limited Partners and the General Partner with the
same rights and obligations as are herein contained.
(e) Additionally, notwithstanding anything else contained
in this Article XIV or in this Agreement, the General
Partner is permitted, without Limited Partner approval, to merge
or consolidate the Partnership with or into another entity if
(A) the General Partner has received an Opinion of Counsel
that the merger or consolidation, as the case may be, would not
result in the loss of the limited liability of any Limited
Partner or cause the Partnership to be treated as an association
taxable as a corporation or otherwise to be taxed as an entity
for federal income tax purposes (to the extent not previously
treated as such), (B) the merger or consolidation would not
result in an amendment to the Partnership Agreement, other than
any amendments that could be adopted pursuant to
Section 13.1, (C) the Partnership is the Surviving
Business Entity in such merger or consolidation, (D) each
Unit outstanding immediately prior to the effective date of the
merger or consolidation is to be an identical Unit of the
Partnership after the effective date of the merger or
consolidation, and (E) the number of Partnership Securities
to be issued by the Partnership in such merger or consolidation
do not exceed 20% of the Partnership Securities Outstanding
immediately prior to the effective date of such merger or
consolidation.
(f) Pursuant to
Section 17-211(g)
of the Delaware Act, an agreement of merger or consolidation
approved in accordance with this Article XIV may
(a) effect any amendment to this Agreement or
(b) effect the adoption of a new partnership agreement for
the Partnership if it is the Surviving Business Entity. Any such
amendment or adoption made pursuant to this Section 14.3
shall be effective at the effective time or date of the merger
or consolidation.
Section 14.4 Certificate
of Merger.
Upon the required approval by the General Partner and the
Unitholders of a Merger Agreement or the Plan of Conversion, as
the case may be, a certificate of merger or articles of
conversion, as applicable, shall be executed and filed with the
Secretary of State of the State of Delaware in conformity with
the requirements of the Delaware Act.
71
Section 14.5 Effect
of Merger, Consolidation or Conversion.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all
property, real, personal and mixed, and all debts due to any of
those business entities and all other things and causes of
action belonging to each of those business entities, shall be
vested in the Surviving Business Entity and after the merger or
consolidation shall be the property of the Surviving Business
Entity to the extent they were of each constituent business
entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall
not revert and is not in any way impaired because of the merger
or consolidation;
(iii) all rights of creditors and all liens on or security
interests in property of any of those constituent business
entities shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity
and may be enforced against it to the same extent as if the
debts, liabilities and duties had been incurred or contracted by
it.
(b) At the effective time of the articles of conversion:
(i) the Partnership shall continue to exist, without
interruption, but in the organizational form of the converted
entity rather than in its prior organizational form;
(ii) all rights, title, and interests to all real estate
and other property owned by the Partnership shall continue to be
owned by the converted entity in its new organizational form
without reversion or impairment, without further act or deed,
and without any transfer or assignment having occurred, but
subject to any existing liens or other encumbrances thereon;
(iii) all liabilities and obligations of the Partnership
shall continue to be liabilities and obligations of the
converted entity in its new organizational form without
impairment or diminution by reason of the conversion;
(iv) all rights of creditors or other parties with respect
to or against the prior interest holders or other owners of the
Partnership in their capacities as such in existence as of the
effective time of the conversion will continue in existence as
to those liabilities and obligations and may be pursued by such
creditors and obligees as if the conversion did not occur;
(v) a proceeding pending by or against the Partnership or
by or against any of Partners in their capacities as such may be
continued by or against the converted entity in its new
organizational form and by or against the prior partners without
any need for substitution of parties; and
(vi) the Partnership Units that are to be converted into
partnership interests, shares, evidences of ownership, or other
securities in the converted entity as provided in the plan of
conversion shall be so converted, and Partners shall be entitled
only to the rights provided in the Plan of Conversion.
ARTICLE XV
RIGHT TO
ACQUIRE LIMITED PARTNER INTERESTS
Section 15.1 Right
to Acquire Limited Partner Interests.
(a) Notwithstanding any other provision of this Agreement,
if at any time the General Partner and its Affiliates hold more
than 80% of the total Limited Partner Interests of any class
then Outstanding, the General Partner shall then have the right,
which right it may assign and transfer in whole or in part to
the Partnership or any Affiliate of the General Partner,
exercisable at its option, to purchase all, but not less than
all, of such Limited Partner Interests of such class then
Outstanding held by Persons other than the General Partner and
its Affiliates, at the greater of (x) the Current Market
Price as of the date three days prior to the date that the
notice described in Section 15.1(b) is mailed and
(y) the highest price paid by
72
the General Partner or any of its Affiliates for any such
Limited Partner Interest of such class purchased during the
90-day
period preceding the date that the notice described in
Section 15.1(b) is mailed. As used in this Agreement,
(i) Current Market Price as of any date of any
class of Limited Partner Interests means the average of the
daily Closing Prices (as hereinafter defined) per Limited
Partner Interest of such class for the 20 consecutive Trading
Days (as hereinafter defined) immediately prior to such date;
(ii) Closing Price for any day means the last
sale price on such day, regular way, or in case no such sale
takes place on such day, the average of the closing bid and
asked prices on such day, regular way, as reported in the
principal consolidated transaction reporting system with respect
to securities listed on the principal National Securities
Exchange (other than the Nasdaq Stock Market) on which such
Limited Partner Interests are listed or admitted to trading or,
if such Limited Partner Interests of such class are not listed
or admitted to trading on any National Securities Exchange
(other than the Nasdaq Stock Market), the last quoted price on
such day or, if not so quoted, the average of the high bid and
low asked prices on such day in the
over-the-counter
market, as reported by the Nasdaq Stock Market or such other
system then in use, or, if on any such day such Limited Partner
Interests of such class are not quoted by any such organization,
the average of the closing bid and asked prices on such day as
furnished by a professional market maker making a market in such
Limited Partner Interests of such class selected by the General
Partner, or if on any such day no market maker is making a
market in such Limited Partner Interests of such class, the fair
value of such Limited Partner Interests on such day as
determined by the General Partner; and (iii) Trading
Day means a day on which the principal National Securities
Exchange on which such Limited Partner Interests of any class
are listed or admitted for trading is open for the transaction
of business or, if Limited Partner Interests of a class are not
listed or admitted for trading on any National Securities
Exchange, a day on which banking institutions in New York City
generally are open.
(b) If the General Partner, any Affiliate of the General
Partner or the Partnership elects to exercise the right to
purchase Limited Partner Interests granted pursuant to
Section 15.1(a), the General Partner shall deliver to the
Transfer Agent notice of such election to purchase (the
Notice of Election to Purchase) and
shall cause the Transfer Agent to mail a copy of such Notice of
Election to Purchase to the Record Holders of Limited Partner
Interests of such class (as of a Record Date selected by the
General Partner) at least 10, but not more than 60, days
prior to the Purchase Date. Such Notice of Election to Purchase
shall also be published for a period of at least three
consecutive days in at least two daily newspapers of general
circulation printed in the English language and published in the
Borough of Manhattan, New York. The Notice of Election to
Purchase shall specify the Purchase Date and the price
(determined in accordance with Section 15.1(a)) at which
Limited Partner Interests will be purchased and state that the
General Partner, its Affiliate or the Partnership, as the case
may be, elects to purchase such Limited Partner Interests, upon
surrender of Certificates representing such Limited Partner
Interests in exchange for payment, at such office or offices of
the Transfer Agent as the Transfer Agent may specify, or as may
be required by any National Securities Exchange on which such
Limited Partner Interests are listed. Any such Notice of
Election to Purchase mailed to a Record Holder of Limited
Partner Interests at his address as reflected in the records of
the Transfer Agent shall be conclusively presumed to have been
given regardless of whether the owner receives such notice. On
or prior to the Purchase Date, the General Partner, its
Affiliate or the Partnership, as the case may be, shall deposit
with the Transfer Agent cash in an amount sufficient to pay the
aggregate purchase price of all of such Limited Partner
Interests to be purchased in accordance with this
Section 15.1. If the Notice of Election to Purchase shall
have been duly given as aforesaid at least 10 days prior to
the Purchase Date, and if on or prior to the Purchase Date the
deposit described in the preceding sentence has been made for
the benefit of the holders of Limited Partner Interests subject
to purchase as provided herein, then from and after the Purchase
Date, notwithstanding that any Certificate shall not have been
surrendered for purchase, all rights of the holders of such
Limited Partner Interests (including any rights pursuant to
Article IV, Article V, Article VI, and
Article XII) shall thereupon cease, except the right
to receive the purchase price (determined in accordance with
Section 15.1(a)) for Limited Partner Interests therefor,
without interest, upon surrender to the Transfer Agent of the
Certificates representing such Limited Partner Interests, and
such Limited Partner Interests shall thereupon be deemed to be
transferred to the General Partner, its Affiliate or the
Partnership, as the case
73
may be, on the record books of the Transfer Agent and the
Partnership, and the General Partner or any Affiliate of the
General Partner, or the Partnership, as the case may be, shall
be deemed to be the owner of all such Limited Partner Interests
from and after the Purchase Date and shall have all rights as
the owner of such Limited Partner Interests (including all
rights as owner of such Limited Partner Interests pursuant to
Article IV, Article V, Article VI and
Article XII).
(c) At any time from and after the Purchase Date, a holder
of an Outstanding Limited Partner Interest subject to purchase
as provided in this Section 15.1 may surrender his
Certificate evidencing such Limited Partner Interest to the
Transfer Agent in exchange for payment of the amount described
in Section 15.1(a), therefor, without interest thereon.
ARTICLE XVI
GENERAL
PROVISIONS
Section 16.1 Addresses
and Notices; Written Communications.
(a) Any notice, demand, request, report or proxy materials
required or permitted to be given or made to a Partner under
this Agreement shall be in writing and shall be deemed given or
made when delivered in person or when sent by first
class United States mail or by other means of written
communication to the Partner at the address described below. Any
notice, payment or report to be given or made to a Partner
hereunder shall be deemed conclusively to have been given or
made, and the obligation to give such notice or report or to
make such payment shall be deemed conclusively to have been
fully satisfied, upon sending of such notice, payment or report
to the Record Holder of such Partnership Securities at his
address as shown on the records of the Transfer Agent or as
otherwise shown on the records of the Partnership, regardless of
any claim of any Person who may have an interest in such
Partnership Securities by reason of any assignment or otherwise.
An affidavit or certificate of making of any notice, payment or
report in accordance with the provisions of this
Section 16.1 executed by the General Partner, the Transfer
Agent or the mailing organization shall be prima facie evidence
of the giving or making of such notice, payment or report. If
any notice, payment or report addressed to a Record Holder at
the address of such Record Holder appearing on the books and
records of the Transfer Agent or the Partnership is returned by
the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver it, such
notice, payment or report and any subsequent notices, payments
and reports shall be deemed to have been duly given or made
without further mailing (until such time as such Record Holder
or another Person notifies the Transfer Agent or the Partnership
of a change in his address) if they are available for the
Partner at the principal office of the Partnership for a period
of one year from the date of the giving or making of such
notice, payment or report to the other Partners. Any notice to
the Partnership shall be deemed given if received by the General
Partner at the principal office of the Partnership designated
pursuant to Section 2.3. The General Partner may rely and
shall be protected in relying on any notice or other document
from a Partner or other Person if believed by it to be genuine.
(b) The terms in writing, written
communications, written notice and words of
similar import shall be deemed satisfied under this Agreement by
use of
e-mail and
other forms of electronic communication.
Section 16.2 Further
Action.
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be
necessary or appropriate to achieve the purposes of this
Agreement.
Section 16.3 Binding
Effect.
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
74
Section 16.4 Integration.
This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining
thereto.
Section 16.5 Creditors.
None of the provisions of this Agreement shall be for the
benefit of, or shall be enforceable by, any creditor of the
Partnership.
Section 16.6 Waiver.
No failure by any party to insist upon the strict performance of
any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach of any other
covenant, duty, agreement or condition.
Section 16.7 Third-Party
Beneficiaries.
Each Partner agrees that any Indemnitee shall be entitled to
assert rights and remedies hereunder as a third-party
beneficiary hereto with respect to those provisions of this
Agreement affording a right, benefit or privilege to such
Indemnitee.
Section 16.8 Counterparts.
This Agreement may be executed in counterparts, all of which
together shall constitute an agreement binding on all the
parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party
shall become bound by this Agreement immediately upon affixing
its signature hereto or, in the case of a Person acquiring a
Limited Partner Interest, pursuant to Section 10.1(a)
without execution hereto.
Section 16.9 Applicable
Law.
This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware, without regard to
the principles of conflicts of law.
Section 16.10 Invalidity
of Provisions.
If any provision of this Agreement is or becomes invalid,
illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein
shall not be affected thereby.
Section 16.11 Consent
of Partners.
Each Partner hereby expressly consents and agrees that, whenever
in this Agreement it is specified that an action may be taken
upon the affirmative vote or consent of less than all of the
Partners, such action may be so taken upon the concurrence of
less than all of the Partners and each Partner shall be bound by
the results of such action.
Section 16.12 Facsimile
Signatures.
The use of facsimile signatures affixed in the name and on
behalf of the transfer agent and registrar of the Partnership on
certificates representing Common Units is expressly permitted by
this Agreement.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK.]
75
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
GENERAL PARTNER:
TARGA RESOURCES GP LLC
Name: Rene R. Joyce
Title: Chief Executive Officer
ORGANIZATIONAL LIMITED PARTNERS:
TARGA GP INC.
Name: Rene R. Joyce
Title: Chief Executive Officer
TARGA LP INC.
Name: Rene R. Joyce
Title: Chief Executive Officer
Signature
Page First Amended and Restated Agreement
of Limited Partnership of Targa Resources Partners, LP
76
LIMITED PARTNERS:
All Limited Partners now and hereafter admitted as Limited
Partners of the Partnership, pursuant to powers of attorney now
and hereafter executed in favor of, and granted and delivered to
the General Partner or without execution hereof pursuant to
Section 10.2(a) hereof.
[ ]
Name:
Title:
Signature
Page First Amended and Restated Agreement
of Limited Partnership of Targa Resources Partners, LP
77
EXHIBIT A
to the First Amended and Restated
Agreement of Limited Partnership of
Targa Resources Partners LP
Certificate Evidencing Common Units
Representing Limited Partner Interests in
Targa Resources Partners LP
In accordance with Section 4.1 of the First Amended and
Restated Agreement of Limited Partnership of Targa Resources
Partners LP, as amended, supplemented or restated from time to
time (the Partnership Agreement),
Targa Resources Partners LP, a Delaware limited partnership (the
Partnership), hereby certifies that
(the Holder) is the registered owner
of Common Units representing limited partner interests in the
Partnership (the Common Units)
transferable on the books of the Partnership, in person or by
duly authorized attorney, upon surrender of this Certificate
properly endorsed. The rights, preferences and limitations of
the Common Units are set forth in, and this Certificate and the
Common Units represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the
Partnership Agreement. Copies of the Partnership Agreement are
on file at, and will be furnished without charge on delivery of
written request to the Partnership at, the principal office of
the Partnership located at 1000 Louisiana, Suite 4300,
Houston, Texas 77002. Capitalized terms used herein but not
defined shall have the meanings given them in the Partnership
Agreement.
THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF
TARGA RESOURCES PARTNERS LP THAT THIS SECURITY MAY NOT BE SOLD,
OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IF SUCH
TRANSFER WOULD (A) VIOLATE THE THEN APPLICABLE FEDERAL OR
STATE SECURITIES LAWS OR RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR ANY OTHER GOVERNMENTAL AUTHORITY WITH JURISDICTION
OVER SUCH TRANSFER, (B) TERMINATE THE EXISTENCE OR
QUALIFICATION OF TARGA RESOURCES PARTNERS LP UNDER THE LAWS OF
THE STATE OF DELAWARE, OR (C) CAUSE TARGA RESOURCES
PARTNERS LP TO BE TREATED AS AN ASSOCIATION TAXABLE AS A
CORPORATION OR OTHERWISE TO BE TAXED AS AN ENTITY FOR FEDERAL
INCOME TAX PURPOSES (TO THE EXTENT NOT ALREADY SO TREATED OR
TAXED). TARGA RESOURCES GP LLC, THE GENERAL PARTNER OF TARGA
RESOURCES PARTNERS LP, MAY IMPOSE ADDITIONAL RESTRICTIONS ON THE
TRANSFER OF THIS SECURITY IF IT RECEIVES AN OPINION OF COUNSEL
THAT SUCH RESTRICTIONS ARE NECESSARY TO AVOID A SIGNIFICANT RISK
OF TARGA RESOURCES PARTNERS LP BECOMING TAXABLE AS A CORPORATION
OR OTHERWISE BECOMING TAXABLE AS AN ENTITY FOR FEDERAL INCOME
TAX PURPOSES. THE RESTRICTIONS SET FORTH ABOVE SHALL NOT
PRECLUDE THE SETTLEMENT OF ANY TRANSACTIONS INVOLVING THIS
SECURITY ENTERED INTO THROUGH THE FACILITIES OF ANY NATIONAL
SECURITIES EXCHANGE ON WHICH THIS SECURITY IS LISTED OR ADMITTED
TO TRADING.
The Holder, by accepting this Certificate, is deemed to have
(i) requested admission as, and agreed to become, a Limited
Partner and to have agreed to comply with and be bound by and to
have executed the Partnership Agreement, (ii) represented
and warranted that the Holder has all right, power and authority
and, if an individual, the capacity necessary to enter into the
Partnership Agreement, (iii) granted the powers of attorney
provided for in the Partnership Agreement and (iv) made the
waivers and given the consents and approvals contained in the
Partnership Agreement.
Exhibit A-1
This Certificate shall not be valid for any purpose unless it
has been countersigned and registered by the Transfer Agent and
Registrar.
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Dated: _
_
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Targa Resources Partners LP
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By: Targa Resources GP
LLC
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Countersigned and Registered by:
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[ ]
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By:
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as Transfer Agent and Registrar
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Name:
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By: _
_
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By:
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Authorized Signature
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Secretary
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[Reverse of Certificate]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this Certificate, shall be construed as follows
according to applicable laws or regulations:
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TEN COM -
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as tenants in common
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UNIF GIFT/TRANSFERS MIN ACT
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TEN ENT -
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as tenants by the entireties
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Custodian
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(Cust)
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(Minor)
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JT TEN -
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as joint tenants with right of
survivorship
and not as tenants in common
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under Uniform Gifts/Transfers to
CD Minors Act (State)
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Additional abbreviations, though not in the above list, may also
be used.
Exhibit A-2
ASSIGNMENT
OF COMMON UNITS OF
TARGA RESOURCES PARTNERS LP
FOR VALUE RECEIVED,
hereby assigns, conveys, sells and transfers unto
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(Please print or typewrite name
and address of assignee)
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(Please insert Social Security or
other identifying number of assignee)
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Common Units representing limited partner interests evidenced by
this Certificate, subject to the Partnership Agreement, and does
hereby irrevocably constitute and appoint
as its
attorney-in-fact
with full power of substitution to transfer the same on the
books of Targa Resources Partners LP.
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Date: _
_
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NOTE:
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The signature to any endorsement
hereon must correspond with the name as written upon the face of
this Certificate in every particular, without alteration,
enlargement or change
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THE SIGNATURE(S) MUST BE
GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE 17d-15
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(Signature)
(Signature)
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No transfer of the Common Units evidenced hereby will be
registered on the books of the Partnership, unless the
Certificate evidencing the Common Units to be transferred is
surrendered for registration or transfer.
Exhibit A-3
exv10w1
Exhibit 10.1
Execution
CREDIT AGREEMENT
Dated as of February 14, 2007
Among
TARGA RESOURCES PARTNERS LP,
as the Borrower,
BANK OF AMERICA, N.A.,
as the Administrative Agent, Swing Line Lender
and
L/C Issuer,
WACHOVIA BANK, N.A.,
as the Syndication Agent,
MERRILL LYNCH CAPITAL,
ROYAL BANK OF CANADA,
and
THE ROYAL BANK OF SCOTLAND PLC,
as the Co-Documentation Agents,
and
The Other Lenders Party Hereto
BANC OF AMERICA SECURITIES LLC and WACHOVIA CAPITAL MARKETS, LLC
as
Joint Lead Arrangers
and
BANC OF AMERICA SECURITIES LLC,
as
Sole Book Manager
$500,000,000 Five-Year Revolving Credit Facility
TABLE OF CONTENTS
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Section |
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Page |
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ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS |
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1 |
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1.01 Defined Terms |
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1 |
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1.02 Other Interpretive Provisions |
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27 |
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1.03 Accounting Terms |
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27 |
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1.04 Rounding |
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28 |
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1.05 Times of Day |
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28 |
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1.06 Letter of Credit Amounts |
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28 |
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ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS |
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28 |
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2.01 Committed Loans |
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28 |
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2.02 Borrowings, Conversions and Continuations of Committed Loans |
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29 |
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2.03 Letters of Credit |
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30 |
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2.04 Swing Line Loans |
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39 |
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2.05 Prepayments |
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42 |
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2.06 Termination or Reduction of Commitments |
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44 |
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2.07 Repayment of Loans |
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44 |
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2.08 Interest |
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44 |
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2.09 Fees |
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45 |
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2.10 Computation of Interest and Fees |
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46 |
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2.11 Evidence of Debt |
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46 |
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2.12 Payments Generally; Administrative Agents Clawback |
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47 |
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2.13 Sharing of Payments by Lenders |
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49 |
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2.14 Increase in Commitments |
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49 |
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ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY |
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51 |
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3.01 Taxes |
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51 |
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3.02 Illegality |
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53 |
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3.03 Inability to Determine Rates |
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53 |
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3.04 Increased Costs; Reserves on Eurodollar Rate Loans |
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54 |
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3.05 Compensation for Losses |
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55 |
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3.06 Mitigation Obligations; Replacement of Lenders |
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56 |
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3.07 Survival |
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56 |
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ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS |
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56 |
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4.01 Conditions of Initial Credit Extension |
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56 |
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4.02 Conditions to all Credit Extensions |
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60 |
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ARTICLE V. REPRESENTATIONS AND WARRANTIES |
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60 |
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5.01 Existence, Qualification and Power; Compliance with Laws |
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60 |
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5.02 Authorization; No Contravention |
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61 |
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5.03 Governmental Authorization; Other Consents |
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61 |
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5.04 Binding Effect |
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61 |
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5.05 Financial Statements; No Material Adverse Effect |
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62 |
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5.06 Litigation |
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62 |
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5.07 No Default |
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62 |
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5.08 Ownership of Property; Liens |
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62 |
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5.09 Environmental Compliance |
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63 |
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5.10 Insurance |
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63 |
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Section |
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Page |
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5.11 Taxes |
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63 |
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5.12 ERISA Compliance |
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64 |
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5.13 Subsidiaries; Equity Interests; Taxpayer Identification Number |
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64 |
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5.14 Margin Regulations; Investment Company Act |
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65 |
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5.15 Disclosure |
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65 |
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5.16 Compliance with Laws |
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65 |
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5.17 Intellectual Property; Licenses, Etc |
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65 |
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5.18 Labor Disputes and Acts of God |
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66 |
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5.19 Solvency |
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66 |
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5.20 Credit Arrangements |
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66 |
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5.21 Real Property |
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66 |
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5.22 Labor Matters |
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66 |
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5.23 Security Documents |
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66 |
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ARTICLE VI. AFFIRMATIVE COVENANTS |
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67 |
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6.01 Financial Statements |
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67 |
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6.02 Certificates; Other Information |
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67 |
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6.03 Notices |
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70 |
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6.04 Payment of Obligations |
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71 |
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6.05 Preservation of Existence, Etc |
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71 |
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6.06 Maintenance of Properties |
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71 |
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6.07 Maintenance of Insurance |
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71 |
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6.08 Compliance with Laws |
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72 |
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6.09 Books and Records |
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72 |
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6.10 Inspection Rights |
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72 |
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6.11 Use of Proceeds |
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72 |
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6.12 Additional Subsidiaries, Guarantors and Pledgors |
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73 |
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6.13 Agreement to Deliver Security Documents |
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73 |
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6.14 Perfection and Protection of Security Interests and Liens |
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74 |
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6.15 Performance on the Borrowers Behalf |
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74 |
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6.16 Environmental Matters; Environmental Reviews |
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74 |
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6.17 Compliance with Agreements |
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75 |
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6.18 Designation and Conversion of Restricted and Unrestricted Subsidiaries |
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75 |
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6.19 Maintenance of Corporate Separateness |
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76 |
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ARTICLE VII. NEGATIVE COVENANTS |
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76 |
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7.01 Liens |
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76 |
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7.02 Investments |
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78 |
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7.03 Indebtedness |
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79 |
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7.04 Subordinated Indebtedness |
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81 |
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7.05 Fundamental Changes |
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81 |
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7.06 Dispositions |
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82 |
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7.07 Restricted Payments |
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84 |
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7.08 Change in Nature of Business |
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84 |
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7.09 Transactions with Affiliates |
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84 |
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7.10 Burdensome Agreements |
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85 |
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7.11 Prohibited Contracts |
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85 |
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7.12 Limitation on Credit Extensions |
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85 |
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7.13 Use of Proceeds |
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85 |
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7.14 Interest Coverage Ratio |
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86 |
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7.15 Leverage Ratios |
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86 |
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7.16 Negative Pledge |
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87 |
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ii
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Section |
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ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES |
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87 |
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8.01 Events of Default |
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87 |
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8.02 Remedies Upon Event of Default |
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89 |
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8.03 Application of Funds |
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90 |
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ARTICLE IX. ADMINISTRATIVE AGENT |
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91 |
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9.01 Appointment and Authority |
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91 |
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9.02 Rights as a Lender |
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91 |
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9.03 Exculpatory Provisions |
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92 |
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9.04 Reliance by Agent |
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92 |
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9.05 Delegation of Duties |
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93 |
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9.06 Resignation of Agent |
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93 |
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9.07 Non-Reliance on Agent and Other Lenders |
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94 |
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9.08 No Other Duties, Etc |
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94 |
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9.09 Administrative Agent May File Proofs of Claim |
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94 |
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9.10 Collateral and Guaranty Matters |
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95 |
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9.11 Indemnification of Agents |
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96 |
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9.12 Intercreditor Agreement |
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96 |
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ARTICLE X. MISCELLANEOUS |
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97 |
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10.01 Amendments, Etc |
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97 |
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10.02 Notices; Effectiveness; Electronic Communication |
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98 |
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10.03 No Waiver; Cumulative Remedies |
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100 |
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10.04 Expenses; Indemnity; Damage Waiver |
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100 |
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10.05 Payments Set Aside |
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102 |
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10.06 Successors and Assigns |
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103 |
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10.07 Treatment of Certain Information; Confidentiality |
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107 |
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10.08 Deposit Accounts; Right of Setoff |
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108 |
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10.09 Interest Rate Limitation |
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108 |
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10.10 Counterparts; Integration; Effectiveness |
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109 |
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10.11 Survival of Representations and Warranties |
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109 |
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10.12 Severability |
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109 |
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10.13 Replacement of Lenders |
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109 |
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10.14 Governing Law; Jurisdiction; Etc |
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110 |
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10.15 Waiver of Jury Trial and Special Damages |
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111 |
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10.16 No Advisory or Fiduciary Responsibility |
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112 |
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10.17 USA PATRIOT Act Notice |
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113 |
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10.18 No General Partners Liability |
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113 |
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10.19 Time of the Essence |
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113 |
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10.20 ENTIRE AGREEMENT |
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113 |
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SIGNATURES |
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S-1 |
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iii
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SCHEDULES |
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1.01 Certain Permitted Hedging Parties |
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2.01 Commitments and Applicable Percentages |
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4.01 Security Documents |
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5.13 Subsidiaries; Equity Interests; Taxpayer Identification Number |
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5.21 Material Real Property |
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6.07 Insurance Summary Property and Casualty |
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7.01 Existing Liens |
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7.09 Affiliate Transactions |
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10.02 Administrative Agents Office; Certain Addresses for Notices |
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10.06 Processing and Recordation Fees |
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EXHIBITS |
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Form of |
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A Committed Loan Notice |
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B Swing Line Loan Notice |
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C Note |
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D Compliance Certificate |
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E Assignment and Assumption |
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F Guaranty |
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G Opinion Matters |
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H Pledge and Security Agreement |
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I Deed of Trust |
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J Intercreditor Agreement |
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iv
CREDIT AGREEMENT
This CREDIT AGREEMENT (Agreement) is entered into as of February 14, 2007, among
Targa Resources Partners LP, a Delaware limited partnership (the Borrower), each lender
from time to time party hereto (collectively, the Lenders and individually, a
Lender), and Bank of America, N.A., as Administrative Agent, Collateral Agent, Swing Line
Lender and L/C Issuer.
The Borrower has requested that the Lenders provide a revolving credit facility, and the
Lenders are willing to do so on the terms and conditions set forth herein.
In consideration of the mutual covenants and agreements herein contained, the parties hereto
covenant and agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set
forth below:
Acquired Entity or Business means any Person, property, business or asset acquired
by the Borrower or any Restricted Subsidiary (but not any related Person, property, business or
assets to the extent not so acquired), to the extent not subsequently sold, transferred or
otherwise disposed by the Borrower or such Restricted Subsidiary.
Acquisition means the acquisition by the Borrower from Targa of all the outstanding
partnership interests of Targa North Texas.
Additional Debt means Indebtedness for borrowed money other than Indebtedness
described in Section 7.03.
Administrative Agent means Bank of America in its capacity as administrative agent
under any of the Loan Documents, or any successor administrative agent.
Administrative Agents Office means the Administrative Agents address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or account as
the Administrative Agent may from time to time notify to the Borrower and the Lenders.
Administrative Questionnaire means an Administrative Questionnaire in a form
supplied by the Administrative Agent.
Affiliate means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.
1
Agent-Related Persons means, with respect to any Agent, such Agent, together with
its Affiliates, and the officers, directors, employees, agents, advisors and attorneys-in-fact of
such Agent and its Affiliates.
Agents means, collectively, the Administrative Agent, the Collateral Agent and the
Syndication Agent.
Aggregate Commitments means the Commitments of all the Lenders.
Agreement means this Credit Agreement.
Applicable Percentage means with respect to any Lender at any time, the percentage
(carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lenders
Commitment at such time. If the commitment of each Lender to make Loans and the obligation of the
L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or
if the Aggregate Commitments have expired, then the Applicable Percentage of each Lender shall be
determined based on the Applicable Percentage of such Lender most recently in effect, giving effect
to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth
opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption
pursuant to which such Lender becomes a party hereto, as applicable.
Applicable Rate means, from time to time, the following percentages per annum, based
upon, as of any date of determination, the ratio of (i) Consolidated Funded Indebtedness as of such
date to (ii) Consolidated Adjusted EBITDA for the period of four consecutive fiscal quarters most
recently ended for which the Compliance Certificate has been received by Administrative Agent
pursuant to Section 6.02(b) or (c):
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Consolidated |
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Funded |
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Indebtedness to |
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Revolver |
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Consolidated |
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Commitment |
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Eurodollar |
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Revolver |
Pricing Level |
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Adjusted EBITDA |
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Fee |
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Rate |
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Base Rate |
1 |
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Greater than or equal to 5.25 to 1.0 |
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0.35 |
% |
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2.25 |
% |
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1.25 |
% |
2 |
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Less than 5.25 to 1.00 but greater than or equal to 4.75 to 1.0 |
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0.35 |
% |
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2.00 |
% |
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1.00 |
% |
3 |
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Less than 4.75 to 1.00 but greater than or equal to 4.25 to 1.0 |
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0.30 |
% |
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1.75 |
% |
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0.75 |
% |
4 |
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Less than 4.25 to 1.00 but greater than or equal to 3.75 to 1.0 |
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0.30 |
% |
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1.50 |
% |
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0.50 |
% |
2
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Consolidated |
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Funded |
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Indebtedness to |
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Revolver |
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Consolidated |
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Commitment |
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Eurodollar |
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Revolver |
Pricing Level |
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Adjusted EBITDA |
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Fee |
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Rate |
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Base Rate |
5 |
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Less than 3.75 to 1.00 but greater than or equal to 3.25 to 1.0 |
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0.25 |
% |
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1.25 |
% |
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0.25 |
% |
6 |
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Less than 3.25 to 1.00 |
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0.20 |
% |
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1.00 |
% |
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0.00 |
% |
Any increase or decrease in the Applicable Rate resulting from a change in the ratio of
Consolidated Funded Indebtedness to Consolidated Adjusted EBITDA shall become effective as of the
first Business Day immediately following the date a Compliance Certificate is delivered pursuant to
Section 6.02(b) or (c); provided, however, that at the option of
the Administrative Agent or the Required Lenders, the highest Pricing Level (i.e., the Pricing
Level that produces the highest Applicable Rate) shall apply as of the first Business Day after the
date on which a Compliance Certificate was required to have been delivered but was not delivered,
and shall continue to so apply to and including the date on which such Compliance Certificate is so
delivered (and thereafter the Pricing Level otherwise determined in accordance with this definition
shall apply). The Applicable Rate in effect from the Closing Date through the date following the
Closing Date on which a Compliance Certificate is delivered or to be delivered pursuant to
Section 6.02(b) or (c) shall be determined based upon Pricing Level 4.
Approved Fund means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a
Lender.
Arranger means each of Banc of America Securities LLC and Wachovia Capital Markets,
LLC, in its capacity as a joint lead arranger.
Assignee Group means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.
Assignment and Assumption means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is required by
Section 10.06(b)), and accepted by the Administrative Agent, in substantially the form of
Exhibit E or any other form approved by the Administrative Agent.
Attributable Indebtedness means, on any date, (a) in respect of any Capital Lease of
any Person, the capitalized amount thereof that would appear on a balance sheet of such Person
prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease
Obligation, the capitalized amount of the remaining lease payments under the relevant lease that
would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a Capital Lease.
Audited Financial Statements means the audited Consolidated financial statements of
the predecessor business of the Borrower and its Subsidiaries for the ten month period ended
October 31, 2005 and the two month period ended December 31, 2005, and the related Consolidated
statements of income or operations, shareholders equity and cash flows for such periods of the
predecessor business of the Borrower and its Subsidiaries, including the notes thereto.
3
Availability Period means the period from and including the Closing Date to the
earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Commitments
pursuant to Section 2.06, and (c) the date of termination of the commitment of each Lender
to make Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to
Section 8.02.
Bank of America means Bank of America, N.A. and its successors.
Base Rate means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such
day as publicly announced from time to time by Bank of America as its prime rate. The prime
rate is a rate set by Bank of America based upon various factors including Bank of Americas costs
and desired return, general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced rate. Any change in
such rate announced by Bank of America shall take effect at the opening of business on the day
specified in the public announcement of such change.
Base Rate Committed Loan means a Committed Loan that is a Base Rate Loan.
Base Rate Loan means a Loan that bears interest based on the Base Rate.
Borrower has the meaning specified in the introductory paragraph hereto.
Borrower Materials has the meaning specified in Section 6.02.
Borrowers Partnership Agreement means the Amended and Restated Agreement of Limited
Partnership of the Borrower dated February 14, 2007, as the same may be amended, restated,
supplemented, or otherwise modified from time to time.
Borrowing means a Committed Borrowing or a Swing Line Borrowing, as the context may
require.
Business Day means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact closed in, the state
where the Administrative Agents Office is located and, if such day relates to any Eurodollar Rate
Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in
the London interbank eurodollar market.
Capital Lease means any lease that has been or should be, in accordance with GAAP
recorded as a capital lease.
Capital Lease Obligation means, with respect to any Person and a Capital Lease, the
amount of the obligation of such Person as the lessee under such Capital Lease which would, in
accordance with GAAP, appear as a liability on a balance sheet of such Person as of the date of any
determination thereof.
Cash Collateralize has the meaning specified in Section 2.03(g).
4
Cash Management Obligations means obligations owed by the Borrower or any Restricted
Subsidiary to any Lender or any Affiliate of a Lender in respect of any overdraft and related
liabilities arising from treasury, depository and cash management services or any automated
clearing house transfers of funds.
Change in Law means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any
change in any law, rule, regulation or treaty or in the administration, interpretation or
application thereof by any Governmental Authority or (c) the making or issuance of any request,
guideline or directive (whether or not having the force of law) by any Governmental Authority.
Change of Control means the earlier to occur of:
(a) Targa shall cease to Control General Partner, or any Person, other than Targa or a Person
Controlled by Targa, shall Control General Partner; or
(b) General Partner shall cease for any reason to be the sole General Partner of the
Borrower; or
(c) Any change of control or similar event occurs under the terms of any indenture, note
agreement or other agreement governing any outstanding Unsecured Note Indebtedness that result in
such Unsecured Note Indebtedness becoming due and payable before its maturity or being subject to
a repurchase, retirement or redemption right or option; or
(d) Less than 50% of Targas Consolidated assets, after deducting therefrom the value (net of
any applicable reserves) of all goodwill, trade names, trademarks, patents and other like
intangible assets, are in the Present Line of Business.
Chico Plant means the cryogenic natural gas processing plant located in Wise County,
Texas, including the real property owned by Targa North Texas on which the Chico Plant and related
equipment and operations are located.
Closing Date means the first date all the conditions precedent in Section
4.01 are satisfied or waived in accordance with Section 10.01.
Code means the Internal Revenue Code of 1986.
Collateral means all property of any kind which is subject to a Lien in favor of
Secured Parties (or in favor of the Administrative Agent or the Collateral Agent for the benefit of
Secured Parties) or which, under the terms of any Security Document, is purported to be subject to
such a Lien, in each case granted or created to secure all or part of the Obligations, the Cash
Management Obligations and the Secured Swap Obligations.
Collateral Agent means Bank of America, acting through one or more of its branches
or Affiliates, in its capacity as collateral agent under any of the Loan Documents, or any
successor collateral agent.
5
Commitment means, as to each Lender, its obligation to (a) make Committed Loans to
the Borrower pursuant to Section 2.01, (b) purchase participations in L/C Obligations, and
(c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite such Lenders name on Schedule 2.01
or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as
applicable, as such amount may be adjusted from time to time in accordance with this Agreement.
Committed Borrowing means a borrowing consisting of simultaneous Committed Loans of
the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by
each of the Lenders pursuant to Section 2.01.
Committed Loan has the meaning specified in Section 2.01.
Committed Loan Notice means a notice of (a) a Committed Borrowing, (b) a conversion
of Committed Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans,
pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of
Exhibit A.
Compliance Certificate means a certificate substantially in the form of Exhibit
D.
Consolidated refers to the consolidation of any Person, in accordance with GAAP,
with its properly Consolidated Subsidiaries. References herein to a Persons Consolidated
financial statements, financial position, financial condition, liabilities, etc. refer to the
Consolidated financial statements, financial position, financial condition, liabilities, etc. of
such Person and its properly Consolidated Subsidiaries. For avoidance of doubt, neither an
Unrestricted Subsidiary nor a Partially Owned Operating Company shall be considered a Consolidated
Subsidiary of the Borrower.
Consolidated Adjusted EBITDA means, for any period, Consolidated EBITDA;
provided that, (a) if, since the beginning of the four fiscal quarter period ending on the
date for which Consolidated Adjusted EBITDA is determined, the Borrower or any Consolidated
Restricted Subsidiary shall have made any Material Acquisition or Disposition or a Subsidiary shall
be redesignated as either an Unrestricted Subsidiary or a Restricted Subsidiary, Consolidated
Adjusted EBITDA shall be calculated giving pro forma effect thereto as if the Material Acquisition
or Disposition or redesignation had occurred on the first day of such period. Such pro forma effect
shall be determined (i) in good faith by a Responsible Officer of General Partner, and (ii) without
giving effect to any anticipated or proposed change in operations, revenues, expenses or other
items included in the computation of Consolidated Adjusted EBITDA, except with the consent of the
Administrative Agent in its reasonable discretion and (b) Consolidated Adjusted EBITDA may include,
at the Borrowers option, any Material Project EBITDA Adjustments as provided below. As used
herein, Material Project EBITDA Adjustments means, with respect to the construction or
expansion of any capital project of the Borrower or any of its Consolidated Restricted
Subsidiaries, the aggregate capital cost of which (inclusive of capital costs expended prior to the
acquisition thereof) is reasonably expected by the Borrower to exceed, or exceeds, $10,000,000 (a
Material Project):
6
(A) prior to the date on which a Material Project has achieved commercial operation
(the Commercial Operation Date) (but including the fiscal quarter in which such
Commercial Operation Date occurs), a percentage (based on the then-current completion
percentage of such Material Project as of the date of determination) of an amount to be
approved by Administrative Agent as the projected Consolidated EBITDA attributable to such
Material Project for the first 12-month period following the scheduled Commercial Operation
Date of such Material Project (such amount to be determined based upon projected revenues
from customer contracts, projected revenues that are determined by the Administrative Agent,
in its discretion, to otherwise be highly probable, the creditworthiness and applicable
projected production of the prospective customers, capital and other costs, operating and
administrative expenses, scheduled Commercial Operation Date, commodity price assumptions
and other factors deemed appropriate by Administrative Agent), which may, at the Borrowers
option, be added to actual Consolidated EBITDA for the fiscal quarter in which construction
or expansion of such Material Project commences and for each fiscal quarter thereafter until
the Commercial Operation Date of such Material Project (including the fiscal quarter in
which such Commercial Operation Date occurs, but net of any actual Consolidated EBITDA
attributable to such Material Project following such Commercial Operation Date);
provided that if the actual Commercial Operation Date does not occur by the
scheduled Commercial Operation Date, then the foregoing amount shall be reduced, for
quarters ending after the scheduled Commercial Operation Date to (but excluding) the first
full quarter after its Commercial Operation Date, by the following percentage amounts
depending on the period of delay (based on the period of actual delay or then-estimated
delay, whichever is longer): (i) 90 days or less, 0%, (ii) longer than 90 days, but not more
than 180 days, 25%, (iii) longer than 180 days but not more than 270 days, 50%, (iv) longer
than 270 days but not more than 365 days, 75%, and (v) longer than 365 days, 100%; and
(B) beginning with the first full fiscal quarter following the Commercial Operation
Date of a Material Project and for the two immediately succeeding fiscal quarters, an amount
equal to the projected Consolidated EBITDA attributable to such Material Project for the
balance of the four full fiscal quarter period following such Commercial Operation Date,
which may, at the Borrowers option, be added to actual Consolidated EBITDA for such fiscal
quarters.
Notwithstanding the foregoing:
(i) no such Material Project EBITDA Adjustment shall be allowed with respect to any
Material Project unless:
(a) at least 30 days prior to the last day of the fiscal quarter for which the
Borrower desires to commence inclusion of such Material Project EBITDA Adjustment in
Consolidated EBITDA with respect to a Material Project (the Initial
Quarter), the Borrower shall have delivered to Administrative Agent written pro
forma projections of Consolidated EBITDA attributable to such Material Project, and
7
(b) prior to the last day of the Initial Quarter, Administrative Agent shall
have approved (such approval not to be unreasonably withheld) such projections and
shall have received such other information and documentation as Administrative Agent
may reasonably request, all in form and substance satisfactory to Administrative
Agent, and
(ii) the aggregate amount of all Material Project EBITDA Adjustments during any period shall
be limited to 15% of the total actual Consolidated EBITDA for such period (which total actual
Consolidated EBITDA shall be determined without including any Material Project EBITDA Adjustments).
