Bridge Loan Agreement


    
      

    

     

    Exhibit
      10.2

     

    

      EXECUTION
        COPY

       

      BRIDGE
        LOAN AGREEMENT

       

      DATED
        AS OF MARCH 1, 2006

       

      BY
        AND AMONG

       

      SOUTHERN
        UNION COMPANY

       

      AND

       

      ENHANCED
        SERVICE SYSTEMS, INC.,

       

      as
        the Borrowers,

       

      AND

       

      THE
        BANKS PARTY HERETO,

       

      as
        the Banks,

       

      AND

       

      LEHMAN
        COMMERCIAL PAPER INC.,

       

      as
        the Administrative Agent

       

      


       

      ______________________________________________________

       

      JPMORGAN
        CHASE BANK, N.A.

       

      and

       

      WACHOVIA
        BANK, NATIONAL ASSOCIATION,

       

      as
        Co-Syndication Agents

       

      AND

       

      CALYON
        NEW YORK BRANCH

       

      and

       

      BANK
        OF AMERICA, N.A.,

       

      as
        Co-Documentation Agents

       

      AND

       

      LEHMAN
        BROTHERS INC.

       

      and

       

      MERRILL
        LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

       

      as
        the Joint Lead Arrangers and Joint Bookrunners

       

      


       


      
        
          
            


            


          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



      TABLE
        OF CONTENTS

       

      
        	
                1.

              	 	
                CERTAIN
                  DEFINITIONS

              	
                2

              
	 	
                1.1

              	
                Definitions

              	
                2

              
	 	
                1.2

              	
                Terms
                  Generally

              	
                23

              
	
                2.

              	 	
                THE
                  LOANS

              	
                24

              
	 	
                2.1

              	
                The
                  Loans

              	
                24

              
	 	
                2.2

              	
                Interest
                  Rate Determination

              	
                26

              
	 	
                2.3

              	
                Additional
                  Interest Rate Provisions

              	
                27

              
	
                3.

              	 	
                JOINT
                  AND SEVERAL LIABILITY OF BORROWERS

              	
                29

              
	 	
                3.1 

              	
                Joint
                  and Several Liability of Borrowers

              	
                29

              
	
                4.

              	 	
                PAYMENTS
                  AND PREPAYMENTS

              	
                32

              
	 	
                4.1

              	
                Optional
                  and Mandatory Prepayment

              	
                32

              
	 	
                4.2

              	
                Repayment
                  of the Loans; and Maturity of the Loans

              	
                33

              
	 	
                4.3

              	
                Place
                  of Payment or Prepayment

              	
                33

              
	 	
                4.4

              	
                No
                  Prepayment Premium or Penalty

              	
                34

              
	 	
                4.5

              	
                Taxes

              	
                34

              
	 	
                4.6

              	
                Reduction
                  or Termination of Commitments

              	
                34

              
	
                5.

              	 	
                FEES

              	
                34

              
	 	
                5.1

              	
                Specified
                  Fees

              	
                34

              
	 	
                5.2

              	
                Fees
                  Not Interest

              	
                34

              
	
                6.

              	 	
                APPLICATION
                  OF PROCEEDS

              	
                34

              
	 	
                6.1

              	
                Application
                  of Proceeds

              	
                34

              
	
                7.

              	 	
                REPRESENTATIONS
                  AND WARRANTIES

              	
                35

              
	 	
                7.1

              	
                Organization
                  and Qualification

              	
                35

              
	 	
                7.2

              	
                Financial
                  Statements

              	
                35

              
	 	
                7.3

              	
                Litigation

              	
                35

              
	 	
                7.4

              	
                Default

              	
                36

              
	 	
                7.5

              	
                Title
                  to Assets

              	
                36

              
	 	
                7.6

              	
                Payment
                  of Taxes

              	
                36

              
	 	
                7.7

              	
                Conflicting
                  or Adverse Agreements or Restrictions; Governmental
                  Approvals

              	
                36

              
	 	
                7.8

              	
                Authorization,
                  Validity, Etc.

              	
                36

              
	 	
                7.9

              	
                Investment
                  Company Act Not Applicable

              	
                37

              
	 	
                7.10

              	
                Public
                  Utility Holding Company Act Not Applicable

              	
                37

              
	 	
                7.11

              	
                Regulations
                  G, T, U and X

              	
                37

              
	 	
                7.12

              	
                ERISA

              	
                37

              
	 	
                7.13

              	
                No
                  Financing of Certain Security Acquisitions

              	
                38

              
	 	
                7.14

              	
                Franchises,
                  Co-Licenses, Etc

              	
                38

              
	 	
                7.15

              	
                Lines
                  of Business

              	
                38

              
	 	
                7.16

              	
                Environmental
                  Matters

              	
                38

              


      


      
        
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                7.17

              	
                No
                  Agreements Prohibiting Pledge of Southern Union Panhandle and Panhandle
                  Eastern Equity Interests

              	
                39

              
	 	
                7.18

              	
                No
                  Agreements Prohibiting Pledge of Sid Richardson Acquired
                  Business

              	
                39

              
	 	
                7.19

              	
                Use
                  of Proceeds

              	
                39

              
	 	
                7.20

              	
                Disclosure

              	
                39

              
	 	
                7.21

              	
                Sid
                  Richardson Acquired Business Matters

              	
                40

              
	 	
                7.22

              	
                Collateral
                  Matters

              	
                40

              
	
                8.

              	 	
                CONDITIONS

              	
                41

              
	 	
                8.1

              	
                Representations
                  True and No Defaults

              	
                41

              
	 	
                8.2

              	
                Governmental
                  Approvals

              	
                41

              
	 	
                8.3

              	
                Compliance
                  With Law

              	
                41

              
	 	
                8.4

              	
                Notice
                  of Borrowing and Other Documents

              	
                41

              
	 	
                8.5

              	
                Payment
                  of Fees and Expenses

              	
                41

              
	 	
                8.6

              	
                Loan
                  Documents, Opinions and Other Instruments

              	
                42

              
	 	
                8.7

              	
                Consummation
                  of Sid Richardson Acquisition

              	
                43

              
	 	
                8.8

              	
                No
                  Material Adverse Change

              	
                43

              
	 	
                8.9

              	
                Financial
                  Statements

              	
                43

              
	 	
                8.10

              	
                Indebtedness

              	
                43

              
	 	
                8.11

              	
                Miscellaneous
                  Documents

              	
                44

              
	 	
                8.12

              	
                Officers’
                  Certificate

              	
                44

              
	
                9.

              	 	
                AFFIRMATIVE
                  COVENANTS

              	
                44

              
	 	
                9.1

              	
                Financial
                  Statements and Information

              	
                44

              
	 	
                9.2

              	
                Lease
                  and Investment Schedules

              	
                45

              
	 	
                9.3

              	
                Books
                  and Records

              	
                45

              
	 	
                9.4

              	
                Insurance

              	
                45

              
	 	
                9.5

              	
                Maintenance
                  of Property

              	
                46

              
	 	
                9.6

              	
                Inspection
                  of Property and Records

              	
                46

              
	 	
                9.7

              	
                Existence,
                  Laws, Obligations

              	
                46

              
	 	
                9.8

              	
                Notice
                  of Certain Matters

              	
                46

              
	 	
                9.9

              	
                ERISA

              	
                46

              
	 	
                9.10

              	
                Compliance
                  with Environmental Laws

              	
                47

              
	 	
                9.11

              	
                PGA
                  Clauses

              	
                48

              
	 	
                9.12

              	
                Conveyance
                  of Acquired Business Equity Interests to Subsidiaries of the
                  Parent

              	
                48

              
	 	
                9.13

              	
                Collateral
                  Matters Upon Acquired Business Equity Interests Transfer

              	
                48

              
	 	
                9.14

              	
                Control
                  of SUG EAT LLC

              	
                49

              
	
                10.

              	 	
                NEGATIVE
                  COVENANTS

              	
                49

              
	 	
                10.1

              	
                Capital
                  Requirements

              	
                49

              
	 	
                10.2

              	
                Mortgages,
                  Liens, Etc

              	
                50

              
	 	
                10.3

              	
                Debt

              	
                51

              
	 	
                10.4

              	
                Loans,
                  Advances and Investments

              	
                53

              
	 	
                10.5

              	
                Stock
                  and Debt of Subsidiaries

              	
                55

              


      


      
        
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                10.6

              	
                Merger,
                  Consolidation, Etc.

              	
                55

              
	 	
                10.7

              	
                Supply
                  and Purchase Contracts

              	
                56

              
	 	
                10.8

              	
                Sale
                  or Other Disposition of Assets

              	
                56

              
	 	
                10.9

              	
                Discount
                  or Sale of Receivables

              	
                58

              
	 	
                10.10

              	
                Change
                  in Accounting Method

              	
                58

              
	 	
                10.11

              	
                Restricted
                  Payment

              	
                58

              
	 	
                10.12

              	
                Securities
                  Credit Regulations

              	
                58

              
	 	
                10.13

              	
                Nature
                  of Business; Management

              	
                59

              
	 	
                10.14

              	
                Transactions
                  with Related Parties

              	
                59

              
	 	
                10.15

              	
                Hazardous
                  Materials

              	
                59

              
	 	
                10.16

              	
                Limitations
                  on Payments on Subordinated Debt

              	
                59

              
	 	
                10.17

              	
                No
                  Agreements Prohibiting Pledge of Southern Union Panhandle and Panhandle
                  Eastern Equity Interests

              	
                59

              
	 	
                10.18

              	
                No
                  Agreements Prohibiting Pledge of the Sid Richardson Acquired Business
                  Equity Interests

              	
                59

              
	 	
                10.19

              	
                Restriction
                  on Transfer

              	
                60

              
	
                11.

              	 	
                EVENTS
                  OF DEFAULT; REMEDIES

              	
                60

              
	 	
                11.1

              	
                If
                  any of the following events shall occur

              	
                60

              
	 	
                (A)

              	
                Failure
                  to Pay Principal or Interest

              	
                61

              
	 	
                (B)

              	
                Failure
                  to Pay Fee or Other Amounts

              	
                61

              
	 	
                (C)

              	
                Failure
                  to Pay Other Debt

              	
                61

              
	 	
                (D)

              	
                Misrepresentation
                  or Breach of Warranty

              	
                61

              
	 	
                (E)

              	
                Violation
                  of Certain Covenants

              	
                61

              
	 	
                (F)

              	
                Violation
                  of Other Covenants, Etc

              	
                61

              
	 	
                (G)

              	
                Bankruptcy
                  and Other Matters

              	
                62

              
	 	
                (H)

              	
                Dissolution

              	
                62

              
	 	
                (I)

              	
                Undischarged
                  Judgment

              	
                62

              
	 	
                (J)

              	
                Environmental
                  Matters

              	
                62

              
	 	
                (K)

              	
                Default
                  under the Existing Revolving Credit Facility

              	
                63

              
	 	
                (L)

              	
                Change
                  in Control

              	
                63

              
	 	
                (M)

              	
                Change
                  in Ownership

              	
                63

              
	 	
                (N)

              	
                Invalidity
                  of Lien on Collateral

              	
                63

              
	 	
                (O)

              	
                Restricted
                  SUG EAT Entities Activities

              	
                63

              
	 	
                (P)

              	
                Modifications

              	
                64

              
	
                12.

              	 	
                THE
                  AGENT

              	
                64

              
	 	
                12.1

              	
                Authorization
                  and Action

              	
                64

              
	 	
                12.2

              	
                Agent’s
                  Reliance, Etc

              	
                65

              
	 	
                12.3

              	
                Defaults

              	
                65

              
	 	
                12.4

              	
                LCPI
                  and Affiliates

              	
                66

              
	 	
                12.5

              	
                Non-Reliance
                  on Agent and Other Banks

              	
                66

              
	 	
                12.6

              	
                Indemnification

              	
                66

              
	 	
                12.7

              	
                Successor
                  Agent

              	
                67

              


      


      
        
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                12.8

              	
                Agent’s
                  Reliance

              	
                67

              
	
                13.

              	 	
                MISCELLANEOUS

              	
                68

              
	 	
                13.1

              	
                Representation
                  by the Banks

              	
                68

              
	 	
                13.2

              	
                Amendments,
                  Waivers, Etc

              	
                68

              
	 	
                13.3

              	
                Reimbursement
                  of Expenses

              	
                68

              
	 	
                13.4

              	
                Notices

              	
                69

              
	 	
                13.5

              	
                Governing
                  Law; Jurisdiction; Consent to Service of Process

              	
                70

              
	 	
                13.6

              	
                Survival
                  of Representations, Warranties and Covenants

              	
                70

              
	 	
                13.7

              	
                Counterparts

              	
                70

              
	 	
                13.8

              	
                Severability

              	
                71

              
	 	
                13.9

              	
                Descriptive
                  Headings

              	
                71

              
	 	
                13.10

              	
                Accounting
                  Terms

              	
                71

              
	 	
                13.11

              	
                Limitation
                  of Liability

              	
                71

              
	 	
                13.12

              	
                Set-Off

              	
                71

              
	 	
                13.13

              	
                Sale
                  or Assignment

              	
                72

              
	 	
                13.14

              	
                Non
                  U.S. Banks

              	
                74

              
	 	
                13.15

              	
                Interest

              	
                74

              
	 	
                13.16

              	
                Indemnification

              	
                75

              
	 	
                13.17

              	
                Payments
                  Set Aside

              	
                76

              
	 	
                13.18

              	
                Bridge
                  Loan Agreement Controls

              	
                77

              
	 	
                13.19

              	
                Obligations
                  Several

              	
                77

              
	 	
                13.20

              	
                Pro
                  Rata Treatment

              	
                77

              
	 	
                13.21

              	
                No
                  Rights, Duties or Obligations of Syndication Agent or Documentation
                  Agent

              	
                78

              
	 	
                13.22

              	
                Final
                  Agreement

              	
                78

              
	 	
                13.23

              	
                WAIVER
                  OF JURY TRIAL

              	
                78

              
	 	
                13.24

              	
                USA
                  Patriot Act

              	
                78

              
	 	
                13.25

              	
                Successors
                  and Assigns Generally

              	
                78

              


      

      


       

      SCHEDULES

       

      Schedule
        2.1(a) - Commitments

      Schedule
        7.1(A)- List
        of
        Subsidiaries

      Schedule
        7.1(B)- Ownership
        Structure of Partnership Companies as of Closing Date

      Schedule
        7.3 - Disclosed
        Litigation

      Schedule
        7.6 - Tax
        Matters

      Schedule
        7.7 - Required
        Consents

      Schedule
        7.12 - ERISA
        Matters

       


      
        
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      EXHIBITS

       

      Exhibit
        A - Form
        of
        Note

      Exhibit
        B - Form
        of
        Notice of Borrowing

      Exhibit
        C - Form
        of
        Assignment and Acceptance

      Exhibit
        D-1 - Form
        of
        Parent Pledge Agreement

      Exhibit
        D-2 - Form
        of
        SUG EAT Entities Pledge Agreement

      Exhibit
        E - Form
        of
        Opinion

      Exhibit
        F - Form
        of
        Intercreditor Agreement

      


      


      



      
        
          
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      BRIDGE
        LOAN AGREEMENT

       

      This
        BRIDGE LOAN AGREEMENT is dated as of March 1, 2006, and entered into by and
        among SOUTHERN UNION COMPANY, a Delaware corporation (the “Parent”),
        ENHANCED SERVICE SYSTEMS, INC. a Delaware corporation and a direct wholly-owned
        Subsidiary (defined below) of the Parent (“ESSI”
and
        together with the Parent, the “Borrowers”
and
        each a “Borrower”),
        the
        Banks (as such term is defined in Section 1.1 below) from time to time party
        hereto, and LEHMAN COMMERCIAL PAPER INC., as administrative agent (in such
        capacity, the “Agent”)
        for
        the Banks.

       

      WITNESSETH:

       

      WHEREAS,
        pursuant to a purchase and sale agreement, dated as of December 15, 2005
        (including any annexes, schedules and exhibits thereto) (as the same may
        be
        amended, supplemented or otherwise modified from time to time in accordance
        with
        the provisions hereof and thereof, the “Sid
        Richardson Acquisition
        Agreement”),
        by
        and among SRCG, Ltd., a Texas limited partnership, as seller (“SRCG”),
        SRCG
        Genpar, L.P., a Delaware limited partnership, as seller (“Genpar”
and,
        together with SRCG, the “Sellers”),
        Southern Union Gathering Company LLC, a Delaware limited liability company
        and a
        wholly-owned subsidiary of the Parent (“SUGC”),
        and
        Southern Union Panhandle LLC, a Delaware limited liability company and a
        wholly-owned subsidiary of the Parent (“Southern
        Union Panhandle”
and
        together with SUGC, the “SUG
        Purchasers”),
        (b)
        the Assignment and Assumption Agreement For Purchase and Sale of Property,
        dated
        as of February 27, 2006 (the “Sid
        Richardson Acquisition Agreement Assignment”
and
        together with the Sid Richardson Acquisition Agreement, the “Sid
        Richardson Acquisition Documents”),
        by
        and among the SUG Purchasers and the SUG EAT Entities (defined below), pursuant
        to which the SUG Purchasers shall assign to the SUG EAT Entities all of their
        respective rights, title and interests in and to the Sid Richardson Acquisition
        Agreement and any other related documents, SUG EAT Inc. (defined below) will
        purchase from SRCG (i) 100% of all issued and outstanding limited partner
        interests in Sid Richardson Energy Services, Ltd., a Texas limited partnership
        (“SRES”),
        and
        (ii) 100% of all issued and outstanding limited partner interests in Richardson
        Energy Marketing, Ltd., a Texas limited partnership (“REM”)
        and
        (b) SUG EAT LLC (defined below) will purchase from Genpar (i) 100% of all
        issued
        and outstanding general partner interests in SRES, (ii) 100% of all issued
        and
        outstanding general partner interests in REM and (iii) 100% of all issued
        and
        outstanding general partner interests in Leapartners, L.P., a Texas limited
        partnership (“Leapartners”
and
        together with SRES and REM, the “Sid
        Richardson Acquired
        Business”)
        (such
        purchase of partnership interests described in the foregoing is referred
        to
        herein as the “Sid
        Richardson Acquisition”).

       

      WHEREAS,
        in order to effect the Sid Richardson Acquisition, ESSI shall make a loan
        in the
        aggregate principal amount of $1.6 billion to the SUG EAT Entities (the
“SUG
        EAT Entities Loan”)
        on the
        Closing Date (defined below) pursuant to the SUG EAT Entities Loan Documents
        (defined below). The proceeds of the SUG EAT Entities Loan shall be used
        by the
        SUG EAT Entities to fund the purchase price of the Sid Richardson Acquisition.
        As security for the SUG EAT Entities Loan, the SUG EAT Entities shall, on
        the
        Closing Date, grant 

       


      
        
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      to
        ESSI a
        second priority security interest in 100% of all issued and outstanding limited
        partner interests in SRES and REM and 100% of all issued and outstanding
        general
        partner interests in SRES, REM and Leapartners. 

       

      WHEREAS,
        the Borrowers have requested the Banks to extend credit on the Closing Date
        in
        an aggregate principal amount of $1.6 billion.

       

      WHEREAS,
        the proceeds of the Loans are to be used in accordance with Section 6.1 of
        this Agreement.

       

      NOW,
        THEREFORE, the Banks are willing to extend such credit to Borrowers on the
        terms
        and subject to the conditions set forth herein. Accordingly, the parties
        hereto
        agree as follows:

       

      1.  CERTAIN
        DEFINITIONS

       

      :
        INTERPRETATION.

       

      1.1  Definitions

       

      :
        As
        used
        in this Agreement, the following terms shall have the following
        meanings:

       

      “Acquired
        Business Equity Interests”
shall
        mean, collectively, (i) 100% of all issued and outstanding Equity Interests
        in
        REM, (ii) 100% of all issued and outstanding Equity Interests in SRES and
        (iii)
        100% of all issued and outstanding general partner interests in
        Leapartners.

       

      “Acquired
        Business Equity Interests Transfer”
shall
        mean the transfer of all the Acquired Business Equity Interests to one or
        more
        wholly-owned Subsidiaries of the Parent (other than any of the SUG Partnership
        Entities) upon the consummation of the Qualified Transaction or pursuant
        to
        Section 9.12(b); and the Borrower and such Subsidiaries shall have complied
        in
        all respects with Section 9.13.

       

      “Acquired
        Business Material Adverse Effect”
means
        any circumstance, change or effect that (i) is materially adverse to the
        business, operations (including results of operation), assets, liabilities
        or
        financial condition of the Partnership Companies taken as a whole or (ii)
        materially impedes the ability of the Sellers to complete the transactions
        contemplated in the Sid Richardson Acquisition Documents or to perform their
        obligations thereunder, but in the case of clause (i) above, shall exclude
        any
        circumstance, change or effect (except, as to clauses (a) and (c) below,
        to the
        extent that such circumstance, change or effect shall have a disproportionate
        impact (vis-á-vis other entities with operations in the counties where the
        Partnership Companies have physical assets) on the Partnership Companies)
        resulting or arising from: (a) any change in general economic conditions
        in the
        industries or markets in which a Partnership Company operates; (b) seasonal
        reductions in revenues and/or earnings of the Partnership Companies in the
        ordinary course of their respective businesses; (c) national or international
        political, diplomatic or military conditions, including any engagement in
        hostilities, whether or not pursuant to a declaration of war, or the occurrence
        of any military or terrorist attack; and (d) changes in accounting principles
        generally accepted in the United States 

       


      
        
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      as
        in
        effect from time to time, as consistently applied, or other accounting
        principles after the date of the Sid Richardson Acquisition
        Agreement.

       

      “Additional
        Costs”
shall
        mean, with respect to any Rate Period in the case of any Eurodollar Rate
        Loan,
        all costs, losses or payments, as determined by any Bank in its sole and
        absolute discretion (which determination shall be conclusive in the absence
        of
        manifest error) that such Bank or its Domestic Lending Office or its Eurodollar
        Lending Office does, or would, if such Eurodollar Rate Loan were funded during
        such Rate Period by the Domestic Lending Office or the Eurodollar Lending
        Office
        of such Bank, incur, suffer or make by reason of:

       

      (a) any
        and
        all present or future taxes (including, without limitation, any interest
        equalization tax or any similar tax on the acquisition of debt obligations,
        or
        any stamp or registration tax or duty or official or sealed papers tax),
        levies,
        imposts or any other charge of any nature whatsoever imposed by any taxing
        authority on or with regard to any aspect of the transactions contemplated
        by
        this Agreement, except such taxes as may be measured by the overall net income
        of such Bank or its Domestic Lending Office or its Eurodollar Lending Office
        and
        imposed by the jurisdiction, or any political subdivision or taxing authority
        thereof, in which such Bank’s Domestic Lending Office or its Eurodollar Lending
        Office is located; and

       

      (b) any
        increase in the cost to such Bank of agreeing to make or making, funding
        or
        maintaining any Eurodollar Rate Loan because of or arising from (i) the
        introduction of, or any change (other than any change by way of imposition
        or
        increase of reserve requirements, in the case of any Eurodollar Rate Loan,
        included in the Eurodollar Rate Reserve Percentage) in or in the interpretation
        or administration of, any law or regulation or (ii) the compliance with any
        request from any central bank or other governmental authority (whether or
        not
        having the force of law).

       

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

       

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

       

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

       

      “Alternate
        Base Rate”
shall
        mean, 

       


      
        
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      (a)
        for
        any day during the period from and including the Closing Date to and including
        the third day following the Closing Date, the Initial Alternate Base Rate;
        and

       

      (b)
        for
        any day thereafter, a rate, per annum (rounds upward to the nearest 1/16
        of 1%)
        equal to: (i) the greater of (x) the Prime Rate (computed on the basis of
        the
        actual number of days elapsed over a year of 365 or 366 days, as the case
        may
        be) in effect on such day; or (ii) the Federal Funds Rate in effect for such
        day
        plus one-half of one percent (1/2%) (computed on the basis of the actual
        number
        of days elapsed over a year of 360 days), plus (ii) the Applicable Margin.
        

       

      “Alternate
        Base Rate Loan”
shall
        mean any Loan which bears interest at the Alternate Base Rate.

       

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

       

      “Applicable
        Margin”
shall
        mean, at any date, (a) with respect to Eurodollar Rate Loans, the applicable
        percentage per annum set forth below under the caption “Applicable Margin for
        Eurodollar Rate Loans” and (b) with respect to Alternate Base Rate Loans, the
        applicable percentage per annum set forth below under the caption “Applicable
        Margin for Alternate Base Rate Loans”, in each case changing with the rating of
        the Parent’s unsecured, non-credit enhanced Senior Funded Debt and determined in
        accordance with the following grid:

       

      
        	
                Rating
                  of the Parent’s 

                 

                unsecured,
                  non-credit enhanced 

                 

                Senior
                  Funded Debt

                 

              	
                Applicable
                  Margin

                 

                for

                 

                Eurodollar
                  Rate Loans

                 

              	
                Applicable
                  Margin

                 

                for

                 

                Alternate
                  Base Rate Loans

                 

              
	
                Equal
                  to or greater than A3 by Moody’s and equal to or greater than A- by
                  S&P

                 

              	
                 

                 

                 

                 

                0.425%

                 

              	
                 

                 

                 

                 

                0.000%

                 

              
	
                Baa1
                  by Moody’s or BBB+ by S&P

                 

              	
                0.500%

                 

              	
                0.000%

                 

              
	
                Baa2
                  by Moody’s or BBB by S&P

                 

              	
                0.575%

                 

              	
                0.000%

                 

              
	
                Baa3
                  by Moody’s or BBB- by S&P

                 

              	
                0.725%

                 

              	
                0.000%

                 

              
	
                Ba1
                  by Moody’s or BB+ by S&P

                 

              	
                1.100%

                 

              	
                0.100%

                 

              
	
                Less
                  than Ba1 by Moody’s and less than BB+ by S&P

                 

              	
                 

                 

                1.350%

                 

              	
                 

                 

                0.350%

                 

              


      

      



      
        
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      Notwithstanding
        the foregoing provisions, in the event that ratings of the Parent’s unsecured,
        non-credit enhanced Senior Funded Debt under Moody’s and under S&P’s fall
        within different rating categories which are not functional equivalents,
        the
        Eurodollar Rate Loans and the Alternate Base Rate Loans shall be based on
        the
        higher of such ratings if there is only one category differential between
        the
        functional equivalents of such ratings, and if there is a two category
        differential between the functional equivalents of such ratings, the component
        of pricing from the grid set forth above shall be based on the rating category
        which is then in the middle of or between the two category ratings which
        are
        then in effect, and if there is greater than a two category differential
        between
        the functional equivalents of such ratings, the component of pricing from
        the
        grid set forth above shall be based on the rating category which is then
        one
        rating category above the lowest of the two category ratings which are then
        in
        effect. Additionally, in the event that the Parent withdraws from having
        its
        unsecured, non-credit enhanced Senior Funded Debt being rated by Moody’s or
        S&P, so that one or both of such ratings services fails to rate the Parent’s
        unsecured, non-credit enhanced Senior Funded Debt, the component of pricing
        from
        the grid set forth above for purposes of determining the Applicable Margin
        for
        Eurodollar Rate Loans and the Alternate Base Rate Loans commencing thereafter
        shall be (x) in the case of Eurodollar Rate Loans, 1.350% and (y) in the
        case of
        Alternate Base Rate Loans, 0.350%, in each case until such time as the Parent
        subsequently causes its unsecured, non-credit enhanced Senior Funded Debt
        to be
        rated by both of said ratings services.

       

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

       

      “Asset
        Sale”
shall
        mean any conveyance, sale, lease, sublease, assignment, transfer or other
        disposition (including by way of merger or consolidation and including any
        sale
        and leaseback transaction) of any property by the Parent or any of its
        Subsidiaries to any Person; provided, however,
        that an
        Asset Sale shall not include (x) any disposition of cash and cash equivalents
        in
        the ordinary course of business, (y) any conveyance, sale, lease, assignment,
        transfer or other disposition of Property to the extent such conveyance,
        sale,
        lease, assignment, transfer or disposition is permitted pursuant to clause
        (i)
        in the proviso in Section 10.8 and (z) any conveyance, sale, assignment,
        transfer or other disposition of Property for fair market value resulting
        in no
        more than $1,000,000 in net cash proceeds per Asset Sale (or series of related
        Asset Sales).

       

      “Assignment
        and Acceptance”
shall
        have the meaning set forth in Section 13.13.

       

      “Bank
        Affiliate”
shall
        have the meaning set forth in Section 13.13(g).

       

      “Banks”
shall
        mean, collectively, (a) each Person listed on Schedule
        2.1(a)
        that is
        a party to this Agreement and (b) any Person that becomes a “Bank” hereunder
        pursuant to an 

       


      
        
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      Assignment
        and Acceptance, other than any such Person that ceases to be a party hereto
        pursuant to such Assignment and Acceptance.

       

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

       

      “Borrowing”
shall
        mean Loans of the same Type, made pursuant to Section 2.1(a), converted or
        continued on the same date and, in the case of Eurodollar Rate Loans, as
        to
        which a single Rate Period is in effect.

       

      “Borrowing
        Date”
shall
        mean, as applicable, (a) the date on which the Loans were made by the Banks
        pursuant to Section 2.1(a), which shall be the Closing Date, or (b) if
        applicable, a date of the continuation or conversion of Eurodollar Loans
        and/or
        Alternate Base Rate Loans, in each case with respect to clauses (a) and (b)
        above, as set forth in a Notice of Borrowing delivered pursuant to Section
        2.1(c).

       

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

       

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

       

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

       

      “Cash
        Interest Expense”
shall
        mean, for any period, total interest expense to the extent paid in cash
        (including the interest component of Capitalized Lease Obligations and
        capitalized interest and all dividends and interest paid on or with respect
        to
        the Parent’s Structured Securities) of the Parent and any of its Subsidiaries
        for such period all as determined in conformity with GAAP.

       

      “CCE
        Group”
shall
        mean CCE Holdings and its Subsidiaries.

       

      “CCE
        Holdings”
shall
        mean CCE Holdings LLC, a Delaware limited liability company.

       

      “CDEC”
shall
        mean Chicago Deferred Exchange Corporation, an Illinois corporation and a
        wholly-owned subsidiary of LaSalle National Bank, a national banking
        association. CDEC shall act as a “qualified intermediary” for the Parent
        pursuant to an agreement between CDEC and the Parent to facilitate the Qualified
        Transaction.

       

      “Change
        of Control”
shall
        mean (a) the acquisition of ownership, directly or indirectly, beneficially
        or
        of record, by any Person or group (within the meaning of the Securities Exchange
        Act of 1934 and the rules of the Securities and Exchange Commission thereunder
        

       


      
        
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      as
        in
        effect on the date hereof), of shares representing more than 30% of the
        aggregate ordinary voting power represented by the issued and outstanding
        capital stock of the Parent; or (b) the occupation of a majority of the seats
        (other than vacant seats) on the Board of Directors of the Parent by Persons
        who
        were neither (i) nominated by the Board of Directors of the Parent nor (ii)
        appointed by directors so nominated.

       

      “Closing
        Date”
shall
        mean March 1, 2006.

       

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

       

      “Collateral”
shall
        mean all “Collateral” referred to in the Collateral Documents and all other
        property that is or is intended to be subject to any Lien in favor of the
        Agent
        for the benefit of the Secured Parties.

       

      “Collateral
        Documents”
shall
        mean the Pledge Agreements and each other agreement that creates or purports
        to
        create a Lien in favor of the Agent for the benefit of the Secured Parties,
        and
        the Intercreditor Agreement.

       

      “Commitment”
shall
        have the meaning set forth in Section 2.1(a) and “Commitments”
shall
        mean, collectively, the Commitments of all of the Banks.

       

      “Consolidated
        Net Income”
shall
        mean for any period the consolidated net income of the Parent and all of
        its
        Subsidiaries, determined in accordance with GAAP, for such period.

       

      “Consolidated
        Net Worth”
shall
        mean, for any period for the Parent and all of its Subsidiaries, (a) the
        sum of
        the following consolidated items, all determined in accordance with GAAP
        and
        without duplication: the consolidated stockholders’ equity of all classes of
        stock (whether common, preferred, mandatorily convertible preferred or
        preference) of the Parent and its Subsidiaries; the Equity-Preferred Securities;
        the other preferred securities of the Parent’s Subsidiaries not constituting
        Equity-Preferred Securities; and the minority interests in the Parent’s
        Subsidiaries, less (b) the sum of the following consolidated items, without
        duplication: the book amount of any deferred charges (including, but not
        limited
        to, unamortized debt discount and expenses, organization expenses, experimental
        and development expenses, but excluding prepaid expenses) that are not permitted
        to be recovered by the Parent or its applicable Subsidiaries under rates
        permitted under rate tariffs, plus (c) the sum of all amounts contributed
        or
        paid by the Parent to the Rabbi Trusts for purposes of funding the same,
        but
        only to the extent such contributions and payments are required to be deducted
        from the consolidated stockholders’ equity of the Parent and its Subsidiaries in
        accordance with GAAP.

       

      “Consolidated
        Total Capitalization”
shall
        mean at any time the sum of: (a) Consolidated Net Worth at such time; plus
        (b)
        the principal amount of outstanding Debt (other than Equity-Preferred Securities
        (to the extent included in Debt of the Parent and its Subsidi

       


      
        
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      aries)
        not to exceed 10% of Consolidated Total Capitalization calculated for purposes
        of this clause without reference to any Equity-Preferred Securities) of the
        Parent and its Subsidiaries.

       

      “Consolidated
        Total Indebtedness”
shall
        mean all Debt of the Parent and all of its Subsidiaries including any current
        maturities thereof, plus, without duplication, all amounts outstanding under
        Standby Letters of Credit and, without duplication, all reimbursement or
        repayment obligations of the Parent with respect to all Letters of Credit,
        less,
        without duplication and to the extent included in Debt of the Parent and
        its
        Subsidiaries, Equity-Preferred Securities not to exceed 10% of Consolidated
        Total Capitalization (calculated for purposes of this clause without reference
        to any Equity-Preferred Securities).

       

      “Credit
        Exposure”
shall
        mean, with respect to any Bank, (a) the amount of its Commitment, if still
        in
        existence, or (b) the aggregate outstanding principal amount of its Loans,
        if
        the Commitments are no longer in existence.

       

      “Cross
        Country”
shall
        mean CrossCountry Energy, LLC, a Delaware limited liability
        company.

       

      “Debt”
shall
        mean (without duplication), for any Person indebtedness for money borrowed
        determined in accordance with GAAP but in any event including, (a) indebtedness
        of such Person for borrowed money or arising out of any extension of credit
        to
        or for the account of such Person (including, without limitation, extensions
        of
        credit in the form of reimbursement or payment obligations of such Person
        relating to letters of credit issued for the account of such Person) or for
        the
        deferred purchase price of property or services, except indebtedness which
        is
        owing to trade creditors in the ordinary course of business and which is
        due
        within thirty (30) days after the original invoice date; (b) indebtedness
        of the
        kind described in clause (a) of this definition which is secured by (or for
        which the holder of such Debt has any existing right, contingent or otherwise,
        to be secured by) any Lien upon or in Property (including, without limitation,
        accounts and contract rights) owned by such Person, whether or not such Person
        has assumed or become liable for the payment of such indebtedness or
        obligations; (c) Capitalized Lease Obligations of such Person; and (d)
        obligations under direct or indirect Guaranties other than Guaranties issued
        by
        the Parent covering obligations of the Southern Union Trusts under the
        Structured Securities. Whenever the definition of Debt is being used herein
        in
        order to compute a financial ratio or covenant applicable to the consolidated
        business of the Parent and its Subsidiaries, Debt which is already included
        in
        such computation by virtue of the fact that it is owed by a Subsidiary of
        the
        Parent will not also be added by virtue of the fact that the Parent has executed
        a guaranty with respect to such Debt that would otherwise require such
        guaranteed indebtedness to be considered Debt hereunder. Nothing contained
        in
        the foregoing sentence is intended to limit the other provisions of this
        Agreement which contain limitations on the amount and types of Debt which
        may be
        incurred by the Parent or its Subsidiaries.

       

      “Debt
        Issuance”
shall
        mean the incurrence or issuance by the Parent or any of its Subsidiaries
        of any
        Debt or other indebtedness after the Closing Date; 

       


      
        
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      “Debtor
        Laws”
shall
        mean all applicable liquidation, conservatorship, bankruptcy, moratorium,
        arrangement, receivership, insolvency, reorganization, or similar laws, or
        general equitable principles from time to time in effect affecting the rights
        of
        creditors generally.

       

      “Default”
shall
        mean any of the events specified in Section 11.1, whether or not there has
        been
        satisfied any requirement in connection with such event for the giving of
        notice, or the lapse of time, or the happening of any further condition,
        event
        or act.

       

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

       

      “Domestic
        Lending Office”
shall
        mean, with respect to each Bank, the office of such Bank located at its “Address
        for Notices” set forth below the name of such Bank on the signature pages hereof
        or such other office of such Bank as such Bank may from time to time specify
        to
        the Borrowers and the Agent.

       

      “EBDIT”
shall
        mean for any period the sum of (a) consolidated net earnings for the Parent
        and
        its Subsidiaries (excluding for all purposes hereof all extraordinary items),
        plus (b) each of the following to the extent actually deducted in deriving
        such
        net earnings: (i) depreciation and amortization expense; (ii) interest expense;
        (iii) federal and state income taxes; and (iv) dividends charged against
        income
        on or with respect to Structured Securities, in each case before adjustment
        for
        extraordinary items, as shown in the financial statements of Parent and its
        Subsidiaries referred to in Section 7.2 hereof (excluding for all purposes
        hereof all extraordinary items), and determined in accordance with GAAP,
        and (c)
        plus (or minus, if applicable) the net amount of non-cash deductions from
        (or
        additions to, if applicable) such net earnings for such period attributable
        to
        fluctuations in the market price(s) of securities which the Parent is obligated
        to purchase in future periods under any of the Rabbi Trusts, but only to
        the
        extent that such deductions (or additions, if applicable) are required to
        be
        taken in accordance with GAAP.

       

      “Eligible
        Assignee”
shall
        mean: (i) any Bank, any Bank Affiliate, any Approved Fund, or any institution
        100% of the voting stock of which is directly, or indirectly owned by such
        Bank
        or by the immediate or remote parent of such Bank; or (ii) a commercial bank,
        a
        foreign branch of a United States commercial bank, a domestic branch of a
        foreign commercial bank or other financial institution having in each case
        assets in excess of $1,000,000,000.00.

       

      “Environmental
        Law”
shall
        mean (a) the Comprehensive Environmental Response, Compensation and Liability
        Act of 1980 (as amended by the Superfund Amendments and Reauthorization Act
        of
        1986, 42 U.S.C.A. § 9601 et
        seq.),
        as
        amended from time to time, and any and all rules and regulations issued or
        promulgated thereunder (“CERCLA”);
        (b)
        the Resource Conservation and Recovery Act (as amended by the Hazardous and
        Solid Waste Amendment of 1984, 42 U.S.C.A. § 6901 et
        seq.),
        as
        amended from time to time, and any and all rules and regulations promulgated
        thereunder (“RCRA”);
        (c)
        the Clean Air Act, 42 U.S.C.A. § 7401 et
        seq.,
        as
        amended from time to time, and any and all rules and regulations promulgated
        thereunder; (d) the Clean Water Act of 1977, 33 U.S.CA § 1251 et
        seq.,
        as


       


      
        
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      amended
        from time to time, and any and all rules and regulations promulgated thereunder;
        (e) the Toxic Substances Control Act, 15 U.S.C.A. § 2601 et seq.,
        as
        amended from time to time, and any and all rules and regulations promulgated
        thereunder; or (f) any other federal or state law, statute, rule, or emulation
        enacted in connection with or relating to the protection or regulation of
        the
        environment (including, without limitation, those laws, statutes, rules,
        and
        regulations regulating the disposal, removal, production, storing, refining,
        handling, transferring, processing, or transporting of Hazardous Materials)
        and
        any rules and regulations issued or promulgated in connection with any of
        the
        foregoing by any governmental authority, and “Environmental
        Laws”
shall
        mean each of the foregoing.

       

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

       

      “Equity
        Interests”
shall
        mean, with respect to any Person, any and all shares, interests, participations
        or other equivalents, including membership interests (however designated,
        whether voting or nonvoting), of equity of such person, including, if such
        person is a partnership, partnership interests (whether general or limited)
        and
        any other interest or participation that confers on a person the right to
        receive a share of the profits and losses of, or distributions of property
        of,
        such partnership, whether outstanding on the date hereof or issued after
        the
        Closing Date.

       

      “Equity
        Issuance”
shall
        mean, without duplication, any issuance or sale by the Parent or any of its
        Subsidiaries after the Closing Date of any of its Equity Interests (including
        any Equity Interests issued upon exercise of any warrant or option) or any
        warrants or options to purchase Equity Interests; provided, however,
        that an
        Equity Issuance shall not include (i) any Debt Issuance, (ii) issuance
        or sale by the Parent of its Equity Interests (including its Equity Interests
        issued upon award of restricted stock units or exercise of any warrant or
        option
        or warrants or options to purchase its Equity Interests) to directors, officers
        or employees of the Parent or any of its Subsidiaries pursuant to any of
        the
        Parent’s employee stock incentive plans, (iii) issuance or sale by the Parent of
        any of its Equity Interests (including its Equity Interests issued upon the
        award of restricted stock units or exercise of any warrants or options to
        purchase Equity Interests) to officers or employees of the Parent or any
        of its
        Subsidiaries pursuant to the Parent’s stock incentive plan as part of any
        retention or change in control agreement and (iv) any issuance or sale of
        any Equity Interests in the Parent resulting from the settlement of the forward
        stock purchase contracts or remarketing of the 2008 Senior Notes that constitute
        a part of the 2003 Equity Units so long as the net cash proceeds received
        from
        such issuance or sale are promptly applied to repay amounts outstanding under
        the Existing Revolving Credit Agreement.

       


        “Equity-Preferred
          Securities”
shall
          mean (i) Debt, preferred equity or any other securities that are mandatorily
          convertible by the issuer thereof at a date certain, without cash payment
          by the
          issuer, into common shares of stock of the Parent or (ii) Equity
          Units of the Parent or (iii) any
          other
          securities (A) that are issued by the Parent or any of its Subsidiaries,
          (B)
          that are not subject to mandatory redemption at any time, directly or
          indirectly, (C) that are perpetual or mature not less than 30 years from
          the
          date of issuance, (D) the Debt compo


       


      
        
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      nent,
        if
        any, issued in connection therewith, including any guaranty, is subordinate
        in
        right of payment to all other unsecured and unsubordinated Debt of the issuer
        of
        such Debt component (including any such guaranty, if applicable), and (E)
        the
        terms of which permit the issuer thereof to defer at any time, without any
        additional payment or premium, the payment of any and all interest and/or
        distributions thereon, as applicable, to a date occurring after the Maturity
        Date. 

       


        “Equity
          Units”
shall
          mean securities issued by any Person and sold as a unit consisting of a
          debt
          security of such Person and a forward contract obligating the holder of
          such
          unit to purchase common shares of stock of such Person at a fixed price
          on a
          fixed date in the future.


       

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

       

      “ESSI”
shall
        have the meaning set forth in the preamble hereto

       

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

       

      “Eurodollar
        Lending Office”
shall
        mean, with respect to each Bank, the office of such Bank located at its “Address
        for Notices” set forth below the name of such Bank on the signature pages
        hereof, or such other office of such Bank as such Bank may from time to time
        specify to the Borrowers and the Agent.

