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): March 17, 2016
 
Southcross Energy Partners, L.P.
(Exact name of registrant as specified in its charter)
 
Delaware
 
001-35719
 
45-5045230
(State or other jurisdiction
 
(Commission
 
(IRS Employer
of incorporation or
 organization)
 
File Number)
 
Identification No.)
 
1717 Main Street
Suite 5200
Dallas, Texas 75201
(Address of principal executive office) (Zip Code)
 
(214) 979-3720
(Registrant's 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.

On March 17, 2016, Southcross Energy Partners, L.P. (the “Partnership”) and Southcross Holdings LP (“Holdings”) entered into an equity cure contribution agreement (the “Equity Cure Agreement”) related to that certain Third Amended and Restated Revolving Credit Agreement, dated as of August 4, 2014, among the Partnership, as borrower, Wells Fargo Bank, N.A. as administrative agent, UBS Securities LLC and Barclays Bank PLC, as co-syndication agents, JPMorgan Chase Bank, N.A., as documentation agent, and the lenders party thereto (as amended, the “Revolving Credit Agreement”). Under the terms of the Revolving Credit Agreement, the Partnership has the right to cure any default with respect to a financial covenant in the Revolving Credit Agreement by having Holdings purchase equity interests in or make capital contributions to the Partnership that result in proceeds that would satisfy the requirements of such financial covenant.

Pursuant to the Equity Cure Agreement, Holdings has agreed, subject to bankruptcy court approval, to contribute up to $50 million to the Partnership (the “Contribution Amount”) to fund potential equity cures upon notification from the Partnership that a contribution would cure any default of a financial covenant in the Revolving Credit Agreement occurring between March 15, 2016 and March 31, 2017. In exchange for the Contribution Amount, the Partnership will issue Holdings a number of the Partnership's common units representing limited partner interests equal to, subject to certain exceptions, (i) the applicable Contribution Amount divided by (ii) a common unit reference price (“Reference Price”) equal to the volume weighted daily average price of the common units on the New York Stock Exchange (“VWAP”) calculated for a period of 15 trading days ending two trading days prior to the contribution by Holdings. Notwithstanding the VWAP calculation, the Reference Price will be no less than $0.89 per common unit and no greater than $1.48 per common unit (the “Range”), and if the VWAP is within the Range for a period of 15 trading days, the first of which is the tenth trading day following this announcement, such VWAP will be the Reference Price for all common units issued in exchange for the Contribution Amount. It is expected that funding of any amount under the Contribution Agreement would be from funds received by Holdings from the proceeds of the equity investment contemplated under, and after the effectiveness of, the plan of reorganization for Holdings.

Holdings indirectly owns 100% of Southcross Energy Partners GP, LLC, a Delaware limited liability company and the general partner of the Partnership (the “General Partner”), all of the Partnership’s subordinated units representing limited partner interests and approximately 23.3% of the Partnership’s common units. The General Partner owns an approximate 2.0% general interest in the Partnership and all of the Partnership’s incentive distribution rights. The Conflicts Committee of the Board of Directors of the General Partner, acting pursuant to delegated authority under the Partnership’s Third Amended and Restated Agreement of Limited Partnership, approved the terms of the Equity Cure Agreement and the transactions contemplated thereunder.

The foregoing description of the Equity Cure Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Equity Cure Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated into this Item 1.01 by reference.

Item 3.02 Unregistered Sales of Equity Securities.

The information set forth in Item 1.01 of this Current Report on Form 8-K related to the common units to be issued to Holdings pursuant to the Equity Cure Agreement is incorporated into this Item 3.02 by reference. Any common units acquired by Holdings in the future pursuant to the Equity Cure Agreement will be issued in a private transaction exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On March 17, 2016, the General Partner entered into retention agreements (the “Retention Agreements”) with John E. Bonn, Chief Executive Officer of the General Partner, Bret M. Allan, Chief Financial Officer of the General Partner, and Joel D. Moxley, Chief Commercial Officer of the General Partner (the “Named Executive Officers”). Pursuant to the Retention Agreements, the Named Executive Officers will each receive a one-time special restructuring bonus in an amount equal to 100% of his then-current annual salary (the “Restructuring Bonus”) if he remains continuously employed with the General Partner through the date that Holdings consummates a plan of reorganization under Chapter 11 of Title 11 of the United States Code. Each Named Executive Officer will also receive a special one-time retention bonus in an amount equal to 100% of his then-current annual salary (the “Retention Bonus”) if he remains continuously employed with the General Partner through November 1, 2016.





Notwithstanding the foregoing, if there is a change in control (as such term is defined in the Amended and Restated 2012 Long-Term Incentive Plan of the Partnership) or the Named Executive Officer experiences a qualifying termination, in any case, prior to November 1, 2016, the Named Executive Officer will be entitled to receive any unpaid portion of the Restructuring Bonus or the Retention Bonus.

The foregoing description of the Retention Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of each Retention Agreement, which are filed as Exhibits 10.2, 10.3 and 10.4 to this Current Report on Form 8-K and are incorporated into this Item 5.02 by reference.

Item 7.01 Regulation FD Disclosure.

Cleansing Materials

On March 22, 2016, Holdings announced that it had entered into a Restructuring Support Agreement with a majority of its senior lenders under its revolving and term loan credit agreements and all of its Class B preferred equity holders and, as part of this agreement, commenced a solicitation of votes for a prepackaged plan of reorganization. Holdings intends to commence a prepackaged Chapter 11 case in the U.S. Bankruptcy Court. In connection with its restructuring, Holdings entered into non-disclosure agreements (“NDAs”) with its senior lenders and provided the senior lenders certain confidential financial projections of the Partnership (the “Financing Projections”) in early 2016. Pursuant to the NDAs, Holdings agreed to publicly disclose the Financing Projections. The Partnership is providing these Financing Projections in connection with Holdings prepackaged Chapter 11 bankruptcy filing, and copies of the Financing Projections are furnished hereby as Exhibit 99.1.

