Execution Copy

CREDIT AGREEMENT
 
dated as of December 1, 2006
 
by and among
 
TRUNKLINE LNG HOLDINGS LLC
 
as the Borrower
 
PANHANDLE EASTERN PIPE LINE COMPANY, LP
 
as a Guarantor
 
CROSSCOUNTRY CITRUS, LLC
 
as a Guarantor
 
and
 
THE BANKS NAMED HEREIN
 
as the Banks
 
and
 
BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH
 
as the Agent,
 
the Sole Book Runner and the Sole Lead Arranger
 

 

TABLE OF CONTENTS
 
 
1.
CERTAIN DEFINITIONS
 

 

 
1.1
Defined Terms
 

 
1.2
Computation of Time Periods; Other Definitional Provisions
 

 
1.3
Accounting Terms
 

 
2.
AMOUNTS AND TERMS OF THE LOANS
 

 

 
2.1
The Loans
 

 
2.2
Making of the Loans
 

 
2.3
Repayment of Loans
 

 
2.4
Termination of the Commitments
 

 
2.5
Prepayments
 

 
2.6
Interest
 

 
2.7
Fees
 

 
2.8
Conversion of Loans
 

 
2.9
Increased Costs, Etc.
 

 
2.10
Payments and Computations
 

 
2.11
Taxes
 

 
2.12
Sharing of Payments, Etc
 

 
2.13
Use of Proceeds
 

 
2.14
Evidence of Debt
 

 
2.15
Replacement of Banks
 

 
3.
REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES
 

 

 
3.1
Organization and Qualification. Such Loan Party:
 

 
3.2
Authorization, Validity, Etc.
 

 
3.3
Conflicting or Adverse Agreements or Restrictions
 

 
3.4
No Consents Required
 

 
3.5
Financial Statements.
 

 
3.6
Litigation
 

 
3.7
Default
 

 
3.8
Compliance
 

 
3.9
Title to Assets
 

 
3.10
Payment of Taxes
 

 
3.11
Investment Company Act Not Applicable
 

 
3.12
Public Utility Holding Company Act Not Applicable
 

 
3.13
Regulations G, T, U and X
 

 
3.14
ERISA
 

 
3.15
No Financing of Certain Security Acquisitions
 

 
3.16
Franchises, Co-Licenses, Etc
 

 
3.17
Environmental Matters
 

 
3.18
Disclosure
 

 
3.19
Insurance
 

 
3.20
Subsidiaries.
 

 
4.
CONDITIONS TO FUNDING
 

 

 
4.1
Representations True and No Defaults
 

 
4.2
Intentionally Omitted
 

 
4.3
Compliance With Law
 

 
4.4
Notice of Borrowing and Other Documents.
 

 
4.5
Payment of Fees and Expenses
 

 
4.6
Repayment of Debt
 

 
4.7
Loan Documents Satisfactory
 

 
4.8
Inter-Company Note Satisfactory
 

 
4.9
Loan Documents, Opinions and Other Instruments
 

 
5.
AFFIRMATIVE COVENANTS OF THE LOAN PARTIES
 

 

 
5.1
Financial Statements and Information. Deliver to the Banks
 

 
5.2
Books and Records
 

 
5.3
Insurance
 

 
5.4
Maintenance of Property
 

 
5.5
Inspection of Property and Records.
 

 
5.6
Existence, Laws, Obligations, Taxes
 

 
5.7
Notice of Certain Matters
 

 
5.8
ERISA
 

 
5.9
Compliance with Environmental Laws
 

 
6.
NEGATIVE COVENANTS OF PANHANDLE EASTERN
 

 

 
6.1
Financial Covenants
 

 
6.2
Liens, Etc.
 

 
6.3
Debt
 

 
6.4
Change in Nature of Business
 

 
6.5
Mergers, Consolidation
 

 
6.6
Sale of Assets
 

 
6.7
Restricted Payments
 

 
6.8
Sales and Leasebacks
 

 
6.9
Transactions with Related Parties
 

 
6.10
Hazardous Materials
 

 
7.
NEGATIVE COVENANTS OF THE BORROWER
 

 

 
7.1
Liens, Etc
 

 
7.2
Debt
 

 
7.3
Merger, Consolidation
 

 
7.4
Sale of Assets
 

 
7.5
Restricted Payment
 

 
7.6
Securities Credit Regulations
 

 
7.7
Nature of Business
 

 
7.8
Transactions with Related Parties
 

 
7.9
Hazardous Materials
 

 
7.10
Use of Proceeds
 

 
7.11
Other Documents
 

 
8.
NEGATIVE COVENANTS OF CCC
 

 

 
8.1
Liens, Etc
 

 
8.2
Debt
 

 
8.3
Merger, Consolidation
 

 
8.4
Sale of Assets
 

 
8.5
Restricted Payment
 

 
8.6
Securities Credit Regulations
 

 
8.7
Nature of Business
 

 
8.8
Transactions with Related Parties
 

 
8.9
Hazardous Materials
 

 
8.10
Use of Proceeds
 

 
8.11
Other Documents
 

 
9.
EVENTS OF DEFAULT; REMEDIES
 

 

 
9.1
Failure to Pay Obligations When Due
 

 
9.2
Intentionally Omitted.
 

 
9.3
Failure to Pay Other Debt
 

 
9.4
Misrepresentation or Breach of Warranty
 

 
9.5
Violation of Certain Covenants
 

 
9.6
Violation of Other Covenants, Etc
 

 
9.7
Bankruptcy and Other Matters
 

 
9.8
Dissolution.
 

 
9.9
Undischarged Judgment
 

 
9.10
Loan Documents
 

 
9.11
Change of Control. Any of the following events shall occur:
 

 
9.12
Other Remedies
 

 
9.13
Remedies Cumulative.
 

 
10.
THE AGENT
 

 

 
10.1
Authorization and Action
 

 
10.2
Agent’s Reliance, Etc
 

 
10.3
Defaults
 

 
10.4
HVB and Affiliates
 

 
10.5
Non-Reliance on Agent and Other Banks
 

 
10.6
Indemnification
 

 
10.7
Successor Agent
 

 
10.8
Agent’s Reliance
 

 
11.
GUARANTY
 

 

 
11.1
Guaranty
 

 
11.2
Guaranty Absolute
 

 
11.3
Waivers and Acknowledgments
 

 
11.4
Subrogation
 

 
11.5
Subordination
 

 
11.6
Continuing Guaranty
 

 
12.
MISCELLANEOUS
 

 

 
12.1
Amendments, Waivers, Etc
 

 
12.2
Reimbursement of Expenses
 

 
12.3
Notices
 

 
12.4
Governing Law
 

 
12.5
Waiver of Jury Trial
 

 
12.6
Consent to Jurisdiction
 

 
12.7
Survival of Representations, Warranties and Covenants
 

 
12.8
Counterparts
 

 
12.9
Severability
 

 
12.10
Descriptive Headings
 

 
12.11
Accounting Terms
 

 
12.12
Limitation of Liability
 

 
12.13
Set-Off
 

 
12.14
Sale or Assignment
 

 
12.15
Interest
 

 
12.16
Indemnification
 

 
12.17
Payments Set Aside
 

 
12.18
Loan Agreement Controls
 

 
12.19
Obligations Several
 

 
12.20
Final Agreement
 

 
Exhibit A Note
Exhibit B Assignment and Acceptance

Schedule 3.1  Subsidiaries
Schedule 3.10  Tax Matters
Schedule 3.14  ERISA Matters
Schedule 3.17  Environmental Matters

CREDIT AGREEMENT
 
CREDIT AGREEMENT dated as of December 1, 2006 among TRUNKLINE LNG HOLDINGS LLC a
limited liability company organized under the laws of Delaware (the “Borrower”),
PANHANDLE EASTERN PIPE LINE COMPANY, LP, a limited partnership organized under
the laws of Delaware (“Panhandle Eastern”), CROSSCOUNTRY CITRUS, LLC, a limited
liability company organized under the laws of Delaware (“CCC”), the financial
institutions listed on the signature pages hereof (collectively, the “Banks”
and, individually, a “Bank”), and BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK
BRANCH (“HVB”), in its capacity as administrative agent (the “Agent”) for the
Banks hereunder:
 
PRELIMINARY STATEMENTS:
 
1.  The Borrower desires to obtain from the Banks a senior term loan financing
(the “Financing”) in an aggregate principal amount of $465,000,000, the proceeds
of which will be used to make the Inter-Company Loan (as defined below) to CCC.
 
2.  The Banks have indicated their willingness to provide the Financing, but
only on and subject to the terms and conditions of this Agreement, including the
guaranty set forth herein.
 
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements contained herein, the parties hereto hereby agree as follows:
 
1.  CERTAIN DEFINITIONS.
 
1.1  Defined Terms. As used in this Agreement, the following terms shall have
the following meanings:
 
“Affiliate” shall mean any Person controlling, controlled by or under common
control with any other Person. For purposes of this definition, “control”
(including “controlled by” and “under common control with”) shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise. If any Person shall own, directly
or indirectly, beneficially or of record, twenty percent (20%) or more of the
voting equity (whether outstanding capital stock, partnership interests or
otherwise) of another Person, such Person shall be deemed to be an Affiliate.
 
“Agent” shall have the meaning set forth in the preamble hereto.
 
“Agreement” shall mean this Credit Agreement, as the same may be amended,
modified, supplemented or restated from time to time.
 
“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the
greater of: (a) the Prime Rate in effect on such day and (b) 1/2 of 1% per annum
above the Federal Funds Rate in effect on such day. The Alternate Base Rate is
an index rate and is not necessarily intended to be the lowest or best rate of
interest charged to other customers in connection with extensions of credit or
to other banks. Any change in the Alternate Base Rate due to a change in the
Prime Rate or the Federal Funds Rate shall be effective from and including the
effective date of such change in the Prime Rate or the Federal Funds Rate,
respectively.
 
“Alternate Base Rate Loan” shall mean any Loan which bears interest as described
in Section 2.6(a)(i) (Interest).
 
“Applicable Lending Office” shall mean, with respect to each Bank, such Bank’s
(a) Domestic Lending Office in the case of an Alternate Base Rate Loan; and (b)
Eurodollar Lending Office in the case of a Eurodollar Rate Loan.
 
“Applicable Margin” shall mean with respect to (a) Alternate Base Rate Loans, a
percentage per annum set forth below under the caption “Alternate Base Rate
Loans” and (b) Eurodollar Rate Loans, subject to the provisos set forth below, a
percentage per annum set forth below under the caption “Eurodollar Rate Loans,”
in each case determined by reference to the rating of Panhandle Eastern’s
unsecured, non-credit enhanced Senior Funded Debt (effective from and after the
date the applicable change of such a debt rating is first announced by the
applicable rating agency):
 
Rating of Panhandle Eastern’s unsecured, non-credit enhanced Senior Funded Debt
Eurodollar Rate Loan
Alternate Base Rate Loan
Equal or greater to Baa1 by Moody’s Investor Service, Inc. and/or equal or
greater to BBB+ by Standard and Poor’s Ratings Group
0.620%
0%
Baa2 by Moody’s Investor Service, Inc. or BBB by Standard and Poor’s Ratings
Group
0.750%
0%
Baa3 by Moody’s Investor Service, Inc. or BBB- by Standard and Poor’s Ratings
Group
0.875%
0%
Ba1 by Moody’s Investor Service, Inc. or BB+ by Standard and Poor’s Ratings
Group
1.250%
0.250%
Ba2 by Moody’s Investor Service, Inc. or BB by Standard and Poor’s Ratings Group
1.500%
0.500%
Below Ba2 by Moody’s Investor Service, Inc. or below BB by Standard and Poor’s
Ratings Group
1.750%
0.750%
     

provided that, for the period beginning on the Funding Date and ending on the
six-month anniversary of the Funding Date, the Applicable Margin for Eurodollar
Rate Loans shall not be less than 0.750% and provided, further, that upon the
occurrence of an SUG Change of Control, the Applicable Margin for Eurodollar
Rate Loans and for Base Rate Loans shall be increased by 1.0% above the
Applicable Margin otherwise in effect at such time, commencing 10 Business Days
after the occurrence of the SUG Change of Control, unless such increase in
Applicable Margin shall have been waived in writing by Majority Banks.
 
Notwithstanding the foregoing provisions, in the event that ratings of Panhandle
Eastern’s unsecured, non-credit enhanced Senior Funded Debt under Standard &
Poor’s Ratings Group and under Moody’s Investor Service, Inc. fall within
different rating categories which are not functional equivalents, the Applicable
Margin shall be based on the higher of such ratings if there is only one
category differential between the functional equivalents of such ratings, and if
there is a two category differential between the functional equivalents of such
ratings, the component of pricing from the grid set forth above shall be based
on the rating category which is then in the middle of or between the two
category ratings which are then in effect, and if there is greater than a two
category differential between the functional equivalents of such ratings, the
component of pricing from the grid set forth above shall be based on the rating
category which is then one rating category above the lowest of the two category
ratings which are then in effect. Additionally, in the event that Panhandle
Eastern withdraws from having its unsecured, non-credit enhanced Senior Funded
Debt being rated by Moody’s Investor Service, Inc. or Standard and Poor’s
Ratings Group, so that one or both of such ratings services fails to rate
Panhandle Eastern’s unsecured, non-credit enhanced Senior Funded Debt, (a) the
Applicable Margin for all Eurodollar Rate Loans for all Interest Periods
commencing thereafter shall be 1.750% and (b) the Applicable Margin for all
Alternate Base Rate Loans shall be 0.750% effective immediately, in each case
continuing until such time as Panhandle Eastern subsequently causes its
unsecured, non-credit enhanced Senior Funded Debt to be rated by both of said
ratings services.
 
“Approved Fund” shall mean any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Bank, (b) an Affiliate of a Bank or (c) an
entity or an Affiliate of an entity that administers or manages a Bank.
 
“April 2005 Credit Agreement” shall mean the Credit Agreement, dated as of April
26, 2005, by and among the Borrower, as the borrower, Panhandle Eastern, as a
guarantor, Trunkline LNG Company, LLC, as a guarantor, the financial
institutions party thereto, and HVB, as the administrative agent, the sole book
runner and the sole lead arranger, as amended, restated, amended and restated or
otherwise modified from time to time;
 
“Assignment and Acceptance” shall mean and Assignment and Acceptance
substantially in the form of Exhibit B hereto.
 
“Attributable Indebtedness” shall mean, with respect to any Sale-Leaseback
Transaction, the present value (discounted at the rate set forth or implicit in
the terms of the lease included in such Sale-Leaseback Transaction) of the total
obligations of the lessee for rental payments (other than amounts required to be
paid on account of taxes, maintenance, repairs, insurance, assessments,
utilities, operating and labor costs and other items that do not constitute
payments for property rights) during the remaining term of the lease included in
such Sale-Leaseback Transaction (including any period for which such lease has
been extended). In the case of any lease that is terminable by the lessee upon
payment of a penalty, the Attributable Indebtedness shall be the lesser of the
(a) Attributable Indebtedness determined assuming termination on the first date
such lease may be terminated (in which case the Attributable Indebtedness shall
also include the amount of the penalty, but no rent shall be considered as
required to be paid under such lease subsequent to the first date on which it
may be so terminated) and (b) the Attributable Indebtedness determined assuming
no such termination.
 
“Bank” shall have the meaning set forth in the preamble hereto and shall include
the Agent, in its individual capacity.
 
“Borrower” shall have the meaning set forth in the preamble hereto.
 
“Business Day” shall mean a day when the Agent is open for business, provided
that, if the applicable Business Day relates to any Eurodollar Rate Loan, it
shall mean a day when the Agent is open for business and banks are open for
business in the London interbank market and in New York City.
 
“Capital Lease” shall mean any lease of any Property (whether real, personal, or
mixed) which, in conformity with GAAP, is accounted for as a capital lease on
the balance sheet of the lessee.
 
“Capitalized Lease Obligations” shall mean, for any Person, any of their
obligations that should, in accordance with GAAP, be recorded as Capital Leases.
 
“CCC” shall have the meaning set forth in the preamble hereto.
 
“Change in Law” shall mean (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
such date or (c) compliance by any Bank with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after such date.
 
“Citrus Corp.” shall mean Citrus Corp., a Delaware corporation.
 
“Closing Date” shall mean the date hereof.
 
“Code” shall mean the Internal Revenue Code of 1986, as amended, as now or
hereafter in effect, together with all regulations, rulings and interpretations
thereof or thereunder issued by the Internal Revenue Service.
 
“Commitment” shall mean, with respect to any Bank, the commitment of such Bank
to make a Loan on the Funding Date, in the amount set forth opposite such Bank’s
name on the signature pages hereto, and the aggregate amount of all the
Commitments is $465,000,000.
 
“Consolidated” shall refer to the consolidation of accounts in accordance with
GAAP.
 
“Consolidated Net Income” of any Person shall mean, for any period, the
aggregate net income (or loss) from continuing operations of such Person and its
Subsidiaries on a Consolidated basis.
 
“Consolidated Net Tangible Assets” shall mean, at any date of determination, the
total amount of assets of Panhandle Eastern and its Subsidiaries after deducting
therefrom:
 
(a)  all current liabilities (excluding (i) any current liabilities that by
their terms are extendable or renewable at the option of the obligor thereon to
a time more than 12 months after the time as of which the amount thereof is
being computed, and (ii) current maturities of Long-Term Debt); and
 
(b)  the value (net of any applicable reserves) of all goodwill, trade names,
trademarks, patents and other like intangible assets,
 
all as set forth on the Consolidated balance sheet of Panhandle Eastern and its
Subsidiaries for Panhandle Eastern’s most recently completed fiscal quarter,
prepared in accordance with GAAP.
 
“Consolidated Total Capitalization” shall mean, at any time, an amount equal to
the sum of (a) Consolidated Debt for Borrowed Money of Panhandle Eastern and its
Subsidiaries at such time plus (b) an amount equal to the sum of all amounts
which, in accordance with GAAP, would be included under owner’s equity on a
Consolidated balance sheet of Panhandle Eastern and its Subsidiaries; provided,
however, that consistent with past practice, any loans made to Southern Union by
Panhandle Eastern up to but not exceeding $50,000,000 in the aggregate at any
time outstanding shall not be deemed to reduce owner’s equity for purposes of
this definition.
 
“Conversion”, “Convert” and “Converted” each shall refer to a conversion of
Loans of one Type into Loans of the other Type pursuant to Section 2.8
(Conversion of Loans).
 
“Debt” shall mean (without duplication), for any Person, indebtedness for money
borrowed determined in accordance with GAAP but in any event including (a)
indebtedness of such Person for borrowed money or arising out of any extension
of credit to or for the account of such Person (including, without limitation,
extensions of credit in the form of reimbursement or payment obligations of such
Person relating to letters of credit issued for the account of such Person) or
for the deferred purchase price of property or services, except indebtedness
which is owing to trade creditors in the ordinary course of business; (b)
indebtedness of the kind described in clause (a) of this definition which is
secured by (or for which the holder of such Debt has any existing right,
contingent or otherwise, to be secured by) any Lien upon or in Property
(including, without limitation, accounts and contract rights) owned by such
Person, whether or not such Person has assumed or become liable for the payment
of such indebtedness or obligations; (c) Capitalized Lease Obligations of such
Person; and (d) obligations under direct or indirect Guaranties. Whenever the
definition of Debt is being used herein in order to compute a financial ratio or
covenant applicable to the consolidated business of Panhandle Eastern and its
Subsidiaries, Debt which is already included in such computation by virtue of
the fact that it is owed by a Subsidiary of Panhandle Eastern will not also be
added by virtue of the fact that Panhandle Eastern has executed a guaranty with
respect to such Debt that would otherwise require such guaranteed indebtedness
to be considered Debt hereunder. Nothing contained in the foregoing sentence is
intended to limit the other provisions of this Agreement which contain
limitations on the amount and types of Debt which may be incurred by any Loan
Party.
 
“Debt for Borrowed Money” of any Person shall mean, at any date of
determination, the sum without duplication of (i) all items that, in accordance
with GAAP, would be classified as indebtedness on a Consolidated balance sheet
of such Person, (ii) all Guarantees by such Person of Debt of another Person and
(iii) all letter of credit reimbursement obligations of such Person.
 
“Debt/Capitalization Ratio” shall mean, as of any date of determination, the
ratio of (a) the aggregate amount of outstanding Consolidated Debt for Borrowed
Money of Panhandle Eastern and its Subsidiaries as of such date to (b)
Consolidated Total Capitalization of Panhandle Eastern and its Subsidiaries as
of such date.
 
“Debtor Laws” shall mean all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization,
or similar laws, or general equitable principles from time to time in effect
affecting the rights of creditors generally.
 
“Default” shall mean any of the events specified in Section 9 (Events of
Default; Remedies), whether or not there has been satisfied any requirement in
connection with such event for the giving of notice, or the lapse of time, or
the happening of any further condition, event or act.
 
“Dollars” and “$” shall mean lawful currency of the United States of America.
 
“Domestic Lending Office” shall mean, with respect to each Bank, the office of
such Bank located at its “Address for Notices” set forth below the name of such
Bank on the signature pages hereof or such other office of such Bank as such
Bank may from time to time specify to the Borrower and the Agent.
 
“EBITDA” shall mean, for any period for any Person, (a) Consolidated Net Income
for such period, plus (b) without duplication and to the extent reflected as a
charge in the statement of such Consolidated Net Income for such period, the sum
of (i) income tax expense, (ii) interest expense, amortization or write-off of
debt discount and debt issuance costs and commissions, discounts and other fees
and charges associated with Debt (including the Loans), (iii) depreciation and
amortization expense, (iv) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (v) any extraordinary or
non-recurring charges, (vi) any non-cash expenses or losses, and (vii) losses on
sales of assets, minus (c) to the extent included in the statement of such
Consolidated Net Income for such period, the sum of (i) any extraordinary,
unusual or non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, gains on the sales of assets outside of the ordinary course of
business), (ii) income tax credits (to the extent not netted from income tax
expense), and (iii) any other non-cash income, and minus (d) any cash payments
made during such period in respect of items described in sub-clause (a)(vi)
above subsequent to the fiscal quarter in which the relevant non-cash expenses
or losses were reflected as a charge in the statement of Consolidated Net
Income, all as determined on a consolidated basis.
 
“Eligible Assignee” shall mean: (i) any Bank, or any Affiliate of any Bank, any
Approved Fund, or any institution 100% of the voting stock of which is directly,
or indirectly owned by such Bank or by the immediate or remote parent of such
Bank; or (ii) a commercial bank, a foreign branch of a United States commercial
bank, a domestic branch of a foreign commercial bank or other financial
institution having in each case assets in excess of $1,000,000,000.
 
“Environmental Law” shall mean (a) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C.A. § 9601 et seq.), as amended from
time to time, and any and all rules and regulations issued or promulgated
thereunder (“CERCLA”); (b) the Resource Conservation and Recovery Act (as
amended by the Hazardous and Solid Waste Amendment of 1984, 42 U.S.C.A. § 6901
et seq.), as amended from time to time, and any and all rules and regulations
promulgated thereunder (“RCRA”); (c) the Clean Air Act, 42 U.S.C.A. § 7401 et
seq., as amended from time to time, and any and all rules and regulations
promulgated thereunder; (d) the Clean Water Act of 1977, 33 U.S.CA § 1251 et
seq., as amended from time to time, and any and all rules and regulations
promulgated thereunder; (e) the Toxic Substances Control Act, 15 U.S.C.A. § 2601
et seq., as amended from time to time, and any and all rules and regulations
promulgated thereunder; or (f) any other federal or state law, statute, rule, or
emulation enacted in connection with or relating to the protection or regulation
of the environment (including, without limitation, those laws, statutes, rules,
and regulations regulating the disposal, removal, production, storing, refining,
handling, transferring, processing, or transporting of Hazardous Materials) and
any rules and regulations issued or promulgated in connection with any of the
foregoing by any governmental authority, and “Environmental Laws” shall mean
each of the foregoing.
 
“EPA” shall mean the Environmental Protection Agency, or any successor
organization.
 