       

      “Eurodollar
        Rate”
shall
        mean with respect to the applicable Rate Period in effect for each Eurodollar
        Rate Loan, the sum of (a) the quotient obtained by dividing (i) the rate
        appearing on Page 3750 of the Dow Jones Market Service (or on any successor
        or
        substitute page of such Service, or any successor to or substitute for such
        Service, providing rate quotations comparable to those currently provided
        on
        such page of such Service, as determined by the Agent from time to time for
        purposes of providing quotations of interest rates applicable to dollar deposits
        in the London interbank market) at approximately 11:00 a.m., London time,
        two
        Business Days prior to the commencement of such Rate Period, as the rate
        for
        dollar deposits with a maturity comparable to such Rate Period (or in the
        event
        that such rate quote is not available at such time for any reason, then
        utilizing the rate at which dollar deposits of $5,000,000 and for a maturity
        comparable to such Rate Period are offered by the principal London office
        of the
        Agent in immediately available funds in the London interbank market at
        approximately 11:00 a.m., London time, two Business Days prior to the
        commencement of such Rate Period) by (ii) a percentage equal to 100% minus
        the
        Eurodollar Rate Reserve Percentage for such Rate Period, plus (b) the Applicable
        Margin.

       

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

       


      
        
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      “Eurodollar
        Rate Reserve Percentage”
of
        the
        Agent for any Rate Period for any Eurodollar Rate Loan shall mean the reserve
        percentage applicable during such Rate Period (or if more than one such
        percentages shall be so applicable, the daily average of such percentages
        for
        those days in such Rate Period during which any such percentage shall be
        so
        applicable) under regulations issued from time to time by the Board of Governors
        of the Federal Reserve System (or any successor) for determining the maximum
        reserve requirement (including, without limitation, any emergency, supplemental,
        or other marginal reserve requirement) for member banks of the Federal Reserve
        System with deposits exceeding $1,000,000,000 with respect to liabilities
        or
        assets consisting of or including Eurocurrency Liabilities having a term
        equal
        to such Rate Period.

       

      “Event
        of Default”
shall
        mean any of the events specified in Section 11.1, provided that there has
        been
        satisfied any requirement in connection with such event for the giving of
        notice, or the lapse of time, or the happening of any further condition,
        event
        or act.

       

      “Expiration
        Date”
shall
        mean the last day of a Rate Period.

       

      “Existing
        Revolving Credit Facility”
shall
        mean the revolving credit facility provided to the Parent under the terms
        of the
        Fourth Amended and Restated Revolving Credit Agreement, dated as of September
        28, 2005, entered into by and among the Parent, JPMorgan Chase Bank, N.A.,
        as
        the administrative agent, and the banks and other financial institutions
        party
        thereto, as such credit agreement is amended, amended and restated, modified
        or
        supplemented from time to time.

       

      “Existing
        Revolving Credit Facility Closing Date”
shall
        mean September 28, 2005.

       

      “Existing
        Revolving Credit Facility
        Letter of Credit”
shall
        mean any Standby Letter of Credit issued for the account of the Parent under
        the
        Existing Revolving Credit Facility.

       

      “Federal
        Funds Rate”
shall
        mean, for any period, a fluctuating interest rate per annum equal for each
        day
        during such period to the weighted average of the rates (rounded to the nearest
        1/100 of 1%) on overnight federal fund transactions with members of the Federal
        Reserve System arranged by federal funds brokers, as published for such day
        (or,
        if such day is not a Business Day, for the next preceding Business Day) by
        the
        Federal Reserve Bank of New York, or, if such rate is not so published for
        any
        day which is a Business Day, the average of the quotations for such day on
        such
        transactions received by the Agent from three federal funds brokers of
        recognized standing selected by the Agent.

       

      “Fee
        Letter”
shall
        mean the Fee Letter dated February 10, 2006, entered into among the Parent,
        the
        Joint Lead Arrangers, LCPI, Lehman Brothers Commercial Bank, and Merrill
        Lynch
        Bank USA.

       

      “Funded
        Debt”
shall
        mean all Debt of a Person which matures more than one year from the date
        of
        creation or matures within one year from such date but is renewable or
        extendible, at the option of such Person, by its terms or by the terms of
        any
        instrument or agreement relating thereto, to a date more than one year from
        such
        date or arises under a re

       


      
        
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      volving
        credit or similar agreement which obligates Banks to extend credit during
        a
        period of more than one year from such date, including, without limitation,
        all
        amounts of any Funded Debt required to be paid or prepaid within one year
        from
        the date of determination of the existence of any such Funded Debt.

       

      “GAAP”
shall
        mean generally accepted accounting principles, applicable to the circumstances
        as of the date of determination, applied consistently with such principles
        as
        applied in the preparation of the Parent’s audited financial statements referred
        to in Section 7.2.

       

      “Genpar”
shall
        have the meaning set forth in the recitals hereto.

       

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

       

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

       

      “Grey
        Ranch”
shall
        mean Grey Ranch Plant, L.P., a Texas limited partnership.

       

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

       

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

       

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

       

      “Indemnified
        Parties”
shall
        have the meaning set forth in Section 13.16.

       

      “Initial
        Alternate Base Rate”
shall
        mean the rate per annum as determined in accordance with clause (b) in the
        definition of Alternate Base Rate minus 2.25%.

       

      “Intercreditor
        Agreement”
shall
        mean the Intercreditor Agreement to be executed and delivered on the Closing
        Date by ESSI and the Agent and acknowledged by the SUG EAT Entities,
        substantially in the form of Exhibit
        F,
        as the
        same may be amended, supplemented or otherwise modified from time to
        time.

       

      “Interest
        Payment Date”
shall
        mean (a) as to any Eurodollar Rate Loan in which the Rate Period with respect
        thereto is not greater than three (3) months, the date on which such Rate
        Period
        ends; (b) as to any Eurodollar Rate Loan in which the Rate Period with respect
        thereto is greater than three (3) months, the date on which the third month
        of
        such Rate Period ends, and the date on which each such Rate Period ends;
        (c) as
        to any Alternate Base Rate Loan, the last Business Day of each March, June,
        September and December to occur during any period in which such Loan is
        outstanding and on the date such Alternate Base Rate Loan is converted to
        another Type; and (d) as to all Loans, such time as the principal of and
        interest on the Loans shall have been paid in full.

       

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

       

      “Investment”
of
        any
        Person shall mean any investment so classified under GAAP, and, whether or
        not
        so classified, includes (a) any direct or indirect loan advance made by it
        to
        any other Person; (b) any direct or indirect Guaranty for the benefit of
        such
        Person; provided,
        however,
        that
        for purposes of determining Investments of the Parent hereunder, the existing
        Guaranty by the Parent of certain tax increment financing extended by The
        Fidelity Deposit and Discount Bank to The Redevelopment Authority of the
        County
        of Lackawanna shall be deemed to not be an Investment; (c) any capital
        contribution to any other Person; and (d) any ownership or similar interest
        in
        any other Person; and the amount of any Investment shall be the original
        principal or capital amount thereof (plus
        any
        subsequent principal or capital amount) minus
        all cash
        returns of principal or capital thereof.

       

      “Joint
        Lead Arrangers”
shall
        mean, collectively, Lehman Brothers Inc. and Merrill Lynch, Pierce, Fenner
&
Smith Incorporated.

       

      “LCPI”
shall
        mean Lehman Commercial Paper Inc.

       

      “LDC
        Proceeds”
shall
        have the meaning set forth in the definition of Qualified
        Transaction.

       

      “LDC
        Sale”
shall
        have the meaning set forth in the definition of Qualified
        Transaction.

       

      “Leapartners”
shall
        have the meaning set forth in the recitals hereto.

       

      “Letter(s)
        of Credit”
shall
        mean, in the singular form, any letter of credit issued by any Person for
        the
        account of the Parent and, in the plural form, all such letters of credit
        issued
        by any Person for the account of the Parent.

       

      “Lien”
shall
        mean any mortgage, deed of trust, pledge, security interest, encumbrance,
        lien
        (including without limitation, any such interest arising under any Environmental
        Law), or similar charge of any kind (including without limitation, any agreement
        to give any of the foregoing, any conditional sale or other title retention
        agreement or any lease in the nature thereof), or the interest of the lessor
        under any Capital Lease.

       

      “Loan”
shall
        mean a loan from a Bank to the Borrowers made pursuant to Section
        2.1(a).

       

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

       

      “Loan
        Parties”
means,
        collectively, (i) the Borrowers, (ii) each of the SUG EAT Entities until
        the
        Acquired Business Equity Interests Transfer has been fully consummated, and
        (iii) each Subsidiary of the Parent that holds or owns any of the Acquired
        Business Equity Interests.

       

      “Majority
        Banks”
shall
        mean at any time Banks holding more than 50% of the Pro Rata
        Percentages.

       

      “Material
        Adverse Effect”
shall
        mean any material adverse effect on (a) the financial condition, business,
        properties, assets, prospects or operations of the Parent and its Subsidiaries
        taken as a whole, or (b) the ability of any of the Loan Parties to perform
        their
        respective obligations under this Agreement, any Note or any other Loan Document
        to which it is a party on a timely basis.

       

      “Maturity
        Date”
shall
        mean February 28, 2007.

       

      “Moody’s”
shall
        mean Moody’s Investors Service, Inc.

       

      “NEG
        Assets”
shall
        mean those “Assets” (as defined in the NEG Purchase Agreement) owned by the
        Parent, directly or indirectly through any “Subsidiary” or any “Affiliate” (as
        such terms are defined in the NEG Purchase Agreement) of the Parent, and
        the
“Stock” (as such term is defined in the NEG Purchase Agreement), all of which
        are to be sold pursuant to the NEG Purchase Agreement.

       

      “NEG
        Purchase Agreement”
shall
        mean the Purchase and Sale Agreement, dated as of February 15, 2006, between
        the
        Parent and National Grid USA, as the same may be amended, modified or
        supplemented from time to time. 

       

      “Non-Revolving
        Credit Facility Letter of Credit”
        shall
        mean any Letter of Credit which is not an Existing Revolving Credit Facility
        Letter of Credit.

       

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

       

      “Notice
        of Borrowing”
shall
        have the meaning set forth in Section 2.1(c).

       

      “Obligations”
shall
        mean all obligations of the Borrowers to the Agent and each Bank under this
        Agreement, the Notes and all other Loan Documents to which it is a
        party.

       

      “Officer’s
        Certificate”
shall
        mean a certificate signed in the name of the Parent or a Subsidiary of the
        Parent, as the case may be, by either its President, one of its Vice Presidents,
        its Treasurer, its Secretary, or one of its Assistant Treasurers or Assistant
        Secretaries.

       

      “Panhandle
        Eastern”
shall
        mean Panhandle Eastern Pipe Line Company, LP, a Delaware limited
        partnership.

       

      “Panhandle
        Eastern Refinancing Debt”
shall
        mean any Debt of Panhandle Eastern and/or any of its Subsidiaries issued
        in
        exchange for, or the net proceeds of which are used to extend, refinance,
        renew,
        replace, defease or refund, any Debt of Panhandle Eastern and/or any of its
        Subsidiaries existing as of the Existing Revolving Credit Facility Closing
        Date,
provided,
        that:

       

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

       

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

       

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

       

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

       

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

       

      “Partnership
        Company” shall
        mean any of SRES, REM, Grey Ranch, any SRES Subsidiary or any of their
        respective subsidiaries; and “Partnership
        Companies”
shall
        mean, collectively, SRES, REM, Grey Ranch, the SRES Subsidiaries and their
        respective subsidiaries.

       

      “Payment
        Office”
shall
        mean, with respect to the Agent, the office of the Agent located at its “Address
        for Notices” set forth below the name of the Agent on the signature pages hereof
        or such other office of the Agent as the Agent may from time to time specify
        to
        the Borrowers and the Banks.

       

      “Permitted
        Subordinated Lien”
shall
        mean the Lien granted by each of the SUG EAT Entities in favor of ESSI in
        all of
        their respective rights title and interest in and to the SUG EAT Entities
        Collateral pursuant to the terms of the SUG EAT Entities Loan Documents,
        which
        Lien shall be at all times fully subordinated to the Liens granted in favor
        of
        the Agent in such SUG EAT Entities Collateral pursuant to the Collateral
        Documents and subject to the terms and conditions of the Intercreditor
        Agreement.

       

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

       

      “PGEnergy
        Assets”
shall
        mean those “Assets” (as defined in the PGEnergy Purchase Agreement) owned by the
        Parent, directly or indirectly through PG Energy Services, Inc., a Pennsylvania
        corporation, and the Equity Interests in PG Energy Services Inc., all of
        which
        are to be sold pursuant to the PGEnergy Purchase Agreement. 

       

      “PGEnergy
        Purchase Agreement”
shall
        mean the Purchase and Sale Agreement, dated as of January 26, 2006, between
        the
        Parent and UGI Corporation, as the same may be amended, modified or supplemented
        from time to time.

       

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

       

      “Pledge
        Agreements”
shall
        mean, collectively, (i) the Parent Pledge Agreement to be executed and delivered
        on the Closing Date by the Parent and the Agent, substantially in the form
        of
Exhibit
        D-1,
        as the
        same may be amended, supplemented or otherwise modified from time to time,
        (ii)
        the Pledge Agreement to be executed and delivered on the Closing Date by
        the SUG
        EAT Entities and the Agent, substantially in the form of Exhibit
        D-2,
        as the
        same may be amended, supplemented or otherwise modified from time to time
        (the“SUG
        EAT Entities Pledge Agreement”)
        and
        (iii) any pledge agreement executed and delivered pursuant to Section
        9.13.

       

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

       

      “Prior
        Acquisitions”
shall
        mean collectively the Parent’s previous acquisitions of and mergers with Fall
        River Gas Company, Providence Energy Corporation and Valley Resources,
        Inc.

       

      “Pro-Rata
        Percentage”
shall
        mean with respect to any Bank, a fraction (expressed as a percentage), the
        numerator of which shall be the amount of such Bank’s Credit Exposure and the
        denominator of which shall be the aggregate amount of all the Credit Exposure,
        as adjusted from time to time in accordance with this Agreement.

       

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

       

      “Qualified
        Exchange Accommodation
        Agreement” shall
        mean the Qualified Exchange Accommodation Agreement, dated as of February
        27,
        2006, by and among SUG EAT Inc., SUG EAT LLC and the Parent.

       

      “Qualified
        Transaction”
shall
        mean, collectively, the following transactions so long as the Acquired Business
        Equity Interests Transfer has not been consummated: the sale by the Parent
        of
        each of the PGEnergy Assets and the NEG Assets (each an “LDC
        Sale”)
        and
        the contemporaneous assignment to CDEC of the Parent’s rights to all the
        proceeds from such sale (such proceeds from each LDC Sale being referred
        to as
        the “LDC
        Proceeds”).
        Immediately upon the consummation of any LDC Sale, the Parent will require
        and
        direct CDEC to immediately transfer or otherwise distribute to the SUG EAT
        Inc.
        the LDC Proceeds received by CDEC from such LDC Sale, and SUG EAT Inc. shall
        then immediately make a corresponding partial prepayment of the SUG EAT Entities
        Loan in an amount equal to such LDC Proceeds to ESSI. Upon the earlier of
        (i)
        the consummation of the second LDC Sale or (ii) the Safe Harbor Transfer
        Date,
        the Parent shall direct CDEC to require the SUG EAT Entities to transfer
        to one
        or more wholly-owned Subsidiaries (other than the SUG Partnership Entities)
        designated by the Parent the Acquired Business Equity Interests and all related
        Collateral described in the SUG EAT Entities Pledge Agreement free and clear
        of
        all Liens other than the Liens in favor of the Agent created under the
        Collateral Documents. The Borrowers shall apply any LDC Proceeds received
        by
        them or any of their Subsidiaries in accordance with Section
        4.1(b)(iv).

       

      “Qualifying
        Assets”
shall
        mean (i) equity interests owned one hundred percent (100%) by the Parent
        in
        entities engaged primarily in one or more of the Parent’s lines of business
        described in Section 7.15 (singly, a “Qualified
        Entity,”
        collectively, “Qualified
        Entities”),
        or
        productive assets used in one or more of such lines of business; and (ii)
        equity
        interests of less than one hundred percent (100%) owned by the Parent in
        one or
        more Qualifying Entities, provided
        that at
        any time the aggregate amount of the Parent’s investment in Qualifying Assets
        described in clause (ii) that are then held by the Parent as of the applicable
        determination date (measured by the aggregate purchase price paid therefor,
        including the aggregate amount of Debt assumed or deemed incurred by the
        Parent
        in connection with such acquisitions) does not exceed twenty percent (20%)
        of
        the Consolidated Net Worth of the Parent and its Subsidiaries as of the
        applicable determination date.

       

      “Rabbi
        Trusts”
shall
        mean those four (4) certain non-qualified deferred compensation irrevocable
        trusts existing as of the Closing Date, previously established by the Parent
        for
        the benefit of its executive employees, so long as the assets in each of
        such
        trusts which have not yet been distributed to one or more executive employees
        of
        the Parent remain subject to the claims of the Parent’s general
        creditors.

       

      “Rate
        Period”
shall
        mean the period of time for which the Eurodollar Rate shall be in effect
        as to
        any Eurodollar Rate Loan commencing on the date such Loan was made or such
        Loan
        was converted to or continued as an Eurodollar Rate Loan, as the case may
        be,
        and ending on the date one, two, three or six months thereafter as specified
        in
        the applicable Notice of Borrowing and subject to the provisions of Sections
        2.2
        and 2.3; provided,
        however,
        that
        any Rate Period that would otherwise end on a day which is not a Business
        Day
        shall be extended to the next succeeding Business Day unless such Business
        Day
        falls in another calendar month, in which case such Rate Period shall end
        on the
        next preceding Business Day. 

       

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

       

      “REM”
shall
        have the meaning set forth in the recitals hereto.

       

      “Restricted
        Payment”
shall
        mean, with respect to any Person, such Person’s declaration or payment of any
        dividend on, or purchase or agreement to purchase any of, or making of any
        other
        distribution with respect to, any of its Equity Interests stock, except,
        in the
        case of the Parent only, (i) any such dividend, purchase or distribution
        consisting solely of capital stock of the Parent and (ii) any dividend or
        interest paid on or with respect to the Parent’s Structured Securities to the
        extent that such amounts are included in Cash Interest Expense.

       

      “Safe
        Harbor Transfer Date”
shall
        mean August 28, 2006.

       

      “S&P”
shall
        mean Standard & Poor’s Ratings Group.

       

      “Secured
        Obligations”
shall
        mean the “Secured Obligations” as defined in Section 1 of the Pledge
        Agreements.

       

      “Secured
        Parties”
shall
        mean the Agent and the Banks.

       

      “Securities
        Act”
shall
        have the meaning set forth in Section 13.1.

       

      “Sellers”
shall
        have the meaning set forth in the recitals hereto.

       

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

       

      “Senior
        Notes”
shall
        mean, collectively, (a) the $475,000,000 of 7.6% Senior Notes of the Parent
        previously placed with investors on or about January 31, 1994, (b) the
        $300,000,000 of 8.25% Senior Notes of the Parent previously placed with
        investors on or about November 3, 1999, (c) the $125,000,000 of the 2008
        Senior
        Notes, and (d) the $100,000,000 of 4.375% Senior Notes of the Parent previously
        placed with investors on or about February 11, 2005, as each such Senior
        Notes
        may be amended, modified, or supplemented from time to time in accordance
        with
        the terms of this Agreement; and “Senior
        Note”
shall
        mean each such note individually.

       

      “Sid
        Richardson Acquired
        Business”
shall
        have the meaning set forth in the recitals hereto.

       

      “Sid
        Richardson Acquisition”
shall
        have the meaning set forth in the recitals hereto.

       

      “Sid
        Richardson Acquisition Agreement”
shall
        have the meaning set forth in the recitals hereto.

       

      Sid
        Richardson Acquisition
        Agreement Assignment”
shall
        have the meaning set forth in the recitals hereto.

       

      “Sid
        Richardson Acquisition Documents”
shall
        have the meaning set forth in the recitals hereto. 

       

      “Significant
        Property”
shall
        mean at any time property or assets of the Parent or any of its Subsidiaries
        having a book value (net of accumulated depreciation taken in accordance
        with
        GAAP) of at least $5,000,000.00 or that contributed (or is an integrated
        physical portion of an assemblage of assets that contributed) at least 5%
        of the
        gross income of the owner thereof for the fiscal quarter most recently
        ended.

       

      “Southern
        Union Panhandle”
shall
        have the meaning set forth in the recitals hereto.

       

      “Southern
        Union Trust”
shall
        mean any of those certain Delaware business trusts organized for the sole
        purpose of purchasing Subordinated Debt Securities constituting a portion
        of,
        and described in the definition of, Structured Securities and issuing the
        Preferred Securities and Common Securities also constituting a portion of,
        and
        described in the definition of, Structured Securities, and having no assets
        other than the Parent’s Subordinated Debt Securities, the Guaranties (as
        described in the definition of Structured Securities) and the proceeds thereof.
        Southern Union Trusts shall be considered to be Subsidiaries for purposes
        hereof
        so long as their affairs are consolidated under GAAP and for federal income
        tax
        purposes with the affairs of the Parent.

       

      “SRCG”
shall
        have the meaning set forth in the recitals hereto.

       

      “SRES”
shall
        have the meaning set forth in the recitals hereto.

       

      “SRES
        Subsidiaries”
shall
        mean, collectively, Leapartners, SRCG-West Texas Gathering Company, Inc.,
        a
        Texas corporation, Mi Vida Genpar, L.L.C., a Texas limited liability company,
        Sid Richardson Pipeline, Ltd., a Texas limited partnership, West Texas Gathering
        Company, a Delaware corporation, and Sid Richardson Gas Pipeline, Ltd., a
        Texas
        limited partnership.

       

      “Standby
        Letter of Credit”
shall
        mean any standby letter of credit issued to support obligations (contingent
        or
        otherwise) of the Parent.

       

      “Structured
        Securities”
shall
        mean collectively (a) the Subordinated Debt Securities, the Guaranties, the
        Common Securities and the Preferred Securities of the Southern Union Trusts,
        all
        as described and defined in the Registration Statement on Form S-3 filed
        by the
        Parent with the Securities and Exchange Commission on March 25, 1995, and
        (b)
        subordinated debt securities, guaranties, common securities and/or preferred
        securities issued in connection with the consummation of the Prior Acquisitions
        in an aggregate face amount of not more than $150,000,000 upon terms and
        conditions substantially similar in all material respects to the terms and
        conditions described and defined in such Registration Statement on Form S-3
        filed by the Parent with the Securities and Exchange Commission on March
        25,
        1995. For all purposes of this Agreement, the amounts payable by Southern
        Union
        Trusts under the Preferred Securities and Common Securities (or similar
        securities provided for under subclause (b) above) and the amounts payable
        by
        the Parent under the Subordinated Debt Securities or the Guaranties (or similar
        securities provided for under subclause (b) above) shall be treated without
        duplication, it being recognized that the amounts payable by Southern Union
        Trusts are funded with payments made or to be made by the Parent to Southern
        Union Trusts and are also guaranteed by the Parent under the Guaranties
        described in the S-3 mentioned above (or similar guaranties provided for
        under
        subclause (b) above).

       

      “Subsidiary”
of
        a
        Person shall mean a corporation, partnership, limited liability company or
        other
        business entity of which a majority of the shares of securities or other
        interests having ordinary voting power for the election of directors or other
        governing body (other than securities or interests having such power only
        by
        reason of the happening of a contingency) are at the time beneficially owned,
        or
        the management of which is otherwise controlled, directly, or indirectly
        through
        one or more intermediaries, or both, by such Person. Solely for purposes
        of this
        Agreement and the other Loan Documents, each of the SUG Partnership Entities
        shall be deemed a “Subsidiary” of the Parent. Notwithstanding the foregoing in
        this definition of “Subsidiary”, SUG EAT Inc. shall be deemed a “Subsidiary” of
        the Parent solely for purposes of Section 4.1(b) and each of the definitions
        of
        Asset Sale, Equity Issuance and Debt Issuance. Notwithstanding the fact that
        the
        management of Cross Country is or may be controlled by the Parent, neither
        Cross
        Country nor any of its subsidiaries shall be deemed to constitute a Subsidiary
        of the Parent for purposes of this Agreement so long as the Parent does not
        beneficially own, directly, or indirectly, a majority of the shares of
        securities or other interests in Cross Country having ordinary voting power
        for
        the election of directors or other governing body (other than securities
        or
        interests having such power only by reason of the happening of a
        contingency).

       

      “SUGC
        ”
shall
        have the meaning set forth in the recitals hereto.

       

      “SUG
        EAT Entities”
shall
        mean, collectively, SUG EAT LLC and SUG EAT Inc.

       

      “SUG
        EAT Entities Collateral”
shall
        mean “Collateral” as such term is defined in the SUG EAT Entities Pledge
        Agreement.

       

      “SUG
        EAT Entities Loan”
shall
        have the meaning set forth in the recitals hereto.

       

      “SUG
        EAT Entities Loan Documents”
shall
        mean, collectively, (a) the Promissory Note dated March 1, 2006, between
        the SUG
        EAT Entities, as payors, and ESSI, as payee, (b) the pledge agreement, dated
        as
        of March 1, 2006, by and between the SUG EAT Entities and ESSI and (c) any
        issuer control agreements executed to perfect the lien created by the pledge
        agreement referred to in clause (b) above.

       

      “SUG
        EAT Entities Permitted Activities”
shall
        have the meaning set forth in Section 11.1(O).

       

      “SUG
        EAT Entities Pledge Agreement”
shall
        have the meaning set forth in the definition of Pledge Agreements.

       

      “SUG
        EAT Entities Transaction Document”
shall
        mean (a) the SUG EAT Entities Loan Documents, (b) the Qualified Exchange
        Accommodation Agreement, (c) the Management Agreement, or (d) the Sid Richardson
        Acquisition Agreement Assignment; and “SUG
        EAT Entities Transaction Documents”
shall
        mean, collectively, each of the foregoing. 

       

      “SUG
        EAT Inc.”
shall
        mean SUG EAT, Inc., a Delaware corporation and a direct wholly- owned subsidiary
        of CDEC.

       

      “SUG
        EAT LLC”
shall
        mean SUG EAT, LLC, a Delaware limited liability company and a direct
        wholly-owned subsidiary of SUG EAT Inc.

       

      “SUG
        Management Agreement”
shall
        mean the Management Agreement, dated as of March 1, 2006 by and between SUG
        EAT
        LLC and Southern Union Panhandle pursuant to which, among other things, Southern
        Union Panhandle is engaged or otherwise appointed the sole manager of SUG
        EAT
        LLC.

       

      “SUG
        Partnership Entities”
shall
        mean the Partnership Companies and SUG EAT LLC.

       

      “SUG
        Purchasers”
shall
        have the meaning set forth in the recitals hereto.

       

      “Transferee
        Subsidiary”
shall
        have the meaning set forth in Section 9.13.

       

      “Trunkline
        LNG Holdings”
shall
        mean CMS Trunkline LNG Holdings, LLC, a Delaware limited liability
        company.

       

      “2003
        Equity Units”
shall
        mean the 2,500,000 equity units issued by the Parent June 11, 2003, with
        each
        such equity unit consisting of a forward stock purchase contract for the
        purchase of shares of the Parent’s common stock and a 2.75% senior note of the
        Parent due August 16, 2008 (the “2008
        Senior Notes”),
        which
        2008 Senior Notes were issued pursuant to Supplemental Indenture No. 1, dated
        as
        of June 11, 2003 between the Parent and JPMorgan Chase Bank, N.A., as trustee
        (the “2003
        Supplemental Indenture”).

       

      “2003
        Supplemental Indenture”
shall
        have the meaning set forth in the definition of 2003 Equity Units.

       

      “2008
        Senior Notes”
shall
        have the meaning in the definition of 2003 Equity Units.

       

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

       

      1.2  Terms
        Generally.

       

       The
        definitions of terms herein shall apply equally to the singular and plural
        forms
        of the terms defined. Whenever the context may require, any pronoun shall
        include the corresponding masculine, feminine and neuter forms. The words
        “include,” “includes” and “including” shall be deemed to be followed by the
        phrase “without limitation.” Unless the context requires otherwise (a) any
        definition of or reference to any Loan Document, agreement, instrument or
        other
        document herein shall be construed as referring to such agreement, instrument
        or
        other document as from time to time amended, supplemented or otherwise modified
        (subject to any restrictions on such amendments, supplements or modifications
        set forth herein), (b) any reference herein to any Person shall be
        construed to include such Person’s successors and assigns, (c) the words
“herein,” “hereof” and “hereunder,” and words of similar import, shall be
        construed to refer to this Agreement in its entirety and not to any particular
        provision hereof, (d) all references herein to Articles, Sections, Exhibits
        and Schedules shall be construed to refer to Articles and Sections of, and
        Exhibits and Schedules to, this Agreement, and (e) any reference to any law
        or regulation herein shall refer to such law or regulation as amended, modified
        or supplemented from time to time.

       

      2.  THE
        LOANS

       

      2.1  The
        Loans

       

      (a)  Subject
        to the terms and conditions and relying upon the representations and warranties
        of the Borrowers herein set forth, each Bank severally agrees to make a single
        Loan to the Borrowers on the Closing Date in a principal amount not to exceed
        the amount set opposite such Bank’s name on Schedule
        2.1(a)
        (such
        Bank’s “Commitment”).
        The
        Borrowers may not reborrow any Loan or portion thereof that has been repaid
        or
        prepaid. 

       

      (b)  (i)The
        Borrowers shall execute and deliver to the Agent for each Bank to evidence
        the
        Loan made by each Bank under such Bank’s Commitment, a Note, which shall be: (i)
        dated the date of the Closing Date; (ii) in the principal amount of such
        Bank’s
        Loan made by it on the Closing Date; (iii) in substantially the form
        attached hereto as Exhibit
        A,
        with
        blanks appropriately filled; (iv) payable to the order of such Bank on the
        Maturity Date; and (v) subject to acceleration upon the occurrence of an
        Event
        of Default. 

       

      (ii) Each
        Loan
        shall bear interest on the unpaid principal amount thereof from time to time
        outstanding at the rate per annum determined as specified in
        Sections 2.2(a), 2.2(b), 2.3(b) and 2.3(c), and accrued interest on each
        Loan shall be payable in arrears on each Interest Payment Date for such Loan,
        commencing with the first Interest Payment Date following the date of each
        Loan;
provided,
        however,
        that
        (i) interest accrued pursuant to Section 2.2(b) shall be payable on
        demand, (ii) in the event of any repayment or prepayment of any Loan,
        accrued interest on the principal amount repaid or prepaid shall be payable
        on
        the date of such repayment or prepayment and (iii) in the event of any
        conversion of any Eurodollar Rate Loan prior to the end of the current Rate
        Period therefor, accrued interest on such Loan shall be payable on the effective
        date of such conversion.

      


      (c)  Each
        Loan
        to be made pursuant to Section 2.1(a), each conversion of Loans from one
        Type to
        the other, and each continuation of Eurodollar Rate Loans or Alternate Base
        Rate
        Loans shall be: (i) in the case of any Eurodollar Rate Loan, in a principal
        amount of not less than $10,000,000.00 or an integral multiple of $5,000,000.00
        in excess thereof; or (ii) in the case of any Alternate Base Rate Loan, in
        a
        principal amount of not less than $10,000,000.00 or an integral multiple
        of
        $5,000,000.00 in excess thereof, and, at the option of the Borrowers, any
        Borrowing, continuation or conversion under this Section 2.1(c) may be comprised
        of two or more such Loans bearing different rates of interest. Each Borrowing
        under Section 2.1(a), each conversion of Loans from one Type to the other,
        and
        each continuation of Eurodollar Rate Loans or Alternate Base Rate Loans shall
        be
        made upon prior notice from the Borrowers to the Agent in the form attached
        hereto as Exhibit
        B
        (the
“Notice
        of Borrowing”)
        delivered to the Agent not later than 11:00 am (New York City time): (i)
        on the
        third Business Day prior to the requested date of a Borrowing of, conversion
        to
        or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar
        Rate
        Loans to Alternate Base Rate Loans; and (ii) on the requested date of a
        Borrowing or continuation of Alternate Base Rate Loans. Each Notice of Borrowing
        shall be irrevocable and shall specify: (i) whether the Borrowers are requesting
        a Borrowing on the Closing Date, a conversion of Loans from one Type to the
        other, or a continuation of Eurodollar Rate Loans or Alternative Base Rate
        Loans, (ii) the requested date of the Borrowing, conversion or continuation,
        as
        the case may be (which shall be a Business Day), (iii) the principal amount
        of
        Loans to be borrowed, converted or continued, (iv) the Type of Loans to be
        borrowed or to which existing Loans are to be converted, (v) if applicable,
        the
        duration of the Rate Period with respect thereto and the Expiration Date
        of such
        Rate Period, and (vi) in the case of the Borrowing pursuant to Section 2.1(a),
        the demand deposit account into which the proceeds of the borrowing are to
        be
        deposited by the Agent. If the Borrowers fail to specify a Type of Loan in
        a
        Notice of Borrowing or if the Borrowers fail to give a timely notice requesting
        a conversion or continuation, then the applicable Loans shall be made as,
        converted to, or continued as Alternate Base Rate Loans. Any such automatic
        conversion to Alternate Base Rate Loans shall be effective as of the last
        day of
        the Rate Period then in effect with respect to the applicable Loans. If the
        Borrowers request a Borrowing of, conversion to, or continuation of Eurodollar
        Rate Loans in any such Notice of Borrowing, but fails to specify an Rate
        Period,
        it will be deemed to have specified an Rate Period of one month. The Borrowers
        may give the Agent telephonic notice by the required time of any proposed
        Borrowing, continuation or conversion under this Section 2.1(c); provided
        that
        such telephonic notice shall be confirmed in writing by delivery to the Agent
        as
        promptly as practicable (but in no event later than the date relating to
        any
        such Borrowing, conversion or continuation) of a Notice of Borrowing. Neither
        the Agent nor any Bank shall incur any liability to any of the Borrowers
        in
        acting upon any telephonic notice referred to above which the Agent believes
        in
        good faith to have been given by the Borrowers, or for otherwise acting in
        good
        faith under this Section 2.1(c). After giving effect to all Borrowings, all
        conversions of Loans from one Type to the other, and all continuations of
        Loans
        as the same Type, there shall not be more than eight Rate Periods in effect.
        

       

      (d)  Following
        receipt of a Notice of Borrowing in respect of a Borrowing under Section
        2.1(a)
        or conversion or continuation of Types of Loans as provided in Section 2.1(c)
        (and if no timely notice of a conversion or continuation is provided by the
        Borrowers, the Agent shall notify each Bank of the details of any automatic
        conversion to Alternate Base Rate Loans described in Section 2.1(c)), the
        Agent
        shall promptly notify each Bank of the applicable interest rate under
        Section 2.2. With respect to the Loan to be made by each Bank pursuant to
        Section 2.1(a), each Bank shall, before 11:00 am (New York City time) on
        the
        Closing Date, make the amount of such Loan available to the Agent by wire
        transfer in same day funds in dollars, at the Agent’s Payment Office. After the
        Agent’s receipt of such funds and upon fulfillment of the applicable conditions
        set forth in Section 8, on the Closing Date, the Agent shall make the
        Borrowing available to the Borrowers at the Agent’s Payment Office in
        immediately available funds and, to the extent requested in the Notice of
        Borrowing, deposit or otherwise credit such funds to the account designated
        in
        such Notice of Borrowing. Each Bank shall post on a schedule attached to
        its
        Note: (i) the date and principal amount of the Loan made under such Note;
        (ii) the rate of interest each such Loan will bear; and (iii) each payment
        of principal thereon; provided,
        however,
        that
        any failure of such Bank so to mark such Note shall not affect the Borrowers,
        obligations thereunder or hereunder; and provided further
        that
        such Bank’s records as to such matters shall be controlling whether or not such
        Bank has so marked such Note. Any deposit to a demand deposit account by
        the
        Agent pursuant to a request (whether written or oral) believed by the Agent
        to
        be an authorized request by the Borrowers for a Loan hereunder shall be deemed
        to be a Loan hereunder for all purposes with the same effect as if the Borrowers
        had in fact requested the Agent to make such Loan.

       

      (e)  Unless
        the Agent shall have received notice from a Bank prior to the date of the
        Borrowing of the Loans pursuant to Section 2.1(a) that such Bank will not
        make
        available to the Agent the amount of the Loan to be made by such Bank hereunder,
        the Agent may assume that such Bank has made such portion available to the
        Agent
        on the Closing Date in accordance with this Section 2.1 and the Agent may,
        in
        reliance upon such assumption, make available to the Borrowers on the Closing
        Date a corresponding amount. If and to the extent that such Bank shall not
        have
        so made such amount available to the Agent, such Bank (severally) and the
        Borrowers (jointly and severally) agree to repay to the Agent forthwith on
        demand such corresponding amount together with interest thereon, for each
        day
        from the date such amount is made available to the Borrowers until the date
        such
        amount is repaid to the Agent, (i) in the case of the Borrowers, at the interest
        rate applicable at the time to the Loans comprising such borrowing, and (ii)
        in
        the case of such Bank, at the Federal Funds Rate. If such Bank shall repay
        to
        the Agent such corresponding amount, such amount so repaid shall constitute
        such
        Bank’s Loan as part of such Borrowing for purposes of this
        Agreement.

       

      (f)  The
        failure of any Bank to make its Loan to be made by it on the Closing Date
        pursuant to Section 2.1(a) shall not relieve any other Bank of its obligation,
        if any, hereunder to make its Loan on the Closing Date, but no Bank shall
        be
        responsible for the failure of any other Bank to make the Loan to be made
        by
        such other Bank on the Closing Date.

       

      (g)  Except
        as
        otherwise provided herein, a Eurodollar Rate Loan may be continued or converted
        only on the last day of a Rate Period for such Eurodollar Rate Loan. During
        the
        existence of a Default, no Loans may be requested as, converted to or continued
        as Eurodollar Rate Loans without the consent of the Majority Banks.

       

      2.2  Interest
        Rate Determination

       

      (a)  (i)Except
        as
        specified in Sections 2.3(b), Alternate Base Rate Loans shall bear interest
        on
        the unpaid principal amount thereof from time to time outstanding, until
        maturity, at a rate per annum equal to the lesser of (A) the Alternate Base
        Rate
        in effect from time to time for such Loans or (B) the Highest Lawful Rate.
        

       

      (ii) Except
        as
        specified in Sections 2.3(b) and 2.3(c), Eurodollar Rate Loans shall bear
        interest on the unpaid principal amount thereof from time to time outstanding,
        until maturity, at a rate per annum equal to the lesser of (A) the Eurodollar
        Rate for the Rate Period in effect for such Borrowing of such Loans in effect
        from time to time or (B) the Highest Lawful Rate. 

      


      (iii) All
        interest hereunder shall be calculated based on a year of 360 days in the
        case
        of the Eurodollar Rate or the Alternate Base Rate based on the Federal Funds
        Rate and a year of 365 or 366 days, as the case may be, in the case of the
        Alternate Base Rate based on the Prime Rate, and in each case shall be payable
        for the actual number of days elapsed (including the first day but excluding
        the
        last day). The applicable Alternate Base Rate or Eurodollar Rate shall be
        determined by the Agent in accordance with the provisions of this Agreement
        and
        such determination shall be conclusive absent manifest error. 

      


      (b)  Any
        principal, interest, fees or other amount owing hereunder, under any Note
        or
        under any other Loan Document that is not paid when due (whether at stated
        maturity, by acceleration or otherwise) shall bear interest at a rate per
        annum
        equal to the lesser of (i) two percent (2%) above the Alternate Base Rate
        in
        effect from time to time or (ii) the Highest Lawful Rate.

       

      2.3  Additional
        Interest Rate Provisions

       

      (a)  The
        respective Note of each Bank may be held by the applicable Bank for the account
        of its respective Domestic Lending Office or its respective Eurodollar Lending
        Office, and may be transferred from one to the other from time to time as
        each
        Bank may determine.

       

      (b)  If
        the
        Borrowers shall have chosen the Eurodollar Rate in a Notice of Borrowing
        and
        prior to the requested date of Borrowing, conversion or continuation, any
        Bank
        in good faith determines (which determination shall be conclusive) that (i)
        deposits in Dollars in the principal amount of such Eurodollar Rate Loan
        are not
        being offered to the Eurodollar Lending Office of such Bank in the Eurodollar
        interbank market selected by such Bank in its sole discretion in good faith
        or
        (ii) adequate and reasonable means do not exist for ascertaining the chosen
        Eurodollar Rate in respect of such Eurodollar Rate Loan or (iii) the Eurodollar
        Rate for any Rate Period for such Eurodollar Rate Loan will not adequately
        reflect the cost to such Bank of making or maintaining such Eurodollar Rate
        Loan
        for such Rate Period, then such Bank will so notify the Borrowers and the
        Agent
        and such Eurodollar Rate shall not become effective as to such Eurodollar
        Rate
        Loan on such Borrowing Date or at any time thereafter until such time thereafter
        as the Borrowers receive notice from the Agent that the circumstances giving
        rise to such determination no longer apply.

       

      (c)  Anything
        in this Agreement to the contrary notwithstanding, if at any time any Bank
        in
        good faith determines (which determination shall be conclusive) that the
        introduction of or any change in any applicable law, rule or regulation or
        any
        change in the interpretation or administration thereof by any governmental
        or
        other regulatory authority charged with the interpretation or administration
        thereof shall make it unlawful for the Bank (or the Eurodollar Lending Office
        of
        such Bank) to maintain or fund any Eurodollar Rate Loan, such Bank shall
        give
        notice thereof to the Borrowers and the Agent. With respect to any Eurodollar
        Rate Loan which is outstanding when such Bank so notifies the Borrowers,
        upon
        such date as shall be specified in such notice the Rate Period shall end
        and the
        lesser of (i) the Alternate Base Rate or (ii) the Highest Lawful Rate shall
        commence to apply in lieu of the Eurodollar Rate in respect of such Eurodollar
        Rate Loan and shall continue to apply unless and until the Borrowers change
        the
        rate as provided in Section 2.1(c). No more than five (5) Business Days after
        such specified date, the Borrowers shall, jointly and severally, pay to such
        Bank (x) accrued and unpaid interest on such Eurodollar Rate Loan at the
        Eurodollar Rate in effect at the time of such notice to but not including
        such
        specified date plus (y) such amount or amounts (to the extent that such amount
        or amounts would not be usurious under applicable law) as may be necessary
        to
        compensate such Bank for any direct or indirect costs and losses incurred
        by it
        (to the extent that such amounts have not been included in the Additional
        Costs
        in calculating such Eurodollar Rate), but otherwise without penalty. If notice
        has been given by such Bank pursuant to the foregoing provisions of this
        Section
        2.3(c), then, unless and until such Bank notifies the Borrowers that the
        circumstances giving rise to such notice no longer apply, such Eurodollar
        Rate
        shall not again apply to such Loan or any other Loan and the obligation of
        such
        Bank to continue any Eurodollar Rate Loan as a Eurodollar Rate Loan shall
        be
        suspended. Any such claim by such Bank for compensation under clause (y)
        above
        shall be accompanied by a certificate setting forth the computation upon
        which
        such claim is based, and such certificate shall be conclusive and binding
        for
        all purposes, absent manifest error.