The Financing Projections, including financial projections, forecasts or budgets, were not prepared with a view toward public disclosure or compliance with the published guidelines of the Securities and Exchange Commission (the “SEC”) or the guidelines established by the American Institute of Certified Public Accountants regarding projections or forecasts. The Financing Projections do not purport to present the Partnership's financial condition in accordance with accounting principles generally accepted in the United States. Neither the Partnership's independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the Financing Projections, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the Financing Projections. The inclusion of the information in the Financing Projections should not be regarded as an indication that the Partnership or its affiliates or representatives consider the Financing Projections to be a reliable prediction of future events, and the Financing Projections should not be relied upon as such. None of Holdings, the Partnership or any of its affiliates or representatives have made or make any representation to any person regarding the Financing Projections, and none of them undertakes any obligation to publicly update such information to reflect circumstances existing after the date when the information was made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Financing Projections are shown to be in error.

The information set forth in this Item 7.01 of this Current Report on Form 8-K is being furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any of the Partnership’s filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing. The filing of this Item 7.01 of this Current Report on Form 8-K shall not be deemed an admission as to the materiality of any information herein that is required to be disclosed solely by reason of Regulation FD.

Cautionary Note Regarding Forward-Looking Statements

Many of the statements included or incorporated in this Current Report on Form 8-K and the exhibits furnished herewith constitute “forward-looking statements.” In particular, they include statements relating to future actions, strategies, future operating and financial performance, and the Partnership’s future financial results. These forward-looking statements are based on current expectations and projections about future events. Readers are cautioned that forward-looking statements are not guarantees of future operating and financial performance or results and involve substantial risks and uncertainties that cannot be predicted or quantified, and, consequently, the actual performance of the Partnership may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, factors described from time to time in the Partnership’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the SEC (including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein).





Item 9.01 Financial Statements and Exhibits.
 
(d) Exhibits
 
Exhibit
 
 
Number
 
Exhibit Description
10.1

Equity Cure Contribution Agreement, dated March 17, 2016, by and between Southcross Energy Partners, L.P. and Southcross Holdings LP.
10.2

Retention Agreement, dated March 17, 2016, by and between Southcross Energy GP, LLC and Mr. John E. Bonn.
10.3

Retention Agreement, dated March 17, 2016, by and between Southcross Energy GP, LLC and Mr. Bret M. Allan.
10.4

Retention Agreement, dated March 17, 2016, by and between Southcross Energy GP, LLC and Mr. Joel D. Moxley.
99.1

Partnership Financing Projections





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 hereunto duly authorized.

 
Southcross Energy Partners, L.P.
 
 
 
 
 
By:
Southcross Energy Partners GP, LLC,
 
 
its general partner
 
 
 
 
 
 
Dated: March 22, 2016
By:
/s/ Bret M. Allan
 
 
Name:
Bret M. Allan
 
 
Title:
Senior Vice President and Chief Financial Officer


 





INDEX TO EXHIBITS
 
Exhibit
Number
 
Exhibit Description
10.1
 
Equity Cure Contribution Agreement, dated March 17, 2016, by and between Southcross Energy Partners, L.P. and Southcross Holdings LP.
10.2
 
Retention Agreement, dated March 17, 2016, by and between Southcross Energy GP, LLC and Mr. John E. Bonn.
10.3
 
Retention Agreement, dated March 17, 2016, by and between Southcross Energy GP, LLC and Mr. Bret M. Allan.
10.4
 
Retention Agreement, dated March 17, 2016, by and between Southcross Energy GP, LLC and Mr. Joel D. Moxley.
99.1
 
Partnership Financing Projections
 






Exhibit 10.1

Execution Version

EQUITY CURE CONTRIBUTION AGREEMENT
This Equity Cure Contribution Agreement (this “ Agreement ”) is made as of March 17, 2016 (the “ Effective Date ”), by and among Southcross Energy Partners, L.P., a Delaware limited partnership (“ SXE ”), and Southcross Holdings LP, a Delaware limited partnership (“ Southcross Holdings ”). SXE and Southcross Holdings are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties .”
WHEREAS, SXE is subject to certain financial covenants under the terms of that certain Third Amended and Restated Revolving Credit Agreement, dated as of August 4, 2014, among SXE, as Borrower, Wells Fargo Bank, N.A., as Administrative Agent, UBS Securities LLC and Barclays Bank PLC, as Co-Syndication Agents, JPMorgan Chase Bank, N.A., as Documentation Agent, and the Lenders party thereto, as amended by the First Amendment thereto, dated as of May 7, 2015 (as may be amended from time to time, the “SXE Revolving Credit Agreement” );
WHEREAS, under the terms of the SXE Revolving Credit Agreement, SXE has an Equity Cure Right (as such term is defined under the SXE Revolving Credit Agreement) that it may elect to exercise from time to time, on the terms and subject to the conditions specified therein, in order to cure a Financial Covenant Default (as such term is defined under the SXE Revolving Credit Agreement);
WHEREAS, Southcross Holdings and certain of its affiliates may commence voluntary cases under chapter 11 of title 11 of the United States Code (the “Chapter 11 Cases”) in a bankruptcy court of proper jurisdiction (the “Bankruptcy Court”) to, among other things, implement a restructuring (the “Southcross Holdings Restructuring”);
WHEREAS, in connection with the Southcross Holdings Restructuring and subject to Southcross Holdings obtaining Bankruptcy Court authority to assume and perform under this Agreement, Southcross Holdings is willing to agree to purchase up to $50 million of Common Units (as such term is defined in the Third Amended and Restated Agreement of Limited Partnership of SXE, dated as of August 4, 2014 (as may be amended from time to time, the “ SXE LP Agreement” )) from SXE on the terms set forth herein, and SXE is willing to issue up to $50 million of Common Units to Southcross Holdings on the terms set forth herein;
WHEREAS, the Conflicts Committee (the “ Conflicts Committee ”) of the Board of Directors (the “ Board ”) of Southcross Energy Partners GP, LLC, a Delaware limited liability company (the “ General Partner ”) has (a) determined that (i) this Agreement and the transactions contemplated herein are in the best interests of the Partnership Group (as such term is defined under the SXE LP Agreement), and (ii) this Agreement and the transactions contemplated herein are fair and reasonable to SXE; and (b) recommended that the Board approve this Agreement and the transactions contemplated herein;
WHEREAS, the Board has approved this Agreement and the transactions contemplated herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual agreements, covenants, representations and warranties set forth herein, the Parties hereby agree as follows:
ARTICLE I
EQUITY CURE CONTRIBUTIONS

