PEPL Form 8K 031507


    EXHIBIT
      10.1

    


    


    


    CREDIT
      AGREEMENT

     

    dated
      as of March 15, 2007

     

    by
      and among

     

    TRUNKLINE
      LNG HOLDINGS LLC

     

    as
      the Borrower

     

    PANHANDLE
      EASTERN PIPE LINE COMPANY, LP

     

    as
      a Guarantor

     

    TRUNKLINE
      LNG COMPANY, LLC

     

    as
      a Guarantor

     

    THE
      BANKS NAMED HEREIN

     

    as
      the Banks

     

    and

     

    BAYERISCHE
      HYPO- UND VEREINSBANK AG, NEW YORK BRANCH

     

    as
      the Administrative Agent

     

    UNICREDIT
      MARKETS & INVESTMENT BANKING, acting 

     

    through
      BAYERISCHE HYPO- UND VEREINSBANK AG

     

    and

     

    WACHOVIA
      CAPITAL MARKETS, LLC

     

    as
      the Joint Book Managers and the Joint Lead Arrangers

     

    THE
      BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH

     

    and

     

    WACHOVIA
      BANK, NATIONAL ASSOCIATION

     

    as
      the Documentation Agents

     

    BANK
      OF AMERICA, N.A.

     

    as
      the Syndication Agent

     

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    


     


    TABLE
      OF CONTENTS

    

       

      


       

      
        	
                 

                1.

                 

              	
                 

                CERTAIN DEFINITIONS

                 

              	
                 

                 1

              
	
                1.1

              	
                Defined Terms

              	
                 1
               
	
                1.2

              	
                Computation of Time Periods; Other Definitional Provisions

              	
                 14

              
	
                1.3

              	
                Accounting Terms

              	 15
	
                 

                2.

                 

              	
                 

                AMOUNTS AND TERMS OF THE LOANS

                 

              	
                 

                 15

              
	
                2.1

              	
                The Loans

              	 15
	
                2.2

              	
                Making of the Loans

              	 15
	
                2.3

              	
                Repayment of Loans

              	 16
	
                2.4

              	
                Termination of the Commitments

              	 16
	
                2.5

              	
                Prepayments

              	 16
	
                2.6

              	
                Interest

              	 16
	
                2.7

              	
                Fees

              	 17
	
                2.8

              	
                Conversion of Loans

              	 17
	
                2.9

              	
                Increased Costs, Etc.

              	 18
	
                2.10

              	
                Payments and Computations

              	 19
	
                2.11

              	
                Taxes

              	 20
	
                2.12

              	
                Sharing of Payments, Etc.

              	 24
	
                2.13

              	
                Use of Proceeds

              	 24
	
                2.14

              	
                Evidence of Debt

              	 24
	
                2.15

              	
                Replacement of Banks

              	 25
	
                 

                3.

                 

              	
                 

                REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES

                 

              	
                 

                 25

              
	
                3.1

              	
                Organization and Qualification. Such Loan Party:

              	 25
	
                3.2

              	
                Authorization, Validity, Etc.

              	 26
	
                3.3

              	
                Conflicting or Adverse Agreements or Restrictions

              	 26
	
                3.4

              	
                No Consents Required

              	 26
	
                3.5

              	
                Financial Statements.

              	 26
	
                3.6

              	
                Litigation

              	 27
	
                3.7

              	
                Default

              	 27
	
                3.8

              	
                Compliance

              	 27
	
                3.9

              	
                Title to Assets

              	 27
	
                3.10

              	
                Payment of Taxes

              	 28
	
                3.11

              	
                Investment Company Act Not Applicable

              	 28
	
                3.12

              	
                Regulations G, T, U and X

              	 28
	
                3.13

              	
                ERISA

              	 28
	
                3.14

              	
                No Financing of Certain Security Acquisitions

              	 28
	
                3.15

              	
                Franchises, Co-Licenses, Etc.

              	 29
	
                3.16

              	
                Environmental Matters

              	 29
	
                3.17

              	
                Disclosure

              	 29
	
                3.18

              	
                Insurance

              	 29
	
                3.19

              	
                Subsidiaries.

              	 29
	
                 

                4.

                 

              	
                 

                CONDITIONS TO FUNDING

                 

              	
                 

                 29

              
	
                4.1

              	
                Representations True and No Defaults

              	 29
	
                4.2

              	
                Intentionally Omitted

              	 30
	
                4.3

              	
                Compliance With Law

              	 30
	
                4.4

              	
                Notice of Borrowing and Other Documents.

              	 30
	
                4.5

              	
                Payment of Fees and Expenses

              	 30
	
                4.6

              	
                Repayment of Debt

              	 30
	
                4.7

              	
                Loan Documents Satisfactory

              	 30
	
                4.8

              	
                Loan Documents, Opinions and Other Instruments

              	 
	
                 

                5.

                 

              	
                 

                AFFIRMATIVE COVENANTS OF THE LOAN PARTIES

                 

              	
                 

                 31

              
	
                5.1

              	
                Financial Statements and Information. Deliver to the Banks

              	 31
	
                5.2

              	
                Books and Records

              	 32
	
                5.3

              	
                Insurance

              	 32
	
                5.4

              	
                Maintenance of Property

              	 32
	
                5.5

              	
                Inspection of Property and Records.

              	 32
	
                5.6

              	
                Existence, Laws, Obligations, Taxes

              	 33
	
                5.7

              	
                Notice of Certain Matters

              	 33
	
                5.8

              	
                ERISA

              	 33
	
                5.9

              	
                Compliance with Environmental Laws

              	 34
	
                 

                6.

                 

              	
                 

                NEGATIVE COVENANTS OF PANHANDLE EASTERN

                 

              	
                 

                 34

              
	
                6.1

              	
                Financial Covenant

              	 34
	
                6.2

              	
                Liens, Etc.

              	 35
	
                6.3

              	
                Debt

              	 35
	
                6.4

              	
                Change in Nature of Business

              	 35
	
                6.5

              	
                Mergers, Consolidation

              	 35
	
                6.6

              	
                Sale of Assets

              	 36
	
                6.7

              	
                Restricted Payments

              	 36
	
                6.8

              	
                Sales and Leasebacks

              	 36
	
                6.9

              	
                Transactions with Related Parties

              	 37
	
                6.10

              	
                Hazardous Materials

              	 37
	
                 

                7.

                 

              	
                 

                NEGATIVE COVENANTS OF THE BORROWER

              	
                 

                 37

              
	
                7.1

              	
                Liens, Etc.

              	 37
	
                7.2

              	
                Debt

              	 38
	
                7.3

              	
                Merger, Consolidation

              	 38
	
                7.4

              	
                Sale of Assets

              	 38
	
                7.5

              	
                Restricted Payment

              	 39
	
                7.6

              	
                Securities Credit Regulations

              	 39
	
                7.7

              	
                Nature of Business

              	 39
	
                7.8

              	
                Transactions with Related Parties

              	 39
	
                7.9

              	
                Hazardous Materials

              	 39
	
                7.10

              	
                Use of Proceeds

              	 40
	
                7.11

              	
                Other Documents

              	 40
	
                 

                8.

                 

              	
                 

                EVENTS OF DEFAULT; REMEDIES

                 

              	
                 

                 40

              
	
                8.1

              	
                Failure to Pay Obligations When Due

              	 40
	
                8.2

              	
                Intentionally Omitted.

              	 40
	
                8.3

              	
                Failure to Pay Other Debt

              	 40
	
                8.4

              	
                Misrepresentation or Breach of Warranty

              	 41
	
                8.5

              	
                Violation of Certain Covenants

              	 41
	
                8.6

              	
                Violation of Other Covenants, Etc.

              	 41
	
                8.7

              	
                Bankruptcy and Other Matters

              	 41
	
                8.8

              	
                Dissolution.

              	 41
	
                8.9

              	
                Undischarged Judgment

              	 42
	
                8.10

              	
                Loan Documents

              	 42
	
                8.11

              	
                Change of Control.

              	 42
	
                8.12

              	
                Other Remedies

              	 42
	
                8.13

              	
                Remedies Cumulative.

              	 42
	
                 

                9.

                 

              	
                 

                THE AGENT

                 

              	
                 

                 42

                 

              
	
                9.1

              	
                Authorization and Action

              	 43
	
                9.2

              	
                Agent’s Reliance, Etc.

              	 43
	
                9.3

              	
                Defaults

              	 43
	
                9.4

              	
                HVB and Affiliates

              	 44
	
                9.5

              	
                Non-Reliance on Agent and Other Banks

              	 44
	
                9.6

              	
                Indemnification

              	 44
	
                8.7

              	
                Successor Agent

              	 45
	
                9.8

              	
                Agent’s Reliance

              	 45
	
                 

                10.

                 

              	
                 

                GUARANTY

                 

              	
                 

                 45

                 

              
	
                10.1

              	
                Guaranty

              	 45
	
                10.2

              	
                Guaranty Absolute

              	 46
	
                10.3

              	
                Waivers and Acknowledgments

              	 47
	
                10.4

              	
                Subrogation

              	 48
	
                10.5

              	
                Subordination

              	 48
	
                10.6

              	
                Continuing Guaranty

              	 49
	
                10.7

              	
                General Limitation on Guarantee Obligations

              	 49
	
                 

                11.

                 

              	
                 

                MISCELLANEOUS

                 

              	
                 

                 49

              
	
                11.1

              	
                Amendments, Waivers, Etc.

              	 48
	
                11.2

              	
                Reimbursement of Expenses

              	 50
	
                11.3

              	
                Notices

              	 51
	
                11.4

              	
                Governing Law

              	 53
	
                11.5

              	
                Waiver of Jury Trial

              	 53
	
                11.6

              	
                Consent to Jurisdiction

              	 54
	
                11.7

              	
                Survival of Representations, Warranties and Covenants

              	 54
	
                11.8

              	
                Counterparts

              	 54
	
                11.9

              	
                Severability

              	 54
	
                11.10

              	
                Descriptive Headings

              	 54
	
                11.11

              	
                Accounting Terms

              	 54
	
                11.12

              	
                Limitation of Liability

              	 54
	
                11.13

              	
                Set-Off

              	 55
	
                11.14

              	
                Sale or Assignment

              	 55
	
                11.15

              	
                Interest

              	 59
	
                11.16

              	
                Indemnification

              	 60
	
                11.17

              	
                Payments Set Aside

              	 61
	
                11.18

              	
                Loan Agreement Controls

              	 61
	
                11.19

              	
                Obligations Several

              	 61
	
                11.20

              	
                Final Agreement

              	 61
	
                11.21

              	
                PATRIOT Act

              	 61


      

    

     

               
      Annex I  Commitments

     

    Exhibit
      A  Note

    Exhibit
      B  Assignment
      and Acceptance

    


    Schedule
      3.1  Subsidiaries

    Schedule
      3.10  Tax
      Matters

    Schedule
      3.13  ERISA
      Matters

    Schedule
      3.16  Environmental
      Matters

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    



    CREDIT
      AGREEMENT

     

    CREDIT
      AGREEMENT dated as of March 15, 2007 among TRUNKLINE LNG HOLDINGS LLC, a limited
      liability company organized under the laws of Delaware (the “Borrower”),
      PANHANDLE EASTERN PIPE LINE COMPANY, LP, a limited partnership organized under
      the laws of Delaware (“Panhandle
      Eastern”),
      TRUNKLINE LNG COMPANY, LLC, a limited liability company organized under the
      laws
      of Delaware (“TLNG”),
      the
      financial institutions listed on the signature pages hereof and any other Person
      that shall have become a party hereto pursuant to an Assignment and Acceptance,
      other than any such Person that ceases to be a party hereto pursuant to an
      Assignment and Acceptance (collectively, the “Banks”
and,
      individually, a “Bank”),
      and
      BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH (“HVB”),
      in
      its capacity as administrative agent (the “Agent”)
      for
      the Banks hereunder:

     

    PRELIMINARY
      STATEMENTS:

     

    1. The
      Borrower desires to obtain from the Banks a senior term loan financing (the
      “Financing”)
      in an
      aggregate principal amount of $455,000,000,
      the
      proceeds of which will be used by the Borrower solely to repay in full the
      April
      2005 Credit Agreement (as defined below) and to make a distribution to Panhandle
      Eastern. Panhandle Eastern will use the proceeds of such distribution to repay
      in full the Panhandle Eastern 2.75% Senior Notes (as defined below).


     

    2. The
      Banks
      have indicated their willingness to provide the Financing, but only on and
      subject to the terms and conditions of this Agreement, including the guaranty
      set forth herein.

     

    NOW,
      THEREFORE, in consideration of the premises and of the mutual covenants and
      agreements contained herein, the parties hereto hereby agree as
      follows:

     

    1.  CERTAIN
      DEFINITIONS.

     

    1.1  Defined
      Terms.
      As used
      in this Agreement, the following terms shall have the following
      meanings:

     

    “Administrative
      Questionnaire”
shall
      mean an administrative questionnaire in a form supplied by the
      Agent.

     

    “Affiliate”
shall
      mean any Person controlling, controlled by or under common control with any
      other Person. For purposes of this definition, “control” (including “controlled
      by” and “under common control with”) shall mean the possession, directly or
      indirectly, of the power to direct or cause the direction of the management
      and
      policies of such Person, whether through the ownership of voting securities
      or
      otherwise. If any Person shall own, directly or indirectly, beneficially or
      of
      record, twenty percent (20%) or more of the voting equity (whether outstanding
      capital stock, partnership interests or otherwise) of another Person, such
      Person shall be deemed to be an Affiliate.

     

    “Agent”
shall
      have the meaning set forth in the preamble hereto.

     

    “Agreement”
      shall
      mean
      this
      Credit Agreement, as the same may be amended, modified, supplemented or restated
      from time to time.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Alternate
      Base Rate”
shall
      mean, for any day, a rate per annum equal to the greater of: (a) the Prime
      Rate
      in effect on such day and (b) 1/2 of 1% per annum above the Federal Funds Rate
      in effect on such day. The Alternate Base Rate is an index rate and is not
      necessarily intended to be the lowest or best rate of interest charged to other
      customers in connection with extensions of credit or to other banks. Any change
      in the Alternate Base Rate due to a change in the Prime Rate or the Federal
      Funds Rate shall be effective from and including the effective date of such
      change in the Prime Rate or the Federal Funds Rate, respectively.

     

    “Alternate
      Base Rate Loan”
shall
      mean any Loan which bears interest as described in Section 2.6(a)(i)
      (Interest).

     

    “Applicable
      Lending Office”
shall
      mean, with respect to each Bank, such Bank’s (a) Domestic Lending Office in the
      case of an Alternate Base Rate Loan; and (b) Eurodollar Lending Office in the
      case of a Eurodollar Rate Loan.

     

    “Applicable
      Margin”
shall
      mean with respect to (a) Alternate Base Rate Loans, a percentage per annum
      set
      forth below under the caption “Alternate Base Rate Loans” and
      (b) Eurodollar Rate Loans, subject to the provisos set forth below, a
      percentage per annum set forth below under the caption “Eurodollar Rate Loans,”
in each case determined by reference to the rating of Panhandle Eastern’s
      unsecured, non-credit enhanced Senior Funded Debt (effective from and after
      the
      date the applicable change of such a debt rating is first announced by the
      applicable rating agency):

     

    
      	
              Rating
                of Panhandle Eastern’s unsecured, non-credit enhanced Senior Funded
                Debt

            	
              Eurodollar
                Rate Loan

            	
              Alternate
                Base Rate Loan

            
	
              Equal
                to or higher than Baa1 by Moody’s Investor Service, Inc. / Equal to or
                higher than BBB+ by Standard and Poor’s Ratings Group

            	
              0.350%

            	
              0%

            
	
              Baa2
                by Moody’s Investor Service, Inc. / BBB by Standard and Poor’s Ratings
                Group

            	
              0.450%

            	
              0%

            
	
              Baa3
                by Moody’s Investor Service, Inc. / BBB- by Standard and Poor’s Ratings
                Group

            	
              0.625%

            	
              0%

            
	
              Ba1
                by Moody’s Investor Service, Inc. / BB+ by Standard and Poor’s Ratings
                Group

            	
              0.875%

            	
              0%

            
	
              Below
                Ba1 by Moody’s Investor Service, Inc. / Below BB+ by Standard and Poor’s
                Ratings Group

            	
              1.125%

            	
              0.125%

            
	 	 	 


    

    provided
      that
      upon the occurrence of an SUG Change of Control, the Applicable Margin for
      Eurodollar Rate Loans and for Base Rate Loans shall be increased by 1.00% above
      the Applicable Margin otherwise in effect at such time with respect to all
      interest periods or portions of interest periods on or before April 4, 2008
      and
      1.50% above the Applicable Margin otherwise in effect at such time with respect
      to all interest periods or portions of interest periods after April 4, 2008,
      commencing 10 Business Days after the occurrence of the SUG Change of Control,
      unless such increase in Applicable Margin shall have been waived in writing
      by
      Required Banks.

     

    Notwithstanding
      the foregoing provisions, in the event that ratings of Panhandle Eastern’s
      unsecured, non-credit enhanced Senior Funded Debt under Standard & Poor’s
      Ratings Group and under Moody’s Investor Service, Inc. fall within different
      rating categories which are not functional equivalents, the Applicable Margin
      shall be based on the higher of such ratings if there is only one category
      differential between the functional equivalents of such ratings, and if there
      is
      a two category differential between the functional equivalents of such ratings,
      the component of pricing from the grid set forth above shall be based on the
      rating category which is then in the middle of or between the two category
      ratings which are then in effect, and if there is greater than a two category
      differential between the functional equivalents of such ratings, the component
      of pricing from the grid set forth above shall be based on the rating category
      which is then one rating category below the higher of the two category ratings
      which are then in effect. Additionally, in the event that Panhandle Eastern
      withdraws from having its unsecured, non-credit enhanced Senior Funded Debt
      being rated by Moody’s Investor Service, Inc. or Standard and Poor’s Ratings
      Group, so that one or both of such ratings services fails to rate Panhandle
      Eastern’s unsecured, non-credit enhanced Senior Funded Debt, (a) the Applicable
      Margin for all Eurodollar Rate Loans for all Interest Periods commencing
      thereafter shall be 1.125% and (b) the Applicable Margin for all Alternate
      Base
      Rate Loans shall be 0.125% effective immediately, in each case continuing until
      such time as Panhandle Eastern subsequently causes its unsecured, non-credit
      enhanced Senior Funded Debt to be rated by both of said ratings
      services.

    
       

      
        
           

          
            
              
              

            

            
              -2-

              
                

              

            

            
              
              

            

          

        

      

    

    “Approved
      Fund”
shall
      mean any Person (other than a natural person) that is engaged in making,
      purchasing, holding or investing in bank loans and similar extensions of credit
      in the ordinary course of its business and that is administered or managed
      by
      (a) a Bank, (b) an Affiliate of a Bank or (c) an entity or an Affiliate of
      an
      entity that administers or manages a Bank.

     

    “April
      2005 Credit Agreement”
shall
      mean the Credit Agreement, dated as of April 26, 2005, by and among the
      Borrower, as the borrower, Panhandle Eastern, as a guarantor, Trunkline LNG
      Company, LLC, as a guarantor, the financial institutions party thereto, and
      HVB,
      as the administrative agent, the sole book runner and the sole lead arranger,
      as
      amended, restated, amended and restated or otherwise modified and in effect
      on
      the Funding Date.

     

    “Assignment
      and Acceptance”
shall
      mean an Assignment and Acceptance substantially in the form of Exhibit B hereto
      or any other form approved by the Agent.

     

    “Attributable
      Indebtedness”
shall
      mean, with respect to any Sale-Leaseback Transaction, the present value
      (discounted at the rate set forth or implicit in the terms of the lease included
      in such Sale-Leaseback Transaction) of the total obligations of the lessee
      for
      rental payments (other than amounts required to be paid on account of taxes,
      maintenance, repairs, insurance, assessments, utilities, operating and labor
      costs and other items that do not constitute payments for property rights)
      during the remaining term of the lease included in such Sale-Leaseback
      Transaction (including any period for which such lease has been extended).
      In
      the case of any lease that is terminable by the lessee upon payment of a
      penalty, the Attributable Indebtedness shall be the lesser of the (a)
      Attributable Indebtedness determined assuming termination on the first date
      such
      lease may be terminated (in which case the Attributable Indebtedness shall
      also
      include the amount of the penalty, but no rent shall be considered as required
      to be paid under such lease subsequent to the first date on which it may be
      so
      terminated) and (b) the Attributable Indebtedness determined assuming no such
      termination.

     

    “Bank”
shall
      have the meaning set forth in the preamble hereto and shall include the Agent,
      in its individual capacity.

     

    “Borrower”
shall
      have the meaning set forth in the preamble hereto.

     

    “Borrowing”
shall
      mean the borrowing of Loans on the Funding Date pursuant to Section 2.1 (The
      Loans).

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    “Business
      Day”
shall
      mean a day when the Agent is open for business, provided
      that, if
      the applicable Business Day relates to any Eurodollar Rate Loan, it shall mean
      a
      day when the Agent is open for business and banks are open for business in
      the
      London interbank market and in New York City.

     

    “Capital
      Lease”
shall
      mean any lease of any Property (whether real, personal, or mixed) which, in
      conformity with GAAP, is accounted for as a capital lease on the balance sheet
      of the lessee.

     

    “Capitalized
      Lease Obligations”
shall
      mean, for any Person, any of their obligations that should, in accordance with
      GAAP, be recorded as Capital Leases.

     

    “CCC”
shall
      mean CrossCountry Citrus, LLC.

     

    “CERCLA”
shall
      mean 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.

     

    “Change
      in Law”
shall
      mean (a) the adoption of any law, rule or regulation after the date of this
      Agreement, (b) any change in any law, rule or regulation or in the
      interpretation or application thereof by any Governmental Authority after such
      date or (c) compliance by any Bank with any request, guideline or directive
      (whether or not having the force of law) of any Governmental Authority made
      or
      issued after such date.

     

    “Citrus
      Corp.”
shall
      mean Citrus Corp., a Delaware corporation.

     

    “Citrus
      Investment”
shall
      mean (i) any Investment by Panhandle Eastern or any of its Subsidiaries in,
      to
      or with respect to CCC or Citrus Corp. and (ii) any accounts receivable owing
      from CCC or Citrus Corp. to Panhandle Eastern or any of its
      Subsidiaries.

     

    “Closing
      Date”
shall
      mean the date hereof.

     

    “Code”
shall
      mean the Internal Revenue Code of 1986, as amended, as now or hereafter in
      effect, together with all regulations, rulings and interpretations thereof
      or
      thereunder issued by the Internal Revenue Service.

     

    “Commitment”
shall
      mean, with respect to any Bank, the commitment of such Bank to make a Loan
      on
      the Funding Date, in the amount set forth opposite such Bank’s name on Annex I
      hereto, and the aggregate amount of all the Commitments is
      $455,000,000.

     

    “Consolidated”
shall
      refer to the consolidation of accounts in accordance with GAAP.

     

    “Consolidated
      Net Tangible Assets”
shall
      mean, at any date of determination, the total amount of assets of Panhandle
      Eastern and its Subsidiaries after deducting therefrom:

     

    (a) all
      current liabilities (excluding (i) any current liabilities that by their terms
      are extendable or renewable at the option of the obligor thereon to a time
      more
      than 12 months after the time as of which the amount thereof is being computed,
      and (ii) current maturities of Long-Term Debt); and

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    (b) the
      value
      (net of any applicable reserves) of all goodwill, trade names, trademarks,
      patents and other like intangible assets,

     

    all
      as
      set forth on the Consolidated balance sheet of Panhandle Eastern and its
      Subsidiaries for Panhandle Eastern’s most recently completed fiscal quarter,
      prepared in accordance with GAAP.

     

    “Consolidated
      Total Capitalization”
shall
      mean, at any time, an amount equal to the sum of (a) Consolidated Debt for
      Borrowed Money of Panhandle Eastern and its Subsidiaries at such time
plus
      (b) an
      amount equal to the sum of all amounts which, in accordance with GAAP, would
      be
      included under owner’s equity on a Consolidated balance sheet of Panhandle
      Eastern and its Subsidiaries; provided
      that
      consistent with past practice, any loans made to Southern Union by Panhandle
      Eastern up to but not exceeding $50,000,000 in the aggregate at any time
      outstanding shall not be deemed to reduce owner’s equity for purposes of this
      definition.

     

    “Conversion”,
      “Convert”
and
      “Converted”
each
      shall refer to a conversion of Loans of one Type into Loans of the other Type
      pursuant to Section 2.8 (Conversion of Loans).

     

    “Debt”
shall
      mean (without duplication), for any Person, indebtedness for money borrowed
      determined in accordance with GAAP but in any event including (a) indebtedness
      of such Person for borrowed money or arising out of any extension of credit
      to
      or for the account of such Person (including, without limitation, extensions
      of
      credit in the form of reimbursement or payment obligations of such Person
      relating to letters of credit issued for the account of such Person) or for
      the
      deferred purchase price of property or services, except indebtedness which
      is
      owing to trade creditors in the ordinary course of business; (b) indebtedness
      of
      the kind described in clause (a) of this definition which is secured by (or
      for
      which the holder of such Debt has any existing right, contingent or otherwise,
      to be secured by) any Lien upon or in Property (including, without limitation,
      accounts and contract rights) owned by such Person, whether or not such Person
      has assumed or become liable for the payment of such indebtedness or
      obligations; (c) Capitalized Lease Obligations of such Person; and (d)
      obligations under direct or indirect Guaranties. Whenever the definition of
      Debt
      is being used herein in order to compute a financial ratio or covenant
      applicable to the consolidated business of Panhandle Eastern and its
      Subsidiaries, Debt which is already included in such computation by virtue
      of
      the fact that it is owed by a Subsidiary of Panhandle Eastern will not also
      be
      added by virtue of the fact that Panhandle Eastern has executed a guaranty
      with
      respect to such Debt that would otherwise require such guaranteed indebtedness
      to be considered Debt hereunder. Nothing contained in the foregoing sentence
      is
      intended to limit the other provisions of this Agreement which contain
      limitations on the amount and types of Debt which may be incurred by any Loan
      Party.

     

    “Debt
      for Borrowed Money”
of
      any
      Person shall mean, at any date of determination, the sum without duplication
      of
      (i) all items that, in accordance with GAAP, would be classified as indebtedness
      on a Consolidated balance sheet of such Person, (ii) all Guarantees by such
      Person of Debt of another Person and (iii) all letter of credit reimbursement
      obligations of such Person.

     

    “Debt/Capitalization
      Ratio”
shall
      mean, as of any date of determination, the ratio of (a) the aggregate amount
      of
      outstanding Consolidated Debt for Borrowed Money of Panhandle Eastern and its
      Subsidiaries as of such date to (b) Consolidated Total Capitalization of
      Panhandle Eastern and its Subsidiaries as of such date.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    “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 8 (Events of Default; Remedies),
      whether or not there has been satisfied any requirement in connection with
      such
      event for the giving of notice, or the lapse of time, or the happening of any
      further condition, event or act.

     

    “Dollars”
and
      “$”
shall
      mean lawful currency of the United States of America.

     

    “Domestic
      Lending Office”
shall
      mean, with respect to each Bank, such office of such Bank as shall be specified
      in its Administrative Questionnaire or such other office of such Bank as such
      Bank may from time to time specify to the Borrower and the Agent.

