SEVENTH SUPPLEMENTAL INDENTURE

between

PANHANDLE EASTERN PIPE LINE COMPANY, LP

Issuer

and

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A

Trustee

 

 

Table of Contents

ARTICLE I

DEFINITIONS

ARTICLE II

GENERAL TERMS AND CONDITIONS OF THE SENIOR NOTES

ARTICLE III

COVENANTS

ARTICLE IV

DEFAULT

ARTICLE V

DEFEASANCE

ARTICLE VI

FORM OF SENIOR NOTES

ARTICLE VII

ISSUANCE OF SENIOR NOTES

ARTICLE VIII

MISCELLANEOUS

 

 

THIS SEVENTH SUPPLEMENTAL INDENTURE, dated as of June 2, 2009 (this “Seventh Supplemental Indenture”), between Panhandle Eastern Pipe Line Company, LP (formerly known as Panhandle Eastern Pipe Line Company, LLC and Panhandle Eastern Pipe Line Company), a Delaware limited partnership (the “Issuer”), and The Bank of New York Mellon Trust Company, N.A. (as successor to J.P. Morgan Trust Company, National Association), as trustee (the “Trustee”) under the indenture, dated as of March 29, 1999, among the Issuer, CMS Panhandle Holding Company, a Michigan corporation, and NBD Bank, as trustee (the “Base Indenture” and, as so supplemented, the “Indenture”).

WHEREAS, CMS Panhandle Holding Company and the Issuer executed and delivered the Base Indenture to NBD Bank to provide for the future issuance of CMS Panhandle Holding Company’s unsecured debt securities guaranteed by the Issuer, to be issued from time to time in one or more series as might be determined by CMS Panhandle Holding Company under the Indenture, in an unlimited aggregate principal amount which may be authenticated and delivered as provided in the Base Indenture;

WHEREAS, the Issuer, CMS Panhandle Holding Company, and NBD Bank executed the First Supplemental Indenture, dated as of March 29, 1999, under which CMS Panhandle Holding Company issued a series of Debt Securities in three tranches known as its 6.125% Senior Notes due 2004, 6.500% Senior Notes due 2009 and 7.000% Senior Notes due 2029 in aggregate principal amounts of $300,000,000, $200,000,000 and $300,000,000, respectively;

WHEREAS, Panhandle Eastern Pipe Line Company became the Issuer as provided for in the Base Indenture as a result of the merger of CMS Panhandle Holding Company into Panhandle Eastern Pipe Line Company, effective June 15, 1999, and Bank One Trust Company, National Association became the Trustee provided for in the Base Indenture as a result of the merger of NBD Bank into Bank One Trust Company, National Association;

WHEREAS, the Issuer and the Trustee executed the Second Supplemental Indenture, dated as of March 27, 2000, under which the Issuer issued a series of Debt Securities known as its 8.25% Senior Notes due 2010, Series A, in the principal amount of $100,000,000 (the “2010 A Senior Notes”), and a series of senior notes to be issued in exchange for the 2010 A Senior Notes, known as the Issuer’s “8.25% Senior Notes Due 2010, Series B,” in the principal amount of $100,000,000;

WHEREAS, in June, 2003, Southern Union Panhandle, LLC, a wholly-owned subsidiary of Southern Union Company (“Southern Union”), acquired all of the outstanding capital stock of the Issuer, after which Southern Union caused Panhandle Eastern Pipe Line Company to convert to a Delaware limited liability company;

WHEREAS, the Issuer and the Trustee executed the Third Supplemental Indenture, dated as of August 18, 2003, to provide for the establishment of two new series of its Debt Securities: (i) the 4.80% Senior Notes due 2008 in the initial principal amount of $300,000,000, consisting of two tranches, the first tranche of 4.80% Senior Notes due 2008 known as “4.80% Senior Notes due 2008, Series A” (the “4.80% Series A Notes”), and the second tranche of 4.80% Senior Notes due 2008 to be issued in exchange for the 4.80% Series A Notes, known as “4.80% Senior Notes due 2008, Series B”; and (ii) the 6.05% Senior Notes due 2013 in the initial principal amount of $250,000,000, consisting of two tranches, the first tranche of 6.05% Senior Notes due 2013 known as “6.05% Senior Notes due 2013, Series A” (the “6.05% Series A Notes”), and the second tranche of 6.05% Senior Notes due 2013 to be issued in exchange for the 6.05% Series A Notes, known as the “6.05% Senior Notes due 2013, Series B”;

WHEREAS, J.P. Morgan Trust Company, National Association became the Trustee provided for in the Base Indenture as a result of the assumption of certain assets of Bank One Trust Company, National Association by a merger subsidiary which later merged with and into J.P. Morgan Trust Company, National Association;

