Exhibit No. 10(a)
SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
(LONG-TERM CREDIT FACILITY)
THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT (LONG-TERM CREDIT FACILITY) (the "Amendment") is made effective as of
April 3, 2003, by and among SOUTHERN UNION COMPANY, a Delaware corporation (the
"Borrower"), the financial institutions listed on the signature pages of the
Credit Agreement (as hereinafter defined) (individually the "Bank" and
collectively the "Banks") and JPMORGAN CHASE BANK, a New York banking
corporation formerly known as THE CHASE MANHATTAN BANK, successor by merger to
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION ("Chase"), in its capacity as agent
(the "Agent") for the Banks.
RECITALS:
WHEREAS, the Borrower, the Banks and the Agent have executed a certain
Second Amended and Restated Revolving Credit Agreement (Long-Term Credit
Facility) dated effective May 29, 2001, as previously amended by that certain
First Amendment to Second Amended and Restated Revolving Credit Agreement
(Long-Term Credit Facility) dated effective June 10, 2002, by and among the
Borrower, the Banks and the Agent (said Second Amended and Restated Revolving
Credit Agreement, as previously amended, being hereinafter referred to as the
"Credit Agreement"); and
WHEREAS, the Majority Banks, the Agent and the Borrower desire to
further amend the Credit Agreement in certain respects.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other
goods and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENTS:
1. Amendment of Definitions. The definitions of "Consolidated Net
Worth," "Consolidated Total Capitalization," "Consolidated Total Indebtedness"
and "Short-Term Credit Facility Agreement" contained in Section 1 of the Credit
Agreement are hereby amended and restated in their entirety to hereafter be and
read as follows:
"Consolidated Net Worth" shall mean, for any period for the Borrower
and all Subsidiaries, (a) the sum of the following consolidated items, all
determined in accordance with GAAP and without duplication: the consolidated
stockholders' equity of all classes of stock (whether common, preferred,
mandatorily convertible preferred or preference) of the Borrower and its
Subsidiaries; the Equity-Preferred Securities; the other preferred securities of
the Borrower's Subsidiaries not constituting Equity-Preferred Securities; and
the minority interests in the Borrower's Subsidiaries, less (b) the sum of the
following consolidated items, without duplication: the book amount of any
deferred charges (including, but not limited to, unamortized debt discount and
expenses, organization expenses, experimental and development expenses, but
excluding prepaid expenses) that are not permitted to be recovered by the
Borrower or its applicable Subsidiaries under rates permitted under rate
tariffs, plus (c) the sum of all amounts contributed or paid by the Borrower to
the Rabbi Trusts for purposes of funding the same, but only to the extent such
contributions and payments are required to be deducted from the consolidated
stockholders' equity of the Borrower and its Subsidiaries in accordance with
GAAP.
"Consolidated Total Capitalization" shall mean at any time the sum of:
(a) Consolidated Net Worth at such time; plus (b) the principal amount of
outstanding Debt (other than (i) the Debt outstanding under the AIG Loan and
(ii) to the extent included in Debt of the Borrower and its Subsidiaries,
Equity-Preferred Securities not to exceed 10% of Consolidated Total
Capitalization [calculated for purposes of this clause without reference to any
Equity-Preferred Securities]) of the Borrower and its Subsidiaries.
"Consolidated Total Indebtedness" shall mean all Debt of the Borrower
and all Subsidiaries including any current maturities thereof, plus, without
duplication, all amounts outstanding under Standby Letters of Credit and,
without duplication, all Facility Letter of Credit Obligations, less, without
duplication, (i) all Debt of the Borrower outstanding under the AIG Loan and
(ii) to the extent included in Debt of the Borrower and its Subsidiaries,
Equity-Preferred Securities not to exceed 10% of Consolidated Total
Capitalization (calculated for purposes of this clause without reference to any
Equity-Preferred Securities).
"Short-Term Credit Facility Agreement" means that certain Revolving
Credit Agreement (Short-Term Credit Facility) of even effective date herewith,
executed by and among the Borrower, JPMorgan, as administrative agent, and the
banks or financial institutions now or hereafter a party thereto in connection
with the Short-Term Credit Facility, as the same may be amended, modified,
increased, supplemented, restated and/or replaced from time to time.
2. New Definitions. The following additional definitions are hereby
added to Section 1 of the Credit Agreement to hereafter be and read as follows:
"Additional Equity Offering" shall mean (a) a public offering by the
Borrower of additional capital stock in the Borrower resulting in not less than
$100,000,000.00 of net cash equity proceeds being received by the Borrower and
(b) any additional offering or issuance of capital stock, Equity-Preferred
Securities or any other equity interests in Borrower or Southern Union Panhandle
(to the extent permitted under Section 9.5), so long as all net cash proceeds
from any such offering or issuance of equity described in clauses (a) or (b)
above are applied in the following order: (i) first, to payment of the Bridge
Loan until the same is fully paid; (ii) second, for other working capital needs
of the Borrower or any of its Subsidiaries, including without limitation, the
payment of the AIG Loan (but only to the extent not otherwise required to be
applied to the Term Loan Facility, the Obligations under this Agreement and/or
Debt outstanding under the Short-Term Credit Facility in accordance with the
following clauses); (iii) third, 50% of the net cash proceeds, if any, received
by the Borrower in excess of $125,000,000.00 in the aggregate from all
Additional Equity Offerings shall be applied to the Term Loan Facility; and (iv)
fourth, 50% of the net cash proceeds, if any, received by the Borrower in excess
of $125,000,000.00 in the aggregate from all Additional Equity Offerings shall
be applied to Obligations under this Agreement and/or Debt outstanding under the
Short-Term Credit Facility.
"AIG Entities" shall mean AIG Highstar Capital, L.P., a Delaware
limited partnership, AIG Highstar Funding Corp., a Delaware corporation, and any
other permitted owner and holder of any shares of stock or other equity
interests in Southern Union Panhandle not owned and held by the Borrower or any
of the Borrower's Subsidiaries.
"AIG Loan" shall mean a credit facility to be provided to the Borrower
by one or more of the AIG Entities in an aggregate principal amount not to
exceed $150,000,000.00 for purposes of financing a portion of the acquisition
costs for the Panhandle Eastern Acquisition, said loan to be (a) non-recourse to
the Borrower and its Subsidiaries, (b) secured only by 28% of the issued and
outstanding stock and other equity interests in Southern Union Panhandle, and
(c) subject to other terms and conditions acceptable to the Agent in all
respects.
"Bridge Loan" shall mean an unsecured short-term credit facility to be
obtained by the Borrower in an aggregate principal amount not to exceed
$115,000,000.00, and having a final stated maturity on or before September 1,
2003, for purposes of financing a portion of the acquisition costs for the
Panhandle Eastern Acquisition, so long as such short-term credit facility is
obtained upon terms and conditions substantially similar to the terms and
conditions set forth in the term sheet attached hereto as Exhibit D.
"Equity-Preferred Securities" means (i) Debt, preferred equity or any
other securities that are mandatorily convertible by the issuer thereof at a
date certain, without cash payment by the issuer, into common shares of stock of
the Borrower or (ii) any other securities (A) that are issued by the Borrower or
any Subsidiary, (B) that are not subject to mandatory redemption at any time,
directly or indirectly, (C) that are perpetual or mature not less than 30 years
from the date of issuance, (D) the Debt component, if any, issued in connection
therewith, including any guaranty, is subordinate in right of payment to all
other unsecured and unsubordinated Debt of the issuer of such Debt component
(including any such guaranty, if applicable), and (E) the terms of which permit
the issuer thereof to defer at any time, without any additional payment or
premium, the payment of any and all interest and/or distributions thereon, as
applicable, to a date occurring after the Maturity Date.
