<PAGE>
As filed with the Securities and Exchange Commission on May 1, 1995
Registration No. 33-58297
=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
___________________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
SOUTHERN UNION COMPANY Delaware 75-0571592
SOUTHERN UNION FINANCING I Delaware To Be Applied For
SOUTHERN UNION FINANCING II Delaware To Be Applied For
SOUTHERN UNION FINANCING III Delaware To Be Applied For
(Exact name of Registrant as (State or other (I.R.S. Employer
specified in its Charter) Jurisdiction of Identification
Incorporation Number)
or Organization)
504 Lavaca Street, Suite 800
Austin, Texas 78701
(512) 477-5852
(Address, including zip code, and telephone number,
including area code, of each registrant's principal
executive offices)
__________________
Dennis K. Morgan, Esq. With a copy to:
Vice President-Legal and Secretary Stephen A. Bouchard,Esq.
SOUTHERN UNION COMPANY Fleischman and Walsh, L.L.P.
504 Lavaca Street, Suite 800 1400 Sixteenth Street, N.W.,
Suite 600
Austin, Texas 78701 Washington, D.C. 20036
(512) 477-5852 (202) 939-7911
(Name, address, including zip code,
and telephone number, including
area code, of agent for service
for each registrant)
________________________
Approximate Date of Commencement of Proposed Sale to Public:
From time to time after the effective date of the Registration
Statement, as determined by market conditions.
________________________
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following blank: _____
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, as amended, other than securi-
ties offered only in connection with dividend or interest
reinvestment plans, please check the following blank: X
_____
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Title of Each Class Amount to Price Per Offering Registra-
of Securities to be be Regis- Unit Price tion Fee
Registered tered (1) (1)(2)(3) (1)(2)(3) (2)
___________________ _________ _________ _________ _________
Preferred Securities
of Southern Union
Financing I. . . .
Preferred Securities
of Southern Union
Financing II . . .
Preferred Securities
of Southern Union
Financing III. . .
Senior Debt Securi-
ties of Southern
Union Company. . .
Guarantees of Pre-
ferred Securities
of Southern Union
Financing I,
Southern Union
Financing II,
Southern Union
Financing III by
Southern Union
Company (4). . . .
_________________________________________________________________
Total $300,000,000 100% $300,000,000 $103,449.00
(1) Such indeterminate number of Preferred Securities of
Southern Union Financing I, Southern Union Financing II and
Southern Union Financing III and such indeterminate princi-
pal amount of Senior or Subordinated Debt Securities of
Southern Union Company as may from time to time be issued at
indeterminate prices. Subordinated Debt Securities may be
issued and sold to Southern Union Financing I, Southern
Union Financing II and Southern Union Financing III, in
which event such Subordinated Debt Securities may later be
distributed to the holders of Preferred Securities upon a
dissolution of Southern Union Financing I, Southern Union
Financing II and Southern Union Financing III and the dis-
tribution of the assets thereof.
(2) Estimated solely for the purpose of calculating the regis-
tration fee pursuant to Rule 457. The aggregate public
offering price of the Preferred Securities of Southern Union
Financing I, Southern Union Financing II and Southern Union
Financing III and the Senior or Subordinated Debt Securities
of Southern Union Company registered hereby will not exceed
$300,000,000.
(3) Exclusive of accrued interest and distributions, if any.
(4) No separate consideration will be received for any Guaran-
tees.
The Registrants hereby amend this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the Registrants shall file a further amendment that
specifically states that this Registration Statement shall there-
after become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration
Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
=================================================================
SUBJECT TO COMPLETION, DATED MAY 1, 1995
PROSPECTUS
$300,000,000
SOUTHERN UNION COMPANY
Senior Debt Securities and Subordinated Debt Securities
Southern Union Financing I
Southern Union Financing II
Southern Union Financing III
Preferred Securities guaranteed to the extent set forth herein by
Southern Union Company
Southern Union Company ("Southern Union" and, together with its
subsidiaries, the "Company"), a Delaware corporation, may offer,
from time to time, (i) unsecured senior debt securities (the
"Senior Debt Securities") consisting of debentures, notes or
other evidence of indebtedness, and (ii) unsecured subordinated
debt securities (the "Subordinated Debt Securities") consisting
of debentures, notes or other evidence of indebtedness (item (i)
or (ii) above being referred to herein as the "Debt Securities")
or any combination of the foregoing, in each case in one or more
series and in amounts, at prices and on terms to be determined at
or prior to the time of any such offering. The Subordinated Debt
Securities when issued will be unsecured obligations of Southern
Union. Southern Union's obligations under the Subordinated Debt
Securities will be subordinate and junior in right of payment to
certain other indebtedness of Southern Union as may be described
in an accompanying Prospectus Supplement (the "Prospectus Sup-
plement").
Southern Union Financing I, Southern Union Financing II and
Southern Union Financing III (each, a "Southern Union Trust")
each a statutory business trust formed under the laws of the
State of Delaware, may offer, from time to time, preferred
securities, representing undivided beneficial interests in the
assets of the respective Southern Union Trust ("Preferred Securi-
ties"). The payment of periodic cash distributions ("distribu-
tions") with respect to Preferred Securities of each of the
Southern Union Trusts out of moneys held by each of the Southern
Union Trusts, and payments on liquidation, redemption or otherwise
with respect to such Preferred Securities, will be guaranteed by
Southern Union to the extent described herein (each a "Guarantee").
See "Description of the Guarantees" below. Southern Union's
obligations under the Guarantees are subordinate and junior in
right of payment to all other liabilities of Southern Union and
rank pari passu with the most senior preferred stock, if any,
issued from time to time by Southern Union. Subordinated Debt
Securities may be issued and sold from time to time in one or more
series by Southern Union to a Southern Union Trust, or a trustee of
such trust in connection with the investment of the proceeds from
the offering of Preferred Securities and Common Securities (as
defined herein) of such Southern Union Trust. The Subordinated
Debt Securities purchased by a Southern Union Trust may be subse-
quently distributed pro rata to holders of Preferred Securities and
Common Securities in connection with the dissolution of such
Southern Union Trust, upon the occurrence of certain events as may
be described in an accompanying Prospectus Supplement.
Specific terms of the Debt Securities of any series or the Pre-
ferred Securities of any Southern Union Trust in respect of which
this Prospectus is being delivered (the "Offered Securities") will
be set forth in a Prospectus Supplement with respect to such
Offered Securities, which will describe, without limitation and
where applicable, the following: (i) in the case of Debt Securi-
ties, the specific designation, aggregate principal amount,
denomination, maturity, premium, if any, any exchange, con-
version, redemption or sinking fund provisions, if any, interest
rate (which may be fixed or variable), if any, the time and
method of calculating interest payments, if any, dates on which
premium, if any, and interest, if any, will be payable, the right
of Southern Union, if any, to defer payment of interest on the
Debt Securities and the maximum length of such deferral period,
the initial public offering price, subordination terms, and any
listing on a securities exchange and other specific terms of the
offering; and (ii) in the case of Preferred Securities, the
designation, number of securities, liquidation preference per
security, initial public offering price, any listing on a securi-
ties exchange, distribution rate (or method of calculation
thereof), dates on which distributions shall be payable and dates
from which distributions shall accrue, any voting rights, terms
for any conversion or exchange into other securities, any redemp-
tion, exchange or sinking fund provisions, any other rights,
preferences, privileges, limitations or restrictions relating to
the Preferred Securities and the terms upon which the proceeds of
the sale of the Preferred Securities shall be used to purchase a
specific series of Subordinated Debt Securities of Southern
Union.
The Offered Securities may be offered in amounts, at prices and
on terms to be determined at the time of offering; provided, how-
ever, that, the aggregate initial public offering price of all
Offered Securities shall not exceed $300,000,000. Any Prospectus
Supplement relating to any series of Offered Securities will con-
tain information concerning certain United States federal income
tax considerations, if applicable, to the Offered Securities.
Southern Union and/or each of the Southern Union Trusts may sell
the Offered Securities directly, through agents designated from
time to time or through underwriters or dealers. See "Plan of
Distribution" below. If any agents of Southern Union and/or any
Southern Union Trust or any underwriters or dealers are involved
in the sale of the Offered Securities, the names of such agents,
underwriters or dealers and any applicable commissions and dis-
counts will be set forth in any related Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COM-
MISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE. THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF
SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
The date of this Prospectus is _______________________, 1995.
Information contained herein is subject to completion or amend-
ment. A registration statement relating to these securities has
been filed with the Securities and Exchange Commission. These
securities may not be sold, nor may offers to buy be accepted,
prior to the time the registration statement becomes effective.
This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such State. No dealer, salesperson or
any other individual has been authorized by Southern Union or any
of the Southern Union Trusts to give any information or to make any
representation other than those contained or incorporated by
reference in this Prospectus or any accompanying Prospectus
Supplement and, if given or made, such information or representa-
tion must not be relied upon as having been authorized. This
Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. Neither the delivery
of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change
in the affairs of Southern Union or any of the Southern Union
Trusts since the date hereof.
AVAILABLE INFORMATION
This Prospectus constitutes a part of a Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") filed by Southern Union and the
Southern Union Trusts with the Securities and Exchange Commission
(the "SEC") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Offered Securities. This
Prospectus does not contain all of the information set forth in
such Registration Statement, certain parts of which are omitted
in accordance with the rules and regulations of the SEC.
Reference is made to such Registration Statement and to the
exhibits relating thereto for further information with respect to
the Company, the Southern Union Trusts and the Offered Securi-
ties. Any statements contained herein concerning the provisions
of any document filed as an exhibit to the Registration Statement
or otherwise filed with the SEC or incorporated by reference
herein are not necessarily complete, and, in each instance,
reference is made to the copy of such document so filed for a
more complete description of the matter involved. Each such
statement is qualified in its entirety by such reference.
Southern Union is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy state-
ments and other information with the SEC. Reports, proxy state-
ments and other information concerning Southern Union can be
inspected and copied at prescribed rates at the SEC's Public
Reference Room, Judiciary Plaza, 450 Fifth Street, Northwest,
Washington, D.C. 20549, as well as the following Regional
Offices of the SEC: 7 World Trade Center, New York, New York
10048; and Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661-2511. Such reports, proxy statements
and other information may also be inspected at the offices of the
New York Stock Exchange ("NYSE"), on which Southern Union common
stock is traded, at 20 Broad Street, New York, New York 10005.
No separate financial statements of any of the Southern Union
Trusts have been included herein. Southern Union does not con-
sider that such financial statements would be material to holders
of the Preferred Securities because (i) all of the voting securi-
ties of each of the Southern Union Trusts will be owned, directly
or indirectly, by Southern Union, a reporting company under the
Exchange Act, (ii) each of the Southern Union Trusts has no inde-
pendent operations but exists for the sole purpose of issuing
securities representing undivided beneficial interests in the
assets of such Southern Union Trust and investing the proceeds
thereof in Subordinated Debt Securities issued by Southern Union,
and (iii) the obligations of each of the Southern Union Trusts
under the Trust Securities (as defined herein) are fully and uncon-
ditionally guaranteed by Southern Union to the extent that such
Southern Union Trust has funds available to meet such obligations.
See "Particular Terms of the Subordinated Debt Securities" and
"Description of the Guarantees."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Southern Union (File No. 1-6407)
with the SEC pursuant to the Exchange Act are incorporated by
reference herein and made a part hereof:
1. Transition Report on Form 10-K for the year ended June 30,
1994 (the "1994 Form 10-K").
2. Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1994 (the "First Quarter Form 10-Q") and
December 31, 1994 (the "Second Quarter Form 10-Q").
All documents filed by Southern Union pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the termination of the offering of the
Offered Securities pursuant hereto shall be deemed to be incorpo-
incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein or in any
Prospectus Supplement shall be deemed to be modified or super-
seded for purposes of this Prospectus, or in any Prospectus Sup-
plement, to the extent that a statement contained herein or
therein (or in any other subsequently filed document that also is
or is deemed to be incorporated by reference herein or therein)
modifies or supersedes such statement. Any statement so modified
or superseded shall not be deemed, except as so modified or super-
seded, to constitute a part of this Prospectus or any Prospectus
Supplement.
Southern Union undertakes to provide without charge to each per-
person to whom a copy of this Prospectus has been delivered, upon
the written or oral request of any such person, a copy of any or
all of the foregoing documents incorporated herein by reference,
other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents. Such
requests should be directed to Dennis K. Morgan, Vice President
- - Legal and Secretary, Southern Union Company, at 504 Lavaca
Street, Suite 800, Austin, Texas 78701, telephone (512)
477-5852.
SOUTHERN UNION COMPANY
The Company's principal line of business is the distribution of
natural gas as a public utility through Southern Union Gas Com-
pany ("Southern Union Gas") and Missouri Gas Energy, each of
which is a division of Southern Union. Southern Union Gas serves
approximately 495,000 residential, commercial, industrial, agri-
cultural and other customers in Texas (including the cities of
Austin, Brownsville, El Paso, Galveston and Port Arthur) and
Oklahoma. Missouri Gas Energy, acquired on January 31, 1994,
serves approximately 473,000 customers in central and western
Missouri (including the cities of Kansas City, St. Joseph, Joplin
and Monett).
Subsidiaries of Southern Union have been established to support
and expand natural gas sales and to capitalize on the Company's
gas energy expertise. These subsidiaries market natural gas to
end-users, sell natural gas as a vehicular fuel, convert vehicles
to operate on natural gas, operate intrastate and interstate
natural gas pipeline systems, and sell commercial gas air condi-
tioning and other gas-fired engine-driven applications. By pro-
viding "one-stop shopping," the Company can serve its various
customers' particular energy needs, which encompass substantially
all of the natural gas distribution and sales businesses from
natural gas sales to specialized energy consulting services.
Certain subsidiaries also hold investments in real estate and
other assets, which are primarily used in Southern Union's
utility business.
The Company is a sales and market-driven energy company whose
management is committed to achieving profitable growth of its
natural gas energy businesses in an increasingly competitive
business environment. Management's strategies for achieving
these objectives principally consist of (i) promoting new sales
opportunities and markets for natural gas, (ii) enhancing finan-
cial and operating performance, and (iii) expanding the Company
through development of existing systems and selectively acquiring
new systems. Management develops and continually evaluates these
strategies, and the Company's implementation of them, by applying
its experience and expertise in analyzing the energy industry,
technological advances, market opportunities and general business
trends. Each of these strategies, as implemented throughout the
Company's businesses, reflects the Company's commitment to its
core natural gas utility business. Central to all of the Com-
pany's businesses and strategies is the sale and transportation
of natural gas.
Consistent with this strategy, the Company has actively pursued
selected acquisitions in the natural gas distribution, transpor-
tation and sales industries where management believes there are
opportunities to promote new sales of and markets for natural gas
and/or synergies that permit enhanced financial and operating
performance. Since 1990, Southern Union has acquired seven gas
distribution systems in Texas and one in Missouri. Collectively,
these systems have added nearly 587,000 of the Company's present
customers, representing approximately $289,293,000 of annual
sales revenue to Southern Union. See "Acquisitions and Divesti-
ture" in the Notes to Southern Union's Consolidated Financial
Statements included in the 1994 Form 10-K. Southern Union's most
recent acquisition was consummated on January 31, 1994, when it
acquired Missouri Gas Energy.
Southern Union was incorporated under the laws of the State of
Delaware in 1932. The Company's corporate headquarters are
located at 504 Lavaca Street, Suite 800, Austin, Texas 78701,
and its telephone number is (512) 477-5852.
THE SOUTHERN UNION FINANCING TRUSTS
Each of Southern Union Financing I, Southern Union Financing II
and Southern Union Financing III is a statutory business trust
formed under Delaware law pursuant to (i) a separate declaration
of trust (each, a "Declaration") executed by Southern Union, as
sponsor for such trust (the "Sponsor"), and the Southern Union
Trustees (as defined herein) of such trust and (ii) the filing
of a certificate of trust with the Secretary of State of the
State of Delaware on March 28, 1995. Each Southern Union Trust
exists for the exclusive purposes of (i) issuing the Preferred
Securities and common securities representing undivided bene-
ficial interests in the assets of the Trust (the "Common Securi-
ties" and, together with the Preferred Securities, the "Trust
Securities"), (ii) investing the gross proceeds from the sale of
the Trust Securities in the Subordinated Debt Securities and
(iii) engaging in only those other activities necessary or inci-
dental thereto. All of the Common Securities will be directly or
indirectly owned by Southern Union. The Common Securities will
rank pari passu, and payments will be made thereon pro rata, with
the Preferred Securities, except that, upon an event of default
under the Declaration, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the
rights of the holders of the Preferred Securities. Southern Union
will directly or indirectly acquire Common Securities in an aggre-
gate liquidation amount equal to 3% of the total capital of each
Southern Union Trust. Each Southern Union Trust has a term of
approximately 55 years but may terminate earlier, as provided in
each Declaration. Each Southern Union Trust's business and affairs
will be conducted by the trustees (the "Southern Union Trustees")
appointed by Southern Union as direct or indirect holder of all the
Common Securities. The holder of the Common Securities will be
entitled to appoint, remove or replace any of, or increase or
reduce the number of, the Southern Union Trustees of a Southern
Union Trust. The duties and obligations of the Southern Union
Trustees shall be governed by the Declaration of such Southern
Union Trust. A majority of the Southern Union Trustees of each
Southern Union Trust will be persons who are employees or officers
of or who are affiliated with Southern Union (the "Regular
Trustees"). In certain limited circumstances set forth in a
Prospectus Supplement, the holders of a majority of the Preferred
Securities will be entitled to appoint one additional Regular
Trustee who need not be an employee or officer of or otherwise
affiliated with Southern Union. One Southern Union Trustee of each
Southern Union Trust will be a financial institution that is not
affiliated with Southern Union and has a specified minimum amount
of aggregate capital, surplus, and undivided profits of not less
than $50,000,000, which shall act as property trustee and as
indenture trustee for the purposes of the Trust Indenture Act of
1939 (the "Trust Indenture Act") pursuant to the terms set forth
in a Prospectus Supplement (the "Property Trustee"). In addi-
tion, (unless the Property Trustee maintains a principal place of
business in the State of Delaware) and otherwise meets the
requirements of applicable law, one Southern Union Trustee of
each Southern Union Trust will have a principal place of business
or reside in the State of Delaware (the "Delaware Trustee").
Southern Union will pay all fees and expenses related to the
Southern Union Trusts and the offering of the Trust Securities.
The office of the Delaware Trustee for each Southern Union Trust
is Wilmington Trust Company, Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890. The principal place
of business of each Southern Union Trust is c/o Southern Union
Company, 504 Lavaca Street, Suite 800, Austin, Texas 78701,
telephone (512) 477-5852.
USE OF PROCEEDS
Each Southern Union Trust will use all proceeds received from the
sale of its Preferred Securities to purchase Subordinated Debt
Securities from Southern Union. The Company intends to add the
net proceeds from the sale of the Debt Securities to Southern
Union's general funds, to be used for general corporate purposes,
including repurchases of outstanding long-term debt securities,
capital expenditures, investments in subsidiaries, working capi-
tal, repayment of borrowings under bank credit agreements and
other business opportunities or as otherwise disclosed in any
Prospectus Supplement.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed
charges for Southern Union on an historical basis for the year
ended June 30, 1994, and each of the four years in the period
ended December 31, 1993, and for the six-month and twelve-month
periods ended December 31, 1994. Such ratios are also presented
on a pro forma basis for the year ended June 30, 1994 and the
twelve-month periods ended December 31, 1994. For the purpose of
calculating such ratios, "earnings" consist of income from con-
tinuing operations before income taxes and "fixed charges" con-
sist of interest expense, amortization of debt discount or
premium and an estimate of interest implicit in rentals.
Twelve Six
Months Year Months
Decem- Ended Decem-
ber 31, June 30, ber 31, Year Ended December 31,
_______________________
1994 1994(a) 1994 1993 1992 1991 1990
_______ ________ _______ ____ ____ ____ ____
Ratio of
Earnings to
Fixed
Charges. . . . 1.21 1.49 1.03 1.76 1.77 1.82 1.10
==== ==== ==== ==== ==== ==== ====
Pro Forma -
Ratio of
Earnings to
Fixed
Charges(b) . . 1.38 1.39
==== ====
_____________________________
(a) During 1994, the Company changed its fiscal year-end from
December 31 to June 30.
(b) This pro forma ratio gives effect to an increase in out-
standing debt, as of the beginning of the period presented,
primarily as a result of the January 31, 1994 acquisition of
Missouri Gas Energy, which was financed through the sale of
$475 million of 7.60% Senior Notes. Those debt proceeds,
along with proceeds of a $50 million common stock rights
offering and working capital from operations, were also used
to retire approximately $105 million of long-term debt. This
ratio also assumes the acquisition of Missouri Gas Energy
occurred as of the beginning of the period presented, as
reflected in the pro forma condensed statement of consolidated
operations included in the 1994 Form 10-K and the December 31,
1994 Second Quarter Form 10-Q.
DESCRIPTION OF SOUTHERN UNION DEBT SECURITIES
The following description sets forth certain general terms and
provisions of the Debt Securities to which any Prospectus Supple-
ment may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement and the extent, if any, to
which such general provisions may apply to the Debt Securities so
offered will be described in the Prospectus Supplement relating
to such Debt Securities.
The Debt Securities may be issued, from time to time, in one or
more series, and will constitute either Senior Debt Securities or
Subordinated Debt Securities. Senior Debt Securities may be issued
under an Indenture dated as of January 31, 1994 (the "Senior Debt
Securities Indenture"), between the Company and The Chase Manhattan
Bank, N. A., as trustee (the "Senior Debt Securities Trustee").
The Subordinated Debt Securities may be issued from time to time
under an Indenture dated as of___________________ , 1995 (the "Sub-
ordinated Debt Securities Indenture") between the Company and
_____________________________ as trustee (the "Subordinated Debt
Securities Trustee").
The Senior Debt Securities Indenture and the Subordinated Debt
Securities Indenture are referred to herein individually as an
"Indenture" and, collectively, as the "Indentures," and the Senior
Debt Securities Trustee and the Subordinated Debt Securities
Trustee are each referred to herein as the "Trustee." Copies of
the Indentures are filed as an exhibit to the Registration State-
ment. Capitalized terms used in this section which are not other-
wise defined in this Prospectus shall have the meanings set forth
in the Indentures to which they relate.
The following summaries of certain provisions of the Debt
Securities and the Indentures do not purport to be complete and are
subject to, and are qualified in their entirety by express
reference to all the provisions of the Indentures, including the
definitions therein of certain terms.
General
The Debt Securities will be direct, unsecured obligations of
Southern Union.
The Indentures do not limit the aggregate principal amount of Debt
Securities that may be issued thereunder and provide that Debt
Securities may be issued thereunder from time to time in one or
more series.
Unless otherwise indicated in the Prospectus Supplement relating
thereto, the principal of, and any premium or interest on, the Debt
Securities will be payable, and the Debt Securities will be
exchangeable and transfers thereof will be registrable, at the
Place of Payment; provided that, at the option of Southern Union,
payment of interest may be made by check mailed to the address of
the person entitled thereto as it appears in the Security Register.
The Indentures do not contain any provisions that may afford the
Holders of Debt Securities protection in the event of a highly
leveraged transaction or other transaction involving Southern Union
that may occur in connection with a takeover attempt resulting in
a decline in the credit rating of the Debt Securities. Any provi-
sion that does provide such protection, if applicable to the Debt
Securities, will be described in any Prospectus Supplement relating
thereto.
The Debt Securities may be issued under the Indentures as Original
Issue Discount Securities to be offered and sold at a substantial
discount below their principal amount. Special United States
federal income tax, accounting and other considerations applicable
to any such Original Issue Discount Securities will be described in
any Prospectus Supplement relating thereto. "Original Issue Dis-
count Security" means any security that provides for an amount less
than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof as a result of
the occurrence of an Event of Default and the continuation thereof.
In addition, the Subordinated Debt Securities may, for United
States federal income tax purposes, be deemed to have been issued
with "original issue discount" ("OID") even if such securities are
offered and sold at an amount equal to their stated principal
amount. The United States federal income tax consequences of Sub-
ordinated Debt Securities deemed to be issued with OID will be
described in any Prospectus Supplement relating thereto.
The Indenture does not contain any provisions that would limit the
ability of Southern Union to incur indebtedness. Reference is made
to any Prospectus Supplement relating to the Debt Securities
offered thereby for information with respect to any deletions from,
modifications of or additions to the Events of Default or covenants
of Southern Union applicable to such Debt Securities that are
described herein.
Under the Indentures, Southern Union will have the ability to issue
Debt Securities with terms different from those of Debt Securities
previously issued, without the consent of the Holders of previously
issued series of Debt Securities, in an aggregate principal amount
determined by Southern Union.
Registration and Transfer
The Debt Securities may be issued as Registered Securities or
Bearer Securities. Registered Securities will be exchangeable for
other Registered Securities of the same series and of a like aggre-
gate principal amount and tenor of different authorized denomina-
tions. If (but only if) provided for in any Prospectus Supplement,
Bearer Securities (with all unmatured coupons, except as provided
below, and all matured coupons in default) of any series may be
exchanged for Registered Securities of the same series of any
authorized denominations and of a like aggregate principal amount
and tenor. In such event, Bearer Securities surrendered in a per-
mitted exchange for Registered Securities between a Regular Record
Date or a Special Record Date and the relevant date for payment of
interest shall be surrendered without the coupon relating to such
date for payment of interest, and interest will not be payable on
such date for payment of interest in respect of the Registered
Security issued in exchange for such Bearer Security but will be
payable only to the holder of such coupon when due, in accordance
with the terms of the Indenture. Unless otherwise specified in any
Prospectus Supplement, Bearer Securities will not be issued in
exchange for Registered Securities.
The Debt Securities may be presented for exchange as described
above, and Registered Securities may be presented for registration
of transfer (duly endorsed or accompanied by a written instrument
of transfer), at the corporate trust office of the Trustee in New
York, New York, or at the office of any transfer agent designated
by Southern Union for such purpose with respect to any series of
Debt Securities and referred to in any Prospectus Supplement. No
service charge will be made for any transfer or exchange of Debt
Securities, but Southern Union may require payment of a sum suffi-
cient to cover any tax or other governmental charge payable in con-
nection therewith. If any Prospectus Supplement refers to any
transfer agent (in addition to the Trustee) initially designated by
Southern Union with respect to any series of Debt Securities,
Southern Union may at any time rescind the designation of any such
transfer agent or approve a change in the location at which any
such transfer agent acts, except that, if Debt Securities of a
series are issuable solely as Registered Securities, Southern Union
will be required to maintain a transfer agent in each Place of Pay-
ment for such series and, if Debt Securities of a series may be
issuable both as Registered Securities and as Bearer Securities,
Southern Union will be required to maintain (in addition to the
Trustee) a transfer agent in a Place of Payment for such series
located outside the United States. Southern Union may at any time
designate additional transfer agents with respect to any series of
Debt Securities.
In the event of any redemption of Debt Securities, Southern Union
shall not be required to: (i) issue, register the transfer of or
exchange Debt Securities of any series during a period beginning at
the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of
business on (A) if Debt Securities of the series are issuable only
as Registered Securities, the day of mailing of the relevant notice
of redemption and (B) if Debt Securities of the series are issuable
as Bearer Securities, the day of the first publication of the rele-
vant notice of redemption or, if Debt Securities of the series are
also issuable as Registered Securities and there is no publication,
the day of mailing of the relevant notice of redemption; (ii)
register the transfer of or exchange any Registered Security, or
portion thereof, called for redemption, except the unredeemed por-
tion of any Registered Security being redeemed in part; (iii)
exchange any Bearer Security selected for redemption, except to
exchange such Bearer Security for a Registered Security of that
series and like tenor that is simultaneously surrendered for
redemption; or (iv) issue, register the transfer of or exchange any
Debt Securities that has been surrendered for repayment at the
option of the Holder, except the portion if any, thereof not to be
so repaid.
Global Securities
The Debt Securities of a series may be issued in whole or in part
in the form of one or more Global Securities (as such term is
defined below), which will be deposited with, or on behalf of, a
depositary ("Depositary") or its nominee identified in the appli-
cable Prospectus Supplement. In such case, one or more Global
Securities will be issued in a denomination or aggregate denomina-
tion equal to the portion of the aggregate principal amount of
outstanding Debt Securities of the series to be represented by such
Global Security or Global Securities. Unless and until it is
exchanged in whole or in part for Debt Securities in registered
form, a Global Security may not be registered for transfer or
exchange except as (i) a whole by the Depositary for such Global
Security to a nominee of such Depositary, by a nominee of such
Depositary to such Depositary or another nominee to such Depositary
or by such Depositary, or by any nominee to a successor Depositary
or a nominee of such successor Depositary, and (ii) in the circum-
stances described in the applicable Prospectus Supplement. The
term "Global Security," when used with respect to any series of
Debt Securities, means a Debt Security that is executed by Southern
Union and authenticated and delivered by the Trustee to the
Depositary or pursuant to the Depositary's instruction, which shall
be registered in the name of the Depositary or its nominee and
which shall represent, and shall be denominated in an amount equal
to the aggregate principal amount of, all of the Outstanding Debt
Securities of such series or any portion thereof, in either case
having the same terms, including, without limitation, the same
original issue date, date or dates on which principal is due, and
interest rate or method of determining interest.
The specific terms of the depositary arrangement with respect to
any portion of a series of Debt Securities to be represented by a
Global Security will be described in the applicable Prospectus
Supplement. Southern Union expects that the following provisions
will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement,
Debt Securities that are to be represented by a Global Security to
be deposited with or on behalf of a Depositary will be represented
by a Global Security registered in the name of such Depositary or
its nominee. Upon the issuance of such Global Security, and the
deposit of such Global Security with or on behalf of the Depositary
for such Global Security, the Depositary will credit on its book-
entry registration and transfer system the respective principal
amounts of the Debt Securities represented by such Global Security
to the accounts of institutions that have accounts with such
Depositary or its nominee ("participants"). The accounts to be
credited will be designated by the underwriters or agents of such
Debt Securities or, if such Debt Securities are offered and sold
directly by Southern Union, by Southern Union. Ownership of bene-
ficial interests in such Global Security will be limited to par-
ticipants or Persons that may hold interests through participants.
Ownership of beneficial interests by participants in such Global
Security will be shown on, and the transfer of that ownership
interest will be effected only through, records maintained by the
Depositary or its nominee for such Global Security. Ownership of
beneficial interests in such Global Security by Persons that hold
through participants will be shown on, and the transfer of that
ownership interest within such participant will be effected only
through, records maintained by such participant. The laws of some
jurisdictions require that certain purchasers of securities take
physical delivery of such securities in certificated form. The
foregoing limitations and such laws may impair the ability to
transfer beneficial interests in such Global Securities.
So long as the Depositary for a Global Security, or its nominee, is
the registered owner of such Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner
or Holder of the Debt Securities represented by such Global
Security for all purposes under the Indenture. Unless otherwise
specified in the applicable Prospectus Supplement, owners of bene-
ficial interests in such Global Security will not be entitled to
have Debt Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled
to receive physical delivery of Debt Securities of such series in
certificated form and will not be considered the Holders thereof
for any purposes under the Indenture. Accordingly, each Person
owning a beneficial interest in such Global Security must rely on
the procedures of the Depositary and, if such Person is not a
participant, on the procedures of the participant through which
such Person owns its interest to exercise any rights of a Holder
under the Indenture. Southern Union understands that under
existing industry practices, if Southern Union requests any action
of Holders or an owner of a beneficial interest in such Global
Security desires to give any notice or take any action a Holder is
entitled to give or take under the Indenture, then the Depositary
would authorize the participants to give such notice or take such
action, and participants would authorize beneficial owners owning
through such participants to give such notice or take such action
or would otherwise act upon the instructions of beneficial owners
owning through them.
Principal of and any premium and interest on a Global Security will
be payable in the manner described in the applicable Prospectus
Supplement.
Restrictions
The Debt Securities Indentures provide that Southern Union shall
not consolidate with or merge with or into any other corporation,
or convey, transfer or lease, or permit one or more of its Sub-
sidiaries to convey, transfer or lease, all or substantially all of
the properties and assets of the Company on a consolidated basis to
any Person, unless either Southern Union is the continuing corpora-
tion or such corporation or Person assumes by supplemental inden-
ture all the obligations of Southern Union under the Indentures and
the Debt Securities, no default or Event of Default shall exist
immediately after the transaction, and the surviving corporation or
such Person is a corporation, partnership or trust organized and
validly existing under the laws of the United States of America,
any state thereof or the District of Columbia.
Pursuant to the Indentures, Southern Union will not, nor will it
permit any Subsidiary to, create, incur, issue or assume any Debt
secured by any Lien on any property or assets owned by Southern
Union or any Subsidiary, and Southern Union will not, nor will it
permit any Subsidiary to, create, incur, issue or assume any Debt
secured by any Lien on any shares of stock or Debt of any Sub-
sidiary (such shares of stock or Debt of any Subsidiary being
called "Restricted Securities"), unless (i) in the case of Debt
which is expressly by its terms subordinate or junior in right of
payment to the applicable series of Debt Securities, such Debt
Securities are secured by a Lien on such property or assets that is
senior to such other Lien with the same relative priority as such
subordinated Debt has with respect to the applicable series of Debt
Securities or (ii) in the case of Liens securing Debt that is
ranked pari passu with the applicable series of Debt Securities,
such Debt Securities are secured by a Lien on such property or
assets that is equal and ratable with such other Lien, except that
any Lien securing such Debt Securities may be junior to any Lien on
Southern Union's accounts receivable, inventory and related con-
tract rights securing Debt under Southern Union's revolving credit
facility, entered into on September 30, 1993, with Texas Commerce
Bank, N. A., as amended on November 15, 1993, and July 1, 1994;
provided, however, that, nothing contained in Section 1009 of the
Indenture shall prevent, restrict or apply to, and there shall be
excluded from secured Debt in any computation under that Section,
Debt secured by:
(a) Liens on any property or assets or Restricted Securities of
Southern Union or any Subsidiary existing as of the date of
the first issuance by Southern Union of the applicable Debt
Securities issued pursuant to an Indenture or such other date
as may be specified in a Prospectus Supplement for an appli-
cable series of Debt Securities issued pursuant to an Inden-
ture, subject to the provisions of subsection (h) below;
(b) Liens on any property or assets or Restricted Securities of
any corporation existing at the time such corporation becomes
a Subsidiary, or arising thereafter (i) otherwise than in con-
nection with the borrowing of money arranged thereafter and
(ii) pursuant to contractual commitments entered into prior to
and not in contemplation of such corporation's becoming a Sub-
sidiary;
(c) Liens on any property or assets or Restricted Securities of
Southern Union or any Subsidiary existing at the time of
acquisition thereof, or securing the payment of all or any
part of the purchase price or construction cost thereof, or
securing any Debt incurred prior to, at the time of or within
120 days after, the acquisition of such property or assets or
Restricted Securities or the completion of any such construc-
tion, whichever, is later, for the purpose of financing all or
any part of the purchase price or construction cost thereof;
(d) Liens on any property or assets to secure all or any part of
the cost of development, operation, construction, alteration,
repair or improvement of all or any part of such property or
assets or to secure Debt incurred by Southern Union or any
Subsidiary prior to, at the time of or within 120 days after,
the completion of such development, operation, construction,
alteration, repair or improvement, whichever is later, for the
purpose of financing all or any part of such cost;
(e) Liens in favor of the Trustee for the benefit of the Holders
and subsequent holders of the Debt Securities securing the
Debt Securities;
(f) Liens secured by property or assets of Southern Union or any
Subsidiary that comprise no more than 20% of Consolidated Net
Tangible Assets (as defined below);
(g) Liens which secure Senior Indebtedness owing by a Subsidiary
to Southern Union or to another Subsidiary; and
(h) Any extension, renewal, substitution or replacement (or suc-
cessive extensions, renewals, substitutions or replacements),
in whole or in part, of any of the Liens referred to in para-
graphs (a) through (g) above or the Debt secured thereby;
provided that, (1) such extension, renewal, substitution or
replacement Lien shall be limited to all or any part of the
same property or assets or Restricted Securities that secured
the Lien extended, renewed, substituted or replaced (plus
improvements on such property and plus any other property or
assets not then owned by Southern Union or a Subsidiary or
constituting Restricted Securities) and (2) in the case of
paragraphs (a) through (c) above, the Debt secured by such
Lien at such time is not increased.
For the purposes of Section 1009, the giving of a guarantee that is
secured by a Lien on any property or assets or Restricted Securi-
ties, and the creation of a Lien on any property or assets or
Restricted Securities to secure Debt that existed prior to the
creation of such Lien, shall be deemed to involve the creation of
Debt in an amount equal to the principal amount guaranteed or
secured by such Lien; but the amount of Debt secured by Liens on
property or assets and Restricted Securities shall be computed
without cumulating the underlying indebtedness with any guarantee
thereof or Lien securing the same.
Limitation on Sale and Leaseback Transactions
Except in respect of Subordinated Debt Securities issued to a
Southern Union Trust or a trustee of such trust, Southern Union
will not, and will not permit any Subsidiary to, enter into any
arrangement after the date of the original issuance by Southern
Union of the applicable series of Debt Securities issued pursuant
to an Indenture, or such other date as may be specified in any
Prospectus Supplement for an applicable series of Debt Securities
issued pursuant to an Indenture, with any Person (other than
Southern Union or another Subsidiary) providing for the leasing by
Southern Union or any such Subsidiary of any property (except a
lease for a temporary period not to exceed three years by the end
of which it is intended that the use of such property by the lessee
will be discontinued) that was or is owned or leased by Southern
Union or a Subsidiary and that has been or is to be sold or trans-
ferred by Southern Union or such Subsidiary to such Person (herein
referred to as a "sale and leaseback transaction") unless either --
(a) after giving pro forma effect to such transaction, the
Attributable Debt (as defined below) of Southern Union and its
Subsidiaries in respect of such sale and leaseback transaction
and all other sale and leaseback transactions entered into
after the date of the first issuance by Southern Union of Debt
Securities issued pursuant to the Indenture (other than such
sale and leaseback transactions as are permitted by paragraph
(b) below) would not exceed 20% of Consolidated Net Tangible
Assets, or
(b) Southern Union, within 180 days after the sale and leaseback
transaction, applies or causes a Subsidiary to apply an amount
equal to the greater of the net proceeds from the sale of the
property subject to the sale and leaseback transaction or the
fair market value of the property so sold and leased back at
the time of the sale and leaseback transaction to the retire-
ment of Debt Securities of any series or any other Debt of
Southern Union (other than Debt subordinated to the Debt
Securities) or Debt of a Subsidiary having a stated maturity
more than 12 months from the date of such application or which
is extendible at the option of the obligor thereon to a date
more than 12 months from the date of such application (and,
unless otherwise expressly provided with respect to any one or
more series of Debt Securities, any redemption of Debt Securi-
ties pursuant to this provision shall not be deemed to consti-
tute a refunding operation or anticipated refunding operation
for the purposes of any provision limiting Southern Union's
right to redeem Debt Securities of any one or more such series
when such redemption involves a refunding operation or antici-
pated refunding operation); provided that, the amount to be so
applied shall be reduced by (i) the principal amount of Debt
Securities delivered within 180 days after such sale or trans-
fer to the Trustee for retirement and cancellation and (ii)
the principal amount of any such Debt of Southern Union or a
Subsidiary, other than Debt Securities, is voluntarily retired
by Southern Union or a Subsidiary within 180 days after such
sale or transfer. Notwithstanding the foregoing, no retire-
ment referred to in this paragraph (b) may be effected by pay-
ment at maturity or pursuant to any mandatory sinking fund
payment or any mandatory prepayment provision.
Notwithstanding the foregoing, where Southern Union or any Sub-
sidiary is the lessee in any sale and leaseback transaction,
Attributable Debt shall not include any Debt resulting from the
guarantee by Southern Union or any other Subsidiary of the lessee's
obligation thereunder.
Events of Default
Each Indenture provides, with respect to any series of Debt
Securities outstanding thereunder, that any one or more of the fol-
lowing events that has occurred and is continuing shall constitute
an Event of Default: (i) default in the payment of any interest
upon or any Additional Amounts payable in respect of any Debt
Security of that series, or of any coupon appertaining thereto,
when the same becomes due and payable and continues for 30 days;
provided, however, that, a valid extension of the interest payment
period by Southern Union for the Subordinated Debt Securities shall
not constitute a default in the payment of interest for this pur-
pose, and provided further that if Subordinated Debt Securities are
issued to a Southern Union trust or a trustee of such trust in con-
nection with the issuance of Trust Securities by such Southern
Union Trust, such 30-day period will be replaced by a ten-day
period, (ii) default in the payment of the principal of or any pre-
mium on any Debt Security of that series when due, whether at
maturity, upon redemption by declaration or otherwise; provided,
however, that, a valid extension of the maturity of the Subordi-
nated Debt Securities shall not constitute a default for this pur-
pose; (iii) default in the deposit of any sinking fund payment,
when and as due by the terms of any Debt Securities of that series;
(iv) default in the performance or breach of any covenant or agree0
ment of Southern Union in the Indenture with respect to any Debt
Security of that series, continued for 60 days after written notice
to Southern Union from the Trustee or from the holders of at least
25% of the outstanding Debt Securities of that series; (v) cross-
acceleration of other Debt of Southern Union in excess of 10% of
Consolidated Net Worth; (vi) certain events in bankruptcy, insol-
vency or reorganization of Southern Union; (vii) the voluntary or
involuntary dissolution, winding-up or termination of such Southern
Union Trust to which (or to a trustee of such trust to which) Sub-
ordinated Debt Securities were issued in connection with the
issuance of Trust Securities by such Southern Union Trust, except
in connection with the distribution of Subordinated Debt Securities
to the holders of Trust Securities in liquidation of such Southern
Union Trust, the redemption of all of the Trust Securities of such
Southern Union Trust, or certain mergers, consolidations or amal-
gamations, each as permitted by the Declaration of such Southern
Union Trust; and (viii) any other Event of Default provided with
respect to Debt Securities of that series. Southern Union is
required to file annually with the Trustee an officer's certificate
as to Southern Union's compliance with all conditions and covenants
under each Indenture. Each Indenture provides that the Trustee may
withhold notice to the Holders of Debt Securities of any default,
except in the case of a default on the payment of the principal of
(or premium), if any, or interest on any Debt Securities or the
payment of any sinking fund installment with respect to such
Securities if it considers it in the interest of the Holders of
Debt Securities to do so.
If an Event of Default, other than certain events with respect to
bankruptcy, insolvency and reorganization of Southern Union or any
significant Subsidiary, occurs and is continuing with respect to
Debt Securities of a particular series, the Trustee or the Holders
of not less than 25% in principal amount of Outstanding Debt
Securities of that series may declare the Outstanding Debt Securi-
ties of that series due and payable immediately. If an Event of
Default with respect to certain events of bankruptcy, insolvency or
reorganization of Southern Union or any Significant Subsidiary with
respect to Debt Securities of a particular series shall occur and
be continuing, then the principal of all the Outstanding Debt
Securities of that series, and accrued and unpaid interest thereon,
shall automatically be due and payable without any act on the part
of the Trustee or any Holder.
Subject to the provisions relating to the duties of the Trustee, if
an Event of Default with respect to Debt Securities of a particular
series occurs and is continuing, the Trustee shall be under no
obligation to exercise any of its rights or powers under the
applicable Indenture at the request or direction of any of the
Holders of Debt Securities of such series, unless such Holders
shall have offered to the Trustee reasonable indemnity and security
against the costs, expenses and liabilities that might be incurred
by it in compliance with such request. Subject to such provisions
for the indemnification of the Trustee, the Holders of a majority
in principal amount of the Outstanding Debt Securities of such
series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee
under the applicable Indenture, or exercising any trust or power
conferred on the Trustee with respect to the Debt Securities of
that series. The Trustee may refuse to follow directions in con-
flict with law or the Indenture that may involve Trustee in per-
sonal liability or may be unduly prejudicial to Holders not joining
therein.
The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series may, on behalf of the
Holders of all the Debt Securities of such series and any related
coupons, waive any past default under the applicable Indenture with
respect to such series and its consequences, except a default (i)
in the payment of the principal of (or premium, if any) or interest
on or Additional Amounts payable in respect of any Debt Security of
such series unless such default has been cured and a sum sufficient
to pay all matured installments of interest and principal due
otherwise than by acceleration and any applicable premium has been
deposited with the Trustee or (ii) in respect of a covenant or
provision that cannot be modified or amended without the consent of
the Holder of each Outstanding Debt Security of such series
affected thereby.
Modification or Waiver
Modification and amendment of each of the Indentures may be made by
Southern Union and the applicable Trustee with the consent of the
Holders of not less than a majority in principal amount of all
Outstanding Indenture Securities or any series that are affected by
such modification or amendment; provided that, no such modification
or amendment may, without the consent of the Holder of each Out-
standing Debt Security of such series, among other things, (i)
change the Stated Maturity of the principal of (or premium, if any,
on) or any installment of principal of or interest on any Debt
Security of such series, (ii) reduce the principal amount or the
rate of interest on or any Additional Amounts payable in respect
of, or any premium payable upon the redemption of, any Debt
Security of such series, (iii) change any obligation of Southern
Union to pay Additional Amounts in respect of any Debt Security of
such series, (iv) reduce the amount of principal of an original
issue discount Debt Security of such series that would be due and
payable upon a declaration of acceleration of the Maturity thereof,
(v) adversely affect any right of repayment at the option of the
Holder of any Debt Security of such series, (vi) change the place
or currency of payment of principal of, or any premium or interest
on, any Debt Security of such series, (vii) impair the right to
institute suit for the enforcement of any such payment on or after
the Stated Maturity thereof or any Redemption Date or Repayment
Date therefor, (viii) reduce the above-stated percentage of Holders
of Outstanding Debt Securities of such series necessary to modify
or amend the Indenture or to consent to any waiver thereunder or
reduce the requirements for voting or quorum described below, (ix)
modify the change of control provisions, if any, or (x) modify the
foregoing requirements or reduce the percentage of Outstanding Debt
Securities of such series necessary to waive any past default.
Modification and amendment of the Indenture may be made by Southern
Union and the applicable Trustee without the consent of any Holder,
for any of the following purposes: (i) to evidence the succession
of another Person to Southern Union as obligor under an Indenture;
(ii) to add to the covenants of Southern Union for the benefit of
the Holders of all or any series of Debt Securities; (iii) to add
Events of Default for the benefit of the Holders of all or any
series of Debt Securities; (iv) to add or change any provisions of
the applicable Indenture to facilitate the issuance of Bearer
Securities; (v) to change or eliminate any provisions of the
applicable Indenture, provided that any such change or elimination
shall become effective only when there are no Outstanding Debt
Securities of any series created prior thereto that is entitled to
the benefit of such provision; (vi) to establish the form or terms
of Debt Securities of any series and any related coupons; (vii) to
secure the Debt Securities; (viii) to provide for the acceptance of
appointment by a successor Trustee or facilitate the administration
of the trusts under the applicable Indenture by more than one
Trustee; and (ix) to close the applicable Indenture with respect to
the authentication and delivery of additional series of Debt
Securities, in order to cure any ambiguity, defect or inconsistency
in the applicable Indenture, provided such action does not
adversely affect the interest of Holders of Debt Securities of any
series in any material respect.
Each Indenture contains provisions for convening meetings of the
Holders of Debt Securities of a series if Debt Securities of that
series are issuable as Bearer Securities. A meeting may be called
at any time by the applicable Trustee and also by such Trustee pur-
suant to a request made to such Trustee by Southern Union or the
Holders of at least 10% in principal amount of the Debt Securities
of such series Outstanding, but in any case, notice shall be given
as provided in the applicable Indenture. Except for any consent
that must be given by the Holder of each Debt Security affected
thereby, as described above, any resolution presented at a meeting
or adjourned meeting duly reconvened at which a quorum is present
may be adopted by the affirmative vote of the Holders of a majority
in principal amount of the Debt Securities of that series Out-
standing; provided, however, that, any resolution with respect to
any request, demand, authorization, direction, notice, consent,
waiver or other action that may be made, given or taken by the
Holders of a specified percentage that is less than a majority in
principal amount of Debt Securities of a series Outstanding may be
adopted at a meeting or adjourned meeting, duly reconvened and at
which a quorum is present, by the affirmative vote of the Holders
of such specified percentage in principal amount of the Debt
Securities of that series Outstanding. Any resolution passed or
decision taken at any meeting of Holders of Debt Securities of any
series duly held in accordance with the applicable Indenture will
be binding on all Holders of Debt Securities of that series and the
related coupons. The quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will consist of persons
entitled to vote a majority in principal amount of the Debt Securi-
ties of a series Outstanding; provided, however, that, if any
action is to be taken at such meeting with respect to a consent or
waiver that may be given by the Holders of not less than a speci-
fied percentage in principal amount of the Debt Securities of a
series Outstanding, the Persons entitled to vote such specified
percentage in principal amount of the Debt Securities of such
series Outstanding will constitute a quorum. Notwithstanding the
foregoing provisions, if any action is to be taken at a meeting of
Holders of Debt Securities of any series with respect to any
request, demand, authorization, direction, notice, consent, waiver
or other action that the applicable Indenture expressly provides
may be made, given or taken by the Holders of a specified per-
centage in principal amount of all Outstanding Debt Securities
affected thereby, or of the Holders of such series and one or more
additional series, then (i) there shall be no minimum quorum
requirement for such meeting; and (ii) the principal amount of the
Outstanding Debt Securities of such series that vote in favor of
such request, demand, authorization, direction, notice, consent,
waiver or other action shall be taken into account in determining
whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken under
the applicable Indenture.
Financial Information
So long as any of the Debt Securities are outstanding, Southern
Union will file with the Commission, to the extent permitted under
the Exchange Act, the annual reports, quarterly reports and other
documents otherwise required to be filed with the Commission pursu-
ant to Section 13(a) or 15(d) of the Exchange Act as if Southern
Union were subject to such Sections, and Southern Union will also
provide to all Holders and file with the Trustees copies of such
reports and documents within 15 days after it files them with the
Commission or, if filing such reports and documents by Southern
Union with the Commission is not permitted under the Exchange Act,
within 15 days after it would otherwise have been required to file
such reports and documents if permitted, in each case at Southern
Union's cost.
Certain Definitions
"Attributable Debt" means, as to any specified lease under which
any Person is at the time liable for a term of more than 12 months,
at any date as of which the amount thereof is to be determined, the
total net amount of rent required to be paid by such Person under
such lease during the remaining term thereof (excluding any subse-
quent renewal or other extension options held by the lessee), dis-
counted from the respective due dates thereof to such date at a
rate equal to the weighted average of the interest rates borne by
the Outstanding Debt Securities, compounded monthly. The net
amount of rent required to be paid under any such lease for any
such period shall be the aggregate amount of the rent payable by
the lessee with respect to such period after excluding any amounts
required to be paid on account of maintenance and repairs, ser-
vices, insurance, taxes, assessments, water rates and similar
charges and contingent rents (such as those based on sales). In
the case of any lease that is terminable by the lessee upon the
payment of a penalty, such net amount of rent shall include the
lesser of (i) the total discounted net amount of rent required to
be paid from the later of the first date upon which such lease may
be so terminated or the date of the determination of such net
amount of rent, as the case may be, and (ii) the amount of such
penalty (in which event no rent shall be considered as required to
be paid under such lease subsequent to the first date upon which it
may be so terminated).
"Consolidated Net Tangible Assets" means the total amount of assets
(less applicable reserves and other property deductible items) of
Southern Union and its consolidated Subsidiaries after deducting
therefrom (i) all current liabilities (excluding any current lia-
bilities which are by their terms extendible 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 (ii)
all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles, all as set forth
on the most recent balance sheet of Southern Union and its con-
solidated subsidiaries and computed in accordance with generally
accepted accounting principles.
PARTICULAR TERMS OF THE SENIOR DEBT SECURITIES
The following description of the Senior Debt Securities sets forth
certain general terms and provisions of the Senior Debt Securities
to which any Prospectus Supplement may relate. The particular
terms of the Senior Debt Securities offered by any Prospectus Sup-
plement, and the extent, if any, to which such general provisions
may apply to the Senior Debt Securities so offered, will be
described in the Prospectus Supplement relating to such Senior Debt
Securities.
General
The Senior Debt Securities Indenture provides for the issuance of
Senior Debt Securities from time to time in one or more series.