1.1     Contribution Obligations .

(a) On each Contribution Date during the Contribution Period, if SXE has given notice to Southcross Holdings as set forth in Section 2.6 at least two business days before such Contribution Date that such contribution will be required (each a “ Contribution Notice ”), (i) Southcross Holdings will contribute the applicable Contribution Amount to SXE by wire transfer of immediately available funds and (ii) upon receipt of such funds, SXE will issue to Southcross Holdings a number of Common Units equal to the applicable Issuance Amount (each such contribution and issuance referred to herein as an “Equity Cure Contribution” ). The delivery of any such notice by SXE shall be approved by the Conflicts Committee.

(b) With respect to each Contribution Date, the applicable “ Contribution Amount ” shall be equal to the Equity Cure Amount (as such term is defined under the SXE Revolving Credit Agreement) required to be funded pursuant to the applicable




Equity Cure Election and set forth in the applicable Contribution Notice; provided, however, that the total of all Contribution Amounts contributed by Southcross Holdings shall not exceed $50 million.

(c) “Contribution Date ” means in each case, as applicable, the business day specified by SXE in the applicable Contribution Notice given pursuant to Section 1.1(a) in connection with the applicable Equity Cure Election, which specified date shall be no later than five days after the date on which SXE has delivered the Equity Cure Notice (as defined under the SXE Revolving Credit Agreement) to the Administrative Agent (as defined under the SXE Revolving Credit Agreement) with respect to such Equity Cure Election.

(d) “Contribution Period” shall mean the period commencing on March 15, 2016 and running through March 31, 2017.

(e) “Equity Cure Election” shall mean any election by SXE to exercise its Equity Cure Right with respect to an Equity Cure Test Date (as such term is defined under the SXE Revolving Credit Agreement) consisting of any of December 31, 2015, March 31, 2016, June 30, 2016, September 30, 2016 and December 31, 2016

(f) With respect to each Contribution Date, the applicable “ Issuance Amount ” shall be equal to (i) the applicable Contribution Amount divided by (ii) the applicable Reference Price, rounded down to the nearest whole number.

(g) For the Issuance Amount relating to an Equity Cure Test Date of December 31, 2015, the “ Reference Price ” shall be equal to:

(i) The Initial Measurement Period VWAP, if the Initial Measurement Period VWAP is (A) equal to or greater than $0.89 and (B) equal to or less than $1.48;

(ii) $0.89, if the Initial Measurement Period VWAP is less than $0.89; or

(iii) $1.48, if the Initial Measurement Period VWAP is greater than $1.48.

(h) For each other Issuance Amount, the “ Reference Price ” shall be equal to:

(i) The Initial Measurement Period VWAP, if the Initial Measurement Period VWAP was (A) equal to or greater than $0.89 and (B) equal to or less than $1.48;

(ii) The Subsequent Measurement Period VWAP, if (A) the Initial Measurement Period VWAP was either less than $0.89 or greater than $1.48 and (B) the applicable Subsequent Measurement Period VWAP is (x) equal to or greater than $0.89 and (y) equal to or less than $1.48

(iii) $0.89, if (A) the Initial Measurement Period VWAP was either less than $0.89 or greater than $1.48 and (B) the applicable Subsequent Measurement Period VWAP is less than $0.89; or

(iv) $1.48, if (A) the Initial Measurement Period VWAP was either less than $0.89 or greater than $1.48 and (B) the applicable Subsequent Measurement Period VWAP is greater than $1.48.

(i) “Initial Measurement Period VWAP” shall mean the volume weighted daily average price of a Common Unit, as reported on the New York Stock Exchange (or any applicable successor exchange), for the 15 trading days the first of which trading days is (or is the first trading day following) the tenth day following the date that both of the following have been publicly announced: (i) the bankruptcy filing of Southcross Holdings and (ii) that SXE will not file for bankruptcy.

(j) “Subsequent Measurement Period VWAP” shall mean the volume weighted daily average price of a Common Unit, as reported on the New York Stock Exchange (or any applicable successor exchange), for the 15 trading days the last of which is the second trading day prior to the applicable Contribution Date.

