EXHIBIT 10-A
REVOLVING CREDIT AGREEMENT
(LONG-TERM CREDIT FACILITY)
REVOLVING CREDIT AGREEMENT
(LONG-TERM CREDIT FACILITY)
DATED AS OF NOVEMBER 10, 1998
BY AND AMONG
SOUTHERN UNION COMPANY
as the Borrower
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AND
THE BANKS NAMED HEREIN
as the Banks
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AND
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
as the Agent
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REVOLVING CREDIT AGREEMENT
(LONG-TERM CREDIT FACILITY)
SOUTHERN UNION COMPANY, a corporation organized under the
laws of Delaware (hereinafter called the "Borrower"), the xxxxx-
cial institutions listed on the signature pages hereof (collec-
tively, the "Banks" and individually, a "Bank"), and CHASE BANK OF
TEXAS, NATIONAL ASSOCIATION, a national banking association
("Chase") in its capacity as agent (the "Agent") for the Banks
hereunder, hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the fol-
following terms shall have the following meanings:
"Account Debtor" shall mean the party who is obligated on or
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under an Account.
"Accounts" shall mean, with respect to the Borrower, all of
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its accounts, accounts receivable, contract rights, chattel
paper, drafts, acceptances, and similar writings and evidences of
monetary obligations now owned or hereafter acquired or created
by virtue of goods or merchandise sold (including gas) in the
ordinary course of its business, including without limitation PGA
Receivables, and, in any event, all "accounts" as that term is
defined in the Uniform Commercial Code in effect in any appli-
cable jurisdiction.
"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, with-
out limitation, any interest equalization tax or any similar tax
on the acquisition of debt obligations, or any stamp or registra-
tion 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
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or under common control with any other Person. For purposes of
this definition, "control" (including "controlled by" and "under
common control with") means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the
ownership of voting securities or otherwise. If any Person shall
own, directly or indirectly, beneficially or of record, twenty
percent (20%) or more of the voting equity (whether outstanding
capital stock, partnership interests or otherwise) of another
Person, such Person shall be deemed to be an Affiliate.
"Agent" shall have the meaning set forth in the preamble
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hereto.
"Agreement" shall mean this Revolving Credit Agreement, as
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the same may be amended, modified, supplemented or restated from
time to time.
"Alternate Base Rate" shall mean, for any day, a rate, per
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annum (rounds upward to the nearest 1/16 of 1%) equal to: (a) the
greatest of (i) the Prime Rate (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as
the case may be) in effect on such day; (ii) the Federal Funds
Rate in effect for such day plus 1/2 of 1 percent (1/2%) (com-
----
puted on the basis of the actual number of days elapsed over a
year of 360 days); or (iii) the Average CD Rate in effect for
such day plus 1 percent (1%) (computed on the basis of the actual
----
number of days elapsed over a year of 360 days).
"Alternate Base Rate Loan" shall mean any Loan which bears
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interest at the Alternate Base Rate.
"Applicable Lending Office" shall mean, with respect to each
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Bank, such Bank's (a) Domestic Lending Office in the case of an
Alternate Base Rate Loan; (b) Domestic Lending Office in the case
of a CD Rate Loan; and (c) Eurodollar Lending Office in the case
of a Eurodollar Rate Loan.
"Assignment and Acceptance" shall have the meaning set forth
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in Section 13.13.
"Available Senior Funded Debt Capacity" for any period shall
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mean, as of the first day of that period, the principal amount of
additional Senior Funded Debt that the Borrower would be per-
mitted to issue under the then existing indentures, note purchase
agreements and credit agreements (other than the Agreement and
other revolving credit agreements).
"Average CD Rate" shall mean, as of any date, the latest
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one-week moving average of secondary market morning offering
rates in the United States for 90-day certificates of deposit of
the Agent, such moving average being determined daily by the
Agent on the basis of such rates reported by two certificate of
deposit dealers to and published by the Federal Reserve Bank of
New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by
the Agent from two certificate of deposit dealers of recognized
standing selected by the Agent, in either case adjusted to the
nearest 1/4 of one percent or, if there is no nearest 1/4 of one
percent, to the next higher 1/4 of one percent.
"Bank" shall have the meaning set forth in the preamble
----
hereto and shall include the Agent, in its individual capacity.
"Borrower" shall have the meaning set forth in the preamble
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hereto.
"Borrowing Base" shall mean, as of any time of determination
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when the Borrower's Senior Funded Debt is rated Baa3 or higher by
Xxxxx'x Investor Service, Inc. or BBB- or higher by Standard and
Poor's Corporation, the amount of $60,000,000.00 and, as of any
other time of determination, without duplication, an amount equal
to (a) the sum of: (i) 95% of Eligible Accounts Receivable; plus
----
(ii) 75% of Eligible Unbilled Accounts of the Borrower; plus
----
(iii) 100% of all Cash and the face value of all Cash Equivalents
(other than the Accounts); plus (iv) 50% of Eligible Inventory;
----
plus (v) 95% of Eligible PGA Receivables; plus (vi) 75% of
---- ----
Eligible Marketing Accounts (provided that the amount of Eligible
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Marketing Accounts to be used in the determination of the Bor-
rowing Base shall never exceed $12,000,000.00), in each case as
reflected on the books of the Borrower as of the time at which
the Borrowing Base is being determined; minus (b) the aggregate
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principal amounts then outstanding under the Short-Term Credit
Facility Notes. Notwithstanding the foregoing, however, that if
(and for so long as) Borrower's Senior Funded Debt is rated equal
to or lower than Ba2 by Xxxxx'x Investor Service, Inc. or BB by
Standard and Poor's Corporation, the maximum amount of Cash and
Cash Equivalents included in the Borrowing Base shall be
$5,000,000.00.
"Borrowing Date" shall mean a date upon which the Borrower
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has requested a Loan is to be made in a Notice of Borrowing
delivered pursuant to Section 2.1.
"Business Day" shall mean a day when the Agent is open for
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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.
"CD Rate" shall mean, with respect to the applicable Rate
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Period in effect for each CD Rate Loan, the sum of (a) the
average rate of interest determined by the Agent to be the bid
rate per annum on such date, of at least two (2) certificate of
deposit dealers of recognized standing selected by the Agent for
the purchase at face value of certificates of deposit having a
maturity equal to such Rate Period and in an amount substantially
equal to the principal amount of the CD Rate Loan to be made by
the Agent for such Rate Period, divided by the result obtained by
subtracting from 100% the CD Rate Reserve Percentage plus (b) the
----
annual assessment rate estimated by the Agent on such date deter-
mined by then current annual assessment payable by the Agent to
the Federal Deposit Insurance Corporation for such Corporation's
insuring Dollar deposits of the Agent in the United States,
expressed as a percentage, plus (c) the following:
----
if, and for so long as the Borrower's Senior Funded Debt is
rated:
additional percentage
per annum to be added
by Moody's Investors by Standard and to the rate determined
Service, Inc. Poor's Corporation by (a) and (b) above
higher than Baal and higher than BBB+ 5/8 of 1 percent (5/8%)
---
higher than Bal and higher than BB+
---
but lower than or but lower than or 7/8 of 1 percent (7/8%)
equal to Bal equal to BBB+
lower than or or lower than or
--
equal to Ba1 equal to BB+ 1 and 3/8 of 1 percent
(1-3/8%)
"CD Rate Loan" shall mean any Loan which bears interest at
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the CD Rate.
"CD Rate Reserve Percentage" for any Rate Period for any CD
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Rate Loan shall mean the reserve percentage applicable on the
first day of the applicable Rate Period 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, but not limited to, any
emergency, supplemental or other marginal reserve requirement)
applicable, or to become applicable to the Agent, for a period
equal to the applicable Rate Period to U.S. Dollar nonpersonal
time deposits in the United States with a maturity corresponding
to the end of the Rate Period, applied to the certificates of
deposit used in the calculation of the CD Rate for such Rate
Period.
"Capital Lease" shall mean any lease of any Property
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(whether real, personal, or mixed) which, in conformity with
GAAP, is accounted for as a capital lease on the balance sheet of
the lessee.
"Capitalized Lease Obligations" shall mean, for the Borrower
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and its Subsidiaries, any of their obligations that should, in
accordance with GAAP, be recorded as Capital Leases.
"Cash" shall mean for any Person currency and coin on hand
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together with the Dollar amount of collected balances in deposit
accounts of such Person at depository institutions in the United
States whose deposits are insured by the United States of America
or an agency thereof, excluding any such accounts in which any
other Person has an interest superior to that of the Person in
question.
"Cash Equivalents" shall mean (a) marketable direct obliga-
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tions issued or unconditionally guaranteed by the United States
Government or issued by an agency thereof and backed by the full
faith and credit of the United States, in each case maturing
within ninety (90) days after the date of acquisition thereof;
(b) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within
ninety (90) days after the date of acquisition thereof and, at
the time of acquisition, having the highest rating obtainable
from either Standard and Poor's Corporation or Xxxxx'x Investors
Service, Inc. (or, if at any time neither Standard and Poor's
Corporation nor Xxxxx'x Investors Service, Inc. shall be rating
such obligations, then from such other nationally recognized
rating services acceptable to the Agent); (c) commercial paper
maturing no more than ninety (90) days after the date of creation
thereof and, at the time of acquisition, having a rating of at
least A-1 or P-1 from either Standard and Poor's Corporation or
Xxxxx'x Investors Service, Inc. (or, if at any time neither
Standard and Poor's Corporation nor Xxxxx'x Investors Service,
Inc. shall be rating such obligations, then the highest rating
from such other nationally recognized rating services acceptable
to the Agent); (d) domestic and Eurodollar certificates of
deposit or bankers' acceptances maturing within ninety (90) days
after the date of acquisition thereof issued by any Bank or any
commercial bank organized under the laws of the United States of
America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $250,000,000; and
(e) accounts and investments in collective funds invested solely
in instruments listed in (a) through (d) above, in any combina-
tion.
"Cash Interest Expense" shall mean, for any period, total
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interest expense to the extent paid in cash (including the
interest component of Capitalized Lease Obligations and capi-
talized interest and all dividends and interest paid on or with
respect to Borrower's Structured Securities) of the Borrower and
any Subsidiary for such period all as determined in conformity
with GAAP.
"Closing Date" shall mean November 10, 1998.
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"Code" shall mean the Internal Revenue Code of 1986, as
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amended, as now or hereafter in effect, together with all regu-
lations, rulings and interpretations thereof or thereunder issued
by the Internal Revenue Service.
"Commitment" shall have the meaning set forth in Section
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2.1(a) and "Commitments" shall mean, collectively, the Commit-
ments of all of the Banks.
"Consolidated Net Income" shall mean for any period the
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consolidated net income of the Borrower and all Subsidiaries,
determined in accordance with GAAP, for such period.
"Consolidated Net Worth" shall mean, for any period for the
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Borrower and all Subsidiaries, the consolidated stockholders'
equity of the Borrower and its Subsidiaries, and preferred
securities of the Borrower's Subsidiaries, all determined in
accordance with GAAP, less the sum of the following consolidated
items, without duplication: the book amount of any deferred
charges (including, but not limited to, unamortized debt discount
and expenses, organization expenses, experimental and development
expenses, but excluding prepaid expenses) that are not permitted
to be recovered by the Borrower under rates permitted under rate
tariffs.
"Consolidated Total Capitalization" shall mean at any time
---------------------------------
the sum of: (a) Consolidated Net Worth at such time; plus (b)
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the principal amount of outstanding Debt of the Borrower and its
Subsidiaries.
"Consolidated Total Indebtedness" shall mean all Debt of the
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Borrower and all Subsidiaries including any current maturities
thereof, plus, without duplication, all amounts outstanding under
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Standby Letters of Credit and, without duplication, all Facility
Letter of Credit Obligations.
"Debt" means (without duplication), for any Person indebted-
----
ness 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 con-
tract rights) owned by such Person, whether or not such Person
has assumed or become liable for the payment of such indebtedness
or obligations; (c) Capitalized Lease Obligations of such Person;
(d) obligations under direct or indirect Guaranties other than
Guaranties issued by the Borrower covering obligations of the
Southern Union Trusts under the Structured Securities.
"Debtor Laws" shall mean all applicable liquidation, con-
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servatorship, bankruptcy, moratorium, arrangement, receivership,
insolvency, reorganization, or similar laws, or general equitable
principles from time to time in effect affecting the rights of
creditors generally.
"Default" shall mean any of the events specified in Section
11, whether or not there has been satisfied any requirement in
connection with such event for the giving of notice, or the lapse
of time, or the happening of any further condition, event or act.
"Dollars" and "$" shall mean lawful currency of the United
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States of America.
"Domestic Lending Office" shall mean, with respect to each
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Bank, the office of such Bank specified as its "Domestic Lending
Office" opposite its name on Schedule 13.4 attached hereto and
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made a part hereof or such other office of such Bank as such Bank
may from time to time specify to the Borrower and the Agent.
"EBDIT" shall mean for any period the sum of consolidated
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net earnings for the Borrower and its Subsidiaries (excluding for
all purposes hereof all extraordinary items) plus each of the
----
following to the extent actually deducted in deriving net
earnings: (a) depreciation and amortization expense; (b)
interest expense; (c) federal and state income taxes; and (d)
dividends charged against income on or with respect to Structured
Securities, in each case before adjustment for extraordinary
items, as shown in the financial statements of Borrower and its
Subsidiaries referred to in Section 7.2 hereof (excluding for all
purposes hereof all extraordinary items), and determined in
accordance with GAAP.
"Eligible Accounts Receivable" shall mean Accounts payable
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within 30 days of the date of invoice thereof other than the
following (determined without duplication):
(a) Accounts which remain unpaid sixty (60) days after the
original due date of the applicable invoice;
(b) all Accounts owing by a single Account Debtor,
including a currently scheduled Account, if five percent (5%) or
more of the balance owing by such Account Debtor to the Borrower
remains unpaid ninety (90) days after the original due date of
the applicable invoice or invoices;
(c) Accounts in excess of $10,000 each outstanding, with
respect to which the Account Debtor has asserted a counterclaim,
dispute, or other claim or defense;
(d) Accounts which are not payable in Dollars;
(e) Accounts with respect to which the Account Debtor has:
(i) applied for or consented to the appointment of a receiver,
trustee, custodian, intervenor, or liquidator of such Account
Debtor or of all or a substantial part of its assets; (ii) filed
a voluntary petition in bankruptcy, admitted in writing that it
is unable to pay its debts as they become due, or generally has
not paid its debts as they became due; (iii) made a general
assignment for the benefit of creditors; (iv) filed a petition or
answer to seek reorganization or an arrangement with creditors or
to take advantage of any Debtor Laws; (v) filed an answer
admitting the material allegations of or consenting to, or
defaulted in answering, a petition filed against it in any bank-
ruptcy, reorganization, or insolvency proceeding; (vi) taken cor-
porate action for the purpose of effecting any of the foregoing;
(vii) had an involuntary petition
or complaint filed against it seeking bankruptcy or reorganiza-
tion or the appointment of a receiver, custodian, trustee, inter-
venor, or liquidator of it, or all or substantially all of its
assets; or (viii) had an order, order for relief, judgment, or
decree entered by any court of competent jurisdiction or other
competent authority approving a petition or complaint seeking
reorganization of it or appointing a receiver, custodian,
trustee, intervenor or liquidator of it or of all or substan-
tially all of its assets, provided, however, that Accounts that
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are of the type described in this paragraph (e) but not excluded
from Eligible Accounts Receivable by paragraphs (a) through (d)
or (f) or (g) of this definition shall not be excludable from
Eligible Accounts Receivable if and for so long as a cash deposit
stands as security for the obligations of the Account Debtor pur-
suant to Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code or the
Account is being paid currently and is entitled to administrative
priority under Section 507(a) of the United States Bankruptcy
Code (or similar provision of other Debtor Laws);
(f) Accounts payable by Affiliates of the Borrower;
(g) Accounts with respect to which the Account Debtor is
incorporated in, or primarily conducting business in, any juris-
diction outside the United States of America;
provided, however, that Eligible Accounts Receivables do not
-------- ------- include PGA Receivables.
"Eligible Assignee" shall mean: (i) any Bank, or any
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Affiliate of any Bank, 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 com-
mercial 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.
"Eligible Inventory" means Inventory other than the fol-
------------------
lowing (without duplication):
(a) Inventory which the Agent determines, in the exercise
of its reasonable discretion and in accordance with its customary
business practices, to be unacceptable due to age, type, cate-
gory, and/or quantity;
(b) Inventory which is work in process or purchased for
use with respect to a contract and with respect to which Borrower
has billed, or is entitled to xxxx, an advance payment;
(c) Inventory which is in transit in the United States of
America and which is under the control and ownership of a Person
other than Borrower;
(d) Inventory which is located outside of the United
States of America; and
(e) Inventory which is not useable or saleable in the
ordinary course of Borrower's business.
"Eligible Marketing Accounts" shall mean, for any date of
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determination of the Borrowing Base, any Accounts evidencing
Marketing Loans ("Marketing Accounts") other than the following
(determined without duplication):
(a) Marketing Accounts which are past due by more than
sixty (60) days;
(b) all Marketing Accounts owing by a single Account
Debtor, including a currently scheduled Marketing Account, if
five percent (5%) or more of the balance owing by such Account
Debtor to the Borrower is past due by more than ninety (90) days;
(c) Marketing Accounts in excess of $10,000 each out-
standing, with respect to which the Account Debtor has asserted a
counterclaim, dispute, or other claim or defense;
(d) Marketing Accounts which are not payable in Dollars;
(e) Marketing Accounts with respect to which the Account
Debtor has: (i) applied for or consented to the appointment of a
receiver, trustee, custodian, intervenor, or liquidator of such
Account Debtor or of all or a substantial part of its assets;
(ii) filed a voluntary petition in bankruptcy admitted in writing
that it is unable to pay its debts as they become due, or
generally has not paid its debts as they became due; (iii) made a
general assignment for the benefit of creditors; (iv) filed a
petition or answer to seek reorganization or an arrangement with
creditors or to take advantage of any Debtor Laws; (v) filed an
answer admitting the material allegations of or consenting to, or
defaulted in answering, a petition filed against it in any bank-
ruptcy, reorganization, or insolvency proceeding; (vi) taken cor-
porate action for the purpose of effecting any of the foregoing;
(vii) had an involuntary petition or complaint filed against it
seeking bankruptcy or reorganization or the appointment of a
receiver, custodian, trustee, intervenor, or liquidator of it, or
all or substantially all of its assets; or (viii) had an order,
order for relief, judgment, or decree entered by any court of
competent jurisdiction or other competent authority approving a
petition or complaint seeking reorganization of it or appointing
a receiver, custodian, trustee, intervenor or liquidator of it or
of all or substantially all of its assets, provided, however,
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that Accounts that are of the type described in this paragraph
(e) but not excluded from Eligible Marketing Accounts paragraphs
(a) through (d) or (f) of this definition shall not be excludable
from Eligible Marketing Accounts if and for so long as a cash
deposit stands as security for the obligations of the Account
Debtor pursuant to Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy
Code or the Account is being paid currently and is entitled to
administrative priority under Section 507(a) of the United States
Bankruptcy Code (or similar provision of other Debtor Laws); and
(f) Marketing Accounts payable by Affiliates of the
Borrower.
"Eligible PGA Receivables" shall mean PGA Receivables that
------------------------
are classified as current receivables in accordance with GAAP,
other than the following (determined without duplication):
(a) PGA Receivables which remain unpaid sixty (60) days
after the original date of the applicable invoice;
(b) all PGA Receivables owing by a single Account Debtor,
including a currently scheduled PGA Receivable, if five percent
(5%) or more of the balance owing by such Account Debtor to the
Borrower remains unpaid ninety (90) days after the original date
of the applicable invoice or invoices;
(c) PGA Receivables in excess of $10,000 each outstanding,
with respect to which the Account Debtor has asserted a counter-
claim, dispute, or other claim or defense;
(d) PGA Receivables which are not payable in Dollars;
(e) PGA Receivables with respect to which the Account
Debtor has: (i) applied for or consented to the appointment of a
receiver, trustee, custodian, intervenor, or liquidator of such
Account Debtor or of all or a substantial part of its assets;
(ii) filed a voluntary petition in bankruptcy, admitted in
writing that it is unable to pay its debts as they become due, or
generally has not paid its debts as they became due; (iii) made a
general assignment for the benefit of creditors; (iv) filed a
petition or answer to seek reorganization or an arrangement with
creditors or to take advantage of any Debtor Laws; (v) filed an
answer admitting the material allegations of or consenting to, or
defaulted in answering, a petition filed against it in any bank-
ruptcy, reorganization, or insolvency proceeding; (vi) taken cor-
porate action for the purpose of effecting any of the foregoing;
(vii) had an involuntary petition or complaint filed against it
seeking bankruptcy or reorganization or the appointment of a
receiver, custodian, trustee, intervenor, or liquidator of it, or
all or substantially all of its assets; or (viii) had an order,
order for relief, judgment, or decree entered by any court of
competent jurisdiction or other competent authority approving a
petition or complaint seeking reorganization of it or appointing
a receiver, custodian, trustee, intervenor or liquidator of it or
all or substantially all of its assets, provided, however, that
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PGA Receivables that are of the type described in this paragraph
(e) but not excluded from Eligible PGA Receivables by paragraphs
(a) through (d) or (f) or (g) of this definition shall not be
excludable from Eligible PGA Receivables if and for so long as a
cash deposit stands as security for the obligations of the
Account Debtor pursuant to Section 366 of the United States Bank-
ruptcy Code or the PGA Receivable is being paid currently and is
entitled to administrative priority under Section 507(a) of the
United States Bankruptcy Code (or similar provision of other
Debtor Laws);
(f) PGA Receivables payable by Affiliates of the Borrower;
or
(g) PGA Receivables with respect to which the Account
Debtor is incorporated in, or primarily conducting business in,
any jurisdiction outside the United States of America;
provided, however, that Eligible PGA Receivables do not include
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Eligible Accounts Receivable.
