Document:

ex10_3.htm

    Exhibit 10.3    

      CTS
CORPORATION

      RESTRICTED STOCK UNIT
AGREEMENT

      

      

      THIS
AGREEMENT is made as of the ____ day of ____, 20__ (the "Grant Date") between
CTS CORPORATION, an Indiana corporation (the "Company"), and [Grantee Name] (the
"Grantee").

      

      

          1.   Grant. Subject to the
terms set forth in this Agreement and in the Company's 2009 Omnibus Equity and
Performance Incentive Plan (the "Plan"), the Company hereby grants to the
Grantee [# of units] Restricted Stock Units (the “Award”).  Except as
expressly provided herein, capitalized terms used herein shall have the meaning
ascribed to such terms under the Plan.

       

      It is
intended that this Agreement and its administration comply with the provisions
of Section 409A of the Code.  Accordingly, notwithstanding any
provision in this Agreement or in the Plan to the contrary, this Agreement and
the Plan will be interpreted applied and, to the minimum extent necessary to
comply with Section 409A of the Code, amended, so that the Agreement does not
fail to meet, and is operated in accordance with, the requirements of paragraphs
(2), (3) and (4) of Section 409A(a) of the Code.  As used herein,
“Code” means the Internal Revenue Code of 1986 as amended from time to time, and
any interpretations thereof issued by the U.S. Treasury Department on which the
Company is permitted to rely.

       

           2.   Vesting and Settlement of
Restricted Stock Units.   The Award shall vest and become
non-forfeitable in installments equal to _________ percent (_____%) multiplied
by the initial number of Restricted Stock Units specified in Section 1 of this
Agreement on ________, 20__, ______________ percent (_____%) multiplied by the
initial number of Restricted Stock Units specified in Section 1 of this
Agreement on ________, 20__, and _______________ percent (_____%) multiplied by
the initial number of Restricted Stock Units specified in Section 1 of this
Agreement on ______, 20__. Each specified date shall be a "Vesting Date,"
provided that the Grantee remains in the continuous employ of the Company and is
an employee of the Company on the Vesting Date.

      

      Restricted
Stock Units shall be settled solely in cash.  The Company shall
distribute to the Grantee on each of the Vesting Dates or as soon thereafter as
practicable, but in no event later than March 15th of the
year following the year in which the applicable Vesting Date occurs (each such
date of distribution, a "Settlement Date"), an amount equal to the Fair Market
Value on the Vesting Date of one Share for each Restricted Stock Unit vesting as
of the Vesting Date. Amounts paid to the Grantee in settlement of Restricted
Stock Units shall be referred to herein as Settlement
Amounts.  Settlement Amounts shall be calculated in U.S. dollars.
Settlement Amounts may be paid in U.S. dollars or in the currency of the country
in which the Grantee resides by the Company or its Affiliate.  If
applicable, the exchange rate reported in the Wall Street Journal on the Vesting
Date will be the exchange rate used to convert Settlement Amounts from U.S.
dollars into another currency.  The Company’s obligations to the
Grantee with respect to vested Restricted Stock Units will be satisfied in full
upon the distribution of the Settlement Amount.  In no event may any
Settlement Date be accelerated except in accordance with Section 409A of the
Code.

      

      Notwithstanding anything to the
contrary in this Agreement, upon the first to occur of the following events, all
Restricted Stock Units granted hereunder shall vest and become nonforfeitable
and Settlement Amounts shall be distributed to the Grantee, estate, guardian or
designated beneficiary of the Grantee as the case may be, in the settlement of
Restricted Stock Units as soon as practicable, but in no event later than 30
days after the occurrence of such event, and such date(s) of distribution shall
be deemed to be the Settlement Date(s):

      

      (a)  Grantee’s
becoming disabled, as defined by Section 409A of the Code;

      

      (b)  Grantee’s
death; or

      

      (c)  A
change in ownership or effective control of the Company,  or in the
ownership of a substantial portion of the assets of the Company, within the
meaning of Section 409A of the Code.

      

      Unless the Committee determines
otherwise in its sole discretion, if the Grantee’s employment with the Company
terminates for any reason not specified above, all Restricted Stock Units
granted hereunder which have not vested as of the date of such termination of
employment shall be permanently forfeited on such termination date.

      

      3.    Tax
Withholding.  The Company shall have the right to deduct from
any compensation due the Grantee from the Company any federal, state, local or
foreign taxes required by the law of any jurisdiction to be withheld in
connection with the grant or vesting of any Restricted Stock Unit pursuant to
this Agreement provided that the amount withheld shall not exceed the legally
required minimum withholding.  To the extent that the amounts payable
to the Grantee are insufficient for such withholding, it shall be a condition to
the grant or vesting of the Restricted Stock Units that the Grantee shall pay
such taxes or make provisions that are satisfactory to the Company for the
payment thereof. No Settlement Amounts shall be transferred to the Grantee
hereunder until such time as all applicable withholding taxes have been
satisfied.

      

      4.    Rights Not
Conferred.  The Grantee shall have none of the rights of a
stockholder with respect to the Restricted Stock Units, including the right to
receive dividends or vote stock. The Grantee is further advised that until
distribution, the Company’s obligation will be merely that of an unfunded and
unsecured promise of the Company to deliver Settlement Amounts in the future,
and the rights of the Grantee will be no greater than that of an unsecured
general creditor.  No assets of the Company will be held as collateral
security for the obligations of the Company hereunder, and all assets of the
Company will be subject to the claims of the Company’s
creditors.  Nothing contained in the Plan or in this Agreement shall
confer upon the Grantee any right with respect to continued employment by the
Company or any subsidiary thereof or interfere in any way with the right of the
Company to terminate the employment of the Grantee at any time.