       

      (d)  EACH
        BORROWER JOINTLY AND SEVERALLY WILL INDEMNIFY EACH BANK AGAINST, AND REIMBURSE
        EACH BANK ON DEMAND FOR, ANY LOSS (INCLUDING LOSS OF REASONABLY ANTICIPATED
        PROFITS DETERMINED USING REASONABLE ATTRIBUTION AND ALLOCATION METHODS),
        OR
        REASONABLE COST OR EXPENSE INCURRED OR SUSTAINED BY SUCH BANK (INCLUDING
        WITHOUT
        LIMITATION, ANY LOSS OR EXPENSE INCURRED BY REASON OF THE LIQUIDATION OR
        REEMPLOYMENT OF DEPOSITS OR OTHER FUNDS ACQUIRED BY SUCH BANK TO FUND OR
        MAINTAIN ANY EURODOLLAR RATE LOAN) AS A RESULT OF (i) ANY ADDITIONAL COSTS
        INCURRED BY SUCH BANK; (ii) ANY CONTINUATION, CONVERSION, PAYMENT, PREPAYMENT
        OR
        REPAYMENT (WHETHER AUTHORIZED OR REQUIRED HEREUNDER OR OTHERWISE) OF ALL
        OR A
        PORTION OF ANY LOAN ON A DAY OTHER THAN THE EXPIRATION DATE OF A RATE PERIOD
        FOR
        SUCH LOAN; (iii) ANY PAYMENT OR PREPAYMENT (WHETHER REQUIRED HEREUNDER OR
        OTHERWISE) OF ANY LOAN MADE AFTER THE DELIVERY OF A NOTICE OF BORROWING BUT
        BEFORE THE BORROWING DATE IF SUCH PAYMENT OR PREPAYMENT PREVENTS THE PROPOSED
        BORROWING FROM BECOMING FULLY EFFECTIVE; (iv) AFTER RECEIPT BY THE AGENT
        OF A
        NOTICE OF BORROWING, THE FAILURE OF ANY LOAN TO BE MADE OR EFFECTED BY SUCH
        BANK
        DUE TO ANY CONDITION PRECEDENT TO A BORROWING NOT BEING SATISFIED BY THE
        BORROWERS OR DUE TO ANY OTHER ACTION OR INACTION OF THE BORROWERS, OR (v)
        ANY
        FAILURE BY ANY
        BORROWER (FOR A REASON OTHER THAN THE FAILURE OF A BANK TO MAKE A LOAN) TO
        PREPAY, BORROW, CONTINUE OR CONVERT ANY LOAN OTHER THAN AN ALTERNATE BASE
        RATE
        LOAN ON THE DATE OR IN THE AMOUNT NOTIFIED BY THE BORROWERS. ANY BANK DEMANDING
        PAYMENT UNDER THIS SECTION 2.3(d) SHALL DELIVER TO THE BORROWERS AND THE
        AGENT A
        STATEMENT REASONABLY SETTING FORTH THE AMOUNT AND MANNER OF DETERMINING SUCH
        LOSS, COST OR EXPENSE. THE FACTS SET FORTH IN SUCH STATEMENT SHALL BE CONCLUSIVE
        AND BINDING FOR ALL PURPOSES, ABSENT MANIFEST ERROR.

       

      (e)  If,
        after
        the date of this Agreement, any Bank shall have determined that the adoption
        of
        any applicable law, rule, guideline, interpretation or regulation regarding
        capital adequacy, or any change therein, or any change in the interpretation
        or
        administration thereof by any governmental authority, central bank or comparable
        agency charged with the interpretation or administration thereof, or compliance
        by such Bank with any request or directive regarding capital adequacy (whether
        or not having the force of law) of any such authority, central bank or
        comparable agency, has or would have the effect of reducing the rate of return
        on such Bank’s capital as a consequence of its obligations hereunder and under
        similar lending arrangements to a level below that which such Bank could
        have
        achieved but for such adoption, change or compliance (taking into consideration
        such Bank’s policies with respect to capital adequacy) by an amount deemed by
        such Bank to be material then the Borrowers jointly and severally shall pay
        to
        such Bank such additional amount or amounts as will compensate such Bank
        for
        such reduction.

       

      (f)  A
        certificate of such Bank setting forth such amount or amounts as shall be
        necessary to compensate such Bank as specified in subparagraph (e) above
        shall
        be delivered as soon as practicable to the Borrowers (with a copy thereof
        to the
        Agent) and to the extent determined in accordance with subparagraph (e) above
        shall be conclusive and binding, absent manifest error. The Borrowers jointly
        and severally shall pay such Bank the amount shown as due on any such
        certificate within fifteen (15) days after such Bank delivers such certificate.
        In preparing such certificate, such Bank may employ such assumptions and
        allocations (consistently applied with respect to advances made by such Bank
        or
        commitments by such Bank to make advances) of costs and expenses as it shall
        in
        good faith deem reasonable and may use any reasonable averaging and attribution
        method (consistently applied with respect to advances made by such Bank or
        commitments by such Bank to make advances).

       

      3.  JOINT
        AND SEVERAL LIABILITY OF BORROWERS

       

      3.1  Joint
        and Several Liability of Borrowers

       

       

      (a)  Each
        Borrower is accepting joint and several liability hereunder and under the
        other
        Loan Documents in consideration of the financial accommodations to be provided
        by the Agent and the Banks under this Agreement, for the mutual benefit,
        directly and indirectly, of each Borrower and in consideration of the
        undertakings of the other Borrower to accept joint and several liability
        for the
        Obligations.

       

      (b)  Each
        Borrower, jointly and severally, hereby irrevocably and unconditionally accepts,
        not merely as a surety but also as a co-debtor, joint and several liability
        with
        the other Borrower, with respect to the payment and performance of all of
        the
        Obligations (including any Obligations arising under this Section 3.1), it
        being
        the intention of the parties hereto that all the Obligations shall be the
        joint
        and several obligations of each Borrower without preferences or distinction
        among them.

       

      (c)  If
        and to
        the extent that any Borrower shall fail to make any payment with respect
        to any
        of the Obligations as and when due or to perform any of the Obligations in
        accordance with the terms thereof, then in each such event the other Borrower
        will make such payment with respect to, or perform, such
        Obligation.

       

      (d)  The
        obligations of each Borrower under the provisions of this Section 3.1 constitute
        the absolute and unconditional, full recourse obligations of each Borrower
        enforceable against each such Borrower.

       

      (e)  Except
        as
        otherwise expressly provided in this Agreement: (i) each Borrower hereby
        waives
        notice of acceptance of its joint and several liability, notice of any Loans
        under or pursuant to this Agreement, notice of the occurrence of any Default,
        Event of Default, or of any demand for any payment under this Agreement,
        notice
        of any action at any time taken or omitted by any Agent or any Borrower under
        or
        in respect of any of the Obligations, any requirement of diligence or to
        mitigate damages and, generally, to the extent permitted by applicable law,
        all
        demands, notices and other formalities of every kind in connection with this
        Agreement (except as otherwise provided in this Agreement); and (ii) each
        Borrower hereby assents to, and waives notice of, any extension or postponement
        of the time for the payment of any of the Obligations, the acceptance of
        any
        payment of any of the Obligations, the acceptance of any partial payment
        thereon, any waiver, consent or other action or acquiescence by the Agent
        or any
        Bank at any time or times in respect of any default by any Borrower in the
        performance or satisfaction of any term, covenant, condition or provision
        of
        this Agreement, any and all other indulgences whatsoever by the Agent or
        any
        Bank in respect of any of the Obligations, and the taking, addition,
        substitution or release, in whole or in part, at any time or times, of any
        security for any of the Obligations or the addition, substitution or release,
        in
        whole or in part, of any Borrower. 

       

      (f)  Without
        limiting the generality of the foregoing, each Borrower assents to any other
        action or delay in acting or failure to act on the part of the Agent or any
        Bank
        with respect to the failure by any Borrower to comply with any of its respective
        Obligations, including any failure strictly or diligently to assert any right
        or
        to pursue any remedy or to comply fully with applicable laws, statutes, rules
        or
        regulations, which might, but for the provisions of this Section 3.1 afford
        grounds for terminating, discharging or relieving any Borrower, in whole
        or in
        part, from any of its Obligations under this Section 3.1, it being the intention
        of each Borrower that, so long as any of the Obligations hereunder remain
        unsatisfied, the Obligations of such Borrower under this Section 3.1 shall
        not
        be discharged except by performance and then only to the extent of such
        performance. The Obligations of each Borrower under this Section 3.1 shall
        not
        be diminished or rendered unenforceable by any winding up, reorganization,
        arrangement, liquidation, reconstruction or similar proceeding with respect
        to
        any Borrower or the Agent or any Bank or other Loan Party. The joint and
        several
        liability of the Borrowers hereunder shall continue in full force and effect
        notwithstanding any absorption, merger, amalgamation or any other change
        whatsoever in the name, constitution or place of formation of any of the
        Borrowers or the Agent or any Bank.

       

      (g)  Each
        Borrower represents and warrants to the Agent and Banks that such Borrower
        is
        currently informed of the financial condition of the Borrowers and of all
        other
        circumstances which a diligent inquiry would reveal and which bear upon the
        risk
        of nonpayment of the Obligations. 

       

      (h)  The
        provisions of this Section 3.1 are made for the benefit of the Agent, the
        Banks
        and their respective successors and assigns, and may be enforced by any of
        them
        from time to time against any or all of the Borrowers as often as occasion
        therefor may arise and without requirement on the part of such Agent, Bank,
        successor or assign first to marshal any of its or their claims or to exercise
        any of its rights against any of the other Borrowers or to exhaust any remedies
        available to it against any of the other Borrowers or to resort to any other
        source or means of obtaining payment of any of the Obligations hereunder
        or to
        elect any other remedy. The provisions of this Section 3.1 shall remain in
        effect until all of the Obligations shall have been paid in full or otherwise
        fully satisfied. If at any time, any payment, or any part thereof, made in
        respect of any of the Obligations, is rescinded or must otherwise be restored
        or
        returned by the Agent or any Bank upon the insolvency, bankruptcy or
        reorganization of any of the Borrowers, or otherwise, the provisions of this
        Section 3.1 will forthwith be reinstated in effect, as though such payment
        had
        not been made.

       

      (i)  Each
        Borrower hereby agrees that it will not enforce any of its rights of
        contribution or subrogation against the other Borrower with respect to any
        liability incurred by it hereunder or under any of the other Loan Documents,
        any
        payments made by it to the Agent or the Banks with respect to any of the
        Obligations or any collateral security therefor until such time as all of
        the
        Obligations have been paid in full in cash. Any claim which any Borrower
        may
        have against the other Borrower with respect to any payments to the Agent
        or any
        Bank hereunder or under any other Loan Documents are hereby expressly made
        subordinate and junior in right of payment, without limitation as to any
        increases in the Obligations arising hereunder or thereunder, to the prior
        payment in full in cash of the Obligations and, in the event of any insolvency,
        bankruptcy, receivership, liquidation, reorganization or other similar
        proceeding under the laws of any jurisdiction relating to any Borrower, its
        debts or its assets, whether voluntary or involuntary, all such Obligations
        shall be paid in full in cash before any payment or distribution of any
        character, whether in cash, securities or other property, shall be made to
        the
        other Borrower therefor.

       

      (j)  Each
        Borrower hereby agrees that, after the occurrence and during the continuance
        of
        any Default or Event of Default, the payment of any amounts due with respect
        to
        the indebtedness owing by any Borrower to the other Borrower is hereby
        subordinated to the prior payment in full in cash of the Obligations. Each
        Borrower hereby agrees that after the occurrence and during the continuance
        of
        any Default or Event of Default, such Borrower will not demand, sue for or
        otherwise attempt to collect any indebtedness of the other Borrower owing
        to
        such Borrower. If, notwithstanding the foregoing sentence, such Borrower
        shall
        collect, enforce or receive any amounts in respect of such indebtedness,
        such
        amounts shall be collected, enforced and received by such Borrower as trustee
        for the Agent, and such Borrower shall deliver any such amounts to Agent
        for
        application to the Obligations in accordance with Section 4.3. 

       

      4.  PAYMENTS
        AND PREPAYMENTS

       

      4.1  Optional
        and Mandatory Prepayment

       

      (a)  Optional
        Prepayments.
        The
        Borrowers shall have the right at any time and from time to time to prepay
        any
        of the Loans, in whole or in part, as follows:

       

      (i)  with
        respect to the Eurodollar Rate Loans, by giving not less than three (3) Business
        Days’ prior written notice to such effect to the Agent; and

       

      (ii)  with
        respect to the Alternate Base Rate Loans, by giving not less than one (1)
        Business Day’s prior written notice to such effect to the Agent.

       

      Each
        such
        optional prepayment shall be accompanied by accrued interest on the amount
        so
        repaid to the date of such prepayment. Any partial prepayment shall be in
        the
        amount of $5,000,000.00 or an integral multiple thereof.

       

      (b)  Mandatory
        Prepayments.

       

      (i)  Asset
        Sales.
        Not
        later than one Business Day following the receipt of any net cash proceeds
        of
        any Asset Sale by the Parent or any of its Subsidiaries, the Borrowers shall
        make prepayments in accordance with Section 4.1(c) in an aggregate amount
        equal
        to 100% of such net cash proceeds.

       

      (ii)  Debt
        Issuance.
        Not
        later than one Business Day following the receipt of any net cash proceeds
        of
        any Debt Issuance by the Parent or any of its Subsidiaries, the Borrowers
        shall
        make prepayments in accordance with Section 4.1(c) in an aggregate amount
        equal
        to 100% of such net cash proceeds; provided,
        however,
        that no
        such prepayment shall be required under this Section 4.1(b)(ii) with
        respect to any Debt or other indebtedness of the Parent or any of its
        Subsidiaries incurred or issued so long as (x) the net cash proceeds therefrom
        are applied at the time of such incurrence or issuance to refinance or repay
        any
        Debt or indebtedness of the Parent or such Subsidiary that is in existence
        on
        the Closing Date and has a stated maturity date that is prior to March 15,
        2007
        or (y) in the case of any Debt or other indebtedness of the Parent incurred
        under the Existing Revolving Credit Facility, the net cash proceeds therefrom
        are used by the Parent solely for working capital purposes.

       

      (iii)  Equity
        Issuance.
        Not
        later than one Business Day following the receipt of any net cash proceeds
        of
        any Equity Issuance by the Parent or any of its Subsidiaries, the Borrowers
        shall make prepayments in accordance with Section 4.1(c) in an aggregate
        amount
        equal to 100% of such net cash proceeds.

       

      (iv)  SUG
        EAT Entities Loan Documents.
        Not
        later than one Business Day following the receipt by ESSI of any net cash
        proceeds constituting prepayment or repayment by any of the SUG EAT Entities
        of
        their respective obligations under the SUG EAT Entities Loan Documents, the
        Borrowers shall make repayments in accordance with Section 4.1(c) in an
        aggregate amount equal to 100% of such net cash proceeds.

       

      (c)  Application
        of Mandatory Prepayments.
        In the
        event of any mandatory prepayment of the Loan pursuant to Section 4.1(b),
        all
        net cash proceeds received as provided in Section 4.1(b) shall be applied
        to the
        ratable prepayment of the outstanding aggregate principal amount of the Loans,
        together with accrued interest thereon to the date of such
        prepayment.

       

      4.2  Repayment
        of the Loans; and Maturity of the Loans.

       

      


       

      (a)  Each
        Borrower jointly and severally hereby unconditionally promises to pay to
        the
        Agent for the account of each Bank holding a Loan or Loans the then unpaid
        principal amount of each Loan on the Maturity Date.

       

      (b)  Each
        Loan
        shall mature, and the principal amount thereof shall be due and payable,
        together with accrued and unpaid interest thereon, on the Maturity
        Date.

       

      4.3  Place
        of Payment or Prepayment

       

       All
        payments and prepayments made in accordance with the provisions of this
        Agreement or of the Notes or of any other Loan Document in respect of fees
        or of
        principal or interest on the Loans shall be made to the Agent for the account
        of
        the Banks at the Agent’s Payment Office, no later than 12:00 noon, New York City
        time, in immediately available funds. Unless the Agent shall have received
        notice from the Borrowers prior to the date on which any payment is due to
        the
        Banks hereunder that the Borrowers will not make any payment due hereunder
        in
        full, the Agent may assume that the Borrowers have made such payment in full
        to
        the Agent on such date and the Agent may, in reliance upon such assumption,
        cause to be distributed to each Bank on such due date an amount equal to
        the
        amount then due to such Bank. If and to the extent the Borrowers shall not
        have
        so made such payment in full to the Agent, each Bank shall repay to the Agent
        forthwith on demand such amount distributed to such Bank together with interest
        thereon, for each day from the date such amount is distributed to such Bank
        until the date such Bank repays such amount to the Agent, at the Federal
        Funds
        Rate. If and to the extent that the Agent receives any payment or prepayment
        from the Borrowers and fails to distribute such payment or prepayment to
        the
        Banks ratably on the basis of their respective Pro Rata Percentage on the
        day
        the Agent receives such payment or prepayment, and such distribution shall
        not
        be so made by the Agent in full on the required day, the Agent shall pay
        to each
        Bank such Bank’s Pro Rata Percentage thereof together with interest thereon at
        the Federal Funds Rate for each day from the date such amount is paid to
        the
        Agent by the Borrowers until the date the Agent pays such amount to such
        Bank.

       

      4.4  No
        Prepayment Premium or Penalty

       

      Each
        prepayment pursuant to Section 4.1 shall be without premium or penalty, subject
        in the case of Eurodollar Rate Loans to the provisions of Section
        2.3(d).

       

      4.5  Taxes

       

      All
        payments (whether of principal, interest, reimbursements or otherwise) under
        this Agreement or any other Loan Document shall be made by the Borrowers
        without
        set off or counterclaim and shall be made free and clear of and without
        deduction for any present or future tax, levy, impost or any other charge,
        if
        any, of any nature whatsoever now or hereafter imposed by any taxing authority.
        If the making of such payments is prohibited by law, unless such a tax, levy,
        impost or other charge is deducted or withheld therefrom, the Borrowers jointly
        and severally shall pay to the Banks, on the date of each such payment, such
        additional amounts as may be necessary in order that the net amounts received
        by
        the Banks after such deduction or withholding shall equal the amounts which
        would have been received if such deduction or withholding were not
        required.

       

      4.6  Reduction
        or Termination of Commitments

       

      The
        Commitments shall automatically terminate in their entirety at 5:00 p.m.
        (New
        York City time) on the Closing Date.

       

      5.  FEES

       

      


       

      5.1  Specified
        Fees

       

      The
        Parent
        shall
        pay the fees set forth in the Fee Letter at the times and to the applicable
        parties as set forth therein.

       

      5.2  Fees
        Not Interest

       

      The
        fees
        described in this Agreement represent compensation for services rendered
        and to
        be rendered separate and apart from the lending of money or the provision
        of
        credit and do not constitute compensation for the use, detention, or forbearance
        of money, and the obligation of the Borrowers to pay each fee described herein
        shall be in addition to, and not in lieu of, the obligation of the Borrowers
        to
        pay interest, other fees described in this Agreement, and expenses otherwise
        described in this Agreement. Fees shall be payable when due in Dollars and
        in
        immediately available funds.

       

      6.  APPLICATION
        OF PROCEEDS

       

      6.1  Application
        of Proceeds

       

      The
        Borrowers
        agree
        that the proceeds of the Loans shall be used solely to
        fund
        the SUG EAT Entities Loan in accordance with the terms of the SUG EAT Entities
        Loan Documents, which loan proceeds shall in turn be immediately used by
        the SUG
        EAT Entities to fund the purchase price of the Sid Richardson
        Acquisition.

       

      7.  REPRESENTATIONS
        AND WARRANTIES

       

      Each
        Borrower represents and warrants that:

       

      7.1  Organization
        and Qualification

       

      Each
        of
        the Parent, each of its Subsidiaries and each of the SUG Partnership Entities:
        (a) is a corporation, limited liability company or partnership, as the case
        may
        be, duly organized, validly existing, and in good standing under the laws
        of its
        respective state of incorporation or formation; (b) has the corporate or
        organizational power to own its respective properties and to carry on its
        respective businesses as now conducted; and (c) is duly qualified as foreign
        corporation, limited liability company or partnership, as the case may be
        (or,
        in the case of any Southern Union Trust, trusts) to do business and is in
        good
        standing in every jurisdiction where such qualification is necessary except
        when
        the failure to so qualify would not or does not have a Material Adverse Effect.
        Each Borrower is a corporation organized under the laws of Delaware and has
        the
        Subsidiaries listed on Schedule
        7.1(A),
        and no
        others, each of which is a Delaware corporation unless otherwise noted on
        Schedule
        7.1(A).
        None of
        the Subsidiaries listed on Schedule
        7.1(A)
        as
“Inactive Subsidiaries” conducts or will conduct any business, and none of such
        Subsidiaries has any assets other than minimum legal capitalization. As of
        the
        Closing Date, (a) CDEC directly owns and holds all the Equity Interests in
        SUG
        EAT Inc., (b) SUG EAT Inc. directly owns and holds all of the Equity Interests
        in SUG EAT LLC, (c) Southern Union Panhandle is the sole manager of SUG EAT
        LLC
        and (d) Schedule
        7.1(B)
        sets
        forth all the holders and owners of all the Equity Interests in each of SRES,
        REM, Leapartners and their respective subsidiaries (including without
        limitation, the Partnership Companies) immediately after giving effect to
        the
        Sid Richardson Acquisition.

       

      7.2  Financial
        Statements

       

      The
        Parent has furnished the Banks with (a) the Parent’s annual audit reports
        containing the Parent’s consolidated balance sheets, statements of income and
        stockholder’s equity and a cash flow statements as at and for the twelve month
        periods ending June 30, 2002, June 30, 2003, June 30, 2004 and December 31,
        2004, accompanied by the certificate of Price Waterhouse Coopers and (b)
        the
        Parent’s unaudited financial report as of the fiscal quarter ending September
        30, 2005. These statements are complete and correct and present fairly in
        accordance with GAAP, consistently applied throughout the periods involved,
        the
        consolidated financial position of the Parent and the Subsidiaries and the
        results of its and their operations as at the dates and for the periods
        indicated subject, as to interim statements only, to changes resulting from
        customary end-of-year credit adjustments which in the aggregate will not
        be
        material.

       

      7.3  Litigation

       

      Except
        as
        disclosed on Schedule
        7.3
        or
Schedule
        7.16,
        there
        is no: (a) action or proceeding pending or, to the knowledge of the Borrowers,
        threatened against the Parent or any of its Subsidiaries before any court,
        administrative agency or arbitrator which is reasonably expected to have
        a
        Material Adverse Effect; (b) judgment outstanding against the Parent or any
        of
        its Subsidiaries for the payment of money; or (c) other outstanding judgment,
        order or decree affecting the Parent or any of its Subsidiaries before or
        by any
        administrative or governmental authority, compliance with or satisfaction
        of
        which may reasonably be expected to have a Material Adverse Effect.

       

      7.4  Default

       

      Neither
        the Parent nor any of its Subsidiaries is in default under or in violation
        of
        the provisions of any instrument evidencing any Debt or of any agreement
        relating thereto or any judgment, order, law, writ, injunction or decree
        of any
        court or any order, regulation or demand of any administrative or governmental
        instrumentality which default or violation might have a Material Adverse
        Effect.

       

      7.5  Title
        to Assets

       

      The
        Parent and each of its Subsidiaries have good and marketable title to their
        respective assets, subject to no Liens except those permitted in Section
        10.2.

       

      7.6  Payment
        of Taxes

       

      The
        Parent and each of its Subsidiaries have filed all tax returns required to
        be
        filed and have paid all taxes shown on said returns and all assessments which
        are due and payable (except such as are being contested in good faith by
        appropriate proceedings for which adequate reserves for their payment have
        been
        provided in a manner consistent with the accounting practices followed by
        the
        Parent as of June 30, 2005). The Borrowers are not aware of any pending
        investigation by any taxing authority or of any claims by any governmental
        authority for any unpaid taxes, except as disclosed on Schedule
        7.6.

       

      7.7  Conflicting
        or Adverse Agreements or Restrictions;
        Governmental
        Approvals.

       

      Neither
        the Parent nor any of its Subsidiaries is a party to any contract or agreement
        or subject to any restriction which would have a Material Adverse Effect.
        Neither the execution and delivery of this Agreement or any other Loan Document
        nor the consummation of the transactions contemplated hereby nor fulfillment
        of
        and compliance with the respective terms, conditions and provisions of this
        Agreement or of any of the other Loan Documents or of any instruments required
        hereby or thereby will (a) require any consent or approval of, registration
        or
        filing with, or other action by any Governmental Authority, except as set
        forth
        in Schedule
        7.7
        or
(b) conflict
        with or result in a breach of any of the terms, conditions or provisions
        of, or
        constitute a default under, or result in any violation of, or result in the
        creation or imposition of any lien (other than as contemplated or permitted
        by
        this Agreement) on any of the property of the Parent or any of its Subsidiaries
        pursuant to (i) the charter or bylaws or other applicable organizational
        documents of the Parent or any of its Subsidiaries; (ii) any law or any
        regulation of any administrative or governmental instrumentality; (iii) any
        order, writ, injunction or decree of any court; or (iv) the terms, conditions
        or
        provisions of any agreement or instrument to which the Parent or any of its
        Subsidiaries is a party or by which it is bound or to which it is
        subject.

       

      7.8  Authorization,
        Validity, Etc.

       

      Each
        Borrower has the organizational power and authority to make, execute, deliver
        and carry out this Agreement and the other Loan Documents to which such Person
        is a party, and the transactions contemplated herein and therein, to make
        the
        borrowings provided for herein, to execute and deliver the Notes and to perform
        its obligations hereunder and under the other Loan Documents to which it
        is a
        party and all such action has been duly authorized by all necessary
        organizational proceedings on its part. Each Loan Party (other than the
        Borrowers) has the organizational power and authority to make, execute, deliver
        and carry out the Loan Documents to which such Person is a party and the
        transactions contemplated therein and to perform its obligations thereunder
        and
        all such action has been duly authorized by all necessary organizational
        proceeding on its part. This Agreement has been duly and validly executed
        and
        delivered by the Borrowers and constitutes the valid and legally binding
        agreement of the Borrowers enforceable against the Borrowers in accordance
        with
        its terms, except as limited by Debtor Laws; and the Notes and the other
        Loan
        Documents, when duly executed and delivered by the Borrowers and each other
        Loan
        Party, as the case may be, pursuant to the provisions hereof and thereof,
        will
        constitute the valid and legally binding obligation of the Borrowers and
        each
        such other Loan Party, as the case may be, enforceable against such Person
        in
        accordance with the terms thereof and of this Agreement, except as limited
        by
        Debtor Laws.

       

      7.9  Investment
        Company Act Not Applicable

       

      Neither
        the Parent nor any of its Subsidiaries is an “investment company” or a company
“controlled” by an “investment company”, within the meaning of the Investment
        Company Act of 1940, as amended.

       

      7.10  Public
        Utility Holding Company Act Not Applicable

       

      Neither
        the Parent nor any of its Subsidiaries is a “holding company”, or a “subsidiary
        company” of a “holding company”, or an “affiliate” of a “holding company”, or an
        affiliate of a “subsidiary company” of a “holding company”, as such terms are
        defined in the Public Utility Holding Company Act of 2005, as
        amended.

       

      7.11  Regulations
        G, T, U and X

       

      No
        Loan
        shall be a “purpose credit secured directly or indirectly by margin stock”
within the meaning of Regulation U of the Board of Governors of the Federal
        Reserve System (“margin stock”); none of the proceeds of any Loan will be used
        to extend credit to others for the purpose of purchasing or carrying any
        margin
        stock, or for any other purpose which would constitute this transaction a
        “purpose credit secured directly or indirectly by margin stock” within the
        meaning of said Regulation U, as now in effect or as the same may hereafter
        be
        in effect. Neither the Parent nor any of its Subsidiaries will take or permit
        any action which would involve the Banks in a violation of Regulation G,
        Regulation T, Regulation U, Regulation X or any other regulation of the Board
        of
        Governors of the Federal Reserve System or a violation of the Securities
        Exchange Act of 1934, in each case as now or hereafter in effect. Not more
        than
        twenty-five percent (25%) of the value (as determined by any reasonable method)
        of the assets subject to the negative pledge set forth in Section 10.2 and
        the
        restrictions on disposition of assets set forth in Section 10.8 is represented
        by margin stock.

       

      7.12  ERISA

       

      Except
        as
        disclosed in Part
        A
        in Schedule 7.12,
        no
        Reportable Event (as defined in § 4043(c) of ERISA) has occurred with respect to
        any Plan. Each Plan complies in all material respects with all applicable
        provisions of ERISA, and, the Parent and each of its Subsidiaries have filed
        all
        reports required by ERISA and the Code to be filed with respect to each Plan.
        Except as disclosed in Part
        B
        in Schedule 7.12,
        the
        Borrowers have no knowledge of any event which could result in a liability
        of
        the Parent or any of its Subsidiaries to the Pension Benefit Guaranty
        Corporation. The Parent and each of its Subsidiaries have met all requirements
        with respect to funding the Plans imposed by ERISA or the Code. Since the
        effective date of Title IV of ERISA, there have not been any, nor are there
        now
        existing any, events or conditions that would permit any Plan to be terminated
        under circumstances which would cause the lien provided under § 4068 of ERISA to
        attach to any property of the Parent or any of its Subsidiaries.

       

      7.13  No
        Financing of Certain Security Acquisitions

       

      None
        of
        the proceeds of any Loan will be used to acquire any security in any transaction
        that is subject to §13 or §14 of the Securities Exchange Act of 1934, as
        amended, except the equity interests described in subparagraph (ii) of the
        definition of “Qualifying Assets”.

       

      7.14  Franchises,
        Co-Licenses, Etc

       

      The
        Parent and each of its Subsidiaries own or have obtained all the material
        governmental permits, certificates of authority, leases, patents, trademarks,
        service marks, trade names, copyrights, franchises and licenses, and rights
        with
        respect thereto, required or necessary (or, in the sole and independent judgment
        of the Borrowers, prudent) in connection with the conduct of their respective
        businesses as presently conducted or as proposed to be conducted.

       

      7.15  Lines
        of Business

       

      The
        nature of the Parent’s lines of business are predominately the following: (a)
        the operation of energy distribution and transportation services, including
        without limitation, natural gas sales, storage and transportation and
        distribution, propane sales and distribution and promotion, marketing and
        sale
        of compressed natural gas and the terminalling and storage of liquefied natural
        gas; (b) the development and marketing of fuel cell and distributive energy
        options; (c) electric marketing/generation; (d) the operation of fuel oil
        distribution and transportation networks; (e) gathering and processing of
        natural gas; and (f) sales and rentals of appliances utilizing one or more
        of
        the fuel or energy options specified in this Section 7.15. Notwithstanding
        anything contained in the foregoing in this Section 7.15 to the contrary,
        the
        only line of business of the SUG EAT Entities is the SUG EAT Entities Permitted
        Activities.

       

      7.16  Environmental
        Matters

       

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

       

      7.17  No
        Agreements Prohibiting Pledge of Southern Union Panhandle and
        Panhandle Eastern Equity Interests

       

      The
        Parent is not a party to any contract or other agreement with any Person
        that
        directly or indirectly prohibits the Borrower from granting any Lien against
        the
        Equity Interests in (i) Southern Union Panhandle or (ii) Panhandle Eastern,
        in
        each case at any time owned and held by the Parent as security for any Debt
        of
        the Parent or any of its Subsidiaries.

       

      7.18  No
        Agreements Prohibiting Pledge of Sid
        Richardson Acquired Business.

       

      Neither
        the Parent
        nor any
        Subsidiary of the Parent
        nor any
        SUG EAT Entity is a party to any contract or other agreement with any Person
        that directly or indirectly prohibits the Parent
        or such
        Subsidiary or such SUG EAT Entity from granting any Lien against the Equity
        Interests in (i) SRES, (ii) REM or (iii) Leapartners, in each case at any
        time
        owned and held by the Parent
        or any
        of its Subsidiaries or any SUG EAT Entity as security for any Debt of the
        Parent
        or any
        of its Subsidiaries.

       

      7.19  Use
        of Proceeds.

       

       The
        proceeds of the Loans will be used by the Borrowers only as permitted by
        Section
        6.1.

       

      7.20  Disclosure.

       

       

       

      (a)  Any
        report, financial statements, certificates or other information filed by
        or on
        behalf of the Parent with the SEC
        (including, in each case, all amendments and supplements thereto) do not
        contain
        any material misstatement of fact or omit to state any material fact necessary
        to make the statements therein, in the light of the circumstances under which
        they were made, not materially misleading.

       

      (b)  All
        reports, financial statements, certificates or other information furnished
        by or
        on behalf of the Parent or any of its Subsidiaries to the Agent, the Joint
        Lead
        Arrangers or any Bank in connection with the Sid Richardson Acquisition and
        the
        negotiation of this Agreement or any other Loan Document or delivered hereunder
        or thereunder (as modified or supplemented by other information so furnished),
        taken as a whole, are true and correct in all material respects and do not
        omit
        to state a material fact necessary to make the statements contained therein
        not
        misleading, in light of the circumstances under which such statements were
        made,
        in each case on the date on which such information was furnished; provided
        that,
        with respect to projected financial information, the Borrowers represent
        only
        that such information was prepared in good faith based on assumptions believed
        to be reasonable at the time (it being understood that this representation
        and
        warranty in this Section 7.20(b) as it pertains to any of SRES, REM, Leapartners
        and their respective Subsidiaries shall be limited to the knowledge of the
        Borrowers).

       

      7.21  Sid
        Richardson Acquired Business Matters.

       


         To
          the
          knowledge of the Borrowers, the
          representations and warranties contained in the Sid Richardson Acquisition
          Documents that relate to the Partnership Companies and its Subsidiaries
          are true
          and correct in all material respects
          as of
          the Closing Date, with only such exceptions as would not in the aggregate
          reasonably be expected to have a material adverse effect on (x) the Borrowers
          or
          (y) SRES, REM, Leapartners and their Subsidiaries.


       

      7.22  Collateral
        Matters.

       

       

       

      (a)  Each
        Collateral Document delivered pursuant to Section 8.6 will, upon execution
        and
        delivery thereof, be effective to create in favor of the Agent, for the benefit
        of the Secured Parties, legal, valid and enforceable Liens on, and security
        interests in, all of the Loan Parties’ right, title and interest in and to the
        Collateral thereunder, and (i) when all appropriate filings or recordings
        are made in the appropriate offices as may be required under applicable law
        and
        (ii) upon the taking of possession or control by the Agent of such
        Collateral with respect to which a security interest may be perfected only
        by
        possession or control (which possession or control shall be given to the
        Agent
        to the extent required by any Collateral Document), such Collateral Document
        will constitute fully perfected Liens on, and security interests in, all
        right,
        title and interest of the Loan Parties in such Collateral, in each case free
        and
        clear of any Lien, except for the liens and security interests created by
        the
        Loan Documents and, in the case of the SUG EAT Entities Collateral, the
        Permitted Subordinated Lien.

       

      (b)  The
        Parent has rights and sufficient title to and is the legal and beneficial
        owner
        of the Collateral pledged by it under the Collateral Documents free and clear
        of
        any Lien, except for the liens and security interests created by the Loan
        Documents. 

       

      (c)  Upon
        the
        consummation of the Sid Richardson Acquisition, each of the SUG EAT Entities
        will have rights and sufficient title to and will be the legal and beneficial
        owners of the Acquired Business Equity Interests and the other Collateral
        to be
        pledged by them under the Collateral Documents to which it is a party, free
        and
        clear of any Lien, except for the liens and security interests created under
        the
        Loan Documents and the Permitted Subordinated Lien.

       

      8.  CONDITIONS

       

      


       

      The
        several obligations of each Bank to make its Loan is subject to the following
        conditions:

       

      8.1  Representations
        True and No Defaults.

       

      (a)  The
        representations and warranties contained in Section 7 shall be true and correct
        on and as of the particular Borrowing Date as though made on and as of such
        date.

       

      (b)  None
        of
        the Loan Parties shall be in default in the due performance of any covenant
        on
        its part contained in this Agreement and the other Loan Documents.

       

      (c)  No
        Event
        of Default or Default shall have occurred and be continuing.

       

      8.2  Governmental
        Approvals

       

      The
        Borrowers and each other Loan Party shall have obtained all orders, approvals
        or
        consents of any Governmental Authority required in connection with the Sid
        Richardson Acquisition or the making and carrying out of this Agreement and
        the
        other Loan Documents, the making of the borrowings pursuant hereto, the issuance
        of the Notes to evidence such borrowings, and the execution and delivery
        of the
        other Loan Documents, and all applicable waiting periods and appeal periods
        shall have expired, in each case without the imposition of any burdensome
        condition. The Borrowers shall have obtained all amendments or consents of
        any
        other Person under any applicable loan or financing agreement or other debt
        instrument of the Borrowers or its Affiliates that are necessary or reasonably
        desirable to permit the consummation of (a)
        the
        Sid Richardson Acquisition on the terms contemplated by the Sid Richardson
        Acquisition Documents and (b)
        this
        Agreement and the other Loan Documents and the transactions contemplated
        hereunder and thereunder on the terms contemplated hereby and thereby (including
        without limitation, the security arrangements contemplated hereby), each
        of
        which amendments or consents shall be in form and substance satisfactory
        to the
        Banks. 

       

      8.3  Compliance
        With Law

       

      The
        business and operations of the Parent and each of its Subsidiaries as conducted
        at all times relevant to the transactions contemplated by this Agreement
        to and
        including the close of business on the particular Borrowing Date shall have
        been
        and shall be in compliance in all material respects with all applicable State
        and Federal laws, regulations and orders affecting the Parent and each of
        its
        Subsidiaries and the business and operations of any of them.

       

      8.4  Notice
        of Borrowing and Other Documents

       

      On
        each
        Borrowing Date, the Banks shall have received (a) a Notice of Borrowing;
        and (b)
        such other documents and certificates relating to the transactions herein
        contemplated as the Banks may reasonably request.

       

      8.5  Payment
        of Fees and Expenses

       

      The
        Borrowers shall have paid (a) all expenses of the type described in Section
        13.3
        through the date of such Loan, (b) all closing, structuring and other invoiced
        fees owed as of the Closing Date to the Agent, any of the Banks and/or any
        of
        the Joint Lead Arrangers (and their respective Affiliates) by the Borrowers
        under this Agreement or any other written agreement between the Parent and/or
        the other Borrower, the Agent, the applicable Bank(s) and/or the applicable
        Joint Lead Arranger(s) (and their respective Affiliates), and (c) all the
        fees
        set forth in the Fee Letter at the times and to the parties as set forth
        in such
        Fee Letter.

       

      8.6  Loan
        Documents, Opinions and Other Instruments

       

      As
        of the
        Closing Date, each applicable Loan Party (to the extent a party thereto)
        shall
        have delivered to the Agent the following: (a) this Agreement, each of the
        Notes, the Collateral Documents (including the Pledge Agreements and financing
        statements or any other evidence of all recordings, filings or any other
        action
        that the Agent may deem necessary in order to perfect and protect the first
        priority liens and security interests created under the Pledge Agreements),
        the
        Intercreditor Agreement and all other Loan Documents required by the Agent
        and
        the Banks to be executed and delivered by such Loan Party in connection with
        this Agreement; (b) with respect to each Loan Party, a certificate from the
        Secretary of State of the State of Delaware as to the continued existence
        and
        good standing of each such Loan Party in the State of Delaware; (c) with
        respect
        to the Parent, a certificate from the Secretary of State of the State of
        Texas
        as to the continued qualification of each such Loan Party to do business
        in the
        State of Texas; (d) a Secretary’s Certificate executed by the duly elected
        Secretary or a duly elected Assistant Secretary of the Parent, in a form
        acceptable to the Agent, whereby such Secretary or Assistant Secretary certifies
        that attached thereto is a true and complete copy of each Organizational
        Document of each Borrower and that such Organizational Documents have not
        been
        modified, rescinded or amended and are in full force and effect, (2) that
        attached thereto is a true and complete copy of resolutions adopted by the
        Board
        of Directors of each Borrower authorizing such Borrower to enter into the
        Loan
        Documents, to borrow hereunder, to pledge its interest in the Collateral
        and to
        perform its obligations under the Loan Documents, in each case all in accordance
        with the terms of this Agreement and the other Loan Documents, and to enter
        into
        such documents and perform such obligation necessary to consummate the SUG
        EAT
        Entity Loan, the Sid Richardson Acquisition Assignment and the Qualified
        Transaction, and that such resolutions have not been modified, rescinded
        or
        amended and are in full force and effect; (e) an officer’s certificate executed
        by the duly elected senior vice president of SUG EAT, Inc., in a form acceptable
        to the Agent, whereby such senior vice president certifies (1) that attached
        thereto is a true and complete copy of each Organizational Document of each
        SUG
        EAT Entity and that such Organizational Documents have not been modified,
        rescinded or amended and are in full force and effect, (2) that attached
        thereto is a true and complete copy of resolutions adopted by the Board of
        Directors of SUG EAT Inc., in its individual capacity and as sole member
        of SUG
        EAT LLC, authorizing such SUG EAT Entity to enter into the Loan Documents
        to
        which it is a party, to pledge their respective interests in the Collateral
        to
        secure the Obligations and to perform their obligations thereunder, in each
        case
        all in accordance with the terms of this Agreement and the other Loan Documents,
        and to enter into such documents and perform such obligation necessary to
        consummate the SUG EAT Entity Loan, the Sid Richardson Acquisition Assignment
        and the Qualified Transaction, and that such resolutions have not been modified,
        rescinded or amended and are in full force and effect, and (3) as to the
        incumbency and specimen signature of each officer of SUG EAT Inc. executing
        any
        Loan Document or any other document delivered in connection herewith on behalf
        of such Loan Party (together with a certificate of another officer as to
        the
        incumbency and specimen signature of the secretary or assistant secretary
        executing the certificate in this clause (3)); (f) a legal opinion from
        in-house counsel for the Borrowers, dated as of the Closing Date, addressed
        to
        the Agent and the Banks in the form of Exhibit
        E;
        (g)
        with respect to the Borrowers, a solvency certificate of a senior financial
        officer of the Parent in form and substance satisfactory to the Agent; and
        (h) a
        legal opinion from in-house counsel for SUG EAT, Inc., dated as of the Closing
        Date, addressed to the Agent and the Banks covering matters similar to the
        opinions set forth in Exhibit E but with respect to each of the SUG EAT
        Entities, which legal opinion shall be in form and substance reasonably
        satisfactory to the Agent.

       

      8.7  Consummation
        of Sid
        Richardson Acquisition

       

      Simultaneously
        with the funding of Loans on the Closing Date, the SUG EAT Entities Loan
        to the
        SUG EAT Entities shall be made by ESSI pursuant to the SUG EAT Entities Loan
        Documents and the Sid Richardson Acquisition shall have been consummated
        on
        terms and conditions substantially as set forth in the
        Sid
        Richardson Acquisition Documents, as amended or modified in a manner that
        does
        not materially adversely impact the Banks.