“Equity Interests” shall mean, with respect to any Person, shares of capital
stock of (or other ownership or profit interests in) such Person, warrants,
options or other rights for the purchase or other acquisition from such Person
of shares of capital stock of (or other ownership or profit interests in) such
Person, securities convertible into or exchangeable for shares of capital stock
of (or other ownership or profit interests in) such Person or warrants, rights
or options for the purchase or other acquisition from such Person of such shares
(or such other interests), and other ownership or profit interests in such
Person (including, without limitation, partnership, member or trust interests
therein), whether voting or non-voting, and whether or not such shares,
warrants, options, rights or other interests are authorized or otherwise
existing on any date of determination.
 
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules, regulations, rulings and
interpretations thereof issued by the Internal Revenue Service or the Department
of Labor thereunder.
 
“Eurocurrency Liabilities” shall have the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
 
“Eurodollar Lending Office” shall mean, with respect to each Bank, the office of
such Bank located at its “Address for Notices” set forth below the name of such
Bank on the signature pages hereof, or such other office of such Bank as such
Bank may from time to time specify to the Borrower and the Agent.
 
“Eurodollar Rate” shall mean, for any Interest Period in effect for each
Eurodollar Rate Loan comprising part of the same Borrowing, an interest rate per
annum equal to the rate determined by the Agent to be the offered rate which
appears on the display designated as page “BBAM1” on the Bloomberg service (or
on any successor or substitute page of such display, or any successor to or
substitute for such display, providing rate quotations comparable to those
currently provided on such page of such screen, as determined by the Agent from
time to time for purposes of providing quotations of interest rates applicable
to dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the “Eurodollar Rate” with respect to such Eurodollar Rate
Loans for such Interest Period shall be the rate at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
 
“Eurodollar Rate Loan” shall mean a Loan that bears interest as provided in
Section 2.6(a)(ii) (Interest).
 
“Event of Default” shall mean any of the events specified in Section 9 (Events
of Default; Remedies), provided that there has been satisfied any requirement in
connection with such event for the giving of notice, or the lapse of time, or
the happening of any further condition, event or act.
 
“Existing TWH Indebtedness” shall have the meaning set forth in Section 2.13
(Use of Proceeds).
 
“Federal Funds Rate” shall mean, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Agent from three federal funds brokers of recognized standing
selected by it.
 
“Fee Letter” shall mean that certain fee letter dated as of the date hereof by
and between the Borrower and HVB.
 
“Funded Debt” shall mean all Debt of a Person which matures more than one year
from the date of creation or matures within one year from such date but is
renewable or extendible, at the option of such Person, by its terms or by the
terms of any instrument or agreement relating thereto, to a date more than one
year from such date or arises under a revolving credit or similar agreement
which obligates Banks to extend credit during a period of more than one year
from such date, including, without limitation, all amounts of any Funded Debt
required to be paid or prepaid within one year from the date of determination of
the existence of any such Funded Debt.
 
“Funding Date” shall mean the date on which each of the conditions precedent set
forth in Section 4 (Conditions to Funding) shall have been satisfied or waived
by the Banks.
 
“GAAP” has the meaning specified in Section 1.3 (Accounting Terms).
 
“Governmental Authority” shall mean any (domestic or foreign) federal, state,
county, municipal, parish, provincial, or other government, or any department,
commission, board, court, agency (including, without limitation, the EPA), or
any other instrumentality of any of them or any other political subdivision
thereof, and any entity exercising executive, legislative, judicial, regulatory,
or administrative functions of, or pertaining to, government, including, without
limitation, any arbitration panel, any court, or any commission.
 
“Governmental Requirement” shall mean any order, permit, law, statute
(including, without limitation, any Environmental Protection Statute), code,
ordinance, rule, regulation, certificate, or other direction or requirement of
any Governmental Authority.
 
“Guaranteed Obligations” shall have the meaning set forth in Section 11.1.
 
“Guarantor” shall mean each of Panhandle Eastern and CCC.
 
“Guaranty” shall mean, with respect to any Person, any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of
another Person, including, without limitation, by means of an agreement to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or to maintain financial covenants, or to assure the payment of such Debt
by an agreement to make payments in respect of goods or services regardless of
whether delivered or to purchase or acquire the Debt of another, or otherwise,
provided that the term “Guaranty” shall not include endorsements for deposit or
collection in the ordinary course of business.
 
“Hazardous Materials” shall mean any substance which, pursuant to any
Environmental Laws, requires special handling in its collection, use, storage,
treatment or disposal, including but not limited to any of the following: (a)
any “hazardous waste” as defined by RCRA; (b) any “hazardous substance” as
defined by CERCLA; (c) asbestos; (d) polychlorinated biphenyls; (e) any
flammables, explosives or radioactive materials; and (f) any substance, the
presence of which on any of Loan Parties’ properties is prohibited by any
Governmental Authority.
 
“Hedge Agreements” shall mean interest rate, commodity or currency swap, cap or
collar agreements, future or option contracts and other hedging agreements
(including, without limitation, all “swap agreements” as defined in 11 U.S.C. §
101).
 
“Highest Lawful Rate” shall mean, with respect to each Bank, the maximum
non-usurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged, or received with respect to the Notes
or on other amounts, if any, due to such Bank pursuant to this Agreement, under
laws applicable to such Bank which are presently in effect, or, to the extent
allowed by law, under such applicable laws which may hereafter be in effect and
which allow a higher maximum non-usurious interest rate than applicable laws now
allow.
 
“HVB” shall have the meaning set forth in the preamble.
 
“Indemnified Parties” shall have the meaning set forth in Section 12.16
(Indemnification).
 
“Inter-Company Loan” shall mean the loan made by the Borrower to CCC pursuant to
the Inter-Company Note.
 
“Inter-Company Note” shall mean the note dated as of the date hereof by CCC in
favor of Borrower.
 
“Interest Coverage Ratio” shall mean, as of any date of determination, the ratio
of (a) Consolidated EBITDA of Panhandle Eastern to (b) Consolidated Interest
Expense of Panhandle Eastern, in each case for the four fiscal quarters then
ended.
 
“Interest Expense” of any Person shall mean, for any period, total cash interest
expense (including that attributable to Capitalized Leases) of such Person for
such period with respect to all outstanding Debt of such Person (including all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers’ acceptance financing and net costs and benefits under
Hedge Agreements in respect of interest rates to the extent such net costs and
benefits are allocable to such period in accordance with GAAP).
 
“Interest Period” shall mean, for each Eurodollar Rate Loan comprising part of
the same borrowing, the period commencing on the date of such Eurodollar Rate
Loan or the date of the Conversion of any Alternate Base Rate Loan into such
Eurodollar Rate Loan, and ending on the last day of the period selected by the
Borrower pursuant to the provisions below and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below. The duration of each such Interest Period shall be one,
two, three or six months (or, if available to each Bank, nine or twelve months),
as the Borrower may, upon notice received by the Agent not later than 11:00 A.M.
(New York City time) on the third Business Day prior to the first day of such
Interest Period, select; provided, however, that:
 
(a)  whenever the last day of any Interest Period would otherwise occur on a day
other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day, provided, however, that,
if such extension would cause the last day of such Interest Period to occur in
the next following calendar month, the last day of such Interest Period shall
occur on the next preceding Business Day; and
 
(b)  whenever the first day of any Interest Period occurs on a day of an initial
calendar month for which there is no numerically corresponding day in the
calendar month that succeeds such initial calendar month by the number of months
equal to the number of months in such Interest Period, such Interest Period
shall end on the last Business Day of such succeeding calendar month.
 
“Inventory” shall mean, with respect to Borrower or any Subsidiary, all of such
Person’s now owned or hereafter acquired or created inventory in all of its
forms and of every nature, wherever located, whether acquired by purchase,
merger, or otherwise, and all raw materials, work in process therefor and
finished goods thereof, and all supplies, materials, and products of every
nature and description used, usable, or consumed in connection with the
manufacture, packing, shipping, advertising, selling, leasing, furnishing, or
production of such goods, and shall include, in any event, all “inventory”
(within the meaning of such term in the Uniform Commercial Code in effect in any
applicable jurisdiction), whether in mass or joint, or other interest or right
of any kind in goods which are returned to, repossessed by, or stopped in
transit by such Person, and all accessions to any of the foregoing and all
products of any of the foregoing.
 
“Investment” of any Person shall mean any investment so classified under GAAP,
and, whether or not so classified, includes (a) any direct or indirect loan
advance made by it to any other Person; (b) any direct or indirect Guaranty for
the benefit of such Person; (c) any capital contribution to any other Person;
and (d) any ownership or similar interest in any other Person; and the amount of
any Investment shall be the original principal or capital amount thereof (plus
any subsequent principal or capital amount) minus all cash returns of principal
or capital thereof.
 
“Lien” shall mean any mortgage, deed of trust, pledge, security interest,
encumbrance, lien (including without limitation, any such interest arising under
any Environmental Law), or similar charge of any kind (including without
limitation, any agreement to give any of the foregoing, any conditional sale or
other title retention agreement or any lease in the nature thereof), or the
interest of the lessor under any Capital Lease.
 
“Loan” or “Loans” shall mean a loan or loans, respectively, from the Banks to
the Borrower made under Section 2.1 (The Loans).
 
“Loan Document” shall mean this Agreement, any Note, the Fee Letter and any
other document, agreement or instrument now or hereafter executed and delivered
by any Loan Party in connection with any of the transactions contemplated by any
of the foregoing, as any of the foregoing may hereafter be amended, modified, or
supplemented, and “Loan Documents” shall mean, collectively, each of the
foregoing.
 
“Loan Party” shall mean CCC, Panhandle Eastern, the Borrower and its
Subsidiaries.
 
“Long-Term Debt” shall mean any Debt that, in accordance with GAAP, constitutes
(or, when incurred, constituted) a long-term liability.
 
“Majority Banks” shall mean at any time Banks holding more than 50% of the
unpaid principal amounts outstanding under the Loans, or, if no such amounts are
outstanding, more than 50% of the Pro Rata Percentages.
 
“Material Adverse Change” shall mean, for any Person, any material adverse
change in the business, operations, financial condition or assets of such Person
and its Subsidiaries, taken as a whole.
 
“Material Adverse Effect” shall mean any material adverse effect on (a) the
financial condition, business, properties, assets or operations of Panhandle
Eastern and its Subsidiaries, taken as a whole, or (b) the ability of Panhandle
Eastern, Borrower or CCC to perform its obligations under this Agreement, any
Note, any other Loan Document or the Inter-Company Note on a timely basis.
 
“Maturity Date” shall mean April 4, 2008.
 
“Note” or “Notes” shall mean a promissory note or notes, respectively, of the
Borrower, executed and delivered under this Agreement.
 
“Notice of Borrowing” shall have the meaning set forth in Section 2.2(a) (Making
the Loans).
 
“Obligations” shall mean all obligations of Panhandle Eastern, Borrower and CCC
to the Banks under this Agreement, the Notes and all other Loan Documents to
which any of them is a party.
 
“Officer’s Certificate” shall mean a certificate signed in the name of the
applicable Loan Party, by either its President, one of its Vice Presidents, its
Treasurer, its Secretary, or one of its Assistant Treasurers or Assistant
Secretaries.
 
“Panhandle Eastern” shall have the meaning set forth in the preamble hereto.
 
“Permitted Liens” shall mean any of the following Liens:
 
(c)  Any Lien:
 
(i)  arising by reason of deposits with or the giving of any form of security to
any Governmental Authority in connection with the financing of the acquisition
or construction of property to be used in the business of a Loan Party;
 
(ii)  for current taxes and assessments or taxes and assessments not at the time
delinquent and for which adequate reserves have been established to the extent
required by GAAP; or
 
(iii)  for taxes and assessments which are delinquent but the validity of which
is being contested at the time by a Loan Party in good faith and by appropriate
proceedings and for which adequate reserves have been established to the extent
required by GAAP;
 
(d)  Leases, whether now or hereafter existing, in the ordinary course of
business, of property and assets now and hereafter owned by a Loan Party
(excluding Capitalized Leases) and any renewals or extensions thereof;
 
(e)  Liens reserved in leases, or arising by operation of law, for rent and for
compliance with the terms of the lease in the case of the leasehold estates;
 
(f)  Liens arising by reason of deposits with or the giving of any form of
security to any Governmental Authority or any other governmental body created or
approved by law or governmental regulation for any purpose at any time as
required by law or governmental regulation as a condition to the transaction of
any business or the exercise of any privilege or license, or to enable a Loan
Party to maintain self-insurance or to participate in any fund for liability on
any insurance risks or in connection with workmen’s compensation, unemployment
insurance, old age pensions or other social security or to share in the
privileges or benefits required for companies participating in such
arrangements;
 
(g)  (i) Mechanics’, materialmen’s, warehousemen’s, landlord’s or similar Liens
or any Lien arising by reason of pledges or deposits to secure payment of
workmen’s compensation or other insurance or social security legislation, (ii)
good faith deposits or downpayments in connection with tenders or leases of real
estate, bids or contracts (other than contracts for the payment of money),
including contracts for the acquisition of machinery and equipment, (iii)
deposits to secure public or statutory obligations, (iv) deposits to secure or
in lieu of surety, stay or appeal bonds, (v) margin deposits (provided that all
such margin deposits shall not exceed $2,000,000 in the aggregate at any time)
and (vi) deposits as security for the payment of taxes or assessments or other
similar charges;
 
(h)  Liens of any judgments not constituting an Event of Default under Section
9.9 (Undischarged Judgment);
 
(i)  Any obligation or duties, affecting the property of a Loan Party, to any
Governmental Authority with respect to any franchise, grant, lease, license,
permit or similar arrangement with such Governmental Authority;
 
(j)  Rights reserved to or vested in any Governmental Authority by the terms of
any right, power, franchise, grant, license or permit or by any provision of
law, to terminate or to require annual or other periodic payments as a condition
to the continuance of such right, power, franchise, grant, license or permit;
 
(k)  Rights reserved to or vested in any Governmental Authority to control or
regulate any property of a Loan Party, or to use such property in any manner
which does not materially impair the use of such property for the purpose for
which it is held by a Loan Party;
 
(l)  Zoning laws and ordinances;
 
(m)  Restrictive covenants, easements on, exceptions to or reservations in
respect of any property of a Loan Party granted or reserved for the purpose of
electric lines, fiber optic lines, water and sewer lines, pipelines, other
utilities, roads, streets, alleys, highways, railroad purposes, the removal of
oil, gas, hydrocarbon, coal or other minerals, and other like purposes, or for
the use of real property or interests therein, facilities and equipment, which
do not materially impair the use thereof for the purposes for which it is held
by a Loan Party, and any and all rents, royalties, reservations, Liens and
rights or interests of third parties, in each case not securing any Debt,
arising in the ordinary course of business of a Loan Party by virtue of any
lease or exploration, development, drilling, unitization, communitization or
operating agreement relating to or affecting any oil, gas, hydrocarbon, coal or
other mineral properties in which a Loan Party has an interest;
 
(n)  Defects or irregularities of title, and inaccuracies of legal descriptions,
affecting any portion of the property of a Loan Party or any of its Subsidiaries
that individually or in the aggregate do not materially interfere with the
operation, value of use of the properties of such Loan Party or such
Subsidiaries taken as a whole;
 
(o)  Liens securing Debt with respect to Debt of any Person that becomes a
Subsidiary of a Loan Party, provided that such Liens were in existence prior to
the date on which such Person becomes a Subsidiary of such Loan Party and were
not created in contemplation of such Person becoming a Subsidiary of such Loan
Party;
 
(p)  Liens on any office equipment, data processing equipment (including
computer and computer peripheral equipment), or motor vehicles purchased in the
ordinary course of the applicable Loan Party’s business; and
 
(q)  Liens created in the ordinary course of business in favor of banks and
other financial institutions over credit balances or any bank accounts of a Loan
Party held at such banks or financial institutions.
 
“Person” shall mean an individual, partnership, joint venture, corporation,
joint stock company, bank, trust, unincorporated organization and/or a
government or any department or agency thereof.
 
“Plan” shall mean any plan subject to Title IV of ERISA and maintained for
employees of any Loan Party or of any member of a “controlled group of
corporations,” as such term is defined in the Code, of which a Loan Party is a
member, or any such plan to which a Loan Party thereof is required to contribute
on behalf of its employees.
 
“Prime Rate” shall mean, on any day, the rate determined by the Agent and
announced to its customers as being its prime rate for that day. Without notice
to the Borrower or any other Person, the Prime Rate shall change automatically
from time to time as and in the amount by which said Prime Rate shall fluctuate,
with each such change to be effective as of the date of each change in such
Prime Rate. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer. The Agent
may make commercial or other loans at rates of interest at, above or below the
Prime Rate.
 
“Priority Obligations Amount” shall mean the sum (without duplication) of (i)
all Attributable Indebtedness with respect to any Sale-Leaseback Transaction
entered into by Panhandle Eastern or any of its Subsidiaries, (ii) all Debt of
Panhandle Eastern or any of its Subsidiaries secured by a Lien (other than Liens
permitted by clauses (a) through (c) of Section 6.2 (Liens, Etc.)) and (iii) all
Debt of Subsidiaries of Panhandle Eastern (other than Borrower or TLNG), other
than such Debt owed to Panhandle Eastern or another Subsidiary.
 
“Pro-Rata Percentage” shall mean with respect to any Bank, a fraction (expressed
as a percentage), the numerator of which shall be the amount of such Bank’s
outstanding Loans (or Commitment) and the denominator of which shall be the
aggregate amount of all the outstanding Loans (or Commitments) of the Banks, as
adjusted from time to time in accordance herewith.
 
“Property” shall mean any interest or right in any kind of property or asset,
whether real, personal, or mixed, owned or leased, tangible or intangible, and
whether now held or hereafter acquired.
 
“Register” shall have the meaning set forth in Section 12.14(d).
 
“Release” shall mean a “release”, as such term is defined in CERCLA.
 
“Restricted Payment” shall mean a Person’s declaration or payment of any
dividends, the purchase, redemption, retirement, defeasance or other acquisition
for value of any of its Equity Interests now or hereafter outstanding, return
any capital to its stockholders, partners or members (or the equivalent Persons
thereof) as such, making any distribution of assets, Equity Interests,
obligations or securities to its stockholders, partners or members (or the
equivalent Persons thereof) as such or making of any interest payment on any
Debt owing to its direct or indirect parent (or any equity owner thereof).
 
“Required Banks” shall mean, at any time, Banks having more than 66-2/3% of the
aggregate amount of the Loans outstanding at such time.
 
“Sale-Leaseback Transaction” has the meaning set forth in Section 6.8 (Sales and
Leasebacks).
 
“Senior Funded Debt” shall mean Funded Debt of Panhandle Eastern excluding Debt
that is contractually subordinated in right of payment to any other Debt of
Panhandle Eastern.
 
“Southern Union” shall mean Southern Union Company.
 
“Subsidiary” of any Person shall mean any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors (or similar board) of such
Person (irrespective of whether at the time capital stock of any other class or
classes of such Person shall or might have voting power upon the occurrence of
any contingency), (b) the interest in the capital or profits of such
partnership, joint venture or limited liability company or (c) the beneficial
interest in such trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person’s other Subsidiaries.
 
“SUG Change of Control” shall occur if any Person or “group” (within the meaning
of Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute) shall have acquired beneficial
ownership of 50% or more on a fully diluted basis of the voting and/or economic
interest in Southern Union.
 
“TLNG” shall mean Trunkline LNG Company, LLC, a Delaware limited liability
company.
 
“Type” shall mean, with respect to any Loan, any Alternate Base Rate Loan or any
Eurodollar Rate Loan.
 
1.2  Computation of Time Periods; Other Definitional Provisions. In this
Agreement and the other Loan Documents in the computation of periods of time
from a specified date to a later specified date, the word “from” shall mean
“from and including” and the words “to” and “until” each shall mean “to but
excluding”. References in the Loan Documents to any agreement or contract “as
amended” shall mean and be a reference to such agreement or contract as amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with its terms.
 
1.3  Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting principles
in effect from time to time in the United States of America (“GAAP”). If, at any
time after the date of this Agreement, any material change is made to GAAP or
Panhandle Eastern’s, CCC’s or the Borrower’s accounting practices that would
affect in any material respect the determination of compliance with the
covenants set forth in this Agreement, the Borrower and the Agent shall
negotiate in good faith to amend any such covenant to restore the Borrower and
the Banks to the position they occupied before the implementation of such
material change in GAAP or accounting practices if the Borrower notifies the
Agent of such change (or if the Agent notifies the Borrower that the Required
Banks request an amendment to any such covenant for such purpose); provided
that, until so amended, such covenant shall continue to be computed on the basis
of GAAP as in effect and applied immediately before such change shall have
become effective.
 
2.  AMOUNTS AND TERMS OF THE LOANS
 
2.1  The Loans. Each Bank severally agrees, on the terms and conditions
hereinafter set forth, to make a single Loan (a “Loan”) to the Borrower on the
Funding Date in an amount equal to such Bank’s Commitment at such time. The
initial Borrowing shall consist of Loans made simultaneously by the Banks
ratably according to their Commitments. Amounts borrowed under this Section 2.1
and repaid or prepaid may not be reborrowed.
 
2.2  Making of the Loans.
 
(a)  The initial Borrowing shall be made on notice, given not later than 11:00
A.M. (New York City time) on the third Business Day prior to the date of such
Borrowing in the case of a Borrowing consisting of Eurodollar Rate Loans, or not
later than 9:00 A.M. (New York City time) on the date of such Borrowing in the
case of a Borrowing consisting of Alternate Base Rate Loans, by the Borrower to
the Agent, which shall give to each Bank prompt notice thereof. The notice of
the initial Borrowing (the “Notice of Borrowing”) shall be in writing, in form
and substance satisfactory to the Agent, specifying therein the requested (i)
date of such Borrowing, (ii) Type of Loans comprising such Borrowing, (iii)
aggregate amount of such Borrowing, which shall not exceed the aggregate amount
of the Commitments and (iv) in the case of a Borrowing consisting of Eurodollar
Rate Loans, initial Interest Period for each such Loan. Each Bank shall, before
11:00 A.M. (New York City time) on the date of such Borrowing, make available
for the account of its Applicable Lending Office to the Agent at the Agent’s
account, in same day funds, such Bank’s portion of such Borrowing in accordance
with Section 2.1 (The Loans). After the Agent’s receipt of such funds and upon
fulfillment of the applicable conditions set forth in Section 4 (Conditions to
Funding), the Agent will make such funds available to the Borrower by electronic
transfer of same day funds to the Borrower’s account.
 
(b)  The Notice of Borrowing shall be irrevocable and binding on the Borrower.
If the Notice of Borrowing specifies the initial Borrowing is to be comprised of
Eurodollar Rate Loans, the Borrower shall indemnify each Bank against any loss,
cost or expense incurred by such Bank as a result of any failure to fulfill on
or before the date specified in the Notice of Borrowing the applicable
conditions set forth in Section 4 (Conditions to Funding), including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to fund the Loan
to be made by such Bank as part of such Borrowing when such Loan, as a result of
such failure, is not made on such date.
 
(c)  Unless the Agent shall have received written notice from a Bank prior to
the date of the initial Borrowing that such Bank will not make available to the
Agent such Bank’s ratable portion of such Borrowing, the Agent may assume that
such Bank has made such portion available to the Agent on the date of such
Borrowing in accordance with clause (a) of this Section 2.2 and the Agent may,
in reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such ratable portion available to the Agent, such Bank and the Borrower
severally agree to repay or pay to the Agent forthwith on demand such
corresponding amount and to pay interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid or paid to the Agent, at (i) in the case of the Borrower, the interest
rate applicable at such time under Section 2.6 (Interest) to Loans comprising
such Borrowing and (ii) in the case of such Bank, the Federal Funds Rate. If
such Bank shall pay to the Agent such corresponding amount, such amount so paid
shall constitute such Bank’s Loan as part of such Borrowing for all purposes.
 
(d)  The failure of any Bank to make the Loan to be made by it as part of the
initial Borrowing shall not relieve any other Bank of its obligation, if any,
hereunder to make its Loan on the date of such Borrowing, but no Bank shall be
responsible for the failure of any other Bank to make the Loan to be made by
such other Bank on the date of such Borrowing.
 
2.3  Repayment of Loans. The Borrower shall repay to the Agent for the ratable
account of the Banks the aggregate outstanding principal amount of the Loans on
the Maturity Date.
 