Reference is made to the Prospectus Supplement relating to a par-
ticular issuance of a series of Senior Debt Securities being
offered (the "Senior Debt Securities") for, among other things, the
following terms thereof: (1) the title of the Senior Debt Securi-
ties; (2) any limit on the aggregate principal amount of such
Senior Debt Securities; (3) the percentage of the principal amount
at which such Senior Debt Securities will be issued and, if other
than the principal amount thereof, the portion of the principal
amount payable upon declaration of acceleration of the maturity
thereof, or the method by which such portion shall be determined;
(4) the date or dates on which the principal of such Senior Debt
Securities will be payable; (5) the rate or rates at which such
Senior Debt Securities will bear interest, or the method by which
such rate or rates shall be determined, and the date such interest
shall accrue, or the method by which such date or dates shall be
determined; (6) the dates on which such interest will be payable
and the Regular Record Dates for any Interest Payment Dates and the
basis on which interest shall be calculated; (7) the dates, if any,
on which, and the price or prices at which, the Senior Debt Securi-
ties may, pursuant to any mandatory or optional sinking fund provi-
sions, be redeemed by Southern Union and other detailed terms and
provisions of such sinking funds; (8) the date, if any, after
which, and the price or prices at which, the Senior Debt Securities
may, pursuant to any optional redemption provisions, be redeemed at
the option of Southern Union or of the Holder thereof and other
detailed terms and provisions of such optional redemption; (9) the
applicability, if at all, to such Senior Debt Securities of the
provisions of Article Fourteen of the Senior Debt Securities
Indenture described under "Defeasance and Covenant Defeasance" and
any provisions in modification of, in addition to or in lieu of any
of the provisions of such Article; (10) whether and under what cir-
cumstances Southern Union will pay Additional Amounts, as contem-
plated by Section 1005 of the Senior Debt Securities Indenture, on
such Senior Debt Securities to any Holder who is not a United
States person (including any modification to the definition of such
term as contained in the Senior Debt Securities Indenture as
originally executed) in respect to any tax, assessment or govern-
mental charge and, if so, whether Southern Union will have the
option to redeem such Senior Debt Securities rather than pay such
Additional Amounts (and the terms of any such option); (11) any
deletions from, modifications of or additions to the Events of
Default or covenants of Southern Union with respect to such Senior
Debt Securities, whether or not such Events of Default or covenants
are consistent with the Events of Default or covenants set forth
herein; and (12) any other terms of such Senior Debt Securities.
For a description of the terms of any series of Senior Debt
Securities, reference must be made to both the Prospectus Supple-
ment relating thereto and the description of Debt Securities set
forth herein.
Unless otherwise indicated in the Prospectus Supplement relating
thereto, the Senior Debt Securities will be issued in United States
dollars in fully registered form, without coupons, in denominations
of $1,000, or any integral multiple thereof. No service charge
will be made for any transfer or exchange of the Senior Debt
Securities, but Southern Union may require payment of a sum suffi-
cient to cover any tax or other governmental charge payable in con-
nection therewith.
Denominations
Senior Debt Securities may be issuable as Registered Securities
solely, as Bearer Securities solely, or as both. Registered
Securities will be issuable in denominations of $1,000 and integral
multiples of $1,000, and Bearer Securities will be issuable in the
denomination of $5,000 or, in each case, in such other denomina-
tions as may be in the terms of the Senior Debt Securities.
The Senior Debt Securities Indenture also provides that Senior Debt
Securities may be issuable in global form. Unless otherwise indi-
cated in any Prospectus Supplement, Bearer Securities will have
interest coupons attached.
Defeasance
The Senior Debt Securities Indenture provides that, if the provi-
sions of Article Fourteen are made applicable to the Senior Debt
Securities of or within any series and any related coupons pursuant
to Section 1401 of the Senior Debt Securities Indenture, Southern
Union may elect either (a) to defease and be discharged from any
and all obligations with respect to such Senior Debt Securities and
any related coupons (except for the obligation to pay Additional
Amounts, if any, upon the occurrence of certain events of tax,
assessment or governmental charge with respect to payments on such
Senior Debt Securities and the obligations to register the transfer
or exchange of such Senior Debt Securities and any related coupons,
to replace temporary or mutilated, destroyed, lost or stolen Senior
Debt Securities and any related coupons, to maintain an office or
agency in respect of such Senior Debt Securities and any related
coupons and to hold moneys for payment in trust) ("defeasance") or
(b) to be released from its obligations with respect to such Senior
Debt Securities and any related coupons under Section 1402 (being
the restriction described under "Limitation on Liens") or, if
provided pursuant to Section 1403 of the Senior Debt Securities
Indenture, its obligations with respect to any other covenant, and
any omission to comply with such obligations shall not constitute
a default or an Event of Default with respect to such Senior Debt
Securities and any related coupons ("covenant defeasance"), in
either case upon the irrevocable deposit by Southern Union with the
Senior Debt Securities Trustee (or other qualifying trustee), in
trust, of an amount, in such Currency in which such Senior Debt
Securities and any related coupons are then specified as payable at
Stated Maturity, or Government Obligations (as defined below), or
both, applicable to such Senior Debt Securities and any related
coupons (with such applicability being determined on the basis of
the currency, currency unit or composite currency in which such
Senior Debt Securities are then specified as payable at Stated
Maturity), which through the scheduled payment of principal and
interest in accordance with their terms, will provide money in an
amount sufficient to pay the principal of (and premium, if any) and
interest, if any, on such Senior Debt Securities and any related
coupons, and any mandatory sinking fund or analogous payments
thereon, on the scheduled due dates therefor.
Such a trust may only be established if, among other things,
Southern Union has delivered to the Senior Debt Securities Trustee
an Opinion of Counsel (as specified in the Senior Debt Securities
Indenture) to the effect that the Holders of such Senior Debt
Securities and any related coupons will not recognize income gain
or loss for United States federal income tax purposes as a result
of such defeasance or covenant defeasance and will be subject to
United States federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred; provided that,
such Opinion of Counsel, in the case of defeasance under clause (a)
above, must refer to and be based upon a revenue ruling of the
Internal Revenue Service or a change in applicable United States
federal income tax law occurring after the date of the Senior Debt
Securities Indenture.
"Government Obligations" means securities that are (i) direct
obligations of the government that issued the Currency in which the
Senior Debt Securities of a particular series are payable, 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 government that issued the
Currency in which the Senior Debt Securities of such series are
payable, the payment of which is unconditionally guaranteed as a
full faith and credit obligation by the United States of America or
such other government, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of any such Government
Obligation held by such custodian for the account of the holder of
a depository receipt; provided that (except as required by law),
such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the Government
Obligation or the specific payment of interest in or principal of
the Government Obligation evidenced by such depository receipt.
Unless otherwise provided in the Prospectus Supplement, if, after
Southern Union has deposited funds and/or Government Obligations to
effect defeasance or covenant defeasance relating thereto with
respect to Senior Debt Securities of any series, (a) the Holder of
Senior a Debt Security of such series is entitled to and does
elect, pursuant to the terms of such Senior Debt Security, to
receive payment in a currency other than that in which such deposit
has been made in respect of such Senior Debt Security or (b) the
currency in which such deposit has been made in respect of any
Senior Debt Security of such series ceases to be used by its
government of issuance, then the indebtedness represented by such
Senior Debt Security shall be deemed to have been, and will be,
fully discharged and satisfied through the payment of the principal
of (and premium, if any) and interest, if any, on such Senior Debt
Security as they become due out of the proceeds yielded by con-
verting the amount so deposited in respect of such Senior Debt
Security into the Currency in which such Debt Security becomes
payable as a result of such election or such cessation of usage
based on the applicable Market Exchange Rate. Unless otherwise
provided in the Prospectus Supplement, all payments of principal of
(and premium, if any) and interest, if any, and Additional Amounts,
if any, on any Debt Security that is payable in a Foreign Currency
that ceases to be used by its government of issuance shall be made
in U. S. Dollars.
In the event Southern Union effects covenant defeasance with
respect to (i) any Senior Debt Securities and any related coupons
and (ii) such Senior Debt Securities and any related coupons are
declared due and payable because of the occurrence of any Event of
Default, other than the Event of Default described in clause (iii)
or (vi) under "Events of Default," with respect to any covenant for
which there has been defeasance, the Currency and/or Government
Obligations on deposit with the Trustee will be sufficient to pay
amounts due on such Senior Debt Securities and any related coupons
at the time of their Stated Maturity but may not be sufficient to
pay amounts due on such Senior Debt Securities and any related
coupons at the time of the acceleration resulting from such Event
of Default. However, Southern Union would remain liable to make
payment of such amounts due at the time of acceleration.
The Prospectus Supplement may further describe the provisions, if
any, permitting such defeasance or covenant defeasance, including
any modifications to the provisions described above, with respect
to the Senior Debt Securities of or within a particular series and
any related coupons.
Ranking of Senior Debt Securities
The Senior Debt Securities will rank pari passu with all other
unsecured indebtedness of the Company, except that the Senior Debt
Securities will be senior in right of payment to any subordinated
indebtedness which, by its terms, is subordinate to the Senior Debt
Securities.
Information Concerning the Senior Debt Securities Trustee
The Senior Debt Securities Trustee, prior to default, undertakes to
perform only such duties as are specifically set forth in the
Senior Debt Securities Indenture and, after default, shall exercise
the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provision,
the Senior Debt Securities Trustee is under no obligation to exer-
cise any of the powers vested in it by the Senior Debt Securities
Indenture at the request of any Holder of Senior Debt Securities,
unless offered reasonable indemnity by such Holder against the
costs, expenses and liabilities which might be incurred thereby.
(Section 602). The Senior Debt Securities Trustee is not required
to expand or risk its own funds or otherwise incur personal
financial liability in the performance of its duties if the Senior
Debt Securities Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it. (Section 602).
PARTICULAR TERMS OF THE SUBORDINATED DEBT SECURITIES
The following description of the Subordinated Debt Securities sets
forth the general terms and provisions of the Subordinated Debt
Securities to which any Prospectus Supplement may relate. The
particular terms of the Subordinated Debt Securities offered by any
Prospectus Supplement and the extent, if any, to which such general
provisions may apply will be described in the Prospectus Supplement
relating to such Subordinated Debt Securities.
General
The Subordinated Debt Securities will be unsecured, subordinated
obligations of Southern Union.
In the event Subordinated Debt Securities are issued to any
Southern Union Trust (or a trustee of such trust) in connection
with the issuance of Trust Securities by any such Southern Union
Trust, such Subordinated Debt Securities subsequently may be dis-
tributed pro rata to the holders of such Trust Securities in con-
nection with the dissolution of such Southern Union Trust upon the
occurrence of certain events described in the Prospectus Supplement
relating to such Trust Securities. Only one series of Subordinated
Debt Securities will be issued to each Southern Union Trust in con-
nection with the issuance of Trust Securities by such Southern
Union Trust.
The Subordinated Debt Securities are issuable in one or more series
pursuant to an indenture supplement to the Subordinated Debt
Securities Indenture or a resolution of Southern Union's Board of
Directors or a special committee thereof (each a "Supplemental
Indenture").
Reference is made to the Prospectus Supplement relating to any Sub-
ordinated Debt Securities being offered for, among other things,
the following terms thereof: (1) the title of the Subordinated
Debt Securities; (2) any limit on the aggregate principal amount of
such Subordinated Debt Securities; (3) the percentage of the prin-
cipal amount at which such Subordinated Debt Securities will be
issued and, if other than the principal amount thereof, the portion
of the principal amount thereof payable upon acceleration of the
maturity thereof, or the method by which such portion shall be
determined; (4) the date or dates, on which the principal of such
Subordinated Debt Securities will be payable; (5) the rights, if
any, to defer payments of interest on the Subordinated Debt Securi-
ties by extending the interest payment period, and the duration of
such extensions; (6) the subordination terms of the Subordinated
Debt Securities of such series; (7) the rate or rates at which such
Subordinated Debt Securities will bear interest, or the method by
which such rate or rates shall be determined, and the date such
interest shall accrue, or the method by which such date or dates
shall be determined; (8) the dates on which such interest will be
payable and the Regular Record Dates for any Interest Payment Dates
and the basis on which interest shall be calculated; (9) the dates,
if any, on which, the price or prices at which the Subordinated
Debt Securities may, pursuant to any mandatory or optional sinking
fund provisions, be redeemed by Southern Union and other detailed
terms and provisions of such sinking funds; (10) the date, if any,
after which, and the price or prices at which, the Subordinated
Debt Securities may, pursuant to any optional redemption provi-
sions, be redeemed at the option of Southern Union or of the Holder
thereof, and other detailed terms and provisions of such optional
redemption; (11) whether and under what circumstances Southern
Union will pay Additional Amounts as contemplated by Section 1005
of the Indenture on such Subordinated Debt Securities to any Holder
who is not a United States person (including any modification to
the definition of such term as contained in the Subordinated Debt
Securities Indenture as originally executed) in respect to any tax,
assessment or governmental charge and, if so, whether Southern
Union will have the option to redeem such Subordinated Debt Securi-
ties rather than pay such Additional Amounts (and the terms of any
such option); (12) any deletions from, modifications of or addi-
tions to the Events of Default or covenants of Southern Union with
respect to such Subordinated Debt Securities, whether or not such
Events of Default or covenants are consistent with the Events of
Default or covenants set forth herein; and (13) any other terms of
such Subordinated Debt Securities. For a description of the terms
of any series of the Subordinated Debt Securities, reference must
be made to both the Prospectus Supplement relating thereto and to
the description of Subordinated Debt Securities set forth herein.
Unless otherwise indicated in the Prospectus Supplement relating
thereto, the Subordinated Debt Securities will be issued in United
States dollars in fully registered form, without coupons, in
denominations of $25 or any integral multiple thereof. No service
charge will be made for any transfer or exchange of the Subordi-
nated Debt Securities, but Southern Union may require payment of
a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Certain Covenants
In the event Subordinated Debt Securities are issued to a Southern
Union Trust or a trustee of such trust in connection with the
issuance of Trust Securities by such Southern Union Trust, Southern
Union will not, and will cause any subsidiary of Southern Union
which is not a wholly-owned subsidiary of Southern Union not to,
declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of its capital stock, if at such time (i)
there shall have occurred any event that would constitute an Event
of Default, (ii) Southern Union shall be in default with respect to
its payment of any obligations under a Guarantee or (iii) Southern
Union shall have given notice of its election to defer payments of
interest by extending the interest payment period as provided in
the Subordinated Debt Securities Indenture and such period, or any
extension thereof, shall be continuing; provided, however, that,
the foregoing restriction does not apply to any stock dividends
paid by Southern Union where the dividend stock is of the same
class as that of the stock held by the holders receiving the divi-
dend. If Southern Union elects to extend the interest payment
period with respect to one series of Subordinated Debt Securities
issued to a Southern Union Trust or a trustee of such trust, it
must also elect to extend the interest payment period for all
series of Subordinated Debt Securities issued to other Southern
Union Trusts or a trustee of such trust until deferred interest on
all Subordinated Debt Securities issued to Southern Union Trusts is
paid in full. (Section 1012.)
In the event Subordinated Debt Securities are issued to a Southern
Union Trust or a trustee of such trust in connection with the
issuance of Trust Securities of such Southern Union Trust, for so
long as such Trust Securities remain outstanding, Southern Union
will covenant (i) to directly or indirectly maintain 100% ownership
of the Common Securities of such Southern Union Trust; provided,
however, that any permitted successor of Southern Union under the
Indenture may succeed to Southern Union's ownership of such Common
Securities and (ii) to use its reasonable efforts to cause such
Southern Union Trust (a) to remain a statutory business trust,
except in connection with the distribution of Subordinated Debt
Securities to the holders of Trust Securities in liquidation of
such Southern Union Trust, the redemption of all of the Trust
Securities of such Southern Union Trust, or certain mergers, con-
solidations or amalgamations, each as permitted by the Declaration
of such Southern Union Trust, and (b) to otherwise continue to be
classified as a grantor trust for United States federal income tax
purposes.
Denomination
Subordinated Debt Securities may be issuable as Registered Securi-
ties solely, as Bearer Securities solely, or as both. Registered
Securities will be issuable in denominations of $25 and integral
multiples of $25 and Bearer Securities will be issuable in the
denomination of $5,000 or, in each case, in such other denomina-
tions as may be in the terms of the Subordinated Debt Securities.
The Subordinated Debt Securities Indenture also provides that Sub-
ordinated Debt Securities may be issued in global form. Unless
otherwise indicated in any Prospectus Supplement, Bearer Securities
will have interest coupons attached.
Subordination
The Subordinated Debt Securities will be subordinated and junior in
right of payment to certain other indebtedness of Southern Union to
the extent set forth in the Prospectus Supplement that will accom-
pany this Prospectus.
Governing Law
The Subordinated Debt Securities Indenture and the Subordinated
Debt Securities will be governed by, and construed in accordance
with, the internal laws of the State of New York. (Section 111).
Information Concerning the Subordinated Debt Securities Trustee
The Subordinated Debt Securities Trustee, prior to default, under-
takes to perform only such duties as are specifically set forth in
the Subordinated Debt Securities Indenture and, after default,
shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject
to such provision, the Subordinated Debt Securities Trustee is
under no obligation to exercise any of the powers vested in it by
the Subordinated Debt Securities Indenture at the request of any
holder of Subordinated Debt Securities, unless offered reasonable
indemnity by such holder against the costs, expenses and liabili-
ties that might be incurred thereby. (Section 602). The Subordi-
nated Debt Securities Trustee is not required to expand or risk its
own funds or otherwise incur personal financial liability in the
performance of its duties if the Subordinated Debt Securities
Trustee reasonably believes that repayment or adequate indemnity is
not reasonably assured to it. (Section 602).
Defeasance
The Subordinated Debt Securities Indenture provides that, if the
provisions of Article Fourteen are made applicable to the Subordi-
nated Debt Securities of or within any series and any related
coupons pursuant to Section 1401 of the Subordinated Debt Securi-
ties Indenture, Southern Union may elect either (a) to defease and
be discharged from any and all obligations with respect to such
Subordinated Debt Securities and any related coupons (except for
the obligation to pay Additional Amounts, if any, upon the
occurrence of certain events of tax, assessment or governmental
charge with respect to payments on such Subordinated Debt Securi-
ties and the obligations to register the transfer or exchange of
such Subordinated Debt Securities and any related coupons, to
replace temporary or mutilated, destroyed, lost or stolen Subordi-
nated Debt Securities and any related coupons, to maintain an
office or agency in respect of such Subordinated Debt Securities
and any related coupons and to hold moneys for payment in trust)
("defeasance") or (b) to be released from its obligations with
respect to such Subordinated Debt Securities and any related
coupons under Section 1402 (being the restriction described under
"Limitation on Liens") or, if provided pursuant to Section 1403 of
the Subordinated Debt Securities Indenture, its obligations with
respect to any other covenant, and any omission to comply with such
obligations shall not constitute a default or an Event of Default
with respect to such Subordinated Debt Securities and any related
coupons ("covenant defeasance"), in either case, upon the irrevo-
cable deposit by Southern Union with the Subordinated Debt Securi-
ties Trustee (or other qualifying trustee), in trust, of an amount,
in such Currency in which such Senior Debt Securities and any
related coupons are then specified as payable at Stated Maturity,
or Government Obligations (as defined below), or both, applicable
to such Subordinated Debt Securities and any related coupons (with
such applicability being determined on the basis of the currency,
currency unit or composite currency in which such Subordinated Debt
Securities are then specified as payable at Stated Maturity) which
through the scheduled payment of principal and interest in accor-
dance with their terms will provide money in an amount sufficient
to pay the principal of (and premium, if any) and interest, if any,
on such Subordinated Debt Securities and any related coupons, and
any mandatory sinking fund or analogous payments thereon, on the
scheduled due dates therefor.
Such a trust may only be established if, among other things,
Southern Union has delivered to the Subordinated Debt Securities
Trustee an Opinion of Counsel (as specified in the Subordinated
Debt Securities Indenture) to the effect that the Holders of such
Subordinated Debt Securities and any related coupons will not
recognize income gain or loss for United States federal income tax
purposes as a result of such defeasance or covenant defeasance and
will be subject to United States federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such defeasance or covenant defeasance had not
occurred; provided that, such Opinion of Counsel, in the case of
defeasance under clause (a) above, must refer to and be based upon
a revenue ruling of the Internal Revenue Service or a change in
applicable United States federal income tax law occurring after
the date of the Subordinated Debt Securities Indenture.
"Government Obligations" means securities that are (i) direct
obligations of the government that issued the Currency in which the
Subordinated Debt Securities of a particular series are payable,
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 government that issued the
Currency in which the Subordinated Debt Securities of such series
are payable, the payment of which is unconditionally guaranteed as
a full faith and credit obligation by the United States of America
or such other government, which, in either case, are not callable
or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of any such Government
Obligation held by such custodian for the account of the holder of
a depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the Government
Obligation or the specific payment of interest in or principal of
the Government Obligation evidenced by such depository receipt.
Unless otherwise provided in the Prospectus Supplement, if, after
Southern Union has deposited funds and/or Government Obligations to
effect defeasance or covenant defeasance relating thereto with
respect to Subordinated Debt Securities of any series, (a) the
Holder of a Subordinated Debt Security of such series is entitled
to and does elect, pursuant to the terms of such Subordinated Debt
Security, to receive payment in a currency other than that in which
such deposit has been made in respect of such Subordinated Debt
Security or (b) the currency in which such deposit has been made in
respect of any Subordinated Debt Security of such series ceases to
be used by its government of issuance, then the indebtedness
represented by such Subordinated Debt Security shall be deemed to
have been, and will be, fully discharged and satisfied through the
payment of the principal of (and premium, if any) and interest, if
any, on such Subordinated Debt Security as they become due out of
the proceeds yielded by converting the amount so deposited in
respect of such Subordinated Debt Security into the Currency in
which such Subordinated Debt Security becomes payable as a result
of such election or such cessation of usage based on the applicable
Market Exchange Rate. Unless otherwise provided in the Prospectus
Supplement, all payments of principal of (and premium, if any) and
interest, if any, and Additional Amounts, if any, on any Debt
Security that is payable in a Foreign Currency that ceases to be
used by its government of issuance shall be made in U. S. Dollars.
In the event Southern Union effects covenant defeasance with
respect to (i) any Subordinated Debt Securities and any related
coupons and (ii) such Subordinated Debt Securities and any related
coupons are declared due and payable because of the occurrence of
any Event of Default, other than the Event of Default described in
clause (iii) or (vi) under "Events of Default," with respect to any
covenant for which there has been defeasance, the Currency and/or
Government Obligations on deposit with the Trustee will be suffi-
cient to pay amounts due on such Subordinated Debt Securities and
any related coupons at the time of their Stated Maturity but may
not be sufficient to pay amounts due on such Subordinated Debt
Securities and any related coupons at the time of the acceleration
resulting from such Event of Default. However, Southern Union
would remain liable to make payment of such amounts due at the time
of acceleration.
The Prospectus Supplement may further describe the provisions, if
any, permitting such defeasance or covenant defeasance, including
any modifications to the provisions described above, with respect
to the Subordinated Debt Securities of or within a particular
series and any related coupons.
Miscellaneous
Southern Union will have the right at all times to assign any of
its respective rights or obligations under the Subordinated Debt
Securities Indenture to a direct or indirect wholly-owned sub-
sidiary of Southern Union; provided, that, in the event of any such
assignment, Southern Union will remain liable for all of their
respective obligations. Subject to the foregoing, the Subordinated
Debt Securities Indenture will be binding upon and inure to the
benefit of the parties thereto and their respective successors and
assigns. The Subordinated Debt Securities Indenture provides that
it may not otherwise be assigned by the parties thereto. (Section
803).]
DESCRIPTION OF THE SOUTHERN UNION TRUSTS' PREFERRED SECURITIES
Each Southern Union Trust may issue, from time to time, only one
series of Preferred Securities having terms described in the
Prospectus Supplement relating thereto. The Declaration of each
Southern Union Trust authorizes the Regular Trustees of such
Southern Union Trust to issue on behalf of such Southern Union
Trust one series of Preferred Securities. The Declaration will be
qualified as an indenture under the Trust Indenture Act. The Pre-
ferred Securities will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as shall be
set forth in the Declaration or made part of the Declaration by the
Trust Indenture Act. Reference is made to any Prospectus Supple-
ment relating to the Preferred Securities of a Southern Union Trust
for specific terms, including (i) the distinctive designation of
such Preferred Securities, (ii) the number of Preferred Securities
issued by such Southern Union Trust, (iii) the annual distribution
rate (or method of determining such rate) for Preferred Securities
issued by such Southern Union Trust and the date or dates upon
which such distributions shall be payable (provided, however, that,
distributions on such Preferred Securities shall be payable on a
quarterly basis to holders of such Preferred Securities as of a
record date in each quarter during which such Preferred Securities
are outstanding) (iv) whether distributions on Preferred Securities
issued by such Southern Union Trust shall be cumulative, and, in
the case of Preferred Securities having such cumulative distribu-
tion rights, the date or dates or method of determining the date or
dates from which distributions on Preferred Securities issued by
such Southern Union Trust shall be cumulative, (v) the amount or
amounts which shall be paid out of the assets of such Southern
Union Trust to the holders of Preferred Securities of such Southern
Union Trust upon voluntary or involuntary dissolution, winding-up
or termination of such Southern Union Trust, (vi) the obligation,
if any, of such Southern Union Trust to purchase or redeem Pre-
ferred Securities issued by such Southern Union Trust and the price
or prices at which, the period or periods within which and the
terms and conditions upon which Preferred Securities issued by such
Southern Union Trust shall be purchased or redeemed, in whole or in
part, pursuant to such obligation, (vii) the voting rights, if any,
of Preferred Securities issued by such Southern Union Trust in
addition to those required by law, including the number of votes
per Preferred Security and any requirement for the approval by the
holders of Preferred Securities, or of Preferred Securities issued
by one or more Southern Union Trusts, or of both, as a condition to
specified action or amendments to the Declaration of such Southern
Union Trust, and (viii) any other relevant rights, preferences,
privileges, limitations or restrictions of Preferred Securities
issued by such Southern Union Trust consistent with the Declaration
of such Southern Union Trust or with applicable law. All Preferred
Securities offered hereby will be guaranteed by Southern Union to
the extent set forth below under "Description of the Guarantees."
Certain United States federal income tax considerations applicable
to any offering of Preferred Securities will be described in the
Prospectus Supplement relating thereto.
In connection with the issuance of Preferred Securities, each
Southern Union Trust will issue one series of Common Securities.
The Declaration of each Southern Union Trust authorizes the Regular
Trustees of such trust to issue on behalf of such Southern Union
Trust one series of Common Securities having such terms including
distributions, redemption, voting, liquidation rights or such
restrictions as shall be set forth therein. The terms of the
Common Securities issued by a Southern Union Trust will be sub-
stantially identical to the terms of the Preferred Securities
issued by such trust and the Common Securities will rank pari
passu, and payments will be made thereon pro rata with the
Preferred Securities except that, upon an event of default under
the Declaration, the rights of the holders of the Common Securities
to payment in respect of distributions and payments upon liquida-
tion, redemption and otherwise will be subordinated to the rights
of the holders of the Preferred Securities. Except in certain
limited circumstances, the Common Securities will also carry the
right to vote and to appoint, remove or replace any of the Southern
Union Trustees of a Southern Union Trust. All of the Common
Securities of a Southern Union Trust will be directly or indirectly
owned by Southern Union.
DESCRIPTION OF THE GUARANTEES
Set forth below is a summary of information concerning the Guaran-
tees that will be executed and delivered by Southern Union for the
benefit of the holders, from time to time, of Preferred Securities.
The summary does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by
reference to, the form of Guarantee, which is filed as an exhibit
to the Registration Statement of which this Prospectus forms a
part.
General
Pursuant to each Guarantee, Southern Union will irrevocably and
unconditionally agree, to the extent set forth herein, to pay in
full to the holders of the Preferred Securities issued by a
Southern Union Trust, the Guarantee Payments (as defined herein)
(except to the extent paid by such Southern Union Trust), as and
when due, regardless of any defense, right of set-off or counter-
claim which such Southern Union Trust may have or assert. The fol-
lowing payments with respect to Preferred Securities issued by a
Southern Union Trust (the "Guarantee Payments"), to the extent not
paid by such Southern Union Trust will be subject to the Guarantee
(without duplication): (i) any accrued and unpaid distributions
that are required to be paid on such Preferred Securities, to the
extent such Southern Union Trust shall have funds available there-
for, (ii) the redemption price, including all accrued and unpaid
distributions (the "Redemption Price"), to the extent such Southern
Union Trust has funds available therefor with respect to any Pre-
ferred Securities called for redemption by such Southern Union
Trust and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of such Southern Union Trust (other than
in connection with the distribution of Subordinated Debt Securities
to the holders of Preferred Securities or the redemption of all of
the Preferred Securities) the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on such
Preferred Securities to the date of payment to the extent such
Southern Union Trust has funds available therefor or (b) the amount
of assets of such Southern Union Trust remaining available for dis-
tribution to holders of such Preferred Securities in liquidation of
such Southern Union Trust. Southern Union's obligation to make a
Guarantee Payment may be satisfied by direct payment of the
required amounts by Southern Union to the holders of Preferred
Securities or by causing the applicable Southern Union Trust to pay
such amounts to such holders.
Each Guarantee will be qualified as an Indenture under the Trust
Indenture Act. Wilmington Trust Company will act as indenture
trustee (the "Indenture Trustee") for the purposes of the Trust
Indenture Act and it will hold each Guarantee as trustee (the
"Guarantee Trustee") for the benefit of the holders of the Pre-
ferred Securities issued by the relevant Southern Union Trust. The
terms of each Guarantee will be those set forth in the Guarantee
and those made part of the Guarantee by the Trust Indenture Act.
Each Guarantee will be a full and unconditional guarantee with
respect to the Preferred Securities issued by the applicable
Southern Union Trust from the time of issuance of such Preferred
Securities but will not apply to any payment of distributions
except to the extent such Southern Union Trust shall have funds
available therefor. If Southern Union does not make interest
payments on the Subordinated Debt Securities purchased by a
Southern Union Trust, such Southern Union Trust will not pay dis-
tributions on the Preferred Securities issued by such Southern
Union Trust and will not have funds available therefor. See
"Particular Terms of the Subordinated Debt Securities."
Southern Union has also agreed to irrevocably and unconditionally
guarantee the obligations of the Southern Union Trusts with respect
to the Common Securities (the "Common Securities Guarantees") to
the same extent as the Guarantees, except that, upon an event of
default under the Declaration, holders of Preferred Securities
under the Guarantees shall have priority over holders of Common
Securities under the Common Securities Guarantee with respect to
distributions and payments on liquidation, redemption or otherwise.
Certain Covenants of Southern Union
In each Guarantee, Southern Union will covenant that, so long as
any Preferred Securities issued by the applicable Southern Union
Trust remain outstanding, Southern Union will not, and will cause
any subsidiary of Southern Union which is not a wholly-owned
subsidiary of Southern Union not to, declare or pay any dividend
on, or make any distribution with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its
capital stock, or make any guarantee payment with respect to the
foregoing, if at such time Southern Union shall be in default with
respect to its payments or other obligations under the Guarantee or
there shall have occurred any event that would constitute an event
of default under the Declaration. However, each Guarantee will
except from the foregoing any stock dividends paid by Southern
Union where the dividend stock is of the same class as that of the
stock held by the holders receiving the dividend.
Amendments and Assignment
Except with respect to any changes that do not adversely affect
the rights of holders of Preferred Securities (in which case no
vote will be required), each Guarantee may be amended only with the
prior approval of the holders of not less than 66 2/3% in liquidation
amount of the outstanding Preferred Securities issued by the
applicable Southern Union Trust. The manner of obtaining any such
approval of holders of such Preferred Securities will be set forth
in an accompanying Prospectus Supplement. All guarantees and
agreements contained in a Guarantee shall bind the successors,
assignees, receivers, trustees and representatives of Southern
Union and shall inure to the benefit of the holders of the Pre-
ferred Securities of the applicable Southern Union Trust then
outstanding.
Events of Default
An Event of Default under the Guarantee occurs when Southern Union
defaults on any of its payments or other obligations under the
Guarantee. The holders of a majority in liquidation amount of the
Preferred Securities to which a Guarantee relates have the right to
direct the time, method and place of conducting any proceeding for
any remedy available to the Guarantee Trustee in respect of the
Guarantee or exercising any trust or power conferred upon the
Guarantee Trustee under the Guarantee.
If the Guarantee Trustee fails to enforce the Guarantee Agreement,
any holder of Preferred Securities may, after a period of 30 days
has elapsed from such holders written request to the Guarantee
Trustee to enforce the Guarantee, institute a legal proceeding
directly against Southern Union to enforce the Guarantee Trustee's
rights under the Guarantee without first instituting a legal
proceeding against any other entity.
Southern Union will be required to provide annually to the Guaran-
tee Trustee a statement as to the performance by Southern Union of
certain of its obligations under each of the Guarantees and as to
any default in such performance.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, prior to default, undertakes to perform only
such duties as are specifically set forth in the Guarantee Agree-
ment and, after default, shall exercise the same degree of care as
a prudent individual would exercise in the conduct of his or her
own affairs. Subject to such revision, the Guarantee Trustee is
under no obligation to exercise any of the powers vested in it by
the Guarantee Agreement at the request of any holder of Preferred
Securities unless it is offered reasonable indemnity by such holder
against the costs, expenses and liabilities that might be incurred
thereby. The Guarantee Trustee is not required to expand or risk
its own funds or otherwise incur personal financial liability in
the performance of its duties if the Guarantee Trustee reasonably
believes that repayment or adequate indemnity is not reasonably
assured to it.
Termination of the Guarantees
Each Guarantee will terminate as to the Preferred Securities issued
by the applicable Southern Union Trust upon full payment of the
Redemption Price of all Preferred Securities of such Southern Union
Trust, upon distribution of the Subordinated Debt Securities held
by such Southern Union Trust to the holders of the Preferred
Securities of such Southern Union Trust or upon full payment of the
amounts payable in accordance with the Declaration of such Southern
Union Trust upon liquidation of such Southern Union Trust. Each
Guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any holder of Preferred Securities
issued by the applicable Southern Union Trust must restore payment
of any sums paid under such Preferred Securities or the Guarantee.
Status of the Guarantees
Each Guarantee will constitute an unsecured obligation of Southern
Union and will rank (i) subordinate and junior in right of payment
to all other liabilities of Southern Union, (ii) pari passu with
the most senior preferred or preference stock now or hereafter
issued by Southern Union and with any guarantee now or hereafter
entered into by Southern Union in respect of any preferred or
preference stock of any affiliate of Southern Union and (iii)
senior to Southern Union's common stock. Each holder of Preferred
Securities issued by such Southern Union Trust by acceptance
thereof agrees to the subordination provisions and other terms of
the applicable Guarantee.
Each Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may institute a legal
proceeding against the guarantor to enforce its rights under a
Guarantee without instituting a legal proceeding against any other
person or entity).
Governing Law
The Guarantees will be governed by and construed in accordance with
the internal laws of the State of New York.
PLAN OF DISTRIBUTION
Southern Union may sell any series of the Debt Securities and the
Southern Union Trusts may sell the Preferred Securities in one or
more of the following ways from time to time (i) to or through
underwriters or dealers, (ii) directly to purchasers, or (iii)
through agents. The Prospectus Supplement with respect to any
Offered Securities will set forth (i) the terms of the offering of
the Offered Securities, including the name or names of any under-
writers, dealers or agents, (ii) the purchase price of the Offered
Securities and the proceeds to Southern Union or the applicable
Southern Union Trust as the case may be from such sale, (iii) any
underwriting discounts and commissions or agency fees and other
items constituting underwriters' or agents' compensation, (iv) any
initial public offering prices, (v) any discounts or concessions
allowed or reallowed or paid to dealers, and (vi) any securities
exchange on which such Offered Securities may be listed. Any
initial public offering price, discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are used in the sale, the Offered Securities will
be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The Offered
Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or
directly by one or more firms acting as underwriters. The under-
writer or underwriters with respect to a particular underwritten
offering of Offered Securities will be named in the Prospectus
Supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of such Prospectus Supplement. Unless
otherwise set forth in the Prospectus Supplement relating thereto,
the obligations of the underwriters to purchase the Offered Securi-
ties will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all the Offered Securi-
ties if any are purchased.
If dealers are utilized in the sale of Offered Securities, Southern
Union and/or the applicable Southern Union Trust will sell such
Offered Securities to the dealers as principals. The dealers may
then resell such Offered Securities to the public at varying prices
to be determined by such dealers at the time of resale. The names
of the dealers and the terms of the transaction will be set forth
in the Prospectus Supplement relating thereto.
Any series of Debt Securities may be sold from time to time either
directly by Southern Union or through agents designated by Southern
Union. Any series of Preferred Securities may be sold from time to
time either directly by the applicable Southern Union Trust or by
agents designated by such trust. Any agent involved in the offer
or sale of the Offered Securities in respect to which this
Prospectus is delivered will be named, and any commissions payable
to Southern Union and/or the applicable Southern Union Trust to
such agent will be set forth, in the Prospectus Supplement relating
thereto. Unless otherwise indicated in the Prospectus Supplement,
any such agent will be acting on a best efforts basis for the
period of its appointment.
The Debt Securities may be sold directly by Southern Union and the
Preferred Securities may be sold directly by the applicable
Southern Union Trust to institutional investors or others who may
be deemed to be underwriters within the meaning of the Securities
Act with respect to any resale thereof. The terms of any such
sales will be described in the Prospectus Supplement relating
thereto.
If so indicated in the Prospectus Supplement, Southern Union and/or
the applicable Southern Union Trust will authorize agents, under-
writers or dealers to solicit offers from certain types of institu-
tions to purchase Offered Securities from Southern Union and/or the
applicable Southern Union Trust at the public offering price set
forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject only to those condi-
tions set forth in the Prospectus Supplement, and the Prospectus
Supplement will set forth the commission payable for solicitation
of such contracts.
Agents, dealers and underwriters may be entitled under agreements
with Southern Union and/or the applicable Southern Union Trust to
indemnification by Southern Union and/or such Southern Union Trust
against certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments that
such agents, dealers or underwriters may be required to make in
respect thereof. Agents, dealers and underwriters may be customers
of, engage in transactions with, or perform services for Southern
Union and/or the applicable Southern Union Trust in the ordinary
course of business.
Each series of Offered Securities will be a new issue of securities
and will have no established trading market. Any underwriters to
whom Offered Securities are sold for public offering and sale may
make a market in such Offered Securities, but such underwriters
will not be obligated to do so and may discontinue any market
making at any time without notice. The Offered Securities may or
may not be listed on a national securities exchange. No assurance
can be given that there will be a market for the Offered Securi-
ties.
VALIDITY OF SECURITIES
The validity of the Offered Securities offered hereby will be
passed upon for Southern Union by Fleischman and Walsh, L.L.P.,
Washington, D. C. Aaron I. Fleischman, Senior Partner of
Fleischman and Walsh, L.L.P., is a director of Southern Union.
Mr. Fleischman, Fleischman and Walsh, L.L.P., and other attorneys
in that firm beneficially own shares of common stock that, in the
aggregate, represent less than two percent (2%) of the shares of
common stock outstanding.
EXPERTS
The consolidated financial statements and related financial state-
ment schedules included in Southern Union Company's Transition
Report on Form 10-K for the year ended June 30, 1994 are inicorpo-
rated by reference in this Prospectus in reliance upon the reports
of Coopers & Lybrand L.L.P., given on the authority of that firm as
experts in accounting and auditing.
<PAGE>
________________________________ ________________________________
No dealer, salesperson or other
individual has been authorized
to give any information or to
make any representations other
than those contained or incor-
porated by reference in this Southern Union Company
Prospectus in connection with
the offer made by this Senior Debt Securities and
Prospectus and, if given or Subordinated Debt Securities
made, such information or repre- and
sentations must not be Southern Union Financing I
relied upon as having been Southern Union Financing II
authorized by Southern Union Southern Union Financing III
Company, Southern Union Preferred Securities
Financing I, Southern Union guaranteed to the extent set
Financing II, or Southern Union forth herein by
Financing III or the Under- Southern Union Company
writers. Neither the delivery
of this Prospectus nor any
sale made hereunder and there-
under shall under any circum-
stance create an implication
that there has been no change
in the affairs of Southern
Union Company or Southern
Union Financing I, Southern
Union Financing II or Southern
Union Financing III since the
date hereof. This Prospectus
does not constitute an offer
or solicitation by anyone in
any state in which such offer _______________________
or solicitation is not autho-
rized or in which the person PROSPECTUS
making such offer or solicita-
tion is not qualified to do so _______________________
or to anyone to whom it is
unlawful to make such offer
or solicitation.
____________________
TABLE OF CONTENTS
Page
____
Available Information
Incorporation of Certain
Documents by Reference
Southern Union Company
Southern Union Financing
Trusts
Use of Proceeds
Ratio of Earnings to Fixed
Charges
Description of Southern
Union Debt Securities
General
Registration and
Transfer
Global Securities
Restrictions
Limitation on Sale
and Leaseback
Transactions
Events of Default
Modification or
Waiver
Financial Information
Certain Definitions
Particular Terms of the
Senior Debt Securities
Particular Terms of the
Subordinated Debt
Securities
Description of the
Southern Union Trusts'
Preferred Securities
Description of the
Guarantees __________, 1995
Plan of Distribution
Validity of Securities
Experts
_______________________________ _______________________________
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*
Securities and Exchange Commission Filing Fee . . $103,449.00
Rating Agency Fees. . . . . . . . . . . . . . . . *
Blue Sky Fees and Expenses. . . . . . . . . . . . *
Trustee's Expenses. . . . . . . . . . . . . . . . *
Printing and Engraving Fees . . . . . . . . . . . *
Accounting Fees and Expenses. . . . . . . . . . . *
Legal Fees and Expenses . . . . . . . . . . . . . *
Miscellaneous . . . . . . . . . . . . . . . . . . *
__________
Total. . . . . . . . . . . . . . . . . . . . *
==========
_________________________________
* All fees and expenses other than SEC Registration Fee are
estimated. To be completed by amendment.
Item 15. Indemnification of Directors and Officers.
Article Twelfth of the Restated Certificate of Incorporation of
Southern Union eliminates personal liability of directors to the
fullest extent permitted by Delaware Law. Section 145 of the
Delaware Corporation Law provides that a Delaware corporation may
indemnify any person against expenses, fines and settlements
actually and reasonably incurred by any such person in connection
with a threatened, pending or completed action, suit or proceeding
in which he is involved by reason of the fact that he is or was a
director, officer, employee or agent of such corporation, provided
that (i) he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
corporation and (ii) with respect to any criminal action or
proceeding, he had no reasonable cause to believe his conduct was
unlawful. If the action or suit is by or in the name of the
corporation, the corporation may indemnify any such person against
expenses actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification may be made in respect to any claim, issue or
matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty
to the corporation, unless and only to the extent that the Delaware
Court of Chancery or the court in which the action or suit is
brought determines upon application that, despite the adjudication
of liability but in the light of the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such
expense as the court deems proper.
The Declaration of each Southern Union Trust provides that no
Southern Union Trustee, affiliate of any Southern Union Trustee, or
any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Southern Union Trustee,
or any employee or agent of such Southern Union Trust or its
affiliates (each an "Indemnified Person") shall be liable,
responsible or accountable in damages or otherwise to such Southern
Union Trust or any employee or agent of the trust or its affiliates
for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good
faith on behalf of such Southern Union Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by such
Declaration or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of
such Indemnified Person's gross negligence (or, in the case of the
Property Trustee, negligence) or willful misconduct with respect to
such acts or omissions. The Declaration of each Southern Union
Trust also provides that to the fullest extent permitted by appli-
applicable law, Southern Union shall indemnify and hold harmless
each Indemnified Person from and against any loss, damage or claim
incurred by such Indemnified Person by reason of any act or
omission performed or omitted by such Indemnified Person in good
faith on behalf of such Southern Union Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of
authority conferred on such Indemnified Person by such Declaration,
except that no Indemnified Person shall be entitled to be indemni-
fied in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of gross negligence (or, in the case
of the Property Trustee, negligence) or willful misconduct with
respect to such acts or omissions. The Declaration of each
Southern Union Trust further provides that, to the fullest extent
permitted by applicable law, expenses (including legal fees)
incurred by an Indemnified Person in defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by
Southern Union prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by or an under-
taking by or on behalf of the Indemnified Person to repay such
amount if it shall be determined that the Indemnified Person is not
entitled to be indemnified for the underlying cause of action as
authorized by such Declaration.
The directors and officers of Southern Union and the Regular
Trustees are covered by insurance policies indemnifying against
certain liabilities, including certain liabilities arising under
the Securities Act of 1933, as amended (the "Securities Act"),
which might be incurred by them in such capacities and against
which they cannot be indemnified by Southern Union or the Southern
Union Trusts.
Any agents, dealers or underwriters who execute any of the agree-
ments filed as Exhibit 1 to this registration statement will agree
to indemnify Southern Union's directors and their officers and the
Southern Union Trustees who signed the registration statement
against certain liabilities that may arise under the Securities Act
with respect to information furnished to Southern Union or any of
the Southern Union Trusts by or on behalf of any such indemnifying
party.
Item 16. Exhibits.
Exhibits identified in parentheses below are on file with the SEC
and are incorporated herein by reference to such previous filings.
All other exhibits are provided as part of this electronic trans-
mission.
*1 - Form of Underwriting Agreement for offering of
Preferred Securities.
**4-A - Certificate of Trust of Southern Union Financing I.
**4-B - Certificate of Trust of Southern Union Financing II.
**4-C - Certificate of Trust of Southern Union Financing III.
4-D - Form of Amended and Restated Declaration of Trust of
Southern Union Financing I.
*4-E - Form of Amended and Restated Declaration of Trust of
Southern Union Financing II.
*4-F - Form of Amended and Restated Declaration of Trust of
Southern Union Financing III.
4-G - Form of Subordinated Debt Securities Indenture among
Southern Union Company and __________________________,
as Trustee.
4-H - Form of Supplemental Indenture to Indenture to be used
in connection with the issuance of Subordinated Debt
Securities and Preferred Securities.
4-I - Form of Preferred Security (included in 4-D above).
4-J - Form of Subordinated Debt Security (included in 4-H
above).
4-K - Form of Guarantee with respect to Preferred Securities.
**4-L - Senior Debt Securities Indenture between Chase
Manhattan Bank, N.A., as trustee, and Southern Union
Company dated January 31, 1994. (Filed as Exhibit 4.1
to Southern Union's Current Report on Form 8-K dated
February 15, 1994 and incorporated herein by reference.)
*5 - Opinion of Fleischman and Walsh, L.L.P.
*8 - Opinion of Skadden, Arps, Slate, Meagher & Flom as to
certain federal income taxation matters.
**12 - Computation of Ratio of Earnings to Fixed Charges of
Southern Union Company.
23-A - Consent of Independent Accountants, Coopers & Lybrand
L.L.P.
23-B - Consent of Fleischman and Walsh, L.L.P. is contained in
the opinion of counsel filed as Exhibit 5.
23-C - Consent of Skadden, Arps, Slate, Meagher & Flom is
contained in the opinion of counsel filed as Exhibit 8.
**24 - Powers of Attorney (the powers of attorney for the
Southern Union Trustees of Southern Union Financing I,
Southern Union Financing II and Southern Union
Financing III are included in Exhibits 4-A, 4-B and 4-
C, respectively).
*25-A - Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of ________________, as Trustee
under the Subordinated Debt Securities Indenture.
*25-B - Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of ________________, as Trustee
under the Senior Debt Securities Indenture.
*25-C - Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of Wilmington Trust Company, as
Trustee under the Amended and Restated Declaration of
Trust of Southern Union Financing I.
*25-D - Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of Wilmington Trust Company, as
Trustee under the Amended and Restated Declaration of
Trust of Southern Union Financing II.
*25-E - Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of Wilmington Trust Company, as
Trustee under the Amended and Restated Declaration of
Trust of Southern Union Financing III.
*25-F - Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of Wilmington Trust Company, as
Trustee of Preferred Securities Guarantee of Southern
Union Financing I.
*25-G - Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of Wilmington Trust Company, as
Trustee of Preferred Securities Guarantee of Southern
Union Financing II.
*25-H - Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of Wilmington Trust Company, as
Trustee of Preferred Securities Guarantee of Southern
Union Financing III.
________________________________
* To be filed by amendment.
** Previously filed.
Item 17. Undertaking.
The Registrants hereby undertake that, for purposes of determining
any liability under the Securities Act, each filing of Southern
Union's Annual Report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (and where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act)
that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and con-
trolling persons of the Registrants pursuant to the provisions
referred to in Item 15 (other than the insurance policies referred
to therein), or otherwise, the Registrants have been advised that,
in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrants of expenses incurred or paid by a director, officer
or controlling person of the Registrants in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrants will, unless in the opinion of
their counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
The Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration State-
ment
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) that, individually or in the aggregate, repre-
sent a fundamental change in the information set forth
in the Registration Statement;
(iii) to include any material information with respect to the
Plan of Distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that the undertakings set forth in paragraphs
(i) and (ii) above do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by Southern Union pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorpo-
rated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securi-
ties at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed
as part of a registration statement in reliance upon Rule 430A
and contained in the form of prospectus filed by the regis-
trant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that
it meets the requirements for filing on Form S-3 and has duly
caused this Amendment to this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the
City of Austin, State of Texas, on April _____, 1995.
SOUTHERN UNION COMPANY
By RONALD J. ENDRES
_____________________________
Ronald J. Endres
Senior Vice President of
Administration and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to this Registration Statement has been signed by the
following persons in the capacities indicated on April _____, 1995.
Signature/Name Title
______________ _____
GEORGE L. LINDEMANN* Chairman of the Board,
Chief Executive Officer
and Director
JOHN E. BRENNAN* Director
FRANK W. DENIUS* Director
AARON I. FLEISCHMAN* Director
PETER H. KELLEY* Director
ADAM M. LINDEMANN* Director
ROGER J. PEARSON* Director
GEORGE ROUNTREE, III* Director
DAN K. WASSONG* Director
RONALD J. ENDRES Senior Vice President
________________
Ronald J. Endres of Administration, and
Chief Financial Officer
DAVID J. KVAPIL Vice President and
_______________
David J. Kvapil Controller
(Principal Accounting
Officer)
*By RONALD J. ENDRES
________________
Ronald J. Endres
Attorney-in-fact
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of
Southern Union Financing I, Southern Union Financing II and
Southern Union Financing III certifies that it has reasonable
grounds to believe that it meets all the requirements for filing on
Form S-3 and has duly caused this Amendment to this Registration
Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Austin, State of Texas, on the
_____ day of April, 1995.
SOUTHERN UNION FINANCING I
By RONALD J. ENDRES
________________
Ronald J. Endres, Trustee
By DAVID J. KVAPIL
_______________
David J. Kvapil, Trustee
SOUTHERN UNION FINANCING II
By RONALD J. ENDRES
________________
Ronald J. Endres, Trustee
By DAVID J. KVAPIL
_______________
David J. Kvapil, Trustee
SOUTHERN UNION FINANCING III
By RONALD J. ENDRES
________________
Ronald J. Endres, Trustee
By DAVID J. KVAPIL
_______________
David J. Kvapil, Trustee
EXHIBIT INDEX
<PAGE>
*1 - Form of Underwriting Agreement for offering of
Preferred Securities.
**4-A - Certificate of Trust of Southern Union Financing I.
**4-B - Certificate of Trust of Southern Union Financing II.
**4-C - Certificate of Trust of Southern Union Financing III.
4-D - Form of Amended and Restated Declaration of Trust of
Southern Union Financing I.
*4-E - Form of Amended and Restated Declaration of Trust of
Southern Union Financing II.
*4-F - Form of Amended and Restated Declaration of Trust of
Southern Union Financing III.
4-G - Form of Subordinated Debt Securities Indenture among
Southern Union Company and _________________________,
as Trustee.
4-H - Form of Supplemental Indenture to Indenture to be
used in connection with the issuance of Subordinated
Debt Securities and Preferred Securities.
4-I - Form of Preferred Security (included in 4-D above).
4-J - Form of Subordinated Debt Security (included in 4-H
above).
4-K - Form of Guarantee with respect to Preferred
Securities.
**4-L - Senior Debt Securities Indenture between Chase
Manhattan Bank, N.A., as trustee, and Southern Union
Company dated January 31, 1994. (Filed as Exhibit
4.1 to Southern Union's Current Report on Form 8-K
dated February 15, 1994 and incorporated herein by
reference.
*5 - Opinion of Fleischman and Walsh, L.L.P.
*8 - Opinion of Skadden, Arps, Slate, Meagher & Flom as to
certain federal income taxation matters.
