Exhibit No. 10(c)
FIRST AMENDMENT TO
AMENDED AND RESTATED TERM LOAN CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED TERM LOAN CREDIT AGREEMENT
(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 ("Chase"), in its capacity
as agent (the "Agent") for the Banks.
RECITALS:
WHEREAS, the Borrower, the Banks and the Agent have executed a certain
Amended and Restated Term Loan Credit Agreement dated effective July 15, 2002
(the "Credit Agreement"); and
WHEREAS, the Majority Banks, the Agent and the Borrower desire to 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 "Revolving Credit Facilities" 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).
"Revolving Credit Facilities" shall mean (a) that certain
$150,000,000.00 revolving credit facility provided to the Borrower under the
terms of that certain Revolving Credit Agreement (Short-Term Credit Facility)
dated effective April 3, 2003 by and among the Borrower, JPMorgan, as
administrative agent, and the banks or financial institutions now or hereafter a
party thereto, (b) that certain $225,000,000.00 revolving credit facility
provided to the Borrower under the terms of that certain Second Amended and
Restated Revolving Credit Agreement (Long-Term Credit Facility) dated effective
May 29, 2001 by and among the Borrower, The Chase Manhattan Bank, now known as
JPMorgan), as administrative agent, and the banks or financial institutions now
or hereafter a party thereto, and (c) any and all amendments, modifications,
increases, supplements, restatements and/or replacements of either of said
revolving credit facilities now or hereafter existing 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 Obligations under this Agreement and/or Debt outstanding under
either of the Revolving Credit Facilities 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 Obligations under this Agreement; 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 Debt outstanding under one or more of the Revolving Credit
Facilities.
"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 Obligations under this Agreement; and (iii) the balance, if any,
shall be applied to Debt outstanding under one or more of the Revolving
Credit Facilities; 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 (e) and (f) are
hereby added to Section 3.1 of the Credit Agreement to read as follows:
(e) 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 Obligations under this Agreement; and
(iii) the balance, if any, shall be applied to Debt outstanding under
one or more of the Revolving Credit Facilities.
(f) 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 Obligations under this Agreement and/or Debt outstanding under
either of the Revolving Credit Facilities 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
Obligations under this Agreement; 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 Debt outstanding under one or more of the Revolving Credit
Facilities.
4. Pledge of Southern Union Panhandle Stock Representation and
Warranty. A new Section 6.17 is hereby added to the Credit Agreement to read as
follows:
6.17 No Agreements Prohibiting Pledge of Southern Union
Panhandle Stock. Except for the applicable negative covenants of this
Agreement, the Revolving Credit Facilities 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 and Bridge Loan Affirmative Covenants.
New Sections 8.12 and 8.13 are hereby added to the Credit Agreement to read as
follows:
8.12 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.
8.13 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 9.1(a)
and 9.1(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 9.2(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 9.3(a) and 9.3(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 or outstanding under the
Revolving Credit Facilities, the AIG Loan, the Bridge Loan and any
Equity-Preferred Securities (to the extent the same constitutes Debt)
not in default 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 9.4(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-Revolving Credit 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 Loans shall not be included and 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 or either of the Revolving Credit
Facilities or shall be borrowed from a financial institution that is
not a Bank under this Agreement or either of the Revolving Credit
Facilities.
9. Amendment of Investment Negative Covenant. Sections 9.4(a) and
9.4(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 6.1; (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 9.4(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
9.5 of the Credit Agreement is hereby amended and restated in its entirety to
hereafter be and read as follows:
9.5 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 9.8 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
9.17 is hereby added to the Credit Agreement to read as follows:
9.17 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 9.18 is hereby added to the Credit Agreement to read as follows:
9.18 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 Revolving Credit Facilities 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 6 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 12.2 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
-------------------------------------------
BAYERISCHE HYPO-AND VEREINSBANK AG, NEW YORK BRANCH
By: s/ Mrianne Weinzier s/ Xxxxx Xxxxxxx
-------------------------------------------
Name: Xxxxxxxx Xxxxxxxx Xxxxx Xxxxxxx
Title: Director Managing Director
BANK ONE, NA
(Main Office-Chicago)
By: s/ Xxxxxx X. Xxxx
-------------------------------------------
Name: Xxxxxx X. Xxxx
-------------------------------------------
Title: Associate Director
-------------------------------------------
WACHOVIA BANK, NATIONAL ASSOCIATION
By: s/Xxxx Xxxxx
-------------------------------------------
Name: Xxxx Xxxxx
-------------------------------------------
Title: Vice President
-------------------------------------------
FLEET NATIONAL BANK
By: s/ Xxxxx Xxxx
-------------------------------------------
Name: Xxxxx Xxxx
-------------------------------------------
Title: Vice President
-------------------------------------------
ALLFIRST BANK
By: s/ Xxxxxx Xxxxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxxxx
-------------------------------------------
Title: Senior Vice President
-------------------------------------------
THE BANK OF TOKYO-MITSUBISHI, LTD.
By:
-------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
XXXXX XXX COMMERICAL BANK, LTD.
By: s/ Xxx Xxxx
-------------------------------------------
Name: Xxx Xxxx
-------------------------------------------
Title: VP & General Manager
-------------------------------------------
KBC BANK N.V.
By: s/ Xxx Xxxxxxxxxxx
-------------------------------------------
Name: Xxx Xxxxxxxxxxx
-------------------------------------------
Title: Sr. Vice President & General Manager
-------------------------------------------
PNC BANK, NATIONAL ASSOCIATION
By: s/ Xxxxxxx Xxxxx
-------------------------------------------
Name: Xxxxxxx Xxxxx
-------------------------------------------
Title: Managing Director
-------------------------------------------
MANUFACTURERS & TRADERS TRUST CO.
By: s/ Xxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxx
-------------------------------------------
Title: Vice President
-------------------------------------------
CREDIT LYONNAIS NEW YORK BRANCH
By: s/ Xxxxxxx Xxxxxxxx
-------------------------------------------
Name: Xxxxxxx Xxxxxxxx
-------------------------------------------
Title: Senior Vice President
-------------------------------------------
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
-------------------------------------------
BANK OF COMMUNICATIONS, NEW YORK BRANCH
By: s/ De Cai Li
-------------------------------------------
Name: De Cai Li
-------------------------------------------
Title: General Manager
-------------------------------------------
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 X.X. Xxxxxx Securities Inc. and [Merrill
and 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
Reductions and incurrence after the Prepayments: Closing Date of equity
Prepayments 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 Customary for credit agreements of this nature, with
Warranties: 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 Customary in credit agreements of this nature, and
of each Obligor: 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 The credit agreement will contain customary provisions
of Circumstances: 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 Lenders will have the right to transfer or sell
Participations: 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
Default 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 of
Offering: 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 any other
Securities: 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 of
Acquisition: 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 dated
Acquisition December 21, 2002, by and between CMS Gas Transmission
Agreement: 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-
Holdings Sale: 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 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.
