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Exhibit 10.1

FOURTH AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT

DATED AS OF SEPTEMBER 29, 2005

BY AND AMONG

SOUTHERN UNION COMPANY

as the Borrower

AND

THE BANKS NAMED HEREIN

as the Banks

AND

JPMORGAN CHASE BANK, N.A.

as the Administrative Agent
AND
BANK OF AMERICA, NA

as the Syndication Agent
AND

J.P. MORGAN SECURITIES INC. &
WACHOVIA CAPITAL MARKETS, LLC

as the Co-Book Runners and Co-Lead Arrangers

 
 
 

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FOURTH AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

Reference is hereby made to that certain Third Amended and Restated Revolving
Credit Agreement dated as of May 28, 2004, executed by and between SOUTHERN
UNION COMPANY, a corporation organized under the laws of Delaware (the
“Borrower”), the financial institutions listed on the signature pages of said
Revolving Credit Agreement (each of said financial institutions now or hereafter
a party to said Revolving Credit Agreement being hereinafter referred to
collectively as “Banks” and individually as a “Bank”), and JPMORGAN CHASE BANK,
a New York banking corporation association now known as JPMORGAN CHASE BANK,
N.A., a national banking association (“JPMorgan”), in its capacity as agent (the
“Agent”) for the Banks. Said Third Amended and Restated Revolving Credit
Agreement has been previously amended by that certain First Amendment to Third
Amended and Restated Revolving Credit Agreement dated November 9, 2004, executed
by and among the Borrower, the Agent and the Majority Banks, and said Third
Amended and Restated Revolving Credit Agreement, as previously amended, is
referred to herein as the “Original Agreement.”

As a result of certain discussions between the Borrower, the Agent and the
Banks, the parties to the Original Agreement now desire to amend and restate the
Original Agreement in its entirety. Accordingly, the Original Agreement is
hereby amended and restated in its entirety to hereafter be and read as follows:

SOUTHERN UNION COMPANY, a corporation organized under the laws of Delaware
(hereinafter called the “Borrower”), the financial institutions listed on the
signature pages hereof (collectively, the “Banks” and individually, a “Bank”),
JPMORGAN CHASE BANK, N.A., a national banking association (“JPMorgan”), in its
capacity as administrative agent (the “Agent”) for the Banks hereunder, and BANK
OF AMERICA, NA, in its capacity as syndication agent (“Syndication Agent”) for
the Banks hereunder, hereby agree as follows:
 

CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have
the following meanings:
 
“Additional Costs” shall mean, with respect to any Rate Period in the case of
any Eurodollar Rate Loan, all costs, losses or payments, as determined by any
Bank in its sole and absolute discretion (which determination shall be
conclusive in the absence of manifest error) that such Bank or its Domestic
Lending Office or its Eurodollar Lending Office does, or would, if such
Eurodollar Rate Loan were funded during such Rate Period by the Domestic Lending
Office or the Eurodollar Lending Office of such Bank, incur, suffer or make by
reason of:
 
(a) any and all present or future taxes (including, without limitation, any
interest equalization tax or any similar tax on the acquisition of debt
obligations, or any stamp or registration tax or duty or official or sealed
papers tax), levies, imposts or any other charge of any nature whatsoever
imposed by any taxing authority on or with regard to any aspect of the
transactions contemplated by this Agreement, except such taxes as may be
measured by the overall net income of such Bank or its Domestic Lending Office
or its Eurodollar Lending Office and imposed by the jurisdiction, or any
political subdivision or taxing authority thereof, in which such Bank's Domestic
Lending Office or its Eurodollar Lending Office is located; and
 
(b) any increase in the cost to such Bank of agreeing to make or making, funding
or maintaining any Eurodollar Rate Loan because of or arising from (i) the
introduction of, or any change (other than any change by way of imposition or
increase of reserve requirements, in the case of any Eurodollar Rate Loan,
included in the Eurodollar Rate Reserve Percentage) in or in the interpretation
or administration of, any law or regulation or (ii) the compliance with any
request from any central bank or other governmental authority (whether or not
having the force of law).
 
“Additional Offering” shall mean, collectively, the previous issuance, offering
and sale in any offering or issuance of capital stock, Equity-Preferred
Securities or any other equity interests in the Borrower (to the extent
permitted under Section 10.5), where all net cash proceeds thereof were applied
to finance or refinance a portion of the acquisition costs for the Cross Country
Acquisition.
 
“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”)
 

 
 
 

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means 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 Revolving 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 (rounds upward
to the nearest 1/16 of 1%) equal to: (a) the greatest of (i) the Prime Rate
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be) in effect on such day; or (ii) the Federal
Funds Rate in effect for such day plus one-half of one percent (1/2%) (computed
on the basis of the actual number of days elapsed over a year of 360 days).
 
“Alternate Base Rate Loan” shall mean any Loan which bears interest at the
Alternate Base Rate.
 
“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.
 
“Approved Fund” means 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.
 
“Assignment and Acceptance” shall have the meaning set forth in Section 13.13.
 
“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.
 
“Borrowing Date” shall mean a date upon which the Borrower has requested a Loan
is to be made in a Notice of Borrowing delivered pursuant to Section 2.1.
 
“Business Day” shall mean a day when the Agent is open for business, provided
that, if the applic-able 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 the Borrower and its
Subsidiaries, any of their obligations that should, in accordance with GAAP, be
recorded as Capital Leases.
 
“Cash Interest Expense” shall mean, for any period, total interest expense to
the extent paid in cash (including the interest component of Capitalized Lease
Obligations and capitalized interest and all dividends and interest paid on or
with respect to Borrower’s Structured Securities) of the Borrower and any
Subsidiary for such period all as determined in conformity with GAAP.
 
“CCE Acquisition” shall mean CCE Acquisition LLC, a Delaware limited liability
company formed by the Borrower for the purpose of ultimately owning and holding
50% of all issued and outstanding equity interest in CCE Holdings.
 

 
 

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“CCE Group” means CCE Holdings and its Subsidiaries.
 
“CCE Holdings” shall mean CCE Holdings LLC, a Delaware limited liability
company.
 
“CCE Holdings LLC Agreement” shall mean the Limited Liability Company Agreement
of CCE Holdings dated as June 18, 2004, as amended from time to time, among the
members of CCE Holdings.
 
“Closing Date” shall mean September 29, 2005.
 
“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 have the meaning set forth in Section 2.1(a) and
“Commitments” shall mean, collectively, the Commitments of all of the Banks.
 
“Consolidated Net Income” shall mean for any period the consolidated net income
of the Borrower and all Subsidiaries, determined in accordance with GAAP, for
such period.
 
“Consolidated Net Worth” shall mean, for any period for the Borrower and all
Subsidiaries, (a) the sum of the following consolidated items, all determined in
accordance with GAAP and without duplication: the consolidated stockholders'
equity of all classes of stock (whether common, preferred, mandatorily
convertible preferred or preference) of the Borrower and its Subsidiaries; the
Equity-Preferred Securities; the other preferred securities of the Borrower’s
Subsidiaries not constituting Equity-Preferred Securities; and the minority
interests in the Borrower’s Subsidiaries, less (b) the sum of the following
consolidated items, without duplication: the book amount of any deferred charges
(including, but not limited to, unamortized debt discount and expenses,
organization expenses, experimental and development expenses, but excluding
prepaid expenses) that are not permitted to be recovered by the Borrower or its
applicable Subsidiaries under rates permitted under rate tariffs, plus (c) the
sum of all amounts contributed or paid by the Borrower to the Rabbi Trusts for
purposes of funding the same, but only to the extent such contributions and
payments are required to be deducted from the consolidated stockholders’ equity
of the Borrower and its Subsidiaries in accordance with GAAP.
 
“Consolidated Total Capitalization” shall mean at any time the sum of: (a)
Consolidated Net Worth at such time; plus (b) the principal amount of
outstanding Debt (other than Equity-Preferred Securities (to the extent included
in Debt of the Borrower and its Subsidiaries) not to exceed 10% of Consolidated
Total Capitalization [calculated for purposes of this clause without reference
to any Equity-Preferred Securities]) of the Borrower and its Subsidiaries.
 
“Consolidated Total Indebtedness” shall mean all Debt of the Borrower and all
Subsidiaries including any current maturities thereof, plus, without
duplication, all amounts outstanding under Standby Letters of Credit and,
without duplication, all Facility Letter of Credit Obligations, less, without
duplication and to the extent included in Debt of the Borrower and its
Subsidiaries, Equity-Preferred Securities not to exceed 10% of Consolidated
Total Capitalization (calculated for purposes of this clause without reference
to any Equity-Preferred Securities).
 
“Cross Country” shall mean CrossCountry Energy, LLC, a Delaware limited
liability company.
 
“Cross Country Acquisition” shall mean the acquisition by CCE Holdings of 100%
of all issued and outstanding equity interest in Cross Country in accordance
with the Cross Country Acquisition Agreement, so long as such acquisition is in
substantial compliance with the following specified terms:
 
(a) immediately after the consummation of such acquisition, Cross Country is a
wholly-owned Subsidiary of CCE Holdings;
 
(b) the aggregate consideration paid for all equity interest in Cross Country
shall be approximately $2,450,000,000 (which amount includes the assumption of
approximately $461,000,000 of outstanding Debt of Transwestern Pipeline Company
and is subject to customary purchase price adjustment as set forth in the Cross
Country Acquisition Agreement);
 

 
 

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(c) neither the Borrower nor any of its Subsidiaries shall have, incur or assume
any liability with respect to any Debt of Cross Country and its Subsidiaries
immediately after the consummation of such acquisition; and
 
(d) all material requisite approvals and consents from any Governmental
Authority with respect to such acquisition shall have been received by the
Borrower and its Subsidiaries in a form acceptable to the Agent.
 
“Cross Country Acquisition Agreement” shall mean that certain Purchase Agreement
dated as of June 24, 2004 and amended by Amendment No. 1 dated as of September
1, 2004, by and among Enron Operations Services, LLC, Enron Transportation
Services, LLC, EOC Preferred, L.L.C. and Enron Corp., as sellers, and CCE
Holdings, as purchaser, as the same may hereafter be amended (the form of any
such amendment to be approved by the Agent, such approval not to be unreasonably
withheld, conditioned or delayed).
 
“Cross Country Acquisition Closing Date” means the date on which the Cross
Country Acquisition is consummated.
 
“Debt” means (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 and which
is due within thirty (30) days after the original invoice date; (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; (d) obligations
under direct or indirect Guaranties other than Guaranties issued by the Borrower
covering obligations of the Southern Union Trusts under the Structured
Securities. Whenever the definition of Debt is being used herein in order to
compute a financial ratio or covenant applicable to the consolidated business of
the Borrower and its Subsidiaries, Debt which is already included in such
computation by virtue of the fact that it is owed by a Subsidiary of the
Borrower will not also be added by virtue of the fact that the Borrower 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 the Borrower or its Subsidiaries.
 
“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 11, 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.
 
“EBDIT” shall mean for any period the sum of (a) consolidated net earnings for
the Borrower and its Subsidiaries (excluding for all purposes hereof all
extraordinary items), plus (b) each of the following to the extent actually
deducted in deriving such net earnings: (i) depreciation and amortization
expense; (ii) interest expense; (iii) federal and state income taxes; and (iv)
dividends charged against income on or with respect to Structured Securities, in
each case before adjustment for extraordinary items, as shown in the financial
statements of Borrower
 

 
 

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and its Subsidiaries referred to in Section 7.2 hereof (excluding for all
purposes hereof all extraordinary items), and determined in accordance with
GAAP, and (c) plus (or minus, if applicable) the net amount of non-cash
deductions from (or additions to, if applicable) such net earnings for such
period attributable to fluctuations in the market price(s) of securities which
the Borrower is obligated to purchase in future periods under any of the Rabbi
Trusts, but only to the extent that such deductions (or additions, if
applicable) are required to be taken in accordance with GAAP.
 
“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 $1,000,000,000.00.
 
“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-Preferred Securities” means (i) Debt, preferred equity or any other
securities that are mandatorily convertible by the issuer thereof at a date
certain, without cash payment by the issuer, into common shares of stock of the
Borrower or (ii) any other securities (A) that are issued by the Borrower or any
Subsidiary, (B) that are not subject to mandatory redemption at any time,
directly or indirectly, (C) that are perpetual or mature not less than 30 years
from the date of issuance, (D) the Debt component, if any, issued in connection
therewith, including any guaranty, is subordinate in right of payment to all
other unsecured and unsubordinated Debt of the issuer of such Debt component
(including any such guaranty, if applicable), and (E) the terms of which permit
the issuer thereof to defer at any time, without any additional payment or
premium, the payment of any and all interest and/or distributions thereon, as
applicable, to a date occurring after the Maturity Date.
 
“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 with respect to the applicable Rate Period in
effect for each Eurodollar Rate Loan, the sum of (a) the quotient obtained by
dividing (i) the rate appearing on Page 3750 of the Dow Jones Market Service (or
on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the

 
 

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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
Rate Period, as the rate for dollar deposits with a maturity comparable to such
Rate Period (or in the event that such rate quote is not available at such time
for any reason, then utilizing the rate at which dollar deposits of $5,000,000
and for a maturity comparable to such Rate 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 Rate Period) by (ii) a percentage equal to
100% minus the Eurodollar Rate Reserve Percentage for such Rate Period, plus (b)
an additional percentage per annum changing with the rating of the Borrower’s
unsecured, non-credit enhanced Senior Funded Debt and determined in accordance
with the following grid:

 
Rating of the Borrower’s unsecured, non-credit enhanced Senior Funded Debt
 
 
Additional Percentage Per Annum
 
 
Equal to or greater than A3 by Moody’s Investor Service, Inc. and equal to or
greater than A- by Standard and Poor’s Ratings Group
 
 
0.325%
 
 
Baa1 by Moody’s Investor Service, Inc. or BBB+ by Standard and Poor’s Ratings
Group
 
 
0.400%
 
 
Baa2 by Moody’s Investor Service, Inc. or BBB by Standard and Poor’s Ratings
Group
 
 
0.475%
 
 
Baa3 by Moody’s Investor Service, Inc. or BBB- by Standard and Poor’s Ratings
Group
 
 
0.625%
 
 
Ba1 by Moody’s Investor Service, Inc. or BB+ by Standard and Poor’s Ratings
Group
 
 
1.000%
 
 
Less than Ba1 by Moody’s Investor Service, Inc. and less than BB+ by Standard
and Poor’s Ratings Group
 
 
1.250%
 

Notwithstanding the foregoing provisions, in the event that ratings of the
Borrower’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 Eurodollar
Rate 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 Borrower 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 the Borrower’s unsecured,
non-credit enhanced Senior Funded Debt, the component of pricing from the grid
set forth above for purposes of determining the applicable Eurodollar Rate for
all Rate Periods commencing thereafter shall be 1.250% until such time as
Borrower subsequently causes its unsecured, non-credit enhanced Senior Funded
Debt to be rated by both of said ratings services.

“Eurodollar Rate Loan” shall mean any Loan that bears interest at the Eurodollar
Rate.

“Eurodollar Rate Reserve Percentage” of the Agent for any Rate Period for any
Eurodollar Rate Loan shall mean the reserve percentage applicable during such
Rate Period (or if more than one such percentages shall be so applicable, the
daily average of such percentages for those days in such Rate Period during
which any such
 

 
 

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percentage shall be so applicable) under regulations issued from time to time by
the Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental, or other marginal reserve requirement) for member banks
of the Federal Reserve System with deposits exceeding $1,000,000,000 with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Rate Period.
 
“Event of Default” shall mean any of the events specified in Section 11,
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.
 
“Expiration Date” shall mean the last day of a Rate Period.
 
“Facility Letter(s) of Credit” shall mean, in the singular form, any Standby
Letter of Credit issued by an Issuing Bank for the account of the Borrower
pursuant to Section 3 and, in the plural form, all such Standby Letters of
Credit issued for the account of the Borrower.
 
“Facility Letter of Credit Fee Percentage” shall mean a fee expressed as a
percent per annum for all periods equal to a percentage per annum changing with
the rating of the Borrower’s unsecured, non-credit enhanced Senior Funded Debt
and determined in accordance with the following grid:

 
Rating of the Borrower’s unsecured, non-credit enhanced Senior Funded Debt
 
 
Additional Percentage Per Annum
 
 
Equal to or greater than A3 by Moody’s Investor Service, Inc. and equal to or
greater than A- by Standard and Poor’s Ratings Group
 
 
0.325%
 
 
Baa1 by Moody’s Investor Service, Inc. or BBB+ by Standard and Poor’s Rating
 
 
0.400%
 
 
Baa2 by Moody’s Investor Service, Inc. or BBB by Standard and Poor’s Rating
Group
 
 
0.475%
 
 
Baa3 by Moody’s Investor Service, Inc. or BBB- by Standard and Poor’s Rating
Group
 
 
0.625%
 
 
Ba1 Moody’s Investor Service, Inc. or BB+ by Standard and Poor’s Rating Group
 
 
1.000%
 
 
Less than Ba1 by Moody’s Investor Service, Inc. and less than BB+ by Standard
and Poor’s Rating Group
 
 
1.250%
 

 
Notwithstanding the foregoing provisions, in the event that ratings of the
Borrower’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 Facility
Letter of Credit Fee Percentage 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 Borrower withdraws from having its unsecured, non-credit enhanced Senior
Funded Debt being rated by Moody’s Investor Service, Inc. or Standard and

 
 

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Poor’s Ratings Group, so that one or both of such ratings services fails to rate
the Borrower’s unsecured, non-credit enhanced Senior Funded Debt, the component
of pricing from the grid set forth above for purposes of determining the
applicable Facility Letter of Credit Fee Percentage for all periods thereafter
shall be 1.250% until such time as the Borrower subsequently causes its
unsecured, non-credit enhanced Senior Funded Debt to be rated by both of said
ratings services.

“Facility Letter of Credit Obligations” shall mean, at any particular time, the
sum of (a) the Reimbursement Obligations, plus (b) the aggregate undrawn face
amount of all outstanding Facility Letters of Credit, in each case as determined
by the Agent.

“Federal Funds Rate” shall mean, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
(rounded to the nearest 1/100 of 1%) on overnight federal fund transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from Fulton
Prebon and Garvin Guy Butler or two other federal funds brokers of recognized
standing selected by the Agent.
 
“Funded Debt” means 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.
 
“GAAP” shall mean generally accepted accounting principles, applicable to the
circumstances as of the date of determination, applied consistently with such
principles as applied in the preparation of the Borrowers audited financial
statements referred to in Section 7.2.
 
“General Intangibles” shall mean all of the Borrower’s contract rights now
existing or hereafter acquired, arising or created under contracts or
arrangements for the purchase, sale, storage or transportation of gas or other
Inventory.
 
“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” means 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.
 
“Guaranty” means, 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 the Borrower’s or any Subsidiary's properties is
prohibited by any Governmental Authority.
 

 
 

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“Highest Lawful Rate” shall mean, with respect to each Bank, the maximum
nonusurious 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 nonusurious interest rate than applicable laws now
allow.
 
“Indemnified Parties” shall have the meaning set forth in Section 13.16.
 
