Exhibit 4.14


 






 


FIFTH SUPPLEMENTAL INDENTURE


 


between


 


PANHANDLE EASTERN PIPE LINE COMPANY, LP


 


Issuer


 


and


 


THE BANK OF NEW YORK TRUST COMPANY, N.A


 


Trustee


 


Dated as of October [•], 2007


 






 

















 


	
  Table of
  Contents

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  	
   

  
	
  DEFINITIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.1

  	
  Definition
  of Terms

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
   

  
	
  GENERAL
  TERMS AND CONDITIONS OF THE SENIOR NOTES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.1

  	
  Designation
  and Principal Amount of the Senior Notes

  	
  10

  	
   

  
	
  SECTION 2.2

  	
  Maturity of
  the Senior Notes

  	
  10

  	
   

  
	
  SECTION 2.3

  	
  Interest on
  the Senior Notes

  	
  10

  	
   

  
	
  SECTION 2.4

  	
  Form of the
  Senior Notes

  	
  10

  	
   

  
	
  SECTION 2.5

  	
  Redemption
  of the Senior Notes

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
   

  
	
  COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.1

  	
  Limitation
  on Restricted Payments

  	
  11

  	
   

  
	
  SECTION 3.2

  	
  Limitation
  on Liens

  	
  12

  	
   

  
	
  SECTION 3.3

  	
  Restriction
  on Sale-Leasebacks

  	
  14

  	
   

  
	
  SECTION 3.4

  	
  Financial
  Information

  	
  15

  	
   

  
	
  SECTION 3.5

  	
  Applicability
  of Covenants

  	
  16

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
   

  
	
  DEFAULT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.1

  	
  General

  	
  16

  	
   

  
	
  SECTION 4.2

  	
  Additional
  Event of Default

  	
  16

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
   

  
	
  DEFEASANCE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.1

  	
  General

  	
  16

  	
   

  
	
  SECTION 5.2

  	
  Covenant
  Defeasance

  	
  16

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
   

  
	
  FORM OF
  SENIOR NOTES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.1

  	
  Form of
  Senior Notes

  	
  17

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
   

  
	
  ISSUANCE OF
  SENIOR NOTES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.1

  	
  Original
  Issue of Senior Notes

  	
  25

  	
   

  
	
  SECTION 7.2

  	
  Additional
  Senior Notes

  	
  25

  	
   

  



 


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  ARTICLE VIII

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.1

  	
  Ratification
  of Indenture

  	
  25

  	
   

  
	
  SECTION 8.2

  	
  Trustee Not
  Responsible for Recitals

  	
  26

  	
   

  
	
  SECTION 8.3

  	
  Governing
  Law

  	
  26

  	
   

  
	
  SECTION 8.4

  	
  Separability

  	
  26

  	
   

  
	
  SECTION 8.5

  	
  Counterparts

  	
  26

  	
   

  



 


ii
















 


FIFTH SUPPLEMENTAL INDENTURE,
dated as of October [•], 2007 (the “Fifth Supplemental
Indenture”), between Panhandle Eastern Pipe Line Company, LP (formerly known as
Panhandle Eastern Pipe Line LLC and Panhandle Eastern Pipe Line Company), a
Delaware limited partnership (the “Issuer”), and The Bank of New York 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 of a 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 desires to
issue a new series of Debt Securities known as the [•]% Senior Notes due 2017,
in the principal amount of $[•]
(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 Fifth 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 Default or Event of Default shall
have occurred and be continuing;


 


WHEREAS, on October [•], 2007, the Issuer
registered the Senior Notes under the Securities Act pursuant to the
Post-Effective Amendment No. 1 to Form S-3 Registration Statement
(Registration No. 333-137998);


 


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 Fifth Supplemental
Indenture, and all requirements necessary to make this Fifth 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 Fifth Supplemental Indenture has been duly
authorized in all respects:


 


2

















 


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


 


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 Fifth
Supplemental Indenture;


 


(b)                                 a
term defined anywhere in this Fifth 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 Fifth 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 Fifth 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 a Default or 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 or


 


3

















 


limited partnership 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.


 


4

















 


“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 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 one of the Reference Treasury Dealers appointed by the Trustee after
consultation with the Issuer.