WHEREAS, the Issuer and Trustee executed the Fourth Supplemental Indenture, dated as of  March 12, 2004, under which the Issuer issued two new series of its Debt Securities: (i) the 2.75% Senior Notes due 2007, Series A, in the initial principal amount of $200,000,000 (the “Series A Notes”), and (ii) the second series, to be issued in exchange for the Series A Notes, known as the “2.75% Senior Notes due 2007, Series B”;

WHEREAS, in June 2004, the Issuer converted from a Delaware limited liability company to a Delaware limited partnership;

WHEREAS, in October 2006, The Bank of New York Trust Company, N.A. became the Trustee provided for in the Base Indenture as a result of the sale by The Bank of New York Company, Inc. of its retail and regional middle market banking business to JP Morgan Chase & Co. in exchange for, among other things, the acquisition of J.P. Morgan Trust Company, National Association;

WHEREAS, the Issuer and Trustee executed the Fifth Supplemental Indenture, dated as of October 26, 2007, under which the Issuer issued a new series of its Debt Securities known as the 6.20% Senior Notes due 2017, in the principal amount of $300,000,000.

WHEREAS, the Issuer and Trustee executed the Sixth Supplemental Indenture, dated as of June 12, 2008, under which the Issuer issued a new series of its Debt Securities known as the 7.00% Senior Notes due 2018, in the principal amount of $400,000,000.

WHEREAS, the Issuer desires to issue a new series of Debt Securities known as the 8.125   % Senior Notes due 2019, in the principal amount of $150,000,000   (the “Senior Notes”), the form and substance of such Senior Notes and the terms, provisions and conditions thereof to be set forth as provided in the Base Indenture and this Seventh Supplemental Indenture,

WHEREAS, there is no limit on the amount of Additional Senior Notes (as defined below) that may be issued after the initial issuance of the Initial Senior Notes (as defined below), provided that at the time of issuance of any Additional Senior Notes, no Event of Default shall have occurred and be continuing;

WHEREAS, on May 21, 2009, the Issuer registered the Senior Notes under the Securities Act pursuant to the Registration Statement on Form S-3 (Registration No. 333-137998), as amended by Post-Effective Amendment No. 1;

WHEREAS, the Issuer wishes to amend and add certain provisions to the Base Indenture for the benefit of the holders of the Senior Notes; and

WHEREAS, the Issuer has requested that the Trustee execute and deliver this Seventh Supplemental Indenture, and all requirements necessary to make this Seventh Supplemental Indenture a valid instrument, in accordance with its terms, and to make the Senior Notes, when executed by the Issuer and authenticated and delivered by the Trustee, the valid obligations of the Issuer, have been performed, and the execution and delivery of this Seventh Supplemental Indenture has been duly authorized in all respects:

NOW THEREFORE, in consideration of the purchase and acceptance of the Senior Notes to be issued hereunder by the holders thereof, and for the purpose of setting forth, as provided in the Indenture, the form and substance of the Senior Notes and the terms, provisions and conditions thereof, the Issuer covenants and agrees with the Trustee as follows:

ARTICLE I

DEFINITIONS

Unless the context otherwise requires:

(a)           a term defined in the Base Indenture has the same meaning when used in this Seventh Supplemental Indenture;

(b)           a term defined anywhere in this Seventh Supplemental Indenture has the same meaning throughout;

(c)           the singular includes the plural and vice versa;

(d)           a reference to a Section or Article is to a Section or Article of this Seventh Supplemental Indenture;

(e)           headings are for convenience of reference only and do not affect interpretation;

(f)           the following terms have the meanings given to them in this Section 1.01(f):

“Additional Senior Notes” means any additional Senior Notes (other than Initial Senior Notes) issued from time to time under this Seventh Supplemental Indenture in accordance with Section 2.04 of the Base Indenture, as a part of the same series as the Initial Senior Notes; provided , that no Additional Senior Notes may be issued during the continuance of an Event of Default.

“Adjusted Consolidated Net Income” means, for any period, the net income of the Issuer and its Consolidated Subsidiaries, plus (i) depreciation and amortization expense of the Issuer and its Consolidated Subsidiaries, (ii) income taxes and deferred taxes of the Issuer and its Consolidated Subsidiaries and (iii) other non-cash charges, in each case, determined on a consolidated basis in accordance with generally accepted accounting principles; provided , however , that there shall not be included in such Adjusted Consolidated Net Income any net income of any Person if such Person is not a Subsidiary, except that (A) the Issuer’s equity in the net income of any such Person for such period shall be included in such Adjusted Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Issuer or a Consolidated Subsidiary of the Issuer as a dividend or other distribution and (B) the Issuer’s equity in a net loss of any such Person for such period shall be included in determining such Adjusted Consolidated Net Income.

