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

 
Exhibit 10.2
 

EXECUTION COPY
 
BRIDGE LOAN AGREEMENT
 
DATED AS OF MARCH 1, 2006
 
BY AND AMONG
 
SOUTHERN UNION COMPANY
 
AND
 
ENHANCED SERVICE SYSTEMS, INC.,
 
as the Borrowers,
 
AND
 
THE BANKS PARTY HERETO,
 
as the Banks,
 
AND
 
LEHMAN COMMERCIAL PAPER INC.,
 
as the Administrative Agent
 

 
______________________________________________________
 
JPMORGAN CHASE BANK, N.A.
 
and
 
WACHOVIA BANK, NATIONAL ASSOCIATION,
 
as Co-Syndication Agents
 
AND
 
CALYON NEW YORK BRANCH
 
and
 
BANK OF AMERICA, N.A.,
 
as Co-Documentation Agents
 
AND
 
LEHMAN BROTHERS INC.
 
and
 
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
 
as the Joint Lead Arrangers and Joint Bookrunners
 

 

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TABLE OF CONTENTS
 
1.
 
CERTAIN DEFINITIONS
2
 
1.1
Definitions
2
 
1.2
Terms Generally
23
2.
 
THE LOANS
24
 
2.1
The Loans
24
 
2.2
Interest Rate Determination
26
 
2.3
Additional Interest Rate Provisions
27
3.
 
JOINT AND SEVERAL LIABILITY OF BORROWERS
29
 
3.1 
Joint and Several Liability of Borrowers
29
4.
 
PAYMENTS AND PREPAYMENTS
32
 
4.1
Optional and Mandatory Prepayment
32
 
4.2
Repayment of the Loans; and Maturity of the Loans
33
 
4.3
Place of Payment or Prepayment
33
 
4.4
No Prepayment Premium or Penalty
34
 
4.5
Taxes
34
 
4.6
Reduction or Termination of Commitments
34
5.
 
FEES
34
 
5.1
Specified Fees
34
 
5.2
Fees Not Interest
34
6.
 
APPLICATION OF PROCEEDS
34
 
6.1
Application of Proceeds
34
7.
 
REPRESENTATIONS AND WARRANTIES
35
 
7.1
Organization and Qualification
35
 
7.2
Financial Statements
35
 
7.3
Litigation
35
 
7.4
Default
36
 
7.5
Title to Assets
36
 
7.6
Payment of Taxes
36
 
7.7
Conflicting or Adverse Agreements or Restrictions; Governmental Approvals
36
 
7.8
Authorization, Validity, Etc.
36
 
7.9
Investment Company Act Not Applicable
37
 
7.10
Public Utility Holding Company Act Not Applicable
37
 
7.11
Regulations G, T, U and X
37
 
7.12
ERISA
37
 
7.13
No Financing of Certain Security Acquisitions
38
 
7.14
Franchises, Co-Licenses, Etc
38
 
7.15
Lines of Business
38
 
7.16
Environmental Matters
38

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7.17
No Agreements Prohibiting Pledge of Southern Union Panhandle and Panhandle
Eastern Equity Interests
39
 
7.18
No Agreements Prohibiting Pledge of Sid Richardson Acquired Business
39
 
7.19
Use of Proceeds
39
 
7.20
Disclosure
39
 
7.21
Sid Richardson Acquired Business Matters
40
 
7.22
Collateral Matters
40
8.
 
CONDITIONS
41
 
8.1
Representations True and No Defaults
41
 
8.2
Governmental Approvals
41
 
8.3
Compliance With Law
41
 
8.4
Notice of Borrowing and Other Documents
41
 
8.5
Payment of Fees and Expenses
41
 
8.6
Loan Documents, Opinions and Other Instruments
42
 
8.7
Consummation of Sid Richardson Acquisition
43
 
8.8
No Material Adverse Change
43
 
8.9
Financial Statements
43
 
8.10
Indebtedness
43
 
8.11
Miscellaneous Documents
44
 
8.12
Officers’ Certificate
44
9.
 
AFFIRMATIVE COVENANTS
44
 
9.1
Financial Statements and Information
44
 
9.2
Lease and Investment Schedules
45
 
9.3
Books and Records
45
 
9.4
Insurance
45
 
9.5
Maintenance of Property
46
 
9.6
Inspection of Property and Records
46
 
9.7
Existence, Laws, Obligations
46
 
9.8
Notice of Certain Matters
46
 
9.9
ERISA
46
 
9.10
Compliance with Environmental Laws
47
 
9.11
PGA Clauses
48
 
9.12
Conveyance of Acquired Business Equity Interests to Subsidiaries of the Parent
48
 
9.13
Collateral Matters Upon Acquired Business Equity Interests Transfer
48
 
9.14
Control of SUG EAT LLC
49
10.
 
NEGATIVE COVENANTS
49
 
10.1
Capital Requirements
49
 
10.2
Mortgages, Liens, Etc
50
 
10.3
Debt
51
 
10.4
Loans, Advances and Investments
53
 
10.5
Stock and Debt of Subsidiaries
55

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10.6
Merger, Consolidation, Etc.
55
 
10.7
Supply and Purchase Contracts
56
 
10.8
Sale or Other Disposition of Assets
56
 
10.9
Discount or Sale of Receivables
58
 
10.10
Change in Accounting Method
58
 
10.11
Restricted Payment
58
 
10.12
Securities Credit Regulations
58
 
10.13
Nature of Business; Management
59
 
10.14
Transactions with Related Parties
59
 
10.15
Hazardous Materials
59
 
10.16
Limitations on Payments on Subordinated Debt
59
 
10.17
No Agreements Prohibiting Pledge of Southern Union Panhandle and Panhandle
Eastern Equity Interests
59
 
10.18
No Agreements Prohibiting Pledge of the Sid Richardson Acquired Business Equity
Interests
59
 
10.19
Restriction on Transfer
60
11.
 
EVENTS OF DEFAULT; REMEDIES
60
 
11.1
If any of the following events shall occur
60
 
(A)
Failure to Pay Principal or Interest
61
 
(B)
Failure to Pay Fee or Other Amounts
61
 
(C)
Failure to Pay Other Debt
61
 
(D)
Misrepresentation or Breach of Warranty
61
 
(E)
Violation of Certain Covenants
61
 
(F)
Violation of Other Covenants, Etc
61
 
(G)
Bankruptcy and Other Matters
62
 
(H)
Dissolution
62
 
(I)
Undischarged Judgment
62
 
(J)
Environmental Matters
62
 
(K)
Default under the Existing Revolving Credit Facility
63
 
(L)
Change in Control
63
 
(M)
Change in Ownership
63
 
(N)
Invalidity of Lien on Collateral
63
 
(O)
Restricted SUG EAT Entities Activities
63
 
(P)
Modifications
64
12.
 
THE AGENT
64
 
12.1
Authorization and Action
64
 
12.2
Agent’s Reliance, Etc
65
 
12.3
Defaults
65
 
12.4
LCPI and Affiliates
66
 
12.5
Non-Reliance on Agent and Other Banks
66
 
12.6
Indemnification
66
 
12.7
Successor Agent
67

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12.8
Agent’s Reliance
67
13.
 
MISCELLANEOUS
68
 
13.1
Representation by the Banks
68
 
13.2
Amendments, Waivers, Etc
68
 
13.3
Reimbursement of Expenses
68
 
13.4
Notices
69
 
13.5
Governing Law; Jurisdiction; Consent to Service of Process
70
 
13.6
Survival of Representations, Warranties and Covenants
70
 
13.7
Counterparts
70
 
13.8
Severability
71
 
13.9
Descriptive Headings
71
 
13.10
Accounting Terms
71
 
13.11
Limitation of Liability
71
 
13.12
Set-Off
71
 
13.13
Sale or Assignment
72
 
13.14
Non U.S. Banks
74
 
13.15
Interest
74
 
13.16
Indemnification
75
 
13.17
Payments Set Aside
76
 
13.18
Bridge Loan Agreement Controls
77
 
13.19
Obligations Several
77
 
13.20
Pro Rata Treatment
77
 
13.21
No Rights, Duties or Obligations of Syndication Agent or Documentation Agent
78
 
13.22
Final Agreement
78
 
13.23
WAIVER OF JURY TRIAL
78
 
13.24
USA Patriot Act
78
 
13.25
Successors and Assigns Generally
78

 
SCHEDULES
 
Schedule 2.1(a) - Commitments
Schedule 7.1(A)- List of Subsidiaries
Schedule 7.1(B)- Ownership Structure of Partnership Companies as of Closing Date
Schedule 7.3 - Disclosed Litigation
Schedule 7.6 - Tax Matters
Schedule 7.7 - Required Consents
Schedule 7.12 - ERISA Matters
 

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EXHIBITS
 
Exhibit A - Form of Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D-1 - Form of Parent Pledge Agreement
Exhibit D-2 - Form of SUG EAT Entities Pledge Agreement
Exhibit E - Form of Opinion
Exhibit F - Form of Intercreditor Agreement

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BRIDGE LOAN AGREEMENT
 
This BRIDGE LOAN AGREEMENT is dated as of March 1, 2006, and entered into by and
among SOUTHERN UNION COMPANY, a Delaware corporation (the “Parent”), ENHANCED
SERVICE SYSTEMS, INC. a Delaware corporation and a direct wholly-owned
Subsidiary (defined below) of the Parent (“ESSI” and together with the Parent,
the “Borrowers” and each a “Borrower”), the Banks (as such term is defined in
Section 1.1 below) from time to time party hereto, and LEHMAN COMMERCIAL PAPER
INC., as administrative agent (in such capacity, the “Agent”) for the Banks.
 
WITNESSETH:
 
WHEREAS, pursuant to a purchase and sale agreement, dated as of December 15,
2005 (including any annexes, schedules and exhibits thereto) (as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the provisions hereof and thereof, the “Sid Richardson Acquisition Agreement”),
by and among SRCG, Ltd., a Texas limited partnership, as seller (“SRCG”), SRCG
Genpar, L.P., a Delaware limited partnership, as seller (“Genpar” and, together
with SRCG, the “Sellers”), Southern Union Gathering Company LLC, a Delaware
limited liability company and a wholly-owned subsidiary of the Parent (“SUGC”),
and Southern Union Panhandle LLC, a Delaware limited liability company and a
wholly-owned subsidiary of the Parent (“Southern Union Panhandle” and together
with SUGC, the “SUG Purchasers”), (b) the Assignment and Assumption Agreement
For Purchase and Sale of Property, dated as of February 27, 2006 (the “Sid
Richardson Acquisition Agreement Assignment” and together with the Sid
Richardson Acquisition Agreement, the “Sid Richardson Acquisition Documents”),
by and among the SUG Purchasers and the SUG EAT Entities (defined below),
pursuant to which the SUG Purchasers shall assign to the SUG EAT Entities all of
their respective rights, title and interests in and to the Sid Richardson
Acquisition Agreement and any other related documents, SUG EAT Inc. (defined
below) will purchase from SRCG (i) 100% of all issued and outstanding limited
partner interests in Sid Richardson Energy Services, Ltd., a Texas limited
partnership (“SRES”), and (ii) 100% of all issued and outstanding limited
partner interests in Richardson Energy Marketing, Ltd., a Texas limited
partnership (“REM”) and (b) SUG EAT LLC (defined below) will purchase from
Genpar (i) 100% of all issued and outstanding general partner interests in SRES,
(ii) 100% of all issued and outstanding general partner interests in REM and
(iii) 100% of all issued and outstanding general partner interests in
Leapartners, L.P., a Texas limited partnership (“Leapartners” and together with
SRES and REM, the “Sid Richardson Acquired Business”) (such purchase of
partnership interests described in the foregoing is referred to herein as the
“Sid Richardson Acquisition”).
 
WHEREAS, in order to effect the Sid Richardson Acquisition, ESSI shall make a
loan in the aggregate principal amount of $1.6 billion to the SUG EAT Entities
(the “SUG EAT Entities Loan”) on the Closing Date (defined below) pursuant to
the SUG EAT Entities Loan Documents (defined below). The proceeds of the SUG EAT
Entities Loan shall be used by the SUG EAT Entities to fund the purchase price
of the Sid Richardson Acquisition. As security for the SUG EAT Entities Loan,
the SUG EAT Entities shall, on the Closing Date, grant
 

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to ESSI a second priority security interest in 100% of all issued and
outstanding limited partner interests in SRES and REM and 100% of all issued and
outstanding general partner interests in SRES, REM and Leapartners.
 
WHEREAS, the Borrowers have requested the Banks to extend credit on the Closing
Date in an aggregate principal amount of $1.6 billion.
 
WHEREAS, the proceeds of the Loans are to be used in accordance with Section 6.1
of this Agreement.
 
NOW, THEREFORE, the Banks are willing to extend such credit to Borrowers on the
terms and subject to the conditions set forth herein. Accordingly, the parties
hereto agree as follows:
 
1.  CERTAIN DEFINITIONS
 
: INTERPRETATION.
 
1.1  Definitions
 
: As used in this Agreement, the following terms shall have the following
meanings:
 
“Acquired Business Equity Interests” shall mean, collectively, (i) 100% of all
issued and outstanding Equity Interests in REM, (ii) 100% of all issued and
outstanding Equity Interests in SRES and (iii) 100% of all issued and
outstanding general partner interests in Leapartners.
 
“Acquired Business Equity Interests Transfer” shall mean the transfer of all the
Acquired Business Equity Interests to one or more wholly-owned Subsidiaries of
the Parent (other than any of the SUG Partnership Entities) upon the
consummation of the Qualified Transaction or pursuant to Section 9.12(b); and
the Borrower and such Subsidiaries shall have complied in all respects with
Section 9.13.
 
“Acquired Business Material Adverse Effect” means any circumstance, change or
effect that (i) is materially adverse to the business, operations (including
results of operation), assets, liabilities or financial condition of the
Partnership Companies taken as a whole or (ii) materially impedes the ability of
the Sellers to complete the transactions contemplated in the Sid Richardson
Acquisition Documents or to perform their obligations thereunder, but in the
case of clause (i) above, shall exclude any circumstance, change or effect
(except, as to clauses (a) and (c) below, to the extent that such circumstance,
change or effect shall have a disproportionate impact (vis-á-vis other entities
with operations in the counties where the Partnership Companies have physical
assets) on the Partnership Companies) resulting or arising from: (a) any change
in general economic conditions in the industries or markets in which a
Partnership Company operates; (b) seasonal reductions in revenues and/or
earnings of the Partnership Companies in the ordinary course of their respective
businesses; (c) national or international political, diplomatic or military
conditions, including any engagement in hostilities, whether or not pursuant to
a declaration of war, or the occurrence of any military or terrorist attack; and
(d) changes in accounting principles generally accepted in the United States
 

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as in effect from time to time, as consistently applied, or other accounting
principles after the date of the Sid Richardson Acquisition Agreement.
 
“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).
 
“Affiliate” shall mean any Person controlling, controlled by or under common
control with any other Person. For purposes of this definition, “control”
(including “controlled by” and “under common control with”) shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise. If any Person shall own, directly
or indirectly, beneficially or of record, twenty percent (20%) or more of the
voting equity (whether outstanding capital stock, partnership interests or
otherwise) of another Person, such Person shall be deemed to be an Affiliate.
 
“Agent” shall have the meaning set forth in the preamble hereto.
 
“Agreement” shall mean this Bridge Loan Agreement, as the same may be amended,
modified, supplemented or restated from time to time.
 
“Alternate Base Rate” shall mean,
 

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(a) for any day during the period from and including the Closing Date to and
including the third day following the Closing Date, the Initial Alternate Base
Rate; and
 
(b) for any day thereafter, a rate, per annum (rounds upward to the nearest 1/16
of 1%) equal to: (i) the greater of (x) 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), plus (ii) the Applicable
Margin.
 
“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
(a) Domestic Lending Office in the case of an Alternate Base Rate Loan; and (b)
Eurodollar Lending Office in the case of a Eurodollar Rate Loan.
 
“Applicable Margin” shall mean, at any date, (a) with respect to Eurodollar Rate
Loans, the applicable percentage per annum set forth below under the caption
“Applicable Margin for Eurodollar Rate Loans” and (b) with respect to Alternate
Base Rate Loans, the applicable percentage per annum set forth below under the
caption “Applicable Margin for Alternate Base Rate Loans”, in each case changing
with the rating of the Parent’s unsecured, non-credit enhanced Senior Funded
Debt and determined in accordance with the following grid:
 
Rating of the Parent’s
 
unsecured, non-credit enhanced
 
Senior Funded Debt
 
Applicable Margin
 
for
 
Eurodollar Rate Loans
 
Applicable Margin
 
for
 
Alternate Base Rate Loans
 
Equal to or greater than A3 by Moody’s and equal to or greater than A- by S&P
 
 
 
 
 
0.425%
 
 
 
 
 
0.000%
 
Baa1 by Moody’s or BBB+ by S&P
 
0.500%
 
0.000%
 
Baa2 by Moody’s or BBB by S&P
 
0.575%
 
0.000%
 
Baa3 by Moody’s or BBB- by S&P
 
0.725%
 
0.000%
 
Ba1 by Moody’s or BB+ by S&P
 
1.100%
 
0.100%
 
Less than Ba1 by Moody’s and less than BB+ by S&P
 
 
 
1.350%
 
 
 
0.350%
 

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Notwithstanding the foregoing provisions, in the event that ratings of the
Parent’s unsecured, non-credit enhanced Senior Funded Debt under Moody’s and
under S&P’s fall within different rating categories which are not functional
equivalents, the Eurodollar Rate Loans and the Alternate Base Rate Loans 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 the Parent withdraws
from having its unsecured, non-credit enhanced Senior Funded Debt being rated by
Moody’s or S&P, so that one or both of such ratings services fails to rate the
Parent’s unsecured, non-credit enhanced Senior Funded Debt, the component of
pricing from the grid set forth above for purposes of determining the Applicable
Margin for Eurodollar Rate Loans and the Alternate Base Rate Loans commencing
thereafter shall be (x) in the case of Eurodollar Rate Loans, 1.350% and (y) in
the case of Alternate Base Rate Loans, 0.350%, in each case until such time as
the Parent subsequently causes its unsecured, non-credit enhanced Senior Funded
Debt to be rated by both of said ratings services.
 
“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.
 
“Asset Sale” shall mean any conveyance, sale, lease, sublease, assignment,
transfer or other disposition (including by way of merger or consolidation and
including any sale and leaseback transaction) of any property by the Parent or
any of its Subsidiaries to any Person; provided, however, that an Asset Sale
shall not include (x) any disposition of cash and cash equivalents in the
ordinary course of business, (y) any conveyance, sale, lease, assignment,
transfer or other disposition of Property to the extent such conveyance, sale,
lease, assignment, transfer or disposition is permitted pursuant to clause (i)
in the proviso in Section 10.8 and (z) any conveyance, sale, assignment,
transfer or other disposition of Property for fair market value resulting in no
more than $1,000,000 in net cash proceeds per Asset Sale (or series of related
Asset Sales).
 
“Assignment and Acceptance” shall have the meaning set forth in Section 13.13.
 
“Bank Affiliate” shall have the meaning set forth in Section 13.13(g).
 
“Banks” shall mean, collectively, (a) each Person listed on Schedule 2.1(a) that
is a party to this Agreement and (b) any Person that becomes a “Bank” hereunder
pursuant to an
 

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Assignment and Acceptance, other than any such Person that ceases to be a party
hereto pursuant to such Assignment and Acceptance.
 
“Borrower” or “Borrowers” shall have the meaning set forth in the preamble
hereto.
 
“Borrowing” shall mean Loans of the same Type, made pursuant to Section 2.1(a),
converted or continued on the same date and, in the case of Eurodollar Rate
Loans, as to which a single Rate Period is in effect.
 
“Borrowing Date” shall mean, as applicable, (a) the date on which the Loans were
made by the Banks pursuant to Section 2.1(a), which shall be the Closing Date,
or (b) if applicable, a date of the continuation or conversion of Eurodollar
Loans and/or Alternate Base Rate Loans, in each case with respect to clauses (a)
and (b) above, as set forth in a Notice of Borrowing delivered pursuant to
Section 2.1(c).
 
“Business Day” shall mean a day when the Agent is open for business, provided
that, if the applicable Business Day relates to any Eurodollar Rate Loan, it
shall mean a day when the Agent is open for business and banks are open for
business in the London interbank market and in New York City.
 
“Capital Lease” shall mean any lease of any Property (whether real, personal, or
mixed) which, in conformity with GAAP, is accounted for as a capital lease on
the balance sheet of the lessee.
 
“Capitalized Lease Obligations” shall mean, for the Parent 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 the Parent’s Structured Securities) of the Parent and any of its
Subsidiaries for such period all as determined in conformity with GAAP.
 
“CCE Group” shall mean CCE Holdings and its Subsidiaries.
 
“CCE Holdings” shall mean CCE Holdings LLC, a Delaware limited liability
company.
 
“CDEC” shall mean Chicago Deferred Exchange Corporation, an Illinois corporation
and a wholly-owned subsidiary of LaSalle National Bank, a national banking
association. CDEC shall act as a “qualified intermediary” for the Parent
pursuant to an agreement between CDEC and the Parent to facilitate the Qualified
Transaction.
 
“Change of Control” shall mean (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder
 

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as in effect on the date hereof), of shares representing more than 30% of the
aggregate ordinary voting power represented by the issued and outstanding
capital stock of the Parent; or (b) the occupation of a majority of the seats
(other than vacant seats) on the Board of Directors of the Parent by Persons who
were neither (i) nominated by the Board of Directors of the Parent nor (ii)
appointed by directors so nominated.
 
“Closing Date” shall mean March 1, 2006.
 
“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.
 
“Collateral” shall mean all “Collateral” referred to in the Collateral Documents
and all other property that is or is intended to be subject to any Lien in favor
of the Agent for the benefit of the Secured Parties.
 
“Collateral Documents” shall mean the Pledge Agreements and each other agreement
that creates or purports to create a Lien in favor of the Agent for the benefit
of the Secured Parties, and the Intercreditor Agreement.
 
“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 Parent and all of its Subsidiaries, determined in accordance with GAAP,
for such period.
 
“Consolidated Net Worth” shall mean, for any period for the Parent and all of
its 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 Parent and its
Subsidiaries; the Equity-Preferred Securities; the other preferred securities of
the Parent’s Subsidiaries not constituting Equity-Preferred Securities; and the
minority interests in the Parent’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 Parent
or its applicable Subsidiaries under rates permitted under rate tariffs, plus
(c) the sum of all amounts contributed or paid by the Parent 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 Parent 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 Parent and its Subsidi
 

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aries) not to exceed 10% of Consolidated Total Capitalization calculated for
purposes of this clause without reference to any Equity-Preferred Securities) of
the Parent and its Subsidiaries.
 
“Consolidated Total Indebtedness” shall mean all Debt of the Parent and all of
its Subsidiaries including any current maturities thereof, plus, without
duplication, all amounts outstanding under Standby Letters of Credit and,
without duplication, all reimbursement or repayment obligations of the Parent
with respect to all Letters of Credit, less, without duplication and to the
extent included in Debt of the Parent 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).
 
“Credit Exposure” shall mean, with respect to any Bank, (a) the amount of its
Commitment, if still in existence, or (b) the aggregate outstanding principal
amount of its Loans, if the Commitments are no longer in existence.
 
“Cross Country” shall mean CrossCountry Energy, LLC, a Delaware limited
liability company.
 
“Debt” shall mean (without duplication), for any Person indebtedness for money
borrowed determined in accordance with GAAP but in any event including, (a)
indebtedness of such Person for borrowed money or arising out of any extension
of credit to or for the account of such Person (including, without limitation,
extensions of credit in the form of reimbursement or payment obligations of such
Person relating to letters of credit issued for the account of such Person) or
for the deferred purchase price of property or services, except indebtedness
which is owing to trade creditors in the ordinary course of business 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; and (d)
obligations under direct or indirect Guaranties other than Guaranties issued by
the Parent 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 Parent 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
Parent will not also be added by virtue of the fact that the Parent 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 Parent or its Subsidiaries.
 
“Debt Issuance” shall mean the incurrence or issuance by the Parent or any of
its Subsidiaries of any Debt or other indebtedness after the Closing Date;
 

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“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 11.1, 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 Borrowers and the Agent.
 
“EBDIT” shall mean for any period the sum of (a) consolidated net earnings for
the Parent 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 Parent 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 Parent 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, any Bank Affiliate, 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
 

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amended from time to time, and any and all rules and regulations promulgated
thereunder; (e) the Toxic Substances Control Act, 15 U.S.C.A. § 2601 et seq., as
amended from time to time, and any and all rules and regulations promulgated
thereunder; or (f) any other federal or state law, statute, rule, or emulation
enacted in connection with or relating to the protection or regulation of the
environment (including, without limitation, those laws, statutes, rules, and
regulations regulating the disposal, removal, production, storing, refining,
handling, transferring, processing, or transporting of Hazardous Materials) and
any rules and regulations issued or promulgated in connection with any of the
foregoing by any governmental authority, and “Environmental Laws” shall mean
each of the foregoing.
 
“EPA” shall mean the Environmental Protection Agency, or any successor
organization.
 
“Equity Interests” shall mean, with respect to any Person, any and all shares,
interests, participations or other equivalents, including membership interests
(however designated, whether voting or nonvoting), of equity of such person,
including, if such person is a partnership, partnership interests (whether
general or limited) and any other interest or participation that confers on a
person the right to receive a share of the profits and losses of, or
distributions of property of, such partnership, whether outstanding on the date
hereof or issued after the Closing Date.
 
“Equity Issuance” shall mean, without duplication, any issuance or sale by the
Parent or any of its Subsidiaries after the Closing Date of any of its Equity
Interests (including any Equity Interests issued upon exercise of any warrant or
option) or any warrants or options to purchase Equity Interests;
provided, however, that an Equity Issuance shall not include (i) any Debt
Issuance, (ii) issuance or sale by the Parent of its Equity Interests (including
its Equity Interests issued upon award of restricted stock units or exercise of
any warrant or option or warrants or options to purchase its Equity Interests)
to directors, officers or employees of the Parent or any of its Subsidiaries
pursuant to any of the Parent’s employee stock incentive plans, (iii) issuance
or sale by the Parent of any of its Equity Interests (including its Equity
Interests issued upon the award of restricted stock units or exercise of any
warrants or options to purchase Equity Interests) to officers or employees of
the Parent or any of its Subsidiaries pursuant to the Parent’s stock incentive
plan as part of any retention or change in control agreement and (iv) any
issuance or sale of any Equity Interests in the Parent resulting from the
settlement of the forward stock purchase contracts or remarketing of the 2008
Senior Notes that constitute a part of the 2003 Equity Units so long as the net
cash proceeds received from such issuance or sale are promptly applied to repay
amounts outstanding under the Existing Revolving Credit Agreement.
 
“Equity-Preferred Securities” shall mean (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
Parent or (ii) Equity Units of the Parent or (iii) any other securities (A) that
are issued by the Parent or any of its Subsidiaries, (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 compo
 

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nent, 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.
 
“Equity Units” shall mean securities issued by any Person and sold as a unit
consisting of a debt security of such Person and a forward contract obligating
the holder of such unit to purchase common shares of stock of such Person at a
fixed price on a fixed date in the future.
 
“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.
 
“ESSI” shall have the meaning set forth in the preamble hereto
 
“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 Borrowers 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 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) the Applicable
Margin.
 
“Eurodollar Rate Loan” shall mean any Loan that bears interest at the Eurodollar
Rate.
 

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“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 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 11.1,
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.
 
“Existing Revolving Credit Facility” shall mean the revolving credit facility
provided to the Parent under the terms of the Fourth Amended and Restated
Revolving Credit Agreement, dated as of September 28, 2005, entered into by and
among the Parent, JPMorgan Chase Bank, N.A., as the administrative agent, and
the banks and other financial institutions party thereto, as such credit
agreement is amended, amended and restated, modified or supplemented from time
to time.
 
“Existing Revolving Credit Facility Closing Date” shall mean September 28, 2005.
 
“Existing Revolving Credit Facility Letter of Credit” shall mean any Standby
Letter of Credit issued for the account of the Parent under the Existing
Revolving Credit Facility.
 
“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 three
federal funds brokers of recognized standing selected by the Agent.
 
“Fee Letter” shall mean the Fee Letter dated February 10, 2006, entered into
among the Parent, the Joint Lead Arrangers, LCPI, Lehman Brothers Commercial
Bank, and Merrill Lynch Bank USA.
 
“Funded Debt” shall mean all Debt of a Person which matures more than one year
from the date of creation or matures within one year from such date but is
renewable or extendible, at the option of such Person, by its terms or by the
terms of any instrument or agreement relating thereto, to a date more than one
year from such date or arises under a re
 

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volving 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 Parent’s audited financial
statements referred to in Section 7.2.
 
“Genpar” shall have the meaning set forth in the recitals hereto.
 
“Governmental Authority” shall mean any (domestic or foreign) federal, state,
county, municipal, parish, provincial, or other government, or any department,
commission, board, court, agency (including, without limitation, the EPA), or
any other instrumentality of any of them or any other political subdivision
thereof, and any entity exercising executive, legislative, judicial, regulatory,
or administrative functions of, or pertaining to, government, including, without
limitation, any arbitration panel, any court, or any commission.
 
“Governmental Requirement” shall mean any Order, Permit, law, statute
(including, without limitation, any Environmental Protection Statute), code,
ordinance, rule, regulation, certificate, or other direction or requirement of
any Governmental Authority.
 
“Grey Ranch” shall mean Grey Ranch Plant, L.P., a Texas limited partnership.
 
“Guaranty” shall mean, with respect to any Person, any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of
another Person, including, without limitation, by means of an agreement to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or to maintain financial covenants, or to assure the payment of such Debt
by an agreement to make payments in respect of goods or services regardless of
whether delivered or to purchase or acquire the Debt of another, or otherwise,
provided that the term “Guaranty” shall not include endorsements for deposit or
collection in the ordinary course of business.
 
“Hazardous Materials” shall mean any substance which, pursuant to any
Environmental Laws, requires special handling in its collection, use, storage,
treatment or disposal, including but not limited to any of the following: (a)
any “hazardous waste” as defined by RCRA; (b) any “hazardous substance” as
defined by CERCLA; (c) asbestos; (d) polychlorinated biphenyls; (e) any
flammables, explosives or radioactive materials; and (f) any substance, the
presence of which on any of the Parent’s or any of its Subsidiary’s properties
is prohibited by any Governmental Authority.
 
“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 Loans
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.
 
“Initial Alternate Base Rate” shall mean the rate per annum as determined in
accordance with clause (b) in the definition of Alternate Base Rate minus 2.25%.
 
“Intercreditor Agreement” shall mean the Intercreditor Agreement to be executed
and delivered on the Closing Date by ESSI and the Agent and acknowledged by the
SUG EAT Entities, substantially in the form of Exhibit F, as the same may be
amended, supplemented or otherwise modified from time to time.
 