(k) If from time to time during the Contribution Period there occurs any default under the SXE Revolving Credit Agreement that is subject to, and capable of cure pursuant to, an Equity Cure Right, SXE will notify Southcross Holdings of such default, and SXE will make an Equity Cure Election and will provide a Contribution Notice in accordance with Section 1.1(a) , such that SXE will require and accept, and Southcross Holdings will make, the applicable equity contribution in accordance with this Section 1.1 and SXE will use the proceeds therefrom to satisfy its Equity Cure Right and cure such default. The provisions of this Agreement will not apply, and Southcross Holdings will have no obligation to contribute any applicable Contribution




Amount hereunder, if (i) any default or other event that is not subject to and capable of cure pursuant to an Equity Cure Right then exists under the SXE Revolving Credit Agreement or (ii) the applicable Contribution Amount that Southcross Holdings is required to contribute in accordance with this Section 1.1 would not alone fully and completely cure the default or event subject to such Equity Cure Right.

(l) The Parties acknowledge and agree that nothing in this Agreement creates an obligation or alters any existing obligation, if any, of the equity holders of Southcross Holdings or any other entity not a party to this Agreement to fund money to Southcross Holdings or SXE.

1.2     Representations Warranties of Southcross Holdings . Southcross Holdings hereby represents and warrants that the following statements are correct and complete:

(a) All Common Units acquired by Southcross Holdings hereunder will be acquired for Southcross Holdings’ own account as an investment without the present intent to sell, transfer or otherwise distribute the same to any other Person in violation of any state or federal securities laws, rules or regulations. Southcross Holdings acknowledges that any Common Units acquired by it hereunder will not be registered pursuant to the Securities Act of 1933, as amended (the “ 1933 Act ”), and that none of such Common Units may be transferred, except pursuant to an effective registration statement or an applicable exemption from registration under the 1933 Act. Southcross Holdings is an “accredited investor” as defined under Rule 501 promulgated under the 1933 Act.

(b) Southcross Holdings acknowledges that it can bear the economic risk of its investment in the Common Units to be acquired hereunder indefinitely, and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in such Common Units

(c) Southcross Holdings has the requisite limited partnership power and authority to execute, deliver and perform its obligations under this Agreement, and this Agreement and the transactions contemplated hereby have been duly authorized by all necessary limited partnership action. This Agreement has been duly executed and delivered by Southcross Holdings and constitutes a valid and binding agreement of Southcross Holdings (assuming the due execution and delivery of this Agreement by, or on behalf of, SXE), enforceable against it in accordance with its terms.

(d) The execution, delivery and performance by Southcross Holdings of this Agreement and the consummation of the transactions contemplated hereby do not and will not (with or without the giving of notice, the lapse of time, or both) result in a violation or breach of, conflict with, cause increased liability or fees, or require approval, consent or authorization under (i) any law, rule or regulation applicable to Southcross Holdings, (ii) any contract to which Southcross Holdings is a party or by which Southcross Holdings or any of Southcross Holdings’ properties or assets may be bound or affected or (iii) any of Southcross Holdings’ organizational and governing documents.

1.3     Representations Warranties of SXE . SXE hereby represents and warrants that the following statements are correct and complete:

(a) All Common Units acquired by SXE hereunder are duly authorized and, when issued in accordance herewith, will be validly issued and, to the extent applicable, fully paid and non-assessable.

(b) SXE has the requisite limited partnership power and authority to execute, deliver and perform its obligations under this Agreement, and this Agreement and the transactions contemplated hereby have been duly authorized by all necessary limited partnership action. This Agreement has been duly executed and delivered by SXE and constitutes a valid and binding agreement of SXE (assuming the due execution and delivery of this Agreement by, or on behalf of, Southcross Holdings), enforceable against it in accordance with its terms.

(c) The execution, delivery and performance by SXE of this Agreement and the consummation of the transactions contemplated hereby do not and will not (with or without the giving of notice, the lapse of time, or both) result in a violation or breach of, conflict with, cause increased liability or fees, or require approval, consent or authorization under (i) any law, rule or regulation applicable to SXE, (ii) any contract to which SXE is a party or by which SXE or any of SXE’s properties or assets may be bound or affected or (iii) any of SXE’s organizational and governing documents.

1.4     Public Announcement . As part of the public announcement of the commencement of the Chapter 11 Cases, the Parties agree that Southcross Holdings will include a concurrent announcement stating that SXE is not filing for bankruptcy.




1.5     Bankruptcy Court Approval . Notwithstanding anything to the contrary in this Agreement, Southcross Holdings’ obligations under this Agreement are conditioned upon obtaining Bankruptcy Court authority to assume and perform under this Agreement in the Chapter 11 Cases; provided, however, that Southcross Holdings agrees to seek such Bankruptcy Court authority as soon as reasonably practicable following the commencement of the Chapter 11 Cases.

ARTICLE II
MISCELLANEOUS

2.1     Governing Law; Jury Trial Waiver. Etc. . THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CONFLICT OR CHOICE OF LAW PROVISION THAT WOULD RESULT IN THE IMPOSITION OF ANOTHER JURISDICTION’S LAW, AND THE APPLICABLE PROVISIONS OF THE BANKRUPTCY CODE. THE LAWS OF THE STATE OF DELAWARE, AND THE APPLICABLE PROVISIONS OF THE BANKRUPTCY CODE, SHALL GOVERN ANY DISPUTE, CONTROVERSY, REMEDY OR CLAIM BETWEEN THE PARTIES ARISING OUT OF, RELATING TO, OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, INCLUDING THE EXISTENCE, VALIDITY, PERFORMANCE, OR BREACH THEREOF. WITH RESPECT TO ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, EACH PARTY HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY. So long as Southcross Holdings is subject to cases under Chapter 11 of the Bankruptcy Code, all actions and proceedings with respect to, arising directly or indirectly in connection with, out of, related to, or from this Agreement or the transactions contemplated hereby shall be exclusively litigated, heard and determined in the Bankruptcy Court governing such cases, and the Parties hereby unconditionally and irrevocably submit to the exclusive jurisdiction and authority of such Bankruptcy Court to hear and determine any such action or proceeding; provided , however , that if such bankruptcy cases are closed or the Bankruptcy Court is unwilling or unable to hear any such dispute, the parties hereby unconditionally and irrevocably submit to the jurisdiction of the courts of the state of Delaware.