 


5

















 


“Initial Senior Notes” means
the initial $[•]
aggregate principal amount of Senior Notes issued under this Fifth 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 or any limited liability company, any
non-convertible Capital Stock of such corporation or limited liability company
and any Capital Stock of such corporation or limited liability company
convertible solely into non-convertible Capital Stock other than Preferred
Stock of such corporation or limited liability company; 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;


 


6

















 


(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 Issuer or any of its Subsidiaries 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 Issuer 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 Issuer 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 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 each of Banc of America Securities LLC and J.P. Morgan Securities Inc. or
their affiliates plus two others which are primary U.S. Government securities
dealers, and their respective successors; provided,
however, that if any of the
foregoing


 


7

















 


or their affiliates shall cease
to be a primary U.S. Government securities dealer in The City of New York (a “Primary
Treasury Dealer”), the Issuer shall substitute therefor another Primary
Treasury Dealer.


 


“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 Post-Effective Amendment No. 1 to Form S-3 Registration
Statement (Registration no. 333-137998) filed with the SEC by Issuer and
Southern Union on October [22], 2007.


 


“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 Fifth 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 Fifth Supplemental Indenture. The
Initial Senior Notes and the Additional Senior Notes shall be treated as a
single class for all purposes under this Fifth 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 Companies, 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.


 


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“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 limited liability company, general
partnership, joint venture or similar entity, at least a majority of whose
outstanding membership, 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 Issuer held in treasury, 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.


 


“Treasury Rate” means, with
respect to any redemption date, the rate per annum equal to the semiannual
equivalent yield to maturity or interpolated (on a day count basis) 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 for such redemption date.


 


“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 managers
(in the case of a limited liability company) (or persons performing similar
functions).


 


(g)                                 solely
for purposes of this Fifth Supplemental Indenture,


 


(1)                                  the
defined term “Business Day” contained in Section 1.01 of the Base
Indenture shall be replaced in its entirety by the following new definition:


 


“Business Day” means a day on
which banking institutions in the Borough of Manhattan, New York, New York are
not authorized or required by law or regulation to close; and


 


(2)                                  the
defined term “Board of Directors” contained in Section 1.01 of the Base
Indenture shall be deemed to include the Board of Managers of a limited
liability company.


 


9

















 


ARTICLE II

GENERAL TERMS AND CONDITIONS OF THE SENIOR
NOTES


 


SECTION 2.1                                                  Designation
and Principal Amount of the Senior Notes.


 


There is hereby authorized a
single series of Debt Securities designated as the “[•]% Senior Notes due 2017”,
the principal amount of which shall be as set forth in any written order of the
Issuer for the authentication and delivery of Senior Notes pursuant to Section 2.4
of the Base Indenture; provided, however, that Additional Senior Notes may be
issued by the Issuer at any time subject to the terms and conditions of the
Base Indenture and this Fifth Supplemental Indenture, provided, that at the time of such
issuance no Default or Event of Default shall have occurred and be continuing.


 


The initial principal amount of
the Senior Notes shall be $[•].


 


SECTION 2.2                                                  Maturity
of the Senior Notes.


 


The Senior Notes will mature on November 1,
2017.


 


SECTION 2.3                                                  Interest
on the Senior Notes.


 


Interest shall accrue from the date set
forth, and shall be payable on the Senior Notes in the amount and as otherwise
set forth, in the form of such Senior Note appearing in Article VI of
this Fifth Supplemental Indenture.


 


SECTION 2.4                                                  Form of
the Senior Notes.


 


The form of the Senior
Notes shall be substantially in the form provided for in Article VI. The
terms of the Senior Notes form part of this Fifth Supplemental
Indenture. The Senior Notes shall be represented by one or more Global Notes in
definitive, registered form, without interest coupons. The Senior Notes will be
represented by one or more Global Notes in definitive, registered form, without
interest coupons. The Senior Notes will be initially issued as Global Notes
registered in the name of Cede & Co. (as nominee for DTC, New York,
New York, which, together with its nominees and their successors, is hereby
designated the Depositary for the Senior Notes).


 


SECTION 2.5                                                  Redemption
of the Senior Notes.


 


The Senior Notes will be
redeemable as a whole or in part, at the option of the Issuer at any time, at a
redemption price equal to the greater of (i) 100% of the principal amount
of such Senior Notes and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon (exclusive of interest
accrued to the date of redemption) discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate plus 20 basis points, plus accrued and unpaid interest
thereon to the date of redemption.