“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, the last Business
Day of each March, June, September and December to occur during any period in
which such Loan is outstanding and on the date such Alternate Base Rate Loan is
converted to another Type; and (d) as to all Loans, such time as the principal
of and interest on the Loans shall have been paid in full.
 
“Inventory” shall mean, with respect to the Parent or any of its Subsidiaries,
all of such Person’s now owned or hereafter acquired or created inventory in all
of its forms and of every nature, wherever located, whether acquired by
purchase, merger, or otherwise, and all raw materials, work in process therefor
and finished goods thereof, and all supplies, materials, and products of every
nature and description used, usable, or consumed in connection with the
manufacture, packing, shipping, advertising, selling, leasing, furnishing, or
production of such goods, and shall include, in any event, all “inventory”
(within the meaning of such term in the Uniform Commercial Code in effect in any
applicable jurisdiction), whether in mass or joint, or other interest or right
of any kind in goods which are returned to, repossessed by, or stopped in
transit by such Person, and all accessions to any of the foregoing and all
products of any of the foregoing.
 
“Investment” of any Person shall mean any investment so classified under GAAP,
and, whether or not so classified, includes (a) any direct or indirect loan
advance made by it to any other Person; (b) any direct or indirect Guaranty for
the benefit of such Person; provided, however, that for purposes of determining
Investments of the Parent hereunder, the existing Guaranty by the Parent 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.
 
“Joint Lead Arrangers” shall mean, collectively, Lehman Brothers Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
 
“LCPI” shall mean Lehman Commercial Paper Inc.
 
“LDC Proceeds” shall have the meaning set forth in the definition of Qualified
Transaction.
 
“LDC Sale” shall have the meaning set forth in the definition of Qualified
Transaction.
 
“Leapartners” shall have the meaning set forth in the recitals hereto.
 
“Letter(s) of Credit” shall mean, in the singular form, any letter of credit
issued by any Person for the account of the Parent and, in the plural form, all
such letters of credit issued by any Person for the account of the Parent.
 
“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” shall mean a loan from a Bank to the Borrowers made pursuant to Section
2.1(a).
 
“Loan Document” shall mean this Agreement, any Note, any Collateral Document,
the Intercreditor Agreement or any other document, agreement, certificate or
instrument now or hereafter executed and delivered by the Borrowers 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.
 
“Loan Parties” means, collectively, (i) the Borrowers, (ii) each of the SUG EAT
Entities until the Acquired Business Equity Interests Transfer has been fully
consummated, and (iii) each Subsidiary of the Parent that holds or owns any of
the Acquired Business Equity Interests.
 
“Majority Banks” shall mean at any time Banks holding 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 Parent and its Subsidiaries taken as a whole, or (b) the ability of any of
the Loan Parties to perform their respective obligations under this Agreement,
any Note or any other Loan Document to which it is a party on a timely basis.
 
“Maturity Date” shall mean February 28, 2007.
 
“Moody’s” shall mean Moody’s Investors Service, Inc.
 
“NEG Assets” shall mean those “Assets” (as defined in the NEG Purchase
Agreement) owned by the Parent, directly or indirectly through any “Subsidiary”
or any “Affiliate” (as such terms are defined in the NEG Purchase Agreement) of
the Parent, and the “Stock” (as such term is defined in the NEG Purchase
Agreement), all of which are to be sold pursuant to the NEG Purchase Agreement.
 
“NEG Purchase Agreement” shall mean the Purchase and Sale Agreement, dated as of
February 15, 2006, between the Parent and National Grid USA, as the same may be
amended, modified or supplemented from time to time. 
 
“Non-Revolving Credit Facility Letter of Credit” shall mean any Letter of Credit
which is not an Existing Revolving Credit Facility Letter of Credit.
 
“Note” or “Notes” shall mean a promissory note or notes, respectively, of the
Borrowers, executed and delivered under this Agreement.
 
“Notice of Borrowing” shall have the meaning set forth in Section 2.1(c).
 
“Obligations” shall mean all obligations of the Borrowers to the Agent and each
Bank under this Agreement, the Notes and all other Loan Documents to which it is
a party.
 
“Officer’s Certificate” shall mean a certificate signed in the name of the
Parent or a Subsidiary of the Parent, 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 Existing
Revolving Credit Facility 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;
 
(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.
 
“Parent” shall have the meaning set forth in the preamble hereto.
 
“Partnership Company” shall mean any of SRES, REM, Grey Ranch, any SRES
Subsidiary or any of their respective subsidiaries; and “Partnership Companies”
shall mean, collectively, SRES, REM, Grey Ranch, the SRES Subsidiaries and their
respective subsidiaries.
 
“Payment Office” shall mean, with respect to the Agent, the office of the Agent
located at its “Address for Notices” set forth below the name of the Agent on
the signature pages hereof or such other office of the Agent as the Agent may
from time to time specify to the Borrowers and the Banks.
 
“Permitted Subordinated Lien” shall mean the Lien granted by each of the SUG EAT
Entities in favor of ESSI in all of their respective rights title and interest
in and to the SUG EAT Entities Collateral pursuant to the terms of the SUG EAT
Entities Loan Documents, which Lien shall be at all times fully subordinated to
the Liens granted in favor of the Agent in such SUG EAT Entities Collateral
pursuant to the Collateral Documents and subject to the terms and conditions of
the Intercreditor Agreement.
 
“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.
 
“PGEnergy Assets” shall mean those “Assets” (as defined in the PGEnergy Purchase
Agreement) owned by the Parent, directly or indirectly through PG Energy
Services, Inc., a Pennsylvania corporation, and the Equity Interests in PG
Energy Services Inc., all of which are to be sold pursuant to the PGEnergy
Purchase Agreement. 
 
“PGEnergy Purchase Agreement” shall mean the Purchase and Sale Agreement, dated
as of January 26, 2006, between the Parent and UGI Corporation, as the same may
be amended, modified or supplemented from time to time.
 
“Plan” shall mean any plan subject to Title IV of ERISA and maintained for
employees of the Parent or of any member of a “controlled group of
corporations,” as such term is defined in the Code, of which the Parent or any
of its Subsidiaries is a member, or any such plan to which the Parent or any of
its Subsidiaries is required to contribute on behalf of its employees.
 
“Pledge Agreements” shall mean, collectively, (i) the Parent Pledge Agreement to
be executed and delivered on the Closing Date by the Parent and the Agent,
substantially in the form of Exhibit D-1, as the same may be amended,
supplemented or otherwise modified from time to time, (ii) the Pledge Agreement
to be executed and delivered on the Closing Date by the SUG EAT Entities and the
Agent, substantially in the form of Exhibit D-2, as the same may be amended,
supplemented or otherwise modified from time to time (the“SUG EAT Entities
Pledge Agreement”) and (iii) any pledge agreement executed and delivered
pursuant to Section 9.13.
 
“Prime Rate” shall mean, on any day, the rate as publicly announced from time to
time by JPMorgan Chase Bank as being its “prime rate” for that day. Without
notice to the Borrowers 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 Parent’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
Credit Exposure and the denominator of which shall be the aggregate amount of
all the Credit Exposure, as adjusted from time to time in accordance with this
Agreement.
 
“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.
 
“Qualified Exchange Accommodation Agreement” shall mean the Qualified Exchange
Accommodation Agreement, dated as of February 27, 2006, by and among SUG EAT
Inc., SUG EAT LLC and the Parent.
 
“Qualified Transaction” shall mean, collectively, the following transactions so
long as the Acquired Business Equity Interests Transfer has not been
consummated: the sale by the Parent of each of the PGEnergy Assets and the NEG
Assets (each an “LDC Sale”) and the contemporaneous assignment to CDEC of the
Parent’s rights to all the proceeds from such sale (such proceeds from each LDC
Sale being referred to as the “LDC Proceeds”). Immediately upon the consummation
of any LDC Sale, the Parent will require and direct CDEC to immediately transfer
or otherwise distribute to the SUG EAT Inc. the LDC Proceeds received by CDEC
from such LDC Sale, and SUG EAT Inc. shall then immediately make a corresponding
partial prepayment of the SUG EAT Entities Loan in an amount equal to such LDC
Proceeds to ESSI. Upon the earlier of (i) the consummation of the second LDC
Sale or (ii) the Safe Harbor Transfer Date, the Parent shall direct CDEC to
require the SUG EAT Entities to transfer to one or more wholly-owned
Subsidiaries (other than the SUG Partnership Entities) designated by the Parent
the Acquired Business Equity Interests and all related Collateral described in
the SUG EAT Entities Pledge Agreement free and clear of all Liens other than the
Liens in favor of the Agent created under the Collateral Documents. The
Borrowers shall apply any LDC Proceeds received by them or any of their
Subsidiaries in accordance with Section 4.1(b)(iv).
 
“Qualifying Assets” shall mean (i) equity interests owned one hundred percent
(100%) by the Parent in entities engaged primarily in one or more of the
Parent’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 Parent in one or more Qualifying Entities,
provided that at any time the aggregate amount of the Parent’s investment in
Qualifying Assets described in clause (ii) that are then held by the Parent 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 the Parent in connection with such acquisitions) does not exceed twenty
percent (20%) of the Consolidated Net Worth of the Parent 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 Parent 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 Parent remain subject to the claims of the
Parent’s general creditors.
 
“Rate Period” shall mean the period of time for which the Eurodollar Rate shall
be in effect as to any Eurodollar Rate Loan commencing on the date such Loan was
made or such Loan was converted to or continued as an Eurodollar Rate Loan, as
the case may be, and ending on the date one, two, three or six months thereafter
as specified in the applicable Notice of Borrowing and subject to the provisions
of Sections 2.2 and 2.3; 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.
 
“Release” shall mean a “release”, as such term is defined in CERCLA.
 
“REM” shall have the meaning set forth in the recitals hereto.
 
“Restricted Payment” shall mean, with respect to any Person, such Person’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 Equity
Interests stock, except, in the case of the Parent only, (i) any such dividend,
purchase or distribution consisting solely of capital stock of the Parent and
(ii) any dividend or interest paid on or with respect to the Parent’s Structured
Securities to the extent that such amounts are included in Cash Interest
Expense.
 
“Safe Harbor Transfer Date” shall mean August 28, 2006.
 
“S&P” shall mean Standard & Poor’s Ratings Group.
 
“Secured Obligations” shall mean the “Secured Obligations” as defined in Section
1 of the Pledge Agreements.
 
“Secured Parties” shall mean the Agent and the Banks.
 
“Securities Act” shall have the meaning set forth in Section 13.1.
 
“Sellers” shall have the meaning set forth in the recitals hereto.
 
“Senior Funded Debt” shall mean Funded Debt of the Parent excluding Debt that is
contractually subordinated in right of payment to any other Debt.
 
“Senior Notes” shall mean, collectively, (a) the $475,000,000 of 7.6% Senior
Notes of the Parent previously placed with investors on or about January 31,
1994, (b) the $300,000,000 of 8.25% Senior Notes of the Parent previously placed
with investors on or about November 3, 1999, (c) the $125,000,000 of the 2008
Senior Notes, and (d) the $100,000,000 of 4.375% Senior Notes of the Parent
previously placed with investors on or about February 11, 2005, as each such
Senior Notes may be amended, modified, or supplemented from time to time in
accordance with the terms of this Agreement; and “Senior Note” shall mean each
such note individually.
 
“Sid Richardson Acquired Business” shall have the meaning set forth in the
recitals hereto.
 
“Sid Richardson Acquisition” shall have the meaning set forth in the recitals
hereto.
 
“Sid Richardson Acquisition Agreement” shall have the meaning set forth in the
recitals hereto.
 
Sid Richardson Acquisition Agreement Assignment” shall have the meaning set
forth in the recitals hereto.
 
“Sid Richardson Acquisition Documents” shall have the meaning set forth in the
recitals hereto.
 
“Significant Property” shall mean at any time property or assets of the Parent
or any of its Subsidiaries 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 have the meaning set forth in the recitals
hereto.
 
“Southern Union Trust” shall mean 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 Parent’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 Parent.
 
“SRCG” shall have the meaning set forth in the recitals hereto.
 
“SRES” shall have the meaning set forth in the recitals hereto.
 
“SRES Subsidiaries” shall mean, collectively, Leapartners, SRCG-West Texas
Gathering Company, Inc., a Texas corporation, Mi Vida Genpar, L.L.C., a Texas
limited liability company, Sid Richardson Pipeline, Ltd., a Texas limited
partnership, West Texas Gathering Company, a Delaware corporation, and Sid
Richardson Gas Pipeline, Ltd., a Texas limited partnership.
 
“Standby Letter of Credit” shall mean any standby letter of credit issued to
support obligations (contingent or otherwise) of the Parent.
 
“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 Parent with the Securities and Exchange
Commission on March 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 Parent 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 Parent 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 Parent to Southern Union Trusts and are also guaranteed by the Parent 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. Solely for purposes of this Agreement and the other Loan Documents, each
of the SUG Partnership Entities shall be deemed a “Subsidiary” of the Parent.
Notwithstanding the foregoing in this definition of “Subsidiary”, SUG EAT Inc.
shall be deemed a “Subsidiary” of the Parent solely for purposes of Section
4.1(b) and each of the definitions of Asset Sale, Equity Issuance and Debt
Issuance. Notwithstanding the fact that the management of Cross Country is or
may be controlled by the Parent, neither Cross Country nor any of its
subsidiaries shall be deemed to constitute a Subsidiary of the Parent for
purposes of this Agreement so long as the Parent 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).
 
“SUGC ” shall have the meaning set forth in the recitals hereto.
 
“SUG EAT Entities” shall mean, collectively, SUG EAT LLC and SUG EAT Inc.
 
“SUG EAT Entities Collateral” shall mean “Collateral” as such term is defined in
the SUG EAT Entities Pledge Agreement.
 
“SUG EAT Entities Loan” shall have the meaning set forth in the recitals hereto.
 
“SUG EAT Entities Loan Documents” shall mean, collectively, (a) the Promissory
Note dated March 1, 2006, between the SUG EAT Entities, as payors, and ESSI, as
payee, (b) the pledge agreement, dated as of March 1, 2006, by and between the
SUG EAT Entities and ESSI and (c) any issuer control agreements executed to
perfect the lien created by the pledge agreement referred to in clause (b)
above.
 
“SUG EAT Entities Permitted Activities” shall have the meaning set forth in
Section 11.1(O).
 
“SUG EAT Entities Pledge Agreement” shall have the meaning set forth in the
definition of Pledge Agreements.
 
“SUG EAT Entities Transaction Document” shall mean (a) the SUG EAT Entities Loan
Documents, (b) the Qualified Exchange Accommodation Agreement, (c) the
Management Agreement, or (d) the Sid Richardson Acquisition Agreement
Assignment; and “SUG EAT Entities Transaction Documents” shall mean,
collectively, each of the foregoing.
 
“SUG EAT Inc.” shall mean SUG EAT, Inc., a Delaware corporation and a direct
wholly- owned subsidiary of CDEC.
 
“SUG EAT LLC” shall mean SUG EAT, LLC, a Delaware limited liability company and
a direct wholly-owned subsidiary of SUG EAT Inc.
 
“SUG Management Agreement” shall mean the Management Agreement, dated as of
March 1, 2006 by and between SUG EAT LLC and Southern Union Panhandle pursuant
to which, among other things, Southern Union Panhandle is engaged or otherwise
appointed the sole manager of SUG EAT LLC.
 
“SUG Partnership Entities” shall mean the Partnership Companies and SUG EAT LLC.
 
“SUG Purchasers” shall have the meaning set forth in the recitals hereto.
 
“Transferee Subsidiary” shall have the meaning set forth in Section 9.13.
 
“Trunkline LNG Holdings” shall mean CMS Trunkline LNG Holdings, LLC, a Delaware
limited liability company.
 
“2003 Equity Units” shall mean the 2,500,000 equity units issued by the Parent
June 11, 2003, with each such equity unit consisting of a forward stock purchase
contract for the purchase of shares of the Parent’s common stock and a 2.75%
senior note of the Parent due August 16, 2008 (the “2008 Senior Notes”), which
2008 Senior Notes were issued pursuant to Supplemental Indenture No. 1, dated as
of June 11, 2003 between the Parent and JPMorgan Chase Bank, N.A., as trustee
(the “2003 Supplemental Indenture”).
 
“2003 Supplemental Indenture” shall have the meaning set forth in the definition
of 2003 Equity Units.
 
“2008 Senior Notes” shall have the meaning in the definition of 2003 Equity
Units.
 
“Type” shall mean, with respect to any Loan, any Alternate Base Rate Loan or any
Eurodollar Rate Loan.
 
1.2  Terms Generally.
 
 The definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” Unless the context requires otherwise (a) any
definition of or reference to any Loan Document, agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (c) the words “herein,” “hereof”
and “hereunder,” and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof,
(d) all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, and (e) any reference to any law or regulation herein shall
refer to such law or regulation as amended, modified or supplemented from time
to time.
 
2.  THE LOANS
 
2.1  The Loans
 
(a)  Subject to the terms and conditions and relying upon the representations
and warranties of the Borrowers herein set forth, each Bank severally agrees to
make a single Loan to the Borrowers on the Closing Date in a principal amount
not to exceed the amount set opposite such Bank’s name on Schedule 2.1(a) (such
Bank’s “Commitment”). The Borrowers may not reborrow any Loan or portion thereof
that has been repaid or prepaid.
 
(b)  (i)The Borrowers shall execute and deliver to the Agent for each Bank to
evidence the Loan made by each Bank under such Bank’s Commitment, a Note, which
shall be: (i) dated the date of the Closing Date; (ii) in the principal amount
of such Bank’s Loan made by it on the Closing Date; (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.
 
(ii) Each Loan 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), and accrued interest on each Loan
shall be payable in arrears on each Interest Payment Date for such Loan,
commencing with the first Interest Payment Date following the date of each Loan;
provided, however, that (i) interest accrued pursuant to Section 2.2(b) shall be
payable on demand, (ii) in the event of any repayment or prepayment of any Loan,
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any
conversion of any Eurodollar Rate Loan prior to the end of the current Rate
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.

(c)  Each Loan to be made pursuant to Section 2.1(a), each conversion of Loans
from one Type to the other, and each continuation of Eurodollar Rate Loans or
Alternate Base Rate Loans shall be: (i) in the case of any Eurodollar Rate Loan,
in a principal amount of not less than $10,000,000.00 or an integral multiple of
$5,000,000.00 in excess thereof; or (ii) in the case of any Alternate Base Rate
Loan, in a principal amount of not less than $10,000,000.00 or an integral
multiple of $5,000,000.00 in excess thereof, and, at the option of the
Borrowers, any Borrowing, continuation or conversion under this Section 2.1(c)
may be comprised of two or more such Loans bearing different rates of interest.
Each Borrowing under Section 2.1(a), each conversion of Loans from one Type to
the other, and each continuation of Eurodollar Rate Loans or Alternate Base Rate
Loans shall be made upon prior notice from the Borrowers 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 (New York City time): (i) on the third Business
Day prior to the requested date of a Borrowing of, conversion to or continuation
of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to
Alternate Base Rate Loans; and (ii) on the requested date of a Borrowing or
continuation of Alternate Base Rate Loans. Each Notice of Borrowing shall be
irrevocable and shall specify: (i) whether the Borrowers are requesting a
Borrowing on the Closing Date, a conversion of Loans from one Type to the other,
or a continuation of Eurodollar Rate Loans or Alternative Base Rate Loans, (ii)
the requested date of the Borrowing, conversion or continuation, as the case may
be (which shall be a Business Day), (iii) the principal amount of Loans to be
borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to
which existing Loans are to be converted, (v) if applicable, the duration of the
Rate Period with respect thereto and the Expiration Date of such Rate Period,
and (vi) in the case of the Borrowing pursuant to Section 2.1(a), the demand
deposit account into which the proceeds of the borrowing are to be deposited by
the Agent. If the Borrowers fail to specify a Type of Loan in a Notice of
Borrowing or if the Borrowers fail to give a timely notice requesting a
conversion or continuation, then the applicable Loans shall be made as,
converted to, or continued as Alternate Base Rate Loans. Any such automatic
conversion to Alternate Base Rate Loans shall be effective as of the last day of
the Rate Period then in effect with respect to the applicable Loans. If the
Borrowers request a Borrowing of, conversion to, or continuation of Eurodollar
Rate Loans in any such Notice of Borrowing, but fails to specify an Rate Period,
it will be deemed to have specified an Rate Period of one month. The Borrowers
may give the Agent telephonic notice by the required time of any proposed
Borrowing, continuation or conversion under this Section 2.1(c); provided that
such telephonic notice shall be confirmed in writing by delivery to the Agent as
promptly as practicable (but in no event later than the date relating to any
such Borrowing, conversion or continuation) of a Notice of Borrowing. Neither
the Agent nor any Bank shall incur any liability to any of the Borrowers in
acting upon any telephonic notice referred to above which the Agent believes in
good faith to have been given by the Borrowers, or for otherwise acting in good
faith under this Section 2.1(c). After giving effect to all Borrowings, all
conversions of Loans from one Type to the other, and all continuations of Loans
as the same Type, there shall not be more than eight Rate Periods in effect.
 
(d)  Following receipt of a Notice of Borrowing in respect of a Borrowing under
Section 2.1(a) or conversion or continuation of Types of Loans as provided in
Section 2.1(c) (and if no timely notice of a conversion or continuation is
provided by the Borrowers, the Agent shall notify each Bank of the details of
any automatic conversion to Alternate Base Rate Loans described in Section
2.1(c)), the Agent shall promptly notify each Bank of the applicable interest
rate under Section 2.2. With respect to the Loan to be made by each Bank
pursuant to Section 2.1(a), each Bank shall, before 11:00 am (New York City
time) on the Closing Date, make the amount of such Loan available to the Agent
by wire transfer in same day funds in dollars, at the Agent’s Payment Office.
After the Agent’s receipt of such funds and upon fulfillment of the applicable
conditions set forth in Section 8, on the Closing Date, the Agent shall make the
Borrowing available to the Borrowers at the Agent’s Payment Office in
immediately available funds and, to the extent requested in the Notice of
Borrowing, deposit or otherwise credit such funds to the account designated in
such Notice of Borrowing. Each Bank shall post on a schedule attached to its
Note: (i) the date and principal amount of the 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 Borrowers, obligations thereunder or hereunder;
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 a
demand deposit account by the Agent pursuant to a request (whether written or
oral) believed by the Agent to be an authorized request by the Borrowers for a
Loan hereunder shall be deemed to be a Loan hereunder for all purposes with the
same effect as if the Borrowers had in fact requested the Agent to make such
Loan.
 
(e)  Unless the Agent shall have received notice from a Bank prior to the date
of the Borrowing of the Loans pursuant to Section 2.1(a) that such Bank will not
make available to the Agent the amount of the Loan to be made by such Bank
hereunder, the Agent may assume that such Bank has made such portion available
to the Agent on the Closing Date in accordance with this Section 2.1 and the
Agent may, in reliance upon such assumption, make available to the Borrowers on
the Closing Date a corresponding amount. If and to the extent that such Bank
shall not have so made such amount available to the Agent, such Bank (severally)
and the Borrowers (jointly and 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 Borrowers until the date such
amount is repaid to the Agent, (i) in the case of the Borrowers, 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
Bank’s Loan as part of such Borrowing for purposes of this Agreement.
 
(f)  The failure of any Bank to make its Loan to be made by it on the Closing
Date pursuant to Section 2.1(a) shall not relieve any other Bank of its
obligation, if any, hereunder to make its Loan on the Closing Date, 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 Closing Date.
 
(g)  Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued or converted only on the last day of a Rate Period for such Eurodollar
Rate Loan. During the existence of a Default, no Loans may be requested as,
converted to or continued as Eurodollar Rate Loans without the consent of the
Majority Banks.
 
2.2  Interest Rate Determination
 
(a)  (i)Except as specified in Sections 2.3(b), Alternate Base Rate Loans shall
bear interest on the unpaid principal amount thereof from time to time
outstanding, until maturity, at a rate per annum equal to the lesser of (A) the
Alternate Base Rate in effect from time to time for such Loans or (B) the
Highest Lawful Rate.
 
(ii) Except as specified in Sections 2.3(b) and 2.3(c), Eurodollar Rate Loans
shall bear interest on the unpaid principal amount thereof from time to time
outstanding, until maturity, at a rate per annum equal to the lesser of (A) the
Eurodollar Rate for the Rate Period in effect for such Borrowing of such Loans
in effect from time to time or (B) the Highest Lawful Rate.

(iii) All interest hereunder shall be 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, and in each case shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day). The applicable Alternate Base Rate or Eurodollar Rate shall be
determined by the Agent in accordance with the provisions of this Agreement and
such determination shall be conclusive absent manifest error.

(b)  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.
 
2.3  Additional Interest Rate Provisions
 
(a)  The respective Note of each Bank may be held by the applicable 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.
 
(b)  If the Borrowers shall have chosen the Eurodollar Rate in a Notice of
Borrowing and prior to the requested date of Borrowing, conversion or
continuation, 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 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 or maintaining such
Eurodollar Rate Loan for such Rate Period, then such Bank will so notify the
Borrowers 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 Borrowers receive notice from the Agent that
the circumstances giving rise to such determination no longer apply.
 
(c)  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 Borrowers and the Agent. With respect to any Eurodollar
Rate Loan which is outstanding when such Bank so notifies the Borrowers, 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 Borrowers change the
rate as provided in Section 2.1(c). No more than five (5) Business Days after
such specified date, the Borrowers shall, jointly and severally, 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 Borrowers 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 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.
 
(d)  EACH BORROWER JOINTLY AND SEVERALLY 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 CONTINUATION, CONVERSION, PAYMENT,
PREPAYMENT 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 BORROWING DATE IF SUCH PAYMENT OR PREPAYMENT PREVENTS
THE PROPOSED BORROWING FROM BECOMING FULLY EFFECTIVE; (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 BORROWERS OR DUE TO ANY OTHER ACTION OR INACTION OF THE BORROWERS, OR (v)
ANY FAILURE BY ANY BORROWER (FOR A REASON OTHER THAN THE FAILURE OF A BANK TO
MAKE A LOAN) TO PREPAY, BORROW, CONTINUE OR CONVERT ANY LOAN OTHER THAN AN
ALTERNATE BASE RATE LOAN ON THE DATE OR IN THE AMOUNT NOTIFIED BY THE BORROWERS.
ANY BANK DEMANDING PAYMENT UNDER THIS SECTION 2.3(d) SHALL DELIVER TO THE
BORROWERS 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.
 
(e)  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 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
Borrowers jointly and severally shall pay to such Bank such additional amount or
amounts as will compensate such Bank for such reduction.
 
(f)  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 Borrowers (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 Borrowers jointly
and severally 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).
 
3.  JOINT AND SEVERAL LIABILITY OF BORROWERS
 
3.1  Joint and Several Liability of Borrowers
 
 
(a)  Each Borrower is accepting joint and several liability hereunder and under
the other Loan Documents in consideration of the financial accommodations to be
provided by the Agent and the Banks under this Agreement, for the mutual
benefit, directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrower to accept joint and several liability for the
Obligations.
 
(b)  Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrower, with respect to the payment and
performance of all of the Obligations (including any Obligations arising under
this Section 3.1), it being the intention of the parties hereto that all the
Obligations shall be the joint and several obligations of each Borrower without
preferences or distinction among them.
 
(c)  If and to the extent that any Borrower shall fail to make any payment with
respect to any of the Obligations as and when due or to perform any of the
Obligations in accordance with the terms thereof, then in each such event the
other Borrower will make such payment with respect to, or perform, such
Obligation.
 
(d)  The obligations of each Borrower under the provisions of this Section 3.1
constitute the absolute and unconditional, full recourse obligations of each
Borrower enforceable against each such Borrower.
 
(e)  Except as otherwise expressly provided in this Agreement: (i) each Borrower
hereby waives notice of acceptance of its joint and several liability, notice of
any Loans under or pursuant to this Agreement, notice of the occurrence of any
Default, Event of Default, or of any demand for any payment under this
Agreement, notice of any action at any time taken or omitted by any Agent or any
Borrower under or in respect of any of the Obligations, any requirement of
diligence or to mitigate damages and, generally, to the extent permitted by
applicable law, all demands, notices and other formalities of every kind in
connection with this Agreement (except as otherwise provided in this Agreement);
and (ii) each Borrower hereby assents to, and waives notice of, any extension or
postponement of the time for the payment of any of the Obligations, the
acceptance of any payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
the Agent or any Bank at any time or times in respect of any default by any
Borrower in the performance or satisfaction of any term, covenant, condition or
provision of this Agreement, any and all other indulgences whatsoever by the
Agent or any Bank in respect of any of the Obligations, and the taking,
addition, substitution or release, in whole or in part, at any time or times, of
any security for any of the Obligations or the addition, substitution or
release, in whole or in part, of any Borrower.
 
(f)  Without limiting the generality of the foregoing, each Borrower assents to
any other action or delay in acting or failure to act on the part of the Agent
or any Bank with respect to the failure by any Borrower to comply with any of
its respective Obligations, including any failure strictly or diligently to
assert any right or to pursue any remedy or to comply fully with applicable
laws, statutes, rules or regulations, which might, but for the provisions of
this Section 3.1 afford grounds for terminating, discharging or relieving any
Borrower, in whole or in part, from any of its Obligations under this Section
3.1, it being the intention of each Borrower that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of such Borrower under
this Section 3.1 shall not be discharged except by performance and then only to
the extent of such performance. The Obligations of each Borrower under this
Section 3.1 shall not be diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, reconstruction or similar proceeding
with respect to any Borrower or the Agent or any Bank or other Loan Party. The
joint and several liability of the Borrowers hereunder shall continue in full
force and effect notwithstanding any absorption, merger, amalgamation or any
other change whatsoever in the name, constitution or place of formation of any
of the Borrowers or the Agent or any Bank.
 
(g)  Each Borrower represents and warrants to the Agent and Banks that such
Borrower is currently informed of the financial condition of the Borrowers and
of all other circumstances which a diligent inquiry would reveal and which bear
upon the risk of nonpayment of the Obligations.
 
(h)  The provisions of this Section 3.1 are made for the benefit of the Agent,
the Banks and their respective successors and assigns, and may be enforced by
any of them from time to time against any or all of the Borrowers as often as
occasion therefor may arise and without requirement on the part of such Agent,
Bank, successor or assign first to marshal any of its or their claims or to
exercise any of its rights against any of the other Borrowers or to exhaust any
remedies available to it against any of the other Borrowers or to resort to any
other source or means of obtaining payment of any of the Obligations hereunder
or to elect any other remedy. The provisions of this Section 3.1 shall remain in
effect until all of the Obligations shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by the Agent or any Bank upon the insolvency, bankruptcy or
reorganization of any of the Borrowers, or otherwise, the provisions of this
Section 3.1 will forthwith be reinstated in effect, as though such payment had
not been made.
 
