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EXHIBIT (4)(b)
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FIRST SUPPLEMENTAL INDENTURE
among
CMS PANHANDLE HOLDING COMPANY
(TO BE MERGED WITH AND INTO THE GUARANTOR AND SUCCESSOR)
Issuer,
PANHANDLE EASTERN PIPE LINE COMPANY,
Guarantor
and
NBD BANK,
Trustee
Dated as of March 29, 1999
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Table of Contents
ARTICLE I.
DEFINITIONS
SECTION 1.01 Definition of Terms.............................2
ARTICLE II.
GENERAL TERMS AND CONDITIONS OF
THE NOTES
SECTION 2.01 Designation and Principal Amount................7
SECTION 2.02 Maturity........................................7
SECTION 2.03 Interest........................................8
SECTION 2.04 Redemption......................................8
SECTION 2.05 Form............................................8
ARTICLE III.
COVENANTS
SECTION 3.01 Limitation on Restricted Payments...............9
SECTION 3.02 Limitation on Liens............................11
SECTION 3.03 Restriction on Sale-Leasebacks.................13
SECTION 3.04 Limitation on Other Business Activities........14
SECTION 3.05 Applicability of Covenants.....................14
ARTICLE IV.
DEFAULT
SECTION 4.01 General........................................15
SECTION 4.02 Additional Event of Default....................15
ARTICLE V.
DEFEASANCE
SECTION 5.01 General........................................15
SECTION 5.02 Covenant Defeasance............................15
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ARTICLE VI.
FORM OF NOTE
SECTION 6.01 Form of Note.....................................15
ARTICLE VII.
ORIGINAL ISSUE OF NOTES AND GUARANTEES
SECTION 7.01 Original Issue of Notes and Guarantees...........32
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.01 Ratification of Indenture........................32
SECTION 8.02 Trustee Not Responsible for Recitals.............32
SECTION 8.03 Governing Law....................................32
SECTION 8.04 Separability.....................................33
SECTION 8.05 Counterparts.....................................33
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FIRST SUPPLEMENTAL INDENTURE, dated as of March 29, 1999 (the
"First Supplemental Indenture"), among CMS Panhandle Holding Company, a Michigan
corporation (the "Issuer"), Panhandle Eastern Pipe Line Company, a Delaware
corporation (the "Company" or the "Guarantor"), and NBD Bank, as trustee (the
"Trustee") under the indenture dated as of March 29, 1999 among the Issuer, the
Guarantor and the Trustee (the "Base Indenture" and, as so supplemented, the
"Indenture").
WHEREAS, the Issuer and the Guarantor executed and delivered
the Base Indenture to the Trustee to provide for the future issuance of the
Issuer's unsecured debt securities guaranteed by the Guarantor, to be issued
from time to time in one or more series as might be determined by the Issuer
under the Indenture, in an unlimited aggregate principal amount which may be
authenticated and delivered as provided in the Base Indenture;
WHEREAS, pursuant to the terms of the Base Indenture, the
Issuer desires to provide for the establishment of a new series of its Debt
Securities in three tranches to be 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,
and the Guarantor desires to provide for the issuance of a Guarantee of such
Debt Securities (the "Note Guarantee" and, together with the Debt Securities,
the "Notes"), the form and substance of such Notes and the terms, provisions and
conditions thereof to be set forth as provided in the Base Indenture and this
First Supplemental Indenture;
WHEREAS, the Issuer, the Guarantor and the Initial Purchasers
named therein have entered into a Registration Rights Agreement, dated as of
March 29, 1999 (the "Registration Rights Agreement"), which requires the Issuer
and the Guarantor to use their best efforts to make an Exchange Offer which
would enable holders of Notes to exchange such Notes for Notes not subject to
certain restrictions under the Securities Act or to cause a Shelf Registration
Statement to be declared effective with respect to the Notes (in each case as
defined in such Registration Rights Agreement); and
WHEREAS, the Issuer and the Guarantor have requested that the
Trustee execute and deliver this First Supplemental Indenture, and all
requirements necessary to make this First Supplemental Indenture a valid
instrument, in accordance with its terms, and to make the Notes, when executed
by the Issuer and authenticated and delivered by the Trustee, the valid
obligations of the Issuer and to make the Guarantee endorsed thereon when
executed by the Guarantor a valid obligation of the Guarantor, have been
performed, and the execution and delivery of this First Supplemental Indenture
has been duly authorized in all respects:
NOW THEREFORE, in consideration of the purchase and acceptance
of the Notes by the holders thereof, and for the purpose of setting forth, as
provided in the Indenture, the form and substance of the Notes and the terms,
provisions and conditions thereof, the Issuer and the Guarantor covenant and
agree with the Trustee as follows:
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ARTICLE I.
DEFINITIONS
SECTION 1.1 Definition of Terms.
Unless the context otherwise requires:
(a) a term defined in the Base Indenture has the same
meaning when used in this First Supplemental Indenture;
(b) a term defined anywhere in this First 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 First 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):
"Adjusted Consolidated Net Income" means, for any period, the
net income of the Company and its Consolidated Subsidiaries, plus (i)
depreciation and amortization expense of the Company and its Consolidated
Subsidiaries, (ii) income taxes and deferred taxes of the Company 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 (i) any net income of any Person if such
Person is not a Subsidiary, except that (A) the Company's equity in the net
income of any such Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed by such
Person during such period to the Company or a Consolidated Subsidiary as a
dividend or other distribution and (B) the Company's equity in a net loss of any
such Person for such period shall be included in determining such Adjusted
Consolidated Net Income; and (ii) any net income of any Person acquired by the
Company or a Subsidiary in a pooling-of-interests transaction for any period
prior to the date of such acquisition.
"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, including any Preferred Stock or letter
stock; provided that Hybrid Preferred Securities are not considered Capital
Stock for purposes of this definition.
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"Consolidated Debt" means the total Debt of the Company and
its Consolidated Subsidiaries, as set forth on the consolidated balance sheet of
the Company and its Consolidated Subsidiaries for the Company'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 Company 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 Company 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 Company and its Consolidated Subsidiaries for the Company'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 (other than in connection with the acquisition of the Company
and its affiliated companies by CMS Energy) 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 Company in
accordance with generally accepted accounting principles.
"CMS Energy" means CMS Energy Corporation, a Michigan
corporation and any successor entity.
"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.
