UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2011
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 1-4101
Tennessee Gas Pipeline Company, L.L.C.
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 74-1056569 | |
(State or Other Jurisdiction of | (I.R.S. Employer | |
Incorporation or Organization) | Identification No.) | |
El Paso Building | ||
1001 Louisiana Street | ||
Houston, Texas | 77002 | |
(Address of Principal Executive Offices) | (Zip Code) |
Telephone Number: (713) 420-2600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes ¨ No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ¨ No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | þ (Do not check if a smaller reporting company) | Smaller Reporting Company | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No þ
State the aggregate market value of the voting equity held by non-affiliates of the registrant: None
TENNESSEE GAS PIPELINE COMPANY, L.L.C. MEETS THE CONDITIONS OF GENERAL INSTRUCTION
I(1)(a) AND (b) TO FORM 10-K AND IS
THEREFORE FILING THIS REPORT WITH A REDUCED DISCLOSURE FORMAT AS PERMITTED BY SUCH INSTRUCTION.
Documents Incorporated by Reference: None
TENNESSEE GAS PIPELINE COMPANY, L.L.C.
Caption |
Page | |||||
PART I | ||||||
Item 1. | 1 | |||||
Item 1A. | 5 | |||||
Item 1B. | 14 | |||||
Item 2. | 14 | |||||
Item 3. | 14 | |||||
Item 4. | 14 | |||||
PART II | ||||||
Item 5. | 14 | |||||
Item 6. | * | |||||
Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
15 | ||||
Item 7A. | 21 | |||||
Item 8. | 22 | |||||
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
46 | ||||
Item 9A. | 46 | |||||
Item 9B. | 46 | |||||
PART III | ||||||
Item 10. | Directors, Executive Officers and Corporate Governance |
* | ||||
Item 11. | Executive Compensation |
* | ||||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
* | ||||
Item 13. | Certain Relationships and Related Transactions, and Director Independence |
* | ||||
Item 14. | 47 | |||||
PART IV | ||||||
Item 15. | 48 | |||||
49 |
* | We have not included a response to this item in this document since no response is required pursuant to the reduced disclosure format permitted by General Instruction I to Form 10-K. |
Below is a list of terms that are common to our industry and used throughout this document:
/d | = | per day | MMBtu | = | million British thermal units | |||||||
BBtu | = | billion British thermal units | MMcf | = | million cubic feet | |||||||
Bcf | = | billion cubic feet | NGL | = | natural gas liquids | |||||||
LNG | = | liquefied natural gas | TBtu | = | trillion British thermal units |
When we refer to cubic feet measurements, all measurements are at a pressure of 14.73 pounds per square inch.
When we refer to us, we, our, or ours, we are describing Tennessee Gas Pipeline Company, L.L.C. and/or our subsidiaries.
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Overview and Strategy
We are a Delaware limited liability company, originally formed in 1947 as a corporation. Effective October 1, 2011, we converted our legal structure to a limited liability company and changed our name to Tennessee Gas Pipeline Company, L.L.C. We are owned 100 percent indirectly through a wholly owned subsidiary of El Paso Corporation (El Paso). Our primary business consists of the interstate transportation and storage of natural gas. We conduct our business activities through our natural gas pipeline system and storage facilities as discussed below.
On October 16, 2011, El Paso announced a definitive agreement with Kinder Morgan, Inc. (KMI) whereby KMI will acquire El Paso in a transaction that valued El Paso at approximately $38 billion (based on the KMI stock price at that date), including the assumption of debt. The transaction has been approved by each companys board of directors but remains subject to approvals of El Paso shareholders, the Federal Trade Commission (FTC) and other customary regulatory and other approvals. The approval of KMI shareholders will also be required, but a voting agreement has been executed by the majority of the shareholders of KMI to support the transaction. The completion of the merger may trigger change in control provisions in certain agreements (e.g. debt) to which we are a party.
Our pipeline system and storage facilities operate under a tariff approved by the Federal Energy Regulatory Commission (FERC) that establishes rates, cost recovery mechanisms and other terms and conditions of services to our customers. The fees or rates established under our tariff are a function of our costs of providing services to our customers, including a reasonable return on our invested capital.
Our strategy is to enhance the value of our transportation and storage business by:
| focusing on customer service; |
| successfully executing on time and on budget for our committed expansion projects; |
| developing growth projects in our market and supply areas; |
| maintaining the safety of our pipeline system and other assets; |
| optimizing our contract portfolio; |
| successfully recontracting expiring contracts for transportation capacity; |
| focusing on increasing utilization, efficiency and cost control in our operations; and |
| managing market segmentation and differentiation. |
Pipeline System. Our pipeline system consists of approximately 13,900 miles of pipeline with a design capacity of 7,549 MMcf/d. During 2011, 2010 and 2009, average throughput was 6,267 BBtu/d, 5,081 BBtu/d, and 4,614 BBtu/d. This multiple-line system begins in the natural gas producing regions of Louisiana, the Gulf of Mexico and south Texas and extends to the northeast section of the U.S., including the metropolitan areas of New York City and Boston. Our system also has interconnects at the U.S.-Mexico border and the U.S.-Canada border.
Storage Facilities. Along our pipeline system, we have 93 Bcf of underground working natural gas storage capacity through partially owned facilities or long-term contracts. Of the total capacity, 29 Bcf is contracted from Bear Creek Storage Company, L.L.C. (Bear Creek) located in Bienville Parish, Louisiana. Bear Creek is a joint venture equally owned by us and our affiliate, Southern Natural Gas Company, L.L.C. (SNG). The facility has 58 Bcf of working natural gas storage capacity that is committed equally to SNG and us.
Markets and Competition
We provide transportation and storage services in both our natural gas supply and market areas. Our pipeline system connects with multiple pipelines that provide our customers with access to diverse sources of supply and various natural gas markets.
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The natural gas industry has experienced a major shift from conventional supply sources to unconventional sources, such as shales. In addition, the increase in oil prices has led to increased production of natural gas found in association with the production of oil. This shift has impacted supply patterns, gas flows and rates that can be charged on pipeline systems. The impact will vary among pipelines according to the location and the number of competitors attached to these new supply sources. Our pipeline is connected to major shale formations: the Haynesville Shale in northern Louisiana and Texas and the Marcellus Shale in Pennsylvania. Gas from these sources could continue to increasingly displace receipts over time from traditional sources such as south Texas and the Gulf of Mexico on our system. In addition, the Eagle Ford Shale in South Texas and the Utica Shale in Ohio/Pennsylvania offer a growing supply source which should provide additional benefit to us. Due to the economic uplift from oil and NGL production in these trends, drilling activity is growing rapidly and expected to do so for the next five years. Future production growth in the dry gas portion of these shales could be impacted by producer decisions to shift their activity to projects in different regions that contain liquids and offer a better economic return. A potential loss of dry gas volumes in the Marcellus Shale, however, may be offset by increased drilling in the liquid rich portion of the play as well as increased production from the Utica. An example of growing activity in a liquid rich play is occurring in the Eagle Ford Shale in South Texas, which could become a major source of supply into our system.
Another change in the supply patterns is the reduction in imports from Canada. This decrease has been the result of continuing declines in conventional Canadian production coupled with increasing demand in Canada. On the Southern border, exports to Mexico are increasing and may increase further over time as demand growth exceeds production growth in that country. In addition to these trends in Canada and Mexico, imports of LNG to the U.S. have been declining over the last several years in response to increased U.S. shale gas production which has resulted in a decline in U.S. natural gas prices relative to gas prices in Europe and Asia. The projected gas price disparity between U.S. and European/Asian markets suggests that North America could change from a net importer of LNG to a net exporter of LNG before the end of this decade. All of the aforementioned factors have led to increased demand for domestic U.S. supplies and related transportation services over the last several years, a trend which is likely to continue.
Electric power generation has been the source of most of the demand growth for natural gas over the last 10 years, and this trend is expected to continue. The growth of natural gas in this sector is influenced by competition with coal and economic growth. Short-term market shifts have been driven by relative electric generation costs of coal-fired plants versus gas-fired plants. A long-term market shift in the use of coal in power generation could be driven by environmental regulations. The future demand for natural gas could be increased by regulations limiting or discouraging coal use. However, natural gas demand could potentially be adversely affected by laws mandating or encouraging renewable power sources. Industrial demand has also grown recently with the economic recovery and low natural gas price environment, and this sector offers an opportunity for continued growth. In addition, a potential new and significant demand market for North American natural gas production is for LNG exports to Europe and Asia. Several Gulf Coast projects have received Department of Energy approval to export LNG to global markets beginning in the second half of this decade.
We face competition in all our market areas and we compete with other interstate and intrastate pipelines for deliveries to multiple-connection customers who can take deliveries at alternative points. Natural gas delivered on our system competes with alternative energy sources used to generate electricity such as hydroelectric power, coal and fuel oil. In addition, we compete with pipelines and gathering systems for connection to new supply sources in Texas, the Gulf of Mexico, and the emerging shale basins.
For a further discussion of factors impacting our markets and competition, see Item 1A. Risk Factors.
Customers and Contracts
We provide natural gas services to a variety of customers, including natural gas distribution and industrial companies, electric generation companies, natural gas producers, other natural gas pipelines and natural gas marketing and trading companies. Our existing transportation and storage contracts expire at various times and in varying amounts of throughput capacity. Our ability to extend our existing customer contracts or remarket expiring contracted capacity is dependent on competitive alternatives, the regulatory environment at the federal, state and local levels and market supply and demand factors at the relevant dates these contracts are extended or expire. The duration of new or renegotiated contracts will be affected by current prices, competitive conditions and judgments concerning future market trends and volatility. Although we attempt to recontract or remarket our capacity at the maximum rates allowed under our tariff, we frequently enter into firm transportation contracts at amounts that are less than these maximum allowable rates to remain competitive.
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The following table details our customer and contract information related to our pipeline system as of December 31, 2011. Firm customers reserve capacity on our pipeline system and storage facilities and are obligated to pay a monthly reservation or demand charge, regardless of the amount of natural gas they transport or store, for the term of their contracts. Interruptible customers are customers without reserved capacity that pay usage charges based on the volume of natural gas they transport, store, inject or withdraw.
Customer Information |
Contract Information | |
Approximately 420 firm and interruptible customers. | Approximately 480 firm transportation contracts. Weighted average remaining contract term of approximately four years. | |
Major Customer: National Grid USA and subsidiaries (481 BBtu/d) (285 BBtu/d) |
Expire in 2012-2014. Expire in 2015-2029. |
Regulatory Environment
Our interstate natural gas transmission system and storage operations are regulated by the FERC under the Natural Gas Act of 1938, the Natural Gas Policy Act of 1978 and the Energy Policy Act of 2005. We operate under a tariff approved by the FERC that establishes rates, cost recovery mechanisms and other terms and conditions of services to our customers. The rates established under our tariff are a function of our costs of providing services to our customers, including a reasonable return on our invested capital. Generally, the FERCs authority also extends to:
| rates and charges for natural gas transportation and storage; |
| certification and construction of new facilities; |
| extension or abandonment of services and facilities; |
| maintenance of accounts and records; |
| relationships between pipelines and certain affiliates; |
| terms and conditions of service; |
| depreciation and amortization policies; |
| acquisition and disposition of facilities; and |
| initiation and discontinuation of services. |
Our interstate pipeline system is also subject to federal, state and local safety and environmental statutes and regulations of the U.S. Department of Transportation and the U.S. Department of the Interior. We have ongoing inspection programs designed to keep our facilities in compliance with pipeline safety and environmental requirements. For a further discussion of the potential impact of regulatory matters on us, see Item 1A. Risk Factors.
Environmental
A description of our environmental remediation activities is included in Part II, Item 8. Financial Statements and Supplementary Data, Note 7, and is incorporated herein by reference.
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Employees
We do not have employees. Following our conversion to a limited liability company, our former employees continue to provide services to us under a master services agreement with an affiliated service company owned by El Paso. We are managed and operated by officers of El Paso and its affiliates. Under the master services agreement, we reimburse the affiliate for various general and administrative services performed for our benefit and for direct expenses incurred on our behalf.
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CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions or beliefs that we believe to be reasonable; however, assumed facts almost always vary from the actual results and such variances can be material. Where we express an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis. We cannot assure you, however, that the stated expectation or belief will occur. The words believe, expect, estimate, anticipate, and similar expressions will generally identify forward-looking statements. All of our forward-looking statements, whether written or oral, are expressly qualified by these and other cautionary statements. We disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date provided. With this in mind, you should consider the risks discussed elsewhere in this report and other documents we file with the Securities and Exchange Commission (SEC) from time to time and the following important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. If any of the following risks were actually to occur, our business, results of operations, financial condition and growth could be materially adversely affected.
Risks Related to Our Business
The success of our business depends on many factors beyond our control.
The results of our business are impacted in the long term by the volumes of natural gas we transport or store and the prices we are able to charge for these services. The volumes we transport and store depend on the actions of third parties that are based on factors beyond our control. Such factors include events that negatively impact our customers demand for natural gas and could expose our pipeline to the risk that we will not be able to renew contracts at expiration or that we will be required to discount our rates significantly upon renewal. We are also highly dependent on our customers and downstream pipelines to attach new and increased loads on their systems in order to grow our business. Further, state agencies that regulate our local distribution company customers could impose requirements that could impact demand for our services.
The volume of natural gas that we transport and store also depends on the availability of natural gas supplies that are accessible to our pipeline system, including the need for producers to continue to develop additional gas supplies to offset the natural decline from existing wells connected to our system. This requires the development of additional natural gas reserves, obtaining additional supplies from interconnecting pipelines, and the development of LNG facilities on or near our system. There have been major shifts in supply basins over the last few years, especially with regard to the development of new natural gas shale plays and declining production from conventional sources of supplies as well as declining deliveries from Canada. A prolonged decline in energy prices could cause a decrease in these development activities and could cause a decrease in the volume of reserves available for transmission and storage through our system.
Furthermore, our ability to deliver natural gas to our shippers is dependent upon their ability to purchase and deliver natural gas at various receipt points into our system. On occasion, particularly during extreme weather conditions, the natural gas delivered by our shippers at the receipt points into our system is less than the natural gas that they take at delivery points from our system. This can cause operational problems and can negatively impact our ability to meet our shippers demand.
With the recent rapid growth of shale production in the U.S. and the subsequent drop in natural gas prices, the need and incentive to import LNG to U.S. regasification terminals have greatly diminished. Actual U.S. LNG imports are now at their lowest levels in several years. If shale gas production continues to grow as expected, imports of LNG to the U.S. will remain at minimal levels.
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The agencies that regulate us and our customers could affect our profitability.
Our business is extensively regulated by the FERC, the U.S. Department of Transportation, the U.S. Department of the Interior, the U.S. Coast Guard, the U.S. Department of Homeland Security and various state and local regulatory agencies who have the ability to issue regulations or enforcement orders that may adversely affect our profitability. The FERC regulates most aspects of our business, including the terms and conditions of services offered, our relationships with affiliates, construction and abandonment of facilities and the rates charged by our pipeline (including establishing authorized rates of return). We periodically file to adjust the rates charged to our customers. There is a risk that after a prescribed regulatory process the FERC may establish rates that are not acceptable to us and have a negative impact on us. In addition, our profitability is influenced by fluctuations in costs and our ability to recover any increases in our costs in the rates charged to our shippers. Our operating results can be negatively impacted to the extent that such costs increase in an amount greater than what we are permitted to recover in our rates or to the extent that there is a lag before we can file and obtain rate increases. For a discussion of our recent rate case filed with the FERC, see Part II, Item 8. Financial Statements and Supplementary Data, Note 7.
Our existing rates may also be challenged by complaint. The FERC commenced several proceedings against pipeline systems and storage facilities to reduce the rates they were charging their customers. There is a risk that the FERC or our customers could file similar complaints on us and that a successful complaint against our rates could have an adverse impact on us. For example, the FERC recently initiated an investigation concerning our affiliate, Bear Creek, and a successful complaint against its rates could have an adverse impact on us.
Certain of our transportation services are subject to negotiated rate contracts that may not allow us to recover our costs of providing the services.
Under FERC policy, interstate pipelines and their customers may execute contracts at a negotiated rate which may be above or below the FERC regulated recourse rate for that service. These negotiated rate contracts are generally not subject to adjustment for increased costs which could occur due to inflation, increases in the cost of capital or taxes or other factors relating to the specific facilities being used to perform the services. It is possible that costs to perform services under negotiated rate contracts will exceed the negotiated rates. Any shortfall of revenue, representing the difference between recourse rates and negotiated rates could result in either losses or lower rates of return in providing such services.
Our revenues are generated under contracts that must be renegotiated periodically.
Our revenues are generated under transportation and storage contracts which expire periodically and must be renegotiated, extended or replaced. If we are unable to extend or replace these contracts when they expire or are terminated or if we are unable to renegotiate contract terms as favorable as the existing contracts, we could suffer a material reduction in our revenues, earnings and cash flows. For example, basis differentials between receipt and delivery points on our pipeline system could remain low over time and thereby negatively impact our ability to renew contracts at rates that were previously in place. In addition, basis differentials often remain low during periods in which the price for natural gas is low, such as we are currently experiencing. Our ability to extend and replace contracts could be adversely affected by factors we cannot control, as discussed above. In addition, changes in state regulation of local distribution companies may cause them to negotiate short-term contracts or turn back their capacity when their contracts expire.
We may not succeed in an expansion of our pipeline system.
Our ability to engage in expansion projects will be subject to, among other things, approval of our member and numerous business, economic, regulatory, competitive and political uncertainties beyond our control. Therefore, we cannot assure you that any additional expansion projects will be undertaken or, if undertaken, will be successful.
The success of expansion projects may depend on, among others, the following factors:
| other existing pipelines may provide transportation services to the area to which we are expanding; |
| other entities, upon obtaining the proper regulatory approvals, may construct new competing pipelines or increase the capacity of existing competing pipelines; |
| a competitors new or upgraded pipeline could offer transportation services that are more desirable to shippers because of costs, location, facilities or other factors; |
| shippers may be unwilling to sign long-term firm transportation contracts for service which would make use of a planned expansion; |
| we may be unable to obtain the requisite environmental and regulatory permits and approvals; and |
| the FERC may not grant us the required certificates for our expansion projects. |
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We may also require additional capital to fund any expansion project. If we fail to generate sufficient funds in the future, we may have to delay or abandon potential expansion projects which could require us to write off significant development costs. Moreover, if we are unable to obtain long term firm transportation contracts for volumes that would enable us to cover the costs of any such expansion and provide us with an acceptable rate of return, we may not proceed with such expansion. Also, a potential expansion may cost more than planned to complete and such excess cost may not be recoverable. Our inability to recover any such costs or expenditures could materially adversely affect our business, financial condition, cash flows and results of operations.
We depend on a key customer for a significant portion of our revenues and the loss of this key customer could result in a decline in our revenues.
We rely on a key customer for a significant portion of our revenues. For the year ended December 31, 2011, National Grid USA and subsidiaries accounted for approximately 14 percent of our operating revenues. The creditworthiness of our customers may be adversely impacted by negative effects in the economy, including low natural gas prices which can reduce liquidity and cash flows for some of our customers that produce natural gas. The loss of any material portion of the contracted volumes of this customer, as a result of competition, creditworthiness, inability to negotiate extensions, or replacements of contracts or otherwise, could have a material adverse effect on us. For additional information on our revenues from this customer, see Part II, Item 8. Financial Statements and Supplementary Data, Note 9.
The costs to maintain, repair and replace our pipeline system may exceed our expected levels.
Much of our pipeline infrastructure was originally constructed many years ago. The age of these assets may result in them being more costly to maintain and repair. We may also be required to replace certain facilities over time. In addition, our pipeline assets may be subject to the risk of failures or other incidents due to factors outside of our control (including due to third party excavation near our pipeline, unexpected degradation of our pipeline, erosion of soil, as well as design, construction or manufacturing defects) that could result in personal injury or property damages. Much of our pipeline system is located in populated areas which increases the level of such risks. Such incidents could also result in unscheduled outages or periods of reduced operating flows which could result in a loss of our ability to serve our customers and a loss of revenues. Although we are targeted to complete our pipeline integrity program which includes the development and use of in-line inspection tools in high consequence areas by its required completion date at the end of 2012, we will continue to incur substantial expenditures beyond 2012 relating to the integrity and safety of our pipeline. In addition, as indicated above there is a risk that new regulations or other regulatory actions associated with pipeline safety and integrity issues will be adopted that could require us to incur additional material expenditures in the future. We are also subject to inherent risks associated with our storage operations, including potential risk of gas losses and field degradation.
We do not own all of the land on which our pipeline and other related facilities are located, which could disrupt our operations.
We do not own all of the land on which our pipeline and other related facilities are located. We are subject to the risk that we do not have valid rights-of-way, that such rights-of-way may lapse or terminate, our facilities may not be properly located within the boundaries of such rights-of-way or the landowners otherwise interfere with our operations. Any loss of or interference with these rights could have a material adverse effect on us.
There are accounting principles that are unique to regulated interstate pipeline assets that could materially impact our recorded earnings.
Accounting policies for FERC regulated pipelines are in certain instances different from U.S. generally accepted accounting principles (GAAP) for nonregulated entities. For example, we are permitted to record certain regulatory assets on our balance sheet that would not typically be recorded under GAAP for nonregulated entities. In determining whether to account for regulatory assets on our pipeline, we consider various factors including regulatory changes and the impact of competition to determine the probability of recovery of these assets. Currently, we have regulatory assets recorded on our balance sheet. If we determine that future recovery is no longer probable, then we could be required to write off the regulatory assets in the future. In addition, we capitalize a carrying cost on equity funds related to our construction of long-lived assets. Equity amounts capitalized are included as other income on our income statement. To the extent that one of our expansion projects is not fully subscribed when it goes into service, we may experience a reduction in our earnings once the project is placed into service. We periodically evaluate the applicability of accounting standards
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related to regulated operations, and consider factors such as regulatory changes and the impact of competition. If cost-based regulation ends or competition increases, we may have to evaluate our assets for impairment and write-off the associated regulatory assets, which could impact our future earnings.
The supply and demand for natural gas could be adversely affected by many factors outside of our control which could negatively affect us.
Our success depends on the supply and demand for natural gas. The degree to which our business is impacted by changes in supply or demand varies. For example, we are not significantly impacted in the short-term by reductions in the supply or demand for natural gas since we recover most of our revenues from reservation charges under longer-term contracts that are not dependent on the supply and demand of natural gas in the short-term. However, our business can be negatively impacted by sustained downturns in supply and demand for natural gas. One of the major factors that will impact natural gas demand will be the potential growth of natural gas in the power generation market, particularly driven by the speed and level of which coal-fired power generation is replaced with natural gas-fired power generation. One of the major factors that has been impacting natural gas supplies has been the significant growth in unconventional sources, such as from shale plays. In addition, the supply and demand for natural gas for our business will depend on many other factors outside of our control, which include, among others:
| adverse changes in global economic conditions, including changes that negatively impact general demand for power generation and industrial loads for natural gas; |
| adverse changes in geopolitical factors and unexpected wars, terrorist activities and others acts of aggression; |
| adverse changes in domestic regulations that could impact the supply or demand for natural gas; |
| technological advancements that may drive further increases in production from natural gas shales; |
| competition from imported LNG and Canadian supplies, alternate fuels and renewable energy sources; |
| increased prices of natural gas that could negatively impact demand; |
| increased costs to transport natural gas; |
| adoption of various energy efficiency and conservation measures; and |
| perceptions of customers on the availability and price volatility of natural gas prices over the longer-term. |
The price for natural gas could be adversely affected by many factors outside of our control which could negatively affect us.
Natural gas prices historically have been volatile and are likely to continue to be volatile in the future, especially given current global geopolitical and economic conditions. There is a risk that commodity prices, which are at relatively low levels at this time, could remain depressed for sustained periods. The degree to which our business is impacted by lower commodity prices varies. For example, we are not significantly impacted in the short-term by changes in natural gas prices. However, we can be negatively impacted in the long-term by sustained depression in commodity prices for natural gas, including reductions in differentials between receipt and delivery points on our system and in our ability to renew transportation contracts on favorable terms, as well as to construct new pipeline infrastructure. The price for natural gas is subject to a variety of additional factors that are outside of our control, which include, among others:
| changes in regional and domestic supply and demand; |
| changes in basis differentials among different supply basins that can negatively impact our ability to compete with supplies from other basins, including our ability to maintain transportation revenues and renew transportation contracts in supply basins that are not as competitive as other alternatives; |
| changes in the costs of transporting natural gas; |
| increased federal and state taxes, if any, on the transportation of natural gas; |
| the price and availability of supplies of alternative energy sources; and |
| the amount of capacity available to transport natural gas. |
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Our business is subject to competition from third parties which could negatively affect us.
The natural gas business is highly competitive. We compete with other interstate and intrastate pipeline companies as well as gatherers and storage companies for the transportation and storage of natural gas. We also compete with suppliers of alternative energy sources used to generate electricity, such as coal and fuel oil. We frequently have one or more competitors in the supply basins and markets that we are connected to. This includes growing competition in many of the markets that we serve, including many of the markets in the northeast.
Our operations are subject to operational hazards and uninsured risks which could negatively affect us.
Our operations are subject to a number of inherent operational hazards and uninsured risks such as:
| Adverse weather conditions, natural disasters, and/or other climate related matters including extreme cold or heat, lightning and flooding, fires, hurricanes, tornadoes and other natural disasters. Although the potential effects of climate change on our operations (such as hurricanes, flooding, etc.) are uncertain at this time, changes in climate patterns as a result of global emissions of greenhouse gas (GHG) could also have a negative impact upon our operations in the future, particularly with regard to any of our facilities that are located in or near the Gulf of Mexico and other coastal regions. |
| Acts of aggression on critical energy infrastructure including terrorist activity or cyber security events. We are subject to the ongoing risk that one of these incidents may occur which could significantly impact our business operations and/or financial results. Should one of these events occur in the future, it could impact our ability to operate or control our pipeline assets, our operations could be disrupted, property could be damaged and/or customer information could be stolen resulting in substantial loss of revenues, increased costs to respond or other financial loss, damage to reputation, increased regulation and litigation and/or inaccurate information reported from our operations to our financial applications, to our customers and to regulatory entities. |
| Other hazards including the collision of third party equipment with our infrastructure (such as damage caused to our underground pipelines by third party excavation); explosions, pipeline failures, mechanical and process safety failures, events causing our facilities to operate below expected levels of capacity or efficiency; uncontrollable flows of natural gas, release of pollution or contaminants into the environment (including discharges of toxic gases or substances) and other environmental hazards. |
Each of these risks could result in (a) damage or destruction of our facilities, (b) damages and injuries to persons and property or (c) business interruptions while damaged energy and/or technology infrastructure is repaired or replaced, each of which could cause us to suffer substantial losses. While we maintain insurance against some of these risks in amounts that we believe are reasonable, our insurance coverages have material deductibles, self-insurance levels, limits on our maximum recovery and do not cover all risks. For example, from time to time we may not carry, or may be unable to obtain on terms that we find acceptable, insurance coverage for certain exposures including, but not limited to, certain environmental exposures (including potential environmental fines and penalties), business interruption and named windstorm/hurricane exposures. The premiums and deductibles we pay for certain insurance policies are also subject to the risk of substantial increases over time that could negatively impact our financial results. In addition, we may not be able to renew existing insurance policies or procure desirable insurance on commercially reasonable terms. There is also a risk that our insurers may default on their coverage obligations or that amounts for which we are insured, or that the proceeds of such insurance will not compensate us fully for our losses. As a result, we could be adversely affected if a significant event occurs that is not fully covered by insurance.
We are subject to a complex set of laws and regulations that regulate the energy industry for which we have to incur substantial compliance and remediation costs.
Our operations are subject to a complex set of federal, state and local laws and regulations that tend to change from time to time and generally are becoming increasingly more stringent. In addition to the laws and regulations affecting our business, there are various laws and regulations that regulate various market practices in the industry, including antitrust laws and laws that prohibit fraud and manipulation in the markets in which we operate. The authority of the FTC and the FERC to impose penalties for violations of laws or regulations has generally increased over the last few years. In addition, our business is subject to laws and regulations that
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govern environmental, health and safety matters. These regulations include compliance obligations for air emissions, water quality, wastewater discharge and solid and hazardous waste disposal, as well as regulations designed for the protection of human health and safety and threatened or endangered species. Compliance obligations can result in significant costs to install and maintain pollution controls and to maintain measures to address personal and process safety and protection of the environment and animal habitat near our operations. We are often obligated to obtain permits or approvals in our operations from various federal, state and local authorities, which permits and approvals (including renewals thereof) can be denied or delayed. In addition, we are exposed to fines and penalties to the extent that we fail to comply with the applicable laws and regulations, as well as the potential for limitations to be imposed on our operations. These regulations often impose remediation obligations associated with the investigation or clean-up of contaminated properties, as well as damage claims arising out of the contamination of properties or impact on natural resources. Finally, many of our assets are located and operate on federal, state, or local lands and are typically regulated by one or more federal, state or local agencies. For example, we operate assets that are located on federal lands both onshore and offshore, which are regulated by the U.S. Department of the Interior, particularly by the Bureau of Land Management and the Bureau of Ocean Energy Management, Regulation and Enforcement.
The laws and regulations (and the interpretations thereof) that are applicable to our business could materially change in the future and increase the cost of our operations or otherwise negatively impact us.
The regulatory framework affecting our business is frequently subject to change, with the risk that either new laws and regulations may be enacted or existing laws and regulations may be amended. Such new or amended laws and regulations can materially affect our operations and our financial results. In this regard, there have been proposals to adopt or amend federal, state, and local laws and regulations that could negatively impact our business, which includes among others:
| Climate Change and other Emissions. The Environmental Protection Agency (EPA) and several state environmental agencies have adopted regulations to regulate GHG emissions. It is uncertain at this time what impact the existing and proposed regulations will have on the demand for natural gas and on our operations. This will largely depend on what regulations are ultimately adopted; how the requirements of these regulations are implemented; and incentives and subsidies provided to other fossil fuels, nuclear power and renewable energy sources. Although the EPA has adopted a tailoring rule to regulate GHG emissions, it is not expected to materially impact our existing operations until 2016. However, the tailoring rule is subject to judicial reviews and such reviews could result in the EPA being required to regulate GHG emissions at lower levels that could subject us to regulation prior to 2016. There have also been various legislative and regulatory proposals and final rules at the federal and state levels to address air emissions from power plants and industrial boilers. Although such rules and proposals will generally favor the use of natural gas over other fossil fuels such as coal, it remains uncertain what regulations will ultimately be adopted and when they will be adopted. Finally, there have been various other environmental regulatory proposals that could increase the cost of our environmental liabilities as well as increase our future compliance costs. For example, the EPA has implemented more stringent emission standards with regard to certain natural gas operations that will affect our business. It is uncertain what impact new environmental regulations might have on us until further definition is provided by the various legislative, regulatory and judicial branches. In addition, any regulations would likely increase our costs of compliance by potentially delaying the receipt of permits and other regulatory approvals; requiring us to monitor emissions, install additional equipment or modify facilities to reduce GHG and other emissions; purchase air emission credits; and utilize electric-driven compression at facilities to obtain regulatory permits and approvals in a timely manner. While we may be able to include some or all of the costs associated with our environmental liabilities and environmental compliance in the rates charged by our pipeline, our ability to recover such costs is uncertain and may depend on events beyond our control including the outcome of future rate proceedings before the FERC and the provisions of any final regulations and legislation. |
| Renewable / Conservation Legislation. There have been various legislative and regulatory proposals at the federal and state levels to provide incentives and subsidies to (a) shift more power generation to renewable energy sources and (b) support technological advances to drive less energy consumption. These incentives and subsidies could have a negative impact on natural gas consumption and thus have negative impacts on our operations and financial results. |
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| Pipeline Safety. New federal legislation was enacted in December 2011 associated with pipeline safety and integrity issues, including changes that require installation of additional valves and other equipment on our pipeline and potential expansion of high consequence areas. The legislation requires the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration to conduct various studies, which may ultimately result in additional regulations that could negatively affect our operations. |
We are exposed to the credit risk of our counterparties and our credit risk management may not be adequate to protect against such risk.
We are subject to the risk that our counterparties fail to make payments to us within the time required under our contracts. Our current largest exposures are associated with shippers under long-term transportation contracts on our pipeline system. Our credit procedures and policies may not be adequate to fully eliminate counterparty credit risk. In addition, in certain situations, we may assume certain additional credit risks for competitive reasons or otherwise. If our existing or future counterparties fail to pay and/or perform, we could be adversely affected. For example, we may not be able to effectively remarket capacity or enter into new contracts at similar terms during and after insolvency proceedings involving a customer.
We are exposed to the credit and performance risk of our key contractors and suppliers.
As an owner of energy infrastructure facilities with significant capital expenditures, we rely on contractors for certain construction and we rely on suppliers for key materials, supplies and services, including steel mills and pipe and tubular manufacturers. There is a risk that such contractors and suppliers may experience credit and performance issues that could adversely impact their ability to perform their contractual obligations with us, including their performance and warranty obligations. This could result in delays or defaults in performing such contractual obligations and increased costs to seek replacement contractors, each which could adversely impact us.
We have certain contingent liabilities that could exceed our estimates.
We have certain contingent liabilities associated with litigation, regulatory and environmental matters and although we believe that we have established appropriate reserves for these matters, we could be required to accrue additional amounts in the future and these amounts could be material (see Part II, Item 8. Financial Statements and Supplementary Data, Note 7).