**12 - Computation of Ratio of Earnings to Fixed Charges of
Southern Union Company.
23-A - Consent of Independent Accountants, Coopers & Lybrand
L.L.P.
23-B - Consent of Fleischman and Walsh, L.L.P. is contained
in the opinion of counsel filed as Exhibit 5.
23-C - Consent of Skadden, Arps, Slate, Meagher & Flom is
contained in the opinion of counsel filed as Exhibit
8.
**24 - Powers of Attorney (the powers of attorney for the
Southern Union Trustees of Southern Union Financing
I, Southern Union Financing II and Southern Union
Financing III are included in Exhibits 4-A, 4-B and
4-C, respectively).
*25-A - Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of ________________, as
Trustee under the Subordinated Debt Securities
Indenture.
*25-B - Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of _______________________,
as Trustee under the Senior Debt Securities
Indenture.
*25-C - Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company,
as Trustee under the Amended and Restated Declaration
of Trust of Southern Union Financing I.
*25-D - Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company,
as Trustee under the Amended and Restated Declaration
of Trust of Southern Union Financing II.
*25-E - Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company,
as Trustee under the Amended and Restated Declaration
of Trust of Southern Union Financing III.
*25-F - Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company,
as Trustee of Preferred Securities Guarantee of
Southern Union Financing I.
*25-G - Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company,
as Trustee of Preferred Securities Guarantee of
Southern Union Financing II.
*25-H - Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company,
as Trustee of Preferred Securities Guarantee of
Southern Union Financing III.
______________________________
* To be filed by amendment.
** Previously filed.
<PAGE>
EXHIBIT 23-A
CONSENT OF INDEPENDENT ACCOUNTANTS
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS Exhibit 23-A
We consent to the incorporation by reference in this registration
statement on Form S-3 (File No. 33-58297) of our report, which
includes an explanatory paragraph concerning certain accounting
changes, dated September 15, 1994, on our audit of the consolidated
financial statements and financial statement schedules of Southern
Union Company and Subsidiaries as of June 30, 1994 and December 31,
1993, and for each of the three years in the periods ended June 30,
1994 and December 31, 1993 and 1992. We also consent to the
reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Austin, Texas
April _____, 1995
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 1, 1995
PROSPECTUS SUPPLEMENT
(To Prospectus Dated May 1, 1995)
3,000,000 Preferred Securities
Southern Union Financing I
____% Trust Originated Preferred Securities(sm) ("TOPrS(sm)")
(Liquidation amount $25 per Preferred Security)
guaranteed to the extent set forth herein by
SOUTHERN UNION COMPANY
_______________
The ____% Trust Originated Preferred Securities (the "Preferred
Securities") offered hereby represent preferred undivided bene-
ficial interests in the assets of Southern Union Financing I, a
statutory business trust formed under the laws of the State of
Delaware ("Southern Union Financing" or the "Trust"). Southern
Union Company, a Delaware corporation ("Southern Union" and,
together with its subsidiaries, the "Company"), will directly or
indirectly own all the common securities (the "Common Securities"
and, together with the Preferred Securities, the "Trust Securi-
ties") representing undivided beneficial interests in the assets of
Southern Union Financing. Southern Union Financing exists for the
sole purpose of issuing the Preferred Securities and Common Securi-
ties and investing the proceeds thereof in an equivalent amount of
_____% Subordinated Deferrable Interest Notes due 2025 ("Subordi-
nated Debt Securities") of Southern Union. Upon an event of a
default under the Declaration (as defined herein), the holders of
Preferred Securities will have a preference over the holders of the
Common Securities with respect to payments in respect of distribu-
tions and payments upon redemption, liquidation and otherwise.
______________________ (continued on next page)
See "Investment Considerations" for certain information relevant to
an investment in the Preferred Securities, including the period and
circumstances during and under which payments of distributions on
the Preferred Securities may be deferred and the related United
States federal income tax consequences of such deferral.
Application will be made to list the Preferred Securities on the
New York Stock Exchange. If approved, trading of the Preferred
Securities on the New York Stock Exchange is expected to commence
within a 30-day period after the initial delivery of the Preferred
Securities. See "Underwriting."
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Initial Proceeds to
Public Southern
Offering Underwriting Union Trust
Price (1) Commission (2) (3)(4)
Per Preferred Security. . $25.00 (3) $25.00
Total . . . . . . . . . . $75,000,000 (3) $75,000,000
(1) Plus accrued distributions, if any, from ______________, 1995.
(2) Southern Union Financing and Southern Union have agreed to
indemnify the several Underwriters against certain liabili-
ties, including liabilities under the Securities Act of 1933,
as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the
Preferred Securities will be invested in Subordinated Debt
Securities, Southern Union has agreed to pay to the Under-
writers as compensation ("Underwriters' Compensation") for
their arranging the investment therein of such proceeds
$__________ per Preferred Security (or $____________ in the
aggregate); provided that, such compensation for sales of
10,000 or more Preferred Securities to a single purchaser will
be $____________ per Preferred Security. Therefore, to the
extent of such sales, the actual amount of Underwriters' Com-
pensation will be less than the aggregate amount specified in
the preceding sentence. See "Underwriting."
(4) Expenses of the offering which are payable by Southern Union
are estimated to be $____________.
The Preferred Securities offered hereby are offered severally by
the Underwriters, as specified herein, subject to receipt and
acceptance by them and subject to their right to reject any order
in whole or in part. It is expected that delivery of the Preferred
Securities will be made only in book-entry form through the facili-
ties of The Depository Trust Company, on or about ____________,
1995.
_______________________
Merrill Lynch & Co.
_______________________
The date of this Prospectus Supplement is _____________, 1995.
(sm) "Trust Originated Preferred Securities" and "TOPrS" are
service marks of Merrill Lynch & Co., Inc.
Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been
filed with the Securities and Exchange Commission. These securi-
ties may not be sold nor may offers to buy be accepted prior to the
time the registration statement becomes effective. This prospectus
shall not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these securities in any
State in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of
any such State.
(continued from previous page)
Holders of the Preferred Securities are entitled to receive cumu-
lative cash distributions at an annual rate of _____% of the liqui-
dation amount of $25 per Preferred Security, accruing from the date
of original issuance and payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year, commencing
June 30, 1995 ("distributions"). The payment of distributions out
of moneys held by Southern Union Financing and payments on liquida-
tion of Southern Union Financing or the redemption of Preferred
Securities, as set forth below, are guaranteed by Southern Union
(the "Guarantee") to the extent Southern Union Financing has funds
available therefor as described under "Description of the Guaran-
tees" in the accompanying Prospectus. The obligations of Southern
Union under the Guarantee are subordinate and junior in right of
payment to all other liabilities of Southern Union and pari passu
with the most senior preferred stock issued, from time to time, if
any, by Southern Union. The obligations of Southern Union under
the Subordinated Debt Securities are subordinate and junior in
right of payment to all present and future Senior Indebtedness (as
defined herein) of Southern Union, which aggregated approximately
$475 million at December 31, 1994, and rank pari passu with
Southern Union's other general unsecured creditors.
The distribution rate and the distribution and other payment dates
for the Preferred Securities will correspond to the interest rate
and interest and other payment dates on the Subordinated Debt
Securities, which will be the sole assets of Southern Union
Financing. As a result, if principal or interest is not paid on
the Subordinated Debt Securities, no amounts will be paid on the
Preferred Securities. If Southern Union does not make principal or
interest payments on the Subordinated Debt Securities, Southern
Union Financing will not have sufficient funds to make distribu-
tions on the Preferred Securities, in which event, the Guarantee
will not apply to such distributions until Southern Union
Financing has sufficient funds available therefor.
Southern Union has the right to defer payments of interest on the
Subordinated Debt Securities by extending the interest payment
period on the Subordinated Debt Securities at any time for up to 20
consecutive quarters (each an "Extension Period"). If interest
payments are so deferred, distributions will also be deferred.
During such Extension Period, distributions will continue to accrue
with interest thereon (to the extent permitted by applicable law)
at an annual rate of _____% per annum compounded quarterly, and
during any Extension Period, holders of Preferred Securities will
be required to include deferred interest in their current gross
income for United States federal income tax purposes in advance of
receipt of the cash distributions payments attributable to such
deferred distributions. There could be multiple Extension Periods
of varying lengths throughout the term of the Subordinated Debt
Securities. See "Description of the Subordinated Debt Securities
- -- Option to Extend Interest Payment Period." See "Investment
Considerations -- Option to Extend Interest Payment Period and
Defer Payment of Interest" and "United States Federal Income
Taxation -- Original Issue Discount."
The Subordinated Debt Securities are redeemable by Southern Union,
in whole or in part, from time to time, on or after _____________,
2000, or at any time in certain circumstances upon the occurrence
of a Tax Event (as defined herein). If Southern Union redeems
Subordinated Debt Securities, Southern Union Financing must redeem
Trust Securities having an aggregate liquidation amount equal to
the aggregate principal amount of the Subordinated Debt Securities
so redeemed at $25 per Preferred Security plus accrued and unpaid
distributions thereon (the "Redemption Price") to the date fixed
for redemption. See "Description of the Preferred Securities --
Mandatory Redemption." The Preferred Securities will be redeemed
upon maturity of the Subordinated Debt Securities. The Subordi-
nated Debt Securities mature on _________________, 2025, but the
maturity date may be extended only once, for up to an additional 19
years at the option of Southern Union, provided certain financial
covenants are met. See "Description of the Subordinated Debt
Securities -- Option to Extend Maturity Date." In addition, upon
the occurrence of a Tax Event arising from a change in law or a
change in legal interpretation regarding tax matters, unless the
Subordinated Debt Securities are redeemed in the limited circum-
stances described herein, Southern Union Financing shall be
dissolved, with the result that the Subordinated Debt Securities
will be distributed to the holders of the Preferred Securities, on
a pro rata basis, in lieu of any cash distribution. See "Descrip-
tion of the Preferred Securities -- Tax Event Redemption or Distri-
bution." In certain circumstances, Southern Union will have the
right to redeem the Subordinated Debt Securities, which would
result in the redemption by Southern Union Financing of Trust
Securities in the same amount on a pro rata basis. If the Sub-
ordinated Debt Securities are distributed to the holders of the
Preferred Securities, Southern Union will use its best efforts to
have the Subordinated Debt Securities listed on the New York Stock
Exchange or on such other exchange as the Preferred Securities are
then listed. See "Description of the Preferred Securities -- Tax
Event Redemption or Distribution" and "Description of the Subordi-
nated Debt Securities."
In the event of the involuntary or voluntary dissolution, winding
up or termination of Southern Union Financing, the holders of the
Preferred Securities will be entitled to receive for each Preferred
Security a liquidation amount of $25 plus accrued and unpaid dis-
tributions thereon (including interest thereon) to the date of
payment, unless, in connection with such dissolution, the Subordi-
nated Debt Securities are distributed to the holders of the Pre-
ferred Securities. See "Description of the Preferred Securities --
Liquidation Distribution Upon Dissolution."
_____________________
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER
MARKET OR OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF COMMENCED,
MAY BE DISCONTINUED AT ANY TIME.
<PAGE>
SOUTHERN UNION COMPANY SELECTED HISTORICAL FINANCIAL INFORMATION
The following table sets forth selected historical financial
information with respect to the Company for the periods indi-
cated. This information should be read in conjunction with the
Company's Consolidated Financial Statements and notes thereto
included in the 1994 Form 10-K and the First and Second Quarter
Form 10-Q, which are incorporated by reference into this
Prospectus. See "Incorporation of Certain Documents by Reference"
in the accompanying Prospectus. The selected historical financial
information for the year ended June 30, 1994, and each of the four
years in the period ended December 31, 1993, has been derived from
financial statements that have been audited by Coopers & Lybrand
L.L.P., the Company's independent accountants. See "Experts" in
the accompanying Prospectus. The selected historical financial
information for the twelve months ended December 31, 1994, has been
derived from financial statements that are unaudited, but which, in
the opinion of management, include all adjustments necessary for a
fair presentation of the financial position and results of opera-
tions for such period.
Six Twelve
Months Months
Ended Ended Year
Decem- Decem- Ended
ber 31, ber 31, June 30, Year ended December 31,(a)(b)
___________________________________
1994 1994(b) 1994 1993 1992 1991 1990
(a)(b)
________ ________ ________ ________ ________ ________ ________
(Dollars in thousands, except per share amounts)
Operating Results:
Operating Revenues
$214,611 $483,574 $374,516 $209,005 $192,445 $200,261 $199,865
Operating Margin(c)
108,152 222,841 163,389 98,621 89,527 91,023 81,314
Earnings From Continuing Operations
390 5,279 8,378 7,733 6,391 4,673 387
Net Earnings (Loss) Available for Common Stock
390 5,279 8,378 6,890 1,445 987 (3,668)
Earnings (Loss) Per Share
.03 .46 .85 .83 .18 .12 (.44)
Weighted Average Shares Outstanding (000's)
11,452 11,445 9,866 8,286 8,256 8,326 8,326
Operating Data:
Gas Sales (MMcf)
30,804 99,815 72,223 44,859 51,104 43,679 43,295
======== ======== ======== ======== ======== ======== ========
Gas Transported (MMcf)
16,864 56,043 36,134 22,750 25,438 8,608 5,592
======== ======== ======== ======== ======== ======== ========
Average Gas Sales Customers Served
957,928 915,241 660,425 421,233 394,199 428,077 407,139
======== ======== ======== ======== ======== ======== ========
Balance Sheet Data:
Property, Plant and Equipment, Net
$745,331 $745,331 $723,300 $325,543 $285,505 $278,881 $323,187
Total Assets
962,720 962,720 890,950 416,207 377,167 369,783 411,451
Short-Term Debt and Current Maturities of Long-Term Debt
44,956 44,956 889 40,655 14,360 2,385 10,098
Long-Term Debt - Less Current Maturities
478,722 478,722 479,048 89,019 109,464 110,482 103,783
Preferred Stock
-- -- -- -- 24,900 25,000 25,000
Common Stockholders' Equity
209,460 209,460 208,975 201,938 148,003 147,356 146,332
Weather Effect:
Degree Days (d)
1,057 2,482 1,829 1,954 2,020 2,439 2,348
Percent of Normal, Based on 30-Year Average (e)
78% 84% 92% 89% 91% 95% 87%
______________________________
(a) During 1994, the Company changed its fiscal year-end from
December 31 to June 30.
(b) On January 31, 1994 Southern Union acquired the natural gas
distribution facilities of Missouri Gas Energy. In 1993, also
in fiscal year 1994, Southern Union acquired (i) Rio Grande
Valley Gas Company, (ii) the natural gas distribution facili-
ties serving Eagle Pass, Texas, and (iii) Berry Gas Company.
During 1992, Southern Union acquired the natural gas distribu-
tion facilities serving Nixon, Texas. During 1991, Southern
Union acquired natural gas distribution and transmission
facilities serving (i) an area in south Texas, including the
cities of Lockhart, Luling, Cuero, Shiner, Yoakum, and
Gonzales, (ii) the west Texas city of Andrews and (iii) the
north Texas cities of Mineral Wells, Weatherford, Graham,
Breckenridge, Millsap, Jacksboro and surrounding communities.
In 1991, Southern Union sold the assets of its Arizona gas
utility operations. Because of these acquisitions and
divestiture, the results of operations of the Company for
certain years are not comparable to other periods.
(c) Operating margin consists of operating revenues less gas
purchase costs.
(d) "Degree days" are a measure of the coldness of the weather
experienced. A Degree day is equivalent to each degree that
the daily mean temperature for a day falls below 65 degrees
Fahrenheit.
(e) Information with respect to weather conditions is provided by
the National Oceanic and Atmospheric Administration. Per-
centages of normal are computed based on the weighted average
number of customers.
<PAGE>
The following information concerning the Company, Southern Union
Financing, the Preferred Securities, the Guarantee and the Subordi-
nated Debt Securities supplements, and should be read in conjunc-
tion with, the information contained in the accompanying
Prospectus. Capitalized terms used in this Prospectus Supplement
have the same meanings as in the accompanying Prospectus.
SOUTHERN UNION COMPANY
The Company's principal line of business is the distribution of
natural gas as a public utility through Southern Union Gas Company
("Southern Union Gas") and Missouri Gas Energy, each of which is a
division of Southern Union. Southern Union Gas serves approxi-
mately 495,000 residential, commercial, industrial, agricultural
and other customers in Texas (including the cities of Austin,
Brownsville, El Paso, Galveston and Port Arthur) and Oklahoma.
Missouri Gas Energy, acquired on January 31, 1994, serves approxi-
mately 473,000 customers in central and western Missouri (including
the cities of Kansas City, St. Joseph, Joplin and Monett).
Subsidiaries of Southern Union have been established to support and
expand natural gas sales and to capitalize on the Company's gas
energy expertise. These subsidiaries market natural gas to end-
users, sell natural gas as a vehicular fuel, convert vehicles to
operate on natural gas, operate intrastate and interstate natural
gas pipeline systems, and sell commercial gas air conditioning and
other gas-fired engine-driven applications. By providing "one-stop
shopping," the Company can serve its various customers' particular
energy needs, which encompass substantially all of the natural gas
distribution and sales businesses from natural gas sales to
specialized energy consulting services. Certain subsidiaries also
own or hold interests in real estate and other assets, which are
primarily used in Southern Union's utility business.
The Company is a sales and market-driven energy company whose
management is committed to achieving profitable growth of its
natural gas energy businesses in an increasingly competitive
business environment. Management's strategies for achieving these
objectives principally consist of (i) promoting new sales oppor-
tunities and markets for natural gas, (ii) enhancing financial and
operating performance and (iii) expanding the Company through
development of existing systems and selectively acquiring new
systems. Management develops and continually evaluates these
strategies, and the Company's implementation of them, by applying
its experience and expertise in analyzing the energy industry,
technological advances, market opportunities and general business
trends. Each of these strategies, as implemented throughout the
Company's businesses, reflects the Company's commitment to its core
natural gas utility business. Central to all of the Company's
businesses and strategies is the sale and transportation of natural
gas.
SOUTHERN UNION FINANCING I
Southern Union Financing is a statutory business trust formed under
Delaware law pursuant to (i) a declaration of trust, dated as of
March 28, 1995, executed by Southern Union, as sponsor (the
"Sponsor"), and the trustees of Southern Union Financing (the
"Southern Union Trustees") and (ii) the filing of a certificate of
trust with the Secretary of State of the State of Delaware on
March 28, 1995. Such declaration will be amended and restated in
its entirety (as so amended and restated, the "Declaration") sub-
stantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and the accompanying
Prospectus form a part. The Declaration will be qualified as an
indenture under the Trust Indenture Act of 1939 as amended (the
"Trust Indenture Act"). Upon issuance of the Preferred Securities,
the purchasers thereof will own all of the Preferred Securities.
See "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company." Southern Union will
directly or indirectly acquire Common Securities in an amount equal
to 3% of the total capital of Southern Union Financing. Southern
Union Financing exists for the exclusive purposes of (i) issuing
the Trust Securities representing undivided beneficial interests in
the assets of the Trust, (ii) investing the gross proceeds of the
Trust Securities in the Subordinated Debt Securities and (iii)
engaging in only those other activities necessary or incidental
thereto.
Pursuant to the Declaration, the number of Southern Union Trustees
will initially be three. Two of the Southern Union Trustees (the
"Regular Trustees") will be persons who are employees or officers
of or who are affiliated with Southern Union. The third trustee
will be a financial institution that maintains its principal place
of business in the state of Delaware and is unaffiliated with
Southern Union, which trustee will serve as property trustee under
the Declaration and as Indenture trustee for the purposes of the
Trust Indenture Act (the "Property Trustee"). Initially,
Wilmington Trust Company, a Delaware banking corporation, will be
the Property Trustee until removed or replaced by the holder of the
Common Securities. In certain circumstances, the holders of a
majority of the Preferred Securities will be entitled to appoint
one Regular Trustee (a "Special Regular Trustee"), who need not
be an officer or employee of or otherwise affiliated with Southern
Union. See "Description of the Preferred Securities -- Voting
Rights."
The Property Trustee will hold title to the Subordinated Debt
Securities for the benefit of the holders of the Trust Securities
and the Property Trustee will have the power to exercise all
rights, powers, and privileges under the Indenture as defined
herein as the holder of the Subordinated Debt Securities, subject
to the Declaration. In addition, the Property Trustee will main-
maintain exclusive control of a segregated non-interest bearing
bank account (the "Property Account") to hold all payments in
respect of the Subordinated Debt Securities for the benefit of the
holders of the Trust Securities. The Property Trustee will make
payments of distributions and payments on liquidation, redemption
and otherwise to the holders of the Trust Securities out of funds
from the Property Account. Subject to the right of the holders of
the Preferred Securities to appoint a Special Regular Trustee.
Southern Union, as the direct or indirect holder of all the Common
Securities, will have the right to appoint, remove or replace any
Southern Union Trustee and to increase or decrease the number of
Southern Union Trustees; provided that, (i) the number of Southern
Union Trustees shall be at least three and (ii) a majority shall be
Regular Trustees. Southern Union will pay all fees and expenses
related to Southern Union Financing and the offering of the Trust
Securities. See "Description of the Subordinated Debt Securities
- -- Miscellaneous."
Southern Union Financing will not file as a separate registrant the
periodic reports required by Sections 13 and 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
with respect to the Preferred Securities for the following reasons:
(1) Southern Union Financing is managed by the Southern Union
Trustees, a majority of whom are appointed by Southern Union, a
reporting company under the Exchange Act, as the owner of all the
Common Securities issued by Southern Union Financing; and (2)
Southern Union Financing has no independent operations but exists
for the sole purpose of issuing Trust Securities representing
undivided beneficial interests in Southern Union Financing and
investing the proceeds thereof in the Subordinated Debt Securities.
The rights of the holders of the Preferred Securities, including
economic rights, rights to information and voting rights, are set
forth in the Declaration, the Delaware Business Trust Act (the
"Trust Act") and the Trust Indenture Act. See "Description of the
Preferred Securities."
INVESTMENT CONSIDERATIONS
Prospective purchasers of Preferred Securities should carefully
review the information contained elsewhere in this Prospectus Sup-
plement and in the accompanying Prospectus and should particularly
consider the following matters.
Ranking of Subordinate Obligations Under the Guarantee, and
Subordinated Debt Securities
Southern Union's obligations under the Guarantee are subordinate
and junior in right of payment to all liabilities of Southern Union
and pari passu with the most senior preferred stock issued, from
time to time, if any, by Southern Union. The obligations of
Southern Union under the Subordinated Debt Securities are subordi-
nate and junior in right of payment to all present and future
Senior Indebtedness of Southern Union and pari passu with obliga-
tions to or rights of Southern Union's other general unsecured
creditors. As of December 31, 1994, Senior Indebtedness aggregated
approximately $475 million. There are no terms in the Preferred
Securities, the Subordinated Debt Securities or the Guarantee that
limit Southern Union's ability to incur additional indebtedness,
including indebtedness that ranks senior to the Subordinated Debt
Securities and the Guarantee. See "Description of the Guarantees
- -- Status of the Guarantees" and "Particular Terms of the Subordi-
nated Debt Securities -- Subordination" in the accompanying
Prospectus, and "Description of the Subordinated Debt Securities --
Subordination" herein.
Rights Under the Guarantee
The Guarantee will be qualified as an indenture under the Trust
Indenture Act. Wilmington Trust Company will act as indenture
trustee under the Guarantee for the purposes of compliance with the
Trust Indenture Act (the "Guarantee Trustee"). The Guarantee
Trustee will hold the Guarantee for the benefit of the holders of
the Preferred Securities.
The Guarantee guarantees to the holders of the Preferred Securities
the payment of (i) any accrued and unpaid distributions that are
required to be paid on the Preferred Securities, to the extent
Southern Union Financing has funds available therefor, (ii) the
Redemption Price, including all accrued and unpaid distributions
with respect to Preferred Securities called for redemption by
Southern Union Financing, to the extent Southern Union Financing
has funds available therefor, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of Southern
Union Financing (other than in connection with the distribution of
Subordinated Debt Securities to the holders of Preferred Securities
or a redemption of all the Preferred Securities), the lesser of (a)
the aggregate of the liquidation amount and all accrued and unpaid
distributions on the Preferred Securities to the date of the pay-
ment to the extent Southern Union Financing has funds available
therefor or (b) the amount of assets of Southern Union Financing
remaining available for distribution to holders of the Preferred
Securities in liquidation of Southern Union Financing. The holders
of a majority in liquidation amount of the Preferred Securities
have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or exercising any trust or power conferred
upon the Guarantee Trustee under the Guarantee, and, if the Guaran-
tee Trustee fails to enforce the Guarantee, any holder of Preferred
Securities may, after a period of 30 days has elapsed from such
holder's written request to the Guarantee Trustee to enforce the
Guarantee, institute a legal proceeding directly against Southern
Union to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee or any
other person. If Southern Union were to default on its obligation
to pay amounts payable on the Subordinated Debt Securities,
Southern Union Financing would lack available funds for the payment
of distributions or amounts payable on redemption of the Preferred
Securities or otherwise, and, in such event, holders of the Pre-
ferred Securities would not be able to rely upon the Guarantee for
payment of such amounts. Instead, holders of the Preferred Securi-
ties would rely on the enforcement by the Property Trustee of its
rights as registered holder of the Subordinated Debt Securities
against Southern Union pursuant to the terms of the Subordinated
Debt Securities and may also vote to appoint a Special Regular
Trustee who shall have the same rights, powers and privileges as
the Regular Trustees. See "Description of the Guarantees" and
"Particular Terms of the Subordinated Debt Securities" in the
accompanying Prospectus. The Declaration provides that each holder
of Preferred Securities, by acceptance thereof, agrees to the pro-
visions of the Guarantee, including the subordination provisions
thereof, and the Subordinated Debt Securities Indenture.
Enforcement of Certain Rights by Holders of Preferred Securities
If (i) Southern Union fails to pay distributions in full on the
Preferred Securities for six consecutive quarterly distribution
payments or (ii) a Declaration Event of Default (as defined herein)
occurs and is continuing, then the holders of Preferred Securities
would rely on the enforcement by the Property Trustee of its rights
as a holder of the Subordinated Debt Securities against Southern
Union. In addition, the holders of a majority in aggregate
liquidation amount of the Preferred Securities will have the right
to direct the time, method, and place of conducting any proceeding
for any remedy available to the Property Trustee or to direct the
exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property
Trustee to exercise the remedies available to it as a holder of the
Subordinated Debt Securities. If the Property Trustee fails to
enforce its rights under the Subordinated Debt Securities, a holder
of Preferred Securities may, after a period of 30 days has elapsed
from such holder's written request to the Property Trustee to
enforce such rights, institute a legal proceeding directly against
Southern Union to enforce the Property Trustee's rights under the
Subordinated Debt Securities without first instituting any legal
proceeding against the Property Trustee or any other person or
entity. Upon the occurrence of any of the events described in
clauses (i) or (ii) above, the holders of the Preferred Securities
also will be entitled, by majority vote, to appoint a Special
Regular Trustee, who shall have the same rights, powers and
privileges as the other Regular Trustees.
Option to Extend Interest Payment Period
Southern Union has the right under the Indenture (as such term is
defined in "Description of Subordinated Debt Securities" herein, to
defer payments of interest on the Subordinated Debt Securities by
extending the interest payment period at any time, and from time to
time, on the Subordinated Debt Securities. As a consequence of
such an extension, quarterly distributions on the Preferred Securi-
ties would be deferred (but despite such deferral would continue to
accrue with interest thereon compounded quarterly) by Southern
Union Financing during any such period. Such Extension Period is
limited to a period not exceeding 20 consecutive quarters. In the
event that Southern Union exercises this right to defer interest
payments, Southern Union shall not and shall cause any subsidiary
of Southern Union that is not a wholly-owned subsidiary of Southern
Union not to declare or pay dividends on, or make a distribution
with respect to, or redeem, purchase or acquire, or make a liquida-
tion payment with respect to, any of its capital stock until
deferred interest on the Subordinated Debt Securities is paid in
full; provided that, however, the foregoing restriction does not
apply to any stock dividends paid by Southern Union where the
dividend stock is of the same class as that of the stock held by
the holders receiving the dividend. In addition, Southern Union
will be required to defer interest payments on all series of Sub-
ordinated Debt Securities held by other Southern Union Trusts (as
defined in the accompanying Prospectus) or trustees of such trusts
until deferred interest on all Subordinated Debt Securities held by
Southern Union Trusts or trustees of such trusts is paid in full.
Prior to the termination of any such extension period, Southern
Union may further extend the interest payment period; provided
that, such Extension Period, together with all such previous and
further extensions thereof, may not exceed 20 consecutive quarters.
Upon the termination of any Extension Period and the payment of all
amounts then due, Southern Union may commence a new Extension
Period, subject to the above requirements. See "Description of the
Preferred Securities -- Distributions" and "Description of the
Subordinated Debt Securities -- Option to Extend Interest Payment
Period."
Should Southern Union exercise its right to defer payments of
interest by extending the interest payment period, each holder of
Preferred Securities will continue to accrue income (as original
issue discount) in respect of the deferred interest allocable to
its Preferred Securities for United States federal income tax
purposes, which will be allocated but not distributed, to holders
of record of Preferred Securities. As a result, each such holder
of Preferred Securities will recognize income for United States
federal income tax purposes in advance of the receipt of cash and
will not receive the cash from Southern Union Financing related to
such income if such holder disposes of its Preferred Securities
prior to the record date for the date on which distributions of
such amounts are made. Southern Union has no current intention of
exercising its right to defer payments of interest by extending the
interest payment period on the Subordinated Debt Securities. How-
ever, should Southern Union determine to exercise such right in
the future, the market price of the Preferred Securities is likely
to be affected. A holder that disposes of its Preferred Securities
during an Extension Period, therefore, might not receive the same
return on its investment as a holder that continues to hold its
Preferred Securities. In addition, as a result of the existence of
Southern Union's right to defer interest payments, the market price
of the Preferred Securities (which represent an undivided bene-
ficial interest in the Subordinated Debt Securities) may be more
volatile than other securities on which original issue discount
accrues that do not have such rights. See "United States Federal
Income Taxation -- Original Issue Discount."
Tax Event Redemption or Distribution
Upon the occurrence of a Tax Event, Southern Union Financing shall
be dissolved, except in the limited circumstance described below
with the result that the Subordinated Debt Securities may be dis-
tributed to the holders of the Trust Securities in connection with
the liquidation of Southern Union Financing. In certain circum-
stances, Southern Union shall have the right to redeem the Subordi-
nated Debt Securities, in whole or in part in lieu of a
distribution of the Subordinated Debt Securities by Southern Union
Financing; in which event Southern Union Financing will redeem the
Trust Securities on a pro rata basis to the same extent as the
Subordinated Debt Securities are redeemed by Southern Union. See
"Description of the Preferred Securities -- Tax Event Redemption or
Distribution."
Under current United States federal income tax law, a distribution
of Subordinated Debt Securities upon the dissolution of Southern
Union Financing would not be a taxable event to holders of the Pre-
ferred Securities. Upon occurrence of a Tax Event, however, a dis-
solution of Southern Union Financing in which holders of the
Preferred Securities receive cash would be a taxable event to such
holders. See "United States Federal Income Taxation -- Receipt of
Subordinated Debt Securities or Cash Upon Liquidation of Southern
Union Financing."
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debt Securities that may be distri-
buted in exchange for Preferred Securities if a dissolution or
liquidation of Southern Union Financing were to occur.
Accordingly, the Preferred Securities that an investor may pur-
chase, whether pursuant to the offer made hereby or in the
secondary market, or the Subordinated Debt Securities that a holder
of Preferred Securities may receive on dissolution and liquidation
of Southern Union Financing, may trade at a discount to the price
that the investor paid to purchase the Preferred Securities offered
hereby. Because holders of Preferred Securities may receive Sub-
ordinated Debt Securities upon the occurrence of a Tax Event,
prospective purchasers of Preferred Securities are also making an
investment decision with regard to the Subordinated Debt Securities
and should carefully review all the information regarding the Sub-
ordinated Debt Securities contained herein and in the accompanying
Prospectus. See "Description of the Preferred Securities -- Tax
Event Redemption or Distribution" and "Description of the Subordi-
nated Debt Securities -- General."
A Security holder who disposes of their Preferred Securities
between record dates for payments of distributions thereon will
nevertheless be required to include accrued but unpaid interest on
the Subordinated Debt Securities through the date of disposition in
income as ordinary income, and to add such amount to their adjusted
tax basis in their pro rata share of the underlying Subordinated
Debt Securities deemed disposed of.
Limited Voting Rights
Holders of Preferred Securities will have limited voting rights
and, except for the rights of holders of Preferred Securities to
appoint a Special Regular Trustee upon the occurrence of certain
events described herein, will not be able to appoint, remove or
replace, or to increase or decrease the number of Southern Union
Trustees, which voting rights are vested exclusively in the holder
of the Common Securities.
Trading Price
The Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to
the underlying Subordinated Debt Securities. See "United States
Federal Income Taxation -- Original Issue Discount" and "Sales of
Preferred Securities."
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed
charges for Southern Union on an historical basis for the year
ended June 30, 1994, and each of the four years in the period ended
December 31, 1993, and for the six-month and twelve-month periods
ended December 31, 1994. Such ratios are also presented on a pro
forma basis for the year ended June 30, 1994 and the twelve-month
periods ended December 31, 1994. For the purpose of calculating
such ratios, "earnings" consist of income from continuing opera-
tions before income taxes and "fixed charges" consist of interest
expense, amortization of debt discount or premium and an estimate
of interest implicit in rentals.
Twelve Six
Months Year Months
Decem- Ended Decem-
ber 31, June 30, ber 31, Year Ended December 31,
_______________________
1994 1994(a) 1994 1993 1992 1991 1990
_______ ________ _______ ____ ____ ____ ____
Ratio of
Earnings to
Fixed
Charges. . . . 1.21 1.49 1.03 1.76 1.77 1.82 1.10
==== ==== ==== ==== ==== ==== ====
Pro Forma -
Ratio of
Earnings to
Fixed
Charges(b) . . 1.38 1.39
==== ====
___________________________________
(a) During 1994, the Company changed its fiscal year-end from
December 31 to June 30.
(b) This pro forma ratio gives effect to an increase in out-
standing debt, as of the beginning of the period presented,
primarily as a result of the January 31, 1994 acquisition of
Missouri Gas Energy, which was financed through the sale of
$475 million of 7.60% Senior Notes. Those debt proceeds,
along with proceeds of a $50 million common stock rights
offering and working capital from operations, were also used
to retire approximately $105 million of long-term debt. This
ratio also assumes the acquisition of Missouri Gas Energy
occurred as of the beginning of the period presented, as
reflected in the pro forma condensed statement of consolidated
operations included in the 1994 Form 10-K and the December 31,
1994 Second Quarter Form 10-Q.
CAPITALIZATION OF SOUTHERN UNION AT DECEMBER 31, 1994
The following table sets forth the unaudited summary capitalization
of Southern Union and its consolidated subsidiaries as of
December 31, 1994, and as adjusted to reflect the application of
the estimated net proceeds from the sale of 3,000,000 Preferred
Securities. See "Use of Proceeds" below. The table should be read
in conjunction with Southern Union's consolidated financial state-
ments and notes thereto and other financial data incorporated by
reference herein. See "Incorporation of Certain Documents by
Reference" in the accompanying Prospectus.
At December 31, 1994
__________________________________
Actual As Adjusted (1)
_________________ _______________
Amount Percent Amount Percent
________ _______ ______ _______
(thousands, except percentages)
Short-term debt(2). . . . . . . $ 44,956 $
======== =======
Long-term debt
Senior notes . . . . . . . . 475,000
First mortgage bonds
and other. . . . . . . . . 3,722
________ _______
478,722 69.6% . %
Guaranteed minority interests
in trust holding subordi-
nated debentures of sub-
sidiary. . . . . . . . . . . -- -- .
Common stockholders' equity . . 209,460 30.4 .
________ ______ ________ ____
Total Capitalization . . . . $688,182 100.0% $ . %
======== ====== ======== ====
________________________________
(1) Adjusted for the sale of, and application of the estimated
proceeds from the sale of, the Preferred Securities.
(2) Includes long-term debt due within one year and notes payable.
The average outstanding balance on notes payable for the
twelve months ended December 31, 1994, was $18.5 million.
ACCOUNTING TREATMENT
The financial statements of Southern Union Financing will be
reflected in Southern Union's consolidated financial statements
with the Preferred Securities shown as a guaranteed minority
interests in trust holding subordinated debentures of subsidiary.
USE OF PROCEEDS
All of the proceeds from the sale of the Preferred Securities will
be invested by Southern Union Financing in Subordinated Debt
Securities of Southern Union issued pursuant to the Indenture
therefor described herein and ultimately will be used by Southern
Union for general corporate purposes, which may include capital
expenditures, repurchases of outstanding long-term debt securities,
investments in subsidiaries, working capital, repayment of loans
under bank credit agreements and other business opportunities.
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of
the Declaration. The Declaration will be qualified as an indenture
under the Trust Indenture Act. The Property Trustee, the
Wilmington Trust Company, will act as the indenture trustee for
purposes of compliance with the provisions of the Trust Indenture
Act. The terms of the Preferred Securities will include those
stated in the Declaration and those made part of the Declaration by
the Trust Indenture Act. The following summary of the principal
terms and provisions of the Preferred Securities does not purport
to be complete and is subject to, and qualified in its entirety by
reference to, the Declaration, a copy of which is filed as an
exhibit to the Registration Statement of which this Prospectus
Supplement is a part, the Trust Act and the Trust Indenture Act.
General
The Declaration authorizes the Regular Trustees to issue on behalf
of Southern Union Financing the Trust Securities, which represent
undivided beneficial interests in the assets of Southern Union
Financing. All of the Common Securities will be owned, directly or
indirectly, by Southern Union. The Common Securities rank pari
passu, and payments will be made thereon on a pro rata basis, with
the Preferred Securities, except that upon the occurrence of a
Declaration Event of Default, the rights of the holders of the
Common Securities to receive payment of periodic distributions and
payments upon liquidation, redemption and otherwise will be subor-
dinated to the rights of the holders of the Preferred Securities.
The Declaration does not permit the issuance by Southern Union
Financing of any securities other than the Trust Securities or the
incurrence of any indebtedness by Southern Union Financing. Pursu-
ant to the Declaration, the Property Trustee will own the Subordi-
nated Debt Securities purchased by Southern Union Financing for the
benefit of the holders of the Trust Securities. The payment of
distributions out of money held by Southern Union Financing, and
payments upon redemption of the Preferred Securities or liquidation
of Southern Union Financing, are guaranteed by Southern Union to
the extent described under "Description of the Guarantees" in the
accompanying Prospectus. The Guarantee will be held by Wilmington
Trust Company, the Guarantee Trustee, for the benefit of the
holders of the Preferred Securities. The Guarantee does not cover
payment of distributions when Southern Union Financing does not
have sufficient available funds to pay such distributions. In such
event, the remedy of a holder of Preferred Securities is to vote to
appoint a Special Regular Trustee and to direct the Property
Trustee to enforce the Property Trustees rights under the Subordi-
nated Debt Securities. See "Description of the Preferred Securi-
ties -- Voting Rights."
Distributions
Distributions on the Preferred Securities will be fixed at a rate
per annum of ____% of the stated liquidation amount of $25 per
Preferred Security. Distributions in arrears for more than one
quarter will bear interest thereon at the rate per annum of ____%
thereof compounded quarterly. The term "distribution" as used
herein includes any such interest payable unless otherwise stated.
The amount of distributions payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will
accrue from _______________________, and will be payable quarterly
in arrears on March 31, June 30, September 30 and December 31 of
each year, commencing __________________, when, as and if available
for payment by the Property Trustee from the Property Account,
except as otherwise described below.
Southern Union has the right under the Indenture to defer payments
of interest on the Subordinated Debt Securities by extending the
interest payment period from time to time on the Subordinated Debt
Securities, which, if exercised, would defer quarterly distribu-
tions on the Preferred Securities (though such distributions would
continue to accrue with interest since interest would continue to
accrue on the Subordinated Debt Securities) during any such
extended interest payment period. Such right to extend the
interest payment period for the Subordinated Debt Securities is
limited to a period not exceeding 20 consecutive quarters. In the
event that Southern Union exercises this right, Southern Union will
not and will cause any subsidiary of Southern Union that is not a
wholly-owned subsidiary of Southern Union not to declare or pay
dividends on, make distributions with respect to, or redeem, pur-
chase or acquire, or make a liquidation payment with respect to,
any of its capital stock until deferred interest on the Subordi-
nated Debt Securities is paid in full; provided that, however, the
foregoing restriction does not apply to any stock dividends paid by
Southern Union where the dividend stock is of the same class as
that of the stock held by the holders receiving the dividend. In
addition, Southern Union will be required to defer interest pay-
ments on all series of Subordinated Debt Securities held by other
Southern Union Trusts or a trustee of such trusts until deferred
interest on all Subordinated Debt Securities held by Southern Union
Trusts or a trustee of such trusts is paid in full. Prior to the
termination of any such Extension Period, Southern Union may
further extend the interest payment period; provided that, such
Extension Period, together with all such previous and further
extensions thereof, may not exceed 20 consecutive quarters. Upon
the termination of any Extension Period and the payment of all
amounts then due, Southern Union may commence a new Extension
Period, subject to the above requirements. See "Description of
the Subordinated Debt Securities -- Interest" and "-- Option to
Extend Interest Payment Period." If distributions are deferred,
such deferred distributions and accrued interest thereon shall be
paid to holders of record of the Preferred Securities as they
appear on the books and records of Southern Union Financing on the
record date next following the termination of such deferral period.
Distributions on the Preferred Securities must be paid on the dates
payable to the extent that Southern Union Financing has funds
available for the payment of such distributions in the Property
Account. Southern Union Financing's funds available for distribu-
tion to the holders of the Preferred Securities will be limited to
payments received from Southern Union on the Subordinated Debt
Securities. See "Description of the Subordinated Debt Securities."
The payment of distributions out of moneys held by Southern Union
Financing is guaranteed by Southern Union to the extent set forth
under "Description of the Guarantees" in the accompanying
Prospectus.
Distributions on the Preferred Securities will be payable to the
holders thereof as they appear on the books and records of Southern
Union Financing on the relevant record dates, which, as long as the
Preferred Securities remain in book-entry only form, will be one
Business Day prior to the relevant payment dates. Such distribu-
tions will be paid through the Property Trustee who will hold
amounts received in respect of the Subordinated Debt Securities
in the Property Account for the benefit of the holders of the Trust
Securities. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment will be made as
described under "Book-Entry Only Issuance -- The Depository Trust
Company" below. In the event that the Preferred Securities do not
continue to remain in book-entry only form, the Regular Trustees
shall have the right to select relevant record dates, which shall
be more than one Business Day prior to the relevant payment dates.
In the event that any date on which distributions are to be made on
the Preferred Securities is not a Business Day, then payment of the
distributions payable on such date will be made on the next suc-
ceeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such record date.
A "Business Day" shall mean any day other than Saturday, Sunday or
any other day on which banking institutions in the City of New York
(in the state of New York) are permitted or required by any appli-
cable law to close.
Mandatory Redemption
The Subordinated Debt Securities will mature on ________________,
2025, unless the maturity date is extended at the option of
Southern Union (provided certain financial covenants are met), and
may be redeemed, in whole or in part, at any time on or after
________________, 2000, or at any time in certain circumstances
upon the occurrence of a Tax Event. Upon the repayment of the
Subordinated Debt Securities, whether at maturity or upon redemp-
tion, the proceeds from such repayment or payment shall simul-
taneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the
Subordinated Debt Securities so repaid or redeemed at the Redemp-
tion Price; provided that, holders of Trust Securities shall be
given not less than 30 nor more than 60 days notice of such redemp-
tion. See "Description of the Subordinated Debt Securities --
Optional Redemption." In the event that fewer than all the
outstanding Preferred Securities are to be redeemed, the Preferred
Securities will be redeemed pro rata as described under "Book-Entry
Only Issuance -- the Depository Trust Company" below.
Tax Event Redemption or Distribution
"Tax Event" means that the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experi-
enced in such matters (a "Dissolution Tax Opinion") to the effect
that, as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or
taxing authority thereof or therein or (b) any amendment to or
change in an interpretation or application of such laws or
regulations by any legislative body, court, governmental agency or
regulatory authority (including the enactment of any legislation
and the publication of any judicial decision or regulatory deter-
mination on or after such date), there is more than an insubstan-
tial risk that (i) Southern Union Financing would be subject to
United States federal income tax with respect to income accrued or
received on the Subordinated Debt Securities, (ii) interest payable
to Southern Union Financing on the Subordinated Debt Securities
would not be deductible by Southern Union for United States federal
income tax purposes or (iii) Southern Union Financing would be
subject to more than a de minimis amount of other taxes, duties or
other governmental charges which change or amendment becomes
effective on or after the date of this Prospectus Supplement.
If, at any time, a Tax Event (as defined above) shall occur and be
continuing, Southern Union Financing shall, except in the limited
circumstances described below, be dissolved with the result that
the Subordinated Debt Securities with an aggregate principal amount
equal to the aggregate stated liquidation amount of, with an
interest rate identical to the distribution rate of, and accrued
and unpaid interest equal to accrued and unpaid distributions
on, the Trust Securities, would be distributed to the holders of
the Trust Securities in liquidation of such holders' interests in
Southern Union Financing on a pro rata basis within 90 days fol-
lowing the occurrence of such Tax Event; provided that, such
dissolution and distribution shall be conditioned on (i) the
Regular Trustees receipt of an opinion of nationally recognized
independent tax counsel experienced in such matters (a "No
Recognition Opinion"), which opinion may rely on published revenue
rulings of the Internal Revenue Service, to the effect that the
holders of the Trust Securities will not recognize any gain or loss
for United States federal income tax purposes as a result of such
dissolution and distribution of Subordinated Debt Securities, and
(ii) Southern Union being unable to avoid such Tax Event within
such 90 day period by taking some ministerial action or pursuing
some other reasonable measure that will have no adverse effect on
Southern Union Financing, Southern Union or the holders of the
Trust Securities. Furthermore, if after receipt of a Dissolution
Tax Opinion by the Regular Trustees (i) Southern Union has received
an opinion (a "Redemption Tax Opinion") of nationally recognized
independent tax counsel experienced in such matters that, as a
result of a Tax Event, there is more than an insubstantial risk
that Southern Union would be precluded from deducting the interest
on the Subordinated Debt Securities for United States federal
income tax purposes, even after the Subordinated Debt Securities
were distributed to the holders of Trust Securities in liquidation
of such holders' interests in Southern Union Financing as described
above, or (ii) the Regular Trustees shall have been informed by
such tax counsel that it cannot deliver a No Recognition Opinion to
Southern Union Financing, Southern Union shall have the right, upon
not less than 30 nor more than 60 days notice, to redeem the Subor-
dinated Debt Securities, in whole or in part, for cash within 90
days following the occurrence of such Tax Event, and, following
such redemption, Trust Securities with an aggregate liquidation
amount equal to the aggregate principal amount of the Subordinated
Debt Securities so redeemed shall be redeemed by Southern Union
Financing at the Redemption Price on a pro rata basis; provided,
however, that, if at the time there is available to Southern Union
or Southern Union Financing the opportunity to eliminate, within
such 90 day period, the Tax Event by taking some ministerial
action, such as filing a form or making an election or pursuing
some other similar reasonable measure that has no adverse effect on
Southern Union Financing, Southern Union or the holders of the
Trust Securities, Southern Union or Southern Union Financing will
pursue such measure in lieu of redemption.
If the Subordinated Debt Securities are distributed to the holders
of the Preferred Securities, Southern Union will use its best
efforts to cause the Subordinated Debt Securities to be listed on
the New York Stock Exchange or on such other exchange as the Pre-
ferred Securities are then listed.
After the date for any distribution of Subordinated Debt Securities
upon dissolution of Southern Union Financing, (i) the Preferred
Securities will no longer be deemed to be outstanding, (ii) the
Depositary or its nominee, as the record holder of the Preferred
Securities, will receive a registered global certificate or cer-
tificates representing the Subordinated Debt Securities to be
delivered upon such distribution, and (iii) any certificates repre-
senting Preferred Securities not held by the Depositary or its
nominee will be deemed to represent Subordinated Debt Securities
having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to
accrued and unpaid distributions on such Preferred Securities until
such certificates are presented to Southern Union or its agent for
transfer or reissuance.
There can be no assurance as to the market prices for either the
Preferred Securities or the Subordinated Debt Securities that may
be distributed in exchange for the Preferred Securities if a disso-
lution and liquidation of Southern Union Financing were to occur.
Accordingly, the Preferred Securities that an investor may pur-
chase, whether pursuant to the offer made hereby or in the
secondary market, or the Subordinated Debt Securities that an
investor may receive if a dissolution and liquidation of Southern
Union Financing were to occur, may trade at a discount to the
price that the investor paid to purchase the Preferred Securities
offered hereby.
Redemption Procedures
Southern Union Financing may not redeem fewer than all of the out-
standing Preferred Securities unless all accrued and unpaid distri-
butions have been paid on all Preferred Securities for all
quarterly distribution periods terminating on or prior to the date
of redemption.
If Southern Union Financing gives a notice of redemption in respect
of Preferred Securities (which notice will be irrevocable), then,
by 12:00 noon, New York time, on the redemption date, and if
Southern Union has paid to the Property Trustee a sufficient amount
of cash in connection with the related redemption or maturity of
the Subordinated Debt Securities, then Southern Union Financing
will irrevocably deposit with the Depositary funds sufficient to
pay the applicable Redemption Price and will give the Depositary
irrevocable instructions and authority to pay the Redemption Price
to the holders of the Preferred Securities. See "Book-Entry Only
Issuance -- The Depository Trust Company." If notice of redemption
shall have been given and funds deposited as required, then, imme-
diately prior to the close of business on the date of such deposit,
distributions will cease to accrue and all rights of holders of
such Preferred Securities so called for redemption will cease,
except the right of the holders of such Preferred Securities to
receive the Redemption Price but without interest on such Redemp-
tion Price. In the event that any date fixed for redemption of
Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next suc-
ceeding day that is a Business Day (without any interest or other
payment in respect of any such delay), except that, if such Busi-
ness Day falls in the next calendar year, such payment will be made
on the immediately preceding Business Day. In the event that pay-
ment of the Redemption Price in respect of Preferred Securities is
improperly withheld or refused and not paid either by Southern
Union Financing, or by Southern Union pursuant to the Guarantee,
distributions on such Preferred Securities will continue to accrue
at the then applicable rate from the original redemption date to
the date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calcu-
lating the Redemption Price.
In the event that fewer than all of the outstanding Preferred
Securities are to be redeemed, the Preferred Securities will be
redeemed pro rata as described below under "Book-Entry Only
Issuance -- The Depository Trust Company."
Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), Southern Union
or its subsidiaries may at any time, and from time to time, pur-
purchase outstanding Preferred Securities by tender, in the open
market or by private agreement.
Liquidation Distribution Upon Dissolution
In the event of any voluntary or involuntary liquidation, dissolu-
tion, winding-up or termination of Southern Union Financing (each
a "Liquidation"), the then holders of the Preferred Securities will
be entitled to receive out of the assets of Southern Union
Financing, after satisfaction of liabilities to creditors, distri-
butions in an amount equal to the aggregate of the stated liquida-
tion amount of $25 per Preferred Security plus accrued and unpaid
distributions thereon to the date of payment (the "Liquidation
Distribution"), unless, in connection with such Liquidation, Sub-
ordinated Debt Securities in an aggregate principal amount equal to
the Liquidation Distribution, with an interest rate identical to
the distribution rate of, and accrued and unpaid interest equal to
accrued and unpaid distributions on, the Preferred Securities have
been distributed on a pro rata basis to the holders of the Pre-
Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be
paid only in part because Southern Union Financing has insufficient
assets available to pay in full the aggregate Liquidation Distribu-
tion, then the amounts payable directly by Southern Union Financing
on the Preferred Securities shall be paid on a pro rata basis. The
holders of the Common Securities will be entitled to receive dis
tributions upon any such dissolution pro rata with the holders of
the Preferred Securities, except that if a Declaration Event of
Default has occurred and is continuing, the Preferred Securities
shall have a preference over the Common Securities with regard to
such distributions.