"Exchangeable Stock" means any Capital Stock of a corporation
that is exchangeable or convertible into another security (other than Capital
Stock of such corporation 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 Company ending immediately
prior to the date of determination (or, in respect of
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any such determination occurring on or prior to December 31, 1999, the number of
full fiscal quarters that shall have elapsed from the date of issuance of the
Notes).
"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 Note or Notes represented by a Global
Security.
"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 Company in exchange for subordinated debt
issued by the Company, respectively; (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 Company 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 Company) at all times by the Company, (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 Company and payments made from time to time on
such subordinated debt.
"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 Subsidiary 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
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such advance, loan, extension of credit or Debt is subordinated in right of
payment to the senior creditors of the borrower.
"▇▇▇▇▇'▇" means ▇▇▇▇▇'▇ Investors Service, Inc., and any
successor thereto which is a nationally recognized statistical rating
organization, or if such entity shall cease to rate the Notes or shall cease to
exist and there shall be no such successor thereto, any other nationally
recognized statistical rating organization selected by the Company which is
acceptable to the Trustee.
"Non-Convertible Capital Stock" means, with respect to any
corporation, any non-convertible Capital Stock of such corporation and any
Capital Stock of such corporation convertible solely into non-convertible
Capital Stock other than Preferred Stock of such corporation; provided, however,
that Non-Convertible Capital Stock shall not include any Redeemable Stock or
Exchangeable Stock.
"Permitted Liens" means: (i) Liens upon rights-of-way for
pipeline purposes; (ii) any governmental Lien, mechanics', materialmen's,
carriers' or similar Lien incurred in the ordinary course of business which is
not yet due or which is being contested in good faith by appropriate proceedings
and any undetermined Lien which is incidental to construction; (iii) the right
reserved to, or vested in, any municipality or public authority by the terms of
any right, power, franchise, grant, license, permit or by any provision of law,
to purchase or recapture or to designate a purchaser of, any property; (iv)
Liens for taxes and assessments which are (A) for the then current year, (B) not
at the time delinquent, or (C) delinquent but the validity of which is being
contested at the time by the Company or any Subsidiary in good faith; (v) Liens
of, or to secure performance of, leases; (vi) any Lien upon, or deposits of, any
assets in favor of any surety company or clerk of court for the purpose of
obtaining indemnity or stay of judicial proceedings; (vii) any Lien upon
property or assets acquired or sold by the Company or any Restricted Subsidiary
resulting from the exercise of any rights arising out of defaults on
receivables; (viii) any Lien incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance, temporary
disability, social security, retiree health or similar laws or regulations or to
secure obligations imposed by statute or governmental regulations; (ix) any Lien
upon any property or assets in accordance with customary banking practice to
secure any Debt incurred by the Company or any Restricted Subsidiary in
connection with the exporting of goods to, or between, or the marketing of goods
in, or the importing of goods from, foreign countries; or (x) any Lien in favor
of the United States of America or any state thereof, or any other country, or
any political subdivision of any of the foregoing, to secure partial, progress,
advance or other payments pursuant to any contract or statute, or any Lien
securing industrial development, pollution control or similar revenue bonds.
"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 Company
and its Consolidated Subsidiaries taken as a whole.
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"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 Notes 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 Notes.
"Restricted Subsidiary" means any Subsidiary of the Company
owning or leasing any Principal Property.
"Standard & Poor's" means Standard & Poor's Ratings Group, a
division of McGraw Hill Inc., and any successor thereto which is a nationally
recognized statistical rating organization, or if such entity shall cease to
rate the Notes or shall cease to exist and there shall be no such successor
thereto, any other nationally recognized statistical rating organization
selected by the Company which is acceptable to the Trustee.
"Sale-Leaseback Transaction" means, with respect to the
Company or any Restricted Subsidiary, the sale or transfer by the Company or
such Restricted Subsidiary of any Principal Property to a Person (other than the
Company or a Subsidiary) and the taking back by the Company 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.
"Subsidiary" means, with respect to any Person, (i) any
corporation at least a majority of whose outstanding Voting Stock shall at the
time be owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of
whose outstanding partnership or similar interests shall at the time be owned by
such Person, or by one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries and (iii) any limited partnership of which such Person
or any of its Subsidiaries is a general partner.
"Total Capital" means the sum of (i) Consolidated Debt and
(ii) Capital Stock, Hybrid Preferred Securities, premium on Capital Stock,
capital surplus, capital in excess of par value and retained earnings (however
the foregoing may be designated), less, to the extent not otherwise deducted,
the cost of shares of Capital Stock of the Company held in treasury, all as set
forth on the consolidated balance sheet of the Company and its Consolidated
Subsidiaries for the Company's most recently completed fiscal quarter, prepared
in accordance with generally accepted accounting principles.
"Voting Stock" means securities of any class or classes the
holders of which are ordinarily, in the absence of contingencies, entitled to
vote for corporate directors (or persons performing similar functions).
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ARTICLE II.
GENERAL TERMS AND CONDITIONS OF
THE NOTES
SECTION 2.1 Designation and Principal Amount.
There is hereby authorized a single series of Debt Securities
in three tranches designated as follows:
(a) (1) The "6.125% Senior Notes due 2004" (the "2004 Notes"),
limited in aggregate principal amount to $300,000,000, which amount shall be as
set forth in any written order of the Issuer for the authentication and delivery
of Notes pursuant to Section 2.04 of the Base Indenture; and (2) a Guarantee of
such Debt Securities.
(b) (1) The "6.500% Senior Notes due 2009" (the "2009 Notes"),
limited in aggregate principal amount to $200,000,000, which amount shall be as
set forth in any written order of the Issuer for the authentication and delivery
of Notes pursuant to Section 2.04 of the Base Indenture; and (2) a Guarantee of
such Debt Securities.
(c) (1) The "7.000% Senior Notes due 2029" (the "2029 Notes"),
limited in aggregate principal amount to $300,000,000, which amount shall be as
set forth in any written order of the Issuer for the authentication and delivery
of Notes pursuant to Section 2.04 of the Base Indenture; and (2) a Guarantee of
such Debt Securities.
SECTION 2.2 Maturity.
The 2004 Notes will mature on March 15, 2004, the 2009 Notes
will mature on July 15, 2009 and the 2029 Notes will mature on July 15, 2029.
SECTION 2.3 Interest.