We have also sold assets and either retained certain liabilities or indemnified certain purchasers against future liabilities related to assets sold, including liabilities associated with environmental and other representations that we have provided. Although we believe that we have established appropriate reserves for these liabilities, we could be required to accrue additional amounts in the future and these amounts could be material.
We are subject to interest rate risks.
Although our debt capital structure has fixed interest rates, changes in market conditions, including potential increases in the deficits of foreign, federal and state governments, could have a negative impact on interest rates that could cause our future financing costs to increase. Since interest rates are at historically low levels, it is anticipated that they will increase in the future.
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Risks Related to Our Affiliation with El Paso
El Paso files reports and other information with the SEC under the Securities Exchange Act of 1934, as amended. Each prospective investor should consider this information and the matters disclosed therein in addition to the matters described in this report. Such information is not included herein or incorporated by reference into this report.
We are an indirect wholly owned subsidiary of El Paso.
As an indirect wholly owned subsidiary of El Paso, subject to limitations in our credit agreements and indentures, El Paso has substantial control over:
| our payment of dividends; |
| decisions on our financing and capital raising activities; |
| mergers or other business combinations; |
| our acquisitions or dispositions of assets; and |
| our participation in El Pasos cash management program. |
El Paso may exercise such control in its interests and not necessarily in the interests of us or the holders of our long-term debt.
Our relationship with El Paso and its financial condition subjects us to potential risks that are beyond our control.
Due to our relationship with El Paso, adverse developments or announcements concerning El Paso or its other subsidiaries could adversely affect our financial condition, even if we have not suffered any similar development. There is a risk that our or El Pasos credit ratings may be adversely affected in the future as the credit rating agencies continue to review our and El Pasos leverage, liquidity and credit profile, and potential transactions. Following the announcement of El Pasos proposed merger with KMI, Moodys and Fitch adjusted their view of El Paso to a negative outlook, and Moodys adjusted their view of us to a negative outlook. Any reduction in our or El Pasos credit ratings could impact our ability to access the capital markets as well as our cost of capital. Below are the ratings assigned to our and El Pasos senior unsecured indebtedness at December 31, 2011.
Rating Agency | ||||||||||||
Moodys
Investor Service |
Standard & Poors |
Fitch Ratings | ||||||||||
Credit Rating | ||||||||||||
TGP |
Baa3 | (1) | BB | (2) | BBB- | (1) | ||||||
El Paso |
Ba3 | (2) | BB- | (2) | BB+ | (2) |
(1) | Investment grade. |
(2) | Non-investment grade. |
El Paso provides cash management and other corporate services for us. Pursuant to El Pasos cash management program, we transfer surplus cash to El Paso in exchange for an affiliated note receivable. In addition, we conduct commercial transactions with some of our affiliates. If El Paso or such affiliates are unable to meet their respective liquidity needs, we may not be able to access cash under the cash management program, or our affiliates may not be able to pay their obligations to us. However, we might still be required to satisfy any affiliated payables we have established. Our inability to recover any affiliated receivables owed to us could adversely affect our financial position and cash flows. For a further discussion of our affiliated transactions, see Part II, Item 8. Financial Statements and Supplementary Data, Note 11.
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A default under El Pasos $1.25 billion revolving credit agreement by any party could accelerate our future borrowings, if any, under the credit agreement and our long-term debt, which could adversely affect our liquidity position.
We are a party to El Pasos $1.25 billion revolving credit agreement. We are only liable, however for our borrowings under the credit agreement, which were zero at December 31, 2011. Under the credit agreement, a default by El Paso, or any other borrower, could result in the acceleration of repayment of all outstanding borrowings, including the borrowings of any non-defaulting party. The acceleration of repayments of borrowings, if any, or the inability to borrow under the credit agreement, could adversely affect our liquidity position and, in turn, our financial condition.
We may be subject to a change of control if an event of default occurs under El Pasos credit agreement.
Under El Pasos $1.25 billion credit agreement, our member interest and the common stock of one of El Pasos other subsidiaries are pledged as collateral. As a result, our ownership is subject to change if there is a default under the credit agreement and El Pasos lenders exercise rights over their collateral, even if we do not have any borrowings outstanding under the credit agreement. For additional information concerning El Pasos credit facility, see Part II, Item 8. Financial Statements and Supplementary Data, Note 6.
Our business requires the retention and recruitment of a skilled workforce and the loss of employees could result in the failure to implement our business plan.
Our business requires the retention and recruitment of a skilled workforce. If El Paso is unable to retain and recruit employees such as engineers and other technical personnel, our business could be negatively impacted.
Risk Related to the Proposed Merger between Kinder Morgan and El Paso
Closing of the proposed transactions may trigger change in control provisions in certain agreements to which we are a party.
On October 16, 2011, El Paso announced a definitive agreement with KMI whereby KMI will acquire El Paso. As a result of the announcement, we were placed on negative outlook by Moodys. During the pendency of the proposed transaction, a decrease in El Pasos or Kinder Morgans perceived creditworthiness may have an adverse effect on our perceived creditworthiness, possibly resulting in a downgrade of credit ratings, tightening of credit under our existing credit facilities, increasing our borrowing costs or, upon completion of the transactions with KMI, could trigger certain change of control provisions to certain agreements to which we are a party. If we experience a credit downgrade in conjunction with the change of control and we are unable to negotiate waivers of those change of control provisions, the counterparties may exercise their rights and remedies under certain agreements, potentially requiring us to repurchase a portion of our outstanding debt. Even if we are able to negotiate waivers, the counterparties may require a fee for such waiver or seek to renegotiate the agreements on less favorable terms.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
We have not included a response to this item since no response is required under Item 1B of Form 10-K.
A description of our properties is included in Item 1. Business, and is incorporated herein by reference.
We believe that we have satisfactory title to the properties owned and used in our business, subject to liens for taxes not yet payable, liens incident to minor encumbrances, liens for credit arrangements and easements and restrictions that do not materially detract from the value of these properties, our interests in these properties, or the use of these properties in our business. We believe that our properties are adequate and suitable for the conduct of our business in the future.
A description of our material legal proceedings is included in Part II, Item 8. Financial Statements and Supplementary Data, Note 7, and is incorporated herein by reference.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our member interest is owned by an indirect subsidiary of El Paso and, accordingly is not publicly traded. Prior to converting to a limited liability company effective October 1, 2011, all of our common stock, par value $5 per share, was owned by the El Paso subsidiary and, accordingly, our stock was not publicly traded.
We make distributions to our member at the discretion of our member as defined in our limited liability company agreement. Prior to converting to limited liability company, we paid dividends on our common stock from time to time from legally available funds that were approved for payment by our Board of Directors. No cash distribution was paid in 2011 and no common stock dividends were declared or paid in 2009. During 2010, we utilized $334 million of our note receivable from the cash management program to pay a dividend to our parent.
ITEM 6. SELECTED FINANCIAL DATA
Information has been omitted from this report pursuant to the reduced disclosure format permitted by General Instruction I to Form 10-K.
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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The information required by this Item is presented in a reduced disclosure format pursuant to General Instruction I to
Form 10-K. Our Managements Discussion and Analysis (MD&A) should
be read in conjunction with our consolidated financial statements and the accompanying footnotes. MD&A includes forward-looking statements that are subject to risks and uncertainties that may result in actual results differing from the
statements we make. These risks and uncertainties are discussed further in Part I, Item 1A. Risk Factors. We have included a discussion in this MD&A of our business, results of operations, liquidity and capital resources, and a discussion
of factors that may impact us as we operate in the future.
On October 16, 2011, El Paso announced a definitive agreement with KMI whereby KMI will acquire El Paso in a transaction that valued El Paso at approximately $38 billion (based on the KMI stock price at that date), including the assumption of debt. The transaction has been approved by each companys board of directors but remains subject to approvals of El Paso shareholders, the FTC and other customary regulatory and other approvals. The approval of KMI shareholders will also be required, but a voting agreement has been executed by the majority of the shareholders of KMI to support the transaction. The completion of the merger may trigger change in control provisions in certain agreements (e.g. debt) to which we are a party.
Our Business
Our primary business consists of the interstate transportation and storage of natural gas. We face varying degrees of competition from other existing and proposed pipelines and LNG facilities, as well as from alternative energy sources used to generate electricity such as hydroelectric power, coal and fuel oil. Our revenues from transportation and storage services consist of the following types.
Type |
Description |
Percent of 2011 Revenues (1) | ||
Reservation |
Reservation revenues are from customers (referred to as firm customers) that reserve capacity on our pipeline system and storage facilities. These firm customers are obligated to pay a monthly reservation or demand charge, regardless of the amount of natural gas they transport or store, for the term of their contracts. | 80 | ||
Usage and Other |
Usage revenues are from both firm customers and interruptible customers (those without reserved capacity) that pay usage charges and provide fuel in-kind (prior to our rate case settlement) based on the volume of gas actually transported, stored, injected or withdrawn. We also earn revenue from other miscellaneous sources. | 20 |
(1) The revenue recorded for the regulatory liability adjustment of $40 million was excluded (see Results of Operations for future discussion).
The FERC regulates the rates we can charge our customers. These rates are generally a function of the cost of providing services to our customers, including a reasonable return on our invested capital. In December 2011, the FERC approved our rate case settlement which became effective June 1, 2011. For a further discussion of our rate case settlement, see Results of Operations below. Our financial results can be subject to volatility due to factors such as changes in natural gas prices, changes in supply and demand, regulatory actions, competition, declines in the creditworthiness of our customers and weather. In addition, our future earnings may be impacted by both positive and negative fluctuations in gas prices related to the revaluation of our fuel under or over recoveries, imbalances and system encroachments. Our tariff provides that the difference between the quantity of fuel retained and fuel used in operations and lost and unaccounted for will be flowed-through or charged to shippers. These fuel trackers remove the volumetric impact of over or under collecting fuel and lost and unaccounted for gas from our operating revenues.
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We continue to manage the process of renewing expiring contracts to limit the risk of significant impacts on our revenues. Our ability to extend our existing customer contracts or remarket expiring contracted capacity is dependent on competitive alternatives, the regulatory environment at the federal, state and local levels and the market supply and demand factors at the relevant dates these contracts are extended or expire. The duration of new or renegotiated contracts will be affected by current prices, competitive conditions and judgments concerning future market trends and volatility. Subject to regulatory requirements, we attempt to recontract or remarket our capacity at the maximum rates allowed under our tariff, although at times, we enter into firm transportation contracts at amounts that are less than these maximum allowable rates to remain competitive.
Our existing contracts expire at various times and in varying amounts of throughput capacity. The weighted average remaining contract term for our active contracts is approximately four years as of December 31, 2011. Below are the contract expiration portfolio and the associated revenue expirations for our firm transportation contracts as of December 31, 2011, including those with terms beginning in 2012 or later.
Contracted Capacity |
Percent
of Contracted Capacity |
Reservation Revenue | Percent
of Reservation Revenue |
|||||||||||||
(BBtu/d) | (In millions) | |||||||||||||||
2012 |
2,444 | 28 | $ | 100 | 14 | |||||||||||
2013 |
1,087 | 12 | 41 | 6 | ||||||||||||
2014 |
1,580 | 18 | 139 | 20 | ||||||||||||
2015 |
1,063 | 12 | 72 | 10 | ||||||||||||
2016 |
287 | 3 | 28 | 4 | ||||||||||||
2017 and beyond |
2,369 | 27 | 322 | 46 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
8,830 | 100 | $ | 702 | 100 | |||||||||||
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|
|
|
|
|
|
Results of Operations
Our management uses segment earnings before interest expense and income taxes (Segment EBIT) as a measure to assess the operating results and effectiveness of our business, which consists of consolidated operations as well as an investment in an unconsolidated affiliate. We believe Segment EBIT is useful to investors to provide them with the same measure used by our management to evaluate our performance and so that investors may evaluate our operating results without regard to our financing methods. Segment EBIT is defined as net income adjusted for items such as (i) interest and debt expense, (ii) affiliated interest income, and (iii) income taxes. Segment EBIT may not be comparable to measures used by other companies. Additionally, Segment EBIT should be considered in conjunction with net income, income before income taxes and other performance measures such as operating income or operating cash flows. Below is a reconciliation of our Segment EBIT to net income, our throughput volumes and an analysis and discussion of our results for the year ended December 31, 2011 compared with 2010.
Operating Results:
2011 | 2010 | |||||||
(In millions, except for volumes) |
||||||||
Operating revenues |
$ | 976 | $ | 845 | ||||
Operating expenses |
(607 | ) | (577 | ) | ||||
|
|
|
|
|||||
Operating income |
369 | 268 | ||||||
Earnings from unconsolidated affiliate |
14 | 14 | ||||||
Other income, net |
40 | 23 | ||||||
|
|
|
|
|||||
Segment EBIT |
423 | 305 | ||||||
Interest and debt expense |
(134 | ) | (150 | ) | ||||
Affiliated interest income, net |
16 | 15 | ||||||
Income tax expense |
(102 | ) | (67 | ) | ||||
|
|
|
|
|||||
Net income |
$ | 203 | $ | 103 | ||||
|
|
|
|
|||||
Throughput volumes (BBtu/d) |
6,267 | 5,081 | ||||||
|
|
|
|
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Segment EBIT Analysis:
Variance | ||||||||||||||||
Operating Revenue |
Operating Expense |
Other | Total | |||||||||||||
Favorable/(Unfavorable) | ||||||||||||||||
(In millions) | ||||||||||||||||
Reservation and usage revenues |
$ | 134 | $ | | $ | | $ | 134 | ||||||||
Gas not used in operations and other natural gas sales |
(61 | ) | 7 | | (54 | ) | ||||||||||
Expansions |
18 | (3 | ) | 15 | 30 | |||||||||||
Regulatory liability adjustment |
40 | | | 40 | ||||||||||||
Operating and general and administrative expenses |
| (32 | ) | | (32 | ) | ||||||||||
Other(1) |
| (2 | ) | 2 | | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total impact on Segment EBIT |
$ | 131 | $ | (30 | ) | $ | 17 | $ | 118 | |||||||
|
|
|
|
|
|
|
|
(1) | Consists of individually insignificant items. |
Reservation and Usage Revenues. We experienced an overall net increase in our reservation and usage revenues of approximately $134 million for the year ended December 31, 2011 compared to 2010. The increase was primarily due to higher rates which became effective June 1, 2011 as a result of our November 2010 rate case, that is further discussed below, and higher throughput volumes due to increased supply in the Haynesville and Marcellus shale basins. Partially offsetting these favorable impacts were lower usage revenues on certain interruptible services due to lower basis differentials.
Gas Not Used in Operations and Other Natural Gas Sales. Effective June 1, 2011, we implemented a fuel volume tracker as part of our rate case filed with the FERC and as a result, we no longer recognize revenues associated with gas not used in operations which lowered our Segment EBIT by $67 million for the year ended December 31, 2011. In addition, we implemented an electric compression tracker as part of our rate case which resulted in lower electric compression expenses of $11 million. The unfavorable impacts associated with these operational activities are offset by higher reservation revenues discussed above. Prior to June 1, 2011, gas not used in operations resulted in revenues to us, which we recognized when the volumes were retained, valued at the market price specified in our tariff. During 2011, we experienced lower prices coupled with lower retained fuel volumes in excess of fuel used in operations primarily due to the shift in flow patterns, which unfavorably impacted our Segment EBIT by $10 million. Offsetting these unfavorable items were $8 million of other gas sales and $4 million of higher natural gas processing revenues recognized during 2011 compared to 2010.
Expansions. On November 1, 2011, we placed the 300 Line Project into service and as a result, our reservation revenues increased by $18 million in 2011. We also benefited from an increase in the equity portion of the allowance for funds used during construction or AFUDC related to this project and other expansion projects of $15 million in 2011, when compared to 2010. Partially offsetting these increases were depreciation and operating expenses of $3 million on the new facilities.
Below is additional information related to our significant expansion projects.
| MPP Project. The MPP project consists of approximately 8 miles of 30-inch pipeline looping and modifications to four existing compressor stations in Pennsylvania which will provide natural gas transportation from the Marcellus shale supply area to existing delivery points on our system. Upon completion, we expect the MPP project to increase natural gas delivery capacity in the region by approximately 235 MMcf/d. All of the firm transportation capacity resulting from this project is fully subscribed with two shippers through executed precedent agreements. We filed a certificate application with the FERC in December 2011 and anticipate receiving approval in late 2012. Pending regulatory approvals, construction is expected to begin in 2013, with a November 2013 in-service date. The expected cost for this project is less than $100 million. |
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| Northeast Upgrade Project. In 2010, we entered into precedent agreements with two shippers to provide 620 MMcf/d of additional firm transportation service from receipt points in the Marcellus shale basin to an interconnect in New Jersey. All of the firm transportation capacity is fully subscribed with these two shippers. This project includes approximately 40 miles of pipeline looping and approximately 22,310 horsepower of additional compression. Additionally, we are placing appurtenances in service to provide interim backhaul transport of natural gas. In March 2011, we filed an application with the FERC for certificate authorization to construct this project and we anticipate receiving approval in the first quarter of 2012. The expected cost for this project is approximately $400 million, and the project is anticipated to be placed in service in November 2013. |
Regulatory Liability Adjustment. As provided by our rate case settlement in December 2011, we recorded a reduction to our net regulatory liabilities resulting from the elimination of certain regulatory assets and liabilities associated with our postretirement benefit plan and certain deferred taxes since these items were provided for under prior rate settlements and there is no funding requirement or cost recovery in our current rates for these items. For a further discussion, see Item 8. Financial Statements and Supplementary Data, Notes 4 and 7.
Operating and General and Administrative Expenses. Our operating and general and administrative expenses were higher in 2011 compared to 2010 primarily due to higher benefits and payroll costs of $16 million. Additionally, our Segment EBIT was unfavorably impacted during 2011 by $14 million of increased contractor costs due to repairs on our pipeline system.
Regulatory Matters
Rate Case. In December 2011, the FERC approved our settlement that resolved the outstanding issues arising from our general rate case filing. The settlement provides for, among other things, (i) an increase in our base tariff rates effective June 1, 2011, (ii) implementation of cost trackers for fuel and pipeline safety and greenhouse gas, (iii) significant contract extensions to October 2014, (iv) a filing requirement for our next general rate case to be effective no earlier than April 2014 but no later than November 2015, and (v) a revenue sharing mechanism with certain of our customers for certain revenues above an annual threshold. In addition, as part of the settlement, we will refund approximately $68 million to our customers by March 31, 2012. We believe our accruals established for this matter are adequate.
Assets Sale. In November 2011, the FERC issued an order approving, in part, and rejecting certain portions of our abandonment application related to our October 2010 agreement to sell certain of our offshore pipeline assets and related facilities. The sale was contingent upon receiving approval to collect in our future rates the difference between the regulatory net book value and the purchase price (loss) and the designation of certain facilities as non-jurisdictional. In December 2011, we filed a request for partial rehearing and stay of the November order. We are currently negotiating an amended purchase and sale agreement that includes additional offshore assets not included in the October 2010 agreement and we anticipate filing a new abandonment application with the FERC by mid-2012. However, the outcome of the negotiations and of the FERCs approval of the application is currently undeterminable.
Cost and Revenue Study. In November 2011, our 50 percent owned affiliate, Bear Creek, along with other unaffiliated companies, received an order from the FERC related to an investigation into the rates charged to customers. The FERC ordered Bear Creek to file a full cost and revenue study within 75 days of the order. Bear Creek filed the cost and revenue study in January 2012 and the outcome of the proceeding is not expected to be material to our results of operations.
Interest and Debt Expense
Interest and debt expense for the year ended December 31, 2011, was $16 million lower than in 2010 due to an increase in capitalized AFUDC related to debt on our 300 Line Project and lower accruals related to our polychlorinated biphenyls (PCB) refund obligations. Additionally, we received a favorable franchise tax settlement in the third quarter of 2011 and as a result our accrued interest related to these taxes was lower compared to 2010.
Affiliated Interest Income, Net
The following table shows the average advances due from El Paso and the average short-term interest rates for the year ended December 31:
2011 | 2010 | |||||||
(In millions, except for rates) | ||||||||
Average advance due from El Paso |
$ | 844 | $ | 1,015 | ||||
Average short-term interest rate |
2.0 | % | 1.5 | % |
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Income Taxes
Effective October 1, 2011, we changed our tax entity status from a corporation to a limited liability company. As a single member limited liability company, we will continue to record income taxes on a separate return basis and reflect current and deferred income taxes in our financial statements.
Our effective tax rates of 33 percent and 39 percent for the years ended December 31, 2011 and 2010 were different than the statutory rate of 35 percent due to the effect of state income taxes. During the fourth quarter of 2011, we recorded a $14 million deferred state tax benefit to correct the estimated effective tax rate applicable to differences in financial statement and tax bases of property, plant and equipment. For a reconciliation of the statutory rate to the effective tax rates, see Item 8. Financial Statements and Supplementary Data, Note 2.
Liquidity and Capital Resources
Our primary sources of liquidity are cash flows from operating activities and amounts available to us under El Pasos cash management program while our primary uses of cash are for working capital, capital expenditures and debt service requirements. At December 31, 2011, we had a note receivable from El Paso of approximately $519 million. We do not intend to settle any amounts owed under this note within the next twelve months and therefore, classified it as non-current on our balance sheet. See Item 8. Financial Statements and Supplementary Data, Note 11 for a further discussion of El Pasos cash management program.
For the year ended December 31, 2011 compared with 2010, our operating cash flows increased by $113 million primarily due to an increase in our reservation revenues as a result of higher tariff rates effective June 1, 2011. Partially offsetting these cash inflows were settlements of refund obligations associated with our PCB liability.
Our cash capital expenditures for the year ended December 31, 2011 are listed below.
(In millions) | ||||
Expansions |
$ | 480 | ||
Maintenance |
158 | |||
Other(1) |
45 | |||
|
|
|||
Total |
$ | 683 | ||
|
|
(1) | Relates to building renovations at our corporate facilities prior to our distribution of these facilities to our parent in October 2011. |
Although financial market conditions have improved, continued volatility in the financial markets could impact our longer-term access to capital for future growth projects as well as the cost of such capital. Additionally, although the impacts are difficult to quantify at this point, a prolonged recovery of the global economy could have adverse impacts on natural gas consumption and demand. However, we believe our exposure to changes in natural gas consumption and demand is largely mitigated by a revenue base that is significantly comprised of long-term contracts that are based on firm demand charges and are less affected by a potential reduction in the actual usage or consumption of natural gas.
We believe we have adequate liquidity available to us to meet our capital requirements and our existing operating needs through cash flows from operating activities and amounts available to us under El Pasos cash management program. In addition, we are eligible to borrow amounts available under El Pasos $1.25 billion revolving credit agreement and are only liable for amounts we directly borrow. During the first half of 2011, El Paso refinanced this credit facility and its collateral restrictions under the facility were modified providing El Pasos master limited partnership the ability to acquire up to 100 percent ownership interests in us or another El Paso subsidiary, or some combination thereof. This credit facility provides for an elimination of collateral support upon El Paso achieving investment grade status by one of the rating agencies. Additionally, our cost to borrow under the El Paso credit facility has increased to LIBOR plus 2.25 percent. As of December 31, 2011, El Paso had approximately $620 million of capacity remaining and available to us and our affiliates under this credit agreement, and none of the amount outstanding under the facility was issued or
19
borrowed by us. For a further discussion of the credit facility, see Item 8. Financial Statements and Supplementary Data, Note 6. While we do not anticipate a need to directly access the financial markets in 2012 for any of our operating activities or expansion capital needs based on liquidity available to us, market conditions may impact our or El Pasos ability to act opportunistically. Our future plans could also be impacted by the completion of El Pasos announced acquisition by KMI.
For further detail on our risk factors including potential adverse general economic conditions including our ability to access financial markets which could impact our operations and liquidity, see Part I, Item 1A. Risk Factors.
Commitments and Contingencies
For a further discussion of our commitments and contingencies, see Item 8. Financial Statements and Supplementary Data, Note 7, which is incorporated herein by reference.
20
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to the risk of changing interest rates. At December 31, 2011, we had an interest bearing note receivable from El Paso of approximately $519 million, with a variable interest rate of 2.5% that is due upon demand. While we are exposed to changes in interest income based on changes to the variable interest rate, the fair value of this note receivable approximates the carrying value due to the note being due on demand and the market-based nature of the interest rate.
The table below shows the carrying value, the related weighted-average effective interest rates on our non-affiliated fixed rate long-term debt securities and the estimated fair value of these securities which is based on quoted market prices for the same or similar issues.
December 31, 2011 | December 31, 2010 | |||||||||||||||||||||||
Expected Fiscal Year of Maturity of Carrying Amounts |
Fair | Carrying | Fair | |||||||||||||||||||||
2012-2016 | Thereafter | Total | Value | Amount | Value | |||||||||||||||||||
(In millions, except for rates) | ||||||||||||||||||||||||
Liabilities: |
||||||||||||||||||||||||
Long-term debtfixed rate |
$ | 243 | $ | 1,525 | $ | 1,768 | $ | 2,096 | $ | 1,851 | $ | 2,071 | ||||||||||||
Average effective interest rate |
9.0 | % | 7.6 | % |
21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
MANAGEMENTS ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined by the Securities and Exchange Commission (SEC) rules adopted under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. It consists of policies and procedures that:
| pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
| provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
| provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Under the supervision and with the participation of management, including the President and Chief Financial Officer, we made an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2011. In making this assessment, we used the criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation, we concluded that our internal control over financial reporting was effective as of December 31, 2011.
22
Report of Independent Registered Public Accounting Firm
The Member of Tennessee Gas Pipeline Company, L.L.C.
We have audited the accompanying consolidated balance sheets of Tennessee Gas Pipeline Company, L.L.C. (the Company) as of December 31, 2011 and 2010, and the related consolidated statements of income and comprehensive income, members equity/stockholders equity, and cash flows for each of the three years in the period ended December 31, 2011. Our audits also included the financial statement schedule listed in the Index at Item 15(a) for each of the three years in the period ended December 31, 2011. These financial statements and schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Companys internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Tennessee Gas Pipeline Company, L.L.C. at December 31, 2011 and 2010, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP
Houston, Texas
February 27, 2012
23
TENNESSEE GAS PIPELINE COMPANY, L.L.C.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In millions)
Year Ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Operating revenues |
$ | 976 | $ | 845 | $ | 933 | ||||||
|
|
|
|
|
|
|||||||
Operating expenses |
||||||||||||
Operation and maintenance |
353 | 328 | 371 | |||||||||
Depreciation and amortization |
198 | 196 | 187 | |||||||||
Taxes, other than income taxes |
56 | 53 | 54 | |||||||||
|
|
|
|
|
|
|||||||
607 | 577 | 612 | ||||||||||
|
|
|
|
|
|
|||||||
Operating income |
369 | 268 | 321 | |||||||||
Earnings from unconsolidated affiliate |
14 | 14 | 11 | |||||||||
Other income, net |
40 | 23 | 13 | |||||||||
Interest and debt expense |
(134 | ) | (150 | ) | (155 | ) | ||||||
Affiliated interest income, net |
16 | 15 | 16 | |||||||||
|
|
|
|
|
|
|||||||
Income before income taxes |
305 | 170 | 206 | |||||||||
Income tax expense |
102 | 67 | 79 | |||||||||
|
|
|
|
|
|
|||||||
Net income |
203 | 103 | 127 | |||||||||
|
|
|
|
|
|
|||||||
Other comprehensive income |
||||||||||||
Unrealized actuarial gains on postretirement benefit obligations (net of income taxes of $2 in 2011) |
4 | | | |||||||||
|
|
|
|
|
|
|||||||
Comprehensive income |
$ | 207 | $ | 103 | $ | 127 | ||||||
|
|
|
|
|
|
See accompanying notes.
24
TENNESSEE GAS PIPELINE COMPANY, L.L.C.
CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts)
December 31, | ||||||||
2011 | 2010 | |||||||
ASSETS | ||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | | $ | | ||||
Accounts and note receivable |
||||||||
Customer, net of allowance |
8 | 24 | ||||||
Affiliates |
20 | 378 | ||||||
Other |
76 | 51 | ||||||
Materials and supplies |
57 | 44 | ||||||
Deferred income taxes |
52 | 43 | ||||||
Other |
10 | 5 | ||||||
|
|
|
|
|||||
Total current assets |
223 | 545 | ||||||
|
|
|
|
|||||
Property, plant and equipment, at cost |
5,158 | 4,951 | ||||||
Less accumulated depreciation and amortization |
1,002 | 1,056 | ||||||
|
|
|
|
|||||
4,156 | 3,895 | |||||||
Additional acquisition cost assigned to utility plant, net |
1,883 | 1,923 | ||||||
|
|
|
|
|||||
Total property, plant and equipment, net |
6,039 | 5,818 | ||||||
|
|
|
|
|||||
Other long-term assets |
||||||||
Note receivable from affiliate |
519 | 617 | ||||||
Investment in unconsolidated affiliate |
57 | 56 | ||||||
Other |
84 | 76 | ||||||
|
|
|
|
|||||
660 | 749 | |||||||
|
|
|
|
|||||
Total assets |
$ | 6,922 | $ | 7,112 | ||||
|
|
|
|
|||||
LIABILITIES AND MEMBERS EQUITY/STOCKHOLDERS EQUITY | ||||||||
Current liabilities |
||||||||
Accounts payable |
||||||||
Trade |
$ | 80 | $ | 90 | ||||
Affiliates |
45 | 38 | ||||||
Other |
64 | 57 | ||||||
Current maturities of long-term debt |
| 86 | ||||||
Taxes payable |
23 | 23 | ||||||
Contractual deposits |
29 | 28 | ||||||
Asset retirement obligations |
22 | 28 | ||||||
Accrued interest |
32 | 33 | ||||||
Accrued liabilities |
73 | 13 | ||||||
Regulatory liabilities |
40 | 78 | ||||||
Other |
8 | 25 | ||||||
|
|
|
|
|||||
Total current liabilities |
416 | 499 | ||||||
|
|
|
|
|||||
Long-term debt, less current maturities |
1,768 | 1,765 | ||||||
|
|
|
|
|||||
Other long-term liabilities |
||||||||
Deferred income taxes |
1,514 | 1,422 | ||||||
Regulatory liabilities |
11 | 90 | ||||||
Other |
30 | 35 | ||||||
|
|
|
|
|||||
1,555 | 1,547 | |||||||
|
|
|
|
|||||
Commitments and contingencies (Note 7) |
||||||||
Members equity/stockholders equity |
||||||||
Common stock, par value $5 per share; 300 shares authorized; 208 shares issued and outstanding in 2010 |
| | ||||||
Additional paid-in capital |
| 2,209 | ||||||
Retained earnings |
| 1,092 | ||||||
Members equity |
3,179 | | ||||||
Accumulated other comprehensive income |
4 | | ||||||
|
|
|
|
|||||
Total members equity/stockholders equity |
3,183 | 3,301 | ||||||
|
|
|
|
|||||
Total liabilities and members equity/stockholders equity |
$ | 6,922 | $ | 7,112 | ||||
|
|
|
|
See accompanying notes.
25
TENNESSEE GAS PIPELINE COMPANY, L.L.C.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Year Ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Cash flows from operating activities |
||||||||||||
Net income |
$ | 203 | $ | 103 | $ | 127 | ||||||
Adjustments to reconcile net income to net cash from operating activities |
||||||||||||
Depreciation and amortization |
198 | 196 | 187 | |||||||||
Deferred income tax expense |
85 | 72 | 2 | |||||||||
Earnings from unconsolidated affiliate, adjusted for cash distributions |
(1 | ) | 8 | 2 | ||||||||
Other non-cash income items |
(70 | ) | (16 | ) | (1 | ) | ||||||
Asset and liability changes |
||||||||||||
Accounts receivable |
2 | 42 | 17 | |||||||||
Change in deferred purchase price from accounts receivable sales |
(28 | ) | (35 | ) | | |||||||
Accounts payable |
8 | (41 | ) | 36 | ||||||||
Income taxes payable |
1 | (73 | ) | 17 | ||||||||
Other asset changes |
7 | (17 | ) | (25 | ) | |||||||
Other liability changes |
(40 | ) | 13 | 6 | ||||||||
|
|
|
|
|
|
|||||||
Net cash provided by operating activities |
365 | 252 | 368 | |||||||||
|
|
|
|
|
|
|||||||
Cash flows from investing activities |
||||||||||||
Capital expenditures |
(683 | ) | (321 | ) | (361 | ) | ||||||
Net change in notes receivable from affiliates |
400 | 390 | (232 | ) | ||||||||
Return of capital from investment in unconsolidated affiliate |
| 15 | | |||||||||
Other |
4 | (2 | ) | (9 | ) | |||||||
|
|
|
|
|
|
|||||||
Net cash provided by (used in) investing activities |
(279 | ) | 82 | (602 | ) | |||||||
|
|
|
|
|
|
|||||||
Cash flows from financing activities |
||||||||||||
Net proceeds from issuance of long-term debt |
| | 234 | |||||||||
Payments to retire long-term debt |
(86 | ) | | | ||||||||
Dividend paid to parent |
| (334 | ) | | ||||||||
|
|
|
|
|
|
|||||||
Net cash provided by (used in) financing activities |
(86 | ) | (334 | ) | 234 | |||||||
|
|
|
|
|
|
|||||||
Net change in cash and cash equivalents |
| | | |||||||||
Cash and cash equivalents |
||||||||||||
Beginning of period |
| | | |||||||||
|
|
|
|
|
|
|||||||
End of period |
$ | | $ | | $ | | ||||||
|
|
|
|
|
|
|||||||
Supplemental cash flow information |
||||||||||||
Interest paid, net of amounts capitalized |
$ | 128 | $ | 133 | $ | 130 | ||||||
Income tax payments |
12 | 78 | 60 |
See accompanying notes.