"Exchange Company" shall mean Southern Union Exchange Company, a
Delaware corporation and/or any other entity created and owned by Chicago
Deferred Exchange Corporation that the Borrower hereafter enters into a
"qualified exchange accommodation agreement" with for purposes of facilitating
the Panhandle Eastern Acquisition.
"Panhandle Eastern" shall mean Panhandle Eastern Pipe Line Company, a
Delaware corporation.
"Panhandle Eastern Acquisition" shall mean the acquisition by the
Exchange Company of 100% of all issued and outstanding stock and other equity
interests, if any, in Panhandle Eastern in accordance with the Panhandle Eastern
Acquisition Agreement, so long as such acquisition is in substantial compliance
with the following specified terms:
(a) immediately after the finalization and consummation of such
acquisition, Panhandle Eastern is a wholly-owned Subsidiary of the
Exchange Company;
(b) the aggregate consideration paid for all stock and other
equity interests in Panhandle Eastern shall not exceed $663,000,000.00
in cash, with the source of said cash purchase price to be a
combination of some or all of the following: (i) $406,000,000.00 of
"like-kind" exchange proceeds previously received from the prior sale
to ONEOK, Inc. of the "Southern Union Gas Company" Texas division and
certain other related assets; (ii) the proceeds of the AIG Loan; (iii)
the proceeds of the Additional Equity Offering, if any; (iv) the
proceeds of the Bridge Loan, if required; and (v) other cash, if any,
held by or available to the Borrower;
(c) the Exchange Company shall make a Section 338(h)(10)
election under the Code as part of the closing of such acquisition, and
as soon as reasonably possible after the finalization and consummation
of such acquisition, the Exchange Company shall cause Panhandle Eastern
and each of its applicable Subsidiaries to convert from "C
corporations" to limited liability companies after receipt of all
requisite approvals and consents from any Governmental Authority,
including without limitation, the Federal Energy Regulatory Commission;
(d) immediately after such conversion of Panhandle Eastern and
each of its applicable Subsidiaries from "C corporations" to limited
liability companies, the Exchange Company shall distribute to the
Borrower 100% of all membership and other equity interests in Panhandle
Eastern, thus causing Panhandle Eastern to be a wholly-owned Subsidiary
of the Borrower;
(e) immediately after such distribution to the Borrower of 100%
of all membership and other equity interests in Panhandle Eastern, the
existing Debt of Panhandle Eastern and its Subsidiaries may cause
Consolidated Total Indebtedness to increase by not more than
$1,170,000,000.00 in the aggregate, provided that neither the Borrower
nor any of its Subsidiaries existing prior to such distribution shall
have, incur or assume any liability with respect to such existing Debt
of Panhandle Eastern and its Subsidiaries;
(f) one (1) Business Day after such distribution by the Exchange
Company to the Borrower of all membership and other equity interests in
Panhandle Eastern, the Borrower shall distribute to Southern Union
Panhandle 100% of all membership and other equity interests in
Panhandle Eastern; and
(g) all requisite approvals and consents from any Governmental
Authority with respect to the above-described acquisitions and
distributions shall have been received by the Borrower in a form
acceptable to the Agent.
"Panhandle Eastern Acquisition Agreement" shall mean that certain Stock
Purchase Agreement dated December 21, 2002, by and between CMS Gas Transmission
Company, as seller, Southern Union Panhandle, as purchaser, and the Borrower and
the AIG Entities, as sponsors, as the same may hereafter be amended, modified,
supplemented, restated or replaced (the form of any such amendment,
modification, etc. to be approved by the Agent, such approval to not be
unreasonably withheld, conditioned or delayed), it being contemplated that such
Stock Purchase Agreement will be assigned by the Borrower to the Exchange
Company to facilitate the Panhandle Eastern Acquisition.
"Panhandle Eastern Refinancing Debt" shall mean any Debt of Panhandle
Eastern and/or any of its Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund, any Debt of Panhandle Eastern and/or any of its Subsidiaries existing
prior to the Exchange Company's acquisition of all stock and other equity
interests in Panhandle Eastern in connection with the Panhandle Eastern
Acquisition, provided, that:
(a) the principal amount of such Panhandle Eastern Refinancing
Debt does not exceed the then outstanding principal amount of the Debt
so extended, refinanced, renewed, replaced, defeased or refunded;
(b) the interest rate or rates to accrue under such Panhandle
Eastern Refinancing Indebtedness do not exceed the lesser of (i) the
interest rate or rates then accruing on the Debt so extended,
refinanced, renewed, replaced, defeased or refunded or (ii) the
prevailing market interest rate or rates which are then applicable to,
and generally available for, Debt which is similar in type, amount,
maturity and other terms to the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded;
(c) the maturities, amortization schedules, covenants,
defaults, remedies, collateral security provisions (or absence thereof)
and other terms of such Panhandle Eastern Refinancing Indebtedness,
including without limitation, any restrictions on the payment by
Panhandle Eastern and/or its applicable Subsidiaries of any dividends
or other shareholder distributions, are in each case the same or more
favorable to Panhandle Eastern and/or its applicable Subsidiaries as
those in the Debt so extended, refinanced, renewed, replaced, defeased
or refunded; and
(d) no Default or Event of Default has occurred and is
continuing or would result from the issuance or origination of such
Panhandle Eastern Refinancing Indebtedness.
"Southern Union Panhandle" shall mean Southern Union Panhandle Corp., a
Delaware corporation formed by the Borrower for the purpose of ultimately owning
and holding 100% of all issued and outstanding equity interests in Panhandle
Eastern.
"Trunkline LNG Holdings" shall mean CMS Trunkline LNG Holdings, LLC, a
Delaware limited liability company.
"Trunkline LNG Holdings Sale" shall mean the sale by Panhandle Eastern
to a third-party that is not an Affiliate of the Borrower or any of the AIG
Entities of all or a portion of the issued and outstanding stock and other
equity interests, if any, in Trunkline LNG Holdings, so long as such sale is
finalized and consummated in substantial compliance with the following specified
terms:
(a) all cash proceeds received by Panhandle Eastern from such
sale, less customary and reasonable transaction fees and the amount of
all taxes payable by the Panhandle Eastern attributable to such sale,
shall by fully distributed by Panhandle Eastern to Southern Union
Panhandle, and in turn by Southern Union Panhandle to the Borrower and
the AIG Entities;
(b) all cash proceeds distributed to the Borrower from such sale
shall be immediately applied against the Borrower's Debt in the
following order: (i) first to the Bridge Loan until the same is fully
paid; (ii) second, 50% of the remaining cash proceeds shall be applied
to the Term Loan Facility; and (iii) the balance, if any, shall be
applied to Obligations under this Agreement and/or Debt outstanding
under the Short-Term Credit Facility; and
(c) all requisite approvals and consents from any Governmental
Authority with respect to such sale shall have been received by
Panhandle Eastern in a form acceptable to the Agent.