Consolidated EBITDA means, for any period, the sum of the Consolidated Net Income of
the Borrower and its Consolidated Restricted Subsidiaries during such period, plus (a) the
following to the extent deducted in calculating such Consolidated Net Income: (i) all Interest
Expense for such period, (ii) all Federal, state, local and foreign income taxes (including any
franchise taxes to the extent based upon net income) for such period, (iii) all depreciation,
amortization (including amortization of good will, debt issue costs and amortization under FAS Rule
123) and other non-cash charges (including any provision for the reduction in the carrying value of
assets recorded in accordance with GAAP, any extraordinary gains (or losses), any non-cash gains
(or losses) resulting from mark to market activity as a result of the implementation of Statement
of Financial Accounting Standards 133, Accounting for Derivative Instruments and Hedging
Activities, but excluding any non-cash charges that constitute an accrual of or reserve for future
cash charges, and not treating write downs or write offs of receivables as non-cash charges) for
such period and (iv) costs and expenses incurred in connection with the transactions contemplated
hereby and minus (b) the following to the extent included in calculating such Consolidated
Net Income, (i) all Federal, state, local and foreign income tax credits for such period and (ii)
all non-cash items of income (other than account receivables and similar items arising from the
normal course of business and reflected as income under accrual methods of accounting consistent
with past practices) for such period. For avoidance of doubt, Consolidated Net Income attributable
to Unrestricted Subsidiaries, Partially Owned Operating Companies and Persons that are not
Subsidiaries shall not be considered in calculating Consolidated EBITDA except to the extent of
actual cash distributions to the Borrower or any of its Consolidated Restricted Subsidiaries by
such Unrestricted Subsidiaries, such Partially Owned Operating Companies or such other Persons.
Notwithstanding the foregoing, the actual cash distributions to the Borrower or any of its
Consolidated Restricted Subsidiaries by (i) Persons who are not Subsidiaries and any of whose
Equity Interests that are owned by a Loan Party are not Collateral or (ii) Unrestricted
Subsidiaries, during any period that will be included in Consolidated EBITDA shall be limited in
the aggregate to 15% of the total actual Consolidated EBITDA for such period (which total actual
Consolidated EBITDA shall be determined without including any such distributions).
Consolidated Funded Indebtedness means, as of any date, the sum of the following
(without duplication): (i) Indebtedness of the Borrower or any of its Consolidated Restricted
Subsidiaries for borrowed money or evidenced by bonds, debentures, notes, loan agreements or other
similar instruments, (ii) Attributable Indebtedness of the Borrower or any of its Consolidated
Restricted Subsidiaries in respect of Capital Lease Obligations and Synthetic Lease Obligations or
(iii) Indebtedness of the Borrower or any of its Consolidated Restricted
8
Subsidiaries in respect of Guarantees of Indebtedness of another Person (other than the
Borrower or a Restricted Subsidiary).
Consolidated Leverage Ratio means, for any date of determination (i) Consolidated
Funded Indebtedness on such date of determination to (ii) Consolidated Adjusted EBITDA for the
period of four consecutive fiscal quarters most recently ended prior to the date of determination.
Consolidated Net Income means, for any period, the Borrowers and its Consolidated
Restricted Subsidiaries gross revenues for such period, including any cash dividends or
distributions actually received from any other Person during such period, minus the Borrowers and
its Restricted Subsidiaries expenses and other proper charges against income (including taxes on
income to the extent imposed), determined on a Consolidated basis in accordance with GAAP
consistently applied (including, without duplication, the elimination of earnings or losses
attributable to outstanding minority interests and the exclusion of the net earnings of any Person
other than a Restricted Subsidiary in which the Borrower or any of its Restricted Subsidiaries has
an ownership interest).
Consolidated Net Tangible Assets means, at any date of determination, the total
amount of Consolidated assets of the Borrower and its Consolidated Restricted 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, or on a pro forma
basis would be set forth, on the Consolidated balance sheet of the Borrower and its Consolidated
Restricted Subsidiaries for the most recently completed fiscal quarter, prepared in accordance with
GAAP.
Consolidated Senior Leverage Ratio means, for any date of determination (i)
Consolidated Funded Indebtedness on such date of determination (excluding the Unsecured Note
Indebtedness) to (ii) Consolidated Adjusted EBITDA for the period of four consecutive fiscal
quarters most recently ended prior to the date of determination.
Contractual Obligation means, as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which such Person is a party
or by which it or any of its property is bound.
Control means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. Controlling and Controlled
have meanings correlative thereto.
Credit Extension means each of the following: (a) a Borrowing and (b) an L/C Credit
Extension.
Debtor Relief Laws means the Bankruptcy Code of the United States, and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,
9
rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the
United States or other applicable jurisdictions from time to time in effect and affecting the
rights of creditors generally.
Default means any event or condition that constitutes an Event of Default or that,
with the giving of any notice, the passage of time, or both, would be an Event of Default.
Default Rate means (a) when used with respect to Obligations other than Letter of
Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate, if
any, applicable to Base Rate Loans plus (iii) 2% per annum; provided,
however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest
rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan
plus 2% per annum, and (b) when used with respect to Letter of Credit Fees, a rate equal to the
Applicable Rate plus 2% per annum.
Defaulting Lender means any Lender that (a) has failed to fund any portion of the
Committed Loans, participations in L/C Obligations or participations in Swing Line Loans required
to be funded by it hereunder within one Business Day of the date required to be funded by it
hereunder, unless such failure has been cured, (b) has otherwise failed to pay over to the
Administrative Agent or any other Lender any other amount required to be paid by it hereunder
within one Business Day of the date when due, unless the subject of a good faith dispute or unless
such failure has been cured, or (c) has been deemed insolvent or become the subject of a bankruptcy
or insolvency proceeding.
Disposition or Dispose means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction and any sale of Equity Interests) of any
property by any Person (or the granting of any option or other right to do any of the foregoing),
including any sale, assignment, transfer or other disposal, with or without recourse, of any notes
or accounts receivable or any rights and claims associated therewith; provided, that Disposition
or Dispose shall not be deemed to include any issuance by the Borrower of any of its Equity
Interest to another Person.
DOL means the Department of Labor, or any Governmental Authority succeeding to any
of its principal functions.
Dollar and $ mean lawful money of the United States.
Domestic Subsidiary means any Subsidiary that is organized under the laws of any
political subdivision of the United States.
Eligible Assignee means any Person that meets the requirements to be an assignee
under Section 10.06(b)(iii), (v) and (vi) (subject to such consents, if
any, as may be required under Section 10.06(b)(iii)).
Eligible Equity Interests means, with respect to any First-Tier Foreign Subsidiary,
all shares of capital stock or other Equity Interests of whatever class of such First-Tier Foreign
Subsidiary, in each case together with any certificates evidencing the same, excluding, however,
all shares of capital stock or other Equity Interests of such First-Tier Foreign Subsidiary which
10
represent in excess of 66% of the combined voting power of all classes of capital stock or
other Equity Interests of such First-Tier Foreign Subsidiary; provided, however,
that if following a change in the relevant sections of the Code or the regulations, rules, rulings,
notices or other official pronouncements issued or promulgated thereunder which would change the
maximum percentage of the total combined voting power of all classes of capital stock or other
Equity Interests of any such First-Tier Foreign Subsidiary entitled to vote that may be pledged
without causing (a) the undistributed earnings of such First-Tier Foreign Subsidiary as determined
for United States federal income tax purposes to be treated as a deemed dividend to, or investment
in United States property of, the owner of such capital stock or other Equity Interests or (b)
other material adverse consequences to the Borrower, any Guarantor, or any of their Restricted
Subsidiaries, then the 66% limitation set forth above shall be changed to 1% less than such maximum
percentage.
Environmental Laws means any and all Federal, state, local, and foreign statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, authorizations, agreements or governmental restrictions relating to pollution
and the protection of the environment or the release of any Hazardous Materials into the
environment, including those related to hazardous substances or wastes, air emissions and
discharges to waste or public systems.
Environmental Liability means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the
Borrower, any other Loan Party or any of their respective Subsidiaries (whether imposed by Law or
imposed or assumed by any contract, agreement or other consensual arrangement or otherwise), and
directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, or (d) the release or threatened release of any
Hazardous Materials into the environment.
Equity Interests means, with respect to any Person, all of the shares of capital
stock of (or other ownership or profit interests in) such Person, all of the warrants, options or
other rights for the purchase or acquisition from such Person of shares of capital stock of (or
other ownership or profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person
or warrants, rights or options for the purchase or acquisition from such Person of such shares (or
such other interests), and all of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting, and whether or not
such shares, warrants, options, rights or other interests are outstanding on any date of
determination.
Equity Investors means the Sponsor and the Management Stockholders.
ERISA means the Employee Retirement Income Security Act of 1974.
ERISA Affiliate means any trade or business (whether or not incorporated) under
common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the
Code).
11
ERISA Event means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of
ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2)
of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e)
of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing
of a notice of intent to terminate, the treatment of a Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a
Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA,
other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any ERISA Affiliate.
Eurodollar Rate means, for any Interest Period with respect to a Eurodollar Rate
Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (BBA LIBOR),
as published by Reuters (or other commercially available source providing quotations of BBA LIBOR
as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for
delivery on the first day of such Interest Period) with a term equivalent to such Interest Period.
If such rate is not available at such time for any reason, then the Eurodollar Rate for such
Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate
at which deposits in Dollars for delivery on the first day of such Interest Period in same day
funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by
Bank of America and with a term equivalent to such Interest Period would be offered by Bank of
Americas London Branch to major banks in the London interbank eurodollar market at their request
at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such
Interest Period.
Eurodollar Rate Loan means a Committed Loan that bears interest at a rate based on
the Eurodollar Rate.
Event of Default has the meaning specified in Section 8.01.
Excess Sale Proceeds means Net Proceeds of a Disposition by the Borrower or any of
its Restricted Subsidiaries pursuant to Section 7.06(m) that have not been applied within
two hundred seventy (270) days after the date of receipt of such Net Proceeds to the purchase of
capital assets used in the Present Line of Business.
Exchange Act means the Securities Exchange Act of 1934.
Excluded Taxes means, with respect to the Administrative Agent, any Lender, the L/C
Issuer or any other recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however
denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction
(or any political subdivision thereof) under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which its applicable
Lending
12
Office is located, (b) any branch profits taxes imposed by the United States or any similar
tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section
10.13), any withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party hereto (or designates a new Lending Office) or is
attributable to such Foreign Lenders failure or inability (other than as a result of a Change in
Law) to comply with Section 3.01(e), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment),
to receive additional amounts from the Borrower with respect to such withholding tax pursuant to
Section 3.01(a).
Extraordinary Receipts means gross proceeds received by any Loan Party relating to
(a) insurance in respect of casualty to property that the Borrower has determined (which
determination must be made with reasonable promptness following such casualty) will not be applied
to the repair or replacement thereof within two hundred seventy (270) days following such casualty,
(b) payments pursuant to any indemnity agreement that the Borrower has determined (which
determination must be made with reasonable promptness following receipt of such payment) will not
be applied to remedy the circumstances or improve, repair or replace the property of such Loan
Party pursuant to which such indemnity payment arose within two hundred seventy (270) days
following such payment, or (c) pension reversions; provided that in no event shall
such Extraordinary Receipts include Net Proceeds.
Federal Funds Rate means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; provided that (a) if such
day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole
multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined
by the Administrative Agent.
Fee Letter means the letter agreement, dated January 4, 2007, among the Borrower,
the Administrative Agent, the Syndication Agent and the Arrangers.
First-Tier Foreign Subsidiary means a Foreign Subsidiary that is a direct Subsidiary
of the Borrower, any Guarantor or a Domestic Subsidiary.
Foreign Lender means any Lender that is organized under the laws of a jurisdiction
other than that in which the Borrower is resident for tax purposes. For purposes of this
definition, the United States, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.
Foreign Subsidiary means, with respect to any Person, any Subsidiary of such Person
which is not a Domestic Subsidiary. Any unqualified reference to any Foreign Subsidiary shall
13
be deemed a reference to a Foreign Subsidiary of the Borrower, unless the context clearly
indicates otherwise.
FRB means the Board of Governors of the Federal Reserve System of the United States.
Fund means any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its activities.
GAAP means generally accepted accounting principles in the United States set forth
in the opinions and pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board or such other principles as may be approved by a significant segment of the
accounting profession in the United States, that are applicable to the circumstances as of the date
of determination, consistently applied.
General Partner means Targa Resources GP LLC, a Delaware limited liability company
which, as of the Closing Date, is a Wholly Owned Subsidiary of Targa, and which, as of the Closing
Date, owns a two percent (2%) general partner interest in, and is the sole general partner of, the
Borrower.
Governmental Authority means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or the European Central
Bank).
Guarantee means, as to any Person, (a) any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other
obligation payable or performable by another Person (the primary obligor) in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation, (ii) to purchase or lease property, securities or services for the purpose of
assuring the obligee in respect of such Indebtedness or other obligation of the payment or
performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of income or cash flow of
the primary obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in
respect of such Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any
assets of such Person securing any Indebtedness or other obligation of any other Person, whether or
not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or
otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is made or, if
14
not stated or determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the guaranteeing Person in good faith. The term Guarantee as a verb has a
corresponding meaning.
Guarantors means, collectively, each Restricted Subsidiary of the Borrower that is
not an Immaterial Subsidiary and has become party to the Guaranty on the Closing Date or at any
time thereafter, including pursuant to the requirements of Section 6.12.
Guaranty means the Guaranty made by the Guarantors in favor of the Administrative
Agent, L/C Issuer and the Lenders, substantially in the form of Exhibit F.
Hazardous Materials means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to
any Environmental Law.
Hedging Party means, in each case in its capacity as a party to a Swap Contract, (i)
any Person that is a Lender or an Affiliate of a Lender, (ii) any Person listed on Schedule 1.01
hereto and any of such Persons Affiliates and (iii) any other Person with the consent of the
Administrative Agent, such consent not be unreasonably withheld or delayed.
Holding Company means, at any time, any company that at such time (a) owns (directly
or indirectly through one or more other Holding Companies satisfying the requirements of this
definition) a majority of the Voting Stock of the Borrower, (b) does not own any other material
assets (other than cash, cash equivalents and Investments in other Holding Companies) and (c) does
not engage in any business or activity other than serving as a direct or indirect holding company
controlling the Borrower and activities incidental thereto.
Immaterial Subsidiary means any one or more Domestic Restricted Subsidiary of the
Borrower or any of its Restricted Subsidiaries that, together with all other Domestic Restricted
Subsidiaries that have not executed and delivered a Guaranty, contribute less than 0.5% to
Consolidated Net Tangible Assets and contribute less than 5% to Consolidated EBITDA.
Indebtedness means, as to any Person at a particular time, without duplication, all
of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:
(a) all obligations of such Person for borrowed money and all obligations of such
Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;
(b) all direct or contingent obligations of such Person arising under letters of credit
(including standby and commercial), bankers acceptances, bank guaranties, surety bonds and
similar instruments;
(c) net obligations of such Person under any Swap Contract;
15
(d) all obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable in the ordinary course of business that are (i)
not unpaid for more than 90 days after the date on which such trade account payable was
created or (ii) being contested in good faith by appropriate proceedings diligently
conducted and adequate reserves in accordance with GAAP are being maintained by the
applicable Loan Party);
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property
owned or being purchased by such Person (including indebtedness arising under conditional
sales or other title retention agreements and mortgage, industrial revenue bonds, industrial
development bonds and similar financings), whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse;
(f) all Attributable Indebtedness in respect of Capital Lease Obligations and Synthetic
Lease Obligations of such Person;
(g) all obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Equity Interest in such Person (other than as permitted
pursuant to Section 7.06) or any other Person, valued, in the case of a redeemable
preferred interest, at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends; and
(h) all Guarantees of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture (other than a joint venture that is itself a corporation or limited
liability company) in which such Person is a general partner or a joint venturer, unless and to the
extent that such Indebtedness is expressly made non-recourse to such Person. The amount of any net
obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. The amount of Indebtedness of any Person for purposes of clause (e) shall
be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness and
(ii) if and to the extent such Indebtedness is limited in recourse to the property encumbered, the
fair market value of the property encumbered thereby, as determined by such Person in good faith.
Indemnified Taxes means Taxes other than Excluded Taxes.
Indemnitees has the meaning specified in Section 10.04(b).
Information has the meaning specified in Section 10.07.
Initial Financial Statements means (a) the Audited Financial Statements and (b) the
unaudited pro forma Consolidated financial statements of the Borrower and its Consolidated
Subsidiaries as of September 30, 2006 after giving effect to the Acquisition.
Initial Public Offering means the initial offering or issuance by the Borrower of
Equity Interests pursuant to the Registration Statement.
16
Intercompany Indebtedness means all indebtedness of Targa North Texas existing prior
to the date hereof owing to Targa or any of its Subsidiaries which was incurred in connection with
the transfer of assets to Targa North Texas.
Intercreditor Agreement means the Intercreditor Agreement, substantially in the form
attached as Exhibit J, among the Borrower, the Collateral Agent and any Hedging Party that
is party to any Secured Hedge Agreement.
Interest Expense means, with respect to any period, the sum (without duplication) of
the following (in each case, eliminating all offsetting debits and credits between the Borrower and
its Restricted Subsidiaries and all other items required to be eliminated in the course of the
preparation of Consolidated financial statements of the Borrower and its Restricted Subsidiaries in
accordance with GAAP): (a) all interest, premium payments, debt discount, fees, charges and related
expenses in respect of Indebtedness of the Borrower or any of its Restricted Subsidiaries
(including imputed interest on Capital Lease Obligations) which are accrued during such period and
whether expensed in such period or capitalized and (b) all other amounts properly treated as
interest expense in accordance with GAAP.
Interest Payment Date means, (a) as to any Loan other than a Base Rate Loan, the
last day of each Interest Period applicable to such Loan and the Maturity Date; provided,
however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the
respective dates that fall every three months after the beginning of such Interest Period shall
also be Interest Payment Dates; and (b) as to any Base Rate Loan (including a Swing Line Loan), the
last Business Day of each March, June, September and December and the Maturity Date.
Interest Period means, as to each Eurodollar Rate Loan, the period commencing on the
date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan
and ending on the date one, two, three or six months thereafter, as selected by the Borrower in its
Committed Loan Notice or such other period that is twelve months or less requested by the Borrower
and consented to by all the Lenders; provided that:
(i) any Interest Period that would otherwise end on a day that is not a Business Day
shall be extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next preceding
Business Day;
(ii) any Interest Period that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Maturity Date.
Investment means, as to any Person, any direct or indirect acquisition or investment
by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of
another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of,
or purchase or other acquisition of any other debt or equity participation or interest in, another
Person, including any partnership or joint venture interest in such other Person and any
17
arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, or
(c) the purchase or other acquisition (in one transaction or a series of transactions) of all or
substantially all of the property and assets or business of another Person or assets that
constitute a business unit, line of business or division of another Person. For purposes of
covenant compliance, the amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such Investment.
IP Rights has the meaning specified in Section 5.17.
IRS means the United States Internal Revenue Service.
ISP means, with respect to any Letter of Credit, the International Standby
Practices 1998 published by the Institute of International Banking Law & Practice, Inc. (or such
later version thereof as may be in effect at the time of issuance of such Letter of Credit).
Issuer Documents means with respect to any Letter of Credit, the Letter of Credit
Application, and any other document, agreement and instrument entered into by the L/C Issuer and
the Borrower (or any Restricted Subsidiary) or in favor of the L/C Issuer and relating to any such
Letter of Credit.
Laws means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or
judicial precedents or authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or administration thereof, and
all applicable administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case whether or not having the
force of law.
L/C Advance means, with respect to each Lender, such Lenders funding of its
participation in any L/C Borrowing in accordance with its Applicable Percentage.
L/C Borrowing means an extension of credit resulting from a drawing under any Letter
of Credit which has not been reimbursed on the date when made or refinanced as a Committed
Borrowing.
L/C Credit Extension means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount thereof.
L/C Issuer means Bank of America in its capacity as issuer of Letters of Credit
hereunder, or any successor issuer of Letters of Credit hereunder.
L/C Obligations means, as at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available
to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in
accordance with Section 1.06. For all purposes of this Agreement, if on any date of
determination a Letter of Credit has expired by its terms but any amount may still be drawn
18
thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be
deemed to be outstanding in the amount so remaining available to be drawn.
Lender has the meaning specified in the introductory paragraph hereto and, as the
context requires, includes the Swing Line Lender.
Lending Office means, as to any Lender, the office or offices of such Lender
described as such in such Lenders Administrative Questionnaire, or such other office or offices as
a Lender may from time to time notify the Borrower and the Administrative Agent.
Letter of Credit means any letter of credit issued hereunder.
Letter of Credit Application means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.
Letter of Credit Expiration Date means the day that is nine days prior to the
Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business
Day).
Letter of Credit Fee has the meaning specified in Section 2.03(i).
Lien means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or other security interest
or preferential arrangement in the nature of a security interest of any kind or nature whatsoever
(including any conditional sale or other title retention agreement, any easement, right of way or
other encumbrance on title to real property, and any financing lease having substantially the same
economic effect as any of the foregoing).
Loan means an extension of credit by a Lender to the Borrower under Article
II in the form of a Committed Loan or a Swing Line Loan.
Loan Documents means this Agreement, each Note, each Issuer Document, the Fee
Letter, the Guaranty, the Security Documents, the Intercreditor Agreement and all other agreements,
certificates, documents, instruments and writings at any time delivered in connection herewith or
therewith (exclusive of term sheets and commitment letters).
Loan Parties means, collectively, the Borrower and each Guarantor.
Management Stockholders means the members of management of Targa or its Subsidiaries
who are investors in Targa or any Holding Company.
Mark-to-Market means the process of revaluing for trading purposes commodity
contracts held by any Person, whether in respect of physical inventory, futures, forward exchanges,
swaps or other derivatives, and which contracts may have a fixed price, a floating price and fixed
differential, or other pricing basis, to the current market prices for such contracts, and
determining the gain or loss on such contracts, on an aggregate net trading basis for all such
contracts of such Person, by comparing the original prices of such contracts to the market prices
on the date of determination.
19
Material Acquisition or Disposition means the Acquisition or any of the following
having a fair market value in excess of $30,000,000: (a) any acquisition of any Acquired Entity or
Business, (b) the Disposition of any assets (including Equity Interests) by the Borrower or any of
its Restricted Subsidiaries, and (c) all mergers and consolidations of the type referred to in
Sections 7.05(d) and (e).
Material Adverse Effect means (a) a material adverse effect on the business,
operations, assets, liabilities (actual or contingent) or financial condition of the Borrower and
its Restricted Subsidiaries, taken as a whole, (b) a material adverse effect on the ability of the
Borrower or the Loan Parties (taken as a whole) to perform their respective payment obligations
under any Loan Document to which the Borrower or any of the other Loan Parties is a party or (c) a
material adverse effect on the rights and remedies of the Lenders under any Loan Document.
Maturity Date means February 14, 2012; provided, however, that if
such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.
Moodys means Moodys Investors Service, Inc. and any successor thereto.
Mortgage has the meaning specified in Section 4.01(a)(iv).
Mortgage Policy has the meaning specified in Section 4.01(a)(iv)(B).
Multiemployer Plan means any employee benefit plan of the type described in Section
4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate makes or is obligated to make
contributions, or during the preceding five plan years, has made or been obligated to make
contributions.
Net Proceeds means the remainder of (a) as applicable (i) the gross proceeds
received from a Disposition (excluding proceeds that constitute capital assets used in the Present
Line of Business), or (ii) the gross proceeds received by any Loan Party from the issuance of
Additional Debt, as applicable, less (b) underwriter discounts and commissions, investment banking
fees, legal, accounting and other professional fees and expenses, amounts required to be applied to
the repayment of Indebtedness secured by a Lien permitted hereunder on any asset which is the
subject of such Disposition, and other usual and customary transaction costs, net of taxes paid or
reasonably estimated to be payable as a result thereof within two years of the date of the relevant
Disposition as a result of any gain recognized in connection therewith and related to such
Disposition or Additional Debt issuance, as applicable. To the extent any such gross proceeds are
received that are not cash or cash equivalents or are not promptly converted to cash or cash
equivalents, the value of such proceeds shall be the fair market value thereof at the time of
receipt.
Note means a promissory note made by the Borrower in favor of a Lender evidencing
Loans made by such Lender, substantially in the form of Exhibit C.
Obligations means all advances to, and debts, liabilities, obligations, covenants
and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan
or Letter of Credit, whether direct or indirect (including those acquired by assumption),
20
absolute or contingent, due or to become due, now existing or hereafter arising and including
interest and fees that accrue after the commencement by or against any Loan Party of any proceeding
under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding.
Omnibus Agreement means the Omnibus Agreement dated as of the Closing Date among
Targa, General Partner and the Borrower.
Organization Documents means, (a) with respect to any corporation, the certificate
or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents
with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement; and (c) with respect
to any partnership, joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation or organization and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or organization with
the applicable Governmental Authority in the jurisdiction of its formation or organization and, if
applicable, any certificate or articles of formation or organization of such entity.
Other Taxes means all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or
under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement or any other Loan Document.
Outstanding Amount means (i) with respect to Committed Loans and Swing Line Loans on
any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings
and prepayments or repayments of Committed Loans and Swing Line Loans, as the case may be,
occurring on such date; and (ii) with respect to any L/C Obligations on any date, the amount of
such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such
date and any other changes in the aggregate amount of the L/C Obligations as of such date,
including as a result of any reimbursements by the Borrower of Unreimbursed Amounts.
Partially Owned Operating Company means any Person (i) that is not a Wholly Owned
Subsidiary of the Borrower where the portion of the Equity Interest not owned by the Borrower and
its Restricted Subsidiaries is owned by Targa or any of its Subsidiaries, and (ii) that holds
operating assets.
Participant has the meaning specified in Section 10.06(d).
PBGC means the Pension Benefit Guaranty Corporation.
Pension Plan means any employee pension benefit plan (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and
is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any
ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple
employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time
during the immediately preceding five plan years.
21
Permitted Acquisition has the meaning set forth in Section 7.02(i).
Person means any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental Authority or other entity.
Plan means any employee benefit plan (as such term is defined in Section 3(3) of
ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412
of the Code or Title IV of ERISA, any ERISA Affiliate.
Platform has the meaning specified in Section 6.02.
Pledge and Security Agreement means the Pledge and Security Agreement, dated as of
the date hereof, and to be executed and delivered by the Borrower and the other Pledgors in favor
of the Collateral Agent, substantially in the form of Exhibit H, as amended, restated,
supplemented or otherwise modified from time to time, including, without limitation, by any
supplement thereto executed and delivered after the date of this Agreement pursuant to Section
6.12 in order to (a) effect the joinder of any additional Subsidiary or (b) subject thereto any
additional Equity Interests.
Pledgors means the Borrower, each Guarantor, and each of the Restricted Subsidiaries
from time to time parties to the Pledge and Security Agreement.
Present Line of Business means (i) the Loan Parties existing natural gas and
natural gas liquids gathering, treating, processing, terminalling, storage, transporting and
marketing operations, (ii) other oil, natural gas, natural gas liquids and related products
gathering, treating, processing, terminalling, storage, transporting and marketing operations and
(iii) any business that is reasonably related, incidental or ancillary thereto.
Register has the meaning specified in Section 10.06(c).
Registration Statement means the Form S-1 Registration Statement filed by the
Borrower with the SEC as Registration No. 333-138747, as amended.
Related Parties means, with respect to any Person, such Persons Affiliates and the
partners, directors, officers, employees, agents and advisors of such Person and of such Persons
Affiliates.
Reportable Event means any of the events set forth in Section 4043(c) of ERISA,
other than events for which the 30 day notice period has been waived.
Request for Credit Extension means (a) with respect to a Borrowing, conversion or
continuation of Committed Loans, a Committed Loan Notice, (b) with respect to an L/C Credit
Extension, a Letter of Credit Application and (c) with respect to a Swing Line Loan, a Swing Line
Loan Notice.
Required Lenders means, as of any date of determination, (subject to the
Intercreditor Agreement with respect to those matters as to which Hedging Parties are entitled to
vote thereunder) Lenders having more than 50% of the Aggregate Commitments or, if the
22
commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C
Credit Extensions have been terminated pursuant to Section 8.02, Lenders holding in the
aggregate more than 50% of the Total Outstandings (with the aggregate amount of each Lenders risk
participation and funded participation in L/C Obligations and Swing Line Loans being deemed held
by such Lender for purposes of this definition); provided that the Commitment of, and the
portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded
for purposes of making a determination of Required Lenders.
Responsible Officer means the chief executive officer, chief accounting officer,
president, chief financial officer, treasurer, assistant treasurer or controller of a Loan Party
and, solely for purposes of notices given pursuant to Article II, any other officer or
employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to
the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer
of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such Responsible Officer shall
be conclusively presumed to have acted on behalf of such Loan Party.
Restricted Payment means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity Interest of any
Loan Party or any Subsidiary, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on
account of any return of capital to any Persons stockholders, partners or members (or the
equivalent of any thereof), or any option, warrant or other right to acquire any such dividend or
other distribution or payment.
Restricted Subsidiary means any Subsidiary that is not an Unrestricted Subsidiary or
a Partially Owned Operating Company, provided, that any such Partially Owned Operating
Company will be a Restricted Subsidiary of the Borrower solely for purposes of Sections
7.01, 7.02, 7.03, 7.05, 7.06, 7.07 and 7.08.
S&P means Standard & Poors Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto.
SEC means the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.
Secured Hedge Agreement means any Swap Contract that (i) is permitted under Article
7 and (ii) is by and between any Loan Party and any Hedging Party; provided that such Swap Contract
shall not constitute a Secured Hedge Agreement unless the relevant Hedging Party is a Lender or an
Affiliate of a Lender or subject to the Intercreditor Agreement (a) on the Closing Date (in the
case of transactions under Swap Contracts in effect on the Closing Date) or (b) on the date of an
applicable transaction (in the case of transactions under Swap Contracts entered into after the
Closing Date).
Secured Parties means, collectively, the Administrative Agent, the Collateral Agent,
the L/C Issuer, the Lenders, any Hedging Party that is a party to a Secured Hedge Agreement,
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and each co-agent or sub-agent appointed by the Administrative Agent or Collateral Agent from
time to time pursuant to Section 9.05.
Secured Swap Obligations means all obligations arising from time to time under
Secured Hedge Agreements; provided that if such counterparty ceases to be a Lender
hereunder or an Affiliate of a Lender hereunder, or ceases to be a party to the Intercreditor
Agreement, Secured Swap Obligations shall only include such obligations to the extent arising from
transactions either (i) entered into on or prior to the Closing Date if the counterparty was a
Lender hereunder or an Affiliate of a Lender hereunder or a party to the Intercreditor Agreement on
the Closing Date or (ii) entered into after the Closing Date if such counterparty was a Lender
hereunder or an Affiliate of a Lender hereunder or a party to the Intercreditor Agreement at the
time the transaction was entered into.
Security Documents means the instruments listed in Schedule 4.01 and all
other security agreements, deeds of trust, mortgages, chattel mortgages, pledges, Guarantees,
financing statements, continuation statements, extension agreements and other agreements or
instruments now, heretofore, or hereafter delivered by any Loan Party to Administrative Agent in
connection with this Agreement or any transaction contemplated hereby to secure or Guarantee the
payment of any part of the Obligations, the Secured Swap Obligations or the Cash Management
Obligations or the performance of any Loan Partys other duties and obligations under the Loan
Documents or the Secured Hedge Agreements.
Solvent and Solvency mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is greater than the total
amount of liabilities, including contingent liabilities, of such Person, (b) the present fair
salable value of the assets of such Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become absolute and matured, (c) such
Person does not intend to, and does not believe that it will, incur debts or liabilities beyond
such Persons ability to pay such debts and liabilities as they mature, (d) such Person is not
engaged in business or a transaction, and is not about to engage in business or a transaction, for
which such Persons property would constitute an unreasonably small capital, and (e) such Person is
able to pay its debts and liabilities, contingent obligations and other commitments as they mature
in the ordinary course of business. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or matured liability.
Specified Acquisition means an acquisition (or series of related acquisitions) of an
Acquired Entity or Business for an aggregate purchase price of not less than $30,000,000.
Sponsor means Warburg Pincus LLC and its Affiliates, but not including, however, any
portfolio companies of any of the foregoing.
Subsidiary of a Person means a corporation, partnership, joint venture, limited
liability company or other business entity of which a majority of the shares of securities or other
interests having ordinary voting power for the election of directors or other governing body (other
than securities or interests having such power only by reason of the happening of a contingency)
are
24
at the time beneficially owned, or the management of which is otherwise controlled, directly,
or indirectly through one or more intermediaries, or both, by such Person.
Swap Contract means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity options, forward
commodity contracts, commodity futures contracts, equity or equity index swaps or options, bond or
bond price or bond index swaps or options or forward bond or forward bond price or forward bond
index transactions, interest rate options, forward foreign exchange transactions, cap transactions,
floor transactions, collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or subject to any master agreement, and (b) any
and all transactions of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any
other master agreement relating to transactions of the type described in clause (a) above (any such
master agreement, together with any related schedules, a Master Agreement), including any
such obligations or liabilities under any Master Agreement.
Swap Termination Value means, in respect of any one or more Swap Contracts, after
taking into account the effect of any legally enforceable netting agreement relating to such Swap
Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and
termination value(s) determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the Mark-to-Market
value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Swap Contracts (which may include a
Lender or any Affiliate of a Lender).
Swing Line Borrowing means a borrowing of a Swing Line Loan pursuant to Section
2.04.
Swing Line Lender means Bank of America in its capacity as provider of Swing Line
Loans, or any successor swing line lender hereunder.
Swing Line Loan has the meaning specified in Section 2.04(a).
Swing Line Loan Notice means a notice of a Swing Line Borrowing pursuant to
Section 2.04(b), which, if in writing, shall be substantially in the form of Exhibit
B.
Swing Line Sublimit means an amount equal to the lesser of (a) $100,000,000 and (b)
the Aggregate Commitments. The Swing Line Sublimit is part of, and not in addition to, the
Aggregate Commitments.
Syndication Agent means Wachovia Bank, N.A. in its capacity as syndication agent
under any of the Loan Documents, or any successor syndication agent.
Synthetic Lease Obligation means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or
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possession of property creating obligations that do not appear on the balance sheet of such
Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).
Targa means Targa Resources, Inc., a Delaware corporation.
Targa Credit Agreement means that certain Credit Agreement dated as of October 31,
2005, among Targa, Credit Suisse, as administrative agent and the lenders from time to time party
thereto.
Targa North Texas means Targa North Texas LP, a Delaware limited partnership.
Taxes means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental Authority, including
any interest, additions to tax or penalties applicable thereto.
Threshold Amount means an amount equal to three percent (3%) of Consolidated Net
Tangible Assets of the Borrower as of the financial statements most recently delivered pursuant to
Section 4.01(a)(vii), Section 6.01(a) or Section 6.01(b), as applicable.
Total Outstandings means the aggregate Outstanding Amount of all Loans and all L/C
Obligations.
Type means, with respect to a Committed Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.
UCC means the Uniform Commercial Code as the same may from time to time be in effect
in the State of New York or the Uniform Commercial Code (or similar code or statute) of another
jurisdiction, to the extent it may be required to apply to any item or items of Collateral.
Unfunded Pension Liability means the excess of a Pension Plans benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Pension Plans assets,
determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section
412 of the Code for the applicable plan year.
United States and U.S. mean the United States of America.
Unreimbursed Amount has the meaning specified in Section 2.03(c)(i).
Unrestricted Subsidiary means any Subsidiary which the Borrower has designated in
writing to the Administrative Agent to be an Unrestricted Subsidiary pursuant to Section
6.18 and which the Borrower has not designated to be a Restricted Subsidiary pursuant to
Section 6.18.
Unsecured Note Indebtedness means Indebtedness permitted under Sections
7.03(f) or (o).
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Voting Stock of any Person means Equity Interests of any class or classes having
ordinary voting power for the election of directors or the equivalent governing body of such
Person.
Wholly Owned Subsidiary means any Subsidiary of a Person, all of the issued and
outstanding Equity Interests are directly or indirectly (through one or more Subsidiaries) owned by
such Person, excluding directors qualifying shares if applicable.
1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document,
unless otherwise specified herein or in such other Loan Document:
(a) The definitions of terms herein shall apply equally to the singular and plural forms of
the terms defined. Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words include, includes and
including shall be deemed to be followed by the phrase without limitation. The word
will shall be construed to have the same meaning and effect as the word shall.
Unless the context requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements or modifications
set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be
construed to include such Persons successors and assigns, (iii) the words herein,
hereof and hereunder, and words of similar import when used in any Loan
Document, shall be construed to refer to such Loan Document in its entirety and not to any
particular provision thereof, (iv) all references in a Loan Document to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, the Loan Document in which such references appear, (v) any reference to any law
shall include all statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless otherwise
specified, refer to such law or regulation as amended, modified or supplemented from time to time,
and (vi) the words asset and property shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
(b) In the computation of periods of time from a specified date to a later specified date,
the word from means from and including; the words to and
until each mean to but excluding; and the word through means to
and including.
(c) Section headings herein and in the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any other Loan
Document.
1.03 Accounting Terms.
(a) Generally. All accounting terms not specifically or completely defined herein
shall be construed in conformity with, and all financial data (including financial ratios and
other financial calculations) required to be submitted pursuant to this Agreement shall be
27
prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time,
applied in a manner consistent with that used in preparing the Audited Financial Statements,
except as otherwise specifically prescribed herein.
(b) Changes in GAAP. If at any time any change in GAAP would affect the computation
of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or
the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower
shall negotiate in good faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change in GAAP (subject to the approval of the Required Lenders);
provided that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall
provide to the Administrative Agent and the Lenders financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting forth a reconciliation
between calculations of such ratio or requirement made before and after giving effect to such
change in GAAP.
1.04 Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this
Agreement shall be calculated by dividing the appropriate component by the other component,
carrying the result to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number (with a rounding-up if there is no
nearest number).
1.05 Times of Day. Unless otherwise specified, all references herein to times of day shall be
references to Eastern time (daylight or standard, as applicable).
1.06 Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit
at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such
time; provided, however, that with respect to any Letter of Credit that, by its
terms or the terms of any Issuer Document related thereto, provides for one or more automatic
increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be
the maximum stated amount of such Letter of Credit after giving effect to all such increases,
whether or not such maximum stated amount is in effect at such time.
ARTICLE II.
THE COMMITMENTS AND CREDIT EXTENSIONS
2.01 Committed Loans. Subject to the terms and conditions set forth herein, each Lender severally
agrees to make loans (each such loan, a Committed Loan) to the Borrower from time to
time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at
any time outstanding the amount of such Lenders Commitment; provided, however,
that after giving effect to any Committed Borrowing, (i) the Total Outstandings shall not exceed
the Aggregate Commitments, and (ii) the aggregate Outstanding Amount of the Committed Loans of any
Lender, plus such Lenders Applicable Percentage of the Outstanding Amount of all L/C
Obligations, plus such Lenders Applicable Percentage of the Outstanding Amount of all
Swing Line Loans shall not exceed such Lenders Commitment. Within the limits of each Lenders
Commitment, and subject to the other terms and conditions hereof, the
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Borrower may borrow under
this Section 2.01, prepay under Section 2.05, and reborrow under this Section
2.01. Committed Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided
herein.
2.02 Borrowings, Conversions and Continuations of Committed Loans.
(a) Each Committed Borrowing, each conversion of Committed Loans from one Type to the other,
and each continuation of Eurodollar Rate Loans shall be made upon the Borrowers irrevocable
notice to the Administrative Agent, which may be given by telephone. Each such notice must be
received by the Administrative Agent not later than (i) noon three Business Days prior to the
requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of
any conversion of Eurodollar Rate Loans to Base Rate Committed Loans, and (ii) 11:00 a.m. on the
requested date of any Borrowing of Base Rate Committed Loans; provided, however,
that if the Borrower wishes to request Eurodollar Rate Loans having an Interest Period other than
one, two, three or six months in duration as provided in the definition of Interest Period, the
applicable notice must be received by the Administrative Agent not later than noon four Business
Days prior to the requested date of such Borrowing, conversion or continuation, whereupon the
Administrative Agent shall give prompt notice to the Lenders of such request and determine whether
the requested Interest Period is acceptable to all of them. Not later than noon, three Business
Days before the requested date of such Borrowing, conversion or continuation, the Administrative
Agent shall notify the Borrower (which notice may be by telephone) whether or not the requested
Interest Period has been consented to by all the Lenders. Each telephonic notice by the Borrower
pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the
Administrative Agent of a written Committed Loan Notice, appropriately completed and signed by a
Responsible Officer of General Partner. Each Borrowing of, conversion to or continuation of
Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of
$1,000,000 in excess thereof or in the amount of the unused Commitments. Except as provided in
Sections 2.03(c) and 2.04(c), each Borrowing of or conversion to Base Rate
Committed Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in
excess thereof or in the amount of the unused Commitments. Each Committed Loan Notice (whether
telephonic or written) shall specify (i) whether the Borrower is requesting a Committed Borrowing,
a conversion of Committed Loans from one Type to the other, or a continuation of Eurodollar Rate
Loans, (ii) the requested date of the Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day), (iii) the principal amount
of Committed Loans to be borrowed, converted or continued, (iv) the Type of Committed Loans to be
borrowed or to which existing Committed Loans are to be converted, and (v) if applicable, the
duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of
Committed Loan in a Committed Loan Notice or if the Borrower fails to give a timely notice
requesting a conversion or continuation, then the applicable Committed Loans shall be made as, or
converted to, Base Rate Loans (unless the Committed Loan being continued is a Eurodollar Rate
Loan, in which case it shall be continued as a Eurodollar Rate Loan with an Interest Period of one
month). Any such automatic conversion to Base Rate Loans or continuations as Eurodollar Rate
Loans shall be effective as of the last day of the Interest Period then in effect with respect to
the applicable Eurodollar Rate Loans. If the Borrower requests a Borrowing of, conversion to, or
continuation of Eurodollar Rate Loans in
29
any such Committed Loan Notice, but fails to specify an
Interest Period, it will be deemed to have specified an Interest Period of one month.
(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly
notify each Lender of the amount of its Applicable Percentage of the applicable Committed Loans,
and if no timely notice of a conversion or continuation is provided by the Borrower, the
Administrative Agent shall notify each Lender of the details of any automatic conversion to Base
Rate Loans or continuations as Eurodollar Rate Loans described in the preceding subsection. In
the case of a Committed Borrowing, each Lender shall make the amount of its Committed Loan
available to the Administrative Agent in immediately available funds at the Administrative Agents
Office not later than 1:00 p.m. on the Business Day specified in the applicable Committed Loan
Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if
such Borrowing is the initial Credit Extension, Section 4.01), the Administrative Agent
shall make all funds so received available to the Borrower in like funds as received by the
Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of
America with the amount of such funds or (ii) wire transfer of such funds, in each case in
accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent
by the Borrower; provided, however, that if, on the date the Committed Loan Notice
with respect to such Borrowing is given by the Borrower, there are L/C Borrowings outstanding,
then the proceeds of such Borrowing, first, shall be applied to the payment in full of any
such L/C Borrowings, and second, shall be made available to the Borrower as provided
above.
(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted
only on the last day of an Interest Period for such Eurodollar Rate Loan unless the Borrower pays
the amount due, if any, under Section 3.05 in connection therewith. During the existence
of an Event of Default, the Administrative Agent or the Required Lenders may require that no Loans
may be requested as, converted to or continued as Eurodollar Rate Loans.