26
TENNESSEE GAS PIPELINE COMPANY, L.L.C.
CONSOLIDATED STATEMENTS OF MEMBERS EQUITY/STOCKHOLDERS EQUITY
(In millions, except share amounts)
Common Stock | Additional Paid-in |
Retained | Note Receivable from |
Total Stockholders |
Members | Accumulated Other Comprehensive |
Total Members |
|||||||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Affiliate | Equity | Equity | Income | Equity | ||||||||||||||||||||||||||||
January 1, 2009 |
208 | $ | | $ | 2,209 | $ | 1,196 | $ | (334 | ) | $ | 3,071 | $ | | $ | | $ | | ||||||||||||||||||
Net income |
127 | 127 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
December 31, 2009 |
208 | | 2,209 | 1,323 | (334 | ) | 3,198 | | | | ||||||||||||||||||||||||||
Net income |
103 | 103 | ||||||||||||||||||||||||||||||||||
Reclassification of note receivable from affiliate (Note 11) |
334 | 334 | ||||||||||||||||||||||||||||||||||
Dividend paid to parent |
(334 | ) | (334 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
December 31, 2010 |
208 | | 2,209 | 1,092 | | 3,301 | | | | |||||||||||||||||||||||||||
Net income |
||||||||||||||||||||||||||||||||||||
For the nine months ended September 30, 2011 |
125 | 125 | ||||||||||||||||||||||||||||||||||
For the three months ended December 31, 2011 |
78 | 78 | ||||||||||||||||||||||||||||||||||
Conversion to limited liability company (October 1, 2011) |
(208 | ) | (2,209 | ) | (1,217 | ) | (3,426 | ) | 3,426 | 3,426 | ||||||||||||||||||||||||||
Non-cash distribution to parent (Note 11) |
(325 | ) | (325 | ) | ||||||||||||||||||||||||||||||||
Other comprehensive income |
4 | 4 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
December 31, 2011 |
| $ | | $ | | $ | | $ | | $ | | $ | 3,179 | $ | 4 | $ | 3,183 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
27
TENNESSEE GAS PIPELINE COMPANY, L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
We are a Delaware limited liability company, originally formed in 1947 as a corporation. Effective October 1, 2011, we converted our legal structure to a limited liability company and changed our name to Tennessee Gas Pipeline Company, L.L.C. We are an indirect wholly owned subsidiary of El Paso Corporation (El Paso).
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) and include the accounts of all consolidated subsidiaries after the elimination of intercompany accounts and transactions. Our financial statements for prior periods include reclassifications that were made to conform to the current year presentation, none of which impacted our reported net income, stockholders equity or cash flows from operating activities.
On October 16, 2011, El Paso announced a definitive agreement with Kinder Morgan, Inc. (KMI) whereby KMI will acquire El Paso in a transaction that valued El Paso at approximately $38 billion (based on the KMI stock price at that date), including the assumption of debt. The transaction has been approved by each companys board of directors but remains subject to approvals of El Paso shareholders, the Federal Trade Commission (FTC) and other customary regulatory and other approvals. The approval of KMI shareholders will also be required, but a voting agreement has been executed by the majority of the shareholders of KMI to support the transaction. The completion of the merger may trigger change in control provisions in certain agreements (e.g. debt) to which we are a party.
Principles of Consolidation
We consolidate entities when we have the ability to control or direct the operating and financial decisions of the entity or when we have a significant interest in the entity that gives us the ability to direct the activities that are significant to that entity. The determination of our ability to control, direct or exert significant influence over an entity involves the use of judgment. We apply the equity method of accounting where we can exert significant influence over, but do not control or direct the policies, decisions or activities of an entity. We use the cost method of accounting where we are unable to exert significant influence over the entity.
Use of Estimates
The preparation of our financial statements requires the use of estimates and assumptions that affect the amounts we report as assets, liabilities, revenues and expenses and our disclosures in these financial statements. Actual results can, and often do, differ from those estimates.
Regulated Operations
Our natural gas pipeline and storage operations are subject to the jurisdiction of the Federal Energy Regulatory Commission (FERC) and follow the Financial Accounting Standards Boards accounting standards for regulated operations. Under these standards, we record regulatory assets and liabilities that would not be recorded for non-regulated entities. Regulatory assets and liabilities represent probable future revenues or expenses associated with certain charges or credits that are expected to be recovered from or refunded to customers through the rate making process. Items to which we may record a regulatory asset or liability include certain postretirement employee benefit plan costs in periods prior to 2011 when our rate case was settled, loss on reacquired debt, taxes related to an equity return component on regulated capital projects and certain costs related to gas not used in operations and other costs included in, or expected to be included in, future rates. For further details of our regulatory assets and liabilities, see Note 4.
28
Cash and Cash Equivalents
We consider short-term investments with an original maturity of less than three months to be cash equivalents.
Allowance for Doubtful Accounts
We establish provisions for losses on accounts receivable and for natural gas imbalances due from shippers and operators if we determine that we will not collect all or part of the outstanding balance. We regularly review collectability and establish or adjust our allowance as necessary using the specific identification method.
Materials and Supplies
We value materials and supplies at the lower of cost or market value with cost determined using the average cost method.
Natural Gas Imbalances
Natural gas imbalances occur when the amount of natural gas delivered from or received by a pipeline system or storage facility differs from the contractual amount to be delivered or received. We value these imbalances due to or from shippers and operators utilizing current index prices. Imbalances are settled in cash or in-kind, subject to the terms of our tariff.
Imbalances due from others are reported in our balance sheet as either accounts receivable from customers or accounts receivable from affiliates. Imbalances owed to others are reported on the balance sheet as either trade accounts payable or accounts payable to affiliates. We classify all imbalances as current as we expect to settle them within a year.
Property, Plant and Equipment
Our property, plant and equipment is recorded at its original cost of construction or, upon acquisition, at either the fair value of the assets acquired or the cost to the entity that first placed the asset in service. For assets we construct, we capitalize direct costs, such as labor and materials, and indirect costs, such as overhead, interest and an equity return component, as allowed by the FERC. We capitalize major units of property replacements or improvements and expense minor items.
We use the composite (group) method to depreciate regulated property, plant and equipment. Under this method, assets with similar useful lives and other characteristics are grouped and depreciated as one asset. We apply the depreciation rate approved in our rate settlements to the total cost of the group until its net book value equals its salvage value. We re-evaluate depreciation rates each time we file with the FERC for an increase or decrease in our transportation and storage rates. Currently, our depreciation rates vary from one percent to 25 percent per year.
When we retire regulated property, plant and equipment, we charge accumulated depreciation and amortization for the original cost of the assets in addition to the cost to remove, sell or dispose of the assets, less their salvage value. We do not recognize a gain or loss unless we sell an entire operating unit, as determined by the FERC. We include gains or losses on dispositions of operating units in operation and maintenance expense in our income statements. For properties not subject to regulation by the FERC, we reduce property, plant and equipment for its original cost, less accumulated depreciation and salvage value with any remaining gain or loss recorded in income.
Included in our property balances are additional acquisition costs, which represent the excess purchase costs associated with purchase business combinations allocated to us. These costs are amortized on a straight-line basis and are not recoverable in our rates under current FERC policies.
Also included in our property balances are base gas and working gas at our storage facilities. We periodically evaluate natural gas volumes at our storage facilities for gas losses. When events or circumstances indicate a loss has occurred, we recognize a loss in our income statement or defer the loss as a regulatory asset on our balance sheet if deemed probable of recovery through future rates charged to our customers.
29
We capitalize a carrying cost (an allowance for funds used during construction or AFUDC) on debt and equity funds related to the construction of long-lived assets. This carrying cost consists of a return on the investment financed by debt and a return on the investment financed by equity. The debt portion is calculated based on the average cost of debt. Interest costs capitalized are included as a reduction to interest and debt expense on our income statements. The equity portion is calculated based on the most recent FERC approved rate of return. Equity amounts capitalized are included in other income on our income statements.
Asset and Investment Divestitures/Impairments
We evaluate assets and investments for impairment when events or circumstances indicate that their carrying values may not be recovered. These events include market declines that are believed to be other than temporary, changes in the manner in which we intend to use a long-lived asset, decisions to sell an asset or investment and adverse changes in the legal or business environment such as adverse actions by regulators. If an event occurs, we evaluate the recoverability of our carrying value based on either (i) the long-lived assets ability to generate future cash flows on an undiscounted basis or (ii) the fair value of the investment in an unconsolidated affiliate. If an impairment is indicated, or if we decide to sell a long-lived asset or group of assets, we adjust the carrying value of the asset downward, if necessary, to its estimated fair value. Our fair value estimates are generally based on assumptions market participants would use, including market data obtained through the sales process or an analysis of expected discounted cash flows.
Revenue Recognition
Our revenues are primarily generated from natural gas transportation and storage services. Revenues for all services are based on the thermal quantity of gas delivered or subscribed at a price specified in the contract. For our transportation and storage services, we recognize reservation revenues on firm contracted capacity ratably over the contract period. For interruptible or volumetric-based services, we record revenues when physical deliveries of natural gas are made at the agreed upon delivery point or when gas is injected or withdrawn from the storage facility. For contracts with step-up or step-down rate provisions that are not related to changes in levels of service, we recognize reservation revenues ratably over the contract life. Prior to the implementation of a fuel volume tracker effective June 1, 2011 as part of our rate case filed with the FERC, gas not used in operations was based on the volumes of natural gas we were allowed to retain relative to the amounts of natural gas we used for operating purposes. We recognized revenue on gas not used in operations from our shippers when we retained the volumes at the market price required under our tariff. We are subject to FERC regulations and, as a result, revenues we collect may be subject to refund in a rate proceeding. We establish reserves for these potential refunds.
Environmental Costs and Other Contingencies
Environmental Costs. We record liabilities at their undiscounted amounts on our balance sheet as other current and long-term liabilities when environmental assessments indicate that remediation efforts are probable and the costs can be reasonably estimated. Estimates of our liabilities are based on currently available facts, existing technology and presently enacted laws and regulations, taking into consideration the likely effects of other societal and economic factors, and include estimates of associated legal costs. These amounts also consider prior experience in remediating contaminated sites, other companies clean-up experience and data released by the Environmental Protection Agency (EPA) or other organizations. Our estimates are subject to revision in future periods based on actual costs or new circumstances. We capitalize costs that benefit future periods and we recognize a current period charge in operation and maintenance expense when clean-up efforts do not benefit future periods.
We evaluate any amounts paid directly or reimbursed by government sponsored programs and potential recoveries or reimbursements of remediation costs from third parties, including insurance coverage, separately from our liability. Recovery is evaluated based on the creditworthiness or solvency of the third party, among other factors. When recovery is assured, we record and report an asset separately from the associated liability on our balance sheet.
30
Other Contingencies. We recognize liabilities for other contingencies when we have an exposure that indicates it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Where the most likely outcome of a contingency can be reasonably estimated, we accrue a liability for that amount. Where the most likely outcome cannot be estimated, a range of potential losses is established and if no one amount in that range is more likely than any other, the low end of the range is accrued.
Income Taxes
El Paso maintains a tax accrual policy to record both regular and alternative minimum taxes for companies included in its consolidated federal and state income tax returns. The policy provides, among other things, that (i) each company in a taxable income position will accrue a current expense equivalent to its federal and state income taxes, and (ii) each company in a tax loss position will accrue a benefit to the extent its deductions, including general business credits, can be utilized in the consolidated returns. El Paso pays all consolidated U.S. federal and state income taxes directly to the appropriate taxing jurisdictions and, under a separate tax billing agreement, El Paso may bill or refund its subsidiaries for their portion of these income tax payments. Prior to our conversion to a limited liability company which is further discussed below, we filed and paid taxes directly to certain state taxing authorities.
Effective October 1, 2011, we changed our tax entity status from a corporation to a limited liability company. As a single member limited liability company, we continue to record federal income taxes on a separate return basis. Pursuant to El Pasos policy, we record current income taxes based on our taxable income and we provide for deferred income taxes to reflect estimated future tax payments and receipts. Deferred taxes represent the tax impacts of differences between the financial statement and tax bases of assets and liabilities and carryovers at each year end. We account for tax credits under the flow-through method, which reduces the provision for income taxes in the year the tax credits first become available. We reduce deferred tax assets by a valuation allowance when, based on our estimates, it is more likely than not that a portion of those assets will not be realized in a future period. The estimates utilized in the recognition of deferred tax assets are subject to revision, either up or down, in future periods based on new facts or circumstances.
Accounting for Asset Retirement Obligations
We record a liability for legal obligations associated with the replacement, removal or retirement of our long-lived assets in the period the obligation is incurred and estimable. Our asset retirement liabilities are initially recorded at their estimated fair value with a corresponding increase to property, plant and equipment. This increase in property, plant and equipment is then depreciated over the useful life of the asset to which that liability relates. An ongoing expense is recognized for changes in the value of the liability as a result of the passage of time, which we record as depreciation and amortization expense in our income statement. We have the ability to recover certain of these costs from our customers and have recorded an asset (rather than expense) associated with the accretion of the liabilities described above.
Postretirement Benefits
We maintain a postretirement benefit plan covering certain of our former employees. This plan requires us to make contributions to fund the benefits to be paid under the plan. These contributions are invested until the benefits are paid to plan participants. The net benefit cost of this plan is recorded in our income statement and is a function of many factors including benefits earned during the year by plan participants (which is a function of factors such as the level of benefits provided under the plan, actuarial assumptions and the passage of time), expected returns on plan assets and amortization of certain deferred gains and losses.
In accounting for our postretirement benefit plan, we record an asset or liability based on the over funded or under funded status of the plan. Any deferred amounts related to unrecognized gains and losses or changes in actuarial assumptions are recorded in accumulated other comprehensive income, a component of members equity, until those gains and losses are recognized in the income statement. For a further discussion of our policy with respect to our postretirement benefit plan, see Note 8.
31
2. Income Taxes
Effective October 1, 2011, we changed our tax entity status from a corporation to a limited liability company. As a single member limited liability company, we continue to record federal income taxes on a separate return basis and reflect current and deferred income taxes in our financial statements.
Components of Income Tax Expense. The following table reflects the components of income tax expense included in net income for each of the three years ended December 31.
2011 | 2010 | 2009 | ||||||||||
(In millions) | ||||||||||||
Current |
||||||||||||
Federal |
$ | 13 | $ | (8 | )(1) | $ | 76 | |||||
State |
4 | 3 | 1 | |||||||||
|
|
|
|
|
|
|||||||
17 | (5 | ) | 77 | |||||||||
|
|
|
|
|
|
|||||||
Deferred |
||||||||||||
Federal |
96 | 64 | (7 | ) | ||||||||
State |
(11 | ) | 8 | 9 | ||||||||
|
|
|
|
|
|
|||||||
85 | 72 | 2 | ||||||||||
|
|
|
|
|
|
|||||||
Total income tax expense |
$ | 102 | $ | 67 | $ | 79 | ||||||
|
|
|
|
|
|
(1) | During 2010, we utilized a portion of our net operating loss carryover which resulted in a tax benefit for the year ended December 31, 2010. |
Effective Tax Rate Reconciliation. Our income tax expense differs from the amount computed by applying the statutory federal income tax rate of 35 percent for the following reasons for each of the three years ended December 31:
2011 | 2010 | 2009 | ||||||||||
(In millions, except for rates) | ||||||||||||
Income tax expense at the statutory federal rate of 35% |
$ | 107 | $ | 60 | $ | 72 | ||||||
State income taxes, net of federal income tax effect |
(5 | ) | 7 | 7 | ||||||||
|
|
|
|
|
|
|||||||
Income tax expense |
$ | 102 | $ | 67 | $ | 79 | ||||||
|
|
|
|
|
|
|||||||
Effective tax rate |
33 | % | 39 | % | 38 | % | ||||||
|
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|
|
|
|
During the fourth quarter of 2011, we recorded a $14 million deferred state tax benefit to correct the estimated effective tax rate applicable to differences in financial statement and tax bases of property, plant and equipment.
Deferred Tax Assets and Liabilities. The following are the components of our net deferred tax liability at December 31:
2011 | 2010 | |||||||
(In millions) | ||||||||
Deferred tax liabilities |
||||||||
Property, plant and equipment |
$ | 1,787 | $ | 1,500 | ||||
Other |
20 | 6 | ||||||
|
|
|
|
|||||
Total deferred tax liability |
1,807 | 1,506 | ||||||
|
|
|
|
|||||
Deferred tax assets |
||||||||
Net operating loss and tax credit carryovers |
||||||||
U.S. Federal |
250 | 26 | ||||||
State |
30 | 19 | ||||||
Other liabilities |
65 | 81 | ||||||
|
|
|
|
|||||
Total deferred tax asset |
345 | 126 | ||||||
|
|
|
|
|||||
Net deferred tax liability |
$ | 1,462 | $ | 1,380 | ||||
|
|
|
|
We believe it is more likely than not that we will realize the benefit of our deferred tax assets due to expected future taxable income, including the effect of future reversals of existing taxable temporary differences primarily related to depreciation.
32
Net Operating Loss (NOL) Carryovers. The table below presents the details of our federal and state NOL carryover periods as of December 31, 2011:
2012 | 2013-2016 | 2017-2021 | 2022-2031 | Total | ||||||||||||||||
(In millions) | ||||||||||||||||||||
U.S. federal NOL |
$ | | $ | | $ | 63 | $ | 652 | $ | 715 | ||||||||||
State NOL |
9 | 165 | 235 | 322 | 731 |
Usage of our U.S. federal carryovers is subject to the limitations provided under Sections 382 and 383 of the Internal Revenue Code as well as the separate return limitation year rules of Internal Revenue Service regulations.
Unrecognized Tax Benefits. El Paso files consolidated U.S. federal and certain state tax returns which include our taxable income. Prior to our conversion to a limited liability company, we filed and paid taxes directly to certain state taxing authorities. With a few exceptions, we and El Paso are no longer subject to state and local income tax examinations by tax authorities for years prior to 2001 and U.S. income tax examinations for years prior to 2007. For years in which our returns are still subject to review, our unrecognized tax benefits could increase or decrease our income tax expense and our effective income tax rates as these matters are finalized. We are currently unable to estimate the range of potential impacts the resolution of any contested matters could have on our financial statements. The following table shows the change in our unrecognized tax benefits:
2011 | 2010 | |||||||
(In millions) | ||||||||
Amount at January 1 |
$ | 18 | $ | 16 | ||||
Addition: |
||||||||
Tax positions taken in prior years |
| 6 | ||||||
Tax positions taken in current year |
1 | | ||||||
Reduction: |
||||||||
Settlements with taxing authorities |
| (4 | ) | |||||
|
|
|
|
|||||
Amount at December 31 |
$ | 19 | $ | 18 | ||||
|
|
|
|
As of December 31, 2011 and 2010, approximately $16 million and $15 million (net of federal tax benefits) of unrecognized tax benefits and associated interest and penalties would affect our income tax expense and our effective income tax rate if recognized in future periods. While the amount of our unrecognized tax benefits could change in the next twelve months, we do not expect this change to have a significant impact on our results of operations or financial position.
We classify interest and penalties related to unrecognized tax benefits as income taxes in our financial statements. As of December 31, 2011 and 2010, we had liabilities for interest and penalties related to our unrecognized tax benefits of approximately $4 million. During 2011, 2010 and 2009, we accrued less than $1 million of interest. In addition, during 2010 we settled a state tax audit which generated a reduction of $3 million to the interest and penalties liability related to our unrecognized tax benefits.
3. Financial Instruments
At December 31, 2011 and 2010, the carrying amounts of cash and cash equivalents and trade receivables and payables represent fair value because of the short-term nature of these instruments. At December 31, 2011 and 2010, we had an interest bearing note receivable from El Paso of approximately $519 million and $976 million due upon demand, with a variable interest rate of 2.5% and 1.5%. While we are exposed to changes in interest income based on changes to the variable interest rate, the fair value of this note receivable approximates the carrying value due to the note being due on demand and the market-based nature of the interest rate.
In addition, the carrying amounts of our long-term debt and their estimated fair values, which are primarily based on quoted market prices for the same or similar issues (Level 2 fair value measurement), are as follows at December 31:
2011 | 2010 | |||||||||||||||
Carrying Amount |
Fair Value |
Carrying Amount |
Fair Value |
|||||||||||||
(In millions) | ||||||||||||||||
Long-term debt, including current maturities |
$ | 1,768 | $ | 2,096 | $ | 1,851 | $ | 2,071 |
33
4. Regulatory Assets and Liabilities
Our regulatory asset and liability balances are recoverable or reimbursable over various periods. Below are the details of our regulatory assets and liabilities at December 31:
2011 | 2010 | |||||||
(In millions) | ||||||||
Current regulatory assets(1) |
$ | 7 | $ | 3 | ||||
|
|
|
|
|||||
Non-current regulatory assets |
||||||||
Taxes on capitalized funds used during construction |
50 | 38 | ||||||
Postretirement benefits |
| 2 | ||||||
Other |
5 | 6 | ||||||
|
|
|
|
|||||
Total non-current regulatory assets(1) |
55 | 46 | ||||||
|
|
|
|
|||||
Total regulatory assets |
$ | 62 | $ | 49 | ||||
|
|
|
|
|||||
Current regulatory liabilities |
||||||||
Environmental |
$ | 40 | $ | 78 | ||||
|
|
|
|
|||||
Total current regulatory liabilities |
40 | 78 | ||||||
|
|
|
|
|||||
Non-current regulatory liabilities |
||||||||
Environmental |
6 | 44 | ||||||
Postretirement benefits |
| 35 | ||||||
Other (2) |
5 | 11 | ||||||
|
|
|
|
|||||
Total non-current regulatory liabilities |
11 | 90 | ||||||
|
|
|
|
|||||
Total regulatory liabilities |
$ | 51 | $ | 168 | ||||
|
|
|
|
(1) | Included in other current and long-term assets on our balance sheets. |
(2) | As part of our rate case settlement in December 2011, we were required to eliminate our regulatory liability associated with certain deferred taxes. We reflected this adjustment as a net increase to our operating revenues of approximately $11 million. For a further discussion of our rate case, see Note 7. |
The significant regulatory assets and liabilities include:
Taxes on Capitalized Funds Used During Construction. Represents the regulatory asset balance established to offset the deferred tax for the equity component of AFUDC. Taxes on capitalized funds used during construction and the offsetting deferred income taxes are included in the rate base and are recovered over the depreciable lives of the long-lived asset to which they relate.
Postretirement Benefits. These balances represented unrecognized gains and losses or changes in actuarial assumptions related to our postretirement benefit plan and differences in the postretirement benefit related amounts expensed and the amounts recovered in rates. As part of our rate case settlement in December 2011, we were required to reduce these balances. As such, we reclassified $4 million (net of income taxes of $2 million) to accumulated other comprehensive income which represented the unrecognized gain on our postretirement benefit plan at the time of the settlement. In addition, we recorded an increase to our operating revenues of approximately $29 million related to the remaining other postretirement benefit related costs. For a further discussion of our rate case, see Note 7.
Environmental. Includes amounts collected, substantially in excess of certain polychlorinated biphenyls (PCB) environmental remediation costs incurred to date, through a surcharge to our customers under a settlement approved by the FERC in November of 1995. This environmental liability is not deducted from the rate base on which we are allowed to earn a return. For a further discussion of the PCB matter, see Note 7.
34
5. Property, Plant and Equipment
Additional Acquisition Costs. Included in our property balances are additional acquisition costs assigned to utility plant, which represent the excess of allocated purchase costs over the historical costs of the facilities. At December 31, 2011 and 2010, additional acquisition costs assigned to utility plant was approximately $2.4 billion and accumulated depreciation was approximately $498 million and $458 million, respectively. These additional acquisition costs are being amortized on a straight-line basis over 62 years and are not recoverable in our rates under current FERC policies. Our amortization expense related to additional acquisition costs assigned to utility plant was approximately $40 million, $40 million and $39 million for the years ended December 31, 2011, 2010 and 2009.
Capitalized Costs During Construction. Interest costs capitalized are included as a reduction to interest and debt expense on our income statements and were $12 million, $6 million and $3 million during the years ended December 31, 2011, 2010 and 2009. Equity amounts capitalized are included in other income on our income statements and were $22 million, $13 million and $6 million (exclusive of taxes) during the years ended December 31, 2011, 2010 and 2009.
Construction Work-In-Progress. At December 31, 2011 and 2010, we had $134 million and $406 million of construction work-in-progress included in our property, plant and equipment.
Asset Retirement Obligations. We have legal obligations associated with the retirement of our natural gas pipeline, transmission facilities and storage wells. We have obligations to plug storage wells when we no longer plan to use them and when we abandon them. Our legal obligations associated with our natural gas transmission facilities primarily involve purging, sealing and possibly removing the facilities if they are abandoned. We also have obligations to remove hazardous materials associated with our natural gas transmission facilities if they are ever demolished or replaced. We continue to evaluate our asset retirement obligations and future developments could impact the amounts we record.
Where we can reasonably estimate the asset retirement obligation, we accrue a liability based on an estimate of the timing and amount of settlement. In estimating our asset retirement obligations, we utilize several assumptions, including a projected inflation rate of 2.5 percent, and credit-adjusted discount rates that currently range from five to 12 percent based on when the liabilities were recorded. We record changes in these estimates based on changes in the expected amount and timing of payments to settle our obligations. We intend on operating and maintaining our natural gas pipeline and storage systems as long as supply and demand for natural gas exists, which we expect for the foreseeable future. Therefore, we believe that we cannot reasonably estimate the asset retirement obligation for the substantial majority of our natural gas pipeline and storage system assets because these assets have indeterminate lives.
The net asset retirement obligation reported on our balance sheets in current and other long-term liabilities, and the changes in the net liability for the years ended December 31 were as follows:
2011 | 2010 | |||||||
(In millions) | ||||||||
Net asset retirement obligation at January 1 |
$ | 29 | $ | 91 | ||||
Liabilities settled |
(2 | ) | (26 | ) | ||||
Accretion expense |
| 2 | ||||||
Liabilities incurred |
| 5 | ||||||
Changes in estimate(1) |
(4 | ) | (43 | ) | ||||
|
|
|
|
|||||
Net asset retirement obligation at December 31(2) |
$ | 23 | $ | 29 | ||||
|
|
|
|
(1) | 2010 amount reflects updated information received on our hurricane related asset retirement obligations. |
(2) | For the years ended December 31, 2011 and 2010, approximately $22 million and $28 million of this amount are reflected as current liabilities on our balance sheets. |
35
6. Debt and Credit Facilities
Debt. Our long-term debt consisted of the following at December 31:
2011 | 2010 | |||||||
(In millions) | ||||||||
6.0% Debentures due December 2011 |
$ | | $ | 86 | ||||
8.0% Notes due February 2016 |
250 | 250 | ||||||
7.5% Debentures due April 2017 |
300 | 300 | ||||||
7.0% Debentures due March 2027 |
300 | 300 | ||||||
7.0% Debentures due October 2028 |
400 | 400 | ||||||
8.375% Notes due June 2032 |
240 | 240 | ||||||
7.625% Debentures due April 2037 |
300 | 300 | ||||||
|
|
|
|
|||||
1,790 | 1,876 | |||||||
Less: Current maturities |
| 86 | ||||||
Unamortized discount |
22 | 25 | ||||||
|
|
|
|
|||||
Total long-term debt |
$ | 1,768 | $ | 1,765 | ||||
|
|
|
|
Credit Facility. We are eligible to borrow amounts available under El Pasos $1.25 billion revolving credit agreement and are only liable for amounts we directly borrow. During the first half of 2011, El Paso refinanced this credit facility and its collateral restrictions were modified providing El Pasos master limited partnership the ability to acquire up to 100 percent ownership interests in us or another El Paso subsidiary, or some combination thereof. This credit facility provides for an elimination of collateral support upon El Paso achieving investment grade status by one of the rating agencies. Additionally, our current cost to borrow under the El Paso credit facility has increased to LIBOR plus 2.25 percent. As of December 31, 2011, El Paso had approximately $620 million of capacity remaining and available to us and our affiliates under this credit agreement, and none of the amount outstanding under the facility was issued or borrowed by us. Our member interest and the common stock of another El Paso subsidiary are pledged as collateral under the credit agreement.
Under El Pasos $1.25 billion revolving credit agreement and our indentures, we are subject to a number of restrictions and covenants. The most restrictive of these include (i) limitations on the incurrence of additional debt, based on a ratio of debt to EBITDA (as defined in the agreements), which shall not exceed 5 to 1; (ii) limitations on the use of proceeds from borrowings; (iii) limitations, in some cases, on transactions with our affiliates; (iv) limitations on the incurrence of liens; and (v) potential limitations on our ability to declare and pay dividends. For the year ended December 31, 2011, we were in compliance with our debt-related covenants.
7. Commitments and Contingencies
Legal Proceedings
We and our affiliates are named defendants in numerous legal proceedings and claims that arise in the ordinary course of our business. For each of these matters, we evaluate the merits of the case or claim, our exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If we determine that an unfavorable outcome is probable and can be estimated, we establish the necessary accruals. While the outcome of these matters cannot be predicted with certainty, and there are still uncertainties related to the costs we may incur, based upon our evaluation and experience to date, we believe we have established appropriate reserves for these matters. It is possible, however, that new information or future developments could require us to reassess our potential exposure related to these matters and adjust our accruals accordingly, and these adjustments could be material. At December 31, 2011, we had approximately $2 million accrued for our outstanding legal proceedings, which has not been reduced by $2 million of related insurance receivables.
Environmental Matters
We are subject to federal, state and local laws and regulations governing environmental quality and pollution control. These laws and regulations require us to remove or remedy the effect of the disposal or release of specified substances at current and former operating sites. At December 31, 2011 and 2010, our accrual was approximately $5 million and $4 million for expected remediation costs and associated onsite, offsite and groundwater technical studies and for related environmental legal costs; however, we estimate that our exposure could be as high as $9 million at December 31, 2011. Our accrual at December 31, 2011 includes approximately $1 million for environmental contingencies related to properties we previously owned.
36
Our environmental remediation projects are in various stages of completion. Our recorded liabilities reflect our current estimates of amounts we will spend to remediate these sites. However, depending on the stage of completion or assessment, the ultimate extent of contamination or remediation required may not be known. As additional assessments occur or remediation efforts continue, we may incur additional liabilities.
PCB Cost Recoveries and Refund. Since 1994, we have been conducting remediation activities at certain of our compressor stations associated with PCBs and other hazardous materials. We have collected amounts, substantially in excess of remediation costs incurred to date, through a surcharge to our customers under a settlement approved by the FERC in November of 1995. In November 2009, the FERC approved an amendment to the 1995 settlement that provides for interim refunds over a three year period of approximately $157 million of our collected amounts plus interest of 8%. Through December 31, 2011, we have refunded approximately $138 million, including interest, to our customers. Our remaining refund obligations of approximately $40 million, including interest, are recorded as current regulatory liabilities on our balance sheet at December 31, 2011 and these amounts are expected to be refunded to our customers during 2012.
Superfund Matters. Included in our recorded environmental liabilities are projects where we have received notice that we have been designated or could be designated as a Potentially Responsible Party (PRP) under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), commonly known as Superfund, or state equivalents for four active sites. Liability under the federal CERCLA statute may be joint and several, meaning that we could be required to pay in excess of our pro rata share of remediation costs. We consider the financial strength of other PRPs in estimating our liabilities. Accruals for these matters are included in the environmental reserve discussed above.
For 2012, we estimate that our total remediation expenditures will be approximately $2 million, most of which will be expended under government directed clean-up plans. In addition, we expect to make capital expenditures for environmental matters of approximately $9 million in the aggregate for 2012 through 2016, including capital expenditures associated with the impact of the EPA rule on emissions of hazardous air pollutants from reciprocating internal combustion engines which are subject to regulations with which we have to be in compliance by October 2013.
It is possible that new information or future developments could require us to reassess our potential exposure related to environmental matters. We may incur significant costs and liabilities in order to comply with existing environmental laws and regulations. It is also possible that other developments, such as increasingly strict environmental laws, regulations and orders of regulatory agencies, as well as claims for damages to property and the environment or injuries to employees and other persons resulting from our current or past operations, could result in substantial costs and liabilities in the future. As this information becomes available, or other relevant developments occur, we will adjust our accrual amounts accordingly. While there are still uncertainties related to the ultimate costs we may incur, based upon our evaluation and experience to date, we believe our reserves are adequate.
Rates and Regulatory Matter
In December 2011, the FERC approved our settlement that resolved the outstanding issues arising from our general rate case filing. The settlement provides for, among other things, (i) an increase in our base tariff rates effective June 1, 2011, (ii) implementation of cost trackers for fuel and pipeline safety and greenhouse gas, (iii) significant contract extensions to October 2014, (iv) a filing requirement for our next general rate case to be effective no earlier than April 2014 but no later than November 2015, and (v) a revenue sharing mechanism with certain of our customers for certain revenues above an annual threshold. In addition, as part of the settlement, we will refund approximately $68 million to our customers by March 31, 2012. We believe our accruals established for this matter are adequate.
In addition to the provisions discussed above, the settlement also required us to reduce the net regulatory liabilities associated with our postretirement benefit plan and certain deferred taxes. We have reflected these adjustments as an increase to our operating revenues of approximately $40 million since these items were provided for under prior rate settlements and there is no funding requirement or cost recovery in our current rates for these items. For a further discussion of these regulatory assets and liabilities, see Note 4.