“Interest Payment Date” shall mean (a) as to any Eurodollar Rate Loan in which
the Rate Period with respect thereto is not greater than three (3) months, the
date on which such Rate Period ends; (b) as to any Eurodollar Rate Loan in which
the Rate Period with respect thereto is greater than three (3) months, the date
on which the third month of such Rate Period ends, and the date on which each
such Rate Period ends; (c) as to any Alternate Base Rate Loan in which the Rate
Period with respect thereto is not greater than ninety (90) days, the date on
which such Rate Period ends; (d) as to any Alternate Base Rate Loan in which the
Rate Period with respect thereto is greater than ninety (90) days, the ninetieth
(90th) day of such Rate Period, and the date on which each such Rate Period
ends; and (e) as to all Loans, such time as the principal of and interest on the
Notes shall have been paid in full.
 
“Inventory” means, 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 means 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; provided, however, that for purposes of determining
Investments of Borrower hereunder, the existing Guaranty by Borrower of certain
tax increment financing extended by The Fidelity Deposit and Discount Bank to
The Redevelopment Authority of the County of Lackawanna shall be deemed to not
be an Investment; (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.
 
“Issuing Bank” shall mean (a) any Bank and/or any Affiliate of any Bank listed
on the signature pages of this Agreement attached hereto and made a part hereof,
or (b) any Bank or any Affiliate of any Bank not listed on the signature pages
of this Agreement, but only in the event that such Bank or such Affiliate
agrees, in its sole discretion at the request of the Borrower, and on the terms
and conditions mutually acceptable to such Bank or such Affiliate, as the case
may be, to become an Issuing Bank for the purpose of issuing one or more
Facility Letters of Credit pursuant to Section 3. When a Bank is referred to as
an Issuing Bank under this Agreement, such reference to such Bank shall be
interpreted to refer to such Bank solely in its capacity as an Issuing Bank.
 
“L/C Subfacility” shall mean that portion of the Commitments equal to
$40,000,000.00.
 
“Letter(s) of Credit” shall mean, in the singular form, any letter of credit
issued by any Person for the account of the Borrower and, in the plural form,
all such letters of credit issued by any Person for the account of the Borrower.
 
“Letter of Credit Commitment” shall mean, with respect to each Issuing Bank,
such Issuing Bank's commitment to issue Facility Letters of Credit.
 
“Letter of Credit Reimbursement Agreement” shall mean, with respect to a
Facility Letter of Credit, such form of application therefor and form of
reimbursement agreement therefor (whether in a single or several
 

 
 

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documents, taken together) as the Issuing Bank from which the Facility Letter of
Credit is requested may employ in the ordinary course of business for its own
account, whether or not providing for collateral security, with such
modifications thereto as may be agreed upon by such Issuing Bank and the account
party and as are not materially adverse to the interests of any Bank; provided,
however, in the event of any conflict between the terms of any Letter of Credit
Reimbursement Agreement and this Agreement, the terms of this Agreement shall
control; and provided, further, that any grant or purported grant of a security
interest in favor of the Issuing Bank contained in any Letter of Credit
Reimbursement Agreement shall be void.
 
“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.
 
“Loan Document” shall mean this Agreement, any Note, or any other document,
agreement or instrument now or hereafter executed and delivered by the Borrower
or any other Person 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.
 
“Majority Bank” shall mean at any time Banks holding more than 50% of the unpaid
principal amounts outstanding under the Notes, or, if no such amounts are
outstanding, more than 50% of the Pro Rata Percentages.
 
“Material Adverse Effect” shall mean any material adverse effect on (a) the
financial condition, business, properties, assets, prospects or operations of
the Borrower and its Subsidiaries taken as a whole, or (b) the ability of the
Borrower to perform its obligations under this Agreement, any Note or any other
Loan Document on a timely basis.
 
“Maturity Date” shall mean May 28, 2010.
 
“Non-Facility Letter of Credit” shall mean any Letter of Credit which is not a
Facility Letter of Credit.
 
“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 2.1(c).
 
“Obligations” shall mean (a) all obligations of the Borrower to the Bank under
this Agreement, the Notes and all other Loan Documents to which it is a party;
(b) all Reimbursement Obligations; and (c) any other obligations of the Borrower
with respect to a Facility Letter of Credit.
 
“Officer’s Certificate” shall mean a certificate signed in the name of the
Borrower or a Subsidiary, as the case may be, 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 mean Panhandle Eastern Pipe Line Company, LP, a
Delaware limited partnership.
 
“Panhandle Eastern Refinancing Debt” shall mean any Debt of Panhandle Eastern
and/or any of its Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund, any Debt
of Panhandle Eastern and/or any of its Subsidiaries existing as of the Closing
Date, provided, that:

(a) the principal amount of such Panhandle Eastern Refinancing Debt does not
exceed the then outstanding principal amount of the Debt so extended,
refinanced, renewed, replaced, defeased or refunded;

 
 

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(b) the interest rate or rates to accrue under such Panhandle Eastern
Refinancing Indebtedness do not exceed the lesser of (i) the interest rate or
rates then accruing on the Debt so extended, refinanced, renewed, replaced,
defeased or refunded or (ii) the prevailing market interest rate or rates which
are then applicable to, and generally available for, Debt which is similar in
type, amount, maturity and other terms to the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded;

(c) the maturities, amortization schedules, covenants, defaults, remedies,
collateral security provisions (or absence thereof) and other terms of such
Panhandle Eastern Refinancing Indebtedness, including without limitation, any
restrictions on the payment by Panhandle Eastern and/or its applicable
Subsidiaries of any dividends or other shareholder distributions, are in each
case the same or more favorable to Panhandle Eastern and/or its applicable
Subsidiaries as those in the Debt so extended, refinanced, renewed, replaced,
defeased or refunded; and

(d) no Default or Event of Default has occurred and is continuing or would
result from the issuance or origination of such Panhandle Eastern Refinancing
Indebtedness.

“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 the Borrower or of any member of a “controlled group of
corporations,” as such term is defined in the Code, of which the Borrower or any
Subsidiary is a member, or any such plan to which the Borrower or any Subsidiary
is required to contribute on behalf of its employees.
 
“Prime Rate” shall mean, on any day, the rate determined by the Agent 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.
 
“Prior Acquisitions” shall mean collectively the Borrower’s previous
acquisitions of and mergers with Fall River Gas Company, Providence Energy
Corporation and Valley Resources, Inc.
 
“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
Commitment and the denominator of which shall be the aggregate amount of all the
Commitments of the Banks, as adjusted from time to time in accordance with
Section 4.6.
 
“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.
 
“Qualifying Assets” shall mean (i) equity interests owned one hundred percent
(100%) by the Borrower in entities engaged primarily in one or more of the
Borrower’s lines of business described in Section 7.15 (singly, a “Qualified
Entity,” collectively, “Qualified Entities”), or productive assets used in one
or more of such lines of business; and (ii) equity interests of less than one
hundred percent (100%) owned by the Borrower in one or more Qualifying Entities,
provided that at any time the aggregate amount of the Borrower’s investment in
Qualifying Assets described in clause (ii) that are then held by the Borrower as
of the applicable determination date (measured by the aggregate purchase price
paid therefor, including the aggregate amount of Debt assumed or deemed incurred
by Borrower in connection with such acquisitions) does not exceed twenty percent
(20%) of the Consolidated Net Worth of the Borrower and its Subsidiaries as of
the applicable determination date.
 
“Rabbi Trusts” shall mean those four (4) certain non-qualified deferred
compensation irrevocable trusts existing as of the Closing Date, previously
established by the Borrower for the benefit of its executive employees, so long
as the assets in each of such trusts which have not yet been distributed to one
or more executive employees of the Borrower remain subject to the claims of the
Borrower’s general creditors.
 

 
 

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“Rate Period” shall mean the period of time for which the Alternate Base Rate or
the Eurodollar Rate shall be in effect as to any Alternate Base Rate Loan or
Eurodollar Rate Loan, as the case may be, commencing with the Borrowing Date or
the Expiration Date of the immediately preceding Rate Period, as the case may
be, applicable to and ending on the effective date of any reborrowing made as
provided in Section 2.2(a) as the Borrower may specify in the related Notice of
Borrowing, subject, however, to the early termination provisions of the second
sentence of Section 2.3(c) relating to any Eurodollar Rate Loan; provided,
however, that any Rate Period that would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Rate Period
shall end on the next preceding Business Day. For any Alternate Base Rate Loan,
the Rate Period shall be 90 days; and for any Eurodollar Rate Loan the Rate
Period may be 15 days, 1, 2, 3, or 6 months, in each case as specified in the
applicable Notice of Borrowing, subject to the provisions of Sections 2.2 and
2.3.
 
“Reimbursement Obligations” shall mean the reimbursement or repayment
obligations of the Borrower to Issuing Banks pursuant to this Agreement or the
applicable Letter of Credit Reimbursement Agreement with respect to Facility
Letters of Credit issued for the account of the Borrower.
 
“Release” shall mean a “release”, as such term is defined in CERCLA.
 
“Restricted Payment” shall mean the Borrower's declaration or payment of any
dividend on, or purchase or agreement to purchase any of, or making of any other
distribution with respect to, any of its capital stock, except any such
dividend, purchase or distribution consisting solely of capital stock of the
Borrower, and except any dividend or interest paid on or with respect to the
Borrower’s Structured Securities to the extent that such amounts are included in
Cash Interest Expense.
 
“Securities Act” shall have the meaning set forth in Section 13.1.
 
“Senior Funded Debt” shall mean Funded Debt of the Borrower excluding Debt that
is contractually subordinated in right of payment to any other Debt.
 
“Senior Notes” means (a) the $475,000,000 of 7.6% Senior Notes of the Borrower
previously placed with investors on or about January 31, 1994, and (b) the
$300,000,000 of 8.25% Senior Notes of the Borrower previously placed with
investors on or about November 3, 1999, as such Senior Notes may be amended,
modified, or supplemented from time to time in accordance with the terms of this
Agreement; and “Senior Note” means each such note individually.
 
“Significant Property” shall mean at any time property or assets of the
-Borrower or any Subsidiary having a book value (net of accumulated depreciation
taken in accordance with GAAP) of at least $5,000,000.00 or that contributed (or
is an integrated physical portion of an assemblage of assets that contributed)
at least 5% of the gross income of the owner thereof for the fiscal quarter most
recently ended.
 
“Southern Union Panhandle” shall mean Southern Union Panhandle LLC, a Delaware
limited liability company.

“Southern Union Trust” means any of those certain Delaware business trusts
organized for the sole purpose of purchasing Subordinated Debt Securities
constituting a portion of, and described in the definition of, Structured
Securities and issuing the Preferred Securities and Common Securities also
constituting a portion of, and described in the definition of, Structured
Securities, and having no assets other than the Borrower’s Subordinated Debt
Securities, the Guaranties (as described in the definition of Structured
Securities) and the proceeds thereof. Southern Union Trusts shall be considered
to be Subsidiaries for purposes hereof so long as their affairs are consolidated
under GAAP and for federal income tax purposes with the affairs of the Borrower.
 
“Standby Letter of Credit” shall mean any standby letter of credit issued to
support obligations (contingent or otherwise) of the Borrower.
 
“Structured Securities” shall mean collectively (a) the Subordinated Debt
Securities, the Guaranties, the Common Securities and the Preferred Securities
of the Southern Union Trusts, all as described and defined in the Registration
Statement on Form S-3 filed by the Borrower with the Securities and Exchange
Commission on March
 

 
 

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25, 1995, and (b) subordinated debt securities, guaranties, common securities
and/or preferred securities issued in connection with the consummation of the
Prior Acquisitions in an aggregate face amount of not more than $150,000,000
upon terms and conditions substantially similar in all material respects to the
terms and conditions described and defined in such Registration Statement on
Form S-3 filed by the Borrower with the Securities and Exchange Commission on
March 25, 1995. For all purposes of this Agreement, the amounts payable by
Southern Union Trusts under the Preferred Securities and Common Securities (or
similar securities provided for under subclause (b) above) and the amounts
payable by the Borrower under the Subordinated Debt Securities or the Guaranties
(or similar securities provided for under subclause (b) above) shall be treated
without duplication, it being recognized that the amounts payable by Southern
Union Trusts are funded with payments made or to be made by the Borrower to
Southern Union Trusts and are also guaranteed by the Borrower under the
Guaranties described in the S-3 mentioned above (or similar guaranties provided
for under subclause (b) above).
 
“Subsidiary” of a Person shall mean a corporation, partnership, limited
liability company or other business entity of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than securities or interests having
such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled,
directly, or indirectly through one or more intermediaries, or both, by such
Person. Notwithstanding the fact that the management of Cross Country is or may
be controlled by the Borrower, neither Cross Country nor any of its subsidiaries
shall be deemed to constitute a Subsidiary of the Borrower for purposes of this
Agreement so long as the Borrower does not beneficially own, directly, or
indirectly, a majority of the shares of securities or other interests in Cross
Country having ordinary voting power for the election of directors or other
governing body (other than securities or interests having such power only by
reason of the happening of a contingency).
 
“Trunkline LNG Holdings” shall mean CMS Trunkline LNG Holdings, LLC, a Delaware
limited liability company.
 
“Type” shall mean, with respect to any Loan, any Alternate Base Rate Loan or any
Eurodollar Rate Loan.
 
“Unused L/C Subfacility” shall mean, at any time, the amount, if any, by which
the L/C Subfacility then in effect exceeds the aggregate outstanding amount of
all Facility Letter of Credit Obligations.

THE LOANS
 
The Loans
 
Subject to the terms and conditions and relying upon the representations and
warranties of the Borrower herein set forth, each Bank severally agrees to make
Loans to the Borrower on any one or more Business Days prior to the Maturity
Date, up to an aggregate principal amount of Loans not exceeding at any time
outstanding: (i) the amount set opposite such Banks name on the signature pages
hereof (such Bank's “Commitment”); minus (ii) such Bank’s Pro Rata Percentage of
the Facility Letter of Credit Obligations. Within such limits and during such
period and subject to the terms and conditions of this Agreement, the Borrower
may borrow, repay and reborrow hereunder.
 
The Borrower shall execute and deliver to the Agent for each Bank to evidence
the Loans made by each Bank under such Bank’s Commitment, a Note, which shall
be: (i) dated the date of the Closing
 

 
 

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Date; (ii) in the principal amount of such Bank’s maximum Commitment; (iii) in
substantially the form attached hereto as Exhibit A, with blanks appropriately
filled; (iv) payable to the order of such Bank on the Maturity Date; and (v)
subject to acceleration upon the occurrence of an Event of Default. Each Note
shall bear interest on the unpaid principal amount thereof from time to time
outstanding at the rate per annum determined as specified in Sections 2.2(a),
2.2(b), 2.3(b) and 2.3(c), payable on each Interest Payment Date and at
maturity, commencing with the first Interest Payment Date following the date of
each Note.
 
Each Loan shall be: (i) in the case of any Eurodollar Rate Loan, in an amount of
not less than $1,000,000.00 or an integral multiple of $1,000,000.00 in excess
thereof; or (ii) in the case of any Alternate Base Rate Loan, in an amount of
not less than $500,000.00 or an integral multiple of $100,000.00 in excess
thereof and, at the option of the Borrower, any borrowing under this Section
2.1(c) may be comprised of two or more such Loans bearing different rates of
interest. Each such borrowing shall be made upon prior notice from the Borrower
to the Agent in the form attached hereto as Exhibit B (the “Notice of
Borrowing”) delivered to the Agent not later than 11:00 am (Houston time): (i)
on the third Business Day prior to the Borrowing Date, if such borrowing
consists of Eurodollar Rate Loans; and (ii) on the Borrowing Date, if such
borrowing consists of Alternate Base Rate Loans. Each Notice of Borrowing shall
be irrevocable and shall specify: (i) the amount of the proposed borrowing and
of each Loan comprising a part thereof; (ii) the Borrowing Date; (iii) the rate
of interest that each such Loan shall bear; (iv) the Rate Period with respect to
each such Loan and the Expiration Date of each such Rate Period; and (v) the
demand deposit account of the Borrower at JPMorgan into which the proceeds of
the borrowing are to be deposited by the Agent. The Borrower may give the Agent
telephonic notice by the required time of any proposed borrowing under this
Section 2.1(c); provided that such telephonic notice shall be confirmed in
writing by delivery to the Agent promptly (but in no event later than the
Borrowing Date relating to any such borrowing) of a Notice of Borrowing. 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 believes in good faith
to have been given by the Borrower, or for otherwise acting in good faith under
this Section 2.1(c).
 

 
 

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In the case of a proposed borrowing comprised of Eurodollar Rate Loans, the
Agent shall promptly notify each Bank of the applicable interest rate under
Section 2.2. Each Bank shall, before 11:00 am (Houston time) on the Borrowing
Date, make available for the account of its Applicable Lending Office to the
Agent at the Agent's address set forth in Section 13.4, in same day funds, its
Pro Rata Percentage of such borrowing. After the Agent's receipt of such funds
and upon fulfillment of the applicable conditions set forth in Section 8, on the
Borrowing Date, the Agent shall make the borrowing available to the Borrower at
its Applicable Lending Office in immediately available funds. Each Bank shall
post on a schedule attached to its Note(s): (i) the date and principal amount of
each Loan made under such Note; (ii) the rate of interest each such Loan will
bear; and (iii) each payment of principal thereon; provided, however, that any
failure of such Bank so to mark such Note shall not affect the Borrower's
obligations thereunder; and provided further that such Bank's records as to such
matters shall be controlling whether or not such Bank has so marked such Note.
Any deposit to the Borrower’s demand deposit account by the Agent or by JPMorgan
Chase Bank (of funds received from the Agent) pursuant to a request (whether
written or oral) believed by the Agent or by JPMorgan Chase Bank to be an
authorized request by the Borrower for a Loan hereunder shall be deemed to be a
Loan hereunder for all purposes with the same effect as if the Borrower had in
fact requested the Agent to make such Loan.
 
Unless the Agent shall have received notice from a Bank prior to the date of any
borrowing that such Bank will not make available to the Agent such Bank’s Pro
Rata Percentage 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 this Section 2.1 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 Pro Rata Percentage available
to the Agent, such Bank and the Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Agent, (i) in the case of the Borrower, at
the interest rate applicable at the time to the Loans comprising such borrowing,
and (ii) in the case of such Bank, at the Federal Funds Rate. If such Bank shall
repay to the Agent such corresponding amount, such amount so repaid shall
constitute such
 

 
 

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Bank's Loan as part of such borrowing for purposes of this Agreement.
 
The failure of any Bank to make the Loan to be made by it as part of any
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 any borrowing.
 

Interest Rate Determination
 
Except as specified in Sections 2.3(b) and 2.3(c), the Loans shall bear interest
on the unpaid principal amount thereof from time to time outstanding, until
maturity, at a rate per annum (calculated based on a year of 360 days in the
case of the Eurodollar Rate or the Alternate Base Rate based on the Federal
Funds Rate and a year of 365 or 366 days, as the case may be, in the case of the
Alternate Base Rate based on the Prime Rate) equal to the lesser of (A) the rate
specified in the Notice of Borrowing with respect thereto or (B) the Highest
Lawful Rate from the first day to, but not including, the Expiration Date of the
Rate Period then in effect with respect thereto.
 
Any principal, interest, fees or other amount owing hereunder, under any Note or
under any other Loan Document that is not paid when due (whether at stated
maturity, by acceleration or otherwise) shall bear interest at a rate per annum
equal to the lesser of (i) two percent (2%) above the Alternate Base Rate in
effect from time to time or (ii) the Highest Lawful Rate.
 
Additional Interest Rate Provisions
 
The Note may be held by each Bank for the account of its respective Domestic
Lending Office or its respective Eurodollar Lending Office, and may be
transferred from one to the other from time to time as each Bank may determine.
 