     

    “Eligible
      Assignee”
shall
      mean: (i) any Bank, or any Affiliate of any Bank, any Approved Fund, or any
      institution 100% of the voting stock of which is directly or indirectly owned
      by
      such Bank or by the immediate or remote parent of such Bank; or (ii) a
      commercial bank, a foreign branch of a United States commercial bank, a domestic
      branch of a foreign commercial bank or other financial institution having in
      each case assets in excess of $1,000,000,000.

     

    “Environmental
      Law”
shall
      mean (a) CERCLA; (b) the Resource Conservation and Recovery Act (as amended
      by
      the Hazardous and Solid Waste Amendment of 1984, 42 U.S.C.A. § 6901 et
      seq.),
      as
      amended from time to time, and any and all rules and regulations promulgated
      thereunder (“RCRA”); (c) the Clean Air Act, 42 U.S.C.A. § 7401 et
      seq.,
      as
      amended from time to time, and any and all rules and regulations promulgated
      thereunder; (d) the Clean Water Act of 1977, 33 U.S.CA § 1251 et
      seq.,
      as
      amended from time to time, and any and all rules and regulations promulgated
      thereunder; (e) the Toxic Substances Control Act, 15 U.S.C.A. § 2601
et
      seq.,
      as
      amended from time to time, and any and all rules and regulations promulgated
      thereunder; or (f) any other federal or state law, statute, rule, or emulation
      enacted in connection with or relating to the protection or regulation of the
      environment (including, without limitation, those laws, statutes, rules, and
      regulations regulating the disposal, removal, production, storing, refining,
      handling, transferring, processing, or transporting of Hazardous Materials)
      and
      any rules and regulations issued or promulgated in connection with any of the
      foregoing by any governmental authority, and “Environmental
      Laws”
shall
      mean each of the foregoing.

     

    “EPA”
shall
      mean the Environmental Protection Agency or any successor
      organization.

     

    “Equity
      Interests”
shall
      mean, with respect to any Person, shares of capital stock of (or other ownership
      or profit interests in) such Person, warrants, options or other rights for
      the
      purchase or other acquisition from such Person of shares of capital stock of
      (or
      other ownership or profit interests in) such Person, securities convertible
      into
      or exchangeable for shares of capital stock of (or other ownership or profit
      interests in) such Person or warrants, rights or options for the purchase or
      other acquisition from such Person of such shares (or such other interests),
      and
      other ownership or profit interests in such Person (including, without
      limitation, partnership, member or trust interests therein), whether voting
      or
      non-voting, and whether or not such shares, warrants, options, rights or other
      interests are authorized or otherwise existing on any date of
      determination.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    “ERISA”
shall
      mean the Employee Retirement Income Security Act of 1974, as amended from time
      to time, and all rules, regulations, rulings and interpretations thereof issued
      by the Internal Revenue Service or the Department of Labor
      thereunder.

     

    “Eurocurrency
      Liabilities”
shall
      have the meaning assigned to that term in Regulation D of the Board of Governors
      of the Federal Reserve System, as in effect from time to time.

     

    “Eurodollar
      Lending Office”
shall
      mean, with respect to each Bank, such office of such Bank as shall be specified
      in its Administrative Questionnaire or such other office of such Bank as such
      Bank may from time to time specify to the Borrower and the Agent.

     

    “Eurodollar
      Rate”
shall
      mean, for any Interest Period in effect for each Eurodollar Rate Loan, an
      interest rate per annum equal to the rate determined by the Agent to be the
      offered rate which appears on the display designated as page “BBAM1” on the
      Bloomberg service (or on any successor or substitute page of such display,
      or
      any successor to or substitute for such display, providing rate quotations
      comparable to those currently provided on such page of such screen, as
      determined by the Agent from time to time for purposes of providing quotations
      of interest rates applicable to dollar deposits in the London interbank market)
      at approximately 11:00 a.m., London time, two Business Days prior to the
      commencement of such Interest Period, as the rate for dollar deposits with
      a
      maturity comparable to such Interest Period. In the event that such rate is
      not
      available at such time for any reason, then the “Eurodollar Rate” with respect
      to such Eurodollar Rate Loans for such Interest Period shall be the rate at
      which dollar deposits of $5,000,000 and for a maturity comparable to such
      Interest Period are offered by the principal London office of the Agent in
      immediately available funds in the London interbank market at approximately
      11:00 a.m., London time, two Business Days prior to the commencement of such
      Interest Period.

     

    “Eurodollar
      Rate Loan”
shall
      mean a Loan that bears interest as provided in Section 2.6(a)(ii)
      (Interest).

     

    “Event
      of Default”
shall
      mean any of the events specified in Section 8 (Events of Default; Remedies),
      provided
      that
      there has been satisfied any requirement in connection with such event for
      the
      giving of notice, or the lapse of time, or the happening of any further
      condition, event or act.

     

    “Federal
      Funds Rate”
shall
      mean, for any day, the weighted average (rounded upwards, if necessary, to
      the
      next 1/100 of 1%) of the rates on overnight federal funds transactions with
      members of the Federal Reserve System arranged by federal funds brokers, as
      published on the next succeeding Business Day by the Federal Reserve Bank of
      New
      York, or, if such rate is not so published for any day that is a Business Day,
      the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
      quotations for such day for such transactions received by the Agent from three
      federal funds brokers of recognized standing selected by it.

     

    “Fee
      Letter”
shall
      mean that certain fee letter dated as of February 27, 2007 by and among the
      Borrower, the Guarantors, HVB, Wachovia and the Lead Arrangers.

     

    “Funded
      Debt”
shall
      mean all Debt of a Person which matures more than one year from the date of
      creation or matures within one year from such date but is renewable or
      extendible, at the option of such Person, by its terms or by the terms of any
      instrument or agreement relating thereto, to a date more than one year from
      such
      date or arises under a revolving credit or similar agreement which obligates
      Banks to extend credit during a period of more than one year from such date,
      including, without limitation, all amounts of any Funded Debt required to be
      paid or prepaid within one year from the date of determination of the existence
      of any such Funded Debt.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    “Funding
      Date”
shall
      mean the date on which each of the conditions precedent set forth in Section
      4
      (Conditions to Funding) shall have been satisfied or waived by the
      Banks.

     

    “GAAP”
has
      the
      meaning specified in Section 1.3 (Accounting Terms).

     

    “Governmental
      Authority”
shall
      mean any (domestic or foreign) federal, state, county, municipal, parish,
      provincial, or other government, or any department, commission, board, court,
      agency (including, without limitation, the EPA), or any other instrumentality
      of
      any of them or any other political subdivision thereof, and any entity
      exercising executive, legislative, judicial, regulatory, or administrative
      functions of, or pertaining to, government, including, without limitation,
      any
      arbitration panel, any court, or any commission.

     

    “Governmental
      Requirement”
shall
      mean any order, permit, law, statute (including, without limitation, any
      Environmental Protection Statute), code, ordinance, rule, regulation,
      certificate, or other direction or requirement of any Governmental
      Authority.

     

    “Guaranteed
      Obligations” shall
      have the meaning set forth in Section 10.1.

     

    “Guarantor”
shall
      mean each of Panhandle Eastern and TLNG.

     

    “Guaranty”
shall
      mean, with respect to any Person, any obligation, contingent or otherwise,
      of
      such Person directly or indirectly guaranteeing any Debt of another Person,
      including, without limitation, by means of an agreement to purchase or pay
      (or
      advance or supply funds for the purchase or payment of) such Debt or to maintain
      financial covenants, or to assure the payment of such Debt by an agreement
      to
      make payments in respect of goods or services regardless of whether delivered
      or
      to purchase or acquire the Debt of another, or otherwise, provided
      that the
      term “Guaranty” shall not include endorsements for deposit or collection in the
      ordinary course of business.

     

    “Hazardous
      Materials”
shall
      mean any substance which, pursuant to any Environmental Laws, requires special
      handling in its collection, use, storage, treatment or disposal, including
      but
      not limited to any of the following: (a) any “hazardous waste” as defined by
      RCRA; (b) any “hazardous substance” as defined by CERCLA; (c) asbestos; (d)
      polychlorinated biphenyls; (e) any flammables, explosives or radioactive
      materials; and (f) any substance, the presence of which on any of Loan Parties’
properties is prohibited by any Governmental Authority.

     

    “Highest
      Lawful Rate”
shall
      mean, with respect to each Bank, the maximum non-usurious interest rate, if
      any,
      that at any time or from time to time may be contracted for, taken, reserved,
      charged, or received with respect to the Notes or on other amounts, if any,
      due
      to such Bank pursuant to this Agreement, under laws applicable to such Bank
      which are presently in effect, or, to the extent allowed by law, under such
      applicable laws which may hereafter be in effect and which allow a higher
      maximum non-usurious interest rate than applicable laws now allow.

     

    “HVB”
shall
      have the meaning set forth in the preamble.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    “Indemnified
      Parties”
shall
      have the meaning set forth in Section 11.16 (Indemnification).

     

    “Interest
      Period”
shall
      mean, for each Eurodollar Rate Loan, the period commencing on the date of such
      Eurodollar Rate Loan or the date of the Conversion of any Alternate Base Rate
      Loan into such Eurodollar Rate Loan, and ending on the last day of the period
      selected by the Borrower pursuant to the provisions below and, thereafter,
      each
      subsequent period commencing on the last day of the immediately preceding
      Interest Period and ending on the last day of the period selected by the
      Borrower pursuant to the provisions below. The duration of each such Interest
      Period shall be one, two, three or six months (or, if available to each Bank,
      nine or twelve months), as the Borrower may, upon notice received by the Agent
      not later than 11:00 A.M. (New York City time) on the third Business Day prior
      to the first day of such Interest Period, select;
      provided
      that:

     

    (a) whenever
      the last day of any Interest Period would otherwise occur on a day other than
      a
      Business Day, the last day of such Interest Period shall be extended to occur
      on
      the next succeeding Business Day, provided
      that, if
      such extension would cause the last day of such Interest Period to occur in
      the
      next following calendar month, the last day of such Interest Period shall occur
      on the next preceding Business Day; and

     

    (b) whenever
      the first day of any Interest Period occurs on a day of an initial calendar
      month for which there is no numerically corresponding day in the calendar month
      that succeeds such initial calendar month by the number of months equal to
      the
      number of months in such Interest Period, such Interest Period shall end on
      the
      last Business Day of such succeeding calendar month.

     

    “Inventory”
shall
      mean, with respect to the Borrower or any Subsidiary, all of such Person’s now
      owned or hereafter acquired or created inventory in all of its forms and of
      every nature, wherever located, whether acquired by purchase, merger, or
      otherwise, and all raw materials, work in process therefor and finished goods
      thereof, and all supplies, materials, and products of every nature and
      description used, usable, or consumed in connection with the manufacture,
      packing, shipping, advertising, selling, leasing, furnishing, or production
      of
      such goods, and shall include, in any event, all “inventory” (within the meaning
      of such term in the Uniform Commercial Code in effect in any applicable
      jurisdiction), whether in mass or joint, or other interest or right of any
      kind
      in goods which are returned to, repossessed by, or stopped in transit by such
      Person, and all accessions to any of the foregoing and all products of any
      of
      the foregoing.

     

    “Investment”
of
      any
      Person shall mean any investment so classified under GAAP, and, whether or
      not
      so classified, includes (a) any direct or indirect loan advance made by it
      to
      any other Person; (b) any direct or indirect Guaranty for the benefit of such
      Person; (c) any capital contribution to any other Person; and (d) any ownership
      or similar interest in any other Person; and the amount of any Investment shall
      be the original principal or capital amount thereof (plus
      any
      subsequent principal or capital amount) minus
      all cash
      returns of principal or capital thereof.

     

    “Lead
      Arrangers”
shall
      mean UniCredit Markets & Investment Banking, acting through Bayerische Hypo-
      und Vereinsbank AG and Wachovia Capital Markets, LLC.

     

    “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.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    “Loan”
or
      “Loans”
shall
      mean a loan or loans, respectively, from the Banks to the Borrower made under
      Section 2.1 (The Loans).

     

    “Loan
      Document” shall
      mean this Agreement, any Note, the Fee Letter and any other document, agreement
      or instrument now or hereafter executed and delivered by any Loan Party in
      connection with any of the transactions contemplated by any of the foregoing,
      as
      any of the foregoing may hereafter be amended, modified, or supplemented, and
      “Loan
      Documents”
shall
      mean, collectively, each of the foregoing.

     

    “Loan
      Party”
shall
      mean TLNG, Panhandle Eastern, the Borrower and its Subsidiaries.

     

    “Long-Term
      Debt”
shall
      mean any Debt that, in accordance with GAAP, constitutes (or, when incurred,
      constituted) a long-term liability.

     

    “Majority
      Banks”
shall
      mean at any time Banks holding more than 50% of the unpaid principal amounts
      outstanding under the Loans, or, if no such amounts are outstanding, more than
      50% of the Pro Rata Percentages.

     

    “Material
      Adverse Change”
shall
      mean, for any Person, any material adverse change in the business, operations,
      financial condition or assets of such Person and its Subsidiaries, taken as
      a
      whole.

     

    “Material
      Adverse Effect”
shall
      mean any material adverse effect on (a) the financial condition, business,
      properties, assets or operations of Panhandle Eastern and its Subsidiaries,
      taken as a whole, or (b) the ability of Panhandle Eastern, the Borrower or
      TLNG
      to perform its obligations under this Agreement, any Note or any other Loan
      Document on a timely basis.

     

    “Maturity
      Date”
shall
      mean March 13, 2012.

     

    “Note” or
      “Notes”
shall
      mean a promissory note or notes, respectively, of the Borrower, executed and
      delivered under this Agreement.

     

    “Notice
      of Borrowing”
shall
      have the meaning set forth in Section 2.2(a) (Making the Loans).

     

    “Obligations”
shall
      mean all obligations of Panhandle Eastern, the Borrower and TLNG to the Banks
      under this Agreement, the Notes and all other Loan Documents to which any of
      them is a party.

     

    “Officer’s
      Certificate”
shall
      mean a certificate signed in the name of the applicable Loan Party, by either
      its President, one of its Vice Presidents, its Treasurer, its Secretary, or
      one
      of its Assistant Treasurers or Assistant Secretaries.

     

    “Other
      Taxes”
shall
      have the meaning set forth in Section 2.11(b) (Taxes).

     

    “Panhandle
      Eastern”
shall
      have the meaning set forth in the preamble hereto.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    “Panhandle
      Eastern 2.75% Senior Notes”
shall
      mean the senior notes issued by Panhandle Eastern pursuant to the Fourth
      Supplemental Indenture, dated as of March 12, 2004, between Panhandle Eastern
      and J.P. Morgan Trust Company, National Association, as trustee, to the
      Indenture, dated as of March 29, 1999, among Panhandle Eastern, CMS Panhandle
      Holding Company and NBD Bank.

     

    “Permitted
      Liens”
shall
      mean any of the following Liens:

     

    (a) Any
      Lien:

     

    (i) arising
      by reason of deposits with or the giving of any form of security to any
      Governmental Authority in connection with the financing of the acquisition
      or
      construction of property to be used in the business of a Loan
      Party;

     

    (ii) for
      current taxes and assessments or taxes and assessments not at the time
      delinquent and for which adequate reserves have been established to the extent
      required by GAAP; or

     

    (iii) for
      taxes
      and assessments which are delinquent but the validity of which is being
      contested at the time by a Loan Party in good faith and by appropriate
      proceedings and for which adequate reserves have been established to the extent
      required by GAAP;

     

    (b) Leases,
      whether now or hereafter existing, in the ordinary course of business, of
      property and assets now and hereafter owned by a Loan Party (excluding
      Capitalized Leases) and any renewals or extensions thereof;

     

    (c) Liens
      reserved in leases, or arising by operation of law, for rent and for compliance
      with the terms of the lease in the case of the leasehold estates;

     

    (d) Liens
      arising by reason of deposits with or the giving of any form of security to
      any
      Governmental Authority or any other governmental body created or approved by
      law
      or governmental regulation for any purpose at any time as required by law or
      governmental regulation as a condition to the transaction of any business or
      the
      exercise of any privilege or license, or to enable a Loan Party to maintain
      self-insurance or to participate in any fund for liability on any insurance
      risks or in connection with workmen’s compensation, unemployment insurance, old
      age pensions or other social security or to share in the privileges or benefits
      required for companies participating in such arrangements;

     

    (e) 
      (i)
      Mechanics’, materialmen’s, warehousemen’s, landlord’s or similar Liens or any
      Lien arising by reason of pledges or deposits to secure payment of workmen’s
      compensation or other insurance or social security legislation, (ii) good faith
      deposits or downpayments in connection with tenders or leases of real estate,
      bids or contracts (other than contracts for the payment of money), including
      contracts for the acquisition of machinery and equipment, (iii) deposits to
      secure public or statutory obligations, (iv) deposits to secure or in lieu
      of
      surety, stay or appeal bonds, (v) margin deposits (provided
      that all
      such margin deposits shall not exceed $2,000,000 in the aggregate at any time)
      and (vi) deposits as security for the payment of taxes or assessments or other
      similar charges;

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    (f) Liens
      of
      any judgments not constituting an Event of Default under Section 8.9
      (Undischarged Judgment);

     

    (g) Any
      obligation or duties, affecting the property of a Loan Party, to any
      Governmental Authority with respect to any franchise, grant, lease, license,
      permit or similar arrangement with such Governmental Authority;

     

    (h) Rights
      reserved to or vested in any Governmental Authority by the terms of any right,
      power, franchise, grant, license or permit or by any provision of law, to
      terminate or to require annual or other periodic payments as a condition to
      the
      continuance of such right, power, franchise, grant, license or
      permit;

     

    (i) Rights
      reserved to or vested in any Governmental Authority to control or regulate
      any
      property of a Loan Party, or to use such property in any manner which does
      not
      materially impair the use of such property for the purpose for which it is
      held
      by a Loan Party;

     

    (j) Zoning
      laws and ordinances;

     

    (k) Restrictive
      covenants, easements on, exceptions to or reservations in respect of any
      property of a Loan Party granted or reserved for the purpose of electric lines,
      fiber optic lines, water and sewer lines, pipelines, other utilities, roads,
      streets, alleys, highways, railroad purposes, the removal of oil, gas,
      hydrocarbon, coal or other minerals, and other like purposes, or for the use
      of
      real property or interests therein, facilities and equipment, which do not
      materially impair the use thereof for the purposes for which it is held by
      a
      Loan Party, and any and all rents, royalties, reservations, Liens and rights
      or
      interests of third parties, in each case not securing any Debt, arising in
      the
      ordinary course of business of a Loan Party by virtue of any lease or
      exploration, development, drilling, unitization, communitization or operating
      agreement relating to or affecting any oil, gas, hydrocarbon, coal or other
      mineral properties in which a Loan Party has an interest;

     

    (l) Defects
      or irregularities of title, and inaccuracies of legal descriptions, affecting
      any portion of the property of a Loan Party or any of its Subsidiaries that
      individually or in the aggregate do not materially interfere with the operation,
      value of use of the properties of such Loan Party or such Subsidiaries taken
      as
      a whole;

     

    (m) Liens
      securing Debt with respect to Debt of any Person that becomes a Subsidiary
      of a
      Loan Party, provided
      that
      such Liens were in existence prior to the date on which such Person becomes
      a
      Subsidiary of such Loan Party and were not created in contemplation of such
      Person becoming a Subsidiary of such Loan Party; 

     

    (n) Liens
      on
      any office equipment, data processing equipment (including computer and computer
      peripheral equipment), or motor vehicles purchased in the ordinary course of
      the
      applicable Loan Party’s business; and

     

    (o) Liens
      created in the ordinary course of business in favor of banks and other financial
      institutions over credit balances or any bank accounts of a Loan Party held
      at
      such banks or financial institutions.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    “Person”
shall
      mean an individual, partnership, joint venture, corporation, joint stock
      company, bank, trust, unincorporated organization and/or a government or any
      department or agency thereof.

     

    “Plan”
shall
      mean any plan subject to Title IV of ERISA and maintained for employees of
      any
      Loan Party or of any member of a “controlled group of corporations,” as such
      term is defined in the Code, of which a Loan Party is a member, or any such
      plan
      to which a Loan Party thereof is required to contribute on behalf of its
      employees.

     

    “Prime
      Rate”
shall
      mean, on any day, the rate determined by the Agent and announced to its
      customers as being its prime rate for that day. Without notice to the Borrower
      or any other Person, the Prime Rate shall change automatically from time to
      time
      as and in the amount by which said Prime Rate shall fluctuate, with each such
      change to be effective as of the date of each change in such Prime Rate. The
      Prime Rate is a reference rate and does not necessarily represent the lowest
      or
      best rate actually charged to any customer. The Agent may make commercial or
      other loans at rates of interest at, above or below the Prime Rate.

     

    “Priority
      Obligations Amount”
shall
      mean the sum (without duplication) of (i) all Attributable Indebtedness with
      respect to any Sale-Leaseback Transaction entered into by Panhandle Eastern
      or
      any of its Subsidiaries, (ii) all Debt of Panhandle Eastern or any of its
      Subsidiaries secured by a Lien (other than Liens permitted by clauses (a)
      through (c) of Section 6.2 (Liens, Etc.)) and (iii) all Debt of Subsidiaries
      of
      Panhandle Eastern (other than the Borrower or TLNG), other than such Debt owed
      to Panhandle Eastern or another Subsidiary. 

     

    “Pro-Rata
      Percentage”
shall
      mean with respect to any Bank, a fraction (expressed as a percentage), the
      numerator of which shall be the amount of such Bank’s outstanding Loans (or
      Commitment) and the denominator of which shall be the aggregate amount of all
      the outstanding Loans (or Commitments) of the Banks, as adjusted from time
      to
      time in accordance herewith.

     

    “Property”
shall
      mean any interest or right in any kind of property or asset, whether real,
      personal, or mixed, owned or leased, tangible or intangible, and whether now
      held or hereafter acquired.

     

    “Register”
shall
      have the meaning set forth in Section 11.14(d).

     

    “Release”
shall
      mean a “release”, as such term is defined in CERCLA.

     

    “Restricted
      Payment”
shall
      mean a Person’s declaration or payment of any dividends, the purchase,
      redemption, retirement, defeasance or other acquisition for value of any of
      its
      Equity Interests now or hereafter outstanding, return any capital to its
      stockholders, partners or members (or the equivalent Persons thereof) as such,
      making any distribution of assets, Equity Interests, obligations or securities
      to its stockholders, partners or members (or the equivalent Persons thereof)
      as
      such or making of any interest payment on any Debt owing to its direct or
      indirect parent (or any equity owner thereof).

     

    “Required
      Banks”
shall
      mean at any time Banks holding more than 66-2/3% of the unpaid principal amounts
      outstanding under the Loans, or, if no such amounts are outstanding, more than
      66-2/3% of the Pro Rata Percentages.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    “Sale-Leaseback
      Transaction”
has
      the
      meaning set forth in Section 6.8 (Sales and Leasebacks).

     

    “Senior
      Funded Debt”
shall
      mean Funded Debt of Panhandle Eastern excluding Debt that is contractually
      subordinated in right of payment to any other Debt of Panhandle
      Eastern.

     

    “Southern
      Union”
shall
      mean Southern Union Company.

     

    “Subsidiary”
of
      any
      Person shall mean any corporation, partnership, joint venture, limited liability
      company, trust or estate of which (or in which) more than 50% of (a) the issued
      and outstanding capital stock having ordinary voting power to elect a majority
      of the Board of Directors (or similar board) of such Person (irrespective of
      whether at the time capital stock of any other class or classes of such Person
      shall or might have voting power upon the occurrence of any contingency), (b)
      the interest in the capital or profits of such partnership, joint venture or
      limited liability company or (c) the beneficial interest in such trust or estate
      is at the time directly or indirectly owned or controlled by such Person, by
      such Person and one or more of its other Subsidiaries or by one or more of
      such
      Person’s other Subsidiaries.

     

    “SUG
      Change of Control”
shall
      occur if any Person or “group” (within the meaning of Rules 13d-3 and 13d-5
      under the Securities Exchange Act of 1934, as amended from time to time, and
      any
      successor statute) shall have acquired beneficial ownership of 50% or more
      on a
      fully diluted basis of the voting and/or economic interest in Southern
      Union.

     

    “Taxes”
shall
      have the meaning set forth in Section 2.11(a) (Taxes).

     

    “TLNG”
shall
      have the meaning set forth in the preamble hereto.

     

    “Type” shall
      mean, with respect to any Loan, any Alternate Base Rate Loan or any Eurodollar
      Rate Loan.

     

    “Wachovia”
shall
      mean Wachovia Bank, National Association.

     

    1.2  Computation
      of Time Periods; Other Definitional Provisions.
      In this
      Agreement and the other Loan Documents in the computation of periods of time
      from a specified date to a later specified date, the word “from”
shall
      mean “from and including” and the words “to”
and
      “until”
each
      shall mean “to but excluding”. References in the Loan Documents to any agreement
      or contract “as
      amended”
shall
      mean and be a reference to such agreement or contract as amended, amended and
      restated, supplemented or otherwise modified from time to time in accordance
      with its terms.

     

    1.3  Accounting
      Terms.
      All
      accounting terms not specifically defined herein shall be construed in
      accordance with generally accepted accounting principles in effect from time
      to
      time in the United States of America (“GAAP”).
      If,
      at any time after the date of this Agreement, any material change is made to
      GAAP or Panhandle Eastern’s or the Borrower’s accounting practices that would
      affect in any material respect the determination of compliance with the
      covenants set forth in this Agreement, the Borrower and the Agent shall
      negotiate in good faith to amend any such covenant to restore the Borrower
      and
      the Banks to the position they occupied before the implementation of such
      material change in GAAP or accounting practices if the Borrower notifies the
      Agent of such change (or if the Agent notifies the Borrower that the Required
      Banks request an amendment to any such covenant for such purpose); provided
      that,
      until so amended, such covenant shall continue to be computed on the basis
      of
      GAAP as in effect and applied immediately before such change shall have become
      effective.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    2.  AMOUNTS
      AND TERMS OF THE LOANS 

     

    2.1  The
      Loans.
      Each
      Bank severally agrees, on the terms and conditions hereinafter set forth, to
      make a single Loan (a “Loan”)
      to the
      Borrower on the Funding Date in an amount equal to such Bank’s Commitment at
      such time. The Borrowing shall consist of Loans made simultaneously by the
      Banks
      ratably according to their Commitments. Amounts borrowed under this Section
      2.1
      and repaid or prepaid may not be reborrowed.

     

    2.2  Making
      of the Loans.

     

    (a) The
      Borrowing shall be made on notice, given not later than 11:00 A.M. (New York
      City time) on the third Business Day prior to the date of the Borrowing if
      the
      Borrowing consists of Eurodollar Rate Loans, or not later than 9:00 A.M. (New
      York City time) on the date of the Borrowing if Borrowing consists of Alternate
      Base Rate Loans, by the Borrower to the Agent, which shall give to each Bank
      prompt notice thereof. The notice of the Borrowing (the “Notice
      of Borrowing”)
      shall
      be in writing, in form and substance satisfactory to the Agent, specifying
      therein the requested (i) date of the Borrowing, (ii) Type of Loans comprising
      the Borrowing, (iii) aggregate amount of the Borrowing, which shall not exceed
      the aggregate amount of the Commitments and (iv) if the Borrowing consists
      of
      Eurodollar Rate Loans, initial Interest Period for each such Loan. Each Bank
      shall, before 11:00 A.M. (New York City time) on the date of the Borrowing,
      make
      available for the account of its Applicable Lending Office to the Agent at
      the
      Agent’s account, in same day funds, such Bank’s portion of the Borrowing in
      accordance with Section 2.1 (The Loans). After the Agent’s receipt of such funds
      and upon fulfillment of the applicable conditions set forth in Section 4
      (Conditions to Funding), the Agent will make such funds available to the
      Borrower by electronic transfer of same day funds to the Borrower’s account.