(d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the
interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of
such interest rate. At any time that Base Rate Loans are outstanding, the Administrative Agent
shall notify the Borrower and the Lenders of any change in Bank of Americas prime rate used in
determining the Base Rate promptly following the public announcement of such change.
(e) After giving effect to all Committed Borrowings, all conversions of Committed Loans from
one Type to the other, and all continuations of Committed Loans as the same Type, there shall not
be more than fifteen Interest Periods in effect with respect to Committed Loans.
2.03 Letters of Credit.
(a) The Letter of Credit Commitment.
(i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in
reliance upon the agreements of the Lenders set forth in this Section 2.03, (1) from
time to time on any Business Day during the period from the Closing Date until
30
the Letter of
Credit Expiration Date, to issue Letters of Credit upon the request of the Borrower for the
account of the Borrower or any Restricted Subsidiary, and to amend or extend Letters of
Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor
drawings under the Letters of Credit; and (B) the Lenders severally agree to participate in
Letters of Credit issued for the account of the Borrower or any Loan Party and any drawings
thereunder; provided that after taking such Letter of Credit into account, (x) the
Total Outstandings shall not exceed the Aggregate Commitments, and (y) the aggregate
Outstanding Amount of the Committed Loans of any Lender, plus such Lenders
Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such
Lenders Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not
exceed such Lenders Commitment. Each request by the Borrower for the issuance or amendment
of a Letter of Credit shall be deemed to be a representation by the Borrower that the L/C
Credit Extension so requested complies with the conditions set forth in the proviso to the
preceding sentence. Within the foregoing limits, and subject to the terms and conditions
hereof, the Borrowers ability to obtain Letters of Credit shall be fully revolving, and
accordingly the Borrower may, during the foregoing period, obtain Letters of Credit for the
account of the Borrower or any Restricted Subsidiary to replace Letters of Credit that have
expired or that have been drawn upon and reimbursed.
(ii) The L/C Issuer shall not issue any Letter of Credit, if:
(A) subject to Section 2.03(b)(iii), the expiry date of such requested
Letter of Credit would occur more than twelve months after the date of issuance or
last extension, unless the Required Lenders have approved such expiry date; or
(B) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless all the Lenders have approved such expiry
date.
(iii) The L/C Issuer shall not be under any obligation to issue any Letter of Credit
if:
(A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such
Letter of Credit, or any Law applicable to the L/C Issuer or any
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or
request that the L/C Issuer refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon the L/C Issuer
with respect to such Letter of Credit any restriction, reserve or capital
requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in
effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed
loss, cost or expense which was not applicable on the Closing Date and which the L/C
Issuer in good faith deems material to it;
(B) the issuance of such Letter of Credit would violate any Laws or one or more
policies of the L/C Issuer applicable to letters of credit generally;
31
(C) except as otherwise agreed by the Administrative Agent and the L/C Issuer,
such Letter of Credit is in an initial stated amount less than $100,000.
(D) such Letter of Credit is to be denominated in a currency other than
Dollars;
(E) such Letter of Credit contains any provisions for automatic reinstatement
of the stated amount after any drawing thereunder; or
(F) a default of any Lenders obligations to fund under Section 2.03(c)
exists or any Lender is at such time a Defaulting Lender hereunder, unless the L/C
Issuer has entered into satisfactory arrangements with the Borrower or such Lender
to eliminate the L/C Issuers risk with respect to such Lender.
(iv) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be
permitted at such time to issue such Letter of Credit in its amended form under the terms
hereof.
(v) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A)
the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its
amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does
not accept the proposed amendment to such Letter of Credit.
(vi) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of
Credit issued by it and the documents associated therewith, and the L/C Issuer shall have
all of the benefits and immunities (A) provided to the Administrative Agent in Article
IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection
with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents
pertaining to such Letters of Credit as fully as if the term Administrative Agent as used
in Article IX included the L/C Issuer with respect to such acts or omissions, and
(B) as additionally provided herein with respect to the L/C Issuer.
(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of
Credit.
(i) Each Letter of Credit shall be issued or amended, as the case may be, upon the
request of the Borrower for the account of the Borrower or any Restricted Subsidiary, as the
case may be, delivered to the L/C Issuer (with a copy to the Administrative Agent) in the
form of a Letter of Credit Application, appropriately completed and signed by a Responsible
Officer of General Partner. Such Letter of Credit Application must be received by the L/C
Issuer and the Administrative Agent not later than noon at least one Business Day (or such
later date and time as the Administrative Agent and the L/C Issuer may agree in a particular
instance in their sole discretion) prior to the proposed issuance date or date of amendment,
as the case may be. In the case of a request for an initial issuance of a Letter of Credit,
such Letter of Credit Application shall specify in form and detail reasonably satisfactory
to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which
shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name
and address of the beneficiary thereof; (E) the
32
documents to be presented by such
beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; and (G) such other matters
as the L/C Issuer may require. In the case of a request for an amendment of any outstanding
Letter of Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date
of amendment thereof (which shall be a Business Day); (C) the nature of the proposed
amendment; and (D) such other matters as the L/C Issuer may require. Additionally, the
Borrower shall furnish to the L/C Issuer and the Administrative Agent such other documents
and information pertaining to such requested Letter of Credit issuance or amendment,
including any Issuer Documents, as the L/C Issuer or the Administrative Agent may require.
(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will
confirm with the Administrative Agent (by telephone or in writing) that the Administrative
Agent has received a copy of such Letter of Credit Application from the Borrower and, if
not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Unless the
L/C Issuer has received written notice from any Lender, the Administrative Agent or any Loan
Party, at least one Business Day prior to the requested date of issuance or amendment of the
applicable Letter of Credit, that one or more applicable conditions contained in Article
IV shall not then be satisfied, then, subject to the terms and conditions hereof, the
L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the
Borrower or the applicable Restricted Subsidiary, as the case may be, or enter into the
applicable amendment, as the case may be, in each case in accordance with the L/C Issuers
usual and customary business practices. Immediately upon the issuance of each Letter of
Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees
to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount
equal to the product of such Lenders Applicable Percentage times the amount of such
Letter of Credit.
(iii) If the Borrower so requests in any applicable Letter of Credit Application, the
L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that
has automatic extension provisions (each, an Auto-Extension Letter of Credit);
provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to
prevent any such extension at least once in each twelve-month period (commencing with
the date of issuance of such Letter of Credit) by giving prior notice to the
beneficiary thereof not later than a day (the Non-Extension Notice Date) in each
such twelve-month period to be agreed upon at the time such Letter of Credit is issued.
Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a
specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of
Credit has been issued, the Lenders shall be deemed to have authorized (but may not require)
the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry
date not later than the Letter of Credit Expiration Date; provided, however,
that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined
that it would not be permitted, or would have no obligation, at such time to issue such
Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the
provisions of clause (ii) or (iii) of Section 2.03(a) or otherwise), or (B) it has
received notice (which may be by telephone or in writing) on or before the day that is five
33
Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that
the Required Lenders have elected not to permit such extension or (2) from the
Administrative Agent, any Lender or the Borrower that one or more of the applicable
conditions specified in Section 4.02 is not then satisfied, and in each such case
directing the L/C Issuer not to permit such extension.
(iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter
of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C
Issuer will also deliver to the Borrower and the Administrative Agent a true and complete
copy of such Letter of Credit or amendment.
(c) Drawings and Reimbursements; Funding of Participations.
(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the L/C Issuer shall notify the Borrower and the
Administrative Agent thereof. Not later than noon on the date of any payment by the L/C
Issuer under a Letter of Credit (each such date, an Honor Date), the Borrower
shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the
amount of such drawing. If the Borrower fails to so reimburse the L/C Issuer by such time,
the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of
the unreimbursed drawing (the Unreimbursed Amount), and the amount of such
Lenders Applicable Percentage thereof. In such event, the Borrower shall be deemed to have
requested a Committed Borrowing of Base Rate Loans to be disbursed on the Honor Date in an
amount equal to the Unreimbursed Amount, without regard to the minimum and multiples
specified in Section 2.02 for the principal amount of Base Rate Loans, but subject
to the amount of the unutilized portion of the Aggregate Commitments and the conditions set
forth in Section 4.02 (other than the delivery of a Committed Loan Notice). Any
notice given by the L/C Issuer or the Administrative Agent pursuant to this Section
2.03(c)(i) may be given by telephone if immediately confirmed in writing;
provided that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.
(ii) Each Lender shall upon any notice pursuant to Section 2.03(c)(i) make
funds available to the Administrative Agent for the account of the L/C Issuer at the
Administrative Agents Office in an amount equal to its Applicable Percentage of the
Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by
the Administrative Agent, whereupon, subject to the provisions of Section
2.03(c)(iii), each Lender that so makes funds available shall be deemed to have made a
Base Rate Committed Loan to the Borrower in such amount. The Administrative Agent shall
remit the funds so received to the L/C Issuer.
(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Committed Borrowing of Base Rate Loans because the conditions set forth in Section
4.02 cannot be satisfied or for any other reason, the Borrower shall be deemed to have
incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that
is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with
interest) and shall bear interest at the Default Rate. In such event,
34
each Lenders payment
to the Administrative Agent for the account of the L/C Issuer pursuant to Section
2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C
Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its
participation obligation under this Section 2.03.
(iv) Until each Lender funds its Committed Loan or L/C Advance pursuant to this
Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of
Credit, interest in respect of such Lenders Applicable Percentage of such amount shall be
solely for the account of the L/C Issuer.
(v) Each Lenders obligation to make Committed Loans or L/C Advances to reimburse the
L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section
2.03(c), shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right
which such Lender may have against the L/C Issuer, the Borrower or any other Person for any
reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
provided, however, that each Lenders obligation to make Committed Loans
pursuant to this Section 2.03(c) is subject to the conditions set forth in
Section 4.02 (other than delivery by the Borrower of a Committed Loan Notice). No
such making of an L/C Advance shall relieve or otherwise impair the obligation of the
Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer
under any Letter of Credit, together with interest as provided herein.
(vi) If any Lender fails to make available to the Administrative Agent for the account
of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.03(c) by the time specified in Section
2.03(c)(ii), the L/C Issuer shall be entitled to recover from such Lender (acting
through the Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment is
immediately available to the L/C Issuer at a rate per annum equal to the greater of the
Federal Funds Rate and a rate determined by the L/C Issuer in accordance with banking
industry rules on interbank compensation, plus any administrative, processing or similar
fees customarily charged by the L/C Issuer in connection with the foregoing. If such Lender
pays such amount (with interest and fees as aforesaid), the amount so paid shall
constitute such Lenders Committed Loan included in the relevant Committed Borrowing or L/C
Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the
L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any
amounts owing under this clause (vi) shall be conclusive absent manifest error.
(d) Repayment of Participations.
(i) At any time after the L/C Issuer has made a payment under any Letter of Credit and
has received from any Lender such Lenders L/C Advance in respect of such payment in
accordance with Section 2.03(c), if the Administrative Agent receives for the
account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or
interest thereon (whether directly from the Borrower or otherwise, including proceeds of
35
Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will
distribute to such Lender its Applicable Percentage thereof (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such Lenders L/C
Advance was outstanding) in the same funds as those received by the Administrative Agent.
(ii) If any payment received by the Administrative Agent for the account of the L/C
Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the
circumstances described in Section 10.05 (including pursuant to any settlement
entered into by the L/C Issuer in its discretion), each Lender shall pay to the
Administrative Agent for the account of the L/C Issuer its Applicable Percentage thereof on
demand of the Administrative Agent, plus interest thereon from the date of such demand to
the date such amount is returned by such Lender, at a rate per annum equal to the Federal
Funds Rate from time to time in effect. The obligations of the Lenders under this clause
shall survive the payment in full of the Obligations and the termination of this Agreement.
(e) Obligations Absolute. The obligation of the Borrower to reimburse the L/C Issuer
for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement regardless of any circumstances, including any of the following:
(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or
any other Loan Document;
(ii) the existence of any claim, counterclaim, setoff, defense or other right that the
Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of
such Letter of Credit (or any Person for whom any such beneficiary or any such transferee
may be acting), the L/C Issuer or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement
or instrument relating thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented under such Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing under
such Letter of Credit;
(iv) any payment by the L/C Issuer under such Letter of Credit against presentation of
a draft or certificate that does not strictly comply with the terms of such Letter of
Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to any beneficiary
or any transferee of such Letter of Credit, including any arising in connection with any
proceeding under any Debtor Relief Law; or
36
(v) any other circumstance or happening whatsoever, whether or not similar to any of
the foregoing, including any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or any Subsidiary.
The Borrower or the applicable Restricted Subsidiary that is the account party thereon, as the
case may be, shall promptly examine a copy of each Letter of Credit and each amendment thereto that
is delivered to it and, in the event of any claim of noncompliance with the Borrowers or such
Restricted Subsidiarys instructions or other irregularity, the Borrower or such Restricted
Subsidiary will immediately notify the L/C Issuer. The Borrower and any such Restricted Subsidiary
shall be conclusively deemed to have waived any such claim against the L/C Issuer and its
correspondents unless such notice is given as aforesaid.
(f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any
drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any
document (other than any sight draft, certificates and documents expressly required by the Letter
of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. None of the L/C Issuer, the
Administrative Agent, any of their respective Related Parties nor any correspondent, participant
or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in
connection herewith at the request or with the approval of the Lenders or the Required Lenders, as
applicable; (ii) any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document
or instrument related to any Letter of Credit or Issuer Document. The Borrower and each Loan
Party hereby assume all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided, however, that this
assumption is not intended to, and shall not, preclude the Borrower or a Loan Party, as the case
may be, pursuing such rights and remedies as it may have against the beneficiary or transferee at
law or under any other agreement. None of the L/C Issuer, the Administrative Agent, any of their
respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall
be liable or responsible for any of the matters described in clauses (i) through (v) of
Section 2.03(e); provided, however, that anything in such clauses to the
contrary notwithstanding, the Borrower or a Loan Party, as the case may be, may have a claim
against the L/C Issuer, and the L/C Issuer may be liable to the Borrower or a Loan Party, as the
case may be, to the extent, but only to the extent, of any direct, as opposed to consequential or
exemplary, damages suffered by the Borrower or such Loan Party, as the case may be, which the
Borrower or such Loan Party proves were caused by the L/C Issuers
willful misconduct or gross negligence or the L/C Issuers willful failure to pay under any
Letter of Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that
appear on their face to be in order, without responsibility for further investigation, regardless
of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or purporting to transfer or
assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason. The L/C Issuer shall deliver
to the Borrower or a Restricted Subsidiary, as the case may be, copies of any documents purporting
to assign or transfer a Letter of Credit issued for the account of the Borrower or such Restricted
37
Subsidiary. The failure of L/C Issuer to deliver such documents will not relieve the Borrower or
any Restricted Subsidiary of its obligations hereunder or under the other Loan Documents.
(g) Cash Collateral. Upon the request of the Administrative Agent, (i) if the L/C
Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing
has resulted in an L/C Borrowing and the conditions set forth in Section 4.01 to a
Committed Borrowing cannot then be met, or (ii) if, as of the Letter of Credit Expiration Date,
any L/C Obligation for any reason remains outstanding, the Borrower shall, in each case,
immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations. Sections
2.05 and 8.02(c) set forth certain additional requirements to deliver Cash Collateral
hereunder. For purposes of this Section 2.03, Section 2.05 and Section
8.02(c), Cash Collateralize means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the L/C
Obligations, cash or deposit account balances pursuant to documentation in form and substance
satisfactory to the Administrative Agent and the L/C Issuer (which documents are hereby consented
to by the Lenders). Derivatives of such term have corresponding meanings. The Borrower hereby
grants to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, a security
interest in all such cash, deposit accounts and all balances therein and all proceeds of the
foregoing. Cash Collateral shall be maintained in blocked, non-interest bearing deposit accounts
at Bank of America and may be invested in cash equivalents. If at any time during which Cash
Collateral is required to be maintained in respect of L/C Obligations, the Administrative Agent
determines that any funds held as Cash Collateral are subject to any right or claim of any Person
other than the Administrative Agent or that the total amount of such funds is less than the
aggregate Outstanding Amount of all L/C Obligations, the Borrower will, forthwith upon demand by
the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited as
Cash Collateral, an amount equal to the excess of (x) such aggregate Outstanding Amount over (y)
the total amount of funds, if any, then held as Cash Collateral that the Administrative Agent
determines to be free and clear of any such right and claim. Upon the drawing of any Letter of
Credit for which funds are on deposit as Cash Collateral, such funds shall be applied, to the
extent permitted under applicable Laws, to reimburse the L/C Issuer. To the extent that the
amount of any Cash Collateral exceeds the then Outstanding Amount of L/C Obligations and so long
as no Event of Default has occurred and is continuing, the excess shall be refunded to the
Borrower.
(h) Applicability of ISP and UCP. Unless otherwise expressly agreed by the L/C
Issuer and the Borrower, when a Letter of Credit is issued, (i) the Borrower may specify that
either the rules of the ISP or the rules of the Uniform Customs and Practice for Documentary
Credits (UCP), as most recently published by the International Chamber of Commerce at
the time of issuance, apply to each standby Letter of Credit, and (ii) the rules of the UCP shall
apply to each commercial Letter of Credit.
(i) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent for
the account of each Lender in accordance with its Applicable Percentage a Letter of Credit fee
(the Letter of Credit Fee) for each Letter of Credit issued for the account of the
Borrower or a Restricted Subsidiary, as the case may be, equal to the Applicable Rate with respect
to Eurodollar Rate Loans times the daily amount available to be drawn under such Letter of
Credit on a quarterly basis in arrears. For purposes of computing the daily amount available to
38
be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in
accordance with Section 1.06. Letter of Credit Fees shall be (i) computed on a quarterly
basis in arrears and (ii) due and payable on the tenth Business Day after the end of each March,
June, September and December, commencing with the first such date to occur after the issuance of
such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. If there
is any change in the Applicable Rate during any quarter, the daily maximum amount of each Letter
of Credit shall be computed and multiplied by the Applicable Rate separately for each period
during such quarter that such Applicable Rate was in effect. Notwithstanding anything to the
contrary contained herein, upon the request of Administrative Agent or the Required Lenders, while
any Obligation bears interest at the Default Rate pursuant to Section 2.08(b), all Letter
of Credit Fees shall accrue at the Default Rate.
(j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The
Borrower shall pay directly to the L/C Issuer for its own account a fronting fee with respect to
each Letter of Credit issued for the account of the Borrower or a Restricted Subsidiary, as the
case may be, equal to the greater of (i) $125 or (ii) one-eighth percent (0.125%) per annum,
computed on the daily maximum amount available to be drawn under such Letter of Credit (whether or
not such maximum amount is then in effect under such Letter of Credit) and on a quarterly basis in
arrears, and due and payable on the tenth Business Day after the end of each March, June,
September and December, commencing with the first such date to occur after the issuance of such
Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For purposes
of computing the daily amount available to be drawn under any Letter of Credit, the amount of such
Letter of Credit shall be determined in accordance with Section 1.06. In addition, the
Borrower shall pay directly to the L/C Issuer for its own account the customary issuance,
presentation, amendment and other processing fees, and other standard costs and charges, of the
L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and
standard costs and charges are due and payable on demand and are nonrefundable.
(k) Conflict with Issuer Documents. In the event of any conflict between the terms
hereof and the terms of any Issuer Document, the terms hereof shall control.
(l) Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of
Credit issued or outstanding hereunder is in support of any obligations of, or is for the account
of, a Subsidiary, the Borrower shall be obligated to reimburse the L/C Issuer hereunder for any
and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the
issuance of Letters of Credit for the account of Restricted Subsidiaries inures to the
benefit of the Borrower, and that the Borrowers business derives substantial benefits from the
businesses of such Restricted Subsidiaries.
2.04 Swing Line Loans.
(a) The Swing Line. Subject to the terms and conditions set forth herein, the Swing
Line Lender agrees, in reliance upon the agreements of the other Lenders set forth in this
Section 2.04, to make loans (each such loan, a Swing Line Loan) to the Borrower
from time to time on any Business Day during the Availability Period in an aggregate amount not to
exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the
39
fact
that such Swing Line Loans, when aggregated with the Applicable Percentage of the Outstanding
Amount of Committed Loans and L/C Obligations of the Lender acting as Swing Line Lender, may
exceed the amount of such Lenders Commitment; provided, however, that after
giving effect to any Swing Line Loan, (i) the Total Outstandings shall not exceed the Aggregate
Commitments, and (ii) the aggregate Outstanding Amount of the Committed Loans of any Lender,
plus such Lenders Applicable Percentage of the Outstanding Amount of all L/C Obligations,
plus such Lenders Applicable Percentage of the Outstanding Amount of all Swing Line Loans
shall not exceed such Lenders Commitment, and provided, further, that the
Borrower shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line
Loan. Within the foregoing limits, and subject to the other terms and conditions hereof, the
Borrower may borrow under this Section 2.04, prepay under Section 2.05, and
reborrow under this Section 2.04. Each Swing Line Loan shall be a Base Rate Loan.
Immediately upon the making of a Swing Line Loan, each Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk
participation in such Swing Line Loan in an amount equal to the product of such Lenders
Applicable Percentage times the amount of such Swing Line Loan.
(b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the
Borrowers irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be
given by telephone. Each such notice must be received by the Swing Line Lender and the
Administrative Agent not later than 1:00 p.m. on the requested borrowing date, and shall specify
(i) the amount to be borrowed, which shall be a minimum of $100,000, and (ii) the requested
borrowing date, which shall be a Business Day. Each such telephonic notice must be confirmed
promptly by delivery to the Swing Line Lender and the Administrative Agent of a written Swing Line
Loan Notice, appropriately completed and signed by a Responsible Officer of General Partner.
Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the
Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line
Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof.
Unless the Swing Line Lender has received notice (by telephone or in writing) from the
Administrative Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of
the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line
Loan as a result of the limitations set forth in the proviso to the first sentence of Section
2.04(a), or (B) that one or more of the applicable
conditions specified in Article IV is not then satisfied, then, subject to the terms
and conditions hereof, the Swing Line Lender will, not later than 3:00 p.m. on the borrowing date
specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the
Borrower at its office by crediting the account of the Borrower on the books of the Swing Line
Lender in immediately available funds.
(c) Refinancing of Swing Line Loans.
(i) The Swing Line Lender at any time in its sole and absolute discretion may request,
on behalf of the Borrower (which hereby irrevocably authorizes the Swing Line Lender to so
request on its behalf), that each Lender make a Base Rate Committed Loan in an amount equal
to such Lenders Applicable Percentage of the amount of Swing Line Loans then outstanding.
Such request shall be made in writing (which written request
40
shall be deemed to be a
Committed Loan Notice for purposes hereof) and in accordance with the requirements of
Section 2.02, without regard to the minimum and multiples specified therein for the
principal amount of Base Rate Loans, but subject to the unutilized portion of the Aggregate
Commitments and the conditions set forth in Section 4.02. The Swing Line Lender
shall furnish the Borrower with a copy of the applicable Committed Loan Notice promptly
after delivering such notice to the Administrative Agent. Each Lender shall make an amount
equal to its Applicable Percentage of the amount specified in such Committed Loan Notice
available to the Administrative Agent in immediately available funds for the account of the
Swing Line Lender at the Administrative Agents Office not later than 1:00 p.m. on the day
specified in such Committed Loan Notice, whereupon, subject to Section 2.04(c)(ii),
each Lender that so makes funds available shall be deemed to have made a Base Rate Committed
Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so
received to the Swing Line Lender.
(ii) If for any reason any Swing Line Loan cannot be refinanced by such a Committed
Borrowing in accordance with Section 2.04(c)(i), the request for Base Rate Committed
Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request
by the Swing Line Lender that each of the Lenders fund its risk participation in the
relevant Swing Line Loan and each Lenders payment to the Administrative Agent for the
account of the Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed
payment in respect of such participation.
(iii) If any Lender fails to make available to the Administrative Agent for the account
of the Swing Line Lender any amount required to be paid by such Lender pursuant to the
foregoing provisions of this Section 2.04(c) by the time specified in Section
2.04(c)(i), the Swing Line Lender shall be entitled to recover from such Lender (acting
through the Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment is
immediately available to the Swing Line Lender at a rate per annum equal to the greater of
the Federal Funds Rate and a rate determined by the Swing Line Lender in accordance with
banking industry rules on interbank compensation, plus any administrative, processing or
similar fees customarily charged by the Swing Line Lender in connection with the foregoing.
If such Lender pays such amount (with interest and
fees as aforesaid), the amount so paid shall constitute such Lenders Committed Loan
included in the relevant Committed Borrowing or funded participation in the relevant Swing
Line Loan, as the case may be. A certificate of the Swing Line Lender submitted to any
Lender (through the Administrative Agent) with respect to any amounts owing under this
clause (iii) shall be conclusive absent manifest error.
(iv) Each Lenders obligation to make Committed Loans or to purchase and fund risk
participations in Swing Line Loans pursuant to this Section 2.04(c) shall be
absolute and unconditional and shall not be affected by any circumstance, including (A) any
setoff, counterclaim, recoupment, defense or other right which such Lender may have against
the Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (B) the
occurrence or continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however,
41
that each
Lenders obligation to make Committed Loans pursuant to this Section 2.04(c) is
subject to the conditions set forth in Section 4.02. No such funding of risk
participations shall relieve or otherwise impair the obligation of the Borrower to repay
Swing Line Loans, together with interest as provided herein.
(d) Repayment of Participations.
(i) At any time after any Lender has purchased and funded a risk participation in a
Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line
Loan, the Swing Line Lender will distribute to such Lender its Applicable Percentage thereof
in the same funds as those received by the Swing Line Lender.
(ii) If any payment received by the Swing Line Lender in respect of principal or
interest on any Swing Line Loan is required to be returned by the Swing Line Lender under
any of the circumstances described in Section 10.05 (including pursuant to any
settlement entered into by the Swing Line Lender in its discretion), each Lender shall pay
to the Swing Line Lender its Applicable Percentage thereof on demand of the Administrative
Agent, plus interest thereon from the date of such demand to the date such amount is
returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent
will make such demand upon the request of the Swing Line Lender. The obligations of the
Lenders under this clause shall survive the payment in full of the Obligations and the
termination of this Agreement.
(e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be
responsible for invoicing the Borrower for interest on the Swing Line Loans. Until each Lender
funds its Base Rate Committed Loan or risk participation pursuant to this Section 2.04 to
refinance such Lenders Applicable Percentage of any Swing Line Loan, interest in respect of such
Applicable Percentage shall be solely for the account of the Swing Line Lender.
(f) Payments Directly to Swing Line Lender. The Borrower shall make all payments of
principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.
2.05 Prepayments.
(a) The Borrower may, upon notice to the Administrative Agent, at any time or from time to
time voluntarily prepay Committed Loans in whole or in part without premium or penalty;
provided that (i) such notice must be received by the Administrative Agent not later than
(A) noon three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B) 11:00
a.m. on the date of prepayment of Base Rate Committed Loans; (ii) any prepayment of Eurodollar Rate
Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof or, if less, the outstanding amount of such Loans; and (iii) any prepayment of Base Rate
Committed Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in
excess thereof or, in each case, if less, the entire principal amount thereof then outstanding.
Each such notice shall specify the date and amount of such prepayment and the Type(s) of Committed
Loans to be prepaid and, if Eurodollar Rate Loans are to be prepaid, the Interest Period(s) of such
Loans. The Administrative Agent will promptly notify
42
each Lender of its receipt of each such
notice and the amount of such Lenders Applicable Percentage of such prepayment. If such notice is
given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in
such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar
Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any
additional amounts required pursuant to Section 3.05. Each such prepayment shall be
applied to the Committed Loans of the Lenders in accordance with their respective Applicable
Percentages. Notwithstanding anything herein to the contrary, the Borrower may rescind any notice
of prepayment under this Section 2.05(a) not later than 1:00 p.m. on the Business Day
before such prepayment was scheduled to take place if such prepayment would have resulted from a
refinancing of the Committed Loans, which refinancing shall not be consummated or shall otherwise
be delayed.
(b) The Borrower may, upon notice to the Swing Line Lender (with a copy to the Administrative
Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part
without premium or penalty; provided that (i) such notice must be received by the Swing
Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment,
and (ii) any such prepayment shall be in a minimum principal amount of $100,000 or, if less, the
entire principal amount of Swing Line Loans then outstanding. Each such notice shall specify the
date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall
make such prepayment and the payment amount specified in such notice shall be due and payable on
the date specified therein.
(c) If for any reason the Outstanding Amount of all Loans at any time exceeds the Aggregate
Commitments then in effect, the Borrower shall within one Business Day following demand by the
Administrative Agent prepay the Loans in an aggregate amount equal to such excess.
(d) On the date (or the next succeeding Business Day if such date is not a Business Day) that
any Net Proceeds become Excess Sale Proceeds, (i) the Borrower shall make a mandatory prepayment of
the principal of the Loans in the amount of the Excess Sale Proceeds,
and (ii) the Aggregate Commitments shall be reduced, dollar for dollar, by the amount of such
Excess Sale Proceeds provided, however, that prepayments and the corresponding reduction in
Aggregate Commitments under this Section 2.05(d) shall not be required until the aggregate
amount of unapplied Net Proceeds and unapplied Extraordinary Receipts exceeds $5,000,000.
(e) Any Extraordinary Receipts shall be immediately applied as a mandatory prepayment on the
Loans; provided, however, that prepayments under this Section 2.05(e) shall not be required
until the aggregate amount of unapplied Extraordinary Receipts and unapplied Net Proceeds exceeds
$5,000,000.
(f) Immediately upon the consummation by any Loan Party of any issuance of Additional Debt
(but without waiving the requirements of Administrative Agent and/or any Lenders consent to any
such issuance in violation of any Loan Document), the Borrower shall make a mandatory prepayment on
the Loans in an amount equal to the Net Proceeds from such issuance.
43
(g) Each prepayment under Section 2.05(c), (d), (e) or (f)
shall be applied ratably as follows: (i) first to prepay the Outstanding Amount of the Committed
Loans, and (ii) second, to repay the Outstanding Amount of the Swing Line Loans.
(h) Each prepayment of the Loans under Section 2.05(c), (d), (e) or
(f) shall be accompanied by all interest then accrued and unpaid on the principal so
prepaid, together with any additional amounts required pursuant to Section 3.05. Any
principal or interest prepaid pursuant to this Section shall be in addition to, and not in lieu of,
all payments otherwise required to be paid under the Loan Documents at the time of such prepayment.
Each such prepayment shall be applied to the Committed Loans or Swing Line Loans, as applicable,
of the Lenders in accordance with their respective Applicable Percentage of such Committed Loans or
Swing Line Loans.
2.06 Termination or Reduction of Commitments. The Borrower may, upon notice to the
Administrative Agent, terminate the Aggregate Commitments, or from time to time permanently reduce
the Aggregate Commitments; provided that (i) any such notice shall be received by the
Administrative Agent not later than noon five Business Days prior to the date of termination or
reduction, (ii) any such partial reduction shall be in an aggregate amount of $5,000,000 or any
whole multiple of $1,000,000 in excess thereof, (iii) the Borrower shall not terminate or reduce
the Aggregate Commitments if, after giving effect thereto and to any concurrent prepayments
hereunder, the Total Outstandings would exceed the Aggregate Commitments, and (iv) if, after giving
effect to any reduction of the Aggregate Commitments, the Swing Line Sublimit exceeds the amount of
the Aggregate Commitments, such Sublimit shall be automatically reduced by the amount of such
excess. The Administrative Agent will promptly notify the Lenders of any such notice of
termination or reduction of the Aggregate Commitments. Any reduction of the Aggregate Commitments
shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees
accrued until the effective date of any termination of the Aggregate Commitments shall be paid
on the effective date of such termination. Notwithstanding anything herein to the contrary,
the Borrower may rescind any notice of termination of Aggregate Commitments under this Section
2.06 not later than 1:00 p.m. on the Business Day before such termination was scheduled to take
place if such termination would have resulted from a refinancing of the Aggregate Commitments,
which refinancing shall not be consummated or shall otherwise be delayed
2.07 Repayment of Loans.
(a) The Borrower shall repay to the Lenders on the Maturity Date the aggregate principal
amount of Committed Loans outstanding on such date.
(b) The Borrower shall repay each Swing Line Loan on the earlier to occur of (i) the date ten
Business Days after such Loan is made and (ii) the Maturity Date.
2.08 Interest.
(a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall
bear interest on the outstanding principal amount thereof for each Interest Period at a rate per
annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate with
44
respect to Eurodollar Rate Loans; (ii) each Base Rate Committed Loan shall bear interest on the
outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal
to the Base Rate plus the Applicable Rate with respect to Base Rate Loans; and (iii) each
Swing Line Loan shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Rate with respect to Base Rate Loans.
(b) (i) If any amount of principal of any Loan is not paid when due (after giving effect to
any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such
amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal
to the Default Rate to the fullest extent permitted by applicable Laws.
(ii) If any amount (other than principal of any Loan) payable by the Borrower under any
Loan Document is not paid when due (after giving effect to any applicable grace periods),
whether at stated maturity, by acceleration or otherwise, then upon the request of the
Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate
per annum at all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.
(iii) Upon the request of the Administrative Agent or Required Lenders, after an Event
of Default under Section 8.01(a) shall have occurred and be continuing, the Borrower
shall pay interest on the principal amount of all outstanding Obligations hereunder at a
fluctuating interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws and shall continue to pay interest at such
rate until but excluding the date on which such Event of Default is cured or waived
(and thereafter the Pricing Level otherwise applicable shall apply).
(iv) Accrued and unpaid interest on past due amounts (including interest on past due
interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date
applicable thereto and at such other times as may be specified herein. Interest hereunder shall
be due and payable in accordance with the terms hereof before and after judgment, and before and
after the commencement of any proceeding under any Debtor Relief Law.
2.09 Fees. In addition to certain fees described in subsections (i) and (j)
of Section 2.03:
(a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the
account of each Lender in accordance with its Applicable Percentage, a commitment fee equal to the
Applicable Rate with respect to Commitment Fees times the actual daily amount by which the
Aggregate Commitments exceed the Outstanding Amount of Committed Loans and L/C Obligations (but
excluding, for the avoidance of doubt, the Swing Line Loans); provided, however
that any commitment fee accrued with respect to the Commitment of a Lender that has failed to fund
any portion of the Committed Loans required to be funded by it hereunder within one Business Day
of the date required to be funded by it hereunder shall not be payable
45
by the Borrower until such
time as such failure has been cured. The commitment fees shall accrue at all times during the
Availability Period, including at any time during which one or more of the conditions in
Article IV are not met, and shall be due and payable quarterly in arrears on the tenth
Business Day after each March, June, September and December, commencing with the first such date
to occur after the Closing Date, and on the last day of the Availability Period. The commitment
fees shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate
during any quarter, the actual daily amount shall be computed and multiplied by the Applicable
Rate separately for each period during such quarter that such Applicable Rate was in effect.
(b) Other Fees.
(i) The Borrower shall pay to the Arrangers, the Administrative Agent and the
Syndication Agent for their own respective accounts fees in the amounts and at the times
specified in the Fee Letter. Such fees shall be fully earned when paid and shall not be
refundable for any reason whatsoever.
(ii) The Borrower shall pay to the Lenders such fees as shall have been separately
agreed upon in writing in the amounts and at the times so specified. Such fees shall be
fully earned when paid and shall not be refundable for any reason whatsoever.
2.10 Computation of Interest and Fees. All computations of interest for Base Rate Loans when
the Base Rate is determined by Bank of Americas prime rate shall be made on the basis of a year
of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees
and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in
more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year).
Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a
Loan, or any portion thereof, for the day on which the Loan or such portion is paid,
provided that any Loan that is repaid on the same day on which it is made shall, subject to
Section 2.12(a), bear interest for one day. Each determination by the Administrative Agent
of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent
manifest error.
2.11 Evidence of Debt.
(a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or
records maintained by such Lender and by the Administrative Agent in the ordinary course of
business in accordance with its usual practice. The accounts or records maintained by the
Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of
the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon.
Any failure to so record or any error in doing so shall not, however, limit or otherwise affect
the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations.
In the event of any conflict between the accounts and records maintained by any Lender and the
accounts and records of the Administrative Agent in respect of such matters, the accounts and
records of the Administrative Agent shall control in the absence of manifest error. Upon the
request of any Lender made through the Administrative Agent, the Borrower shall execute and
deliver to such Lender (through the
46
Administrative Agent) a Note, which shall evidence such
Lenders Loans in addition to such accounts or records. Each Lender may attach schedules to its
Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and
payments with respect thereto.
(b) In addition to the accounts and records referred to in Section 2.11(a), each Lender and
the Administrative Agent shall maintain in accordance with its usual practice accounts or records
evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing
Line Loans. In the event of any conflict between the accounts and records maintained by the
Administrative Agent and the accounts and records of any Lender in respect of such matters, the
accounts and records of the Administrative Agent shall control in the absence of manifest error.
2.12 Payments Generally; Administrative Agents Clawback.
(a) General. All payments to be made by the Borrower shall be made without condition
or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly
provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent,
for the account of the respective Lenders to which such payment is owed, at the Administrative
Agents Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date
specified herein. The Administrative Agent will promptly distribute to each Lender its Applicable
Percentage (or other applicable share as provided herein) of such payment in like funds as
received by wire transfer to such Lenders Lending Office. All payments received by the
Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day
and any applicable interest or fee shall continue to accrue. If any payment to be made by the
Borrower shall come due on a day other than a Business Day, payment shall be made on the next
following Business Day, and such extension of time shall be reflected in computing interest or
fees, as the case may be; except that this sentence shall not apply to the Maturity Date.
(b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the proposed date of any
Committed Borrowing of Eurodollar Rate Loans (or, in the case of any Committed Borrowing of Base
Rate Loans, prior to noon on the date of such Committed Borrowing) that such Lender will not make
available to the Administrative Agent such Lenders share of such Committed Borrowing, the
Administrative Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.02 (or, in the case of a Committed Borrowing of Base Rate Loans,
that such Lender has made such share available in accordance with and at the time required by
Section 2.02) and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share of the applicable
Committed Borrowing available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding
amount in immediately available funds with interest thereon, for each day from and including the
date such amount is made available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of
the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation, plus any administrative, processing or similar
fees
47
customarily charged by the Administrative Agent in connection with the foregoing, and (B) in
the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans.
If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same
or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount
of such interest paid by the Borrower for such period. If such Lender pays its share of the
applicable Committed Borrowing to the Administrative Agent, then the amount so paid shall
constitute such Lenders Committed Loan included in such Committed Borrowing. Any payment by the
Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall
have failed to make such payment to the Administrative Agent.
(ii) Payments by the Borrower; Presumptions by Administrative Agent. Unless the
Administrative Agent shall have received notice from the Borrower prior to the date on which any
payment is due to the Administrative Agent for the account of the Lenders or the L/C Issuer
hereunder that the Borrower will not make such payment, the Administrative Agent may assume
that the Borrower has made such payment on such date in accordance herewith and may, in reliance
upon such assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or
the L/C Issuer, as the case may be, severally agrees to repay to the Administrative Agent forthwith
on demand the amount so distributed to such Lender or the L/C Issuer, in immediately available
funds with interest thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal
Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.
A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount
owing under this subsection (b) shall be conclusive, absent manifest error.
(c) Failure to Satisfy Conditions Precedent. If any Lender makes available to the
Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing
provisions of this Article II, and such funds are not made available to the Borrower by
the Administrative Agent because the conditions to the applicable Credit Extension set forth in
Article IV are not satisfied or waived in accordance with the terms hereof, the
Administrative Agent shall return such funds (in like funds as received from such Lender) to such
Lender, without interest.
(d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make
Committed Loans, to fund participations in Letters of Credit and Swing Line Loans and to make
payments pursuant to Section 10.04(c) are several and not joint. The failure of any
Lender to make any Committed Loan, to fund any such participation or to make any payment under
Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its
corresponding obligation to do so on such date, and no Lender shall be responsible for the failure
of any other Lender to so make its Committed Loan, to purchase its participation or to make its
payment under Section 10.04(c).
(e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain
the funds for any Loan in any particular place or manner or to constitute a representation
48
by any
Lender that it has obtained or will obtain the funds for any Loan in any particular place or
manner.
(f) Insufficient Funds. If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal, L/C Borrowings,
interest and fees then due hereunder, such funds shall be applied (i) first, toward
payment of interest and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and (ii)
second, toward payment of principal and L/C Borrowings then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal and L/C Borrowings then
due to such parties.
2.13 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain
payment in respect of any principal of or interest on any of the Committed Loans made by it, or the
participations in L/C Obligations or in Swing Line Loans held by it resulting in such Lenders
receiving payment of a proportion of the aggregate amount of such Committed Loans or participations
and accrued interest thereon greater than its pro rata share thereof as provided
herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent
of such fact, and (b) purchase (for cash at face value) participations in the Committed Loans and
subparticipations in L/C Obligations and Swing Line Loans of the other Lenders, or make such other
adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on
their respective Committed Loans and other amounts owing them, provided that:
(i) if any such participations or subparticipations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the extent of such
recovery, without interest; and
(ii) the provisions of this Section shall not be construed to apply to (x) any payment
made by the Borrower pursuant to and in accordance with the express terms of this Agreement
or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Committed Loans or subparticipations in L/C Obligations or Swing
Line Loans to any assignee or participant, other than to the Borrower or any Subsidiary
thereof (as to which the provisions of this Section shall apply).
Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of such Loan Party in the
amount of such participation.
2.14 Increase in Commitments.
(a) Request for Increase. Provided there exists no Default, without the consent of
the Lenders and upon notice to the Administrative Agent (which shall promptly notify the
49
Lenders),
the Borrower may from time to time, request an increase in the Aggregate Commitments (as
determined by the Borrower but subject to the approval of the Administrative Agent (such approval
not to be unreasonably withheld or delayed)) by an amount that will not cause the Aggregate
Commitments to be greater than the sum of (i) the Aggregate Commitments on the Closing Date, plus
(ii) $250,000,000; provided that any such request for an increase shall be in a minimum
amount of $5,000,000. At the time of sending such notice, the Borrower may request all or part of
such increase from the existing Lenders and if it does so, shall specify (in consultation with the
Administrative Agent) the time period
within which each Lender is requested to respond (which shall in no event be less than ten
Business Days from the date of delivery of such notice to the Lenders).
(b) Lender Elections to Increase. Each Lender shall notify the Administrative Agent
within such time period whether or not it agrees to increase its Commitment and, if so, whether by
an amount equal to, greater than, or less than its Applicable Percentage of such requested
increase. Any Lender not responding within such time period shall be deemed to have declined to
increase its Commitment.
(c) Notification by Administrative Agent; Additional Lenders. The Administrative
Agent shall notify the Borrower and each Lender of the Lenders responses to each request made
hereunder. To achieve the full amount of a requested increase and subject to the approval of the
Administrative Agent, the L/C Issuer and the Swing Line Lender (which approvals shall not be
unreasonably withheld or delayed), the Borrower may also invite additional Eligible Assignees to
become Lenders pursuant to a joinder agreement in form and substance reasonably satisfactory to
the Administrative Agent and its counsel. It shall not be a condition to obtaining an increase in
the Aggregate Commitments that the full amount of such increase requested by the Borrower be
approved by the Lenders or any additional Eligible Assignees. If less than the full amount of the
increase requested by the Borrower is approved by the Lenders and any additional Eligible
Assignee, the Borrower may, at its option, accept the amount of the increase so approved, or the
Borrower may withdraw its request for such increase.