If the Borrower shall have chosen the Eurodollar Rate in a Notice of Borrowing
and prior to the Borrowing Date, any Bank in good faith determines (which
determination shall be conclusive) that (i) deposits in Dollars in the principal
amount of such Eurodollar Rate Loan are not being offered to the Eurodollar
Lending Office of such
 

 
 

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Bank in the Eurodollar interbank market selected by such Bank in its sole
discretion in good faith or (ii) adequate and reasonable means do not exist for
ascertaining the chosen Eurodollar Rate in respect of such Eurodollar Rate Loan
or (iii) the Eurodollar Rate for any Rate Period for such Eurodollar Rate Loan
will not adequately reflect the cost to such Bank of making such Eurodollar Rate
Loan for such Rate Period, then such Bank will so notify the Borrower and the
Agent and such Eurodollar Rate shall not become effective as to such Eurodollar
Rate Loan on such Borrowing Date or at any time thereafter until such time
thereafter as the Borrower receives notice from the Agent that the circumstances
giving rise to such determination no longer apply.
 
Anything in this Agreement to the contrary notwithstanding, if at any time any
Bank in good faith determines (which determination shall be conclusive) that the
introduction of or any change in any applicable law, rule or regulation or any
change in the interpretation or administration thereof by any governmental or
other regulatory authority charged with the interpretation or administration
thereof shall make it unlawful for the Bank (or the Eurodollar Lending Office of
such Bank) to maintain or fund any Eurodollar Rate Loan, such Bank shall give
notice thereof to the Borrower and the Agent. With respect to any Eurodollar
Rate Loan which is outstanding when such Bank so notifies the Borrower, upon
such date as shall be specified in such notice the Rate Period shall end and the
lesser of (i) the Alternate Base Rate or (ii) the Highest Lawful Rate shall
commence to apply in lieu of the Eurodollar Rate in respect of such Eurodollar
Rate Loan and shall continue to apply unless and until the Borrower changes the
rate as provided in Section 2.2(a). No more than five (5) Business Days after
such specified date, the Borrower shall pay to such Bank (x) accrued and unpaid
interest on such Eurodollar Rate Loan at the Eurodollar Rate in effect at the
time of such notice to but not including such specified date plus (y) such
amount or amounts (to the extent that such amount or amounts would not be
usurious under applicable law) as may be necessary to compensate such Bank for
any direct or indirect costs and losses incurred by it (to the extent that such
amounts have not been included in the Additional Costs in calculating such
Eurodollar Rate), but otherwise without penalty. If notice has been given by
such Bank pursuant to the foregoing provisions of this Section 2.3(c), then,
unless and until such Bank notifies the Borrower that the circumstances giving
rise to such notice no longer apply, such Eurodollar Rate shall not again apply
to such Loan or any other Loan and the obligation of such Bank to
 

 
 

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continue any Eurodollar Rate Loan as a Eurodollar Rate Loan shall be suspended.
Any such claim by such Bank for compensation under clause (y) above shall be
accompanied by a certificate setting forth the computation upon which such claim
is based, and such certificate shall be conclusive and binding for all purposes,
absent manifest error.
 
THE BORROWER WILL INDEMNIFY EACH BANK AGAINST, AND REIMBURSE EACH BANK ON DEMAND
FOR, ANY LOSS (INCLUDING LOSS OF REASONABLY ANTICIPATED PROFITS DETERMINED USING
REASONABLE ATTRIBUTION AND ALLOCATION METHODS), OR REASONABLE COST OR EXPENSE
INCURRED OR SUSTAINED BY SUCH BANK (INCLUDING WITHOUT LIMITATION, ANY LOSS OR
EXPENSE INCURRED BY REASON OF THE LIQUIDATION OR REEMPLOYMENT OF DEPOSITS OR
OTHER FUNDS ACQUIRED BY SUCH BANK TO FUND OR MAINTAIN ANY EURODOLLAR RATE LOAN)
AS A RESULT OF (i) ANY ADDITIONAL COSTS INCURRED BY SUCH BANK; (ii) ANY PAYMENT
OR REPAYMENT (WHETHER AUTHORIZED OR REQUIRED HEREUNDER OR OTHERWISE) OF ALL OR A
PORTION OF ANY LOAN ON A DAY OTHER THAN THE EXPIRATION DATE OF A RATE PERIOD FOR
SUCH LOAN; (iii) ANY PAYMENT OR PREPAYMENT (WHETHER REQUIRED HEREUNDER OR
OTHERWISE) OF ANY LOAN MADE AFTER THE DELIVERY OF A NOTICE OF BORROWING BUT
BEFORE THE APPLICABLE BORROWING DATE IF SUCH PAYMENT OR PREPAYMENT PREVENTS THE
PROPOSED BORROWING FROM BECOMING FULLY EFFECTIVE; OR (iv) AFTER RECEIPT BY THE
AGENT OF A NOTICE OF BORROWING, THE FAILURE OF ANY LOAN TO BE MADE OR EFFECTED
BY SUCH BANK DUE TO ANY CONDITION PRECEDENT TO A BORROWING NOT BEING SATISFIED
BY THE BORROWER OR DUE TO ANY OTHER ACTION OR INACTION OF THE BORROWER. ANY BANK
DEMANDING PAYMENT UNDER THIS SECTION 2.3(d) SHALL DELIVER TO THE BORROWER AND
THE AGENT A STATEMENT REASONABLY SETTING FORTH THE AMOUNT AND MANNER OF
DETERMINING SUCH LOSS, COST OR EXPENSE. THE FACTS SET FORTH IN SUCH STATEMENT
SHALL BE CONCLUSIVE AND BINDING FOR ALL PURPOSES, ABSENT MANIFEST ERROR.
 
If, after the date of this Agreement, any Bank shall have determined that the
adoption of any applicable law, rule, guideline, interpretation or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable
 

 
 

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agency charged with the interpretation or administration thereof, or compliance
by such Bank with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital as a consequence of its obligations hereunder and under
similar lending arrangements to a level below that which such Bank could have
achieved but for such adoption, change or compliance (taking into consideration
such Bank's policies with respect to capital adequacy) by an amount deemed by
such Bank to be material then the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such reduction.
 
A certificate of such Bank setting forth such amount or amounts as shall be
necessary to compensate such Bank as specified in subparagraph (e) above shall
be delivered as soon as practicable to the Borrower (with a copy thereof to the
agent) and to the extent determined in accordance with subparagraph (e) above
shall be conclusive and binding, absent manifest error. The Borrower shall pay
such Bank the amount shown as due on any such certificate within fifteen (15)
days after such Bank delivers such certificate. In preparing such certificate,
such Bank may employ such assumptions and allocations (consistently applied with
respect to advances made by such Bank or commitments by such Bank to make
advances) of costs and expenses as it shall in good faith deem reasonable and
may use any reasonable averaging and attribution method (consistently applied
with respect to advances made by such Bank or commitments by such Bank to make
advances).
 
Increase of Commitments
 
At any time after the Closing Date, provided that no Default or Event of Default
shall have occurred and be continuing, the Borrower may request from time to
time one or more increases of the Commitments by notice to the Agent in writing
of the amount of each such proposed increase (each such notice, a “Commitment
Increase Notice”). Any such Commitment Increase Notice must offer each Bank the
opportunity to subscribe for its pro rata share of the requested increase in the
Commitments, and the Agent shall promptly provide to each Bank a copy of any
Commitment Increase Notice received by the Agent. Within 10 Business Days after
receipt by the Agent of the applicable Commitment Increase Notice, each Bank
wishing to subscribe for its pro rata share of the requested
 

 
 

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increase in the Commitments must deliver written notice of such fact to the
Agent. If any portion of the requested increase in the Commitments is not
subscribed for by the Banks within such 10-day period, the Borrower may, in its
sole discretion, but with the consent of the Agent as to any Person that is not
at such time a Bank (which consent shall not be unreasonably withheld or delayed
so long as such Person is an Eligible Assignee), offer to any existing Bank or
to one or more additional banks or financial institutions the opportunity to
participate in all or a portion of such unsubscribed portion of the requested
increase in the Commitments pursuant to Section 2.4 (b) or (c) below, as
applicable;
 
Any additional bank or financial institution that the Borrower selects to offer
a participation in the unsubscribed portion of the increased Commitments, and
that elects to become a party to this Agreement and obtain a Commitment, shall
execute an agreement (a “New Bank Agreement”), in the form required by the
Agent, with the Borrower and the Agent, whereupon such bank or financial
institution (a “New Bank”) shall become a Bank for all purposes hereunder to the
same extent as if originally a party hereto and shall be bound by and entitled
to the benefits of this Agreement, and the signature pages hereof shall be
deemed to add the name and Commitment of such New Bank, provided that the
Commitment of any such New Bank shall be in an amount not less than $5,000,000;
 
Any Bank that accepts an offer by the Borrower to increase its Commitment
pursuant to this Section 2.4 shall, in each case, execute a commitment increase
agreement (a “Commitment Increase Agreement”), in the form required by the
Agent, with the Borrower and the Agent, whereupon such Bank shall be bound by
and entitled to the benefits of this Agreement with respect to the full amount
of its Commitment as so increased, and the signature pages hereof shall be
deemed to be amended to reflect such increase in the Commitment of such Bank;
 
The effectiveness of any New Bank Agreement or Commitment Increase Agreement
shall be contingent upon receipt by the Agent of such corporate resolutions of
the Borrower and legal opinions of in-house counsel to the Borrower, if any, as
the Agent shall reasonably request with respect thereto;
 
If any bank or financial institution becomes a New Bank pursuant to Section
2.4(b) or if any Bank’s Commitment is increased pursuant to Section 2.4(c),
additional Loans and additional liability for
 

 
 

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Facility Letters of Credit made or issued on or after the effectiveness thereof
(the “Re-Allocation Date”) shall be made pro rata based on each Bank’s
(including each New Bank’s) respective Commitment in effect on and after such
Re-Allocation Date (except to the extent that any such pro rata borrowings or
incurring of liability would result in any Bank making an aggregate principal
amount of Loans and incurring liability for the Facility Letters of Credit in
excess of its Commitment, in which case such excess amount will be allocated to,
and made or incurred by, such New Bank and/or Banks with such increased
Commitments to the extent of, and pro rata based on, their respective
Commitments), and continuations of Eurodollar Rate Loans outstanding on such
Re-Allocation Date shall be effected by repayment of such Eurodollar Rate Loans
on the last day of the Rate Period applicable thereto and the extension of new
Eurodollar Rate Loans pro rata based on the Banks’ respective Commitments in
effect on and after such Re-Allocation Date. In the event that on any such
Re-Allocation Date there are Alternate Base Rate Loans outstanding, the Borrower
shall make prepayments thereof and borrow new Alternate Base Rate Loans so that,
after giving effect thereto, the Alternate Base Rate Loans outstanding are held
pro rata based on the Banks’ respective Commitments in effect on and after such
Re-Allocation Date. In the event that on any such Re-Allocation Date there are
Eurodollar Rate Loans outstanding, such Eurodollar Rate Loans shall remain
outstanding with the respective holders thereof until the expiration of their
respective Rate Periods (unless the Borrower elects to prepay any thereof in
accordance with the applicable provisions of this Agreement), and interest on
and repayments of such Eurodollar Rate Loans will be paid thereon to the
respective Banks holding such Eurodollar Rate Loans pro rata based on the
respective principal amounts thereof outstanding;
 
Notwithstanding anything to the contrary in this Section 2.4, (i) no Bank shall
have any obligation to increase its Commitment under this Section 2.4 unless it
agrees in writing to do so in its sole discretion, (ii) no Bank shall have any
right to decrease the amount of its Commitment as a result of any requested
increase of the Commitments pursuant to this Section 2.4, (iii) the Agent shall
have no obligation to find or locate any New Bank to participate in any
unsubscribed portion of any increase in the Commitments requested by the
Borrower, (iv) each increase in the Commitments requested by the Borrower shall
not be less than $10,000,000, (v) after giving effect to any increase in the
Commitments pursuant to this Section 2.4, the sum of the Commitments shall not
exceed $500,000,000, and (vi) in
 

 
 

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the event the Borrower reduces the Commitments pursuant to Section 4.6 or any
other provision of this Agreement more than one time during the term of this
Agreement, the ability of the Borrower to request increases in the Commitments
pursuant to this Section 2.4 shall automatically terminate; and
 
The Borrower shall execute and deliver to the Agent (for delivery by the Agent
to each applicable Bank) a new Note payable to each applicable Bank (including
each New Bank) participating in any increase of the Commitments in the original
principal amount of such Bank’s Commitment after giving effect to any such
increase of the Commitments.
 
LETTERS OF CREDIT
 
Obligation to Issue. Subject to the terms and conditions of this Agreement, and
in reliance upon the representations and warranties of the Borrower set forth
herein or in any other Loan Document, each Issuing Bank hereby severally agrees
to issue, from time to time during the period commencing on the Closing Date and
ending on the Business Day immediately prior to the Maturity Date, for the
account of the Borrower through such of the Issuing Bank's branches as it and
the Borrower may jointly agree, one or more Facility Letters of Credit in
accordance with this Section 3. Notwithstanding the foregoing, no Issuing Bank
shall have any obligation to issue, and shall not issue, any Facility Letter of
Credit at any time if:
 
the aggregate undrawn face amount of Facility Letters of Credit theretofore
issued by such Issuing Bank, after giving effect to all requested but unissued
Facility Letters of Credit, exceeds any limit imposed by law or regulation upon
such Issuing Bank;
 
after taking into account the face amount of the requested Facility Letter of
Credit the aggregate principal amount of Facility Letter of Credit Obligations
with respect to Facility Letters of Credit issued by such Issuing Bank for the
account of the Borrower (which amount shall be calculated without giving effect
to the participation of the Banks pursuant to Section 3.5) would exceed such
Issuing Bank's Letter of Credit Commitment;
 
immediately after giving effect to the issuance of such Facility Letter of
Credit, the aggregate Facility Letter of Credit Obligations would exceed the L/C
Subfacility;
 

 
 

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immediately after giving effect to the issuance of such Facility Letter of
Credit, the aggregate of outstanding Loans, would exceed the Banks' aggregate
Commitments; or
 
such Facility Letter of Credit has an expiry date (i) more than one year after
the date of issuance; or (ii) after the Business Day immediately preceding the
Maturity Date.
 
Conditions. The obligation of an Issuing Bank to issue any Facility Letter of
Credit, and of each Bank to participate therein as provided in Section 3.5 is
subject to the satisfaction in full of the applicable conditions precedent set
forth in Section 8 and each of the following conditions:
 
the Borrower shall have delivered to the Issuing Bank, at such times and -in
such manner as such Issuing Bank may prescribe, a Letter of Credit application,
a Letter of Credit Reimbursement Agreement, and such other documents and
materials as may be required pursuant to the terms thereof;
 
the terms of the proposed Facility Letter of Credit shall not be inconsistent
with any term or provision of this Agreement and otherwise shall be satisfactory
to such Issuing Bank; and
 
as of the date of issuance of such Facility Letter of Credit, no order,
judgment, or decree of any court, arbitrator, or governmental authority shall
purport by its terms to enjoin or restrain the Issuing Bank from issuing such
Facility Letter of Credit, and no law, rule, or regulation applicable to such
Issuing Bank, and no request or directive (whether or not having the force of
law) from any governmental authority having jurisdiction over such Issuing Bank,
shall prohibit or request that such Issuing Bank refrain from the issuance of
Letters of Credit, generally or the issuance of such Facility Letter of Credit.
 
Issuance of Facility Letters of Credit
 
The Borrower shall give the Agent written notice (or telephonic notice confirmed
in writing by the Borrower not later than the requested issuance date of the
Facility Letter of Credit) of its request for the issuance of a Facility Letter
of Credit no later than 11:00 a.m. four (4) Business Days prior to the date such
Facility Letter of Credit is requested to be issued. Such notice shall be
irrevocable and shall specify, with respect to such requested Facility Letter of
Credit, the
 

 
 

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face amount, beneficiary, effective date of issuance, expiry date (which
effective date and expiry date shall be a Business Day and, with respect to the
expiry date, shall be no later than the Business Day immediately preceding the
Maturity Date), the identity of the Issuing Bank selected by the Borrower, and
the purpose for which such Facility Letter of Credit is to be issued. At the
time a request for the issuance of a Facility Letter of Credit is made, the
Borrower shall also provide the Agent with a copy of the form of Letter of
Credit that the proposed Issuing Bank has agreed to issue. If the face amount of
the requested Facility Letter of Credit is less than or equal to the Unused L/C
Subfacility, as determined by the Agent as of the close of business on the date
of its receipt of written notice of the requested issuance, the Agent shall so
notify the proposed Issuing Bank in writing (or by telephonic notice promptly
confirmed thereafter in writing) not later than the close of business on the
second Business Day following the Agent’s receipt of the Borrower’s written
notice. The Issuing -Bank shall issue such Facility Letter of Credit on the date
requested by the Borrower, unless (i) on or before the Business Day prior to
such issuance date, such Issuing Bank shall have received written notice from
the Agent or any Bank that the conditions precedent to the issuance of a
Facility Letter of Credit as set forth in Section 3.2 have not been met; or (ii)
on the requested issuance date, such Issuing Bank has actual knowledge that such
conditions precedent have not been met. If an Issuing Bank receives written
notice, or has actual knowledge, that the conditions precedent to the issuance
of a Facility Letter of Credit have not been met, then such Issuing Bank shall
have no obligation to issue, and shall not issue, any Facility Letter of Credit
until (i) such notice is withdrawn; or (ii) such Issuing Bank receives a notice
from the Agent that the condition(s) described in such notice have been waived
in accordance with the provisions of this Agreement. The Issuing Bank shall give
the Agent prompt written notice (or telephonic notice promptly confirmed in
writing) of the issuance of any Facility Letter of Credit. Any Letter of Credit
issued by an Issuing Bank in compliance with the provisions of this Section 3.3
shall be a Facility Letter of Credit.
 
An Issuing Bank shall not extend or amend any Facility Letter of Credit unless
the requirements of this Section 3.3 are met as though a new Facility Letter of
Credit was being requested and issued.
 

 
 

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An Issuing Bank or any Bank may issue Non-Facility Letters of Credit for its own
account, and at its own risk. None of the provisions of this Section 3 shall
apply to any Non-Facility Letter of Credit.
 
Reimbursement Obligations; Duties of Issuing Bank
 
Notwithstanding any provisions to the contrary in any Letter of Credit
Reimbursement Agreement:
 
the Borrower shall reimburse the applicable Issuing Bank for a drawing under a
Facility Letter of Credit issued by such Issuing Bank no later than the earlier
of (A) the time specified in the related Letter of Credit Reimbursement
Agreement; or (B) one (1) Business Day after the payment of such drawing by such
Issuing Bank; and
 
the Borrower’s Reimbursement Obligations with respect to a drawing under a
Facility Letter of Credit shall bear interest from the date of such drawing to
the date paid in full at the higher of (A) the interest rate specified in the
applicable Letter of Credit Reimbursement Agreement; or (B) the interest rate
for past due Alternate Base Rate Loans; but not greater than the Highest Lawful
Rate.
 