3. Amendment of Required Prepayments. New subparagraphs (d) and (e) are
hereby added to Section 4.1 of the Credit Agreement to read as follows:
(d) All cash proceeds distributed to the Borrower from the
Trunkline LNG Holdings Sale shall be immediately applied against the
Borrower's Debt in the following order: (i) first to the Bridge Loan
until the same is fully paid; (ii) second, 50% of the remaining cash
proceeds shall be applied to the Term Loan Facility; and (iii) the
balance, if any, shall be applied to Obligations under this Agreement
and/or Debt outstanding under the Short-Term Credit Facility.
(e) All net cash proceeds received by the Borrower from any
Additional Equity Offerings shall be applied in the following order:
(i) first, to payment of the Bridge Loan until the same is fully paid;
(ii) second, for other working capital needs of the Borrower or any of
its Subsidiaries, including without limitation, the payment of the AIG
Loan (but only to the extent not otherwise required to be applied to
the Term Loan Facility, the Obligations under this Agreement and/or
Debt outstanding under the Short-Term Credit Facility in accordance
with the following clauses); (iii) third, 50% of the net cash proceeds,
if any, received by the Borrower in excess of $125,000,000.00 in the
aggregate from all Additional Equity Offerings shall be applied to the
Term Loan Facility; and (iv) fourth, 50% of the net cash proceeds, if
any, received by the Borrower in excess of $125,000,000.00 in the
aggregate from all Additional Equity Offerings shall be applied to
Obligations under this Agreement and/or Debt outstanding under the
Short-Term Credit Facility.
4. Pledge of Southern Union Panhandle Stock Representation and
Warranty. A new Section 7.17 is hereby added to the Credit Agreement to read as
follows:
7.17 No Agreements Prohibiting Pledge of Southern Union
Panhandle Stock. Except for the applicable negative covenants of this
Agreement, the Short-Term Credit Facility Agreement, the Term Loan
Facility and the Bridge Loan, the Borrower is not a party to any
contract or other agreement with any Person that directly or indirectly
prohibits the Borrower from granting any Lien against the stock or
other equity interests in Southern Union Panhandle (whether common,
preferred or another class of equity ownership) at any time owned and
held by the Borrower as security for any Debt of the Borrower or any of
its Subsidiaries.
5. Additional Equity Offering Affirmative Covenant. New Sections 9.12
and 9.13 are hereby added to the Credit Agreement to read as follows:
9.12 Additional Equity Offering. On or before September 1,
2003, the Borrower agrees to (a) cause the Additional Equity Offering
to be consummated and finalized, and (b) if the Bridge Loan is then
outstanding, cause the proceeds received by the Borrower from such
Additional Equity Offering to be utilized to fully pay the Bridge Loan.
9.13 Bridge Loan Commitments. On or before April 4, 2003, the
Borrower agrees to cause to be delivered to the Agent valid and binding
written loan commitments for the Bridge Loan, accepted by the Borrower,
from one or more lenders in an aggregate amount of not less than
$100,000,000.00.
6. Amendment of Capital Requirements Negative Covenant. Sections
10.1(a) and 10.1(b) of the Credit Agreement are hereby amended and restated in
their entirety to hereafter be and read as follows:
(a) permit its Consolidated Net Worth at the end of any fiscal
quarter to be less than the sum of (i) $741,887,000, (ii) 40% of
Consolidated Net Income (if positive) for the period commencing on
January 1, 2002 and ending on the date of determination, and treated as
a single accounting period; (iii) the difference between (A) 100% of
the net proceeds of any issuance of capital or preferred stock or any
other Equity-Preferred Securities by the Borrower or any consolidated
Subsidiary, including without limitation, the Additional Equity
Offering, received by the Borrower or such consolidated Subsidiary at
any time after January 1, 2002; and (B) the aggregate amount of all
redemption or repurchase payments hereafter made, if any, by the
Borrower and any such consolidated Subsidiary in connection with the
repurchase by the Borrower or any such consolidated Subsidiary of any
of their respective capital or preferred stock; (iv) without
duplication, the difference between (A) 100% of the net proceeds
heretofore and hereafter received by the Borrower and any consolidated
Subsidiary in respect of the issuance by the Borrower or such
consolidated Subsidiary of the Structured Securities, and (B) the
aggregate amount of all redemption payments hereafter made, if any, by
the Borrower and any such consolidated Subsidiary in connection with
the redemption of any of the Structured Securities; and (v) the
minority interests in the Borrower's Subsidiaries.
(b) permit the ratio of its Consolidated Total Indebtedness to
its Consolidated Total Capitalization to be greater than (i) 0.65 to
1.00 at the end of any fiscal quarter ending prior to the Exchange
Company's acquisition of all stock and other equity interests in
Panhandle Eastern in connection with the Panhandle Eastern Acquisition;
(ii) 0.75 to 1.00 at the end of any fiscal quarter ending on or after
the Exchange Company's acquisition of all stock and other equity
interests in Panhandle Eastern in connection with the Panhandle Eastern
Acquisition, but before the consummation of either the Additional
Equity Offering or the Trunkline LNG Holdings Sale, (iii) 0.70 to 1.00
at the end of any fiscal quarter ending on or after the consummation of
either the Additional Equity Offering or the Trunkline LNG Holdings
Sale, and (iv) 0.65 to 1.00 at the end of any fiscal quarter ending on
or after the earlier to occur of (A) the consummation of both the
Additional Equity Offering and the Trunkline LNG Holdings Sale or (B)
December 31, 2003.
7. Amendment of Liens Negative Covenant. Section 10.2(d) of the Credit
Agreement is hereby amended and restated in its entirety to hereafter be and
read as follows:
(d) Liens on property existing at the time of acquisition
thereof by the Borrower or any Subsidiary, including without
limitation, (i) any property acquired by the Borrower in consummating
and finalizing any of the Prior Acquisitions, (ii) any Liens existing
on any property of Panhandle Eastern or any of its Subsidiaries to
secure existing Debt of Panhandle Eastern or any of its Subsidiaries on
the date the Exchange Company acquires all stock and other equity
interests in Panhandle Eastern in connection with the Panhandle Eastern
Acquisition, and (iii) any Liens against any property of Panhandle
Eastern or any of its Subsidiaries to secure Panhandle Eastern
Refinancing Debt (provided such Liens are limited to property of
Panhandle Eastern or any of its Subsidiaries securing the Debt so
extended, refinanced, renewed, replaced, defeased or refunded), or
purchase money Liens placed on an item of real or personal property
purchased by the Borrower or any Subsidiary to secure a portion of the
purchase price of such property, including without limitation, any
Liens against up to 28% of the stock and other equity interests in
Southern Union Panhandle granted by the Borrower as security for the
AIG Loan; provided that no such Lien may encumber or cover any other
property of the Borrower or any Subsidiary.
8. Amendment of Debt Negative Covenant. Sections 10.3(a) and 10.3(g) of
the Credit Agreement are hereby amended and restated in their entirety to
hereafter be and read as follows:
(a) Debt evidenced by the Notes, the Short-Term Credit
Facility Notes, the Facility Letter of Credit Obligations or
outstanding under the Term Loan Facility, the AIG Loan, the Bridge Loan
and any Equity-Preferred Securities (to the extent the same constitutes
Debt) not in default, as well as (i) existing Debt of Panhandle Eastern
and/or any of its Subsidiaries otherwise permitted in the definition of
"Panhandle Eastern Acquisition," (ii) any Panhandle Eastern Refinancing
Debt, (iii) any loans or advances of proceeds of the AIG Loan, the
Bridge Loan and/or the Additional Equity Offering by the Borrower to
Southern Union Panhandle for purposes of financing the Panhandle
Eastern Acquisition, (iv) any loans or advances by the Borrower to
Panhandle Eastern and/or any of the Borrower's other Subsidiaries
permitted under Section 10.4(b) and (v) any working capital credit
facility or facilities provided directly to Panhandle Eastern and/or
any of Panhandle Eastern's Subsidiaries by any party other than the
Borrower, so long as the principal amount of all such outstanding
working capital facilities, together with the outstanding principal
amount of any working capital loans or advances by the Borrower to
Panhandle Eastern and/or any of Panhandle Eastern's Subsidiaries, does
not exceed $25,000,000 in the aggregate at any time.