      

      5.    Agreement Not
Assignable.  This Agreement and the Restricted Stock Units
awarded hereunder are not transferable or assignable by the Grantee; provided
that no provision herein shall prevent the distribution of shares to the
Grantee’s estate or designated beneficiary, in the event of the Grantee’s
death.

      

      6.    Adjustments.  In
the event of any merger, reorganization, consolidation, recapitalization, stock
dividend, stock split, reverse stock split, spin-off, combination, repurchase or
exchange of Shares or other securities of the Company, or corporate transaction
or event having an effect similar to the foregoing, the Committee shall adjust
the Award, as provided by the Plan.

      

      7.    Governing
Law.  This Agreement shall be construed in accordance with and
governed by the laws of the State of Indiana.

      

      8.    Amendments.  Any
amendment to the Plan shall be deemed to be an amendment to this Agreement to
the extent that the amendment is applicable hereto; provided, however, that no
amendment to the Plan or the Agreement shall adversely affect the value or
number of the Grantee’s Restricted Stock Units without the Grantee’s written
consent, except to the extent necessary to comply with the provisions of Section
409A of the Code.

      

      9.    Administration.  The
Committee shall have the power to interpret the Plan and this Agreement and to
adopt such rules for the administration, interpretation, and application of the
Plan as are consistent therewith and to interpret or revoke any such
rules.  All actions taken and all interpretations and determinations
made by the Committee shall be final and binding upon the Grantee, the Company
and all other interested persons.  No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or this Agreement.

      

      10.  Effect on Other Employee
Benefit Plans.  The value of the Restricted Stock Units granted
pursuant to this Agreement shall not be included as compensation, earnings,
salary or other similar terms used when calculating the Grantee’s benefits under
any employee benefit plan sponsored by the Company or any subsidiary, except as
such plan otherwise expressly provides.  The Company expressly
reserves its rights to amend, modify, or terminate any of the Company’s employee
benefit plans.

      

      11.  Severability.  If
any provision of the Plan or this Agreement is, becomes, or is deemed to be
invalid, illegal or unenforceable in any jurisdiction or would disqualify the
Plan or award hereunder under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws, or
if it cannot be so construed or deemed amended without, in the determination of
the Committee, materially altering the purpose or intent of the Plan or award,
such provision shall be stricken as to such jurisdiction or award, and the
remainder of the Plan or Agreement shall be in full force and
effect.

      

      12.  Construction.  The
Restricted Stock Units granted hereunder are being issued pursuant to Section 10
of the Plan (“Restricted Stock Award”) and are subject to the terms of the
Plan.  A copy of the Plan has been given to the Grantee, and
additional copies of the Plan are available upon request during normal business
hours at the principal executive offices of the Company.  To the
extent that any provision of this Agreement violates or is inconsistent with an
express provision of the Plan, the Plan provision shall govern and any
inconsistent provision in this Agreement shall be of no force or
effect.

      

      13.  Data
Protection.  By signing below, the Grantee expressly consents
to the transfer and use of personal data by the Company and its agents in
connection with the administration of this Award.

      

      14.  Binding
Effect.  This Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties hereto.

      

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

      

       

      _____________________________________

      Grantee:

      

       

      CTS
CORPORATION

       

      

      By:___________________________________

      James L.
Cummins

      Senior
Vice President Administrationex4_1.htm

    
      
        

      

     

    
      SEVENTH
SUPPLEMENTAL INDENTURE

       

      

    

    between

     

    PANHANDLE
EASTERN PIPE LINE COMPANY, LP

     

    Issuer

     

    and

     

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

     

    Trustee

     

    
      Dated as
of June 2, 2009

       

      

    

    

     

    
      
        
          

          

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    Table of
Contents

     

     

    ARTICLE
I

     

     

    DEFINITIONS

     

    
      	
               
      

            	
              SECTION
      1.1    Definition of
      Terms..................................................................................................................3

            

    

     

    ARTICLE
II

    GENERAL
TERMS AND CONDITIONS OF THE SENIOR NOTES

     

    
      	
               
      

            	
              SECTION
      2.1    Designation and
      Principal Amount of the Senior
      Notes..................................................10

            

    

    
      	
               
      

            	
              SECTION
      2.2    Maturity of the
      Senior
      Notes................................................................................................10

            

    

    
      	
               
      

            	
              SECTION
      2.3    Interest on the
      Senior
      Notes.................................................................................................10

            

    

    
      	
               
      

            	
              SECTION
      2.4    Form of the
      Senior
      Notes......................................................................................................10

            

    

    
      	
               
      

            	
              SECTION
      2.5    Redemption of
      the Senior
      Notes..........................................................................................10

            

    

     

    ARTICLE
III

    COVENANTS

     

    
      	
               
      

            	
              SECTION
      3.1    Limitation on
      Restricted
      Payments......................................................................................11

            

    

    
      	
               
      

            	
              SECTION
      3.2    Limitation on
      Liens.................................................................................................................12

            

    

    
      	
               
      

            	
              SECTION
      3.3    Restriction on
      Sale-Leasebacks...........................................................................................14