Interest shall accrue from the dates, and shall be payable on
the 2004 Notes, the 2009 Notes and the 2029 Notes in the amounts, and as
otherwise set forth in the form of the Note appearing in Article VI of this
First Supplemental Indenture.
SECTION 2.4 Redemption.
The Notes may be redeemed at the option of the Issuer at any
time from time to time, in whole or in part, in the manner set forth in the form
of the Notes appearing in Article VI of this First Supplemental Indenture.
SECTION 2.5 Form.
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The forms of the 2004 Notes, the 2009 Notes and the 2029 Notes
shall be substantially in forms provided for in Article VI. The respective terms
of the 2004 Notes, the 2009 Notes and the 2029 Notes form part of this First
Supplemental Indenture. The Notes may be represented by one or more Global Notes
and one or more Notes in definitive, registered form. The Notes will be
initially issued as Global Notes registered in the name of Cede & Co. (as
nominee for the Depository Trust Company ("DTC"), New York, New York, which,
together with its nominees and their successors, is hereby designated the
Depositary for the Notes). The Notes shall initially contain restrictions on
transfer, substantially as described in the form set forth in Article VI. Each
Note, whether in the form of a Global Note or in certificated form, shall
initially bear a non-registration legend and a Restricted Certificate of
Transfer, in each case in substantially the form set forth in such form.
It is contemplated that beneficial interests in Notes owned by
qualified institutional buyers (as defined in Rule 144A under the Securities
Act) ("QIBs") or sold to QIBs in reliance upon Rule 144A under the Securities
Act will be represented by one or more global certificates registered in the
name of Cede & Co., as registered owner and as nominee for DTC; and beneficial
interests in Notes acquired by foreign purchasers pursuant to Regulation S under
the Securities Act will be evidenced by one or more separate global certificates
(each the "Regulation S Global Certificate"), also registered in the name of
Cede & Co., as registered owner and as nominee for DTC for the accounts of
Euroclear and Cedel Bank; prior to the 40th day after the date of initial
issuance of the Notes, beneficial interests in the Regulation S Global
Certificate may be held only through Euroclear or Cedel Bank; Notes acquired by
Institutional Accredited Investors (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act) ("IAIs") and other eligible transferees, who are
not QIBs and who are not foreign purchasers pursuant to Regulation S under the
Securities Act, will be in certificated form. The Trustee and the Issuer will
have no responsibility under the Indenture for transfers of beneficial interests
in the Notes. So long as a Note bears a non-registration legend and a Restricted
Transfer Certificate the Trustee shall authenticate and issue new Notes upon a
registration of transfer only upon receipt of a Restricted Transfer Certificate
in the form set forth in Article VI. The Trustee shall refuse to register any
transfer of a Note in violation of the legend set forth on such Note and without
appropriate completion of the Restricted Transfer Certificate on such Note.
Subject to the conditions set forth therein and in the
Indenture, pursuant to the Registration Rights Agreement, the non-registration
legend and the Restricted Transfer Certificate may be removed or rendered
inapplicable in the event of an Exchange Offer or the effectiveness of a Shelf
Registration Statement, in each case, in respect of the Notes.
ARTICLE III.
COVENANTS
SECTION 3.1 Limitation on Restricted Payments.
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(a) Prior to the consummation of the Merger, the Issuer shall
not declare, make or pay any Restricted Payment (as defined herein), except (i)
to the extent necessary to consummate the Merger, or (ii) to the extent the
Company would be permitted to make such Restricted Payment pursuant to Section
3.01(b) of this First Supplemental Indenture.
(b) So long as any of the Notes are outstanding and until
either:
(1) such Notes are rated Baa1 (or an equivalent
rating) or higher by Moody's and BBB+ (or an equivalent
rating) or higher by Standard & Poor's; or
(2) so long as the Company is a Subsidiary of CMS
Energy, the long-term senior unsecured debt rating of CMS
Energy is rated Baa3 (or an equivalent rating) or higher by
Moody's and BBB- (or an equivalent rating) or higher by
Standard & Poor's;
in each case at which time the Company will be permanently released from the
provisions of this Section 3.01(b), the Company will not, and will not permit
any of its Restricted Subsidiaries, directly or indirectly, to:
(i) declare or pay any dividend or make any
distribution on the Capital Stock of the Company to the direct
or indirect holders of its Capital Stock (except dividends or
distributions payable solely in its Non-Convertible Capital
Stock or in options, warrants or other rights to purchase such
Non-Convertible Capital Stock and except dividends or
distributions payable to the Company or a Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire
for value any Capital Stock of the Company; or
(iii) make any Loan to CMS Energy or any of its
Affiliates that is not a Subsidiary of the Company;
(any such dividend, distribution, purchase, redemption, other acquisition or
retirement described in (i) through (iii) above being hereinafter referred to as
a "Restricted Payment"), unless at the time the Company or such Restricted
Subsidiary makes such Restricted Payment and after giving effect thereto:
(1) no Event of Default, and no event that
with the lapse of time or the giving of notice or both would
constitute an Event of Default, shall have occurred and be
continuing (or would result therefrom);
(2) the Company's Fixed Charge Coverage
Ratio is greater than or equal to 2.2; and
(3) the Company's Leverage Ratio is less
than or equal to 55%.
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Notwithstanding the foregoing, the Company or any of its
Restricted Subsidiaries may declare, make or pay any Restricted Payment, if at
the time the Company or such Restricted Subsidiary makes such Restricted Payment
and after giving effect thereto:
(1) no Event of Default, and no event that
with the lapse of time or the giving of notice or both would
constitute an Event of Default, shall have occurred and be
continuing (or would result therefrom); and
(2) the aggregate amount of such Restricted
Payment and all other Restricted Payments made since the date
of issuance of the Notes would not exceed the sum of:
(A) $50 million;
(B) 75% of Adjusted Consolidated Net Income
accumulated since the date of issuance of
the Notes to the end of the most recent
fiscal quarter ending at least 45 days prior
to the date of such Restricted Payment; and
(C) the aggregate net cash proceeds received
by the Company after the date of issuance of
the Notes from capital contributions or the
issuance of Capital Stock of the Company to
a person who is not a Subsidiary of the
Company, or from the issuance to such a
person of options, warrants or other rights
to acquire such Capital Stock of the
Company.
