Document:

EXHIBIT 4.1

 

SOUTHERN UNION
COMPANY

 

2,000,000 Equity
Units (Initially consisting of 

2,000,000 Corporate Units)

 

Underwriting
Agreement

 

February 7, 2005

 

Merrill Lynch, Pierce, Fenner & Smith

Incorporated

J.P.
Morgan Securities Inc.

As
Representatives of the

several
Underwriters listed

in Schedule 1 hereto

 

c/o Merrill Lynch,
Pierce, Fenner & Smith

Incorporated

4 World Financial Center

New York, New York 10080

 

c/o J.P. Morgan
Securities Inc.

277 Park Avenue

New York, New York 10172

 

Ladies and Gentlemen:

 

Southern
Union Company, a Delaware corporation (the “Company”), proposes to issue and
sell to the several Underwriters named in Schedule 1 hereto (the “Underwriters”),
for whom you are acting as representatives (the “Representatives”), an
aggregate of 2,000,000 Equity Units of the Company (the “Securities”), the
terms of which are identified in Schedule 2 hereto.

 

Each
of the Securities initially will consist of a unit (referred to as a “Corporate
Unit”) with a stated amount of $50.00 (the “Stated Amount”) comprised of (a) a
stock purchase contract (a “Purchase Contract” and, collectively with each
other Purchase Contract, the “Purchase Contracts”) under which (i) the holder
of the Corporate Units (a “Holder,” and, collectively with other Holders of
Corporate Units, the “Holders”) will purchase from the Company on February 16,
2008 for an amount in cash equal to the Stated Amount per Security, a number of
shares (each, a “Common Share” and, collectively with all other Common Shares
that may be issued and sold by the Company upon settlement of the Purchase
Contracts, the “Common Securities”) of common stock, $1.00 par value per share,
of the Company (the “Common Stock”), as set forth in the Purchase Contract and
Pledge Agreement (as defined below) and (ii) the Company will pay quarterly
contract adjustment payments at the rate of 0.625% of the Stated Amount per
year, and (b) a 1/20, or 5.00%, undivided beneficial ownership interest in
$1,000 principal amount of the 

 

 

Company’s Senior Note
initially due February 16, 2010 (a “Note”, and collectively with each other
Note, the “Notes”).

 

In
accordance with the terms of a Purchase Contract and Pledge Agreement (the “Purchase
Contract and Pledge Agreement”) to be dated as of the Closing Date (as defined
below) between the Company and JPMorgan Chase Bank, N.A., as Purchase Contract
Agent (the “Purchase Contract Agent”), pursuant to which the Purchase Contracts
will be issued, the holders of the Corporate Units will pledge the Notes to
JPMorgan Chase Bank, N.A., as the Collateral Agent (the “Collateral Agent”), to
secure the Holders’ obligations to purchase Common Securities under the
Purchase Contracts.  The Purchase
Contracts and the Purchase Contract and Pledge Agreement are herein
collectively referred to as the “Equity Unit Agreements”.  The Notes will be issued pursuant to the
Indenture (the “Base Indenture”), dated as of January 31, 1994, between us and
JPMorgan Chase Bank, N.A. (the “Trustee”), as amended and supplemented by
Supplemental Indenture No. 1, dated as of June 11, 2003 and as further amended
and supplemented by Supplemental Indenture No. 2 (the “Second Supplemental
Indenture”), to be dated the Closing Date between the Company and the Trustee.
The Base Indenture, as so amended or supplemented, is herein referred to as the
“Indenture”.

 

Concurrently
with this offering, the Company is offering, by means of a separate prospectus
supplement, 14,913,042 shares of its Common Stock.  Neither offering is contingent upon each
other.

 

Notwithstanding any other provision of this
Agreement, immediately upon commencement of discussions with respect to the
transactions contemplated hereby, the Company (and each employee,
representative or other agent of the Company) may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure of
the transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to the Company
relating to such tax treatment and tax structure.  For purposes of the
foregoing, the term “tax treatment” is the purported or claimed federal income
tax treatment of the transactions contemplated hereby, and the term “tax
structure” includes any fact that may be relevant to understanding the purported
or claimed federal income tax treatment of the transactions contemplated
hereby.

 

For purposes of this Agreement, unless explicitly
stated otherwise, references to the Company’s subsidiaries shall only include
its consolidated subsidiaries; references to the subsidiaries of CCE Holdings,
LLC, the joint venture between a subsidiary of the Company and GE Commercial
Finance Energy Financial Services (“CCE Holdings”), shall only include CCE
Holdings’ consolidated subsidiaries.

 

The
Company hereby confirms its agreement with the several Underwriters concerning
the purchase and sale of the Securities, as follows:

 

1.             Registration Statement.  The Company has prepared and filed with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Securities Act”), a registration statement on Form S-3 (File No. 333-113757), which includes a 

 

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form of prospectus (the “Base Prospectus”) to be used in connection with the public offering and sale of certain securities, including the Securities, to be issued from time to time by the Company.  Such registration statement, as amended, including the financial statements, exhibits and schedules thereto, in the form in which it was declared effective by the Commission under the Securities Act, including all documents incorporated or deemed to be incorporated by reference therein or that are filed subsequent to the date of the Prospectus by the Company with the Commission pursuant to the Securities Act of 1934, as amended, and the rules and regulations promulgated thereunder (collectively, the “Exchange Act”), is called the “Registration Statement”.  Any registration statement filed by the Company pursuant to Rule 462(b) under the Securities Act is called the “Rule 462(b) Registration Statement”, and from and after the date and time of filing of the Rule 462(b) Registration Statement, the term “Registration Statement” shall include the Rule 462(b) Registration Statement.  In addition, the Company has filed with the Commission a prospectus supplement specifically relating to the Securities (the “Prospectus Supplement”) pursuant to Rule 424 of the Securities Act within the applicable time period set forth therein.  The term “Prospectus” means the Base Prospectus together with the Prospectus Supplement specifically relating to the Securities, in the form first used by the Underwriters to confirm sales of the Securities.  The term “Preliminary Prospectus” means a preliminary prospectus supplement specifically relating to the Securities, together with the Base Prospectus.  Capitalized terms used but not defined herein shall have the meanings given to such terms in the Registration Statement and the Prospectus.

 

2.             Purchase
of the Securities by the Underwriters. 
(a)      The Company agrees to issue and sell the
Securities to the several Underwriters as provided in this Agreement, and each
Underwriter, on the basis of the representations, warranties and agreements set
forth herein and subject to the conditions set forth herein, agrees, severally
and not jointly, to purchase from the Company the respective number of
Securities set forth opposite such Underwriter’s name in Schedule 1 hereto at a
price per share (the “Purchase Price”) set forth in Schedule 2 hereto.

 

(b)           The
Company understands that the Underwriters intend to make a public offering of
the Securities as soon after the effectiveness of this Agreement as in the
judgment of the Representatives is advisable, and initially to offer the
Securities on the terms set forth in the Prospectus.  The Company acknowledges and agrees that the
Underwriters may offer and sell Securities to or through any affiliate of an
Underwriter and that any such affiliate may offer and sell Securities purchased
by it to or through any Underwriter.

 

(c)           Payment
for the Securities shall be made by wire transfer in immediately available
funds to the account specified by the Company to the Representatives in the
case of the Securities, at the offices of Davis Polk & Wardwell at 10:00
A.M. New York City time on February 11, 2005, or at such other time or place on
the same or such other date, not later than the fifth business day thereafter,
as the Representatives and the Company may agree upon in writing.  The time and date of such payment for the
Securities is referred to herein as the “Closing Date”.

 

Payment for the
Securities to be purchased on the Closing Date shall be made against delivery
to the Representatives for the respective accounts of the several Underwriters
of the Securities to be purchased on such date in definitive form registered in
such names and in such denominations as 

 

3

 

the Representatives shall
request in writing not later than two full business days prior to the Closing
Date and against credit to the securities account of the Collateral Agent of
security entitlements in respect of the Notes constituting a part of such
Securities as set forth in the Purchase Contract and Pledge Agreement, with any
transfer taxes payable in connection with the sale of the Securities duly paid
by the Company.  The Securities will be
made available for inspection and packaging by the Representatives at the
office of Merrill Lynch, Pierce, Fenner & Smith Incorporated set forth
above not later than 1:00 P.M., New York City time, on the business day prior
to the Closing Date.

 

3.             Representations
and Warranties of the Company.  The
Company represents and warrants to each Underwriter that:

 

(a)           Preliminary Prospectus. 
No order preventing or suspending the use of any Preliminary Prospectus
has been issued by the Commission, and each Preliminary Prospectus, at the time
of filing thereof, complied in all material respects with the Securities Act
and did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that the Company makes no representation
and warranty with respect to any statements or omissions made in reliance upon
and in conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly
for use in any Preliminary Prospectus.

 

(b)           Registration Statement and Prospectus.  The Registration Statement has been declared
effective by the Commission.  No order
suspending the effectiveness of the Registration Statement has been issued by
the Commission and no proceeding for that purpose has been initiated or
threatened by the Commission; as of the applicable effective date of the
Registration Statement and any amendment thereto, the Registration Statement
complied and will comply in all material respects with the Securities Act
(other than the omission of certain historical and pro forma financial
information relating to Panhandle Eastern Pipe Line Company, L.P. (“Panhandle”)
at the time the Registration Statement was declared effective), and did not and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and as of the date hereof and as of the
applicable filing date of the Prospectus and any amendment or supplement
thereto and as of the Closing Date the Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided
that the Company makes no representation and warranty with respect to any
statements or omissions made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through the Representatives expressly for use in the
Registration Statement and the Prospectus and any amendment or supplement
thereto.

 

(c)           Incorporated Documents. 
The documents incorporated by reference in the Prospectus, when they
become effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities Act or
the Exchange Act, 

 

4

 

as applicable, and none
of such documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and any further documents so filed and incorporated by
reference in the Prospectus, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all material respects
to the requirements of the Securities Act or the Exchange Act, as applicable,
and will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

 

(d)           Financial Statements. 
The financial statements and the related notes thereto of the Company
and its consolidated subsidiaries, the financial statements and the related
notes thereto of Transwestern Pipeline Company, LLC (“Transwestern”) and the
financial statements and the related notes thereto of Citrus Corp. (“Citrus”)
and its consolidated subsidiaries included or incorporated by reference in the
Registration Statement and the Prospectus comply in all material respects with
the applicable requirements of the Securities Act and the Exchange Act, as
modified by the letter from the Commission dated December 21, 2004, and present
fairly the financial position of the Company and its consolidated subsidiaries,
Transwestern and Citrus and its consolidated subsidiaries, respectively, as of
the dates indicated and the results of their operations and the changes in
their cash flows for the periods specified; such financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods covered thereby, and the supporting
schedules included or incorporated by reference in the Registration Statement
present fairly the information required to be stated therein; the other
financial information included or incorporated by reference in the Registration
Statement and the Prospectus has been derived from the accounting records of
the Company and its subsidiaries, Transwestern and Citrus and its subsidiaries
and presents fairly the information shown thereby; and the pro  forma
financial information and the related notes thereto included or incorporated by
reference in the Registration Statement and the Prospectus has been prepared in
accordance with the applicable requirements of the Securities Act and the
Exchange Act, as applicable and as modified by the letter from the Commission
dated December 21, 2004, and the assumptions underlying such pro  forma
financial information are reasonable and are set forth in the Registration
Statement and the Prospectus.

 

(e)           No Material Adverse Change. 
Since the date of the most recent financial statements of the Company
included or incorporated by reference in the Registration Statement and the
Prospectus, except as disclosed in or incorporated by reference in the
Registration Statement or Prospectus: (i) there has not been any change in the
capital stock or long-term debt of the Company or any of its subsidiaries, or
any dividend or distribution of any kind declared, set aside for payment, paid
or made by the Company on any class of capital stock, or any material adverse
change in or affecting the business, properties, management, financial
position, stockholders’ equity, results of operations or prospects of the
Company and its subsidiaries taken as a whole, (ii) neither the Company nor any
of its subsidiaries has entered into any transaction or agreement that is material
to the Company and its subsidiaries taken as a whole or incurred any liability
or obligation, direct or contingent, that is material to the Company and its
subsidiaries taken as a whole and (iii) neither the Company nor any of its subsidiaries has sustained any material
loss or interference with its business from fire, explosion, flood or other
calamity, 

 

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whether or not covered by
insurance, or from any labor disturbance or dispute or any action, order or
decree of any court or arbitrator or governmental or regulatory authority,
except in each case as otherwise disclosed in the Registration Statement and
the Prospectus.  To the best of the
Company’s knowledge, since the date of the most recent financial statements of
the Company included or incorporated by reference in the Registration Statement
and the Prospectus (except as disclosed in or incorporated by reference in the
Registration Statement and the Prospectus), (i) there has
not been any change in the capital stock or long term debt of CCE Holdings or
any of its subsidiaries, or any dividend or distribution of any kind declared,
set aside for payment, paid or made by CCE Holdings on any class of capital
stock (except in the ordinary course of business, as permitted under the
Purchase Agreement, dated as of June 24, 2004, as amended by Amendment No. 1 to
the Purchase Agreement, dated as of September 1, 2004, and Amendment No. 2 to
the Purchase Agreement, dated as of November 11, 2004, by and among CCE
Holdings, Enron Operations Services, LLC, Enron Transportation Services, LLC,
EOC Preferred, L.L.C. and Enron Corp. (the “Purchase Agreement”), or any
material adverse change in or affecting the business, properties, management,
financial position, stockholders’ equity, results of operations or prospects of
CCE Holdings and its subsidiaries taken as a whole, (ii) neither CCE Holdings nor any of its
subsidiaries has entered into any transaction or agreement that is material to
CCE Holdings and its subsidiaries taken as a whole or incurred any liability or
obligation, direct or contingent, that is material to CCE Holdings and its
subsidiaries taken as a whole (other than in the ordinary course of business or
as permitted under the Purchase Agreement) and (iii) neither CCE
Holdings nor any of its subsidiaries has sustained any material loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor disturbance or
dispute or any action, order or decree of any court or arbitrator or
governmental or regulatory authority, except in each case as otherwise
disclosed in the Registration Statement and the Prospectus.

 

(f)            Organization and Good Standing.  The Company, each of its subsidiaries and CCE
Holdings have been duly organized and are validly existing and in good standing
under the laws of their respective jurisdictions of organization, are duly
qualified to do business and are in good standing in each jurisdiction in which
their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to conduct
the businesses in which they are engaged, except where the failure to be so
qualified or have such power or authority would not, individually or in the
aggregate, have a material adverse effect on the business, properties,
management, financial position, stockholders’ equity, results of operations or
prospects of the Company and its subsidiaries taken as a whole (a “Material
Adverse Effect”).  The Company does not
own or control, directly or indirectly, any corporation, association or other
entity other than the subsidiaries listed in Exhibit 21 to the Registration
Statement, except to the extent all subsidiaries omitted, considered in the
aggregate as a single subsidiary, would not constitute a significant subsidiary
(as defined in Rule 1-02 of Regulation S-X).

 

(g)           Capitalization.  The
Company has an authorized capitalization as set forth in the Prospectus under
the heading “Capitalization”; all the outstanding shares of capital stock of
the Company have been duly and validly authorized and issued and are fully paid
and non-assessable and are not subject to any pre-emptive or similar rights;
except as described in or expressly contemplated by the Prospectus, there are
no outstanding rights (including, without limitation, pre-

 

6

 

emptive rights), warrants
or options to acquire, or instruments convertible into or exchangeable for, any
shares of capital stock or other equity interest in the Company or any of its
subsidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock of the
Company or any such subsidiary, any such convertible or exchangeable securities
or any such rights, warrants or options; the capital stock of the Company
conforms in all material respects to the description thereof contained in the
Registration Statement and the Prospectus; and all the outstanding shares of
capital stock or other equity interests of each subsidiary of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and are owned directly or indirectly by the Company, free and clear of any
lien, charge, encumbrance, security interest, restriction on voting or transfer
or any other claim of any third party.

 

(h)           Due Authorization. 
The Company has full right, power and authority to execute and deliver
this Agreement, and to perform its obligations hereunder; and all action
required to be taken for the due and proper authorization, execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby has been duly and validly taken.

 

(i)            Underwriting Agreement. 
This Agreement has been duly authorized, executed and delivered by the
Company.

 

(j)            Authorization of the Equity Unit Agreements.  Each of the Equity Unit Agreements will on the
Closing Date be duly authorized, executed and delivered by, and (assuming due
authorization, execution and delivery thereof by the parties thereto other than
the Company) will be a valid and binding agreement of, the Company, enforceable
in accordance with its terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles; provided, however, that upon the occurrence of a
Termination Event (as defined in the Purchase Contract), the Bankruptcy Code
(11 U.S.C. §§ 101-1330, as amended) should not substantively limit the
provisions of the Purchase Contract and Pledge Agreement that require termination
of the Purchase Contracts and release of the Collateral Agent’s security
interest in (1) the Senior Notes, (2) the Treasury Securities (as defined in
the Purchase Contract) or (3) the applicable ownership interest of the Treasury
Portfolio (as defined in the Purchase Contract), as applicable, and the
transfer of such securities to the Purchase Contract Agent, for the benefit of
the Holders of the Equity Units (as defined in the Prospectus); provided
further, that the Company makes no representation as to whether a court
exercising bankruptcy jurisdiction might issue a temporary restraining order or
provide other interim relief that would delay the exercise of such termination
right for a period of time pending final adjudication of any challenge to the
exercise of such right during a bankruptcy case involving the Company.  Each of the Equity Unit Agreements conforms
in all material respects to the description thereof contained in the
Prospectus.

 

(k)           Authorization of the Indenture.  The Indenture has been duly authorized by the
Company and qualified under the Trust Indenture Act and, when the Second
Supplemental Indenture is executed and delivered by the Company and the Trustee
(and assuming due authorization, execution and delivery of the Indenture by the
Trustee), the Indenture will constitute a legally valid and binding agreement
of the Company enforceable against the Company in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency, 

 

7

 

reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.  The Indenture conforms in all material
respects to the description thereof contained in the Prospectus.

 

(l)            Authorization of the Senior Notes.  The Senior Notes have been duly authorized by
the Company, and, when executed, authenticated and issued in accordance with
the terms of the Indenture and delivered to and paid for by the Underwriters
pursuant to this Agreement (assuming due authentication of the Senior Notes by
the Trustee), will constitute legally valid and binding obligations of the
Company, entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors or by
general equitable principles.  The Senior
Notes will conform in all material respects to the description thereof
contained in the Prospectus.

 

(m)          Authorization of the Securities.  The Securities have been duly and validly
authorized, and when executed and authenticated and delivered against payment
therefor in accordance with this Agreement will constitute valid and binding
obligations of the Company entitled to the benefits provided by the Purchase
Agreement, enforceable against the Company in accordance with their terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles; provided,
however, that upon the occurrence of a Termination Event, the Bankruptcy
Code should not substantively limit the provisions of the Purchase Contract and
Pledge Agreement that require termination of the Purchase Contracts and release
of the Collateral Agent’s security interest in (1) the Senior Notes, (2) the
Treasury Securities (as defined in the Purchase Contract) or (3) the applicable
ownership interest of the Treasury Portfolio (as defined in the Purchase
Contract), as applicable, and the transfer of such securities to the Purchase
Contract Agent, for the benefit of the Holders of the Equity Units (as defined
in the Prospectus); provided  further, however, the Company makes
no representation as to whether a court exercising bankruptcy jurisdiction
might issue a temporary restraining order or provide other interim relief that
would delay the exercise of such termination right for a period of time pending
final adjudication of any challenge to the exercise of such right during a
bankruptcy case involving the Company.  The
issuance of the Securities will not be subject to any preemptive or similar
rights and will conform in all material respects to the description thereof in
the Prospectus.  All corporate action
required to be taken for the authorization, issuance and delivery of the
Corporate Units has been validly taken.

 

(n)           Listing; Registration of Common Shares.  The Securities and the Common Shares to be
issued and sold by the Company pursuant to the Purchase Contract and Pledge
Agreement have been approved for listing on the New York Stock Exchange, subject
to official notice of issuance, and the Securities and the Common Shares have
been registered under the Exchange Act;

 

(o)           Aggregate Number of Securities Issued.  Immediately after any sale of Securities by
the Company hereunder, the aggregate amount of Securities which have been
issued and sold by the Company hereunder and Common Shares to be delivered upon
expiration of the Purchase Contracts and of any securities of the Company
(other than the Securities or the Common Shares) that shall 

 

8

 

have been issued and sold
pursuant to the Registration Statement will not exceed the amount of securities
registered under the Registration Statement;

 

(p)           The Shares.  The
Common Shares to be issued and sold by the Company pursuant to the Purchase
Contract Agreement have been duly authorized and reserved for issuance and,
when issued and delivered in accordance with the provisions of the Purchase
Contract Agreement will be duly and validly issued and fully paid and nonassessable
and conform to the description thereof in the Prospectus; the issuance of the
Common Shares is not and will not be subject to any preemptive or similar
rights.

 

(q)           No Violation or Default. 
Neither the Company nor any of its subsidiaries is (i) in violation
of its charter or by-laws or similar organizational documents; (ii) in
default, and no event has occurred that, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any term,
covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject; or (iii) in violation of any law or statute or any
judgment, order, rule or regulation of any
court or arbitrator or governmental or regulatory authority, except, in the
case of clauses (ii) and (iii) above, for any such default or violation
that would not, individually or in the aggregate, have a Material Adverse
Effect.

 

(r)            No Conflicts.  The
execution, delivery and performance by the Company of the Indenture, this
Agreement, and the Equity Unit Agreements and the consummation of the
transactions herein and therein contemplated will not (i) conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any
of its subsidiaries or CCE Holdings or any of its subsidiaries pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement or instrument
to which the Company or any of its subsidiaries or CCE Holdings or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
CCE Holdings or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries or CCE Holdings or
any of its subsidiaries is subject, (ii) result in any violation of the
provisions of the charter or by-laws or similar organizational documents of the
Company or any of its subsidiaries or CCE Holdings or any of its subsidiaries
or (iii) result in the violation of any law or statute or any judgment, order,
rule  or regulation of any court or
arbitrator or governmental or regulatory authority.

 

(s)           No Consents Required. 
No consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental or regulatory
authority is required for the execution, delivery and performance by the
Company of the Indenture, this Agreement, and the Equity Unit Agreements and
the consummation of the transactions herein and therein contemplated, except
for the Orders described in paragraph (t) below, the registration of the
Securities under the Securities Act and such consents, approvals,
authorizations, orders and registrations or qualifications as may be required
under applicable state securities laws in 

 

9

 

connection with the
purchase and distribution of the Securities by the Underwriters or which have
already been obtained or made.

 

(t)            Appropriate
Orders Entered.  An appropriate order or orders (each an “Order”) of each
governmental authority or agency the consent of which was necessary for the
Company to consummate its indirect 50% investment in CrossCountry Energy, LLC and
is necessary for the Company duly and validly to issue and sell the Securities
pursuant to this Agreement, including without limitation the Pennsylvania
Public Utility Commission, the Missouri Public Service Commission and the
Massachusetts Department of Telecommunications and Energy, has been entered,
and each such Order is in full force and effect and has not been modified or
repealed in any respect; no filing with, or approval, authorization, consent,
license, registration, qualification, order or decree of, any court or
governmental authority or agency, domestic or foreign, is necessary or required
for the due authorization, execution and delivery by the Company of the
Indenture, this Agreement and the Equity Unit Agreements and the consummation
or for the performance by the Company of the transactions herein and therein
contemplated, except (i) such as have been obtained under the Securities Act,
(ii) as may be required to be obtained under state securities laws and (iii) as
have been obtained pursuant to the Orders or any post closing notices as may be
required by such Orders.

 

(u)           Legal Proceedings. 
Except as described in the Prospectus, there are no legal, governmental
or regulatory investigations, actions, suits or proceedings pending to which the
Company or any of its subsidiaries is or may be a party or to which any
property of the Company or any of its subsidiaries is or may be the subject
that, individually or in the aggregate, if determined adversely to the Company
or any of its subsidiaries, could reasonably be expected to have a Material
Adverse Effect or materially and adversely affect the ability of the Company to
perform its obligations under the Indenture, this Agreement and the Equity Unit
Agreements; no such investigations, actions, suits or proceedings are, to the
best knowledge of the Company, threatened, or to the Company’s knowledge,
contemplated by any governmental or regulatory authority or threatened by
others; and (i) there are no current or pending legal, governmental or regulatory
actions, suits or proceedings that are required under the Securities Act to be
described in the Prospectus that are not so described and (ii) there are no
statutes, regulations or contracts or other documents that are required under
the Securities Act to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus that are not so filed
or described.

 

(v)           Independent Accountants. 
PricewaterhouseCoopers LLP, who have certified certain financial
statements of the Company and its subsidiaries, Citrus and its subsidiaries and
Transwestern are independent public accountants with respect to the Company and
its subsidiaries, Citrus and its subsidiaries and Transwestern, as required by
the Securities Act.

 

(w)          Title to Real and Personal Property.  The Company and its subsidiaries have good
title, or have valid rights to lease or otherwise use, all items of real and
personal property that are material to the respective businesses of the Company
and its subsidiaries, in each case free and clear of all liens, encumbrances,
claims and defects and imperfections of title except those that (i) do not
materially interfere with the use made and proposed to be made of such property
by the 

 

10

 

Company and its
subsidiaries or (ii) could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.

 

(x)            No Undisclosed Relationships.  No relationship, direct or indirect, exists
between or among the Company or any of its subsidiaries, on the one hand, and
the directors, officers, stockholders, customers or suppliers of the Company or
any of its subsidiaries, on the other, that is required by the Securities Act
to be described in the Registration Statement and the Prospectus and that is
not so described.

 

(y)           Investment Company Act. 
The Company is not, and after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as described in the
Prospectus will not be, an “investment company” or an entity “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations of the Commission thereunder
(collectively, “Investment Company Act”).

 

(z)            Public Utility Holding Company Act.  Neither the Company nor any of its
subsidiaries is a “holding company” or a “subsidiary company” of a holding
company or an “affiliate” thereof within the meaning of the Public Utility
Holding Company Act of 1935, as amended.

 

(aa)         Taxes.  Except as
would not reasonably be expected to have a Material Adverse Effect, the Company
and its subsidiaries have paid all federal, state, local and foreign taxes and
filed all tax returns required to be paid or filed through the date hereof,
except to the extent being contested in good faith and for which the Company or
a subsidiary has established reserves; and except as otherwise disclosed in the
Prospectus, there is no tax deficiency that has been, or could reasonably be expected
to be, asserted against the Company or any of its subsidiaries or any of their
respective properties or assets.

 

(bb)         Licenses and Permits. 
The Company and its subsidiaries possess all licenses, certificates,
permits and other authorizations issued by, and have made all declarations and
filings with, the appropriate federal, state, local or foreign governmental or
regulatory authorities that are necessary for the ownership or lease of their
respective properties or the conduct of their respective businesses as
described in the Registration Statement and the Prospectus, except where the
failure to possess or make the same would not, individually or in the
aggregate, have a Material Adverse Effect; and except as described in the
Prospectus, neither the Company nor any of its subsidiaries has received notice
of any revocation or modification of any such license, certificate, permit or
authorization or has any reason to believe that any such license, certificate,
permit or authorization will not be renewed in the ordinary course.

 

(cc)         No Labor Disputes. 
Except as would not, individually or in the aggregate, have a Material
Adverse Effect, no labor disturbance by or dispute with employees of the
Company or any of its subsidiaries exists or, to the best knowledge of the
Company, is contemplated or threatened.

 

(dd)         Compliance With Environmental Laws.  Except as disclosed in the Prospectus, the
Company and its subsidiaries (i) are in compliance with any and all
applicable federal, state, local and foreign laws, rules, regulations,
decisions and orders relating to the protection of human 

 

11

 

health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, “Environmental Laws”); (ii) have received and
are in compliance with all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses; and (iii) have not received notice of any actual or potential
liability for the investigation or remediation of any disposal or release of
hazardous or toxic substances or wastes, pollutants or contaminants, except in
any such case for any such failure to comply, or failure to receive required
permits, licenses or approvals, or liability as would not, individually or in
the aggregate, have a Material Adverse Effect.

 

(ee)         Compliance With ERISA. 
Except as disclosed in the Prospectus or the Registration Statement or
as would not reasonably be expected to have a Material Adverse Effect, each
employee benefit plan, within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), that is
maintained, administered or contributed to by the Company or any of its
affiliates for employees or former employees of the Company and its affiliates
(excluding employee benefit plans with respect to which CrossCountry Energy,
LLC and/or any of its affiliates took action to withdraw upon the closing of
the acquisition by CCE Holdings of CrossCountry Energy, LLC) has been
maintained in compliance with its terms and the requirements of any applicable
statutes, orders, rules and regulations, including but not limited to ERISA and
the Internal Revenue Code of 1986, as amended (the “Code”); no prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the
Code, has occurred with respect to any such plan excluding transactions
effected pursuant to a statutory or administrative exemption; and for each such
plan that is subject to the funding rules of Section 412 of the Code or Section
302 of ERISA, no “accumulated funding deficiency” as defined in Section 412 of
the Code has been incurred, whether or not waived.

 

(ff)           Accounting Controls. 
The Company and its subsidiaries maintain systems of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

 

(gg)         Insurance.  The
Company and its subsidiaries have insurance covering their respective properties,
operations, personnel and businesses, including business interruption
insurance, which insurance is in amounts and insures against such losses and
risks as are adequate to protect the Company and its subsidiaries and their
respective businesses; and neither the Company nor any of its subsidiaries has
(i) received notice from any insurer or agent of such insurer that capital
improvements or other expenditures are required or necessary to be made in
order to continue such insurance or (ii) any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage at reasonable cost from similar insurers
as may be necessary to continue its business.

 

12

 

(hh)         No Unlawful Payments. 
Neither the Company nor any of its subsidiaries nor, to the best
knowledge of the Company, any director, officer, agent, employee or other
person associated with or acting on behalf of the Company or any of its
subsidiaries has (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977; or
(iv) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.

 

(ii)           No Restrictions on Subsidiaries.  No subsidiary of the Company is currently
prohibited, directly or indirectly, under any agreement or other instrument to
which it is a party or is subject, from paying any dividends to the Company,
from making any other distribution on such subsidiary’s capital stock, from
repaying to the Company any loans or advances to such subsidiary from the
Company or from transferring any of such subsidiary’s properties or assets to
the Company or any other subsidiary of the Company.

 

(jj)           No Broker’s Fees. 
Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person (other than this
Agreement) that would give rise to a valid claim against the Company or any of
its subsidiaries or any Underwriter for a brokerage commission, finder’s fee or
like payment in connection with the offering and sale of the Securities.

 

(kk)         No Registration Rights. 
No person has the right to require the Company or any of its
subsidiaries to register any securities for sale under the Securities Act by
reason of the filing of the Registration Statement with the Commission or the
issuance and sale of the Securities.

 

(ll)           No Stabilization.  The
Company has not taken, directly or indirectly, any
action that is designed to, or that could reasonably be expected to cause or
result in, any stabilization or manipulation of the price of the Securities or
Common Shares.

 

(mm)       Forward-Looking Statements. 
No forward-looking statement (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) contained in the
Registration Statement and the Prospectus has been made or reaffirmed without a
reasonable basis or has been disclosed other than in good faith.

 

(nn)         Statistical and Market Data. 
Nothing has come to the attention of the Company that has caused the
Company to believe that the statistical and market-related data included in the
Registration Statement and the Prospectus is not based on or derived from
sources that are reliable and accurate in all material respects.

 

(oo)         Compliance with Sarbanes-Oxley Act. 
The Company and the Company’s directors or officers, in their
capacities as such, are in compliance in all material respects with the
provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith (the “Sarbanes Oxley Act”), including
Section 402 related to loans and Sections 302 and 906 related to
certifications; and there is and has been no failure on the part of any of the
Company’s subsidiaries or such subsidiary’s directors or officers, in their
capacities as such, to 

 

13

 

comply in all material
respects with any applicable provision of the Sarbanes-Oxley Act, including
Section 402 related to loans and Sections 302 and 906 related to
certifications.

 

(pp)         Significant Subsidiaries.  All
of the Company’s significant subsidiaries (as defined in Rule 1-02(w) of
Regulation S-X) as of the date of this Agreement are included on Attachment I
to Annex A-I hereto.

 

(qq)         Material Agreements.  The
agreements and other documents filed as exhibits to the Company’s Annual Report
on Form 10-K for the year ended June 30, 2004 or as filed as an exhibit to any
subsequent filing under the Exchange Act, constitute all of the outstanding
material contracts of the Company and its subsidiaries taken as a whole
required to be filed as exhibits under Item 601 of Regulation S-K.

 

4.             Further Agreements of
the Company.  The Company
covenants and agrees with each Underwriter that:

 

(a)           Filing of the Prospectus. 
The Company will file the final Prospectus with the Commission within
the time periods specified by Rule 424(b) and Rule 430A under the Securities
Act and will file promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
the Prospectus and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Securities; and the Company will
furnish copies of the Prospectus to the Underwriters in New York City prior to
10:00 A.M., New York City time, on the business day next succeeding the date of
this Agreement in such quantities as the Representatives may reasonably
request.

 

(b)           Delivery of Copies. 
The Company will deliver, without charge, (i) to the Representatives,
three signed copies of the Registration Statement as originally filed and each
amendment thereto, in each case including all exhibits and consents filed
therewith and documents incorporated by reference therein; and (ii) to each
Underwriter (A) a conformed copy of the Registration Statement as originally
filed and each amendment thereto (without exhibits) and (B) during the
Prospectus Delivery Period, as many copies of the Prospectus (including all
amendments and supplements thereto and documents incorporated by reference
therein) as the Representatives may reasonably request.  As used herein, the term “Prospectus Delivery
Period” means such period of time after the first date of the public offering
of the Securities as in the opinion of counsel for the Underwriters a
prospectus relating to the Securities is required by law to be delivered in
connection with sales of the Securities by any Underwriter or dealer.

 

(c)           Amendments or Supplements. 
Before filing any amendment or supplement to the Registration Statement
or the Prospectus, the Company will furnish to the Representatives and counsel
for the Underwriters a copy of the proposed amendment or supplement for review
and will not file any such proposed amendment or supplement to which the
Representatives reasonably objects.

 

(d)           Notice to the Representatives.  The Company will advise the Representatives
promptly, and confirm such advice in writing, (i) when any amendment to the
Registration 

 

14

 

Statement has been filed
or becomes effective; (ii) when any supplement to the Prospectus or any
amendment to the Prospectus has been filed; (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or the receipt of any comments from the Commission
relating to the Registration Statement or any other request by the Commission
for any additional information; (iv) of the issuance by the Commission of any
order suspending the effectiveness of the Registration Statement or preventing
or suspending the use of any Preliminary Prospectus or the Prospectus or the initiation
or threatening of any proceeding for that purpose; (v) of the occurrence of any
event within the Prospectus Delivery Period as a result of which the Prospectus
as then amended or supplemented would include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing when the
Prospectus is delivered to a purchaser, not misleading; and (vi) of the receipt
by the Company of any notice with respect to any suspension of the
qualification of the Securities for offer and sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; and the Company
will use its best efforts to prevent the issuance of any such order suspending
the effectiveness of the Registration Statement, preventing or suspending the
use of any Preliminary Prospectus or the Prospectus or suspending any such
qualification of the Securities and, if any such order is issued, will obtain
as soon as possible the withdrawal thereof.

 

(e)           Ongoing Compliance of the Prospectus.  If during the Prospectus Delivery Period (i)
any event shall occur or condition shall exist as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, not
misleading or (ii) it is necessary to amend or supplement the Prospectus to
comply with law, the Company will immediately notify the Underwriters thereof
and forthwith prepare and, subject to paragraph (c) above, file with the
Commission and furnish to the Underwriters and to such dealers as the
Representatives may designate, such amendments or supplements to the Prospectus
as may be necessary so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances existing when the Prospectus
is delivered to a purchaser, be misleading or so that the Prospectus will
comply with law.

 

(f)            Blue Sky Compliance. 
The Company will qualify the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representatives shall
reasonably request and will continue such qualifications in effect so long as
required for distribution of the Securities; provided that the Company
shall not be required to (i) qualify as a foreign corporation or other entity
or as a dealer in securities in any such jurisdiction where it would not
otherwise be required to so qualify, (ii) file any general consent to service
of process in any such jurisdiction or (iii) subject itself to taxation in any
such jurisdiction if it is not otherwise so subject.

 

(g)           Earnings Statement.  The
Company will make generally available to its security holders and the
Representatives as soon as practicable an earnings statement that satisfies the
provisions of Section 11(a) of the Securities Act and Rule 158 of the
Commission promulgated thereunder covering a period of at least twelve months
beginning with the first fiscal quarter of the Company occurring after the “effective
date” (as defined in Rule 158) of the Registration Statement.

 

15

 

(h)           Clear Market.  For a
period of 90 days after the date of the initial public offering of the
Securities, the Company will not without the prior written consent of the
Representatives (i) offer, pledge, announce the intention to sell, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Securities, Purchase Contracts or shares of Common Stock or (ii) enter into any
swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Securities, Purchase Contracts or
shares of Common Stock, whether any such transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise, without the prior written consent of the
Representatives, other than (i) the Securities to be sold hereunder, (ii) any
shares of Common Stock of the Company issued under the Company’s existing stock
based plans or upon the exercise of options granted under existing employee
stock option plans and (iii) any shares issuable in connection with the
Treasury Units (as defined in the Prospectus Supplement) or Corporate Units to
be created or recreated upon substitution of pledged securities, or shares of
the Company’s Common Stock issuable upon settlement of the Corporate Units or
Treasury Units.

 

(i)            Use of Proceeds.  The
Company will apply the net proceeds from the sale of the Securities as
described in the Prospectus under the heading “Use of Proceeds”.

 

(j)            No Stabilization.  The
Company will not take, directly or indirectly, any
action designed to or that could reasonably be expected to cause or result in
any stabilization or manipulation of the price of the Securities.

 

(k)           Exchange Listing.  The
Company will use its best efforts to list, subject to notice of issuance, the
Securities on the New York Stock Exchange (the “Exchange”).

 

(l)            Reports.  So long as
the Securities are outstanding, the Company will furnish to the
Representatives, as soon as they are available, copies of all reports or other
communications (financial or other) furnished to holders of the Securities, and
copies of any reports and financial statements furnished to or filed with the
Commission or any national securities exchange or automatic quotation system.

 

5.             Conditions
of Underwriters’ Obligations.  The
obligation of each Underwriter to purchase the Securities on the Closing Date
as provided herein is subject to the performance by the Company of its
covenants and other obligations hereunder and to the following additional
conditions:

 

(a)           Registration Compliance; No Stop Order.  The Registration Statement (or if a
post-effective amendment thereto is required to be filed under the Securities
Act, such post-effective amendment) shall have become effective, and the Representatives
shall have received notice thereof, not later than 5:00 P.M., New York City
time, on the date hereof; no order suspending the effectiveness of the
Registration Statement shall be in effect and no proceeding for such purpose
shall be pending before or threatened by the Commission; the Prospectus shall
have been timely filed with the Commission under the Securities Act and in
accordance with 

 

16

 

Section 4(a) hereof; and
all requests by the Commission for additional information shall have been
complied with to the reasonable satisfaction of the Representatives.

 

(b)           Representations and Warranties.  The representations and warranties of the
Company contained herein shall be true and correct on the date hereof and on
and as of the Closing Date; and the statements of the Company and its officers
made in any certificates delivered pursuant to this Agreement shall be true and
correct on and as of the Closing Date.

 

(c)           No Downgrade. 
Subsequent to the execution and delivery of this Agreement, (i) no
downgrading shall have occurred in the rating accorded any securities or
preferred stock of or guaranteed by the Company or any of its subsidiaries by
any “nationally recognized statistical rating organization”, as such term is
defined by the Commission for purposes of Rule 436(g)(2) under the Securities
Act and (ii) no such organization shall have publicly announced that it has
under surveillance or review, or has changed its outlook with respect to, its
rating of any securities or preferred stock of or guaranteed by the Company or
any of its subsidiaries (other than an announcement with positive implications
of a possible upgrading).

 

(d)           No Material Adverse Change. 
Subsequent to the execution and delivery of this Agreement, no event or
condition of a type described in Section 3(e) hereof shall have occurred or
shall exist, which event or condition is not described in the Prospectus
(excluding any amendment or supplement thereto) and the effect of which in the
judgment of the Representatives makes it impracticable or inadvisable to
proceed with the offering, sale or delivery of the Securities on the Closing
Date on the terms and in the manner contemplated by this Agreement and the
Prospectus.

 

(e)           Officer’s Certificate. 
The Representatives shall have received on and as of the Closing Date a
certificate of the chief financial officer or chief accounting officer of the
Company and one additional senior executive officer of the Company who is
satisfactory to the Representatives (i) confirming that such officers have
carefully reviewed the Registration Statement and the Prospectus and, to the
best knowledge of such officers, the representation set forth in Section 3(b)
hereof is true and correct, (ii) confirming that the other representations and
warranties of the Company in this Agreement are true and correct and that the
Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to such Closing Date
and (iii) to the effect set forth in paragraphs (a), (c) and (d) above.

 

(f)            Comfort Letters.  On
the date of this Agreement and on the Closing Date PricewaterhouseCoopers LLP
shall have furnished to the Representatives, at the request of the Company,
letters, dated the respective dates of delivery thereof and addressed to the
Underwriters, in form and substance reasonably satisfactory to the
Representatives, containing statements and information of the type customarily
included in accountants’ “comfort letters” to underwriters with respect to the
financial statements and certain financial information contained or
incorporated by reference in the Registration Statement and the Prospectus;
provided, that the letters delivered on the Closing Date shall use a “cut-off”
date no more than three business days prior to such Closing Date.

 

17

 

(g)           Opinion of Counsel for the Company.  (i) Fleischman and Walsh L.L.P., outside
counsel for the Company, shall have furnished to the Representatives, at the
request of the Company, their written opinion, dated the Closing Date and
addressed to the Underwriters, in form and substance reasonably satisfactory to
the Representatives, to the effect set forth in Annex A-1 hereto; and (ii)
Dennis Morgan, Esq., Executive Vice President – Litigation and Regulatory of
the Company, shall have furnished to the Representatives, at the request of the
Company, his written opinion, dated the Closing Date and addressed to the
Underwriters, in form and substance reasonably satisfactory to the
Representatives, to the effect set forth in Annex A-2 hereto.

 

(h)           Opinion of Tax Counsel for the Company.  Roberts & Holland LLP, special tax
counsel for the Company, shall have furnished to the Representatives, at the
request of the Company, their written opinion, dated the Closing Date and
addressed to the Underwriters, to the effect that the statements in the
Prospectus under the caption “Certain United States Federal Income Tax
Consequences” fairly present and summarize, in all material respects, the
matters referred to therein.

 

(i)            Opinion of Massachusetts Counsel for the Company.  Keegan, Werlin & Pabian LLP,
Massachusetts counsel for the Company, shall have furnished to the
Representatives, at the request of the Company, their written opinion, dated
the Closing Date and addressed to the Underwriters, in form and substance
reasonably satisfactory to the Representatives, to the effect set forth in
Annex C hereto.

 

(j)            Opinion of Pennsylvania Counsel for the Company.  Hawke, McKeon Sniscak & Kennard LLP,
Pennsylvania counsel for the Company, shall have furnished to the
Representatives, at the request of the Company, their written opinion, dated
the Closing Date and addressed to the Underwriters, in form and substance
reasonably satisfactory to the Representatives, to the effect set forth in
Annex B hereto.

 

(k)           Opinion of Counsel for the Underwriters.  The Representatives shall have received on
and as of the Closing Date an opinion of Davis Polk & Wardwell, counsel for
the Underwriters, with respect to such matters as the Representatives may
reasonably request, and such counsel shall have received such documents and
information as they may reasonably request to enable them to pass upon such
matters.

 

(l)            No Legal
Impediment to Issuance.  No action
shall have been taken and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any federal, state or foreign governmental or
regulatory authority that would, as of the Closing Date prevent the issuance or
sale of the Securities; and no injunction or order of any federal, state or
foreign court shall have been issued that would, as of the Closing Date prevent
the issuance or sale of the Securities.

 

(m)          Good Standing.  The
Representatives shall have received on and as of the Closing Date satisfactory
evidence of the good standing of the Company and the Subsidiaries (as defined
in the opinion of counsel for the Company set forth on Annex A-1 attached
hereto) in their respective jurisdictions of organization and their good
standing as foreign entities in such other jurisdictions as the Representatives
may reasonably request, in each case in writing or any 

 

18

 

standard form of
telecommunication from the appropriate governmental authorities of such
jurisdictions.

 

(n)           Exchange Listing.  The
Securities to be delivered on the Closing Date shall have been approved for
listing on the New York Stock Exchange, subject to official notice of issuance.

 

(o)           Lock-up Agreements. 
The “lock-up” agreements, each substantially in the form of Exhibit A
hereto, between you and certain shareholders, officers and directors of the
Company relating to sales and certain other dispositions of Securities,
Purchase Contracts or shares of Common Stock or certain other securities,
delivered to you on or before the date hereof, shall be full force and effect
on the Closing Date.

 

(p)           Additional Documents. 
On or prior to the Closing Date the Company shall have furnished to the
Representatives such further certificates and documents as the Representatives
may reasonably request.

 

All opinions, letters, certificates and evidence mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.

 

6.             Indemnification
and Contribution.

 

(a)           Indemnification of the
Underwriters.  The Company agrees to indemnify and hold
harmless each Underwriter, its affiliates, directors and officers and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages and liabilities (including, without limitation,
legal fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted, as such fees and expenses are incurred),
joint or several, that arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus (or any amendment or supplement thereto) or any
Preliminary Prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except insofar as such losses, claims, damages or
liabilities arise out of, or are based upon, any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with any information relating to any Underwriter furnished to the Company in
writing by such Underwriter through the Representatives expressly for use
therein, it being understood and agreed that the only such information
furnished by any Underwriter consists of the information described as such in
subsection (b) below; provided that
the Company will not be liable to any Underwriter with respect to any
Prospectus to the extent that the Company shall sustain the burden of proving
that any such loss, liability, claim, damage or expense resulted from the fact
that such Underwriter, in contravention of a requirement of this Agreement or
applicable law, sold Shares to a person to whom such Underwriter failed to send
or give, at or prior to the Closing Date, a copy of the Prospectus, as then
amended or supplemented if: (i) the Company has previously furnished copies
thereof (sufficiently in advance of the Closing Date to allow for distribution
by the Closing Date) to the Underwriter and the loss, 

 

19

 

liability,
claim, damage or expense of such Underwriter resulted from an untrue statement
or omission of a material fact contained in or omitted from the Preliminary
Prospectus which was corrected in the Prospectus as, if applicable, amended or
supplemented prior to the Closing Date and such Prospectus was required by law
to be delivered at or prior to the written confirmation of sale to such person
and (ii) such failure to give or send such Prospectus by the Closing Date to
the party or parties asserting such loss, liability, claim, damage or expense
would have constituted the sole defense to the claim asserted by such person.

 

(b)           Indemnification of the Company.  Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, its directors, its
officers who signed the Registration Statement and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the indemnity set forth in
paragraph (a) above, but only with respect to any losses, claims, damages or
liabilities that arise out of, or are based upon, any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to such Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly
for use in the Registration Statement and the Prospectus (or any amendment or
supplement thereto) or any Preliminary Prospectus, it being understood and
agreed upon that the only such information furnished by any Underwriter consists
of the following information in the Prospectus furnished on behalf of each
Underwriter: the concession and reallowance figures appearing in the third
paragraph under the caption “Underwriting” and the information contained in the
fifth and sixth paragraphs under the caption “Underwriting”.

 

(c)           Notice and Procedures. 
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnification may be sought pursuant to either
paragraph (a) or (b) above, such person (the “Indemnified Person”) shall
promptly notify the person against whom such indemnification may be sought (the
“Indemnifying Person”) in writing; provided that the failure to notify
the Indemnifying Person shall not relieve it from any liability that it may
have under this Section 6 except to the extent that it has been materially
prejudiced (through the forfeiture of substantive rights or defenses) by such
failure; and provided, further, that the failure to notify the
Indemnifying Person shall not relieve it from any liability that it may have to
an Indemnified Person otherwise than under this Section 6.  If any such proceeding shall be brought or asserted
against an Indemnified Person and it shall have notified the Indemnifying
Person thereof, the Indemnifying Person shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others entitled to indemnification pursuant to this Section 6 that the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding, as incurred.  In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary; (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person; (iii) the Indemnified Person shall have reasonably concluded that there
may be legal defenses available to it that are different from or in addition to
those available to the Indemnifying Person; or (iv) the named parties in any
such proceeding (including any 

 

20

 

impleaded parties)
include both the Indemnifying Person and the Indemnified Person and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them.  It is understood and agreed that the
Indemnifying Person shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any reasonably required local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be paid or reimbursed as they are incurred. 
Any such separate firm for any Underwriter, its affiliates, directors
and officers and any control persons of such Underwriter shall be designated in
writing by Merrill Lynch, Pierce, Fenner & Smith Incorporated and any such
separate firm for the Company, its directors, its officers who signed the
Registration Statement and any control persons of the Company shall be
designated in writing by the Company. 
The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Person agrees to indemnify each Indemnified Person from and against any loss or
liability by reason of such settlement or judgment.  Notwithstanding the foregoing sentence, if at
any time an Indemnified Person shall have requested that an Indemnifying Person
reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by this paragraph, the Indemnifying Person shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by the Indemnifying
Person of such request and (ii) the Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement.  No Indemnifying
Person shall, without the written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnification could have
been sought hereunder by such Indemnified Person, unless such settlement (x)
includes an unconditional release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all
liability on claims that are the subject matter of such proceeding and (y) does
not include any statement as to or any admission of fault, culpability or a
failure to act by or on behalf of any Indemnified Person.

 

(d)           Contribution.  If the
indemnification provided for in paragraphs (a) and (b) above is unavailable to
an Indemnified Person or insufficient in respect of any losses, claims, damages
or liabilities referred to therein, then each Indemnifying Person under such
paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters  on the other
from the offering of the Securities or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
but also the relative fault of the Company on the one hand and the Underwriters
on the other in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations.  The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same respective proportions as the net
proceeds (before deducting expenses) received by the Company from the sale of
the Securities and the total underwriting discounts and commissions received by
the Underwriters in 

 

21

 

connection therewith, in
each case as set forth in the table on the cover of the Prospectus, bear to the
aggregate offering price of the Securities. 
The relative fault of the Company on the one hand and the Underwriters
on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or by the Underwriters and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.

 

(e)           Limitation on Liability. 
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 6 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account
of the equitable considerations referred to in paragraph (d) above.  The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to
in paragraph (d) above shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses incurred by such Indemnified
Person in connection with any such action or claim.  Notwithstanding the provisions of this
Section 6, in no event shall an Underwriter be required to contribute any
amount in excess of the amount by which the total underwriting discounts and
commissions received by such Underwriter with respect to the offering of the
Securities exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. 
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.  The Underwriters’ obligations to contribute
pursuant to this Section 6 are several in proportion to their respective
purchase obligations hereunder and not joint.

 

(f)            Non-Exclusive Remedies. 
The remedies provided for in this Section 6 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
Indemnified Person at law or in equity.

 

7.             Effectiveness
of Agreement.  This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.

 

8.             Termination.  This Agreement may be terminated in the
absolute discretion of the Representatives, by notice to the Company, if after
the execution and delivery of this Agreement and prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on or by any
of the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board Options Exchange,
the Chicago Mercantile Exchange or the Chicago Board of Trade; (ii) trading of
any securities issued or guaranteed by the Company shall have been suspended on
any exchange or in any over-the-counter market; (iii) a general moratorium on
commercial banking activities shall have been declared by federal or New York
State authorities; or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis,
either within or outside the United States, that, in the judgment of the
Representatives, is material and adverse and makes it impracticable or
inadvisable to proceed with the offering, sale or delivery of 

 

22

 

the Securities on the
Closing Date on the terms and in the manner contemplated by this Agreement and
the Prospectus.

 

9.             Defaulting
Underwriter.  (a)                If,
on the Closing Date any Underwriter defaults on
its obligation to purchase the Securities that it has agreed to purchase
hereunder on such date, the non-defaulting Underwriters may in their discretion
arrange for the purchase of such Securities by other persons satisfactory to the
Company on the terms contained in this Agreement.  If, within 36 hours after any such default by
any Underwriter, the non-defaulting Underwriters do not arrange for the
purchase of such Securities, then the Company shall be entitled to a further
period of 36 hours within which to procure other persons satisfactory to the
non-defaulting Underwriters to purchase such Securities on such terms.  If other persons become obligated or agree to
purchase the Securities of a defaulting Underwriter, either the non-defaulting
Underwriters or the Company may postpone the Closing Date for up to five full
business days in order to effect any changes that in the opinion of counsel for
the Company or counsel for the Underwriters may be necessary in the
Registration Statement and the Prospectus or in any other document or
arrangement, and the Company agrees to promptly prepare any amendment or
supplement to the Registration Statement and the Prospectus that effects any
such changes.  As used in this Agreement,
the term “Underwriter” includes, for all purposes of this Agreement unless the
context otherwise requires, any person not listed in Schedule 1 hereto that,
pursuant to this Section 9, purchases Securities that a defaulting Underwriter
agreed but failed to purchase.

 

(b)           If,
after giving effect to any arrangements for the purchase of the Securities of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters and
the Company as provided in paragraph (a) above, the aggregate number of
Securities that remain unpurchased on the Closing Date does not exceed
one-eleventh of the aggregate number of Securities to be purchased on such
date, then the Company shall have the right to require each non-defaulting
Underwriter to purchase the number of Securities that such Underwriter agreed
to purchase hereunder on such date plus such Underwriter’s pro rata share
(based on the number of Securities that such Underwriter agreed to purchase on
such date) of the Securities of such defaulting Underwriter or Underwriters for
which such arrangements have not been made.

 

(c)           If,
after giving effect to any arrangements for the purchase of the Securities of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters and
the Company as provided in paragraph (a) above, the aggregate number of
Securities that remain unpurchased on the Closing Date exceeds one-eleventh of
the aggregate amount of Securities to be purchased on such date, or if the
Company shall not exercise the right described in paragraph (b) above, then this
Agreement shall terminate without liability on the part of the non-defaulting
Underwriters.  Any termination of this
Agreement pursuant to this Section 9 shall be without liability on the part of
the Company, except that the Company will continue to be liable for the payment
of expenses as set forth in Section 10 hereof and except that the
provisions of Section 6 hereof shall not terminate and shall remain in effect.

 

(d)           Nothing
contained herein shall relieve a defaulting Underwriter of any liability it may
have to the Company or any non-defaulting Underwriter for damages caused by its
default.

 

23

 

10.           Payment
of Expenses. 
(a)   Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay
or cause to be paid all costs and expenses incident to the performance of its
obligations hereunder, including without limitation, (i) the costs
incident to the authorization, issuance, sale, preparation and delivery of the
Securities and Common Shares and any taxes payable in that connection;
(ii) the costs incident to the preparation, printing and filing under the
Securities Act of the Registration Statement, the Preliminary Prospectus and
the Prospectus (including all exhibits, amendments and supplements thereto) and
the distribution thereof; (iii) the costs of reproducing and distributing
this Agreement, the Indenture and the Equity Unit Agreements; (iv) the fees and
expenses of the Company’s counsel and independent accountants; (v) the cost of
preparing stock certificates; (vi) the costs and charges of any transfer
agent and any registrar; (vii) all expenses and application fees incurred in
connection with any filing with, and clearance of the offering by, the National
Association of Securities Dealers, Inc.; (viii) all expenses incurred by the
Company in connection with any “road show” presentation to potential investors;
and (ix) all expenses and application fees related to the listing of the
Securities and the Common Shares on the New York Stock Exchange.  The Underwriters agree to reimburse the
Company for up to $405,000 of expenses incurred by the Company in connection
with this Agreement and the offering contemplated hereby.

 

(b)           If
(i) this Agreement is terminated pursuant to Section 8, (ii) the Company for
any reason fails to tender the Securities for delivery to the Underwriters or
(iii) the Underwriters decline to purchase the Securities for any reason
permitted under this Agreement, the Company agrees to reimburse the
Underwriters for all out-of-pocket costs and expenses (including the fees and
expenses of their counsel) reasonably incurred by the Underwriters in
connection with this Agreement and the offering contemplated hereby.