"Eligible Unbilled Accounts" shall mean, for any date of
--------------------------
determination of the Borrowing Base, the dollar amount of gas
sales by the Borrower to customers under supply contracts for
which the Borrower has delivered the gas to the purchaser, but
which has not been billed and has not become the subject of an
account receivable and which the Borrower intends to xxxx on a
current basis (and so accounts for such amount), which dollar
amount has been determined in accordance with the applicable
tariff, franchise or license agreement, less (without duplica-
----
tion):
(a) gas sales to Account Debtors for which five percent
(5%) or more of the balance of Accounts owing by such Account
Debtor to the Borrower remains unpaid ninety (90) days after the
original date of the applicable invoice or invoices;
(b) gas sales with respect to which the purchaser has: (i)
applied for or consented to the appointment of a receiver,
trustee, custodian, intervenor, or liquidator of such purchaser
or of all or a substantial part of its assets; (ii) filed a
voluntary petition in bankruptcy, admitted in writing that it is
unable to pay its debts as they become due, or generally has not
paid its debts as they became due; (iii) made a general assign-
ment for the benefit of creditors; (iv) filed a petition or
answer to seek reorganization or an arrangement with creditors or
to take advantage of any Debtor Laws; (v) filed an answer
admitting the material allegations of or consenting to, or
defaulted in answering, a petition filed against it in any bank-
ruptcy, reorganization, or insolvency proceeding; (vi) taken cor-
porate
action for the purpose of effecting any of the foregoing; (vii)
had an involuntary petition or complaint filed against it seeking
bankruptcy or reorganization or the appointment of a receiver,
custodian, trustee, intervenor, or liquidator of it, or all or
substantially all of its assets; or (viii) had an order, order
for relief judgment, or decree entered by any court of competent
jurisdiction or other competent authority approving a petition or
complaint seeking reorganization of it or appointing a receiver,
custodian, trustee, intervenor or liquidator of it or of all or
substantially all of its assets, provided, however, that gas
-------- -------
sales that are of the type described in this paragraph (b) but
not excluded from Eligible Unbilled Accounts by paragraphs (a) or
(c) through (e) of this definition shall not be excludable from
Eligible Unbilled Accounts if and for so long as a cash deposit
stands as security for the obligations of the Account Debtor
pursuant to Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code or
the Unbilled Account is being paid currently and is entitled to
administrative priority under Section 507(a) of the United States
Bankruptcy Code (or similar provision of other Debtor Laws);
(c) gas sales outside the U.S. or to Account Debtors whose
Accounts are not payable in Dollars;
(d) gas sales that have not been billed within thirty-five
(35) days following the delivery of the gas to the purchaser; and
(e) gas sales to Affiliates of the Borrower.
"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. Section 9601 et seq.), as amended from time
to time, and any and all rules and regulations issued or promul-
gated thereunder ("CERCLA"); (b) the Resource Conservation and
Recovery Act (as amended by the Hazardous and Solid Waste Amend-
ment of 1984, 42 U.S.C.A. Section 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. Section
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.C.A. Section 1251 et seq., as amended from time
to time, and any and all rules and regulations promulgated there-
under; (e) the Toxic Substances Control Act, 15 U.S.C.A. Section
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 environ-
ment (including, without limitation, those laws, statutes, rules,
and regulations regulating the disposal, removal, production,
storing, refining, handling, transferring, processing, or trans-
porting 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.
"ERISA" shall mean the Employee Retirement Income Security
-----
Act of 1974, as amended from time to time, and all rules, regu-
lations, rulings and interpretations thereof issued by the Inter-
nal Revenue Service or the Department of Labor thereunder.
"Eurocurrency Liabilities" shall have the meaning assigned
------------------------
to that term in Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Eurodollar Lending Office" shall mean, with respect to each
-------------------------
Bank, the office of such Bank specified as its "Eurodollar
Lending Office" opposite its name on Schedule 13.4 attached here-
-------------
to and made a part hereof (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Bank
as such Bank may from time to time specify to the Borrower and
the Agent.
"Eurodollar Rate" shall mean with respect to the applicable
---------------
Rate Period in effect for each Eurodollar Rate Loan, the sum of
(a) the quotient obtained by dividing (i) the annual rate of
interest determined by the Agent, at or before 11:00 a.m. Houston
time (or as soon thereafter as practicable), on the second Busi-
ness Day prior to the first day of such Rate Period, to be the
annual rate of interest at which deposits of Dollars are offered
to the Agent by prime banks in whatever Eurodollar interbank mar-
ket may be selected by the Agent in its sole discretion, acting
in good faith, at the time of determination and in accordance
with then existing practice in such market for delivery on the
first day of such Rate Period in immediately available funds and
having a maturity equal to such Rate Period in an amount sub-
stantially equal to the amount of such Eurodollar Rate Loan by
(ii) a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage for such Rate Period, plus (b) an additional percent-
----
age per annum changing with the rating of the Borrower's Senior
Funded Debt and determined in accordance with the following grid:
Additional
Rating of the Borrower's Senior Funded Debt Percentage
Per Annum
-----------------------------------------------------------------
Equal to or greater than A3 by Moody's Investor Ser-
vice, Inc. and equal to or greater than A- by 0.300%
---
Standard and Poor's Corporation
Baa1 by Xxxxx'x Investor Service, Inc. or BBB+ by 0.400%
--
Standard and Poor's Corporation
Baa2 by Xxxxx'x Investor Service, Inc. or BBB by 0.450%
--
Standard and Poor's Corporation
Baa3 by Xxxxx'x Investor Service, Inc. or BBB- by 0.500%
--
Standard and Poor's Corporation
Equal to or less than Ba1 by Moody's Investor Ser-
vice, Inc. and equal to or less than BB+ by 1.000%
---
Standard and Poor's Corporation
"Eurodollar Rate Loan" shall mean any Loan that bears
--------------------
interest at the Eurodollar Rate.
"Eurodollar Rate Reserve Percentage" of the Agent for any
----------------------------------
Rate Period for any Eurodollar Rate Loan shall mean the reserve
percentage applicable during such Rate Period (or if more than
one such percentages shall be so applicable, the daily average of
such percentages for those days in such Rate Period during which
any such percentage shall be so applicable) under regulations
issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any
emergency,
supplemental, or other marginal reserve requirement) for member
banks of the Federal Reserve System with deposits exceeding
$1,000,000,000 with respect to liabilities or assets consisting
of or including Eurocurrency Liabilities having a term equal to
such Rate Period.
"Event of Default" shall mean any of the events specified in
----------------
Section 11, provided that there has been satisfied any require-
-------- ----
ment in connection with such event for the giving of notice, or
the lapse of time, or the happening of any further condition,
event or act.
"Expiration Date" shall mean the last day of a Rate Period.
---------------
"Facility Letter(s) of Credit" shall mean, in the singular
----------------------------
form, any Standby Letter of Credit issued by an Issuing Bank for
the account of the Borrower pursuant to Section 3 and, in the
plural form, all such Standby Letters of Credit issued for the
account of the Borrower.
"Facility Letter of Credit Fee Percentage" shall mean a fee
----------------------------------------
expressed as a percent per annum for all periods equal to a per-
centage per annum changing with the rating of the Borrower's
Senior Funded Debt and determined in accordance with the fol-
lowing grid:
Additional
Rating of the Borrower's Senior Funded Debt Percentage
Per Annum
-----------------------------------------------------------------
Equal to or greater than A3 by Moody's Investor Ser-
vice, Inc. and equal to or greater than A- by 0.300%
---
Standard and Poor's Corporation
Baa1 by Xxxxx'x Investor Service, Inc. or BBB+ by 0.400%
--
Standard and Poor's Corporation
Baa2 by Xxxxx'x Investor Service, Inc. or BBB by 0.450%
--
Standard and Poor's Corporation
Baa3 by Xxxxx'x Investor Service, Inc. or BBB- by 0.500%
--
Standard and Poor's Corporation
Equal to or less than Ba1 by Moody's Investor Ser- 1.000%
vice, Inc. and equal to or less than BB+ by
---
Standard and Poor's Corporation
"Facility Letter of Credit Obligations" shall mean, at any
-------------------------------------
particular time, the sum of (a) the Reimbursement Obligations,
plus (b) the aggregate undrawn face amount of all outstanding
----
Facility Letters of Credit, in each case as determined by the
Agent.
"Federal Funds Rate" shall mean, for any period, a fluct-
------------------
uating 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 Xxxxxx Prebon and Xxxxxx
Xxx Xxxxxx or two other federal funds brokers of recognized
standing selected by the Agent.
"Funded Debt" means all Debt of a Person which matures more
-----------
than one year from the date of creation or matures within one
year from such date but is renewable or extendible, at the option
of such Person, by its terms or by the terms of any instrument or
agreement relating thereto, to a date more than one year from
such date or arises under a revolving credit or similar agreement
which obligates Banks to extend credit during a period of more
than one year from such date, including, without limitation, all
amounts of any Funded Debt required to be paid or prepaid within
one year from the date of determination of the existence of any
such Funded Debt.
"GAAP" shall mean generally accepted accounting principles,
----
applicable to the circumstances as of the date of determination,
applied consistently with such principles as applied in the
preparation of the Borrowers audited financial statements
referred to in Section 7.2.
"General Intangibles" shall mean all of the Borrower's con-
-------------------
tract rights now existing or hereafter acquired, arising or
created under contracts or arrangements for the purchase, sale,
storage or transportation of gas or other Inventory.
"Governmental Authority" shall mean any (domestic or
----------------------
foreign) federal, state, county, municipal, parish, provincial,
or other government, or any department, commission, board, court,
agency (including, without limitation, the EPA), or any other
instrumentality of any of them or any other political subdivision
thereof, and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of, or per-
taining to, government, including, without limitation, any arbi-
tration panel, any court, or any commission.
"Governmental Requirement" means any Order, Permit, law,
------------------------
statute (including, without limitation, any Environmental Pro-
tection Statute), code, ordinance, rule, regulation, certificate,
or other direction or requirement of any Governmental Authority.
"Guaranty" means, with respect to any Person, any obliga-
--------
tion, 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 collec-
tion in the ordinary course of business.
"Hazardous Materials" shall mean any substance which, pursu-
-------------------
ant to any Environmental Laws, requires special handling in its
collection, use, storage, treatment or disposal, including but
not limited to any of the following: (a) any "hazardous waste" as
defined by RCRA; (b) any "hazardous substance" as defined by
CERCLA; (c) asbestos; (d) polychlorinated biphenyls; (e) any
flammables, explosives or radioactive materials; and (f) any
substance, the presence of which on any of the Borrower's or any
Subsidiary's properties is prohibited by any Governmental
Authority.
"Highest Lawful Rate" shall mean, with respect to each Bank,
-------------------
the maximum nonusurious interest rate, if any, that at any time
or from time to time may be contracted for, taken, reserved,
charged, or received with respect to the Notes or on other
amounts, if any, due to such Bank pursuant to this Agreement,
under laws applicable to such Bank which are presently in effect,
or, to the extent allowed by law, under such applicable laws
which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow.
"Indemnified Parties" shall have the meaning set forth in
-------------------
Section 13.16.
"Interest Payment Date" shall mean (a) as to any Eurodollar
---------------------
Rate Loan in which the Rate Period with respect thereto is not
greater than three (3) months, the date on which such Rate Period
ends; (b) as to any Eurodollar Rate Loan in which the Rate Period
with respect thereto is greater than three (3) months, the date
on which the third month of such Rate Period ends, and the date
on which each such Rate Period ends; (c) as to any Alternate Base
Rate Loan or any CD Rate Loan in which the Rate Period with
respect thereto is not greater than ninety (90) days, the date on
which such Rate Period ends; (d) as to any CD Rate Loan in which
the Rate Period with respect thereto is greater than ninety (90)
days, the ninetieth (90th) day of such Rate Period, and the date
on which each such Rate Period ends; and (e) as to all Loans,
such time as the principal of and interest on the Notes shall
have been paid in full.
"Inventory" means, with respect to Borrower or any Subsidi-
---------
ary, all of such Person's now owned or hereafter acquired or
created inventory in all of its forms and of every nature,
wherever located, whether acquired by purchase, merger, or
otherwise, and all raw materials, work in process therefor and
finished goods thereof, and all supplies, materials, and products
of every nature and description used, usable, or consumed in
connection with the manufacture, packing, shipping, advertising,
selling, leasing, furnishing, or production of such goods, and
shall include, in any event, all "inventory" (within the meaning
of such term in the Uniform Commercial Code in effect in any
applicable jurisdiction), whether in mass or joint, or other
interest or right of any kind in goods which are returned to,
repossessed by, or stopped in transit by such Person, and all
accessions to any of the foregoing and all products of any of the
foregoing.
"Investment" of any Person means any investment so classi-
----------
fied under GAAP, and, whether or not so classified, includes (a)
any direct or indirect loan advance made by it to any other Per-
son; (b) any direct or indirect Guaranty for the benefit of such
Person; (c) any capital contribution to any other Person; and (d)
any ownership or similar interest in any other Person; and the
amount of any Investment shall be the original principal or
capital amount thereof (plus any subsequent principal or capital
----
amount) minus all cash returns of principal or capital thereof.
-----
"Issuing Bank" shall mean (a) Banks and/or Affiliates of
------------
Banks listed on the signature pages of this Agreement attached
hereto and made a part hereof, or (b) any Bank or any Affiliate
not listed on the signature pages of this Agreement in the event
that such Bank or such Affiliate agrees, in its sole discretion
at the request of the Borrower, and on the terms and conditions
mutually acceptable to such Bank or such Affiliate, as the case
may be, to become an Issuing Bank for the purpose of issuing one
or more Facility Letters of Credit pursuant to Section 3. When a
Bank is referred to as an Issuing Bank under this Agreement, such
reference to such Bank shall be interpreted to refer to such Bank
solely in its capacity as an Issuing Bank.
"L/C Subfacility" shall mean that portion of the Commitments
---------------
equal to $25,000,000.00.
"Letter(s) of Credit" shall mean, in the singular form, any
-------------------
letter of credit issued by any Person for the account of the
Borrower and, in the plural form, all such letters of credit
issued by any Person for the account of the Borrower.
"Letter of Credit Commitment" shall mean, with respect to
---------------------------
each Issuing Bank, such Issuing Bank's commitment to issue
Facility Letters of Credit.
"Letter of Credit Reimbursement Agreement" shall mean, with
----------------------------------------
respect to a Facility Letter of Credit, such form of application
therefor and form of reimbursement agreement therefor (whether in
a single or several documents, taken together) as the Issuing
Bank from which the Facility Letter of Credit is requested may
employ in the ordinary course of business for its own account,
whether or not providing for collateral security, with such
modifications thereto as may be agreed upon by such Issuing Bank
and the account party and as are not materially adverse to the
interests of any Bank; provided, however, in the event of any
-------- -------
conflict between the terms of any Letter of Credit Reimbursement
Agreement and this Agreement, the terms of this Agreement shall
control; and provided, further, that any grant or purported grant
-------- -------
of a security interest in favor of the Issuing Bank contained in
any Letter of Credit Reimbursement Agreement shall be void.
"Lien" shall mean any mortgage, deed of trust, pledge,
----
security interest, encumbrance, lien (including without limita-
tion, 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 there-
of), or the interest of the lessor under any Capital Lease.
"Loan" or "Loans" shall mean a loan or loans, respectively,
---- -----
from the Banks to the Borrower made under Section 2.1.
"Loan Document" shall mean this Agreement, any Note, or any
-------------
other document, agreement or instrument now or hereafter executed
and delivered by the Borrower or any other Person in connection
with any of the transactions contemplated by any of the fore-
going, as any of the foregoing may hereafter be amended, modi-
fied, or supplemented, and "Loan Documents" shall mean,
--------------
collectively, each of the foregoing.
"Majority Bank" shall mean at any time Banks holding at
-------------
least 66-2/3% of the unpaid principal amounts outstanding under
the Notes, or, if no such amounts are outstanding, 66-2/3% of the
Pro Rata Percentages.
"Marketing Loans" shall mean those loans or advances
---------------
described in and permitted by Section 10.4(e).
"Material Adverse Effect" shall mean any material adverse
-----------------------
effect on (a) the financial condition, business, properties,
assets, prospects or operations of the Borrower and its Subsidi-
aries taken as a whole, or (b) the ability of the Borrower to
perform its obligations under this Agreement, any Note or any
other Loan Document on a timely basis.
"Maturity Date" shall mean June 30, 2001, as modified pursu-
-------------
ant to the provisions of Section 2.4 hereof.
"Non-Facility Letter of Credit" shall mean any Letter of
-----------------------------
Credit which is not a Facility Letter of Credit.
"Note" or "Notes" shall mean a promissory note or notes,
---- -----
respectively, of the Borrower, executed and delivered under this
Agreement.
"Notice of Borrowing" shall have the meaning set forth in
-------------------
Section 2.1(c).
"Obligations" shall mean (a) all obligations of the Borrower
-----------
to the Bank under this Agreement, the Notes and all other Loan
Documents to which it is a party; (b) all Reimbursement Obliga-
tions; and (c) any other obligations of the Borrower with respect
to a Facility Letter of Credit.
"Officer's Certificate" shall mean a certificate signed in
---------------------
the name of the Borrower or a Subsidiary, as the case may be, by
either its President, one of its Vice Presidents, its Treasurer,
its Secretary, or one of its Assistant Treasurers or Assistant
Secretaries.
"Person" shall mean an individual, partnership, joint ven-
------
ture, corporation, joint stock company, bank, trust, unincorpo-
rated organization and/or a government or any department or
agency thereof.
"PGA Receivables" shall mean, with respect to any Accounts
---------------
arising under any tariff or franchise agreement that permits the
Borrower to recover from customers substantially all of the
amount by which the cost of gas purchases exceeds the amount cur-
rently billed to customers for delivery of such gas, the portion
of such Accounts that has been billed to customers for the
delivery of gas representing the Borrowers recovery of the excess
cost of gas over the amount otherwise currently billed to such
customer.
"Plan" shall mean any plan subject to Title IV of ERISA and
----
maintained for employees of the Borrower or of any member of a
"controlled group of corporations," as such term is defined in
the Code, of which the Borrower or any Subsidiary is a member, or
any such plan to which the Borrower or any Subsidiary is required
to contribute on behalf of its employees.
"Prime Rate" shall mean, on any day, the rate determined by
----------
the Agent as being its prime rate for that day. Without notice
to the Borrower or any other Person, the Prime Rate shall change
automatically from time to time as and in the amount by which
said Prime Rate shall fluctuate, with each such change to be
effective as of the date of each change in such Prime Rate. The
Prime Rate is a reference rate and does not necessarily represent
the lowest or best rate actually charged to any customer. The
Agent may make commercial or other loans at rates of interest at,
above or below the Prime Rate.
"Pro-Rata Percentage" shall mean with respect to any Bank, a
-------------------
fraction (expressed as a percentage), the numerator of which
shall be the amount of such Bank's Commitment and the denominator
of which shall be the aggregate amount of all the Commitments of
the Banks, as adjusted from time to time in accordance with
Section 4.6.
"Property" shall mean any interest or right in any kind of
--------
property or asset, whether real, personal, or mixed, owned or
leased, tangible or intangible, and whether now held or hereafter
acquired.
"Qualifying Assets" shall mean (i) equity interests owned
-----------------
one hundred percent (100%) by the Borrower in entities engaged
primarily in the business of natural gas transportation and local
distribution and propane sales and distribution (including, with-
out limitation, the promotion or marketing and sale of compressed
natural gas and liquefied natural gas) (singly, a "Qualified
Entity," collectively, "Qualified Entities"), or productive assets
used in such businesses; provided, however, that as to any
-------- -------
related group of such Assets acquired for a purchase price of
more than Forty Million Dollars ($40,000,000.00) (including the
amount of any Debt assumed or deemed incurred in connection with
such acquisition), the Majority Banks shall have delivered to the
Borrower their prior written consent; and (ii) equity interests
of less than one hundred percent (100%) owned by the Borrower in
one or more Qualifying Entities, provided that at any one time
the amount of the Borrower's investment in Qualifying Assets
described in clause (ii) (measured by the aggregate purchase
price paid therefor) does not exceed $30,000,000.00 (including
the amount of Debt assumed or deemed incurred by Borrower in
connection with such acquisition).
"Rate Period" shall mean the period of time for which the
-----------
Alternate Base Rate, the Eurodollar Rate or the CD Rate shall be
in effect as to any Alternate Base Rate Loan, Eurodollar Rate
Loan or CD Rate Loan, as the case may be, commencing with the
Borrowing Date or the Expiration Date of the immediately pre-
ceding Rate Period, as the case may be, applicable to and ending
on the effective date of any reborrowing made as provided in
Section 2.2(a) as the Borrower may specify in the related Notice
of Borrowing subject, however, to the early termination provi-
sions of the second sentence of Section 2.3(b) relating to any
Eurodollar Rate Loan; provided, however, that any Rate Period
-------- -------
that would otherwise end on a day which is not a Business Day
shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such
Rate Period shall end on the next preceding Business Day. For
any Alternate Base Rate Loan, the Rate Period shall be 90 days;
for any Eurodollar Rate Loan the Rate Period may be 15 days, 1,
2, 3, or 6 months; and for any CD Rate Loan the Rate Period may
be 30, 60, 90, or 180 days, in each case as specified in the
applicable Notice of Borrowing, subject to the provisions of
Sections 2.2 and 2.3.
"Reimbursement Obligations" shall mean the reimbursement or
-------------------------
repayment obligations of the Borrower to Issuing Banks pursuant
to this Agreement or the applicable Letter of Credit Reimburse-
ment Agreement with respect to Facility Letters of Credit issued
for the account of the Borrower.
"Release" shall mean a "release", as such term is defined in
-------
CERCLA.
"Restricted Payment" shall mean the Borrower's declaration
------------------
or payment of any dividend on, or purchase or agreement to pur-
chase any of, or making of any other distribution with respect
to, any of its capital stock, except any such dividend, purchase
or distribution consisting solely of capital stock of the Bor-
rower, and except any dividend or interest paid on or with
respect to the Borrower's Structured Securities to the extent
that such amounts are included in Cash Interest Expense.
"Securities Act" shall have the meaning set forth in Section
--------------
13.1.
"Senior Funded Debt" shall mean Funded Debt of the Borrower
------------------
excluding Debt that is contractually subordinated in right of
payment to any other Debt.
"Senior Notes" means Borrower's senior notes due or maturing
------------
no earlier than September 30, 1998, as such Senior Notes may be
amended, modified, or supplemented from time to time in
accordance with the terms of this Agreement; and "Senior Note"
-----------
means each such note individually.
"Short-Term Credit Facility" means that certain
--------------------------
$40,000,000.00 credit facility provided to the Borrower by the
Banks, as evidenced and governed by the Short-Term Credit
Facility Agreement.
"Short-Term Credit Facility Agreement" means that certain
------------------------------------
Revolving Credit Agreement of even effective date herewith,
executed by and among the Borrower, the Banks, and the Agent in
connection with the Short-Term Credit Facility, as the same may
be amended, modified, supplemented, or restated from time to
time.
"Short-Term Credit Facility Notes" means the promissory
--------------------------------
notes of the Borrower executed and delivered under the Short-Term
Credit Facility Agreement.
"Significant Property" shall mean at any time property or
--------------------
assets of the Borrower or any Subsidiary having a book value (net
of accumulated depreciation taken in accordance with GAAP) of at
least $1,000,000.00 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 Trust" means any of those certain Delaware
--------------------
business trusts organized for the sole purpose of purchasing
Subordinated Debt Securities constituting a portion of, and
described in the definition of, Structured Securities and issuing
the Preferred Securities and Common Securities also constituting
a portion of, and described in the definition of, Structured
Securities, and having no assets other than the Borrower's
Subordinated Debt Securities, the Guaranties (as described in the
definition of Structured Securities) and the proceeds thereof.
Southern Union Trusts shall be considered to be Subsidiaries for
purposes hereof so long as their affairs are consolidated under
GAAP and for federal income tax purposes with the affairs of the
Borrower.