2.2     Third-Party Beneficiaries . The terms and provisions of this Agreement are intended solely for the benefit of the Parties and their respective successors or permitted assigns, and it is not the intention of the Parties to confer third party beneficiary rights upon any other Person.

2.3     Assignment; Waiver . No Party may assign its rights and obligations under this Agreement without the prior written consent of the other Parties. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Any waiver of a breach of any of the terms of this Agreement or of any default hereunder shall be in writing and shall not be deemed a waiver of any subsequent breach or default and shall in no way affect the other terms of this Agreement. No waiver shall be executed on behalf of SXE without the approval of the Conflicts Committee. No failure to exercise and no relaxation, forbearance, indulgence or delay on the part of any Party in exercising any right, remedy, power or privilege of that Party under this Agreement and no course of dealing among the Parties shall be construed or operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

2.4     Entire Agreement; Severability . This Agreement supersedes all prior discussions and agreements between the Parties and/or their respective affiliates with respect to the subject matter hereof and contains the sole and entire agreement between the Parties and their respective affiliates hereto with respect to the subject matter hereof. If any provision of this Agreement or the application of any such provision to any Person or circumstance, shall be declared judicially to be invalid, unenforceable or void, such decision shall not have the effect of invalidating or voiding the remainder of this Agreement, it being the intent and agreement of the Parties that this Agreement shall be deemed amended to modify such provision to the extent necessary to render it valid, legal and enforceable while preserving its intent or, if such modification is not possible, by substituting therefor another provision that is valid, legal and enforceable and that achieves the same objective.

2.5     Amendment . This Agreement may only be amended, modified or supplemented by an instrument in writing signed by the Parties; provided , however , that SXE shall not execute any such amendment, modification or supplement without the consent or approval of the Conflicts Committee.

2.6     Notices . All notices, demands or communications required or permitted under this Agreement shall be in writing and delivered personally, by reputable overnight delivery service or other courier with charges prepaid, by certified mail, postage prepaid and return receipt requested, or by facsimile transmission or e-mail that is confirmed by another writing, sent to the Parties as follows:





If to Southcross Holdings:
Southcross Holdings LP., et al.
1717 Main Street
Dallas, Texas 75201
Attention: General Counsel
E-mail address: Kelly.Jameson@southcrossenergy.com


If to SXE:

Southcross Energy Partners, GP.
1717 Main Street
Dallas, Texas 75201
Attention: General Counsel
E-mail address: Kelly.Jameson@southcrossenergy.com

with a copy to:

Southcross Energy Partners GP, LLC
1700 Pacific Avenue, Suite 2900
Dallas, Texas 75201
Attn: Conflicts Committee Chair
Facsimile: (214) 979-3710

All such notices shall be deemed to have been duly given, (a) as of the date of delivery, if delivered personally or by overnight delivery service or other courier, (b) on the date receipt is acknowledged, if delivered by certified mail, and (c) upon the date on which the transmission is separately confirmed in writing, if delivered by facsimile or e-mail. A Party may change its address for notice by notice to the other Parties in the manner set forth above.
2.7     Counterparts; Delivery . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original instrument, but all of which taken together shall constitute one and the same instrument. A Party’s delivery of an executed counterpart signature page by facsimile or e-mail transmission is as effective as executing and delivering this Agreement in the presence of the other Parties. No Party shall be bound until such time as all of the Parties have executed this Agreement (or counterparts hereof).

2.8     Time of the Essence . With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.

2.9     Construction . In this Agreement, unless a clear contrary intention appears in the applicable provision: (a) the singular includes the plural and vice versa; (b) reference to a person or entity includes such person’s or entity’s successors and assigns but, in the case of a Party, only if such successors and assigns are permitted by this Agreement; (c) reference to any gender includes each other gender; (d) references to any Section, Article, subsection and other subdivision refer to the corresponding Section, Article, subsection and other subdivision of this Agreement; (e) references in any Section or Article or definition to any clause means such clause of such Section, Article or definition; (f) “hereunder,” “hereof,” “hereto” and words of similar import are references to this Agreement as a whole and not to any particular provision of this Agreement; (g) the word “including” (in its various forms) means “including without limitation”; (h) each accounting term not otherwise defined in this Agreement has the meaning commonly applied to it in accordance with GAAP; (i) references to “days” are to calendar days; and (j) all references to money refer to the lawful currency of the United States. The Article and Section titles and headings in this Agreement are inserted for convenience of reference only and are not intended to be a part of, or to affect the meaning or interpretation of, this Agreement.

2.10     Specific Performance . The Parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the Parties do not perform their obligations under the provisions of this Agreement in accordance with its specified terms or otherwise breach such provisions. The Parties acknowledge and agree that the Parties will be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction without proof of damages or otherwise, this being in addition to any other remedy to which they are entitled under this Agreement





2.11     Non-Recourse . All proceedings, actions, obligations, damages or causes of action (whether in contract, in tort, in law or in equity, or granted by statute whether by or through attempted piercing of the corporate, limited partnership or limited liability company veil or otherwise) that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to (a) this Agreement, (b) the negotiation, execution or performance of this Agreement (including any representation or warranty made in connection with, or as inducement to, this Agreement), (c) any breach or violation of this Agreement and (d) any failure of the transactions contemplated by this Agreement to be consummated, in each case, may only be made against (and are those solely of) the persons that are expressly named as Parties to this Agreement and then only to the extent of the specific obligations of such Parties.