       

      8.8  No
        Material Adverse Change

       

      (a)  There
        has
        not occurred any event, development or circumstance since December 31, 2004
        that
        has caused or could reasonably be expected to cause a material adverse condition
        or material adverse change in or affecting (A) the business, condition
        (financial or otherwise), results of operation, assets, liabilities, management,
        prospects or value of the Parent and its Subsidiaries, taken as a whole or
        (B)
        the validity or enforceability of any of the Loan Documents or the rights
        and
        remedies of the Agent and the Banks thereunder.

       

      (b)  There
        has
        not occurred any Acquired Business Material Adverse Effect on any Partnership
        Company since September 30, 2005.

       

      8.9  Financial
        Statements

       

      The
        Joint
        Lead Arrangers shall have received, reviewed, and be satisfied with, the
        following:

       

      (a)  in
        the
        case of the Parent: (i) the audited consolidated balance sheets and related
        statements of income, stockholders’ equity and cash flows of each of the Parent
        for each of the fiscal years ending 2002, 2003 and 2004 and (ii) unaudited
        consolidated and consolidating balance sheets and related statements of income,
        stockholders’ equity and cash flows of the Parent for fiscal quarters ending
        March 31, 2005, June 30, 2005 and September 30, 2005; and

       

      (b)  in
        the
        case of the Partnership Companies: (i) the audited consolidated balance sheets
        and related statements of income, stockholders’ equity and cash flows of the
        Partnership Companies for each of the fiscal years ending 2003 and 2004 and
        (ii) unaudited consolidated balance sheets and related statements of
        income, stockholders’ equity and cash flows of the Partnership Companies for
        fiscal quarter ending November 30, 2005.

       

      8.10  Indebtedness

       

      After
        giving effect to the Transactions and the other transactions contemplated
        hereby, the Borrowers shall have no outstanding indebtedness or preferred
        Equity
        Interests other than (i) indebtedness outstanding as of February 10, 2006,
        (ii) indebtedness outstanding under the Existing Revolving Credit Facility
        and (iii) indebtedness outstanding under this Agreement.

       

      8.11  Miscellaneous
        Documents

       

      The
        Borrowers shall have delivered to the Agent a Secretary’s Certificate executed
        by the duly elected Secretary or a duly elected Assistant Secretary of the
        Parent, in a form acceptable to the Agent, and dated as of the Closing Date,
        whereby such Secretary or Assistant Secretary certifies (a) that attached
        thereto is a true and complete copy of each of the SUG EAT Entities Transaction
        Documents; and (b) that each of the SUG EAT Entities Transaction Documents
        have
        not been modified, rescinded or amended and are in full force and effect.
        The
        Banks, the Agent and the Joint Lead Arrangers shall have been satisfied in
        all
        respects with each SUG EAT Entities Transaction Document.

       

      8.12  Officers’
        Certificate

       

      The
        Agent
        shall have received an executed Officer’s Certificate of the Parent dated the
        Closing Date, confirming compliance with the conditions precedent set forth
        in
        this Section 8.

       

      9.  AFFIRMATIVE
        COVENANTS

       

      Each
        Borrower covenants and agrees that, so long as the Borrowers may borrow
        hereunder and until payment in full of the Loans, the Notes, all other
        Obligations, and its other obligations under this Agreement and the other
        Loan
        Documents, Borrowers will:

       

      9.1  Financial
        Statements and Information

       

      Deliver
        to the Banks:

       

      (a)  as
        soon
        as available, and in any event within 120 days after the end of each fiscal
        year
        of the Parent, a copy of the annual audit report of the Parent and its
        Subsidiaries for such fiscal year containing a balance sheet, statements
        of
        income and stockholders equity and a cash flow statement, all in reasonable
        detail and certified by PricewaterhouseCoopers or another independent certified
        public accountant of recognized standing satisfactory to the Banks. The Parent
        will obtain from such accountants and deliver to the Banks at the time said
        financial statements are delivered the written statement of the accountants
        that
        in making the examination necessary to said certification they have obtained
        no
        knowledge of any Event of Default or Default, or if such accountants shall
        have
        obtained knowledge of any such Event of Default or Default, they shall state
        the
        nature and period of existence thereof in such statement; provided
        that
        such accountants shall not be liable directly or indirectly to the Banks
        for
        failure to obtain knowledge of any such Event of Default or Default;
        and

       

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

       

      (c)  copies
        of
        all statements and reports sent to stockholders of the Parent or filed with
        the
        Securities and Exchange Commission; and

       

      (d)  such
        additional financial or other information as the Banks may reasonably request
        including, without limitation, copies of such monthly, quarterly, and annual
        reports of gas purchases and sales that any of the Borrowers is required
        to
        deliver to or file with governmental bodies pursuant to tariffs and/or franchise
        agreements.

       

      All
        financial statements specified in clauses (a) and (b) above shall be furnished
        in consolidated and consolidating form for the Parent and all its Subsidiaries
        with comparative consolidated figures for the corresponding period in the
        preceding year. Together with each delivery of financial statements required
        by
        clauses (a) and (b) above, the Borrowers will deliver to the Banks (i) such
        schedules, computations and other information as may be required to demonstrate
        that the Borrowers are in compliance with its covenants in Section 10.1 or
        reflecting any noncompliance therewith as at the applicable date and (ii)
        an
        Officer’s Certificate stating that there exists no Event of Default or Default,
        or, if any such Event of Default or Default exists, stating the nature thereof,
        the period of existence thereof and what action the Borrowers has taken or
        proposes to take with respect thereto. The Banks are authorized to deliver
        a
        copy of any financial statement delivered to it to any regulatory body having
        jurisdiction over them, and to disclose same to any prospective assignees
        or
        participant Banks.

       

      9.2  Lease
        and Investment Schedules

       

      Deliver
        to the Banks:

       

      (a)  from
        time
        to time and, in any event, with each delivery of annual financial statements
        under Section 9.1(a), a current, complete schedule (in a form reasonably
        satisfactory to the Agent) of all agreements to rent or lease any property
        (personal, real or mixed, but not including oil and gas leases) to which
        the
        Parent or any of its Subsidiaries is a party lessee and which, considered
        independently or collectively with other leases with the same lessor, involve
        an
        obligation by the Parent or such Subsidiary to make payments of at least
        $1,000,000.00 in any year, showing the total amounts payable under each such
        agreement, the amounts and due dates of payments thereunder and containing
        a
        description of the rented or leased property, and all other information the
        Majority Banks may request; and

       

      (b)  with
        each
        delivery of annual financial statements under Section 9.1(a) a current complete
        schedule (in a form reasonably satisfactory to the Agent) listing all debt
        exceeding $1,000,000.00 in principal amount outstanding and equity owned
        or held
        by the Parent or any of its Subsidiaries containing all information required
        by,
        and in a form satisfactory to, the Banks, except for such debt or equity
        of such
        Subsidiaries.

       

      9.3  Books
        and Records

       

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

       

      9.4  Insurance

       

      .
        Maintain, and cause each of its Subsidiaries to maintain, insurance with
        financially sound, responsible and reputable companies in such types and
        amounts
        and against such casualties, risks and contingencies as is customarily carried
        by owners of similar businesses and properties, and furnish to the Banks,
        together with each delivery of annual financial statements under Section
        9.1(a),
        an Officer’s Certificate containing full information as to the insurance
        carried.

       

      9.5  Maintenance
        of Property

       

      Cause
        its
        Significant Property and the Significant Property of each of its Subsidiaries
        to
        be maintained, preserved, protected and kept in good repair, working order
        and
        condition so that the business carried on in connection therewith may be
        conducted properly and efficiently, except for normal wear and
        tear.

       

      9.6  Inspection
        of Property and Records

       

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

       

      9.7  Existence,
        Laws, Obligations

       

       Maintain,
        and cause each of its Subsidiaries to maintain, its corporate existence and
        franchises, and any license agreements and tariffs that permit the recovery
        of a
        return that the Borrowers consider to be fair (and as to licenses, franchises,
        and tariffs that are subject to regulatory determinations of recovery of
        returns, the Borrowers have presented or is presenting favorable defense
        thereof); and to comply, and cause each of its Subsidiaries to comply, with
        all
        statutes and governmental regulations noncompliance with which might have
        a
        Material Adverse Effect, and pay, and cause each of its Subsidiaries to pay,
        all
        taxes, assessments, governmental charges, claims for labor, supplies, rent
        and
        other obligations which if unpaid might become a lien against the property
        of
        the Parent or any of its Subsidiaries except liabilities being contested
        in good
        faith. Notwithstanding the foregoing, the Borrowers may dissolve those certain
        inactive and minimally capitalized Subsidiaries designated as such on
Schedule
        7.1.

       

      9.8  Notice
        of Certain Matters

       

      Notify
        the Agent immediately upon acquiring knowledge of the occurrence of any of
        the
        following events: (a) the institution or threatened institution of any lawsuit
        or administrative proceeding affecting the Parent or any of its Subsidiaries
        that is not covered by insurance (less applicable deductible amounts) and
        which,
        if determined adversely to the Parent or such Subsidiary, could reasonably
        be
        expected to have a Material Adverse Effect; (b) the occurrence of any material
        adverse change, or of any event that in the good faith opinion of the Borrowers
        is likely, to result in a material adverse change, in the assets, liabilities,
        financial condition, business or affairs of the Parent or any of its
        Subsidiaries; (c) the occurrence of any Event of Default or any Default;
        (d) a
        change by Moody’s or by S&P in the rating or outlook of the Parent’s Funded
        Debt or of the Parent’s unsecured, non-credit enhanced Senior Funded Debt; or
        (e) the incurrence of any Lien (other than Liens granted pursuant to the
        Collateral Documents and, in the case of the SUG EAT Entities Collateral,
        the
        Permitted Subordinated Lien) on, or claim asserted against, any of the
        Collateral.

       

      9.9  ERISA

       

      At
        all
        times:

       

      (a)  except
        as
        disclosed in Schedule
        7.12,
        to the
        extent required of the Parent under applicable law, maintain
        and keep in full force and effect each Plan, subject to the Borrowers’
respective right, in accordance with applicable legal requirements, (i) to
        amend
        any such Plans, (ii) to merge any such Plans, and to (iii) cease benefit
        accruals under any such Plans;

       

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

       

      (c)  except
        for events disclosed in Schedule
        7.12,
        immediately upon acquiring knowledge of any “reportable event” or of any
“prohibited transaction” (as such terms are defined in § 4043 and §406 of
        ERISA) in connection with any Plan, furnish the Banks with a statement executed
        by the president or chief financial officer of the Parent setting forth the
        details thereof and the action which the Borrowers propose to take with respect
        thereto and, when known, any action taken by the Internal Revenue Service
        with
        respect thereto;

       

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

       

      (e)  to
        the
        extent required of any of the Borrowers under applicable law, maintain Pension
        Benefit Guaranty Corporation liability coverage insurance required under
        ERISA;

       

      (f)  furnish
        the Banks with copies of the summary annual report for each Plan filed with
        the
        Internal Revenue Service as the Agent or the Banks may request; and

       

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

       

      9.10  Compliance
        with Environmental Laws

       

      At
        all
        times:

       

      (a)  use
        and
        operate, and cause each of its Subsidiaries to use and operate, all of their
        respective facilities and properties in material compliance with all
        Environmental Laws; keep, and cause each of its Subsidiaries to keep, all
        necessary permits, approvals, orders, certificates, licenses and other
        authorizations relating to environmental matters in effect and remain in
        material compliance therewith; handle, and cause each of its Subsidiaries
        to
        handle, all Hazardous Materials in material compliance with all applicable
        Environmental Laws; and dispose, and cause each of its Subsidiaries to dispose,
        of all Hazardous Materials generated by the Parent or any of its Subsidiaries
        or
        at any property owned or leased by them at facilities or with carriers that
        maintain valid permits, approvals, certificates, licenses or other
        authorizations for such disposal under applicable Environmental
        Laws;

       

      (b)  promptly
        notify the Agent and provide copies upon receipt of all written claims,
        complaints, notices or inquiries relating to the condition of the facilities
        and
        properties of the Parent and each of its Subsidiaries under, or their respective
        compliance with, applicable Environmental Laws wherein the condition or the
        noncompliance that is the subject of such claim, complaint, notice, or inquiry
        involves, or could reasonably be expected to involve, liability of or
        expenditures by the Parent and its Subsidiaries of $10,000,000.00 or more;
        and

       

      (c)  provide
        such information and certifications which the Banks may reasonably request
        from
        time to time to evidence compliance with this Section 9.10.

       

      9.11  PGA
        Clauses

       

      The
        Borrowers will use their best efforts to maintain in force provisions in
        all of
        its tariffs and franchise agreements that permit the Parent to recover from
        customers substantially all of the amount by which the cost of gas purchases
        exceeds the amount currently billed to customers for the delivery of such
        gas
        (sometimes referred to as PGA clauses).

       

      9.12  Conveyance
        of Acquired Business Equity Interests to Subsidiaries of the
        Parent.

       

       

       

      (a) Within
        one Business Day following the consummation of the final LDC Sale in respect
        of
        a Qualified Transaction, the Parent shall cause SRES, REM and Leapartners
        to
        become wholly-owned Subsidiaries of the Parent by directing
        CDEC to require (i) SUG EAT Inc. to assign and convey to a wholly-owned
        Subsidiary of the Parent 100% of all issued and outstanding limited partner
        interests in each of SRES and REM and all other related Collateral (as such
        term
        is defined in the SUG EAT Entities Pledge Agreement), and (ii) SUG EAT LLC
        to
        assign and convey to another wholly-owned Subsidiary of the Parent 100% of
        all
        issued and outstanding general partner interests in SRES, REM and Leapartners
        and all other related Collateral (as such term is defined in the SUG EAT
        Entities Pledge Agreement). 

       

      (b) Notwithstanding
        the foregoing in Section 9.12(a), in the event that the Qualified Transaction
        has not been fully consummated by the Safe
        Harbor Transfer Date,
        then
        the
        Parent shall immediately cause SRES, REM and Leapartners to become wholly-owned
        Subsidiaries of the Parent by directing
        CDEC to require (i) SUG EAT Inc. to assign and convey to a wholly-owned
        Subsidiary of the Parent 100% of all issued and outstanding limited partner
        interests in each of SRES and REM and all other related Collateral (as such
        term
        is defined in the SUG EAT Entities Pledge Agreement), and (ii) SUG EAT LLC
        to
        assign and convey to another wholly-owned Subsidiary of the Parent 100% of
        all
        issued and outstanding general partner interests in SRES, REM and Leapartners
        and all other related Collateral (as such term is defined in the SUG EAT
        Entities Pledge Agreement). 

       

      9.13  Collateral
        Matters Upon
        Acquired Business Equity Interests Transfer

       

      When
        any
        of the SUG EAT Entities shall transfer any of the Acquired Business Equity
        Interests and/or other Collateral to one or more wholly-owned Subsidiaries
        of
        the Parent (each a “Transferee
        Subsidiary”),
        then
        the Parent shall (1) cause the Permitted Subordinated Lien to be terminated
        in
        full immediately prior to the consummation of such transfer and (2) cause
        the
        Transferee Subsidiary to do the following: (i) at the time of the consummation
        of such transfer, execute and deliver to the Agent (A) a pledge agreement
        substantially similar to the SUG EAT Entities Pledge Agreement pursuant to
        which
        each such Transferee Subsidiary shall pledge and grant a first priority lien
        on
        and security interests in all such Transferee Subsidiary’s rights, title and
        interests in such Acquired Business Equity Interests and such other collateral
        similar to the Collateral described in the SUG EAT Entities Pledge Agreement,
        subject to no other Liens, (B) other collateral documents similar to the
        Collateral Documents (other than the Pledge Agreements) as the Agent may
        reasonably request, (C) such documents, certificates and opinions similar
        to
        those that otherwise would have been required pursuant to Section 8.6 if
        such
        Transferee Subsidiary had been a “Loan Party” on the Closing Date and (D) UCC
        financing statements in appropriate form for filing under the UCC in each
        jurisdiction as may be necessary or appropriate or, in the opinion of the
        Agent,
        desirable to perfect the Liens created, or purported to be created, by the
        Collateral Documents; (ii) prior to the consummation of such transfer, deliver
        to the Agent copies of UCC, tax and judgment lien searches, bankruptcy and
        pending lawsuit searches or equivalent reports or searches, each of a recent
        date in relation to the date of such transfer listing all effective financing
        statements, lien notices or comparable documents that name any such Transferee
        Subsidiary as debtor and that are filed in those state and county jurisdictions
        in which any property of such Transferee Subsidiary is located and the state
        and
        county jurisdictions in which such Transferee Subsidiary is organized or
        maintains its principal place of business, none of which encumber the Collateral
        covered or intended to be covered by the Collateral Documents (other than
        the
        Liens thereon created pursuant to the Collateral Documents); and (iii) take
        such
        other action as the Agent deems desirable or advisable to create, perfect
        and
        preserve the security interest to be so pledged and granted; all the foregoing
        documents and actions described in clauses (1) and (2) above to be in form
        and
        substance reasonably satisfactory to the Agent.

       

      9.14  Control
        of SUG EAT LLC

       

      Southern
        Union Panhandle shall at all times until the consummation of the Acquired
        Business Equity Interests Transfer, directly
        or indirectly, have the power to direct or cause the direction of the
        management, policies and/or activities of SUG EAT LLC, through the SUG
        Management Agreement and through the operating agreement of SUG EAT LLC (it
        being understood and agreed that Southern Union shall at all times be the
        sole
        non-member manager of SUG EAT LLC pursuant to such operating
        agreement).

       

      10.  NEGATIVE
        COVENANTS

       

      


       

      The
        Borrowers covenant and agree that, so long as the Borrowers may borrow hereunder
        and until payment in full of the Loans, the Notes, all other Obligations,
        and
        its other obligations under this Agreement and the other Loan Documents,
        except
        with the written consent of the Banks:

       

      10.1  Capital
        Requirements

       

      The
        Borrowers will not:

       

      (a)  permit
        the Parent’s Consolidated Net Worth at the end of any fiscal quarter to be less
        than the sum of (i) $1,267,663,000; (ii) 40% of Consolidated Net Income (if
        positive) for the period commencing on January 1, 2004 and ending on the
        date of
        determination, and treated as a single accounting period; (iii) the difference
        between (A) 100% of the net proceeds of any issuance of capital or preferred
        stock or any other Equity-Preferred Securities by the Parent or any consolidated
        Subsidiary received by the Parent or such consolidated Subsidiary at any
        time
        after January 1, 2004; and (B) the aggregate amount of all redemption or
        repurchase payments hereafter made, if any, by the Parent and any such
        consolidated Subsidiary in connection with the repurchase by the Parent or
        any
        such consolidated Subsidiary of any of their respective capital or preferred
        stock; (iv) without duplication, the difference between (A) 100% of the net
        proceeds heretofore and hereafter received by the Parent and any consolidated
        Subsidiary in respect of the issuance by the Parent or such consolidated
        Subsidiary of the Structured Securities, and (B) the aggregate amount of
        all
        redemption payments hereafter made, if any, by the Parent and any such
        consolidated Subsidiary in connection with the redemption of any of the
        Structured Securities; and (v) the minority interests in the Parent’s
        Subsidiaries; or

       

      (b)  permit
        the ratio of the Parent’s Consolidated Total Indebtedness to its Consolidated
        Total Capitalization to be greater than 0.70 to 1.00 at the end of any fiscal
        quarter ending on or after the Closing Date; or

       

      (c)  acquire,
        or permit any of their respective Subsidiaries to acquire, any assets other
        than
        (i) investments permitted under Section 10.4, or (ii) Qualifying Assets;
        or

       

      (d)  permit
        the ratio of EBDIT to Cash Interest Expense for the four fiscal quarters
        most
        recently ended (considered as a single accounting period) at any time to
        be less
        than 2.00 to 1.00 at all times.

       

      10.2  Mortgages,
        Liens, Etc

       

      The
        Borrowers will not, and will not permit any of their respective Subsidiaries
        to,
        create or permit to exist any Lien (including the charge upon assets purchased
        under a conditional sales agreement, purchase money mortgage, security agreement
        or other title retention agreement) upon any of its respective assets, whether
        now owned or hereafter acquired, or assign or otherwise convey any right
        to
        receive income, except:

       

      (a)  Liens
        for
        taxes not yet due or that are being contested in good faith by appropriate
        proceedings;

       

      (b)  other
        Liens incidental to the conduct of its business or the ownership of its assets
        that were not incurred in connection with the borrowing of money or the
        obtaining of advances or credit, and that do not in the aggregate materially
        detract from the value of such assets or materially impair the use thereof
        in
        the operation of such business;

       

      (c)  Liens
        on
        assets of any of their respective Subsidiaries to secure obligations of such
        Subsidiary to the Parent or another of its Subsidiaries;

       

      (d)  (i)
        Liens
        on property existing at the time of acquisition thereof by the Parent or
        any of
        its Subsidiaries, including without limitation, (A) any property acquired
        by the
        Parent in consummating and finalizing any of the Prior Acquisitions, (B)
        any
        Liens existing on any property of Panhandle Eastern or any of its Subsidiaries
        to secure existing Debt of Panhandle Eastern or any of its Subsidiaries as
        of
        the Existing Revolving Credit Facility Closing Date and (C) any Liens against
        any property of Panhandle Eastern or any of its Subsidiaries to secure Panhandle
        Eastern Refinancing Debt (provided
        such
        Liens are limited to property of Panhandle Eastern or any of its Subsidiaries
        securing the Debt so extended, refinanced, renewed, replaced, defeased or
        refunded), or (ii) purchase money Liens placed on an item of real or personal
        property purchased by the Parent or any of its Subsidiaries to secure a portion
        of the purchase price of such property; provided
        that no
        such Lien may encumber or cover any other property of the Parent or any of
        its
        Subsidiaries; and

       

      (e)  Liens
        granted pursuant to the Collateral Documents to secure the Secured
        Obligations.

       

      10.3  Debt

       

      The
        Borrowers will not, and will not permit any of their respective Subsidiaries
        to,
        incur or permit to exist any Debt, except:

       

      (a)  Debt
        outstanding under this Agreement, Debt outstanding under the Existing Revolving
        Credit Facility (including reimbursement obligations under the Existing
        Revolving Credit Facility Letters of Credit), and Debt issued pursuant to
        any
        Equity-Preferred Securities (to the extent the same constitutes Debt) in
        each
        case not in default, as well as (i) Debt of Panhandle Eastern and/or any
        of its
        Subsidiaries outstanding as of the Existing Revolving Credit Facility Closing
        Date, (ii) any Panhandle Eastern Refinancing Debt, (iii) any working capital
        credit facility or facilities provided directly to Panhandle Eastern and/or
        any
        of Panhandle Eastern’s Subsidiaries by any party other than the Parent, so long
        as the principal amount of all such outstanding working capital facilities,
        together with the outstanding principal amount of any working capital loans
        or
        advances by the Parent to Panhandle Eastern and/or any of Panhandle Eastern’s
        Subsidiaries, does not exceed (A) $50,000,000 in the aggregate at any time
        that
        the ratio of Consolidated Total Indebtedness to Consolidated Total
        Capitalization for Panhandle Eastern and Panhandle Eastern’s Subsidiaries
        (excluding the Parent and all other Subsidiaries of the Parent for purposes
        of
        such calculation) is greater than 0.65 to 1.00 and (B) $75,000,000 in the
        aggregate at any time that the ratio of Consolidated Total Indebtedness to
        Consolidated Total Capitalization for Panhandle Eastern and Panhandle Eastern’s
        Subsidiaries (excluding the Parent and all other Subsidiaries of the Parent
        for
        purposes of such calculation) is less than or equal to 0.65 to 1.00, and
        (iv)
        any loans or advances by the Parent to Panhandle Eastern and/or any of the
        Parent’s other Subsidiaries permitted under Section 10.4(b);

       

      (b)  Debt
        of
        any Subsidiary of the Parent to the Parent or any other Subsidiary of the
        Parent, except to the extent limited by the terms of Section 10.4(b), and
        Debt
        of the Parent to any Subsidiary of the Parent;

       

      (c)  Debt
        existing as of September 30, 2005 as reflected on financial statements delivered
        under Section 7.2(b) and refinancings thereof and, in the case of the 2008
        Senior Notes, any remarketings thereof in accordance with the terms of the
        2003
        Supplemental Indenture, other than Debt that has been refinanced by the proceeds
        of loans under the Existing Revolving Credit Facility;

       

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

       

      (e)  Debt
        of
        the Parent or any of its Subsidiaries representing the portion of the purchase
        price of property acquired by the Parent or such Subsidiary that is secured
        by
        Liens permitted by the provisions of Section 10.2(d); provided,
        however,
        that at
        no time may the aggregate principal amount of such Debt outstanding exceed
        thirty percent (30%) of the Consolidated Net Worth of the Parent and its
        Subsidiaries as of the applicable determination date;

       

      (f)  Debt
        evidenced by the Senior Notes;

       

      (g)  additional
        Debt of the Parent and Structured Securities of the Parent and the Southern
        Union Trusts, provided
        that
        after giving effect to the issuance thereof, there shall exist no Default
        or
        Event of Default; and: (i) the ratio of Consolidated Total Indebtedness to
        Consolidated Total Capitalization shall be no greater than 0.70 to 1.00 at
        all
        times on or after the Closing Date; (ii) the ratio of EBDIT for the four
        fiscal
        quarters most recently ended to pro forma Cash Interest Expense for the
        following four fiscal quarters shall be no less than 2.00 to 1.0 at all times;
        provided, however,
        that if
        the additional Debt for which the determinations required to be made by this
        subparagraph (g) will be used to finance in whole or in part the consideration
        to be paid by the Parent for the acquisition of any entity otherwise permitted
        under the terms of this Agreement, the determination of EBDIT for purposes
        of
        this ratio shall include not only the EBDIT of the Parent and its Subsidiaries
        for the four fiscal quarters most recently ended, but shall also include
        the
        EBDIT of such entity to be acquired for such four fiscal quarters most recently
        ended; and (iii) (A) such Debt and Structured Securities shall have a final
        maturity or mandatory redemption date, as the case may be, no earlier than
        the
        Maturity Date and shall mature or be subject to mandatory redemption or
        mandatory defeasance no earlier than the Maturity Date (as so extended) and
        shall be subject to no mandatory redemption or “put” to the Parent or any
        Southern Union Trust exercisable, or sinking fund or other similar mandatory
        principal payment provisions that require payments to be made toward principal,
        prior to the Maturity Date (as so extended); or (B) (x) such additional Debt
        shall have a final maturity date prior to the Maturity Date, (y) such additional
        Debt shall not exceed Two Hundred Fifty Million Dollars ($250,000,000.00)
        in the
        aggregate plus Twenty Million Dollars ($20,000,000.00) of reimbursement
        obligations incurred in connection with Non-Revolving Credit Facility Letters
        of
        Credit issued by a Bank or Banks or by any other financial institution, and
        (z)
        such additional Debt shall be borrowed from a Bank or Banks as a loan or
        loans
        arising independent of this Agreement or shall be borrowed from a financial
        institution that is not a Bank under this Agreement; and

       

      (h)  additional
        Debt of Trunkline LNG Holdings or any of its Subsidiaries, so long as (i)
        such
        Debt is to Trunkline LNG Holdings and/or any of its Subsidiaries only and
        is not
        recourse in any respect to the Parent or any other Subsidiary of the Parent
        (other than Panhandle Eastern and its Subsidiaries), (ii) the proceeds of
        such
        Debt is used solely to finance capital expenditures of Trunkline LNG Holdings
        and/or its Subsidiaries, and (iii) after giving effect to such Debt, no Default
        or Event of Default shall exist.

       

      10.4  Loans,
        Advances and Investments

       

      The
        Borrowers will not, and will not permit any of their respective Subsidiaries
        to,
        make or have outstanding any loan or advance to, or own or acquire any stock
        or
        securities of or equity interest or other Investment in, any Person, except
        (without duplication):

       

      (a)  except
        to
        the extent prohibited by Section 10.19, stock or other equity interests of
        (i)
        the Subsidiaries named in Section 7.1; (ii) in addition to Sections 10.4(g)
        and
        10.4(l), other entities that are acquired by the Parent or any of its
        Subsidiaries but that are promptly merged with and into the Parent; (iii)
        Southern Union Panhandle, Panhandle Eastern and any Subsidiaries of Panhandle
        Eastern acquired as a result of the Panhandle Eastern Acquisition; and (iv)
        the
        same Qualifying Entities as the Qualifying Entities under subparagraph (ii)
        of
        the definition of “Qualifying Assets”, provided
        that at
        any one time the aggregate purchase price paid for such stock and other equity
        interests in such Qualifying Entities, including the aggregate amount of
        Debt
        assumed or deemed incurred by the Parent in connection with the purchase
        of such
        stock and other equity interests, is not more than twenty percent (20%) of
        the
        Consolidated Net Worth of the Parent and its Subsidiaries as of the applicable
        determination date; provided,
        however,
        that,
        notwithstanding the foregoing in this Section 10.4(a) to the contrary, none
        of
        the SUG Partnership Entities may acquire any Equity Interests in any other
        Subsidiary of the Parent at any time prior to the consummation of the Acquired
        Business Equity Interests Transfer;

       

      (b)  subject
        to Section 10.4(j) below, loans or advances to any of the Parent’s Subsidiaries,
        other than to any of the SUG Partnership Entities at any time prior to the
        consummation of the Acquired Business Equity Interests Transfer; provided,
        however,
        that
        the principal amount of such loans and advances for working capital purposes
        at
        any time outstanding to Panhandle Eastern and/or any of Panhandle Eastern’s
        Subsidiaries, together with the principal amount of any outstanding working
        capital credit facility or facilities provided directly to Panhandle Eastern
        and/or any of Panhandle Eastern’s Subsidiaries by any party other than the
        Parent, does not exceed $25,000,000 in the aggregate at any time;

       

      (c)  Securities
        maturing no more than 180 days after Parent’s purchase that are
        either:

       

      (i)  readily
        marketable securities issued by the United States or its agencies or
        instrumentalities; or

       

      (ii)  commercial
        paper rated “Prime 2” by Moody’s or A-2 by S&P; or

       

      (iii)  certificates
        of deposit or repurchase contracts on customary terms with financial
        institutions in which deposits are insured by any agency or instrumentality
        of
        the United States; or

       

      (iv)  readily
        marketable securities received in settlement of liabilities created in the
        ordinary course of business; or

       

      (v)  obligations
        of states, agencies, counties, cities and other political subdivisions of
        any
        state rated at least MIG2, VMIG2 or Aa by Moody’s or AA by S&P;
        or

       

      (vi)  loan
        participations in credits in which the borrower’s debt is rated at least Aa or
        Prime 2 by Moody’s or AA or A-2 by S&P; or

       

      (vii)  money
        market mutual funds that are regulated by the Securities and Exchange
        Commission, have a dollar-weighted average stated maturity of 90 days or
        fewer
        on their investments and include in their investment objectives the maintenance
        of a stable net asset value of $1 for each share.

       

      (d)  other
        equity interests owned by any of its Subsidiaries on the date of this Agreement
        and such additional equity interests to the extent (but only to the extent)
        that
        such Subsidiary is legally obligated to acquire those interests on the date
        of
        this Agreement, in each case as disclosed to the Banks in writing;

       

      (e)  loans
        or
        advances by the Parent to customers in connection with and pursuant to marketing
        and merchandising products that the Parent reasonably expects to increase
        sales
        of the Parent or its Subsidiaries, provided
        that:
        (i) such loans must be either less than $2,000,000.00 to any one customer
        (or
        group of affiliated customers, shown on the Parent’s records to be Affiliates)
        or must be disclosed on Schedule
        9.2
        hereof;
        and (ii) all such loans must not exceed $24,000,000.00 in the aggregate
        outstanding at any time;

       

      (f)  travel
        and expense advances in the ordinary course of business to officers and
        employees;

       

      (g)  the
        applicable Subsidiaries of the Parent may acquire the Acquired Business Equity
        Interests pursuant to the Acquired Business Equity Interests
        Transfer;

       

      (h)  except
        to
        the extent prohibited by Section 10.19, stock or securities of or equity
        interests in, any Person, provided
        that,
        after giving effect to the acquisition and ownership thereof, the Borrowers
        are
        in compliance with the provisions of Sections 10.1(a), 10.1(b) and 10.1(d);
        provided,
        however,
        that,
        notwithstanding the foregoing in this Section 10.4(h) to the contrary, none
        of
        the SUG Partnership Entities may acquire any Equity Interests in any other
        Subsidiary of the Parent at any time prior to the consummation of the Acquired
        Business Equity Interests Transfer;

       

      (i)  loans
        or
        advances to any member of the CCE Group by the Parent or any of its Subsidiaries
        not otherwise permitted under the other provisions of this Section 10.4,
        so long
        as the sum of such loans and advances does not exceed $25,000,000 in the
        aggregate at any time;

       

      (j)  the
        SUG
        EAT Entities Loan directly to the SUG EAT Entities by ESSI as evidenced by
        the
        SUG EAT Loan Documents, provided
        that the
        principal amount of such loan does not exceed $1.6 billion any LDC Proceeds
        shall be used for the repayment thereof and the provisions of Section 4.1(b)
        shall be complied with;

       

      (k)  loans,
        advances or other Investments by the Parent or any of its Subsidiaries not
        otherwise permitted under the other provisions of this Section 10.4, so long
        as
        the sum of the outstanding balance of all of such loans and advances and
        the
        purchase price paid for all of such other Investments does not exceed in
        the
        aggregate seven percent (7%) of the Consolidated Net Worth of the Parent
        and its
        Subsidiaries as of the applicable determination date; provided,
        however,
        that,
        except to the extent permitted pursuant to Section 10.4(j), neither the Parent
        nor any other Subsidiaries of the Parent (other than the SUG Partnership
        Entities) may make loans or advances to or make other Investments in any
        of the
        SUG Partnership Entities at any time prior to the consummation of the Acquired
        Business Equity Interests Transfer; and

       

      (l)  to
        the
        extent applicable, the applicable Subsidiaries of the Parent may consummate
        the
        Sid Richardson Acquisition in accordance with the terms of the Sid Richardson
        Acquisition Documents.

       

      Notwithstanding
        the foregoing in this Section 10.4, any net cash proceeds received in connection
        with any Asset Sale by the Parent or any of its Subsidiaries shall be applied
        in
        accordance with Sections 4.1(b) and 4.1(c). 

       

      10.5  Stock
        and Debt of Subsidiaries

       

      The
        Borrowers will not, and will not permit any of their respective Subsidiaries
        to,
        sell or otherwise dispose of any shares of stock, other equity interests
        or Debt
        of any of its Subsidiaries, or permit any of its Subsidiaries to issue or
        dispose of its stock (other than directors’ qualifying shares), except for the
        following: (i) the sale, transfer or issuance of stock, other equity interests
        or Debt of any of the Parent’s Subsidiaries to the Parent or another Subsidiary
        of the Parent, other than to any of the SUG Partnership Entities at any time
        prior to the consummation of the Acquired Business Equity Interests Transfer,
        except to the extent prohibited by Section 10.19; (ii) the sale of stock
        in Sea
        Robin Pipeline Company and Debt of Sea Robin Pipeline Company, (iii) the
        issuance by Southern Union Trusts of preferred beneficial interests in public
        offerings of the Parent’s Structured Securities, and (iv) the issuance by other
        Subsidiaries of the Parent formed for the purpose of issuing Equity-Preferred
        Securities. Notwithstanding the foregoing in this Section 10.5, any net cash
        proceeds received in connection with any Asset Sale by the Parent or any
        of its
        Subsidiaries shall be applied in accordance with Sections 4.1(b) and
        4.1(c).

       

      10.6  Merger,
        Consolidation, Etc.

       

      The
        Borrowers will not, and will not permit any of their respective Subsidiaries
        to,
        merge or consolidate with any other Person or sell, lease, transfer or otherwise
        dispose of (whether in one transaction or a series of transactions) all or
        a
        substantial part of its assets or acquire (whether in one transaction or
        a
        series of transactions) all or a substantial part of the assets of any Person,
        except that:

       

      (a)  except
        to
        the extent prohibited by Section 10.19, any of its Subsidiaries may merge
        or
        consolidate with the Parent (provided
        that the
        Parent shall be the continuing or surviving corporation) or with any one
        or more
        Subsidiaries of the Parent, other than any of the SUG Partnership Entities
        at
        any time prior to the consummation of the Acquired Business Equity Interests
        Transfer;

       

      (b)  except
        to
        the extent prohibited by Section 10.19, any of its Subsidiaries may sell,
        lease,
        transfer or otherwise dispose of any of its assets to the Parent or any other
        of
        its Subsidiaries, other than to any of the SUG Partnership Entities at any
        time
        prior to the consummation of the Acquired Business Equity Interests Transfer;
        

       

      (c)  the
        applicable Subsidiaries of the Parent may acquire the Acquired Business Equity
        Interests pursuant to the Acquired Business Equity Interests
        Transfer;

       

      (d)  the
        Parent may acquire the assets of any Person, provided
        that,
        after giving effect to such acquisition, the Borrower is in compliance with
        the
        provisions of Sections 10.1(a), 10.1(b) and 10.1(d); 

       

      (e)  the
        Parent or any of its Subsidiaries may sell, lease, assign or otherwise dispose
        of assets as otherwise permitted under Section 10.8, except to the extent
        prohibited by Section 10.19; and

       

      (f)  to
        the
        extent applicable, the applicable Subsidiaries of the Parent may consummate
        the
        Sid Richardson Acquisition in accordance with the terms of the Sid Richardson
        Acquisition Documents.

       

      Notwithstanding
        the foregoing in this Section 10.6, any net cash proceeds received in connection
        with any Asset Sale by the Parent or any of its Subsidiaries shall be applied
        in
        accordance with Sections 4.1(b) and 4.1(c).

       

      10.7  Supply
        and Purchase Contracts

       

      The
        Borrowers will not, and will not permit any of their respective Subsidiaries
        to,
        enter into or be a party to any contract for the purchase of materials, supplies
        or other property if such contract requires that payment for such materials,
        supplies or other property shall be made regardless of whether or not delivery
        is ever made or tendered of such materials, supplies and other property,
        except
        in those circumstances and involving those supply or purchase contracts that
        the
        Borrowers reasonably considers to be necessary or helpful in its operations
        in
        the ordinary course of business and that the Borrowers reasonably consider
        not
        to be unnecessarily burdensome on the Parent or its Subsidiaries.

       

      10.8  Sale
        or Other Disposition of Assets

       

      The
        Borrowers will not, and will not permit any of their respective Subsidiaries
        to,
        except as permitted under this Section 10.8, sell, assign, lease, or otherwise
        dispose of (whether in one transaction or in a series of transactions) all
        or
        any part of its Property (whether now owned or hereafter acquired); provided,
        however,
        that
        (i) the Parent or any of its Subsidiaries may in the ordinary course of business
        dispose of (a) Property consisting of Inventory; and (b) Property consisting
        of
        goods or equipment that are, in the opinion of the Parent or any of its
        Subsidiaries, obsolete or unproductive, but if in the good faith judgment
        of the
        Parent or such Subsidiary such disposition without replacement thereof would
        have a Material Adverse Effect, such goods and equipment shall be replaced,
        or
        their utility and function substituted, by new or existing goods or equipment;
        (ii) the Parent may transfer or dispose of any of its Significant Property
        (in any transaction or series of transactions) to any Subsidiary or Subsidiaries
        of the Parent (other than to any of the SUG Partnership Entities at any time
        prior to the consummation of the Acquired Business Equity Interests Transfer),
        only if such Property so transferred or disposed of after the Existing Revolving
        Credit Facility Closing Date has an aggregate value (determined after
        depreciation and in accordance with GAAP) of not more than ten percent (10%)
        of
        the aggregate value of all of the Parent’s and its Subsidiaries’ real property
        and tangible personal property other than Inventory considered on a consolidated
        basis and determined after depreciation and in accordance with GAAP, as of
        September 30, 2005; (iii) the Parent may dispose of its real property in
        one or
        more sale/leaseback transactions, provided
        that any
        Debt incurred in connection with such transaction does not create a Default
        as
        defined herein; (iv) a Southern Union Trust may distribute the Parent’s
        subordinated debt securities constituting a portion of the Structured
        Securities, on the terms and under the conditions set out in the registration
        statement therefor filed with the Securities and Exchange Commission on March
        25, 1995 or any similar registration statement filed with the Securities
        and
        Exchange Commission in connection with any other Structured Securities issued
        in
        connection with the Prior Acquisitions; (v) except to the extent prohibited
        by Section 10.19, the Parent or any of its Subsidiaries may dispose of real
        property or tangible personal property other than Inventory (in consideration
        of
        such amount as in the good faith judgment of the Parent or such Subsidiary
        represents a fair consideration therefor), provided
        that the
        aggregate value of such property disposed of (determined after depreciation
        and
        in accordance with GAAP) after the Existing Revolving Credit Facility Closing
        Date does not exceed ten percent (10%) of the aggregate value of all of the
        Parent’s and its Subsidiaries’ real property and tangible personal property
        other than Inventory considered on a consolidated basis and determined after
        depreciation and in accordance with GAAP, as of September 30, 2005; provided,
        however,
        that no
        such disposition shall be made to any of the SUG Partnership Entities at
        any
        time prior to the consummation of the Acquired Business Equity Interests
        Transfer; (vi) the Parent may dispose of Qualifying Assets of the type
        described in clause (ii) of the definition of Qualifying Assets, except to
        the
        extent prohibited by Section 10.19; provided,
        however,
        that no
        such disposition shall be made to any of the SUG Partnership Entities at
        any
        time prior to the consummation of the Acquired Business Equity Interests
        Transfer; (vii) the Parent may dispose of other Investments of the type
        acquired under the terms of Section 10.4(h); (viii) the Parent may sell all
        stock or all or substantially all of the assets in Sea Robin Pipeline Company;
        (ix) the Parent may consummate the Qualified Transaction so long as the Parent
        shall be in full compliance with all the provisions set forth in the definition
        of “Qualified Transaction”; (x) the SUG Purchasers may assign all of their
        rights, title and interest in and to Sid Richardson Acquisition Agreement
        and
        related documents to the SUG EAT Entities pursuant to and in accordance with
        the
        Sid Richardson Acquisition Agreement Assignment; and (xi) ESSI may assign
        its
        rights and interests in and to the SUG EAT Entities Loan Documents to the
        Parent
        or any other Subsidiary of the Parent (other than any of the SUG Partnership
        Entities) so long as at the time of such assignment the assignee becomes
        a party
        to the Intercreditor Agreement pursuant to a joinder agreement in form and
        substance satisfactory to the Agent.

       

      Notwithstanding
        the foregoing in this Section 10.8, any net cash proceeds received in connection
        with any Asset Sale by the Parent or any of its Subsidiaries shall be applied
        in
        accordance with Sections 4.1(b) and 4.1(c). 

       

      10.9  Discount
        or Sale of Receivables

       

      The
        Borrowers will not, and will not permit any of their respective Subsidiaries,
        other than Southern Union Total Energy Services, Inc., to discount or sell
        with
        recourse, or sell for less than the face value thereof (including any accrued
        interest) any of its notes receivable, receivables under leases or other
        accounts receivable. Notwithstanding the foregoing to the contrary in this
        Agreement, the Borrowers will not, and the Borrowers will not permit ESSI
        to,
        transfer, convey, assign, sell, or otherwise dispose of any of the SUG EAT
        Entities Loan Documents or any loans evidenced thereby.

       

      10.10  Change
        in Accounting Method

       

      The
        Borrowers will not, and will not permit any of their respective Subsidiaries
        to,
        make any change in the method of computing depreciation for either tax or
        book
        purposes or any other material change in accounting method representing any
        departure from GAAP without the Majority Banks’ prior written
        approval.