"Standby Letter of Credit" shall mean any standby letter of
------------------------
credit issued to support obligations (contingent or otherwise) of
the Borrower.
"Structured Securities" shall mean collectively the Subordi-
---------------------
nated Debt Securities, the Guaranties, the Common Securities and
the Preferred Securities of the Southern Union Trusts, all as
described and defined in the Registration Statement on Form S-3
filed by the Borrower with the Securities and Exchange Commission
on March 25, 1995. For all purposes of this Agreement, the
amounts payable by Southern Union Trusts under the Preferred
Securities and Common Securities and the amounts payable by the
Borrower under the Subordinated Debt Securities or the Guaranties
shall be treated without duplication, it being recognized that
the amounts payable by Southern Union Trusts are funded with pay-
ments made or to be made by the Borrower to Southern Union Trusts
and are also guaranteed by the Borrower under the Guaranties
described in the S-3 mentioned above.
"Subsidiary" or "Subsidiaries" shall mean any corporation or
---------- ------------
corporations organized under the laws of any state of the United
States of America, Canada, or any province of Canada, which
conduct(s) the major portion of business in the United States of
America or Canada and of which not less than 50% of the voting
stock of every class (except for directors' qualifying shares),
at the time as of which any determination is being made, is owned
by the Borrower either directly or indirectly through other
Subsidiaries.
"Type" shall mean, with respect to any Loan, any Alternate
----
Base Rate Loan, any Eurodollar Rate Loan or any CD Rate Loan.
"Unused L/C Subfacility" shall mean, at any time, the
----------------------
amount, if any, by which the L/C Subfacility then in effect
exceeds the aggregate outstanding amount of all Facility Letter
of Credit Obligations.
2. THE LOANS
2.1 The Loans
(a) Subject to the terms and conditions and relying
upon the representations and warranties of the Borrower herein
set forth, each Bank severally agrees to make Loans to the Bor-
rower on any one or more Business Days prior to the Maturity
Date, up to an aggregate principal amount of Loans not exceeding
at any time outstanding: (i) the lesser of (A) the amount set
opposite such Banks name on the signature pages hereof (such
Bank's "Commitment"), and (B) such Bank's Pro Rata Percentage of
the Borrowing Base; minus (ii) such Bank's Pro Rata Percentage of
-----
the Facility Letter of Credit Obligations. Within such limits
and during such period and subject to the terms and conditions of
this Agreement, the Borrower may borrow, repay and reborrow here-
under.
(b) The Borrower shall execute and deliver to the
Agent for each Bank to evidence the Loans made by each Bank under
such Bank's Commitment, a Note, which shall be: (i) dated the
date of the initial Loan; (ii) in the principal amount of such
Bank's maximum Commitment; (iii) in substantially the form
attached hereto as Exhibit A, with blanks appropriately filled;
---------
(iv) payable to the order of such Bank on the Maturity Date; and
(v) subject to acceleration upon the occurrence of an Event of
Default. Each Note shall bear interest on the unpaid principal
amount thereof from time to time outstanding at the rate per
annum determined as specified in Sections 2.2(a), 2.2(b), 2.3(b)
and 2.3(c), payable on each Interest Payment Date and at
maturity, commencing with the first Interest Payment Date fol-
lowing the date of each Note.
(c) Each Loan shall be: (i) in the case of any Euro-
dollar Rate Loan, in an amount of not less than $1,000,000.00 or
an integral multiple of $1,000,000.00 in excess thereof; (ii) in
the case of any CD Rate Loan, in an amount of not less than
$1,000,000.00 or an integral multiple of $1,000,000.00 in excess
thereof; or (iii) in the case of any Alternate Base Rate Loan, in
an amount of not less than $500,000.00 or an integral multiple of
$100,000.00 in excess thereof and, at the option of the Borrower,
any borrowing under this Section 2.1(c) may be comprised of two
or more such Loans bearing different rates of interest. Each
such borrowing shall be made upon prior notice from the Borrower
to the Agent in the form attached hereto as Exhibit B (the
---------
"Notice of Borrowing") delivered to the Agent not later than
11:00 am (Houston time): (i) on the third Business Day prior to
the Borrowing Date, if such borrowing consists of Eurodollar Rate
Loans; (ii) on the Business Day
prior to the Borrowing Date, if such borrowing consists of CD
Rate Loans; and (iii) on the Borrowing Date, if such borrowing
consists of Alternate Base Rate Loans. Each Notice of Borrowing
shall be irrevocable and shall specify: (i) the amount of the
proposed borrowing and of each Loan comprising a part thereof;
(ii) the Borrowing Date; (iii) the rate of interest that each
such Loan shall bear; (iv) the Rate Period with respect to each
such Loan and the Expiration Date of each such Rate Period; and
(v) the demand deposit account of the Borrower at Chase Bank of
Texas, National Association into which the proceeds of the
borrowing are to be deposited by the Agent. The Borrower may
give the Agent telephonic notice by the required time of any
proposed borrowing under this Section 2.1(c); provided that such
-------- ----
telephonic notice shall be confirmed in writing by delivery to
the Agent promptly (but in no event later than the Borrowing Date
relating to any such borrowing) of a Notice of Borrowing.
Neither the Agent nor any Bank shall incur any liability to the
Borrower in acting upon any telephonic notice referred to above
which the Agent believes in good faith to have been given by the
Borrower, or for otherwise acting in good faith under this
Section 2.1(c).
(d) In the case of a proposed borrowing comprised of
CD Rate Loans or Eurodollar Rate Loans, the Agent shall promptly
notify each Bank of the applicable interest rate under Section
2.2. Each Bank shall, before 11:00 am (Houston time) on the
Borrowing Date, make available for the account of its Applicable
Lending Office to the Agent at the Agent's address set forth in
Section 13.4, in same day funds, its Pro Rata Percentage of such
borrowing. After the Agent's receipt of such funds and upon ful-
fillment of the applicable conditions set forth in Section 8, on
the Borrowing Date, the Agent shall make the borrowing available
to the Borrower at its Applicable Lending Office in immediately
available funds. Each Bank shall post on a schedule attached to
its Note(s): (i) the date and principal amount of each Loan made
under such Note; (ii) the rate of interest each such Loan will
bear; and (iii) each payment of principal thereon; provided,
--------
however, that any failure of such Bank so to xxxx such Note shall
-------
not affect the Borrower's obligations thereunder; and provided
--------
further that such Bank's records as to such matters shall be
-------
controlling whether or not such Bank has so marked such Note.
Any deposit to the Borrower's demand deposit account by the Agent
or by Chase Bank of Texas, National Association (of funds
received from the Agent) pursuant to a request (whether written
or oral) believed by the Agent or by Chase Bank of Texas,
National Association to be an authorized request by the Borrower
for a Loan hereunder shall be deemed to be a Loan hereunder for
all purposes with the same effect as if the Borrower had in fact
requested the Agent to make such Loan.
(e) Unless the Agent shall have received notice from
a Bank prior to the date of any borrowing that such Bank will not
make available to the Agent such Bank's Pro Rata Percentage of
such borrowing, the Agent may assume that such Bank has made such
portion available to the Agent on the date of such borrowing in
accordance with this Section 2.1 and the Agent may, in reliance
upon such assumption, make available to the Borrower on such date
a corresponding amount. If and to the extent that such Bank
shall not have so made such Pro Rata Percentage available to the
Agent, such Bank and the Borrower severally agree to repay to the
Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to
the Agent, (i) in the case of the Borrower, at the interest rate
applicable at the time to the Loans comprising such borrowing,
and (ii) in the case of such Bank, at the Federal Funds Rate. If
such Bank shall repay to the Agent such corresponding amount,
such amount so repaid shall constitute such Bank's Loan as part
of such borrowing for purposes of this Agreement.
(f) The failure of any Bank to make the Loan to be
made by it as part of any borrowing shall not relieve any other
Bank of its obligation, if any, hereunder to make its Loan on the
date of such borrowing, but no Bank shall be responsible for the
failure of any other Bank to make the Loan to be made by such
other Bank on the date of any borrowing.
2.2 Interest Rate Determination
(a) Except as specified in Sections 2.3(b) and
2.3(c), the Loans shall bear interest on the unpaid principal
amount thereof from time to time outstanding, until maturity, at
a rate per annum (calculated based on a year of 360 days in the
case of the Eurodollar Rate, the CD Rate or the Alternate Base
Rate based on the Federal Funds Rate or the Average CD Rate and a
year of 365 or 366 days, as the case may be, in the case of the
Alternate Base Rate based on the Prime Rate) equal to the lesser
of (A) the rate specified in the Notice of Borrowing with respect
thereto or (B) the Highest Lawful Rate from the first day to, but
not including, the Expiration Date of the Rate Period then in
effect with respect thereto.
(b) Any amount of principal or interest 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) five percent (5%) 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 Note may be held by each Bank for the account
of its respective Domestic Lending Office or its respective Euro-
dollar Lending Office, and may be transferred from one to the
other from time to time as each Bank may determine.
(b) If the Borrower shall have chosen the Eurodollar
Rate in a Notice of Borrowing and prior to the Borrowing Date,
any Bank in good faith determines (which determination shall be
conclusive) that (i) deposits in Dollars in the principal amount
of such Eurodollar Rate Loan are not being offered to the EUro-
dollar 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 ascer-
taining the chosen Eurodollar Rate in respect of such Eurodollar
Rate Loan or (iii) the Eurodollar Rate for any Rate Period for
such Eurodollar Rate Loan will not adequately reflect the cost to
such Bank of making such Eurodollar Rate Loan for such Rate
Period, then such Bank will so notify the Borrower and the Agent
and such Eurodollar Rate shall not become effective as to such
Eurodollar Rate Loan on such Borrowing Date or at any time there-
after until such time thereafter as the Borrower receives notice
from the Agent that the circumstances giving rise to such deter-
mination no longer apply.
(c) Anything in this Agreement to the contrary not-
withstanding, if at any time any Bank in good faith determines
(which determination shall be conclusive) that the introduction
of or any change in any applicable law, rule or regulation or any
change in the interpretation or administration thereof by any
governmental or other regulatory authority charged with the
interpretation or administration thereof shall make it unlawful
for the Bank (or the Eurodollar Lending Office of such Bank) to
maintain or fund any Eurodollar Rate Loan, such Bank shall give
notice thereof to the Borrower and the Agent. With respect to
any Eurodollar Rate Loan which is outstanding when such Bank so
notifies the Borrower, upon such date as shall be specified in
such
notice the Rate Period shall end and the lesser of (i) the Alter-
nate Base Rate or (ii) the Highest Lawful Rate shall commence to
apply in lieu of the Eurodollar Rate in respect of such Euro-
dollar Rate Loan and shall continue to apply unless and until the
Borrower changes the rate as provided in Section 2.2(a). No more
than five (5) Business Days after such specified date, the Bor-
rower shall pay to such Bank (x) accrued and unpaid interest on
such Eurodollar Rate Loan at the Eurodollar Rate in effect at the
time of such notice to but not including such specified date plus
----
(y) such amount or amounts (to the extent that such amount or
amounts would not be usurious under applicable law) as may be
necessary to compensate such Bank for any direct or indirect
costs and losses incurred by it (to the extent that such amounts
have not been included in the Additional Costs in calculating
such Eurodollar Rate), but otherwise without penalty. If notice
has been given by such Bank pursuant to the foregoing provisions
of this Section 2.3(c), then, unless and until such Bank notifies
the Borrower that the circumstances giving rise to such notice no
longer apply, such Eurodollar Rate shall not again apply to such
Loan or any other Loan and the obligation of such Bank to con-
tinue 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) THE BORROWER WILL INDEMNIFY EACH BANK AGAINST,
AND REIMBURSE EACH BANK ON DEMAND FOR, ANY LOSS (INCLUDING LOSS
OF REASONABLY ANTICIPATED PROFITS DETERMINED USING REASONABLE
ATTRIBUTION AND ALLOCATION METHODS), OR REASONABLE COST OR
EXPENSE INCURRED OR SUSTAINED BY SUCH BANK (INCLUDING WITHOUT
LIMITATION, ANY LOSS OR EXPENSE INCURRED BY REASON OF THE LIMITA-
TION OR REEMPLOYMENT OF DEPOSITS OR OTHER FUNDS ACQUIRED BY SUCH
BANK TO FUND OR MAINTAIN ANY EURODOLLAR RATE LOAN OR CD RATE
LOAN) AS A RESULT OF (i) ANY ADDITIONAL COSTS INCURRED BY SUCH
BANK; (ii) ANY PAYMENT OR REPAYMENT (WHETHER AUTHORIZED OR
REQUIRED HEREUNDER OR OTHERWISE) OF ALL OR A PORTION OF ANY LOAN
ON A DAY OTHER THAN THE EXPIRATION DATE OF A RATE PERIOD FOR SUCH
LOAN; (iii) ANY PAYMENT OR PREPAYMENT (WHETHER REQUIRED HEREUNDER
OR OTHERWISE) OF ANY LOAN MADE AFTER THE DELIVERY OF A NOTICE OF
BORROWING BUT BEFORE THE APPLICABLE BORROWING DATE IF SUCH PAY-
MENT OR PREPAYMENT PREVENTS THE PROPOSED BORROWING FROM BECOMING
FULLY EFFECTIVE; OR (iv) AFTER RECEIPT BY THE AGENT OF A NOTICE
OF BORROWING, THE FAILURE OF ANY LOAN TO BE MADE OR EFFECTED BY
SUCH BANK DUE TO ANY CONDITION PRECEDENT TO A BORROWING NOT BEING
SATISFIED BY THE BORROWER OR DUE TO ANY OTHER ACTION OR INACTION
OF THE BORROWER. ANY BANK DEMANDING PAYMENT UNDER THIS SECTION
2.3(d) SHALL DELIVER TO THE BORROWER AND THE AGENT A STATEMENT
REASONABLY SETTING FORTH THE AMOUNT AND MANNER OF DETERMINING
SUCH LOSS, COST OR EXPENSE. THE FACTS SET FORTH IN SUCH STATEMENT
SHALL BE CONCLUSIVE AND BINDING FOR ALL PURPOSES, ABSENT MANIFEST
ERROR.
(e) (i) 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 interpreta-
tion 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 Borrower shall pay to
such Bank such additional amount or amounts as will compensate
such Bank for such reduction.
(ii) A certificate of such Bank setting forth
such amount or amounts as shall be necessary to compensate such
Bank as specified in subparagraph (i) above shall be delivered as
soon as practicable to the Borrower (with a copy thereof to the
agent) and to the extent determined in accordance with subpara-
graph (i) above shall be conclusive and binding, absent manifest
error. The Borrower shall pay such Bank the amount shown as due
on any such certificate within fifteen (15) days after such Bank
delivers such certificate. In preparing such certificate, such
Bank may employ such assumptions and allocations (consistently
applied with respect to advances made by such Bank or commitments
by such Bank to make advances) of costs and expenses as it shall
in good xxxxx xxxx 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).
(f) In calculating the CD Rate, the Eurodollar Rate,
the Commitment Fee, and the Facility Letter of Credit Fee Per-
centage and notwithstanding provisions in the definitions of such
terms to the contrary, in the event that the Borrower has a
Standard & Poor's rating greater than or equal to A- or a Xxxxx'x
rating greater than or equal to A3, the Borrower shall be
entitled to use the higher of the Standard & Poor's or Moody's
ratings to determine the additional component of pricing from the
grids set forth in the definition of Alternate Base Rate, CD
Rate, Eurodollar Rate, Commitment Fee and Facility Letter of
Credit Fee Percentage.
2.4 Extension of Maturity Date. On a Business Day no less
--------------------------
than sixty (60) and no more than ninety (90) days prior to
June 30, 1999, and during such period in each year thereafter
during which this Agreement is in effect, the Borrower may elect
to notify the Agent, in writing, of its request for an extension
of the maturity date of each Banks Commitment (on the terms and
conditions set forth herein) for a period of up to one (1) year
from the date of the then current Maturity Date. Promptly after
receipt of such request, the Agent shall notify the Banks of such
request. Each Bank shall notify the Agent in writing of its con-
sent to, or rejection of, such request on or prior to May 15 of
each such year. In the event that any Bank fails to so notify
the Agent, that request shall be deemed to have been rejected by
such Bank. The Commitments shall be extended hereunder only upon
the consent of each Bank, whereupon the Maturity Date of each
Note shall be deemed to be extended to the agreed date of exten-
sion, but in no event later than the date which is one (1) year
after the date of the Maturity Date in effect prior to such
extension. In the event of the renewal and extension of the
Commitments and the maturity date of the Notes pursuant to this
Section 2.4, the terms and conditions of this Agreement will
apply during such renewal and extension period and, from and
after the date of such extension, the term "Maturity Date" shall
mean such date as so renewed and extended.
3. LETTERS OF CREDIT
3.1 Obligation to Issue. Subject to the terms and condi-
-------------------
tions of this Agreement, and in reliance upon the representations
and warranties of the Borrower set forth herein or in any other
Loan Document, each Issuing Bank hereby severally agrees to
issue, from time to time during the period commencing on the
Closing Date and ending on the Business Day immediately prior to
the Maturity Date, for the account of the Borrower through such
of the Issuing Bank's branches as it and the Borrower may jointly
agree, one or more Facility Letters of Credit in accordance with
this Section 3. Notwithstanding the foregoing, no Issuing Bank
shall have any obligation to issue, and shall not issue, any
Facility Letter of Credit at any time if:
(a) the aggregate undrawn face amount of Facility
Letters of Credit theretofore issued by such Issuing Bank, after
giving effect to all requested but unissued Facility Letters of
Credit, exceeds any limit imposed by law or regulation upon such
Issuing Bank;
(b) after taking into account the face amount of the
requested Facility Letter of Credit the aggregate principal
amount of Facility Letter of Credit Obligations with respect to
Facility Letters of Credit issued by such Issuing Bank for the
account of the Borrower (which amount shall be calculated without
giving effect to the participation of the Banks pursuant to
Section 3.5) would exceed such Issuing Bank's Letter of Credit
Commitment;
(c) immediately after giving effect to the issuance
of such Facility Letter of Credit, the aggregate Facility Letter
of Credit Obligations would exceed the L/C Subfacility;
(d) immediately after giving effect to the issuance
of such Facility Letter of Credit, the aggregate of outstanding
Loans, would exceed the Banks' aggregate Commitments; or
(e) such Facility Letter of Credit has an expiry date
(i) more than one year after the date of issuance; or (ii) after
the Business Day immediately preceding the Maturity Date.
3.2 Conditions. The obligation of an Issuing Bank to
----------
issue any Facility Letter of Credit, and of each Bank to partici-
xxxx therein as provided in Section 3.5 is subject to the satis-
faction in full of the applicable conditions precedent set forth
in Section 8 and each of the following conditions:
(a) the Borrower shall have delivered to the Issuing
Bank, at such times and in such manner as such Issuing Bank may
prescribe, a Letter of Credit application, a Letter of Credit
Reimbursement Agreement, and such other documents and materials
as may be required pursuant to the terms thereof;
(b) the terms of the proposed Facility Letter of
Credit shall not be inconsistent with any term or provision of
this Agreement and otherwise shall be satisfactory to such
Issuing Bank; and
(c) as of the date of issuance of such Facility
Letter of Credit, no order, judgment, or decree of any court,
arbitrator, or governmental authority shall purport by its terms
to enjoin or restrain the Issuing Bank from issuing such Facility
Letter of Credit, and no law, rule, or regulation applicable to
such Issuing Bank, and no request or directive (whether or not
having the force of law) from any governmental authority having
jurisdiction over such Issuing Bank, shall prohibit or request
that such Issuing Bank refrain from the issuance of Letters of
Credit, generally or the issuance of such Facility Letter of
Credit.
3.3 Issuance of Facility Letters of Credit
(a) The Borrower shall give the Agent written notice
(or telephonic notice confirmed in writing by the Borrower not
later than the requested issuance date of the Facility Letter of
Credit) of its request for the issuance of a Facility Letter of
Credit no later than 11:00 a.m. four (4) Business Days prior to
the date such Facility Letter of Credit is requested to be
issued. Such notice shall be irrevocable and shall specify, with
respect to such requested Facility Letter of Credit, the face
amount, beneficiary, effective date of issuance, expiry date
(which effective date and expiry date shall be a Business Day
and, with respect to the expiry date, shall be no later than the
Business Day immediately preceding the Maturity Date), the
identity of the Issuing Bank selected by the Borrower, and the
purpose for which such Facility Letter of Credit is to be issued.
At the time a request for the issuance of a Facility Letter of
Credit is made, the Borrower shall also provide the Agent with a
copy of the form of Letter of Credit that the proposed Issuing
Bank has agreed to issue. If the face amount of the requested
Facility Letter of Credit is less than or equal to the Unused L/C
Subfacility, as determined by the Agent as of the close of busi-
ness on the date of its receipt of written notice of the
requested issuance, the Agent shall so notify the proposed
Issuing Bank in writing (or by telephonic notice promptly
confirmed thereafter in writing) not later than the close of
business on the second Business Day following the Agent's receipt
of the Borrower's written notice. The Issuing Bank shall issue
such Facility Letter of Credit on the date requested by the
Borrower, unless (i) on or before the Business Day prior to such
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issuance date, such Issuing Bank shall have received written
notice from the Agent or any Bank that the conditions precedent
to the issuance of a Facility Letter of Credit as set forth in
Section 3.2 have not been met; or (ii) on the requested issuance
date, such Issuing Bank has actual knowledge that such conditions
precedent have not been met. If an Issuing Bank receives written
notice, or has actual knowledge, that the conditions precedent to
the issuance of a Facility Letter of Credit have not been met,
then such Issuing Bank shall have no obligation to issue, and
shall not issue, any Facility Letter of Credit until (i) such
notice is withdrawn; or (ii) such Issuing Bank receives a notice
from the Agent that the condition(s) described in such notice
have been waived in accordance with the provisions of this Agree-
ment. The Issuing Bank shall give the Agent prompt written
notice (or telephonic notice promptly confirmed in writing) of
the issuance of any Facility Letter of Credit. Any Letter of
Credit issued by an Issuing Bank in compliance with the pro-
visions of this Section 3.3 shall be a Facility Letter of Credit.
(b) An Issuing Bank shall not extend or amend any
Facility Letter of Credit unless the requirements of this Section
3.3 are met as though a new Facility Letter of Credit was being
requested and issued.
(c) An Issuing Bank or any Bank may issue Non-
Facility Letters of Credit for its own account, and at its own
risk. None of the provisions of this Section 3 shall apply to
any Non-Facility Letter of Credit.
3.4 Reimbursement Obligations; Duties of Issuing Bank
(a) Notwithstanding any provisions to the contrary in
any Letter of Credit Reimbursement Agreement:
(1) the Borrower shall reimburse the applicable
Issuing Bank for a drawing under a Facility Letter of Credit
issued by such Issuing Bank no later than the earlier of (A) the
time
specified in the related Letter of Credit Reimbursement Agree-
ment; or (B) one (1) Business Day after the payment of such
drawing by such Issuing Bank; and
(2) the Borrower's Reimbursement Obligations
with respect to a drawing under a Facility Letter of Credit shall
bear interest from the date of such drawing to the date paid in
full at the higher of (A) the interest rate specified in the
applicable Letter of Credit Reimbursement Agreement; or (B) the
interest rate for past due Alternate Base Rate Loans; but not
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greater than the Highest Lawful Rate.