(d) Effective Date and Allocations. If the Aggregate Commitments are increased in
accordance with this Section, the Administrative Agent and the Borrower shall determine the
effective date (the Increase Effective Date) and the final allocation of such increase.
The Administrative Agent shall promptly notify the Borrower and the Lenders of the final amount
and allocation of such increase and the Increase Effective Date.
(e) Conditions to Effectiveness of Increase. As a condition precedent to such
increase, the Borrower shall deliver to the Administrative Agent a certificate of each Loan Party
dated as of the Increase Effective Date (in sufficient copies for each Lender) signed by a
Responsible Officer of such Loan Party (i) certifying and attaching the resolutions adopted by
such Loan Party approving or consenting to such increase, and (ii) in the case of the Borrower,
certifying that, before and after giving effect to such increase, (A) the representations and
warranties contained in Article V and the other Loan Documents are true and correct in all
material respects on and as of the Increase Effective Date, except to the extent that such
representations and warranties specifically refer to an earlier date, in which case they are true
and correct as of such earlier date, and except that for purposes of this Section 2.14,
the
50
representations and warranties contained in subsection (a) of Section 5.05
shall be deemed to refer to the most recent statements furnished pursuant to clauses (a)
and (b) of Section 6.01, and (B) no Default exists. The Borrower shall prepay any
Committed Loans outstanding on the Increase Effective Date (and pay any additional amounts
required pursuant to Section 3.05) to the extent necessary to keep the outstanding
Committed Loans ratable with any revised Applicable Percentages arising from any nonratable
increase in the Commitments under this Section.
(f) Conflicting Provisions. This Section shall supersede any provisions in
Section 2.13 or 10.01 to the contrary.
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
(a) Payments Free of Taxes. Any and all payments by or on account of any obligation
of the Borrower hereunder or under any other Loan Document shall be made free and clear of and
without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that
if the Borrower shall be required by applicable law to deduct any Indemnified Taxes (including any
Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent, Lender or L/C Issuer, as the case may be, receives
an amount equal to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall timely pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable law.
(b) Payment of Other Taxes by the Borrower. Without limiting the provisions of
subsection (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.
(c) Indemnification by the Borrower. The Borrower shall indemnify the Administrative
Agent, each Lender and the L/C Issuer, within 10 days after demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) paid by the Administrative
Agent, such Lender or the L/C Issuer, as the case may be, and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified
Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered to the Borrower
by a Lender or the L/C Issuer (with a copy to the Administrative Agent), or by the Administrative
Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive absent
manifest error.
(d) Evidence of Payments. As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to
the Administrative Agent the original or a certified copy of a receipt issued by
51
such Governmental
Authority evidencing such payment, a copy of the return reporting such payment or other evidence
of such payment reasonably satisfactory to the Administrative Agent.
(e) Status of Lenders. Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the Borrower is resident
for tax purposes, or any treaty to which such jurisdiction is a party, with respect to
payments hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to
the Administrative Agent), at the time or times prescribed by applicable law or reasonably
requested by the Borrower or the Administrative Agent, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate of withholding. In addition, any Lender, if requested by the
Borrower or the Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements.
Without limiting the generality of the foregoing, in the event that the Borrower is resident
for tax purposes in the United States, any Foreign Lender shall deliver to the Borrower and the
Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior
to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to
time thereafter upon the request of the Borrower or the Administrative Agent, but only if such
Foreign Lender is legally entitled to do so), whichever of the following is applicable:
(i) duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility
for benefits of an income tax treaty to which the United States is a party,
(ii) duly completed copies of Internal Revenue Service Form W-8ECI,
(iii) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that
such Foreign Lender is not (A) a bank within the meaning of Section 881(c)(3)(A) of the
Code, (B) a 10 percent shareholder of the Borrower within the meaning of Section
881(c)(3)(B) of the Code, or (C) a controlled foreign corporation described in Section
881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form
W-8BEN, or
(iv) any other form prescribed by applicable law as a basis for claiming exemption from
or a reduction in United States Federal withholding tax duly completed together with such
supplementary documentation as may be prescribed by applicable law to permit the Borrower to
determine the withholding or deduction required to be made.
(f) Treatment of Certain Refunds. If the Administrative Agent, any Lender or the L/C
Issuer determines, in its sole discretion, that it has received a refund of any Taxes or Other
Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower
has paid additional amounts pursuant to this Section, it shall pay to the Borrower an
52
amount equal
to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by
the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrative Agent, such Lender or the L/C
Issuer, as the case may be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that the Borrower, upon the
request of the Administrative Agent, such Lender or the L/C Issuer, agrees
to repay the amount paid over to the Borrower (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to the Administrative Agent, such Lender or the
L/C Issuer in the event the Administrative Agent, such Lender or the L/C Issuer is required to
repay such refund to such Governmental Authority. This subsection shall not be construed to
require the Administrative Agent, any Lender or the L/C Issuer to make available its tax returns
(or any other information relating to its taxes that it deems confidential) to the Borrower or any
other Person.
3.02 Illegality. If any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending
Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates
based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on
the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London
interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative
Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base
Rate Committed Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Borrower that the circumstances giving rise to such determination no
longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with
a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of
such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such
Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such
prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or
converted.
3.03 Inability to Determine Rates. If the Required Lenders determine that for any reason in
connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof
that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market
for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and
reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period
with respect to a proposed Eurodollar Rate Loan , or (c) the Eurodollar Rate for any requested
Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly
reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so
notify the Borrower and each Lender. Thereafter, the obligation of the Lenders to make or maintain
Eurodollar Rate Loans shall be suspended until the Administrative Agent (upon the instruction of
the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke
any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or,
failing that, will be deemed to have converted such request into a request for a Committed
Borrowing of Base Rate Loans in the amount specified therein.
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3.04 Increased Costs; Reserves on Eurodollar Rate Loans.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan,
insurance charge or similar requirement against assets of, deposits with or for the account
of, or credit extended or participated in by, any Lender (except any reserve requirement
contemplated by Section 3.04(e)) or the L/C Issuer;
(ii) subject any Lender or the L/C Issuer to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or
any Eurodollar Rate Loan made by it, or change the basis of taxation of payments to such
Lender or the L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes
covered by Section 3.01 and the imposition of, or any change in the rate of, any
Excluded Tax payable by such Lender or the L/C Issuer); or
(iii) impose on any Lender or the L/C Issuer or the London interbank market any other
condition, cost or expense affecting this Agreement or Eurodollar Rate Loans made by such
Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Rate Loan (or of maintaining its obligation to make any such Loan), or
to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining
any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer
hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or
the L/C Issuer, the Borrower will pay to such Lender or the L/C Issuer, as the case may be, such
additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be,
for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender or the L/C Issuer determines that any Change
in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such
Lenders or the L/C Issuers holding company, if any, regarding capital requirements has or would
have the effect of reducing the rate of return on such Lenders or the L/C Issuers capital or on
the capital of such Lenders or the L/C Issuers holding company, if any, as a consequence of this
Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of
Credit held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below
that which such Lender or the L/C Issuer or such Lenders or the L/C Issuers holding company
could have achieved but for such Change in Law (taking into consideration such Lenders or the L/C
Issuers policies and the policies of such Lenders or the L/C Issuers holding company with
respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the
L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender
or the L/C Issuer or such Lenders or the L/C Issuers holding company for any such reduction
suffered.
(c) Certificates for Reimbursement. A certificate of a Lender or the L/C Issuer
setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or
54
its
holding company, as the case may be, as specified in subsection (a) or (b) of this Section and
delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such
Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate
within ten (10) days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any Lender or the L/C Issuer
to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a
waiver of such Lenders or the L/C Issuers right to demand such compensation, provided
that the Borrower shall not be required to compensate a Lender or the L/C Issuer pursuant to the
foregoing provisions of this Section for any increased costs incurred or reductions suffered more
than nine months prior to the date that such Lender or the L/C Issuer, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and
of such Lenders or the L/C Issuers intention to claim compensation therefor (except that, if the
Change in Law giving rise to such increased costs or reductions is retroactive, then the
nine-month period referred to above shall be extended to include the period of retroactive effect
thereof).
(e) Reserves on Eurodollar Rate Loans. The Borrower shall pay to each Lender, as
long as such Lender shall be required to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency funds or deposits (currently known as Eurocurrency
liabilities), additional interest on the unpaid principal amount of each Eurodollar Rate Loan
equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by
such Lender in good faith, which determination shall be conclusive), which shall be due and
payable on each date on which interest is payable on such Loan, provided the Borrower
shall have received at least ten (10) days prior notice (with a copy to the Administrative Agent)
of such additional interest from such Lender. If a Lender fails to give notice ten (10) days
prior to the relevant Interest Payment Date, such additional interest shall be due and payable ten
(10) days from receipt of such notice.
3.05 Compensation for Losses. Upon demand of any Lender (with a copy to the Administrative Agent)
from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender
harmless from any loss, cost or expense incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate
Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary,
mandatory, automatic, by reason of acceleration, or otherwise);
(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a
Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or
in the amount notified by the Borrower; or
(c) any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest
Period therefor as a result of a request by the Borrower pursuant to Section 10.13;
including any loss of anticipated profits and any loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the
deposits from which such funds were obtained.
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For purposes of calculating amounts payable by the Borrower to the Lenders under this Section
3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the
Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank
eurodollar market for a comparable amount and for a comparable period, whether or not such
Eurodollar Rate Loan was in fact so funded.
3.06 Mitigation Obligations; Replacement of Lenders.
(a) Designation of a Different Lending Office. If any Lender requests compensation
under Section 3.04, or the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or
if any Lender gives a notice pursuant to Section 3.02, then such Lender shall use
reasonable efforts to designate a different Lending Office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in
the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable,
and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation under Section
3.04, or if any Lender delivers to the Borrower a notice pursuant to Section 3.02, or if the
Borrower is required to pay any additional amount to any Lender or any Governmental Authority for
the account of any Lender pursuant to Section 3.01, the Borrower may replace such Lender
in accordance with Section 10.13.
3.07 Survival. All of the Borrowers obligations under this Article III shall survive
termination of the Aggregate Commitments and repayment of all other Obligations hereunder.
ARTICLE IV.
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
4.01 Conditions of Initial Credit Extension. The obligation of the L/C Issuer and each Lender to
make its initial Credit Extension hereunder is subject to satisfaction of the following conditions
precedent:
(a) The Administrative Agents receipt of the following, each of which shall be originals or
telecopies (followed promptly by originals) unless otherwise specified, each properly executed by
a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of
certificates of governmental officials, a recent date before the Closing Date) and each in form
and substance satisfactory to the Administrative Agent and each of the Lenders:
(i) executed counterparts of this Agreement and the Guaranty, sufficient in number for
distribution to the Administrative Agent, each Lender and the Borrower;
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(ii) a Note executed by the Borrower in favor of each Lender requesting a Note;
(iii) the Pledge and Security Agreement duly executed by each Loan Party; together
with:
(A) certificates, if any, representing the Pledged Shares referred to in the
Pledge and Security Agreement accompanied by undated stock powers executed in blank,
(B) proper Financing Statements in form appropriate for filing under the UCC of
all jurisdictions that the Administrative Agent and Collateral Agent may deem
necessary in order to perfect the Liens created under the Pledge and Security
Agreement, covering the Collateral described in the Pledge and Security Agreement,
(C) completed requests for information, dated on or before the date of the
initial Credit Extension, listing all effective financing statements filed in the
jurisdictions referred to in clause (B) above that name any Loan Party as debtor,
together with copies of such other financing statements,
(D) evidence of the completion of all other actions, recordings and filings of
or with respect to the Pledge and Security Agreement that the Administrative Agent
or Collateral Agent may deem necessary in order to perfect the Liens created
thereby, and
(E) evidence that all other action that the Administrative Agent and Collateral
Agent may deem necessary or desirable in order to perfect the Liens created under
the Pledge and Security Agreement has been taken (including receipt of duly executed
payoff letters, UCC-3 termination statements and landlords and bailees waiver and
consent agreements);
(iv) deeds of trust, mortgages, leasehold deeds of trust and leasehold mortgages, in
substantially the form of Exhibit I (with such changes as may be reasonably
satisfactory to the Administrative Agent and Collateral Agent and their counsel to account
for local law matters) and covering substantially all of the operating assets of the
Borrower and its Subsidiaries owned on the Closing Date (together with the Assignments of
Leases and Rents referred to therein and each other mortgage delivered
pursuant to Section 6.13, in each case as amended, the Mortgages),
duly executed by the appropriate Loan Party, together with:
(A) evidence that counterparts of the Mortgages have been duly executed,
acknowledged and delivered and are in form suitable for filing or recording in all
filing or recording offices that the Administrative Agent and Collateral Agent may
deem necessary or desirable in order to create a valid first and subsisting Lien on
the property described therein in favor of the Collateral Agent for the benefit of
the Secured Parties and that all filing, documentary,
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stamp, intangible and
recording taxes and fees have been or will be paid upon recording,
(B) in respect of the Chico Plant a fully paid title insurance policy (the
Mortgage Policies) in form and substance, with endorsements and in amounts
reasonably acceptable to the Administrative Agent and Collateral Agent, issued,
coinsured and reinsured by title insurers reasonably acceptable to the
Administrative Agent and Collateral Agent, insuring the Mortgage in respect of such
property to be valid first and subsisting Liens on the property described therein,
free and clear of all defects (including, but not limited to, mechanics and
materialmens Liens) and encumbrances, excepting only Liens permitted under the Loan
Documents, and providing for such other affirmative insurance (including
endorsements for future advances under the Loan Documents and for mechanics and
materialmens Liens) and such coinsurance and direct access reinsurance as the
Administrative Agent may deem necessary or desirable, and
(C) evidence that all other action that the Administrative Agent and Collateral
Agent may deem necessary or desirable in order to create valid first and subsisting
Liens on the property described in the Mortgages has been taken;
(v) such certificates of resolutions or other action, incumbency certificates and/or
other certificates of Responsible Officers of each Loan Party as the Administrative Agent
may reasonably require evidencing the identity, authority and capacity of each Responsible
Officer thereof authorized to act as a Responsible Officer in connection with this Agreement
and the other Loan Documents to which such Loan Party is a party;
(vi) such documents and certifications as the Administrative Agent may reasonably
require to evidence that each Loan Party is duly organized or formed, and that each Loan
Party is validly existing, in good standing and qualified to engage in business in each
jurisdiction where its ownership, lease or operation of properties or the conduct of its
business requires such qualification;
(vii) a favorable opinion of Bracewell & Giuliani LLP, counsel to the Loan Parties,
addressed to the Administrative Agent and each Lender, as to the matters set forth in
Exhibit G and such other matters concerning the Loan Parties and the Loan Documents
as the Administrative Agent may reasonably request;
(viii) the Initial Financial Statements;
(ix) certificates or binders evidencing Loan Parties insurance in effect on the date
hereof naming the Collateral Agent as loss payee and additional insured;
(x) a certificate signed by a Responsible Officer of General Partner certifying (A)
that the conditions specified in Sections 4.02(a) and (b) have been
satisfied; (B) that there has been no event or circumstance since September 30, 2006 that
has had or could be reasonably expected to have, either individually or in the aggregate, a
Material Adverse Effect; and (C) a calculation of the Consolidated Leverage Ratio as of the
Closing Date demonstrating that such ratio does not exceed 5.0 to 1.0;
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(xi) a certificate attesting to the Solvency of the Loan Parties (taken as a whole)
after giving effect to the Acquisition and the Initial Public Offering, from the chief
financial officer, chief accounting officer, treasurer or controller of General Partner; and
(xii) such other assurances, certificates, documents, consents or opinions as the
Administrative Agent, the L/C Issuer, the Swing Line Lender or the Required Lenders
reasonably may require.
(b) (i) All fees required to be paid to the Administrative Agent, the Syndication Agent and
the Arrangers on or before the Closing Date shall have been paid and (ii) all fees required to be
paid to the Lenders on or before the Closing Date shall have been paid.
(c) Unless waived by the Administrative Agent, the Borrower shall have paid all fees, charges
and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by
the Administrative Agent) to the extent invoiced prior to or on the Closing Date, plus such
additional amounts of such fees, charges and disbursements as shall constitute its reasonable
estimate of such fees, charges and disbursements incurred or to be incurred by it through the
closing proceedings (provided that such estimate shall not thereafter preclude a final settling of
accounts between the Borrower and the Administrative Agent).
(d) The Intercreditor Agreement shall have been duly executed and delivered by each party
thereto, and shall be in full force and effect.
(e) The corporate and capital structure of the Borrower shall be as disclosed in the
Registration Statement.
(f) The consummation of the Initial Public Offering shall have occurred on substantially the
terms as contained in the Registration Statement.
(g) The Borrower shall have received sufficient proceeds from the Initial Public Offering to
finance that portion of the Acquisition not funded by the use of proceeds from this Agreement.
(h) (i) The Borrower has received all governmental, shareholder and third party consents and
approvals necessary to consummate the Initial Public Offering, which consents and approvals are in
full force and effect, (ii) no order, decree, judgment, ruling or injunction exists which
restrains the consummation of the Initial Public Offering or the transactions
contemplated by this Agreement, and (iii) there is no pending, or to the knowledge of the
Borrower, threatened, action, suit, investigation or proceeding which seeks to restrain or affect
the Initial Public Offering, or which, if adversely determined, could materially and adversely
affect the ability of the Borrower to consummate the Initial Public Offering.
(i) Concurrently with the consummation of the Initial Public Offering, (i) all outstanding
Intercompany Indebtedness shall have been repaid or forgiven and (ii) that portion of the loans
made under the Targa Credit Agreement with respect to the assets owned by Targa North Texas and
acquired in the Acquisition shall have been repaid and arrangements
59
satisfactory to the
Administrative Agent shall have been made for the release of the Liens securing same.
(j) The Closing Date shall have occurred on or before March 15, 2007.
Without limiting the generality of the provisions of Section 9.04, for purposes of
determining compliance with the conditions specified in this Section 4.01, each Lender that
has signed this Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
4.02 Conditions to all Credit Extensions. The obligation of each Lender to honor any Request for
Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed
Loans to the other Type, or a continuation of Eurodollar Rate Loans) is subject to the following
conditions precedent:
(a) The representations and warranties of the Borrower and each other Loan Party contained in
Article V or any other Loan Document, or which are contained in any document furnished at
any time under or in connection herewith or therewith, shall be true and correct in all material
respects on and as of the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which case they shall be
true and correct as of such earlier date, and except that for purposes of this Section
4.02, the representations and warranties contained in subsection (a) of Section
5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses
(a) and (b) of Section 6.01.
(b) No Default shall exist, or would result from such proposed Credit Extension or from the
application of the proceeds thereof.
(c) The Administrative Agent and, if applicable, the L/C Issuer or the Swing Line Lender
shall have received a Request for Credit Extension in accordance with the requirements hereof.
Each Request for Credit Extension (other than a Committed Loan Notice requesting only a
conversion of Committed Loans to the other Type or a continuation of Eurodollar Rate Loans)
submitted by the Borrower shall be deemed to be a representation and warranty that the conditions
specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of
the applicable Credit Extension.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent and the Lenders that:
5.01 Existence, Qualification and Power; Compliance with Laws. Each Loan Party and each Subsidiary
thereof (a) is duly organized or formed, validly existing and, as applicable, in good standing
under the Laws of the jurisdiction of its incorporation or organization, (b) has
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all requisite
power and authority and all requisite governmental licenses, authorizations, consents and approvals
to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its
obligations under the Loan Documents to which it is a party, (c) is duly qualified and is licensed
and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease
or operation of properties or the conduct of its business requires such qualification or license,
and (d) is in compliance with all Laws (excluding Environmental Laws that are the subject of
Section 5.09, federal, state and local income tax Laws that are the subject of Section
5.11 and ERISA that is the subject of Section 5.12); except in each case referred to in
clause (b)(i), (c) or (d), to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect.
5.02 Authorization; No Contravention. The execution, delivery and performance by each Loan Party
of each Loan Document to which such Person is party, have been duly authorized by all necessary
corporate or other organizational action, and do not and will not (a) contravene the terms of any
of such Persons Organization Documents; (b) conflict with or result in any breach or contravention
of, or the creation of any Lien under (other than Liens permitted by the Loan Documents), or
require any payment to be made under (i) any Contractual Obligation (other than the Loan Documents)
to which such Person is a party or affecting such Person or the properties of such Person or any of
its Subsidiaries or (ii) any material order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is subject; or (c) violate any
material Law. Each Loan Party is in compliance with all Contractual Obligations referred to in
clause (b)(i), except to the extent that failure to do so could not reasonably be expected to have
a Material Adverse Effect.
5.03 Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or
other action by, or notice to, or filing with, any Governmental Authority or any other Person is
necessary or required in connection with (a) the execution, delivery or performance by, or
enforcement against, any Loan Party of this Agreement or any other Loan Document, (b) the grant by
any Loan Party of the Liens granted by it pursuant to the Security Documents, (c) the perfection or
maintenance of the Liens created under the Security Documents (including the first priority nature
thereof) or (d) the exercise by the Administrative Agent or any Lender of its rights under the Loan
Documents or the remedies in respect of the Collateral pursuant to the Security Documents, except
for (i) filings necessary to perfect and maintain the perfection of the Liens on the Collateral
granted by the Loan Parties in favor of the Lenders, (ii) the authorizations, approvals, actions,
notices and filings which have
been duly obtained, taken, given or made and are in full force and effect and (iii) those
approvals, consents, exemptions, authorizations or other action, notices or filings, the failure of
which to obtain or make could not reasonably be expected to have a Material Adverse Effect.
5.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto.
This Agreement constitutes, and each other Loan Document when so delivered will constitute, a
legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is
party thereto in accordance with its terms, except as such enforceability may be limited by Debtor
Relief Laws and by general principles of equity.
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5.05 Financial Statements; No Material Adverse Effect.
(a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii)
fairly present in all material respects the financial condition of the predecessor business of the
Borrower and its Subsidiaries as of the date thereof and their results of operations for the
period covered thereby in accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and
other liabilities, direct or contingent, of the predecessor business of the Borrower and its
Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and
Indebtedness that would be required to be disclosed in Consolidated financial statements of the
Borrower or the footnotes thereto prepared in accordance with GAAP.
(b) The unaudited pro forma Consolidated financial statements of the Borrower and its
Consolidated Subsidiaries as of September 30, 2006 (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise expressly noted
therein, and (ii) fairly present in all material respects the Consolidated pro forma financial
condition of the Borrower and its Consolidated Subsidiaries (after giving effect to the
Acquisition) as of the date thereof and their Consolidated pro forma results of operations for the
period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes
and to normal year-end audit adjustments. As of the Closing Date, all material indebtedness and
other liabilities, direct or contingent, of the Borrower and its Consolidated Subsidiaries as of
the date of such financial statements, including liabilities for taxes, material commitments and
Indebtedness, are disclosed in the Initial Financial Statements.
(c) Since September 30, 2006, there has been no event or circumstance, either individually or
in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.
5.06 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the
Borrower, threatened in writing, at law, in equity, in arbitration or before any Governmental
Authority, against any Loan Party or any Subsidiary thereof or against any of their properties or
revenues, or that is contemplated by any Loan Party against any other Person that (a) purport to
affect or pertain to this Agreement or any other Loan Document, or any of the transactions
contemplated hereby, or (b) either individually or in the aggregate, if determined adversely,
could reasonably be expected to have a Material Adverse Effect.
5.07 No Default. Neither any Loan Party nor any Restricted Subsidiary thereof is in default under
or with respect to any Contractual Obligation that could, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. No Default has occurred and is
continuing or would result from the consummation of the transactions contemplated by this Agreement
or any other Loan Document.
5.08 Ownership of Property; Liens. Each Loan Party and each Restricted Subsidiary thereof has (or
on the Closing Date, will have) (i) good and defensible fee simple title to or valid leasehold
interests, or valid easements or other property interests in, all of its real property and
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good and
valid title to all of its personal property necessary in the ordinary conduct of its business,
except for such defects in title as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The property of the Loan Parties and any of their
Restricted Subsidiaries is subject to no Liens other than Liens permitted under Section
7.01. No material default exists under (i) any lease on any property on which a Mortgage is
granted, or (ii) any other lease, to the extent such default would reasonably be expected to have a
Material Adverse Effect. All of the plants, offices, or facilities and other tangible assets
owned, leased or used by any Loan Party or any Restricted Subsidiary thereof in the conduct of
their respective businesses are (a) insured to the extent and in a manner required by Section
6.07, (b) structurally sound with no known defects which have or could reasonably be expected
to have a Material Adverse Effect, (c) in good operating condition and repair, subject to ordinary
wear and tear and except to the extent failure could not reasonably be expected to have a Material
Adverse Effect, (d) not in need of maintenance or repair except for ordinary, routine maintenance
and repair the cost of which is immaterial and except to the extent failure to so maintain and
repair could not reasonably be expected to have a Material Adverse Effect, (e) sufficient for the
operation of the businesses of such Loan Party and its Restricted Subsidiaries as currently
conducted, except to the extent failure to be so sufficient could not reasonably be expected to
have a Material Adverse Effect and (f) in conformity with all applicable laws, ordinances, orders,
regulations and other requirements (including applicable zoning, environmental, motor vehicle
safety, occupational safety and health laws and regulations) relating thereto, except where the
failure to conform could not reasonably be expected to have a Material Adverse Effect.
5.09 Environmental Compliance(a) . The Borrower and its Restricted Subsidiaries periodically
conduct in the ordinary course of business a review of the effect of existing Environmental Laws
and claims
alleging potential liability or responsibility for violation of any Environmental Law on their
respective businesses, operations and properties, and as a result thereof the Borrower has
reasonably concluded that such Environmental Laws and claims could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
5.10 Insurance. The properties of each Loan Party and each Subsidiary thereof are insured with
financially sound and reputable insurance companies not Affiliates of any Loan Party, in such
amounts, with such deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where the applicable Loan
Party or Subsidiary operates.
5.11 Taxes. Except as could not, either individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect, each Loan Party and each Restricted Subsidiary thereof has
filed all federal, state and other tax returns and reports required to be filed, and have paid all
federal, state and other taxes, assessments, fees and other governmental charges levied or imposed
upon them or their properties, income or assets otherwise due and payable, except those which are
being contested in good faith by appropriate proceedings diligently conducted and for which
adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment
against any Loan Party or any Restricted Subsidiary thereof that would, if made, have a Material
Adverse Effect. No Loan Party nor any Restricted Subsidiary thereof is party to any tax sharing
agreement, except as provided in the Borrowers Partnership Agreement or in the Omnibus Agreement.
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5.12 ERISA Compliance.
(a) On the Closing Date, the Borrower has no Plans. Each Plan from time to time in effect
shall be in compliance in all material respects with the applicable provisions of ERISA, the Code
and other Federal or state Laws. Each such Plan that is intended to qualify under Section 401(a)
of the Code has received a favorable determination letter from the IRS or an application for such
a letter is currently being processed by the IRS with respect thereto and, to the best knowledge
of the Borrower, nothing has occurred which would prevent, or cause the loss of, such
qualification. Each Loan Party and each ERISA Affiliate have made all required contributions to
each Plan subject to Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.
(b) There are no pending or, to the best knowledge of the Borrower, threatened claims,
actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could
reasonably be expected to have a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to any Plan that has
resulted or could reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan
has any Unfunded Pension Liability; (iii) no Loan Party nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension
Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) no Loan Party
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event
has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) no
Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject to Section
4069 or 4212(c) of ERISA.
5.13 Subsidiaries; Equity Interests; Taxpayer Identification Number. Other than those specifically
disclosed in Part (a) of Schedule 5.13 or as disclosed from time to time pursuant to
Sections 6.12, the Borrower has no Subsidiaries and all of the outstanding Equity Interests
in the Borrowers Subsidiaries have been validly issued, are fully paid and nonassessable and are
owned in the amounts so disclosed free and clear of all Liens other than the Liens created pursuant
to the Loan Documents. Set forth on Part (b) of Schedule 5.13, as of the Closing Date, as
supplemented by each report required to be delivered pursuant to Section 6.02(k), as of the
date of such report is: (i) a complete and accurate list of all Loan Parties showing as of such
date the jurisdiction of its formation, the address of its principal place of business, its U.S.
taxpayer identification number or, in the case of any non-U.S. Loan Party that does not have a U.S.
taxpayer identification number, its unique identification number issued to it by the jurisdiction
of its incorporation, and, for the preceding 5 years, any other jurisdiction of organization and
any other name (including any trade or fictitious name) used by such Loan Party, and (ii) a
complete and accurate list of the Investments of the type permitted by Sections 7.02(d),
(i) or (j) and Investments in Partially Owned Operating Companies. All of the
outstanding Equity Interests in the Borrower have been validly issued, are fully paid and
nonassessable, except with respect to additional contributions required to be made by General
Partner pursuant to the Borrowers Partnership Agreement or applicable Law.
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5.14 Margin Regulations; Investment Company Act.
(a) No Loan Party is engaged or will engage, principally or as one of its important
activities, in the business of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying
margin stock.
(b) No Loan Party nor any Person Controlling any Loan Party nor any Subsidiary thereof is or
is required to be registered as an investment company under the Investment Company Act of 1940.
5.15 Disclosure. Each Loan Party has disclosed to the Administrative Agent and the Lenders all
matters required to be disclosed pursuant to Section 6.03. No report, financial statement,
certificate or other written information furnished by or on behalf of any Loan Party to the
Administrative
Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of
this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified
or supplemented by other information so furnished) when taken as a whole contains any material
misstatement of fact or omits to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading; provided
that, with respect to projected financial information, the Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be reasonable at the time
of preparation; provided, further, that, with respect to pro forma financial
information, the Borrower represents only that such information was prepared in good faith and
reflects, in all material respects, such pro forma financial information is in accordance with
assumptions and requirements of GAAP for pro forma presentation and based upon such other
assumptions that are believed to be reasonable at the time of preparation and, to the extent
material, are disclosed as part of such pro forma financial information.
5.16 Compliance with Laws. Each Loan Party and each Restricted Subsidiary thereof is in compliance
in all material respects with the requirements of all Laws (except for Environmental Laws that are
the subject of Section 5.09, federal and state income tax Laws that are the subject of
Section 5.11 and ERISA that is the subject of Section 5.12) and all orders, writs,
injunctions and decrees applicable to it or to its properties, except in such instances in which
(a) such requirement of Law or order, writ, injunction or decree is being contested in good faith
by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either
individually or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
5.17 Intellectual Property; Licenses, Etc. Each Loan Party and each Restricted Subsidiary thereof
own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights,
patents, patent rights, franchises, licenses and other intellectual property rights (collectively,
IP Rights) that are reasonably necessary for the operation of their respective businesses as
currently conducted, and, without conflict with the rights of any other Person, except to the
extent such conflict, either individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect. To the best knowledge of the Borrower, no slogan or other
advertising device, product, process, method, substance, part or other material now employed, or
now contemplated to be employed, by any Loan Party or any
65
Restricted Subsidiary thereof infringes
upon any rights held by any other Person, except to the extent such conflicts, either individually
or in the aggregate, which could not reasonably be expected to have a Material Adverse Effect. No
claim or litigation regarding any of the foregoing is pending or, to the best knowledge of the
Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
5.18 Labor Disputes and Acts of God. Neither the business nor the properties of any Loan
Party or any Restricted Subsidiary thereof has been affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of
the public enemy or other casualty
(whether or not covered by insurance), that either individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect.
5.19 Solvency. Upon giving effect to the execution of this Agreement and the other Loan
Documents by each Loan Party and the consummation of the transactions contemplated hereby and
thereby, each Loan Party will be Solvent.
5.20 Credit Arrangements. No Affiliate of any Loan Party is party to or subject to any credit
agreement, loan agreement, indenture, purchase agreement, guaranty or other arrangement providing
for or otherwise relating to any Indebtedness or any extension of credit (or commitment for any
extension of credit) that creates by a covenant of such Affiliate or otherwise, any limitation or
restriction of any action of any Loan Party or any obligation that any Loan Party be caused to take
any action.
5.21 Real Property. As of the Closing Date, Schedule 5.21 sets forth a description of each
material fee owned property owned by any Loan Party and each material parcel of real property
leased by any Loan Party (in both cases, other than the realty associated with the pipelines and
gathering systems and other than immaterial real property including, but not limited to, compressor
sites, pump stations and meter sites). All material pipelines, gathering systems and the realty
associated therewith owned by the Loan Parties as of the Closing Date are described in the
Registration Statement. The Borrower shall provide updates to Schedule 5.21 upon the
reasonable request of the Administrative Agent.
5.22 Labor Matters. There are no collective bargaining agreements or Multiemployer Plans covering
the employees of any Loan Party or any Subsidiary thereof as of the Closing Date and except as
could not reasonably be expected to have a Material Adverse Effect, no Loan Party nor any
Subsidiary thereof has suffered any strikes, walkouts, work stoppages or other material labor
difficulty within the last five years.
5.23 Security Documents. The provisions of the Security Documents are effective to create in favor
of the Collateral Agent for the benefit of the Secured Parties a legal, valid and enforceable first
priority Lien (subject to Liens permitted by Section 7.01) on all right, title and interest
of the respective Loan Parties in the Collateral described therein. Except for filings completed
prior to the Closing Date and as contemplated hereby and by the Collateral Documents from time to
time, no filing or other action will be necessary to perfect or protect such Liens.
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ARTICLE VI.
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the
Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01,
6.02, and 6.03) cause each Restricted Subsidiary to:
6.01 Financial Statements. Deliver to the Administrative Agent for further distribution to each
Lender:
(a) as soon as available, but in any event within 30 days after the date on which the Borrower
is required under Securities Laws to file a Form 10-K annual report for each fiscal year of the
Borrower (commencing with the fiscal year ended December 31, 2007), a Consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year,
and the related Consolidated and consolidating statements of income or operations, partners equity
and cash flows for such fiscal year, setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such
consolidating statements to be for the Guarantors on a combined basis and the Borrowers
Subsidiaries that are not Guarantors on a combined basis and such Consolidated statements to be
audited and accompanied by a report and opinion of an independent certified public accountant of
nationally recognized standing reasonably acceptable to the Administrative Agent, which report and
opinion shall be prepared in accordance with generally accepted auditing standards and applicable
Securities Laws 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, but in any event within 30 days after the date on which the Borrower
is required under Securities Laws to file a Form 10-Q quarterly reports for each of the first three
fiscal quarters of each fiscal year of the Borrower (commencing with the fiscal quarter ended March
31, 2007), a Consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as
at the end of such fiscal quarter, and the related Consolidated and consolidating statements of
income or operations, partners equity and cash flows for such fiscal quarter and for the portion
of the Borrowers fiscal year then ended, setting forth in each case in comparative form the
figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding
portion of the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP,
such consolidating statements to be for the Guarantors on a combined basis and the Borrowers
Subsidiaries that are not Guarantors on a combined basis and such Consolidated statements to be
certified by the chief financial officer, chief accounting officer, treasurer or controller of the
Borrower as fairly presenting the financial condition, results of operations, partners equity and
cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal
year-end audit adjustments and the absence of footnotes.
6.02 Certificates; Other Information. Deliver to the Administrative Agent for further
distribution to each Lender:
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(a) no later than three (3) days after the delivery of the financial statements referred to in
Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer
of General Partner and stating that such officer has caused this Agreement to be reviewed and has
no knowledge of any Default by the Borrower in the performance or observance of any of the
provisions of this Agreement, during, or at the end of, as applicable, such fiscal year or fiscal
quarter, or, if such officer has such knowledge, specifying each Default and the nature thereof,
showing compliance by the Borrower as of the date of such statement with the financial covenants
set forth in Article VII, and calculations for such financial covenants shall be included,
and the other applicable covenants set forth in Exhibit D;
(b) promptly after any request by the Administrative Agent or any Lender, copies of any
detailed audit reports, management letters or recommendations submitted to the board of directors
(or the audit committee of the board of directors) of the Borrower by independent accountants in
connection with the accounts or books of the Borrower or any Subsidiary, or any audit of any of
them;
(c) promptly after the same are available, copies of each annual report, proxy or financial
statement or other report or communication sent to the partners of the Borrower, and copies of all
annual, regular, periodic and special reports and registration statements which the Borrower may
file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act
of 1934, or with any national securities exchange, and in any case not otherwise required to be
delivered to the Administrative Agent pursuant hereto;
(d) promptly, and in any event within five Business Days after receipt thereof by any Loan
Party or any Subsidiary thereof, copies of each notice or other correspondence received from the
SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or
possible investigation or other inquiry by such agency regarding financial or other operational
results of any Loan Party or any Subsidiary thereof;
(e) promptly after the furnishing thereof, copies of any statement or report furnished to any
holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the terms of any
indenture, loan or credit or similar agreement and not otherwise required to be furnished to the
Lenders pursuant to Section 6.01 or any other clause of this Section 6.02;
(f) within five Business Days after (i) a Responsible Officers receipt of any written notice
of any violation by any Loan Party of any Environmental Law, (ii) a Responsible Officers
obtaining knowledge that any Governmental Authority has asserted that any Loan Party is not in
compliance with any Environmental Law or that any Governmental Authority is investigating any Loan
Partys compliance therewith, (iii) a Responsible Officers receipt of any written notice from any
Governmental Authority or other Person or otherwise obtaining knowledge that any Loan Party is or
may be liable to any Person as a result of the Release or threatened Release of any Contaminant or
that any Loan Party is subject to investigation by any Governmental Authority evaluating whether
any remedial action is needed to respond to the Release or threatened Release of any Contaminant,
or (iv) a Responsible Officers receipt of any written notice of the imposition of any
Environmental Lien against any property of any Loan Party which in any event under clause (i),
(ii), (iii) or (iv) preceding could reasonably be expected to result in, or has resulted in,
liability, either individually or in the aggregate, in excess
68
of $10,000,000 or otherwise could reasonably be expected to have, or has resulted in, a
Material Adverse Effect, copies of such notice or a written notice setting forth the matters in
(ii) above;
(g) not less than 3 Business Days prior to any change in any Loan Partys (i) name as it
appears in the jurisdiction of its formation, incorporation, or organization, (ii) type of entity,
or (iii) organizational identification number, written notice thereof;
(h) upon the Administrative Agents request, or, in the event that such filing reflects a
significant material adverse change with respect to the matters covered thereby, within three
Business Days after the filing thereof with the PBGC, the DOL, or the IRS, as applicable, copies of
the following: (i) each annual report (form 5500 series), including Schedule B thereto, filed with
the PBGC, the DOL, or the IRS with respect to each Plan; (ii) a copy of each funding waiver request
filed with the PBGC, the DOL, or the IRS with respect to any Plan and all communications received
by any Loan Party or any ERISA Affiliate from the PBGC, the DOL, or the IRS with respect to such
request; and (iii) a copy of each other filing or notice filed with the PBGC, the DOL, or the IRS,
with respect to each Plan by any Loan Party or any ERISA Affiliate;
(i) as soon as available, but in any event within 90 days after the end of each fiscal year, a
business and financial plan for the Borrower (in form reasonably satisfactory to Administrative
Agent and based on assumptions believed to be reasonable in light of the circumstances at the time
when made), prepared or caused to be prepared by a Responsible Officer of General Partner, setting
forth for the then calendar year, financial projections, budgets and hedging schedules for the
Borrower and its Consolidated Subsidiaries;
(j) not less than one Business Day prior to, and as a condition to, (i) the making of a
Material Acquisition or Disposition, (ii) the commencement of any Material Project, (iii) the
designation of any Subsidiary as a Restricted Subsidiary (other than an Immaterial Subsidiary) or
an Unrestricted Subsidiary (including at the time of formation or acquisition of such Subsidiary),
or (iv) to the extent exceeding (in the aggregate with any related transactions) $25,000,000, the
making of any Investment permitted under Section 7.02 (d), (i) or (j), or
the incurrence of any Indebtedness permitted under Section 7.03(f) or (o), a
certificate from a Responsible Officer of General Partner demonstrating compliance or pro forma
compliance, as the case may be, with the provisions of Section 7.14 and/or Section
7.15 and containing calculations in such detail as may be reasonably required by the
Administrative Agent;
(k) at the time of the delivery of each Compliance Certificate under Section 6.02(a),
a report containing a description of all changes in the information included in Part (b) of
Schedule 5.13 as may be necessary for Part (b) of Schedule 5.13 to be accurate and
complete as of the date of such report; and
(l) promptly, such additional information regarding the business, financial or corporate
affairs of the Borrower or any Subsidiary, or compliance with the terms of the Loan Documents, as
the Administrative Agent or any Lender may from time to time reasonably request.
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Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(a) (to the extent any such documents are included in materials otherwise filed
with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on
the Borrowers website on the Internet at the website address listed on Schedule 10.02; or
(ii) on which such documents are posted on the Borrowers behalf on an Internet or intranet
website, if any, to which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative Agent); provided
that: (I) the Borrower shall deliver paper copies of such documents to the Administrative Agent or
any Lender that requests the Borrower to deliver such paper copies until a written request to cease
delivering paper copies is given by the Administrative Agent or such Lender and (II) the Borrower
shall notify the Administrative Agent (by telecopier or electronic mail) of the posting of any such
documents and provide to the Administrative Agent by electronic mail electronic versions
(i.e., soft copies) of such documents. The Administrative Agent shall have no obligation
to request the delivery or to maintain copies of the documents referred to above, and in any event
shall have no responsibility to monitor compliance by the Borrower with any such request for
delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining
its copies of such documents.
The Borrower hereby acknowledges that (a) the Administrative Agent, the Syndication Agent
and/or the Arrangers will make available to the Lenders and the L/C Issuer materials and/or
information provided by or on behalf of the Borrower hereunder (collectively, the Borrower
Materials) by posting the Borrower Materials on IntraLinks or another similar electronic
system (the Platform) and (b) certain of the Lenders may be public-side Lenders (i.e.,
Lenders that do not wish to receive material non-public information with respect to the Borrower or
its securities) (each, a Public Lender). The Borrower hereby agrees that so long as the
Borrower is the issuer of any outstanding debt or equity securities that are registered or issued
pursuant to a private offering or is actively contemplating issuing any such securities (w) all the
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 the Borrower Materials PUBLIC, the Borrower
shall be deemed to have authorized the Administrative Agent, the Syndication Agent, the Arrangers,
the L/C Issuer and the Lenders to treat such Borrower Materials as not containing any material
non-public information (although it may be sensitive and proprietary) with respect to the Borrower
or its securities for purposes of United States Federal and state securities laws; (y) all the
Borrower Materials marked PUBLIC are permitted to be made available through a portion of the
Platform designated Public Investor; and (z) the Administrative Agent, the Syndication Agent and
the Arrangers shall be entitled to treat any the Borrower Materials that are not marked PUBLIC as
being suitable only for posting on a portion of the Platform not designated Public Investor.
6.03 Notices. Promptly notify the Administrative Agent:
(a) of the occurrence of any Default;
(b) to the extent not otherwise disclosed pursuant to Section 6.02(c), of any matter
that has resulted or could reasonably be expected to result in a Material Adverse Effect,
70
including (i) breach or non-performance of, or any default under, a Contractual Obligation of the
Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension,
or any material development therein, between the Borrower or any Subsidiary and any Governmental
Authority; or (iii) the commencement of, or any material development in, any litigation or
proceeding by any Person not a Governmental Authority affecting the Borrower or any Subsidiary;
(c) of the occurrence of any ERISA Event;
(d) of any material change in accounting policies or financial reporting practices by the
Borrower or any Subsidiary; and
(e) of the occurrence of any Disposition of property or assets, any sale of Equity Interests,
any incurrence or issuance of any Indebtedness or receipt of any Extraordinary Receipt, in each
case with respect to which the Borrower is required to make a mandatory prepayment pursuant to
Section 2.05.