       

      10.11  Restricted
        Payment

       

       

      (a)  The
        Parent will not pay or declare any Restricted Payment unless immediately
        prior
        to such payment and after giving effect to such payment, the Parent could
        incur
        at least $1 of additional Debt by meeting the requirements of clauses (i)
        and
        (ii) of Section 10.3(g) and after giving effect thereto no Default or Event
        of Default exists hereunder; provided,
        however,
        that
        the Parent’s ability to purchase or agree to purchase its common stock and/or
        preferred equity securities (including without limitation, Equity-Preferred
        Securities) shall be limited as follows: (a) not more than $50,000,000 in
        the
        aggregate of common stock and preferred equity securities may be repurchased
        per
        each fiscal year of the Parent at any time the ratio of Consolidated Total
        Indebtedness to Consolidated Total Capitalization for the Parent and its
        Subsidiaries is greater than 0.60 to 1.00; (b) not more than $100,000,000
        in the
        aggregate of common stock and preferred equity securities may be repurchased
        per
        each fiscal year of the Parent at any time the ratio of Consolidated Total
        Indebtedness to Consolidated Total Capitalization for the Parent and its
        Subsidiaries is less than or equal to 0.60 to 1.00; and (c) no repurchases
        of
        common stock or preferred equity securities may be made if the Parent’s
        unsecured, non-credit enhanced senior debt as specified by S&P and Moody’s
        falls below either BBB- or Baa3, respectively.

       

      (b)  At
        any
        time prior to the consummation of the Acquired Business Equity Interests
        Transfer, the Borrowers shall cause each of the SUG Partnership Entities
        to not
        make a Restricted Payment to any Person other than a cash dividend payment
        to
        the holder of such Partnership Company’s Equity Interests, provided that such
        cash dividend payment is used solely by SUG EAT LLC to pay the management
        fees
        owing to Southern Union Panhandle pursuant to the SUG Management
        Agreement.

       

      10.12  Securities
        Credit Regulations

       

      None
        of
        the Borrowers or any of their respective Subsidiaries will take or permit
        any
        action which might cause the Loans or this Agreement or any other Loan Document
        to violate Regulation G, Regulation T, Regulation U, Regulation X or any
        other
        regulation of the Board of Governors of the Federal Reserve System or a
        violation of the Securities Exchange Act of 1934, in each case as now or
        hereafter in effect.

       

      10.13  Nature
        of Business; Management

       

      The
        Borrowers will not, and will not permit any of their respective Subsidiaries
        to:
        (a) change its principal line of business; or (b) enter into any business
        not
        within the scope of Section 7.15 and the definition of Qualifying Assets;
        or (c)
        permit any material overall change in the management of the Parent.

       

      10.14  Transactions
        with Related Parties

       

      The
        Borrowers will not, and will not permit any of their respective Subsidiaries
        to,
        enter into any transaction or agreement with any officer, director or holder
        of
        ten percent (10%) or more of any class of the outstanding capital stock of
        the
        Parent or any of its Subsidiaries (or any Affiliate of any such Person) unless
        the same is upon terms substantially similar to those obtainable from wholly
        unrelated sources.

       

      10.15  Hazardous
        Materials

       

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

       

      10.16  Limitations
        on Payments on Subordinated Debt

       

      The
        Borrowers will not, and will not permit any of their respective Subsidiaries
        to,
        make any payment in respect of interest on, principal of, or otherwise relating
        to, the Parent’s
        subordinated debt securities issued in connection with the Structured Securities
        if, after giving effect to such payment, a Default or Event of Default would
        exist.

       

      10.17  No
        Agreements
        Prohibiting Pledge of Southern Union Panhandle and
        Panhandle Eastern Equity Interests

       

      Neither
        Borrower will
        enter into any contract or other agreement with any Person that directly
        or
        indirectly prohibits the Parent
        from
        granting any Lien against the Equity Interests in any of (x) Southern Union
        Panhandle and (y) Panhandle Eastern at any time owned and held by the
Parent
        as
        security for any Debt of the Parent
        or
        any of
        its Subsidiaries.

       

      10.18  No
        Agreements Prohibiting Pledge of the Sid Richardson Acquired
        Business
        Equity Interests.

       

       The
        Borrowers will not, and the Borrowers will cause their respective Subsidiaries
        to not, enter into any contract or other agreement with any Person that directly
        or indirectly prohibits any of the Parent or any Subsidiary of the Parent
        from
        granting any Lien against the Equity Interests in (x) SRES, (y) REM or (z)
        Leapartners, in each case at any time owned and held by such Person as security
        for any Debt of the Borrower or any of its Subsidiaries.

       

      10.19  Restriction
        on Transfer 

       

      Neither
        the Parent nor any of its Subsidiaries shall, and the Borrower shall cause
        each
        of its Subsidiaries not to: 

       

      (a)  sell,
        lease, exchange, assign, transfer, dispose of, contribute or dividend (i)
        any
        Equity Interests in any of the Subsidiaries that holds any of the Acquired
        Business Equity Interests or (ii) any Collateral; provided,
        however,
        that
        (A) unless an Event of Default shall have occurred and be continuing, any
        of the
        Borrower’s Subsidiaries shall be entitled to dividend any cash Distributions
        constituting Collateral to any of the Borrowers or any of its other Subsidiaries
        to the extent permitted pursuant to Section 10.11(b) and (B) the applicable
        Subsidiaries of the Parent may transfer, convey or assign the Collateral
        to
        another wholly-owned Subsidiary of the Parent (other than the SUG Partnership
        Entities) in connection with the Acquired Business Equity Interests Transfer;
        or

       

      (b)  merge
        or
        consolidate any of (i) Southern Union Panhandle, (ii) Panhandle Eastern,
        (iii)
        any Subsidiary of the Borrower that holds any of the Acquired Business Equity
        Interests, (iv) REM, (v) SRES or (vi) Leapartners, in each case with and
        into
        any other Person; or

       

      (c)  create,
        incur, assume or otherwise suffer to exist any Lien on the Collateral or
        any
        part thereof, except for the Liens created by the Collateral Documents and
        except for, in the case of the SUG EAT Entities Collateral only, at any time
        prior to the consummation of the Acquired Business Interests Transfer, the
        Permitted Subordinated Lien created by the SUG EAT Entities Loan Documents;
        or

       

      (d)  sell,
        lease, exchange, assign, transfer, dispose of, contribute or dividend all
        or
        substantially all of the assets of any of the Partnership Companies or Panhandle
        Eastern to the Parent or any other Subsidiary of the Parent or any Affiliate
        of
        the Parent.

       

      11.  EVENTS
        OF DEFAULT; REMEDIES

       

      11.1  If
        any of
        the following events shall occur

       

      then
        the
        Agent shall at the request, or may with the consent, of the Majority Banks,
        (a)
        by notice to the Borrowers, declare the Commitment of each Bank and the several
        obligation of each Bank to make Loans hereunder to be terminated, whereupon
        the
        same shall forthwith terminate, and (b) declare the Loans and the Notes and
        all
        interest accrued and unpaid thereon, and all other amounts payable under
        the
        Notes, this Agreement and the other Loan Documents, to be forthwith due and
        payable, whereupon the Loans, the Notes, all such interest and all such other
        amounts, shall become and be forthwith due and payable without presentment,
        demand, protest, or further notice of any kind (including, without limitation,
        notice of default, notice of intent to accelerate and notice of acceleration),
        all of which are hereby expressly waived by the Borrowers; provided,
        however,
        that
        with respect to any Event of Default described in Sections 11.1(G) or 11.1(H)
        hereof, (i) the Commitment of each Bank and the obligation of the Banks to
        make
        Loans shall automatically be terminated and (ii) the entire unpaid principal
        amount of the Loans and the Notes, all interest accrued and unpaid thereon,
        and
        all such other amounts payable under the Notes, this Agreement and the other
        Loan Documents, shall automatically become immediately due and payable, without
        presentment demand, protest, or any notice of any kind (including, without
        limitation, notice of default, notice of intent to accelerate and notice
        of
        acceleration), all of which are hereby expressly waived by the
        Borrowers:

       

      (A)  Failure
        to Pay Principal or Interest

       

      Any
        Borrower does not pay, repay or prepay any principal of or interest on any
        Loan
        when and as the same shall become due and payable, whether at the due date
        thereof or at a date fixed for prepayment (whether voluntary or mandatory)
        thereof or by acceleration thereof or otherwise; or

       

      (B)  Failure
        to Pay Fee or Other Amounts

       

      Any
        Borrower does not pay any fee or any other obligation or amount payable under
        this Agreement or the other Loan Documents, within five (5) calendar days
        after
        the same shall have become due; or

       

      (C)  Failure
        to Pay Other Debt

       

      Any
        Borrower or any of its Subsidiaries fails to pay principal or interest on
        any
        Debt (other than the Obligations) aggregating more than $3,000,000.00 when
        due
        and any related grace period has expired, or the holder of any of such other
        Debt declares such Debt due prior to its stated maturity because of the such
        Borrower’s or any such Subsidiary’s default thereunder and the expiration of any
        related grace period; or

       

      (D)  Misrepresentation
        or Breach of Warranty

       

      Any
        representation or warranty made by any Loan Party herein or in any other
        Loan
        Document or otherwise furnished to the Agent or any Bank in connection with
        this
        Agreement or any other Loan Document shall be incorrect, false or misleading
        in
        any material respect when made; or 

       

      (E)  Violation
        of Certain Covenants

       

       (i)
        Any Borrower violates any covenant, agreement or condition contained in Section
        9.12, 9.13, 9.14, 10.1(a), 10.1(b), 10.1(d), 10.2, 10.3, 10.4, 10.5, 10.6,
        10.8,
        10.9, 10.10, 10.11, 10.15, 10.17, 10.18 or 10.19; or (ii) any Borrower or
        any
        other Loan Party violates any covenant, agreement or condition contained
        in
        Section 4(d) of the applicable Pledge Agreement; or

       

      (F)  Violation
        of Other Covenants, Etc

       

       (i)
        Any Borrower violates any other covenant, agreement or condition contained
        herein or in any other Loan Document (other than the covenants, agreements
        and
        conditions set forth or described in clauses (A), (B), (C), (D) and (E) of
        this
        Section 11.1) and such violation shall not have been remedied within (30)
        days
        after the earlier of (i) actual discovery by any Borrower of such violation
        or
        (ii) written notice has been received by the Borrowers from the Agent, any
        Bank,
        or any holder of a Note; or (ii) any Loan Party (other than the Borrowers)
        violates any other covenant, agreement or condition contained in any Collateral
        Document (other than the covenants, agreements and conditions set forth or
        described in clause (E)(ii) of this Section 11.1) and such violation shall
        not
        have been remedied within (30) days after the earlier of (i) actual discovery
        by
        any Borrower or such Loan Party of such violation or (ii) written notice
        has
        been received by the Borrowers from the Bank or the holder of the Note; or
        

       

      (G)  Bankruptcy
        and Other Matters

       

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

       

      (H)  Dissolution

       

      Any
        order
        is entered in any proceeding against any Borrower, any of its respective
        Subsidiaries or any other Loan Party decreeing the dissolution, liquidation,
        winding-up or split-up of the Parent or such Subsidiary, and such order remains
        in effect for thirty (30) days; or

       

      (I)  Undischarged
        Judgment

       

      Final
        Judgment or judgments in the aggregate, that might be or give rise to Liens
        on
        any property of any Borrower, any of its respective Subsidiaries or any other
        Loan Party for the payment of money in excess of $5,000,000.00 shall be rendered
        against any Borrower, any of its respective Subsidiaries or any other Loan
        Party, and the same shall remain undischarged for a period of thirty (30)
        days
        during which execution shall not be effectively stayed; or

       

      (J)  Environmental
        Matters

       

      The
        occurrence of any of the following events that could result in liability
        to the
        Parent or any of its Subsidiaries under any Environmental Law or the creation
        of
        a Lien on any property of the Parent or any of its Subsidiaries in favor
        of any
        Governmental Authority or any other Person for any liability under any
        Environmental Law or for damages arising from costs incurred by such Person
        in
        response to a Release or threatened Release of Hazardous Materials into the
        environment if any such asserted liability or Lien exceeds $10,000,000.00
        and if
        any such lien would cover any property of the Parent or any of its Subsidiaries
        which property is or would reasonably be considered to be integral to the
        operations of the Parent or any of its Subsidiaries in the ordinary course
        of
        business:

       

      (a) the
        Release of Hazardous Materials at, upon, under or within the property owned
        or
        leased by the Parent or any of its Subsidiaries or any contiguous property;
        or

       

      (b) the
        receipt by the Parent or any of its Subsidiaries of any summons, claim,
        complaint, judgment, order or similar notice that it is not in compliance
        with
        or that any Governmental Authority is investigating its compliance with any
        Environmental Law; or

       

      (c) the
        receipt by the Parent or any of its Subsidiaries of any notice or claim to
        the
        effect that it is or may be liable for the Release or threatened Release
        of
        Hazardous Materials into the environment; or

       

      (d) any
        Governmental Authority incurs costs or expenses in response to the Release
        of
        any Hazardous Material which affects in any way the properties of the Parent
        or
        any of its Subsidiaries; or

       

      (K)  Default
        under the Existing Revolving Credit Facility.

       

      An
        Event
        of Default (as defined under the credit agreement evidencing the Existing
        Revolving Credit Facility) shall occur under the Existing Revolving Credit
        Facility;
        or

       

      (L)  Change
        in Control

       

      A
        Change
        in Control has occurred;.

       

      (M)  Change
        in Ownership

       

      At
        any
        time prior to the consummation of the Acquired Business Equity Interests
        Transfer: (i) CDEC shall cease to directly own 100% of all issued and
        outstanding Equity Interests in SUG EAT Inc.; (ii) SUG EAT Inc. shall cease
        to
        directly own 100% of all issued and outstanding Equity Interests in SUG EAT
        LLC;
        (iii) SUG EAT Inc. shall cease to own (x) 100% of all issued and outstanding
        limited partner interests in SRES and (y) 100% of all issued and outstanding
        limited partner interests in REM; (iv) SUG EAT LLC shall cease to own (x)
        100%
        of all issued and outstanding general partner interests in SRES, (y) 100%
        of all
        issued and outstanding general partner interests in REM and (z) 100% of all
        issued and outstanding general partner interests in Leapartners; or (v) any
        Person (other than SUG EAT Inc. and SUG EAT LLC) identified in Schedule
        7.1(B)
        as an
“owner” shall cease to own and hold the percentage of the Equity Interests set
        forth in such Schedule
        7.1(B)
        in the
        Person identified opposite such owner’s name in such Schedule
        7.1(B);
        or

       

      (N)  Invalidity
        of Lien on Collateral.

       

       Any
        Collateral Document shall for any reason (other than pursuant to the terms
        thereof) cease to create a valid and perfected lien on and security interest
        in
        (having the first priority as required by the terms of the Collateral Documents)
        any material portion of the Collateral purported to be covered thereby (or
        any
        Loan Party shall so assert or shall take any action to discontinue or to
        assert
        the invalidity or unenforceability thereof); or the Intercreditor Agreement
        shall fail to constitute the valid, binding and enforceable agreement of
        ESSI in
        accordance with the terms thereof, or ESSI shall so assert in writing;
        or

       

      (O)  Restricted
        SUG EAT Entities Activities.

       

      Any
        SUG
        EAT Entity engages in or conducts any trade or business activities, becomes
        or
        otherwise is liable for any obligations or indebtedness, holds or owns any
        properties or assets, enters into any transaction with any Person, or grants
        or
        pledges a Lien on any part of the Collateral owned by it to any Person other
        than the Agent, other than the following (collectively, the “SUG
        EAT Entities Permitted Activities”):
        (i) (A) in the case of SUG EAT Inc., its ownership of (x) 100% of the
        limited partner interests in SRES and (y) 100% of the limited partner interests
        in REM; and (B) in the case of SUG EAT LLC, its ownership of (x) 100% of
        the
        general partner interests in SRES, (y) 100% of the general partner interests
        in
        REM and (z) 100% of the general partner interests in Leapartners, (ii) the
        incurrence of indebtedness under, and be liable for its respective obligations
        owing to ESSI under, the SUG EAT Entities Loan Documents; (iii) grant and
        pledge
        a Lien on the Collateral owned by it pursuant to the Collateral Document;
        (iv)
        its respective obligations under the Collateral Documents; (v) consummate
        the
        Acquired Business Equity Interests Transfer; (vi) receive any LDC Proceeds
        pursuant to a Qualified Transaction; and (vii) the grant of the Permitted
        Subordinated Lien pursuant to the SUG EAT Entities Loan Documents; and
        (viii) activities incidental to the foregoing clauses (i) through (vi)
        above; or

       

      (P)  Modifications.

       

      At
        any
        time prior to the consummation of the Acquired Business Equity Interests
        Transfer, any provision of any of the following shall have be modified, waived,
        amended, supplemented, amended and restated or terminated: (i) any of the
        SUG
        EAT Entities Transaction Documents; (ii) any Organizational Document of any
        SUG
        EAT Entity; or (iii) any agreement or document entered into between CDEC
        and the
        Parent in connection with the Qualified Transaction.

       

      11.2  Other
        Remedies

       

      In
        addition to and cumulative of any rights or remedies expressly provided for
        in
        this Section 11, if any one or more Events of Default shall have occurred,
        the
        Agent shall at the request, and may with the consent, of the Majority Banks
        proceed to protect and enforce the rights of the Banks hereunder by any
        appropriate proceedings. The Agent shall at the request, and may with the
        consent, of the Majority Banks also proceed either by the specific performance
        of any covenant or agreement contained in this Agreement or any other Loan
        Document or by enforcing the payment of the Loans or by enforcing any other
        legal or equitable right provided under this Agreement or the Notes or any
        other
        Loan Document or otherwise existing under any law in favor of the Banks and
        the
        holder of the Notes.

       

      11.3  Remedies
        Cumulative

       

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

       

      12.  THE
        AGENT

       

      12.1  Authorization
        and Action

       

      Each
        Bank
        hereby appoints LCPI as its Agent under the Loan Documents and irrevocably
        authorizes the Agent (subject to Sections 12.1 and 12.7) to take such action
        as
        the Agent on its behalf and to exercise such powers under this Agreement
        and the
        other Loan Documents as are delegated to the Agent by the terms thereof,
        together with such powers as are reasonably incidental thereto. Without
        limitation of the foregoing, each Bank expressly authorizes the Agent to
        execute, deliver, and perform its obligations under this Agreement and the
        other
        Loan Documents, and to exercise all rights, powers, and remedies that the
        Agent
        may have hereunder and thereunder. As to any matters not expressly provided
        for
        by this Agreement or any other Loan Document (including, without limitation,
        enforcement or collection of the Obligations and any Loan Document), the
        Agent
        shall not be required to exercise any discretion or take any action, but
        shall
        be required to act, or to refrain from acting (and shall be fully protected
        in
        so acting or refraining from acting), upon the instructions of the Majority
        Banks, and such instructions shall be binding upon all the Banks and all
        holders
        of any Note; provided,
        however,
        that
        the Agent shall not be required to take any action which exposes the Agent
        to
        personal liability or which is contrary to this Agreement or any other Loan
        Document or applicable law. The Agent agrees to give to each Bank prompt
        notice
        of each notice given to it by the Borrowers pursuant to the terms of this
        Agreement.

       

      12.2  Agent’s
        Reliance, Etc

       

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

       

      12.3  Defaults

       

      The
        Agent
        shall not be deemed to have knowledge of the occurrence of a Default (other
        than
        the nonpayment of principal of or interest hereunder or of any fees) unless
        the
        Agent has received notice from a Bank or the Borrowers specifying such Default
        and stating that such notice is a Notice of Default. In the event that the
        Agent
        receives such a notice of the occurrence of a Default, the Agent shall give
        prompt notice thereof to the Banks (and shall give each Bank prompt notice
        of
        each such nonpayment). The Agent shall (subject to Section 12.7) take such
        action with respect to such Default; provided
        that,
        unless and until the Agent shall have received the directions referred to
        in
        Sections 12.1 or 12.7, the Agent may (but shall not be obligated to) take
        such
        action, or refrain from taking such action, with respect to such Default
        as it
        shall deem advisable and in the best interest of the Banks.

       

      12.4  LCPI
        and Affiliates

       

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

       

      12.5  Non-Reliance
        on Agent and Other Banks

       

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

       

      12.6  Indemnification

       

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

       

      12.7  Successor
        Agent

       

      The
        Agent
        may resign at any time as Agent under this Agreement by giving written notice
        thereof to the Banks and the Borrowers and may be removed at any time with
        or
        without cause by the Majority Banks. Upon any such resignation or removal,
        the
        Majority Banks shall have the right to appoint a successor Agent. If no
        successor Agent shall have been so appointed by the Majority Banks or shall
        have
        accepted such appointment within thirty (30) days after the retiring Agent’s
        giving of notice of resignation or the Majority Banks’ removal of the retiring
        Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor
        Agent, which shall be a commercial bank organized under the laws of the United
        States of America or of any State thereof and having a combined capital and
        surplus of at least $500,000,000.00. Upon the acceptance of any appointment
        as
        Agent hereunder by a successor Agent, such successor Agent shall thereupon
        succeed to and become vested with all the rights, powers, privileges and
        duties
        of the retiring Agent, and the retiring Agent shall be discharged from its
        duties and obligations under this Agreement and the other Loan Documents.
        After
        any retiring Agent’s resignation or removal hereunder as Agent, the provisions
        of this Section 12 shall inure to its benefit as to any actions taken or
        omitted to be taken by it while it was Agent under this Agreement and the
        other
        Loan Documents.

       

      12.8  Agent’s
        Reliance

       

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

       

      13.  MISCELLANEOUS

       

      13.1  Representation
        by the Banks

       

      Each
        Bank
        represents that it is the intention of such Bank, as of the date of its
        acquisition of its Note, to acquire the Note for its account or for the account
        of its Affiliates, and not with a view to the distribution or sale thereof,
        and,
        subject to any applicable laws, the disposition of such Bank’s property shall at
        all times be within its control. The Notes have not been registered under
        the
        Securities Act of 1933, as amended (the “Securities
        Act”),
        and
        may not be transferred, sold or otherwise disposed of except (a) in a registered
        offering under the Securities Act; (b) pursuant to an exemption from the
        registration provisions of the Securities Act; or (c) if the Securities Act
        shall not apply to the Notes or the transactions contemplated hereunder as
        commercial lending transactions.

       

      13.2  Amendments,
        Waivers, Etc

       

      No
        amendment or waiver of any provision of any Loan Document, nor consent to
        any
        departure by the Borrowers or any other Loan Party therefrom, shall in any
        event
        be effective unless the same shall be in writing and signed by the applicable
        Loan Parties and the Majority Banks, and then such waiver or consent shall
        be
        effective only in the specific instance and for the specific purpose for
        which
        given; provided,
        however,
        that no
        amendment, waiver or consent shall, unless in writing and signed by each
        Bank,
        do any of the following: (a) waive any of the conditions specified in Section
        8;
        (b) increase the Commitment of any Bank or alter the term thereof, or subject
        any Bank to any additional or extended obligations; (c) change the principal
        of,
        or rate of interest on, any Loan, any Note or any fees or other amounts payable
        hereunder; (d) postpone any date fixed for any payment of principal of, or
        interest on, any Loan, any Note or any fees or other amounts payable hereunder;
        (e) change the percentage of the Commitments or of the aggregate unpaid
        principal amount of any Loan, any Note or the number of Banks which shall
        be
        required for Banks, or any of them, to take any action hereunder; (f) amend
        this
        Section 13.2; or (g) release any of the Collateral from the Liens of the
        Collateral Documents; and provided,
        further,
        that no
        amendment, waiver, or consent shall, unless in writing and signed by the
        Agent
        in addition to each Bank, affect the rights or duties of the Agent under
        any
        Loan Document. No failure or delay on the part of any Bank or the Agent in
        exercising any power or right hereunder shall operate as a waiver thereof
        nor
        shall any single or partial exercise of any such right or power, or any
        abandonment or discontinuance of steps to enforce such a right or power,
        preclude any other or further exercise thereof or the exercise of any other
        right or power. No course of dealing between the Loan Parties and any Bank
        or
        the Agent shall operate as a waiver of any right of any Bank or the Agent.
        No
        modification or waiver of any provision of this Agreement or the Note or
        any
        other Loan Document nor consent to any departure by the Loan Parties therefrom
        shall in any event be effective unless the same shall be in writing, and
        then
        such waiver or consent shall be effective only in the specific instance and
        for
        the purpose for which given. No notice to or demand on the Borrower or any
        other
        Loan Party in any case shall entitle the Borrowers to any other or further
        notice or demand in similar or other circumstances.

       

      13.3  Reimbursement
        of Expenses

       

      Each
        Borrower jointly and severally agrees to reimburse each Bank for its reasonable
        out-of-pocket expenses, including the reasonable fees and expenses of counsel
        to
        the Agent and each Bank, in connection with the transactions contemplated
        by
        this Agreement and the other Loan Documents, whether or not such contemplated
        transactions shall be consummated, or any of them, or otherwise in connection
        with this Agreement or any other Loan Documents, including its negotiation,
        preparation, execution, administration, modification and enforcement, and
        all
        reasonable fees, including the reasonable fees and expenses of counsel to
        the
        Agent and each Bank, costs and expenses of the Agent for environmental
        consultants and costs and expenses of the Agent and each Bank in connection
        with
        due diligence, transportation, computer time and research and duplication.
        Borrower jointly and severally agrees to pay any and all stamp and other
        taxes
        which may be payable or determined to be payable in connection with the
        execution and delivery of this Agreement or the other Loan Documents, and
        to
        save any Bank or holder of any Note harmless from any and all liabilities
        with
        respect to or resulting from any delay or omission to pay any such taxes.
        The
        obligations of the Borrowers under this Section 13.3 shall survive the
        termination of this Agreement and/or the payment in full of the
        Obligations.

       

      13.4  Notices

       

      All
        notices and other communications provided for herein shall be in writing
        (including telex, facsimile, or cable communication) and shall be mailed,
        telecopied, telexed, cabled or delivered addressed as follows:

       

      (a) If
        to the
        Borrowers, to it at: Southern
        Union Company

       

      Enhanced
        Service Systems, Inc. 

       

      417
        Lackawanna Avenue

       

      Scranton,
        PA 18503

       

      Attention:
        Mr. Richard N. Marshall

       

      Fax:
        (570) 614-5158

       

      with
        copies to: Southern
        Union Company

       

      Enhanced
        Service Systems, Inc.

       

      5444
        Westheimer Road

       

      Houston,
        Texas 77056

       

      Attention:
        Monica Gaudiosi, Esq.

       

      Fax:
        (713) 989-1213

       

      (b) If
        to the
        Agent, to it at: Lehman
        Commercial Paper Inc.

       

      c/o
        Lehman Brothers Inc.

       

      745
        7th
        Avenue, 5th Floor

       

      New
        York,
        NY 10019

       

      Attn:
        Michelle Rosolinsky

       

      Phone:
        (212) 526-6560

       

      Fax:
        (646) 758-5015

       

      and,
        if
        to any Bank, at the address specified below its name on the signature pages
        hereof, and if to any other Loan Party, at the address specified above for
        the
        Borrowers, or as to the Borrowers, the Agent or any Bank, to such other address
        as shall be designated by such party in a written notice to the other party
        and,
        as to each other party, at such other address as shall be designated by such
        party in a written notice to the Borrowers and the Agent. All such notices
        and
        communications shall, when mailed, telecopied, telexed, transmitted, or cabled,
        become effective when deposited in the mail, confirmed by telex answer back,
        transmitted to the telecopier, or delivered to the cable company, except
        that
        notices and communications to the Agent under Sections 2.1(c), 2.1(d) or
        2.2
        shall not be effective until actually received by the Agent.

       

      13.5  Governing
        Law; Jurisdiction; Consent to Service of Process

       

       

      (a)  THIS
        AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
        WITH
        THE LAWS OF THE STATE OF NEW YORK.

       

      (b)  Each
        Borrower hereby irrevocably submits to the nonexclusive jurisdiction of The
        United States District Court for the Southern District of New York and of
        any
        New York State Court sitting in the Borough of Manhattan in New York City
        for
        purposes of all legal proceedings arising out of or relating to any Loan
        Document or the transactions contemplated thereby. Each Borrower hereby
        irrevocably waives, to the fullest extent permitted by law, any objection
        which
        it may now or hereafter have to the laying of the venue of any such proceeding
        brought in such a court and any claim that any such proceeding brought in
        any
        such court has been brought in an inconvenient forum. Nothing contained in
        this
        Section or in any other provision of any Loan Document (unless expressly
        provided otherwise) shall be deemed or construed as an agreement by any Bank
        to
        be subject to the jurisdiction of such courts.

       

      (c)  Each
        Borrower hereby consents to process being served in any suit, action or
        proceeding relating hereto by mailing a copy thereof by registered or certified
        air mail to its address designated pursuant to Section 13.4. Nothing contained
        in this Section or in any other provision of any Loan Document will affect
        the
        right of any party hereto to serve process in any other manner permitted
        by
        law.

       

      13.6  Survival
        of Representations, Warranties and Covenants

       

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

       

      13.7  Counterparts

       

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

       

      13.8  Severability

       

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

       

      13.9  Descriptive
        Headings

       

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

       

      13.10  Accounting
        Terms

       

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

       

      13.11  Limitation
        of Liability

       

      No
        claim
        may be made by any Borrower or any other Person against the Agent or any
        Bank or
        the Affiliates, directors, officers, employees, attorneys, or agents of the
        Agent or any Bank for any special, indirect, consequential, or punitive damages
        in respect to any claim for breach of contract arising out of or related
        to the
        transactions contemplated by this Agreement, or any act, omission, or event
        occurring in connection herewith and each Borrower hereby waives, releases,
        and
        agrees not to sue upon any claim for any such damages, whether or not accrued
        and whether or not known or suspected to exist in its favor.

       

      13.12  Set-Off

       

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

       

      13.13  Sale
        or Assignment

       

      (a)  Each
        Bank
        may assign to an Eligible Assignee all or a portion of its rights and
        obligations under this Agreement (including, without limitation, all or a
        portion of its Commitments or Loans, as the case may be, and the Note (if
        any)
        held by it); provided,
        however,
        that:
        (i) each such assignment shall be of a constant, and not a varying, percentage
        of all of the assigning Bank’s rights and obligations under this Agreement; (ii)
        the amount so assigned shall equal or exceed $5,000,000.00; (iii) the parties
        to
        each such assignment shall execute and deliver to the Agent, for its acceptance
        and recording in the Register (as hereinafter defined), an Assignment and
        Acceptance in the form of Exhibit
        C
        attached
        hereto and made a part hereof (the “Assignment
        and Acceptance”);
        and
        (iv) any such assignment shall not require the consent of any Borrower. Upon
        such execution, delivery, acceptance, and recording, from and after the
        effective date specified in each Assignment and Acceptance, which effective
        date
        shall be the date on which such Assignment and Acceptance is accepted by
        the
        Agent, (A) the Eligible Assignee thereunder shall be a party hereto and,
        to the
        extent that rights and obligations hereunder have been assigned to it pursuant
        to such Assignment and Acceptance, have the rights and obligations of a Bank
        under the Loan Documents, and (B) the Bank assignor thereunder shall, to
        the
        extent that rights and obligations hereunder have been assigned by it pursuant
        to such Assignment and Acceptance, relinquish its rights and be released
        from
        its obligations under the Loan Documents (and, in the case of an Assignment
        and
        Acceptance covering all or the remaining portion of an assigning Bank’s rights
        and obligations under the Loan Documents, such Bank shall cease to be a party
        thereto).

       

      (b)  By
        executing and delivering an Assignment and Acceptance, the Bank assignor
        thereunder and the Eligible Assignee thereunder confirm to and agree with
        each
        other and the other parties hereto as follows: (i) other than as provided
        in
        such Assignment and Acceptance, such assigning Bank makes no representation
        or
        warranty and assumes no responsibility with respect to any statements,
        warranties, or representations made in or in connection with any Loan Document
        or the execution, legality, validity, enforceability, genuineness, sufficiency,
        or value of any Loan Document or any other instrument or document furnished
        pursuant thereto; (ii) such assigning Bank makes no representation or warranty
        and assumes no responsibility with respect to the financial condition of
        each
        Borrower or any of its Subsidiaries or the performance or observance by each
        Loan Party of any of its obligations under any Loan Document or any other
        instrument or document furnished pursuant thereto; (iii) such Eligible Assignee
        confirms that it has received a copy of the Loan Documents, together with
        copies
        of the financial statements referred to in Section 7.2 and such other documents
        and information as it has deemed appropriate to make its own credit analysis
        and
        decision to enter into such Assignment and Acceptance; (iv) such Eligible
        Assignee, independently and without reliance upon the Agent, such assigning
        Bank, or any Bank and based on such documents and information as it shall
        deem
        appropriate at the time, will continue to make its own credit decisions in
        taking or not taking action under this Agreement; (v) such Eligible Assignee
        appoints and authorizes the Agent to take such action as agent on its behalf
        and
        to exercise such powers under any Loan Document as are delegated to the Agent
        by
        the terms thereof, together with such powers as are reasonably incidental
        thereto; and (vi) such Eligible Assignee agrees that it will perform in
        accordance with their terms all of the obligations which by the terms of
        any
        Loan Document are required to be performed by it as a Bank.

       

      (c)  The
        Agent
        shall maintain at its address referred to in Section 13.4 a copy of each
        Assignment and Acceptance delivered to and accepted by it and a register
        for the
        recordation of the names and addresses of Banks and the Commitment of, and
        principal amount of the Loans owing to, each Bank from time to time (the
        “Register”).
        The
        entries in the Register shall be conclusive and binding for all purposes,
        absent
        manifest error, and the Borrowers, the Agent, and Banks may treat each Person
        whose name is recorded in the Register as Bank hereunder for all purposes
        of the
        Loan Documents. The Register shall be available for inspection by the Borrowers
        or any Bank at any reasonable time and from time to time upon reasonable
        prior
        notice.

       

      (d)  Upon
        its
        receipt of an Assignment and Acceptance executed by an assigning Bank, together
        with any Note subject to such assignment, the Agent, if such Assignment and
        Acceptance has been completed and is in substantially the form of Exhibit
        C,
        shall
        (i) accept such Assignment and Acceptance; (ii) record the information contained
        therein in the Register; and (iii) give prompt notice thereof to the Borrowers.
        Within three (3) Business Days after its receipt of such notice, the Borrowers
        at their own expense, shall execute and deliver to the Agent in exchange
        for
        each surrendered Note a new Note to the order of such Eligible Assignee in
        an
        amount equal to the Commitment or Loans (as the case may be) assumed by it
        pursuant to such Assignment and Acceptance and, if the assigning Bank has
        retained a Commitment or Loans (as the case may be) hereunder, a new Note
        to the
        order of the assigning Bank in an amount equal to the Commitment or Loans
        (as
        the case may be) retained by it hereunder. The new Notes shall be in an
        aggregate principal amount equal to the aggregate principal amount of the
        surrendered Notes, shall be dated the effective date of such Assignment and
        Acceptance and shall otherwise be in substantially the form of Exhibit C
        attached
        hereto and made a part hereof. Upon receipt by the Agent of each such new
        Note
        conforming to the requirements set forth in the preceding sentences, the
        Agent
        shall return to the Borrowers each such surrendered Note marked to show that
        each such surrendered Note has been replaced, renewed, and extended by such
        new
        Note.

       

      (e)  Each
        Bank
        may sell participations to one or more banks or other entities in or to all
        or a
        portion of its rights and/or obligations under this Agreement (including,
        without limitation, all or a portion of its Commitment or Loans (as the case
        may
        be) and the Note (if any) held by it); provided,
        however,
        that
        (i) each Bank’s obligations under this Agreement (including, without limitation,
        its Commitment to the Borrowers hereunder) shall remain unchanged; (ii) such
        Bank shall remain solely responsible to the other parties hereto for the
        performance of such obligations; (iii) except as provided below, such Bank
        shall
        remain the holder of any such Loans and any such Note for all purposes of
        this
        Agreement; and (iv) the participating banks or other entities shall be entitled
        to the benefits of Sections 2.3 and 4.5 to recover costs, losses and expenses
        in
        the circumstances, and to the extent provided in Section 2.3, as though such
        participant were a Bank; provided,
        however,
        the
        amounts to which a participant shall be entitled to obtain pursuant to Sections
        2.3 and 4.5 shall be determined by reference to such participant’s selling Bank
        and shall be recoverable solely from such selling Bank and (v) the Borrowers,
        the Agent and the other Banks shall continue to deal solely and directly
        with
        the selling Bank in connection with such Bank’s rights and obligations under
        this Agreement and the other Loan Documents; provided,
        however,
        the
        selling Bank may grant a participant rights with respect to amendments,
        modification or waivers with respect to any fees payable hereunder to such
        Bank
        (including the amount and the dates fixed for the payment of any such fees)
        or
        the amount of principal or the rate of interest payable on, the dates fixed
        for
        any payment of principal or interest on, the Loans, or the release of any
        obligations of the Borrowers hereunder and under the other Loan Documents,
        or
        the release of any security for any of the Obligations. Except with respect
        to
        cost protections contained in Sections 2.3 and 4.6, no participant shall
        be a
        third party beneficiary of this Agreement and shall not be entitled to enforce
        any rights provided to its selling Bank against the Company under this Agreement
        or any other Loan Documents.

       

      (f)  Notwithstanding
        anything herein to the contrary, each Bank may pledge and assign all or any
        portion of its rights and interests under the Loan Documents to any Federal
        Reserve Bank.

       

      (g)  “Bank
        Affiliate”
shall
        mean (a) with respect to any Bank, (i) an Affiliate of such Bank or (ii)
        any
        entity (whether a corporation, partnership, trust or otherwise) that is engaged
        in making, purchasing, holding or otherwise investing in bank loans and similar
        extensions of credit in the ordinary course of its business and is administered
        or managed by a Bank or an Affiliate of such Bank and (b) with respect to
        any
        Bank that is a fund which invests in bank loans and similar extensions of
        credit, any other fund that invests in bank loans and similar extensions
        of
        credit and is managed by the same investment advisor as such Bank or by an
        Affiliate of such investment advisor. 

       

      13.14  Non
        U.S. Banks

       

      Prior
        to
        the date of the initial Borrowings hereunder, and from time to time thereafter
        if requested by the Borrowers or the Agent, each Bank organized under the
        laws
        of a jurisdiction outside the United States of America shall provide the
        Agent
        and the Borrowers with the forms prescribed by the Internal Revenue Service
        of
        the United States of America certifying such Banks exemption from United
        States
        withholding taxes with respect to all payments to be made to such Bank hereunder
        or under such Bank’s Note. Unless the Borrowers and the Agent have received
        forms or other documents satisfactory to them indicating that payments hereunder
        or under such Bank’s Note are not subject to United States withholding tax or
        are subject to such tax at a rate reduced by an applicable tax treaty, the
        Borrowers or the Agent shall withhold taxes from such payments at the applicable
        statutory rate in the case of payments to or for any Bank organized under
        the
        laws of a jurisdiction outside the United States.

       

      13.15  Interest

       

      All
        agreements between the Borrowers, the Agent or any Bank, whether now existing
        or
        hereafter arising and whether written or oral, are hereby expressly limited
        so
        that in no contingency or event whatsoever, whether by reason of demand being
        made on any Note, Loan, other Obligation or otherwise, shall the amount paid,
        or
        agreed to be paid, to the Agent or any Bank for the use, forbearance, or
        detention of the money to be loaned under this Agreement or otherwise or
        for the
        payment or performance of any covenant or obligation contained herein or
        in any
        document related hereto exceed the amount permissible at the Highest Lawful
        Rate. If, as a result of any circumstances whatsoever, fulfillment of any
        provision hereof or of any of such documents, at the time performance of
        such
        provision shall be due, shall involve transcending the limit of validity
        prescribed by applicable usury law, then, ipso
        facto,
        the
        obligation to be filled shall be reduced to the limit of such validity, and
        if,
        from any such circumstance, the Agent or any Bank shall ever receive interest
        or
        anything which might be deemed interest under applicable law which would
        exceed
        the amount permissible at the Highest Lawful Rate, such amount which would
        be
        excessive interest shall be applied to the reduction of the principal amount
        owing on account of the Loans or the amounts owing on other obligations of
        the
        Borrowers to the Agent or any Bank under this Agreement, the other Loan
        Documents or any document related hereto and not to the payment of interest,
        or
        if such excessive interest exceeds the unpaid principal balance of the Loans
        and
        the amounts owing on other obligations of the Borrowers to the Agent or any
        Bank
        under this Agreement or any document related hereto, as the case may be,
        such
        excess shall be refunded to the Borrowers. All sums paid or agreed to be
        paid to
        the Agent or any Bank for the use, forbearance, or detention of the indebtedness
        of the Borrowers to the Agent or any Bank shall, to the extent permitted
        by
        applicable law, be amortized, prorated, allocated, and spread throughout
        the
        full term of such indebtedness until payment in full of the principal thereof
        (including the period of any renewal or extension thereof) so that the interest
        on account of such indebtedness shall not exceed the Highest Lawful Rate.
        The
        terms and provisions of this Section 13.15 shall control and supersede every
        other provision of all agreements between the Borrowers and the
        Banks.