2.4  Termination of the Commitments. The Commitment of each Bank shall be
automatically and permanently reduced to $0 on the Funding Date.
 
2.5  Prepayments.
 
(a)  Voluntary Prepayments. The Borrower may, upon at least three Business Days’
notice in the case of Eurodollar Rate Loans and at least one Business Day’s
notice in the case of Alternate Base Rate Loans, in each case to the Agent
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given the Borrower shall, prepay the outstanding aggregate
principal amount of the Loans comprising part of the same Borrowing in whole or
ratably in part, together with accrued interest to the date of such prepayment
on the aggregate principal amount prepaid; provided, however, that (i) each
partial prepayment shall be in an aggregate principal amount of $1,000,000 in
the case of Eurodollar Rate Loans and $1,000,000 in the case of Alternate Base
Rate Loans, or in each case an integral multiple of $1,000,000 in excess thereof
and (ii) if any prepayment of a Eurodollar Rate Loan is made on a date other
than the last day of an Interest Period for such Loan, the Borrower shall also
pay any amounts owing pursuant to Section 12.2(b) (Reimbursement of
Expenses-breakage expenses). Each such prepayment of any Loans shall be applied
to installments thereof as directed by the Borrower. The Agent shall promptly
notify each Bank of any notice received from Borrower pursuant to this Section
2.5.
 
(b)  Mandatory Prepayments. No later than the first Business Day following the
date of receipt by Borrower or any of its Subsidiaries of any repayment of
principal by or on behalf of CCC pursuant to the Inter-Company Loan, Borrower
shall prepay the Loan in an aggregate amount equal to such proceeds; provided,
however, that if any prepayment of a Eurodollar Rate Loan is made on a date
other than the last day of an Interest Period for such Loan, the Borrower shall
also pay any amounts owing pursuant to Section 12.2(b) (Reimbursement of
Expenses-breakage expenses). Each such prepayment of any Loans shall be applied
to installments thereof as directed by the Borrower.
 
2.6  Interest.
 
(a)  The Borrower shall pay interest on the unpaid principal amount of each Loan
owing to each Bank from the date of such Loan until such principal amount shall
be paid in full, at the following rates per annum:
 
(i)  During such periods as such Loan is an Alternate Base Rate Loan, a rate per
annum equal at all times to the sum of (a) the Alternate Base Rate in effect
from time to time plus (b) the Applicable Margin in effect from time to time,
payable in arrears quarterly on the last day of each March, June, September and
December during such periods and on the date such Alternate Base Rate Loan shall
be Converted or paid in full.
 
(ii)  During such periods as such Loan is a Eurodollar Rate Loan, a rate per
annum equal at all times during each Interest Period for such Loan to the sum of
(a) the Eurodollar Rate for such Interest Period for such Loan (b) the
Applicable Margin in effect on the first day of such Interest Period, payable in
arrears on the last day of such Interest Period and, if such Interest Period has
a duration of more than three months, on each day that occurs during such
Interest Period every three months from the first day of such Interest Period
and on the date such Eurodollar Rate Loan shall be Converted or paid in full.
 
(b)  To the fullest extent permitted by applicable law, the amount of any
principal, interest, fee or other amount payable under this Agreement or any
other Loan Document to any Agent or any Bank that is not paid when due, from the
date such amount shall be due until such amount shall be paid in full, payable
in arrears on the date such amount shall be paid in full and on demand, at a
rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid, in the case of principal or interest, on the Type of Loan
relating to such principal or interest pursuant to clause (i) or (ii) of clause
(a) above, as applicable, and, in all other cases, on Alternate Base Rate Loans
pursuant to clause (i) of clause (a) above.
 
(c)  Promptly after receipt of the Notice of Borrowing pursuant to Section
2.2(a) (Making of the Loans), a notice of Conversion pursuant to Section 2.8
(Conversion of Loans) or a notice of selection of an Interest Period pursuant to
the terms of the definition of “Interest Period”, the Agent shall give notice to
the Borrower and each Bank of the applicable Interest Period and the applicable
interest rate determined by the Agent for purposes of clause (a)(i) or (a)(ii)
above. If the Borrower shall fail to select the duration of any Interest Period
for any Eurodollar Rate Loans in accordance with the provisions contained in the
definition of “Interest Period”, the Agent will forthwith so notify the Borrower
and the Banks, whereupon the Borrower shall be deemed to have selected a
one-month Interest Period for each such Eurodollar Rate Loan.
 
2.7  Fees.
 
(a)   The Borrower shall pay to the Agent for its own account such fees as may
from time to time be agreed between the Borrower and the Agent, including the
fees specified in the Fee Letter.
 
(b)  All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Agent. Fees paid shall not be refundable under any
circumstances.
 
2.8  Conversion of Loans.
 
(a)  The Borrower may on any Business Day, upon notice given to the Agent not
later than 11:00 A.M. (New York City time) on the third Business Day prior to
the date of the proposed Conversion and subject to the provisions of Section 2.6
(Interest) and 2.9 (Increased Costs), Convert all or any portion of the Loans of
one Type comprising the same borrowing into Loans of the other Type; provided,
however, that any Conversion of Eurodollar Rate Loans into Alternate Base Rate
Loans shall be made only on the last day of an Interest Period for such
Eurodollar Rate Loans and each Conversion of Loans shall be made ratably among
the Banks in accordance with their Pro Rata Percentages; and also provided that,
upon giving effect to such Conversions, no more than five Interest Periods shall
be in effect. Each such notice of Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Loans to be
Converted and (iii) if such Conversion is into Eurodollar Rate Loans, the
duration of the initial Interest Period for such Loans. Each notice of
Conversion shall be in writing and shall be irrevocable and binding on the
Borrower. The Agent shall promptly notify each Bank of any notice received from
Borrower pursuant to this Section 2.8.
 
(b)  Upon the occurrence and during the continuation of any Default and if the
Required Banks shall so direct, (i) each Eurodollar Rate Loan will
automatically, on the last day of the then existing Interest Period therefor,
Convert into an Alternate Base Rate Loan and (ii) the obligation of the Banks to
make, or to Convert Loans into, Eurodollar Rate Loans shall be suspended.
 
2.9  Increased Costs, Etc.
 
(a)  If, due to a Change in Law, there shall be any increase in the cost to any
Bank of agreeing to make or of making, funding or maintaining Eurodollar Rate
Loans (excluding, for purposes of this Section 2.9, any such increased costs
resulting from (i) Taxes or Other Taxes (as to which Section 2.11 (Taxes) shall
govern), (ii) changes in the rate of taxation or basis of taxation of overall
net income or overall gross income by the United States or by the foreign
jurisdiction or state under the laws of which such Bank is organized or has its
principal office or Applicable Lending Office or any political subdivision
thereof and (iii) reserve requirements contemplated by Section 2.9(b) (Taxes)),
then the Borrower shall from time to time, within 10 days of receipt of a
certificate from such Bank setting forth in reasonable detail a calculation of
the amount necessary to compensate such Bank (with a copy of such certificate to
the Agent), pay to the Agent for the account of such Bank additional amounts
sufficient to compensate such Bank for such increased cost; provided, however,
that a Bank claiming additional amounts under this Section 2.9(a) agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the making
of such a designation would avoid the need for, or reduce the amount of, such
increased cost that may thereafter accrue and would not, in the reasonable
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
as to the amount of such increased cost, submitted to the Borrower by such Bank,
shall be conclusive and binding for all purposes, absent manifest error.
 
(b)  The Borrower shall pay to each Bank, as long as such Bank shall be required
to maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits (currently known as “Eurocurrency
Liabilities”), additional interest on the unpaid principal amount of each
Eurodollar Rate Loan equal to the actual costs of such reserves allocated to
such Loan by such Bank (as determined by such Bank in good faith, which
determination shall be conclusive), which shall be due and payable on each date
on which interest is payable on such Loan, provided the Borrower shall have
received at least 10 days’ prior notice (with a copy to the Agent) of such
additional interest from such Bank (which notice shall contain a calculation of
such additional interest in reasonable detail). If a Bank fails to give notice
10 days prior to the relevant date on which interest is payable, such additional
interest shall be due and payable 10 days from receipt of such notice.
 
(c)  If, with respect to any Eurodollar Rate Loans, the Majority Banks notify
the Agent that the Eurodollar Rate for any Interest Period for such Loans will
not adequately reflect the cost to the Banks of making, funding or maintaining
their Eurodollar Rate Loans for such Interest Period, the Agent shall forthwith
so notify the Borrower and the Banks, whereupon (i) each such Eurodollar Rate
Loan will automatically, on the last day of the then existing Interest Period
therefor, Convert into an Alternate Base Rate Loan and (ii) the obligation of
the Banks to make, or to Convert Loans into, Eurodollar Rate Loans shall be
suspended until the Agent shall notify the Borrower that the Banks have
determined that the circumstances causing such suspension no longer exist.
 
(d)  Notwithstanding any other provision of this Agreement, if the introduction
or effectiveness of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other Governmental
Authority shall assert that it is unlawful, for any Bank or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Loans or to continue to fund or maintain Eurodollar Rate Loans hereunder, then,
on notice thereof and demand therefor by such Bank to the Borrower through the
Agent, (i) each Eurodollar Rate Loan will automatically, upon such demand,
Convert into an Alternate Base Rate Loan and (ii) the obligation of the Banks to
make, or to Convert Loans into, Eurodollar Rate Loans shall be suspended until
the Agent shall notify the Borrower that such Bank has determined that the
circumstances causing such suspension no longer exist; provided, however, that,
before making any such demand, such Bank agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
designate a different Eurodollar Lending Office if the making of such a
designation would allow such Bank or its Eurodollar Lending Office to continue
to perform its obligations to make Eurodollar Rate Loans or to continue to fund
or maintain Eurodollar Rate Loans and would not, in the judgment of such Bank,
be otherwise disadvantageous to such Bank.
 
(e)  A Bank shall only be entitled to recover increased costs pursuant to
Section 2.9 (Increased Costs) to the extent such costs were incurred during any
time or period commencing not more than 120 days prior to the date on which such
Bank notifies the Agent and the Borrower that it proposes to demand such
compensation and identifies to the Agent and the Borrower the statute,
regulation or other basis upon which the claimed compensation is or will be
based; provided that, if the Change in Law giving rise to such increased costs
is retroactive, then the 120-day period referred to above shall be extended to
include the period of retroactive effect thereof.
 
2.10  Payments and Computations.
 
(a)  The Borrower shall make each payment hereunder and under the Notes,
irrespective of any right of counterclaim or set-off, not later than 12:00 P.M.
(New York City time) on the day when due in U.S. dollars to the Agent at the
Agent’s account in same day funds, with payments being received by the Agent
after such time being deemed to have been received on the next succeeding
Business Day. The Agent will promptly thereafter cause like funds to be
distributed (x) if such payment by the Borrower is in respect of principal,
interest or any other Obligation then payable hereunder and under the Notes to
more than one Bank, to such Banks for the account of their respective Applicable
Lending Offices ratably in accordance with the amounts of such respective
Obligations then payable to such Banks and (y) if such payment by the Borrower
is in respect of any Obligation then payable hereunder to one Bank, to such Bank
for the account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 12.14(d) (Sale or Assignment), from and after
the effective date of such Assignment and Acceptance, the Agent shall make all
payments hereunder and under the Notes in respect of the interest assigned
thereby to the Bank assignee thereunder, and the parties to such Assignment and
Acceptance shall make all appropriate adjustments in such payments for periods
prior to such effective date directly between themselves.
 
(b)  The Borrower hereby authorizes each Bank and each of its Affiliates, if and
to the extent payment owed to such Bank is not made when due hereunder or, in
the case of a Bank, under the Note held by such Bank, to charge from time to
time, to the fullest extent permitted by law, against any or all of the
Borrower’s accounts with such Bank or such Affiliate any amount so due.
 
(c)  All computations of interest based on the Prime Rate shall be made by the
Agent on the basis of a year of 365 or 366 days, as the case may be, and all
computations of interest based on the Eurodollar Rate or the Federal Funds Rate
shall be made by the Agent on the basis of a year of 360 days, in each case for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest is payable. Each determination
by the Agent of an interest rate hereunder shall be conclusive and binding for
all purposes, absent manifest error.
 
(d)  Whenever any payment hereunder or under the Notes shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest; provided, however, that if
such extension would cause payment of interest on or principal of Eurodollar
Rate Loans to be made in the next following calendar month, such payment shall
be made on the next preceding Business Day.
 
(e)  Unless the Agent shall have received notice from the Borrower prior to the
date on which any payment is due to any Bank hereunder that the Borrower will
not make such payment in full, the Agent may assume that the Borrower has made
such payment in full to the Agent on such date and the Agent may, in reliance
upon such assumption, cause to be distributed to each such Bank on such due date
an amount equal to the amount then due such Bank. If and to the extent the
Borrower shall not have so made such payment in full to the Agent, each such
Bank shall repay to the Agent forthwith on demand such amount distributed to
such Bank together with interest thereon, for each day from the date such amount
is distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
 
(f)  If the Agent receives funds for application to the Obligations of the Loan
Parties under or in respect of the Loan Documents under circumstances for which
the Loan Documents do not specify the Loans to which, or the manner in which,
such funds are to be applied, the Agent may, but shall not be obligated to,
elect to distribute such funds to each of the Banks in accordance with such
Bank’s pro rata share of the aggregate principal amount of all Loans outstanding
at such time, for application to such principal repayment installments thereof,
as the Agent shall direct.
 
2.11  Taxes.
 
(a)  Any and all payments by any Loan Party to or for the account of any Bank or
any Agent hereunder or under the Notes or any other Loan Document shall be made,
in accordance with Section 2.10 (Payments and Computations) or the applicable
provisions of such other Loan Document, if any, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of each Bank and each Agent, taxes that are imposed on its overall net
income by the United States (and franchise taxes imposed in lieu thereof) and
taxes that are imposed on its overall net income (and franchise taxes imposed in
lieu thereof) by the state or foreign jurisdiction under the laws of which such
Bank or such Agent, as the case may be, is organized or any political
subdivision thereof and, in the case of each Bank, taxes that are imposed on its
overall net income (and franchise taxes imposed in lieu thereof) by the state or
foreign jurisdiction of such Bank’s principal office or Applicable Lending
Office or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities in respect of
payments hereunder or under the Notes being hereinafter referred to as “Taxes”).
If any Loan Party shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder or under any Note or any other Loan
Document to any Bank or any Agent, (i) the sum payable by such Loan Party shall
be increased as may be necessary so that after such Loan Party and the Agent
have made all required deductions (including deductions applicable to additional
sums payable under this Section 2.11) such Bank or such Agent, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Loan Party shall make all such deductions and
(iii) such Loan Party shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
 
(b)  In addition, a Loan Party shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made by such Loan Party hereunder or under any Notes or any
other Loan Documents or from the execution, delivery or registration of,
performance under, or otherwise with respect to, this Agreement, the Notes or
the other Loan Documents (hereinafter referred to as “Other Taxes”).
 
(c)  Panhandle Eastern, Borrower and CCC shall indemnify each Bank and each
Agent for and hold them harmless against the full amount of Taxes and Other
Taxes, imposed on or paid by such Bank or such Agent (as the case may be) with
respect to any payment by or on account of any obligation of the Loan Parties
hereunder (including Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 2.11) and any liability
(including penalties, additions to tax, interest and expenses) arising therefrom
or with respect thereto. This indemnification shall be made within 30 days from
the date such Bank or such Agent (as the case may be) makes written demand
therefor.
 
(d)  Within 30 days after the date of any payment of Taxes, the appropriate Loan
Party shall furnish to the Agent, at its address referred to in Section 12.3
(Notices), the original or a certified copy of a receipt evidencing such
payment, to the extent such a receipt is issued therefor, or other written proof
of payment thereof that is reasonably satisfactory to the Agent. In the case of
any payment hereunder or under the Notes or the other Loan Documents by or on
behalf of a Loan Party through an account or branch outside the United States or
by or on behalf of a Loan Party by a payor that is not a United States person,
if such Loan Party determines that no Taxes are payable in respect thereof, such
Loan Party shall furnish, or shall cause such payor to furnish, to the Agent, at
such address, an opinion of counsel reasonably acceptable to the Agent stating
that such payment is exempt from Taxes. For purposes of subsections (d) and (e)
of this Section 2.11, the terms “United States” and “United States person” shall
have the meanings specified in Section 7701 of the Internal Revenue Code.
 
(e)  Each Bank organized under the laws of a jurisdiction outside the United
States shall, on or prior to the date of its execution and delivery of this
Agreement or on the date of the Assignment and Acceptance pursuant to which it
becomes a Bank, as the case may be, and from time to time thereafter as
reasonably requested in writing by a Loan Party (but only so long thereafter as
such Bank remains lawfully able to do so), or upon the obsolescence or
invalidity of any form previously provided provide each of the Agent and such
Loan Party with two original Internal Revenue Service Forms W-8BEN or W-8ECI, as
appropriate, or any other form prescribed by the Internal Revenue Service,
certifying that such Bank is exempt from or entitled to a reduced rate of United
States withholding tax on payments pursuant to this Agreement or the Notes or
any other Loan Document, or (in the case of a Bank that is claiming exemption
from U.S. federal withholding with respect to payments of “portfolio interest”
and has certified in writing to the Agent that it is not (i) a “bank” as defined
in Section 881(c)(3)(A) of the Internal Revenue Code, (ii) a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue
Code) of such Loan Party or (iii) a controlled foreign corporation related to
such Loan Party (within the meaning of Section 864(d)(4) of the Internal Revenue
Code)) Internal Revenue Service Form W-8BEN, or any successor or other form
prescribed by the Internal Revenue Service, or, in the case of a Bank that has
certified that it is not a “bank” as described above, certifying that such Bank
is a foreign corporation, partnership, estate or trust. If the forms provided by
a Bank at the time such Bank first becomes a party to this Agreement indicate a
United States interest withholding tax rate in excess of zero, withholding tax
at such rate shall be considered excluded from Taxes unless and until such Bank
provides the appropriate forms certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such forms; provided, however, that if, at the effective
date of the Assignment and Acceptance pursuant to which a Bank becomes a party
to this Agreement, the Bank assignor was entitled to payments under subsection
(a) of this Section 2.11 in respect of United States withholding tax with
respect to interest paid at such date, then, to such extent, the term Taxes
shall include (in addition to withholding taxes that may be imposed in the
future or other amounts otherwise includable in Taxes) United States withholding
tax, if any, applicable with respect to the Bank assignee on such date. If any
form or document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service Form W-8BEN
or W-8ECI or the related certificate described above, that the applicable Bank
reasonably considers to be confidential, such Bank shall give notice thereof to
the applicable Loan Party and shall not be obligated to include in such form or
document such confidential information.
 
(f)  For any period with respect to which a Bank has failed to provide a Loan
Party with the appropriate form, certificate or other document described in
subsection (e) above (other than if such failure is due to a change in law, or
in the interpretation or application thereof, occurring after the date on which
a form, certificate or other document originally was required to be provided or
if such form, certificate or other document otherwise is not required under
subsection (e) above), such Bank shall not be entitled to indemnification under
subsection (a) or (c) of this Section 2.11 with respect to Taxes imposed by the
United States by reason of such failure; provided, however, that should a Bank
become subject to Taxes because of its failure to deliver a form, certificate or
other document required hereunder, the Loan Parties shall, at the sole expense
of such Bank, take such steps as such Bank shall reasonably request to assist
such Bank to recover such Taxes.
 
(g)  Any Bank claiming any additional amounts payable pursuant to this Section
2.11 agrees to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to change the jurisdiction of its Applicable
Lending Office or assign its rights and obligations under this Agreement to
another of its offices, branches or Affiliates if the making of such a change or
assignment would avoid the need for, or reduce the amount of, any such
additional amounts that may thereafter accrue and would not, in the reasonable
judgment of such Bank, be otherwise disadvantageous to such Bank.
 
(h)  If a Bank or Agent actually receives a refund of any Taxes or Other Taxes
as to which it has been indemnified by a Loan Party or with respect to which a
Loan Party has paid additional amounts pursuant to this Section 2.11, it shall
pay over such refund to the Loan Party (but only to the extent of indemnity
payments made, or additional amounts paid, by the Loan Party under this Section
2.11 with respect to the Taxes or Other Taxes giving rise to such refund), net
of all out-of-pocket expenses of the Agent or such Bank or Agent and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund); provided that the Loan Party, upon the request of
the Agent or such Bank or Agent, agrees to repay the amount paid over to the
Loan Party (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Agent or such Bank or Agent in the event
the Agent or such Bank or Agent is required to repay such refund to such
Governmental Authority. This Section 2.11(h) shall not be construed to require
the Agent or any Bank or Agent to claim a refund or make available its tax
returns (or any other information relating to its taxes which it deems
confidential) to the Loan Parties or any other Person.
 
2.12  Sharing of Payments, Etc. If any Bank shall obtain at any time any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise, other than as a result of an assignment pursuant to Section 12.14
(Sale and Assignment)) (a) on account of Obligations due and payable to such
Bank hereunder and under the Notes and the other Loan Documents at such time in
excess of its ratable share (according to the proportion of (i) the amount of
such Obligations due and payable to such Bank at such time to (ii) the aggregate
amount of the Obligations due and payable to all Banks hereunder and under the
Notes and the other Loan Documents at such time) of payments on account of the
Obligations due and payable to all Banks hereunder and under the Notes at such
time obtained by all the Banks at such time or (b) on account of Obligations
owing (but not due and payable) to such Bank hereunder and under the Notes and
the other Loan Documents at such time in excess of its ratable share (according
to the proportion of (i) the amount of such Obligations owing to such Bank at
such time to (ii) the aggregate amount of the Obligations owing (but not due and
payable) to all Banks hereunder and under the Notes and the other Loan Documents
at such time) of payments on account of the Obligations owing (but not due and
payable) to all Banks hereunder and under the Notes at such time obtained by all
of the Banks at such time, such Bank shall forthwith purchase from the other
Banks such interests or participating interests in the Obligations due and
payable or owing to them, as the case may be, as shall be necessary to cause
such purchasing Bank to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Bank, such purchase from each other
Bank shall be rescinded and such other Bank shall repay to the purchasing Bank
the purchase price to the extent of such Bank’s ratable share (according to the
proportion of (i) the purchase price paid to such Bank to (ii) the aggregate
purchase price paid to all Banks) of such recovery together with an amount equal
to such Bank’s ratable share (according to the proportion of (i) the amount of
such other Bank’s required repayment to (ii) the total amount so recovered from
the purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered; provided, further
that, so long as the Obligations under the Loan Documents shall not have been
accelerated, any excess payment received by any Bank shall be shared on a pro
rata basis only with other Banks. The Borrower agrees that any Bank so
purchasing an interest or participating interest from another Bank pursuant to
this Section 2.12 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such interest
or participating interest, as the case may be, as fully as if such Bank were the
direct creditor of the Borrower in the amount of such interest or participating
interest, as the case may be.
 
2.13  Use of Proceeds. The Borrower agrees that the proceeds of the Loans shall
be used to make the Inter-Company Loan to CCC. CCC shall cause the proceeds of
the Inter-Company Loan received by it to repay in full (a) the existing Debt
under the Amended and Restated Credit Agreement dated as of December 21, 2005 by
and among Transwestern Holding Company, LLC, CCC, the lenders party thereto,
Wachovia Bank, National Association, as administrative agent, Bank of America,
N.A., as syndication agent, and JPMorgan Chase Bank, N.A., Sun Trust Bank and
Calyon, New York Branch, as co-documentation agents and (b) the existing Debt
under the notes issued pursuant to the Note Purchase Agreement, dated as of
November 17, 2004, between Transwestern Holding Company, LLC and the holders
listed therein (the Debt referred to in clause (a) and (b) shall collectively be
referred to as the “Existing TWH Indebtedness”).
 
2.14  Evidence of Debt.
 
(a)  (i) Each Bank shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Bank
resulting from each Loan owing to such Bank from time to time, including the
amounts of principal and interest payable and paid to such Bank from time to
time hereunder. The Borrower agrees that upon request by any Bank to the
Borrower (with a copy of such request to the Agent) to the effect that a
promissory note or other evidence of indebtedness is required or appropriate in
order for such Bank to evidence (whether for purposes of pledge, enforcement or
otherwise) the Loans owing to, or to be made by, such Bank, the Borrower shall
promptly execute and deliver to such Bank, with a copy to the Agent, a Note
payable to the order of such Bank in a principal amount equal to the Loans of
such Bank. All references to Notes in the Loan Documents shall mean Notes, if
any, to the extent issued hereunder.
 