[ Signature Page Follows ]





IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement as of the Effective Date.

 
 
 
SOUTHCROSS HOLDINGS LP
 
 
 
 
 
 
 
 
By: SOUTHCROSS HOLDINGS GP LLC,
 
 
 
 
its General Partner
 
 
 
 
 
 
 
 
By:
/s/ John E. Bonn
 
 
 
 
Name: John E. Bonn
 
 
 
 
Title: President and CEO
 
 
 
 
 
 
 
 
 
 
 
 
 
SOUTHCROSS ENERGY PARTNERS, L.P.
 
 
 
 
 
 
 
 
By: SOUTHCROSS ENERGY PARTNERS GP, LLC,
 
 
 
 
its General Partner
 
 
 
 
 
 
 
 
By:
/s/ Bret M. Allan
 
 
 
 
Name: Bret M. Allan
 
 
 
 
Title: Senior Vice President and CFO





Exhibit 10.2

Southcross Energy Partners GP, LLC
1717 Main Street, Suite 5200
Dallas, TX 75201

STRICTLY CONFIDENTIAL

March 17, 2016

To:     John E. Bonn

Re:      Special Executive Bonus Terms
Dear John:
In recognition of the critical executive role you play in Southcross Energy Partners GP, LLC (the “ Company ”) and its affiliates, the Company is pleased to offer you the opportunity to earn a special cash incentive award. This letter outlines the terms of the award that the Company has determined to provide to you and sets forth the terms under which you will be entitled to such payment.
Bonuses. If you remain continuously employed with the Company through the date on which Southcross Holding, LP consummates a plan of reorganization in the proposed Southcross Holdings, LP, et al., cases under chapter 11 of title 11 of the United States Code (“ Restructuring Effective Date ”), you shall receive a one-time special restructuring bonus payment in an amount equal to 100% of your then current annual base salary (the “ Restructuring Bonus ”). The Restructuring Bonus will be paid in cash in a single lump sum, less applicable withholdings, on or within 10 business days after the Restructuring Effective Date. In addition, if you remain continuously employed with the Company through November 1, 2016 (the “ Retention Date ”), you will receive a one-time special retention bonus payment in an amount equal to 100% of your then current annual base salary (the “ Retention Bonus, ” and together with the Restructuring Bonus, the “Bonuses”). The Retention Bonus will be paid in cash in a single lump sum, less applicable withholdings, on or within 10 business days after the Retention Date, unless paid before as outlined below.
Notwithstanding the foregoing, if (i) there is a Change of Control (as defined in the Southcross Energy Partners, L.P. Amended and Restated 2012 Long-Term Incentive Plan (the “ LTIP ”)), or (ii) your employment is involuntarily terminated by the GP without “Cause” (as defined in your Employment Agreement dated March 5, 2015 (the “ Employment Agreement ”)), or (iii) you resign your employment for “Good Reason” (as defined in your Employment Agreement), in any case on or after March 16, 2016 but prior to the Retention Date, then (and, in the case of your termination pursuant to either clause (ii) or (iii), subject to you signing within 21 days after your date of termination, and not revoking, a general release of claims in favor of the Company in a form reasonably acceptable to the Company (the “ Release ”)) you will be entitled to receive the previously unpaid portion of the Bonuses, to be paid in a single cash lump sum within 15 business days or as set out in such Release (but not before the Release becomes non-revocable).

For the avoidance of doubt, in no event will an amount greater than 200% of your current annual base salary be paid to you pursuant to the terms of this letter. It is intended that all amounts payable under this letter will be exempt from the requirements of Section 409A (as defined below) pursuant to the “short-term deferral” exemption, and any ambiguities or ambiguous terms herein shall be interpreted to give effect to such intent. Each payment and benefit payable under this letter is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2). “ Section 409A ” means Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance thereunder, as they may be amended or modified from time to time, and any applicable state law equivalents.

Payment. If any portion of the Bonuses is earned, such amount will be paid, less all applicable withholdings, through the regular payroll processes of the Company, provided that it is understood that all payment amounts hereunder represent solely an obligation of the Company.

Confidentiality . As a condition to receiving the Bonuses, you agree to keep confidential the contents of this letter, including the fact that you are eligible to receive the Bonuses and the terms and conditions of this letter agreement (unless and until such terms and conditions become generally available to or known by the public other than as a result of your violation of this provision). However, you may discuss this information, with your attorney, financial advisor and immediate family members on a confidential basis.




Governing Law; Assignment; Successors . This letter agreement shall be binding upon the Company and its affiliates and their respective successors and assigns and will be interpreted, enforced and governed under the laws of the State of Texas in the United States and without regard to any applicable jurisdiction’s choice of law provisions. The Company may cause any of its applicable affiliates or successors to assume all or any of the Company’s obligations hereunder and, in such event, where the context requires, all references to the Company herein shall be deemed to refer to such affiliate or successor, as applicable. This letter agreement may not be assigned by you, without the prior written consent of the Company, other than by will or the laws of descent and distribution.
No Employment Contract . This letter agreement is not a contract of employment and does not create a guarantee of continued employment with the Company or any of its affiliates or successors.
Entire Agreement . This letter agreement supersedes any and all prior agreements, negotiations and discussions of the parties with respect to the matters expressly contained herein, and it contains the entire agreement of the parties with respect to those matters. Notwithstanding anything in this letter agreement to the contrary, this letter agreement is in addition to and does not modify anything in the employment agreement between John E. Bonn and Southcross Energy Partners GP, LLC dated March 5, 2015.
[ Signature Page Follows ]





Please indicate your agreement with and acceptance of the foregoing by returning a countersigned copy of this letter to the undersigned at your earliest convenience.