(i)  Each Borrower hereby agrees that it will not enforce any of its rights of
contribution or subrogation against the other Borrower with respect to any
liability incurred by it hereunder or under any of the other Loan Documents, any
payments made by it to the Agent or the Banks with respect to any of the
Obligations or any collateral security therefor until such time as all of the
Obligations have been paid in full in cash. Any claim which any Borrower may
have against the other Borrower with respect to any payments to the Agent or any
Bank hereunder or under any other Loan Documents are hereby expressly made
subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower, its
debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to the
other Borrower therefor.
 
(j)  Each Borrower hereby agrees that, after the occurrence and during the
continuance of any Default or Event of Default, the payment of any amounts due
with respect to the indebtedness owing by any Borrower to the other Borrower is
hereby subordinated to the prior payment in full in cash of the Obligations.
Each Borrower hereby agrees that after the occurrence and during the continuance
of any Default or Event of Default, such Borrower will not demand, sue for or
otherwise attempt to collect any indebtedness of the other Borrower owing to
such Borrower. If, notwithstanding the foregoing sentence, such Borrower shall
collect, enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Borrower as trustee
for the Agent, and such Borrower shall deliver any such amounts to Agent for
application to the Obligations in accordance with Section 4.3.
 
4.  PAYMENTS AND PREPAYMENTS
 
4.1  Optional and Mandatory Prepayment
 
(a)  Optional Prepayments. The Borrowers shall have the right at any time and
from time to time to prepay any of the Loans, in whole or in part, as follows:
 
(i)  with respect to the Eurodollar Rate Loans, by giving not less than three
(3) Business Days’ prior written notice to such effect to the Agent; and
 
(ii)  with respect to the Alternate Base Rate Loans, by giving not less than one
(1) Business Day’s prior written notice to such effect to the Agent.
 
Each such optional prepayment shall be accompanied by accrued interest on the
amount so repaid to the date of such prepayment. Any partial prepayment shall be
in the amount of $5,000,000.00 or an integral multiple thereof.
 
(b)  Mandatory Prepayments.
 
(i)  Asset Sales. Not later than one Business Day following the receipt of any
net cash proceeds of any Asset Sale by the Parent or any of its Subsidiaries,
the Borrowers shall make prepayments in accordance with Section 4.1(c) in an
aggregate amount equal to 100% of such net cash proceeds.
 
(ii)  Debt Issuance. Not later than one Business Day following the receipt of
any net cash proceeds of any Debt Issuance by the Parent or any of its
Subsidiaries, the Borrowers shall make prepayments in accordance with Section
4.1(c) in an aggregate amount equal to 100% of such net cash proceeds; provided,
however, that no such prepayment shall be required under this Section 4.1(b)(ii)
with respect to any Debt or other indebtedness of the Parent or any of its
Subsidiaries incurred or issued so long as (x) the net cash proceeds therefrom
are applied at the time of such incurrence or issuance to refinance or repay any
Debt or indebtedness of the Parent or such Subsidiary that is in existence on
the Closing Date and has a stated maturity date that is prior to March 15, 2007
or (y) in the case of any Debt or other indebtedness of the Parent incurred
under the Existing Revolving Credit Facility, the net cash proceeds therefrom
are used by the Parent solely for working capital purposes.
 
(iii)  Equity Issuance. Not later than one Business Day following the receipt of
any net cash proceeds of any Equity Issuance by the Parent or any of its
Subsidiaries, the Borrowers shall make prepayments in accordance with Section
4.1(c) in an aggregate amount equal to 100% of such net cash proceeds.
 
(iv)  SUG EAT Entities Loan Documents. Not later than one Business Day following
the receipt by ESSI of any net cash proceeds constituting prepayment or
repayment by any of the SUG EAT Entities of their respective obligations under
the SUG EAT Entities Loan Documents, the Borrowers shall make repayments in
accordance with Section 4.1(c) in an aggregate amount equal to 100% of such net
cash proceeds.
 
(c)  Application of Mandatory Prepayments. In the event of any mandatory
prepayment of the Loan pursuant to Section 4.1(b), all net cash proceeds
received as provided in Section 4.1(b) shall be applied to the ratable
prepayment of the outstanding aggregate principal amount of the Loans, together
with accrued interest thereon to the date of such prepayment.
 
4.2  Repayment of the Loans; and Maturity of the Loans.
 

 
(a)  Each Borrower jointly and severally hereby unconditionally promises to pay
to the Agent for the account of each Bank holding a Loan or Loans the then
unpaid principal amount of each Loan on the Maturity Date.
 
(b)  Each Loan shall mature, and the principal amount thereof shall be due and
payable, together with accrued and unpaid interest thereon, on the Maturity
Date.
 
4.3  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 in respect of fees or of
principal or interest on the Loans shall be made to the Agent for the account of
the Banks at the Agent’s Payment Office, no later than 12:00 noon, New York City
time, in immediately available funds. Unless the Agent shall have received
notice from the Borrowers prior to the date on which any payment is due to the
Banks hereunder that the Borrowers will not make any payment due hereunder in
full, the Agent may assume that the Borrowers have 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 Borrowers 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 Borrowers 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 Borrowers until the date the Agent pays such amount to such Bank.
 
4.4  No Prepayment Premium or Penalty
 
Each prepayment pursuant to Section 4.1 shall be without premium or penalty,
subject in the case of Eurodollar Rate Loans to the provisions of Section
2.3(d).
 
4.5  Taxes
 
All payments (whether of principal, interest, reimbursements or otherwise) under
this Agreement or any other Loan Document shall be made by the Borrowers 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 Borrowers jointly
and severally 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.
 
4.6  Reduction or Termination of Commitments
 
The Commitments shall automatically terminate in their entirety at 5:00 p.m.
(New York City time) on the Closing Date.
 
5.  FEES
 

 
5.1  Specified Fees
 
The Parent shall pay the fees set forth in the Fee Letter at the times and to
the applicable parties as set forth therein.
 
5.2  Fees Not Interest
 
The fees described in this Agreement represent compensation 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 Borrowers to pay each fee
described herein shall be in addition to, and not in lieu of, the obligation of
the Borrowers to pay interest, other fees described in this Agreement, and
expenses otherwise described in this Agreement. Fees shall be payable when due
in Dollars and in immediately available funds.
 
6.  APPLICATION OF PROCEEDS
 
6.1  Application of Proceeds
 
The Borrowers agree that the proceeds of the Loans shall be used solely to fund
the SUG EAT Entities Loan in accordance with the terms of the SUG EAT Entities
Loan Documents, which loan proceeds shall in turn be immediately used by the SUG
EAT Entities to fund the purchase price of the Sid Richardson Acquisition.
 
7.  REPRESENTATIONS AND WARRANTIES
 
Each Borrower represents and warrants that:
 
7.1  Organization and Qualification
 
Each of the Parent, each of its Subsidiaries and each of the SUG Partnership
Entities: (a) is a corporation, limited liability company or partnership, as the
case may be, duly organized, validly existing, and in good standing under the
laws of its respective state of incorporation or formation; (b) has the
corporate or organizational power to own its respective properties and to carry
on its respective businesses as now conducted; and (c) is duly qualified as
foreign corporation, limited liability company or partnership, as the case may
be (or, in the case of any Southern Union Trust, trusts) to do business and is
in good standing in every jurisdiction where such qualification is necessary
except when the failure to so qualify would not or does not have a Material
Adverse Effect. Each Borrower is a corporation organized under the laws of
Delaware and has the Subsidiaries listed on Schedule 7.1(A), and no others, each
of which is a Delaware corporation unless otherwise noted on Schedule 7.1(A).
None of the Subsidiaries listed on Schedule 7.1(A) as “Inactive Subsidiaries”
conducts or will conduct any business, and none of such Subsidiaries has any
assets other than minimum legal capitalization. As of the Closing Date, (a) CDEC
directly owns and holds all the Equity Interests in SUG EAT Inc., (b) SUG EAT
Inc. directly owns and holds all of the Equity Interests in SUG EAT LLC, (c)
Southern Union Panhandle is the sole manager of SUG EAT LLC and (d) Schedule
7.1(B) sets forth all the holders and owners of all the Equity Interests in each
of SRES, REM, Leapartners and their respective subsidiaries (including without
limitation, the Partnership Companies) immediately after giving effect to the
Sid Richardson Acquisition.
 
7.2  Financial Statements
 
The Parent has furnished the Banks with (a) the Parent’s annual audit reports
containing the Parent’s consolidated balance sheets, statements of income and
stockholder’s equity and a cash flow statements as at and for the twelve month
periods ending June 30, 2002, June 30, 2003, June 30, 2004 and December 31,
2004, accompanied by the certificate of Price Waterhouse Coopers and (b) the
Parent’s unaudited financial report as of the fiscal quarter ending September
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 Parent and the Subsidiaries 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.
 
7.3  Litigation
 
Except as disclosed on Schedule 7.3 or Schedule 7.16, there is no: (a) action or
proceeding pending or, to the knowledge of the Borrowers, threatened against the
Parent or any of its Subsidiaries before any court, administrative agency or
arbitrator which is reasonably expected to have a Material Adverse Effect; (b)
judgment outstanding against the Parent or any of its Subsidiaries for the
payment of money; or (c) other outstanding judgment, order or decree affecting
the Parent or any of its Subsidiaries before or by any administrative or
governmental authority, compliance with or satisfaction of which may reasonably
be expected to have a Material Adverse Effect.
 
7.4  Default
 
Neither the Parent nor any of its Subsidiaries 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, law, 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.
 
7.5  Title to Assets
 
The Parent and each of its Subsidiaries have good and marketable title to their
respective assets, subject to no Liens except those permitted in Section 10.2.
 
7.6  Payment of Taxes
 
The Parent and each of its Subsidiaries 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
Parent as of June 30, 2005). The Borrowers are 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.
 
7.7  Conflicting or Adverse Agreements or Restrictions; Governmental Approvals.
 
Neither the Parent nor any of its Subsidiaries is a party to any contract or
agreement or subject to any restriction which would have a Material Adverse
Effect. Neither the execution and delivery of this Agreement 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 of this Agreement or of any of the other Loan Documents or of any
instruments required hereby or thereby will (a) require any consent or approval
of, registration or filing with, or other action by any Governmental Authority,
except as set forth in Schedule 7.7 or (b) 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 Parent or any of its Subsidiaries pursuant to (i) the charter or
bylaws or other applicable organizational documents of the Parent or any of its
Subsidiaries; (ii) any law or any regulation of any administrative or
governmental instrumentality; (iii) any order, writ, injunction or decree of any
court; or (iv) the terms, conditions or provisions of any agreement or
instrument to which the Parent or any of its Subsidiaries is a party or by which
it is bound or to which it is subject.
 
7.8  Authorization, Validity, Etc.
 
Each Borrower has the organizational power and authority to make, execute,
deliver and carry out this Agreement and the other Loan Documents to which such
Person is a party, and the transactions contemplated herein and therein, to make
the borrowings provided for herein, to execute and deliver the Notes and to
perform its obligations hereunder and under the other Loan Documents to which it
is a party and all such action has been duly authorized by all necessary
organizational proceedings on its part. Each Loan Party (other than the
Borrowers) has the organizational power and authority to make, execute, deliver
and carry out the Loan Documents to which such Person is a party and the
transactions contemplated therein and to perform its obligations thereunder and
all such action has been duly authorized by all necessary organizational
proceeding on its part. This Agreement has been duly and validly executed and
delivered by the Borrowers and constitutes the valid and legally binding
agreement of the Borrowers enforceable against the Borrowers 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 Borrowers and each other Loan
Party, as the case may be, pursuant to the provisions hereof and thereof, will
constitute the valid and legally binding obligation of the Borrowers and each
such other Loan Party, as the case may be, enforceable against such Person in
accordance with the terms thereof and of this Agreement, except as limited by
Debtor Laws.
 
7.9  Investment Company Act Not Applicable
 
Neither the Parent nor any of its Subsidiaries is an “investment company” or a
company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended.
 
7.10  Public Utility Holding Company Act Not Applicable
 
Neither the Parent nor any of its Subsidiaries is a “holding company”, or a
“subsidiary company” of a “holding company”, or an “affiliate” of a “holding
company”, or an affiliate of a “subsidiary company” of a “holding company”, as
such terms are defined in the Public Utility Holding Company Act of 2005, as
amended.
 
7.11  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 Parent nor any of its Subsidiaries will take or permit
any action which would involve the Banks in a violation of Regulation G,
Regulation T, Regulation U, Regulation X or any other regulation of the Board of
Governors of the Federal Reserve System or a violation of the Securities
Exchange Act of 1934, in each case as now or hereafter in effect. 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 and the
restrictions on disposition of assets set forth in Section 10.8 is represented
by margin stock.
 
7.12  ERISA
 
Except as disclosed in Part A in Schedule 7.12, no Reportable Event (as defined
in § 4043(c) of ERISA) has occurred with respect to any Plan. Each Plan complies
in all material respects with all applicable provisions of ERISA, and, the
Parent and each of its Subsidiaries have filed all reports required by ERISA and
the Code to be filed with respect to each Plan. Except as disclosed in Part B in
Schedule 7.12, the Borrowers have no knowledge of any event which could result
in a liability of the Parent or any of its Subsidiaries to the Pension Benefit
Guaranty Corporation. The Parent and each of its Subsidiaries 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 which would cause the lien provided under § 4068
of ERISA to attach to any property of the Parent or any of its Subsidiaries.
 
7.13  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”.
 
7.14  Franchises, Co-Licenses, Etc
 
The Parent and each of its Subsidiaries 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 Borrowers, prudent) in connection with the conduct of their respective
businesses as presently conducted or as proposed to be conducted.
 
7.15  Lines of Business
 
The nature of the Parent’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; (e) gathering and processing of
natural gas; and (f) sales and rentals of appliances utilizing one or more of
the fuel or energy options specified in this Section 7.15. Notwithstanding
anything contained in the foregoing in this Section 7.15 to the contrary, the
only line of business of the SUG EAT Entities is the SUG EAT Entities Permitted
Activities.
 
7.16  Environmental Matters
 
Except as disclosed in the environmental disclosures in the footnotes to its
financial statements as currently filed with the Securities and Exchange
Commission: (a) all facilities and property owned or leased by the Parent or any
of its Subsidiaries have been and continue to be, owned or leased and operated
by the Parent and such Subsidiary in material compliance with all Environmental
Laws; (b) there has not been (during the period of the Parent’s or any of its
Subsidiaries’ 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 Parent or any of its Subsidiaries (i) in quantities that would be
required to be reported under any Environmental Law, (ii) that required, or may
reasonably be expected to require, the Parent or any of its Subsidiaries to
expend funds on remediation or cleanup activities pursuant to any Environmental
Law except for remediation or clean-up activities that would not be reasonably
expected to have a Material Adverse Effect, or (iii) that otherwise, singly or
in the aggregate, has, or may reasonably be expected to have, a Material Adverse
Effect; (c) the Parent and each of its Subsidiaries 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; (d) there are no polychlorinated biphenyls (PCB’s) or
asbestos-containing materials or surface impoundments in any of the facilities
now (or, to the knowledge of the Borrowers, previously) owned or leased by the
Parent or any of its Subsidiaries, except for PCB’s, surface impoundments, and
asbestos-containing materials of the type and in quantities that 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; (e)
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 Borrowers, previously) owned or leased by the Parent or any of
its Subsidiaries during the time of the Parent’s or such Subsidiary’s ownership
or leased by the Parent or any of its Subsidiaries during the time of the
Parent’s or such Subsidiary’s ownership except in material compliance with all
applicable Environmental Laws; and (f) all underground storage tanks located on
the property now (or, to the knowledge of the Borrowers, previously) owned or
leased by the Borrowers or any of its Subsidiaries have been (and to the extent
currently owned or leased are) operated in material compliance with all
applicable Environmental Laws.
 
7.17  No Agreements Prohibiting Pledge of Southern Union Panhandle and Panhandle
Eastern Equity Interests
 
The Parent 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 Equity Interests in (i) Southern Union Panhandle or (ii) Panhandle
Eastern, in each case at any time owned and held by the Parent as security for
any Debt of the Parent or any of its Subsidiaries.
 
7.18  No Agreements Prohibiting Pledge of Sid Richardson Acquired Business.
 
Neither the Parent nor any Subsidiary of the Parent nor any SUG EAT Entity is a
party to any contract or other agreement with any Person that directly or
indirectly prohibits the Parent or such Subsidiary or such SUG EAT Entity from
granting any Lien against the Equity Interests in (i) SRES, (ii) REM or (iii)
Leapartners, in each case at any time owned and held by the Parent or any of its
Subsidiaries or any SUG EAT Entity as security for any Debt of the Parent or any
of its Subsidiaries.
 
7.19  Use of Proceeds.
 
 The proceeds of the Loans will be used by the Borrowers only as permitted by
Section 6.1.
 
7.20  Disclosure.
 
 
 
(a)  Any report, financial statements, certificates or other information filed
by or on behalf of the Parent with the SEC (including, in each case, all
amendments and supplements thereto) do not contain any material misstatement of
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
materially misleading.
 
(b)  All reports, financial statements, certificates or other information
furnished by or on behalf of the Parent or any of its Subsidiaries to the Agent,
the Joint Lead Arrangers or any Bank in connection with the Sid Richardson
Acquisition and the negotiation of this Agreement or any other Loan Document or
delivered hereunder or thereunder (as modified or supplemented by other
information so furnished), taken as a whole, are true and correct in all
material respects and do not omit to state a material fact necessary to make the
statements contained therein not misleading, in light of the circumstances under
which such statements were made, in each case on the date on which such
information was furnished; provided that, with respect to projected financial
information, the Borrowers represent only that such information was prepared in
good faith based on assumptions believed to be reasonable at the time (it being
understood that this representation and warranty in this Section 7.20(b) as it
pertains to any of SRES, REM, Leapartners and their respective Subsidiaries
shall be limited to the knowledge of the Borrowers).
 
7.21  Sid Richardson Acquired Business Matters.
 
 To the knowledge of the Borrowers, the representations and warranties contained
in the Sid Richardson Acquisition Documents that relate to the Partnership
Companies and its Subsidiaries are true and correct in all material respects as
of the Closing Date, with only such exceptions as would not in the aggregate
reasonably be expected to have a material adverse effect on (x) the Borrowers or
(y) SRES, REM, Leapartners and their Subsidiaries.
 
7.22  Collateral Matters.
 
 
 
(a)  Each Collateral Document delivered pursuant to Section 8.6 will, upon
execution and delivery thereof, be effective to create in favor of the Agent,
for the benefit of the Secured Parties, legal, valid and enforceable Liens on,
and security interests in, all of the Loan Parties’ right, title and interest in
and to the Collateral thereunder, and (i) when all appropriate filings or
recordings are made in the appropriate offices as may be required under
applicable law and (ii) upon the taking of possession or control by the Agent of
such Collateral with respect to which a security interest may be perfected only
by possession or control (which possession or control shall be given to the
Agent to the extent required by any Collateral Document), such Collateral
Document will constitute fully perfected Liens on, and security interests in,
all right, title and interest of the Loan Parties in such Collateral, in each
case free and clear of any Lien, except for the liens and security interests
created by the Loan Documents and, in the case of the SUG EAT Entities
Collateral, the Permitted Subordinated Lien.
 
(b)  The Parent has rights and sufficient title to and is the legal and
beneficial owner of the Collateral pledged by it under the Collateral Documents
free and clear of any Lien, except for the liens and security interests created
by the Loan Documents.
 
(c)  Upon the consummation of the Sid Richardson Acquisition, each of the SUG
EAT Entities will have rights and sufficient title to and will be the legal and
beneficial owners of the Acquired Business Equity Interests and the other
Collateral to be pledged by them under the Collateral Documents to which it is a
party, free and clear of any Lien, except for the liens and security interests
created under the Loan Documents and the Permitted Subordinated Lien.
 
8.  CONDITIONS
 

 
The several obligations of each Bank to make its Loan is subject to the
following conditions:
 
8.1  Representations True and No Defaults.
 
(a)  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.
 
(b)  None of the Loan Parties shall be in default in the due performance of any
covenant on its part contained in this Agreement and the other Loan Documents.
 
(c)  No Event of Default or Default shall have occurred and be continuing.
 
8.2  Governmental Approvals
 
The Borrowers and each other Loan Party shall have obtained all orders,
approvals or consents of any Governmental Authority required in connection with
the Sid Richardson Acquisition or the making and carrying out of this Agreement
and the other Loan Documents, the making of the borrowings pursuant hereto, the
issuance of the Notes to evidence such borrowings, and the execution and
delivery of the other Loan Documents, and all applicable waiting periods and
appeal periods shall have expired, in each case without the imposition of any
burdensome condition. The Borrowers shall have obtained all amendments or
consents of any other Person under any applicable loan or financing agreement or
other debt instrument of the Borrowers or its Affiliates that are necessary or
reasonably desirable to permit the consummation of (a) the Sid Richardson
Acquisition on the terms contemplated by the Sid Richardson Acquisition
Documents and (b) this Agreement and the other Loan Documents and the
transactions contemplated hereunder and thereunder on the terms contemplated
hereby and thereby (including without limitation, the security arrangements
contemplated hereby), each of which amendments or consents shall be in form and
substance satisfactory to the Banks.
 
8.3  Compliance With Law
 
The business and operations of the Parent and each of its Subsidiaries 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
Parent and each of its Subsidiaries and the business and operations of any of
them.
 
8.4  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.
 
8.5  Payment of Fees and Expenses
 
The Borrowers shall have paid (a) all expenses of the type described in Section
13.3 through the date of such Loan, (b) all closing, structuring and other
invoiced fees owed as of the Closing Date to the Agent, any of the Banks and/or
any of the Joint Lead Arrangers (and their respective Affiliates) by the
Borrowers under this Agreement or any other written agreement between the Parent
and/or the other Borrower, the Agent, the applicable Bank(s) and/or the
applicable Joint Lead Arranger(s) (and their respective Affiliates), and (c) all
the fees set forth in the Fee Letter at the times and to the parties as set
forth in such Fee Letter.
 
8.6  Loan Documents, Opinions and Other Instruments
 
As of the Closing Date, each applicable Loan Party (to the extent a party
thereto) shall have delivered to the Agent the following: (a) this Agreement,
each of the Notes, the Collateral Documents (including the Pledge Agreements and
financing statements or any other evidence of all recordings, filings or any
other action that the Agent may deem necessary in order to perfect and protect
the first priority liens and security interests created under the Pledge
Agreements), the Intercreditor Agreement and all other Loan Documents required
by the Agent and the Banks to be executed and delivered by such Loan Party in
connection with this Agreement; (b) with respect to each Loan Party, a
certificate from the Secretary of State of the State of Delaware as to the
continued existence and good standing of each such Loan Party in the State of
Delaware; (c) with respect to the Parent, a certificate from the Secretary of
State of the State of Texas as to the continued qualification of each such Loan
Party to do business in the State of Texas; (d) a Secretary’s Certificate
executed by the duly elected Secretary or a duly elected Assistant Secretary of
the Parent, in a form acceptable to the Agent, whereby such Secretary or
Assistant Secretary certifies that attached thereto is a true and complete copy
of each Organizational Document of each Borrower and that such Organizational
Documents have not been modified, rescinded or amended and are in full force and
effect, (2) that attached thereto is a true and complete copy of resolutions
adopted by the Board of Directors of each Borrower authorizing such Borrower to
enter into the Loan Documents, to borrow hereunder, to pledge its interest in
the Collateral and to perform its obligations under the Loan Documents, in each
case all in accordance with the terms of this Agreement and the other Loan
Documents, and to enter into such documents and perform such obligation
necessary to consummate the SUG EAT Entity Loan, the Sid Richardson Acquisition
Assignment and the Qualified Transaction, and that such resolutions have not
been modified, rescinded or amended and are in full force and effect; (e) an
officer’s certificate executed by the duly elected senior vice president of SUG
EAT, Inc., in a form acceptable to the Agent, whereby such senior vice president
certifies (1) that attached thereto is a true and complete copy of each
Organizational Document of each SUG EAT Entity and that such Organizational
Documents have not been modified, rescinded or amended and are in full force and
effect, (2) that attached thereto is a true and complete copy of resolutions
adopted by the Board of Directors of SUG EAT Inc., in its individual capacity
and as sole member of SUG EAT LLC, authorizing such SUG EAT Entity to enter into
the Loan Documents to which it is a party, to pledge their respective interests
in the Collateral to secure the Obligations and to perform their obligations
thereunder, in each case all in accordance with the terms of this Agreement and
the other Loan Documents, and to enter into such documents and perform such
obligation necessary to consummate the SUG EAT Entity Loan, the Sid Richardson
Acquisition Assignment and the Qualified Transaction, and that such resolutions
have not been modified, rescinded or amended and are in full force and effect,
and (3) as to the incumbency and specimen signature of each officer of SUG EAT
Inc. executing any Loan Document or any other document delivered in connection
herewith on behalf of such Loan Party (together with a certificate of another
officer as to the incumbency and specimen signature of the secretary or
assistant secretary executing the certificate in this clause (3)); (f) a legal
opinion from in-house counsel for the Borrowers, dated as of the Closing Date,
addressed to the Agent and the Banks in the form of Exhibit E; (g) with respect
to the Borrowers, a solvency certificate of a senior financial officer of the
Parent in form and substance satisfactory to the Agent; and (h) a legal opinion
from in-house counsel for SUG EAT, Inc., dated as of the Closing Date, addressed
to the Agent and the Banks covering matters similar to the opinions set forth in
Exhibit E but with respect to each of the SUG EAT Entities, which legal opinion
shall be in form and substance reasonably satisfactory to the Agent.
 
8.7  Consummation of Sid Richardson Acquisition
 
Simultaneously with the funding of Loans on the Closing Date, the SUG EAT
Entities Loan to the SUG EAT Entities shall be made by ESSI pursuant to the SUG
EAT Entities Loan Documents and the Sid Richardson Acquisition shall have been
consummated on terms and conditions substantially as set forth in the Sid
Richardson Acquisition Documents, as amended or modified in a manner that does
not materially adversely impact the Banks.
 
8.8  No Material Adverse Change
 
(a)  There has not occurred any event, development or circumstance since
December 31, 2004 that has caused or could reasonably be expected to cause a
material adverse condition or material adverse change in or affecting (A) the
business, condition (financial or otherwise), results of operation, assets,
liabilities, management, prospects or value of the Parent and its Subsidiaries,
taken as a whole or (B) the validity or enforceability of any of the Loan
Documents or the rights and remedies of the Agent and the Banks thereunder.
 
(b)  There has not occurred any Acquired Business Material Adverse Effect on any
Partnership Company since September 30, 2005.
 
8.9  Financial Statements
 
The Joint Lead Arrangers shall have received, reviewed, and be satisfied with,
the following:
 
(a)  in the case of the Parent: (i) the audited consolidated balance sheets and
related statements of income, stockholders’ equity and cash flows of each of the
Parent for each of the fiscal years ending 2002, 2003 and 2004 and
(ii) unaudited consolidated and consolidating balance sheets and related
statements of income, stockholders’ equity and cash flows of the Parent for
fiscal quarters ending March 31, 2005, June 30, 2005 and September 30, 2005; and
 
(b)  in the case of the Partnership Companies: (i) the audited consolidated
balance sheets and related statements of income, stockholders’ equity and cash
flows of the Partnership Companies for each of the fiscal years ending 2003 and
2004 and (ii) unaudited consolidated balance sheets and related statements of
income, stockholders’ equity and cash flows of the Partnership Companies for
fiscal quarter ending November 30, 2005.
 
8.10  Indebtedness
 
After giving effect to the Transactions and the other transactions contemplated
hereby, the Borrowers shall have no outstanding indebtedness or preferred Equity
Interests other than (i) indebtedness outstanding as of February 10, 2006,
(ii) indebtedness outstanding under the Existing Revolving Credit Facility and
(iii) indebtedness outstanding under this Agreement.
 
8.11  Miscellaneous Documents
 
The Borrowers shall have delivered to the Agent a Secretary’s Certificate
executed by the duly elected Secretary or a duly elected Assistant Secretary of
the Parent, in a form acceptable to the Agent, and dated as of the Closing Date,
whereby such Secretary or Assistant Secretary certifies (a) that attached
thereto is a true and complete copy of each of the SUG EAT Entities Transaction
Documents; and (b) that each of the SUG EAT Entities Transaction Documents have
not been modified, rescinded or amended and are in full force and effect. The
Banks, the Agent and the Joint Lead Arrangers shall have been satisfied in all
respects with each SUG EAT Entities Transaction Document.
 
8.12  Officers’ Certificate
 
The Agent shall have received an executed Officer’s Certificate of the Parent
dated the Closing Date, confirming compliance with the conditions precedent set
forth in this Section 8.
 
9.  AFFIRMATIVE COVENANTS
 
Each Borrower covenants and agrees that, so long as the Borrowers may borrow
hereunder and until payment in full of the Loans, the Notes, all other
Obligations, and its other obligations under this Agreement and the other Loan
Documents, Borrowers will:
 
9.1  Financial Statements and Information
 
Deliver to the Banks:
 
(a)  as soon as available, and in any event within 120 days after the end of
each fiscal year of the Parent, a copy of the annual audit report of the Parent
and its 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 PricewaterhouseCoopers or another independent certified
public accountant of recognized standing satisfactory to the Banks. The Parent
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
 
(b)  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 Parent (excluding
the fourth quarter), an unaudited financial report of the Parent and its
Subsidiaries as at the end of such quarter and for the period then ended,
containing a balance sheet, statements of income and stockholders equity and a
cash flow statement, all in reasonable detail and certified by a financial
officer of the Parent to have been prepared in accordance with GAAP, except as
may be explained in such certificate; and
 
(c)  copies of all statements and reports sent to stockholders of the Parent or
filed with the Securities and Exchange Commission; and
 
(d)  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 that any of the Borrowers 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 Parent and all its
Subsidiaries with comparative consolidated figures for the corresponding period
in the preceding year. Together with each delivery of financial statements
required by clauses (a) and (b) above, the Borrowers will deliver to the Banks
(i) such schedules, computations and other information as may be required to
demonstrate that the Borrowers are 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 Borrowers 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 Banks.
 
9.2  Lease and Investment Schedules
 
Deliver to the Banks:
 
(a)  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 a form
reasonably satisfactory to the Agent) of all agreements to rent or lease any
property (personal, real or mixed, but not including oil and gas leases) to
which the Parent or any of its Subsidiaries is a party lessee and which,
considered independently or collectively with other leases with the same lessor,
involve an obligation by the Parent or such 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
 
(b)  with each delivery of annual financial statements under Section 9.1(a) a
current complete schedule (in a form reasonably satisfactory to the Agent)
listing all debt exceeding $1,000,000.00 in principal amount outstanding and
equity owned or held by the Parent or any of its Subsidiaries containing all
information required by, and in a form satisfactory to, the Banks, except for
such debt or equity of such Subsidiaries.
 
9.3  Books and Records
 
Maintain, and cause each of its Subsidiaries to maintain, proper books of record
and account in accordance with sound accounting practices in which true, full
and correct entries will be made of all their respective dealings and business
affairs.
 
9.4  Insurance
 
. Maintain, and cause each of its Subsidiaries to maintain, insurance with
financially sound, responsible and reputable companies in such types and amounts
and against such casualties, risks and contingencies as is customarily carried
by owners of similar businesses and properties, 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.
 