 

11.           Persons
Entitled to Benefit of Agreement. 
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and the officers and directors
and any controlling persons referred to in Section 6 hereof.  Nothing in this Agreement is intended or
shall be construed to give any other person any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.  No purchaser of Securities from
any Underwriter shall be deemed to be a successor merely by reason of such
purchase.

 

12.           Survival.  The respective indemnities, rights of
contribution, representations, warranties and agreements of the Company and the
Underwriters contained in this Agreement or made by or on behalf of the Company
or the Underwriters pursuant to this Agreement or any certificate delivered
pursuant hereto shall survive the delivery of and payment for the Securities
and shall remain in full force and effect, regardless of any termination of
this Agreement or any investigation made by or on behalf of the Company or the
Underwriters.

 

13.           Certain
Defined Terms.  For purposes of this
Agreement, (a) except where otherwise expressly provided, the term “affiliate”
has the meaning set forth in Rule 405 under the Securities Act; (b) the term “business
day” means any day other than a day on which banks are

 

24

 

permitted or required to be closed in New York City; and (c) the term “subsidiary”
has the meaning set forth in Rule 405 under the Securities Act.

 

14.           Miscellaneous.  (a)              Authority of
the Representatives.  Any
action by the Underwriters hereunder may be taken by Merrill Lynch, Pierce,
Fenner & Smith Incorporated and J.P. Morgan Securities Inc. on behalf of
the Underwriters, and any such action taken by Merrill Lynch, Pierce, Fenner
& Smith Incorporated and J.P. Morgan Securities Inc. shall be binding upon
the Underwriters.

 

(b)           Notices.  All notices
and other communications hereunder shall be in writing and shall be deemed to
have been duly given if mailed or transmitted and confirmed by any standard
form of telecommunication.  Notices to
the Underwriters shall be given to the Representatives c/o Merrill Lynch,
Pierce, Fenner & Smith Incorporated, 4 World Financial Center, New York,
New York 10080 (fax: 212-449-3207); Attention: Global Origination Counsel and
J.P. Morgan Securities Inc., 277 Park Avenue, New York, New York 10172 (fax:
212-622-8358); Attention: Henry Wilson. 
Notices to the Company shall be given to it at Southern Union Company,
One PEI Center, Wilkes-Barre, Pennsylvania 18711, (fax: 570-829-8900); Attention:
Thomas F. Karam.

 

(c)           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

 

(d)           Counterparts.  This
Agreement may be signed in counterparts (which may include counterparts
delivered by any standard form of telecommunication), each of which shall be an
original and all of which together shall constitute one and the same
instrument.

 

(e)           Amendments or Waivers. 
No amendment or waiver of any provision of this Agreement, nor any
consent or approval to any departure therefrom, shall in any event be effective
unless the same shall be in writing and signed by the parties hereto.

 

(f)            Headings.  The
headings herein are included for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this
Agreement.

 

25

 

If the foregoing is in
accordance with your understanding, please indicate your acceptance of this
Agreement by signing in the space provided below.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  SOUTHERN UNION COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas F. Karam

  	
   

  
	
   

  	
  Name:

  	
  Thomas F. Karam

  
	
   

  	
  Title:

  	
  President & Chief
  Operating Officer

  
	
  Accepted: February 7,
  2004

  	
   

  
					

 

MERRILL LYNCH, PIERCE,
FENNER & SMITH

INCORPORATED

J.P. MORGAN SECURITIES INC.

For itself and on behalf of the

several Underwriters listed

in Schedule 1 hereto.

 

	
  By: MERRILL LYNCH, PIERCE,
  FENNER & SMITH

  	
   

  
	
  INCORPORATED

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Karl L. Newlin

  	
   

  	
   

  
	
  Authorized
  Signatory

  	
   

  
	
   

  	
   

  
	
  By: J.P. MORGAN SECURITIES
  INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
   /s/ Paul A. O’Hern

  	
   

  	
   

  
	
  Authorized
  Signatory

  	
   

  

 

 

Schedule 1

 

	
  Underwriter

  	
   

  	
  Number of Securities

  
	
   

  	
   

  	
   

  
	
  Merrill Lynch, Pierce,
  Fenner & Smith Incorporated

  	
   

  	
  1,000,000

  
	
  J.P. Morgan Securities
  Inc.

  	
   

  	
  1,000,000

  
	
  Total:

  	
   

  	
  2,000,000

  

 

 

Schedule 2

 

Registration Statement No.:  333-113757

 

Number of Securities:  2,000,000

 

Purchase Price by Underwriters:  $48.50 per Corporate Unit

 

Price to Public per Corporate
Unit:  $50.00

 

Gross Spread per Corporate Unit:  3%

 

Reference Price:
$24.61

 

Threshold Appreciation Price:  $30.7625

 

Payment Dates:  February 16, May 16, August 16 and November
16

 

Contract Adjustment Payment
Dates:  February 16,
May 16, August 16 and November 16

 

Contract Adjustment Payments:  0.625% of $50.00 Stated Amount

 

Purchase Contract Settlement
Date:  February 16,
2008

 

Aggregate Principal Amount of
Senior Notes: 
$100,000,000

 

Initial Maturity of the Senior
Notes:  February 16,
2010

 

Interest rate on the Senior
Notes:  5%

 

Stock Exchange Listing:  New York Stock Exchange

 

 

Annex A-1

 

[Form of Opinion
of Counsel for the Company]

 

(a)           The
Registration Statement was declared effective under the Securities Act as of
the date and time specified in such opinion; the Prospectus was filed with the
Commission pursuant to the subparagraph of Rule 424(b) under the Securities Act
specified in such opinion on the date specified therein; and no order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose is pending or, to the knowledge of such counsel,
threatened by the Commission.

 

(b)           The
Company and each of the Company’s subsidiaries identified on Attachment I
hereto (the “Subsidiaries”) have been duly organized and are validly existing
and in good standing under the laws of the State of Delaware, are duly
qualified to do business and are in good standing in each jurisdiction
identified opposite its name on Attachment II hereto, which the Company has
advised such counsel are the only jurisdictions in which their respective
ownership or leasing of property or the conduct of their respective businesses
requires such qualification, and have all power and authority necessary to own
or hold their respective properties and to conduct the businesses in which they
are engaged, except where the failure to be so qualified or have such power or
authority would not, individually or in the aggregate, have a material adverse
effect on the business, properties, management, financial position,
stockholders’ equity, results of operations or prospects of the Company and its
subsidiaries taken as a whole (a “Material Adverse Effect”).

 

(c)           The
Company has an authorized capitalization as set forth in the Prospectus under
the heading “Description of Southern Union’s Common Stock and Preferred Stock —
General”; all the outstanding shares of capital stock of the Company have been
duly issued and validly authorized and to the knowledge of such counsel after
due inquiry are fully paid and non-assessable; the capital stock of the Company
conforms in all material respects to the description thereof contained in the Registration
Statement and the Prospectus; and all necessary actions under the limited
liability company act or the limited partnership act under which each
Subsidiary was organized and the Subsidiary’s constituent documents have been
taken for the purchase of such subsidiary’s equity interests.

 

(d)           The
Underwriting Agreement has been duly authorized, executed and delivered by the
Company.

 

(e)           The
shares of Common Stock to be issued and sold by the Company pursuant to the
Purchase Contracts have been duly authorized and reserved for issuance and,
when issued and delivered in accordance with the provisions of the Purchase
Contract Agreement, will be validly issued, fully paid and non-assessable and
the issuance of the Securities is not subject to any preemptive or similar
rights.

 

(f)            No
consent, approval, authorization, order, registration or qualification of or
with any court or arbitrator or governmental or regulatory authority is
required for the execution,

 

 

delivery and performance by the Company of this Agreement, the
Indenture and the Equity Units Agreements, and the Securities, the issuance and
sale of the Securities being delivered on the Closing Date and compliance by
the Company with the terms thereof and the consummation of the transactions
contemplated hereby and thereby, except for (i) the registration of the
Securities under the Securities Act, (ii) such consents, approvals,
authorizations, orders and registrations or qualifications as may be required
under applicable state securities laws in connection with the purchase and
distribution of the Securities by the Underwriters and (iii) as have been
obtained pursuant to the Orders (as defined in the Underwriting Agreement) or
any post closing notices required by such orders.

 

(g)           The
Purchase Contract and Pledge Agreement has been duly authorized, executed and
delivered by the Company, and assuming that the Purchase Contract Agreement is
the valid and legally binding obligation of the Purchase Contract Agent, the
Purchase Contract Agreement will constitute a valid and legally binding
obligation of the Company enforceable against the Company in accordance with
its terms.

 

(h)           The
Corporate Units have been duly authorized by the Company, and assuming that (i)
the Purchase Contract and Pledge Agreement is the valid and legally binding
obligation of the Purchase Contract Agent and Collateral Agent, (ii) the
Corporate Units have been duly authenticated by the Purchase Contract Agent,
(iii) the Corporate Units are the valid and legally binding obligation of the
holders thereof, (iv) the Indenture is the valid and legally binding obligation
of the Trustee and (v) the Notes have been duly authenticated by the Trustee,
upon payment and delivery in accordance with the Underwriting Agreement, the
Corporate Units will be validly issued, and the Corporate Units will constitute
valid and legally binding obligations of the Company enforceable against the
Company in accordance with their terms and entitled to the benefits of the
Purchase Contract  and Pledge Agreement.

 

(i)            The
Indenture has been duly authorized, executed and delivered by the Company and
duly qualified under the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”), and, assuming that the Indenture is the valid and legally
binding obligation of the Trustee, constitutes a valid and legally binding
obligation of the Company enforceable against the Company in accordance with
its terms.

 

(j)            The
Notes have been duly authorized, executed and issued by the Company and,
assuming due authentication thereof by the Trustee, and upon payment and
delivery of the Corporate Units in accordance with the Underwriting Agreement,
will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms and entitled to
the benefits of the Indenture.

 

(k)           The
execution, delivery and performance by the Company of this Agreement, the
Indenture and the Equity Unit Agreements, and the Securities, the issuance and
sale of the Securities being delivered on the Closing Date, and the compliance
by the Company with the terms of, and the consummation of the transactions
contemplated hereby and thereby will not (i) conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
Subsidiaries pursuant to, any indenture, mortgage,

 

2

 

deed of trust, loan agreement or other agreement or instrument listed
as an exhibit in the Company’s Annual Report on Form 10-K for the year ended
June 30, 2004 or in any report subsequently filed by the Company pursuant to
Section 13(a) or 15(d) of the Exchange Act, (ii) result in any violation of the
provisions of the charter or by-laws or similar organizational documents of the
Company or any of the Subsidiaries or (iii) result in the violation of any law
or statute or any judgment, order or regulation of any court or arbitrator or
governmental or regulatory authority of the District of Columbia or the United
States of America (other than the blue sky laws of the various states as to
which such counsel need express no opinion) except, in the case of clauses (i)
and (iii) above, for such conflict, breach or violation that would not,
individually or in the aggregate, have a Material Adverse Effect.

 

(l)            The
statements in the Prospectus under the headings (i) “The Cross Country
Acquisition” and “Description of Southern Union’s Common Stock and Preferred
Stock,” “Description of the Equity
Units,” “Description of the Purchase Contracts,” “Certain Provisions of the
Purchase Contract and the Purchase Contract and Pledge Agreement” and “Description
of the Senior Notes” and (ii) “Business
– Transportation and Storage Segment—Regulation,” and, to our knowledge after
due inquiry, “Business – Distribution Segment—Regulation and Rates,” “Business
– Environmental” and “Legal Proceedings,” in the case of clause (ii) above, incorporated
by reference from Items 1 and 3 of Part I of the Company’s Annual Report on
Form 10-K for the year ended June 30, 2004, and Item 1 of Part II of the
Company’s Quarterly Report on Form 10-Q for the period ended September 30,
2004, to the extent that they constitute summaries of the terms of
stock, matters of law or legal conclusions, fairly summarize the matters
described therein in all material respects; and, to the knowledge of such
counsel after due inquiry, (A) there are no current or pending legal,
governmental or regulatory actions, suits or proceedings that are required
under the Securities Act to be described in the Prospectus and that are not so
described and (B) there are no statutes, regulations or contracts and other
documents that are required under the Securities Act to be filed as exhibits to
the Registration Statement or described in the Prospectus and that have not
been so filed or described.

 

(m)          The
Company is not and, after giving effect to the offering and sale of the Shares
and the application of the proceeds thereof as described in the Prospectus,
will not be an “investment company” within the meaning of the Investment
Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder (collectively, “Investment Company Act”) that is required
to be registered under the Investment Company Act.

 

(n)           Neither
the Company nor any of its subsidiaries is a “holding company” or, to the
knowledge of such counsel after due inquiry, “subsidiary company” of a holding
company or an “affiliate” thereof, within the meaning of the Public Utility
Holding Company Act of 1935, as amended.

 

(o)           Such
counsel has no reason to believe that (i) any document filed pursuant to the
Exchange Act and incorporated by reference in the Registration Statement and
the Prospectus (other than financial statements and related schedules therein,
as to which such counsel need express no belief) did not comply when so filed
as to form in all material respects with the Exchange Act and the rules and
regulations of the Commission thereunder and (ii) the Registration Statement
and Prospectus (other than financial statements and other financial

 

3

 

information contained therein, as to which such counsel need express no
belief) do not comply as to form in all material respects with the Securities
Act and the applicable rules and regulations of the Commission thereunder
(other than the omission of certain historical and pro forma information
relating to Panhandle at the time the Registration Statement was declared
effective or as otherwise contemplated by the letter from the Commission dated
December 21, 2004).

 

Such
counsel shall also state that they have participated in conferences with
representatives of the Company and with representatives of its independent
accountants and counsel at which conferences the contents of the Registration
Statement and the Prospectus and any amendment and supplement thereto and
related matters were discussed and, although such counsel has not undertaken to
determine independently and such counsel is not passing on and assume no
responsibility for the accuracy, completeness or fairness of the Registration
Statement, the Prospectus and any amendment or supplement thereto (except as
expressly provided above), nothing has come to the attention of such counsel to
cause such counsel to believe that the Registration Statement, at the time of its effective date and at the date of the
Underwriting Agreement, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (other than the financial statements
and other financial information contained therein, as to which such counsel
need express no belief), or that the Prospectus or any amendment or supplement
thereto as of its date and the Closing Date contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (other than the financial  statements and other financial information
contained therein, as to which such counsel need express no belief).

 

Such
counsel may state that whenever its opinion is based on factual matters that
are to its “knowledge after due inquiry” such counsel has relied, as to factual
matters, on the representation and warranties of the Company set forth in this
Agreement (after discussion of the contents thereof with the Company) or
certificates of officers of the Company as to the existence or nonexistence of
the factual matters upon which such opinion is predicated.  Such counsel shall state that it has no
reason to believe, however, that any such certificate is untrue or inaccurate
in any material respect.

 

In
rendering such opinions, such counsel may state that they express no opinion as
to the laws of any jurisdiction other than the relevant federal law of the
United States of America, District of Columbia law and the Delaware General
Corporation Law and, with respect to the opinion expressed in paragraphs (b)
and (c) only, the Delaware Limited Liability Company Act and the Delaware
Revised Uniform Limited Partnership Act, insofar as such laws apply, and that
they render no opinion with respect to the state securities or blue sky laws of
any jurisdiction or the law of any other jurisdiction.  With respect to paragraph (h), such counsel
may also state that they render no opinion with respect to the anti-fraud
provisions of the federal securities laws. 
Such counsel may note that they are not admitted to the practice of law
in the states of Delaware, Massachusetts, Pennsylvania or Rhode Island.

 

4

 

Attachment I

 

Subsidiaries

 

1.             Panhandle
Eastern Pipe Line Company, L.P.

 

2.             Trunkline
Gas Company, LLC

 

3.             Trunkline
LNG Company, LLC

 

4.             CCE
Acquisition, LLC

 

5.             CCE
Holdings, LLC

 

5

 

Attachment II

 

	
  Name

  	
   

  	
  Jurisdictions
  of 

  Foreign Qualification

  
	
   

  	
   

  	
   

  
	
  1.       Southern
  Union Company

  	
   

  	
  Massachusetts, Missouri 

  Pennsylvania and Rhode Island

  
	
   

  	
   

  	
   

  
	
  2.       Panhandle
  Eastern Pipe Line Company, L.P.

  	
   

  	
  Indiana, Kansas, Michigan, Missouri, Ohio, Oklahoma,
  Texas and Illinois

  
	
   

  	
   

  	
   

  
	
  3.       Trunkline
  Gas Company, LLC

  	
   

  	
  Arkansas, Indiana, Kentucky, Louisiana, Mississippi,
  Tennessee, Texas and Wisconsin

  
	
   

  	
   

  	
   

  
	
  4.       Trunkline
  LNG Company, LLC

  	
   

  	
  Louisiana and Texas

  
	
   

  	
   

  	
   

  
	
  5.       CCE
  Acquisition, LLC

  	
   

  	
  none

  
	
   

  	
   

  	
   

  
	
  5.       CCE
  Holdings, LLC

  	
   

  	
  none

  

 

6

 

Annex A-2

 

[Form of Opinion
of Dennis Morgan]

 

(a)           All
the outstanding shares of capital stock of the Company are fully paid and
non-assessable.

 

(b)           Neither
the Company nor any of its subsidiaries is (i) in violation of its charter or
bylaws or similar organizational documents; (ii) in default, and no event has
occurred that, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which it is a party or by which it is bound
or to which any of its property or assets is subject; or (iii) in violation of
any law or statute or any judgment, order, rule or regulation of any court or
arbitrator or governmental or regulatory authority, except in the case of
clauses (ii) or (iii) for any such default or violation that would not,
individually or in the aggregate, have a Material Adverse Effect.

 

(c)           To
the knowledge of such counsel after due inquiry, except as described in the
Prospectus, there are no legal, governmental or regulatory investigations,
actions, suits or proceedings pending to which the Company or any of its
subsidiaries is or may be a party or to which any property of the Company or
any of its subsidiaries is or may be the subject which, individually or in the
aggregate, if determined adversely to the Company or any of its subsidiaries,
could reasonably be expected to have a Material Adverse Effect; and to the
knowledge of such counsel after due inquiry, no such investigations, actions,
suits or proceedings are threatened or to his knowledge contemplated by any
governmental or regulatory authority or threatened by others.

 

(d)           Each
of the Company and its subsidiaries owns, possesses or has obtained all
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with, all
governmental authorities (including foreign regulatory agencies), all
self-regulatory organizations and all courts and other tribunals, domestic or
foreign, necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as conducted as of the date hereof except
where the failure to possess or make the same would not, individually or in the
aggregate, have a Material Adverse Effect, and neither the Company nor any such
subsidiary has received any actual notice of any proceeding relating to
revocation or modification of any such license, permit, certificate, consent,
order, approval or other authorization, except as described in the Registration
Statement and the Prospectus; and each of the Company and its subsidiaries is
in compliance with all laws and regulations relating to the conduct of its
business as conducted as of the date of the Prospectus except for the
noncompliance of laws and regulations that would not, individually or in the
aggregate, have a Material Adverse Effect.

 

(e)           The
statements in the Prospectus under the
headings  “Business – Transportation and
Storage Segment—Regulation,” “Business – Distribution Segment—

 

 

Regulation
and Rates,” “Business – Environmental” and “Legal Proceedings,” which are
incorporated by reference from Items 1 and 3 of Part I of the Company’s Annual
Report on Form 10-K for the year ended June 30, 2004, and Item 1 of Part II of
the Company’s Quarterly Report on Form 10-Q for the period ended September 30,
2004 to the extent that they constitute summaries of matters of law or
regulation or legal conclusions, fairly summarize the matters described therein
in all material respects; and, to the knowledge of such counsel after due
inquiry, (A) there are no current or pending legal, governmental or regulatory
actions, suits or proceedings that are required under the Securities Act to be
described in the Prospectus and that are not so described and (B) there are no
statutes, regulations or contracts and other documents that are required under
the Securities Act to be filed as exhibits to the Registration Statement or
described in the Prospectus and that have not been so filed or described.

 

(f)            No filing with, or approval, authorization,
consent, license, registration, qualification, order or decree of, any court or
governmental authority or agency, domestic or foreign, is necessary or required
for the execution, delivery and performance by the Company of the Underwriting
Agreement and the consummation of the transaction contemplated thereby except
(i) such as have been obtained under the Securities Act, (ii) as may be
required to be obtained under state securities laws and (iii) such as have been
obtained from the Pennsylvania Public Utility Commission and the Massachusetts
Department of Telecommunications and Energy regarding the issuance of the
Securities.

 

2

 

Annex B

 

[Form of Opinion
of Pennsylvania Counsel for the Company]

 

An appropriate order or orders (each an “Order”) of the Pennsylvania Public Utility
Commission necessary to permit the issuance and delivery of the Securities has
been entered, and the Order is in full force and effect and has not been
modified or repealed in any respect; no filing with, or approval,
authorization, consent, license, registration, qualification, order or decree
of, any court or governmental authority or agency in Pennsylvania, is necessary
or required under any Pennsylvania Public Utility Law for the due
authorization, execution and delivery by the Company of this Agreement, or for
the performance by the Company of the transactions contemplated hereby except
as may be required to be obtained under Pennsylvania Blue Sky laws.

 

 

Annex C

 

[Form of Opinion
of Massachusetts Counsel for the Company]

 

An appropriate order or orders (each an “Order”) of the Massachusetts Department of
Telecommunications and Energy necessary to permit the issuance and delivery of
the Securities has been entered, and the Order is in full force and effect and
has not been modified or repealed in any respect.  No filing with, or approval, authorization,
consent, license, registration, qualification, order or decree of, any court or
governmental authority or agency in Massachusetts is necessary or required for
the due authorization, execution and delivery by the Company of this Agreement,
or for the performance by the Company of the transactions contemplated thereby,
except as may be required to be obtained under Massachusetts Blue Sky law.

 

 

Exhibit A

 

FORM OF LOCK-UP
AGREEMENT

 

February     , 2005

 

MERRILL
LYNCH, PIERCE, FENNER & SMITH

INCORPORATED

J.P. MORGAN SECURITIES INC.

As Representatives of 

the several Underwriters listed in 

Schedule I to the Underwriting

Agreements referred to below

 

c/o Merrill Lynch,
Pierce, Fenner & Smith

                Incorporated

4 World Financial Center

New York, New York 10080

 

c/o J.P. Morgan
Securities Inc.

277 Park Avenue

New York, NY  10172

 

Re:          Southern Union Company --- Public Offering

 

Ladies and Gentlemen:

 

The undersigned
understands that you, as Representatives of the several Underwriters, propose
to enter into (i) an Underwriting Agreement (the “Common Stock Underwriting
Agreement”) with Southern Union Company, a Delaware corporation
(the “Company”), providing for the public offering (the “Common Stock Offering”)
by the several Underwriters named in
Schedule I to the Common Stock Underwriting Agreement (the “Common Stock
Underwriters”), of Common Stock, par value $1.00 per share, of the Company (the
“Common Stock”) and (ii) an Underwriting Agreement (the “Equity Units
Underwriting Agreement” and together with the Common Stock Underwriting
Agreement, the “Underwriting Agreements”) with, the Company, providing for the
public offering (the “Equity Units Offering” and collectively with the Common
Stock Offering, the “Public Offerings”) by the several Underwriters named in
Schedule I to the Equity Units Underwriting Agreement (the “Equity Units
Underwriters” and collectively with the Common Stock Underwriters, the “Underwriters”),
of Equity Units, of the Company (the “Equity Units” and collectively with the
Common Stock, the “Securities”). Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the applicable
Underwriting Agreement.

 

 

In consideration of the
Underwriters’ agreement to purchase and make the Public Offerings of the
Securities, and for other good and valuable consideration, receipt of which is
hereby acknowledged, the undersigned hereby agrees that, without the prior
written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P.
Morgan Securities Inc. on behalf of the Underwriters, the undersigned will not,
during the period ending 90 days after the
date of the prospectuses relating to the Public Offerings (collectively, the “Prospectus”),
(1) offer, pledge, announce the intention to sell, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
(including without limitation, Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and securities which may
be issued upon exercise of a stock option or warrant) or (2) enter into any
swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. In addition,
the undersigned agrees that, without the prior written consent of Merrill
Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc.
on behalf of the Underwriters, it will not, during the period ending 90 days
after the date of the Prospectus, make any demand for or exercise any right
with respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock.

 

In furtherance of the
foregoing, the Company, and any duly appointed transfer agent for the
registration or transfer of the securities described herein, are hereby
authorized to decline to make any transfer of securities if such transfer would
constitute a violation or breach of this Letter Agreement.

 

The undersigned hereby
represents and warrants that the undersigned has full power and authority to
enter into this Letter Agreement. All authority herein conferred or agreed to
be conferred and any obligations of the undersigned shall be binding upon the
successors, assigns, heirs or personal representatives of the undersigned.

 

The undersigned
understands that, if neither of the Underwriting Agreements become effective,
or if both of the Underwriting Agreements (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment
for and delivery of the Securities to be sold thereunder, the undersigned shall
be released from all obligations under this Letter Agreement.  For the avoidance of doubt, if only one of
the Underwriting Agreements does not become effective or is terminated, then
the undersigned’s obligations under this Letter Agreement shall continue
unaffected.

 

The undersigned
understands that the Underwriters are entering into the Underwriting Agreements
and proceeding with the Public Offerings in reliance upon this Letter
Agreement.

 

 

This lock-up agreement shall
be governed by and construed in accordance with the laws of the State of New
York, without regard to the conflict of laws principles thereof.

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [NAME OF STOCKHOLDER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
  Accepted as of the date

  first set forth above: 

  	
   

  
					

 

MERRILL LYNCH, PIERCE,
FENNER & SMITH

INCORPORATED

J.P. MORGAN SECURITIES INC.

Acting severally on
behalf of themselves

and the several Underwriters named in

Schedule I to the Common Stock Underwriting Agreement

 

	
  By: MERRILL LYNCH, PIERCE,
  FENNER & SMITH

  	
   

  
	
  INCORPORATED

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
   

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
				

 

MERRILL
LYNCH, PIERCE, FENNER & SMITH

                INCORPORATED

J.P. MORGAN SECURITIES
INC.

Acting severally on
behalf of themselves

and the several Underwriters named in

Schedule I to the Equity Units Underwriting Agreement

 

	
  By: MERRILL LYNCH, PIERCE,
  FENNER & SMITH

  	
   

  
	
  INCORPORATED

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
   

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
				

 

3EXHIBIT 4.2

 

 

 

 

SOUTHERN
UNION COMPANY

 

 

and

 

 

JPMORGAN
CHASE BANK, N.A.

as Purchase Contract Agent

 

and 

 

 

JPMORGAN
CHASE BANK, N.A.

 

as
Collateral Agent, Custodial Agent and Securities Intermediary 

 

 

PURCHASE CONTRACT AND PLEDGE AGREEMENT

 

Dated as of
February 11, 2005

 

 

 

 

 

TABLE OF CONTENTS

 

 

	
  ARTICLE 1

  	
   

  	
   

  
	
  DEFINITIONS
  AND OTHER PROVISIONS OF GENERAL APPLICATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  1.01.

  	
  Definitions

  	
   

  	
   

  
	
  Section
  1.02. 

  	
  Compliance Certificates and Opinions

  	
   

  	
   

  
	
  Section
  1.03.

  	
  Form
  of Documents Delivered to Purchase Contract Agent

  	
   

  	
   

  
	
  Section 1.04.

  	
  Acts of Holders; Record Dates

  	
   

  	
   

  
	
  Section 1.05.

  	
  Notices

  	
   

  	
   

  
	
  Section 1.06.

  	
  Notice to Holders; Waiver

  	
   

  	
   

  
	
  Section 1.07. 

  	
  Effect of Headings and Table of
  Contents

  	
   

  	
   

  
	
  Section 1.08.

  	
  Successors and Assigns

  	
   

  	
   

  
	
  Section 1.09.

  	
  Separability Clause

  	
   

  	
   

  
	
  Section 1.10. 

  	
  Benefits of Agreement

  	
   

  	
   

  
	
  Section 1.11. 

  	
  Governing Law

  	
   

  	
   

  
	
  Section 1.12.

  	
  Legal Holidays

  	
   

  	
   

  
	
  Section 1.13. 

  	
  Counterparts

  	
   

  	
   

  
	
  Section 1.14. 

  	
  Inspection of Agreement

  	
   

  	
   

  
	
  Section 1.15.

  	
  Appointment of Financial
  Institution as Agent for the Company

  	
   

  	
   

  
	
  Section 1.16.

  	
  No Waiver

  	
   

  	
   

  
	
  Section 1.17. 

  	
  Tax Treatment

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  2

  	
   

  	
   

  
	
  CERTIFICATE FORMS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
  Forms of Certificates
  Generally

  	
   

  	
   

  
	
  Section 2.02. 

  	
  Form of Purchase Contract Agent’s
  Certificate of Authentication

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  3

  	
   

  	
   

  
	
  THE
  UNITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
  Amount; Form and
  Denominations

  	
   

  	
   

  
	
  Section 3.02. 

  	
  Rights and Obligations Evidenced by
  the Certificates

  	
   

  	
   

  
	
  Section 3.03. 

  	
  Execution, Authentication,
  Delivery and Dating

  	
   

  	
   

  
	
  Section 3.04. 

  	
  Temporary Certificates

  	
   

  	
   

  
	
  Section 3.05. 

  	
  Registration;
  Registration of Transfer and Exchange

  	
   

  	
   

  
	
  Section 3.06. 

  	
  Book-Entry Interests

  	
   

  	
   

  
	
  Section 3.07. 

  	
  Notices to Holders

  	
   

  	
   

  
	
  Section 3.08.

  	
  Appointment of Successor
  Depositary

  	
   

  	
   

  
	
  Section 3.09.

  	
  Definitive Certificates

  	
   

  	
   

  
	
  Section 3.10.

  	
  Mutilated, Destroyed, Lost and Stolen
  Certificates

  	
   

  	
   

  
	
  Section
  3.11. 

  	
  Persons Deemed Owners

  	
   

  	
   

  
	
  Section 3.12. 

  	
  Cancellation

  	
   

  	
   

  
					

	
  Section 3.13. 

  	
  Creation of Treasury Units
  by Substitution of Treasury Securities

  	
   

  	
   

  

 

i

 

	
  Section 3.14. 

  	
  Recreation of Corporate
  Units

  	
   

  	
   

  	 

	
  Section 3.15. 

  	
  Transfer of Collateral
  upon Occurrence of Termination Event

  	
   

  	
   

  	 

	
  Section 3.16. 

  	
  No Consent to Assumption

  	
   

  	
   

  	 

	
  Section 3.17. 

  	
  Substitutions

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  ARTICLE
  4

  	
   

  	
   

  	 

	
  THE SENIOR
  NOTES AND APPLICABLE OWNERSHIP

  	
   

  	
   

  	 

	
  INTERESTS IN THE
  TREASURY PORTFOLIO

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  Section 4.01. 

  	
  Interest Payments; Rights to Interest Payments Preserved

  	
   

  	
   

  	 

	
  Section 4.02. 

  	
  Principal Payments Prior to
  or on Purchase Contract Settlement Date

  	
   

  	
   

  	 

	
  Section 4.03. 

  	
  Notice and Voting

  	
   

  	
   

  	 

	
  Section
  4.04.

  	
  Tax
  Event Redemption

  	
   

  	
   

  	 

	
  Section
  4.05.

  	
  Payments
  to Purchase Contract Agent

  	
   

  	
   

  	 

	
  Section 4.06. 

  	
  Payments Held in Trust

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  ARTICLE 5

  	
   

  	
   

  
	
  THE PURCHASE CONTRACTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	 

	
  Section 5.01. 

  	
  Purchase of Shares of Common Stock

  	
   

  	
   

  	 

	
  Section 5.02. 

  	
  Remarketing; Payment of Purchase Price

  	
   

  	
   

  	 

	
  Section
  5.03. 

  	
  Issuance
  of Shares of Common Stock

  	
   

  	
   

  	 

	
  Section 5.04. 

  	
  Adjustment of Settlement Rate

  	
   

  	
   

  	 

	
  Section
  5.05. 

  	
  Notice
  of Adjustments and Certain Other Events

  	
   

  	
   

  	 

	
  Section
  5.06. 

  	
  Termination
  Event; Notice

  	
   

  	
   

  	 

	
  Section
  5.07. 

  	
  Early
  Settlement

  	
   

  	
   

  	 

	
  Section
  5.08. 

  	
  No
  Fractional Shares

  	
   

  	
   

  	 

	
  Section
  5.09. 

  	
  Charges
  and Taxes

  	
   

  	
   

  	 

	
  Section
  5.10. 

  	
  Contract
  Adjustment Payments

  	
   

  	
   

  	 

	
  Section
  5.11.

  	
  Deferral
  of Contract Adjustment Payments

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  ARTICLE 6

  	
   

  	
   

  	 

	
  RIGHTS AND REMEDIES OF HOLDERS

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  Section
  6.01. 

  	
  Unconditional
  Right of Holders to Receive Contract Adjustment Payments and to Purchase
  Shares of Common Stock

  	
   

  	
   

  	 

	
  Section 6.02. 

  	
  Restoration of Rights and Remedies

  	
   

  	
   

  	 

	
  Section
  6.03.

  	
  Rights
  and Remedies Cumulative

  	
   

  	
   

  	 

	
  Section
  6.04. 

  	
  Delay
  or Omission Not Waiver

  	
   

  	
   

  	 

	
  Section
  6.05. 

  	
  Undertaking
  for Costs

  	
   

  	
   

  	 

	
  Section 6.06. 

  	
  Waiver of Stay or Extension Laws

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  ARTICLE 7

  	
   

  	
   

  	 

	
  THE PURCHASE CONTRACT AGENT

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  Section
  7.01. 

  	
  Certain
  Duties and Responsibilities

  	
   

  	
   

  	 

	
  Section
  7.02. 

  	
  Notice
  of Default

  	
   

  	
   

  	 

 

ii

 

	
  Section
  7.03. 

  	
  Certain
  Rights of Purchase Contract Agent

  	
   

  	
   

  
	
  Section
  7.04. 

  	
  Not
  Responsible for Recitals or Issuance of Units

  	
   

  	
   

  
	
  Section
  7.05.

  	
  May
  Hold Units

  	
   

  	
   

  
	
  Section
  7.06. 

  	
  Money
  Held In Custody

  	
   

  	
   

  
	
  Section
  7.07. 

  	
  Compensation
  and Reimbursement

  	
   

  	
   

  
	
  Section
  7.08.

  	
  Corporate
  Purchase Contract Agent Required, Eligibility

  	
   

  	
   

  
	
  Section
  7.09. 

  	
  Resignation
  and Removal; Appointment of Successor

  	
   

  	
   

  
	
  Section
  7.10. 

  	
  Acceptance
  of Appointment by Successor

  	
   

  	
   

  
	
  Section
  7.11. 

  	
  Merger,
  Conversion, Consolidation or Succession to Business

  	
   

  	
   

  
	
  Section
  7.12. 

  	
  Preservation
  of Information; Communications to Holders

  	
   

  	
   

  
	
  Section
  7.13. 

  	
  No
  Obligations of Purchase Contract Agent

  	
   

  	
   

  
	
  Section
  7.14. 

  	
  Tax
  Compliance

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
   

  	
   

  
	
  SUPPLEMENTAL AGREEMENTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.01. 

  	
  Supplemental Agreements without Consent of Holders

  	
   

  	
   

  
	
  Section 8.02. 

  	
  Supplemental Agreements with Consent of Holders

  	
   

  	
   

  
	
  Section
  8.03. 

  	
  Execution
  of Supplemental Agreements

  	
   

  	
   

  
	
  Section
  8.04. 

  	
  Effect
  of Supplemental Agreements

  	
   

  	
   

  
	
  Section
  8.05. 

  	
  Reference
  to Supplemental Agreements

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
   

  	
   

  
	
  CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER
  OR LEASE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  9.01. 

  	
  Covenant
  Not to Consolidate, Merge, Convey, Transfer or Lease Property Except under
  Certain Conditions

  	
   

  	
   

  
	
  Section
  9.02. 

  	
  Rights
  and Duties of Successor Corporation

  	
   

  	
   

  
	
  Section
  9.03. 

  	
  Officers’
  Certificate and Opinion of Counsel Given to Purchase Contract Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
   

  	
   

  
	
  COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.01. 

  	
  Performance under Purchase Contracts

  	
   

  	
   

  
	
  Section 10.02. 

  	
  Maintenance of Office or Agency

  	
   

  	
   

  
	
  Section 10.03. 

  	
  Company to Reserve Common Stock

  	
   

  	
   

  
	
  Section 10.04.

  	
  Covenants as to Common Stock; Listing

  	
   

  	
   

  
	
  Section 10.05.

  	
  Statements of Officers of the Company as to Default

  	
   

  	
   

  
	
  Section 10.06. 

  	
  ERISA

  	
   

  	
   

  
	
  Section 10.07. 

  	
  Tax Treatment.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  11

  	
   

  	
   

  
	
  PLEDGE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.01. 

  	
  Pledge

  	
   

  	
   

  
	
  Section 11.02.

  	
  Termination

  	
   

  	
   

  
					

 

iii

 

	
  ARTICLE 12

  	
   

  	
   

  
	
  ADMINISTRATION OF COLLATERAL

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.01. 

  	
  Initial Deposit of Senior Notes

  	
   

  	
   

  
	
  Section 12.02. 

  	
  Establishment of Collateral Account

  	
   

  	
   

  
	
  Section 12.03. 

  	
  Treatment as Financial Assets

  	
   

  	
   

  
	
  Section 12.04. 

  	
  Sole Control by Collateral Agent

  	
   

  	
   

  
	
  Section 12.05. 

  	
  Jurisdiction

  	
   

  	
   

  
	
  Section 12.06. 

  	
  No Other Claims

  	
   

  	
   

  
	
  Section 12.07.

  	
  Investment and Release

  	
   

  	
   

  
	
  Section 12.08.

  	
  Statements and Confirmations

  	
   

  	
   

  
	
  Section 12.09.

  	
  Tax Allocations

  	
   

  	
   

  
	
  Section 12.10. 

  	
  No Other Agreements

  	
   

  	
   

  
	
  Section 12.11. 

  	
  Powers Coupled with an Interest

  	
   

  	
   

  
	
  Section 12.12.

  	
  Waiver of Lien; Waiver of Set-off

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13

  	
   

  	
   

  
	
  RIGHTS AND REMEDIES OF THE COLLATERAL AGENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 13.01. 

  	
  Rights and Remedies of the Collateral Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14

  	
   

  	
   

  
	
  REPRESENTATIONS AND WARRANTIES TO

  	
   

  	
   

  
	
  COLLATERAL AGENT; HOLDER COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 14.01. 

  	
  Representations and Warranties

  	
   

  	
   

  
	
  Section 14.02. 

  	
  Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 15

  	
   

  	
   

  
	
  THE COLLATERAL AGENT, THE CUSTODIAL AGENT
  AND THE SECURITIES INTERMEDIARY

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 15.01. 

  	
  Appointment, Powers and Immunities

  	
   

  	
   

  
	
  Section 15.02.

  	
  Instructions of the Company

  	
   

  	
   

  
	
  Section 15.03. 

  	
  Reliance by Collateral Agent, Custodial Agent and Securities
  Intermediary

  	
   

  	
   

  
	
  Section 15.04. 

  	
  Certain Rights

  	
   

  	
   

  
	
  Section 15.05.

  	
  Merger, Conversion, Consolidation or Succession to Business

  	
   

  	
   

  
	
  Section 15.06. 

  	
  Rights in Other Capacities

  	
   

  	
   

  
	
  Section 15.07. 

  	
  Non-reliance on Collateral Agent, the Custodial Agent and Securities
  Intermediary

  	
   

  	
   

  
	
  Section 15.08. 

  	
  Compensation and Indemnity

  	
   

  	
   

  
	
  Section 15.09. 

  	
  Failure to Act

  	
   

  	
   

  
	
  Section 15.10. 

  	
  Resignation and Removal of Collateral Agent, the Custodial Agent and
  the Securities Intermediary

  	
   

  	
   

  
	
  Section 15.11. 

  	
  Right to Appoint Agent or Advisor

  	
   

  	
   

  
	
  Section 15.12. 

  	
  Survival

  	
   

  	
   

  
	
  Section 15.13. 

  	
  Exculpation

  	
   

  	
   

  
	
  Section 15.14. 

  	
  Expenses, Etc

  	
   

  	
   

  
						

 

iv

 

	
  ARTICLE 16

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 16.01. 

  	
  Security Interest Absolute

  	
   

  	
   

  
	
  Section 16.02. 

  	
  Notice of Tax Event, Tax Event Redemption and Termination Event

  	
   

  	
   

  
					

 

EXHIBITS

 

	
  Exhibit A

  	
  –

  	
  Form of Corporate Units Certificate

  
	
  Exhibit B

  	
  –

  	
  Form of Treasury Units Certificate

  
	
  Exhibit C 

  	
  –

  	
  Instruction to Purchase Contract Agent From
  Holder to Create Treasury Units or Corporate Units

  
	
  Exhibit D 

  	
  –

  	
  Notice from Purchase Contract Agent to
  Holders Upon Termination Event

  
	
  Exhibit E 

  	
  –

  	
  Notice to Settle by Separate Cash

  
	
  Exhibit F 

  	
  –

  	
  Reserved

  
	
  Exhibit G 

  	
  –

  	
  Instruction from Purchase Contract Agent to
  Collateral Agent (Creation of Treasury Units)

  
	
  Exhibit H

  	
  –

  	
  Instruction from the Collateral Agent to
  the Securities Intermediary (Creation of Treasury Units)

  
	
  Exhibit I

  	
  –

  	
  Instruction from Purchase Contract Agent to
  Collateral Agent (Recreation of Corporate Units)

  
	
  Exhibit J

  	
  –

  	
  Instruction from Collateral Agent to
  Securities Intermediary (Recreation of Corporate Units)

  
	
  Exhibit K

  	
  –

  	
  Notice of Cash Settlement from Collateral
  Agent to Purchase Contract Agent

  
	
  Exhibit L

  	
  –

  	
  Instruction to Custodial Agent Regarding
  Remarketing

  
	
  Exhibit M

  	
  –

  	
  Instruction to Custodial Agent Regarding
  Withdrawal from Remarketing

  

 

v

 

PURCHASE CONTRACT AND PLEDGE AGREEMENT, dated as of February 11, 2005,
among SOUTHERN UNION COMPANY, a Delaware corporation (the “Company”),
JPMORGAN CHASE BANK, N.A., a national banking association, acting as purchase
contract agent for, and for purposes of the Pledge created hereby as
attorney-in-fact of, the Holders from time to time of the Units (in such
capacities, together with its successors and assigns in such capacities, the “Purchase Contract Agent”), JPMorgan Chase Bank, N.A., as
collateral agent hereunder for the benefit of the Company (in such capacity,
together with its successors in such capacity, the “Collateral
Agent”), as custodial agent (in such capacity, together with its
successors in such capacity, the “Custodial
Agent”), and as securities intermediary (as defined in Section
8-102(a)(14) of the UCC) with respect to the Collateral Account (in such
capacity, together with its successors in such capacity, the “Securities Intermediary”).

 

RECITALS

 

WHEREAS, the Company has duly authorized the
execution and delivery of this Agreement and the Certificates evidencing the
Units;

 

WHEREAS, all things necessary to make the
Purchase Contracts, when the Certificates are executed by the Company and
authenticated, executed on behalf of the Holders and delivered by the Purchase
Contract Agent, as provided in this Agreement, the valid obligations of the
Company, and to constitute these presents a valid agreement of the Company, in
accordance with its terms, have been done;

 

WHEREAS, pursuant to the terms of this
Agreement and the Purchase Contracts, the Holders of the Units have irrevocably
authorized the Purchase Contract Agent, as attorney-in-fact of such Holders,
among other things, to execute and deliver this Agreement on behalf of such
Holders and to grant the Pledge provided herein of the Collateral to secure the
Obligations.

 

NOW, THEREFORE, the parties hereto agree as
follows:

 

ARTICLE 1

DEFINITIONS AND OTHER
PROVISIONS OF GENERAL APPLICATION

 

Section 1.01.  Definitions. 
For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:

 

(a)           the
terms defined in this Article have the meanings assigned to them in this
Article and include the plural as well as the singular, and nouns and pronouns
of the masculine gender include the feminine and neuter genders; 

 

(b)           all
accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with generally accepted accounting principles in the United
States;

 

1

 

(c)           the
words “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular Article, Section,
Exhibit or other subdivision;

 

(d)           the
following terms which are defined in the UCC shall have the meanings set forth
therein: “certificated security,”
“control,” “financial asset,” “entitlement order,” “securities account” and “security entitlement”; and

 

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

 

“Act” has the
meaning, with respect to any Holder, set forth in Section 1.04.

 

“Adjustment Factor”
has the meaning set forth in Section 5.04(a)(ix).

 

“Affiliate” of
any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified
Person.  For the purposes of this
definition, “control” when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.

 

“Aggregate Market
Capitalization” has the meaning set forth in Section 5.04.

 

“Agreement”
means this instrument as originally executed or as it may from time to time be
supplemented or amended by one or more agreements supplemental hereto entered
into pursuant to the applicable provisions hereof.

 

“Applicable Market Value”
has the meaning set forth in Section 5.01(a).

 

“Applicable Ownership
Interest” shall mean, with respect to the U.S. Treasury Securities
in a Treasury Portfolio contained in a Corporate Unit, (i) for a Remarketing
Treasury Portfolio, (A) a 1/20, or 5.00%, undivided beneficial ownership
interest in a $1,000 face amount of a principal or interest strip in a U.S.
Treasury Security included in the Treasury Portfolio that matures on or prior
to February 15, 2008, (B) if the Reset Date occurs prior to November 16, 2007,
for the scheduled quarterly Payment Date on the Senior Notes that would have
occurred on November 16, 2007 if no remarketing had occurred, a 0.0546875%
undivided beneficial ownership interest (or, if the Reset Date is not otherwise
a Payment Date, such other percentage as determined by the Remarketing Agent)
in a $1,000 face amount of a principal or interest strip in a U.S. Treasury
Security maturing on or prior to November 15, 2007 in an amount equal to the
interest payment payable on November 16, 2007 in respect of a 1/20, or 5.00%,
beneficial ownership interest in $1,000 aggregate principal amount of Senior
Notes, assuming that (1) the interest rate on the Senior Notes had not been
reset to the Reset Rate and (2) interest on the Senior Notes accrued from the Reset
Date to but excluding November 16, 2007, and (C)

 

2

 

for the
scheduled quarterly Payment Date on the Senior Notes that would have occurred
on February 16, 2008 if no remarketing had occurred, a 0.0546875% undivided
beneficial ownership interest (or, if the Reset Date is not otherwise a Payment
Date, such other percentage as determined by the Remarketing Agent) in a $1,000
face amount of a principal or interest strip in a U.S. Treasury Security
maturing on or prior to February 15, 2008 in an amount equal to the interest
payment payable on February 16, 2008 in respect of a 1/20, or 5.00%, beneficial
ownership interest in $1,000 aggregate principal amount of Senior Notes,
assuming that (1) the interest rate on the Senior Notes had not been reset to
the Reset Rate and (2) interest on the Senior Notes accrued from the later of
the Reset Date and November 16, 2007 to but excluding February 16, 2008, or
(ii) for a Tax Event Treasury Portfolio, (A) a 1/20, or 5.00%, undivided
beneficial ownership interest in a $1,000 face amount of a principal or
interest strip in a U.S. Treasury Security included in the Treasury Portfolio
that matures on or prior to February 15, 2008, and (B) for each scheduled
Payment Date on the Senior Notes that occurs after the Tax Event Redemption
Date and on or prior to February 16, 2008, a 0.0546875% undivided beneficial
ownership interest in a $1,000 face amount of a principal or interest strip in
a U.S. Treasury Security maturing on or prior to that Payment Date in an amount
equal to the interest payment payable on such Payment Date in respect of a
1/20, or 5.00%, beneficial ownership interest in $1,000 aggregate principal
amount of Senior Notes, assuming that interest on the Senior Notes accrued from
and including the immediately preceding Payment Date.

 

“Applicable Principal
Amount” means the aggregate principal amount of the Senior Notes
that are components of Corporate Units.

 

“Applicants” has
the meaning set forth in Section 7.12(b).

 

“Bankruptcy Code”
means title 11 of the United States Code, or any other law of the United States
that from time to time provides a uniform system of bankruptcy laws.

 

“Beneficial Owner”
means, with respect to a Book-Entry Interest, a Person who is the beneficial
owner of such Book-Entry Interest as reflected on the books of the Depositary
or on the books of a Person maintaining an account with such Depositary
(directly as a Depositary Participant or as an indirect participant, in each
case in accordance with the rules of such Depositary).

 

“Board of Directors”
means the board of directors of the Company or a duly authorized committee of
that board.

 

“Board Resolution”
means one or more resolutions of the Board of Directors, a copy of which has
been certified by the Secretary or an Assistant Secretary of the Company, to
have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification and delivered to the Purchase Contract
Agent.

 

“Book-Entry Interest”
means a beneficial interest in a Global Certificate, registered in the name of
a Depositary or a nominee thereof, ownership and transfers of

3

 

which shall be
maintained and made through book entries by such Depositary as described in
Section 3.06.

 

“Business Day”
or “business day” means any day other than
a Saturday or Sunday or any other day on which banking institutions and trust
companies in New York City, New York are permitted or required by applicable
law to remain closed or a day on which the Indenture Trustee or the Collateral
Agent is closed for business; provided that
for purposes of the second paragraph of Section 1.12 only, the term “Business
Day” shall also be deemed to exclude any day on which DTC is closed.

 

“Cash”
means any coin or currency of the United States as at the time shall be legal
tender for payment of public and private debts.

 

“Cash Merger”
has the meaning set forth in Section 5.04(b)(ii).

 

“Cash Merger Early
Settlement” has the meaning set forth in Section 5.04(b)(ii).

 

“Cash Merger Early
Settlement Date” has the meaning set forth in Section 5.04(b)(ii).

 

“Cash Settlement”
has the meaning set forth in Section 5.02(b)(i).

 

“Certificate”
means a Corporate Units Certificate or a Treasury Units Certificate.

 

“Closing Price”
has the meaning set forth in Section 5.01(a).

 

“Code” means the
Internal Revenue Code of 1986, as amended.

 

“Collateral”
means the collective reference to:

 

(i)            the
Collateral Account and all investment property and other financial assets from
time to time credited to the Collateral Account and all security entitlements
with respect thereto, including, without limitation, (A) the Senior Notes and
security entitlements relating thereto that are a component of the Corporate
Units from time to time, (B) the Applicable Ownership Interests (as specified
in clause (i)(A) or (ii)(A) of the definition thereof) of the Holders with
respect to the Treasury Portfolio which are a component of the Corporate Units
from time to time; (C) any Treasury Securities and security entitlements
relating thereto Transferred to the Securities Intermediary from time to time
in connection with the creation of Treasury Units in accordance with Section
3.13 hereof and (D) payments made by Holders pursuant to Section 5.02 hereof;

 

(ii)           all
Proceeds of any of the foregoing (whether such Proceeds arise before or after
the commencement of any proceeding under any applicable bankruptcy, insolvency
or other similar law, by or against the pledgor or with respect to the
pledgor); and

 

4

 

(iii)          all
powers and rights now owned or hereafter acquired under or with respect to the
Collateral.

 

“Collateral
Account” means the securities account of JPMorgan Chase Bank, N.A.,
as Collateral Agent, maintained
on the books of the Securities Intermediary and designated “JPMorgan Chase
Bank, N.A., as Collateral Agent of Southern Union Company, as pledgee of
JPMorgan Chase Bank, N.A., as the Purchase Contract Agent on behalf of and as
attorney-in-fact for the Holders.”

 

 “Collateral Agent” means the Person named as “Collateral
Agent” in the first paragraph of this Agreement until a successor Collateral
Agent shall have become such pursuant to this Agreement, and thereafter
“Collateral Agent” shall mean the Person who is then the Collateral Agent
hereunder.

 

“Collateral Substitution”
means (i) with respect to a Corporate Unit, (x) the substitution of the Pledged
Senior Note included in such Corporate Unit with Treasury Securities in an
aggregate principal amount at maturity equal to the aggregate principal amount
of such Pledged Senior Note, or (y) the substitution of the Pledged Applicable
Ownership Interest in the Treasury Portfolio included in such Corporate Unit
with Treasury Securities in an amount equal to such Pledged Applicable
Ownership Interest in the Treasury Portfolio, or (ii) with respect to a
Treasury Unit, (x) the substitution of the Pledged Treasury Securities included
in such Treasury Unit (if the Applicable Ownership Interest in the Treasury
Portfolio has not replaced the Senior Note as a component of the Corporate
Unit) with Senior Notes in an aggregate principal amount equal to the aggregate
principal amount at stated maturity of the Pledged Treasury Securities, or (y)
the substitution of the Pledged Treasury Securities included in such Treasury
Unit (if the Applicable Ownership Interest in the Treasury Portfolio has
replaced the Senior Note as a component of the Corporate Unit) with the
appropriate Applicable Ownership Interest (as specified in clause (i)(A) or
(ii)(A) of the definition thereof) in the Treasury Portfolio.

 

“Common Stock”
means the common stock, par value $1.00 per share, of the Company. 

 

“Company” means
the Person named as the “Company” in the first paragraph of this instrument
until a successor shall have become such pursuant to the applicable provision
of this Agreement, and thereafter “Company” shall mean such successor.

 

“Constituent Person”
has the meaning set forth in Section 5.04(b)(i).

 

“Contract Adjustment
Payments” means the payments payable by the Company on the Payment
Dates in respect of each Purchase Contract, at a rate per year of 0.625% of the
Stated Amount per Purchase Contract.

 

“Corporate Trust Office”
means the office of the Purchase Contract Agent at which, at any particular
time, its corporate trust business shall be principally administered,

 

5

 

which office
at the date hereof is located at 4 New York Plaza, 15th Floor, New
York, New York 10004, Attention: 
Institutional Trust Services.

 

“Corporate Unit”
means a Unit, initially issued in substantially the form set forth as Exhibit A
hereto in the Stated Amount of $50, which represents (i) beneficial ownership
by the Holder of either (A) prior to the occurrence of a Tax Event Redemption
(1) a 1/20, or 5.00%, undivided beneficial ownership interest in $1,000
principal amount of a Senior Note, or (2) on and after the Reset Date, (x) an
Applicable Ownership Interest in the Remarketing Treasury Portfolio, subject to
the Pledge of such Senior Note or Applicable Ownership Interest in the
Remarketing Treasury Portfolio by the Holder pursuant to this Agreement (except
that the Applicable Ownership Interests specified in clauses (i)(B) and (i)(C)
of the definition thereof shall not be subject to the Pledge), and (y) if the
Reset Date occurs on a date that is not also a Payment Date, prior to the
Payment Date next following the Reset Date, the right to receive the interest
accrued on the 1/20, or 5.00%, undivided beneficial ownership interest in
$1,000 principal amount of Senior Note from and including the Payment Date
immediately preceding the Reset Date to but excluding the Reset Date, or (B) on
or after the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, an Applicable Ownership Interest in the Tax Event
Treasury Portfolio, subject to the Pledge of such Applicable Ownership Interest
in the Tax Event Treasury Portfolio by the Holder pursuant to this Agreement
(except that the Applicable Ownership Interests specified in clause (ii)(B) of
the definition thereof shall not be subject to the Pledge), and (ii) the rights
and obligations of the Company and the Holder under one Purchase Contract.

 

“Corporate Units
Certificate” means a certificate evidencing the rights and
obligations of a Holder in respect of the number of Corporate Units specified
on such certificate.

 

“Current Market Price”
has the meaning set forth in Section 5.04(a)(viii).

 

“Custodial Agent”
means the Person named as Custodial Agent in the first Paragraph of this
Agreement until a successor Custodial Agent shall have become such pursuant to
the applicable provisions of this Agreement, and thereafter “Custodial Agent”
shall mean the Person who is then the Custodial Agent hereunder.

 

“Deferred Contract
Adjustment Payments” has the meaning set forth in Section 5.11. 

 

“Depositary”
means a clearing agency registered under Section 17A of the Exchange Act that
is designated to act as Depositary for the Units as contemplated by Sections
3.06 and 3.08.

 

“Depositary Participant”
means a broker, dealer, bank, other financial institution or other Person for
whom from time to time the Depositary effects book entry transfers and pledges
of securities deposited with the Depositary.

 

6

 

“DTC” means The
Depository Trust Company.

 

“Early Settlement”
has the meaning set forth in Section 5.07(a).