 


10

















 


Notice of any redemption will
be mailed at least 30 days but not more than 60 days before the redemption
date by the Issuer or by the Trustee on the Issuer’s behalf to each Holder of
Senior Notes to be redeemed.


 


Unless the Issuer defaults in
payment of the redemption price, on and after the applicable redemption date
interest will cease to accrue on the Senior Notes or portions thereof called
for redemption.


 


ARTICLE III

COVENANTS


 


SECTION 3.1                                                  Limitation
on Restricted Payments.


 


(a)                             So
long as any of the Senior Notes are outstanding and during any time that such
Senior Notes are rated below Baa3 (or an equivalent rating) by Moody’s and
below BBB- (or an equivalent rating) by Standard & Poor’s, the Issuer
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 Partnership Interest of the Issuer to
the direct or indirect holders of its Partnership Interests (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 Issuer or a
Subsidiary of the Issuer);


 


(ii)                                  purchase, redeem or
otherwise acquire or retire for value any Capital Stock of the Issuer; or


 


(iii)                               make any Loan to
Southern Union or any of its Affiliates that is not a Subsidiary of the Issuer;


 


(iv)                              (any such dividend,
distribution, purchase, redemption, other acquisition, retirement or Loan
described in (i) through (iii) above being hereinafter referred to as
a “Restricted Payment”), unless at the time the Issuer or such Restricted
Subsidiary makes such Restricted Payment and after giving effect thereto:


 


(1)                                  no Default or Event
of Default shall have occurred and be continuing (or would result therefrom);


 


(2)                                  the Issuer’s Fixed
Charge Coverage Ratio is greater than or equal to 2.2; and


 


(3)                                  the Issuer’s Leverage
Ratio is less than or equal to 55%.


 


Notwithstanding the foregoing,
the Issuer or any of its Restricted Subsidiaries may declare, make or pay
any Restricted Payment, if at the time the Issuer or such Restricted Subsidiary
makes such Restricted Payment and after giving effect thereto:


 


11

















 


(1)                                  no Default or 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
original date of issuance of the Initial Senior Notes would not exceed the sum
of:


 


(A)                              $175 million;


 


(B)                                75% of Adjusted
Consolidated Net Income accumulated since the original date of issuance of the
Initial Senior 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 Issuer after the original date of issuance of the
Initial Senior Notes from capital contributions or the issuance of Capital
Stock of the Issuer to a Person who is not a Subsidiary of the Issuer, or from
the issuance to such a Person of options, warrants or other rights to acquire
such Capital Stock of the Issuer.


 


None of the foregoing provisions will
prohibit:


 


(i)                                     dividends or other
distributions paid in respect of any class of Capital Stock issued by the
Issuer in connection with the acquisition of any business or assets by the
Issuer 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 Issuer made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Non-Convertible Capital Stock
of the Issuer; 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.


 


(a)                                  The
Issuer 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 Issuer or any other Person (other than the Senior Notes),
without in any such case making effective provision whereby all of the Senior
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 Issuer 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


 


12

















 


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 Issuer 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 Issuer or any Restricted Subsidiary (whether or not the obligations secured
thereby are assumed by the Issuer 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 Issuer or any Restricted Subsidiary existing at the
time of the acquisition by the Issuer 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;


 


(vii)                           any Lien in favor of the
Issuer or any Restricted Subsidiary;


 


(viii)                        any Lien created or assumed by
the Issuer 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 Issuer 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 Issuer or by a
Subsidiary of the Issuer, provided
that such program is on terms customary for similar transactions, or any
document executed by any Subsidiary of the Issuer 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;


 


13

















 


(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).


 


Notwithstanding the foregoing,
the Issuer 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 Issuer or any other Person (other than the Senior Notes)
that is not otherwise excepted by clauses (i) through (xiii), inclusive,
above without securing the Senior Notes, 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 3.3(a) of this
Fifth 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)                                  The
Issuer shall not, nor shall it permit any Restricted Subsidiary to, engage in a
Sale-Leaseback Transaction, unless:


 


(i)                                     the 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 Issuer or such
Restricted Subsidiary would be entitled to incur Debt secured by a Lien on the
Principal Property subject thereto (pursuant to clauses (i) through
(xiii), inclusive, of the first paragraph of Section 3.2(a) of this
Fifth


 


14

















 


Supplemental Indenture) in a principal amount equal to or exceeding the
net sale proceeds from the Sale-Leaseback Transaction without securing the
Senior Notes; or


 


(iv)                              the Issuer 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 Issuer or any Subsidiary of the
Issuer, or (B) investment in another Principal Property or in a Subsidiary
of the Issuer which owns another Principal Property.