     

    (b) The
      Notice of Borrowing shall be irrevocable and binding on the Borrower. If the
      Notice of Borrowing specifies the Borrowing is to be comprised of Eurodollar
      Rate Loans, the Borrower shall indemnify each Bank against any loss, cost or
      expense incurred by such Bank as a result of any failure to fulfill on or before
      the date specified in the Notice of Borrowing the applicable conditions set
      forth in Section 4 (Conditions to Funding), including, without limitation,
      any
      loss, cost or expense incurred by reason of the liquidation or reemployment
      of
      deposits or other funds acquired by such Bank to fund the Loan to be made by
      such Bank as part of the Borrowing when such Loan, as a result of such failure,
      is not made on such date.

     

    (c) Unless
      the Agent shall have received written notice from a Bank prior to the date
      of
      the Borrowing that such Bank will not make available to the Agent such Bank’s
      ratable portion of the Borrowing, the Agent may assume that such Bank has made
      such portion available to the Agent on the date of the Borrowing in accordance
      with clause (a) of this Section 2.2 and the Agent may, in reliance upon such
      assumption, make available to the Borrower on such date a corresponding amount.
      If and to the extent that such Bank shall not have so made such ratable portion
      available to the Agent, such Bank and the Borrower severally agree to repay
      or
      pay to the Agent forthwith on demand such corresponding amount and to pay
      interest thereon, for each day from the date such amount is made available
      to
      the Borrower until the date such amount is repaid or paid to the Agent, at
      (i)
      in the case of the Borrower, the interest rate applicable at such time under
      Section 2.6 (Interest) to Loans comprising the Borrowing and (ii) in the case
      of
      such Bank, the Federal Funds Rate. If such Bank shall pay to the Agent such
      corresponding amount, such amount so paid shall constitute such Bank’s Loan as
      part of the Borrowing for all purposes.

     

    (d) The
      failure of any Bank to make the Loan to be made by it as part of the Borrowing
      shall not relieve any other Bank of its obligation, if any, hereunder to make
      its Loan on the date of the Borrowing, but no Bank shall be responsible for
      the
      failure of any other Bank to make the Loan to be made by such other Bank on
      the
      date of the Borrowing.

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    2.3  Repayment
      of Loans.
      The
      Borrower shall repay to the Agent for the ratable account of the Banks the
      aggregate outstanding principal amount of the Loans on the Maturity
      Date.

     

    2.4  Termination
      of the Commitments.
      The
      Commitment of each Bank shall be automatically and permanently reduced to $0
      on
      the Funding Date.

     

    2.5  Prepayments.
      The
      Borrower may, upon at least three Business Days’ notice in the case of
      Eurodollar Rate Loans and at least one Business Day’s notice in the case of
      Alternate Base Rate Loans, in each case to the Agent stating the proposed date
      and aggregate principal amount of the prepayment, and if such notice is given
      the Borrower shall, prepay the outstanding aggregate principal amount of the
      Loans in whole or ratably in part, together with accrued interest to the date
      of
      such prepayment on the aggregate principal amount prepaid; provided
      that (i)
      each partial prepayment shall be in an aggregate principal amount of $1,000,000
      in the case of Eurodollar Rate Loans and $1,000,000 in the case of Alternate
      Base Rate Loans, or in each case an integral multiple of $1,000,000 in excess
      thereof and (ii) if any prepayment of a Eurodollar Rate Loan is made on a date
      other than the last day of an Interest Period for such Loan, the Borrower shall
      also pay any amounts owing pursuant to Section 11.2(b) (Reimbursement of
      Expenses-breakage expenses). The Agent shall promptly notify each Bank of any
      notice received from the Borrower pursuant to this Section 2.5.

     

    2.6  Interest.

     

    (a) The
      Borrower shall pay interest on the unpaid principal amount of each Loan owing
      to
      each Bank from the date of such Loan until such principal amount shall be paid
      in full, at the following rates per annum:

     

    (i) During
      such periods as such Loan is an Alternate Base Rate Loan, a rate per annum
      equal
      at all times to the sum of (a) the Alternate Base Rate in effect from time
      to
      time plus
      (b) the
      Applicable Margin in effect from time to time, payable in arrears quarterly
      on
      the last day of each March, June, September and December during such periods
      and
      on the date such Alternate Base Rate Loan shall be Converted or paid in
      full.

     

    (ii) During
      such periods as such Loan is a Eurodollar Rate Loan, a rate per annum equal
      at
      all times during each Interest Period for such Loan to the sum of (a) the
      Eurodollar Rate for such Interest Period for such Loan plus
      (b) the
      Applicable Margin in effect from time to time, payable in arrears on the last
      day of such Interest Period and, if such Interest Period has a duration of
      more
      than three months, on each day that occurs during such Interest Period every
      three months from the first day of such Interest Period and on the date such
      Eurodollar Rate Loan shall be Converted or paid in full.

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    (b) To
      the
      fullest extent permitted by applicable law, the amount of any principal,
      interest, fee or other amount payable under this Agreement or any other Loan
      Document to any Agent or any Bank that is not paid when due, from the date
      such
      amount shall be due until such amount shall be paid in full, payable in arrears
      on the date such amount shall be paid in full and on demand, at a rate per
      annum
      equal at all times to 2% per annum above the rate per annum required to be
      paid,
      in the case of principal or interest, on the Type of Loan relating to such
      principal or interest pursuant to clause (i) or (ii) of clause (a) above, as
      applicable, and, in all other cases, on Alternate Base Rate Loans pursuant
      to
      clause (i) of clause (a) above.

     

    (c) Promptly
      after receipt of the Notice of Borrowing pursuant to Section 2.2(a) (Making
      of
      the Loans), a notice of Conversion pursuant to Section 2.8 (Conversion of Loans)
      or a notice of selection of an Interest Period pursuant to the terms of the
      definition of “Interest Period”, the Agent shall give notice to the Borrower and
      each Bank of the applicable Interest Period and the applicable interest rate
      determined by the Agent for purposes of clause (a)(i) or (a)(ii) above. If
      the
      Borrower shall fail to select the duration of any Interest Period for any
      Eurodollar Rate Loans in accordance with the provisions contained in the
      definition of “Interest Period”, the Agent will forthwith so notify the Borrower
      and the Banks, whereupon the Borrower shall be deemed to have selected a
      one-month Interest Period for each such Eurodollar Rate Loan.

     

    2.7  Fees.

     

    (a) Each
      of
      the Borrower and the Guarantors agrees, jointly and severally, to pay to the
      Agent and the Lead Arrangers fees in such amounts and at such times as are
      specified in the Fee Letter.

     

    (b) All
      fees
      payable hereunder shall be paid on the dates due, in immediately available
      funds, to the Agent. Fees paid shall not be refundable under any
      circumstances.

     

    2.8  Conversion
      of Loans.

     

    (a) The
      Borrower may on any Business Day, upon notice given to the Agent not later
      than
      11:00 A.M. (New York City time) on the third Business Day prior to the date
      of
      the proposed Conversion and subject to the provisions of Section 2.6 (Interest)
      and 2.9 (Increased Costs), Convert all or any portion of the Loans of one Type
      into Loans of the other Type; provided
      that any
      Conversion of Eurodollar Rate Loans into Alternate Base Rate Loans shall be
      made
      only on the last day of an Interest Period for such Eurodollar Rate Loans and
      each Conversion of Loans shall be made ratably among the Banks in accordance
      with their Pro Rata Percentages; and also provided
      that,
      upon giving effect to such Conversions, no more than five Interest Periods
      shall
      be in effect. Each such notice of Conversion shall, within the restrictions
      specified above, specify (i) the date of such Conversion, (ii) the Loans to
      be
      Converted and (iii) if such Conversion is into Eurodollar Rate Loans, the
      duration of the initial Interest Period for such Loans. Each notice of
      Conversion shall be in writing and shall be irrevocable and binding on the
      Borrower. The Agent shall promptly notify each Bank of any notice received
      from
      the Borrower pursuant to this Section 2.8.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    (b) Upon
      the
      occurrence and during the continuation of any Default and if the Required Banks
      shall so direct, (i) each Eurodollar Rate Loan will automatically, on the last
      day of the then existing Interest Period therefor, Convert into an Alternate
      Base Rate Loan and (ii) the obligation of the Banks to make, or to Convert
      Loans
      into, Eurodollar Rate Loans shall be suspended.

     

    2.9  Increased
      Costs, Etc.

     

    (a) If,
      due
      to a Change in Law, there shall be any increase in the cost to any Bank of
      agreeing to make or of making, funding or maintaining Eurodollar Rate Loans
      (excluding, for purposes of this Section 2.9, any such increased costs resulting
      from (i) Taxes or Other Taxes (as to which Section 2.11 (Taxes) shall govern),
      (ii) changes in the rate of taxation or basis of taxation of overall net income
      or overall gross income by the United States or by the foreign jurisdiction
      or
      state under the laws of which such Bank is organized or has its principal office
      or Applicable Lending Office or any political subdivision thereof and (iii)
      reserve requirements contemplated by clause (b) of this Section 2.9), then
      the
      Borrower shall from time to time, within 10 days of receipt of a certificate
      from such Bank setting forth in reasonable detail a calculation of the amount
      necessary to compensate such Bank (with a copy of such certificate to the
      Agent), pay to the Agent for the account of such Bank additional amounts
      sufficient to compensate such Bank for such increased cost; provided
      that a
      Bank claiming additional amounts under this Section 2.9(a) agrees to use
      reasonable efforts (consistent with its internal policy and legal and regulatory
      restrictions) to designate a different Applicable Lending Office if the making
      of such a designation would avoid the need for, or reduce the amount of, such
      increased cost that may thereafter accrue and would not, in the reasonable
      judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
      as to the amount of such increased cost, submitted to the Borrower by such
      Bank,
      shall be conclusive and binding for all purposes, absent manifest
      error.

     

    (b) The
      Borrower shall pay to each Bank, as long as such Bank shall be required to
      maintain reserves with respect to liabilities or assets consisting of or
      including Eurocurrency funds or deposits (currently known as “Eurocurrency
      Liabilities”),
      additional interest on the unpaid principal amount of each Eurodollar Rate
      Loan
      equal to the actual costs of such reserves allocated to such Loan by such Bank
      (as determined by such Bank in good faith, which determination shall be
      conclusive), which shall be due and payable on each date on which interest
      is
      payable on such Loan, provided
      that the
      Borrower shall have received at least 10 days’ prior notice (with a copy to the
      Agent) of such additional interest from such Bank (which notice shall contain
      a
      calculation of such additional interest in reasonable detail). If a Bank fails
      to give notice 10 days prior to the relevant date on which interest is payable,
      such additional interest shall be due and payable 10 days from receipt of such
      notice.

     

    (c) If,
      with
      respect to any Eurodollar Rate Loans, the Majority Banks notify the Agent that
      the Eurodollar Rate for any Interest Period for such Loans will not adequately
      reflect the cost to the Banks of making, funding or maintaining their Eurodollar
      Rate Loans for such Interest Period, the Agent shall forthwith so notify the
      Borrower and the Banks, whereupon (i) each such Eurodollar Rate Loan will
      automatically, on the last day of the then existing Interest Period therefor,
      Convert into an Alternate Base Rate Loan and (ii) the obligation of the Banks
      to
      make, or to Convert Loans into, Eurodollar Rate Loans shall be suspended until
      the Agent shall notify the Borrower that the Banks have determined that the
      circumstances causing such suspension no longer exist.

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    (d) Notwithstanding
      any other provision of this Agreement, if the introduction or effectiveness
      of
      or any change in or in the interpretation of any law or regulation shall make
      it
      unlawful, or any central bank or other Governmental Authority shall assert
      that
      it is unlawful, for any Bank or its Eurodollar Lending Office to perform its
      obligations hereunder to make Eurodollar Rate Loans or to continue to fund
      or
      maintain Eurodollar Rate Loans hereunder, then, on notice thereof and demand
      therefor by such Bank to the Borrower through the Agent, (i) each Eurodollar
      Rate Loan will automatically, upon such demand, Convert into an Alternate Base
      Rate Loan and (ii) the obligation of the Banks to make, or to Convert Loans
      into, Eurodollar Rate Loans shall be suspended until the Agent shall notify
      the
      Borrower that such Bank has determined that the circumstances causing such
      suspension no longer exist; provided
      that,
      before making any such demand, such Bank agrees to use reasonable efforts
      (consistent with its internal policy and legal and regulatory restrictions)
      to
      designate a different Eurodollar Lending Office if the making of such a
      designation would allow such Bank or its Eurodollar Lending Office to continue
      to perform its obligations to make Eurodollar Rate Loans or to continue to
      fund
      or maintain Eurodollar Rate Loans and would not, in the judgment of such Bank,
      be otherwise disadvantageous to such Bank.

     

    (e) A
      Bank
      shall only be entitled to recover increased costs pursuant to this Section
      2.9
      to the extent such costs were incurred during any time or period commencing
      not
      more than 120 days prior to the date on which such Bank notifies the Agent
      and
      the Borrower that it proposes to demand such compensation and identifies to
      the
      Agent and the Borrower the statute, regulation or other basis upon which the
      claimed compensation is or will be based; provided
      that, if
      the Change in Law giving rise to such increased costs is retroactive, then
      the
      120-day period referred to above shall be extended to include the period of
      retroactive effect thereof. 

     

    2.10  Payments
      and Computations.

     

    (a) The
      Borrower shall make each payment hereunder and under the Notes, irrespective
      of
      any right of counterclaim or set-off, not later than 12:00 P.M. (New York City
      time) on the day when due in U.S. dollars to the Agent at the Agent’s account in
      same day funds, with payments being received by the Agent after such time being
      deemed to have been received on the next succeeding Business Day. The Agent
      will
      promptly thereafter cause like funds to be distributed (x) if such payment
      by
      the Borrower is in respect of principal, interest or any other Obligation then
      payable hereunder and under the Notes to more than one Bank, to such Banks
      for
      the account of their respective Applicable Lending Offices ratably in accordance
      with the amounts of such respective Obligations then payable to such Banks
      and
      (y) if such payment by the Borrower is in respect of any Obligation then payable
      hereunder to one Bank, to such Bank for the account of its Applicable Lending
      Office, in each case to be applied in accordance with the terms of this
      Agreement. Upon its acceptance of an Assignment and Acceptance and recording
      of
      the information contained therein in the Register pursuant to Section 11.14(d)
      (Sale or Assignment), from and after the effective date of such Assignment
      and
      Acceptance, the Agent shall make all payments hereunder and under the Notes
      in
      respect of the interest assigned thereby to the Bank assignee thereunder, and
      the parties to such Assignment and Acceptance shall make all appropriate
      adjustments in such payments for periods prior to such effective date directly
      between themselves.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    (b) The
      Borrower hereby authorizes each Bank and each of its Affiliates, if and to
      the
      extent payment owed to such Bank is not made when due hereunder or, in the
      case
      of a Bank, under the Note held by such Bank, to charge from time to time, to
      the
      fullest extent permitted by law, against any or all of the Borrower’s accounts
      with such Bank or such Affiliate any amount so due.

     

    (c) All
      computations of interest based on the Prime Rate shall be made by the Agent
      on
      the basis of a year of 365 or 366 days, as the case may be, and all computations
      of interest based on the Eurodollar Rate or the Federal Funds Rate shall be
      made
      by the Agent on the basis of a year of 360 days, in each case for the actual
      number of days (including the first day but excluding the last day) occurring
      in
      the period for which such interest is payable. Each determination by the Agent
      of an interest rate hereunder shall be conclusive and binding for all purposes,
      absent manifest error.

     

    (d) Whenever
      any payment hereunder or under the Notes shall be stated to be due on a day
      other than a Business Day, such payment shall be made on the next succeeding
      Business Day, and such extension of time shall in such case be included in
      the
      computation of payment of interest; provided
      that if
      such extension would cause payment of interest on or principal of Eurodollar
      Rate Loans to be made in the next following calendar month, such payment shall
      be made on the next preceding Business Day.

     

    (e) Unless
      the Agent shall have received notice from the Borrower prior to the date on
      which any payment is due to any Bank hereunder that the Borrower will not make
      such payment in full, the Agent may assume that the Borrower has made such
      payment in full to the Agent on such date and the Agent may, in reliance upon
      such assumption, cause to be distributed to each such Bank on such due date
      an
      amount equal to the amount then due such Bank. If and to the extent the Borrower
      shall not have so made such payment in full to the Agent, each such Bank shall
      repay to the Agent forthwith on demand such amount distributed to such Bank
      together with interest thereon, for each day from the date such amount is
      distributed to such Bank until the date such Bank repays such amount to the
      Agent, at the Federal Funds Rate.

     

    (f) If
      the
      Agent receives funds for application to the Obligations of the Loan Parties
      under or in respect of the Loan Documents under circumstances for which the
      Loan
      Documents do not specify the Loans to which, or the manner in which, such funds
      are to be applied, the Agent may, but shall not be obligated to, elect to
      distribute such funds to each of the Banks in accordance with such Bank’s pro
      rata share of the aggregate principal amount of all Loans outstanding at such
      time.

     

    2.11  Taxes.

     

    (a) Any
      and
      all payments by any Loan Party to or for the account of any Bank or any Agent
      hereunder or under the Notes or any other Loan Document shall be made, in
      accordance with Section 2.10 (Payments and Computations) or the applicable
      provisions of such other Loan Document, if any, free and clear of and without
      deduction for any and all present or future taxes, levies, imposts, deductions,
      charges or withholdings, and all liabilities with respect thereto, excluding,
      in the
      case of each Bank and each Agent, taxes that are imposed on its overall net
      income by the United States (and franchise taxes imposed in lieu thereof) and
      taxes that are imposed on its overall net income (and franchise taxes imposed
      in
      lieu thereof) by the state or foreign jurisdiction under the laws of which
      such
      Bank or such Agent, as the case may be, is organized or any political
      subdivision thereof and, in the case of each Bank, taxes that are imposed on
      its
      overall net income (and franchise taxes imposed in lieu thereof) by the state
      or
      foreign jurisdiction of such Bank’s principal office or Applicable Lending
      Office or any political subdivision thereof (all such non-excluded taxes,
      levies, imposts, deductions, charges, withholdings and liabilities in respect
      of
      payments hereunder or under the Notes being hereinafter referred to as
“Taxes”).
      If
      any Loan Party shall be required by law to deduct any Taxes from or in respect
      of any sum payable hereunder or under any Note or any other Loan Document to
      any
      Bank or any Agent, (i) the sum payable by such Loan Party shall be increased
      as
      may be necessary so that after such Loan Party and the Agent have made all
      required deductions (including deductions applicable to additional sums payable
      under this Section 2.11) such Bank or such Agent, as the case may be, receives
      an amount equal to the sum it would have received had no such deductions been
      made, (ii) such Loan Party shall make all such deductions and (iii) such Loan
      Party shall pay the full amount deducted to the relevant taxation authority
      or
      other authority in accordance with applicable law.

     

    
      
        
        

      

      
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    (b) In
      addition, a Loan Party shall pay any present or future stamp, documentary,
      excise, property or similar taxes, charges or levies that arise from any payment
      made by such Loan Party hereunder or under any Notes or any other Loan Documents
      or from the execution, delivery or registration of, performance under, or
      otherwise with respect to, this Agreement, the Notes or the other Loan Documents
      (hereinafter referred to as “Other
      Taxes”).

     

    (c) Panhandle
      Eastern, the Borrower and TLNG shall indemnify each Bank and each Agent for
      and
      hold them harmless against the full amount of Taxes and Other Taxes, imposed
      on
      or paid by such Bank or such Agent (as the case may be) with respect to any
      payment by or on account of any obligation of the Loan Parties hereunder
      (including Taxes or Other Taxes imposed or asserted by any jurisdiction on
      amounts payable under this Section 2.11) and any liability (including penalties,
      additions to tax, interest and expenses) arising therefrom or with respect
      thereto. This indemnification shall be made within 30 days from the date such
      Bank or such Agent (as the case may be) makes written demand
      therefor.

     

    (d) Within
      30
      days after the date of any payment of Taxes, the appropriate Loan Party shall
      furnish to the Agent, at its address referred to in Section 11.3 (Notices),
      the
      original or a certified copy of a receipt evidencing such payment, to the extent
      such a receipt is issued therefor, or other written proof of payment thereof
      that is reasonably satisfactory to the Agent. In the case of any payment
      hereunder or under the Notes or the other Loan Documents by or on behalf of
      a
      Loan Party through an account or branch outside the United States or by or
      on
      behalf of a Loan Party by a payor that is not a United States person, if such
      Loan Party determines that no Taxes are payable in respect thereof, such Loan
      Party shall furnish, or shall cause such payor to furnish, to the Agent, at
      such
      address, an opinion of counsel reasonably acceptable to the Agent stating that
      such payment is exempt from Taxes. For purposes of subsections (d) and (e)
      of
      this Section 2.11, the terms “United
      States”
and
      “United
      States person”
shall
      have the meanings specified in Section 7701 of the Internal Revenue
      Code.

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

    (e) Each
      Bank
      organized under the laws of a jurisdiction outside the United States shall,
      on
      or prior to the date of its execution and delivery of this Agreement or on
      the
      date of the Assignment and Acceptance pursuant to which it becomes a Bank,
      as
      the case may be, and from time to time thereafter as reasonably requested in
      writing by a Loan Party (but only so long thereafter as such Bank remains
      lawfully able to do so), or upon the obsolescence or invalidity of any form
      previously provided provide each of the Agent and such Loan Party with two
      original Internal Revenue Service Forms W-8BEN or W-8ECI, as appropriate, or
      any
      other form prescribed by the Internal Revenue Service, certifying that such
      Bank
      is exempt from or entitled to a reduced rate of United States withholding tax
      on
      payments pursuant to this Agreement or the Notes or any other Loan Document,
      or
      (in the case of a Bank that is claiming exemption from U.S. federal withholding
      with respect to payments of “portfolio interest” and has certified in writing to
      the Agent that it is not (i) a “bank” as defined in Section 881(c)(3)(A) of the
      Internal Revenue Code, (ii) a 10-percent shareholder (within the meaning of
      Section 871(h)(3)(B) of the Internal Revenue Code) of such Loan Party or (iii)
      a
      controlled foreign corporation related to such Loan Party (within the meaning
      of
      Section 864(d)(4) of the Internal Revenue Code)) Internal Revenue Service Form
      W-8BEN, or any successor or other form prescribed by the Internal Revenue
      Service, or, in the case of a Bank that has certified that it is not a “bank” as
      described above, certifying that such Bank is a foreign corporation,
      partnership, estate or trust. If the forms provided by a Bank at the time such
      Bank first becomes a party to this Agreement indicate a United States interest
      withholding tax rate in excess of zero, withholding tax at such rate shall
      be
      considered excluded from Taxes unless and until such Bank provides the
      appropriate forms certifying that a lesser rate applies, whereupon withholding
      tax at such lesser rate only shall be considered excluded from Taxes for periods
      governed by such forms; provided
      that if,
      at the effective date of the Assignment and Acceptance pursuant to which a
      Bank
      becomes a party to this Agreement, the Bank assignor was entitled to payments
      under subsection (a) of this Section 2.11 in respect of United States
      withholding tax with respect to interest paid at such date, then, to such
      extent, the term Taxes shall include (in addition to withholding taxes that
      may
      be imposed in the future or other amounts otherwise includable in Taxes) United
      States withholding tax, if any, applicable with respect to the Bank assignee
      on
      such date. If any form or document referred to in this subsection (e) requires
      the disclosure of information, other than information necessary to compute
      the
      tax payable and information required on the date hereof by Internal Revenue
      Service Form W-8BEN or W-8ECI or the related certificate described above, that
      the applicable Bank reasonably considers to be confidential, such Bank shall
      give notice thereof to the applicable Loan Party and shall not be obligated
      to
      include in such form or document such confidential information.

     

    (f) For
      any
      period with respect to which a Bank has failed to provide a Loan Party with
      the
      appropriate form, certificate or other document described in subsection (e)
      above (other
      than if
      such
      failure is due to a change in law, or in the interpretation or application
      thereof, occurring after the date on which a form, certificate or other document
      originally was required to be provided or if such form, certificate or other
      document otherwise is not required under subsection (e) above), such Bank shall
      not be entitled to indemnification under subsection (a) or (c) of this Section
      2.11 with respect to Taxes imposed by the United States by reason of such
      failure; provided
      that
      should a Bank become subject to Taxes because of its failure to deliver a form,
      certificate or other document required hereunder, the Loan Parties shall, at
      the
      sole expense of such Bank, take such steps as such Bank shall reasonably request
      to assist such Bank to recover such Taxes.

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    (g) Any
      Bank
      claiming any additional amounts payable pursuant to this Section 2.11 agrees
      to
      use reasonable efforts (consistent with its internal policy and legal and
      regulatory restrictions) to change the jurisdiction of its Applicable Lending
      Office or assign its rights and obligations under this Agreement to another
      of
      its offices, branches or Affiliates if the making of such a change or assignment
      would avoid the need for, or reduce the amount of, any such additional amounts
      that may thereafter accrue and would not, in the reasonable judgment of such
      Bank, be otherwise disadvantageous to such Bank.

     

    (h) If
      a Bank
      or Agent actually receives a refund of any Taxes or Other Taxes as to which
      it
      has been indemnified by a Loan Party or with respect to which a Loan Party
      has
      paid additional amounts pursuant to this Section 2.11, it shall pay over such
      refund to the Loan Party (but only to the extent of indemnity payments made,
      or
      additional amounts paid, by the Loan Party under this Section 2.11 with respect
      to the Taxes or Other Taxes giving rise to such refund), net of all
      out-of-pocket expenses of the Agent or such Bank or Agent and without interest
      (other than any interest paid by the relevant Governmental Authority with
      respect to such refund); provided
      that the
      Loan Party, upon the request of the Agent or such Bank or Agent, agrees to
      repay
      the amount paid over to the Loan Party (plus any penalties, interest or other
      charges imposed by the relevant Governmental Authority) to the Agent or such
      Bank or Agent in the event the Agent or such Bank or Agent is required to repay
      such refund to such Governmental Authority. This Section 2.11(h) shall not
      be
      construed to require the Agent or any Bank or Agent to claim a refund or make
      available its tax returns (or any other information relating to its taxes which
      it deems confidential) to the Loan Parties or any other Person.