None of the foregoing provisions will prohibit:
(i) dividends or other distributions paid in respect
of any class of Capital Stock issued by the Company in
connection with the acquisition of any business or assets by
the Company or a Restricted Subsidiary where the dividends or
other distributions with respect to such Capital Stock are
payable solely from the net earnings of such business or
assets;
(ii) any purchase or redemption of Capital Stock of
the Company made by exchange for, or out of the proceeds of
the substantially concurrent sale of, NonConvertible Capital
Stock of the Company; or
(iii) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such
dividends would have complied with this covenant.
SECTION 3.2 Limitation on Liens.
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(a) Prior to the consummation of the Merger, the Issuer shall
not create, assume, incur or suffer to exist any Lien upon any of its property
or assets, including common stock of the Company held by the Issuer, except
Permitted Liens described in clause (iv) of the definition thereof.
(b) The Company shall not, nor will it permit any Restricted
Subsidiary to, create, assume, incur or suffer to exist any Lien upon any
Principal Property, whether owned or leased on the date of the Indenture or
thereafter acquired, to secure any Debt of the Company or any other Person
(other than the Notes), without in any such case making effective provision
whereby all of the Notes outstanding shall be secured equally and ratably with,
or prior to, such Debt so long as such Debt shall be so secured. There is
excluded from this restriction:
(i) any Lien upon any property or assets of the
Company or any Restricted Subsidiary in existence on the date
of the Indenture or created pursuant to an "after-acquired
property" clause or similar term in existence on the date of
the Indenture or any mortgage, pledge agreement, security
agreement or other similar instrument in existence on the date
of the Indenture;
(ii) any Lien upon any property or assets created at
the time of acquisition of such property or assets by the
Company or any Restricted Subsidiary or within 18 months after
such time to secure all or a portion of the purchase price for
such property or assets or Debt incurred to finance such
purchase price, whether such Debt was incurred prior to, at
the time of or within 18 months of such acquisition;
(iii) any Lien upon any property or assets existing
thereon at the time of the acquisition thereof by the Company
or any Restricted Subsidiary (whether or not the obligations
secured thereby are assumed by the Company or any Restricted
Subsidiary);
(iv) any Lien upon any property or assets of a Person
existing thereon at the time such Person becomes a Restricted
Subsidiary by acquisition, merger or otherwise (whether or not
such Lien was created in anticipation of such acquisition);
(v) any Lien securing obligations assumed by the
Company or any Restricted Subsidiary existing at the time of
the acquisition by the Company or any Restricted Subsidiary of
the property or assets subject to such Lien or at the time of
the acquisition of the Person which owns such property or
assets;
(vi) any Lien on property to secure all or part of
the cost of construction or improvements thereon or to secure
Debt incurred prior to, at the time of, or within 18 months
after completion of such construction or making of such
improvements, to provide funds for any such purpose;
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(vii) any Lien in favor of the Issuer, the Company or
any Restricted Subsidiary;
(viii) any Lien created or assumed by the Company or
any Restricted Subsidiary in connection with the issuance of
Debt the interest on which is excludable from gross income of
the holder of such Debt pursuant to the Internal Revenue Code
of 1986, as amended, or any successor statute, for the purpose
of financing, in whole or in part, the acquisition or
construction of property or assets to be used by the Company
or any Subsidiary;
(ix) any Lien upon property or assets of any foreign
Restricted Subsidiary to secure Debt of that foreign
Restricted Subsidiary;
(x) Permitted Liens;
(xi) any Lien created by any program providing for
the financing, sale or other disposition of trade or other
receivables classified as current assets in accordance with
United States generally accepted accounting principles entered
into by the Company or by a Subsidiary of the Company,
provided that such program is on terms customary for similar
transactions, or any document executed by any Subsidiary in
connection therewith, provided that such Lien is limited to
the trade or other receivables in respect of which such
program is created or exists, and the proceeds thereof;
(xii) any Lien upon any additions, improvements,
replacements, repairs, fixtures, appurtenances or component
parts thereof attaching to or required to be attached to
property or assets pursuant to the terms of any mortgage,
pledge agreement, security agreement or other similar
instrument, creating a Lien upon such property or assets
permitted by clauses (i) through (xi), inclusive, above; or
(xiii) any extension, renewal, refinancing, refunding
or replacement (or successive extensions, renewals,
refinancing, refundings or replacements) of any Lien, in whole
or in part, that is referred to in clauses (i) through (vi),
inclusive, above (and liens related thereto referred to in
clause (xii) above), or of any Debt secured thereby; provided,
however, that the principal amount of Debt secured thereby
shall not exceed the greater of the principal amount of Debt
so secured at the time of such extension, renewal,
refinancing, refunding or replacement and the original
principal amount of Debt so secured (plus in each case the
aggregate amount of premiums, other payments, costs and
expenses paid or incurred in connection with such extension,
renewal, refinancing, refunding or replacement); provided
further, however, that such extension, renewal, refinancing,
refunding or replacement shall be limited to all or a part of
the property (including improvements, alterations and repairs
on such property) subject to the encumbrance so extended,
renewed, refinanced, refunded or replaced (plus improvements,
alterations and repairs on such property).
16
Notwithstanding the foregoing, under the Indenture, the
Company may, and may permit any Restricted Subsidiary to, create, assume, incur,
or suffer to exist any Lien upon any Principal Property to secure Debt of the
Company or any Person (other than the Notes) that is not otherwise excepted by
clauses (i) through (xiii), inclusive, above without securing the Notes issued
under the Indenture, provided that the aggregate principal amount of all Debt
then outstanding secured by such Lien and all similar Liens, together with all
net sale proceeds from Sale-Leaseback Transactions (excluding Sale-Leaseback
Transactions permitted by clauses (i) through (iv), inclusive, of Section
3.03(b) of this First Supplemental Indenture) does not exceed the greater of 15%
of Consolidated Net Tangible Assets or 15% of Total Capital.
SECTION 3.3 Restriction on Sale-Leasebacks.
(a) Prior to the consummation of the Merger, the Issuer
shall not engage in a Sale-Leaseback Transaction.