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(b) No action taken or omitted to be taken by an
Issuing Bank in connection with any Facility Letter of Credit
shall (i) result in any liability on the part of such Issuing
Bank to any Bank, unless such Issuing Bank's action or omission
constitutes willful misconduct or gross negligence; or (ii)
relieve any Bank of any of its obligations to such Issuing Bank
hereunder, unless the Facility Letter of Credit in question was
issued in contravention of the provisions of Section 3.3 or at a
time during which a notice, described in Section 3.3, from such
Bank to such Issuing Bank remained in effect. Each Bank agrees
that, prior to making any payment to a beneficiary with respect
to a drawing under a Facility Letter of Credit, the Issuing Bank
shall be responsible only to confirm that documents required by
the terms of such Facility Letter of Credit to be delivered as a
condition precedent to such drawing have been delivered and that
the same appear on their face to conform with the requirements
thereof. Each Bank further agrees that such Issuing Bank may
assume that documents appearing on their face to be the documents
required to be delivered as a condition precedent to a drawing do
in fact comply.
3.5 Participations
(a) Immediately upon the issuance by an Issuing Bank
of any Facility Letter of Credit in compliance with the pro-
visions of Section 3.3, and immediately upon conversion of a
Letter of Credit of an Issuing Bank to a Facility Letter of
Credit pursuant to Section 3.10, each Bank shall be deemed to
have irrevocably and unconditionally purchased and received from
such Issuing Bank, without recourse or warranty, an undivided
interest and participation to the extent of such Bank's Pro Rata
Percentage in such Facility Letter of Credit, including without
limitation, all obligations of the Borrower with respect thereto
and any security therefor or guaranty pertaining thereto.
(b) An Issuing Bank shall promptly notify the Agent,
and the Agent shall promptly notify the other Banks, if the Bor-
rower fails to reimburse such Issuing Bank for payments made by
such Issuing Bank in respect of drawings by a beneficiary under a
Facility Letter of Credit. Upon each such other Banks receipt of
such notice, such Bank shall unconditionally pay to the Agent,
for the account of such Issuing Bank, an amount equal to such
Bank's Pro Rata Percentage of the unreimbursed payment made by
such Issuing Bank under the Facility Letter of Credit. Such
payment shall be made by such Bank in Dollars and in same day
funds on the day such Bank receives notice from the Agent that
such payment is owing, if such notice is received by such Bank
prior to 11:00 a.m. (Houston time) on a Business Day; if such
notice is not received by such time, then such Bank shall remit
its payment on the next Business Day following the day such
notice is received. Any amount payable by a Bank under this
Section 3.5(b) which is not paid when due pursuant to the terms
hereof shall be payable on demand, together with interest thereon
at the Federal Funds Rate from the date such payment was due
until paid in full. The failure of any Bank to make any payment
owing by it under this Section 3.5(b) shall neither relieve nor
increase the obligation of any other Bank to make any payment
owing by it under this Section 3.5(b). The Agent shall promptly
remit to the
applicable Issuing Bank all amounts received by the Agent, for
the account of such Issuing Bank, from each Bank pursuant to this
Section 3.5(b). No payment made by a Bank pursuant to this Sec-
tion 3.5(b) shall prejudice the ability of such Bank to claim
that the Issuing Bank to which such payment is made is subject to
liability under Section 3.4(b).
(c) Whenever an Issuing Bank receives a payment with
respect to a Reimbursement Obligation (including any interest
thereon) for which such Issuing Bank has received payments from a
Bank pursuant to Section 3.5(b), such Issuing Bank shall promptly
remit to the Agent and the Agent shall promptly remit to each
Bank which has funded its participating interest therein, in
Dollars and in the kind of funds so received, an amount equal to
each Bank's Pro Rata Percentage thereof. Each such payment shall
be made by the Issuing Bank or the Agent, as the case may be, on
the Business Day on which such Person receives the funds paid to
such Person pursuant to the preceding sentence, if received prior
to 11:00 a.m. (Houston time) on such Business Day, and otherwise
on the next succeeding Business Day.
(d) Upon the request of the Agent or any Bank, an
Issuing Bank shall furnish to the Agent or each Bank copies of
any Facility Letter of Credit, Letter of Credit Reimbursement
Agreement, or Letter of Credit application to which Issuing Bank
is party, and such other documentation as may reasonably be
requested by the Agent or such Bank with respect to a Facility
Letter of Credit issued by such Issuing Bank.
(e) The obligations of a Bank under Section 3.5(b) to
make payments to the Agent for the account of an Issuing Bank
with respect to a Facility Letter of Credit shall be irrevocable,
not subject to any qualification or exception whatsoever, and
shall be made in accordance with, but not subject to, the terms
and conditions of this Agreement under all circumstances
(assuming that such Issuing Bank has issued such Facility Letter
of Credit in compliance with the provisions of Section 3.3),
including, without limitation, any of the following circum-
stances:
(i) any lack of validity or enforceability of
this Agreement or any other Loan Document;
(ii) the existence of any claim, set off,
defense, or other right which the Borrower may have at any time
against a beneficiary named in a Facility Letter of Credit or any
transferee of any Facility Letter of Credit (or any Person for
whom any such transferee may be acting), the Agent, any Bank, the
Issuing Bank, or any Person, whether in connection with this
Agreement, any Facility Letter of Credit, the transactions con-
templated herein, or any unrelated transactions (including any
underlying transactions between the Borrower and the beneficiary
named in any Facility Letter of Credit);
(iii) any draft, certificate, of any other docu-
ment presented under the Facility Letter of Credit proving to be
forged, fraudulent, invalid, or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security
for the performance or observance of any of the terms of any Loan
Document;
(v) any failure by the Agent or an Issuing Bank
to make any reports required pursuant to Section 3.8; or
(vi) the occurrence of any Default or Event of
Default.
3.5 Payment of Reimbursement Obligations
(a) The Borrower agrees to pay to each Issuing Bank
the amount of all Reimbursement Obligations, interest, and other
amounts payable to such Issuing Bank under or in connection with
any Facility Letter of Credit immediately when due, irrespective
of any claim, set off, defense, or other right which the Borrower
may have at any time against any Issuing Bank or any other
Person.
(b) In the event any payment by the Borrower received
by an Issuing Bank with respect to a Facility Letter of Credit
and distributed to Banks on account of their respective partici-
pation is thereafter set aside, avoided, or recovered from such
Issuing Bank in connection with any Debtor Laws, each Bank which
received such distribution shall, upon demand by such Issuing
Bank, contribute each Bank's Pro Rata Percentage of the amount
set aside, avoided, or recovered together with interest at the
rate required to be paid by the Issuing Bank upon the amount
required to be repaid by it.
3.7 Exoneration. As between the Borrower, each Bank, and
-----------
each Issuing Bank, the Borrower assumes all risks of the acts and
omissions of, or misuse of the Facility Letter of Credit issued
by such Issuing Bank by, the respective beneficiaries of such
Facility Letter of Credit. In furtherance and not in limitation
of the foregoing, subject to the provisions of the Letter of
Credit applications, the Issuing Bank and the Banks shall not be
responsible for:
(a) the form, validity, sufficiency, accuracy,
genuineness, or legal effect of any document submitted by any
party in connection with the application for and issuance of a
Facility Letter of Credit, even if it should in fact prove to be
in any or all respects invalid, insufficient, inaccurate,
fraudulent, or forged;
(b) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a
Facility Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason;
(c) failure of the beneficiary of a Facility Letter
of Credit to comply duly with conditions required in order to
draw upon such Facility Letter of Credit, provided that the
-------- ----
Issuing Bank complies with the provisions of Section 3.4(b);
(d) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable, tele-
graph, telex, or otherwise, whether or not they be in cipher;
(e) errors in interpretation of technical terms;
(f) any loss or delay in the transmission or other-
wise of any document required in order to make a drawing under
any Facility Letter of Credit or of the proceeds thereof;
(g) the misapplication by the beneficiary of a
Facility Letter of Credit; or
(h) any consequences arising from causes beyond the
control of the Agent, any Bank, or any Issuing Bank, including,
without limitation, any act or omission, whether rightful or
wrongful,
of any present or future de jure or de facto government or
Governmental Authority. In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth, any
action taken or omitted by an Issuing Bank under or in connection
with the Facility Letters of Credit or any related certificates,
if taken or omitted in good faith and not constituting gross
negligence or willful misconduct, shall not put the Issuing Bank,
the Agent, or any Bank under any resulting liability to the Bor-
rower or relieve the Borrower of any of its obligations hereunder
to any such Person.
3.8 Issuing Bank's Reporting Requirements. In addition to
-------------------------------------
the reports required by Section 3.5, each Issuing Bank shall, no
later than the tenth (10th) Business Day following the last day
of each quarter of such Issuing Bank's fiscal year, provide to
the Agent and the Borrower a schedule for Standby Letters of
Credit issued as Facility Letters of Credit, in form and sub-
stance reasonably satisfactory to the Agent, showing the date of
issue, beneficiary, face amount, expiration date, and the
reference number of each Facility Letter of Credit issued by such
Issuing Bank which was outstanding at any time during such
quarter and the aggregate amount payable by the Borrower during
the quarter pursuant to Section 3.9.
3.9 Compensation for Facility Letters of Credit
(a) Facility Letter of Credit Fee. The Borrower
-----------------------------
agrees to pay to the Agent, for the account of each Bank, in the
case of each Letter of Credit issued as, or converted to (for
transactions which convert Letters of Credit in existence on the
Closing Date to Facility Letters of Credit pursuant to Section
3.10), a Facility Letter of Credit, a facility letter of credit
fee (the "Facility Letter of Credit Fee") payable quarterly in
arrears equal to the applicable Facility Letter of Credit Fee
Percentage of the average amount available to be drawn under such
Letter of Credit during the quarter then ending multiplied by the
actual number of days during such quarter on which such Letter of
Credit was outstanding, divided by 360 but no less than $500.00
per Facility Letter of Credit per year. The Borrower shall also
pay to the Agent in the event of any extension or modification of
a Facility Letter of Credit which extends the expiration date or
increases the maximum amount available for drawing thereunder an
additional fee calculated and payable on the same basis as that
set forth in the first sentence of this Section 3.9(a) with
respect to any such extension or additional amount. Whenever an
Issuing Bank receives a payment from the Borrower with respect to
any fees incurred in connection with any Facility Letter of
Credit issued by such Issuing Bank, such Issuing Bank shall
promptly remit to the Agent, and the Agent shall promptly remit
to each Bank which has funded its participation in such Facility
Letter of Credit, in Dollars and in same day funds, an amount
equal to such Bank's Pro Rata Percentage of such fees.
(b) Issuing Bank's Charges. Each Issuing Bank shall
----------------------
have the right to receive, solely for its own account, such
amounts as it and the Borrower may agree, in writing, to compen-
sate such Issuing Bank with respect to issuance fees and such
Issuing Bank's out-of-pocket costs of issuing and servicing
Facility Letters of Credit.
(c) Increased Capital. If either (i) the introduc-
-----------------
tion of or any change in or in the interpretation of any law or
regulation, or (ii) compliance by any Issuing Bank or any Bank
with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law)
affects or would affect (by an amount deemed by such Issuing Bank
to be material) the capital required or expected to be maintained
by it or any corporation controlling it, and such Bank or such
Issuing Bank determines, on the basis of reasonable allocations,
that the amount of such capital is increased by (an amount deemed
by such Issuing Bank to be material) or is based (to a
degree deemed by such Issuing Bank to be material) upon its
issuance or maintenance of or participation in, or commitment to
issue or to participate in, the Facility Letters of Credit then,
upon demand by such Bank or such Issuing Bank, the Borrower shall
immediately pay to the Agent (for the account of each Bank) or
such Issuing Bank, from time to time as specified by such Bank or
such Issuing Bank, additional amounts sufficient to compensate
such Bank or such Issuing Bank therefor. A certificate as to
such amounts submitted to the Borrower by such Bank or such
Issuing Bank shall, in the absence of manifest error, be con-
clusive and binding for all purposes.
3.10 Transitional Provisions. Schedule 3.10 contains a
----------------------- -------------
schedule of certain Letters of Credit issued for the account of
the Borrower prior to the Closing Date by one or more of the
Issuing Banks. Subject to the satisfaction of the conditions
precedent contained in Section 8, on the Closing Date (a) such
Letters of Credit shall be deemed to be converted into Facility
Letters of Credit issued pursuant to Section 3.3; and (b) the
face amount of such Letters of Credit shall be included in the
calculation of the Facility Letter of Credit Obligations.
4. PAYMENTS AND PREPAYMENTS
4.1 Required Prepayments
(a) The Borrower agrees that if at any time it or the
Agent determines that the sum of (i) the aggregate principal
amount of Loans outstanding and (ii) the face amount of Facility
Letters of Credit issued hereunder exceeds the lesser of (i) the
Commitments or (ii) the Borrowing Base, then the Borrower shall
make a prepayment of principal of the Loans in an amount at least
equal to such excess.
(b) Upon the Borrower's reduction or termination of
the Commitments under Section 4.6, the Borrower shall make such
prepayments as are required by the terms of Section 4.6.
(c) Immediately upon the termination of any period of
180 consecutive calendar days in which the aggregate principal
amount outstanding under the Notes and the Short-Term Credit
Facility Notes has exceeded the Borrower's Available Senior
Funded Debt Capacity outstanding under the Senior Notes, the
Borrower will prepay the Notes and/or the Short-Term Credit
Facility Notes by the amount of such excess, together with all
interest accrued on such prepaid amount and such other amounts
that may be required to be paid in consequence of such prepayment
under Section 2.3(d).
4.2 Repayment of the Loans. Borrower shall repay the
----------------------
principal amount of each Loan, on the last day of the Interest
Period for such Loan, together with all accrued and unpaid
interest thereon as of such date, irrespective of any claim, set
off, defense, or other right which the Borrower may have at any
time against any Bank, the Agent or any other Person.
4.3 Place of Payment or Prepayment. All payments and
------------------------------
prepayments made in accordance with the provisions of this Agree-
ment or of the Notes or of any other Loan Document or of the
Letter of Credit Reimbursement Agreements in respect of commit-
ment fees or of principal or interest on the Notes shall be made
to the Agent for the account of the Banks at its Domestic Lending
Office, no later than noon, Houston time, in immediately avail-
able funds. Unless the Agent
shall have received notice from the Borrower prior to the date on
which any payment is due to the Banks hereunder that the Borrower
will not make any payment due hereunder in full, the Agent may
assume that the Borrower has made such payment in full to the
Agent on such date and the Agent may, in reliance upon such
assumption, cause to be distributed to each Bank on such due date
an amount equal to the amount then due to such Bank. If and to
the extent the Borrower shall not have so made such payment in
full to the Agent, each Bank shall repay to the Agent forthwith
on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is dis-
tributed 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 Bor-
rower and fails to distribute such payment or prepayment to the
Banks ratably on the basis of their respective Pro Rata Percent-
age on the day the Agent receives such payment or prepayment, and
such distribution shall not be so made by the Agent in full on
the required day, the Agent shall pay to each Bank such Bank's
Pro Rata Percentage thereof together with interest thereon at the
Federal Funds Rate for each day from the date such amount is paid
to the Agent by the Borrower until the date the Agent pays such
amount to such Bank.
4.4 No Prepayment Premium or Penalty. Each prepayment
--------------------------------
pursuant to Section 4.1 or 4.3 shall be without premium or
penalty, subject in the case of Eurodollar Rate Loans and CD 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 on the Notes
or in respect of Facility Letter of Credit Obligations shall be
made by the Borrower without set off or counterclaim and shall be
made free and clear of and without deduction for any present or
future tax, levy, impost or any other charge, if any, of any
nature whatsoever now or hereafter imposed by any taxing
authority. If the making of such payments is prohibited by law,
unless such a tax, levy, impost or other charge is deducted or
withheld therefrom, the Borrower shall pay to the Banks, on the
date of each such payment, such additional amounts as may be
necessary in order that the net amounts received by the Banks
after such deduction or withholding shall equal the amounts which
would have been received if such deduction or withholding were
not required.
4.6 Reduction or Termination of Commitments. The Borrower
---------------------------------------
may at any time or from time to time reduce or terminate the Com-
mitment of each Bank by giving not less than ten (10) full Busi-
ness Days' prior written notice to such effect to the Agent,
provided that any partial reduction shall be in the amount of
$1,000,000.00 or an integral multiple thereof. Concurrently with
each such reduction or termination, all amounts in excess of the
reduced Commitments shall be automatically due and payable and it
is a condition to the effectiveness of such reduction that the
Borrower shall immediately prepay the entire amount of such
excess together with all accrued interest thereon and such other
amounts that may be required to be paid in consequence of such
prepayment under Section 2.3(d). Promptly after the Agent's
receipt of such notice of reduction, the Agent shall notify each
Bank of the proposed reduction and such reduction shall be effec-
tive on the date specified in the Borrower's notice with respect
to such reduction and shall reduce the Commitment of each Bank
proportionately in accordance with its Pro Rata Percentage (and
such reduction shall also ratably reduce the Commitments related
to Facility Letters of Credit). After each such reduction, the
commitment fee shall be calculated upon the Commitments as so
reduced. The Commitment of each Bank shall automatically termi-
nate on the Maturity Date or in the event of acceleration of the
maturity date of the Notes. Each reduction of the Commitment
hereunder shall be irrevocable.
5. COMMITMENT FEE AND OTHER FEES
5.1 Commitment Fee. The Borrower agrees to pay to the
--------------
Agent for the account of each Bank a commitment fee based on a
year of 360 days, from the Closing Date to, but not including,
the Maturity Date (or such earlier date as of which all Commit-
ments shall have terminated), on the daily average unused amount
of each Bank's Commitment, such commitment fee to be payable
quarterly in arrears on (a) the last day of each March, June,
September, and December, commencing on December 31, 1998 and (b)
the Maturity Date, at a rate per annum changing with the rating
of the Borrower's Senior Funded Debt, and determined in
accordance with the following grid:
Percentage
Rating of the Borrower's Senior Funded Debt Per Annum
-----------------------------------------------------------------
Equal to or greater than A3 by Moody's Investor Ser- 0.125%
vice, Inc. and equal to or greater than A- by
---
Standard and Poor's Corporation
Baa1 by Xxxxx'x Investor Service, Inc. or BBB+ by 0.150%
--
Standard and Poor's Corporation
Baa2 by Xxxxx'x Investor Service, Inc. or BBB by 0.150%
--
Standard and Poor's Corporation
Baa3 by Xxxxx'x Investor Service, Inc. or BBB- by 0.150%
--
Standard and Poor's Corporation
Equal to or less than Ba1 by Moody's Investor Ser- 0.250%
vice, Inc. and equal to or less than BB+ by
---
Standard and Poor's Corporation
5.2 Facility Letter of Credit Fee. The Borrower shall pay
-----------------------------
to the Agent, for the account of each Issuing Bank, the Facility
Letter of Credit Fees as set forth in Section 3.9.
5.3 Fees Not Interest; Nonpayment. 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 Borrower to pay each fee described herein shall be in
addition to, and not in lieu of, the obligation of the Borrower
to pay interest, other fees described in this Agreement, and
expenses otherwise described in this Agreement. Fees shall be
payable when due in Dollars and in immediately available funds.
The commitment fee referred to in Section 5.1 shall be non-
refundable, and shall, to the fullest extent permitted by law,
bear interest, if not paid when due, at a rate per annum equal to
the lesser of (a) five percent (5%) above the Alternate Base Rate
as in effect from time to time or (b) the Highest Lawful Rate.
6. APPLICATION OF PROCEEDS
6.1 Application of Proceeds. The Borrower agrees that the
-----------------------
proceeds of the Loans shall be used:
(a) to provide working capital and for general corpo-
rate purposes;
(b) to finance the acquisition of Qualifying Assets,
which Qualifying Assets may be acquired on a revolving basis as
long as at any one time the amount of the Borrower's investment
in Qualifying Assets does not exceed the amounts set forth in
clause (i) and clause (ii) of the definition of Qualifying Assets
as applicable; provided, however, that the prior written consent
-------- -------
of the Majority Banks shall be required for the use of Loan pro-
ceeds to finance any portion of any such acquisition described in
clause (i) of the definition of Qualifying Assets requiring the
payment of more than $40,000,000.
(c) to finance the Borrower's open market acquisition
of its own 7.60% Senior Notes due 2024; provided, however, that
-------- -------
such use shall be limited to an aggregate amount advanced to
$60,000,000.
7. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
7.1 Organization and Qualification. The Borrower and each
------------------------------
Subsidiary: (a) are corporations duly organized, validly
existing, and in good standing under the laws of their respective
states of incorporation; (b) have the corporate or organizational
power to own their respective properties and to carry on their
respective businesses as now conducted; and (c) are duly quali-
fied as foreign corporations (or, in the case of any Southern
Union Trust, trusts) to do business and are in good standing in
every jurisdiction where such qualification is necessary except
when the failure to so qualify would not or does not have a
Material Adverse Effect. The Borrower is a corporation organized
under the laws of Delaware and has the following Subsidiaries and
no others, each of which is a Delaware corporation unless other-
wise noted: Lavaca Realty Company; KellAir Aviation Company;
Xxxxxxx Gas Services, Inc.; Southern Transmission Company;
Southern Union Gas Company, Inc, a Texas corporation; Southern
Union Total Energy Systems, Inc.; Southern Union Energy Inter-
national, Inc.; Southern Union International Investments, Inc;
Energia Xxxxxxxx del Sur S.A. de C.V., a Mexican corporation;
SUPro Energy Company; Contigo, Inc.; Energy Worx, Inc.; Norteno
Pipeline Company; Western Utilities, Inc.; Western Utilities,
Inc., a New Mexico corporation; Atlantic Gas Corporation, a
Florida corporation; and the Southern Union Trusts. Neither
Subsidiary named Southern Union Gas Company, Inc; Western
Utilities, Inc., a Delaware corporation; nor Western Utilities,
Inc., a New Mexico corporation, conducts or will conduct any
business and none has any assets other than minimum legal
capitalization.
7.2 Financial Statements. The Borrower has furnished the
--------------------
Banks with the Borrower's consolidated balance sheet, statements
of income and stockholder's equity and a cash flow statement as
at and for the twelve month period ending June 30, 1998, accom-
panied by the certificate of Price Waterhouse Coopers. These
statements are complete and correct and present fairly in
accordance with GAAP, consistently applied throughout the periods
involved, the consolidated financial position of the Borrower and
the Subsidiaries 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.
There has been no material
adverse change in the condition, financial or otherwise, of the
Borrower or any Subsidiary since June 30, 1998.