Each notice pursuant to this Section 6.03 shall be accompanied by a statement of a
Responsible Officer of General Partner setting forth details of the occurrence referred to therein
and stating what action the Borrower has taken and proposes to take with respect thereto. Each
notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions
of this Agreement and any other Loan Document that have been breached, if any.
6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable, all its
obligations and liabilities (including all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets and all lawful claims which, if unpaid, would by law
become a Lien upon its property) except in each case, to the extent the failure to pay or discharge
the same could not reasonably be expected to have a Material Adverse Effect.
6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and effect its
legal existence and good standing under the Laws of the jurisdiction of its organization except in
a transaction permitted by Section 7.05 or 7.06; (b) take all reasonable action to
maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered
patents, trademarks, trade names and service marks, the non-preservation of which could reasonably
be expected to have a Material Adverse Effect.
6.06 Maintenance of Properties. Except where the failure to do so could not reasonably be expected
to have a Material Adverse Effect, (a) maintain, preserve and protect all of its material
properties and equipment necessary in the operation of its business in good working order and
condition, ordinary wear and tear
excepted; (b) make all necessary repairs thereto and renewals and replacements thereof; and (c) use
the standard of care typical in the industry in the operation and maintenance of its facilities.
6.07 Maintenance of Insurance. Maintain with financially sound and reputable insurance companies
not Affiliates of any Loan Party, insurance with respect to its properties and
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business against
loss or damage of the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under similar circumstances
by such other Persons and providing (a) for payment of losses to the Collateral Agent as its
interests may appear, (b) that such policies may not be canceled or reduced or affected in any
material manner for any reason without 30 days prior notice to the Collateral Agent (or 10 days
prior notice in the case of a failure to pay premiums), and (c) to provide for any other matters
specified in any applicable Security Document or which the Administrative Agent may reasonably
require. Each Loan Party will maintain any additional insurance coverage as described in the
respective Security Documents. The Borrower shall maintain, or cause to be maintained, with an
insurer reasonably acceptable to the Administrative Agent, flood insurance sufficient for Lenders
to comply with Regulation H of the Board of Governors of the Federal Reserve System. Each Loan
Party shall at all times maintain insurance against business interruption and its liability for
injury to persons or property in accordance with Schedule 6.07, which insurance shall be by
financially sound and reputable insurers.
6.08 Compliance with Laws. Comply in all material respects with the requirements of all Laws and
all orders, writs, injunctions and decrees applicable to it or to its business or property, except
in such instances in which (a) such requirement of Law or order, writ, injunction or decree is
being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure
to comply therewith could not reasonably be expected to have a Material Adverse Effect.
6.09 Books and Records. Maintain proper books of record and account, in which entries in
conformity with GAAP consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Borrower and such Subsidiary, as the case may be.
6.10 Inspection Rights. Permit representatives and independent contractors of the Administrative
Agent and each Lender to visit and inspect any of its properties, to examine its corporate,
financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its
affairs, finances and accounts with its directors, officers, and independent public accountants,
and at such reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the Borrower; provided, however, that,
excluding any such visits and inspections during the continuation of an Event of Default, only the
Administrative Agent on behalf of the Lenders may exercise rights of the Administrative Agent and
the Lenders under this Section 6.10 and the Administrative Agent shall not exercise such rights
more often than one (1)
time during any calendar year absent the existence of an Event of Default and only one (1) such
time shall be at the Borrowers expense; provided, further that when an Event of
Default exists the Administrative Agent or any Lender (or any of their respective representatives
or independent contractors) may do any of the foregoing at the expense of the Borrower at any time
during normal business hours and without advance notice.
6.11 Use of Proceeds. On the Closing Date, use the proceeds of this Agreement to (i) fund a
portion of the Acquisition and related expenses, (ii) repay Intercompany Indebtedness, and (iii)
pay fees and expenses incurred pursuant to this Agreement and the Initial Public Offering.
Thereafter, the proceeds of this Agreement shall be used for working capital including
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the issuance
of Letters of Credit, capital expenditures, and for general corporate purposes not in contravention
of any Law or of any Loan Document.
6.12 Additional Subsidiaries, Guarantors and Pledgors. Notify the Administrative Agent and
the Collateral Agent not later than three (3) Business days after any Person becomes a Subsidiary,
which notice shall provide the information included in Schedule 5.13 as may be necessary
for Schedule 5.13 to be accurate and complete as of the date of such notice and shall
specify whether such Person is a Domestic Restricted Subsidiary (and if it is or is to be treated
as an Immaterial Subsidiary information demonstrating to the reasonable satisfaction of the
Administrative Agent that such treatment is permitted), a Partially Owned Operating Company, a
Foreign Subsidiary or an Unrestricted Subsidiary (and shall include compliance with the
requirements of Section 6.18 for designation as an Unrestricted Subsidiary) and (a) in the
case of any Person that becomes a Domestic Restricted Subsidiary (other than an Immaterial
Subsidiary) of the Borrower, and promptly thereafter (and in any event within 30 days (or such
longer period as the Administrative Agent may agree in its discretion)), cause such Person, to (i)
become a Guarantor by executing and delivering to the Administrative Agent a counterpart of the
Guaranty or such other document as the Administrative Agent shall deem appropriate for such
purpose, and (ii) deliver to the Administrative Agent documents of the types referred to in clauses
(v) and (vi) of Section 4.01(a) and, if requested by the Administrative Agent, favorable
opinions of counsel to such Person (which shall cover, among other things, the legality, validity,
binding effect and enforceability of the documentation referred to in clause (i)), all in form,
content and scope reasonably satisfactory to the Administrative Agent and (b) at the time that any
Person becomes a Restricted Subsidiary of the Borrower or a Partially Owned Operating Company, and
promptly thereafter (and in any event within 30 days (or such longer period as the Administrative
Agent may agree in its discretion)), (w) cause all of the Equity Interests, or Eligible Equity
Interests in the case of a First-Tier Foreign Subsidiary, of such Person owned by a Loan Party to
be pledged to the Collateral Agent to secure the Obligations, the Cash Management Obligations and
the Secured Swap Obligations by executing and delivering the Pledge and Security Agreement or a
joinder thereto, (x) pursuant to the Pledge and Security Agreement, deliver or cause to be
delivered to the Collateral Agent all certificates, stock powers and other documents required by
the Pledge and Security Agreement with respect to all such Equity Interests or Eligible Equity
Interests, as applicable, in any such Person, (y) take or cause to be taken such other actions, all
as may be necessary to provide the Collateral Agent with a first priority perfected pledge on and
security interest in such Equity Interests or Eligible
Equity Interests, as applicable, in such Subsidiary, and (z) deliver to the Collateral Agent
documents of the types referred to in clauses (v) and (vi) of Section
4.01(a) and, if requested by the Collateral Agent, favorable opinions of counsel to such Person
(which shall cover, among other things, the legality, validity, binding effect and enforceability
of the documentation referred to in clause (w)), all in form, content and scope reasonably
satisfactory to the Administrative Agent.
6.13 Agreement to Deliver Security Documents. Deliver and to cause each Guarantor and any other
Person required by the Administrative Agent or the Collateral Agent to deliver, to further secure
the Obligations, the Secured Swap Obligations, and the Cash Management Obligations, whenever
requested by the Administrative Agent or Collateral Agent in their sole and absolute discretion,
deeds of trust, mortgages, chattel mortgages, security agreements, flood hazard certification,
evidence of title, financing statements and other Security Documents in form and substance
satisfactory to the Administrative Agent and Collateral Agent
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for the purpose of granting,
confirming, and perfecting first and prior liens or security interests, subject only to Liens
permitted under the Loan Documents, on any real or personal property now owned or hereafter
acquired by such Persons, excluding real property that, taken together with all property reasonably
related thereto or used in connection therewith that does not then constitute Collateral, has a
fair market value of less than $10,000,000. Notwithstanding the foregoing, (a) Equity Interests of
a Person that is not a Subsidiary or a Partially Owned Operating Company shall not be required to
be Collateral to the extent prohibited by a provision that is permitted by clause (II) of the
proviso in Section 7.10 and (b) Equity Interests of an Unrestricted Subsidiary shall not be
required to be Collateral.
6.14 Perfection and Protection of Security Interests and Liens. Deliver and to cause each
Guarantor and any other Person required by the Administrative Agent or Collateral Agent to deliver
Security Documents pursuant to Section 6.13, to deliver from time to time to the
Collateral Agent any financing statements, continuation statements, extension agreements and other
documents, properly completed and executed (and acknowledged when required) by such Persons in form
and substance reasonably satisfactory to the Collateral Agent, which the Collateral Agent requests
for the purpose of perfecting, confirming, or protecting any Liens or other rights in any property
securing any Obligations, Secured Swap Obligations and Cash Management Obligations. The Borrower
further agrees to promptly, upon request by the Administrative Agent or Collateral Agent, or any
Lender through the Administrative Agent, correct any material defect or error that may be
discovered in any Security Document or in the execution, acknowledgment, filing or recordation
thereof.
6.15 Performance on the Borrowers Behalf. If any Loan Party fails to pay any taxes, insurance
premiums, expenses, attorneys fees or other amounts it is required to pay under any Loan Document,
the Administrative Agent may pay the same after notice of such payment by the Administrative Agent
is given to the Borrower. The Borrower shall promptly reimburse the Administrative Agent for any
such payments and each amount paid by the Administrative Agent shall constitute an Obligation owed
hereunder which is due and payable on the date such amount is paid by the Administrative Agent.
6.16 Environmental Matters; Environmental Reviews. Except, in each case, to the extent that the failure to do so could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect, (a) comply in all
material respects with all Environmental Laws now or hereafter applicable to such Loan Party as
well as all contractual obligations and agreements with respect to environmental remediation or
other environmental matters, (b) obtain, at or prior to the time required by applicable
Environmental Laws, all environmental, health and safety permits, licenses and other authorizations
necessary for its operations and will maintain such authorizations in full force and effect, (c)
conduct any investigation, study, sampling and testing, and undertake any cleanup, removal,
remedial or other action necessary to remove and clean up all Hazardous Materials from any of its
properties, in accordance with the requirements of all Environmental Laws, and (d) promptly pay and
discharge when due all Environmental Liabilities and debts, claims, liabilities and obligations
with respect to any clean-up or remediation measures necessary to comply with Environmental Laws
unless, in each case, the same are being contested in good faith by appropriate proceedings
diligently conducted and adequate reserves in accordance with GAAP are being maintained by the
applicable Loan Party.
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6.17 Compliance with Agreements. Observe, perform or comply with any agreement with any Person or
any term or condition of any instrument, if such agreement or instrument is materially significant
to such Loan Party or to Loan Parties on a Consolidated basis or materially significant to any
Guarantor, unless any such failure to so observe, perform or comply is remedied within the
applicable period of grace (if any) provided in such agreement or instrument or unless such failure
to so observe, perform or comply would not reasonably be expected to have a Material Adverse
Effect.
6.18 Designation and Conversion of Restricted and Unrestricted Subsidiaries.
(a) Unless designated after the Closing Date in writing to the Administrative Agent pursuant
to this Section, any Person that becomes a Subsidiary of the Borrower or any of its Restricted
Subsidiaries shall be classified as a Restricted Subsidiary.
(b) The Borrower may designate any Subsidiary (including a newly formed or newly acquired
Subsidiary) as an Unrestricted Subsidiary if (i) the representations and warranties of the Loan
Parties contained in each of the Loan Documents are true and correct on and as of such date as if
made on and as of the date of such designation (or, if stated to have been made expressly as of an
earlier date, were true and correct as of such date), (ii) after giving effect to such
designation, no Default or Event of Default would exist, (iii) immediately after giving effect to
such designation, the Borrower and its Restricted Subsidiaries shall be in pro forma compliance
with all of the covenants set forth in Sections 7.14 and 7.15, such compliance to
be determined on the basis of the financial information most recently delivered to the
Administrative Agent and the Lenders pursuant to Section 6.01(a) or (b) as though
such Investment had been consummated as of the first day of the fiscal period covered thereby,
(iv) no Subsidiary may be designated as an Unrestricted Subsidiary if it will be treated as a
restricted subsidiary for purposes of any indenture or agreement governing Unsecured Note
Indebtedness and (v) in the case of a Subsidiary which is already classified as a Restricted
Subsidiary (other than an Immaterial Subsidiary), the Borrower has obtained the prior written
consent of the Administrative Agent and the Required Lenders. Except as provided in this Section,
no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary.
(c) The Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if
after giving effect to such designation, (i) the representations and warranties of the Loan
Parties contained in each of the Loan Documents are true and correct in all material respects on
and as of such date as if made on and as of the date of such redesignation (or, if stated to have
been made expressly as of an earlier date, were true and correct as of such date), (ii) after
giving effect to such designation, no Default or Event of Default would exist and (iii)
immediately after giving effect to such designation, the Borrower and its Restricted Subsidiaries
shall be in pro forma compliance with all of the covenants set forth in Sections 7.14 and
7.15, such compliance to be determined on the basis of the financial information most
recently delivered to the Administrative Agent and the Lenders pursuant to Section 6.01(a)
or (b) as though such Investment had been consummated as of the first day of the fiscal
period covered thereby.
(d) The Borrower will not, and will not permit any of the Restricted Subsidiaries to
Guarantee any Indebtedness or other obligations of any Unrestricted Subsidiary.
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(e) The Borrower will not permit any Unrestricted Subsidiary to hold any Equity Interests in,
or any Indebtedness of, the Borrower or any Restricted Subsidiary.
6.19 Maintenance of Corporate Separateness. Satisfy customary corporate or limited liability
company formalities and other requirements necessary to preserve the separate existence of each
Unrestricted Subsidiary from the Borrower and each Restricted Subsidiary.
ARTICLE VII.
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the
Borrower shall not, nor shall it permit any Restricted Subsidiary to, directly or indirectly:
7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, other than the following:
(a) Liens pursuant to any Loan Document;
(b) Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or
extensions thereof, provided that (i) the Lien does not extend to any additional property
other than after-acquired property that is affixed or incorporated into the property covered by
such Lien or financed by Indebtedness permitted under Section 7.03 and proceeds and
products thereof, (ii) the amount secured or benefited thereby is not increased except as
contemplated by Section 7.03(b), (iii) the direct or any contingent obligor with respect
thereto is not changed, and (iv) any renewal or extension of the obligations secured or benefited
thereby is permitted by Section 7.03(b);
(c) Liens for taxes not yet due or which are being contested in good faith and by appropriate
proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the
books of the applicable Person in accordance with GAAP;
(d) carriers, warehousemens, mechanics, materialmens, repairmens or other like Liens
arising in the ordinary course of business which are not overdue for a period of more than 60 days
or if more than sixty (60) days overdue, are unfiled and no other action has been take to enforce
such Lien or which are being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the books of the applicable
Person in accordance with GAAP;
(e) (i) pledges or deposits in the ordinary course of business in connection with workers
compensation, unemployment insurance and other social security legislation, other than any Lien
imposed by ERISA and (ii) pledges and deposits in the ordinary course of business securing
liability for reimbursement or indemnification obligations of (including obligations in respect of
letters of credit or bank guarantees for the benefit of) insurance carriers providing property,
casualty or liability insurance to the Borrower or any of its
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Restricted Subsidiaries and (iii)
Liens on proceeds of insurance policies securing Indebtedness permitted under Section
7.03(m)(i);
(f) deposits to secure the performance of bids, trade contracts and leases (other than
Indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or
litigation), performance bonds and other obligations of a like nature incurred in the ordinary
course of business;
(g) easements, rights-of-way, servitudes, permits, reservations, exceptions, covenants and
other restrictions as to the use of real property, and other similar encumbrances incurred in the
ordinary course of business which, with respect to all of the foregoing, do not secure the payment
of Indebtedness of a Loan Party (other than pursuant to the Loan Documents) and which do not in
any case materially detract from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of the applicable Person;
(h) Liens securing judgments for the payment of money not constituting an Event of Default
under Section 8.01(h) or securing appeal or other surety bonds related to such judgments;
(i) Liens securing Capital Leases and purchase money Indebtedness permitted under Section
7.03(e); provided that (i) such Liens securing purchase money Indebtedness do not at any time
encumber any property other than the property financed by such Indebtedness and the proceeds and
products thereof and (ii) the Indebtedness secured thereby does not exceed as of the date such
Indebtedness is incurred the cost or fair market value, whichever is lower, of the property being
acquired on the date of acquisition;
(j) Subject to the consent of Administrative Agent, Liens existing upon property acquired in
an acquisition or of any Person that becomes a Restricted Subsidiary, existing at
the time of such acquisition and not incurred in contemplation thereof, and not upon any
other property, securing only Indebtedness permitted by Section 7.03(i);
(k) Liens reserved in leases of business premises entered into in the ordinary course of
business for rent and for compliance with the terms of the lease limited to equipment and fixtures
on the leased premises;
(l) Liens (i) of a collection bank arising under Section 4.210 of the UCC on items in the
course of collection, (ii) attaching to commodity trading accounts or other commodities brokerage
accounts incurred in the ordinary course of business (iii) in favor of a banking institution
arising as a matter of law encumbering deposits (including the right of set-off) and which are
within the general parameters customary in the banking industry; or (iv) in connection with Cash
Management Obligations and other obligations in respect of netting services, overdraft protections
and similar arrangements, in each case in connection with deposit accounts in the ordinary course
of business and that are limited to Liens customary in such arrangements;
(m) Liens (i) on cash advances in favor of the seller of any property to be acquired in an
Investment permitted pursuant to Sections 7.02(i) and (j),to be applied against
the
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purchase price for such Investment, and (ii) consisting of an agreement to Dispose of any
property in a Disposition permitted under Section 7.05, in each case, solely to the extent
such Investment or Disposition, as the case may be, would have been permitted on the date of the
creation of such Lien;
(n) Liens encumbering reasonable customary initial deposits and margin deposits and similar
Liens (in each case limited to the cash, commodity contracts or other Investments in such account)
attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary
course of business and not for speculative purposes;
(o) Liens that constitute Guarantees of Indebtedness to the extent such Guarantees are
permitted by Section 7.03;
(p) Liens on Property not constituting Collateral for the Obligations, the Cash Management
Obligations or the Secured Swap Obligations and not otherwise permitted by the foregoing clauses
of this Section 7.01; provided that the aggregate principal or face amount of all
Indebtedness secured by Liens under this Section 7.01(o) shall not exceed $50,000,000 at
any time.
provided, nothing in this Section 7.01 shall in and of itself constitute or be
deemed to constitute an agreement or acknowledgment by the Administrative Agent or any Lender that
any Indebtedness subject to or secured by any Lien, right or other interest permitted under
subsections (a) through (o) above ranks in priority to any Obligation.
7.02 Investments. Make any Investments, except:
(a) Investments held by the Borrower or such Subsidiary in the form of cash equivalents;
(b) Investments of the Borrower in any Restricted Subsidiary and Investments of any
Restricted Subsidiary in the Borrower or in another Restricted Subsidiary;
(c) Investments representing non-cash consideration of Dispositions permitted under
Section 7.05;
(d) The acquisition of or other Investments (other than Investments consisting of Guarantees)
in any Unrestricted Subsidiary so long as (i) immediately before and immediately after giving pro
forma effect to any such acquisition or Investment, no Default shall have occurred and be
continuing and (ii) immediately after giving effect to such acquisition or Investment, the
Borrower and its Restricted Subsidiaries shall be in pro forma compliance with all of the
covenants set forth in Sections 7.14 and 7.15, such compliance to be determined on
the basis of the financial information most recently delivered to the Administrative Agent and the
Lenders pursuant to Section 6.01(a) or (b) as though such Investment had been
consummated as of the first day of the fiscal period covered thereby;
(e) Investments consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course of business, and
Investments received in satisfaction or partial satisfaction thereof from
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financially troubled
account debtors to the extent reasonably necessary in order to prevent or limit loss;
(f) Guarantees permitted by Section 7.03;
(g) Investments in Swap Contracts permitted by Section 7.03(d);
(h) Loans or advances to any officer, director or employee of any Loan Party for travel and
related expenses consistent with the policies and procedures of such Loan Party and not to exceed
$2,500,000 at any one time outstanding;
(i) the purchase or other acquisition of property and assets or businesses of any Person or
of assets constituting a business unit, a line of business or division of such Person, or Equity
Interests in a Person that, upon the consummation thereof, will be a wholly owned Restricted
Subsidiary of the Borrower (including as a result of a merger or consolidation); provided that,
with respect to each purchase or other acquisition made pursuant to this Section 7.02(i)
(each, a Permitted Acquisition):
(A) to the extent required by Section 6.12, each applicable Loan Party
and any such newly created or acquired Restricted Subsidiary (and, to the extent
required by this Agreement, the Restricted Subsidiaries of such created or acquired
Restricted Subsidiary) shall be a Guarantor and shall have complied with the
requirements of Sections 6.12 and 6.13, within the times specified
therein;
(B) the acquired property, assets, business or Person is in the Present Line of
Business; and
(C) (1) immediately before and immediately after giving pro forma effect to any
such purchase or other acquisition, no Default shall have occurred and be continuing
and (2) immediately after giving effect to such purchase or other acquisition, the
Borrower and its Restricted Subsidiaries shall be in pro forma compliance with all
of the covenants set forth in Sections 7.14 and 7.15, such
compliance to be determined on the basis of the financial information most recently
delivered to the Administrative Agent and the Lenders pursuant to Section
6.01(a) or (b) as though such purchase or other acquisition had been
consummated as of the first day of the fiscal period covered thereby; and
(j) Investments (other than Investments consisting of Guarantees) in Persons (other than a
Person that is or becomes a Subsidiary of the Borrower) in the Present Line of Business to the
extent not otherwise permitted by the foregoing clauses of this Section, so long as, immediately
after giving effect to any such Investment, no Default has occurred and is continuing and the
Borrower and its Restricted Subsidiaries shall be in pro forma compliance with all of the
covenants set forth in Sections 7.14 and 7.15, such compliance to be determined on
the basis of the financial information most recently delivered to the Administrative Agent and the
Lenders pursuant to Section 6.01(a) or (b) as though such Investment had been
consummated as of the first day of the fiscal period covered thereby.
7.03 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, except:
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(a) Indebtedness under the Loan Documents;
(b) [intentionally omitted];
(c) Guarantees of the Borrower or any Guarantor in respect of Indebtedness otherwise
permitted hereunder of the Borrower or any Restricted Subsidiary;
(d) obligations (contingent or otherwise) of the Borrower or any Restricted Subsidiary
existing or arising under any Swap Contract with a Hedging Party designed to hedge against
interest rates, foreign exchange rates or commodities pricing risks incurred in the ordinary
course of business and not for speculative purposes;
(e) Indebtedness in respect of Capital Lease Obligations, Synthetic Lease Obligations and
purchase money obligations for fixed or capital assets within the requirements set forth in
Section 7.01(i); provided, however, that the aggregate amount of all such
Indebtedness at any one time outstanding shall not exceed an amount equal to five percent (5%) of
Consolidated Net Tangible Assets;
(f) unsecured Indebtedness in respect of a private placement or a public sale of unsecured
senior or subordinated notes by the Borrower and unsecured guarantees of such notes by one or more
of the Guarantors, provided, that (i) no principal of such Indebtedness is scheduled to
mature earlier than the Maturity Date and (ii) after giving effect to such Indebtedness and the
application of any of the proceeds thereof on the issuance date no Default
or Event of Default shall exist and, on a pro forma basis, the Borrower shall comply with the
covenants contained in Sections 7.14 and 7.15;
(g) Indebtedness of any Restricted Subsidiary owing to the Borrower or another Restricted
Subsidiary subordinated to the Obligations, the Cash Management Obligations and the Secured Swap
Obligations on terms satisfactory to the Administrative Agent;
(h) Indebtedness owed to Targa or any of its Subsidiaries that is subordinated to the
Obligations, the Cash Management Obligations and the Secured Swap Obligations on terms reasonably
satisfactory to the Administrative Agent;
(i) Subject to the consent of Administrative Agent, Indebtedness acquired in an acquisition,
existing at the time of such acquisition and not incurred in contemplation thereof;
provided that such Indebtedness shall not be secured except to the extent such
Indebtedness is secured by Liens permitted by Section 7.01(j); provided further,
that no Person, other than the obligor or obligors thereon at the time of such acquisition shall
become liable for such Indebtedness;
(j) Cash Management Obligations and other Indebtedness in respect of netting services,
overdraft protections and similar arrangements, in each case in connection with deposit accounts
in the ordinary course of business and discharged within two Business Days of its incurrence;
(k) Indebtedness representing deferred compensation to employees of the Borrower and its
Restricted Subsidiaries incurred in the ordinary course of business;
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(l) Customary indemnification obligations or customary obligations in respect of purchase
price or other similar adjustments, in each case incurred by the Borrower or any Restricted
Subsidiary in connection with the Disposition of any assets permitted hereby, or any Investment
permitted hereby or any Permitted Acquisition, but excluding Guarantees of Indebtedness; provided
that (i) such obligations are not required to be reflected on the balance sheet of the Borrower or
any Restricted Subsidiary (contingent obligations referred to in a footnote to financial
statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on
such balance sheet for purposes of this clause (l)(i)) and (ii) the maximum liability in
respect of all such obligations incurred in connection with any Disposition shall at no time
exceed the gross proceeds, including noncash proceeds (the fair market value of such noncash
proceeds being measured at the time received and without giving effect to any subsequent changes
in value), actually received by the Borrower and its Restricted Subsidiaries in connection with
such Disposition;
(m) Indebtedness consisting of (i) the financing of insurance premiums or (ii) customary
take-or-pay obligations contained in supply agreements, in each case, in the ordinary course of
business;
(n) Obligations in respect of performance, bid, appeal and surety bonds and similar
obligations provided by the Borrower or any of its Restricted Subsidiaries, in each case in the
ordinary course of business;
(o) Indebtedness for borrowed money of the Borrower and Guaranties thereof by one or more of
the Guarantors; provided that (i) such Indebtedness and guaranties are unsecured and are
subordinated to the Obligations, the Cash Management Obligations and the Secured Swap Obligations
on terms reasonably satisfactory to the Administrative Agent, (ii) no principal of such
Indebtedness is scheduled to mature earlier than the Maturity Date, (iii) after giving effect to
such Indebtedness and the application of any of the proceeds thereof on the issuance date no
Default or Event of Default shall exist and, on a pro forma basis, the Borrower shall comply with
the covenants contained in Sections 7.14 and 7.15, and such principal amount of
such subordinated Indebtedness cannot be prepaid except in accordance with Section 7.04.
(p) Indebtedness not otherwise permitted by the foregoing clauses of this Section
7.03; provided that the aggregate principal or face amount of all Indebtedness shall not
exceed 10% of Consolidated Net Tangible Assets.
7.04 Subordinated Indebtedness(a) . Pay the principal of any Indebtedness that is
subordinated to the Obligations, other than with the proceeds of unsecured Indebtedness permitted
under Section 7.03 that is subordinated on terms at least as favorable to the
Administrative Agent and the Lenders as the Indebtedness being so repaid.
7.05 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another Person, or
Dispose of (whether in one transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so
long as no Default exists or would result therefrom:
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(a) any Restricted Subsidiary may merge with (i) the Borrower, provided that the
Borrower shall be the continuing or surviving Person, or (ii) any one or more other Restricted
Subsidiaries, provided that when any Wholly Owned Subsidiary is merging with another
Restricted Subsidiary, the Wholly Owned Subsidiary shall be the continuing or surviving Person;
and
(b) any Restricted Subsidiary may liquidate or dissolve or change its legal form if the
Borrower determines in good faith that such action is in the best interests of the Borrower and
its Restricted Subsidiaries and is not materially disadvantageous to the Lenders;
(c) any Restricted Subsidiary may Dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or to another Restricted Subsidiary;
provided that if the transferor in such a transaction is a Wholly Owned Subsidiary, then
the transferee must either be the Borrower or a Wholly Owned Subsidiary; provided,
further that if the transferor in any such a transaction is a Guarantor, then the
transferee must either be the Borrower or Guarantor.
(d) so long as no Default exists or would result therefrom, any Restricted Subsidiary may
merge with any other Person in order to effect an Investment permitted
pursuant to Section 7.02; provided that the continuing or surviving Person shall be a
Subsidiary, which together with each of its Subsidiaries, shall have complied with the
requirements of Section 6.12.
(e) so long as no Default has occurred and is continuing or would result therefrom, each of
the Borrower and any of its Restricted Subsidiaries may merge into or consolidate with any other
Person or permit any other Person to merge into or consolidate with it; provided, however,
that in each case, immediately after giving effect thereto (i) in the case of any such merger to
which the Borrower is a party, the Borrower is the surviving entity and (ii) in the case of any
such merger to which any Loan Party (other than the Borrower) is a party, such Loan Party is the
surviving entity.
(f) so long as no Default exists or would result therefrom, a merger, dissolution,
liquidation, consolidation or Disposition, the purpose and effect of which is to consummate a
Disposition permitted pursuant to Section 7.06.
7.06 Dispositions. Make any Disposition or enter into any agreement to make any Disposition,
except:
(a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired,
and Dispositions in the ordinary course of business of property no longer used or useful in the
conduct of the business of the Borrower and its Restricted Subsidiaries;
(b) Dispositions of inventory or cash equivalents or immaterial assets in the ordinary course
of business;
(c) Dispositions of fixtures or equipment to the extent that (i) such property is exchanged
for credit against the purchase price of similar replacement fixtures or equipment or
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(ii) the
proceeds of such Disposition are promptly applied to the purchase price of such replacement
fixtures or equipment;
(d) Restricted Payments permitted by Section 7.07 and Liens permitted by Section
7.01;
(e) Dispositions of property acquired by the Borrower or any Subsidiary after the Closing
Date pursuant to sale-leaseback transactions; provided that the applicable sale-leaseback
transaction (i) occurs within ninety (90) days after the acquisition or construction (as
applicable) of such property and (ii) is made for cash consideration not less than the cost of
acquisition or construction of such property;
(f) Dispositions of accounts receivables in connection with the collection or compromise
thereof in the ordinary course of business;
(g) Leases, subleases, licenses or sublicenses (including the provision of software under an
open source license), easements, rights of way or similar rights or encumbrances in each case in
the ordinary course of business and which do not materially interfere with the business of the
Borrower and its Restricted Subsidiaries;
(h) transfers of property that has suffered a casualty (constituting a total loss or
constructive total loss of such property) upon receipt of the Extraordinary Receipts of such
casualty;
(i) Dispositions of Investments in joint ventures to the extent required by, or made pursuant
to customary buy/sell arrangements between, the joint venture parties set forth in joint venture
arrangements and similar binding arrangements;
(j) Dispositions of property, subject to the Security Documents, by the Borrower or any
Subsidiary to the Borrower or to a Wholly Owned Subsidiary of the Borrower; provided that
if the transferor of such property is the Borrower or a Guarantor, the transferee thereof must
either be the Borrower or a Guarantor;
(k) Dispositions permitted under Section 7.05;
(l) Dispositions by the Borrower and its Restricted Subsidiaries not otherwise permitted
under clauses (a) through (k) or (m) of this Section 7.06; provided that (i) at
the time of such Disposition, no Default shall exist or would result from such Disposition, (ii)
the aggregate book value of all property Disposed of in reliance on this clause (l) since the
Closing Date shall not exceed ten percent (10%) of Consolidated Net Tangible Assets on the first
day of the fiscal year most recently ended at the time of such determination and (iii) no
Disposition of less than all of the Equity Interests of any Subsidiary shall be permitted under
this clause (l); and
(m) Dispositions by the Borrower and its Restricted Subsidiaries not otherwise permitted
under clauses (a) through (l) of this Section 7.06; provided that (i) at the time
of such Disposition, no Default shall exist or would result from such Disposition, (ii) the
Disposition is for 75% cash or cash equivalents, (iii) the Borrower shall make the prepayment or
reinvestment
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of proceeds of such Disposition as required by Section 2.05(d), and (iv) no
Disposition of less than all of the Equity Interests of any Subsidiary shall be permitted under
this clause (m).
provided, however, that any Disposition pursuant to clauses (a),
(b), (c), (e), (f), (i), (j), (k),
(l) or (m) shall be for fair market value.
No Loan Party will discount, sell, pledge or assign any notes payable to it, accounts receivable or
future income except for Dispositions permitted by clause (f). So long as no Event of
Default then exists, the Administrative Agent will, at the Borrowers request and expense, execute
a release, satisfactory to the Borrower and the Administrative Agent, of any Collateral so sold,
transferred, leased, exchanged, alienated or disposed of pursuant to this Section.
7.07 Restricted Payments. Declare or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, except that, so long as no Default shall
have occurred and be continuing at the time of any action described below or would result
therefrom:
(a) each Subsidiary may make Restricted Payments to the Borrower, the Guarantors and any
other Person that owns an Equity Interest in such Subsidiary, ratably according to their
respective holdings of the type of Equity Interest in respect of which such Restricted
Payment is being made;
(b) the Borrower and each Subsidiary may declare and make dividend payments or other
distributions payable solely in the common stock or other common Equity Interests of such Person;
(c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity
Interests issued by it with the proceeds received from the substantially concurrent issue of new
shares of its common stock or other common Equity Interests;
(d) the Borrower may make cash distributions in an amount not to exceed Available Cash (as
such term is defined in the Borrowers Partnership Agreement) to the holders of its Equity
Interest.
7.08 Change in Nature of Business. Engage in any material line of business other than the Present
Line of Business.
7.09 Transactions with Affiliates. Enter into any transaction of any kind with any Affiliate of
the Borrower, whether or not in the ordinary course of business, other than on fair and reasonable
terms substantially as favorable to the Borrower or such Subsidiary as would be obtainable by the
Borrower or such Subsidiary at the time in a comparable arms length transaction with a Person
other than an Affiliate, provided that the foregoing restriction shall not apply to transactions
(a) between or among the Borrower and any of its Wholly Owned Subsidiaries or between and among any
Wholly Owned Subsidiaries, (b) the transaction contemplated hereby and the payment of fees and
expenses related thereto, (c) Restricted Payments permitted under Section 7.07, and (d)
transactions pursuant to agreements, instruments or arrangements in existence on the Closing Date
and set forth on Schedule 7.09 or any
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amendment thereto to the extent such an amendment is not adverse to the Lenders in any material respect.
7.10 Burdensome Agreements. Enter into any Contractual Obligation (other than this Agreement or
any other Loan Document) that (a) limits the ability (i) of any Subsidiary to (A) make Restricted
Payments to the Borrower or any Guarantor, (B) redeem Equity Interests held in it by the Borrower
or any Guarantor, (C) otherwise transfer property to the Borrower or any Guarantor, (D) to repay
loans and other indebtedness owing by it to the Borrower or any Guarantor, (ii) of any Restricted
Subsidiary to Guarantee the Indebtedness of the Borrower or (iii) of the Borrower or any Restricted
Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person,
provided, however, that the foregoing clauses shall not prohibit (I) any negative
pledge incurred or provided in favor of any holder of Indebtedness permitted under Section
7.03 solely to the extent any such negative pledge relates to the property financed by or the
subject of such Indebtedness, (II) provisions in Organizational Documents and other similar
agreements applicable to joint ventures or to other Persons that are not Restricted Subsidiaries or
Partially Owned Operating Companies (to the extent Investment in such joint venture or other Person
is permitted under Section 7.02) that limit
Liens on or transfers of the Equity Interests in such joint venture or other Person entered into in
the ordinary course of business, (III) are customary restrictions in leases, subleases, licenses,
or asset sale agreements otherwise permitted hereby (or in easements, rights of way or similar
rights or encumbrances, in each case granted to the Borrower or a Restricted Subsidiary by a third
party in respect of real property owned by such third party) so long as such restrictions relate
only to the assets (or the Borrowers or such Restricted Subsidiarys rights under such easement,
right of way or similar right or encumbrance, as applicable) subject thereto or (b) requires the
grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another
obligation of such Person.
7.11 Prohibited Contracts.
(a) Enter into any take-or-pay contract or other contract or arrangement for the purchase
of goods or services which obligates it to pay for such goods or service regardless of whether
they are delivered or furnished to it, other than contracts for pipeline capacity or for services
in either case reasonably anticipated to be utilized in the ordinary course of business or as
otherwise permitted by Section 7.03(m)(ii); or
(b) Incur any obligation to contribute to any Multiemployer Plan.
7.12 Limitation on Credit Extensions. Except for Investments permitted under Section 7.02,
extend credit, make advances or make loans other than normal and prudent extensions of credit to
customers buying goods and services in the ordinary course of business or to another Loan Party in
the ordinary course of business, which extensions shall not be for longer periods than those
extended by similar businesses operated in a normal and prudent manner.
7.13 Use of Proceeds. Use the proceeds of any Credit Extension, whether directly or indirectly,
and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the
meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or
carrying margin stock or to refund indebtedness originally incurred for such purpose.
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7.14 Interest Coverage Ratio. On the Closing Date and at the end of each fiscal quarter, beginning
March 31, 2007, permit the ratio of (a) Consolidated Adjusted EBITDA to (b) Interest Expense for
the four consecutive fiscal quarter period then ended to be less than 2.25 to 1.0.
7.15 Leverage Ratios.
(a) If no Unsecured Note Indebtedness is outstanding on the applicable date of determination,
permit the Consolidated Leverage Ratio to be greater than: (i) 5.75 to 1.0 on the Closing Date nor
on the last day of the fiscal quarters ending March 31, 2007 and June 30, 2007; and (ii) 5.00 to
1.0 on the last day of any fiscal quarter ending on or after September 30, 2007.
(b) If any Unsecured Note Indebtedness is incurred or outstanding on the applicable date of
determination, permit the Consolidated Leverage Ratio to be greater than: (i) during the period
prior to September 30, 2007, 6.25 to 1.0 on the date any Unsecured Note Indebtedness is incurred
nor on the last day of any fiscal quarter ending during such period; and (ii) during the period on
or after September 30, 2007, 5.50 to 1.0 on the date any Unsecured Note Indebtedness is incurred
nor on the last day of any fiscal quarter ending during such period.
(c) If any Unsecured Note Indebtedness is incurred or outstanding on the applicable date of
determination, permit the Consolidated Senior Leverage Ratio to be greater than: (i) during the
period prior to September 30, 2007, 5.25 to 1.0 on the date any Unsecured Note Indebtedness is
incurred nor on the last day of any fiscal quarter ending during such period; nor (ii) during the
period on or after September 30, 2007, 4.50 to 1.0 on the date any Unsecured Note Indebtedness is
incurred nor on the last day of any fiscal quarter ending during such period.
(d) During an Acquisition Period, the maximum permitted Consolidated Leverage Ratio and the
maximum permitted Consolidated Senior Leverage Ratio shall each be increased by 0.50 to 1.00 from
the otherwise applicable ratio set forth above (for example, the Consolidated Leverage Ratio
requirement that would otherwise be 5.50 to 1.00 will become 6.00 to 1.00). As used in this
Section 7.15(d), Acquisition Period means a period elected by the Borrower, such
election to be exercised by the Borrower by delivering notice thereof to the Administrative Agent,
beginning with the funding date of the purchase price for any Specified Acquisition and ending on
the earlier of (a) the first anniversary date of such funding date or (b) the Borrowers election
(provided, that the Borrower is in compliance with all applicable provisions of this Section
7.15 after giving effect to such election), to terminate such Acquisition Period, such
election to be exercised by the Borrower delivering notice thereof to the Administrative Agent;
provided that once any Acquisition Period is in effect, the next succeeding Acquisition Period may
not commence until (i) the termination of such Acquisition Period in effect and (ii) after giving
effect to the termination of such Acquisition Period in effect the Borrower shall be in compliance
with all applicable provisions of this Section 7.15 and no Default shall have occurred and
be continuing.
(e) Notwithstanding anything to the contrary, and for the avoidance of doubt, any failure by
the Borrower to be in compliance with any requirement of this Section 7.15 shall not
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be
remedied by a change in the Consolidated Leverage Ratio upon the incurrence of any Unsecured Note
Indebtedness or the election of an Acquisition Period.
7.16 Negative Pledge. Allow any Person, other than the Administrative Agent, L/C Issuer or any
Lender or any other Secured Party, to create or otherwise cause or suffer to exist or become
effective, or permit any
of the Subsidiaries to create or otherwise cause or suffer to exist or become effective, directly
or indirectly, any Lien (other than Liens permitted by Section 7.01) upon the assets of the
Borrower or any of its Subsidiaries without the prior express written consent of the Administrative
Agent.
ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES
8.01 Events of Default. Any of the following shall constitute an Event of Default:
(a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and as
required to be paid herein, any amount of principal of any Loan or any L/C Obligation, or (ii)
within five days after the same becomes due, any interest on any Loan or on any L/C Obligation, or
any fee due hereunder, or (iii) within five days after the same becomes due, any other amount
payable hereunder or under any other Loan Document; or
(b) Specific Covenants. The Borrower fails to perform or observe any term, covenant
or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05,
6.11 or 6.12 or Article VII; provided, however that if the
Borrower fails to deliver any financial statements, certificates or other information required by
Section 6.01, 6.02, 6.03 or 6.12 and subsequently delivers such
financial statements, certificates or other information as required by such Sections, then such
Event of Default shall be deemed to have been cured and/or waived; or
(c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or
agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its
part to be performed or observed and such failure continues for 30 days after notice thereof by
the Administrative Agent; or
(d) Representations and Warranties. Any representation, warranty, certification or
statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party
herein, in any other Loan Document, or in any document delivered in connection herewith or
therewith shall be incorrect or misleading in any material respect when made or deemed made; or
(e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any payment
when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise)
in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness
under Swap Contracts) having an aggregate principal amount (including the undrawn face amount of
any outstanding Letter of Credit, surety bonds and other similar contingent obligations
outstanding under any agreement relating to such Indebtedness or Guarantee and including amounts
owing to all creditors under any combined or syndicated credit arrangement) of more than the
Threshold Amount, or (B) fails to observe or perform any
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other agreement or condition relating to
any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event occurs, the effect of which default or other
event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or
beneficiaries of such Guarantee (or a trustee or agent
on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to be demanded or to become due or to be
repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to
repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity,
or such Guarantee to become payable or cash collateral in respect thereof to be demanded; provided
that this clause (e)(B) shall not apply to secured Indebtedness that becomes due as a result of
the voluntary sale or transfer of the property or assets securing such Indebtedness, if such sale
or transfer is permitted hereunder; or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under
such Swap Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as defined
in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to
which the Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event,
the Swap Termination Value owed by the Borrower or such Subsidiary as a result thereof is greater
than the Threshold Amount; or
(f) Insolvency Proceedings, Etc. The Borrower or any of its Restricted Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes
an assignment for the benefit of creditors; or applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or
for all or any material part of its property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the application or consent of
such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any
proceeding under any Debtor Relief Law relating to any such Person or to all or any material part
of its property is instituted without the consent of such Person and continues undismissed or
unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or
(g) Inability to Pay Debts; Attachment. (i) The Borrower or any of its Restricted
Subsidiaries becomes unable or admits in writing its inability or fails generally to pay its debts
as they become due, or (ii) any writ or warrant of attachment or execution or similar process is
issued or levied against all or any material part of the property of any such Person and is not
released, vacated or fully bonded within 60 days after its issue or levy; or
(h) Judgments. There is entered against the Borrower or any of its Restricted
Subsidiaries (i) a final judgment or order for the payment of money in an aggregate amount
exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as
to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final
judgments that have, or could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and, in either case, the same shall remain undischarged and either (A)
enforcement proceedings are commenced by any creditor upon such judgment or order which have not
been stayed by reason of a pending appeal or otherwise, or (B) there is a period of thirty (30)
consecutive days during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect; or
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(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer
Plan which has resulted or could reasonably be expected to result in liability of any Loan Party
under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC
in an aggregate amount in excess of the Threshold Amount, or (ii) any Loan Party or any ERISA
Affiliate fails to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or
(j) Invalidity of Loan Documents. Any material provision of any Loan Document, at
any time after its execution and delivery and for any reason other than as expressly permitted
hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force
and effect; or any Loan Party or any other Person contests in any manner the validity or
enforceability of any material provision of any Loan Document; or any Loan Party denies that it
has any or further liability or obligation under any Loan Document, or purports to revoke,
terminate or rescind any provision of any Loan Document; or
(k) Change of Control. There occurs any Change of Control; or
(l) Security Documents. Any Security Document shall for any reason (other than
pursuant to the terms hereof and thereof) cease to create a valid and perfected first priority
Lien in any asset having a value in excess of the Threshold Amount, except to the extent that any
such loss of perfection or priority results from the failure of the Administrative Agent or the
Collateral Agent to maintain possession of certificates actually delivered to it representing
securities pledged under the Security Documents or to file Uniform Commercial Code continuation
statements and except as to Collateral consisting of real property to the extent that such losses
are covered by a lenders title insurance policy and such insurer has not denied coverage.