Pursuant to the Declaration, Southern Union Financing shall
terminate (i) on __________________, 2050, the expiration of the
term of Southern Union Financing, (ii) upon the bankruptcy of
Southern Union or the holder of the Common Securities, (iii) upon
the filing of a certificate of dissolution or its equivalent with
respect to the holder of the Common Securities or Southern Union
the filing of a certificate of cancellation with respect to
Southern Union Financing, or the revocation of the charter of the
holder of the Common Securities or Southern Union and the expira-
tion of 90 days after the date of revocation without a reinstate-
ment thereof, (iv) upon the distribution of Subordinated Debt
Securities upon the occurrence of a Tax Event, (v) upon the entry
of a decree of a judicial dissolution of the holder of the Common
Securities, Southern Union or Southern Union Financing, or (vi)
upon the redemption of all the Trust Securities.
Declaration Events of Default
An event of default under the Indenture (an "Indenture Event of
Default") constitutes an event of default under the Declaration
with respect to the Trust Securities (a "Declaration Event of
Default") provided that pursuant to the Declaration, the holder of
the Common Securities will be deemed to have waived any Declaration
Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Preferred Securi-
ties have been cured, waived or eliminated. Until such Declaration
Events of Default with respect to the Preferred Securities have
been so cured, waived, or otherwise eliminated, the Property
Trustee will be deemed to be acting solely on behalf of the holders
of the Preferred Securities and only the holders of the Preferred
Securities will have the right to direct the Property Trustee with
respect to certain matters under the Declaration and therefore the
Indenture.
Upon the occurrence of a Declaration Event of Default, the Property
Trustee as the sole holder of the Subordinated Debt Securities will
have the right under the Indenture to declare the principal of and
interest on the Subordinated Debt Securities to be immediately due
and payable.
Voting Rights
Except as described herein, under the Trust Act, the Trust Inden-
Indenture Act and under "Description of the Guarantees --
Amendments and Assignment" in the accompanying Prospectus, and as
otherwise required by law and the Declaration, the holders of the
Preferred Securities will have no voting rights.
If (i) Southern Union Financing fails to pay distributions in full
on the Preferred Securities for six (6) consecutive quarterly
distribution periods or (ii) a Declaration Event of Default occurs
and is continuing (each an "Appointment Event"), then the holders
of the Preferred Securities, acting as a single class, will be
entitled by the majority vote of such holders to appoint a Special
Regular Trustee. For purposes of determining whether Southern
Union Financing has failed to pay distributions in full for six (6)
consecutive quarterly distribution periods, distributions shall be
deemed to remain in arrears, notwithstanding any payments in
respect thereof, until full cumulative distributions have been or
contemporaneously are paid with respect to all quarterly distribu-
tion periods terminating on or prior to the date of payment of such
cumulative distributions. Any holder of Preferred Securities
(other than Southern Union or any of its affiliates) shall be
entitled to nominate any person to be appointed as Special Regular
Trustee. Not later than 30 days after such right to appoint a
Special Regular Trustee arises, the Regular Trustees shall convene
a meeting of the holders of Preferred Securities for the purpose of
appointing a Special Regular Trustee. If the Regular Trustees fail
to convene such meeting within such 30-day period, the holders of
not less than 10% of the aggregate stated liquidation amount of the
outstanding Preferred Securities will be entitled to convene such
meeting. The provisions of the Declaration relating to the con-
vening and conduct of the meetings of the holders will apply with
respect to any such meeting. Any Special Regular Trustee so
appointed shall cease to be a Special Regular Trustee if the
Appointment Event pursuant to which the Special Regular Trustee was
appointed and all other Appointment Events cease to be continuing.
Notwithstanding the appointment of any such Special Regular
Trustee, Southern Union shall retain all rights under the Inden-
ture, including the right to defer payments of interest by
extending the interest payment period or as provided under "Des-
cription of the Subordinated Debt Securities -- Option to Extend
Interest Payment Period". If such an extension occurs, there will
be no Indenture Event of Default and consequently, no Declaration
Event of Default for failure to make any scheduled interest payment
during the Extension Period on the date originally scheduled.
Subject to the requirement of the Property Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of
this paragraph, the holders of a majority in aggregate liquidation
amount of the Preferred Securities, have the right to (i) direct
the time, method and place of conducting any proceeding for any
remedy available to the Property Trustee, or direct the exercise of
any trust or power conferred upon the Property Trustee under the
Declaration including, the right to direct the Property Trustee, as
holder of the Subordinated Debt Securities (i) direct the time,
method and place of conducting any proceeding for any remedy avail-
able to the Indenture Trustee, or executing any trust or power con-
ferred on the Indenture Trustee with respect to the Subordinated
Debt Securities; or (ii) waive any past Indenture Event of Default
which is waivable under Section 513 of the Base Indenture (as
defined herein), or (iii) exercise any right to rescind or annul a
declaration that the principal of all the Subordinated Debt Securi-
Securities shall be due and payable; provided, however, that,
where a consent under the Indenture would require the consent of
more than a majority of the holders (a "Super-Majority") affected
thereby, only the holders of at least such Super-Majority of the
Preferred Securities may direct the Property Trustee to give such
consent. If the Property Trustee fails to enforce its rights under
the Subordinated Debt Securities, a record holder of Preferred
Securities may, after a period of 30 days has elapsed from such
holder's written request to the Property Trustee to enforce such
rights, institute a legal proceeding directly against Southern
Union to enforce the Property Trustee's rights under the Subordi-
nated Debt Securities without first instituting any legal pro-
ceeding against the Property Trustee or any other person or entity.
The Property Trustee shall notify all holders of the Preferred
Securities of any notice of default received from the Indenture
Trustee with respect to the Subordinated Debt Securities. Such
notice shall state that such Indenture Event of Default also
constitutes a Declaration Event of Default. Except with respect
to directing the time, method and place of conducting any remedy
available to the Property Trustee, and the Indenture Trustee as set
forth above, the Property Trustee shall not take any of the fore-
going actions at the direction of the holders of the Preferred
Securities unless the Property Trustee has obtained an opinion of
tax counsel to the effect that, as a result of such action,
Southern Union Financing will not fail to be classified as a
grantor trust for United States federal income tax purposes.
In the event the consent of the Property Trustee as the holder of
the Subordinated Debt Securities is required under the Indenture
with respect to any amendment, modification or termination of the
Indenture or the Subordinated Debt Securities, the Property Trustee
shall request the direction of the holders of the Trust Securities
with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termi-
nation as directed by a majority in liquidation amount of the Trust
Securities voting together as a single class; provided, however,
_________________
that where a consent under the Indenture would require the consent
of a Super Majority, the Property Trustee may only give such con-
sent at the direction of the holder of at least the proportion in
liquidation amount of the Trust Securities which the relevant Super
Majority represents of the aggregate principal amount of the Subor-
dinated Debt Securities outstanding; provided further that the
________________
Property Trustee shall not take any action in accordance with the
directions of the holders of the Trust Securities unless the
Property Trustee has obtained an opinion of tax counsel to the
affect that for the purposes of United States federal income tax
Southern Union Financing will not be classified as other than a
grantor trust.
A waiver of an Indenture Event of Default will constitute a waiver
of the corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securi-
ties may be given at a separate meeting of holders of Preferred
Securities convened for such purpose, at a meeting of all of the
holders of Trust Securities or pursuant to written consent. The
Regular Trustees will cause a notice of any meeting at which
holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such holders is to
be taken, to be mailed to each holder of record of Preferred
Securities. Each such notice will include a statement setting
forth the following information: (i) the date of such meeting or
the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which
such holders are entitled to vote or of such matter upon which
written consent is sought; and (iii) instructions for the delivery
of proxies or consents. No vote or consent of the holders of Pre-
ferred Securities will be required for Southern Union Financing to
redeem and cancel Preferred Securities or distribute Subordinated
Debt Securities in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled
to vote or consent under any of the circumstances described above,
any of the Preferred Securities that are owned at such time by
Southern Union or any entity directly or indirectly controlling or
controlled by or under direct or indirect common control with
Southern Union, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Pre-
ferred Securities were not outstanding.
The procedures by which holders of Preferred Securities may exer-
rcise their voting rights are described below. See "-- Book-Entry
Only Issuance -- The Depository Trust Company" below.
Except in the limited circumstances described above, in connection
with the appointment of a Special Regular
Trustee, holders of the Preferred Securities will have no rights to
appoint or remove the Southern Union Trustees, who may be
appointed, removed or replaced solely by Southern Union as the
indirect or direct holder of all of the Common Securities.
Modifications of the Declaration
The Declaration may be modified and amended if approved by a
majority of the Regular Trustees, provided that if any proposed
amendment provides for, or the Regular Trustees otherwise propose
to effect, (i) any action that would adversely affect the powers,
preferences or special rights of the Trust Securities, whether by
way of amendment to the Declaration or otherwise, or (ii) the dis-
solution, winding-up or termination of Southern Union Financing
other than pursuant to the terms of the Declaration, then the
holders of the Trust Securities voting together as a single class
will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the
approval of at least 66 2/3% in liquidation amount of the Trust
Securities affected thereby; provided, that the rights of holders
of Preferred Securities under Article V of the Declaration to
appoint, remove or replace a Special Regular Trustee shall not be
amended without the consent of each holder of Preferred Securities;
provided, further, if any amendment or proposal referred to in
clause (i) above would adversely affect only the Preferred Securi-
ties or the Common Securities, then only the affected class will be
entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of
66 2/3% in liquidation amount of such class of Securities.
Notwithstanding the foregoing, no amendment or modification may be
made to the Declaration if such amendment or modification would (i)
cause Southern Union Financing to be characterized for purposes of
United States federal income taxation as other than a grantor
trust, (ii) reduce or otherwise adversely affect the powers of the
Property Trustee, (iii) cause Southern Union Financing to be deemed
an "investment company" which is required to be registered under
the Investment Company Act of 1940, as amended (the "1940 Act").
Mergers, Consolidations or Amalgamations
Southern Union Financing may not consolidate, amalgamate, merge or
be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety, to any corporation or other
body, except as described below. Southern Union Financing may,
with the consent of a majority of the Regular Trustees and without
the consent of the holders of the Preferred Securities, consoli-
date, amalgamate, merge with or into, or be replaced by a trust
organized as such under the laws of any State; provided that, (i)
such successor entity either (x) expressly assumes all of the obli-
gations of Southern Union Financing under the Preferred Securities
or (y) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred Securities
(the "Successor Securities"), so long as the Successor Securities
rank the same as the Preferred Securities rank with respect to
distributions and payments upon liquidation, redemption and other-
wise, (ii) Southern Union expressly acknowledges a trustee of such
successor entity possessing the same powers and duties as the
Property Trustee as the holder of the Subordinated Debt Securities,
(iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notifica-
tion of issuance, on any national securities exchange or with
another organization on which the Preferred Securities are then
listed or quoted, (iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized
statistical rating organization, (v) such merger, consolidation,
amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Preferred Securi-
ties (including any Successor Securities) in any material respect
(other than with respect to any dilution of the holders' interest
in the new entity), (vi) such successor entity has a purpose
identical to that of Southern Union Financing, (vii) prior to such
merger, consolidation, amalgamation or replacement, Southern Union
has received an opinion of a nationally recognized independent
counsel to Southern Union Financing experienced in such matters to
the effect that, (A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the holders of the Preferred Securities (including
any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the new
entity), and (B) following such merger, consolidation, amalgamation
or replacement, neither Southern Union Financing nor such successor
entity will be required to register as an investment company under
the 1940 Act and (viii) Southern Union guarantees the obligations
of such successor entity under the Successor Securities at least to
the extent provided by the Guarantee. Notwithstanding the fore-
going, Southern Union Financing shall not, except with the consent
of holders of 100% in liquidation amount of the Trust Securities,
consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate,
merge with or into, or replace it, if such consolidation, amalgama-
tion, merger or replacement would cause Southern Union Financing
or the Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes.
Book-Entry Only Issuance -- The Depository Trust Company
The Depository Trust Company ("DTC") will act as securities
depositary for the Preferred Securities. The Preferred Securities
will be issued only as fully-registered securities registered in
the name of Cede & Co. (DTC's nominee). One or more fully-
registered global Preferred Securities certificates, representing
the total aggregate number of Preferred Securities, will be issued
and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form.
Such laws may impair the ability to transfer beneficial interests
in the global Preferred Securities as represented by a global
certificate.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC holds securi-
securities that its participants ("Participants") deposit with DTC.
DTC also facilitates the settlement among Participants of securi-
ties transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Partici-
pants and by the New York Stock Exchange, Inc. (the "New York Stock
Exchange"), the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system
is also available to others, such as securities brokers and
dealers, banks and trust companies that clear transactions through
or maintain a direct or indirect custodial relationship with a
Direct Participant either directly or indirectly ("Indirect Par-
ticipants"). The rules applicable to DTC and its Participants are
on file with the Securities and Exchange Commission.
Purchases of Preferred Securities within the DTC system must be
made by or through Direct Participants, which will receive a credit
for the Preferred Securities on DTC's records. The ownership
interest of each actual purchaser of each Preferred Security
("Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial
Owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of
their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to
be accomplished by entries made on the books of Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the Pre-
ferred Securities, except in the event that use of the book-entry
system for the Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities
deposited by Participants with DTC are registered in the name of
DTC's nominee, Cede & Co. The deposit of Preferred Securities with
DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Preferred Securities. DTC's records
reflect only the identity of the Direct Participants to whose
accounts such Preferred Securities are credited, which may or may
not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of
their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and
by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any
statutory or regulatory requirements that may be in effect from
time to time.
Redemption notices shall be sent to Cede & Co. If less than all of
the Preferred Securities are being redeemed, DTC will reduce pro
rata the amount of the interest of each Direct Participant in such
series to be redeemed, provided that if, as a result of such pro
rata redemption, any Direct Participants would hold fractional
interests in the Preferred Securities, DTC will round the amount of
the interest of such Direct Participants to be redeemed to avoid
such fractional interests.
Although voting with respect to the Preferred Securities is
limited, in those cases where a vote is required, neither DTC nor
Cede & Co. will itself consent or vote with respect to Preferred
Securities. Under its usual procedures, DTC would mail an Omnibus
Proxy to Southern Union Financing as soon as possible after the
record date. The Omnibus Proxy assigns Cede & Co. consenting or
voting rights to those Direct Participants to whose accounts the
Preferred Securities are credited on the record date (identified in
a listing attached to the Omnibus Proxy). Southern Union and
Southern Union Financing believe that the arrangements among DTC,
Direct and Indirect Participants, and Beneficial Owners will enable
the Beneficial Owners to exercise rights equivalent in substance to
the rights that can be directly exercised by a holder of a bene-
beneficial interest in Southern Union Financing.
Distribution payments on the Preferred Securities will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on
the relevant payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe
that it will not receive payments on such payment date. Payments
by participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securi-
ties held for the account of customers in bearer form or registered
in "street name," and such payments will be the responsibility of
such Participant and not of DTC, Southern Union Financing or
Southern Union, subject to any statutory or regulatory requirements
to the contrary that may be in effect from time to time. Payment
of distributions to DTC is the responsibility of Southern Union
Financing, disbursement of such payments to Direct Participants is
the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners is the responsibility of Direct and Indirect Par-
ticipants.
Except as provided herein, a Beneficial Owner in a global Preferred
Security certificate will not be entitled to receive physical
delivery of Preferred Securities. Accordingly, each Beneficial
Owner must rely on the procedures of DTC to exercise any rights
under the Preferred Securities.
DTC may discontinue providing its services as Depositary with
respect to the Preferred Securities at any time by giving reason-
able notice to Southern Union Financing. Under such circumstances,
in the event that a successor securities depositary is not
obtained, Preferred Securities certificates are required to be
printed and delivered. Additionally, the Regular Trustees (with
the consent of Southern Union) may decide to discontinue use of the
system of book-entry transfers through DTC (or any successor
depositary) with respect to the Preferred Securities. In that
event, certificates for the Preferred Securities will be printed
and delivered.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Southern Union and
Southern Union Financing believes to be reliable, but neither
Southern Union nor Southern Union Financing takes responsibility
for the accuracy thereof.
Information Concerning the Property Trustee
The Property Trustee, prior to the occurrence of a default with
respect to the Trust Securities, undertakes to perform only such
duties as are specifically set forth in the Declaration and, after
default, shall exercise the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs.
Subject to such provision, the Property Trustee is under no obliga-
tion to exercise any of the powers vested in it by the Declaration
at the request of any holder of Preferred Securities, unless
offered reasonable indemnity by such holder against the costs,
expenses and liabilities which might be incurred thereby. The
holders of Preferred Securities will not be required to offer
such indemnity in the event such holders, by exercising their
voting rights, direct the Property Trustee to take any action
following a Declaration Event of Default.
Paying Agent
In the event that the Preferred Securities do not remain in book-
entry only form, the following provisions would apply:
The Property Trustee will act as paying agent, and may designate an
additional or substitute paying agent at any time.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of Southern Union Financing, but
upon payment (with the giving of such indemnity as Southern Union
Financing or Southern Union may require) in respect of any tax or
other government charges that may be imposed in relation to it.
Southern Union Financing will not be required to register or cause
to be registered the transfer of Preferred Securities after such
Preferred Securities have been called for redemption.
Governing Law
The Declaration and the Preferred Securities will be governed by,
and construed in accordance with, the internal laws of the States
of Delaware.
Miscellaneous
The Regular Trustees are authorized and directed to operate
Southern Union Financing in such a way so that Southern Union
Financing will not be required to register as an "investment
company" under the 1940 Act or characterized as other than a
grantor trust for United States federal income tax purposes.
Southern Union is authorized and directed to conduct its affairs so
that the Subordinated Debt Securities will be treated as indebted-
ness of Southern Union for United States federal income tax pur-
poses. In this connection, Southern Union and the Regular Trustees
are authorized to take any action, not inconsistent with applicable
law, the certificate of trust of Southern Union Financing, the
certificate of incorporation of Southern Union, or that each of
Southern Union and the Regular Trustees determines in their dis-
cretion to be necessary or desirable to achieve such end, as long
as such action does not adversely affect the interests of the
holders of the Preferred Securities or vary the terms thereof.
Holders of the Preferred Securities have no preemptive rights.
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
Set forth below is a description of the specific terms of the Sub-
ordinated Debt Securities in which Southern Union Financing will
invest the proceeds from the issuance and sale of the Trust
Securities. This description supplements the description of the
general terms and provisions of the Subordinated Debt Securities
set forth in the accompanying Prospectus under the caption
"Particular Terms of the Subordinated Debt Securities." The fol-
following description does not purport to be complete and is sub-
ject to, and is qualified in its entirety by reference to, the
description in the accompanying Prospectus and the Subordinated
Debt Securities Indenture, dated as of ________________, 1995, (the
"Base Indenture") between Southern Union and The Chase Manhattan
Bank (N. A.), as Trustee (the "Indenture Trustee"), as supplemented
by a First Supplemental Indenture, dated as of ___________________,
1995 (the Base Indenture, as so supplemented, is hereinafter
referred to as the "Indenture"), the forms of which are filed as an
Exhibit to the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus forms a part. Certain
capitalized terms used herein are defined in the Indenture.
Under certain circumstances involving the dissolution of Southern
Union Financing following the occurrence of a Tax Event, Subordi-
nated Debt Securities may be distributed to the holders of the Pre-
ferred Securities in liquidation of Southern Union Financing. See
"Description of the Preferred Securities -- Tax Event Redemption or
Distribution."
If the Subordinated Debt Securities are distributed to the holders
of the Preferred Securities, Southern Union will use its best
efforts to have the Subordinated Debt Securities listed on the New
York Stock Exchange or on such other national securities exchange
or similar organization on which the Preferred Securities are then
listed or quoted.
General
The Subordinated Debt Securities will be issued as unsecured debt
under the Indenture. The Subordinated Debt Securities will be
limited in aggregate principal amount to approximately $___________
million, such amount being the sum of the aggregate stated
liquidation of the Preferred Securities and the capital contributed
by Southern Union in exchange for the Common Securities (the
"Southern Union Payment").
The Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Subordinated Debt
Securities will mature and become due and payable, together with
any accrued and unpaid interest thereon including Compound Interest
(as hereinafter defined) and Additional Interest (as hereinafter
defined), if any, on _______________, 2025, subject to the election
of Southern Union to extend the scheduled maturity date of the Sub-
ordinated Debt Securities to a date not later than _______________,
2044, which election is subject to Southern Union's satisfying
certain financial covenants. See " -- Option to Extend Maturity."
If Subordinated Debt Securities are distributed to holders of Pre-
ferred Securities in liquidation of such holders' interests in
Southern Union Financing, such Subordinated Debt Securities will
initially be issued as a Global Security (as defined below). As
described herein, under certain limited circumstances, Subordinated
Debt Securities may be issued in certificated form in exchange for
a Global Security (as defined below). See "Book-Entry and Settle-
ment" below. In the event that Subordinated Debt Securities are
issued in certificated form, such Subordinated Debt Securities will
be in denominations of $25 and integral multiples thereof and may
be transferred or exchanged at the offices described below. Pay-
ments on Subordinated Debt Securities issued as a Global Security
will be made to DTC, a successor Depositary or, in the event that
no Depositary is used, to a Paying Agent for the Subordinated
Debt Securities. In the event Subordinated Debt Securities are
issued in certificated form, principal and interest will be pay-
able, the transfer of the Subordinated Debt Securities will be
registrable and Subordinated Debt Securities will be exchangeable
for Subordinated Debt Securities of other denominations of a like
aggregate principal amount at the corporate trust office of the
Trustee in ___________________, ____________________; provided
that, payment of interest may be made at the option of Southern
Union by check mailed to the address of the persons entitled
thereto.
Subordination
The Indenture provides that the Subordinated Debt Securities are
subordinated and junior in right of payment to all Senior Indebted-
ness of Southern Union. No payment of principal (including redemp-
tion and sinking fund payments), premium, if any, or interest on
the Subordinated Debt Securities may be made (i) if any Senior
Indebtedness of Southern Union is not paid when due, (ii) any
applicable grace period with respect to such default has ended and
such default has not been cured or waived or ceased to exist, or
(iii) if the maturity of any Senior Indebtedness of Southern Union
has been accelerated because of a default. Upon any distribution
of assets of Southern Union to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other
proceedings, all principal, premium, if any, and interest due or to
become due on all Senior Indebtedness of Southern Union must be
paid in full before the holders of Subordinated Debt Securities are
entitled to receive or retain any payment. Upon satisfaction of
all claims of all Senior Indebtedness then outstanding the rights
of the holders of the Subordinated Debt Securities will be subor-
gated to the rights of the holders of Senior Indebtedness of
Southern Union to receive payments or distributions applicable
to Senior Indebtedness until all amounts owing on the Subordinated
Debt Securities are paid in full. In addition, the Subordinated
Debt Securities will rank pari passu will all other subordinated
debt securities issued under the Base Indenture to other Southern
Union Trusts or to other trusts or partnerships affiliated with
Southern Union in connection with the issuance of any preferred
securities, and also rank pari passu with the other general
unsecured creditors of Southern Union.
The term "Senior Indebtedness" means, with respect to Southern
Union, (i) the principal, premium, if any, and interest in respect
of (A) indebtedness of such obligor for money borrowed and (B)
indebtedness evidenced by securities, debentures, bonds or other
similar instruments issued by such obligor including, without
limitation, in the case of Southern Union, all obligations under
its 7.60% Senior Notes due 2024, (ii) all capital lease obligations
of such obligor, (iii) all obligations of such obligor issued or
assumed as the deferred purchase price of property, all conditional
sale obligations of such obligor and all obligations of such
obligor under any title retention agreement (but excluding trade
accounts payable arising in the ordinary course of business), (iv)
all obligations of such obligor for the reimbursement on any letter
of credit, banker's acceptance, security purchase facility or simi-
lar credit transaction, (v) all obligations of the type referred to
in clauses (i) through (iv) of other persons for the payment of
which such obligor is responsible or liable as obligor, guarantor
or otherwise, and (vi) all obligations of the type referred to in
clauses (i) through (v) of other persons secured by any lien on any
property or asset of such obligor (whether or not such obligation
is assumed by such obligor), except for (1) any such indebtedness
that is by its terms subordinated to or pari passu with the Subor-
dinated Debt Securities and, in particular, the Subordinated Debt
Securities shall rank pari passu with all other debt securities and
guarantees issued in respect of those debt securities, issued to
(a) any other Southern Union Trust or a trustee of such trust and
(b) any other trust or a trustee of such trust, partnership or
other entity affiliated with Southern Union that is a financing
vehicle of Southern Union (a "financing entity") in connection with
the issuance of Preferred Securities by such financing entity and
(2) any indebtedness between or among such obligor and its affili-
ates. Such Senior Indebtedness shall continue to be Senior
Indebtedness and entitled to the benefits of the subordination
provisions irrespective of any amendment, modification or waiver
of any term of such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior
Indebtedness that may be issued by Southern Union. As of
December 31, 1994, Senior Indebtedness of Southern Union aggregated
approximately $475 million.
Certain Covenants
Southern Union will not and will cause any subsidiary of Southern
Union that is not a wholly-owned subsidiary of Southern Union not
to declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation
payment with respect to, any of its capital stock if at such time
(i) there shall have occurred any event that would constitute an
Event of Default under the Subordinated Debt Securities Indenture,
(ii) Southern Union shall be in default with respect to its payment
of any obligations under the Guarantee or (iii) Southern Union
shall have given notice of its election to defer payments of
interest by extending the interest payment period as provided in
the Indenture and such period, or any extension thereof, shall be
continuing; provided, however, that, the foregoing restriction does
not apply to any stock dividends paid by Southern Union where the
dividend stock is of the same class as that of the stock held by
the holders receiving the dividend. If Southern Union elects to
extend the interest payment period with respect to one series of
Subordinated Debt Securities issued to a Southern Union Trust or a
trustee of such trust, it must also elect to extend the interest
payment period for all series of Subordinated Debt Securities
issued to other Southern Union Trusts or a trustee of such trust,
until deferred interest on all Subordinated Debt Securities issued
to Southern Union Trusts is paid in full.
For so long as such Trust Securities remain outstanding, Southern
Union will covenant (i) to directly or indirectly maintain 100%
ownership of the Common Securities of Southern Union Financing;
provided, however, that, any permitted successor of Southern Union
under the Indenture may succeed to Southern Union's ownership of
such Common Securities, (ii) to not voluntarily dissolve, wind-up
or terminate Southern Union Financing, except in connection with
certain mergers, consolidations or amalgamations permitted by the
Declaration, and (iii) to use its reasonable efforts to cause
Southern Union Financing to remain a business trust, except in
connection with the distribution of Subordinated Debt Securities to
the holders of Trust Securities in liquidation of Southern Union
Financing and in connection with certain mergers, consolidations or
amalgamations permitted by the Declaration, and otherwise continue
to be treated as a grantor trust for United States federal income
tax purposes.
The Indenture does not limit the aggregate amount of Senior
Indebtedness which may be issued by Southern Union or Southern
Union Financing. As of December 31, 1994, Senior Indebtedness of
Southern Union aggregated approximately $475 million.
Optional Redemption
Southern Union shall have the right to redeem the Subordinated Debt
Securities, in whole or in part, from time to time, on or after
___________________, 2000, or at any time in certain circumstances
upon the occurrence of a Tax Event as described under "Description
of the Preferred Securities -- Tax Event Redemption or Distribu-
tion," upon not less than 30 nor more than 60 days notice, at a
redemption price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest, including Additional
Interest, if any, to the redemption date. If a partial redemption
of the Preferred Securities resulting from a partial redemption of
the Subordinated Debt Securities would result in the delisting of
the Preferred Securities, Southern Union may only redeem the Subor-
dinated Debt Securities in whole.
Interest
Each Subordinated Debt Security shall bear interest at the rate of
____% per annum from the original date of issuance, payable
quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year (each an "Interest Payment Date"),
commencing June 30, 1995, to the person in whose name such Subordi-
nated Debt Security is registered, subject to certain exceptions,
at the close of business on the Business Day next preceding such
Interest Payment Date. In the event the Subordinated Debt Securi-
ties shall not continue to remain in book-entry only form, Southern
Union shall have the right to select record dates, which shall be
more than one Business Day prior to the Interest Payment Date.
The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. The amount of
interest payable for any period shorter than a full quarterly
period for which interest is computed, will be computed on the
basis of the actual number of days elapsed in such 30-day month.
In the event that any date on which interest is payable on the Sub-
Subordinated Debt Securities is not a Business Day, then payment
of the interest payable on such date will be made on the next suc-
ceeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, then such
payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
Option to Extend Maturity Date
The maturity date of the Subordinated Debt Securities is
__________________, 2025 (the "Scheduled Maturity Date"). Southern
Union, however, may, before the Scheduled Maturity Date, extend
such maturity date no more than one time for up to an additional 19
years from the Scheduled Maturity Date; provided that (a) Southern
Union is not in bankruptcy or otherwise insolvent, (b) Southern
Union is not in default on any Subordinated Debt Securities issued
to a Southern Union Trust or to any trustee of such trust in con-
nection with an issuance of Trust Securities by such Southern Union
Trust, (c) Southern Union has made timely payment on the Subordi-
nated Debt Securities for the immediately preceding 6 quarters
without deferrals, (d) Southern Union Financing is not in arrears
on payments of distributions on the Preferred Securities, (e) such
Subordinated Debt Securities are rated Investment Grade by any one
of Standard & Poor's Corporation, Moody's Investors Service, Inc.,
Fitch Investor Services, Duff & Phelps Credit Rating Company or any
other nationally recognized statistical rating organization, and
(g) the final maturity of such Subordinated Debt Securities is not
later than the 49th anniversary of the issuance of the Preferred
Securities. Pursuant to the Declaration, the Regular Trustees are
required to give notice of Southern Union's election to extend the
Scheduled Maturity Date to the holders of the Preferred Securities.
Option to Extend Interest Payment Period
Southern Union shall have the right at any time, and from time to
time, during the term of the Subordinated Debt Securities to defer
payments of interest by extending the interest payment period for
a period not exceeding 20 consecutive quarters, at the end of which
Extension Period, Southern Union shall pay all interest then
accrued and unpaid (including any Additional Interest, as herein
defined) together with interest thereon compounded quarterly at the
rate specified for the Subordinated Debt Securities to the extent
permitted by applicable law ("Compound Interest"); provided that,
during any such Extension Period, Southern Union shall not, and
shall cause any subsidiary of Southern Union that is not a wholly-
owned subsidiary of Southern Union not to, declare or pay any divi-
dend on, make any distribution with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to any
of its capital stock or the capital stock until deferred interest
on the Subordinated Debt Securities is paid in full; provided that,
however, the foregoing restriction does not apply to any stock
dividends paid by Southern Union where the dividend stock is of the
same class as that of the stock held by the holders receiving the
dividend. In addition, Southern Union will be required to defer
interest payments on all series of Subordinated Debt Securities
held by other Southern Union Trusts or trustees of such Trusts
until deferred interest on all Subordinated Debt Securities held by
Southern Union Trusts or trustees of such Trusts is paid in full.
Prior to the termination of any such Extension Period, Southern
Union may further defer payments of interest by extending the
interest payment period; provided, however, that, such Extension
Period, including all such previous and further extensions, may not
exceed 20 consecutive quarters. Upon the termination of any
Extension Period and the payment of all amounts then due, Southern
Union may commence a new Extension Period, subject to the terms set
forth in this section. No interest during an Extension Period,
except at the end thereof, shall be due and payable. Southern
Union has no present intention of exercising its right to defer
payments of interest by extending the interest payment period on
the Subordinated Debt Securities. If the Property Trustee shall be
the sole holder of the Subordinated Debt Securities, Southern Union
shall give the Regular Trustees and the Property Trustee notice of
its selection of such Extension Period one Business Day prior to
the earlier of (i) the date distributions on the Preferred Securi-
ties are payable or (ii) the date the Regular Trustees are required
to give notice to the New York Stock Exchange (or other applicable
self-regulatory organization) or to holders of the Preferred
Securities of the record date or the date such distribution is pay-
able, but, in any event, such notice shall be given not less than
one Business Day prior to such record date. The Property Trustee
shall give notice of Southern Union's selection of such Extension
Period to the holders of the Preferred Securities. If the Property
Trustee shall not be the sole holder of the Subordinated Debt
Securities, Southern Union shall give the holders of the Subordi-
nated Debt Securities notice of its selection of such Extension
Period ten Business Days prior to the earlier of (i) the Interest
Payment Date or (ii) the date upon which Southern Union is required
to give notice to the New York Stock Exchange (or other applicable
self-regulatory organization) or to holders of the Subordinated
Debt Securities of the record or payment date of such related
interest payment, but, in any event, such notice shall be given not
less than two Business Days prior to such record date.
Additional Interest
If at any time Southern Union Financing shall be required to pay
any taxes, duties, assessments or governmental charges of whatever
nature (other than withholding taxes) imposed by the United States,
or any other taxing authority, then, in any such case, Southern
Union will pay as additional interest ("Additional Interest") such
additional amounts as shall be required so that the net amounts
received and retained by Southern Union Financing after paying any
such taxes, duties, assessments or other governmental charges will
be not less than the amounts Southern Union Financing would have
received had no such taxes, duties, assessments or other govern-
mental charges been imposed.
Indenture Events of Default
If any Indenture Event of Default shall occur and be continuing,
the Property Trustee, as the holder of the Subordinated Debt
Securities will have the right to declare the principal of and the
interest on the Subordinated Debt Securities (including any Com-
pound Interest and Additional Interest, if any) and any other
amounts payable under the Indenture to be forthwith due and payable
and to enforce its other rights as a creditor with respect to the
Subordinated Debt Securities. See "Particular Terms of the Subor-
dinated Debt Securities -- Events of Default" in the accompanying
Prospectus for a description of the Events of Default. An Inden-
ture Event of Default also constitutes a Declaration Event of
Default. The holders of Preferred Securities in certain circum-
stances have the right to direct the Property Trustee to exercise
its rights as the holder of the Subordinated Debt Securities. See
"Description of the Preferred Securities -- Declaration Events of
Default" and "Voting Rights."
Book-Entry and Settlement
If distributed to holders of Preferred Securities in connection
with the involuntary or voluntary dissolution, winding-up or
liquidation of Southern Union Financing as a result of the
occurrence of a Tax Event, the Subordinated Debt Securities will be
issued in the form of one or more global certificates (each a
"Global Security") registered in the name of the Depositary or its
nominee. Except under the limited circumstances described below,
Subordinated Debt Securities represented by the Global Security
will not be exchangeable for and will not otherwise be issuable as
Subordinated Debt Securities in definitive form. The Global
Securities described above may not be transferred except by the
Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary
or to a successor Depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive
form. Such laws may impair the ability to transfer beneficial
interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a
Global Security will not be entitled to receive physical delivery
of Subordinated Debt Securities in definitive form and will not be
considered the holders (as defined in the Indenture) thereof for
any purpose under the Indenture, and no Global Security repre-
senting Subordinated Debt Securities shall be exchangeable, except
for another Global Security of like denomination and tenor to be
registered in the name of the Depositary or its nominee or to a
successor Depositary or its nominee. Accordingly, each beneficial
owner must rely on the procedures of the Depositary or if such
person is not a Participant, on the procedures of the Participant
through which such person owns its interest to exercise any rights
of a holder under the Indenture.
The Depositary
If Subordinated Debt Securities are distributed to holders of Pre-
ferred Securities in liquidation of such holders' interests in
Southern Union Financing, DTC will act as securities depository for
the Subordinated Debt Securities. For a description of DTC and the
specific terms of the depository arrangements, see "Description of
the Preferred Securities -- Book-Entry Only Issuance -- The
Depository Trust Company." As of the date of this Prospectus Sup-
pleplement, the description therein of DTC's book-entry system and
DTC's practices as they relate to purchases, transfers, notices and
payments with respect to the Preferred Securities apply in all
material respects to any debt obligations represented by one or
more Global Securities held by DTC. Southern Union may appoint a
successor to DTC or any successor Depositary in the event DTC or
such successor Depositary is unable or unwilling to continue as a
depository for the Global Securities.
None of Southern Union, Southern Union Financing, the Indenture
Trustee, any paying agent and any other agent of Southern Union or
the Indenture Trustee will have any responsibility or liability for
any aspect of the records relating to or payments made on account
of beneficial ownership interests in a Global Security for such
Subordinated Debt Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership
interests.
Discontinuance of the Depositary's Services
A Global Security shall be exchangeable for Subordinated Debt
Securities registered in the names of persons other than the
Depositary or its nominee only if (i) the Depositary notifies
Southern Union that it is unwilling or unable to continue as a
Depositary for such Global Security and no successor Depositary
shall have been appointed, (ii) the Depositary, at any time, ceases
to be a clearing agency registered under the Exchange Act at which
time the Depositary is required to be so registered to act as such
Depositary and no successor Depositary shall have been appointed,
(iii) Southern Union, in its sole discretion, determines that such
Global Security shall be so exchangeable or (iv) there shall have
occurred an Event of Default with respect to such Subordinated Debt
Securities. Any Global Security that is exchangeable pursuant to
the preceding sentence shall be exchangeable for Subordinated Debt
Securities registered in such names as the Depositary shall direct.
It is expected that such instructions will be based upon directions
received by the Depositary from its Participants with respect to
ownership of beneficial interests in such Global Security.
Miscellaneous
The Indenture will provide that Southern Union will pay all fees
and expenses related to (i) the offering of the Trust Securities
and the Subordinated Debt Securities, (ii) the organization,
maintenance and dissolution of Southern Union Financing and (iii)
the retention of the Southern Union Trustees. The payment of such
fees and expenses will be fully and unconditionally guaranteed by
Southern Union.
EFFECT OF OBLIGATIONS UNDER THE
SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of Southern Union
Financing is to issue the Trust Securities evidencing undivided
beneficial interests in the assets of Southern Union Financing, and
to invest the proceeds from such issuance and sale in the Subordi-
nated Debt Securities.
As long as payments of interest and other payments are made when
due on the Subordinated Debt Securities, such payments will be
sufficient to cover distributions and payments due on the Trust
Securities because of the following factors: (i) the aggregate
principal amount of Subordinated Debt Securities will be equal to
the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other
payment dates on the Subordinated Debt Securities will match the
distribution rate and distribution and other payment dates for the
Preferred Securities; (iii) Southern Union shall pay all, and
Southern Union Financing shall not be obligated to pay, directly or
indirectly, any costs and expenses of Southern Union Financing; and
(iv) the Declaration further provides that the Southern Union
Trustees shall not cause or permit Southern Union Financing to,
among other things, engage in any activity that is not consistent
with the purposes of Southern Union Financing.
Payments of distributions (to the extent funds therefor are avail-
able) and other payments due on the Preferred Securities (to the
extent funds therefor are available) are guaranteed by Southern
Union as and to the extent set forth under "Description of the
Guarantees" in the accompanying Prospectus. If Southern Union does
not make interest payments on the Subordinated Debt Securities pur-
chased by Southern Union Financing, it is expected that Southern
Union Financing will not have sufficient funds to pay distributions
on the Preferred Securities. The Guarantee is a full and uncondi-
tional guarantee from the time of its issuance but does not apply
to any payment of distributions unless and until Southern Union
Financing has sufficient funds for the payment of such distribu-
tions.
If Southern Union fails to make interest or other payments on the
Subordinated Debt Securities when due (taking account of any Exen-
sion Period), the Declaration provides a mechanism whereby the
holders of the Preferred Securities, using the procedures described
in "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company" and "-- Voting Rights,"
may (i) appoint a Special Trustee and (ii) direct the Property
Trustee to enforce its rights under the Subordinated Debt Securi-
ties. If the Property Trustee fails to enforce its rights under
the Subordinated Debt Securities, a holder of Preferred Securities
may, after a period of 30 days has elapsed from such holder's
written request to the Property Trustee to enforce such rights,
institute a legal proceeding against Southern Union to enforce the
Property Trustee's rights under the Subordinated Debt Securities
without first instituting any legal proceeding against the Property
Trustee or any other person or entity. Southern Union, under the
Guarantee, acknowledges that the Guarantee Trustee shall enforce
the Guarantee on behalf of the holders of the Preferred Securities.
In addition, if the Guarantee Trustee fails to enforce the Guaran-
tee, a holder of Preferred Securities, using the procedures
described in "Description of the Preferred Securities -- Book-Entry
Only Issuance -- The Depository Trust Company" herein and
"Description of the Guarantees -- Status of the Guarantees" in the
accompanying Prospectus, may institute a legal proceeding directly
against Southern Union to enforce its rights under the Guarantee
without first instituting a legal proceeding against Southern Union
Financing, the Guarantee Trustee, or any other person or entity.
Southern Union and Southern Union Financing believe that the above
mechanisms and obligations, taken together, are substantially
equivalent to a full and unconditional guarantee by Southern Union
of payments due on the Preferred Securities. See "Description of
the Guarantees -- General" in the accompanying Prospectus.
UNITED STATES FEDERAL INCOME TAXATION
General
The following is a summary of certain of the material United States
federal income tax consequences of the purchase, ownership and dis-
position of Preferred Securities. Unless otherwise stated, this
summary deals only with Preferred Securities held as capital assets
by holders who purchase the Preferred Securities upon original
issuance ("Initial Holders"). It does not deal with special
classes of holders such as banks, thrifts, real estate investment
trusts, regulated investment companies, insurance companies,
dealers in securities or currencies, tax-exempt investors, or
persons that will hold the Preferred Securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part
of a "conversion transaction" or other integrated investment, or as
other than a capital asset. This summary also does not address the
tax consequences to persons that have a functional currency other
than the U.S. Dollar or the tax consequences to shareholders, part-
ners or beneficiaries of a holder of Preferred Securities.
Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local
government or of any foreign government that may be applicable to
the Preferred Securities. This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury regulations
thereunder and administrative and judicial interpretations thereof,
as of the date hereof, all of which are subject to change, possibly
on a retroactive basis.
Classification of the Subordinated Debt Securities
In connection with the issuance of the Subordinated Debt Securi-
ties, Skadden, Arps, Slate, Meagher & Flom, special tax counsel to
Southern Union and Southern Union Financing, will render its
opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Indenture (and cer-
tain other documents), and based on certain facts and assumptions
contained in such opinion, the Subordinated Debt Securities held
by Southern Union Financing will be classified for United States
federal income tax purposes as indebtedness of Southern Union.
Classification of Southern Union Financing
In connection with the issuance of the Preferred Securities,
Skadden, Arps, Slate, Meagher & Flom, special tax counsel to
Southern Union and Southern Union Financing, will render its
opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration and the
Indenture (and certain other documents), and based on certain facts
and assumptions contained in such opinion, Southern Union Financing
will be classified for United States federal income tax purposes as
a grantor trust and not as an association taxable as a corporation
or a partnership. Accordingly, for United States federal income
tax purposes, each holder of Preferred Securities will be con-
sidered the owner of an undivided interest in the Subordinated Debt
Securities, and each holder will be required to include in its
gross income any original issue discount ("OID") accrued with
respect to its allocable share of those Subordinated Debt Securi-
ties.
Original Issue Discount
Because Southern Union has the option, under the terms of the
Subordinated Debt Securities, to defer payments of interest by
extending interest payment periods for up to 20 quarters, all of
the stated interest payments on the Subordinated Debt Securities
will treated as "original issue discount." Holders of debt
instruments issued with OID must include that discount in income on
an economic accrual basis before the receipt of cash attributable
to the interest, regardless of their method of tax accounting.
Generally, all of a holder's taxable interest income with respect
to the Subordinated Debt Securities will be accounted for as OID,
and actual distributions of stated interest will not be separately
reported as taxable income. Actual payments and distributions of
stated interest will not, however, be separately reported as tax-
able income. The amount of OID that accrues in any month will
approximately equal the amount of the interest that accrues on the
Subordinated Debt Securities in that month at the stated interest
rate. In the event that the interest payment period is extended,
holders will continue to accrue OID approximately equal to the
amount of the interest payment due at the end of the extended
interest payment period on an economic accrual basis over the
length of the extended interest period.
Because income on the Preferred Securities will constitute OID,
corporate holders of Preferred Securities will not be entitled to
a dividends - received deduction with respect to any income
recognized with respect to the Preferred Securities.
Market Discount and Bond Premium
Holders of Preferred Securities other than Initial Holders may be
considered to have acquired their undivided interests in the Sub-
ordinated Debt Securities with market discount or acquisition
premium as such phrases are defined for United States federal
income tax purposes. Such holders are advised to consult their tax
advisors as to the income tax consequences of the acquisition,
ownership and disposition of the Preferred Securities.
Receipt of Subordinated Debt Securities or Cash Upon Liquidation of
Southern Union Financing
Under certain circumstances, as described under the caption
"Description of the Preferred Securities -- Tax Event Redemp-
tion or Distribution," Subordinated Debt Securities may be dis-
tributed to holders in exchange for the Preferred Securities and in
liquidation of Southern Union Financing. Under current law, such
a distribution, for United States federal income tax purposes,
would be treated as a non-taxable event to each holder, and each
holder would receive an aggregate tax basis in the Subordinated
Debt Securities equal to such holder's aggregate tax basis in its
Preferred Securities. A holder's holding period in the Subordi-
nated Debt Securities so received in liquidation of Southern Union
Financing would include the period during which the Preferred
Securities were held by such holder.
Under certain circumstances described herein (see "Description of
the Preferred Securities"), the Subordinated Debt Securities may be
redeemed for cash and the proceeds of such redemption distributed
to holders in redemption of their Preferred Securities. Under
current law, such a redemption would, for United States federal
income tax purposes, constitute a taxable disposition of the
redeemed Preferred Securities, and a holder could recognize gain or
loss as if it sold such redeemed Preferred Securities for cash.
See "United States Federal Income Taxation -- Sales of Preferred
Securities."
Sales of Preferred Securities
A holder that sells Preferred Securities will recognize gain or
loss equal to the difference between its adjusted tax basis in the
Preferred Securities and the amount realized on the sale of such
Preferred Securities. A holder's adjusted tax basis in the Pre-
ferred Securities generally will be its initial purchase price
increased by OID previously includible in such holder's gross
income to the date of disposition and decreased by payments
received on the Preferred Securities. Such gain or loss generally
will be a capital gain or loss and generally will be a long-term
capital gain or loss if the Preferred Securities have been held for
more than one year.
The Preferred Securities may trade at a price that does not
accurately reflect the value of accrued but unpaid interest with
respect to the underlying Subordinated Debt Securities. A holder
who disposes of his Preferred Securities between record dates for
payments of distributions thereon will be required to include
accrued but unpaid interest on the Subordinated Debt Securities
through the date of disposition in income as ordinary income, and
to add such amount to his adjusted tax basis in his pro rata share
of the underlying Subordinated Debt Securities disposed of.
Accordingly, a holder will recognize a capital loss to the extent
the selling price (which may not fully reflect the value of accrued
but unpaid interest) is less than the holder's adjusted tax basis
(which will include accrued but unpaid interest) or a capital gain
to the extent the selling price (which could overestimate the value
of the accrued but unpaid interest) exceeds the holders adjusted
tax basis (subject to the market discount rates discussed above.)
Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income
tax purposes.
United States Alien Holders
For purposes of this discussion, a "United States Alien Holder" is
any corporation, individual, partnership, estate or trust that is,
as to the United States, a foreign corporation, a non-resident
alien individual, a foreign partnership, or a non-resident
fiduciary of a foreign estate or trust.
Under present United States federal income tax law: (i) payments
by Southern Union Financing or any of its paying agents to any
holder of a Preferred Security who or which is a United States
Alien Holder will not be subject to United States federal with-
holding tax; provided that, (a) the beneficial owner of the Pre-
ferred Security does not actually or constructively own 10% or more
of the total combined voting power of all classes of stock of
Southern Union entitled to vote, (b) the beneficial owner of the
Preferred Security is not a controlled foreign corporation that
is related to Southern Union through stock ownership, and (c)
either (A) the beneficial owner of the Preferred Security certifies
to Southern Union Financing or its agent, under penalties of
perjury, that it is not a United States holder and provides its
name and address or (B) a securities clearing organization, bank or
other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "Financial Institu-
tion"), and holds the Preferred Security in such capacity, that
certifies to Southern Union Financing or its agent, under penalties
of perjury, that such statement has been received from the bene-
ficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes Southern Union Financing or its
agent with a copy thereof; and (ii) a United States Alien Holder of
a Preferred Security will not be subject to United States federal
withholding tax on any gain realized upon the sale or other dispo-
sition of a Preferred Security.
Information Reporting to Holders
Subject to the qualifications discussed below, income on the Pre-
ferred Securities will be reported to holders on Forms 1099, which
forms should be mailed to holders of Preferred Securities by
January 31 following each calendar year.
Southern Union Financing will be obligated to report annually to
Cede & Co., as holder of record of the Preferred Securities, the
OID related to the Subordinated Debt Securities that accrued during
the year. Southern Union Financing currently intends to report
such information on Form 1099 prior to January 31 following each
calendar year even though Southern Union Financing is not legally
required to report to record holders until April 15 following each
calendar year. The Underwriters have indicated to Southern Union
Financing that, to the extent that they hold Preferred Securities
as nominees for beneficial holders, they currently expect to report
to such beneficial holders on Forms 1099 by January 31 following
each calendar year. Under current law, holders of Preferred
Securities who hold as nominees for beneficial holders will not
have any obligation to report information regarding the beneficial
holders to Southern Union Financing. Southern Union Financing,
moreover, will not have any obligation to report to beneficial
holders who are not also record holders. Thus, beneficial holders
of Preferred Securities who hold their Preferred Securities through
the Underwriters will receive Forms 1099 reflecting the income on
their Preferred Securities from such nominee holders rather than
Southern Union Financing.
Backup Withholding
Payments made on, and proceeds from the sale of, the Preferred
Securities may be subject to a "backup" withholding tax of 31%
unless the holder complies with certain identification require-
ments. Any withheld amounts will be allowed as a credit against
the holder's United States federal income tax, provided the
required information is provided to the Service.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE
DEPENDING UPON A HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO
THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
UNITED STATES FEDERAL OR OTHER TAX LAWS.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement (the "Underwriting Agreement"), Southern Union Financing
has agreed to sell to each of the Underwriters named below, and
each of the Underwriters, for whom Merrill Lynch, Pierce, Fenner &
Smith Incorporated is acting as representative (the "Representa-
tive"), has severally agreed to purchase the number of Preferred
Securities set forth opposite its name below. In the Underwriting
Agreement, the several Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the Pre-
ferred Securities offered hereby if any of the Preferred Securities
are purchased. In the event of default by an Underwriter, the
Underwriting Agreement provides that, in certain circumstances, the
purchase commitments of the nondefaulting Underwriters may be
increased or the Underwriting Agreement may be terminated.
Number of
Underwriters Preferred Securities
____________ ____________________
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Total . . . . . . . . . . . . . . . . . . . . 3,000,000
The Underwriters propose to offer the Preferred Securities, in
part, directly to the public at the initial public offering price
set forth on the cover page of this Prospectus Supplement, and, in
part, to certain securities dealers at such price less a concession
of $____________ per Preferred Security. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of
$___________ per Preferred Security to certain brokers and dealers.
After the Preferred Securities are released for sale to the public,
the offering price and other selling terms may from time to time be
varied by the Representative.
In view of the fact that the proceeds of the sale of the Preferred
Securities will ultimately be used to purchase the Subordinated
Debt Securities of Southern Union, the Underwriting Agreement pro-
vides that Southern Union will pay as compensation ("Underwriters'
Compensation") to the Underwriters' arranging the investment
therein of such proceeds, an amount in New York Clearing House
(next day) funds of $__________ per Preferred Security (or
$___________ in the aggregate) for the accounts of the several
Underwriters; provided that, such compensation for sales of 10,000
or more Preferred Securities to any single purchaser will be
$____________ per Preferred Security. Therefore, to the extent of
such sales, the actual amount of Underwriters Compensation will be
less than the aggregate amount specified in the preceding sentence.
Southern Union has agreed that, during the period beginning from
the date of the Underwriting Agreement and continuing to and
including the earlier of (i) the date after the closing date on
which the distribution of the Preferred Securities and the
Guarantee ceases, as determined by the Underwriters, or (ii) ______
days after the closing date, not to offer, sell, contract to sell,
or otherwise dispose of any Preferred Securities, any preferred
stock or any other securities of Southern Union that are substan-
tially similar to the Preferred Securities (other than Subordinated
Debt Securities), or any securities convertible into or exchange-
able for Preferred Securities, without the prior written consent of
the Underwriters.
Application has been made to list the Preferred Securities on the
New York Stock Exchange. If so approved, trading of the Preferred
Securities on the New York Stock Exchange is expected to commence
within a 30 day period after the initial delivery of the Preferred
Securities. The Representative has advised Southern Union
Financing that it intends to make a market in the Preferred Securi-
ties prior to the commencement of trading on the New York Stock
Exchange. The Representatives will have no obligation to make a
market in the Preferred Securities, however, and may cease market
making activities, if commenced, at any time.