            

    

    
      	
               
      

            	
              SECTION
      3.4    Financial
      Information.............................................................................................................15

            

    

    
      	
               
      

            	
              SECTION
      3.5    Applicability
      of
      Covenants...................................................................................................16

            

    

     

    ARTICLE
IV

    DEFAULT

     

    
      	
               
      

            	
              SECTION
      4.1    General.....................................................................................................................................16

            

    

    
      	
               
      

            	
              SECTION
      4.2    Additional
      Event of
      Default.................................................................................................16

            

    

     

    ARTICLE
V

    DEFEASANCE

     

    
      	
               
      

            	
              SECTION
      5.1    General....................................................................................................................................16

            

    

    
      	
               
      

            	
              SECTION
      5.2    Covenant
      Defeasance..........................................................................................................16

            

    

     

    ARTICLE
VI

    FORM OF
SENIOR NOTES

     

    
      	
               
      

            	
              SECTION
      6.1    Form of Senior
      Notes...........................................................................................................17

            

    

     

    ARTICLE
VII

    ISSUANCE
OF SENIOR NOTES

     

    
      	
               
      

            	
              SECTION
      7.1    Original Issue
      of Senior
      Notes...........................................................................................25

            

    

    
      	
               
      

            	
              SECTION
      7.2    Additional
      Senior
      Notes.....................................................................................................25

            

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

    ARTICLE
VIII

    MISCELLANEOUS

     

    
      	
               
      

            	
              SECTION
      8.1    Consent,
      Amendment and
      Waiver...................................................................................25

            

    

    
      	
               
      

            	
              SECTION
      8.2    Ratification of
      Indenture....................................................................................................26

            

    

    
      	
               
      

            	
              SECTION
      8.3    Trustee Not
      Responsible for
      Recitals..............................................................................26

            

    

    
      	
               
      

            	
              SECTION
      8.4    Governing
      Law....................................................................................................................26

            

    

    
      	
               
      

            	
              SECTION
      8.5    Separability..........................................................................................................................26

            

    

    
      	
               
      

            	
              SECTION
      8.6    Counterparts........................................................................................................................26

            

    

    

     

    

     

    
      
        
           

           

        

         

      

      
        ii 

        
          

        

      

      
         

      

    

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

    ARTICLE
I

     

    DEFINITIONS

     

    SECTION
1.1 Definition of
Terms.

     

    Unless
the context otherwise requires:

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

    “Permitted
Liens” means:

     

    (i)           Liens
upon rights-of-way for pipeline purposes;

     

    (ii)           any
governmental Lien, mechanics’, materialmen’s, carriers’ or similar Lien incurred
in the ordinary course of business which is not yet due or which is being
contested in good faith by appropriate proceedings and any undetermined Lien
which is incidental to construction;

     

    (iii)           the
right reserved to, or vested in, any municipality or public authority by the
terms of any right, power, franchise, grant, license, permit or by any provision
of law, to purchase or recapture or to designate a purchaser of, any
property;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (iv)           Liens
for taxes and assessments which are (A) for the then current year, (B) not at
the time delinquent, or (C) delinquent but the validity of which is being
contested at the time by the Issuer or any of its Subsidiaries in good
faith;

     

    (v)           Liens
of, or to secure performance of, leases;

     

    (vi)           any
Lien upon, or deposits of, any assets in favor of any surety company or clerk of
court for the purpose of obtaining indemnity or stay of judicial
proceedings;

     

    (vii)           any
Lien upon property or assets acquired or sold by the Issuer or any Restricted
Subsidiary resulting from the exercise of any rights arising out of defaults on
receivables;

     

    (viii)                      any
Lien incurred in the ordinary course of business in connection with workmen’s
compensation, unemployment insurance, temporary disability, social security,
retiree health or similar laws or regulations or to secure obligations imposed
by statute or governmental regulations;

     

    (ix)           any
Lien upon any property or assets in accordance with customary banking practice
to secure any Debt incurred by the Issuer or any Restricted Subsidiary in
connection with the exporting of goods to, or between, or the marketing of goods
in, or the importing of goods from, foreign countries; or

     

    (x)           any
Lien in favor of the United States of America or any state thereof, or any other
country, or any political subdivision of any of the foregoing, to secure
partial, progress, advance or other payments pursuant to any contract or
statute, or any Lien securing industrial development, pollution control or
similar revenue bonds.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    “Standard
& Poor’s” means Standard & Poor’s, a division of The McGraw-Hill
Companies, Inc., and any successor thereto which is a nationally recognized
statistical rating organization, or if such entity shall cease to rate the
Senior Notes or shall cease to exist and there shall be no such successor
thereto, any other nationally recognized statistical rating organization
selected by the Issuer which is acceptable to the Trustee.

     

    “Subsidiary”
means, with respect to any Person, (i) any corporation at least a majority of
whose outstanding Voting Stock shall at the time be owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, (ii) any limited liability company,
general partnership, joint venture or similar entity, at least a majority of
whose outstanding membership, partnership or similar interests shall at the time
be owned by such Person, or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries and (iii) any limited partnership of
which such Person or any of its Subsidiaries is a general partner.