8.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the
Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders,
take any or all of the following actions:
(a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer
to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be
terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and
unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document
to be immediately due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Borrower;
(c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to
the then Outstanding Amount thereof); and
(d) exercise on behalf of itself and the Lenders all rights and remedies available to it and
the Lenders under the Loan Documents;
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provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the
obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit
Extensions
shall automatically terminate, the unpaid principal amount of all outstanding Loans and all
interest and other amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, in each case without further act of the Administrative Agent or any
Lender.
8.03 Application of Funds. After the exercise of remedies provided for in Section 8.02 (or
after the Loans have automatically become immediately due and payable and the L/C Obligations have
automatically been required to be Cash Collateralized as set forth in the proviso to Section
8.02), any amounts received on account of the Obligations, the Cash Management Obligations and
the Secured Swap Obligations shall be applied by the Administrative Agent and the Collateral Agent
in the following order:
First, to payment of that portion of the Obligations constituting fees, indemnities,
expenses and other amounts (including fees, charges and disbursements of external counsel to the
Administrative Agent and amounts payable under Article III) payable to the Administrative
Agent in its capacity as such and payable to the Collateral Agent in its capacity as such;
Second, to payment of that portion of the Obligations constituting fees, indemnities
and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders
and the L/C Issuer (including fees, charges and disbursements of external counsel to the respective
Lenders and the L/C Issuer and amounts payable under Article III), ratably among them in
proportion to the respective amounts described in this clause Second payable to them;
Third, to payment of that portion of the Obligations constituting accrued and unpaid
Letter of Credit Fees and interest on the Loans, L/C Borrowings and other Obligations, ratably
among the Lenders and the L/C Issuer in proportion to the respective amounts described in this
clause Third payable to them;
Fourth, to payment of that portion of the Obligations constituting unpaid principal of
the Loans and L/C Borrowings, the Secured Swap Obligations and the Cash Management Obligations,
ratably among the Lenders, the Hedging Parties and the L/C Issuer in proportion to the respective
amounts described in this clause Fourth held by them;
Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters
of Credit; and
Last, the balance, if any, after all of the Obligations, the Cash Management
Obligations and the Secured Swap Obligations have been indefeasibly paid in full, to the Borrower
or as otherwise required by Law.
Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount
of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings
under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral
after all
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Letters of Credit have either been fully drawn or expired, such remaining amount shall be
applied to the other Obligations, Cash Management Obligations and Secured Swap Obligations, if any,
in the order set forth above.
ARTICLE IX.
ADMINISTRATIVE AGENT
9.01 Appointment and Authority.
(a) Each of the Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act
on its behalf as the Administrative Agent hereunder and under the other Loan Documents and
authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers
as are delegated to the Administrative Agent by the terms hereof or thereof, together with such
actions and powers as are reasonably incidental thereto. The provisions of this Article are
solely for the benefit of the Agents, the Lenders and the L/C Issuer, and neither the Borrower nor
any other Loan Party shall have rights as a third party beneficiary of any of such provisions.
(b) Each of the Lenders (in its capacities as a Lender, Swing Line Lender (if applicable),
L/C Issuer (if applicable) and a potential Hedging Party) hereby irrevocably appoints and
authorizes the Collateral Agent to act as the agent of (and to hold any security interest created
by the Security Documents for and on behalf of or on trust for) such Lender for purposes of
acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan
Parties to secure any of the Obligations, the Secured Swap Obligations or the Cash Management
Obligations together with such powers and discretion as are reasonably incidental thereto. In
this connection, the Collateral Agent (and any co-agents, sub-agents and attorneys-in-fact
appointed by the Administrative Agent or the Collateral Agent pursuant to Section 9.05 for
purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under
the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of
the Administrative Agent), shall be entitled to the benefits of all provisions of this Article
IX (including, Section 9.11, as though such co-agents, sub-agents and
attorneys-in-fact were the Collateral Agent) as if set forth in full herein with respect thereto.
Without limiting the generality of the foregoing, the Lenders hereby expressly authorize the
Collateral Agent to execute any and all documents (including releases) with respect to the
Collateral and the rights of the Secured Parties with respect thereto (including the Intercreditor
Agreement), as contemplated by and in accordance with the provisions of this Agreement and the
Security Documents and acknowledge and agree that any such action by any Agent shall bind the
Lenders.
9.02 Rights as a Lender. Any Person serving an Agent hereunder shall have the same rights and
powers in its capacity as a Lender as any other Lender and may exercise the same as though it were
not such Agent and the term Lender or Lenders shall, unless otherwise expressly indicated or
unless the context otherwise requires, include such Person serving as an Agent hereunder in its
individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act
as the financial
advisor or in any other advisory capacity for and generally engage in any kind of business with any
Loan Party or any Subsidiary or other Affiliate
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thereof as if such Person were not an Agent
hereunder and without any duty to account therefor to the Lenders.
9.03 Exculpatory Provisions. No Agent shall have any duties or obligations except those expressly
set forth herein and in the other Loan Documents. Without limiting the generality of the
foregoing, Agents:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan
Documents that such Agent is required to exercise as directed in writing by the Required Lenders
(or such other number or percentage of the Lenders as shall be expressly provided for herein or in
the other Loan Documents), provided that no Agent shall be required to take any action
that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is
contrary to any Loan Document or applicable law; and
(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any
duty to disclose, and shall not be liable for the failure to disclose, any information relating to
the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as
Agent or any of its Affiliates in any capacity.
No Agent shall be liable for any action taken or not taken by it (i) with the consent or at
the request of the Required Lenders (or such other number or percentage of the Lenders as shall be
necessary, or as such Agent shall believe in good faith shall be necessary, under the circumstances
as provided in Sections 10.01 and 8.02) or (ii) in the absence of its own gross
negligence or willful misconduct. No Agent shall be deemed to have knowledge of any Default unless
and until notice describing such Default is given to such Agent by the Borrower, a Lender or the
L/C Issuer.
No Agent shall be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this Agreement or any other
Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder
or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of
the covenants, agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the Administrative Agent.
9.04 Reliance by Agent. Each Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing (including any electronic message, Internet or intranet website posting
or other distribution) believed by it
to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Each
Agent also may rely upon any statement made to it orally or by telephone and believed by it to have
been made by the proper Person, and shall not
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incur any liability for relying thereon. In
determining compliance with any condition hereunder to the making of a Loan, or the issuance of a
Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C
Issuer, such Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer
unless such Agent shall have received notice to the contrary from such Lender or the L/C Issuer
prior to the making of such Loan or the issuance of such Letter of Credit. Each Agent may consult
with legal counsel (who may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it in accordance with
the advice of any such counsel, accountants or experts.
9.05 Delegation of Duties. Each of the Administrative Agent and the Collateral Agent may perform
any and all of its duties and exercise its rights and powers hereunder or under any other Loan
Document by or through any one or more sub-agents appointed by the Administrative Agent or the
Collateral Agent, respectively. Each of the Administrative Agent and the Collateral Agent and any
such sub-agent may perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this Article shall apply
to any such sub-agent and to the Related Parties of the Administrative Agent and the Collateral
Agent and any such sub-agent, and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities of the
Administrative Agent and the Collateral Agent.
9.06 Resignation of Agent. The Administrative Agent or the Collateral Agent may at any time give
notice of its resignation to the Lenders, the L/C Issuer and the Borrower. Upon receipt of any
such notice of resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an
Affiliate of any such bank with an office in the United States. If no such successor shall have
been so appointed by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent or Collateral Agent gives notice of its resignation, then
such retiring Administrative Agent or Collateral Agent may on behalf of the Lenders and the L/C
Issuer, appoint a successor Administrative Agent or Collateral Agent meeting the qualifications set
forth above; provided that if the Administrative Agent or Collateral Agent shall notify the
Borrower and the Lenders that no qualifying Person has accepted such appointment, then such
resignation shall nonetheless become effective in accordance with such notice and (1) the retiring
Administrative Agent or Collateral Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any Collateral held by the
Administrative Agent or Collateral Agent on behalf of the Lenders or the L/C Issuer under any of
the Loan Documents, the retiring Administrative Agent or Collateral Agent shall continue to hold
such Collateral until such time as a successor Administrative Agent or Collateral Agent is
appointed) and (2) all payments, communications and determinations provided to be made by, to or
through the Administrative Agent or Collateral Agent shall instead be made by or to each Lender and
the L/C Issuer directly, until such time as the Required Lenders appoint a successor
Administrative Agent or Collateral Agent as provided for above in this Section. Upon the
acceptance of a successors appointment as Administrative Agent or Collateral Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers, privileges and duties
of the retiring (or retired) Administrative Agent or Collateral Agent, and the retiring
Administrative Agent or Collateral Agent shall be discharged from all of its duties and obligations
hereunder or under the other
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Loan Documents (if not already discharged therefrom as provided above
in this Section). The fees payable by the Borrower to a successor Administrative Agent or
Collateral Agent shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the retiring Administrative Agents or Collateral
Agents resignation hereunder and under the other Loan Documents, the provisions of this Article
and Section 10.04 shall continue in effect for the benefit of such retiring Administrative
Agent or Collateral Agent, its sub-agents and their respective Related Parties in respect of any
actions taken or omitted to be taken by any of them while the retiring Administrative Agent or
Collateral Agent was acting as the Administrative Agent.
Any resignation by Bank of America as the Administrative Agent pursuant to this Section shall
also constitute its resignation as L/C Issuer and Swing Line Lender. Upon the acceptance of a
successors appointment as the Administrative Agent hereunder, (a) such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer
and Swing Line Lender, (b) the retiring L/C Issuer and Swing Line Lender shall be discharged from
all of their respective duties and obligations hereunder or under the other Loan Documents, and (c)
the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit,
if any, outstanding at the time of such succession or make other arrangements satisfactory to the
retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect
to such Letters of Credit.
9.07 Non-Reliance on Agent and Other Lenders. Each Lender and the L/C Issuer acknowledges that it
has, independently and without reliance upon any Agent, any Agent-Related Person or any other
Lender or any of their Related Parties and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender
and the L/C Issuer also acknowledges that it will, independently and without reliance upon any
Agent, any Agent-Related Person or any other Lender or any of their Related Parties and based on
such documents and information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement, any other Loan
Document or any related agreement or any document furnished hereunder or thereunder.
9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the agents
listed on the cover page hereof shall have any powers, duties, liabilities or responsibilities
under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as
the Administrative Agent, a Lender or the L/C Issuer hereunder.
9.09 Administrative Agent May File Proofs of Claim . In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the
principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether the Administrative Agent shall have made any
demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or
otherwise
(a) to file and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and
unpaid and to file such other documents as may be necessary or advisable in order
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to have the
claims of the Lenders, the L/C Issuer and the Administrative Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuer and
the Administrative Agent and their respective agents and external counsel and all other amounts
due the Lenders, the L/C Issuer and the Administrative Agent under Sections 2.03(i) and
(j), 2.09 and 10.04) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such
claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such
payments to the Administrative Agent and, in the event that the Administrative Agent shall consent
to the making of such payments directly to the Lenders and the L/C Issuer, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and
advances of the Administrative Agent and its agents and external counsel, and any other amounts due
the Administrative Agent under Sections 2.09 and 10.04.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or
consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the
L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or
the L/C Issuer in any such proceeding.
9.10 Collateral and Guaranty Matters. The Lenders, the L/C Issuer and the Hedging Parties
irrevocably authorize the Collateral Agent, at its option and in its discretion,
(a) to release any Lien on any property granted to or held by the Collateral Agent under any
Loan Document (i) upon termination of the Aggregate Commitments and payment in full of all
Obligations, the Cash Management Obligations and the Secured Swap Obligations (other than
contingent indemnification obligations) and the expiration or termination of all Letters of
Credit, (ii) that is sold or to be sold as part of or in connection with any sale permitted
hereunder or under any other Loan Document, (iii) subject to Section 10.01, if approved,
authorized or ratified in writing by the Required Lenders or, except to the extent that any such
loss of perfection or priority results from the failure of the Administrative Agent or the
Collateral Agent to maintain possession of certificates actually delivered to it representing
securities pledged under the Security Documents or to file Uniform Commercial Code
continuation statements and except as to Collateral consisting of real property to the extent that
such losses are covered by a lenders title insurance policy and such insurer has not denied
coverage or (iv) if the property subject to such Lien is owned by a Guarantor, upon release of
such Guarantor from its obligations under its Guaranty pursuant to clause (c) below; and
(b) to subordinate any Lien on any Property granted to or held by the Collateral Agent under
any Loan Document to the holder of any Lien on such property that is permitted by Section
7.01(i); and
(c) to release any Guarantor from its obligations under the Guaranty if such Person ceases to
be a Restricted Subsidiary as a result of a transaction permitted hereunder.
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Upon request by the Collateral Agent at any time, the Required Lenders will confirm in writing
the Administrative Agents authority to release or subordinate its interest in particular types or
items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to
this Section 9.10. In each case as specified in this Section 9.10, the
Administrative Agent or the Collateral Agent will (and each Lender irrevocably authorizes such
Agent to), at the Borrowers expense, execute and deliver to the applicable Loan Party such
documents as such Loan Party may reasonably request to evidence the release or subordination of
such item of Collateral from the assignment and security interest granted under the Security
Documents, or to evidence the release of such Guarantor from its obligations under the Guaranty, in
each case in accordance with the terms of the Loan Documents and this Section 9.10.
9.11 Indemnification of Agents. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand each Agent and Agent-Related Person (to the
extent not reimbursed by or on behalf of any Loan Party and without limiting the obligation of any
Loan Party to do so), pro rata, and hold harmless each Agent and Agent-Related Person from and
against any and all losses, claims, damages, liabilities and related expenses (including the fees,
charges and disbursements of any external counsel for any Agent) incurred by it; provided that no
Lender shall be liable for the payment to any Agent or Agent-Related Person of any portion of such
losses, claims, damages, liabilities and related expenses resulting from such Agents or
Agent-Related Persons own gross negligence or willful misconduct, as determined by the final
judgment of a court of competent jurisdiction; provided that no action taken in accordance
with the directions of the Required Lenders (or such other number or percentage of the Lenders as
shall be required by the Loan Documents) shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section 9.11. In the case of any investigation, litigation
or proceeding giving rise to any loss, claim, damage, liability and related expense this
Section 9.11 applies whether any such investigation, litigation or proceeding is brought by
any Lender or any other Person. Without limitation of the foregoing, each Lender shall reimburse
the Administrative Agent or Collateral Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including attorney costs) incurred by such Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that such Agent is not reimbursed for such expenses by or on
behalf of the Borrower. The undertaking in this
Section 9.11 shall survive termination of the Aggregate Commitments, the payment of
all other Obligations, Secured Swap Obligations and Cash Management Obligations, and the
resignation of such Agent.
9.12 Intercreditor Agreement. The Collateral Agent is authorized to enter into the
Intercreditor Agreement, and the parties hereto acknowledge, on behalf of themselves and their
Affiliates, that the Intercreditor Agreement is binding upon them and their Affiliates without
execution thereof.
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ARTICLE X.
MISCELLANEOUS
10.01 Amendments, Etc. Subject to the Intercreditor Agreement with respect to those matters as to
which Hedging Parties are entitled to vote thereunder, no amendment or waiver of any provision of
this Agreement or any other Loan Document (other than the Intercreditor Agreement), and no consent
to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case
may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given;
provided, however, that no such amendment, waiver or consent shall:
(a) waive any condition set forth in Section 4.01(a) without the written consent of
each Lender;
(b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated
pursuant to Section 8.02) without the written consent of such Lender;
(c) postpone any date fixed by this Agreement or any other Loan Document for any payment or
mandatory prepayment of principal, interest, fees or other amounts due to the Lenders (or any of
them) or any scheduled or mandatory reduction of the Aggregate Commitments hereunder or under any
other Loan Document without the written consent of each Lender directly affected thereby, it being
understood that the waiver of (or amendment to the terms of) any mandatory prepayment of Loans
shall not constitute a postponement of any date scheduled for the payment of principal or
interest;
(d) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C
Borrowing, or (subject to clause (iv) of the second proviso to this Section 10.01) any
fees or other amounts payable hereunder or under any other Loan Document, without the written
consent of each Lender directly affected thereby; provided, however, that only the
consent of the Required Lenders shall be necessary (i) to amend the definition of Default Rate
or to waive any obligation of the Borrower to pay interest or Letter of Credit Fees at the Default
Rate and (ii) to change the manner of computation of any financial ratio (including any change in
any applicable defined term) used in determining the Applicable Rate that would result in a
reduction of any interest rate on any Loan or any fee payable hereunder;
(e) change Section 2.13 or Section 8.03 in a manner that would alter the pro
rata sharing of payments required thereby without the written consent of each Lender;
(f) change any provision of this Section or the definition of Required Lenders or any other
provision hereof specifying the number or percentage of Lenders required to amend, waive or
otherwise modify any rights hereunder or make any determination or grant any consent hereunder
without the written consent of each Lender;
(g) except as otherwise permitted herein, release any Guarantor from the Guaranty without the
written consent of each Lender; or
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(h) release of all or substantially all of the Collateral hereunder without the written
consent of each Lender;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights
or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of
Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing
and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or
duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall,
unless in writing and signed by the Administrative Agent or the Collateral Agent in addition to the
Lenders required above, affect the rights or duties of the Administrative Agent or the Collateral
Agent under this Agreement or any other Loan Document; and (iv) the Fee Letter may be amended, or
rights or privileges thereunder waived, in a writing executed only by the parties thereto.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of
such Lender may not be increased or extended without the consent of such Lender.
No amendment or waiver of any provision of the Intercreditor Agreement shall be effective unless
consented to in writing by the Required Lenders (and as otherwise required in the Intercreditor
Agreement), and each such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
10.02 Notices; Effectiveness; Electronic Communication.
(a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in subsection (b) below), all
notices and other communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or sent by telecopier,
or email as follows, and all notices and other communications expressly permitted hereunder to be
given by telephone shall be made to the applicable telephone number, as follows:
(i) if to the Borrower, the Administrative Agent, the Collateral Agent, the L/C Issuer
or the Swing Line Lender, to the address, telecopier number, electronic mail address or
telephone number specified for such Person on Schedule 10.02; and
(ii) if to any other Lender, to the address, telecopier number, electronic mail address
or telephone number specified in its Administrative Questionnaire.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall
be deemed to have been given when received; notices sent by telecopier shall be deemed to have been
given when sent (except that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day for the recipient).
Notices delivered through electronic communications to the extent provided in subsection (b) below,
shall be effective as provided in such subsection (b).
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(b) Electronic Communications. Notices and other communications to the Lenders and
the L/C Issuer hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative
Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C
Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable, has
notified the Administrative Agent that it is incapable of receiving notices under such Article by
electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree
to accept notices and other communications to it hereunder by electronic communications pursuant
to procedures approved by it, provided that approval of such procedures may be limited to
particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the senders receipt of an acknowledgement
from the intended recipient (such as by the return receipt requested function, as available,
return e-mail or other written acknowledgement), provided that if such notice or other
communication is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on the next Business Day
for the recipient, and (ii) notices or communications posted to an Internet or intranet website
shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as
described in the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.
(c) The Platform. THE PLATFORM IS PROVIDED AS IS AND AS AVAILABLE. THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS
OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM
THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY
RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION
WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of
its Related Parties (collectively, the Agent Parties) have any
liability to the Borrower, any Lender, the L/C Issuer or any other Person for losses, claims,
damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out
of the Borrowers or the Administrative Agents transmission of the Borrower Materials through the
Internet, except to the extent that such losses, claims, damages, liabilities or expenses are
determined by a court of competent jurisdiction by a final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Agent Party; provided,
however, that in no event shall any Agent Party have any liability to the Borrower, any
Lender, the L/C Issuer or any other Person for indirect, special, incidental, consequential or
punitive damages (as opposed to direct or actual damages).
(d) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures
shall, subject to applicable Law, have the same force and effect as manually-signed originals and
shall be binding on all Loan Parties, the Administrative Agent, the Collateral
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Agent, the L/C
Issuer and the Lenders. The Administrative Agent may also require that any such documents and
signatures be confirmed by a manually-signed original thereof; provided, however, that the failure
to request or deliver the same shall not limit the effectiveness of any facsimile document or
signature.
(e) Change of Address, Etc. Each of the Borrower, the Administrative Agent, the L/C
Issuer and the Swing Line Lender may change its address, telecopier or telephone number for
notices and other communications hereunder by notice to the other parties hereto. Each other
Lender may change its address, telecopier or telephone number for notices and other communications
hereunder by notice to the Borrower, the Administrative Agent, the L/C Issuer and the Swing Line
Lender. In addition, each Lender agrees to notify the Administrative Agent from time to time to
ensure that the Administrative Agent has on record (i) an effective address, contact name,
telephone number, telecopier number and electronic mail address to which notices and other
communications may be sent and (ii) accurate wire instructions for such Lender.
(f) Reliance by Administrative Agent, L/C Issuer and Lenders. The Administrative
Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon any notices
(including telephonic Committed Loan Notices and Swing Line Loan Notices) purportedly given by or
on behalf of the Borrower even if (i) such notices were not made in a manner specified herein,
were incomplete or were not preceded or followed by any other form of notice specified herein, or
(ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The
Borrower shall indemnify the Administrative Agent, the L/C Issuer, each Lender and the Related
Parties of each of them from all losses, costs, expenses and liabilities resulting from the
reliance by such Person on each notice purportedly given by or on behalf of the Borrower except to
the extent that such losses, claims, damages, liabilities or expenses are determined by a court of
competent jurisdiction by a final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Person. All telephonic notices to and other telephonic
communications with the Administrative Agent may be recorded by the Administrative Agent, and each
of the parties hereto hereby consents to such recording.
10.03 No Waiver; Cumulative Remedies. No failure by any Lender, the L/C Issuer or the Administrative Agent to exercise, and no delay
by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
10.04 Expenses; Indemnity; Damage Waiver.
(a) Costs and Expenses. The Borrower shall pay (i) all reasonable out-of-pocket
expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees,
charges and disbursements of external counsel for the Administrative Agent), in connection with
the syndication of the credit facilities provided for herein, the preparation, negotiation,
execution, delivery and administration of this Agreement and the other Loan Documents or any
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amendments, modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all
reasonable out-of-pocket expenses incurred by the Administrative Agent, any Lender or the L/C
Issuer (including the fees, charges and disbursements of any external counsel for the
Administrative Agent, any Lender or the L/C Issuer), in connection with the enforcement or
protection of its rights (A) in connection with this Agreement and the other Loan Documents,
including its rights under this Section, or (B) in connection with the Loans made or Letters of
Credit issued hereunder, including all such reasonably out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of Credit.
(b) Indemnification by the Borrower. The Borrower shall indemnify the Administrative
Agent (and any sub-agent thereof), each other Agent, each Lender and the L/C Issuer, and each
Related Party of any of the foregoing Persons (each such Person being called an
Indemnitee) against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses (including the fees, charges and disbursements of any
external counsel for any Indemnitee), incurred by any Indemnitee or asserted against any
Indemnitee by any third party or by any Loan Party or any Subsidiary thereof arising out of, in
connection with, as a result of or in any other way associated with (i) the execution or delivery
of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or
thereby, and the performance by the parties hereto of their respective obligations hereunder or
thereunder, (ii) the Collateral, the Loan Documents and consummation of the transactions or events
(including the enforcement or defense thereof and any occupation, operation, use or maintenance of
Collateral or other property of a Loan Party) at any time associated therewith or contemplated
therein, (iii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom
(including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if
the documents presented in connection with such demand do not strictly comply with the terms of
such Letter of Credit), (iv) any actual or alleged presence or release of Hazardous Materials on
or from any property owned or operated
by any Loan Party or any Subsidiary thereof, or any Environmental Liability related in any
way to any Loan Party or any Subsidiary thereof, or (v) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by any Loan Party or any
Subsidiary thereof, and regardless of whether any Indemnitee is a party thereto, in all cases,
whether or not caused by or arising, in whole or in part, out of the comparative, contributory or
sole negligence of the Indemnitee; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related
expenses (x) are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or
(y) result from a claim brought by the Borrower or any other Loan Party against an Indemnitee for
breach in bad faith of such Indemnitees obligations hereunder or under any other Loan Document,
if the Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on
such claim as determined by a court of competent jurisdiction.
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(c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails
to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by
it to the Administrative Agent (or any sub-agent thereof), each other Agent, the L/C Issuer or any
Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative
Agent (or any such sub-agent), the L/C Issuer or such Related Party, as the case may be, such
Lenders Applicable Percentage (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed
expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was
incurred by or asserted against the Administrative Agent (or any such sub-agent) or the L/C Issuer
in its capacity as such, or against any Related Party of any of the foregoing acting for the
Administrative Agent (or any such sub-agent) or L/C Issuer in connection with such capacity. The
obligations of the Lenders under this subsection (c) are subject to the provisions of Section
2.12(d).
(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable law, the Borrower shall not assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or as a result of,
this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the
proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any
damages arising from the use by unintended recipients of any information or other materials
distributed to such unintended recipients by such Indemnitee through telecommunications,
electronic or other information transmission systems in connection with this Agreement or the
other Loan Documents or the transactions contemplated hereby or thereby other than for direct or
actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as
determined by a final and nonappealable judgment of a court of competent jurisdiction.
(e) Payments. All amounts due under this Section shall be payable not later than ten
Business Days after demand therefor.
(f) Survival. The agreements in this Section shall survive the resignation of the
Administrative Agent, the L/C Issuer and the Swing Line Lender, the replacement of any Lender, the
termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the
other Obligations.
10.05 Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made
to the Administrative Agent, the L/C Issuer or any Lender, or the Administrative Agent, the L/C
Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff
or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the Administrative Agent,
the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the
extent of such recovery, the obligation or part thereof originally intended to be satisfied shall
be revived and continued in full force and effect as if such payment had not been made or such
setoff had not occurred, and (b) each Lender and
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the L/C Issuer severally agrees to pay to the
Administrative Agent upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such
demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from
time to time in effect. The obligations of the Lenders and the L/C Issuer under clause (b) of the
preceding sentence shall survive the payment in full of the Obligations and the termination of this
Agreement.
10.06 Successors and Assigns.
(a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of the Administrative Agent and
each Lender and no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this
Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this
Section, or (iii) by way of pledge or assignment of a security interest subject to the
restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by
any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall
be construed to confer upon any Person (other than the parties hereto, their respective successors
and assigns permitted hereby, Participants to the extent provided in subsection (d) of this
Section and, to the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans (including for purposes of this subsection (b),
participations in L/C Obligations and in Swing Line Loans) at the time owing to it);
provided that any such assignment shall be subject to the following conditions:
(i) Minimum Amounts.
(A) in the case of an assignment of the entire remaining amount of the
assigning Lenders Commitment and the Loans at the time owing to it or in the case
of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and
(B) in any case not described in subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the principal
outstanding balance of the Loans of the assigning Lender subject to each such
assignment, determined as of the date the Assignment and Assumption with respect to
such assignment is delivered to the Administrative Agent or, if Trade Date is
specified in the Assignment and Assumption, as of the Trade Date, shall not be less
than $5,000,000 unless each of the Administrative Agent and, so long as no Event of
Default has occurred and is continuing, the Borrower otherwise
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consents (each such
consent not to be unreasonably withheld or delayed); provided,
however, that concurrent assignments to members of an Assignee Group and
concurrent assignments from members of an Assignee Group to a single assignee (or to
an assignee and members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such minimum amount has been met.
(ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lenders rights and obligations
under this Agreement with respect to the Loans or the Commitment assigned, except that this
clause (ii) shall not apply to the Swing Line Lenders rights and obligations in respect of
Swing Line Loans;
(iii) Required Consents. No consent shall be required for any assignment
except to the extent required by subsection (b)(i)(B) of this Section and, in addition:
(A) the consent of the Borrower (such consent not to be unreasonably withheld
or delayed) shall be required unless (1) an Event of Default has occurred and is
continuing at the time of such assignment or (2) such assignment is to a Lender, an
Affiliate of a Lender or an Approved Fund;
(B) the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required if such assignment is to a
Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with
respect to such Lender;
(C) the consent of the L/C Issuer (such consent not to be unreasonably withheld
or delayed) shall be required for any assignment that increases the
obligation of the assignee to participate in exposure under one or more Letters
of Credit (whether or not then outstanding); and
(D) the consent of the Swing Line Lender (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment unless such assignment is
to a Lender, an Affiliate of a Lender or an Approved Fund.
(iv) Assignment and Assumption. The parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee in the amount, if any, required as set forth in Schedule
10.06; provided, however, that the Administrative Agent may, in its sole
discretion, elect to waive such processing and recordation fee in the case of any
assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent
an Administrative Questionnaire.
(v) No Assignment to the Borrower. No such assignment shall be made to the
Borrower or any of the Borrowers Affiliates or Subsidiaries.
(vi) No Assignment to Natural Persons. No such assignment shall be made to a
natural person.
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Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c)
of this Section, from and after the effective date specified in each Assignment and Assumption, the
assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lenders rights and obligations
under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be
entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04
with respect to facts and circumstances occurring prior to the effective date of such assignment.
Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee
Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that
does not comply with this subsection shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with subsection (d) of
this Section.
(c) Register. The Administrative Agent, acting solely for this purpose as an agent
of the Borrower, shall maintain at the Administrative Agents Office a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and addresses of the
Lenders, and the Commitments of, and principal amounts of the Loans and L/C Obligations owing to,
each Lender pursuant to the terms hereof from time to time (the Register). The entries
in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the
Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(d) Participations. Any Lender may at any time, without the consent of, or notice
to, the Borrower or the Administrative Agent, sell participations to any Person (other than a
natural person or the Borrower or any of the Borrowers Affiliates or Subsidiaries) (each, a
Participant) in all or a portion of such Lenders rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans (including such Lenders
participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i)
such Lenders obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of such obligations and
(iii) the Borrower, the Administrative Agent, the Lenders and the L/C Issuer shall continue to
deal solely and directly with such Lender in connection with such Lenders rights and obligations
under this Agreement.
Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant. Subject to subsection (e) of this Section,
the Borrower agrees that each Participant shall be entitled to the benefits of Sections
3.01, 3.04 and
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3.05 to the same extent as if it were a Lender and had acquired
its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 10.08 as though it
were a Lender, provided such Participant agrees to be subject to Section 2.13 as
though it were a Lender.
(e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.01 or 3.04 than the applicable Lender
would have been entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the Borrowers prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled
to the benefits of Section 3.01 unless the Borrower is notified of the participation sold
to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with
Section 3.01(e) as though it were a Lender.
(f) Certain Pledges. Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement (including under its Note, if any) to
secure obligations of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender
from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
(g) Electronic Execution of Assignments. The words execution, signed,
signature, and words of like import in any Assignment and Assumption shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of which shall be of the
same legal effect, validity or enforceability as a manually executed signature or the
use of a paper-based recordkeeping system, as the case may be, to the extent and as provided
for in any applicable law, including the Federal Electronic Signatures in Global and National
Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state
laws based on the Uniform Electronic Transactions Act.
(h) Resignation as L/C Issuer or Swing Line Lender after Assignment. Notwithstanding
anything to the contrary contained herein, if at any time Bank of America assigns all of its
Commitment and Loans pursuant to subsection (b) above, Bank of America may, (i) upon 30 days
notice to the Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days notice to
the Borrower, resign as Swing Line Lender. In the event of any such resignation as L/C Issuer or
Swing Line Lender, the Borrower shall be entitled to appoint from among the Lenders a successor
L/C Issuer or Swing Line Lender hereunder; provided, however, that no failure by
the Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C
Issuer or Swing Line Lender, as the case may be. If Bank of America resigns as L/C Issuer, it
shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with
respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C
Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to
make Base Rate Committed Loans or fund risk participations in Unreimbursed Amounts pursuant to
Section 2.03(c)). If Bank of America resigns as Swing Line Lender, it shall retain all
the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made
by it and outstanding as of the effective date of such resignation, including the right to require
the Lenders to make Base Rate
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Committed Loans or fund risk participations in outstanding Swing
Line Loans pursuant to Section 2.04(c). Upon the appointment of a successor L/C Issuer
and/or Swing Line Lender, (a) such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case
may be, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the
Letters of Credit, if any, outstanding at the time of such succession or make other arrangements
satisfactory to Bank of America to effectively assume the obligations of Bank of America with
respect to such Letters of Credit.
10.07 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent, the
Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its Affiliates and to its and its
Affiliates respective partners, directors, officers, employees, agents, advisors and
representatives (it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority purporting to have
jurisdiction over it (including any self-regulatory authority, such as the National Association of
Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the same as those of
this Section, to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction
relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the
extent such Information (x) becomes publicly available other than as a result of a breach of this
Section or (y) becomes available to the Administrative Agent, any Lender, the L/C Issuer or any of
their respective Affiliates on a nonconfidential basis from a source other than the Borrower.
For purposes of this Section, Information means all information received from the
Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective
businesses, other than any such information that is available to the Administrative Agent, any
Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by the Borrower or any
Subsidiary, provided that, in the case of information received from the Borrower or any
Subsidiary after the date hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
Each of the Administrative Agent, the Lenders and the L/C Issuer acknowledges that (a) the
Information may include material non-public information concerning the Borrower or a Subsidiary, as
the case may be, (b) it has developed compliance procedures regarding the use of material
non-public information and (c) it will handle such material non-public information in accordance
with applicable Law, including Federal and state securities Laws.
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10.08 Deposit Accounts; Right of Setoff. Each Loan Party hereby grants to L/C Issuer and each
Lender a security interest, a Lien, and a right of offset, each of which shall be in addition to
all other interests, Liens, and rights of L/C Issuer or any Lender at common Law, under the Loan
Documents, or otherwise, to secure the repayment of the Obligations, the Cash Management
Obligations and the Secured Swap Obligations upon and against (a) any and all moneys, securities or
other property (and the proceeds therefrom) of such Loan Party now or hereafter held or received by
or in transit to L/C Issuer or any Lender from or for the account of such Loan Party, whether for
safekeeping, custody, pledge, transmission, collection or otherwise, (b) any and all deposits
(general or special, time or demand, provisional or final, in whatever currency) of such Loan Party
with L/C Issuer or any Lender, and (c) any other credits and claims of such Loan Party at any time
existing against L/C Issuer or any Lender, including claims under certificates of deposit. If an
Event of Default shall have occurred and be continuing, each Lender, the L/C Issuer and each of
their respective Affiliates is hereby authorized at any time and from time to time, to the fullest
extent permitted by applicable law, to foreclose upon such Lien and/or to set off and apply any and
all deposits (general or special, time or demand, provisional or final, in whatever currency) at
any time held and other obligations (in whatever currency) at any time owing by such Lender, the
L/C Issuer or any such Affiliate to or for the credit or the account of the Borrower or any other
Loan Party against any and all of the Obligations, the Cash Management Obligations and the Secured
Swap Obligations to such Lender or the L/C Issuer, irrespective of whether or not such Lender or
the L/C Issuer shall have made any demand under this Agreement or any other Loan Document and
although such obligations of the Borrower or such Loan Party may be contingent or unmatured or are
owed to a branch or office of such Lender or the L/C Issuer different from
the branch or office holding such deposit or obligated on such indebtedness. The rights of each
Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to other
rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or their
respective Affiliates may have. Each Lender and the L/C Issuer agrees to notify the Borrower and
the Administrative Agent promptly after any such foreclosure or such setoff and application,
provided that the failure to give such notice shall not affect the validity of such
foreclosure or such setoff and application. The remedies of foreclosure and offset are separate
and cumulative, and either may be exercised independently of the other without regard to procedures
or restrictions applicable to the other.
10.09 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan
Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the
maximum rate of non-usurious interest permitted by applicable Law (the Maximum Rate). If
the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such
unpaid principal, refunded to the Borrower. In determining whether the interest contracted for,
charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person
may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations hereunder.
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10.10 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts
(and by different parties hereto in different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single contract. This Agreement
and the other Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in Section 4.01, this
Agreement shall become effective when it shall have been executed by the Administrative Agent and
when the Administrative Agent shall have received counterparts hereof that, when taken together,
bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
10.11 Survival of Representations and Warranties. All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or
in connection herewith or therewith shall survive the execution and delivery hereof and thereof.
Such representations and warranties have been or will be relied upon by the Administrative Agent
and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or
on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice
or knowledge of any Default at the time of any Credit Extension, and shall continue in full force
and effect as
long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter
of Credit shall remain outstanding.
10.12 Severability. If any provision of this Agreement or the other Loan Documents is held to be
illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining
provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby
and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which comes as close as
possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a
provision in a particular jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
10.13 Replacement of Lenders. If any Lender requests compensation under Section 3.04, or
if the Borrower is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 3.01, or if any Lender is a
Defaulting Lender or in connection with any proposed amendment, modification, termination, waiver
or consent with respect to any of the provisions hereof as contemplated by Section 10.01,
the consent of Required Lenders shall have been obtained but the consent of one or more of such
other Lenders whose consent is required shall not have been obtained, if any other circumstance
exists hereunder that gives the Borrower the right to replace a Lender as a party hereto, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject
to the restrictions contained in, and consents required by, Section 10.06), all of its
interests, rights and obligations under this Agreement and the related Loan Documents to an
assignee that shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment), provided that:
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(a) the Borrower shall have paid to the Administrative Agent the assignment fee specified in
Section 10.06(b);
(b) such Lender shall have received payment of an amount equal to the outstanding principal
of its Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder and under the other Loan Documents (including any amounts under
Section 3.05) from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts);
(c) in the case of any such assignment resulting from a claim for compensation under
Section 3.04 or payments required to be made pursuant to Section 3.01, such
assignment will result in a reduction in such compensation or payments thereafter; and
(d) such assignment does not conflict with applicable Laws.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as
a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to
require such assignment and delegation cease to apply.
10.14 Governing Law; Jurisdiction; Etc.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
(b) SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY
AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT
OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION
OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN
DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.
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(c) WAIVER OF VENUE. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF
THIS SECTION. EACH OF THE PARTIES HERETO HEREBY AGREES THAT SECTIONS 5-1401 AND
4-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THE LOAN
DOCUMENTS AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) SERVICE OF PROCESS. IN FURTHERANCE OF THE FOREGOING, BORROWER AND EACH GUARANTOR
HEREBY IRREVOCABLY DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, 111 EIGHTH AVENUE , NEW YORK,
NEW YORK 10011, AS AGENT OF BORROWER AND EACH GUARANTOR TO RECEIVE SERVICE OF ALL PROCESS BROUGHT
AGAINST BORROWER OR SUCH
GUARANTOR WITH RESPECT TO ANY SUCH PROCEEDING IN ANY SUCH COURT IN NEW YORK, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY BORROWER AND EACH GUARANTOR TO BE EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. COPIES OF ANY SUCH PROCESS SO SERVED SHALL ALSO BE SENT BY REGISTERED MAIL TO
BORROWER OR SUCH GUARANTOR AT ITS ADDRESS SET FORTH BELOW, BUT THE FAILURE OF BORROWER OR SUCH
GUARANTOR TO RECEIVE SUCH COPIES SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS AS
AFORESAID. BORROWER AND EACH GUARANTOR SHALL FURNISH TO ADMINISTRATIVE AGENT, L/C ISSUER AND
LENDERS A CONSENT OF CT CORPORATION SYSTEM AGREEING TO ACT HEREUNDER PRIOR TO THE EFFECTIVE DATE
OF THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ADMINISTRATIVE AGENT, L/C ISSUER AND
LENDERS TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF
ADMINISTRATIVE AGENT, L/C ISSUER AND LENDERS TO BRING PROCEEDINGS AGAINST BORROWER OR EACH
GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION. IF FOR ANY REASON CT CORPORATION SYSTEM SHALL
RESIGN OR OTHERWISE CEASE TO ACT AS BORROWERS OR EACH GUARANTORS AGENT, BORROWER AND SUCH
GUARANTOR HEREBY IRREVOCABLY AGREES TO (A) IMMEDIATELY DESIGNATE AND APPOINT A NEW AGENT
REASONABLY ACCEPTABLE TO ADMINISTRATIVE AGENT TO SERVE IN SUCH CAPACITY AND, IN SUCH EVENT, SUCH
NEW AGENT SHALL BE DEEMED TO BE SUBSTITUTED FOR CT CORPORATION SYSTEM FOR ALL PURPOSES HEREOF AND
(B) PROMPTLY DELIVER TO ADMINISTRATIVE AGENT THE WRITTEN CONSENT (IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO ADMINISTRATIVE AGENT) OF SUCH NEW AGENT AGREEING TO SERVE IN SUCH CAPACITY.
10.15 Waiver of Jury Trial and Special Damages. EACH PARTY HERETO AND EACH OTHER LOAN PARTY HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST
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EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO AND EACH OTHER LOAN PARTY (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION. EACH LOAN PARTY AND EACH LENDER HEREBY FURTHER (A) IRREVOCABLY
WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY SUCH LITIGATION ANY SPECIAL DAMAGES, AS DEFINED BELOW, (B) CERTIFY THAT NO PARTY HERETO NOR
ANY REPRESENTATIVE OR AGENT OR COUNSEL
FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (C) ACKNOWLEDGE THAT IT HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
CONTAINED IN THIS SECTION. AS USED IN THIS SECTION, SPECIAL DAMAGES INCLUDES ALL SPECIAL,
CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE ANY
PAYMENTS OR FUNDS WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY OTHER
PARTY HERETO.