9.5  Maintenance of Property
 
Cause its Significant Property and the Significant Property of each of its
Subsidiaries 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.
 
9.6  Inspection of Property and Records
 
Permit any officer, director or agent of the Agent or any Bank, on written
notice and at such Bank’s expense, to visit and inspect during normal business
hours any of the properties, corporate books and financial records of the Parent
and each of its Subsidiaries and discuss their respective affairs and finances
with their principal officers, all at such times as the Agent or any Bank may
reasonably request.
 
9.7  Existence, Laws, Obligations
 
 Maintain, and cause each of its Subsidiaries to maintain, its corporate
existence and franchises, and any license agreements and tariffs that permit the
recovery of a return that the Borrowers consider to be fair (and as to licenses,
franchises, and tariffs that are subject to regulatory determinations of
recovery of returns, the Borrowers have presented or is presenting favorable
defense thereof); and to comply, and cause each of its Subsidiaries to comply,
with all statutes and governmental regulations noncompliance with which might
have a Material Adverse Effect, and pay, and cause each of its Subsidiaries to
pay, all taxes, assessments, governmental charges, claims for labor, supplies,
rent and other obligations which if unpaid might become a lien against the
property of the Parent or any of its Subsidiaries except liabilities being
contested in good faith. Notwithstanding the foregoing, the Borrowers may
dissolve those certain inactive and minimally capitalized Subsidiaries
designated as such on Schedule 7.1.
 
9.8  Notice of Certain Matters
 
Notify the Agent 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 Parent or any of its
Subsidiaries that is not covered by insurance (less applicable deductible
amounts) and which, if determined adversely to the Parent 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 Borrowers is likely, to result in a material adverse
change, in the assets, liabilities, financial condition, business or affairs of
the Parent or any of its Subsidiaries; (c) the occurrence of any Event of
Default or any Default; (d) a change by Moody’s or by S&P in the rating or
outlook of the Parent’s Funded Debt or of the Parent’s unsecured, non-credit
enhanced Senior Funded Debt; or (e) the incurrence of any Lien (other than Liens
granted pursuant to the Collateral Documents and, in the case of the SUG EAT
Entities Collateral, the Permitted Subordinated Lien) on, or claim asserted
against, any of the Collateral.
 
9.9  ERISA
 
At all times:
 
(a)  except as disclosed in Schedule 7.12, to the extent required of the Parent
under applicable law, maintain and keep in full force and effect each Plan,
subject to the Borrowers’ respective right, in accordance with applicable legal
requirements, (i) to amend any such Plans, (ii) to merge any such Plans, and to
(iii) cease benefit accruals under any such Plans;
 
(b)  to the extent required of Borrowers under applicable law, make
contributions to each Plan in a timely manner and in an amount sufficient to
comply with the minimum funding standards requirements of ERISA;
 
(c)  except for events disclosed in Schedule 7.12, 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,
furnish the Banks with a statement executed by the president or chief financial
officer of the Parent setting forth the details thereof and the action which the
Borrowers propose to take with respect thereto and, when known, any action taken
by the Internal Revenue Service with respect thereto;
 
(d)  notify the Banks promptly upon receipt by the Parent or any of its
Subsidiaries of any notice of the institution of any proceeding or other action
which may result in the termination of any Plan and furnish to the Banks copies
of such notice;
 
(e)  to the extent required of any of the Borrowers under applicable law,
maintain Pension Benefit Guaranty Corporation liability coverage insurance
required under ERISA;
 
(f)  furnish the Banks with copies of the summary annual report for each Plan
filed with the Internal Revenue Service as the Agent or the Banks may request;
and
 
(g)  furnish the Banks with copies of any request for waiver of the funding
standards or extension of the amortization periods required by § 303 and § 304
of ERISA or § 412 of the Code promptly after the request is submitted to the
Secretary of the Treasury, the Department of Labor or the Internal Revenue
Service, as the case may be.
 
9.10  Compliance with Environmental Laws
 
At all times:
 
(a)  use and operate, and cause each of its Subsidiaries to use and operate, all
of their respective facilities and properties in material compliance with all
Environmental Laws; keep, and cause each of its Subsidiaries to keep, all
necessary permits, approvals, orders, certificates, licenses and other
authorizations relating to environmental matters in effect and remain in
material compliance therewith; handle, and cause each of its Subsidiaries to
handle, all Hazardous Materials in material compliance with all applicable
Environmental Laws; and dispose, and cause each of its Subsidiaries to dispose,
of all Hazardous Materials generated by the Parent or any of its Subsidiaries 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;
 
(b)  promptly notify the Agent and provide copies upon receipt of all written
claims, complaints, notices or inquiries relating to the condition of the
facilities and properties of the Parent and each of its Subsidiaries 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 Parent and its Subsidiaries of
$10,000,000.00 or more; and
 
(c)  provide such information and certifications which the Banks may reasonably
request from time to time to evidence compliance with this Section 9.10.
 
9.11  PGA Clauses
 
The Borrowers will use their best efforts to maintain in force provisions in all
of its tariffs and franchise agreements that permit the Parent to recover from
customers substantially all of the amount by which the cost of gas purchases
exceeds the amount currently billed to customers for the delivery of such gas
(sometimes referred to as PGA clauses).
 
9.12  Conveyance of Acquired Business Equity Interests to Subsidiaries of the
Parent.
 
 
 
(a) Within one Business Day following the consummation of the final LDC Sale in
respect of a Qualified Transaction, the Parent shall cause SRES, REM and
Leapartners to become wholly-owned Subsidiaries of the Parent by directing CDEC
to require (i) SUG EAT Inc. to assign and convey to a wholly-owned Subsidiary of
the Parent 100% of all issued and outstanding limited partner interests in each
of SRES and REM and all other related Collateral (as such term is defined in the
SUG EAT Entities Pledge Agreement), and (ii) SUG EAT LLC to assign and convey to
another wholly-owned Subsidiary of the Parent 100% of all issued and outstanding
general partner interests in SRES, REM and Leapartners and all other related
Collateral (as such term is defined in the SUG EAT Entities Pledge Agreement).
 
(b) Notwithstanding the foregoing in Section 9.12(a), in the event that the
Qualified Transaction has not been fully consummated by the Safe Harbor Transfer
Date, then the Parent shall immediately cause SRES, REM and Leapartners to
become wholly-owned Subsidiaries of the Parent by directing CDEC to require (i)
SUG EAT Inc. to assign and convey to a wholly-owned Subsidiary of the Parent
100% of all issued and outstanding limited partner interests in each of SRES and
REM and all other related Collateral (as such term is defined in the SUG EAT
Entities Pledge Agreement), and (ii) SUG EAT LLC to assign and convey to another
wholly-owned Subsidiary of the Parent 100% of all issued and outstanding general
partner interests in SRES, REM and Leapartners and all other related Collateral
(as such term is defined in the SUG EAT Entities Pledge Agreement).
 
9.13  Collateral Matters Upon Acquired Business Equity Interests Transfer
 
When any of the SUG EAT Entities shall transfer any of the Acquired Business
Equity Interests and/or other Collateral to one or more wholly-owned
Subsidiaries of the Parent (each a “Transferee Subsidiary”), then the Parent
shall (1) cause the Permitted Subordinated Lien to be terminated in full
immediately prior to the consummation of such transfer and (2) cause the
Transferee Subsidiary to do the following: (i) at the time of the consummation
of such transfer, execute and deliver to the Agent (A) a pledge agreement
substantially similar to the SUG EAT Entities Pledge Agreement pursuant to which
each such Transferee Subsidiary shall pledge and grant a first priority lien on
and security interests in all such Transferee Subsidiary’s rights, title and
interests in such Acquired Business Equity Interests and such other collateral
similar to the Collateral described in the SUG EAT Entities Pledge Agreement,
subject to no other Liens, (B) other collateral documents similar to the
Collateral Documents (other than the Pledge Agreements) as the Agent may
reasonably request, (C) such documents, certificates and opinions similar to
those that otherwise would have been required pursuant to Section 8.6 if such
Transferee Subsidiary had been a “Loan Party” on the Closing Date and (D) UCC
financing statements in appropriate form for filing under the UCC in each
jurisdiction as may be necessary or appropriate or, in the opinion of the Agent,
desirable to perfect the Liens created, or purported to be created, by the
Collateral Documents; (ii) prior to the consummation of such transfer, deliver
to the Agent copies of UCC, tax and judgment lien searches, bankruptcy and
pending lawsuit searches or equivalent reports or searches, each of a recent
date in relation to the date of such transfer listing all effective financing
statements, lien notices or comparable documents that name any such Transferee
Subsidiary as debtor and that are filed in those state and county jurisdictions
in which any property of such Transferee Subsidiary is located and the state and
county jurisdictions in which such Transferee Subsidiary is organized or
maintains its principal place of business, none of which encumber the Collateral
covered or intended to be covered by the Collateral Documents (other than the
Liens thereon created pursuant to the Collateral Documents); and (iii) take such
other action as the Agent deems desirable or advisable to create, perfect and
preserve the security interest to be so pledged and granted; all the foregoing
documents and actions described in clauses (1) and (2) above to be in form and
substance reasonably satisfactory to the Agent.
 
9.14  Control of SUG EAT LLC
 
Southern Union Panhandle shall at all times until the consummation of the
Acquired Business Equity Interests Transfer, directly or indirectly, have the
power to direct or cause the direction of the management, policies and/or
activities of SUG EAT LLC, through the SUG Management Agreement and through the
operating agreement of SUG EAT LLC (it being understood and agreed that Southern
Union shall at all times be the sole non-member manager of SUG EAT LLC pursuant
to such operating agreement).
 
10.  NEGATIVE COVENANTS
 

 
The Borrowers covenant and agree that, so long as the Borrowers may borrow
hereunder and until payment in full of the Loans, the Notes, all other
Obligations, and its other obligations under this Agreement and the other Loan
Documents, except with the written consent of the Banks:
 
10.1  Capital Requirements
 
The Borrowers will not:
 
(a)  permit the Parent’s 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 Parent or any
consolidated Subsidiary received by the Parent 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 Parent and any
such consolidated Subsidiary in connection with the repurchase by the Parent 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 Parent and any consolidated
Subsidiary in respect of the issuance by the Parent or such consolidated
Subsidiary of the Structured Securities, and (B) the aggregate amount of all
redemption payments hereafter made, if any, by the Parent and any such
consolidated Subsidiary in connection with the redemption of any of the
Structured Securities; and (v) the minority interests in the Parent’s
Subsidiaries; or
 
(b)  permit the ratio of the Parent’s Consolidated Total Indebtedness to its
Consolidated Total Capitalization to be greater than 0.70 to 1.00 at the end of
any fiscal quarter ending on or after the Closing Date; or
 
(c)  acquire, or permit any of their respective Subsidiaries to acquire, any
assets other than (i) investments permitted under Section 10.4, or (ii)
Qualifying Assets; or
 
(d)  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.
 
10.2  Mortgages, Liens, Etc
 
The Borrowers will not, and will not permit any of their respective Subsidiaries
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:
 
(a)  Liens for taxes not yet due or that are being contested in good faith by
appropriate proceedings;
 
(b)  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;
 
(c)  Liens on assets of any of their respective Subsidiaries to secure
obligations of such Subsidiary to the Parent or another of its Subsidiaries;
 
(d)  (i) Liens on property existing at the time of acquisition thereof by the
Parent or any of its Subsidiaries, including without limitation, (A) any
property acquired by the Parent 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 Existing Revolving Credit Facility 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
Parent or any of its Subsidiaries 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 Parent or any of its Subsidiaries; and
 
(e)  Liens granted pursuant to the Collateral Documents to secure the Secured
Obligations.
 
10.3  Debt
 
The Borrowers will not, and will not permit any of their respective Subsidiaries
to, incur or permit to exist any Debt, except:
 
(a)  Debt outstanding under this Agreement, Debt outstanding under the Existing
Revolving Credit Facility (including reimbursement obligations under the
Existing Revolving Credit Facility Letters of Credit), and Debt issued pursuant
to any Equity-Preferred Securities (to the extent the same constitutes Debt) in
each case not in default, as well as (i) Debt of Panhandle Eastern and/or any of
its Subsidiaries outstanding as of the Existing Revolving Credit Facility
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
Parent, 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 Parent 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 Parent and all other Subsidiaries of the Parent 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 Parent and all other Subsidiaries of the
Parent for purposes of such calculation) is less than or equal to 0.65 to 1.00,
and (iv) any loans or advances by the Parent to Panhandle Eastern and/or any of
the Parent’s other Subsidiaries permitted under Section 10.4(b);
 
(b)  Debt of any Subsidiary of the Parent to the Parent or any other Subsidiary
of the Parent, except to the extent limited by the terms of Section 10.4(b), and
Debt of the Parent to any Subsidiary of the Parent;
 
(c)  Debt existing as of September 30, 2005 as reflected on financial statements
delivered under Section 7.2(b) and refinancings thereof and, in the case of the
2008 Senior Notes, any remarketings thereof in accordance with the terms of the
2003 Supplemental Indenture, other than Debt that has been refinanced by the
proceeds of loans under the Existing Revolving Credit Facility;
 
(d)  endorsements in the ordinary course of business of negotiable instruments
in the course of collection;
 
(e)  Debt of the Parent or any of its Subsidiaries representing the portion of
the purchase price of property acquired by the Parent 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
Parent and its Subsidiaries as of the applicable determination date;
 
(f)  Debt evidenced by the Senior Notes;
 
(g)  additional Debt of the Parent and Structured Securities of the Parent 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 0.70 to 1.00 at all times on or after the Closing Date; (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
Parent 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 Parent 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 Parent 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 the
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-Revolving Credit 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
 
(h)  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 Parent or any other
Subsidiary of the Parent (other than Panhandle Eastern and its Subsidiaries),
(ii) the proceeds of such 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.
 
10.4  Loans, Advances and Investments
 
The Borrowers will not, and will not permit any of their respective Subsidiaries
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):
 
(a)  except to the extent prohibited by Section 10.19, stock or other equity
interests of (i) the Subsidiaries named in Section 7.1; (ii) in addition to
Sections 10.4(g) and 10.4(l), other entities that are acquired by the Parent or
any of its Subsidiaries but that are promptly merged with and into the Parent;
(iii) Southern Union Panhandle, Panhandle Eastern and any Subsidiaries of
Panhandle Eastern acquired as a result of the Panhandle Eastern Acquisition; and
(iv) 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, including the aggregate amount of Debt assumed or deemed
incurred by the Parent 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 Parent and its Subsidiaries as of the applicable determination
date; provided, however, that, notwithstanding the foregoing in this Section
10.4(a) to the contrary, none of the SUG Partnership Entities may acquire any
Equity Interests in any other Subsidiary of the Parent at any time prior to the
consummation of the Acquired Business Equity Interests Transfer;
 
(b)  subject to Section 10.4(j) below, loans or advances to any of the Parent’s
Subsidiaries, other than to any of the SUG Partnership Entities at any time
prior to the consummation of the Acquired Business Equity Interests Transfer;
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 Parent, does not exceed $25,000,000 in the aggregate at any time;
 
(c)  Securities maturing no more than 180 days after Parent’s purchase that are
either:
 
(i)  readily marketable securities issued by the United States or its agencies
or instrumentalities; or
 
(ii)  commercial paper rated “Prime 2” by Moody’s or A-2 by S&P; or
 
(iii)  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
 
(iv)  readily marketable securities received in settlement of liabilities
created in the ordinary course of business; or
 
(v)  obligations of states, agencies, counties, cities and other political
subdivisions of any state rated at least MIG2, VMIG2 or Aa by Moody’s or AA by
S&P; or
 
(vi)  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
 
(vii)  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.
 
(d)  other equity interests owned by any of its Subsidiaries 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;
 
(e)  loans or advances by the Parent to customers in connection with and
pursuant to marketing and merchandising products that the Parent reasonably
expects to increase sales of the Parent or its 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 Parent’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;
 
(f)  travel and expense advances in the ordinary course of business to officers
and employees;
 
(g)  the applicable Subsidiaries of the Parent may acquire the Acquired Business
Equity Interests pursuant to the Acquired Business Equity Interests Transfer;
 
(h)  except to the extent prohibited by Section 10.19, stock or securities of or
equity interests in, any Person, provided that, after giving effect to the
acquisition and ownership thereof, the Borrowers are in compliance with the
provisions of Sections 10.1(a), 10.1(b) and 10.1(d); provided, however, that,
notwithstanding the foregoing in this Section 10.4(h) to the contrary, none of
the SUG Partnership Entities may acquire any Equity Interests in any other
Subsidiary of the Parent at any time prior to the consummation of the Acquired
Business Equity Interests Transfer;
 
(i)  loans or advances to any member of the CCE Group by the Parent or any of
its Subsidiaries 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;
 
(j)  the SUG EAT Entities Loan directly to the SUG EAT Entities by ESSI as
evidenced by the SUG EAT Loan Documents, provided that the principal amount of
such loan does not exceed $1.6 billion any LDC Proceeds shall be used for the
repayment thereof and the provisions of Section 4.1(b) shall be complied with;
 
(k)  loans, advances or other Investments by the Parent or any of its
Subsidiaries 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
Parent and its Subsidiaries as of the applicable determination date; provided,
however, that, except to the extent permitted pursuant to Section 10.4(j),
neither the Parent nor any other Subsidiaries of the Parent (other than the SUG
Partnership Entities) may make loans or advances to or make other Investments in
any of the SUG Partnership Entities at any time prior to the consummation of the
Acquired Business Equity Interests Transfer; and
 
(l)  to the extent applicable, the applicable Subsidiaries of the Parent may
consummate the Sid Richardson Acquisition in accordance with the terms of the
Sid Richardson Acquisition Documents.
 
Notwithstanding the foregoing in this Section 10.4, any net cash proceeds
received in connection with any Asset Sale by the Parent or any of its
Subsidiaries shall be applied in accordance with Sections 4.1(b) and 4.1(c).
 
10.5  Stock and Debt of Subsidiaries
 
The Borrowers will not, and will not permit any of their respective Subsidiaries
to, sell or otherwise dispose of any shares of stock, other equity interests or
Debt of any of its Subsidiaries, or permit any of its Subsidiaries 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 of the Parent’s Subsidiaries to the Parent or another Subsidiary
of the Parent, other than to any of the SUG Partnership Entities at any time
prior to the consummation of the Acquired Business Equity Interests Transfer,
except to the extent prohibited by Section 10.19; (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 the Parent’s Structured Securities, and (iv) the issuance by other
Subsidiaries of the Parent formed for the purpose of issuing Equity-Preferred
Securities. Notwithstanding the foregoing in this Section 10.5, any net cash
proceeds received in connection with any Asset Sale by the Parent or any of its
Subsidiaries shall be applied in accordance with Sections 4.1(b) and 4.1(c).
 
10.6  Merger, Consolidation, Etc.
 
The Borrowers will not, and will not permit any of their respective Subsidiaries
to, merge or consolidate with any other Person or sell, lease, transfer or
otherwise dispose of (whether in one transaction or a series of transactions)
all or a substantial part of its assets or acquire (whether in one transaction
or a series of transactions) all or a substantial part of the assets of any
Person, except that:
 
(a)  except to the extent prohibited by Section 10.19, any of its Subsidiaries
may merge or consolidate with the Parent (provided that the Parent shall be the
continuing or surviving corporation) or with any one or more Subsidiaries of the
Parent, other than any of the SUG Partnership Entities at any time prior to the
consummation of the Acquired Business Equity Interests Transfer;
 
(b)  except to the extent prohibited by Section 10.19, any of its Subsidiaries
may sell, lease, transfer or otherwise dispose of any of its assets to the
Parent or any other of its Subsidiaries, other than to any of the SUG
Partnership Entities at any time prior to the consummation of the Acquired
Business Equity Interests Transfer;
 
(c)  the applicable Subsidiaries of the Parent may acquire the Acquired Business
Equity Interests pursuant to the Acquired Business Equity Interests Transfer;
 
(d)  the Parent 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(a), 10.1(b) and 10.1(d);
 
(e)  the Parent or any of its Subsidiaries may sell, lease, assign or otherwise
dispose of assets as otherwise permitted under Section 10.8, except to the
extent prohibited by Section 10.19; and
 
(f)  to the extent applicable, the applicable Subsidiaries of the Parent may
consummate the Sid Richardson Acquisition in accordance with the terms of the
Sid Richardson Acquisition Documents.
 
Notwithstanding the foregoing in this Section 10.6, any net cash proceeds
received in connection with any Asset Sale by the Parent or any of its
Subsidiaries shall be applied in accordance with Sections 4.1(b) and 4.1(c).
 
10.7  Supply and Purchase Contracts
 
The Borrowers will not, and will not permit any of their respective Subsidiaries
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 Borrowers reasonably considers to be necessary or helpful in
its operations in the ordinary course of business and that the Borrowers
reasonably consider not to be unnecessarily burdensome on the Parent or its
Subsidiaries.
 
10.8  Sale or Other Disposition of Assets
 
The Borrowers will not, and will not permit any of their respective Subsidiaries
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 Parent or any of its Subsidiaries may in the
ordinary course of business dispose of (a) Property consisting of Inventory; and
(b) Property consisting of goods or equipment that are, in the opinion of the
Parent or any of its Subsidiaries, obsolete or unproductive, but if in the good
faith judgment of the Parent or such Subsidiary such disposition without
replacement thereof would have a Material Adverse Effect, such goods and
equipment shall be replaced, or their utility and function substituted, by new
or existing goods or equipment; (ii) the Parent may transfer or dispose of any
of its Significant Property (in any transaction or series of transactions) to
any Subsidiary or Subsidiaries of the Parent (other than to any of the SUG
Partnership Entities at any time prior to the consummation of the Acquired
Business Equity Interests Transfer), only if such Property so transferred or
disposed of after the Existing Revolving Credit Facility Closing Date has an
aggregate value (determined after depreciation and in accordance with GAAP) of
not more than ten percent (10%) of the aggregate value of all of the Parent’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 September 30, 2005; (iii) the Parent 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 Parent’s subordinated debt securities constituting a portion of the
Structured Securities, on the terms and under the conditions set out in the
registration statement 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) except to the
extent prohibited by Section 10.19, the Parent or any of its Subsidiaries may
dispose of real property or tangible personal property other than Inventory (in
consideration of such amount as in the good faith judgment of the Parent 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 Existing Revolving Credit Facility Closing
Date does not exceed ten percent (10%) of the aggregate value of all of the
Parent’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 September 30, 2005; provided,
however, that no such disposition shall be made to any of the SUG Partnership
Entities at any time prior to the consummation of the Acquired Business Equity
Interests Transfer; (vi) the Parent may dispose of Qualifying Assets of the type
described in clause (ii) of the definition of Qualifying Assets, except to the
extent prohibited by Section 10.19; provided, however, that no such disposition
shall be made to any of the SUG Partnership Entities at any time prior to the
consummation of the Acquired Business Equity Interests Transfer; (vii) the
Parent may dispose of other Investments of the type acquired under the terms of
Section 10.4(h); (viii) the Parent may sell all stock or all or substantially
all of the assets in Sea Robin Pipeline Company; (ix) the Parent may consummate
the Qualified Transaction so long as the Parent shall be in full compliance with
all the provisions set forth in the definition of “Qualified Transaction”; (x)
the SUG Purchasers may assign all of their rights, title and interest in and to
Sid Richardson Acquisition Agreement and related documents to the SUG EAT
Entities pursuant to and in accordance with the Sid Richardson Acquisition
Agreement Assignment; and (xi) ESSI may assign its rights and interests in and
to the SUG EAT Entities Loan Documents to the Parent or any other Subsidiary of
the Parent (other than any of the SUG Partnership Entities) so long as at the
time of such assignment the assignee becomes a party to the Intercreditor
Agreement pursuant to a joinder agreement in form and substance satisfactory to
the Agent.
 
Notwithstanding the foregoing in this Section 10.8, any net cash proceeds
received in connection with any Asset Sale by the Parent or any of its
Subsidiaries shall be applied in accordance with Sections 4.1(b) and 4.1(c).
 
10.9  Discount or Sale of Receivables
 
The Borrowers will not, and will not permit any of their respective
Subsidiaries, other than Southern Union Total Energy 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. Notwithstanding the foregoing to the contrary in this
Agreement, the Borrowers will not, and the Borrowers will not permit ESSI to,
transfer, convey, assign, sell, or otherwise dispose of any of the SUG EAT
Entities Loan Documents or any loans evidenced thereby.
 
10.10  Change in Accounting Method
 
The Borrowers will not, and will not permit any of their respective Subsidiaries
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.
 
10.11  Restricted Payment
 
 
(a)  The Parent will not pay or declare any Restricted Payment unless
immediately prior to such payment and after giving effect to such payment, the
Parent could incur at least $1 of additional Debt by meeting the requirements of
clauses (i) and (ii) of Section 10.3(g) and after giving effect thereto no
Default or Event of Default exists hereunder; provided, however, that the
Parent’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 Parent at any time the ratio of Consolidated Total
Indebtedness to Consolidated Total Capitalization for the Parent 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 Parent at any time the ratio of Consolidated Total
Indebtedness to Consolidated Total Capitalization for the Parent 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 Parent’s
unsecured, non-credit enhanced senior debt as specified by S&P and Moody’s falls
below either BBB- or Baa3, respectively.
 
(b)  At any time prior to the consummation of the Acquired Business Equity
Interests Transfer, the Borrowers shall cause each of the SUG Partnership
Entities to not make a Restricted Payment to any Person other than a cash
dividend payment to the holder of such Partnership Company’s Equity Interests,
provided that such cash dividend payment is used solely by SUG EAT LLC to pay
the management fees owing to Southern Union Panhandle pursuant to the SUG
Management Agreement.
 
10.12  Securities Credit Regulations
 
None of the Borrowers or any of their respective Subsidiaries will take or
permit any action which might cause the Loans or this Agreement or any other
Loan Document 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.
 
10.13  Nature of Business; Management
 
The Borrowers will not, and will not permit any of their respective Subsidiaries
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 Parent.
 
10.14  Transactions with Related Parties
 
The Borrowers will not, and will not permit any of their respective Subsidiaries
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 Parent or any of its Subsidiaries (or any Affiliate of any such Person)
unless the same is upon terms substantially similar to those obtainable from
wholly unrelated sources.
 
10.15  Hazardous Materials
 
The Borrowers will not, and will not permit any of their respective Subsidiaries
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.
 
10.16  Limitations on Payments on Subordinated Debt
 
The Borrowers will not, and will not permit any of their respective Subsidiaries
to, make any payment in respect of interest on, principal of, or otherwise
relating to, the Parent’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.
 
10.17  No Agreements Prohibiting Pledge of Southern Union Panhandle and
Panhandle Eastern Equity Interests
 
Neither Borrower will enter into any contract or other agreement with any Person
that directly or indirectly prohibits the Parent from granting any Lien against
the Equity Interests in any of (x) Southern Union Panhandle and (y) Panhandle
Eastern at any time owned and held by the Parent as security for any Debt of the
Parent or any of its Subsidiaries.
 
10.18  No Agreements Prohibiting Pledge of the Sid Richardson Acquired Business
Equity Interests.
 
 The Borrowers will not, and the Borrowers will cause their respective
Subsidiaries to not, enter into any contract or other agreement with any Person
that directly or indirectly prohibits any of the Parent or any Subsidiary of the
Parent from granting any Lien against the Equity Interests in (x) SRES, (y) REM
or (z) Leapartners, in each case at any time owned and held by such Person as
security for any Debt of the Borrower or any of its Subsidiaries.
 
10.19  Restriction on Transfer 
 
Neither the Parent nor any of its Subsidiaries shall, and the Borrower shall
cause each of its Subsidiaries not to:
 
(a)  sell, lease, exchange, assign, transfer, dispose of, contribute or dividend
(i) any Equity Interests in any of the Subsidiaries that holds any of the
Acquired Business Equity Interests or (ii) any Collateral; provided, however,
that (A) unless an Event of Default shall have occurred and be continuing, any
of the Borrower’s Subsidiaries shall be entitled to dividend any cash
Distributions constituting Collateral to any of the Borrowers or any of its
other Subsidiaries to the extent permitted pursuant to Section 10.11(b) and (B)
the applicable Subsidiaries of the Parent may transfer, convey or assign the
Collateral to another wholly-owned Subsidiary of the Parent (other than the SUG
Partnership Entities) in connection with the Acquired Business Equity Interests
Transfer; or
 
(b)  merge or consolidate any of (i) Southern Union Panhandle, (ii) Panhandle
Eastern, (iii) any Subsidiary of the Borrower that holds any of the Acquired
Business Equity Interests, (iv) REM, (v) SRES or (vi) Leapartners, in each case
with and into any other Person; or
 
(c)  create, incur, assume or otherwise suffer to exist any Lien on the
Collateral or any part thereof, except for the Liens created by the Collateral
Documents and except for, in the case of the SUG EAT Entities Collateral only,
at any time prior to the consummation of the Acquired Business Interests
Transfer, the Permitted Subordinated Lien created by the SUG EAT Entities Loan
Documents; or
 
(d)  sell, lease, exchange, assign, transfer, dispose of, contribute or dividend
all or substantially all of the assets of any of the Partnership Companies or
Panhandle Eastern to the Parent or any other Subsidiary of the Parent or any
Affiliate of the Parent.
 