 

“Early Settlement Amount”
has the meaning set forth in Section 5.07(b).

 

“Early Settlement Date”
has the meaning set forth in Section 5.07(b).

 

“ERISA” means
the Employee Retirement Income Security Act of 1974, as amended.

 

“Exchange Act”
means the Securities Exchange Act of 1934 and any statute successor thereto, in
each case as amended from time to time, and the rules and regulations
promulgated thereunder.

 

“Expiration Date”
has the meaning set forth in Section 1.04(e).

 

“Expiration Time”
has the meaning set forth in Section 5.04(a)(vi).

 

“Failed Early Remarketing”
has the meaning set forth in Section 5.02(a).

 

“Failed Final Remarketing”
has the meaning set forth in Section 5.02(c)(ii).

 

“Failed Remarketing”
shall mean a Failed Early Remarketing or a Failed Final Remarketing.

 

“Final Three-Day
Remarketing Period” means the Three-Day Remarketing Period beginning
on and including the fifth Business Day, and ending on and including the third
Business Day, prior to February 16, 2008.

 

“Fixed Settlement Rate”
means each of the Minimum Settlement Rate and the Maximum Settlement Rate.

 

“Global Certificate”
means a Certificate that evidences all or part of the Units and is registered
in the name of the Depositary or a nominee thereof.

 

“Holder” means,
with respect to a Unit, the Person in whose name the Unit evidenced by a
Certificate is registered in the Security Register; provided,
however, that solely for the purpose of determining whether the
Holders of the requisite number of Units have voted on any matter (and not for
any other purpose hereunder), if the Unit remains in the form of one or more
Global Certificates and if the Depositary that is the registered holder of such
Global Certificate has sent an omnibus proxy assigning voting rights to the
Depositary Participants to whose accounts the Units are credited on the record
date, the term “Holder” shall mean such Depositary Participant acting at the
direction of the Beneficial Owners.

 

7

 

“Indemnitees”
has the meaning set forth in Section 7.07(c).

 

“Indenture”
means the Indenture, dated as of January 31, 1994, between the Company and the
Indenture Trustee (including any provisions of the TIA that are deemed
incorporated therein), as heretofore amended and supplemented and as amended
and supplemented by the Second Supplemental Indenture pursuant to which the
Senior Notes will be issued.

 

“Indenture Trustee”
means JPMorgan Chase Bank, N.A., as trustee under the Indenture, or any
successor thereto.

 

“Issuer Order”
or “Issuer Request” means a written order
or request signed in the name of the Company by (i) either its Chief Executive
Officer, its President or one of its Vice Presidents, and (ii) either its
Corporate Secretary or one of its Assistant Corporate Secretaries or its
Treasurer or one of its Assistant Treasurers, and delivered to the Purchase
Contract Agent.

 

“Maximum Settlement Rate”
has the meaning set forth in Section 5.01(a).

 

“Minimum Settlement Rate”
has the meaning set forth in Section 5.01(a).

 

“non-electing share”
has the meaning set forth in Section 5.04(b)(i).

 

“NYSE” has the
meaning set forth in Section 5.01(a).

 

“Obligations”
means, with respect to each Holder, all obligations and liabilities of such
Holder under such Holder’s Purchase Contract and this Agreement or any other
document made, delivered or given in connection herewith or therewith, in each
case whether on account of principal, interest (including, without limitation,
interest accruing before and after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to such Holder, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Company or the Collateral Agent or the Securities Intermediary that are
required to be paid by the Holder pursuant to the terms of any of the foregoing
agreements).

 

“Officers’ Certificate” means a certificate signed by (i) either the
Company’s Chief Executive Officer, its President or one of its Vice Presidents,
and (ii) either the Company’s Corporate Secretary or one of its Assistant
Corporate Secretaries or its Treasurer or one of its Assistant Treasurers, and
delivered to the Purchase Contract Agent. Any Officers’ Certificate delivered
with respect to compliance with a condition or covenant provided for in this
Agreement (other than the Officers’ Certificate provided for in Section 10.05)
shall include: 

 

8

 

(i)            a
statement that each officer signing the Officers’ Certificate has read the
covenant or condition and the definitions relating thereto;

 

(ii)           a
brief statement of the nature and scope of the examination or investigation
undertaken by each officer in rendering the Officers’ Certificate;

 

(iii)          a
statement that, in the opinion of each such officer, each such officer has made
such examination or investigation as is necessary to enable such officer to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and

 

(iv)          a
statement as to whether, in the opinion of each such officer, such condition or
covenant has been complied with.

 

“Opinion of Counsel”
means a written opinion of counsel, who may be counsel to the Company (and who
may be an employee of the Company), and who shall be reasonably acceptable to
the Purchase Contract Agent.  An opinion
of counsel may rely on certificates as to matters of fact. 

 

“Outstanding Units”
means, with respect to any Unit and as of the date of determination, all Units
evidenced by Certificates theretofore authenticated, executed and delivered
under this Agreement, except:

 

(i)            if
a Termination Event has occurred, (x) Corporate Units for which the underlying
Senior Notes or Applicable Ownership Interests in the Treasury Portfolio have
been theretofore deposited with the Purchase Contract Agent in trust for the
Holders of such Corporate Units and (y) Treasury Units for which Treasury
Securities have been deposited with the Purchase Contract Agent in trust for
the Holders of such Treasury Units;

 

(ii)           Units
evidenced by Certificates theretofore cancelled by the Purchase Contract Agent
or delivered to the Purchase Contract Agent for cancellation or deemed
cancelled pursuant to the provisions of this Agreement; and

 

(iii)          Units
evidenced by Certificates in exchange for or in lieu of which other
Certificates have been authenticated, executed on behalf of the Holder and
delivered pursuant to this Agreement, other than any such Certificate in
respect of which there shall have been presented to the Purchase Contract Agent
proof satisfactory to it that such Certificate is held by a protected purchaser
in whose hands the Units evidenced by such Certificate are valid obligations of
the Company; 

 

provided,
however, that in determining whether the
Holders of the requisite number of the Units have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Units owned by
the Company or any Affiliate of the Company shall be

 

9

 

disregarded
and deemed not to be Outstanding Units, except that, in determining whether the
Purchase Contract Agent shall be authorized and protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Units that a Responsible Officer of the Purchase Contract Agent actually knows
to be so owned shall be so disregarded. Units so owned that have been pledged
in good faith may be regarded as Outstanding Units if the pledgee establishes
to the satisfaction of the Purchase Contract Agent the pledgee’s right so to
act with respect to such Units and that the pledgee is not the Company or any
Affiliate of the Company.

 

“Payment Date”
means each February 16, May 16, August 16 and November 16 of each year,
commencing May 16, 2005.

 

“Period for Early
Remarketing” means the period beginning on and including the third
Business Day prior to August 16, 2007 and ending on and including the ninth
Business Day prior to February 16, 2008, the last possible Remarketing Date
prior to the Final Three-Day Remarketing Period.

 

“Permitted
Investments” means any one of the following, in each case maturing
on the Business Day following the date of acquisition:

 

(1)           any evidence of
indebtedness with an original maturity of 365 days or less issued, or directly
and fully guaranteed or insured, by the United States of America or any agency
or instrumentality thereof (provided
that the full faith and credit of the United States of America is pledged in
support of the timely payment thereof or such indebtedness constitutes a
general obligation of it);

 

(2)           deposits, certificates
of deposit or acceptances with an original maturity of 365 days or less of any
institution which is a member of the Federal Reserve System having combined
capital and surplus and undivided profits of not less than $500 million at the
time of deposit (and which may include the Collateral Agent); 

 

(3)           investments with an
original maturity of 365 days or less of any Person that is fully and
unconditionally guaranteed by a bank referred to in clause (2); 

 

(4)           repurchase agreements
and reverse repurchase agreements relating to marketable direct obligations
issued or unconditionally guaranteed by the United States of America or issued
by any agency thereof and backed as to timely payment by the full faith and
credit of the United States of America; 

 

(5)           investments in
commercial paper, other than commercial paper issued by the Company or its
affiliates, of any corporation incorporated under the laws of the United States
or any State thereof, which commercial paper has a rating at the time of
purchase at least equal to “A-1”
by Standard & Poor’s Ratings

 

10

 

Services (“S&P”)
or at least equal to “P-1” by
Moody’s Investors Service, Inc. (“Moody’s”);
and 

 

(6)           investments in money
market funds (including, but not limited to, money market funds managed by the
Collateral Agent or an affiliate of the Collateral Agent) registered under the
Investment Company Act of 1940, as amended, rated in the highest applicable
rating category by S&P or Moody’s.

 

“Person” means a
legal person, including any individual, corporation, estate, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political
subdivision thereof or any other entity of whatever nature.

 

“Plan” means an
employee benefit plan that is subject to ERISA, a plan or individual retirement
account that is subject to Section 4975 of the Code or any entity whose assets
are considered assets of any such plan.

 

“Pledge” means
the lien and security interest in the Collateral created by this Agreement.

 

“Pledged
Applicable Ownership Interests” means the Applicable Ownership
Interests (as specified in clause (i)(A) or (ii)(A) of the definition thereof)
of the Holders with respect to the Treasury Portfolio and security entitlements
with respect thereto from time to time credited to the Collateral Account and
not then released from the Pledge.

 

“Pledged
Securities” means the Pledged Senior Notes, the Pledged Applicable
Ownership Interests and the Pledged Treasury Securities, collectively.

 

 “Pledged Senior Notes” means Senior Notes
and security entitlements with respect thereto from time to time credited to
the Collateral Account and not then released from the Pledge.

 

 “Pledged Treasury Securities” means Treasury
Securities and security entitlements with respect thereto from time to time
credited to the Collateral Account and not then released from the Pledge.

 

“Predecessor Certificate”
means a Predecessor Corporate Units Certificate or a Predecessor Treasury Units
Certificate.

 

“Predecessor Corporate
Units Certificate” of any particular Corporate Units Certificate means
every previous Corporate Units Certificate evidencing all or a portion of the
rights and obligations of the Company and the Holder under the Corporate Units
evidenced thereby; and, for the purposes of this definition, any Corporate
Units Certificate authenticated and delivered under Section 3.10 in exchange
for or in lieu of a mutilated, destroyed, lost or stolen Corporate Units
Certificate shall be deemed to evidence the same

 

11

 

rights and
obligations of the Company and the Holder as the mutilated, destroyed, lost or
stolen Corporate Units Certificate.

 

“Predecessor Treasury Units
Certificate” of any particular Treasury Units Certificate means
every previous Treasury Units Certificate evidencing all or a portion of the
rights and obligations of the Company and the Holder under the Treasury Units
evidenced thereby; and, for the purposes of this definition, any Treasury Units
Certificate authenticated and delivered under Section 3.10 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Treasury Units Certificate shall
be deemed to evidence the same rights and obligations of the Company and the
Holder as the mutilated, destroyed, lost or stolen Treasury Units Certificate.

 

“Primary Treasury Dealer”
shall mean a primary U.S. government securities dealer.

 

“Pro Rata” shall
mean pro rata to each Holder according to the aggregate Stated Amount of the
Units held by such Holder in relation to the aggregate Stated Amount of all
Units outstanding.

 

“Proceeds”
has the meaning ascribed thereto in the UCC and includes, without limitation,
all interest, dividends, cash, instruments, securities, financial assets and
other property received, receivable or otherwise distributed upon the sale
(including, without limitation, the Remarketing), exchange, collection or
disposition of any financial assets from time to time credited to the
Collateral Account.

 

“Prospectus”
means the prospectus relating to the delivery of shares or any securities in
connection with an Early Settlement pursuant to Section 5.07 or a Cash Merger
Early Settlement of Purchase Contracts pursuant to Section 5.04(b)(ii), in the
form in which first filed, or transmitted for filing, with the Securities and
Exchange Commission after the effective date of the Registration Statement
pursuant to Rule 424(b) under the Securities Act, including the documents
incorporated by reference therein as of the date of such Prospectus.

 

“Purchase Contract”
means, with respect to any Unit, the contract forming a part of such Unit and
obligating the Company to (i) sell, and the Holder of such Unit to purchase,
not later than the Purchase Contract Settlement Date, for $50 in cash, a number
of shares of Common Stock equal to the applicable Settlement Rate, and (ii) pay
the Holder thereof Contract Adjustment Payments, in each case on the terms and
subject to the conditions set forth in Article 5 hereof. 

 

“Purchase Contract Agent”
means the Person named as the “Purchase Contract Agent” in the first paragraph
of this Agreement until a successor Purchase Contract Agent shall have become
such pursuant to the applicable provisions of this Agreement, and thereafter
“Purchase Contract Agent” shall mean such Person or any subsequent successor
who is appointed pursuant to this Agreement.

 

12

 

“Purchase Contract
Settlement Date” means February 16, 2008.

 

“Purchase Contract
Settlement Fund” has the meaning set forth in Section 5.03.

 

“Purchase Price”
has the meaning set forth in Section 5.01(a).

 

“Purchased Shares”
has the meaning set forth in Section 5.04(a)(vi).

 

“Put Right” has
the meaning set forth in Section 7.04(a) of the Second Supplemental Indenture.

 

“Quotation Agent”
means any Primary Treasury Dealer selected by the Company.

 

“Record Date”
for any distribution and any Contract Adjustment Payment and any Deferred
Contract Adjustment Payment payable on any Payment Date means, as to any Global
Certificate or any other Certificate, the first business day of the calendar
month in which the relevant Payment Date falls; provided that
the Company may, at its option, select any other day as the Record Date for any
Payment Date so long as (i) such Record Date selected is more than one Business
Day but less than sixty Business Days prior to such Payment Date and (ii) at
least ten Business Days prior to the new Record Date for such Payment Date, the
Company notifies the Purchase Contract Agent in writing of the new Record Date
and instructs the Purchase Contract Agent to notify the Holders of such Record
Date.

 

“Redemption Amount”
has the meaning set forth in Section 1.02 of the Second Supplemental Indenture.

 

“Redemption Price”
has the meaning set forth in Section 1.02 of the Second Supplemental Indenture.

 

“Reference Dealer”
means a dealer engaged in trading of convertible securities.

 

“Reference Price”
has the meaning set forth in Section 5.01(a)(ii).

 

“Registration Statement”
means a registration statement under the Securities Act prepared by the Company
covering, inter alia, the delivery by the Company
of any securities in connection with an Early Settlement on the Early
Settlement Date or a Cash Merger Early Settlement of Purchase Contracts on the
Cash Merger Early Settlement Date under Section 5.04(b)(ii), including all
exhibits thereto and the documents incorporated by reference in the prospectus
contained in such registration statement, and any post-effective amendments
thereto.

 

“Remarketing”
means the remarketing of the Senior Notes by the Remarketing Agent pursuant to
the Remarketing Agreement.

 

13

 

“Remarketing Agent”
has the meaning set forth in Section 1.02 of the Second Supplemental Indenture.

 

“Remarketing Agreement”
has the meaning set forth in Section 1.02 of the Second Supplemental Indenture.

 

“Remarketing Announcement”
has the meaning set forth in Section 7.01 of the Second Supplemental Indenture.

 

“Remarketing Date(s)”
means one or more Business Days during the period beginning on the third
Business Day immediately preceding August 16, 2007 and ending on the third
Business Day immediately preceding February 16, 2008 selected by the Company as
a date on which the Remarketing Agent shall, in accordance with the terms of
the Remarketing Agreement, remarket the Senior Notes.

 

“Remarketing Fee”
means (i) 25 basis points (0.25%) of (A) if the Reset Date is not the Purchase
Contract Settlement Date and if the Remarketed Senior Notes mature on February
6, 2010, the sum of the Remarketing Treasury Portfolio Purchase Price and the
Separate Senior Notes Purchase Price or (B) if the Reset Date is the Purchase
Contract Settlement Date and if the Remarketed Senior Notes mature on February
16, 2010, the aggregate principal amount of the Remarketed Senior Notes, or
(ii) as established by mutual agreement between the Company and the Remarketing
Agent, if the maturity date of the Remarketed Senior Notes is, in connection
with the Successful Remarketing and in accordance with the provisions of the
Senior Notes, extended to a date after February 16, 2010 (which shall not be
more than 10 years from the Reset Date).

 

“Remarketing Per Senior
Note Price” means an amount equal to (i) the Remarketing Treasury
Portfolio Purchase Price divided by Applicable Principal Amount on any
Successful Remarketing Date during the Period for Early Remarketing.

 

“Remarketing Treasury
Portfolio” means (i) interest or principal strips of U.S. Treasury
Securities that mature on or prior to February 15, 2008 in an aggregate amount
equal to the principal amount of the Senior Notes underlying the Corporate
Units, (ii) if the Reset Date occurs prior to November 16, 2007, with respect
to the scheduled quarterly Payment Date on the Senior Notes that would have
occurred on November 16, 2007, interest or principal strips of U.S. Treasury
Securities that mature on or prior to November 15, 2007 in an aggregate amount
equal to the aggregate interest payment that would be due on November 16, 2007
on the principal amount of the Senior Notes that would have been components of
the Corporate Units assuming that (A) the interest rate on the Senior Notes had
not been reset to the Reset Rate; (B) interest on the Senior Notes accrued from
the Reset Date to, but excluding, November 16, 2007 and (C) there was no
remarketing, and (iii) with respect to the scheduled quarterly Payment Date on
the Senior Notes that would have occurred on February 16, 2008, interest or
principal strips of U.S. Treasury Securities that mature on or prior to
February 15, 2008 in an aggregate amount equal to the aggregate interest
payment that would be due on February 16, 2008 on the principal amount of the

 

14

 

Senior Notes
that would have been components of the Corporate Units assuming that (A) the
interest rate on the Senior Notes had not been reset to the Reset Rate, (B)
that interest on the Senior Notes accrued from the later of the Reset Date and
November 16, 2007 to, but excluding, February 16, 2008 and (C) there was no
remarketing.

 

“Remarketing Treasury
Portfolio Purchase Price” means the lowest aggregate ask-side price
quoted by a Primary Treasury Dealer to the Quotation Agent on the third
Business Day immediately preceding the Reset Date for the purchase of the
Remarketing Treasury Portfolio for settlement on the Reset Date.

 

“Reorganization Event”
has the meaning set forth in Section 5.04(b)(i).

 

“Reset Date” has
the meaning set forth in Section 1.02 of the Second Supplemental Indenture.

 

“Reset Rate” has
the meaning set forth in Section 1.02 of the Second Supplemental Indenture.

 

“Responsible Officer”
means, when used with respect to the Purchase Contract Agent, any officer of
the Purchase Contract Agent within the Institutional Trust Services –
Conventional Debt Unit (or any successor unit, department or division of the
Purchase Contract Agent) located at the Corporate Trust Office of the Purchase
Contract Agent who has direct responsibility for the administration of the
Agreement and, for the purposes of Section 7.01(b)(ii), also means, with
respect to a particular corporate trust matter, any other officer, trust
officer or person performing similar functions to whom such matter is referred
because of his or her knowledge of and familiarity of the particular subject.

 

“Rights” has the
meaning set forth in Section 5.04(a)(xi).

 

“Second Supplemental
Indenture” means the Supplemental Indenture No. 2, dated as of the
date hereof, between the Company and the Indenture Trustee, pursuant to which
the Senior Notes are issued.

 

“Securities Act”
means the Securities Act of 1933 and any statute successor thereto, in each
case as amended from time to time, and the rules and regulations promulgated
thereunder.

 

“Securities Intermediary”
means the Person named as Securities Intermediary in the first Paragraph of
this Agreement until a successor Securities Intermediary shall have become such
pursuant to the applicable provisions of this Agreement, and thereafter
“Securities Intermediary” shall mean such successor or any subsequent
successor.

 

“Security Register”
and “Security Registrar” have the respective
meanings set forth in Section 3.05.

 

15

 

“Senior Indebtedness”
means indebtedness of any kind of the Company unless the instrument under which
such indebtedness is incurred expressly provides that it is on a parity in
right of payment with or subordinate in right of payment to the Contract
Adjustment Payments.

 

“Senior Notes”
means the series of notes designated the Senior Notes initially due February
16, 2010 to be issued by the Company under the Indenture.

 

“Separate
Senior Notes” means Senior Notes that are not components of
Corporate Units.

 

“Separate Senior Notes
Purchase Price” means the amount in cash equal to the product of the
Remarketing Per Senior Note Price multiplied by the number of Separate Senior
Notes remarketed in a Remarketing during the Period for Early Remarketing.

 

“Settlement Rate”
has the meaning set forth in Section 5.01(a).

 

“Stated Amount”
means $50.

 

“Successful Early
Remarketing” has the meaning set forth in Section 5.02(c)(ii).

 

“Successful Final
Remarketing” has the meaning set forth in Section 5.02.

 

“Successful Remarketing”
means a Successful Early Remarketing or a Successful Final Remarketing.

 

“Tax Event” has
the meaning set forth in Section 1.02(e) of the Second Supplemental Indenture.

 

“Tax Event Redemption”
means the redemption of the Senior Notes pursuant to the Indenture following
the occurrence of a Tax Event.

 

“Tax Event Redemption Date”
means the date upon which a Tax Event Redemption is scheduled to occur pursuant
to the Indenture.

 

“Tax Event Treasury
Portfolio” means (i) interest or principal strips of U.S. Treasury
Securities that mature on or prior to February 15, 2008 in an aggregate amount
equal to the principal amount of Senior Notes included in the Corporate Units,
and (ii) with respect to each scheduled Payment Date on the Senior Notes that
occurs after the Tax Event Redemption and on or prior to February 16, 2008,
interest or principal strips of U.S. Treasury Securities which mature on or prior
to that Payment Date in an aggregate amount equal to the aggregate interest
payment that would be due on the aggregate principal amount of the Senior Notes
included in the Corporate Units on that Payment Date assuming that interest
accrued from and including the immediately preceding Payment Date.

 

16

 

“Tax Event Treasury
Portfolio Purchase Price” means the lowest aggregate ask-side price
quoted by a Primary Treasury Dealer to the Quotation Agent on the third
Business Day immediately preceding the Tax Event Redemption Date for the
purchase of the Tax Event Treasury Portfolio for settlement on the Tax Event
Redemption Date.

 

“Termination Date”
means the date, if any, on which a Termination Event occurs.

 

“Termination Event”
means the occurrence of any of the following events:

 

(i)            at
any time on or prior to the Purchase Contract Settlement Date, a judgment,
decree or court order shall have been entered granting relief under the
Bankruptcy Code, adjudicating the Company to be insolvent, or approving as
properly filed a petition seeking reorganization or liquidation of the Company
or any other similar applicable Federal or state law and if such judgment,
decree or order shall have been entered more than 60 days prior to the Purchase
Contract Settlement Date, such decree or order shall have continued
undischarged and unstayed for a period of 60 days;

 

(ii)           at
any time on or prior to the Purchase Contract Settlement Date, a judgment,
decree or court order for the appointment of a receiver or liquidator or
trustee or assignee in bankruptcy or insolvency of the Company or of its
property, or for the termination or liquidation of its affairs, shall have been
entered and if such judgment, decree or order shall have been entered more than
60 days prior to the Purchase Contract Settlement Date, such judgment, decree
or order shall have continued undischarged and unstayed for a period of 60
days; or

 

(iii)          at
any time on or prior to the Purchase Contract Settlement Date, the Company
shall file a petition for relief under the Bankruptcy Code, or shall consent to
the filing of a bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization or liquidation under the Bankruptcy
Code or any other similar applicable Federal or State law, or shall consent to
the filing of any such petition, or shall consent to the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it
or of its property, or shall make an assignment for the benefit of creditors,
or shall admit in writing its inability to pay its debts generally as they
become due.

 

“Three-Day Remarketing
Period” means a period beginning on and including the first of three
sequential Remarketing Dates and ending on and including the third of such
sequential Remarketing Dates during which the Senior Notes will be remarketed
in accordance with the provisions of the Remarketing Agreement.

 

“Threshold Appreciation
Price” has the meaning set forth in Section 5.01(a).

 

“TIA” means the
Trust Indenture Act of 1939, as amended from time to time, or any successor
legislation.

 

17

 

“TRADES”
means the Treasury/Reserve Automated Debt Entry System maintained by the
Federal Reserve Bank of New York pursuant to the TRADES Regulations.

 

“TRADES
Regulations” means the regulations of the United States Department
of the Treasury, published at 31 C.F.R. Part 357, as amended from time to
time.  Unless otherwise defined herein,
all terms defined in the TRADES Regulations are used herein as therein defined.

 

“Trading Day”
has the meaning set forth in Section 5.01(a).

 

“Trailing 12 Month Period”
has the meaning set forth in Section 5.04(a)(v).

 

“Transfer”
means (i) in the case of certificated securities in registered form, delivery
as provided in Section 8-301(a) of the UCC, indorsed to the transferee or in
blank by an effective endorsement; (ii) in the case of Treasury Securities,
registration of the transferee as the owner of such Treasury Securities on
TRADES; and (iii) in the case of security entitlements, including, without
limitation, security entitlements with respect to Treasury Securities, a
securities intermediary indicating by book entry that such security entitlement
has been credited to the transferee’s securities account. 

 

“Treasury Portfolio”
means, as applicable, the Remarketing Treasury Portfolio or the Tax Event
Treasury Portfolio.

 

“Treasury Portfolio
Purchase Price” means, as applicable, the Remarketing Treasury
Portfolio Purchase Price or the Tax Event Treasury Portfolio Purchase Price.

 

“Treasury Securities”
means zero-coupon U.S. treasury securities that mature on February 15, 2008
(CUSIP No. 912833CT5).

 

“Treasury Unit”
means a Unit, initially issued in substantially the form set forth as Exhibit B
hereto in a Stated Amount of $50, which represents (i) a 1/20, or 5.00%,
undivided beneficial ownership interest in a Treasury Security having a
principal amount at maturity equal to $1,000, and (ii) the rights and obligations
of the Company and the Holder under one Purchase Contract.

 

“Treasury Units Certificate”
means a certificate evidencing the rights and obligations of a Holder in
respect of the number of Treasury Units specified on such certificate.

 

“UCC”
means the Uniform Commercial Code as in effect in the State of New York from
time to time.

 

“Underwriters”
means the underwriters identified in Schedule 1 to the Underwriting Agreement.

 

18

 

“Underwriting Agreement”
means the Underwriting Agreement, dated as of February 7, 2005, among the
Company and the Underwriters, relating to the issuance of Corporate Units by
the Company.

 

“Unit” means a
Corporate Unit or a Treasury Unit, as the case may be.

 

“Value”
means, with respect to any item of Collateral on any date, as to (1) Cash, the
amount thereof, (2) Treasury Securities or Senior Notes, the aggregate
principal amount thereof at maturity and (3) Applicable Ownership Interests (as
specified in clause (i)(A) or (ii)(A) of the definition thereof), the
appropriate aggregate percentage of the aggregate principal amount at maturity
of the Treasury Portfolio.

 

“Vice President”
means any vice president, whether or not designated by a number or a word or
words added before or after the title “vice president.”

 

Section 1.02.  Compliance Certificates
and Opinions.  Except as
otherwise expressly provided by this Agreement, upon any application or request
by the Company to the Purchase Contract Agent to take any action in accordance
with any provision of this Agreement, the Company shall furnish to the Purchase
Contract Agent an Officers’ Certificate stating that all conditions precedent,
if any, provided for in this Agreement relating to the proposed action have
been complied with and, if requested by the Purchase Contract Agent, an Opinion
of Counsel stating that, in the opinion of such counsel, all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate or opinion need be
furnished.

 

Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this Agreement (other
than the Officers’ Certificate provided for in Section 10.05) shall include:

 

(i)            a
statement that each individual signing such certificate or opinion has read
such covenant or condition and the definitions herein relating thereto;

 

(ii)           a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based;

 

(iii)          a
statement that, in the opinion of each such individual, he or she has made such
examination or investigation as is necessary to enable such individual to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and

 

(iv)          a
statement as to whether, in the opinion of each such individual, such condition
or covenant has been complied with.

 

19

 

 

Section 1.03.  Form of Documents Delivered to Purchase
Contract Agent.  In any case where several matters
are required to be certified by, or covered by an opinion of, any specified
Person, it is not necessary that all such matters be certified by, or covered
by the opinion of, only one such Person, or that they be so certified or
covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents. Any certificate or opinion of an officer
of the Company may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which its
certificate or opinion is based are erroneous. 
Any such certificate or Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.

 

Where any Person is required to make, give or
execute two or more applications, requests, consents, certificates, statements,
opinions or other instruments under this Agreement, they may, but need not, be
consolidated and form one instrument.

 

Section 1.04.  Acts of Holders; Record Dates.  (a) Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Agreement to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Purchase Contract Agent and, where it is hereby expressly required, to the
Company.  Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the “Act” of the
Holders signing such instrument or instruments. 
Proof of execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Agreement and (subject
to Section 7.01) conclusive in favor of the Purchase Contract Agent and the
Company, if made in the manner provided in this Section.

 

(b)      The fact and date of the
execution by any Person of any such instrument or writing may be proved in any
manner which the Purchase Contract Agent deems sufficient.

 

(c)       The ownership of Units
shall be proved by the Security Register.

 

(d)      Any request, demand,
authorization, direction, notice, consent, waiver or other Act of the Holder of
any Unit shall bind every future Holder of the same Unit and the Holder of
every Certificate evidencing such Unit issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or

 

20

 

suffered to be done by the Purchase Contract
Agent or the Company in reliance thereon, whether or not notation of such
action is made upon such Certificate.

 

(e)       The Company may set any
date as a record date for the purpose of determining the Holders of Outstanding
Units entitled to give, make or take any request, demand, authorization,
direction, notice, consent, waiver or other action provided or permitted by
this Agreement to be given, made or taken by Holders of Units.  If any record date is set pursuant to this
paragraph, the Holders of the Outstanding Corporate Units and the Outstanding
Treasury Units, as the case may be, on such record date, and no other Holders,
shall be entitled to take the relevant action with respect to the Corporate
Units or the Treasury Units, as the case may be, whether or not such Holders
remain Holders after such record date; provided that
no such action shall be effective hereunder unless taken prior to or on the
applicable Expiration Date by Holders of the requisite number of Outstanding
Units on such record date.  Nothing
contained in this paragraph shall be construed to prevent the Company from
setting a new record date for any action for which a record date has previously
been set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be cancelled and be of no
effect), and nothing contained in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite number of Outstanding Units
on the date such action is taken. 
Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to
the Purchase Contract Agent in writing and to each Holder of Units in the
manner set forth in Section 1.06.

 

With respect to any record date set pursuant
to this Section 1.04(e), the Company may designate any date as the “Expiration Date” and from time to time may change the
Expiration Date to any earlier or later day; provided that
no such change shall be effective unless notice of the proposed new Expiration
Date is given to the Purchase Contract Agent in writing, and to each Holder of
Units in the manner set forth in Section 1.06, prior to or on the existing
Expiration Date. If an Expiration Date is not designated with respect to any
record date set pursuant to this Section, the Company shall be deemed to have
initially designated the 180th day after such record date as the Expiration
Date with respect thereto, subject to its right to change the Expiration Date
as provided in this paragraph. 
Notwithstanding the foregoing, no Expiration Date shall be later than the
180th day after the applicable record date.

 

Section 1.05.  Notices.  All notices,
requests, consents and other communications provided for herein (including,
without limitation, any modifications of, or waivers or consents under, this
Agreement) shall be given or made in writing (including, without limitation, by
telecopy) delivered to the intended recipient at the “Address for Notices” specified below its
name on the signature pages hereof or, as to any party, at such other address
as shall be designated by such party in a notice to the other parties. Except
as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopier or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.

 

21

 

The Purchase Contract Agent shall send to the
Indenture Trustee at the following address a copy of any notices in the form of
Exhibits C, D, E or F it sends or receives:

 

JPMorgan Chase Bank, N.A.

4 New York Plaza, 15th Floor

New York, NY 10004

Attention:  Institutional Trust Services

Fax:  (212) 623-6167

 

Section 1.06.  Notice to Holders; Waiver.  

 

Where this Agreement provides for notice to
Holders of any event, such notice shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, to each Holder affected by such event, at its address as it appears in
the Security Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice.  In any case where notice to Holders is given
by mail, neither the failure to mail such notice, nor any defect in any notice
so mailed to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders.  Where
this Agreement provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Holders shall be filed
with the Purchase Contract Agent, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.

 

In case by reason of the suspension of
regular mail service or by reason of any other cause it shall be impracticable
to give such notice by mail, then such notification as shall be made with the
approval of the Purchase Contract Agent shall constitute a sufficient
notification for every purpose hereunder. 

 

Section 1.07.  Effect of Headings and
Table of Contents.  The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof. 

 

Section 1.08.  Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the Company, the Purchase
Contract Agent, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent, and the Holders from time to time
of the Units, by their acceptance of the same, shall be deemed to have agreed
to be bound by the provisions hereof and to have ratified the agreements of,
and the grant of the Pledge hereunder by, the Purchase Contract Agent.

 

Section 1.09.  Separability Clause.  In case any provision in this
Agreement or in the Units shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions hereof and
thereof shall not in any way be affected or impaired thereby.

 

22

 

Section 1.10.  Benefits of Agreement.  Nothing contained in this
Agreement or in the Units, express or implied, shall give to any Person, other
than the parties hereto and their successors hereunder and, to the extent
provided hereby, the Holders, any benefits or any legal or equitable right,
remedy or claim under this Agreement. The Holders from time to time shall be
beneficiaries of this Agreement and shall be bound by all of the terms and
conditions hereof and of the Units evidenced by their Certificates by their
acceptance of delivery of such Certificates.

 

Section 1.11.  Governing Law.  THIS AGREEMENT AND THE UNITS SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PROVISIONS THEREOF TO THE
EXTENT THAT THE APPLICATION OF A LAW OF A DIFFERENT JURISDICTION WOULD GOVERN
AS A RESULT.  The Company, the Collateral
Agent, the Custodial Agent, the Securities Intermediary and the Holders from
time to time of the Units, acting through the Purchase Contract Agent as their
attorney-in-fact, hereby submit to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New York
state court sitting in New York City for the purposes of all legal proceedings
arising out of or relating to this Agreement or the transactions contemplated
hereby. The Company, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Holders from time to time of the Units, acting through the
Purchase Contract Agent as their attorney-in-fact, irrevocably waive, to the
fullest extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.

 

Section 1.12.  Legal Holidays.  In any case where
any Payment Date shall not be a Business Day (notwithstanding any other
provision of this Agreement or the Units), Contract Adjustment Payments or
other distributions shall not be paid on such date, but Contract Adjustment
Payments and Deferred Contract Adjustment Payments or such other distributions
shall be paid on the next succeeding Business Day, unless such Business Day is
in the next succeeding calendar year, in which case such Contract Adjustment
Payments or other distributions shall be paid on the immediately preceding Business
Day, in each case with the same force and effect as if made on such scheduled
Payment Date; provided that no interest shall
accrue or be payable by the Company or to any Holder in respect of such payment
or distribution for the period from and after any such scheduled Payment Date.

 

In any case where the Purchase Contract
Settlement Date or any Early Settlement Date or Cash Merger Early Settlement
Date shall not be a Business Day (notwithstanding any other provision of this
Agreement or the Units), Purchase Contracts shall not be performed and Early
Settlement and Cash Merger Early Settlement shall not be effected on such date,
but Purchase Contracts shall be performed or Early Settlement or Cash Merger
Early Settlement shall be effected, as applicable, on the next succeeding
Business Day with

 

23

 

the same force
and effect as if made on such Purchase Contract Settlement Date, Early
Settlement Date or Cash Merger Early Settlement Date, as applicable.

 

Section 1.13.  Counterparts. 
This Agreement may be executed in any number of counterparts
by the parties hereto on separate counterparts, each of which, when so executed
and delivered, shall be deemed an original, but all such counterparts shall
together constitute one and the same instrument.

 

Section 1.14.  Inspection of Agreement.  A copy of this Agreement shall be
available at all reasonable times during normal business hours at the Corporate
Trust Office for inspection by any Holder or Beneficial Owner.

 

Section 1.15.  Appointment of Financial
Institution as Agent for the Company.  The
Company may appoint a financial institution (which may be the Collateral Agent)
to act as its agent in performing its obligations and in accepting and
enforcing performance of the obligations of the Purchase Contract Agent and the
Holders, under this Agreement and the Purchase Contracts, by giving notice of
such appointment in the manner provided in Section 1.05 hereof.  Any such appointment shall not relieve the
Company in any way from its obligations hereunder.

 

Section 1.16.  No Waiver.  No failure on the part of the
Company, the Purchase Contract Agent, the Collateral Agent, the Securities
Intermediary or any of their respective agents to exercise, and no course of
dealing with respect to, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise by the Company, the Collateral Agent, the Securities Intermediary or
any of their respective agents of any right, power or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy.  The remedies herein are
cumulative and are not exclusive of any remedies provided by law.

 

Section 1.17.  Tax Treatment.  The Company agrees, and by acceptance of a
Corporate Unit, each U.S. Holder of a Corporate Unit will be deemed to have
agreed (1) for United States federal, state and local income and franchise tax
purposes to treat the acquisition of a Corporate Unit as the acquisition of the
Senior Note and the Purchase Contract constituting the Corporate Unit and (2)
to treat the Senior Note as indebtedness for United States federal, state and
local income and franchise tax purposes.

 

ARTICLE 2

CERTIFICATE FORMS

 

Section 2.01.  Forms of Certificates Generally.  The Certificates (including the
form of Purchase Contract forming part of each Unit evidenced thereby) shall be
in substantially the form set forth in Exhibit A hereto (in the case of
Corporate Units Certificates) or Exhibit B hereto (in the case of Treasury
Units Certificates), with such letters, numbers or other marks of
identification or designation and such legends or

 

24

 

endorsements
printed, lithographed or engraved thereon as may be required by the rules of
any securities exchange on which the Units are listed or any depositary
therefor, or as may, consistently herewith, be determined by the officers of
the Company executing such Certificates, as evidenced by their execution of the
Certificates.

 

The definitive Certificates shall be produced
in any manner as determined by the officers of the Company executing the Units
evidenced by such Certificates, consistent with the provisions of this
Agreement, as evidenced by their execution thereof.

 

Every Global Certificate authenticated,
executed on behalf of the Holders and delivered hereunder shall bear a legend
in substantially the following form:

 

“THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF CEDE & CO., AS NOMINEE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION (THE “DEPOSITARY”), THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY.  THIS CERTIFICATE IS
EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A
TRANSFER OF THIS CERTIFICATE 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 CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REQUESTED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

 

Section 2.02.  Form of Purchase Contract Agent’s Certificate
of Authentication.  The form
of the Purchase Contract Agent’s certificate of authentication of the Units
shall be in substantially the form set forth on the form of the applicable
Certificates.

 

25

 

ARTICLE 3
THE UNITS

 

Section 3.01.  Amount; Form and Denominations.  The aggregate number of Units
evidenced by Certificates authenticated, executed on behalf of the Holders and
delivered hereunder is limited to 2,000,000, except for Certificates
authenticated, executed and delivered upon registration of transfer of, in
exchange for, or in lieu of, other Certificates pursuant to Section 3.04,
Section 3.05, Section 3.10, Section 3.13, Section 3.14 or Section 8.05.

 

The Certificates shall be issuable only in
registered form and only in denominations of a single Corporate Unit or
Treasury Unit and any integral multiple thereof.

 

Section 3.02.  Rights and Obligations Evidenced
by the Certificates.  Each
Corporate Units Certificate shall evidence the number of Corporate Units
specified therein, with each such Corporate Unit representing (i) the ownership
by the Holder thereof of either (A) prior to the occurrence of a Tax Event
Redemption (1) a 1/20, or 5.00%, undivided beneficial interest in $1,000
aggregate principal amount of a Senior Note or (2) on and after the Reset Date,
(x) the Applicable Ownership Interest in the Remarketing Treasury Portfolio and
(y) if the Reset Date occurs on a date that is not also a Payment Date, prior
to the Payment Date next following the Reset Date, the right to receive the
interest accrued on a 1/20, or 5.00%, undivided beneficial ownership interest
in $1,000 principal amount of Senior Note from and including the Payment Date
immediately preceding the Reset Date to, but excluding, the Reset Date, or (B)
on or after the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, an Applicable Ownership Interest in the Tax Event
Treasury Portfolio subject, in each case, to the Pledge of the interest in such
aggregate principal amount of Senior Notes or such Applicable Ownership
Interests (except that the Applicable Ownership Interests specified in clauses
(i)(B), (i)(C) and (ii)(B) of the definition thereof shall not be subject to
the Pledge) in the appropriate Treasury Portfolio, as the case may be, by such
Holder pursuant to this Agreement, and (ii) the rights and obligations of the
Holder thereof and the Company under one Purchase Contract.  The Purchase Contract Agent is hereby
authorized, as attorney-in-fact for, and on behalf of, the Holder of each
Corporate Unit, to pledge, pursuant to Article 11 hereof, the Senior Note or the
Applicable Ownership Interests (as specified in clause (i)(A) or (ii)(A) of the
definition thereof) in the Treasury Portfolio, if any, forming a part of such
Corporate Unit, to the Collateral Agent for the benefit of the Company, and to
grant to the Collateral Agent, for the benefit of the Company, a security
interest in the right, title and interest of such Holder in such Senior Note
and or Applicable Ownership Interests (as specified in clause (i)(A) or (ii)(A)
of the definition thereof) in the Treasury Portfolio, if any, to secure the
obligation of the Holder under each Purchase Contract to purchase shares of
Common Stock.  

 

Upon the formation of a Treasury Unit
pursuant to Section 3.13, each Treasury Unit Certificate shall evidence the
number of Treasury Units specified therein, with each such Treasury Unit
representing (i) the ownership by the Holder thereof of a 1/20, or

 

26

 

5.00%,
undivided beneficial interest in a Treasury Security with a principal amount
equal to $1,000, subject to the Pledge of such interest by such Holder pursuant
to this Agreement, and (ii) the rights and obligations of the Holder thereof
and the Company under one Purchase Contract. 
The Purchase Contract Agent is hereby authorized, as attorney-in-fact
for, and on behalf of, the Holder of each Treasury Unit, to pledge, pursuant to
Article 11 hereof, such Holder’s interest in the Treasury Security forming a
part of such Treasury Unit to the Collateral Agent, for the benefit of the
Company, and to grant to the Collateral Agent, for the benefit of the Company,
a security interest in the right, title and interest of such Holder in such
Treasury Security to secure the obligation of the Holder under each Purchase
Contract to purchase shares of Common Stock.  

 

Prior to the purchase of shares of Common
Stock under each Purchase Contract, such Purchase Contracts shall not entitle
the Holder of a Unit to any of the rights of a holder of shares of Common
Stock, including, without limitation, the right to vote or receive any dividends
or other payments or to consent or to receive notice as a shareholder in
respect of the meetings of shareholders or for the election of directors of the
Company or for any other matter, or any other rights whatsoever as a
shareholder of the Company.

 

Section 3.03.  Execution, Authentication,
Delivery and Dating.  Subject
to the provisions of Section 3.13 and Section 3.14 hereof, upon the execution
and delivery of this Agreement, and at any time and from time to time
thereafter, the Company may deliver Certificates executed by the Company to the
Purchase Contract Agent for authentication, execution on behalf of the Holders
and delivery, together with its Issuer Order for authentication of such
Certificates, and the Purchase Contract Agent in accordance with such Issuer
Order shall authenticate, execute on behalf of the Holders and deliver such
Certificates.

 

The Certificates shall be executed on behalf
of the Company by its Chairman of the Board of Directors, its Chief Executive
Officer, its President, its Treasurer or one of its Vice Presidents.  The signature of any of these officers on the
Certificates may be manual or facsimile.

 

Certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificates.

 

No Purchase Contract evidenced by a
Certificate shall be valid until such Certificate has been executed on behalf
of the Holder by the manual signature of an authorized officer of the Purchase
Contract Agent, as such Holder’s attorney-in-fact.  Such signature by an authorized officer of
the Purchase Contract Agent shall be conclusive evidence that the Holder of
such Certificate has entered into the Purchase Contract or Purchase Contracts
evidenced by such Certificate.

 

27

 

Each Certificate shall be dated the date of
its authentication.

 

No Certificate shall be entitled to any
benefit under this Agreement or be valid or obligatory for any purpose unless
there appears on such Certificate a certificate of authentication substantially
in the form provided for herein executed by an authorized officer of the
Purchase Contract Agent by manual signature, and such certificate upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder.

 

Section 3.04.  Temporary Certificates.  Pending the preparation of
definitive Certificates, the Company shall execute and deliver to the Purchase
Contract Agent, and the Purchase Contract Agent shall authenticate, execute on
behalf of the Holders, and deliver, in lieu of such definitive Certificates,
temporary Certificates which are in substantially the form set forth in Exhibit
A or Exhibit B hereto, as the case may be, with such letters, numbers or other
marks of identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as may be required by the rules of
any securities exchange on which the Corporate Units or Treasury Units, as the
case may be, are listed, or as may, consistently herewith, be determined by the
officers of the Company executing such Certificates, as evidenced by their
execution of the Certificates.

 

If temporary Certificates are issued, the
Company will cause definitive Certificates to be prepared without unreasonable
delay.  After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
Corporate Trust Office, at the expense of the Company and without charge to the
Holder.  Upon surrender for cancellation
of any one or more temporary Certificates, the Company shall execute and
deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall
authenticate, execute on behalf of the Holder, and deliver in exchange
therefor, one or more definitive Certificates of like tenor and denominations
and evidencing a like number of Units as the temporary Certificate or
Certificates so surrendered.  Until so
exchanged, the temporary Certificates shall in all respects evidence the same
benefits and the same obligations with respect to the Units evidenced thereby
as definitive Certificates.

 

Section 3.05.  Registration; Registration of Transfer and Exchange.  The Purchase
Contract Agent shall keep at the Corporate Trust Office a register (the “Security Register”) in which, subject to such reasonable
regulations as it may prescribe, the Purchase Contract Agent shall provide for
the registration of Certificates and of transfers of Certificates (the Purchase
Contract Agent, in such capacity, the “Security Registrar”).  The Security Registrar shall record
separately the registration and transfer of the Certificates evidencing
Corporate Units and Treasury Units.

 

Upon surrender for registration of transfer
of any Certificate at the Corporate Trust Office, the Company shall execute and
deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall
authenticate, execute on behalf of the designated transferee or transferees,
and deliver, in the name of the designated transferee or transferees, one or

 

28

 

more new
Certificates of any authorized denominations, like tenor, and evidencing a like
number of Corporate Units or Treasury Units, as the case may be.

 

At the option of the Holder, Certificates may
be exchanged for other Certificates, of any authorized denominations and
evidencing a like number of Corporate Units or Treasury Units, as the case may
be, upon surrender of the Certificates to be exchanged at the Corporate Trust
Office.  Whenever any Certificates are so
surrendered for exchange, the Company shall execute and deliver to the Purchase
Contract Agent, and the Purchase Contract Agent shall authenticate, execute on
behalf of the Holder, and deliver the Certificates which the Holder making the
exchange is entitled to receive.

 

All Certificates issued upon any registration
of transfer or exchange of a Certificate shall evidence the ownership of the
same number of Corporate Units or Treasury Units, as the case may be, and be
entitled to the same benefits and subject to the same obligations under this
Agreement as the Corporate Units or Treasury Units, as the case may be,
evidenced by the Certificate surrendered upon such registration of transfer or exchange.

 

Every Certificate presented or surrendered
for registration of transfer or exchange shall (if so required by the Purchase
Contract Agent) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Purchase Contract Agent
duly executed, by the Holder thereof or its attorney duly authorized in
writing.

 

No service charge shall be made for any
registration of transfer or exchange of a Certificate, but the Company and the
Purchase Contract Agent may require payment from the Holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Certificates, other than any
exchanges pursuant to Section 3.04, Section 3.06 and Section 8.05 not involving
any transfer.

 

Notwithstanding the foregoing, the Company
shall not be obligated to execute and deliver to the Purchase Contract Agent,
and the Purchase Contract Agent shall not be obligated to authenticate, execute
on behalf of the Holder and deliver any Certificate in exchange for any other
Certificate presented or surrendered for registration of transfer or for
exchange on or after the Business Day immediately preceding the earliest to
occur of any Early Settlement Date with respect to such Certificate, any Cash
Merger Early Settlement Date with respect to such Certificate, the Purchase
Contract Settlement Date or the Termination Date.  In lieu of delivery of a new Certificate, upon
satisfaction of the applicable conditions specified above in this Section and
receipt of appropriate registration or transfer instructions from such Holder,
the Purchase Contract Agent shall:

 

(i)            if
the Purchase Contract Settlement Date or an Early Settlement Date or a Cash
Merger Early Settlement Date with respect to such other Certificate has
occurred, deliver the shares of Common Stock issuable in respect of the

 

29

 

Purchase
Contracts forming a part of the Units evidenced by such other Certificate; or

 

(ii)           if
a Termination Event, Early Settlement, or Cash Merger Early Settlement shall
have occurred prior to the Purchase Contract Settlement Date, or a Cash
Settlement shall have occurred, transfer the Senior Notes, the Treasury
Securities, or the appropriate Applicable Ownership Interests in the Treasury
Portfolio, as the case may be, evidenced thereby, in each case subject to the
applicable conditions and in accordance with the applicable provisions of
Section 3.15 and Article 5 hereof.

 

Section 3.06.  Book-Entry Interests.  The Certificates, on original
issuance, will be issued in the form of one or more fully registered Global
Certificates, to be delivered to the Depositary or its custodian by, or on
behalf of, the Company.  The Company hereby
designates DTC as the initial Depositary. 
Such Global Certificates shall initially be registered on the Security
Register in the name of Cede & Co., the nominee of the Depositary, and no
Beneficial Owner will receive a definitive Certificate representing such
Beneficial Owner’s interest in such Global Certificate, except as provided in
Section 3.09.  The Purchase Contract
Agent shall enter into an agreement with the Depositary if so requested by the
Company.  Unless and until definitive,
fully registered Certificates have been issued to Beneficial Owners pursuant to
Section 3.09:

 

(i)            the
provisions of this Section 3.06 shall be in full force and effect;

 

(ii)           the
Company shall be entitled to deal with the Depositary for all purposes of this
Agreement (including, without limitation, making Contract Adjustment Payments
and receiving approvals, votes or consents hereunder) as the Holder of the
Units and the sole holder of the Global Certificates and shall have no
obligation to the Beneficial Owners; provided that a
Beneficial Owner may directly enforce against the Company, without any consent,
proxy, waiver or involvement of the Depositary of any kind, such Beneficial
Owner’s right to receive a definitive Certificate representing the Units
beneficially owned by such Beneficial Owner, as set forth in Section 3.09;

 

(iii)          to
the extent that the provisions of this Section 3.06 conflict with any other
provisions of this Agreement, the provisions of this Section 3.06 shall
control; and

 

(iv)          except
as set forth in the proviso of clause (ii) of this Section 3.06, the rights of
the Beneficial Owners shall be exercised only through the Depositary and shall
be limited to those established by law and agreements between such Beneficial
Owners and the Depositary or the Depositary Participants.  The Depositary will make book entry transfers
among Depositary Participants and receive and transmit payments of Contract
Adjustment Payments to such Depositary Participants.

 

30

 

Transfers of
securities evidenced by Global Certificates shall be made through the
facilities of the Depositary, and any cancellation of, or increase or decrease
in the number of, such securities (including the creation of Treasury Units and
the recreation of Corporate Units pursuant to Section 3.13 and Section 3.14
respectively) shall be accomplished by making appropriate annotations on the
Schedule of Increases and Decreases for such Global Certificate. 

 

Section 3.07.  Notices to Holders.  Whenever a notice or other
communication to the Holders is required to be given under this Agreement, the
Company or the Company’s agent shall give such notices and communications to
the Holders and, with respect to any Units registered in the name of the
Depositary or the nominee of the Depositary, the Company or the Company’s agent
shall, except as set forth herein, have no obligations to the Beneficial
Owners.

 

Section 3.08.  Appointment of Successor Depositary . If the
Depositary elects to discontinue its services as securities depositary with
respect to the Units, the Company may, in its sole discretion, appoint a
successor Depositary with respect to the Units. 

 

Section 3.09.  Definitive Certificates.  

 

If:

 

(i)            the
Depositary notifies the Company that it is unwilling or unable to continue its
services as securities depositary with respect to the Units and no successor
Depositary has been appointed pursuant to Section 3.08 within 90 days after
such notice; or

 

(ii)           the
Depositary ceases to be a “clearing agency” registered under Section 17A of the
Exchange Act when the Depositary is required to be so registered to act as the
Depositary and so notifies the Company, and no successor Depositary has been
appointed pursuant to Section 3.08 within 90 days after such notice; 

 

(iii)          to
the extent permitted by the Depositary, the Company determines at any time that
the Units shall no longer be represented by Global Certificates and shall
inform such Depositary of such determination and participants in such
Depositary elect to withdraw their beneficial interests in the Units from such
Depositary, following notification by the Depositary of their right to do so;
or 

 

(iv)          a
Beneficial Owner requests to exchange such Beneficial Owner’s interest in the
Global Certificates for definitive Certificates in order to exercise or enforce
such Beneficial Owner’s rights under the Units represented by such Global
Certificates,

 

31

 

then (x)
definitive Certificates shall be prepared by the Company with respect to such
Units and delivered to the Purchase Contract Agent and (y) upon surrender of
the Global Certificates representing the Units by the Depositary, accompanied
by registration instructions (other than in the case of clause (iv) above), the
Company shall cause definitive Certificates to be delivered to Beneficial
Owners in accordance with instructions provided by the Depositary.  The Company and the Purchase Contract Agent
shall not be liable for any delay in delivery of such instructions and may
conclusively rely on and shall be authorized and protected in relying on, such
instructions.  Each definitive
Certificate so delivered shall evidence Units of the same kind and tenor as the
Global Certificate so surrendered in respect thereof.

 

Section 3.10.  Mutilated, Destroyed, Lost and Stolen Certificates.  If any mutilated Certificate is
surrendered to the Purchase Contract Agent, the Company shall execute and
deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall
authenticate, execute on behalf of the Holder, and deliver in exchange
therefor, a new Certificate, evidencing the same number of Corporate Units or
Treasury Units, as the case may be, and bearing a Certificate number not
contemporaneously outstanding.

 

If there shall be delivered to the Company
and the Purchase Contract Agent (i) evidence to their satisfaction of the
destruction, loss or theft of any Certificate, and (ii) such security or
indemnity as may be required by them to hold each of them and any agent of any
of them harmless, then, in the absence of notice to the Company or the Purchase
Contract Agent that such Certificate has been acquired by a protected
purchaser, the Company shall execute and deliver to the Purchase Contract
Agent, and the Purchase Contract Agent shall authenticate, execute on behalf of
the Holder, and deliver to the Holder, in lieu of any such destroyed, lost or
stolen Certificate, a new Certificate, evidencing the same number of Corporate
Units or Treasury Units, as the case may be, and bearing a Certificate number
not contemporaneously outstanding.

 

Notwithstanding the foregoing, the Company
shall not be obligated to execute and deliver to the Purchase Contract Agent,
and the Purchase Contract Agent shall not be obligated to authenticate, execute
on behalf of the Holder, and deliver to the Holder, a Certificate on or after
the Business Day immediately preceding the earliest of any Early Settlement
Date with respect to such lost or mutilated Certificate, any Cash Merger Early
Settlement Date with respect to such lost or mutilated Certificate, the
Purchase Contract Settlement Date or the Termination Date.  In lieu of delivery of a new Certificate,
upon satisfaction of the applicable conditions specified above in this Section
and receipt of appropriate registration or transfer instructions from such
Holder, the Purchase Contract Agent shall:

 

(i)            if
the Purchase Contract Settlement Date (including upon any Cash Settlement) or
an Early Settlement Date or a Cash Merger Early Settlement Date with respect to
such lost, stolen, destroyed or mutilated Certificate has occurred, deliver the
shares of Common Stock issuable in respect of the Purchase Contracts forming a
part of the Units evidenced by such Certificate; or

 

32

 

(ii)           if
a Cash Merger Early Settlement or an Early Settlement with respect to such lost
or mutilated Certificate or if a Termination Event shall have occurred prior to
the Purchase Contract Settlement Date or a Cash Settlement shall have occurred,
transfer the Senior Notes, the Treasury Securities or the appropriate
Applicable Ownership Interests (as specified in clause (i)(A) or (ii)(A) of the
definition thereof) in the Treasury Portfolio, as the case may be, evidenced
thereby, in each case subject to the applicable conditions and in accordance
with the applicable provisions of Section 3.15 and Article 5 hereof.