10.16 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction
contemplated hereby, the Borrower and each other Loan Party acknowledges and agrees, and
acknowledges its Affiliates understanding, that: (i) the credit facility provided for hereunder
and any related arranging or other services in connection therewith (including in connection with
any amendment, waiver or other modification hereof or of any other Loan Document) are an
arms-length commercial transaction between the Borrower, each other Loan Party and their
respective Affiliates, on the one hand, and the Administrative Agent, the Syndication Agent and the
Arrangers, on the other hand, and the Borrower and each other Loan Party is capable of evaluating
and understanding and understands and accepts the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents (including any amendment, waiver or other
modification hereof or thereof); (ii) in connection with the process leading to such transaction,
the Administrative Agent, the Syndication Agent and any Arranger each is and has been acting solely
as a principal and is not the financial advisor, agent or fiduciary, for the Borrower, any other
Loan Party or any of their respective Affiliates, stockholders, creditors or employees or any other
Person; (iii) neither the Administrative Agent, the Syndication Agent nor any Arranger has assumed
or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower or any
other Loan Party with respect to any of the transactions contemplated hereby or the process leading
thereto,
112
including with respect to any amendment, waiver or other modification hereof or of any
other Loan Document (irrespective of whether the Administrative Agent, the Syndication Agent or any
Arranger advised or is currently advising the Borrower, any other Loan Party or any of their
respective Affiliates on other matters) and neither the Administrative Agent, the Syndication Agent
nor any Arranger has any obligation to the Borrower, any other Loan Party or any of their
respective Affiliates with respect to the transactions contemplated hereby except those obligations
expressly set forth herein and in the other Loan Documents; (iv) the Administrative Agent, the
Syndication Agent and each Arranger and their respective Affiliates may be engaged in a broad range
of transactions that involve interests that differ from those of the Borrower, the other Loan
Parties and their respective Affiliates, and neither the Administrative Agent nor the Arranger has
any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary
relationship; and (v) the Administrative Agent, the Syndication Agent and each Arranger have not
provided and will not provide any legal, accounting, regulatory or tax advice with respect to any
of the transactions contemplated hereby (including any amendment, waiver or other modification
hereof or of any other Loan Document) and each of the Borrower and the other Loan Parties has
consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate. Each of the Borrower and the
other Loan Parties hereby waives and releases, to the fullest extent permitted by law, any claims
that it may have against the Administrative Agent, the Syndication Agent and any Arranger with
respect to any breach or alleged breach of agency or fiduciary duty.
10.17 USA PATRIOT Act Notice. Each Lender that is subject to the Act (as hereinafter defined) and
the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower
that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the Act), it is required to obtain, verify and record information
that identifies the Borrower, which information includes the name and address of the Borrower and
other information that will allow such Lender or the Administrative Agent, as applicable, to
identify the Borrower in accordance with the Act.
10.18 No General Partners Liability. The Administrative Agent and the Lenders agree for
themselves and their respective successors and assigns, including any subsequent holder of any
Note, that no claim under this Agreement or under any other Loan Document shall be made against
General Partner, and that no judgment, order or execution entered in any suit, action or
proceeding, whether legal or equitable, hereunder or on any other Loan Document shall be obtained
or enforced, against General Partner or its assets for the purpose of obtaining satisfaction and
payment of amounts owed under this Agreement or any other Loan Document.
10.19 Time of the Essence. Time is of the essence of the Loan Documents.
10.20 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
[Remainder of page intentionally left blank.]
113
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.
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TARGA RESOURCES PARTNERS LP |
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By: |
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Targa Resources GP LLC, its sole general |
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partner |
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By: |
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/s/ Howard M. Tate |
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Howard M. Tate |
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Vice President Finance and Assistant |
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Treasurer |
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[Credit Agreement Signature Page]
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BANK OF AMERICA, N.A., as Administrative Agent
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By: |
/s/ Todd Mac Neill |
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Name: |
Todd Mac Neill |
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Title: |
Vice President |
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[Credit Agreement Signature Page]
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BANK OF AMERICA, N.A., as a Lender,
L/C Issuer and Swing Line Lender
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By: |
/s/ Adam H. Fey |
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Name: |
Adam H. Fey |
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Title: |
Vice President |
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[Credit Agreement Signature Page]
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WACHOVIA BANK, NATIONAL
ASSOCIATION, as Syndication Agent and as a Lender
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By: |
/s/ Paul Pritchett |
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Name: |
Paul Pritchett |
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Title: |
Vice President |
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[Credit Agreement Signature Page]
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MERRILL LYNCH CAPITAL, A DIVISION
OF MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC., as
Co-Documentation Agent and as a Lender
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By: |
/s/ Gregory Hanson |
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Name: |
Gregory Hanson |
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Title: |
Vice President |
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[Credit Agreement Signature Page]
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ROYAL BANK OF CANADA, as
Co-Documentation Agent and as a Lender
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By: |
/s/ Scott Gildea |
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Name: |
Scott Gildea |
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Title: |
Authorized Signatory |
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[Credit Agreement Signature Page]
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THE ROYAL BANK OF SCOTLAND PLC, as
Co-Documentation Agent and as a Lender
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By: |
/s/ Brian Smith |
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Name: |
Brian Smith |
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Title: |
Vice President |
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[Credit Agreement Signature Page]
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BNP PARIBAS, as a Lender
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By: |
/s/ Mark A. Cox |
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Name: |
Mark A. Cox |
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Title: |
Director |
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By: |
/s/ Greg Smothers |
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Name: |
Greg Smothers |
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Title: |
Vice President |
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[Credit Agreement Signature Page]
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SOCIÉTÉ GÉNÉRALE, as a Lender
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By: |
/s/ Eventa Robcinc |
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Name: |
Eventa Robcinc |
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Title: |
Vice President |
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[Credit Agreement Signature Page]
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BMO CAPITAL MARKETS FINANCING, INC., as a Lender
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By: |
/s/ Cahal Carmody |
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Name: |
Cahal Carmody |
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Title: |
Vice President |
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[Credit Agreement Signature Page]
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ABN AMRO BANK N.V., as a Lender
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By: |
/s/ Jim Moyes |
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Name: |
Jim Moyes |
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Title: |
Managing Director |
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By: |
/s/ John Reed |
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Name: |
John Reed |
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Title: |
Director |
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[Credit Agreement Signature Page]
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THE BANK OF NOVA SCOTIA, as a Lender
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By: |
/s/ Gregory E. George |
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Name: |
Gregory E. George |
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Title: |
Managing Director |
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[Credit Agreement Signature Page]
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CITIBANK, N.A., as a Lender
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By: |
/s/ Ashish Sethi |
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Name: |
Ashish Sethi |
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Title: |
Attorney-in-Fact |
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[Credit Agreement Signature Page]
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AMEGY BANK NATIONAL ASSOCIATION, as a Lender
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By: |
/s/ W. Bryan Chapman |
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Name: |
W. Bryan Chapman |
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Title: |
Vice President |
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[Credit Agreement Signature Page]
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COMPASS BANK, as a Lender
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By: |
/s/ Murray E. Brasseux |
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Name: |
Murray E. Brasseux |
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Title: |
Executive Vice President |
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[Credit Agreement Signature Page]
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U.S. BANK NATIONAL ASSOCIATION, as a Lender
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By: |
/s/ Tracy L. Harnisch |
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Name: |
Tracy L. Harnisch |
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Title: |
Assistant Vice President |
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[Credit Agreement Signature Page]
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FORTIS CAPITAL CORP., as a Lender
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By: |
/s/ Darrell Holley |
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Name: |
Darrell Holley |
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Title: |
Managing Director |
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By: |
/s/ David Montgomery |
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Name: |
David Montgomery |
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Title: |
Senior Vice President |
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[Credit Agreement Signature Page]
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JPMORGAN CHASE BANK, N.A., as a Lender
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By: |
/s/ Kevin J. Utsey |
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Name: |
Kevin J. Utsey |
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Title: |
Vice President |
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[Credit Agreement Signature Page]
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COMERICA BANK, as a Lender
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By: |
/s/ Josh Strong |
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Name: |
Josh Strong |
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Title: |
Corporate Banking Officer |
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[Credit Agreement Signature Page]
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GUARANTY BANK, as a Lender
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By: |
/s/ Jim R. Hamilton |
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Name: |
Jim R. Hamilton |
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Title: |
Senior Vice President |
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[Credit Agreement Signature Page]
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NATIXIS, as a Lender
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By: |
/s/ Louis P. Laville, III |
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Name: |
Louis P. Laville, III |
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Title: |
Managing Director |
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By: |
/s/ Daniel Payer |
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Name: |
Daniel Payer |
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Title: |
Director |
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[Credit Agreement Signature Page]
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UBS LOAN FINANCE LLC, as a Lender
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By: |
/s/ Richard L. Tavrow |
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Name: |
Richard L. Tavrow |
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Title: |
Director |
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By: |
/s/ Irja R. Otsa |
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Name: |
Irja R. Otsa |
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Title: |
Associate Director |
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[Credit Agreement Signature Page]
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LEHMAN BROTHERS COMMERCIAL
BANK, as a Lender
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By: |
/s/ George Janes |
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Name: |
George Janes |
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Title: |
Chief Credit Officer |
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[Credit Agreement Signature Page]
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CREDIT SUISSE, as a Lender
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By: |
/s/ James Morgan |
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Name: |
James Morgan |
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Title: |
Managing Director |
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By: |
/s/ Nupur Kumar |
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Name: |
Nupur Kumar |
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Title: |
Associate |
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[Credit Agreement Signature Page]
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GOLDMAN SACHS CREDIT PARTNERS L.P., as a Lender
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By: |
/s/ Mark Walton |
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Name: |
Mark Walton |
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Title: |
Authorized Signatory |
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[Credit Agreement Signature Page]
SCHEDULE 1.01
CERTAIN PERMITTED HEDGING PARTIES
Bank of America, N.A.
Bank of Montreal
BP Corporation North America Inc.
BP Products North America Inc.
ConocoPhillips Gas Power Marketing, a division of ConocoPhillips, Inc.
Coral Energy Resources LP
Deutsche Bank AG, New York Branch
ExxonMobil Corporation
J. Aron & Company
JPMorgan Chase Bank, N.A.
Merrill Lynch Commodities, Inc.
Morgan Stanley Capital Group, Inc.
Sempra Energy Trading Group.
Shell Trading (US) Company
Société Générale
Wachovia Bank, National Association
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* |
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In each case, the Hedging Party shall be the Affiliate which is trading entity of the
counterparties specified above. |
SCHEDULE 2.01
COMMITMENTS
AND APPLICABLE PERCENTAGES
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Applicable |
Lender |
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Commitment |
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Percentage |
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Bank of America, N.A. |
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$ |
29,750,000 |
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5.950000000 |
% |
Wachovia Bank, National Association |
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$ |
29,750,000 |
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5.950000000 |
% |
Merrill Lynch Capital |
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$ |
29,500,000 |
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5.900000000 |
% |
The Royal Bank of Scotland plc |
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$ |
29,500,000 |
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5.900000000 |
% |
Royal Bank of Canada |
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$ |
29,500,000 |
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5.900000000 |
% |
BNP Paribas |
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$ |
25,000,000 |
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5.000000000 |
% |
Société Générale |
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$ |
25,000,000 |
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5.000000000 |
% |
BMO Capital Markets Financing, Inc. |
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$ |
25,000,000 |
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5.000000000 |
% |
ANB AMRO Bank N.V. |
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$ |
25,000,000 |
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5.000000000 |
% |
The Bank of Nova Scotia |
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$ |
25,000,000 |
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5.000000000 |
% |
Citibank, NA |
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$ |
19,000,000 |
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3.800000000 |
% |
Amegy Bank National Association |
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$ |
19,000,000 |
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3.800000000 |
% |
Compass Bank |
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$ |
19,000,000 |
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3.800000000 |
% |
U.S. Bank National Association |
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$ |
19,000,000 |
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3.800000000 |
% |
Fortis Capital Corp. |
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$ |
19,000,000 |
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3.800000000 |
% |
JPMorgan Chase Bank, N.A. |
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$ |
19,000,000 |
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3.800000000 |
% |
Comerica Bank |
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$ |
19,000,000 |
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3.800000000 |
% |
Guaranty Bank |
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$ |
19,000,000 |
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3.800000000 |
% |
Natixis |
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$ |
19,000,000 |
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3.800000000 |
% |
UBS Loan Finance LLC |
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$ |
14,000,000 |
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2.800000000 |
% |
Lehman Brothers Commercial Bank |
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$ |
14,000,000 |
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2.800000000 |
% |
Credit Suisse |
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$ |
14,000,000 |
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2.800000000 |
% |
Goldman Sachs Credit Partners L.P. |
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$ |
14,000,000 |
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2.800000000 |
% |
Total |
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$ |
500,000,000 |
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100.000000000 |
% |
SCHEDULE 4.01
SECURITY DOCUMENTS
1. |
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Guaranty Agreement. |
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2. |
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Pledge and Security Agreement. |
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3. |
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Deed of Trust, Mortgage, Assignment, Security Agreement, Fixture Filing and Financing
Statement from Targa North Texas LP, to PRLAP, Inc., as Trustee and Bank of America, N.A., as
Collateral Agent. |
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4. |
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Deed of Trust, Mortgage, Assignment, Security Agreement, Fixture Filing and Financing
Statement from Targa Intrastate Pipeline LP to PRLAP, Inc., as Trustee and Bank of America,
N.A., as Collateral Agent. |
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5. |
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UCC-1 Financing Statements related to all of the foregoing. |
SCHEDULE 5.13
SUBSIDIARIES;
OTHER EQUITY INVESTMENTS
Part (a). Subsidiaries.
Targa Resources Operating GP LLC, a Delaware limited liability company
Targa
Resources Opererating LP, a Delaware limited partnership
Targa North Texas GP LLC, a Delaware limited liability company
Targa North Texas LP, a Delaware limited partnership
Targa Intrastate Pipeline LLC, a Delaware limited liability company
Part (b). Other Equity Investments.
Part (b)(ii). Loan Party Information.
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ADDRESS OF |
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PRINCIPAL |
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PRIOR |
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JURISDICTION OF |
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PLACE OF |
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ORGANIZATIONAL |
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PRIOR |
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JURISDICTION OF |
NAME |
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FORMATION |
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BUSINESS |
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FEIN |
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ID NUMBER |
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NAMES |
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FORMATION |
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1000 Louisiana,
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Ste. 4300
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Targa Resources Partners LP |
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Delaware |
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Houston, TX
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77002 |
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65-1295427 |
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4239562 |
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None |
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None |
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1000 Louisiana, |
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Targa Resources Operating GP LLC |
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Ste. 4300
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Delaware |
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Houston, TX
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77002 |
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64-0949235 |
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4292540 |
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None |
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None |
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1000 Louisiana,
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Ste. 4300
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Targa Resources Operating LP |
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Delaware |
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Houston, TX
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77002 |
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64-0949238 |
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4292546 |
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None |
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None |
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1000 Louisiana,
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Ste. 4300
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Targa North Texas GP LLC |
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Delaware |
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Houston,TX
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77002 |
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None |
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4066474 |
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None |
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None |
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1000 Louisiana,
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Ste. 4300
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Targa North Texas LP |
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Delaware |
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Houston, TX
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77002 |
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20-4036176 |
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4067407 |
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None |
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None |
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1000 Louisiana,
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Ste. 4300
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Targa Intrastate Pipeline LLC |
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Delaware |
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Houston, TX 77002 |
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76-0634836 |
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3173058 |
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Dynegy Intrastate |
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Pipeline, LLC |
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None |
Part (b)(ii). Other Equity Investments.
None.
SCHEDULE 5.21
MATERIAL REAL PROPERTY
Material Fee Owned Property:
The cryogenic natural gas processing plant located in Wise County, Texas, including the real
property owned by Targa North Texas on which the Chico Plant and related equipment and operations
are located.
Material Leased Property:
The cryogenic natural gas processing plant located in Shackelford County, Texas, including the
real property leased by Targa North Texas on which the Shackelford Plant and related equipment and
operations are located.
INSURANCE SUMMARY
Insurance requirements with respect to business interruption and liability for injury to
persons and property as required by Section 6.07 shall be for coverages (and deductibles in
the case of liability coverage) as are customarily carried under similar circumstances and subject
to the following minimum amounts and periods:
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1) |
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Comprehensive General/Excess Liability Insurance covering liability for third party
property damage and/or bodily injury, with a minimum coverage of $100,000,000 per
occurrence (subject to customary annual aggregate limits). |
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2) |
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Business Interruption Insurance providing coverage for operations for not less than a
12 month period of indemnity with no more than a 60 day waiting period. |
As of the Closing Date, the Loan Parties maintain the actual insurance policies as set forth
on the following two pages, but such policies are not part of the minimum insurance requirements.
SCHEDULE 6.07
INSURANCE SUMMARY
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RETENTION/ |
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LINE OF COVERAGE |
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LIMIT OF LIABILITY |
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DEDUCTIBLE |
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POLICY TERM |
1)
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Workers Compensation/Employers
Liability
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Statutory/$1MM per occurrence
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$250,000 per
occurrence
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10/31/06-10/31/07 |
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2)
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Business Auto Liability
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$1MM any one occurrence CSL
Self-Insure Auto Physical Damage
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$250,000 per
occurrence
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10/31/06-10/31/07 |
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3)
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Excess Liability (Includes Sudden & Accidental
Pollution)
1st Layer Excess Liability
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$35MM and in the aggregate as applicable excess
of underlying limits
(Includes Employment Practices Liability,
limited Errors & Omissions, Incidental Medical
Malpractice, etc.)
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As per Schedule of
Underlyings,
including $1MM GL
SIR.
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10/31/06-10/31/07 |
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4)
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2nd Layer Excess Liability
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$100MM xs $35MM
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Underlying
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10/31/06-10/31/07 |
5)
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3rd Layer Excess Liability
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$25MM xs $135MM
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Underlying
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10/31/06-10/31/07 |
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6)
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4th
Layer Excess
Liability
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$140MM xs $160MM
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Underlying
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10/31/06-10/31/07 |
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7)
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5th
Layer Excess
Liability
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$100MM xs $300MM (total $400MM)
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Underlying
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10/31/06-10/31/07 |
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8)
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All Risk Onshore
Property Insurance
Coverage
Flood, Windstorm,
Earthquake are Annual Aggregate
Limits
MLP will have
separate
Aggregate/Sublimits
under main Targa
policy
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$400MM per occurrence CSL Replacement Cost Value property damage
(except for ACV on old shut-down TMS gas plants/compressor
stations), boiler & machinery, EDP, transit, earthquake, flood,
windstorm, expediting expenses, extra expenses, product stored
below ground, construction projects, pollution cleanup. Program placed in following layers:
$50MM Primary (Incl. Flood/Windstorm)
$50MM xs $50MM Excess (Incl. F/W)
$300MM xs $100MM Excess (Excl. F/W)
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$500K (Interest)
Plants < $50MM
$1MM (100%)
Plants > $50MM
Windstorm/Flood: 2.0% of Insured Values, subject to
$2.5MM (100%) MIN and $10MM (100%)
MAX
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10/31/05-4/16/07 |
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RETENTION/ |
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LINE OF COVERAGE |
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LIMIT OF LIABILITY |
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DEDUCTIBLE |
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POLICY TERM |
9)
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Business Interruption/Contingent
Business Interruption
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Gross earnings actual loss
sustained wording
24 Mos. Period of Indemnity
$10MM CBI Named
Customers/Suppliers
$5MM CBI Un-named
Customers/Suppliers
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30 day waiting period
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10/31/05-4/16/07 |
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10)
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Stand-Alone Terrorism Property/BI
Coverage
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$200MM per occurrence/policy
aggregate
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$1MM PD
30 day wait BI
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10/31/05-4/16/07 |
SCHEDULE 7.01
EXISTING LIENS
None.
SCHEDULE 7.09
AFFILIATE TRANSACTIONS
1. |
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Borrower Partnership Agreement |
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2. |
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Contribution Agreement dated as of December 1, 2005 among Targa Midstream Services Limited
Partnership, Targa GP Inc., Targa LP Inc., Targa Downstream GP LLC, Targa North Texas GP LLC,
Targa Straddle GP LLC, Targa Permian GP LLC, Targa Versado GP LLC, Targa Downstream LP, Targa
North Texas, Targa Straddle LP, Targa Permian LP and Targa Versado LP (the 2005
Contribution Agreement). |
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3. |
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Amendment to 2005 Contribution Agreement dated as of January 1, 2007. |
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4. |
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Contribution, Conveyance and Assumption Agreement dated as of February 14, 2007 among the
Borrower, Targa Operating LP, General Partner, Targa Operating GP LLC, Targa GP, Inc., Targa
LP, Inc., Targa Regulated Holdings LLC, Targa North Texas LP, and Targa North Texas GP LLC. |
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5. |
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Omnibus Agreement among Targa, the General Partner and the Borrower. |
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6. |
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Natural Gas Purchase Agreement dated as of January 1, 2007 between Targa Gas Marketing LLC
and Targa North Texas. |
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7. |
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Products Purchase Agreement dated as of January 1, 2007 between Targa Liquids Marketing and
Trade and Targa North Texas. |
SCHEDULE 10.02
ADMINISTRATIVE AGENTS OFFICE;
CERTAIN ADDRESSES FOR NOTICES
BORROWER:
Targa Resources Partners LP
1000 Louisiana, Suite 4300
Houston, Texas 77002
Attention: Vice President Finance
Telephone: 713.584.1024
Telecopier: 713.584.1523
Electronic Mail: howardtate@targaresources.com
Website Address: www.targaresources.com
U.S. Taxpayer Identification Number: 65-1295427
ADMINISTRATIVE AGENT:
Administrative Agents Office
(for payments and Requests for Credit Extensions):
Bank of America, N.A.
901 Main St
Mail Code: TX1-492-14-11
Dallas, TX 75202
Attention: Ramon Gomez
Telephone: 214.209.2627
Telecopier: 214.290.8367
Electronic Mail: ramon.gomez_jr@bankofamerica.com
Account No.: 1292000883
Ref: Targa Resources
ABA# 026009593
Other Notices as Administrative Agent:
Bank of America, N.A.
Agency Management
100 Federal St
Mail Code: MA5-100-11-02
Boston, MA 02110
Attention: Todd Mac Neill
Telephone: 617.434.6842
Telecopier: 617.790.1361
Electronic Mail: Todd.G.MacNeill@bankofamerica.com
L/C ISSUER:
Bank of America, N.A.
Trade Operations
1 Fleet Way
Mail Code: PA6-580-02-30
Scranton, PA 18507
Attention: Michael Grizzanti
Telephone: 570.330.4214
Telecopier: 800.755.8743
Electronic Mail: michael.a.grizzanti@bankofamerica.com
SWING LINE LENDER:
Bank of America, N.A.
901 Main St
Mail Code: TX1-492-14-11
Dallas, TX 75202
Attention: Ramon Gomez
Telephone: 214.209.2627
Telecopier: 214.290.8367
Electronic Mail: ramon.gomez_jr@bankofamerica.com
Account No.: 1292000883
Ref: Targa Resources
ABA# 026009593
SCHEDULE 10.06
PROCESSING AND RECORDATION FEES
The Administrative Agent will charge a processing and recordation fee (an Assignment
Fee) in the amount of $2,500 for each assignment; provided, however, that in
the event of two or more concurrent assignments to members of the same Assignee Group (which may be
effected by a suballocation of an assigned amount among members of such Assignee Group) or two or
more concurrent assignments by members of the same Assignee Group to a single Eligible Assignee (or
to an Eligible Assignee and members of its Assignee Group), the Assignment Fee will be $2,500 plus
the amount set forth below:
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Transaction |
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Assignment Fee |
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First four concurrent assignments or suballocations to
members of an Assignee Group (or from members of an
Assignee Group, as applicable) |
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-0- |
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Each additional concurrent assignment or suballocation to a
member of such Assignee Group (or from a member of such
Assignee Group, as applicable) |
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$ 500 |
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exv10w2
Exhibit 10.2
CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT
THIS CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT, dated as of February 14, 2007, is
entered into by and among TARGA RESOURCES PARTNERS LP, a Delaware limited partnership (MLP),
TARGA RESOURCES OPERATING LP, a Delaware limited partnership (OLP), TARGA RESOURCES GP LLC, a
Delaware limited liability company (GP), TARGA RESOURCES OPERATING GP LLC, a Delaware limited
liability company (OLP GP), TARGA GP INC., a Delaware corporation (GP Inc.), TARGA LP INC., a
Delaware corporation (LP Inc.), TARGA REGULATED HOLDINGS LLC, a Delaware limited liability
company (TRH), TARGA NORTH TEXAS GP LLC, a Delaware limited liability company (North Texas GP),
and TARGA NORTH TEXAS LP, a Delaware limited partnership (North Texas LP). The parties to this
agreement are collectively referred to herein as the Parties. Capitalized terms used herein shall
have the meanings assigned to such terms in Section 1.1.
RECITALS
WHEREAS, GP, LP Inc. and GP Inc. have formed MLP, pursuant to the Delaware Revised Uniform
Limited Partnership Act (the Delaware LP Act), for the purpose of engaging in any business
activity that is approved by GP and that lawfully may be conducted by a limited partnership
organized pursuant to the Delaware LP Act.
WHEREAS, in order to accomplish the objectives and purposes in the preceding recital, the
following actions have been taken prior to the date hereof:
1. GP Inc. formed North Texas GP under the terms of the Delaware Limited Liability Company Act (the
Delaware LLC Act), and contributed $1,000 in exchange for all of the member interests in North
Texas GP.
2. North Texas GP and LP Inc. formed North Texas LP under the terms of the Delaware LP Act, to
which North Texas GP contributed $500 and LP Inc. contributed $500 in exchange for a 50% general
partner interest and a 50% limited partner interest, respectively.
3. Targa Midstream Services Limited Partnership (TMS) conveyed beneficial title to the assets,
generally referred to as the North Texas Assets it acquired from Dynegy, Inc. (the North Texas
Assets) to North Texas LP on behalf of North Texas GP and LP Inc. in part as a capital
contribution and in exchange for a promissory note/acquisition payment obligation of $408,090,000
from North Texas GP and a promissory note/acquisition payment obligation of $408,090,000 from LP
Inc. (collectively the Intercompany Debt).
4. TRH conveyed all of its right, title and interest in and to the member interest in Targa
Intrastate Pipeline LLC, a Delaware limited liability company to North Texas LP.
5. North Texas LP assumed the obligations of North Texas GP and LP Inc. under the Intercompany
Debt.
6. TMS conveyed legal title to the North Texas Assets to North Texas LP on behalf of North Texas GP
and LP Inc.
7. GP Inc. formed GP, under the terms of the Delaware LLC Act, and contributed $1,000 in exchange
for all of the member interests in GP.
8. GP, LP Inc. and GP Inc. formed MLP, under the terms of the Delaware LP Act, to which GP
contributed $20 and LP Inc. and GP Inc. each contributed $490 in exchange for a 2% general partner
interest, a 49% limited partner interest and a 49% limited partner interest, respectively
(together, the MLP Formation Interests).
9. MLP formed OLP GP under the terms of the Delaware LLC Act, and contributed $1,000 in exchange
for all of the member interests in OLP GP.
10. OLP GP and MLP formed OLP, under the terms of the Delaware LP Act, to which OLP GP contributed
$0.01 and MLP contributed $999.99 in exchange for a 0.001% general partner interest and 99.999%
limited partner interest, respectively.
- 1 -
11. MLP, as Borrower, entered into the Credit Agreement with Bank of America N.A. as Administrative
Agent and the other lenders party thereto.
WHEREAS, immediately prior to the closing of the MLPs initial public offering (MLP IPO), GP
Inc. will convey a part of its member interest (the Interest) in North Texas GP to GP equal to 2%
of the equity value of the MLP at the end of the MLP IPO closing based upon the IPO pricing.
WHEREAS, at the MLP IPO closing, each of the following actions shall occur:
1. GP will convey the Interest to MLP in exchange for (a) a continuation of its 2% general partner
interest and (b) the incentive distribution rights (the IDRs).
2. GP Inc. will convey its remaining member interest in North Texas GP to MLP in exchange for
5,475,052 subordinated limited partner units (Sub Units) representing limited partner interests
with an 18.94% interest in the MLP.
3. LP Inc. will convey all of its limited partner interest in North Texas LP to MLP in exchange for
6,053,179 Sub Units with a 20.94% interest in MLP.
4. The public, through the Underwriters, will contribute $352.8 million in cash, less the net
amount of $21.7 payable to the Underwriters after taking into account the Underwriters discount
and the structuring fees payable to the Underwriters in exchange for 16,800,000 Common Units in MLP
(representing a 58.1% interest).
5. MLP will (a) pay transaction expenses associated with the transactions contemplated by this
Agreement in the amount of approximately $4.0 million (exclusive of the Underwriters spread and
the structuring fee) and (b) pay fees and expenses associated with the Credit Agreement in the
amount of approximately $4.2 million and (c) contribute the balance of the cash received from the
public to North Texas LP as a capital contribution (50% on behalf of North Texas GP and 50% on
behalf of LP Inc.).
6. MLP will borrow $342.5 million from new lenders under the Credit Agreement and contribute those
funds to North Texas LP as a capital contribution (50% on behalf of North Texas GP).
7. MLP will convey its member interest in North Texas GP and its limited partner interest in North
Texas LP to the OLP as a capital contribution (of which 0.001% of such contribution will be made to
OLP on behalf of OLP GP).
8. North Texas LP will use the various funds contributed to it to retire the Intercompany Debt.
9. The agreements of limited partnership and the limited liability company agreements of the
aforementioned entities will be amended and restated to the extent necessary to reflect the
applicable matters set forth above and as contained in this Agreement.
NOW, THEREFORE, in consideration of their mutual undertakings and agreements hereunder, the
Parties undertake and agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 The following capitalized terms shall have the meanings given below.
(a) Acquisition means consummation of the transactions contemplated by the terms of this
Agreement.
(b) Agreement means this Contribution, Conveyance and Assumption Agreement.
(c) Common Unit has the meaning assigned to such term in the Partnership Agreement.
- 2 -
(d) Credit Agreement means the Credit Agreement, dated as of February 14, 2007, among MLP, OLP,
the subsidiaries of the MLP, and Bank of America, N.A., as administrative agent for the lenders
named therein.
(e) Effective Time shall mean 8:00 a.m. New York, New York time on February 14, 2007.
(f) IDRs means Incentive Distribution Rights as such term is defined in the Partnership
Agreement.
(g) MLP has the meaning assigned to such term in the opening paragraph of this Agreement.
(h) Offering means the initial public offering by MLP of Common Units.
(i) Option means the over-allotment option afforded the Underwriters in the Offering.
(j) Partnership Agreement means the Amended and Restated Agreement of Limited Partnership of MLP
dated as of February 14, 2007.
(k) Sub Unit means Subordinated Unit as such term is defined in the Partnership Agreement.
(l) Underwriters means Citigroup Global Markets Inc., Goldman, Sachs & Co., UBS Securities LLC,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and A.G. Edwards & Sons, Inc., Credit Suisse
Securities (USA) LLC, Lehman Brothers Inc., Wachovia Capital Markets, LLC, Raymond James &
Associates, Inc., RBC Capital Markets Corporation and Sanders Morris Harris Inc.
ARTICLE 2
CONTRIBUTIONS, ACKNOWLEDGMENTS AND DISTRIBUTIONS
Section 2.1 Contribution of the Interest to GP. GP Inc. hereby grants, contributes, bargains,
conveys, assigns, transfers, sets over and delivers to GP, its successors and assigns, for its and
their own use forever, all right, title and interest in and to the Interest and GP hereby accepts
the Interest.
Section 2.2 Contribution of the Interest by GP to MLP. GP hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers to MLP, its successors and assigns,
for its and their own use forever, all right, title and interest in and to the Interest, as a
capital contribution, in exchange for (a) a continuation of its 2% general partner interest in MLP
and (b) the issuance of the IDRs, and MLP hereby accepts the Interest as a contribution to the
capital of MLP.
Section 2.3 Contribution of remaining member interest in North Texas GP to MLP. GP Inc. hereby
grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to MLP, its
successors and assigns, for its and their own use forever, all right, title and interest in and to
its remaining member interest in North Texas GP after the contribution of the Interest to GP and
MLP, in exchange for 5,475,052 million Sub Units representing limited partner interests with a
18.94% interest in the MLP, and MLP hereby accepts such member interests in North Texas GP.
Section 2.4 Contribution of limited partner interest in North Texas LP to MLP. LP Inc. hereby
grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to MLP, its
successors and assigns, for its and their own use forever, all right, title and interest in and to
the limited partner interest in North Texas LP, in exchange for 6,053,179 million Sub Units
representing limited partner interests with a 20.94% interest in the MLP, and MLP hereby accepts
such member interests in North Texas LP.
Section 2.5 Public Cash Contribution. The Parties acknowledge a capital contribution by the
public through the Underwriters to MLP of $352.8 million in cash ($331.1 million net to MLP after
taking into account the Underwriters discount and the structuring fee payable to the Underwriters,
but before paying offering expenses) in exchange for 16,800,000 Common Units, representing a 58.1%
interest in MLP.
- 3 -
Section 2.6 Payment of Transaction Costs. The Parties acknowledge the payment by MLP, in
connection with the Acquisition, of transaction expenses in the amount of $4.0 million (exclusive
of the Underwriters discount and the structuring fee but including fees and expenses related to
the Credit Agreement).
Section 2.7 Capital Contribution by MLP to North Texas LP. MLP hereby distributes, grants,
bargains, conveys, assigns, transfers, sets over and delivers to North Texas LP as a capital
contribution (50% of which is made on behalf of North Texas GP) $665.4 million.
Section 2.8 Contribution by MLP of limited partner interest in North Texas LP to OLP. MLP
hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to OLP,
its successors and assigns, for its and their own use forever, all right, title and interest in and
to the limited partner interest in North Texas LP (of which 0.001% is being contributed on behalf
of OLP GP) as a capital contribution, and OLP hereby accepts such limited partner interest as a
contribution to the capital of OLP.
Section 2.9 Contribution by MLP of all member interest in North Texas GP to OLP. MLP hereby
grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to OLP, its
successors and assigns, for its and their own use forever, all right, title and interest in and to
the member interest in North Texas GP (of which 0.001% is being contributed on behalf of OLP GP) as
a capital contribution, and OLP hereby accepts such member interest as a contribution to the
capital of OLP.
Section 2.10 Redemption of MLP Formation Interests. MLP hereby redeems and retires the MLP
Formation Interests for an aggregate payment of $1,000, and GP, LP Inc. and GP Inc. hereby
acknowledge the redemption of the MLP Formation Interests and accept payment for such interests
equal to the amounts that each contributed to MLP at its formation.
Section 2.11 Issuance of Certificates. At the Closing, MLP shall issue to each of GP Inc. and
LP Inc. a certificate or certificates, which may be held in book entry form, representing the
respective number of Sub Units to be issued to each of GP Inc. and LP Inc. pursuant to Section 2.3
and Section 2.4.
Section 2.12 Certificate Legend. The certificates evidencing the Sub Units delivered pursuant
to Section 2.3 and Section 2.4 shall bear a legend substantially in the form set forth below and
containing such other information as MLP may deem necessary or appropriate:
THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF TARGA RESOURCES PARTNERS LP (THE
PARTNERSHIP) THAT THIS SECURITY MAY NOT BE SOLD, OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED IF SUCH TRANSFER WOULD (A) VIOLATE THE THEN APPLICABLE FEDERAL OR STATE SECURITIES LAWS
OR RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION
OR ANY OTHER GOVERNMENTAL AUTHORITY WITH JURISDICTION OVER SUCH TRANSFER, (B) TERMINATE THE
EXISTENCE OR QUALIFICATION OF THE PARTNERSHIP UNDER THE LAWS OF THE STATE OF DELAWARE, OR (C) CAUSE
THE PARTNERSHIP TO BE TREATED AS AN ASSOCIATION TAXABLE AS A CORPORATION OR OTHERWISE TO BE TAXED
AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES (TO THE EXTENT NOT ALREADY SO TREATED OR TAXED). TARGA
RESOURCES GP LLC, THE GENERAL PARTNER OF THE PARTNERSHIP, MAY IMPOSE ADDITIONAL RESTRICTIONS ON THE
TRANSFER OF THIS SECURITY IF IT RECEIVES AN OPINION OF COUNSEL THAT SUCH RESTRICTIONS ARE NECESSARY
TO AVOID A SIGNIFICANT RISK OF THE PARTNERSHIP BECOMING
TAXABLE AS A CORPORATION OR OTHERWISE BECOMING TAXABLE AS AN ENTITY FOR FEDERAL INCOME TAX
PURPOSES.
ARTICLE 3
ADDITIONAL TRANSACTIONS
Section 3.1 Purchase of Additional Common Units. If the Option is exercised in whole or in
part, the public, through the Underwriters, will contribute additional cash to MLP in exchange for
up to an additional 2,520,000 Common Units.
- 4 -
Section 3.2 Reducing amounts outstanding under Credit Agreement. The Parties acknowledge, in
the event that the Option is exercised in whole or in part, MLP will use the net proceeds from the
issuance of additional Common Units to pay the lenders under the Credit Agreement to reduce
outstanding borrowings under the Credit Agreement.
ARTICLE 4
FURTHER ASSURANCES
From time to time after the Effective Time, and without any further consideration, the Parties
agree to execute, acknowledge and deliver all such additional deeds, assignments, bills of sale,
conveyances, instruments, notices, releases, acquittances and other documents, and will do all such
other acts and things, all in accordance with applicable law, as may be necessary or appropriate
(a) more fully to assure that the applicable Parties own all of the properties, rights, titles,
interests, estates, remedies, powers and privileges granted by this Agreement, or which are
intended to be so granted, or (b) more fully and effectively to vest in the applicable Parties and
their respective successors and assigns beneficial and record title to the interests contributed
and assigned by this Agreement or intended so to be and to more fully and effectively carry out the
purposes and intent of this Agreement.
ARTICLE 5
EFFECTIVE TIME
Notwithstanding anything contained in this Agreement to the contrary, none of the provisions
of Article 2 or Article 3 of this Agreement shall be operative or have any effect until the
Effective Time, at which time all the provisions of Article 2 and Article 3 of this Agreement shall
be effective and operative in accordance with Article 6, without further action by any party
hereto.
ARTICLE 6
MISCELLANEOUS
Section 6.1 Order of Completion of Transactions. The contribution of the Interest to GP
referenced in Section 2.1 is deemed to have occurred immediately prior to the closing of the MLP
IPO whereas all of the other actions referenced in Section 2.2 through 2.12 shall occur at the
closing of the MLP IPO. Following the completion of the transactions as provided in Article 2, the
transactions, if they occur, provided for in Article 3, shall be completed.
Section 6.2 Headings; References; Interpretation. All Article and Section headings in this
Agreement are for convenience only and shall not be deemed to control or affect the meaning or
construction of any of the provisions hereof. The words hereof, herein and hereunder and
words of similar import, when used in this Agreement, shall refer to this Agreement as a whole,
including, without limitation, all Schedules and Exhibits attached hereto, and not to any
particular provision of this Agreement. All references herein to Articles, Sections, Schedules and
Exhibits shall, unless the context requires a different construction, be deemed to be references to
the Articles and Sections of this Agreement and the Schedules and Exhibits attached hereto, and all
such Schedules and Exhibits attached hereto are hereby incorporated herein and made a part hereof
for all purposes. All personal pronouns used in this Agreement, whether used in the masculine,
feminine or neuter gender, shall include all other genders, and the singular shall include the
plural and vice versa. The use herein of the word including following any general statement, term
or matter shall not be construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or matters, whether or not
non-limiting language (such as without limitation, but not limited to, or words of similar
import) is used with reference thereto, but rather shall be deemed to refer to all other items or
matters that could reasonably fall within the broadest possible scope of such general statement,
term or matter.
Section 6.3 Successors and Assigns. The Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and assigns.
Section 6.4 No Third Party Rights. The provisions of this Agreement are intended to bind the
Parties as to each other and are not intended to and do not create rights in any other person or
confer upon any other person any benefits, rights or remedies and no person is or is intended to be
a third party beneficiary of any of the provisions of this Agreement.
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Section 6.5 Counterparts. This Agreement may be executed in any number of counterparts, all of
which together shall constitute one agreement binding on the parties hereto.
Section 6.6 Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware applicable to contracts made and to be performed wholly
within such state without giving effect to conflict of law principles thereof.
Section 6.7 Severability. If any of the provisions of this Agreement are held by any court of
competent jurisdiction to contravene, or to be invalid under, the laws of any political body having
jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate
the entire Agreement. Instead, this Agreement shall be construed as if it did not contain the
particular provision or provisions held to be invalid and an equitable adjustment shall be made and
necessary provision added so as to give effect to the intention of the Parties as expressed in this
Agreement at the time of execution of this Agreement.
Section 6.8 Amendment or Modification. This Agreement may be amended or modified from time to
time only by the written agreement of all the Parties. Each such instrument shall be reduced to
writing and shall be designated on its face as an Amendment to this Agreement.
Section 6.9 Integration. This Agreement and the instruments referenced herein supersede all
previous understandings or agreements among the Parties, whether oral or written, with respect to
their subject matter. This document and such instruments contain the entire understanding of the
Parties with respect to the subject matter hereof and thereof. No understanding, representation,
promise or agreement, whether oral or written, is intended to be or shall be included in or form
part of this Agreement unless it is contained in a written amendment hereto executed by the parties
hereto after the date of this Agreement.
Section 6.10 Deed; Bill of Sale; Assignment. To the extent required and permitted by
applicable law, this Agreement shall also constitute a deed, bill of sale or assignment of
the assets and interests referenced herein.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the date
first above written.
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Targa Resources Partners LP
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Targa Resources GP LLC,
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its general partner |
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/s/ Rene R. Joyce
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Rene R. Joyce |
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Chief Executive Officer |
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Targa Resources GP LLC
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By: |
/s/ Rene R. Joyce
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Rene R. Joyce |
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Chief Executive Officer |
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Targa Resources Operating LP
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By: |
Targa Resources Operating GP LLC,
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its general partner |
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/s/ Rene R. Joyce
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Rene R. Joyce |
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Chief Executive Officer |
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Targa Resources Operating GP LLC
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/s/ Rene R. Joyce
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Rene R. Joyce |
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Chief Executive Officer |
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/s/ Rene R. Joyce
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Rene R. Joyce |
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Chief Executive Officer |
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Targa LP Inc.
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/s/ Rene R. Joyce
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Rene R. Joyce |
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Chief Executive Officer |
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Targa Regulated Holdings LLC
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/s/ Rene R. Joyce
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Rene R. Joyce |
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Chief Executive Officer |
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Targa North Texas GP LLC
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/s/ Rene R. Joyce
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Rene R. Joyce |
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Chief Executive Officer |
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Targa North Texas LP
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Targa North Texas GP LLC,
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its general partner |
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exv10w3
Exhibit 10.3
OMNIBUS AGREEMENT
among
TARGA RESOURCES, INC.
TARGA RESOURCES GP LLC
and
TARGA RESOURCES PARTNERS LP
OMNIBUS AGREEMENT
THIS OMNIBUS AGREEMENT (Agreement) is entered into on, and effective as of, the Closing Date
(as defined herein), and is by and among Targa Resources, Inc., a Delaware corporation (Targa),
Targa Resources LLC, Targa Resources GP LLC, a Delaware limited liability company (the General
Partner) and Targa Resources Partners LP, a Delaware limited partnership (the Partnership). The
above-named entities are sometimes referred to in this Agreement each as a Party and collectively
as the Parties.
RECITALS:
1. The Parties desire by their execution of this Agreement to evidence their agreement, as
more fully set forth in Article II, with respect to the amount to be paid by the Partnership for
certain general and administrative services to be performed by Targa and its Affiliates as well as
direct expenses, including operating expenses, incurred by Targa and its Affiliates for and on
behalf of the Partnership Group (as defined herein).