Prior to this offering there has been no public market for the
Preferred Securities. In order to meet one of the requirements for
listing the Preferred Securities on the New York Stock Exchange,
the Underwriters will undertake to sell lots of 100 or more Pre-
ferred Securities such that there are a minimum of 400 beneficial
holders of Preferred Securities.
Southern Union Financing and Southern Union have agreed to indem-
nify the Underwriters against, or contribute to payments that the
Underwriters may be required to make in respect of, certain
liabilities, including liabilities under the Securities Act of
1933, as amended.
Certain of the Underwriters engage in transactions with, and, from
time to time, have performed services for, Southern Union and its
subsidiaries in the ordinary course of business.
LEGAL MATTERS
The validity of the Preferred Securities, the Subordinated Debt
Securities, the Guarantee and certain matters relating thereto will
be passed upon for Southern Union and Southern Union Financing by
Fleischman and Walsh, L.L.P., Washington, D. C., and on behalf of
the Underwriters by Skadden, Arps, Slate, Meagher & Flom, New York,
New York. Aaron I. Fleischman, Senior Partner of Fleischman and
Walsh, L.L.P., is a director of Southern Union. Mr. Fleischman,
Fleischman and Walsh, L.L.P., and other attorneys in the firm
beneficially own shares of Southern Union common stock that, in the
aggregate, represent less than two percent (2%) of the shares of
Southern Union common stock outstanding. Certain United States
federal income taxation matters will be passed upon for Southern
Union and Southern Union Financing by Skadden, Arps, Slate, Meagher
& Flom, New York, New York.
<PAGE>
________________________________ ________________________________
No dealer, salesperson or other
individual has been authorized
to give any information or to
make any representations other
than those contained or incor-
porated by reference in this $75,000,000
Prospectus Supplement in con-
nection with the offer made by
this Prospectus Supplement and, Southern Union Financing I
if given or made, such informa-
tion or representation must not ____% Trust Originated
be relied upon as having been Preferred Securities ("TOPrS")
authorized by Southern Union guaranteed to the extent set
Company, Southern Union forth herein by
Financing I, or the Under- Southern Union Company
writers. Neither the delivery
of this Prospectus Supplement
nor any sale made hereunder and
thereunder shall under any cir-
cumstance create an implication
that there has been no change
in the affairs of Southern _____________________
Union Company or Souhern Union PROSPECTUS SUPPLEMENT
Financing I, since the date _____________________
hereof. This Prospectus Sup-
plement does not constitute an
offer or solicitation by anyone
in any state in which such
offer or solicitation is not
authorized or in which the
person making such offer or
solicitation is not qualified
to do so or to anyone to whom it Merrill Lynch & Co.
is unlawful to make such offer
or solicitation.
______________________ _____________, 1995
TABLE OF CONTENTS
Page
____
Selected Historical Finan-
cial Information
Southern Union Company
Southern Union Financing I
Investment Considerations
Ratio of Earnings to Fixed
Charges
Capitalization of Southern
Union
Accounting Treatment
Use of Proceeds
Description of the Pre-
ferred Securities
Description of the Subordi-
nated Debt Securities
Effect of Obligations Under
the Subordinated Debt
Securities and the Guarantee
United States Federal Income
Taxation
Underwriting
Legal Matters
________________________________ ________________________________
<PAGE>
EXHIBIT 4-D
AMENDED AND RESTATED DECLARATION OF TRUST
<PAGE>
=========================================
AMENDED AND RESTATED DECLARATION
OF TRUST
SOUTHERN UNION FINANCING I
Dated as of __________, 1995
=========================================
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
SOUTHERN UNION FINANCING I
April __, 1995
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of April ___, 1995, by the undersigned
trustees (together with all other Persons from time to time duly
appointed and serving as trustees in accordance with the provi-
sions of this Declaration, the "Trustees"), Southern Union
Company, a Delaware Corporation, as trust sponsor (the "Spon-
sor"), and by the holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this
Declaration;
WHEREAS, the Trustees and the Sponsor established a trust (the
"Trust") under the Delaware Business Trust Act pursuant to a
Declaration of Trust dated as of March 28, 1995, (the "Original
Declaration") and a Certificate of Trust filed with the Secretary
of State of Delaware on March 28, 1995 for the sole purpose of
issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the
proceeds thereof in certain Debentures of the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have
been issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declara-
tion, amend and restate each and every term and provision of the
Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust
Act and that this Declaration constitute the governing instrument
of such business trust, the Trustees declare that all assets con-
tributed to the Trust will be held in trust for the benefit of
the holders, from time to time, of the securities representing
undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
(a) Capitalized terms used in this Declaration but not
defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the
same meaning throughout;
(c) all references to "the Declaration" or "this Declara-
tion" are to this Declaration as modified, supplemented
or amended from time to time;
(d) all references in this Declaration to Articles and Sec-
tions and Exhibits are to Articles and Sections of and
Exhibits to this Declaration unless otherwise speci-
fied;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise
defined in this Declaration or unless the context
otherwise requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Appointment Event" means an event defined in the terms of the
Preferred Securities, as set forth in Exhibit A, which entitles
the Holders of a Majority in liquidation amount of the Preferred
Securities to appoint a Special Regular Trustee.
"Authorized Officer" of a Person means any Person that is autho-
rized to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained
and made through book entries by a Clearing Agency as described
in Section 9.4.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by
law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as it may be amended
from time to time.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is
acting as depositary for the Preferred Securities and in whose
name or in the name of a nominee of that organization, shall be
registered a Global Certificate and which shall undertake to
effect book entry transfers and pledges of the Preferred Securi-
ties.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time
the Clearing Agency effects book entry transfers and pledges of
securities deposited with the Clearing Agency.
"Closing Date" means April ___, 1995.
"Code" means the Internal Revenue Code of 1986 as amended.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.1.
"Common Securities Guarantee" means the guarantee agreement to be
dated as of April ___, 1995 of the Sponsor in respect of the
Common Securities.
"Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substan-
tially in the form of Annex II to Exhibit A.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the
Trust or (ii) the Trust's Affiliates; and (b) any Holder of
Securities.
"Debenture Issuer" means the Sponsor in its capacity as issuer of
the Debentures.
"Debenture Trustee" means [ ], as trustee under
the Indenture until a successor is appointed thereunder, and
thereafter means such successor trustee.
"Debentures" means the series of Debentures to be issued to the
Property Trustee by the Debenture Issuer under the Indenture, a
specimen certificate for such series of Debentures being Exhibit
B.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Definitive Preferred Security Certificates" has the meaning set
forth in Section 9.4.
"Direction" by a Person means a written direction signed:
(a) if the Person is a natural person, by that Person; or
(b) in any other case, in the name of such Person by one or
more Authorized Officers of that Person.
"Distribution" means a distribution payable to Holders of Securi-
ties in accordance with Section 6.1.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is con-
tinuing in respect of the Debentures.
"Holder" means a Person in whose name a Certificate representing
a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act.
"Indemnified Person" means any Trustee, any Affiliate of any
Trustee, or any officers, directors, shareholders, members, part-
ners, employees, representatives or agents of any Trustee, or any
employee or agent of the Trust or its Affiliates.
"Indenture" means the Indenture dated as of ______________, 1995,
among the Debenture Issuer and [ ], as trustee, and
any indenture supplemental thereto pursuant to which the Deben0
tures are to be issued.
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Ministerial Action" has the meaning set forth in the terms of
the Securities as set forth in Exhibit A.
"Officers' Certificate" means, with respect to any Person, a cer-
tificate signed by two Authorized Officers of such Person. Any
Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Declaration shall
include:
(a) a statement that each officer signing the Certificate
has read the covenant or condition and the definition
relating thereto;
(b) a brief statement of the nature and scope of the exami-
nation or investigation undertaken by each officer in
rendering the Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's
opinion, is necessary to enable such officer to express
an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied
with.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Person" means a legal person, including any individual, corpora-
tion, estate, partnership, joint venture, association, joint
stock company, limited liability company, trust, unincorporated
association, or government or any agency or political subdivision
thereof, or any other entity of whatever nature.
"Preferred Securities Guarantee" means the guarantee agreement to
be dated as of April ___, 1995, of the Sponsor in respect of the
Preferred Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such
Book Entry Interest, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant
or as an indirect participant, in each case in accordance with
the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate representing
a Preferred Security substantially in the form of Annex I to
Exhibit A.
"Pricing Agreement" means the pricing agreement between the
Trust, the Debenture Issuer, and the underwriters designated by
the Regular Trustees with respect to the offer and sale of the
Preferred Securities.
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in Section
3.8(c).
"Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both of them.
"Regular Trustee" means any Trustee other than the Property
Trustee and the Delaware Trustee.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other
Person that owns, directly or indirectly, 100% of the outstanding
voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Property
Trustee, any vice-president, any assistant vice-president, the
secretary, any assistant secretary, the treasurer, any assistant
treasurer, any trust officer or assistant trust officer or any
other officer in the Corporate Trust Department of the Property
Trustee customarily performing functions similar to those per-
formed by any of the above designated officers and also means,
with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"66-2/3% in liquidation amount of the Securities" means, except
as provided in the terms of the Preferred Securities and by the
Trust Indenture Act, a vote by Holder(s) of Securities voting
together as a single class or, as the context may require, a vote
by Holder(s) of Preferred Securities or Holder(s) of Common
Securities voting separately as a class, representing 66 2/3% of
the liquidation amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions, to the date upon which the voting percent-
ages are determined) of all Securities of such class.
"Special Regular Trustee" means a Regular Trustee appointed by
the Holders of a Majority in liquidation amount of the Preferred
Securities in accordance with Section 5.6(a)(ii)(B).
"Sponsor" means Southern Union Company, a Delaware corporation,
or any successor entity in a merger, consolidation or amalgam-
ation, in its capacity as sponsor of the Trust.
"Tax Event" means the Regular Trustees shall have received an
opinion of nationally recognized independent tax counsel experi-
enced in such matters to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority
thereof or therein or (b) any amendment to or change in an
interpretation or application of such laws or regulations, there
is more than an insubstantial risk that (i) the Trust would be
subject to United States federal income tax with respect to
income accrued or received on the Subordinated Debt Securities,
(ii) interest payable to the Trust on the Subordinated Debt
Securities would not be deductible by the Debenture Issuer for
United States federal income tax purposes or (iii) the Trust
would be subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust
Indenture Act, the vote by Holder(s) of Securities voting
together as a single class or, as the context may require, the
vote by Holder(s) of Preferred Securities or Holder(s) of Common
Securities, voting separately as a class, representing 10% of the
liquidation amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percent-
ages are determined) of all Securities of such class.
"Treasury Regulations" means the income tax regulations, includ-
ing temporary and proposed regulations, promulgated under the
Code by the United States Treasury, as such regulations may be
amended from time to time (including corresponding provisions of
succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue
in office in accordance with the terms hereof, and all other
Persons who may from time to time be duly appointed, qualified
and serving as Trustees in accordance with the provisions hereof,
and references herein to a Trustee or the Trustees shall refer to
such Person or Persons solely in their capacity as trustees
hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Underwriting Agreement" means the Underwriting Agreement for the
offering and sale of Preferred Securities in the form of Exhibit
C.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the
Trust Indenture Act that are required to be part of
this Declaration and shall, to the extent applicable,
be governed by such provisions;
(b) the Property Trustee shall be the only Trustee which is
a Trustee for the purposes of the Trust Indenture Act;
(c) if and to the extent that any provision of this Decla-
ration limits, qualifies or conflicts with the duties
imposed by Sections 310 to 317, inclusive, of the Trust
Indenture Act, such imposed duties shall control; and
(d) the application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securi-
ties as equity securities representing undivided
beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor, the Debenture Issuer and the
Regular Trustees on behalf of the Trust shall provide
the Property Trustee (i) within 14 days after each
record date for payment of Distributions, a list, in
such form as the Property Trustee may reasonably re-
quire, of the names and addresses of the Holders of the
Securities ("List of Holders") as of such record
date, provided that none of the Sponsor, the Debenture
_____________
Issuer or the Regular Trustees on behalf of the Trust
shall be obligated to provide such List of Holders at
any time the List of Holders does not differ from the
most recent List of Holders given to the Property
Trustee by the Sponsor, the Debenture Issuer and the
Regular Trustees on behalf of the Trust, and (ii) at
any other time, within 30 days of receipt by the Trust
of a written request for a List of Holders as of a date
no more than 14 days before such List of Holders is
given to the Property Trustee. The Property Trustee
shall preserve, in as current a form as is reasonably
practicable, all information contained in Lists of
Holders given to it or which it receives in the capa-
city as Paying Agent (if acting in such capacity)
provided that the Property Trustee may destroy any List
_____________
of Holders previously given to it on receipt of a new
List of Holders.
(b) The Property Trustee shall comply with its obligations
under Sections 311(a), 311(b) and 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year, the Property Trustee
shall provide to the Holders of the Preferred Securities such
reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form and in the manner provided by Section
313 of the Trust Indenture Act. The Property Trustee shall also
comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor, the Debenture Issuer and the Regular
Trustees on behalf of the Trust shall provide to the Property
Trustee such documents, reports and information as required by
Section 314 (if any) and the compliance certificate required by
Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture
Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor, the Debenture Issuer and the Regular
Trustees on behalf of the Trust shall provide to the Property
Trustee such evidence of compliance with any conditions prece-
dent, if any, provided for in this Declaration that relate to any
of the matters set forth in Section 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) may be given in the form of
an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of
Preferred Securities may, by vote, on behalf of the
Holders of all of the Preferred Securities, waive any
past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the
Event of Default arises out of an Event of Default
under the Indenture:
(i) which is not waivable under the Indenture, the
Event of Default under the Declaration shall also
not be waivable; or
(ii) which requires the consent or vote of all or a
Super-Majority of the holders of the Debentures
to be waived under the Indenture, the Event of
Default under the Declaration may only be waived
by the vote of all of the Holders of the Pre-
ferred Securities or such proportion thereof in
liquidation amount as represents the relevant
Super Majority of the aggregate principal amount
of the Debentures outstanding.
Upon such waiver, any such default shall cease to
exist, and any Event of Default with respect to
the Preferred Securities arising therefrom shall
be deemed to have been cured, for every purpose
of this Declaration, but no such waiver shall
extend to any subsequent or other default or an
Event of Default with respect to the Preferred
Securities or impair any right consequent there-
on. Any waiver by the Holders of the Preferred
Securities of an Event of Default with respect to
the Preferred Securities shall also be deemed to
constitute a waiver by the Holders of the Common
Securities of any such Event of Default with
respect to the Common Securities for all purposes
of this Declaration without any further cut,
vote, or consent of the Holders of the Common
Securities.
(b) The Holders of a Majority in liquidation amount of the
Common Securities may, by vote, on behalf of the
Holders of all of the Common Securities, waive any past
Event of Default with respect to the Common Securities
and its consequences, provided that, if the Event of
_____________
Default arises out of an Event of Default under the
Indenture:
(i) which is not waivable under the Indenture, except
where the Holders of the Common Securities are
deemed to have waived such Event of Default under
the Declaration as provided below in this Section
2.6(b), the Event of Default under the Declara-
tion is not waivable; or
(ii) which requires the consent or vote of a Super
Majority to be waived, except where the Holders
of the Common Securities are deemed to have
waived such Event of Default under the Declara-
tion as provided below in this Section 2(b), the
Event of Default under the Declaration may only
be waived by the vote of the Holders of at least
the proportion in liquidation amount of the
Preferred Securities as represents the relevant
Super Majority of the aggregate principal amount
of the Debentures outstanding;
provided that, each Holder of Common Securities will be
_____________
deemed to have waived any such Event of Default and all
Event of Default with respect to the Common Securities
and its consequences until all Events of Default with
respect to the Preferred Securities have been cured,
waived or otherwise eliminated, and until such Events
of Default have been so cured, waived or otherwise
eliminated, the Property Trustee will be deemed to be
acting solely on behalf of the Holders of the Preferred
Securities and only the Holders of the Preferred
Securities will have the right to direct the Property
Trustee in accordance with the terms of the Securities.
Subject to the foregoing provisions of this Section
2.6(b), upon such waiver, any such default shall cease
to exist and any Event of Default with respect to the
Common Securities arising therefrom shall be deemed to
have been cured, for every purpose of this Declaration,
but no such waiver shall extend to any subsequent or
other default or Event of Default with respect to the
Common Securities or impair any right consequent
thereon.
(c) A waiver Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the
Preferred Securities, constitutes a waiver of the
corresponding Event of Default under this Declaration.
SECTION 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail,
first class postage prepaid, to the Holders of the
Securities, notices of all defaults with respect to the
Securities known to the Property Trustee, unless such
defaults have been cured before the giving of such
notice (the term "defaults" for the purposes of this
Section 2.7(a) being hereby defined to be an Event of
Default as defined in the Indenture, not including any
periods of grace provided for therein and irrespective
of the giving of any notice provided therein; provided
________
that, except for a default in the payment of principal
____
of (or premium, if any) or interest on any of the
Debentures or in the payment of any sinking fund
installment established for the Debentures, the
Property Trustee shall be protected in withholding such
notice if and so long as the board of directors, the
executive committee, or a trust committee of directors
and/or Responsible Officers of the Property Trustee
in good faith determines that the withholding of such
notice is in the interests of the Holders of the
Securities.
(b) The Property Trustee shall not be deemed to have knowl-
edge of any default except:
(i) a default under Sections 6.01(a)(1) and
6.01(a)(2) of the Indenture; or
(ii) any default as to which the Property Trustee
shall have received written notice or a Responsi-
ble Officer charged with the administration of
the Declaration shall have obtained written
notice of.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Southern Union Financing I", as such name may
be modified from time to time by the Regular Trustees following
written notice to the Holders of Securities. The Trust's activi-
ties may be conducted under the name of the Trust or any other
name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Southern
Union Company, 504 Lavaca Street, Suite 800, Austin, Texas
78701. On ten Business Days written notice to the Holders of
Securities, the Regular Trustees may designate another principal
office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to
acquire the Debentures, and (b) except as otherwise limited
herein, to engage in only those other activities necessary, or
incidental thereto. The Trust shall not borrow money, issue debt
or reinvest proceeds derived from investments, pledge any of its
assets, or otherwise undertake (or permit to be undertaken) any
activity that would (i) cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to
the specific duties of the Property Trustee, the Regular Trustees
shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Regular Trustees
in accordance with their powers shall constitute the act of and
serve to bind the Trust and an action taken by the Property
Trustee in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Trustees acting
on behalf of the Trust, no person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons
dealing with the Trust are entitled to rely conclusively on the
power and authority of the Trustees as set forth in this Declara-
tion.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures
and the Property Trustee Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be
vested in the Trust. The Holders shall not have legal title to
any part of the assets of the Trust, but shall have an undivided
beneficial interest in the asset of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activi-
ties:
(a) to issue and sell the Preferred Securities and the
Common Securities in accordance with this Declaration;
provided, however, that the Trust may issue no more
_________________
than one series of Preferred Securities and no more
than one series of Common Securities, and, provided
________
further, that there shall be no interests in the Trust
_______
other than the Securities, and the issuance of Securi-
ties shall be limited to a one-time, simultaneous
issuance of both Preferred Securities and Common
Securities on the Closing Date;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the regis-
tration statement on Form Section 3 prepared
by the Sponsor, including any amendments thereto,
pertaining to the Preferred Securities;
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by
the Sponsor to be necessary in order to qualify
or register all or part of the Preferred Securi-
ties in any State in which the Sponsor has
determined to qualify or register such Preferred
Securities for sale;
(iii) execute and file an application, prepared by
the Sponsor, to the New York Stock Exchange or
any other national stock exchange or the Nasdaq
National Market for listing upon notice of
issuance of any Preferred Securities;
(iv) execute and file with the Commission a registra-
tion statement on Form 8-A, including any
amendments thereto, prepared by the Sponsor
relating to the registration of the Preferred
Securities under Section 12(b) of the Exchange
Act; and
(v) execute and enter into the Underwriting Agreement
and Pricing Agreement providing for the sale of
the Preferred Securities;
(c) to acquire the Debentures with the proceeds of the sale
of the Preferred Securities and the Common Securities;
provided, however, that the Regular Trustees shall
_________________
cause legal title to the Debentures to be held of
record in the name of the Property Trustee for the
benefit of the Holders of the Preferred Securities and
the Holders or Common Securities;
(d) to give the Debenture Issuer, the Sponsor and the
Property Trustee prompt written notice of the occur-
rence of a Tax Event; provided that the Regular
_____________
Trustees shall consult with the Debenture Issuer, the
Sponsor and the Property Trustee before taking or
refraining from taking any Ministerial Action in
relation to a Tax Event;
(e) to establish a record date with respect to all actions
to be taken hereunder that require a record date be
established, including and with respect to, for the
purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and
exchanges, and to issue relevant notices to the Holders
of Preferred Securities and Holders of Common Securi-
ties as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be
required of the Regular Trustees pursuant to the terms
of the Securities;
(g) to bring or defend, pay, collect, compromise, arbi-
trate, resort to legal action, or otherwise adjust
claims or demands of or against the Trust ("Legal
Action"), unless pursuant to Section 3.8(e), the
Property Trustee has the exclusive power to bring such
Legal Action;
(h) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and
managers, contractors, advisors, and consultants and
pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obliga-
tions under the Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4)
of the Trust Indenture Act to the Property Trustee,
which certificate may be executed by any Regular
Trustee;
(k) to incur expenses which are necessary or incidental to
carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as regis-
trar and transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the
Securities of any notice received from the Debenture
Issuer of its election (i) to defer payments of inter-
est on the Debentures by extending the interest payment
period under the Indenture or, (ii) to extend the
scheduled maturity date on the Debentures;
(n) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf
of the Trust in all matters necessary or incidental to
the foregoing;
(o) to take all action that may be necessary or appropriate
for the preservation and the continuation of the
Trust's valid existence, rights, franchises and privi-
leges as a statutory business trust under the laws of
the State of Delaware and of each other jurisdiction in
which such existence is necessary to protect the
limited liability of the Holders of the Securities or
to enable the Trust to effect the purposes for which
the Trust was created;
(p) to take any action, not inconsistent with this Declara-
tion or with applicable law, that the Regular Trustees
determine in their discretion to be necessary or desir-
able in carrying out the activities of the Trust as set
out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered
under the Investment Company Act;
(ii) causing the Trust not to be characterized for
United States federal income tax purposes as an
association taxable as a corporation or a part-
nership but for each Holder of Securities to be
treated as owning an undivided beneficial in-
terest in the Debentures; and
(iii) cooperating with the Debenture Issuer to ensure
that the Debentures will be treated as indebted-
ness of the Debenture Issuer for United States
federal income tax purposes,
provided that such action does not adversely affect the
interests of Holders; and
(q) to take all action necessary to cause all applicable
tax returns and tax information reports that are re-
quired to be filed with respect to the Trust to be duly
prepared and filed by the Regular Trustees, on behalf
of the Trust.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Regular
Trustees shall not take any action that is inconsistent with the
purposes and functions of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none
of the powers or the authority of the Property Trustee set forth
in Section 3.8.
SECTION 3.7 Prohibition of Actions by the Trust and the
Trustees.
(a) The Trust shall not, and the Trustees (including the
Property Trustee) shall not engage in any activity
other than as required or authorized by this Declara-
tion. In particular, the Trust shall not and the
Trustees (including the Property Trustee) shall not:
(i) invest any proceeds received by the Trust from
holding the Debentures but shall distribute all
such proceeds to Holders of Securities pursuant
to the terms of this Declaration and of the Secu-
rities;
(ii) acquire any assets other than as expressly
provided herein;
(iii) possess Trust property for other than a Trust
purpose;
(iv) make any loans or incur any indebtedness other
than loans represented by the Debentures;
(v) possess any power or otherwise act in such a
way as to vary the Trust assets or the terms of
the Securities in any way whatsoever;
(vi) issue any securities or other evidences of
beneficial ownership of, or beneficial interest
in, the Trust other than the Securities; or
(vii) (A) direct the time, method and place of exer-
cising any trust or power conferred upon the
Debenture Trustee with respect to the Deben-
tures, (B) waive any past default that is
waivable under Section 513 of the indenture,
(C) exercise any right to rescind or annul
any declaration that the principal of all the
Debentures shall be due and payable or (D)
consent to any amendment, modification or
termination of the Indenture or the Deben-
tures, where such consent shall be required,
unless the Trust shall have received an
opinion of counsel to the effect that such
modification will not cause more than an
insubstantial risk that for United States
federal income tax purposes the Trust will be
characterized as an association taxable as a
corporation or a partnership and that each
Holder of Securities will not be treated as
owning an undivided beneficial interest in
the Debentures.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and
held of record in the name of the Property Trustee in
trust for the benefit of the Holders of the Securities.
The right, title and interest of the Property Trustee
to the Debentures shall vest automatically in each
Person who may hereafter be appointed as Property
Trustee in accordance with in Section 5.6. Such
vesting and cessation of title shall be effective
whether or not conveyancing documents with regard to
the Debentures have been executed and delivered;
(b) the Property Trustee shall not transfer its right,
title and interest in the Debentures to the Regular
Trustees or to the Delaware Trustee (if the Property
Trustee does not also act as Delaware Trustee);
(c) the Property Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Property Trustee
Account") in the name of and under the exclusive
control of the Property Trustee on behalf of the
Holders of the Securities and, upon the receipt
of payments of funds made in respect of the
Debentures held by the Property Trustee, deposit
such funds into the Property Trustee Account and
make payments to the Holders of the Preferred
Securities and Holders of the Common Securities
from the Property Trustee Account in accordance
with Section 6.1. Funds in the Property
Trustee Account shall be held uninvested until
disbursed in accordance with this Declaration.
The Property Trustee Account shall be an account
that is maintained with a banking institution
the rating on whose long term unsecured indebted-
ness is at least equal to the rating assigned to
the Preferred Securities by a "nationally recog-
nized statistical rating organization", as that
term is defined for purposes of Rule 436(g)(2)
under the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption
of the Preferred Securities and the Common
Securities to the extent the Debentures are re-
deemed or mature; and
(iii) upon notice of distribution issued by the Regular
Trustees in accordance with the terms of the Pre-
ferred Securities and forms of the Common Securi-
ties, engage in such ministerial activities as
shall be necessary or appropriate to effect the
distribution of the Debentures to Holders of
Securities upon the occurrence of certain special
events (as may be defined in the terms of the
Securities) arising from a change in law or a
change in legal interpretation or other specified
circumstances pursuant to the terms of the
Securities;
(d) the Property Trustee shall take all actions and perform
such duties as may be specifically required of the
Property Trustee pursuant to the terms of the Securi-
ties;
(e) the Property Trustee shall take any Legal Action which
arises out of or in connection with an Event of Default
or the Property Trustee's duties and obligations under
this Declaration or the Trust Indenture Act;
(f) the Property Trustee shall not resign as a Trustee
unless either:
(i) the Trust has been completely liquidated and
the proceeds of the liquidation distributed to
the Holders of Securities pursuant to the terms
of the Securities; or
(ii) a Successor Property Trustee has been appointed
and has accepted that appointment in accordance
with Section 5.6;
(g) the Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a
holder of Debentures under the Indenture and, if an
Event of Default occurs and is continuing, the Property
Trustee shall, for the benefit of Holders of the
Securities, enforce its rights as holder of the
Debentures subject to the rights of the Holders pursu-
ant to the terms of such Securities;
(h) the Property Trustee may authorize one or more Persons
(each, a "Paying Agent") to pay Distributions, redemp-
tion payments or liquidation payments on behalf of the
Trust with respect to all securities and any such
Paying Agent shall comply with Section 317(b) of the
Trust Indenture Act. Any Paying Agent may be
removed by the Property Trustee at any time and a
successor Paying Agent or additional Paying Agents may
be appointed at any time by the Property Trustee, and
(i) subject to this Section 3.8, the Property Trustee shall
have none of the duties, liabilities, powers or the
authority of the Regular Trustees set forth in Section
3.6;
The Property Trustee must exercise the powers set forth in
this Section 3.8 in a manner which is consistent with the
purposes and functions of the Trust set out in Section 3.3,
and the Property Trustee shall not take any action which is
inconsistent with the purposes and functions of the Trust
set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property
Trustee.
(a) The Property Trustee, before the occurrence of any
Event of Default and after the curing of all Events of
Default that may have occurred, shall undertake to
perform only such duties as are specifically set forth
in this Declaration and no implied covenants shall be
read into this Declaration against the Property
Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section
2.6), the Property Trustee shall exercise such of the
rights and powers vested in it by this Declaration, and
use the same degree of care and skill in their exer-
cise, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own
affairs;
(b) no provision of this Declaration shall be construed to
relieve the Property Trustee from liability for its own
negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default
and after the curing or waiving of all such
Events of Default that may have occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the
express provisions of this Declaration and
the Property Trustee shall not be liable
except for the performance of such duties
and obligations as are specifically set
forth in this Declaration, and no implied
covenants or obligations shall be read into
this Declaration against the Property
Trustee; and
(B) in the absence of bad faith on the part of
the Property Trustee, the Property Trustee
may conclusively rely, as to the truth of
the statements and the correctness of the
opinions expressed therein, upon any cer-
tificates or opinions furnished to the
Property Trustee and conforming to the re-
quirements of this Declaration; but in the
case of any such certificates or opinions
that by any provision hereof are
specifically required to be furnished to the
Property Trustee, the Property Trustee shall
be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Declaration;
(ii) the Property Trustee shall not be liable for
any error of judgment made in good faith by a
Responsible Officer of the Property Trustee,
unless it shall be proved that the Property
Trustee was negligent in ascertaining the per-
tinent facts;
(iii) the Property Trustee shall not be liable with
respect to any action taken or omitted to be
taken by it in good faith in accordance with the
direction of the Holders of not less than a
Majority in liquidation amount of the Securities
at the time outstanding relating to the time,
method and place of conducting any proceeding
for any remedy available to the Property
Trustee, or exercising any trust or power
conferred upon the Property Trustee under this
Declaration;
(iv) no provision of this Declaration shall require
the Property Trustee to expend or risk its own
funds or otherwise incur personal financial
liability in the performance of any of its
duties or in the exercise of any of its rights
or powers, if it shall have reasonable ground
for believing that the repayment of such funds
or liability is not reasonably assured to it
under the terms of this Declaration or adequate
indemnity against such risk or liability is not
reasonably assured to it;
(v) the Property Trustee's sole duty with respect
to the custody, safe keeping and physical pres-
ervation of the Debentures and the Property
Trustee Account shall be to deal with such
property in a similar manner as the Property
Trustee deals with similar property for its own
account, subject to the protections and limita-
tions on liability afforded to the Property
Trustee under this Declaration, the Trust Inden-
ture Act and Rule 3a-7;
(vi) the Property Trustee shall have no duty or lia-
bility for or with respect to the value,
genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or
assessments levied thereon or in connection
therewith;
(vii) the Property Trustee shall not be liable for
any interest on any money received by it except
as it may otherwise agree with the Sponsor.
Money held by the Property Trustee need not be
segregated from other funds held by it except in
relation to the Segregated Property Trustee
Account maintained by the Property Trustee
pursuant to Section 3.8(c)(i) and except to the
extent otherwise required by law;
(viii) the Property Trustee shall not be responsible
for monitoring the compliance by the Regular
Trustees or the Sponsors with their respective
duties under this Declaration, nor shall the
Property Trustee be liable for the default or
misconduct of the Regular Trustees or the Spon-
sor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may rely and shall be fully
protected in acting or refraining from acting
upon any resolution, certificate, statement,
instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other
paper or document believed by it to be genuine
and to have been signed, sent or presented by
the proper party or parties;
(ii) any direction or act of the Sponsor or the Regu-
lar Trustees contemplated by this Declaration
shall be sufficiently evidenced by a Direction
or an Officers' Certificate;
(iii) whenever in the administration of this Declara-
tion, the Property Trustee shall deem it desir-
able that a matter be proved or established
before taking, suffering or omitting any action
hereunder, the Property Trustee (unless other
evidence is herein specifically prescribed) may,
in the absence of bad faith on its part and, if
the Trust is excluded from the definition of an
Investment Company solely by means of Rule 3a-7,
subject to the requirements of Rule 3a-7,
request and rely upon an Officers' Certificate
which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Regular
Trustees;
(iv) the Property Trustee shall have no duty to see
to any recording, filing or registration of any
instrument (including any financing or continua-
tion statement or any tax or securities) (or any
rerecording, refiling or registration thereof);
(v) the Property Trustee may consult with counsel
and the advice or opinion of such counsel and
the experts with respect to legal matters or
advice within the scope of such experts' area of
expertise shall be full and complete authoriza-
tion and protection in respect of any action
taken, suffered or omitted by it hereunder
in good faith and in accordance with such advice
or opinion such counsel may be counsel to the
Sponsor or any of its Affiliates, and may
include any of its employees. The Property
Trustee shall have the right at any time to seek
instructions concerning the administration of
this Declaration from any court of competent
jurisdiction;
(vi) the Property Trustee shall be under no obliga-
tion to exercise any of the rights or powers
vested in it by this Declaration at the request
or direction of any Holder, unless such Holder
shall have provided to the Property Trustee
adequate security and indemnity, which would
satisfy a reasonable person in the position of
the Property Trustee, against the costs,
expenses (including attorneys' fees and
expenses) and liabilities that might be incurred
by it in complying with such request or direc-
tion, including such reasonable advances as may
be requested by the Property Trustee provided,
that, nothing contained in this Section
3.10(a)(vi) shall be taken to relieve the
Property Trustee, upon the occurrence of an
Event of Default, of its obligation to exercise
the rights and powers vested in it by this
Declaration;
(vii) the Property Trustee shall not be bound to make
any investigation into the facts or matters
stated in any resolution, certificate, state-
ment, instrument, opinion, report, notice,
request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness
or other paper or document, but the Property
Trustee, in its discretion, may make such
further inquiry or investigation into such facts
or matters as it may see fit;
(viii) the Property 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 Property 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;
(ix) any action taken by the Property Trustee or its
agents hereunder shall bind the Trust and the
Holders of the Securities and the signature of
the Property Trustee or its agents alone shall
be sufficient and effective to perform any
such action; and no third party shall be re-
quired to inquire as to the authority of the
Property Trustee to so act, or as to its
compliance with any of the terms and provisions
of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's
or its agent's taking such action;
(x) whenever in the administration of this Declara-
tion the Property Trustee shall deem it desir-
able to receive instructions with respect to
enforcing any remedy or right or taking any
other action hereunder the Property Trustee (i)
may request instructions from the Holders of the
Securities, (ii) may refrain from enforcing such
remedy or right or taking such other action
until such instructions are received, and (iii)
shall be protected in acting in accordance with
such instructions; and
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be
under any obligation to take any action that is
discretionary under the provisions of this
Declaration except upon the Direction of the
Sponsor or the Regular Trustees, as the case may
be.
(b) No provision of this Declaration shall be deemed to
impose any duty or obligation on the Property Trustee
to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it,
in any jurisdiction in which it shall be illegal, or in
which the Property Trustee shall be unqualified or
incompetent, in accordance with applicable law, to
perform any such act or acts, or to exercise any such
right, power, duty or obligation. No permissive power
or authority available to the Property Trustee shall be
construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other
than Section 5.2, the Delaware Trustee shall not be entitled to
exercise any powers, nor shall the Delaware Trustee have any of
the duties and responsibilities of the Regular Trustees or the
Property Trustee described in this Declaration. Except as set
forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act, a majority of
or, if there are only two, both of the Regular Trustees are
authorized to execute on behalf of the Trust any documents which
the Regular Trustees have the power and authority to execute
pursuant to Section 3.6; provided that, any listing application
prepared by the Sponsor referred to in Section 3.6(b)(iii) may be
executed by the Regular Trustee.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securi-
ties.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees
do not assume any responsibility for their correctness. The
Trustees make no representations as to the value or condition of
the property of the Trust or any part thereof. The Trustees make
no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall have existence for 55 years from the
Closing Date.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with
or into, or be replaced by, or convey, transfer or
lease its properties and assets substantially as an
entirety to any corporation or other body, except as
described in Section 3.15(b) and (c);
(b) the Trust may, with the consent of a majority of the
Regular Trustees and without the consent of the Holders
of the Securities, consolidate, amalgamate, merge with
or into, or be replaced by a trust organized as such
under the laws of any State; provided, that:
_______________
(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations
of the Trust under the Preferred Securi-
ties; or
(B) substitutes for the Preferred Securities
other securities having substantially the
same terms as the Preferred Securities (the
"Successor Securities") so long as the
Successor Securities rank the same as the
Preferred Securities rank with respect to
Distributions and payments upon liquida-
tion, redemption and maturity;
(ii) the Debenture Issuer expressly acknowledges a
trustee of the Successor Entity which possesses
the same powers and duties as the Property
Trustee as the Holder of the Debentures;
(iii) the Preferred Securities or any Successor Secu-
rities are listed, or any Successor Securities
will be listed upon notification of issuance, on
any national securities exchange or other
organization on which the Preferred Securities
are then listed;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securi-
ties (including any Successor Securities) to be
downgraded by any nationally recognized statis-
tical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the
rights, preferences and privileges of the
Holders of the Preferred Securities (including
any Successor Securities) in any material
respect (other than with respect to any dilution
of such Holders' interests in the Preferred
Securities as a result of such merger, consoli-
dation, amalgamation or replacement;
(vi) such successor entity has a purpose identical
to that of the Trust;
(vii) prior to such merger, consolidation, amalgama-
tion or replacement, the Sponsor has received
an opinion of a nationally recognized indepen-
dent counsel to the Trust experienced in such
matters to the effect that:
(A) such merger, consolidation, amalgamation
or replacement does not adversely affect
the rights, preferences and privileges of
the Holders of the Preferred Securities
(including any Successor Securities) in
any material respect (other than with
respect to any dilution of the Holders'
interest in the new entity); and
(B) following such merger, consolidation,
amalgamation or replacement, neither the
Trust nor the Successor Entity will be
required to register as an Investment
Company; and
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities
at least to the extent provided by the Preferred
Securities Guarantee; and
(c) notwithstanding Section 3.15(b), the Trust shall,
except with the consent of Holders of 100% in liquida-
tion amount of the Securities, not consolidate, amal-
gamate, merge with or into, or be replaced by any other
entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger or replacement
would cause the Trust or Successor Entity for United
States federal income tax purposes to be classified as
an association taxable as a corporation or a partner-
ship and each Holder of the Securities not to be
treated as owning an undivided beneficial interest in
the Debentures.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date the Sponsor will purchase all the Common
Securities issued by the Trust, in an amount equal to 3% of the
capital of the Trust, at the same time as the Preferred Securi-
ties are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securi-
ties, the Sponsor shall have the exclusive right and responsibil-
ity to engage in the following activities:
(a) to prepare for filing by the Trust with the Commission
a registration statement on Form S-3 in relation to the
Preferred Securities, including any amendments thereto;
(b) to determine the States in which to take appropriate
action to qualify or register for sale all or part of
the Preferred Securities and to take any and all such
acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take,
and prepare for execution and filing any documents to
be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with
the applicable laws of any such States;
(c) to prepare for filing by the Trust an application to
the New York Stock Exchange or any other national stock
exchange or the Nasdaq National Market for listing upon
notice of issuance of any Preferred Securities;
(d) to prepare for filing by the Trust with the Commission
a registration statement on Form 8-A relating to the
registration of the Preferred Securities under Section
12(b) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of the Underwriting Agreement
and Pricing Agreement providing for the sale of the
Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees shall initially be three (3), and:
(a) at any time before the issuance of any Securities, the
Sponsor may, by written instrument, increase or de-
crease the number of Trustees; and
(b) after the issuance of any Securities:
(i) and except as provided in Sections 5.1(b)(ii) and
5.6(a)(ii)(B) with respect to the Special Regular
Trustee, the number of Trustees may be increased
or decreased by vote of the Holders of a Majority
in liquidation amount of the Common Securities
voting as a class at a meeting of the Holders of
the Common Securities; and
(ii) the number of Trustees shall be increased auto-
matically by one (1) if an Appointment Event has
occurred and is continuing and the Holders of a
Majority in liquidation amount of the Preferred
Securities appoint a Special Regular Trustee in
accordance with Section 5.6,
provided that in any case, the number of Trustees shall be at
_____________
least three (3), in which case:
(c) the Trustee that acts as the Property Trustee shall
also act as the Delaware Trustee pursuant to Section
5.2.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its prin-
cipal place of business in the State of Delaware, and
otherwise meets the requirements of applicable law
provided that if the Property Trustee has its principal place of
business in the State of Delaware and otherwise meets the re-
quirements of applicable law, then the Property Trustee shall
also be the Delaware Trustee and Section 3.11 shall have no
application.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act
as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business
under the laws of the United States of America or
any State or Territory thereof or of the District
of Columbia, or a corporation or Person permitted
by the Commission to act as an institutional
trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust
powers, having a combined capital and surplus of
at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by
Federal, State, Territorial or District of
Columbia authority. If such corporation pub-
lishes reports of condition at least annually,
pursuant to law or to the requirements of the
supervising or examining authority referred to
above, then for the purposes of this Section
5.3(a)(ii), the combined capital and surplus of
such corporation shall be deemed to be its com-
bined capital and surplus as set forth in its
most recent report of condition so published; and
(iii) if the Trust is excluded from the definition of
an Investment Company solely by means of Rule
3a-7 and to the extent Rule 3a-7 requires a
trustee having certain qualifications to hold
title to the "eligible assets" of the Trust, the
Property Trustee shall possess those qualifica-
tions.
(b) If at any time the Property Trustee shall cease to be
eligible to so act under Section 5.3(a), the Property
Trustee shall immediately resign in the manner and with
the effect set out in Section 5.6(c)
(c) If the Property Trustee has or shall acquire any "con-
flicting interest" within the meaning of Section
310(b) of the Trust Indenture Act, the Property Trustee
and the Holder of the Common Securities (as if it were
the obligor referred to in Section 310(b) of the Trust
Indenture Act) shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture
Act.
(d) The Preferred Securities Guarantee shall be deemed to
be specifically described in this Declaration for
purposes of clause (i) of the first provision contained
in Section 310(b) of the Trust Indenture Act.
SECTION 5.4 Qualifications of Regular Trustees and Delaware
Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a
natural person who is at least 21 years of age or a legal entity
that shall act through one or more Authorized Officers.
SECTION 5.5 Initial Trustees.
The initial Regular Trustees shall be:
Ronald J. Endres
504 Lavaca Street, Suite 800
Austin, Texas 78701
David J. Kvapil
504 Lavaca Street, Suite 800
Austin, Texas 78701
The initial Delaware Trustee shall be:
Wilmington Trust Company
1100 N. Market Street
Wilmington, Delaware 19890
who shall also act as Property Trustee.
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed or
removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities;
(A) other than in respect to a Special Regular
Trustee by vote of the Holders of a Majority
in liquidation amount of the Common Securi-
ties voting as a class at a meeting of
the Holders of the Common Securities; and
(B) if an Appointment Event has occurred and is
continuing, one (1) additional Regular
Trustee (the "Special Regular Trustee") may
be appointed by vote of the Holders of a
Majority in liquidation amount of the Pre-
ferred Securities, voting as a class at a
meeting of the Holders of the Preferred
Securities and such Special Regular Trustee
may only be removed (otherwise than by the
operation of Section 5.6(c)), by vote of
the Holders of a Majority in liquidation
amount of the Preferred Securities voting as
a class at a meeting of the Holders of the
Preferred Securities.
(b) (i) The Trustee that acts as Property Trustee shall
not be removed in accordance with Section 5.6(a)
until a Successor Property Trustee has been
appointed and has accepted such appointment by
written instrument executed by such Successor
Property Trustee and delivered to the Regular
Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall
not be removed in accordance with this Section
5.6(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware
Trustee") has been appointed and has accepted
such appointment by written instrument executed
by such Successor Delaware Trustee and delivered
to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until
his successor shall have been appointed or until his
death, removal or resignation, provided that a Special
_____________
Regular Trustee shall only hold office while an Ap-
pointment Event is continuing and shall cease to hold
office immediately after the Appointment Event pursuant
to which the Special Regular Trustee was appointed and
all other Appointment Events cease to be continuing.
Any Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in
writing signed by the Trustee and delivered to the
Sponsor and the Trust, which resignation shall take
effect upon such delivery or upon such later date as is
specified therein; provided, however, that:
_________________
(i) no such resignation of the Trustee that acts as
the Property Trustee shall be effective:
(A) until a Successor Property Trustee has
been appointed and has accepted such ap-
pointment by instrument executed by such
Successor Property Trustee and delivered to
the Trust, the Sponsor and the resigning
Property Trustee; or
(B) if the Trust is not deemed an Investment
Company solely by reason of Rule 3a-7, until
the assets of the Trust have been completely
liquidated and the proceeds thereof dis-
tributed to the holders of the Securities;
and
(ii) no such resignation of the Trustee that acts as
the Delaware Trustee shall be effective until a
Successor Delaware Trustee has been appointed and
has accepted such appointment by instrument
executed by such Successor Delaware Trustee and
delivered to the Trust, the Sponsor and the
resigning Delaware Trustee; and
(iii) no such resignation of a Special Regular Trustee
shall be effective until the 60th day following
delivery of the instrument of resignation of the
Special Regular Trustee to the Sponsor and the
Trust or such later date specified in such
instrument during which period the Holders of the
Preferred Securities shall have the right to
appoint a successor Special Trustee as provided
in this Section 5,6; and
(d) if no Successor Property Trustee or Successor Delaware
Trustee shall have been appointed and accepted appoint-
ment as provided in this Section 5.6 within 60 days
after delivery to the Sponsor and the Trust of an
instrument of resignation, the resigning Property
Trustee or Delaware Trustee, as applicable, may peti-
tion any court of competent jurisdiction for appoint-
ment of a Successor Property Trustee or Successor
Delaware Trustee. Such court may thereupon, after
causing such notice to be given, if any, as it may deem
proper and prescribe, appoint a Successor Property
Trustee or Successor Delaware Trustee, as the case may
be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number
of Trustees is not reduced pursuant to Section 5.1, or if the
number of Trustees is increased pursuant to Section 5.1, a
vacancy shall occur. A resolution certifying the existence of
such vacancy by a majority of the Regular Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy
shall be filled with a Trustee appointed in accordance
with Section 5.6.
SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolu-
tion, liquidation, incompetence or incapacity to perform the
duties of a Trustee shall not operate to annul the Trust.
Whenever a vacancy in the number of Regular Trustees shall occur,
until such vacancy is filled by the appointment of a Regular
Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the
duties imposed upon the Regular Trustees by this Declaration.
SECTION 5.9 Meetings.
Meetings of the Regular Trustees shall be held from time to time
upon the call of any Regular Trustee. Regular meetings of the
Regular Trustees may be held at a time and place fixed by reso-
lution of the Regular Trustees. Notice of any in-person meetings
of the Regular Trustees shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 48 hours before such meeting.
Notice of any telephonic meetings of the Regular Trustees or any
committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight
courier) not less than 24 hours before a meeting. Notices shall
contain a brief statement of the time, place and anticipated pur-
poses of the meeting. The presence (whether in person or by
telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee
attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has
not been lawfully called or convened. Unless provided otherwise
in this Declaration, any action of the Regular Trustees may be
taken at a meeting by vote of a majority of the Regular Trustees
present (whether in person or by telephone) and eligible to vote
with respect to such matter, provided that a Quorum is present,
or without a meeting by the unanimous written consent of the
Regular Trustees.
SECTION 5.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consis-
tent with applicable law, delegate to any other natural
person over the age of 21 his or her power for the pur-
pose of executing any documents contemplated in Section
3.6, including any registration statement or amendment
thereto filed with the Commission, or making any other
governmental filing; and
(b) the Regular Trustees shall have power to delegate from
time to time to such of their number or to officers of
the Trust the doing of such things and the execution of
such instruments either in the name of the Trust or the
names of the Regular Trustees or otherwise as the
Regular Trustees may deem expedient, to the extent such
delegation is not prohibited by applicable law or con-
trary to the provisions of the Trust, as set forth
herein.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in accor-
dance with the applicable terms of the relevant Holder's Securi-
ties. Distributions shall be made on the Preferred Securities
and the Common Securities in accordance with the preferences set
forth in their respective terms. If and to the extent that the
Debenture Issuer makes a payment of interest (including Com-
pounded Interest (as defined in the Indenture)) and Additional
Interest (as defined in the Indenture), premium and principal on
the Debentures held by the Property Trustee (the amount of any
such payment being a "Payment Amount"), the Property Trustee
shall and is directed, to the extent funds are available for that
purpose, to make a distribution (a "Distribution") of the Payment
Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust issue
one class of preferred securities representing
undivided beneficial interests in the assets of the
Trust having such terms as are set forth in Exhibit A
and incorporated herein by reference (the "Preferred
Securities") and one class of common securities
representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth
in Exhibit A (the "Common Securities.") The Trust
shall have no securities or other interests in the as-
sets of the Trust other than the Preferred Securities
and the Common Securities.
(b) The Certificates shall be signed on behalf of the Trust
by the Regular Trustees (or if there are more than two
Regular Trustees by any two of the Regular Trustees).
Such signatures may be the manual or facsimile signa-
tures of the present or any future Regular Trustee.
Typographical and other minor errors or defects in any
such reproduction of any such signature shall not
affect the validity of any Certificate. In case any
Regular Trustee of the Trust who shall have signed any
of the Securities shall cease to be such Regular
Trustee before the Certificates so signed shall be
delivered by the Trust, such Certificates nevertheless
may be delivered as though the person who signed such
Certificates had not ceased to be such Regular Trustee;
and any Certificate may be signed on behalf of the
Trust by such persons who, at the actual date of
execution of such Security, shall be the Regular
Trustees of the Trust, although at the date of the
execution and delivery of the Declaration any such per-
son was not such a Regular Trustee. Certificates shall
be printed, lithographed or engraved or may be produced
in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution
thereof, and may have such letters, numbers or other
marks of identification or designation and such legends
or endorsements as the Regular Trustees may deem appro-
priate, or as may be required to comply with any law or
with any rule or regulation of any stock exchange on
which Securities may be listed, or to conform to usage.
(c) The consideration received by the Trust for the issu-
ance of the Securities shall constitute a contribution
to the capital of the Trust and shall not constitute a
loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed
to be validly issued, fully paid and non-assessable.
(e) Every Person, by virtue of having become a Holder or a
Preferred Security Beneficial Owner in accordance with
the terms of this Declaration, shall be deemed to have
expressly assented and agreed to the terms of, and
shall be bound, by this Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Holder of the Common
Securities, the Sponsor or the Debenture Issuer;
(ii) upon the filing of a certificate of dissolution
or its equivalent with respect to the Holder of
the Common Securities, the Sponsor or the Deben-
ture Issuer; the filing of a certificate of
cancellation with respect to the Trust or the
revocation of the Holder of the Common Securi-
ties, the Sponsor's or the Debenture Issuer's
charter and the expiration of 90 days after the
date of revocation without a reinstatement there-
of;
(iii) upon the entry of a decree of judicial dissolu-
tion of the Holder of the Common Securities, the
Sponsor, the Debenture Issuer or the Trust;
(iv) when all of the Securities shall have been called
for redemption and the amounts necessary for
redemption thereof shall have been paid to the
Holders in accordance with the terms of the
Securities;
(v) upon the occurrence and continuation of a Tax
Event pursuant to which the Trust shall have been
dissolved in accordance with the terms of the
Securities and all of the Debentures endorsed
thereon shall have been distributed to the
Holders of Securities in exchange for all of the
Securities; or
(vi) before the issuance of any Securities, with the
consent of all of the Regular Trustees and the
Sponsor; and
(b) as soon as is practicable after the occurrence of an
event referred to in Section 8.1(a), the Trustees shall
file a certificate of cancellation with the Secretary
of State of the State of Delaware; and
(c) the provisions of Section 3.9 and Article X shall
survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set
forth in this Declaration and in the terms of the Secu-
rities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration
shall be null and void;
(b) subject to this Article IX, Preferred Securities shall
be freely transferable; and
(c) subject to this Article IX, the Sponsor and any Related
Party may only transfer Common Securities to the Spon-
sor or a Related Party of the Sponsor; provided that,
_____________
any such transfer is subject to the condition precedent
that the transferor obtain the written opinion of
nationally recognized independent counsel experienced
in such matters that such transfer would not cause
more than an insubstantial risk that:
(i) the Trust would be classified for United States
federal income tax purposes as an association
taxable as a corporation or a partnership and
each Holder of Securities would not be treated as
owning an undivided beneficial interest in the
Debentures; and
(ii) the Trust would be an Investment Company or the
transferee would become an Investment Company.