(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 Capitalization shall be no greater than (A) 0.65
to 1.00 at all times prior to the date the Exchange Company acquires
all stock and other equity interests in Panhandle Eastern in connection
with the Panhandle Eastern Acquisition, (B) 0.75 to 1.00 at all times
on and after the date the Exchange Company acquires all stock and other
equity interests in Panhandle Eastern in connection with the Panhandle
Eastern Acquisition, but before the consummation of either the
Additional Equity Offering or the Trunkline LNG Holdings Sale, (C) 0.70
to 1.00 at all times on or after the consummation of either the
Additional Equity Offering or the Trunkline LNG Holdings Sale, and (D)
0.65 to 1.00 at all times on and after the earlier to occur of (x) the
consummation of both the Additional Equity Offering and the Trunkline
LNG Holdings Sale or (y) December 31, 2003; (ii) the ratio of EBDIT for
the four fiscal quarters most recently ended to pro forma Cash Interest
Expense for the following four fiscal quarters shall be no less than
2.00 to 1.0 at all times; provided, however, that if the additional
Debt for which the determinations required to be made by this
subparagraph (g) will be used to finance in whole or in part the
consideration to be paid by the Borrower for the acquisition of any
entity otherwise permitted under the terms of this Agreement, the
determination of EBDIT for purposes of this ratio shall include not
only the EBDIT of the Borrower and its Subsidiaries for the four fiscal
quarters most recently ended, but shall also include the EBDIT of such
entity to be acquired for such four fiscal quarters most recently
ended; and (iii) (A) such Debt and Structured Securities shall have a
final maturity or mandatory redemption date, as the case may be, no
earlier than the Maturity Date and shall mature or be subject to
mandatory redemption or mandatory defeasance no earlier than the
Maturity Date (as so extended) and shall be subject to no mandatory
redemption or "put" to the Borrower or any Southern Union Trust
exercisable, or sinking fund or other similar mandatory principal
payment provisions that require payments to be made toward principal,
prior to such Maturity Date (as so extended); or (B) (x) such
additional Debt shall have a final maturity date prior to the Maturity
Date, (y) such additional Debt shall not exceed One Hundred Million
Dollars ($100,000,000.00) in the aggregate plus Twenty Million Dollars
($20,000,000.00) of reimbursement obligations incurred in connection
with Non-Facility Letters of Credit issued by a Bank or Banks or by any
other financial institution; provided, however, that for purposes of
determining the aggregate amount of such additional Debt for purposes
of this subclause (y), the Debt of the Borrower under the Term Loan
Facility shall not be included and such Debt under the Term Loan
Facility shall be deemed to be permitted Debt for purposes of this
subclause (y), and (z) such additional Debt shall be borrowed from a
Bank or Banks as a loan or loans arising independent of this Agreement,
the Short-Term Credit Facility Agreement or the Term Loan Facility or
shall be borrowed from a financial institution that is not a Bank under
this Agreement, the Short-Term Credit Facility Agreement or the Term
Loan Facility.
9. Amendment of Investment Negative Covenant. Sections 10.4(a) and
10.4(b) of the Credit Agreement are hereby amended and restated in their
entirety to hereafter be and read as follows:
(a) stock or other equity interests of (i) the Subsidiaries
named in Section 7.1; (ii) other entities that are acquired by the
Borrower or any Subsidiary but that are promptly merged with and into
the Borrower; (iii) Southern Union Panhandle, Panhandle Eastern and any
Subsidiaries of Panhandle Eastern acquired as a result of the Panhandle
Eastern Acquisition; and (iv) the same Qualifying Entities as the
Qualifying Entities under subparagraph (ii) of the definition of
"Qualifying Assets," provided that at any one time the aggregate
purchase price paid for such stock in such Qualifying Entities,
including the aggregate amount of Debt assumed or deemed incurred by
Borrower in connection with the purchase of such stock, is not more
than ten percent (10%) of the Consolidated Net Worth of the Borrower
and its Subsidiaries as of the applicable determination date, and
further provided that Investments of the type described in clauses (ii)
and (iv) of this Section 10.4(a) shall be permitted only after the
consummation and finalization of both the Additional Equity Offering
and the Trunkline LNG Holdings Sale and the payment in full of the AIG
Loan.
(b) loans or advances to a Subsidiary, as well as advances of
proceeds of the AIG Loan, the Bridge Loan and/or the Additional Equity
Offering by the Borrower to the Exchange Company for purposes of
facilitating the consummation of the Panhandle Eastern Acquisition;
provided, however, that the principal amount of such loans and advances
for working capital purposes at any time outstanding to Panhandle
Eastern and/or any of Panhandle Eastern's Subsidiaries, together with
the principal amount of any outstanding working capital credit facility
or facilities provided directly to Panhandle Eastern and/or any of
Panhandle Eastern's Subsidiaries by any party other than the Borrower,
does not exceed $25,000,000 in the aggregate at any time.
10. Amendment of Subsidiary Stock and Debt Negative Covenant. Section
10.5 of the Credit Agreement is hereby amended and restated in its entirety to
hereafter be and read as follows:
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, other equity interests or Debt of any Subsidiary, or
permit any Subsidiary to issue or dispose of its stock (other than
directors' qualifying shares), except for the following: (i) the sale,
transfer or issuance of stock, other equity interests or Debt of any
Subsidiary to the Borrower or another Subsidiary of the Borrower; (ii)
the sale of up to 28% of all stock and other equity interests owned by
the Borrower in Southern Union Panhandle upon terms reasonably
acceptable to the Agent, so long as the proceeds of such equity sale
are utilized to fully pay the AIG Loan; (iii) the sale of stock in
Trunkline LNG Holdings and Debt of Trunkline LNG Holdings as a result
of the Trunkline LNG Holdings Sale; (iv) the issuance by Southern Union
Trusts of preferred beneficial interests in public offerings of
Borrower's Structured Securities, and (v) the issuance by other
Subsidiaries of the Borrower formed for the purpose of issuing
Equity-Preferred Securities.
11. Amendment to Sale of Assets Negative Covenant. A new subsection
(ix) is hereby added to the end of Section 10.8 of the Credit Agreement to read
as follows:
(ix) Panhandle Eastern may sell all stock in Trunkline LNG
Holdings pursuant to the Trunkline LNG Holdings Sale.
12. Dividends and Other Distributions Negative Covenant. A new Section
10.17 is hereby added to the Credit Agreement to read as follows:
10.17 Dividends and Other Distributions by Southern Union
Panhandle. The Borrower will not permit Southern Union Panhandle to
make any dividends, payments or other distributions of any kind to
holders of stock or other equity interests in Southern Union Panhandle
(whether common, preferred or another class of equity ownership) unless
such dividends, payments or other distributions are made pro-rata to
the Borrower and each other equity owner based on their respective
percentage ownership interests held in Southern Union Panhandle.