 

Upon the issuance of any new Certificate
under this Section, the Company and the Purchase Contract Agent may require the
payment by the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other fees
and expenses (including, without limitation, the fees and expenses of the
Purchase Contract Agent) connected therewith.

 

Every new Certificate issued pursuant to this
Section in lieu of any destroyed, lost or stolen Certificate shall constitute
an original additional contractual obligation of the Company and of the Holder
in respect of the Units evidenced thereby, whether or not the destroyed, lost
or stolen Certificate (and the Units evidenced thereby) shall be at any time
enforceable by anyone, and shall be entitled to all the benefits and be subject
to all the obligations of this Agreement equally and proportionately with any
and all other Certificates delivered hereunder.

 

The provisions of this Section are exclusive
and shall preclude, to the extent lawful, all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Certificates.  

 

Section 3.11. 
Persons Deemed Owners.  Prior
to due presentment of a Certificate for registration of transfer, the Company
and the Purchase Contract Agent, and any agent of the Company or the Purchase
Contract Agent, may treat the Person in whose name such Certificate is
registered as the owner of the Units evidenced thereby for purposes of (subject
to any applicable record date) any payment or distribution with respect to the
Applicable Ownership Interests in Senior Notes or of the Applicable Ownership
Interests (as specified in clause (ii)(B) of the definition thereof) in the
Treasury Portfolio (if any), as applicable, payment of Contract Adjustment
Payments and performance of the Purchase Contracts and for all other purposes
whatsoever in connection with such Units, whether or not such payment,
distribution, or performance shall be overdue and notwithstanding any notice to
the contrary, and neither the Company nor the Purchase Contract Agent, nor any
agent of the Company or the Purchase Contract Agent, shall be affected by
notice to the contrary.

 

Notwithstanding the foregoing, with respect
to any Global Certificate, nothing contained herein shall prevent the Company,
the Purchase Contract Agent or any agent of the Company or the Purchase
Contract Agent, from giving effect to any written certification, proxy or other
authorization furnished by the Depositary (or its nominee), as

 

33

 

a Holder, with
respect to such Global Certificate, or impair, as between such Depositary and
the related Beneficial Owner, the operation of customary practices governing
the exercise of rights of the Depositary (or its nominee) as Holder of such
Global Certificate.  None of the Company,
the Purchase Contract Agent or any agent of the Company or the Purchase
Contract Agent will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Global Certificate or maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.

 

Section 3.12.  Cancellation.  All Certificates surrendered for
delivery of shares of Common Stock on or after the Purchase Contract Settlement
Date or in connection with an Early Settlement or a Cash Merger Early
Settlement or for delivery of the Senior Notes underlying the appropriate
Applicable Ownership Interests in the Senior Notes, the Applicable Ownership
Interest in the Treasury Portfolio or Treasury Securities, as the case may be,
after the occurrence of a Termination Event or pursuant to a Cash Settlement,
an Early Settlement or a Cash Merger Early Settlement, or upon the registration
of transfer or exchange of a Unit, or a Collateral Substitution or the
recreation of Corporate Units shall, if surrendered to any Person other than
the Purchase Contract Agent, be delivered to the Purchase Contract Agent along
with appropriate written instructions regarding the cancellation thereof and,
if not already cancelled, shall be promptly cancelled by it. The Company may at
any time deliver to the Purchase Contract Agent for cancellation any
Certificates previously authenticated, executed and delivered hereunder which
the Company may have acquired in any manner whatsoever, and all Certificates so
delivered shall, upon an Issuer Order, be promptly cancelled by the Purchase
Contract Agent.  No Certificates shall be
authenticated, executed on behalf of the Holder and delivered in lieu of or in
exchange for any Certificates cancelled as provided in this Section, except as
expressly permitted by this Agreement. 
All cancelled Certificates held by the Purchase Contract Agent shall be
disposed of in accordance with its customary practices.

 

If the Company or any Affiliate of the
Company shall acquire any Certificate, such acquisition shall not operate as a
cancellation of such Certificate unless and until such Certificate is delivered
to the Purchase Contract Agent cancelled or for cancellation.

 

Section 3.13.  Creation of Treasury Units by Substitution
of Treasury Securities.  (a) Unless
the Treasury Portfolio has replaced the Senior Notes underlying the Corporate
Units, and subject to the conditions set forth in this Agreement and to the
last sentence of this paragraph, a Holder of Corporate Units may, at any time
from and after the date of this Agreement and on or prior to 5:00 p.m., New
York City time, on the seventh Business Day immediately preceding the Purchase
Contract Settlement Date, effect a Collateral Substitution and separate the Senior
Notes from the related Purchase Contracts in respect of such Holder’s Corporate
Units by substituting for such Senior Notes, Treasury Securities in an
aggregate principal amount at maturity equal to the aggregate principal amount
of such Senior Notes; provided that
Holders may make Collateral Substitutions only in integral multiples of 20
Corporate Units.  To effect such
substitution, the Holder must:

 

34

 

(1)                                  Transfer
to the Securities Intermediary, for credit to the Collateral Account, Treasury
Securities or security entitlements with respect thereto having a Value equal
to the aggregate principal amount of the Pledged Senior Notes to be released;
and

 

(2)                                  Transfer
the related Corporate Units to the Purchase Contract Agent accompanied by a
notice to the Purchase Contract Agent, substantially in the form of Exhibit C
hereto, (i) stating that the Holder has Transferred the relevant amount of
Treasury Securities to the Securities Intermediary for credit to the Collateral
Account and (ii) requesting that the Purchase Contract Agent instruct the
Collateral Agent to release the Pledged Senior Notes underlying such Corporate
Units, whereupon the Purchase Contract Agent shall promptly provide an
instruction to such effect to the Collateral Agent, substantially in the form
of Exhibit G hereto (A) stating that such Holder has notified the Purchase
Contract Agent that such Holder has Transferred Treasury Securities or security
entitlements with respect thereto to the Securities Intermediary for credit to
the Collateral Account, (B) stating the Value of the Treasury Securities or
security entitlements with respect thereto Transferred by such Holder and (C)
requesting that the Collateral Agent release from the Pledge the Pledged Senior
Notes that are a component of such Corporate Units.

 

Unless a Successful Remarketing of the Senior Notes or a Tax Event
Redemption has previously occurred, Holders shall not be permitted to effect
Collateral Substitutions in accordance with the provisions of this Section 3.13
during the period commencing on and including the Business Day prior to the
first of the three sequential Remarketing Dates comprising a Three-Day
Remarketing Period and ending on and including the Reset Date relating to a
Successful Remarketing or, if none of the Remarketings during such Three-Day
Remarketing Period is successful, the Business Day following the last of the
three sequential Remarketing Dates occurring during such Three-Day Remarketing
Period.

 

Upon confirmation that the Treasury
Securities described in clause (1) above or security entitlements with respect
thereto have been credited to the Collateral Account and receipt of the
instruction to the Collateral Agent described in clause (2) above, the
Collateral Agent shall release such Pledged Senior Notes from the Pledge and
instruct the Securities Intermediary by a notice, substantially in the form of
Exhibit H hereto, to Transfer such Pledged Senior Notes to the Purchase
Contract Agent for distribution to such Holder, free and clear of the Pledge
created hereby.

 

Upon credit to the Collateral Account of
Treasury Securities or security entitlements with respect thereto delivered by
a Holder of Corporate Units and receipt of the related instruction from the
Collateral Agent, the Securities Intermediary shall promptly Transfer the
appropriate Pledged Senior Notes to the Purchase Contract Agent for
distribution to such Holder, free and clear of the Pledge created hereby.

 

35

 

Upon receipt of such Senior Notes, the
Purchase Contract Agent shall promptly:

 

(i)            cancel
the related Corporate Units;

 

(ii)           Transfer
the Pledged Senior Notes to the Holder (such Senior Notes shall be tradeable as
a separate security, independent of the resulting Treasury Units); and

 

(iii)          authenticate,
execute on behalf of such Holder and deliver Treasury Units in book-entry form,
or if applicable, in the form of a Treasury Units Certificate executed by the
Company in accordance with Section 3.03 evidencing the same number of Purchase
Contracts as were evidenced by the cancelled Corporate Units.

 

Holders who elect to separate the Senior
Notes from the related Purchase Contracts and to substitute Treasury Securities
for such Senior Notes shall be responsible for any fees or expenses,
(including, without limitation, fees and expenses payable to the Collateral
Agent), in respect of the substitution, and neither the Company nor the
Purchase Contract Agent shall be responsible for any such fees or expenses.

 

(b)      If the Treasury Portfolio
has replaced the Senior Notes underlying the Corporate Units and subject to the
conditions set forth in this Agreement, a Holder may, at any time on or prior
to the second Business Day immediately preceding the Purchase Contract
Settlement Date, substitute Treasury Securities for the Pledged Applicable
Ownership Interests in the Treasury Portfolio underlying such Corporate Units,
but only in integral multiples of 12,800 Treasury Units or such other number of
Treasury Units as may be determined by the Remarketing Agent following a
Successful Remarketing of the Senior Notes if the Reset Date is not a Payment
Date.  In such an event, the Holder shall
Transfer Treasury Securities having a Value equal to aggregate Value of the Pledged
Applicable Ownership Interests for which substitution is being made to the
Securities Intermediary, for credit to the Collateral Account, and the Purchase
Contract Agent, Collateral Agent and Securities Intermediary shall effect a
Collateral Substitution for the appropriate Pledged Applicable Ownership
Interests in the Treasury Portfolio in the manner set forth in clause (a)
above.

 

(c)       In the event a Holder
making a Collateral Substitution pursuant to this Section 3.13 fails to effect
a book-entry transfer of the Corporate Units or fails to deliver Corporate
Units Certificates to the Purchase Contract Agent after depositing Treasury
Securities with the Securities Intermediary, any distributions on the Senior
Notes or Applicable Ownership Interest in the Treasury Portfolio constituting a
part of such Corporate Units shall be held in the name of the Purchase Contract
Agent or its nominee in trust for the benefit of such Holder, until such
Corporate Units are so transferred or the Corporate Units Certificate is so
delivered, as the case may be, or such Holder provides evidence satisfactory to
the Company and the Purchase Contract Agent that such Corporate

 

36

 

Units Certificate has been destroyed, lost or
stolen, together with any indemnity that may be required by the Purchase
Contract Agent and the Company. 

 

(d)           Except
as described in Section 5.02 or in this Section 3.13 or in connection with a
Cash Settlement, an Early Settlement, a Cash Merger Early Settlement or a
Termination Event, for so long as the Purchase Contract underlying a Corporate
Unit remains in effect, such Corporate Units shall not be separable into its
constituent parts, and the rights and obligations of the Holder in respect of
the Senior Notes or Applicable Ownership Interests in the Treasury Portfolio,
as the case may be, and the Purchase Contract comprising such Corporate Units
may be acquired, and may be transferred and exchanged, only as a Corporate
Unit.

 

Section 3.14.  Recreation of Corporate Units.  (a) Unless the Treasury Portfolio has replaced the Senior Notes
underlying the Corporate Units, and subject to the conditions set forth in this
Agreement and to the last sentence of this paragraph, a Holder of Treasury
Units may recreate Corporate Units at any time on or prior to 5:00 p.m., New
York City time, on the seventh Business Day immediately preceding the Purchase
Contract Settlement Date; provided that
Holders of Treasury Units may only recreate Corporate Units in integral multiples
of 20 Treasury Units.  To recreate
Corporate Units, the Holder must:

 

(1)                                  Transfer
to the Securities Intermediary for credit to the Collateral Account Senior
Notes or security entitlements with respect thereto having an aggregate
principal amount equal to the Value of the Pledged Treasury Securities to be
released; and

 

(2)                                  Transfer
the related Treasury Units to the Purchase Contract Agent accompanied by a
notice to the Purchase Contract Agent, substantially in the form of Exhibit C
hereto, (i) stating that the Holder has transferred the relevant amount of
Senior Notes to the Collateral Agent and (ii) requesting that the Purchase
Contract Agent instruct the Collateral Agent to release the Pledged Treasury
Securities underlying such Treasury Units, whereupon the Purchase Contract
Agent shall promptly provide an instruction to such effect to the Collateral
Agent, substantially in the form of Exhibit I hereto stating that such Holder
has Transferred the Pledged Senior Notes or security entitlements with respect
thereto to the Securities Intermediary for credit to the Collateral Account and
requesting that the Collateral Agent release from the Pledge the Pledged
Treasury Securities related to such Treasury Units.

 

Unless a
Successful Remarketing of the Senior Notes or a Tax Event Redemption has
previously occurred, Holders of Treasury Units shall not be permitted to effect
Collateral Substitutions in accordance with the provisions of this Section 3.14
during the period commencing on and including the Business Day prior to the
first of the three sequential Remarketing Dates comprising a Three-Day
Remarketing Period and ending on and

 

37

 

including the
Reset Date relating to a Successful Remarketing or, if none of the Remarketings
during such Three-Day Remarketing Period is successful, the Business Day
following the last of the three sequential Remarketing Dates occurring during
such Three-Day Remarketing Period.

 

Upon confirmation that the Senior Notes
described in clause (1) above or security entitlements with respect thereto has
been credited to the Collateral Account and receipt of the instruction to the
Collateral Agent to the Collateral Agent described in clause (2) above, the
Collateral Agent shall release such Pledged Treasury Securities from the Pledge
and shall instruct the Securities Intermediary by a notice substantially in the
form of Exhibit J hereto to Transfer such Pledged Treasury Securities to the
Purchase Contract Agent for distribution to such Holder, free and clear of the
Pledge created hereby.

 

Upon credit to the Collateral Account of
Senior Notes or security entitlements with respect thereto delivered by a
Holder of Treasury Units and receipt of the related instruction from the
Collateral Agent, the Securities Intermediary shall promptly Transfer the
appropriate Pledged Treasury Securities to the Purchase Contract Agent for
distribution to such Holder, free and clear of the Pledge created hereby.

 

Upon receipt of such Treasury Securities, the
Purchase Contract Agent shall promptly:

 

(i)            cancel
the related Treasury Units;

 

(ii)           Transfer
the Treasury Securities to the Holder; and 

 

(iii)          authenticate,
execute on behalf of such Holder and deliver Corporate Units in book-entry form
or, if applicable, in the form of a Corporate Units Certificate executed by the
Company in accordance with Section 3.03 evidencing the same number of Purchase
Contracts as were evidenced by the cancelled Treasury Units.

 

Holders who elect to recreate Corporate Units
shall be responsible for any fees or expenses, (including, without limitation,
fees and expenses payable to the Collateral Agent), in respect of the
recreation, and neither the Company nor the Purchase Contract Agent shall be
responsible for any such fees or expenses.

 

(b)           If the Treasury
Portfolio has replaced the Senior Notes underlying the Corporate Units, a
Holder of Treasury Units may at any time on or prior to the second Business Day
immediately preceding the Purchase Contract Settlement Date substitute the Pledged
Applicable Ownership Interests in the Treasury Portfolio for Treasury
Securities, but only in multiples of 12,800 Treasury Units or such other number
of Treasury Units as may be determined by the Remarketing Agent following a
Successful Remarketing of the Senior Notes if the Reset Date is not a Payment
Date.  In addition, if the Corporate
Units are reestablished following a Reset Date which is not also a Payment Date
but prior to the

 

38

 

close of
business on the Record Date related to the Payment Date next succeeding such
Reset Date, the Holder shall deposit with the Securities Intermediary for
credit to the Collateral Account cash in an amount equal to the interest
accrued on the Senior Notes that would have been a component of the Corporate
Units to be created from the Payment Date next preceding the Reset Date to but
excluding the Reset Date.  In such an
event, the Holder shall Transfer the appropriate Applicable Ownership Interests
in the Treasury Portfolio having a Value equal to the aggregate Value of the
Treasury Securities for which substitution is being made to the Securities
Intermediary, for credit to the Collateral Account, and the Purchase Contract
Agent, Collateral Agent and Securities Intermediary shall effect a Collateral
Substitution for the Pledged Applicable Ownership Interests from the Pledge in
the manner set forth in clause Section 3.14 above.

 

(c)           Except
as provided in Section 5.02 or in this Section 3.14 or in connection with a
Cash Settlement, an Early Settlement, a Cash Merger Early Settlement or a
Termination Event, for so long as the Purchase Contract underlying a Treasury
Unit remains in effect, such Treasury Unit shall not be separable into its
constituent parts and the rights and obligations of the Holder of such Treasury
Unit in respect of the 1/20, or 5.00%, of a Treasury Security and the Purchase
Contract comprising such Treasury Unit may be acquired, and may be transferred
and exchanged, only as a Treasury Unit.

 

Section 3.15.  Transfer of Collateral upon Occurrence
of Termination Event.  (a)Upon receipt by the
Collateral Agent of written notice pursuant to Section 5.06 hereof from the
Company or the Purchase Contract Agent that a Termination Event has occurred,
the Collateral Agent shall release all Collateral from the Pledge and shall
promptly instruct the Securities Intermediary to Transfer:

 

(i)            any
Pledged Senior Notes or security entitlements with respect thereto or Pledged
Applicable Ownership Interests;

 

(ii)           any
Pledged Treasury Securities,

 

(iii)          any
payments by Holders (or the Permitted Investments of such payments) pursuant to
Section 5.02 hereof; and

 

(iv)          any Proceeds and all
principal payments the Collateral Agent receives in respect of the foregoing,

 

to the Purchase
Contract Agent for the benefit of the Holders for distribution to such Holders,
in accordance with their respective interests, free and clear of the Pledge
created hereby; provided, however, if any Holder shall be entitled
to receive Senior Notes in an aggregate principal amount of less than $1,000,
or greater than $1,000 but not in an integral multiple of $1,000, the Purchase
Contract Agent shall request, on behalf of such Holder, pursuant to Section
2.03 of the Supplemental Indenture that the Company issue Senior Notes in
denominations of $50, or integral multiples thereof, in exchange for Senior
Notes in denominations of $1,000 or integral multiples thereof; provided further, if any

 

39

 

Holder shall
be entitled to receive less than $1,000 with respect to its Pledged Applicable
Ownership Interests in the Treasury Portfolio or its Pledged Treasury
Securities, the Purchase Contract Agent shall have the right (but not the
obligation) to dispose of such Pledged Applicable Ownership Interests in the
Treasury Portfolio or Pledged Treasury Securities for cash and deliver to such
Holder cash in lieu of delivering the Pledged Applicable Ownership Interests in
the Treasury Portfolio or Pledged Treasury Securities, as the case may be.

 

(b)           If
such Termination Event shall result from the Company’s becoming a debtor under
the Bankruptcy Code, and if the Collateral Agent shall for any reason fail
promptly to effectuate the release and Transfer of all Pledged Senior Notes,
Pledged Applicable Ownership Interests, Pledged Treasury Securities and
payments by Holders (or the Permitted Investments of such payments) pursuant to
Section 5.02 and Proceeds of any of the foregoing, as the case may be, as
provided by this Section 3.15, the Purchase Contract Agent shall use its best
efforts to obtain an opinion of a nationally recognized law firm to the effect
that, notwithstanding the Company’s being the debtor in such a bankruptcy case,
the Collateral Agent will not be prohibited from releasing or Transferring the
Collateral as provided in this Section 3.15, and shall deliver or cause to be
delivered such opinion to the Collateral Agent within ten days after the
occurrence of such Termination Event, and if (A) the Purchase Contract Agent
shall be unable to obtain such opinion within ten days after the occurrence of
such Termination Event or (B) the Collateral Agent shall continue, after
delivery of such opinion, to refuse to effectuate the release and Transfer of
all Pledged Senior Notes, Pledged Applicable Ownership Interests, Pledged
Treasury Securities and the payments by Holders (or the Permitted Investments
of such payments) pursuant to Section 5.02 hereof and Proceeds of any of the
foregoing, as the case may be, as provided in this Section 3.15, then the
Purchase Contract Agent shall within fifteen days after the occurrence of such
Termination Event commence an action or proceeding in the court having
jurisdiction of the Company’s case under the Bankruptcy Code seeking an order
requiring the Collateral Agent to effectuate the release and transfer of all
Pledged Senior Notes, Pledged Applicable Ownership Interests, Pledged Treasury
Securities and the payments by Holders (or the Permitted Investments of such
payments) pursuant to Section 5.02 hereof and Proceeds of any of the foregoing,
or as the case may be, as provided by this Section 3.15.

 

(c)           Upon
the occurrence of a Termination Event and the Transfer to the Purchase Contract
Agent of the Pledged Senior Notes, the appropriate Pledged Applicable Ownership
Interests or the Pledged Treasury Securities, as the case may be, pursuant to
Section 3.15(a), the Purchase Contract Agent shall request transfer
instructions with respect to such Pledged Senior Notes, Applicable Ownership
Interests or Pledged Treasury Securities, as the case may be, from each Holder
by written request, substantially in the form of Exhibit D hereto, mailed to
such Holder at its address as it appears in the Security Register.

 

(d)           Upon
book-entry transfer of the Corporate Units or the Treasury Units or delivery of
a Corporate Units Certificate or Treasury Units Certificate to the Purchase

 

40

 

Contract Agent with such transfer
instructions, the Purchase Contract Agent shall transfer the Pledged Senior
Notes, the Pledged Applicable Ownership Interests or Pledged Treasury
Securities, as the case may be, underlying such Corporate Units or Treasury
Units, as the case may be, to such Holder by book-entry transfer, or other appropriate
procedures, in accordance with such instructions and, in the case of the
Pledged Senior Notes, in accordance with the terms of the Second Supplemental
Indenture.  In the event a Holder of
Corporate Units or Treasury Units fails to effect such transfer or delivery,
the Pledged Senior Notes, the Pledged Applicable Ownership Interests or Pledged
Treasury Securities, as the case may be, and any distributions thereon, shall
be held in the name of the Purchase Contract Agent or its nominee in trust for the
benefit of such Holder, until the earlier to occur of:

 

(i)            the
transfer of such Corporate Units or Treasury Units or surrender of the
Corporate Units Certificate or Treasury Units Certificate or the receipt by the
Company and the Purchase Contract Agent from such Holder of satisfactory
evidence that such Corporate Units Certificate or Treasury Units Certificate
has been destroyed, lost or stolen, together with any indemnity that may be
required by the Purchase Contract Agent and the Company; and

 

(ii)           the
expiration of the time period specified in the abandoned property laws of the
state in which the Purchase Contract Agent holds such property.

 

Section 3.16.  No Consent to Assumption.  Each Holder of a Unit, by
acceptance thereof, shall be deemed expressly to have withheld any consent to
the assumption under Section 365 of the Bankruptcy Code or otherwise, of the
Purchase Contract by the Company or its trustee, receiver, liquidator or a
person or entity performing similar functions in the event that the Company
becomes the debtor under the Bankruptcy Code or subject to other similar state
or Federal law providing for reorganization or liquidation.

 

Section 3.17.  Substitutions.  Whenever a Holder has the right to
substitute Treasury Securities, Senior Notes or security entitlements for any
of them or the Applicable Ownership Interests (as defined in clause (ii)(A) of
the definition thereof) in the Treasury Portfolio, as the case may be, for
financial assets held in the Collateral Account, such substitution shall not
constitute a novation of the security interest created hereby.

 

ARTICLE 4

THE SENIOR NOTES AND
APPLICABLE OWNERSHIP

INTERESTS IN THE TREASURY
PORTFOLIO

 

Section 4.01.  Interest Payments; Rights to Interest
Payments Preserved.  (a)  The Collateral
Agent shall transfer all income and distributions received by it on account of
the Pledged Senior Notes, the Pledged Applicable Ownership Interests or
Permitted Investments from time to time held in the Collateral Account
(JPMorgan Chase Bank, N.A., ABA #021000021, Global Plus Account No.:
10221848.1, Account:  Southern

 

41

 

Union Collateral Account) to the Purchase
Contract Agent for distribution to the applicable Holders as provided in this Agreement
and the Purchase Contracts.

 

(b)           Any
payment on any Pledged Senior Note or on any Applicable Ownership Interests (as
specified in clause (i)(B), (i)(C) or (ii)(B) of the definition thereof) in the
Treasury Portfolio, as the case may be, which is paid on any Payment Date
shall, subject to receipt thereof by the Purchase Contract Agent from the
Company or from the Collateral Agent as provided in Section 4.01 above be paid
to the Person in whose name the Corporate Units Certificate (or one or more
Predecessor Corporate Units Certificates) of which such Pledged Senior Note or
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
forms a part is registered at the close of business on the Record Date for such
Payment Date.  Interest payable on the
Senior Notes on a Reset Date that falls on a day that is not a Payment Date, as
well as any cash deposited with the Collateral Agent in accordance with the
provisions of Section 3.14(b), shall, in accordance with the provisions of this
Agreement, be released by the Collateral Agent to the Purchase Contract Agent
on the next succeeding Payment Date or on such earlier date falling prior to
the Record Date for such next succeeding Payment Date on which (i) Corporate
Units are transformed into Treasury Units pursuant to Section 3.13 by the
Holder establishing Treasury Units, or (ii) Corporate Units are settled early
in accordance with the provisions of Section 5.07 by the Holders exercising
rights pursuant to such Section.  Amounts
payable in accordance with the preceding sentence shall be payable by the
Purchase Contract Agent to the Persons in whose names the Corporate Units
Certificate is registered at the close of business on the Record Date for the
applicable Payment Date or to the Holder of Corporate Units transforming
Corporate Units into Treasury Units or exercising an Early Settlement in
accordance with Section 5.07.  

 

(c)           Each
Corporate Units Certificate evidencing Senior Notes or Applicable Ownership
Interests in the Treasury Portfolio delivered under this Agreement upon
registration of transfer of or in exchange for or in lieu of any other
Corporate Units Certificate shall carry the right to accrued and unpaid
interest or distributions, and to accrue interest or distributions, which were
carried by the Senior Notes or Applicable Ownership Interests in the Treasury
Portfolio underlying such other Corporate Units Certificate.

 

(d)           In the case of any
Corporate Unit with respect to which (i) Cash Settlement of the underlying
Purchase Contract is properly effected pursuant to Section 5.02(b) or hereof,
(ii) Early Settlement of the underlying Purchase Contract is properly effected
pursuant to Section 5.07 hereof, (iii) Cash Merger Early Settlement of the
underlying Purchase Contract is properly effected pursuant to Section
5.04(b)(ii) hereof, (iv) a Collateral Substitution is properly effected
pursuant to Section 3.13, or (v) a Successful Early Remarketing occurs with
respect to the Senior Note that is part of such Corporate Unit, in each case on
a date that is after any Record Date and prior to or on the next succeeding
Payment Date, interest on the Senior Notes or distributions on Applicable
Ownership Interests in the Treasury Portfolio, as the case may be, underlying
such Corporate Unit otherwise payable on such Payment

 

42

 

Date shall be
payable on such Payment Date notwithstanding such Cash Settlement, Early
Settlement, Cash Merger Early Settlement, Collateral Substitution or Successful
Early Remarketing, and such payment or distributions shall, subject to receipt
thereof by the Purchase Contract Agent, be payable to the Person in whose name
the Corporate Units Certificate (or one or more Predecessor Corporate Units
Certificates) was registered at the close of business on the Record Date.

 

(e)           Except as otherwise
expressly provided in Section 4.01(d) hereof, in the case of any Corporate
Units with respect to which Cash Settlement, Early Settlement or Cash Merger
Early Settlement of the underlying Purchase Contract is properly effected, or
with respect to which a Collateral Substitution has been effected, payments on
the related Senior Notes or distributions on Applicable Ownership Interests in
the Treasury Portfolio, as the case may be, that would otherwise be payable or
made after the Purchase Contract Settlement Date, Early Settlement Date, Cash
Merger Early Settlement Date or the date of the Collateral Substitution, as the
case may be, shall not be payable hereunder to the Holder of such Corporate
Units; provided, however,
that to the extent that such Holder continues to hold Separate Senior Notes or
Applicable Ownership Interests in the Treasury Portfolio that formerly
comprised a part of such Holder’s Corporate Units, such Holder shall be
entitled to receive interest on such Separate Senior Notes or distributions on
such Applicable Ownership Interests in the Treasury Portfolio.

 

Section 4.02.  Principal Payments Prior to or on
Purchase Contract Settlement Date.  (a) Subject to the provisions of Section 5.02(a), Section
5.04(b)(ii) and Section 5.07, and except as provided in Section 4.02(b) below,
if no Termination Event shall have occurred, all principal payments received by
the Securities Intermediary in respect of (1) the Pledged Senior Notes, (2) the
Pledged Applicable Ownership Interests and (3) the Pledged Treasury Securities,
shall be credited to the Collateral Account, to be invested in Permitted
Investments until the Purchase Contract Settlement Date, and transferred to the
Company on the Purchase Contract Settlement Date as provided in Section 5.02
hereof. Any balance remaining in the Collateral Account shall be released from
the Pledge and transferred to the Purchase Contract Agent for the benefit of
the Holders of record on the Purchase Contract Settlement Date for distribution
to such Holders in accordance with their respective interests, free and clear
of the Pledge created hereby.  The
Company shall instruct the Collateral Agent in writing as to the specific Permitted
Investments in which any payments made under this Section 4.02 shall be
invested, provided, however, that if the Company fails to
deliver such instructions by 10:30 a.m., New York City time, on the day such
payments are received by the Securities Intermediary, the Collateral Agent shall
instruct the Securities Intermediary to invest such payments in the “Prime Money Market Fund” (a JPMorgan Chase Bank, N.A. money
market fund) or, if such fund is not in existence, is not accepting investments
or does not satisfy the requirements of clause (6) of the definition of
Permitted Investments, in any case, on the date on which such payments are
received by the Securities Intermediary, the “U.S.
Government Money Market Fund” (a JPMorgan Chase Bank, N.A. money
market fund) or, if such fund is not in existence, is not accepting investments
or does not satisfy the requirements of clause (6) of the definition of
Permitted Investments, in any case, on the date on which such payments are
received by the Securities Intermediary, the “Treasury
Plus Money Market Fund” (a

 

43

 

JPMorgan Chase Bank, N.A. money market fund),
or, if such fund is not in existence, is not accepting investments or does not
satisfy the requirements of clause (6) of the definition of Permitted
Investments, in any case, on the date on which such payments are received by
the Securities Intermediary, one or more of money market funds that, on such
date, satisfies the requirements of Permitted Investments described in clause
(6) of the definition of Permitted Investments. 
In no event shall the Collateral Agent be liable for the selection of
Permitted Investments or for investment losses incurred thereon.  Neither Collateral Agent nor the Securities
Intermediary shall have any liability in respect of losses incurred as a result
of the failure of the Company to provide timely written investment direction.

 

(b)           All principal payments
received by the Securities Intermediary in respect of (1) the Senior Notes,
(2)  the Applicable Ownership Interests and (3) the Treasury Securities or
security entitlements with respect thereto, that, in each case, have been
released from the Pledge pursuant hereto shall be transferred to the Purchase
Contract Agent for the benefit of the applicable Holders for distribution to
such Holders in accordance with their respective interests.

 

Section 4.03.  Notice and Voting.  (a) Subject to Section 4.03(b)
hereof, the Purchase Contract Agent may exercise, or refrain from exercising,
any and all voting and other consensual rights pertaining to the Pledged Senior
Notes or any part thereof for any purpose not inconsistent with the terms of
this Agreement; provided that the
Purchase Contract Agent shall not exercise or shall not refrain from exercising
such right, as the case may be, if, in the judgment of the Purchase Contract
Agent, such action would impair or otherwise have a material adverse effect on
the value of all or any of the Pledged Senior Notes; and provided  further
that the Purchase Contract Agent shall give the Company and the Collateral
Agent at least four Business Days’ prior written notice of the manner in which
it intends to exercise, or its reasons for refraining from exercising, any such
right. Upon receipt of any notices and other communications in respect of any
Pledged Senior Notes, including notice of any meeting at which holders of the
Senior Notes are entitled to vote or solicitation of consents, waivers or
proxies of holders of the Senior Notes, the Collateral Agent shall use
reasonable efforts to send promptly to the Purchase Contract Agent such notice
or communication, and as soon as reasonably practicable after receipt of a
written request therefor from the Purchase Contract Agent, execute and deliver
to the Purchase Contract Agent such proxies and other instruments in respect of
such Pledged Senior Notes (in form and substance satisfactory to the Collateral
Agent) as are prepared by the Company and delivered to the Purchase Contract
Agent with respect to the Pledged Senior Notes.

 

(b)           Upon receipt of notice
of any meeting at which holders of Senior Notes are entitled to vote or upon
any solicitation of consents, waivers or proxies of holders of Senior Notes,
the Purchase Contract Agent shall, as soon as practicable thereafter, mail,
first class, postage pre-paid, to the Holders of Corporate Units a notice:

 

44

 

(i)            containing
such information as is contained in the notice or solicitation;

 

(ii)           stating
that each Holder on the record date set by the Purchase Contract Agent therefor
(which, to the extent possible, shall be the same date as the record date for
determining the holders of Senior Notes, as the case may be, entitled to vote)
shall be entitled to instruct the Purchase Contract Agent as to the exercise of
the voting rights pertaining to such Senior Notes underlying their Corporate
Units; and 

 

(iii)          stating
the manner in which such instructions may be given. 

 

Upon the
written request of the Holders of Corporate Units on such record date received
by the Purchase Contract Agent at least six days prior to such meeting, the
Purchase Contract Agent shall endeavor insofar as practicable to vote or cause
to be voted, in accordance with the instructions set forth in such requests,
the maximum number of Senior Notes, as the case may be, as to which any
particular voting instructions are received. 
In the absence of specific instructions from the Holder of a Corporate
Unit, the Purchase Contract Agent shall abstain from voting the Senior Notes
underlying such Corporate Unit.  The
Company hereby agrees, if applicable, to solicit Holders of Corporate Units to
timely instruct the Purchase Contract Agent in order to enable the Purchase
Contract Agent to vote such Senior Notes.

 

(c)           The
Holders of Corporate Units and Treasury Units shall have no voting or other
rights in respect of Common Stock.

 

Section 4.04.  Tax Event Redemption.  (a)  If the Company elects to redeem the Senior
Notes following the occurrence of a Tax Event as permitted by the Indenture, it
shall notify the Collateral Agent in writing that a Tax Event has occurred and
that it intends to redeem the Senior Notes on the Tax Event Redemption
Date.  Upon the occurrence of such Tax
Event Redemption while Senior Notes are still credited to the Collateral
Account, the Collateral Agent shall, and is hereby authorized to, instruct the
Securities Intermediary to present the Pledged Senior Notes for payment as may
be required by their respective terms and to direct the Indenture Trustee to
remit the Redemption Price to the Securities Intermediary for credit to the
Collateral Account, on or prior to 11:00 a.m. New York City time on such Tax
Event Redemption Date, by wire transfer of immediately available funds.  Upon receipt of such funds by the Securities
Intermediary and the credit thereof to the Collateral Account, the Pledged Senior
Notes shall be released from the Collateral Account and promptly transferred to
the Company.  Upon the crediting of such
funds to the Collateral Account, the Collateral Agent, at the written direction
of the Company, shall instruct the Securities Intermediary to (i) apply an
amount equal to the Redemption Amount of such funds to purchase the Treasury
Portfolio from the Quotation Agent, (ii) credit to the Collateral Account the
Applicable Ownership Interests and (iii) promptly remit the remaining portion
of such funds to the Purchase

 

45

 

Contract Agent
for payment to the Holders of Corporate Units, in accordance with their
respective interests.

 

(b)           Upon
the occurrence of a Tax Event Redemption, (i) the Applicable Ownership
Interests (as specified in clause (i)(A) or (ii)(A) of the definition thereof)
in the Treasury Portfolio will be substituted as Collateral for the Pledged
Senior Notes and will be held by the Collateral Agent in accordance with the
terms hereof to secure the Obligation of each Holder of a Corporate Unit, (ii)
the Holders of Corporate Units and the Collateral Agent shall have such rights
and obligations, and the Collateral Agent shall have such security interest,
with respect to such Applicable Ownership Interests (as specified in clause
(i)(A) or (ii)(A) of the definition thereof) as the Holders of Corporate Units
and the Collateral Agent had in respect of the Pledged Senior Notes, as the
case may be, subject to the Pledge thereof, and (iii) any reference herein to
the Senior Notes shall be deemed to be a reference to such Applicable Ownership
Interests (as specified in clause (i)(A) or (ii)(A) of the definition thereof)
in the Treasury Portfolio.  The Company
may cause to be made in any Corporate Units Certificates thereafter to be
issued such change in phraseology and form (but not in substance) as may be
appropriate to reflect the substitution of the Applicable Ownership Interests
(as specified in clause (i)(A) or (ii)(A) of the definition thereof) in the
Treasury Portfolio for Senior Notes as Collateral.

 

Section 4.05.  Payments to Purchase
Contract Agent.  The
Securities Intermediary shall use commercially reasonable efforts to deliver
any payments required to be made by it to the Purchase Contract Agent hereunder
to the account designated by the Purchase Contract Agent for such purpose not
later than 12:00 p.m., New York City time, on the Business Day such payment is
received by the Securities Intermediary; provided,
however, that if such payment is
received on a day that is not a Business Day or after 11:00 a.m., New York City
time, on a Business Day, then the Securities Intermediary shall use
commercially reasonable efforts to deliver such payment to the Purchase
Contract Agent no later than 10:30 a.m., New York City time, on the next
succeeding Business Day.

 

Section 4.06.  Payments Held in Trust.  If
the Purchase Contract Agent or any Holder shall receive any principal payments
on account of financial assets credited to the Collateral Account and not
released therefrom in accordance with this Agreement, the Purchase Contract
Agent or such Holder shall hold the same as trustee of an express trust for the
benefit of the Company and, upon receipt of an Officers’ Certificate of the
Company so directing, promptly deliver the same to the Securities Intermediary
for credit to the Collateral Account or to the Company for application to the
Obligations of the Holders, and the Purchase Contract Agent and Holders shall
acquire no right, title or interest in any such payments of principal amounts
so received.  The Purchase Contract Agent
shall have no liability under this Section 4.06 unless and until it has been
notified in writing that such payment was delivered to it erroneously and shall
have no liability for any action taken, suffered or omitted to be taken prior
to its receipt of such notice.

 

46

 

ARTICLE 5

THE PURCHASE CONTRACTS

 

Section 5.01.  Purchase of Shares of Common Stock.  (a) Each
Purchase Contract shall obligate the Holder of the related Units to purchase,
and the Company to sell, on the Purchase Contract Settlement Date at a price
equal to the Stated Amount (the “Purchase Price”),
a number of newly issued shares of Common Stock (subject to Section 5.08) equal
to the Settlement Rate unless an Early Settlement, a Cash Merger Early
Settlement or a Termination Event with respect to the Units of which such
Purchase Contract is a part shall have occurred.  The “Settlement Rate”
is equal to: 

 

(i)            If
the Applicable Market Value (as defined below) is greater than or equal to
$30.7625 (the “Threshold Appreciation Price”),
1.6254 shares of Common Stock per Purchase Contract (the “Minimum
Settlement Rate”);

 

(ii)           if the Applicable
Market Value is less than the Threshold Appreciation Price but greater than
$24.61 (the “Reference Price”), the number of
shares of Common Stock per Purchase Contact having a value equal to the Stated
Amount divided by the Applicable Market Value;

 

(iii)          if
the Applicable Market Value is less than or equal to the Reference Price,
2.0317 shares of Common Stock per Purchase Contract  (the “Maximum Settlement Rate”);

 

in each case
subject to adjustment as provided in Section 5.04 (and in each case rounded
upward or downward to the nearest 1/10,000th of a share). 

 

The “Applicable Market Value”
means the average of the Closing Price per share of Common Stock on each of the
20 consecutive Trading Days ending on the third Trading Day immediately
preceding the Purchase Contract Settlement Date, subject to adjustments set
forth under Section 5.04 hereof.

 

The “Closing Price”
per share of Common Stock on any date of determination means:

 

(i)            the
closing sale price as of the close of the principal trading session (or, if no
closing price is reported, the last reported sale price) per share on the New
York Stock Exchange, Inc. (the “NYSE”) on such
date;

 

(ii)           if
the Common Stock is not listed for trading on the NYSE on any such date, the
closing sale price (or, if no closing price is reported, the last reported sale
price) per share as reported in the composite transactions for the principal
United States national or regional securities exchange on which the Common
Stock is so listed;

 

47

 

(iii)          if
the Common Stock is not so listed on a United States national or regional
securities exchange, the last reported sale price per share as reported by The
Nasdaq National Market, Inc.;

 

(iv)          if the Common Stock is
not so reported by the Nasdaq National Market, Inc., the last quoted bid price
for the Common Stock in the over-the-counter market as reported by the National
Quotation Bureau or similar organization; or  

 

(v)           if
the bid price referred to in clause (iv) is not available, the market value of
Common Stock on such date as determined by a nationally recognized independent
investment banking firm retained by the Company for purposes of determining the
Closing Price.

 

A “Trading Day”
means a day on which the Common Stock (1) is not suspended from trading on any
national or regional securities exchange or association or over-the-counter
market at the close of business and (2) has traded at least once on the
national or regional securities exchange or association or over-the-counter
market that is the primary market for the trading of the Common Stock.

 

(b)           Each
Holder of a Corporate Unit or a Treasury Unit, by its acceptance of such Unit:

 

(i)            irrevocably
authorizes the Purchase Contract Agent to enter into and perform the related
Purchase Contract on its behalf as its attorney-in-fact (including, without
limitation, the execution of Certificates on behalf of such Holder);  

 

(ii)           agrees to be bound by
the terms and provisions thereof; 

 

(iii)          covenants
and agrees to perform its obligations under such Purchase Contract for so long
as such Holder remains a Holder of a Corporate Unit or a Treasury Unit;

 

(iv)          consents to the
provisions hereof;

 

(v)           irrevocably
authorizes the Purchase Contract Agent to enter into and perform this Agreement
on its behalf and in its name as its attorney-in-fact;

 

(vi)          consents
to, and agrees to be bound by, the Pledge of such Holder’s right, title and
interest in and to the Collateral Account, including the Senior Notes and the
Applicable Ownership Interests (as specified in clause (i)(A) or (ii)(A) of the
definition thereof) in the Treasury Portfolio or the Treasury Securities
pursuant to this Agreement; and 

 

48

 

(vii)         for
United States federal, state and local income and franchise tax purposes,
agrees to (i) treat its acquisition of the Corporate Units as an acquisition of
the Senior Note and Purchase Contract constituting the Corporate Units, (ii)
treat the Senior Notes as indebtedness of the Company and (iii) treat itself as
the owner of the applicable interests in the Collateral Account, including the
Senior Notes, the Applicable Ownership Interests in the Treasury Portfolio (as
specified in clause (i)(A) or (ii)(A) of the definition thereof) or the
Treasury Securities,

 

provided that
upon a Termination Event, the rights of the Holder of such Units under the
Purchase Contract may be enforced without regard to any other rights or
obligations.  

 

(c)           Each
Holder of a Corporate Unit or a Treasury Unit, by its acceptance thereof,
further covenants and agrees that to the extent and in the manner provided in
Section 5.02 hereof, but subject to the terms thereof, Proceeds of the Pledged
Senior Notes, the Pledged Treasury Securities or the Pledged Applicable
Ownership Interests, as applicable, on the Purchase Contract Settlement Date,
shall be paid by the Collateral Agent to the Company in satisfaction of such
Holder’s obligations under such Purchase Contract and such Holder shall acquire
no right, title or interest in such Proceeds.

 

(d)           Upon
registration of transfer of a Certificate, the transferee shall be bound
(without the necessity of any other action on the part of such transferee) by
the terms of this Agreement and the Purchase Contracts underlying such
Certificate and the transferor shall be released from the obligations under
this Agreement and the Purchase Contracts underlying the Certificate so
transferred.  The Company covenants and
agrees, and each Holder of a Certificate, by its acceptance thereof, likewise
covenants and agrees, to be bound by the provisions of this paragraph. 

 

Section 5.02.  Remarketing; Payment of Purchase Price.  (a) (i) Unless a
Tax Event Redemption or a Successful Remarketing has occurred or will occur, on
or prior to the last possible Reset Date related to the applicable Three-Day
Remarketing Period, the Company during the Period for Early Remarketing may, at
its option, and in its sole discretion, select one or more Three-Day
Remarketing Periods consisting of three successive Remarketing Dates on each of
which it shall cause the Remarketing Agent to remarket, in whole (but not in
part), (A) the Pledged Senior Notes of Corporate Units Holders included in the
Corporate Units and (B) any Separate Senior Notes of holders who have elected
to in the manner set forth in clause (ii) below to have their Senior Notes so
remarketed.  Promptly after 11:00 a.m.,
New York City time, on the Business Day immediately preceding the first
Remarketing Date of the applicable Three-Day Remarketing Period, the Purchase Contract
Agent shall notify the Remarketing Agent of the aggregate principal amount of
Pledged Senior Notes and the Custodial Agent shall notify the Remarketing Agent
of the aggregate principal amount of Separate Senior Notes, if any, that are to
be remarketed pursuant to clause (ii) below. 
Concurrently, the Custodial Agent will present for Remarketing the
Separate Senior Notes to the Remarketing Agent. 
Upon receipt of such notices from the Purchase Contract Agent and
Custodial Agent, and the Separate Senior Notes for Remarketing from the Custodial
Agent, the Remarketing Agent shall, during the Three-Day

 

49

 

Remarketing
Period, use its reasonable efforts to remarket (based on the Reset Rate) such
Pledged Senior Notes and Separate Senior Notes at a price equal to the sum of
(x) approximately 100.00% of the sum of the Remarketing Treasury Portfolio
Purchase Price plus the Separate Senior Notes Purchase Price and (y) the
Remarketing Fee.  If the Remarketing
Agent is able to remarket the Pledged Senior Notes and Separate Senior Notes at
a price equal to or greater than 100.00% of the Remarketing Treasury Portfolio
Purchase Price plus the Separate Senior Notes Purchase Price (a “Successful Early Remarketing”), the Collateral Agent shall
instruct the Securities Intermediary to:

 

(A)        Transfer the Pledged
Senior Notes to the Remarketing Agent upon confirmation of deposit by the
Remarketing Agent of the Proceeds of such Successful Remarketing attributable
to such Pledged Senior Notes (after deducting any Remarketing Fee) in the
Collateral Account;

 

(B)         apply an amount equal to
the Remarketing Treasury Portfolio Purchase Price to purchase from the
Quotation Agent the Remarketing Treasury Portfolio;

 

(C)         credit the Applicable
Ownership Interests (as specified in clause (i)(A) of the definition thereof)
to the Collateral Account; and

 

(D)         promptly remit the
remaining portion of such Proceeds to the Purchase Contract Agent for payment
to the Holders of Corporate Units, in accordance with their respective
interests.

 

The
Remarketing Agent may deduct the Remarketing Fee from any amount of Proceeds
therefrom in excess of sum of the Remarketing Treasury Portfolio Purchase Price
plus the Separate Senior Notes Purchase Price. 
With respect to Pledged Senior Notes, any Proceeds of the Remarketing
attributable to such Pledged Senior Notes in excess of the sum of the
Remarketing Treasury Portfolio Purchase Price plus the Remarketing Fee with
respect to such Pledged Senior Notes will be remitted to the Purchase Contract
Agent for payment to the Holders of the related Corporate Units.  The Remarketing Treasury Portfolio will be
substituted for the Pledged Senior Notes and the appropriate Applicable
Ownership Interests (as specified in clause (i)(A) of the definition thereof)
in the Remarketing Treasury Portfolio will be held as Collateral to secure the
Obligations of the Holders of Corporate Units. 
With respect to Separate Senior Notes upon a Successful Early
Remarketing, any Proceeds of the Remarketing attributable to such Separate
Senior Notes in excess of the Remarketing Fee with respect to the Separate
Senior Notes will be remitted to the Custodial Agent for payment to the holders
of such Separate Senior Notes.  None of
the Company, the Purchase Contract Agent, or any Holders of Corporate Units or
holders of Separate Senior Notes whose Senior Notes or Separate Senior Notes
are so remarketed will otherwise be responsible for the payment of any
Remarketing Fee in connection therewith.

 

50

 

Following the occurrence of a Successful
Early Remarketing, the Holders of Corporate Units and the Collateral Agent
shall have such rights and obligations, and the Collateral Agent shall have
such security interest, with respect to the Pledged Applicable Ownership
Interests in the Remarketing Treasury Portfolio as the Holder of Corporate
Units and the Collateral Agent had in respect of the Pledged Senior Notes,
subject to the Pledge thereof, and any reference herein or in the Certificates
to the Senior Notes shall be deemed to be a reference to such Applicable
Ownership Interests (as specified in clause (i)(A) of the definition thereof)
in the Remarketing Treasury Portfolio and any reference herein or in the
Certificates to interest in the Senior Notes shall be deemed to be a reference
to corresponding distributions on such Applicable Ownership Interests (as
specified in clause (i)(A) of the definition thereof) in the Remarketing
Treasury Portfolio.  The Company may
cause to be made in any Corporate Units Certificates thereafter to be issued
such change in phraseology and form (but not in substance) as may be
appropriate to reflect the substitution of such Applicable Ownership Interests
in the Treasury Portfolio for Senior Notes. 

 

If a Remarketing attempt on the first
Remarketing Date during the applicable Three-Day Remarketing Period is not
successful, the Remarketing Agent shall, in accordance with the Remarketing
Agreement, remarket the Senior Notes on each of the next two succeeding
Remarketing Dates during such Three-Day Remarketing Period until a Successful
Remarketing occurs.  If, in spite of
using its reasonable efforts, the Remarketing Agent cannot remarket the Pledged
Senior Notes and the Separate Senior Notes, if any, during such Three-Day Remarketing
Period (other than to the Company) at a price not less than 100.00% of the sum
of the Remarketing Treasury Portfolio Purchase Price plus the Separate Senior
Note Purchase Price or a condition precedent set forth in the Remarketing
Agreement is not fulfilled, the Remarketing will be deemed to have failed (a “Failed Early Remarketing”). 
Promptly following a Failed Early Remarketing, the Remarketing Agent
shall return, no later than the Business Day immediately following the end of
such Three-Day Remarketing Period, the Separate Senior Notes delivered for
Remarketing to the Custodial Agent for delivery to the appropriate holders of
the Separate Senior Notes.

 

(ii)           On
or prior to 5:00 p.m., New York City time, on the second Business Day
immediately preceding the first Remarketing Date of the applicable Three-Day
Remarketing Period, but no earlier than 5:00 p.m., New York City time, on the
fifth Business Day immediately preceding such first Remarketing Date of the
applicable Three-Day Remarketing Period, holders of Separate Senior Notes may
elect to have their Separate Senior Notes remarketed under the Remarketing
Agreement by delivering their Separate Senior Notes, along with a notice of
such election, substantially in the form of Exhibit L hereto, to the Custodial
Agent.  The Custodial Agent shall hold
the Separate Senior Notes in an account separate from the Collateral Account in
which the Pledged Senior Notes shall be held. 
Holders of Separate Senior Notes electing to have their Separate Senior
Notes remarketed will also have the right to withdraw that election by written
notice to the Custodial Agent, substantially in the form of Exhibit M hereto,
on or prior to 5:00 p.m., New

 

51

 

York City time, on the second Business Day
immediately preceding the first Remarketing Date of the relevant Three-Day
Remarketing Period, upon which notice the Custodial Agent shall return such
Separate Senior Notes to such holder. After such time, such election to
remarket shall become an irrevocable election to have such Separate Senior
Notes remarketed in such Remarketing. 
Promptly after 11:00 a.m., New York City time, on the Business Day
immediately preceding the first Remarketing Date of the relevant Three-Day
Remarketing Period, the Custodial Agent shall notify the Remarketing Agent of
the aggregate principal amount of the Separate Senior Notes to be remarketed
and shall deliver to the Remarketing Agent for Remarketing all Separate Senior
Notes delivered to the Custodial Agent pursuant to this Section 5.02(a)(ii) and
not withdrawn pursuant to the terms hereof prior to such date. 

 

(iii)          The Company shall request, not less
than 10 Business Days prior to each Remarketing Announcement Date, that the
Depositary (or any successor or its nominee) notify the Depositary Participants
holding Senior Notes of such Remarketing and procedures to be followed in such
Remarketing.  On the Remarketing
Announcement Date, the Company shall make a Remarketing Announcement regarding
such proposed Remarketing of the Senior Notes.

 

(iv)          The
Company agrees to use its best efforts to ensure that, if required by
applicable law, a registration statement with regard to the full amount of the
Senior Notes to be remarketed in the Remarketing during the Period for Early
Remarketing or the Final Three-Day Remarketing Period, as the case may be,
shall be effective with the Securities and Exchange Commission in a form that
will enable the Remarketing Agent to rely on it in connection with such
Remarketing.

 

(v)           The
Company shall cause a notice of a Failed Remarketing to be published (with a
copy of such notice to be provided to the Purchase Contract Agent) on the
Business Day immediately following the final Remarketing Date of the applicable
Three-Day Remarketing Period, through any appropriate news agency, including
Dow Jones & Company, Inc. and Bloomberg Business News.

 

(b)           (i)
Unless a Tax Event Redemption has occurred prior to the Final Three-Day
Remarketing Period, if no Successful Remarketing has occurred prior to the
Final Three-Day Remarketing Period, each Holder shall have the right to satisfy
such Holder’s Obligations on the Purchase Contract Settlement Date in cash by
notifying the Purchase Contract Agent by use of a notice in substantially the
form of Exhibit E hereto of its intention to pay in cash (“Cash
Settlement”) prior to 5:00 p.m., New York City time, on the seventh
Business Day immediately preceding the Purchase Contract Settlement Date.  Promptly following 5:00 p.m., New York City
time, on the seventh Business Day immediately preceding the Purchase Contract
Settlement Date, the Purchase Contract Agent shall notify the Collateral Agent
and the Indenture Trustee of the receipt of such notices from Holders intending
to make a Cash Settlement. 

 

52

 

(ii)           A Holder of a Corporate
Unit (if the Treasury Portfolio has not replaced the Senior Notes underlying
such Corporate Unit) who has so notified the Purchase Contract Agent of its
intention to effect a Cash Settlement shall pay the Purchase Price to the
Securities Intermediary for credit to the Collateral Account on or prior to
11:00 a.m., New York City time, on the sixth Business Day immediately preceding
the Purchase Contract Settlement Date in lawful money of the United States by
wire transfer, in each case in immediately available funds payable to or upon
the order of the Securities Intermediary.  

 

(iii)          If a Holder of a
Corporate Unit does not notify the Purchase Contract Agent of its intention to
make a Cash Settlement in accordance with Section 5.02(b)(i) above, or does
notify the Purchase Contract Agent in accordance with Section 5.02(b)(i) above
but fails to make such payment as required by Section 5.02(b)(ii) above, such
Holder shall be deemed to have consented to the disposition of the Pledged
Senior Notes pursuant to the Remarketing during the Final Three-Day Remarketing
Period as described in Section 5.02(c) below.

 

(iv)          Promptly after 11:00
a.m., New York City time, on the sixth Business Day preceding the Purchase
Contract Settlement Date, the Collateral Agent, based on cash payments received
by the Securities Intermediary pursuant to Section 5.02(b)(ii) hereof, shall
promptly notify the Purchase Contract Agent and the Indenture Trustee of the aggregate
principal amount of Pledged Senior Notes to be tendered for purchase in the
Remarketing in a notice in the form of Exhibit K hereto.

 

(v)           Upon (1) receipt by the
Collateral Agent of a notice from the Purchase Contract Agent promptly after
the receipt by the Purchase Contract Agent of a notice from a Holder of
Corporate Units that such Holder has elected, in accordance with Section
5.02(b)(i) to effect a Cash Settlement and (2) the payment by such Holder of
the Purchase Price in accordance with Section 5.02(b)(ii) above then the
Collateral Agent shall:

 

(A)        instruct the Securities
Intermediary promptly to invest any such Cash in Permitted Investments;

 

(B)         release from the Pledge
such Holder’s Pledged Senior Notes related to the Corporate Units as to which
such Holder has effected a Cash Settlement; and 

 

(C)         instruct the Securities
Intermediary to Transfer all such Pledged Senior Notes to the Purchase Contract
Agent for distribution to such Holder, in each case free and clear of the
Pledge created hereby.