37
Other Commitments
Capital Commitments. At December 31, 2011, we had capital commitments of approximately $47 million primarily related to our Northeast Upgrade Project and 300 Line Project, of which $27 million is expected to be spent in 2012. We have other planned capital projects that are discretionary in nature, with no substantial contractual capital commitments made in advance of the actual expenditures.
Purchase Obligations. We have entered into unconditional purchase obligations primarily for transportation, storage and other services, totaling $178 million at December 31, 2011. Our annual obligations under these purchase obligations are $38 million in 2012, $27 million in 2013, $21 million in 2014, $16 million in 2015, $15 million in 2016, and $61 million in total thereafter.
Operating Leases. We lease property, facilities and equipment under various operating leases. Future minimum annual rental commitments under our operating leases at December 31, 2011, were as follows:
Year Ending December 31, |
(In millions) | |||
2012 |
$ | 1 | ||
2013 |
1 | |||
2014 |
1 | |||
2015 |
1 | |||
Thereafter |
1 | |||
|
|
|||
Total |
$ | 5 | ||
|
|
Rental expense on our lease obligations for each of the years ended December 31, 2011, 2010 and 2009 were $2 million and is reflected in operation and maintenance expense on our income statements.
Other Commercial Commitments. We hold cancelable easements or rights-of-way arrangements from landowners permitting the use of land for the construction and operation of our pipeline system. Our obligations under these easements are not material to our results of operations.
8. Retirement Benefits
Pension and Retirement Savings Plans. El Paso maintains a pension plan, the El Paso Corporation Pension Plan, and a retirement savings plan covering substantially all of its U.S. employees, including our former employees. The benefits under the pension plan are determined under a cash balance formula. Under its retirement savings plan, El Paso matches 75 percent of participant basic contributions up to six percent of eligible compensation and can make additional discretionary matching contributions depending on El Pasos operating performance relative to its peers. El Paso is responsible for benefits accrued under its plans and allocates the related costs to its affiliates.
Postretirement Benefits Plan. We provide postretirement medical and life insurance benefits for a closed group of employees who were eligible to retire on December 31, 1996, and did so before July 1, 1997, under the El Paso Corporation Retiree Benefits Plan. Medical benefits for this closed group may be subject to deductibles, co-payment provisions, and other limitations and dollar caps on the amount of employer costs and El Paso reserves the right to change these benefits. Employees in this group who retire after July 1, 1997 continue to receive limited postretirement life insurance benefits. Our postretirement benefit plan costs were prefunded and were recoverable under prior rate case settlements. Currently, there is no cost recovery or related funding that is required as part of our current FERC approved rates, however, we can seek to recover any funding shortfall that may be required in the future. We do not anticipate making any contributions to our postretirement benefit plan in 2012. Contributions of approximately $2 million, $5 million, and $4 million were made for the years ended December 31, 2011, 2010, and 2009, respectively.
Accumulated Postretirement Benefit Obligation, Plan Assets and Funded Status. In accounting for our postretirement benefit plan, we record an asset or liability based on the over funded or under funded status. Any deferred amounts related to unrecognized gains and losses or changes in actuarial assumptions are recorded in accumulated other comprehensive income, a component of members equity, until those gains and losses are recognized in the income statement. Prior to our rate case settlement in December 2011, we recorded a regulatory asset or liability for these unrecognized amounts as allowed by the FERC. During 2011, we reclassified $4 million (net of income taxes of $2 million) from a regulatory liability to accumulated other comprehensive income pursuant to our rate case settlement whereby these amounts are no longer included in the rates we charge our customers.
38
The table below provides information about our postretirement benefit plan.
December 31, | ||||||||
2011 | 2010 | |||||||
(In millions) | ||||||||
Change in accumulated postretirement benefit obligation: |
||||||||
Accumulated postretirement benefit obligation beginning of period |
$ | 18 | $ | 18 | ||||
Interest cost |
1 | 1 | ||||||
Participant contributions |
1 | 1 | ||||||
Benefits paid(1) |
(2 | ) | (2 | ) | ||||
|
|
|
|
|||||
Accumulated postretirement benefit obligation end of period |
$ | 18 | $ | 18 | ||||
|
|
|
|
|||||
Change in plan assets: |
||||||||
Fair value of plan assets beginning of period |
$ | 41 | $ | 33 | ||||
Actual return on plan assets |
2 | 4 | ||||||
Employer contributions |
2 | 5 | ||||||
Participant contributions |
1 | 1 | ||||||
Benefits paid |
(2 | ) | (2 | ) | ||||
|
|
|
|
|||||
Fair value of plan assets end of period |
$ | 44 | $ | 41 | ||||
|
|
|
|
|||||
Reconciliation of funded status: |
||||||||
Fair value of plan assets |
$ | 44 | $ | 41 | ||||
Less: accumulated postretirement benefit obligation |
18 | 18 | ||||||
|
|
|
|
|||||
Net asset at December 31 |
$ | 26 | $ | 23 | ||||
|
|
|
|
(1) | Amounts shown net of a subsidy of less than $1 million for each of the years ended December 31, 2011 and 2010 related to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. |
Components of Accumulated Other Comprehensive Income. The amount recognized in accumulated other comprehensive income of $4 million at December 31, 2011, net of income taxes of $2 million, related to unrecognized gains. We anticipate that less than $1 million of our accumulated other comprehensive income will be recognized as part of our net periodic benefit income in 2012.
Plan Assets. The primary investment objective of our plan is to ensure that, over the long-term life of the plan an adequate pool of sufficiently liquid assets exists to meet the benefit obligations to retirees and beneficiaries. Investment objectives are long-term in nature covering typical market cycles. Any shortfall of investment performance compared to investment objectives is generally the result of economic and capital market conditions. Although actual allocations vary from time to time from our targeted allocations, the target allocations of our postretirement plans assets are 65 percent equity and 35 percent fixed income securities. We may invest plan assets in a manner that replicates, to the extent feasible, the Russell 3000 Index and the Barclays Capital Aggregate Bond Index to achieve equity and fixed income diversification, respectively.
We use various methods to determine the fair values of the assets in our other postretirement benefit plan, which are impacted by a number of factors, including the availability of observable market data over the contractual term of the underlying assets. We separate these assets into three levels (Level 1, 2 and 3) based on our assessment of the availability of this market data and the significance of non-observable data used to determine the fair value of these assets. As of December 31, 2011, assets were comprised of an exchange-traded mutual fund with a fair value of $2 million and common/collective trust funds with a fair value of $42 million. As of December 31, 2010, assets were comprised of an exchange-traded mutual fund with a fair value of $2 million and common/collective trust funds with a fair value of $39 million. Our exchange-traded mutual fund invests primarily in dollar-denominated securities, and its fair value (which is considered a Level 1 measurement) is determined based on the price quoted for the fund in actively traded markets. Our common/collective trust funds are invested in approximately 65 percent equity and 35 percent fixed income securities, and their fair values (which are considered Level 2 measurements) are determined primarily based on the net asset value reported by the issuer, which is based on similar assets in active markets. Certain restrictions on withdrawals exist for these common/collective trust funds where the issuer reserves the right to temporarily delay withdrawals in certain situations such as market conditions or at the issuers discretion. We do not have any assets that are considered Level 3 measurements. The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values, and there have been no changes in the methodologies used at December 31, 2011 and 2010.
39
Expected Payment of Future Benefits. As of December 31, 2011, we expect the following benefit payments under our plan.
Year Ending December 31, |
Expected Payments(1) |
|||
(In millions) | ||||
2012 |
$ | 2 | ||
2013 |
2 | |||
2014 |
2 | |||
2015 |
1 | |||
2016 |
1 | |||
2017 - 2021 |
6 |
(1) | Includes a reduction of less than $1 million in each of the years 2012 2016 and approximately $1 million in aggregate for |
Actuarial Assumptions and Sensitivity Analysis. Accumulated postretirement benefit obligations and net benefit costs are based on actuarial estimates and assumptions. The following table details the weighted average actuarial assumptions used in determining our postretirement plan obligations and net benefit costs.
2011 | 2010 | 2009 | ||||||||||
(Percent) | ||||||||||||
Assumptions related to benefit obligations at December 31: |
||||||||||||
Discount rate |
4.30 | 4.82 | 5.37 | |||||||||
Assumptions related to benefit costs for the year ended December 31: |
||||||||||||
Discount rate |
4.82 | 5.37 | 5.95 | |||||||||
Expected return on plan assets(1) |
7.75 | 7.75 | 8.00 |
(1) | The expected return on plan assets listed in the table above is a pre-tax rate of return based on our portfolio of investments. We utilize an after-tax expected return on plan assets to determine our benefit costs, which is based on unrelated business income taxes at a rate of 35 percent. |
Actuarial estimates for our postretirement benefits plan assumed a weighted average annual rate of increase in the per capita costs of covered health care benefits of 7.3 percent, gradually decreasing to 5.0 percent by the year 2019. A one-percentage point change would not have had a significant effect on the accumulated postretirement benefit obligation or interest costs as of and for the years ended December 31, 2011 and 2010.
Components of Net Benefit Income. For each of the years ended December 31, the components of net benefit income are as follows:
2011 | 2010 | 2009 | ||||||||||
(In millions) | ||||||||||||
Interest cost |
$ | 1 | $ | 1 | $ | 1 | ||||||
Expected return on plan assets |
(2 | ) | (2 | ) | (1 | ) | ||||||
|
|
|
|
|
|
|||||||
Net benefit income |
$ | (1 | ) | $ | (1 | ) | $ | | ||||
|
|
|
|
|
|
9. Transactions with Major Customer
The following table shows revenues from our major customer for each of the three years ended December 31:
2011 | 2010 | 2009 | ||||||||||
(In millions) | ||||||||||||
National Grid USA and subsidiaries |
$ | 132 | $ | 116 | $ | 109 |
40
10. Accounts Receivable Sales Program
We participate in an accounts receivable sales program where we sell receivables in their entirety to a third party financial institution (through a wholly-owned special purpose entity). The sale of these accounts receivable (which are short-term assets that generally settle within 60 days) qualify for sale accounting. The third party financial institution involved in our accounts receivable sales program acquires interests in various financial assets and issues commercial paper to fund those acquisitions. We do not consolidate the third party financial institution because we do not have the power to control, direct, or exert significant influence over its overall activities since our receivables do not comprise a significant portion of its operations.
In connection with our accounts receivable sales, we receive a portion of the sales proceeds up front and receive an additional amount upon the collection of the underlying receivables (which we refer to as a deferred purchase price). Our ability to recover the deferred purchase price is based solely on the collection of the underlying receivables. The tables below contain information related to our accounts receivable sales program.
Year Ended December 31, | ||||||||
2011 | 2010 | |||||||
(In millions) | ||||||||
Accounts receivable sold to the third-party financial institution(1) |
$ | 981 | $ | 943 | ||||
Cash received for accounts receivable sold under the program |
510 | 508 | ||||||
Deferred purchase price related to accounts receivable sold |
471 | 435 | ||||||
Cash received related to the deferred purchase price |
443 | 399 | ||||||
Amount paid in conjunction with terminated program(2) |
| 40 |
(1) | During the years ended December 31, 2011 and 2010, losses recognized on the sale of accounts receivable were immaterial. |
(2) | In January 2010, we terminated our previous accounts receivable sales program and paid $40 million to acquire the related senior interests in certain receivables under that program. During 2009, we sold approximately $943 million of accounts receivable under that program and our fees and losses related to the program were not material. |
As of December 31, | ||||||||
2011 | 2010 | |||||||
(In millions) | ||||||||
Accounts receivable sold and held by third-party financial institution |
$ | 108 | $ | 75 | ||||
Uncollected deferred purchase price related to accounts receivable sold(1) |
63 | 35 |
(1) | Initially recorded at an amount which approximates its fair value using observable inputs other than quoted prices in active markets (Level 2 fair value measurement). |
The deferred purchase price related to the accounts receivable sold is reflected as other accounts receivable on our balance sheet. Because the cash received up front and the deferred purchase price relate to the sale or ultimate collection of the underlying receivables, and are not subject to significant other risks given their short term nature, we reflect all cash flows under the accounts receivable sales program as operating cash flows on our statement of cash flows. Under the accounts receivable sales program, we service the underlying receivables for a fee. The fair value of this servicing agreement, as well as the fees earned, were not material to our financial statements for the years ended December 31, 2011, 2010 and 2009.
11. Investment in Unconsolidated Affiliate and Transactions with Affiliates
Investment in Unconsolidated Affiliate
Bear Creek Storage Company, L.L.C. (Bear Creek). We have a 50 percent ownership interest in Bear Creek, a joint venture equally owned with Southern Natural Gas Company, L.L.C. (SNG), our affiliate. We account for our investment in Bear Creek using the equity method of accounting. We and SNG provide storage services to our customers utilizing the Bear Creek storage facility. During 2011, 2010, and 2009, we received $13 million, $14 million and $13 million in cash distributions from Bear Creek. Also, during 2010, Bear Creek utilized its note receivable balance under the cash management program with El Paso to pay a cash distribution to its partners, including $23 million to us. Included in this amount was a return of capital of $15 million.
41
Summarized financial information of Bear Creek as of and for the years ended December 31 is presented as follows:
2011 | 2010 | 2009 | ||||||||||
(In millions) | ||||||||||||
Operating results data: |
||||||||||||
Operating revenues |
$ | 38 | $ | 38 | $ | 37 | ||||||
Operating expenses |
10 | 10 | 15 | |||||||||
Income from continuing operations and net income |
28 | 28 | 22 |
2011 | 2010 | |||||||
(In millions) | ||||||||
Financial position data: |
||||||||
Current assets |
$ | 10 | $ | 9 | ||||
Non-current assets |
105 | 105 | ||||||
Other current liabilities |
1 | 4 | ||||||
Equity in net assets |
114 | 110 |
In November 2011, Bear Creek, along with other unaffiliated companies, received an order from the FERC related to an investigation into the rates charged to customers. The FERC ordered Bear Creek to file a full cost and revenue study within 75 days of the order. Bear Creek filed the cost and revenue study in January 2012 and the outcome of the proceeding is not expected to be material to our results of operations.
Transactions with Affiliates
Cash Management Program and Other Note Receivable. We participate in El Pasos cash management program which matches short-term cash surpluses and needs of participating affiliates, thus minimizing total borrowings from outside sources. El Paso uses the cash management program to settle intercompany transactions between participating affiliates. We have historically advanced cash to El Paso in exchange for an affiliated note receivable that is due upon demand. At December 31, 2011 and 2010, we had a note receivable from El Paso of $519 million and $976 million. We have classified this receivable as noncurrent on our balance sheet at December 31, 2011 as we do not anticipate using it in the next twelve months considering available cash sources and needs. The interest rate on this note is variable and was 2.5% and 1.5% at December 31, 2011 and 2010.
We had a non-interest bearing note receivable of $334 million from an El Paso affiliate. During 2010, we collected this note receivable and immediately distributed the cash received to our parent.
Distributions. In October 2011, we made a non-cash distribution of our corporate facilities and certain other assets and liabilities to our parent. The net distributions were approximately $325 million, which represents the historical costs of these assets and liabilities.
Income Taxes. El Paso files consolidated U.S. federal and certain state tax returns which include our taxable income. Prior to our conversion to a limited liability company which is further discussed in Notes 1 and 2, we filed and paid taxes directly to certain state taxing authorities. At December 31, 2011 and 2010, we had net federal and state income taxes receivable of $1 million and $4 million. The majority of these balances, as well as deferred income taxes and amounts associated with the resolution of unrecognized tax benefits, will become receivable from or payable to El Paso. See Note 1 for a discussion of our income tax policy.
Other Affiliate Balances. At December 31, 2011 and 2010, we had contractual deposits from our affiliates of $10 million.
Affiliate Revenues and Expenses. We enter into transactions with our affiliates within the ordinary course of our business and the services are based on the same terms as non-affiliates. In addition, we store natural gas in an affiliated storage facility and utilize the pipeline system of an affiliate to transport some of our natural gas.
42
During 2009, we entered into a contract with our affiliate, El Paso Marketing, L.P., to sell up to 22 TBtu of natural gas not used in our operations in 2011 at a price of $6.48 per MMBtu. During the first half of 2011, we sold 9.5 TBtu of natural gas not used in operations under this contract. In June 2011, we terminated our contract to sell gas to El Paso Marketing, L.P. in connection with the implementation of a fuel volume tracker as part of our rate case filed with the FERC.
Following our conversion to a limited liability company, we no longer have employees and our former employees continue to provide services to us under a master services agreement with an affiliated service company owned by El Paso. We are managed and operated by officers of El Paso and its affiliates. Under the master services agreement, we reimburse the affiliate for various general and administrative services performed for our benefit and for direct expenses incurred on our behalf. El Paso bills us directly for certain general and administrative costs and allocates a portion of its general and administrative costs to us. In addition to allocations from El Paso, we allocate costs to our pipeline affiliates for their proportionate share of our pipeline services. The allocations from El Paso and the allocations to our affiliates are based on the estimated level of effort devoted to our operations and the relative size of our and their earnings before interest expense and income taxes, gross property and payroll.
The following table shows revenues, expenses and reimbursements from our affiliates for each of the three years ended December 31:
2011 | 2010 | 2009 | ||||||||||
(In millions) | ||||||||||||
Revenues(1) |
$ | 90 | $ | 20 | $ | 16 | ||||||
Operation and maintenance expenses(2) |
131 | 77 | 67 | |||||||||
Reimbursements of operating expenses |
77 | 59 | 45 |
(1) | During 2011, we sold 9.5 TBtu of natural gas not used in operations to our affiliate, El Paso Marketing, L.P. |
(2) | Following our conversion to a limited liability company, we entered into a master services agreement with our affiliate in which we reimburse them for costs incurred on our behalf. |
43
Supplemental Selected Quarterly Financial Information (Unaudited)
Our financial information by quarter is summarized below. Due to the seasonal nature of our business, information for interim periods may not be indicative of our results of operations for the entire year.
Quarters Ended | ||||||||||||||||||||
March 31 | June 30 | September 30 | December 31 | Total | ||||||||||||||||
(In millions) | ||||||||||||||||||||
2011 |
||||||||||||||||||||
Operating revenues |
$ | 234 | $ | 216 | $ | 224 | $ | 302 | $ | 976 | ||||||||||
Operating income |
95 | 65 | 83 | 126 | 369 | |||||||||||||||
Net income |
45 | 30 | 50 | 78 | 203 | |||||||||||||||
2010 |
||||||||||||||||||||
Operating revenues |
$ | 224 | $ | 200 | $ | 213 | $ | 208 | $ | 845 | ||||||||||
Operating income |
89 | 59 | 65 | 55 | 268 | |||||||||||||||
Net income |
39 | 20 | 28 | 16 | 103 |
44
SCHEDULE VALUATION AND QUALIFYING ACCOUNTS
SCHEDULE II
TENNESSEE GAS PIPELINE COMPANY, L.L.C.
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2011, 2010 and 2009
(In millions)
Description |
Balance at Beginning of Period |
Charged to Costs and Expenses |
Deductions | Charged to Other Accounts |
Balance at End of Period |
|||||||||||||||
2011 |
||||||||||||||||||||
Legal reserves |
$ | | $ | 3 | $ | (1 | ) | $ | | $ | 2 | |||||||||
Environmental reserves |
4 | 1 | | | 5 | |||||||||||||||
Regulatory reserves(2) |
| | | 68 | 68 | |||||||||||||||
2010 |
||||||||||||||||||||
Legal reserves |
$ | 7 | $ | | $ | (7 | ) | $ | | $ | | |||||||||
Environmental reserves |
5 | 1 | (2 | )(1) | | 4 | ||||||||||||||
2009 |
||||||||||||||||||||
Legal reserves |
$ | | $ | 7 | $ | | $ | | $ | 7 | ||||||||||
Environmental reserves |
6 | | (1 | )(1) | | 5 |
(1) | Primarily payments made for environmental remediation activities. |
(2) | See Note 7 for a discussion of our rate case. |
45
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of December 31, 2011, we carried out an evaluation under the supervision and with the participation of our management, including our President and Chief Financial Officer (CFO), as to the effectiveness, design and operation of our disclosure controls and procedures. This evaluation considered the various processes carried out under the direction of our disclosure committee in an effort to ensure that information required to be disclosed in the U.S. Securities and Exchange Commission reports we file or submit under the Securities Exchange Act of 1934, as amended (Exchange Act) is accurate, complete and timely. Our management, including our President and CFO, does not expect that our disclosure controls and procedures or our internal controls will prevent and/or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our President and CFO concluded that our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of December 31, 2011. See Item 8. Financial Statements and Supplementary Data under Managements Annual Report on Internal Control Over Financial Reporting.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the fourth quarter of 2011 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
None.
46
Item 10, Directors, Executive Officers and Corporate Governance; Item 11, Executive Compensation; Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters; and Item 13, Certain Relationships and Related Transactions, and Director Independence have been omitted from this report pursuant to the reduced disclosure format permitted by General Instruction I to Form 10-K.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
The audit fees for the years ended December 31, 2011 and 2010 of $1,593,000 and $982,000, respectively, were primarily for professional services rendered by Ernst & Young LLP for the audits of the consolidated financial statements of Tennessee Gas Pipeline Company, L.L.C. as well as the review of documents filed with the SEC and related consents.
All Other Fees
No other audit-related, tax or other services were provided by our independent registered public accounting firm for the years ended December 31, 2011 and 2010.
Policy for Approval of Audit and Non-Audit Fees
We are an indirect wholly owned subsidiary of El Paso and do not have a separate audit committee. El Pasos Audit Committee has adopted a pre-approval policy for audit and non-audit services. For a description of El Pasos pre-approval policies for audit and non-audit related services, see El Pasos Annual Report on Form 10-K for the year ended December 31, 2011.
47
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as a part of this report:
1. Financial statements
The following consolidated financial statements are included in Part II, Item 8 of this report:
Page | ||||
Report of Independent Registered Public Accounting Firm |
23 | |||
Consolidated Statements of Income and Comprehensive Income |
24 | |||
Consolidated Balance Sheets |
25 | |||
Consolidated Statements of Cash Flows |
26 | |||
Consolidated Statements of Members Equity/Stockholders Equity |
27 | |||
Notes to Consolidated Financial Statements |
28 |
2. Financial statement schedules
Schedule II Valuation and Qualifying Accounts |
45 |
All other schedules are omitted because they are not applicable, or the required information is disclosed in the financial statements or accompanying notes.
3. Exhibits
The Exhibit Index, which follows the signature page to this report and is hereby incorporated herein by reference, sets forth a list of those exhibits filed herewith, and includes and identifies contracts or arrangements required to be filed as exhibits to this Form 10-K by Item 601(b)(10)(iii) of Regulation S-K.
The agreements included as exhibits to this report are intended to provide information regarding their terms and not to provide any other factual or disclosure information about us or the other parties to the agreements. The agreements may contain representations and warranties by the parties to the agreements, including us, solely for the benefit of the other parties to the applicable agreement and:
| should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; |
| may have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; |
| may apply standards of materiality in a way that is different from what may be viewed as material to certain investors; and |
| were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. |
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.
Undertaking
We hereby undertake, pursuant to Regulation S-K, Item 601(b), paragraph (4)(iii), to furnish to the Securities and Exchange Commission upon request all constituent instruments defining the rights of holders of our long-term debt and consolidated subsidiaries not filed herewith for the reason that the total amount of securities authorized under any of such instruments does not exceed 10 percent of our total consolidated assets.
48
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Tennessee Gas Pipeline Company, L.L.C. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 27th day of February 2012.
TENNESSEE GAS PIPELINE COMPANY, L.L.C. | ||
By: |
/s/ Norman G. Holmes | |
Norman G. Holmes | ||
President |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Tennessee Gas Pipeline Company, L.L.C. and in the capacities and on the dates indicated:
Signature |
Title |
Date | ||
/s/ Norman G. Holmes |
President and Director | February 27, 2012 | ||
Norman G. Holmes | (Principal Executive Officer) | |||
Executive Vice President and | ||||
/s/ John R. Sult |
Chief Financial Officer | February 27, 2012 | ||
John R. Sult | (Principal Financial Officer) | |||
/s/ Rosa P. Jackson |
Vice President and Controller | February 27, 2012 | ||
Rosa P. Jackson | (Principal Accounting Officer) | |||
/s/ Daniel B. Martin Daniel B. Martin |
Director |
February 27, 2012 | ||
/s/ Bryan W. Neskora Bryan W. Neskora |
Director |
February 27, 2012 | ||
/s/ James C. Yardley James C. Yardley |
Director |
February 27, 2012 |
49
TENNESSEE GAS PIPELINE COMPANY, L.L.C.
EXHIBIT INDEX
December 31, 2011
Each exhibit identified below is filed as part of this Report. Exhibits filed with this Report are designated by *. All exhibits not so designated are incorporated herein by reference to a prior filing as indicated.
Exhibit Number |
Description | |
*3.A | Certificate of Conversion of Tennessee Gas Pipeline Company, L.L.C., dated October 1, 2011. | |
*3.B | First Amended and Restated Limited Liability Company Agreement of Tennessee Gas Pipeline Company, L.L.C., dated February 14, 2012. | |
*4.A | Indenture dated as of March 4, 1997, between Tennessee Gas Pipeline Company and Wilmington Trust Company (as successor to JPMorgan Chase Bank, formerly known as The Chase Manhattan Bank), as Trustee. | |
*4.A.1 | First Supplemental Indenture dated as of March 13, 1997, between Tennessee Gas Pipeline Company and the Trustee. | |
*4.A.2 | Second Supplemental Indenture dated as of March 13, 1997, between Tennessee Gas Pipeline Company and the Trustee. | |
*4.A.3 | Third Supplemental Indenture dated as of March 13, 1997, between Tennessee Gas Pipeline Company and the Trustee. | |
*4.A.4 | Fourth Supplemental Indenture dated as of October 9, 1998, between Tennessee Gas Pipeline Company and the Trustee. | |
4.A.5 | Fifth Supplemental Indenture dated June 10, 2002, between Tennessee Gas Pipeline Company and the Trustee (incorporated by reference to Exhibit 4.A.5 to our Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 2, 2009). | |
4.A.6 | Sixth Supplemental Indenture dated as of January 27, 2009 between Tennessee Gas Pipeline Company and the Trustee (incorporated by reference to Exhibit 4.A to our Current Report on Form 8-K filed with the SEC on January 29, 2009). | |
*4.A.7 | Seventh Supplemental Indenture dated as of October 1, 2011 between Tennessee Gas Pipeline Company, Tennessee Gas Pipeline Issuing Corporation and the Trustee. | |
10.A | Fourth Amended and Restated Credit Agreement dated as of May 27, 2011, among El Paso Corporation, El Paso Natural Gas Company, Tennessee Gas Pipeline Company, as Borrowers, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent for the Lenders (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on June 3, 2011). | |
10.B | Fourth Amended and Restated Security Agreement dated as of May 27, 2011, among El Paso Corporation, the persons referred to therein as Pipeline Company Borrowers, the persons referred to therein as Subsidiary Grantors, and JPMorgan Chase Bank, N.A., as Collateral Agent and Depository Bank (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the SEC on June 3, 2011). |
50
21 | Omitted pursuant to the reduced disclosure format permitted by General Instruction I to Form 10-K. | |
*23 | Consent of Independent Registered Public Accounting Firm Ernst & Young LLP. | |
*31.A | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
*31.B | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
*32.A | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
*32.B | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
*101.INS | XBRL Instance Document. | |
*101.SCH | XBRL Schema Document. | |
*101.CAL | XBRL Calculation Linkbase Document. | |
*101.DEF | XBRL Definition Linkbase Document. | |
*101.LAB | XBRL Labels Linkbase Document. | |
*101.PRE | XBRL Presentation Linkbase Document. |
51
Exhibit 3.A
CERTIFICATE OF CONVERSION
FROM A CORPORATION TO A
LIMITED LIABILITY COMPANY
PURSUANT TO SECTION 266
OF THE DELAWARE
GENERAL CORPORATION LAW
AND SECTION 18-214 OF THE
DELAWARE LIMITED LIABILITY COMPANY ACT
This Certificate of Conversion of Tennessee Gas Pipeline Company (the Corporation) effective on October 1, 2011, is being duly executed and filed by an authorized person of the Corporation to convert the Corporation to a Delaware limited liability company in accordance with Section 266 of the Delaware General Corporation Law (the DGCL) and Section 18-214 of the Delaware Limited Liability Company Act (the DLLCA).
1. | The name of the Corporation set forth in its original Certificate of Incorporation was: |
Tennessee Gas Transmission Company
2. | The name of the Corporation immediately prior to filing this Certificate of Conversion was: |
Tennessee Gas Pipeline Company
3. | The jurisdiction of the Corporation immediately prior to filing this Certificate of Conversion was: |
Delaware
4. | The jurisdiction where the Corporation was first created is: |
Delaware
5. | The date the Certificate of Incorporation of the Corporation was filed is: |
June 9, 1947
6. | The name of the limited liability company (the LLC) as set forth in its Certificate of Formation is: |
Tennessee Gas Pipeline Company, L.L.C.
7. | This conversion has been approved in accordance with the provisions of Section 266 of the DGCL and Section 18-214 of the DLLCA. |
8. | This Certificate of Conversion shall be effective at 8:05 a.m. Eastern Time on October 1, 2011. |
IN WITNESS WHEREOF, this Certificate of Conversion has been executed by an authorized person of the Corporation on the 29th day of September, 2011.
By: |
/s/ Stacy J. James | |
Stacy J. James | ||
Corporate Secretary |
2
Exhibit 3.B
FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
TENNESSEE GAS PIPELINE COMPANY, L.L.C.
A DELAWARE LIMITED LIABILITY COMPANY
PREAMBLE
This FIRST AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of Tennessee Gas Pipeline Company, L.L.C. (the Company) is entered into effective as of the 14th day of February, 2012, by El Paso TGPC Investments, L.L.C.
WHEREAS, the Company was formed as a Delaware corporation under the Delaware General Corporation Law on June 9, 1947; and
WHEREAS, the Company converted to a limited liability company under the Act pursuant to the filing of the Certificate of Conversion (as hereinafter defined) and the Certificate of Formation (as hereinafter defined), each effective on October 1, 2011.
NOW, THEREFORE, El Paso TGPC Investments, L.L.C. desires to amend and restate the limited liability company agreement for the purposes and upon the terms and conditions hereinafter set forth.
ARTICLE I
NOW, THEREFORE, the Member (as hereinafter defined) hereby adopts the following:
ARTICLE II
DEFINITIONS AND TERMS
SECTION 2.01. Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for the purposes of this Agreement:
Act means the Delaware Limited Liability Company Act, 6 Del C. §§ 18-101, et seq., as amended from time to time (or any corresponding provisions of succeeding Law).
Agreement means this Limited Liability Company Agreement, as the same may be amended from time to time.
Board has the meaning given such term in Section 7.01.
Capital Contribution means a capital contribution made by the Member pursuant to Section 4.01 or Section 4.02.
Certificate of Conversion means the Certificate of Conversion filed with the Secretary of State of the State of Delaware effective as of October 1, 2011, to convert the Company from a Delaware corporation to a Delaware limited liability company pursuant to the Act, as originally executed by Stacy J. James (as an authorized person within the meaning of the Act).
Certificate of Formation means the Certificate of Formation filed with the Secretary of State of the State of Delaware effective as of October 1, 2011, to form the Company pursuant to the Act, as originally executed by Stacy J. James (as an authorized person within the meaning of the Act) and as amended, modified, supplemented or restated from time to time, as the context requires.
Claim means any and all losses, claims, damages, liabilities (joint or several), expenses (including reasonable legal fees and expenses), judgments, penalties, interest, settlements or other amounts arising from any and all claims, demands, actions, suits or proceedings (whether civil, criminal, administrative or investigative), deficiencies, levies, duties, imposts, remediation and cleanup costs and natural resources damages.
Director has the meaning given such term in Section 7.02.
Distributable Cash means cash (in U.S. dollars) of the Company that the Member determines is available for distribution.
Interest means, with respect to any Member the ownership interest in the Company at any time, as set forth on Exhibit A, including the right of the Member to any and all benefits to which the Member may be entitled as provided in this Agreement, together with the obligations of the Member to comply with all the terms and provisions of this Agreement.
Law means any applicable constitutional provision, statute, act, code (including the Internal Revenue Code of 1986, as amended and in effect from time to time), law, regulation, rule, ordinance, order, decree, ruling, proclamation, notice, resolution, judgment, decision, declaration, policy statement or interpretative or advisory opinion or letter of a Governmental Authority having valid jurisdiction.
Member refers to the Member set forth in Exhibit A hereto and any other member or members admitted to the Company in accordance with this Agreement or any amendment or restatement hereof.
Person has the meaning set forth in the Act.
SECTION 2.02. Terms Generally. The definitions in Section 2.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. All references herein to Articles, Sections and Exhibits shall be deemed to be references to Articles and Sections of, and Exhibits to, this Agreement unless the context shall otherwise require. The words include, includes and including shall be deemed to be followed by the phrase without limitation.
2
ARTICLE III
FORMATION
SECTION 3.01. Name. The name of the Company shall be as set forth in the Preamble hereof. All business of the Company shall be conducted under such name and title to all property, real, personal, or mixed, owned by or leased to the Company shall be held in such name. Notwithstanding the preceding sentence, the Member may change the name of the Company or adopt such trade or fictitious names as it may determine.