“Capital Stock” means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) corporate stock, partnership interests or limited liability company interests, including any Preferred Stock or letter stock; provided that Hybrid Preferred Securities are not considered Capital Stock for purposes of this definition.

“Comparable Treasury Issue” means the United States Treasury security or securities selected by an Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the Senior Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such Senior Notes.

“Comparable Treasury Price” means, with respect to any redemption date, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

“Consolidated Debt” means the total Debt of the Issuer and its Consolidated Subsidiaries, as set forth on the consolidated balance sheet of the Issuer and its Consolidated Subsidiaries for the Issuer’s most recently completed fiscal quarter, prepared in accordance with generally accepted accounting principles.

“Consolidated Interest Expense” means, for any period, the total interest expense in respect of Consolidated Debt of the Issuer and its Consolidated Subsidiaries, including, without duplication, (i) interest expense attributable to capital leases, (ii) amortization of debt discount, (iii) capitalized interest, (iv) cash and noncash interest payments, (v) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing, (vi) net costs under Interest Rate Protection Agreements (including amortization of discount), and (vii) interest expense in respect of obligations of other Persons that constitutes Debt of the Issuer or any of its Consolidated Subsidiaries, provided , however , that Consolidated Interest Expense shall exclude any costs otherwise included in interest expense recognized on early retirement of debt.

“Consolidated Net Tangible Assets” means, at any date of determination, the total amount of assets after deducting therefrom (i) all current liabilities (excluding (A) any current liabilities that by their terms are extendable or renewable at the option of the obligor thereon to a time more than 12 months after the time as of which the amount thereof is being computed, and (B) current maturities of long-term debt), and (ii) the value (net of any applicable reserves) of all goodwill, trade names, trademarks, patents and other like intangible assets, all as set forth on the consolidated balance sheet of the Issuer and its Consolidated Subsidiaries for the Issuer’s most recently completed fiscal quarter, prepared in accordance with generally accepted accounting principles.  “Intangible assets” does not include any value write-up of tangible assets in connection with acquisition transactions accounted for on a purchase method.

“Consolidated Subsidiary” means any Subsidiary whose accounts are or are required to be consolidated with the accounts of the Issuer in accordance with generally accepted accounting principles.

“DTC” means The Depository Trust Company, or any successor thereto.

“Debt” means any obligation created or assumed by any Person for the repayment of money borrowed and any purchase money obligation created or assumed by such Person.

“Depositary” means, with respect to the Global Notes, DTC.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchangeable Stock” means any Capital Stock of a corporation or a limited liability company that is exchangeable or convertible into another security (other than Capital Stock of such corporation, partnership or limited liability company that is neither Exchangeable Stock nor Redeemable Stock).

“Fixed Charge Coverage Ratio” means the ratio of Adjusted Consolidated Net Income plus Consolidated Interest Expense to Consolidated Interest Expense, for the four fiscal quarters of the Issuer ending immediately prior to the date of determination.

“Funded Debt” means all Debt maturing one year or more from the date of the creation thereof, all Debt directly or indirectly renewable or extendable, at the option of the debtor, by its terms or by the terms of any instrument or agreement relating thereto, to a date one year or more from the date of the creation thereof, and all Debt under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of one year or more.

“Global Note” means a Senior Note evidencing all or part of a series of Senior Notes, issued to the Depositary or its nominee with respect to such series of Senior Notes and registered in the name of such Depositary or nominee.

“Holder” means a Person in whose name a Senior Note is registered.

“Hybrid Preferred Securities” means preferred securities issued by a Hybrid Preferred Securities Subsidiary, where such preferred securities have the following characteristics: (i) such Hybrid Preferred Securities Subsidiary lends substantially all of the proceeds from the issuance of such preferred securities to the Issuer in exchange for subordinated debt issued by the Issuer; (ii) such preferred securities contain terms providing for the deferral of distributions corresponding to provisions providing for the deferral of interest payments on such subordinated debt; and (iii) the Issuer makes periodic interest payments on such subordinated debt, which interest payments are in turn used by the Hybrid Preferred Securities Subsidiary to make corresponding payments to the holders of the Hybrid Preferred Securities.

“Hybrid Preferred Securities Subsidiary” means any business trust or limited partnership (or similar entity) (i) all of the common equity interest of which is owned (either directly or indirectly through one or more wholly-owned Subsidiaries of the Issuer) at all times by the Issuer, (ii) that has been formed for the purpose of issuing Hybrid Preferred Securities and (iii) substantially all of the assets of which consist at all times solely of subordinated debt issued by the Issuer and payments made from time to time on such subordinated debt.