     

    “Total
Capital” means the sum of (i) Consolidated Debt and (ii) Capital Stock, Hybrid
Preferred Securities, premium on Capital Stock, capital surplus, capital in
excess of par value and retained earnings (however the foregoing may be
designated), less, to the extent not otherwise deducted, the cost of shares of
Capital Stock of the Issuer held in treasury, all as set forth on the
consolidated balance sheet of the Issuer and its Consolidated Subsidiaries for
the Issuer’s most recently completed fiscal quarter, prepared in accordance with
generally accepted accounting principles.

     

    “Treasury
Rate” means, with respect to any redemption date, the rate per annum equal to
the semiannual equivalent yield to maturity or interpolated (on a day count
basis) of the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date.

     

    “Voting
Stock” means securities of any class or classes the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for corporate
directors or managers (in the case of a limited liability company) (or persons
performing similar functions).

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    ARTICLE
II

     

    GENERAL
TERMS AND CONDITIONS OF THE SENIOR NOTES

     

    SECTION
2.1 Designation and Principal
Amount of the Senior Notes.

     

    There is
hereby authorized a single series of Debt Securities designated as the “8.125%
Senior Notes due 2019”, the principal amount of which shall be as set forth in
any written order of the Issuer for the authentication and delivery of Senior
Notes pursuant to Section 2.4 of the Base Indenture; provided, however, that Additional
Senior Notes may be issued by the Issuer at any time subject to the terms and
conditions of the Base Indenture and this Seventh Supplemental Indenture, provided, that at the time of
such issuance no Default or Event of Default shall have occurred and be
continuing.

     

    The
initial principal amount of the Senior Notes shall be $150,000,000.

     

    SECTION
2.2 Maturity of the Senior
Notes.

     

    The
Senior Notes will mature on June 1, 2019.

    

    SECTION
2.3 Interest on the Senior
Notes.

     

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

    

    SECTION
2.4 Form of the Senior
Notes.

     

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

     

    SECTION
2.5 Redemption of the Senior
Notes.

     

    The
Senior Notes will be redeemable as a whole or in part, at the option of the
Issuer at any time, at a redemption price equal to the greater of (i) 100% of
the principal amount of such Senior Notes or (ii) the sum of the present values
of the remaining scheduled payments of principal and interest thereon (exclusive
of interest accrued to the date of redemption) discounted to the redemption date
on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 50 basis points, plus, in either case, accrued
and unpaid interest thereon to the date of redemption.

     

    
      
        
        

      

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

     

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

     

    ARTICLE
III

     

    COVENANTS

     

    SECTION
3.1 Limitation on Restricted
Payments.

     

    (a) So long
as any of the Senior Notes are outstanding and during any time that such Senior
Notes are rated below Baa3 (or an equivalent rating) by Moody’s and below BBB-
(or an equivalent rating) by Standard & Poor’s, the Issuer will not, and
will not permit any of its Restricted Subsidiaries, directly or indirectly,
to:

     

    (i) declare
or pay any dividend or make any distribution on the Capital Stock of the Issuer
to the direct or indirect holders of its Capital Stock (except dividends or
distributions payable solely in its Non-Convertible Capital Stock or in options,
warrants or other rights to purchase such Non-Convertible Capital Stock and
except dividends or distributions payable to the Issuer or a Subsidiary of the
Issuer);

     

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

     

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

     

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

     

    (1) no Event
of Default, and no event that with the lapse of time or the giving of notice or
both would constitute an Event of Default, shall have occurred and be continuing
(or would result therefrom);

     

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

     

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

     

    
      
        
        

      

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

     

    (1)           no
Event of Default, and no event that with the lapse of time or the giving of
notice or both would constitute an Event of Default, shall have occurred and be
continuing (or would result therefrom); and

     

    (2)           the
aggregate amount of such Restricted Payment and all other Restricted Payments
made since the original date of issuance of the Initial Senior Notes would not
exceed the sum of:

     

    (A)           $175
million;

     

    (B)           75%
of Adjusted Consolidated Net Income accumulated since the original date of
issuance of the Initial Senior Notes to the end of the most recent fiscal
quarter ending at least 45 days prior to the date of such Restricted Payment;
and

     

    (C)           the
aggregate net cash proceeds received by the Issuer after the original date of
issuance of the Initial Senior Notes from capital contributions or the issuance
of Capital Stock of the Issuer to a Person who is not a Subsidiary of the
Issuer, or from the issuance to such a Person of options, warrants or other
rights to acquire such Capital Stock of the Issuer.

     

    None of
the foregoing provisions will prohibit:

     

    (i)           dividends
or other distributions paid in respect of any class of Capital Stock issued by
the Issuer in connection with the acquisition of any business or assets by the
Issuer or a Restricted Subsidiary where the dividends or other distributions
with respect to such Capital Stock are payable solely from the net earnings of
such business or assets;

     

    (ii)           any
purchase or redemption of Capital Stock of the Issuer made by exchange for, or
out of the proceeds of the substantially concurrent sale of, Non-Convertible
Capital Stock of the Issuer; or

     

    (iii)           dividends
paid within 60 days after the date of declaration thereof if at such date of
declaration such dividends would have complied with this covenant.

     

    
      
        
        

      

      
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    SECTION
3.2 Limitation
on Liens.