SECTION 9.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of Cer-
tificates and of transfers of Certificates, which will be
effected without charge but only upon payment (with such indem-
nity as the Regular Trustees may require) in respect of any tax
or other government charges which may be imposed in relation to
it. Upon surrender for registration of transfer of any Certifi-
cate, the Regular Trustees shall cause one or more new Certifi-
cates to be issued in the name of the designated transferee or
transferees. Every Certificate surrendered for registration of
transfer shall be accompanied by a written instrument of transfer
in form satisfactory to the Regular Trustees duly executed by the
Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall
be canceled by the Regular Trustees. A transferee of a Certifi-
cate shall be entitled to the rights and subject to the obliga-
tions of a Holder hereunder upon the receipt by such transferee
of a Certificate. By acceptance of a Certificate, each trans-
feree shall be deemed to have agreed to be bound by this Declara-
tion and the documents incorporated by reference herein.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the
sole holder of such Certificate and of the Securities represented
by such Certificate for purposes of receiving Distributions and
for all other purposes whatsoever and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in
such Certificate or in the Securities represented by such Cer-
tificate on the part of any Person, whether or not the Trust
shall have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Preferred Securi-
ties, the Preferred Securities Certificates, on original
issuance, will be issued in the form of one or more, fully regis-
tered, global Preferred Security Certificates (each a "Global
Certificate"), to be delivered to DTC, the initial Clearing
Agency, by, or on behalf of, the Trust. Such Global Certificates
shall initially be registered on the books and records of the
Trust in the name of Cede & Co., the nominee of DTC, and no
Preferred Security Beneficial Owner will receive a definitive
Preferred Security Certificate representing such Preferred
Security Beneficial Owner's interests in such Global Certifi-
cates, except as provided in Section 9.7. Unless and until
definitive, fully registered Preferred Security Certificates (the
"Definitive Preferred Security Certificates") have been issued to
the Preferred Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full
force and effect;
(b) the Trust and the Trustees shall be entitled to deal
with the Clearing Agency for all purposes of this
Declaration (including the payment of Distributions on
the Global Certificates and receiving approvals, votes
or consents hereunder) as the Holder of the Preferred
Securities and the sole holder of the Global Certifi-
cates and shall have no obligation to the Preferred
Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4
conflict with any other provisions of this Declaration,
the provisions of this Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners
shall be exercised only through the Clearing Agency and
shall be limited to those established by law and agree-
ments between such Preferred Security Beneficial Owners
and the Clearing Agency and/or the Clearing Agency Par-
ticipants and receive and transmit payments of Distri-
butions on the Global Certificates to such Clearing
Agency Participants. DTC will make book entry trans-
fers among the Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred
Security Holders is required under this Declaration, unless and
until Definitive Preferred Security Certificates shall have been
issued to the Preferred Security Beneficial Owners pursuant to
Section 9.7, the Regular Trustees shall give all such notices and
communications specified herein to be given to the Preferred
Security Holders to the Clearing Agency, and shall have no notice
obligations to the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities,
the Regular Trustees may, in their sole discretion, appoint a
successor Clearing Agency with respect to such Preferred Securi-
ties.
SECTION 9.7 Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred
Securities and a successor Clearing Agency is not
appointed within 90 days after such discontinuance
pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the
Sponsor to terminate the book entry system through the
Clearing Agency with respect to the Preferred Securi-
ties,
then:
(c) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust
with respect to such Preferred Securities; and
(d) upon surrender of the Global Certificates by the Clear-
ing Agency, accompanied by registration instructions,
the Regular Trustees shall cause Definitive Certifi-
cates to be delivered to Preferred Security Beneficial
Owners in accordance with the instructions of the
Clearing Agency. Neither the Trustees nor the Trust
shall be liable for any delay in delivery of such in-
structions and each of them may conclusively rely on
and shall be protected in relying on, said instructions
of the Clearing Agency. The Definitive Preferred
Security Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as
evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification
or designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be
required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which Preferred
Securities may be listed, or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the
Regular Trustees, or if the Regular Trustees shall
receive evidence to their satisfaction of the destruc-
tion, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such
security or indemnity as may be required by them to
keep each of them harmless.
then:
In the absence of notice that such Certificate shall have been
acquired by a bona fide purchaser, any two Regular Trustees on
behalf of the Trust shall execute and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Certifi-
cate, a new Certificate of like denomination. In connection with
the issuance of any new Certificate under this Section 9.8, the
Regular Trustees may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Certificate issued pursuant
to this Section shall constitute conclusive evidence of an
ownership interest in the relevant Securities, as if originally
issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the
Securities Guarantees and the terms of the Securities
the Sponsor shall not be:
(i) personally liable for the return of any portion of
the capital contributions (or any return thereon)
of the Holders of the Securities which shall be
made solely from assets of the Trust; and
(ii) be required to pay to the Trust or to any Holder
of Securities any deficit upon dissolution of the
Trust or otherwise; and
(b) Pursuant to Section 3803(a) of the Business Trust Act,
the Holder of the Common Securities shall be liable for
all of the debts and obligations of the Trust (other
than with respect to the Securities) to the extent not
satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act,
the Holders of the Preferred Securities shall be
entitled to the same limitation of personal liability
extended to stockholders of private corporations for
profit organized under the General Corporation Law of
the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any
Covered Person for any loss, damage or claim incurred
by reason of any act or omission performed or omitted
by such Indemnified Person in good faith on behalf of
the Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified
Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's
gross negligence (or, in the case of the Property
Trustee, pursuant to Section 3.9, negligence) or will-
ful misconduct with respect to such acts or omissions;
and
(b) an Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and
upon such information, opinions, reports or statements
presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such
other Person's professional or expert competence and
who has been selected with reasonable care by or on
behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other
facts pertinent to the existence and amount of assets
from which Distributions to Holders of Securities might
properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and lia-
bilities relating thereto to the Trust or to any other
Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the
provisions of this Declaration. The provisions of this
Declaration, to the extent that they restrict the
duties and liabilities of an Indemnified Person other-
wise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust
Indenture Act), are agreed by the parties hereto to
replace such other duties and liabilities of such
Indemnified Person;
(b) unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between an Indemnified Person and any Covered Per-
son; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is,
or provides terms that are, fair and reasonable to
the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of
interest, take such action or provide such terms,
considering in each case the relative interest of each
party (including its own interest) to such conflict,
agreement, transaction or situation and the benefits
and burdens relating to such interests, any customary
or accepted industry practices, and any applicable gen-
erally accepted accounting practices or principles. In
the absence of bad faith by the Indemnified Person, the
resolution, action or term so made, taken or provided
by the Indemnified Person shall not constitute a breach
of this Declaration or any other agreement contemplated
herein or of any duty or obligation of the Indemnified
Person at law or in equity or otherwise; and
(c) whenever in this Declaration an Indemnified Person is
permitted or required to make a decision
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be
entitled to consider such interests and factors as
it desires, including its own interests, and shall
have no duty or obligation to give any considera-
tion to any interest of or factors affecting the
Trust or any other Person; or
(ii) in its "good faith" or under another express stan-
dard,
the Indemnified Person shall act under such express
standard and shall not be subject to any other or dif-
ferent standard imposed by this Declaration or by
applicable law.
SECTION 10.4 Indemnification.
(a) To the fullest extent permitted by applicable law, the
Sponsor shall indemnify and hold harmless each Indemni-
fied Person from and against any loss, damage, lia-
bility, tax, penalty, expense or claim of any kind or
nature whatsoever incurred by such Indemnified Person
by reason of the creation, operation or termination of
the trust or any act or omission performed or omitted
by such Indemnified Person in good faith on behalf of
the Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Declara-
tion, except that no Indemnified Person shall be
entitled to be indemnified in respect of any loss,
damage or claim incurred by such Indemnified Person by
reason of gross negligence (or, in the case of the
Property Trustee, pursuant to Section 3.9, negligence)
or willful misconduct with respect to such acts or
omissions; and
(b) to the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by an Indemni-
fied Person in defending any claim, demand, action,
suit or proceeding shall, from time to time, be ad-
vanced by the Sponsor prior to the final disposition of
such claim, demand, action, suit or proceeding upon
receipt by the Sponsor of an undertaking by or on
behalf of the Indemnified Person to repay such amount
if it shall be determined that the Indemnified Person
is not entitled to be indemnified as authorized in
Section 10.4(a). The indemnification shall survive the
termination of this Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Debenture Issuer, the
Delaware Trustee and the Property Trustee may engage in or
possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar
to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in
and to such independent ventures or the income or profits derived
therefrom and the pursuit of any such venture, even if competi-
tive with the business of the Trust, shall not be deemed wrongful
or improper. No Covered Person, the Sponsor, the Debenture
Issuer, the Delaware Trustee, or the Property Trustee shall be
obligated to present any particular investment or other oppor-
tunity to the Trust even if such opportunity is of a character
that, if presented to the Trust, could be taken by the Trust, and
any Covered Person, the Sponsor, the Debenture Issuer, the
Delaware Trustee and the Property Trustee shall have the right to
take for its own account (individually or as a partner or fidu-
ciary) or to recommend to others any such particular investment
or other opportunity. Any Covered Person, the Delaware Trustee
and the Property Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate
of the Sponsor, or may act as depositary for, trustee or agent
for, or act on any committee or body of holders of, securities or
other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calen-
dar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Regular Trustees shall keep, or cause to be kept, full
books of account, records and supporting documents,
which shall reflect in reasonable detail, each transac-
tion of the Trust. The books of account shall be main-
tained on the accrual method of accounting, in
accordance with generally accepted accounting princi-
ples, consistently applied. The Trust shall use the
accrual method of accounting for United States federal
income tax purposes. The books of account and the
records of the Trust shall be examined by and reported
upon as of the end of each Fiscal Year by a firm of
independent certified public accountants selected by
the Regular Trustees;
(b) the Regular Trustees shall cause to be prepared and de-
livered to each of the Holders of Securities, within 90
days after the end of each Fiscal Year of the Trust,
annual financial statements of the Trust, including a
balance sheet of the Trust as of the end of such Fiscal
Year, and the related statements of income or loss;
(c) the Regular Trustees shall cause to be duly prepared
and delivered to each of the Holders of Securities, any
annual United States federal income tax information
statement, required by the Code, containing such infor-
mation with regard to the Securities held by each
Holder as is required by the Code and the Treasury
Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the
Regular Trustees shall endeavor to deliver all such
statements within 30 days after the end of each Fiscal
Year of the Trust; and
(d) the Regular Trustees shall cause to be duly prepared
and filed with the appropriate taxing authority, an
annual United States federal income tax return, on a
Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax
returns required to be filed by the Regular Trustees on
behalf of the Trust with any state or local taxing
authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that
_________________
all payments of funds in respect of the Debentures held by the
Property Trustee shall be made directly to the Property Trustee
Account and no other funds of the Trust shall be deposited in the
Property Trustee Account. The sole signatories for such accounts
shall be designated by the Regular Trustees; provided, however,
_________________
that the Property Trustee shall designate the sole signatories
for the Property Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all with-
holding requirements under United States federal, state and local
law. The Trust shall request, and the Holders shall provide to
the Trust, such forms or certificates as are necessary to estab-
lish an exemption from withholding with respect to each Holder,
and any representations and forms as shall reasonably be
requested by the Trust to assist it in determining the extent of,
and in fulfilling, its withholding obligations. The Holder shall
file required forms with applicable jurisdictions and, unless an
exemption from withholding is properly established by a Holder,
shall remit amounts withheld with respect to the Holder to
applicable jurisdictions. To the extent that the Holder is
required to withhold and pay over any amounts to any authority
with respect to distributions or allocations to any Holder, the
amount withheld shall be deemed to be a distribution in the
amount of the withholding to the Holder. In the event of any
claimed over withholding, Holders shall be limited to an action
against the applicable jurisdiction. If the amount withheld was
not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by
any applicable terms of the Securities, this Declara-
tion may be amended by, and only by, a written instru-
ment approved and executed by the Trustees (or, if
there are more than two Regular Trustees a majority of
the Regular Trustees); provided, however, that:
_________________
(i) no amendment shall be made, and any such pur-
ported amendment shall be void and ineffective,
to the extent the result thereof would be to
(A) cause the Trust to be characterized for
purposes of United States federal income
taxation as an association taxable as a
corporation or a partnership and each Holder
of Securities not to be treated as owning an
undivided beneficial interest in the
Debentures;
(B) reduce or otherwise adversely affect the
powers of the Property Trustee; or
(C) cause the Trust to be deemed an Investment
Company that is required to be registered
under the Investment Company Act;
(ii) at such time after the Trust has issued any
Securities that remain outstanding, any amend-
ment that would adversely affect the rights,
privileges or preferences of any Holder of
Securities may be effected only with such addi-
tional requirements as may be set forth in the
terms of such Securities;
(iii) Section 9.1(c) and this Section 12.1 shall not
be amended without the consent of all of the
Holders of the Securities;
(iv) Article IV shall not be amended without the con-
sent of the Holders of a Majority in liquidation
amount of the Common Securities; and
(v) the rights of the holders of the Common Securi-
ties under Article V to increase or decrease
the number of, and appoint and remove Trustees
shall not be amended without the consent of the
Holders of a Majority in liquidation amount of
the Common Securities.
(b) Notwithstanding Section 12.1(a)(ii), this Declaration
may be amended without the consent of the Holders of
the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent
with any other provision of this Declaration;
(iii) add to the covenants, restrictions or obligations
of the Sponsor; and
(iv) conform to any change in Rule 3a-7 or written
change in interpretation or application of Rule
3a-7 by any legislative body, court, government
agency or regulatory authority which amendment
does not have a material adverse effect on the
right, preferences or privileges of the Holders.
SECTION 12.2 Meetings of the Holders of Securities; Action by
Written Consent.
(a) Meetings of the Holders of any class of Securities may
be called at any time by the Regular Trustees (or as
provided in the terms of the Securities) to consider
and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules
of any stock exchange on which the Preferred Securities
are listed or admitted for trading. The Regular
Trustees shall call a meeting of the Holders of such
class, if directed to do so by the Holders of at least
10% in liquidation amount of such class of Securities.
Such direction shall be given by delivering to the
Regular Trustees one or more calls in a writing stating
that the signing Holders of Securities wish to call a
meeting and indicating the general or specific purpose
for which the meeting is to be called. Any Holders of
Securities calling a meeting shall specify in writing
the Security Certificates held by the Holders of
Securities exercising the right to call a meeting and
only those specified shall be counted for purposes of
determining whether the required percentage set forth
in the second sentence of this paragraph has been met;
and
(b) except to the extent otherwise provided in the terms of
the Securities, the following provisions shall apply to
meetings of Holders of Securities:
(i) notice of any such meeting shall be given to
all the Holders of Securities having a right to
vote thereat at least 7 days and not more than 60
days before the date of such meeting. Whenever a
vote, consent or approval of the Holders of
Securities is permitted or required under this
Declaration or the rules of any stock exchange on
which the Preferred Securities are listed or
admitted for trading, such vote, consent or ap-
proval may be given at a meeting of the Holders
of Securities. Any action that may be taken at a
meeting of the Holders of Securities may be taken
without a meeting if a consent in writing setting
forth the action so taken is signed by the
Holders of Securities owning not less than the
minimum amount of Securities in liquidation
amount that would be necessary to authorize or
take such action at a meeting at which all
Holders of Securities having a right to vote
thereon were present and voting. Prompt notice
of the taking of action without a meeting
shall be given to the Holders of Securities
entitled to vote who have not consented in
writing. The Regular Trustees may specify
that any written ballot submitted to the Security
Holder for the purpose of taking any action with-
out a meeting shall be returned to the Trust
within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any
Person to act for it by proxy on all matters in
which a Holder of Securities is entitled to
participate, including waiving notice of any
meeting, or voting or participating at a meeting.
No proxy shall be valid after the expiration of
11 months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be
revocable at the pleasure of the Holder of
Securities executing it. Except as otherwise
provided herein, all matters relating to the
giving, voting or validity of proxies shall be
governed by the General Corporation Law of the
State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the
Trust were a Delaware corporation and the Holders
of the Securities were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders of the Securities
shall be conducted by the Regular Trustees or by
such other Person that the Regular Trustees may
designate; and
(iv) unless the Business Trust Act, this Declaration,
the terms of the Securities or the listing rules
of any stock exchange on which the Preferred
Securities are then listed or trading, otherwise
provides, the Regular Trustees, in their sole
discretion, shall establish all other provisions
relating to meetings of Holders of Securities,
including notice of the time, place or purpose of
any meeting at which any matter is to be voted on
by any Holders of Securities, waiver of any such
notice, action by consent without a meeting, the
establishment of a record date, quorum require-
ments, voting in person or by proxy or any other
matter with respect to the exercise of any such
right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
The Trustee which acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this
Declaration, and each Successor Property Trustee represents and
warrants to the Trust and the Sponsor at the time of the Succes-
sor Property Trustee's acceptance of its appointment as Property
Trustee that:
(a) The Property Trustee is a national banking association
with trust powers, duly organized, validly existing and
in good standing under the laws of the United States,
with trust power and authority to execute and deliver,
and to carry out and perform its obligations under the
terms of, the Declaration.
(b) The execution, delivery and performance by the Property
Trustee of the Declaration has been duly authorized by
all necessary corporate action on the part of the
Property Trustee. The Declaration has been duly exe-
cuted and delivered by the Property Trustee, and it
constitutes a legal, valid and binding obligation
of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bank-
ruptcy, reorganization, moratorium, insolvency, and
other similar laws affecting creditors' rights
generally and to general principles of equity and the
discretion of the court (regardless of whether the
enforcement of such remedies is considered in a pro-
ceeding in equity or at law).
(c) The execution, delivery and performance of the Declara-
tion by the Property Trustee does not conflict with or
constitute a breach of the Articles of Organization or
By-laws of the Property Trustee.
(d) No consent, approval or authorization of, or registra-
tion with or notice to, any State or Federal banking
authority is required for the execution, delivery or
performance by the Property Trustee, of the Declara-
tion.
(e) If the Property Trustee does not also act as the
Delaware Trustee, the Delaware Trustee shall be a
natural person who is a resident of the State of
Delaware.
(f) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the
Declaration. The Declaration under Delaware law con-
stitutes a legal, valid and binding obligation of the
Delaware Trustee, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, reor-
ganization, moratorium, insolvency, and other similar
laws affecting creditors' rights generally and to
general principles of equity and the discretion of the
court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at
law).
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be deliv-
ered, telecopied or mailed by registered or certified mail, as
follows:
(a) if given to the Trust, in care of the Regular Trustees
at the Trust's mailing address set forth below (or such
other address as the Trust may give notice of to the
Holders of the Securities):
SOUTHERN UNION FINANCING I
504 Lavaca Street, Suite 800
Austin, Texas 78701
Attention: [ ]
(b) if given to the Property Trustee, at the mailing ad-
dress set forth below (or such other address as the
Property Trustee may give notice of to the Holders of
the Securities):
WILMINGTON TRUST COMPANY
1100 N. Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
(c) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such
other address as the Holder of the Common Securities
may give notice to the Trust):
SOUTHERN UNION COMPANY
504 Lavaca Street
Austin, Texas 78701
Attention: [ ]
(d) if given to any other Holder, at the address set forth
on the books and records of the Trust.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a
changed address of which no notice was given, such notice or
other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the
State of Delaware and all rights and remedies shall be governed
by such laws without regard to principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust not be
characterized for United States federal income tax purposes as an
association taxable as a corporation or a partnership but rather,
the Trust be characterized as a grantor trust or otherwise in a
manner that each Holder of Securities be treated as owning an
undivided beneficial interest in the Debentures. The provisions
of this Declaration shall be interpreted to further this inten-
tion of the parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for conveni-
ence of reference only and do not affect the interpretation of
this Declaration or any provision hereof.
SECTION 14.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named
or referred to, the successors and assigns of such party shall be
deemed to be included, and all covenants and agreements in this
Declaration by the Sponsor and the Trustees shall bind and inure
to the benefit of their respective successors and assigns,
whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid,
the remainder of this Declaration, or the application of such
provision to persons or circumstances other than those to which
it is held invalid, shall not be affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the
affixing of the signature of each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature
pages shall be read as though one, and they shall have the same
force and effect as though all of the signers had signed a single
signature page.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these presents to
be executed as of the day and year first above written.
Ronald J. Endres
as Trustee
RONALD J. ENDRES
___________________________
David J. Kvapil
as Trustee
DAVID J. KVAPIL
___________________________
WILMINGTON TRUST COMPANY
as Delaware Trustee
By:
Name:
Title:
SOUTHERN UNION COMPANY, Inc.
as Sponsor
By:
Name:
Title:
<PAGE>
EXHIBIT A
TERMS OF SECURITIES
<PAGE>
EXHIBIT A
TERMS OF
__% TRUST ORIGINATED PREFERRED SECURITIES
__% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration
of Trust, dated as of __________________, 1995 (as amended from
time to time, the "Declaration"), the designation, rights, privi-
leges, restrictions, preferences and other terms and provisions
of the Preferred Securities and the Common Securities are set out
below (each capitalized term used but not defined herein has the
meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
(a) "Preferred Securities." Preferred Securities of the
Trust with an aggregate liquidation amount with respect
to the assets of the Trust of $[____________ million
($ )] and a liquidation amount with respect
to the assets of the Trust of $25 per Preferred
Security, are hereby designated for the purposes of
identification only as "_____% Trust Originated Pre-
ferred Securities" (the "Preferred Securities"). The
Preferred Security Certificates evidencing the Pre-
ferred Securities shall be substantially in the form
attached hereto as Annex I, with such changes and addi-
tions thereto or deletions therefrom as may be required
by ordinary usage, custom or practice or to conform to
the rules of any stock exchange on which the Preferred
Securities are listed.
(b) "Common Securities." Common Securities of the Trust
with an aggregate liquidation amount with respect to
the assets of the Trust of $[_______ million ($ )]
and a liquidation amount with respect to the assets of
the Trust of $25 per Common Security, are hereby
designated for the purposes of identification only as
"____% Trust Originated Common Securities" (the "Common
Securities"). The Common Security Certificates
evidencing the Common Securities shall be substantially
in the form attached hereto as Annex II, with such
changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at
a rate per annum of [*.*]% (the "Coupon Rate") of the
stated liquidation amount of $25 per Security, such
rate being the rate of interest payable on the Deben-
tures to be held by the Property Trustee. Distribu-
tions in arrears for more than one quarter will bear
interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The
term "Distributions" as used herein includes such cash
distributions and any such interest payable unless
otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the
Debentures held by the Property Trustee. The amount of
Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis
of a 360-day year of twelve 30-day months, and for any
period shorter than a full quarterly Distribution
period for which Distributions are computed, Distribu-
tions will be computed on the basis of the actual
number of days elapsed in such a 30-day month.
(b) Distributions on the Securities will be cumulative,
will accrue from , 1995 and will be payable
[quarterly in arrears, on March 31, June 30, Septem
ber 30, and December 31 of each year, commencing on
__________________, 1995, except as otherwise described
below]. The Debenture Issuer has the right under the
Indenture to defer payments of interest by extending
the interest payment period from time to time on the
Debentures for a period not exceeding 20 consecutive
quarters (each an "Extension Period") and, as a conse-
quence of such Extension, Distributions will also be
deferred. Despite such deferral, quarterly Distribu-
tions will continue to accrue with interest thereon (to
the extent permitted by applicable law) at the Coupon
Rate compounded quarterly during any such Extension
Period. Prior to the termination of any such Extension
Period, the Debenture Issuer may further extend such
Extension Period; provided that such Extension Period
_____________
together with all such previous and further extensions
thereof may not exceed 20 consecutive quarters. Pay-
ments of accrued Distributions will be payable to
Holders as they appear on the books and records of the
Trust on the first record date after the end of the
Extension Period. Upon the termination of any Exten-
sion Period and the payment of all amounts then due,
the Debenture Issuer may commence a new Extension
Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the
Holders thereof as they appear on the books and records
of the Trust on the relevant record dates. While the
Preferred Securities remain in book-entry only form,
the relevant record dates shall be one Business Day
prior to the relevant payment dates which payment dates
correspond to the interest payment dates on the Deben-
tures. Subject to any applicable laws and regulations
and the provisions of the Declaration, each such pay-
ment in respect of the Preferred Securities will be
made as described under the heading "Description of the
Preferred Securities -- Book-Entry Only Issuance -- The
Depository Trust Company" in the Prospectus Supplement
dated ______, 1995, to the Prospectus dated ______,
1995 (together, the "Prospectus"), of the Trust
included in the Registration Statement on Form S-3 of
the Sponsor, the Debenture Issuer, the Trust and cer-
tain other business trusts. The relevant record dates
for the Common Securities, and, if the Preferred
Securities shall not continue to remain in book-entry
only form, the relevant record dates for the Preferred
Securities, shall conform to the rules of any securi-
ties exchange on which the securities are listed and,
if none, shall be selected by the Regular Trustees,
which dates shall be at least one Business Day but less
than 60 Business Days before the relevant payment
dates, which payment dates correspond to the interest
payment dates on the Debentures. Distributions payable
on any Securities that are not punctually paid on any
Distribution payment date, as a result of the Debenture
Issuer having failed to make a payment under the Deben-
tures will cease to be payable to the Person in whose
name such Securities are registered on the relevant
record date, and such defaulted Distribution will
instead be payable to the Person in whose name such
Securities are registered on the special record date or
other specified date determined in accordance with the
Indenture. If any date on which Distributions are pay-
able on the Securities is not a Business Day, then pay-
ment of the Distribution payable on such date will be
made on the next succeeding day that is a Business Day
(and without any interest or other payment in respect
of any such delay) except that, if such Business Day is
in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if
made on such date.
(d) In the event that there is any money or other property
held by or for the Trust that is not accounted for
hereunder, such property shall be distributed Pro Rata
(as defined herein) among the Holders of the Securi-
ties.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust, the Holders of the
Securities on the date of the dissolution, winding-up or termina-
tion, as the case may be, will be entitled to receive out of the
assets of the Trust available for distribution to Holders of
Securities after satisfaction of liabilities of creditors an
amount equal to the aggregate of the stated liquidation amount of
$25 per Security plus accrued and unpaid Distributions thereon to
the date of payment (such amount being the "Liquidation Distribu-
tion"), unless, in connection with such dissolution, winding-up
or termination, Debentures in an aggregate principal amount equal
to the aggregate stated liquidation amount of such Securities,
with an interest rate equal to the Coupon Rate of, and bearing
accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on, such Securities, shall be distributed on
a Pro Rata basis to the Holders of the Securities in exchange for
such Securities.
If, upon any such dissolution, the Liquidation Distribution can
be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Liquidation Distribution,
then the amounts payable directly by the Trust on the Securities
shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in
part, whether at maturity or upon redemption, the pro-
ceeds from such repayment or payment shall be simulta-
neously applied to redeem Securities having an
aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so repaid or re-
deemed at a redemption price of $25 per Security plus
an amount equal to accrued and unpaid Distributions
thereon at the date of the redemption, payable in cash
(the "Redemption Price"). Holders will be given not
less than 30 nor more than 60 days notice of such
redemption.
(b) If fewer than all the outstanding Securities are to be
so redeemed, the Common Securities and the Preferred
Securities will be redeemed Pro Rata and the Preferred
Securities to be redeemed will be as described in
Paragraph 4(f)(ii) below.
(c) If a Tax Event (as defined below) shall occur and be
continuing the Regular Trustees shall dissolve the
Trust and, after satisfaction of creditors, cause
Debentures held by the Property Trustee, having an
aggregate principal amount equal to the aggregate
stated liquidation amount of, with an interest rate
identical to the Coupon Rate of, and accrued and unpaid
interest equal to accrued and unpaid Distributions on
and having the same record date for payment as the
Securities, to be distributed to the Holders of the
Securities in liquidation of such Holders' interests in
the Trust on a Pro Rata basis, within 90 days following
the occurrence of such Tax Event (the "90 Day Period");
provided, however, that, as a condition of such disso-
____________________
lution and distribution, the Regular Trustees shall
have received an opinion of a nationally recognized
independent tax counsel experienced in such matters (a
"No Recognition Opinion"), which opinion may rely on
published revenue rulings of the Internal Revenue Ser-
vice, to the effect that the Holders of the Securities
will not recognize any gain or loss for United States
federal income tax purposes as a result of the disso-
lution of the Trust and the distribution of Debentures,
and provided, further, that, if at the time there is
__________________
available to the Trust the opportunity to eliminate,
within the 90 Day Period, the Tax Event by taking some
ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable
measure that has no adverse effect on the Trust, the
Debenture Issuer, the Sponsor or the Holders of the
Securities ("Ministerial Action"), the Trust will
pursue such Ministerial Action in lieu of dissolution.
If after receipt of a Dissolution Tax Opinion by the
Regular Trustees (i) the Debenture Issuer has received
an opinion (a "Redemption Tax Opinion") of a nationally
recognized independent tax counsel experienced in such
matters that, as a result of a Tax Event, there is more
than an insubstantial risk that the Debenture Issuer
would be precluded from deducting the interest on the
Debentures for United States federal income tax pur-
poses even if the Debentures were distributed to the
Holders of Securities in liquidation of such Holders'
interests in the Trust as described in this paragraph
4(c), or (ii) the Regular Trustees shall have been in-
formed by such tax counsel that a No Recognition
Opinion cannot be delivered to the Trust, the Debenture
Issuer shall have the right at any time, upon not less
than 30 nor more than 60 days notice, to redeem the
Debentures in whole or in part for cash within 90 days
following the occurrence of such Tax Event, and, fol-
lowing such redemption, Securities with an aggregate
liquidation amount equal to the aggregate principal
amount of the Debentures so redeemed shall be redeemed
by the Trust at the Redemption Price on a Pro Rata
basis; provided, however, that, if at the time there is
_________________
available to the Trust the opportunity to eliminate,
within such 90 day period, the Tax Event by taking some
Ministerial Action, the Trust or the Debenture Issuer
will pursue such Ministerial Action in lieu of redemp-
tion.
"Tax Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized inde-
pendent tax counsel experienced in such matters (a
"Dissolution Tax Opinion") to the effect that on or
after the date of the Prospectus Supplement, as a
result of (a) any amendment to, or change (including
any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any
political subdivision or taxing authority therefore or
therein, or (b) any amendment to, or change in, an
interpretation or application of any such laws or
regulations by any legislative body, court, govern-
mental agency or regulatory authority, which amendment
or change is enacted, promulgated, issued or announced
or which interpretation or pronouncement is issued or
announced or which action is taken, in each case on or
after the date of the Prospectus Supplement, there is
more than an insubstantial risk that (i) the Trust is
or will be within 90 days of the date thereof, subject
to United States federal income tax with respect to
interest accrued or received on the Debentures, (ii)
the Trust is, or will be within 90 days of the date
thereof, subject to more than a de minimis amount of
taxes, duties or other governmental charges, or (iii)
interest payable by the Debenture Issuer to the Trust
on the Debentures is not, or within 90 days of the date
thereof will not be, deductible, in whole or in part,
by the Debenture Issuer for United States federal
income tax purposes.
On and from the date fixed by the Regular Trustees for
any distribution of Debentures and dissolution of the
Trust: (i) the Securities will no longer be deemed to
be outstanding, (ii) The Depository Trust Company (the
"Depository") or its nominee (or any successor Clearing
Agency or its nominee), as the record Holder of the
Preferred Securities, will receive a registered global
certificate or certificates representing the Debentures
to be delivered upon such distribution and any certifi-
cates representing Securities, except for certificates
representing Preferred Securities held by the Deposi-
tory or its nominee (or any successor Clearing Agency
or its nominee), will be deemed to represent beneficial
interests in the Debentures having an aggregate princi-
pal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the
Coupon Rate of, and accrued and unpaid interest equal
to accrued and unpaid Distributions on such Securities
until such certificates are presented to the Debenture
Issuer or its agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions
have been paid on all Securities for all [quarterly]
Distribution periods terminating on or before the date
of redemption.
(e) If the Debentures are distributed to holders of the
Securities, pursuant to the terms of the Indenture, the
Debenture Issuer will use its best efforts to have the
Debentures listed on the New York Stock Exchange or on
such other exchange as the Preferred Securities were
listed immediately prior to the distribution of the
Debentures.
(f) "Redemption or Distribution Procedures."
(i) Notice of any redemption of, or notice of distri-
bution of Debentures in exchange for the Securi-
ties (a "Redemption/Distribution Notice") will be
given by the Trust by mail to each Holder of
Securities to be redeemed or exchanged not fewer
than 30 nor more than 60 days before the date
fixed for redemption or exchange thereof which,
in the case of a redemption, will be the date
fixed for redemption of the Debentures. For pur-
poses of the calculation of the date of redemp-
tion or exchange and the dates on which notices
are given pursuant to this paragraph 4(f)(i), a
Redemption/Distribution Notice shall be deemed to
be given on the day such notice is first mailed
by first-class mail, postage prepaid, to Holders
of Securities. Each Redemption/Distribution
Notice shall be addressed to the Holders of
Securities at the address of each such Holder
appearing in the books and records of the Trust.
No defect in the Redemption/Distribution Notice
or in the mailing of either thereof with respect
to any Holder shall affect the validity of the
redemption or exchange proceedings with respect
to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to
be redeemed shall be redeemed Pro Rata and, in
the event Preferred Securities are held in book-
entry only form by the Depositary or its nominee
(or any successor Clearing Agency or its nomi-
nee), the Depositary will reduce Pro Rata the
amount of the interest of each Clearing Agency
Participant in the Preferred Securities to be
redeemed; provided that if, as a result of such
Pro Rata redemption, Clearing Agency Participants
would hold fractional interests in the Preferred
Securities, the Depositary will adjust the amount
of the interest of each Clearing Agency Partici-
pant to be redeemed to avoid such fractional
interests.
(iii) If Securities are to be redeemed and the Trust
gives a Redemption/Distribution Notice, which
notice may only be issued if the Debentures are
redeemed as set out in this paragraph 4 (which
notice will be irrevocable), then (A) while the
Preferred Securities are in book-entry only form,
with respect to the Preferred Securities, by
12:00 noon, New York City time, on the redemption
date, provided that the Debenture Issuer has paid
the Property Trustee a sufficient amount of cash
in connection with the related redemption or
maturity of the Debentures, the Property Trustee
will deposit irrevocably with the Depositary (or
successor Clearing Agency) funds sufficient to
pay the applicable Redemption Price with respect
to the Preferred Securities and will give the
Depository irrevocable instructions and authority
to pay the Redemption Price to the Holders of the
Preferred Securities, and (B) with respect to
Preferred Securities issued in definitive form
and Common Securities, provided that the Deben-
ture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the
related redemption or maturity of the Debentures,
the Property Trustee will pay the relevant Re-
demption Price to the Holders of such Securities
by check mailed to the address of the relevant
Holder appearing on the books and records of the
Trust on the redemption date. If a Redemption/
Distribution Notice shall have been given and
funds deposited as required, if applicable, then
immediately prior to the close of business on the
date of such deposit, or on the redemption date,
as applicable, distributions will cease to accrue
on the Securities so called for redemption and
all rights of Holders of such Securities so
called for redemption will cease, except the
right of the Holders of such Securities to
receive the Redemption Price, but without inter-
est on such Redemption Price. Neither the Regu-
lar Trustees nor the Trust shall be required to
register or cause to be registered the transfer
of any Securities that have been so called for
redemption. If any date fixed for redemption of
Securities is not a Business Day, then payment of
the Redemption Price payable on such date will be
made on the next succeeding day that is a Busi-
ness Day (and without any interest or other pay-
ment in respect of any such delay) except that,
if such Business Day falls in the next calendar
year, such payment will be made on the immedi-
ately preceding Business Day, in each case with
the same force and effect as if made on such date
fixed for redemption. If payment of the Redem-
demption Price in respect of any Securities is
improperly withheld or refused and not paid
either by the Property Trustee or by the Sponsor
as guarantor pursuant to the relevant Securities
Guarantee, Distributions on such Securities will
continue to accrue from the original redemption
date to the actual date of payment, in which case
the actual payment date will be considered the
date fixed for redemption for purposes of calcu-
lating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent
by the Regular Trustees on behalf of the Trust to
(A) in respect of the Preferred Securities, the
Depositary or its nominee (or any successor
Clearing Agency or its nominee) if the Global
Certificates have been issued or, if Definitive
Preferred Security Certificates have been issued,
to the Holder thereof, and (B) in respect of the
Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law
(including, without limitation, United States
federal securities laws), provided the acquiror
is not the Holder of the Common Securities or the
obligor under the Indenture, the Sponsor or any
of its subsidiaries may at any time and from time
to time purchase outstanding Preferred Securities
by tender, in the open market or by private
agreement.
5. Voting Rights - Preferred Securities.
(a) Except as provided under paragraphs 5(b) and 7 and as
otherwise required by law and the Declaration, the
Holders of the Preferred Securities will have no voting
rights.
(b) If (i) the Trust fails to make Distributions in full on
the Preferred Securities for 6 consecutive quarterly
Distribution periods, or (ii) an Event of Default
occurs and is continuing (each of (i) and (ii) being an
"Appointment Event"), then the Holders of the Preferred
Securities, acting as a single class, will be entitled
by the vote of a Majority in liquidation amount of the
Preferred Securities to appoint a Special Regular
Trustee in accordance with Section 5.6(a)(ii)(B) of the
Declaration. Any Holder of Preferred Securities (other
than the Sponsor, or any entity directly or indirectly
controlling or controlled by or under direct or indi-
rect common control with the Sponsor) will be entitled
to nominate any person to be appointed as Special
Regular Trustee. For purposes of determining whether
the Trust has failed to make Distributions in full for
6 consecutive quarterly Distribution periods, Distribu-
tions shall be deemed to remain in arrears, notwith-
standing any payments in respect thereof, until full
cumulative Distributions have been or contemporaneously
are paid with respect to all quarterly Distribution
periods terminating on or prior to the date of payment
of such cumulative Distributions. Not later than 30
days after such right to appoint a Special Regular
Trustee arises, the Regular Trustees will convene a
meeting for the purpose of appointing a Special Regular
Trustee. If the Regular Trustees fail to convene
such meeting within such 30-day period, the Holders of
10% in liquidation amount of the Preferred Securities
will be entitled to convene such meeting in accordance
with Section 12.2 of the Declaration. The record date
for such meeting will be the close of business on the
Business Day that is one Business Day before the day on
which notice of the meeting is sent to the Holders.
The provisions of the Declaration relating to the con-
vening and conduct of the meetings of the Holders will
apply with respect to any such meeting.
A Special Regular Trustee may be removed without cause
at any time by vote of the Holders of a Majority in
liquidation amount of the Preferred Securities at a
meeting of the Holders of the Preferred Securities in
accordance with Section 5.6(a)(ii)(B) of the Declara-
tion. The Holders of 10% in liquidation amount of the
Preferred Securities will be entitled to convene such a
meeting in accordance with Section 12.2 of the Declara-
tion. The record date for such meeting will be the
close of business on the Business Day which is one
Business Day before the day on which the notice of
meeting is sent to Holders. Notwithstanding the
appointment of a Special Regular Trustee, the Debenture
Issuer shall retain all rights under the Indenture,
including the right to extend the interest payment
period on the Debentures.
Subject to the requirements set forth in this para-
graph, the Holders of a majority in liquidation amount
of the Preferred Securities, voting separately as a
class may direct the time, method, and place of con-
ducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power con-
ferred upon the Property Trustee under the Declaration,
including (i) directing the time, method, place of con-
ducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power con-
ferred on the Property Trustee with respect to the
Debentures, (ii) waive any past default and its conse-
quences that is waivable under Section 513 of the
Indenture, or (iii) exercise any right to rescind or
annul a declaration that the principal of all the
Debentures shall be due and payable, provided, however,
_________________
that, where a consent under the Indenture would
require the consent or act of the Holders of greater
than a majority of the Holders in principal amount of
Debentures affected thereby, (a "Super Majority"), the
Property Trustee may only give such consent or take
such action at the direction of the Holders of at least
the proportion in liquidation amount of the Preferred
Securities which the relevant Super Majority represents
of the aggregate principal amount of the Debentures
outstanding. The Property Trustee shall not revoke any
action previously authorized or approved by a vote of
the Holders of the Preferred Securities. Other than
with respect to directing the time, method and place of
conducting any remedy available to the Property Trustee
or the Debenture Trustee as set forth above, the
Property Trustee shall not take any action in
accordance with the directions of the Holders of the
Preferred Securities under this paragraph unless the
Property Trustee has obtained an opinion of tax counsel
to the effect that for the purposes of United States
federal income tax the Trust will not fail to be
classified as a grantor trust. If the Property Trustee
fails to enforce its rights under the Declaration, any
Holder of Preferred Securities may, after a period of
30 days has elapsed from such Holder's written request
to the Property Trustee to enforce such rights, insti-
tute a legal proceeding directly against any Person to
enforce the Property Trustee's rights under the Decla-
ration without first instituting a legal proceeding
against the Property Trustee or any other Person.
Any approval or direction of Holders of Preferred
Securities may be given at a separate meeting of
Holders of Preferred Securities convened for such pur-
pose, at a meeting of all of the Holders of Securities
in the Trust or pursuant to written consent. The
Regular Trustees will cause a notice of any meeting at
which Holders of Preferred Securities are entitled to
vote, or of any matter upon which action by written
consent of such Holders is to be taken, to be mailed to
each Holder of record of Preferred Securities. Each
such notice will include a statement setting forth (i)
the date of such meeting or the date by which such
action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on
which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Preferred
Securities will be required for the Trust to redeem and
cancel Preferred Securities or to distribute the Deben-
tures in accordance with the Declaration and the terms
of the Securities.
Notwithstanding that Holders of Preferred Securities
are entitled to vote or consent under any of the cir-
cumstances described above, any of the Preferred
Securities that are owned by the Sponsor or any Affili-
ate of the Sponsor shall not be entitled to vote or
consent and shall, for purposes of such vote or con-
sent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under paragraphs 6(b), (c) and 7 as
otherwise required by law and the Declaration, the
Holders of the Common Securities will have no voting
rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote
to appoint, remove or replace any Trustee or to in-
crease or decrease the number of Trustees, subject to
the exclusive right of the Holders of the Preferred
Securities to appoint, remove or replace a Special
Regular Trustee.
(c) Subject to Section 2.6 of the Declaration and only
after the Event of Default with respect to the Pre-
ferred Securities have been cured, waived, or otherwise
eliminated, the requirements of the second to last
sentence of this paragraph,the Holders of a Majority in
liquidation amount of the Common Securities, voting
separately as a class, may direct the time, method, and
place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee
under the Declaration, including (i) directing the
time, method, place of conducting any proceeding for
any remedy available to the Debenture Trustee, or
exercising any trust or power conferred on the Deben-
ture Trustee with respect to the Debentures, (ii) waive
any past default and its consequences that is waivable
under Section 606 of the Indenture, or (iii) exercise
any right to rescind or annul a declaration that the
principal of all the Debentures shall be due and
payable, provided, however, that, where a consent or
_________________
action under the Indenture would require the consent
or act of the Holders of greater than a majority in
principal amount of Debentures affected thereby (a
"Super Majority"), the Property Trustee may only give
such consent or take such action at the direction of
the Holders of at least the proportion in liquidation
amount of the Common Securities which the relevant
Super Majority represents of the aggregate principal
amount of the Debentures outstanding. Pursuant to this
paragraph 6(c), the Property Trustee shall not revoke
any action previously authorized or approved by a vote
of the Holders of the Preferred Securities. Other than
with respect to directing the time, method and place of
conducting any remedy available to the Property Trustee
or the Debenture Trustee as set forth above, the
Property Trustee shall not take any action in accor-
dance with the directions of the Holders of the Common
Securities under this paragraph unless the Property
Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal
income tax the Trust will not be classified as an
association taxable as a corporation or a partnership
and that each Holder of the Securities will be treated
as owning an undivided beneficial interest in the
Debentures on account of such action. If the Property
Trustee fails to enforce its rights under the Declara-
tion, any Holder of Common Securities may, after a
period of 30 days has elapsed from such holder's
written request to the Property Trustee to enforce such
rights, institute a legal proceeding directly against
any Person to enforce the Property Trustee's rights
under the Declaration, without first instituting
a legal proceeding against the Property Trustee or any
other Person.
Any approval or direction of Holders of Common Securi-
ties may be given at a separate meeting of Holders of
Common Securities convened for such purpose, at a
meeting of all of the Holders of Securities in the
Trust or pursuant to written consent. The Regular
Trustees will cause a notice of any meeting at which
Holders of Common Securities are entitled to vote, or
of any matter upon which action by written consent of
such Holders is to be taken, to be mailed to each
Holder of record of Common Securities. Each such
notice will include a statement setting forth (i) the
date of such meeting or the date by which such action
is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such
Holders are entitled to vote or of such matter upon
which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securi-
ties will be required for the Trust to redeem and can-
cel Common Securities or to distribute the Debentures
in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of
the Declaration, if any proposed amendment to the
Declaration provides for, or the Regular Trustees
otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special
rights of the Securities, whether by way of amendment
to the Declaration or otherwise, or (ii) the dissolu-
tion, winding-up or termination of the Trust, other
than as described in Section 8.1 of the Declaration,
then the Holders of outstanding Securities as a class,
will be entitled to vote on such amendment or proposal
(but not on any other amendment or proposal) and such
amendment or proposal shall not be effective except
with the approval of the Holders of at least 66 2/3% in
liquidation amount of the Securities, voting together
as a single class provided, however, that, the rights
_________________
of Holders of Preferred Securities under Article V of
the Declaration to appoint, remove or replace a Special
Regular Trustee shall not be amended without the
consent of each Holder of Preferred Securities pro-
vided, however, if any amendment or proposal referred
to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then
only the affected class will be entitled to vote on
such amendment or proposal and such amendment or
proposal shall not be effective except with the
approval of 66 2/3% in liquidation amount of such class
of securities.
(b) In the event the consent of the Property Trustee as the
holder of the Debentures and the Debenture Guarantee is
required under the Indenture with respect to any amend-
ment, modification or termination on the Indenture, the
Debentures or the Debenture Guarantee, the Property
Trustee shall request the direction of the Holders of
the Securities with respect to such amendment, modifi-
cation or termination and shall vote with respect to
such amendment, modification or termination as directed
by a Majority in liquidation amount of the Securities
voting together as a single class; provided, however,
_________________
that where a consent under the Indenture would require
the consent of the holders of greater than a majority
in aggregate principal amount of the Debentures (a
"Super Majority"), the Property Trustee may only give
such consent at the direction of the Holders of at
least the proportion in liquidation amount of the
Securities which the relevant Super Majority represents
of the aggregate principal amount of the Debentures
outstanding; provided, further, that the Property
_________________
Trustee shall not take any action in accordance with
the directions of the Holders of the Securities under
this paragraph 7(b) unless the Property Trustee has
obtained an opinion of tax counsel to the effect that
for the purposes of United States federal income tax
the Trust will not be classified as other than a
grantor trust.
8. Pro Rata.
A reference in these terms of the Securities to any payment, dis-
tribution or treatment as being "Pro Rata" shall mean pro rata to
each Holder of Securities according to the aggregate liquidation
amount of the Securities held by the relevant Holder in relation
to the aggregate liquidation amount of all Securities outstanding
unless, in relation to a payment, an Event of Default under the
Indenture has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder
of the Preferred Securities pro rata according to the aggregate
liquidation amount of Preferred Securities held by the relevant
Holder relative to the aggregate liquidation amount of all
Preferred Securities outstanding, and only after satisfaction of
all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggre-
gate liquidation amount of Common Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Common
Securities outstanding.
9. Ranking.
The Preferred Securities rank pari passu and payment thereon
__________
shall be made Pro Rata with the Common Securities except that,
where an Event of Default occurs and is continuing under the
Indenture in respect of the Debentures held by the Property
Trustee, the rights of Holders of the Common Securities to payment
in respect of Distributions and payments upon liquida-
tion, redemption and otherwise are subordinated to the rights to
payment of the Holders of the Preferred Securities.
10. Listing.
The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed for quotation on the New York
Stock Exchange Limited.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred
Securities Guarantee and the Common Securities Guarantee, respec-
tively, including the subordination provisions therein and to the
provisions of the Indenture.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration and the Pre-
ferred Securities Guarantee and the Indenture to a Holder without
charge on written request to the Trust at its principal place of
business.
<PAGE>
ANNEX I
[F THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT - This Preferred Security is a Global Certificate within
the meaning of the Declaration hereinafter referred to and is
registered in the name of The Depository Trust Company (the
"Depositary") or a nominee of the Depositary. This Preferred
Security is exchangeable for Preferred Securities registered in
the name of a person other than the Depositary or its nominee
only in the limited circumstances described in the Declaration
and no transfer of this Preferred Security (other than a transfer
of this Preferred Security as a whole by the Depositary to a
nominee of the Depository or by a nominee of the Depository to
the Depositary or another nominee of the Depositary) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street,
New York) to the Trust or its agent for registration of transfer,
exchange or payment, and any Preferred Security issued is regis-
tered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company
and any payment hereon is made to Cede & Co., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.]
Certificate Number Number of Preferred Securities
CUSIP NO. _____________
Certificate Evidencing Preferred Securities
of
SOUTHERN UNION FINANCING I
Preferred Securities.
(liquidation amount $25 per Preferred Security)
<PAGE>
SOUTHERN UNION FINANCING I, a business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies
that _____________________________ (the "Holder") is the regis-
tered owner of preferred securities of the Trust representing
undivided beneficial interests in the assets of the Trust desig-
nated the _______% Trust Originated Preferred Securities (liq-
uidation amount $25 per Preferred Security) (the "Preferred
Securities"). The Preferred Securities are transferable on the
books and records of the Trust, in person or by a duly authorized
attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the
Preferred Securities represented hereby are issued and shall in
all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of ________,
1995, as the same may be amended from time to time (the "Declara-
tion"), including the designation of the terms of the Preferred
Securities as set forth in Exhibit A to the Declaration. Capi-
talized terms used herein but not defined shall have the meaning
given them in the Declaration. The Holder is entitled to the
benefits of the Preferred Securities Guarantee to the extent pro-
vided therein. The Sponsor will provide a copy of the Decla-
ration, the Preferred Securities Guarantee and the Indenture to a
Holder without charge upon written request to the Trust at its
principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and
the Preferred Securities as evidence of indirect beneficial
ownership in the Debentures.
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate
this day of ___________________, 199__.
[ ]
as Trustee
______________________________________
[ ]
as Trustee
_______________________________________
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Security Certificate to:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert assignee's social security or tax identification number)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert address and zip code of assignee) and irrevocably
appoints)
_________________________________________________________________
_________________________________________________________________
___________________________________________________________ agent
to transfer this Preferred Security Certificate on the books of
the Trust. The agent may substitute another to act for him or
her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Pre-
ferred Security Certificate)
<PAGE>
ANNEX II
Certificate Number Number of Preferred Securities
Certificate Evidencing Common Securities
of
SOUTHERN UNION FINANCING I
Common Securities.
(liquidation amount $25 per Preferred Security)
SOUTHERN UNION FINANCING I, a business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies
that _____________________________ (the "Holder") is the regis-
tered owner of common securities of the Trust representing
undivided beneficial interests in the assets of the Trust desig-
nated the _______ Trust Originated Common Securities (liquidation
amount $25 per Common Security) (the "Common Securities"). The
Common Securities are transferable on the books and records of
the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form
for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securi-
ties represented hereby are issued and shall in all respects be
subject to the provisions of the Amended and Restated Declaration
of Trust of the Trust dated as of ___________________, 1995, as
the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Common Securities
as set forth in Exhibit A to the Declaration. Capitalized terms
used herein but not defined shall have the meaning given them in
the Declaration.
The Holder is entitled to the benefits of the Common Securities
Guarantee to the extent provided therein. The Trust will provide
a copy of the Declaration, the Common Securities Guarantee and
the Indenture to a Holder without charge upon written request to
the Trust at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat for United States
federal income tax purposes the Debentures as indebtedness and
the Common Securities as evidence of indirect beneficial owner-
ship in the Debentures.
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate
this day of _____________________, 199__.