“Independent Investment Banker” means any of Wachovia Capital Markets, LLC and RBC Capital Markets Corporation (and their respective successors) or, if no such firm is willing and able to select the applicable Comparable Treasury Issue or perform the other functions of the Independent Investment Banker provided in the Indenture, an independent investment banking institution of national standing appointed by us and reasonably acceptable to the Trustee.

“Initial Senior Notes” means the initial $150,000,000 aggregate principal amount of Senior Notes issued under this Seventh Supplemental Indenture.

“Interest Rate Protection Agreement” means any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement designed to protect the Issuer or any of its Subsidiaries against fluctuations in interest rates.

“Leverage Ratio” means 100% multiplied by the ratio of Consolidated Debt to Total Capital at the end of the most recent fiscal quarter preceding the date of determination.

“Lien” means any mortgage, pledge, security interest, charge, lien or other encumbrance of any kind, whether or not filed, recorded or perfected under applicable law.

“Loan” means any direct or indirect advance (other than advances to customers in the ordinary course of business that are recorded as receivables on the balance sheet of the Person making such advances), loan or other extension of credit (including by way of guarantee or similar arrangement) to another Person or any purchase of Debt issued by another Person, where such advance, loan, extension of credit or Debt is subordinated in right of payment to the senior creditors of the borrower.

“Moody’s” means Moody’s Investors Service, Inc., and any successor thereto which is a nationally recognized statistical rating organization, or if such entity shall cease to rate the Senior Notes or shall cease to exist and there shall be no such successor thereto, any other nationally recognized statistical rating organization selected by the Issuer which is acceptable to the Trustee.

“Non-Convertible Capital Stock” means, with respect to any corporation, partnership or limited liability company, any non-convertible Capital Stock of such corporation, partnership or limited liability company and any Capital Stock of such corporation, partnership or limited liability company convertible solely into non-convertible Capital Stock other than Preferred Stock of such corporation, partnership or limited liability company; provided , however , that Non-Convertible Capital Stock shall not include any Redeemable Stock or Exchangeable Stock.

“Permitted Liens” means:

“Principal Property” means any natural gas pipeline system, natural gas gathering system or natural gas storage facility located in the United States, except any such property that in the opinion of the Board of Directors is not of material importance to the business conducted by the Issuer and its Consolidated Subsidiaries taken as a whole.

“Prospectus” shall mean the prospectus included in the Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including any such prospectus supplement with respect to the terms of the offering of any portion of the Senior Notes covered by the Registration Statement, and by all other amendments and supplements to a prospectus, including post-effective amendments, and in each case including all material incorporated by reference therein.

“Redeemable Stock” means any Capital Stock that by its terms or otherwise is required to be redeemed prior to the 90th day before the stated maturity of any of the outstanding Senior Notes of any series or is redeemable at the option of the holder thereof at any time prior to the 90th day before the stated maturity of any of the outstanding Senior Notes of either series.

“Reference Treasury Dealer” means a Primary Treasury Dealer (as defined below) selected by Wachovia Capital Markets, LLC and RBC Capital Markets Corporation (in each case, or its affiliates and its successors); if any of the Reference Treasury Dealers resign, the respective successor dealer shall be (1) a primary U.S. Government Securities dealer in the City of New York (a “Primary Treasury Dealer”), and (2) any other Primary Treasury Dealer selected by the Company.

“Reference Treasury Dealer Quotations”  means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 3:30 p.m. New York time on the third Business Day preceding such redemption date.

“Registration Statement” means that certain Registration Statement   on Form S-3 (Registration no. 333-137998), as amended by Post-Effective Amendment No.1, as   filed with the SEC by the Issuer and Southern Union.

“Restricted Subsidiary” means any Subsidiary of the Issuer owning or leasing any Principal Property.

“Rule 144A” means Rule 144A under the Securities Act.

“Sale-Leaseback Transaction” means, with respect to the Issuer or any Restricted Subsidiary, the sale or transfer by the Issuer or such Restricted Subsidiary of any Principal Property to a Person (other than the Issuer or a Subsidiary of the Issuer) and the taking back by the Issuer or such Restricted Subsidiary, as the case may be, of a lease of such Principal Property.  With respect to the Issuer, “Sale-Leaseback Transaction” means the sale or transfer by the Issuer of any assets or property to another Person and the taking back by the Issuer of a lease of such assets or property.

“SEC” means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at any time after the execution of this Seventh Supplemental Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

“Securities Act” means the Securities Act of 1933, as amended.

“Senior Notes” has the meaning assigned to it in the recitals to this Seventh Supplemental Indenture.  The Initial Senior Notes and the Additional Senior Notes shall be treated as a single class for all purposes under this Seventh Supplemental Indenture, and unless the context otherwise requires, all references to the Senior Notes shall include the Initial Senior Notes and any Additional Senior Notes.

“Standard & Poor’s” means Standard & Poor’s, a division of The McGraw-Hill