7.3 Litigation. Except as disclosed on Schedule 7.3 or
---------- ------------
pursuant to Section 7.16, there is no: (a) action or proceeding
pending or, to the knowledge of the Borrower, threatened against
the Borrower or any Subsidiary before any court, administrative
agency or arbitrator which is reasonably expected to have a
Material Adverse Effect; (b) judgment outstanding against the
Borrower for the payment of money; or (c) other outstanding
judgment, order or decree affecting the Borrower or any Sub-
sidiary before or by any administrative or governmental
authority, compliance with or satisfaction of which may rea-
sonably be expected to have a Material Adverse Effect.
7.4 Default. Neither the Borrower nor any Subsidiary is
-------
in default under or in violation of the provisions of any instru-
ment evidencing any Debt or of any agreement relating thereto or
any judgment, order, writ, injunction or decree of any court or
any order, regulation or demand of any administrative or govern-
mental instrumentality which default or violation might have a
Material Adverse Effect.
7.5 Title to Assets. The Borrower and each Subsidiary
---------------
have good and marketable title to their respective assets, sub-
ject to no Liens except those permitted in Section 10.2.
7.6 Payment of Taxes. The Borrower and each Subsidiary
----------------
have filed all tax returns required to be filed and have paid all
taxes shown on said returns and all assessments which are due and
payable (except such as are being contested in good faith by ap-
propriate proceedings for which adequate reserves for their pay-
ment have been provided in a manner consistent with the accounting
practices followed by the Borrower as of December 31,
1992). The Borrower is not aware of any pending investigation by
any taxing authority or of any claims by any governmental autho-
rity for any unpaid taxes, except as disclosed on Schedule 7.6.
------------
7.7 Conflicting or Adverse Agreements or Restrictions.
-------------------------------------------------
Neither the Borrower nor any Subsidiary is a party to any con-
tract or agreement or subject to any restriction which would have
a Material Adverse Effect. Neither the execution and delivery of
this Agreement or the Notes or any other Loan Document nor the
consummation of the transactions contemplated hereby nor fulfill-
ment of and compliance with the respective terms, conditions and
provisions hereof or of the Notes or of any instruments required
hereby will conflict with or result in a breach of any of the
terms, conditions or provisions of, or constitute a default
under, or result in any violation of, or result in the creation
or imposition of any lien (other than as contemplated or per-
mitted by this Agreement) on any of the property of the Borrower
or any Subsidiary pursuant to (a) the charter or bylaws
applicable to the Borrower or any Subsidiary; (b) any law or any
regulation of any administrative or governmental instrumentality;
(c) any order, writ, injunction or decree of any court; or (d)
the terms, conditions or provisions of any agreement or instru-
ment to which the Borrower or any Subsidiary is a party or by
which it is bound or to which it is subject.
7.8 Authorization, Validity, Etc. The Borrower has the
----------------------------
corporate power and authority to make, execute, deliver and carry
out this Agreement and the transactions contemplated herein, to
make the borrowings provided for herein, to execute and deliver
the Notes and to perform its obligations hereunder and under the
Notes and the other Loan Documents to which it is a party and all
such action has been duly authorized by all necessary corporate
proceedings on its part. This
Agreement has been duly and validly executed and delivered by the
Borrower and constitutes the valid and legally binding agreement
of the Borrower enforceable in accordance with its terms, except
as limited by Debtor Laws; and the Notes and the other Loan Docu-
ments, when duly executed and delivered by the Borrower pursuant
to the provisions hereof, will constitute the valid and legally
binding obligation of the Borrower enforceable in accordance with
the terms thereof and of this Agreement, except as limited by
Debtor Laws.
7.9 Investment Company Act Not Applicable. Neither the
-------------------------------------
Borrower nor any Subsidiary is an "investment company" or a com-
pany "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 Borrower nor any Subsidiary is a "holding company",
or a "subsidiary company" of a "holding company", or an "affiliate"
of a "holding company", or an affiliate of a "subsidiary company"
of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.
7.11 Regulations G, T, U and X. No Loan shall be a "pur-
-------------------------
pose credit secured directly or indirectly by margin stock" with-
in 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 pur-
pose which would constitute this transaction a "purpose credit
secured directly or indirectly by margin stock" within the
meaning of said Regulation U, as now in effect or as the same may
hereafter be in effect. Neither the Borrower nor any Subsidiary
will take or permit any action which would involve the Banks in a
violation of Regulation G, Regulation T, Regulation U, Regulation
X or any other 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. After
applying proceeds of the Loans and the Short-Term Credit Facility
used to acquire the equity interests described in the definition
of "Qualifying Assets", not more than 25 percent (25%) of the
value (as determined by any reasonable method) of the assets
subject to the negative pledge set forth in Section 10.2 of the
Credit Agreement and the restrictions on disposition of assets
set forth in Section 10.8 of the Credit Agreement is represented
by margin stock.
7.12 ERISA. No Reportable Event (as defined in Section
-----
4043(b) of ERISA) has occurred with respect to any Plan. Each
Plan complies in all material respects with a applicable pro-
visions of ERISA, and the Borrower and each Subsidiary have
filed all reports required by ERISA and the Code to be filed
with respect to each Plan. The Borrower has no knowledge of
any event which could result in a liability of the Borrower
or any Subsidiary to the Pension Benefit Guaranty Corporation.
The Borrower and each Subsidiary have met all requirements
with respect to funding the Plans imposed by ERISA or the
Code. Since the effective date of Title IV of ERISA, there
have not been any, nor are there now existing any, events or
conditions that would permit any Plan to be terminated under
circumstances which would cause the lien provided under
Section 4068 of ERISA to attach to any property of the Bor-
rower or any Subsidiary. The value of the Plans' benefits
guaranteed under Title IV of ERISA on the date hereof does not
exceed the value of such Plans' assets allocable to such benefits
as of the date of this Agreement and shall not be permitted to do
so hereafter.
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 Section 13 or Section 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 Borrower and each
----------------------------
Subsidiary own or have obtained all the material governmental
permits, certificates of authority, leases, patents, trademarks,
service marks, trade names, copyrights, franchises and licenses,
and rights with respect thereto, required or necessary (or, in
the sole and independent judgment of the Borrower, prudent) in
connection with the conduct of their respective businesses as
presently conducted or as proposed to be conducted.
7.15 Line of Business. The nature of the Borrower's line
----------------
of business is predominately the operation of gas distribution
and transportation networks in Texas, Missouri, Florida, and
Mexico.
7.16 Environmental Matters. Except as disclosed in
---------------------
Schedule 7.16, all facilities and property owned or leased by the
-------------
Borrower or any Subsidiary have been and continue to be, owned or
leased and operated by the Borrower and each Subsidiary in
material compliance with all Environmental Laws; (i) there has
not been (during the period of the Borrower's, or a Subsidiary's
ownership or lease) any Release of Hazardous Materials at, on or
under any property now (or, to the Borrower's knowledge,
previously) owned or leased by the Borrower or any Subsidiary (A)
in quantities that would be required to be reported under any
Environmental Law, (B) that required, or may reasonably be
expected to require, the Borrower to expend funds on remediation
or cleanup activities pursuant to any Environmental Law except
for remediation or clean-up activities that would not be
reasonably expected to have a Material Adverse Effect, or (c)
that otherwise, singly or in the aggregate, has, or may reason-
ably be expected to have, a Material Adverse Effect; (ii) the
Borrower and each Subsidiary have been issued and are in material
compliance with all permits, certificates, approvals, orders,
licenses and other authorizations relating to environmental
matters necessary for their respective businesses; and (iii)
there are no polychlorinated biphenyls (PCB's) or asbestos-
containing materials or surface impoundments in any of the
facilities now (or, to the knowledge of the Borrower, previously)
owned or leased by the Borrower or any Subsidiary, except for
asbestos-containing materials of the type and in quantities that,
to the knowledge of the borrower, do not currently require
remediation, and if remediation of such asbestos-containing
materials is hereafter required for any reason, such remediation
activities would not reasonably be expected to have a Material
Adverse Effect; (iv) Hazardous Materials have not been generated,
used, treated, recycled, stored or disposed of in any of the
facilities or on any of the property now (or, to the knowledge of
the Borrower, previously) owned or leased by the Borrower or any
Subsidiary during the time of the Borrower's or such Subsidiary's
ownership or leased by the Borrower or any Subsidiary during the
time of the Borrower's or such Subsidiary's ownership except in
material compliance with all applicable Environmental Laws; and
(v) all underground storage tanks located on the property now
(or, to the knowledge of the Borrower, previously) owned or
leased by the Borrower or any Subsidiary have been (and to the
extent currently owned or leased are) operated in material com-
pliance with all applicable Environmental Laws.
8. CONDITIONS
The obligation of the Banks to make any Loans or issue any
Facility Letters of Credit is subject to the following condi-
tions:
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) The Borrower shall not be in default in the due
performance of any covenant on its part contained in this Agree-
ment;
(c) no material adverse change shall have occurred
with respect to the business, properties or condition (financial
or otherwise) of the Borrower reflected in the audited financial
statements of the Borrower dated June 30, 1998, (copies of such
audited financial statements having been supplied to the Agent
and each Bank); and
(d) no Event of Default or Default shall have
occurred and be continuing.
8.2 Governmental Approvals. The Borrower shall have
----------------------
obtained all orders, approvals or consents of all public regula-
tory bodies required for the making and carrying out of this
Agreement, the making of the borrowings pursuant hereto, the
issuance of the Notes to evidence such borrowings, and the
execution and delivery of the Security Documents.
8.3 Compliance With Law. The business and operations of
-------------------
the Borrower and each Subsidiary as conducted at all times
relevant to the transactions contemplated by this Agreement to
and including the close of business on the particular Borrowing
Date shall have been and shall be in compliance in all material
respects with all applicable State and Federal laws, regulations
and orders affecting the Borrower and each Subsidiary and the
business and operations of any of them.
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 reason-
ably request.
9. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as the
Borrower may borrow hereunder and until payment in full of the
Notes, and its other obligations under this Agreement and the
other Loan Documents the Borrower will:
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 Borrower, a copy of
the annual audit report of the Borrower and the Subsidiaries for
such fiscal year containing a balance sheet, statements of income
and stockholders equity and a cash flow statement, all in reason-
able detail and certified by Price Waterhouse Coopers or another
independent certified public accountant of recognized standing
satisfactory to the Banks. The Borrower will obtain from such
accountants and deliver to the Banks at the time said financial
statements are delivered the written statement of the accountants
that in making the examination necessary to said certification
they have obtained no knowledge of any Event of Default or
Default, or if such accountants shall have obtained knowledge of
any such Event of Default or Default, they shall state the nature
and period of existence thereof in such statement; provided that
-------------
such accountants shall not
be liable directly or indirectly to the Banks for failure to
obtain knowledge of any such Event of Default or Default; and
(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 Borrower (excluding the fourth
quarter), an unaudited financial report of the Borrower and the
Subsidiaries as at the end of such quarter and for the period
then ended, containing a balance sheet, statements of income and
stockholders equity and a cash flow statement, all in reasonable
detail and certified by a financial officer of the Borrower to
have been prepared in accordance with GAAP, except as may be
explained in such certificate; and
(c) within thirty (30) days after the end of each
month for which the rating of the Borrower's Senior Funded Debt
is lower than BBB- by Standard and Poor's Corporation and lower
than Baa3 by Xxxxx'x Investor Service, Inc.: (i) a list of the
Eligible Accounts Receivable, Cash, Cash Equivalents and Inven-
tory of the Borrower as at the end of the preceding month, such
list to be in the form attached hereto as Annex 1 to Exhibit C
------- ---------
and to contain such information and detail as the Banks may
request, including, without limiting the generality of the
foregoing, aging of Accounts in the customary manner; (ii) cer-
tification by the Borrower of its PGA Receivables and Eligible
Unbilled Accounts as of the end of the preceding month; and (iii)
a Borrowing Base certificate for such month in the form attached
hereto as Exhibit C; provided, however, that the Borrower may
--------- -------- -------
deliver the Borrowing Base reports for the last month of any
fiscal year and the Borrowing Base reports for the first two
months of the succeeding fiscal year no later than 90 days
following the commencement of such succeeding fiscal year.
(d) copies of all statements and reports sent to
stockholders of the Borrower or filed with the Securities and
Exchange Commission; and
(e) 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 the Borrower is required to deliver to
or file with governmental bodies pursuant to tariffs and/or
franchise agreements.
All financial statements specified in clauses (a) and (b) above
shall be furnished in consolidated and consolidating form for the
Borrower and all Subsidiaries with comparative consolidated
figures for the corresponding period in the preceding year.
Together with each delivery of financial statements required by
clauses (a) and (b) above, the Borrower will deliver to the Banks
(i) such schedules, computations and other information as may be
required to demonstrate that the Borrower is in compliance with
its covenants in Section 10.1 or reflecting any noncompliance
therewith as at the applicable date and (ii) an Officer's Cer-
tificate stating that there exists no Event of Default or
Default, or, if any such Event of Default or Default exists,
stating the nature thereof, the period of existence thereof and
what action the Borrower has taken or proposes to take with
respect thereto. The Banks are authorized to deliver a copy of
any financial statement delivered to it to any regulatory body
having jurisdiction over them, and to disclose same to any
prospective assignees or participant Lenders.
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 the form of Schedule 9.2) of all
------------
agreements to rent or lease any property (personal, real or
mixed, but not including oil and gas leases)
to which the Borrower or any Subsidiary is a party lessee and
which, considered independently or collectively with other leases
with the same lessor, involve an obligation by the Borrower or a
Subsidiary to make payments of at least $250,000.00 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 the form of
Schedule 9.2) listing all debt exceeding $200,000.00 in principal
------------
amount outstanding and equity owned or held by the Borrower or
any Subsidiary containing all information required by, and in a
form satisfactory to, the Banks, except for such debt or equity
of Subsidiaries.
9.3 Books and Records. Maintain, and cause each Sub-
-----------------
sidiary 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 Subsidiary to
---------
maintain, insurance with financially sound, responsible and
reputable companies in such types and amounts and against such
casualties, risks and contingencies as is customarily carried by
owners of similar 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 Subsidiary to be
maintained, preserved, protected and kept in good repair, working
order and condition so that the business carried on in connection
therewith may be conducted properly and efficiently, except for
normal wear and tear; provided, however, that the improved
-------- -------
properties of Lavaca Realty Company should be maintained, pre-
served and protected in a manner consistent with the maintenance,
preservation and protection of improved real property held for
sale.
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 Banks expense, to visit and inspect during
normal business hours any of the properties, corporate books and
financial records of the Borrower and each Subsidiary and discuss
their respective affairs and finances with their principal
officers, all at such times as the Agent or any Bank may
reasonably request.
9.7 Existence, Laws, Obligations. Maintain, and cause
----------------------------
each Subsidiary to maintain, its corporate existence and xxxx-
chises, and any license agreements and tariffs that permit the
recovery of a return that the Borrower considers to be fair (and
as to licenses, franchises, and tariffs that are subject to
regulatory determinations of recovery of returns, the Borrower
has presented or is presenting favorable defense thereof); and to
comply, and cause each Subsidiary to comply, with all statutes
and governmental regulations noncompliance with which might have
a Material Adverse Effect, and pay, and cause each Subsidiary to
pay, all taxes, assessments, governmental charges, claims for
labor, supplies, rent and other obligations which if unpaid might
become a lien against the property of the Borrower or any Sub-
sidiary except liabilities being contested in good faith.
9.8 Notice of Certain Matters. Notify the Agent Bank
-------------------------
immediately upon acquiring knowledge of the occurrence of any of
the following events: (a) the institution or threatened institu-
tion of any lawsuit or administrative proceeding affecting the
Borrower or any Subsidiary that is not covered by insurance (less
applicable deductible amounts) and which, if determined adversely
to the Borrower or such Subsidiary, could reasonably be expected
to have a Material Adverse Effect; (b) the occurrence of any
material adverse change, or of any event that in the good faith
opinion of the Borrower is likely, to result in a material
adverse change, in the assets, liabilities, financial condition,
business or affairs of the Borrower or any Subsidiary; (c) the
occurrence of any Event of Default or any Default; or (d) a
change by Xxxxx'x Investors Service, Inc. or by Standard and
Poor's Corporation in the rating of the Borrower's Funded Debt.
9.9 ERISA. At all times:
-----
(a) maintain and keep in full force and effect each
Plan;
(b) 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) immediately upon acquiring knowledge of any
"reportable event" or of any "prohibited transaction" (as such
terms are defined in the Code Section 4043) in connection with
any Plan, furnish the Banks with a statement executed by the
president or chief financial officer of the Borrower setting
forth the details thereof and the action which the Borrower
proposes to take with respect thereto and, when known, any
action taken by the Internal Revenue Service with respect
thereto;
(d) notify the Banks promptly upon receipt by the
Borrower or any Subsidiary of any notice of the institution of
any proceeding or other action which may result in the termina-
tion of any Plan and furnish to the Banks copies of such notice;
(e) acquire and maintain in amounts satisfactory to
the Banks from either the Pension Benefit Guaranty Corporation or
authorized private insurers, when available, the contingent
employer liability coverage insurance required under ERISA;
(f) furnish the Banks with copies of the summary
annual report for each Plan filed with the Internal Revenue
Service as the Agent or the Banks may request; and
(g) furnish the Banks with copies of any request for
waiver of the funding standards or extension of the amortization
periods required by Section 303 and Section 304 of ERISA or
Section 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 Subsidiary to use
and operate, all of their respective facilities and properties in
material compliance with all Environmental Laws; keep, and cause
each Subsidiary to keep, all necessary permits, approvals,
orders, certificates, licenses and other authorizations relating
to environmental matters in effect and remain in material com-
pliance therewith; handle, and cause each Subsidiary to handle,
all Hazardous Materials in material compliance with all
applicable Environmental Laws; and dispose, and cause each Sub-
sidiary to dispose, of all Hazardous Materials generated by the
Borrower or any Subsidiary or at any property owned or leased by
them
at facilities or with carriers that maintain valid permits,
approvals, certificates, licenses or other authorizations for
such disposal under applicable Environmental Laws;
(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
Borrower and each Subsidiary under, or their respective compli-
ance with, applicable Environmental Laws wherein the condition or
the noncompliance that is the subject of such claim, complaint,
notice, or inquiry involves, or could reasonably be expected to
involve, liability of or expenditures by the Borrower and its
Subsidiaries of $5,000,000.00 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 Borrower will use its best efforts
-----------
to maintain in force provisions in all of its tariffs and xxxx-
chise agreements that permit the Borrower to recover from custo-
mers 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).
10. NEGATIVE COVENANTS
So long as the Borrower may borrow hereunder and until pay-
ment in full of the Notes, except with the written consent of the
Banks:
10.1 Capital Requirements. The Borrower will not:
--------------------
(a) permit its Consolidated Net Worth at the end of
any fiscal quarter to be less than the sum of (i)
$241,503,000.00, (ii) 40% of Consolidated Net Income for the
period commencing on July 1, 1998, ending on the date of
determination, and treated as a single accounting period, and
(iii) 100% of the net proceeds of any issuance of capital or
preferred stock by the Borrower or any consolidated Subsidiary
received by the Borrower or such consolidated Subsidiary at any
time after the Closing Date; and (iv) without duplication, the
difference between (A) 100% of the net proceeds heretofore and
hereafter received by the Borrower and any consolidated Sub-
sidiary in respect of the issuance by the Borrower or such con-
solidated Subsidiary of the Structured Securities, and (B) the
aggregate amount of all redemption payments hereafter made, if
any, by the Borrower and any such consolidated Subsidiary in
connection with the redemption of any of the Structured
Securities; or
(b) permit the ratio of its Consolidated Total
Indebtedness to its Consolidated Total Capitalization to be
greater than 0.70 to 1.00 at the end of any fiscal quarter; or
(c) acquire, or permit any Subsidiary 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 (con-
sidered as a single accounting period) at any time to be less
than 2.25 to 1.0; or
(e) permit the aggregate outstanding principal amount
of the Notes and the Short-Term Credit Facility Notes to exceed
for a period of 180 consecutive days the Borrower's Available
Senior Funded Debt Capacity.
10.2 Mortgages, Liens, Etc. The Borrower will not, and
---------------------
will not permit any Subsidiary to, create or permit to exist any
Lien (including the charge upon assets purchased under a condi-
tional sales agreement, purchase money mortgage, security agree-
ment 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 a Subsidiary to secure obliga-
tions of such Subsidiary to the Borrower or another Subsidiary;
and
(d) Liens on property existing at the time of
acquisition thereof by the Borrower or any Subsidiary or purchase
money Liens placed on an item of real or personal property pur-
chased by the Borrower or any Subsidiary to secure a portion of
the purchase price of such property, provided that no such Lien
-------------
may encumber or cover any other property of the Borrower or any
Subsidiary.
10.3 Debt. The Borrower will not, and will not permit any
----
Subsidiary to, incur or permit to exist any Debt, except:
(a) Debt evidenced by the Notes, the Short-Term
Credit Facility Notes and Facility Letter of Credit Obligations
not in default;
(b) Debt of any Subsidiary to the Borrower or any
other Subsidiary;
(c) Debt existing as of June 30, 1998 as reflected on
financial statements delivered under Section 7.2(b) and refin-
ancings thereof other than Debt that has been refinanced by the
proceeds of Loans or the proceeds of the Short-Term Credit
Facility;
(d) endorsements in the ordinary course of business
of negotiable instruments in the course of collection;
(e) Debt of the Borrower or any Subsidiary repre-
senting the portion of the purchase price of property acquired by
the Borrower or such Subsidiary that is secured by Liens per-
mitted by the provisions of Section 10.2(d); provided, however,
-------- -------
that at no time may the aggregate principal amount of such Debt
outstanding exceed fifteen percent (15%) of the Consolidated Net
Worth of the borrower and its Subsidiaries as of the applicable
determination date;
(f) Debt evidenced by Senior Notes; and
(g) additional Debt of the Borrower and Structured
Securities of the Borrower and the Southern Union Trusts provided
that after giving effect to the issuance thereof there shall
exist no Default or Event of Default; and: (i) the ratio of
Consolidated Total Indebtedness to Consolidated total Capitaliza-
tion shall be no greater than 0.70 to 1.00; (ii) the ratio of
EBDIT to pro forma Cash Interest Expense shall be no less than
2.25 to 1.00; and (iii) (A) such Debt and Structured Securities
shall have a final maturity or redemption date, as the case may
be, no earlier than the Maturity Date (as the same may be
extended pursuant to Section 2.4) and shall mature or be subject
to redemption or defeasance no earlier than the Maturity Date (as
so extended) and shall be subject to no mandatory redemption or
"put" to the borrower or any Southern Union Trust exercisable, or
sinking fund or other similar mandatory principal payment pro-
visions that require payments to be made toward principal, prior
to such Maturity Date (as so extended); or (B) (x) such addi-
tional Debt shall have a final maturity date prior to the
Maturity Date, (y) such additional Debt shall not exceed Thirty-
Five Million Dollars ($35,000,000.00) in the aggregate plus Five
Million Dollars ($5,000,000.00) of reimbursement obligations
incurred in connection with Non-Facility Letters of Credit issued
by a Bank or Banks or by any other financial institution, and (z)
such additional Debt shall be borrowed from a Bank or Banks as a
loan or loans arising independent of this Agreement or the Short-
Term Credit Facility Agreement or shall be borrowed from a
financial institution that is not a Bank under this Agreement or
the Short-Term Credit Facility Agreement.