13. No Agreements Prohibiting Pledge of Southern Union Panhandle Stock.
A new Section 10.18 is hereby added to the Credit Agreement to read as follows:
10.18 No Agreements Prohibiting Pledge of Southern Union
Panhandle Stock. The Borrower will not enter into any contract or other
agreement with any Person that directly or indirectly prohibits the
Borrower from granting any Lien against the stock or other equity
interests in Southern Union Panhandle (whether common, preferred or
another class of equity ownership) at any time owned and held by the
Borrower as security for any Debt of the Borrower or any of its
Subsidiaries, other than the applicable negative covenants of this
Agreement, the Short-Term Credit Facility Agreement, the Term Loan
Facility and the Bridge Loan.
14. New Exhibit. A new Exhibit D, in the form of Exhibit A attached to
this Amendment, is hereby added to the Agreement.
15. Other Sections. Except as expressly amended by this Amendment, the
provisions of the Agreement and the Notes shall remain in full force and effect,
and the Borrower acknowledges and reaffirms its liability to the Banks
thereunder. In the event of any inconsistency between this Amendment and the
terms of the Agreement or the Notes, this Amendment shall govern.
16. Representations and Warranties. The Borrower represents and
warrants to the Banks as of the Borrower's execution of this Amendment and as of
the effective date hereof that:
a. Representations and Warranties. The representations and
warranties contained in Section 7 of the Credit Agreement, as amended hereby,
are true and correct, and no Default or Event of Default has occurred and is
continuing.
b. Corporate Power and Authorization. The Borrower is duly
authorized and empowered to execute, deliver and perform its obligations under
this Amendment and to make the borrowings provided for in the Credit Agreement,
and all requisite corporate action on the Borrower's part for the due execution,
delivery and performance of this Amendment has been duly and effectively taken.
c. Binding Obligations. This Amendment constitutes the legal, valid
and binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms, except as limited by Debtor Laws.
d. No Conflict or Resultant Lien. The execution, delivery and
performance of this Amendment and the consummation of the transactions
contemplated herein do not and will not violate any provision of, or result in a
default under, the certificate of incorporation or bylaws of the Borrower, or
any contract, agreement or instrument or any governmental requirement to which
the Borrower is subject, or result in the creation or imposition of any Lien
upon any property of the Borrower (other than as contemplated or permitted by
the Credit Agreement).
e. No Consent. The Borrower's execution, delivery and performance
of this Amendment does not require the consent or approval of any Person.
17. Miscellaneous.
a. In accordance with the terms of Section 13.2 of the Credit
Agreement, this Amendment shall become effective when executed and delivered by
the Borrower, the Agent and the Majority Banks.
b. No Bank, by its execution of this Amendment, waives any rights
it may have against any person not a party hereto.
c. This Amendment may be executed in multiple counterparts, each of
which shall constitute an original instrument, but all of which shall constitute
one and the same Amendment.
d. All capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to such terms in the Credit Agreement.
e. The invalidity of any one or more covenants, phrases, clauses,
sentences or paragraphs of this Amendment shall not affect the remaining portion
of this Amendment, or any part thereof, and in case of any such invalidity, this
Amendment shall be construed as if such invalid covenants, phrases, clauses,
sentences or paragraphs had not been inserted. The section headings in this
Amendment are for convenience only and shall not limit or in any way affect the
meaning of the terms and provisions of this Amendment.
f. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES OF AMERICA.
THIS WRITTEN AMENDMENT, TOGETHER WITH THE CREDIT AGREEMENT, THE NOTES
AND THE LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENT OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
be effective as of the date first above written.
SOUTHERN UNION COMPANY
By: s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
--------------------------------------------
Title: Treasurer
--------------------------------------------
JPMORGAN CHASE BANK, for itself and as Agent for
the Banks
By: s/ Xxx Sample
------------------------------------------
Name: Xxx Sample
------------------------------------------
Title: Senior Vice President
------------------------------------------
BANK ONE, NA
(Main Office-Chicago)
By: s/ Xxxxxx X. Xxxx
-----------------------------------------
Name: Xxxxxx X. Xxxx
-----------------------------------------
Title: Associate Director
-----------------------------------------
WACHOVIA BANK, NATIONAL ASSOCIATION
(SUCCESSOR TO FIRST UNION NATIONAL BANK)
By: s/ Xxxx Xxxxx
-----------------------------------------
Name: Xxxx Xxxxx
-----------------------------------------
Title: Vice President
-----------------------------------------
FLEET NATIONAL BANK
By: s/ Xxxxx Xxxx
-----------------------------------------
Name: Xxxxx Xxxx
-----------------------------------------
Title: Vice President
-----------------------------------------
MIZUHO CORPORATE BANK, LTD., FORMERLY KNOWN
AS THE FUJI BANK, LIMITED
By: s/ Jun Shimmachi
-----------------------------------------
Name: Jun Shimmachi
-----------------------------------------
Title: Vice President
-----------------------------------------
MIZUHO CORPORATE BANK (USA)
By: s/ Takuya Honjb
-----------------------------------------
Name: Takuya Honjb
-----------------------------------------
Title: President and CEO
-----------------------------------------
CREDIT LYONNAIS NEW YORK BRANCH
By: s/ Xxxxxxx Xxxxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxxxx
-----------------------------------------
Title: Senior Vice President
-----------------------------------------
THE BANK OF TOKYO-MITSUBISHI, LTD.
By:
-----------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
US BANK, NATIONAL ASSOCIATION
(FORMERLY KNOWN AS FIRSTAR BANK, N.A.)
By:
-----------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
NATIONAL AUSTRALIA BANK LIMITED,
A.C.N. 0040444937
By:
-----------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
THE NORINCHUKIN BANK,
NEW YORK BRANCH
By: s/ Xxxxxxx Xxx
-----------------------------------------
Name: Xxxxxxx Xxx
-----------------------------------------
Title: General Manager
-----------------------------------------
CITIZENS BANK OF RHODE ISLAND
By: s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------------------------
Title: Vice President
-----------------------------------------
WESTLB AG (FORMERLY KNOWN AS WESTDEUTSCHE
LANDESBANK GIROZENTRALE), A GERMAN BANKING
INSTITUTION ORGANIZED UNDER THE LAWS OF THE STATE
OF NORTH RHINE-WESTPAHLIA, GERMANY, ACTING
THROUGH ITS NEW YORK BRANCH
By: s/ Xxx Xxxxxxxxxx s/ Xxxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxx Xxxxxxxxxx Xxxxxx Xxxxxxxxx
-----------------------------------------
Title: Managing Director Director
-----------------------------------------
KBC BANK, N.V.
By: s/ Xxx Xxxxxxxxxxx
-----------------------------------------
Name: Xxx Xxxxxxxxxxx
-----------------------------------------
Title: Sr. Vice President and General Manager
-----------------------------------------
UMB BANK, N.A.
By: s/ Xxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxxx
-----------------------------------------
Title: Senior Vice President
-----------------------------------------
SUNTRUST BANK
By:
-----------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
XXXXX FARGO BANK TEXAS,
NATIONAL ASSOCIATION
By: s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
-----------------------------------------
Title: Vice President
-----------------------------------------
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By:
-----------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
EXHIBIT A
SUMMARY OF TERMS AND CONDITIONS
BRIDGE FACILITY
Borrower: Southern Union Company (the "Borrower").