(b)  The Register maintained by the Agent pursuant to Section 12.14(d) (Sale and
Assignment) shall include a control account, and a subsidiary account for each
Bank, in which accounts (taken together) shall be recorded (i) the date and
amount of each Borrowing made hereunder, the Type of Loans comprising such
Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the
terms of each Assignment and Acceptance delivered to and accepted by it, (iii)
the amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Bank hereunder, and (iv) the amount of any sum
received by the Agent from the Borrower hereunder and each Bank’s share thereof.
 
(c)  Entries made in good faith by the Agent in the Register pursuant to
subsection (b) above, and by each Bank in its account or accounts pursuant to
subsection (a) above, shall be prima facie evidence of the amount of principal
and interest due and payable or to become due and payable from the Borrower to,
in the case of the Register, each Bank and, in the case of such account or
accounts, such Bank, under this Agreement, absent manifest error; provided,
however, that the failure of the Agent or such Bank to make an entry, or any
finding that an entry is incorrect, in the Register or such account or accounts
shall not limit or otherwise affect the obligations of the Borrower under this
Agreement.
 
2.15  Replacement of Banks. If (a) any Bank requests compensation under Section
2.9 (Increased Costs) or asserts, pursuant to Section 2.9(d) that it is unlawful
for such Bank to make Eurodollar Rate Loans, (b) the Borrower is required to pay
any additional amount to any Bank or any Governmental Authority for the account
of any Bank pursuant to Section 2.11 (Taxes), (c) any Bank defaults in its
obligation to fund Loans hereunder, or (d) with respect of any Bank that does
not approve any amendment or waiver of any provision of any Loan Document that
requires the unanimous consent of all of the Banks pursuant to Section 12.1
(Amendments; Waivers, Etc.), if such amendment or waiver is agreed to by the
Required Banks, then the Borrower may, at its sole expense, upon prior notice to
such Bank and the Agent, require such Bank to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 12.14 (Sale and Assignment)), all its interests, rights and obligations
under this Agreement to an assignee that shall assume such obligations (which
assignee may be another Bank, if a Bank accepts such assignment); provided that
(i) to the extent required under Section 12.14 (Sale and Assignment), the
Borrower shall have received the prior written consent of the Agent, which
consent shall not unreasonably be withheld, (ii) such Bank shall have received
payment of an amount equal to the outstanding principal of its Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for compensation under
Section 2.9 (Increased Costs) or payments required to be made pursuant to
Section 2.11 (Taxes), such assignment will result in a reduction in such
compensation or payments. A Bank shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Bank or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.
 
3.  REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES
 
Each of Panhandle Eastern, Borrower and CCC represents and warrants that:
 
3.1  Organization and Qualification. Such Loan Party:
 
(a)  is duly organized, validly existing, and in good standing under the laws of
its state of organization;
 
(b)  has the corporate or organizational power to own its properties and to
carry on its respective businesses as now conducted; and
 
(c)  is duly qualified as a foreign limited partnership or limited liability
company, as applicable, to do business and is in good standing in every
jurisdiction where such qualification is necessary except when the failure to so
qualify would not or does not have a Material Adverse Effect.
 
The Borrower has the Subsidiaries as applicable listed on Schedule 3.1 attached
hereto and made a part hereof for all purposes, and no others, each of which is
a Delaware limited liability company unless otherwise noted on Schedule 3.1.
 
3.2  Authorization, Validity, Etc. Each such Loan Party has the limited
liability company or limited partnership power and authority to make, execute,
deliver and perform under this Agreement, the Loan Documents and the
Inter-Company Note to which it is a party and the transactions contemplated
herein and therein, and all such action has been duly authorized by all
necessary limited partnership or limited liability company proceedings on its
part. Each Loan Document and the Inter-Company Note to which a Loan Party is a
party has been duly and validly executed and delivered by such Loan Party and
constitutes the valid and legally binding agreement of such Loan Party
enforceable against such Loan Party in accordance with its terms, except as
limited by Debtor Laws.
 
3.3  Conflicting or Adverse Agreements or Restrictions. No Loan Party is a party
to any contract or agreement or subject to any restriction which would
materially adversely affect the ability of any Loan Party to perform its
obligations under the Loan Documents and the Inter-Company Note to which it is a
party. Neither the execution and delivery of this Agreement, any other Loan
Document or the Inter-Company Note by any Loan Party that is or is to become a
party thereto, nor the consummation of the transactions contemplated hereby or
thereby, nor the fulfillment of and compliance with the respective terms,
conditions and provisions hereof or thereof or of any instruments required
hereby will conflict with or result in a breach of any of the terms, conditions
or provisions of, or constitute a default under, or result in any violation of,
or result in the creation or imposition of any lien (other than as contemplated
or permitted by this Agreement) on any of the property of such Loan Party
pursuant to (a) the charter or bylaws or similar organizational documents
applicable to such Loan Party; (b) any law or any regulation of any Government
Authority; (c) any order, writ, injunction or decree of any court; or (d) the
terms, conditions or provisions of any agreement or instrument to which such
Loan Party is a party or by which it is bound or to which it is subject
(including, without limitation, Section 7.8 of the April 2005 Credit Agreement),
except in the case of clauses (b), (c) and (d) for conflicts, breaches,
defaults, violations or the creation or imposition of liens that could not be
reasonably expected to have a Material Adverse Effect.
 
3.4  No Consents Required. No action, approval, consent, waiver, exemption,
variance, franchise, order, permit, authorization, right or license of or from a
Governmental Authority, and no notice to or filing with, any Governmental
Authority (including without limitation the SEC under PUHCA) or any other third
party is required for (a) the due execution, delivery or performance by any Loan
Party of any Loan Document or the Inter-Company Note to which it is or is to be
a party, or for the consummation of the transactions contemplated hereby,
including without limitation the incurrence of Debt under this Agreement and the
Inter-Company Note and the borrowing and repayment of Loans hereunder and
thereunder; or (b) the exercise by any Agent or any Bank of its rights under the
Loan Documents, except for those authorizations, approvals, actions, notices and
filings (A) which have been duly obtained or made or which are not required
under the terms of the Loan Documents to have been obtained or made on or prior
to such date or (B) with respect to the consummation of the transactions
contemplated hereby, the failure of which to be obtained or made could not
reasonably be expected to have a Material Adverse Effect.
 
3.5  Financial Statements.
 
(a)  Panhandle Eastern has furnished the Banks with its audited financial report
as of the fiscal year ending December 31, 2005 and its unaudited financial
reports as of each of the quarterly periods ending March 31, 2006, June 30, 2006
and September 30, 2006. These statements are complete and correct and present
fairly, in all material respects, in accordance with GAAP, consistently applied
throughout the periods involved, the Consolidated financial position of
Panhandle Eastern and its Subsidiaries and the results of their operations as at
the dates and for the periods indicated.
 
(b)  The Borrower has furnished the Banks with the Borrower’s unaudited
financial report as of the fiscal year ending December 31, 2005 and its
unaudited financial reports as of each of the quarterly periods ending March 31,
2006, June 30, 2006 and September 30, 2006. These statements are complete and
correct and present fairly, in all material respects, in accordance with GAAP,
consistently applied throughout the periods involved, the Consolidated financial
position of the Borrower and its Subsidiaries and the results of their
operations as at the dates and for the periods indicated.
 
(c)  CCC has furnished the Banks with its unaudited financial report as of the
fiscal year ending December 31, 2005 and its unaudited financial reports as of
each of the quarterly periods ending March 31, 2006, June 30, 2006 and September
30, 2006. These statements are complete and correct and present fairly, in all
material respects, in accordance with GAAP, consistently applied throughout the
periods involved, the financial position of CCC and the results of its
operations as at the dates and for the periods indicated.
 
(d)  Since December 31, 2005, there has not occurred any event or condition
which, individually or in the aggregate, has resulted in, or could reasonably be
expected to result in, a Material Adverse Change respecting Panhandle Eastern,
Borrower or CCC.
 
3.6  Litigation. Except as disclosed pursuant to Section 3.17 (Environmental
Matters), there is no: (a) action or proceeding pending or, to the knowledge of
Panhandle Eastern, Borrower or CCC, threatened against any Loan Party before any
court, administrative agency or arbitrator which is reasonably expected to have
a Material Adverse Effect; (b) unsatisfied judgment outstanding against such
Loan Party for the payment of money; or (c) other outstanding judgment, order or
decree affecting such Loan Party before or by any administrative or governmental
authority, compliance with or satisfaction of which may reasonably be expected
to have a Material Adverse Effect.
 
3.7  Default. No Loan Party is in default under or in violation of the
provisions of any instrument evidencing any Debt or of any agreement relating
thereto or any judgment, order, writ, injunction or decree of any court or any
order, regulation or demand of any administrative or governmental
instrumentality, which default or violation could reasonably be expected to have
a Material Adverse Effect.
 
3.8  Compliance. Each Loan Party is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
 
3.9  Title to Assets. Each Loan Party has good title to its respective assets,
subject to no Liens except those permitted in Section 6.2 (Liens, Etc.), Section
7.1 (Liens, Etc.), Section 8.1 (Liens, Etc.) and Permitted Encumbrances. For
purposes of this Section 3.9, “Permitted Encumbrances” shall mean easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances not interfering in any material respect with the
ordinary conduct of the business of such Loan Party.
 
3.10  Payment of Taxes. Each Loan Party has filed all material tax returns
required to be filed and has paid all taxes shown on said returns and all
assessments which are due and payable (except such as are being contested in
good faith by appropriate proceedings for which adequate reserves for their
payment have been provided in a manner consistent with the accounting practices
followed by the applicable Loan Party as of December 31, 2005). No Loan Party is
aware of any pending investigation by any taxing authority or of any claims by
any Governmental Authority for any unpaid taxes. Except as disclosed on Schedule
3.10, no Loan Party is party to any tax sharing agreement or arrangement.
 
3.11  Investment Company Act Not Applicable. No Loan Party is an “investment
company” or a company “controlled” by an “investment company”, within the
meaning of the Investment Company Act of 1940, as amended.
 
3.12  Public Utility Holding Company Act Not Applicable. No Loan Party is a
“holding company”, or a “subsidiary company” of a “holding company”, or an
“affiliate” of a “holding company”, or an “affiliate” of a “subsidiary company”
of a “holding company”, as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
 
3.13  Regulations G, T, U and X. No Loan shall be a “purpose credit secured
directly or indirectly by margin stock” within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System (“margin stock”); none of
the proceeds of any Loan will be used by any Loan Party to extend credit to
others for the purpose of purchasing or carrying any margin stock, or for any
other purpose which would constitute this transaction a “purpose credit secured
directly or indirectly by margin stock” within the meaning of said Regulation U,
as now in effect or as the same may hereafter be in effect. No Loan Party will
take or permit any action which would involve the Banks in a violation of
Regulation G, Regulation T, Regulation U, Regulation X or any other regulation
of the Board of Governors of the Federal Reserve System or a violation of the
Securities Exchange Act of 1934, in each case as now or hereafter in effect.
 
3.14  ERISA. No Reportable Event (as defined in § 4043(c) of ERISA) has occurred
with respect to any Plan. Except as provided in Schedule 3.14, each Plan
complies in all material respects with applicable provisions of ERISA, and each
Loan Party has filed all reports required by ERISA and the Code to be filed with
respect to each Plan. No Loan Party has any knowledge of any event which could
result in a liability of a Loan Party to the Pension Benefit Guaranty
Corporation. Each Loan Party has met all requirements with respect to funding
the Plans imposed by ERISA or the Code. Since the effective date of Title IV of
ERISA, there have not been any, nor are there now existing any, events or
conditions that would permit any Plan to be terminated under circumstances which
would cause the lien provided under § 4068 of ERISA to attach to any property of
a Loan Party.
 
3.15  No Financing of Certain Security Acquisitions. None of the proceeds of any
Loan will be used to acquire any security in any transaction that is subject to
§13 or §14 of the Securities Exchange Act of 1934, as amended.
 
3.16  Franchises, Co-Licenses, Etc. Each Loan Party owns or has obtained all the
material governmental permits, certificates of authority, leases, patents,
trademarks, service marks, trade names, copyrights, franchises and licenses, and
rights with respect thereto, required or necessary (or, in the sole and
independent judgment of the Borrower, prudent) in connection with the conduct of
their respective businesses as presently conducted or as proposed to be
conducted, except where the failure to have any of the foregoing could not be
reasonably expected to have a Material Adverse Effect.
 
3.17  Environmental Matters. Except as disclosed in Schedule 3.17, (a) all
facilities and property owned or leased by a Loan Party have been and continue
to be, owned or leased and operated by such Loan Party in material compliance
with all Environmental Laws; (b) there has not been (during the period of such
Loan Party’s ownership or lease) any Release of Hazardous Materials at, on,
under or from any property now (or, to such Loan Party’s knowledge, previously)
owned or leased by such Loan Party (i) that required, or may reasonably be
expected to require, such Loan Party to expend funds on remediation or cleanup
activities pursuant to any Environmental Law except for remediation or clean-up
activities that would not be reasonably expected to have a Material Adverse
Effect, or (ii) that otherwise, singly or in the aggregate, has, or may
reasonably be expected to have, a Material Adverse Effect; (c) each Loan Party
has been issued and is in material compliance with all permits, certificates,
approvals, orders, licenses and other authorizations relating to environmental
matters necessary for the conduct of its businesses; (d) there are no
polychlorinated biphenyls (PCB’s) or asbestos-containing materials or surface
impoundments in any of the facilities now (or, to the knowledge of such Loan
Party, previously) owned or leased by such Loan Party, except for PCB’s and
asbestos-containing materials of the type and in quantities that, to the
knowledge of such Loan Party, do not currently require remediation, and if
remediation of such PCB’s and asbestos-containing materials is hereafter
required for any reason, such remediation activities would not reasonably be
expected to have a Material Adverse Effect; (e) Hazardous Materials have not
been generated, used, treated, recycled, stored or disposed of at, on, under or
from any of the facilities or property now (or, to the knowledge of such Loan
Party, previously) owned or leased by such Loan Party during the time of such
Loan Party’s ownership or lease of such property that may require remediation or
clean-up activities that would be reasonably expected to have a Material Adverse
Effect; and (f) all underground storage tanks located on the property now (or,
to the knowledge of such Loan Party, previously) owned or leased by such Loan
Party have been (and to the extent currently owned or leased are) operated in
material compliance with all applicable Environmental Laws.
 
3.18  Existing Liens. There shall not exist any Liens on any Property of the
Borrower or its Subsidiaries other than Permitted Liens. There shall not exist
any Liens on any Property of CCC or its Subsidiaries.
 
3.19  Disclosure. No written information (other than any projections) concerning
any Loan Party and the transactions contemplated hereby furnished by or on
behalf of such Loan Party to the Agent or any Bank in connection with the
negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished), taken as a whole, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained therein not misleading in any material
respect in light of the circumstances under which such statements were or are
made. The projections were prepared by or on behalf of each Loan Party in good
faith based upon assumptions that such Loan Party believes to be reasonable as
of the Closing Date and the Funding Date (it being understood that such
projections are subject to significant uncertainties and contingencies, many of
which are beyond such Loan Party’s control, and accordingly no assurance can be
given and no representations are made that the assumptions are correct or that
the projections will be realized).
 
3.20  Insurance. Each Loan Party has insurance with a responsible and reputable
insurer covering its assets against loss or damage of the kinds customarily
insured against by companies similarly situated in the industry in which such
Person conducts its business, in such amounts and with such deductibles as are
customary for similarly situated companies; and such Person (a) has not received
notice from any insurer or agent of such insurer that any material capital
improvements or other material expenditures are required or necessary to be made
in order to continue such insurance or (b) does not have any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage at commercially available
rates from similar insurers as may be necessary to continue its business.
 
3.21  Subsidiaries. TLNG is wholly owned by the Borrower. The Borrower is wholly
owned by Panhandle Eastern. CCC is an Affiliate of the Borrower and is wholly
owned by Southern Union.
 
4.  CONDITIONS TO FUNDING
 
The obligation of the Banks to make any Loans is subject to the following
conditions:
 
4.1  Representations True and No Defaults.
 
(a)  The representations and warranties contained in Section 3 (Representations
and Warranties of the Loan Parties) shall be true and correct on and as of the
Funding Date as though made on and as of such date;
 
(b)  None of Panhandle Eastern, Borrower or CCC shall be in default in the due
performance of any covenant on its part contained in this Agreement;
 
(c)  No Material Adverse Change shall have occurred with respect to
(i) Panhandle Eastern reflected in the Consolidated annual financial statements
of Panhandle Eastern dated December 31, 2005, (ii) the Borrower reflected in the
Consolidated annual financial statements of the Borrower dated December 31,
2005, or (iii) CCC reflected in the annual financial statements of CCC dated
December 31, 2005; and
 
(d)  No Event of Default or Default shall have occurred and be continuing.
 
4.2  Intentionally Omitted.
 
4.3  Compliance With Law. The business and operations of each Loan Party as
conducted at all times relevant to the transactions contemplated by this
Agreement to and including the close of business on the Funding Date shall have
been and shall be in compliance in all material respects with all applicable
State and Federal laws, regulations and orders affecting such Loan Party and the
business and operations of any of them.
 
4.4  Notice of Borrowing and Other Documents. The Banks shall have received (a)
the Notice of Borrowing; and (b) such other documents and certificates relating
to the transactions herein contemplated as the Banks may reasonably request.
 
4.5  Payment of Fees and Expenses. The Borrower shall have paid (a) all expenses
of the type described in Section 12.2 (Reimbursement of Expenses) through the
date of such Loan and (b) all closing, structuring and other invoiced fees owed
as of the Funding Date to the Agent or any of the Banks by the Borrower under
this Agreement or any other written agreement between a Loan Party and the
Agent, the applicable Bank(s), or any of their Affiliates.
 
4.6  Repayment of Debt. Simultaneously with the funding of the Loans, (i) CCC
shall cause to be repaid all of the obligations under the Existing TWH
Indebtedness, (ii) the obligations of CCC under the Existing TWH Indebtedness
shall be extinguished and (iii) the commitments of any lenders in respect of any
Existing TWH Indebtedness shall be terminated.
 
4.7  Loan Documents Satisfactory. The Agent shall have received a copy of each
of the Loan Documents, each of which shall be in form and substance reasonably
satisfactory to the Agent.
 
4.8  Inter-Company Note Satisfactory. The Agent shall have received a copy of
the Inter-Company Note, which shall be in form and substance reasonably
satisfactory to the Agent.
 
4.9  Loan Documents, Opinions and Other Instruments. As of the Funding Date, the
Loan Parties shall have delivered to the Agent the following:
 
(a)  this Agreement, each of the Notes, all other Loan Documents and the
Inter-Company Note required by the Agent and the Banks to be executed and
delivered by the applicable Loan Parties in connection with this Agreement;
 
(b)  a certificate from the Secretary of State of the State of Delaware as to
the continued existence and good standing of Panhandle Eastern, Borrower and CCC
in the State of Delaware;
 
(c)  a certificate from Secretary of State of each State in which such
certification is necessary as to the good standing of TLNG and each Loan Party
as a foreign entity to do business in such State;
 
(d)  a Secretary’s Certificate executed by the duly elected Secretary or a duly
elected Assistant Secretary of Panhandle Eastern, Borrower and CCC, in a form
acceptable to the Agent, whereby such Secretary or Assistant Secretary certifies
that one or more resolutions adopted by the Board of Managers of such Loan Party
(or, in the case of Panhandle Eastern, the Board of Managers of its general
partner) remain in full force and effect authorizing such Loan Party to enter
into the transactions contemplated hereby and perform its obligations under the
Loan Documents and the Inter-Company Note; and
 
(e)  a legal opinion from in house counsel for the Borrower and each Guarantor,
and New York counsel to the Agent and the Banks, each dated as of the Funding
Date, addressed to the Agent and the Banks and otherwise acceptable in all
respects to the Agent in its discretion.
 

 

 
5.  AFFIRMATIVE COVENANTS OF THE LOAN PARTIES
 
Each of Panhandle Eastern, Borrower and CCC covenants and agrees that, so long
as the Borrower may borrow hereunder and until payment in full of the
Obligations, each of Panhandle Eastern, Borrower and CCC, as applicable, will:
 
5.1  Financial Statements and Information.
 
Deliver to the Banks:
 
(a)  as soon as available, and in any event within 120 days after the end of
each fiscal year of Panhandle Eastern, a copy of the annual audit report of
Panhandle Eastern and its Subsidiaries for such fiscal year containing a balance
sheet, statement of income and stockholders equity and a cash flow statement,
all in reasonable detail and certified by PriceWaterhouseCoopers or another
independent certified public accountant of recognized standing reasonably
satisfactory to the Banks; and
 
(b)  as soon as available, and in any event within 120 days after the end of
each fiscal year of the Borrower and CCC, an unaudited financial report of the
Borrower and its Subsidiaries and an unaudited report of CCC and its
Subsidiaries for such fiscal year containing a balance sheet, statement of
income and stockholders equity and cash flow statement, all in reasonable detail
and certified by a financial officer of such Loan Party to have been prepared in
accordance with GAAP, except as may be explained in such certificate; and
 
(c)  as soon as available, and in any event within 60 days after the end of each
quarterly accounting period in each fiscal year of Panhandle Eastern, CCC and
the Borrower (excluding the fourth quarter), an unaudited financial report of
Panhandle Eastern and its Subsidiaries, CCC and its Subsidiaries and the
Borrower and its Subsidiaries as at the end of such quarter and for the period
then ended, containing a balance sheet, statements of income and stockholders
equity and a cash flow statement, all in reasonable detail and certified by a
financial officer of such Loan Party to have been prepared in accordance with
GAAP, except as may be explained in such certificate;
 
(d)  such additional financial or other information as the Banks may reasonably
request; and
 
(e)  copies of all regular, periodic and special reports, and all registration
statements, that such Loan Party files with the SEC or any governmental
authority that may be substituted therefor, or with any national securities
exchange.
 
All financial statements specified in clauses (a), (b) and (c) above shall be
furnished in Consolidated form for Panhandle Eastern and its Subsidiaries, CCC
and its Subsidiaries and the Borrower and its Subsidiaries with comparative
Consolidated figures for the corresponding period in the preceding year.
Together with each delivery of financial statements required by clauses (a), (b)
and (c) above, each of Panhandle Eastern, CCC and the Borrower, as applicable,
will deliver to the Banks an Officer’s Certificate stating that there exists no
Event of Default or Default, or, if any such Event of Default or Default exists,
stating the nature thereof, the period of existence thereof and what action the
Borrower has taken or proposes to take with respect thereto. Together with each
delivery of financial statements required by clauses (a) and (c) above,
Panhandle Eastern will deliver to the Banks an Officer’s Certificate
demonstrating compliance with the covenants set forth in Section 6.1 (Financial
Covenants). The Banks are authorized to deliver a copy of any financial
statement delivered to it to any regulatory body having jurisdiction over them,
and to disclose same to any prospective assignees or participant Banks.
 
5.2  Books and Records. Maintain, and cause each of its Subsidiaries to
maintain, proper books of record and account in accordance with sound accounting
practices in which true, full and correct entries will be made of all their
respective dealings and business affairs.
 
5.3  Insurance. Maintain, and cause each of its Subsidiaries to maintain,
insurance with financially sound, responsible and reputable companies in such
types and amounts and against such casualties, risks and contingencies as is
customarily carried by owners of similar businesses and properties.
 
5.4  Maintenance of Property. Maintain and preserve, and cause each of its
Subsidiaries to maintain and preserve, all of its properties that are used or
useful in the conduct of its business in accordance with such Loan Party’s
established maintenance plan as in effect from time to time consistent with past
practices.
 
5.5  Inspection of Property and Records. Permit any officer, director or agent
of the Agent or any Bank, on written notice and at such Bank’s expense, to visit
and inspect during normal business hours any of the properties, corporate books
and financial records of each Loan Party and discuss their respective affairs
and finances with their principal officers, all at such times as the Agent or
any Bank may reasonably request.
 