SECTION 3.02. Formation and Term. The Company was first incorporated as a Delaware corporation under Delaware General Corporation Law on June 9, 1947. By filing the Certificate of Conversion and the Certificate of Formation, the Company has been converted and continued as a Delaware limited liability company under the Act. The term of the Company shall continue until terminated as provided in Article IX hereof.
SECTION 3.03. Principal Place of Business. The principal place of business of the Company shall be located at 1001 Louisiana, Houston, Texas 77002. The Member may establish other offices at other locations.
SECTION 3.04. Agent for Service of Process. The Corporation Trust Company shall be the registered agent of the Company upon whom process against it may be served. The address of such agent within the State of Delaware is: Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801.
SECTION 3.05. Purposes of the Company. The Company has been organized to engage in any lawful act or activity for which a Delaware limited liability company may be formed.
ARTICLE IV
CAPITAL CONTRIBUTIONS
SECTION 4.01. Capital Contribution. The Member made contributions in the amounts shown in the records of the Company.
SECTION 4.02. Additional Capital Contributions. If at any time the Member shall determine that additional funds or property are necessary or desirable to meet the obligations or needs of the Company, the Member may make additional Capital Contributions.
SECTION 4.03. Limitation on Liability. The liability of the Member shall be limited to its Interest in the Company, and the Member shall not have any personal liability to contribute money to, or in respect of, the liabilities or the obligations of the Company, except as set forth in the Act.
3
SECTION 4.04. Withdrawal of Capital; Interest. The Member may not withdraw capital or receive any distributions, except as specifically provided herein. No interest shall be paid by the Company on any Capital Contributions.
ARTICLE V
DISTRIBUTIONS
SECTION 5.01. Distributions. Except as otherwise provided in the Act, all Distributable Cash of the Company shall be distributed to the Member, or distributions in kind may be made to the Member at such times as the Member shall determine.
ARTICLE VI
BOOKS AND RECORDS
SECTION 6.01. Books and Records. The Member shall keep or cause to be kept complete and accurate books of account and records that shall reflect all transactions and other matters and include all documents and other materials with respect to the Companys business that are usually entered into and maintained by Persons engaged in similar businesses. All Company financial statements shall be accurate in all material respects, shall fairly present the financial position of the Company and the results of its operations and Distributable Cash and transactions in its reserve accounts, and shall be prepared in accordance with generally accepted accounting principles, subject, in the case of quarterly statements, to year-end adjustments. The books of the Company shall at all times be maintained at the principal office of the Company or at such other location as the Member decides.
ARTICLE VII
MANAGEMENT OF THE COMPANY
SECTION 7.01. Management by Board of Directors. The business and affairs of the Company shall be fully vested in, and managed by, a Board of Directors (the Board) and subject to the discretion of the Board, officers elected pursuant to Section 7.13. The Directors and officers shall collectively constitute managers of the Company within the meaning of the Act. Except as otherwise provided in this Agreement, the authority and functions of the Board, on the one hand, and of the officers, on the other hand, shall be identical to the authority and functions of the board of directors and officers, respectively, of a corporation organized under the General Corporation Law of the State of Delaware. The officers shall be vested with such powers and duties as are set forth in Section 7.13 and as are specified by the Board. Accordingly, except as otherwise specifically provided in this Agreement, the business and affairs of the Company shall be managed under the direction of the Board, and the day-to-day activities of the Company shall be conducted on the Companys behalf by the officers who shall be agents of the Company.
SECTION 7.02. Number; Qualification; Tenure
The number of directors constituting the Board shall be no less than two (each a Director and, collectively, the Directors), and may be fixed from time to time pursuant to a resolution adopted by the Member. A Director need not be a Member. Each Director shall be
4
elected or approved by the Member and shall serve as a Director of the Company for a term of one year (or their earlier death or removal from office) or until their successors are elected and qualified. The initial Directors of the Company shall be Norman G. Holmes, Daniel B. Martin, Bryan W. Neskora and James C. Yardley.
SECTION 7.03. Regular Meetings.
Regular meetings of the Board shall be held at such time and place as shall be designated from time to time by resolution of the Board. Notice of such regular meetings shall not be required.
SECTION 7.04. Special Meetings.
A special meeting of the Board may be called at any time at the request of the President or any two Directors.
SECTION 7.05. Notice.
Written notice of all special meetings of the Board must be given to all Directors at least one business day prior to any special meeting of the Board.
All notices and other communications to be given to Directors shall be sufficiently given for all purposes hereunder if in writing and delivered by hand, courier or overnight delivery service or three days after being mailed by certified or registered mail, return receipt requested, with appropriate postage prepaid, or when received in the form of a telegram or facsimile, and shall be directed to the address or facsimile number as such Director shall designate by notice to the Company. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board need be specified in the notice of such meeting, except for amendments to this Agreement, as provided herein.
Attendance of a Director at a meeting shall constitute waiver of notice of such meeting, except where such Director attends the meeting for the express purpose of objecting to the transaction of business on the ground that the meeting is not lawfully called or convened. A meeting may be held at any time without notice if all the Directors are present or if those not present waive notice of the meeting either before or after such meeting.
SECTION 7.06. Action By Consent of Board or Committee of Board.
To the extent permitted by applicable law, the Board, or any committee of the Board, may act without a meeting so long as all members of the Board or committee shall have executed a written consent with respect to any action taken in lieu of a meeting.
SECTION 7.07. Conference Telephone Meetings.
Directors or members of any committee of the Board may participate in a meeting of the Board or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.
5
SECTION 7.08. Quorum.
A majority of all Directors, present in person or participating in accordance with Section 7.07, shall constitute a quorum for the transaction of business, but if at any meeting of the Board there shall be less than a quorum present, a majority of the Directors present may adjourn the meeting from time to time without further notice. Except as otherwise required by applicable law, all decisions of the Board, or any committee of the Board, shall require the affirmative vote of a majority of all Directors of the Board, or any committee of the Board, respectively. The Directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough Directors to leave less than a quorum.
SECTION 7.09. Vacancies; Increases in the Number of Directors.
Vacancies and newly created directorships resulting from any increase in the number of Directors shall be filled by the Board in its sole discretion. Any Director so chosen shall hold office until the next annual election and until his successor shall be duly elected and shall qualify, unless sooner displaced.
SECTION 7.10. Committees.
Unless the Board of Directors otherwise provides, each committee designated by the Board may make, alter and repeal rules for the conduct of its business. In the absence of a provision by the Board or a provision in the rules of such committee to the contrary, a majority of the entire authorized number of members of such committee shall constitute a quorum for the transaction of business, the vote of a majority of the members present at a meeting at the time of such vote if a quorum is then present shall be the act of such committee, and in other respects such committee shall conduct its business in the same manner as the Board conducts its business. Nothing herein shall be deemed to prevent the Board from appointing one or more committees consisting in whole or in part of persons who are not Directors; provided, however, that no such committee shall have or may exercise any authority of the Board.
SECTION 7.11. Removal.
Any Director or the entire Board may be removed at any time, with or without cause, by the Member.
SECTION 7.12. Compensation of Directors.
Except as expressly provided in any written agreement between the Company and a Director or by resolution of the Board, no Director shall receive any compensation from the Company for services provided to the Company in its capacity as a Director, except that each Director shall be compensated for attendance at Board meetings at rates of compensation as from time to time established by the Board or a committee thereof; provided, however, that Directors who are also employees of the Company or any affiliate thereof shall receive no compensation for their services as Directors or committee members. In addition, the Directors who are not employees of the Company or any affiliate thereof shall be entitled to be reimbursed for out-of-pocket costs and expenses incurred in connection with attending meetings of the Board or committees thereof.
6
SECTION 7.13. Officers. Such of the following officers shall be elected as the Board deems necessary or appropriate: a President, one or more Executive Vice Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a Secretary, a Treasurer, a Controller, one or more Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers and Assistant Controllers, and such other officers with such titles and powers and/or duties as the Board shall from time to time determine. Officers may be designated for particular areas of responsibility and simultaneously serve as officers of subsidiaries or divisions. Any officer so elected may resign at any time upon written notice to the Board. Such resignation shall take effect at the time specified therein, and unless otherwise specified therein, no acceptance of such resignation shall be necessary to make it effective. Any officer may be removed, with or without cause, by the Board. Any such removal shall be without prejudice to the contractual rights of such officer, if any, with the Company, but the election or appointment of any officer shall not of itself create contractual rights. Any number of offices may be held by the same person. Any vacancy occurring in any office by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board.
(a) President. The President shall have general control of the business, affairs, operations and property of the Company, subject to the supervision of the Board. He may sign or execute, in the name of the Company, all deeds, mortgages, bonds, contracts or other undertakings or instruments, except in cases where the signing or execution thereof shall have been expressly delegated by the Board to some other officer or agent of the Company. He shall have and may exercise such powers and perform such duties as may be provided by Law or as are incident to the office of President of a company (as if the Company were a Delaware corporation) and such other duties as are assigned from time to time by the Board.
(b) Vice Presidents. Each Executive Vice President, Senior Vice President, Vice President and Assistant Vice President shall have such powers and perform such duties as may be provided by Law or as may from time to time be assigned to him, either generally or in specific instances, by the Board or the President. Any Executive Vice President or Senior Vice President may perform any of the duties or exercise any of the powers of the President at the request of, or in the absence or disability of, the President or otherwise as occasion may require in the administration of the business and affairs of the Company.
Each Executive Vice President, Senior Vice President, Vice President and Assistant Vice President shall have authority to sign or execute all deeds, mortgages, bonds, contracts or other instruments on behalf of the Company, except in cases where the signing or execution thereof shall have been expressly delegated by the Board to some other officer or agent of the Company.
(c) Secretary. The Secretary shall keep the records of the Company, in books provided for the purpose; he shall be custodian of the seal or seals of the Company; he shall see that the seal is affixed to all documents requiring same, the execution of which, on behalf of the Company, under its seal, is duly authorized, and when said seal is so affixed he may attest same; and, in general, he shall perform all duties incident to the office of the secretary of a company (as if the Company were a Delaware corporation),
7
and such other duties as from time to time may be assigned to him by the Board or the President or as may be provided by Law. Any Assistant Secretary may perform any of the duties or exercise any of the powers of the Secretary at the request of, or in the absence or disability of, the Secretary or otherwise as occasion may require in the administration of the business and affairs of the Company.
(d) Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Company, and shall deposit, or cause to be deposited, in the name of the Company, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by or under authority of the Board; if required, he shall give a bond for the faithful discharge of his duties, with such surety or sureties as the Board may determine; he shall keep or cause to be kept full and accurate records of all receipts and disbursements in books of the Company and shall render to the Board or the President, whenever requested, an account of the financial condition of the Company (as if the Company were a Delaware corporation); and, in general, he shall perform all the duties incident to the office of treasurer of a company, and such other duties as may be assigned to him by the Board or the President or as may be provided by Law.
(e) Controller. The Controller shall be the chief accounting officer of the Company. He shall keep full and accurate accounts of the assets, liabilities, commitments, receipts, disbursements and other financial transactions of the Company; shall cause regular audits of the books and records of account of the Company and supervise the preparation of the Companys financial statements; and, in general, he shall perform the duties incident to the office of controller of a company (as if the Company were a Delaware corporation) and such other duties as may be assigned to him by the Board or the President or as may be provided by Law. If no Controller is elected by the Board, the Treasurer shall perform the duties of the office of controller.
(f) Tax Officer. The Tax Officer shall have the authority to sign or execute on behalf of this Company any federal, foreign, Indian, state or local tax return or report, claim for refund of taxes, extension of a statute of limitation, administrative tax appeals filings and any other document relating to this Companys tax responsibilities.
ARTICLE VIII
TRANSFERS OF COMPANY INTERESTS
SECTION 8.01. Transfers. The Member may, directly or indirectly, sell, assign, transfer, pledge, hypothecate or otherwise dispose of all or any part of its Interest. Any Person acquiring the Members Interest shall be admitted to the Company as a substituted Member with no further action being required on the part of the Member.
8
ARTICLE IX
DISSOLUTION AND TERMINATION
SECTION 9.01. Dissolution. The Company shall be dissolved and its business wound up upon the decision made at any time by the Member to dissolve the Company, or upon the occurrence of any event of dissolution under the Act.
SECTION 9.02. Liquidation. Upon dissolution, the Companys business shall be liquidated in an orderly manner. The Member shall wind up the affairs of the Company pursuant to this Agreement and in accordance with the Act, including, without limitation, Section 18-804 thereof.
SECTION 9.03. Distribution of Property. If in the discretion of the Member it becomes necessary to make a distribution of Company property in kind in connection with the liquidation of the Company, such property shall be transferred and conveyed to the Member subject to Section 18-804 of the Act.
ARTICLE X
INDEMNIFICATION
SECTION 10.01. General. Except to the extent expressly prohibited by the Act, the Company shall indemnify each Person made or threatened to be made a party to any action or proceeding, whether civil or criminal, by reason of the fact that such Person or such Persons testator or intestate is or was a Member or officer of the Company, against Claims incurred in connection with such action or proceeding, or any appeal therefrom; provided that no such indemnification shall be made if a judgment or other final adjudication adverse to such Person establishes that his conduct did not meet the then applicable minimum statutory standards of conduct; and provided, further, that no such indemnification shall be required in connection with any settlement or other non-adjudicated disposition of any threatened or pending action or proceeding unless the Company has given its prior consent to such settlement or such other disposition, which consent shall not be unreasonably withheld.
SECTION 10.02. Reimbursement. The Company shall advance or promptly reimburse, upon request, any Person entitled to indemnification hereunder for all expenses, including attorneys fees, reasonably incurred in defending any action or proceeding in advance of the final disposition thereof upon receipt of an undertaking by or on behalf of such Person (in form and substance satisfactory to the Company) to repay such amount if such Person is ultimately found not to be entitled to indemnification or, where indemnification is granted, to the extent the expenses so advanced or reimbursed exceed the amount to which such Person is entitled; provided that such Person shall cooperate in good faith with any request by the Company that common counsel be utilized by the parties to an action or proceeding who are similarly situated unless to do so would be inappropriate due to actual or potential conflicts of interest between or among such parties; and provided, further, that the Company shall only advance attorneys fees in respect of legal counsel approved by the Company, such approval not to be unreasonably withheld.
9
SECTION 10.03. Availability. The right to indemnification and advancement of expenses under this provision is intended to be retroactive and shall be available with respect to any action or proceeding which relates to events prior to the effective date of this provision.
SECTION 10.04. Indemnification Agreement. The Company is authorized to enter into agreements with any of its members or officers extending rights to indemnification and advancement of expenses to such Person to the fullest extent permitted by applicable Law, but the failure to enter into any such agreement shall not affect or limit the rights of such Person pursuant to this provision.
SECTION 10.05. Enforceability. In case any provision in this Article X shall be determined at any time to be unenforceable in any respect, the other provisions shall not in any way be affected or impaired thereby, and the affected provisions shall be given the fullest possible enforcement in the circumstances, it being the intention of the Company to provide indemnification and advancement of expenses to its members and officers, acting in such capacities, to the fullest extent permitted by Law.
SECTION 10.06. No Amendments. No amendment or repeal of this provision shall apply to or have any effect on the indemnification of, or advancement of expenses to, the Member or any officer of the Company for, or with respect to, acts or omissions of such Member or officer occurring prior to such amendment or repeal.
SECTION 10.07. Not Exclusive. The foregoing shall not be exclusive of any other rights to which the Member or any officer may be entitled as a matter of Law and shall not affect any rights to indemnification to which Company personnel other than the Member or officers may be entitled by contract or otherwise.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Amendments and Consents. This Agreement may be modified or amended only by the Member.
SECTION 11.02. Benefits of Agreement. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditor of the Company or the Member.
SECTION 11.03. Integration. This Agreement constitutes the entire agreement pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements in connection therewith. No covenant, representation or condition not expressed in this Agreement shall affect, or be effective to interpret, change or restrict, the express provisions of this Agreement.
SECTION 11.04. Headings. The titles of Articles and Sections of this Agreement are for convenience only and shall not be interpreted to limit or amplify the provisions of this Agreement.
SECTION 11.05. Severability. Each provision of this Agreement shall be considered separable and if for any reason any provision or provisions hereof are determined to be invalid and contrary to any existing or future Law, such invalidity shall not impair the operation of or affect those portions of this Agreement, which are valid.
10
SECTION 11.06. Applicable Law. This Agreement shall be construed in accordance with, and governed by, the Laws of the State of Delaware, without regard to its conflict of law principles.
SECTION 11.07. Security. Interest shall constitute securities within the meaning of, and governed by, (i) Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as in effect from time to time in the State of Delaware and in the State of New York and (ii) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995.
IN WITNESS WHEREOF, this First Amended and Restated Limited Liability Company Agreement has been duly executed by El Paso TGPC Investments, L.L.C., effective as of the 14th day of February, 2012.
EL PASO TGPC INVESTMENTS, L.L.C. | ||
By: | /s/ John J. Hopper | |
John J. Hopper | ||
Vice President and Treasurer |
11
Exhibit A
Interests
Member |
Percentage Interest | |
El Paso TGPC Investments, L.L.C. 1001 Louisiana Street Houston, Texas 77002 |
100% |
12
EXHIBIT 4.A
TENNESSEE GAS PIPELINE COMPANY
TO
THE CHASE MANHATTAN BANK
TRUSTEE
INDENTURE
DATED AS OF MARCH 4, 1997
TENNESSEE GAS PIPELINE COMPANY
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO
SECTIONS 310 THROUGH 318, INCLUSIVE, OF THE
TRUST INDENTURE ACT OF 1939:
TRUST INDENTURE ACT SECTION |
INDENTURE SECTION | |
Section 310(a)(1) |
609 | |
(a)(2) |
609 | |
(a)(3) |
Not Applicable | |
(a)(4) |
Not Applicable | |
(b) |
608 | |
610 | ||
Section 311(a) |
613 | |
(b) |
613 | |
Section 312(a) |
701 | |
702 | ||
(b) |
702 | |
(c) |
702 | |
Section 313(a) |
703 | |
(b) |
703 | |
(c) |
703 | |
(d) |
703 | |
Section 314(a) |
704 | |
(a)(4) |
101 | |
1004 | ||
(b) |
Not Applicable | |
(c)(1) |
101 | |
102 | ||
(c)(2) |
101 | |
102 | ||
(c)(3) |
Not Applicable | |
(d) |
Not Applicable | |
(e) |
102 | |
Section 315(a) |
601 | |
(b) |
602 | |
(c) |
601 | |
(d) |
601 | |
(e) |
514 | |
Section 316(a) |
101 | |
(a)(1)(A) |
502 | |
512 | ||
(a)(1)(B) |
513 | |
(a)(2) |
Not Applicable | |
(b) |
508 | |
(c) |
104 | |
Section 317(a)(1) |
503 | |
(a)(2) |
504 | |
(b) |
1003 | |
Section 318(a) |
107 |
NOTE: | This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. |
TABLE OF CONTENTS
PAGE | ||||||
PARTIES |
1 | |||||
RECITALS OF THE COMPANY |
1 | |||||
ARTICLE ONE |
||||||
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION |
||||||
SECTION 101. | Definitions |
1 | ||||
Act |
2 | |||||
Affiliate |
2 | |||||
Alternate Program |
2 | |||||
Authenticating Agent |
2 | |||||
Authorized Newspaper |
2 | |||||
Bankruptcy Law |
2 | |||||
Board of Directors |
3 | |||||
Board Resolution |
3 | |||||
Business Day |
3 | |||||
Commission |
3 | |||||
Company |
3 | |||||
Company Request or Company Order |
3 | |||||
Consolidated Net Tangible Assets |
3 | |||||
Corporate Trust Office |
4 | |||||
corporation |
4 | |||||
covenant defeasance |
4 | |||||
Custodian |
4 | |||||
Debt |
4 | |||||
Default |
4 | |||||
Defaulted Interest |
4 | |||||
defeasance |
4 | |||||
Definitive Security |
4 | |||||
Depositary |
4 | |||||
Dollar or $ |
4 | |||||
Event of Default |
5 | |||||
Exchange Act |
5 | |||||
Funded Debt |
5 | |||||
Global Security |
5 | |||||
Holder |
5 | |||||
Indenture |
5 | |||||
interest |
5 | |||||
Interest Payment Date |
5 | |||||
Lien |
5 | |||||
Margin Stock |
6 | |||||
Maturity |
6 |
PAGE | ||||||
Notice of Default |
6 | |||||
Officers Certificate |
6 | |||||
Opinion of Counsel |
6 | |||||
Original Issue Discount Security |
6 | |||||
Outstanding |
6 | |||||
Paying Agent |
7 | |||||
Periodic Offering |
8 | |||||
Permitted Liens |
8 | |||||
Person |
8 | |||||
Place of Payment |
9 | |||||
Predecessor Security |
9 | |||||
Principal Property |
9 | |||||
Redemption Date |
9 | |||||
Redemption Price |
9 | |||||
Regular Record Date |
9 | |||||
Restricted Affiliate |
9 | |||||
Restricted Subsidiary |
10 | |||||
Sale-Leaseback Transaction |
10 | |||||
Securities |
10 | |||||
Security Register and Security Registrar |
10 | |||||
Special Record Date |
10 | |||||
Stated Maturity |
10 | |||||
Subsidiary |
10 | |||||
Trust Indenture Act |
10 | |||||
Trustee |
11 | |||||
U.S. Government Obligations |
11 | |||||
Vice President |
11 | |||||
SECTION 102. | Compliance Certificates and Opinions |
11 | ||||
SECTION 103. | Form of Documents Delivered to Trustee |
12 | ||||
SECTION 104. | Acts of Holders; Record Dates |
13 | ||||
SECTION 105. | Notices, Etc., to Trustee and Company |
14 | ||||
SECTION 106. | Notice to Holders; Waiver |
14 | ||||
SECTION 107. | Conflict with Trust Indenture Act |
15 | ||||
SECTION 108. | Effect of Headings and Table of Contents |
15 | ||||
SECTION 109. | Successors and Assigns |
15 | ||||
SECTION 110. | Separability Clause |
15 | ||||
SECTION 111. | Benefits of Indenture |
15 | ||||
SECTION 112. | Governing Law |
16 | ||||
SECTION 113. | Legal Holidays |
16 | ||||
SECTION 114. | Language of Notices, Etc. |
16 | ||||
SECTION 115. | Incorporators, Stockholders, Officers and Directors of the Company Exempt from Individual Liability | 16 |
ii
PAGE | ||||||
ARTICLE TWO |
||||||
SECURITY FORMS |
||||||
SECTION 201. | Forms Generally |
17 | ||||
SECTION 202. | Form of Face of Security |
17 | ||||
SECTION 203. | Form of Reverse of Security |
21 | ||||
SECTION 204. | Global Securities |
27 | ||||
SECTION 205. | Form of Trustees Certificate of Authentication |
28 | ||||
ARTICLE THREE |
||||||
THE SECURITIES |
||||||
SECTION 301. | Amount Unlimited; Issuable in Series |
29 | ||||
SECTION 302. | Denominations |
32 | ||||
SECTION 303. | Execution, Authentication, Delivery and Dating |
32 | ||||
SECTION 304. | Temporary Securities |
34 | ||||
SECTION 305. | Registration, Registration of Transfer and Exchange |
35 | ||||
SECTION 306. | Mutilated, Destroyed, Lost and Stolen Securities |
37 | ||||
SECTION 307. | Payment of Interest; Interest Rights Preserved |
38 | ||||
SECTION 308. | Persons Deemed Owners |
39 | ||||
SECTION 309. | Cancellation |
40 | ||||
SECTION 310. | Computation of Interest |
40 | ||||
SECTION 311. | CUSIP Numbers |
40 | ||||
ARTICLE FOUR |
||||||
SATISFACTION AND DISCHARGE |
||||||
SECTION 401. | Satisfaction and Discharge of Indenture |
41 | ||||
SECTION 402. | Application of Trust Money |
42 | ||||
ARTICLE FIVE |
||||||
REMEDIES |
||||||
SECTION 501. | Events of Default |
42 | ||||
SECTION 502. | Acceleration of Maturity; Rescission and Annulment |
43 | ||||
SECTION 503. | Collection of Indebtedness and Suits for Enforcement by Trustee |
45 | ||||
SECTION 504. | Trustee May File Proofs of Claim |
46 | ||||
SECTION 505. | Trustee May Enforce Claims Without Possession of Securities |
46 | ||||
SECTION 506. | Application of Money Collected |
47 | ||||
SECTION 507. | Limitation on Suits |
47 | ||||
SECTION 508. | Unconditional Right of Holders to Receive Principal, Premium and Interest |
48 |
iii
PAGE | ||||||
SECTION 509. | Restoration of Rights and Remedies |
48 | ||||
SECTION 510. | Rights and Remedies Cumulative |
48 | ||||
SECTION 511. | Delay or Omission Not Waiver |
49 | ||||
SECTION 512. | Control by Holders |
49 | ||||
SECTION 513. | Waiver of Past Defaults |
49 | ||||
SECTION 514. | Undertaking for Costs |
50 | ||||
SECTION 515. | Waiver of Usury, Stay or Extension Laws |
50 | ||||
ARTICLE SIX |
||||||
THE TRUSTEE |
||||||
SECTION 601. | Certain Duties and Responsibilities |
50 | ||||
SECTION 602. | Notice of Defaults |
51 | ||||
SECTION 603. | Certain Rights of Trustee |
51 | ||||
SECTION 604. | Not Responsible for Recitals or Issuance of Securities |
52 | ||||
SECTION 605. | May Hold Securities |
52 | ||||
SECTION 606. | Money Held in Trust |
53 | ||||
SECTION 607. | Compensation and Reimbursement |
53 | ||||
SECTION 608. | Disqualification; Conflicting Interests |
54 | ||||
SECTION 609. | Corporate Trustee Required; Eligibility |
54 | ||||
SECTION 610. | Resignation and Removal; Appointment of Successor |
54 | ||||
SECTION 611. | Acceptance of Appointment by Successor |
56 | ||||
SECTION 612. | Merger, Conversion, Consolidation or Succession to Business |
57 | ||||
SECTION 613. | Preferential Collection of Claims Against Company |
58 | ||||
SECTION 614. | Appointment of Authenticating Agent |
58 | ||||
ARTICLE SEVEN |
||||||
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY |
||||||
SECTION 701. | Company to Furnish Trustee Names and Addresses of Holders |
60 | ||||
SECTION 702. | Preservation of Information; Communications to Holders |
60 | ||||
SECTION 703. | Reports by Trustee |
61 | ||||
SECTION 704. | Reports by Company |
61 | ||||
ARTICLE EIGHT |
||||||
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE |
||||||
SECTION 801. | Company May Consolidate, Etc., Only on Certain Terms |
62 | ||||
SECTION 802. | Successor Substituted |
63 |
iv
PAGE | ||||||
ARTICLE NINE |
||||||
SUPPLEMENTAL INDENTURES |
||||||
SECTION 901. | Supplemental Indentures Without Consent of Holders |
63 | ||||
SECTION 902. | Supplemental Indentures with Consent of Holders |
64 | ||||
SECTION 903. | Execution of Supplemental Indentures |
65 | ||||
SECTION 904. | Effect of Supplemental Indentures |
65 | ||||
SECTION 905. | Conformity with Trust Indenture Act |
66 | ||||
SECTION 906. | Reference in Securities to Supplemental Indentures |
66 | ||||
ARTICLE TEN |
||||||
COVENANTS |
||||||
SECTION 1001. | Payment of Principal, Premium and Interest |
66 | ||||
SECTION 1002. | Maintenance of Office or Agency |
66 | ||||
SECTION 1003. | Money for Securities Payments to Be Held in Trust |
67 | ||||
SECTION 1004. | Statement by Officers as to Default |
68 | ||||
SECTION 1005. | Existence |
69 | ||||
SECTION 1006. | Limitations on Liens |
69 | ||||
SECTION 1007. | Restriction of Sale-Leaseback Transaction |
71 | ||||
SECTION 1008. | Waiver of Certain Covenants |
72 | ||||
ARTICLE ELEVEN |
||||||
REDEMPTION OF SECURITIES |
||||||
SECTION 1101. | Applicability of Article |
73 | ||||
SECTION 1102. | Election to Redeem; Notice to Trustee |
73 | ||||
SECTION 1103. | Selection by Trustee of Securities to Be Redeemed |
73 | ||||
SECTION 1104. | Notice of Redemption |
74 | ||||
SECTION 1105. | Deposit of Redemption Price |
74 | ||||
SECTION 1106. | Securities Payable on Redemption Date |
75 | ||||
SECTION 1107. | Securities Redeemed in Part |
75 | ||||
ARTICLE TWELVE |
||||||
SINKING FUNDS |
||||||
SECTION 1201. | Applicability of Article |
76 | ||||
SECTION 1202. | Satisfaction of Sinking Fund Payments with Securities |
76 | ||||
SECTION 1203. | Redemption of Securities for Sinking Fund |
76 |
v
PAGE | ||||||
ARTICLE THIRTEEN |
||||||
DEFEASANCE |
||||||
SECTION 1301. | Applicability of Article |
77 | ||||
SECTION 1302. | Legal Defeasance |
77 | ||||
SECTION 1303. | Covenant Defeasance |
79 | ||||
SECTION 1304. | Application by Trustee of Funds Deposited for Payment of Securities |
80 | ||||
SECTION 1305. | Repayment to Company |
81 |
Note: | This Table of Contents shall not, for any purpose, be deemed to be a part of the Indenture. |
vi
INDENTURE dated as of March 4, 1997, between TENNESSEE GAS PIPELINE COMPANY, a corporation duly organized and existing under the laws of Delaware (the Company), having its principal office at 1001 Louisiana, Houston, Texas, and THE CHASE MANHATTAN BANK, a New York banking corporation, as Trustee (the Trustee).
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (the Securities), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture Act that are required to be a part of this Indenture and, to the extent applicable, shall be governed by such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities or of any series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term generally accepted accounting principles with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States at the date of such computation;
(4) the words herein, hereof and hereunder and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and
(5) the words Article and Section refer to an Article and Section, respectively, of this Indenture.
Act, when used with respect to any Holder, has the meaning specified in Section 104.
Affiliate of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, control when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have meanings correlative to the foregoing.
Alternate Program means any program providing for the financing, sale or other disposition of trade or other receivables classified as current assets in accordance with United States generally accepted accounting principles entered into by the Company or a Subsidiary (or for purposes of Section 1006 only, any Restricted Affiliate), provided that such program is on terms customary for similar transactions.
Authenticating Agent means any Person authorized by the Trustee pursuant to Section 614 to act on behalf of the Trustee to authenticate Securities of one or more series.
Authorized Newspaper means a newspaper, in the English language or in an official language of the country of publication, customarily published on each Business Day, whether or not published on Saturdays, Sundays or holidays, and of general circulation in the place in connection with which the term is used or in the financial community of such place.
Bankruptcy Law means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors.
2
Board of Directors means the board of directors of the Company, or the executive or any other committee of that board duly authorized to act in respect thereof.
Board Resolution means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company, the principal financial officer of the Company or any other authorized officer of the Company or a person duly authorized by any of them, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.
Business Day, when used with respect to any Place of Payment or other location, means, except as otherwise provided as contemplated by Section 301 with respect to any series of Securities, each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment or other location are authorized or obligated by law, executive order or regulation to close.
Commission means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act or, if at any time after the execution of this instrument 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.
Company means the Person named as the Company in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Company shall mean such successor Person.
Company Request or Company Order means a written request or order signed in the name of the Company by its Chairman of the Board, its Chief Executive Officer, its President, any of its Vice Presidents or any other authorized officer of the Company or a person duly authorized by any of them, and delivered to the Trustee.
Consolidated Net Tangible Assets means, at any date of determination, the total amount of assets after deducting therefrom (i) all current liabilities (excluding (A) any current liabilities that by their terms are extendable or renewable at the option of the obligor thereon to a time more than 12 months after the time as of which the amount thereof is being computed, and (B) current maturities of long-term debt), and (ii) the value (net of any applicable reserves) of all goodwill, trade names, trademarks, patents and other like intangible assets, all as set forth on the consolidated balance sheet of the Company and its consolidated subsidiaries for the Companys most recently completed fiscal quarter, prepared in accordance with generally accepted accounting principles.
3
Corporate Trust Office means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which at the date hereof is 450 West 33rd Street, New York, NY 10001.
corporation includes corporations, associations, partnerships, limited liability companies, joint-stock companies and business trusts.
covenant defeasance has the meaning specified in Section 1303.
Custodian means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.
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.
Default means, with respect to a series of Securities, any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series.
Defaulted Interest has the meaning specified in Section 307.
defeasance has the meaning specified in Section 1302.
Definitive Security means a Security other than a Global Security or a temporary Security.
Depositary means, with respect to Securities of any series issuable in whole or in part in the form of one or more Global Securities, a clearing agency registered under the Exchange Act that is designated to act as Depositary for such Securities as contemplated by Section 301, until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter shall mean or include each Person which is then a Depositary hereunder, and if at any time there is more than one such Person, shall be a collective reference to such Persons.
Dollar or $ means the coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts.
4
Event of Default has the meaning specified in Section 501.
Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, and any statute successor thereto.
Funded Debt means all Debt maturing one year or more from the date of the creation thereof, all Debt directly or indirectly renewable or extendible, 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 Security means a Security in global form that evidences all or part of the Securities of any series and is authenticated and delivered to, and registered in the name of, the Depositary for such Securities or a nominee thereof.
Holder means a Person in whose name a Security is registered in the Security Register.