11.  EVENTS OF DEFAULT; REMEDIES
 
11.1  If any of the following events shall occur
 
then the Agent shall at the request, or may with the consent, of the Majority
Banks, (a) by notice to the Borrowers, declare the Commitment of each Bank and
the several obligation of each Bank to make Loans hereunder to be terminated,
whereupon the same shall forthwith terminate, and (b) declare the Loans and 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 Loans, 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 Borrowers;
provided, however, that with respect to any Event of Default described in
Sections 11.1(G) or 11.1(H) hereof, (i) the Commitment of each Bank and the
obligation of the Banks to make Loans shall automatically be terminated and (ii)
the entire unpaid principal amount of the Loans and 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 Borrowers:
 
(A)  Failure to Pay Principal or Interest
 
Any Borrower does not pay, repay or prepay any principal of or interest on any
Loan when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment (whether voluntary or mandatory)
thereof or by acceleration thereof or otherwise; or
 
(B)  Failure to Pay Fee or Other Amounts
 
Any Borrower does not pay any fee or any other obligation or amount payable
under this Agreement or the other Loan Documents, within five (5) calendar days
after the same shall have become due; or
 
(C)  Failure to Pay Other Debt
 
Any Borrower or any of its Subsidiaries fails to pay principal or interest on
any Debt (other than the Obligations) 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 such
Borrower’s or any such Subsidiary’s default thereunder and the expiration of any
related grace period; or
 
(D)  Misrepresentation or Breach of Warranty
 
Any representation or warranty made by any Loan Party herein or in any other
Loan Document or otherwise furnished to the Agent or any Bank in connection with
this Agreement or any other Loan Document shall be incorrect, false or
misleading in any material respect when made; or
 
(E)  Violation of Certain Covenants
 
 (i) Any Borrower violates any covenant, agreement or condition contained in
Section 9.12, 9.13, 9.14, 10.1(a), 10.1(b), 10.1(d), 10.2, 10.3, 10.4, 10.5,
10.6, 10.8, 10.9, 10.10, 10.11, 10.15, 10.17, 10.18 or 10.19; or (ii) any
Borrower or any other Loan Party violates any covenant, agreement or condition
contained in Section 4(d) of the applicable Pledge Agreement; or
 
(F)  Violation of Other Covenants, Etc
 
 (i) Any Borrower violates any other covenant, agreement or condition contained
herein or in any other Loan Document (other than the covenants, agreements and
conditions set forth or described in clauses (A), (B), (C), (D) and (E) of this
Section 11.1) and such violation shall not have been remedied within (30) days
after the earlier of (i) actual discovery by any Borrower of such violation or
(ii) written notice has been received by the Borrowers from the Agent, any Bank,
or any holder of a Note; or (ii) any Loan Party (other than the Borrowers)
violates any other covenant, agreement or condition contained in any Collateral
Document (other than the covenants, agreements and conditions set forth or
described in clause (E)(ii) of this Section 11.1) and such violation shall not
have been remedied within (30) days after the earlier of (i) actual discovery by
any Borrower or such Loan Party of such violation or (ii) written notice has
been received by the Borrowers from the Bank or the holder of the Note; or
 
(G)  Bankruptcy and Other Matters
 
Any Borrower, any of its respective Subsidiaries or any other Loan Party (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 any Borrower, any of its respective Subsidiaries or any
other Loan Party 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 any Borrower, any of its respective Subsidiaries or any
other Loan Party seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any Debtor Law and either such
order, decree or judgment so filed against it is not dismissed or stayed (unless
and until such stay is no longer in effect) within thirty (30) days of entry
thereof or an order for relief is entered pursuant to any such law; or
 
(H)  Dissolution
 
Any order is entered in any proceeding against any Borrower, any of its
respective Subsidiaries or any other Loan Party decreeing the dissolution,
liquidation, winding-up or split-up of the Parent or such Subsidiary, and such
order remains in effect for thirty (30) days; or
 
(I)  Undischarged Judgment
 
Final Judgment or judgments in the aggregate, that might be or give rise to
Liens on any property of any Borrower, any of its respective Subsidiaries or any
other Loan Party for the payment of money in excess of $5,000,000.00 shall be
rendered against any Borrower, any of its respective Subsidiaries or any other
Loan Party, and the same shall remain undischarged for a period of thirty (30)
days during which execution shall not be effectively stayed; or
 
(J)  Environmental Matters
 
The occurrence of any of the following events that could result in liability to
the Parent or any of its Subsidiaries under any Environmental Law or the
creation of a Lien on any property of the Parent or any of its Subsidiaries 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 Parent or any of its Subsidiaries
which property is or would reasonably be considered to be integral to the
operations of the Parent or any of its Subsidiaries in the ordinary course of
business:
 
(a) the Release of Hazardous Materials at, upon, under or within the property
owned or leased by the Parent or any of its Subsidiaries or any contiguous
property; or
 
(b) the receipt by the Parent or any of its Subsidiaries 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; or
 
(c) the receipt by the Parent or any of its Subsidiaries 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
 
(d) 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
Parent or any of its Subsidiaries; or
 
(K)  Default under the Existing Revolving Credit Facility.
 
An Event of Default (as defined under the credit agreement evidencing the
Existing Revolving Credit Facility) shall occur under the Existing Revolving
Credit Facility; or
 
(L)  Change in Control
 
A Change in Control has occurred;.
 
(M)  Change in Ownership
 
At any time prior to the consummation of the Acquired Business Equity Interests
Transfer: (i) CDEC shall cease to directly own 100% of all issued and
outstanding Equity Interests in SUG EAT Inc.; (ii) SUG EAT Inc. shall cease to
directly own 100% of all issued and outstanding Equity Interests in SUG EAT LLC;
(iii) SUG EAT Inc. shall cease to own (x) 100% of all issued and outstanding
limited partner interests in SRES and (y) 100% of all issued and outstanding
limited partner interests in REM; (iv) SUG EAT LLC shall cease to own (x) 100%
of all issued and outstanding general partner interests in SRES, (y) 100% of all
issued and outstanding general partner interests in REM and (z) 100% of all
issued and outstanding general partner interests in Leapartners; or (v) any
Person (other than SUG EAT Inc. and SUG EAT LLC) identified in Schedule 7.1(B)
as an “owner” shall cease to own and hold the percentage of the Equity Interests
set forth in such Schedule 7.1(B) in the Person identified opposite such owner’s
name in such Schedule 7.1(B); or
 
(N)  Invalidity of Lien on Collateral.
 
 Any Collateral Document shall for any reason (other than pursuant to the terms
thereof) cease to create a valid and perfected lien on and security interest in
(having the first priority as required by the terms of the Collateral Documents)
any material portion of the Collateral purported to be covered thereby (or any
Loan Party shall so assert or shall take any action to discontinue or to assert
the invalidity or unenforceability thereof); or the Intercreditor Agreement
shall fail to constitute the valid, binding and enforceable agreement of ESSI in
accordance with the terms thereof, or ESSI shall so assert in writing; or
 
(O)  Restricted SUG EAT Entities Activities.
 
Any SUG EAT Entity engages in or conducts any trade or business activities,
becomes or otherwise is liable for any obligations or indebtedness, holds or
owns any properties or assets, enters into any transaction with any Person, or
grants or pledges a Lien on any part of the Collateral owned by it to any Person
other than the Agent, other than the following (collectively, the “SUG EAT
Entities Permitted Activities”): (i) (A) in the case of SUG EAT Inc., its
ownership of (x) 100% of the limited partner interests in SRES and (y) 100% of
the limited partner interests in REM; and (B) in the case of SUG EAT LLC, its
ownership of (x) 100% of the general partner interests in SRES, (y) 100% of the
general partner interests in REM and (z) 100% of the general partner interests
in Leapartners, (ii) the incurrence of indebtedness under, and be liable for its
respective obligations owing to ESSI under, the SUG EAT Entities Loan Documents;
(iii) grant and pledge a Lien on the Collateral owned by it pursuant to the
Collateral Document; (iv) its respective obligations under the Collateral
Documents; (v) consummate the Acquired Business Equity Interests Transfer; (vi)
receive any LDC Proceeds pursuant to a Qualified Transaction; and (vii) the
grant of the Permitted Subordinated Lien pursuant to the SUG EAT Entities Loan
Documents; and (viii) activities incidental to the foregoing clauses (i) through
(vi) above; or
 
(P)  Modifications.
 
At any time prior to the consummation of the Acquired Business Equity Interests
Transfer, any provision of any of the following shall have be modified, waived,
amended, supplemented, amended and restated or terminated: (i) any of the SUG
EAT Entities Transaction Documents; (ii) any Organizational Document of any SUG
EAT Entity; or (iii) any agreement or document entered into between CDEC and the
Parent in connection with the Qualified Transaction.
 
11.2  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 any other Loan
Document or by enforcing the payment of the Loans or by enforcing any other
legal or equitable right provided under this Agreement or the Notes or any other
Loan Document or otherwise existing under any law in favor of the Banks and the
holder of the Notes.
 
11.3  Remedies Cumulative
 
No remedy, right or power conferred upon the Agent or any of 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.
 
12.  THE AGENT
 
12.1  Authorization and Action
 
Each Bank hereby appoints LCPI as its Agent under the Loan Documents 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 other Loan Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto.
Without limitation of the foregoing, each Bank expressly authorizes the Agent to
execute, deliver, and perform its obligations under this Agreement and the other
Loan Documents, and to exercise all rights, powers, and remedies that the Agent
may have hereunder and thereunder. As to any matters not expressly provided for
by this Agreement or any other Loan Document (including, without limitation,
enforcement or collection of the Obligations and any Loan Document), the Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act, or to refrain from acting (and shall be fully protected in
so acting or refraining from acting), upon the instructions of the Majority
Banks, and such instructions shall be binding upon all the Banks and all holders
of any Note; provided, however, that the Agent shall not be required to take any
action which exposes the Agent to personal liability or which is contrary to
this Agreement or any other Loan Document or applicable law. The Agent agrees to
give to each Bank prompt notice of each notice given to it by the Borrowers
pursuant to the terms of this Agreement.
 
12.2  Agent’s Reliance, Etc
 
Neither the Agent nor any of its directors, officers, agents, or employees shall
be liable to any Bank for any action taken or omitted to be taken by it or them
under or in connection with this Agreement, the Notes and the other Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (a) may treat
the original or any successor holder of any Note as the holder thereof until the
Agent receives notice from the Bank which is the payee of such Note concerning
the assignment of such Note; (b) may employ and consult with legal counsel
(including counsel for the Borrowers), 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 or any other Loan Document; (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 Loan Document 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
Borrowers are entitled to any Loan or to inspect the property (including the
books and records) of the Parent or any of it Subsidiaries; (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 Loan Document or any other instrument or document furnished pursuant
thereto; and (f) shall incur no liability under or in respect of this Agreement
or any other Loan Document by acing upon any notice, consent, certificate, or
other instrument or writing (which may be by telegram, cable, telex, or
otherwise) believed by it to be genuine and signed or sent by the proper party
or parties.
 
12.3  Defaults
 
The Agent shall not be deemed to have knowledge of the occurrence of a Default
(other than the nonpayment of principal of or interest hereunder or of any fees)
unless the Agent has received notice from a Bank or the Borrowers 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.
 
12.4  LCPI and Affiliates
 
With respect to its Commitment, any Loan made by it, and the Note issued to it,
LCPI 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 LCPI in
its individual capacity. The Agent 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, any Borrower, any of its respective
Affiliates and any Person who may do business with or own securities of such
Borrower or any such Affiliate, all as if LCPI were not the Agent and without
any duty to account therefore to the Banks.
 
12.5  Non-Reliance on Agent and Other Banks
 
Each Bank agrees that it has, independently and without reliance on the Agent or
any other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrowers and each of its
Subsidiaries and its decision to enter into the transactions contemplated by
this Agreement and the other Loan Documents 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
or any other Loan Document. The Agent shall not be required to keep itself
informed as to the performance or observance by the Borrowers of this Agreement
or any other Loan Document or to inspect the properties or books of the Parent
or any of its Subsidiaries. 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 Parent or any of its Subsidiaries (or any of their
Affiliates) which may come into the possession of the Agent or any of its
Affiliates.
 
12.6  Indemnification
 
Notwithstanding anything to the contrary herein contained, the Agent shall be
fully justified in failing or refusing to take any action hereunder or under any
other Loan Document 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 Borrowers), according to such Bank’s Pro Rata
Percentage, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, and
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of any
Loan Document or any action taken or omitted by the Agent under any Loan
Document; provided, however, 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,
however, 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 other Loan Documents, to the extent that the Agent is not reimbursed for
such expenses by the Borrowers.
 
12.7  Successor Agent
 
The Agent may resign at any time as Agent under this Agreement by giving written
notice thereof to the Banks and the Borrowers 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 and the other Loan
Documents. 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 and
the other Loan Documents.
 
12.8  Agent’s Reliance
 
The Borrowers shall notify the Agent in writing of the names of its officers and
employees authorized to request a Loan on behalf of the Borrowers 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 Borrowers until the Agent receives
written notice from the Borrowers 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
Borrowers. Neither the Agent nor any Bank shall incur any liability to the
Borrowers or any other Loan Party 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 Borrowers or for otherwise acting in good faith.
 
13.  MISCELLANEOUS
 
13.1  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.
 
13.2  Amendments, Waivers, Etc
 
No amendment or waiver of any provision of any Loan Document, nor consent to any
departure by the Borrowers or any other Loan Party therefrom, shall in any event
be effective unless the same shall be in writing and signed by the applicable
Loan Parties 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 Loan, 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 Loan, any Note or any fees
or other amounts payable hereunder; (e) change the percentage of the Commitments
or of the aggregate unpaid principal amount of any Loan, any Note or the number
of Banks which shall be required for Banks, or any of them, to take any action
hereunder; (f) amend this Section 13.2; or (g) release any of the Collateral
from the Liens of the Collateral Documents; and provided, further, that no
amendment, waiver, or consent shall, unless in writing and signed by the Agent
in addition to each Bank, affect the rights or duties of the Agent under any
Loan Document. No failure or delay on the part of any Bank or the Agent in
exercising any power or right hereunder shall operate as a waiver thereof nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No course of dealing between the Loan Parties 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 or any
other Loan Document nor consent to any departure by the Loan Parties 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 or any other
Loan Party in any case shall entitle the Borrowers to any other or further
notice or demand in similar or other circumstances.
 
13.3  Reimbursement of Expenses
 
Each Borrower jointly and severally agrees to reimburse each Bank for its
reasonable out-of-pocket expenses, including the reasonable fees and expenses of
counsel to the Agent and each Bank, in connection with the transactions
contemplated by this Agreement and the other Loan Documents, whether or not such
contemplated transactions shall be consummated, or any of them, or otherwise in
connection with this Agreement or any other Loan Documents, 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. Borrower jointly and severally 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 other Loan Documents, and to
save any Bank or 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 Borrowers under this Section 13.3 shall survive the
termination of this Agreement and/or the payment in full of the Obligations.
 
13.4  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:
 
(a) If to the Borrowers, to it at: Southern Union Company
 
Enhanced Service Systems, Inc.
 
417 Lackawanna Avenue
 
Scranton, PA 18503
 
Attention: Mr. Richard N. Marshall
 
Fax: (570) 614-5158
 
with copies to: Southern Union Company
 
Enhanced Service Systems, Inc.
 
5444 Westheimer Road
 
Houston, Texas 77056
 
Attention: Monica Gaudiosi, Esq.
 
Fax: (713) 989-1213
 
(b) If to the Agent, to it at: Lehman Commercial Paper Inc.
 
c/o Lehman Brothers Inc.
 
745 7th Avenue, 5th Floor
 
New York, NY 10019
 
Attn: Michelle Rosolinsky
 
Phone: (212) 526-6560
 
Fax: (646) 758-5015
 
and, if to any Bank, at the address specified below its name on the signature
pages hereof, and if to any other Loan Party, at the address specified above for
the Borrowers, or as to the Borrowers, the Agent or any Bank, 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 Borrowers 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),
2.1(d) or 2.2 shall not be effective until actually received by the Agent.
 
13.5  Governing Law; Jurisdiction; Consent to Service of Process
 
 
(a)  THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
 
(b)  Each Borrower hereby irrevocably submits to the nonexclusive jurisdiction
of The United States District Court for the Southern District of New York and of
any New York State Court sitting in the Borough of Manhattan in New York City
for purposes of all legal proceedings arising out of or relating to any Loan
Document or the transactions contemplated thereby. Each Borrower hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in any
such court has been brought in an inconvenient forum. 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.
 
(c)  Each Borrower hereby consents to process being served in any suit, action
or proceeding relating hereto by mailing a copy thereof by registered or
certified air mail to its address designated pursuant to Section 13.4. Nothing
contained in this Section or in any other provision of any Loan Document will
affect the right of any party hereto to serve process in any other manner
permitted by law.
 
13.6  Survival of Representations, Warranties and Covenants
 
All representations, warranties and covenants contained herein or made in
writing by any Loan Party in connection herewith shall survive the execution and
delivery of this Agreement and the other Loan Documents, and will bind and inure
to the benefit of the respective successors and assigns of the parties hereto,
whether so expressed or not; provided, however, that the undertaking of the
Banks to make the Loans to the Borrowers shall not inure to the benefit of any
successor or assign of the Borrowers. No investigation at any time made by or on
behalf of the Banks shall diminish the Banks’ rights to rely on any
representations made herein or in connection herewith. All statements contained
in any certificate or other written instrument delivered by any Loan Party or by
any Person authorized by such Loan Party under or pursuant to this Agreement or
any other Loan Document or in connection with the transactions contemplated
hereby or thereby shall constitute representations and warranties hereunder as
of the time made by the Borrowers.
 
13.7  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.
 
13.8  Severability
 
Should any clause, sentence, paragraph or section of this Agreement be
judicially declared to be invalid, unenforceable or void, such decision shall
not have the effect of invalidating or voiding the remainder of this Agreement,
and the parties hereto agree that the part or parts of this Agreement so held to
be invalid, unenforceable or void will be deemed to have been stricken herefrom
and the remainder will have the same force and effectiveness as if such part or
parts had never been included herein. Each covenant contained in this Agreement
shall be construed (absent an express contrary provision herein) as being
independent of each other covenant contained herein, and compliance with any one
covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with one or more other covenants.
 
13.9  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.
 
13.10  Accounting Terms
 
All accounting terms used herein which are not expressly defined in this
Agreement, or the respective meanings of which are not otherwise qualified,
shall have the respective meanings given to them in accordance with GAAP.
 
13.11  Limitation of Liability
 
No claim may be made by any 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 each 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.
 
13.12  Set-Off
 
Each Borrower hereby gives and confirms to each Bank a right of set-off of all
moneys, securities and other property of such 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 such 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 such Borrower with, and any and all claims
of security for the payment of the Obligations and of all other liabilities and
obligations now or hereafter owed by such Borrower to such Bank, contracted with
or acquired by such Bank, whether such liabilities and obligations be joint,
several, absolute, contingent, secured, unsecured, matured or unmatured, and
such 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 each Borrower.
 
13.13  Sale or Assignment
 
(a)  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 or Loans, as the case may be, and the Note (if any)
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 Bank’s rights
and obligations under this Agreement; (ii) the amount so assigned shall equal or
exceed $5,000,000.00; (iii) 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”); and
(iv) any such assignment shall not require the consent of any Borrower. 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 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).
 
(b)  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 each
Borrower or any of its Subsidiaries or the performance or observance by each
Loan Party 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.
 
(c)  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 Borrowers, 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 Borrowers or any Bank at any reasonable time and from time to
time upon reasonable prior notice.
 
(d)  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 Borrowers. Within three (3) Business Days after its receipt of
such notice, the Borrowers at their 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 or Loans (as the case may
be) assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Bank has retained a Commitment or Loans (as the case may be)
hereunder, a new Note to the order of the assigning Bank in an amount equal to
the Commitment or Loans (as the case may be) 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 Borrowers each such surrendered Note
marked to show that each such surrendered Note has been replaced, renewed, and
extended by such new Note.
 
(e)  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 or Loans (as
the case may be) and the Note (if any) held by it); provided, however, that (i)
each Bank’s obligations under this Agreement (including, without limitation, its
Commitment to the Borrowers hereunder) shall remain 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 Loans and 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 4.5 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 4.5 shall be determined
by reference to such participant’s selling Bank and shall be recoverable solely
from such selling Bank and (v) the Borrowers, 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 Borrowers 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 or any other Loan Documents.
 
(f)  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.
 
(g)  “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 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.
 
13.14  Non U.S. Banks
 
Prior to the date of the initial Borrowings hereunder, and from time to time
thereafter if requested by the Borrowers or the Agent, each Bank organized under
the laws of a jurisdiction outside the United States of America shall provide
the Agent and the Borrowers 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 Borrowers 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 Borrowers 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.
 
13.15  Interest
 
All agreements between the Borrowers, 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, Loan, other Obligation or otherwise, shall the
amount paid, or agreed to be paid, to the Agent or any Bank for the use,
forbearance, or detention of the money to be loaned under this Agreement or
otherwise or for the payment or performance of any covenant or obligation
contained herein or in any document related hereto exceed the amount permissible
at the Highest Lawful Rate. If, as a result of any circumstances whatsoever,
fulfillment of any provision hereof or of any of such documents, at the time
performance of such provision shall be due, shall involve transcending the limit
of validity prescribed by applicable usury law, then, ipso facto, the obligation
to be filled shall be reduced to the limit of such validity, and if, from any
such circumstance, the Agent or any Bank shall ever receive interest or anything
which might be deemed interest under applicable law which would exceed the
amount permissible at the Highest Lawful Rate, such amount which would be
excessive interest shall be applied to the reduction of the principal amount
owing on account of the Loans or the amounts owing on other obligations of the
Borrowers to the Agent or any Bank under this Agreement, the other Loan
Documents or any document related hereto and not to the payment of interest, or
if such excessive interest exceeds the unpaid principal balance of the Loans and
the amounts owing on other obligations of the Borrowers 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 Borrowers. 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 Borrowers 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 Borrowers and the Banks.
 
13.16  Indemnification
 
EACH BORROWER JOINTLY AND SEVERALLY 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 OTHER LOAN DOCUMENTS AND THE CONSUMMATION
OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY AND THE EXERCISE OF ANY OF
THE AGENT’S AND THE BANKS’ RIGHTS UNDER THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, DAMAGES, COSTS, AND
EXPENSES INCURRED BY ANY OF THE INDEMNIFIED PARTIES IN INVESTIGATING, PREPARING
FOR, DEFENDING AGAINST, OR PROVIDING EVIDENCE, PRODUCING DOCUMENTS, OR TAKING
ANY OTHER ACTION IN RESPECT OF ANY COMMENCED OR THREATENED LITIGATION UNDER ANY
FEDERAL SECURITIES LAW OR ANY SIMILAR LAW OF ANY JURISDICTION OR AT COMMON LAW
OR (b) ANY AND ALL CLAIMS OR PROCEEDINGS (WHETHER BROUGHT BY A PRIVATE PARTY,
GOVERNMENTAL AUTHORITY OR OTHERWISE) FOR BODILY INJURY, PROPERTY DAMAGE,
ABATEMENT, REMEDIATION, ENVIRONMENTAL DAMAGE, OR IMPAIRMENT OR ANY OTHER INJURY
OR DAMAGE RESULTING FROM OR RELATING TO THE RELEASE OF ANY HAZARDOUS MATERIALS
LOCATED UPON, MIGRATING INTO, FROM, OR THROUGH OR OTHERWISE RELATING TO ANY
PROPERTY OWNED OR LEASED BY ANY BORROWER OR ANY OF ITS SUBSIDIARIES (WHETHER OR
NOT THE RELEASE OF SUCH HAZARDOUS MATERIALS WAS CAUSED BY ANY BORROWER, ANY
SUBSIDIARY OF ANY BORROWER, A TENANT, OR SUBTENANT OF ANY BORROWER OR ANY OF ITS
SUBSIDIARIES, 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 NO BORROWER SHALL BE LIABLE TO THE INDEMNIFIED PARTIES WHERE THE
RELEASE OF SUCH HAZARDOUS MATERIALS OCCURS AT ANY TIME AT WHICH ANY BORROWER OR
ANY OF ITS SUBSIDIARIES 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 EACH
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 EACH BORROWER. FOR
PURPOSES OF THE FOREGOING SECTION 13.16, THE PHRASE “CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY” SET FORTH IN SUBPARAGRAPH (a)
ABOVE SHALL INCLUDE, BUT NOT BE LIMITED TO, THE FINANCING OF ANY CORPORATE
TAKEOVER PERMITTED HEREUNDER AND THE BORROWERS’ USE OF THE LOAN PROCEEDS FOR THE
PURPOSE OF FINANCING THE SID RICHARDSON ACQUISITION. THE OBLIGATIONS OF THE
BORROWERS UNDER THIS SECTION 13.16 SHALL SURVIVE ANY TERMINATION OF THIS
AGREEMENT AND THE REPAYMENT IN FULL OF THE OBLIGATIONS.
 
13.17  Payments Set Aside
 
To the extent that the Borrowers make 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.
 
13.18  Bridge 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.
 
13.19  Obligations Several
 
The obligations of each Bank under this Agreement and the Note to which it is a
party are several, and no Bank shall be responsible for any obligation or
Commitment of any other Bank under this Agreement and the Note to which it is a
party. Nothing contained in this Agreement or the other Loan Documents 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.
 
13.20  Pro Rata Treatment
 
All Loans under, and all payments and other amounts received in connection with
this Agreement and the other Loan Documents (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 Loan held by it (other than pursuant to Section 2.3(d)) in
excess of its Pro Rata Percentage of payments on account of similar Loans
obtained by all the Banks, such Bank shall forthwith purchase from the other
Banks such participations in the 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 Borrowers agree
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
applicable 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.
 
13.21  No Rights, Duties or Obligations of Syndication Agent or Documentation
Agent
 
The Borrowers, 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, JPMorgan Chase Bank, N.A. and Wachovia Bank, National
Association, as Co-Syndication Agent, and Calyon New York Branch and Bank of
America, N.A., as Co-Documentation Agent, shall have no additional rights,
powers, obligations or liabilities under this agreement or any other Loan
Documents in their capacities as Syndication Agent or Documentation Agent,
respectively
 
13.22  Final Agreement
 
THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENT’S OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES HERETO.
 
13.23  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 AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
 
13.24  USA Patriot Act
 
 Each Bank hereby notifies the Borrowers that pursuant to the requirements of
the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record information that
identifies the Borrowers and the other Loan Parties, which information includes
the names and addresses of the Borrowers and the other Loan Parties and other
information that will allow such Bank to identify the Borrowers and the other
Loan Parties, in accordance with the Act.
 
13.25  Successors and Assigns Generally.
 
 The provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns permitted
hereby, except that neither Borrower may assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of the Agent
and each Bank and no Bank may assign or otherwise transfer any of its rights or
obligations hereunder except as provided in Section 13.13.
 
[Signature pages follow]
 

 

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

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 the date and year first above written.
 
SOUTHERN UNION COMPANY
 
By: _/S/ JULIE H. EDWARDS____
 
Name: Julie H. Edwards 
 
Title: Senior Vice President & CFO 
 
ENHANCED SERVICE SYSTEMS, INC.
 
By: _/S/ JULIE H. EDWARDS______
 
Name: Julie H. Edwards 
 
Title: Senior Vice President & CFO 
 

 
 

[Signature Page to Bridge Loan Agreement]

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

LEHMAN COMMERCIAL PAPER INC.,
 
as Administrative Agent
 
By: /S LAURIE D. PERPER 
 
Name: Laurie D. Perper 
 
Title: Senior Vice President
 
Payment Office:
 

 
Lehman Commercial Paper Inc.
 
c/o Lehman Brothers Commercial Bank
 
c/o Lehman Brothers
 
745 7th Avenue, 5th Floor
 
New York, NY 10019
 
Attn: Deal Administrator
 
Loan Servicing Department
 
Phone: (212) 526-6560
 
Fax: (212) 220-9606
 

 

 

 

[Signature Page to Bridge Loan Agreement]

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

[BANKS]
 
[ ],
 
as a Bank
 
By:  
 
Name: 
 
Title: 
 
Address for Notices:
 

 
Domestic Lending Office:
 

 
Eurodollar Lending Office:
 

 

[Signature Page to Bridge Loan Agreement]

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

SCHEDULE 2.1(a)
 
COMMITMENTS
 
Bank
Commitment
   
Lehman Commercial Paper Inc.
$550,000,000.00
Merrill Lynch Bank USA
$550,000,000.00
JPMorgan Chase Bank, N.A.
$ 80,000,000.00
Wachovia Bank, National Association
$ 80,000,000.00
Bank of America, N.A.
$ 80,000,000.00
Calyon New York Branch
$ 80,000,000.00
KBC Bank, N.V.
$ 70,000,000.00
The Bank of Tokyo-Mitsubishi UFJ, Ltd., Houston Agency
$ 25,000,000.00
Union Bank of California, N.A.
$ 25,000,000.00
Sovereign Bank
$ 20,000,000.00
SunTrust Bank
$ 20,000,000.00
LaSalle Bank National Association
$ 20,000,000.00
   
Total:
$1,600,000,000.00

 

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

EXHIBIT A
 
PROMISSORY NOTE
 
$___________ ___________, 200__
 
FOR VALUE RECEIVED, each of undersigned, SOUTHERN UNION COMPANY, a Delaware
corporation (the “Parent”) and ENHANCED SERVICE SYSTEMS, INC., a Delaware
corporation (“ESSI” and together with the Parent, the “Borrowers” and each, a
“Borrower”), JOINTLY AND SEVERALLY HEREBY PROMISES TO PAY to the order of
___________________________________ (the “Bank”), on or before the Maturity Date
(as defined in the Bridge Loan Agreement referred to below), the principal sum
of ________________ Million Dollars and No Cents ($[_______]) in accordance with
the terms and provisions of that certain Bridge Loan Agreement, dated as of
March 1, 2006, (as amended, modified, amended and restated or otherwise
supplemented from time to time in accordance with the terms thereof, the “Bridge
Loan Agreement”), by and among the Borrowers, the Bank, the other Banks party
thereto, and Lehman Commercial Paper Inc., as Administrative Agent (in such
capacity, the “Agent”). Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to such terms in the Bridge Loan Agreement.
 
The outstanding principal balance of this Promissory Note shall be payable at
the Maturity Date. Each Borrower jointly and severally promises to pay interest
on the unpaid principal balance of this Promissory Note from the date of any
Loan evidenced by this Promissory Note until the principal balance thereof is
paid in full. Interest shall accrue on the outstanding principal balance of this
Promissory Note from and including the date of any Loan evidenced by this
Promissory 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 Bridge Loan 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 Bridge Loan 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 Agent’s Payment Office not later than 12:00 noon
(New York City time) on the dates on which such payments shall become due
pursuant to the terms and provisions set forth in the Bridge Loan Agreement.
 
If any payment of interest or principal herein provided for is not paid when
due, then the owner or holder of this Promissory Note may at its option, by
notice to the Borrowers, declare the unpaid, principal balance of this
Promissory Note, all accrued and unpaid interest thereon and all other amounts
payable under this Promissory Note to be forthwith due and payable, whereupon
this Promissory 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 Borrowers.
 
If any payment of principal or interest on this Promissory 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 Promissory Note, each
Borrower jointly and severally agrees to pay (a) all reasonable costs and
expenses incurred by the Agent and all owners and holders of this Promissory
Note in collecting this Promissory Note through any probate, reorganization
bankruptcy or any other proceeding and (b) reasonable attorneys’ fees when and
if this Promissory Note is placed in the hands of an attorney for collection
after default.
 
All agreements between the Borrowers 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 Promissory 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 Bridge Loan Agreement and evidenced by this Promissory Note or
otherwise or for the payment or performance of any covenant or obligation
contained in the Bridge Loan Agreement or this Promissory 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 Bridge Loan 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 Promissory Note or the amounts owing
on other obligations of the Borrowers to the Bank under the Bridge Loan
Agreement and not to the payment of interest, or if such excessive interest
exceeds the unpaid principal balance of this Promissory Note and the amounts
owing on other obligations of the Borrowers to the Bank under the Bridge Loan
Agreement, as the case may be, such excess shall be refunded to the Borrowers.
In determining whether or not the interest paid or payable under any specific
contingencies exceeds the Highest Lawful Rate, the Borrowers 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 Promissory Note, all interest at any time contracted for, charged,
received or reserved in connection with the indebtedness evidenced by this
Promissory Note.
 
This Promissory Note is one of the Notes provided for in, and is entitled to the
benefits of, the Bridge Loan Agreement, which Bridge Loan 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
Bridge Loan Agreement or this Promissory 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 Bridge Loan Agreement subsequent to each such occurrence.
 