Guarantors: Southern Union Panhandle and other direct
subsidiaries of the Borrower [other than
Panhandle Eastern (as defined below) and
its subsidiaries], referred to herein as
the "Guarantors", and the Guarantors,
together with the Borrower, are sometimes
referred to herein as the "Obligors".
Facility Description: Up to $115,000,000 (but not
less than $100,000,000) term loan (the
"Facility") with a maturity of six months
from the date of closing of the Panhandle
Eastern Acquisition (the "Closing Date"),
but in no event later than September 1,
2003 (the "Maturity Date"). The Facility
will be available for drawdown until the
Closing Date, but in no event later than
May 1, 2003.
Security: The Facility will be unsecured.
Purpose: The Facility will be used (i) to finance a
portion of the Panhandle Eastern
Acquisition of Panhandle Eastern (each as
defined on Schedule 1 hereto) and (ii) to
pay fees and expenses incurred in
connection with the Panhandle Eastern
Acquisition.
Joint Lead Arrangers and X.X. Xxxxxx Securities Inc. and [Merrill
Bookrunners: Xxxxx Capital Markets] (together, the
"Lead Arrangers").
Administrative Agent: JPMorgan Chase Bank ("JPMC" or the
"Administrative Agent").
Syndication Agent: Xxxxxxx Xxxxx Capital Markets.
Borrowing Options: LIBOR and Base Rate.
Base Rate means the higher of the
Administrative Agent's prime rate and the
federal funds rate + 0.50%.
LIBOR adjustments for Regulation D will be
charged by Lenders individually.
Pricing: Pricing on the commitments and loans will
be at the rates per annum set forth in the
attached Pricing Schedule, expressed in
basis points per annum.
Interest Payments: At the end of each applicable Interest
Period.
Interest Periods: 1, 2 or 3 months.
Drawdown: A single drawdown with same day notice if
Base Rate Loans and three business
days' notice if LIBOR Loans.
Optional Prepayments: Base Rate Loans may be prepaid at any time
on one business day's notice. LIBOR Loans
may be prepaid upon at least three
business days' notice subject to funding
losses. Amounts prepaid may not be
reborrowed.
Mandatory Commitment 100% of the net cash proceeds from the
issuance or incurrence after the
Reductions and Prepayments: Closing Date of equity or debt by the
Borrower shall be applied to reduce the
commitments under the Facility (if still
in existence) or to prepay the Facility.
100% of the amount of proceeds received by
the Borrower or SUPH from distributions or
loans from Panhandle Eastern, including
distributions received from Panhandle
Eastern upon the Trunkline LNG Holdings
Sale (as defined below). The Borrower will
cause Panhandle Eastern and SUPH to
distribute to the Borrower its share of
any and all net cash proceeds received by
Panhandle Eastern upon such sale or any
other asset sale. Amounts prepaid may not
be reborrowed.
Representations and Warranties: Customary for credit agreements of this
nature, with respect to the Obligors and
their subsidiaries (including Panhandle
Eastern and its subsidiaries), including
but not limited to:
1. Existence and qualification; power;
compliance with laws.
2. Authority; no conflict.
3. No governmental approvals
required.
4. Enforceability.
5. Litigation.
6. No default.
7. ERISA compliance.
8. Use of proceeds; margin regulations.
9. Tax liability.
10. Financial statements; no material
adverse change.
11. Environmental compliance.
12. Public Utility Holding Company Act;
Investment Company Act.
13. Disclosure.
14. Collateral matters.
15. Panhandle Eastern Acquisition matters.
Conditions: Customary in credit agreements of this
nature, including but not limited to:
1. Absence of default.
2. Accuracy of representations and
warranties.
3. Negotiation and execution of
satisfactory credit agreement and
customary closing documentation
(including legal opinions).
4. Payment of fees.
5. Consummation of the Panhandle Eastern
Acquisition on terms satisfactory to
the Lenders.
6. Completion of and satisfaction with
the results of due diligence with
respect to the Borrower and its
subsidiaries and Panhandle Eastern and
its subsidiaries.
7. Absence of material adverse condition
or material adverse change in or
affecting the business, operations,
property, condition (financial or
otherwise) or prospects of the
Borrower and its subsidiaries, or
Panhandle Eastern and its
subsidiaries, in each case taken
as a whole.
8. The fact that the Panhandle Eastern
Acquisition and all other elements
of the Transactions shall close
simultaneously with the closing of the
Facility, on terms and conditions
substantially as described to Lenders
prior to the date of the Commitment
Letter, with such changes thereto as
the Lenders may approve in their sole
discretion. .
9. The fact that the Borrower shall
have received all amendments or
consents under its other existing
financing arrangements that are
necessary or reasonably desirable
to permit the consummation of the
Panhandle Eastern Acquisition on
the terms contemplated thereby,
all of which shall be in form and
substance satisfactory to the Lenders.
10. The fact that the AIG Loan (as
defined in Schedule 1) shall be
funded prior to or simultaneously
with the closing of the Facility,
all on terms and conditions
satisfactory to the Lenders in
their sole discretion
11. Absence of any disruption of or
adverse change (or development that
could reasonably be expected to result
in a material adverse change) in or
affecting U.S. or international loan
syndication, banking, financial or
capital market conditions from those
in effect on the date hereof that,
individually or in the aggregate, in
our good faith judgment has or could
have a material adverse affect on our
ability to fund or syndicate the
Facility, or on the Borrower's
ability to consummate a refinancing
transaction to refinance the Facility
in whole promptly after the Closing
Date.
Covenants of each Obligor: Customary in credit agreements of this
nature, and applicable to the Obligors and
their subsidiaries (including Panhandle
Eastern and its subsidiaries) including
but not limited to:
1. Financial statements.
2. Certificates, notice and other
information.
3. Preservation of existence; maintenance
of corporate separateness.
4. Merger, consolidation, etc.
5. Sale of assets.
6. Maintenance of insurance.
7. Payment of taxes and other potential
liens.
8. Compliance with laws.
9. Environmental laws.
10. Compliance with ERISA.
11. Negative pledge
12. Accounting changes.
13. Limitation on debt of the Borrower.
14. Prohibition on dividends and other
restricted payments (including
intercompany loans) by the Borrower
while a default exists.
15. Financial covenants consistent with
the amended revolving and term
loan credit facilities including,
but not limited to, the following
(with covenants as defined in the
Amended and Restated Term Loan
Credit Agreement dated as of July
15, 2002, as amended to the
Closing Date, among the Borrower,
the Lenders party thereto, and
JPMC, as agent): (a) Consolidated
Total Indebtedness to Consolidated
Total Capitalization of the Borrower
(each determined without inclusion of
[either (x)] the AIG Loan [or (y) to
the extent included in Debt of the
Borrower and its subsidiaries,
Equity-Preferred Securities (as
defined in Schedule 1) not to
exceed 10% of Consolidated Total
Capitalization (calculated for
purposes of this clause (y)
without reference to any
Equity-Preferred Securities))]
not to exceed (i) 75% at the end
of any fiscal quarter ending on
or after the Exchange Company's
acquisition of all stock and
other equity interests in
Panhandle Eastern in connection
with the Panhandle Eastern
Acquisition, but before the
consummation of either the
Additional Equity Offering or the
Trunkline LNG Holdings Sale (as
defined in Schedule 1 hereto),
(ii) 0.70 to 1.00 at the end of
any fiscal quarter ending on or
after the consummation of either
the Additional Equity Offering or
the Trunkline LNG Holdings Sale,
and (iv) 0.65 to 1.00 at the end
of any fiscal quarter ending on
or after the consummation of both
the Additional Equity Offering
and the Trunkline LNG Holdings
Sale; (b) minimum EBDIT to
interest expense of 2.00 to 1.00,
and (c) minimum Consolidated Net
Worth of not less than the sum of
(i) $751,887,000, (ii) 40% of
Consolidated Net Income (if
positive) for the fiscal quarters
after the Closing Date, treated
as a single period and (iii)
certain adjustments made with
respect to equity additions and
payments with respect to equity.