No action taken or omitted to be taken by an Issuing Bank in connection -with
any Facility Letter of Credit shall (i) result in any liability on the part of
such Issuing Bank to any Bank, unless such Issuing Bank’s action or omission
constitutes willful misconduct or gross negligence; or (ii) relieve any Bank of
any of its obligations to such Issuing Bank hereunder, unless the Facility
Letter of Credit in question was issued in contravention of the provisions of
Section 3.3 or at a time during which a notice, described in Section 3.3, from
such Bank to such Issuing Bank remained in effect. Each Bank agrees that, prior
to making any payment to a beneficiary with respect to a drawing under a
Facility Letter of Credit, the Issuing Bank shall be responsible only to confirm
that documents required by the terms of such Facility Letter of Credit to be
delivered as a condition precedent to such drawing have been delivered and that
the same appear on their face to conform with the requirements thereof. Each
Bank further agrees that such Issuing Bank may assume that documents appearing
on their face to be the documents required to be delivered as a condition
precedent to a drawing do in fact comply.
 
Participations
 

 
 

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Immediately upon the issuance by an Issuing Bank of any Facility Letter of
Credit in compliance with the provisions of Section 3.3, and immediately upon
conversion of a Letter of Credit of an Issuing Bank to a Facility Letter of
Credit pursuant to Section 3.10, each Bank shall be deemed to have irrevocably
and unconditionally purchased and received from such Issuing Bank, without
recourse or warranty, an undivided interest and participation to the extent of
such Bank's Pro Rata Percentage in such Facility Letter of Credit, including
without limitation, all obligations of the Borrower with respect thereto and any
security therefor or guaranty pertaining thereto.
 
An Issuing Bank shall promptly notify the Agent, and the Agent shall promptly
notify the other Banks, if the Borrower fails to reimburse such Issuing Bank for
payments made by such Issuing Bank in respect of drawings by a beneficiary under
a Facility Letter of Credit. Upon each such other Banks receipt of such notice,
such Bank shall unconditionally pay to the Agent, for the account of such
Issuing Bank, an amount equal to such Bank's Pro Rata Percentage of the
unreimbursed payment made by such Issuing Bank under the Facility Letter of
Credit. Such payment shall be made by such Bank in Dollars and in same day funds
on the day such Bank receives notice from the Agent that such payment is owing,
if such notice is received by such Bank prior to 11:00 a.m. (Houston time) on a
Business Day; if such notice is not received by such time, then such Bank shall
remit its payment on the next Business Day following the day such notice is
received. Any amount payable by a Bank under this Section 3.5(b) which is not
paid when due pursuant to the terms hereof shall be payable on demand, together
with interest thereon at the Federal Funds Rate from the date such payment was
due until paid in full. The failure of any Bank to make any payment owing by it
under this Section 3.5(b) shall neither relieve nor increase the obligation of
any other Bank to make any payment owing by it under this Section 3.5(b). The
Agent shall promptly remit to the applicable Issuing Bank all amounts received
by the Agent, for the account of such Issuing Bank, from each Bank pursuant to
this Section 3.5(b). No payment made by a Bank pursuant to this Section 3.5(b)
shall prejudice the ability of such Bank to claim that the Issuing Bank to which
such payment is made is subject to liability under Section 3.4(b).
 
Whenever an Issuing Bank receives a payment with respect to a Reimbursement
Obligation (including any interest thereon) for which such Issuing Bank has
received payments from a Bank pursuant to
 

 
 

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Section 3.5(b), such Issuing Bank shall promptly remit to the Agent and the
Agent shall promptly remit to each Bank which has funded its participating
interest therein, in Dollars and in the kind of funds so received, an amount
equal to each Bank's Pro Rata Percentage thereof. Each such payment shall be
made by the Issuing Bank or the Agent, as the case may be, on the Business Day
on which such Person receives the funds paid to such Person pursuant to the
preceding sentence, if received prior to 11:00 a.m. (Houston time) on such
Business Day, and otherwise on the next succeeding Business Day.
 
Upon the request of the Agent or any Bank, an Issuing Bank shall furnish to the
Agent or each Bank copies of any Facility Letter of Credit, Letter of Credit
Reimbursement Agreement, or Letter of Credit application to which Issuing Bank
is party, and such other documentation as may reasonably be requested by the
Agent or such Bank with respect to a Facility Letter of Credit issued by such
Issuing Bank.
 
The obligations of a Bank under Section 3.5(b) to make payments to the Agent for
the account of an Issuing Bank with respect to a Facility Letter of Credit shall
be irrevocable, not subject to any qualification or exception whatsoever, and
shall be made in accordance with, but not subject to, the terms and conditions
of this Agreement under all circumstances (assuming that such Issuing Bank has
issued such Facility Letter of Credit in compliance with the provisions of
Section 3.3), including, without limitation, any of the following circumstances:
 
any lack of validity or enforceability of this Agreement or any other Loan
Document;
 
the existence of any claim, set off, defense, or other right which the Borrower
may have at any time against a beneficiary named in a Facility Letter of Credit
or any transferee of any Facility Letter of Credit (or any Person for whom any
such transferee may be acting), the Agent, any Bank, the Issuing Bank, or any
Person, whether in connection with this Agreement, any Facility Letter of
Credit, the transactions contemplated herein, or any unrelated transactions
(including any un-der-lying transactions between the Borrower and the
beneficiary named in any Facility Letter of Credit);
 
any draft, certificate, of any other document presented under the Facility
Letter of Credit proving to be forged, fraudulent, invalid, or
 

 
 

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insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
 
the surrender or impairment of any security for the performance or observance of
any of the terms of any Loan Document;
 
any failure by the Agent or an Issuing Bank to make any reports required
pursuant to Section 3.8; or
 
the occurrence of any Default or Event of Default.
 
Payment of Reimbursement Obligations
 
The Borrower agrees to pay to each Issuing Bank the amount of all Reimbursement
Obligations, interest, and other amounts payable to such Issuing Bank under or
in connection with any Facility Letter of Credit immediately when due,
irrespective of any claim, set off, defense, or other right which the Borrower
may have at any time against any Issuing Bank or any other Person.
 
In the event any payment by the Borrower received by an Issuing Bank with
respect to a Facility Letter of Credit and distributed to Banks on account of
their respective participation is thereafter set aside, avoided, or recovered
from such Issuing Bank in connection with any Debtor Laws, each Bank which
received such distribution shall, upon demand by such Issuing Bank, contribute
each Bank's Pro Rata Percentage of the amount set aside, avoided, or recovered
together with interest at the rate required to be paid by the Issuing Bank upon
the amount required to be repaid by it.
 
Exoneration. As between the Borrower, each Bank, and each Issuing Bank, the
Borrower assumes all risks of the acts and omissions of, or misuse of the
Facility Letter of Credit issued by such Issuing Bank by, the respective
beneficiaries of such Facility Letter of Credit. In furtherance and not in
limitation of the foregoing, subject to the provisions of the Letter of Credit
applications, the Issuing Bank and the Banks shall not be responsible for:
 
the form, validity, sufficiency, accuracy, genuineness, or legal effect of any
document submitted by any party in connection with the application for and
issuance of a Facility Letter of Credit, even if it should in fact prove to be
in any or all respects invalid, insufficient, inaccurate, fraudulent, or forged;
 

 
 

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the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Facility Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason;
 
failure of the beneficiary of a Facility Letter of Credit to comply duly with
conditions required in order to draw upon such Facility Letter of Credit,
provided that the Issuing Bank complies with the provisions of Section 3.4(b);
 
errors, omissions, interruptions, or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex, or otherwise, whether or not they be
in cipher;
 
errors in interpretation of technical terms;
 
any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any Facility Letter of Credit or of the proceeds
thereof;
 
the misapplication by the beneficiary of a Facility Letter of Credit; or
 
any consequences arising from causes beyond the control of the Agent, any Bank,
or any Issuing Bank, including, without limitation, any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government or
Governmental Authority. In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or omitted by an
Issuing Bank under or in connection with the Facility Letters of Credit or any
related certificates, if taken or omitted in good faith and not constituting
gross negligence or willful misconduct, shall not put the Issuing Bank, the
Agent, or any Bank under any resulting liability to the Borrower or relieve the
Borrower of any of its obligations hereunder to any such Person.
 
Issuing Bank's Reporting Requirements. In addition to the reports required by
Section 3.5, each Issuing Bank shall, no later than the tenth (10th) Business
Day following the last day of each quarter of such Issuing Bank's fiscal year,
provide to the Agent and the Borrower a schedule for Standby Letters of Credit
issued as Facility Letters of Credit, in form and substance reasonably
satisfactory to the Agent, showing the date of issue, beneficiary, face amount,
expiration date, and the reference number of each Facility Letter of Credit
issued
 

 
 

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by such Issuing Bank which was outstanding at any time during such quarter and
the aggregate amount payable by the Borrower during the quarter pursuant to
Section 3.9.
 
Compensation for Facility Letters of Credit
 
Facility Letter of Credit Fee. The Borrower agrees to pay to the Agent, for the
account of each Bank, in the case of each Letter of Credit issued as, or
converted to (for transactions which convert Letters of Credit in existence on
the Closing Date to Facility Letters of Credit pursuant to Section 3.10), a
Facility Letter of Credit, a facility letter of credit fee (the “Facility Letter
of Credit Fee”) payable quarterly in arrears equal to the applicable Facility
Letter of Credit Fee Percentage of the average amount available to be drawn
under such Letter of Credit during the quarter then ending multiplied by the
actual number of days during such quarter on which such Letter of Credit was
outstanding, divided by 360 but no less than $500.00 per Facility Letter of
Credit per year. The Borrower shall also pay to the Agent in the event of any
extension or modification of a Facility Letter of Credit which extends the
expiration date or increases the maximum amount available for drawing thereunder
an additional fee calculated and payable on the same basis as that set forth in
the first sentence of this Section 3.9(a) with respect to any such extension or
additional amount. Whenever an Issuing Bank receives a payment from the Borrower
with respect to any fees incurred in connection with any Facility Letter of
Credit issued by such Issuing Bank, such Issuing Bank shall promptly remit to
the Agent, and the Agent shall promptly remit to each Bank which has funded its
participation in such Facility Letter of Credit, in Dollars and in same day
funds, an amount equal to such Bank's Pro Rata Percentage of such fees.
 
Issuing Bank's Charges. Each Issuing Bank shall have the right to receive,
solely for its own account, such amounts as it and the Borrower may agree, in
writing, to compensate such Issuing Bank with respect to issuance fees and such
Issuing Bank's out-of-pocket costs of issuing and servicing Facility Letters of
Credit.
 
Increased Capital. If either (i) the introduction of or any change in or in the
interpretation of any law or regulation, or (ii) compliance by any Issuing Bank
or any Bank with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law) affects or would
affect (by an amount deemed by such Issuing Bank to be material) the capital
required or expected
 

 
 

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to be maintained by it or any corporation controlling it, and such Bank or such
Issuing Bank determines, on the basis of reasonable allocations, that the amount
of such capital is increased by (an amount deemed by such Issuing Bank to be
material) or is based (to a degree deemed by such Issuing Bank to be material)
upon its issuance or maintenance of or participation in, or commitment to issue
or to participate in, the Facility Letters of Credit then, upon demand by such
Bank or such Issuing Bank, the Borrower shall immediately pay to the Agent (for
the account of each Bank) or such Issuing Bank, from time to time as specified
by such Bank or such Issuing Bank, additional amounts sufficient to compensate
such Bank or such Issuing Bank therefor. A certificate as to such amounts
submitted to the Borrower by such Bank or such Issuing Bank shall, in the
absence of manifest error, be conclusive and binding for all purposes.
 
Transitional Provisions. Schedule 3.10 contains a schedule of certain Letters of
Credit issued for the account of the Borrower prior to the Closing Date by one
or more of the Issuing Banks. Subject to the satisfaction of the conditions
precedent contained in Section 8, on the Closing Date (a) such Letters of Credit
shall be deemed to be converted into Facility Letters of Credit issued pursuant
to Section 3.3; and (b) the face amount of such Letters of Credit shall be
included in the calculation of the Facility Letter of Credit Obligations.
 
PAYMENTS AND PREPAYMENTS
 
Required Prepayments
 
The Borrower agrees that if at any time it or the Agent determines that the sum
of (i) the aggregate principal amount of Loans outstanding and (ii) the face
amount of Facility Letters of Credit issued hereunder exceeds the Commitments,
then the Borrower shall make a prepayment of principal of the Loans in an amount
at least equal to such excess.
 
Upon the Borrower's reduction or termination of the Commitments under Section
4.6, the Borrower shall make such prepayments as are required by the terms of
Section 4.6.
 
Repayment of the Loans. Borrower shall repay the principal amount of each Loan,
on the last day of the Rate Period for such Loan, together with all accrued and
unpaid interest thereon as of such
 

 
 

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date, irrespective of any claim, set off, defense, or other right which the
Borrower may have at any time against any Bank, the Agent or any other Person.
 
Place of Payment or Prepayment. All payments and prepayments made in accordance
with the provisions of this Agreement or of the Notes or of any other Loan
Document or of the Letter of Credit Reimbursement Agreements in respect of
commitment fees or of principal or interest on the Notes shall be made to the
Agent for the account of the Banks at its Domestic Lending Office, no later than
noon, Houston time, in immediately available funds. Unless the Agent shall have
received notice from the Borrower prior to the date on which any payment is due
to the Banks hereunder that the Borrower will not make any payment due hereunder
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 Bank on such due date an amount equal to the
amount then due to such Bank. If and to the extent the Borrower shall not have
so made such payment in full to the Agent, each 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. If and to the extent that the Agent receives any payment or prepayment
from the Borrower and fails to distribute such payment or prepayment to the
Banks ratably on the basis of their respective Pro Rata Percentage on the day
the Agent receives such payment or prepayment, and such distribution shall not
be so made by the Agent in full on the required day, the Agent shall pay to each
Bank such Bank's Pro Rata Percentage thereof together with interest thereon at
the Federal Funds Rate for each day from the date such amount is paid to the
Agent by the Borrower until the date the Agent pays such amount to such Bank.
 
No Prepayment Premium or Penalty. Each prepayment pursuant to Section 4.1 or 4.3
shall be without premium or penalty, subject in the case of Eurodollar Rate
Loans to the provisions of Section 2.3(d).
 
Taxes. All payments (whether of principal, interest, reimbursements or
otherwise) under this Agreement or on the Notes or in respect of Facility Letter
of Credit Obligations shall be made by
 

 
 

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the Borrower without set off or counterclaim and shall be made free and clear of
and without deduction for any present or future tax, levy, impost or any other
charge, if any, of any nature whatsoever now or hereafter imposed by any taxing
authority. If the making of such payments is prohibited by law, unless such a
tax, levy, impost or other charge is deducted or withheld therefrom, the
Borrower shall pay to the Banks, on the date of each such payment, such
additional amounts as may be necessary in order that the net amounts received by
the Banks after such deduction or withholding shall equal the amounts which
would have been received if such deduction or withholding were not required.
 
Reduction or Termination of Commitments. The Borrower may at any time or from
time to time reduce or terminate the Commitment of each Bank by giving not less
than ten (10) full Business Days' prior written notice to such effect to the
Agent, provided that any partial reduction shall be in the amount of
$1,000,000.00 or an integral multiple thereof. Concurrently with each such
reduction or termination, all amounts in excess of the reduced Commitments shall
be automatically due and payable and it is a condition to the effectiveness of
such reduction that the Borrower shall immediately prepay the entire amount of
such excess together with all accrued interest thereon and such other amounts
that may be required to be paid in consequence of such prepayment under Section
2.3(d). Promptly after the Agent's receipt of such notice of reduction, the
Agent shall notify each Bank of the proposed reduction and such reduction shall
be effective on the date specified in the Borrower's notice with respect to such
reduction and shall reduce the Commitment of each Bank proportionately in
accordance with its Pro Rata Percentage (and such reduction shall also ratably
reduce the Commitments related to Facility Letters of Credit). After each such
reduction, the commitment fee shall be calculated upon the Commitments as so
reduced. The Commitment of each Bank shall automatically terminate on the
Maturity Date or in the event of acceleration of the maturity date of the Notes.
Each reduction of the Commitment hereunder shall be irrevocable.
 
COMMITMENT FEE AND OTHER FEES
 
Commitment Fee. The Borrower agrees to pay to the Agent for the account of each
Bank a commitment fee based on a year of 360
 

 
 

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days, from the Closing Date to, but not including, the Maturity Date (or such
earlier date as of which all Commitments shall have terminated), on the daily
average unused amount of each Bank’s Commitment, such commitment fee to be
payable quarterly in arrears on (a) the last day of each March, June, September,
and December, commencing on September 30, 2005 and (b) the Maturity Date, at a
rate per annum changing with the rating of the Borrower’s unsecured, non-credit
enhanced Senior Funded Debt, and determined in accordance with the following
grid:
 
 
Rating of the Borrower’s unsecured, non-credit enhanced Senior Funded Debt
 
 
Percentage Per Annum
 
 
Equal to or greater than A3 by Moody’s Investor Service, Inc. and equal to or
greater than A- by Standard and Poor’s Ratings Group
 
 
0.080%
 
 
Baa1 by Moody’s Investor Service, Inc. or BBB+ by Standard and Poor’s Ratings
Group
 
 
0.100%
 
 
Baa2 by Moody’s Investor Service, Inc. or BBB by Standard and Poor’s Ratings
Group
 
 
0.110%
 
 
Baa3 by Moody’s Investor Service, Inc. or BBB- by Standard and Poor’s Ratings
Group
 
 
0.150%
 
 
Ba1 by Moody’s Investor Service, Inc. or BB+ by Standard and Poor’s Ratings
Group
 
 
0.200%
 
 
Less than Ba1 by Moody’s Investor Service, Inc. and less than BB+ by Standard
and Poor’s Ratings Group
 
 
0.250%
 

Notwithstanding the foregoing provisions, in the event that ratings of the
Borrower’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
above-described commitment fee 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 Borrower withdraws from having its unsecured, non-
 

 
 

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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 the Borrower’s unsecured, non-credit enhanced Senior
Funded Debt, the component of pricing from the grid set forth above for purposes
of determining the applicable commitment fee for all periods thereafter shall be
0.250% until such time as the Borrower subsequently causes its unsecured,
non-credit enhanced Senior Funded Debt to be rated by both of said ratings
services.
 

Facility Letter of Credit Fee. The Borrower shall pay to the Agent, for the
account of each Issuing Bank, the Facility Letter of Credit Fees as set forth in
Section 3.9.
 
Fees Not Interest; Nonpayment. The fees described in this Agreement represent
compen-sation for services rendered and to be rendered separate and apart from
the lending of money or the provision of credit and do not constitute
compensation for the use, detention, or forbearance of money, and the obligation
of the Borrower to pay each fee described herein shall be in addition to, and
not in lieu of, the obligation of the Borrower to pay interest, other fees
described in this Agree-ment, and expenses otherwise described in this
Agreement. Fees shall be payable when due in Dollars and in immediately
available funds. The commitment fee referred to in Section 5.1 shall be
non-refundable, and shall, to the fullest extent permitted by law, bear
interest, if not paid when due, at a rate per annum equal to the lesser of (a)
five percent (5%) above the Alternate Base Rate as in effect from time to time
or (b) the Highest Lawful Rate.
 