       

      13.16  Indemnification

       

      EACH
        BORROWER JOINTLY AND SEVERALLY AGREES TO INDEMNIFY, DEFEND, AND SAVE HARMLESS
        THE AGENT, EACH BANK AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
        AGENTS, AND ATTORNEYS, AND EACH OF THEM (THE “INDEMNIFIED PARTIES”), FROM AND
        AGAINST ALL CLAIMS, ACTIONS, SUITS, AND OTHER LEGAL PROCEEDINGS, DAMAGES,
        COSTS,
        INTEREST, CHARGES, TAXES, COUNSEL FEES, AND OTHER EXPENSES AND PENALTIES
        (INCLUDING WITHOUT LIMITATION ALL ATTORNEY FEES AND COSTS OR EXPENSES OF
        SETTLEMENT) WHICH ANY OF THE INDEMNIFIED PARTIES MAY SUSTAIN OR INCUR BY
        REASON
        OF OR ARISING OUT OF (a) THE MAKING OF ANY LOAN HEREUNDER, THE EXECUTION
        AND
        DELIVERY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE CONSUMMATION
        OF
        THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY AND THE EXERCISE OF ANY
        OF THE
        AGENT’S AND THE BANKS’ RIGHTS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
        OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, DAMAGES, COSTS, AND EXPENSES
        INCURRED BY ANY OF THE INDEMNIFIED PARTIES IN INVESTIGATING, PREPARING FOR,
        DEFENDING AGAINST, OR PROVIDING EVIDENCE, PRODUCING DOCUMENTS, OR TAKING
        ANY
        OTHER ACTION IN RESPECT OF ANY COMMENCED OR THREATENED LITIGATION UNDER ANY
        FEDERAL SECURITIES LAW OR ANY SIMILAR LAW OF ANY JURISDICTION OR AT COMMON
        LAW
        OR (b) ANY AND ALL CLAIMS OR PROCEEDINGS (WHETHER BROUGHT BY A PRIVATE PARTY,
        GOVERNMENTAL AUTHORITY OR OTHERWISE) FOR BODILY INJURY, PROPERTY DAMAGE,
        ABATEMENT, REMEDIATION, ENVIRONMENTAL DAMAGE, OR IMPAIRMENT OR ANY OTHER
        INJURY
        OR DAMAGE RESULTING FROM OR RELATING TO THE RELEASE OF ANY HAZARDOUS MATERIALS
        LOCATED UPON, MIGRATING INTO, FROM, OR THROUGH OR OTHERWISE RELATING TO ANY
        PROPERTY OWNED OR LEASED BY ANY BORROWER OR ANY OF ITS SUBSIDIARIES (WHETHER
        OR
        NOT THE RELEASE OF SUCH HAZARDOUS MATERIALS WAS CAUSED BY ANY BORROWER, ANY
        SUBSIDIARY OF ANY BORROWER, A TENANT, OR SUBTENANT OF ANY BORROWER OR ANY
        OF ITS
        SUBSIDIARIES, A PRIOR OWNER, A TENANT, OR SUBTENANT OF ANY PRIOR OWNER OR
        ANY
        OTHER PARTY AND WHETHER OR NOT THE ALLEGED LIABILITY IS ATTRIBUTABLE TO THE
        HANDLING, STORAGE, GENERATION, TRANSPORTATION, OR DISPOSAL OF ANY HAZARDOUS
        MATERIALS OR THE MERE PRESENCE OF ANY HAZARDOUS MATERIALS ON SUCH PROPERTY;
        PROVIDED
        THAT NO BORROWER SHALL BE LIABLE TO THE INDEMNIFIED PARTIES WHERE THE RELEASE
        OF
        SUCH HAZARDOUS MATERIALS OCCURS AT ANY TIME AT WHICH ANY BORROWER OR ANY
        OF ITS
        SUBSIDIARIES CEASES TO OWN OR LEASE SUCH PROPERTY); AND PROVIDED FURTHER
        THAT NO
        INDEMNIFIED PARTY SHALL BE ENTITLED TO THE BENEFITS OF THIS SECTION 13.16
        TO THE
        EXTENT ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT CONTRIBUTED TO ITS
        LOSS;
        AND PROVIDED FURTHER THAT IT IS THE INTENTION OF EACH BORROWER TO INDEMNIFY
        THE
        INDEMNIFIED PARTIES AGAINST THE CONSEQUENCES OF THEIR OWN NEGLIGENCE. THIS
        AGREEMENT IS INTENDED TO PROTECT AND INDEMNIFY THE INDEMNIFIED PARTIES AGAINST
        ALL RISKS HEREBY ASSUMED BY EACH BORROWER. FOR PURPOSES OF THE FOREGOING
        SECTION
        13.16, THE PHRASE “CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY AND
        THEREBY” SET FORTH IN SUBPARAGRAPH (a) ABOVE SHALL INCLUDE, BUT NOT BE LIMITED
        TO, THE FINANCING OF ANY CORPORATE TAKEOVER PERMITTED HEREUNDER AND THE
        BORROWERS’ USE OF THE LOAN PROCEEDS FOR THE PURPOSE OF FINANCING THE SID
        RICHARDSON ACQUISITION. THE OBLIGATIONS OF THE BORROWERS UNDER THIS SECTION
        13.16 SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT AND THE REPAYMENT IN
        FULL
        OF THE OBLIGATIONS.

       

      13.17  Payments
        Set Aside

       

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

       

      13.18  Bridge
        Loan
        Agreement Controls

       

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

       

      13.19  Obligations
        Several

       

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

       

      13.20  Pro
        Rata Treatment

       

      All
        Loans
        under, and all payments and other amounts received in connection with this
        Agreement and the other Loan Documents (including, without limitation, amounts
        received as a result of the exercise by any Bank of any right of set off)
        shall
        be effectively shared by the Banks ratably in accordance with the respective
        Pro
        Rata Percentages of the Banks. If any Bank shall obtain any payment (whether
        voluntary, involuntary, through the exercise of any right of set off, or
        otherwise) on account of the principal of, or interest on, or fees in respect
        of, any Loan held by it (other than pursuant to Section 2.3(d)) in excess
        of its
        Pro Rata Percentage of payments on account of similar Loans obtained by all
        the
        Banks, such Bank shall forthwith purchase from the other Banks such
        participations in the Loans made by them as shall be necessary to cause such
        purchasing Bank to share the excess payment ratably with each of them;
provided,
        however,
        that if
        all or any portion of such excess payment is thereafter recovered from such
        purchasing Bank, such purchase from each Bank shall be rescinded and such
        Bank
        shall repay to the purchasing Bank the purchase price to the extent of such
        recovery together with an amount equal to such Bank’s ratable share (according
        to the proportion of (a) the amount of such Bank’s required repayment to (b) the
        total amount so recovered from the purchasing Bank) of any interest or other
        amount paid or payable by the purchasing Bank in respect of the total amount
        so
        recovered. Disproportionate payments of interest shall be shared by the purchase
        of separate participations in unpaid interest obligations, disproportionate
        payments of fees shall be shared by the purchase of separate participations
        in
        unpaid fee obligations, and disproportionate payments of principal shall
        be
        shared by the purchase of separate participations in unpaid principal
        obligations. The Borrowers agree that any Bank so purchasing a participation
        from another Bank pursuant to this Section 13.20 may, to the fullest extent
        permitted by law, exercise all its rights of payment (including the right
        of
        set-off) with respect to such participation as fully as if such Bank were
        the
        direct creditor of the applicable Borrower in the amount of such participation.
        Notwithstanding the foregoing, a Bank may receive and retain an amount in
        excess
        of its Pro Rata Percentage to the extent but only to the extent, that such
        excess results from such Bank’s Highest Lawful Rate exceeding another Bank’s
        Highest Lawful Rate.

       

      13.21  No
        Rights, Duties or Obligations of Syndication Agent or
        Documentation
        Agent

       

      The
        Borrowers, the Agent and each Bank acknowledge and agree that except for
        the
        rights, powers, obligations and liabilities under this Agreement and the
        other
        Loan Documents as a Bank, JPMorgan Chase Bank, N.A. and Wachovia Bank, National
        Association, as Co-Syndication Agent, and Calyon New York Branch and Bank
        of
        America, N.A., as Co-Documentation Agent, shall have no additional rights,
        powers, obligations or liabilities under this agreement or any other Loan
        Documents in their capacities as Syndication Agent or Documentation Agent,
        respectively

       

      13.22  Final
        Agreement

       

      THE
        LOAN
        DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND MAY
        NOT BE
        CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
        AGREEMENT’S OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
        BETWEEN THE PARTIES HERETO.

       

      13.23  WAIVER
        OF JURY TRIAL

       

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

       

      13.24  USA
        Patriot Act

       

       Each
        Bank
        hereby notifies the Borrowers that pursuant to the requirements of the USA
        Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
        (the “Act”), it is required to obtain, verify and record information that
        identifies the Borrowers and the other Loan Parties, which information includes
        the names and addresses of the Borrowers and the other Loan Parties and other
        information that will allow such Bank to identify the Borrowers and the other
        Loan Parties, in accordance with the Act.

       

      13.25  Successors
        and Assigns Generally.

       

       The
        provisions of this Agreement shall be binding upon and inure to the benefit
        of
        the parties hereto and their respective successors and assigns permitted
        hereby,
        except that neither Borrower may assign or otherwise transfer any of its
        rights
        or obligations hereunder without the prior written consent of the Agent and
        each
        Bank and no Bank may assign or otherwise transfer any of its rights or
        obligations hereunder except as provided in Section 13.13.

       

      [Signature
        pages follow]

       

      


       


      
        
          
            


            


          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



      IN
        WITNESS WHEREOF, the parties hereto, by their respective officers thereunto
        duly
        authorized, have executed this Agreement on the dates set forth below to
        be
        effective as of the date and year first above written.

       

      SOUTHERN
        UNION COMPANY

       

      By: _/S/
        JULIE H. EDWARDS____

       

      Name:
        Julie H. Edwards 

       

      Title:
        Senior Vice President & CFO 

       

      ENHANCED
        SERVICE SYSTEMS, INC. 

       

      By: _/S/
        JULIE H. EDWARDS______

       

      Name:
        Julie H. Edwards 

       

      Title:
        Senior Vice President & CFO 

       

      


       

       


      
        
          [Signature
            Page to Bridge Loan Agreement]

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      LEHMAN
        COMMERCIAL PAPER INC.,

       

      as
        Administrative Agent 

       

      By: /S
        LAURIE D. PERPER 

       

      Name:
        Laurie D. Perper 

       

      Title:
        Senior Vice President

       

      Payment
        Office:

       

      


       

      Lehman
        Commercial Paper Inc.

       

      c/o
        Lehman Brothers Commercial Bank

       

      c/o
        Lehman Brothers

       

      745
        7th
        Avenue, 5th Floor

       

      New
        York,
        NY 10019

       

      Attn:
        Deal Administrator

       

      Loan
        Servicing Department

       

      Phone:
        (212) 526-6560

       

      Fax:
        (212) 220-9606

       

      


       

      


       

      


       


      
        
          
            [Signature
              Page to Bridge Loan Agreement]

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



      [BANKS]

       

      [
        ],

       

      as
        a Bank


       

      By:  

       

      Name: 

       

      Title: 

       

      Address
        for Notices:

       

      


       

      Domestic
        Lending Office:

       

      


       

      Eurodollar
        Lending Office:

       

      


       


      
        
          
            [Signature
              Page to Bridge Loan Agreement]

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



      SCHEDULE
        2.1(a)

       

      COMMITMENTS

       

      
        	
                Bank
                  

              	
                Commitment

              
	 	 
	
                Lehman
                  Commercial Paper Inc.

              	
                $550,000,000.00

              
	
                Merrill
                  Lynch Bank USA

              	
                $550,000,000.00

              
	
                JPMorgan
                  Chase Bank, N.A.

              	
                $
                  80,000,000.00

              
	
                Wachovia
                  Bank, National Association

              	
                $
                  80,000,000.00

              
	
                Bank
                  of America, N.A.

              	
                $
                  80,000,000.00

              
	
                Calyon
                  New York Branch

              	
                $
                  80,000,000.00

              
	
                KBC
                  Bank, N.V.

              	
                $
                  70,000,000.00

              
	
                The
                  Bank of Tokyo-Mitsubishi UFJ, Ltd., Houston Agency

              	
                $
                  25,000,000.00

              
	
                Union
                  Bank of California, N.A.

              	
                $
                  25,000,000.00

              
	
                Sovereign
                  Bank

              	
                $
                  20,000,000.00

              
	
                SunTrust
                  Bank

              	
                $
                  20,000,000.00

              
	
                LaSalle
                  Bank National Association

              	
                $
                  20,000,000.00

              
	 	 
	
                Total:

              	
                $1,600,000,000.00

              


      

      


       

      



      
        
          
            


          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


            


          

        

      



      EXHIBIT
        A

       

      PROMISSORY
        NOTE

       

      $___________ ___________,
        200__

       

      FOR
        VALUE
        RECEIVED, each of undersigned, SOUTHERN UNION COMPANY, a Delaware corporation
        (the “Parent”) and ENHANCED SERVICE SYSTEMS, INC., a Delaware corporation
        (“ESSI”
and
        together with the Parent, the “Borrowers”
and
        each, a “Borrower”),
        JOINTLY AND SEVERALLY HEREBY PROMISES TO PAY to the order of
        ___________________________________ (the “Bank”),
        on or
        before the Maturity Date (as defined in the Bridge Loan Agreement referred
        to
        below), the principal sum of ________________ Million Dollars and No Cents
        ($[_______]) in accordance with the terms and provisions of that certain
        Bridge
        Loan Agreement, dated as of March 1, 2006, (as amended, modified, amended
        and
        restated or otherwise supplemented from time to time in accordance with the
        terms thereof, the “Bridge
        Loan Agreement”),
        by
        and among the Borrowers, the Bank, the other Banks party thereto, and Lehman
        Commercial Paper Inc., as Administrative Agent (in such capacity, the
“Agent”).
        Capitalized terms used herein and not otherwise defined shall have the meanings
        ascribed to such terms in the Bridge Loan Agreement.

       

      The
        outstanding principal balance of this Promissory Note shall be payable at
        the
        Maturity Date. Each Borrower jointly and severally promises to pay interest
        on
        the unpaid principal balance of this Promissory Note from the date of any
        Loan
        evidenced by this Promissory Note until the principal balance thereof is
        paid in
        full. Interest shall accrue on the outstanding principal balance of this
        Promissory Note from and including the date of any Loan evidenced by this
        Promissory Note to but not including the Maturity Date at the rate or rates,
        and
        shall be due and payable on the dates, set forth in the Bridge Loan Agreement.
        Any amount not paid when due with respect to principal (whether at stated
        maturity, by acceleration or otherwise), costs or expenses, or, to the extent
        permitted by applicable law, interest, shall bear interest from the date
        when
        due to and excluding the date the same is paid in full, payable on demand,
        at
        the rate provided for in Section 2.2(b) of the Bridge Loan
        Agreement.

       

      Payments
        of principal and interest, and all amounts due with respect to costs and
        expenses, shall be made in lawful money of the United States of America in
        immediately available funds, without deduction, set off or counterclaim to
        the
        account of the Agent at the Agent’s Payment Office not later than 12:00 noon
        (New York City time) on the dates on which such payments shall become due
        pursuant to the terms and provisions set forth in the Bridge Loan
        Agreement.

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      


       


      
        
          
            A-

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



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

       

      SOUTHERN
        UNION COMPANY

       

      By:  

       

      Name: 

       

      Title: 

       

      ENHANCED
        SERVICE SYSTEMS, INC. 

       

      By:  

       

      Name: 

       

      Title: 

       

      


       

      



      
        
          
            A-

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



      EXHIBIT
        B

       

      NOTICE
        OF BORROWING

       

      Lehman
        Commercial Paper Inc.,

      as
        Administrative Agent 

      c/o
        Lehman Brothers

      745
        7th
        Avenue, 5th Floor

      New
        York,
        NY 10019

      Attn:
        Michelle Rosolinsky

      


       

      Re: Bridge
        Loan Agreement referred to below

       

      Ladies
        and Gentlemen:

       

      The
        undersigned hereby certifies that s/he is an officer of SOUTHERN UNION COMPANY,
        a Delaware corporation (the “Parent”)
        and of
        ENHANCED SERVICE SYSTEMS, INC., a Delaware corporation (“ESSI”
and
        together with the Parent, the “Borrowers”
and
        each, a “Borrower”),
        authorized to execute this Notice of Borrowing on behalf of the Borrowers.
        With
        reference to that Bridge Loan Agreement, dated as of March 1, 2006 (as the
        same
        may be amended, modified, increased, supplemented and/or restated from time
        to
        time, the “Bridge
        Loan Agreement”)
        entered into by and among the Borrowers, the Banks party thereto and Lehman
        Commercial Paper, Inc., as Administrative Agent (in such capacity, the
“Agent”),
        the
        undersigned further certifies, represents and warrants to the Banks on behalf
        of
        the Borrowers that to his best knowledge and belief after reasonable and
        due
        investigation and review, all of the following statements are true and correct
        (each capitalized term used herein having the same meaning given to it in
        the
        Bridge Loan Agreement unless otherwise specified):

       

      I. [Borrowing][Conversion/Continuation]

       

      [In
        the case of the Borrowing under Section 2.1(a):

       

      (a) [The
        Borrowers hereby request that the Banks advance to the Borrowers the aggregate
        sum of $__________by no later than ____________, 200__ (the “Borrowing
        Date”).
        Immediately following such Loan, the aggregate outstanding balance of Loans
        shall equal $__________.] 

       

      (b) The
        Borrowers hereby request that the Loans bear interest as follows:

       

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


       

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

       

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

       

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

       

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

       

      (c) The
        proceeds of the Borrowing Loans made by the Banks pursuant to the Section
        2.1(a)
        shall be deposited into the account described as follows: [insert
        Name of Account]

       

      [In
        the case of conversions or continuations of Loans:

       

      [The
        Borrowers hereby requests that on [__________]

       

      (i) $[__________]
        of the presently outstanding principal amount of the Loans originally made
        on
        [__________], 

       

      (ii) and
        all
        presently being maintained as [Alternate Base Rate Loans] [Eurodollar Rate
        Loans],

       

      (iii) be
        [converted into] [continued as]

       

      (iv) [Eurodollar
        Rate Loans having a Rate Period of [one/two/three/six] months] [Alternate
        Base
        Rate Loans].

       

      II. Miscellaneous.

       

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

       

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

       

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

       

      SOUTHERN
        UNION COMPANY

       

      By: _________________________

       

      Name: 

       

      Title: 

       

      


       

      



      
        
          
            B-

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



      EXHIBIT
        C

       

      ASSIGNMENT
        AND ACCEPTANCE

       

      [NAME
        AND
        ADDRESS OF

      ASSIGNING
        BANK]

       

      _______________,
        200__

       

      ________________

      ________________

      ________________

      ________________

       

      
        	 	
                Re:

              	
                Southern
                  Union Company Bridge Loan Agreement

              


      

       

      Ladies
        and Gentlemen:

       

      Reference
        is made to that certain Bridge Loan Agreement, dated as of March 1, 2006,
        (as
        amended, supplemented, amended and restated or otherwise modified from time
        to
        time, the “Bridge
        Loan Agreement”),
        by
        and among Southern Union Company (the “Company”),
        the
        Banks party thereto (including us), and Lehman Commercial Paper Inc., as
        Administrative Agent (in such capacity, the “Agent”).
        Capitalized terms used herein and not otherwise defined shall have the meanings
        ascribed to such terms in the Bridge Loan Agreement.

       

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

       

      1. Assignment.
        We hereby sell you and assign to you without recourse, and you hereby
        unconditionally and irrevocably acquire for your own account and risk, a
        percent
        (  %) undivided interest (“your assigned share”) in each of the
        following (the “Assigned
        Obligations”):

       

      a. our
        Note
        (if any); and

       

      b. all
        Loans
        held by us and interest thereon as provided in Section 2 of the Bridge Loan
        Agreement [,except that interest shall accrue on your assigned share in the
        principal of Alternate Base Rate Loans and Eurodollar Rate Loans at an annual
        rate equal to the rate provided in the Bridge Loan Agreement minus
        _____%].

       

      2. Materials
        Provided Assignee

       

      a. We
        will
        promptly request that the Company issue new Notes to us and to you in
        substitution for our Note to reflect the assignment set forth herein. Upon
        issuance of such substitute Notes, (i) you will become a Bank under the Bridge
        Loan Agreement, (ii) you will assume our obligations under the Bridge Loan
        Agreement to the extent of your assigned share, and (iii) the Company will
        release us from our obligations under the Bridge Loan Agreement to the extent,
        but only to the extent, of your assigned share. The Company consents to such
        release by signing this Agreement where indicated below. As a Bank, you will
        be
        entitled to the benefits and subject to the obligations of a “Bank”, as set
        forth in the Bridge Loan Agreement, and your rights and liabilities with
        respect
        to the other Banks and the Agent will be governed by the Bridge Loan Agreement,
        including without limitation, Section 12 of the Bridge Loan
        Agreement.

       

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

       

      3. Governing
        law; Jurisdiction.
        This
        Agreement shall be governed by, and construed in accordance with, the laws
        of
        the State of New York. You irrevocably submit to the jurisdiction of any
        State
        or Federal court sitting in the Borough of Manhattan in New York City in
        any
        suit, action or proceeding arising out of or relating to this Agreement and
        irrevocably waive any objection you may have to this laying of venue of any
        such
        suit, action or proceeding brought in any such court and any claim that any
        such
        suit, action or proceeding has been brought in an inconvenient forum. We
        may
        serve process in any manner permitted by law and may bring proceedings against
        you in any other jurisdiction.

       

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

       

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

       

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

       

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

       

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

       

      Very
        truly yours,

       

       

       

      By:  

       

      Name: 

       

      Title: 

       

      [Street
        Address] 

      [City,
        State, Zip Code] 

      Telephone: 

      Telecopy: 

       

      AGREED
        AND ACCEPTED:

       

      _______________________________

       

      By: _________________________

      _________________________

      _________________________

      _________________________

       

      Attention: ___________________

      Telephone: ___________________

      Telecopy: ___________________

      Account
        for Payments: ____________

       

      


       


      
        
          
            C-

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



      RELEASE
        APPROVED IN SECTION 2 OF THIS AGREEMENT:

       

      SOUTHERN
        UNION COMPANY

      


      


      By: _/s/
        JULIE H. EDWARDS____

      Name: Julie
        H.
        Edwards

      Title: Senior
        Vice President and

      Chief
        Financial Officer

      


      


      


      


      


      ASSIGNMENT
        ACKNOWLEDGED

      


      LEHMAN
        COMMERCIAL PAPER INC.,

       

      as
        Administrative Agent

       

      By: _/s/
        LAURIE D. PERPER___

      Name: Laurie
        D.
        Perper

      Title: Senior
        Vice President

      



      
        
          
            


          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



      EXHIBIT
        D-1

       

      FORM
        OF PARENT PLEDGE AGREEMENT

      

        EXECUTION
          COPY

        


        


        PARENT
          PLEDGE AGREEMENT

        


        dated
          as of

        


        March
          1 , 2006

        


        among

        


        SOUTHERN
          UNION COMPANY,

        


        as
          the Pledgor

        


        and

        


        LEHMAN
          COMMERCIAL PAPER INC.,

        


        as
          Administrative Agent

        



        
          
            
              


            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        TABLE
          OF CONTENTS

         

        _________________

         

        Page

         

        
          	
                  Section
                    1.

                	
                  Definitions

                	
                  1

                
	
                  Section
                    2.

                	
                  Grant
                    Of Transaction Liens

                	
                  4

                
	
                  Section
                    3.

                	
                  General
                    Representations And Warranties

                	
                  5

                
	
                  Section
                    4.

                	
                  Further
                    Assurances; General Covenants

                	
                  6

                
	
                  Section
                    5.

                	
                  Investment
                    Property

                	
                  8

                
	
                  Section
                    6.

                	
                  Transfer
                    of Record Ownership

                	
                  9

                
	
                  Section
                    7.

                	
                  Right
                    to Vote Securities

                	
                  9

                
	
                  Section
                    8.

                	
                  Remedies
                    Upon Event of Default

                	
                  10

                
	
                  Section
                    9.

                	
                  Application
                    Of Proceeds

                	
                  10

                
	
                  Section
                    10.

                	
                  Fees
                    and Expenses; Indemnification

                	
                  11

                
	
                  Section
                    11.

                	
                  Authority
                    To Administer Collateral

                	
                  11

                
	
                  Section
                    12.

                	
                  Limitation
                    on Duty in Respect of Collateral

                	
                  12

                
	
                  Section
                    13.

                	
                  General
                    Provisions Concerning the Agent

                	
                  12

                
	
                  Section
                    14.

                	
                  Termination
                    Of Transaction Liens; Release Of Collateral

                	
                  13

                
	
                  Section
                    15.

                	
                  Notices

                	
                  14

                
	
                  Section
                    16.

                	
                  No
                    Implied Waivers; Remedies Not Exclusive

                	
                  14

                
	
                  Section
                    17.

                	
                  Successors
                    And Assigns

                	
                  14

                
	
                  Section
                    18.

                	
                  Amendments
                    And Waivers

                	
                  15

                
	
                  Section
                    19.

                	
                  Choice
                    Of Law

                	
                  15

                
	
                  Section
                    20.

                	
                  Waiver
                    Of Jury Trial

                	
                  15

                
	
                  Section
                    21.

                	
                  Severability

                	
                  15

                


        

        


        


        


        SCHEDULES

         

        Schedule
          1(a)  Pledgor
          Information

        Schedule
          1(b)  Prior
          Organizational Names 

        Schedule
          1(c)  Changes
          in Corporate Identity; Other Names

        Schedule
          2

        Part
          A: Chief
          Executive Office

        Part
          B: Location
          of Books

        Part
          C: Other
          Places of Businesses

        Part
          D: Prior
          Locations Maintained by the Pledgor

        Schedule
          3  Equity
          Interests Owned by the Pledgor

        Schedule
          4  Filing
          Office

        


        



        
          
            
              i

            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        PLEDGE
          AGREEMENT

         

        This
          PARENT PLEDGE AGREEMENT dated as of March 1, 2006 (as
          amended, amended and restated, supplemented or otherwise modified from
          time to
          time in accordance with the provisions hereof, this “Agreement”),
          by
          and among
          SOUTHERN UNION COMPANY, a Delaware corporation (the “Pledgor”),
          as
          pledgor,
          in
          favor of LEHMAN COMMERCIAL PAPER INC., as administrative agent (in such
          capacity, the “Agent”)
          on
          behalf of the Secured Parties (as defined in the Bridge Loan Agreement
          referred
          to below), as pledgee.

         

        WHEREAS,
          the Pledgor, Enhanced System Services, Inc., a Delaware corporation
          (“ESSI”
and
          together with the Pledgor, the “Borrowers”
and
          each, a “Borrower”),
          the
          Banks party thereto and the Agent are parties to the Bridge Loan Agreement
          dated
          as of March 1, 2006 (as the same may be amended, modified, increased,
          supplemented and/or restated from time to time, the “Bridge
          Loan Agreement”).

         

        WHEREAS,
          the Pledgor is willing to secure the Secured Obligations (defined below)
          by
          granting Liens on the Collateral (as defined below) as provided herein
          and in
          the other Collateral Documents.

         

        WHEREAS,
          it
          is a
          condition to the obligations of the Banks to make the Loans under the Bridge
          Loan Agreement that the Pledgor execute and deliver this Agreement.

         

        NOW,
          THEREFORE, in consideration of the foregoing and other good and valuable
          consideration, the receipt and sufficiency of which are hereby acknowledged,
          the
          parties hereto agree as follows:

         

        Section
          1.  Definitions

         

         

        (a)  Terms
          Defined in Bridge Loan Agreement.
          Terms
          defined in the Bridge Loan Agreement and not otherwise defined in subsection
          (b)
          or (c) of this Section have, as used herein, the respective meanings provided
          for therein.

         

        (b)  Terms
          Defined in UCC.
          As
          used
          herein, each of the following terms has the meaning specified in the
          UCC:

         

        
          	
                  Term

                   

                	
                  UCC

                   

                
	
                  Instrument

                	
                  9-102

                
	
                  Investment
                    Property

                	
                  9-102

                
	
                  Proceeds

                	
                  9-102

                
	
                  Securities
                    Intermediary

                	
                  8-102

                
	
                  Security

                	
                  8-102
                    and 8-103

                
	
                  Security
                    Entitlement

                	
                  8-102

                


        

        


        (c)  Additional
          Definitions.
          The
          following additional terms, as used herein, have the following
          meanings:

         

        “Agreement”
has
          the
          meaning set forth in the preamble hereto.

         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        “Borrowers”
or
          “Borrower”
has
          the
          meaning set forth in the recitals hereto.

         

        “Bridge
          Loan Agreement”
has
          the
          meaning set forth in the recitals hereto.

         

        “Collateral”
means,
          collectively, (i) the Pledged Securities, (ii) all Distributions with respect
          to
          such Pledged Securities, (iii) all Investment Property constituting,
          representing or evidencing any of the foregoing in clauses (i) and (ii)
          above,
          and (iv) all Proceeds of the foregoing in clauses (i), (ii) and (iii)
          above.

         

        “Control”
has
          the
          meaning specified in UCC Section 8-106.

         

        “Distributions”
means,
          collectively, with respect to the Pledgor, all dividends, cash, options,
          warrants, rights, instruments, distributions, returns of capital or principal,
          income, interest, profits and other property, interests (debt or equity)
          or
          proceeds, including as a result of a split, revision, reclassification
          or other
          like change of the Pledged Securities, from time to time received, receivable
          or
          otherwise distributed to the Pledgor in respect of or in exchange for any
          or all
          of the Pledged Securities.

         

        “Equity
          Interest”
means
          (i) in the case of a corporation, any shares of its capital stock, (ii)
          in the
          case of a limited liability company, any membership interest therein, (iii)
          in
          the case of a partnership, any partnership interest (whether general or
          limited)
          therein, (iv) in the case of any other business entity, any participation
          or
          other interest in the equity or profits thereof, (v) any warrant, option
          or
          other right to acquire any Equity Interest described in this definition
          or (vi)
          any Security Entitlement in respect of any Equity Interest described in
          this
          definition.

         

        “Issuer
          Control Agreement”
means
          an Issuer Control Agreement in form and substance satisfactory to the
          Agent.

         

        “LLC
          Interest”
means
          a
          membership interest or similar interest in a limited liability
          company.

         

        “Location”
means,
          with respect to the Pledgor, the jurisdiction in which the Pledgor is located
          for purposes of Section 9-301 of the UCC.

         

        “Opinion
          of Counsel”
means
          a
          written opinion of legal counsel (who may be counsel to a Pledgor or other
          counsel, in either case approved by the Agent) addressed and delivered
          to the
          Agent.

         

        “Organizational
          Documents”
means,
          with respect to any Person, (i) in the case of any corporation, the
          certificate of incorporation and by-laws (or similar documents) of such
          person,
          (ii) in the case of any limited liability company, the certificate of
          formation and operating agreement (or similar documents) of such Person,
          (iii) in the case of any limited partnership, the certificate of formation
          and limited partnership agreement (or similar documents) of such Person,
          (iv) in the case of any general partnership, the partnership agreement (or
          similar document) of such Person and (v) in any other case, the functional
          equivalent of the foregoing.

         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        “own”
refers
          to the possession of sufficient rights in property to grant a security
          interest
          therein as contemplated by UCC Section 9-203, and “acquire”
refers
          to the acquisition of any such rights.

         

        “Partnership
          Interest”
means
          a
          partnership interest, whether general or limited.

         

        “Pledged
          Securities”
means,
          collectively, with respect to the Pledgor, (i) all issued and outstanding
          Equity
          Interests of the issuer set forth on Schedule
          3
          as being
          owned by the Pledgor and all options, warrants, rights, agreements and
          additional Equity Interests of whatever class of any such issuer acquired
          by the
          Pledgor (including by issuance), together with all rights, privileges,
          authority
          and powers of the Pledgor relating to such Equity Interests in such issuer
          or
          under any Organizational Document of such issuer, and the certificates,
          instruments and agreements representing such Equity Interests and any and
          all
          interest of the Pledgor in the entries on the books of any financial
          intermediary pertaining to such Equity Interests, and (ii) all Equity Interests
          issued in respect of the Equity Interests referred to in clause (i) above
          upon
          any consolidation or merger of any issuer of such Equity Interests.

         

        “Pledgor”
has
          the
          meaning set forth in the preamble hereto.

         

        “Post-Petition
          Interest”
means
          any interest that accrues after the commencement of any case, proceeding
          or
          other action relating to the bankruptcy, insolvency or reorganization of
          any one
          or more of the Borrowers (or would accrue but for the operation of applicable
          bankruptcy or insolvency laws), whether or not such interest is allowed
          or
          allowable as a claim in any such proceeding.

         

        “Related
          Parties”
means,
          with respect to any specified Person, such Person’s Affiliates and the
          respective directors, officers, employees, agents and advisors of such
          Person
          and its Affiliates.

         

        “Secured
          Obligations”
means
          all Obligations, including, without limitation, all principal of all Loans
          outstanding from time to time under the Bridge Loan Agreement, all interest
          (including Post-Petition Interest) on the Loans and all other amounts now
          or
          hereafter payable by the Borrowers pursuant to the Loan Documents.

         

        “Transaction
          Liens”
means
          the Liens granted by the Pledgor under the Collateral Documents.

         

        “UCC”
means
          the Uniform Commercial Code as in effect from time to time in the State
          of New
          York; provided
          that, if
          perfection or the effect of perfection or non-perfection or the priority
          of any
          Transaction Lien on any Collateral is governed by the Uniform Commercial
          Code as
          in effect in a jurisdiction other than New York, “UCC” means the Uniform
          Commercial Code as in effect from time to time in such other jurisdiction
          for
          purposes of the provisions hereof relating to such perfection, effect of
          perfection or non-perfection or priority.

         

        (d)  Terms
          Generally.
          The
          definitions of terms herein (including those incorporated by reference
          to the
          UCC or to another document) apply equally to the singular and plural forms
          of
          the terms defined. Whenever the context may require, any pronoun includes
          the
          corresponding masculine, feminine and neuter forms. The words “include”,
          “includes”
and
          “including”
          

         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        shall
          be
          deemed to be followed by the phrase “without
          limitation”.
          The
          word “will”
shall
          be construed to have the same meaning and effect as the word “shall”.
          Unless
          the context requires otherwise, (i) any definition of or reference to the
          Bridge Loan Agreement or any other agreement, instrument or other document
          herein shall be construed as referring to such agreement, instrument or
          other
          document as from time to time amended, supplemented or otherwise modified
          (subject to any restrictions on such amendments, supplements or modifications
          set forth herein), (ii) any reference herein to any Person shall be
          construed to include such Person’s successors and assigns, (iii) the words
“herein”,
          “hereof”
and
          “hereunder”,
          and
          words of similar import, shall be construed to refer to this Agreement
          in its
          entirety and not to any particular provision hereof, (iv) all references
          herein to Sections and Schedules shall be construed to refer to Sections
          of, and
          Schedules to, this Agreement and (v) the word “property”
shall
          be construed to refer to any and all tangible and intangible assets and
          properties, including cash, securities, accounts and contract
          rights.

         

        Section
          2.  Grant
          Of Transaction Liens

         

        .

         

        (a)  The
          Pledgor, in order to secure the Secured Obligations, hereby pledges and
          grants
          to the Agent for the benefit of the Secured Parties a lien on and a security
          interest in all of the right, title and interest of the Pledgor in, to
          and under
          the Collateral, whether now owned or existing or hereafter acquired or
          arising
          and wherever located.

         

        (b)  The
          Transaction Liens are granted as security only and shall not subject the
          Agent
          or any other Secured Party to, or transfer or in any way affect or modify,
          any
          obligation or liability of the Pledgor with respect to any of the Collateral
          or
          any transaction in connection therewith.

         

        (c)  This
          Agreement shall create a continuing security interest in and Lien on the
          Collateral.

         

        Section
          3.  General
          Representations And Warranties

         

        The
          Pledgor represents and warrants that:

         

        (a)  (i)The
          Pledgor is duly organized, validly existing and in good standing under
          the laws
          of the jurisdiction identified as its jurisdiction of organization in
Schedule
          1(a).
          Schedule
          1(a)
          accurately sets forth (x) the form of organization of the Pledgor and (y)
          whether the Pledgor is a “registered organization” within the meaning of the UCC
          and, if it is, its organizational identification number (if any).

         

        (ii) Set
          forth
          in
Schedule
          1(b)
          is any
          other corporate or organizational names of the Pledgor has had in the past
          five
          years, together with the date of the relevant change.

         

        (iii) Set
          forth
          in Schedule
          1(c)
          is a
          list of all other names (including trade names or similar appellations)
          used by
          the Pledgor, or any other business or organization to which the Pledgor
          became
          the successor by merger, consolidation, acquisition, change in form, nature
          or
          jurisdiction of organization or otherwise, at any time during the past
          five
          years. Also set forth in Schedule 1(c)
          is the
          information required by this Section 3(a) for any other business or
          organization to which the Pledgor became the successor by merger, consolidation,
          acquisition, change in form, nature or jurisdiction of organization


         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        or
          otherwise, at any time during the past five years. Except as set forth
          in
Schedule
          1(c),
          the
          Pledgor has not changed its jurisdiction of organization at any time during
          the
          past four months.

         

        (b)  The
          chief
          executive office of the Pledgor is located at the address set forth in
          Part
          A
          of
Schedule
          2.
          Set
          forth in Part
          B
of
          Schedule
          2
          are all
          locations where the Pledgor maintains any books or records relating to
          any of
          the Collateral. Set forth in Part
          C
of
          Schedule
          2
          hereto
          are all the other places of business of the Pledgor. Set forth in Part
          D
          of
Schedule
          2
          are the
          locations or places of business previously maintained by the Pledgor at
          any time
          during the past five years.

         

        (c)  Schedule
          3
          lists
          all Equity Interests in Panhandle Eastern owned by the Pledgor as of the
          Closing
          Date. The Pledgor holds all such Equity Interests directly and not through
          a
          Subsidiary, a Securities Intermediary or any other Person.

         

        (d)  The
          Pledgor has good and marketable title to, owns and has rights in all its
          Collateral (subject to exceptions that are, in the aggregate, not material),
          free and clear of any and all Liens other than the Transaction
          Liens.

         

        (e)  All
          shares of capital stock or other interest included in such Pledged Securities
          (including shares of capital stock in respect of which the Pledgor owns
          a
          Security Entitlement) have been duly authorized and validly issued and
          are fully
          paid and non-assessable. None of such Pledged Securities is subject to
          any
          option to purchase or similar right of any Person.

         

        (f)  The
          Pledgor has not performed any acts that might prevent the Agent from enforcing
          any of the provisions of the Collateral Documents or that would limit the
          Agent
          in any such enforcement. No financing statement, security agreement, mortgage
          or
          similar or equivalent document or instrument covering all or part of the
          Collateral owned by the
          Pledgor
          is on file or of record in any jurisdiction in which such filing or recording
          would be effective to perfect or record a Lien on such Collateral, except
          financing statements, mortgages or other similar or equivalent documents
          with
          respect to the Transaction Liens. After the Closing Date, no Collateral
          owned by
the
          Pledgor
          will be in the possession or under the Control of any other Person having
          a
          claim thereto or security interest therein, other than a Permitted
          Lien.

         

        (g)  The
          Transaction Liens on all Collateral owned by the Pledgor (i) have been
          validly created, (ii) will attach to each item of such Collateral on the
          Closing Date (or, if the Pledgor first obtains rights thereto on a later
          date,
          on such later date) and (iii) when so attached, will secure all the Secured
          Obligations.

         

        (h)  Within
          60
          days after the Closing Date, the Pledgor will furnish to the Agent a file
          search
          report from the UCC filing office applicable to its Location, showing the
          filing
          made at such filing office to perfect the Transaction Liens on its
          Collateral.

         

        (i)  When
          UCC
          financing statements have been filed in the offices specified in Schedule
          4,
          the
          Transaction Liens will constitute perfected security interests in the Collateral
          owned by the Pledgor to the extent that a security interest therein may
          be
          perfected by filing pursuant to the UCC, prior to all Liens and rights
          of others
          therein. Except for the filing of such UCC financing statements, no
          registration, recordation or filing with any governmental body, 

         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        agency
          or
          official is required in connection with the execution or delivery of the
          Collateral Documents or is necessary for the validity or enforceability
          thereof
          or for the perfection or due recordation of the Transaction Liens or for
          the
          enforcement of the Transaction Liens.

         

        (j)  As
          of the
          Closing Date, no Collateral is evidenced by an Instrument or a
          certificate.

         

        Section
          4.  Further
          Assurances; General Covenants

         

        The
          Pledgor covenants as follows:

         

        (a)  The
          Pledgor will, from time to time, at the Pledgor’s expense, execute, deliver,
          file and record any statement, assignment, instrument, document, agreement
          or
          other paper and take any other action (including any filing of financing
          or
          continuation statements under the UCC) that from time to time may be necessary
          or desirable, or that the Agent may request, in order to:

         

        (i)  create,
          preserve, perfect, confirm or validate the Transaction Liens on the
          Collateral;

         

        (ii)  in
          the
          case of Pledged Securities constituting Investment Property that is included
          in
          the Collateral, cause the Agent to have Control thereof;

         

        (iii)  enable
          the Agent and the other Secured Parties to obtain the full benefits of
          the
          Collateral Documents; or

         

        (iv)  enable
          the Agent to exercise and enforce any of its rights, powers and remedies
          with
          respect to any of the Collateral.

         

        To
          the
          extent permitted by applicable law, the Pledgor authorizes the Agent to
          execute
          and file such financing statements or continuation statements without the
          Pledgor’s signature appearing thereon. The Pledgor agrees that a carbon,
          photographic, photostatic or other reproduction of this Agreement or of
          a
          financing statement is sufficient as a financing statement. The Pledgor
          hereby
          appoints the Agent its attorney-in-fact to execute and file all filings
          required
          or so requested for the foregoing purposes, all acts of such attorney being
          hereby ratified and confirmed; and such power, being coupled with an interest,
          shall be irrevocable until all the Transaction Liens granted by the Pledgor
          terminate pursuant to Section 14. The Pledgor will pay the costs of, or
          incidental to, any recording or filing of any financing or continuation
          statements or other documents recorded or filed pursuant hereto.

         

        (b)  The
          Pledgor will not (i) change its name or organizational structure,
          (ii)  change its Location or (iii)  become bound, as provided in UCC
          Section 9-203(d) or otherwise, by a security agreement entered into by
          another
          Person, unless it shall have given the Agent prior notice thereof and delivered
          an Opinion of Counsel with respect thereto in accordance with
          Section 4(c).

         

        (c)  At
          least
          30 days before it takes any action contemplated by Section 4(b), the
          Pledgor will, at the its’ expense, cause to be delivered to the Agent an Opinion
          of Counsel, in form and substance satisfactory to the Agent, as to such
          matters
          that the Agent may reasonably 

         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        request
          relating to the perfection or priority of the Transaction Lien on any Collateral
          to be owned by the Pledgor after it takes such action.

         

        (d)  The
          Pledgor shall comply in all respects with the provisions of Section 10.19
          of the
          Bridge Loan Agreement.

         

        (e)  The
          Pledgor will, promptly upon request, provide to the Agent all information
          and
          evidence concerning the Collateral that the Agent may reasonably request
          from
          time to time to enable it to enforce the provisions of the Collateral
          Documents.

         

        (f)  From
          time
          to time upon request by the Agent, the Pledgor will, at its’ expense, cause to
          be delivered to the Secured Parties an Opinion of Counsel satisfactory
          to the
          Agent as to such matters relating to the transactions contemplated hereby
          as the
          Agent may reasonably request.

         

        (g)  If
          at any
          time any Collateral shall be evidenced by an Instrument, the Pledgor owning
          the
          same shall cause the same promptly, and in any event within ten days, to
          be
          delivered to the Agent to be held in pledge hereunder, together with any
          endorsements or instruments of transfer that the Agent may reasonably
          request.

         

        (h)  The
          Pledgor shall, at its own cost and expense, defend title to the Collateral
          and
          the security interest therein and Lien thereon granted to the Agent and
          the
          priority thereof against all claims and demands of all Persons, at their
          own
          cost and expense, at any time claiming any interest therein adverse to
          the Agent
          or any other Secured Party other than Transactional Liens. There is no
          agreement, order, judgment or decree, and the Pledgor shall not enter into
          any
          agreement or take any other action, that would restrict the transferability
          of
          any of the Pledged Collateral or otherwise impair or conflict with the
          Pledgor’s
          obligations or the rights of the Agent hereunder.

         

        Section
          5.  Investment
          Property

         

        The
          Pledgor represents, warrants and covenants as follows:

         

        (a)  Certificated
          Securities.
          Not
          later than the Closing Date, the Pledgor will deliver to the Agent as Collateral
          hereunder all certificates or instruments representing or evidencing any
          of the
          Collateral then owned by the Pledgor. Thereafter, whenever the Pledgor
          acquires
          any other certificate representing or evidencing any Collateral, the Pledgor
          will immediately deliver such certificate or instrument to the Agent as
          Collateral hereunder.