     

    2.12  Sharing
      of Payments, Etc.
      If any
      Bank shall obtain at any time any payment (whether voluntary, involuntary,
      through the exercise of any right of set-off, or otherwise, other than as a
      result of an assignment pursuant to Section 11.14 (Sale and Assignment)) (a)
      on
      account of Obligations due and payable to such Bank hereunder and under the
      Notes and the other Loan Documents at such time in excess of its ratable share
      (according to the proportion of (i) the amount of such Obligations due and
      payable to such Bank at such time to
      (ii) the
      aggregate amount of the Obligations due and payable to all Banks hereunder
      and
      under the Notes and the other Loan Documents at such time) of payments on
      account of the Obligations due and payable to all Banks hereunder and under
      the
      Notes at such time obtained by all the Banks at such time or (b) on account
      of
      Obligations owing (but not due and payable) to such Bank hereunder and under
      the
      Notes and the other Loan Documents at such time in excess of its ratable share
      (according to the proportion of (i) the amount of such Obligations owing to
      such
      Bank at such time to
      (ii) the
      aggregate amount of the Obligations owing (but not due and payable) to all
      Banks
      hereunder and under the Notes and the other Loan Documents at such time) of
      payments on account of the Obligations owing (but not due and payable) to all
      Banks hereunder and under the Notes at such time obtained by all of the Banks
      at
      such time, such Bank shall forthwith purchase from the other Banks such
      interests or participating interests in the Obligations due and payable or
      owing
      to them, as the case may be, as shall be necessary to cause such purchasing
      Bank
      to share the excess payment ratably with each of them; provided
      that if
      all or any portion of such excess payment is thereafter recovered from such
      purchasing Bank, such purchase from each other Bank shall be rescinded and
      such
      other Bank shall repay to the purchasing Bank the purchase price to the extent
      of such Bank’s ratable share (according to the proportion of (i) the purchase
      price paid to such Bank to
      (ii) the
      aggregate purchase price paid to all Banks) of such recovery together with
      an
      amount equal to such Bank’s ratable share (according to the proportion of (i)
      the amount of such other Bank’s required repayment to
      (ii) the
      total amount so recovered from the purchasing Bank) of any interest or other
      amount paid or payable by the purchasing Bank in respect of the total amount
      so
      recovered; provided,
      further
      that, so
      long as the Obligations under the Loan Documents shall not have been
      accelerated, any excess payment received by any Bank shall be shared on a pro
      rata basis only with other Banks. The Borrower agrees that any Bank so
      purchasing an interest or participating interest from another Bank pursuant
      to
      this Section 2.12 may, to the fullest extent permitted by law, exercise all
      its
      rights of payment (including the right of set-off) with respect to such interest
      or participating interest, as the case may be, as fully as if such Bank were
      the
      direct creditor of the Borrower in the amount of such interest or participating
      interest, as the case may be.

     

    
      
        
        

      

      
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    2.13  Use
      of Proceeds.
      The
      Borrower agrees that the proceeds of the Loans shall be used by it solely to
      repay in full the April 2005 Credit Agreement and to make a distribution to
      Panhandle Eastern, in each case on the Funding Date. Panhandle Eastern will
      use
      the proceeds of such distribution solely to repay in full the Panhandle Eastern
      2.75% Senior Notes on the Funding Date.

     

    2.14  Evidence
      of Debt.

     

    (a) (i)
      Each
      Bank shall maintain in accordance with its usual practice an account or accounts
      evidencing the indebtedness of the Borrower to such Bank resulting from each
      Loan owing to such Bank from time to time, including the amounts of principal
      and interest payable and paid to such Bank from time to time hereunder. The
      Borrower agrees that upon request by any Bank to the Borrower (with a copy
      of
      such request to the Agent) to the effect that a promissory note or other
      evidence of indebtedness is required or appropriate in order for such Bank
      to
      evidence (whether for purposes of pledge, enforcement or otherwise) the Loans
      owing to, or to be made by, such Bank, the Borrower shall promptly execute
      and
      deliver to such Bank, with a copy to the Agent, a Note payable to the order
      of
      such Bank in a principal amount equal to the Loans of such Bank. All references
      to Notes in the Loan Documents shall mean Notes, if any, to the extent issued
      hereunder.

     

    (b) The
      Register maintained by the Agent pursuant to Section 11.14(d) (Sale and
      Assignment) shall include a control account, and a subsidiary account for each
      Bank, in which accounts (taken together) shall be recorded (i) the date and
      amount of the Borrowing, the Type of Loans comprising the Borrowing and, if
      appropriate, the Interest Period applicable thereto, (ii) the terms of each
      Assignment and Acceptance delivered to and accepted by it, (iii) the amount
      of
      any principal or interest due and payable or to become due and payable from
      the
      Borrower to each Bank hereunder, and (iv) the amount of any sum received by
      the
      Agent from the Borrower hereunder and each Bank’s share thereof.

     

    (c) Entries
      made in good faith by the Agent in the Register pursuant to subsection (b)
      above, and by each Bank in its account or accounts pursuant to subsection (a)
      above, shall be prima
      facie
      evidence
      of the amount of principal and interest due and payable or to become due and
      payable from the Borrower to, in the case of the Register, each Bank and, in
      the
      case of such account or accounts, such Bank, under this Agreement, absent
      manifest error; provided
      that the
      failure of the Agent or such Bank to make an entry, or any finding that an
      entry
      is incorrect, in the Register or such account or accounts shall not limit or
      otherwise affect the obligations of the Borrower under this
      Agreement.

     

    
      
        
        

      

      
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    2.15  Replacement
      of Banks.
      If (a)
      any Bank requests compensation under Section 2.9 (Increased Costs) or asserts,
      pursuant to Section 2.9(d) that it is unlawful for such Bank to make Eurodollar
      Rate Loans, (b) the Borrower is required to pay any additional amount to any
      Bank or any Governmental Authority for the account of any Bank pursuant to
      Section 2.11 (Taxes), (c) any Bank defaults in its obligation to fund Loans
      hereunder, or (d) with respect of any Bank that does not approve any amendment
      or waiver of any provision of any Loan Document that requires the unanimous
      consent of all of the Banks pursuant to Section 11.1 (Amendments; Waivers,
      Etc.), if such amendment or waiver is agreed to by the Required Banks, then
      the
      Borrower may, at its sole expense, upon prior notice to such Bank and the Agent,
      require such Bank to assign and delegate, without recourse (in accordance with
      and subject to the restrictions contained in Section 11.14 (Sale and
      Assignment)), all its interests, rights and obligations under this Agreement
      to
      an assignee that shall assume such obligations (which assignee may be another
      Bank, if a Bank accepts such assignment); provided
      that (i)
      to the extent required under Section 11.14 (Sale and Assignment), the Borrower
      shall have received the prior written consent of the Agent, which consent shall
      not unreasonably be withheld, (ii) such Bank shall have received payment of
      an
      amount equal to the outstanding principal of its Loans, accrued interest
      thereon, accrued fees and all other amounts payable to it hereunder, from the
      assignee (to the extent of such outstanding principal and accrued interest
      and
      fees) or the Borrower (in the case of all other amounts) and (iii) in the case
      of any such assignment resulting from a claim for compensation under Section
      2.9
      (Increased Costs) or payments required to be made pursuant to Section 2.11
      (Taxes), such assignment will result in a reduction in such compensation or
      payments. A Bank shall not be required to make any such assignment and
      delegation if, prior thereto, as a result of a waiver by such Bank or otherwise,
      the circumstances entitling the Borrower to require such assignment and
      delegation cease to apply.

     

    3.  REPRESENTATIONS
      AND WARRANTIES OF THE LOAN PARTIES

     

    Each
      of
      Panhandle Eastern, the Borrower and TLNG represents and warrants that:


     

    3.1  Organization
      and Qualification.
      Such
      Loan Party: 

     

    (a) is
      duly
      organized, validly existing, and in good standing under the laws of its state
      of
      organization; 

     

    (b) has
      the
      corporate or organizational power to own its properties and to carry on its
      respective businesses as now conducted; and 

     

    (c) is
      duly
      qualified as a foreign limited partnership or limited liability company, as
      applicable, to do business and is in good standing in every jurisdiction where
      such qualification is necessary except when the failure to so qualify would
      not
      or does not have a Material Adverse Effect. 

     

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

    The
      Borrower has the Subsidiaries as applicable listed on Schedule
      3.1
      attached
      hereto and made a part hereof for all purposes, and no others, each of which
      is
      a Delaware limited liability company unless otherwise noted on Schedule
      3.1.

     

    3.2  Authorization,
      Validity, Etc.
      Each
      such Loan Party has the limited liability company or limited partnership power
      and authority to make, execute, deliver and perform under this Agreement and
      the
      other Loan Documents to which it is a party and the transactions contemplated
      herein and therein, and all such action has been duly authorized by all
      necessary limited partnership or limited liability company proceedings on its
      part. Each Loan Document to which a Loan Party is a party has been duly and
      validly executed and delivered by such Loan Party and constitutes the valid
      and
      legally binding agreement of such Loan Party enforceable against such Loan
      Party
      in accordance with its terms, except as limited by Debtor Laws.

     

    3.3  Conflicting
      or Adverse Agreements or Restrictions.
      No Loan
      Party is a party to any contract or agreement or subject to any restriction
      which would materially adversely affect the ability of any Loan Party to perform
      its obligations under the Loan Documents to which it is a party. Neither the
      execution and delivery of this Agreement or any other Loan Document by any
      Loan
      Party that is or is to become a party thereto, nor the consummation of the
      transactions contemplated hereby or thereby, nor the fulfillment of and
      compliance with the respective terms, conditions and provisions hereof or
      thereof or of any instruments required hereby will conflict with or result
      in a
      breach of any of the terms, conditions or provisions of, or constitute a default
      under, or result in any violation of, or result in the creation or imposition
      of
      any lien (other than as contemplated or permitted by this Agreement) on any
      of
      the property of such Loan Party pursuant to (a) the charter or bylaws or similar
      organizational documents applicable to such Loan Party; (b) any law or any
      regulation of any Government Authority; (c) any order, writ, injunction or
      decree of any court; or (d) the terms, conditions or provisions of any agreement
      or instrument to which such Loan Party is a party or by which it is bound or
      to
      which it is subject, except in the case of clauses (b), (c) and (d) for
      conflicts, breaches, defaults, violations or the creation or imposition of
      liens
      that could not be reasonably expected to have a Material Adverse
      Effect.

     

    3.4  No
      Consents Required.
      No
      action, approval, consent, waiver, exemption, variance, franchise, order,
      permit, authorization, right or license of or from a Governmental Authority,
      and
      no notice to or filing with, any Governmental Authority or any other third
      party
      is required for (a) the due execution, delivery or performance by any Loan
      Party
      of any Loan Document to which it is or is to be a party, or for the consummation
      of the transactions contemplated hereby, including without limitation the
      incurrence of Debt under this Agreement and the borrowing and repayment of
      Loans
      hereunder; or (b) the exercise by any Agent or any Bank of its rights under
      the
      Loan Documents, except for those authorizations, approvals, actions, notices
      and
      filings (A) which have been duly obtained or made or which are not required
      under the terms of the Loan Documents to have been obtained or made on or prior
      to such date or (B) with respect to the consummation of the transactions
      contemplated hereby, the failure of which to be obtained or made could not
      reasonably be expected to have a Material Adverse Effect.

     

    3.5  Financial
      Statements.

     

    (a) Panhandle
      Eastern has furnished the Banks with its audited financial report as of the
      fiscal year ending December 31, 2006. These statements are complete and correct
      and present fairly, in all material respects, in accordance with GAAP,
      consistently applied throughout the periods involved, the Consolidated financial
      position of Panhandle Eastern and its Subsidiaries and the results of their
      operations as at the dates and for the periods indicated.

     

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

    (b) The
      Borrower has furnished the Banks with the Borrower’s unaudited financial report
      as of the fiscal year ending December 31, 2006. These statements are complete
      and correct and present fairly, in all material respects, in accordance with
      GAAP, consistently applied throughout the periods involved, the Consolidated
      financial position of the Borrower and its Subsidiaries and the results of
      their
      operations as at the dates and for the periods indicated. 

     

    (c) Since
      December 31, 2006, there has not occurred any event or condition which,
      individually or in the aggregate, has resulted in, or could reasonably be
      expected to result in, a Material Adverse Change respecting Panhandle Eastern,
      the Borrower or TLNG.

     

    3.6  Litigation.
      Except
      as disclosed pursuant to Section 3.16 (Environmental Matters), there is no:
      (a)
      action or proceeding pending or, to the knowledge of Panhandle Eastern, the
      Borrower or TLNG, threatened against any Loan Party before any court,
      administrative agency or arbitrator which is reasonably expected to have a
      Material Adverse Effect; (b) unsatisfied judgment outstanding against such
      Loan
      Party for the payment of money; or (c) other outstanding judgment, order or
      decree affecting such Loan Party before or by any administrative or governmental
      authority, compliance with or satisfaction of which may reasonably be expected
      to have a Material Adverse Effect. 

     

    3.7  Default.
      No Loan
      Party is in default under or in violation of the provisions of any instrument
      evidencing any Debt or of any agreement relating thereto or any judgment, order,
      writ, injunction or decree of any court or any order, regulation or demand
      of
      any administrative or governmental instrumentality, which default or violation
      could reasonably be expected to have a Material Adverse Effect.

     

    3.8  Compliance.
      Each
      Loan Party is in compliance with all laws, regulations and orders of any
      Governmental Authority applicable to it or its property, except where the
      failure to do so, individually or in the aggregate, could not reasonably be
      expected to result in a Material Adverse Effect.

     

    3.9  Title
      to Assets.
      Each
      Loan Party has good title to its respective assets, subject to no Liens except
      those permitted in Section 6.2 (Liens, Etc.), Section 7.1 (Liens, Etc.) and
      Permitted Encumbrances. For purposes of this Section 3.9, “Permitted
      Encumbrances”
shall
      mean easements, rights-of-way, restrictions, minor defects or irregularities
      in
      title and other similar charges or encumbrances not interfering in any material
      respect with the ordinary conduct of the business of such Loan
      Party.

     

    3.10  Payment
      of Taxes.
      Each
      Loan Party has filed all material tax returns required to be filed and has
      paid
      all taxes shown on said returns and all assessments which are due and payable
      (except such as are being contested in good faith by appropriate proceedings
      for
      which adequate reserves for their payment have been provided in a manner
      consistent with the accounting practices followed by the applicable Loan Party
      as of December 31, 2006). No Loan Party is aware of any pending investigation
      by
      any taxing authority or of any claims by any Governmental Authority for any
      unpaid taxes. Except as disclosed on Schedule
      3.10,
      no Loan
      Party is party to any tax sharing agreement or arrangement.

     

    
      
        
        

      

      
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    3.11  Investment
      Company Act Not Applicable.
      No Loan
      Party is an “investment company” or a company “controlled” by an “investment
      company”, within the meaning of the Investment Company Act of 1940, as
      amended.

     

    3.12  Regulations
      T, U and X.
      No Loan
      shall be a “purpose credit secured directly or indirectly by margin stock”
within the meaning of Regulation U of the Board of Governors of the Federal
      Reserve System (“margin stock”); none of the proceeds of any Loan will be used
      by any Loan Party to extend credit to others for the purpose of purchasing
      or
      carrying any margin stock, or for any other purpose which would constitute
      this
      transaction a “purpose credit secured directly or indirectly by margin stock”
within the meaning of said Regulation U, as now in effect or as the same may
      hereafter be in effect. No Loan Party will take or permit any action which
      would
      involve the Banks in a violation of Regulation T, Regulation U, Regulation
      X or
      any other regulation of the Board of Governors of the Federal Reserve System
      or
      a violation of the Securities Exchange Act of 1934, in each case as now or
      hereafter in effect. 

     

    3.13  ERISA.
      Except
      as
      provided in Schedule
      3.13,
      (i)
      no
      Reportable Event (as defined in § 4043(c) of ERISA) has occurred with respect to
      any Plan, (ii) each
      Plan
      complies in all material respects with applicable provisions of ERISA, and
      each
      Loan Party has filed all reports required by ERISA and the Code to be filed
      with
      respect to each Plan, (iii) no Loan Party has any knowledge of any event which
      could result in a liability of a Loan Party to the Pension Benefit Guaranty
      Corporation and (iv) each Loan Party has met all requirements with respect
      to
      funding the Plans imposed by ERISA or the Code. Since the effective date of
      Title IV of ERISA, there have not been any, nor are there now existing any,
      events or conditions that would permit any Plan to be terminated under
      circumstances which would cause the lien provided under § 4068 of ERISA to
      attach to any property of a Loan Party.

     

    3.14  No
      Financing of Certain Security Acquisitions.
      None of
      the proceeds of any Loan will be used to acquire any security in any transaction
      that is subject to §13 or §14 of the Securities Exchange Act of 1934, as
      amended.

     

    3.15  Franchises,
      Co-Licenses, Etc.
      Each
      Loan Party owns or has obtained all the material governmental permits,
      certificates of authority, leases, patents, trademarks, service marks, trade
      names, copyrights, franchises and licenses, and rights with respect thereto,
      required or necessary (or, in the sole and independent judgment of the Borrower,
      prudent) in connection with the conduct of their respective businesses as
      presently conducted or as proposed to be conducted, except where the failure
      to
      have any of the foregoing could not be reasonably expected to have a Material
      Adverse Effect.

     

    3.16  Environmental
      Matters.
      Except
      as disclosed in Schedule
      3.16,
      (a) all
      facilities and property owned or leased by a Loan Party have been and continue
      to be, owned or leased and operated by such Loan Party in material compliance
      with all Environmental Laws; (b) there has not been (during the period of
      such Loan Party’s ownership or lease) any Release of Hazardous Materials at, on,
      under or from any property now (or, to such Loan Party’s knowledge, previously)
      owned or leased by such Loan Party (i) that required, or may reasonably be
      expected to require, such Loan Party to expend funds on remediation or cleanup
      activities pursuant to any Environmental Law except for remediation or clean-up
      activities that would not be reasonably expected to have a Material Adverse
      Effect, or (ii) that otherwise, singly or in the aggregate, has, or may
      reasonably be expected to have, a Material Adverse Effect; (c) each Loan Party
      has been issued and is in material compliance with all permits, certificates,
      approvals, orders, licenses and other authorizations relating to environmental
      matters necessary for the conduct of its businesses; (d) there are no
      polychlorinated biphenyls (PCB’s) or asbestos-containing materials or surface
      impoundments in any of the facilities now (or, to the knowledge of such Loan
      Party, previously) owned or leased by such Loan Party, except for PCB’s and
      asbestos-containing materials of the type and in quantities that, to the
      knowledge of such Loan Party, do not currently require remediation, and if
      remediation of such PCB’s and asbestos-containing materials is hereafter
      required for any reason, such remediation activities would not reasonably be
      expected to have a Material Adverse Effect; (e) Hazardous Materials have not
      been generated, used, treated, recycled, stored or disposed of at, on, under
      or
      from any of the facilities or property now (or, to the knowledge of such Loan
      Party, previously) owned or leased by such Loan Party during the time of such
      Loan Party’s ownership or lease of such property that may require remediation or
      clean-up activities that would be reasonably expected to have a Material Adverse
      Effect; and (f) all underground storage tanks located on the property now (or,
      to the knowledge of such Loan Party, previously) owned or leased by such Loan
      Party have been (and to the extent currently owned or leased are) operated
      in
      material compliance with all applicable Environmental Laws. 

     

    
      
        
        

      

      
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    3.17  Disclosure.
      No
      written information (other than any projections) concerning any Loan Party
      and
      the transactions contemplated hereby furnished by or on behalf of such Loan
      Party to the Agent or any Bank in connection with the negotiation of this
      Agreement or delivered hereunder (as modified or supplemented by other
      information so furnished), taken as a whole, contains any untrue statement
      of a
      material fact or omits to state a material fact necessary in order to make
      the
      statements contained therein not misleading in any material respect in light
      of
      the circumstances under which such statements were or are made. The projections
      were prepared by or on behalf of each Loan Party in good faith based upon
      assumptions that such Loan Party believes to be reasonable as of the Closing
      Date and the Funding Date (it being understood that such projections are subject
      to significant uncertainties and contingencies, many of which are beyond such
      Loan Party’s control, and accordingly no assurance can be given and no
      representations are made that the assumptions are correct or that the
      projections will be realized).

     

    3.18  Insurance.
      Each
      Loan Party has insurance with a responsible and reputable insurer covering
      its
      assets against loss or damage of the kinds customarily insured against by
      companies similarly situated in the industry in which such Person conducts
      its
      business, in such amounts and with such deductibles as are customary for
      similarly situated companies; and such Person (a) has not received notice from
      any insurer or agent of such insurer that any material capital improvements
      or
      other material expenditures are required or necessary to be made in order to
      continue such insurance or (b) does not have any reason to believe that it
      will
      not be able to renew its existing insurance coverage as and when such coverage
      expires or to obtain similar coverage at commercially available rates from
      similar insurers as may be necessary to continue its business.

     

    3.19  Subsidiaries.
      TLNG is
      wholly owned by the Borrower. The Borrower is wholly owned, directly or
      indirectly, by Panhandle Eastern.

     

    4.  CONDITIONS
      TO FUNDING

     

    The
      obligation of the Banks to make any Loans is subject to the following
      conditions:

     

    4.1  Representations
      True and No Defaults.

     

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

    (a) The
      representations and warranties contained in Section 3 (Representations and
      Warranties of the Loan Parties) shall be true and correct on and as of the
      Funding Date as though made on and as of such date;

     

    (b) None
      of
      Panhandle Eastern, the Borrower or TLNG shall be in default in the due
      performance of any covenant on its part contained in this
      Agreement;

     

    (c) No
      Material Adverse Change shall have occurred with respect to (i) Panhandle
      Eastern reflected in the Consolidated annual financial statements of Panhandle
      Eastern dated December 31, 2006, or (ii) the Borrower reflected in the
      Consolidated annual financial statements of the Borrower dated December 31,
      2006; and

     

    (d) At
      the
      time of and immediately after giving effect to the Borrowing, no Event of
      Default or Default shall have occurred and be continuing.

     

    4.2  Intentionally
      Omitted.
      

     

    4.3  Compliance
      With Law.
      The
      business and operations of each Loan Party as conducted at all times relevant
      to
      the transactions contemplated by this Agreement to and including the close
      of
      business on the Funding Date shall have been and shall be in compliance in
      all
      material respects with all applicable State and Federal laws, regulations and
      orders affecting such Loan Party and the business and operations of any of
      them.

     

    4.4  Notice
      of Borrowing and Other Documents.
      The
      Banks shall have received (a) the Notice of Borrowing; and (b) such other
      documents and certificates relating to the transactions herein contemplated
      as
      the Banks may reasonably request.

     

    4.5  Payment
      of Fees and Expenses.
      The
      Borrower shall have paid (a) all expenses of the type described in Section
      11.2
      (Reimbursement of Expenses) through the date of such Loan and (b) all closing,
      structuring and other invoiced fees owed as of the Funding Date to the Agent
      or
      any of the Banks by the Borrower under this Agreement or any other written
      agreement between a Loan Party and the Agent, the applicable Bank(s), or any
      of
      their Affiliates.

     

    4.6  Repayment
      of Debt.
      Simultaneously with the funding of the Loans, (i) the Borrower shall cause
      to be repaid in full all of the obligations under the April 2005 Credit
      Agreement and the obligations of the Borrower thereunder shall be extinguished
      and (ii) Panhandle Eastern shall cause to be repaid in full all of the
      obligations under the Panhandle Eastern 2.75% Senior Notes and the obligations
      of Panhandle Eastern thereunder shall be extinguished.

     

    4.7  Loan
      Documents Satisfactory.
      The
      Agent shall have received a copy of each of the Loan Documents, each of which
      shall be in form and substance reasonably satisfactory to the
      Agent.

     

    4.8  Loan
      Documents, Opinions and Other Instruments.
      As of
      the Funding Date, the Loan Parties shall have delivered to the Agent the
      following: 

     

    (a) this
      Agreement, each of the Notes and all other Loan Documents required by the Agent
      and the Banks to be executed and delivered by the applicable Loan Parties in
      connection with this Agreement; 

     

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

    (b) a
      certificate from the Secretary of State of the State of Delaware as to the
      continued existence and good standing of Panhandle Eastern, the Borrower and
      TLNG in the State of Delaware; 

     

    (c) a
      certificate from Secretary of State of each State in which such certification
      is
      necessary as to the good standing of TLNG and each Loan Party as a foreign
      entity to do business in such State; 

     

    (d) a
      Secretary’s Certificate executed by the duly elected Secretary or a duly elected
      Assistant Secretary of Panhandle Eastern, the Borrower and TLNG, in a form
      acceptable to the Agent, whereby such Secretary or Assistant Secretary certifies
      that one or more resolutions adopted by the Board of Managers of such Loan
      Party
      (or, in the case of Panhandle Eastern, the Board of Managers of its general
      partner) remain in full force and effect authorizing such Loan Party to enter
      into the transactions contemplated hereby and perform its obligations under
      the
      Loan Documents; and

     

    (e) a
      legal
      opinion from in house counsel for the Borrower and each Guarantor, and New
      York
      counsel to HVB and Wachovia, each dated as of the Funding Date, addressed to
      the
      Agent and the Banks and otherwise acceptable in all respects to the Agent in
      its
      discretion.

     

    5.  AFFIRMATIVE
      COVENANTS OF THE LOAN PARTIES

     

    Each
      of
      Panhandle Eastern, the Borrower and TLNG covenants and agrees that, so long
      as
      the Borrower may borrow hereunder and until payment in full of the Obligations,
      each of Panhandle Eastern, the Borrower and TLNG, as applicable,
      will:

     

    5.1  Financial
      Statements and Information. 

     

    Deliver
      to the Banks:

     

    (a) as
      soon
      as available, and in any event within 120 days after the end of each fiscal
      year
      of Panhandle Eastern, a copy of the annual audit report of Panhandle Eastern
      and
      its Subsidiaries for such fiscal year containing a balance sheet, statement
      of
      income and stockholders equity and a cash flow statement, all in reasonable
      detail and certified by PriceWaterhouseCoopers or another independent certified
      public accountant of recognized standing reasonably satisfactory to the Banks;
      and

     

    (b) as
      soon
      as available, and in any event within 120 days after the end of each fiscal
      year
      of the Borrower, an unaudited financial report of the Borrower and its
      Subsidiaries for such fiscal year containing a balance sheet, statement of
      income and stockholders equity and cash flow statement, all in reasonable detail
      and certified by a financial officer of such Loan Party to have been prepared
      in
      accordance with GAAP, except as may be explained in such certificate; and


     

    (c) as
      soon
      as available, and in any event within 60 days after the end of each quarterly
      accounting period in each fiscal year of Panhandle Eastern and the Borrower
      (excluding the fourth quarter), an unaudited financial report of Panhandle
      Eastern and its Subsidiaries and the Borrower and its Subsidiaries as at the
      end
      of such quarter and for the period then ended, containing a balance sheet,
      statements of income and stockholders equity and a cash flow statement, all
      in
      reasonable detail and certified by a financial officer of such Loan Party to
      have been prepared in accordance with GAAP, except as may be explained in such
      certificate; 

     

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

    (d) such
      additional financial or other information as the Banks may reasonably request;
      and 

     

    (e) copies
      of
      all regular, periodic and special reports, and all registration statements,
      that
      such Loan Party files with the SEC or any governmental authority that may be
      substituted therefor, or with any national securities exchange.

     

    All
      financial statements specified in clauses (a), (b) and (c) above shall be
      furnished in Consolidated form for Panhandle Eastern and its Subsidiaries and
      the Borrower and its Subsidiaries with comparative Consolidated figures for
      the
      corresponding period in the preceding year. Together with each delivery of
      financial statements required by clauses (a), (b) and (c) above, each of
      Panhandle Eastern and the Borrower, as applicable, will deliver to the Banks
      an
      Officer’s Certificate stating that there exists no Event of Default or Default,
      or, if any such Event of Default or Default exists, stating the nature thereof,
      the period of existence thereof and what action the Borrower has taken or
      proposes to take with respect thereto. Together with each delivery of financial
      statements required by clauses (a) and (c) above, Panhandle Eastern will deliver
      to the Banks an Officer’s Certificate demonstrating compliance with the covenant
      set forth in Section 6.1 (Financial Covenant). The Banks are authorized to
      deliver a copy of any financial statement delivered to it to any regulatory
      body
      having jurisdiction over them, and to disclose same to any prospective assignees
      or participant Banks.