2. The Parties desire to evidence their agreement, as more fully set forth in Article III,
with respect to certain indemnification obligations of the Parties.
In consideration of the agreements contained herein, and for other good and valuable
consideration, the Parties hereto hereby agree as follows:
ARTICLE I
Definitions
1.1 Definitions.
As used in this Agreement, the following terms shall have the respective meanings set
forth below:
Affiliate is defined in the Partnership Agreement.
Cap has the meaning given such term in Section 2.4(a).
Closing Date means the date of the closing of the Partnerships initial public
offering of Common Units.
Common Units is defined in the Partnership Agreement.
Conflicts Committee is defined in the Partnership Agreement.
Covered Environmental Losses means all environmental losses, damages, liabilities,
claims, demands, causes of action, judgments, settlements, fines, penalties, costs and
expenses (including, without limitation, costs and expenses of any Environmental Activity,
court costs and reasonable attorneys and experts fees) of any and every kind or character,
by reason of or arising out of:
(i) any violation or correction of violation of Environmental Laws, including without
limitation performance of any Environmental Activity; or
(ii) any event, omission or condition associated with ownership or operation of the
North Texas Assets relating to Environmental Activities (including, without limitation, the
exposure to or presence of Hazardous Substances on, under, about or migrating to or from the
North Texas Assets or the exposure to or Release of Hazardous Substances arising out of
operation of the North Texas Assets) including, without limitation, (A) the cost and expense
of any Environmental Activities, (B) the cost or expense of the preparation and
implementation of any closure, remedial or corrective action or other plans required or
necessary under Environmental Laws and (C) the cost and expense for any environmental or
toxic tort pre-trial, trial or appellate legal or litigation support work; provided, in the
case of clauses (A) and (B), such cost and expense shall not include the costs associated
with project management and soil and ground water monitoring.
CPI Index is defined in Section 2.1(c) of this Agreement.
Environmental Activities shall mean any investigation, study, assessment, evaluation,
sampling, testing, monitoring, containment, removal, disposal, closure, corrective action,
remediation (regardless of whether active or passive), natural attenuation, restoration,
bioremediation, response, repair, corrective measure, cleanup or abatement that is required
or necessary under any applicable Environmental Law, including, but not limited to,
institutional or engineering controls or participation in a governmental voluntary cleanup
program to conduct voluntary investigatory and remedial actions for the clean-up, removal or
remediation of Hazardous Substances that exceed actionable levels established pursuant to
Environmental Laws, or participation in a supplemental environmental project in partial or
whole mitigation of a fine or penalty.
Environmental Laws means all federal, state, and local laws, statutes, rules,
regulations, orders, judgments, ordinances, codes, injunctions, decrees, Environmental
Permits and other legally enforceable requirements and rules of common law relating to (a)
pollution or protection of the environment or natural resources including, without
limitation, the federal Comprehensive Environmental Response, Compensation and Liability
Act, the Superfund Amendments and Reauthorization Act, the Resource Conservation and
Recovery Act, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, the Toxic
Substances Control Act, the Oil Pollution Act of 1990, the Hazardous Materials
Transportation Act, the Marine Mammal Protection Act, the Endangered Species Act, the
National Environmental Policy Act and other environmental conservation and protection laws,
each as amended through the Closing Date, (b) any Release or threatened Release of, or any
exposure of any Person or property to, any Hazardous Substances and (c) the generation,
manufacture, processing, distribution, use, treatment, storage, transport or handling of any
Hazardous Substances.
Environmental Permit means any permit, approval, identification number, license,
registration, consent, exemption, variance or other authorization required under or issued
pursuant to any applicable Environmental Law.
- 2
G&A Expenses Limit is defined in Section 2.1(c) of this Agreement.
General Partner is defined in the introduction to this Agreement.
Hazardous Substance means (a) any substance that is designated, defined or classified
as a hazardous waste, solid waste, hazardous material, pollutant, contaminant or toxic or
hazardous substance, or terms of similar meaning, or that is otherwise regulated under any
Environmental Law, including, without limitation, any hazardous substance as defined under
the Comprehensive Environmental Response, Compensation and Liability Act, as amended, (b)
oil as defined in the Oil Pollution Act of 1990, as amended, including oil, gasoline,
natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet fuel and other refined
petroleum hydrocarbons and petroleum products and (c) radioactive materials, asbestos
containing materials or polychlorinated biphenyls.
Indemnified Party means each Partnership Group Member and Targa in their capacities
as parties entitled to indemnification in accordance with Article III.
Indemnifying Party means each of Targa and the Partnership, as the case may be, in
their capacity as the parties from whom indemnification may be required in accordance with
Article III.
Limited Partner is defined in the Partnership Agreement.
Losses means all losses, damages, liabilities, claims, demands, causes of action,
judgments, settlements, fines, penalties, costs and expenses (including, without limitation,
court costs and reasonable attorneys and experts fees) of any and every kind or character.
North Texas Assets means the gathering and processing assets to be contributed to the
Partnership in connection with its initial public offering and as more completely described
in the Registration Statement and includes the pipelines, processing plants or related
equipment or assets, or portions thereof, conveyed, contributed or otherwise transferred or
intended to be conveyed, contributed or otherwise transferred to any member of the
Partnership Group, or owned by or necessary for the operation of the business, properties or
assets of any member of the Partnership Group, prior to or as of the Closing Date.
Partnership is defined in the introduction to this Agreement.
Partnership Agreement means the First Amended and Restated Agreement of Limited
Partnership of Targa Resources Partners LP, dated as of the Closing Date, as such agreement
is in effect on the Closing Date, to which reference is hereby made for all purposes of this
Agreement. No amendment or modification to the Partnership Agreement subsequent to the
Closing Date shall be given effect for the purposes of this Agreement unless such amendment
receives the approval required pursuant to Section 4.5 hereof.
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Partnership Entities means the General Partner and each member of the Partnership
Group.
Partnership Group means the Partnership and its Subsidiaries treated as a single
consolidated entity.
Partnership Group Member means any member of the Partnership Group.
Partnership Indemnitee shall mean any Person who is an Indemnitee (as defined in the
Partnership Agreement); provided, that the term Partnership Indemnitee shall exclude Targa
and any Affiliate of Targa which is not a member of the Partnership Group.
Party and Parties are defined in the introduction to this Agreement.
Person means an individual or a corporation, limited liability company, partnership,
joint venture, trust, business trust, employee benefit plan, unincorporated organization,
association, government agency or political subdivision thereof or other entity.
Registration Statement means the Registration Statement on Form S-1 (Registration No.
333-138747) filed with the Securities and Exchange Commission with respect to the proposed
initial public offering of Common Units by the Partnership.
Subsidiary means, with respect to any Person, (a) a corporation of which more than
50% of the voting power of shares entitled (without regard to the occurrence of any
contingency) to vote in the election of directors or other governing body of such
corporation is owned, directly or indirectly, at the date of determination, by such Person,
by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership
(whether general or limited) in which such Person or a Subsidiary of such Person is, at the
date of determination, a general or limited partner of such partnership, but only if more
than 50% of the partnership interests of such partnership (considering all of the
partnership interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more Subsidiaries of
such Person, or a combination thereof, or (c) any other Person (other than a corporation or
a partnership) in which such Person, one or more Subsidiaries of such Person, or a
combination thereof, directly or indirectly, at the date of determination, has (i) at least
a majority ownership interest or (ii) the power to elect or direct the election of a
majority of the directors or other governing body of such Person.
Targa is defined in the introduction to this Agreement.
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ARTICLE II
Reimbursement Obligations
2.1 Reimbursement for Allocated General and Administrative Expenses; Limitations on Reimbursement.
(a) Targa hereby agrees to continue to provide the Partnership Group with certain general and
administrative services, such as legal, accounting, treasury, insurance, risk management, health,
safety and environmental, information technology, human resources, credit, payroll, internal audit,
taxes, engineering and marketing. These general and administrative services shall be substantially
identical in nature and quality to the services of such type previously provided by Targa in
connection with their management and operation of the North Texas Assets prior to their acquisition
by the Partnership. In the event that the Partnership Group makes any acquisitions of assets or
businesses from Targa or its Affiliates during the first three years following the date of this
Agreement, Targa will similarly provide general and administrative services that are substantially
identical in nature and quality to the services of such type previously provided by Targa in
connection with their management and operation of such assets or businesses prior to their
acquisition by the Partnership.
(b) Subject to the provisions of Section 2.3(c) below, the Partnership Group hereby agrees to
reimburse Targa for all expenses and expenditures Targa or its Affiliates incur or payments they
make on behalf of the Partnership Group for these general and administrative services.
(c) The amount for which Targa shall be entitled to reimbursement from the Partnership Group
pursuant to Section 2.1(b) for general and administrative expenses shall not exceed $5.0 million
annually for a period of three (3) years following the date of this Agreement (the G&A Expenses
Limit). Following the first anniversary of this Agreement, the G&A Expenses Limit shall be
increased annually over the next two years by the percentage increase in the Consumer Price Index
All Urban Consumers, U.S. City Average, Not Seasonally Adjusted for the applicable year (the CPI
Index). In making such adjustment, the G&A Expenses Limit shall be increased on the first
anniversary of this Agreement by the CPI Index for the prior year period based on the most recent
information available from the U.S. Department of Labor and similarly increased on the second
anniversary of this Agreement by the CPI Index for the prior year period. In the event that the
Partnership Group makes any acquisitions of assets or businesses or the business of the Partnership
Group otherwise expands during the first three years following the date of this Agreement, then the
G&A Expenses Limit shall be appropriately increased in order to account for adjustments in the
nature and extent of the general and administrative services by Targa to the Partnership Group,
with any such increase in the G&A Expenses Limit subject to the approval of the Conflicts
Committee. After the third anniversary of the date of this Agreement, the G&A Expenses Limit will
no longer apply and the General Partner will determine the amount of general and administrative
expenses that will be properly allocated to the Partnership in accordance with the terms of the
Partnership Agreement. The G&A Expenses Limit shall not apply to reimbursement for direct expenses
of the Partnership as provided in Section 2.2.
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2.2 Reimbursement for Direct Expenses.
(a) The Partnership Group hereby agrees to reimburse Targa and its Affiliates for all direct
expenses and expenditures they incur or payments they make on behalf of the Partnership Group,
including, but not limited to, (i) salaries of operational personnel performing services on the
Partnership Groups behalf, the cost of employee benefits for such personnel and general and
administrative expense associated with such personnel, (ii) capital expenditures, (iii) maintenance
and repair costs, (iv) taxes and (v) direct expenses, including operating expenses and certain
allocated operating expenses, associated with the ownership and operation of the North Texas
Assets.
(b) The Partnership Group hereby agrees to reimburse Targa and its Affiliates for all expenses
and expenditures they incur or payments they make as a result of the Partnership becoming a
publicly traded entity, including costs associated with annual and quarterly reports, tax return
and Schedule K-1 preparation and distribution, independent auditor fees, registrar and transfer
agent fees, legal fees and independent director compensation.
(c) The obligation of the Partnership Group to reimburse Targa and its Subsidiaries pursuant
to this Section 2.2 shall not be subject to any monetary limitation, including the G&A Expenses
Limit contained in Section 2.1.
ARTICLE III
Indemnification
3.1 Environmental Indemnification.
(a) Subject to the provisions of Section 3.3, Targa shall indemnify, defend and hold harmless
the Partnership Group and the Partnership Indemnitees from and against any Covered Environmental
Losses suffered or incurred by the Partnership Group or any Partnership Indemnitee relating to the
North Texas Assets for a period of three (3) years from the Closing Date but only to the extent
such violations, corrections, events or conditions occurred on or before the Closing Date;
provided, however, that such indemnity shall not apply to any Covered Environmental Losses reserved
on the books of the Partnership Group as of the Closing Date.
(b) The Partnership Group shall indemnify, defend and hold harmless Targa and its Affiliates,
other than any Partnership Group Member, from and against any Covered Environmental Losses suffered
or incurred by Targa and its Affiliates, other than any Partnership Group Member, relating to the
North Texas Assets occurring after the Closing Date except to the extent that the Partnership Group
is indemnified with respect to any of such Covered Environmental Losses under Section 3.1(a).
(c) The aggregate liability of Targa under Section 3.1(a) shall not exceed $10.0 million.
(d) No claims may be made against Targa for indemnification pursuant to Section 3.1(a) unless
the aggregate dollar amount of the Losses suffered or incurred by the
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Partnership Group or
Partnership Indemnitees exceed $250,000, after such time Targa shall be liable for the full amount
of such claims, subject to the limitations of Section 3.1(c).
(e) Notwithstanding anything herein to the contrary, in no event shall Targa have any
indemnification obligations under this Agreement for claims made as a result of additions to or
modifications of Environmental Laws promulgated after the Closing Date.
3.2 Additional Indemnification
(a) Subject to the provisions of Section 3.3, Targa shall indemnify, defend and hold harmless
the Partnership Group and the Partnership Indemnitees from and against any Losses suffered or
incurred by the Partnership Group or any Partnership Indemnitee by reason of or arising out of:
(i) the failure of the Partnership Group to be the owner of valid and
indefeasible easement rights, leasehold and/or fee ownership interests in and to the
lands on which are located any North Texas Assets, and such failure renders the
Partnership Group liable or unable to use or operate the North Texas Assets in
substantially the same manner that the North Texas Assets were used and operated by
Targa and its Affiliates immediately prior to the Closing Date as described in the
Registration Statement;
(ii) the failure of the Partnership Group to have on the Closing Date any
consent or governmental permit necessary to allow (i) the transfer of any of the
North Texas Assets to the Partnership Group on the Closing Date or (ii) any such
North Texas Assets to cross the roads, waterways, railroads and other areas upon
which any such North Texas Assets are located as of the Closing Date, and any such
failure specified in such clause (ii) renders the Partnership Group unable to use or
operate the North Texas Assets in substantially the same manner that the North Texas
Assets were owned and operated by Targa and its Affiliates immediately prior to the
Closing Date as described in the Registration Statement;
(iii) all federal, state and local income tax liabilities attributable to the
ownership or operation of the North Texas Assets prior to the Closing Date,
including any such income tax liabilities of Targa and its Affiliates that may
result from the consummation of the formation transactions for the Partnership Group
occurring on or prior to the Closing Date; and
(iv) all pending legal actions as of the Closing Date against one or more
Partnership Group Members involving or otherwise relating to the North Texas Assets;
provided, however, that, in the case of clauses (i), (ii) and (iv) above, such indemnification
obligations shall survive for three (3) years from the Closing Date; and that in the case of clause
(iii) above, such indemnification obligations shall survive after the expiration of any applicable
statute of limitations;
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provided, further, that in the case of clauses (i), (ii), (iii) and (iv) above, such
indemnification shall not include indemnity for Losses reserved on the books of the Partnership
Group as of the Closing Date;
provided, further, no claims may be made against Targa for indemnification pursuant to Section 3.2
unless the aggregate dollar amount of the Losses suffered or incurred by the Partnership Group or
Partnership Indemnitees exceed $250,000, after such time Targa shall be liable for the full amount
of such claims.
(b) In addition to and not in limitation of the indemnification provided under this Article
III, the Partnership Group shall indemnify, defend, and hold harmless Targa and its Affiliates,
other than any Partnership Group Member, from and against any Losses suffered or incurred by Targa
and its Affiliates, other than any Partnership Group Member, by reason of or arising out of events
and conditions associated with the operation of the North Texas Assets that occurs on or after the
Closing Date except to the extent that the Partnership Group is indemnified with respect to any
such Losses under Section 3.2(a).
3.3 Indemnification Procedures.
(a) The Indemnified Party agrees that within a reasonable period of time after it becomes
aware of facts giving rise to a claim for indemnification pursuant to this Article III, they will
provide notice thereof in writing to the Indemnifying Party specifying the nature of and specific
basis for such claim; provided, however, that the Indemnified Party shall not submit claims more
frequently than once a calendar quarter (or twice in the case of the last calendar quarter prior to
the expiration of the applicable indemnity coverage under this Agreement).
(b) The Indemnifying Party shall have the right to control all aspects of the defense of (and
any counterclaims with respect to) any claims brought against the Indemnified Party that are
covered by the indemnification set forth in this Article III, including, without limitation, the
selection of counsel, determination of whether to appeal any decision of any court or similar
authority and the settling of any such matter or any issues relating thereto; provided, however,
that no such settlement shall be entered into without the consent (which consent shall not be
unreasonably withheld, conditioned or delayed) of the Indemnified Party unless it includes a full
release of the Indemnified Party from such matter or issues, as the case may be.
(c) The Indemnified Party agrees to cooperate fully with the Indemnifying Party with respect
to all aspects of the defense of any claims covered by the indemnification set forth in this
Article III, including, without limitation, the prompt furnishing to the Indemnifying Party of any
correspondence or other notice relating thereto that the Indemnified Party may receive, permitting
the names of the Indemnified Party to be utilized in connection with such defense, the making
available to the Indemnifying Party of any files, records or other information of the Indemnified
Party that the Indemnifying Party considers relevant to such defense and the making available to
the Indemnifying Party of any employees of the Indemnified Party; provided, however, that in
connection therewith the Indemnifying Party agrees to use reasonable
efforts to minimize the impact thereof on the operations of the Indemnified Party and further
agrees to maintain the confidentiality of all files, records and other information furnished by the
Indemnified Party pursuant to this Section 3.3. In no event shall the obligation of the
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Indemnified
Party to cooperate with the Indemnifying Party as set forth in the immediately preceding sentence
be construed as imposing upon the Indemnified Party an obligation to hire and pay for counsel in
connection with the defense of any claims covered by the indemnification set forth in this Article
III; provided, however, that the Indemnified Party may, at its own option, cost and expense, hire
and pay for counsel in connection with any such defense. The Indemnifying Party agrees to keep any
such counsel hired by the Indemnified Party reasonably informed as to the status of any such
defense, but the Indemnifying Party shall have the right to retain sole control over such defense.
(d) In determining the amount of any loss, cost, damage or expense for which the Indemnified
Party is entitled to indemnification under this Agreement, the gross amount of the indemnification
will be reduced by (i) any insurance proceeds realized by the Indemnified Party, and such
correlative insurance benefit shall be net of any incremental insurance premium that becomes due
and payable by the Indemnified Party as a result of such claim and (ii) all amounts recovered by
the Indemnified Party under contractual indemnities from third Persons.
ARTICLE IV
Miscellaneous
4.1 Choice of Law; Submission to Jurisdiction. This Agreement shall be subject to and governed by
the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might refer
the construction or interpretation of this Agreement to the laws of another state. Each Party
hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to
venue in Houston, Texas.
4.2 Notice. All notices or requests or consents provided for by, or permitted to be given pursuant
to, this Agreement must be in writing and must be given by depositing same in the United States
mail, addressed to the Person to be notified, postpaid, and registered or certified with return
receipt requested or by delivering such notice in person or by telecopier or telegram to such
Party. Notice given by personal delivery or mail shall be effective upon actual receipt. Notice
given by telegram or telecopier shall be effective upon actual receipt if received during the
recipients normal business hours or at the beginning of the recipients next business day after
receipt if not received during the recipients normal business hours. All notices to be sent to a
Party pursuant to this Agreement shall be sent to or made at the address set forth below or at such
other address as such Party may stipulate to the other Parties in the manner provided in this
Section 4.2.
if to Targa:
Targa Resources, Inc.
1000 Louisiana, Suite 4300
Houston, Texas 77002
Attention: General Counsel
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if to the Partnership Entities:
Targa Resources Partners LP
1000 Louisiana, Suite 4300
Houston, Texas 77002
Attention: General Counsel
4.3 Entire Agreement. This Agreement constitutes the entire agreement of the Parties relating to
the matters contained herein, superseding all prior contracts or agreements, whether oral or
written, relating to the matters contained herein.
4.4 Effect of Waiver or Consent. No waiver or consent, express or implied, by any Party to or of
any breach or default by any Person in the performance by such Person of its obligations hereunder
shall be deemed or construed to be a consent or waiver to or of any other breach or default in the
performance by such Person of the same or any other obligations of such Person hereunder.
4.5 Amendment or Modification. This Agreement may be amended or modified from time to time only by
the written agreement of all the Parties hereto; provided, however, that the Partnership may not,
without the prior approval of the Conflicts Committee, agree to any amendment or modification of
this Agreement that, in the reasonable discretion of the General Partner, will adversely affect the
holders of Common Units. Each such instrument shall be reduced to writing and shall be designated
on its face an Amendment or an Addendum to this Agreement.
4.6 Assignment. No Party shall have the right to assign any of its rights or obligations under
this Agreement without the consent of the other Parties hereto.
4.7 Counterparts. This Agreement may be executed in any number of counterparts with the same
effect as if all signatory parties had signed the same document. All counterparts shall be
construed together and shall constitute one and the same instrument.
4.8 Severability. If any provision of this Agreement shall be held invalid or unenforceable by a
court or regulatory body of competent jurisdiction, the remainder of this Agreement shall remain in
full force and effect.
4.9 Further Assurances. In connection with this Agreement and all transactions contemplated by
this Agreement, each signatory party hereto agrees to execute and deliver such additional documents
and instruments and to perform such additional acts as may be necessary or appropriate to
effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and
all such transactions.
4.10 Rights of Limited Partners. The provisions of this Agreement are enforceable solely by the
Parties to this Agreement, and no Limited Partner of the Partnership shall have the right, separate
and apart from the Partnership, to enforce any provision of this Agreement or to compel any Party
to this Agreement to comply with the terms of this Agreement.
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4.11 Successors. This Agreement shall bind and inure to the benefit of the Parties and to their
respective successors and assigns.
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IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the
Closing Date.
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TARGA RESOURCES, INC.
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Rene R. Joyce |
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Chief Executive Officer |
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TARGA RESOURCES LLC
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/s/ Rene R. Joyce |
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Rene R. Joyce |
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Chief Executive Officer |
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TARGA RESOURCES GP LLC
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/s/ Rene R. Joyce |
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Rene R. Joyce |
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Chief Executive Officer |
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TARGA RESOURCES PARTNERS LP
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Targa Resources GP LLC
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Chief Executive Officer |
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[Signature Page to the Omnibus Agreement]
exv10w4
Exhibit 10.4
TARGA RESOURCES PARTNERS LP
INDEMNIFICATION AGREEMENT
THIS AGREEMENT (this Agreement) is effective February ___, 2007, between Targa Resources
Partners LP, a Delaware limited partnership (the MLP), Targa Resources GP LLC, a Delaware limited
liability company (the Company), and the undersigned director or officer of the Company
(Indemnitee).
WHEREAS, the MLP Partnership Agreement (as defined below) provides for indemnification of each
director and officer of the Company and the MLP, as well as persons serving in various other
capacities, to the maximum extent permitted by law;
WHEREAS, the Indemnitee is entitled to indemnification pursuant to the MLP Partnership
Agreement;
WHEREAS, the Company LLC Agreement (as defined below) provides indemnification of each
director and officer of the Company, as well as persons serving in other capacities, to the maximum
extent authorized by law;
WHEREAS, the Indemnitee is entitled to indemnification pursuant to the Company LLC Agreement;
WHEREAS, in recognition of Indemnitees need for substantial protection against personal
liability in order to enhance Indemnitees continued service to the MLP and the Company in an
effective manner, the MLP and the Company wish to provide in this Agreement for the indemnification
of and the advancing of expenses to Indemnitee to the fullest extent permitted by law (whether
partial or complete) and as set forth in this Agreement, and, to the extent insurance is
maintained, for the continued coverage of Indemnitee under the MLPs and/or the Companys
directors and officers liability insurance policies;
WHEREAS, Indemnitee is willing to serve, continue to serve and to take on additional service
for or on behalf of the MLP and/or the Company on condition that the Indemnitee be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the MLP,
the Company and Indemnitee do hereby covenant and agree as follows:
1. Definitions. As used in this Agreement:
(a) The term Proceeding shall include any threatened, pending or completed action, suit,
inquiry or proceeding, whether brought by or in the right of the MLP or the Company or any
predecessor, subsidiary or affiliated company or otherwise and whether of a civil, criminal,
administrative, arbitrative or investigative nature, in which Indemnitee is or will be involved as
a party, as a witness or otherwise, by reason of the fact that Indemnitee is or was a director or
officer of the MLP or the Company, by reason of any action taken by him or of any inaction on his
part while acting as a director or officer or by reason of the fact that he is or was
serving at the request of the MLP or the Company as a director, officer, trustee, employee or
agent of another corporation, partnership, joint venture, trust, limited liability company or other
enterprise; in each case whether or not he is acting or serving in any such capacity at the time
any liability or expense is incurred for which indemnification or reimbursement can be provided
under this Agreement; provided that any such action, suit or proceeding which is brought by
Indemnitee against the MLP or the Company or any predecessor, subsidiary or affiliated company or
directors or officers of the MLP or the Company or any predecessor, subsidiary or affiliated
company, other than an action brought by Indemnitee to enforce his rights under this Agreement,
shall not be deemed a Proceeding without prior approval by a majority of the Board of Directors of
the Company.
(b) The term Expenses shall include, without limitation, any judgments, fines and penalties
against Indemnitee in connection with a Proceeding; amounts paid by Indemnitee in settlement of a
Proceeding; and all attorneys fees and disbursements, accountants fees, private investigation
fees and disbursements, retainers, court costs, transcript costs, fees of experts, fees and
expenses of witnesses, travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other disbursements, or expenses, reasonably
incurred by or for Indemnitee in connection with prosecuting, defending, preparing to prosecute or
defend, investigating, being or preparing to be a witness in a Proceeding or establishing
Indemnitees right of entitlement to indemnification for any of the foregoing.
(c) References to Indemnitees being or acting as a director or officer of the MLP or the
Company or serving at the request of the MLP or the Company as a director, officer, trustee,
employee or agent of another corporation, partnership, joint venture, trust, limited liability
company or other enterprise shall include in each case service to or actions taken while and as a
result of being a director, officer, trustee, employee or agent of any predecessor, subsidiary or
affiliated company of the MLP or the Company.
(d) References to other enterprise shall include employee benefit plans; references to
fines shall include any excise tax assessed with respect to any employee benefit plan; references
to serving at the request of the MLP or the Company shall include any service as a director,
officer, employee or agent of the MLP or the Company which imposes duties on, or involves services
by, such director, officer, trustee, employee or agent with respect to an employee benefit plan,
its participants or beneficiaries.
(e) The term substantiating documentation shall mean copies of bills or invoices for costs
incurred by or for Indemnitee, or copies of court or agency orders or decrees or settlement
agreements, as the case may be, accompanied by a sworn statement from Indemnitee that such bills,
invoices, court or agency orders or decrees or settlement agreements, represent costs or
liabilities meeting the definition of Expenses herein.
(f) The terms he and his have been used for convenience and mean she and her if
Indemnitee is a female.
(g) The term MLP Partnership Agreement means the Amended and Restated Agreement of Limited
Partnership of the MLP, dated as of February ___, 2007, as amended or restated from time to time.
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(h) The term Company LLC Agreement means the Limited Liability Company Agreement of the
Company, dated as of October 23, 2006, as amended or restated from time to time.
(i) The term LLC Statute means the Delaware Limited Liability Company Act.
(j) The term Partnership Statute means the Delaware Revised Uniform Limited Partnership Act.
(k) The term Board of Directors means the Board of Directors of the Company.
2. Indemnity of Indemnitee. Each of the MLP and the Company hereby agrees (subject to the
provisions of Section 5 below) to hold harmless and indemnify Indemnitee against Expenses to the
fullest extent authorized or permitted by law (including the applicable provisions of the
Partnership Statute and the LLC Statute). The phrase to the fullest extent permitted by law
shall include, but not be limited to (a) to the fullest extent permitted by any provision of the
Partnership Statute and the LLC Statute that authorizes or permits additional indemnification by
agreement, or the corresponding provision of any amendment to or replacement of the Partnership
Statute and the LLC Statute and (b) to the fullest extent authorized or permitted by any amendments
to or replacements of the Partnership Statute and the LLC Statute adopted after the date of this
Agreement that increase the extent to which an entity may indemnify its officers and directors.
Any amendment, alteration or repeal of the Partnership Statute and the LLC Statute that adversely
affects any right of Indemnitee shall be prospective only and shall not limit or eliminate any such
right with respect to any Proceeding involving any occurrence or alleged occurrence of any action
or omission to act that took place prior to such amendment or repeal.
3. Additional Indemnity. Each of the MLP and the Company hereby further agrees (subject to the
provisions of Section 5 below) to hold harmless and indemnify Indemnitee against Expenses incurred
by reason of the fact that Indemnitee is or was a director or officer of the MLP or the Company, or
is or was serving at the request of the MLP or the Company as a director, officer, trustee,
employee or agent of another corporation, partnership, joint venture, trust, limited liability
company or other enterprise, including, without limitation, any predecessor, subsidiary or
affiliated entity of the MLP or the Company, provided that the Indemnitee shall not be indemnified
and held harmless if there has been a final and non-appealable judgment entered by a court of
competent jurisdiction determining that, in respect of the matter for which the Indemnitee is
seeking indemnification pursuant to this Agreement, the Indemnitee acted in bad faith or engaged in
fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the
Indemnitees conduct was unlawful. The termination of any Proceeding by judgment, order of the
court, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not, of
itself, create a presumption that Indemnitee acted in bad faith or engaged in fraud or willful
misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitees conduct
was unlawful.
4. Contribution. If the indemnification provided under Section 2 is unavailable by reason of a
court decision, based on grounds other than any of those set forth in Section 5 below,
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then, in respect of any Proceeding in which the MLP or the Company is jointly liable with Indemnitee (or
would be if joined in such Proceeding), the MLP and the Company shall contribute to the amount of
Expenses actually and reasonably incurred and paid or payable by Indemnitee in such proportion as
is appropriate to reflect (a) the relative benefits received by the MLP or the Company on one hand
and Indemnitee on the other from the transaction from which such Proceeding arose and (b) the
relative fault of the MLP or the Company on the one hand and of Indemnitee on the other in
connection with the events that resulted in such Expenses as well as any other relevant equitable
considerations. The relative fault of the MLP or the Company on the one hand and of Indemnitee on
the other shall be determined by reference to, among other things, the parties relative intent,
knowledge, access to information and opportunity to correct or prevent the circumstances resulting
in such Expenses. Each of the MLP and the Company agrees that it would not be just and equitable
if contribution pursuant to this Section 4 were determined by pro rata allocation or any other
method of allocation that does not take into account of the foregoing equitable considerations.
5. Exceptions. Any other provision herein to the contrary notwithstanding, the MLP and the Company
shall not be obligated pursuant to the terms of this Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance expenses to Indemnitee
with respect to proceedings or claims initiated or brought voluntarily by Indemnitee and not by way
of defense, except with respect to proceedings brought to establish or enforce a right to
indemnification under this Agreement;
(b) Insured Claims. To indemnify Indemnitee for expenses or liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and
amounts paid in settlement) to the extent such expenses or liabilities have been paid directly to
Indemnitee by an insurance carrier under a policy of directors and officers liability insurance;
(c) Claims Under Section 16(b). To indemnify Indemnitee for expenses or the payment
of profits arising from the purchase and sale by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute;
(d) Unlawful Claims. To indemnify Indemnitee to the extent such indemnification is
prohibited by applicable law; or
(e) Unauthorized Settlement. To indemnify Indemnitee with regard to any judicial
award if the MLP or the Company was not given a reasonable and timely opportunity, to
participate in the defense of such action or to indemnify Indemnitee for any amounts paid in
settlement of any Proceeding effected without the MLPs or the Companys prior written consent.
6. Choice of Counsel. If Indemnitee is a director but not an officer of the MLP or the Company,
he, together with the other directors who are not officers of the MLP or the Company and are
seeking indemnification (the Outside Directors), shall be entitled to employ, and be reimbursed
for the fees and disbursements of, a single counsel separate from that chosen
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by Indemnitees who
are officers of the MLP or the Company. The principal counsel for Outside Directors (Principal
Counsel) shall be determined by majority vote of the Outside Directors who are seeking
indemnification, and the Principal Counsel for the Indemnitees who are not Outside Directors
(Separate Counsel) shall be determined by majority vote of such Indemnitees, in each case subject
to the consent of the MLP or the Company (not to be unreasonably withheld or delayed). The
obligation of the MLP and the Company to reimburse Indemnitee for the fees and disbursements of
counsel hereunder shall not extend to the fees and disbursements of any counsel employed by
Indemnitee other than Principal Counsel or Separate Counsel, as the case may be, unless Indemnitee
has interests that are different from those of the other Indemnitees or defenses available to him
that are in addition to or different from those of the other Indemnitees such that Principal
Counsel or Separate Counsel, as the case may be, would have an actual or potential conflict of
interest in representing Indemnitee.
7. Advances of Expenses.
(a) Expenses (other than judgments, penalties, fines and settlements) incurred by Indemnitee
shall be paid by the MLP and the Company, in advance of the final disposition of the Proceeding,
within three business days after receipt of Indemnitees written request accompanied by
substantiating documentation and Indemnitees written affirmation as described in subsection (c)
below. No objections based on or involving the question whether such charges meet the definition
of Expenses, including any question regarding the reasonableness of such Expenses, shall be
grounds for failure to advance to such Indemnitee, or to reimburse such Indemnitee for, the amount
claimed within such three business day period, and the undertaking of Indemnitee set forth in this
Section 7 to repay any such amount to the extent it is ultimately determined that Indemnitee is not
entitled to indemnification shall be deemed to include an undertaking to repay any such amounts
determined not to have met such definition.
(b) Indemnitee hereby undertakes to repay to the MLP and the Company (i) any advances or
payment of Expenses made pursuant to this Section 7 and (ii) any judgments, penalties, fines and
settlements paid to or on behalf of Indemnitee hereunder, in each case to the extent that it is
ultimately determined in a final judgment or other final adjudication of a court of competent
jurisdiction that Indemnitee is not entitled to indemnification.
(c) As a condition to the advancement of such Expenses or the payment of such judgments,
penalties, fines and settlements, Indemnitee shall execute an acknowledgment wherein Indemnitee affirms (i) that Indemnitee has met the applicable standard of conduct for
indemnification and (ii) that such Expenses or such judgments, penalties, fines and settlements, as
the case may be, are delivered pursuant and are subject to the provisions of this Agreement.
8. Right of Indemnitee to Indemnification Upon Application; Procedure Upon Application. Any
indemnification payment under this Agreement, other than pursuant to Section 7 hereof, shall be
made no later than 30 days after receipt by the MLP and the Company of the written request of
Indemnitee, accompanied by substantiating documentation, unless a determination is made within said
30-day period that Indemnitee has not met the relevant standards for indemnification set forth in
Section 3 hereof by (a) the Board of Directors by a majority vote of a quorum consisting of
directors who are not or were not parties to such Proceeding, (b) a committee of the Board of
Directors designated by majority vote of the Board
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of Directors, even though less than a quorum,
(c) if there are no such directors, or if such directors so direct, independent legal counsel in a
written opinion or (d) the equity owners.
The right to indemnification or advances as provided by this Agreement shall be enforceable by
Indemnitee in any court of competent jurisdiction. The burden of proving that indemnification is
not appropriate shall be on the MLP and the Company. Neither the failure of the MLP or the Company
(including its Board of Directors, any committee thereof, independent legal counsel or its equity
owners) to have made a determination prior to the commencement of such action that indemnification
is proper in the circumstances because Indemnitee has met the applicable standards of conduct, nor
an actual determination by the MLP and the Company (including its Board of Directors, any committee
thereof, independent legal counsel or its equity owners) that Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a presumption that
Indemnitee has not met the applicable standard of conduct.
9. Indemnification Hereunder Not Exclusive. The indemnification and advancement of expenses
provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee
may be entitled under the MLP Partnership Agreement, the Company LLC Agreement, the Partnership
Statute, the LLC Statute, any directors and officers insurance maintained by or on behalf of the
MLP or the Company, any agreement, or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office; provided, however, that this Agreement
supersedes all prior written indemnification agreements between the MLP or the Company (or any
predecessor thereof) and Indemnitee with respect to the subject matter hereof. However, Indemnitee
shall reimburse the MLP and the Company for amounts paid to Indemnitee pursuant to such other
rights to the extent such payments duplicate any payments received pursuant to this Agreement.
10. Continuation of Indemnity. All agreements and obligations of the MLP and the Company contained
herein shall continue during the period Indemnitee is a director or officer of the MLP or the
Company (or is or was serving at the request of the MLP or the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust, limited liability company or other
enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any possible
Proceeding (notwithstanding the fact that Indemnitee has ceased to serve the MLP or the Company).
11. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to
indemnification by the MLP and the Company for a portion of Expenses, but not, however, for the
total amount thereof, the MLP and the Company shall nevertheless indemnify Indemnitee for the
portion of such Expenses to which Indemnitee is entitled.
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12. Acknowledgements. Each of the MLP and the Company expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on it hereby in order to induce
Indemnitee to serve or to continue to serve as a director or officer of the MLP and/or the Company,
and acknowledges that Indemnitee is relying upon this Agreement in agreeing to serve or in
continuing to serve as a director or officer of the MLP and/or the Company.
13. Enforcement. In the event Indemnitee is required to bring any action or other proceeding to
enforce rights or to collect moneys due under this Agreement and is successful in such action, the
MLP and the Company shall reimburse Indemnitee for all of Indemnitees expenses in bringing and
pursuing such action.
14. Severability. If any provision of this Agreement shall be held to be invalid, illegal or
unenforceable (a) the validity, legality and enforceability of the remaining provisions of this
Agreement shall not be in any way affected or impaired thereby, and (b) to the fullest extent
possible, the provisions of this Agreement shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable. Each section of this Agreement
is a separate and independent portion of this Agreement. If the indemnification to which
Indemnitee is entitled with respect to any aspect of any claim varies between two or more sections
of this Agreement, that section providing the most comprehensive indemnification shall apply.
15. Liability Insurance. To the extent the MLP or the Company maintains an insurance policy or
policies providing directors and officers liability insurance, Indemnitee shall be covered by
such policy or policies, in accordance with its or their terms, to the maximum extent of the
coverage available and maintained by the MLP or the Company for any director or officer of the MLP
or the Company or any applicable subsidiary or affiliated company.
16. Miscellaneous.
(a) Governing Law. This Agreement and all acts and transactions pursuant hereto and
the rights and obligations of the parties hereto shall be governed, construed and interpreted in
accordance with the laws of the State of Delaware, without giving effect to principles of conflict
of law.
(b) Entire Agreement; Enforcement of Rights. This Agreement sets forth the entire
agreement and understanding of the parties relating to the subject matter herein and merges all
prior discussions between them. No modification of or amendment to this Agreement, nor any waiver
of any rights under this Agreement, shall be effective unless in writing signed by the parties to
this Agreement. The failure by any party to enforce any rights under this Agreement shall not be
construed as a waiver of any rights of such party.
(c) Construction. This Agreement is the result of negotiations between and has been
reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this
Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be
construed in favor of or against any one of the parties hereto.
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(d) Notices. All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to
have been given (i) when delivered personally to the recipient, (ii) one business day after the
date when sent to the recipient by reputable overnight courier service (charges prepaid), or (iii)
five business days after the date when mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other communications shall
be sent to the parties at the addresses indicated on the signature page hereto, or to such other
address as any party hereto may, from time to time, designate in writing delivered pursuant to the
terms of this Section 16(d).
(e) Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one instrument.
(f) Successors and Assigns. This Agreement shall be binding upon the MLP and the
Company and their respective successors and assigns and shall inure to the benefit of Indemnitee
and Indemnitees heirs, legal representatives and assigns.
(g) Subrogation. In the event of payment under this Agreement, the MLP and the
Company shall be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to
secure such rights and to enable the MLP and the Company to effectively bring suit to enforce such
rights.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and
year first above written.
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TARGA RESOURCES PARTNERS LP
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By: |
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Name: |
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Title: |
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Address:
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1000 Louisiana, Suite 4300 |
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Houston, Texas 77002 |
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TARGA RESOURCES GP LLC
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Name: |
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Address:
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1000 Louisiana, Suite 4300 |
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Houston, Texas 77002 |
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INDEMNITEE: |
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[Name] |
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9
exv99w1
Exhibit 99.1
TARGA RESOURCES PARTNERS LP ANNOUNCES CLOSING OF INITIAL PUBLIC OFFERING
HOUSTON, February 14, 2007 Targa Resources Partners LP (NASDAQ: NGLS) (Targa Resources
Partners) announced
today the closing of the initial public offering of 19,320,000 of its common units at $21.00 per
unit. The number of units issued
at closing included 2,520,000 additional common units subject to the underwriters over-allotment
option. Net proceeds
received by Targa Resources Partners from the sale of these units were approximately $380.8
million.
The net proceeds from this offering, together with borrowings under a credit facility established
by Targa Resources Partners,
were used to retire intercompany indebtedness owed to Targa Resources, Inc. (Targa). Targa then
applied these funds to
the retirement in full of its $700 million Senior Secured Bridge Loan due October 31, 2007.
The common units offered to the public represent approximately 61.4 percent of the outstanding
equity of Targa Resources
Partners. Targa indirectly owns the remaining equity interests in Targa Resources Partners.
Citigroup, Goldman, Sachs & Co., UBS Investment Bank and Merrill Lynch & Co. acted as joint
book-running managers of the
offering. A. G. Edwards, Credit Suisse, Lehman Brothers and Wachovia Securities acted as senior
co-managers and Raymond
James, RBC Capital Markets and Sanders Morris Harris acted as co-managers for the offering.
A copy of the final prospectus related to the offering may be obtained from the offices of: (i)
Citigroup Global Markets Inc.,
Brooklyn Army Terminal, Attn: Prospectus Delivery Department, 140 58th Street, Brooklyn, New York
11220, phone: 718-765-
6732; (ii) Goldman, Sachs & Co., 85 Broad Street, New York, NY 10004, via fax at 212-902-9316 or
via e-mail at prospectusny@
ny.email.gs.com; (iii) UBS Securities LLC, Prospectus Department, 299 Park Avenue, New York, N.Y.,
10171, 212-821-
3000; or (iv) Merrill Lynch & Co., 4 World Financial Center, Attention: Prospectus Department, New
York, NY 10080; phone:
212-449-1000.
A registration statement relating to these securities has been filed with, and declared effective
by, the Securities and Exchange
Commission. This news release shall not constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any
sale of these securities in any state in which such offer, sale or solicitation would be unlawful
prior to registration or qualification
under the securities law in any such state.
About Targa Resources Partners
Targa Resources Partners was recently formed by Targa to engage in the business of gathering,
compressing, treating,
processing and selling natural gas and the fractionating and selling of natural gas liquids and
natural gas liquids products with
initial operations in the Fort Worth Basin in north Texas. A subsidiary of Targa is the general
partner of Targa Resources
Partners. Targa Resources Partners owns approximately 3,950 miles of integrated gathering
pipelines, two natural gas
processing plants and a fractionator.
Targa Resources Partners principal executive offices are located at 1000 Louisiana, Suite 4300,
Houston, Texas 77002 and its
telephone number is 713-584-1000.
Forward-Looking Statements
Statements about the offering are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act
of 1995. These forward-looking statements rely on a number of assumptions concerning future events
and are subject to a
number of uncertainties and factors, many of which are outside Targas control, and a variety of
risks that could cause results
to differ materially from those expected by management of Targa or Targa Resources Partners.
Investor contact:
Howard Tate
Vice President Finance
713-584-1000
Web site: http://www.targaresources.com
Media contact:
Kenny Juarez
212-371-5999