     

    (a) The
Issuer shall not, nor will it permit any Restricted Subsidiary to, create,
assume, incur or suffer to exist any Lien upon any Principal Property, whether
owned or leased on the date of the Indenture or thereafter acquired, to secure
any Debt of the Issuer or any other Person (other than the Senior Notes),
without in any such case making effective provision whereby all of the Senior
Notes outstanding shall be secured equally and ratably with, or prior to, such
Debt so long as such Debt shall be so secured.  There is excluded from
this restriction:

     

    (i) any Lien
upon any property or assets of the Issuer or any Restricted Subsidiary in
existence on the date of the Indenture or created pursuant to an “after-acquired
property” clause or similar term in existence on the date of the Indenture or
any mortgage, pledge agreement, security agreement or other similar instrument
in existence on the date of the Indenture;

     

    (ii) any Lien
upon any property or assets created at the time of acquisition of such property
or assets by the Issuer or any Restricted Subsidiary or within 18 months after
such time to secure all or a portion of the purchase price for such property or
assets or Debt incurred to finance such purchase price, whether such Debt was
incurred prior to, at the time of or within 18 months of such
acquisition;

     

    (iii) any Lien
upon any property or assets existing thereon at the time of the acquisition
thereof by the Issuer or any Restricted Subsidiary (whether or not the
obligations secured thereby are assumed by the Issuer or any Restricted
Subsidiary);

     

    (iv) any Lien
upon any property or assets of a Person existing thereon at the time such Person
becomes a Restricted Subsidiary by acquisition, merger or otherwise (whether or
not such Lien was created in anticipation of such acquisition);

     

    (v) any Lien
securing obligations assumed by the Issuer or any Restricted Subsidiary existing
at the time of the acquisition by the Issuer or any Restricted Subsidiary of the
property or assets subject to such Lien or at the time of the acquisition of the
Person which owns such property or assets;

     

    (vi) any Lien
on property to secure all or part of the cost of construction or improvements
thereon or to secure Debt incurred prior to, at the time of, or within 18 months
after completion of such construction or making of such improvements, to provide
funds for any such purpose;

     

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

     

    (viii) any Lien
created or assumed by the Issuer or any Restricted Subsidiary in connection with
the issuance of Debt the interest on which is excludable from gross income of
the holder of such Debt pursuant to the Internal Revenue Code of 1986, as
amended, or any successor statute, for the purpose of financing, in whole or in
part, the acquisition or construction of property or assets to be used by the
Issuer or any Subsidiary;

     

    
      
        
        

      

      
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    (ix) any Lien
upon property or assets of any foreign Restricted Subsidiary to secure Debt of
that foreign Restricted Subsidiary;

     

    (x) Permitted
Liens;

     

    (xi) any Lien
created by any program providing for the financing, sale or other disposition of
trade or other receivables classified as current assets in accordance with
United States generally accepted accounting principles entered into by the
Issuer or by a Subsidiary of the Issuer, provided that such program is
on terms customary for similar transactions, or any document executed by any
Subsidiary of the Issuer in connection therewith, provided that such Lien is
limited to the trade or other receivables in respect of which such program is
created or exists, and the proceeds thereof;

     

    (xii) any Lien
upon any additions, improvements, replacements, repairs, fixtures, appurtenances
or component parts thereof attaching to or required to be attached to property
or assets pursuant to the terms of any mortgage, pledge agreement, security
agreement or other similar instrument, creating a Lien upon such property or
assets permitted by clauses (i) through (xi), inclusive, above; or

     

    (xiii) any
extension, renewal, refinancing, refunding or replacement (or successive
extensions, renewals, refinancing, refundings or replacements) of any Lien, in
whole or in part, that is referred to in clauses (i) through (vi), inclusive,
above (and Liens related thereto referred to in clause (xii) above), or of any
Debt secured thereby; provided, however, that the principal
amount of Debt secured thereby shall not exceed the greater of the principal
amount of Debt so secured at the time of such extension, renewal, refinancing,
refunding or replacement and the original principal amount of Debt so secured
(plus in each case the aggregate amount of premiums, other payments, costs and
expenses paid or incurred in connection with such extension, renewal,
refinancing, refunding or replacement); provided further, however, that such extension,
renewal, refinancing, refunding or replacement shall be limited to all or a part
of the property (including improvements, alterations and repairs on such
property) subject to the encumbrance so extended, renewed, refinanced, refunded
or replaced (plus improvements, alterations and repairs on such
property).

     

    Notwithstanding
the foregoing, the Issuer may, and may permit any Restricted Subsidiary to,
create, assume, incur, or suffer to exist any Lien upon any Principal Property
to secure Debt of the Issuer or any other Person (other than the Senior Notes)
that is not otherwise excepted by clauses (i) through (viii), inclusive, above
without securing the Senior Notes, provided that the aggregate
principal amount of all Debt then outstanding secured by such Lien and all
similar Liens, together with all net sale proceeds from Sale-Leaseback
Transactions (excluding Sale-Leaseback Transactions permitted by clauses (i)
through (iv), inclusive, of Section 3.3(a) of this Seventh Supplemental
Indenture) does not exceed the greater of 15% of Consolidated Net Tangible
Assets or 15% of Total Capital.

     

    
      
        
        

      

      
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    SECTION
3.3 Restriction on
Sale-Leasebacks.