(b) The Company shall not, nor shall it permit any Restricted
Subsidiary to, engage in a Sale-Leaseback Transaction, unless:
(i) such Sale-Leaseback Transaction occurs within 18
months from the date of acquisition of the Principal Property
subject thereto or the date of the completion of construction
or commencement of full operations on such Principal Property,
whichever is later;
(ii) the Sale-Leaseback Transaction involves a lease
for a period, including renewals, of not more than four years;
(iii) the Company or such Restricted Subsidiary would
be entitled to incur Debt secured by a Lien on the Principal
Property subject thereto in a principal amount equal to or
exceeding the net sale proceeds from such Sale-Leaseback
Transaction without securing the Notes; or
(iv) the Company or such Restricted Subsidiary,
within an 18-month period after such Sale-Leaseback
Transaction, applies or causes to be applied an amount not
less than the net sale proceeds from such Sale-Leaseback
Transaction to (A) the repayment, redemption or retirement of
Funded Debt of the Company or any Subsidiary, or (B)
investment in another Principal Property or in a Subsidiary of
the Company which owns another Principal Property.
Notwithstanding the foregoing, under the Indenture, the
Company may, and may permit any Restricted Subsidiary to, effect any
Sale-Leaseback Transaction that is not otherwise excepted by clauses (i) through
(iv), inclusive, above, provided that the net sale proceeds from such
Sale-Leaseback Transaction, together with the aggregate principal amount of
outstanding Debt (other than the Notes) secured by Liens upon any Principal
Properties not excepted by
17
clauses (i) through (xiii), inclusive, of Section 3.02(b) of this First
Supplemental Indenture, do not exceed the greater of 15% of the Consolidated Net
Tangible Assets or 15% of Total Capital.
SECTION 3.4 Limitation on Other Business Activities.
Prior to the consummation of the Merger, the Issuer shall not
engage in any trade, business or operations other than in connection with (i)
the holding of common stock (including the making of capital contributions and
the receipt of dividends and other distributions in respect thereof) of the
Company, (ii) the Merger and (iii) the issuance of the Notes.
SECTION 3.5 Applicability of Covenants.
Unless otherwise stated herein, the foregoing covenants
contained in this Article III shall only be in effect so long as any of the
Notes are outstanding.
ARTICLE IV.
DEFAULT
SECTION 4.1 General.
All of the events specified in paragraphs (1) through (6) in
Section 6.01(a) of the Base Indenture shall be "Events of Default" with respect
to the Notes.
SECTION 4.2 Additional Event of Default.
The following event shall be an "Event of Default" with
respect to the Notes: default in the payment of any Liquidated Damages pursuant
to the Registration Rights Agreement with respect to any of the Notes, when due,
and continuance of such default for a period of 60 days.
ARTICLE V.
DEFEASANCE
SECTION 5.1 General.
All of the provisions of Article XI of the Base Indenture
shall be applicable to the Notes.
SECTION 5.2 Covenant Defeasance.
18
With respect to and pursuant to the terms of Section 11.02(b)
of the Base Indenture, the release of covenant obligations provided for therein
shall, with respect to the Notes, also apply to Section 3.01, Section 3.02,
Section 3.03 and Section 3.04 of this First Supplemental Indenture.
ARTICLE VI.
FORM OF NOTE
SECTION 6.1 Form of Note.
The Notes, the Note Guarantee and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the following
forms:
(FORM OF FACE OF NOTE)
[IF THE NOTE IS TO BE A GLOBAL NOTE, INSERT This Note is a
Global Note within the meaning of the Indenture hereinafter referred to and is
registered in the name of a Depositary or a nominee of a Depositary. This Note
is exchangeable for Notes registered in the name of a person other than the
Depositary or its nominee only in the limited circumstances described in the
Indenture, and no transfer of this Note (other than a transfer of this Note as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may be
registered except in limited circumstances.
Unless this Note is presented by an authorized representative
of The Depository Trust Company (55 ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇) to the
issuer or its agent for registration of transfer, exchange or payment, and any
Note issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.]
[IF THE NOTE IS TO BE A RESTRICTED NOTE, INSERT THIS NOTE (OR
ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE SECOND SENTENCE
HEREOF. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING THIS NOTE IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT
OR (C) IT IS AN INSTITUTIONAL
19
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A) (1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT (AN "IAI"), (2) AGREES THAT IT WILL NOT
RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE ISSUER OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND AN OPINION OF COUNSEL
ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUER AND THE GUARANTOR) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION", "U.S. PERSONS" AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.]
No. $
----------- ------------------
CMS Panhandle Holding Company
___% SENIOR NOTE
DUE [2004] [2009] [2029]
CMS PANHANDLE HOLDING COMPANY, a Michigan corporation (the
"Issuer", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
_________________________________, or registered assigns, the principal sum of
____________________ Dollars on [March 15,][July 15,] [2004][2009][2029]
("Maturity") and to pay interest thereon from _________ __, 1999 (the "Original
Issue Date") or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
semi-annually in arrears on [IN THE CASE OF THE 2004 NOTES - March 15 and
September 15][IN THE CASE OF THE 2009 NOTES AND THE 2029 NOTES - January 15 and
July 15] in each year, commencing [IN THE CASE OF THE 2004
20
NOTES - September 15][IN THE CASE OF THE 2009 NOTES AND THE 2029 NOTES - July
15], 1999 and at Maturity at the rate of [IN THE CASE OF THE 2004 NOTES -
6.125][IN THE CASE OF THE 2009 NOTES - 6.500][IN THE CASE OF THE 2029 NOTES -
7.000]% per annum, until the principal hereof shall have become due and payable,
and on any overdue principal and premium, if any, and (without duplication and
to the extent that payment of such interest is enforceable under applicable law)
on any overdue installment of interest at the same rate per annum. The amount of
interest payable on any Interest Payment Date shall be computed on the basis of
a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on this Note is not a Business Day, then payment of interest
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. The interest installment
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture, be paid to the person in whose name
this Note (or one or more Predecessor Securities, as defined in said Indenture)
is registered at the close of business on the regular record date for such
interest installment which shall be the close of business on the 1st day of the
calendar month in which such Interest Payment Date occurs. Any such interest
installment not punctually paid or duly provided for shall forthwith cease to be
payable to the registered holders on such regular record date, and may be paid
to the person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on a special record date to be fixed by the
Trustee for the payment of such defaulted interest, notice whereof shall be
given to the registered holders of this series of Notes not less than 10 days
prior to such special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture. The principal of
(and premium, if any) and the interest on this Note shall be payable at the
office or agency of the Trustee maintained for that purpose in any coin or
currency of the United States of America which at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest may be made at the option of the Issuer by check mailed to the
registered holder at such address as shall appear in the Security Register.