Except as otherwise specifically provided for in the Bridger Loan Agreement, the
Borrowers 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 PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
 

 

A-

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

IN WITNESS WHEREOF, each Borrower has caused this Promissory 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: 
 
ENHANCED SERVICE SYSTEMS, INC.
 
By:  
 
Name: 
 
Title: 
 

 

A-

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

EXHIBIT B
 
NOTICE OF BORROWING
 
Lehman Commercial Paper Inc.,
as Administrative Agent
c/o Lehman Brothers
745 7th Avenue, 5th Floor
New York, NY 10019
Attn: Michelle Rosolinsky

 
Re: Bridge Loan Agreement referred to below
 
Ladies and Gentlemen:
 
The undersigned hereby certifies that s/he is an officer of SOUTHERN UNION
COMPANY, a Delaware corporation (the “Parent”) and of ENHANCED SERVICE SYSTEMS,
INC., a Delaware corporation (“ESSI” and together with the Parent, the
“Borrowers” and each, a “Borrower”), authorized to execute this Notice of
Borrowing on behalf of the Borrowers. With reference to that Bridge Loan
Agreement, dated as of March 1, 2006 (as the same may be amended, modified,
increased, supplemented and/or restated from time to time, the “Bridge Loan
Agreement”) entered into by and among the Borrowers, the Banks party thereto and
Lehman Commercial Paper, Inc., as Administrative Agent (in such capacity, the
“Agent”), the undersigned further certifies, represents and warrants to the
Banks on behalf of the Borrowers 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 Bridge Loan Agreement unless otherwise specified):
 
I. [Borrowing][Conversion/Continuation]
 
[In the case of the Borrowing under Section 2.1(a):
 
(a) [The Borrowers hereby request that the Banks advance to the Borrowers the
aggregate sum of $__________by no later than ____________, 200__ (the “Borrowing
Date”). Immediately following such Loan, the aggregate outstanding balance of
Loans shall equal $__________.]
 
(b) The Borrowers hereby request 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 $________.
 
(ii) 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 $__________.
 
(iii) 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 $_________.
 
(iv) The principal amount of the 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 $_________.
 
(v) The principal amount of the 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 $__________.
 
(c) The proceeds of the Borrowing Loans made by the Banks pursuant to the
Section 2.1(a) shall be deposited into the account described as follows: [insert
Name of Account]
 
[In the case of conversions or continuations of Loans:
 
[The Borrowers hereby requests that on [__________]
 
(i) $[__________] of the presently outstanding principal amount of the Loans
originally made on [__________],
 
(ii) and all presently being maintained as [Alternate Base Rate Loans]
[Eurodollar Rate Loans],
 
(iii) be [converted into] [continued as]
 
(iv) [Eurodollar Rate Loans having a Rate Period of [one/two/three/six] months]
[Alternate Base Rate Loans].
 
II. Miscellaneous.
 
(a) As of the date hereof, and as a result of the [making] [continuation]
[conversion] of the requested Loans, there does not and will not exist any
Default or Event of Default.
 
(b) The representations and warranties contained in Section 7 of the Bridge Loan
Agreement are true and correct in all material respects as of the date hereof
and shall be true and correct upon the [making] [continuation] [conversion] 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: 
 

 

B-

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

EXHIBIT C
 
ASSIGNMENT AND ACCEPTANCE
 
[NAME AND ADDRESS OF
ASSIGNING BANK]
 
_______________, 200__
 
________________
________________
________________
________________
 

 
Re:
Southern Union Company Bridge Loan Agreement

 
Ladies and Gentlemen:
 
Reference is made to that certain Bridge Loan Agreement, dated as of March 1,
2006, (as amended, supplemented, amended and restated or otherwise modified from
time to time, the “Bridge Loan Agreement”), by and among Southern Union Company
(the “Company”), the Banks party thereto (including us), and Lehman Commercial
Paper Inc., as Administrative Agent (in such capacity, the “Agent”). Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
such terms in the Bridge Loan Agreement.
 
Each reference to the Bridge Loan Agreement, the Notes, the other Loan Documents
or any other document evidencing or governing the Loans (all such documents
collectively, the “Financing Documents”) includes each such document as amended,
modified, extended or replaced from time to time. All times are New York City
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 (if any); and
 
b. all Loans held by us and interest thereon as provided in Section 2 of the
Bridge Loan 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 Bridge Loan 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 Bridge
Loan Agreement, (ii) you will assume our obligations under the Bridge Loan
Agreement to the extent of your assigned share, and (iii) the Company will
release us from our obligations under the Bridge Loan 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 Bridge Loan Agreement, and your rights and liabilities with respect
to the other Banks and the Agent will be governed by the Bridge Loan Agreement,
including without limitation, Section 12 of the Bridge Loan Agreement.
 
b. We have furnished you copies of the Bridge Loan 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, the
Loans, 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 New York. You irrevocably
submit to the jurisdiction of any State or Federal court sitting in the Borough
of Manhattan in New York City 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: ____________
 

 

C-

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

RELEASE APPROVED IN SECTION 2 OF THIS AGREEMENT:
 
SOUTHERN UNION COMPANY

By: _/s/ JULIE H. EDWARDS____
Name: Julie H. Edwards
Title: Senior Vice President and
Chief Financial Officer

ASSIGNMENT ACKNOWLEDGED

LEHMAN COMMERCIAL PAPER INC.,
 
as Administrative Agent
 
By: _/s/ LAURIE D. PERPER___
Name: Laurie D. Perper
Title: Senior Vice President

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

EXHIBIT D-1
 
FORM OF PARENT PLEDGE AGREEMENT

EXECUTION COPY

PARENT PLEDGE AGREEMENT

dated as of

March 1 , 2006

among

SOUTHERN UNION COMPANY,

as the Pledgor

and

LEHMAN COMMERCIAL PAPER INC.,

as Administrative Agent

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

TABLE OF CONTENTS
 
_________________
 
Page
 
Section 1.
Definitions
1
Section 2.
Grant Of Transaction Liens
4
Section 3.
General Representations And Warranties
5
Section 4.
Further Assurances; General Covenants
6
Section 5.
Investment Property
8
Section 6.
Transfer of Record Ownership
9
Section 7.
Right to Vote Securities
9
Section 8.
Remedies Upon Event of Default
10
Section 9.
Application Of Proceeds
10
Section 10.
Fees and Expenses; Indemnification
11
Section 11.
Authority To Administer Collateral
11
Section 12.
Limitation on Duty in Respect of Collateral
12
Section 13.
General Provisions Concerning the Agent
12
Section 14.
Termination Of Transaction Liens; Release Of Collateral
13
Section 15.
Notices
14
Section 16.
No Implied Waivers; Remedies Not Exclusive
14
Section 17.
Successors And Assigns
14
Section 18.
Amendments And Waivers
15
Section 19.
Choice Of Law
15
Section 20.
Waiver Of Jury Trial
15
Section 21.
Severability
15

SCHEDULES
 
Schedule 1(a)  Pledgor Information
Schedule 1(b)  Prior Organizational Names
Schedule 1(c)  Changes in Corporate Identity; Other Names
Schedule 2
Part A: Chief Executive Office
Part B: Location of Books
Part C: Other Places of Businesses
Part D: Prior Locations Maintained by the Pledgor
Schedule 3  Equity Interests Owned by the Pledgor
Schedule 4  Filing Office

i

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

PLEDGE AGREEMENT
 
This PARENT PLEDGE AGREEMENT dated as of March 1, 2006 (as amended, amended and
restated, supplemented or otherwise modified from time to time in accordance
with the provisions hereof, this “Agreement”), by and among SOUTHERN UNION
COMPANY, a Delaware corporation (the “Pledgor”), as pledgor, in favor of LEHMAN
COMMERCIAL PAPER INC., as administrative agent (in such capacity, the “Agent”)
on behalf of the Secured Parties (as defined in the Bridge Loan Agreement
referred to below), as pledgee.
 
WHEREAS, the Pledgor, Enhanced System Services, Inc., a Delaware corporation
(“ESSI” and together with the Pledgor, the “Borrowers” and each, a “Borrower”),
the Banks party thereto and the Agent are parties to the Bridge Loan Agreement
dated as of March 1, 2006 (as the same may be amended, modified, increased,
supplemented and/or restated from time to time, the “Bridge Loan Agreement”).
 
WHEREAS, the Pledgor is willing to secure the Secured Obligations (defined
below) by granting Liens on the Collateral (as defined below) as provided herein
and in the other Collateral Documents.
 
WHEREAS, it is a condition to the obligations of the Banks to make the Loans
under the Bridge Loan Agreement that the Pledgor execute and deliver this
Agreement.
 
NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
 
Section 1.  Definitions
 
 
(a)  Terms Defined in Bridge Loan Agreement. Terms defined in the Bridge Loan
Agreement and not otherwise defined in subsection (b) or (c) of this Section
have, as used herein, the respective meanings provided for therein.
 
(b)  Terms Defined in UCC. As used herein, each of the following terms has the
meaning specified in the UCC:
 
Term
 
UCC
 
Instrument
9-102
Investment Property
9-102
Proceeds
9-102
Securities Intermediary
8-102
Security
8-102 and 8-103
Security Entitlement
8-102

(c)  Additional Definitions. The following additional terms, as used herein,
have the following meanings:
 
“Agreement” has the meaning set forth in the preamble hereto.
 

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“Borrowers” or “Borrower” has the meaning set forth in the recitals hereto.
 
“Bridge Loan Agreement” has the meaning set forth in the recitals hereto.
 
“Collateral” means, collectively, (i) the Pledged Securities, (ii) all
Distributions with respect to such Pledged Securities, (iii) all Investment
Property constituting, representing or evidencing any of the foregoing in
clauses (i) and (ii) above, and (iv) all Proceeds of the foregoing in clauses
(i), (ii) and (iii) above.
 
“Control” has the meaning specified in UCC Section 8-106.
 
“Distributions” means, collectively, with respect to the Pledgor, all dividends,
cash, options, warrants, rights, instruments, distributions, returns of capital
or principal, income, interest, profits and other property, interests (debt or
equity) or proceeds, including as a result of a split, revision,
reclassification or other like change of the Pledged Securities, from time to
time received, receivable or otherwise distributed to the Pledgor in respect of
or in exchange for any or all of the Pledged Securities.
 
“Equity Interest” means (i) in the case of a corporation, any shares of its
capital stock, (ii) in the case of a limited liability company, any membership
interest therein, (iii) in the case of a partnership, any partnership interest
(whether general or limited) therein, (iv) in the case of any other business
entity, any participation or other interest in the equity or profits thereof,
(v) any warrant, option or other right to acquire any Equity Interest described
in this definition or (vi) any Security Entitlement in respect of any Equity
Interest described in this definition.
 
“Issuer Control Agreement” means an Issuer Control Agreement in form and
substance satisfactory to the Agent.
 
“LLC Interest” means a membership interest or similar interest in a limited
liability company.
 
“Location” means, with respect to the Pledgor, the jurisdiction in which the
Pledgor is located for purposes of Section 9-301 of the UCC.
 
“Opinion of Counsel” means a written opinion of legal counsel (who may be
counsel to a Pledgor or other counsel, in either case approved by the Agent)
addressed and delivered to the Agent.
 
“Organizational Documents” means, with respect to any Person, (i) in the case of
any corporation, the certificate of incorporation and by-laws (or similar
documents) of such person, (ii) in the case of any limited liability company,
the certificate of formation and operating agreement (or similar documents) of
such Person, (iii) in the case of any limited partnership, the certificate of
formation and limited partnership agreement (or similar documents) of such
Person, (iv) in the case of any general partnership, the partnership agreement
(or similar document) of such Person and (v) in any other case, the functional
equivalent of the foregoing.
 

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“own” refers to the possession of sufficient rights in property to grant a
security interest therein as contemplated by UCC Section 9-203, and “acquire”
refers to the acquisition of any such rights.
 
“Partnership Interest” means a partnership interest, whether general or limited.
 
“Pledged Securities” means, collectively, with respect to the Pledgor, (i) all
issued and outstanding Equity Interests of the issuer set forth on Schedule 3 as
being owned by the Pledgor and all options, warrants, rights, agreements and
additional Equity Interests of whatever class of any such issuer acquired by the
Pledgor (including by issuance), together with all rights, privileges, authority
and powers of the Pledgor relating to such Equity Interests in such issuer or
under any Organizational Document of such issuer, and the certificates,
instruments and agreements representing such Equity Interests and any and all
interest of the Pledgor in the entries on the books of any financial
intermediary pertaining to such Equity Interests, and (ii) all Equity Interests
issued in respect of the Equity Interests referred to in clause (i) above upon
any consolidation or merger of any issuer of such Equity Interests.
 
“Pledgor” has the meaning set forth in the preamble hereto.
 
“Post-Petition Interest” means any interest that accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of any one or more of the Borrowers (or would accrue but for
the operation of applicable bankruptcy or insolvency laws), whether or not such
interest is allowed or allowable as a claim in any such proceeding.
 
“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and its Affiliates.
 
“Secured Obligations” means all Obligations, including, without limitation, all
principal of all Loans outstanding from time to time under the Bridge Loan
Agreement, all interest (including Post-Petition Interest) on the Loans and all
other amounts now or hereafter payable by the Borrowers pursuant to the Loan
Documents.
 
“Transaction Liens” means the Liens granted by the Pledgor under the Collateral
Documents.
 
“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York; provided that, if perfection or the effect of perfection or
non-perfection or the priority of any Transaction Lien on any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, “UCC” means the Uniform Commercial Code as in effect from time to
time in such other jurisdiction for purposes of the provisions hereof relating
to such perfection, effect of perfection or non-perfection or priority.
 
(d)  Terms Generally. The definitions of terms herein (including those
incorporated by reference to the UCC or to another document) apply equally to
the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun includes the corresponding masculine, feminine and neuter
forms. The words “include”, “includes” and “including”
 

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shall be deemed to be followed by the phrase “without limitation”. The word
“will” shall be construed to have the same meaning and effect as the word
“shall”. Unless the context requires otherwise, (i) any definition of or
reference to the Bridge Loan Agreement or any other agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (ii) any reference herein to any Person
shall be construed to include such Person’s successors and assigns, (iii) the
words “herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (iv) all references herein to Sections and Schedules shall be
construed to refer to Sections of, and Schedules to, this Agreement and (v) the
word “property” shall be construed to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
 
Section 2.  Grant Of Transaction Liens
 
.
 
(a)  The Pledgor, in order to secure the Secured Obligations, hereby pledges and
grants to the Agent for the benefit of the Secured Parties a lien on and a
security interest in all of the right, title and interest of the Pledgor in, to
and under the Collateral, whether now owned or existing or hereafter acquired or
arising and wherever located.
 
(b)  The Transaction Liens are granted as security only and shall not subject
the Agent or any other Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of the Pledgor with respect to any of the
Collateral or any transaction in connection therewith.
 
(c)  This Agreement shall create a continuing security interest in and Lien on
the Collateral.
 
Section 3.  General Representations And Warranties
 
The Pledgor represents and warrants that:
 
(a)  (i)The Pledgor is duly organized, validly existing and in good standing
under the laws of the jurisdiction identified as its jurisdiction of
organization in Schedule 1(a). Schedule 1(a) accurately sets forth (x) the form
of organization of the Pledgor and (y) whether the Pledgor is a “registered
organization” within the meaning of the UCC and, if it is, its organizational
identification number (if any).
 
(ii) Set forth in Schedule 1(b) is any other corporate or organizational names
of the Pledgor has had in the past five years, together with the date of the
relevant change.
 
(iii) Set forth in Schedule 1(c) is a list of all other names (including trade
names or similar appellations) used by the Pledgor, or any other business or
organization to which the Pledgor became the successor by merger, consolidation,
acquisition, change in form, nature or jurisdiction of organization or
otherwise, at any time during the past five years. Also set forth in
Schedule 1(c) is the information required by this Section 3(a) for any other
business or organization to which the Pledgor became the successor by merger,
consolidation, acquisition, change in form, nature or jurisdiction of
organization
 

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or otherwise, at any time during the past five years. Except as set forth in
Schedule 1(c), the Pledgor has not changed its jurisdiction of organization at
any time during the past four months.
 
(b)  The chief executive office of the Pledgor is located at the address set
forth in Part A of Schedule 2. Set forth in Part B of Schedule 2 are all
locations where the Pledgor maintains any books or records relating to any of
the Collateral. Set forth in Part C of Schedule 2 hereto are all the other
places of business of the Pledgor. Set forth in Part D of Schedule 2 are the
locations or places of business previously maintained by the Pledgor at any time
during the past five years.
 
(c)  Schedule 3 lists all Equity Interests in Panhandle Eastern owned by the
Pledgor as of the Closing Date. The Pledgor holds all such Equity Interests
directly and not through a Subsidiary, a Securities Intermediary or any other
Person.
 
(d)  The Pledgor has good and marketable title to, owns and has rights in all
its Collateral (subject to exceptions that are, in the aggregate, not material),
free and clear of any and all Liens other than the Transaction Liens.
 
(e)  All shares of capital stock or other interest included in such Pledged
Securities (including shares of capital stock in respect of which the Pledgor
owns a Security Entitlement) have been duly authorized and validly issued and
are fully paid and non-assessable. None of such Pledged Securities is subject to
any option to purchase or similar right of any Person.
 
(f)  The Pledgor has not performed any acts that might prevent the Agent from
enforcing any of the provisions of the Collateral Documents or that would limit
the Agent in any such enforcement. No financing statement, security agreement,
mortgage or similar or equivalent document or instrument covering all or part of
the Collateral owned by the Pledgor is on file or of record in any jurisdiction
in which such filing or recording would be effective to perfect or record a Lien
on such Collateral, except financing statements, mortgages or other similar or
equivalent documents with respect to the Transaction Liens. After the Closing
Date, no Collateral owned by the Pledgor will be in the possession or under the
Control of any other Person having a claim thereto or security interest therein,
other than a Permitted Lien.
 
(g)  The Transaction Liens on all Collateral owned by the Pledgor (i) have been
validly created, (ii) will attach to each item of such Collateral on the Closing
Date (or, if the Pledgor first obtains rights thereto on a later date, on such
later date) and (iii) when so attached, will secure all the Secured Obligations.
 
(h)  Within 60 days after the Closing Date, the Pledgor will furnish to the
Agent a file search report from the UCC filing office applicable to its
Location, showing the filing made at such filing office to perfect the
Transaction Liens on its Collateral.
 
(i)  When UCC financing statements have been filed in the offices specified in
Schedule 4, the Transaction Liens will constitute perfected security interests
in the Collateral owned by the Pledgor to the extent that a security interest
therein may be perfected by filing pursuant to the UCC, prior to all Liens and
rights of others therein. Except for the filing of such UCC financing
statements, no registration, recordation or filing with any governmental body,
 

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agency or official is required in connection with the execution or delivery of
the Collateral Documents or is necessary for the validity or enforceability
thereof or for the perfection or due recordation of the Transaction Liens or for
the enforcement of the Transaction Liens.
 
(j)  As of the Closing Date, no Collateral is evidenced by an Instrument or a
certificate.
 
Section 4.  Further Assurances; General Covenants
 
The Pledgor covenants as follows:
 
(a)  The Pledgor will, from time to time, at the Pledgor’s expense, execute,
deliver, file and record any statement, assignment, instrument, document,
agreement or other paper and take any other action (including any filing of
financing or continuation statements under the UCC) that from time to time may
be necessary or desirable, or that the Agent may request, in order to:
 
(i)  create, preserve, perfect, confirm or validate the Transaction Liens on the
Collateral;
 
(ii)  in the case of Pledged Securities constituting Investment Property that is
included in the Collateral, cause the Agent to have Control thereof;
 
(iii)  enable the Agent and the other Secured Parties to obtain the full
benefits of the Collateral Documents; or
 
(iv)  enable the Agent to exercise and enforce any of its rights, powers and
remedies with respect to any of the Collateral.
 
To the extent permitted by applicable law, the Pledgor authorizes the Agent to
execute and file such financing statements or continuation statements without
the Pledgor’s signature appearing thereon. The Pledgor agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement. The Pledgor hereby
appoints the Agent its attorney-in-fact to execute and file all filings required
or so requested for the foregoing purposes, all acts of such attorney being
hereby ratified and confirmed; and such power, being coupled with an interest,
shall be irrevocable until all the Transaction Liens granted by the Pledgor
terminate pursuant to Section 14. The Pledgor will pay the costs of, or
incidental to, any recording or filing of any financing or continuation
statements or other documents recorded or filed pursuant hereto.
 
(b)  The Pledgor will not (i) change its name or organizational structure, (ii) 
change its Location or (iii)  become bound, as provided in UCC Section 9-203(d)
or otherwise, by a security agreement entered into by another Person, unless it
shall have given the Agent prior notice thereof and delivered an Opinion of
Counsel with respect thereto in accordance with Section 4(c).
 
(c)  At least 30 days before it takes any action contemplated by Section 4(b),
the Pledgor will, at the its’ expense, cause to be delivered to the Agent an
Opinion of Counsel, in form and substance satisfactory to the Agent, as to such
matters that the Agent may reasonably
 

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request relating to the perfection or priority of the Transaction Lien on any
Collateral to be owned by the Pledgor after it takes such action.
 
(d)  The Pledgor shall comply in all respects with the provisions of Section
10.19 of the Bridge Loan Agreement.
 
(e)  The Pledgor will, promptly upon request, provide to the Agent all
information and evidence concerning the Collateral that the Agent may reasonably
request from time to time to enable it to enforce the provisions of the
Collateral Documents.
 
(f)  From time to time upon request by the Agent, the Pledgor will, at its’
expense, cause to be delivered to the Secured Parties an Opinion of Counsel
satisfactory to the Agent as to such matters relating to the transactions
contemplated hereby as the Agent may reasonably request.
 
(g)  If at any time any Collateral shall be evidenced by an Instrument, the
Pledgor owning the same shall cause the same promptly, and in any event within
ten days, to be delivered to the Agent to be held in pledge hereunder, together
with any endorsements or instruments of transfer that the Agent may reasonably
request.
 
(h)  The Pledgor shall, at its own cost and expense, defend title to the
Collateral and the security interest therein and Lien thereon granted to the
Agent and the priority thereof against all claims and demands of all Persons, at
their own cost and expense, at any time claiming any interest therein adverse to
the Agent or any other Secured Party other than Transactional Liens. There is no
agreement, order, judgment or decree, and the Pledgor shall not enter into any
agreement or take any other action, that would restrict the transferability of
any of the Pledged Collateral or otherwise impair or conflict with the Pledgor’s
obligations or the rights of the Agent hereunder.
 
Section 5.  Investment Property
 
The Pledgor represents, warrants and covenants as follows:
 
(a)  Certificated Securities. Not later than the Closing Date, the Pledgor will
deliver to the Agent as Collateral hereunder all certificates or instruments
representing or evidencing any of the Collateral then owned by the Pledgor.
Thereafter, whenever the Pledgor acquires any other certificate representing or
evidencing any Collateral, the Pledgor will immediately deliver such certificate
or instrument to the Agent as Collateral hereunder.
 
(b)  Uncertificated Securities. Not later than the Closing Date, the Pledgor
will enter into (and cause the relevant issuer to enter into) an Issuer Control
Agreement in respect of each Pledged Security then owned by the Pledgor that
constitutes Collateral and is not evidenced or represented by a certificate or
instrument and deliver such Issuer Control Agreement to the Agent (which shall
enter into the same). Thereafter, whenever the Pledgor acquires any other
Pledged Security that constitutes Collateral and is not evidenced or represented
by a certificate or instrument, the Pledgor will enter into (and cause the
relevant issuer to enter into) an Issuer Control Agreement in respect of such
Pledged Security and deliver such Issuer Control Agreement to the Agent (which
shall enter into the same).
 
(c)  Perfection as to Certificated Securities. When the Pledgor delivers the
certificate or instrument representing any Pledged Security owned by it and that
constitutes Collateral to the Agent and complies with Sections 5(a) and 5(e) in
connection with such delivery, (i) the Transaction Lien on such Pledged Security
will be perfected, subject to no prior Liens or rights of others, (ii) the Agent
will have Control of such Pledged Security and (iii) the Agent will be a
protected purchaser (within the meaning of UCC Section 8-303) thereof.
 
(d)  Perfection as to Uncertificated Securities. When the Pledgor, the Agent and
the issuer of any Pledged Security owned by the Pledgor and that constitutes
Collateral and is not represented or evidenced by a certificate or instrument
enter into an Issuer Control Agreement with respect thereto, (i) the Transaction
Lien on such Pledged Security will be perfected, subject to no prior Liens or
rights of others, (ii) the Agent will have Control of such Pledged Security and
(iii) the Agent will be a protected purchaser (within the meaning of UCC Section
8-303) thereof.
 
(e)  Delivery of Pledged Certificates. All certificates or instruments
representing or evidencing any Pledged Security that constitutes Collateral,
when delivered to the Agent, will be in suitable form for transfer by delivery,
or accompanied by duly executed instruments of transfer or assignment in blank,
with signatures appropriately guaranteed, all in form and substance satisfactory
to the Agent.
 
(f)  Communications. The Pledgor will promptly give to the Agent copies of any
notices and other communications received by it with respect to any Collateral
registered in the name of the Pledgor or its nominee.
 
Section 6.  Transfer of Record Ownership
 
At any time when an Event of Default shall have occurred and be continuing, the
Agent may (and to the extent that action by it is required, the Pledgor, if
directed to do so by the Agent, will as promptly as practicable) cause each of
the Pledged Securities (or any portion thereof specified in such direction) to
be transferred of record into the name of the Agent or its nominee. The Pledgor
will take any and all actions reasonably requested by the Agent to facilitate
compliance with this Section. If the provisions of this Section are implemented,
Section 5(c) shall not thereafter apply to any Pledged Security that is
registered in the name of the Agent or its nominee. The Agent will promptly give
to the Pledgor copies of any notices and other communications received by the
Agent with respect to Pledged Securities registered in the name of the Agent or
its nominee.
 
Section 7.  Right to Vote Securities
 
 
 
(a)  Unless an Event of Default shall have occurred and be continuing and the
Agent shall have notified the Pledgor that the Pledgor’s rights under this
Section are suspended, the Pledgor will have the right, from time to time, to
vote and to give consents, ratifications and waivers with respect to any Pledged
Security owned by it, and the Agent will, upon receiving a written request from
the Pledgor, deliver to the Pledgor or as specified in such request such
proxies, powers of attorney, consents, ratifications and waivers in respect of
any such Pledged Security that is registered in the name of the Agent or its
nominee as shall be specified in such request and be in form and substance
satisfactory to the Agent. Unless an Event of Default shall have occurred and be
continuing, the Agent will have no right to take any action which the owner of
 

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any Pledged Securities constituting Partnership Interest or LLC Interest that is
part of the Collateral is entitled to take with respect thereto, except the
right to receive payments and other distributions to the extent provided herein.
 
(b)  If an Event of Default shall have occurred and be continuing, the Agent
will have the right to the extent permitted by law (and, in the case of Pledged
Securities constituting Partnership Interests or LLC Interests that are part of
the Collateral, by the relevant partnership agreement, limited liability company
agreement, operating agreement or other governing document) to vote, to give
consents, ratifications and waivers and to take any other action with respect to
any Investment Property or Pledged Securities that constitute Collateral, with
the same force and effect as if the Agent were the absolute and sole owner
thereof, and the Pledgor will take all such action as the Agent may reasonably
request from time to time to give effect to such right.
 
Section 8.  Remedies Upon Event of Default
 
 
(a)  If an Event of Default shall have occurred and be continuing, the Agent may
exercise (or cause its sub-agents to exercise) any or all of the remedies
available to it (or to such sub-agents) under the Collateral Documents.
 
(b)  Without limiting the generality of the foregoing, if an Event of Default
shall have occurred and be continuing, the Agent may exercise on behalf of the
Secured Parties all the rights of a secured party under the UCC (whether or not
in effect in the jurisdiction where such rights are exercised) with respect to
any Collateral and, in addition, the Agent may, without being required to give
any notice, except as herein provided or as may be required by mandatory
provisions of law, withdraw all cash held by it as Collateral and apply such
cash as provided in Section 9 and, if there shall be no such cash or if such
cash shall be insufficient to pay all the Secured Obligations in full, sell,
lease, license or otherwise dispose of the Collateral or any part thereof.
Notice of any such sale or other disposition shall be given to the Pledgor as
required by Section 11.
 
Section 9.  Application Of Proceeds
 
 
(a)  If an Event of Default shall have occurred and be continuing, the Agent may
apply (i) any cash then held by it as Collateral and (ii) the proceeds of any
sale or other disposition of all or any part of the Collateral, in the following
order of priorities:
 
first, to pay the expenses of such sale or other disposition, including
reasonable compensation to agents of and counsel for the Agent, and all
expenses, liabilities and advances incurred or made by the Agent in connection
with the Collateral Documents, and any other amounts then due and payable to the
Agent pursuant to Section 11 or pursuant to Section 13.3 or 13.16 of the Bridge
Loan Agreement;
 
second, to pay the unpaid principal of the Secured Obligations ratably until
payment in full of the principal of all Secured Obligations shall have been
made;
 

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third, to pay ratably all interest (including Post-Petition Interest) on the
Secured Obligations payable under the Bridge Loan Agreement and any Notes, until
payment in full of all such interest and fees shall have been made;
 
fourth, to pay all other Secured Obligations ratably until payment in full of
all such other Secured Obligations shall have been made; and
 
finally, to pay to the Pledgor, or as a court of competent jurisdiction may
direct, any surplus then remaining from the proceeds of the Collateral owned by
it.
 
(b)  In making the payments and allocations required by this Section, the Agent
may rely upon information supplied to it pursuant to Section 13(c). All
distributions made by the Agent pursuant to this Section shall be final (except
in the event of manifest error) and the Agent shall have no duty to inquire as
to the application by any Secured Party of any amount distributed to it.
 
Section 10.  Fees and Expenses; Indemnification
 
 
(a)  The Pledgor will forthwith upon demand pay to the Agent:
 
(i)  the amount of any taxes that the Agent may have been required to pay by
reason of the Transaction Liens or to free any Collateral from any other Lien
thereon;
 
(ii)  the amount of any and all reasonable out-of-pocket expenses, including
transfer taxes and reasonable fees and expenses of counsel and other experts,
that the Agent may incur in connection with (x) the administration or
enforcement of the Collateral Documents, including such expenses as are incurred
to preserve the value of the Collateral or the validity, perfection, rank or
value of any Transaction Lien, (y) the collection, sale or other disposition of
any Collateral or (z) the exercise by the Agent of any of its rights or powers
under the Collateral Documents;
 
(iii)  the amount of any fees that the Pledgor shall have agreed in writing to
pay to the Agent and that shall have become due and payable in accordance with
such written agreement; and
 
(iv)  the amount required to indemnify the Agent for, or hold it harmless and
defend it against, any loss, liability or expense (including the reasonable fees
and expenses of its counsel and any experts or sub-agents appointed by it
hereunder) incurred or suffered by the Agent in connection with the Collateral
Documents, except to the extent that such loss, liability or expense arises from
the Agent’s gross negligence or willful misconduct or a breach of any duty that
the Agent has under this Agreement (after giving effect to Sections 12 and 13).
 