16. Satisfactory SEC disclosure regarding
the loan.
17. Restriction on agreements that limit,
directly or indirectly, the
Borrower from granting a lien on
the stock or other equity
interests in Southern Union
Panhandle as security for
obligations under the Facility,
with exceptions for negative
pledges under existing credit
agreements of the Borrower to be
specified.
Events of Default: Customary in credit agreements of this
nature, including but not limited to
the following:
1. Failure to pay any principal when due.
2. Failure to pay interest and fees within
five business days of the due date.
3. Failure to meet covenants (with grace
periods, where appropriate).
4. Representations or warranties false in
any material respect when made.
5. Cross default to Material Debt of the
Borrower or any of its subsidiaries (to
be defined as debt in a principal
amount of at least $10 million).
6. Change of ownership or control of the
Borrower.
7. Failure of (i) the Borrower to own at
least 78% of the capital stock of
Southern Union Panhandle (as defined in
Schedule 1) or (ii) Southern Union
Panhandle to own 100% of the capital
stock of Panhandle Eastern.
8. Credit Agreement or any guarantee shall
be unenforceable or invalid. 9. Other
usual defaults with respect to the
Obligors, including but not
limited to insolvency, bankruptcy,
ERISA and judgment defaults.
Increased Costs/Change of The credit agreement will contain
Circumstances: customary provisions protecting the
Lenders in the event of unavailability of
funding, illegality, increased costs and
funding losses.
Indemnification: The Obligors will indemnify the Lenders
against all losses, liabilities, claims,
damages, or expenses relating to their
loans, the Borrower's use of loan proceeds
or the commitments, including but not
limited to reasonable attorneys' fees and
settlement costs (except such as result
from the indemnitee's gross negligence or
willful misconduct).
Transfers and Participations: Lenders will have the right to transfer or
sell participations in their loans
or commitments with the transferability of
voting rights in the case of
participations limited to changes in
principal, rate, fees and term.
Assignments, which must be in amounts of
at least $5 million, will be allowed
with the consent of the Administrative
Agent and (so long as no Event of Defualt
as to it has occurred and is continuing)
the Borrower (such consent not to be
unreasonably withheld); provided that
assignments will be allowed within the
Lender group and to a Lender's affiliates
without any consent requirement. In
connection with each assignment, the
assignor Lender will pay the
Administrative Agent a $3,500 processing
fee.
Required Lenders: Majority of the aggregate amount of the
commitments.
Expenses: The Obligors will pay all legal and other
reasonable out-of-pocket expenses of the
Initial Lenders, Lead Arrangers and the
Administrative Agent to this transaction
and any subsequent amendments or waivers,
including the expenses and reasonable fees
of Xxxxx Xxxx & Xxxxxxxx, special counsel
to the Administrative Agent.
Governing Law: New York.
PRICING SCHEDULE TO BRIDGE LOAN TERM SHEET
Commitment Fee and Applicable Margins: A commitment fee, at a rate determined in
accordance with the following table, per annum will be charged on the unused
commitments. The "Eurodollar Margin" applicable to outstanding LIBOR Loans shall
be determined in accordance with the following grid, provided, however that for
all periods subsequent to the date 90 days following the Closing Date, the
Eurodollar Margin shall be the Additional Percentage Per Annum determined in
accordance with the following grid plus 1.00%. The "Base Rate Margin" applicable
to outstanding Base Rate Loans shall be the Eurodollar Margin reduced by 1.00%.
======================================================== ===================== =========================
Additional Commitment Fee
Rating of the Borrower's unsecured, non-credit Percentage Per Percentage Per Annum
enhanced Senior Funded Debt Annum
-------------------------------------------------------- --------------------- -------------------------
-------------------------------------------------------- --------------------- -------------------------
Equal to or greater than Baa2 by Moody's or equal to
or greater than BBB by S&P 1.25% 0.150%
-------------------------------------------------------- --------------------- -------------------------
-------------------------------------------------------- --------------------- -------------------------
Baa3 by Moody's or BBB- by S&P 1.50% 0.175%
-------------------------------------------------------- --------------------- -------------------------
-------------------------------------------------------- --------------------- -------------------------
Equal to or less than Ba1 by Moody's and equal to or
less than BB+ by S&P 2.00% 0.250%
======================================================== ===================== =========================
In the event that the ratings for Borrower's unsecured, non-credit enhanced
Senior Funded Debt specified by Standard & Poor's Ratings Group and Xxxxx'x
Investor Service, Inc. fall within different rating categories which are not
functional equivalents, the Eurodollar Margin shall be based on the higher of
such ratings if there is only one category difference between the functional
equivalents of such ratings, and if there is a two category difference between
the functional equivalents of such ratings, the Eurodollar Margin shall be based
on the rating category which is equivalent to one rating higher than the lower
of the two ratings then in effect.
In the event that Borrower withdraws from having its unsecured, non-credit
enhanced Senior Funded Debt being rated by Xxxxx'x Investor Service, Inc. or
Standard and Poor's Ratings Group, so that one or both of such ratings services
fails to rate the Borrower's unsecured, non-credit enhanced Senior Funded Debt,
the component of pricing from the grid set forth above for purposes of
determining the applicable Eurodollar Rate for all Rate Periods commencing
thereafter shall be 2.00% until such time as Borrower subsequently causes its
unsecured, non-credit enhanced Senior Funded Debt to be rated by both of said
ratings services.
The Applicable Margin shall be payable monthly in arrears on each determination
date based on outstanding loans during the period then ended.
Funding Fee: The Borrower shall pay to the Administrative Agent on the Closing
Date, for the account of the Lenders pro rata in accordance with each Lender's
funded Loan amount, a fee equal to [0.25]% of the amount of Loans borrowed on
the Closing Date.
Duration Fee: On the 30th day after the Closing Date, the Borrower shall pay to
the Administrative Agent, for the account of the Lenders pro rata in accordance
with each Lender's outstanding Loan on such day, a fee equal to [0.25]% of the
aggregate principal amount of all Loans outstanding on such day.