     

    (a) The
Issuer shall not, nor shall it permit any Restricted Subsidiary to, engage in a
Sale-Leaseback Transaction, unless:

     

    (i) the
Sale-Leaseback Transaction occurs within 18 months from the date of acquisition
of the Principal Property subject thereto or the date of the completion of
construction or commencement of full operations on such Principal Property,
whichever is later;

     

    (ii) the
Sale-Leaseback Transaction involves a lease for a period, including renewals, of
not more than four years;

     

    (iii) the
Issuer or such Restricted Subsidiary would be entitled to incur Debt secured by
a Lien on the Principal Property subject thereto (pursuant to clauses (i)
through (xiii), inclusive, of the first paragraph of Section 3.2(a) of this
Seventh Supplemental Indenture) in a principal amount equal to or exceeding the
net sale proceeds from the Sale-Leaseback Transaction without securing the
Senior Notes; or

     

    (iv) the
Issuer or such Restricted Subsidiary, within an 18-month period after such
Sale-Leaseback Transaction, applies or causes to be applied an amount not less
than the net sale proceeds from such Sale-Leaseback Transaction to (A) the
repayment, redemption or retirement of Funded Debt of the Issuer or any
Subsidiary of the Issuer, or (B) investment in another Principal Property or in
a Subsidiary of the Issuer which owns another Principal Property.

     

    Notwithstanding
the foregoing, the Issuer may, and may permit any Restricted Subsidiary to,
effect any Sale-Leaseback Transaction that is not otherwise excepted by clauses
(i) through (iv), inclusive, above, provided that the net sale
proceeds from such Sale-Leaseback Transaction, together with the aggregate
principal amount of outstanding Debt (other than the Senior Notes) secured by
Liens upon any Principal Properties not excepted by clauses (i) through (xiii),
inclusive, of Section 3.2(a) of this Seventh Supplemental Indenture, do not
exceed the greater of 15% of Consolidated Net Tangible Assets or 15% of Total
Capital.

     

    SECTION
3.4 Financial
Information.

     

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

     

    
      	
               
      

            	
              (1)

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

            

    

     

    
      	
               
      

            	
              (2)

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

            

    

     

    
      
        
        

      

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

     

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

     

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

     

    SECTION
3.5 Applicability of
Covenants.

     

    Unless
otherwise stated herein, the foregoing covenants contained in this
Article III shall only be in effect so long as any of the Senior Notes are
outstanding.

     

    ARTICLE
IV

     

    DEFAULT

     

    SECTION
4.1 General.

     

    All of
the events specified in paragraphs (1) through (6) in Section 6.01(a) of
the Base Indenture shall be “Events of Default” with respect to the Senior
Notes.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    SECTION
4.2 Additional Event of
Default.

     

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

     

    ARTICLE
V

     

    DEFEASANCE

     

    SECTION
5.1 General.

     

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

     

    SECTION
5.2 Covenant
Defeasance.

     

    With
respect to and pursuant to the terms of Section 11.02(b) of the Base
Indenture, the release of covenant obligations provided for therein shall, with
respect to the Senior Notes, also apply to Section 3.1, Section 3.2,
and Section 3.3 of this Seventh Supplemental Indenture.

     

    

     

    ARTICLE
VI

     

    FORM
OF SENIOR NOTES

     

    SECTION
6.1 Form of Senior
Notes.

     

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

     

    [FORM OF
FACE OF SENIOR NOTES DUE 2019]

     

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

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

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

     

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

     

    
      
        
          

           HOU:0060018/00004:1398571v1

        

         

      

      
        19

        
          

        

      

      
         

      

    

    

     

    CUSIP
No.  698455
AC6                                                                                                                     $150,000,000

     

    Panhandle
Eastern Pipe Line Company, LP

     

    8.125%
SENIOR NOTE DUE 2019

     

    PANHANDLE
EASTERN PIPE LINE COMPANY, LP, a Delaware limited partnership (the “Issuer”),
for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of One Hundred Fifty Million Dollars ($150,000,000)
on June 1, 2019 (“Maturity”) and to pay interest thereon from June 2, 2009 (the
“Original Issue Date”) or from the most recent interest payment date (each such
date, an “Interest Payment Date”) to which interest has been paid or duly
provided for, semi-annually in arrears on June 1st and
December 1st  in
each year, commencing December 1, 2009, to the registered holders thereof on the
preceding May 15th and November 15th, respectively, and at Maturity at the rate
of 8.125% per annum, until the principal hereof shall have become due and
payable, and on any overdue principal and premium, if any, and (without
duplication and to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the same rate per
annum.  The amount of interest payable on any Interest Payment Date
shall be computed on the basis of a 360-day year of twelve 30-day
months.  In the event that any date on which interest is payable on
this Senior Note is not a Business Day, then payment of interest payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date. The interest installment so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the Indenture, be paid to the person in whose name this
Senior Note (or one or more Predecessor Securities, as defined in said
Indenture) is registered at the close of business on the regular record date for
such interest installment which shall be the close of business on the 15th day
of the calendar month in which such Interest Payment Date occurs.  Any
such interest installment not punctually paid or duly provided for shall
forthwith cease to be payable to the registered holders on such regular record
date, and may be paid to the person in whose name this Senior Note (or one or
more Predecessor Securities) is registered at the close of business on a special
record date to be fixed by the Trustee (as defined below) for the payment of
such defaulted interest, notice whereof shall be given to the registered holders
of this series of Senior Notes not less than 10 days prior to such special
record date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Senior Notes may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture.  The principal
of (and premium, if any) and the interest on this Senior Note shall be payable
at the office or agency of the Trustee maintained for that purpose in any coin
or currency of the United States of America which at the time of payment is
legal tender for payment of public and private debts; provided, however, that payment of
interest may be made at the option of the Issuer by check mailed to the
registered holder at such address as shall appear in the Security
Register.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    This
Senior Note shall not be entitled to any benefit under the Indenture hereinafter
referred to, be valid or become obligatory for any purpose until the Certificate
of Authentication hereon shall have been signed by or on behalf of the
Trustee.