Indenture means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument, and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. The term Indenture also shall include the terms of particular series of Securities established as contemplated by Section 301.
interest, when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity.
Interest Payment Date, when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security.
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.
5
Margin Stock means margin stock as defined in Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time.
Maturity, when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
Notice of Default means a written notice of the kind specified in Section 501(3).
Officers Certificate means a certificate signed by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President or any other authorized officer of the Company or a person duly authorized by any of them, and delivered to the Trustee. The officer signing an Officers Certificate given pursuant to Section 1004 shall be the principal executive, financial or accounting officer of the Company.
Opinion of Counsel means a written opinion of legal counsel, who may be an employee of or counsel for the Company and who shall be reasonably acceptable to the Trustee.
Original Issue Discount Security means any Security which provides for an amount less than the stated principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502.
Outstanding, when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:
(1) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;
(2) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided, however, that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made;
6
(3) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; and
(4) Securities, except to the extent provided in Sections 1302 and 1303, with respect to which the Company has effected defeasance or covenant defeasance as provided in Article Thirteen;
provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, (A) the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon acceleration of the Maturity thereof on such date pursuant to Section 502, (B) the principal amount of a Security denominated in one or more currencies or currency units other than U.S. dollars shall be the U.S. dollar equivalent of such currencies or currency units, determined in the manner provided as contemplated by Section 301 on the date of original issuance of such Security, of the principal amount (or, in the case of an Original Issue Discount Security, the U.S. dollar equivalent (as so determined) on the date of original issuance of such Security of the amount determined as provided in Clause (A) above) of such Security, and (C) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned as described in Clause (C) above which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgees right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor.
Paying Agent means any Person authorized by the Company to pay the principal of or any premium or interest on any Securities on behalf of the Company.
7
Periodic Offering means an offering of Securities of a series from time to time, the specific terms of which Securities, including, without limitation, the rate or rates of interest or formula for determining the rate or rates of interest thereon, if any, the Stated Maturity or Stated Maturities thereof, the original issue date or dates thereof, the redemption provisions, if any, with respect thereto, and any other terms specified as contemplated by Section 301 with respect thereto, are to be determined by the Company upon the issuance of such Securities.
Permitted Liens means (i) Liens upon rights-of-way for pipeline purposes; (ii) any governmental Lien, mechanics, materialmens, carriers or similar Lien incurred in the ordinary course of business which is not yet due or which is being contested in good faith by appropriate proceedings and any undetermined Lien which is incidental to construction; (iii) the right reserved to, or vested in, any municipality or public authority by the terms of any right, power, franchise, grant, license, permit or by any provision of law, to purchase or recapture or to designate a purchaser of, any property; (iv) Liens of taxes and assessments which are (A) for the then current year, (B) not at the time delinquent, or (C) delinquent but the validity of which is being contested at the time by the Company or any Subsidiary in good faith; (v) Liens of, or to secure performance of, leases; (vi) any Lien upon, or deposits of, any assets in favor of any surety company or clerk of court for the purpose of obtaining indemnity or stay of judicial proceedings; (vii) any Lien upon property or assets acquired or sold by the Company or any Restricted Subsidiary resulting from the exercise of any rights arising out of defaults on receivables; (viii) any Lien incurred in the ordinary course of business in connection with workmens compensation, unemployment insurance, temporary disability, social security, retiree health or similar laws or regulations or to secure obligations imposed by statute or governmental regulations; (ix) any Lien upon any property or assets in accordance with customary banking practice to secure any Debt incurred by the Company or any Restricted Subsidiary in connection with the exporting of goods to, or between, or the marketing of goods in, or the importing of goods from, foreign countries; or (x) any Lien in favor of the United States of America or any state thereof, or any other country, or any political subdivision of any of the foregoing, to secure partial, progress, advance, or other payments pursuant to any contract or statute, or any Lien securing industrial development, pollution control, or similar revenue bonds.
Person means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, other entity, unincorporated organization or government or any agency or political subdivision thereof.
8
Place of Payment, when used with respect to the Securities of any series, means, unless otherwise specifically provided for with respect to such series as contemplated by Section 301, the office or agency of the Company in The City of New York and such other place or places where, subject to the provisions of Section 1002, the principal of and any premium and interest on the Securities of that series are payable as specified as contemplated by Section 301.
Predecessor Security of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
Principal Property means (a) any pipeline assets of the Company or any Subsidiary, including any related facilities employed in the transportation, distribution or marketing of natural gas, that is located in the United States or Canada, and (b) any processing or manufacturing plant owned or leased by the Company or any Subsidiary and located within the United States or Canada, except, in the case of either clause (a) or (b), any such assets or plant which, in the opinion of the Board of Directors, is not material in relation to the activities of the Company and its Subsidiaries as a whole.
Redemption Date, when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.
Redemption Price, when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.
Regular Record Date for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 301.
Restricted Affiliate means any Affiliate of the Company (other than a Subsidiary) designated by the Company as a Restricted Affiliate by written notice to the Trustee; provided that such Affiliate shall not become a Restricted Affiliate until such time that (a) such Affiliate executes a guaranty (in form and substance reasonably satisfactory to the Trustee) in favor of the
9
Trustee, for the ratable benefit of the Holders, guaranteeing the prompt and complete payment by TGP when due (whether at the stated maturity, by acceleration or otherwise) of the Securities; and (b) the Trustee receives an Opinion of Counsel reasonably acceptable to the Trustee, which shall be in form and substance satisfactory to the Trustee; provided further, however, that after such time as such Affiliate becomes a Restricted Affiliate, the Company may terminate the designation of such Affiliate as a Restricted Affiliate by written notice to the Trustee at which time the aforementioned guaranty of such Affiliate shall also terminate.
Restricted Subsidiary means any Subsidiary of the Company owning or leasing any Principal Property.
Sale-Leaseback Transaction means the sale or transfer by the Company or any Restricted Subsidiary of any Principal Property to a Person (other than the Company or a Subsidiary) and the taking back by the Company or any Restricted Subsidiary, as the case may be, of a lease of such Principal Property.
Securities has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture.
Security Register and Security Registrar have the respective meanings specified in Section 305.
Special Record Date for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307.
Stated Maturity, when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable.
Subsidiary means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For the purposes of this definition, voting stock means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.
Trust Indenture Act means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed, except as otherwise provided in Section 905; provided, however, that if the Trust Indenture Act of 1939 is amended after such date, Trust Indenture Act means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.
10
Trustee means the Person named as the Trustee in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Trustee shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, Trustee as used with respect to the Securities of any series shall mean each Trustee with respect to Securities of that series.
U.S. Government Obligations means securities which are (i) direct obligations of the United States for the payment of which its full faith and credit is pledged, or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States, each of which are not callable or redeemable at the option of the issuer thereof.
Vice President, when used with respect to the Company or Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title vice president.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such certificates or opinions as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form of an Officers Certificate, if to be given by an officer of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any other requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (except for certificates provided for in Section 1004) shall include:
(1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;
11
(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
12
SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed (either physically or by means of a facsimile or an electronic transmission, provided that such electronic transmission is transmitted through the facilities of a Depositary) by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered (either physically or by means of a facsimile or an electronic transmission, provided that such electronic transmission is transmitted through the facilities of a Depositary) to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the Act of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 315 of the Trust Indenture Act) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.
The ownership, principal amount and serial numbers of Securities held by any Person, and the date of commencement of such Persons holding the same, shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or other action of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.
Without limiting the foregoing, a Holder entitled hereunder to give or take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any different part of such principal amount.
13
The Company may set any day as the record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by Holders of Securities of such series, but the Company shall have no obligation to do so. With regard to any record date set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not such Holders remain Holders after such record date.
SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trustee Administration Department, or
(2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at 1001 Louisiana, Houston, Texas 77002, to the attention of the Secretary, or at any other address previously furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid (if international mail, by air mail), to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been received by such Holder, whether or not such Holder actually receives such notice.
14
Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.
15
SECTION 112. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Securities (other than a provision of the Securities of any series which specifically states that such provision shall apply in lieu of this Section)) payment of interest or principal (and premium, if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be.
SECTION 114. Language of Notices, Etc.
Any request, demand, authorization, direction, notice, consent, waiver or Act required or permitted under this Indenture shall be in the English language, except that any published notice may be in an official language of the country of publication.
SECTION 115. Incorporators, Stockholders, Officers and Directors of the Company Exempt from Individual Liability.
No recourse under or upon any obligation, covenant or agreement of or contained in this Indenture or of or contained in any Security, or for any claim based thereon or otherwise in respect thereof, or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or any successor Person, either directly or through the Company or any successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a part of the consideration for, the execution of this Indenture and the issue of the Securities.
16
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth in this Article, or in such other form as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities.
The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by an authorized officer or other authorized person on behalf of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such Securities.
SECTION 202. Form of Face of Security.
[Insert any legend required by the United States Internal Revenue Code and the regulations thereunder.]
17
[If a Global Security, insert legend required by Section 204 of the Indenture] [If applicable, insert UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
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TENNESSEE GAS PIPELINE COMPANY
[TITLE OF SECURITY]
NO.
U.S.$
[CUSIP NO.
]
TENNESSEE GAS PIPELINE COMPANY, a corporation duly incorporated and existing under the laws of Delaware (herein called the Company, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to [ ], or registered assigns, the principal sum of [ ] United States Dollars on [ ] [if the Security is to bear interest prior to Maturity, insert , and to pay interest thereon from [ ], or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on [ ] and [ ] in each year, commencing [ ], at the rate of [ ]% per annum, until the principal hereof is paid or made available for payment] [if applicable, insert , and at the rate of [ ]% per annum on any overdue principal and premium and on any overdue installment of interest]. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the [ ] or [ ] (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice of which shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in such Indenture].
19
[If the Security is not to bear interest prior to Maturity, insert The principal of this Security shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption or at Stated Maturity and in such case the overdue principal of this Security shall bear interest at the rate of [ ]% per annum, which shall accrue from the date of such default in payment to the date payment of such principal has been made or duly provided for. Interest on any overdue principal shall be payable on demand. Any such interest on any overdue principal that is not so paid on demand shall bear interest at the rate of [ ]% per annum, which shall accrue from the date of such demand for payment to the date payment of such interest has been made or duly provided for, and such interest shall also be payable on demand.]
[If a Global Security, insert Payment of the principal of [(and premium, if any)] and [if applicable, insert any such] interest on this Security will be made by transfer of immediately available funds to a bank account in [ ] designated by the Holder in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts [state other currency].]
[If a Definitive Security insert Payment of the principal of [(and premium, if any)] and [if applicable, insert any such] interest on this Security will be made at the office or agency of the Company maintained for that purpose in , [in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts] [state other currency] [or subject to any laws or regulations applicable thereto and to the right of the Company (as provided in the Indenture) to rescind the designation of any such Paying Agent, at the [main] offices of [ ] in [ ] and in [ ], or at such other offices or agencies as the Company may designate, by [United States Dollar] [state other currency] check drawn on, or transfer to a [United States Dollar] account maintained by the payee with, a bank in The City of New York [ ] (so long as the applicable Paying Agent has received proper transfer instructions in writing at least [ ] days prior to the payment date)] [if applicable, insert ; provided, however, that payment of interest may be made at the option of the Company by [United States Dollar] [state other currency] check mailed to the addresses of the Persons entitled thereto as such addresses shall appear in the Security Register] [or by transfer to a [United States Dollar] [state other currency] account maintained by the payee with a bank in The City of New York [state other Place of Payment] (so long as the applicable Paying Agent has received proper transfer instructions in writing by the Record Date prior to the applicable Interest Payment Date)].]
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Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
Dated: |
||||||
TENNESSEE GAS PIPELINE COMPANY | ||||||
BY: | ||||||
[TITLE] |
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the Company (the Securities), issued and to be issued in one or more series under an Indenture dated as of March 4, 1997 (the Indenture), between the Company and The Chase Manhattan Bank, as Trustee (the Trustee, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. As provided in the Indenture, the Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates, may be subject to different redemption provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to different covenants and Events of Default and may otherwise vary as in the Indenture provided or permitted. This Security is one of the series designated on the face hereof [if applicable, insert , limited in aggregate principal amount to U.S.$ ].
21
[If applicable, insert The Securities of this series are subject to redemption upon not less than 30 nor more than 60 days notice by mail, [if applicable, insert (1) on [ ] in any year commencing with the year [ ] and ending with the year [ ] through operation of the sinking fund for this series at a Redemption Price equal to 100% of the principal amount, and (2)] at any time [if applicable, insert on or after [ ], ], as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed as percentages of the principal amount): If redeemed [if applicable, insert on or before [ ], [ ]%, and if redeemed] during the 12-month period beginning [ ] of the years indicated,
YEAR |
REDEMPTION PRICE |
YEAR |
REDEMPTION PRICE |
and thereafter at a Redemption Price equal to [ ]% of the principal amount, together in the case of any such redemption [if applicable, insert (whether through operation of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert The Securities of this series are subject to redemption upon not less than 30 nor more than 60 days notice by mail, (1) on [ ] in any year commencing with the year [ ] and ending with the year [ ] through operation of the sinking fund for this series at the Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below, and (2) at any time [if applicable, insert on or after [ ], ], as a whole or in part, at the election of the Company, at the Redemption Prices for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below: If redeemed during the 12-month period beginning [ ] of the years indicated,
22
YEAR |
REDEMPTION PRICE FOR REDEMPTION THROUGH OPERATION OF THE SINKING FUND |
REDEMPTION PRICE FOR REDEMPTION OTHERWISE THAN THROUGH OPERATION OF THE SINKING FUND PRICE |
and thereafter at a Redemption Price equal to [ ]% of the principal amount, together in the case of any such redemption (whether through operation of the sinking fund or otherwise) with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert The sinking fund for this series provides for the redemption on [ ] in each year beginning with the year [ ] and ending with the year [ ] of [if applicable, not less than $ (mandatory sinking fund) and not more than] $ aggregate principal amount of Securities of this series. Securities of this series acquired or redeemed by the Company otherwise than through [if applicable, mandatory] sinking fund payments may be credited against subsequent [if applicable, mandatory] sinking fund payments otherwise required to be made [if applicable, in the inverse order in which they become due].]
[If the Security is subject to redemption in part of any kind, insert In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert The Securities of this series are not redeemable prior to Stated Maturity.]
23
[If the Security is not an Original Issue Discount Security, insert If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert If an Event of Default with respect to Securities of this series shall occur and be continuing, an amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such amount shall be equal to insert formula for determining the amount. Upon payment (i) of the amount of principal so declared due and payable, and (ii) of interest on any overdue principal and overdue interest, all of the Companys obligations in respect of the payment of the principal of and interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all series to be affected (voting as one class). The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Outstanding Securities of all affected series (voting as one class), on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture. The Indenture permits, with certain exceptions as therein provided, the Holders of a majority in principal amount of Securities of all affected series then Outstanding (voting as a single class) to waive past defaults under the Indenture with respect to such Securities and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of
24
this series, the Holders of not less than 25% in principal amount of the Securities of all affected series at the time Outstanding (treated as a single class) shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or [any premium or] interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and [any premium and] interest on this Security at the times, place(s) and rate, and in the coin or currency, herein prescribed.
[If a Global Security, insert This Global Security or portion hereof may not be exchanged for Definitive Securities of this series except in the limited circumstances provided in the Indenture.
The holders of beneficial interests in this Global Security will not be entitled to receive physical delivery of Definitive Securities except as described in the Indenture and will not be considered the Holders thereof for any purpose under the Indenture.]
[If a Definitive Security, insert As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in [if applicable, insert any place where the principal of and any premium and interest on this Security are payable] [if applicable, insert The City of New York[, or, subject to any laws or regulations applicable thereto and to the right of the Company (limited as provided in the Indenture) to rescind the designation of any such transfer agent, at the [main] offices of in and in or at such other offices or agencies as the Company may designate]], duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities 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 Securities of this series are issuable only in registered form without coupons in denominations of U.S. $ and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series 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 Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
No recourse under or upon any obligation, covenant or agreement of or contained in the Indenture or of or contained in any Security, or for any claim based thereon or otherwise in respect thereof, or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor Person, either directly or through the Company or any successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment, penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released by the acceptance hereof and as a condition of, and as part of the consideration for, the Securities and the execution of the Indenture.
The Indenture provides that the Company (a) will be discharged from any and all obligations in respect of the Securities (except for certain obligations described in the Indenture), or (b) need not comply with certain restrictive covenants of the Indenture, in each case if the Company deposits, in trust, with the Trustee money or U.S. Government Obligations (or a combination thereof) which through the payment of interest thereon and principal thereof in accordance with their terms will provide money, in an amount sufficient to pay all the principal of and interest on the Securities, but such money need not be segregated from other funds except to the extent required by law.
26
This Security shall be governed by and construed in accordance with the laws of the State of New York.
All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
[If a Definitive Security, insert as a separate page
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
(Please Print or Typewrite Name and Address of Assignee)
the within instrument of TENNESSEE GAS PIPELINE COMPANY and does hereby irrevocably constitute and appoint Attorney to transfer said instrument on the books of the within-named Company, with full power of substitution in the premises.
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: Dated: |
||
Signature |
NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.]
SECTION 204. Global Securities.
Every Global Security authenticated and delivered hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE
27
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
If Securities of a series are issuable in whole or in part in the form of one or more Global Securities, as specified in or as contemplated by Section 301, then, notwithstanding Clause (9) of Section 301 and the provisions of Section 302, any Global Security shall represent such of the Outstanding Securities of such series as shall be specified therein and may provide that it shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon and that the aggregate amount of Outstanding Securities represented thereby may from time to time be reduced or increased, as the case may be, to reflect exchanges. Any endorsement of a Global Security to reflect the amount, or any reduction or increase in the amount, of Outstanding Securities represented thereby shall be made in such manner and upon instructions given by such Person or Persons as shall be specified therein or in a Company Order. Subject to the provisions of Sections 303, 304 and 305, the Trustee shall deliver and redeliver any Global Security in the manner and upon instructions given by the Person or Persons specified therein or in the applicable Company Order. Any instructions by the Company with respect to endorsement or delivery or redelivery of a Global Security shall be in a Company Order (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel).
The provisions of the last sentence of Section 303 shall apply to any Security represented by a Global Security if such Security was never issued and sold by the Company and the Company delivers to the Trustee the Global Security together with a Company Order (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) with regard to the reduction or increase, as the case may be, in the principal amount of Securities represented thereby, together with the written statement contemplated by the last sentence of Section 303.
SECTION 205. Form of Trustees Certificate of Authentication.
The Trustees certificates of authentication shall be in substantially the following form:
28
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, AS TRUSTEE | ||
By: |
||
Authorized Officer |
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution and, subject to Section 303, set forth, or determined in the manner provided, in an Officers Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish the Securities of the series from Securities of any other series);
(2) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 304, 305, 306, 906 or 1107 and except for any Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest;
(4) the date or dates on which the principal of the Securities of the series is payable or the method of determination thereof;
(5) the rate or rates at which the Securities of the series shall bear interest, if any, or the method of determination thereof, the date or dates from which such interest shall accrue, or the method of determination thereof, the Interest Payment Dates on which any such interest shall be payable and the Regular Record Date for any interest payable on any Interest Payment Date;
29
(6) the place or places where, subject to the provisions of Section 1002, the principal of and any premium and interest on Securities of the series shall be payable, Securities of the series may be surrendered for registration of transfer, Securities of the series may be surrendered for exchange and notices, and demands to or upon the Company in respect of the Securities of the series and this Indenture may be served;
(7) the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions or upon the happening of a specified event or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable;
(10) the currency, currencies or currency units in which payment of the principal of and any premium and interest on any Securities of the series shall be payable if other than the currency of the United States of America and the manner of determining the equivalent thereof in the currency of the United States of America for purposes of the definition of Outstanding in Section 101;
(11) if the amount of payments of principal of or any premium or interest on any Securities of the series may be determined with reference to an index, the manner in which such amounts shall be determined;
(12) if the principal of or any premium or interest on any Securities of the series is to be payable, at the election of the Company or a Holder thereof, in one or more currencies or currency units other than that or those in which the Securities are stated to be payable, the currency, currencies or currency units in which payment of the principal of and any premium and interest on Securities of such series as to which such election is made shall be payable, and the periods within which and the terms and conditions upon which such election is to be made;
(13) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502 or the method of determination thereof;
30
(14) if and as applicable, that the Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the Depositary or Depositaries for such Global Security or Global Securities and any circumstances other than those set forth in Section 305 in which any such Global Security may be transferred to, and registered and exchanged for Securities registered in the name of, a Person other than the Depositary for such Global Security or a nominee thereof and in which any such transfer may be registered;
(15) any deletions from, modifications of or additions to the Events of Default set forth in Section 501 or the covenants of the Company set forth in Article Ten pertaining to the Securities of the series;
(16) if other than as provided in Sections 1302 and 1303, the means of defeasance or covenant defeasance as may be specified for the Securities of the series;
(17) if other than the Trustee, the identity of the Security Registrar and any Paying Agent; and
(18) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture, except as permitted by Section 901(4)).
All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to the Board Resolution referred to above and (subject to Section 303) set forth, or determined in the manner provided, in the Officers Certificate referred to above or in any such indenture supplemental hereto.
All Securities of any one series need not be issued at the same time and, unless otherwise provided, a series may be reopened, without the consent of the Holders, for increases in the aggregate principal amount of such series of Securities and issuances of additional Securities of such series or for the establishment of additional terms with respect to the Securities of such series.
If any of the terms of the series are established by action taken by or pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by an authorized officer or other authorized person on behalf of the Company and delivered to the Trustee at or prior to the delivery of the Officers Certificate setting forth, or providing the manner for determining, the terms of the series.
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With respect to Securities of a series subject to a Periodic Offering, such Board Resolution or Officers Certificate may provide general terms for Securities of such series and provide either that the specific terms of particular Securities of such series shall be specified in a Company Order or that such terms shall be determined by the Company, or one or more of the Companys agents designated in an Officers Certificate, in accordance with a Company Order.
SECTION 302. Denominations.
The Securities of each series shall be issuable only in registered form without coupons in such denominations as shall be specified as contemplated by Section 301. In the absence of any such specified denomination with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its Chief Financial Officer, its President or any Vice President and need not be attested. The signature of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities; provided, however, that in the case of Securities offered in a Periodic Offering, the Trustee shall authenticate and deliver such Securities from time to time in accordance with such other procedures (including, without limitation, the receipt by the Trustee of oral or electronic instructions from the Company or its duly authorized agents, thereafter promptly confirmed in writing) acceptable to the Trustee as may be specified by or pursuant to a Company Order delivered to the Trustee prior to the time of the first authentication of Securities of such series. If the form or terms of the
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Securities of the series have been established in or pursuant to one or more Board Resolutions as permitted by Sections 201 and 301, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating,
(1) if the form or forms of such Securities have been established by or pursuant to Board Resolution as permitted by Section 201, that such form or forms have been established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been, or in the case of Securities of a series offered in a Periodic Offering, will be, established by or pursuant to a Board Resolution as permitted by Section 301, that such terms have been, or in the case of Securities of a series offered in a Periodic Offering, will be, established in conformity with the provisions of this Indenture, subject, in the case of Securities of a series offered in a Periodic Offering, to any conditions specified in such Opinion of Counsel; and
(3) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors rights and to general equity principles.
If such form or forms or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustees own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers Certificate otherwise required pursuant to Section 301 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued.
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With respect to Securities of a series offered in a Periodic Offering, the Trustee may rely, as to the authorization by the Company of any of such Securities, the form or forms and terms thereof and the legality, validity, binding effect and enforceability thereof, upon the Opinion of Counsel and the other documents delivered pursuant to Sections 201 and 301 and this Section, as applicable, in connection with the first authentication of Securities of such series.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 309 for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of Definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the Definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will cause Definitive Securities of that series to be prepared without unreasonable delay. After the preparation of Definitive Securities of such series, the temporary Securities of such series shall be exchangeable for Definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company maintained pursuant to Section 1002 for the purpose of exchanges of Securities of such series, without charge to the Holder. Upon
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surrender for cancellation of any one or more temporary Securities of any series the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more Definitive Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor. Until so exchanged the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as Definitive Securities of such series and tenor.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at an office or agency of the Company in The City of New York a register (the register maintained in such office or in any other office or agency of the Company in a Place of Payment being herein sometimes referred to as the Security Register) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Company will, prior to the issuance of any Securities hereunder, appoint the Trustee as the initial Security Registrar for the purpose of registering Securities and transfers of Securities as herein provided and its corporate trust office which, at the date hereof, is located at 450 West 33rd Street, New York, New York 10001 as the initial office or agency in The City of New York where the Security Register will be maintained. The Company may at any time replace such Security Registrar, change such office or agency or act as its own Security Registrar. The Company will give prompt written notice to the Trustee of any change of the Security Registrar or of the location of such office or agency.
Upon surrender for registration of transfer of any Security of any series at the office or agency of the Company maintained pursuant to Section 1002 for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor.
At the option of the Holder, Securities of any series (except a Global Security) may be exchanged for other Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.
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All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
The Company shall not be required (1) to issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of that series selected for redemption under Section 1103 and ending at the close of business on the day of such mailing, or (2) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.
Notwithstanding any other provision in this Indenture and except as otherwise specified as contemplated by Section 301, no Global Security may be transferred to, or registered or exchanged for Securities registered in the name of, any Person other than the Depositary for such Global Security or any nominee thereof, and no such transfer may be registered, except as provided in this paragraph. Every Security authenticated and delivered upon registration or transfer of, or in exchange for or in lieu of, a Global Security shall be a Global Security, except as provided in this paragraph. If (1) (A) the Depositary for a Global Security notifies the Company that it is unwilling or unable to continue as Depositary for such Global Security or ceases to be a clearing agency registered under the Exchange Act, and (B) a successor Depositary is not appointed by the Company within 90 days, or (2) the Company determines in its sole discretion that Securities of a series issued in global form shall no longer be represented by a Global Security, then such Global Security may be exchanged by such Depositary for Definitive Securities of the same series, of any authorized denomination and of a like aggregate principal amount and tenor, registered in the names of, and the transfer of such Global Security or portion thereof may be registered to, such Persons as such Depositary shall direct.
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SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, together with, in proper cases, such security or indemnity as may be required by the Company or the Trustee to save each of them and any agent of either of them harmless, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in exchange for any mutilated Security or in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder.
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The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with respect to any series of Securities, interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest.
Any interest on any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called Defaulted Interest) shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Securities of such series at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2).
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(2) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 305, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Except as otherwise provided as contemplated by Section 301 with respect to any series of Securities, prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any premium and (subject to Sections 305 and 307) any interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.
No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Trustee, and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company, the Trustee nor any agent of the Company or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
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SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of in accordance with its customary procedures, and the Trustee shall thereafter deliver to the Company a certificate with respect to such disposition.
SECTION 310. Computation of Interest.
Except as otherwise specified in or as contemplated by Section 301 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 311. CUSIP Numbers.
The Company in issuing the Securities may use CUSIP numbers (in addition to the other identification numbers printed on the Securities), and, if so, the Trustee shall use CUSIP numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such CUSIP numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such CUSIP numbers.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect with respect to Securities of any series (except as to any surviving rights of registration of transfer or exchange of such Securities herein expressly provided for), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to such Securities, when
(1) either
(A) all such Securities theretofore authenticated and delivered (other than (i) such Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306, and (ii) such Securities for whose payment money or U.S. Government Obligations has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one year, or
(iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,
and the Company in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount of money in the currency or currency units in which such Securities are payable or, if such Securities are payable in United States Dollars, U.S. Government Obligations sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable hereunder by the Company with respect to such Securities; and
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(3) the Company has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to such Securities have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with respect to Securities of any series, (x) the obligations of the Company to the Trustee under Section 607, the obligations of the Trustee to any Authenticating Agent under Section 614 and the right of the Trustee to resign under Section 610 shall survive, and (y) if money or U.S. Government Obligations shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations of the Company and/or the Trustee under Sections 402, 606, 701 and 1002 and the last paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money and U.S. Government Obligations deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest for whose payment such money or U.S. Government Obligations has been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
Event of Default, wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that series when it becomes due and payable, and continuance of such default for a period of 30 days; or
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(2) default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity; or
(3) default in the performance, or breach, of any term, covenant or warranty of the Company in this Indenture (other than a term, covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities other than that series), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of all series outstanding (or, if any such term, covenant or warranty is not applicable to all series of Securities, by the Holders of at least 25% in principal amount of the Outstanding Securities of all series to which it is applicable) (in each case treated as a single class) a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a Notice of Default hereunder; or
(4) the Company pursuant to or within the meaning of any Bankruptcy Law (A) commences a voluntary case, (B) consents to the entry of any order for relief against it in an involuntary case, (C) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (D) makes a general assignment for the benefit of its creditors; or
(5) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the Company in an involuntary case, (B) appoints a Custodian of the Company or for all or substantially all of its property, or (C) orders the liquidation of the Company; and the order or decree remains unstayed and in effect for 90 days; or
(6) any other Event of Default provided as contemplated by Section 301 with respect to Securities of that series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default of the type described in clauses (1), (2), (3) or (6) of Section 501 occurs and is continuing, then, and in each and every such case, except for any series of Securities the principal of which shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Securities of all affected series then Outstanding hereunder (voting as a single class) by notice in writing to the Company (and to the Trustee if given by Holders), may declare the entire principal (or, if the Securities of any such affected series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all Securities of all such affected series, and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable.
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If an Event of Default of the type described in clause (4) or (5) of Section 501 occurs and is continuing, then and in each and every such case, except for any series of Securities the principal of which shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of all the Securities then Outstanding hereunder (voting as a single class), by notice in writing to the Company (and to the Trustee if given by Holders), may declare the entire principal (or, if Securities of any series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all the Securities then Outstanding, and interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to Securities of all affected series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of all such affected series (voting as a single class) by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum sufficient to pay
(A) all overdue interest on all such affected Securities,
(B) the principal of (and premium, if any, on) any such affected Securities which have become due otherwise than by such declaration of acceleration and any interest thereon at the rate or rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel;
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and
(2) all Events of Default with respect to such affected Securities, other than the non-payment of the principal of Securities of that series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent Default or impair any right consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and premium and on any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated.
If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
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SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company or any other obligor upon the Securities, their property or their creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors or other similar committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.
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SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or any premium or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 607;
SECOND: To the payment of the amounts then due and unpaid for principal of and any premium and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and any premium and interest, respectively; and
THIRD: The balance, if any, to the Company.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the Outstanding Securities of all affected series (treated as a single class) shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series;
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it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium and (subject to Sections 305 and 307) interest on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
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SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 512. Control by Holders.
The Holders of a majority in aggregate principal amount of the Outstanding Securities of any series shall 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 Securities of such series; provided, however, that
(1) such direction shall not be in conflict with any rule of law or with this Indenture;
(2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and
(3) subject to the provisions of Section 601, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall determine that the proceeding so directed would involve the Trustee in personal liability.
SECTION 513. Waiver of Past Defaults.
The Holders of a majority in aggregate principal amount of the Outstanding Securities of all series with respect to which an Event of Default shall have occurred and be continuing (voting as a single class) may on behalf of the Holders of all such Securities waive any past default hereunder with respect to such Securities and its consequences, except
(1) a continuing default in the payment of the principal of or any premium or interest on any such Security, or
(2) a default in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
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SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided, however, that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company.
SECTION 515. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act. No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.
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SECTION 602. Notice of Defaults.
If a Default occurs and is continuing with respect to the Securities of any series, the Trustee shall, within 90 days after it occurs, transmit, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, notice of all uncured or unwaived Defaults known to it; provided, however, that, except in the case of a Default in payment on the Securities of any series, the Trustee may withhold the notice if and so long as the board of directors, the executive committee or a trust committee of its directors and/or its duly authorized officers in good faith determines that withholding such notice is in the interests of Holders of Securities of such series; provided further, however, that, in the case of any default or breach of the character specified in Section 501(3) with respect to the Securities of such series, no such notice to Holders shall be given until at least 60 days after the occurrence thereof.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely on and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties;
(2) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order (other than delivery of any Security to the Trustee for authentication and delivery pursuant to Section 303, which shall be sufficiently evidenced as provided therein) and any resolution of the Board of Directors shall be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers Certificate;
(4) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;
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(6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit;
(7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and
(8) the Trustee may request that the Company deliver an Officers Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers Certificate may be signed by any person authorized to sign an Officers Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustees certificates of authentication, shall be taken as the statements of the Company, and the Trustee or any Authenticating Agent assumes no responsibility for their correctness Neither the Trustee nor any Authenticating Agent makes any representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.
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SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except those attributable to its negligence or bad faith.
The obligations of the Company under this Section to compensate the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder. Such additional indebtedness shall be secured by a lien prior to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities.
Without limiting any rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 501(4) or Section 501(5), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for such services are intended to constitute expenses of administration under any applicable Bankruptcy Law.
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The provisions of this Section shall survive the satisfaction and discharge of this Indenture and the defeasance of the Securities.
SECTION 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be one or more Trustees hereunder with respect to the Securities of each series, at least one of which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus required by the Trust Indenture Act. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of a supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.
The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of all series for which such Trustee is acting as Trustee, delivered to the Trustee and to the Company.
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If at any time:
(1) the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company may remove the Trustee with respect to all Securities, or (B) subject to Section 514, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 611. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 611, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 611, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.
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The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series to all Holders of Securities of such series in the manner provided in Section 106. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or
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change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees as co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business
Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.
