Page 15 - Article V
SPECTRA ENERGY PARTNERS, LP filed this Form 8-K on 1/22/2018
AGREED TAX TREATMENT
Section 5.1 Agreed
Tax Treatment. The Parties agree that the Transactions will be reported for U.S. federal income tax purposes as set
forth in this Section 5.1 (the “Agreed Tax Treatment”). Each Party shall, and shall cause its controlled Affiliates
to, file all tax returns and other reports consistent with the Agreed Tax Treatment, unless required by Law to do otherwise.
Transactions will be reported as (i) with respect to the Conversion of the General Partner Interest into the non-economic general
partner interest and a portion of the Restructuring Common Units, a transaction described in Section 721 of the Code in a manner
consistent with Revenue Ruling 84-52, 1984-1 C.B. 157 and (ii) with respect to the Conversion of the Incentive Distribution Rights
held by SEP GP into the remainder of the Restructuring Common Units, a readjustment of partnership items among existing partners
of a partnership not involving a sale or exchange. As a result, (i) no taxable gain or loss will be reported by SEP or SEP GP and
(ii) in the case of the existing Limited Partners owning Common Units, taxable gain will be reported only to the extent such Limited
Partner’s share of SEP’s liabilities under Section 752 of the Code is decreased by an amount that is greater
than such Limited Partner’s adjusted tax basis in its Common Units.
to Section 5.3(d) of the Amended Partnership Agreement and in connection with the Transaction, SEP GP will make an adjustment to
the Capital Accounts (as defined in the Amended Partnership Agreement) of SEP’s partners and the Carrying Values (as defined
in the Amended Partnership Agreement) of SEP’s properties in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f)
and Proposed Treasury Regulation Section 1.704-1(b)(2)(iv)(f)(5)(v).
Section 5.2 Tax
Representations and Covenants.
Party represents that it is not aware of any fact that is in existence on the date hereof or may reasonably be expected to occur
on or prior to the Closing, or has taken or agreed to take any action, that would reasonably be expected to prevent or impede the
Transactions from qualifying for the Agreed Tax Treatment.
Party agrees to use its reasonable best efforts to cause the Transactions to qualify for the Agreed Tax Treatment, including by
not taking or failing to take any action which action or failure to act such party knows is reasonably likely to prevent such qualification.