This Note shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by or on
behalf of the Trustee.
The provisions of this Note are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
21
IN WITNESS WHEREOF, the Company has caused this instrument to
be executed.
Dated
---------------, ----
CMS PANHANDLE HOLDING COMPANY
By____________________________
Name:
Title:
Attest:
By
-------------------------
Name:
Title:
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series of Notes described in
the within-mentioned Indenture.
NBD BANK, as Trustee
By
-------------------------
Authorized Signatory
22
(FORM OF GUARANTEE)
FOR VALUE RECEIVED, Panhandle Eastern Pipe Line Company (the
"Company" or the "Guarantor"), hereby irrevocably and unconditionally guarantees
to the registered holder of this Note upon which this Guarantee is endorsed
that: (i) principal of, premium, if any, interest and any other payments on this
Note will be promptly paid in full when due, subject to any applicable grace
period, whether on the stated maturity, on an interest payment date, by
acceleration, by call for redemption, upon repurchase or purchase pursuant to
the Indenture referred to therein or otherwise, and interest on the overdue
principal and premium, if any, and interest on any interest or any other
payment, to the extent lawful (in each case including interest accruing on or
after filing of any petition in bankruptcy or reorganization relating to the
Issuer or the Guarantor, whether or not a claim for post-filing interest is
allowed in each proceeding) and all other obligations of the Issuer to the
registered holder of this Note under this Note or the Indenture will be promptly
paid in full when due or performed, all in accordance with the terms hereof and
thereof; and (ii) in case of any extension of time of payment or renewal of said
Note or of any such other obligations, the same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
subject to any applicable grace period, whether at maturity, on an interest
payment date, by acceleration, required repurchase or otherwise.
The Guarantor hereby agrees that its obligations hereunder
shall be as if it were principal debtor and not merely surety, and shall be
absolute and unconditional, irrespective of, and unaffected by, any invalidity,
irregularity or unenforceability of this Note or the Indenture, any failure to
enforce the provisions of this Note or the Indenture, any waiver, modification
or indulgence granted to the Issuer with respect thereto by the holders of this
Note or the Trustee, or any other circumstance which may otherwise constitute a
legal discharge of a surety or guarantor; provided that, notwithstanding the
foregoing, no such waiver, modification, indulgence or circumstance shall
without the written consent to the Guarantor increase the principal amount of
this Note or the interest rate thereon or change the currency of payment with
respect to this Note, or alter the stated maturity thereof. The Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of merger or bankruptcy of the Issuer, to require that the Trustee
pursue or exhaust its legal or equitable remedies against the Issuer prior to
exercising its rights under the Guarantee (including, for the avoidance of
doubt, any right which the Guarantor may have to require the seizure and sale of
the assets of the Issuer to satisfy the outstanding principal of, interest on or
any other amount payable under this Note prior to recourse against the Guarantor
or its assets), protest or notice with respect to this Note or the indebtedness
evidenced thereby and all demands whatsoever, and covenants that, except as
otherwise set forth below and in the Indenture, the Guarantee of the Guarantor
will not be discharged with respect to this Note except by payment in full of
the principal thereof, premium, if any, any interest thereon and all other
amounts payable thereunder. If at any time while this Guarantee remains in
effect any payment of principal of and interest on this Note is rescinded or
must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Issuer, the Guarantor's obligations hereunder with respect
to such payment shall be reinstated as
23
of the date of such rescission, restoration or return as though such a payment
had become due but had not been made at such times.
This Guarantee is dated the date of the Note upon which it is endorsed.
If for any reason this Guarantee shall be deemed to be unenforceable,
the Guarantor hereby irrevocably and unconditionally agrees as a primary obligor
to indemnify fully the registered holder of this Note upon which this Guarantee
is endorsed for and against any amounts owed by the Issuer in respect of this
Note and the Indenture that otherwise would be payable under this Guarantee.
The Guarantor shall be subrogated to all rights of the holder
of said Note against the Issuer in respect of any amounts paid by the Guarantor
pursuant to the provisions of this Guarantee; provided, however, that the
Guarantor shall not, without the consent of the holders of all of the Securities
then outstanding, be entitled to enforce or to receive any payments arising out
of or based upon such right of subrogation until the principal of and premium,
if any, and interest on all Securities shall have been paid in full or payment
thereof shall have been provided for in accordance with said Indenture.
Notwithstanding anything to the contrary contained herein, if
following any payment of principal or interest by the Issuer on the Securities
to the holders of the Securities it is determined by a final decision of a court
of competent jurisdiction that such payment shall be avoided by a trustee in
bankruptcy (including any debtor-in-possession) as a preference under 11 U.S.C.
Section 547 and such payment is paid by such holder to such trustee in
bankruptcy, then and to the extent of such repayment, the obligations of the
Guarantor hereunder shall remain in full force and effect.
Notwithstanding anything to the contrary contained herein,
upon consummation of the Merger, the Company will assume all of the Issuer's
obligations on this Note and under the Indenture, and the Company will be
automatically and unconditionally released and discharged from its obligations
under this Guarantee.
This Guarantee shall not be valid or become obligatory for any
purpose with respect to a Security until the certificate of authentication on
such Security shall have been signed by the Trustee (or the Authentication
Agent).
This Guarantee shall be governed by the laws of the State of
New York.
24
IN WITNESS WHEREOF, Panhandle Eastern Pipe Line Company has
caused this Guarantee to be executed.
PANHANDLE EASTERN PIPE
LINE COMPANY
as Guarantor
By: By:
--------------------- ------------------------
Name: Name:
Title: Assistant Secretary Title:
25
(FORM OF REVERSE OF NOTE)
This Note is one of a duly authorized series of Securities of
the Issuer (herein sometimes referred to as the "Notes"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an indenture (the "Base Indenture") dated as of March 29, 1999 among the
Issuer, Panhandle Eastern Pipe Line Company, a Delaware corporation, as
Guarantor (the "Company" or the "Guarantor") and NBD Bank, as Trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture dated as of
March 29, 1999 among the Issuer, the Guarantor and the Trustee (the Base
Indenture as so supplemented, hereinafter being referred to as the "Indenture"),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the rights, limitations of rights, obligations, duties
and immunities thereunder of the Trustee, the Issuer and the holders of the
Notes. By the terms of the Indenture, the Notes are issuable in series which may
vary as to amount, date of maturity, rate of interest and in other respects as
in the Indenture provided. This series of Notes is limited in aggregate
principal amount as specified in said First Supplemental Indenture.