Any such amount not paid to the Agent on demand will bear interest for each day
thereafter until paid at a rate per annum equal to the sum of 2% plus the rate
applicable to Alternate Base Rate Loans for such day.
 
(b)  If any transfer tax, documentary stamp tax or other tax is payable in
connection with any transfer or other transaction provided for in the Collateral
Documents, the Pledgor will pay such tax and provide any required tax stamps to
the Agent or as otherwise required by law.
 
Section 11.  Authority To Administer Collateral
 
The Pledgor irrevocably appoints the Agent its true and lawful attorney, with
full power of substitution, in the name of the Pledgor, any Secured Party or
otherwise, for the sole use and benefit of the Secured Parties, but at the
Pledgor’s expense, to the extent permitted by law to exercise, at any time and
from time to time while an Event of Default shall have occurred and be
continuing, all or any of the following powers with respect to all or any of the
Pledgor’s Collateral (but the Agent shall not be obligated to and shall have no
liability to the Pledgor or any third party for failure to so do or take
action):
 
(a)  to demand, sue for, collect, receive and give acquittance for any and all
monies due or to become due upon or by virtue thereof;
 
(b)  to settle, compromise, compound, prosecute or defend any action or
proceeding with respect thereto;
 
(c)  to sell, lease, license or otherwise dispose of the same or the proceeds or
avails thereof, as fully and effectually as if the Agent were the absolute owner
thereof;
 
(d)  to extend the time of payment of any or all thereof and to make any
allowance or other adjustment with reference thereto; and
 
(e)  to take any other action and to execute any instrument consistent with the
terms of the Bridge Loan Agreement and the Collateral Documents which the Agent
may deem necessary or advisable to accomplish the purposes hereof.
 
Section 12.  Limitation on Duty in Respect of Collateral
 
. Beyond the exercise of reasonable care in the custody and preservation
thereof, the Agent will have no duty as to any Collateral in its possession or
control or in the possession or control of any sub-agent or bailee or any income
therefrom or as to the preservation of rights against prior parties or any other
rights pertaining thereto. The Agent will be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession or
control if such Collateral is accorded treatment substantially equal to that
which it accords its own property, and will not be liable or responsible for any
loss or damage to any Collateral, or for any diminution in the value thereof, by
reason of any act or omission of any sub-agent or bailee selected by the Agent
in good faith, except to the extent that such liability arises from the Agent’s
gross negligence or willful misconduct.
 
Section 13.  General Provisions Concerning the Agent
 
 
(a)  The provisions of Section 12 of the Bridge Loan Agreement shall inure to
the benefit of the Agent, and shall be binding upon the Pledgor and all Secured
Parties, in connection with this Agreement and the other Collateral Documents.
Without limiting the generality of the foregoing, (i) the Agent shall not be
subject to any fiduciary or other implied duties, regardless of whether an Event
of Default has occurred and is continuing, (ii) the Agent shall not have any
duty to take any discretionary action or exercise any discretionary powers,
except discretionary
 

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rights and powers expressly contemplated by the Collateral Documents that the
Agent is required in writing to exercise by the Majority Banks (or such other
number or percentage of the Banks as shall be necessary under the circumstances
as provided in Section 13.2 of the Bridge Loan Agreement), and (iii) except as
expressly set forth in the Loan Documents, the Agent shall not have any duty to
disclose, and shall not be liable for any failure to disclose, any information
relating to any of the Borrowers or any of their respective Subsidiaries or any
other Loan Party that is communicated to or obtained by the bank serving as
Agent or any of its Affiliates in any capacity. The Agent shall not be
responsible for the existence, genuineness or value of any Collateral or for the
validity, perfection, priority or enforceability of any Transaction Lien,
whether impaired by operation of law or by reason of any action or omission to
act on its part under the Collateral Documents. The Agent shall be deemed not to
have knowledge of any Event of Default unless and until written notice thereof
is given to the Agent by the Pledgor or a Secured Party.
 
(b)  Sub-Agents and Related Parties. The Agent may perform any of its duties and
exercise any of its rights and powers through one or more sub-agents appointed
by it. The Agent and any such sub-agent may perform any of its duties and
exercise any of its rights and powers through its Related Parties. The
exculpatory provisions of Section 12 and this Section shall apply to any such
sub-agent and to the Related Parties of the Agent and any such sub-agent.
 
(c)  Information as to Secured Obligations and Actions by Secured Parties. For
all purposes of the Collateral Documents, including determining the amounts of
the Secured Obligations, or whether any action has been taken under any Loan
Document, the Agent will be entitled to rely on information from (i) its own
records for information as to the Banks, any of the Secured Obligations and
actions taken by them, (ii) any Secured Party (or any trustee, agent or similar
representative designated pursuant to (iii) to supply such information) for
information as to any of the Secured Obligations and actions taken by it, to the
extent that the Agent has not obtained such information from its own records,
and (iv) the Pledgor or any of the Borrowers or any other Loan Party, to the
extent that the Agent has not obtained information from the foregoing sources.
 
(d)  Refusal to Act. The Agent may refuse to act on any notice, consent,
direction or instruction from any Secured Parties or any agent, trustee or
similar representative thereof that, in the Agent’s opinion, (i) is contrary to
law or the provisions of any Collateral Document, (ii) may expose the Agent to
liability (unless the Agent shall have been indemnified, to its reasonable
satisfaction, for such liability by the Secured Parties that gave such notice,
consent, direction or instruction) or (iii) is unduly prejudicial to Secured
Parties not joining in such notice, consent, direction or instruction.
 
(e)  Copies of Certain Notices. Within two Business Days after it receives or
sends any notice referred to in this subsection, the Agent shall send to the
Banks copies of any notice given by the Agent to the Pledgor, or received by it
from the Pledgor, pursuant to Section 8, 9, 11 or 14.
 
Section 14.  Termination Of Transaction Liens; Release Of Collateral
 
 
(a)  The Transaction Liens shall terminate when all Commitments under the Bridge
Loan Agreement shall have expired or been terminated and all the Secured
Obligations shall have been paid in full in cash (other than contingent
indemnification obligations).
 
(b)  At any time before the Transaction Liens terminate, the Agent may, at the
written request of the Borrowers, (i) release any Collateral with the prior
written consent of the Banks.
 
(c)  Upon any termination of a Transaction Lien or release of Collateral, the
Agent will, at the expense of the Pledgor, execute and deliver to the Pledgor
such documents as the Pledgor shall reasonably request to evidence the
termination of such Transaction Lien or the release of such Collateral, as the
case may be.
 
Section 15.  Notices
 
Each notice, request or other communication given to any party hereunder shall
be given in accordance with Section 13.4 of the Bridge Loan Agreement.
 
Section 16.  No Implied Waivers; Remedies Not Exclusive
 
No failure by the Agent or any Secured Party to exercise, and no delay in
exercising and no course of dealing with respect to, any right or remedy under
any Collateral Document shall operate as a waiver thereof; nor shall any single
or partial exercise by the Agent or any Secured Party of any right or remedy
under any Loan Document preclude any other or further exercise thereof or the
exercise of any other right or remedy. The rights and remedies specified in the
Loan Documents are cumulative and are not exclusive of any other rights or
remedies provided by law.
 
Section 17.  Successors And Assigns
 
. This Agreement is for the benefit of the Agent and the Secured Parties. If all
or any part of any Secured Party’s interest in any Secured Obligation is
assigned or otherwise transferred in accordance with the provisions of the
Bridge Loan Agreement, the assignee’s or transferor’s rights hereunder, to the
extent applicable to the obligation so transferred, shall be automatically
transferred with such obligation. This Agreement shall be binding on the Pledgor
and their respective successors and assigns; provided, however, that no Pledgor
may assign any of its rights, interests or obligations herein without the prior
written consent of the Agent and all the Banks.
 
Section 18.  Amendments And Waivers
 
. Neither this Agreement nor any provision hereof may be waived, amended,
modified or terminated except pursuant to an agreement or agreements in writing
entered into by the Agent, with the consent of the Majority Banks, or, in the
case of any such waiver, amendment or modification affecting the number of Banks
required to release any of the Collateral, with the consent of all the Banks. No
such waiver, amendment or modification shall be binding upon the Pledgor, except
with its written consent.
 
Section 19.  Choice Of Law
 
. This Agreement shall be construed in accordance with and governed by the laws
of the State of New York, except as otherwise required by mandatory provisions
of law and except to the extent that remedies provided by the laws of any
jurisdiction other than the State of New York are governed by the laws of such
jurisdiction.
 
Section 20.  Waiver Of Jury Trial
 
. EACH PARTY HERETO 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 ANY COLLATERAL DOCUMENT OR ANY
 

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

TRANSACTION CONTEMPLATED THEREBY (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 AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
 
Section 21.  Severability
 
. If any provision of any Collateral Document is invalid or unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions of the Collateral Documents shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor of the Agent and the
Secured Parties in order to carry out the intentions of the parties thereto as
nearly as may be possible and (ii) the invalidity or unenforceability of such
provision in such jurisdiction shall not affect the validity or enforceability
thereof in any other jurisdiction.
 

 
[Signature pages follow]
 

 

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

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
 
 
SOUTHERN UNION COMPANY, as the Pledgor
 
By: /S/ JULIE H. EDWARDS 
Name: Julie H. Edwards 
Title: Senior Vice President and Chief Financial Officer
 

 
 
LEHMAN COMMERCIAL PAPER INC.,
 
as Administrative Agent
 
By: /S/ LAURIE D. PERPER 
Name: Laurie D. Perper 

 
Title:
Senior Vice President

[Signature Page to Parent Pledge Agreement]

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

SCHEDULE 1(a)
 
PLEDGOR INFORMATION
 
(as of the Closing Date)
 
 
Name of Pledgor
 
 
 
Type of
 
 
Organization
 
 
Jurisdiction
 
 
of
 
 
Organization
 
 
Registered
 
 
Organization/
 
 
Organizational I.D. Number
 
Southern Union Company
Corporation
Delaware
0318923

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

SCHEDULE 1(b)
 

PRIOR ORGANIZATIONAL NAMES
 
 
Pledgor
 
 
Prior Name
 
 
Date of Change
 
Southern Union Company
NONE
N/A

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

SCHEDULE 1(c)
 
CHANGES IN CORPORATE IDENTITY; OTHER NAMES
 
 
Pledgor
 
 
Corporate Name of Entity
 
 
Action
 
 
Date of Action
 
 
State of Formation
 
 
List of All Other Names Used During Past Five Years
 
Southern Union Company
 
Southern Union Company
 
 
Assumed Name
 
 
03/29/2001
 
 
RI
 
 
Fall River Gas, a division of Southern Union Company
 
   
Assumed Name
 
10/11/2000
 
 
MA
 
 
Bristol & Warren Gas
 
 
Company
 
   
Assumed Name
 
06/05/2000
 
 
PA
 
 
Honesdale Gas Company, a division of PG Energy
 
   
Assumed Name
 
09/13/1993
 
 
MO
 
 
Missouri Gas Energy
 
   
 
Assumed Name
 
 
12/17/2001
 
 
RI
 
 
New England Gas
 
   
 
Assumed Name
 
 
02/22/2002
 
 
ME
 
 
New England Gas Company
 
   
 
Assumed Name
 
 
06/05/2000
 
 
PA
 
 
PG Energy
 
   
 
Assumed Name
 
 
09/28/2000
 
 
RI
 
 
ProvEnergy
 
   
 
Assumed Name
 
 
09/28/2000
 
 
RI
 
 
ProvGas
 
   
 
Assumed Name
 
 
01/14/1991
 
 
TX
 
 
Southern Union Gas Company
 
   
 
Assumed Name
 
 
08/05/2003
 
 
NY
 
 
Southern Union Gas Company, Inc.
 
   
 
Assumed Name
 
 
09/28/2000
 
 
RI
 
 
The Providence Gas Company
 
   
 
Assumed Name
 
 
03/29/2001
 
 
RI
 
 
Valley Resources
 

[Add Information required by Section 3(a) to the extent required by
Section 3(a)(iii)]

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

SCHEDULE 2
 
PART A: CHIEF EXECUTIVE OFFICES
 
 
Pledgor
 
 
Address
 
 
State
 
Southern Union Company
5444 Westheimer Road, Houston
Texas

PART B: LOCATION OF BOOKS
 
 
Pledgor
 
 
Address
 
 
State
 
Southern Union Company
5444 Westheimer Road, Houston
Texas

PART C: OTHER PLACES OF BUSINESS
 
 
Pledgor
 
 
Address
 
 
State
 
Southern Union Company
One PEI Center, Wilkes-Barre
417 Lackawanna Ave., Scranton
3420 Broadway, Kansas City
100 Weybosset Street, Providence
767 Fifth Avenue, 50th Floor, New York
Pennsylvania
Pennsylvania
Missouri
Rhode Island
New York

PART D: PRIOR LOCATIONS MAINTAINED BY THE PLEDGOR
 
 
Pledgor
 
 
Address
 
 
State
 
Southern Union Company
504 Lavaca, Suite 800, Austin
221 West 6th Street, Suite 1950, Austin
Texas
Texas

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

SCHEDULE 3
 

 
EQUITY INTERESTS IN COLLATERAL OWNED BY THE PLEDGOR
 
(as of the Closing Date)
 
 
Issuer
 
 
Jurisdiction
 
 
of
 
 
Organization
 
 
 
 
 
Owner of
 
 
Equity Interest
 
 
 
 
 
Percentage
 
 
Owned
 
 
Number of
 
 
Shares or Units
 
Panhandle Eastern Pipe Line Company, LP
Delaware
Southern Union Company
100% of the Limited
Partnership Interests
N/A

 

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

SCHEDULE 4
 

 
FILING OFFICE
 

 
Secretary of State’s Office for the State of Delaware
 

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

EXHIBIT D-2
 
FORM OF SUG EAT ENTITIES PLEDGE AGREEMENT
 

EXECUTION COPY

PLEDGE AGREEMENT

dated as of

March 1 , 2006

among

SUG EAT, INC.,

and

SUG EAT, LLC.,

as Pledgors,

and

LEHMAN COMMERCIAL PAPER INC.,

as Administrative Agent

TABLE OF CONTENTS
 
_________________
 
Page
 
Section 1.
Definitions
1
Section 2.
Grant Of Transaction Liens
4
Section 3.
General Representations And Warranties
5
Section 4.
Further Assurances; General Covenants
6
Section 5.
Investment Property
8
Section 6.
Transfer of Record Ownership
9
Section 7.
Right to Vote Securities
9
Section 8.
Remedies Upon Event of Default
10
Section 9.
Application Of Proceeds
10
Section 10.
Fees and Expenses; Indemnification
11
Section 11.
Authority To Administer Collateral
11
Section 12.
Limitation on Duty in Respect of Collateral
12
Section 13.
General Provisions Concerning the Agent
12
Section 14.
Termination Of Transaction Liens; Release Of Collateral
13
Section 15.
Notices
14
Section 16.
No Implied Waivers; Remedies Not Exclusive
14
Section 17.
Successors And Assigns
14
Section 18.
Amendments And Waivers
15
Section 19.
Choice Of Law
15
Section 20.
Waiver Of Jury Trial
15
Section 21.
Severability
15
Section 22.
Matters Pertaining to Pledgors.
15

SCHEDULES
 
Schedule 1(a)  Pledgor Information
Schedule 1(b)  Prior Organizational Names
Schedule 1(c)  Changes in Corporate Identity; Other Names
Schedule 2
Part A: Chief Executive Office
Part B: Location of Books
Part C: Other Places of Businesses
Part D: Prior Locations Maintained by Pledgors
Schedule 3  Equity Interests Owned by each Pledgor
Schedule 4  Filing Office

i

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

PLEDGE AGREEMENT
 
This PLEDGE AGREEMENT dated as of March 1, 2006 (as amended, amended and
restated, supplemented or otherwise modified from time to time in accordance
with the provisions hereof, this “Agreement”), by and among SUG EAT, INC., a
Delaware corporation (“SUG EAT Inc.”) and SUG EAT, LLC, a Delaware limited
liability company (“SUG EAT LLC”), as pledgors (SUG EAT Inc. and SUG EAT LLC are
collectively referred to as the “Pledgors,” and each, a “Pledgor”) in favor of
LEHMAN COMMERCIAL PAPER INC., as administrative agent (in such capacity, the
“Agent”) on behalf of the Secured Parties (as defined in the Bridge Loan
Agreement referred to below), as pledgee.
 
WHEREAS, Southern Union Company, a Delaware corporation (“Parent”), Enhanced
System Services, Inc., a Delaware corporation and a wholly owned Subsidiary of
the Parent (“ESSI” and together with the Parent, the “Borrowers”), the Banks
party thereto and the Agent are parties to the Bridge Loan Agreement dated as of
March 1, 2006 (as the same may be amended, modified, increased, supplemented
and/or restated from time to time, the “Bridge Loan Agreement”).
 
WHEREAS, in order to effect the Sid Richardson Acquisition (defined in the
Bridge Loan Agreement), ESSI shall make a loan in the aggregate principal amount
of $1.6 billion to the SUG EAT Entities (the “SUG EAT Entities Loan”) on the
Closing Date (defined in the Bridge Loan Agreement) pursuant to the SUG EAT
Entities Loan Documents (defined in the Bridge Loan Agreement). The proceeds of
the SUG EAT Entities Loan shall be used by the SUG EAT Entities to fund the
purchase price of the Sid Richardson Acquisition. As security for the SUG EAT
Entities Loan, the SUG EAT Entities shall, on the Closing Date, grant to ESSI a
second priority security interest in 100% of all issued and outstanding limited
partner interests in SRES and REM and 100% of all issued and outstanding general
partner interests in SRES, REM and Leapartners.
 
WHEREAS, each of Pledgors will receive substantial benefits from the Loans made
to the Borrowers and each, therefore, is willing to secure the Secured
Obligations (as defined below) by granting Liens on its respective Collateral
(as defined below) as provided herein and in the other Collateral Documents.
 
WHEREAS, it is a condition to the obligations of the Banks to make the Loans
under the Bridge Loan Agreement that each Pledgor execute and deliver this
Agreement.
 
NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
 
Section 1.  Definitions
 
.
 
(a)  Terms Defined in Bridge Loan Agreement. Terms defined in the Bridge Loan
Agreement and not otherwise defined in subsection (b) or (c) of this Section
have, as used herein, the respective meanings provided for therein.
 

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

 
(b)  Terms Defined in UCC. As used herein, each of the following terms has the
meaning specified in the UCC:
 
Term
 
UCC
 
Instrument
9-102
Investment Property
9-102
Proceeds
9-102
Securities Intermediary
8-102
Security
8-102 and 8-103
Security Entitlement
8-102

(c)  Additional Definitions. The following additional terms, as used herein,
have the following meanings:
 
“Agreement” has the meaning set forth in the preamble hereto.
 
“Borrowers” or “Borrower” has the meaning set forth in the recitals hereto.
 
“Bridge Loan Agreement” has the meaning set forth in the recitals hereto.
 
“Collateral” means, collectively, (i) the Pledged Securities, (ii) all
Distributions with respect to such Pledged Securities, (iii) all Investment
Property constituting, representing or evidencing any of the foregoing in
clauses (i) and (ii) above, and (iv) all Proceeds of the foregoing in clauses
(i), (ii) and (iii) above.
 
“Control” has the meaning specified in UCC Section 8-106.
 
“Distributions” means, collectively, with respect to each Pledgor, all
dividends, cash, options, warrants, rights, instruments, distributions, returns
of capital or principal, income, interest, profits and other property, interests
(debt or equity) or proceeds, including as a result of a split, revision,
reclassification or other like change of the Pledged Securities, from time to
time received, receivable or otherwise distributed to such Pledgor in respect of
or in exchange for any or all of the Pledged Securities.
 
“Equity Interest” means (i) in the case of a corporation, any shares of its
capital stock, (ii) in the case of a limited liability company, any membership
interest therein, (iii) in the case of a partnership, any partnership interest
(whether general or limited) therein, (iv) in the case of any other business
entity, any participation or other interest in the equity or profits thereof,
(v) any warrant, option or other right to acquire any Equity Interest described
in this definition or (vi) any Security Entitlement in respect of any Equity
Interest described in this definition.
 
“Issuer Control Agreement” means an Issuer Control Agreement in form and
substance satisfactory to the Agent.
 

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

“Location” means, with respect to any Pledgor, the jurisdiction in which such
Pledgor is located for purposes of Section 9-301 of the UCC.
 
“LLC Interest” means a membership interest or similar interest in a limited
liability company.
 
“Opinion of Counsel” means a written opinion of legal counsel (who may be
counsel to a Pledgor or other counsel, in either case approved by the Agent)
addressed and delivered to the Agent.
 
“Organizational Documents” means, with respect to any Person, (i) in the case of
any corporation, the certificate of incorporation and by-laws (or similar
documents) of such person, (ii) in the case of any limited liability company,
the certificate of formation and operating agreement (or similar documents) of
such Person, (iii) in the case of any limited partnership, the certificate of
formation and limited partnership agreement (or similar documents) of such
Person, (iv) in the case of any general partnership, the partnership agreement
(or similar document) of such Person and (v) in any other case, the functional
equivalent of the foregoing.
 
“own” refers to the possession of sufficient rights in property to grant a
security interest therein as contemplated by UCC Section 9-203, and “acquire”
refers to the acquisition of any such rights.
 
“Parent” has the meaning set forth in the recitals hereto.
 
“Partnership Interest” means a partnership interest, whether general or limited.
 
“Pledged Securities” means, collectively, with respect to each Pledgor, (i) all
issued and outstanding Equity Interests of each issuer set forth on Schedule 3
as being owned or otherwise acquired by such Pledgor and all options, warrants,
rights, agreements and additional Equity Interests of whatever class of any such
issuer acquired by such Pledgor (including by issuance), together with all
rights, privileges, authority and powers of such Pledgor relating to such Equity
Interests in each such issuer or under any Organizational Document of such
issuer, and the certificates, instruments and agreements representing such
Equity Interests and any and all interest of such Pledgor in the entries on the
books of any financial intermediary pertaining to such Equity Interests, and
(ii) all Equity Interests issued in respect of the Equity Interests referred to
in clause (i) above upon any consolidation or merger of any issuer of such
Equity Interests.
 
“Pledgors” or “Pledgor” has the meaning set forth in the preamble hereto.
 
“Post-Petition Interest” means any interest that accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of any one or more of the Borrowers (or would accrue but for
the operation of applicable bankruptcy or insolvency laws), whether or not such
interest is allowed or allowable as a claim in any such proceeding.
 
“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and its Affiliates.
 

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

“Secured Obligations” means all Obligations, including, without limitation, all
principal of all Loans outstanding from time to time under the Bridge Loan
Agreement, all interest (including Post-Petition Interest) on such Loans and all
other amounts now or hereafter payable by the Borrowers pursuant to the Loan
Documents.
 
“SUG EAT Inc.” shall have the meaning set forth in the preamble hereto.
 
“SUG EAT LLC” shall have the meaning set forth in the preamble hereto.
 
“Transaction Liens” means the Liens granted by the Pledgors under the Collateral
Documents.
 
“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York; provided that, if perfection or the effect of perfection or
non-perfection or the priority of any Transaction Lien on any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, “UCC” means the Uniform Commercial Code as in effect from time to
time in such other jurisdiction for purposes of the provisions hereof relating
to such perfection, effect of perfection or non-perfection or priority.
 
(d)  Terms Generally. The definitions of terms herein (including those
incorporated by reference to the UCC or to another document) apply equally to
the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun includes the corresponding masculine, feminine and neuter
forms. The words “include”, “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”. The word “will” shall be construed
to have the same meaning and effect as the word “shall”. Unless the context
requires otherwise, (i) any definition of or reference to the Bridge Loan
Agreement or any other agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(ii) any reference herein to any Person shall be construed to include such
Person’s successors and assigns, (iii) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (iv) all
references herein to Sections and Schedules shall be construed to refer to
Sections of, and Schedules to, this Agreement and (v) the word “property” shall
be construed to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.
 
Section 2.  Grant Of Transaction Liens
 
.
 
(a)  Each Pledgor, in order to secure the Secured Obligations, hereby pledges
and grants to the Agent for the benefit of the Secured Parties a lien on and a
security interest in all of the right, title and interest of such Pledgor in, to
and under the Collateral, whether now owned or existing or hereafter acquired or
arising and wherever located.
 
(b)  The Transaction Liens are granted as security only and shall not subject
the Agent or any other Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of any Pledgor with respect to any of the
Collateral or any transaction in connection therewith.
 
(c)  This Agreement shall create a continuing security interest in and Lien on
the Collateral.
 
Section 3.  General Representations And Warranties
 
. Each Pledgor represents and warrants that:
 
(a)  (i)Each Pledgor is duly organized, validly existing and in good standing
under the laws of the jurisdiction identified as its jurisdiction of
organization in Schedule 1(a). Schedule 1(a) accurately sets forth (x) the form
of organization of each Pledgor and (y) whether each Pledgor is a “registered
organization” within the meaning of the UCC and, if it is, its organizational
identification number (if any).
 
(ii) Set forth in Schedule 1(b) is any other corporate or organizational names
of each Pledgor has had in the past five years, together with the date of the
relevant change.
 
(iii) Set forth in Schedule 1(c) is a list of all other names (including trade
names or similar appellations) used by each Pledgor, or any other business or
organization to which each Pledgor became the successor by merger,
consolidation, acquisition, change in form, nature or jurisdiction of
organization or otherwise, at any time during the past five years. Also set
forth in Schedule 1(c) is the information required by this Section 3(a) for any
other business or organization to which each Pledgor became the successor by
merger, consolidation, acquisition, change in form, nature or jurisdiction of
organization or otherwise, at any time during the past five years. Except as set
forth in Schedule 1(c), no Pledgor has changed its jurisdiction of organization
at any time during the past four months.
 
(b)  The chief executive office of each Pledgor is located at the address set
forth in Part A of Schedule 2. Set forth in Part B of Schedule 2 are all
locations where each Pledgor maintains any books or records relating to any of
the Collateral. Set forth in Part C of Schedule 2 hereto are all the other
places of business of each Pledgor. Set forth in Part D of Schedule 2 are the
locations or places of business previously maintained by each Pledgor at any
time during the past five years.
 
(c)  Schedule 3 lists all Equity Interests in SRES, REM and Leapartners owned by
the respective Pledgor as of the Closing Date. Each Pledgor holds all such
Equity Interests directly and not through a subsidiary, a Securities
Intermediary or any other Person.
 
(d)  Each Pledgor has good and marketable title to, owns and has rights in all
its Collateral (subject to exceptions that are, in the aggregate, not material),
free and clear of any and all Liens other than the Transaction Liens and, at any
time prior to the consummation of the Acquired Business Equity Interests
Transfer, the Permitted Subordinated Liens.
 
(e)  All shares of capital stock or other interest included in such Pledged
Securities (including shares of capital stock in respect of which each Pledgor
owns a Security Entitlement) have been duly authorized and validly issued and
are fully paid and non-assessable. None of such Pledged Securities is subject to
any option to purchase or similar right of any Person other than the Call Option
under the Qualified Exchange Accommodation Agreement.
 
(f)  Each Pledgor has not performed any acts that might prevent the Agent from
enforcing any of the provisions of the Collateral Documents or that would limit
the Agent in any such enforcement. No financing statement, security agreement,
mortgage or similar or equivalent document or instrument covering all or part of
the Collateral owned by each Pledgor is on file or of record in any jurisdiction
in which such filing or recording would be effective to perfect or record a Lien
on such Collateral, except financing statements, mortgages or other similar or
equivalent documents with respect to the Transaction Liens. After the Closing
Date, no Collateral owned by each Pledgor will be in the possession or under the
Control of any other Person having a claim thereto or security interest therein,
other than a Permitted Lien.
 
(g)  The Transaction Liens on all Collateral owned by each Pledgor (i) have been
validly created, (ii) will attach to each item of such Collateral on the Closing
Date (or, if such Pledgor first obtains rights thereto on a later date, on such
later date) and (iii) when so attached, will secure all the Secured Obligations.
 
(h)  Within 60 days after the Closing Date, each Pledgor will furnish to the
Agent a file search report from the UCC filing office applicable to its
Location, showing the filing made at such filing office to perfect the
Transaction Liens on its Collateral.
 
(i)  When UCC financing statements have been filed in the offices specified in
Schedule 4, the Transaction Liens will constitute perfected security interests
in the Collateral owned by each Pledgor to the extent that a security interest
therein may be perfected by filing pursuant to the UCC, prior to all Liens and
rights of others therein. Except for the filing of such UCC financing
statements, no registration, recordation or filing with any governmental body,
agency or official is required in connection with the execution or delivery of
the Collateral Documents or is necessary for the validity or enforceability
thereof or for the perfection or due recordation of the Transaction Liens or for
the enforcement of the Transaction Liens.
 
(j)  As of the Closing Date, no Collateral is evidenced by an Instrument or a
certificate.
 
Section 4.  Further Assurances; General Covenants
 
. Each Pledgor covenants as follows:
 
(a)  Such Pledgor will, from time to time, at the Pledgors’ expense, execute,
deliver, file and record any statement, assignment, instrument, document,
agreement or other paper and take any other action (including any filing of
financing or continuation statements under the UCC) that from time to time may
be necessary or desirable, or that the Agent may request, in order to:
 
(i)  create, preserve, perfect, confirm or validate the Transaction Liens on
such Pledgor’s Collateral;
 
(ii)  in the case of Pledged Securities constituting Investment Property that is
included in the Collateral, cause the Agent to have Control thereof;
 
(iii)  enable the Agent and the other Secured Parties to obtain the full
benefits of the Collateral Documents; or
 
(iv)  enable the Agent to exercise and enforce any of its rights, powers and
remedies with respect to any of such Pledgor’s Collateral.
 
To the extent permitted by applicable law, such Pledgor authorizes the Agent to
execute and file such financing statements or continuation statements without
such Pledgor’s signature appearing thereon. Such Pledgor agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement. Such Pledgor hereby
appoints the Agent its attorney-in-fact to execute and file all filings required
or so requested for the foregoing purposes, all acts of such attorney being
hereby ratified and confirmed; and such power, being coupled with an interest,
shall be irrevocable until all the Transaction Liens granted by such Pledgor
terminate pursuant to Section 14. The Pledgors will pay the costs of, or
incidental to, any recording or filing of any financing or continuation
statements or other documents recorded or filed pursuant hereto.
 
(b)  Such Pledgor will not (i) change its name or organizational structure,
(ii)  change its Location or (iii) become bound, as provided in UCC Section
9-203(d) or otherwise, by a security agreement entered into by another Person,
other than at any time prior to the consummation of the Acquired Business Equity
Interests Transfer, the applicable SUG EAT Entities Loan Documents creating the
Permitted Subordinated Liens t, unless, in each case, it shall have given the
Agent prior notice thereof and delivered an Opinion of Counsel with respect
thereto in accordance with Section 4(c).
 