     

    5.2  Books
      and Records.
      Maintain, and cause each of its Subsidiaries to maintain, proper books of record
      and account in accordance with sound accounting practices in which true, full
      and correct entries will be made of all their respective dealings and business
      affairs.

     

    5.3  Insurance.
      Maintain, and cause each of its Subsidiaries to maintain, insurance with
      financially sound, responsible and reputable companies in such types and amounts
      and against such casualties, risks and contingencies as is customarily carried
      by owners of similar businesses and properties.

     

    5.4  Maintenance
      of Property.
      Maintain and preserve, and cause each of its Subsidiaries to maintain and
      preserve, all of its properties that are used or useful in the conduct of its
      business in accordance with such Loan Party’s established maintenance plan as in
      effect from time to time consistent with past practices.

     

    5.5  Inspection
      of Property and Records.
      Permit
      any officer, director or agent of the Agent or any Bank, on written notice
      and
      at such Bank’s expense, to visit and inspect during normal business hours any of
      the properties, corporate books and financial records of each Loan Party and
      discuss their respective affairs and finances with their principal officers,
      all
      at such times as the Agent or any Bank may reasonably request.

     

    5.6  Existence,
      Laws, Obligations, Taxes.
      Maintain, and cause each of its Subsidiaries to maintain, its corporate
      existence and franchises, and any license agreements and tariffs that permit
      the
      recovery of a return that such Loan Party considers to be fair (and as to
      licenses, franchises, and tariffs that are subject to regulatory determinations
      of recovery of returns, such Loan Party has presented or is presenting favorable
      defense thereof); and to comply, and cause each of its Subsidiaries to comply,
      with all statutes and governmental regulations noncompliance with which might
      have a Material Adverse Effect, and pay, and cause each of its Subsidiaries
      to
      pay, all taxes, assessments, governmental charges, claims for labor, supplies,
      rent and other obligations which if unpaid might become a lien against the
      property of such Loan Party and its Subsidiaries except liabilities being
      contested in good faith. 

     

    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

    5.7  Notice
      of Certain Matters.
      Notify
      the Agent promptly upon acquiring knowledge of the occurrence of any of the
      following events: 

     

    (a) the
      institution or threatened institution of any lawsuit or administrative
      proceeding affecting a Loan Party that is not covered by insurance (less
      applicable deductible amounts) and which, if determined adversely to such Loan
      Party, could reasonably be expected to have a Material Adverse Effect;


     

    (b) the
      occurrence of any Material Adverse Change, or of any event that in the good
      faith opinion of such Loan Party is likely to result in a Material Adverse
      Change, affecting such Loan Party; 

     

    (c) the
      occurrence of any Event of Default or any Default; 

     

    (d) a
      change
      by Moody’s Investors Service, Inc. or by Standard and Poor’s Ratings Group in
      the rating of the Funded Debt of Panhandle Eastern; and

     

    (e) such
      other information respecting the business, financial condition, operations
      or
      assets of the Loan Parties as any Agent, or any Bank through the Agent, may
      from
      time to time reasonably request.

     

                
      5.8      ERISA. At all
      times:

    
       

                  (a) to
        the
        extent required of a Loan Party under applicable law, maintain and keep in
        full
        force and effect each Plan, subject to Southern Union’s right, in accordance
        with applicable legal requirements, (i) to amend any such Plans, (ii) to
        merge
        any such Plans, and to (iii) cease benefit accruals under any such
        Plans;

       

              
 (b) to
        the extent required of a Loan Party under applicable law, make contributions
        to
        each Plan in a timely manner and in an amount sufficient to comply with the
        minimum funding standards requirements of ERISA;

       

      (c) promptly
        after acquiring
        knowledge of any “reportable event” or of any “prohibited transaction” (as such
        terms are defined in § 4043 and § 406 of ERISA) in connection with any
        Plan, furnish the Banks with a statement executed by the president or chief
        financial officer of a Loan Party setting forth the details thereof and the
        action which the Borrower proposes to take with respect thereto and, when
        known,
        any action taken by the Internal Revenue Service with respect
        thereto;

       

      (d) notify
        the Banks promptly upon receipt by a Loan Party or any Subsidiary of any
        notice
        of the institution of any proceeding or other action which may result in
        the
        termination of any Plan and furnish to the Banks copies of such
        notice;

       

      
        
          
          

        

        
          -33-

          
            

          

        

        
          
          

        

      

      (d) to
        the
        extent required of a Loan Party under applicable law,
        acquire
        and maintain Pension Benefit Guaranty Corporation employer liability coverage
        insurance required under ERISA;

       

      (e) 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


       

      (f) furnish
        the Banks with copies of any request for waiver of the funding standards
        or
        extension of the amortization periods required by § 303 and § 304 of ERISA or §
412 of the Code promptly after the request is submitted to the Secretary
        of the
        Treasury, the Department of Labor or the Internal Revenue Service, as the
        case
        may be.

       

    

        5.9  Compliance
      with Environmental Laws.
      At all
      times:

     

    (a) 
      (i) use
      and operate, and cause each of its Subsidiaries to use and operate, all of
      their
      respective facilities and properties in material compliance with all
      Environmental Laws; (ii) keep, and cause each of its Subsidiaries to keep,
      all
      necessary permits, approvals, orders, certificates, licenses and other
      authorizations relating to environmental matters in effect and remain in
      material compliance therewith; (iii) handle, and cause each of its Subsidiaries
      to handle, all Hazardous Materials in material compliance with all applicable
      Environmental Laws; and (iv) dispose, and cause each of its Subsidiaries to
      dispose, of all Hazardous Materials with carriers that maintain valid permits,
      approvals, certificates, licenses or other authorizations for such disposal
      in
      material compliance with applicable Environmental Laws;

     

    (b) promptly
      notify the Agent and provide copies upon receipt of all written claims,
      complaints, notices or inquiries relating to the condition of the facilities
      and
      properties of such Loan Party under, or their respective compliance with,
      applicable Environmental Laws wherein the condition or the noncompliance that
      is
      the subject of such claim, complaint, notice, or inquiry involves, or could
      reasonably be expected to involve, liability of or expenditures of (1) in the
      case of the Borrower or any of its Subsidiaries, $10,000,000 or more, and (2)
      in
      the case of Panhandle Eastern and its Subsidiaries taken as a whole, $30,000,000
      or more, to the extent in each case that such matters are not reflected in
      the
      financial statements provided pursuant to Sections 3.5 (a) and (b) hereof for
      the period ended December 31, 2006; and

     

    (c) provide
      such information and certifications which the Banks may reasonably request
      from
      time to time to evidence compliance with this Section 5.9.

     

     6.  NEGATIVE
      COVENANTS OF PANHANDLE EASTERN

     

    So
      long
      as the Borrower may borrow hereunder and until payment in full of the
      Obligations, except with the written consent of the Banks:

     

    6.1  Financial
      Covenant.
      Panhandle Eastern will not permit its Debt/Capitalization Ratio as of the last
      day of any fiscal quarter to be greater than 65.0%.

     

    6.2  Liens,
      Etc.
      Panhandle Eastern will not, and will not permit any of its Subsidiaries to,
      create, incur, assume or suffer to exist any Lien on or with respect to any
      of
      its Property, or sign or file or suffer to exist, under the Uniform Commercial
      Code of any jurisdiction, a financing statement that names Panhandle Eastern
      or
      any of its Subsidiaries as debtor, or sign or suffer to exist any security
      agreement authorizing any secured party thereunder to file such financing
      statement, or assign any accounts or other right to receive income,
      except:

     

    
      
        
        

      

      
        -34-

        
          

        

      

      
        
        

      

    

    (a) Permitted
      Liens for Panhandle Eastern and its Subsidiaries; 

     

    (b) Liens
      existing on the date hereof and any replacement, extension or renewal of the
      indebtedness secured by such Lien, provided
      that the
      amount of Debt or other obligations secured thereby is not increased and is
      not
      secured by any additional assets; and 

     

    (c) Liens
      arising in connection with Capitalized Leases, provided
      that no
      such Lien shall extend to or cover any assets other than the assets subject
      to
      such Capitalized Leases, and purchase money Liens upon or in real property,
      equipment or other fixed or capital assets acquired or held by Panhandle Eastern
      or any of its Subsidiaries to secure the purchase price of such property,
      equipment or other fixed or capital assets or to secure Debt incurred for the
      purpose of financing the acquisition, construction or improvement of any such
      property, equipment or other fixed or capital assets, or Liens existing on
      any
      such property, equipment or other fixed or capital assets at the time of
      acquisition, or extensions, renewals or replacements of any of the foregoing
      for
      the same or a lesser amount (provided
      that no
      such Lien shall extend to or cover any property other than the property,
      equipment or other fixed or capital assets being acquired, constructed or
      improved, and no such extension, renewal or replacement shall extend to or
      cover
      any property not theretofore subject to the Lien being extended, renewed or
      replaced); provided
      that the
      aggregate principal amount of the Debt secured by Liens permitted by this clause
      (c) shall not exceed $50,000,000 at any time outstanding; 

     

    provided
      that
      Panhandle Eastern or any of its Subsidiaries may create or assume any other
      Lien
      securing Debt if, after giving effect to such Debt, the Priority Obligations
      Amount does not exceed 10% of the Consolidated Net Tangible Assets.

     

    6.3  Debt.
      Panhandle Eastern will not, and will not permit any Subsidiary (other than
      the
      Borrower or TLNG) to, create, incur, assume or suffer to exist any Debt, unless
      if after giving effect to such Debt, the Priority Obligations Amount does not
      exceed 10% of the Consolidated Net Tangible Assets. 

     

    6.4  Change
      in Nature of Business.
      Panhandle Eastern will not make any material change in the nature of Panhandle
      Eastern’s business as carried on at the date hereof.

     

    6.5  Mergers,
      Consolidation.
      Panhandle Eastern will not merge into or consolidate with any Person or permit
      any Person to merge into it, or liquidate, wind up or dissolve itself (or suffer
      any liquidation or dissolution), or permit any of its Subsidiaries to do so,
      except that:

     

    (a) any
      Subsidiary of Panhandle Eastern may merge into or consolidate with Panhandle
      Eastern, provided
      that
      Panhandle Eastern is the continuing or surviving Person;

     

    (b) any
      Subsidiary of Panhandle Eastern may merge into or consolidate with any other
      Subsidiary of Panhandle Eastern; provided
      that if
      such Subsidiary is the Borrower, such transaction shall comply with Section
      7.3(c);

     

    
      
        
        

      

      
        -35-

        
          

        

      

      
        
        

      

    

    (c) any
      Subsidiary of Panhandle Eastern may be liquidated or dissolved if Panhandle
      Eastern determines in good faith that such liquidation or dissolution is in
      the
      best interest of Panhandle Eastern and is not materially disadvantageous to
      the
      Banks;

     

    (d) any
      Subsidiary of Panhandle Eastern may merge into or consolidate with any other
      Person or permit any other Person to merge into or consolidate with it;
provided
      that
      either (i) the Person surviving such merger shall be a Subsidiary of Panhandle
      Eastern or (ii) such transaction complies with Sections 6.6(b), 7.3 and 7.4;
      and

     

    (e) Panhandle
      Eastern may merge with any Person; provided
      that
      if
      Panhandle Eastern is not the surviving entity, the surviving entity agrees
      to
      assume and be bound by the terms and conditions of this Agreement pursuant
      to
      documentation satisfactory to the Agent to such effect;

     

    provided
      that in
      each case, immediately before and after giving effect thereto, no Default or
      Event of Default shall have occurred and be continuing and such transaction
      shall not cause or have caused a Material Adverse Effect.

     

    6.6  Sale
      of Assets.
      Panhandle Eastern will not, and will not permit any of its Subsidiaries to,
      sell, lease, transfer or otherwise dispose of, in one transaction or in a series
      of transactions, assets representing all or substantially all of the
      Consolidated assets of Panhandle Eastern, except:

     

    (a) in
      a
      transaction authorized by Section 6.5 (Mergers); and

     

    (b) sales,
      transfers or other dispositions of assets among Panhandle Eastern and its
      Subsidiaries.

     

    6.7  Restricted
      Payments.
      Panhandle Eastern will not, and will not permit any of its Subsidiaries to,
      pay
      or declare any Restricted Payment, except that, (a) any of its Subsidiaries
      may
      make Restricted Payments to Panhandle Eastern or another Subsidiary of Panhandle
      Eastern (except that the Borrower may not make any such payment to any Person
      other than Panhandle Eastern and Subsidiaries of the Borrower may not make
      any
      such payment to any Person other than the Borrower or Panhandle Eastern) and
      (b)
      so long as no Event of Default has occurred and is continuing and Panhandle
      Eastern is in pro forma compliance with Section 6.1 (Financial Covenant) after
      giving effect to such Restricted Payments, Panhandle Eastern may make
      distributions to Southern Union and Southern Union Panhandle, LLC.

     

    6.8  Sales
      and Leasebacks.
      Panhandle Eastern will not enter into any arrangement with any Person (other
      than Subsidiaries of Panhandle Eastern) providing for the leasing by Panhandle
      Eastern or any Subsidiary of real or personal property that has been or is
      to be
      sold or transferred by Panhandle Eastern or such Subsidiary to such Person
      or to
      any other Person to whom funds have been or are to be advanced by such Person
      on
      the security of such property or rental obligations of Panhandle Eastern or
      such
      Subsidiary (each a “Sale-Leaseback
      Transaction”),
      unless if after giving effect to such Sale-Leaseback Transaction, the Priority
      Obligations Amount does not exceed 10% of the Consolidated Net Tangible
      Assets.

     

    6.9  Transactions
      with Related Parties.
      Panhandle Eastern will not, and will not permit any Subsidiary to, enter into
      any transaction or agreement with any officer, director or holder (other than
      Southern Union and its Subsidiaries) of ten percent (10%) or more of any class
      of the outstanding capital stock of Panhandle Eastern or any Subsidiary (or
      any
      Affiliate of any such Person) unless the same is upon terms substantially
      similar to those obtainable from wholly unrelated sources. 

     

    
      
        
        

      

      
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    6.10  Hazardous
      Materials.
      Panhandle Eastern will not, and will not permit any Subsidiary to, (a) cause
      or
      permit any Hazardous Materials to be placed, held, used, located, or disposed
      of
      on, under or at any of such Person’s property or any part thereof by any Person
      in a manner which could reasonably be expected to have a Material Adverse
      Effect; (b) cause or permit any part of any of such Person’s property to be used
      as a manufacturing, storage, treatment or disposal site for Hazardous Materials,
      where such action could reasonably be expected to have a Material Adverse
      Effect; or (c) cause or suffer any liens to be recorded against any of such
      Person’s property as a consequence of, or in any way related to, the presence,
      remediation, or disposal of Hazardous Materials in or about any of such Person’s
      property, including any so-called state, federal or local “superfund” lien
      relating to such matters, where such recordation could reasonably be expected
      to
      have a Material Adverse Effect.

     

    7.  NEGATIVE
      COVENANTS OF THE BORROWER

     

    So
      long
      as the Borrower may borrow hereunder and until payment in full of the
      Obligations, except with the written consent of the Banks:

     

    7.1  Liens,
      Etc.
      The
      Borrower will not, and will not permit any Subsidiary to, create, incur, assume
      or suffer to exist any Lien on or with respect to any of its Property, or sign
      or file or suffer to exist, under the Uniform Commercial Code of any
      jurisdiction, a financing statement that names the Borrower or any of its
      Subsidiaries as debtor, or sign or suffer to exist any security agreement
      authorizing any secured party thereunder to file such financing statement,
      or
      assign any accounts or other right to receive income, except:

     

    (a) Permitted
      Liens for the Borrower and its Subsidiaries; 

     

    (b) Liens
      existing on the date hereof and any replacement, extension or renewal of the
      indebtedness secured by such Lien, provided
      that the
      amount of Debt or other obligations secured thereby is not increased and is
      not
      secured by any additional assets; and 

     

    (c) Liens
      arising in connection with Capitalized Leases, provided
      that no
      such Lien shall extend to or cover any assets other than the assets subject
      to
      such Capitalized Leases, and purchase money Liens upon or in real property,
      equipment or other fixed or capital assets acquired or held by the Borrower
      or
      any of its Subsidiaries to secure the purchase price of such property, equipment
      or other fixed or capital assets or to secure Debt incurred for the purpose
      of
      financing the acquisition, construction or improvement of any such property,
      equipment or other fixed or capital assets, or Liens existing on any such
      property, equipment or other fixed or capital assets at the time of acquisition,
      or extensions, renewals or replacements of any of the foregoing for the same
      or
      a lesser amount (provided
      that no
      such Lien shall extend to or cover any property other than the property,
      equipment or other fixed or capital assets being acquired, constructed or
      improved, and no such extension, renewal or replacement shall extend to or
      cover
      any property not theretofore subject to the Lien being extended, renewed or
      replaced); provided
      that the
      aggregate principal amount of the Debt secured by Liens permitted by this clause
      (c) shall not exceed $10,000,000 at any time outstanding.

     

    
      
        
        

      

      
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    7.2  Debt.
      The
      Borrower will not, and will not permit any Subsidiary to, incur or permit to
      exist any Debt, except: 

     

    (a) Debt
      under this Agreement;

     

    (b) Debt
      of
      TLNG to the Borrower; 

     

    (c) endorsements
      in the ordinary course of business of negotiable instruments in the course
      of
      collection;

     

    (d) Debt
      of
      TLNG or any other Subsidiary of the Borrower subordinated to the Loans on terms
      and pursuant to documentation satisfactory to the Agent;

     

    (e) Unsecured
      Debt of the Borrower; and

     

    (f) Capitalized
      Leases of the Borrower with Subsidiaries as permitted pursuant to
      7.1(c).

     

    7.3  Merger,
      Consolidation.
      The
      Borrower will not, and will not permit any Subsidiary to, merge or consolidate
      with any other Person or sell, lease, transfer or otherwise dispose of (whether
      in one transaction or a series of transactions) all or a substantial part of
      its
      assets or acquire (whether in one transaction or a series of transactions)
      all
      or a substantial part of the assets of any Person, except that:

     

    (a) any
      Subsidiary of the Borrower may merge or consolidate with the Borrower
      (provided
      that the
      Borrower shall be the continuing or surviving corporation) or with any one
      or
      more Subsidiaries of the Borrower;

     

    (b) any
      Subsidiary of the Borrower may sell, lease, transfer or otherwise dispose of
      any
      of its assets to the Borrower or another Subsidiary of the
      Borrower;

     

    (c) the
      Borrower may acquire the assets of or merge with any Person, provided
      that if
      the Borrower is not the surviving entity, the surviving entity agrees to assume
      and be bound by the terms and conditions of this Agreement pursuant to
      documentation satisfactory to the Agent; and 

     

    (d) the
      Borrower or any Subsidiary of the Borrower may sell, lease, assign or otherwise
      dispose of assets as otherwise permitted under Section 7.4 (Sale of Assets),
      which shall include without limitation the transfer of assets to a Subsidiary
      and the subsequent sale of the equity interests in such Subsidiary;

     

    provided
      that,
      after giving effect to any such transaction, no Default or Event of Default
      shall have occurred and be continuing and such transaction shall not cause
      or
      have caused a Material Adverse Effect.

     

    7.4  Sale
      of Assets.
      The
      Borrower will not, and will not permit any Subsidiary to, except as permitted
      under this Section 7.4, sell, assign, lease, or otherwise dispose of (whether
      in
      one transaction or in a series of transactions) all or any part of its Property
      (whether now owned or hereafter acquired); provided
      that


     

    
      
        
        

      

      
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    (a) the
      Borrower or any Subsidiary may in the ordinary course of business dispose of
      (i)
      Property consisting of Inventory; and (ii) Property consisting of goods or
      equipment that are, in the opinion of the Borrower or any Subsidiary of the
      Borrower, obsolete or unproductive, but if in the good faith judgment of the
      Borrower or any Subsidiary of the Borrower such disposition without replacement
      thereof would have a Material Adverse Effect, such goods and equipment shall
      be
      replaced, or their utility and function substituted, by new or existing goods
      or
      equipment; and

     

    (b) the
      Borrower or any Subsidiary may dispose of Property other than Inventory (in
      consideration of such amount as in the good faith judgment of the Borrower
      or
      such Subsidiary represents a fair consideration therefor), provided
      that the
      aggregate value of such property disposed of (determined after depreciation
      and
      in accordance with GAAP) after the Funding Date does not exceed ten percent
      (10%) of the aggregate value of all of the Borrower’s and its Subsidiaries’ real
      property and tangible personal property other than Inventory considered on
      a
      Consolidated basis and determined after depreciation and in accordance with
      GAAP, as of December 31, 2006. 

     

    7.5  Restricted
      Payment.
      The
      Borrower will not pay or declare any Restricted Payment to any Person other
      than
      to Panhandle Eastern. The Borrower will not permit any Subsidiary to pay or
      declare any Restricted Payment to any Person other than the
      Borrower.

     

    7.6  Securities
      Credit Regulations.
      Neither
      the Borrower nor any Subsidiary will take or permit any action which might
      cause
      the Loans or this Agreement to violate Regulation T, Regulation U, Regulation
      X
      or any other regulation of the Board of Governors of the Federal Reserve System
      or a violation of the Securities Exchange Act of 1934, in each case as now
      or
      hereafter in effect.

     

    7.7  Nature
      of Business.
      The
      Borrower will not, and will not permit any Subsidiary, to, make any material
      change in the nature of the Borrower’s business as carried on at the date
      hereof.

     

    7.8  Transactions
      with Related Parties.
      The
      Borrower will not, and will not permit any Subsidiary to, enter into any
      transaction or agreement with any officer, director or holder (other than
      Southern Union and its Subsidiaries) of ten percent (10%) or more of any class
      of the outstanding capital stock of the Borrower or any Subsidiary (or any
      Affiliate of any such Person) unless the same is upon terms substantially
      similar to those obtainable from wholly unrelated sources.

     

    7.9  Hazardous
      Materials.
      The
      Borrower will not, and will not permit any Subsidiary to, (a) cause or permit
      any Hazardous Materials to be placed, held, used, located, or disposed of on,
      under or at any of such Person’s property or any part thereof by any Person in a
      manner which could reasonably be expected to have a Material Adverse Effect;
      (b)
      cause or permit any part of any of such Person’s property to be used as a
      manufacturing, storage, treatment or disposal site for Hazardous Materials,
      where such action could reasonably be expected to have a Material Adverse
      Effect; or (c) cause or suffer any liens to be recorded against any of such
      Person’s property as a consequence of, or in any way related to, the presence,
      remediation, or disposal of Hazardous Materials in or about any of such Person’s
      property, including any so-called state, federal or local “superfund” lien
      relating to such matters, where such recordation could reasonably be expected
      to
      have a Material Adverse Effect.

     

    
      
        
        

      

      
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    7.10  Use
      of Proceeds.
      The
      Borrower will not, and will not permit any Subsidiary to, use the proceeds
      of
      any Loan for any purpose other than for purposes set forth in Section 2.13
      (Use
      of Proceeds); or use any such proceeds in a manner which violates or results
      in
      a violation of any law or regulation.

     

    7.11  Other
      Documents.
      The
      Borrower will not, and will not permit any Subsidiary to, amend, restate or
      otherwise modify or waive any provision or condition of any instrument or
      agreement relating to any secured Debt of such Person if the effect of such
      modification or waiver is to increase the obligations of such Person in a manner
      that is adverse to the Banks without the consent of the Majority Banks.


     

    8.  EVENTS
      OF DEFAULT; REMEDIES

     

    If
      any of
      the following events shall occur, then the Agent shall at the request, or may
      with the consent, of the Majority Banks, declare the Notes and all interest
      accrued and unpaid thereon, and all other amounts payable under the Notes,
      this
      Agreement and the other Loan Documents, to be forthwith due and payable,
      whereupon the Notes, all such interest and all such other amounts, shall become
      and be forthwith due and payable without presentment, demand, protest, or
      further notice of any kind (including, without limitation, notice of default,
      notice of intent to accelerate and notice of acceleration), all of which are
      hereby expressly waived by the Borrower; provided
      that
      with respect to any Event of Default described in Sections 8.7 (Bankruptcy)
      or
      8.8 (Dissolution) hereof, the entire unpaid principal amount of the Notes,
      all
      interest accrued and unpaid thereon, and all such other amounts payable under
      the Notes, this Agreement and the other Loan Documents, shall automatically
      become immediately due and payable, without presentment, demand, protest, or
      any
      notice of any kind (including, without limitation, notice of default, notice
      of
      intent to accelerate and notice of acceleration), all of which are hereby
      expressly waived by the Borrower:

     

    8.1  Failure
      to Pay Obligations When Due.
      The
      Borrower fails to pay, repay or prepay any principal on the date when due,
      or
      any other Obligation within five Business Days after the date when
      due.

     

    8.2  Intentionally
      Omitted.
      

     

    8.3  Failure
      to Pay Other Debt.
      (a) The
      Borrower or any Subsidiary of the Borrower fails to pay principal or interest
      on
      any unsecured Debt aggregating more than $10,000,000 or any secured Debt when
      due and any related grace period has expired, or the holder of any of such
      Debt
      declares such Debt due prior to its stated maturity because of the Borrower’s or
      any Subsidiary’s default thereunder and the expiration of any related grace
      period; (b) Panhandle Eastern or any of its Subsidiaries fails to pay principal
      or interest on any Debt aggregating more than $50,000,000 when due and any
      related grace period has expired, or the holder of any of such Debt declares
      such Debt due prior to its stated maturity because of Panhandle Eastern’s or any
      such Subsidiary’s default thereunder and the expiration of any related grace
      period; (c) at any time that the aggregate amount of all Citrus Investments
      exceeds $10,000,000, CCC or any of its Subsidiaries fails to pay principal
      or
      interest on any Debt aggregating more than $10,000,000 when due and any related
      grace period has expired, or the holder of any of such Debt declares such Debt
      due prior to its stated maturity because of CCC’s or any such Subsidiary’s
      default thereunder and the expiration of any related grace period; or
      (d) at any time that the aggregate amount of all Citrus Investments exceeds
      $10,000,000, the holder of any Debt aggregating more than $10,000,000 of Citrus
      Corp. declares such Debt due prior to its stated maturity because of Citrus
      Corp.’s default thereunder and the expiration of any related grace period.


     

    
      
        
        

      

      
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    8.4  Misrepresentation
      or Breach of Warranty.
      Any
      representation or warranty made by any Loan Party herein or otherwise furnished
      to the Bank in connection with this Agreement or any other Loan Document shall
      be incorrect, false or misleading in any material respect when
      made.

     

    8.5  Violation
      of Certain Covenants.
      Any
      Loan Party violates any covenant, agreement or condition contained in Sections
      5.6 (Existence), 5.7(c) (Notice of Defaults), 6.1 (Financial Covenant), 6.2
      (Liens), 6.3 (Debt), 6.5 (Merger), 6.6 (Sale of Assets), 6.7 (Restricted
      Payments), 7.1 (Liens), 7.2 (Debt), 7.3 (Merger, Consolidation), 7.4 (Sale
      of
      Assets) or 7.5 (Restricted Payments).