10.4 Loans, Advances and Investments. The Borrower will
-------------------------------
not, and will not permit any Subsidiary to, make or have out-
standing 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) stock of (i) the Subsidiaries named in Section
7.1; (ii) other entities that are acquired by the Borrower or any
Subsidiary but that are promptly merged with and into the Bor-
rower; and (iii) the same Qualifying Entities as the Qualifying
Entities under subparagraph (ii) of the definition of "Qualifying
Assets" which stock was acquired by the Borrower for an aggregate
purchase price of no more than Thirty Million Dollars
($30,000,000.00);
(b) loans or advances to a Subsidiary;
(c) Securities maturing no more than 180 days after
Borrower'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 Xxxxx'x
Investors Service, Inc. ("Moody's") or A-2 by Standard and Poor's
Corporation ("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
lest 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 regu-
lated 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 a Subsidiary on
the date of this Agreement and such additional equity interests
to the extent (but only to the extent) that such Subsidiary is
legally obligated to acquire those interests on the date of this
Agreement, in each case as disclosed to the Banks in writing;
(e) loans or advances by the Borrower to customers in
connection with and pursuant to marketing and merchandising
products that the Borrower reasonably expects to increase sales
of the Borrower or Subsidiaries, provided that: (i) such loans
--------
must be either less than $1,500,000.00 to any one customer (or
group of affiliated customers, shown on the Borrower's records to
be Affiliates) or must be disclosed on Schedule 9.2 hereof; and
------------
(ii) all such loans must not exceed $12,000,000.00 in the
aggregate outstanding at any time;
(f) travel and expense advances in the ordinary
course of business to officers and employees;
(g) stock or securities of or equity interests in,
any Person provided that, after giving effect to the acquisition
and ownership thereof, the Borrower is in compliance with the
provisions of Section 10.1(c) of this Agreement;
(h) loans by the Borrower or any Subsidiary other
than Lavaca Realty Company to other Persons representing the
deferred portion of the sales price of Property not exceeding
$371,035.56 in aggregate principal amount outstanding, provided
--------
that such Person remains substantially in compliance with the
note evidencing the same and the payment schedule therefor; and
(i) loans by Lavaca Realty Company to other Persons
representing the deferred portion of the sales price of its
Property not exceeding eighty percent (80%) of the sales price of
such Property, provided that the purchaser's default in payment
of such loan shall not have a material adverse effect on the
consolidated financial condition of the Borrower and its Sub-
sidiaries.
10.5 Stock and Debt of Subsidiaries. The Borrower will
------------------------------
not, and will not permit any Subsidiary to, sell or otherwise
dispose of any shares of stock or Debt of any Subsidiary, or
permit any Subsidiary to issue or dispose of its stock (other
than directors' qualifying shares), except to the Borrower or
another Subsidiary, and except that Southern Union Trusts may
issue preferred beneficial interests in public offerings of
Borrower's Structured Securities.
10.6 Merger, Consolidation, Etc. The Borrower will not,
--------------------------
and will not permit any Subsidiary to, merge or consolidate with
any other Person or sell, lease, transfer or otherwise dispose
of (whether in one transaction or a series of transactions) all
or a substantial part of its assets or acquire (whether in one
transaction or a series of transactions) all or a substantial
part of the assets of any Person, except that:
(a) any Subsidiary may merge or consolidate with the
Borrower (provided that the Borrower shall be the continuing or
-------------
surviving corporation) or with any one or more Subsidiaries;
(b) any Subsidiary may sell, lease, transfer or other-
wise dispose of any of its assets to the Borrower or another
Subsidiary;
(c) subject to Section 10.14, Lavaca Realty Company
may dispose of all or a substantial part of its assets to any
Person, whether in one transaction or a series of transactions,
for a price or prices that do not result in a Material Adverse
Effect; and
(d) the Borrower may acquire the assets of any Person,
provided that, after giving effect to such acquisition, the Bor-
--------
rower is in compliance with the provisions of Sections 10.1(c).
10.7 Supply and Purchase Contracts. The Borrower will not,
-----------------------------
and will not permit any Subsidiary to, enter into or be a party
to any contract for the purchase of materials, supplies or other
property if such contract requires that payment for such
materials, supplies or other property shall be made regardless of
whether or not delivery is ever made or tendered of such
materials, supplies and other property, except in those circum-
stances and involving those supply or purchase contracts that the
Borrower reasonably considers to be necessary or helpful in its
operations in the ordinary course of business and that the Bor-
rower reasonably considers not to be unnecessarily burdensome on
the Borrower or its Subsidiaries.
10.8 Sale or Other Disposition of Assets. The Borrower
-----------------------------------
will not, and will not permit any Subsidiary to, except as
permitted under this Section 10.8, sell, assign, lease, or
otherwise dispose of (whether in one transaction or in a series
of transactions) all or any part of its Property (whether now
owned or hereafter acquired); provided, however, that (i) the
-------- -------
Borrower or any Subsidiary may in the ordinary course of business
dispose of (a) Property consisting of Inventory; and (b) Property
consisting of goods or equipment that are, in the opinion of the
Borrower or any Subsidiary, obsolete or unproductive, but if in
the good faith judgment of the Borrower or any Subsidiary such
disposition 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) Lavaca Realty Company may dispose of its
Property on the terms set forth in Section 10.6(c); (iii) the
Borrower may transfer or dispose of any of its Significant
Property (in any transaction or series of transactions) to any
Subsidiary or Subsidiaries only if such Property has a net book
value of not more than $5,000,000.00 in the aggregate; (iv) the
Borrower and Lavaca Realty Company may dispose of their 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; (v) a Southern Union
Trust may distribute the Borrower's subordinated debt securities
constituting a portion of the Structured Securities, on the terms
and under the conditions set out in the registration statement
therefor filed with the Securities and Exchange Commission on
March 25, 1995; (vi) the Borrower or any Subsidiary may dispose
of real property or tangible personal property other than Inven
ory (in consideration of such amount as in the good faith
judgment of the Borrower or such Subsidiary represents a fair
consideration therefor), provided that the aggregate value of
such property disposed of (determined after depreciation and in
accordance with GAAP) does not exceed
ten percent (10%) of the aggregate value of all of the Borrower's
and its Subsidiaries' real property and tangible personal
property other than Inventory considered on a consolidated basis
and determined after depreciation and in accordance with GAAP, as
of June 30, 1998; and (vii) the Borrower may dispose of
Qualifying Assets of the type described in clause (ii) of the
definition of Qualifying Assets, provided that the Borrower make
a payment on the Loan in an amount equal to the lesser of (a) the
net sales proceeds from such disposition, and (b) the amount of
Loan proceeds used to acquire such clause (ii) Qualifying Assets.
10.9 Discount or Sale of Receivables. The Borrower will
-------------------------------
not, and will not permit any Subsidiary, 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.
10.10 Change in Accounting Method. The Borrower will not,
---------------------------
and will not permit any Subsidiary to, make any change in the
method of computing depreciation for either tax or book purposes
or any other material change in accounting method representing
any departure from GAAP without the Majority Banks' prior written
approval.
10.11 Restricted Payment. The Borrower will not pay or
------------------
declare any Restricted Payment unless immediately prior to such
payment and after giving effect to such payment, the Borrower
---
could incur at least $1 of additional Debt without violating the
provisions of Section 10.3(g) and after giving effect thereto no
---
Default or Event of Default exists hereunder.
10.12 Securities Credit Regulations. Neither the Borrower
-----------------------------
nor any Subsidiary will take or permit any action which might
cause the Loans or the Facility Letter of Credit Obligations or
this Agreement to violate Regulation G, Regulation T, Regulation
U, Regulation X or any other regulation of the Board of Governors
of the Federal Reserve System or a violation of the Securities
Exchange Act of 1934, in each case as now or hereafter in effect.
10.13 Nature of Business; Management. The Borrower will
------------------------------
not, and will not permit any Subsidiary to: (a) change its
principal line of business; or (b) enter into any business not
within the scope of Section 10.1(c)(ii) and the definition of
Qualifying Assets; or (c) permit any material overall change in
the management of the Borrower.
10.14 Transactions with Related Parties. The Borrower will
---------------------------------
not, and will not permit any Subsidiary to, enter into any
transaction or agreement with any officer, director or holder of
ten percent (10%) or more of any class of the outstanding capital
stock of the Borrower or any Subsidiary (or any Affiliate of any
such Person) unless the same is upon terms substantially similar
to those obtainable from wholly unrelated sources.
10.15 Hazardous Materials. The Borrower will not, and will
-------------------
not permit any Subsidiary to (a) cause or permit any Hazardous
Materials to be placed, held, used, located, or disposed of on,
under or at any of such Person's property or any part thereof by
any Person in a manner which could reasonably be expected to have
a Material Adverse Effect; (b) cause or permit any part of any of
such Person's property to be used as a manufacturing, storage,
treatment or disposal site for Hazardous Materials, where such
action could reasonably be expected to have a Material Adverse
Effect; or (c) cause or suffer any liens to be recorded against
any of such Person's property as a consequence of,
or in any way related to, the presence, remediation, or disposal
of Hazardous Materials in or about any of such Person's
property, including any so-called state, federal or local
"superfund" lien relating to such matters, where such recordation
could reasonably be expected to have a Material Adverse Effect.
10.16 Limitations on Payments on Subordinated Debt. The
--------------------------------------------
Borrower will not, and will not permit any Subsidiary to, make
any payment in respect of interest on, principal of, or otherwise
relating to, the borrower's subordinated debt securities issued
in connection with the Structured Securities if, after giving
effect to such payment, a Default or Event of Default would
exist.
11. EVENTS OF DEFAULT; REMEDIES
If any of the following events shall occur, then the Agent
shall at the request, or may with the consent, of the holders of
at least sixty-six and two-thirds percent (66 2/3%) in principal
amount of the Notes then outstanding or, if no Note is then out-
standing, Banks having at least sixty-six and two-thirds percent
(66-2/3%) of the Commitments, (a) by notice to the Borrower,
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 Notes and all
interest accrued and unpaid thereon, and all other amounts pay-
able under the Notes, this agreement and the other Loan Docu-
ments, to be forthwith due and payable, whereupon the Notes, all
such interest and all such other amounts, shall become and be
forthwith due and payable without presentment, demand, protest,
or further notice of any kind (including, without limitation,
notice of default, notice of intent to accelerate and notice of
acceleration), all of which are hereby expressly waived by the
Borrower; provided, however, that with respect to any Event of
-------- -------
Default described in Section 11.8 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 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 immedi-
ately 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 accelera-
tion), all of which are hereby expressly waived by the Borrower:
11.1 Failure to Pay Principal or Interest. The Borrower
------------------------------------
does not pay, repay or prepay any principal of or interest on any
Note or any Short-Term Credit Facility Note when due; or
11.2 Failure to Pay Commitment Fee or Other Amounts. The
----------------------------------------------
Borrower does not pay any commitment fee or any other obligation
or amount payable under this Agreement, the Short-Term Credit
Facility Agreement, the Notes, the Short-Term Credit Facility
Notes, or any Letter of Credit Reimbursement Agreement within two
(2) calendar days after the same shall have become due; or
11.3 Failure to Pay Other Debt. The Borrower or any
-------------------------
Subsidiary fails to pay principal or interest aggregating more
than $1,000,000.00 on any other Debt when due and any related
grace period has expired, or the holder of any of such other Debt
declares such Debt due prior to its stated maturity because of
the Borrower's or any Subsidiary's default thereunder and the
expiration of any related grace period; or
11.4 Misrepresentation or Breach of Warranty. Any repre-
---------------------------------------
sentation or warranty made by the Borrower herein or otherwise
furnished to the Bank in connection with this Agreement or any
other Loan Document shall be incorrect, false or misleading in
any material respect when made; or
11.5 Violation of Negative Covenants. The Borrower vio-
-------------------------------
lates any covenant, agreement or condition contained in Sections
10.2, 10.3, 10.5, 10.6, 10.9, 10.10, 10.11, or 10.15; or
11.6 Violation of Other Covenants, Etc. The Borrower vio-
---------------------------------
lates any other covenant, agreement or condition contained herein
(other than the covenants, agreements and conditions set forth or
described in Sections 11.1, 11.2, 11.3, 11.4, and 11.5 above) or
in any other Loan Document and such violation shall not have been
remedied within (30) days after written notice has been received
by the Borrower from the Bank or the holder of the Note; or
11.7 Bankruptcy and Other Matters. The Borrower or any
----------------------------
Subsidiary (a) makes an assignment for the benefit of creditors;
or (b) admits in writing its inability to pay its debts generally
as they become due; or (c) generally fails to pay its debts as
they become due; or (d) files a petition or answer seeking for
itself, or consenting to or acquiescing in, any reorganization,
arrangement, composition, readjustment, liquidation, dissolution,
or similar relief under any applicable Debtor Law (including,
without limitation, the Federal Bankruptcy Code); or (i) there is
appointed a receiver, custodian, liquidator, fiscal agent, or
trustee of the Borrower or any Subsidiary or of the whole or any
substantial part of their respective assets; or (ii) any court
enters an order, judgment or decree approving a petition filed
against the Borrower or any Subsidiary seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution,
or similar relief under any Debtor Law and either such order,
decree or judgment so 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
11.8 Dissolution. Any order is entered in any proceeding
-----------
against the Borrower or any Subsidiary decreeing the dissolution,
liquidation, winding-up or split-up of the Borrower or such Sub-
sidiary, and such order remains in effect for thirty (30) days;
or
11.9 Undischarged Judgment. Final Judgment or judgments in
---------------------
the aggregate, that might be or give rise to Liens on any
property of the Borrower or any Subsidiary, for the payment of
money in excess of $1,000,000.00 shall be rendered against the
Borrower or any Subsidiary and the same shall remain undischarged
for a period of thirty (30) days during which execution shall not
be effectively stayed; or
11.10 Environmental Matters. The occurrence of any of the
---------------------
following events that could result in liability to the Borrower
or any Subsidiary under any Environmental Law or the creation of
a Lien on any property of the Borrower or any Subsidiary in favor
of any governmental authority or any other Person for any
liability under any Environmental Law or for damages arising from
costs incurred by such Person in response to a Release or
threatened Release of Hazardous Materials into the environment if
any such asserted liability or Lien exceeds $5,000,000.00 and if
any such lien would cover any property of the Borrower or any
Subsidiary which property is or would reasonably be considered to
be integral to the operations of the Borrower or any Subsidiary
in the ordinary course of business:
(a) the Release of Hazardous Materials at, upon,
under or within the property owned or leased by the Borrower or
any Subsidiary or any contiguous property;
(b) the receipt by the Borrower or any Subsidiary of
any summons, claim, complaint, judgment, order or similar notice
that it is not in compliance with or that any governmental
authority is investigating its compliance with any Environmental
Law;
(c) the receipt by the Borrower or any Subsidiary of
any notice or claim to the effect that it is or may be liable for
the Release or threatened Release of Hazardous Materials into the
environment; or
(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 Borrower or any
Subsidiary.
11.11 Other Remedies. In addition to and cumulative of any
--------------
rights or remedies expressly provided for in this Section 11, if
any one or more Events of Default shall have occurred, the Agent
shall at the request, and may with the consent, of the Majority
Banks proceed to protect and enforce the rights of the Banks
hereunder by any appropriate proceedings. The Agent shall at the
request, and may with the consent, of the Majority Banks also
proceed either by the specific performance of any covenant or
agreement contained in this Agreement or by enforcing the payment
of the Notes or by enforcing any other legal or equitable right
provided under this Agreement or the Notes or otherwise existing
under any law in favor of the holder of the Notes.
11.12 Remedies Cumulative. No remedy, right or power con-
-------------------
ferred upon the Banks is intended to be exclusive of any other
remedy, right or power given hereunder or now or hereafter
existing at law, in equity, or otherwise, and all such remedies,
rights and powers shall be cumulative.
12. THE AGENT
12.1 Authorization and Action. Each Bank hereby appoints
------------------------ Chase as its Agent under and
irrevocably authorizes the Agent (subject to Sections 12.1 and
12.7) to take such action as the Agent on its behalf and to
exercise such powers under this Agreement and the Notes as are
delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto. Without limitation
of the foregoing, each Bank expressly authorizes the Agent to
execute, deliver, and perform its obligations under this Agree-
ment, and to exercise all rights, powers, and remedies that the
Agent may have hereunder. As to any matters not expressly pro-
vided for by this Agreement (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be
required to exercise any discretion or take any action, but shall
be required to act, or to refrain from acting (and shall be fully
protected in so acting or refraining from acting), upon the
instructions of the Majority Banks, and such instructions shall
be binding upon all the Banks and all holders of any Note;
provided, however, that the Agent shall not be required to take
-------- -------
any action which exposes the Agent to personal liability or which
is contrary to this Agreement or applicable law. The Agent
agrees to give to each Bank prompt notice of each notice given to
it by the Borrower pursuant to the terms of this Agreement.
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 negli-
gence 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 there-
of until the Agent receives notice from the Bank which is the
payee of such Note concerning the assignment of such Note; (b)
may employ and consult with legal counsel (including counsel for
the Borrower), independent public accountants, and other experts
selected by it and shall not be liable to any Bank for any action
taken, or omitted to be taken, in good faith by it or them in
accordance with the advice of such counsel, accountants, or
experts received in such consultations and shall not be liable
for any negligence or misconduct of any such counsel,
accountants, or other experts; (c) makes no warranty or represen-
tation to any Bank and shall not be responsible to any Bank for
any opinions, certifications, statements, warranties, or repre-
sentations made in or in connection with this Agreement; (d)
shall not have any duty to any Bank to ascertain or to inquire as
to the performance or observance of any of the terms, covenants,
or conditions of this Agreement or any other instrument or docu-
ment furnished pursuant thereto or to satisfy itself that all
conditions to and requirements for any Loan have been met or that
the Borrower is entitled to any Loan or to inspect the property
(including the books and records) of the Borrower or any Subsidi-
ary; (e) shall not be responsible to any Bank for the due execu-
tion, legality, validity, enforceability, genuineness,
sufficiency, or value of this Agreement or any other instrument
or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of this Agreement by acing upon any
notice, consent, certificate, or other instrument or writing
(which may be by telegram, cable, telex, or 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 non-
payment of principal of or interest hereunder or of any fees)
unless the Agent has received notice from a Bank or the Borrower
specifying such Default and stating that such notice is a Notice
of Default. In the event that the Agent receives such a notice
of the occurrence of a Default, the Agent shall give prompt
notice thereof to the Banks (and shall give each Bank prompt
notice of each such nonpayment). The Agent shall (subject to
Section 12.7) take such action with respect to such Default;
provided that, unless and until the Agent shall have received the
-------- ----
directions referred to in Sections 12.1 or 12.7, the Agent may
(but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem
advisable and in the best interest of the Banks.
12.4 Chase and Affiliates. With respect to its Commitment,
--------------------
any Loan made by it, and the Note issued to it, Chase 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 Chase in its individual capacity. Chase and
its respective Affiliates may accept deposits from, lend money
to, act as trustee under indentures of, and generally engage in
any kind of business with, the Borrower, any of its respective
Affiliates and any Person who may do business with or own
securities of the Borrower or any such Affiliate, all as if Chase
were not the Agent and without any duty to account therefor 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 infor-
mation as it has deemed appropriate, made its own credit analysis
of the Borrower and each Subsidiary and its decision to enter
into the transactions contemplated by this Agreement and that it
will, independently and without reliance upon the Agent or any
other Bank, and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking
or not taking action under this Agreement. The Agent shall not
be required to keep itself informed as to the performance or
observance by the Borrower of this Agreement or to inspect the
properties or books of the Borrower or any Subsidiary. Except
for notices, reports, and other documents and information
expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning
the affairs, financial condition, or business of the Borrower or
any Subsidiary (or any of their Affiliates) which may come into
the possession of the Agent or any of its Affiliates.
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 unless it shall
first be indemnified to its satisfaction by the Banks against any
and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, and disbursements of
any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent in any way relating to or
arising out of its taking or continuing to take any action. Each
Bank agrees to indemnify the Agent (to the extent not reimbursed
by the Borrower), according to such Bank's Commitment, from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, and dis-
bursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Agent in any way
relating to or arising out of this Agreement or the Notes or any
action taken or omitted by the Agent under this Agreement or the
Notes; provided that no Bank shall be liable for any portion of
-------- ----
such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements
resulting from the gross negligence or willful misconduct of the
person being indemnified; and provided further that it is the
-------- -------
intention of each Bank to indemnify the Agent against the con-
sequences of the Agent's own negligence, whether such negligence
be sole, joint, concurrent, active or passive. Without limita-
tion 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 enforce-
ment of, or legal advice in respect of rights or responsibilities
under, this Agreement and the Notes, to the extent that the Agent
is not reimbursed for such expenses by the Borrower.
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 Borrower and may be removed at any time with or
without cause by the Majority Banks. Upon any such resignation
or removal, the Majority Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been so
appointed by the Majority Banks or shall have accepted such
appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation or the Majority Banks' removal
of the retiring Agent, then the retiring Agent may, on behalf of
the Banks, appoint a successor Agent, which shall be a commercial
bank organized under the laws of the United States of America or
of any State thereof and having a combined capital and surplus of
at least $500,000,000.00. Upon the acceptance of any appointment
as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obliga-
tions under this Agreement. After any retiring Agent's resigna-
tion 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.
12.8 Agent's Reliance. The Borrower shall notify the Agent
----------------
in writing of the names of its officers and employees authorized
to request a Loan on behalf of the Borrower and shall provide the
Agent with a specimen signature of each such officer or employee.
The Agent shall be entitled to rely conclusively on such
officer's or employee's authority to request a Loan on behalf of
the Borrower until the Agent receives written notice from the
Borrower to the contrary. The Agent shall have no duty to verify
the authenticity of the signature appearing on any Notice of
Borrowing, and, with respect to any oral request for a Loan, the
Agent shall have no duty to verify the identity of any Person
representing himself as one of the officers or employees autho-
rized to make such request on behalf of the Borrower. Neither
the Agent nor any Bank shall incur any liability to the Borrower
in acting upon any telephonic notice referred to above which the
Agent or such Bank believes in good faith to have been given by a
duly authorized officer or other Person authorized to borrow on
behalf of the Borrower or for otherwise acting in good faith.