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SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor).
SECTION 614. Appointment of Authenticating Agent.
The Trustee (upon notice to the Company) may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issue (in accordance with procedures acceptable to the Trustee) and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustees certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all
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of the corporate agency or corporate trust business of such Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or such Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of Securities of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.
Except with respect to an Authenticating Agent appointed at the request of the Company, the Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be entitled to be reimbursed by the Company for such payments, subject to the provisions of Section 607.
If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustees certificate of authentication, an alternative certificate of authentication in the following form:
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This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, AS TRUSTEE | ||||
By: |
||||
As Authenticating Agent | ||||
By: | ||||
Authorized Officer |
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than May 15 and November 15 in each year, a list for each series of Securities, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Securities of such series as of the preceding April 30 or October 31, as the case may be, and
(2) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Security Registrar for Securities of a series, no such list need be furnished with respect to such series of Securities.
SECTION 702. Preservation of Information; Communications to Holders.
The Trustee shall comply with the obligations imposed upon it pursuant to Section 312 of the Trust Indenture Act.
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The rights of the Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to the names and addresses of Holders made pursuant to the Trust Indenture Act.
SECTION 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto.
Reports so required to be transmitted at stated intervals of not more than 12 months shall be transmitted no later than July 15 in each calendar year with respect to the 12-month period ending on the previous May 15, commencing May 15, 1997.
A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when any Securities are listed on any stock exchange.
SECTION 704. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it shall file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations;
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(2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and
(3) transmit by mail to all Holders, as their names and addresses appear in the Security Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or sell, lease or transfer its properties and assets as, or substantially as, an entirety to, any Person, unless:
(1) (A) in the case of a merger, the Company is the surviving entity, or (B) the Person formed by such consolidation or into which the Company is merged or the Person which acquires by sale or transfer, or which leases, the properties and assets of the Company as, or substantially as, an entirety shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest on all the Securities and the performance or observance of every covenant and condition of this Indenture on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Default or Event of Default exists; and
(3) where the Company is not the surviving entity, the Company has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, transfer or lease and the supplemental indenture required in connection with such transaction comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with.
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SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company into, any other Person or any sale, transfer or lease of the properties and assets of the Company as, or substantially as, an entirety in accordance with Section 801, the successor Person formed by such consolidation or into which the Company is merged or to which such sale, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named originally as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to secure the Securities pursuant to the requirements of Section 1006 or otherwise; or
(2) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities; or
(3) to add to the covenants of the Company or the Events of Default for the benefit of the Holders of all or any series of Securities (and if such covenants or Events of Default are to be for the benefit of less than all series of Securities, stating that such covenants or Events of Default, as the case may be, are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company; or
(4) to add to, change or eliminate any of the provisions of this Indenture in respect of one or more series of Securities; provided, however, that any such addition, change or elimination shall become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; or
(5) to establish the form or terms of Securities of any series as permitted by Sections 201 and 301; or
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(6) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, to comply with any applicable mandatory provisions of law or to make any other provisions with respect to matters or questions arising under this Indenture, provided that such action pursuant to this clause (6) shall not adversely affect the interests of the Holders of Securities of any series in any material respect; or
(7) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 611; or
(8) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the Trust Indenture Act or under any similar federal statute subsequently enacted, and to add to this Indenture such other provisions as may be expressly required under the Trust Indenture Act.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all series affected by such supplemental indenture (voting as one class), by Act of said Holders delivered to the Company and the Trustee, the Company and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any installment of principal of or interest, if any, on, any Security, or reduce the principal amount thereof or premium, if any, on or the rate of interest thereon, or
(2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or
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(3) change any obligation of the Company, with respect to Outstanding Securities of a series, to maintain an office or agency in the places and for the purposes specified in Section 1002 for such series, or
(4) modify any of the provisions of this Section, Section 513 or Section 1008, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to the Trustee and concomitant changes in this Section, or the deletion of this proviso, in accordance with the requirements of Sections 611 and 901(7).
A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustees own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
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SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of and any premium and interest on the Securities of that series in accordance with the terms of the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.
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The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
Except as otherwise specified with respect to a series of Securities as contemplated by Section 301, the Company hereby initially designates as the Place of Payment for each series of Securities The City and State of New York, and initially appoints the Trustee at its Corporate Trust Office as the Companys office or agency for each such purpose in such city.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of or any premium or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium and interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, on or prior to each due date of the principal of or any premium or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest, if any, on Securities of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any
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other obligor upon the Securities of that series) in the making of any payment of principal (and premium, if any) or interest, if any, on the Securities of that series; and (3) during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of or any premium or interest on any Security of any series and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in an Authorized Newspaper in each Place of Payment with respect to such series, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 150 days after the end of each fiscal year of the Company ending after the date hereof, an Officers Certificate, stating whether or not to the best knowledge of the signer thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.
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SECTION 1005. Existence.
Subject to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if it shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company.
SECTION 1006. Limitations on Liens.
The Company will 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 this Indenture or thereafter acquired, to secure any Debt of the Company or any other Person (other than the Securities issued hereunder), without in any such case making effective provision whereby all of the Securities Outstanding hereunder shall be secured equally and ratably with, or prior to, such Debt so long as such Debt shall be so secured. This restriction shall not apply to:
(i) any Lien upon any property or assets of the Company or any Restricted Subsidiary in existence on the date of this Indenture or created pursuant to an after-acquired property clause or similar term in existence on the date of this Indenture or any mortgage, pledge agreement, security agreement or other similar instrument in existence on the date of this Indenture;
(ii) any Lien upon any property or assets created at the time of acquisition of such property or assets by the Company or any Restricted Subsidiary or within one year 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 one year of such acquisition;
(iii) any Lien upon any property or assets existing thereon at the time of the acquisition thereof by the Company or any Restricted Subsidiary (whether or not the obligations secured thereby are assumed by the Company or any Restricted Subsidiary);
(iv) any Lien upon any property or assets of a Person existing thereon at the time such Person becomes a Restricted Subsidiary by acquisition, merger or otherwise;
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(v) the assumption by the Company or any Restricted Subsidiary of obligations secured by any Lien existing at the time of the acquisition by the Company or any Restricted Subsidiary of the property or assets subject to such Lien or at the time of the acquisition of the Person which owns such property or assets;
(vi) any Lien on property to secure all or part of the cost of construction or improvements thereon or to secure Debt incurred prior to, at the time of, or within one year after completion of such construction or making of such improvements, to provide funds for any such purpose;
(vii) any Lien on any oil, gas, mineral and processing and other plant properties to secure the payment of costs, expenses or liabilities incurred under any lease or grant or operating or other similar agreement in connection with or incident to the exploration, development, maintenance or operation of such properties;
(viii) any Lien arising from or in connection with a conveyance by the Company or any Restricted Subsidiary of any production payment with respect to oil, gas, natural gas, carbon dioxide, sulphur, helium, coal, metals, minerals, steam, timber or other natural resources;
(ix) any Lien in favor of the Company or any Restricted Subsidiary;
(x) any Lien created or assumed by the Company or any Restricted Subsidiary in connection with the issuance of Debt the interest on which is excludable from gross income of the holder of such Debt pursuant to the Internal Revenue Code of 1986, as amended, or any successor statute, for the purpose of financing, in whole or in part, the acquisition or construction of property or assets to be used by the Company or any Subsidiary;
(xi) any Lien upon property or assets of any foreign Restricted Subsidiary to secure Debt of that foreign Restricted Subsidiary;
(xii) Permitted Liens;
(xiii) any Lien created by any Alternate Program or any document executed by any Subsidiary or Restricted Affiliate in connection therewith, provided that such Lien is limited to the trade or other receivables in respect of which such Alternate Program is created or exists, and the proceeds thereof;
(xiv) any Lien on Margin Stock;
(xv) 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 (xiv), inclusive, of this Section; or
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(xvi) 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 (xv), inclusive, of this Section, 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 required to be 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 provisions of this Section, the Company may, and may permit any Restricted Subsidiary to, create, assume, incur or suffer to exist any Lien upon any Principal Property to secure any Debt of the Company or any other Person (other than the Securities) that is not excepted by clauses (i) through (xvi), inclusive, of this Section without securing the Securities issued hereunder, 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 1007), does not exceed 15% of Consolidated Net Tangible Assets.
SECTION 1007. Restriction of Sale-Leaseback Transaction.
The Company will not, nor will it permit any Restricted Subsidiary to, engage in a Sale-Leaseback Transaction unless:
(i) such Sale-Leaseback Transaction occurs within one year 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 three years;
(iii) the Company or such Restricted Subsidiary would be entitled to incur Debt secured by a Lien on the Principal Property subject thereto in a principal amount equal to or exceeding the net sale proceeds from such Sale- Leaseback Transaction without securing the Securities; or
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(iv) the Company or such Restricted Subsidiary, within a one-year period after such Sale-Leaseback Transaction, applies or causes to be applied an amount not less than the net sale proceeds from such Sale-Leaseback Transaction to (A) the repayment, redemption or retirement of Funded Debt of the Company or any Subsidiary, or (B) investment in another Principal Property.
Notwithstanding the foregoing provisions of this Section, the Company may, and may permit any Restricted Subsidiary to, effect any Sale-Leaseback Transaction that is not excepted by clauses (i) through (iv), inclusive, of this Section, provided that the net sale proceeds from such Sale-Leaseback Transaction, together with the aggregate principal amount of then outstanding Debt (other than the Securities) secured by Liens upon Principal Properties not excepted by clauses (i) through (xvi), inclusive, of Section 1006, do not exceed 15% of the Consolidated Net Tangible Assets.
SECTION 1008. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term, provision or condition set forth in Section 1005, 1006 or 1007 with respect to the Securities of any series if before the time for such compliance the Holders of at least a majority in aggregate principal amount of the Outstanding Securities of all affected series (voting as one class) shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect.
A waiver which changes or eliminates any term, provision or condition of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such term, provision or condition, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for Securities of any series) in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
In case of any redemption at the election of the Company of less than all the Securities of any series, the Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the principal amount of Securities of such series to be redeemed and, if applicable, of the tenor of the Securities to be redeemed. In the case of any redemption of Securities (1) prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, or (2) pursuant to an election of the Company which is subject to a condition specified in the terms of such Securities, the Company shall furnish the Trustee with an Officers Certificate evidencing compliance with such restriction or condition.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed (unless all the Securities of such series and of a specified tenor are to be redeemed), the particular Securities to be redeemed shall be selected not more than 45 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof) of the principal amount of Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series.
The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed.
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For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail (if international mail, by air mail), postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series and of a specified tenor are to be redeemed, the identification (and, in the case of partial redemption of any Securities, the principal amounts) of the particular Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date,
(5) the place or places where such Securities are to be surrendered for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed shall be given by the Company or, at the Companys request, by the Trustee in the name and at the expense of the Company.
SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities which are to be redeemed on that date.
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SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that, unless otherwise specified as contemplated by Section 301, installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and of like tenor, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered.
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ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified in or as contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a mandatory sinking fund payment, and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an optional sinking fund payment. If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other than any previously called for redemption), and (2) may apply as a credit Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series; provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for any series of Securities (unless a shorter period shall be satisfactory to the Trustee), the Company will deliver to the Trustee an Officers Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by
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payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 1202 and stating the basis for such credit and that such Securities have not been previously so credited, and will also deliver to the Trustee any Securities to be so delivered. Not less than 30 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
DEFEASANCE
SECTION 1301. Applicability of Article.
The provisions of this Article shall be applicable to each series of Securities except as otherwise specified as contemplated by Section 301 for Securities of such series.
SECTION 1302. Legal Defeasance.
In addition to discharge of the Indenture pursuant to Section 401, the Company shall be deemed to have paid and discharged the entire indebtedness on all the Securities of such a series on the 91st day after the date of the deposit referred to in clause (1) below, and the provisions of this Indenture with respect to the Securities of such series shall no longer be in effect (except as to (i) rights of registration of transfer and exchange of Securities of such series and the Companys right of optional redemption, if any, (ii) substitution of mutilated, destroyed, lost or stolen Securities, (iii) rights of Holders of Securities to receive payments of principal thereof and interest thereon, upon the Stated Maturities therefor or on the Redemption Dates therefor (but not upon acceleration), and remaining rights of the Holders to receive mandatory sinking fund payments, if any, (iv) the rights, obligations, duties and immunities of the Trustee hereunder, (v) the rights of the Holders of Securities of such series as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them, and (vi) the obligations of the Company under Section 1002), and the Trustee, at the expense of the Company, shall, upon a Company Request, execute proper instruments acknowledging the same, if the conditions set forth below are satisfied (hereinafter, defeasance):
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(1) The Company has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust, for the purposes of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Securities of such series (i) cash in an amount, or (ii) in the case of any series of Securities the payments on which may only be made in legal coin or currency of the United States, U.S. Government Obligations, maturing as to principal and interest at such times and in such amounts as will insure the availability of cash, or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal and interest and premium, if any, on all Securities of such series on each date that such principal, interest or premium, if any, is due and payable or on any Redemption Date established pursuant to clause (3) below, and (B) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series;
(2) The Company has delivered to the Trustee an Opinion of Counsel based on the fact that (x) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (y) since the date hereof, there has been a change in the applicable federal income tax law, in either case to the effect that, and such opinion shall confirm that, the holders of the Securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance and will be subject to federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit and defeasance had not occurred;
(3) If the Securities are to be redeemed prior to Stated Maturity (other than from mandatory sinking fund payments or analogous payments), notice of such redemption shall have been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee shall have been made;
(4) No Default or Event of Default shall have occurred and be continuing on the date of such deposit; and
(5) The Company has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance contemplated by this provision have been complied with.
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For this purpose, such defeasance means that the Company and any other obligor upon the Securities of such series shall be deemed to have paid and discharged the entire debt represented by the Securities of such series, which shall thereafter be deemed to be Outstanding only for the purposes of Section 1304 and the rights and obligations referred to in clauses (i) through (vi), inclusive, of the first paragraph of this Section, and to have satisfied all its other obligations under the Securities of such series and this Indenture insofar as the Securities of such series are concerned.
SECTION 1303. Covenant Defeasance.
The Company and any other obligor, if any, shall be released on the 91st day after the date of the deposit referred to in clause (1) below from its obligations under Sections 704, 801, 1005, 1006 and 1007 with respect to the Securities of any series on and after the date the conditions set forth below are satisfied (hereinafter, covenant defeasance), and the Securities of such series shall thereafter be deemed to be not Outstanding for the purposes of any request, demand, authorization, direction, notice, waiver, consent or declaration or other action or Act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed Outstanding for all other purposes hereunder. For this purpose, such covenant defeasance means that, with respect to the Securities of such series, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such Section, whether directly or indirectly by reason of any reference elsewhere herein to such Section or by reason of any reference in such Section to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 501, but, except as specified above, the remainder of this Indenture and the Securities of such series shall be unaffected thereby. The following shall be the conditions to application of this Section 1303:
(1) The Company has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Securities of such series, (i) cash in an amount, or (ii) in the case of any series of Securities the payments on which may only be made in legal coin or currency of the United States, U.S. Government Obligations, maturing as to principal and interest at such times and in such amounts as will insure the availability of cash, or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal and interest and premium, if any, on all Securities of such series on each date that such principal,
79
interest or premium, if any, is due and payable or on any Redemption Date established pursuant to clause (2) below, and (B) any mandatory sinking fund payments on the day on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series;
(2) If the Securities are to be redeemed prior to Stated Maturity (other than from mandatory sinking fund payments or analogous payments), notice of such redemption shall have been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee shall have been made;
(3) No Default or Event of Default shall have occurred and be continuing on the date of such deposit;
(4) The Company shall have delivered to the Trustee an Opinion of Counsel which shall confirm that the holders of the Securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and covenant defeasance and will be subject to federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit and covenant defeasance had not occurred; and
(5) The Company shall have delivered to the Trustee an Officers Certificate stating that all conditions precedent provided for relating to the covenant defeasance contemplated by this provision have been complied with.
SECTION 1304. Application by Trustee of Funds Deposited for Payment of Securities.
Subject to the provisions of the last paragraph of Section 1003, all moneys or U.S. Government Obligations deposited with the Trustee pursuant to Section 1302 or 1303 (and all funds earned on such moneys or U.S. Government Obligations) shall be held in trust and applied by it to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent), to the Holders of the particular Securities of such series for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest; but such money need not be segregated from other funds except to the extent required by law. Subject to Sections 1302 and 1303, the Trustee promptly shall pay to the Company upon request any excess moneys held by them at any time.
80
SECTION 1305. Repayment to Company.
The Trustee and any Paying Agent promptly shall pay or return to the Company upon Company Request any money and U.S. Government Obligations held by them at any time that are not required for the payment of the principal of and any interest on the Securities of any series for which money or U.S. Government Obligations have been deposited pursuant to Section 1302 or 1303.
The provisions of the last paragraph of Section 1003 shall apply to any money held by the Trustee or any Paying Agent under this Article that remains unclaimed for two years after the Maturity of any series of Securities for which money or U.S. Government Obligations have been deposited pursuant to Section 1302 or 1303.
This instrument may be executed with counterpart signature pages or in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the day and year first above written.
TENNESSEE GAS PIPELINE COMPANY | ||
By: | /s/ H. BRENT AUSTIN | |
Name: H. Brent Austin Title: Senior Vice President | ||
THE CHASE MANHATTAN BANK | ||
By: | /s/ RONALD J. HALLERAN | |
Name: Ronald J. Halleran Title: Second Vice President |
Created by Morningstar® Document ResearchSM
http://documentresearch.morningstar.com
Source: TENNESSEE GAS PIPELINE COMPANY, L.L.C., 10-K, March 07, 2006
81
EXHIBIT 4.A.1
TENNESSEE GAS PIPELINE COMPANY
AND
THE CHASE MANHATTAN BANK,
AS TRUSTEE
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF MARCH 13, 1997
TO
INDENTURE
DATED AS OF MARCH 4, 1997
PROVIDING FOR THE ISSUANCE OF
7 1/2% DEBENTURES DUE 2017
FIRST SUPPLEMENTAL INDENTURE dated as of March 13, 1997, between TENNESSEE GAS PIPELINE COMPANY, a corporation duly organized and existing under the laws of the State of Delaware (hereinafter called the Company), and THE CHASE MANHATTAN BANK, a New York banking corporation, as trustee (hereinafter called the Trustee).
WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture dated as of March 4, 1997 (hereinafter called the Original Indenture), to provide for the issue of an unlimited amount of debentures, notes and/or other debt obligations of the Company (hereinafter referred to as the Securities), the terms of which are to be determined as set forth in Section 301 of the Original Indenture; and
WHEREAS, Section 901 of the Original Indenture provides, among other things, that the Company and the Trustee may enter into indentures supplemental to the Original Indenture for, among other things, the purpose of setting forth the terms of Securities of any series; and
WHEREAS, the Company desires to create a series of the Securities in an aggregate principal amount of $300,000,000 to be designated the 7 1/2% Debentures Due 2017 (the Debentures), and all action on the part of the Company necessary to authorize the issuance of the Debentures under the Original Indenture and this First Supplemental Indenture has been duly taken; and
WHEREAS, all acts and things necessary to make the Debentures, when executed by the Company and authenticated and delivered by the Trustee as in the Original Indenture provided, the valid and binding obligations of the Company, and to constitute these presents a valid and binding supplemental indenture and agreement according to its terms, have been done and performed;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, and of the acceptance of this trust by the Trustee, and of the sum of one dollar to the Company duly paid by the Trustee at the execution and delivery of these presents, and of other valuable consideration the receipt and sufficiency whereof are hereby acknowledged and in order to authorize the authentication and delivery of and to set forth the terms of the Debentures,
IT IS HEREBY COVENANTED, DECLARED AND AGREED by and between the parties hereto, for the benefit of holders of the Debentures issued under the Indenture, as follows:
ARTICLE 1.
TERMS AND ISSUANCE OF 7 1/2% DEBENTURES DUE 2017
SECTION 1.01 Issue of Debentures. A series of Securities which shall be designated the 7 1/2% Debentures Due 2017 shall be executed, authenticated and delivered in accordance with the provisions of, and shall in all respects be subject to, the terms, conditions and covenants of the Original Indenture, including without limitation the terms set forth in this First Supplemental Indenture (including the form of Debentures referred to in SECTION 1.02 hereof). The aggregate principal amount of Debentures which may be authenticated and delivered under the Indenture shall not, except as permitted by the provisions of the Original Indenture, exceed $300,000,000. The entire amount of Debentures may forthwith be executed by the Company and delivered to the Trustee and shall be authenticated by the Trustee and delivered to or upon the order of the Company pursuant to Section 303 of the Indenture.
SECTION 1.02. Forms of Debentures and Authentication Certificate. The Debentures initially shall be issuable in the form of one or more Global Securities. The forms of the Debentures and the Trustees certificate of authentication shall be substantially as set forth on Exhibit A hereto.
ARTICLE 2.
MISCELLANEOUS
SECTION 2.01. Execution as Supplemental Indenture. This First Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture and, as provided in the Original Indenture, this First Supplemental Indenture forms a part thereof. Except as herein expressly otherwise defined, the use of the terms and expressions herein is in accordance with the definitions, uses and constructions contained in the Original Indenture.
SECTION 2.02. Responsibility for Recitals, Etc. The recitals herein and in the Debentures (except in the Trustees certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representations as to the validity or sufficiency of this First Supplemental Indenture or of the Debentures. The Trustee shall not be accountable for the use or application by the Company of the Debentures or of the proceeds thereof.
2
SECTION 2.03. Provisions Binding on Companys Successors. All the covenants, stipulations, promises and agreements in this First Supplemental Indenture contained by the Company shall bind its successors and assigns whether so expressed or not.
SECTION 2.04. New York Contract. THIS FIRST SUPPLEMENTAL INDENTURE AND EACH DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 2.05. Execution and Counterparts. This First Supplemental Indenture may be executed with counterpart signature pages or in any number of counterparts, each of which shall be an original but such counterparts shall together constitute but one and the same instrument.
SECTION 2.06. Capitalized Terms. Capitalized terms not otherwise defined in this First Supplemental Indenture shall have the respective meanings assigned to them in the Original Indenture.
3
IN WITNESS WHEREOF, said TENNESSEE GAS PIPELINE COMPANY has caused this First Supplemental Indenture to be executed in its corporate name by its Chairman of the Board or its President or one of its Vice Presidents, and said THE CHASE MANHATTAN BANK has caused this First Supplemental Indenture to be executed in its corporate name by one of its Vice Presidents as of March 13, 1997.
TENNESSEE GAS PIPELINE COMPANY | ||
By | /s/ H. BRENT AUSTIN | |
H. Brent Austin | ||
Senior Vice President | ||
THE CHASE MANHATTAN BANK | ||
By | /s/ RONALD J. HALLERAN | |
RONALD J. Halleran | ||
Second Vice President |
4
EXHIBIT A
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TENNESSEE GAS PIPELINE COMPANY
7 1/2% DEBENTURE DUE 2017
NO. | U.S.$ | |
CUSIP NO. 880451 AT6 |
TENNESSEE GAS PIPELINE COMPANY, a corporation duly incorporated and existing under the laws of Delaware (herein called the Company, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to , or registered assigns, the principal sum of United States Dollars on April 1, 2017, and to pay interest thereon from March 13, 1997, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on April 1 and October 1 in each year, commencing October 1, 1997, at the rate of 7 1/2% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the March 15 or September 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice of which shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in such Indenture.
Payment of the principal of and interest on this Security will be made by transfer of immediately available funds to a bank account in New York, New York designated by the Holder in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
2
Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
Dated:
TENNESSEE GAS PIPELINE COMPANY | ||
By: |
||
H. Brent Austin | ||
Senior Vice President |
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, | ||
AS TRUSTEE | ||
By: |
||
Authorized Officer |
3
TENNESSEE GAS PIPELINE COMPANY
7 1/2% DEBENTURE DUE 2017
This Security is one of a duly authorized issue of securities of the Company (the Securities), issued and to be issued in one or more series under an Indenture dated as of March 4, 1997 (the Indenture), between the Company and The Chase Manhattan Bank, as Trustee (the Trustee, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. As provided in the Indenture, the Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates, may be subject to different redemption provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to different covenants and Events of Default and may otherwise vary as in the Indenture provided or permitted. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to U.S.$300,000,000.
The Securities of this series are not redeemable prior to Stated Maturity.
If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all series to be affected (voting as one class). The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Outstanding Securities of all affected series (voting as one class), on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture. The Indenture permits, with certain exceptions as therein provided, the Holders of a majority in principal amount of Securities of all affected series then Outstanding (voting as a single class) to waive past defaults under the
4
Indenture with respect to such Securities and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of all affected series at the time Outstanding (treated as a single class) shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Security at the times, place(s) and rate, and in the coin or currency, herein prescribed.
This Global Security or portion hereof may not be exchanged for Definitive Securities of this series except in the limited circumstances provided in the Indenture.
The holders of beneficial interests in this Global Security will not be entitled to receive physical delivery of Definitive Securities except as described in the Indenture and will not be considered the Holders thereof for any purpose under the Indenture.
The Securities of this series are issuable only in registered form without coupons in denominations of U.S. $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
5
No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
No recourse under or upon any obligation, covenant or agreement of or contained in the Indenture or of or contained in any Security, or for any claim based thereon or otherwise in respect thereof, or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor Person, either directly or through the Company or any successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment, penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released by the acceptance hereof and as a condition of, and as part of the consideration for, the Securities and the execution of the Indenture.
The Indenture provides that the Company (a) will be discharged from any and all obligations in respect of the Securities (except for certain obligations described in the Indenture), or (b) need not comply with certain restrictive covenants of the Indenture, in each case if the Company deposits, in trust, with the Trustee money or U.S. Government Obligations (or a combination thereof) which through the payment of interest thereon and principal thereof in accordance with their terms will provide money, in an amount sufficient to pay all the principal of and interest on the Securities, but such money need not be segregated from other funds except to the extent required by law.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
Created by Morningstar® Document ResearchSM
http://documentresearch.morningstar.com
Source: TENNESSEE GAS PIPELINE COMPANY, L.L.C., 10-K, March 07, 2006
6
EXHIBIT 4.A.2
TENNESSEE GAS PIPELINE COMPANY
AND
THE CHASE MANHATTAN BANK,
AS TRUSTEE
SECOND SUPPLEMENTAL INDENTURE
DATED AS OF MARCH 13, 1997
TO
INDENTURE
DATED AS OF MARCH 4, 1997
PROVIDING FOR THE ISSUANCE OF
7% DEBENTURES DUE 2027
SECOND SUPPLEMENTAL INDENTURE dated as of March 13, 1997, between TENNESSEE GAS PIPELINE COMPANY, a corporation duly organized and existing under the laws of the State of Delaware (hereinafter called the Company), and THE CHASE MANHATTAN BANK, a New York banking corporation, as trustee (hereinafter called the Trustee).
WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture dated as of March 4, 1997 (hereinafter called the Original Indenture), to provide for the issue of an unlimited amount of debentures, notes and/or other debt obligations of the Company (hereinafter referred to as the Securities), the terms of which are to be determined as set forth in Section 301 of the Original Indenture; and
WHEREAS, Section 901 of the Original Indenture provides, among other things, that the Company and the Trustee may enter into indentures supplemental to the Original Indenture for, among other things, the purpose of setting forth the terms of Securities of any series; and
WHEREAS, the Company desires to create a series of the Securities in an aggregate principal amount of $300,000,000 to be designated the 7% Debentures Due 2027 (the Debentures), and all action on the part of the Company necessary to authorize the issuance of the Debentures under the Original Indenture and this Second Supplemental Indenture has been duly taken; and
WHEREAS, all acts and things necessary to make the Debentures, when executed by the Company and authenticated and delivered by the Trustee as in the Original Indenture provided, the valid and binding obligations of the Company, and to constitute these presents a valid and binding supplemental indenture and agreement according to its terms, have been done and performed;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, and of the acceptance of this trust by the Trustee, and of the sum of one dollar to the Company duly paid by the Trustee at the execution and delivery of these presents, and of other valuable consideration the receipt and sufficiency whereof are hereby acknowledged and in order to authorize the authentication and delivery of and to set forth the terms of the Debentures,
IT IS HEREBY COVENANTED, DECLARED AND AGREED by and between the parties hereto, for the benefit of holders of the Debentures issued under the Indenture, as follows:
ARTICLE 1.
TERMS AND ISSUANCE OF 7% DEBENTURES DUE 2027
SECTION 1.01 Issue of Debentures. A series of Securities which shall be designated the 7% Debentures Due 2027 shall be executed, authenticated and delivered in accordance with the provisions of, and shall in all respects be subject to, the terms, conditions and covenants of the Original Indenture, including without limitation the terms set forth in this Second Supplemental Indenture (including the form of Debentures referred to in SECTION 1.02 hereof). The aggregate principal amount of Debentures which may be authenticated and delivered under the Indenture shall not, except as permitted by the provisions of the Original Indenture, exceed $300,000,000. The entire amount of Debentures may forthwith be executed by the Company and delivered to the Trustee and shall be authenticated by the Trustee and delivered to or upon the order of the Company pursuant to Section 303 of the Indenture.
SECTION 1.02. Forms of Debentures and Authentication Certificate. The Debentures initially shall be issuable in the form of one or more Global Securities. The forms of the Debentures and the Trustees certificate of authentication shall be substantially as set forth on Exhibit A hereto.
ARTICLE 2.
MISCELLANEOUS
SECTION 2.01. Execution as Supplemental Indenture. This Second Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture and, as provided in the Original Indenture, this Second Supplemental Indenture forms a part thereof. Except as herein expressly otherwise defined, the use of the terms and expressions herein is in accordance with the definitions, uses and constructions contained in the Original Indenture.
2
SECTION 2.02. Responsibility for Recitals, Etc. The recitals herein and in the Debentures (except in the Trustees certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representations as to the validity or sufficiency of this Second Supplemental Indenture or of the Debentures. The Trustee shall not be accountable for the use or application by the Company of the Debentures or of the proceeds thereof.
SECTION 2.03. Provisions Binding on Companys Successors. All the covenants, stipulations, promises and agreements in this Second Supplemental Indenture contained by the Company shall bind its successors and assigns whether so expressed or not.
SECTION 2.04. New York Contract. THIS SECOND SUPPLEMENTAL INDENTURE AND EACH DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 2.05. Execution and Counterparts. This Second Supplemental Indenture may be executed with counterpart signature pages or in any number of counterparts, each of which shall be an original but such counterparts shall together constitute but one and the same instrument.
SECTION 2.06. Capitalized Terms. Capitalized terms not otherwise defined in this Second Supplemental Indenture shall have the respective meanings assigned to them in the Original Indenture.
3
IN WITNESS WHEREOF, said TENNESSEE GAS PIPELINE COMPANY has caused this Second Supplemental Indenture to be executed in its corporate name by its Chairman of the Board or its President or one of its Vice Presidents, and said THE CHASE MANHATTAN BANK has caused this Second Supplemental Indenture to be executed in its corporate name by one of its Vice Presidents as of March 13, 1997.
TENNESSEE GAS PIPELINE COMPANY | ||
By | /s/ H. BRENT AUSTIN | |
H. Brent Austin | ||
Senior Vice President | ||
THE CHASE MANHATTAN BANK | ||
By | /s/ RONALD J. HALLERAN | |
Ronald J. Halleran | ||
Second Vice President |
4
EXHIBIT A
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TENNESSEE GAS PIPELINE COMPANY
7% DEBENTURE DUE 2027
NO. | U.S.$ | |
CUSIP NO. 880451 AS8 |
TENNESSEE GAS PIPELINE COMPANY, a corporation duly incorporated and existing under the laws of Delaware (herein called the Company, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to , or registered assigns, the principal sum of United States Dollars on March 15, 2027, and to pay interest thereon from March 13, 1997, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on March 15 and September 15 in each year, commencing September 15, 1997, at the rate of 7% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the March 1 or September 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice of which shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in such Indenture.
Payment of the principal of (and premium, if any) and interest on this Security will be made by transfer of immediately available funds to a bank account in New York, New York, designated by the Holder in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
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Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
Dated:
TENNESSEE GAS PIPELINE COMPANY | ||
By: |
| |
H. Brent Austin | ||
Senior Vice President |
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, | ||
AS TRUSTEE | ||
By: |
| |
Authorized Officer |
3
TENNESSEE GAS PIPELINE COMPANY
7% DEBENTURE DUE 2027
This Security is one of a duly authorized issue of securities of the Company (the Securities), issued and to be issued in one or more series under an Indenture dated as of March 4, 1997 (the Indenture), between the Company and The Chase Manhattan Bank, as Trustee (the Trustee, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. As provided in the Indenture, the Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates, may be subject to different redemption provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to different covenants and Events of Default and may otherwise vary as in the Indenture provided or permitted. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to U.S.$300,000,000.
The Holder of this Security may elect to have this Security (or any portion hereof that is an integral multiple of $1,000) repaid on March 15, 2007 (or, if such day is not a Business Day, the next succeeding Business Day), at a repayment price equal to the principal amount of this Security (or such portion hereof), together with accrued and unpaid interest thereon to the date of repayment. In order for the Holder of this Security to make this election, the Company must receive at its office or agency in New York, New York, during the period beginning on January 15, 2007 and ending at 5:00 p.m. (New York City time) on February 15, 2007 (or, if such day is not a Business Day, the next succeeding Business Day) this Security with the form entitled Option to Elect Repayment on March 15, 2007 below duly completed. Any such election received during the period beginning on January 15, 2007 and ending at 5:00 p.m. (New York City time) on February 15, 2007 shall be irrevocable. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of this Security for repayment will be determined by the Company whose determination shall be final and binding. Failure of the Company to repay this Security (or such portion hereof) when required shall constitute an
4
Event of Default with respect to the 7% Debentures Due 2027 only and not with respect to any other series of Securities. If applicable, the Company will comply with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended, in connection with any election by Holders to have the Securities repaid on March 15, 2007 (or, if such day is not a Business Day, the next succeeding Business Day).