 


Notwithstanding the foregoing,
the Issuer 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 Senior
Notes) secured by Liens upon any Principal Properties not excepted by clauses (i) through
(xiii), inclusive, of Section 3.2(a) of this Fifth Supplemental
Indenture, do not exceed the greater of 15% of Consolidated Net Tangible Assets
or 15% of Total Capital.


 


SECTION 3.4                                                  Financial
Information.


 


Whether or not required by the
SEC’s rules and regulations, so long as any Senior Notes are outstanding,
the Issuer shall furnish to the Holders of the Senior Notes, within the time
periods specified in the SEC’s rules and regulations:


 


(1)                                  all
quarterly and annual reports that would be required to be filed with the SEC on
Forms 10-Q and 10-K if the Issuer was required to file such reports; and


 


(2)                                  all
current reports that would be required to be filed with the SEC on Form 8-K
if the Issuer was required to file such reports.


 


The Issuer will be required to
prepare all such reports in all material respects in accordance with all applicable
rules and regulations. The Issuer will include in each annual report on Form 10-K
a report on its consolidated financial statements by its certified independent
public accountant. In addition, whether or not required by the SEC, the Issuer
shall file a copy of each of the reports referred to in clauses (1) and (2) above
with the SEC for public availability within the time periods specified in the
SEC’s applicable rules and regulations (unless the SEC will not accept
such a filing) and make that information available to securities analysts and
prospective investors upon request.


 


The Issuer is currently
required under the Exchange Act to file reports with the SEC. If the Issuer is
no longer subject to the periodic reporting requirements of the Exchange Act
for any reason, the Issuer will nevertheless continue filing the reports
specified in the preceding paragraphs with the SEC within the time periods
specified above unless the SEC will not accept such a filing. The Issuer agrees
not to take any action for the purpose of causing the SEC not to accept any
such filings. If, notwithstanding the foregoing, the SEC will not accept the
Issuer’s filings for any reason, the Issuer will post the reports referred to
in this Section 3.4 on the website www.panhandleenergy.com within the time
periods that would apply if the Issuer was required to file those reports with
the SEC.


 


15
















 


For so long as any Senior Notes remain outstanding, at any time the
Issuer is not required to file the reports required by this Section 3.4
with the SEC, the Issuer shall furnish at the Issuer’s cost to the Holders and
to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act.


 


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 Senior 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 Senior Notes.


 


SECTION 4.2                                                  Additional
Event of Default.


 


The following event shall be an
“Event of Default” with respect to the Senior Notes: as a result of any action
taken by the Issuer or its direct or indirect equity holders, there is a change
in the Issuer’s federal income tax status or a change in the deemed issuer of
the indebtedness evidenced by the Senior Notes for federal income tax purposes,
unless (i) Holders of more than 50% in principal amount of the Senior
Notes consent to such change or (ii) (a) the Issuer certifies to the
Trustee that it has received a ruling from the Internal Revenue Service or (b) the
Issuer delivers to the Trustee an opinion of nationally recognized independent
counsel reasonably acceptable in form and substance to the Trustee, in
either case to the effect that the Holders of the Senior Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
the change and that such Holders will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if the change had not occurred.


 


ARTICLE V

DEFEASANCE


 


SECTION 5.1                                                  General.


 


All of the provisions of Article XI
of the Base Indenture shall be applicable to the Senior Notes.


 


SECTION 5.2                                                  Covenant
Defeasance.


 


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 Senior
Notes, also apply to Section 3.1, Section 3.2, and Section 3.3
of this Fifth Supplemental Indenture.


 


16

















 


ARTICLE VI

FORM OF SENIOR NOTES


 


SECTION 6.1                                                  Form of
Senior Notes.


 


The Senior Notes, and the
Trustee’s Certificate of Authentication to be endorsed thereon, are to be
substantially in the following forms:


 


[FORM OF
FACE OF SENIOR NOTES DUE 2017]


 


This Senior Note is a Global
Note within the meaning of the Indenture hereinafter referred to and is
registered in the name of the Depositary or a nominee of the Depositary. This
Senior Note is exchangeable for Senior 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 may not be transferred except as a whole
by the Depositary to a nominee of the Depositary, by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such a
successor Depositary.