 

The Company shall instruct the Collateral Agent in writing as to the
type of Permitted Investments in which any such Cash shall be invested; provided, however, that if

 

53

 

the Company fails to deliver such instructions by 10:30 a.m., New York
City time, on the day such payments are received by the Securities
Intermediary, the Collateral Agent shall instruct the Securities Intermediary
to invest such payments in the “Prime Money Market Fund”
(a JPMorgan Chase Bank, N.A. money market fund) or, if such fund is not in
existence, is not accepting investments or does not satisfy the requirements of
clause (6) of the definition of Permitted Investments, in any case, on the date
on which such payments are received by the Securities Intermediary, the “U.S. Government Money Market Fund” (a JPMorgan Chase Bank,
N.A. money market fund) or, if such fund is not in existence, is not accepting
investments or does not satisfy the requirements of clause (6) of the definition
of Permitted Investments, in any case, on the date on which such payments are
received by the Securities Intermediary, the “Treasury
Plus Money Market Fund” (a JPMorgan Chase Bank, N.A. money market
fund), or, if such fund is not in existence, is not accepting investments or
does not satisfy the requirements of clause (6) of the definition of Permitted
Investments, in any case, on the date on which such payments are received by
the Securities Intermediary, one or more of money market funds that, on such
date, satisfies the requirements of Permitted Investments described in clause
(6) of the definition of Permitted Investments. 
In no event shall the Collateral Agent be liable for the selection of
Permitted Investments or for investment losses incurred thereon.  Neither Collateral Agent nor the Securities
Intermediary shall have any liability in respect of losses incurred as a result
of the failure of the Company to provide timely written investment direction.

 

Upon maturity of the Permitted Investments on the Purchase Contract
Settlement Date, the Collateral Agent shall, and is hereby authorized to, (A)
instruct the Securities Intermediary to remit to the Company on the Purchase
Contract Settlement Date such portion of the proceeds of such Permitted Investments
as is equal to the aggregate Purchase Price under all Purchase Contracts in
respect of which Cash Settlement has been affected as provided above to the
Company on the Purchase Contract Settlement Date, and (B) release any amounts
in excess of such aggregate Purchase Price earned from such Permitted
Investments to the Purchase Contract Agent for distribution to the Holders who
have effected Cash Settlement pro-rata in proportion to the amount paid by such
Holders under Section 5.02(b)(ii) above.

 

(c)           (i) Unless a Tax Event
Redemption has occurred prior to the Final Three-Day Remarketing Period, if a
Successful Remarketing has not occurred during the Period for Early
Remarketing, the Pledged Senior Notes of any Holders of Corporate Units who
have not notified the Purchase Contract Agent of their intention to effect a
Cash Settlement as provided in Section 5.02(b)(i) above, or who have so
notified the Purchase Contract Agent in accordance with Section 5.02(b)(i)
above but have failed to make such payment as required by Section 5.02(b)(ii)
above, and the Separate Senior Notes of any holder who has elected for its
Separate Senior Notes to be remarketed pursuant to Section 5.02(a)(ii) will be
remarketed by the Remarketing Agent during the Final Three-Day Remarketing
Period.  In order to facilitate the
Remarketing during the Final Three-Day Remarketing Period, the Purchase
Contract Agent, based on the notice specified in Section 5.02(b)(iv), and the
Collateral Agent, based on the notice specified in Section 5.02(b)(ii), shall
notify the

 

54

 

Remarketing Agent, by 11:00 a.m., New York
City time, on the sixth Business Day immediately preceding the Purchase
Contract Settlement Date, of the aggregate principal amount of Pledged Senior
Notes or aggregate principal amount of Separate Senior Notes that are to be
remarketed pursuant to Section 5.02(a)(ii), as the case may be, to be
remarketed.  Concurrently, the Custodial
Agent will present for Remarketing the Separate Senior Notes to the Remarketing
Agent.

 

(ii)           Upon receipt of such
notices from the Purchase Contract Agent and the Collateral Agent and the
Separate Senior Notes (if any) from the Custodial Agent, as set forth in clause
(1) above, the Remarketing Agent shall, during the Final Three-Day Remarketing
Period, use its reasonable efforts to remarket (based on the Reset Rate) such
Pledged Senior Notes and the Separate Senior Notes on such date at a price
equal to the sum of (x) approximately 100.00% of the aggregate principal amount
of such Pledged Senior Notes and the Separate Senior Notes and (y) the
Remarketing Fee.  If the Remarketing
Agent is able to remarket the Pledged Senior Notes and Separate Senior Notes at
a price equal to or greater than 100.00% of the aggregate principal amount of
the Pledged Senior Notes and Separate Senior Notes (if any) (a “Successful Final Remarketing”), the Collateral Agent shall:

 

(A)        instruct the Securities
Intermediary to Transfer the related Pledged Senior Notes to the Remarketing Agent
upon confirmation of deposit by the Remarketing Agent of the Proceeds of such
Remarketing attributable to such Pledged Senior Notes (after deducting the
Remarketing Fee) in the Collateral Account;

 

(B)         instruct the Securities
Intermediary to invest such Proceeds of the Remarketing in one or more of the
Permitted Investments; and 

 

(C)         on the Purchase Contract
Settlement Date, in consultation with the Purchase Contract Agent, instruct the
Securities Intermediary to remit a portion of the Proceeds from such
Remarketing attributable to such Pledged Senior Notes equal to the aggregate
principal amount of such Pledged Senior Notes to satisfy in full such Holder’s
Obligations to pay the Purchase Price to purchase the shares of Common Stock
under the related Purchase Contracts, less the amount of any Deferred Contract
Adjustment Payments payable to such Holder, and to remit the balance of the
Proceeds from the Remarketing, if any, to the Purchase Contract Agent for
distribution to such Holder.

 

The Company
shall instruct the Collateral Agent in writing as to the type of Permitted
Investments in which any such Proceeds shall be invested; provided, however,
that if the Company fails to deliver such instructions by 10:30 a.m., New York
City time, on the day such payments are received by the Securities
Intermediary, the Collateral Agent shall instruct the Securities Intermediary
to invest such payments in the “Prime Money Market Fund”
(a JPMorgan Chase Bank, N.A. money market fund) or, if such fund is not

 

55

 

in existence,
is not accepting investments or does not satisfy the requirements of clause (6)
of the definition of Permitted Investments, in any case, on the date on which
such payments are received by the Securities Intermediary, the “U.S. Government Money Market Fund” (a JPMorgan Chase Bank,
N.A. money market fund) or, if such fund is not in existence, is not accepting
investments or does not satisfy the requirements of clause (6) of the
definition of Permitted Investments, in any case, on the date on which such
payments are received by the Securities Intermediary, the “Treasury
Plus Money Market Fund” (a JPMorgan Chase Bank, N.A. money market
fund), or, if such fund is not in existence, is not accepting investments or
does not satisfy the requirements of clause (6) of the definition of Permitted
Investments, in any case, on the date on which such payments are received by
the Securities Intermediary, one or more of money market funds that, on such
date, satisfies the requirements of Permitted Investments described in clause
(6) of the definition of Permitted Investments. 
In no event shall the Collateral Agent be liable for the selection of
Permitted Investments or for investment losses incurred thereon.  Neither Collateral Agent nor the Securities
Intermediary shall have any liability in respect of losses incurred as a result
of the failure of the Company to provide timely written investment direction.

 

The
Remarketing Agent may deduct as the Remarketing Fee from Proceeds in excess of
the aggregate principal amount of the Remarketed Senior Notes.  With respect to Separate Senior Notes upon a
Successful Final Remarketing any proceeds of the Remarketing in excess of the
Remarketing Fee attributable to the Separate Senior Notes will be remitted to
the Custodial Agent for payment to the holders of Separate Senior Notes.  

 

If a
Remarketing attempt on the first Remarketing Date during the Final Three-Day
Remarketing Period is not successful, the Remarketing Agent shall, in
accordance with the Remarketing Agreement, remarket the Senior Notes on each of
the next two succeeding Remarketing Dates during the Final Three-Day
Remarketing Period until a Successful Remarketing occurs.  If, in spite of using its reasonable efforts,
the Remarketing Agent cannot remarket the Pledged Senior Notes and Separate
Senior Notes (if any) at a price not less than 100.00% of the aggregate
principal amount of the Pledged Senior Notes and Separate Senior Notes to be
remarketed during the Final Three-Day Remarketing Period (other than to the
Company) or a condition precedent in the Remarketing Agreement is not
fulfilled, the Remarketing will be deemed to have failed (a “Failed Final Remarketing”). 
Following a Failed Final Remarketing, as of the Purchase Contract
Settlement Date, each Holder of any Pledged Senior Notes that are subject to a
Failed Final Remarketing, shall be deemed to have exercised such Holder’s Put
Right with respect to such Senior Notes and to have elected to have a portion
of the Proceeds of the Put Right set-off against such Holder’s obligation to
pay the aggregate Purchase Price for the shares of Common Stock to be issued
under the related Purchase Contracts, less any Deferred Contract Adjustment
Payments, in full satisfaction of such Holders’ obligations under such Purchase
Contracts.  Following such set-off, the
Holder’s obligations to pay the Purchase Price for the shares of Common Stock
will be deemed to be satisfied in full, and the Collateral Agent shall cause
the Securities Intermediary to release the Pledged Senior Notes from the
Collateral

 

56

 

Account and
shall promptly transfer the Pledged Senior Notes to the Company.  Thereafter, the Collateral Agent shall
promptly remit the remaining portion of the Proceeds of the Holder’s exercise
of the Put Right in excess of the aggregate Purchase Price, less any Deferred
Contract Adjustment Payments, for the shares of Common Stock to be issued under
such Purchase Contracts to the Purchase Contract Agent for payment to the
Holder of the Corporate Units to which such Senior Notes relate.

 

(d)           In the case of a
Treasury Unit or a Corporate Unit (if the Treasury Portfolio has replaced the
Senior Note as a component of such Corporate Unit), upon the maturity of the
Pledged Treasury Securities or the appropriate Pledged Applicable Ownership
Interests held by the Securities Intermediary on or prior to the Business Day
immediately preceding the Purchase Contract Settlement Date, the principal amount
of the Treasury Securities or the appropriate Pledged Applicable Ownership
Interests received by the Securities Intermediary shall be invested promptly in
Permitted Investments, selected in the manner set forth in the second sentence
of Section 4.02(a) (as if the Securities Intermediary were the Collateral Agent
referred to therein).  On the Purchase
Contract Settlement Date, an amount equal to the Purchase Price, less the
amount of any Deferred Contract Adjustment Payments payable to such Holders,
shall be remitted to the Company as payment of such Holder’s Obligations under
the related Purchase Contracts without receiving any instructions from the
Holder.  In the event the sum of the
Proceeds from the related Pledged Treasury Securities or related Pledged
Applicable Ownership Interests and the Proceeds from such Permitted Investments
is in excess of the aggregate Purchase Price, less the amount of any Deferred
Contract Adjustment Payments payable to such Holders, the Collateral Agent
shall cause the Securities Intermediary to distribute such excess to the
Purchase Contract Agent for the benefit of the Holder of the related Treasury
Units or Corporate Units when received.

 

(e)           With respect to the
Senior Notes to be distributed to Holders upon a Cash Settlement, subject to
the receipt thereof, the Purchase Contract Agent shall transfer such Senior
Notes by book-entry transfer or other appropriate procedures in accordance with
written instructions provided by the Holder thereof or, if no such instructions
are given to the Purchase Contract Agent by the Holder, the Purchase Contract
Agent, subject to applicable abandoned property laws, shall hold such Senior
Notes, and any interest payment thereon, in the name of the Purchase Contract
Agent or its nominee in trust for the benefit of such Holder until the
expiration of the time period specified in the abandoned property laws of the
relevant state where the property is held. 
Distributions to Holders of any other payments described above shall be
payable at the office of the Purchase Contract Agent in New York City
maintained for that purpose or, at the option of the Holder, by check mailed to
the address of the Person entitled thereto at such address as it appears on the
Security Register.

 

(f)            The obligations of the
Holders to pay the Purchase Price are non-recourse obligations and, except to
the extent satisfied by Early Settlement, Cash Merger Early Settlement or Cash
Settlement, are payable solely out of the proceeds of any Collateral pledged to
secure the obligations of the Holders, and in no event will Holders be liable
for

 

57

 

any deficiency
between the proceeds of the disposition of Collateral and the Purchase Price.

 

(g)           The Company shall not
be obligated to issue any shares of Common Stock in respect of a Purchase
Contract or deliver any certificates thereof to the Holder of the related Units
unless the Company shall have received payment for the Common Stock to be
purchased thereunder in the manner herein set forth.

 

Section 5.03.  Issuance of Shares of Common Stock. 
(a) Unless a
Termination Event, an Early Settlement or a Cash Merger Early Settlement shall
have occurred, subject to Section 5.04(b), on the Purchase Contract Settlement
Date upon receipt of the aggregate Purchase Price payable on all Outstanding
Units, the Company shall issue and deposit with the Purchase Contract Agent,
for the benefit of the Holders of the Outstanding Units, one or more
certificates representing newly issued shares of Common Stock registered in the
name of the Purchase Contract Agent (or its nominee) as custodian for the
Holders (such certificates for shares of Common Stock, together with any
dividends or distributions for which a record date and payment date for such
dividend or distribution has occurred after the Purchase Contract Settlement
Date, being hereinafter referred to as the “Purchase
Contract Settlement Fund”) to which the Holders are entitled
hereunder.

 

(b)           Subject
to the foregoing, upon surrender of a Certificate to the Purchase Contract
Agent on or after the Purchase Contract Settlement Date, Early Settlement Date
or Cash Merger Early Settlement Date, as the case may be, together with
settlement instructions thereon duly completed and executed, the Holder of such
Certificate shall be entitled to receive forthwith in exchange therefor a
certificate representing that number of newly issued whole shares of Common
Stock which such Holder is entitled to receive pursuant to the provisions of
this Article 5 (after taking into account all Units then held by such Holder),
together with cash in lieu of fractional shares as provided in Section 5.08 and
any dividends or distributions with respect to such shares constituting part of
the Purchase Contract Settlement Fund, but without any interest thereon, and
the Certificate so surrendered shall forthwith be cancelled.  Such shares shall be registered in the name
of the Holder or the Holder’s designee as specified in the settlement
instructions provided by the Holder to the Purchase Contract Agent.  If any shares of Common Stock issued in
respect of a Purchase Contract are to be registered to a Person other than the
Person in whose name the Certificate evidencing such Purchase Contract is registered
(but excluding any Depositary or nominee thereof), no such registration shall
be made unless the Person requesting such registration has paid any transfer
and other taxes required by reason of such registration in a name other than
that of the registered Holder of the Certificate evidencing such Purchase
Contract or has established to the satisfaction of the Company that such tax
either has been paid or is not payable.

 

Section 5.04.  Adjustment of Settlement Rate.  (a)  Adjustments for Dividends, Distributions,
Stock Splits, Etc.  

 

58

 

(i)            In case the Company
shall pay or make a dividend or other distribution on Common Stock in (1)
Common Stock (including any annual stock dividend) or (2) cash
or any combination of cash and Common Stock, each Fixed Settlement Rate
in effect at the close of business on the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution shall be
increased by (x) to the extent such dividend or distribution consists of Common
Stock, dividing each Fixed Settlement Rate by a fraction of which:

 

(A)        the
numerator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination, and

 

(B)         the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution; 

 

and (y) to the extent such dividend or distribution consists of
cash, increased by dividing each Fixed Settlement Rate by a fraction of which: 

 

(A)        the
numerator shall be the Current Market Price of the Common Stock on such date
fixed for determination less the amount of cash so distributed; and 

 

(B)         the
denominator shall be the Current Market Price of the Common Stock,

 

in each case, such increase to become effective immediately at the
opening of business on the day following the date fixed for such
determination.  

 

For the purposes of this paragraph (i), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include any shares
issuable in respect of any scrip certificates issued in lieu of fractions of
shares of Common Stock.  The Company
agrees that it shall not pay any dividend or make any distribution on shares of
Common Stock held in the treasury of the Company.

 

(ii)           In case the Company
shall issue rights, warrants or options, other than pursuant to any dividend
reinvestment plans or share purchase plans, to all holders of its Common Stock
(not being available on an equivalent basis to Holders of the Units upon
settlement of the Purchase Contracts underlying such Units) entitling them, for
a period expiring within 45 days after the record date for the determination of
shareholders entitled to receive such rights, warrants or options, to subscribe
for or purchase shares of Common Stock at a price per share less than the
Current Market Price per share of Common Stock on the date of announcement of
such issuance, each Fixed Settlement Rate in effect at the close of business on
the

 

59

 

date of such
announcement shall be increased by dividing such Fixed Settlement Rate by a
fraction of which:

 

(A)        the
numerator shall be the number of shares of Common Stock outstanding at the
close of business on the date of such announcement plus the number of shares of
Common Stock which the aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or purchase would purchase
at such Current Market Price; and

 

(B)         the
denominator shall be the number of shares of Common Stock outstanding at the
close of business on the date of such announcement plus the number of shares of
Common Stock so offered for subscription or purchase, 

 

such increase to become effective immediately after the opening of
business on the Business Day following the date of such announcement.  The Company agrees that it shall notify the
Purchase Contract Agent if any issuance of such rights, warrants or options is
cancelled or not completed following the announcement thereof and each Fixed
Settlement Rate shall thereupon be readjusted to the Fixed Settlement Rate in
effect immediately prior to the date of such announcement.  For the purposes of this paragraph (ii), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include any shares
issuable in respect of any scrip certificates issued in lieu of fractions of
shares of Common Stock.  The Company
agrees that it shall not issue any such rights, warrants or options in respect
of shares of Common Stock held in the treasury of the Company.

 

(iii)          In case outstanding
shares of Common Stock shall be subdivided or split into a greater number of
shares of Common Stock, each Fixed Settlement Rate in effect at the close of
business on the day preceding the day upon which such subdivision or split
becomes effective shall be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, each Fixed Settlement Rate in effect at the close of
business on the day preceding the day upon which such combination becomes
effective shall be proportionately reduced, such increase or reduction, as the
case may be, to become effective immediately at the opening of business on the
day following the day upon which such subdivision, split or combination becomes
effective.

 

(iv)          In case the Company
shall, by dividend or otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness or assets (including shares of capital stock,
securities, cash and property but excluding any rights, warrants or options
referred to in paragraph (ii) of this Section 5.04(a), any dividend or
distribution paid exclusively in cash and any dividend or distribution

 

60

 

referred to in
paragraph (i) of this Section 5.04(a)), each Fixed Settlement Rate in effect at
the close of business on the date fixed for the determination of shareholders
entitled to receive such distribution shall be adjusted by dividing such rate
by a fraction of which: 

 

(A)        the
numerator shall be the Current Market Price per share of Common Stock on the
date fixed for such determination less the then fair market value (as
reasonably determined by the Board of Directors, whose determination shall be
conclusive and the basis for which shall be described in a Board Resolution) of
the portion of the assets or evidences of indebtedness so distributed
applicable to one share of Common Stock; and

 

(B)         the
denominator shall be such Current Market Price per share of Common Stock,

 

such adjustment to become effective at the opening of business on the
day following the date fixed for the determination of shareholders entitled to
receive such distribution.  In any case
in which this paragraph (iv) is applicable, paragraph (ii) of this Section
5.04(a) shall not be applicable.  In the
event that such dividend or distribution is not so paid or made, each Fixed
Settlement Rate shall again be adjusted to be the Fixed Settlement Rate which
would then be in effect if such dividend or distribution had not been
declared.  

 

(v)           In case the Company
shall, by dividend or otherwise, distribute to all holders of its Common Stock
cash (excluding any cash that is distributed in a Reorganization Event to which
Section 5.04(b) applies, as part of a distribution referred to in paragraph
(iv) of this Section 5.04(a) or any cash (or portion thereof) for which an adjustment
was made pursuant to paragraph (i) of this Section 5.04(a) in an aggregate
amount that, combined together with (I) the aggregate amount of any other
distributions (other than any cash (or portion thereof) for which an adjustment
was made pursuant to paragraph (i) of this Section 5.04(c)) to all holders of
its Common Stock made exclusively in cash within the 12 months preceding the
date of payment of such distribution (the “Trailing 12 Month Period”)
and in respect of which no adjustment pursuant to this paragraph (v) or
paragraph (vi) of this Section has been made and (II) the aggregate amount of
any cash plus the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a Board Resolution) of
consideration (other than consideration payable in respect of any odd-lot
tender offer) payable in respect of any tender or exchange offer by the Company
or any of its subsidiaries and calculated as of the expiration of such tender
or exchange offer for all or any portion of the Common Stock concluded within
the Trailing 12 Month Period and in respect of which no adjustment pursuant to
this paragraph (v) or paragraph (vi) of this Section has been made, exceeds 10%
of the Aggregate Market Capitalization on the date of determination of holders
of shares of Common

 

61

 

Stock entitled
to receive such distribution, then, in such case, each Fixed Settlement Rate in
effect at the close of business on such record date shall be adjusted by
dividing such rate by a fraction of which:

 

(A)        the
numerator shall be the Current Market Price of Common Stock on such record date
less the amount of cash so distributed (and not excluded as provided above)
applicable to one share of Common Stock; and

 

(B)         the
denominator shall be the Current Market Price of Common Stock, 

 

such increase to be effective at the opening of business on the day
following the record date; provided, however,
that in the event the portion of cash so distributed applicable to one share of
Common Stock is equal to or greater than the Current Market Price per share of
Common Stock on the record date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each holder of a Unit shall have the right to
receive upon settlement of the Units the amount of cash such Holder would have
received had such Holder settled each Unit on the record date.  In the event that such dividend or
distribution is not so paid or made, each Fixed Settlement Rate shall again be
adjusted to be the Fixed Settlement Rate which would then be in effect if such
dividend or distribution had not been declared. 

 

(vi)          If the Company or any
subsidiary of the Company shall make a tender or exchange offer (other than any
odd-lot tender offer) for all or any portion of the Common Stock and upon
expiration of such tender or exchange offer (as amended upon the expiration
thereof) the Company or its subsidiary shall be required to pay to shareholders
based on the acceptance (up to any maximum specified in the terms of the tender
or exchange offer) of Purchased Shares (as herein defined) any consideration,
then if the sum of (I) the fair market value of the aggregate consideration to
be paid in such tender offer or exchange offer (as reasonably determined by the
Board of Directors, whose determination shall be conclusive and the basis for
which shall be described in a Board Resolution) plus (II) the aggregate of the
cash plus the fair market value (as reasonably determined by the Board of
Directors, whose determination shall be conclusive and the basis for which
shall be described in a Board Resolution), as of the expiration of such tender
or exchange offer, of consideration payable in respect of any other tender or
exchange offer (other than consideration payable in respect of any odd-lot
tender offer), by the Company or any subsidiary of the Company for all or any
portion of Common Stock expiring within the 12 months preceding the expiration
of such tender or exchange offer and in respect of which no adjustment pursuant
to this paragraph (vi) has been made, plus (III) the aggregate amount of any
distributions (other than cash distributions (or portion thereof) for which an
adjustment was made pursuant to paragraph (i) of this Section 5.04) to all
holders of Common

 

62

 

Stock made
exclusively in cash within the 12 months preceding the expiration of such
tender or exchange offer and in respect of which no adjustment pursuant to
paragraph (v) has been made, exceeds 10% of the Aggregate Market Capitalization
(including any tendered shares) as of the last time (the “Expiration
Time”) tenders could have been made pursuant to such tender or
exchange offer (as it may be amended), then, each Fixed Settlement Rate in
effect at the close of business on the day of the Expiration Time shall be
adjusted by dividing by a fraction:  

 

(A)        the numerator of which
shall be equal to the product of the number of shares of Common Stock
outstanding, including the Purchased Shares, and the Closing Price of the
Common Stock on the Trading Day next succeeding the Expiration Time; and   

 

(B)         the
denominator of which shall be equal to the sum of (1) the fair market value, as
determined by the Board of Directors (as described above in this Section
5.04(a)(vi)), of the aggregate consideration payable for all shares of Common
Stock that the Company or a subsidiary of the Company, as the case may be,
purchased in such tender or exchange offer (the “Purchased
Shares”) and (2) the product of the number of shares of Common Stock
outstanding, less any Purchased Shares, and the Closing Price of the Common
Stock on the Trading Day next succeeding the Expiration Time,

 

such adjustment to become effective at the
opening of business on the date following the date of the Expiration Time.

 

(vii)         The reclassification of
Common Stock into securities including securities other than Common Stock
(other than any reclassification upon a Reorganization Event to which Section
5.04(b) applies) shall be deemed to involve:

 

(A)        a
distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be deemed
to be “the date fixed for the determination of shareholders entitled to receive
such distribution” and the “date fixed for such determination” within the
meaning of paragraph (iv) of this Section); and

 

(B)         a
subdivision, split or combination, as the case may be, of the number of shares
of Common Stock outstanding immediately prior to such reclassification into the
number of shares of Common Stock outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to be “the day upon
which such subdivision or split becomes effective” or “the day upon which such
combination becomes effective”, as the case may be, and “the day upon

 

63

 

which such subdivision, split or combination
becomes effective” within the meaning of paragraph (iii) of this Section).

 

(viii)        The “Current
Market Price” per share of Common Stock on any date of determination
means the average of the daily Closing Prices for the 20 consecutive Trading
Days ending the earlier of the day in question and the day before the “ex date”
with respect to the issuance or distribution requiring such computation.  For purposes of this paragraph, the term “ex
date,” when used with respect to any issuance or distribution, shall mean the
first date on which Common Stock trades regular way on such exchange or in such
market without the right to receive such issuance or distribution.

 

The term “Aggregate Market
Capitalization” means, for any date, the product of (i) the average
of the daily Closing Prices of Common Stock for the 20 consecutive Trading Days
ending no later than the earlier of the day in question and the day before the “ex
date” (as defined in the preceding paragraph) preceding such date multiplied by
(ii) the number of shares of Common Stock outstanding on such date.

 

(ix)           All adjustments to the
Fixed Settlement Rate shall be calculated to the nearest 1/10,000th of a share
of Common Stock (or if there is not a nearest 1/10,000th of a share, to the
next lower 1/10,000th of a share).  No
adjustment in the Fixed Settlement Rate shall be required unless such
adjustment would require an increase or decrease of at least one percent
thereof; provided, however, that any adjustments
which by reason of this subparagraph are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.  If any adjustment is made to each Fixed
Settlement Rate pursuant to this Section 5.04(a), an adjustment shall also be
made to the Applicable Market Value solely to determine which of clauses (i),
(ii) or (iii) of the definition of Settlement Rate in Section 5.01(a) will
apply on the Purchase Contract Settlement Date or any Cash Merger Early
Settlement Date.  Such adjustment shall
be made by multiplying the Applicable Market Value by the Adjustment
Factor.  The “Adjustment
Factor” means, initially, a fraction of which the numerator shall be
the Maximum Settlement Rate immediately after the first adjustment to each
Fixed Settlement Rate pursuant to this Section 5.04(a) and the denominator
shall be the Maximum Settlement Rate immediately prior to such adjustment.  Each time an adjustment is required to be
made to each Fixed Settlement Rate pursuant to this Section 5.04(a), the
Adjustment Factor shall be multiplied by a fraction the numerator of which
shall be the Maximum Settlement Rate immediately after such adjustment to each
Fixed Settlement Rate pursuant to this Section 5.04(a) and the denominator of
which shall be the Maximum Settlement Rate immediately prior to such
adjustment.  Notwithstanding the
foregoing, if any adjustment to each Fixed Settlement Rate is required to be
made pursuant to the occurrence of any of the events contemplated by this
Section 5.04(a) during the period taken into consideration for determining the
Applicable Market Value, the 20 individual

 

64

 

Closing Prices
used to determine the Applicable Market Value shall be adjusted rather than the
Applicable Market Value and the Applicable Market Value shall be determined by
(A) multiplying the Closing Prices for Trading Days prior to such adjustment to
each Fixed Settlement Rate by the Adjustment Factor in effect prior to such
adjustment, (B) multiplying the Closing Prices for Trading Days following such
adjustment by the Adjustment Factor reflecting such adjustment, and (C)
dividing the sum of all such adjusted Closing Prices by 20.

 

(x)            The Company may, but
shall not be required to, make such increases in the Fixed Settlement Rate, in
addition to those required by this Section 5.04(a), as the Board of Directors
considers to be advisable in order to avoid or diminish any income tax to any
holders of shares of Common Stock resulting from any dividend or distribution
of stock or issuance of rights or warrants to purchase or subscribe for stock
or from any event treated as such for income tax purposes or for any other
reason.  The Company may make such
a discretionary adjustment only if it makes the same proportionate adjustment
to each Fixed Settlement Rate.

 

(xi)           If the Company
hereafter adopts any stockholder rights plan involving the issuance of
preference share purchase rights or other similar rights (the “Rights”) to all holders of the Common Stock, a Holder shall
be entitled to receive upon settlement of any Purchase Contract, in addition to
the shares of Common Stock issuable upon settlement of such Purchase Contract,
the related Rights for the Common Stock, unless such Rights under the future
stockholder rights plan have separated from the Common Stock at the time of
conversion, in which case each Fixed Settlement Rate shall be adjusted as
provided in Section 5.04(iv) on the date such Rights separate from the Common
Stock.

 

(b)           Adjustment for
Consolidation, Merger or Other Reorganization Event.

 

(i)            In the event of:

 

(A)        any consolidation or
merger of the Company with or into another Person (other than a merger or
consolidation in which the Company is the continuing corporation and in which
the shares of Common Stock outstanding immediately prior to the merger or
consolidation are not exchanged for cash, securities or other property of the
Company or another corporation);

 

(B)         any sale, transfer, lease
or conveyance to another Person of the property of the Company as an entirety
or substantially as an entirety;  

 

(C)         any statutory share
exchange of the Company with another Person (other than in connection with a
merger or acquisition); or 

 

65

 

(D)         any liquidation,
dissolution or termination of the Company other than as a result of or after
the occurrence of a Termination Event (any event described in clauses
(A),(B),(C) and (D), a “Reorganization Event”),

 

the Settlement
Rate will be adjusted to provide that each Holder of Units will receive on the
Purchase Contract Settlement Date with respect to each Purchase Contract forming
a part thereof, the kind and amount of securities, cash and other property
receivable upon such Reorganization Event (without any interest thereon, and
without any right to dividends or distribution thereon which have a record date
that is prior to the Purchase Contract Settlement Date) by a Holder of the
maximum number of shares of Common Stock issuable on account of each Purchase
Contract if the Purchase Contract Settlement Date had occurred immediately
prior to such Reorganization Event (the “Exchange Property”).  The kind and amount of Exchange Property will
be determined assuming such Holder of Common Stock is not a Person with which
the Company consolidated or into which the Company merged or which merged into
the Company or to which such sale or transfer was made, as the case may be (any
such Person, a “Constituent Person”), or an
Affiliate of a Constituent Person to the extent such Reorganization Event
provides for different treatment of Common Stock held by Affiliates of the
Company and non-affiliates and such Holder failed to exercise its rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such Reorganization Event (provided
that if the kind or amount of securities, cash and other property receivable
upon such Reorganization Event is not the same for each share of Common Stock
held immediately prior to such Reorganization Event by other than a Constituent
Person or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised (“non-electing share”),
then for the purpose of this Section 5.04(b)(i) the kind and amount of
securities, cash and other property receivable upon such Reorganization Event
by each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares).

 

The actual amount of Exchange Property
receivable upon settlement of each Purchase Contract shall be (1) in the case
of settlement on the Purchase Contract Settlement Date or pursuant to Section
5.04(b)(ii), a variable amount based upon the applicable Settlement Rate and
the Applicable Market Value of the Exchange Property at such time and (2) in
the case of any Early Settlement, determined in accordance with the procedures
described under Section 5.07 using the Settlement Rate that results in the
minimum amount of Exchange Property being delivered under such Purchase
Contract.

 

For purposes of this Section 5.04(b)(i) and
Section 5.04(b)(ii), the term “Applicable Market Value” shall be deemed to
refer to the “Applicable Market Value” of the Exchange Property, and such value
shall be determined (A) with respect to any publicly traded securities that
compose all or part of the Exchange Property, based on the Closing Price of
such securities, (B) in the case of any cash that composes all or part of the
Exchange Property, based on the amount of such cash and (C) in the case of any
other property that composes all or part of the Exchange Property, based on the
value of such property, as

 

66

 

determined by
a nationally recognized independent investment banking firm retained by the
Company for this purpose; provided
that prior to the separation of the Rights or any similar stockholder rights from
the Common Stock, such Rights or similar stockholder rights shall be deemed to
have no value.  The term “Closing Price”
shall be deemed to refer to the closing sale price, last quoted bid price or
mid-point of the last bid and ask prices, as the case may be, of any publicly
traded securities that comprise all or part of the Exchange Property. The term “Trading
Day” shall be deemed to refer to any publicly traded securities that comprise
all or part of the Exchange Property.

 

In the event of such a Reorganization Event,
the Person formed by such consolidation, merger or exchange or the Person which
acquires the assets of the Company or, in the event of a liquidation,
dissolution or termination of the Company, the Company or a liquidating trust
created in connection therewith, shall execute and deliver to the Purchase
Contract Agent an agreement supplemental hereto providing that each Holder of
an Outstanding Unit shall have the rights provided by this Section 5.04(b)(i).
Such supplemental agreement shall provide for adjustments which, for events
subsequent to the effective date of such supplemental agreement, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 5.04. The above provisions of this Section 5.04 shall similarly apply
to successive Reorganization Events.  

 

(ii)           In the event of a
consolidation or merger of the Company with or into another Person, or any
merger of another Person into the Company (other than a merger that does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock), in each case in which 30% or more of the
total consideration paid to the Company’s shareholders consists of cash or cash
equivalents (a “Cash Merger”), then a Holder of a
Unit may settle (“Cash Merger Early
Settlement”) its Purchase Contract, upon the conditions set forth
below, at the Settlement Rate in effect immediately prior to the closing of the
Cash Merger; provided that (A) the Cash Merger
Early Settlement Date (as defined below) is no later than the fifth Business
Day immediately preceding the Purchase Contract Settlement Date and (B) no Cash
Merger Early Settlement will be permitted pursuant to this Section 5.04(b)(ii)
unless, at the time such Cash Merger Early Settlement is effected, there is an
effective Registration Statement with respect to any securities to be issued
and delivered in connection with such Cash Merger Early Settlement, if such a
Registration Statement is required (in the view of counsel, which need not be
in the form of a written opinion, for the Company) under the Securities
Act.  If such a Registration Statement is
so required, the Company covenants and agrees to use its best efforts to (x)
have in effect a Registration Statement covering any securities to be delivered
in respect of the Purchase Contracts being settled and (y) provide a Prospectus
in connection therewith, in each case in a form that may be used in connection
with such Cash Merger Early Settlement.  If
a Holder elects a Cash Merger Early Settlement of some or all of its Purchase
Contracts, such Holder shall be entitled to receive, on the Cash Merger Early
Settlement Date, the aggregate amount of any accrued and unpaid Contract
Adjustment Payments including and any Deferred Contract

 

67

 

Adjustment
Payments, with respect to such Purchase Contracts.  The Company shall pay such amount as a credit
against the amount otherwise payable by such Holder to effect such Cash Merger
Early Settlement.

 

Within five Business Days of the completion of a Cash Merger, the
Company shall provide written notice to Holders of Units of such completion of
a Cash Merger, which shall specify the deadline for submitting the notice to
settle early in cash pursuant to this Section 5.04(b)(ii), the date on which
such Cash Merger Early Settlement shall occur (which date shall be 10 days
after the date of such written notice by the Company, but which shall in no
event be later than the fifth Business Day immediately preceding the Purchase
Contract Settlement Date) (the “Cash Merger Early
Settlement Date”), the applicable Settlement Rate and the amount
(per share of Common Stock) of cash, securities and other consideration
receivable by the Holder, including the amount of Contract Adjustment Payments
and Deferred Contract Adjustment Payments receivable, upon settlement.

 

Corporate Units Holders and Treasury Units Holders may only effect Cash
Merger Early Settlement pursuant to this Section 5.04(b)(ii) in integral
multiples of 20 Corporate Units or Treasury Units, as the case may be.  If the Treasury Portfolio has replaced the
Senior Notes as a component of the Corporate Units, Corporate Units Holders may
only effect Cash Merger Early Settlement pursuant to this Section 5.04(b)(ii)
in multiples of 12,800 Corporate Units or such other number of Corporate Units
as may be determined by the Remarketing Agent following a Successful
Remarketing of the Senior Notes if the Reset Date is not a Payment Date.  Other than the provisions relating to timing
of notice and settlement, which shall be as set forth above, the provisions of
Section 5.01 shall apply with respect to a Cash Merger Early Settlement
pursuant to this Section 5.04(b)(ii).  

 

In order to exercise the right to effect Cash Merger Early Settlement
with respect to any Purchase Contracts, the Holder of the Certificate
evidencing Units shall deliver, no later than 5:00 p.m., New York City time, on
the third Business Day immediately preceding the Cash Merger Early Settlement Date,
such Certificate to the Purchase Contract Agent at the Corporate Trust Office
duly endorsed for transfer to the Company or in blank with the form of Election
to Settle Early on the reverse thereof duly completed and accompanied by
payment (payable to the Company in immediately available funds) in an amount
equal to the sum of:

 

(i)            product
of (A) the Stated Amount times (B) the number of Purchase Contracts with
respect to which the Holder has elected to effect Cash Merger Early Settlement,
less 

 

(ii)           the
amount of any accrued and unpaid Contract Adjustment Payments and any Deferred
Contract Adjustment Payments.  

 

68

 

Upon receipt
of such Certificate and payment of such funds, the Purchase Contract Agent
shall pay the Company from such funds the related Purchase Price pursuant to
the terms of the related Purchase Contracts, and notify the Collateral Agent
that all the conditions necessary for a Cash Merger Early Settlement by a
Holder of Units have been satisfied pursuant to which the Purchase Contract
Agent has received from such Holder, and paid to the Company as confirmed in
writing by the Company, the related Purchase Price.

 

Upon receipt by the Collateral Agent of the notice from the Purchase
Contract Agent set forth in the preceding paragraph, the Collateral Agent shall
release from the Pledge, (1) the Pledged Senior Notes or the Pledged Applicable
Ownership Interests in the case of a Holder of Corporate Units or (2) Pledged
Treasury Securities, in the case of a Holder of Treasury Units, in each case
with a Value equal to the product of (x) the Stated Amount times (y) the number
of Purchase Contracts as to which such Holder has elected to effect Cash Merger
Early Settlement, and shall instruct the Securities Intermediary to Transfer
all such Pledged Applicable Ownership Interests or Pledged Senior Notes or
Pledged Treasury Securities, as the case may be, to the Purchase Contract Agent
for distribution to such Holder, in each case free and clear of the Pledge
created hereby.

 

If a Holder properly effects an effective Cash Merger Early Settlement
in accordance with the provisions of this Section 5.04(b)(ii), the Company will
deliver (or will cause the Collateral Agent to deliver) to the Holder on the
Cash Merger Early Settlement Date:

 

(A)        the
kind and amount of securities, cash and other property receivable upon such
Cash Merger by a Holder of the number of shares of Common Stock issuable on
account of each Purchase Contract if the Purchase Contract Settlement Date had
occurred immediately prior to such Cash Merger (based on the Settlement Rate in
effect at such time), assuming such Holder of Common Stock is not a Constituent
Person or an Affiliate of a Constituent Person to the extent such Cash Merger
provides for different treatment of Common Stock held by Affiliates of the
Company and non-affiliates and such Holder failed to exercise its rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such Cash Merger (provided that if the kind or amount
of securities, cash and other property receivable upon such Cash Merger is not
the same for each non-electing share, then for the purpose of this Section
5.04(b)(ii), the kind and amount of securities, cash and other property
receivable upon such Cash Merger by each non-electing share shall be deemed to
be the kind and amount so receivable per share by a plurality of the non-electing
shares).  For the avoidance of doubt, for
the purposes of determining the Applicable Market Value (in connection with
determining the appropriate Settlement Rate to be applied in the foregoing

 

69

 

sentence), the date of the closing of the
Cash Merger shall be deemed to be the Purchase Contract Settlement Date;

 

(B)         the
Senior Notes, the Applicable Ownership Interests in the Treasury Portfolio or
Treasury Securities, as the case may be, related to the Purchase Contracts with
respect to which the Holder is effecting a Cash Merger Early Settlement; and 

 

(C)         if
so required under the Securities Act, a Prospectus as contemplated by this
Section 5.04(b)(ii).

 

(c)           All calculations and
determinations pursuant to this Section 5.04 shall be made by the Company or
its agent and the Purchase Contract Agent shall have no responsibility with
respect thereto.

 

(d)           The Corporate Units or
the Treasury Units of the Holders who do not elect Cash Merger Early Settlement
in accordance with the foregoing will continue to remain outstanding and be
subject to settlement on the Purchase Contract Settlement Date in accordance
with the terms hereof.

 

Section 5.05.  Notice of Adjustments and Certain Other Events.  (a)
Whenever the Fixed Settlement Rates are adjusted as herein provided, the
Company shall within 10 Business Days following the occurrence of an event that
requires an adjustment to each Fixed Settlement Rate pursuant to Section 5.04
(or if the Company is not aware of such occurrence, as soon as practicable
after becoming so aware):

 

(i)            compute each adjusted
Fixed Settlement Rate in accordance with Section 5.04 and prepare and transmit
to the Purchase Contract Agent an Officers’ Certificate setting forth each
Fixed Settlement Rate, the method of calculation thereof in reasonable detail,
and the facts requiring such adjustment and upon which such adjustment is
based; and  

 

(ii)           provide
a written notice to the Holders of the Units of the occurrence of such event
and a statement in reasonable detail setting forth the method by which the
adjustment to each Fixed Settlement Rate was determined and setting forth each
adjusted Fixed Settlement Rate.

 

(b)           The
Purchase Contract Agent shall not at any time be under any duty or responsibility
to any Holder of Units to determine whether any facts exist which may require
any adjustment of each Fixed Settlement Rate, or with respect to the nature or
extent or calculation of any such adjustment when made, or with respect to the
method employed in making the same.  The
Purchase Contract Agent shall be fully authorized and protected in relying on
any Officers’ Certificate delivered pursuant to Section 5.05(a)(i) and any
adjustment contained therein and the Purchase Contract Agent shall not be
deemed to have knowledge of any adjustment unless and until it has received
such certificate. The

 

70

 

Purchase Contract Agent shall not be
accountable with respect to the validity or value (or the kind or amount) of
any shares of Common Stock, or of any securities or property, which may at the
time be issued or delivered with respect to any Purchase Contract; and the
Purchase Contract Agent makes no representation with respect thereto.  The Purchase Contract Agent shall not be
responsible for any failure of the Company to issue, transfer or deliver any
shares of Common Stock pursuant to a Purchase Contract or to comply with any of
the duties, responsibilities or covenants of the Company contained in this Article.

 

Section 5.06.  Termination Event; Notice.  The Purchase Contracts and all
obligations and rights of the Company and the Holders thereunder, including,
without limitation, the rights of the Holders to receive and the obligation of
the Company to pay any Contract Adjustment Payments (including any accrued and
unpaid Contract Adjustment Payments and any Deferred Contract Adjustment
Payments), and the rights and obligations of Holders to purchase Common Stock,
shall immediately and automatically terminate, without the necessity of any
notice or action by any Holder, the Purchase Contract Agent or the Company, if,
prior to or on the Purchase Contract Settlement Date, a Termination Event shall
have occurred.

 

Upon and after the occurrence of a Termination
Event, the Units shall thereafter represent the right to receive the Senior
Notes, the Treasury Securities or the Applicable Ownership Interests in the
Treasury Portfolio, as the case may be, forming part of such Units, in
accordance with the provisions of Section 3.15 hereof.  Upon the occurrence of a Termination Event,
the Company shall promptly but in no event later than two Business Days
thereafter give written notice to the Purchase Contract Agent, the Collateral
Agent and the Holders, at their addresses as they appear in the Security
Register.

 

Section 5.07.  Early Settlement.  (a) Subject to and upon compliance with the provisions of this
Section 5.07 and the last sentence of this Section 5.07(a), at the option of
the Holder thereof, Purchase Contracts underlying Units may be settled early (“Early Settlement”) at any time prior to 5:00 p.m., New York
City time, on the seventh Business Day immediately preceding the Purchase
Contract Settlement Date; provided that
no Early Settlement will be permitted pursuant to this Section 5.07 unless, at
the time such Early Settlement is effected, there is an effective Registration
Statement with respect to any securities to be issued and delivered in
connection with such Early Settlement, if such a Registration Statement is
required (in the view of counsel, which need not be in the form of a written
opinion, for the Company) under the Securities Act.  If such a Registration Statement is so
required, the Company covenants and agrees to use best efforts to (i) have in
effect a Registration Statement covering any securities to be delivered in
respect of the Purchase Contracts being settled and (ii) provide a Prospectus
in connection therewith, in each case in a form that may be used in connection
with such Early Settlement.  Unless a
Successful Remarketing of the Senior Notes or a Tax Event Redemption has
previously occurred, Holders of Corporate Units shall not be permitted to
effect Early Settlement during the period commencing on and including the
Business Day prior to the first of the three sequential Remarketing Dates
comprising a Three-Day Remarketing Period and ending on and including the Reset
Date relating to a Successful Remarketing or, if none of

 

71

 

the Remarketings during such Three-Day
Remarketing Period is successful, the Business Day following the last of the
three sequential Remarketing Dates occurring during such Three-Day Remarketing
Period.

 

(b)           In order to exercise
the right to effect Early Settlement with respect to any Purchase Contracts,
the Holder of the Certificate evidencing Units shall deliver, at any time prior
to 5:00 p.m., New York City time, on the seventh Business Day immediately
preceding the Purchase Contract Settlement Date, such Certificate to the
Purchase Contract Agent at the Corporate Trust Office duly endorsed for
transfer to the Company or in blank with the form of Election to Settle Early
on the reverse thereof duly completed and accompanied by payment (payable to
the Company in immediately available funds) in an amount (the “Early Settlement Amount”) equal to the sum of:

 

(i)            the
product of (A) the Stated Amount times (B) the number of Purchase Contracts
with respect to which the Holder has elected to effect Early Settlement, plus

 

(ii)           if
such delivery is made with respect to any Purchase Contracts during the period
from the close of business on any Record Date next preceding any Payment Date
to the opening of business on such Payment Date, an amount equal to the
Contract Adjustment Payments and any Deferred Contract Adjustment Payments
payable on such Payment Date with respect to such Purchase Contracts, minus

 

(iii)          the
amount of any Deferred Contract Adjustment Payments.

 

Except as provided in the immediately
preceding sentence, no payment shall be made upon Early Settlement of any
Purchase Contract on account of any Contract Adjustment Payments accrued on
such Purchase Contract or on account of any dividends on the Common Stock
issued upon such Early Settlement.  If
the foregoing requirements are first satisfied with respect to Purchase
Contracts underlying any Units at or prior to 5:00 p.m., New York City time, on
a Business Day, such day shall be the “Early Settlement Date”
with respect to such Units and if such requirements are first satisfied after
5:00 p.m., New York City time, on a Business Day or on a day that is not a
Business Day, the “Early Settlement Date”
with respect to such Units shall be the next succeeding Business Day.

 

Upon the receipt of such Certificate and
Early Settlement Amount from the Holder, the Purchase Contract Agent shall pay
to the Company such Early Settlement Amount, the receipt of which payment the
Company shall confirm in writing. The Purchase Contract Agent shall then notify
the Collateral Agent that (A) such Holder has elected to effect an Early
Settlement, which notice shall set forth the number of such Purchase Contracts
as to which such Holder has elected to effect Early Settlement, (B) the
Purchase Contract Agent has received from such Holder, and paid to the Company
as confirmed in writing by the

 

72

 

Company, the
related Early Settlement Amount and (C) all conditions to such Early Settlement
have been satisfied.

 

Upon receipt by the Collateral Agent of the
notice from the Purchase Contract Agent set forth in the preceding paragraph,
the Collateral Agent shall release from the Pledge, (1) the Pledged Senior
Notes or the Pledged Applicable Ownership Interests in the case of a Holder of
Corporate Units or (2) Pledged Treasury Securities, in the case of a Holder of
Treasury Units, in each case with a Value equal to the product of (x) the
Stated Amount times (y) the number of Purchase Contracts as to which such
Holder has elected to effect Early Settlement, and shall instruct the
Securities Intermediary to Transfer all such Pledged Applicable Ownership
Interests or Pledged Senior Notes or Pledged Treasury Securities, as the case
may be, to the Purchase Contract Agent for distribution to such Holder, in each
case free and clear of the Pledge created hereby.

 

Holders of Treasury Units may only effect
Early Settlement pursuant to this Section 5.07 in integral multiples of 20
Treasury Units.  If the Treasury
Portfolio has replaced the Senior Notes as a component of the Corporate Units,
Corporate Units Holders may only effect Early Settlement pursuant to this
Section 5.07 in integral multiples of 12,800 Corporate Units or such other
number of Corporate Units as may be determined by the Remarketing Agent
following a Successful Remarketing of the Senior Notes if the Reset Date is not
a Payment Date.

 

Upon Early Settlement of the Purchase
Contracts, the rights of the Holders to receive and the obligation of the
Company to pay any Contract Adjustment Payments (including any accrued and
unpaid Contract Adjustment Payments) with respect to such Purchase Contracts
shall immediately and automatically terminate.

 

(c)           Upon Early Settlement
of Purchase Contracts by a Holder of the related Units, the Company shall
issue, and the Holder shall be entitled to receive, a number of shares of
Common Stock (or in the case of an Early Settlement following a Reorganization
Event, a number of units of Exchange Property) equal to the Minimum Settlement
Rate for each Purchase Contract as to which Early Settlement is effected.  

 

(d)           No later than the third
Business Day after the applicable Early Settlement Date, the Company shall
cause the shares of Common Stock issuable upon Early Settlement of Purchase
Contracts to be issued and delivered, together with payment in lieu of any
fraction of a share, as provided in Section 5.08.

 

(e)           Upon
Early Settlement of any Purchase Contracts, and subject to receipt of shares of
Common Stock from the Company and the Senior Notes, the Applicable Ownership Interests
in the Treasury Portfolio or Treasury Securities, as the case may be, from the
Securities Intermediary, as applicable, the Purchase Contract Agent shall, in
accordance with the instructions provided by the Holder thereof on the
applicable form of Election to Settle Early on the reverse of the Certificate
evidencing the related Units:

 

73

 

(i)            transfer
to the Holder the Senior Notes, the Applicable Ownership Interests in the
Treasury Portfolio or Treasury Securities, as the case may be, forming a part
of such Units, and

 

(ii)           deliver
to the Holder a certificate or certificates for the full number of shares of
Common Stock issuable upon such Early Settlement, together with payment in lieu
of any fraction of a share, as provided in Section 5.08, and

 

(f)            The
Company shall, if so required under the Securities Act, deliver a Prospectus
for the shares of Common Stock issuable upon such Early Settlement as
contemplated by Section 5.07(a).

 

(g)           In
the event that Early Settlement is effected with respect to Purchase Contracts
underlying less than all the Units evidenced by a Certificate, upon such Early
Settlement the Company shall execute and the Purchase Contract Agent shall
execute on behalf of the Holder, authenticate and deliver to the Holder
thereof, at the expense of the Company, a Certificate evidencing the Units as
to which Early Settlement was not effected.

 

(h)           A
Holder of a Unit who effects Early Settlement may elect to have the Senior
Notes no longer a part of a Corporate Unit remarketed in accordance with the
provisions of Section 5.02. 

 

Section 5.08.  No Fractional Shares.  No fractional shares or scrip
representing fractional shares of Common Stock shall be issued or delivered
upon settlement on the Purchase Contract Settlement Date, or upon Early
Settlement or Cash Merger Early Settlement of any Purchase Contracts.  If Certificates evidencing more than one
Purchase Contract shall be surrendered for settlement at one time by the same
Holder, the number of full shares of Common Stock which shall be delivered upon
settlement shall be computed on the basis of the aggregate number of Purchase
Contracts evidenced by the Certificates so surrendered.  Instead of any fractional share of Common
Stock which would otherwise be deliverable upon settlement of any Purchase
Contracts on the Purchase Contract Settlement Date, or upon Early Settlement or
Cash Merger Early Settlement, the Company, through the Purchase Contract Agent,
shall make a cash payment in respect of such fractional interest in an amount
equal to the percentage of such fractional share times the Applicable Market
Value calculated as if the date of such settlement were the Purchase Contract
Settlement Date.  The Company shall
provide the Purchase Contract Agent from time to time with sufficient funds to
permit the Purchase Contract Agent to make all cash payments required by this
Section 5.08 in a timely manner.

 

Section 5.09.  Charges and Taxes.  The Company will pay all stock
transfer and similar taxes attributable to the initial issuance and delivery of
the shares of Common Stock pursuant to the Purchase Contracts; provided, however, that the Company shall not be required to
pay any such tax or taxes which may be payable in respect of any exchange of or
substitution for a Certificate evidencing a Unit or any issuance of a share of
Common

 

74

 

Stock in a name other than that of the
registered Holder of a Certificate surrendered in respect of the Units evidenced
thereby, other than in the name of the Purchase Contract Agent, as custodian
for such Holder, and the Company shall not be required to issue or deliver such
share certificates or Certificates unless or until the Person or Persons
requesting the transfer or issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.

 

Section 5.10.  Contract Adjustment Payments.  (a) Subject to Section 5.10(d) and 5.11, the Company shall
pay, on each Payment Date, the Contract Adjustment Payments payable in respect
of each Purchase Contract to the Person in whose name a Certificate is
registered at the close of business on the Record Date relating to such Payment
Date.  The Contract Adjustment Payments
will be payable at the office of the Purchase Contract Agent in the Borough of
Manhattan, New York City maintained for that purpose. If the book-entry system
for the Units has been terminated, the Contract Adjustment Payments will be
payable, at the option of the Company, by check mailed to the address of the
Person entitled thereto at such Person’s address as it appears on the Security
Register, or by wire transfer to the account designated by such Person by a
prior written notice to the Purchase Contract Agent.  If any date on which Contract Adjustment
Payments are to be made is not a Business Day, then payment of the Contract
Adjustment Payments payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest in respect of any such
delay); provided that if such Business Day is in
the next succeeding calendar year, then payment of the Contract Adjustment
Payments will be made on the Business Day immediately preceding such Business
Day, in each case, with the same force and effect as if made on such scheduled
Payment Date.  Contract Adjustment
Payments payable for any period will be computed on the basis of a 360-day year
of twelve 30-day months.  The Contract
Adjustment Payments will accrue from February 11, 2005.

 

(b)           Upon
the occurrence of a Termination Event, the Company’s obligation to pay future
Contract Adjustment Payments (including any accrued Contract Adjustment
Payments) and any Deferred Contract Adjustment Payments shall cease.

 

(c)           Each
Certificate delivered under this Agreement upon registration of transfer of or
in exchange for or in lieu of (including as a result of a Collateral
Substitution or the recreation of Corporate Units) any other Certificate shall
carry the right to accrued and unpaid Contract Adjustment Payments and Deferred
Contract Adjustment Payments, which right was carried by the Purchase Contracts
underlying such other Certificates.

 

(d)           In the case of any Unit
with respect to which Early Settlement or Cash Merger Early Settlement of the
underlying Purchase Contract is effected on a date that is after any Record
Date and prior to or on the next succeeding Payment Date, Contract Adjustment
Payments and Deferred Contract Adjustment Payments otherwise payable on such
Payment Date shall be payable on such Payment Date notwithstanding such Early
Settlement or Cash Merger Early Settlement, and such Contract Adjustment
Payments and

 

75

 

Deferred
Contract Adjustment Payments shall be paid to the Person in whose name the
Certificate evidencing such Unit is registered at the close of business on such
Record Date.  Except as otherwise
expressly provided in the immediately preceding sentence, and the right to
receive accrued and unpaid Contract Adjustment Payments as set forth in Section
5.04(b)(ii), in the case of any Unit with respect to which Early Settlement or
Cash Merger Early Settlement of the underlying Purchase Contract is effected,
Contract Adjustment Payments (but not, for the avoidance of doubt, Deferred
Contract Adjustment Payments) that would otherwise be payable after the Early
Settlement or Cash Merger Early Settlement Date with respect to such Purchase
Contract shall not be payable.

 

(e)           The Company’s obligations
with respect to Contract Adjustment Payments and Deferred Contract Adjustment
Payments, if any, will be subordinated and junior in right of payment to the
Company’s obligations under any Senior Indebtedness.