         

        (b)  Uncertificated
          Securities.
          Not
          later than the Closing Date, the Pledgor will enter into (and cause the
          relevant
          issuer to enter into) an Issuer Control Agreement in respect of each Pledged
          Security then owned by the Pledgor that constitutes Collateral and is not
          evidenced or represented by a certificate or instrument and deliver such
          Issuer
          Control Agreement to the Agent (which shall enter into the same). Thereafter,
          whenever the Pledgor acquires any other Pledged Security that constitutes
          Collateral and is not evidenced or represented by a certificate or instrument,
          the Pledgor will enter into (and cause the relevant issuer to enter into)
          an
          Issuer Control Agreement in respect of such Pledged Security and deliver
          such
          Issuer Control Agreement to the Agent (which shall enter into the
          same).

         

        (c)  Perfection
          as to Certificated Securities.
          When the
          Pledgor delivers the certificate or instrument representing any Pledged
          Security
          owned by it and that constitutes Collateral to the Agent and complies with
          Sections 5(a) and 5(e) in connection with such delivery, (i) the
          Transaction Lien on such Pledged Security will be perfected, subject to
          no prior
          Liens or rights of others, (ii) the Agent will have Control of such Pledged
          Security and (iii) the Agent will be a protected purchaser (within the
          meaning of UCC Section 8-303) thereof.

         

        (d)  Perfection
          as to Uncertificated Securities.
          When
          the Pledgor, the Agent and the issuer of any Pledged Security owned by
          the
          Pledgor and that constitutes Collateral and is not represented or evidenced
          by a
          certificate or instrument enter into an Issuer Control Agreement with respect
          thereto, (i) the Transaction Lien on such Pledged Security will be
          perfected, subject to no prior Liens or rights of others, (ii) the Agent
          will have Control of such Pledged Security and (iii) the Agent will be a
          protected purchaser (within the meaning of UCC Section 8-303)
          thereof.

         

        (e)  Delivery
          of Pledged Certificates.
          All
          certificates or instruments representing or evidencing any Pledged Security
          that
          constitutes Collateral, when delivered to the Agent, will be in suitable
          form
          for transfer by delivery, or accompanied by duly executed instruments of
          transfer or assignment in blank, with signatures appropriately guaranteed,
          all
          in form and substance satisfactory to the Agent.

         

        (f)  Communications.
          The
          Pledgor will promptly give to the Agent copies of any notices and other
          communications received by it with respect to any Collateral registered
          in the
          name of the Pledgor or its nominee.

         

        Section
          6.  Transfer
          of Record Ownership

         

        At
          any
          time when an Event of Default shall have occurred and be continuing, the
          Agent
          may (and to the extent that action by it is required, the Pledgor, if directed
          to do so by the Agent, will as promptly as practicable)
          cause
          each of the Pledged Securities (or any portion thereof specified in such
          direction) to be transferred of record into the name of the Agent or its
          nominee. The Pledgor will take any and all actions reasonably requested
          by the
          Agent to facilitate compliance with this Section. If
          the
          provisions of this Section are implemented, Section 5(c) shall not
          thereafter apply to any Pledged Security that is registered in the name
          of the
          Agent or its nominee.
          The
          Agent will promptly give to the Pledgor copies of any notices and other
          communications received by the Agent with respect to Pledged Securities
          registered in the name of the Agent or its nominee.

         

        Section
          7.  Right
          to Vote Securities

         

         

         

        (a)  Unless
          an
          Event of Default shall have occurred and be continuing and the Agent shall
          have
          notified the Pledgor that the Pledgor’s rights under this Section are suspended,
          the Pledgor will have the right, from time to time, to vote and to give
          consents, ratifications and waivers with respect to any Pledged Security
          owned
          by it, and the Agent will, upon receiving a written request from the Pledgor,
          deliver to the Pledgor or as specified in such request such proxies, powers
          of
          attorney, consents, ratifications and waivers in respect of any such Pledged
          Security that is registered in the name of the Agent or its nominee as
          shall be
          specified in such request and be in form and substance satisfactory to
          the
          Agent. Unless an Event of Default shall have occurred and be continuing,
          the
          Agent will have no right to take any action which the owner of 

         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        any
          Pledged Securities constituting Partnership Interest or LLC Interest that
          is
          part of the Collateral is entitled to take with respect thereto, except
          the
          right to receive payments and other distributions to the extent provided
          herein.

         

        (b)  If
          an
          Event of Default shall have occurred and be continuing, the Agent will
          have the
          right to the extent permitted by law (and, in the case of Pledged Securities
          constituting Partnership Interests or LLC Interests that are part of the
          Collateral, by the relevant partnership agreement, limited liability company
          agreement, operating agreement or other governing document) to vote, to
          give
          consents, ratifications and waivers and to take any other action with respect
          to
          any Investment Property or Pledged Securities that constitute Collateral,
          with
          the same force and effect as if the Agent were the absolute and sole owner
          thereof, and the Pledgor will take all such action as the Agent may reasonably
          request from time to time to give effect to such right.

         

        Section
          8.  Remedies
          Upon Event of Default

         

         

        (a)  If
          an
          Event of Default shall have occurred and be continuing, the Agent may exercise
          (or cause its sub-agents to exercise) any or all of the remedies available
          to it
          (or to such sub-agents) under the Collateral Documents.

         

        (b)  Without
          limiting the generality of the foregoing, if an Event of Default shall
          have
          occurred and be continuing, the Agent may exercise on behalf of the Secured
          Parties all the rights of a secured party under the UCC (whether or not
          in
          effect in the jurisdiction where such rights are exercised) with respect
          to any
          Collateral and, in addition, the Agent may, without being required to give
          any
          notice, except as herein provided or as may be required by mandatory provisions
          of law, withdraw all cash held by it as Collateral and apply such cash
          as
          provided in Section 9 and, if there shall be no such cash or if such cash
          shall
          be insufficient to pay all the Secured Obligations in full, sell, lease,
          license
          or otherwise dispose of the Collateral or any part thereof. Notice of any
          such
          sale or other disposition shall be given to the Pledgor as required by
          Section 11.

         

        Section
          9.  Application
          Of Proceeds

         

         

        (a)  If
          an
          Event of Default shall have occurred and be continuing, the Agent may apply
          (i) any cash then held by it as Collateral and (ii) the proceeds of
          any sale or other disposition of all or any part of the Collateral, in
          the
          following order of priorities:

         

        first,
          to pay
          the expenses of such sale or other disposition, including reasonable
          compensation to agents of and counsel for the Agent, and all expenses,
          liabilities and advances incurred or made by the Agent in connection with
          the
          Collateral Documents, and any other amounts then due and payable to the
          Agent
          pursuant to Section 11 or pursuant to Section 13.3 or 13.16 of the Bridge
          Loan Agreement;

         

        second,
          to pay
          the unpaid principal of the Secured Obligations ratably until payment in
          full of
          the principal of all Secured Obligations shall have been made;

         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        third,
          to pay
          ratably all interest (including Post-Petition Interest) on the Secured
          Obligations payable under the Bridge Loan Agreement and any Notes, until
          payment
          in full of all such interest and fees shall have been made;

         

        fourth,
          to pay
          all other Secured Obligations ratably until payment in full of all such
          other
          Secured Obligations shall have been made; and

         

        finally,
          to pay
          to the Pledgor, or as a court of competent jurisdiction may direct, any
          surplus
          then remaining from the proceeds of the Collateral owned by it.

         

        (b)  In
          making
          the payments and allocations required by this Section, the Agent may rely
          upon
          information supplied to it pursuant to Section 13(c). All distributions
          made by the Agent pursuant to this Section shall be final (except in the
          event
          of manifest error) and the Agent shall have no duty to inquire as to the
          application by any Secured Party of any amount distributed to it.

         

        Section
          10.  Fees
          and Expenses; Indemnification

         

         

        (a)  The
          Pledgor will forthwith upon demand pay to the Agent:

         

        (i)  the
          amount of any taxes that the Agent may have been required to pay by reason
          of
          the Transaction Liens or to free any Collateral from any other Lien
          thereon;

         

        (ii)  the
          amount of any and all reasonable out-of-pocket expenses, including transfer
          taxes and reasonable fees and expenses of counsel and other experts, that
          the
          Agent may incur in connection with (x) the administration or enforcement
          of the
          Collateral Documents, including such expenses as are incurred to preserve
          the
          value of the Collateral or the validity, perfection, rank or value of any
          Transaction Lien, (y) the collection, sale or other disposition of any
          Collateral or (z) the exercise by the Agent of any of its rights or powers
          under
          the Collateral Documents;

         

        (iii)  the
          amount of any fees that the Pledgor shall have agreed in writing to pay
          to the
          Agent and that shall have become due and payable in accordance with such
          written
          agreement; and

         

        (iv)  the
          amount required to indemnify the Agent for, or hold it harmless and defend
          it
          against, any loss, liability or expense (including the reasonable fees
          and
          expenses of its counsel and any experts or sub-agents appointed by it hereunder)
          incurred or suffered by the Agent in connection with the Collateral Documents,
          except to the extent that such loss, liability or expense arises from the
          Agent’s gross negligence or willful misconduct or a breach of any duty that the
          Agent has under this Agreement (after giving effect to Sections 12 and
          13).

         

        Any
          such
          amount not paid to the Agent on demand will bear interest for each day
          thereafter until paid at a rate per annum equal to the sum of 2% plus the
          rate
          applicable to Alternate Base Rate Loans for such day.

         

        (b)  If
          any
          transfer tax, documentary stamp tax or other tax is payable in connection
          with
          any transfer or other transaction provided for in the Collateral Documents,
          the
          Pledgor will pay such tax and provide any required tax stamps to the Agent
          or as
          otherwise required by law.

         

        Section
          11.  Authority
          To Administer Collateral

         

        The
          Pledgor irrevocably appoints the Agent its true and lawful attorney, with
          full
          power of substitution, in the name of the Pledgor, any Secured Party or
          otherwise, for the sole use and benefit of the Secured Parties, but at
          the
          Pledgor’s expense, to the extent permitted by law to exercise, at any time and
          from time to time while an Event of Default shall have occurred and be
          continuing, all or any of the following powers with respect to all or any
          of the
          Pledgor’s Collateral (but the Agent shall not be obligated to and shall have no
          liability to the Pledgor or any third party for failure to so do or take
          action):

         

        (a)  to
          demand, sue for, collect, receive and give acquittance for any and all
          monies
          due or to become due upon or by virtue thereof;

         

        (b)  to
          settle, compromise, compound, prosecute or defend any action or proceeding
          with
          respect thereto;

         

        (c)  to
          sell,
          lease, license or otherwise dispose of the same or the proceeds or avails
          thereof, as fully and effectually as if the Agent were the absolute owner
          thereof;

         

        (d)  to
          extend
          the time of payment of any or all thereof and to make any allowance or
          other
          adjustment with reference thereto; and 

         

        (e)  to
          take
          any other action and to execute any instrument consistent with the terms
          of the
          Bridge Loan Agreement and the Collateral Documents which the Agent may
          deem
          necessary or advisable to accomplish the purposes hereof.

         

        Section
          12.  Limitation
          on Duty in Respect of Collateral

         

        .
          Beyond
          the exercise of reasonable care in the custody and preservation thereof,
          the
          Agent will have no duty as to any Collateral in its possession or control
          or in
          the possession or control of any sub-agent or bailee or any income therefrom
          or
          as to the preservation of rights against prior parties or any other rights
          pertaining thereto. The Agent will be deemed to have exercised reasonable
          care
          in the custody and preservation of the Collateral in its possession or
          control
          if such Collateral is accorded treatment substantially equal to that which
          it
          accords its own property, and will not be liable or responsible for any
          loss or
          damage to any Collateral, or for any diminution in the value thereof, by
          reason
          of any act or omission of any sub-agent or bailee selected by the Agent
          in good
          faith, except to the extent that such liability arises from the Agent’s gross
          negligence or willful misconduct.

         

        Section
          13.  General
          Provisions Concerning the Agent

         

         

        (a)  The
          provisions of Section 12 of the Bridge Loan Agreement shall inure to the
          benefit
          of the Agent, and shall be binding upon the Pledgor and all Secured Parties,
          in
          connection with this Agreement and the other Collateral Documents. Without
          limiting the generality of the foregoing, (i) the Agent shall not be subject
          to
          any fiduciary or other implied duties, regardless of whether an Event of
          Default
          has occurred and is continuing, (ii) the Agent shall not have any duty to
          take any discretionary action or exercise any discretionary powers, except
          discretionary 

         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        rights
          and powers expressly contemplated by the Collateral Documents that the
          Agent is
          required in writing to exercise by the Majority Banks (or such other number
          or
          percentage of the Banks as shall be necessary under the circumstances as
          provided in Section 13.2 of the Bridge Loan Agreement), and (iii) except as
          expressly set forth in the Loan Documents, the Agent shall not have any
          duty to
          disclose, and shall not be liable for any failure to disclose, any information
          relating to any of the Borrowers or any of their respective Subsidiaries
          or any
          other Loan Party that is communicated to or obtained by the bank serving
          as
          Agent or any of its Affiliates in any capacity. The Agent shall not be
          responsible for the existence, genuineness or value of any Collateral or
          for the
          validity, perfection, priority or enforceability of any Transaction Lien,
          whether impaired by operation of law or by reason of any action or omission
          to
          act on its part under the Collateral Documents. The Agent shall be deemed
          not to
          have knowledge of any Event of Default unless and until written notice
          thereof
          is given to the Agent by the Pledgor or a Secured Party.

         

        (b)  Sub-Agents
          and Related Parties.
          The
          Agent
          may perform any of its duties and exercise any of its rights and powers
          through
          one or more sub-agents appointed by it. The Agent and any such sub-agent
          may
          perform any of its duties and exercise any of its rights and powers through
          its
          Related Parties. The exculpatory provisions of Section 12 and this Section
          shall apply to any such sub-agent and to the Related Parties of the Agent
          and
          any such sub-agent.

         

        (c)  Information
          as to Secured Obligations and Actions by Secured Parties. For
          all
          purposes of the Collateral Documents, including determining the amounts
          of the
          Secured Obligations, or whether any action has been taken under any Loan
          Document, the Agent will be entitled to rely on information from (i) its
          own records for information as to the Banks, any of the Secured Obligations
          and
          actions taken by them, (ii) any Secured Party (or any trustee, agent or
          similar representative designated pursuant to (iii) to supply such
          information) for information as to any of the Secured Obligations and actions
          taken by it, to the extent that the Agent has not obtained such information
          from
          its own records, and (iv) the Pledgor or any of the Borrowers or any other
          Loan Party, to the extent that the Agent has not obtained information from
          the
          foregoing sources.

         

        (d)  Refusal
          to Act.
          The
          Agent may refuse to act on any notice, consent, direction or instruction
          from
          any Secured Parties or any agent, trustee or similar representative thereof
          that, in the Agent’s opinion, (i) is contrary to law or the provisions of
          any Collateral Document, (ii) may expose the Agent to liability (unless the
          Agent shall have been indemnified, to its reasonable satisfaction, for
          such
          liability by the Secured Parties that gave such notice, consent, direction
          or
          instruction) or (iii) is unduly prejudicial to Secured Parties not joining
          in such notice, consent, direction or instruction.

         

        (e)  Copies
          of Certain Notices.
          Within
          two Business Days after it receives or sends any notice referred to in
          this
          subsection, the Agent shall send to the Banks copies of any notice given
          by the
          Agent to the Pledgor, or received by it from the Pledgor, pursuant to Section
          8,
          9, 11 or 14.

         

        Section
          14.  Termination
          Of Transaction Liens; Release Of Collateral

         

         

        (a)  The
          Transaction Liens shall terminate when all Commitments under the Bridge
          Loan
          Agreement shall have expired or been terminated and all the Secured Obligations
          shall have been paid in full in cash (other than contingent indemnification
          obligations).

         

        (b)  At
          any
          time before the Transaction Liens terminate, the Agent may, at the written
          request of the Borrowers, (i) release any Collateral with the prior written
          consent of the Banks.

         

        (c)  Upon
          any
          termination of a Transaction Lien or release of Collateral, the Agent will,
          at
          the expense of the Pledgor, execute and deliver to the Pledgor such documents
          as
          the Pledgor shall reasonably request to evidence the termination of such
          Transaction Lien or the release of such Collateral, as the case may
          be.

         

        Section
          15.  Notices

         

        Each
          notice, request or other communication given to any party hereunder shall
          be
          given in accordance with Section 13.4 of the Bridge Loan Agreement.

         

        Section
          16.  No
          Implied Waivers; Remedies Not Exclusive

         

        No
          failure by the Agent or any Secured Party to exercise, and no delay in
          exercising and no course of dealing with respect to, any right or remedy
          under
          any Collateral Document shall operate as a waiver thereof; nor shall any
          single
          or partial exercise by the Agent or any Secured Party of any right or remedy
          under any Loan Document preclude any other or further exercise thereof
          or the
          exercise of any other right or remedy. The rights and remedies specified
          in the
          Loan Documents are cumulative and are not exclusive of any other rights
          or
          remedies provided by law.

         

        Section
          17.  Successors
          And Assigns

         

        .
          This
          Agreement is for the benefit of the Agent and the Secured Parties. If all
          or any
          part of any Secured Party’s interest in any Secured Obligation is assigned or
          otherwise transferred in accordance with the provisions of the Bridge Loan
          Agreement, the assignee’s or transferor’s rights hereunder, to the extent
          applicable to the obligation so transferred, shall be automatically transferred
          with such obligation. This Agreement shall be binding on the Pledgor and
          their
          respective successors and assigns;
          provided,
          however,
          that no
          Pledgor may assign any of its rights, interests or obligations herein without
          the prior written consent of the Agent and all the Banks.

         

        Section
          18.  Amendments
          And Waivers

         

        .
          Neither
          this Agreement nor any provision hereof may be waived, amended, modified
          or
          terminated except pursuant to an agreement or agreements in writing entered
          into
          by the Agent, with the consent of the Majority Banks, or, in the case of
          any
          such waiver, amendment or modification affecting the number of Banks required
          to
          release any of the Collateral, with the consent of all the Banks. No such
          waiver, amendment or modification shall be binding upon the Pledgor, except
          with
          its written consent.

         

        Section
          19.  Choice
          Of Law

         

        .
          This
          Agreement shall be construed in accordance with and governed by the laws
          of the
          State of New York, except as otherwise required by mandatory provisions
          of law
          and except to the extent that remedies provided by the laws of any jurisdiction
          other than the State of New York are governed by the laws of such
          jurisdiction.

         

        Section
          20.  Waiver
          Of Jury Trial

         

        .
          EACH
          PARTY HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
          ANY
          RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
          INDIRECTLY ARISING OUT OF OR RELATING TO ANY COLLATERAL DOCUMENT OR ANY
          

         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        TRANSACTION
          CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
          EACH
          PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
          ANY
          OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
          WOULD
          NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
          (B)
          ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
          ENTER
          INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
          CERTIFICATIONS IN THIS SECTION.

         

        Section
          21.  Severability

         

        .
          If any
          provision of any Collateral Document is invalid or unenforceable in any
          jurisdiction, then, to the fullest extent permitted by law, (i) the other
          provisions of the Collateral Documents shall remain in full force and effect
          in
          such jurisdiction and shall be liberally construed in favor of the Agent
          and the
          Secured Parties in order to carry out the intentions of the parties thereto
          as
          nearly as may be possible and (ii) the invalidity or unenforceability of
          such
          provision in such jurisdiction shall not affect the validity or enforceability
          thereof in any other jurisdiction.

         

        


         

        [Signature
          pages follow]

         

        


         


        
          
            
              


            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        IN
          WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
          executed by their respective authorized officers as of the day and year
          first
          above written.

         

         

        SOUTHERN
          UNION COMPANY, as the Pledgor

         

        By: /S/
          JULIE H. EDWARDS 

        Name:
          Julie H. Edwards 

        Title: Senior
          Vice President and Chief Financial Officer

         

        


         

         

        LEHMAN
          COMMERCIAL PAPER INC., 

         

        as
          Administrative Agent

         

        By: /S/
          LAURIE D. PERPER 

        Name:
          Laurie D. Perper 

        
          	 	
                  Title:

                	
                  Senior
                    Vice President

                


        

        


        


        


        


        


        


        


        


        


        


        


        [Signature
          Page to Parent Pledge Agreement]

        



        
          
            
              


            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        SCHEDULE
          1(a)

         

        PLEDGOR
          INFORMATION

         

        (as
          of the Closing Date)

         

        
          	
                   

                  Name
                    of Pledgor

                   

                	
                   

                   

                  Type
                    of

                   

                   

                  Organization

                   

                	
                   

                  Jurisdiction

                   

                   

                  of

                   

                   

                  Organization

                   

                	
                   

                  Registered

                   

                   

                  Organization/

                   

                   

                  Organizational
                    I.D. Number

                   

                
	
                  Southern
                    Union Company

                	
                  Corporation

                	
                  Delaware

                	
                  0318923

                


        

        



        
          
            
              


              


              


            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        SCHEDULE
          1(b)

         

        


        PRIOR
          ORGANIZATIONAL NAMES 

         

        
          	
                   

                  Pledgor

                   

                	
                   

                  Prior
                    Name

                   

                	
                   

                  Date
                    of Change

                   

                
	
                  Southern
                    Union Company

                	
                  NONE

                	
                  N/A

                


        

        



        
          
            
              


              


              


            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        SCHEDULE
          1(c)

         

        CHANGES
          IN CORPORATE IDENTITY; OTHER NAMES

         

        
          	
                   

                  Pledgor

                   

                	
                   

                  Corporate
                    Name of Entity

                   

                	
                   

                  Action

                   

                	
                   

                  Date
                    of Action

                   

                	
                   

                  State
                    of Formation

                   

                	
                   

                  List
                    of All Other Names Used During Past Five Years

                   

                
	
                  Southern
                    Union Company

                	
                   

                  Southern
                    Union Company

                   

                	
                   

                  Assumed
                    Name

                   

                	
                   

                  03/29/2001

                   

                	
                   

                  RI

                   

                	
                   

                  Fall
                    River Gas, a division of Southern Union Company

                   

                
	 	 	
                  Assumed
                    Name

                	
                   

                  10/11/2000

                   

                	
                   

                  MA

                   

                	
                   

                  Bristol
                    & Warren Gas 

                   

                   

                  Company

                   

                
	 	 	
                  Assumed
                    Name

                	
                   

                  06/05/2000

                   

                	
                   

                  PA

                   

                	
                   

                  Honesdale
                    Gas Company, a division of PG Energy

                   

                
	 	 	
                  Assumed
                    Name

                	
                   

                  09/13/1993

                   

                	
                   

                  MO

                   

                	
                   

                  Missouri
                    Gas Energy

                   

                
	 	 	
                   

                  Assumed
                    Name

                   

                	
                   

                  12/17/2001

                   

                	
                   

                  RI

                   

                	
                   

                  New
                    England Gas

                   

                
	 	 	
                   

                  Assumed
                    Name

                   

                	
                   

                  02/22/2002

                   

                	
                   

                  ME

                   

                	
                   

                  New
                    England Gas Company

                   

                
	 	 	
                   

                  Assumed
                    Name

                   

                	
                   

                  06/05/2000

                   

                	
                   

                  PA

                   

                	
                   

                  PG
                    Energy

                   

                
	 	 	
                   

                  Assumed
                    Name

                   

                	
                   

                  09/28/2000

                   

                	
                   

                  RI

                   

                	
                   

                  ProvEnergy

                   

                
	 	 	
                   

                  Assumed
                    Name

                   

                	
                   

                  09/28/2000

                   

                	
                   

                  RI

                   

                	
                   

                  ProvGas

                   

                
	 	 	
                   

                  Assumed
                    Name

                   

                	
                   

                  01/14/1991

                   

                	
                   

                  TX

                   

                	
                   

                  Southern
                    Union Gas Company

                   

                
	 	 	
                   

                  Assumed
                    Name

                   

                	
                   

                  08/05/2003

                   

                	
                   

                  NY

                   

                	
                   

                  Southern
                    Union Gas Company, Inc.

                   

                
	 	 	
                   

                  Assumed
                    Name

                   

                	
                   

                  09/28/2000

                   

                	
                   

                  RI

                   

                	
                   

                  The
                    Providence Gas Company

                   

                
	 	 	
                   

                  Assumed
                    Name

                   

                	
                   

                  03/29/2001

                   

                	
                   

                  RI

                   

                	
                   

                  Valley
                    Resources

                   

                


        

        


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

        


        



        
          
            
              


              


              


            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        SCHEDULE
          2

         

        PART
          A: CHIEF
          EXECUTIVE OFFICES

         

        
          	
                   

                  Pledgor

                   

                	
                   

                  Address

                   

                	
                   

                  State

                   

                
	
                  Southern
                    Union Company

                	
                  5444
                    Westheimer Road, Houston

                	
                  Texas

                


        

        


        


        PART
          B: LOCATION
          OF BOOKS

         

        
          	
                   

                  Pledgor

                   

                	
                   

                  Address

                   

                	
                   

                  State

                   

                
	
                  Southern
                    Union Company

                	
                  5444
                    Westheimer Road, Houston

                	
                  Texas

                


        

        


        


        PART
          C: OTHER
          PLACES OF BUSINESS

         

        
          	
                   

                  Pledgor

                   

                	
                   

                  Address

                   

                	
                   

                  State

                   

                
	
                  Southern
                    Union Company

                	
                  One
                    PEI Center, Wilkes-Barre

                  417
                    Lackawanna Ave., Scranton

                  3420
                    Broadway, Kansas City

                  100
                    Weybosset Street, Providence

                  767
                    Fifth Avenue, 50th
                    Floor, New York

                	
                  Pennsylvania

                  Pennsylvania

                  Missouri

                  Rhode
                    Island

                  New
                    York

                


        

        


        


        PART
          D: PRIOR
          LOCATIONS MAINTAINED BY THE PLEDGOR

         

        
          	
                   

                  Pledgor

                   

                	
                   

                  Address

                   

                	
                   

                  State

                   

                
	
                  Southern
                    Union Company

                	
                  504
                    Lavaca, Suite 800, Austin

                  221
                    West 6th Street, Suite 1950, Austin

                	
                  Texas

                  Texas

                


        

        



        
          
            
              


              


              


            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        SCHEDULE
          3

         

        


         

        EQUITY
          INTERESTS IN COLLATERAL OWNED BY THE
          PLEDGOR 

         

        (as
          of the Closing Date)

         

        
          	
                   

                  Issuer

                   

                	
                   

                  Jurisdiction

                   

                   

                  of

                   

                   

                  Organization

                   

                	
                   

                   

                   

                   

                  Owner
                    of

                   

                   

                  Equity
                    Interest

                   

                	
                   

                   

                   

                   

                  Percentage

                   

                   

                  Owned

                   

                	
                   

                  Number
                    of

                   

                   

                  Shares
                    or Units

                   

                
	
                  Panhandle
                    Eastern Pipe Line Company, LP

                	
                  Delaware

                	
                  Southern
                    Union Company

                	
                  100%
                    of the Limited 

                  Partnership
                    Interests

                	
                  N/A

                


        

        


         

        



        
          
            
              


              


              


            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        SCHEDULE
          4

         

        


         

        FILING
          OFFICE

         

        


         

        Secretary
          of State’s Office for the State of Delaware

         


      



      
        
          
            


          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      



      EXHIBIT
        D-2

       

      FORM
        OF SUG EAT ENTITIES PLEDGE AGREEMENT

       

      

        EXECUTION
          COPY

        


        PLEDGE
          AGREEMENT

        


        dated
          as of

        


        March
          1 , 2006

        


        among

        


        SUG
          EAT, INC.,

        


        and

        


        SUG
          EAT, LLC.,

        


        as
          Pledgors,

        


        and

        


        LEHMAN
          COMMERCIAL PAPER INC.,

        


        as
          Administrative Agent

        



        TABLE
          OF CONTENTS

         

        _________________

         

        Page

         

        
          	
                  Section
                    1.

                	
                  Definitions

                	
                  1

                
	
                  Section
                    2.

                	
                  Grant
                    Of Transaction Liens

                	
                  4

                
	
                  Section
                    3.

                	
                  General
                    Representations And Warranties

                	
                  5

                
	
                  Section
                    4.

                	
                  Further
                    Assurances; General Covenants

                	
                  6

                
	
                  Section
                    5.

                	
                  Investment
                    Property

                	
                  8

                
	
                  Section
                    6.

                	
                  Transfer
                    of Record Ownership

                	
                  9

                
	
                  Section
                    7.

                	
                  Right
                    to Vote Securities

                	
                  9

                
	
                  Section
                    8.

                	
                  Remedies
                    Upon Event of Default

                	
                  10

                
	
                  Section
                    9.

                	
                  Application
                    Of Proceeds

                	
                  10

                
	
                  Section
                    10.

                	
                  Fees
                    and Expenses; Indemnification

                	
                  11

                
	
                  Section
                    11.

                	
                  Authority
                    To Administer Collateral

                	
                  11

                
	
                  Section
                    12.

                	
                  Limitation
                    on Duty in Respect of Collateral

                	
                  12

                
	
                  Section
                    13.

                	
                  General
                    Provisions Concerning the Agent

                	
                  12

                
	
                  Section
                    14.

                	
                  Termination
                    Of Transaction Liens; Release Of Collateral

                	
                  13

                
	
                  Section
                    15.

                	
                  Notices

                	
                  14

                
	
                  Section
                    16.

                	
                  No
                    Implied Waivers; Remedies Not Exclusive

                	
                  14

                
	
                  Section
                    17.

                	
                  Successors
                    And Assigns

                	
                  14

                
	
                  Section
                    18.

                	
                  Amendments
                    And Waivers

                	
                  15

                
	
                  Section
                    19.

                	
                  Choice
                    Of Law

                	
                  15

                
	
                  Section
                    20.

                	
                  Waiver
                    Of Jury Trial

                	
                  15

                
	
                  Section
                    21.

                	
                  Severability

                	
                  15

                
	
                  Section
                    22.

                	
                  Matters
                    Pertaining to Pledgors.

                	
                  15

                


        

        


        


        SCHEDULES

         

        Schedule
          1(a)  Pledgor
          Information

        Schedule
          1(b)  Prior
          Organizational Names 

        Schedule
          1(c)  Changes
          in Corporate Identity; Other Names

        Schedule
          2

        Part
          A: Chief
          Executive Office

        Part
          B: Location
          of Books

        Part
          C: Other
          Places of Businesses

        Part
          D: Prior
          Locations Maintained by Pledgors

        Schedule
          3  Equity
          Interests Owned by each Pledgor

        Schedule
          4  Filing
          Office

        



        
          
            
              i

            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        PLEDGE
          AGREEMENT

         

        This
          PLEDGE AGREEMENT dated as of March 1, 2006 (as
          amended, amended and restated, supplemented or otherwise modified from
          time to
          time in accordance with the provisions hereof, this “Agreement”),
          by
          and among
          SUG
          EAT, INC., a Delaware corporation (“SUG
          EAT Inc.”)
          and
          SUG EAT, LLC, a Delaware limited liability company (“SUG
          EAT LLC”),
          as
          pledgors (SUG EAT Inc. and
          SUG
          EAT LLC are collectively referred to as the
          “Pledgors,”
and
          each, a “Pledgor”)
          in
          favor of LEHMAN COMMERCIAL PAPER INC., as administrative agent (in such
          capacity, the “Agent”)
          on
          behalf of the Secured Parties (as defined in the Bridge Loan Agreement
          referred
          to below), as pledgee.

         

        WHEREAS,
          Southern Union Company, a Delaware corporation (“Parent”),
          Enhanced System Services, Inc., a Delaware corporation and a wholly owned
          Subsidiary of the Parent (“ESSI”
and
          together with the Parent, the “Borrowers”),
          the
          Banks party thereto and the Agent are parties to the Bridge Loan Agreement
          dated
          as of March 1, 2006 (as the same may be amended, modified, increased,
          supplemented and/or restated from time to time, the “Bridge
          Loan Agreement”).

         

        WHEREAS,
          in order to effect the Sid Richardson Acquisition (defined in the Bridge
          Loan
          Agreement), ESSI shall make a loan in the aggregate principal amount of
          $1.6
          billion to the SUG EAT Entities (the “SUG
          EAT Entities Loan”)
          on the
          Closing Date (defined in the Bridge Loan Agreement) pursuant to the SUG
          EAT
          Entities Loan Documents (defined in the Bridge Loan Agreement). The proceeds
          of
          the SUG EAT Entities Loan shall be used by the SUG EAT Entities to fund
          the
          purchase price of the Sid Richardson Acquisition. As security for the SUG
          EAT
          Entities Loan, the SUG EAT Entities shall, on the Closing Date, grant to
          ESSI a
          second priority security interest in 100% of all issued and outstanding
          limited
          partner interests in SRES and REM and 100% of all issued and outstanding
          general
          partner interests in SRES, REM and Leapartners. 

         

        WHEREAS,
          each of Pledgors will receive substantial benefits from the Loans made
          to the
          Borrowers and each, therefore, is willing to secure the Secured Obligations
          (as
          defined below) by granting Liens on its respective Collateral (as defined
          below)
          as provided herein and in the other Collateral Documents.

         

        WHEREAS,
          it
          is a
          condition to the obligations of the Banks to make the Loans under the Bridge
          Loan Agreement that each Pledgor execute and deliver this
          Agreement.

         

        NOW,
          THEREFORE, in consideration of the foregoing and other good and valuable
          consideration, the receipt and sufficiency of which are hereby acknowledged,
          the
          parties hereto agree as follows:

         

        Section
          1.  Definitions

         

        .

         

        (a)  Terms
          Defined in Bridge Loan Agreement.
          Terms
          defined in the Bridge Loan Agreement and not otherwise defined in subsection
          (b)
          or (c) of this Section have, as used herein, the respective meanings provided
          for therein.

         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        


         

        (b)  Terms
          Defined in UCC.
          As
          used
          herein, each of the following terms has the meaning specified in the
          UCC:

         

        
          	
                  Term

                   

                	
                  UCC

                   

                
	
                  Instrument

                	
                  9-102

                
	
                  Investment
                    Property

                	
                  9-102

                
	
                  Proceeds

                	
                  9-102

                
	
                  Securities
                    Intermediary

                	
                  8-102

                
	
                  Security

                	
                  8-102
                    and 8-103

                
	
                  Security
                    Entitlement

                	
                  8-102

                


        

        


        (c)  Additional
          Definitions.
          The
          following additional terms, as used herein, have the following
          meanings:

         

        “Agreement”
has
          the
          meaning set forth in the preamble hereto.

         

        “Borrowers”
or
          “Borrower”
has
          the
          meaning set forth in the recitals hereto.

         

        “Bridge
          Loan Agreement”
has
          the
          meaning set forth in the recitals hereto.

         

        “Collateral”
means,
          collectively, (i) the Pledged Securities, (ii) all Distributions with respect
          to
          such Pledged Securities, (iii) all Investment Property constituting,
          representing or evidencing any of the foregoing in clauses (i) and (ii)
          above,
          and (iv) all Proceeds of the foregoing in clauses (i), (ii) and (iii)
          above.

         

        “Control”
has
          the
          meaning specified in UCC Section 8-106.

         

        “Distributions”
means,
          collectively, with respect to each Pledgor, all dividends, cash, options,
          warrants, rights, instruments, distributions, returns of capital or principal,
          income, interest, profits and other property, interests (debt or equity)
          or
          proceeds, including as a result of a split, revision, reclassification
          or other
          like change of the Pledged Securities, from time to time received, receivable
          or
          otherwise distributed to such Pledgor in respect of or in exchange for
          any or
          all of the Pledged Securities.

         

        “Equity
          Interest”
means
          (i) in the case of a corporation, any shares of its capital stock, (ii)
          in the
          case of a limited liability company, any membership interest therein, (iii)
          in
          the case of a partnership, any partnership interest (whether general or
          limited)
          therein, (iv) in the case of any other business entity, any participation
          or
          other interest in the equity or profits thereof, (v) any warrant, option
          or
          other right to acquire any Equity Interest described in this definition
          or (vi)
          any Security Entitlement in respect of any Equity Interest described in
          this
          definition.

         

        “Issuer
          Control Agreement”
means
          an Issuer Control Agreement in form and substance satisfactory to the
          Agent.

         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        “Location”
means,
          with respect to any Pledgor, the jurisdiction in which such Pledgor is
          located
          for purposes of Section 9-301 of the UCC.

         

        “LLC
          Interest”
means
          a
          membership interest or similar interest in a limited liability
          company.

         

        “Opinion
          of Counsel”
means
          a
          written opinion of legal counsel (who may be counsel to a Pledgor or other
          counsel, in either case approved by the Agent) addressed and delivered
          to the
          Agent.

         

        “Organizational
          Documents”
means,
          with respect to any Person, (i) in the case of any corporation, the
          certificate of incorporation and by-laws (or similar documents) of such
          person,
          (ii) in the case of any limited liability company, the certificate of
          formation and operating agreement (or similar documents) of such Person,
          (iii) in the case of any limited partnership, the certificate of formation
          and limited partnership agreement (or similar documents) of such Person,
          (iv) in the case of any general partnership, the partnership agreement (or
          similar document) of such Person and (v) in any other case, the functional
          equivalent of the foregoing.

         

        “own”
refers
          to the possession of sufficient rights in property to grant a security
          interest
          therein as contemplated by UCC Section 9-203, and “acquire”
refers
          to the acquisition of any such rights.

         

        “Parent”
has
          the
          meaning set forth in the recitals hereto.

         

        “Partnership
          Interest”
means
          a
          partnership interest, whether general or limited.

         

        “Pledged
          Securities”
means,
          collectively, with respect to each Pledgor, (i) all issued and outstanding
          Equity Interests of each issuer set forth on Schedule
          3
          as being
          owned or otherwise acquired by such Pledgor and all options, warrants,
          rights,
          agreements and additional Equity Interests of whatever class of any such
          issuer
          acquired by such Pledgor (including by issuance), together with all rights,
          privileges, authority and powers of such Pledgor relating to such Equity
          Interests in each such issuer or under any Organizational Document of such
          issuer, and the certificates, instruments and agreements representing such
          Equity Interests and any and all interest of such Pledgor in the entries
          on the
          books of any financial intermediary pertaining to such Equity Interests,
          and
          (ii) all Equity Interests issued in respect of the Equity Interests referred
          to
          in clause (i) above upon any consolidation or merger of any issuer of such
          Equity Interests.

         

        “Pledgors”
or
          “Pledgor”
has
          the
          meaning set forth in the preamble hereto.

         

        “Post-Petition
          Interest”
means
          any interest that accrues after the commencement of any case, proceeding
          or
          other action relating to the bankruptcy, insolvency or reorganization of
          any one
          or more of the Borrowers (or would accrue but for the operation of applicable
          bankruptcy or insolvency laws), whether or not such interest is allowed
          or
          allowable as a claim in any such proceeding.

         

        “Related
          Parties”
means,
          with respect to any specified Person, such Person’s Affiliates and the
          respective directors, officers, employees, agents and advisors of such
          Person
          and its Affiliates.

         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        “Secured
          Obligations”
means
          all Obligations, including, without limitation, all principal of all Loans
          outstanding from time to time under the Bridge Loan Agreement, all interest
          (including Post-Petition Interest) on such Loans and all other amounts
          now or
          hereafter payable by the Borrowers pursuant to the Loan Documents.

         

        “SUG
          EAT Inc.”
shall
          have the meaning set forth in the preamble hereto.

         

        “SUG
          EAT LLC”
shall
          have the meaning set forth in the preamble hereto.

         

        “Transaction
          Liens”
means
          the Liens granted by the Pledgors under the Collateral Documents.

         

        “UCC”
means
          the Uniform Commercial Code as in effect from time to time in the State
          of New
          York; provided
          that, if
          perfection or the effect of perfection or non-perfection or the priority
          of any
          Transaction Lien on any Collateral is governed by the Uniform Commercial
          Code as
          in effect in a jurisdiction other than New York, “UCC” means the Uniform
          Commercial Code as in effect from time to time in such other jurisdiction
          for
          purposes of the provisions hereof relating to such perfection, effect of
          perfection or non-perfection or priority.

         

        (d)  Terms
          Generally.
          The
          definitions of terms herein (including those incorporated by reference
          to the
          UCC or to another document) apply equally to the singular and plural forms
          of
          the terms defined. Whenever the context may require, any pronoun includes
          the
          corresponding masculine, feminine and neuter forms. The words “include”,
          “includes”
and
          “including”
shall
          be deemed to be followed by the phrase “without
          limitation”.
          The
          word “will”
shall
          be construed to have the same meaning and effect as the word “shall”.
          Unless
          the context requires otherwise, (i) any definition of or reference to the
          Bridge Loan Agreement or any other agreement, instrument or other document
          herein shall be construed as referring to such agreement, instrument or
          other
          document as from time to time amended, supplemented or otherwise modified
          (subject to any restrictions on such amendments, supplements or modifications
          set forth herein), (ii) any reference herein to any Person shall be
          construed to include such Person’s successors and assigns, (iii) the words
“herein”,
          “hereof”
and
          “hereunder”,
          and
          words of similar import, shall be construed to refer to this Agreement
          in its
          entirety and not to any particular provision hereof, (iv) all references
          herein to Sections and Schedules shall be construed to refer to Sections
          of, and
          Schedules to, this Agreement and (v) the word “property”
shall
          be construed to refer to any and all tangible and intangible assets and
          properties, including cash, securities, accounts and contract
          rights.

         

        Section
          2.  Grant
          Of Transaction Liens

         

        .

         

        (a)  Each
          Pledgor, in order to secure the Secured Obligations, hereby pledges and
          grants
          to the Agent for the benefit of the Secured Parties a lien on and a security
          interest in all of the right, title and interest of such Pledgor in, to
          and
          under the Collateral, whether now owned or existing or hereafter acquired
          or
          arising and wherever located.

         

        (b)  The
          Transaction Liens are granted as security only and shall not subject the
          Agent
          or any other Secured Party to, or transfer or in any way affect or modify,
          any
          obligation or liability of any Pledgor with respect to any of the Collateral
          or
          any transaction in connection therewith.

         

        (c)  This
          Agreement shall create a continuing security interest in and Lien on the
          Collateral.

         

        Section
          3.  General
          Representations And Warranties

         

        .
          Each
          Pledgor represents and warrants that:

         

        (a)  (i)Each
          Pledgor is duly organized, validly existing and in good standing under
          the laws
          of the jurisdiction identified as its jurisdiction of organization in
Schedule
          1(a).
          Schedule
          1(a)
          accurately sets forth (x) the form of organization of each Pledgor and
          (y)
          whether each Pledgor is a “registered organization” within the meaning of the
          UCC and, if it is, its organizational identification number (if
          any).

         

        (ii) Set
          forth
          in
Schedule
          1(b)
          is any
          other corporate or organizational names of each Pledgor has had in the
          past five
          years, together with the date of the relevant change.

         

        (iii) Set
          forth
          in Schedule
          1(c)
          is a
          list of all other names (including trade names or similar appellations)
          used by
          each Pledgor, or any other business or organization to which each
          Pledgor
          became the successor by merger, consolidation, acquisition, change in form,
          nature or jurisdiction of organization or otherwise, at any time during
          the past
          five years. Also set forth in Schedule 1(c)
          is the
          information required by this Section 3(a) for any other business or
          organization to which each Pledgor became the successor by merger,
          consolidation, acquisition, change in form, nature or jurisdiction of
          organization or otherwise, at any time during the past five years. Except
          as set
          forth in Schedule
          1(c),
          no
          Pledgor has changed its jurisdiction of organization at any time during
          the past
          four months.