Utilization Fee. The Borrower agrees to pay to Agent, for the account of each
Bank, a utilization fee at a rate per annum equal to 0.100%, based on a year of
360 days, from the Closing Date to, but not including, the Maturity Date (or
such earlier date as of which the Commitments have been terminated), on the
daily average of the aggregate principal amount of the Loans outstanding on
those days when such aggregate principal amount of the Loans outstanding exceeds
fifty percent (50%) of the aggregate amount of the Commitments, such utilization
fee to be payable quarterly in arrears on (a) the last day of each March, June,
September, and December, commencing on September 30, 2005, and (b) the Maturity
Date.
 

 
 

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APPLICATION OF PROCEEDS
 
 
6.1 Application of Proceeds. The Borrower agrees that the proceeds of the Loans
shall be used to provide working capital and for general corporate purposes,
including without limitation, financing the Borrower’s (i) acquisition of
Qualifying Assets, (ii) open market acquisition of its Senior Notes, and (iii)
repurchase of its own common stock and preferred equity securities to the extent
permitted under the terms of Section 10.11.
 

REPRESENTATIONS AND WARRANTIES
 
The Borrower represents and warrants that:

Organization and Qualification. The Borrower and each Subsidiary: (a) are
corporations duly organized, validly existing, and in good standing under the
laws of their respective states of incorporation; (b) have the corporate or
organizational power to own their respective properties and to carry on their
respective businesses as now conducted; and (c) are duly qualified as foreign
corporations (or, in the case of any Southern Union Trust, trusts) to do
business and are 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 is a corporation organized under the laws
of Delaware and has the Subsidiaries listed on Schedule 7.1 attached hereto and
made a part hereof for all purposes, and no others, each of which is a Delaware
corporation unless otherwise noted on Schedule 7.1. None of the Subsidiaries
listed on Schedule 7.1 as “Inactive Subsidiaries” conducts or will conduct any
business, and none of such Subsidiaries has any assets other than minimum legal
capitalization.
 
Financial Statements. The Borrower has furnished the Banks with (a) the
Borrower’s annual audit reports containing the Borrower’s consolidated balance
sheets, statements of income and stockholder's equity and a cash flow statements
as at and for the twelve month period ending December 31, 2004, accompanied by
the certificate of Price Waterhouse Coopers and (b) the Borrower’s unaudited
financial report as of the fiscal quarter ending June 30, 2005. These statements
are complete and correct and present fairly in accordance with GAAP,
consistently applied throughout the periods involved, the consolidated financial
position of the Borrower and the Subsidiaries
 

 
 

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and the results of its and their operations as at the dates -and for the periods
indicated subject, as to interim statements only, to changes resulting from
customary end-of-year credit adjustments which in the aggregate will not be
material.
 
Litigation. Except as disclosed on Schedule 7.3 or pursuant to Section 7.16,
there is no: (a) action or proceeding pending or, to the knowledge of the
Borrower, threatened against the Borrower or any Subsidiary before any court,
administrative agency or arbitrator which is reasonably expected to have a
Material Adverse Effect; (b) judgment outstanding against the Borrower for the
payment of money; or (c) other outstanding judgment, order or decree affecting
the Borrower or any Subsidiary before or by any administrative or governmental
authority, compliance with or satisfaction of which may reasonably be expected
to have a Material Adverse Effect.
 
Default. Neither the Borrower nor any Subsidiary 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 might have a Material
Adverse Effect.
 
Title to Assets. The Borrower and each Subsidiary have good and marketable title
to their respective assets, subject to no Liens except those permitted in
Section 10.2.
 
Payment of Taxes. The Borrower and each Subsidiary have filed all tax returns
required to be filed and have 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 Borrower as of June 30, 2005). The Borrower is not 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
7.6.
 
Conflicting or Adverse Agreements or Restrictions. Neither the Borrower nor any
Subsidiary is a party to any contract or agreement or subject to any restriction
which would have a Material Adverse
 

 
 

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Effect. Neither the execution and delivery of this Agreement or the Notes or any
other Loan Document nor the consummation of the transactions contemplated hereby
nor fulfillment of and compliance with the respective terms, conditions and
provisions hereof or of the Notes 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 the Borrower or any
Subsidiary pursuant to (a) the charter or bylaws applicable to the Borrower or
any Subsidiary; (b) any law or any regulation of any administrative or
governmental instrumentality; (c) any order, writ, injunction or decree of any
court; or (d) the terms, conditions or provisions of any agreement or instrument
to which the Borrower or any Subsidiary is a party or by which it is bound or to
which it is subject.
 
Authorization, Validity, Etc. The Borrower has the corporate power and authority
to make, execute, deliver and carry out this Agreement and the transactions
contemplated herein, to make the borrowings provided for herein, to execute and
deliver the Notes and to perform its obligations hereunder and under the Notes
and the other Loan Documents to which it is a party and all such action has been
duly authorized by all necessary corporate proceedings on its part. This
Agreement has been duly and validly executed and delivered by the Borrower and
constitutes the valid and legally binding agreement of the Borrower enforceable
in accordance with its terms, except as limited by Debtor Laws; and the Notes
and the other Loan Documents, when duly executed and delivered by the Borrower
pursuant to the provisions hereof, will constitute the valid and legally binding
obligation of the Borrower enforceable in accordance with the terms thereof and
of this Agreement, except as limited by Debtor Laws.
 
Investment Company Act Not Applicable. Neither the Borrower nor any Subsidiary
is an "investment company” or a company "controlled” by an "investment company”,
within the meaning of the Investment Company Act of 1940, as amended.
 
Public Utility Holding Company Act Not Applicable. Neither the Borrower nor any
Subsidiary is a "holding company”, or a "subsidiary
 

 
 

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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.
 
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 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. Neither the Borrower nor any Subsidiary
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 regu-lation
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.
After applying proceeds of the Loans used to acquire the equity interests
described in the definition of "Qualifying Assets”, not more than twenty-five
percent (25%) of the value (as determined by any reasonable method) of the
assets subject to the negative pledge set forth in Section 10.2 of the Credit
Agreement and the restrictions on dis-position of assets set forth in Section
10.8 of the Credit Agreement is represented by margin stock.
 
ERISA. No Reportable Event (as defined in § 4043(c) of ERISA) has occurred with
respect to any Plan. Except as provided in Schedule 7.12, each Plan complies in
all material respects with applicable provisions of ERISA, and the Borrower and
each Subsidiary have filed all reports required by ERISA and the Code to be
filed with respect to each Plan. Except as provided in Schedule 7.12, the
Borrower has no knowledge of any event which could result in a liability of the
Borrower or any Subsidiary to the Pension Benefit Guaranty Corporation. The
Borrower and each Subsidiary have 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
 

 
 

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which would cause the lien provided under § 4068 of ERISA to attach to any
property of the Borrower or any Subsidiary.
 
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, except the equity
interests described in subparagraph (ii) of the definition of "Qualifying
Assets”.
 
Franchises, Co-Licenses, Etc. The Borrower and each Subsidiary own or have
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.
 
Lines of Business. The nature of the Borrower's lines of business are
predominately the following: (a) the operation of energy distribution and
transportation services, including without limitation, natural gas sales,
storage and transportation and distribution, propane sales and distribution and
promotion, marketing and sale of compressed natural gas and the terminalling and
storage of liquefied natural gas; (b) the development and marketing of fuel cell
and distributive energy options; (c) electric marketing/generation; (d) the
operation of fuel oil distribution and transportation networks; and (e) sales
and rentals of appliances utilizing one or more of the fuel or energy options
specified in this Section 7.15.
 
Environmental Matters. Except as disclosed in Schedule 7.16, all facilities and
property owned or leased by the Borrower or any Subsidiary have been and
continue to be, owned or leased and operated by the Borrower and each Subsidiary
in material compliance with all Environmental Laws; (i) there has not been
(during the period of the Borrower’s, or a Subsidiary's ownership or lease) any
Release of Hazardous Materials at, on or under any property now (or, to the
Borrower’s knowledge, previously) owned or leased by the Borrower or any
Subsidiary (A) in quantities that would be required to be reported under any
Environmental Law, (B) that required, or may reasonably be expected to require,
the Borrower to expend funds on
 

 
 

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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 (C) that otherwise, singly or in the aggregate,
has, or may reasonably be expected to have, a Material Adverse Effect; (ii) the
Borrower and each Subsidiary have been issued and are in material compliance
with all permits, certificates, approvals, orders, licenses and other
authorizations relating to environmental matters necessary for their respective
businesses; and (iii) 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 the Borrower, previously) owned or leased by the
Borrower or any Subsidiary, except for PCB’s, surface impoundments, and
asbestos-containing materials of the type and in quantities that, to the
knowledge of the borrower, do not currently require remediation, and if
remediation of such materials or conditions is hereafter required for any
reason, such remediation activities would not reasonably be expected to have a
Material Adverse Effect; (iv) Hazardous Materials have not been generated, used,
treated, recycled, stored or disposed of in any of the facilities or on any of
the property now (or, to the knowledge of the Borrower, previously) owned or
leased by the Borrower or any Subsidiary during the time of the Borrower’s or
such Subsidiary’s ownership or leased by the Borrower or any Subsidiary during
the time of the Borrower’s or such Subsidiary's ownership except in material
compliance with all applicable Environmental Laws; and (v) all underground
storage tanks located on the property now (or, to the knowledge of the Borrower,
previously) owned or leased by the Borrower or any Subsidiary have been (and to
the extent currently owned or leased are) operated in material compliance with
all applicable Environmental Laws.
 
No Agreements Prohibiting Pledge of Southern Union Panhandle Stock. Except
for the applicable negative covenants of this Agreement, the Borrower is not a
party to any contract or other agreement with any Person that directly or
indirectly prohibits the Borrower from granting any Lien against the stock or
other equity interests in Southern Union Panhandle (whether common, preferred or
another class of equity ownership) at any time owned and held by the Borrower as
security for any Debt of the Borrower or any of its Subsidiaries.
 

 
 

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No Agreements Prohibiting Pledge of CCE Holdings Equity. Except for the
applicable negative covenants of this Agreement and the CCE Holdings LLC
Agreement, neither the Borrower nor Southern Union Panhandle is a party to any
contract or other agreement with any Person that directly or indirectly
prohibits the Borrower or Southern Union Panhandle from granting any Lien
against the equity interests in CCE Holdings (whether common, preferred or
another class of equity ownership) at any time owned and held by the Borrower or
any of its Subsidiaries as security for any Debt of the Borrower or any of its
Subsidiaries.
 
CONDITIONS
 
The obligation of the Banks to make any Loans or issue any Facility Letters of
Credit is subject to the following conditions:

Representations True and No Defaults
 
The representations and warranties contained in Section 7 shall be true and
correct on and as of the particular Borrowing Date as though made on and as of
such date;
 
The Borrower shall not be in default in the due performance of any covenant on
its part contained in this Agreement; and
 
no Event of Default or Default shall have occurred and be continuing.
 
Governmental Approvals. The Borrower shall have obtained all orders, approvals
or consents of all public regulatory bodies required for the making and carrying
out of this Agreement, the making of the borrowings pursuant hereto, the
issuance of the Notes to evidence such borrowings, and the execution and
delivery of the Security Documents.
 
Compliance With Law. The business and operations of the Borrower and each
Subsidiary as conducted at all times relevant to the transactions contemplated
by this Agreement to and including the close of business on the particular
Borrowing Date shall have been and shall be in compliance in all material
respects with all applicable State and Federal laws, regulations and orders
affecting the Borrower and each Subsidiary and the business and operations of
any of them.
 

 
 

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Notice of Borrowing and Other Documents. On each Borrowing Date, the Banks shall
have received (a) a Notice of Borrowing; and (b) such other documents and
certificates relating to the transactions herein contemplated as the Banks may
reasonably request.
 
Payment of Fees and Expenses. The Borrower shall have paid (a) all expenses of
the type described in Section 13.3 through the date of such Loan or the issuance
of such Facility Letter of Credit and (b) all closing, structuring and other
invoiced fees owed as of the Closing Date to the Agent, any of the Banks and/or
J. P. Morgan Securities Inc. by the Borrower under this Agreement or any other
written agreement between the Borrower and the Agent, the applicable Bank(s) or
J. P. Morgan Securities Inc.
 
Loan Documents, Opinions and Other Instruments. As of the Closing Date, the
Borrower shall have delivered to the Agent the following: (a) this Agreement,
each of the Notes and all other Loan Documents required by the Agent and the
Banks to be executed and delivered by the Borrower 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 the Borrower in the
State of Delaware; (c) a certificate from Secretary of State of the State of
Texas as to the continued qualification of the Borrower to do business in the
State of Texas; (d) a current certificate from the Office of the Comptroller of
the State of Texas as to the good standing of the Borrower in the State of
Texas; (e) a Secretary’s Certificate executed by the duly elected Secretary or a
duly elected Assistant Secretary of the Borrower, in a form acceptable to the
Agent, whereby such Secretary or Assistant Secretary certifies that one or more
corporate resolutions adopted by the Board of Directors of the Borrower remain
in full force and effect authorizing the Borrower to secure Loans and Facility
Letters of Credit in accordance with the terms of this Agreement; and (f) a
legal opinion from in-house counsel for the Borrower, dated as of the Closing
Date, addressed to the Agent and the Lenders and otherwise acceptable in all
respects to the Agent in its discretion.
 
Financial Condition. As of the Closing Date only, no material adverse change
shall have occurred with respect to the business, assets, properties or
condition (financial or otherwise) of the Borrower reflected in the quarterly
financial statements of the
 

 
 

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Borrower dated June 30, 2005 (copies of such audited financial statements having
been supplied to the Agent and each Bank)
 
AFFIRMATIVE COVENANTS
 
The Borrower covenants and agrees that, so long as the Borrower may borrow
hereunder and until payment in full of the Notes, and its other obligations
under this Agreement and the other Loan Documents the Borrower will:

Financial Statements and Information. Deliver to the Banks:
 
as soon as available, and in any event within 120 days after the end of each
fiscal year of the Borrower, a copy of the annual audit report of the Borrower
and the Subsidiaries for such fiscal year containing a balance sheet, statements
of income and stockholders equity and a cash flow statement, all in reasonable
detail and certified by Price Waterhouse Coopers or another independent
certified public accountant of recognized standing satisfactory to the Banks.
The Borrower will obtain from such accountants and deliver to the Banks at the
time said financial statements are delivered the written statement of the
accountants that in making the examination necessary to said certification they
have obtained no knowledge of any Event of Default or Default, or if such
accountants shall have obtained knowledge of any such Event of Default or
Default, they shall state the nature and period of existence thereof in such
statement; provided that such accountants shall not be liable directly or
indirectly to the Banks for failure to obtain knowledge of any such Event of
Default or Default; and
 
as soon as available, and in any event within sixty (60) days after the end of
each quarterly accounting period in each fiscal year of the Borrower (excluding
the fourth quarter), an unaudited financial report of the Borrower and the
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 the Borrower to have been prepared in accordance with GAAP, except as
may be explained in such certificate; and
 
copies of all statements and reports sent to stockholders of the Borrower or
filed with the Securities and Exchange Commission; and
 
such additional financial or other information as the Banks may reasonably
request including, without limitation, copies of such monthly, quarterly, and
annual reports of gas purchases and sales
 

 
 

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that the Borrower is required to deliver to or file with governmental bodies
pursuant to tariffs and/or franchise agreements.
 
All financial statements specified in clauses (a) and (b) above shall be
furnished in consolidated and consolidating form for the Borrower and all
Subsidiaries with comparative consolidated figures for the corresponding period
in the preceding year. Together with each delivery of financial statements
required by clauses (a) and (b) above, the Borrower will deliver to the Banks
(i) such schedules, computations and other information as may be required to
demonstrate that the Borrower is in compliance with its covenants in Section
10.1 or reflecting any noncompliance therewith as at the applicable date and
(ii) 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. 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 Lenders.

Lease and Investment Schedules. Deliver to the Banks:
 
from time to time and, in any event, with each delivery of annual financial
statements under Section 9.1(a), a current, complete schedule (in the form of
Schedule 9.2) of all agreements to rent or lease any property (personal, real or
mixed, but not including oil and gas leases) to which the Borrower or any
Subsidiary is a party lessee and which, considered independently or collectively
with other leases with the same lessor, involve an obligation by the Borrower or
a Subsidiary to make payments of at least $1,000,000.00 in any year, showing the
total amounts payable under each such agreement, the amounts and due dates of
payments thereunder and containing a description of the rented or leased
property, and all other information the Majority Banks may request; and
 
with each delivery of annual financial statements under Section 9.1(a) a current
complete schedule (in the form of Schedule 9.2) listing all debt exceeding
$1,000,000.00 in principal amount outstanding and equity owned or held by the
Borrower or any Subsidiary containing all information required by, and in a form
satisfactory to, the Banks, except for such debt or equity of Subsidiaries.
 
Books and Records. Maintain, and cause each Subsidiary 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.
 
Insurance. Maintain, and cause each Subsidiary 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
 

 
 

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businesses and properties, and furnish to the Banks, together with each delivery
of annual financial statements under Section 9.1(a), an Officer's Certificate
containing full information as to the insurance carried.
 
Maintenance of Property. Cause its Significant Property and the Significant
Property of each Subsidiary to be maintained, preserved, protected and kept in
good repair, working order and condition so that the business carried on in
connection therewith may be conducted properly and efficiently, except for
normal wear and tear.
 
Inspection of Property and Records. Permit any officer, director or agent of the
Agent or any Bank, on written notice and at such Banks expense, to visit and
inspect during normal business hours any of the properties, corporate books and
financial records of the Borrower and each Subsidiary and discuss their
respective affairs and finances with their principal officers, all at such times
as the Agent or any Bank may reasonably request.
 
Existence, Laws, Obligations. Maintain, and cause each Subsidiary to maintain,
its corporate existence and franchises, and any license agreements and tariffs
that permit the recovery of a return that the Borrower considers to be fair (and
as to licenses, franchises, and tariffs that are subject to regulatory
determinations of recovery of returns, the Borrower has presented or is
presenting favorable defense thereof); and to comply, and cause each Subsidiary
to comply, with all statutes and governmental regulations noncompliance with
which might have a Material Adverse Effect, and pay, and cause each Subsidiary
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 the Borrower or any Subsidiary except liabilities being
contested in good faith. Notwithstanding the foregoing, the Borrower may
dissolve those certain inactive and minimally capitalized Subsidiaries
designated as such on Schedule 7.1.
 
Notice of Certain Matters. Notify the Agent Bank immediately 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
the Borrower or any Subsidiary that is not covered by insurance (less applicable
deductible amounts)
 

 
 

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and which, if determined adversely to the Borrower or such Subsidiary, 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
the Borrower is likely, to result in a material adverse change, in the assets,
liabilities, financial condition, business or affairs of the Borrower or any
Subsidiary; (c) the occurrence of any Event of Default or any Default; or (d) a
change by Moody's Investors Service, Inc. or by Standard and Poor's Ratings
Group in the rating of the Borrower’s Funded Debt.
 
ERISA. At all times:
 
to the extent required of Borrower under applicable law, maintain and keep in
full force and effect each Plan, subject to Borrower’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;
 
to the extent required of Borrower 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;
 
immediately upon 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, fur-nish the Banks with a statement executed by the
president or chief financial officer of the Borrower 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;
 
notify the Banks promptly upon receipt by the Borrower 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;
 
to the extent required of Borrower under applicable law, maintain Pension
Benefit Guaranty Corporation liability coverage insurance required under ERISA;
 

 
 

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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
 
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.
 