SOUTHCROSS ENERGY PARTNERS GP, LLC
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Bret M. Allan
 
 
 
 
Name: Bret M. Allan
 
 
 
 
Title: Senior Vice President and CFO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agreed and Accepted:
 
 
 
 
 
 
 
 
 
/s/ John E. Bonn
 
 
March 17, 2016
 
John E. Bonn
 
 
Date
 
 
 
 
 
 
 
 
 
 






Exhibit 10.3

Southcross Energy Partners GP, LLC
1717 Main Street, Suite 5200
Dallas, TX 75201

STRICTLY CONFIDENTIAL

March 17, 2016

To:     Mr. Bret M. Allan

Re:      Special Executive Bonus Terms
Dear Bret:
In recognition of the critical executive role you play in Southcross Energy Partners GP, LLC (the “ Company ”) and its affiliates, the Company is pleased to offer you the opportunity to earn a special cash incentive award. This letter outlines the terms of the award that the Company has determined to provide to you and sets forth the terms under which you will be entitled to such payment.
Bonuses. If you remain continuously employed with the Company through the date on which Southcross Holding, LP consummates a plan of reorganization in the proposed Southcross Holdings, LP, et al., cases under chapter 11 of title 11 of the United States Code (“Restructuring Effective Date”), you shall receive a one-time special restructuring bonus payment in an amount equal to 100% of your then current annual base salary (the “Restructuring Bonus”). The Restructuring Bonus will be paid in cash in a single lump sum, less applicable withholdings, on or within 10 business days after the Restructuring Effective Date. In addition, if you remain continuously employed with the Company through November 1, 2016 (the “ Retention Date ”), you will receive a one-time special retention bonus payment in an amount equal to 100% of your then current annual base salary (the “ Retention Bonus, ” and together with the Restructuring Bonus, the “Bonuses”). The Retention Bonus will be paid in cash in a single lump sum, less applicable withholdings, on or within 10 business days after the Retention Date, unless paid before as outlined below.
Notwithstanding the foregoing, if (i) there is a Change of Control (as defined in the Southcross Energy Partners, L.P. Amended and Restated 2012 Long-Term Incentive Plan (the “ LTIP ”)), or (ii) your employment is involuntarily terminated by the GP without “Cause” (as defined in your Severance Agreement dated June 8, 2015 (the “ Severance Agreement ”)), or (iii) you resign your employment for “Good Reason” (as defined in your Severance Agreement), in any case on or after March 16, 2016 but prior to the Retention Date, then (and, in the case of your termination pursuant to either clause (ii) or (iii), subject to you signing within 21 days after your date of termination, and not revoking, a general release of claims in favor of the Company in a form reasonably acceptable to the Company (the “ Release ”)) you will be entitled to receive the previously unpaid portion of the Bonuses, to be paid in a single cash lump sum within 15 business days or as set out in such Release (but not before the Release becomes non-revocable).

For the avoidance of doubt, in no event will an amount greater than 200% of your current annual base salary be paid to you pursuant to the terms of this letter. It is intended that all amounts payable under this letter will be exempt from the requirements of Section 409A (as defined below) pursuant to the “short-term deferral” exemption, and any ambiguities or ambiguous terms herein shall be interpreted to give effect to such intent. Each payment and benefit payable under this letter is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2). “ Section 409A ” means Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance thereunder, as they may be amended or modified from time to time, and any applicable state law equivalents.

Payment. If any portion of the Bonuses is earned, such amount will be paid, less all applicable withholdings, through the regular payroll processes of the Company, provided that it is understood that all payment amounts hereunder represent solely an obligation of the Company.

Confidentiality . As a condition to receiving the Bonuses, you agree to keep confidential the contents of this letter, including the fact that you are eligible to receive the Bonuses and the terms and conditions of this letter agreement (unless and until such terms and conditions become generally available to or known by the public other than as a result of your violation of this provision). However, you may discuss this information, with your attorney, financial advisor and immediate family members on a confidential basis.




Governing Law; Assignment; Successors . This letter agreement shall be binding upon the Company and its affiliates and their respective successors and assigns and will be interpreted, enforced and governed under the laws of the State of Texas in the United States and without regard to any applicable jurisdiction’s choice of law provisions. The Company may cause any of its applicable affiliates or successors to assume all or any of the Company’s obligations hereunder and, in such event, where the context requires, all references to the Company herein shall be deemed to refer to such affiliate or successor, as applicable. This letter agreement may not be assigned by you, without the prior written consent of the Company, other than by will or the laws of descent and distribution.
No Employment Contract . This letter agreement is not a contract of employment and does not create a guarantee of continued employment with the Company or any of its affiliates or successors.
Entire Agreement . This letter agreement supersedes any and all prior agreements, negotiations and discussions of the parties with respect to the matters expressly contained herein, and it contains the entire agreement of the parties with respect to those matters.
[ Signature Page Follows ]




Please indicate your agreement with and acceptance of the foregoing by returning a countersigned copy of this letter to the undersigned at your earliest convenience.