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) pursu-
ant 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 commer-
cial 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 Borrower therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Borrower and the
Majority Banks, and then such waiver or consent shall be effec-
tive only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver, or
-------- -------
consent shall, unless in writing and signed by each Bank, do any
of the following: (a) waive any of the conditions specified in
Section 8; (b) increase the Commitment of any Bank or alter the
term thereof, or subject any Bank to any additional or extended
obligations; (c) change the principal of, or rate of interest on,
any Note, or any fees or other amounts payable hereunder; (d)
postpone any date fixed for any payment of principal of, or
interest on, any Note, or any fees (including, without limita-
tion, any fee) or other amounts payable hereunder; (e) change the
percentage of the Commitments or of the aggregate unpaid princi-
pal amount of any Note, or the number of Banks which shall be
required for Banks, or any of them, to take any action hereunder;
or (f) amend this Section 13.2; and provided, further, that no
-------- -------
amendment, waiver, or consent shall, unless in writing and signed
by the Agent in addition to each Bank, affect the rights or
duties of the Agent under any Loan Document. No failure or delay
on the part of any Bank or the Agent in exercising any power or
right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise
thereof or the exercise of any other right or power. No course
of dealing between the Borrower and any Bank or the Agent shall
operate as a waiver of any right of any Bank or the Agent. No
modification or waiver of any provision of this Agreement or the
Note nor consent to any departure by the Borrower therefrom shall
in any event be effective unless the same shall be in writing,
and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice
to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or
other circumstances.
13.3 Reimbursement of Expenses. Other than expenses pro-
-------------------------
vided in Section 9.7, any provision hereof to the contrary not-
withstanding, and whether or not the transactions contemplated by
this Agreement shall be consummated, the Borrower agrees to xxxx-
xxxxx the Bank for its reasonable out-of-pocket expenses,
including the reasonable fees and expenses of counsel to the
Bank, in connection with such transactions, or any of them, or
otherwise in connection with this Agreement, including its nego-
tiation, 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 dupli-
cation. The Borrower agrees to pay any and all stamp and other
taxes which may be payable or determined to be payable in connec-
tion with the execution and delivery of this Agreement or the
Notes, and to save any holder of any Note harmless from any and
all liabilities with respect to or resulting from any delay or
omission to pay any such taxes. The obligations of the Borrower
under this Section 13.3 shall survive the termination of this
Agreement and/or the payment of the Notes.
13.4 Notices. All notices and other communications pro-
-------
vided 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
Borrower,
to it at: Southern Union Company
000 Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
with copies
to: Xxxxx Xxxxxxxxx, Esq.
Xx. Xxxxxx Xxxxx
Southern Union Company
000 Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
(b) If to the
Agent, to
it at: Chase Bank of Texas,
National Association
000 Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Manager/Regional
Lending Group
Fax: (000) 000-0000
with a
copy to: Chase Bank of Texas,
National Association
0000 Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Manager/Loan
Syndication Services
Fax: (000) 000-0000
and if to any Bank, at its Domestic Lending Office specified
opposite its name on Schedule 13.4 attached hereto, or as to the
-------------
Borrower or the Agent, to such other address as shall be desig-
nated by such party in a written notice to the other party and,
as to each other party, at such other address as shall be desig-
nated by such party in a written notice to the Borrower and the
Agent. All such notices and communications shall, when mailed,
telecopied, telexed, transmitted, or cabled, become effective
when deposited in the mail, confirmed by telex answerback,
transmitted to the telecopier, or delivered to the cable com-
pany, except that notices and communications to the Agent under
Sections 2.1(c) or 2.2 shall not be effective until actually
received by the Agent.
13.5 Governing Law. THIS AGREEMENT AND THE NOTES SHALL BE
-------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS AND THE UNITED STATES OF AMERICA; provided,
--------
however, that Chapter 346 of the Texas Finance Code, as amended,
-------
shall not apply to this Agreement and the Notes issued hereunder.
13.6 Survival of Representations, Warranties and Covenants.
-----------------------------------------------------
All representations, warranties and covenants contained herein or
made in writing by the Borrower in connection herewith shall sur-
vive the execution and delivery of this Agreement and the Notes,
and will bind and inure to the benefit of the respective succes-
sors and assigns of the parties hereto, whether so expressed or
not, provided that the undertaking of the Banks to make the Loans
-------- ----
to the Borrower shall not inure to the benefit of any successor
or assign of the Borrower. No investigation at any time made by
or on behalf of the Banks shall diminish the Banks' rights to
rely on any representations made herein or in connection here-
with. All statements contained in any certificate or other
written instrument delivered by the Borrower or by any Person
authorized by the Borrower under or pursuant to this Agreement or
in connection with the transactions contemplated hereby shall
constitute representations and warranties hereunder as of the
time made by the Borrower.
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 Separability. Should any clause, sentence, paragraph
------------
or section of this Agreement be judicially declared to be
invalid, unenforceable or void, such decision shall not have the
effect of invalidating or voiding the remainder of this Agree-
ment, 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 pro-
vision herein) as being independent of each other covenant con-
tained 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 con-
struing the terms and provisions of this Agreement.
13.10 Accounting Terms. All accounting terms used herein
----------------
which are not expressly defined in the Agreement, or the
respective meanings of which are not otherwise qualified, shall
have the respective meanings given to them in accordance with
GAAP.
13.11 Limitation of Liability. No claim may be made by the
-----------------------
Borrower or any other Person against the Agent or any Bank or the
Affiliates, directors, officers, employees, attorneys, or agents
of the Agent or any Bank for any special, indirect, consequen-
tial, or punitive damages in respect to any claim for breach of
contract arising out of or related to the transactions contem-
plated by this Agreement, or any act, omission, or event
occurring in connection herewith and the Borrower hereby waives,
releases, and agrees not to xxx 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. The Borrower hereby gives and confirms to
-------
each Bank a right of set-off of all moneys, securities and other
property of the Borrower (whether special, general or limited)
and the proceeds thereof, now or hereafter delivered to remain
with or in transit in any manner to such Bank, its Affiliates,
correspondents or agents from or for the Borrower, whether for
safekeeping, custody, pledge, transmission, collection or other-
wise or coming into possession of such Bank, its Affiliates,
correspondents or agents in any way, and also, any balance of any
deposit accounts and credits of the Borrower with, and any and
all claims of security for the payment of the Notes and of all
other liabilities and obligations now or hereafter owed by the
Borrower to such Bank, contracted with or acquired by such Bank,
whether such liabilities and obligations be joint, several,
absolute, contingent, secured, unsecured, matured or unmatured,
and the Borrower hereby authorizes each Bank, its Affiliates,
correspondents or agents at any time or times, without prior
notice, to apply such money, securities, other property, pro-
ceeds, balances, credits of claims, or any part of the foregoing,
to such liabilities in such amounts as it may select, whether
such liabilities be contingent, unmatured or otherwise, and
whether any collateral security therefor is deemed adequate or
not. The rights described herein shall be in addition to any
collateral security, if any, described in any separate agreement
executed by the Borrower.
13.13 Sale or Assignment
(a) Subject to the prior written consent of the Agent
and the Borrower, such consent not to be unreasonably withheld,
each Bank may assign to an Eligible Assignee all or a portion of
its rights and obligations under this Agreement (including, with-
out limitation, all or a portion of its Commitments and the Note
held by it); provided, however, that: (i) each such assignment
-------- -------
shall be of a constant, and not a varying, percentage of all of
the assigning Banks rights and obligations under this Agreement;
(ii) the amount of the Commitments so assigned shall equal or
exceed $5,000,000.00; (iii) the Commitment of each Bank shall be
not less than $5,000,000.00 (subject only to reductions pursuant
to Sections 4.6 and 11 hereof); (iv) the parties to each such
assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register (as hereinafter
defined), an Assignment and Acceptance in the form of Exhibit D
---------
attached hereto and made a part hereof (the "Assignment and
Acceptance"), together with any Note subject to such assignment
and a processing and recordation fee of $2,000.00; and (v) any
such assignment from one
Bank to another Bank shall not require the consent of the Agent
or the Borrower if such assignment does not result in any Bank
holding more than 60% of the aggregate outstanding Commitments.
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 the Borrower or any Sub-
sidiary or the performance or observance by the Borrower of any
of its obligations under any Loan Document or any other instru-
ment or document furnished pursuant thereto; (iii) such Eligible
Assignee confirms that it has received a copy of the Loan Docu-
ments, 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 docu-
ments 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 recorda-
tion of the names and addresses of Banks and the Commitment of,
and principal amount of the Loans owing to, each Bank from time
to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error,
and the Borrower, the Agent, and Banks may treat each Person
whose name is recorded in the Register as Bank hereunder for all
purposes of the Loan Documents. The Register shall be available
for inspection by the Borrower or any Bank at any reasonable time
and from time to time upon reasonable prior notice.
(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 D,
---------
shall (i) accept such
Assignment and Acceptance; (ii) record the information contained
therein in the Register; and (iii) give prompt notice thereof to
the Borrower. Within three (3) Business Days after its receipt
of such notice, the Borrower at its own expense, shall execute
and deliver to the Agent in exchange for each surrendered Note a
new Note to the order of such Eligible Assignee in an amount
equal to the Commitment assumed by it pursuant to such Assignment
and Acceptance and, if the assigning Bank has retained a Commit-
ment hereunder, a new Note to the order of the assigning Bank in
an amount equal to the Commitment retained by it hereunder. The
new Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of the surrendered Notes, shall be
dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of Exhibit D
---------
attached hereto and made a part hereof. Upon receipt by the
Agent of each such new Note conforming to the requirements set
forth in the preceding sentences, the Agent shall return to the
Borrower each such surrendered Note marked to show that each such
surrendered Note has been replaced, renewed, and extended by such
new Note.
(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 obligations under this Agreement (including, without limita-
tion, all or a portion of its Commitment and the Note held by
it); provided, however, that (i) each Bank's obligations under
-----------------
this Agreement (including, without limitation, its Commitment to
the Borrower hereunder) shall remain unchanged; (ii) such Bank
shall remain solely responsible to the other parties hereto for
the performance of such obligations; (iii) except as provided
below, such Bank shall remain the holder of any such Note for all
purposes of this Agreement; and (iv) the participating banks or
other entities shall be entitled to the benefits of Sections 2.3
and 4.6 to recover costs, losses and expenses in the circum-
stances, and to the extent provided in Section 2.3, as though
such participant were a Bank; provided, however, the amounts to
-------- -------
which a participant shall be entitled to obtain pursuant to
Sections 2.3 and 4.6 shall be determined by reference to such
participant's selling Bank and shall be recoverable solely from
such selling Bank and (v) the Borrower, the Agent and the other
Banks shall continue to deal solely and directly with the selling
Bank in connection with such Bank's rights and obligations under
this Agreement and the other Loan Documents; provided, however,
-------- -------
the selling Bank may grant a participant rights with respect to
amendments, modification or waivers with respect to any fees pay-
able hereunder to such Bank (including the amount and the dates
fixed for the payment of any such fees) or the amount of princi-
pal or the rate of interest payable on, the dates fixed for any
payment of principal or interest on, the Loans, or the release of
any obligations of the Borrower hereunder and under the other
Loan Documents, or the release of any security for any of the
Obligations. Except with respect to cost protections contained
in Sections 2.3 and 4.6, no participant shall be a third party
beneficiary of this Agreement and shall not be entitled to
enforce any rights provided to its selling Bank against the
Company under this Agreement.
13.14 Non U.S. Banks. Prior to the date of the initial Bor-
--------------
rowings hereunder, and from time to time thereafter if requested
by the Borrower or the Agent, each Bank organized under the laws
of a jurisdiction outside the United States of America shall
provide the Agent and the Borrower with the forms prescribed by
the Internal Revenue Service of the United States of America
certifying such Banks exemption from United States withholding
taxes with respect to all payments to be made to such Bank here-
under or under such Bank's Note. Unless the Borrower and the
Agent have received forms or other documents satisfactory to them
indicating that payments hereunder or under such Bank's Note are
not subject to United States withholding tax or are subject to
such tax at a rate reduced by an applicable tax treaty, the Bor-
rower 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 Borrower, the
--------
Agent or any Bank, whether now existing or hereafter arising and
whether written or oral, are hereby expressly limited so that in
no contingency or event whatsoever, whether by reason of demand
being made on any Note or otherwise, shall the amount paid, or
agreed to be paid, to the Agent or any Bank for the use, forbear-
ance, 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 pro-
vision hereof or of any of such documents, at the time perfor-
xxxxx 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 reduc-
tion of the principal amount owing on account of the Notes or the
amounts owing on other obligations of the Borrower to the Agent
or any Bank under this Agreement or any document related hereto
and not to the payment of interest, or if such excessive interest
exceeds the unpaid principal balance of the Notes and the amounts
owing on other obligations of the Borrower to the Agent or any
Bank under this Agreement or any document related hereto, as the
case may be, such excess shall be refunded to the Borrower. All
sums paid or agreed to be paid to the Agent or any Bank for the
use, forbearance, or detention of the indebtedness of the Bor-
rower to the Agent or any Bank shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread
throughout the full term of such indebtedness until payment in
full of the principal thereof (Including the period of any
renewal or extension thereof) so that the interest on account of
such indebtedness shall not exceed the Highest Lawful Rate. The
terms and provisions of this Section 13.15 shall control and
supersede every other provision of all agreements between the
Borrower and the Banks.
13.16 Indemnification. THE BORROWER AGREES TO INDEMNIFY,
---------------
DEFEND, AND SAVE HARMLESS THE AGENT, EACH BANK AND THEIR RESPEC-
TIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND ATTORNEYS, AND
EACH OF THEM (THE "INDEMNIFIED PARTIES"), FROM AND AGAINST ALL
CLAIMS, ACTIONS, SUITS, AND OTHER LEGAL PROCEEDINGS, DAMAGES,
COSTS, INTEREST, CHARGES, TAXES, COUNSEL FEES, AND OTHER EXPENSES
AND PENALTIES (INCLUDING WITHOUT LIMITATION ALL ATTORNEY FEES AND
COSTS OR EXPENSES OF SETTLEMENT) WHICH ANY OF THE INDEMNIFIED
PARTIES MAY SUSTAIN OR INCUR BY REASON OF OR ARISING OUT OF (A)
THE MAKING OF ANY LOAN HEREUNDER, THE EXECUTION AND DELIVERY OF
THIS AGREEMENT AND THE NOTES AND THE CONSUMMATION OF THE TRANSAC-
TIONS CONTEMPLATED THEREBY AND THE EXERCISE OF ANY OF THE BANKS'
RIGHTS UNDER THIS AGREEMENT AND THE NOTES OR OTHERWISE,
INCLUDING, WITHOUT LIMITATION, DAMAGES, COSTS, AND EXPENSES
INCURRED BY ANY OF THE INDEMNIFIED PARTIES IN INVESTIGATING,
PREPARING FOR, DEFENDING AGAINST, OR PROVIDING EVIDENCE, PRO-
DUCING DOCUMENTS, OR TAKING ANY OTHER ACTION IN RESPECT OF ANY
COMMENCED OR THREATENED LITIGATION UNDER ANY FEDERAL SECURITIES
LAW OR ANY SIMILAR LAW OF ANY JURISDICTION OR AT COMMON LAW OR
(B) ANY AND ALL CLAIMS OR PROCEEDINGS (WHETHER BROUGHT BY A
PRIVATE PARTY, GOVERNMENTAL AUTHORITY OR OTHERWISE) FOR BODILY
INJURY, PROPERTY DAMAGE, ABATEMENT, REMEDIATION, ENVIRONMENTAL
DAMAGE, OR IMPAIRMENT OR ANY OTHER INJURY OR DAMAGE RESULTING
FROM OR RELATING TO THE RELEASE OF ANY HAZARDOUS MATERIALS
LOCATED UPON, MIGRATING INTO, FROM, OR THROUGH OR OTHERWISE
RELATING TO ANY PROPERTY OWNED OR LEASED BY THE BORROWER OR ANY
SUBSIDIARY (WHETHER OR NOT THE RELEASE OF SUCH HAZARDOUS
MATERIALS WAS CAUSED BY THE BORROWER, ANY SUBSIDIARY, A TENANT,
OR SUBTENANT OF THE BORROWER OR ANY SUBSIDIARY, A PRIOR OWNER, A
TENANT, OR SUBTENANT OF ANY PRIOR OWNER OR ANY OTHER PARTY AND
WHETHER OR NOT THE ALLEGED LIABILITY IS ATTRIBUTABLE TO THE
HANDLING, STORAGE, GENERATION, TRANSPORTATION, OR DISPOSAL OF ANY
HAZARDOUS MATERIALS OR THE MERE PRESENCE OF ANY HAZARDOUS
MATERIALS ON SUCH PROPERTY; PROVIDED THAT THE BORROWER SHALL NOT
-------------
BE LIABLE TO THE INDEMNIFIED PARTIES WHERE THE RELEASE OF SUCH
HAZARDOUS MATERIALS OCCURS AT ANY TIME AT WHICH THE BORROWER OR
ANY SUBSIDIARY CEASES TO OWN SUCH PROPERTY); AND PROVIDED FURTHER
----------------
THAT NO INDEMNIFIED PARTY SHALL BE ENTITLED TO THE BENEFITS OF
THIS SECTION 13.16 TO THE EXTENT ITS OWN GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT CONTRIBUTED TO ITS LOSS; AND PROVIDED FURTHER
----------------
THAT IT IS THE INTENTION OF THE BORROWER TO INDEMNIFY THE INDEM-
NIFIED PARTIES AGAINST THE CONSEQUENCES OF THEIR OWN NEGLIGENCE.
THIS AGREEMENT IS INTENDED TO PROTECT AND INDEMNIFY THE INDEMNI-
FIED PARTIES AGAINST ALL RISKS HEREBY ASSUMED BY THE BORROWER.
FOR PURPOSES OF THE FOREGOING SECTION 13.16, THE PHRASE "CONSUM-
MATION OF THE TRANSACTIONS CONTEMPLATED THEREBY" SET FORTH IN
SUBPARAGRAPH (A) ABOVE SHALL INCLUDE, BUT NOT BE LIMITED TO, THE
FINANCING OF ANY CORPORATE TAKEOVER PERMITTED HEREUNDER AND THE
BORROWER'S USE OF THE LOAN PROCEEDS FOR THE PURPOSE OF ACQUIRING
ANY EQUITY INTERESTS DESCRIBED IN SUBPARAGRAPH (II) OF THE
DEFINITION OF "QUALIFYING ASSETS" SET FORTH IN THIS AGREEMENT (AS
AMENDED). THE OBLIGATIONS OF THE BORROWER UNDER THIS SECTION
13.16 SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT AND THE
REPAYMENT OF THE NOTES.
13.17 Payments Set Aside. To the extent that the Borrower
------------------
makes a payment or payments to the Agent or any Bank or the Agent
or any Bank exercises its right of set off, and such payment or
payments or the proceeds of such set off or any part thereof are
subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a
trustee, receiver or any other Person under any Debtor Law or
equitable cause, then, to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied,
and all rights and remedies therefor, shall be revived and shall
continue in full force and effect as if such payment had not been
made or set off had not occurred.
13.18 Loan Agreement Controls. If there are any conflicts
-----------------------
or inconsistencies among this Agreement and any other document
executed in connection with the transactions connected herewith,
the provisions of this Agreement shall prevail and control.
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
Note to which it is a party, and no action taken by any Bank
pursuant thereto, shall be deemed to constitute the Banks to be a
partnership, an association, a joint venture, or any other kind
of entity.
13.20 Pro Rata Treatment. All Loans under, and all payments
------------------
and other amounts received in connection with this Agreement
(including, without limitation, amounts received as a result of
the exercise by any Bank of any right of set off) shall be
effectively shared by the Banks ratably in accordance with the
respective Pro Rata Percentages of the Banks. If any Bank shall
obtain any payment (whether voluntary, involuntary, through the
exercise of any right of set off, or otherwise) on account of the
principal of, or interest on, or fees in respect of, any Note
held by it (other than pursuant to Section 2.3(d)) in excess of
its Pro Rata Percentage of payments on account of similar Notes
obtained by all the Banks, such Bank shall forthwith purchase
from the other Banks such participations in the Notes or Loans
made by them as shall be necessary to cause such purchasing Bank
to share the excess payment ratably with each of them; provided,
--------
however, that if all or any portion of such excess payment is
-------
thereafter recovered from such purchasing Bank, such purchase
from each Bank shall be rescinded and such Bank shall repay to
the purchasing Bank the purchase price to the extent of such
recovery together with an amount equal to such Bank's ratable
share (according to the proportion of (a) the amount of such
Bank's required repayment to (b) the total amount so recovered
from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so
recovered. Disproportionate payments of interest shall be shared
by the purchase of separate participations in unpaid interest
obligations, disproportionate payments of fees shall be shared by
the purchase of separate participations in unpaid fee obliga-
tions, and disproportionate payments of principal shall be shared
by the purchase of separate participations in unpaid principal
obligations. The Borrower agrees that any Bank so purchasing a
participation from another Bank pursuant to this Section 13.20
may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect
to such participation as fully as if such Bank were the direct
creditor of the Borrower in the amount of such participation.
Notwithstanding the foregoing, a Bank may receive and retain an
amount in excess of its Pro Rata Percentage to the extent but
only to the extent, that such excess results from such Bank's
Highest Lawful Rate exceeding another Bank's Highest Lawful Rate.
13.21 Replacement of Amended and Restated Credit Agreement.
----------------------------------------------------
Effective as of the Closing Date, this Agreement and the Short-
Term Credit Facility Agreement together supersede and replace
that certain Amended and Restated Revolving Credit Agreement
dated effective December 31, 1997, executed by and among the
Borrower, the Banks, and the Agent.
13.22 Final Agreement. THIS WRITTEN AGREEMENT REPRESENTS
---------------
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRA-
DICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENT'S OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREE-
MENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto, by their respective
officers thereunto duly authorized, have executed this Agreement
on the dates set forth below to be effective as of November 10,
1998.
SOUTHERN UNION COMPANY
By XXXXXX X. XXXXXX
----------------
Xxxxxx X. Xxxxxx
Executive Vice President
Commitment: CHASE BANK OF TEXAS, NATIONAL
$15,000,000.00 ASSOCIATION, for itself and as Agent
for the Banks
By
--------------------------------
Name
------------------------------
Title
-----------------------------
Commitment: CREDIT LYONNAIS NEW YORK BRANCH
$9,000,000.00
By
--------------------------------
Name
------------------------------
Title
-----------------------------
Commitment: NATIONSBANK, N.A.
$13,500,000.00
By
--------------------------------
Name
------------------------------
Title
-----------------------------
Commitment: THE FIRST NATIONAL BANK OF CHICAGO
$13,500,000.00
By
--------------------------------
Name
------------------------------
Title
-----------------------------
Commitment: THE BANK OF NOVA SCOTIA
$9,000,000.00
By
--------------------------------
Name
------------------------------
Title
-----------------------------
EXHIBIT A
REVOLVING NOTE
(Long-Term Credit Facility)
$ , 19
---------------- --------------- ----
FOR VALUE RECEIVED, the undersigned, SOUTHERN UNION COMPANY,
a corporation organized under the laws of Delaware (the "Bor-
rower"), HEREBY PROMISES TO PAY to the order of
----------------
(the "Bank"), on or be-
----------------------------------------
fore (the "Maturity Date"), the prin-
---------------------------
cipal sum of Million and No/100ths Dollars ($ ,000,000.00)
--
in accordance with the terms and provisions of that certain
Revolving Credit Agreement dated , 1998, by and
----------------
among the Borrower, the Bank, the other banks named on the signa-
ture pages thereof, and CHASE BANK OF TEXAS, NATIONAL ASSOCIA-
TION, as Agent (the "Credit Agreement"). Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed
to such terms in the Credit Agreement.