 


Unless this certificate is
presented by an authorized representative of The Depository Trust Company, a
New York corporation (“DTC”), to the Issuer or its agent for registration
of transfer, exchange or payment, and any certificate issued is registered in
the name of Cede & Co. or such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede &
Co. or to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede &
Co., has an interest herein.


 


Unless and until it is
exchanged in whole or in part for Senior Notes in definitive registered form in
accordance with the provisions of the Indenture applicable to such exchange,
this certificate may not be transferred except as a whole by DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by
DTC or any such nominee to a successor Depository or a nominee of such
successor Depository.


 


17

















 


	
  CUSIP No. [•]

  	
   

  	
  $[        
  ]

  



 


Panhandle Eastern Pipe Line Company, LP


 


[•]% SENIOR NOTE DUE 2017


 


PANHANDLE EASTERN PIPE LINE COMPANY, LP, a
Delaware limited partnership (the “Issuer”), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal
sum of [AMOUNT IN WORDS] dollars ($[       
]) on November 1, 2017 (“Maturity”) and to pay interest thereon
from October [•], 2007 (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 May 1st
and November 1st in each year, commencing May 1, 2008 and at Maturity
at the rate of [•]%
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 Senior 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 Senior 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
Senior 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 (as defined
below) for the payment of such defaulted interest, notice whereof shall be
given to the registered holders of this series of Senior 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 Senior 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
Senior 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.


 


18

















 


This Senior 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 Senior 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.


 


19

















 


IN WITNESS WHEREOF, the Issuer has caused
this instrument to be executed.


 


Dated [      
]


 


	
   

  	
  PANHANDLE
  EASTERN PIPE LINE

  COMPANY, LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
  By 

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
					



 


20

















 


[FORM OF
CERTIFICATE OF AUTHENTICATION]


 


CERTIFICATE OF
AUTHENTICATION


 


This is one of the Senior Notes of the series of
Senior Notes described in the within-mentioned Indenture.


 


THE BANK OF NEW YORK TRUST
COMPANY, N.A., as Trustee


 


 


	
  By 

  	
   

  	
   

  
	
  [Authorized
  Signatory]

  



 


[FORM OF
REVERSE OF SENIOR NOTE]


 


This Senior Note is one of a duly authorized series of
Securities of the Issuer (herein sometimes referred to as the “Senior Notes”),
specified in the Indenture, 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, CMS Panhandle Holding Company, a Michigan corporation
(which has merged into the Issuer), and NBD Bank, as trustee (predecessor to
The Bank of New York Trust Company, N.A.), further supplemented by the Fifth
Supplemental Indenture dated as of March 12, 2004 between the Issuer and
The Bank of New York Trust Company, N.A., as trustee (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 Senior Notes. By the terms of the Indenture, the Senior 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
Senior Notes is not limited in aggregate principal amount, as specified in said
Fifth Supplemental Indenture.


 


The Senior Notes are 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 days nor more than 60 days notice to each holder of such Senior
Notes, at a redemption price equal to the greater of (i) 100% of the
principal amount of such Senior Notes to be redeemed and (ii) the sum of
the present values of the remaining scheduled payments of principal and
interest thereon (exclusive of interest accrued to the date of redemption)
discounted to the redemption date on a semiannual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury Rate plus 20 basis
points, plus 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
applicable redemption date, interest will cease to accrue on the Senior Notes
or portions thereof called for redemption.


 


“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


 


21

















 


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.


 


“Independent Investment Banker” means one of
the Reference Treasury Dealers appointed by the Trustee after consultation with
the Issuer.


 


“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.


 


 “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.


 


“Treasury Rate” means, with respect to any
redemption date, the rate per annum equal to the semiannual equivalent yield to
maturity or interpolated (on a day count basis) 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 for
such redemption date.


 


The Issuer may purchase the Senior Notes
in the open market, by tender or otherwise. Senior Notes so purchased may be
held, resold or surrendered to the Trustee for cancellation. If applicable, the
Issuer will comply with the requirements of Rule 14e-1 under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other
securities laws and regulations in connection with any such purchase.


 


No sinking fund is provided for the Senior
Notes.