     

    The
provisions of this Senior Note are continued on the reverse side hereof and such
continued provisions shall for all purposes have the same effect as though fully
set forth at this place.

     

    
      
        
          

           HOU:0060018/00004:1398571v1

        

         

      

      
        21

        
          

        

      

      
         

      

    

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

     

    Dated
June 2, 2009

     

    PANHANDLE
EASTERN PIPE LINE COMPANY, LP

     

    

     

    

     

    By: 
________________________                                                      

    Name: ______________________                                                     

    Title:  _______________________                                                    

    

     

    Attest:

     

    By: ______________________                                                     

    Name:  ___________________                                                    

    Title:  ____________________                                                    

    

     

    

     

    

     

    
      
        
          

           HOU:0060018/00004:1398571v1

        

         

      

      
        22

        
          

        

      

      
         

      

    

    [FORM
CERTIFICATE OF AUTHENTICATION]

     

    CERTIFICATE
OF AUTHENTICATION

     

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

     

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

     

    

     

    

     

    By______________________

    [Authorized
Signatory]

     

    [FORM OF
REVERSE OF SENIOR NOTE]

     

    REVERSE
OF SENIOR NOTE

     

    This
Senior Note is one of a duly authorized series of Securities of the Issuer
(herein sometimes referred to as the “Senior Notes”), specified in the
Indenture, issued or to be issued in one or more series under and pursuant to an
indenture (the “Base Indenture”) dated as of March 29, 1999 among the Issuer,
CMS Panhandle Holding Company, a Michigan corporation (which has merged into the
Issuer), and NBD Bank, as trustee (predecessor to The Bank of New York Mellon
Trust Company, N.A.), further supplemented by the Seventh Supplemental Indenture
dated as of June 2, 2009 between the Issuer and The Bank of New York Mellon
Trust Company, N.A., as trustee (the “Trustee”) (the Base Indenture as so
supplemented, hereinafter being referred to as the “Indenture”), to which the
Indenture and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Issuer and the holders of the Senior
Notes.  By the terms of the Indenture, the Senior Notes are issuable
in series which may vary as to amount, date of maturity, rate of interest and in
other respects as in the Indenture provided.  This series of Senior
Notes is not limited in aggregate principal amount, as specified in said Seventh
Supplemental Indenture.

     

    The
Senior Notes are redeemable at the option of the Issuer at any time and from
time to time, in whole or in part, upon not less than 30 days nor more than 60
days notice to each holder of such Senior Notes, at a redemption price equal to
the greater of (i) 100% of the principal amount of such Senior Notes to be
redeemed or (ii) the sum of the present values of the remaining scheduled
payments of principal and interest thereon (exclusive of interest accrued to the
date of redemption) discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury
Rate plus 50 basis points, plus, in either case, accrued and unpaid interest
thereon to the date of redemption.  Unless there is a default in the
payment of the redemption price, on and after the applicable redemption date,
interest will cease to accrue on the Senior Notes or portions thereof called for
redemption.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

    “Treasury
Rate” means, with respect to any redemption date, the rate per annum equal to
the semiannual equivalent yield to maturity or interpolated (on a day count
basis) of the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date.

     

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

     

    No
sinking fund is provided for the Senior Notes.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    If an
Event of Default with respect to this Senior Note shall occur and be continuing,
the principal of this Senior Note may be declared due and payable in the manner
and with the effect provided in the Indenture.

     

    The
Indenture contains provisions for defeasance at any time of (i) the entire
indebtedness of this Senior Note or (ii) certain restrictive covenants and
certain other obligations with respect to this Senior Note, in each case upon
compliance with certain conditions set forth therein.

     

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

     

    The
Indenture provides that the holders of a majority in aggregate principal amount
of the outstanding Senior Notes may, on behalf of all holders of Senior Notes,
waive any past default under the Indenture with respect to any Senior Notes,
except a default (i) in the payment of principal of, or premium, if any, or any
interest on any Senior Note; or (ii) in respect of a covenant or provision of
the Indenture which cannot be modified or amended without the consent of the
holder of each outstanding Senior Note affected.

     

    The
Indenture provides that, subject to the duty of the Trustee during default to
act with the required standard of care, the Trustee will be under no obligation
to exercise any of its rights or powers under the Indenture at the request or
direction of any of the holders, unless such holders shall have offered to the
Trustee reasonable indemnity.  Subject to such provisions for the
indemnification of the Trustee, the holders of a majority in aggregate principal
amount of the outstanding Senior Notes have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee, with respect to the
Senior Notes; provided,
however, that the
Trustee shall not be obligated to take any action unduly prejudicial to holders
not joining in such direction or involving the Trustee in personal
liability.

     

    No
reference herein to the Indenture and no provision of this Senior Note or of the
Indenture shall alter or impair the obligation of the Issuer, which is absolute
and unconditional, to pay the principal of and any premium and interest on this
Senior Note at the times, place and rate, and in the coin or currency, herein
prescribed.