(c)  At least 30 days before it takes any action contemplated by Section 4(b),
such Pledgor will, at the Pledgors’ expense, cause to be delivered to the Agent
an Opinion of Counsel, in form and substance satisfactory to the Agent, as to
such matters that the Agent may reasonably request relating to the perfection or
priority of the Transaction Lien on any Collateral to be owned by such Pledgor
after it takes such action.
 
(d)  The Pledgors shall not, and shall cause each of its subsidiaries and each
of the Partnership Companies to not:
 
(i)  sell, lease, exchange, assign, transfer, dispose of, contribute or dividend
any Collateral or any Equity Interests in any of the SUG EAT Entities or any of
the Partnership Companies other than, in the case of the Collateral, in
connection with an Acquired Business Equity Interests Transfer;
 
(ii)  merge or consolidate with and into any other Person; or
 
(iii)  create, incur, assume or otherwise suffer to exist any Lien on the
Collateral or any part thereof or on any Equity Interests in any of the SUG EAT
Entities or any Partnership Companies, except, in each case, for the Liens
created by the Collateral Documents and except, in the case of the Collateral
only, at any time prior to the consummation of the Acquired Business Equity
Interests Transfer, for the Permitted Subordinated Lien; or
 
(iv)  sell, lease, exchange, assign, transfer, dispose of, contribute or
dividend all or substantially all of the assets of any of the Partnership
Companies to any Subsidiary of the Parent or any Affiliate of the Parent.
 
(e)  Such Pledgor will, promptly upon request, provide to the Agent all
information and evidence concerning such Pledgor’s Collateral that the Agent may
reasonably request from time to time to enable it to enforce the provisions of
the Collateral Documents.
 
(f)  From time to time upon request by the Agent, such Pledgor will, at the
Pledgors’ expense, cause to be delivered to the Secured Parties an Opinion of
Counsel satisfactory to the Agent as to such matters relating to the
transactions contemplated hereby as the Agent may reasonably request.
 
(g)  If at any time any Collateral shall be evidenced by an Instrument, the
Pledgor owning the same shall cause the same promptly, and in any event within
ten days, to be delivered to the Agent to be held in pledge hereunder, together
with any endorsements or instruments of transfer that the Agent may reasonably
request.
 
(h)  The Pledgors shall, at their own cost and expense, defend title to the
Collateral and the security interest therein and Lien thereon granted to the
Agent and the priority thereof against all claims and demands of all Persons, at
their own cost and expense, at any time claiming any interest therein adverse to
the Agent or any other Secured Party other than Transactional Liens. There is no
agreement, order, judgment or decree, and no Pledgor shall enter into any
agreement or take any other action, that would restrict the transferability of
any of the Pledged Collateral or otherwise impair or conflict with such
Pledgor’s obligations or the rights of the Agent hereunder.
 
Section 5.  Investment Property
 
. Each Pledgor represents, warrants and covenants as follows:
 
(a)  Certificated Securities. Not later than the Closing Date, such Pledgor will
deliver to the Agent as Collateral hereunder all certificates or instruments
representing or evidencing any of the Collateral then owned by such Pledgor.
Thereafter, whenever such Pledgor acquires any other certificate representing or
evidencing any Collateral, such Pledgor will immediately deliver such
certificate or instrument to the Agent as Collateral hereunder.
 
(b)  Uncertificated Securities. Not later than the Closing Date, such Pledgor
will enter into (and cause the relevant issuer to enter into) an Issuer Control
Agreement in respect of each Pledged Security then owned by such Pledgor that
constitutes Collateral and is not evidenced or represented by a certificate or
instrument and deliver such Issuer Control Agreement to the Agent (which shall
enter into the same). Thereafter, whenever such Pledgor acquires any other
Pledged Security that constitutes Collateral and is not evidenced or represented
by a certificate or instrument, such Pledgor will enter into (and cause the
relevant issuer to enter into) an Issuer Control Agreement in respect of such
Pledged Security and deliver such Issuer Control Agreement to the Agent (which
shall enter into the same).
 
(c)  Perfection as to Certificated Securities. When such Pledgor delivers the
certificate or instrument representing any Pledged Security owned by it and that
constitutes Collateral to the Agent and complies with Sections 5(a) and 5(e) in
connection with such delivery, (i) the Transaction Lien on such Pledged Security
will be perfected, subject to no prior Liens or rights of others, (ii) the Agent
will have Control of such Pledged Security and (iii) the Agent will be a
protected purchaser (within the meaning of UCC Section 8-303) thereof.
 
(d)  Perfection as to Uncertificated Securities. When such Pledgor, the Agent
and the issuer of any Pledged Security owned by such Pledgor and that
constitutes Collateral and is not represented or evidenced by a certificate or
instrument enter into an Issuer Control Agreement with respect thereto, (i) the
Transaction Lien on such Pledged Security will be perfected, subject to no prior
Liens or rights of others, (ii) the Agent will have Control of such Pledged
Security and (iii) the Agent will be a protected purchaser (within the meaning
of UCC Section 8-303) thereof.
 
(e)  Delivery of Pledged Certificates. All certificates or instruments
representing or evidencing any Pledged Security that constitutes Collateral,
when delivered to the Agent, will be in suitable form for transfer by delivery,
or accompanied by duly executed instruments of transfer or assignment in blank,
with signatures appropriately guaranteed, all in form and substance satisfactory
to the Agent.
 
(f)  Communications. Each Pledgor will promptly give to the Agent copies of any
notices and other communications received by it with respect to any Collateral
registered in the name of such Pledgor or its nominee.
 
Section 6.  Transfer of Record Ownership
 
. At any time when an Event of Default shall have occurred and be continuing,
the Agent may (and to the extent that action by it is required, the relevant
Pledgor, if directed to do so by the Agent, will as promptly as practicable)
cause each of the Pledged Securities (or any portion thereof specified in such
direction) to be transferred of record into the name of the Agent or its
nominee. Each Pledgor will take any and all actions reasonably requested by the
Agent to facilitate compliance with this Section. If the provisions of this
Section are implemented, Section 5(c) shall not thereafter apply to any Pledged
Security that is registered in the name of the Agent or its nominee. The Agent
will promptly give to the relevant Pledgor copies of any notices and other
communications received by the Agent with respect to Pledged Securities
registered in the name of the Agent or its nominee.
 
Section 7.  Right to Vote Securities
 
.
 
(a)  Unless an Event of Default shall have occurred and be continuing and the
Agent shall have notified the relevant Pledgor that such Pledgor’s rights under
this Section are suspended, each Pledgor will have the right, from time to time,
to vote and to give consents, ratifications and waivers with respect to any
Pledged Security owned by it, and the Agent will, upon receiving a written
request from such Pledgor, deliver to such Pledgor or as specified in such
request such proxies, powers of attorney, consents, ratifications and waivers in
respect of any such Pledged Security that is registered in the name of the Agent
or its nominee as shall be specified in such request and be in form and
substance satisfactory to the Agent. Unless an Event of Default shall have
occurred and be continuing, the Agent will have no right to take any action
which the owner of any Pledged Securities constituting Partnership Interest or
LLC Interest that is part of the Collateral is entitled to take with respect
thereto, except the right to receive payments and other distributions to the
extent provided herein.
 
(b)  If an Event of Default shall have occurred and be continuing, the Agent
will have the right to the extent permitted by law (and, in the case of Pledged
Securities constituting Partnership Interests or LLC Interests that are part of
the Collateral, by the relevant partnership agreement, limited liability company
agreement, operating agreement or other governing docu
 

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

ment) to vote, to give consents, ratifications and waivers and to take any other
action with respect to any Investment Property or Pledged Securities that
constitute Collateral, with the same force and effect as if the Agent were the
absolute and sole owner thereof, and each Pledgor will take all such action as
the Agent may reasonably request from time to time to give effect to such right.
 
Section 8.  Remedies Upon Event of Default
 
.
 
(a)  If an Event of Default shall have occurred and be continuing, the Agent may
exercise (or cause its sub-agents to exercise) any or all of the remedies
available to it (or to such sub-agents) under the Collateral Documents.
 
(b)  Without limiting the generality of the foregoing, if an Event of Default
shall have occurred and be continuing, the Agent may exercise on behalf of the
Secured Parties all the rights of a secured party under the UCC (whether or not
in effect in the jurisdiction where such rights are exercised) with respect to
any Collateral and, in addition, the Agent may, without being required to give
any notice, except as herein provided or as may be required by mandatory
provisions of law, withdraw all cash held by it as Collateral and apply such
cash as provided in Section 9 and, if there shall be no such cash or if such
cash shall be insufficient to pay all the Secured Obligations in full, sell,
lease, license or otherwise dispose of the Collateral or any part thereof.
Notice of any such sale or other disposition shall be given to the relevant
Pledgor(s) as required by Section 11.
 
Section 9.  Application Of Proceeds
 
.
 
(a)  If an Event of Default shall have occurred and be continuing, the Agent may
apply (i) any cash then held by it as Collateral and (ii) the proceeds of any
sale or other disposition of all or any part of the Collateral, in the following
order of priorities:
 
first, to pay the expenses of such sale or other disposition, including
reasonable compensation to agents of and counsel for the Agent, and all
expenses, liabilities and advances incurred or made by the Agent in connection
with the Collateral Documents, and any other amounts then due and payable to the
Agent pursuant to Section 11 or pursuant to Section 13.3 or 13.16 of the Bridge
Loan Agreement;
 
second, to pay the unpaid principal of the Secured Obligations ratably until
payment in full of the principal of all Secured Obligations shall have been
made;
 
third, to pay ratably all interest (including Post-Petition Interest) on the
Secured Obligations payable under the Bridge Loan Agreement and any Notes, until
payment in full of all such interest and fees shall have been made;
 
fourth, to pay all other Secured Obligations ratably until payment in full of
all such other Secured Obligations shall have been made; and
 
finally, to pay to the relevant Pledgor, or as a court of competent jurisdiction
may direct, any surplus then remaining from the proceeds of the Collateral owned
by it.
 
(b)  In making the payments and allocations required by this Section, the Agent
may rely upon information supplied to it pursuant to Section 13(c). All
distributions made by the Agent pursuant to this Section shall be final (except
in the event of manifest error) and the Agent shall have no duty to inquire as
to the application by any Secured Party of any amount distributed to it.
 
Section 10.  Fees and Expenses; Indemnification
 
.
 
(a)  The Pledgors will forthwith upon demand pay to the Agent:
 
(i)  the amount of any taxes that the Agent may have been required to pay by
reason of the Transaction Liens or to free any Collateral from any other Lien
thereon;
 
(ii)  the amount of any and all reasonable out-of-pocket expenses, including
transfer taxes and reasonable fees and expenses of counsel and other experts,
that the Agent may incur in connection with (x) the administration or
enforcement of the Collateral Documents, including such expenses as are incurred
to preserve the value of the Collateral or the validity, perfection, rank or
value of any Transaction Lien, (y) the collection, sale or other disposition of
any Collateral or (z) the exercise by the Agent of any of its rights or powers
under the Collateral Documents; and
 
(iii)  the amount required to indemnify the Agent for, or hold it harmless and
defend it against, any loss, liability or expense (including the reasonable fees
and expenses of its counsel and any experts or sub-agents appointed by it
hereunder) incurred or suffered by the Agent in connection with the Collateral
Documents, except to the extent that such loss, liability or expense arises from
the Agent’s gross negligence or willful misconduct or a breach of any duty that
the Agent has under this Agreement (after giving effect to Sections 12 and 13).
 
Any such amount not paid to the Agent on demand will bear interest for each day
thereafter until paid at a rate per annum equal to the sum of 2% plus the rate
applicable to Alternate Base Rate Loans for such day.
 
(b)  If any transfer tax, documentary stamp tax or other tax is payable in
connection with any transfer or other transaction provided for in the Collateral
Documents, the Pledgors will pay such tax and provide any required tax stamps to
the Agent or as otherwise required by law.
 
Section 11.  Authority To Administer Collateral
 
. Each Pledgor irrevocably appoints the Agent its true and lawful attorney, with
full power of substitution, in the name of such Pledgor, any Secured Party or
otherwise, for the sole use and benefit of the Secured Parties, but at the
Pledgors’ expense, to the extent permitted by law to exercise, at any time and
from time to time while an Event of Default shall have occurred and be
continuing, all or any of the following powers with respect to all or any of
such Pledgor’s Collateral (but the Agent shall not be obligated to and shall
have no liability to such Pledgor or any third party for failure to so do or
take action):
 
(a)  to demand, sue for, collect, receive and give acquittance for any and all
monies due or to become due upon or by virtue thereof;
 
(b)  to settle, compromise, compound, prosecute or defend any action or
proceeding with respect thereto;
 
(c)  to sell, lease, license or otherwise dispose of the same or the proceeds or
avails thereof, as fully and effectually as if the Agent were the absolute owner
thereof;
 
(d)  to extend the time of payment of any or all thereof and to make any
allowance or other adjustment with reference thereto; and
 
(e)  to take any other action and to execute any instrument consistent with the
terms of the Bridge Loan Agreement and the Collateral Documents which the Agent
may deem necessary or advisable to accomplish the purposes hereof.
 
Section 12.  Limitation on Duty in Respect of Collateral
 
. Beyond the exercise of reasonable care in the custody and preservation
thereof, the Agent will have no duty as to any Collateral in its possession or
control or in the possession or control of any sub-agent or bailee or any income
therefrom or as to the preservation of rights against prior parties or any other
rights pertaining thereto. The Agent will be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession or
control if such Collateral is accorded treatment substantially equal to that
which it accords its own property, and will not be liable or responsible for any
loss or damage to any Collateral, or for any diminution in the value thereof, by
reason of any act or omission of any sub-agent or bailee selected by the Agent
in good faith, except to the extent that such liability arises from the Agent’s
gross negligence or willful misconduct.
 
Section 13.  General Provisions Concerning the Agent
 
.
 
(a)  The provisions of Section 12 of the Bridge Loan Agreement shall inure to
the benefit of the Agent, and shall be binding upon all Pledgors and all Secured
Parties, in connection with this Agreement and the other Collateral Documents.
Without limiting the generality of the foregoing, (i) the Agent shall not be
subject to any fiduciary or other implied duties, regardless of whether an Event
of Default has occurred and is continuing, (ii) the Agent shall not have any
duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated by the Collateral
Documents that the Agent is required in writing to exercise by the Majority
Banks (or such other number or percentage of the Banks as shall be necessary
under the circumstances as provided in Section 13.2 of the Bridge Loan
Agreement), and (iii) except as expressly set forth in the Loan Documents, the
Agent shall not have any duty to disclose, and shall not be liable for any
failure to disclose, any information relating to any of the Borrowers or any of
their respective Subsidiaries or any other Loan Party that is communicated to or
obtained by the bank serving as Agent or any of its Affiliates in any capacity.
The Agent shall not be responsible for the existence, genuineness or value of
any Collateral or for the validity, perfection, priority or enforceability of
any Transaction Lien, whether impaired by operation of law or by reason of any
action or omission to act on its part under the Collateral Documents. The Agent
shall be deemed not to have knowledge of any Event of De-
 
(b)  fault unless and until written notice thereof is given to the Agent by the
Borrowers or a Secured Party.
 
(c)  Sub-Agents and Related Parties. The Agent may perform any of its duties and
exercise any of its rights and powers through one or more sub-agents appointed
by it. The Agent and any such sub-agent may perform any of its duties and
exercise any of its rights and powers through its Related Parties. The
exculpatory provisions of Section 12 and this Section shall apply to any such
sub-agent and to the Related Parties of the Agent and any such sub-agent.
 
(d)  Information as to Secured Obligations and Actions by Secured Parties. For
all purposes of the Collateral Documents, including determining the amounts of
the Secured Obligations, or whether any action has been taken under any Loan
Document, the Agent will be entitled to rely on information from (i) its own
records for information as to the Banks, any of the Secured Obligations and
actions taken by them, (ii) any Secured Party (or any trustee, agent or similar
representative designated pursuant to (iii) to supply such information) for
information as to any of the Secured Obligations and actions taken by it, to the
extent that the Agent has not obtained such information from its own records,
and (iv) any Pledgor or any of the Borrowers or any other Loan Party, to the
extent that the Agent has not obtained information from the foregoing sources.
 
(e)  Refusal to Act. The Agent may refuse to act on any notice, consent,
direction or instruction from any Secured Parties or any agent, trustee or
similar representative thereof that, in the Agent’s opinion, (i) is contrary to
law or the provisions of any Collateral Document, (ii) may expose the Agent to
liability (unless the Agent shall have been indemnified, to its reasonable
satisfaction, for such liability by the Secured Parties that gave such notice,
consent, direction or instruction) or (iii) is unduly prejudicial to Secured
Parties not joining in such notice, consent, direction or instruction.
 
(f)  Copies of Certain Notices. Within two Business Days after it receives or
sends any notice referred to in this subsection, the Agent shall send to the
Banks copies of any notice given by the Agent to any Pledgor, or received by it
from any Pledgor, pursuant to Section 8, 9, 11 or 14.
 
Section 14.  Termination Of Transaction Liens; Release Of Collateral
 
.
 
(a)  The Transaction Liens shall terminate when all Commitments under the Bridge
Loan Agreement shall have expired or been terminated and all the Secured
Obligations shall have been paid in full in cash (other than contingent
indemnification obligations).
 
(b)  At any time before the Transaction Liens terminate, the Agent may, at the
written request of the Borrowers, release any Collateral with the prior written
consent of the Banks.
 
(c)  Upon any termination of a Transaction Lien or release of Collateral, the
Agent will, at the expense of the relevant Pledgor, execute and deliver to such
Pledgor such documents as such Pledgor shall reasonably request to evidence the
termination of such Transaction Lien or the release of such Collateral, as the
case may be.
 
Section 15.  Notices
 
. Each notice, request or other communication given to any party hereunder shall
be given in accordance with Section 13.4 of the Bridge Loan Agreement and in the
case of the Pledgors, any such notice, request or other communication shall be
given to the address and fax numbers as follows:
 
If to SUG EAT, LLC:  SUG EAT, Inc.
40 Court Street, 2nd Floor
 
Plymouth, MA 02360
 
Att: Daniel Feehan
 
fax: (508) 732-3202
 

 
with a copy to:   Southern Union Company
Southern Union Panhandle LLC
5444 Westheimer Road
Houston, Texas 77056
Attention: Monica Gaudiosi, Esq.
Fax: (713) 989-1213

If to SUG EAT, INC.  SUG EAT, Inc.
135 S. LaSalle Street, Suite 1940
 
Chicago, IL 60603
 
Att: Mary Cunninghman
 
fax: (312) 992-4570
 

 
with a copy to:   Southern Union Company
Southern Union Panhandle LLC
5444 Westheimer Road
Houston, Texas 77056
Attention: Monica Gaudiosi, Esq.
Fax: (713) 989-1213

Section 16.  No Implied Waivers; Remedies Not Exclusive
 
. No failure by the Agent or any Secured Party to exercise, and no delay in
exercising and no course of dealing with respect to, any right or remedy under
any Collateral Document shall operate as a waiver thereof; nor shall any single
or partial exercise by the Agent or any Secured Party of any right or remedy
under any Loan Document preclude any other or further exercise thereof or the
exercise of any other right or remedy. The rights and remedies specified in the
Loan Documents are cumulative and are not exclusive of any other rights or
remedies provided by law.
 
Section 17.  Successors And Assigns
 
. This Agreement is for the benefit of the Agent and the Secured Parties. If all
or any part of any Secured Party’s interest in any Secured Obligation is
assigned or otherwise transferred in accordance with the provisions of the
Bridge Loan Agreement, the assignee’s or transferor’s rights hereunder, to the
extent applicable to the obligation so transferred, shall be automatically
transferred with such obligation. This Agreement shall be binding on the
Pledgors and their respective successors and assigns; provided, however, that
 

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no Pledgor may assign any of its rights, interests or obligations herein without
the prior written consent of the Agent and all the Banks.
 
Section 18.  Amendments And Waivers
 
. Neither this Agreement nor any provision hereof may be waived, amended,
modified or terminated except pursuant to an agreement or agreements in writing
entered into by the Agent, with the consent of the Majority Banks, or, in the
case of any such waiver, amendment or modification affecting the number of Banks
required to release any of the Collateral, with the consent of all the Banks. No
such waiver, amendment or modification shall be binding upon any Pledgor, except
with its written consent.
 
Section 19.  Choice Of Law
 
. This Agreement shall be construed in accordance with and governed by the laws
of the State of New York, except as otherwise required by mandatory provisions
of law and except to the extent that remedies provided by the laws of any
jurisdiction other than the State of New York are governed by the laws of such
jurisdiction.
 
Section 20.  Waiver Of Jury Trial
 
. EACH PARTY HERETO 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 ANY COLLATERAL DOCUMENT OR ANY
TRANSACTION CONTEMPLATED THEREBY (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 AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
 
Section 21.  Severability
 
. If any provision of any Collateral Document is invalid or unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions of the Collateral Documents shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor of the Agent and the
Secured Parties in order to carry out the intentions of the parties thereto as
nearly as may be possible and (ii) the invalidity or unenforceability of such
provision in such jurisdiction shall not affect the validity or enforceability
thereof in any other jurisdiction.
 
Section 22.  Matters Pertaining to Pledgors.
 
(a)  Subrogation. Each Pledgor hereby agrees that until the payment and
satisfaction in full in cash of all Secured Obligations and the expiration and
termination of the Commitments of the Banks under the Bridge Loan Agreement it
shall waive any claim and shall not exercise any right or remedy, direct or
indirect, arising by reason of any performance by it of its obligations
hereunder, whether by subrogation or otherwise, against the Borrowers or any
other Loan Party of any of the Secured Obligations or any security for any of
the Secured Obligations.
 
(b)  Unconditional and Absolute. The obligations of the Pledgors under this
Agreement, to the fullest extent permitted by applicable law, are absolute and
unconditional, joint and several, irrespective of the value, genuineness,
validity, regularity or enforceability of the Se-
 
(c)  cured Obligations, or any substitution, release or exchange of any other
guarantee of or security for any of the Secured Obligations, and, irrespective
of any other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a surety or a Pledgor (except for payment in
full). Without limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not alter or impair the
liability of the Pledgors hereunder which shall remain absolute and
unconditional under any and all circumstances as described above:
 
(i)  at any time or from time to time, without notice to the Pledgors, the time
for any performance of or compliance with any of the Secured Obligations shall
be extended, or such performance or compliance shall be waived;
 
(ii)  any of the acts mentioned in any of the provisions of the Bridge Loan
Agreement or any other Loan Document shall be done or omitted;
 
(iii)  the maturity of any of the Secured Obligations shall be accelerated, or
any of the Secured Obligations shall be amended in any respect, or any right
under the Loan Documents shall be amended or waived in any respect or the other
Pledgor, any other pledgor or any security for the Secured Obligations shall be
released or exchanged in whole or in part or otherwise dealt with;
 
(iv)  any Lien or security interest granted to, or in favor of, Agent for the
benefit of the Secured Parties as security for any of the Secured Obligations
shall fail to be perfected; and
 
(v)  any other circumstances which might constitute a defense available to, or a
discharge of, any Pledgor.
 
(d)  Waivers. Each Pledgor hereby expressly waives diligence, presentment,
demand of payment, protest and all notices whatsoever, and any requirement that
any Secured Party exhaust any right, power or remedy or proceed against the
Borrowers under the Bridge Loan Agreement, this Agreement, any other Loan
Document, or any other agreement or instrument referred to herein or therein, or
against any other Person under this Agreement or under any guarantee of, or
security for, any of the Secured Obligations. Each Pledgor waives any and all
notice of the creation, renewal, extension, waiver, termination or accrual of
any of the Secured Obligations and notice of or proof of reliance by any Secured
Party upon this Agreement as it pertains to the Pledgors or acceptance thereof,
and all dealings between the Borrowers and the Secured Parties shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Agreement. The obligations and liabilities of the Pledgors hereunder shall not
be conditioned or contingent upon the pursuit by the Secured Parties or any
other Person at any time of any right or remedy against the Borrowers or against
any other Person which may be or become liable in respect of all or any part of
the Secured Obligations or against any collateral security or guarantee therefor
or right of offset with respect thereto. To the extent it may lawfully do so,
each Pledgor absolutely and irrevocably waives and relinquishes the benefit and
advantage of, and covenants not to assert against the Agent or any Secured
Party, any valuation, stay, appraisement, extension, redemption or similar laws
and any and all rights or defenses it may have as a surety now or hereafter
existing which, but for this provision, might be applicable to the sale of any
Collateral made under the judgment, order or decree of any court, or privately
 

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under the power of sale conferred by this Agreement, or otherwise. Each Pledgor
further waives any and all suretyship defenses.
 
(e)  General Limitation. In any action or proceeding involving any applicable
state, federal or foreign bankruptcy, insolvency, reorganization or other law
affecting the rights of creditors generally, if the obligations of any Pledgor
under this Agreement would otherwise be held or determined to be void, voidable,
invalid or unenforceable, or subordinated to the claims of any other creditors,
on account of the amount of its liability under this Agreement, then,
notwithstanding any other provision to the contrary, the amount of such
liability shall, without any further action by such Pledgor or any other Person,
be automatically limited and reduced to the highest amount that is valid and
enforceable and not subordinated to the claims of other creditors as determined
in such action or proceeding.
 
(f)  Independent Investigation. Each Pledgor hereby acknowledges that it has
undertaken its own independent investigation of the financial condition of each
of the Borrowers and all other matters pertaining to this Agreement, the Bridge
Loan Agreement and the other Loan Document and further acknowledges that it is
not relying in any manner upon any representation or statement of the Agent, any
Bank or any of their respective Related Parties with respect thereto. Each
Pledgor represents and warrants that it has received and reviewed copies of the
Loan Documents and that it is in a position to obtain, and it hereby assumes
full responsibility for obtaining, any additional information concerning the
financial condition of each Borrower and any other matters pertinent hereto that
any Pledgor may desire. No Pledgor is relying upon or expecting the Agent, any
Bank or any of their respective Related Parties to furnish to such Pledgor any
information now or hereafter in the Agent’s, any Bank’s or any of their
respective Related Parties’ possession concerning the financial condition of any
of the Borrowers or any other matter.
 
[Signature pages follow]
 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
 
 
SUG EAT, INC., as a Pledgor
 
By: _/S/_DANIEL FEEHAN_____________
Name: Daniel Feehan 
Title: Senior Vice President
 

 
 
SUG EAT, LLC, as a Pledgor
 

 
By: Southern Union Panhandle LLC, as its Sole Manager
 
By: Southern Union Company, as its Sole Member
 
By: _/S/ JULIE H. EDWARDS____________
Name: Julie H. Edwards 
Title: Senior Vice President and Chief
Financial Officer

 
LEHMAN COMMERCIAL PAPER INC.,
 
as Administrative Agent
 
By: _/S/ LAURIE D. PERPER__________________
Name: Laurie D. Perper 

 
Title:
Senior Vice President

[Signature Page to Pledge Agreement (SUG EAT Entities)]

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SCHEDULE 1(a)
 
PLEDGORS INFORMATION
 
(as of the Closing Date)
 
 
Name of Pledgor
 
 
 
Type of
 
 
Organization
 
 
Jurisdiction
 
 
of
 
 
Organization
 
 
Registered
 
 
Organization/
 
 
Organizational I.D. Number
 
SUG EAT, Inc.
Corporation
Delaware
4115790
SUG EAT, LLC
Limited liability Company
Delaware
4116240

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SCHEDULE 1(b)
 

PRIOR ORGANIZATIONAL NAMES
 
 
Pledgor
 
 
Prior Name
 
 
Date of Change
 
SUG EAT, Inc.
None
N/A
SUG EAT, Inc.
None
N/A

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SCHEDULE 1(c)
 
CHANGES IN CORPORATE IDENTITY; OTHER NAMES
 
 
Pledgor
 
 
Corporate Name of Entity
 
 
Action
 
 
Date of Action
 
 
State of Formation
 
 
List of All Other Names Used During Past Five Years
 
SUG EAT, Inc.
 
None
 
 
N/A
 
 
N/A
 
 
N/A
 
 
N/A
 
SUG EAT, Inc.
 
None
 
 
N/A
 
 
N/A
 
 
N/A
 
 
N/A
 

[Add Information required by Section 3(a) to the extent required by
Section 3(a)(iii)]

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SCHEDULE 2
 
PART A: CHIEF EXECUTIVE OFFICES
 
 
Pledgor
 
 
Address
 
 
State
 
SUG EAT, Inc.
135 S. LaSalle Street, Suite 1940
Chicago, Illinois 60603
Illinois
SUG EAT, LLC
.
135 S. LaSalle Street. Suite 1940
Chicago
Illinois

PART B: LOCATION OF BOOKS
 
 
Pledgor
 
 
Address
 
 
State
 
SUG EAT, Inc.
135 S. LaSalle Street, Suite 1940
Chicago, Illinois 60603
Illinois
SUG EAT, LLC
.
135 S. LaSalle Street. Suite 1940
Chicago
Illinois

PART C: OTHER PLACES OF BUSINESS
 
 
Pledgor
 
 
Address
 
 
State
 
SUG EAT, Inc.
40 Court Street
Plymouth, MA 02360
Massachusetts
SUG EAT, LLC
.
40 Court Street
Plymouth, MA 02360
Massachusetts

 
PART D: PRIOR LOCATIONS MAINTAINED BY THE PLEDGORS
 
 
Pledgor
 
 
Address
 
 
State
 
SUG EAT, Inc.
N/A
N/A
SUG EAT, LLC
.
N/A
N/A

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SCHEDULE 3
 
EQUITY INTERESTS IN COLLATERAL OWNED BY THE PLEDGORS
 
(as of the Closing Date)
 
 
Issuer
 
 
Jurisdiction
 
 
of
 
 
Organization
 
 
 
 
 
Owner of
 
 
Equity Interest
 
 
 
 
 
Percentage
 
 
Owned
 
 
Number of
 
 
Shares or Units
 
Richardson Energy
Marketing, Ltd.
Texas
SUG EAT, Inc.
100% of the Limited
Partnership Interests
N/A
Richardson Energy
Marketing, Ltd.
Texas
SUG EAT, LLC
100% of the General
Partnership Interests
N/A
Sid Richardson
Energy Services, Ltd.
Texas
SUG EAT, Inc.
100% of the Limited
Partnership Interests
N/A
Sid Richardson
Energy Services, Ltd.
Texas
SUG EAT, LLC
100% of the General
Partnership Interests
N/A
Leapartners, LP
Texas
SUG EAT, LLC
100% of the General
Partnership Interests
N/A

 

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SCHEDULE 4
 
FILING OFFICE
 

 
Secretary of State’s Office for the State of Delaware
 

 

 

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EXHIBIT E
 
FORM OF IN-HOUSE COUNSEL OPINION
 

 

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EXHIBIT F
 
FORM OF INTERCREDITOR AGREEMENT