[IN THE CASE OF A 2004 NOTE OR 2009 NOTE OR 2029 NOTE -- This
tranche of the Notes (the "[2004] [2009] [2029] Notes") is redeemable at the
option of the Issuer at any time and from time to time, in whole or in part,
upon not less than 30 nor more than 45 days notice to each holder of such Notes,
at a redemption price equal to the Make-Whole Price of such Notes. "Make-Whole
Price" means an amount equal to the greater of (i) 100% of the principal amount
of the Notes to be redeemed and (ii) as determined by an Independent Investment
Banker, the sum of the present values of the remaining scheduled payments of
principal and interest thereon (excluding the portion of any such interest
accrued to the redemption date) discounted to the date of redemption on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Adjusted Treasury Rate, plus, in each case, accrued and unpaid interest
thereon to the date of redemption. Unless there is a default in the payment of
the redemption price, on and after the date of redemption, interest will cease
to accrue on Notes or portions thereof called for redemption.
"Adjusted Treasury Rate" means, with respect to any date of
redemption, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price at such date of redemption, plus [IN THE CASE OF A
2004 NOTE - 15 basis points (0.15%)] [IN THE CASE OF A 2009 NOTE - 25 basis
points (0.25%)] [IN THE CASE OF A 2029 NOTE - 40 basis points (0.40%)].
"Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker as having a maturity
comparable to the remaining term of the [2004 Notes] [2009 Notes] [2029 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 comparable maturity to the remaining term of such Notes.
26
"Comparable Treasury Price" means, with respect to any date of
redemption, (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
on the third Business Day preceding such date of redemption, as set forth in the
daily statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities", or (ii) if such release (or any successor release) is
not published or does not contain such prices on such Business Day, (A) the
average of the Reference Treasury Dealer Quotations for such date of redemption,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of both such Reference Treasury Dealer
Quotations.
"Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Trustee after consultation with the Company.
"Reference Treasury Dealer" means, for the Notes, each of
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, Barclays Capital Inc.,
Chase Securities Inc., NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC, First Chicago
Capital Markets, Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. and ▇▇ ▇▇▇▇▇ Securities
Corporation and their respective successors; provided, however, that if any of
the foregoing shall not be a primary U.S. Government securities dealer in New
York City ( a "Primary Treasury Dealer"), the Company shall substitute therefor
another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any date of redemption, 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 5:00 p.m.
on the third Business Day preceding such date of redemption.
If an Event of Default with respect to this Note shall occur
and be continuing, the principal of this Note may be declared due and payable in
the manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time
of (i) the entire indebtedness of this Note or (ii) certain restrictive
covenants and certain other obligations with respect to this Note, in each case
upon compliance with certain conditions set forth therein.
The Indenture permits, with certain exceptions as therein
provided, modifications and amendments of the Indenture by the Guarantor and the
Trustee with the consent of the holders of a majority in aggregate principal
amount of the outstanding Notes.
The Indenture provides that the holders of a majority in
aggregate principal amount of the outstanding Notes may, on behalf of the
holders of all Notes, waive, insofar as the Notes are concerned, compliance by
the Issuer and Guarantor with certain restrictive provisions of the Indenture.
27
The Indenture provides that the holders of a majority in
aggregate principal amount of the outstanding Notes may, on behalf of all
holders of Notes, waive any past default under the Indenture with respect to any
Notes, except a default (i) in the payment of principal of, or premium, if any,
or any interest on any Note; or (ii) in respect of a covenant or provision of
the Indenture which cannot be modified or amended without the consent of the
holder of each outstanding Note affected.
The Indenture provides that, subject to the duty of the
Trustee during default to act with the required standard of care, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the holders, unless such holders
shall have offered to the Trustee reasonable indemnity. Subject to such
provisions for the indemnification of the Trustee, the holders of a majority in
aggregate principal amount of the outstanding Notes have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Notes; provided, however, that the Trustee shall not be obligated
to take any action unduly prejudicial to holders not joining in such direction
or involving the Trustee in personal liability.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and any premium and
interest on this Note at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to certain
limitations therein and herein set forth, the transfer of this Note is
registerable in the Security Register, upon surrender of this Note for
registration of transfer at the office or agency of the Issuer in any place
where the principal of and any premium and interest on this Note are payable,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Security Registrar duly executed by, the
holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of this series and of like tenor, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Notes are issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Notes are
exchangeable for a like aggregate principal amount of Notes and of like tenor of
a different authorized denomination, as requested by the holder surrendering the
same.
No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
[IN THE CASE OF A 2004 NOTE OR 2009 NOTE OR 2029 NOTE -- The
Issuer shall not be required to (a) issue, exchange or register the transfer of
this Note for a period of 15 days next
28
preceding the mailing of the notice of redemption of Notes or (b) exchange or
register the transfer of any Note or any portion thereof selected, called or
being called for redemption, except in the case of any Note to be redeemed in
part, the portion thereof not so to be redeemed.]
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note is registered as the owner hereof for
all purposes, whether or not this Note be overdue, and neither the Issuer, the
Trustee nor any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of
or the interest on this Note, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Issuer or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
All terms used in this Note which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
29
[IF NOTE IS A RESTRICTED NOTE -
(RESTRICTED CERTIFICATE OF TRANSFER)
FOR VALUE RECEIVED, THE UNDERSIGNED HEREBY SELL(S), ASSIGN(S)
AND TRANSFER(S) UNTO PLEASE INSERT SOCIAL
-------------------------------------
SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
-----------------------------------------------------------
-----------------------------------------------------------
(Please print or typewrite name and address including postal zip code, of
assignee)
-----------------------------------------------------------
the within Note and all rights thereunder, and hereby
irrevocably constitutes and appoints
-------------------------------
----------------------------------------------------------------
to transfer said Note on the books of the Issuer, with full power of
substitution in the premises.