Compliance with Environmental Laws. At all times:
 
use and operate, and cause each Subsidiary to use and operate, all of their
respective facilities and properties in material compliance with all
Environmental Laws; keep, and cause each Subsidiary to keep, all necessary
permits, approvals, orders, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material compliance
therewith; handle, and cause each Subsidiary to handle, all Hazardous Materials
in material compliance with all applicable Environmental Laws; and dispose, and
cause each Subsidiary to dispose, of all Hazardous Materials generated by the
Borrower or any Subsidiary or at any property owned or leased by them at
facilities or with carriers that maintain valid permits, approvals,
certificates, licenses or other authorizations for such disposal under
applicable Environmental Laws;
 
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 the Borrower and each Subsidiary 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 by the Borrower and its Subsidiaries of $10,000,000.00 or more; and
 
provide such information and certifications which the Banks may reasonably
request from time to time to evidence compliance with this Section 9.10.
 
PGA Clauses. The Borrower will use its best efforts to maintain in force
provisions in all of its tariffs and franchise agreements that permit the
Borrower to recover from customers substantially all of the amount by which the
cost of gas purchases exceeds the amount
 

 
 

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currently billed to customers for the delivery of such gas (sometimes referred
to as PGA clauses).
 
NEGATIVE COVENANTS
 
So long as the Borrower may borrow hereunder and until payment in full of the
Notes, except with the written consent of the Banks:

Capital Requirements. The Borrower will not:
 
permit its Consolidated Net Worth at the end of any fiscal quarter to be less
than the sum of (i) $1,267,663,000; (ii) 40% of Consolidated Net Income (if
positive) for the period commencing on January 1, 2004 and ending on the date of
determination, and treated as a single accounting period; (iii) the difference
between (A) 100% of the net proceeds of any issuance of capital or preferred
stock or any other Equity-Preferred Securities by the Borrower or any
consolidated Subsidiary, including without limitation, the Additional Offering,
received by the Borrower or such consolidated Subsidiary at any time after
January 1, 2004; and (B) the aggregate amount of all redemption or repurchase
payments hereafter made, if any, by the Borrower and any such consolidated
Subsidiary in connection with the repurchase by the Borrower or any such
consolidated Subsidiary of any of their respective capital or preferred stock;
(iv) without duplication, the difference between (A) 100% of the net proceeds
heretofore and hereafter received by the Borrower and any consolidated
Subsidiary in respect of the issuance by the Borrower or such consolidated
Subsidiary of the Structured Securities, and (B) the aggregate amount of all
redemption payments hereafter made, if any, by the Borrower and any such
consolidated Subsidiary in connection with the redemption of any of the
Structured Securities; and (v) the minority interests in the Borrower’s
Subsidiaries; or
 
permit the ratio of its Consolidated Total Indebtedness to its Consolidated
Total Capitalization to be greater than 0.65 to 1.00 at the end of any fiscal
quarter; or
 
acquire, or permit any Subsidiary to acquire, any assets other than
(i) investments permitted under Section 10.4, or (ii) Qualifying Assets; or
 
permit the ratio of EBDIT to Cash Interest Expense for the four fiscal quarters
most recently ended (considered as a single accounting period) at any time to be
less than 2.00 to 1.00 at all times.
 

 
 

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Mortgages, Liens, Etc. The Borrower will not, and will not permit any Subsidiary
to, create or permit to exist any Lien (including the charge upon assets
purchased under a conditional sales agreement, purchase money mortgage, security
agreement or other title retention agreement) upon any of its respective assets,
whether now owned or hereafter acquired, or assign or otherwise convey any right
to receive income, except:
 
Liens for taxes not yet due or that are being contested in good faith by
appropriate proceedings;
 
other Liens incidental to the conduct of its business or the ownership of its
assets that were not incurred in connection with the borrowing of money or the
obtaining of advances or credit, and that do not in the aggregate materially
detract from the value of such assets or materially impair the use thereof in
the operation of such business;
 
Liens on assets of a Subsidiary to secure obligations of such Subsidiary to the
Borrower or another Subsidiary; and
 
(i) Liens on property existing at the time of acquisition thereof by the
Borrower or any Subsidiary, including without limitation, (A) any property
acquired by the Borrower in consummating and finalizing any of the Prior
Acquisitions, (B) any Liens existing on any property of Panhandle Eastern or any
of its Subsidiaries to secure existing Debt of Panhandle Eastern or any of its
Subsidiaries as of the Closing Date and (C) any Liens against any property of
Panhandle Eastern or any of its Subsidiaries to secure Panhandle Eastern
Refinancing Debt (provided such Liens are limited to property of Panhandle
Eastern or any of its Subsidiaries securing the Debt so extended, refinanced,
renewed, replaced, defeased or refunded), or (ii) purchase money Liens placed on
an item of real or personal property purchased by the Borrower or any Subsidiary
to secure a portion of the purchase price of such property; provided that no
such Lien may encumber or cover any other property of the Borrower or any
Subsidiary.
 
Debt. The Borrower will not, and will not permit any Subsidiary to, incur or
permit to exist any Debt, except:
 
Debt evidenced by the Notes or the Facility Letter of Credit Obligations, or
issued pursuant to the Additional Offering and any
 

 
 

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Equity-Preferred Securities (to the extent the same constitutes Debt) not in
default, as well as (i) Debt of Panhandle Eastern and/or any of its Subsidiaries
outstanding as of the Closing Date, (ii) any Panhandle Eastern Refinancing Debt,
(iii) any working capital credit facility or facilities provided directly to
Panhandle Eastern and/or any of Panhandle Eastern’s Subsidiaries by any party
other than the Borrower, so long as the principal amount of all such outstanding
working capital facilities, together with the outstanding principal amount of
any working capital loans or advances by the Borrower to Panhandle Eastern
and/or any of Panhandle Eastern’s Subsidiaries, does not exceed (A) $50,000,000
in the aggregate at any time that the ratio of Consolidated Total Indebtedness
to Consolidated Total Capitalization for Panhandle Eastern and Panhandle
Eastern’s Subsidiaries (excluding the Borrower and all other Subsidiaries of the
Borrower for purposes of such calculation) is greater than 0.65 to 1.00 and (B)
$75,000,000 in the aggregate at any time that the ratio of Consolidated Total
Indebtedness to Consolidated Total Capitalization for Panhandle Eastern and
Panhandle Eastern’s Subsidiaries (excluding the Borrower and all other
Subsidiaries of the Borrower for purposes of such calculation) is less than or
equal to 0.65 to 1.00, (iv) any loans or advances of proceeds of the Additional
Offering by the Borrower (or Panhandle Eastern, if applicable) to CCE
Acquisition for purposes of financing the Cross Country Acquisition and (v) any
loans or advances by the Borrower to Panhandle Eastern and/or any of the
Borrower’s other Subsidiaries permitted under Section 10.4(b);
 
Debt of any Subsidiary to the Borrower or any other Subsidiary, except to the
extent limited by the terms of Section 10.4(b), and Debt of the Borrower to any
Subsidiary;
 
Debt existing as of June 30, 2005 as reflected on financial statements delivered
under Section 7.2(b) and refinancings thereof other than Debt that has been
refinanced by the proceeds of Loans;
 
endorsements in the ordinary course of business of negotiable instruments in the
course of collection;
 
Debt of the Borrower or any Subsidiary representing the portion of the purchase
price of property acquired by the Borrower or such Subsidiary that is secured by
Liens permitted by the provisions of Section 10.2(d); provided, however, that at
no time may the aggregate principal amount of such Debt outstanding exceed
thirty percent (30%) of the Consolidated Net Worth of the Borrower and its
Subsidiaries as of the applicable determination date;
 

 
 

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Debt evidenced by Senior Notes;
 
additional Debt of the Borrower and Structured Securities of the Borrower and
the Southern Union Trusts, provided that after giving effect to the issuance
thereof, there shall exist no Default or Event of Default; and: (i) the ratio of
Consolidated Total Indebtedness to Consolidated Total Capitalization shall be no
greater than 0.65 to 1.00 at all times; (ii) the ratio of EBDIT for the four
fiscal quarters most recently ended to pro forma Cash Interest Expense for the
following four fiscal quarters shall be no less than 2.00 to 1.0 at all times;
provided, however, that if the additional Debt for which the determinations
required to be made by this subparagraph (g) will be used to finance in whole or
in part the consideration to be paid by the Borrower for the acquisition of any
entity otherwise permitted under the terms of this Agreement, the determination
of EBDIT for purposes of this ratio shall include not only the EBDIT of the
Borrower and its Subsidiaries for the four fiscal quarters most recently ended,
but shall also include the EBDIT of such entity to be acquired for such four
fiscal quarters most recently ended; and (iii) (A) such Debt and Structured
Securities shall have a final maturity or mandatory redemption date, as the case
may be, no earlier than the Maturity Date and shall mature or be subject to
mandatory redemption or mandatory defeasance no earlier than the Maturity Date
(as so extended) and shall be subject to no mandatory redemption or “put” to the
Borrower or any Southern Union Trust exercisable, or sinking fund or other
similar mandatory principal payment provisions that require payments to be made
toward principal, prior to such Maturity Date (as so extended); or (B) (x) such
additional Debt shall have a final maturity date prior to the Maturity Date, (y)
such additional Debt shall not exceed Two Hundred Fifty Million Dollars
($250,000,000.00) in the aggregate plus Twenty Million Dollars ($20,000,000.00)
of reimbursement obligations incurred in connection with Non-Facility Letters of
Credit issued by a Bank or Banks or by any other financial institution, and (z)
such additional Debt shall be borrowed from a Bank or Banks as a loan or loans
arising independent of this Agreement or shall be borrowed from a financial
institution that is not a Bank under this Agreement; and
 
additional Debt of Trunkline LNG Holdings or any of its Subsidiaries, so long as
(i) such Debt is to Trunkline LNG Holdings and/or any of its Subsidiaries only
and is not recourse in any respect to the Borrower or any other Subsidiary of
the Borrower (other than Panhandle Eastern and its Subsidiaries), (ii) the
proceeds of such
 

 
 

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Debt is used solely to finance capital expenditures of Trunkline LNG Holdings
and/or its Subsidiaries, and (iii) after giving effect to such Debt, no Default
or Event of Default shall exist.
 
Loans, Advances and Investments. The Borrower will not, and will not permit any
Subsidiary to, make or have outstanding any loan or advance to, or own or
acquire any stock or securities of or equity interest or other Investment in,
any Person, except (without duplication):
 
stock or other equity interests of (i) the Subsidiaries named in Section 7.1;
(ii) other entities that are acquired by the Borrower or any Subsidiary but that
are promptly merged with and into the Borrower; (iii) Southern Union Panhandle,
Panhandle Eastern and any Subsidiaries of Panhandle Eastern acquired as a result
of the Panhandle Eastern Acquisition; (iv) CCE Holdings; and (v) the same
Qualifying Entities as the Qualifying Entities under subparagraph (ii) of the
definition of "Qualifying Assets,”provided that at any one time the aggregate
purchase price paid for such stock and other equity interests in such Qualifying
Entities then held by the Borrower as of the determination date, including the
aggregate amount of Debt assumed or deemed incurred by the Borrower in
connection with the purchase of such stock and other equity interests, is not
more than twenty percent (20%) of the Consolidated Net Worth of the Borrower and
its Subsidiaries as of the applicable determination date;
 
loans or advances to a Subsidiary, as well as advances of proceeds of the
Additional Offering by the Borrower or Panhandle Eastern to CCE Acquisition for
purposes of facilitating the consummation of the Cross Country Acquisition;
provided, however, that the principal amount of such loans and advances for
working capital purposes at any time outstanding to Panhandle Eastern and/or any
of Panhandle Eastern’s Subsidiaries, together with the principal amount of any
outstanding working capital credit facility or facilities provided directly to
Panhandle Eastern and/or any of Panhandle Eastern’s Subsidiaries by any party
other than the Borrower, does not exceed $25,000,000 in the aggregate at any
time;
 
Securities maturing no more than 180 days after Borrower’s purchase that are
either:
 
readily marketable securities issued by the United States or its agencies or
instrumentalities; or
 

 
 

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commercial paper rated "Prime 2” by Moody’s Investors Service, Inc. ("Moody’s”)
or A-2 by Standard and Poor’s Ratings Group ("S&P”); or
 
certificates of deposit or repurchase contracts on customary terms with
financial institutions in which deposits are insured by any agency or
instrumentality of the United States; or
 
readily marketable securities received in settlement of liabilities created in
the ordinary course of business; or
 
obligations of states, agencies, counties, cities and other political
subdivisions of any state rated at lest MIG2, VMIG2 or Aa by Moody’s or AA by
S&P; or
 
loan participations in credits in which the borrower’s debt is rated at least Aa
or Prime 2 by Moody’s or AA or A-2 by S&P; or
 
money market mutual funds that are regulated by the Securities and Exchange
Commission, have a dollar-weighted average stated maturity of 90 days or fewer
on their investments and include in their investment objectives the maintenance
of a stable net asset value of $1 for each share.
 
other equity interests owned by a Subsidiary on the date of this Agreement and
such additional equity interests to the extent (but only to the extent) that
such Subsidiary is legally obligated to acquire those interests on the date of
this Agreement, in each case as disclosed to the Banks in writing;
 
loans or advances by the Borrower to customers in connection with and pursuant
to marketing and merchandising products that the Borrower reasonably expects to
increase sales of the Borrower or Subsidiaries, provided that: (i) such loans
must be either less than $2,000,000.00 to any one customer (or group of
affiliated customers, shown on the Borrower’s records to be Affiliates) or must
be disclosed on Schedule 9.2 hereof; and (ii) all such loans must not exceed
$24,000,000.00 in the aggregate outstanding at any time;
 
travel and expense advances in the ordinary course of business to officers and
employees;
 
stock or securities of or equity interests in, any Person provided that, after
giving effect to the acquisition and ownership
 

 
 

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thereof, the Borrower is in compliance with the provisions of Section 10.1(c) of
this Agreement;
 
loans or advances to any member of the CCE Group by the Borrower or any
Subsidiary not otherwise permitted under the other provisions of this Section
10.4, so long as the sum of such loans and advances does not exceed $25,000,000
in the aggregate at any time; and
 
loans, advances or other Investments by the Borrower or any Subsidiary not
otherwise permitted under the other provisions of this Section 10.4, so long as
the sum of the outstanding balance of all of such loans and advances and the
purchase price paid for all of such other Investments does not exceed in the
aggregate seven percent (7%) of the Consolidated Net Worth of the Borrower and
its Subsidiaries as of the applicable determination date.
 
Stock and Debt of Subsidiaries. The Borrower will not, and will not permit any
Subsidiary to, sell or otherwise dispose of any shares of stock, other equity
interests or Debt of any Subsidiary, or permit any Subsidiary to issue or
dispose of its stock (other than directors' qualifying shares), except for the
following: (i) the sale, transfer or issuance of stock, other equity interests
or Debt of any Subsidiary to the Borrower or another Subsidiary of the Borrower;
(ii) the sale of stock in Sea Robin Pipeline Company and Debt of Sea Robin
Pipeline Company, (iii) the issuance by Southern Union Trusts of preferred
beneficial interests in public offerings of Borrower’s Structured Securities,
and (iv) the issuance by other Subsidiaries of the Borrower formed for the
purpose of issuing Equity-Preferred Securities.
 
Merger, Consolidation, Etc. 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:
 
any Subsidiary 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;
 

 
 

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any Subsidiary may sell, lease, transfer or otherwise dispose of any of its
assets to the Borrower or another Subsidiary;
 
the Borrower may acquire the assets of any Person, provided that, after giving
effect to such acquisition, the Borrower is in compliance with the provisions of
Sections 10.1(c); and
 
the Borrower or any Subsidiary may sell, lease, assign or otherwise dispose of
assets as otherwise permitted under Section 10.8.
 
Supply and Purchase Contracts. The Borrower will not, and will not permit any
Subsidiary to, enter into or be a party to any contract for the purchase of
materials, supplies or other property if such contract requires that payment for
such materials, supplies or other property shall be made regardless of whether
or not delivery is ever made or tendered of such materials, supplies and other
property, except in those circumstances and involving those supply or purchase
contracts that the Borrower reasonably considers to be necessary or helpful in
its operations in the ordinary course of business and that the Borrower
reasonably considers not to be unnecessarily burdensome on the Borrower or its
Subsidiaries.
 
Sale or Other Disposition of Assets. The Borrower will not, and will not permit
any Subsidiary to, except as permitted under this Section 10.8, 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 (i) the Borrower or any Subsidiary may in the
ordinary course of business dispose of (a) Property consisting of Inventory; and
(b) Property con-sist-ing of goods or equipment that are, in the opinion of the
Borrower or any Subsidiary, obsolete or unproductive, but if in the good faith
judgment of the Borrower or any Subsidiary such disposition with-out 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; (ii) the Borrower may transfer or dispose of any of its Significant
Property (in any transaction or series of transactions) to any Subsidiary or
Subsidiaries only if such Property so transferred or disposed of after the
Closing Date has an aggregate value (determined after depreciation and in
accordance with GAAP) of not
 

 
 

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more than 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 June 30, 2005; (iii) the Borrower may dispose
of its real property in one or more sale/leaseback transactions, provided that
any Debt incurred in connection with such transaction does not create a Default
as defined herein; (iv) a Southern Union Trust may distribute the Borrower’s
subordinated debt securities constituting a portion of the Structured
Securities, on the terms and under the conditions set out in the registration
state-ment therefor filed with the Securities and Exchange Commission on March
25, 1995 or any similar registration statement filed with the Securities and
Exchange Commission in connection with any other Structured Securities issued in
connection with the Prior Acquisitions; (v) the Borrower or any Subsidiary may
dispose of real property or tangible personal property other than Inven-tory (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 Closing 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 deter-mined after depreciation and in accordance with
GAAP, as of June 30, 2005; (vi) the Borrower may dispose of Qualifying Assets of
the type described in clause (ii) of the definition of Qualifying Assets,
provided that the Borrower applies the net proceeds from such disposition
against the Loans in an amount equal to the amount of Loan proceeds previously
advanced to finance the acquisition of such clause (ii) Qualifying Assets;
(vii) the Borrower may dispose of other Investments of the type acquired under
the terms of Section 10.4(h), provided that the Borrower applies the net
proceeds from such disposition against the Loans in an amount equal to the
amount of Loan proceeds previously advanced to finance the acquisition of such
other Investments; and (viii) the Borrower may sell all stock or all or
substantially all of the assets in Sea Robin Pipeline Company.
 
Discount or Sale of Receivables. The Borrower will not, and will not permit any
Subsidiary, other than Southern Union Total Energy
 

 
 

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Services, Inc., to discount or sell with recourse, or sell for less than the
face value thereof (including any accrued interest) any of its notes receivable,
receivables under leases or other accounts receivable.
 
Change in Accounting Method. The Borrower will not, and will not permit any
Subsidiary to, make any change in the method of computing depreciation for
either tax or book purposes or any other material change in accounting method
representing any departure from GAAP without the Majority Banks' prior written
approval.
 