     

    8.6  Violation
      of Other Covenants, Etc.
      Any Loan
      Party violates any other covenant, agreement or condition contained herein
      (other than the covenants, agreements and conditions set forth or described
      in
      Sections 8.1 (Failure to Pay Obligations When Due), 8.3 (Cross Default), 8.4
      (Representations), and 8.5 (Certain Covenants) above) or in any other Loan
      Document and such violation shall not have been remedied within (30) days after
      the earlier of (i) actual discovery by a Loan Party of such violation or (ii)
      written notice has been received by the Borrower from the Bank or the holder
      of
      the Note.

     

    8.7  Bankruptcy
      and Other Matters.
      Any
      Loan Party or Southern Union (a) makes an assignment for the benefit of
      creditors; or (b) admits in writing its inability to pay its debts generally
      as
      they become due; or (c) generally fails to pay its debts as they become due;
      or
      (d) files a petition or answer seeking for itself, or consenting to or
      acquiescing in, any reorganization, arrangement, composition, readjustment,
      liquidation, dissolution, or similar relief under any applicable Debtor Law
      (including, without limitation, the Federal Bankruptcy Code); there is appointed
      a receiver, custodian, liquidator, fiscal agent, or trustee of any Loan Party
      or
      Southern Union or of the whole or any substantial part of their respective
      assets; or any court enters an order, judgment or decree approving a petition
      filed against any Loan Party or Southern Union seeking reorganization,
      arrangement, composition, readjustment, liquidation, dissolution, or similar
      relief under any Debtor Law and either such order, decree or judgment so filed
      against it is not dismissed or stayed (unless and until such stay is no longer
      in effect) within thirty (30) days of entry thereof or an order for relief
      is
      entered pursuant to any such law.

     

    8.8  Dissolution.
      Any
      order is entered in any proceeding against any Loan Party or Southern Union
      decreeing the dissolution, liquidation, winding-up or split-up of any Loan
      Party
      or Southern Union, and such order remains in effect for thirty (30)
      days.

     

    8.9  Undischarged
      Judgment.
      (a) A
      final judgment or judgments in the aggregate, that might be or give rise to
      Liens on any property of the Borrower or any of its Subsidiaries, for the
      payment of money in excess of $10,000,000 shall be rendered against the Borrower
      or any of its Subsidiaries and the same shall remain undischarged for a period
      of sixty (60) days during which execution shall not be effectively stayed,
      (b) a
      final judgment or judgments in the aggregate, that might be or give rise to
      Liens on any property of Panhandle Eastern or any of its Subsidiaries, for
      the
      payment of money in excess of $50,000,000 shall be rendered against Panhandle
      Eastern or any of its Subsidiaries and the same shall remain undischarged for
      a
      period of sixty (60) days during which execution shall not be effectively stayed
      or (c)  at any time that the aggregate amount of all Citrus Investments
      exceeds $10,000,000, a final judgment or judgments in the aggregate, that might
      be or give rise to Liens on any property of CCC or any of its Subsidiaries,
      for
      the payment of money in excess of $10,000,000 shall be rendered against CCC
      or
      any of its Subsidiaries and the same shall remain undischarged for a period
      of
      sixty (60) days during which execution shall not be effectively
      stayed.

     

    
      
        
        

      

      
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    8.10  Loan
      Documents.
      Any
      material provision in any Loan Document shall for any reason cease to be valid
      and binding on any party thereto except upon fulfillment of such party’s
      obligations thereunder (or any such party shall so state in writing), or shall
      be declared null and void, or the validity or enforceability thereof shall
      be
      contested by any party thereto (other than the Agent and the Banks) or any
      Governmental Authority, or any such party shall deny in writing that it has
      any
      liability or obligation thereunder, except upon fulfillment of its obligations
      thereunder.

     

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

     

    (a) Panhandle
      Eastern shall cease to own or control, directly or indirectly, 100% of the
      Equity Interests and voting power of each of the Borrower and TLNG;

     

    (b) Southern
      Union shall cease to own, or control, directly or indirectly, at least 51%
      of
      the Equity Interests and voting power of Panhandle Eastern; or

     

    (c)  at
      any time that the aggregate amount of all Citrus Investments exceeds
      $10,000,000, (i) Southern Union shall cease to own or control, directly or
      indirectly, 51% of the Equity Interests and voting power of CCC, (ii) CCC shall
      cease to own or control, directly or indirectly, at least 50% of the Equity
      Interests and voting power of Citrus Corp., or (iii) CCC shall cease to own
      or
      control, directly or indirectly, at least 40% of the Equity Interests and voting
      power of Florida Gas Transmission Company.

     

    8.12  Other
      Remedies.
      In
      addition to and cumulative of any rights or remedies expressly provided for
      in
      this Section 8, if any one or more Events of Default shall have occurred, the
      Agent shall at the request, and may with the consent, of the Majority Banks
      proceed to protect and enforce the rights of the Banks hereunder by any
      appropriate proceedings. The Agent shall at the request, and may with the
      consent, of the Majority Banks also proceed either by the specific performance
      of any covenant or agreement contained in this Agreement or by enforcing the
      payment of the Notes or by enforcing any other legal or equitable right provided
      under this Agreement or the Notes or otherwise existing under any law in favor
      of the holder of the Notes.

     

    8.13  Remedies
      Cumulative.
      No
      remedy, right or power conferred upon the Banks is intended to be exclusive
      of
      any other remedy, right or power given hereunder or now or hereafter existing
      at
      law, in equity, or otherwise, and all such remedies, rights and powers shall
      be
      cumulative.

     

    9.  THE
      AGENT

     

    9.1  Authorization
      and Action.
      Each
      Bank hereby appoints HVB as its Agent under and irrevocably authorizes the
      Agent
      (subject to this Section 9.1 and Section 9.7 (Successor Agent)) to take such
      action as the Agent on its behalf and to exercise such powers under this
      Agreement, the Loan Documents and the Notes as are delegated to the Agent by
      the
      terms thereof, together with such powers as are reasonably incidental thereto.
      Without limitation of the foregoing, each Bank expressly authorizes the Agent
      to
      execute, deliver, and perform its obligations under this Agreement and the
      Loan
      Documents, and to exercise all rights, powers, and remedies that the Agent
      may
      have hereunder and thereunder. As to any matters not expressly provided for
      by
      this Agreement (including, without limitation, enforcement or collection of
      the
      Notes), the Agent shall not be required to exercise any discretion or take
      any
      action, but shall be required to act, or to refrain from acting (and shall
      be
      fully protected in so acting or refraining from acting), upon the instructions
      of the Majority Banks, and such instructions shall be binding upon all the
      Banks
      and all holders of any Note; provided
      that the
      Agent shall not be required to take any action which exposes the Agent to
      personal liability or which is contrary to this Agreement or applicable law.
      The
      Agent agrees to give to each Bank prompt notice of each notice given to it
      by
      the Borrower pursuant to the terms of this Agreement.

     

    
      
        
        

      

      
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    9.2  Agent’s
      Reliance, Etc.
      Neither
      the Agent nor any of its directors, officers, agents, or employees shall be
      liable to any Bank for any action taken or omitted to be taken by it or them
      under or in connection with this Agreement, the Notes and the other Loan
      Documents, except for its or their own gross negligence or willful misconduct.
      Without limitation of the generality of the foregoing, the Agent: (a) may treat
      the original or any successor holder of any Note as the holder thereof until
      the
      Agent receives notice from the Bank which is the payee of such Note concerning
      the assignment of such Note; (b) may employ and consult with legal counsel
      (including counsel for the Borrower), independent public accountants, and other
      experts selected by it and shall not be liable to any Bank for any action taken,
      or omitted to be taken, in good faith by it or them in accordance with the
      advice of such counsel, accountants, or experts received in such consultations
      and shall not be liable for any negligence or misconduct of any such counsel,
      accountants, or other experts; (c) makes no warranty or representation to any
      Bank and shall not be responsible to any Bank for any opinions, certifications,
      statements, warranties, or representations made in or in connection with this
      Agreement; (d) shall not have any duty to any Bank to ascertain or to inquire
      as
      to the performance or observance of any of the terms, covenants, or conditions
      of this Agreement or any other instrument or document furnished pursuant thereto
      or to satisfy itself that all conditions to and requirements for any Loan have
      been met or that the Borrower is entitled to any Loan or to inspect the property
      (including the books and records) of the Borrower or any Subsidiary; (e) shall
      not be responsible to any Bank for the due execution, legality, validity,
      enforceability, genuineness, sufficiency, or value of this Agreement or any
      other instrument or document furnished pursuant thereto; and (f) shall incur
      no
      liability under or in respect of this Agreement by acting upon any notice,
      consent, certificate, or other instrument or writing believed by it to be
      genuine and signed or sent by the proper party or parties.

     

    9.3  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) unless the
      Agent has received notice from a Bank or the Borrower specifying such Default
      and stating that such notice is a Notice of Default. In the event that the
      Agent
      receives such a notice of the occurrence of a Default, the Agent shall give
      prompt notice thereof to the Banks (and shall give each Bank prompt notice
      of
      each such nonpayment). The Agent shall (subject to Section 9.7 (Successor
      Agent)) take such action with respect to such Default as shall be instructed
      by
      the Majority Banks; provided
      that,
      unless and until the Agent shall have received the directions referred to in
      Sections 9.1 (Authorization and Action) or 9.7 (Successor Agent), the Agent
      may
      (but shall not be obligated to) take such action, or refrain from taking such
      action, with respect to such Default as it shall deem advisable and in the
      best
      interest of the Banks.

     

    
      
        
        

      

      
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    9.4  HVB
      and Affiliates.
      With
      respect to its Commitment, any Loan made by it, and the Note issued to it,
      HVB
      shall have the same rights and powers under this Agreement as any other Bank
      and
      may exercise the same as though it were not the Agent; and the term “Bank” or
“Banks” shall, unless otherwise expressly indicated, include HVB in its
      individual capacity. HVB and its respective Affiliates may accept deposits
      from,
      lend money to, act as trustee under indentures of, and generally engage in
      any
      kind of business with, the Borrower, any of its respective Affiliates and any
      Person who may do business with or own securities of the Borrower or any such
      Affiliate, all as if HVB were not the Agent and without any duty to account
      therefor to the Banks.

     

    9.5  Non-Reliance
      on Agent and Other Banks.
      Each
      Bank agrees that it has, independently and without reliance on the Agent or
      any
      other Bank, and based on such documents and information as it has deemed
      appropriate, made its own credit analysis of the Borrower and each Subsidiary
      and its decision to enter into the transactions contemplated by this Agreement
      and that it will, independently and without reliance upon the Agent or any
      other
      Bank, and based on such documents and information as it shall deem appropriate
      at the time, continue to make its own analysis and decisions in taking or not
      taking action under this Agreement. The Agent shall not be required to keep
      itself informed as to the performance or observance by the Borrower of this
      Agreement or to inspect the properties or books of Panhandle Eastern, the
      Borrower or any Subsidiary. Except for notices, reports, and other documents
      and
      information expressly required to be furnished to the Banks by the Agent
      hereunder, the Agent shall not have any duty or responsibility to provide any
      Bank with any credit or other information concerning the affairs, financial
      condition, or business of Southern Union, Panhandle Eastern, the Borrower or
      any
      Subsidiary (or any of their Affiliates) which may come into the possession
      of
      the Agent or any of its Affiliates.

     

    9.6  Indemnification.
      Notwithstanding anything to the contrary herein contained, the Agent shall
      be
      fully justified in failing or refusing to take any action hereunder unless
      it
      shall first be indemnified to its satisfaction by the Banks against any and
      all
      liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
      costs, expenses, and disbursements of any kind or nature whatsoever which may
      be
      imposed on, incurred by or asserted against the Agent in any way relating to
      or
      arising out of its taking or continuing to take any action. Each Bank agrees
      to
      indemnify the Agent (to the extent not reimbursed by the Borrower), according
      to
      such Bank’s Pro Rata Percentage, from and against any and all liabilities,
      obligations, losses, damages, penalties, actions, judgments, suits, costs,
      expenses, and disbursements of any kind or nature whatsoever which may be
      imposed on, incurred by, or asserted against the Agent in any way relating
      to or
      arising out of this Agreement or the Notes or any action taken or omitted by
      the
      Agent under this Agreement or the Notes; provided
      that no
      Bank shall be liable for any portion of such liabilities, obligations, losses,
      damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
      resulting from the gross negligence or willful misconduct of the person being
      indemnified; and provided,
      further,
      that it
      is the intention of each Bank to indemnify the Agent against the consequences
      of
      the Agent’s own negligence, whether such negligence be sole, joint, concurrent,
      active or passive. Without limitation of the foregoing, each Bank agrees to
      reimburse the Agent promptly upon demand for its Pro Rata Percentage of any
      out-of-pocket expenses (including attorneys’ fees) incurred by the Agent in
      connection with the preparation, administration, or enforcement of, or legal
      advice in respect of rights or responsibilities under, this Agreement and the
      Notes, to the extent that the Agent is not reimbursed for such expenses by
      the
      Borrower.

     

    
      
        
        

      

      
        -44-

        
          

        

      

      
        
        

      

    

    9.7  Successor
      Agent.
      The
      Agent may resign at any time as Agent under this Agreement by giving written
      notice thereof to the Banks and the Borrower and may be removed at any time
      with
      or without cause by the Majority Banks. Upon any such resignation or removal,
      the Majority Banks shall have the right to appoint a successor Agent. If no
      successor Agent shall have been so appointed by the Majority Banks or shall
      have
      accepted such appointment within thirty (30) days after the retiring Agent’s
      giving of notice of resignation or the Majority Banks’ removal of the retiring
      Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor
      Agent, which shall be a commercial bank organized under the laws of the United
      States of America or of any State thereof and having a combined capital and
      surplus of at least $500,000,000. Upon the acceptance of any appointment as
      Agent hereunder by a successor Agent, such successor Agent shall thereupon
      succeed to and become vested with all the rights, powers, privileges and duties
      of the retiring Agent, and the retiring Agent shall be discharged from its
      duties and obligations under this Agreement. After any retiring Agent’s
      resignation or removal hereunder as Agent, the provisions of this Section 9
      shall inure to its benefit as to any actions taken or omitted to be taken by
      it
      while it was Agent under this Agreement.

     

    9.8  Agent’s
      Reliance.
      The
      Borrower shall notify the Agent in writing of the names of its officers and
      employees authorized to request a Loan on behalf of the Borrower and shall
      provide the Agent with a specimen signature of each such officer or employee.
      The Agent shall be entitled to rely conclusively on such officer’s or employee’s
      authority to request a Loan on behalf of the Borrower until the Agent receives
      written notice from the Borrower to the contrary. The Agent shall have no duty
      to verify the authenticity of the signature appearing on any Notice of
      Borrowing, and, with respect to any oral request for a Loan, the Agent shall
      have no duty to verify the identity of any Person representing himself as one
      of
      the officers or employees authorized to make such request on behalf of the
      Borrower. Neither the Agent nor any Bank shall incur any liability to the
      Borrower in acting upon any telephonic notice referred to above which the Agent
      or such Bank believes in good faith to have been given by a duly authorized
      officer or other Person authorized to borrow on behalf of the Borrower or for
      otherwise acting in good faith. 

     

    10.  GUARANTY

     

    10.1  Guaranty.
      Each
      Guarantor hereby absolutely, unconditionally and irrevocably guarantees the
      punctual payment when due, whether at scheduled maturity or by acceleration,
      demand or otherwise, of all Obligations of the Borrower now or hereafter
      existing under or in respect of the Loan Documents (including, without
      limitation, any extensions, modifications, substitutions, amendments or renewals
      of any or all of the foregoing Obligations), whether direct or indirect,
      absolute or contingent, and whether for principal, interest, premiums, fees,
      indemnities, contract causes of action, costs, expenses or otherwise (such
      Obligations being the “Guaranteed
      Obligations”).

     

    10.2  Guaranty
      Absolute.
      Each
      Guarantor guarantees that the Guaranteed Obligations will be paid strictly
      in
      accordance with the terms of the Loan Documents, regardless of any law,
      regulation or order now or hereafter in effect in any jurisdiction affecting
      any
      of such terms or the rights of any Bank with respect thereto. The Obligations
      of
      each Guarantor under or in respect of this Guaranty are independent of any
      Obligations of the Borrower under or in respect of the Loan Documents, and
      a
      separate action or actions may be brought and prosecuted against each Guarantor
      to enforce this Guaranty, irrespective of whether any action is brought against
      the Borrower or whether the Borrower is joined in any such action or actions.
      The liability of each Guarantor under this Guaranty shall be irrevocable,
      absolute and unconditional irrespective of, and each Guarantor hereby
      irrevocably waives any defenses it may now have or hereafter acquire in any
      way
      relating to, any or all of the following:

     

    
      
        
        

      

      
        -45-

        
          

        

      

      
        
        

      

    

    (a) any
      lack
      of validity or enforceability of any Loan Document or any agreement or
      instrument relating thereto;

     

    (b) any
      change in the time, manner or place of payment of, or in any other term of,
      all
      or any of the Guaranteed Obligations or any other Obligations of the Borrower
      under or in respect of the Loan Documents, or any other amendment or waiver
      of
      or any consent to departure from any Loan Document, including, without
      limitation, any increase in the Guaranteed Obligations resulting from the
      extension of additional credit to any Loan Party or any of its Subsidiaries
      or
      otherwise;

     

    (c) any
      taking, exchange, release or non-perfection of any collateral, or any taking,
      release or amendment or waiver of, or consent to departure from, any other
      guaranty, for all or any of the Guaranteed Obligations;

     

    (d) any
      manner of application of any collateral, or proceeds thereof, to all or any
      of
      the Guaranteed Obligations, or any manner of sale or other disposition of any
      collateral for all or any of the Guaranteed Obligations or any other Obligations
      of any Loan Party under the Loan Documents or any other assets of any Loan
      Party
      or any of its Subsidiaries;

     

    (e) any
      change, restructuring or termination of the corporate structure or existence
      of
      any Loan Party or any of its Subsidiaries;

     

    (f) any
      failure of any Bank to disclose to any Loan Party any information relating
      to
      the business, operations, financial condition, assets or prospects of any other
      Loan Party now or hereafter known to such Bank (each Guarantor waiving any
      duty
      on the part of the Banks to disclose such information);

     

    (g) the
      failure of any other Person to execute or deliver any other guaranty or
      agreement or the release or reduction of liability of any other guarantor or
      surety with respect to the Guaranteed Obligations; or

     

    (h) any
      other
      circumstance (including, without limitation, any statute of limitations) or
      any
      existence of or reliance on any representation by any Bank that might otherwise
      constitute a defense available to, or a discharge of, any Loan Party or any
      other guarantor or surety.

     

    This
      Guaranty shall continue to be effective or be reinstated, as the case may be,
      if
      at any time any payment of any of the Guaranteed Obligations is rescinded or
      must otherwise be returned by any Bank or any other Person upon the insolvency,
      bankruptcy or reorganization of the Borrower or otherwise, all as though such
      payment had not been made.

     

    
      
        
        

      

      
        -46-

        
          

        

      

      
        
        

      

    

    10.3  Waivers
      and Acknowledgments.

     

    (a) Each
      Guarantor hereby unconditionally and irrevocably waives promptness, diligence,
      notice of acceptance, presentment, demand for performance, notice of
      nonperformance, default, acceleration, protest or dishonor and any other notice
      with respect to any of the Guaranteed Obligations and this Guaranty and any
      requirement that any Bank protect, secure, perfect or insure any Lien or any
      property subject thereto or exhaust any right or take any action against any
      Loan Party or any other Person or any collateral.

     

    (b) Each
      Guarantor hereby unconditionally and irrevocably waives any right to revoke
      this
      Guaranty and acknowledges that this Guaranty is continuing in nature and applies
      to all Guaranteed Obligations, whether existing now or in the
      future.

     

    (c) Each
      Guarantor hereby unconditionally and irrevocably waives (i) any defense arising
      by reason of any claim or defense based upon an election of remedies by any
      Bank
      that in any manner impairs, reduces, releases or otherwise adversely affects
      the
      subrogation, reimbursement, exoneration, contribution or indemnification rights
      of each Guarantor or other rights of such Guarantor to proceed against the
      Borrower, any other guarantor or any other Person and (ii) any defense based
      on
      any right of set-off or counterclaim against or in respect of the Obligations
      of
      such Guarantor hereunder.

     

    (d) Each
      Guarantor hereby unconditionally and irrevocably waives any duty on the part
      of
      any Bank to disclose to any Guarantor any matter, fact or thing relating to
      the
      business, operations, financial condition, assets or prospects of the Borrower
      or any of its Subsidiaries now or hereafter known by such Bank.

     

    (e) Each
      Guarantor acknowledges that it will receive substantial direct and indirect
      benefits from the financing arrangements contemplated by the Loan Documents
      and
      that the waivers set forth in Section 10.2 (Guaranty Absolute) and this Section
      10.3 are knowingly made in contemplation of such benefits.

     

    10.4  Subrogation.
      Each
      Guarantor hereby unconditionally and irrevocably agrees not to exercise any
      rights that it may now have or hereafter acquire against the Borrower that
      arise
      from the existence, payment, performance or enforcement of such Guarantor’s
      Obligations under or in respect of this Guaranty or any other Loan Document,
      including, without limitation, any right of subrogation, reimbursement,
      exoneration, contribution or indemnification and any right to participate in
      any
      claim or remedy of any Bank against the Borrower or any other insider guarantor,
      whether or not such claim, remedy or right arises in equity or under contract,
      statute or common law, including, without limitation, the right to take or
      receive from the Borrower, directly or indirectly, in cash or other property
      or
      by set-off or in any other manner, payment or security on account of such claim,
      remedy or right, unless and until all of the Guaranteed Obligations and all
      other amounts payable under this Guaranty shall have been paid in full in cash
      and the Commitments shall have expired or been terminated. If any amount shall
      be paid to any Guarantor in violation of the immediately preceding sentence
      at
      any time prior to the later of (a) the payment in full in cash of the Guaranteed
      Obligations and all other amounts payable under this Guaranty and (b) the
      Maturity Date, such amount shall be received and held in trust for the benefit
      of the Banks, shall be segregated from other property and funds of such
      Guarantor and shall forthwith be paid or delivered to the Agent in the same
      form
      as so received (with any necessary endorsement or assignment) to be credited
      and
      applied to the Guaranteed Obligations and all other amounts payable under this
      Guaranty, whether matured or unmatured, in accordance with the terms of the
      Loan
      Documents or other amounts payable under this Guaranty thereafter arising.
      If
      (i) any Guarantor shall make payment to any Bank of all or any part of the
      Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
      amounts payable under this Guaranty shall have been paid in full in cash and
      (iii) the Maturity Date shall have occurred, the Banks will, at such Guarantor’s
      request and expense, execute and deliver to such Guarantor appropriate
      documents, without recourse and without representation or warranty, necessary
      to
      evidence the transfer by subrogation to such Guarantor of an interest in the
      Guaranteed Obligations resulting from such payment made by such Guarantor
      pursuant to this Guaranty.

     

    
      
        
        

      

      
        -47-

        
          

        

      

      
        
        

      

    

    10.5  Subordination.
      Each
      Guarantor hereby subordinates any and all debts, liabilities and other
      Obligations owed to such Guarantor by the Borrower (the “Subordinated
      Obligations”)
      to the
      Guaranteed Obligations to the extent and in the manner hereinafter set forth
      in
      this Section 10.5:

     

    (a) Except
      during the continuance of a Default (including the commencement and continuation
      of any proceeding under any Debtor Law relating to the Borrower), a Guarantor
      may receive regularly scheduled payments from the Borrower on account of the
      Subordinated Obligations. After the occurrence and during the continuance of
      any
      Default (including the commencement and continuation of any proceeding under
      any
      Debtor Law relating to the Borrower), however, unless the Agent otherwise
      agrees, no Guarantor shall demand, accept or take any action to collect any
      payment on account of the Subordinated Obligations.

     

    (b) In
      any
      proceeding under any Debtor Law relating to the Borrower, each Guarantor agrees
      that the Banks shall be entitled to receive payment in full in cash of all
      Guaranteed Obligations (including all interest and expenses accruing after
      the
      commencement of a proceeding under any Debtor Law, whether or not constituting
      an allowed claim in such proceeding (“Post
      Petition Interest”))
      before any Guarantor receives payment of any Subordinated
      Obligations.

     

    (c) After
      the
      occurrence and during the continuance of any Default (including the commencement
      and continuation of any proceeding under any Debtor Law relating to the
      Borrower), each Guarantor shall, if the Agent so requests, collect, enforce
      and
      receive payments on account of the Subordinated Obligations as trustee for
      the
      Banks and deliver such payments to the Agent on account of the Guaranteed
      Obligations (including all Post Petition Interest), together with any necessary
      endorsements or other instruments of transfer, but without reducing or affecting
      in any manner the liability of such Guarantor under the other provisions of
      this
      Guaranty.

     

    (d) After
      the
      occurrence and during the continuance of any Default (including the commencement
      and continuation of any proceeding under any Debtor Law relating to the
      Borrower), the Agent is authorized and empowered (but without any obligation
      to
      so do), in its discretion, (i) in the name of a Guarantor, to collect and
      enforce, and to submit claims in respect of, Subordinated Obligations and to
      apply any amounts received thereon to the Guaranteed Obligations (including
      any
      and all Post Petition Interest), and (ii) to require each Guarantor (A) to
      collect and enforce, and to submit claims in respect of, Subordinated
      Obligations and (B) to pay any amounts received on such obligations to the
      Agent
      for application to the Guaranteed Obligations (including any and all Post
      Petition Interest).

     

    
      
        
        

      

      
        -48-

        
          

        

      

      
        
        

      

    

    10.6  Continuing
      Guaranty.
      This
      Guaranty is a continuing guaranty and shall remain in full force and effect
      until the later of (a) the payment in full in cash of the Guaranteed Obligations
      and all other amounts payable under this Guaranty and (b) the Maturity
      Date.

     

    10.7  General
      Limitation on Guaranteed Obligations.
      In any
      action or proceeding involving any state corporate law, or any state or Federal
      bankruptcy, insolvency, reorganization or other law affecting the rights of
      creditors generally, if the obligations of TLNG under Section 10.1
      (Guaranty) would otherwise be held or determined to be void, invalid or
      unenforceable, or subordinated to the claims of any other creditors, on account
      of the amount of its liability under Section 10.1 (Guaranty), then,
      notwithstanding any other provision hereof to the contrary, the amount of such
      liability shall, without any further action by TLNG, any Bank 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.