 


If an Event of Default with respect to this
Senior Note shall occur and be continuing, the principal of this Senior 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 Senior Note
or (ii) certain restrictive covenants and certain other obligations with
respect to this Senior Note, in each case upon compliance with certain
conditions set forth therein.


 


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The Indenture permits, with certain
exceptions as therein provided, modifications and amendments of the Indenture
by the Issuer and the Trustee with the consent of the holders of a majority in
aggregate principal amount of the outstanding Senior Notes.


 


The Indenture provides that the holders of a
majority in aggregate principal amount of the outstanding Senior Notes may, on
behalf of the holders of all Senior Notes,


 


modify or eliminate
restrictive covenants, which right includes the right to waive insofar as the
Senior Notes are concerned, compliance by the Issuer with certain restrictive
provisions of the Indenture.


 


The Indenture provides that the holders of a
majority in aggregate principal amount of the outstanding Senior Notes may, on
behalf of all holders of Senior Notes, waive any past default under the
Indenture with respect to any Senior Notes, except a default (i) in the
payment of principal of, or premium, if any, or any interest on any Senior
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 Senior 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 Senior 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 Senior 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 Senior 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 Senior 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 Senior
Note is registrable in the Security Register, upon surrender of this Senior
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 Senior 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 Senior 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 Senior 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, Senior Notes are exchangeable for a like
aggregate


 


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principal amount of Senior
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.


 


The Issuer shall not be required to (a) issue,
exchange or register the transfer of this Senior Note for a period of 15 days
next preceding the mailing of the notice of redemption of Senior Notes or (b) exchange
or register the transfer of any Senior Note or any portion thereof selected,
called or being called for redemption, except in the case of any Senior Note to
be redeemed in part, the portion thereof not so to be redeemed.


 


Prior to due presentment of this Senior 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 Senior Note
is registered as the owner hereof for all purposes, whether or not this Senior
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 Senior 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 Senior Note which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.


 


CERTIFICATE OF TRANSFER


 


FOR VALUE RECEIVED, THE UNDERSIGNED HEREBY
SELL(S), ASSIGN(S) AND TRANSFER(S) UNTO


 


 


 


 


(Please print
or typewrite name and address including postal zip code, of assignee)


 


 


(PLEASE INSERT
SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE)


 


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the within Senior Note and all rights
thereunder, and hereby irrevocably constitutes and appoints


 


 


 


to transfer said Senior Note on the books of
the Issuer, with full power of substitution in the premises.


 


	
  Dated:

  	
   

  	
   

  	
   

  	
  ]

  
	
   

  	
  [Name of Assignor]

  



 


ARTICLE VII

ISSUANCE OF SENIOR NOTES


 


SECTION 7.1                                                  Original
Issue of Senior Notes.


 


Upon execution of this Fifth
Supplemental Indenture, the Senior Notes in the initial principal amount of $[•] may be executed by
the Issuer. Such Senior Notes may be delivered to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver said
Senior 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.


 


SECTION 7.2                                                  Additional
Senior Notes.


 


Upon execution of this Fifth
Supplemental Indenture, subject to Section 2.1 hereof, Additional Senior
Notes may be executed by the Issuer. Such Additional Senior Notes may be
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Additional Senior 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 Fifth Supplemental Indenture, is in all respects ratified
and confirmed, and this Fifth Supplemental Indenture shall be deemed part of
the Indenture in the manner and to the extent herein and therein provided. The
provisions of this Fifth Supplemental Indenture shall supersede the provisions
of the Indenture to the extent the Indenture is inconsistent herewith.


 


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SECTION 8.2                                                  Trustee
Not Responsible for Recitals.


 


The recitals herein contained
are made by the Issuer 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 Fifth Supplemental Indenture.


 


SECTION 8.3                                                  Governing
Law.


 


This Fifth Supplemental
Indenture and each Senior 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 Fifth Supplemental Indenture or in the Senior
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 this Fifth Supplemental Indenture or of the Senior
Notes, but this Fifth Supplemental Indenture and the Senior 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 Fifth 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.


 


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IN WITNESS WHEREOF, the parties
hereto have caused this Fifth Supplemental Indenture to be duly executed as of
the day and year first above written.


 


 


	
   

  	
  PANHANDLE
  EASTERN PIPE LINE COMPANY, LP,

  
	
   

  	
  as Issuer

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BANK OF
  NEW YORK TRUST COMPANY,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
									



 


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