Restricted Payment. The Borrower will not pay or declare any -Restricted Payment
unless immediately prior to such payment and after giving effect to such
payment, the Borrower could incur at least $1 of additional Debt without
violating the provisions of Section 10.3(g) and after giving effect thereto no
Default or Event of Default -exists hereunder; provided, however, that the
Borrower’s ability to purchase or agree to purchase its common stock and/or
preferred equity securities (including without limitation, Equity-Preferred
Securities) shall be limited as follows: (a) not more than $50,000,000 in the
aggregate of common stock and preferred equity securities may be repurchased per
each fiscal year of the Borrower at any time the ratio of Consolidated Total
Indebtedness to Consolidated Total Capitalization for the Borrower and its
Subsidiaries is greater than 0.60 to 1.00; (b) not more than $100,000,000 in the
aggregate of common stock and preferred equity securities may be repurchased per
each fiscal year of the Borrower at any time the ratio of Consolidated Total
Indebtedness to Consolidated Total Capitalization for the Borrower and its
Subsidiaries is less than or equal to 0.60 to 1.00; and (c) no repurchases of
common stock or preferred equity securities may be made if the Borrower’s
unsecured, non-credit enhanced senior debt as specified by Standard & Poor’s
Ratings Group and Moody’s Investor Service, Inc. falls below either BBB- or
Baa3, respectively.
 
Securities Credit Regulations. Neither the Borrower nor any Subsidiary will take
or permit any action which might cause the Loans or the Facility Letter of
Credit Obligations 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.
 

 
 

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Nature of Business; Management. The Borrower will not, and will not permit any
Subsidiary to: (a) change its principal line of business; or (b) enter into any
business not within the scope of Section 7.15 and the definition of Qualifying
Assets; or (c) permit any material overall change in the management of the
Borrower.
 
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 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.
 
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.
 
Limitations on Payments on Subordinated Debt. The Borrower will not, and will
not permit any Subsidiary to, make any payment in respect of interest on,
principal of, or other-wise relating to, the borrower’s subordinated debt
securities issued in connection with the Structured Securities if, after giving
effect to such payment, a Default or Event of Default would exist.
 
No Agreements Prohibiting Pledge of Southern Union Panhandle Stock. The Borrower
will not enter into any contract or other agreement with any Person that
directly or indirectly prohibits the Borrower from granting any Lien against the
stock or other equity
 

 
 

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interests in Southern Union Panhandle (whether common, preferred or another
class of equity ownership) at any time owned and held by the Borrower as
security for any Debt of the Borrower or any of its Subsidiaries, other than the
applicable negative covenants of this Agreement.
 
No Agreements Prohibiting Pledge of CCE Holdings Equity. Neither the Borrower
nor Southern Union Panhandle nor CCE Acquisition will enter into any contract or
other agreement with any Person that directly or indirectly prohibits the
Borrower or Southern Union Panhandle or CCE Acquisition from granting any Lien
against the equity interests in CCE Holdings (whether common, preferred or
another class of equity ownership) at any time owned and held by the Borrower or
any of its Subsidiaries as security for any Debt of the Borrower or any of its
Subsidiaries, other than the applicable negative covenants of this Agreement and
the CCE Holdings LLC Agreement.
 
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 holders of more than fifty percent (50%) in
principal amount of the Notes then outstanding or, if no Note is then
outstanding, Banks having more than fifty percent (50%) of the Commitments, (a)
by notice to the Borrower, declare the Commit-ment of each Bank and the several
obligation of each Bank to make Loans hereunder to be termi-nated, whereupon the
same shall forthwith terminate, and (b) 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 11.7 or 11.8 here-of, (i) the
Commitment of each Bank and the obligation of the Banks to make Loans shall
automati-cally be terminated and (ii) 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:
 
Failure to Pay Principal or Interest. The Borrower does not pay, repay or prepay
any principal of or interest on any Note when due.
 
Failure to Pay Commitment Fee or Other Amounts. The Borrower does not pay any
commitment fee or any other obligation or amount payable under this Agreement,
the Notes, or any Letter of Credit Reimbursement Agreement within five (5)
calendar days after the same shall have become due.
 

 
 

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Failure to Pay Other Debt. The Borrower or any Subsidiary fails to pay principal
or interest on any other Debt aggregating more than $3,000,000.00 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.
 
Misrepresentation or Breach of Warranty. Any representation or warranty made by
the Borrower 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.
 
Violation of Negative Covenants. The Borrower violates any covenant, agreement
or condition contained in Sections 10.2, 10.3, 10.5, 10.6, 10.8, 10.9, 10.10,
10.11, or 10.15.
 
Violation of Other Covenants, Etc. The Borrower violates any other covenant,
agreement or condition contained herein (other than the covenants, agreements
and conditions set forth or described in Sections 11.1, 11.2, 11.3, 11.4, and
11.5 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 the
Borrower of such violation or (ii) written notice has been received by the
Borrower from the Bank or the holder of the Note.
 
Bankruptcy and Other Matters. The Borrower or any Subsidiary (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 (i) there is appointed a receiver, custodian, liquidator, fiscal
agent, or trustee of the Borrower or any Subsidiary or of the whole or any
substantial part of their respective assets; or (ii) any court enters an order,
judgment or decree approving a petition filed against the Borrower or any
Subsidiary seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any Debtor Law and either such
order, decree or judgment so
 

 
 

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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.
 
Dissolution. Any order is entered in any proceeding against the Borrower or any
Subsidiary decreeing the dissolution, liquidation, winding-up or split-up of the
Borrower or such Subsidiary, and such order remains in effect for thirty (30)
days.
 
Undischarged Judgment. Final Judgment or judgments in the aggregate, that might
be or give rise to Liens on any property of the Borrower or any Subsidiary, for
the payment of money in excess of $5,000,000.00 shall be rendered against the
Borrower or any Subsidiary and the same shall remain undischarged for a period
of thirty (30) days during which execution shall not be effectively stayed.
 
Environmental Matters. The occurrence of any of the following events that could
result in liability to the Borrower or any Subsidiary under any Environmental
Law or the creation of a Lien on any property of the Borrower or any Subsidiary
in favor of any governmental authority or any other Person for any liability
under any Environmental Law or for damages arising from costs incurred by such
Person in response to a Release or threatened Release of Hazardous Materials
into the environment if any such asserted liability or Lien exceeds
$10,000,000.00 and if any such lien would cover any property of the Borrower or
any Subsidiary which property is or would reasonably be considered to be
integral to the operations of the Borrower or any Subsidiary in the ordinary
course of business:
 
the Release of Hazardous Materials at, upon, under or within the property owned
or leased by the Borrower or any Subsidiary or any contiguous property;
 
the receipt by the Borrower or any Subsidiary of any summons, claim, complaint,
judgment, order or similar notice that it is not in compliance with or that any
governmental authority is investigating its compliance with any Environmental
Law;
 
the receipt by the Borrower or any Subsidiary of any notice or claim to the
effect that it is or may be liable for the Release or threatened Release of
Hazardous Materials into the environment; or
 

 
 

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any governmental authority incurs costs or expenses in response to the Release
of any Hazardous Material which affects in any way the properties of the
Borrower or any Subsidiary.
 
Other Remedies. In addition to and cumulative of any rights or remedies
expressly provided for in this Section 11, 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.
 
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.
 

THE AGENT
 
Authorization and Action. Each Bank hereby appoints JPMorgan as its Agent under
and irrevocably authorizes the Agent (subject to Sections 12.1 and 12.7) to take
such action as the Agent on its behalf and to exercise such powers under this
Agreement 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 to
exercise all rights, powers, and remedies that the Agent may have hereunder. 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
 

 
 

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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.
 
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
(which may be by telegram, cable, telex, or
 

 
 

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otherwise) believed by it to be genuine and signed or sent by the proper party
or parties.
 
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
12.7) take such action with respect to such Default; provided that, unless and
until the Agent shall have received the directions referred to in Sections 12.1
or 12.7, 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.
 
JPMorgan and Affiliates. With respect to its Commitment, any Loan made by it,
and the Note issued to it, JPMorgan 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 JPMorgan in its individual capacity. JPMorgan 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 JPMorgan
were not the Agent and without any duty to account therefor to the Banks.
 
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
 

 
 

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to keep itself informed as to the performance or observance by the Borrower of
this Agreement or to inspect the properties or books of 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 the Borrower or any Subsidiary (or any of their Affiliates) which
may come into the possession of the Agent or any of its Affiliates.
 
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 Commitment, 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.
 

 
 

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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 $500,000,000.00. 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 12 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
 
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.
 

 
 

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MISCELLANEOUS
 
Representation by the Banks. Each Bank represents that it is the intention of
such Bank, as of the date of its acquisition of its Note, to acquire the Note
for its account or for the account of its Affiliates, and not with a view to the
distribution or sale thereof, and, subject to any applicable laws, the
disposition of such Bank's property shall at all times be within its control.
The Notes have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), and may not be transferred, sold or otherwise -disposed
of except (a) in a registered Offering under the Securities Act; (b) pursuant to
an exemption from the registration provisions of the Securities Act; or (c) if
the Securities Act shall not apply to the Notes or the transactions contemplated
hereunder as commercial lending transactions.
 
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 8; (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 rate of interest on, any Note, or
any fees or other amounts payable hereunder; (d) postpone any date fixed for any
payment of principal of, or interest on, any Note, or any fees (including,
without limitation, any fee) or other amounts payable hereunder; (e) change the
percentage of the Commitments or of the aggregate unpaid principal amount of any
Note, or the number of Banks which shall be required for Banks, or any of them,
to take any action hereunder; or (f) amend this Section 13.2; 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
 

 
 

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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.
 
Reimbursement of Expenses. The Borrower agrees to reimburse each Bank for its
reasonable out-of-pocket expenses, including the reasonable fees and expenses of
counsel to each Bank, in connection with the transactions contemplated by this
Agreement, whether or not such contemplated transactions shall be consummated,
or any of them, or otherwise in connection with this Agreement, including its
negotiation, preparation, execution, administration, modification and
enforcement, and all reasonable fees, including the reasonable fees and expenses
of counsel to the Agent and each Bank, costs and expenses of the Agent for
environmental consultants and costs and expenses of the Agent and each Bank in
connection with due diligence, transportation, computer time and research and
duplication. The Borrower agrees to pay any and all stamp and other taxes which
may be payable or determined to be payable in connection with the execution and
delivery of this Agreement or the Notes, and to save any holder of any Note
harmless from any and all liabilities with respect to or resulting from any
delay or omission to pay any such taxes. The obligations of the Borrower under
this Section 13.3 shall survive the termination of this Agreement and/or the
payment of the Notes.
 
Notices. All notices and other communications provided for herein shall be in
writing (including telex, facsimile, or cable communication) and shall be
mailed, telecopied, telexed, cabled or delivered addressed as follows:
 

 
 

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(a) If to the Borrower, to it at:     Southern Union Company
     One PEI Center
Wilkes-Barre, Pennsylvania 18711-0601
Attention: Mr. Richard N. Marshall
Fax: (570) 820-2401

with copies to:            Southern Union Company
   5444 Westheimer Road
    Houston, Texas 77056
    Attention: Dennis K. Morgan, Esq.
    Fax: (713) 989-1166

(b) If to the Agent, to it at:             JPMorgan Chase Bank, N.A.
  700 Lavaca, 2nd Floor
  Austin, Texas 78701
  Attention: Manager/Commercial Lending
  Fax: (512) 479-2853

with a copy to:              JPMorgan Chase Bank, N.A.
  Loan and Agency Services
  1111 Fannin, Floor 10
  Houston, Texas 77002
  Attention: Rosemarie Salvacion
  Fax: (713) 427-6307

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 such notices and
communications shall, when mailed, telecopied, telexed, transmitted, or cabled,
become effective when deposited in the mail, confirmed by telex answer back,
transmitted to the telecopier, or delivered to the cable company, except that
notices and communications to the Agent under Sections 2.1(c) or 2.2 shall not
be effective until actually received by the Agent.

Governing Law; Venue. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE UNITED
STATES OF AMERICA; provided, however, that Chapter 346 of the Texas Finance
Code, as amended, shall not apply to this Agreement and the Notes issued
hereunder. Travis County, Texas shall be a proper place of venue to enforce
payment or performance of this Agreement and the other Loan Documents by the
Borrower, unless the Agent shall give its prior written consent to a different
venue. The Borrower hereby irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to any of the Loan
Documents in the District Courts of Travis County, Texas, or in the United
States District Court for the Western District of Texas, Austin Division, and
hereby further irrevocably waives any claims that any such suit, action or
proceeding brought in any such court has
 

 
 

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been brought in an inconvenient forum. The Borrower hereby irrevocably agrees
that, provided that the Borrower can obtain personal jurisdiction over and
service of process upon the Agent or the applicable Bank, any legal proceeding
against the Agent or any Bank arising out of or in connection with this
Agreement or the other Loan Documents shall be brought in the district courts of
Travis County, Texas, or in the United States District Court for the Western
District of Texas, Austin Division. Nothing contained in this Section or in any
other provision of any Loan Document (unless expressly provided otherwise) shall
be deemed or construed as an agreement by any Bank to be subject to the
jurisdiction of such courts.
 
Survival of Representations, Warranties and Covenants. All representations,
warranties and covenants contained herein or made in writing by the Borrower in
connection herewith shall survive the execution and delivery of this Agreement
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 the Borrower 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 the Borrower.
 
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.
 
Separability. 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
 

 
 

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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.
 
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.
 
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.
 
Limitation of Liability. No claim may be made by the Borrower or any other
Person against the Agent or any Bank or the Affiliates, directors, officers,
employees, attorneys, or agents of the Agent or any Bank 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 Borrower hereby waives, releases, and agrees 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.
 
Set-Off. The Borrower hereby gives and confirms to each Bank a right of set-off
of all moneys, securities and other property of the Borrower (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 the Borrower, 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 the Borrower with, and any and
all claims of security for the payment of the Notes and of all other liabilities
and obligations now or hereafter owed by the Borrower to such Bank, contracted
with or acquired by such
 

 
 

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Bank, whether such liabilities and obligations be joint, several, absolute,
contingent, secured, unsecured, matured or unmatured, and the Borrower 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
the Borrower.
 
Sale or Assignment
 
Subject to the prior written consent of the Agent and the Borrower, such consent
not to be unreasonably withheld or delayed, each Bank may assign to an Eligible
Assignee all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments and the Note
held by it); provided, however, that: (i) each such assignment shall be of a
constant, and not a varying, percentage of all of the assigning Banks rights and
obligations under this Agreement; (ii) the amount of the Commitments so assigned
shall equal or exceed $5,000,000.00; (iii) the Commitment of each Bank shall be
not less than $5,000,000.00 (subject only to reductions pursuant to Sections 4.6
and 11 hereof); (iv) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register (as
hereinafter defined), an Assignment and Acceptance in the form of Exhibit C
attached hereto and made a part hereof (the "Assignment and Acceptance"),
together with any Note subject to such assignment and a processing and
recordation fee of $5,000.00; (v) any such assignment from one Bank to another
Bank shall not require the consent of the Agent or the Borrower if such
assignment does not result in any Bank holding more than 60% of the aggregate
outstanding Commitments; and (vi) any such assignment shall not require the
consent of the Borrower if a Default or Event of Default shall have occurred and
is then continuing. Upon such execution, delivery, acceptance, and recording,
from and after the effective date specified in each Assignment and Acceptance,
which effective date shall be the date on which such Assignment and Acceptance
is accepted by the Agent, (A) the Eligible Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder
 

 
 

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have been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of a Bank under the Loan Documents, and (B) 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 and be released from its obligations under the Loan Documents (and,
in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Bank's rights and obligations under the Loan Documents,
such Bank shall cease to be a party thereto).
 
By executing and delivering an Assignment and Acceptance, the Bank assignor
thereunder and the Eligible Assignee thereunder confirm to and agree with each
other and the other parties 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 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 the
Borrower or any Subsidiary or the performance or observance by the Borrower of
any of its obligations under any Loan Document or any other instrument or
document furnished pursuant thereto; (iii) such Eligible Assignee confirms that
it has received a copy of the Loan Documents, together with copies of the
financial statements referred to in Section 7.2 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 Eligible
Assignee, independently and without reliance upon the Agent, such assigning
Bank, or any Bank and based on such documents and information as it shall deem
appropriate at the time, will continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such Eligible Assignee
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under any Loan Document as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; and (vi) such Eligible Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of any
Loan Document are required to be performed by it as a Bank.
 

 
 

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The Agent shall maintain at its address referred to in Section 13.4 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 Banks and the Commitment of,
and 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 Banks may
treat each Person whose name is recorded in the Register as Bank hereunder for
all purposes of the Loan Documents. The Register shall be available for
inspection by the Borrower or any Bank at any reasonable time and from time to
time upon reasonable prior notice.
 
Upon its receipt of an Assignment and Acceptance executed by an assigning Bank,
together with any Note subject to such assignment, the Agent, if such Assignment
and Acceptance has been completed and is in substantially the form of Exhibit C,
shall (i) accept such Assignment and Acceptance; (ii) record the information
contained therein in the Register; and (iii) give prompt notice thereof to the
Borrower. Within three (3) Business Days after its receipt of such notice, the
Borrower at its own expense, shall execute and deliver to the Agent in exchange
for each surrendered Note a new Note to the order of such Eligible Assignee in
an amount equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Bank has retained a Commitment hereunder, a new
Note to the order of the assigning Bank in an amount equal to the Commitment
retained by it hereunder. The new Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of the surrendered Notes, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit C attached hereto and made a
part hereof. Upon receipt by the Agent of each such new Note conforming to the
requirements set forth in the preceding sentences, the Agent shall return to the
Borrower each such surrendered Note marked to show that each such surrendered
Note has been replaced, renewed, and extended by such new Note.
 
Each Bank may sell participations to one or more banks or other entities in or
to all or a portion of its rights and/or obligations under this Agreement
(including, without limitation, all or a portion of its Commitment and the Note
held by it); provided, however, that (i) each Bank's obligations under this
Agreement (including, without limitation, its Commitment to the Borrower
hereunder) shall remain
 

 
 

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unchanged; (ii) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations; (iii) except as provided below,
such Bank shall remain the holder of any such Note for all purposes of this
Agreement; and (iv) the participating banks or other entities shall be entitled
to the benefits of Sections 2.3 and 4.6 to recover costs, losses and expenses in
the circumstances, and to the extent provided in Section 2.3, as though such
participant were a Bank; provided, however, the amounts to which a participant
shall be entitled to obtain pursuant to Sections 2.3 and 4.6 shall be determined
by reference to such participant's selling Bank and shall be recoverable solely
from such selling Bank and (v) the Borrower, the Agent and the other Banks shall
continue to deal solely and directly with the selling Bank in connection with
such Bank's rights and obligations under this Agreement and the other Loan
Documents; provided, however, the selling Bank may grant a participant rights
with respect to amendments, modification or waivers with respect to any fees
payable hereunder to such Bank (including the amount and the dates fixed for the
payment of any such fees) or the amount of principal or the rate of interest
payable on, the dates fixed for any payment of principal or interest on, the
Loans, or the release of any obligations of the Borrower hereunder and under the
other Loan Documents, or the release of any security for any of the Obligations.
Except with respect to cost protections contained in Sections 2.3 and 4.6, no
participant shall be a third party beneficiary of this Agreement and shall not
be entitled to enforce any rights provided to its selling Bank against the
Company under this Agreement.
 
Notwithstanding anything herein to the contrary, each Bank may pledge and assign
all or any portion of its rights and interests under the Loan Documents to any
Federal Reserve Bank.
 
