Common use of Recourse Debt Clause in Contracts

Recourse Debt. (a) Immediately prior to the Closing, Spectra MLP shall borrow an amount equal to the Cash Distribution under indebtedness that constitutes an MLP GP Recourse Liability in a manner such that the proceeds of such borrowing are allocable to the Cash Distribution pursuant to Treasury Regulation Section 1.707-5(b)(1) and Temporary Treasury Regulation 1.163-8T (such borrowing, and any “refinancing” of such borrowing treated as the liability it refinances pursuant to Treasury Regulation Section 1.707-5(c), the “Transaction Debt”, and together with all other indebtedness of Spectra MLP that constitutes an MLP GP Recourse Liability, the “Spectra MLP Debt”). (b) The Parties intend that the Cash Distribution paid to MLP GP shall qualify as a “debt-financed transfer” not taken into account as part of a “disguised sale” of property contributed to Spectra MLP under Treasury Regulation Sections 1.707-3 and 1.707-5(b). (c) For a period of four years following the Closing Date, the Parties shall ensure (and shall cause their respective Affiliates to ensure) that MLP GP’s “allocable share” of (i) the Transaction Debt will not be less than the entire outstanding principal balance of the Transaction Debt outstanding immediately after the Closing and (ii) the Spectra MLP Debt will not be less than the entire outstanding principal balance of the Spectra MLP Debt outstanding immediately after the Closing. (d) The Parties shall act at all times in a manner consistent with the foregoing provisions of this Section 6.9, except with the prior written consent of MLP GP or as otherwise required by applicable Law following a final determination by the U.S. Internal Revenue Service or a Governmental Authority with competent jurisdiction.