The Securities of this series are redeemable, upon not less than 30 nor more than 60 days notice by mail, as a whole or in part, at the option of the Company at any time and from time to time after March 15, 2007 at a redemption price equal to greater of (i) 100% of the principal amount of such Securities and (ii) as determined by an Independent Investment Banker, the sum of the present values of the remaining scheduled payments of principal and interest hereon discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, together, in each case, with accrued and unpaid interest to such Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.
Adjusted Treasury Rate means, with respect to any Redemption Date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such date of redemption, plus .15%.
Comparable Treasury Issue means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such securities.
Comparable Treasury Price means, with respect to any Redemption Date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated Composite 3:30 p.m. Quotations for U.S.
5
Government Securities, or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, (A) the average of the Reference Treasury Dealer Quotations for such date of redemption, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.
Independent Investment Banker means one of the Reference Treasury Dealers appointed by the Trustee after consultation with the Company.
Reference Treasury Dealer means each of Donaldson, Lufkin & Jenrette Securities Corporation, Morgan Stanley & Co. Incorporated, Chase Securities Inc. and Citicorp Securities, Inc. and their respective successors; provided, however, that if any of the foregoing shall not be a primary U.S. Government securities dealer in New York City (a Primary Treasury Dealer), the Company shall substitute therefor another Primary Treasury Dealer.
Reference Treasury Dealer Quotations means, with respect to each Reference Treasury Dealer and any 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 5:00 p.m. on the third Business Day preceding such Redemption Date.
In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.
If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all series to be affected (voting as one class). The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Outstanding Securities of all affected series (voting as one class), on behalf of the Holders of all Securities of such series,
6
to waive compliance by the Company with certain provisions of the Indenture. The Indenture permits, with certain exceptions as therein provided, the Holders of a majority in principal amount of Securities of all affected series then Outstanding (voting as a single class) to waive past defaults under the Indenture with respect to such Securities and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of all affected series at the time Outstanding (treated as a single class) shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Security at the times, place(s) and rate, and in the coin or currency, herein prescribed.
This Global Security or portion hereof may not be exchanged for Definitive Securities of this series except in the limited circumstances provided in the Indenture.
The holders of beneficial interests in this Global Security will not be entitled to receive physical delivery of Definitive Securities except as described in the Indenture and will not be considered the Holders thereof for any purpose under the Indenture.
7
The Securities of this series are issuable only in registered form without coupons in denominations of U.S. $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series 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 Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
No recourse under or upon any obligation, covenant or agreement of or contained in the Indenture or of or contained in any Security, or for any claim based thereon or otherwise in respect thereof, or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor Person, either directly or through the Company or any successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment, penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released by the acceptance hereof and as a condition of, and as part of the consideration for, the Securities and the execution of the Indenture.
The Indenture provides that the Company (a) will be discharged from any and all obligations in respect of the Securities (except for certain obligations described in the Indenture), or (b) need not comply with certain restrictive covenants of the Indenture, in each case if the Company deposits, in trust, with the Trustee money or U.S. Government Obligations (or a combination thereof) which through the payment of interest thereon and principal thereof in accordance with their terms will provide money, in an amount sufficient to pay all the principal of and interest on the Securities, but such money need not be segregated from other funds except to the extent required by law.
8
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
9
OPTION TO ELECT REPAYMENT ON MARCH 15, 2007
The undersigned hereby irrevocably requests and instructs the Company to repay the within Security (or portion thereof specified below) pursuant to its terms at a price equal to the principal amount thereof, together with interest to the repayment date, to the undersigned, at
Tax I.D. No.
(Please Print or Typewrite Name, Address and Tax Identification Number of the Undersigned)
For this Security to be repaid the Company must receive at the corporate trust office of the Trustee in the Borough of Manhattan, The City of New York or at such additional place or places of which the Company shall from time to time notify the holder of the within Security during the period from and including January 15, 2007 to and including February 15, 2007 or, if February 15, 2007 is not a Business Day, the next succeeding Business Day, this Security with this Option to Elect Repayment on March 15, 2007 form duly completed.
If less than the entire principal amount of the within Security is to be repaid, specify the portion thereof (which shall be $1,000 or an integral multiple of $1,000 in excess of $1,000) which the Holder elects to have repaid: $ ; and specify the denomination or denominations (which shall be $1,000 or an integral multiple of $1,000 in excess of $1,000) of the Security or Securities to be issued to the Holder for the amount of the portion of the within Security not being repaid (in the absence of any such specification, one such Security will be issued for the portion not being repaid: $ ).
Dated: |
||||||
NOTICE: The signature on this Option to Elect Repayment on March 15, 2007 must correspond with the name as written upon the face of this instrument in every particular without alteration or enlargement or any other change whatsoever. |
Created by Morningstar® Document ResearchSM
http://documentresearch.morningstar.com
Source: TENNESSEE GAS PIPELINE COMPANY, L.L.C., 10-K, March 07, 2006
10
EXHIBIT 4.A.3
TENNESSEE GAS PIPELINE COMPANY
AND
THE CHASE MANHATTAN BANK,
AS TRUSTEE
THIRD SUPPLEMENTAL INDENTURE
DATED AS OF MARCH 13, 1997
TO
INDENTURE
DATED AS OF MARCH 4, 1997
PROVIDING FOR THE ISSUANCE OF
7 5/8% DEBENTURES DUE 2037
THIRD SUPPLEMENTAL INDENTURE dated as of March 13, 1997, between TENNESSEE GAS PIPELINE COMPANY, a corporation duly organized and existing under the laws of the State of Delaware (hereinafter called the Company), and THE CHASE MANHATTAN BANK, a New York banking corporation, as trustee (hereinafter called the Trustee).
WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture dated as of March 4, 1997 (hereinafter called the Original Indenture), to provide for the issue of an unlimited amount of debentures, notes and/or other debt obligations of the Company (hereinafter referred to as the Securities), the terms of which are to be determined as set forth in Section 301 of the Original Indenture; and
WHEREAS, Section 901 of the Original Indenture provides, among other things, that the Company and the Trustee may enter into indentures supplemental to the Original Indenture for, among other things, the purpose of setting forth the terms of Securities of any series; and
WHEREAS, the Company desires to create a series of the Securities in an aggregate principal amount of $300,000,000 to be designated the 7 5/8% Debentures Due 2037 (the Debentures), and all action on the part of the Company necessary to authorize the issuance of the Debentures under the Original Indenture and this Third Supplemental Indenture has been duly taken; and
WHEREAS, all acts and things necessary to make the Debentures, when executed by the Company and authenticated and delivered by the Trustee as in the Original Indenture provided, the valid and binding obligations of the Company, and to constitute these presents a valid and binding supplemental indenture and agreement according to its terms, have been done and performed;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, and of the acceptance of this trust by the Trustee, and of the sum of one dollar to the Company duly paid by the Trustee at the execution and delivery of these presents, and of other valuable consideration the receipt and sufficiency whereof are hereby acknowledged and in order to authorize the authentication and delivery of and to set forth the terms of the Debentures,
IT IS HEREBY COVENANTED, DECLARED AND AGREED by and between the parties hereto, for the benefit of holders of the Debentures issued under the Indenture, as follows:
ARTICLE 1.
TERMS AND ISSUANCE OF 7 5/8% DEBENTURES DUE 2037
SECTION 1.01 Issue of Debentures. A series of Securities which shall be designated the 7 5/8% Debentures Due 2037 shall be executed, authenticated and delivered in accordance with the provisions of, and shall in all respects be subject to, the terms, conditions and covenants of the Original Indenture, including without limitation the terms set forth in this Third Supplemental Indenture (including the form of Debentures referred to in SECTION 1.02 hereof). The aggregate principal amount of Debentures which may be authenticated and delivered under the Indenture shall not, except as permitted by the provisions of the Original Indenture, exceed $300,000,000. The entire amount of Debentures may forthwith be executed by the Company and delivered to the Trustee and shall be authenticated by the Trustee and delivered to or upon the order of the Company pursuant to Section 303 of the Indenture.
SECTION 1.02. Forms of Debentures and Authentication Certificate. The Debentures initially shall be issuable in the form of one or more Global Securities. The forms of the Debentures and the Trustees certificate of authentication shall be substantially as set forth on Exhibit A hereto.
ARTICLE 2.
MISCELLANEOUS
SECTION 2.01. Execution as Supplemental Indenture. This Third Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture and, as provided in the Original Indenture, this Third Supplemental Indenture forms a part thereof. Except as herein expressly otherwise defined, the use of the terms and expressions herein is in accordance with the definitions, uses and constructions contained in the Original Indenture.
2
SECTION 2.02. Responsibility for Recitals, Etc. The recitals herein and in the Debentures (except in the Trustees certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representations as to the validity or sufficiency of this Third Supplemental Indenture or of the Debentures. The Trustee shall not be accountable for the use or application by the Company of the Debentures or of the proceeds thereof.
SECTION 2.03. Provisions Binding on Companys Successors. All the covenants, stipulations, promises and agreements in this Third Supplemental Indenture contained by the Company shall bind its successors and assigns whether so expressed or not.
SECTION 2.04. New York Contract. THIS THIRD SUPPLEMENTAL INDENTURE AND EACH DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 2.05. Execution and Counterparts. This Third Supplemental Indenture may be executed with counterpart signature pages or in any number of counterparts, each of which shall be an original but such counterparts shall together constitute but one and the same instrument.
SECTION 2.06. Capitalized Terms. Capitalized terms not otherwise defined in this Third Supplemental Indenture shall have the respective meanings assigned to them in the Original Indenture.
3
IN WITNESS WHEREOF, said TENNESSEE GAS PIPELINE COMPANY has caused this Third Supplemental Indenture to be executed in its corporate name by its Chairman of the Board or its President or one of its Vice Presidents, and said THE CHASE MANHATTAN BANK has caused this Third Supplemental Indenture to be executed in its corporate name by one of its Vice Presidents as of March 13, 1997.
TENNESSEE GAS PIPELINE COMPANY | ||
By | /s/ H. BRENT AUSTIN | |
H. Brent Austin | ||
Senior Vice President | ||
THE CHASE MANHATTAN BANK | ||
By | /s/ RONALD J. HALLERAN | |
Ronald J. Halleran | ||
Second Vice President |
4
EXHIBIT A
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TENNESSEE GAS PIPELINE COMPANY
7 5/8% DEBENTURES DUE 2037
NO. | U.S.$ | |
CUSIP NO. 880451 AU3 |
TENNESSEE GAS PIPELINE COMPANY, a corporation duly incorporated and existing under the laws of Delaware (herein called the Company, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to , or registered assigns, the principal sum of United States Dollars on April 1, 2037, and to pay interest thereon from March 13, 1997, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on April 1 and October 1 in each year, commencing October 1, 1997, at the rate of 7 5/8% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the March 15 or September 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice of which shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in such Indenture.
Payment of the principal of and interest on this Security will be made by transfer of immediately available funds to a bank account in New York, New York, designated by the Holder in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
2
Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
Dated:
TENNESSEE GAS PIPELINE COMPANY | ||
By: |
| |
H. Brent Austin | ||
Senior Vice President |
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, | ||
AS TRUSTEE | ||
By: |
| |
Authorized Officer |
3
TENNESSEE GAS PIPELINE COMPANY
7 5/8% DEBENTURES DUE 2037
This Security is one of a duly authorized issue of securities of the Company (the Securities), issued and to be issued in one or more series under an Indenture dated as of March 4, 1997 (the Indenture), between the Company and The Chase Manhattan Bank, as Trustee (the Trustee, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. As provided in the Indenture, the Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates, may be subject to different redemption provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to different covenants and Events of Default and may otherwise vary as in the Indenture provided or permitted. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to U.S.$300,000,000.
The Securities of this series are not redeemable prior to Stated Maturity.
If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all series to be affected (voting as one class). The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Outstanding Securities of all affected series (voting as one class), on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture. The Indenture permits, with certain exceptions as therein provided, the Holders of a majority in principal amount of Securities of all affected series
4
then Outstanding (voting as a single class) to waive past defaults under the Indenture with respect to such Securities and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of all affected series at the time Outstanding (treated as a single class) shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Security at the times, place(s) and rate, and in the coin or currency, herein prescribed.
This Global Security or portion hereof may not be exchanged for Definitive Securities of this series except in the limited circumstances provided in the Indenture.
The holders of beneficial interests in this Global Security will not be entitled to receive physical delivery of Definitive Securities except as described in the Indenture and will not be considered the Holders thereof for any purpose under the Indenture.
5
The Securities of this series are issuable only in registered form without coupons in denominations of U.S. $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series 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 Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
No recourse under or upon any obligation, covenant or agreement of or contained in the Indenture or of or contained in any Security, or for any claim based thereon or otherwise in respect thereof, or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor Person, either directly or through the Company or any successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment, penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released by the acceptance hereof and as a condition of, and as part of the consideration for, the Securities and the execution of the Indenture.
The Indenture provides that the Company (a) will be discharged from any and all obligations in respect of the Securities (except for certain obligations described in the Indenture), or (b) need not comply with certain restrictive covenants of the Indenture, in each case if the Company deposits, in trust, with the Trustee money or U.S. Government Obligations (or a combination thereof) which through the payment of interest thereon and principal thereof in accordance with their terms will provide money, in an amount sufficient to pay all the principal of and interest on the Securities, but such money need not be segregated from other funds except to the extent required by law.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
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Source: TENNESSEE GAS PIPELINE COMPANY, L.L.C., 10-K, March 07, 2006
6
EXHIBIT 4.A.4
TENNESSEE GAS PIPELINE COMPANY
ISSUER
AND
THE CHASE MANHATTAN BANK
TRUSTEE
FOURTH SUPPLEMENTAL INDENTURE
DATED AS OF OCTOBER 9, 1998
TO
INDENTURE
DATED AS OF MARCH 4, 1997
7% DEBENTURES DUE 2028
FOURTH SUPPLEMENTAL INDENTURE, dated as of October 9, 1998 (herein called the Fourth Supplemental Indenture), between TENNESSEE GAS PIPELINE COMPANY, a Delaware corporation (herein called the Company), having its principal office at 1001 Louisiana Street, Houston, Texas 77002 and THE CHASE MANHATTAN BANK, a banking corporation duly organized and existing under the laws of the State of New York, as trustee under the Indenture referred to below (herein called the Trustee).
RECITALS OF THE COMPANY
WHEREAS, the Company has heretofore executed and delivered to the Trustee the Indenture, dated as of March 4, 1997 (herein called the Original Indenture), providing for the issuance from time to time of one or more series of the Companys unsecured debentures, notes or other evidences of indebtedness (herein called the Securities), the terms of which are to be determined as set forth in Section 301 of the Original Indenture; and WHEREAS, Section 901 of the Indenture provides, among other things, that the Company and the Trustee may enter into indentures supplemental to the Original Indenture for, among other things, the purpose of setting forth the terms of Securities of any series; and
WHEREAS, the Company desires to create a series of the Securities in an aggregate principal amount of $400,000,000, which series shall be designated the 7% Debentures Due 2028 (the Debentures), and all action on the part of the Company necessary to authorize the issuance of the Debentures under the Original Indenture and this Fourth Supplemental Indenture has been duly taken; and
WHEREAS, all acts and things necessary to make the Debentures, when executed by the Company and completed, authenticated and delivered by the Trustee as provided in the Original Indenture and this Fourth Supplemental Indenture, the valid and binding obligations of the Company and to constitute these presents a valid and binding supplemental indenture and agreement according to its terms, have been done and performed;
NOW, THEREFORE, THIS FOURTH SUPPLEMENTAL INDENTURE WITNESSETH:
That in consideration of the premises and the issuance of the Debentures, the Company covenants and agrees with the Trustee, for the equal and proportionate benefit of all holders of the Debentures, as follows:
ARTICLE I
TERMS AND ISSUANCE OF 7% DEBENTURES DUE 2028
Section 1.01 Issue of Debentures. A series of Securities which shall be designated the 7% Debentures Due 2028 shall be executed, authenticated and delivered in accordance with the provisions of, and shall in all respects be subject to, the terms, conditions and covenants of the Original Indenture, including without limitation the terms set forth in this Fourth Supplemental Indenture (including the form of Debentures referred to in Section 1.02 hereof). The aggregate
-1-
principal amount of Debentures which may be authenticated and delivered under the Original Indenture shall not, except as permitted by the provisions of the Original Indenture, exceed $400,000,000. The entire amount of Debentures may forthwith be executed by the Company and delivered to the Trustee and shall be authenticated by the Trustee and delivered to or upon the order of the Company pursuant to Section 303 of the Indenture.
Section 1.02 Forms of Debentures and Authentication Certificate. The Debentures initially shall be issuable in the form of one or more Global Securities. The forms of the Debentures and the Trustees certificate of authentication shall be substantially as set forth on Exhibit A hereto.
ARTICLE II
MISCELLANEOUS
Section 2.01 Execution as Supplemental Indenture. This Fourth Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture and, as provided in the Original Indenture, this Fourth Supplemental Indenture forms a part thereof. Except as herein expressly otherwise defined, the use of the terms and expressions herein is in accordance with the definitions, uses and constructions contained in the Original Indenture.
Section 2.02 Responsibility for Recitals, Etc. The recitals herein and in the Debentures (except in the Trustees certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representations as to the validity or sufficiency of this Fourth Supplemental Indenture or of the Debentures. The Trustee shall not be accountable for the use or application by the Company of the Debentures or of the proceeds thereof.
Section 2.03 Provisions Binding on Companys Successors. All the covenants, stipulations, promises and agreements in this Fourth Supplemental Indenture contained by the Company shall bind its successors and assigns whether so expressed or not.
Section 2.04 New York Contract. THIS FOURTH SUPPLEMENTAL INDENTURE AND EACH DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 2.05 Execution and Counterparts. This Fourth Supplemental Indenture may be executed with counterpart signature pages or in any number of counterparts, each of which shall be an original but such counterparts shall together constitute but one and the same instrument.
Section 2.06 Capitalized Terms. Capitalized terms not otherwise defined in this Fourth Supplemental Indenture shall have the respective meanings assigned to them in the Original Indenture.
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IN WITNESS WHEREOF, said TENNESSEE GAS PIPELINE COMPANY has caused this Fourth Supplemental Indenture to be executed in its corporate name by its Chairman of the Board or its President or one of its Vice Presidents, and said THE CHASE MANHATTAN BANK has caused this Fourth Supplemental Indenture to be executed in its corporate name by one of its Second Vice Presidents as of October 9, 1998.
TENNESSEE GAS PIPELINE COMPANY | ||
By: | /s/ H. BRENT AUSTIN | |
Name: H. Brent Austin | ||
Title: Executive Vice President | ||
THE CHASE MANHATTAN BANK | ||
By: | /s/ R. J. HALLERAN | |
Name: R. J. Halleran | ||
Title: Second Vice President |
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EXHIBIT A
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF, TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TENNESSEE GAS PIPELINE COMPANY
7% DEBENTURE DUE 2028
NO. | U.S.$ | |
CUSIP No. 880451AV1 |
TENNESSEE GAS PIPELINE COMPANY, a corporation duly incorporated and existing under the laws of Delaware (herein called the Company, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of United States Dollars on October 15, 2028, and to pay interest thereon from October 9, 1998, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on April 15 and October 15 in each year, commencing April 15, 1999, at the rate of 7% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the April 1 or October 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and shall either be paid to the Person
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in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice of which shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at such time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in such Indenture.
Payment of the principal of and premium, if any, and interest on this Security will be made by transfer of immediately available funds to a bank account in New York, New York designated by the Holder in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
Dated:
TENNESSEE GAS PIPELINE COMPANY | ||
By: |
||
| ||
Name: | ||
Title: |
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, | ||
AS TRUSTEE | ||
By: | ||
| ||
Name: | ||
Title: |
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TENNESSEE GAS PIPELINE COMPANY
7% DEBENTURE DUE 2028
This Security is one of a duly authorized issue of Securities of the Company (the Securities), issued and to be issued in one or more series under an Indenture dated as of March 4, 1997 (the Indenture), between the Company and The Chase Manhattan Bank, as Trustee (the Trustee, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. As provided in the Indenture, the Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates, may be subject to different redemption provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to different covenants and Events of Default and may otherwise vary as in the Indenture provided or permitted. This Security is one of a series of Securities designated on the face hereof limited in aggregate principal amount to U.S. $400,000,000.
The Securities of this series are redeemable, upon not less than 30 nor more than 60 days notice by mail, as a whole or in part, at the option of the Company at any time at a redemption price equal to the greater of (i) 100% of the principal amount thereof and (ii) as determined by an Independent Investment Banker, the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus, in each case, accrued and unpaid interest thereon to the date of redemption, but interest installments whose Stated Maturity is on or prior to such date of redemption will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.
Adjusted Treasury Rate means, with respect to any Redemption Date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such date of redemption, plus 0.40%.
Comparable Treasury Issue means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Debentures to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Debentures.
Comparable Treasury Price means, with respect to any Redemption Date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such date of redemption, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated Composite 3:30 p.m. Quotations for U.S. Government Securities, or (ii) if such release (or any successor release) is not published or does not contain such
A-3
prices on such business day, (A) the average of the Reference Treasury Dealer Quotations for such date of redemption, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.
Independent Investment Banker means one of the Reference Treasury Dealers appointed by the Trustee after consultation with the Company.
Reference Treasury Dealer means each of Donaldson, Lufkin & Jenrette Securities Corporation, Chase Securities Inc. and NationsBanc Montgomery Securities LLC, and their respective successors; provided, however, that if any of the foregoing shall not be a primary U.S. Government securities dealer in New York City (a Primary Treasury Dealer), the Company shall substitute therefor another Primary Treasury Dealer.
Reference Treasury Dealer Quotations means, with respect to each Reference Treasury Dealer and any date of redemption, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such date of redemption.
In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.
If an Event of Default with respect to the Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of not less than the Holders of a majority in aggregate principal amount of the Outstanding Securities of all series to be affected (voting as one class). The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Outstanding Securities of all affected series (voting as one class), on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture. The Indenture permits, with certain exceptions as therein provided, the Holders of a majority in aggregate principal amount of Securities of all affected series then Outstanding (voting as a single class) to waive past defaults under the Indenture with respect to such Securities and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
A-4
As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of all affected securities at the time Outstanding (treated as a single class) shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of the Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, and interest on this Security at the times, place(s) and rate, and in the coin or currency, herein prescribed.
This Global Security or portion hereof may not be exchanged for Definitive Securities except in the limited circumstances provided in the Indenture.
The holders of beneficial interests in this Global Security will not be entitled to receive physical delivery of Definitive Securities except as described in the Indenture and will not be considered the Holders hereof for any purpose under the Indenture.
The Securities of this series are issuable only in registered form, without coupons, in denominations of U.S. $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series 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 Company may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
No recourse under or upon any obligation, covenant or agreement of or contained in the Indenture or of or contained in any Security, or for any claim based thereon or otherwise in respect thereof, or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor Person, either directly or through the Company or any successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment, penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released by the acceptance hereof and as a condition of, and as part of the consideration for, the Securities and the execution of the Indenture.
A-5
The Indenture provides that the Company (a) will be discharged from any and all obligations in respect of the Securities (except for certain obligations described in the Indenture), or (b) need not comply with certain restrictive covenants of the Indenture, in each case if the Company deposits, in trust, with the Trustee money or U.S. Government Obligations (or a combination thereof) which through the payment of interest thereon and principal thereof in accordance with their terms will provide money, in an amount sufficient to pay all the principal of and interest of the Securities, but such money need not be segregated from other funds except to the extent required by law.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
Created by Morningstar® Document ResearchSM
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Source: TENNESSEE GAS PIPELINE COMPANY, L.L.C., 10-K, March 07, 2006
A-6
EXHIBIT 4.A.7
TENNESSEE GAS PIPELINE COMPANY
as Issuer
TENNESSEE GAS PIPELINE ISSUING CORPORATION
as Co-issuer
WILMINGTON TRUST COMPANY
as Trustee
SEVENTH SUPPLEMENTAL INDENTURE
Dated as of October 1, 2011
To
INDENTURE
Dated as of March 4, 1997
ARTICLE 1 Relation to Indenture; Definitions |
1 | |||
SECTION 1.01. Relation to Indenture |
1 | |||
SECTION 1.02. Definitions |
1 | |||
SECTION 1.03. General References |
1 | |||
ARTICLE 2 Amendments to Original Indenture |
2 | |||
SECTION 2.01. Definitions |
2 | |||
SECTION 2.02. Co-issuer Party |
2 | |||
ARTICLE 3 Miscellaneous |
2 | |||
SECTION 3.01. Certain Trustee Matters |
2 | |||
SECTION 3.02. Continued Effect |
2 | |||
SECTION 3.03. Governing Law |
2 | |||
SECTION 3.04. Counterparts |
3 |
SEVENTH SUPPLEMENTAL INDENTURE, dated as of October 1, 2011 (this Seventh Supplemental Indenture), among (i) TENNESSEE GAS PIPELINE COMPANY, a Delaware corporation (the Company), (ii) TENNESSEE GAS PIPELINE ISSUING CORPORATION, a Delaware corporation (Finance Corp) and (iii) WILMINGTON TRUST COMPANY, as successor-in-trust to JPMorgan Chase Bank (formerly the Chase Manhattan Bank), as trustee under the Indenture referred to below (the Trustee).
RECITALS OF THE COMPANY
WHEREAS, the Company has issued Securities pursuant to the Indenture, dated as of March 4, 1997 (the Original Indenture), as amended and supplemented by (i) the First Supplemental Indenture, dated as of March 13,1997 (the First Supplemental Indenture), (ii) the Second Supplemental Indenture, dated as of March 13, 1997 (the Second Supplemental Indenture), (iii) the Third Supplemental Indenture, dated as of March 13, 1997 (the Third Supplemental Indenture), (iv) the Fourth Supplemental Indenture, dated as of October 9, 1998 (the Fourth Supplemental Indenture), (v) the Fifth Supplemental Indenture, dated as of June 10, 2002 (the Fifth Supplemental Indenture) and (vi) the Sixth Supplemental Indenture, dated as of January 27, 2009 (the Sixth Supplemental Indenture) (the Original Indenture, as so amended and supplemented by the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture, the Fifth Supplemental Indenture and the Sixth Supplemental Indenture, being referred to herein as the Indenture); and
WHEREAS, the Company intends to convert to a Delaware limited liability company by the filing of a Certificate of Conversion with the Secretary of State of the State of Delaware (the Conversion); and
WHEREAS, the Conversion is permitted by the terms of the Indenture, and the parties hereto desire to amend the Indenture, as permitted by Section 901(6) thereof, to add Finance Corp as a co-issuer party to the Indenture and to each series of Securities; and
WHEREAS, the Company has heretofore delivered or is delivering contemporaneously herewith to the Trustee the Opinion of Counsel referred to in Section 903 of the Indenture; and
WHEREAS, all acts and things necessary to make this Seventh Supplemental Indenture a valid and binding agreement in accordance with the Indenture have been done or performed;
NOW, THEREFORE, in consideration of the premises, agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree, for the equal and proportionate benefit of all Securityholders, as follows:
ARTICLE 1
RELATION TO INDENTURE; DEFINITIONS
SECTION 1.01. Relation to Indenture.
With respect to each series of Securities, this Seventh Supplemental Indenture constitutes an integral part of the Indenture.
SECTION 1.02. Definitions.
For all purposes of this Seventh Supplemental Indenture, capitalized terms used herein and not otherwise defined herein shall have the meanings assigned thereto in the Indenture.
SECTION 1.03. General References.
All references in this Seventh Supplemental Indenture to Articles and Sections, unless otherwise specified, refer to the corresponding Articles and Sections of this Seventh Supplemental Indenture; and the terms herein, hereof, hereunder and any other word of similar import refers to this Seventh Supplemental Indenture.
1
ARTICLE 2
AMENDMENTS TO ORIGINAL INDENTURE
With respect to each series of Securities, the Indenture is hereby amended as set forth below.
SECTION 2.01. Definitions.
The following definition is hereby added to Article One of the Original Indenture:
Finance Corp
The term Finance Corp shall mean Tennessee Gas Pipeline Issuig Corporation, a Delaware corporation.
Section 2.02. Co-issuer Party.
SECTION 116 Finance Corp is hereby designated as a co-issuer party under this Indenture and to each series of Securities at any time issued under this Indenture. Finance Corp hereby assumes, agrees to be bound by, and agrees to be jointly and severally liable, as a primary obligor and not as a guarantor or surety, with respect to, any and all obligations of the Company under this Indenture and each such series of Securities. The provisions of this Section 116 shall become effective at the time that the Company converts to a Delaware limited liability company by the filing of a Certificate of Conversion with the Secretary of State of the State of Delaware.
ARTICLE 3
MISCELLANEOUS
SECTION 3.01. Certain Trustee Matters.
The recitals contained herein shall be taken as the statements of the Company and Finance Corp, and the Trustee does not assume any responsibility for their correctness.
The Trustee does not make any representations as to the validity or sufficiency of this Seventh Supplemental Indenture or the proper authorization or the due execution hereof by the Company or Finance Corp.
In entering into this Seventh Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture (to the extent applicable to the Trustee), whether or not elsewhere herein so provided.
SECTION 3.02. Continued Effect.
Except as expressly supplemented and amended by this Seventh Supplemental Indenture, the Indenture shall continue in full force and effect in accordance with the provisions thereof, and the Indenture (as supplemented and amended by this Seventh Supplemental Indenture) is in all respects hereby ratified and confirmed. This Seventh Supplemental Indenture and all its provisions shall be deemed a part of the Indenture in the manner and to the extent herein and therein provided.
SECTION 3.03. Governing Law.
This Seventh Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York.
2
SECTION 3.04. Counterparts.
This instrument may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
(Signature Page Follows)
3
IN WITNESS WHEREOF, the parties hereto have caused this Seventh Supplemental Indenture to be duly executed and delivered, all as of the day and year first above written.
TENNESSEE GAS PIPELINE COMPANY | ||
By: | /s/ John J. Hopper | |
John J. Hopper | ||
Vice President and Treasurer | ||
TENNESSEE GAS PIPELINE ISSUING CORPORATION | ||
By: | /s/ John J. Hopper | |
John J. Hopper | ||
Vice President and Treasurer | ||
WILMINGTON TRUST COMPANY | ||
as Trustee | ||
By: | /s/ Michael G. Oller, Jr. | |
Name: | Michael G. Oller, Jr | |
Title: | Assistant Vice President |
SEVENTH SUPPLEMENTAL INDENTURE
SIGNATURE PAGE
4
Exhibit 23
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement (Form S-3, No. 333-158205), and in the related Prospectus of Tennessee Gas Pipeline Company, L.L.C. of our report dated February 27, 2012 with respect to the consolidated financial statements and schedule of Tennessee Gas Pipeline Company, L.L.C. included in this Annual Report (Form 10-K) for the year ended December 31, 2011.
/s/ Ernst & Young LLP
Houston, Texas
February 27, 2012
EXHIBIT 31.A
CERTIFICATION
I, Norman G. Holmes, certify that:
1. I have reviewed this Annual Report on Form 10-K of Tennessee Gas Pipeline Company, L.L.C.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: February 27, 2012
/s/ Norman G. Holmes |
Norman G. Holmes |
President |
(Principal Executive Officer) |
Tennessee Gas Pipeline Company, L.L.C. |
EXHIBIT 31.B
CERTIFICATION
I, John R. Sult, certify that:
1. I have reviewed this Annual Report on Form 10-K of Tennessee Gas Pipeline Company, L.L.C.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: February 27, 2012
/s/ John R. Sult |
John R. Sult |
Executive Vice President and Chief Financial Officer |
(Principal Financial Officer) |
Tennessee Gas Pipeline Company, L.L.C. |
EXHIBIT 32.A
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K for the period ending December 31, 2011, of Tennessee Gas Pipeline Company, L.L.C. (the Company) as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Norman G. Holmes, President, certify (i) that the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and (ii) that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Norman G. Holmes |
Norman G. Holmes |
President |
(Principal Executive Officer) |
Tennessee Gas Pipeline Company, L.L.C. |
February 27, 2012 |
A signed original of this written statement required by Section 906 has been provided to Tennessee Gas Pipeline Company, L.L.C. and will be retained by Tennessee Gas Pipeline Company, L.L.C. and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.B
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K for the period ending December 31, 2011, of Tennessee Gas Pipeline Company, L.L.C. (the Company) as filed with the Securities and Exchange Commission on the date hereof (the Report), I, John R. Sult, Executive Vice President and Chief Financial Officer, certify (i) that the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and (ii) that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ John R. Sult |
John R. Sult |
Executive Vice President and Chief Financial Officer |
(Principal Financial Officer) |
Tennessee Gas Pipeline Company, L.L.C. |
February 27, 2012 |
A signed original of this written statement required by Section 906 has been provided to Tennessee Gas Pipeline Company, L.L.C. and will be retained by Tennessee Gas Pipeline Company, L.L.C. and furnished to the Securities and Exchange Commission or its staff upon request.
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