Notwithstanding anything herein to the contrary, each Bank may assign all or a
portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments and the Note
held by it) to one or more Bank Affiliates without the prior written consent of
the Borrower. For purposes of this Section 12.13, “Bank Affiliate” shall mean
(a) with respect to any Bank, (i) an Affiliate of such Bank or (ii) any entity
(whether a corporation, partnership, trust or otherwise) that is engaged in
making, purchasing, holding or otherwise investing in bank loans and similar
extensions of credit in the ordinary course of its business and is administered
or managed by a Bank or an Affiliate
 

 
 

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of such Bank and (b) with respect to any Bank that is a fund which invests in
bank loans and similar extensions of credit, any other fund that invests in bank
loans and similar extensions of credit and is managed by the same investment
advisor as such Bank or by an Affiliate of such investment advisor. Each Bank
Affiliate shall be deemed for purposes hereof to be an “Eligible Assignee.”
 
Non U.S. Banks. Prior to the date of the initial Borrowings hereunder, and from
time to time thereafter if requested by the Borrower or the Agent, each Bank
organized under the laws of a jurisdiction outside the United States of America
shall provide the Agent and the Borrower with the forms prescribed by the
Internal Revenue Service of the United States of America certifying such Banks
exemption from United States withholding taxes with respect to all payments to
be made to such Bank hereunder or under such Bank's Note. Unless the Borrower
and the Agent have received forms or other documents satisfactory to them
indicating that payments hereunder or under such Bank's Note are not subject to
United States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Borrower or the Agent shall withhold taxes from such
payments at the applicable statutory rate in the case of payments to or for any
Bank organized under the laws of a jurisdiction outside the United States.
 
Interest. All agreements between the Borrower, 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
 

 
 

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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 13.15 shall control and supersede every other provision of all
agreements between the Borrower and the Banks.
 
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 THEREBY 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
 

 
 

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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 13.16 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. FOR PURPOSES OF THE FOREGOING SECTION 13.16, THE
PHRASE "CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY” SET FORTH IN
SUBPARAGRAPH (a) ABOVE SHALL INCLUDE, BUT NOT BE LIMITED TO, THE FINANCING OF
ANY CORPORATE TAKEOVER PERMITTED HEREUNDER AND THE BORROWER’S USE OF THE LOAN
PROCEEDS FOR THE PURPOSE OF ACQUIRING ANY EQUITY INTERESTS DESCRIBED IN
 

 
 

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SUBPARAGRAPH (ii) OF THE DEFINITION OF "QUALIFYING ASSETS” SET FORTH IN THIS
AGREEMENT (AS AMENDED). THE OBLIGATIONS OF THE BORROWER UNDER THIS SECTION 13.16
SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT AND THE REPAYMENT OF THE NOTES.
 
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.
 
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.
 
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.
 
Pro Rata Treatment. All Loans under, and all payments and other amounts received
in connection with this Agreement (including, without limitation, amounts
received as a result of the exercise by any Bank of any right of set off) shall
be effectively shared by the Banks ratably in accordance with the respective Pro
Rata Percentages of the Banks. If any Bank shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set off, or
otherwise) on account of the principal of, or interest on, or fees in respect
of, any Note held by it (other than pursuant to Section 2.3(d)) in excess of its
 

 
 

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Pro Rata Percentage of payments on account of similar Notes obtained by all the
Banks, such Bank shall forthwith purchase from the other Banks such
participations in the Notes or Loans made by them 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 Bank
shall be rescinded and such Bank shall repay to the purchasing Bank the purchase
price to the extent of such recovery together with an amount equal to such
Bank's ratable share (according to the proportion of (a) the amount of such
Bank's required repayment to (b) 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. Disproportionate
payments of interest shall be shared by the purchase of separate participations
in unpaid interest obligations, disproportionate payments of fees shall be
shared by the purchase of separate participations in unpaid fee obligations, and
disproportionate payments of principal shall be shared by the purchase of
separate participations in unpaid principal obligations. The Borrower agrees
that any Bank so purchasing a participation from another Bank pursuant to this
Section 13.20 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation. Notwithstanding the foregoing, a Bank may
receive and retain an amount in excess of its Pro Rata Percentage to the extent
but only to the extent, that such excess results from such Bank’s Highest Lawful
Rate exceeding another Bank’s Highest Lawful Rate.
 
No Rights, Duties or Obligations of Syndication Agent. The Borrower, the Agent
and each Bank acknowledge and agree that except for the rights, powers,
obligations and liabilities under this Agreement and the other Loan Documents as
a Bank, Fleet National Bank, as Syndication Agent, shall have no additional
rights, powers, obligations or liabilities under this agreement or any other
Loan Documents in its capacity as Syndication Agent.
 
Final Agreement. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE
 

 
 

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CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENT'S OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
 
WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREE-MENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
 

 
 

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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 September 29, 2005.

SOUTHERN UNION COMPANY

By:       
Name:      
Title:      

Commitment:     JPMORGAN CHASE BANK, N.A.,
$36,000,000     for itself and as Agent for the Banks

By:  
Name:  
Title:  

 
 

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WACHOVIA BANK, N.A.
Commitment  
$36,000,000 
By:  
Name:  
Title:  
Address for Notices:

Wachovia Bank, N.A.
301 South College Street, DC-6 NC0760
Charlotte, North Carolina 28288
Attention: Allison Newman
Fax No.: (704) 383-6647

Commitment:     BANK OF AMERICA, N.A.
$35,000,000
By:  
Name:  
Title:  
 
Address for Notices:

Bank of America, N.A.
100 N. Tryon Street, NC1-007-13-13
Charlotte, North Carolina 28255
Attention: Kevin Bertelsen
Fax No.: (704) 386-1319

Separate Domestic and Eurodollar Lending Office:

Bank of America, N.A.
901 Main Street
Dallas, Texas 75202

 
 

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Commitment:     UFJ BANK LIMITED, NEW YORK BRANCH
$25,000,000
By:  
Name:  
Title:  
 
Address for Notices:

UFJ Bank Limited, New York Branch
55 East 52nd Street
New York, New York 10055
Attention: John T. Feeney
Fax No.: (212) 754-1304

Commitment:      KBC BANK N.V.
$20,000,000
By:  
Name:  
Title:  
 
Address for Notices:

KBC Bank, N.V.
Atlanta Representative Office
245 Peachtree Center Avenue, Suite 2550
Atlanta, Georgia 30303
Attention: Thomas Van Craen
Fax No.: (404) 584-5465
 
Separate Domestic and Eurodollar Lending Office:

KBC Bank, N.V.
New York Branch
125 West 55th Street
New York, New York 10019

 
 

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Commitment:     WELLS FARGO BANK, NA
$20,000,000
By:  
Name:  
Title:  

Address for Notices:

Wells Fargo Bank, NA
1000 Louisiana Street, 9th Floor
Houston, Texas 77002
Attention: Marc Cuenod
Fax No.: (713) 739-1087

Separate Domestic and Eurodollar Lending Office:

Wells Fargo Bank, NA
201 Third Street
San Francisco, California 94103

Commitment:     CALYON NEW YORK BRANCH
$20,000,000
By:  
Name:  
Title:  

Address for Notices:

Calyon New York Branch
1301 Travis, Suite 2100
Houston, Texas 77002
Attention: Darrell Stanley
Fax No.: (713) 890-8668

Separate Domestic and Eurodollar Lending Office:

Calyon New York Branch
1301 Avenue of the Americas
New York, New York 10019

 
 

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Commitment:     MERRILL LYNCH BANK USA
$20,000,000     

By:  
Name:  
Title:  

 
Address for Notices:

Merrill Lynch Bank USA
15 W. South Temple, Suite 300
Salt Lake City, Utah 84101
Attention: Derek Befus
Fax No.: (801) 531-7470

Commitment:     SOVEREIGN BANK
$20,000,000

By:  
Name:  
Title:  

 
Address for Notices:

Sovereign Bank
75 State Street, 4th Floor
Boston, Massachusetts 02109
Attention: Robert Lanigan
Fax No.: (617) 346-7249

 
 

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Commitment:      LASALLE BANK N.A.
$20,000,000
By:  
Name:  
Title:  

 
Address for Notices:

LaSalle Bank N.A.
135 S. LaSalle Street, Suite 625
Chicago, Illinois 60603
Attention: Sean Drinan
Fax No.: (312) 904-1994

Commitment:     THE BANK OF TOKYO-MITSUBISHI, LTD.
$20,000,000     HOUSTON AGENCY     

By:  
Name:  
Title:  

 
Address for Notices:

The Bank of Tokyo-Mitsubishi, Ltd.,
Houston Agency
1100 Louisiana, Suite 2800
Houston, Texas 77002
Attention: Bryan E. Hulshof
Fax No.: (713) 658-0116

 
 

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Commitment:     UMB BANK, N.A.
$19,000,000      
By:  
Name:  
Title:  
 
Address for Notices:

UMB Bank, N.A.
1010 Grand Blvd.
Kansas City, Missouri 64106
Attention: David A. Proffitt
Fax No.: (816) 860-7143

Commitment:     BAYERISCHE LANDESBANK,
$15,000,000     CAYMAN ISLANDS BRANCH

By:  
Name:  
Title:  

 
Address for Notices:

Bayerische Landesbank,
Cayman Islands Branch
560 Lexington Avenue
New York, New York 10022
Attention: Dietmar Rieg
Fax No.: (212) 230-9166

 
 

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Commitment:     CREDIT SUISSE, CAYMAN ISLANDS
$15,000,000     BRANCH    

By:  
Name:  
Title:  

 
Address for Notices:

Credit Suisse, Cayman Islands Branch
Eleven Madison Avenue
New York, New York 10010
Attention: Sarah Wu
Fax No.: (212) 743-2042

Commitment:     PNC BANK, NATIONAL ASSOCIATION
$15,000,000
By:  
Name:  
Title:  

 
Address for Notices:

PNC Bank, National Association
Two Tower Center Blvd.
East Brunswick, New Jersey 08816
Attention: Michael Nardo
Fax No.: (732) 220-3270

 
 

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Commitment:     SUMITOMO MITSUI BANKING
$15,000,000     CORPORATION
By:  
Name:  
Title:  

 
Address for Notices:

Sumitomo Mitsui Banking Corporation
277 Park Avenue
New York, New York 10172
Attention: Robert Dupree
Fax No.: (212) 224-4384

Commitment:     MIZUHO CORPORATE BANK (USA)
$15,000,000      

By:  
Name:  
Title:  

 
Address for Notices:

Mizuho Corporate Bank (USA)
1251 Avenue of the Americas
New York, New York 10020-1104
Attention: Yoshimi Tsushima
Fax No.: (212) 282-4488

Commitment:     BANK OF CHINA, NEW YORK BRANCH
$12,000,000      
By:  
Name:  
Title:  

 
Address for Notices:

Bank of China, New York Branch
410 Madison Avenue
New York, New York 10017
Attention: Joseph Zeng
Fax No.: (212) 308-4993

Commitment:     ROYAL BANK OF CANADA.
$12,000,000      
By:  
Name:  
Title:  
 
Address for Notices:

Royal Bank of Canada
New York Branch
One Liberty Plaza, 3rd Floor
New York, New York 1006-1404
Attention: Compton Singh
Fax No.: (212) 428-2372

 
 

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Commitment:     BANK OF COMMUNICATIONS,
$5,000,000     NEW YORK BRANCH      
By:  
Name:  
Title:  

 
Address for Notices:

Bank of Communications,
New York Branch
One Exchange Plaza
55 Broadway, 31st Floor
New York, New York 10006-3008
Attention: Richard Thornhill
Fax No.: (212) 376-8089

Commitment:     CHINATRUST COMMERCIAL BANK,
$5,000,000     NEW YORK BRANCH      
By:  
Name:  
Title:  

 
Address for Notices:

Chinatrust Commercial Bank,
New York Branch
366 Madison Avenue, 3/F
New York, New York 10017
Attention: Laurence Chui
     Fax No.: (212) 949-4774

 
 

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EXHIBIT A

REVOLVING NOTE

$___________       ____________, 200__

FOR VALUE RECEIVED, the undersigned, SOUTHERN UNION COMPANY, a corporation
organized under the laws of Delaware (the “Borrower”), HEREBY PROMISES TO PAY to
the order of ___________________________________ (the “Bank”), on or before
_______________________ (the "Maturity Date”), the principal sum of
________________ Million and No/ 100ths Dollars ($_,000,000.00) in accordance
with the terms and provisions of that certain Fourth Amended and Restated
Revolving Credit Agreement dated August ____, 2005, by and among the Borrower,
the Bank, the other banks named on the signature pages thereof, and JPMORGAN
CHASE BANK, N.A., as Agent (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 Revolving Note shall be payable at the
Maturity Date. The Borrower promises to pay interest on the unpaid principal
balance of this Revolving Note from the date of any Loan evidenced by this
Revolving Note until the principal balance thereof is paid in full. Interest
shall accrue on the outstanding principal balance of this Revolving Note from
and including the date of any Loan evidenced by this Revolving 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
2.2(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 JPMorgan Chase Bank, N.A. in
Houston, Texas (or such other address as the Agent under the Credit Agreement
may specify) not later than noon (Houston 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 Revolving Note may at its option, by
notice to the Borrower, declare the unpaid, principal balance of this Revolving
Note, all accrued and unpaid interest thereon and all other amounts payable
under this Revolving Note to be forthwith due and payable, whereupon this
Revolving 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 Revolving 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 Revolving Note, the
Borrower agrees to pay (a) all reasonable costs and expenses incurred by the
Agent and all owners and holders of this Revolving Note in collecting this
Revolving Note through any probate, reorganization bankruptcy or any other
proceeding and (b) reasonable attorneys' fees when and if this Revolving 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 Revolving 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 Revolving Note or
otherwise or for the payment or performance of any covenant or obligation
contained in the Credit Agreement or this Revolving 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 Revolving 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 Revolving 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) amortize, prorate, allocate and
spread in equal parts during the period of the full stated term of this
Revolving Note, all interest at any time contracted for, charged, received or
reserved in connection with the indebtedness evidenced by this Revolving Note.

This Revolving 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 Revolving 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 Revolving 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 REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW.

IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be executed
and delivered by its officer thereunto duly authorized effective as of the date
first above written.

SOUTHERN UNION COMPANY

By:_________________________________
Name:_______________________________
Title:________________________________

 
 

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EXHIBIT B

NOTICE OF BORROWING

The undersigned hereby certifies that s/he is an officer of SOUTHERN UNION
COMPANY, a corporation organized under the laws of Delaware (the “Borrower”),
authorized to execute this Notice of Borrowing on behalf of the Borrower. With
reference to that certain Fourth Amended and Restated Revolving Credit Agreement
dated September 29, 2005 (as same may be amended, modified, increased,
supplemented and/or restated from time to time, the “Credit Agreement”) entered
into by and between the Borrower, JPMORGAN CHASE BANK, N.A., as Agent, and the
Banks identified therein, the undersigned further certifies, represents and
warrants to Banks on behalf of the Borrower that to his best knowledge and
belief after reasonable and due investigation and review, all of the following
statements are true and correct (each capitalized term used herein having the
same meaning given to it in the Credit Agreement unless otherwise specified):

(a) Borrower requests that the Banks advance to the Borrower the aggregate sum
of $__________by no later than ____________, 200__ (the “Borrowing Date”).
Immediately following such Loan, the aggregate outstanding balance of Loans
shall equal $__________. Borrower requests that the Loans bear interest as
follows:

(i) The principal amount of the Loans, if any, which shall bear interest at the
Alternate Base Rate requested to be made by the Banks is $________. The initial
Rate Period for such Loans shall be 90 days.

(ii) The principal amount of the Loans, if any, which shall bear interest at the
Eurodollar Rate for which the Rate Period shall be fifteen days requested to be
made by the Banks is $________________.

(iii) The principal amount of the Loans, if any, which shall bear interest at
the Eurodollar Rate for which the Rate Period shall be one month requested to be
made by the Banks is $__________.

(iv) The principal amount of the Loans, if any, which shall bear interest at the
Eurodollar Rate for which the Rate Period shall be two months requested to be
made by the Banks is $_________.

(v) The principal amount of the Revolving Loans, if any, which shall bear
interest at the Eurodollar Rate for which the Rate Period shall be three months
requested to be made by the Banks is $_________.

(vi) The principal amount of the Revolving Loans, if any, which shall bear
interest at the Eurodollar Rate for which the Rate Period shall be six months
requested to be made by the Banks is $__________.

(b) The proceeds of the borrowing shall be deposited into Borrower's demand
deposit account at JPMorgan Chase Bank, N.A. more fully described as follows:

Account No. 09916100522, styled Southern Union Company.

(c) Of the aggregate sum to be advanced, $_____________ will be advanced to
provide working capital pursuant to Section 6.1(a) of the Credit Agreement and
$__________will be advanced for the purposes set forth in Section 6.1(b) of the
Credit Agreement; and $__________ will be advanced for the purposes set forth in
Section 6.1(c) of the Credit Agreement; and $___________ will be advanced for
the purposes of replacing Loans currently outstanding under the Credit
Agreement.

(d) The Expiration Date of each Rate Period specified in (a) above shall be the
last day of such Rate Period.

(e) As of the date hereof, and as a result of the making of the requested Loans,
there does not and will not exist any Default or Event of Default.

(f) The representations and warranties contained in Section 7 of the Credit
Agreement are true and correct in all material respects as of the date hereof
and shall be true and correct upon the making of the requested Loan, with the
same force and effect as though made on and as of the date hereof and thereof.

EXECUTED AND DELIVERED this _____ day of _______________, 200__.

SOUTHERN UNION COMPANY

By:_________________________
Name:_______________________
Title:________________________

 
 

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EXHIBIT C

ASSIGNMENT AND ACCEPTANCE

[NAME AND ADDRESS OF
ASSIGNING BANK]

_______________, 200__

________________
________________
________________
________________

   
Re:
Southern Union Company Fourth Amended and Restated Revolving Credit Agreement

Ladies and Gentlemen:
We have entered into a Fourth Amended and Restated Revolving Credit Agreement
dated as of September 29, 2005 (the “Credit Agreement”), among certain banks
(including us), JPMorgan Chase Bank, N.A. (the "Agent") and Southern Union
Company (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 Houston times.

1. Assignment. We hereby sell you 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 each of the following
(the "Assigned Obligations”):

a. our Note;

b. 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 _____%]; and

c. commitment fees payable pursuant to Section 5 of the Credit Agreement[,
except that your assigned share in such fees shall be at an annual rate equal to
the rate provided in the Credit Agreement minus ____%].

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 12 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 Financing
Document or any security interest created thereunder, (ii) the truthfulness and
accuracy of any representation contained in any Financing Document, (iii) the
filing or recording of any Financing Document necessary to perfect any security
interest created thereunder, (iv) the financial condition of the Company or any
other Person obligated under any Financing Document, any financial or other
information, certificate, receipt or other document furnished or to be furnished
under any Financing Document or (v) any other matter not specifically set forth
herein having any relation to any Financing 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 credit worthiness of the
Company and the structure of the transaction.
 
3. Governing law; Jurisdiction. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas. You irrevocably
submit to the jurisdiction of any State or Federal court sitting in Austin,
Texas in any suit, action or proceeding arising out of or relating to this
Agreement and irrevocably waive any objection you may have to this laying of
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding has been brought in an
inconvenient forum. We may serve process in any manner permitted by law and may
bring proceedings against you in any other jurisdiction.
 
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, telecopy or telex; 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 13.13 OF THE CREDIT
AGREEMENT AND RELEASE APPROVED IN SECTION 2 OF THIS AGREEMENT:

SOUTHERN UNION COMPANY

By: _______________________
Name: _______________________
Title: _______________________