5.6  Existence, Laws, Obligations, Taxes. Maintain, and cause each of its
Subsidiaries to maintain, its corporate existence and franchises, and any
license agreements and tariffs that permit the recovery of a return that such
Loan Party considers to be fair (and as to licenses, franchises, and tariffs
that are subject to regulatory determinations of recovery of returns, such Loan
Party has presented or is presenting favorable defense thereof); and to comply,
and cause each of its Subsidiaries to comply, with all statutes and governmental
regulations noncompliance with which might have a Material Adverse Effect, and
pay, and cause each of its Subsidiaries to pay, all taxes, assessments,
governmental charges, claims for labor, supplies, rent and other obligations
which if unpaid might become a lien against the property of such Loan Party and
its Subsidiaries except liabilities being contested in good faith.
 
5.7  Notice of Certain Matters. Notify the Agent promptly upon acquiring
knowledge of the occurrence of any of the following events:
 
(a)  the institution or threatened institution of any lawsuit or administrative
proceeding affecting a Loan Party that is not covered by insurance (less
applicable deductible amounts) and which, if determined adversely to such Loan
Party, could reasonably be expected to have a Material Adverse Effect;
 
(b)  the occurrence of any Material Adverse Change, or of any event that in the
good faith opinion of such Loan Party is likely to result in a Material Adverse
Change, affecting such Loan Party;
 
(c)  the occurrence of any Event of Default or any Default;
 
(d)  a change by Moody’s Investors Service, Inc. or by Standard and Poor’s
Ratings Group in the rating of the Funded Debt of Panhandle Eastern; and
 
(e)  such other information respecting the business, financial condition,
operations or assets of the Loan Parties as any Agent, or any Bank through the
Agent, may from time to time reasonably request.
 
5.8  ERISA. At all times:
 
(a)  to the extent required of a Loan Party under applicable law, maintain and
keep in full force and effect each Plan, subject to Southern Union’s right, in
accordance with applicable legal requirements, (i) to amend any such Plans, (ii)
to merge any such Plans, and to (iii) cease benefit accruals under any such
Plans;
 
(b)  to the extent required of a Loan Party under applicable law, make
contributions to each Plan in a timely manner and in an amount sufficient to
comply with the minimum funding standards requirements of ERISA;
 
(c)  promptly after acquiring knowledge of any “reportable event” or of any
“prohibited transaction” (as such terms are defined in § 4043 and § 406 of
ERISA) in connection with any Plan, furnish the Banks with a statement executed
by the president or chief financial officer of a Loan Party setting forth the
details thereof and the action which the Borrower proposes to take with respect
thereto and, when known, any action taken by the Internal Revenue Service with
respect thereto;
 
(d)  notify the Banks promptly upon receipt by a Loan Party or any Subsidiary of
any notice of the institution of any proceeding or other action which may result
in the termination of any Plan and furnish to the Banks copies of such notice;
 
(e)  to the extent required of a Loan Party under applicable law, acquire and
maintain Pension Benefit Guaranty Corporation employer liability coverage
insurance required under ERISA;
 
(f)  furnish the Banks with copies of the summary annual report for each Plan
filed with the Internal Revenue Service as the Agent or the Banks may request;
and
 
(g)  furnish the Banks with copies of any request for waiver of the funding
standards or extension of the amortization periods required by § 303 and § 304
of ERISA or § 412 of the Code promptly after the request is submitted to the
Secretary of the Treasury, the Department of Labor or the Internal Revenue
Service, as the case may be.
 
5.9  Compliance with Environmental Laws. At all times:
 
(a)  (i) use and operate, and cause each of its Subsidiaries to use and operate,
all of their respective facilities and properties in material compliance with
all Environmental Laws; (ii) keep, and cause each of its Subsidiaries to keep,
all necessary permits, approvals, orders, certificates, licenses and other
authorizations relating to environmental matters in effect and remain in
material compliance therewith; (iii) handle, and cause each of its Subsidiaries
to handle, all Hazardous Materials in material compliance with all applicable
Environmental Laws; and (iv) dispose, and cause each of its Subsidiaries to
dispose, of all Hazardous Materials with carriers that maintain valid permits,
approvals, certificates, licenses or other authorizations for such disposal in
material compliance with applicable Environmental Laws;
 
(b)  promptly notify the Agent and provide copies upon receipt of all written
claims, complaints, notices or inquiries relating to the condition of the
facilities and properties of such Loan Party under, or their respective
compliance with, applicable Environmental Laws wherein the condition or the
noncompliance that is the subject of such claim, complaint, notice, or inquiry
involves, or could reasonably be expected to involve, liability of or
expenditures of (1) in the case of Borrower, CCC or any of their respective
Subsidiaries, $10,000,000 or more, and (2) in the case of Panhandle Eastern and
its Subsidiaries taken as a whole, $30,000,000 or more, to the extent in each
case that such matters are not reflected in the financial statements provided
pursuant to Sections 3.5 (a) and (b) hereof for the period ended September 30,
2006; and
 
(c)  provide such information and certifications which the Banks may reasonably
request from time to time to evidence compliance with this Section 5.9.
 
6.  NEGATIVE COVENANTS OF PANHANDLE EASTERN
 
So long as the Borrower may borrow hereunder and until payment in full of the
Obligations, except with the written consent of the Banks:
 
6.1  Financial Covenants. Panhandle Eastern will not
 
(a)  Permit the Interest Coverage Ratio as of the end of any fiscal quarter to
be less than 2.00 to 1.00.
 
(b)  Permit its Debt/Capitalization Ratio as of the last day of any fiscal
quarter to be greater than 65.0%.
 
6.2  Liens, Etc. Panhandle Eastern will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien on or with
respect to any of its Property, or sign or file or suffer to exist, under the
Uniform Commercial Code of any jurisdiction, a financing statement that names
Panhandle Eastern or any of its Subsidiaries as debtor, or sign or suffer to
exist any security agreement authorizing any secured party thereunder to file
such financing statement, or assign any accounts or other right to receive
income, except:
 
(a)  Permitted Liens for Panhandle Eastern and its Subsidiaries;
 
(b)  Liens existing on the date hereof and any replacement, extension or renewal
of the indebtedness secured by such Lien, provided that the amount of Debt or
other obligations secured thereby is not increased and is not secured by any
additional assets; and
 
(c)  Liens arising in connection with Capitalized Leases; provided that no such
Lien shall extend to or cover any assets other than the assets subject to such
Capitalized Leases) and purchase money Liens upon or in real property, equipment
or other fixed or capital assets acquired or held by Panhandle Eastern or any of
its Subsidiaries to secure the purchase price of such property, equipment or
other fixed or capital assets or to secure Debt incurred for the purpose of
financing the acquisition, construction or improvement of any such property,
equipment or other fixed or capital assets, or Liens existing on any such
property, equipment or other fixed or capital assets at the time of acquisition,
or extensions, renewals or replacements of any of the foregoing for the same or
a lesser amount (provided that no such Lien shall extend to or cover any
property other than the property, equipment or other fixed or capital assets
being acquired, constructed or improved, and no such extension, renewal or
replacement shall extend to or cover any property not theretofore subject to the
Lien being extended, renewed or replaced); provided that the aggregate principal
amount of the Debt secured by Liens permitted by this clause (c) shall not
exceed $50,000,000 at any time outstanding;
 
provided, however, that Panhandle Eastern or any of its Subsidiaries may create
or assume any other Lien securing Debt if, after giving effect to such Debt, the
Priority Obligations Amount does not exceed 10% of the Consolidated Net Tangible
Assets.
 
6.3  Debt. Panhandle Eastern will not, and will not permit any Subsidiary (other
than the Borrower or TLNG) to, create, incur, assume or suffer to exist any
Debt, unless if after giving effect to such Debt, the Priority Obligations
Amount does not exceed 10% of the Consolidated Net Tangible Assets.
 
6.4  Change in Nature of Business. Panhandle Eastern will not make any material
change in the nature of Panhandle Eastern’s business as carried on at the date
hereof.
 
6.5  Mergers, Consolidation. Panhandle Eastern will not merge into or
consolidate with any Person or permit any Person to merge into it, or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution), or permit
any of its Subsidiaries to do so, except that:
 
(a)  any Subsidiary of Panhandle Eastern may merge into or consolidate with
Panhandle Eastern, provided that Panhandle Eastern is the continuing or
surviving Person;
 
(b)  any Subsidiary of Panhandle Eastern may merge into or consolidate with any
other Subsidiary of Panhandle Eastern; provided that if such Subsidiary is the
Borrower, such transaction shall comply with Section 7.3(c);
 
(c)  any Subsidiary of Panhandle Eastern may be liquidated or dissolved if
Panhandle Eastern determines in good faith that such liquidation or dissolution
is in the best interest of Panhandle Eastern and is not materially
disadvantageous to the Banks;
 
(d)  any Subsidiary of Panhandle Eastern may merge into or consolidate with any
other Person or permit any other Person to merge into or consolidate with it;
provided that either (i) the Person surviving such merger shall be a Subsidiary
of Panhandle Eastern or (ii) such transaction complies with Sections 6.6(b), 7.3
and 7.4; and
 
(e)  Panhandle Eastern may merge with any Person; provided that if Panhandle
Eastern is not the surviving entity, the surviving entity agrees to assume and
be bound by the terms and conditions of this Agreement pursuant to documentation
satisfactory to the Agent to such effect;
 
provided, however, that in each case, immediately before and after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing
and such transaction shall not cause or have caused a Material Adverse Effect.
 
6.6  Sale of Assets. Panhandle Eastern will not, and will not permit any of its
Subsidiaries to, sell, lease, transfer or otherwise dispose of, in one
transaction or in a series of transactions, assets representing all or
substantially all of the Consolidated assets of Panhandle Eastern, except:
 
(a)  in a transaction authorized by Section 6.5 (Mergers); and
 
(b)  sales, transfers or other dispositions of assets among Panhandle Eastern
and its Subsidiaries.
 
6.7  Restricted Payments. Panhandle Eastern will not, and will not permit any of
its Subsidiaries to, pay or declare any Restricted Payment, except that, (a) any
of its Subsidiaries may make Restricted Payments to Panhandle Eastern or another
Subsidiary of Panhandle Eastern (except that the Borrower may not make any such
payment to any Person other than Panhandle Eastern and Subsidiaries of the
Borrower may not make any such payment to any Person other than Borrower or
Panhandle Eastern) and (b) so long as no Event of Default has occurred and is
continuing and Panhandle Eastern is in pro forma compliance with Section 6.1(b)
(Financial Covenants) after giving effect to such Restricted Payments, Panhandle
Eastern may make distributions to Southern Union and Southern Union Panhandle,
LLC.
 
6.8  Sales and Leasebacks. Panhandle Eastern will not enter into any arrangement
with any Person (other than Subsidiaries of Panhandle Eastern) providing for the
leasing by Panhandle Eastern or any Subsidiary of real or personal property that
has been or is to be sold or transferred by Panhandle Eastern or such Subsidiary
to such Person or to any other Person to whom funds have been or are to be
advanced by such Person on the security of such property or rental obligations
of Panhandle Eastern or such Subsidiary (each a “Sale-Leaseback Transaction”),
unless if after giving effect to such Sale-Leaseback Transaction, the Priority
Obligations Amount does not exceed 10% of the Consolidated Net Tangible Assets.
 
6.9  Transactions with Related Parties. Panhandle Eastern will not, and will not
permit any Subsidiary to, enter into any transaction or agreement with any
officer, director or holder (other than Southern Union and its Subsidiaries) of
ten percent (10%) or more of any class of the outstanding capital stock of
Panhandle Eastern or any Subsidiary (or any Affiliate of any such Person) unless
the same is upon terms substantially similar to those obtainable from wholly
unrelated sources.
 
6.10  Hazardous Materials. Panhandle Eastern will not, and will not permit any
Subsidiary to, (a) cause or permit any Hazardous Materials to be placed, held,
used, located, or disposed of on, under or at any of such Person’s property or
any part thereof by any Person in a manner which could reasonably be expected to
have a Material Adverse Effect; (b) cause or permit any part of any of such
Person’s property to be used as a manufacturing, storage, treatment or disposal
site for Hazardous Materials, where such action could reasonably be expected to
have a Material Adverse Effect; or (c) cause or suffer any liens to be recorded
against any of such Person’s property as a consequence of, or in any way related
to, the presence, remediation, or disposal of Hazardous Materials in or about
any of such Person’s property, including any so-called state, federal or local
“superfund” lien relating to such matters, where such recordation could
reasonably be expected to have a Material Adverse Effect.
 
7.  NEGATIVE COVENANTS OF THE BORROWER
 
So long as the Borrower may borrow hereunder and until payment in full of the
Notes, except with the written consent of the Banks:
 
7.1  Liens, Etc. The Borrower will not, and will not permit any Subsidiary to,
create, incur, assume or suffer to exist any Lien on or with respect to any of
its Property, or sign or file or suffer to exist, under the Uniform Commercial
Code of any jurisdiction, a financing statement that names the Borrower or any
of its Subsidiaries as debtor, or sign or suffer to exist any security agreement
authorizing any secured party thereunder to file such financing statement, or
assign any accounts or other right to receive income, except:
 
(a)  Permitted Liens for the Borrower and its Subsidiaries;
 
(b)  Liens existing on the date hereof and any replacement, extension or renewal
of the indebtedness secured by such Lien, provided that the amount of Debt or
other obligations secured thereby is not increased and is not secured by any
additional assets; and
 
(c)  Liens arising in connection with Capitalized Leases; provided that no such
Lien shall extend to or cover any assets other than the assets subject to such
Capitalized Leases) and purchase money Liens upon or in real property, equipment
or other fixed or capital assets acquired or held by the Borrower or any of its
Subsidiaries to secure the purchase price of such property, equipment or other
fixed or capital assets or to secure Debt incurred for the purpose of financing
the acquisition, construction or improvement of any such property, equipment or
other fixed or capital assets, or Liens existing on any such property, equipment
or other fixed or capital assets at the time of acquisition, or extensions,
renewals or replacements of any of the foregoing for the same or a lesser amount
(provided that no such Lien shall extend to or cover any property other than the
property, equipment or other fixed or capital assets being acquired, constructed
or improved, and no such extension, renewal or replacement shall extend to or
cover any property not theretofore subject to the Lien being extended, renewed
or replaced); provided that the aggregate principal amount of the Debt secured
by Liens permitted by this clause (c) shall not exceed $10,000,000 at any time
outstanding.
 
7.2  Debt. The Borrower will not, and will not permit any Subsidiary to, incur
or permit to exist any Debt, except:
 
(a)  Debt under this Agreement;
 
(b)  Debt of TLNG to the Borrower and unsecured Debt of the Borrower to any
Subsidiary;
 
(c)  [Intentionally omitted.]
 
(d)  Debt under the April 2005 Credit Agreement;
 
(e)  endorsements in the ordinary course of business of negotiable instruments
in the course of collection;
 
(f)  Debt of TLNG or any other Subsidiary of the Borrower subordinated to the
Loans on terms and pursuant to documentation satisfactory to the Agent;
 
(g)  Unsecured Debt of the Borrower; and
 
(h)  Capitalized Leases of the Borrower with Subsidiaries as permitted pursuant
to 7.1(c).
 
7.3  Merger, Consolidation. The Borrower will not, and will not permit any
Subsidiary to, merge or consolidate with any other Person or sell, lease,
transfer or otherwise dispose of (whether in one transaction or a series of
transactions) all or a substantial part of its assets or acquire (whether in one
transaction or a series of transactions) all or a substantial part of the assets
of any Person, except that:
 
(a)  any Subsidiary of the Borrower may merge or consolidate with the Borrower
(provided that the Borrower shall be the continuing or surviving corporation) or
with any one or more Subsidiaries of the Borrower;
 
(b)  any Subsidiary of the Borrower may sell, lease, transfer or otherwise
dispose of any of its assets to the Borrower or another Subsidiary of the
Borrower;
 
(c)  the Borrower may acquire the assets of or merge with any Person, provided
that if Borrower is not the surviving entity, the surviving entity agrees to
assume and be bound by the terms and conditions of this Agreement pursuant to
documentation satisfactory to the Agent; and
 
(d)  the Borrower or any Subsidiary of the Borrower may sell, lease, assign or
otherwise dispose of assets as otherwise permitted under Section 7.4 (Sale of
Assets), which shall include without limitation the transfer of assets to a
Subsidiary and the subsequent sale of the equity interests in such Subsidiary;
 
provided that, after giving effect to any transaction, no Default or Event of
Default shall have occurred and be continuing and such transaction shall not
cause or have caused a Material Adverse Effect.
 
7.4  Sale of Assets. The Borrower will not, and will not permit any Subsidiary
to, except as permitted under this Section 7.4, sell, assign, lease, or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or any part of its Property (whether now owned or hereafter acquired);
provided, however, that
 
(a)  the Borrower or any Subsidiary may in the ordinary course of business
dispose of (i) Property consisting of Inventory; and (ii) Property consisting of
goods or equipment that are, in the opinion of the Borrower or any Subsidiary of
the Borrower, obsolete or unproductive, but if in the good faith judgment of the
Borrower or any Subsidiary of the Borrower such disposition without replacement
thereof would have a Material Adverse Effect, such goods and equipment shall be
replaced, or their utility and function substituted, by new or existing goods or
equipment; and
 
(b)  the Borrower or any Subsidiary may dispose of Property other than Inventory
(in consideration of such amount as in the good faith judgment of the Borrower
or such Subsidiary represents a fair consideration therefor), provided that the
aggregate value of such property disposed of (determined after depreciation and
in accordance with GAAP) after the Funding Date does not exceed ten percent
(10%) of the aggregate value of all of the Borrower’s and its Subsidiaries’ real
property and tangible personal property other than Inventory considered on a
Consolidated basis and determined after depreciation and in accordance with
GAAP, as of December 31, 2005.
 
7.5  Restricted Payment. The Borrower will not pay or declare any Restricted
Payment to any Person other than to Panhandle Eastern. The Borrower will not
permit any Subsidiary to pay or declare any Restricted Payment to any Person
other than the Borrower.
 
7.6  Securities Credit Regulations. Neither the Borrower nor any Subsidiary will
take or permit any action which might cause the Loans or this Agreement to
violate Regulation G, Regulation T, Regulation U, Regulation X or any other
regulation of the Board of Governors of the Federal Reserve System or a
violation of the Securities Exchange Act of 1934, in each case as now or
hereafter in effect.
 
7.7  Nature of Business. The Borrower will not, and will not permit any
Subsidiary, to, make any material change in the nature of the Borrower’s
business as carried on at the date hereof.
 
7.8  Transactions with Related Parties. The Borrower will not, and will not
permit any Subsidiary to, enter into any transaction or agreement with any
officer, director or holder (other than Southern Union and its Subsidiaries) of
ten percent (10%) or more of any class of the outstanding capital stock of the
Borrower or any Subsidiary (or any Affiliate of any such Person) unless the same
is upon terms substantially similar to those obtainable from wholly unrelated
sources.
 
7.9  Hazardous Materials. The Borrower will not, and will not permit any
Subsidiary to, (a) cause or permit any Hazardous Materials to be placed, held,
used, located, or disposed of on, under or at any of such Person’s property or
any part thereof by any Person in a manner which could reasonably be expected to
have a Material Adverse Effect; (b) cause or permit any part of any of such
Person’s property to be used as a manufacturing, storage, treatment or disposal
site for Hazardous Materials, where such action could reasonably be expected to
have a Material Adverse Effect; or (c) cause or suffer any liens to be recorded
against any of such Person’s property as a consequence of, or in any way related
to, the presence, remediation, or disposal of Hazardous Materials in or about
any of such Person’s property, including any so-called state, federal or local
“superfund” lien relating to such matters, where such recordation could
reasonably be expected to have a Material Adverse Effect.
 
7.10  Use of Proceeds. The Borrower will not, and will not permit any Subsidiary
to, use the proceeds of any Loan for any purpose other than for purposes set
forth in Section 2.13 (Use of Proceeds); or use any such proceeds in a manner
which violates or results in a violation of any law or regulation.
 
7.11  Other Documents. The Borrower will not, and will not permit any Subsidiary
to, amend, restate or otherwise modify or waive any provision or condition of
(a) any instrument or agreement relating to any secured Debt of such Person if
the effect of such modification or waiver is to increase the obligations of such
Person in a manner that is adverse to the Banks without the consent of the
Majority Banks or (b) the Inter-Company Note if the effect of such modification
or waiver is to violate Section 7.8 (Transactions with Related Parties),
decrease the interest rate to a rate below the interest rate under this
Agreement in effect at such time, alter the frequency of interest payments if
the effect of such alteration would be that CCC pays interest less frequently
than once per calendar quarter or extend the maturity date thereof to a date
that is later than the Maturity Date.
 
8.  NEGATIVE COVENANTS OF CCC
 
So long as the Borrower may borrow hereunder and until payment in full of the
Obligations, except with the written consent of the Banks:
 
8.1  Liens, Etc. CCC will not, and will not permit any Subsidiary to, create,
incur, assume or suffer to exist any Lien on or with respect to any of its
Property, or sign or file or suffer to exist, under the Uniform Commercial Code
of any jurisdiction, a financing statement that names CCC or any of its
Subsidiaries as debtor, or sign or suffer to exist any security agreement
authorizing any secured party thereunder to file such financing statement, or
assign any accounts or other right to receive income, except:
 
(a)  Permitted Liens for CCC and its Subsidiaries;
 
(b)  Liens arising in connection with Capitalized Leases; provided that no such
Lien shall extend to or cover any assets other than the assets subject to such
Capitalized Leases) and purchase money Liens upon or in real property, equipment
or other fixed or capital assets acquired or held by CCC or any of its
Subsidiaries to secure the purchase price of such property, equipment or other
fixed or capital assets or to secure Debt incurred for the purpose of financing
the acquisition, construction or improvement of any such property, equipment or
other fixed or capital assets, or Liens existing on any such property, equipment
or other fixed or capital assets at the time of acquisition, or extensions,
renewals or replacements of any of the foregoing for the same or a lesser amount
(provided that no such Lien shall extend to or cover any property other than the
property, equipment or other fixed or capital assets being acquired, constructed
or improved, and no such extension, renewal or replacement shall extend to or
cover any property not theretofore subject to the Lien being extended, renewed
or replaced); provided that the aggregate principal amount of the Debt secured
by Liens permitted by this clause (c) shall not exceed $10,000,000 at any time
outstanding.
 
8.2  Debt. CCC will not, and will not permit any Subsidiary to, incur or permit
to exist any Debt, except:
 
(a)  Debt under this Agreement;
 
(b)  Debt under the Inter-Company Note;
 
(c)  Debt existing as of September 30, 2006 as reflected on CCC’s financial
statements delivered under Section 3.2 (Financial Statements) and refinancings
thereof, other than the Debt under the Existing TWH Indebtedness;
 
(d)  endorsements in the ordinary course of business of negotiable instruments
in the course of collection;
 
(e)  Debt of Subsidiaries of CCC subordinated to the Loans on terms and pursuant
to documentation satisfactory to the Agent;
 
(f)  Unsecured Debt of CCC in a principal amount not to exceed $10,000,000; and
 
(g)  Capitalized Leases of CCC with Subsidiaries as permitted pursuant to
8.1(b).
 
8.3  Merger, Consolidation. CCC will not, and will not permit any Subsidiary to,
merge or consolidate with any other Person or sell, lease, transfer or otherwise
dispose of (whether in one transaction or a series of transactions) all or a
substantial part of its assets or acquire (whether in one transaction or a
series of transactions) all or a substantial part of the assets of any Person,
except that:
 
(a)  any Subsidiary of CCC may merge or consolidate with CCC (provided that CCC
shall be the continuing or surviving corporation) or with any one or more
Subsidiaries of CCC;
 
(b)  any Subsidiary of CCC may sell, lease, transfer or otherwise dispose of any
of its assets to CCC or another Subsidiary of CCC;
 
(c)  CCC may acquire the assets of or merge with any Person, provided that if
Borrower is not the surviving entity, the surviving entity agrees to assume and
be bound by the terms and conditions of this Agreement pursuant to documentation
satisfactory to the Agent.
 