The outstanding principal balance of this Revolving Note
shall be payable at the Maturity Date. The Borrower promises to
pay interest on the unpaid principal balance of this Revolving
Note from the date of any Loan evidenced by this Revolving Note
until the principal balance thereof is paid in full. Interest
shall accrue on the outstanding principal balance of this
Revolving Note from and including the date of any Loan evidenced
by this Revolving Note to but not including the Maturity Date at
the rate or rates, and shall be due and payable on the dates, set
forth in the Credit Agreement. Any amount not paid when due with
respect to principal (whether at stated maturity, by acceleration
or otherwise), costs or expenses, or, to the extent permitted by
applicable law, interest, shall bear interest from the date when
due to and excluding the date the same is paid in full, payable
on demand, at the rate provided for in Section 2.2(c) of the
Credit Agreement.
Payments of principal and interest, and all amounts due with
respect to costs and expenses, shall be made in lawful money of
the United States of America in immediately available funds,
without deduction, set off or counterclaim to the account of the
Agent at the principal office of Chase Bank of Texas, National
Association in Houston, Texas (or such other address as the Agent
under the Credit Agreement may specify) not later than noon
(Houston time) on the dates on which such payments shall become
due pursuant to the terms and provisions set forth in the Credit
Agreement.
If any payment of interest or principal herein provided for
is not paid when due, then the owner or holder of this Revolving
Note may at its option, by notice to the Borrower, declare the
unpaid, principal balance of this Revolving Note, all accrued and
unpaid interest thereon and all other amounts payable under this
Revolving Note to be forthwith due and payable, whereupon this
Revolving Note, all such interest and all such amounts shall
become and be forthwith due and payable in full, without present-
ment, demand, protest, notice of intent to accelerate, notice of
actual acceleration or further notice of any kind, all of which
are hereby expressly waived by the Borrower.
If any payment of principal or interest on this Revolving
Note shall become due on a Saturday, Sunday, or public holiday on
which the Agent is not open for business, such payment shall be
made
on the next succeeding Business Day and such extension of time
shall in such case be included in computing interest in connec-
tion with such payment.
In addition to all principal and accrued interest on this
Revolving Note, the Borrower agrees to pay (a) all reasonable
costs and expenses incurred by the Agent and all owners and
holders of this Revolving Note in collecting this Revolving Note
through any probate, reorganization bankruptcy or any other
proceeding and (b) reasonable attorneys' fees when and if this
Revolving Note is placed in the hands of an attorney for collec-
tion after default.
All agreements between the Borrower and the Bank, whether
now existing or hereafter arising and whether written or oral,
are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of demand being made on this
Revolving Note or otherwise, shall the amount paid, or agreed to
be paid, to the Bank for the use, forbearance, or detention of
the money to be loaned under the Credit Agreement and evidenced
by this Revolving Note or otherwise or for the payment or perfor-
xxxxx of any covenant or obligation contained in the Credit
Agreement or this Revolving Note exceed the amount permissible at
Highest Lawful Rate. If as a result of any circumstances whatso-
ever, fulfillment of any provision hereof or of the Credit Agree-
ent at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by appli-
cable 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 any-
thing which might be deemed interest under applicable law which
would exceed the amount permissible at the Highest Lawful Rate,
such amount which would be excessive interest shall be applied to
the reduction of the principal amount owing on account of this
Revolving Note or the amounts owing on other obligations of the
Borrower to the Bank under the Credit Agreement and not to the
payment of interest, or if such excessive interest exceeds the
unpaid principal balance of this Revolving Note and the amounts
owing on other obligations of the Borrower to the Bank under the
Credit Agreement, as the case may be, such excess shall be
refunded to the Borrower. In determining whether or not the
interest paid or payable under any specific contingencies exceeds
the Highest Lawful Rate, the Borrower and the Bank shall, to the
maximum extent permitted under applicable law, (a) characterize
any nonprincipal payment as an expense, fee or premium rather
than as interest; (b) exclude voluntary prepayments and the
effects thereof, and (c) amortize, prorate, allocate and spread
in equal parts during the period of the full stated term of this
Revolving Note, all interest at any time contracted for, charged,
received or reserved in connection with the indebtedness
evidenced by this Revolving Note.
This Revolving Note is one of the Notes provided for in, and
is entitled to the benefits of, the Credit Agreement, which
Credit Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain
stated events, for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions and
with the effect therein specified, and provisions to the effect
that no provision of the Credit Agreement or this Revolving Note
shall require the payment or permit the collection of interest in
excess of the Highest Lawful Rate. It is contemplated that by
reason of prepayments or repayments hereon prior to the Maturity
Date, there may be times when no indebtedness is owing hereunder
prior to such date; but notwithstanding such occurrence this
Revolving Note shall remain valid and shall be in full force and
effect as to Loans made pursuant to the Credit Agreement
subsequent to each such occurrence.
Except as otherwise specifically provided for in the Credit
Agreement, the Borrower and any and all endorsers, guarantors and
sureties severally waive grace, demand, presentment for payment,
notice of dishonor or default, protest, notice of protest, notice
of intent to accelerate, notice of acceleration and diligence in
collecting and bringing of suit against any party hereto, and
agree to all renewals, extensions or partial payments hereon and
to any release or substitution of security hereof, in whole or in
part, with or without notice, before or after maturity.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS AND APPLICABLE
FEDERAL LAW.
IN WITNESS WHEREOF, the Borrower has caused this Revolving
Note to be executed and delivered by its officer thereunto duly
authorized effective as of the date first above written.
SOUTHERN UNION COMPANY
By
--------------------------------
Name
------------------------------
Title
-----------------------------
EXHIBIT B
NOTICE OF BORROWING
(Long-Term Credit Facility)
The undersigned hereby certifies that s/he is an officer of
SOUTHERN UNION COMPANY, a corporation organized under the laws of
Delaware (the "Borrower"), authorized to execute this Notice of
Borrowing on behalf of the Borrower. With reference to that
certain Revolving Credit Agreement dated , 1998
------------------
(as same may be amended, modified, increased, supplemented and/or
restated from time to time, the "Credit Agreement") entered into
by and between the Borrower, CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Agent, and the Banks identified therein, the
undersigned further certifies, represents and warrants to Banks
on behalf of the Borrower that to his best knowledge and belief
after reasonable and due investigation and review, all of the
following statements are true and correct (each capitalized term
used herein having the same meaning given to it in the Credit
Agreement unless otherwise specified):
(a) Borrower requests that the Banks advance to the Bor-
rower the aggregate sum of $ by no later than
---------------
, 19 (the "Borrowing Date"). Immediately
------------------- ----
following such Loan, the aggregate outstanding balance of Loans
shall equal $ . Borrower requests that the Loans
----------------
bear interest as follows:
(i) The principal amount of the Loans, if any, which
shall bear interest at the Alternate Base Rate requested to be
made by the Banks is $ . The initial Rate Period
---------------
for such Loans shall be 90 days.
-------
(ii) The principal amount of the Loans, if any, which
shall bear interest at the CD Rate for which the Rate Period
shall be 30 days requested to be made by the Banks is $ .
------- ---------
(iii) The principal amount of the Loans, if any, which
shall bear interest at the CD Rate for which the Rate Period
shall be 60 days requested to be made by the Banks is $ .
------- ---------
(iv) The principal amount of the Loans, if any, which
shall bear interest at the CD Rate for which the Rate Period
shall be 90 days requested to be made by the Banks is
-------
$ .
-------------
(v) The principal amount of the Loans, if any, which
shall bear interest at the CD Rate for which the Rate Period
shall be 180 days requested to be made by the Banks is
--------
$ .
-------------
(vi) The principal amount of the Loans, if any, which
shall bear interest at the Eurodollar Rate for which the Rate
Period shall be fifteen days requested to be made by the Banks is
------------
$ .
--------------
(vii) 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
---------
$ .
--------------
(viii) 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
----------
$ .
--------------
(ix) The principal amount of the Revolving Loans, if
any, which shall bear interest at the Eurodollar Rate for which
the Rate Period shall be three months requested to be made by the
------------
Banks is $ .
--------------
(x) The principal amount of the Revolving Loans, if
any, which shall bear interest at the Eurodollar Rate for which
the Rate Period shall be six months requested to be made by the
----------
Banks is $ .
--------------
(b) The proceeds of the borrowing shall be deposited into
Borrower's demand deposit account at Chase Bank of Texas,
National Association more fully described as follows:
Account No. 09916100522, styled Southern Union Company.
(c) Of the aggregate sum to be advanced, $
--------------
will be advanced to provide working capital pursuant to Section
6.1(a) of the Credit Agreement and $ will be advanced
------------
for the purposes set forth in Section 6.1(b) of the Credit Agree-
ment; and $ will be advanced for the purposes set
--------------
forth in Section 6.1(c) of the Credit Agreement; and $
-----------
will be advanced for the purposes of replacing Loans currently
outstanding under the Credit Agreement.
(d) Of the aggregate sum to be advanced, $
--------------
corresponds to the Borrowing Base.
(e) The Expiration Date of each Rate Period specified in
(a) above shall be the last day of such Rate Period.
(f) As of the date hereof, and as a result of the making
of the requested Loans, there does not and will not exist any
Default or Event of Default.
(g) The representations and warranties contained in
Section 7 of the Credit Agreement are true and correct in all
material respects as of the date hereof and shall be true and
correct upon the making of the requested Loan, with the same
force and effect as though made on and as of the date hereof and
thereof.
(h) No change that would cause a material adverse effect
on the business, operations or condition (financial or otherwise)
of the Borrower has occurred since the date of the most recent
financial statements provided to the Banks dated as of ,
---------
19 .
----
EXECUTED AND DELIVERED this day of , 19 .
---- ----------- ----
SOUTHERN UNION COMPANY
By
--------------------------------
Name
------------------------------
Title
-----------------------------
EXHIBIT C
BORROWING BASE CERTIFICATE
MONTHLY ACCOUNTING PERIOD ENDED , 19
------------ ----
Reference is made to that certain Revolving Credit Agreement
dated , 1998 (as amended, modified and supple-
----------------
mented and in effect from time to time, the "Credit Agreement")
by and among SOUTHERN UNION COMPANY, a corporation duly organized
and validly existing under the laws of the State of Delaware (the
'Borrower"), CHASE BANK OF TEXAS, NATIONAL ASSOCIATION (the
"Agent") and the Banks named therein (the "Banks"). Capitalized
terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the Credit Agreement.
Pursuant to Section 9.1 of the Credit Agreement, the under-
signed, of the Borrower, hereby certi-
--------------------------
fies that, to the best of his/her knowledge, (i) attached hereto
as Annex 1 is a true and accurate calculation of the Borrowing
Base as of the end of the monthly accounting period ended
, 19 determined in accordance with the
----------------- ----
requirements set forth in the Credit Agreement and (ii) attached
hereto as Annex 2 is an Accounts Receivable Report; (iii) and
attached hereto as Annex 3 is a listing of all cash and Cash
Equivalents of the Borrower; and (iv) attached hereto as Annex 4
is a listing of all Inventory of the Borrower; (v) attached here-
to as Annex 5 is a listing of all Eligible Marketing Accounts of
the Borrower; and (vi) attached hereto as Annex 6 is a certifica-
tion by the Borrower of all PGA Receivables and all Eligible
Unbilled Receivables, each of which is true and accurate in all
respects.
IN WITNESS WHEREOF, the undersigned has caused this Bor-
rowing Base Certificate to be duly executed as of the day of
----
, 19 .
-------------------- ----
-----------------------------------
Title
-----------------------------
ANNEX I
BORROWING BASE CERTIFICATE
Total Accounts Receivable (determined
net of credits, rebates, discounts,
allowances or offsets) at
, 19 $
--------------------- ---- -------
Less: ineligible Accounts Receivable at
, 19
------------------- ----
(determined without duplication):
receivables past due more than
60 days from the invoice
date
-------
receivables of any Account
Debtor for which more than
5% of receivables remain
unpaid over 90 days from
invoice date
-------
receivables of at least $10,000
each, subject to dispute,
offset, counterclaim or
other claim from Account
Debtors
-------
receivables not payable in
Dollars
-------
receivables from Account
Debtors subject to
bankruptcy and similar
laws (except 366
protection)
-------
receivables from Affiliates
-------
Total of ineligible receivables $
-------
Total Eligible Accounts Receivable $
-------
Total Unbilled Accounts
(determined net of credits,
rebates, discounts,
allowances or offsets)
at , 19 $
--------------- ---- -------
Less: ineligible unbilled Accounts
at , 19
-------------- ----
(determined without duplica-
tion):
unbilled Accounts of any
Account Debtor for
which more than 5% of
receivables remain
unpaid over 90 days
from invoice date
-------
unbilled Accounts for
Account Debtors subject
to bankruptcy and similar
laws (except 366 pro-
tection)
-------
unbilled Accounts for non-U.S.
deliveries or not payable
in Dollars
-------
unbilled Accounts unbilled for
more than 30 days after
the date of sale
-------
unbilled Accounts to Affiliates
-------
Total ineligible unbilled Accounts $
-------
Total Eligible Unbilled Accounts $
-------
Cash on hand and in deposit accounts
-------
U.S. Government and agency obligations
-------
State obligations
-------
A1/P1 Commercial Paper (90 day)
-------
Certificates of Deposit
-------
Mutual funds invested in the preceding
-------
Total Cash and Cash Equivalents
(if less than Ba2/BB, not more than
$5,000,000.00) $
-------
Eligible Inventory at , 19 $
--------- ---- -------
Total Marketing Accounts
, 19 $
----------------- ---- -------
Less: ineligible marketing accounts
at , 19
------------- ----
(determined without duplica-
tion):
receivables past due more than
60 days from the invoice
date
-------
receivables of any Account
Debtor for which more
than 5% of receivables
remain unpaid over 90 days
from invoice date
-------
receivables of at least
$10,000 each, subject to
dispute, offset, counter-
claim or other claim from
Account Debtors
-------
receivables not payable in
Dollars
-------
receivables from Account
Debtors subject to
bankruptcy and similar
laws (except 366 pro-
tection)
-------
receivables from Affiliates
-------
Total of ineligible Marketing
Accounts $
-------
Total Eligible Marketing Accounts
(not greater than $8,000,000.00) $
-------
Total PGA Receivables
, 19 $
--------------- ---- -------
Less: ineligible PGA Receivables
at , 19
--------------- ----
(determined without dupli-
cation):
receivables past due more
than 60 days from the
invoice date
-------
receivables of any Account
Debtor for which more
than 5% of receivables
remain unpaid over 90
days from invoice date
-------
receivables of at least
$10,000 each, subject
to dispute, offset,
counterclaim or other
claim from Account
Debtors
-------
receivables not payable in
Dollars
-------
receivables from Account
Debtors subject to
bankruptcy and similar
laws (except 366 pro-
tection)
-------
receivables from Affiliates
-------
Total ineligible PGA Receivables $
-------
Total Eligible PGA Receivables $
-------
-----------------------------------------------------------------
95% of Eligible Accounts Receivable $
-------
75% of Unbilled Accounts $
-------
100% of Cash and Cash Equivalents $
-------
50% of Eligible Inventory $
-------
95% of Eligible PGA Receivables $
-------
75% of Eligible Marketing Accounts $
-------
(Less: Aggregate Principal Amounts
outstanding under Short-Term
Credit Facility Notes) ($ )
------
TOTAL BORROWING BASE $
-------
EXHIBIT D
ASSIGNMENT AND ACCEPTANCE
[NAME AND ADDRESS OF ASSIGNING BANK]
, 19
--------------- ----
--------------------------
--------------------------
--------------------------
Re: Southern Union Company Revolving Credit Agreement
Ladies and Gentlemen:
We have entered into a Revolving Credit Agreement dated as
of , 1998 (the "Credit Agreement"), among certain
---------------
banks (including us), Chase Bank of Texas, National Association
(the "Agent") and Southern Union Company (the "Company").
Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to such terms in the Credit Agreement.
Each reference to the Credit Agreement, the Notes, or any
other document evidencing or governing the Loans (all such
documents collectively, the "Financing Documents") includes each
such document as amended, modified, extended or replaced from
time to time. All times are Houston times.
1. ASSIGNMENT. We hereby sell you and assign to you without
recourse, and you hereby unconditionally and irrevocably acquire
for your own account and risk, a percent ( %) undivided interest
("your assigned share") in each of the following (the "Assigned
Obligations"):
a. our Note;
b. all Loans and interest thereon as provided in Section 2
of the Credit Agreement [,except that interest shall accrue on
your assigned share in the principal of Alternate Base Rate Loans
and Eurodollar Rate Loans at an annual rate equal to the rate
provided in the Credit Agreement minus %]; and
------
c. commitment fees payable pursuant to Section 5 of the
Credit Agreement [, except that your assigned share in such fees
shall be at an annual rate equal to the rate provided in the
Credit Agreement minus %].
-----
2. MATERIALS PROVIDED ASSIGNEE
a. We will promptly request that the Company issue new
Notes to us and to you in substitution for our Note to reflect
the assignment set forth herein. Upon issuance of such substi-
tute Notes, (i) you will become a Bank under the Credit Agree-
ment, (ii) you will assume our obligations under the Credit
Agreement to the extent of your assigned share, and (iii) the
Company will release us from our obligations under the Credit
Agreement to the extent, but only to the extent, of your assigned
share. The Company consents to such release by signing this
Agreement where indicated below. As a Bank, you will be entitled
to the benefits and subject to the obligations of a "Bank", as
set forth in the Credit Agreement, and your rights and
liabilities with respect to the other Banks and the Agent will be
governed by the Credit Agreement, including without limitation
Section 12 thereof.
b. We have furnished you copies of the Credit Agreement,
our Note and each other Financing Document you have requested.
We do not represent or warrant (i) the priority, legality,
validity, binding effect or enforceability of any Financing
Document or any security interest created thereunder, (ii) the
truthfulness and accuracy of any representation contained in any
Financing Document, (iii) the filing or recording of any
Financing Document necessary to perfect any security interest
created thereunder, (iv) the financial condition of the Company
or any other Person obligated under any Financing Document, any
financial or other information, certificate, receipt or other
document furnished or to be furnished under any Financing
Document or (v) any other matter not specifically set forth
herein having any relation to any Financing Document, your
interest in one Note, the Company or any other Person. You
represent to us that you are able to make, and have made, your
own independent investigation and determination of the foregoing
matters, including, without limitation, the credit worthiness of
the Company and the structure of the transaction.
3. GOVERNING LAW; JURISDICTION. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Texas. You irrevocably submit to the jurisdiction of
any State or Federal court sitting in Houston, Texas in any suit,
action or proceeding arising out of or relating to this Agreement
and irrevocably waive any objection you may have to this laying
of venue of any such suit, action or proceeding brought in any
such court and any claim that any such suit, action or proceeding
has been brought in an inconvenient forum. We may serve process
in any manner permitted by law and may bring proceedings against
you in any other jurisdiction.
4. NOTICES. All notices and other communications given
hereunder to a party shall be given in writing (including bank
wire, telecopy, telex or similar writing) at such party's address
set forth on the signature pages hereof or such other address as
such party may hereafter specify by notice to the other party.
Notice may also be given by telephone to the Person, or any other
officer in the office, listed on the signature pages hereof if
confirmed promptly by telex or telecopy. Notices shall be
effective immediately, if given by telephone; upon transmission,
if given by bank wire, telecopy or telex; five days after deposit
in the mails, if mailed; and when delivered, if given by other
means.
5. AUTHORITY. Each of us represents and warrants that the
execution and delivery of this Agreement have been validly
authorized by all necessary corporate action and that this
Agreement constitutes a valid and legally binding obligation
enforceable against it in accordance with its terms.
6. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by each party on separate counterparts,
each of which shall be an original but all of which taken
together shall be but one instrument.
7. AMENDMENTS. No amendment modification or waiver of any
provision of this Agreement shall be effective unless in writing
and signed by the party against whom enforcement is sought.
If the foregoing correctly sets forth our agreement, please
so indicate by signing the enclosed copy of this Agreement and
returning it to us.
Very truly yours,
-------------------------------------
By
----------------------------------
Name
--------------------------------
Title
-------------------------------
[Street Address]
--------------------
[City, State, Zip Code]
-------------
Telephone
---------------------------
Telecopy
---------------------------
AGREED AND ACCEPTED:
---------------------------
By
------------------------
------------------------
------------------------
------------------------
Attention
-----------------
Telephone
-----------------
Telecopy
------------------
Account for Payments
------
ASSIGNMENT APPROVED PURSUANT TO SECTION 13.13 OF THE CREDIT
AGREEMENT AND RELEASE APPROVED IN SECTION 2 OF THIS AGREEMENT:
SOUTHERN UNION COMPANY
By
-----------------------
Name
---------------------
Title
--------------------
SCHEDULE 13.4
DOMESTIC AND EURODOLLAR LENDING OFFICES
Name: Chase Bank of Texas, National Association
Domestic: Chase Bank of Texas, National Association
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
with copies of notices to:
Xx. Xxxxx Xxxxxxxxxx
Syndication & Private Placements
Chase Bank of Texas, National Association
707 Travis 08 TCB-N 96
Xxxxxxx, Xxxxx 00000
Eurodollar: Chase Bank of Texas, National Association
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
SCHEDULE 13.4
(continued)
Name: Credit Lyonnais New York Branch
Domestic: Credit Lyonnais
--------------------------
--------------------------
--------------------------
with copies of notices to:
--------------------------
--------------------------
--------------------------
--------------------------
--------------------------
Eurodollar: Credit Lyonnais
--------------------------
--------------------------
--------------------------
SCHEDULE 13.4
(continued)
Name: NationsBank, N.A.
Domestic: NationsBank, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Mr. Xxxxxx Xxxxxxxx
with copies of notices to:
--------------------------
--------------------------
--------------------------
--------------------------
--------------------------
Eurodollar: NationsBank, N.A.
--------------------------
--------------------------
--------------------------
SCHEDULE 13.4
(continued)
Name: The First National Bank of Chicago
Domestic: The First National Bank of Chicago
--------------------------
--------------------------
--------------------------
with copies of notices to:
--------------------------
--------------------------
--------------------------
--------------------------
--------------------------
Eurodollar: The First National Bank of Chicago
--------------------------
--------------------------
--------------------------
SCHEDULE 13.4
(continued)
Name: The Bank of Nova Scotia
Domestic: The Bank of Nova Scotia
--------------------------
--------------------------
--------------------------
with copies of notices to:
--------------------------
--------------------------
--------------------------
--------------------------
--------------------------
Eurodollar: The Bank of Nova Scotia
--------------------------
--------------------------
--------------------------