 

(f)            In
the event (x) of any payment by, or distribution of assets of, the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any dissolution, winding-up, liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, or (y) subject to the provisions of Section 5.10(h) below,
that (i) a default shall have occurred and be continuing with respect to the
payment of principal, interest or any other monetary amounts due and payable on
any Senior Indebtedness and such default shall have continued beyond the period
of grace, if any, specified in the instrument evidencing such Senior
Indebtedness (and the Purchase Contract Agent shall have received written
notice thereof from the Company or one or more holders of Senior Indebtedness
or their representative or representatives or the trustee or trustees under any
indenture pursuant to which any such Senior Indebtedness may have been issued),
or (ii) the maturity of any Senior Indebtedness shall have been accelerated
because of a default in respect of such Senior Indebtedness (and the Purchase
Contract Agent shall have received written notice thereof from the Company or
one or more holders of Senior Indebtedness or their representative or
representatives or the trustee or trustees under any indenture pursuant to
which any such Senior Indebtedness may have been issued), then:

 

(i)            the
holders of all Senior Indebtedness shall first be entitled to receive, in the
case of clause (x) above, payment of all amounts due or to become due upon all
Senior Indebtedness and, in the case of subclauses (i) and (ii) of clause (y)
above, payment of all amounts due thereon, or provision shall be made for such
payment in money or money’s worth, before the Holders of any of the Units are
entitled to receive any Contract Adjustment Payments or Deferred Contract
Adjustment Payments on the Purchase Contracts underlying the Units;

 

(ii)           any
payment by, or distribution of assets of, the Company of any kind or character,
whether in cash, property or securities, to which the Holders of any of the
Units would be entitled except for the provisions of Section 5.10(e) through
(q), including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the Company

 

76

 

being subordinated to the payment of such
Contract Adjustment Payments or Deferred Contract Adjustment Payments on the
Purchase Contracts underlying the Units, shall be paid or delivered by the
Person making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the representative or
representatives of the holders of Senior Indebtedness or to the trustee or
trustees under any indenture under which any instruments evidencing any of such
Senior Indebtedness may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of such Senior Indebtedness held or represented
by each, to the extent necessary to make payment in full of all Senior
Indebtedness remaining unpaid after giving effect to any concurrent payment or
distribution (or provision therefor) to the holders of such Senior
Indebtedness, before any payment or distribution is made of such Contract
Adjustment Payments or Deferred Contract Adjustment Payments to the Holders of
such Units; and

 

(iii)          in
the event that, notwithstanding the foregoing, any payment by, or distribution
of assets of, the Company of any kind or character, whether in cash, property
or securities, including any such payment or distribution which may be payable
or deliverable by reason of the payment of any other indebtedness of the
Company being subordinated to the payment of Contract Adjustment Payments or
Deferred Contract Adjustment Payments on the Purchase Contracts underlying the
Units, shall be received by the Purchase Contract Agent or the Holders of any
of the Units when such payment or distribution is prohibited pursuant to Section
5.10(e) through (q), such payment or distribution shall be paid over to the
representative or representatives of the holders of Senior Indebtedness or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing any such Senior Indebtedness may have been issued, ratably as
aforesaid, for application to the payment of all Senior Indebtedness remaining
unpaid until all such Senior Indebtedness shall have been paid in full, after
giving effect to any concurrent payment or distribution (or provision therefor)
to the holders of such Senior Indebtedness.

 

(g)           For
purposes of Section 5.10(e) through (q), the words “cash, property or
securities” shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other Person
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in Section 5.10(e) through (q)
with respect to such Contract Adjustment Payments or Deferred Contract
Adjustment Payments on the Units to the payment of all Senior Indebtedness
which may at the time be outstanding; provided that
(i) the indebtedness or guarantee of indebtedness, as the case may be,
that constitutes Senior Indebtedness is assumed by the Person, if any,
resulting from any such reorganization or readjustment, and (ii) the rights of
the holders of the Senior Indebtedness are not, without the consent of each
such holder adversely affected thereby, altered by such reorganization or
readjustment;

 

77

 

(h)           Any failure by the
Company to make any payment on or perform any other obligation under Senior
Indebtedness, other than any indebtedness incurred by the Company or assumed or
guaranteed, directly or indirectly, by the Company for money borrowed (or any
deferral, renewal, extension or refunding thereof) or any indebtedness or
obligation as to which the provisions of Section 5.10(e) through (q) shall have
been waived by the Company in the instrument or instruments by which the
Company incurred, assumed, guaranteed or otherwise created such indebtedness or
obligation, shall not be deemed a default or event of default if (i) the
Company shall be disputing its obligation to make such payment or perform such
obligation and (ii) either (A) no final judgment relating to such dispute shall
have been issued against the Company which is in full force and effect and is
not subject to further review, including a judgment that has become final by
reason of the expiration of the time within which a party may seek further
appeal or review, and (B) in the event a judgment that is subject to further
review or appeal has been issued, the Company shall in good faith be
prosecuting an appeal or other proceeding for review and a stay of execution
shall have been obtained pending such appeal or review.

 

(i)            Subject
to the irrevocable payment in full of all Senior Indebtedness, the Holders of
the Units shall be subrogated (equally and ratably with the holders of all
obligations of the Company which by their express terms are subordinated to
Senior Indebtedness of the Company to the same extent as payment of the
Contract Adjustment Payments and Deferred Contract Adjustment Payments in
respect of the Purchase Contracts underlying the Units is subordinated and
which are entitled to like rights of subrogation) to the rights of the holders
of Senior Indebtedness to receive payments or distributions of cash, property
or securities of the Company applicable to the Senior Indebtedness until all
such Contract Adjustment Payments and Deferred Contract Adjustment Payments
owing on the Units shall be paid in full, and as between the Company, its
creditors other than holders of such Senior Indebtedness and the Holders, no
such payment or distribution made to the holders of Senior Indebtedness by
virtue of Section 5.10(e) through (q) that otherwise would have been made to
the Holders shall be deemed to be a payment by the Company on account of such
Senior Indebtedness, it being understood that the provisions of Section 5.10(e)
through (q) are and are intended solely for the purpose of defining the
relative rights of the Holders, on the one hand, and the holders of Senior
Indebtedness, on the other hand.

 

(j)            Nothing
contained in Section 5.10(e) through (q) or elsewhere in this Agreement or in
the Units is intended to or shall impair, as among the Company, its creditors
other than the holders of Senior Indebtedness and the Holders, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders such
Contract Adjustment Payments and Deferred Contract Adjustment Payments on the
Units as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company other than the holders of Senior
Indebtedness, nor shall anything herein or therein prevent the Purchase
Contract Agent or any Holder from exercising all remedies otherwise permitted
by applicable law upon default under this Agreement, subject to the rights, if
any, under

 

78

 

Section 5.10(e) through (q), of the holders
of Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy.

 

(k)           Upon
payment or distribution of assets of the Company referred to in Section 5.10(e)
through (q), the Purchase Contract Agent and the Holders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which any such dissolution, winding up, liquidation or reorganization
proceeding affecting the affairs of the Company is pending or upon a
certificate of the trustee in bankruptcy, receiver, assignee for the benefit of
creditors, liquidating trustee or Purchase Contract Agent or other person
making any payment or distribution, delivered to the Purchase Contract Agent or
to the Holders, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to these Section 5.10(e) through (q).

 

(l)            The
Purchase Contract Agent shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee or representative on behalf of such holder) to
establish that such notice has been given by a holder of Senior Indebtedness or
a trustee or representative on behalf of any such holder or holders. In the
event that the Purchase Contract Agent determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
Section 5.10(e) through (q), the Purchase Contract Agent may request such
Person to furnish evidence to the reasonable satisfaction of the Purchase
Contract Agent as to the amount of Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
Section 5.10(e) through (q), and, if such evidence is not furnished, the
Purchase Contract Agent may defer payment to such Person pending judicial
determination as to the right of such Person to receive such payment.

 

(m)          Nothing
contained in Section 5.10(e) through (q) shall affect the obligations of the
Company to make, or prevent the Company from making, payment of the Contract
Adjustment Payments and Deferred Contract Adjustment Payments, except as
otherwise provided in these Section 5.10(e) through (q).

 

(n)           Each
Holder of Units, by its acceptance thereof, authorizes and directs the Purchase
Contract Agent on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in Section 5.10(e) through
(q) and appoints the Purchase Contract Agent its attorney-in-fact, as the case
may be, for any and all such purposes.

 

(o)           The
Company shall give prompt written notice to the Purchase Contract Agent of any
fact known to the Company that would prohibit the making of any payment of
moneys to or by the Purchase Contract Agent in respect of the Units pursuant to
the

 

79

 

provisions of this Section. Notwithstanding
the provisions of Section 5.10(e) through (q) or any other provisions of this
Agreement, the Purchase Contract Agent shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment of
moneys to or by the Purchase Contract Agent, or the taking of any other action
by the Purchase Contract Agent, unless and until the Purchase Contract Agent
shall have received written notice thereof mailed or delivered to the Purchase
Contract Agent at its Institutional Trust Services department from the Company,
any Holder, or the holder or representative of any Senior Indebtedness; provided that if at least two Business Days prior to the
date upon which by the terms hereof any such moneys may become payable for any
purpose, the Purchase Contract Agent shall not have received with respect to
such moneys the notice provided for in this Section, then, anything herein
contained to the contrary notwithstanding, the Purchase Contract Agent shall
have full power and authority to receive such moneys and to apply the same to
the purpose for which they were received and shall not be affected by any
notice to the contrary that may be received by it within two Business Days
prior to or on or after such date.

 

(p)           The
Purchase Contract Agent in its individual capacity shall be entitled to all the
rights set forth in this Section with respect to any Senior Indebtedness at the
time held by it, to the same extent as any other holder of Senior Indebtedness
and nothing in this Agreement shall deprive the Purchase Contract Agent of any
of its rights as such holder.

 

(q)           No right of any present
or future holder of any Senior Indebtedness to enforce the subordination herein
shall at any time or in any way be prejudiced or impaired by any act or failure
to act on the part of the Company or by any noncompliance by the Company with
the terms, provisions and covenants of this Agreement, regardless of any
knowledge thereof which any such holder may have or be otherwise charged with.

 

(r)            Nothing
in this Section 5.10 shall apply to claims of, or payments to, the Purchase
Contract Agent under or pursuant to Section 7.07.

 

(s)           With
respect to the holders of Senior Indebtedness, (i) the duties and obligations
of the Purchase Contract Agent shall be determined solely by the express
provisions of this Agreement; (ii) the Purchase Contract Agent shall not be
liable to any such holders if it shall, acting in good faith, mistakenly pay
over or distribute to the Holders or to the Company or any other Person cash,
property or securities to which any holders of Senior Indebtedness shall be
entitled by virtue of this Section 5.10 or otherwise; (iii) no implied
covenants or obligations shall be read into this Agreement against the Purchase
Contract Agent; and (iv) the Purchase Contract Agent shall not be deemed to be
a fiduciary as to such holders.

 

Section 5.11.  Deferral of Contract Adjustment Payments.  (a)  The Company has the right at any time, and
from time to time, to defer payment of all or part of the Contract Adjustment
Payments in respect of each Purchase Contract by extending the period for payment
of Contract Adjustment Payments to any subsequent Payment Date (an “Extension Period”), but not beyond the Purchase Contract
Settlement Date (or, with

 

80

 

respect to Purchase Contracts for which an
effective Early Settlement or Cash Merger Early Settlement has occurred, the
Early Settlement Date or Cash Merger Early Settlement Date, as the case may
be).  Prior to the expiration of any
Extension Period, the Company may further extend such Extension Period to any
subsequent Payment Date, but not beyond the Purchase Contract Settlement Date
(or any applicable Early Settlement Date or Cash Merger Early Settlement Date).

 

If the Company so elects to defer Contract
Adjustment Payments, the Company shall pay additional Contract Adjustment
Payments on such deferred installments of Contract Adjustment Payments at a
rate equal to 5.0% per annum, compounding on each succeeding Payment Date,
until such deferred installments are paid in full (such deferred installments
of Contract Adjustment Payments together with the accrued additional Contract
Adjustment Payments thereon, being referred to herein as the “Deferred Contract Adjustment Payments”).  

 

At the end of each Extension Period,
including as the same may be extended as provided above, or, in the event of an
effective Early Settlement or Cash Merger Early Settlement, on the Early
Settlement Date or Cash Merger Early Settlement Date, as the case may be, the
Company shall pay all Deferred Contract Adjustment Payments then due in the
manner set forth in Section 5.10(a) (in the case of the end of an Extension
Period), in the manner set forth in Section 5.07(b) (in the case of an Early
Settlement) or in the manner set forth in Section 5.04(b)(ii) (in the case of a
Cash Merger Early Settlement) to the extent such amounts are not deducted from
the amount otherwise payable by the Holder in the case of a Cash Settlement,
any Early Settlement or any Cash Merger Early Settlement.  In the event of an Early Settlement, the
Company shall pay all Deferred Contract Adjustment Payments due on the Purchase
Contracts being settled early through the Payment Date immediately preceding
the applicable Early Settlement Date.  In
the event of a Cash Merger Early Settlement, the Company shall pay all Deferred
Contract Adjustment Payments due on the Purchase Contracts being settled on the
Cash Merger Early Settlement Date to but excluding such Cash Merger Early
Settlement Date.

 

Upon termination of any Extension Period and
the payment of all Deferred Contract Adjustment Payments and all accrued and
unpaid Contract Adjustment Payments then due, the Company may commence a new
Extension Period, provided that such Extension
Period, together with all extensions thereof, may not extend beyond the Purchase
Contract Settlement Date (or any applicable Early Settlement Date or Cash
Merger Early Settlement Date).  Except in
the case of an Early Settlement or Cash Merger Early Settlement, no Contract
Adjustment Payments shall be due and payable during an Extension Period except
at the end thereof, except that prior to the end of such Extension Period, the
Company, at its option, may prepay on any Payment Date all or any portion of
the Deferred Contract Adjustment Payments accrued during the then elapsed portion
of such Extension Period. 

 

(b)           The
Company shall give written notice to the Purchase Contract Agent (and the
Purchase Contract Agent shall give notice thereof to Holders of Purchase
Contracts) of

 

81

 

its election to extend any period for the
payment of Contract Adjustment Payments, the expected length of any such
Extension Period and any extension of any Extension Period, at least five
Business Days before the earlier of (i) the Record Date for the Payment Date on
which Contract Adjustment Payments would have been payable except for the
election to begin or extend the Extension Period or (ii) the date the Purchase
Contract Agent is required to give notice to any securities exchange or to
Holders of Purchase Contracts of such Record Date or such Payment Date. 

 

(c)           The
Company shall give written notice to the Purchase Contract Agent (and the
Purchase Contract Agent shall give notice thereof to Holders of Purchase
Contracts) of the end of an Extension Period or its election to pay any portion
of the Deferred Contract Adjustment Payments on a payment date prior to the end
of an Extension Period, at least five Business Days before the earlier of (i)
the Record Date for the Payment Date on which such Extension Period shall end
or such payment of Deferred Contract Adjustment Payments shall be made or (ii)
the date the Purchase Contract Agent is required to give notice to any
securities exchange or to Holders of Purchase Contracts of such Record Date or
such Payment Date. 

 

(d)           In
the event the Company exercises its option to defer the payment of Contract
Adjustment Payments, then, until all Deferred Contract Adjustment Payments have
been paid, the Company shall not, and shall not permit any of its subsidiaries
to, declare or pay dividends on, make distributions with respect to, or redeem,
purchase or acquire, or make a liquidation payment with respect to, any of its
capital stock or their capital stock or make guarantee payments with respect to
the foregoing; provided that, (i) the Company
will not be restricted from paying or distributing shares of Common Stock on
the outstanding shares of Common Stock (including any annual stock dividend)
and (ii) the Company’s subsidiaries will not be restricted from declaring or paying
any dividends, or making any distributions, to the Company or any of the
Company’s other subsidiaries as a result of the foregoing.

 

ARTICLE 6
RIGHTS AND REMEDIES OF HOLDERS

 

Section 6.01.  Unconditional Right of Holders to Receive
Contract Adjustment Payments and to Purchase Shares of Common Stock.  Each Holder of a Unit shall have
the right, which is absolute and unconditional, (i) subject to Article 5, to
receive each Contract Adjustment Payment and Deferred Contract Adjustment
Payment with respect to the Purchase Contract comprising part of such Unit on
the respective Payment Date for such Unit and (ii) except upon and following a
Termination Event, to purchase shares of Common Stock pursuant to such Purchase
Contract and, in each such case, to institute suit for the enforcement of any
such right to receive Contract Adjustment Payments and the right to purchase
shares of Common Stock, and such rights shall not be impaired without the
consent of such Holder.

 

82

 

Section 6.02.  Restoration of Rights and Remedies.  If
any Holder has instituted any proceeding to enforce any right or remedy under
this Agreement and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company and such
Holder shall be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of such Holder shall continue
as though no such proceeding had been instituted.

 

Section 6.03.  Rights and Remedies Cumulative.  Except as otherwise provided with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Certificates in the last paragraph of Section 3.10, no right or remedy herein
conferred upon or reserved to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other appropriate
right or remedy.

 

Section 6.04.  Delay or Omission Not Waiver.  No
delay or omission of any Holder to exercise any right upon a default or remedy
upon a default shall impair any such right or remedy or constitute a waiver of
any such right.  Every right and remedy
given by this Article or by law to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by such Holders.

 

Section 6.05.  Undertaking for Costs.  All
parties to this Agreement agree, and each Holder of a Unit, by its acceptance
of such Unit shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Agreement, or in any suit against the Purchase Contract Agent for
any action taken, suffered or omitted by it as Purchase Contract Agent, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys’ fees and costs against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; provided that
the provisions of this Section shall not apply to any suit instituted by the
Purchase Contract Agent, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% of the Outstanding Units, or to
any suit instituted by any Holder for the enforcement of interest on any Senior
Notes or Contract Adjustment Payments on or after the respective Payment Date
therefor in respect of any Unit held by such Holder, or for enforcement of the
right to purchase shares of Common Stock under the Purchase Contracts
constituting part of any Unit held by such Holder. 

 

Section 6.06.  Waiver of Stay or Extension Laws.  The
Company covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force, which may affect the covenants or

 

83

 

the performance of this Agreement; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Purchase
Contract Agent or the Holders, but will suffer and permit the execution of
every such power as though no such law had been enacted.

 

ARTICLE 7

THE PURCHASE CONTRACT AGENT

 

Section 7.01.  Certain Duties and
Responsibilities.  (a) The Purchase Contract Agent:

 

(i)            undertakes
to perform, with respect to the Units, such duties and only such duties as are
specifically set forth in this Agreement and the Remarketing Agreement and no
implied covenants or obligations shall be read into this Agreement or the
Remarketing Agreement against the Purchase Contract Agent; and

 

(ii)           in
the absence of bad faith or gross negligence on its part, may, with respect to
the Units, conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Purchase Contract Agent and conforming to the requirements of
this Agreement or the Remarketing Agreement, as applicable, but in the case of
any certificates or opinions which by any provision hereof are specifically
required to be furnished to the Purchase Contract Agent, the Purchase Contract
Agent shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Agreement or the Remarketing
Agreement, as applicable (but need not confirm or investigate the accuracy of
the mathematical calculations or other facts stated therein). 

 

(b)      No provision of this
Agreement or the Remarketing Agreement shall be construed to relieve the
Purchase Contract Agent from liability for its own grossly negligent action,
its own grossly negligent failure to act, or its own willful misconduct, except
that: 

 

(i)            this
paragraph shall not be construed to limit the effect of paragraph (a) of this
Section 7.01;

 

(ii)           the Purchase Contract
Agent shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it shall be conclusively determined by a court of
competent jurisdiction that the Purchase Contract Agent was grossly negligent
in ascertaining the pertinent facts; and

 

84

 

(iii)          no
provision of this Agreement or the Remarketing Agreement shall require the
Purchase Contract Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or in
the exercise of any of its rights or powers.

 

(c)           Whether
or not therein expressly so provided, every provision of this Agreement and the
Remarketing Agreement relating to the conduct or affecting the liability of or
affording protection to the Purchase Contract Agent shall be subject to the
provisions of this Section.

 

(d)           The
Purchase Contract Agent is authorized to execute and deliver the Remarketing
Agreement in its capacity as Purchase Contract Agent.  

 

Section 7.02.  Notice of Default.  Within
30 days after the occurrence of any default by the Company hereunder of which a
Responsible Officer of the Purchase Contract Agent has actual knowledge, the
Purchase Contract Agent shall transmit by mail to the Company and the Holders
of Units, as their names and addresses appear in the Security Register, notice
of such default hereunder, unless such default shall have been cured or waived.

 

Section 7.03.  Certain Rights of Purchase Contract
Agent.  Subject to the
provisions of Section 7.01:

 

(a)           the
Purchase Contract Agent may, in the absence of bad faith, conclusively rely and
shall be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;

 

(b)           any
request or direction of the Company mentioned herein shall be sufficiently
evidenced by an Officers’ Certificate, Issuer Order or Issuer Request, and any
resolution of the Board of Directors of the Company may be sufficiently
evidenced by a Board Resolution;

 

(c)           whenever
in the administration of this Agreement or the Remarketing Agreement the
Purchase Contract Agent shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting to take any action
hereunder, the Purchase Contract Agent (unless other evidence be herein
specifically prescribed in this Agreement) may, in the absence of bad faith on
its part, conclusively rely upon an Officers’ Certificate of the Company;

 

(d)           the
Purchase Contract Agent may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;  

 

85

 

(e)           the
Purchase Contract Agent shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the Purchase
Contract Agent, in its discretion, may make reasonable further inquiry or
investigation into such facts or matters related to the execution, delivery and
performance of the Purchase Contracts as it may see fit, and, if the Purchase
Contract Agent shall determine to make such further inquiry or investigation,
it shall be entitled to examine the relevant books, records and premises of the
Company, personally or by agent or attorney; 

 

(f)            the
Purchase Contract Agent may execute any of the powers hereunder or perform any
duties hereunder either directly or by or through agents, attorneys, custodians
or nominees or an Affiliate and the Purchase Contract Agent shall not be
responsible for any misconduct or negligence on the part of any agent,
attorney, custodian or nominee or an Affiliate appointed with due care by it
hereunder;

 

(g)           the
Purchase Contract Agent shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Holders pursuant to this Agreement, unless such Holders shall have
offered to the Purchase Contract Agent security or indemnity satisfactory to
the Purchase Contract Agent against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction;

 

(h)           the
Purchase Contract Agent shall not be liable for any action taken, suffered, or
omitted to be taken by it in the absence of bad faith or gross negligence by
it;

 

(i)            the
Purchase Contract Agent shall not be deemed to have notice of adjustment to
each Fixed Settlement Rate, the occurrence of a Termination Event or any
default hereunder unless a Responsible Officer of the Purchase Contract Agent
has actual knowledge thereof or unless written notice of any such adjustment, occurrence
or event which is in fact such a default is received by a Responsible Offer at
the Corporate Trust Office of the Purchase Contract Agent, and such notice
references the Units and this Agreement;

 

(j)            the
Purchase Contract Agent may request that the Company deliver an Officers’
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Agreement,
which Officers’ Certificate may be signed by any person authorized to sign an
Officers’ Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded; 

 

(k)           the
rights, privileges, protections, immunities and benefits given to the Purchase
Contract Agent, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Purchase Contract Agent in each
of its

 

86

 

capacities hereunder, and to each agent,
custodian and other Person employed to act hereunder; 

 

(l)            the
Purchase Contract Agent shall not be required to initiate or conduct any
litigation or collection proceedings hereunder and shall have no
responsibilities with respect to any default hereunder except as expressly set
forth herein; and

 

(m)          the Purchase Contract
Agent shall not be responsible or liable for any failure or delay in the
performance of its obligations under this Agreement arising out of or caused
directly or indirectly, by acts of God; earthquake; fires; floods; wars; civil
or military disturbances; terrorist acts; sabotage; epidemics; riots;
interruptions, loss or malfunctions of utilities; accidents; labor disputes;
and acts of civil or military authority or governmental actions; it being
understood that the Purchase Contract Agent shall use reasonable efforts which
are consistent with accepted practices in the banking industry to resume
performance as soon as practicable under the circumstances.

 

Section 7.04.  Not Responsible for Recitals or Issuance of Units.  The recitals contained herein, the
Remarketing Agreement and in the Certificates shall be taken as the statements
of the Company, and the Purchase Contract Agent assumes no responsibility for
their accuracy or validity.  The Purchase
Contract Agent makes no representations as to the validity or sufficiency of
either this Agreement or of the Units or the Pledge or the Collateral and shall
have no responsibility for perfecting or maintaining the perfection of any
security interest in the Collateral. The Purchase Contract Agent shall not be
accountable for the use or application by the Company of the proceeds in
respect of the Units or the Purchase Contracts.

 

Section 7.05.  May Hold Units.  Any Security Registrar or any
other agent of the Company, or the Purchase Contract Agent and its Affiliates,
in their individual or any other capacity, may become the owner or pledgee of
Units and may otherwise deal with the Company, the Collateral Agent or any
other Person with the same rights it would have if it were not Security
Registrar or such other agent, or the Purchase Contract Agent.  The Company may become the owner or pledgee
of Units.

 

Section 7.06.  Money Held In Custody.  Money held by the Purchase
Contract Agent in custody hereunder need not be segregated from the Purchase
Contract Agent’s other funds except to the extent required by law or provided
herein.  The Purchase Contract Agent
shall be under no obligation to invest or pay interest on any money received by
it hereunder except as otherwise provided hereunder or agreed in writing with
the Company.

 

Section 7.07.  Compensation and
Reimbursement.  The Company
agrees:  (a) to pay to the Purchase
Contract Agent compensation for all services rendered by it hereunder and under
the Remarketing Agreement as the Company and the Purchase Contract Agent shall
from time to time agree in writing;

 

87

 

(b)           except
as otherwise expressly provided for herein, to reimburse the Purchase Contract
Agent upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Purchase Contract Agent in accordance with any
provision of this Agreement and the Remarketing Agreement (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel) in connection with the negotiation, preparation, execution and
delivery and performance of this Agreement and the Remarketing Agreement and
any modification, supplement or waiver of any of the terms thereof, except any
such expense, disbursement or advance as may be attributable to its gross
negligence, willful misconduct or bad faith; and

 

(c)           to indemnify the
Purchase Contract Agent and any predecessor Purchase Contract Agent (and each
of its directors, officers, agents and employees (collectively, the “Indemnitees”) for, and to hold each Indemnitee harmless
against, any loss, claim, damage, fine, penalty, liability or expense
(including reasonable fees and expenses of counsel) incurred without gross
negligence, willful misconduct or bad faith on its part, arising out of or in
connection with the acceptance or administration of its duties hereunder and
the Remarketing Agreement, including the Indemnitees’ reasonable costs and
expenses of defending themselves against any claim (whether asserted by the
Company, a Holder or any other person) or liability in connection with the
exercise or performance of any of the Purchase Contract Agent’s powers or
duties hereunder or thereunder.

 

In addition, and without prejudice to the
rights provided to the Purchase Contract Agent hereunder, when the Purchase
Contract Agent incurs expenses or renders services after a Termination Event
occurs, the expenses and the compensation for the services (including the fees
and expenses of its counsel) are intended to constitute expenses of
administration under any applicable federal or state bankruptcy law.

 

The provisions of this Section shall survive
the resignation and removal of the Purchase Contract Agent, the satisfaction
and discharge of the Units and the termination of this Agreement.

 

Section 7.08.  Corporate Purchase Contract Agent Required, Eligibility.  There shall at all times be a
Purchase Contract Agent hereunder which shall be a Person organized and doing
business under the laws of the United States of America, any State thereof or
the District of Columbia, authorized under such laws to exercise corporate
trust powers, having (or being a member of a bank holding company having) a
combined capital and surplus of at least $50,000,000, subject to supervision or
examination by Federal or State authority and having a corporate trust office
in the Borough of Manhattan, New York City, if there be such a Person in the
Borough of Manhattan, New York City, qualified and eligible under this Article
and willing to act on reasonable terms. 
If such Person publishes or files reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such Person shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published or
filed.  If at any time the Purchase
Contract Agent shall cease to be eligible in accordance with the provisions of
this

 

88

 

Section, it shall resign immediately in the
manner and with the effect hereinafter specified in this Article.

 

Section 7.09.  Resignation and Removal; Appointment of
Successor.  (a)  No resignation or removal of the Purchase
Contract Agent and no appointment of a successor Purchase Contract Agent
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Purchase Contract Agent in accordance with the applicable
requirements of Section 7.10.

 

(b)           The
Purchase Contract Agent may resign at any time by giving written notice thereof
to the Company 60 days prior to the effective date of such resignation.  If the instrument of acceptance by a
successor Purchase Contract Agent required by Section 7.10 shall not have been
delivered to the Purchase Contract Agent within 30 days after the giving of
such notice of resignation, the resigning Purchase Contract Agent may petition,
at the expense of the Company, any court of competent jurisdiction for the
appointment of a successor Purchase Contract Agent. 

 

(c)           The
Purchase Contract Agent may be removed at any time by Act of the Holders of a
majority in number of the Outstanding Units delivered to the Purchase Contract
Agent and the Company.  If the instrument
of acceptance by a successor Purchase Contract Agent required by Section 7.10
shall not have been delivered to the Purchase Contract Agent within 30 days
after such Act, the Purchase Contract Agent being removed may petition any
court of competent jurisdiction for the appointment of a successor Purchase
Contract Agent.

 

(d)           If
at any time:

 

(i)            the
Purchase Contract Agent fails to comply with Section 310(b) of the TIA, as if
the Purchase Contract Agent were an indenture trustee under an indenture
qualified under the TIA, and shall fail to resign after written request
therefor by the Company or by any Holder who has been a bona fide Holder of a
Unit for at least six months;

 

(ii)           the
Purchase Contract Agent shall cease to be eligible under Section 7.08 and shall
fail to resign after written request therefor by the Company or by any such
Holder; or

 

(iii)          the
Purchase Contract Agent shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Purchase Contract Agent or of its
property shall be appointed or any public officer shall take charge or control
of the Purchase Contract Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, 

 

then, in any such case, (i) the Company by a Board Resolution may
remove the Purchase Contract Agent, or (ii) any Holder who has been a bona fide
Holder of a

 

89

 

Unit for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Purchase Contract Agent and the appointment of a successor
Purchase Contract Agent.

 

(e)           If
the Purchase Contract Agent shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Purchase Contract Agent
for any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Purchase Contract Agent and shall comply with the applicable
requirements of Section 7.10.  If no
successor Purchase Contract Agent shall have been so appointed by the Company
and accepted appointment in the manner required by Section 7.10, any Holder who
has been a bona fide Holder of a Unit for at least six months, on behalf of
itself and all others similarly situated, or the Purchase Contract Agent may
petition at the expense of the Company, 
any court of competent jurisdiction for the appointment of a successor
Purchase Contract Agent.

 

(f)            The
Company shall give, or shall cause such successor Purchase Contract Agent to
give, notice of each resignation and each removal of the Purchase Contract
Agent and each appointment of a successor Purchase Contract Agent by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Security Register. Each
notice shall include the name of the successor Purchase Contract Agent and the
address of its Corporate Trust Office.

 

Section 7.10.  Acceptance of Appointment by Successor.  (a)  In case of the appointment hereunder of a
successor Purchase Contract Agent, every such successor Purchase Contract Agent
so appointed shall execute, acknowledge and deliver to the Company and to the
retiring Purchase Contract Agent an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Purchase Contract Agent
shall become effective and such successor Purchase Contract Agent, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, agencies and duties of the retiring Purchase Contract Agent; but, on
the request of the Company or the successor Purchase Contract Agent, such
retiring Purchase Contract Agent shall, upon payment of amounts owed to it
pursuant to Section 7.07, execute and deliver an instrument transferring to
such successor Purchase Contract Agent all the rights, powers and trusts of the
retiring Purchase Contract Agent and duly assign, transfer and deliver to such
successor Purchase Contract Agent all property and money held by such retiring
Purchase Contract Agent hereunder.

 

(b)           Upon
request of any such successor Purchase Contract Agent, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Purchase Contract Agent all such rights, powers
and agencies referred to in paragraph (a) of this Section 7.10.

 

90

 

(c)           No
successor Purchase Contract Agent shall accept its appointment unless at the
time of such acceptance such successor Purchase Contract Agent shall be
qualified and eligible under this Article.

 

Section 7.11.  Merger, Conversion, Consolidation or Succession to Business.  Any Person into which the Purchase
Contract Agent may be merged or converted or with which it may be consolidated,
or any Person resulting from any merger, conversion or consolidation to which
the Purchase Contract Agent shall be a party, or any Person succeeding to all
or substantially all the corporate trust business of the Purchase Contract
Agent, shall be the successor of the Purchase Contract Agent hereunder, provided that such Person shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or
any further act on the part of any of the parties hereto.  In case any Certificates shall have been
authenticated and executed on behalf of the Holders, but not delivered, by the
Purchase Contract Agent then in office, any successor by merger, conversion or
consolidation to such Purchase Contract Agent may adopt such authentication and
execution and deliver the Certificates so authenticated and executed with the
same effect as if such successor Purchase Contract Agent had itself
authenticated and executed such Units.

 

Section 7.12.  Preservation of Information; Communications to Holders.  (a)  The Purchase Contract Agent shall preserve,
in as current a form as is reasonably practicable, the names and addresses of
Holders received by the Purchase Contract Agent in its capacity as Security
Registrar.

 

(b)           If three or more
Holders (herein referred to as “Applicants”)
apply in writing to the Purchase Contract Agent, and furnish to the Purchase
Contract Agent reasonable proof that each such Applicant has owned a Unit for a
period of at least six months preceding the date of such application, and such
application states that the Applicants desire to communicate with other Holders
with respect to their rights under this Agreement or under the Units and is
accompanied by a copy of the form of proxy or other communication which such
Applicants propose to transmit, then the Purchase Contract Agent shall mail to
all the Holders copies of the form of proxy or other communication which is
specified in such request, with reasonable promptness after a tender to the
Purchase Contract Agent of the materials to be mailed and of payment, or
provision for the payment, of the reasonable expenses of such mailing.

 

Section 7.13.  No Obligations of Purchase Contract Agent.  Except to the extent otherwise
expressly provided in this Agreement, the Purchase Contract Agent assumes no
obligations and shall not be subject to any liability under this Agreement, the
Remarketing Agreement or any Purchase Contract in respect of the obligations of
the Holder of any Unit thereunder.  The
Company agrees, and each Holder of a Certificate, by its acceptance thereof,
shall be deemed to have agreed, that the Purchase Contract Agent’s execution of
the Certificates on behalf of the Holders shall be solely as agent and attorney-in-fact
for the Holders, and that the Purchase Contract Agent shall have no obligation
to perform such Purchase Contracts on behalf of the Holders, except to the
extent expressly provided in

 

91

 

Article Five hereof.  Anything contained in this Agreement to the
contrary notwithstanding, in no event shall the Purchase Contract Agent or its
officers, directors, employees or agents be liable under this Agreement or the
Remarketing Agreement for indirect, incidental, special, punitive, or
consequential loss or damage of any kind whatsoever, including lost profits,
whether or not the likelihood of such loss or damage was known to the Purchase
Contract Agent and regardless of the form of action. 

 

Section 7.14.  Tax Compliance.  (a)  The Purchase Contract Agent, on its own
behalf and on behalf of the Company, will comply with all applicable
certification, information reporting and withholding (including “backup”
withholding) requirements imposed by applicable tax laws, regulations or
administrative practice with respect to (i) any payments made with respect to
the Units or (ii) the issuance, delivery, holding, transfer, redemption or
exercise of rights under the Units.  Such
compliance shall include, without limitation, the preparation and timely filing
of required returns and the timely payment of all amounts required to be
withheld to the appropriate taxing authority or its designated agent.

 

(b)           The
Purchase Contract Agent shall comply in accordance with the terms hereof with
any written direction received from the Company with respect to the execution
or certification of any required documentation and the application of such
requirements to particular payments or Holders or in other particular
circumstances, and may for purposes of this Agreement conclusively rely on any
such direction in accordance with the provisions of Section 7.01 hereof. 

 

(c)           The
Purchase Contract Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available, on
written request, to the Company or its authorized representative within a
reasonable period of time after receipt of such request.

 

ARTICLE 8

SUPPLEMENTAL AGREEMENTS

 

Section 8.01.  Supplemental Agreements without Consent of Holders.  Without the consent of any
Holders, the Company, when authorized by a Board Resolution, the Purchase
Contract Agent, the Collateral Agent, the Custodial Agent and the Securities
Intermediary at any time and from time to time, may enter into one or more
agreements supplemental hereto, in form satisfactory to the Company and the
Purchase Contract Agent, to:

 

(a)           evidence
the succession of another Person to the Company, and the assumption by any such
successor of the covenants of the Company herein and in the Certificates;

 

92

 

(b)           evidence
and provide for the acceptance of appointment hereunder by a successor Purchase
Contract Agent, Collateral Agent, Securities Intermediary or Custodial Agent;

 

(c)           add
to the covenants of the Company for the benefit of the Holders, or surrender
any right or power herein conferred upon the Company provided that such
covenants or such surrender do not adversely affect the validity, perfection or
priority of the Pledge created hereunder;

 

(d)           make
provision with respect to the rights of Holders pursuant to the requirements of
Section 5.04(b); or

 

(e)           except
as provided for in Section 5.04, cure any ambiguity (or formal defect), or
correct or supplement any provisions herein that may be inconsistent with any
other provisions herein or with the description of the Units and the Purchase
Contracts contained in the Prospectus, or make any other provisions with
respect to such matters or questions arising under this Agreement; provided that such action shall not adversely affect the
interests of the Holders in any material respect; provided
further that any amendment made solely
to conform the provisions of this Agreement to the description of the Units and
the Purchase Contracts contained in the Prospectus will not be deemed to
adversely affect the interests of the Holders.

 

Section 8.02.  Supplemental Agreements with Consent of Holders.  With the consent of the Holders of
not less than a majority of the Outstanding Units voting together as one class,
including without limitation the consent of the Holders obtained in connection
with a tender or an exchange offer, by Act of said Holders delivered to the
Company, the Purchase Contract Agent, the Company, the Collateral Agent, the
Securities Intermediary and the Custodial Agent, as the case may be, when
authorized by a Board Resolution, and the Purchase Contract Agent may enter
into an agreement or agreements supplemental hereto for the purpose of
modifying in any manner the terms of the Purchase Contracts, or the provisions
of this Agreement or the rights of the Holders in respect of the Units; provided, however, that, except as contemplated herein, no
such supplemental agreement shall, without the unanimous consent of the Holders
of each outstanding Purchase Contract affected thereby,

 

(a)           change any Payment
Date;

 

(b)           change
the amount of Collateral required to be Pledged to secure a Holder’s
obligations under the Purchase Contract (except for the rights of holders of
Corporate Units to substitute Treasury Securities for the Pledged Senior Notes
or the Pledged Applicable Ownership Interests, as the case may be, or the
rights of Holders of Treasury Units to substitute Senior Notes or the
Applicable Ownership Interests (as specified in clause (i)(A) and (ii)(A) of
the definition thereof) in the Treasury Portfolio, as applicable, for the
Pledged Treasury Securities), unless such change is not adverse to the Holders,
impair the right of the Holder of any Purchase Contract to receive distributions
on the

 

93

 

related Collateral or otherwise adversely
affect the Holder’s rights in or to such Collateral or adversely alter the
rights in or to such Collateral;

 

(c)           impair
the Holders’ right to institute suit for the enforcement of any Purchase
Contract or any Contract Adjustment Payments or any Deferred Contract
Adjustment Payments;

 

(d)           reduce
the number of shares of Common Stock or the amount of any other property to be
purchased pursuant to any Purchase Contract, increase the price to purchase
shares of Common Stock or any other property upon settlement of any Purchase
Contract or change the Purchase Contract Settlement Date or the right to Early
Settlement or Cash Merger Early Settlement or otherwise adversely affect the
Holder’s rights under the Purchase Contract; 

 

(e)           reduce
any Contract Adjustment Payments or any Deferred Contract Adjustment Payments
or change any place where, or the coin or currency in which, any Contract
Adjustment Payment is payable; or

 

(f)            reduce the percentage
of the outstanding Purchase Contracts the consent of whose Holders is required
for any modification or amendment to the provisions of this Agreement or the
Purchase Contracts;

 

(g)           otherwise
effect any action that would require the consent of the Holder of each
Outstanding Unit affected thereby if such action were effected by a
modification or amendment of the provisions of this Agreement; or

 

(h)           reduce the percentage
of Purchase Contracts the consent of whose Holders is required for the
modification or amendment of the provisions of this Agreement; 

 

provided
that if any amendment or proposal referred to above would adversely affect only
the Corporate Units or the Treasury Units, then only the affected class of
Holders as of the record date for the Holders entitled to vote thereon will be
entitled to vote on such amendment or proposal, and such amendment or proposal
shall not be effective except with the consent of Holders of not less than a
majority of such class; and provided, further,
that the unanimous consent of the Holders of each outstanding Purchase Contract
of such class affected thereby shall be required to approve any amendment or
proposal specified in clauses (a) through (h) above.

 

It shall not be necessary for any Act of
Holders under this Section to approve the particular form of any proposed
supplemental agreement, but it shall be sufficient if such Act shall approve
the substance thereof. 

 

Section 8.03.  Execution of Supplemental Agreements. 
In executing, or accepting the additional agencies created
by, any supplemental agreement permitted by this Article or the modifications
thereby of the agencies created by this Agreement, the Purchase

 

94

 

Contract Agent, the Collateral Agent, the
Securities Intermediary and the Custodial Agent shall be provided, and (subject
to Section 7.01 with respect to the Purchase Contract Agent) shall be fully
authorized and protected in relying upon, an Officers’ Certificate and an
Opinion of Counsel stating that the execution of such supplemental agreement is
authorized or permitted by this Agreement and that any and all conditions
precedent to the execution and delivery of such supplemental agreement have
been satisfied.  The Purchase Contract
Agent, the Collateral Agent, the Securities Intermediary and the Custodial
Agent may, but shall not be obligated to, enter into any such supplemental
agreement which affects their own rights, duties or immunities under this
Agreement or otherwise.

 

Section 8.04.  Effect of Supplemental Agreements. 
Upon the execution of any supplemental agreement under this
Article, this Agreement shall be modified in accordance therewith, and such
supplemental agreement shall form a part of this Agreement for all purposes;
and every Holder of Certificates theretofore or thereafter authenticated,
executed on behalf of the Holders and delivered hereunder, shall be bound
thereby.

 

Section 8.05.  Reference to Supplemental Agreements. 
Certificates authenticated, executed on behalf of the Holders
and delivered after the execution of any supplemental agreement pursuant to
this Article may, and shall if required by the Purchase Contract Agent, bear a
notation in form approved by the Purchase Contract Agent as to any matter
provided for in such supplemental agreement. 
If the Company shall so determine, new Certificates so modified as to
conform, in the opinion of the Purchase Contract Agent and the Company, to any
such supplemental agreement may be prepared and executed by the Company and
authenticated, executed on behalf of the Holders and delivered by the Purchase
Contract Agent in exchange for outstanding Certificates.

 

ARTICLE 9
CONSOLIDATION,
MERGER, CONVEYANCE, TRANSFER OR LEASE

 

Section 9.01.  Covenant Not to Consolidate,
Merge, Convey, Transfer or Lease Property Except under Certain Conditions.  The Company covenants that it will
not consolidate with, convert into, or merge with and into, any other
corporation or sell, assign, transfer, lease or convey all or substantially all
of its properties and assets to any Person, unless:

 

(a)           either
the Company shall be the surviving Person, or the successor (if other than the
Company) shall be a corporation organized and existing under the laws of the
United States of America or a State thereof or the District of Columbia and
such corporation shall expressly assume all the obligations of the Company
under the Purchase Contracts, this Agreement (including the Pledge provided for
herein), the Indenture (including any supplement thereto) and the Remarketing
Agreement by one or more supplemental agreements in form reasonably
satisfactory to the Purchase Contract Agent and the Collateral Agent, executed
and delivered to the Purchase Contract Agent and the Collateral Agent by such
corporation; and

 

95

 

(b)           the
Company or such successor corporation, as the case may be, shall not,
immediately after such consolidation, conversion, merger, sale, assignment,
transfer, lease or conveyance, be in default of payment obligations under the
Purchase Contracts, this Agreement, the Indenture (including any supplement
thereto) or the Remarketing Agreement or in material default in the performance
of any other covenants under any of the foregoing agreements.

 

Section 9.02.  Rights and Duties of Successor Corporation.  In case of any such merger,
consolidation, share exchange, sale, assignment, transfer, lease or conveyance
and upon any such assumption by a successor corporation in accordance with
Section 9.01, such surviving Person shall succeed to and be substituted for the
Company with the same effect as if it had been named herein as the
Company.  Such surviving Person thereupon
may cause to be signed, and may issue either in its own name or in the name of
Southern Union Company any or all of the Certificates evidencing Units issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Purchase Contract Agent; and, upon the order of such surviving
Person, instead of the Company, and subject to all the terms, conditions and
limitations in this Agreement prescribed, the Purchase Contract Agent shall
authenticate and execute on behalf of the Holders and deliver any Certificates
which previously shall have been signed and delivered by the officers of the
Company to the Purchase Contract Agent for authentication and execution, and
any Certificate evidencing Units which such surviving Person thereafter shall
cause to be signed and delivered to the Purchase Contract Agent for that
purpose.  All the Certificates issued
shall in all respects have the same legal rank and benefit under this Agreement
as the Certificates theretofore or thereafter issued in accordance with the terms
of this Agreement as though all of such Certificates had been issued at the
date of the execution hereof.

 

In case of any such merger, consolidation,
share exchange, sale, assignment, transfer, lease or conveyance such change in
phraseology and form (but not in substance) may be made in the Certificates
evidencing Units thereafter to be issued as may be appropriate.

 

Section 9.03.  Officers’ Certificate and Opinion of Counsel
Given to Purchase Contract Agent.  The
Purchase Contract Agent, subject to Section 7.01 and Section 7.03, shall receive
an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that
any such merger, consolidation, share exchange, sale, assignment, transfer,
lease or conveyance, and any such assumption, complies with the provisions of
this Article and that all conditions precedent to the consummation of any such
merger, consolidation, share exchange, sale, assignment, transfer, lease or
conveyance have been met.

 

96

 

ARTICLE 10

COVENANTS

 

Section 10.01.  Performance under Purchase
Contracts.  The Company
covenants and agrees for the benefit of the Holders from time to time of the
Units that it will duly and punctually perform its obligations under the
Purchase Contracts in accordance with the terms of the Purchase Contracts and
this Agreement.

 

Section 10.02.  Maintenance of Office or Agency.  The Company will maintain in the
Borough of Manhattan, New York City an office or agency where Certificates may
be presented or surrendered for acquisition of shares of Common Stock upon
settlement of the Purchase Contracts on the Purchase Contract Settlement Date
or upon Early Settlement or Cash Merger Early Settlement and for transfer of
Collateral upon occurrence of a Termination Event, where Certificates may be
surrendered for registration of transfer or exchange, for a Collateral
Substitution or recreation of Corporate Units and where notices and demands to
or upon the Company in respect of the Units and this Agreement may be served.  The Company will give prompt written notice
to the Purchase Contract Agent of the location, and any change in the location,
of such office or agency. The Company initially designates the Corporate Trust
Office of the Purchase Contract Agent as such office of the Company, and the
Company hereby appoints the Purchase Contract Agent as its agent to receive all
such presentations, surrenders, notices and demands.  If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the
Purchase Contract Agent with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office, and the Company hereby appoints the Purchase Contract Agent as its
agent to receive all such presentations, surrenders, notices and demands.

 

The Company
may also from time to time designate one or more other offices or agencies
where Certificates may be presented or surrendered for any or all such purposes
and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, New York City for such purposes.  The Company will give prompt written notice
to the Purchase Contract Agent of any such designation or rescission and of any
change in the location of any such other office or agency. The Company hereby
designates as the place of payment for the Units the Corporate Trust Office and
appoints the Purchase Contract Agent at its Corporate Trust Office as paying
agent in the city in which such Corporate Trust Office is located.

 

Section 10.03.  Company to Reserve Common
Stock.  The Company shall at
all times prior to the Purchase Contract Settlement Date reserve and keep
available, free from preemptive rights, out of its authorized but unissued
Common Stock the full number of shares of Common Stock issuable against tender
of payment in respect of all Purchase Contracts constituting a part of the
Units evidenced by Outstanding Certificates.

 

97

 

Section 10.04.  Covenants as to Common Stock; Listing.  (a) The Company covenants that all
shares of Common Stock which may be issued against tender of payment in respect
of any Purchase Contract constituting a part of the Outstanding Units will,
upon issuance, be duly authorized, validly issued, fully paid and
nonassessable.

 

The Company
further covenants that, if at any time the Common Stock shall be listed on the
NYSE or any other national securities exchange or automated quotation system,
the Company will, if permitted by the rules of such exchange or automated
quotation system, list and keep listed, so long as the Common Stock shall be so
listed on such exchange or automated quotation system, all Common Stock
issuable upon Settlement of Purchase Contracts; provided,
however, that, if the rules of such
exchange or automated quotation system permit the Company to defer the listing
of such Common Stock until the date on which any Purchase Contract first
settles in accordance with the provisions of this Agreement, the Company
covenants to list such Common stock issuable upon Settlement of the Purchase
Contracts in accordance with the requirements of such exchange or automated
quotation system at such time.

 

Section 10.05.  Statements of Officers of the Company as to
Default.  The Company will
deliver to the Purchase Contract Agent, within 120 days after the end of each
fiscal year of the Company, commencing with the fiscal year ending December 31,
2005, an Officers’ Certificate, stating whether or not to the knowledge of the
signers thereof) the Company is in default in the performance and observance of
any of the terms, provisions and conditions hereof, and if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.

 

Section 10.06.  ERISA. 
Each Holder from time to time of the Units that is a Plan or
who used assets of a Plan to purchase Units hereby represents that either (i)
no portion of the assets used by such Holder to acquire the Corporate Units
constitutes assets of the Plan or (ii) the purchase or holding of the Corporate
Units by such purchaser or transferee will not constitute a non-exempt
prohibited transaction under Section 406 of ERISA or Section 4973 of
the Code or similar violation under any applicable laws.

 

Section 10.07.  Tax Treatment. The
Company covenants and agrees, for United States federal, state and local income
and franchise tax purposes, to (i) treat a Holder’s acquisition of the
Corporate Units as the acquisition of the Senior Note and Purchase Contract
constituting the Corporate Units and (ii) treat each Holder as the owner of the
applicable interest in the Collateral Account, including the Senior Notes,
Applicable Ownership Interests in the Treasury Portfolio or the Treasury
Securities.

 

ARTICLE 11

PLEDGE

 

Section 11.01.  Pledge.  Each Holder, acting through the
Purchase Contract Agent as such Holder’s attorney-in-fact, and the Purchase
Contract Agent, acting solely as such

 

98

 

attorney-in-fact, hereby pledges and grants to the Collateral Agent, as
agent of and for the benefit of the Company, a continuing first priority
security interest in and to, and a lien upon and right of set-off against, all
of such Person’s right, title and interest in and to the Collateral to secure
the prompt and complete payment and performance when due (whether at stated maturity,
by acceleration or otherwise) of the Obligations. The Collateral Agent shall
have all of the rights, remedies and recourses with respect to the Collateral
afforded a secured party by the UCC, in addition to, and not in limitation of,
the other rights, remedies and recourses afforded to the Collateral Agent by
this Agreement.

 

Section 11.02.  Termination.  As to each Holder, the Pledge
created hereby shall terminate upon the satisfaction of such Holder’s
Obligations. Upon such termination, the Collateral Agent shall instruct the
Securities Intermediary to Transfer such portion of the Collateral attributable
to such Holder to the Purchase Contract Agent for distribution to such Holder,
free and clear of the Pledge created hereby.

 

ARTICLE 12

ADMINISTRATION OF COLLATERAL

 

Section 12.01.  Initial Deposit of Senior
Notes.  (a) Prior to or concurrently with the execution and delivery of
this Agreement, the Purchase Contract Agent, on behalf of the initial Holders
of the Corporate Units, shall Transfer to the Securities Intermediary, for
credit to the Collateral Account, the Senior Notes or security entitlements
relating thereto and of security entitlements the Securities Intermediary shall
indicate by book-entry that a securities entitlement with respect to such
Senior Notes has been credited to the Collateral Account.

 

(b)                                 The Collateral Agent
may, at any time or from time to time, in its sole discretion, cause any or all
securities or other property underlying any financial assets credited to the
Collateral Account to be registered in the name of the Securities Intermediary,
the Collateral Agent or their respective nominees; provided,
however, that unless any Event of Default (as defined in the
Indenture) shall have occurred and be continuing, the Collateral Agent agrees
not to cause any Senior Notes to be so re-registered.

 

Section 12.02.  Establishment of Collateral
Account.  The Securities
Intermediary hereby confirms that:

 

(a)                                  the Securities
Intermediary has established the Collateral Account;

 

(b)                                 the Collateral Account
is a securities account;

 

(c)                                  subject to the terms
of this Agreement, the Securities Intermediary shall identify in its records
the Collateral Agent as the entitlement holder entitled to exercise the rights
that comprise any financial asset credited to the Collateral Account;

 

99

 

(d)                                 all property delivered
to the Securities Intermediary pursuant to this Agreement, including any
Applicable Ownership Interests in the Treasury Portfolio (as specified in
clause (i) of the definition thereof) and the Permitted Investments, will be
credited promptly to the Collateral Account; and

 

(e)                                  all securities or
other property underlying any financial assets credited to the Collateral
Account shall be (i) registered in the name of the Purchase Contract Agent and
indorsed to the Securities Intermediary or in blank, (ii) registered in the
name of the Securities Intermediary or (iii) credited to another securities
account maintained in the name of the Securities Intermediary. In no case will
any financial asset credited to the Collateral Account be registered in the
name of the Purchase Contract Agent (in its capacity as such) or any Holder or
specially indorsed to the Purchase Contract Agent (in its capacity as such) or
any Holder, unless such financial asset has been further indorsed to the
Securities Intermediary or in blank.

 

Section 12.03.  Treatment as Financial
Assets.  Each item of property
(whether investment property, financial asset, security, instrument or cash)
credited to the Collateral Account shall be treated as a financial asset.

 

Section 12.04.  Sole Control by Collateral
Agent.  Except as provided in Section 15.01,
at all times prior to the termination of the Pledge, the Collateral Agent shall
have sole control of the Collateral Account, and the Securities Intermediary
shall take instructions and directions, and comply with entitlement orders,
with respect to the Collateral Account or any financial asset credited thereto
solely from the Collateral Agent. If at any time the Securities Intermediary
shall receive an entitlement order issued by the Collateral Agent and relating
to the Collateral Account, the Securities Intermediary shall comply with such
entitlement order without further consent by the Purchase Contract Agent or any
Holder or any other Person. Except as otherwise permitted under this Agreement,
until termination of the Pledge, the Securities Intermediary will not comply
with any entitlement orders issued by the Purchase Contract Agent or any
Holder.

 

Section 12.05.  Jurisdiction.  The Collateral Account, and the
rights and obligations of the Securities Intermediary, the Collateral Agent,
the Purchase Contract Agent and the Holders with respect thereto, shall be
governed by the laws of the State of New York. Regardless of any provision in
any other agreement, the Securities Intermediary’s jurisdiction is the State of
New York.

 

Section 12.06.  No Other Claims.  Except for the claims and interest
of the Collateral Agent and of the Purchase Contract Agent and the Holders in
the Collateral Account, the Securities Intermediary (without having conducted
any investigation) does not know of any claim to, or interest in, the
Collateral Account or in any financial asset credited thereto. If any Person
asserts any lien, encumbrance or adverse claim (including any writ,
garnishment, judgment, warrant of attachment, execution or similar process)
against the Collateral Account or in any financial asset carried therein, the
Securities Intermediary will promptly notify the Collateral Agent and the
Purchase Contract Agent.

 

100

 

Section 12.07.  Investment and Release.  All proceeds of financial assets
from time to time credited to the Collateral Account shall be invested and
reinvested as provided in this Agreement. At all times prior to termination of
the Pledge, no property shall be released from the Collateral Account except in
accordance with this Agreement or upon written instructions of the Collateral Agent.

 

Section 12.08.  Statements and
Confirmations.  The Securities
Intermediary will promptly send copies of all statements, confirmations and
other correspondence concerning the Collateral Account and any financial assets
credited thereto simultaneously to each of the Purchase Contract Agent and the
Collateral Agent at their addresses for notices under this Agreement.

 

Section 12.09.  Tax Allocations.  The Purchase Contract Agent shall
report all items of income, gain, expense and loss recognized in the Collateral
Account, to the extent such reporting is required by law, to the Internal
Revenue Service authorities in the manner required by law.  Neither the Securities Intermediary nor the
Collateral Agent shall have any tax reporting duties hereunder.