(d)  CCC or any Subsidiary of CCC may sell, lease, assign or otherwise dispose
of assets as otherwise permitted under Section 8.4 (Sale of Assets), which shall
include without limitation the transfer of assets to a Subsidiary and the
subsequent sale of the equity interests in such Subsidiary;
 
provided that, after giving effect to any transaction, no Default or Event of
Default shall have occurred and be continuing and such transaction shall not
cause or have caused a Material Adverse Effect.
 
8.4  Sale of Assets. CCC will not, and will not permit any Subsidiary to, except
as permitted under this Section 8.4, sell, assign, lease, or otherwise dispose
of (whether in one transaction or in a series of transactions) all or any part
of its Property (whether now owned or hereafter acquired); provided, however,
that
 
(a)  CCC or any Subsidiary may in the ordinary course of business dispose of (i)
Property consisting of Inventory; and (ii) Property consisting of goods or
equipment that are, in the opinion of CCC or any Subsidiary of CCC, obsolete or
unproductive, but if in the good faith judgment of CCC or any Subsidiary of CCC
such disposition without replacement thereof would have a Material Adverse
Effect, such goods and equipment shall be replaced, or their utility and
function substituted, by new or existing goods or equipment; and
 
(b)  CCC or any Subsidiary may dispose of Property other than Inventory (in
consideration of such amount as in the good faith judgment of CCC or such
Subsidiary represents a fair consideration therefor), provided that the
aggregate value of such property disposed of (determined after depreciation and
in accordance with GAAP) after the Funding Date does not exceed ten percent
(10%) of the aggregate value of all of CCC’s and its Subsidiaries’ real property
and tangible personal property other than Inventory considered on a Consolidated
basis and determined after depreciation and in accordance with GAAP, as of
December 31, 2005.
 
8.5  Restricted Payment. CCC will not pay or declare any Restricted Payment to
any Person other than to Southern Union and its Subsidiaries. Restricted
Payments by CCC in any period shall not exceed the sum of (i) Consolidated Net
Income of CCC in such period (provided that for purpose of this Section 8.5(i),
Consolidated Net Income shall not include special dividends and distributions
received by CCC) and (ii) 75% of (a) special dividends or distributions received
by CCC in such period less (b) any special dividends that are required to be
paid by CCC to third parties under indemnification or refund arrangements with
such third parties in such period , provided that, concurrent with the making of
a Restricted Payment by CCC based on a special dividend or distribution
received, CCC shall prepay the Inter-Company Loan in an amount equal to 25% of
(a) special dividends or distributions received by CCC in such period less
(b) any special dividends that are required to be paid by CCC to third parties
under indemnification or refund arrangements with such third parties in such
period.  Notwithstanding the foregoing, CCC may use the proceeds of the
Inter-Company Loan as contemplated by Section 2.13 (Use of Proceeds). CCC will
not permit any Subsidiary to pay or declare any Restricted Payment to any Person
other than CCC.
 
8.6  Securities Credit Regulations. Neither CCC nor any Subsidiary will take or
permit any action which might cause the Loans or this Agreement to violate
Regulation G, Regulation T, Regulation U, Regulation X or any other regulation
of the Board of Governors of the Federal Reserve System or a violation of the
Securities Exchange Act of 1934, in each case as now or hereafter in effect.
 
8.7  Nature of Business. CCC will not, and will not permit any Subsidiary to,
make any material change in the nature of CCC’s business as carried on at the
date hereof.
 
8.8  Transactions with Related Parties. CCC will not, and will not permit any
Subsidiary to, enter into any transaction or agreement with any officer director
or holder (other than Southern Union and its Subsidiaries) of ten percent (10%)
or more of any class of the outstanding capital stock of CCC or any Subsidiary
(or any Affiliate of any such Person) unless the same is upon terms
substantially similar to those obtainable from wholly unrelated sources.
 
8.9  Hazardous Materials. CCC will not, and will not permit any Subsidiary to,
(a) cause or permit any Hazardous Materials to be placed, held, used, located,
or disposed of on, under or at any of such Person’s property or any part thereof
by any Person in a manner which could reasonably be expected to have a Material
Adverse Effect; (b) cause or permit any part of any of such Person’s property to
be used as a manufacturing, storage, treatment or disposal site for Hazardous
Materials, where such action could reasonably be expected to have a Material
Adverse Effect; or (c) cause or suffer any liens to be recorded against any of
such Person’s property as a consequence of, or in any way related to, the
presence, remediation, or disposal of Hazardous Materials in or about any of
such Person’s property, including any so-called state, federal or local
“superfund” lien relating to such matters, where such recordation could
reasonably be expected to have a Material Adverse Effect.
 
8.10  Use of Proceeds. CCC will not, and will not permit any Subsidiary to, use
the proceeds of any Loan for any purpose other than for purposes set forth in
Section 2.13 (Use of Proceeds); or use any such proceeds in a manner which
violates or results in a violation of any law or regulation.
 
8.11  Other Documents. CCC will not, and will not permit any Subsidiary to,
amend, restate or otherwise modify or waive any provision or condition of any
instrument or agreement relating to any secured Debt of such Person if the
effect of such modification or waiver is to increase the obligations of such
Person in a manner that is adverse to the Banks without the consent of the
Majority Banks.
 
9.  EVENTS OF DEFAULT; REMEDIES
 
If any of the following events shall occur, then the Agent shall at the request,
or may with the consent, of the Majority Banks, declare the Notes and all
interest accrued and unpaid thereon, and all other amounts payable under the
Notes, this Agreement and the other Loan Documents, to be forthwith due and
payable, whereupon the Notes, all such interest and all such other amounts,
shall become and be forthwith due and payable without presentment, demand,
protest, or further notice of any kind (including, without limitation, notice of
default, notice of intent to accelerate and notice of acceleration), all of
which are hereby expressly waived by the Borrower; provided, however, that with
respect to any Event of Default described in Sections 9.7 (Bankruptcy) or 9.8
(Dissolution) hereof, the entire unpaid principal amount of the Notes, all
interest accrued and unpaid thereon, and all such other amounts payable under
the Notes, this Agreement and the other Loan Documents, shall automatically
become immediately due and payable, without presentment, demand, protest, or any
notice of any kind (including, without limitation, notice of default, notice of
intent to accelerate and notice of acceleration), all of which are hereby
expressly waived by the Borrower:
 
9.1  Failure to Pay Obligations When Due. The Borrower fails to pay, repay or
prepay any principal on the date when due, or any other Obligation within five
Business Days after the date when due.
 
9.2  Intentionally Omitted.
 
9.3  Failure to Pay Other Debt. (a) The Borrower or any Subsidiary of the
Borrower fails to pay principal or interest on any unsecured Debt aggregating
more than $10,000,000 or any secured Debt when due and any related grace period
has expired, or the holder of any of such other Debt declares such Debt due
prior to its stated maturity because of the Borrower’s or any Subsidiary’s
default thereunder and the expiration of any related grace period; (b) Panhandle
Eastern or any of its Subsidiaries fails to pay principal or interest on any
other Debt aggregating more than $50,000,000 when due and any related grace
period has expired, or the holder of any of such other Debt declares such Debt
due prior to its stated maturity because of Panhandle Eastern’s or any such
Subsidiary’s default thereunder and the expiration of any related grace period;
(c) CCC or any of its Subsidiaries fails to pay principal or interest on any
other Debt aggregating more than $10,000,000 when due and any related grace
period has expired, or the holder of any of such other Debt declares such Debt
due prior to its stated maturity because of CCC’s or any such Subsidiary’s
default thereunder and the expiration of any related grace period; or (d) the
holder of any Debt aggregating more than $10,000,000 of Citrus Corp. declares
such Debt due prior to its stated maturity because of Citrus Corp.’s default
thereunder and the expiration of any related grace period.
 
9.4  Misrepresentation or Breach of Warranty. Any representation or warranty
made by any Loan Party herein or otherwise furnished to the Bank in connection
with this Agreement or any other Loan Document shall be incorrect, false or
misleading in any material respect when made.
 
9.5  Violation of Certain Covenants. Any Loan Party violates any covenant,
agreement or condition contained in Sections 5.6 (Existence), 5.7(c) (Notice of
Defaults), 6.1 (Financial Covenants), 6.2 (Liens), 6.3 (Debt), 6.5 (Merger), 6.6
(Sale of Assets), 6.7 (Restricted Payments), 7.1 (Liens), 7.2 (Debt), 7.3
(Merger, Consolidation), 7.4 (Sale of Assets), 7.5 (Restricted Payments), 8.1
(Liens), 8.2 (Debt), 8.3 (Merger, Consolidation), 8.4 (Sale of Assets) or 8.5
(Restricted Payments).
 
9.6  Violation of Other Covenants, Etc. Any Loan Party violates any other
covenant, agreement or condition contained herein (other than the covenants,
agreements and conditions set forth or described in Sections 9.1 (Failure to Pay
Obligations When Due), 9.3 (Cross Default), 9.4 (Representations), and 9.5
(Certain Covenants) above) or in any other Loan Document and such violation
shall not have been remedied within (30) days after the earlier of (i) actual
discovery by a Loan Party of such violation or (ii) written notice has been
received by the Borrower from the Bank or the holder of the Note.
 
9.7  Bankruptcy and Other Matters. Any Loan Party or Southern Union (a) makes an
assignment for the benefit of creditors; or (b) admits in writing its inability
to pay its debts generally as they become due; or (c) generally fails to pay its
debts as they become due; or (d) files a petition or answer seeking for itself,
or consenting to or acquiescing in, any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
applicable Debtor Law (including, without limitation, the Federal Bankruptcy
Code); or (e) there is appointed a receiver, custodian, liquidator, fiscal
agent, or trustee of any Loan Party or Southern Union or of the whole or any
substantial part of their respective assets; or (f) any court enters an order,
judgment or decree approving a petition filed against any Loan Party or Southern
Union seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any Debtor Law and either such
order, decree or judgment so filed against it is not dismissed or stayed (unless
and until such stay is no longer in effect) within thirty (30) days of entry
thereof or an order for relief is entered pursuant to any such law.
 
9.8  Dissolution. Any order is entered in any proceeding against any Loan Party
or Southern Union decreeing the dissolution, liquidation, winding-up or split-up
of any Loan Party or Southern Union, and such order remains in effect for thirty
(30) days.
 
9.9  Undischarged Judgment. (a) A final judgment or judgments in the aggregate,
that might be or give rise to Liens on any property of the Borrower or any of
its Subsidiaries, for the payment of money in excess of $10,000,000 shall be
rendered against the Borrower or any of its Subsidiaries and the same shall
remain undischarged for a period of sixty (60) days during which execution shall
not be effectively stayed, (b) a final judgment or judgments in the aggregate,
that might be or give rise to Liens on any property of Panhandle Eastern or any
of its Subsidiaries, for the payment of money in excess of $50,000,000 shall be
rendered against Panhandle Eastern or any of its Subsidiaries and the same shall
remain undischarged for a period of sixty (60) days during which execution shall
not be effectively stayed or (c) a final judgment or judgments in the aggregate,
that might be or give rise to Liens on any property of CCC or any of its
Subsidiaries, for the payment of money in excess of $10,000,000 shall be
rendered against CCC or any of its Subsidiaries and the same shall remain
undischarged for a period of sixty (60) days during which execution shall not be
effectively stayed.
 
9.10  Loan Documents. Any material provision in any Loan Document or the
Inter-Company Note shall for any reason cease to be valid and binding on any
party thereto except upon fulfillment of such party’s obligations thereunder (or
any such party shall so state in writing), or shall be declared null and void,
or the validity or enforceability thereof shall be contested by any party
thereto (other than the Agent and the Banks) or any Governmental Authority, or
any such party shall deny in writing that it has any liability or obligation
thereunder, except upon fulfillment of its obligations thereunder.
 
9.11  Change of Control. Any of the following events shall occur:
 
(a)  Panhandle Eastern shall cease to own or control, directly or indirectly,
100% of the Equity Interests and voting power of the Borrower;
 
(b)  Southern Union shall cease to own, or control, directly or indirectly, at
least 51% of the Equity Interests and voting power of Panhandle Eastern or of
CCC;
 
(c)  CCC shall cease to own or control, directly or indirectly, at least 50% of
the Equity Interests and voting power of Citrus Corp.; or
 
(d)  CCC shall cease to own or control, directly or indirectly, at least 40% of
the Equity Interests and voting power of Florida Gas Transmission Company.
 
9.12  Other Remedies. In addition to and cumulative of any rights or remedies
expressly provided for in this Section 9, if any one or more Events of Default
shall have occurred, the Agent shall at the request, and may with the consent,
of the Majority Banks proceed to protect and enforce the rights of the Banks
hereunder by any appropriate proceedings. The Agent shall at the request, and
may with the consent, of the Majority Banks also proceed either by the specific
performance of any covenant or agreement contained in this Agreement or by
enforcing the payment of the Notes or by enforcing any other legal or equitable
right provided under this Agreement or the Notes or otherwise existing under any
law in favor of the holder of the Notes.
 
9.13  Remedies Cumulative. No remedy, right or power conferred upon the Banks is
intended to be exclusive of any other remedy, right or power given hereunder or
now or hereafter existing at law, in equity, or otherwise, and all such
remedies, rights and powers shall be cumulative.
 
10.  THE AGENT
 
10.1  Authorization and Action. Each Bank hereby appoints HVB as its Agent under
and irrevocably authorizes the Agent (subject to this Section 10.1 and Section
10.7 (Successor Agent)) to take such action as the Agent on its behalf and to
exercise such powers under this Agreement, the Loan Documents and the Notes as
are delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto. Without limitation of the foregoing, each
Bank expressly authorizes the Agent to execute, deliver, and perform its
obligations under this Agreement and the Loan Documents, and to exercise all
rights, powers, and remedies that the Agent may have hereunder and thereunder.
As to any matters not expressly provided for by this Agreement (including,
without limitation, enforcement or collection of the Notes), the Agent shall not
be required to exercise any discretion or take any action, but shall be required
to act, or to refrain from acting (and shall be fully protected in so acting or
refraining from acting), upon the instructions of the Majority Banks, and such
instructions shall be binding upon all the Banks and all holders of any Note;
provided, however, that the Agent shall not be required to take any action which
exposes the Agent to personal liability or which is contrary to this Agreement
or applicable law. The Agent agrees to give to each Bank prompt notice of each
notice given to it by the Borrower pursuant to the terms of this Agreement.
 
10.2  Agent’s Reliance, Etc. Neither the Agent nor any of its directors,
officers, agents, or employees shall be liable to any Bank for any action taken
or omitted to be taken by it or them under or in connection with this Agreement,
the Notes and the other Loan Documents, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Agent: (a) may treat the original or any successor holder of any
Note as the holder thereof until the Agent receives notice from the Bank which
is the payee of such Note concerning the assignment of such Note; (b) may employ
and consult with legal counsel (including counsel for the Borrower), independent
public accountants, and other experts selected by it and shall not be liable to
any Bank for any action taken, or omitted to be taken, in good faith by it or
them in accordance with the advice of such counsel, accountants, or experts
received in such consultations and shall not be liable for any negligence or
misconduct of any such counsel, accountants, or other experts; (c) makes no
warranty or representation to any Bank and shall not be responsible to any Bank
for any opinions, certifications, statements, warranties, or representations
made in or in connection with this Agreement; (d) shall not have any duty to any
Bank to ascertain or to inquire as to the performance or observance of any of
the terms, covenants, or conditions of this Agreement or any other instrument or
document furnished pursuant thereto or to satisfy itself that all conditions to
and requirements for any Loan have been met or that the Borrower is entitled to
any Loan or to inspect the property (including the books and records) of the
Borrower or any Subsidiary; (e) shall not be responsible to any Bank for the due
execution, legality, validity, enforceability, genuineness, sufficiency, or
value of this Agreement or any other instrument or document furnished pursuant
thereto; and (f) shall incur no liability under or in respect of this Agreement
by acing upon any notice, consent, certificate, or other instrument or writing
believed by it to be genuine and signed or sent by the proper party or parties.
 
10.3  Defaults. The Agent shall not be deemed to have knowledge of the
occurrence of a Default (other than the nonpayment of principal of or interest
hereunder or of any fees) unless the Agent has received notice from a Bank or
the Borrower specifying such Default and stating that such notice is a Notice of
Default. In the event that the Agent receives such a notice of the occurrence of
a Default, the Agent shall give prompt notice thereof to the Banks (and shall
give each Bank prompt notice of each such nonpayment). The Agent shall (subject
to Section 10.7 (Successor Agent)) take such action with respect to such
Default; provided that, unless and until the Agent shall have received the
directions referred to in Sections 10.1 (Authorization and Action) or 10.7
(Successor Agent), the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default as it
shall deem advisable and in the best interest of the Banks.
 
10.4  HVB and Affiliates. With respect to its Commitment, any Loan made by it,
and the Note issued to it, HVB shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it were not the
Agent; and the term “Bank” or “Banks” shall, unless otherwise expressly
indicated, include HVB in its individual capacity. HVB and its respective
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Borrower,
any of its respective Affiliates and any Person who may do business with or own
securities of the Borrower or any such Affiliate, all as if HVB were not the
Agent and without any duty to account therefor to the Banks.
 
10.5  Non-Reliance on Agent and Other Banks. Each Bank agrees that it has,
independently and without reliance on the Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of the Borrower and each Subsidiary and its decision to enter into the
transactions contemplated by this Agreement and that it will, independently and
without reliance upon the Agent or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement.
The Agent shall not be required to keep itself informed as to the performance or
observance by the Borrower of this Agreement or to inspect the properties or
books of Panhandle Eastern, the Borrower or any Subsidiary. Except for notices,
reports, and other documents and information expressly required to be furnished
to the Banks by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition, or business of Southern Union,
Panhandle Eastern, the Borrower or any Subsidiary (or any of their Affiliates)
which may come into the possession of the Agent or any of its Affiliates.
 
10.6  Indemnification. Notwithstanding anything to the contrary herein
contained, the Agent shall be fully justified in failing or refusing to take any
action hereunder unless it shall first be indemnified to its satisfaction by the
Banks against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, and disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of its taking or continuing to take
any action. Each Bank agrees to indemnify the Agent (to the extent not
reimbursed by the Borrower), according to such Bank’s Pro Rata Percentage, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, and disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Agent in any way relating to or arising out of this Agreement or the Notes or
any action taken or omitted by the Agent under this Agreement or the Notes;
provided that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, or disbursements resulting from the gross negligence or willful
misconduct of the person being indemnified; and provided, further, that it is
the intention of each Bank to indemnify the Agent against the consequences of
the Agent’s own negligence, whether such negligence be sole, joint, concurrent,
active or passive. Without limitation of the foregoing, each Bank agrees to
reimburse the Agent promptly upon demand for its Pro Rata Percentage of any
out-of-pocket expenses (including attorneys’ fees) incurred by the Agent in
connection with the preparation, administration, or enforcement of, or legal
advice in respect of rights or responsibilities under, this Agreement and the
Notes, to the extent that the Agent is not reimbursed for such expenses by the
Borrower.
 
10.7  Successor Agent. The Agent may resign at any time as Agent under this
Agreement by giving written notice thereof to the Banks and the Borrower and may
be removed at any time with or without cause by the Majority Banks. Upon any
such resignation or removal, the Majority Banks shall have the right to appoint
a successor Agent. If no successor Agent shall have been so appointed by the
Majority Banks or shall have accepted such appointment within thirty (30) days
after the retiring Agent’s giving of notice of resignation or the Majority
Banks’ removal of the retiring Agent, then the retiring Agent may, on behalf of
the Banks, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent’s resignation or removal hereunder as Agent, the
provisions of this Section 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
 
10.8  Agent’s Reliance. The Borrower shall notify the Agent in writing of the
names of its officers and employees authorized to request a Loan on behalf of
the Borrower and shall provide the Agent with a specimen signature of each such
officer or employee. The Agent shall be entitled to rely conclusively on such
officer’s or employee’s authority to request a Loan on behalf of the Borrower
until the Agent receives written notice from the Borrower to the contrary. The
Agent shall have no duty to verify the authenticity of the signature appearing
on any Notice of Borrowing, and, with respect to any oral request for a Loan,
the Agent shall have no duty to verify the identity of any Person representing
himself as one of the officers or employees authorized to make such request on
behalf of the Borrower. Neither the Agent nor any Bank shall incur any liability
to the Borrower in acting upon any telephonic notice referred to above which the
Agent or such Bank believes in good faith to have been given by a duly
authorized officer or other Person authorized to borrow on behalf of the
Borrower or for otherwise acting in good faith.
 
11.  GUARANTY
 
11.1  Guaranty. Each Guarantor hereby absolutely, unconditionally and
irrevocably guarantees the punctual payment when due, whether at scheduled
maturity or by acceleration, demand or otherwise, of all Obligations of the
Borrower now or hereafter existing under or in respect of the Loan Documents
(including, without limitation, any extensions, modifications, substitutions,
amendments or renewals of any or all of the foregoing Obligations), whether
direct or indirect, absolute or contingent, and whether for principal, interest,
premiums, fees, indemnities, contract causes of action, costs, expenses or
otherwise (such Obligations being the “Guaranteed Obligations”).
 
11.2  Guaranty Absolute. Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of any Bank with
respect thereto. The Obligations of each Guarantor under or in respect of this
Guaranty are independent of any Obligations of the Borrower under or in respect
of the Loan Documents, and a separate action or actions may be brought and
prosecuted against each Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against the Borrower or whether the Borrower is
joined in any such action or actions. The liability of each Guarantor under this
Guaranty shall be irrevocable, absolute and unconditional irrespective of, and
each Guarantor hereby irrevocably waives any defenses it may now have or
hereafter acquire in any way relating to, any or all of the following:
 
(a)  any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
 
(b)  any change in the time, manner or place of payment of, or in any other term
of, all or any of the Guaranteed Obligations or any other Obligations of the
Borrower under or in respect of the Loan Documents, or any other amendment or
waiver of or any consent to departure from any Loan Document, including, without
limitation, any increase in the Guaranteed Obligations resulting from the
extension of additional credit to any Loan Party or any of its Subsidiaries or
otherwise;
 
(c)  any taking, exchange, release or non-perfection of any collateral, or any
taking, release or amendment or waiver of, or consent to departure from, any
other guaranty, for all or any of the Guaranteed Obligations;
 
(d)  any manner of application of any collateral, or proceeds thereof, to all or
any of the Guaranteed Obligations, or any manner of sale or other disposition of
any collateral for all or any of the Guaranteed Obligations or any other
Obligations of any Loan Party under the Loan Documents or any other assets of
any Loan Party or any of its Subsidiaries;
 
(e)  any change, restructuring or termination of the corporate structure or
existence of any Loan Party or any of its Subsidiaries;
 
(f)  any failure of any Bank to disclose to any Loan Party any information
relating to the business, operations, financial condition, assets or prospects
of any other Loan Party now or hereafter known to such Bank (each Guarantor
waiving any duty on the part of the Banks to disclose such information);
 
(g)  the failure of any other Person to execute or deliver any other guaranty or
agreement or the release or reduction of liability of any other guarantor or
surety with respect to the Guaranteed Obligations; or
 
(h)  any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by any Bank
that might otherwise constitute a defense available to, or a discharge of, any
Loan Party or any other guarantor or surety.
 
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Bank or any other Person upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as
though such payment had not been made.
 
11.3  Waivers and Acknowledgments.
 
(a)  Each Guarantor hereby unconditionally and irrevocably waives promptness,
diligence, notice of acceptance, presentment, demand for performance, notice of
nonperformance, default, acceleration, protest or dishonor and any other notice
with respect to any of the Guaranteed Obligations and this Guaranty and any
requirement that any Bank protect, secure, perfect or insure any Lien or any
property subject thereto or exhaust any right or take any action against any
Loan Party or any other Person or any collateral.
 
(b)  Each Guarantor hereby unconditionally and irrevocably waives any right to
revoke this Guaranty and acknowledges that this Guaranty is continuing in nature
and applies to all Guaranteed Obligations, whether existing now or in the
future.
 