     

    As
provided in the Indenture and subject to certain limitations therein and herein
set forth, the transfer of this Senior Note is registrable in the Security
Register, upon surrender of this Senior Note for registration of transfer at the
office or agency of the Issuer in any place where the principal of and any
premium and interest on this Senior Note are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Security Registrar duly executed by, the holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Senior Notes
of this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    The
Senior Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.  As
provided in the Indenture and subject to certain limitations therein set forth,
Senior Notes are exchangeable for a like aggregate principal amount of Senior
Notes and of like tenor of a different authorized denomination, as requested by
the holder surrendering the same.

     

    No
service charge shall be made for any such registration of transfer or exchange,
but the Issuer may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.

     

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

     

    Prior to
due presentment of this Senior Note for registration of transfer, the Issuer,
the Trustee and any agent of the Issuer or the Trustee may treat the Person in
whose name this Senior Note is registered as the owner hereof for all purposes,
whether or not this Senior Note be overdue, and neither the Issuer, the Trustee
nor any such agent shall be affected by notice to the contrary.

     

    No
recourse shall be had for the payment of the principal of or the interest on
this Senior Note, or for any claim based hereon, or otherwise in respect hereof,
or based on or in respect of the Indenture, against any incorporator,
stockholder, officer or director, past, present or future, as such, of the
Issuer or of any predecessor or successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issuance hereof, expressly waived and
released.

     

    All terms
used in this Senior Note which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.

     

    CERTIFICATE
OF TRANSFER

     

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

     

    

     

    

     

    

     

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

     

    

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

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

     

    

     

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

     

    

     

    

     

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

     

    Dated:___________________                                                                                                ______________________]

    [Name of Assignor]

     

    ARTICLE
VII

     

    ISSUANCE
OF SENIOR NOTES

     

    SECTION
7.1 Original Issue of Senior
Notes.

     

    Upon
execution of this Seventh Supplemental Indenture, the Senior Notes in the
initial principal amount of $150,000,000 may be executed by the
Issuer.  Such Senior Notes may be delivered to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver said
Senior Notes to or upon the written order of the Issuer, signed by its Chairman,
President, Treasurer, Assistant Treasurer or any Vice President and its
Secretary or an Assistant Secretary, without any further action by the
Issuer.

     

    SECTION
7.2 Additional Senior
Notes.

     

    Upon
execution of this Seventh Supplemental Indenture, subject to Section 2.1
hereof, Additional Senior Notes may be executed by the Issuer.  Such
Additional Senior Notes may be delivered to the Trustee for authentication, and
the Trustee shall thereupon authenticate and deliver said Additional Senior
Notes to or upon the written order of the Issuer, signed by its Chairman,
President, Treasurer, Assistant Treasurer or any Vice President and its
Secretary or an Assistant Secretary, without any further action by the
Issuer.

     

    ARTICLE
VIII

     

    MISCELLANEOUS

     

    SECTION
8.1 Consent, Amendment and
Waiver.

     

    For
purposes of Article VI and Article IX of the Base Indenture, it is understood
that the covenants and Events of Default included in this Seventh Supplemental
Indenture have been included solely for the benefit of the holders of the Senior
Notes and therefore any consent, amendment or waiver thereof shall require the
consent of a majority in aggregate principal amount of the outstanding Senior
Notes voting as a separate class or the consent of the holders of each
outstanding Senior Note, as the case may be.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    SECTION
8.2 Ratification of
Indenture.

     

    The Base
Indenture, as supplemented by this Seventh Supplemental Indenture, is in all
respects ratified and confirmed, and this Seventh Supplemental Indenture shall
be deemed part of the Indenture in the manner and to the extent herein and
therein provided.  The provisions of this Seventh Supplemental
Indenture shall supersede the provisions of the Indenture to the extent the
Indenture is inconsistent herewith.

     

    SECTION
8.3 Trustee Not Responsible for
Recitals.

     

    The
recitals herein contained are made by the Issuer and not by the Trustee, and the
Trustee assumes no responsibility for the correctness thereof. The Trustee makes
no representation as to the validity or sufficiency of this Seventh Supplemental
Indenture.

     

    SECTION
8.4 Governing
Law.

     

    This
Seventh Supplemental Indenture and each Senior Note shall be deemed to be a
contract made under the internal laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of said
State.

     

    SECTION
8.5 Separability.

     

    In case
any one or more of the provisions contained in this Seventh Supplemental
Indenture or in the Senior Notes shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Seventh
Supplemental Indenture or of the Senior Notes, but this Seventh Supplemental
Indenture and the Senior Notes shall be construed as if such invalid or illegal
or unenforceable provision had never been contained herein or
therein.

     

    SECTION
8.6 Counterparts.

     

    This
Seventh Supplemental Indenture may be executed in any number of counterparts
each of which shall be an original; but such counterparts shall together
constitute but one and the same instrument.

     

    
      
        
          

           HOU:0060018/00004:1398571v1

        

         

      

      
        28

        
          

        

      

      
         

      

    

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

     

    

    PANHANDLE
EASTERN PIPE LINE COMPANY, LP,

    as
Issuer

    

    By:  _____________________                                                              

    Name:  Richard
N. Marshall

    Title:   
Senior Vice President and

         Chief
Financial Officer

    

    

    

    THE BANK
OF NEW YORK MELLON TRUST COMPANY,

    as
Trustee

    

    

    By:  _____________________                                                              

    Name: 
Julie Hoffman-Ramos

    Title:   
Assistant Treasurer

    

    

    

    

    
      
        
          

           HOU:0060018/00004:1398571v1

        

         

      

      
        29

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