 

Section 12.10.  No Other Agreements.  The Securities Intermediary has
not entered into, and prior to the termination of the Pledge will not enter
into, any agreement with any other Person relating to the Collateral Account or
any financial assets credited thereto, including, without limitation, any
agreement to comply with entitlement orders of any Person other than the
Collateral Agent.

 

Section 12.11.  Powers Coupled with an
Interest.  The rights and
powers granted in this Purchase Contract and Pledge Agreement to the Collateral
Agent have been granted in order to perfect its security interests in the
Collateral Account, are powers coupled with an interest and will be affected
neither by the bankruptcy of the Purchase Contract Agent or any Holder nor by
the lapse of time. The obligations of the Securities Intermediary under this
Purchase Contract and Pledge Agreement shall continue in effect until the
termination of the Pledge.

 

Section 12.12.  Waiver of Lien; Waiver of
Set-off.  The Securities
Intermediary waives any security interest, lien or right to make deductions or
set-offs that it may now have or hereafter acquire in or with respect to the
Collateral Account, any financial asset credited thereto or any security
entitlement in respect thereof.  Neither
the financial assets credited to the Collateral Account nor the security
entitlements in respect thereof will be subject to deduction, set-off, banker’s
lien, or any other right in favor of any person other than the Company.

 

101

 

ARTICLE 13

RIGHTS AND REMEDIES OF THE
COLLATERAL AGENT

 

Section 13.01.  Rights and Remedies of the
Collateral Agent.  (a) In
addition to the rights and remedies set forth herein or otherwise available at
law or in equity, after an event of default (as specified in Section 13.01(b)
below) hereunder, the Collateral Agent shall have all of the rights and
remedies with respect to the Collateral of a secured party under the UCC
(whether or not the UCC is in effect in the jurisdiction where the rights and
remedies are asserted) and the TRADES Regulations and such additional rights
and remedies to which a secured party is entitled under the laws in effect in
any jurisdiction where any rights and remedies hereunder may be asserted.
Without limiting the generality of the foregoing, such remedies may include, to
the extent permitted by applicable law, (1) retention of the Pledged Senior
Notes, Pledged Treasury Securities or the applicable Pledged Applicable
Ownership Interests in full satisfaction of the Holders’ obligations under the
Purchase Contracts and the Purchase Contract Agreement or (2) sale of the
Pledged Senior Notes, Pledged Treasury Securities or the applicable Pledged
Applicable Ownership Interests in one or more public or private sales.

 

(b)                                 Without limiting any
rights or powers otherwise granted by this Agreement to the Collateral Agent,
in the event the Collateral Agent is unable to make payments to the Company on
account of the Pledged Applicable Ownership Interests, or on account of
principal payments of any Pledged Treasury Securities as provided in this
Agreement in satisfaction of the Obligations of the Holder of the Units of
which such applicable Pledged Applicable Ownership Interests or such Pledged
Treasury Securities, as applicable, are a part under the related Purchase
Contracts, the inability to make such payments shall constitute an “event of default” hereunder and the Collateral Agent shall
have and may exercise, with reference to such Pledged Treasury Securities or
Pledged Applicable Ownership Interests, as applicable, any and all of the
rights and remedies available to a secured party under the UCC and the TRADES
Regulations after default by a debtor, and as otherwise granted herein or under
any other law.

 

(c)                                  Without limiting any
rights or powers otherwise granted by this Agreement to the Collateral Agent,
the Collateral Agent is hereby irrevocably authorized to receive, collect and
apply to the satisfaction of the Obligations all payments of (i) the principal
amount of the Pledged Senior Notes, (ii) the principal amount of the Pledged
Treasury Securities and (iii) the Pledged Applicable Ownership Interests (as
specified in clause (i)(A) or (ii)(A) of the definition thereof), subject, in
each case, to the provisions of this Agreement, and as otherwise provided
herein.

 

(d)                                 The Purchase Contract
Agent and each Holder of Units agrees that, from time to time, upon the written
request of the Collateral Agent or the Purchase Contract Agent, such Holder
shall execute and deliver such further documents and do such other acts and
things as the Collateral Agent may reasonably request in order to maintain the
Pledge, and the perfection and priority thereof, and to confirm the rights of
the Collateral Agent hereunder. The Purchase Contract Agent shall have no
liability to any Holder for executing

 

102

 

any documents or taking any such acts requested by the Collateral Agent
hereunder, except for liability for its own grossly negligent acts, its own
grossly negligent failure to act or its own willful misconduct.

 

ARTICLE 14

REPRESENTATIONS AND WARRANTIES
TO

COLLATERAL AGENT; HOLDER
COVENANTS

 

Section 14.01.  Representations and
Warranties.  Each Holder from
time to time, acting through the Purchase Contract Agent as attorney-in-fact
(it being understood that the Purchase Contract Agent shall not be liable for
any representation or warranty made by or on behalf of a Holder), hereby
represents and warrants to the Collateral Agent (with respect to such Holder’s
interest in the Collateral), which representations and warranties shall be
deemed repeated on each day a Holder Transfers Collateral, that:

 

(a)                                  such Holder has the
power to grant a security interest in and lien on the Collateral;

 

(b)                                 such Holder is the
sole beneficial owner of the Collateral and, in the case of Collateral
delivered in physical form, is the sole holder of such Collateral and is the
sole beneficial owner of, or has the right to Transfer, the Collateral it
Transfers to the Collateral Agent for credit to the Collateral Account, free
and clear of any security interest, lien, encumbrance, call, liability to pay
money or other restriction other than the security interest and lien granted
under Article 11 hereof;

 

(c)                                  upon the Transfer of
the Collateral to the Securities Intermediary for credit to the Collateral
Account, the Collateral Agent, for the benefit of the Company, will have a
valid and perfected first priority security interest therein (assuming that any
central clearing operation or any securities intermediary or other entity not
within the control of the Holder involved in the Transfer of the Collateral,
including the Collateral Agent and the Securities Intermediary, gives the
notices and takes the action required of it hereunder and under applicable law
for perfection of that interest and assuming the establishment and exercise of
control pursuant to Article 12 hereof); and

 

(d)                                 the execution and
performance by the Holder of its obligations under this Agreement will not result
in the creation of any security interest, lien or other encumbrance on the
Collateral other than the security interest and lien granted under Article 11
hereof or violate any provision of any existing law or regulation applicable to
it or of any mortgage, charge, pledge, indenture, contract or undertaking to
which it is a party or which is binding on it or any of its assets.

 

Section 14.02.  Covenants.  The Purchase Contract Agent and
the Holders from time to time, acting through the Purchase Contract Agent as
their attorney-in-fact (it being understood that the Purchase Contract Agent
shall not be liable for any covenant made by 

103

 

or on behalf of a Holder), hereby covenant to
the Collateral Agent that for so long as the Collateral remains subject to the
Pledge:

 

 

(a)                                  neither the Purchase
Contract Agent nor such Holders will create or purport to create or allow to
subsist any mortgage, charge, lien, pledge or any other security interest
whatsoever over the Collateral or any part of it other than pursuant to this
Agreement; and

 

(b)                                 neither the Purchase
Contract Agent nor such Holders will sell or 
otherwise dispose (or attempt to dispose) of the Collateral or any part
of it except for the beneficial interest therein, subject to the Pledge
hereunder, transferred in connection with a Transfer of the Units.

 

ARTICLE 15
THE COLLATERAL
AGENT, THE CUSTODIAL AGENT AND THE SECURITIES INTERMEDIARY

 

It is hereby
agreed as follows:

 

Section 15.01.  Appointment, Powers and
Immunities.  The Collateral
Agent, the Custodial Agent and the Securities Intermediary shall act as agent
for the Company hereunder with such powers as are specifically vested in the
Collateral Agent, the Custodial Agent and the Securities Intermediary, as the
case may be, by the terms of this Agreement. The Collateral Agent, the
Custodial Agent and Securities Intermediary shall:

 

(a)                                  have no duties or
responsibilities except those expressly set forth in this Agreement and no
implied covenants or obligations shall be inferred from this Agreement against
the Collateral Agent, the Custodial Agent or the Securities Intermediary, nor
shall the Collateral Agent, the Custodial Agent or the Securities Intermediary
be bound by the provisions of any agreement by any party hereto beyond the
specific terms hereof;

 

(b)                                 not be responsible for
any recitals contained in this Agreement, or in any certificate or other
document referred to or provided for in, or received by it under, this
Agreement, the Units or the Purchase Contract Agreement, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement (other than as against the Collateral Agent, the Custodial Agent or
the Securities Intermediary, as the case may be), the Units, any Collateral or
the Purchase Contract Agreement or any other document referred to or provided
for herein or therein or for any failure by the Company or any other Person
(except the Collateral Agent, the Custodial Agent or Securities Intermediary, as
the case may be) to perform any of its obligations hereunder or thereunder or
for the perfection, priority or, except as expressly required hereby,
maintenance of any security interest created hereunder;

 

104

 

(c)                                  not be required to
initiate or conduct any litigation or collection proceedings hereunder (except
pursuant to directions furnished under Section 15.02 hereof, subject to Section 15.08
hereof);

 

(d)                                 not be responsible for
any action taken or omitted to be taken by it hereunder or under any other
document or instrument referred to or provided for herein or in connection
herewith or therewith, except for its own gross negligence or willful
misconduct; and

 

(e)                                  not be required to
advise any party as to selling or retaining, or taking or refraining from
taking any action with respect to, any securities or other property deposited
hereunder.

 

Subject to the
foregoing, during the term of this Agreement, the Collateral Agent, the
Custodial Agent and the Securities Intermediary shall take all reasonable
action in connection with the safekeeping and preservation of the Collateral
hereunder as determined by industry standards.

 

No provision
of this Agreement shall require the Collateral Agent, the Custodial Agent or
the Securities Intermediary to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties hereunder. In
no event shall the Collateral Agent, the Custodial Agent or the Securities
Intermediary be liable for any amount in excess of the Value of the Collateral.

 

Section 15.02.  Instructions of the
Company.  The Company shall
have the right, by one or more written instruments executed and delivered to
the Collateral Agent, to direct the time, method and place of conducting any
proceeding for the realization of any right or remedy available to the
Collateral Agent, or of exercising any power conferred on the Collateral Agent,
or to direct the taking or refraining from taking of any action authorized by this
Agreement; provided, however, that (i) such direction shall not
conflict with the provisions of any law or of this Agreement or involve the
Collateral Agent in personal liability and (ii) the Collateral Agent shall be
indemnified to its satisfaction as provided herein. Nothing contained in this Section 15.02
shall impair the right of the Collateral Agent in its discretion to take any
action or omit to take any action which it deems proper and which is not
inconsistent with such direction.  None
of the Collateral Agent, the Custodial Agent or the Securities Intermediary has
any obligation or responsibility to file UCC financing statements.

 

Section 15.03.  Reliance by Collateral Agent,
Custodial Agent and Securities Intermediary. 
Each of the Securities Intermediary, the Custodial Agent and
the Collateral Agent shall be entitled to rely conclusively upon any
certification, order, judgment, opinion, notice or other written communication
(including, without limitation, any thereof by telecopy) believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons (without being required to determine the correctness
of any fact stated therein) and consult with and conclusively rely upon advice,

 

105

 

opinions and statements of legal counsel and other experts selected by
the Collateral Agent, the Custodial Agent or the Securities Intermediary, as
the case may be. As to any matters not expressly provided for by this Agreement,
the Collateral Agent, the Custodial Agent and the Securities Intermediary shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions given by the Company in accordance
with this Agreement.

 

Section 15.04.  Certain Rights.  (a) Whenever in the administration
of the provisions of this Agreement the Collateral Agent, the Custodial Agent
or the Securities Intermediary shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering any action to be
taken hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of gross negligence or bad
faith on the part of the Collateral Agent, the Custodial Agent or the
Securities Intermediary, be deemed to be conclusively proved and established by
a certificate signed by one of the Company’s officers, and delivered to the
Collateral Agent, the Custodial Agent or the Securities Intermediary and such
certificate, in the absence of gross negligence or bad faith on the part of the
Collateral Agent, the Custodial Agent or the Securities Intermediary, shall be
full warrant to the Collateral Agent, the Custodial Agent or the Securities
Intermediary for any action taken, suffered or omitted by it under the
provisions of this Agreement upon the faith thereof.

 

(b)                                 The Collateral Agent,
the Custodial Agent or the Securities Intermediary shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
entitlement order, approval or other paper or document.

 

Section 15.05.  Merger, Conversion,
Consolidation or Succession to Business. 
Any corporation into which the Collateral Agent, the
Custodial Agent or the Securities Intermediary may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Collateral Agent, the Custodial
Agent or the Securities Intermediary shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Collateral Agent, the Custodial Agent or the Securities Intermediary shall be
the successor of the Collateral Agent, the Custodial Agent or the Securities
Intermediary hereunder without the execution or filing of any paper with any
party hereto or any further act on the part of any of the parties hereto except
where an instrument of transfer or assignment is required by law to effect such
succession, anything herein to the contrary notwithstanding.

 

Section 15.06.  Rights in Other
Capacities.  The Collateral
Agent, the Custodial Agent and the Securities Intermediary and their affiliates
may (without having to account therefor to the Company) accept deposits from,
lend money to, make their investments in and generally engage in any kind of
banking, trust or other business with the Purchase Contract Agent, any other
Person interested herein and any Holder of Units (and any of their respective
subsidiaries or affiliates) as if it were not acting as the Collateral

 

106

 

Agent, the Custodial Agent or the Securities Intermediary, as the case
may be, and the Collateral Agent, the Custodial Agent, the Securities
Intermediary and their affiliates may accept fees and other consideration from
the Purchase Contract Agent and any Holder of Units without having to account
for the same to the Company; provided
that each of the Securities Intermediary, the Custodial Agent and the
Collateral Agent covenants and agrees with the Company that it shall not
accept, receive or permit there to be created in favor of itself and shall take
no affirmative action to permit there to be created in favor of any other
Person, any security interest, lien or other encumbrance of any kind in or upon
the Collateral other than the lien created by the Pledge.

 

Section 15.07.  Non-reliance on Collateral
Agent, the Custodial Agent and Securities Intermediary.  None of the Securities
Intermediary, the Custodial Agent or the Collateral Agent shall be required to
keep itself informed as to the performance or observance by the Purchase
Contract Agent or any Holder of Units of this Agreement, the Units or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Purchase Contract Agent or any Holder of Units. None
of the Collateral Agent, the Custodial Agent or the Securities Intermediary
shall have any duty or responsibility to provide the Company with any credit or
other information concerning the affairs, financial condition or business of
the Purchase Contract Agent or any Holder of Units (or any of their respective
affiliates) that may come into the possession of the Collateral Agent, the
Custodial Agent or the Securities Intermediary or any of their respective
affiliates.

 

Section 15.08.  Compensation and
Indemnity.  The Company agrees
to:

 

(a)                                  pay the Collateral
Agent, the Custodial Agent and the Securities Intermediary from time to time
such compensation as shall be agreed in writing between the Company and the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, for all services rendered by them hereunder;

 

(b)                                 indemnify and hold
harmless the Collateral Agent, the Custodial Agent, the Securities Intermediary
and each of their respective directors, officers, agents and employees
(collectively, the “Indemnitees”),
from and against any and all claims, liabilities, losses, damages, fines,
penalties and expenses (including reasonable fees and expenses of counsel)
(collectively, “Losses” and individually, a “Loss”) that may be imposed on, incurred by,
or asserted against, the Indemnitees or any of them for following any instructions
or other directions upon which any of the Collateral Agent, the Custodial Agent
or the Securities Intermediary is entitled to rely pursuant to the terms of
this Agreement, provided that the
Collateral Agent, the Custodial Agent or the Securities Intermediary has not
acted with gross negligence or engaged in willful misconduct or bad faith with
respect to the specific Loss against which indemnification is sought; and

 

(c)                                  in addition to and
not in limitation of paragraph (b) immediately above, indemnify and hold the
Indemnitees and each of them harmless from and against any and all Losses that
may be imposed on, incurred by or asserted against, the Indemnitees or any of
them in connection with or arising out of the Collateral Agent’s, the Custodial
Agent’s

 

107

 

or the Securities Intermediary’s acceptance or performance of its
powers and duties under this Agreement, provided
the Collateral Agent, the Custodial Agent or the Securities Intermediary has
not acted with gross negligence or engaged in willful misconduct or bad faith
with respect to the specific Loss against which indemnification is sought.

 

The provisions
of this Section and Section 15.14 shall survive the resignation or
removal of the Collateral Agent, the Custodial Agent or the Securities
Intermediary and the termination of this Agreement.

 

Section 15.09.  Failure to Act.  In the event of any ambiguity in
the provisions of this Agreement or any dispute between or conflicting claims
by or among the parties hereto or any other Person with respect to any funds or
property deposited hereunder, then at its sole option, each of the Collateral
Agent, the Custodial Agent and the Securities Intermediary shall be entitled,
after prompt notice to the Company and the Purchase Contract Agent, to refuse
to comply with any and all claims, demands or instructions with respect to such
property or funds so long as such dispute or conflict shall continue, and the
Collateral Agent, the Custodial Agent and the Securities Intermediary shall not
be or become liable in any way to any of the parties hereto for its failure or
refusal to comply with such conflicting claims, demands or instructions. The
Collateral Agent, the Custodial Agent and the Securities Intermediary shall be
entitled to refuse to act until either:

 

(a)                                  such conflicting or
adverse claims or demands shall have been finally determined by a court of
competent jurisdiction or settled by agreement between the conflicting parties
as evidenced in a writing satisfactory to the Collateral Agent, the Custodial
Agent or the Securities Intermediary; or

 

(b)                                 the Collateral Agent,
the Custodial Agent or the Securities Intermediary shall have received security
or an indemnity satisfactory to it sufficient to save it harmless from and
against any and all loss, liability or reasonable out-of-pocket expense which
it may incur by reason of its acting.

 

The Collateral Agent, the Custodial Agent and
the Securities Intermediary may in addition elect to commence an interpleader action
or seek other judicial relief or orders as the Collateral Agent, the Custodial
Agent or the Securities Intermediary may deem necessary. Notwithstanding
anything contained herein to the contrary, none of the Collateral Agent, the
Custodial Agent or the Securities Intermediary shall be required to take any
action that is in its opinion contrary to law or to the terms of this
Agreement, or which would in its opinion subject it or any of its officers,
employees or directors to liability.

 

Section 15.10.  Resignation and Removal of
Collateral Agent, the Custodial Agent and the Securities Intermediary.  (a)  Subject to the appointment and acceptance of
a successor Collateral Agent, Custodial Agent or Securities Intermediary as
provided below:

 

108

 

(i)             the
Collateral Agent, the Custodial Agent or the Securities Intermediary may resign
at any time by giving notice thereof to the Company and the Purchase Contract
Agent as attorney-in-fact for the Holders of Units;

 

(ii)          the
Collateral Agent, the Custodial Agent or the Securities Intermediary may be
removed at any time by the Company; and

 

(iii)       if
the Collateral Agent, the Custodial Agent or the Securities Intermediary fails
to perform any of its material obligations hereunder in any material respect
for a period of not less than 20 days after receiving written notice of such
failure by the Purchase Contract Agent and such failure shall be continuing,
the Collateral Agent, the Custodial Agent and the Securities Intermediary may
be removed by the Purchase Contract Agent, acting at the direction of the
Holders of Units.

 

The Purchase
Contract Agent shall promptly notify the Company of any removal of the
Collateral Agent, the Custodial Agent or the Securities Intermediary pursuant
to clause (iii) of this Section 15.10. Upon any such resignation or
removal, the Company shall have the right to appoint a successor Collateral
Agent, Custodial Agent or Securities Intermediary, as the case may be, which
shall not be an Affiliate of the Purchase Contract Agent. If no successor
Collateral Agent, Custodial Agent or Securities Intermediary shall have been so
appointed and shall have accepted such appointment within 30 days after the
retiring Collateral Agent’s, Custodial Agent’s or Securities Intermediary’s
giving of notice of resignation or the Company’s or the Purchase Contract Agent’s
giving notice of such removal, then the retiring or removed Collateral Agent,
Custodial Agent or Securities Intermediary may petition any court of competent
jurisdiction, at the expense of the Company, for the appointment of a successor
Collateral Agent, Custodial Agent or Securities Intermediary. The Collateral
Agent, the Custodial Agent and the Securities Intermediary shall each be a bank
or a national banking association which has an office (or an agency office) in
New York City with a combined capital and surplus of at least $50,000,000.  Upon the acceptance of any appointment as
Collateral Agent, Custodial Agent or Securities Intermediary hereunder by a
successor Collateral Agent, Custodial Agent or Securities Intermediary, as the
case may be, such successor Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be, shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Collateral
Agent, Custodial Agent or Securities Intermediary, as the case may be, and the
retiring Collateral Agent, Custodial Agent or Securities Intermediary, as the
case may be, shall take all appropriate action, subject to payment of any
amounts then due and payable to it hereunder, to transfer any money and
property held by it hereunder (including the Collateral) to such
successor.  The retiring Collateral Agent,
Custodial Agent or Securities Intermediary shall, upon such succession, be
discharged from its duties and obligations as Collateral Agent, Custodial Agent
or Securities Intermediary hereunder. After any retiring Collateral Agent’s,
Custodial Agent’s or Securities Intermediary’s resignation hereunder as
Collateral Agent, Custodial Agent or Securities Intermediary, the provisions of
this Article 15 shall continue in effect for its benefit in respect of any
actions taken or omitted to be

 

109

 

taken by it while it was acting as the Collateral Agent, the Custodial
Agent or the Securities Intermediary. 
Any resignation or removal of the Collateral Agent, the Custodial Agent
or the Securities Intermediary hereunder, at a time when such Person is acting
as the Collateral Agent, the Custodial Agent or the Securities Intermediary,
shall be deemed for all purposes of this Agreement as the simultaneous
resignation or removal of the Collateral Agent, the Securities Intermediary or
the Custodial Agent, as the case may be.

 

(b)                                 Because JPMorgan Chase
Bank, N.A. is serving as the Collateral Agent hereunder and as the Purchase
Contract Agent hereunder, if an event of default occurs hereunder JPMorgan
Chase Bank, N.A. will resign as the Collateral Agent, Custodial Agent and the
Securities Intermediary, but continue to act as the Purchase Contract
Agent.  A successor Collateral Agent,
Custodial Agent and Securities Intermediary will be appointed in accordance
with the terms hereof.

 

Section 15.11.  Right to Appoint Agent or
Advisor.  The Collateral Agent
shall have the right to appoint agents or advisors in connection with any of
its duties hereunder, and the Collateral Agent shall not be liable for any
action taken or omitted by, or in reliance upon the advice of, such agents or
advisors selected in good faith. The appointment of agents pursuant to this Section 15.11
shall be subject to prior written consent of the Company, which consent shall
not be unreasonably withheld.

 

Section 15.12.  Survival.  The provisions of this Article 15
shall survive termination of this Agreement and the resignation or removal of
the Collateral Agent, the Custodial Agent or the Securities Intermediary.

 

Section 15.13.  Exculpation.  Anything contained in this
Agreement to the contrary notwithstanding, in no event shall the Collateral
Agent, the Custodial Agent or the Securities Intermediary or their officers,
directors, employees or agents be liable under this Agreement for indirect,
special, punitive, or consequential loss or damage of any kind whatsoever,
including, but not limited to, lost profits, whether or not the likelihood of
such loss or damage was known to the Collateral Agent, the Custodial Agent or
the Securities Intermediary, or any of them and regardless of the form of action.  Section 7.03(m) hereof is hereby made
applicable to the Collateral Agent, the Custodial Agent and the Securities
Intermediary as if they and each of them were named therein in place of the
Purchase Contract Agent.

 

Section 15.14.  Expenses, Etc..  The Company agrees to reimburse
the Collateral Agent, the Custodial Agent and the Securities Intermediary for:

 

(a)                                  all reasonable costs
and expenses of the Collateral Agent, the Custodial Agent and the Securities
Intermediary (including, without limitation, the reasonable fees and expenses
of counsel to the Collateral Agent, the Custodial Agent and the Securities
Intermediary), in connection with (i) the negotiation, preparation, execution
and delivery or performance of this Agreement and (ii) any modification, supplement
or waiver of any of the terms of this Agreement;

 

110

 

(b)                                 all reasonable costs
and expenses of the Collateral Agent, the Custodial Agent and the Securities
Intermediary (including, without limitation, reasonable fees and expenses of
counsel) in connection with (i) any enforcement or proceedings resulting or
incurred in connection with causing any Holder of Units to satisfy its
obligations under the Purchase Contracts forming a part of the Units and (ii)
the enforcement of this Section 15.14;

 

(c)                                  all transfer, stamp,
documentary or other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of this Agreement or any other
document referred to herein and all costs, expenses, taxes, assessments and
other charges incurred in connection with any filing, registration, recording
or perfection of any security interest contemplated hereby;

 

(d)                                 all reasonable fees
and expenses of any agent or advisor appointed by the Collateral Agent and
consented to by the Company under Section 15.11 of this Agreement; and

 

(e)                                  any other
out-of-pocket costs and expenses reasonably incurred by the Collateral Agent,
the Custodial Agent and the Securities Intermediary in connection with the
performance of their duties hereunder.

 

ARTICLE 16

MISCELLANEOUS

 

Section 16.01.  Security Interest
Absolute.  All rights of the
Collateral Agent and security interests hereunder, and all obligations of the
Holders from time to time hereunder, shall be absolute and unconditional
irrespective of:

 

(a)                                  any lack of validity
or enforceability of any provision of the Purchase Contracts or the Units or
any other agreement or instrument relating thereto;

 

(b)                                 any change in the
time, manner or place of payment of, or any other term of, or any increase in
the amount of, all or any of the obligations of Holders of the Units under the
related Purchase Contracts, or any other amendment or waiver of any term of, or
any consent to any departure from any requirement of, the Purchase Contract
Agreement or any Purchase Contract or any other agreement or instrument
relating thereto; or

 

(c)                                  any other
circumstance which might otherwise constitute a defense available to, or
discharge of, a borrower, a guarantor or a pledgor.

 

Section 16.02.  Notice of Tax Event, Tax Event
Redemption and Termination Event.  Upon
the occurrence of a Tax Event, a Tax Event Redemption or a Termination Event,
the Company shall deliver written notice to the Purchase Contract Agent, the
Collateral Agent and the Securities Intermediary.  Upon the written request of the Collateral
Agent or the

 

111

 

Securities Intermediary, the Company shall inform such party whether or
not a Tax Event, a Tax Event Redemption or a Termination Event has occurred.

 

[SIGNATURES ON THE FOLLOWING
PAGE]

 

112

 

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

 

	
  SOUTHERN UNION COMPANY

  	
   

  	
  JPMORGAN CHASE BANK, N.A., as Purchase Contract
  Agent and as attorney-in-fact of the Holders from time to time of the Units

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ David J. Kvapil

  	
   

  	
   

  	
  By:

  	
  /s/ Paul J. Schmalzal

  
	
   

  	
  Name:

  	
  David J. Kvapil

  	
   

  	
   

  	
  Name:

  	
  Paul J. Schmalzal

  
	
   

  	
  Title:

  	
  Senior Vice President &

  Chief Financial Officer

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
								

 

	
  Address for Notices:

  	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
   

  
	
  Southern Union Company

  One PEI Center, Second Floor

  Wilkes-Barve, Pennsylvania 18711

  Telecopier No.: (570) 829-8900

  Attention: Thomas F. Karam

  	
   

  	
  JPMorgan Chase Bank, N.A.

  4 New York Plaza, 15th Floor

  New York, NY 10004

  Telecopier No.: (212) 623-6167

  Attention: Institutional Trust Services

  

 

	
  JPMORGAN CHASE BANK, N.A.

  as Collateral Agent, Custodial Agent and

  Securities Intermediary

  
	
   

  
	
  By:

  	
  /s/ Paul J. Schmalzal

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Paul J. Schmalzal

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  JPMorgan Chase Bank, N.A.

  4 New York Plaza, 15th Floor

  New York, NY 10004

  Telecopier No.: (212) 623-6167

  Attention: Institutional Trust Services

  	
   

  	
   

  
							

 

 

EXHIBIT A

 

(FORM OF FACE OF CORPORATE UNIT CERTIFICATE)

 

[For inclusion
in Global Certificates only - THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN
THE MEANING OF THE PURCHASE CONTRACT AND PLEDGE AGREEMENT HEREINAFTER REFERRED
TO AND IS REGISTERED IN THE NAME OF CEDE & CO., AS THE NOMINEE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE “DEPOSITARY”),
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY.  THIS CERTIFICATE IS EXCHANGEABLE FOR
CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR
ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE
CONTRACT AND PLEDGE AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A
TRANSFER OF THIS CERTIFICATE 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
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

 

	
  No.

  	
   

  	
  CUSIP No.
  844030809

  
	
  Number of
  Corporate Units:

  	
   

  	
   

  

 

SOUTHERN UNION COMPANY

Corporate Units

 

This Corporate
Units Certificate certifies that [Cede & Co.] is the registered Holder of
the number of Corporate Units set forth above [For inclusion in Global
Certificates only – or such other number of Corporate Units reflected in the Schedule of
Increases or Decreases in Global Certificate attached hereto], which number
shall not exceed 2,000,000. Each Corporate Unit consists of (i) beneficial
ownership by the Holder of either (A) prior to the occurrence of a Tax Event
Redemption (1) a 1/20, or 5.00%, undivided beneficial ownership interest in
$1,000 principal amount of Senior Note, or (2) on and after the Reset Date, (x)
an Applicable Ownership Interest in the Remarketing Treasury Portfolio, subject
to the Pledge of such Senior Note or

 

A-1

 

Applicable Ownership Interest in the Remarketing Treasury Portfolio by
the Holder pursuant to the Purchase Contract and Pledge Agreement (except that
the Applicable Ownership Interests specified in clauses (i)(B) and (i)(C) of
the definition thereof shall not be subject to the Pledge), and (y) if the
Reset Date occurs on a date that is not also a Payment Date, prior to the
Payment Date next following the Reset Date, the right to receive the interest
accrued on the 1/20, or 5.00%, undivided beneficial ownership interest in
$1,000 principal amount of Senior Notes from and including the Payment Date
immediately preceding the Reset Date to, but excluding, the Reset Date, or (B)
on or after the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, an Applicable Ownership Interest in the Tax Event
Treasury Portfolio, subject to the Pledge of such Applicable Ownership Interest
in the Tax Event Treasury Portfolio by the Holder pursuant to the Purchase
Contract and Pledge Agreement (except that the Applicable Ownership Interests
specified in clauses (ii)(B) of the definition thereof shall not be subject to
the Pledge), and (ii) the rights and obligations of the Company and the Holder
under one Purchase Contract. All capitalized terms used herein which are
defined in the Purchase Contract and Pledge Agreement (as defined on the
reverse hereof) have the meaning set forth therein.

 

Pursuant to
the Purchase Contract and Pledge Agreement, the Senior Note or the Applicable
Ownership Interests (as specified in clause (i)(A) or (ii)(A) of the definition
thereof) in the Treasury Portfolio, as the case may be, constituting part of
each Corporate Unit evidenced hereby have been pledged to the Collateral Agent,
for the benefit of the Company, to secure the obligations of the Holder under
the Purchase Contract comprising part of such Corporate Unit.

 

The Purchase Contract
and Pledge Agreement provides that all payments of the principal amount with
respect to any of the Pledged Senior Notes (as defined in the Purchase Contract
and Pledge Agreement) or the Applicable Ownership Interests (as specified in
clause (i)(A) or (ii)(A) of the definition thereof) in the Treasury Portfolio,
as the case may be, or interest or distributions on any Pledged Senior Notes or
the Applicable Ownership Interests (as specified in clause (i)(B), (i)(C) or
(ii)(B) of the definition thereof) in the Treasury Portfolio, as the case may
be, constituting part of the Corporate Units received by the Securities
Intermediary shall be paid by wire transfer in same day funds (i) in the case
of (A) interest on Pledged Senior Notes or distributions with respect to the
Applicable Ownership Interests (as specified in clause (i)(B), (i)(C) or
(ii)(B) of the definition thereof) in the Treasury Portfolio, as the case may
be, and (B) any payments of the principal amount of any Senior Notes or with
respect to the Applicable Ownership Interests (as specified in clause (i)(A) or
(ii)(A) of the definition thereof) in the Treasury Portfolio, as the case may
be, that have been released from the Pledge pursuant to the Purchase Contract
and Pledge Agreement, to the Purchase Contract Agent to the account designated
by the Purchase Contract Agent, on the Business Day such payment is received by
the Securities Intermediary (provided that in the event such payment is
received by the Securities Intermediary on a day that is not a Business Day or
after 12:30 p.m., New York City time, on a Business Day, then such payment
shall be made no later than 10:30 a.m., New York City time, on the next
succeeding Business Day) and (ii) in the case of payments with respect to the
principal amount of the Pledged Senior Notes or with respect to the Applicable
Ownership Interests (as specified in clause (i)(A) or (ii)(A) of the definition
thereof) in the Treasury Portfolio, to the Company on the Purchase Contract
Settlement Date (as described herein) in

 

A-2

 

accordance with the terms of the Purchase Contract and Pledge
Agreement, in full satisfaction of the respective obligations of the Holders of
the Corporate Units of which such Pledged Senior Notes or the Applicable
Ownership Interests (as specified in clause (i)(A) or (ii)(A) of the definition
thereof) in the Treasury Portfolio, as the case may be, are a part under the
Purchase Contracts forming a part of such Corporate Units.  Interest on the Senior Notes and
distributions on the Applicable Ownership Interests (as specified in clause
(i)(B), (i)(C) or (ii)(B) of the definition thereof) in the Treasury Portfolio,
as the case may be, forming part of a Corporate Units evidenced hereby, which
are payable quarterly in arrears on February 16, May 16, August 16,
and November 16 of each year, commencing May 16, 2005 (each, a “Payment Date”), shall, subject to receipt thereof by the
Purchase Contract Agent from the Securities Intermediary, be paid to the Person
in whose name this Corporate Units Certificate (or a Predecessor Corporate
Units Certificate) is registered at the close of business on the Record Date
for such Payment Date.  If the Senior
Notes are successfully remarketed pursuant to the Remarketing Agreement and the
Reset Date is not a Payment Date, any interest paid with respect to the Pledged
Senior Notes on such Reset Date shall be received by the Collateral Agent and
held in a non-interest bearing account, until payment to the Purchase Contract
Agent for the benefit of Holders is made on the Payment Date next following
such Reset Date or on such earlier date as (1) Corporate Units are transformed
into Treasury Units by the Holder establishing Treasury Units or (2) Corporate
Units are settled early by Holder.

 

Each Purchase
Contract evidenced hereby obligates the Holder of this Corporate Units
Certificate to purchase, and the Company to sell, on February 16, 2008
(the “Purchase Contract Settlement Date”), at
a price equal to $50.00 (the “Stated Amount”),
a number of newly issued shares of common stock, par value $1.00 per share (“Common Stock”), of the Company, equal to the Settlement
Rate, unless on or prior to the Purchase Contract Settlement Date there shall
have occurred a Termination Event or an Early Settlement or Cash Merger Early
Settlement with respect to such Purchase Contract, all as provided in the
Purchase Contract and Pledge Agreement and more fully described on the reverse
hereof.  The Purchase Price for the
shares of Common Stock purchased pursuant to each Purchase Contract evidenced
hereby, if not paid earlier, shall be paid on the Purchase Contract Settlement
Date by application of payment received in respect of the principal amount with
respect to any Pledged Senior Notes pursuant to the Remarketing or the Pledged
Applicable Ownership Interests (as specified in clause (i)(A) or (ii)(A) of the
definition thereof) in the Treasury Portfolio, as the case may be, pledged to
secure the obligations under such Purchase Contract of the Holder of the
Corporate Units of which such Purchase Contract is a part.

 

Each Purchase
Contract evidenced hereby obligates the holder to agree, for United States
federal, state and local income and franchise tax purposes, to (i) treat an
acquisition of the Corporate Units as an acquisition of the Senior Note and
Purchase Contract constituting the Corporate Units and (ii) treat itself as
owner of the applicable interest in the Collateral Account, including the
Senior Notes and the Applicable Ownership Interests in the Treasury Portfolio.

 

The Company
shall pay, on each Payment Date, in respect of each Purchase Contract forming
part of a Corporate Unit evidenced hereby, an amount (the “Contract
Adjustment Payments”) equal to 0.625% per year of the Stated Amount,
computed on the basis of a 360-day

 

A-3

 

year consisting of twelve 30-day months.  Such Contract Adjustment Payments shall be
payable to the Person in whose name this Corporate Units Certificate is
registered at the close of business on the Record Date for such Payment
Date.  The Company may, at its option,
defer such Contract Adjustment Payments as described in the Purchase Contract
and Pledge Agreement.

 

The Company
shall pay, on each Payment Date, the Contract Adjustment Payments payable in
respect of each Purchase Contract to the Person in whose name the Corporate
Units Certificate evidencing such Purchase Contract is registered at the close
of business on the Record Date for such Payment Date.  Contract Adjustment Payments will be payable
at the office of the Purchase Contract Agent in New York City. If the
book-entry system for the Corporate Units has been terminated, the Contract
Adjustment Payments will be payable, at the option of the Company, by check
mailed to the address of the Person entitled thereto at such Person’s address
as it appears on the Security Register, or by wire transfer to the account
designated by such Person by a prior written notice to the Purchase Contract
Agent.

 

Interest on
the Senior Notes and distributions on the Applicable Ownership Interests (as
specified in clause (i)(B), (i)(C) or (ii)(B) of the definition thereof) and
the Contract Adjustment Payments will be payable at the office of the Purchase
Contract Agent in New York City. If the book-entry system for the Corporate
Units has been terminated, the Contract Adjustment Payments will be payable, at
the option of the Company, by check mailed to the address of the Person
entitled thereto at such Person’s address as it appears on the Security
Register, or by wire transfer to the account designated by such Person by a
prior written notice to the Purchase Contract Agent.

 

Reference is
hereby made to the further provisions set forth on the reverse hereof, which
further provisions shall for all purposes have the same effect as if set forth
at this place.

 

Unless the
certificate of authentication hereon has been executed by the Purchase Contract
Agent by manual signature, this Corporate Units Certificate shall not be
entitled to any benefit under the Purchase Contract and Pledge Agreement or be
valid or obligatory for any purpose.

 

A-4

 

 

IN WITNESS
WHEREOF, the Company and the Holder specified above have caused this instrument
to be duly executed.

 

	
   

  	
  SOUTHERN UNION COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  HOLDER SPECIFIED ABOVE (as to

  obligations of such Holder under the Purchase

  Contracts)

  
	
   

  	
   

  
	
   

  	
  By:

  	
  JPMORGAN CHASE BANK, N.A.,

  not individually but solely as Attorney

  in-Fact of such Holder

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Paul J. Schmalzel

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
							

 

A-5

 

CERTIFICATE OF AUTHENTICATION

OF PURCHASE CONTRACT AGENT

 

This is one of
the Corporate Units Certificates referred to in the within mentioned Purchase
Contract and Pledge Agreement.

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.

  as Purchase Contract Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
						

 

A-6

 

(FORM OF REVERSE OF CORPORATE
UNIT CERTIFICATE)

 

Each Purchase
Contract evidenced hereby is governed by a Purchase Contract and Pledge
Agreement, dated as of February 11, 2005 (as may be supplemented from time
to time, the “Purchase Contract and Pledge Agreement”),
among the Company, JPMorgan Chase Bank, N.A., as Purchase Contract Agent
(including its successors hereunder, the “Purchase Contract Agent”)
and JPMorgan Chase Bank, N.A., as Collateral Agent, Custodial Agent and
Securities Intermediary, to which Purchase Contract and Pledge Agreement and
supplemental agreements thereto reference is hereby made for a description of
the respective rights, limitations of rights, obligations, duties and
immunities thereunder of the Purchase Contract Agent, the Company, and the
Holders and of the terms upon which the Corporate Units Certificates are, and
are to be, executed and delivered.

 

Each Purchase
Contract evidenced hereby obligates the Holder of this Corporate Units
Certificate to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the “Purchase Price”), a number of shares of Common Stock equal
to the Settlement Rate, unless an Early Settlement, a Cash Merger Early
Settlement or a Termination Event with respect to the Units of which such Purchase
Contract is a part shall have occurred. 
The “Settlement Rate” is equal to:

 

(1)                                  if the Applicable
Market Value (as defined below) is greater than or equal to $30.7625 (the “Threshold Appreciation Price”), 1.6254 shares of Common
Stock per Purchase Contract (the “Minimum Settlement Rate”);

 

(2)                                  if the Applicable
Market Value is less than the Threshold Appreciation Price but greater than
$24.61 (the “Reference Price”), the number of
shares of Common Stock per Purchase Contact having a value equal to the Stated
Amount divided by the Applicable Market Value; and

 

(3)                                  if the Applicable
Market Value is less than or equal to the Reference Price, 2.0317 shares of
Common Stock per Purchase Contract (the “Maximum Settlement Rate”);

 

in each case
subject to adjustment as provided in the Purchase Contract and Pledge Agreement
(and in each case rounded upward or downward to the nearest 1/10,000th of a
share).

 

No fractional
shares of Common Stock will be issued upon settlement of Purchase Contracts, as
provided in Section 5.08 of the Purchase Contract and Pledge Agreement.

 

Each Purchase
Contract evidenced hereby, which is settled through Early Settlement or Cash
Merger Early Settlement, shall obligate the Holder of the related Corporate
Units to purchase at the Purchase Price, and the Company to sell, a number of
newly issued shares of Common Stock equal to the Minimum Settlement Rate (in
the case of an Early Settlement) or applicable Settlement Rate (in the case of
a Cash Merger Early Settlement).

 

A-7

 

The “Applicable Market Value” means the average of the Closing
Price per share of Common Stock on each of the 20 consecutive Trading Days
ending on the third Trading Day immediately preceding the Purchase Contract Settlement
Date subject to adjustments set forth under Section 5.04 of the Purchase
Contract and Pledge Agreement.

 

The “Closing Price” per share of Common Stock on any date of
determination means:

 

(1)                                  the closing sale
price as of the close of the principal trading session (or, if no closing price
is reported, the last reported sale price) per share on the New York Stock
Exchange, Inc. (the “NYSE”) on such
date;

 

(2)                                  if the Common Stock
is not listed for trading on the NYSE on any such date, the closing sale price
(or, if no closing price is reported, the last reported sale price) per share
as reported in the composite transactions for the principal United States
national or regional securities exchange on which the Common Stock is so
listed;

 

(3)                                  if the Common Stock
is not so listed on a United States national or regional securities exchange,
the last reported sale price per share as reported by The Nasdaq Stock Market,
Inc.;

 

(4)                                  if the Common Stock
is not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization; or

 

(5)                                  if such bid price is
not available, the market value of the Common Stock on such date as determined
by a nationally recognized independent investment banking firm retained for
this purpose by the Company.

 

A “Trading Day” means a day on which Common Stock (1) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (2) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.

 

In accordance
with the terms of the Purchase Contract and Pledge Agreement, the Holder of
this Corporate Units Certificate may pay the Purchase Price for the shares of
Common Stock purchased pursuant to each Purchase Contract evidenced hereby by
effecting a Cash Settlement, an Early Settlement or, if applicable, a Cash
Merger Early Settlement or from the proceeds of the Applicable Ownership
Interests (as specified in clause (i)(A) or (ii)(A) of the definition thereof)
in the Treasury Portfolio or a Remarketing of the related Pledged Senior Notes.
Unless the Treasury Portfolio has replaced the Senior Notes underlying the
Corporate Units, a Holder of Corporate Units who (1) does not, on or prior to
5:00 p.m., New York City time, on the seventh Business Day immediately
preceding the Purchase Contract Settlement Date, notify the Purchase Contract
Agent of its intention to effect a Cash Settlement, or who does so notify the
Purchase Contract Agent but fails to make an effective Cash Settlement prior to
11:00 a.m., New York

 

A-8

 

City time, on the sixth Business Day immediately preceding the Purchase
Contract Settlement Date, or (2) on or prior to 5:00 p.m., New York City time,
on the seventh Business Day prior to the Purchase Contract Settlement Date,
does not make an effective Early Settlement, shall pay the Purchase Price, less
the amount of any Deferred Contract Adjustment Payments payable to such Holder,
for the shares of Common Stock to be delivered under the related Purchase
Contract from the proceeds of the sale of the related Pledged Senior Notes held
by the Collateral Agent in the Remarketing unless the Holder has previously
made a Cash Merger Early Settlement. 
Unless the Treasury Portfolio has replaced the Senior Notes as a component
of the Corporate Units, such sale will be made by the Remarketing Agent
pursuant to the terms of the Remarketing Agreement during the Final Three-Day
Remarketing Period.  If the Treasury
Portfolio has replaced the Senior Notes as a component of Corporate Units, a
Holder of Corporate Units shall pay the Purchase Price for the shares of Common
Stock to be delivered under the related Purchase Contract from the proceeds at
maturity of the Applicable Ownership Interest (as specified in clause (i)(A) or
(ii)(A) of the definition thereof) in the Treasury Portfolio.

 

As provided in
the Purchase Contract and Pledge Agreement, upon the occurrence of a Failed
Final Remarketing, each Holder of any Pledged Senior Notes that are subject to
a Failed Final Remarketing shall be deemed to have exercised such Holder’s Put
Right and to have elected to pay the Purchase Price under the Purchase Contract
out of a portion of the proceeds from the Put Right in full satisfaction of
such Holder’s obligations under the Purchase Contract.  In the event of the Company’s failure to pay
the Put Price when due, the Company shall be deemed to have netted such Holder’s
obligation to pay the Company the Purchase Price, less any Deferred Contract
Adjustment Payments, under the Purchase Contracts against the Company’s
obligation to pay the Put Price, in full satisfaction of such Holder’s
obligation under the Purchase Contracts.

 

The Company
shall not be obligated to issue any shares of Common Stock in respect of a
Purchase Contract or deliver any certificates therefor to the Holder unless it
shall have received payment of the aggregate Purchase Price, less any Deferred
Contract Adjustment Payments, for the shares of Common Stock to be purchased
thereunder in the manner set forth in the Purchase Contract and Pledge
Agreement.

 

Each Purchase
Contract evidenced hereby and all obligations and rights of the Company and the
Holder thereunder shall terminate if a Termination Event shall occur.  Upon the occurrence of a Termination Event,
the Company shall give written notice to the Purchase Contract Agent and to the
Holders, at their addresses as they appear in the Security Register.  Upon and after the occurrence of a
Termination Event, the Collateral Agent shall release the Pledged Senior Notes
or the appropriate Applicable Ownership Interest (as specified in clause (i)(A)
or (ii)(A) of the definition thereof) in the Treasury Portfolio forming a part
of each Corporate Unit from the Pledge. 
A Corporate Unit shall thereafter represent the right to receive the
Senior Note or the appropriate Applicable Ownership Interests in the Treasury
Portfolio forming a part of such Corporate Units in accordance with the terms
of the Purchase Contract and Pledge Agreement.

 

A-9

 

Under the
terms of the Purchase Contract and Pledge Agreement, the Purchase Contract
Agent will be entitled to exercise the voting and any other consensual rights
pertaining to the Pledged Senior Notes, but only to the extent instructed in
writing by the Holders.  Upon receipt of
notice of any meeting at which holders of Senior Notes are entitled to vote or
upon any solicitation of consents, waivers or proxies of holders of Senior
Notes, the Purchase Contract Agent shall, as soon as practicable thereafter,
mail, first class, postage pre-paid, to the Corporate Units Holders the notice
required by the Purchase Contract and Pledge Agreement:

 

(1)                                  containing such
information as is contained in the notice or solicitation;

 

(2)                                  stating that each
Holder on the record date set by the Purchase Contract Agent therefor (which,
to the extent possible, shall be the same date as the record date for
determining the holders of Senior Notes, as the case may be, entitled to vote)
shall be entitled to instruct the Purchase Contract Agent as to the exercise of
the voting rights pertaining to the Senior Notes underlying such Holder’s
Corporate Units; and

 

(3)                                  stating the manner in
which such instructions may be given.

 

Upon the
occurrence of a Tax Event Redemption, the Collateral Agent shall surrender the
Pledged Senior Notes against delivery of an amount equal to the aggregate
Redemption Price of the Pledged Senior Notes and shall deposit the funds in the
Collateral Account in exchange for the Pledged Senior Notes.  Thereafter, the Collateral Agent shall cause
the Securities Intermediary to apply an amount equal to the aggregate
Redemption Amount of such funds to purchase on behalf of the Holders of
Corporate Units the Tax Event Treasury Portfolio and to promptly remit the
remaining portion of such Redemption Price, if any, to the Purchase Contract
Agent for payment to the Holders of such Corporate Units.

 

Upon the
occurrence of a Successful Remarketing of Senior Notes during the Period for
Early Remarketing, pursuant to the terms of the Remarketing Agreement, the
Remarketing Agent will apply an amount equal to the Remarketing Treasury
Portfolio Purchase Price to purchase on behalf of the Holders of Corporate
Units, the Remarketing Treasury Portfolio, and, after deducting the Remarketing
Fee to the extent permitted under the terms of the Remarketing Agreement,
promptly remit the remaining portion of such proceeds of such Successful
Remarketing to the Purchase Contract Agent for payment to the Holders of such
Corporate Units.

 

Following the
occurrence of (i) a Tax Event Redemption prior to the Purchase Contract
Settlement Date, or (ii) a Successful Remarketing of the Senior Notes on or
prior to the ninth Business Day prior to the Purchase Contract Settlement Date,
the Holders of Corporate Units and the Collateral Agent shall have such
security interest rights and obligations with respect to the Applicable
Ownership Interests in the Treasury Portfolio as the Holder of Corporate Units
and the Collateral Agent had in respect of the Senior Notes, as the case may
be, subject to the Pledge of the Applicable Ownership Interest (as specified in
clause (i)(A) or (ii)(A) of the definition thereof) as provided in the Purchase
Contract and Pledge Agreement and any reference herein to the Senior Notes
shall be deemed to be a reference to such Treasury Portfolio.

 

A-10

 

The Corporate
Units Certificates are issuable only in registered form and only in
denominations of a single Corporate Unit and any integral multiple
thereof.  The transfer of any Corporate
Units Certificate will be registered and Corporate Units Certificates may be
exchanged as provided in the Purchase Contract and Pledge Agreement.  A Holder who elects to substitute a Treasury
Security for a Senior Note, thereby creating Treasury Units, shall be
responsible for any fees or expenses payable in connection therewith. Except as
provided in the Purchase Contract and Pledge Agreement, for so long as the
Purchase Contract underlying a Corporate Unit remains in effect, such Corporate
Units shall not be separable into its constituent parts, and the rights and
obligations of the Holder of such Corporate Units in respect of the Senior
Notes and Purchase Contract constituting such Corporate Units may be
transferred and exchanged only as a Corporate Unit.

 

Unless the
Treasury Portfolio has replaced the Senior Notes as a component of the
Corporate Units, and subject to the conditions set forth in the Purchase
Contract and Pledge Agreement and the last sentence of this paragraph, the Holder
of Corporate Units may substitute, at any time prior to 5:00 p.m., New York
City time, on the seventh Business Day immediately preceding the Purchase
Contract Settlement Date, for the Pledged Senior Notes securing such Holder’s
obligations under the related Purchase Contracts, Treasury Securities in an
aggregate principal amount at maturity equal to the aggregate principal amount
of the Pledged Senior Notes in accordance with the terms of the Purchase
Contract and Pledge Agreement.  From and
after such Collateral Substitution, each Unit for which such Pledged Treasury
Securities secures the Holder’s obligation under the Purchase Contract shall be
referred to as a “Treasury Unit”.  A Holder may make such Collateral
Substitution only in integral multiples of 20 Corporate Units.  Unless a Successful Remarketing of the Senior
Notes or a Tax Event Redemption has previously occurred, Holders shall not be
permitted to effect Collateral Substitutions in accordance with the provisions
of the Purchase Contract and Pledge Agreement during the period commencing on
and including the Business Day prior to the first of the three sequential
Remarketing Dates comprising a Three-Day Remarketing Period and ending on and
including the Reset Date relating to a Successful Remarketing or, if none of
the Remarketings during such Three-Day Remarketing Period is successful, the
Business Day following the last of the three sequential Remarketing Dates
occurring during such Three-Day Remarketing Period.

 

If the
Treasury Portfolio has replaced the Senior Notes as a component of the
Corporate Units, a Holder may, at any time on or prior to the second Business
Day immediately preceding the Purchase Contract Settlement Date, substitute
Treasury Securities for the Applicable Ownership Interests in the Treasury
Portfolio, but only in integral multiples of 12,800 Corporate Units or such
other number of Corporate Units as may be determined by the Remarketing Agent
following a Successful Remarketing of the Senior Notes if the Reset Date is not
a Payment Date.

 

The Purchase
Contracts and all obligations and rights of the Company and the Holders
thereunder, including, without limitation, the rights of the Holders to receive
and the obligation of the Company to pay any Contract Adjustment Payments, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Purchase Contract Agent or the Company, if, on or
prior to the Purchase Contract Settlement Date, a Termination Event shall have
occurred.  Upon the occurrence of a
Termination Event, the Company shall

 

A-11

 

promptly but in no event later than two Business Days thereafter give
written notice to the Purchase Contract Agent, the Collateral Agent and the
Holders, at their addresses as they appear in the Security Register.  Upon and after the occurrence of a
Termination Event, the Collateral Agent shall release the Senior Notes or the
Applicable Ownership Interests (as specified in clause (i)(A) or (ii)(A) of the
definition thereof) in the Treasury Portfolio, as the case may be, from the
Pledge in accordance with the provisions of the Purchase Contract and Pledge
Agreement.  A Corporate Unit shall
thereafter represent the right to receive the Senior Note or the appropriate
Applicable Ownership Interests in the Treasury Portfolio forming a part of such
Corporate Units in accordance with the terms of the Purchase Contract and
Pledge Agreement.

 

Subject to and upon compliance with the
provisions of the Purchase Contract and Pledge Agreement and the last sentence
of this paragraph, at the option of the Holder thereof, Purchase Contracts
underlying Units may be settled early at any time prior to 5:00 p.m., New York
City time, on the seventh Business Day immediately preceding the Purchase
Contract Settlement Date (“Early Settlement”)
as provided in the Purchase Contract and Pledge Agreement.  Unless a Successful Remarketing of the Senior
Notes or a Tax Event Redemption has previously occurred, Holders of Corporate
Units shall not be permitted to effect Early Settlement during the period
commencing on and including the Business Day prior to the first of the three
sequential Remarketing Dates comprising a Three-Day Remarketing Period and
ending on and including the Reset Date relating to a Successful Remarketing or,
if none of the Remarketings during such Three-Day Remarketing Period is
successful, the Business Day following the last of the three sequential
Remarketing Dates occurring during such Three-Day Remarketing Period.

 

Upon Early
Settlement of Purchase Contracts by a Holder of the related Units, the Pledged
Senior Notes or appropriate Applicable Ownership Interests (as specified in
clause (i)(A) or (ii)(A) of the definition thereof) underlying such Units shall
be released from the Pledge as provided in the Purchase Contract and Pledge
Agreement and the Holder shall be entitled to receive a number of shares of
Common Stock on account of each Purchase Contract forming part of a Corporate
Unit as to which Early Settlement is effected equal to the Minimum Settlement
Rate.

 

Upon the
occurrence of a Cash Merger, a Holder of Corporate Units may effect Cash Merger
Early Settlement of the Purchase Contract underlying such Corporate Units
pursuant to the terms of Section 5.04(b)(ii) of the Purchase Contract and
Pledge Agreement.  Upon Cash Merger Early
Settlement of Purchase Contracts by a Holder of the related Corporate Units,
the Pledged Senior Notes or appropriate Applicable Ownership Interests (as
specified in clause (i)(A) or (ii)(A) of the definition thereof) in the
Treasury Portfolio underlying such Corporate Units shall be released from the
Pledge as provided in the Purchase Contract and Pledge Agreement.

 

Upon
registration of transfer of this Corporate Units Certificate, the transferee
shall be bound (without the necessity of any other action on the part of such
transferee, except as may be required by the Purchase Contract Agent pursuant
to the Purchase Contract and Pledge Agreement), under the terms of the Purchase
Contract and Pledge Agreement and the Purchase Contracts evidenced hereby and
the transferor shall be released from the obligations under the

 

A-12

 

Purchase Contracts evidenced by this Corporate Units Certificate.  The Company covenants and agrees, and the
Holder, by its acceptance hereof, likewise covenants and agrees, to be bound by
the provisions of this paragraph.