SCHEDULE 1 TO BRIDGE LOAN TERM SHEET
THE PANHANDLE EASTERN ACQUISITION AND CERTAIN RELATED DEFINITIONS
Additional Equity Shall mean (a) a public offering by the Borrower
Offering: of additional capital stock in the Borrower
resulting in not less than $100,000,000.00 of net
equity proceeds being received by the Borrower and
(b) any additional offering or issuance of capital
stock, Equity-Preferred Securities or any other equity
interests in Borrower or Southern Union Panhandle (to
the extent permitted under the applicable negative
covenants restricting issuance of stock in any
Subsidiary of Borrower), so long as all net cash
proceeds from any such offering or issuance of equity
described in clauses (a) or (b) above are applied in
the following order: (i) first, to payment of the
Bridge Loan; and (ii) the balance, if any, for other
working capital needs of the Borrower or any of its
subsidiaries, including without limitation, the payment
of the AIG Loan
AIG Entities: Shall mean AIG Highstar Capital, L.P., a Delaware
limited partnership, AIG Highstar Funding Corp.,
a Delaware corporation, and any other permitted
owner and holder of any shares of stock or other equity
interests in Southern Union Panhandle not owned and
held by the Borrower or any of the Borrower's
subsidiaries
AIG Loan: Shall mean a credit facility to be provided to
the Borrower by one or more of the AIG Entities in an
aggregate principal amount not to exceed
$150,000,000.00 for purposes of financing a portion of
the acquisition costs for the Panhandle Eastern
Acquisition, said loan to be (a) non-recourse to the
Borrower, (b) secured only by 28% of the issued and
outstanding stock and other equity interests in
Southern Union Panhandle and (c) subject to other terms
and conditions acceptable to the Administrative Agent
in all respects
Equity-Preferred Shall mean (i) Debt, preferred equity or
Securities: any other securities that are mandatorily convertible
by the issuer thereof a date certain, without cash
payment by the issuer, into common shares of stock of
the Borrower or (ii) any other securities (A) that are
issued by the Borrower or any Subsidiary, (B) that are
not subject to mandatory redemption at any time,
directly or indirectly, (C) that are perpetual or
mature not less than 30 years from any date of
issuance, (D) the Debt component, if any, issued in
connection therewith, including any guaranty, is
subordinate in right of payment to all other unsecured
and unsubordinated Debt of the issuer of such Debt
component (including any such guaranty, if applicable),
and (E) the terms of which permit the issuer thereof to
defer at any time, without any additional payment or
premium, the payment of any and all interest and/or
distributions thereon, as applicable, to a date
occurring after [the date that is 364 days after
effectiveness of the First Amendment to the existing
Revolving Credit Agreement]
Exchange Company: Shall mean Southern Union Exchange Company, a
Delaware corporation and/or any other entity created
and owned by Chicago Deferred Exchange Corporation that
the Borrower hereafter enters into a "qualified
exchange accommodation agreement" with for purposes
of facilitating the Panhandle Eastern Acquisition
Panhandle Eastern: Shall mean Panhandle Eastern Pipeline Company, a
Delaware corporation
Panhandle Eastern Shall mean the acquisition by the Exchange Company
Acquisition: of 100% of all issued and outstanding stock and
other equity interests, if any, in Panhandle
Eastern in accordance with the Panhandle Eastern
Acquisition Agreement, so long as such acquisition is
in substantial compliance with the following specified
terms:
(a) immediately after the finalization and consummation of such
acquisition, Panhandle Eastern is a wholly-owned Subsidiary of
the Exchange Company;
(b) the aggregate consideration paid for all stock and other equity
interests in Panhandle Eastern shall not exceed $663,000,000.00
in cash, with the source of said cash purchase price to be a
combination of some or all of the following: (i) $406,000,000.00
of "like-kind" exchange proceeds previously received from the
prior sale to ONEOK, Inc. of the "Southern Union Gas Company"
Texas division and certain other related assets; (ii) the
proceeds of the AIG Loan; (iii) the proceeds of the Additional
Equity Offering, if any; (iv) the proceeds of the Bridge Loan, if
required; and (v) other cash, if any, held by or available to the
Borrower;
(c) the Exchange Company shall make a Section 338(h)(10) election
under the Internal Revenue Code as part of the closing of such
acquisition, and as soon as reasonably possible after the
finalization and consummation of such acquisition, the Exchange
Company shall cause Panhandle Eastern and each of its applicable
subsidiaries to convert from "C corporations" to limited
liability companies after receipt of all requisite approvals and
consents from any Governmental Authority, including without
limitation, the Federal Energy Regulatory Commission;
(d) immediately after such conversion of Panhandle Eastern and each
of its applicable subsidiaries from "C corporations" to limited
liability companies, the Exchange Company shall distribute to the
Borrower 100% of all membership and other equity interests in
Panhandle Eastern, thus causing Panhandle Eastern to be a
wholly-owned Subsidiary of the Borrower;
(e) immediately after such distribution to the Borrower of 100% of
all membership and other equity interests in Panhandle Eastern,
the existing Debt of Panhandle Eastern and its subsidiaries may
cause Consolidated Total Indebtedness to increase by not more
than $1,170,000,000.00 in the aggregate, provided that neither
the Borrower nor any of its subsidiaries existing prior to such
distribution shall have, incur or assume any liability with
respect to such existing Debt of Panhandle Eastern and its
subsidiaries;
(f) one (1) Business Day after such distribution by the Exchange
Company to the Borrower of all membership and other equity
interests in Panhandle Eastern, the Borrower shall distribute to
Southern Union Panhandle 100% of all membership and other equity
interests in Panhandle Eastern; and
(g) all requisite approvals and consents from any Governmental
Authority with respect to the above-described acquisitions and
distributions shall have been received by the Borrower in a form
acceptable to the Administrative Agent
Panhandle Eastern Shall mean that certain Stock Purchase Agreement
Acquisition dated December 21, 2002, by and between CMS Gas
Agreement: Transmission Company, as seller, Southern Union Panhandle,
as purchaser, and the Borrower and the AIG Entities, as
sponsors, as the same may hereafter be amended, modified,
supplemented, restated or replaced (the form of any such
amendment, modification, etc. to be approved by the
Administrative Agent, such approval to not be unreasonably
withheld, conditioned or delayed), it being contemplated that
such Stock Purchase Agreement will be assigned by the
Borrower to the Exchange Company to facilitate the
Panhandle Eastern Acquisition
Southern Union Shall mean Southern Union Panhandle Corp., a Delaware
Panhandle: corporation formed by the Borrower for the purpose of
ultimately owning and holding 100% of all
issued and outstanding equity interests in Panhandle Eastern
Trunkline LNG Shall mean CMS Trunkline LNG Holdings, LLC, a Delaware
Holdings: limited liability company
Trunkline LNG Shall mean the sale by Panhandle Eastern to a third-party
Holdings Sale: that is not an Affiliate of the Borrower or any of
the AIG Entities of all or a portion of the issued and
outstanding stock and other equity interests, if any, in
Trunkline LNG Holdings, so long as such sale is
finalized and consummated in substantial
compliance with the following specified terms:
(a) all cash proceeds received by
Panhandle Eastern from such sale,
less customary and reasonable
transaction fees and the amount
of all taxes payable by the
Panhandle Eastern attributable to
such sale, shall by fully
distributed by Panhandle Eastern
to Southern Union Panhandle, and
in turn by Southern Union
Panhandle to the Borrower and the
AIG Entities;
(b) all cash proceeds distributed to
the Borrower from such sale shall
be immediately applied against
the Borrower's Debt in the
following order: (i) first to the
Bridge Loan until the same is
fully paid; (ii) second, 50% of
the remaining cash proceeds shall
be applied to the Term Loan
Facility; and (iii) the balance,
if any, shall be applied to Debt
under the Short-Term Revolving
Credit Facility and/or Debt
outstanding under the Long-Term
Revolving Credit Facility; and
(c) all requisite approvals and
consents from any Governmental
Authority with respect to such
sale shall have been received by
Panhandle Eastern in a form
acceptable to the Administrative
Agent.