SOUTHCROSS ENERGY PARTNERS GP, LLC
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ John E. Bonn
 
 
 
 
Name: John E. Bonn
 
 
 
 
Title: President and CEO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agreed and Accepted:
 
 
 
 
 
 
 
 
 
/s/ Bret M. Allan
 
 
March 17, 2016
 
Name:   Bret M. Allan
 
 
Date
 
 
 
 
 
 
 
 
 
 





Exhibit 10.4

Southcross Energy Partners GP, LLC
1717 Main Street, Suite 5200
Dallas, TX 75201

STRICTLY CONFIDENTIAL

March 17, 2016

To:     Mr. Joel D. Moxley

Re:      Special Executive Bonus Terms
Dear Joel:
In recognition of the critical executive role you play in Southcross Energy Partners GP, LLC (the “ Company ”) and its affiliates, the Company is pleased to offer you the opportunity to earn a special cash incentive award. This letter outlines the terms of the award that the Company has determined to provide to you and sets forth the terms under which you will be entitled to such payment.
Bonuses. If you remain continuously employed with the Company through the date on which Southcross Holding, LP consummates a plan of reorganization in the proposed Southcross Holdings, LP, et al., cases under chapter 11 of title 11 of the United States Code (“ Restructuring Effective Date ”), you shall receive a one-time special restructuring bonus payment in an amount equal to 100% of your then current annual base salary (the “ Restructuring Bonus ”). The Restructuring Bonus will be paid in cash in a single lump sum, less applicable withholdings, on or within 10 business days after the Restructuring Effective Date. In addition, if you remain continuously employed with the Company through November 1, 2016 (the “ Retention Date ”), you will receive a one-time special retention bonus payment in an amount equal to 100% of your then current annual base salary (the “ Retention Bonus, ” and together with the Restructuring Bonus, the “Bonuses”). The Retention Bonus will be paid in cash in a single lump sum, less applicable withholdings, on or within 10 business days after the Retention Date, unless paid before as outlined below.
Notwithstanding the foregoing, if (i) there is a Change of Control (as defined in the Southcross Energy Partners, L.P. Amended and Restated 2012 Long-Term Incentive Plan (the “ LTIP ”)), or (ii) your employment is involuntarily terminated by the GP without “Cause” (as defined in your Severance Agreement dated June 15, 2015 (the “ Severance Agreement ”)), or (iii) you resign your employment for “Good Reason” (as defined in your Severance Agreement), in any case on or after March 16, 2016 but prior to the Retention Date, then (and, in the case of your termination pursuant to either clause (ii) or (iii), subject to you signing within 21 days after your date of termination, and not revoking, a general release of claims in favor of the Company in a form reasonably acceptable to the Company (the “ Release ”)) you will be entitled to receive the previously unpaid portion of the Bonuses, to be paid in a single cash lump sum within 15 business days or as set out in such Release (but not before the Release becomes non-revocable).

For the avoidance of doubt, in no event will an amount greater than 200% of your current annual base salary be paid to you pursuant to the terms of this letter. It is intended that all amounts payable under this letter will be exempt from the requirements of Section 409A (as defined below) pursuant to the “short-term deferral” exemption, and any ambiguities or ambiguous terms herein shall be interpreted to give effect to such intent. Each payment and benefit payable under this letter is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2). “ Section 409A ” means Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance thereunder, as they may be amended or modified from time to time, and any applicable state law equivalents.

Payment. If any portion of the Bonuses is earned, such amount will be paid, less all applicable withholdings, through the regular payroll processes of the Company, provided that it is understood that all payment amounts hereunder represent solely an obligation of the Company.

Confidentiality . As a condition to receiving the Bonuses, you agree to keep confidential the contents of this letter, including the fact that you are eligible to receive the Bonuses and the terms and conditions of this letter agreement (unless and until such terms and conditions become generally available to or known by the public other than as a result of your violation of this provision). However, you may discuss this information, with your attorney, financial advisor and immediate family members on a confidential basis.




Governing Law; Assignment; Successors . This letter agreement shall be binding upon the Company and its affiliates and their respective successors and assigns and will be interpreted, enforced and governed under the laws of the State of Texas in the United States and without regard to any applicable jurisdiction’s choice of law provisions. The Company may cause any of its applicable affiliates or successors to assume all or any of the Company’s obligations hereunder and, in such event, where the context requires, all references to the Company herein shall be deemed to refer to such affiliate or successor, as applicable. This letter agreement may not be assigned by you, without the prior written consent of the Company, other than by will or the laws of descent and distribution.
No Employment Contract . This letter agreement is not a contract of employment and does not create a guarantee of continued employment with the Company or any of its affiliates or successors.
Entire Agreement . This letter agreement supersedes any and all prior agreements, negotiations and discussions of the parties with respect to the matters expressly contained herein, and it contains the entire agreement of the parties with respect to those matters.
[ Signature Page Follows ]





Please indicate your agreement with and acceptance of the foregoing by returning a countersigned copy of this letter to the undersigned at your earliest convenience.

SOUTHCROSS ENERGY PARTNERS GP, LLC
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ John E. Bonn
 
 
 
 
Name: John E. Bonn
 
 
 
 
Title: President and CEO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agreed and Accepted:
 
 
 
 
 
 
 
 
 
/s/ Joel D. Moxley
 
 
March 17, 2016
 
Name: Joel D. Moxley
 
 
Date
 
 
 
 
 
 
 
 
 
 




Southcross Energy Partners, L.P. Four-Year Financing Projections Southcross Energy Partners, L.P. Four-Year Financing Projections Amounts in millions of USD FY FY FY FY 2016 2017 2018 2019 Adj. EBITDA $86.3 $102.0 $112.7 $127.5 Capex (54.3) (38.2) (23.8) (22.2) Debt Service (36.9) (34.3) (32.3) (30.0) Change in Working Capital 12.3 (11.9) (1.6) (10.0) Other (0.7) (0.8) (0.9) (1.0) Net Operating Change in Cash $6.6 $16.7 $54.1 $64.3 Exhibit 99.1