(c)  Each Guarantor hereby unconditionally and irrevocably waives (i) any
defense arising by reason of any claim or defense based upon an election of
remedies by any Bank that in any manner impairs, reduces, releases or otherwise
adversely affects the subrogation, reimbursement, exoneration, contribution or
indemnification rights of each Guarantor or other rights of such Guarantor to
proceed against the Borrower, any other guarantor or any other Person and (ii)
any defense based on any right of set-off or counterclaim against or in respect
of the Obligations of such Guarantor hereunder.
 
(d)  Each Guarantor hereby unconditionally and irrevocably waives any duty on
the part of any Bank to disclose to any Guarantor any matter, fact or thing
relating to the business, operations, financial condition, assets or prospects
of the Borrower or any of its Subsidiaries now or hereafter known by such Bank.
 
(e)  Each Guarantor acknowledges that it will receive substantial direct and
indirect benefits from the financing arrangements contemplated by the Loan
Documents and that the waivers set forth in Section 11.2 (Guaranty Absolute) and
this Section 11.3 are knowingly made in contemplation of such benefits.
 
11.4  Subrogation. Each Guarantor hereby unconditionally and irrevocably agrees
not to exercise any rights that it may now have or hereafter acquire against the
Borrower that arise from the existence, payment, performance or enforcement of
such Guarantor’s Obligations under or in respect of this Guaranty or any other
Loan Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of any Bank against the Borrower or any other
insider guarantor, whether or not such claim, remedy or right arises in equity
or under contract, statute or common law, including, without limitation, the
right to take or receive from the Borrower, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall have been
paid in full in cash and the Commitments shall have expired or been terminated.
If any amount shall be paid to any Guarantor in violation of the immediately
preceding sentence at any time prior to the later of (a) the payment in full in
cash of the Guaranteed Obligations and all other amounts payable under this
Guaranty and (b) the Maturity Date, such amount shall be received and held in
trust for the benefit of the Banks, shall be segregated from other property and
funds of such Guarantor and shall forthwith be paid or delivered to the Agent in
the same form as so received (with any necessary endorsement or assignment) to
be credited and applied to the Guaranteed Obligations and all other amounts
payable under this Guaranty, whether matured or unmatured, in accordance with
the terms of the Loan Documents or other amounts payable under this Guaranty
thereafter arising. If (i) any Guarantor shall make payment to any Bank of all
or any part of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall have been
paid in full in cash and (iii) the Maturity Date shall have occurred, the Banks
will, at such Guarantor’s request and expense, execute and deliver to such
Guarantor appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to such Guarantor of
an interest in the Guaranteed Obligations resulting from such payment made by
such Guarantor pursuant to this Guaranty.
 
11.5  Subordination. Each Guarantor hereby subordinates any and all debts,
liabilities and other Obligations owed to such Guarantor by the Borrower (the
“Subordinated Obligations”) to the Guaranteed Obligations to the extent and in
the manner hereinafter set forth in this Section 11.5:
 
(a)  Except during the continuance of a Default (including the commencement and
continuation of any proceeding under any Debtor Law relating to the Borrower), a
Guarantor may receive regularly scheduled payments from the Borrower on account
of the Subordinated Obligations. After the occurrence and during the continuance
of any Default (including the commencement and continuation of any proceeding
under any Debtor Law relating to the Borrower), however, unless the Agent
otherwise agrees, no Guarantor shall demand, accept or take any action to
collect any payment on account of the Subordinated Obligations.
 
(b)  In any proceeding under any Debtor Law relating to the Borrower, each
Guarantor agrees that the Banks shall be entitled to receive payment in full in
cash of all Guaranteed Obligations (including all interest and expenses accruing
after the commencement of a proceeding under any Debtor Law, whether or not
constituting an allowed claim in such proceeding (“Post Petition Interest”))
before any Guarantor receives payment of any Subordinated Obligations.
 
(c)  After the occurrence and during the continuance of any Default (including
the commencement and continuation of any proceeding under any Debtor Law
relating to the Borrower), each Guarantor shall, if the Agent so requests,
collect, enforce and receive payments on account of the Subordinated Obligations
as trustee for the Banks and deliver such payments to the Agent on account of
the Guaranteed Obligations (including all Post Petition Interest), together with
any necessary endorsements or other instruments of transfer, but without
reducing or affecting in any manner the liability of such Guarantor under the
other provisions of this Guaranty.
 
(d)  After the occurrence and during the continuance of any Default (including
the commencement and continuation of any proceeding under any Debtor Law
relating to the Borrower), the Agent is authorized and empowered (but without
any obligation to so do), in its discretion, (i) in the name of a Guarantor, to
collect and enforce, and to submit claims in respect of, Subordinated
Obligations and to apply any amounts received thereon to the Guaranteed
Obligations (including any and all Post Petition Interest), and (ii) to require
each Guarantor (A) to collect and enforce, and to submit claims in respect of,
Subordinated Obligations and (B) to pay any amounts received on such obligations
to the Agent for application to the Guaranteed Obligations (including any and
all Post Petition Interest).
 
11.6  Continuing Guaranty. This Guaranty is a continuing guaranty and shall
remain in full force and effect until the later of (a) the payment in full in
cash of the Guaranteed Obligations and all other amounts payable under this
Guaranty and (b) the Maturity Date.
 
12.  MISCELLANEOUS
 
12.1  Amendments, Waivers, Etc. No amendment or waiver of any provision of any
Loan Document, nor consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Borrower and the Majority Banks, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by each Bank, do any of the following:
 
(a)  waive any of the conditions specified in Section 4 (Conditions to Funding);
 
(b)  increase the Commitment of any Bank or alter the term thereof, or subject
any Bank to any additional or extended obligations;
 
(c)  change the principal of, or decrease the rate of interest on, the Loans or
any Note, or any fees or other amounts payable hereunder (except that the
Majority Banks may waive in writing the increase in Applicable Margin resulting
from the occurrence of an SUG Change of Control);
 
(d)  postpone any date fixed for any payment of principal of, or interest on,
the Loans or any Note, or any fees (including, without limitation, any fee) or
other amounts payable hereunder;
 
(e)  change the definition of “Majority Banks” or the number of Banks which
shall be required for Banks, or any of them, to take any action hereunder;
 
(f)  amend this Section 12.1; or
 
(g)  reduce or limit the obligations of any Guarantor under the Loan Documents
or release any Guarantor from its obligations under the Loan Documents;
 
and provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to each Bank, affect the rights or
duties of the Agent under any Loan Document. No failure or delay on the part of
any Bank or the Agent in exercising any power or right hereunder shall operate
as a waiver thereof nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of any
other right or power. No course of dealing between the Borrower and any Bank or
the Agent shall operate as a waiver of any right of any Bank or the Agent. No
modification or waiver of any provision of this Agreement or the Note nor
consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be in writing, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.
 
12.2  Reimbursement of Expenses.
 
(a)  The Borrower agrees to pay on demand (and whether or not the Funding Date
occurs) (1) all reasonable and documented out-of-pocket costs and expenses of
the Agent, including reasonable and documented fees and expenses of a single
counsel for the Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of this
Agreement or any amendments, modifications or waivers of the provisions hereof,
and (2) all costs and expenses of the Agent and each Bank in connection with the
enforcement of the Loan Documents, whether in any action, suit or litigation, or
any bankruptcy, insolvency or other similar proceeding affecting creditors’
rights generally (including, without limitation, the reasonable fees and
expenses of counsel for the Agent and each Bank with respect thereto). The
Borrower further agrees to pay any stamp or other taxes that may be payable in
connection with the execution or delivery of any Loan Document.
 
(b)  If any payment of principal of, or Conversion of, any Eurodollar Rate Loan
is made by the Borrower to or for the account of a Bank other than on the last
day of the Interest Period for such Loan, as a result of a payment or Conversion
pursuant to Section 2.5 (Prepayments), 2.8 (Conversion of Loans) or 2.9(d)
(Increased Costs, Etc.), acceleration of the maturity of the Notes pursuant to
Section 9 (Events of Default; Remedies) or for any other reason, or by an
Eligible Assignee to a Bank other than on the last day of the Interest Period
for such Loan upon an assignment of rights and obligations under this Agreement
pursuant to Section 12.14 (Sale or Assignment) as a result of a demand by the
Borrower pursuant to Section 12.14(a), or if the Borrower fails to make any
payment or prepayment of a Loan for which a notice of prepayment has been given,
whether pursuant to Section 2.3 (Repayment of Loans), 2.5 (Prepayments) or
Section 9 (Events of Default; Remedies) or otherwise, the Borrower shall, upon
demand by such Bank (with a copy of such demand to the Agent), pay to the Agent
for the account of such Bank any amounts required to compensate such Bank for
any additional losses, costs or expenses reasonably incurred by such Bank as a
result of such payment or Conversion or such failure to pay or prepay, as the
case may be, including, without limitation, any loss, cost or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by any Bank to fund or maintain such Loan.
 
(c)  The obligations of the Borrower under this Section 12.2 shall survive the
termination of this Agreement and/or the payment of the Notes.
 
12.3  Notices. Any communications between the parties hereto or notices provided
herein to be given shall be given to the following addresses:
 
            (a)         If to Panhandle Eastern, to: Panhandle Eastern Pipe Line
Company, LP
c/o Southern Union Company
5444 Westheimer Road
Houston, Texas 77056

 
Attn:
Richard N. Marshall,

Senior Vice President and
Chief Financial Officer
Phone: (713) 989-7000
Fax: (713) 989-1213
 
                with copies to: Southern Union Company
5444 Westheimer Road
Houston, Texas 77056

 
Attn:
Monica M. Gaudiosi,

Senior Vice President and
Associate General Counsel
Phone: (713) 989-7567
Fax: (713) 989-1213
 
and
 
Fleischman and Walsh, L.L.P.
1919 Pennsylvania Avenue, N.W.
Suite 600
Washington, D.C. 20006
Attn: Seth M. Warner
Phone: (202) 939-7945
Fax: (202) 265-5706
 
        (b)         If to the Borrower, to: Trunkline LNG Holdings LLC
c/o Southern Union Company
5444 Westheimer Road
Houston, Texas 77056

 
Attn:
Richard N. Marshall,

Senior Vice President and
Chief Financial Officer
Phone: (713) 989-7000
Fax: (713) 989-1213
 
            with copies to: Southern Union Company
5444 Westheimer Road
Houston, Texas 77056

 
Attn:
Monica M. Gaudiosi,

Senior Vice President and
Associate General Counsel
Phone: (713) 989-7567
Fax: (713) 989-1213
 
and
 
Fleischman and Walsh, L.L.P.
1919 Pennsylvania Avenue, N.W.
Suite 600
Washington, D.C. 20006
Attn: Seth M. Warner
Phone: (202) 939-7945
Fax: (202) 265-5706
 
        (c)         If to CCC, to: CrossCountry Citrus, LLC
c/o Southern Union Company
5444 Westheimer Road
Houston, Texas 77056

 
Attn:
Richard N. Marshall,

Senior Vice President and
Chief Financial Officer
Phone: (713) 989-7000
Fax: (713) 989-1213
 
            with copies to: Southern Union Company
5444 Westheimer Road
Houston, Texas 77056

 
Attn:
Monica M. Gaudiosi,

Senior Vice President and
Associate General Counsel
Phone: (713) 989-7567
Fax: (713) 989-1213
 
and
 
Fleischman and Walsh, L.L.P.
1919 Pennsylvania Avenue, N.W.
Suite 600
Washington, D.C. 20006
Attn: Seth M. Warner
Phone: (202) 939-7945
Fax: (202) 265-5706
 
            If to the Agent, to: Bayerische Hypo- und Vereinsbank AG, New York
 Branch
150 East 42nd Street
New York, NY 10017-4679
Attn: Agency Services, Wayne Miller
Tel: 212-672-5930
Fax: 212-672-6025
 
            with copies to: DLA Piper US LLP
1251 Avenue of the Americas
New York, NY 10020
Attn: Nicolai Sarad
Phone: (212) 335-4642
Fax: (212) 884-8542
 
and if to any Bank, at the address specified below its name on the signature
pages hereof, or as to the Borrower or the Agent, to such other address as shall
be designated by such party in a written notice to the other party and, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Borrower and the Agent. All notices or other
communications required or permitted to be given hereunder shall be in writing
and shall be considered as properly given (a) if delivered in person, (b) if
sent by overnight delivery service (including Federal Express, UPS, ETA, Emery,
DHL, AirBorne and other similar overnight delivery services), (c) if mailed by
first class United States Mail, postage prepaid, registered or certified with
return receipt requested or (d) if sent by facsimile or other electronic
transmission. Notice so given shall be effective upon receipt by the addressee,
except that communication or notice so transmitted by direct written electronic
means shall be deemed to have been validly and effectively given on the day (if
a Business Day and, if not, on the next following Business Day) on which it is
transmitted if transmitted before 4:00 p.m. (New York time), recipient’s time,
and if transmitted after that time, on the next following Business Day;
provided, however, that if any notice is tendered to an addressee and the
delivery thereof is refused by such addressee, such notice shall be effective
upon such tender. Any party shall have the right to change its address for
notice hereunder to any other location within the continental United States by
giving of 30 days’ notice to the other parties in the manner set forth above.
 
12.4  Governing Law. This Agreement, and any instrument or agreement required
hereunder (to the extent not otherwise expressly provided for therein), shall be
governed by, and construed under, the laws of the State of New York, without
reference to conflicts of laws (other than Section 5-1401 and Section 5-1402 of
the New York General Obligations Law).
 
12.5  Waiver of Jury Trial. THE AGENT, THE BANKS AND EACH LOAN PARTY HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
COURSE OR CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR
ACTIONS, OF THE AGENT, THE BANKS OR THE LOAN PARTIES. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE BANKS TO ENTER INTO THIS AGREEMENT.
 
12.6  Consent to Jurisdiction. The Agent, the Banks and each Loan Party agree
that any legal action or proceeding by or against any Loan Party or with respect
to or arising out of this Agreement or any other Loan Document may be brought in
or removed to the Supreme Court of the State of New York, in and for the County
of New York, or the United States District Court for the Southern District of
New York, and any court of appeals from either therefrom as the Agent may elect.
By execution and delivery of the Agreement, each of the Banks, the Agent and
each Loan Party accepts, for themselves and in respect of their property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
Agent, the Banks and each Loan Party irrevocably consent to the service of
process out of any of the aforementioned courts in any manner permitted by law.
Nothing herein shall affect the right of the Agent and the Banks to bring legal
action or proceedings in any other competent jurisdiction. The Agent, the Banks
and each Loan Party further agree that the aforesaid courts of the State of New
York and of the United States of America shall have exclusive jurisdiction with
respect to any claim or counterclaim of any Loan Party based upon the assertion
that the rate of interest charged by the Banks on or under this Agreement, the
Loans and/or the other Loan Documents is usurious. The Agent, the Banks and each
Loan Party hereby waive any right to stay or dismiss any action or proceeding
under or in connection with this Agreement or any other Loan Document brought
before the foregoing courts on the basis of an inconvenient forum.
 
12.7  Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants contained herein or made in writing by
any Loan Party in connection herewith shall survive the execution and delivery
of the Loan Documents and the Notes, and will bind and inure to the benefit of
the respective successors and assigns of the parties hereto, whether so
expressed or not, provided that the undertaking of the Banks to make the Loans
to the Borrower shall not inure to the benefit of any successor or assign of the
Borrower. No investigation at any time made by or on behalf of the Banks shall
diminish the Banks’ rights to rely on any representations made herein or in
connection herewith. All statements contained in any certificate or other
written instrument delivered by any Loan Party or by any Person authorized by
the Borrower under or pursuant to this Agreement or in connection with the
transactions contemplated hereby shall constitute representations and warranties
hereunder as of the time made by such Loan Party.
 
12.8  Counterparts. This Agreement may be executed in several counterparts, and
by the parties hereto on separate counterparts, and each counterpart, when so
executed and delivered, shall constitute an original instrument and all such
separate counterparts shall constitute but one and the same instrument.
 
12.9  Severability. Should any clause, sentence, paragraph or section of this
Agreement be judicially declared to be invalid, unenforceable or void, such
decision shall not have the effect of invalidating or voiding the remainder of
this Agreement, and the parties hereto agree that the part or parts of this
Agreement so held to be invalid, unenforceable or void will be deemed to have
been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein. Each
covenant contained in this Agreement shall be construed (absent an express
contrary provision herein) as being independent of each other covenant contained
herein, and compliance with any one covenant shall not (absent such an express
contrary provision) be deemed to excuse compliance with one or more other
covenants.
 
12.10  Descriptive Headings. The section headings in this Agreement have been
inserted for convenience only and shall be given no substantive meaning or
significance whatsoever in construing the terms and provisions of this
Agreement.
 
12.11  Accounting Terms. All accounting terms used herein which are not
expressly defined in the Agreement, or the respective meanings of which are not
otherwise qualified, shall have the respective meanings given to them in
accordance with GAAP.
 
12.12  Limitation of Liability. No claim may be made by any Person for any
special, indirect, consequential, or punitive damages in respect to any claim
for breach of contract arising out of or related to the transactions
contemplated by this Agreement, or any act, omission, or event occurring in
connection herewith and the parties hereto hereby waive, release, and agree not
to sue upon any claim for any such damages, whether or not accrued and whether
or not known or suspected to exist in its favor.
 
12.13  Set-Off. Each Loan Party hereby gives and confirms to each Bank a right
of set-off of all moneys, securities and other property of such Loan Party
(whether special, general or limited) and the proceeds thereof, now or hereafter
delivered to remain with or in transit in any manner to such Bank, its
Affiliates, correspondents or agents from or for such Loan Party, whether for
safekeeping, custody, pledge, transmission, collection or otherwise or coming
into possession of such Bank, its Affiliates, correspondents or agents in any
way, and also, any balance of any deposit accounts and credits of such Loan
Party with, and any and all claims of security for the payment of the Loans and
of all other liabilities and obligations now or hereafter owed by any Loan Party
to such Bank, contracted with or acquired by such Bank, whether such liabilities
and obligations be joint, several, absolute, contingent, secured, unsecured,
matured or unmatured, and each Loan Party hereby authorizes each Bank, its
Affiliates, correspondents or agents at any time or times, without prior notice,
to apply such money, securities, other property, proceeds, balances, credits of
claims, or any part of the foregoing, to such liabilities in such amounts as it
may select, whether such liabilities be contingent, unmatured or otherwise, and
whether any collateral security therefor is deemed adequate or not. The rights
described herein shall be in addition to any collateral security, if any,
described in any separate agreement executed by any Loan Party.
 
12.14  Sale or Assignment.
 
(a)  Each Bank may assign and, so long as no Default shall have occurred and be
continuing pursuant to Section 9.1 (Failure to Pay Obligations When Due) or 9.7
(Bankruptcy and Other Matters), if demanded by the Borrower (pursuant to Section
2.15 (Replacement of Banks)) upon at least five Business Days’ notice to such
Bank and the Agent, a Bank will assign, to one or more Eligible Assignees all or
a portion of its rights and obligations under this Agreement and the other Loan
Documents (including, without limitation, all or a portion of the Loans owing to
it and the Note or Notes held by it); provided, however, that
 
(i)  each such assignment shall be of a uniform, and not a varying, percentage
of all rights and obligations under and in respect of the Loan Agreement;
 
(ii)  except in the case of an assignment of all of a Bank’s rights and
obligations under this Agreement or any assignment to any Bank, an Affiliate of
any Bank or an Approved Fund, the aggregate amount of the Loans being assigned
to such assignee pursuant to such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than $1,000,000;
 
(iii)  except in the case of an assignment to a Person that, immediately prior
to such assignment, was a Bank, an Affiliate of any Bank or an Approved Fund,
such assignment shall be approved by the Agent, and so long as no Default shall
have occurred and be continuing pursuant to Section 9.1 (Failure to Pay
Obligations When Due) or 9.7 (Bankruptcy and Other Matters) at the time of
effectiveness of such assignment, the Borrower (in each case such approvals not
to be unreasonably withheld or delayed); provided that no Borrower approval
shall be required for any assignment made by HVB to any Eligible Assignee from
the Closing Date through and including the two-month anniversary of the Funding
Date;
 
(iv)  each such assignment made as a result of a demand by the Borrower pursuant
to this Section 12.14 shall be made in accordance with Section 2.15 (Replacement
of Banks);
 
(v)  no Bank shall be obligated to make any such assignment as a result of a
demand by the Borrower pursuant to this Section 12.14 unless and until such Bank
shall have received one or more payments from either the Borrower or one or more
assignees in an aggregate amount at least equal to the aggregate outstanding
principal amount of the Loans owing to such Bank, together with accrued interest
thereon to the date of payment of such principal amount and all other amounts
payable to such Bank under this Agreement;
 
(vi)  the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with any Note or Notes subject to such assignment and a
processing and recordation fee of $3,500 (provided, however, that for each such
assignment made as a result of a demand by the Borrower pursuant to this Section
12.14, the Borrower shall pay to the Agent the applicable processing and
recordation fee); and
 
(vii)  the assignee, if it shall not be a Bank, shall deliver to the Agent an
administrative questionnaire in the form prepared by the Agent.
 
(b)  Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in such Assignment and Acceptance,
 
(i)  the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder
and
 
(ii)  the Bank assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (other than its rights under Sections 2.9
(Increased Costs), 2.11 (Taxes) and 12.2 (Reimbursement of Expenses)) to the
extent any claim thereunder relates to an event arising prior to such
assignment) and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all of the remaining portion
of an assigning Bank’s rights and obligations under this Agreement, such Bank
shall cease to be a party hereto).
 
(c)  By executing and delivering an Assignment and Acceptance, each Bank
assignor thereunder and each assignee thereunder confirm to and agree with each
other and the other parties thereto and hereto as follows:
 
(i)  other than as provided in such Assignment and Acceptance, such assigning
Bank makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with any Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto;
 
(ii)  such assigning Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or the
performance or observance by any Loan Party of any of its obligations under any
Loan Document or any other instrument or document furnished pursuant thereto;
 
(iii)  such assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements most recently delivered
hereunder and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance;
 
(iv)  such assignee will, independently and without reliance upon any Agent,
such assigning Bank or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement;
 
(v)  such assignee confirms that it is an Eligible Assignee;
 
(vi)  such assignee appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers and discretion under the Loan
Documents as are delegated to such Agent by the terms hereof and thereof,
together with such powers and discretion as are reasonably incidental thereto;
and
 
(vii)  such assignee agrees that it will perform in accordance with their terms
all of the obligations that by the terms of this Agreement are required to be
performed by it as a Bank.
 
(d)  The Agent shall maintain at its address a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation of
the names and addresses of the Banks and the principal amount of the Loans owing
to, each Bank from time to time (the “Register”). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Banks may treat each Person whose name is recorded
in the Register as a Bank hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Agent or any
Bank at any reasonable time and from time to time upon reasonable prior notice.
 
(e)  Upon its receipt of an Assignment and Acceptance executed by an assigning
Bank and an assignee, together with any Note or Notes subject to such
assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit C hereto, (1) accept such
Assignment and Acceptance, (2) record the information contained therein in the
Register and (3) give prompt notice thereof to the Borrower. In the case of any
assignment by a Bank, within five Business Days after its receipt of such
notice, the Borrower, at its own expense, shall execute and deliver to the Agent
in exchange for the surrendered Note or Notes a new Note to the order of such
Eligible Assignee in an amount equal to the Loans assumed by it pursuant to such
Assignment and Acceptance and, if any assigning Bank has retained any Loans
hereunder, a new Note to the order of such assigning Bank in an amount equal to
the Loans retained by it hereunder. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes and shall be dated the effective date of such
Assignment and Acceptance. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
Section 12.14.
 