 

The Holder of
this Corporate Units Certificate, by its acceptance hereof, authorizes the Purchase
Contract Agent to enter into and perform the related Purchase Contracts forming
part of the Corporate Units evidenced hereby on its behalf as its
attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the
event that the Company becomes the subject of a case under the Bankruptcy Code,
agrees to be bound by the terms and provisions thereof, covenants and agrees to
perform its obligations under such Purchase Contracts, consents to the
provisions of the Purchase Contract and Pledge Agreement, authorizes the
Purchase Contract Agent to enter into and perform the Purchase Contract and
Pledge Agreement on its behalf as its attorney-in-fact, and consents to the
Pledge of the Senior Notes or the Applicable Ownership Interests (as specified
in clause (i)(A) or (ii)(A) of the definition thereof) in the Treasury
Portfolio, as the case may be, underlying this Corporate Units Certificate
pursuant to the Purchase Contract and Pledge Agreement.  The Holder further covenants and agrees that,
to the extent and in the manner provided in the Purchase Contract and Pledge
Agreement, but subject to the terms thereof, payments with respect to the aggregate
principal amount of the Pledged Senior Notes or the Applicable Ownership
Interests (as specified in clause (i)(A) or (ii)(A) of the definition thereof)
in the Treasury Portfolio, as the case may be, on the Purchase Contract
Settlement Date less any Deferred Contract Adjustment Payments shall be paid by
the Collateral Agent to the Company in satisfaction of such Holder’s
obligations under such Purchase Contract and such Holder shall acquire no
right, title or interest in such payments.

 

Subject to
certain exceptions, the provisions of the Purchase Contract and Pledge
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.

 

The Purchase
Contracts shall be governed by, and construed in accordance with, the laws of
the State of New York, without giving effect to the conflicts of law provisions
thereof to the extent that the application of a law of a different jurisdiction
would govern as a result.

 

Prior to due
presentment of this Certificate for registration of transfer, the Company, the
Purchase Contract Agent and its Affiliates and any agent of the Company or the
Purchase Contract Agent may treat the Person in whose name this Corporate Units
Certificate is registered as the owner of the Corporate Units evidenced hereby
for the purpose of receiving payments of interest payable on the Senior Notes,
receiving payments of Contract Adjustment Payments (subject to any applicable
record date), performance of the Purchase Contracts and for all other purposes
whatsoever, whether or not any payments in respect thereof be overdue and
notwithstanding any notice to the contrary, and neither the Company, the
Purchase Contract Agent nor any such agent shall be affected by notice to the
contrary.

 

The Purchase
Contracts shall not, prior to the settlement thereof, entitle the Holder to any
of the rights of a holder of shares of Common Stock.

 

A-13

 

A copy of the
Purchase Contract and Pledge Agreement is available for inspection at the
offices of the Purchase Contract Agent.

 

A-14

 

ABBREVIATIONS

 

The following
abbreviations, when used in the inscription on the face of this instrument,
shall be construed as though they were written out in full according to
applicable laws or regulations:

 

	
  TEN COM

  	
   

  	
  as tenants in common

  
	
  UNIF GIFT MIN ACT:

  	
   

  	
   

  	
  Custodian

  	
   

  	
   

  
	
   

  	
   

  	
  (cust)

  	
  (minor)

  
	
   

  	
   

  	
  Under Uniform Gifts to Minors Act of

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TENANT:

  	
   

  	
  as tenants by the entireties

  
	
   

  	
   

  	
   

  
	
  JT TEN:

  	
   

  	
  as joint tenants with right of survivorship
  and not as tenants

  in common

  
								

 

Additional
abbreviations may also be used though not in the above list.

 

	
  FOR VALUE
  RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

  	
   

  	
   

  
	
   

  
	
   

  
	
  (Please insert Social Security or Taxpayer I.D. or other Identifying
  Number of Assignee)

  
	
   

  
	
   

  
	
  (Please Print or Type Name and Address Including Postal Zip Code of
  Assignee)

  

 

the within
Corporate Units Certificates and all rights thereunder, hereby irrevocably
constituting and appointing attorney __________________, to transfer said Corporate
Units Certificates on the books of Southern Union Company, with full power of
substitution in the premises.

 

	
  Dated:

  	
   

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NOTICE: The signature to this assignment must

  correspond with the name as it appears upon the face of the

  within Corporate Units Certificates in every particular,

  without alteration or enlargement or any change

  whatsoever.

  
	
   

  	
   

  	
   

  
	
  Signature
  Guarantee:

  	
   

  	
   

  
								

 

Signatures
must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Security Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be determined by the Security
Registrar in addition to, or in substitution for, STAMP, all in accordance with
Securities Exchange Act of 1934, as amended.

 

A-15

 

SETTLEMENT INSTRUCTIONS

 

The
undersigned Holder directs that a certificate for shares of Common Stock
deliverable upon settlement on or after the Purchase Contract Settlement Date
of the Purchase Contracts underlying the number of Corporate Units evidenced by
this Corporate Units Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned
at the address indicated below unless a different name and address have been
indicated below.  If shares are to be
registered in the name of a Person other than the undersigned, the undersigned
will pay any transfer tax payable incident thereto.

 

 

	
  Dated:

  	
   

  	
   

  	
  Signature 

  
	
   

  	
  Signature Guarantee:

  	
   

  	
   

  
	
   

  	
   

  	
  (if assigned
  to another person)

  
							

 

Signatures
must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Security Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be determined by the Security
Registrar in addition to, or in substitution for, STAMP, all in accordance with
Securities Exchange Act of 1934, as amended.

 

 

	
  If shares are to be registered in the name
  of and delivered

  	
   

  	
   

  	
   

  
	
  to a Person other than the Holder, please
  (i) print such Person’s name and address and (ii) provide a guarantee of your
  signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Social
  Security or other

  	
   

  	
   

  
	
  Taxpayer
  Identification

  	
   

  	
   

  
	
  Number, if
  any

  	
   

  	
   

  

 

A-16

 

REGISTERED HOLDER

 

	
  Please print name and address of Registered
  Holder:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DTC Participant #:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

A-17

 

ELECTION TO SETTLE EARLY/CASH
MERGER EARLY SETTLEMENT

 

The
undersigned Holder of this Corporate Units Certificate hereby irrevocably
exercises the option to effect [Early Settlement] [Cash Merger Early
Settlement] in accordance with the terms of the Purchase Contract and Pledge
Agreement with respect to the Purchase Contracts underlying the number of
Corporate Units evidenced by this Corporate Units Certificate specified
below.  The option to effect [Early
Settlement] [Cash Merger Early Settlement] may be exercised only with respect
to Purchase Contracts underlying Corporate Units in multiples of 20 Corporate
Units or an integral multiple thereof; provided that
if Applicable Ownership Interest in the Treasury Portfolio have replaced
Applicable Ownership Interests in the Senior Notes as a component of Corporate
Units, Corporate Unit Holders may only effect [Early Settlement] [Cash Merger
Early Settlement] in multiples of 12,800 Corporate Units.  The undersigned Holder directs that a
certificate for shares of Common Stock or other securities deliverable upon
such [Early Settlement] [Cash Merger Early Settlement] be registered in the name
of, and delivered, together with a check in payment for any fractional share
and any Corporate Units Certificate representing any Corporate Units evidenced
hereby as to which [Early Settlement] [Cash Merger Early Settlement] of the
related Purchase Contracts is not effected, to the undersigned at the address
indicated below unless a different name and address have been indicated
below.  Pledged Senior Notes or the
appropriate Applicable Ownership Interests in the Treasury Portfolio, as the
case may be, deliverable upon such [Early Settlement] [Cash Merger Early
Settlement] will be transferred in accordance with the transfer instructions
set forth below.  If shares are to be
registered in the name of a Person other than the undersigned, the undersigned
will pay any transfer tax payable incident thereto.

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  
	
   

  	
  Signature Guarantee:

  	
   

  	
   

  
						

 

Signatures
must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Security Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be determined by the Security
Registrar in addition to, or in substitution for, STAMP, all in accordance with
Securities Exchange Act of 1934, as amended.

 

	
  DTC Participant #:

  	
   

  	
   

  

 

A-18

 

Number of
Units evidenced hereby as to which [Early Settlement] [Cash Merger Early
Settlement] of the related Purchase Contracts is being elected:

 

	
  If shares of Common Stock or Corporate Units Certificates are to be

  registered in the name of and delivered to and
  Pledged Senior Notes or the

  Applicable Ownership Interests in the
  Treasury Portfolio, as the case may be,

  are to be transferred to a Person other
  than the Holder, please print such

  Person’s name and address:

  	
  REGISTERED HOLDER

  

  

  

  

  Please print name and address of Registered Holder:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
  Name

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address

  	
  Address

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Social
  Security or other

  	
  DTC
  Participant #:

  	
   

  	
   

  
	
  Taxpayer
  Identification

  	
   

  
	
  Number, if
  any

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

A-19

 

Transfer
Instructions for Pledged Senior Notes or the Applicable Ownership Interests in
the Treasury Portfolio, as the case may be, transferable upon [Early
Settlement] [Cash Merger Early Settlement]:

 

	
   

  	
   

  
	
   

  

 

A-20

 

[TO BE ATTACHED TO GLOBAL
CERTIFICATES]

 

SCHEDULE OF INCREASES OR
DECREASES IN GLOBAL CERTIFICATE

 

The initial
number of Corporate Units evidenced by this Global Certificate is
2,000,000.  The following increases or
decreases in this Global Certificate have been made:

 

	
  Date

  	
   

  	
  Amount
  of increase in

  Number of Corporate

  Units evidenced by the

  Global Certificate

  	
   

  	
  Amount
  of decrease in

  Number of Corporate

  Unites evidenced by the

  Global Certificate

  	
   

  	
  Number
  of Corporate Units

  evidenced by this Global

  Certificate following such

  decrease or increase

  	
   

  	
  Signature
  of authorized

  signatory of Purchase

  Contract Agent

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-21

EXHIBIT B

 

(FORM OF FACE
OF TREASURY UNIT CERTIFICATE)

 

[For inclusion
in Global Certificate only - THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN
THE MEANING OF THE PURCHASE CONTRACT AND PLEDGE AGREEMENT HEREINAFTER REFERRED
TO AND IS REGISTERED IN THE NAME OF CEDE & CO., AS NOMINEE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE “DEPOSITARY”),
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY.  THIS CERTIFICATE IS EXCHANGEABLE FOR
CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR
ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE
CONTRACT AND PLEDGE AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A
TRANSFER OF THIS CERTIFICATE 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
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

 

	
  No. 

  	
   

  	
  CUSIP No. 844030882

  
	
  Number of Treasury Units:

  	
   

  	
   

  

 

SOUTHERN UNION COMPANY

Treasury Units

 

This Treasury
Units Certificate certifies that [Cede & Co.] is the registered Holder of
the number of Treasury Units set forth above [For inclusion in Global
Certificates only - or such other number of Treasury Units reflected in the Schedule of
Increases or Decreases in Global Certificate attached hereto], which number
shall not exceed 2,000,000.  Each
Treasury Unit consists of (i) a 1/20, or 5.00%, undivided beneficial ownership
interest of a Treasury Security having a principal amount at maturity equal to
$1,000, subject to the Pledge of such Treasury Security by such Holder pursuant
to the Purchase Contract and Pledge Agreement, and (ii) the rights and
obligations of the Holder under one Purchase Contract with Southern Union
Company, a Delaware corporation (the “Company”).  All capitalized terms used herein which

 

B-1

 

are defined in the Purchase Contract and Pledge Agreement (as defined on
the reverse hereof) have the meaning set forth therein.

 

Pursuant to
the Purchase Contract and Pledge Agreement, the Treasury Securities
constituting part of each Treasury Unit evidenced hereby have been pledged to
the Collateral Agent, for the benefit of the Company, to secure the obligations
of the Holder under the Purchase Contract comprising part of such Treasury
Unit.

 

Each Purchase
Contract evidenced hereby obligates the Holder of this Treasury Units
Certificate to purchase, and the Company, to sell, on February 16, 2008
(the “Purchase Contract Settlement Date”), at
a price equal to $50 (the “Stated Amount”),
a number of newly issued shares of common stock, par value $1.00 per share (“Common Stock”), of the Company, equal to the Settlement
Rate, unless prior to or on the Purchase Contract Settlement Date there shall
have occurred a Termination Event, an Early Settlement or a Cash Merger Early
Settlement with respect to such Purchase Contract, all as provided in the
Purchase Contract and Pledge Agreement and more fully described on the reverse
hereof.  The Purchase Price for the
shares of Common Stock purchased pursuant to each Purchase Contract evidenced
hereby, if not paid earlier, shall be paid on the Purchase Contract Settlement
Date by application of the proceeds from the Treasury Securities at maturity
pledged to secure the obligations of the Holder under such Purchase Contract of
the Treasury Units of which such Purchase Contract is a part.

 

Each Purchase
Contract evidenced hereby obligates the holder to agree, for United States
federal, state and local income and franchise tax purposes, to (i) treat an
acquisition of the Treasury Units as an acquisition of the Treasury Security
and Purchase Contract constituting the Treasury Units and (ii) treat itself as
owner of the applicable interest in the Collateral Account, including the
Treasury Securities.

 

The Company
shall pay, on each Payment Date, in respect of each Purchase Contract forming
part of a Treasury Unit evidenced hereby, an amount (the “Contract
Adjustment Payments”) equal to 0.625% per year of the Stated Amount,
computed on the basis of a 360 day year of twelve 30 day months.  Such Contract Adjustment Payments shall be
payable to the Person in whose name this Treasury Units Certificate is registered
at the close of business on the Record Date for such Payment Date.  The Company may, at its option, defer such
Contract Adjustment Payments, as described in the Purchase Contract and Pledge
Agreement.

 

Contract
Adjustment Payments will be payable at the office of the Purchase Contract
Agent in New York City. If the book-entry system for the Corporate Units has
been terminated, the Contract Adjustment Payments will be payable, at the
option of the Company, by check mailed to the address of the Person entitled
thereto at such Person’s address as it appears on the Security Register, or by
wire transfer to the account designated by such Person by a prior written
notice to the Purchase Contract Agent.

 

Reference is
hereby made to the further provisions set forth on the reverse hereof, which
further provisions shall for all purposes have the same effect as if set forth
at this place.

 

B-2

 

Unless the
certificate of authentication hereon has been executed by the Purchase Contract
Agent by manual signature, this Treasury Units Certificate shall not be
entitled to any benefit under the Purchase Contract and Pledge Agreement or be
valid or obligatory for any purpose.

 

IN WITNESS
WHEREOF, the Company and the Holder specified above have caused this instrument
to be duly executed.

 

 

	
   

  	
  SOUTHERN UNION COMPANY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  HOLDER SPECIFIED ABOVE (as to

  obligations of such Holder under the Purchase

  Contracts)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  JPMORGAN CHASE BANK, N.A.,

  not individually but solely as Attorney-

  in-Fact of such Holder

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
  Paul J. Schmalzel

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
  Vice President

  
							

 

B-3

 

CERTIFICATE OF AUTHENTICATION
OF

PURCHASE CONTRACT AGENT

 

This is one of
the Treasury Units referred to in the within-mentioned Purchase Contract and
Pledge Agreement.

 

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.

  as Purchase Contract Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Officer

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
						

 

B-4

 

(REVERSE OF TREASURY UNIT
CERTIFICATE)

 

Each Purchase
Contract evidenced hereby is governed by a Purchase Contract and Pledge
Agreement, dated as of February 11, 2005 (as may be supplemented from time
to time, the “Purchase Contract and Pledge Agreement”),
among the Company, JPMorgan Chase Bank, N.A., as Purchase Contract Agent
(including its successors hereunder, the “Purchase Contract Agent”)
and JPMorgan Chase Bank, N.A., as Collateral Agent, Custodial Agent and
Securities Intermediary, to which Purchase Contract and Pledge Agreement and
supplemental agreements thereto reference is hereby made for a description of
the respective rights, limitations of rights, obligations, duties and
immunities thereunder of the Purchase Contract Agent, the Company, and the
Holders and of the terms upon which the Corporate Units Certificates are, and
are to be, executed and delivered.

 

Each Purchase
Contract evidenced hereby obligates the Holder of this Treasury Units
Certificate to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the “Purchase Price”) a number of newly issued shares of Common
Stock equal to the Settlement Rate, unless an Early Settlement, a Cash Merger
Early Settlement or a Termination Event with respect to the Units of which such
Purchase Contract is a part shall have occurred. The “Settlement
Rate” is equal to:

 

(1)                                  if the Applicable
Market Value (as defined below) is greater than or equal to $30.7625 (the “Threshold Appreciation Price”), 1.6254 shares of Common
Stock per Purchase Contract (the “Minimum Settlement Rate”);

 

(2)                                  if the Applicable
Market Value is less than the Threshold Appreciation Price but greater than
$24.61 (the “Reference Price”), the number of
shares of Common Stock per Purchase Contact having a value equal to the Stated
Amount divided by the Applicable Market Value; and

 

(3)                                  if the Applicable
Market Value is less than or equal to the Reference Price, 2.0317 shares of
Common Stock per Purchase Contract (the “Maximum Settlement Rate”);

 

in each case
subject to adjustment as provided in the Purchase Contract and Pledge Agreement
(and in each case rounded upward or downward to the nearest 1/10,000th of a
share).

 

No fractional
shares of Common Stock will be issued upon settlement of Purchase Contracts, as
provided in Section 5.08 of the Purchase Contract and Pledge Agreement.

 

Each Purchase
Contract evidenced hereby, which is settled through Early Settlement or Cash
Merger Early Settlement shall obligate the Holder of the related Corporate
Units to purchase at the Purchase Price, and the Company to sell, a number of
newly issued shares of Common Stock equal to the Minimum Settlement Rate (in
the case of an Early Settlement) or applicable Settlement Rate (in the case of
a Cash Merger Early Settlement).

 

B-5

 

The “Applicable Market Value” means the average of the Closing
Price per share of Common Stock on each of the 20 consecutive Trading Days
ending on the third Trading Day immediately preceding the Purchase Contract
Settlement Date subject to adjustments set forth under Section 5.04 of the
Purchase Contract and Pledge Agreement.

 

The “Closing Price” per share of Common Stock on any date of
determination means:

 

(1)                                  the closing sale
price as of the close of the principal trading session (or, if no closing price
is reported, the last reported sale price) per share on the New York Stock
Exchange, Inc. (the “NYSE”) on such
date;

 

(2)                                  if the Common Stock
is not listed for trading on the NYSE on any such date, the closing sale price
(or, if no closing price is reported, the last reported sale price) per share
as reported in the composite transactions for the principal United States
national or regional securities exchange on which Common Stock is so listed;

 

(3)                                  if the Common Stock
is not so listed on a United States national or regional securities exchange,
the last reported sale price per share as reported by The Nasdaq Stock Market,
Inc.;

 

(4)                                  if the Common Stock
is not so reported, the last quoted bid price for Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization; or

 

(5)                                  if such bid price is
not available, the market value of the Common Stock on such date as determined
by a nationally recognized independent investment banking firm retained for
this purpose by the Company.

 

A “Trading Day” means a day on which the Common Stock (1) is
not suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (2) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of Common Stock.

 

In accordance
with the terms of the Purchase Contract and Pledge Agreement, the Holder of
this Treasury Unit shall pay the Purchase Price for the shares of the Common
Stock purchased pursuant to each Purchase Contract evidenced hereby either by
effecting an Early Settlement or, if applicable, a Cash Merger Early Settlement
of each such Purchase Contract or by applying the principal amount of the
Pledged Treasury Securities underlying such Holder’s Treasury Unit equal to the
Stated Amount of such Purchase Contract to the purchase of the Common
Stock.  A Holder of Treasury Units who
(1) on or prior to 5:00 p.m., New York City time, on the seventh Business Day
prior to the Purchase Contract Settlement Date, does not make an effective Early
Settlement, or (2) on or prior to 5:00 p.m., New York City time, on the second
Business Day prior to the Purchase Contract Settlement Date, does not make an
effective Cash Settlement, shall pay the Purchase Price, less the amount of any
Deferred Contract Adjustment Payments 

 

B-6

 

payable to such Holder, for the shares of Common Stock to be issued
under the related Purchase Contract from the proceeds of the Pledged Treasury
Securities.

 

The Company
shall not be obligated to issue any shares of Common Stock in respect of a
Purchase Contract or deliver any certificates therefor to the Holder unless it
shall have received payment of the aggregate Purchase Price, less any Deferred
Contract Payments for the shares of Common Stock to be purchased thereunder in
the manner set forth in the Purchase Contract and Pledge Agreement.

 

Each Purchase
Contract evidenced hereby and all obligations and rights of the Company and the
Holder thereunder, shall terminate if a Termination Event shall occur.  Upon the occurrence of a Termination Event,
the Company shall promptly but in no event later than two Business Days
thereafter give written notice to the Purchase Contract Agent and the Holders,
at their addresses as they appear in the Security Register.  Upon and after the occurrence of a
Termination Event, the Collateral Agent shall release the Pledged Treasury
Securities (as defined in the Purchase Contract and Pledge Agreement) forming a
part of each Treasury Unit.  A Treasury
Unit shall thereafter represent the right to receive the Proceeds of the
Treasury Security forming a part of such Treasury Unit, in accordance with the
terms of the Purchase Contract and Pledge Agreement.

 

The Treasury
Units Certificates are issuable only in registered form and only in denominations
of a single Treasury Unit and any integral multiple thereof.  The transfer of any Treasury Units
Certificate will be registered and Treasury Units Certificates may be exchanged
as provided in the Purchase Contract and Pledge Agreement.  A Holder who elects to substitute a Senior
Note, for Treasury Securities, thereby recreating Corporate Units, shall be
responsible for any fees or expenses associated therewith. Except as provided
in the Purchase Contract and Pledge Agreement, for so long as the Purchase
Contract underlying a Treasury Unit remains in effect, such Treasury Unit shall
not be separable into its constituent parts, and the rights and obligations of
the Holder of such Treasury Unit in respect of the Treasury Security and the
Purchase Contract constituting such Treasury Unit may be transferred and
exchanged only as a Treasury Unit.

 

Unless the
Treasury Portfolio has replaced the Senior Notes underlying the Corporate
Units, subject to the conditions set forth in the Purchase Contract and Pledge
Agreement and the last sentence of this paragraph, a Holder of Treasury Units
may recreate, at any time prior to 5:00 p.m., New York City time, on the
seventh Business Day immediately preceding the Purchase Contract Settlement
Date, Corporate Units by delivering to the Securities Intermediary Senior Notes
with an aggregate principal amount, equal to the aggregate principal amount at
maturity of the Pledged Treasury Securities in exchange for the release of such
Pledged Treasury Securities in accordance with the terms of the Purchase
Contract and Pledge Agreement.  From and
after such substitution, the Holder’s Units shall be referred to as a “Corporate Unit”.  Any
such creation of Corporate Units may be effected only in multiples of 20
Treasury Units.  Unless a Successful
Remarketing of the Senior Notes or a Tax Event Redemption has previously
occurred, Holders shall not be permitted to effect Collateral Substitutions in
accordance with the provisions of the Purchase Contract and Pledge Agreement
during the period commencing on

 

B-7

 

and including the Business Day prior to the first of the three
sequential Remarketing Dates comprising a Three-Day Remarketing Period and
ending on and including the Reset Date relating to a Successful Remarketing or,
if none of the Remarketings during such Three-Day Remarketing Period is
successful, the Business Day following the last of the three sequential
Remarketing Dates occurring during such Three-Day Remarketing Period.

 

If the
Treasury Portfolio has replaced the Senior Notes underlying the Treasury Units,
a Holder may, at any time on or prior to the second Business Day immediately
preceding the Purchase Contract Settlement Date, substitute Treasury Securities
for the Applicable Ownership Interests in the Treasury Portfolio for Treasury
Securities, but only in integral multiples of 12,800 Treasury Units or such
other number of Treasury Units as may be determined by the Remarketing Agent
following a Successful Remarketing of the Senior Notes if the Reset Date is not
a Payment Date.  In such an event, the
Holder shall transfer the Applicable Ownership Interests in the Treasury
Portfolio to the Collateral Agent, and the Purchase Contract Agent shall
instruct the Collateral Agent to release the Pledge of and transfer to the
Holder the Treasury Securities.

 

Subject to and
upon compliance with the provisions of the Purchase Contract and Pledge
Agreement, at the option of the Holder thereof, Purchase Contracts underlying
Units may be settled early at any time prior to 5:00, New York City time, on
the seventh Business Day immediately preceding the Purchase Contract Settlement
Date (“Early Settlement”) as provided in the
Purchase Contract and Pledge Agreement.

 

Upon Early
Settlement of Purchase Contracts by a Holder of the related Units, the Pledged
Treasury Securities underlying such Units shall be released from the Pledge as
provided in the Purchase Contract and Pledge Agreement and the Holder shall be
entitled to receive a number of shares of Common Stock on account of each
Purchase Contract forming part of a Treasury Unit as to which Early Settlement
is effected equal to the Minimum Settlement Rate.

 

Upon the
occurrence of a Cash Merger, a Holder of Treasury Units may effect Cash Merger Early
Settlement of the Purchase Contract underlying such Treasury Units pursuant to
the terms of Section 5.04(b)(ii) of the Purchase Contract and Pledge
Agreement.  Upon Cash Merger Early
Settlement of Purchase Contracts by a Holder of the related Treasury Units, the
Pledged Treasury Securities underlying such Treasury Units shall be released
from the Pledge as provided in the Purchase Contract and Pledge Agreement.

 

Upon
registration of transfer of this Treasury Units Certificate, the transferee
shall be bound (without the necessity of any other action on the part of such
transferee, except as may be required by the Purchase Contract Agent pursuant
to the Purchase Contract and Pledge Agreement), under the terms of the Purchase
Contract and Pledge Agreement and the Purchase Contracts evidenced hereby and
the transferor shall be released from the obligations under the Purchase
Contracts evidenced by this Treasury Units Certificate.  The Company covenants and agrees, and the
Holder, by its acceptance hereof, likewise covenants and agrees, to be bound by
the provisions of this paragraph.

 

B-8

 

The Holder of
this Treasury Units Certificate, by its acceptance hereof, authorizes the
Purchase Contract Agent to enter into and perform the related Purchase
Contracts forming part of the Treasury Units evidenced hereby on its behalf as
its attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the
event that the Company becomes the subject of a case under the Bankruptcy Code,
agrees to be bound by the terms and provisions thereof, covenants and agrees to
perform its obligations under such Purchase Contracts, consents to the
provisions of the Purchase Contract and Pledge Agreement, authorizes the
Purchase Contract Agent to enter into and perform the Purchase Contract and
Pledge Agreement on its behalf as its attorney-in-fact, and consents to the
Pledge of the Treasury Securities underlying this Treasury Units Certificate
pursuant to the Purchase Contract and Pledge Agreement.  The Holder further covenants and agrees,
that, to the extent and in the manner provided in the Purchase Contract and
Pledge Agreement, but subject to the terms thereof, payments in respect to the
aggregate principal amount of the Pledged Treasury Securities on the Purchase
Contract Settlement Date less any Deferred Contract Adjustment Payments shall
be paid by the Collateral Agent to the Company in satisfaction of such Holder’s
obligations under such Purchase Contract and such Holder shall acquire no
right, title or interest in such payments.

 

Subject to
certain exceptions, the provisions of the Purchase Contract and Pledge
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.

 

The Purchase
Contracts shall for all purposes be governed by, and construed in accordance
with, the laws of the State of New York , without giving effect to the
conflicts of law provisions thereof to the extent that the application of a law
of a different jurisdiction would govern as a result.

 

Prior to due
presentment of this Certificate for registration or transfer, the Company, the
Purchase Contract Agent and its Affiliates and any agent of the Company or the
Purchase Contract Agent may treat the Person in whose name this Treasury Units
Certificate is registered as the owner of the Treasury Units evidenced hereby
for the purpose of receiving payments of Contract Adjustment Payments (subject
to any applicable record date), performance of the Purchase Contracts and for
all other purposes whatsoever, whether or not any payments in respect thereof
be overdue and notwithstanding any notice to the contrary, and neither the
Company, the Purchase Contract Agent nor any such agent shall be affected by
notice to the contrary.

 

The Purchase
Contracts shall not, prior to the settlement thereof, entitle the Holder to any
of the rights of a holder of shares of Common Stock.

 

A copy of the
Purchase Contract and Pledge Agreement is available for inspection at the
offices of the Purchase Contract Agent.

 

B-9

 

ABBREVIATIONS

 

The following
abbreviations, when used in the inscription on the face of this instrument,
shall be construed as though they were written out in full according to
applicable laws or regulations:

 

	
  TEN COM:

  	
   

  	
  as tenants
  in common

  
	
   

  	
   

  	
   

  
	
  UNIF GIFT
  MIN ACT:

  	
   

  	
   

  	
  Custodian

  	
   

  	
   

  
	
   

  	
   

  	
  (cust)

  	
  (minor)

  
	
   

  	
   

  	
  Under
  Uniform Gifts to Minors Act of

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TENANT:

  	
   

  	
  as tenants
  by the entireties

  
	
   

  	
   

  	
   

  
	
  JT TEN:

  	
   

  	
  as joint
  tenants with right of survivorship and not as

  tenants in common

  
							

 

Additional
abbreviations may also be used though not in the above list.

 

	
  FOR VALUE
  RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
  (Please insert Social
  Security or Taxpayer I.D. or other Identifying Number of Assignee)

  
	
   

  
	
   

  	
   

  
	
  (Please Print or Type Name
  and Address Including Postal Zip Code of Assignee)

  

 

the within
Treasury Units Certificates and all rights thereunder, hereby irrevocably
constituting and appointing attorney ____________________, to transfer said
Treasury Units Certificates on the books of Southern Union Company, with full
power of substitution in the premises.

 

	
  Dated:

  	
   

  	
   

  	
  Signature

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NOTICE: The signature to this assignment must

  correspond with the name as it appears upon the face of the

  within Corporate Units Certificates in every particular,

  without alteration or enlargement or any change

  whatsoever.

  
	
   

  	
   

  
	
  Signature
  Guarantee:

  	
   

  	
   

  
								

 

Signatures
must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Security Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program (“STAMP”) or
such other “signature guarantee program” as

 

B-10

 

may be
determined by the Security Registrar in addition to, or in substitution for,
STAMP, all in accordance with Securities Exchange Act of 1934, as amended.

 

B-11

 

SETTLEMENT INSTRUCTIONS

 

The
undersigned Holder directs that a certificate for shares of Common Stock
deliverable upon settlement on or after the Purchase Contract Settlement Date
of the Purchase Contracts underlying the number of Treasury Units evidenced by
this Treasury Units Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned
at the address indicated below unless a different name and address have been
indicated below.  If shares are to be
registered in the name of a Person other than the undersigned, the undersigned
will pay any transfer tax payable incident thereto.

 

	
  Dated:

  	
   

  	
   

  	
  Signature

  
	
   

  	
  Signature Guarantee:

  	
   

  	
   

  
	
   

  	
  (if assigned
  to another person)

  

 

Signatures must
be guaranteed by an “eligible guarantor institution” meeting the requirements
of the Security Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be determined by the Security
Registrar in addition to, or in substitution for, STAMP, all in accordance with
Securities Exchange Act of 1934, as amended.

 

 

	
  If shares are to be registered in the name of

  	
   

  	
   

  	
   

  
	
  and delivered to a Person other than the

  Holder, please (i) print such Person’s name

  and address and (ii) provide a guarantee of

  your signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Social
  Security or other

  	
   

  	
   

  
	
  Taxpayer
  Identification

  	
   

  	
   

  
	
  Number, if
  any

  	
   

  	
   

  

 

B-12

 

REGISTERED HOLDER

 

	
  Please print name and address of Registered

  Holder:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  DTC
  Participant #:

  	
   

  	
   

  
			

 

B-13

 

ELECTION TO SETTLE EARLY/CASH MERGER EARLY SETTLEMENT

 

The
undersigned Holder of this Treasury Units Certificate hereby irrevocably
exercises the option to effect [Early Settlement] [Cash Merger Early
Settlement] in accordance with the terms of the Purchase Contract and Pledge
Agreement with respect to the Purchase Contracts underlying the number of
Treasury Units evidenced by this Treasury Units Certificate specified
below.  The option to effect [Early
Settlement] [Cash Merger Early Settlement] may be exercised only with respect
to Purchase Contracts underlying Treasury Units in multiples of 20 Treasury
Units or an integral multiple thereof. 
The undersigned Holder directs that a certificate for shares of Common
Stock or other securities deliverable upon such [Early Settlement] [Cash Merger
Early Settlement] be registered in the name of, and delivered, together with a
check in payment for any fractional share and any Treasury Units Certificate
representing any Treasury Units evidenced hereby as to which [Early Settlement]
[Cash Merger Early Settlement] of the related Purchase Contracts is not
effected, to the undersigned at the address indicated below unless a different
name and address have been indicated below. 
Pledged Treasury Securities deliverable upon such [Early Settlement]
[Cash Merger Early Settlement] will be transferred in accordance with the
transfer instructions set forth below. 
If shares are to be registered in the name of a Person other than the
undersigned, the undersigned will pay any transfer tax payable incident
thereto.

 

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  
	
   

  	
   

  
	
   

  	
  Signature Guarantee:

  	
   

  	
   

  
						

 

B-14

 

Number of
Units evidenced hereby as to which [Early Settlement] [Cash Merger Early
Settlement] of the related Purchase Contracts is being elected:

 

	
  If shares of Common Stock or Treasury

  Units Certificates are to be registered in the

  name of and delivered to and Treasury

  Securities, as the case may be, are to be

  transferred to a Person other than the

  Holder, please print such Person’s name and

  address:

  	
   

  	
  REGISTERED HOLDER

  

  

  

  

  Please print name and address of

  Registered Holder:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Social
  Security or other

  	
   

  	
  DTC
  Participant #:

  	
   

  	
   

  
	
  Taxpayer
  Identification

  	
   

  	
   

  
	
  Number, if
  any

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

B-15

 

Transfer
Instructions for Pledged Treasury Securities Transferable upon [Early
Settlement] [Cash Merger Early Settlement] or a Termination Event:

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

B-16

 

[TO BE ATTACHED TO GLOBAL
CERTIFICATES]

 

SCHEDULE OF INCREASES OR
DECREASES IN GLOBAL CERTIFICATE

 

The following increases or decreases in this Global Certificate have
been made:

 

	
  Date

  	
   

  	
  Amount
  of increase in

  Number of Treasury Units

  evidenced by the Global

  Certificate

  	
   

  	
  Amount
  of decrease in

  Number of Treasury Unites

  evidenced by the Global

  Certificate

  	
   

  	
  Number
  of Treasury Units

  evidenced by this Global

  Certificate following such

  decrease or increase

  	
   

  	
  Signature
  of authorized signatory of Purchase Contract Agent

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

B-17

 

EXHIBIT C

 

INSTRUCTION TO PURCHASE CONTRACT AGENT FROM
HOLDER
(To Create Treasury Units or Corporate Units)

 

JPMorgan Chase
Bank, N.A.,

as Purchase Contract Agent
4 New
York Plaza, 15th Floor

New York, NY 10004

Attention: Institutional Trust Services

Fax: (212) 623-6167

 

Re:                             [                   Corporate
Units] [                   Treasury
Units] of Southern Union Company, a Delaware corporation (the “Company”).

 

The
undersigned Holder hereby notifies you that it has delivered to [                              ],
as Securities Intermediary, for credit to the Collateral Account, $              
aggregate principal amount of [Senior Notes] [Treasury Securities] in exchange
for the [Pledged Senior Notes] [Pledged Treasury Securities] held in the
Collateral Account, in accordance with the Purchase Contract and Pledge
Agreement, dated as of February 11, 2005 (the “Agreement”;
unless otherwise defined herein, terms defined in the Agreement are used herein
as defined therein), between you, the Company, the Collateral Agent, the
Custodial Agent and the Securities Intermediary.  The undersigned Holder has paid all applicable
fees and expenses relating to such exchange. 
The undersigned Holder hereby instructs you to instruct the Collateral
Agent to release to you on behalf of the undersigned Holder the [Pledged Senior
Notes] [Pledged Treasury Securities] related to such [Corporate Units]
[Treasury Units].

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  
	
   

  	
   

  
	
   

  	
  Signature
  Guarantee:

  	
   

  	
   

  
	
   

  	
   

  
	
  DTC Participant No.

  	
   

  	
   

  
								

 

C-1

 

Please print name and address of Registered Holder:

 

	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Social Security or other Taxpayer

  
	
   

  	
   

  	
  Identification Number, if any

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

C-2

 

EXHIBIT D

 

NOTICE FROM PURCHASE CONTRACT AGENT

TO HOLDERS UPON TERMINATION EVENT

 

(Transfer of Collateral upon Occurrence of a Termination Event)

 

	
  [HOLDER]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

	
  Attention:

  
	
  Telecopy:

  	
   

  	
   

  

 

Re:                               [               Corporate
Units] [           Treasury
Units] of Southern Union Company, a Delaware corporation (the “Company”)

 

Please refer
to the Purchase Contract and Pledge Agreement, dated as of February 11,
2005 (the “Purchase Contract and Pledge Agreement”;
unless otherwise defined herein, terms defined in the Purchase Contract and
Pledge Agreement are used herein as defined therein), between the Company and
the undersigned, as Purchase Contract Agent and as attorney-in-fact for the
holders of Corporate Units and Treasury Units from time to time.

 

We hereby
notify you that a Termination Event has occurred and that [the Senior Notes]
[Pledged Applicable Ownership Interests in the Treasury Portfolio] [the
Treasury Securities] compromising a portion of your ownership interest in             
[Corporate Units] [Treasury Units] have been released and are being held by us
for your account pending receipt of transfer instructions with respect to such
[Pledged Senior Notes] [Pledged Applicable Ownership Interests in the Treasury
Portfolio] [Pledged Treasury Securities] (the “Released
Securities”).

 

Pursuant to Section 3.15
of the Purchase Contract and Pledge Agreement, we hereby request written
transfer instructions with respect to the Released Securities. Upon receipt of
your instructions and upon transfer to us of your [Corporate Units][Treasury
Units] effected through book-entry or by delivery to us of your [Corporate
Units Certificate][Treasury Units Certificate], we shall transfer the Released
Securities by book-entry transfer or other appropriate procedures, in
accordance with your instructions.  In
the event you fail to effect such transfer or delivery, the Released Securities
and any distributions thereon, shall be held in our name, or a nominee in trust
for your benefit, until such time as such [Corporate Units][Treasury Units] are
transferred or your [Corporate Units Certificate] [Treasury Units Certificate]
is surrendered or satisfactory evidence is provided that such [Corporate Units
Certificate][Treasury Units Certificate] has been destroyed, lost or stolen,
together with any indemnification that we or the Company may require.

 

D-1

 

	
  Date:

  	
  By:

  	
  JPMORGAN CHASE BANK, N.A.,

  as the Purchase Contract Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  	
  Authorized Signatory

  
						

 

D-2

EXHIBIT E

 

NOTICE TO SETTLE BY SEPARATE CASH

 

 

JPMorgan Chase Bank, N.A.,

as Purchase Contract Agent

4 New York Plaza, 15th Floor

New York, NY 10004

Attention: Institutional Trust Services

Fax: (212) 623-6167

 

Re:                        
Corporate Units of Southern Union Company, a Delaware corporation (the “Company”)

 

The undersigned Holder hereby irrevocably notifies you in accordance
with  Section 5.02 of the Purchase
Contract and Pledge Agreement, dated as of February 11, 2005 (the “Purchase Contract and Pledge Agreement”; unless otherwise
defined herein, terms defined in the Purchase Contract and Pledge Agreement are
used herein as defined therein), between the Company and you, as Purchase
Contract Agent and as Attorney-in-Fact for the Holders of the Purchase Contracts,
that such Holder has elected to pay to the Securities Intermediary for deposit
in the Collateral Account, prior to or on 11:00 a.m., New York City time, on
the sixth Business Day immediately preceding the Purchase Contract Settlement
Date (in lawful money of the United States by certified or cashiers’ check or
wire transfer, in immediately available funds), $        
as the Purchase Price for the shares of Common Stock issuable to such Holder by
the Company with respect to         Purchase
Contracts on the Purchase Contract Settlement Date.  The undersigned Holder hereby instructs you
to notify promptly the Collateral Agent of the undersigned Holders’ election to
make such Cash Settlement with respect to the Purchase Contracts related to
such Holder’s Corporate Units.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  
	
   

  	
   

  
	
   

  	
  Signature
  Guarantee:

  	
   

  

 

Please print name and address of Registered
Holder:

 

	
   

  	
   

  
	
   

   

  	
   

  
	
   

  	
   

  
	
  DTC Participant No.

  	
   

  	
   

  
			

 

E-1

 

EXHIBIT F

 

RESERVED

 

 

F-1

 

EXHIBIT G

 

INSTRUCTION

FROM PURCHASE CONTRACT AGENT

TO COLLATERAL AGENT

(Creation of Treasury Units) 

 

JPMorgan Chase
Bank, N.A.,

as Purchase Contract Agent

4 New York Plaza, 15th Floor

New York, NY 10004

Telecopier No.:  (212) 623-6167

Attention: Institutional Trust Services

 

Re:                                                      
Corporate Units of Southern Union Company (the “Company”) 

 

The securities account of JPMorgan Chase Bank, N.A., as Collateral
Agent, maintained by the Securities Intermediary and designated “[                        ],
as Collateral Agent of Southern Union Company, as pledgee of JPMorgan Chase
Bank, N.A., as the Purchase Contract Agent on behalf of and as attorney-in-fact
for the Holders” (the “Collateral Account”)

 

Please refer to the Purchase Contract and
Pledge Agreement, dated as of February 11, 2005 (the “Agreement”), among the Company, you, as
Collateral Agent, as Securities Intermediary and as Custodial Agent and the
undersigned, as Purchase Contract Agent and as attorney-in-fact for the holders
of Corporate Units from time to time. Capitalized terms used herein but not
defined shall have the meaning set forth in the Agreement.

 

We hereby notify you in accordance with
Section 3.13 of the Agreement that the holder of securities named below (the “Holder”) has elected to substitute $                        
Value of Treasury Securities or security entitlements with respect thereto in
exchange for an equal Value of [Pledged Senior Notes] [Pledged Applicable
Ownership Interests in the Treasury Portfolio] relating to                         
Corporate Units and has delivered to the undersigned a notice stating that the
Holder has Transferred such Treasury Securities or security entitlements with
respect thereto to the Securities Intermediary, for credit to the Collateral
Account. 

 

G-1

 

We hereby request that you instruct the
Securities Intermediary, upon confirmation that such Treasury Securities or
security entitlements thereto have been credited to the Collateral Account, to
release to the undersigned an equal Value of [Pledged Senior Notes] [Pledged
Applicable Ownership Interests in the Treasury Portfolio] in accordance with
Section 3.13 of the Agreement. 

 

Date:

 

	
   

  	
  JPMORGAN CHASE BANK, N.A., as

  
	
   

  	
  Purchase Contract Agent and as

  attorney-in-fact of the Holders from time

  to time of the Units

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  	
  Authorized Signatory

  
					

 

G-2

 

Please print
name and address of Holder electing to substitute Treasury Securities or
security entitlements with respect thereto for the [Pledged Senior Notes]
[Pledged Applicable Ownership Interests in the Treasury Portfolio]:

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
  Social Security or other Taxpayer Identification Number, if any

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

G-3

 

EXHIBIT H

 

INSTRUCTION

FROM COLLATERAL AGENT

TO SECURITIES INTERMEDIARY
(Creation of Treasury Units)  

 

JPMorgan Chase
Bank, N.A.,

as Securities Intermediary

4 New York Plaza, 15th Floor

New York, NY 10004

Telecopier No.:  (212) 623-6167

Attention: Institutional Trust Services

 

Re:                                                     
Corporate Units of Southern Union Company (the “Company”) 

 

The securities account of JPMorgan Chase Bank, N.A., as Collateral
Agent, maintained by the Securities Intermediary and designated “[                       ],
as Collateral Agent of Southern Union Company, as pledgee of JPMorgan Chase
Bank, N.A., as the Purchase Contract Agent on behalf of and as attorney-in-fact
for the Holders” (the “Collateral Account”)

 

Please refer to the Purchase Contract and
Pledge Agreement, dated as of February 11, 2005 (the “Agreement”), among the Company, you, as
Collateral Agent, as Securities Intermediary and as Custodial Agent and the
undersigned, as Purchase Contract Agent and as attorney-in-fact for the holders
of Corporate Units from time to time. Capitalized terms used herein but not
defined shall have the meaning set forth in the Purchase Contract and Pledge
Agreement.

 

When you have confirmed that $                       
Value of Treasury Securities or security entitlements thereto has been credited
to the Collateral Account by or for the benefit of                        ,
as Holder of Corporate Units (the “Holder”),
you are hereby instructed to release from the Collateral Account an equal Value
of [Pledged Senior Notes] [Pledged Applicable Ownership Interests in the
Treasury Portfolio] or security entitlements with respect thereto relating to               
Corporate Units of the Holder by Transfer to the Purchase Contract Agent.

 

H-1

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., as

  
	
   

  	
  Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
								

 

H-2

 

EXHIBIT I

 

INSTRUCTION

FROM PURCHASE CONTRACT AGENT

TO COLLATERAL AGENT

(Recreation of Corporate Units )

 

JPMorgan Chase
Bank, N.A.,

as Purchase Contract Agent

4 New York Plaza, 15th Floor

New York, NY 10004

Telecopier No.:  (212) 623-6167

Attention: Institutional Trust Services

 

Re:                               
Treasury Units of Southern Union Company (the “Company”)

 

Please refer to the Purchase Contract and
Pledge Agreement dated as of February 11, 2005 (the “Agreement”), among the Company, you, as Collateral Agent, as
Securities Intermediary, as Custodial Agent and the undersigned, as Purchase
Contract Agent and as attorney-in-fact for the holders of Treasury Units from
time to time.  Capitalized terms used
herein but not defined shall have the meaning set forth in the Agreement.

 

We hereby notify you in accordance with
Section 3.13 of the Agreement that the holder of securities named below (the “Holder”) has elected to substitute $                     
Value of [Senior Notes] [Applicable Ownership Interests in the Treasury
Portfolio] or security entitlements with respect thereto in exchange for $                     
Value of Pledged Treasury Securities and has delivered to the undersigned a
notice stating that the holder has Transferred such [Senior Notes] [Applicable
Ownership Interests in the Treasury Portfolio] or security entitlements with
respect thereto to the Securities Intermediary, for credit to the Collateral
Account.

 

I-1

 

We hereby request that you instruct the
Securities Intermediary, upon confirmation that such [Senior Notes] [Applicable
Ownership Interests in the Treasury Portfolio] or security entitlements with
respect thereto have been credited to the Collateral Account, to release to the
undersigned $                     Value
of Treasury Securities or security entitlements with respect thereto related to
             Treasury
Units of such Holder in accordance with Section 3.13 of the Agreement. 

 

 

	
   

  	
   

  	
  JPMORGAN CHASE BANK, N.A., as

  Purchase Contract Agent

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  

 

I-2

 

Please print
name and address of Holder electing to substitute [Senior Notes] [Applicable
Ownership Interests in the Treasury Portfolio] or security entitlements with
respect thereto for Pledged Treasury Securities:

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
  Social Security or other Taxpayer

  Identification Number, if any

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

   

  	
   

  	
   

  	
   

  
	
   

  	
   

   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DTC Participant No.

  	
   

  	
   

  	
   

  	
   

  
							

 

I-3

 

EXHIBIT J

 

INSTRUCTION

FROM COLLATERAL AGENT

TO SECURITIES INTERMEDIARY
(Recreation of Corporate Units)

 

JPMorgan Chase
Bank, N.A.,

as Securities Intermediary

4 New York Plaza, 15th Floor

New York, NY 10004

Telecopier No.:  (212) 623-6167

Attention: Institutional Trust Services

 

Re:                               
Treasury Units of Southern Union Company (the “Company”) 

 

The securities account of JPMorgan Chase Bank, N.A.,
as Collateral Agent, maintained by the Securities Intermediary and
designated “[                     ],
as Collateral Agent of Southern Union Company, as pledgee of JPMorgan Chase
Bank, N.A., as the Purchase Contract Agent on behalf of and as attorney-in-fact
for the Holders” (the “Collateral Account”)

 

Please refer to the Purchase Contract and
Pledge Agreement dated as of February 11, 2005 (the “Agreement”), among the Company, you, as Securities
Intermediary, Custodial Agent and Collateral Agent and JPMorgan Chase Bank,
N.A., as Purchase Contract Agent and as attorney-in-fact for the holders of
Corporate Units from time to time, and the undersigned, as Collateral
Agent.  Capitalized terms used herein but
no defined shall have the meaning set forth in the Agreement.

 

When you have confirmed that $                      
Value of [Senior Notes] [Applicable Ownership Interests in the Treasury
Portfolio] or security entitlements with respect thereto has been credited to
the Collateral Account by or for the benefit of                      ,
as Holder of Treasury Units (the “Holder”),
you are hereby instructed to release from the Collateral Account $                      
Value of Treasury Securities or security entitlements thereto by Transfer to
the Purchase Contract Agent.

 

J-1

 

	
   

  	
   

  	
   

  	
  JPMORGAN CHASE BANK, N.A., as

  Collateral Agent

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  

 

J-2

 

EXHIBIT K

 

NOTICE OF CASH SETTLEMENT FROM COLLATERAL

AGENT TO PURCHASE CONTRACT AGENT
(Cash Settlement Amounts)

 

JPMorgan Chase
Bank, N.A.,

as Purchase Contract Agent

4 New York Plaza, 15th Floor

New York, NY 10004

Telecopier No.:  (212) 623-6167

Attention: Institutional Trust Services

 

Re:                                                    
Corporate Units of Southern Union Company (the “Company”) 

 

Please refer to the Purchase Contract and
Pledge Agreement dated as of February 11, 2005 (the “Agreement”), by and among you, the Company, and JPMorgan Chase
Bank, N.A., as Collateral Agent, Custodial Agent and Securities
Intermediary.  Unless otherwise defined
herein, terms defined in the Purchase Contract and Pledge Agreement are used
herein as defined therein.

 

In accordance with Section 5.01(b)(iv) of the
Agreement, we hereby notify you that as of 11:00 a.m., New York City time, on
the sixth Business Day immediately preceding February 16, 2008 (the “Purchase Contract Settlement Date”), we
have received (i) $                      
in immediately available funds paid in an aggregate amount equal to the
Purchase Price due to the Company on the Purchase Contract Settlement Date with
respect to                      
Corporate Units and (ii) based on the funds received set forth in clause (i) above,
an aggregate principal amount of $                 
of Pledged Senior Notes are to be tendered for purchase in the Final Three Day
Remarketing.

 

K-1

 

	
   

  	
   

  	
   

  	
  JPMORGAN CHASE BANK, N.A., as

  Collateral Agent

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  

 

K-2

 

EXHIBIT L

 

INSTRUCTION TO CUSTODIAL AGENT REGARDING
REMARKETING

 

JPMorgan Chase
Bank, N.A.,

as Custodial Agent

4 New York Plaza, 15th Floor

New York, NY 10004

Telecopier No.:  (212) 623-6167

Attention: Institutional Trust Services

 

Re:          Senior
Notes Due 2010 of Southern Union Company (the “Company”)

 

The undersigned hereby notifies you in
accordance with of the Purchase Contract and Pledge Agreement, dated as of
February 11, 2005 (the “Agreement”),
among the Company, you, as Collateral Agent, Custodial Agent and Securities
Intermediary and JPMorgan Chase Bank, N.A., as the Purchase Contract Agent and
as attorney-in-fact for the holders of Corporate Units from time to time, that
the undersigned elects to deliver $                     
aggregate principal amount of Separate Senior Notes for delivery to the
Remarketing Agent prior to 5:00 p.m., New York City time, on the second
Business Day immediately preceding the first of the three sequential
Remarketing Dates of the applicable Three-Day Remarketing Period for
Remarketing pursuant to Section 5.02(a)(ii) of the Agreement.  The undersigned will, upon request of the
Remarketing Agent, execute and deliver any additional documents deemed by the
Remarketing Agent or by the Company to be necessary or desirable to complete
the sale, assignment and transfer of the Separate Senior Notes tendered
hereby.  Capitalized terms used herein
but not defined shall have the meaning set forth in the Agreement.

 

The undersigned hereby instructs you, upon
receipt of the Proceeds of such remarketing from the Remarketing Agent, to
deliver such Proceeds to the undersigned in accordance with the instructions
indicated herein under “A.  Payment
Instructions.”  The undersigned hereby
instructs you, in the event of a Failed Remarketing, upon receipt of the
Separate Senior Notes tendered herewith from the Remarketing Agent, to deliver
such Separate Senior Notes to the person(s) and the address(es) indicated
herein under “B.  Delivery Instructions.”

 

With this notice, the undersigned hereby (i)
represents and warrants that the undersigned has full power and authority to
tender, sell, assign and transfer the Separate Senior Notes tendered hereby and
that the undersigned is the record owner of any Senior Notes tendered herewith
in physical form or a participant in The Depositary Trust Company (“DTC”) and the beneficial owner of any Senior Notes tendered
herewith by book-entry transfer to your account at DTC, (ii) agrees to be bound
by the terms and conditions of Section 5.02(a)(ii) of the Agreement and (iii)
acknowledges and agrees that after 5:00 p.m., New York City time, on the second
Business Day immediately preceding the first of the three sequential
Remarketing Dates of the applicable Three-Day Remarketing Period, such election
shall become an irrevocable election to

 

L-1

 

have such
Separate Senior Notes remarketed in the Remarketing, and that the Separate
Senior Notes tendered herewith will only be returned in the event of a Failed
Remarketing.  

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Signature Guarantee:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Social Security or other Taxpayer
  Identification

  Number, if any

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DTC Participant No.

  	
   

  	
   

  	
   

  	
   

  	
   

  
									

 

L-2

 

A.            PAYMENT
INSTRUCTIONS

 

Proceeds of the remarketing should be paid by check in the name of the
person(s) set forth below and mailed to the address set forth below.

 

Name(s)

(Please Print)

Address

(Please Print)

(Zip Code)

(Tax Identification or Social Security Number)

 

 

B.            DELIVERY INSTRUCTIONS

 

In the event of a Failed Remarketing during the Three-Day Remarketing
Period, Senior Notes which are in physical form should be delivered to the
person(s) set forth below and mailed to the address set forth below.

Name(s)

(Please Print)

Address

(Please Print)

(Zip Code)

(Tax Identification or Social Security Number)

L-3

 

In the event of a Failed Remarketing during the Three-Day Remarketing
Period, Senior Notes which are in book-entry form should be credited to the
account at The Depository Trust Company set forth below.

 

	
   

  	
   

  
	
  DTC Account Number

  
	
   

  
	
  Name of Account Party:

  	
   

  	
   

  
				

 

L-4

 

EXHIBIT M

 

INSTRUCTION TO CUSTODIAL AGENT REGARDING

WITHDRAWAL FROM REMARKETING

 

JPMorgan Chase
Bank, N.A.,

as Custodial Agent

4 New York Plaza, 15th Floor

New York, NY 10004

Telecopier No.:  (212) 623-6167

Attention: Institutional Trust Services

 

Re:          Senior Notes Initially
Due 2010 of Southern Union Company (the “Company”)

 

The undersigned hereby notifies you in accordance
with Section 5.02(a)(ii) of the Purchase Contract and Pledge Agreement, dated
as of February 11, 2005 (the “Agreement”),
among the Company and you, as Collateral Agent, Custodial Agent and Securities
Intermediary, and JPMorgan Chase Bank, N.A., as Purchase Contract Agent and as
attorney-in-fact for the holders of Corporate Units from time to time, that the
undersigned elects to withdraw the $                     
aggregate principal amount of Separate Senior Notes delivered to the Collateral
Agent for Remarketing pursuant to Section 5.02(a)(ii) of the Agreement.  The undersigned hereby instructs you to
return such Separate Senior Notes to the undersigned in accordance with the
undersigned’s instructions.  With this
notice, the Undersigned hereby agrees to be bound by the terms and conditions
of Section 5.02(a)(ii) of the Agreement. 
Capitalized terms used herein but not defined shall have the meaning set
forth in the Agreement.

 

M-1

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Signature Guarantee:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Social Security or other Taxpayer

  Identification Number, if any

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DTC Participant No.

  	
   

  	
   

  	
   

  	
   

  	
   

  
									

 

M-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}]]