The undersigned certifies that said Note is being resold, pledged or otherwise
transferred as follows: (check one)
|_| to the Issuer;
|_| to a Person whom the undersigned reasonably believes is a qualified
institutional buyer within the meaning of Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act") purchasing
for its own account or for the account of a qualified institutional
buyer to whom notice is given that the resale, pledge or other transfer
is being made in reliance on Rule 144A;
|_| in an offshore transaction in accordance with Rule 903 or 904 of
Regulation S under the Securities Act;
|_| to an institution that is an "accredited investor" as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act that is acquiring
this Note for investment purposes and not for distribution; (attach a
copy of an Investment Letter For Institutional Accredited Investors in
the form annexed signed by an authorized officer of the transferee)
|_| as otherwise permitted by the non-registration legend appearing on this
Note; or
|_| as otherwise agreed by the Issuer, confirmed in writing to the Trustee,
as follows: (describe)
---------------------------------------------
30
--------------------
Dated:
--------------------------------------- ----------------------
31
[IF NOTE IS NOT A RESTRICTED NOTE -
(CERTIFICATE OF TRANSFER)
FOR VALUE RECEIVED, THE UNDERSIGNED HEREBY SELL(S), ASSIGN(S)
AND TRANSFER(S) UNTO PLEASE INSERT SOCIAL SECURITY
-------------------------
NUMBER OR OTHER IDENTIFYINGNUMBER OF ASSIGNEE
----------------------------------------------------
----------------------------------------------------
(Please print or typewrite name and address including postal zip code,
of assignee)
------------------------------------------------------------------
the within Note and all rights thereunder, and hereby
irrevocably constitutes and appoints
---------------------------------------
----------------------------------------------------
to transfer said Note on the books of the Issuer, with full power of
substitution in the premises.
Dated:
------------------------------- ---------------------------
32
[IF NOTE IS A RESTRICTED NOTE -
(FORM OF INVESTMENT LETTER FOR
INSTITUTIONAL ACCREDITED INVESTORS)
[Transferor, Trustee and Issuer Names and Addresses]
Ladies and Gentlemen:
In connection with our proposed purchase of [6.125% Senior Notes due
2004][6.500% Senior Notes due 2009][7.000% Senior Notes due 2029] (the "Notes")
issued by CMS Panhandle Holding Company, a Michigan corporation ("Issuer"), as
guaranteed by Panhandle Eastern Pipe Line Company, a Delaware corporation (the
"Guarantor"), we confirm that:
1. We have received a copy of the Offering Memorandum (the
"Offering Memorandum") relating to the Notes and such other information
as we deem necessary in order to make our investment decision. We
acknowledge that we have read and agree to the matters stated under the
caption NOTICE TO INVESTORS in such Offering Memorandum, and the
restrictions on duplication or circulation of, or disclosure relating
to, such Offering Memorandum.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the
Indenture relating to Notes (the "Indenture") and that any subsequent
transfer of the Notes is subject to certain restrictions and conditions
set forth under NOTICE TO INVESTORS in the Offering Memorandum and the
undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Notes except in compliance with such
restrictions and conditions and the Securities Act of 1933, as amended
("Securities Act").
3. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes may not be
offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are
acting as hereinafter stated, that if we sell any Notes, we will do so
only (A) to the Issuer, (B) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined
therein), (C) to an institutional "accredited investor" (as defined
below) that, prior to such transfer, furnishes to the Trustee (as
defined in the Indenture) a signed letter containing certain
representations and agreements relating to the restrictions on transfer
of the Notes (substantially in the form of this letter) and an opinion
of counsel acceptable to the Issuer and the Guarantor that such
transfer is
33
in compliance with the Securities Act, (D) outside the United States in
accordance with Rule 903 or 904 of Regulation S under the Securities
Act, (E) pursuant to the exemption from registration provided by Rule
144 under the Securities Act (if available), or (F) pursuant to an
effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing any of the Notes from
us a notice advising such purchaser that resales of the Notes are
restricted as stated herein.
4. We understand that, on any proposed resale of any Notes, we
will be required to furnish to the Trustee and Issuer such
certifications, legal opinions and other information as the Trustee and
Issuer may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that
the Notes purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which we are
acting are each able to bear the economic risk of our or its
investment.
6. We are acquiring the Notes purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You, the Issuer and the Trustee are entitled to rely upon this letter
and are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
By:
--------------------------
Name:
Title:
(END OF FORM)
34
ARTICLE VII.
ORIGINAL ISSUE OF NOTES AND GUARANTEES
SECTION 7.1 Original Issue of Notes and Guarantees.
Upon execution of this First Supplemental Indenture, 2004
Notes in aggregate principal amount of $300,000,000, 2009 Notes in aggregate
principal amount of $200,000,000 and 2029 Notes in aggregate principal amount of
$300,000,000 may be executed by the Issuer and Note Guarantees endorsed thereon
executed by the Guarantor. Such Notes and Note Guarantees endorsed thereon may
be delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Notes to or upon the written order of the Issuer,
signed by its Chairman, President or any Vice President and its Secretary or an
Assistant Secretary, without any further action by the Issuer.
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.1 Ratification of Indenture.
The Base Indenture, as supplemented by this First Supplemental
Indenture, is in all respects ratified and confirmed, and this First
Supplemental Indenture shall be deemed part of the Indenture in the manner and
to the extent herein and therein provided. The provisions of this First
Supplemental Indenture shall supersede the provisions of the Indenture to the
extent the Indenture is inconsistent herewith.
SECTION 8.2 Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Issuer and the
Guarantor and not by the Trustee, and the Trustee assumes no responsibility for
the correctness thereof. The Trustee makes no representation as to the validity
or sufficiency of this First Supplemental Indenture.
SECTION 8.3 Governing Law.
This First Supplemental Indenture and each Note shall be
deemed to be a contract made under the internal laws of the State of New York,
and for all purposes shall be construed in accordance with the laws of said
State.
SECTION 8.4 Separability.
In case any one or more of the provisions contained in this
First Supplemental Indenture or in the Notes shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of
35
this First Supplemental Indenture or of the Notes, but this First Supplemental
Indenture and the Notes shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.
SECTION 8.5 Counterparts.
This First Supplemental Indenture may be executed in any
number of counterparts each of which shall be an original; but such counterparts
shall together constitute but one and the same instrument.
36
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the day and year first above
written.
CMS PANHANDLE HOLDING COMPANY
As Issuer
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
PANHANDLE EASTERN PIPE LINE COMPANY
As Guarantor
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
NBD BANK,
as Trustee
By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Name: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President