(f)  Each Bank may sell participations to one or more Persons (other than any
Loan Party or any of its Affiliates) in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the Loans owing to it and the Note or Notes (if any)
held by it); provided, however, that (1) such Bank’s obligations under this
Agreement shall remain unchanged, (2) such Bank shall remain solely responsible
to the other parties hereto for the performance of such obligations, (3) such
Bank shall remain the holder of any such Note for all purposes of this
Agreement, (4) the Borrower, the Agent and the other Banks shall continue to
deal solely and directly with such Bank in connection with such Bank’s rights
and obligations under this Agreement and (5) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by any Loan
Party therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, or release any Guarantor.
Subject to the last two sentences of this clause (f), the Borrower agrees that
each participant shall be entitled to the benefits of Section 2.9 (Increased
Costs), 2.11 (Taxes) and 12.2(b) (Breakage Expenses) to the same extent as if it
were a Bank and had acquired its interest by assignment. To the extent permitted
by law, each participant also shall be entitled to the benefits of Section 12.13
(Set-Off) as though it were a Bank, provided such participant agrees to be
subject to Section 2.12 (Sharing of Payments, Etc.) as though it were a Bank. A
participant shall not be entitled to receive any greater payment under Section
2.9 (Increased Costs) or 2.11 (Taxes) than the applicable Bank would have been
entitled to receive with respect to the participation sold to such participant,
unless the sale of the participation to such participant is made with the
Borrower’s prior written consent. A participant that is organized under the laws
of a jurisdiction outside the United States shall not be entitled to the
benefits of Section 2.11 (Taxes) unless the Borrower is notified of the
participation sold to such participant and such participant agrees, for the
benefit of the Borrower, to comply with Section 2.11(e) as though it were a
Bank.
 
(g)  Any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 12.14, disclose to
the assignee or participant or proposed assignee or participant any information
relating to the Borrower furnished to such Bank by or on behalf of the Borrower;
provided, however, that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any Confidential Information received by it from such Bank.
 
(h)  Notwithstanding any other provision to the contrary set forth in this
Agreement, any Bank may at any time create a security interest in all or any
portion of its rights under this Agreement and the other Loan Documents
(including, without limitation, the Loans owing to it and the Note or Notes held
by it) in favor of any Federal Reserve Bank.
 
(i)  Notwithstanding anything to the contrary contained herein, any Bank that is
a fund that invests in bank loans may create a security interest in all or any
portion of the Loans owing to it and the Note or Notes held by it to the trustee
for holders of obligations owed, or securities issued, by such fund as security
for such obligations or securities, provided, that unless and until such trustee
actually becomes a Bank in compliance with the other provisions of this Section
12.14, (1) no such pledge shall release the pledging Bank from any of its
obligations under the Loan Documents and (2) such trustee shall not be entitled
to exercise any of the rights of a Bank under the Loan Documents even though
such trustee may have acquired ownership rights with respect to the pledged
interest through foreclosure or otherwise.
 
12.15  Interest. All agreements between a Loan Party, the Agent or any Bank,
whether now existing or hereafter arising and whether written or oral, are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of demand being made on any Note or otherwise, shall the amount paid,
or agreed to be paid, to the Agent or any Bank for the use, forbearance, or
detention of the money to be loaned under this Agreement or otherwise or for the
payment or performance of any covenant or obligation contained herein or in any
document related hereto exceed the amount permissible at the Highest Lawful
Rate. If, as a result of any circumstances whatsoever, fulfillment of any
provision hereof or of any of such documents, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by applicable usury law, then, ipso facto, the obligation to be
filled shall be reduced to the limit of such validity, and if, from any such
circumstance, the Agent or any Bank shall ever receive interest or anything
which might be deemed interest under applicable law which would exceed the
amount permissible at the Highest Lawful Rate, such amount which would be
excessive interest shall be applied to the reduction of the principal amount
owing on account of the Notes or the amounts owing on other obligations of the
Borrower to the Agent or any Bank under this Agreement or any document related
hereto and not to the payment of interest, or if such excessive interest exceeds
the unpaid principal balance of the Notes and the amounts owing on other
obligations of the Borrower to the Agent or any Bank under this Agreement or any
document related hereto, as the case may be, such excess shall be refunded to
the Borrower. All sums paid or agreed to be paid to the Agent or any Bank for
the use, forbearance, or detention of the indebtedness of the Borrower to the
Agent or any Bank shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full term of such
indebtedness until payment in full of the principal thereof (including the
period of any renewal or extension thereof) so that the interest on account of
such indebtedness shall not exceed the Highest Lawful Rate. The terms and
provisions of this Section 12.15 shall control and supersede every other
provision of all agreements between the Borrower and the Banks.
 
12.16  Indemnification. THE BORROWER AGREES TO INDEMNIFY, DEFEND, AND SAVE
HARMLESS THE AGENT, EACH BANK AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, AND ATTORNEYS, AND EACH OF THEM (THE “INDEMNIFIED PARTIES”),
FROM AND AGAINST ALL CLAIMS, ACTIONS, SUITS, AND OTHER LEGAL PROCEEDINGS,
DAMAGES, COSTS, INTEREST, CHARGES, TAXES, COUNSEL FEES, AND OTHER EXPENSES AND
PENALTIES (INCLUDING WITHOUT LIMITATION ALL ATTORNEY FEES AND COSTS OR EXPENSES
OF SETTLEMENT) WHICH ANY OF THE INDEMNIFIED PARTIES MAY SUSTAIN OR INCUR BY
REASON OF OR ARISING OUT OF (a) THE MAKING OF ANY LOAN HEREUNDER, THE EXECUTION
AND DELIVERY OF THIS AGREEMENT AND THE NOTES AND THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY AND THE EXERCISE OF ANY OF THE BANKS’ RIGHTS
UNDER THIS AGREEMENT AND THE NOTES OR OTHERWISE, INCLUDING, WITHOUT LIMITATION,
DAMAGES, COSTS, AND EXPENSES INCURRED BY ANY OF THE INDEMNIFIED PARTIES IN
INVESTIGATING, PREPARING FOR, DEFENDING AGAINST, OR PROVIDING EVIDENCE,
PRODUCING DOCUMENTS, OR TAKING ANY OTHER ACTION IN RESPECT OF ANY COMMENCED OR
THREATENED LITIGATION UNDER ANY FEDERAL SECURITIES LAW OR ANY SIMILAR LAW OF ANY
JURISDICTION OR AT COMMON LAW OR (b) ANY AND ALL CLAIMS OR PROCEEDINGS (WHETHER
BROUGHT BY A PRIVATE PARTY, GOVERNMENTAL AUTHORITY OR OTHERWISE) FOR BODILY
INJURY, PROPERTY DAMAGE, ABATEMENT, REMEDIATION, ENVIRONMENTAL DAMAGE, OR
IMPAIRMENT OR ANY OTHER INJURY OR DAMAGE RESULTING FROM OR RELATING TO THE
RELEASE OF ANY HAZARDOUS MATERIALS LOCATED UPON, MIGRATING INTO, FROM, OR
THROUGH OR OTHERWISE RELATING TO ANY PROPERTY OWNED OR LEASED BY THE BORROWER OR
ANY SUBSIDIARY (WHETHER OR NOT THE RELEASE OF SUCH HAZARDOUS MATERIALS WAS
CAUSED BY THE BORROWER, ANY SUBSIDIARY, A TENANT, OR SUBTENANT OF THE BORROWER
OR ANY SUBSIDIARY, A PRIOR OWNER, A TENANT, OR SUBTENANT OF ANY PRIOR OWNER OR
ANY OTHER PARTY AND WHETHER OR NOT THE ALLEGED LIABILITY IS ATTRIBUTABLE TO THE
HANDLING, STORAGE, GENERATION, TRANSPORTATION, OR DISPOSAL OF ANY HAZARDOUS
MATERIALS OR THE MERE PRESENCE OF ANY HAZARDOUS MATERIALS ON SUCH PROPERTY;
PROVIDED THAT THE BORROWER SHALL NOT BE LIABLE TO THE INDEMNIFIED PARTIES WHERE
THE RELEASE OF SUCH HAZARDOUS MATERIALS OCCURS AT ANY TIME AT WHICH THE BORROWER
OR ANY SUBSIDIARY CEASES TO OWN OR LEASE SUCH PROPERTY); AND PROVIDED FURTHER
THAT NO INDEMNIFIED PARTY SHALL BE ENTITLED TO THE BENEFITS OF THIS SECTION
12.16 TO THE EXTENT ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT CONTRIBUTED
TO ITS LOSS; AND PROVIDED FURTHER THAT IT IS THE INTENTION OF THE BORROWER TO
INDEMNIFY THE INDEMNIFIED PARTIES AGAINST THE CONSEQUENCES OF THEIR OWN
NEGLIGENCE. THIS AGREEMENT IS INTENDED TO PROTECT AND INDEMNIFY THE INDEMNIFIED
PARTIES AGAINST ALL RISKS HEREBY ASSUMED BY THE BORROWER. THE OBLIGATIONS OF THE
BORROWER UNDER THIS SECTION 12.16 SHALL SURVIVE ANY TERMINATION OF THIS
AGREEMENT AND THE REPAYMENT OF THE NOTES.
 
12.17  Payments Set Aside. To the extent that the Borrower makes a payment or
payments to the Agent or any Bank or the Agent or any Bank exercises its right
of set off, and such payment or payments or the proceeds of such set off or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other Person under any Debtor Law or equitable cause, then, to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied, and all rights and remedies therefor, shall be revived and shall
continue in full force and effect as if such payment had not been made or set
off had not occurred.
 
12.18  Loan Agreement Controls. If there are any conflicts or inconsistencies
among this Agreement and any other document executed in connection with the
transactions connected herewith, the provisions of this Agreement shall prevail
and control.
 
12.19  Obligations Several. The obligations of each Bank under this Agreement
and the Note to which it is a party are several, and no Bank shall be
responsible for any obligation or Commitment of any other Bank under this
Agreement and the Note to which it is a party. Nothing contained in this
Agreement or the Note to which it is a party, and no action taken by any Bank
pursuant thereto, shall be deemed to constitute the Banks to be a partnership,
an association, a joint venture, or any other kind of entity.
 
12.20  Final Agreement. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT’S OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
 

 

IN WITNESS WHEREOF, the parties hereto, by their respective officers thereunto
duly authorized, have executed this Agreement on the dates set forth below to be
effective as of December 1, 2006.
 

 
TRUNKLINE LNG HOLDINGS LLC
As Borrower
 
 
By:
/s/ Richard N. Marshall
 
Name:
Richard N. Marshall
 
Title: 
Senior Vice President and Chief Financial Officer
 
 
PANHANDLE EASTERN PIPE LINE COMPANY, LP
 
 
As a Guarantor
 
 
By:
/s/ Richard N. Marshall
 
Name:
Richard N. Marshall
 
Title:
Senior Vice President and Chief Financial Officer
 
 
CROSSCOUNTRY CITRUS, LLC
As a Guarantor
 
 
By:
/s/ Richard N. Marshall
 
Name:
Richard N. Marshall
 
Title:
         Senior Vice President and Chief Financial Officer

--------------------------------------------------------------------------------

 
Commitment: $465,000,000
 
BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH
 
 
For itself and as Agent for the Banks
 
 
By:
/s/ William W. Hunter
 
Name:
William W. Hunter
 
Title:
    Director
 
 
By:
/s/ Shannon Batchman
 
Name:
Shannon Batchman
 
Title:
    Director
 
 
ADDRESS FOR NOTICES IN ITS CAPACITY AS A BANK:
 
Bayerische Hypo- und Vereinsbank AG,
New York Branch
150 East 42nd Street
New York, NY 10017-4679
Attn: Yoram Dankner and William Hunter
Tel: 212-672-5446 and 212-672-5340
Fax: 212-672-5530
   

--------------------------------------------------------------------------------

EXHIBIT A
 
NOTE
 
$_______________________, 200__
 
FOR VALUE RECEIVED, the undersigned, TRUNKLINE LNG HOLDINGS LLC, a limited
liability company organized under the laws of Delaware (the “Borrower”), HEREBY
PROMISES TO PAY to the order of ___________________________________ (the
“Bank”), on or before April 4, 2008 (the “Maturity Date”), the principal sum of
________________ Million and No/ 100ths Dollars ($_,000,000) in accordance with
the terms and provisions of that certain Credit Agreement dated as of December
1, 2006, by and among the Borrower, Panhandle Eastern Pipe Line Company, LP and
CrossCountry Citrus, LLC, as Guarantors, the Bank, the other banks named on the
signature pages thereof, and BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK
BRANCH, as Agent (as same may be amended, modified, increased, supplemented
and/or restated from time to time, the “Credit Agreement”). Capitalized terms
used herein and not otherwise defined shall have the meanings ascribed to such
terms in the Credit Agreement.
 
The outstanding principal balance of this Note shall be payable at the Maturity
Date. The Borrower promises to pay interest on the unpaid principal balance of
this Note from the date of any Loan evidenced by this Note until the principal
balance thereof is paid in full. Interest shall accrue on the outstanding
principal balance of this Note from and including the date of any Loan evidenced
by this Note to but not including the Maturity Date at the rate or rates, and
shall be due and payable on the dates, set forth in the Credit Agreement. Any
amount not paid when due with respect to principal (whether at stated maturity,
by acceleration or otherwise), costs or expenses, or, to the extent permitted by
applicable law, interest, shall bear interest from the date when due to and
excluding the date the same is paid in full, payable on demand, at the rate
provided for in Section 2.6(b) of the Credit Agreement.
 
Payments of principal and interest, and all amounts due with respect to costs
and expenses, shall be made in lawful money of the United States of America in
immediately available funds, without deduction, set off or counterclaim to the
account of the Agent at the principal office of Bayerische Hypo- und Vereinsbank
AG, New York Branch in New York, New York (or such other address as the Agent
under the Credit Agreement may specify) not later than noon (New York time) on
the dates on which such payments shall become due pursuant to the terms and
provisions set forth in the Credit Agreement.
 
If any payment of interest or principal herein provided for is not paid when
due, then the owner or holder of this Note may at its option, by notice to the
Borrower, declare the unpaid, principal balance of this Note, all accrued and
unpaid interest thereon and all other amounts payable under this Note to be
forthwith due and payable, whereupon this Note, all such interest and all such
amounts shall become and be forthwith due and payable in full, without
presentment, demand, protest, notice of intent to accelerate, notice of actual
acceleration or further notice of any kind, all of which are hereby expressly
waived by the Borrower.
 
If any payment of principal or interest on this Note shall become due on a
Saturday, Sunday, or public holiday on which the Agent is not open for business,
such payment shall be made on the next succeeding Business Day and such
extension of time shall in such case be included in computing interest in
connection with such payment.
 
In addition to all principal and accrued interest on this Note, the Borrower
agrees to pay (a) all reasonable costs and expenses incurred by the Agent and
all owners and holders of this Note in collecting this Note through any probate,
reorganization bankruptcy or any other proceeding and (b) reasonable attorneys’
fees when and if this Note is placed in the hands of an attorney for collection
after default.
 
All agreements between the Borrower and the Bank, whether now existing or
hereafter arising and whether written or oral, are hereby expressly limited so
that in no contingency or event whatsoever, whether by reason of demand being
made on this Note or otherwise, shall the amount paid, or agreed to be paid, to
the Bank for the use, forbearance, or detention of the money to be loaned under
the Credit Agreement and evidenced by this Note or otherwise or for the payment
or performance of any covenant or obligation contained in the Credit Agreement
or this Note exceed the amount permissible at Highest Lawful Rate. If as a
result of any circumstances whatsoever, fulfillment of any provision hereof or
of the Credit Agreement at the time performance of such provision shall be due,
shall involve transcending the limit of validity prescribed by applicable usury
law, then, ipso facto, the obligation to be fulfilled shall be reduced to the
limit of such validity, and if from any such circumstance, the Bank shall ever
receive interest or anything which might be deemed interest under applicable law
which would exceed the amount permissible at the Highest Lawful Rate, such
amount which would be excessive interest shall be applied to the reduction of
the principal amount owing on account of this Note or the amounts owing on other
obligations of the Borrower to the Bank under the Credit Agreement and not to
the payment of interest, or if such excessive interest exceeds the unpaid
principal balance of this Note and the amounts owing on other obligations of the
Borrower to the Bank under the Credit Agreement, as the case may be, such excess
shall be refunded to the Borrower. In determining whether or not the interest
paid or payable under any specific contingencies exceeds the Highest Lawful
Rate, the Borrower and the Bank shall, to the maximum extent permitted under
applicable law, (a) characterize any nonprincipal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof and (c) prorate, allocate and spread in equal parts during the
period of the full stated term of this Note, all interest at any time contracted
for, charged, received or reserved in connection with the indebtedness evidenced
by this Note.
 
This Note is one of the Notes provided for in, and is entitled to the benefits
of, the Credit Agreement, which Credit Agreement, among other things, contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events, for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions and with the effect therein
specified, and provisions to the effect that no provision of the Credit
Agreement or this Note shall require the payment or permit the collection of
interest in excess of the Highest Lawful Rate. It is contemplated that by reason
of prepayments or repayments hereon prior to the Maturity Date, there may be
times when no indebtedness is owing hereunder prior to such date; but
notwithstanding such occurrence this Note shall remain valid and shall be in
full force and effect as to Loans made pursuant to the Credit Agreement
subsequent to each such occurrence.
 
Except as otherwise specifically provided for in the Credit Agreement, the
Borrower and any and all endorsers, guarantors and sureties severally waive
grace, demand, presentment for payment, notice of dishonor or default, protest,
notice of protest, notice of intent to accelerate, notice of acceleration and
diligence in collecting and bringing of suit against any party hereto, and agree
to all renewals, extensions or partial payments hereon and to any release or
substitution of security hereof, in whole or in part, with or without notice,
before or after maturity.
 
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK AND APPLICABLE FEDERAL LAW.
 
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered by its officer thereunto duly authorized effective as of the date
first above written.
 

 
TRUNKLINE LNG HOLDINGS LLC
 
By:
   
Name:
   
Title:
     

--------------------------------------------------------------------------------

EXHIBIT B
 
ASSIGNMENT AND ACCEPTANCE
 
[NAME AND ADDRESS OF
ASSIGNING BANK]
 
_______________, 200__
________________
________________
________________
________________
 
Re: Trunkline LNG Holdings Credit Agreement
 
Ladies and Gentlemen:
 
We have entered into a Credit Agreement dated as of December 1, 2006 (as same
may be amended, modified, increased, supplemented and/or restated from time to
time, the “Credit Agreement”), among certain banks (including us), Bayerische
Hypo- und Vereinsbank AG, New York Branch (the “Agent”) and Trunkline LNG
Holdings LLC (the “Company”). Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to such terms in the Credit Agreement.
 
Each reference to the Credit Agreement, the Notes or any other document
evidencing or governing the Loans (all such documents collectively, the
“Financing Documents”) includes each such document as amended, modified,
extended or replaced from time to time. All times are New York times.
 
1.  Assignment. We hereby sell and assign to you without recourse, and you
hereby unconditionally and irrevocably acquire for your own account and risk, a
___ percent (__%) undivided interest (“your assigned share”) in our Note and all
Loans and interest thereon as provided in Section 2 of the Credit Agreement [,
except that interest shall accrue on your assigned share in the principal of
Alternate Base Rate Loans and Eurodollar Rate Loans at an annual rate equal to
the rate provided in the Credit Agreement minus _____%] (collectively, the
“Assigned Obligations”)
 
2.  Materials Provided Assignee
 
a.  We will promptly request that the Company issue new Notes to us and to you
in substitution for our Note to reflect the assignment set forth herein. Upon
issuance of such substitute Notes, (i) you will become a Bank under the Credit
Agreement, (ii) you will assume our obligations under the Credit Agreement to
the extent of your assigned share, and (iii) the Company will release us from
our obligations under the Credit Agreement to the extent, but only to the
extent, of your assigned share. [The Company consents to such release by signing
this Agreement where indicated below.] As a Bank, you will be entitled to the
benefits and subject to the obligations of a “Bank”, as set forth in the Credit
Agreement, and your rights and liabilities with respect to the other Banks and
the Agent will be governed by the Credit Agreement, including without limitation
Section 10 (The Agent) thereof.
 
b.  We have furnished you copies of the Credit Agreement, our Note and each
other Financing Document you have requested. We do not represent or warrant (i)
the priority, legality, validity, binding effect or enforceability of any Loan
Document or any security interest created thereunder, (ii) the truthfulness and
accuracy of any representation contained in any Loan Document, (iii) the filing
or recording of any Loan Document necessary to perfect any security interest
created thereunder, (iv) the financial condition of the Company or any other
Person obligated under any Loan Document, any financial or other information,
certificate, receipt or other document furnished or to be furnished under any
Loan Document or (v) any other matter not specifically set forth herein having
any relation to any Loan Document, your interest in one Note, the Company or any
other Person. You represent to us that you are able to make, and have made, your
own independent investigation and determination of the foregoing matters,
including, without limitation, the creditworthiness of the Company and the
structure of the transaction.
 
3.  Governing Law; Jurisdiction. This Agreement, and any instrument or agreement
required hereunder (to the extent not otherwise expressly provided for therein),
shall be governed by, and construed under, the laws of the State of New York,
without reference to conflicts of laws (other than Section 5-1401 and Section
5-1402 of the New York General Obligations Law).
 
4.  Notices. All notices and other communications given hereunder to a party
shall be given in writing (including bank wire, telecopy, telex or similar
writing) at such party’s address set forth on the signature pages hereof or such
other address as such party may hereafter specify by notice to the other party.
Notice may also be given by telephone to the Person, or any other officer in the
office, listed on the signature pages hereof if confirmed promptly by telex or
telecopy. Notices shall be effective immediately, if given by telephone; upon
transmission, if given by bank wire, electronic mail, telecopy; five days after
deposit in the mails, if mailed; and when delivered, if given by other means.
 
5.  Authority. Each of us represents and warrants that the execution and
delivery of this Agreement have been validly authorized by all necessary
corporate action and that this Agreement constitutes a valid and legally binding
obligation enforceable against it in accordance with its terms.
 
6.  Counterparts. This Agreement may be executed in one or more counterparts,
and by each party on separate counterparts, each of which shall be an original
but all of which taken together shall be but one instrument.
 
7.  Amendments. No amendment modification or waiver of any provision of this
Agreement shall be effective unless in writing and signed by the party against
whom enforcement is sought.
 
If the foregoing correctly sets forth our agreement, please so indicate by
signing the enclosed copy of this Agreement and returning it to us.
 

 
Very truly yours,
 
     
 
By:
   
Name:
   
Title:
   
 
[Street Address]
   
[City, State, Zip Code]
   
Telephone:
   
Telecopy:
 
AGREED AND ACCEPTED:
 
 
 
By:
                     
 
Attention:
   
Telephone:
   
Telecopy:
   
Account for Payments:
       

ASSIGNMENT APPROVED PURSUANT TO SECTION 12.14 (SALE OR ASSIGNMENT) OF THE CREDIT
AGREEMENT AND RELEASE APPROVED IN SECTION 2 OF THIS AGREEMENT:
 

 
TRUNKLINE LNG HOLDINGS LLC
 
By:
   
Name:
   
Title:
     

Schedule 3.1
Subsidiaries

Trunkline LNG Company, LLC

--------------------------------------------------------------------------------

Schedule 3.10
Tax Matters
 

Tax Sharing Agreement, effective as of April 25, 2005, among Panhandle Eastern
Pipe Line Company, LP, Trunkline LNG Holdings LLC, Trunkline LNG Company, LLC,
PanGas Storage, LLC, Panhandle Holdings, LLC, Trunkline Gas Company, LLC,
Trunkline Field Services, LLC, Panhandle Storage, LLC, Trunkline Offshore
Pipeline, LLC, Trunkline Deepwater Pipeline, LLC, Sea Robin Pipeline Company,
LLC, Panhandle Lake Charles Generation, LLC and any other subsidiaries that may
become a part of the Panhandle group

--------------------------------------------------------------------------------

Schedule 3.14
ERISA Matters

Southern Union and the members of its “controlled group of corporations,” as
defined in the Code, which include two of the Loan Parties, Borrower and
Panhandle Eastern, inadvertently failed to timely submit the information
required by ERISA Section 4010 to the Pension Benefit Guaranty Corporation (the
“PBGC”) for the information year ending December 31, 2003.  This information was
required to be filed by April 15, 2004.  Upon discovery of this inadvertent
failure, Eric Herschmann, Acting General Counsel of Southern Union, advised the
PBGC and requested a waiver of any penalties that might otherwise be assessed
against Southern Union, and Borrower and Panhandle Eastern, as members of
Southern Union’s controlled group.  For the information years ending December
31, 2004 and December 31, 2005, Southern Union submitted the information
required by ERISA Section 4010 to the PBGC on a timely basis.

--------------------------------------------------------------------------------

Schedule 3.17
Environmental Matters

None.