     

    11.  MISCELLANEOUS

     

    11.1  Amendments,
      Waivers, Etc.
      No
      amendment or waiver of any provision of any Loan Document, nor consent to any
      departure by a Loan Party therefrom, shall in any event be effective unless
      the
      same shall be in writing and signed by the Borrower, the Guarantors 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
      that no
      amendment, waiver or consent shall, unless in writing and signed by each Bank,
      do any of the following: 

     

    (a) waive
      any
      of the conditions specified in Section 4 (Conditions to Funding); 

     

    (b) increase
      the Commitment of any Bank or alter the term thereof, or subject any Bank to
      any
      additional or extended obligations; 

     

    (c) change
      the principal of, or decrease the rate of interest on, the Loans or any Note,
      or
      any fees or other amounts payable hereunder (except that the Required Banks
      may
      waive in writing the increase in Applicable Margin resulting from the occurrence
      of an SUG Change of Control); 

     

    (d) postpone
      any date fixed for any payment of principal of, or interest on, the Loans or
      any
      Note, or any fees (including, without limitation, any fee) or other amounts
      payable hereunder; 

     

    (e) change
      the definition of “Majority Banks” or the number of Banks which shall be
      required for Banks, or any of them, to take any action hereunder; 

     

    (f) amend
      this Section 11.1; or

     

    (g) reduce
      or
      limit the obligations of any Guarantor under the Loan Documents or release
      any
      Guarantor from its obligations under the Loan Documents;

     

    
      
        
        

      

      
        -49-

        
          

        

      

      
        
        

      

    

    and
      provided,
      further,
      that
      (I) 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 and (II) at any time after the occurrence of an SUG Change
      of
      Control, the approval of the Required Banks shall be required in order to (a)
      amend or waive, or consent to any departure from, Section 6.1 (Financial
      Covenant), Section 6.2 (Liens, Etc.), Section 6.7 (Restricted Payments), Section
      7.1 (Liens, Etc.) or Section 7.5 (Restricted Payments) or (b) to amend
      any
      defined term relating to any such provision if the effect of any such amendment
      contemplated in this clause (b) would be to cause such provision to be less
      onerous on the relevant Loan Party.
      No
      failure or delay on the part of any Bank or the Agent in exercising any power
      or
      right hereunder shall operate as a waiver thereof nor shall any single or
      partial exercise of any such right or power, or any abandonment or
      discontinuance of steps to enforce such a right or power, preclude any other
      or
      further exercise thereof or the exercise of any other right or power. No course
      of dealing between the Borrower and any Bank or the Agent shall operate as
      a
      waiver of any right of any Bank or the Agent. No modification or waiver of
      any
      provision of this Agreement or the Note nor consent to any departure by the
      Borrower therefrom shall in any event be effective unless the same shall be
      in
      writing, and then such waiver or consent shall be effective only in the specific
      instance and for the purpose for which given. No notice to or demand on the
      Borrower in any case shall entitle the Borrower to any other or further notice
      or demand in similar or other circumstances.

     

    11.2  Reimbursement
      of Expenses.

     

    (a) The
      Borrower agrees to pay on demand (and whether or not the Funding Date occurs)
      (1) all reasonable and documented out-of-pocket costs and expenses of the Agent
      and the Lead Arrangers, including reasonable and documented fees and expenses
      of
      a single counsel for the Agent and the Lead Arrangers, in connection with the
      syndication of the credit facilities provided for herein, the preparation and
      administration of this Agreement or any amendments, modifications or waivers
      of
      the provisions hereof, and (2) all costs and expenses of the Agent and each
      Bank
      in connection with the enforcement of the Loan Documents, whether in any action,
      suit or litigation, or any bankruptcy, insolvency or other similar proceeding
      affecting creditors’ rights generally (including, without limitation, the
      reasonable fees and expenses of counsel for the Agent and each Bank with respect
      thereto). The Borrower further agrees to pay any stamp or other taxes that
      may
      be payable in connection with the execution or delivery of any Loan
      Document.

     

    (b) If
      any
      payment of principal of, or Conversion of, any Eurodollar Rate Loan is made
      by
      the Borrower to or for the account of a Bank other than on the last day of
      the
      Interest Period for such Loan, as a result of a payment or Conversion pursuant
      to Section 2.5 (Prepayments), 2.8 (Conversion of Loans) or 2.9(d) (Increased
      Costs, Etc.), acceleration of the maturity of the Notes pursuant to Section
      8
      (Events of Default; Remedies) or for any other reason, or by an Eligible
      Assignee to a Bank other than on the last day of the Interest Period for such
      Loan upon an assignment of rights and obligations under this Agreement pursuant
      to Section 11.14 (Sale or Assignment) as a result of a demand by the Borrower
      pursuant to Section 11.14(a), or if the Borrower fails to make any payment
      or
      prepayment of a Loan for which a notice of prepayment has been given, whether
      pursuant to Section 2.3 (Repayment of Loans), 2.5 (Prepayments) or Section
      8
      (Events of Default; Remedies) or otherwise, the Borrower shall, upon demand
      by
      such Bank (with a copy of such demand to the Agent), pay to the Agent for the
      account of such Bank any amounts required to compensate such Bank for any
      additional losses, costs or expenses reasonably incurred by such Bank as a
      result of such payment or Conversion or such failure to pay or prepay, as the
      case may be, including, without limitation, any loss, cost or expense incurred
      by reason of the liquidation or reemployment of deposits or other funds acquired
      by any Bank to fund or maintain such Loan.

     

    
      
        
        

      

      
        -50-

        
          

        

      

      
        
        

      

    

    (c) The
      obligations of the Borrower under this Section 11.2 shall survive the
      termination of this Agreement and/or the payment of the Notes.

     

    11.3  Notices.
      Any
      communications between the parties hereto or notices provided herein to be
      given
      shall be given to the following addresses:

     

    (a) If
      to
      Panhandle Eastern, to: Panhandle
      Eastern Pipe Line Company, LP

    c/o
      Southern Union Company

    5444
      Westheimer Road

    Houston,
      Texas 77056

    
      	 	
              Attn:

            	
              Richard
                N. Marshall,

            


    

    Senior
      Vice President and

    Chief
      Financial Officer

    Phone:
      (713) 989-7000

    Fax:
      (713) 989-1213

     

    with
      copies to: Southern
      Union Company

    5444
      Westheimer Road

    Houston,
      Texas 77056

    
      	 	
              Attn:

            	
              Monica
                M. Gaudiosi,

            


    

    Senior
      Vice President and

    Associate
      General Counsel

    Phone:
      (713) 989-7567

    Fax:
      (713) 989-1213

     

    and

     

    Fleischman
      and Walsh, L.L.P.

    1919
      Pennsylvania Avenue, N.W.

    Suite
      600

    Washington,
      D.C. 20006

    Attn:
      Seth M. Warner

    Phone:
      (202) 939-7945

    Fax:
      (202) 265-5706

     

    (b) If
      to the
      Borrower, to: Trunkline
      LNG Holdings LLC

    c/o
      Southern Union Company

    5444
      Westheimer Road

    Houston,
      Texas 77056

    
      	 	
              Attn:

            	
              Richard
                N. Marshall,

            


    

    Senior
      Vice President and

    Chief
      Financial Officer

    Phone:
      (713) 989-7000

    Fax:
      (713) 989-1213

     

    
      
        
        

      

      
        -51-

        
          

        

      

      
        
        

      

    

    with
      copies to: Southern
      Union Company

    5444
      Westheimer Road

    Houston,
      Texas 77056

    
      	 	
              Attn:

            	
              Monica
                M. Gaudiosi,

            


    

    Senior
      Vice President and

    Associate
      General Counsel

    Phone:
      (713) 989-7567

    Fax:
      (713) 989-1213

     

    and

     

    Fleischman
      and Walsh, L.L.P.

    1919
      Pennsylvania Avenue, N.W.

    Suite
      600

    Washington,
      D.C. 20006

    Attn:
      Seth M. Warner

    Phone:
      (202) 939-7945

    Fax:
      (202) 265-5706

     

    (c) If
      to
      TLNG, to: Trunkline
      LNG Company, LLC

    c/o
      Southern Union Company

    5444
      Westheimer Road

    Houston,
      Texas 77056

    
      	 	
              Attn:

            	
              Richard
                N. Marshall,

            


    

    Senior
      Vice President and

    Chief
      Financial Officer

    Phone:
      (713) 989-7000

    Fax:
      (713) 989-1213

     

    with
      copies to: Southern
      Union Company

    5444
      Westheimer Road

    Houston,
      Texas 77056

    
      	 	
              Attn:

            	
              Monica
                M. Gaudiosi,

            


    

    Senior
      Vice President and

    Associate
      General Counsel

    Phone:
      (713) 989-7567

    Fax:
      (713) 989-1213

     

    and

     

    Fleischman
      and Walsh, L.L.P.

    1919
      Pennsylvania Avenue, N.W.

    Suite
      600

    Washington,
      D.C. 20006

    Attn:
      Seth M. Warner

    Phone:
      (202) 939-7945

    Fax:
      (202) 265-5706

     

    If
      to the
      Agent, to: Bayerische
      Hypo- und Vereinsbank AG, New York  Branch

    150
      East
      42nd Street

    New
      York,
      NY 10017-4679

     

    
      
        
        

      

      
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    Attn:
      Agency Services, Wayne Miller

    Tel:
      212-672-5930

    Fax:
      212-672-6025

     

    and
      if to
      any Bank, at the address specified in its Administrative Questionnaire, or
      as to
      the Borrower or the Agent, to such other address as shall be designated by
      such
      party in a written notice to the other party and, as to each other party, at
      such other address as shall be designated by such party in a written notice
      to
      the Borrower and the Agent. All notices or other communications required or
      permitted to be given hereunder shall be in writing and shall be considered
      as
      properly given (a) if delivered in person, (b) if sent by overnight delivery
      service (including Federal Express, UPS, ETA, Emery, DHL, AirBorne and other
      similar overnight delivery services), (c) if mailed by first class United States
      Mail, postage prepaid, registered or certified with return receipt requested
      or
      (d) if sent by facsimile or other electronic transmission. Notice so given
      shall
      be effective upon receipt by the addressee, except that communication or notice
      so transmitted by direct written electronic means shall be deemed to have been
      validly and effectively given on the day (if a Business Day and, if not, on
      the
      next following Business Day) on which it is transmitted if transmitted before
      4:00 p.m. (New York time), recipient’s time, and if transmitted after that time,
      on the next following Business Day; provided
      that if
      any notice is tendered to an addressee and the delivery thereof is refused
      by
      such addressee, such notice shall be effective upon such tender. Any party
      shall
      have the right to change its address for notice hereunder to any other location
      within the continental United States by giving of 30 days’ notice to the other
      parties in the manner set forth above.

     

    11.4  Governing
      Law.
      This
      Agreement, and any instrument or agreement required hereunder (to the extent
      not
      otherwise expressly provided for therein), shall be governed by, and construed
      under, the laws of the State of New York, without reference to conflicts of
      laws
      (other than Section 5-1401 and Section 5-1402 of the New York General
      Obligations Law).

     

    11.5  Waiver
      of Jury Trial.
      THE
      AGENT, THE BANKS AND EACH LOAN PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND
      INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
      OF
      ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
      THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OR CONDUCT, COURSE
      OF
      DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS, OF THE AGENT,
      THE
      BANKS OR THE LOAN PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
      BANKS
      TO ENTER INTO THIS AGREEMENT.

     

    11.6  Consent
      to Jurisdiction.
      The
      Agent, the Banks and each Loan Party agree that any legal action or proceeding
      by or against any Loan Party or with respect to or arising out of this Agreement
      or any other Loan Document may be brought in or removed to the Supreme Court
      of
      the State of New York, in and for the County of New York, or the United States
      District Court for the Southern District of New York, and any court of appeals
      from either therefrom as the Agent may elect. By execution and delivery of
      the
      Agreement, each of the Banks, the Agent and each Loan Party accepts, for
      themselves and in respect of their property, generally and unconditionally,
      the
      jurisdiction of the aforesaid courts. The Agent, the Banks and each Loan Party
      irrevocably consent to the service of process out of any of the aforementioned
      courts in any manner permitted by law. Nothing herein shall affect the right
      of
      the Agent and the Banks to bring legal action or proceedings in any other
      competent jurisdiction. The Agent, the Banks and each Loan Party further agree
      that the aforesaid courts of the State of New York and of the United States
      of
      America shall have exclusive jurisdiction with respect to any claim or
      counterclaim of any Loan Party based upon the assertion that the rate of
      interest charged by the Banks on or under this Agreement, the Loans and/or
      the
      other Loan Documents is usurious. The Agent, the Banks and each Loan Party
      hereby waive any right to stay or dismiss any action or proceeding under or
      in
      connection with this Agreement or any other Loan Document brought before the
      foregoing courts on the basis of an inconvenient forum. 

     

    
      
        
        

      

      
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    11.7  Survival
      of Representations, Warranties and Covenants.
      All
      representations, warranties and covenants contained herein or made in writing
      by
      any Loan Party in connection herewith shall survive the execution and delivery
      of the Loan Documents and the Notes, and will bind and inure to the benefit
      of
      the respective successors and assigns of the parties hereto, whether so
      expressed or not, provided
      that the
      undertaking of the Banks to make the Loans to the Borrower shall not inure
      to
      the benefit of any successor or assign of the Borrower. No investigation at
      any
      time made by or on behalf of the Banks shall diminish the Banks’ rights to rely
      on any representations made herein or in connection herewith. All statements
      contained in any certificate or other written instrument delivered by any Loan
      Party or by any Person authorized by the Borrower under or pursuant to this
      Agreement or in connection with the transactions contemplated hereby shall
      constitute representations and warranties hereunder as of the time made by
      such
      Loan Party.

     

    11.8  Counterparts.
      This
      Agreement may be executed in several counterparts, and by the parties hereto
      on
      separate counterparts, and each counterpart, when so executed and delivered,
      shall constitute an original instrument and all such separate counterparts
      shall
      constitute but one and the same instrument.

     

    11.9  Severability.
      Should
      any clause, sentence, paragraph or section of this Agreement be judicially
      declared to be invalid, unenforceable or void, such decision shall not have
      the
      effect of invalidating or voiding the remainder of this Agreement, and the
      parties hereto agree that the part or parts of this Agreement so held to be
      invalid, unenforceable or void will be deemed to have been stricken herefrom
      and
      the remainder will have the same force and effectiveness as if such part or
      parts had never been included herein. Each covenant contained in this Agreement
      shall be construed (absent an express contrary provision herein) as being
      independent of each other covenant contained herein, and compliance with any
      one
      covenant shall not (absent such an express contrary provision) be deemed to
      excuse compliance with one or more other covenants.

     

    11.10  Descriptive
      Headings.
      The
      section headings in this Agreement have been inserted for convenience only
      and
      shall be given no substantive meaning or significance whatsoever in construing
      the terms and provisions of this Agreement.

     

    11.11  Accounting
      Terms.
      All
      accounting terms used herein which are not expressly defined in the Agreement,
      or the respective meanings of which are not otherwise qualified, shall have
      the
      respective meanings given to them in accordance with GAAP.

     

    11.12  Limitation
      of Liability.
      No
      claim may be made by any Person for any special, indirect, consequential, or
      punitive damages in respect to any claim for breach of contract arising out
      of
      or related to the transactions contemplated by this Agreement, or any act,
      omission, or event occurring in connection herewith and the parties hereto
      hereby waive, release, and agree not to sue upon any claim for any such damages,
      whether or not accrued and whether or not known or suspected to exist in its
      favor.

     

    
      
        
        

      

      
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    11.13  Set-Off.
      Each
      Loan Party hereby gives and confirms to each Bank a right of set-off of all
      moneys, securities and other property of such Loan Party (whether special,
      general or limited) and the proceeds thereof, now or hereafter delivered to
      remain with or in transit in any manner to such Bank, its Affiliates,
      correspondents or agents from or for such Loan Party, whether for safekeeping,
      custody, pledge, transmission, collection or otherwise or coming into possession
      of such Bank, its Affiliates, correspondents or agents in any way, and also,
      any
      balance of any deposit accounts and credits of such Loan Party with, and any
      and
      all claims of security for the payment of the Loans and of all other liabilities
      and obligations now or hereafter owed by any Loan Party to such Bank, contracted
      with or acquired by such Bank, whether such liabilities and obligations be
      joint, several, absolute, contingent, secured, unsecured, matured or unmatured,
      and each Loan Party hereby authorizes each Bank, its Affiliates, correspondents
      or agents at any time or times, without prior notice, to apply such money,
      securities, other property, proceeds, balances, credits of claims, or any part
      of the foregoing, to such liabilities in such amounts as it may select, whether
      such liabilities be contingent, unmatured or otherwise, and whether any
      collateral security therefor is deemed adequate or not. The rights described
      herein shall be in addition to any collateral security, if any, described in
      any
      separate agreement executed by any Loan Party.

     

    11.14  Sale
      or Assignment.

     

    (a) Each
      Bank
      may assign and, so long as no Default shall have occurred and be continuing
      pursuant to Section 8.1 (Failure to Pay Obligations When Due) or 8.7 (Bankruptcy
      and Other Matters), if demanded by the Borrower (pursuant to Section 2.15
      (Replacement of Banks)) upon at least five Business Days’ notice to such Bank
      and the Agent, a Bank will assign, to one or more Eligible Assignees all or
      a
      portion of its rights and obligations under this Agreement and the other Loan
      Documents (including, without limitation, all or a portion of the Loans owing
      to
      it and the Note or Notes held by it); provided
      that


     

    (i) each
      such
      assignment shall be of a uniform, and not a varying, percentage of all rights
      and obligations under and in respect of the Loan Agreement;

     

    (ii) except
      in
      the case of an assignment of all of a Bank’s rights and obligations under this
      Agreement or any assignment to any Bank, an Affiliate of any Bank or an Approved
      Fund, the aggregate amount of the Loans being assigned to such assignee pursuant
      to such assignment (determined as of the date of the Assignment and Acceptance
      with respect to such assignment) shall in no event be less than
      $5,000,000;

     

    (iii) except
      in
      the case of an assignment to a Person that, immediately prior to such
      assignment, was a Bank, an Affiliate of any Bank or an Approved Fund, such
      assignment shall be approved by the Agent, and so long as no Default shall
      have
      occurred and be continuing pursuant to Section 8.1 (Failure to Pay Obligations
      When Due) or 8.7 (Bankruptcy and Other Matters) at the time of effectiveness
      of
      such assignment, the Borrower (in each case such approvals not to be
      unreasonably withheld or delayed); provided
      that no
      Borrower approval shall be required for any assignment made by HVB or Wachovia
      to any Eligible Assignee from the Closing Date through and including the
      two-month anniversary of the Funding Date;

     

    
      
        
        

      

      
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    (iv) each
      such
      assignment made as a result of a demand by the Borrower pursuant to this Section
      11.14 shall be made in accordance with Section 2.15 (Replacement of
      Banks);

     

    (v) no
      Bank
      shall be obligated to make any such assignment as a result of a demand by the
      Borrower pursuant to this Section 11.14 unless and until such Bank shall have
      received one or more payments from either the Borrower or one or more assignees
      in an aggregate amount at least equal to the aggregate outstanding principal
      amount of the Loans owing to such Bank, together with accrued interest thereon
      to the date of payment of such principal amount and all other amounts payable
      to
      such Bank under this Agreement;

     

    (vi) the
      parties to each such assignment shall execute and deliver to the Agent, for
      its
      acceptance and recording in the Register, an Assignment and Acceptance, together
      with any Note or Notes subject to such assignment and a processing and
      recordation fee of $3,500 (provided
      that for
      each such assignment made as a result of a demand by the Borrower pursuant
      to
      this Section 11.14, the Borrower shall pay to the Agent the applicable
      processing and recordation fee); and 

     

    (vii) the
      assignee, if it shall not be a Bank, shall deliver to the Agent an
      Administrative Questionnaire.

     

    (b) Upon
      such
      execution, delivery, acceptance and recording, from and after the effective
      date
      specified in such Assignment and Acceptance, 

     

    (i) the
      assignee thereunder shall be a party hereto and, to the extent that rights
      and
      obligations hereunder have been assigned to it pursuant to such Assignment
      and
      Acceptance, have the rights and obligations of a Bank hereunder, and


     

    (ii) the
      Bank
      assignor thereunder shall, to the extent that rights and obligations hereunder
      have been assigned by it pursuant to such Assignment and Acceptance, relinquish
      its rights (other than its rights under Sections 2.9 (Increased Costs), 2.11
      (Taxes) and 11.2 (Reimbursement of Expenses)) to the extent any claim thereunder
      relates to an event arising prior to such assignment) and be released from
      its
      obligations under this Agreement (and, in the case of an Assignment and
      Acceptance covering all of the remaining portion of an assigning Bank’s rights
      and obligations under this Agreement, such Bank shall cease to be a party
      hereto).

     

    (c) By
      executing and delivering an Assignment and Acceptance, each Bank assignor
      thereunder and each assignee thereunder confirm to and agree with each other
      and
      the other parties thereto and hereto as follows: 

     

    (i) other
      than as provided in such Assignment and Acceptance, such assigning Bank makes
      no
      representation or warranty and assumes no responsibility with respect to any
      statements, warranties or representations made in or in connection with any
      Loan
      Document or the execution, legality, validity, enforceability, genuineness,
      sufficiency or value of, or the perfection or priority of any lien or security
      interest created or purported to be created under or in connection with, any
      Loan Document or any other instrument or document furnished pursuant
      thereto;

     

    
      
        
        

      

      
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    (ii) such
      assigning Bank makes no representation or warranty and assumes no responsibility
      with respect to the financial condition of any Loan Party or the performance
      or
      observance by any Loan Party of any of its obligations under any Loan Document
      or any other instrument or document furnished pursuant thereto; 

     

    (iii) such
      assignee confirms that it has received a copy of this Agreement, together with
      copies of the financial statements most recently delivered hereunder and such
      other documents and information as it has deemed appropriate to make its own
      credit analysis and decision to enter into such Assignment and Acceptance;
      

     

    (iv) such
      assignee will, independently and without reliance upon any Agent, such assigning
      Bank or any other Bank and based on such documents and information as it shall
      deem appropriate at the time, continue to make its own credit decisions in
      taking or not taking action under this Agreement; 

     

    (v) such
      assignee confirms that it is an Eligible Assignee; 

     

    (vi) such
      assignee appoints and authorizes the Agent to take such action as agent on
      its
      behalf and to exercise such powers and discretion under the Loan Documents
      as
      are delegated to such Agent by the terms hereof and thereof, together with
      such
      powers and discretion as are reasonably incidental thereto; and 

     

    (vii) such
      assignee agrees that it will perform in accordance with their terms all of
      the
      obligations that by the terms of this Agreement are required to be performed
      by
      it as a Bank.

     

    (d) The
      Agent
      shall maintain at its address a copy of each Assignment and Acceptance delivered
      to and accepted by it and a register for the recordation of the names and
      addresses of the Banks and the principal amount of the Loans owing to, each
      Bank
      from time to time (the “Register”).
      The
      entries in the Register shall be conclusive and binding for all purposes, absent
      manifest error, and the Borrower, the Agent and the Banks may treat each Person
      whose name is recorded in the Register as a Bank hereunder for all purposes
      of
      this Agreement. The Register shall be available for inspection by the Borrower
      or any Agent or any Bank at any reasonable time and from time to time upon
      reasonable prior notice.

     

    (e) Upon
      its
      receipt of an Assignment and Acceptance executed by an assigning Bank and an
      assignee, together with any Note or Notes subject to such assignment, the Agent
      shall, if such Assignment and Acceptance has been completed and is in
      substantially the form of Exhibit C hereto, (1) accept such Assignment and
      Acceptance, (2) record the information contained therein in the Register and
      (3)
      give prompt notice thereof to the Borrower. In the case of any assignment by
      a
      Bank, within five Business Days after its receipt of such notice, the Borrower,
      at its own expense, shall execute and deliver to the Agent in exchange for
      the
      surrendered Note or Notes a new Note to the order of such Eligible Assignee
      in
      an amount equal to the Loans assumed by it pursuant to such Assignment and
      Acceptance and, if any assigning Bank has retained any Loans hereunder, a new
      Note to the order of such assigning Bank in an amount equal to the Loans
      retained by it hereunder. Such new Note or Notes shall be in an aggregate
      principal amount equal to the aggregate principal amount of such surrendered
      Note or Notes and shall be dated the effective date of such Assignment and
      Acceptance. No assignment shall be effective for purposes of this Agreement
      unless it has been recorded in the Register as provided in this Section
      11.14.

     

    
      
        
        

      

      
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    (f) Each
      Bank
      may sell participations to one or more Persons (other than any Loan Party or
      any
      of its Affiliates) in or to all or a portion of its rights and obligations
      under
      this Agreement (including, without limitation, all or a portion of its
      Commitments, the Loans owing to it and the Note or Notes (if any) held by it);
      provided
      that (1)
      such Bank’s obligations under this Agreement shall remain unchanged, (2) such
      Bank shall remain solely responsible to the other parties hereto for the
      performance of such obligations, (3) such Bank shall remain the holder of any
      such Note for all purposes of this Agreement, (4) the Borrower, the Agent and
      the other Banks shall continue to deal solely and directly with such Bank in
      connection with such Bank’s rights and obligations under this Agreement and (5)
      no participant under any such participation shall have any right to approve
      any
      amendment or waiver of any provision of any Loan Document, or any consent to
      any
      departure by any Loan Party therefrom, except to the extent that such amendment,
      waiver or consent would reduce the principal of, or interest on, the Notes
      or
      any fees or other amounts payable hereunder, in each case to the extent subject
      to such participation, postpone any date fixed for any payment of principal
      of,
      or interest on, the Notes or any fees or other amounts payable hereunder, in
      each case to the extent subject to such participation, or release any Guarantor.
      Subject to the last two sentences of this clause (f), the Borrower agrees that
      each participant shall be entitled to the benefits of Section 2.9 (Increased
      Costs), 2.11 (Taxes) and 11.2(b) (Breakage Expenses) to the same extent as
      if it
      were a Bank and had acquired its interest by assignment. To the extent permitted
      by law, each participant also shall be entitled to the benefits of Section
      11.13
      (Set-Off) as though it were a Bank, provided
      that
      such participant agrees to be subject to Section 2.12 (Sharing of Payments,
      Etc.) as though it were a Bank. A participant shall not be entitled to receive
      any greater payment under Section 2.9 (Increased Costs) or 2.11 (Taxes) than
      the
      applicable Bank would have been entitled to receive with respect to the
      participation sold to such participant, unless the sale of the participation
      to
      such participant is made with the Borrower’s prior written consent. A
      participant that is organized under the laws of a jurisdiction outside the
      United States shall not be entitled to the benefits of Section 2.11 (Taxes)
      unless the Borrower is notified of the participation sold to such participant
      and such participant agrees, for the benefit of the Borrower, to comply with
      Section 2.11(e) as though it were a Bank.

     

    (g) Any
      Bank
      may, in connection with any assignment or participation or proposed assignment
      or participation pursuant to this Section 11.14, disclose to the assignee or
      participant or proposed assignee or participant any information relating to
      the
      Borrower furnished to such Bank by or on behalf of the Borrower; provided
      that,
      prior to any such disclosure, the assignee or participant or proposed assignee
      or participant shall agree to preserve the confidentiality of any Confidential
      Information received by it from such Bank.

     

    
      
        
        

      

      
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    (h) Notwithstanding
      any other provision to the contrary set forth in this Agreement, any Bank may
      at
      any time create a security interest in all or any portion of its rights under
      this Agreement and the other Loan Documents (including, without limitation,
      the
      Loans owing to it and the Note or Notes held by it) in favor of any Federal
      Reserve Bank.

     

    (i) Notwithstanding
      anything to the contrary contained herein, any Bank that is a fund that invests
      in bank loans may create a security interest in all or any portion of the Loans
      owing to it and the Note or Notes held by it to the trustee for holders of
      obligations owed, or securities issued, by such fund as security for such
      obligations or securities, provided
      that
      unless and until such trustee actually becomes a Bank in compliance with the
      other provisions of this Section 11.14, (1) no such pledge shall release the
      pledging Bank from any of its obligations under the Loan Documents and (2)
      such
      trustee shall not be entitled to exercise any of the rights of a Bank under
      the
      Loan Documents even though such trustee may have acquired ownership rights
      with
      respect to the pledged interest through foreclosure or otherwise.