[ ]
as Trustee
___________________________________
[ ]
as Trustee
_________________________________
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Common Security Certificate to:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert assignee's social security or tax identification number)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert address and zip code of assignee) and irrevocably
appoints)
_________________________________________________________________
_________________________________________________________________
___________________________________________________________ agent
to transfer this Common Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Pre-
ferred Security Certificate)
<PAGE>
EXHIBIT B
SPECIMEN OF DEBENTURE
<PAGE>
EXHIBIT C
UNDERWRITING AGREEMENT
<PAGE>
EXHIBIT 4-G
FORM OF SUBORDINATED DEBT SECURITIES INDENTURE
AMONG SOUTHERN UNION COMPANY AND
___________________________, AS TRUSTEE
<PAGE>
________________________________________________________________
SOUTHERN UNION COMPANY
TO
_____________________________
_____________________________
Trustee
_________________________________
Indenture
Dated as of _____________, 1995
_________________________________
________________________________________________________________
<PAGE>
INDENTURE, dated as of ______________, 1995, between Southern
Union Company, a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "Company") having
its principal office at 504 Lavaca Street, Eighth Floor, Austin,
Texas 78701, and _________________________________________, a
national banking association duly organized and existing under the
laws of the United States, Trustee (herein called 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
(herein called the "Securities"), to be issued in one or more
series
as in this Indenture provided.
This Indenture is subject to the provisions of the Trust Indenture
Act of 1939, as amended, that are required to be part of this
Indenture and shall, to the extent applicable, be governed by such
provisions.
All things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
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 covenanted and
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, and the terms
"cash transaction" and "self-liquidating paper", as used
in TIA Section 311, shall have the meanings assigned to
them in the rules of the Commission adopted under the
Trust Indenture Act;
(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 at the date of such
computation; and
(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 sub-
division.
Certain terms, used principally in Article Three, are defined in
that Article.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Additional Amounts" has the meaning specified in Section 1005.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indi-
rect common control with such specified Person. For the purposes
of this definition, "control" of 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.
"Attributable Debt" means, as to any specified lease under which
any
Person is at the time liable for a term of more than 12 months, at
any date as of which the amount thereof is to be determined, the
total net amount of rent required to be paid by such Person under
such lease during the remaining term thereof (excluding any subse-
quent renewal or other extension options held by the lessee), dis-
counted from the respective due dates thereof to such date at a
rate equal to the weighted average of the interest rates borne by
the Outstanding Securities, compounded monthly. The net amount of
rent required to be paid under any such lease for any such period
shall be the aggregate amount of the rent payable by the lessee
with respect to such period after excluding any amounts required to
be paid on account of maintenance and repairs, services, insurance,
taxes, assessments, water rates and similar charges and contingent
rents (such as those based on sales). In the case of any lease
which is terminable by the lessee upon the payment of a penalty,
such net amount of rent shall include the lesser of (i) the total
discounted net amount of rent required to be paid from the later of
the first date upon which such lease may be so terminated or the
date of the determination of such net amount of rent, as the case
may be, and (ii) the amount of such penalty (in which event no rent
shall be considered as required to be paid under such lease subse-
quent to the first date upon which it may be so terminated).
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 611 to act on behalf of the Trustee to
authenticate Securities.
"Authorized Newspaper" means a newspaper, in the English language
or in an official language of the country of publication, custo-
marily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays, and of general circulation in each
place in connection with which the term is used or in the financial
community of each such place. Where successive publications are
required to be made in Authorized Newspapers, such publications may
be made in the same or in different newspapers in the same city
meeting the foregoing requirements and in each case on any Business
Day.
"Bank Credit Facility" means the revolving credit facility dated
September 30, 1993, as amended on November 15, 1993, between the
Company and the Banks as in effect on the date hereof and as such
Facility may be amended, restated, refinanced, supplemented or
otherwise modified from time to time.
"Banks" means the lenders from time to time who are parties to the
Bank Credit Facility.
"Bearer Security" means any Security except a Registered Security.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of such board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been
duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification, and delivered to the
Trustee.
"Business Day", when used with respect to any Place of Payment or
any other particular location referred to in this Indenture or in
the Securities, means, unless otherwise specified with respect to
any Securities pursuant to Section 301, 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 or executive order to close.
"CEDEL S.A." means Cedel, S.A., or its successor.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act
of 1934, or, if at any time after the execution of this Indenture
such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body per-
forming such duties at such time.
"Common Depositary" has the meaning specified in Section 304.
"Common Securities" means undivided beneficial interests in the
assets of a Southern Union Trust which rank pari passu with Pre-
ferred Securities issued by such Southern Union Trust; provided,
_________
however, that upon the occurrence of an Event of Default, the
_______
rights of holders of Common Securities to payment in respect to
distributions and payments upon liquidation, redemption and other-
wise are subordinated to the rights of holders of Preferred
Securities.
"Common Securities Guarantee" means any Guarantee that the Company
enters into that operates directly or indirectly for the benefit of
holders of Common Securities of such Southern Union Trust.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have
become such pursuant to the applicable provisions of this Inden-
ture, 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, its
President, any Vice President, its Treasurer or an Assistant
Treasurer, and delivered to the Trustee.
"Consolidated Net Tangible Assets" means the total amount of assets
(less applicable reserves and other properly deductible items) of
the Company and its consolidated Subsidiaries after deducting
therefrom (i) all current liabilities (excluding any current lia-
bilities which are by their terms extendible 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 (ii)
all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles, all as set forth
on the most recent balance sheet of the Company and its consoli-
dated Subsidiaries and computed in accordance with generally
accepted accounting principles.
"Consolidated Net Worth" means the sum of stockholder's equity,
preferred stock and minority interests as set forth in the Com-
pany's consolidated financial statements.
"Conversion Date" has the meaning specified in Section 312(d).
"Conversion Event" means the cessation of use of (i) a Foreign
Currency both by the government of the country which issued such
Currency and by a central bank or other public institution of or
within the international banking community for the settlement of
transactions, (ii) the ECU both within the European Monetary System
and for the settlement of transactions by public institutions of or
within the European Communities or (iii) any currency unit (or
composite currency) other than the ECU for the purposes for which
it was established.
"Corporate Trust Office" means the principal corporate trust office
of the Trustee at which at any particular time its corporate trust
business shall be administered, which office on the date of execu-
tion of this Indenture is located at __________________________
___________________________________, except that with respect to
presentation of Securities for payment or for registration of
transfer or exchange, such term shall mean the office or agency of
the Trustee at which, at any particular time, its corporate agency
business shall be conducted.
"corporation" includes corporations, associations, companies and
business trusts.
"coupon" means any interest coupon appertaining to a Bearer
Security.
"Currency" means any currency or currencies, composite currency or
currency unit or currency units, including, without limitation, the
ECU, issued by the government of one or more countries or by any
recognized confederation or association of such governments.
"Debt" means notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed.
"Declaration" means, in respect of a Southern Union Trust, the
amended and restated declaration of trust of such Southern Union
Trust or any other governing instrument of such Southern Union
Trust.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Dollar" or "$" means a dollar or other equivalent unit in such
coin or currency of the United States of America as at the time
shall be legal tender for the payment of public and private debts.
"Dollar Equivalent of the Currency Unit" has the meaning specified
in Section 312(g).
"Dollar Equivalent of the Foreign Currency" has the meaning speci-
fied in Section 312(f).
"ECU" means the European Currency Unit as defined and revised from
time to time by the Council of the European Communities.
"Election Date" has the meaning specified in Section 312(h).
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels Office, or its successor as operator of the Euroclear
System.
"European Communities" means the European Economic Community, the
European Coal and Steel Community and the European Atomic Energy
Community.
"European Monetary System" means the European Monetary System
established by the Resolution of December 5, 1978 of the Council of
the European Communities.
"Event of Default" has the meaning specified in Section 501.
"Exchange Date" has the meaning specified in Section 304.
"Exchange Rate Agent" means, with respect to Securities of or
within any series, unless otherwise specified with respect to any
Securities pursuant to Section 301, a New York Clearing House bank,
designated pursuant to Section 301 or Section 313.
"Exchange Rate Officer's Certificate" means a tested telex or a
certificate setting forth (i) the applicable Market Exchange Rate
and (ii) the Dollar or Foreign Currency amounts of principal (and
premium, if any) and interest, if any (on an aggregate basis and on
the basis of a Security having the lowest denomination principal
amount determined in accordance with Section 302 in the relevant
Currency), payable with respect to a Security of any series on the
basis of such Market Exchange Rate, sent (in the case of a telex)
or signed (in the case of a certificate) by the Treasurer, any Vice
President or any Assistant Treasurer of the Company.
"Federal Bankruptcy Code" means the Bankruptcy Act of Title 11 of
the United States Code, as amended from time to time.
"Foreign Currency" means any Currency other than Currency of the
United States.
"Government Obligations" means, unless otherwise specified with
respect to any series of Securities pursuant to Section 301,
securities which are (i) direct obligations of the government which
issued the Currency in which the Securities of a particular series
are payable or (ii) obligations of a Person controlled or super-
vised by and acting as an agency or instrumentality of the govern-
ment which issued the Currency in which the Securities of such
series are payable, the payment of which is unconditionally guaran-
teed by such government, which, in either case, are full faith and
credit obligations of such government payable in such Currency and
are not callable or redeemable at the option of the issuer thereof
and shall also include a depository receipt issued by a bank or
trust company as custodian with respect to any such Government
Obligation or a specific payment of interest on or principal of any
such Government Obligation held by such custodian for the account
of the holder of a depository receipt; provided that (except as
________
required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the
Government Obligation or the specific payment of interest or prin-
cipal of the Government Obligation evidenced by such depository
receipt.
"Holder" means, in the case of a Registered Security, the Person in
whose name a Security is registered in the Security Register and,
in the case of a Bearer Security, the bearer thereof and, when used
with respect to any coupon, shall mean the bearer thereof.
"Indenture" means this instrument as originally executed and as it
may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the appli-
cable provisions hereof, and shall include the terms of particular
series of Securities established as contemplated by Section 301;
provided, however, that, if at any time more than one Person is
_________________
acting as Trustee under this instrument, "Indenture" shall mean,
with respect to any one or more series of Securities for which such
Person is Trustee, 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 appli-
cable provisions hereof and shall include the terms of particular
series of Securities for which such Person is Trustee established
as contemplated by Section 301, exclusive, however, of any provi-
sions or terms which relate solely to other series of Securities
for which such Person is not Trustee, regardless of when such terms
or provisions were adopted, and exclusive of any provisions or
terms adopted by means of one or more indentures supplemental
hereto executed and delivered after such Person had become such
Trustee but to which such Person, as such Trustee, was not a party.
"Indexed Security" means a Security the terms of which provide that
the principal amount thereof payable at Stated Maturity may be more
or less than the principal face amount thereof at original
issuance.
"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 at the rate prescribed in
such Original Issue Discount Security.
"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 pledge, mortgage, lien, charge, encumbrance or
security interest.
"Market Exchange Rate" means, unless otherwise specified with
respect to any Securities pursuant to Section 301, (i) for any con-
version involving a currency unit on the one hand and Dollars or
any Foreign Currency on the other, the exchange rate between the
relevant currency unit and Dollars or such Foreign Currency calcu-
lated by the method specified pursuant to Section 301 for the
Securities of the relevant series, (ii) for any conversion of
Dollars into any Foreign Currency, the noon (New York City time)
buying rate for such Foreign Currency for cable transfers quoted in
New York City as certified for customs purposes by the Federal
Reserve Bank of New York and (iii) for any conversion of one
Foreign Currency into Dollars or another Foreign Currency, the spot
rate at noon local time in the relevant market at which, in accor-
dance with normal banking procedures, the Dollars or Foreign Cur-
rency into which conversion is being made could be purchased with
the Foreign Currency from which conversion is being made from major
banks located in either New York City, London or any other princi-
pal market for Dollars or such purchased Foreign Currency, in each
case determined by the Exchange Rate Agent. Unless otherwise
specified with respect to any Securities pursuant to Section 301,
in the event of the unavailability of any of the exchange rates
provided for in the foregoing clauses (i), (ii) and (iii), the
Exchange Rate Agent shall use, in its sole discretion and without
liability on its part, such quotation of the Federal Reserve Bank
of New York as of the most recent available date, or quotations
from one or more major banks in New York City, London or another
principal market for the Currency in question, or such other quota-
tions as the Exchange Rate Agent shall deem appropriate. Unless
otherwise specified by the Exchange Rate Agent, if there is more
than one market for dealing in any Currency by reason of foreign
exchange regulations or otherwise, the market to be used in respect
of such Currency shall be that upon which a non-resident issuer of
securities designated in such Currency would purchase such Currency
in order to make payments in respect of such securities.
"Maturity", when used with respect to any Security, means the date
on which the principal of such Security or an installment of prin-
cipal becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration,
notice of redemption, notice of option to elect repayment or
otherwise.
"Officers' Certificate" means a certificate signed by the Chairman,
the President or a Vice President, and by the Treasurer, an Assis-
tant Treasurer, the Secretary or an Assistant Secretary of the Com-
pany, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, including an employee of the Company.
"Original Issue Discount Security" means any Security which pro-
vides for an amount less than the 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:
______
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or
redemption or repayment at the option of the Holder money
in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Com-
pany) 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 and any coupons
appertaining thereto; provided 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;
(iii) Securities, except to the extent provided in Sections
1402 and 1403, with respect to which the Company has
effected defeasance and/or covenant defeasance as
provided in Article Fourteen; and
(iv) 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;
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 or are present at a meeting of Holders for quorum
purposes, and for the purpose of making the calculations required
by TIA Section 313, (i) the principal amount of an Original Issue
Discount Security that may be counted in making such determination
or calculation and that shall be deemed to be Outstanding for such
purpose shall be equal to the amount of principal thereof that
would be (or shall have been declared to be) due and payable, at
the time of such determination, upon a declaration of acceleration
of the maturity thereof pursuant to Section 502, (ii) the principal
amount of any Security denominated in a Foreign Currency that may
be counted in making such determination or calculation and that
shall be deemed Outstanding for such purpose shall be equal to the
Dollar equivalent, determined as of the date such Security is
originally issued by the Company as set forth in an Exchange Rate
Officer's Certificate delivered to the Trustee, of the principal
amount (or, in the case of an Original Issue Discount Security, the
Dollar equivalent as of such date of original issuance of the
amount determined as provided in clause (i) above), of such
Security, (iii) the principal amount of any Indexed Security that
may be counted in making such determination or calculation and that
shall be deemed outstanding for such purpose shall be equal to the
principal face amount of such Indexed Security at original
issuance, unless otherwise provided with respect to such Security
pursuant to Section 301, and (iv) 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 making such calculation or 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 which have been
pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's 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 such other obligor.
"Paying Agent" means any Person (including the Company acting as
Paying Agent) authorized by the Company to pay the principal of (or
premium, if any, on) or interest on any Securities on behalf of the
Company.
"Permitted Liens" means Liens permitted by Section 1009.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision
thereof.
"Place of Payment" means, when used with respect to the Securities
of or within any series, the place or places where the principal of
(and premium, if any, on) and interest on such Securities are pay-
able as specified as contemplated by Sections 301 and 1002.
"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 or a Security to which a mutilated,
destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen
Security or the Security to which the mutilated, destroyed, lost or
stolen coupon appertains, as the case may be.
"Preferred Securities" means undivided beneficial interests in the
assets of a Southern Union Trust which rank pari passu with Common
Securities issued by the occurrence of an Event of Default, the
rights of holders of Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and other-
wise are subordinated to the rights of holders of Preferred Securi-
ties.
"Preferred Securities Guarantee" means any Guarantee that the Guar-
antor may enter into with Wilmington Trust Company, as Trustee or
other Persons that operate directly or indirectly for the benefit
of holders of Preferred Securities of such Southern Union Trust.
"Redemption Date", when used with respect to any Security to be
redeemed, in whole or in part, 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.
"Registered Security" means any Security registered in the Security
Register.
"Regular Record Date" for the interest payable on any Interest Pay-
ment Date on the Registered Securities of or within any series
means the date specified for that purpose as contemplated by
Section 301.
"Repayment Date" means, when used with respect to any Security to
be repaid at the option of the Holder, the date fixed for such
repayment pursuant to this Indenture.
"Repayment Price" means, when used with respect to any Security to
be repaid at the option of the Holder, the price at which it is to
be repaid pursuant to this Indenture.
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the
chairman or any vice-chairman of the executive committee of the
board of directors, the chairman of the trust committee, the presi-
dent, or any vice president, secretary, any assistant secretary,
treasurer, any assistant treasurer, cashier, any assistant cashier,
any trust officer or assistant trust officer, the controller or any
assistant controller within the corporate trust administration
division or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above-designated
officers, and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular
subject.
"Restricted Securities" has the meaning specified in Section 1009.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated
and delivered under this Indenture; provided, however, that if at
_________________
any time there is more than one Person acting as Trustee under this
Indenture, "Securities" with respect to the Indenture as to which
such Person is Trustee shall have the meaning stated in the first
recital of this Indenture and shall more particularly mean Securi-
ties authenticated and delivered under this Indenture, exclusive,
however, of Securities of any series as to which such Person is not
Trustee.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Southern Union Trust" means each of Southern Union Financing I,
Southern Union Financing II and Southern Union Financing III, each,
a Delaware statutory business trust.
"Special Record Date" for the payment of any Defaulted Interest on
the Registered Securities of or within any series 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 or a coupon representing such
installment of interest as the fixed date on which the principal of
such Security or such installment of principal or interest is due
and payable, as such date may be extended pursuant to the provi-
sions of Section 308.
"Subsidiary" means any corporation of which at the time of deter-
mination the Company, directly and/or indirectly through one or
more Subsidiaries, owns 50% or more of the shares of Voting Stock.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of
1939 as in force at the date as of which this Indenture was
executed, except as provided in Section 905.
"Trust Securities" means Common Securities and Preferred Securi-
ties.
"Trust Securities Guarantees" means the Common Securities Guarantee
and the Preferred Securities Guarantee.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have
become such pursuant to the applicable provisions of this Inden-
ture, and thereafter "Trustee" shall mean or include each Person
who is then a Trustee hereunder; provided, however, that if at any
_________________
time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean only the Trustee
with respect to Securities of that series.
"United States" means, unless otherwise specified with respect to
any Securities pursuant to Section 301, the United States of
America (including the states and the District of Columbia), its
territories, its possessions and other areas subject to its
jurisdiction.
"United States person" means, unless otherwise specified with
respect to any Securities pursuant to Section 301, an individual
who is a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the
laws of the United States or an estate or trust the income of which
is subject to United States federal income taxation regardless of
its source.
"Valuation Date" has the meaning specified in Section 312(c).
"Vice President", when used with respect to the Company or the
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".
"Voting Stock" means stock of the class or classes having general
voting power under ordinary circumstances to elect at least a
majority of the board of directors, managers or trustees of a cor-
poration (irrespective of whether or not at the time stock of any
other class or classes shall have or might have voting power by
reason of the happening of any contingency).
"Yield to Maturity" means the yield to maturity, computed at the
time of issuance of a Security (or, if applicable, at the most
recent redetermination of interest on such Security) and as set
forth in such Security in accordance with generally accepted United
States bond yield computation principles.
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 an Officers' Certificate stating that
all conditions precedent, if any, provided for in this Indenture
(including any covenant compliance with which constitutes a condi-
tion precedent) relating to the proposed action have been complied
with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied
with, except that in the case of any such application or request as
to which the furnishing of such documents is specifically required
by any provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need
be furnished.
Every certificate or opinion with respect to compliance with a
covenant or condition provided for in this Indenture (other than
pursuant to Section 1004) shall include:
(1) a statement that each individual signing such certifi-
cate or opinion has read such covenant or condition and
the definitions herein relating thereto;
(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 neces-
sary to enable him to express an informed opinion as to
whether or not such covenant or condition has been com-
plied with; and
(4) a statement as to whether, in the opinion of each such
individual, such covenant or condition 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 mat-
ters 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.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture
to be given or taken by Holders of the Outstanding Securi-
ties of all series or one or more series, as the case may
be, may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such
Holders in person or by agents duly appointed in writing.
If Securities of a series are issuable as Bearer Securi-
ties, any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders of such series
may, alternatively, be embodied in and evidenced by the
record of Holders of Securities of such series voting in
favor thereof, either in person or by proxies duly
appointed in writing, at any meeting of Holders of Securi-
ties of such series duly called and held in accordance
with the provisions of Article Fifteen, or a combination
of such instruments and any such record. Except as herein
otherwise expressly provided, such action shall become
effective when such instrument or instruments or record or
both are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or
instruments and any such record (and the action embodied
therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such
instrument or instruments or so voting at any such
meeting. Proof of execution of any such instrument or of
a writing appointing any such agent, or of the holding by
any Person of a Security, shall be sufficient for any pur-
pose of this Indenture and conclusive in favor of the
Trustee and the Company, if made in the manner provided in
this Section. The record of any meeting of Holders of
Securities shall be proved in the manner provided in
Section 1506.
(b) 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 suffi-
cient proof of authority. The fact and date of the execu-
tion 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.
(c) The principal amount and serial numbers of Registered
Securities held by any Person, and the date of holding the
same, shall be proved by the Security Register.
(d) The principal amount and serial numbers of Bearer Securi-
ties held by any Person, and the date of holding the same,
may be proved by the production of such Bearer Securities
or by a certificate executed, as depositary, by any trust
company, bank, banker or other depositary, wherever
situated, if such certificate shall be deemed by the
Trustee to be satisfactory, showing that at the date
therein mentioned such Person had on deposit with such
depositary, or exhibited to it, the Bearer Securities
therein described; or such facts may be proved by the
certificate or affidavit of the Person holding such Bearer
Securities, if such certificate or affidavit is deemed by
the Trustee to be satisfactory. The Trustee and the Com-
pany may assume that such ownership of any Bearer Security
continues until (1) another certificate or affidavit
bearing a later date issued in respect of the same Bearer
Security is produced, or (2) such Bearer Security is pro-
duced to the Trustee by some other Person, or (3) such
Bearer Security is surrendered in exchange for a Regis-
tered Security, or (4) such Bearer Security is no longer
Outstanding. The principal amount and serial numbers of
Bearer Securities held by any Person, and the date of
holding the same, may also be proved in any other manner
which the Trustee deems sufficient.
(e) If the Company shall solicit from the Holders of Regis-
tered Securities any request, demand, authorization,
direction, notice, consent, waiver or other Act, the Com-
pany may, at its option, by or pursuant to a Board Resolu-
tion, fix in advance a record date for the determination
of Holders entitled to give such request, demand, authori-
zation, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so.
Notwithstanding TIA Section 316(c), such record date shall
be the record date specified in or pursuant to such Board
Resolution, which shall be a date not earlier than the
date thirty (30) days prior to the first solicitation of
Holders generally in connection therewith and not later
than the date such solicitation is completed. If such a
record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be
given before or after such record date, but only the
Holders of record at the close of business on such record
date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or con-
sented to such request, demand, authorization, direction,
notice, consent, waiver or other Act, and for that purpose
the Outstanding Securities shall be computed as of such
record date; provided that no such authorization, agree-
________
agreement or consent by the Holders on such record date
shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later
than eleven months after the record date.
(f) Any request, demand, authorization, direction, notice,
consent, waiver or other Act 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.
SECTION 105. Notices, etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other documents 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 suf-
ficient for every purpose hereunder if made, given, fur-
nished or filed in writing to or with the Trustee at its
Corporate Trust Office, Attention: Corporate Trust
Administration Division, or
(2) the Company by the Trustee or by any Holder shall be suf-
ficient 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 the address of its principal office specified in the
first paragraph of this Indenture 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 of any event to Holders of
Registered Securities by the Company or the Trustee, such notice
shall be sufficiently given (unless otherwise herein expressly pro-
vided) if in writing and mailed, first-class postage prepaid, to
each such Holder affected by such event, at his address as it
appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Holders of Registered
Securities 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 of Registered Securities or the sufficiency of any
notice to Holders of Bearer Securities given as provided. 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.
In case, by reason of the suspension of or irregularities in regu-
lar mail service or by reason of any other cause, it shall be
impractical to mail notice of any event to Holders of Registered
Securities when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice
as shall be satisfactory to the Trustee shall be deemed to be
sufficient giving of such notice for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise speci-
fied with respect to any Securities pursuant to Section 301, where
this Indenture provides for notice to Holders of Bearer Securities
of any event, such notice shall be sufficiently given to Holders of
Bearer Securities if published in an Authorized Newspaper in The
City of New York and in such other city or cities as may be speci-
fied in such Securities on a Business Day at least twice, the first
such publication to be not earlier than the earliest date, and not
later than the latest date, prescribed for the giving of such
notice. Any such notice shall be deemed to have been given on the
date of the first such publication.
In case by reason of the suspension of publication of any Autho-
rized Newspaper or Authorized Newspapers or by reason of any other
cause it shall be impracticable to publish any notice to Holders of
Bearer Securities as provided above, then such notification to
Holders of Bearer Securities as shall be given with the approval of
the Trustee shall constitute sufficient notice to such Holders for
every purpose hereunder. Neither the failure to give notice by
publication to Holders of Bearer Securities as provided above, nor
any defect in any notice so published, shall affect the sufficiency
of such notice with respect to other Holders of Bearer Securities
or the sufficiency of any notice to Holders of Registered Securi-
ties given as provided herein.
Any request, demand, authorization, direction, notice, consent or
waiver 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.
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.
SECTION 107. 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 108. 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 109. Separability Clause.
In case any provision in this Indenture or in any Security or
coupon 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 110. Benefits of Indenture.
Nothing in this Indenture or in the Securities or coupons, express
or implied, shall give to any Person, other than the parties
hereto, any Authenticating Agent, any Paying Agent, any Securities
Registrar and their successors hereunder and the Holders of Securi-
ties or coupons, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 111. Governing Law.
THIS INDENTURE AND THE SECURITIES AND COUPONS SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
THIS INDENTURE IS SUBJECT TO THE PROVISIONS OF THE TRUST INDENTURE
ACT OF 1939, AS AMENDED, THAT ARE REQUIRED TO BE PART OF THIS
INDENTURE AND SHALL, TO THE EXTENT APPLICABLE, BE GOVERNED BY SUCH
PROVISIONS.
SECTION 112. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity or Maturity of any Security shall not be a Business
Day at any Place of Payment, then (notwithstanding any other provi-
sion of this Indenture or of any Security or coupon other than a
provision in 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 Redemp-
tion Date, or at the Stated Maturity or Maturity; provided that no
________
interest shall accrue for the period from and after such Interest
Payment Date, Redemption Date, Stated Maturity or Maturity, as the
case may be.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Registered Securities, if any, of each series and the Bearer
Securities, if any, of each series and related coupons shall be in
substantially the forms 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 or coupons. If the forms of
Securities or coupons of any series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant
Secretary 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 or coupons.
Any portion of the text of any Security may be set forth on the
reverse thereof, with an appropriate reference thereto on the face
of the Security.
Unless otherwise specified as contemplated by Section 301, Securi-
ties in bearer form shall have interest coupons attached.
The Trustee's certificate of authentication on all Securities shall
be in substantially the form set forth in this Article.
The definitive Securities and coupons shall be printed, litho-
graphed or engraved on steel-engraved borders or may be produced in
any other manner, all as determined by the officers of the Company
executing such Securities, as evidenced by their execution of such
Securities or coupons.
SECTION 202. Form of Trustee's Certificate of Authentication.
Subject to Section 611, the Trustee's certificate of authentication
shall be in substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
_________________________________
_________________________________
as Trustee
By:______________________________
Authorized Officer
SECTION 203. Securities Issuable in Global Form.
If Securities of or within a series are issuable in global form, as
specified as contemplated by Section 301, then, notwithstanding
clause (10) of Section 301, any such 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 of such series from time to time
endorsed thereon and that the aggregate amount of Outstanding
Securities of such series represented thereby may from time to time
be increased or decreased to reflect exchanges. Any endorsement of
a Security in global form to reflect the amount, or any increase or
decrease in the amount, of Outstanding Securities represented
thereby shall be made by the Trustee in such manner and upon
instructions given by such Person or Persons as shall be specified
therein or in the Company Order to be delivered to the Trustee
pursuant to Section 303 or Section 304. Subject to the provisions
of Section 303 and, if applicable, Section 304, the Trustee shall
deliver and redeliver any Security in permanent global form in the
manner and upon instructions given by the Person or Persons speci-
fied therein or in the applicable Company Order. If a Company
Order pursuant to Section 303 or Section 304 has been, or simul-
taneously is, delivered, any instructions by the Company with
respect to endorsement or delivery or redelivery of a Security in
global form shall be in writing but 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 Security in global form if such
Security was never issued and sold by the Company and the Company
delivers to the Trustee the Security in global form together with
written instructions (which need not comply with Section 102 and
need not be accompanied by an Opinion of Counsel) with regard to
the reduction in the principal amount of Securities represented
thereby, together with the written statement contemplated by the
last sentence of Section 303.
Notwithstanding the provisions of Section 307, unless otherwise
specified as contemplated by Section 301, payment of principal of
and any premium and interest on any Security in permanent global
form shall be made to the Person or Persons specified therein.
Notwithstanding the provisions of Section 309 and except as pro-
vided in the preceding paragraph, the Company, the Trustee and any
agent of the Company and the Trustee shall treat as the Holder of
such principal amount of Outstanding Securities represented by a
permanent global Security (i) in the case of a permanent global
Security in registered form, the Holder of such permanent global
Security in registered form, or (ii) in the case of a permanent
global Security in bearer form, Euroclear or CEDEL.
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 one or more Board Resolutions or pursuant to autho-
rity granted by one or more Board Resolutions and, subject to Sec-
tion 303, set forth in, 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, any or all of the following, as applicable (each of which
(except for the matters set forth in clauses (1), (2) and (19)
below), if so provided, may be determined from time to time by the
Company with respect to unissued Securities of the series and set
forth in such Securities of the series when issued from time to
time):
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other
series of Securities);
(2) any limit upon the aggregate principal amount of the
Securities of the series that 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, 1107 or
1305);
(3) the date or dates, or the method by which such date or
dates will be determined or extended, on which the princi-
principal of the Securities of the series is payable;
(4) the rate or rates at which the Securities of the series
shall bear interest, if any, or the method by which such
rate or rates shall be determined, the date or dates from
which such interest shall accrue, or the method by which
such date ordates shall be determined, the Interest Pay-
ment Dates on which such interest shall be payable and the
Regular Record Date, if any, for the interest payable on
any Registered Security on any Interest Payment Date, or
the method by which such date or dates shall be deter-
mined, and the basis upon which interest shall be calcu-
lated if other than on the basis of a 360-day year of
twelve 30-day months;
(5) the rights, if any, to defer payments of interest on the
Securities by extending the interest payment periods and
the duration of such extension;
(6) the subordination terms of the Securities of the series;
(7) the place or places, if any, other than or in addition
to the Borough of Manhattan, The City of New York, where
the principal of (and premium, if any, on) and any
interest on Securities of the series shall be payable, any
Registered Securities of the series may be surrendered for
registration of transfer, Securities of the series may be
surrendered for exchange and, if different than the loca-
tion specified in Section 106, the place or places where
notices or demands to or upon the Company in respect of
the Securities of the series and this Indenture may be
served;
(8) the period or periods within which, the price or prices
at which, the Currency in which, and other terms and con-
ditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Com-
pany, if the Company is to have that option;
(9) the obligation, if any, of the Company to redeem, repay
or purchase Securities of the series pursuant to any
sinking fund or analogous provision or at the option of a
Holder thereof, and the period or periods within which,
the price or prices at which, the Currency in which, and
other terms and conditions upon which Securities of the
series shall be redeemed, repaid or purchased, in whole or
in part, pursuant to such obligation;
(10) if other than denominations of $25 and any integral
multiple thereof, the denomination or denominations in
which any Registered Securities of the series shall be
issuable and, if other than the denomination of $5,000,
the denomination or denominations in which any Bearer
Securities of the series shall be issuable;
(11) if other than the Trustee, the identity of each Security
Registrar and/or Paying Agent;
(12) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series that
shall be payable upon declaration of acceleration of the
Maturity thereof pursuant to Section 502 or the method by
which such portion shall be determined;
(13) if other than Dollars, the Currency in which payment of
the principal of (and premium, if any, on) or interest, if
any, on the Securities of the series shall be payable or
in which the Securities of the series shall be denominated
and the particular provisions applicable thereto in
accordance with, in addition to or in lieu of any of the
provisions of Section 312;
(14) whether the amount of payments of principal of (and pre-
mium, if any, on) or interest on the Securities of the
series may be determined with reference to an index, for-
mula or other method (which index, formula or method may
be based, without limitation, on one or more Currencies,
commodities, equity indices or other indices), and the
manner in which such amounts shall be determined;
(15) whether the principal of (and premium, if any, on) and
interest, if any, on the Securities of the series are to
be payable, at the election of the Company or a Holder
thereof, in a Currency other than that in which such
Securities are denominated or stated to be payable, the
period or periods within which (including the Election
Date), and the terms and conditions upon which, such
election may be made, and the time and manner of deter-
mining the exchange rate between the Currency in which
such Securities are denominated or stated to be payable
and the Currency in which such Securities are to be so
payable, in each case in accordance with, in addition to
or in lieu of any of the provisions of Section 312;
(16) the designation of the initial Exchange Rate Agent, if
any;
(17) any provisions in modification of, in addition to or in
lieu of the provisions of Article Fourteen that shall be
applicable to the Securities of the series;
(18) provisions, if any, granting special rights to the Holders
of Securities of the series upon the occurrence of such
events as may be specified;
(19) any deletions from, modifications of or additions to the
Events of Default or covenants of the Company with respect
to Securities of the series, whether or not such Events of
Default or covenants are consistent with the Events of
Default or covenants set forth herein;
(20) whether Securities of the series are to be issuable as
Registered Securities, Bearer Securities (with or without
coupons) or both, any restrictions applicable to the
offer, sale or delivery of Bearer Securities, whether any
Securities of the series are to be issuable initially in
temporary global form and whether any Securities of the
series are to be issuable in permanent global form with or
without coupons and, if so, whether beneficial owners
of interests in any such permanent global Security may
exchange such interests for Securities of such series and
of like tenor of any authorized form and denomination and
the circumstances under which any such exchanges may
occur, if other than in the manner provided in Section
305, whether Registered Securities of the series may be
exchanged for Bearer Securities of the series (if per-
mitted by applicable laws and regulations), whether Bearer
Securities of the series may be exchanged for Registered
Securities of the series, and the circumstances under
which and the place or places where such exchanges may be
made and if Securities of the series are to be issuable in
global form, the identity of any initial depository there-
for; provided, that, unless otherwise provided, Securities
shall be issued as Registered Securities;
(21) the date as of which any Bearer Securities of the series
and any temporary global Security representing Outstanding
Securities of the series shall be dated if other than the
date of original issuance of the first Security of the
series to be issued;
(22) the Person to whom any interest on any Registered
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, the
manner in which, or the Person to whom, any interest on
any Bearer Security of the series shall be payable, if
otherwise than upon presentation and surrender of the
coupons appertaining thereto as they severally mature, and
the extent to which, or the manner in which, any interest
payable on a temporary global Security on an Interest Pay-
ment Date will be paid if other than in the manner pro-
vided in Section 304;
(23) if Securities of the series are to be issuable in defini-
tive form (whether upon original issue or upon exchange
of a temporary Security of such series) only upon receipt
of certain certificates or other documents or satisfaction
of other conditions, the form and/or terms of such cer-
tificates, documents or conditions;
(24) whether and under what circumstances the Company will
pay Additional Amounts as contemplated by Section 1005 on
the Securities of the series to any Holder who is not a
United States person (including any modification to the
definition of such term) in respect of any tax, assessment
or governmental charge and, if so, whether the Company
will have the option to redeem such Securities rather than
pay such Additional Amounts (and the terms of any such
option);
(25) if the Securities of the series are to be convertible into
or exchangeable for any securities of any Person
(including the Company), the terms and conditions upon
which such Securities will be so convertible or exchange-
able; and
(26) any other terms, conditions, rights and preferences (or
limitations on such rights and preferences) relating to
the series (which terms shall not be inconsistent with the
requirements of the Trust Indenture Act or the provisions
of this Indenture).
All Securities of any one series and the coupons apper-
taining to any Bearer Securities of such series shall be
substantially identical except, in the case of Registered
Securities, as to denomination and except as may otherwise
be provided in or pursuant to such Board Resolution (sub-
ject to Section 303) and set forth in such Officers' Cer-
tificate or in any such indenture supplemental hereto.
Not all Securities of any one series need be issued at the
same time, and, unless otherwise provided, a series may be
reopened for issuances of additional Securities of such
series.
If any of the terms of the series are established by
action taken pursuant to one or more Board Resolutions, a
copy of an appropriate record of such action(s) shall be
certified by the Secretary or an Assistant Secretary of
the Company and such Board Resolutions shall be delivered
to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the
series.
SECTION 302. Denominations.
The Securities of each series shall be issuable in such denomina-
tions as shall be specified as contemplated by Section 301. With
respect to Securities of any series denominated in Dollars, in the
absence of any such provisions, the Registered Securities of such
series, other than Registered Securities issued in global form
(which may be of any denomination), shall be issuable in denomina-
tions of $25 and any integral multiple thereof and the Bearer
Securities of such series, other than the Bearer Securities issued
in global form (which may be of any denomination), shall be
issuable in a denomination of $5,000.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities and any coupons appertaining thereto shall be exe-
cuted on behalf of the Company by its Chairman, its President or a
Vice President, under its corporate seal reproduced thereon
attested by its Secretary or an Assistant Secretary. The signa-
ture of any of these officers on the Securities or coupons may be
the manual or facsimile signatures of the present or any future
such authorized officer and may be imprinted or otherwise
reproduced on the Securities.
Securities or coupons 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 authenti-
cation and delivery of such Securities or did not hold such offices
at the date of such Securities or coupons.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities of any series
together with any coupon appertaining thereto, executed by the Com-
pany to the Trustee for authentication, together with a Company
Order for the authentication and delivery of such Securities, and
the Trustee in accordance with such Company Order shall authenti-
cate and deliver such Securities; provided, however, that, in con-
_________________
nection with its original issuance, no bearer Security shall be
mailed or otherwise delivered to any location in the United States;
and provided, further, that, unless otherwise specified with
_________________
respect to any series of Securities pursuant to Section 301, a
Bearer Security may be delivered in connection with its original
issuance only if the Person entitled to receive such Bearer
Security shall have furnished a certificate in the form set forth
in Exhibit A-1 to this Indenture, dated no earlier than 15 days
prior to the earlier of the date on which such Bearer Security is
delivered and the date on which any temporary Security first
becomes exchangeable for such Bearer Security in accordance with
the terms of such temporary Security and this Indenture. If any
Security shall be represented by a permanent global Bearer
Security, then, for purposes of this Section and Section 304, the
notation of a beneficial owner's interest therein upon original
issuance of such Security or upon exchange of a portion of a
temporary global Security shall be deemed to be delivery in con-
nection with its original issuance of such beneficial owner's
interest in such permanent global Security. Except as permitted by
Section 306, the Trustee shall not authenticate and deliver any
Bearer Security unless all appurtenant coupons for interest then
matured have been detached and canceled. If not all the Securities
of any series are to be issued at one time and if the Board Resolu-
tion or supplemental indenture establishing such series shall so
permit, such Company Order may set forth procedures acceptable to
the Trustee for the issuance of such Securities and determining
terms of particular Securities of such series such as interest
rate, maturity date, date of issuance and date from which interest
shall accrue.
In authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securi-
ties, the Trustee shall be entitled to receive, and (subject to TIA
Sections 315(a) through 315(d)) shall be fully protected in relying
upon, an Opinion of Counsel stating:
(a) that the form or forms of such Securities and any coupons
have been established in conformity with the provisions of
this Indenture;
(b) that the terms of such Securities and any coupons have
been established in conformity with the provisions of this
Indenture;
(c) that such Securities, together with any coupons apper-
taining thereto, when completed by appropriate insertions
and executed and delivered by the Company to the Trustee
for authentication in accordance with this Indenture,
authenticated and delivered by the Trustee in accordance
with this Indenture and issued by the Company in the man-
ner and subject to any conditions specified in such
Opinion of Counsel, will constitute the legal, valid and
binding obligations of the Company, enforceable in accor-
dance with their terms, subject to applicable bankruptcy,
insolvency, reorganization and other similar laws of
general applicability relating to or affecting the
enforcement of creditors' rights, to general equitable
principles and to such other qualifications as such
counsel shall conclude do not materially affect the rights
of Holders of such Securities and any coupons;
(d) that all laws and requirements in respect of the execution
and delivery by the Company of such Securities, any
coupons and of the supplemental indentures, if any, have
been complied with and that authentication and delivery of
such Securities and any coupons and the execution and
delivery of the supplemental indenture, if any, by the
Trustee will not violate the terms of the Indenture;
(e) that the Company has the corporate power to issue such
Securities and any coupons, and has duly taken all neces-
sary corporate action with respect to such issuance; and
(f) that the issuance of such Securities and any coupons will
not contravene the articles of incorporation or by-laws
of the Company or result in any violation of any of the
terms or provisions of any law or regulation or of any
indenture, mortgage or other agreement known to such
Counsel by which the Company is bound.
Notwithstanding the provisions of Section 301 and of the preceding
two paragraphs, if not all the Securities of any series are to be
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 pursu-
ant to the preceding two paragraphs prior to or at the time of
issuance of each Security, but such documents shall be delivered
prior to or at the time of issuance of the first Security of such
series.
The Trustee shall not be required to authenticate and deliver any
such Securities if the issue of such Securities pursuant to this
Indenture will affect the Trustee's own rights, duties or immuni-
ties under the Securities and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee.
Each Registered Security shall be dated the date of its authentica-
tion, and each Bearer Security shall be dated as of the date speci-
fied as contemplated by Section 301.
No Security or coupon 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 substan-
tially in the form provided for herein duly 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 and is entitled to the benefits of this Inden-
ture. 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 310 together
with a written statement (which need not comply with Section 102
and need not be accompanied by an Opinion of Counsel) stating that
such Security has never been issued and sold by the Company, 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, in
registered form or, if authorized, in bearer form with one or more
coupons or without coupons, and with such appropriate insertions,
omissions, substitutions and other variations as the officers
executing such Securities may determine, as conclusively evidenced
by their execution of such Securities. Such temporary Securities
may be in global form.
Except in the case of temporary Securities in global form (which
shall be exchanged in accordance with the provisions of the fol-
lowing paragraphs), 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 in a Place of Payment
for that series, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities of any series
(accompanied by any unmatured coupons appertaining thereto), the
Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive
Securities of the same series of authorized denominations;
provided, however, that no definitive Bearer Security shall be
_________________
delivered in exchange for a temporary Registered Security; and
provided, further, that a definitive Bearer Security shall be
_________________
delivered in exchange for a temporary Bearer Security only in com-
pliance with the conditions set forth in Section 303. 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.
If temporary Securities of any series are issued in global form,
any such temporary global Security shall, unless otherwise provided
therein, be delivered to the London office of a depositary or com-
mon depositary (the "Common Depositary"), for the benefit of
Euroclear and CEDEL S.A., for credit to the respective accounts of
the beneficial owners of such Securities (or to such other accounts
as they may direct).
Without unnecessary delay but in any event not later than the date
specified in, or determined pursuant to the terms of, any such tem-
porary global Security (the "Exchange Date"), the Company shall
deliver to the Trustee definitive Securities, in aggregate princi-
pal amount equal to the principal amount of such temporary global
Security, executed by the Company. On or after the Exchange Date
such temporary global Security shall be surrendered by the Common
Depositary to the Trustee, as the Company's agent for such purpose,
to be exchanged, in whole or from time to time in part, for defini-
tive Securities without charge and the Trustee shall authenticate
and deliver, in exchange for each portion of such temporary global
Security, an equal aggregate principal amount of definitive Securi-
ties of the same series of authorized denominations and of like
tenor as the portion of such temporary global Security to be
exchanged. The definitive Securities to be delivered in exchange
for any such temporary global Security shall be in bearer form,
registered form, permanent global bearer form or permanent global
registered form, or any combination thereof, as specified as con-
templated by Section 301, and, if any combination thereof is so
specified, as requested by the beneficial owner thereof; provided,
_________
however, that, unless otherwise specified in such temporary global
_______
Security, upon such presentation by the Common Depositary, such
temporary global Security is accompanied by a certificate dated the
Exchange Date or a subsequent date and signed by Euroclear as to
the portion of such temporary global Security held for its account
then to be exchanged and a certificate dated the Exchange Date or
a subsequent date and signed by CEDEL S.A. as to the portion of
such temporary global Security held for its account then to be
exchanged, each in the form set forth in Exhibit A-2 to this Inden-
ture (or in such other form as may be established pursuant to Sec-
tion 301); and provided, further, that definitive Bearer Securities
_________________
shall be delivered in exchange for a portion of a temporary global
Security only in compliance with the requirements of Section 303.
Unless otherwise specified in such temporary global Security, the
interest of a beneficial owner of Securities of a series in a tem-
porary global Security shall be exchanged for definitive Securities
of the same series and of like tenor following the Exchange Date
when the account holder instructs Euroclear or CEDEL S.A., as the
case may be, to request such exchange on his behalf and delivers to
Euroclear or CEDEL S.A., as the case may be, a certificate in the
form set forth in Exhibit A-1 to this Indenture (or in such other
form as may be established pursuant to Section 301), dated no
earlier than 15 days prior to the Exchange Date, copies of which
certificate shall be available from the offices of Euroclear and
CEDEL S.A., the Trustee, any Authenticating Agent appointed for
such series of Securities and each Paying Agent. Unless otherwise
specified in such temporary global Security, any such exchange
shall be made free of charge to the beneficial owners of such tem-
porary global Security, except that a Person receiving definitive
Securities must bear the cost of insurance, postage, transportation
and the like in the event that such Person does not take delivery
of such definitive Securities in person at the offices of Euroclear
or CEDEL S.A. Definitive Securities in bearer form to be delivered
in exchange for any portion of a temporary global Security shall be
delivered only outside the United States.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities of the
same series and of like tenor authenticated and delivered here-
under, except that, unless otherwise specified as contemplated by
Section 301, interest payable on a temporary global Security on an
Interest Payment Date for Securities of such series occurring prior
to the applicable Exchange Date shall be payable to Euroclear and
CEDEL S.A. on such Interest Payment Date upon delivery by Euroclear
and CEDEL S.A. to the Trustee of a certificate or certificates in
the form set forth in Exhibit A-2 to this Indenture (or in such
other form as may be established pursuant to Section 301), for
credit without further interest on or after such Interest Payment
Date to the respective accounts of the Persons who are the bene-
ficial owners of such temporary global Security on such Interest
Payment Date and who have each delivered to Euroclear or CEDEL
S.A., as the case may be, a certificate dated no earlier than 15
days prior to the Interest Payment Date occurring prior to such
Exchange Date in the form set forth in Exhibit A-1 to this Inden-
ture (or in such other form as may be established pursuant to Sec-
tion 301). Notwithstanding anything to the contrary herein
contained, the certifications made pursuant to this paragraph shall
satisfy the certification requirements of the preceding two para-
graphs of this Section and of the third paragraph of Section 303 of
this Indenture and the interests of the Persons who are the bene-
ficial owners of the temporary global Security with respect to
which such certification was made will be exchanged for definitive
Securities of the same series and of like tenor on the Exchange
Date or the date of certification if such date occurs after the
Exchange Date, without further act or deed by such beneficial
owners. Except as otherwise provided in this paragraph, no pay-
ments or principal or interest owing with respect to a beneficial
interest in a temporary global Security will be made unless and
until such interest in such temporary global Security shall have
been exchanged for an interest in a definitive Security. Any
interest so received by Euroclear and CEDEL S.A. and not paid as
herein provided shall be returned to the Trustee immediately prior
to the expiration of two years after such Interest Payment Date in
order to be repaid to the Company in accordance with Section 1003.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register for each series of Securities (the registers
maintained in the Corporate Trust Office of the Trustee and in any
other office or agency of the Company in a Place of Payment being
herein sometimes collectively referred to as the "Security Regis-
ter") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Regis-
tered Securities and of transfers of Registered Securities. The
Security Register shall be in written form or any other form cap-
able of being converted into written form within a reasonable time.
At all reasonable times, the Security Register shall be open to
inspection by the Trustee. The Trustee is hereby initially
appointed as security registrar (the "Security Registrar") for the
purpose of registering Registered Securities and transfers of
Registered Securities as herein provided.
Upon surrender for registration of transfer of any Registered
Security of any series at the office or agency in a Place of Pay-
ment for that series, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated
transferee, one or more new Registered Securities of the same
series, of any authorized denominations and of a like aggregate
principal amount and tenor.
At the option of the Holder, Registered Securities of any series
may be exchanged for other Registered Securities of the same
series, of any authorized denomination and of a like aggregate
principal amount, upon surrender of the Registered Securities to be
exchanged at such office or agency. Whenever any Registered
Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Regis-
tered Securities which the Holder making the exchange is entitled
to receive. Unless otherwise specified with respect to any series
of Securities as contemplated by Section 301, Bearer Securities may
not be issued in exchange for Registered Securities.
If (but only if) expressly permitted in or pursuant to the appli-
cable Board Resolution and (subject to Section 303) set forth in
the applicable Officers' Certificate, or in any indenture supple-
mental hereto, delivered as contemplated by Section 301, at the
option of the Holder, Bearer Securities of any series may be
exchanged for Registered Securities of the same series of any
authorized denomination and of a like aggregate principal amount
and tenor, upon surrender of the Bearer Securities to be exchanged
at any such office or agency, with all unmatured coupons and all
matured coupons in default thereto appertaining. If the Holder of
a Bearer Security is unable to produce any such unmatured coupon or
coupons or matured coupon or coupons in default, any such permitted
exchange may be effected if the Bearer Securities are accompanied
by payment in funds acceptable to the Company in an amount equal to
the face amount of such missing coupon or coupons, or the surrender
of such missing coupon or coupons may be waived by the Company and
the Trustee if there is furnished to them such security or indem-
nity as they may require to save each of them and any Paying Agent
harmless. If thereafter the Holder of such Security shall sur-
render to any Paying Agent any such missing coupon in respect of
which such a payment shall have been made, such Holder shall be
entitled to receive the amount of such payment; provided, however,
_________________
that, except as otherwise provided in Section 1002, interest repre-
sented by coupons shall be payable only upon presentation and sur-
render of those coupons at an office or agency located outside the
United States. Notwithstanding the foregoing, in case a Bearer
Security of any series is surrendered at any such office or agency
in a permitted exchange for a Registered Security of the same
series and like tenor after the close of business at such office or
agency on (i) any Regular Record Date and before the opening of
business at such office or agency on the relevant Interest Payment
Date, or (ii) any Special Record Date and before the opening of
business at such office or agency on the related proposed date for
payment of Defaulted Interest, such Bearer Security shall be sur-
rendered without the coupon relating to such Interest Payment Date
or proposed date for payment, as the case may be, and interest or
Defaulted Interest, as the case may be, will not be payable on such
Interest Payment Date or proposed date for payment, as the case may
be, in respect of the Registered Security issued in exchange for
such Bearer Security, but will be payable only to the Holder of
such coupon when due in accordance with the provisions of this
Indenture.
Whenever any Securities are so surrendered for exchange, the Com-
pany shall execute, and the Trustee shall authenticate and deliver,
the Securities which the Holder making the exchange is entitled to
receive.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any permanent global Security shall be
exchangeable only as provided in this paragraph. If any beneficial
owner of an interest in a permanent global Security is entitled to
exchange such interest for Securities of such series and of like
tenor and principal amount of another authorized form and denomina-
tion, as specified as contemplated by Section 301 and provided that
any applicable notice provided in the permanent global Security
shall have been given, then without unnecessary delay but in any
event not later than the earliest date on which such interest may
be so exchanged, the Company shall deliver to the Trustee defini-
tive Securities in aggregate principal amount equal to the princi-
pal amount of such beneficial owner's interest in such permanent
global Security, executed by the Company. On or after the earliest
date on which such interests may be so exchanged, such permanent
global Security shall be surrendered by the Common Depositary or
such other depositary as shall be specified in the Company Order
with respect thereto to the Trustee, as the Company's agent for
such purpose, to be exchanged, in whole or from time to time in
part, for definitive Securities without charge, and the Trustee
shall authenticate and deliver, in exchange for each portion of
such permanent global Security, an equal aggregate principal amount
of definitive Securities of the same series of authorized denomina-
tions and of like tenor as the portion of such permanent global
Security to be exchanged which, unless the Securities of the series
are not issuable both as Bearer Securities and as Registered
Securities, as specified as contemplated by Section 301, shall be
in the form of Bearer Securities or Registered Securities, or any
combination thereof, as shall be specified by the beneficial owner
thereof; provided, however, that no such exchanges may occur during
_________________
a period beginning at the opening of business 15 days before any
selection of Securities to be redeemed and ending on the relevant
Redemption Date if the Security for which exchange is requested may
be among those selected for redemption; and provided, further, that
_________________
no Bearer Security delivered in exchange for a portion of a per-
manent global Security shall be mailed or otherwise delivered to
any location in the United States. If a Registered Security is
issued in exchange for any portion of a permanent global Security
after the close of business at the office or agency where such
exchange occurs on (i) any Regular Record Date and before the
opening of business at such office or agency on the relevant
Interest Payment Date, or (ii) any Special Record Date and before
the opening of business at such office or agency on the related
proposed date for payment of Defaulted Interest, interest or
Defaulted Interest, as the case may be, will not be payable on such
Interest Payment Date or proposed date for payment, as the case may
be, in respect of such Registered Security, but will be payable on
such Interest Payment Date or proposed date payment, as the case
may be, only to the Person to whom interest in respect of such
portion of such permanent global Security is payable in accordance
with the provisions of this Indenture.