         

        (b)  The
          chief
          executive office of each Pledgor is located at the address set forth in
          Part
          A
          of
Schedule
          2.
          Set
          forth in Part
          B
of
          Schedule
          2
          are all
          locations where each Pledgor maintains any books or records relating to
          any of
          the Collateral. Set forth in Part
          C
of
          Schedule
          2
          hereto
          are all the other places of business of each Pledgor. Set forth in Part
          D
          of
Schedule
          2
          are the
          locations or places of business previously maintained by each Pledgor at
          any
          time during the past five years.

         

        (c)  Schedule
          3
          lists
          all Equity Interests in SRES, REM and Leapartners owned by the respective
          Pledgor as of the Closing Date. Each Pledgor holds all such Equity Interests
          directly and not through a subsidiary, a Securities Intermediary or any
          other
          Person.

         

        (d)  Each
          Pledgor has good and marketable title to, owns and has rights in all its
          Collateral (subject to exceptions that are, in the aggregate, not material),
          free and clear of any and all Liens other than the Transaction Liens and,
          at any
          time prior to the consummation of the Acquired Business Equity Interests
          Transfer, the Permitted Subordinated Liens.

         

        (e)  All
          shares of capital stock or other interest included in such Pledged Securities
          (including shares of capital stock in respect of which each Pledgor owns
          a
          Security Entitlement) have been duly authorized and validly issued and
          are fully
          paid and non-assessable. None of such Pledged Securities is subject to
          any
          option to purchase or similar right of any Person other than the Call Option
          under the Qualified Exchange Accommodation Agreement.

         

        (f)  Each
          Pledgor has not performed any acts that might prevent the Agent from enforcing
          any of the provisions of the Collateral Documents or that would limit the
          Agent
          in any such enforcement. No financing statement, security agreement, mortgage
          or
          similar or equivalent document or instrument covering all or part of the
          Collateral owned by each Pledgor is on file or of record in any jurisdiction
          in
          which such filing or recording would be effective to perfect or record
          a Lien on
          such Collateral, except financing statements, mortgages or other similar
          or
          equivalent documents with respect to the Transaction Liens. After the Closing
          Date, no Collateral owned by each Pledgor will be in the possession or
          under the
          Control of any other Person having a claim thereto or security interest
          therein,
          other than a Permitted Lien.

         

        (g)  The
          Transaction Liens on all Collateral owned by each Pledgor (i) have been
          validly created, (ii) will attach to each item of such Collateral on the
          Closing Date (or, if such Pledgor first obtains rights thereto on a later
          date,
          on such later date) and (iii) when so attached, will secure all the Secured
          Obligations.

         

        (h)  Within
          60
          days after the Closing Date, each Pledgor will furnish to the Agent a file
          search report from the UCC filing office applicable to its Location, showing
          the
          filing made at such filing office to perfect the Transaction Liens on its
          Collateral.

         

        (i)  When
          UCC
          financing statements have been filed in the offices specified in Schedule
          4,
          the
          Transaction Liens will constitute perfected security interests in the Collateral
          owned by each Pledgor to the extent that a security interest therein may
          be
          perfected by filing pursuant to the UCC, prior to all Liens and rights
          of others
          therein. Except for the filing of such UCC financing statements, no
          registration, recordation or filing with any governmental body, agency
          or
          official is required in connection with the execution or delivery of the
          Collateral Documents or is necessary for the validity or enforceability
          thereof
          or for the perfection or due recordation of the Transaction Liens or for
          the
          enforcement of the Transaction Liens. 

         

        (j)  As
          of the
          Closing Date, no Collateral is evidenced by an Instrument or a
          certificate.

         

        Section
          4.  Further
          Assurances; General Covenants

         

        .
          Each
          Pledgor covenants as follows:

         

        (a)  Such
          Pledgor will, from time to time, at the Pledgors’ expense, execute, deliver,
          file and record any statement, assignment, instrument, document, agreement
          or
          other paper and take any other action (including any filing of financing
          or
          continuation statements under the UCC) that from time to time may be necessary
          or desirable, or that the Agent may request, in order to:

         

        (i)  create,
          preserve, perfect, confirm or validate the Transaction Liens on such Pledgor’s
          Collateral;

         

        (ii)  in
          the
          case of Pledged Securities constituting Investment Property that is included
          in
          the Collateral, cause the Agent to have Control thereof;

         

        (iii)  enable
          the Agent and the other Secured Parties to obtain the full benefits of
          the
          Collateral Documents; or

         

        (iv)  enable
          the Agent to exercise and enforce any of its rights, powers and remedies
          with
          respect to any of such Pledgor’s Collateral.

         

        To
          the
          extent permitted by applicable law, such Pledgor authorizes the Agent to
          execute
          and file such financing statements or continuation statements without such
          Pledgor’s signature appearing thereon. Such Pledgor agrees that a carbon,
          photographic, photostatic or other reproduction of this Agreement or of
          a
          financing statement is sufficient as a financing statement. Such Pledgor
          hereby
          appoints the Agent its attorney-in-fact to execute and file all filings
          required
          or so requested for the foregoing purposes, all acts of such attorney being
          hereby ratified and confirmed; and such power, being coupled with an interest,
          shall be irrevocable until all the Transaction Liens granted by such Pledgor
          terminate pursuant to Section 14. The Pledgors will pay the costs of, or
          incidental to, any recording or filing of any financing or continuation
          statements or other documents recorded or filed pursuant hereto.

         

        (b)  Such
          Pledgor will not (i) change its name or organizational structure,
          (ii)  change its Location or (iii) become bound, as provided in UCC
          Section 9-203(d) or otherwise, by a security agreement entered into by
          another
          Person, other than at any time prior to the consummation of the Acquired
          Business Equity Interests Transfer, the applicable SUG EAT Entities Loan
          Documents creating the Permitted Subordinated Liens t, unless, in each
          case, it
          shall have given the Agent prior notice thereof and delivered an Opinion
          of
          Counsel with respect thereto in accordance with Section 4(c).

         

        (c)  At
          least
          30 days before it takes any action contemplated by Section 4(b), such
          Pledgor will, at the Pledgors’ expense, cause to be delivered to the Agent an
          Opinion of Counsel, in form and substance satisfactory to the Agent, as
          to such
          matters that the Agent may reasonably request relating to the perfection
          or
          priority of the Transaction Lien on any Collateral to be owned by such
          Pledgor
          after it takes such action.

         

        (d)  The
          Pledgors shall not, and shall cause each of its subsidiaries and each of
          the
          Partnership Companies to not: 

         

        (i)  sell,
          lease, exchange, assign, transfer, dispose of, contribute or dividend any
          Collateral or any Equity Interests in any of the SUG EAT Entities or any
          of the
          Partnership Companies other than, in the case of the Collateral, in connection
          with an Acquired Business Equity Interests Transfer; 

         

        (ii)  merge
          or
          consolidate with and into any other Person; or

         

        (iii)  create,
          incur, assume or otherwise suffer to exist any Lien on the Collateral or
          any
          part thereof or on any Equity Interests in any of the SUG EAT Entities
          or any
          Partnership Companies, except, in each case, for the Liens created by the
          Collateral Documents and except, in the case of the Collateral only, at
          any time
          prior to the consummation of the Acquired Business Equity Interests Transfer,
          for the Permitted Subordinated Lien; or

         

        (iv)  sell,
          lease, exchange, assign, transfer, dispose of, contribute or dividend all
          or
          substantially all of the assets of any of the Partnership Companies to
          any
          Subsidiary of the Parent or any Affiliate of the Parent.

         

        (e)  Such
          Pledgor will, promptly upon request, provide to the Agent all information
          and
          evidence concerning such Pledgor’s Collateral that the Agent may reasonably
          request from time to time to enable it to enforce the provisions of the
          Collateral Documents.

         

        (f)  From
          time
          to time upon request by the Agent, such Pledgor will, at the Pledgors’ expense,
          cause to be delivered to the Secured Parties an Opinion of Counsel satisfactory
          to the Agent as to such matters relating to the transactions contemplated
          hereby
          as the Agent may reasonably request.

         

        (g)  If
          at any
          time any Collateral shall be evidenced by an Instrument, the Pledgor owning
          the
          same shall cause the same promptly, and in any event within ten days, to
          be
          delivered to the Agent to be held in pledge hereunder, together with any
          endorsements or instruments of transfer that the Agent may reasonably
          request.

         

        (h)  The
          Pledgors shall, at their own cost and expense, defend title to the Collateral
          and the security interest therein and Lien thereon granted to the Agent
          and the
          priority thereof against all claims and demands of all Persons, at their
          own
          cost and expense, at any time claiming any interest therein adverse to
          the Agent
          or any other Secured Party other than Transactional Liens. There is no
          agreement, order, judgment or decree, and no Pledgor shall enter into any
          agreement or take any other action, that would restrict the transferability
          of
          any of the Pledged Collateral or otherwise impair or conflict with such
          Pledgor’s obligations or the rights of the Agent hereunder.

         

        Section
          5.  Investment
          Property

         

        .
          Each
          Pledgor represents, warrants and covenants as follows:

         

        (a)  Certificated
          Securities.
          Not
          later than the Closing Date, such Pledgor will deliver to the Agent as
          Collateral hereunder all certificates or instruments representing or evidencing
          any of the Collateral then owned by such Pledgor. Thereafter, whenever
          such
          Pledgor acquires any other certificate representing or evidencing any
          Collateral, such Pledgor will immediately deliver such certificate or instrument
          to the Agent as Collateral hereunder.

         

        (b)  Uncertificated
          Securities.
          Not
          later than the Closing Date, such Pledgor will enter into (and cause the
          relevant issuer to enter into) an Issuer Control Agreement in respect of
          each
          Pledged Security then owned by such Pledgor that constitutes Collateral
          and is
          not evidenced or represented by a certificate or instrument and deliver
          such
          Issuer Control Agreement to the Agent (which shall enter into the same).
          Thereafter, whenever such Pledgor acquires any other Pledged Security that
          constitutes Collateral and is not evidenced or represented by a certificate
          or
          instrument, such Pledgor will enter into (and cause the relevant issuer
          to enter
          into) an Issuer Control Agreement in respect of such Pledged Security and
          deliver such Issuer Control Agreement to the Agent (which shall enter into
          the
          same).

         

        (c)  Perfection
          as to Certificated Securities.
          When
          such Pledgor delivers the certificate or instrument representing any Pledged
          Security owned by it and that constitutes Collateral to the Agent and complies
          with Sections 5(a) and 5(e) in connection with such delivery, (i) the
          Transaction Lien on such Pledged Security will be perfected, subject to
          no prior
          Liens or rights of others, (ii) the Agent will have Control of such Pledged
          Security and (iii) the Agent will be a protected purchaser (within the
          meaning of UCC Section 8-303) thereof.

         

        (d)  Perfection
          as to Uncertificated Securities.
          When
          such Pledgor, the Agent and the issuer of any Pledged Security owned by
          such
          Pledgor and that constitutes Collateral and is not represented or evidenced
          by a
          certificate or instrument enter into an Issuer Control Agreement with respect
          thereto, (i) the Transaction Lien on such Pledged Security will be
          perfected, subject to no prior Liens or rights of others, (ii) the Agent
          will have Control of such Pledged Security and (iii) the Agent will be a
          protected purchaser (within the meaning of UCC Section 8-303)
          thereof.

         

        (e)  Delivery
          of Pledged Certificates.
          All
          certificates or instruments representing or evidencing any Pledged Security
          that
          constitutes Collateral, when delivered to the Agent, will be in suitable
          form
          for transfer by delivery, or accompanied by duly executed instruments of
          transfer or assignment in blank, with signatures appropriately guaranteed,
          all
          in form and substance satisfactory to the Agent.

         

        (f)  Communications.
          Each
          Pledgor will promptly give to the Agent copies of any notices and other
          communications received by it with respect to any Collateral registered
          in the
          name of such Pledgor or its nominee.

         

        Section
          6.  Transfer
          of Record Ownership

         

        .
          At
          any
          time when an Event of Default shall have occurred and be continuing, the
          Agent
          may (and to the extent that action by it is required, the relevant Pledgor,
          if
          directed to do so by the Agent, will as promptly as practicable)
          cause
          each of the Pledged Securities (or any portion thereof specified in such
          direction) to be transferred of record into the name of the Agent or its
          nominee. Each Pledgor will take any and all actions reasonably requested
          by the
          Agent to facilitate compliance with this Section. If
          the
          provisions of this Section are implemented, Section 5(c) shall not
          thereafter apply to any Pledged Security that is registered in the name
          of the
          Agent or its nominee.
          The
          Agent will promptly give to the relevant Pledgor copies of any notices
          and other
          communications received by the Agent with respect to Pledged Securities
          registered in the name of the Agent or its nominee.

         

        Section
          7.  Right
          to Vote Securities

         

        .

         

        (a)  Unless
          an
          Event of Default shall have occurred and be continuing and the Agent shall
          have
          notified the relevant Pledgor that such Pledgor’s rights under this Section are
          suspended, each Pledgor will have the right, from time to time, to vote
          and to
          give consents, ratifications and waivers with respect to any Pledged Security
          owned by it, and the Agent will, upon receiving a written request from
          such
          Pledgor, deliver to such Pledgor or as specified in such request such proxies,
          powers of attorney, consents, ratifications and waivers in respect of any
          such
          Pledged Security that is registered in the name of the Agent or its nominee
          as
          shall be specified in such request and be in form and substance satisfactory
          to
          the Agent. Unless an Event of Default shall have occurred and be continuing,
          the
          Agent will have no right to take any action which the owner of any Pledged
          Securities constituting Partnership Interest or LLC Interest that is part
          of the
          Collateral is entitled to take with respect thereto, except the right to
          receive
          payments and other distributions to the extent provided herein.

         

        (b)  If
          an
          Event of Default shall have occurred and be continuing, the Agent will
          have the
          right to the extent permitted by law (and, in the case of Pledged Securities
          constituting Partnership Interests or LLC Interests that are part of the
          Collateral, by the relevant partnership agreement, limited liability company
          agreement, operating agreement or other governing docu

         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        ment)
          to
          vote, to give consents, ratifications and waivers and to take any other
          action
          with respect to any Investment Property or Pledged Securities that constitute
          Collateral, with the same force and effect as if the Agent were the absolute
          and
          sole owner thereof, and each Pledgor will take all such action as the Agent
          may
          reasonably request from time to time to give effect to such right.

         

        Section
          8.  Remedies
          Upon Event of Default

         

        .

         

        (a)  If
          an
          Event of Default shall have occurred and be continuing, the Agent may exercise
          (or cause its sub-agents to exercise) any or all of the remedies available
          to it
          (or to such sub-agents) under the Collateral Documents.

         

        (b)  Without
          limiting the generality of the foregoing, if an Event of Default shall
          have
          occurred and be continuing, the Agent may exercise on behalf of the Secured
          Parties all the rights of a secured party under the UCC (whether or not
          in
          effect in the jurisdiction where such rights are exercised) with respect
          to any
          Collateral and, in addition, the Agent may, without being required to give
          any
          notice, except as herein provided or as may be required by mandatory provisions
          of law, withdraw all cash held by it as Collateral and apply such cash
          as
          provided in Section 9 and, if there shall be no such cash or if such cash
          shall
          be insufficient to pay all the Secured Obligations in full, sell, lease,
          license
          or otherwise dispose of the Collateral or any part thereof. Notice of any
          such
          sale or other disposition shall be given to the relevant Pledgor(s) as
          required
          by Section 11.

         

        Section
          9.  Application
          Of Proceeds

         

        .

         

        (a)  If
          an
          Event of Default shall have occurred and be continuing, the Agent may apply
          (i) any cash then held by it as Collateral and (ii) the proceeds of
          any sale or other disposition of all or any part of the Collateral, in
          the
          following order of priorities:

         

        first,
          to pay
          the expenses of such sale or other disposition, including reasonable
          compensation to agents of and counsel for the Agent, and all expenses,
          liabilities and advances incurred or made by the Agent in connection with
          the
          Collateral Documents, and any other amounts then due and payable to the
          Agent
          pursuant to Section 11 or pursuant to Section 13.3 or 13.16 of the Bridge
          Loan Agreement;

         

        second,
          to pay
          the unpaid principal of the Secured Obligations ratably until payment in
          full of
          the principal of all Secured Obligations shall have been made;

         

        third,
          to pay
          ratably all interest (including Post-Petition Interest) on the Secured
          Obligations payable under the Bridge Loan Agreement and any Notes, until
          payment
          in full of all such interest and fees shall have been made;

         

        fourth,
          to pay
          all other Secured Obligations ratably until payment in full of all such
          other
          Secured Obligations shall have been made; and

         

        finally,
          to pay
          to the relevant Pledgor, or as a court of competent jurisdiction may direct,
          any
          surplus then remaining from the proceeds of the Collateral owned by
          it.

         

        (b)  In
          making
          the payments and allocations required by this Section, the Agent may rely
          upon
          information supplied to it pursuant to Section 13(c). All distributions
          made by the Agent pursuant to this Section shall be final (except in the
          event
          of manifest error) and the Agent shall have no duty to inquire as to the
          application by any Secured Party of any amount distributed to it.

         

        Section
          10.  Fees
          and Expenses; Indemnification

         

        .

         

        (a)  The
          Pledgors will forthwith upon demand pay to the Agent:

         

        (i)  the
          amount of any taxes that the Agent may have been required to pay by reason
          of
          the Transaction Liens or to free any Collateral from any other Lien
          thereon;

         

        (ii)  the
          amount of any and all reasonable out-of-pocket expenses, including transfer
          taxes and reasonable fees and expenses of counsel and other experts, that
          the
          Agent may incur in connection with (x) the administration or enforcement
          of the
          Collateral Documents, including such expenses as are incurred to preserve
          the
          value of the Collateral or the validity, perfection, rank or value of any
          Transaction Lien, (y) the collection, sale or other disposition of any
          Collateral or (z) the exercise by the Agent of any of its rights or powers
          under
          the Collateral Documents; and

         

        (iii)  the
          amount required to indemnify the Agent for, or hold it harmless and defend
          it
          against, any loss, liability or expense (including the reasonable fees
          and
          expenses of its counsel and any experts or sub-agents appointed by it hereunder)
          incurred or suffered by the Agent in connection with the Collateral Documents,
          except to the extent that such loss, liability or expense arises from the
          Agent’s gross negligence or willful misconduct or a breach of any duty that the
          Agent has under this Agreement (after giving effect to Sections 12 and
          13).

         

        Any
          such
          amount not paid to the Agent on demand will bear interest for each day
          thereafter until paid at a rate per annum equal to the sum of 2% plus the
          rate
          applicable to Alternate Base Rate Loans for such day.

         

        (b)  If
          any
          transfer tax, documentary stamp tax or other tax is payable in connection
          with
          any transfer or other transaction provided for in the Collateral Documents,
          the
          Pledgors will pay such tax and provide any required tax stamps to the Agent
          or
          as otherwise required by law.

         

        Section
          11.  Authority
          To Administer Collateral

         

        .
          Each
          Pledgor irrevocably appoints the Agent its true and lawful attorney, with
          full
          power of substitution, in the name of such Pledgor, any Secured Party or
          otherwise, for the sole use and benefit of the Secured Parties, but at
          the
          Pledgors’ expense, to the extent permitted by law to exercise, at any time and
          from time to time while an Event of Default shall have occurred and be
          continuing, all or any of the following powers with respect to all or any
          of
          such Pledgor’s Collateral (but the Agent shall not be obligated to and shall
          have no liability to such Pledgor or any third party for failure to so
          do or
          take action):

         

        (a)  to
          demand, sue for, collect, receive and give acquittance for any and all
          monies
          due or to become due upon or by virtue thereof;

         

        (b)  to
          settle, compromise, compound, prosecute or defend any action or proceeding
          with
          respect thereto;

         

        (c)  to
          sell,
          lease, license or otherwise dispose of the same or the proceeds or avails
          thereof, as fully and effectually as if the Agent were the absolute owner
          thereof;

         

        (d)  to
          extend
          the time of payment of any or all thereof and to make any allowance or
          other
          adjustment with reference thereto; and 

         

        (e)  to
          take
          any other action and to execute any instrument consistent with the terms
          of the
          Bridge Loan Agreement and the Collateral Documents which the Agent may
          deem
          necessary or advisable to accomplish the purposes hereof.

         

        Section
          12.  Limitation
          on Duty in Respect of Collateral

         

        .
          Beyond
          the exercise of reasonable care in the custody and preservation thereof,
          the
          Agent will have no duty as to any Collateral in its possession or control
          or in
          the possession or control of any sub-agent or bailee or any income therefrom
          or
          as to the preservation of rights against prior parties or any other rights
          pertaining thereto. The Agent will be deemed to have exercised reasonable
          care
          in the custody and preservation of the Collateral in its possession or
          control
          if such Collateral is accorded treatment substantially equal to that which
          it
          accords its own property, and will not be liable or responsible for any
          loss or
          damage to any Collateral, or for any diminution in the value thereof, by
          reason
          of any act or omission of any sub-agent or bailee selected by the Agent
          in good
          faith, except to the extent that such liability arises from the Agent’s gross
          negligence or willful misconduct.

         

        Section
          13.  General
          Provisions Concerning the Agent

         

        .

         

        (a)  The
          provisions of Section 12 of the Bridge Loan Agreement shall inure to the
          benefit
          of the Agent, and shall be binding upon all Pledgors and all Secured Parties,
          in
          connection with this Agreement and the other Collateral Documents. Without
          limiting the generality of the foregoing, (i) the Agent shall not be subject
          to
          any fiduciary or other implied duties, regardless of whether an Event of
          Default
          has occurred and is continuing, (ii) the Agent shall not have any duty to
          take any discretionary action or exercise any discretionary powers, except
          discretionary rights and powers expressly contemplated by the Collateral
          Documents that the Agent is required in writing to exercise by the Majority
          Banks (or such other number or percentage of the Banks as shall be necessary
          under the circumstances as provided in Section 13.2 of the Bridge Loan
          Agreement), and (iii) except as expressly set forth in the Loan Documents,
          the Agent shall not have any duty to disclose, and shall not be liable
          for any
          failure to disclose, any information relating to any of the Borrowers or
          any of
          their respective Subsidiaries or any other Loan Party that is communicated
          to or
          obtained by the bank serving as Agent or any of its Affiliates in any capacity.
          The Agent shall not be responsible for the existence, genuineness or value
          of
          any Collateral or for the validity, perfection, priority or enforceability
          of
          any Transaction Lien, whether impaired by operation of law or by reason
          of any
          action or omission to act on its part under the Collateral Documents. The
          Agent
          shall be deemed not to have knowledge of any Event of De-

         

        (b)  fault
          unless and until written notice thereof is given to the Agent by the Borrowers
          or a Secured Party.

         

        (c)  Sub-Agents
          and Related Parties.
          The
          Agent
          may perform any of its duties and exercise any of its rights and powers
          through
          one or more sub-agents appointed by it. The Agent and any such sub-agent
          may
          perform any of its duties and exercise any of its rights and powers through
          its
          Related Parties. The exculpatory provisions of Section 12 and this Section
          shall apply to any such sub-agent and to the Related Parties of the Agent
          and
          any such sub-agent.

         

        (d)  Information
          as to Secured Obligations and Actions by Secured Parties. For
          all
          purposes of the Collateral Documents, including determining the amounts
          of the
          Secured Obligations, or whether any action has been taken under any Loan
          Document, the Agent will be entitled to rely on information from (i) its
          own records for information as to the Banks, any of the Secured Obligations
          and
          actions taken by them, (ii) any Secured Party (or any trustee, agent or
          similar representative designated pursuant to (iii) to supply such
          information) for information as to any of the Secured Obligations and actions
          taken by it, to the extent that the Agent has not obtained such information
          from
          its own records, and (iv) any Pledgor or any of the Borrowers or any other
          Loan Party, to the extent that the Agent has not obtained information from
          the
          foregoing sources.

         

        (e)  Refusal
          to Act.
          The
          Agent may refuse to act on any notice, consent, direction or instruction
          from
          any Secured Parties or any agent, trustee or similar representative thereof
          that, in the Agent’s opinion, (i) is contrary to law or the provisions of
          any Collateral Document, (ii) may expose the Agent to liability (unless the
          Agent shall have been indemnified, to its reasonable satisfaction, for
          such
          liability by the Secured Parties that gave such notice, consent, direction
          or
          instruction) or (iii) is unduly prejudicial to Secured Parties not joining
          in such notice, consent, direction or instruction.

         

        (f)  Copies
          of Certain Notices.
          Within
          two Business Days after it receives or sends any notice referred to in
          this
          subsection, the Agent shall send to the Banks copies of any notice given
          by the
          Agent to any Pledgor, or received by it from any Pledgor, pursuant to Section
          8,
          9, 11 or 14.

         

        Section
          14.  Termination
          Of Transaction Liens; Release Of Collateral

         

        .

         

        (a)  The
          Transaction Liens shall terminate when all Commitments under the Bridge
          Loan
          Agreement shall have expired or been terminated and all the Secured Obligations
          shall have been paid in full in cash (other than contingent indemnification
          obligations).

         

        (b)  At
          any
          time before the Transaction Liens terminate, the Agent may, at the written
          request of the Borrowers, release any Collateral with the prior written
          consent
          of the Banks.

         

        (c)  Upon
          any
          termination of a Transaction Lien or release of Collateral, the Agent will,
          at
          the expense of the relevant Pledgor, execute and deliver to such Pledgor
          such
          documents as such Pledgor shall reasonably request to evidence the termination
          of such Transaction Lien or the release of such Collateral, as the case
          may
          be.

         

        Section
          15.  Notices

         

        .
          Each
          notice, request or other communication given to any party hereunder shall
          be
          given in accordance with Section 13.4 of the Bridge Loan Agreement
          and in
          the case of the Pledgors, any such notice, request or other communication
          shall
          be given to the address and fax numbers as follows:

         

        If
          to SUG
          EAT, LLC:  SUG
          EAT,
          Inc.

        40
          Court
          Street, 2nd
          Floor

         

        Plymouth,
          MA 02360

         

        Att:
          Daniel Feehan

         

        fax:
          (508) 732-3202

         

        


         

        with
          a
          copy to:   Southern
          Union Company

        Southern
          Union Panhandle LLC

        5444
          Westheimer Road

        Houston,
          Texas 77056

        Attention:
          Monica Gaudiosi, Esq.

        Fax:
          (713) 989-1213

        


        If
          to SUG
          EAT, INC.  SUG
          EAT,
          Inc.

        135
          S.
          LaSalle Street, Suite 1940

         

        Chicago,
          IL 60603

         

        Att:
          Mary
          Cunninghman

         

        fax:
          (312) 992-4570

         

        


         

        with
          a
          copy to:   Southern
          Union Company

        Southern
          Union Panhandle LLC

        5444
          Westheimer Road

        Houston,
          Texas 77056

        Attention:
          Monica Gaudiosi, Esq.

        Fax:
          (713) 989-1213

        


        Section
          16.  No
          Implied Waivers; Remedies Not Exclusive

         

        .
          No
          failure by the Agent or any Secured Party to exercise, and no delay in
          exercising and no course of dealing with respect to, any right or remedy
          under
          any Collateral Document shall operate as a waiver thereof; nor shall any
          single
          or partial exercise by the Agent or any Secured Party of any right or remedy
          under any Loan Document preclude any other or further exercise thereof
          or the
          exercise of any other right or remedy. The rights and remedies specified
          in the
          Loan Documents are cumulative and are not exclusive of any other rights
          or
          remedies provided by law.

         

        Section
          17.  Successors
          And Assigns

         

        .
          This
          Agreement is for the benefit of the Agent and the Secured Parties. If all
          or any
          part of any Secured Party’s interest in any Secured Obligation is assigned or
          otherwise transferred in accordance with the provisions of the Bridge Loan
          Agreement, the assignee’s or transferor’s rights hereunder, to the extent
          applicable to the obligation so transferred, shall be automatically transferred
          with such obligation. This Agreement shall be binding on the Pledgors and
          their
          respective successors and assigns;
          provided,
          however,
          that


         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        no
          Pledgor may assign any of its rights, interests or obligations herein without
          the prior written consent of the Agent and all the Banks.

         

        Section
          18.  Amendments
          And Waivers

         

        .
          Neither
          this Agreement nor any provision hereof may be waived, amended, modified
          or
          terminated except pursuant to an agreement or agreements in writing entered
          into
          by the Agent, with the consent of the Majority Banks, or, in the case of
          any
          such waiver, amendment or modification affecting the number of Banks required
          to
          release any of the Collateral, with the consent of all the Banks. No such
          waiver, amendment or modification shall be binding upon any Pledgor, except
          with
          its written consent.

         

        Section
          19.  Choice
          Of Law

         

        .
          This
          Agreement shall be construed in accordance with and governed by the laws
          of the
          State of New York, except as otherwise required by mandatory provisions
          of law
          and except to the extent that remedies provided by the laws of any jurisdiction
          other than the State of New York are governed by the laws of such
          jurisdiction.

         

        Section
          20.  Waiver
          Of Jury Trial

         

        .
          EACH
          PARTY HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
          ANY
          RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
          INDIRECTLY ARISING OUT OF OR RELATING TO ANY COLLATERAL DOCUMENT OR ANY
          TRANSACTION CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
          OTHER
          THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
          OR
          ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
          SUCH
          OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
          FOREGOING
          WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
          INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
          WAIVERS
          AND CERTIFICATIONS IN THIS SECTION.

         

        Section
          21.  Severability

         

        .
          If any
          provision of any Collateral Document is invalid or unenforceable in any
          jurisdiction, then, to the fullest extent permitted by law, (i) the other
          provisions of the Collateral Documents shall remain in full force and effect
          in
          such jurisdiction and shall be liberally construed in favor of the Agent
          and the
          Secured Parties in order to carry out the intentions of the parties thereto
          as
          nearly as may be possible and (ii) the invalidity or unenforceability of
          such
          provision in such jurisdiction shall not affect the validity or enforceability
          thereof in any other jurisdiction.

         

        Section
          22.  Matters
          Pertaining to Pledgors.

         

        (a)  Subrogation.
          Each
          Pledgor hereby agrees that until the payment and satisfaction in full in
          cash of
          all Secured Obligations and the expiration and termination of the Commitments
          of
          the Banks under the Bridge Loan Agreement it shall waive any claim and
          shall not
          exercise any right or remedy, direct or indirect, arising by reason of
          any
          performance by it of its obligations hereunder, whether by subrogation
          or
          otherwise, against the Borrowers or any other Loan Party of any of the
          Secured
          Obligations or any security for any of the Secured Obligations. 

         

        (b)  Unconditional
          and Absolute.
          The
          obligations of the Pledgors under this Agreement, to the fullest extent
          permitted by applicable law, are absolute and unconditional, joint and
          several,
          irrespective of the value, genuineness, validity, regularity or enforceability
          of the Se-

         

        (c)  cured
          Obligations, or any substitution, release or exchange of any other guarantee
          of
          or security for any of the Secured Obligations, and, irrespective of any
          other
          circumstance whatsoever that might otherwise constitute a legal or equitable
          discharge or defense of a surety or a Pledgor (except for payment in full).
          Without limiting the generality of the foregoing, it is agreed that the
          occurrence of any one or more of the following shall not alter or impair
          the
          liability of the Pledgors hereunder which shall remain absolute and
          unconditional under any and all circumstances as described above:

         

        (i)  at
          any
          time or from time to time, without notice to the Pledgors, the time for
          any
          performance of or compliance with any of the Secured Obligations shall
          be
          extended, or such performance or compliance shall be waived;

         

        (ii)  any
          of
          the acts mentioned in any of the provisions of the Bridge Loan Agreement
          or any
          other Loan Document shall be done or omitted;

         

        (iii)  the
          maturity of any of the Secured Obligations shall be accelerated, or any
          of the
          Secured Obligations shall be amended in any respect, or any right under
          the Loan
          Documents shall be amended or waived in any respect or the other Pledgor,
          any
          other pledgor or any security for the Secured Obligations shall be released
          or
          exchanged in whole or in part or otherwise dealt with;

         

        (iv)  any
          Lien
          or security interest granted to, or in favor of, Agent for the benefit
          of the
          Secured Parties as security for any of the Secured Obligations shall fail
          to be
          perfected; and

         

        (v)  any
          other
          circumstances which might constitute a defense available to, or a discharge
          of,
          any Pledgor.

         

        (d)  Waivers.
          Each
          Pledgor hereby expressly waives diligence, presentment, demand of payment,
          protest and all notices whatsoever, and any requirement that any Secured
          Party
          exhaust any right, power or remedy or proceed against the Borrowers under
          the
          Bridge Loan Agreement, this Agreement, any other Loan Document, or any
          other
          agreement or instrument referred to herein or therein, or against any other
          Person under this Agreement or under any guarantee of, or security for,
          any of
          the Secured Obligations. Each Pledgor waives any and all notice of the
          creation,
          renewal, extension, waiver, termination or accrual of any of the Secured
          Obligations and notice of or proof of reliance by any Secured Party upon
          this
          Agreement as it pertains to the Pledgors or acceptance thereof, and all
          dealings
          between the Borrowers and the Secured Parties shall likewise be conclusively
          presumed to have been had or consummated in reliance upon this Agreement.
          The
          obligations and liabilities of the Pledgors hereunder shall not be conditioned
          or contingent upon the pursuit by the Secured Parties or any other Person
          at any
          time of any right or remedy against the Borrowers or against any other
          Person
          which may be or become liable in respect of all or any part of the Secured
          Obligations or against any collateral security or guarantee therefor or
          right of
          offset with respect thereto. To the extent it may lawfully do so, each
          Pledgor
          absolutely and irrevocably waives and relinquishes the benefit and advantage
          of,
          and covenants not to assert against the Agent or any Secured Party, any
          valuation, stay, appraisement, extension, redemption or similar laws and
          any and
          all rights or defenses it may have as a surety now or hereafter existing
          which,
          but for this provision, might be applicable to the sale of any Collateral
          made
          under the judgment, order or decree of any court, or privately 

         


        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        


        under
          the
          power of sale conferred by this Agreement, or otherwise. Each Pledgor further
          waives any and all suretyship defenses. 

         

        (e)  General
          Limitation.
          In any
          action or proceeding involving any applicable state, federal or foreign
          bankruptcy, insolvency, reorganization or other law affecting the rights
          of
          creditors generally, if the obligations of any Pledgor under this Agreement
          would otherwise be held or determined to be void, voidable, invalid or
          unenforceable, or subordinated to the claims of any other creditors, on
          account
          of the amount of its liability under this Agreement, then, notwithstanding
          any
          other provision to the contrary, the amount of such liability shall, without
          any
          further action by such Pledgor or any other Person, be automatically limited
          and
          reduced to the highest amount that is valid and enforceable and not subordinated
          to the claims of other creditors as determined in such action or
          proceeding.

         

        (f)  Independent
          Investigation.
          Each
          Pledgor hereby acknowledges that it has undertaken its own independent
          investigation of the financial condition of each of the Borrowers and all
          other
          matters pertaining to this Agreement, the Bridge Loan Agreement and the
          other
          Loan Document and further acknowledges that it is not relying in any manner
          upon
          any representation or statement of the Agent, any Bank or any of their
          respective Related Parties with respect thereto. Each Pledgor represents
          and
          warrants that it has received and reviewed copies of the Loan Documents
          and that
          it is in a position to obtain, and it hereby assumes full responsibility
          for
          obtaining, any additional information concerning the financial condition
          of each
          Borrower and any other matters pertinent hereto that any Pledgor may desire.
          No
          Pledgor is relying upon or expecting the Agent, any Bank or any of their
          respective Related Parties to furnish to such Pledgor any information now
          or
          hereafter in the Agent’s, any Bank’s or any of their respective Related Parties’
possession concerning the financial condition of any of the Borrowers or
          any
          other matter.

         

        [Signature
          pages follow]

         

        


         


        
          
            
              


            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        IN
          WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
          executed by their respective authorized officers as of the day and year
          first
          above written.

         

         

        SUG
          EAT,
          INC., as a Pledgor

         

        By: _/S/_DANIEL
          FEEHAN_____________

        Name:
          Daniel Feehan 

        Title: Senior
          Vice President

         

        


         

         

        SUG
          EAT,
          LLC, as a Pledgor

         

        


         

        By:
          Southern Union Panhandle LLC, as its Sole Manager

         

        By:
          Southern Union Company, as its Sole Member

         

        By:
          _/S/
          JULIE H. EDWARDS____________

        Name:
          Julie H. Edwards 

        Title:
          Senior Vice President and Chief 

        Financial
          Officer

        


         

        LEHMAN
          COMMERCIAL PAPER INC., 

         

        as
          Administrative Agent

         

        By: _/S/
          LAURIE D. PERPER__________________

        Name:
          Laurie D. Perper 

        
          	 	
                  Title:

                	
                  Senior
                    Vice President

                


        

        


        


        


        


        


        


        


        


        


        


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

        



        
          
            
              


            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        SCHEDULE
          1(a)

         

        PLEDGORS
          INFORMATION

         

        (as
          of the Closing Date)

         

        
          	
                   

                  Name
                    of Pledgor

                   

                	
                   

                   

                  Type
                    of

                   

                   

                  Organization

                   

                	
                   

                  Jurisdiction

                   

                   

                  of

                   

                   

                  Organization

                   

                	
                   

                  Registered

                   

                   

                  Organization/

                   

                   

                  Organizational
                    I.D. Number

                   

                
	
                  SUG
                    EAT, Inc.

                	
                  Corporation

                	
                  Delaware

                	
                  4115790

                
	
                  SUG
                    EAT, LLC

                	
                  Limited
                    liability Company

                	
                  Delaware

                	
                  4116240

                


        

        


        


        



        
          
            
              


              


              


            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        SCHEDULE
          1(b)

         

        


        PRIOR
          ORGANIZATIONAL NAMES 

         

        
          	
                   

                  Pledgor

                   

                	
                   

                  Prior
                    Name

                   

                	
                   

                  Date
                    of Change

                   

                
	
                  SUG
                    EAT, Inc. 

                	
                  None

                	
                  N/A

                
	
                  SUG
                    EAT, Inc. 

                	
                  None

                	
                  N/A

                


        

        


        



        
          
            
              


              


              


            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        SCHEDULE
          1(c)

         

        CHANGES
          IN CORPORATE IDENTITY; OTHER NAMES

         

        
          	
                   

                  Pledgor

                   

                	
                   

                  Corporate
                    Name of Entity

                   

                	
                   

                  Action

                   

                	
                   

                  Date
                    of Action

                   

                	
                   

                  State
                    of Formation

                   

                	
                   

                  List
                    of All Other Names Used During Past Five Years

                   

                
	
                  SUG
                    EAT, Inc. 

                	
                   

                  None

                   

                	
                   

                  N/A

                   

                	
                   

                  N/A

                   

                	
                   

                  N/A

                   

                	
                   

                  N/A

                   

                
	
                  SUG
                    EAT, Inc. 

                	
                   

                  None

                   

                	
                   

                  N/A

                   

                	
                   

                  N/A

                   

                	
                   

                  N/A

                   

                	
                   

                  N/A

                   

                


        

        


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

        



        
          
            
              


              


              


            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        SCHEDULE
          2

         

        PART
          A: CHIEF
          EXECUTIVE OFFICES

         

        
          	
                   

                  Pledgor

                   

                	
                   

                  Address

                   

                	
                   

                  State

                   

                
	
                  SUG
                    EAT, Inc.

                	
                  135
                    S. LaSalle Street, Suite 1940 

                  Chicago,
                    Illinois 60603

                	
                  Illinois

                
	
                  SUG
                    EAT, LLC

                  .

                	
                  135
                    S. LaSalle Street. Suite 1940

                  Chicago

                	
                  Illinois

                


        

        


        


        PART
          B: LOCATION
          OF BOOKS

         

        
          	
                   

                  Pledgor

                   

                	
                   

                  Address

                   

                	
                   

                  State

                   

                
	
                  SUG
                    EAT, Inc.

                	
                  135
                    S. LaSalle Street, Suite 1940 

                  Chicago,
                    Illinois 60603

                	
                  Illinois

                
	
                  SUG
                    EAT, LLC

                  .

                	
                  135
                    S. LaSalle Street. Suite 1940

                  Chicago

                	
                  Illinois

                


        

        


        


        PART
          C: OTHER
          PLACES OF BUSINESS

         

        
          	
                   

                  Pledgor

                   

                	
                   

                  Address

                   

                	
                   

                  State

                   

                
	
                  SUG
                    EAT, Inc.

                	
                  40
                    Court Street

                  Plymouth,
                    MA 02360

                	
                  Massachusetts

                
	
                  SUG
                    EAT, LLC

                  .

                	
                  40
                    Court Street

                  Plymouth,
                    MA 02360

                	
                  Massachusetts

                


        

        


         

        PART
          D: PRIOR
          LOCATIONS MAINTAINED BY THE PLEDGORS

         

        
          	
                   

                  Pledgor

                   

                	
                   

                  Address

                   

                	
                   

                  State

                   

                
	
                  SUG
                    EAT, Inc.

                	
                  N/A

                	
                  N/A

                
	
                  SUG
                    EAT, LLC

                  .

                	
                  N/A

                	
                  N/A

                


        

        



        
          
            
              


              


              


            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        SCHEDULE
          3

         

        EQUITY
          INTERESTS IN COLLATERAL OWNED BY THE PLEDGORS

         

        (as
          of the Closing Date)

         

        
          	
                   

                  Issuer

                   

                	
                   

                  Jurisdiction

                   

                   

                  of

                   

                   

                  Organization

                   

                	
                   

                   

                   

                   

                  Owner
                    of

                   

                   

                  Equity
                    Interest

                   

                	
                   

                   

                   

                   

                  Percentage

                   

                   

                  Owned

                   

                	
                   

                  Number
                    of

                   

                   

                  Shares
                    or Units

                   

                
	
                  Richardson
                    Energy 

                  Marketing,
                    Ltd.

                	
                  Texas
                    

                	
                  SUG
                    EAT, Inc.

                	
                  100%
                    of the Limited 

                  Partnership
                    Interests

                	
                  N/A

                
	
                  Richardson
                    Energy 

                  Marketing,
                    Ltd.

                	
                  Texas
                    

                	
                  SUG
                    EAT, LLC

                	
                  100%
                    of the General 

                  Partnership
                    Interests

                	
                  N/A

                
	
                  Sid
                    Richardson 

                  Energy
                    Services, Ltd.

                	
                  Texas
                    

                	
                  SUG
                    EAT, Inc.

                	
                  100%
                    of the Limited 

                  Partnership
                    Interests

                	
                  N/A

                
	
                  Sid
                    Richardson 

                  Energy
                    Services, Ltd.

                	
                  Texas
                    

                	
                  SUG
                    EAT, LLC

                	
                  100%
                    of the General 

                  Partnership
                    Interests

                	
                  N/A

                
	
                  Leapartners,
                    LP

                	
                  Texas

                	
                  SUG
                    EAT, LLC

                	
                  100%
                    of the General 

                  Partnership
                    Interests

                	
                  N/A

                


        

        


         

        



        
          
            
              


              


              


            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
              


            

          

        



        SCHEDULE
          4

         

        FILING
          OFFICE

         

        


         

        Secretary
          of State’s Office for the State of Delaware

         

        


         



       


      
        
          
            


          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      



      EXHIBIT
        E

       

      FORM
        OF IN-HOUSE COUNSEL OPINION

       

      


       


      
        
          
            


          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      



      EXHIBIT
        F

       

      FORM
        OF INTERCREDITOR AGREEMENT