     

    11.15  Interest.
      All
      agreements between a Loan Party, the Agent or any Bank, whether now existing
      or
      hereafter arising and whether written or oral, are hereby expressly limited
      so
      that in no contingency or event whatsoever, whether by reason of demand being
      made on any Note or otherwise, shall the amount paid, or agreed to be paid,
      to
      the Agent or any Bank for the use, forbearance, or detention of the money to
      be
      loaned under this Agreement or otherwise or for the payment or performance
      of
      any covenant or obligation contained herein or in any document related hereto
      exceed the amount permissible at the Highest Lawful Rate. If, as a result of
      any
      circumstances whatsoever, fulfillment of any provision hereof or of any of
      such
      documents, at the time performance of such provision shall be due, shall involve
      transcending the limit of validity prescribed by applicable usury law, then,
      ipso
      facto,
      the
      obligation to be filled shall be reduced to the limit of such validity, and
      if,
      from any such circumstance, the Agent or any Bank shall ever receive interest
      or
      anything which might be deemed interest under applicable law which would exceed
      the amount permissible at the Highest Lawful Rate, such amount which would
      be
      excessive interest shall be applied to the reduction of the principal amount
      owing on account of the Notes or the amounts owing on other obligations of
      the
      Borrower to the Agent or any Bank under this Agreement or any document related
      hereto and not to the payment of interest, or if such excessive interest exceeds
      the unpaid principal balance of the Notes and the amounts owing on other
      obligations of the Borrower to the Agent or any Bank under this Agreement or
      any
      document related hereto, as the case may be, such excess shall be refunded
      to
      the Borrower. All sums paid or agreed to be paid to the Agent or any Bank for
      the use, forbearance, or detention of the indebtedness of the Borrower to the
      Agent or any Bank shall, to the extent permitted by applicable law, be
      amortized, prorated, allocated, and spread throughout the full term of such
      indebtedness until payment in full of the principal thereof (including the
      period of any renewal or extension thereof) so that the interest on account
      of
      such indebtedness shall not exceed the Highest Lawful Rate. The terms and
      provisions of this Section 11.15 shall control and supersede every other
      provision of all agreements between the Borrower and the Banks.

     

    11.16  Indemnification.
      THE
      BORROWER AGREES TO INDEMNIFY, DEFEND, AND SAVE HARMLESS THE AGENT, EACH BANK
      AND
      THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND ATTORNEYS, AND
      EACH
      OF THEM (THE “INDEMNIFIED
      PARTIES”),
      FROM
      AND AGAINST ALL CLAIMS, ACTIONS, SUITS, AND OTHER LEGAL PROCEEDINGS, DAMAGES,
      COSTS, INTEREST, CHARGES, TAXES, COUNSEL FEES, AND OTHER EXPENSES AND PENALTIES
      (INCLUDING WITHOUT LIMITATION ALL ATTORNEY FEES AND COSTS OR EXPENSES OF
      SETTLEMENT) WHICH ANY OF THE INDEMNIFIED PARTIES MAY 

     

    
      
        
        

      

      
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SUSTAIN
        OR INCUR BY REASON OF OR ARISING OUT OF (a) THE MAKING OF ANY LOAN HEREUNDER,
        THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE NOTES AND THE CONSUMMATION
        OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THE EXERCISE OF ANY OF THE BANKS’
RIGHTS UNDER THIS AGREEMENT AND THE NOTES OR OTHERWISE, INCLUDING, WITHOUT
        LIMITATION, DAMAGES, COSTS, AND EXPENSES INCURRED BY ANY OF THE INDEMNIFIED
        PARTIES IN INVESTIGATING, PREPARING FOR, DEFENDING AGAINST, OR PROVIDING
        EVIDENCE, PRODUCING DOCUMENTS, OR TAKING ANY OTHER ACTION IN RESPECT OF ANY
        COMMENCED OR THREATENED LITIGATION UNDER ANY FEDERAL SECURITIES LAW OR ANY
        SIMILAR LAW OF ANY JURISDICTION OR AT COMMON LAW OR (b) ANY AND ALL CLAIMS
        OR
        PROCEEDINGS (WHETHER BROUGHT BY A PRIVATE PARTY, GOVERNMENTAL AUTHORITY OR
        OTHERWISE) FOR BODILY INJURY, PROPERTY DAMAGE, ABATEMENT, REMEDIATION,
        ENVIRONMENTAL DAMAGE, OR IMPAIRMENT OR ANY OTHER INJURY OR DAMAGE RESULTING
        FROM
        OR RELATING TO THE RELEASE OF ANY HAZARDOUS MATERIALS LOCATED UPON, MIGRATING
        INTO, FROM, OR THROUGH OR OTHERWISE RELATING TO ANY PROPERTY OWNED OR LEASED
        BY
        THE BORROWER OR ANY SUBSIDIARY (WHETHER OR NOT THE RELEASE OF SUCH HAZARDOUS
        MATERIALS WAS CAUSED BY THE BORROWER, ANY SUBSIDIARY, A TENANT, OR SUBTENANT
        OF
        THE BORROWER OR ANY SUBSIDIARY, A PRIOR OWNER, A TENANT, OR SUBTENANT OF
        ANY
        PRIOR OWNER OR ANY OTHER PARTY AND WHETHER OR NOT THE ALLEGED LIABILITY IS
        ATTRIBUTABLE TO THE HANDLING, STORAGE, GENERATION, TRANSPORTATION, OR DISPOSAL
        OF ANY HAZARDOUS MATERIALS OR THE MERE PRESENCE OF ANY HAZARDOUS MATERIALS
        ON
        SUCH PROPERTY; PROVIDED
        THAT THE
        BORROWER SHALL NOT BE LIABLE TO THE INDEMNIFIED PARTIES WHERE THE RELEASE
        OF
        SUCH HAZARDOUS MATERIALS OCCURS AT ANY TIME AT WHICH THE BORROWER OR ANY
        SUBSIDIARY CEASES TO OWN OR LEASE SUCH PROPERTY); AND PROVIDED,
        FURTHER,
        THAT NO
        INDEMNIFIED PARTY SHALL BE ENTITLED TO THE BENEFITS OF THIS SECTION 11.16
        TO THE
        EXTENT ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT CONTRIBUTED TO ITS
        LOSS;
        AND PROVIDED,
        FURTHER,
        THAT IT
        IS THE INTENTION OF THE BORROWER TO INDEMNIFY THE INDEMNIFIED PARTIES AGAINST
        THE CONSEQUENCES OF THEIR OWN NEGLIGENCE. THIS AGREEMENT IS INTENDED TO PROTECT
        AND INDEMNIFY THE INDEMNIFIED PARTIES AGAINST ALL RISKS HEREBY ASSUMED BY
        THE
        BORROWER. THE OBLIGATIONS OF THE BORROWER UNDER THIS SECTION 11.16 SHALL
        SURVIVE
        ANY TERMINATION OF THIS AGREEMENT AND THE REPAYMENT OF THE
        NOTES.

    

     

    11.17  Payments
      Set Aside.
      To the
      extent that the Borrower makes a payment or payments to the Agent or any Bank
      or
      the Agent or any Bank exercises its right of set off, and such payment or
      payments or the proceeds of such set off or any part thereof are subsequently
      invalidated, declared to be fraudulent or preferential, set aside and/or
      required to be repaid to a trustee, receiver or any other Person under any
      Debtor Law or equitable cause, then, to the extent of such recovery, the
      obligation or part thereof originally intended to be satisfied, and all rights
      and remedies therefor, shall be revived and shall continue in full force and
      effect as if such payment had not been made or set off had not
      occurred.

     

    
      
        
        

      

      
        -60-

        
          

        

      

      
        
        

      

    

    11.18  Loan
      Agreement Controls.
      If
      there are any conflicts or inconsistencies among this Agreement and any other
      document executed in connection with the transactions connected herewith, the
      provisions of this Agreement shall prevail and control.

     

    11.19  Obligations
      Several.
      The
      obligations of each Bank under this Agreement and the Note to which it is a
      party are several, and no Bank shall be responsible for any obligation or
      Commitment of any other Bank under this Agreement and the Note to which it
      is a
      party. Nothing contained in this Agreement or the Note to which it is a party,
      and no action taken by any Bank pursuant thereto, shall be deemed to constitute
      the Banks to be a partnership, an association, a joint venture, or any other
      kind of entity.

     

    11.20  Final
      Agreement.
      THIS
      WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
      NOT
      BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
      AGREEMENT’S OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
      PARTIES.

     

    11.21  PATRIOT
      Act.
      Each
      Bank hereby notifies the Loan Parties that pursuant to the requirements of
      the
      USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law
      October 26, 2001)), such Bank may be required to obtain, verify and record
      information that identifies the Loan Parties, which information includes the
      name and address of the Loan Parties and other information that will allow
      such
      Bank to identify the Loan Parties in accordance with said Act.

     

    


     


    
      
        
          NY3:#7408959v8 

        

        
        

      

      
        -61-

        
          

        

      

      
        
        

        
        

      

    



    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 hereof.

     

    TRUNKLINE
      LNG HOLDINGS LLC

    As
      the
      Borrower

     

    By:_________________________

     

    Name:

     

    Title:

     

    


     

    PANHANDLE
      EASTERN PIPE LINE COMPANY, LP 

     

    As
      a
      Guarantor

     

    By:_________________________

     

    Name:

     

    Title:
      

     

    


     

    TRUNKLINE
      LNG COMPANY, LLC 

     

    As
      a
      Guarantor

     

    By:_________________________

     

    Name:

     

    Title:

     

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    BAYERISCHE
      HYPO- UND VEREINSBANK AG, NEW YORK
      BRANCH

    For
      itself and as Agent for the Banks

    


    By:_________________________

    Name:

    Title:

    


    By:_________________________

    Name:

    Title:

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    BANKS: 

    


    WACHOVIA
      BANK, NATIONAL ASSOCIATION

    


    By:_________________________

    Name:

    Title:

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    BANK
      OF
      AMERICA, N.A.

    


    By:_________________________

    Name:

    Title:

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    THE
      BANK
      OF TOKYO-MITSUBISHI UFJ, LTD., NEW       YORK
      BRANCH

    


    By:_________________________

    Name:

    Title:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    BAYERISCHE
      LANDESBANK, NEW YORK BRANCH

    


    By:_________________________

    Name:

    Title:

    


    By:_________________________

    Name:

    Title:

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    CREDIT
      SUISSE, CAYMAN ISLANDS BRANCH

    


    By:_________________________

    Name:

    Title:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    GOLDMAN
      SACHS CREDIT PARTNERS L.P.

    


    By:_________________________

    Name:

    Title:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    MIZUHO
      CORPORATE BANK, LTD.

    


    By:_________________________

    Name:

    Title:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    JPMORGAN
      CHASE BANK, N.A.

    


    By:_________________________

    Name:

    Title:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    KBC
      BANK
      N.V.

    


    By:_________________________

    Name:

    Title:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    ROYAL
      BANK OF CANADA

    


    By:_________________________

    Name:

    Title:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    SUNTRUST
      BANK

    


    By:_________________________

    Name:

    Title:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    UNION
      BANK OF CALIFORNIA, N.A.

    


    By:_________________________

    Name:

    Title:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    BANK
      HAPOALIM B.M.

    


    By:_________________________

    Name:

    Title:

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    BANK
      OF
      CHINA, NEW YORK BRANCH

    


    By:_________________________

    Name:

    Title:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    COMMERZBANK
      AG, NEW YORK AND GRAND CAYMAN
      BRANCHES

    


    By:_________________________

    Name:

    Title:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    FIRST
      COMMERCIAL BANK, NEW YORK AGENCY

    


    By:_________________________

    Name:

    Title:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    NATIONAL
      BANK OF EGYPT

    


    By:_________________________

    Name:

    Title:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    PNC
      BANK,
      NATIONAL ASSOCIATION

    


    By:_________________________

    Name:

    Title:

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    WELLS
      FARGO BANK, NATIONAL ASSOCIATION

    


    By:_________________________

    Name:

    Title:

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    THE
      BANK
      OF EAST ASIA, LTD., LOS ANGELES BRANCH

    


    By:_________________________

    Name:

    Title:

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    UMB
      BANK,
      N.A.

    


    By:_________________________

    Name:

    Title:

    


    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    BANK
      OF
      COMMUNICATIONS, NEW YORK BRANCH

    


    By:_________________________

    Name:

    Title:

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    ANNEX
      I

    


    


    COMMITMENTS

    


    [See
      definition of “Commitment” in Section 1.1 (Definitions)]

     

    

      
        	
                Name
                  of Lender

              	
                Commitment
                  ($)

              
	 	 
	
                Bayerische
                  Hypo- und Vereinsbank AG, New York Branch

              	
                $29,250,000

              
	
                Wachovia
                  Bank, National Association

              	
                $29,250,000

              
	
                Bank
                  of America, N.A.

              	
                $26,500,000

              
	
                The
                  Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch

              	
                $26,500,000

              
	
                Bayerische
                  Landesbank, New York Branch

              	
                $26,500,000

              
	
                Credit
                  Suisse, Cayman Islands Branch

              	
                $26,500,000

              
	
                Goldman
                  Sachs Credit Partners L.P.

              	
                $26,500,000

              
	
                Mizuho
                  Corporate Bank, Ltd.

              	
                $26,500,000

              
	
                JPMorgan
                  Chase Bank, N.A.

              	
                $21,500,000

              
	
                KBC
                  Bank N.V.

              	
                $21,500,000

              
	
                Royal
                  Bank of Canada

              	
                $21,500,000

              
	
                SunTrust
                  Bank 

              	
                $21,500,000

              
	
                Union
                  Bank of California, N.A.

              	
                $21,500,000

              
	
                Bank
                  Hapoalim B.M.

              	
                $15,000,000

              
	
                Bank
                  of China, New York Branch

              	
                $15,000,000

              
	
                Commerzbank
                  AG, New York and Grand Cayman Branches

              	
                $15,000,000

              
	
                First
                  Commercial Bank, New York Agency

              	
                $15,000,000

              
	
                National
                  Bank of Egypt

              	
                $15,000,000

              
	
                PNC
                  Bank, National Association

              	
                $15,000,000

              
	
                Wells
                  Fargo Bank, National Association

              	
                $15,000,000

              
	
                The
                  Bank of East Asia, Ltd., Los Angeles Branch

              	
                $10,000,000

              
	
                UMB
                  Bank, N.A.

              	
                $10,000,000

              
	
                Bank
                  of Communications, New York Branch

              	
                $5,000,000

              
	 	 
	
                TOTAL
                  

              	
                $455,000,000

              


      



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
      A

     

    NOTE

     

    $_______________________,
      20__

     

    FOR
      VALUE
      RECEIVED, the undersigned, TRUNKLINE LNG HOLDINGS LLC, a limited liability
      company organized under the laws of Delaware (the “Borrower”),
      HEREBY PROMISES TO PAY to the order of ___________________________________
      (the
“Bank”),
      on or
      before the Maturity Date, the principal sum of ________________ Million and
      No/
      100ths Dollars ($_,000,000) in accordance with the terms and provisions of
      that
      certain Credit Agreement dated as of March 13, 2007, by and among the Borrower,
      Panhandle Eastern Pipe Line Company, LP and Trunkline LNG Company, LLC, as
      Guarantors, the Bank, the other banks parties thereto, and BAYERISCHE HYPO-
      UND
      VEREINSBANK AG, NEW YORK BRANCH, as Agent (as same may be amended, modified,
      increased, supplemented and/or restated from time to time, the “Credit
      Agreement”).
      Capitalized terms used herein and not otherwise defined shall have the meanings
      ascribed to such terms in the Credit Agreement.

     

    The
      outstanding principal balance of this Note shall be payable at the Maturity
      Date. The Borrower promises to pay interest on the unpaid principal balance
      of
      this Note from the date of any Loan evidenced by this Note until the principal
      balance thereof is paid in full. Interest shall accrue on the outstanding
      principal balance of this Note from and including the date of any Loan evidenced
      by this Note to but not including the Maturity Date at the rate or rates, and
      shall be due and payable on the dates, set forth in the Credit Agreement. Any
      amount not paid when due with respect to principal (whether at stated maturity,
      by acceleration or otherwise), costs or expenses, or, to the extent permitted
      by
      applicable law, interest, shall bear interest from the date when due to and
      excluding the date the same is paid in full, payable on demand, at the rate
      provided for in Section 2.6(b) of the Credit Agreement.

     

    Payments
      of principal and interest, and all amounts due with respect to costs and
      expenses, shall be made in lawful money of the United States of America in
      immediately available funds, without deduction, set off or counterclaim to
      the
      account of the Agent at the principal office of Bayerische Hypo- und Vereinsbank
      AG, New York Branch in New York, New York (or such other address as the Agent
      under the Credit Agreement may specify) not later than noon (New York time)
      on
      the dates on which such payments shall become due pursuant to the terms and
      provisions set forth in the Credit Agreement.

     

    If
      any
      payment of interest or principal herein provided for is not paid when due,
      then
      the owner or holder of this Note may at its option, by notice to the Borrower,
      declare the unpaid, principal balance of this Note, all accrued and unpaid
      interest thereon and all other amounts payable under this Note to be forthwith
      due and payable, whereupon this Note, all such interest and all such amounts
      shall become and be forthwith due and payable in full, without presentment,
      demand, protest, notice of intent to accelerate, notice of actual acceleration
      or further notice of any kind, all of which are hereby expressly waived by
      the
      Borrower.

     

    If
      any
      payment of principal or interest on this Note shall become due on a Saturday,
      Sunday, or public holiday on which the Agent is not open for business, such
      payment shall be made on the next succeeding Business Day and such extension
      of
      time shall in such case be included in computing interest in connection with
      such payment.

     

    In
      addition to all principal and accrued interest on this Note, the Borrower agrees
      to pay (a) all reasonable costs and expenses incurred by the Agent and all
      owners and holders of this Note in collecting this Note through any probate,
      reorganization bankruptcy or any other proceeding and (b) reasonable attorneys’
fees when and if this Note is placed in the hands of an attorney for collection
      after default.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    All
      agreements between the Borrower and the Bank, whether now existing or hereafter
      arising and whether written or oral, are hereby expressly limited so that in
      no
      contingency or event whatsoever, whether by reason of demand being made on
      this
      Note or otherwise, shall the amount paid, or agreed to be paid, to the Bank
      for
      the use, forbearance, or detention of the money to be loaned under the Credit
      Agreement and evidenced by this Note or otherwise or for the payment or
      performance of any covenant or obligation contained in the Credit Agreement
      or
      this Note exceed the amount permissible at Highest Lawful Rate. If as a result
      of any circumstances whatsoever, fulfillment of any provision hereof or of
      the
      Credit Agreement at the time performance of such provision shall be due, shall
      involve transcending the limit of validity prescribed by applicable usury law,
      then, ipso
      facto,
      the
      obligation to be fulfilled shall be reduced to the limit of such validity,
      and
      if from any such circumstance, the Bank shall ever receive interest or anything
      which might be deemed interest under applicable law which would exceed the
      amount permissible at the Highest Lawful Rate, such amount which would be
      excessive interest shall be applied to the reduction of the principal amount
      owing on account of this Note or the amounts owing on other obligations of
      the
      Borrower to the Bank under the Credit Agreement and not to the payment of
      interest, or if such excessive interest exceeds the unpaid principal balance
      of
      this Note and the amounts owing on other obligations of the Borrower to the
      Bank
      under the Credit Agreement, as the case may be, such excess shall be refunded
      to
      the Borrower. In determining whether or not the interest paid or payable under
      any specific contingencies exceeds the Highest Lawful Rate, the Borrower and
      the
      Bank shall, to the maximum extent permitted under applicable law, (a)
      characterize any nonprincipal payment as an expense, fee or premium rather
      than
      as interest, (b) exclude voluntary prepayments and the effects thereof and
      (c)
      prorate, allocate and spread in equal parts during the period of the full stated
      term of this Note, all interest at any time contracted for, charged, received
      or
      reserved in connection with the indebtedness evidenced by this
      Note.

     

    This
      Note
      is one of the Notes provided for in, and is entitled to the benefits of, the
      Credit Agreement, which Credit Agreement, among other things, contains
      provisions for acceleration of the maturity hereof upon the happening of certain
      stated events, for prepayments on account of principal hereof prior to the
      maturity hereof upon the terms and conditions and with the effect therein
      specified, and provisions to the effect that no provision of the Credit
      Agreement or this Note shall require the payment or permit the collection of
      interest in excess of the Highest Lawful Rate. It is contemplated that by reason
      of prepayments or repayments hereon prior to the Maturity Date, there may be
      times when no indebtedness is owing hereunder prior to such date; but
      notwithstanding such occurrence this Note shall remain valid and shall be in
      full force and effect as to Loans made pursuant to the Credit Agreement
      subsequent to each such occurrence.

     

    Except
      as
      otherwise specifically provided for in the Credit Agreement, the Borrower and
      any and all endorsers, guarantors and sureties severally waive grace, demand,
      presentment for payment, notice of dishonor or default, protest, notice of
      protest, notice of intent to accelerate, notice of acceleration and diligence
      in
      collecting and bringing of suit against any party hereto, and agree to all
      renewals, extensions or partial payments hereon and to any release or
      substitution of security hereof, in whole or in part, with or without notice,
      before or after maturity.

     

    THIS
      NOTE
      SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
      OF
      NEW YORK AND APPLICABLE FEDERAL LAW.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


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

     

    
      	 	
              TRUNKLINE
                LNG HOLDINGS LLC

            
	 	
              By:

            	 
	 	
              Name:

            	 
	 	
              Title:

            	 
	 	 


    

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      B

     

    ASSIGNMENT
      AND ACCEPTANCE

     

    [NAME
      AND
      ADDRESS OF

    ASSIGNING
      BANK]

     

    _______________,
      20__

    ________________

    ________________

    ________________

    ________________

     

    Re: Trunkline
      LNG Holdings Credit Agreement

     

    Ladies
      and Gentlemen:

     

    We
      have
      entered into a Credit Agreement dated as of March 13, 2007 (as same may be
      amended, modified, increased, supplemented and/or restated from time to time,
      the “Credit
      Agreement”),
      among
      certain banks (including us), Bayerische Hypo- und Vereinsbank AG, New York
      Branch (the “Agent”),
      Trunkline LNG Holdings LLC (the “Company”)
      and
      the Guarantors parties thereto. Capitalized terms used herein and not otherwise
      defined shall have the meanings ascribed to such terms in the Credit
      Agreement.

     

    Each
      reference to the Credit Agreement, the Notes or any other document evidencing
      or
      governing the Loans (all such documents collectively, the “Financing
      Documents”)
      includes each such document as amended, modified, extended or replaced from
      time
      to time. All times are New York times.

     

    1.  Assignment.
      We
      hereby sell and assign to you without recourse, and you hereby unconditionally
      and irrevocably acquire for your own account and risk, a ___ percent (__%)
      undivided interest (“your assigned share”) in our Note and all Loans and
      interest thereon as provided in Section 2 of the Credit Agreement [, except
      that
      interest shall accrue on your assigned share in the principal of Alternate
      Base
      Rate Loans and Eurodollar Rate Loans at an annual rate equal to the rate
      provided in the Credit Agreement minus
      _____%]
      (collectively, the “Assigned
      Obligations”)

     

    2.  Materials
      Provided Assignee

     

    a.  We
      will
      promptly request that the Company issue new Notes to us and to you in
      substitution for our Note to reflect the assignment set forth herein. Upon
      issuance of such substitute Notes, (i) you will become a Bank under the Credit
      Agreement, (ii) you will assume our obligations under the Credit Agreement
      to
      the extent of your assigned share, and (iii) the Company will release us from
      our obligations under the Credit Agreement to the extent, but only to the
      extent, of your assigned share. [The Company consents to such release by signing
      this Agreement where indicated below.] As a Bank, you will be entitled to the
      benefits and subject to the obligations of a “Bank”, as set forth in the Credit
      Agreement, and your rights and liabilities with respect to the other Banks
      and
      the Agent will be governed by the Credit Agreement, including without limitation
      Section 9 (The Agent) thereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    b.  We
      have
      furnished you copies of the Credit Agreement, our Note and each other Financing
      Document you have requested. We do not represent or warrant (i) the priority,
      legality, validity, binding effect or enforceability of any Loan Document or
      any
      security interest created thereunder, (ii) the truthfulness and accuracy of
      any
      representation contained in any Loan Document, (iii) the filing or recording
      of
      any Loan Document necessary to perfect any security interest created thereunder,
      (iv) the financial condition of the Company or any other Person obligated under
      any Loan Document, any financial or other information, certificate, receipt
      or
      other document furnished or to be furnished under any Loan Document or (v)
      any
      other matter not specifically set forth herein having any relation to any Loan
      Document, your interest in one Note, the Company or any other Person. You
      represent to us that you are able to make, and have made, your own independent
      investigation and determination of the foregoing matters, including, without
      limitation, the creditworthiness of the Company and the structure of the
      transaction.

     

    3.  Governing
      Law; Jurisdiction.
      This
      Agreement, and any instrument or agreement required hereunder (to the
      extent
      not otherwise expressly provided for therein), shall be governed by, and
      construed under, the laws of the State of New York, without reference to
      conflicts of laws (other than Section 5-1401 and Section 5-1402 of the New
      York
      General Obligations Law).

     

    4.  Notices.
      All
      notices and other communications given hereunder to a party shall be given
      in
      writing (including bank wire, telecopy, telex or similar writing) at such
      party’s address set forth on the signature pages hereof or such other address as
      such party may hereafter specify by notice to the other party. Notice may also
      be given by telephone to the Person, or any other officer in the office, listed
      on the signature pages hereof if confirmed promptly by telex or telecopy.
      Notices shall be effective immediately, if given by telephone; upon
      transmission, if given by bank wire, electronic mail, telecopy; five days after
      deposit in the mails, if mailed; and when delivered, if given by other
      means.

     

    5.  Authority.
      Each of
      us represents and warrants that the execution and delivery of this Agreement
      have been validly authorized by all necessary corporate action and that this
      Agreement constitutes a valid and legally binding obligation enforceable against
      it in accordance with its terms.

     

    6.  Counterparts.
      This
      Agreement may be executed in one or more counterparts, and by each party on
      separate counterparts, each of which shall be an original but all of which
      taken
      together shall be but one instrument.

     

    7.  Amendments.
      No
      amendment modification or waiver of any provision of this Agreement shall be
      effective unless in writing and signed by the party against whom enforcement
      is
      sought.

     

    If
      the
      foregoing correctly sets forth our agreement, please so indicate by signing
      the
      enclosed copy of this Agreement and returning it to us.

     

    

       

    

     

    
      	 	
              Very
                truly yours,

               

            
	 	 
	 	
               

              By:

            	 
	 	
              Name:

            	 
	 	
              Title:

            	 
	 	
               

              [Street
                Address]

            	 
	 	
              [City,
                State, Zip Code]

            	 
	 	
              Telephone:

            	 
	 	
              Telecopy:

            	 
	
              AGREED
                AND ACCEPTED:

               

            	 
	
               

              By:

            	 	 
	 	 	 
	 	 	 
	 	 	 
	
               

              Attention:

            	 	 
	
              Telephone:

            	 	 
	
              Telecopy:

            	 	 
	
              Account
                for Payments:

            	 	 
	 	 


    

    ASSIGNMENT
      APPROVED PURSUANT TO SECTION 11.14 (SALE OR ASSIGNMENT) OF THE CREDIT AGREEMENT
      AND RELEASE APPROVED IN SECTION 2 OF THIS AGREEMENT:

     

    
      	 	
              TRUNKLINE
                LNG HOLDINGS LLC

            
	 	
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