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 registra-
tion of transfer or exchange.
Every Registered Security presented or surrendered for registration
of transfer or for exchange shall (if so required by the Company or
the Security Registrar) 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, 1107 or 1305 not involving any transfer.
The Company shall not be required (i) to issue, register the trans-
fer of or exchange Securities of any series during a period begin-
ning at the opening of business 15 days before the day of the
selection for redemption of Securities of that series under Section
1103 or 1203 and ending at the close of business on (A) if Securi-
ties of the series are issuable only as Registered Securities, the
date of the mailing of the relevant notice of redemption and (B) if
Securities of the series are issuable as Bearer Securities, the
date of the first publication of the relevant notice of redemption
or, if Securities of the series are also issuable as Registered
Securities and there is no publication, the mailing of the relevant
notice of redemption, or (ii) to register the transfer of or
exchange any Registered Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security
being redeemed in part, or (iii) to exchange any Bearer Security so
selected for redemption except that such a Bearer Security may be
exchanged for a Registered Security of that series and like tenor;
provided that such Registered Security shall be simultaneously sur-
________
rendered for redemption, or (iv) to issue, register the transfer of
or exchange any Security which has been surrendered for repayment
at the option of the Holder, except the portion, if any, of such
Security not to be so repaid.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security or a Security with a mutilated coupon
appertaining to it is surrendered to the Trustee, 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 out-
standing, with coupons corresponding to the coupons, if any,
appertaining to the surrendered Security, or, in case any such
mutilated Security or coupon has become or is about to become due
and payable, the Company in its discretion may, instead of issuing
a new Security, with coupons corresponding to the coupons, if any,
appertaining to the surrendered Security, pay such Security or
coupon.
If there shall be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of
any Security or coupon 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 or coupon has been acquired by a bona
fide purchaser, the Company shall execute and upon Company Order
the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security or in exchange for the Security
for which a destroyed, lost or stolen coupon appertains (with all
appurtenant coupons not destroyed, lost or stolen), a new Security
of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to such
destroyed, lost or stolen Security or to the Security to which such
destroyed, lost or stolen coupon appertains, or, in case any such
destroyed, lost or stolen Security or coupon has become or is about
to become due and payable, the Company in its discretion may,
instead of issuing a new Security, with coupons corresponding to
the coupons, if any, appertaining to such destroyed, lost or stolen
Security or to the Security to which such destroyed, lost or stolen
coupon appertains, pay such Security or coupon.
Upon the issuance of any new Security under this Section, the Com-
pany may require the payment of a sum sufficient to cover any tax
or other government 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 with its coupons, if any, issued
pursuant to this Section in lieu of any destroyed, lost or stolen
Security or in exchange for a Security to which a destroyed, lost
or stolen coupon appertains, shall constitute an original addi-
tional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security and its coupons, if any, or the
destroyed, lost or stolen coupon shall be at any time enforceable
by anyone, and shall be entitled to all the benefits of this Inden-
ture equally and proportionately with any and all other Securities
of that series and their coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen
Securities or coupons.
SECTION 307. Payment of Interest; Interest Rights Preserved;
Optional Interest Reset.
(a) Unless otherwise provided as contemplated by Section 301
with respect to any series of Securities, interest on any
Registered 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 such Security
(or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such
interest at the office or agency of the Company maintained
for such purpose pursuant to Section 1002; provided, how-
________
ever, that each installment of interest on any Registered
_______
Security may at the Company's option be paid by (i)
mailing a check for such interest, payable to or upon the
written order of the Person entitled thereto pursuant to
Section 309, to the address of such Person as it appears
on the Security Register or (ii) transfer to an account
maintained by the payee located in the United States.
Unless otherwise provided as contemplated by Section 301
with respect to the Securities of any series, payment of
interest may be made, in the case of a Bearer Security, by
transfer to an account maintained by the payee with a bank
located outside the United States.
Unless otherwise provided as contemplated by Section 301,
every permanent global Security in bearer form will pro-
vide that interest, if any, payable on any Interest Pay-
ment Date will be paid to each of Euroclear and CEDEL S.A.
with respect to that portion of such permanent global
Security held for its account by the Common Depositary,
for the purpose of permitting each of Euroclear and CEDEL
S.A. to credit the interest received by it in respect of
such permanent global Security to the accounts of the
beneficial owners thereof.
Any interest on any Registered Security of any series
which is payable, but is not punctually paid or duly pro-
vided for, on any Interest Payment Date 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 and, if applicable, interest on such
defaulted interest (to the extent lawful) at the rate
specified in the Securities of such series (such defaulted
interest and, if applicable, interest thereon herein
collectively called "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
Registered 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 Regis-
tered 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 in
the Currency in which the Securities of such series
are payable (except as otherwise specified pursuant
to Section 301 for the Securities of such series and
except, if applicable, as provided in Sections
312(b), 312(d) and 312(e)) equal to the aggregate
amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satis-
factory to the Trustee for such deposit on or 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 pro-
posed 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 given in
the manner provided in Section 106, 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
given, such Defaulted Interest shall be paid to the
Persons in whose name the Registered Securities of
such series (or their respective Predecessor Securi-
ties) are registered at the close of business on such
Special Record Date and shall no longer be payable
pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted
Interest on the Registered 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.
(b) The provisions of this Section 307(b) may be made appli-
cable to any series of Securities pursuant to Section 301
(with such modifications, additions or substitutions as
may be specified pursuant to such Section 301). The
interest rate (or the spread or spread multiplier used to
calculate such interest rate, if applicable) on any
Security of such series may be reset by the Company on the
date or dates specified on the face of such Security (each
an "Optional Reset Date"). The Company may exercise such
option with respect to such Security by notifying the
Trustee of such exercise at least 50 but not more than 60
days prior to an Optional Reset Date for such Note. Not
later than 40 days prior to each Optional Reset Date, the
Trustee shall transmit, in the manner provided for in Sec-
tion 106, to the Holder of any such Security a notice (the
"Reset Notice") indicating whether the Company has elected
to reset the interest rate (or the spread or spread multi-
plier used to calculate such interest rate, if appli-
cable), and if so (i) such new interest rate (or such new
spread or spread multiplier, if applicable) and (ii) the
provisions, if any, for redemption during the period from
such Optional Reset Date to the next Optional Reset Date
or if there is no such next Optional Reset Date, to the
Stated Maturity Date of such Security (each such period a
"Subsequent Interest Period"), including the date or dates
on which or the period or periods during which and the
price or prices at which such redemption may occur during
the Subsequent Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to the
Optional Reset Date, the Company may, at its option, revoke the
interest rate (or the spread or spread multiplier used to calculate
such interest rate, if applicable) provided for in the Reset Notice
and establish an interest rate (or a spread or spread multiplier
used to calculate such interest rate, if applicable) that is higher
than the interest rate (or the spread or spread multiplier, if
applicable) provided for in the Reset Notice, for the Subsequent
Interest Period by causing the Trustee to transmit, in the manner
provided for in Section 106, notice of such higher interest rate
(or such higher spread or spread multiplier, if applicable) to the
Holder of such Security. Such notice shall be irrevocable. All
Securities with respect to which the interest rate (or the spread
or spread multiplier used to calculate such interest rate, if
applicable) is reset on an Optional Reset Date, and with respect to
which the Holders of such Securities have not tendered such Securi-
ties for repayment (or have validly revoked any such tender) pursu-
ant to the next succeeding paragraph, will bear such higher
interest rate (or such higher spread or spread multiplier, if
applicable).
The Holder of any such Security will have the option to elect
repayment by the Company of the principal of such Security on each
Optional Reset Date at a price equal to the principal amount
thereof plus interest accrued to such Optional Reset Date. In
order to obtain repayment on an Optional Reset Date, the Holder
must follow the procedures set forth in Article Thirteen for repay-
ment at the Option of Holders except that the period for delivery
or notification to the Trustee shall be at least 25 but not more
than 35 days prior to such Optional Reset Date and except that, if
the Holder has tendered any Security for repayment pursuant to the
Reset Notice, the Holder may, by written notice to the Trustee,
revoke such tender or repayment until the close of business on the
tenth day before such Optional Reset Date.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Registered 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 Registered
Security is registered as the owner of such Registered Security for
the purpose of receiving payment of principal of (and premium, if
any, on) and (subject to Sections 305 and 307) interest on such
Security and for all other purposes whatsoever, whether or not such
Security be overdue, and none of the Company, the Trustee or any
agent of the Company or the Trustee shall be affected by notice to
the contrary.
Title to any Bearer Security and any coupons appertaining thereto
shall pass by delivery. The Company, the Trustee and any agent of
the Company or the Trustee may treat the bearer of any Bearer
Security and the bearer of any coupon as the absolute owner of such
Security or coupon for the purpose of receiving payment thereof or
on account thereof and for all other purposes whatsoever, whether
or not such Security or coupons be overdue, and none of the Com-
pany, the Trustee or any agent of the Company or the Trustee shall
be affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect
of the records relating to or payments made on account of bene-
ficial ownership interests of a Security in global form or for
maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global Security,
nothing herein shall prevent the Company, the Trustee, or any agent
of the Company or the Trustee, from giving effect to any written
certification, proxy or other authorization furnished by any
depositary, as a Holder, with respect to such global Security or
impair, as between such depositary and owners of beneficial
interests in such global Security, the operation of customary prac-
tices governing the exercise of the rights of such depositary (or
its nominee) as Holder of such global Security.
SECTION 309. Cancellation.
All Securities and coupons surrendered for payment, redemption,
repayment at the option of the Holder, registration of transfer or
exchange or for credit against any current or future sinking fund
payment shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee. All Securities and coupons so
delivered to the Trustee shall be promptly canceled 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 canceled by the Trustee.
If the Company shall so acquire any of the Securities, however,
such acquisition shall not operate as a redemption or satisfaction
of the indebtedness represented by such Securities unless and until
the same are surrendered to the Trustee for cancellation. No
Securities shall be authenticated in lieu of or in exchange for any
Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities
held by the Trustee shall be disposed of by the Trustee in accor-
dance with its customary procedures and certification of their dis-
posal delivered to the Company unless by Company Order the Company
shall direct that canceled Securities be returned to it.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 with
respect to any Securities, interest, if any, on the Securities of
each series shall be computed on the basis of a 360-day year of
twelve 30-day months.
SECTION 311. Currency and Manner of Payments in Respect of
Securities.
(a) With respect to Registered Securities of any series not
permitting the election provided for in paragraph (b)
below or the Holders of which have not made the election
provided for in paragraph (b) below, and with respect to
Bearer Securities of any series, except as provided in
paragraph (d) below, payment of the principal of (and
premium, if any, on) and interest, if any, on any Regis-
tered or Bearer Security of such series will be made in
the Currency in which such Registered Security or Bearer
Security, as the case may be, is payable. The provisions
of this Section 312 may be modified or superseded with
respect to any Securities pursuant to Section 301.
(b) It may be provided pursuant to Section 301 with respect
to Registered Securities of any series that Holders shall
have the option, subject to paragraphs (d) and (e) below,
to receive payments of principal of (and premium, if any,
on) or interest, if any, on such Registered Securities in
any of the Currencies which may be designated for such
election by delivering to the Trustee a written election
with signature guarantees and in the applicable form
established pursuant to Section 301, not later than the
close of business on the Election Date immediately pre-
ceding the applicable payment date. If a Holder so elects
to receive such payments in any such Currency, such elec-
tion will remain in effect for such Holder or any trans-
feree of such Holder until changed by such Holder or such
transferee by written notice to the Trustee (but any such
change must be made not later than the close of business
on the Election Date immediately preceding the next pay-
ment date to be effective for the payment to be made on
such payment date and no such change of election may be
made with respect to payments to be made on any Registered
Security of such series with respect to which an Event of
Default has occurred or with respect to which the Company
has deposited funds pursuant to Article Four or Fourteen
or with respect to which a notice of redemption has been
given by the Company or a notice of option to elect repay-
ment has been sent by such Holder or such transferee).
Any Holder of any such Registered Security who shall not
have delivered any such election to the Trustee not later
than the close of business on the applicable Election Date
will be paid the amount due on the applicable payment date
in the relevant Currency as provided in Section 312(a).
The Trustee shall notify the Exchange Rate Agent as soon
as practicable after the Election Date of the aggregate
principal amount of Registered Securities for which
Holders have made such written election.
(c) Unless otherwise specified pursuant to Section 301, if the
election referred to in paragraph (b) above has been pro-
vided for pursuant to Section 301, then, unless otherwise
specified pursuant to Section 301, not later than the
fourth Business Day after the Election Date for each pay-
ment date for Registered Securities of any series, the
Exchange Rate Agent will deliver to the Company a written
notice specifying, in the Currency in which Registered
Securities of such series are payable, the respective
aggregate amounts of principal of (and premium, if any,
on) and interest, if any, on the Registered Securities to
be paid on such payment date, specifying the amounts in
such Currency so payable in respect of the Registered
Securities as to which the Holders of Registered Securi-
ties of such series shall have elected to be paid in
another Currency as provided in paragraph (b) above. If
the election referred to in paragraph (b) above has been
provided for pursuant to Section 301 and if at least one
Holder has made such election, then, unless otherwise
specified pursuant to Section 301, on the second Business
Day preceding such payment date the Company will deliver
to the Trustee for such series of Registered Securities an
Exchange Rate Officer's Certificate in respect of the
Dollar or Foreign Currency payments to be made on such
payment date. Unless otherwise specified pursuant to
Section
301, the Dollar or Foreign Currency amount receivable by
Holders of Registered Securities who have elected payment
in a Currency as provided in paragraph (b) above shall be
determined by the Company on the basis of the applicable
Market Exchange Rate in effect on the third Business Day
(the "Valuation Date") immediately preceding each payment
date and such determination shall be conclusive and
binding for all purposes, absent manifest error.
(d) If a Conversion Event occurs with respect to a Foreign
Currency in which any of the Securities are denominated or
payable other than pursuant to an election provided for
pursuant to paragraph (b) above, then with respect to each
date for the payment of principal of (and premium, if any,
on) and interest, if any, on the applicable Securities
denominated or payable in such Foreign Currency occurring
after the last date on which such Foreign Currency was
used (the "Conversion Date"), the Dollar shall be the Cur-
rency of payment for use on each such payment date.
Unless otherwise specified pursuant to Section 301, the
Dollar amount to be paid by the Company to the Trustee and
by the Trustee or any Paying Agent to the Holders of such
Securities with respect to such payment date shall be, in
the case of a Foreign Currency other than a currency unit,
the Dollar Equivalent of the Foreign Currency or, in the
case of a currency unit, the Dollar Equivalent of the Cur-
rency Unit, in each case as determined by the Exchange
Rate Agent in the manner provided in paragraph (f) or (g)
below.
(e) Unless otherwise specified pursuant to Section 301, if
the Holder of a Registered Security denominated in any
Currency shall have elected to be paid in another Currency
as provided in paragraph (b) above, and a Conversion Event
occurs with respect to such elected Currency, such Holder
shall receive payment in the Currency in which payment
would have been made in the absence of such election; and
if a Conversion Event occurs with respect to the Currency
in which payment would have been made in the absence of
such election, such Holder shall receive payment in
Dollars as provided in paragraph (d) above.
(f) The "Dollar Equivalent of the Foreign Currency" shall be
determined by the Exchange Rate Agent and shall be
obtained for each subsequent payment date by converting
the specified Foreign Currency into Dollars at the Market
Exchange Rate on the Conversion Date.
(g) The "Dollar Equivalent of the Currency Unit" shall be
determined by the Exchange Rate Agent and subject to the
provisions of paragraph (h) below shall be the sum of each
amount obtained by converting the Specified Amount of each
Component Currency into Dollars at the Market Exchange
Rate for such Component Currency on the Valuation Date
with respect to each payment.
(h) For purposes of this Section 312 the following terms shall
have the following meanings:
A "Component Currency" shall mean any Currency which, on
the Conversion Date, was a component currency of the rele-
vant currency unit, including, but not limited to, the
ECU.
A "Specified Amount" of a Component Currency shall mean
the number of units of such Component Currency or frac-
tions thereof which were represented in the relevant cur-
rency unit, including, but not limited to, the ECU, on the
Conversion Date. If after the Conversion Date the
official unit of any Component Currency is altered by way
of combination or subdivision, the Specified Amount of
such Component Currency shall be divided or multiplied in
the same proportion. If after the Conversion Date two or
more Component Currencies are consolidated into a single
currency, the respective Specified Amounts of such Compo-
nent Currencies shall be replaced by an amount in such
single Currency equal to the sum of the respective Speci-
fied Amounts of such consolidated Component Currencies
expressed in such single Currency, and such amount shall
thereafter be a Specified Amount and such single Currency
shall thereafter be a Component Currency. If after the
Conversion Date any Component Currency shall be divided
into two or more currencies, the Specified Amount of such
Component Currency shall be replaced by amounts of such
two or more currencies, having an aggregate Dollar Equiva-
lent value at the Market Exchange Rate on the date of such
replacement equal to the Dollar Equivalent value of the
Specified Amount of such former Component Currency at the
Market Exchange Rate immediately before such division and
such amounts shall thereafter be Specified Amounts and
such currencies shall thereafter be Component Currencies.
If, after the Conversion Date of the relevant currency
unit, including, but not limited to, the ECU, a Conversion
Event (other than any event referred to above in this
definition of "Specified Amount") occurs with respect to
any Component Currency of such currency unit and is con-
continuing on the applicable Valuation Date, the Specified
Amount of such Component Currency shall, for purposes of
calculating the Dollar Equivalent of the Currency Unit, be
converted into Dollars at the Market Exchange Rate in
effect on the Conversion Date of such Component Currency.
"Election Date" shall mean the date for any series of
Registered Securities as specified pursuant to clause (13)
of Section 301 by which the written election referred to
in paragraph (b) above may be made.
All decisions and determinations of the Exchange Rate Agent
regarding the Dollar Equivalent of the Foreign Currency, the Dollar
Equivalent of the Currency Unit, the Market Exchange Rate and
changes in the Specified Amounts as specified above shall be in its
sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and irrevocably binding upon the Com-
pany, the Trustee and all Holders of such Securities denominated or
payable in the relevant Currency. The Exchange Rate Agent shall
promptly give written notice to the Company and the Trustee of any
such decision or determination.
In the event that the Company determines in good faith that a Con-
version Event has occurred with respect to a Foreign Currency, the
Company will immediately give written notice thereof to the Trustee
and to the Exchange Rate Agent (and the Trustee will promptly
thereafter give notice in the manner provided for in Section 106 to
the affected Holders) specifying the Conversion Date. In the event
the Company so determines that a Conversion Event has occurred with
respect to the ECU or any other currency unit in which Securities
are denominated or payable, the Company will immediately give
written notice thereof to the Trustee and to the Exchange Rate
Agent (and the Trustee will promptly thereafter give notice in the
manner provided for in Section 106 to the affected Holders)
specifying the Conversion Date and the Specified Amount of each
Component Currency on the Conversion Date. In the event the Com-
pany determines in good faith that any subsequent change in any
Component Currency as set forth in the definition of Specified
Amount above has occurred, the Company will similarly give written
notice to the Trustee and the Exchange Rate Agent.
The Trustee shall be fully justified and protected in relying and
acting upon information received by it from the Company and the
Exchange Rate Agent and shall not otherwise have any duty or
obligation to determine the accuracy or validity of such informa-
tion independent of the Company or the Exchange Rate Agent.
SECTION 312. Appointment and Resignation of Successor Exchange
Rate Agent.
(a) Unless otherwise specified pursuant to Section 301, if and
so long as the Securities of any series (i) are denomi-
nated in a Currency other than Dollars or (ii) may be pay-
able in a Currency other than Dollars, or so long as it is
required under any other provision of this Indenture, then
the Company will maintain with respect to each such series
of Securities, or as so required, at least one Exchange
Rate Agent. The Company will cause the Exchange Rate
Agent to make the necessary foreign exchange determina-
tions at the time and in the manner specified pursuant to
Section 301 for the purpose of determining the applicable
rate of exchange and, if applicable, for the purpose of
converting the issued Currency into the applicable payment
Currency for the payment of principal (and premium, if
any) and interest, if any, pursuant to Section 312.
(b) No resignation of the Exchange Rate Agent and no appoint-
ment of a successor Exchange Rate Agent pursuant to this
Section shall become effective until the acceptance of
appointment by the successor Exchange Rate Agent as
evidenced by a written instrument delivered to the Company
and the Trustee.
(c) If the Exchange Rate Agent shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in
the office of the Exchange Rate Agent for any cause with
respect to the Securities of one or more series, the
Company, by or pursuant to a Board Resolution, shall
promptly appoint a successor Exchange Rate Agent or
Exchange Rate Agents with respect to the Securities of
that or those series (it being understood that any such
successor Exchange Rate Agent may be appointed with
respect to the Securities of one or more or all of such
series and that, unless otherwise specified pursuant to
Section 301, at any time there shall only be one Exchange
Rate Agent with respect to the Securities of any particu-
lar series that are originally issued by the Company on
the same date and that are initially denominated and/or
payable in the same Currency).
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 any series of Securities specified in such
Company Request (except as to any surviving rights of registration
of transfer or exchange of Securities of such series herein
expressly provided for and the obligation of the Company to pay any
Additional Amounts as contemplated by Section 1005) and the
Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Inden-
ture as to such series when
(1) either
(A) all Securities of such series theretofore authenti-
cated and delivered and all coupons, if any, apper-
taining thereto (other than (i) coupons appertaining
to Bearer Securities surrendered for exchange for
Registered Securities and maturing after such
exchange, whose surrender is not required or has been
waived as provided in Section 305, (ii) Securities
and coupons of such series which have been destroyed,
lost or stolen and which have been replaced or paid
as provided in Section 306, (iii) coupons apper-
taining to Securities called for redemption and
maturing after the relevant Redemption Date, whose
surrender has been waived as provided in Section
1106, and (iv) Securities and coupons of such series
for whose payment money has theretofore been
deposited in trust with the Trustee or any Paying
Agent or segregated and held in trust by the Company
and thereafter repaid to the Company, as provided in
Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all Securities of such series and, in the case of (i)
or (ii) below, any coupons appertaining thereto 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) if redeemable at the option of the Company, 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 irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust
for such purpose an amount in the Currency in which
the Securities of such series are payable, suffi-
cient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium,
if any) and interest to the date of such deposit (in
the case of Securities which have become due and pay-
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; and
(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 as to
such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 606,
the obligations of the Trustee to any Authenticating Agent under
Section 611 and, if money shall have been deposited with the
Trustee pursuant to subclause (B) of clause (1) of this Section,
the obligations of the Trustee under Section 402 and the last para-
graph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003,
all money deposited with the Trustee pursuant to Section 401 shall
be held in trust and applied by it, in accordance with the provi-
sions of the Securities, the coupons 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 deter-
mine, to the Persons entitled thereto, of the principal (and pre-
mium, if any) and interest for whose payment such money has been
deposited with the Trustee; but such money need not be segregated
from other funds except to the extent required by law.
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 on any Security
of that series, or any related coupon, when such interest
or coupon becomes due and payable, and continuance of such
default for a period of 30 days; provided, that, if
Securities are issued to a Southern Union Trust or a
trustee of such trust in connection with the issuance of
Trust Securities by such trust, such thirty (30) day
period will be replaced by a ten (10) day period; or
(2) default in the payment of the principal of (or premium,
if any, on) any Security of that series at its Maturity;
provided, however, that a valid extension of the maturity
of such Securities in accordance with the terms of any
indenture supplemental hereto shall not constitute a de-
fault in the payment of principal or premium, if any; or
(3) default in the deposit of any sinking fund payment, when
and as due by the terms of the Securities of that series
and Article 12; or
(4) default in the performance, or breach, of any covenant or
agreement of the Company in this Indenture which affects
or is applicable to the Securities of that series (other
than a default in the performance, or breach of a covenant
or agreement which is specifically dealt with elsewhere in
this Section or which has expressly been included in this
Indenture solely for the benefit of one or more 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 all
Outstanding Securities of that series 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
(5) the entry of a decree or order by a court having juris-
diction in the premises adjudging the Company a bankrupt
or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or com-
position of or in respect of the Company under the Federal
Bankruptcy Code or any other applicable federal or state
law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the
Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs,
and the continuance of any such decree or order unstayed
and in effect for a period of 90 consecutive days; or
(6) in the event Securities are issued and sold to a Southern
Union Trust or a trustee of such trust in connection with
the issuance of Trust Securities by such Southern Union
Trust, such Southern Union Trust shall have voluntarily or
involuntarily dissolved, wound-up its business or other-
wise terminated its existence except in connection with
(i) the distribution of Securities to holders of Trust
Securities in liquidation or redemption of their interests
in such Southern Union Trust, (ii) the redemption of all
of the outstanding Trust Securities of such Southern Union
Trust or (iii) certain mergers, consolidations or amalga-
mations, each as permitted by the Declaration of such
Southern Union Trust.
(7) the institution by the Company of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it
to the institution of bankruptcy or insolvency proceedings
against it, or the filing by it of a petition or answer or
consent seeking reorganization or relief under the Federal
Bankruptcy Code or any other applicable federal or state
law, or the consent by it to the filing of any such peti-
tion or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its
property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become
due; or
(8) there shall have occurred one or more defaults by the Com-
pany or any Subsidiary in the payment of the principal of
(or premium, if any, on) Debt in excess of 10% of Consoli-
dated Net Worth under one or more agreements, indentures
or instruments and either (i) such Debt has already become
due and payable in full at the stated maturity thereof or
(ii) such default or defaults results in the acceleration
of the maturity of such Debt; or
(9) any other Event of Default provided with respect to
Securities of that series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default described in clause (1), (2), (3), (4), (7)
or (8) of Section 501 with respect to Securities of any series at
the time Outstanding occurs and is continuing, then in every such
case the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Securities of that series may declare the
principal amount (or, if the Securities of that series are Original
Issue Discount Securities or Indexed Securities, such portion of
the principal amount as may be specified in the terms of that
series) of all of the Securities of that series to be due and pay-
able immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such
principal amount (or specified portion thereof) shall become
immediately due and payable. If an Event of Default specified in
Section 501(5) or 501(6) occurs and is continuing, then the prin-
cipal amount of all the Securities shall ipso facto become and be
immediately due and payable without any declaration or other act on
the part of the Trustee or any Holder.
At any time after a declaration of acceleration with respect to
Securities of any series (or of all series, as the case may be) has
been made and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter provided in
this Article, the Holders of a majority in principal amount of the
Outstanding Securities of that series (or of all series, as the
case may be), 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 in the Currency in which the Securities
of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series
and except, if applicable, as provided in Sections 312(b),
312(d) and 312(e)),
(A) all overdue interest on all Outstanding Securities of
that series (or of all series, as the case may be)
and any related coupons,
(B) all unpaid principal of (and premium, if any, on) any
Outstanding Securities of that series (or of all
series, as the case may be) which has become due
otherwise than by such declaration of acceleration,
and interest on such unpaid principal at the rate or
rates prescribed therefor in such Securities,
(C) interest on 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, disburse-
ments and advances of the Trustee, its agents and
counsel; and
(2) all Events of Default with respect to Securities of that
series (or of all series, as the case may be), other than
the non-payment of amounts of principal of (or premium, if
any, on) or interest on Securities of that series (or of
all series, as the case may be) 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.
Notwithstanding the preceding paragraph, in the event of a declara-
tion of acceleration in respect of the Securities because of an
Event of Default specified in Section 501(7) shall have occurred
and be continuing, such declaration of acceleration shall be
automatically annulled if the Debt that is the subject of such
Event of Default has been discharged or the holders thereof have
rescinded their declaration of acceleration in respect of such
Debt, and written notice of such discharge or rescission, as the
case may be, shall have been given to the Trustee by the Company
and countersigned by the holders of such Debt or a trustee,
fiduciary or agent for such holders, within 30 days after such
declaration of acceleration in respect of the Securities, and no
other Event of Default has occurred during such 30-day period which
has not been cured or waived during such period.
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 installment of
interest on any Security and any related coupon when such
interest becomes due and payable and such default con-
tinues 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,
then the Company will, upon demand of the Trustee, pay to the
Trustee for the benefit of the Holders of such Securities and
coupons, the whole amount then due and payable on such Securities
and coupons for principal (and premium, if any) and interest, and
interest on any overdue principal (and premium, if any) 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 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 Com-
pany 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 (or
of all series, as the case may be) 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
(or of all series, as the case may be) 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 exer-
cise of any power granted herein, or to enforce any other proper
remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquida-
tion, bankruptcy, reorganization, arrangement, adjustment, com-
position or other judicial proceeding relative to the Company or
any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities shall then
be due and payable as therein expressed or by declaration or other-
wise and irrespective of whether the Trustee shall have made any
demand on the Company for the payment of overdue principal, pre-
mium, if any, or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of princi-
pal (and premium, if any), or such portion of the princi-
pal amount of any series of Original Issue Discount
Securities or Indexed Securities as may be specified in
the terms of such series, and interest owing and unpaid in
respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel) and of
the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property pay-
able 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 pro-
ceeding 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 606.
Nothing herein contained 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 com-
position 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.
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the Securi-
ties or coupons may be prosecuted and enforced by the Trustee with-
out the possession of any of the Securities or coupons 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 compensa-
tion, expenses, disbursements and advances of the Trustee, its
agents and counsel, be for the ratable benefit of the Holders of
the Securities and coupons in respect of which such judgment has
been recovered.
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 premium, if any) or interest, upon presen-
tation of the Securities or coupons, or both, as the case may be,
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 606;
Second: To the payment of the amounts then due and unpaid for
principal of (and premium, if any, on) and interest on
the Securities and coupons 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 and coupons for principal (and premium, if
any) and interest, respectively; and
Third: The balance, if any, to the Company or any other Per-
son or Persons entitled thereto.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series or any related coupons
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 that series in the case of
any event of Default described in clause (1), (2), (3),
(4), (7) or (8) of Section 501, or, in the case of any
Event of Default described in clause (5) or (6) of Section
501, the Holders of not less than 25% in principal amount
of all Outstanding Securities, 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 reason-
able 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 or more in principal amount of the
Outstanding Securities of that series in the case of any
Event of Default described in clause (1), (2), (3), (4),
(7) or (8) of Section 501, or, in the case of any Event of
Default described in clause (5) or (6) of Section 501, by
the Holders of a majority or more in principal amount of
all Outstanding Securities;
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, dis-
turb or prejudice the rights of any other Holders of Securities of
the same series, in the case of any Event of Default described in
clause (1), (2), (3), (4), (7) or (8) of Section 501, or of Holders
of all Securities in the case of any Event of Default described in
clause (5) or (6) of Section 501, 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 pro-
vided and for the equal and ratable benefit of all Holders of
Securities of the same series, in the case of any Event of Default
described in clause (1), (2), (3), (4), (7) or (8) of Section 501,
or of Holders of all Securities in the case of any Event of Default
described in clause (5) or (6) of Section 501.
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 uncon-
ditional, to receive payment, as provided herein (including, if
applicable, Article Fourteen) and in such Security, of the princi-
pal of (and premium, if any, on) and (subject to Section 307)
interest on, such Security or payment of such coupon on the
respective Stated Maturities expressed in such Security or coupon
(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 pro-
ceeding 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 pro-
ceeding, the Company, the Trustee and the Holders of Securities and
coupons 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 or
coupons in the last paragraph of Section 306, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders
of Securities or coupons is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right
or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security or coupon to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or con-
stitute 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.
With respect to the Securities of any series, the Holders of not
less than a majority in principal amount of the Outstanding Securi-
ties of such 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 relating to or arising under clause (1), (2), (3), (4), (7)
or (8) of Section 501, and, with respect to all Securities, the
Holders of not less than a majority in principal amount of all Out-
standing Securities 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, not relating to or arising under clause (1), (2), (3),
(4), (7) or (8) of Section 501, provided that in each case
(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) the Trustee need not take any action which might involve
it in personal liability or be unjustly prejudicial to the
Holders of Securities of such series not consenting.
SECTION 513. Waiver of Past Defaults.
Subject to Section 502, the Holders of not less than a majority in
principal amount of the Outstanding Securities of any series may on
behalf of the Holders of all the Securities of such series waive
any past default described in clause (1), (2), (3), (4), (7) or (8)
of Section 501 (or, in the case of a default described in clause
(5) or (6) of Section 501, the Holders of not less than a majority
in principal amount of all Outstanding Securities may waive any
such past default), and its consequences, except a default
(1) in respect of the payment of the principal of (or premium,
if any, on) or interest on any Security or any related
coupon, or
(2) 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, any 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 Event of Default
or impair any right consequent thereon.
SECTION 514. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any man-
ner whatsoever claim or take the benefit or advantage of, any stay
or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or 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 suf-
fer and permit the execution of every such power as though no such
law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults.
Within 90 days after the occurrence of any Default hereunder with
respect to the Securities of any series, the Trustee shall transmit
in the manner and to the extent provided in TIA Section 313(c),
notice of such default hereunder known to the Trustee, unless such
Default shall have been cured or waived; provided, however, that,
_________________
except in the case of a Default in the payment of the principal of
(or premium, if any, on) or interest on any Security of such series
or in the payment of any sinking fund installment with respect to
Securities of such series, the Trustee shall be protected in with-
holding such notice if and so long as the board of directors, the
executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that
the withholding of such notice is in the interest of the Holders of
Securities of such series and any related coupons; and provided,
________
further, that in the case of any Default of the character specified
_______
in Section 501(3) with respect to Securities of such series, no
such notice to Holders shall be given until at least 30 days after
the occurrence thereof.
SECTION 602. Certain Rights of Trustee.
Subject to the provisions of TIA Sections 315(a) through 315(d):
(1) the Trustee may rely 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
believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or
Company Order and any resolution of the Board of Directors
may 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 of Securi-
ties of any series or any related coupons 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;
(6) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, cer-
tificate, 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, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the
Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers here-
under 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 shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it
to be authorized or within the discretion or rights or
powers conferred upon it by this Indenture.
The Trustee shall not be required 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.
SECTION 603. Trustee Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities, except for the
Trustee's certificates of authentication, and in any coupons shall
be taken as the statements of the Company, and neither the Trustee
nor any Authenticating Agent assumes any responsibility for their
correctness. The Trustee makes no representations as to the
validity or sufficiency of this Indenture or of the Securities or
coupons, except that the Trustee represents that it is duly autho-
rized to execute and deliver this Indenture, authenticate the
Securities and perform its obligations hereunder and that the
statements made by it in a Statement of Eligibility on Form T-1
supplied to the Company are true and accurate, subject to the
qualifications set forth therein. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or applica-
tion by the Company of Securities or the proceeds thereof.
SECTION 604. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company or of the
Trustee, in its individual or any other capacity, may become the
owner or pledgee of Securities and coupons and, subject to TIA
Sections 310(b) and 311, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, Authenti-
cating Agent, Paying Agent, Security Registrar or such other agent.
SECTION 605. 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 606. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compen-
sation 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 lia-
bility in connection with the exercise or performance of
any of its powers or duties hereunder.
The obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disburse-
ments and advances and to indemnify and hold harmless the Trustee
shall constitute additional indebtedness hereunder and shall sur-
vive the satisfaction and discharge of this Indenture. As security
for the performance of such obligations of the Company, the Trustee
shall have a claim prior to the Securities upon all property and
funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (and premium, if any, on)
or interest on particular Securities or any coupons.
SECTION 607. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1) and shall
have a combined capital and surplus of at least $50,000,000. If
such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of Federal, State, terri-
torial or District of Columbia supervising or examining authority,
then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of con-
dition 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 herein-
after specified in this Article.
SECTION 608. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appoint-
ment 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 609.
(b) 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 609 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.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of not less
than a majority in principal amount of the Outstanding
Securities of such series, delivered to the Trustee and to
the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions
of TIA Section 310(b) 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
607 and shall fail to resign after written request
therefor by the Company or by any Holder who has been
a bona fide Holder of a Security for at least six
months, 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 liquida-
tion,
then, in any such case, (i) the Company, by a Board
Resolution, may remove the Trustee with respect to all
Securities, or (ii) subject to TIA Section 315(e), 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.
(e) If the Trustee shall resign, be removed or become incap-
able 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, by a Board Resolution,
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). 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 Out-
standing Securities of such series delivered to the Com-
pany and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such
appointment, 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 hereinafter
provided, 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, peti-
tion any court of competent jurisdiction for the appoint-
ment of a successor Trustee with respect to the Securities
of such series.
(f) 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 the
Holders of Securities of such series in the manner pro-
vided for in Section 106. Each notice shall include the
name of the successor Trustee with respect to the Securi-
ties of such series and the address of its Corporate Trust
Office.
SECTION 609. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor
Trustee with respect to all Securities, every such suc-
cessor 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 suc-
cessor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument trans-
ferring 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 here-
under.
(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 change any of the provisions of this
Indenture as shall be necessary to provide for or facili-
tate 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 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 appoint-
ment of such successor Trustee relates. Whenever there is
a successor Trustee with respect to one or more (but less
than all) series of securities issued pursuant to this
Indenture, the terms "Indenture" and "Securities" shall
have the meanings specified in the provisos to the
respective definitions of those terms in Section 101 which
contemplate such situation.
(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 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 610. 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 substan-
tially 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 consolida-
tion 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;
and in case at that time any of the Securities shall not have been
authenticated, any successor Trustee may authenticate such Securi-
ties either in the name of any predecessor hereunder or in the name
of the successor Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Securities or
in this Indenture provided that the certificate of the Trustee
shall have; provided, however, that the right to adopt the certifi-
_________________
cate of authentication of any predecessor Trustee or to authenti-
cate Securities in the name of any predecessor Trustee shall apply
only to its successor or successors by merger, conversion or con-
solidation.
SECTION 611. Appointment of Authenticating Agent.
At any time when any of the Securities remain Outstanding, the
Trustee 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 and the Trustee shall give written notice of such appoint-
ment to all Holders of Securities of the series with respect to
which such Authenticating Agent will serve, in the manner provided
for in Section 106. 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. Any
such appointment shall be evidenced by an instrument in writing
signed by a Responsible Officer of the Trustee, and a copy of such
instrument shall be promptly furnished to the Company. Wherever
reference is made in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustee's certificate
of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authen-
ticating Agent and a certificate of authentication executed on
behalf of the Trustee by an Authenticating Agent. Each Authenti-
cating 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 corporation publishes reports of condi-
tion 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 corporation
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, it 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
to which such Authenticating Agent shall be a party, or any cor-
poration succeeding to the corporate agency or corporate trust
business of an 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 the Authen-
ticating 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 give
written notice of such appointment to all Holders of Securities of
the series with respect to which such Authenticating Agent will
serve, in the manner provided for in Section 106. 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.
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 for such pay-
ments, subject to the provisions of Section 606.
If an appointment with respect to one or more series is made pursu-
ant to this Section, the Securities of such series may have
endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the
following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
________________________________
________________________________
as Trustee
By:______________________________
as Authenticating Agent
By:______________________________
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders.
Every Holder of Securities or coupons, by receiving and holding the
same, agrees with the Company and the Trustee that none of the Com-
pany or the Trustee or any agent of either of them shall be held
accountable by reason of the disclosure of any such information as
to the names and addresses of the Holders in accordance with TIA
Section 312, regardless of the source from which such information
was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under TIA
Section 312(b).
SECTION 702. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the first
May 15 after the first issuance of Securities pursuant to this
Indenture, the Trustee shall transmit to the Holders of Securities,
in the manner and to the extent provided in TIA Section 313(c), a
brief report dated as of such May 15 if required by TIA Section
313(a).
SECTION 703. 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 Securities Exchange Act of
1934; or, if the Company is not required to file informa-
tion, documents or reports pursuant to either of such
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 Securities Exchange Act of 1934 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;
(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 to all Holders, in the manner and to the extent
provided in TIA Section 313(c), 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 pre-
scribed 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 cor-
poration or convey, transfer or lease, or permit one or more of its
Subsidiaries to convey, transfer or lease, all or substantially all
of the property and assets of the Company and its Subsidiaries on
a consolidated basis, to any Person, unless:
(1) the corporation formed by such consolidation or into which
the Company is merged or the Person which acquires by con-
veyance or transfer, or which leases, the properties and
assets of the Company and its Subsidiaries on a consoli-
dated basis (A) shall be a corporation, partnership or
trust organized and validly existing under the laws of the
United States of America, any state thereof or the
District of Columbia and (B) shall expressly assume, by an
indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the
Company's obligation for the due and punctual payment of
the principal of (and premium, if any, on) and interest on
all the Securities and the performance and observance of
every covenant of this Indenture on the part of the Com-
pany to be performed or observed;
(2) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be
continuing; and
(3) the Company or such Person shall have delivered to the
Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and such supplemental inden-
ture comply with this Article and that all conditions
precedent herein provided for relating to such transaction
have been complied with.
This Section shall only apply to a merger or consolidation in which
the Company is not the surviving corporation and to conveyances,
leases and transfers by the Company as transferor or lessor.
SECTION 802. Successor Person Substituted.
Upon any consolidation by the Company with or merger by the Company
into any other corporation or any conveyance, transfer or lease of
the properties and assets of the Company and its Subsidiaries on a
consolidated basis to any Person in accordance with Section 801,
the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, 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 as the Com-
pany herein, and in the event of any such conveyance or transfer,
the Company (which term shall for this purpose mean the Person
named as the "Company" in the first paragraph of this Indenture or
any successor Person which shall theretofore become such in the
manner described in Section 801), except in the case of a lease,
shall be discharged of all obligations and covenants under this
Indenture and the Securities and the coupons and may be dissolved
and liquidated.
SECTION 803. Assignment of Rights.
The Company will have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct
or indirect wholly-owned Subsidiary of the Company; provided, that
in the event of any such assignment, the Company will remain liable
for all of its respective obligations. Subject to the foregoing,
this Indenture will be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. This
Indenture may not otherwise be assigned by the parties hereto.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by
or pursuant to a Board Resolution, and the Trustee, at any time and
from time to time, may enter into one or more indentures supplemen-
tal hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(1) to evidence the succession of another Person to the Com-
pany and the assumption by any such successor of the
covenants of the Company contained herein and in the
Securities; or
(2) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities and any
related coupons (and if such covenants are to be for the
benefit of less than all series of Securities, stating
that such covenants are being included solely for the
benefit of such series) or to surrender any right or power
herein conferred upon the Company; or
(3) to add any additional Events of Default (and if such
Events of Default are to be for the benefit of less than
all series of Securities, stating that such Events of
Default are being included solely for the benefit of such
series); or
(4) to add to or change any of the provisions of this Inden-
ture to provide that Bearer Securities may be registrable
as to principal, to change or eliminate any restrictions
on the payment of principal of or any premium or interest
on Bearer Securities, to permit Bearer Securities to be
issued in exchange for Registered Securities, to permit
Bearer Securities to be issued in exchange for Bearer
Securities of other authorized denominations or to permit
or facilitate the issuance of Securities in uncertifi-
cated form; provided that any such action shall not
________
adversely affect the interests of the Holders of Securi-
ties of any series or any related coupons in any material
respect; or
(5) to change or eliminate any of the provisions of this
Indenture; provided that any such 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
(6) to secure the Securities pursuant to the requirements of
Section 803 or 1009 or otherwise; or
(7) to establish the form or terms of Securities of any series
as permitted by Sections 201 and 301; or
(8) 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 neces-
sary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to
the requirements of Section 609(b);
or
(9) to close this Indenture with respect to the authentication
and delivery of additional series of Securities, to cure
any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to
matters or questions arising under this Indenture;
provided such action shall not adversely affect the
________
interests of the Holders of Securities of any series and
any related coupons in any material respect.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of all Outstanding Securities of any series, by
Act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by or pursuant to a Board Resolution, 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
which affect such series of Securities 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 of such series,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security of such series,
or reduce the principal amount thereof or the rate of
interest thereon or any premium payable upon the redemp-
tion thereof, or change any obligation of the Company to
pay Additional Amounts contemplated by Section 1005
(except as contemplated by Section 801(1) and permitted by
Section 901(1)), or reduce the amount of the principal of
an Original Issue Discount Security of such series that
would be due and payable upon a declaration of accelera-
tion of the Maturity thereof pursuant to Section 502 or
the amount thereof provable in bankruptcy pursuant to
Section 504, or adversely affect any right of repayment at
the option of any Holder of any Security of such series,
or change any Place of Payment where, or the Currency in
which, any Security of such series or any premium or
interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on
or after the Stated Maturity thereof (or, in the case of
redemption or repayment at the option of the Holder, on or
after the Redemption Date or Repayment Date, as the case
may be), or
(2) reduce the percentage in principal amount of the Out-
standing Securities of such series required for any such
supplemental indenture, for any waiver of compliance with
certain provisions of this Indenture which affect such
series or certain defaults applicable to such series
hereunder and their consequences provided for in this
Indenture, or reduce the requirements of Section 1504 for
quorum or voting with respect to Securities of such
series, or
(3) modify any of the provisions of this Section, Section 513
or Section 1011, except to increase any such percentage or
to provide that certain other provisions of this Indenture
which affect such series cannot be modified or waived
without the consent of the Holder of each Outstanding
Security of such series.
Any such supplemental indenture adding any provisions to or
changing in any manner or eliminating any of the provisions of this
Indenture, or modifying in any manner the rights of the Holders of
Securities of such series, shall not 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 inden-
ture, but it shall be sufficient if such Act shall approve the sub-
stance 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 modifica-
tions thereby of the trusts created by this Indenture, the Trustee
shall be entitled to receive, and 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 Trustee's
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.
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 sup-
plemental 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.
SECTION 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902,
the Company shall give notice thereof to the Holders of each Out-
standing Security affected, in the manner provided for in Section
106, setting forth in general terms the substance of such supple-
mental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if any, and Interest;
Subordination.
The Company covenants and agrees for the benefit of the Holders of
each series of Securities and any related coupons that it will duly
and punctually pay the principal of (and premium, if any, on) and
interest on the Securities of that series in accordance with the
terms of the Securities, any coupons appertaining thereto and this
Indenture, subject, however, to the limitations set forth in this
Section 1001. Unless otherwise specified as contemplated by Sec-
tion 301 with respect to any series of Securities, any interest
installments due on Bearer Securities on or before Maturity shall
be payable only upon presentation and surrender of the several
coupons for such interest installments as are evidenced thereby as
they severally mature.
The payment of the principal of, premium, if any, and interest on
the Securities will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness of the Company and
will rank pari passu with the Company's other general unsecured
creditors. No payment on account of principal of, premium, if any,
or interest on the Securities and no acquisition of, or payment on
account of any sinking fund for, the Securities may be made unless
full payment of amounts then due for principal, premium, if any,
and interest then due on all Senior Indebtedness by reason of the
maturity thereof (by lapse of time, acceleration or otherwise) has
been made or duly provided for in cash, as permitted by the instru-
ments creating such Senior Indebtedness or in any other manner
satisfactory to the holders of such Senior Indebtedness. If a
default has occurred giving the holders of any Senior Indebtedness
the right to accelerate the maturity thereof, or an event has
occurred which, with the giving of notice, or lapse of time, or
both, would constitute such an event of default, then, unless and,
until such event shall have been cured or waived or shall have
ceased to exist, no payment on account of principal, of premium, if
any, or interest on the Securities and no acquisition of, or pay-
ment on account of a sinking fund for, the Securities may be made.
The Company shall give prompt written notice to the Trustee of any
default under any Senior Indebtedness or under any agreement pursu-
ant to which Senior Indebtedness may have been issued. Upon any
distribution of its assets in connection with any dissolution,
liquidation or reorganization of the Company, all Senior Indebted-
ness must be paid in full before the Holders of the Securities are
entitled to any payments whatsoever.
SECTION 1002. Maintenance of Office or Agency.
If the Securities of a series are issuable only as Registered
Securities, 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 Inden-
ture may be served.
If Securities of a series are issuable as Bearer Securities, the
Company will maintain (A) in The City of New York, an office or
agency where any Registered Securities of that series may be pre-
sented or surrendered for payment, where any Registered Securities
of that series may be surrendered for registration of transfer,
where Securities of that series may be surrendered for exchange,
where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served and
where Bearer Securities of that series and related coupons may be
presented or surrendered for payment in the circumstances described
in the following paragraph (and not otherwise), (B) subject to any
laws or regulations applicable thereto, in a Place of Payment for
that series which is located outside the United States, an office
or agency where Securities of that series and related coupons may
be presented and surrendered for payment; provided, however, that,
_________________
if the Securities of that series are listed on any stock exchange
located outside the United States and such stock exchange shall so
require, the Company will maintain a Paying Agent for the Securi-
ties of that series in any required city located outside the United
States so long as the Securities of that series are listed on such
exchange, and (C) subject to any laws or regulations applicable
thereto, in a Place of Payment for that series which is located
outside the United States, an office or agency where any Registered
Securities of that series may be surrendered for registration of
transfer, where Securities of that series may be surrendered for
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, except that Bearer Securities of any series and the
related coupons may be presented and surrendered for payment at the
offices specified in the Security, in London, and the Company
hereby appoints the same as its agents to receive such respective
presentations, surrenders, notices and demands.
Unless otherwise specified with respect to any Securities pursuant
to Section 301, no payment of principal, premium or interest on
Bearer Securities shall be made at any office or agency of the Com-
pany in the United States or by check mailed to any address in the
United States or by transfer to an account maintained with a bank
located in the United States; provided, however, that, if the
_________________
Securities of a series are payable in Dollars, payment of principal
of (and premium, if any, on) and interest on any Bearer Security
shall be made at the office of the Company's Paying Agent in The
City of New York, if (but only if) payment in Dollars of the full
amount of such principal, premium or interest, as the case may be,
at all offices or agencies outside the United States maintained for
the purpose by the Company in accordance with this Indenture is
illegal or effectively precluded by exchange controls or other
similar restrictions.
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 any such designation; 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
accordance with the requirements set forth above 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.
Unless otherwise specified with respect to any Securities as con-
templated by Section 301 with respect to a series of Securities,
the Company hereby designates as a Place of Payment for each series
of Securities the office or agency of the Company in the Borough of
Manhattan, The City of New York, and initially appoints the Trustee
at its Corporate Trust Office as Paying Agent in such city and as
its agent to receive all such presentations, surrenders, notices
and demands.
Unless otherwise specified with respect to any Securities pursuant
to Section 301, if and so long as the Securities of any series (i)
are denominated in a Currency other than Dollars or (ii) may be
payable in a Currency other than Dollars, or so long as it is
required under any other provision of the Indenture, then the Com-
pany will maintain with respect to each such series of Securities,
or as so required, at least one Exchange Rate Agent.
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 and any related coupons, it
will, on or before each due date of the principal of (and premium,
if any, on) 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 in the Currency in which the Securities of such
series are payable (except as otherwise specified pursuant to Sec-
tion 301 for the Securities of such series and except, if applica-
ble, as provided in Sections 312(b), 312(d) and 312(e)) sufficient
to pay the principal (and premium, if any) or interest so becoming
due until such sums shall be paid to such Persons or otherwise dis-
posed 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 and any related coupons, it will, prior to or
on each due date of the principal of (and premium, if any, on) or
interest on any Securities of that series, deposit with a Paying
Agent a sum (in the Currency described in the preceding paragraph)
sufficient to pay the principal (and premium, if any) or interest
so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal, premium or interest, 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 (other than the Trustee)
for any series of Securities 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, on) and interest on Securities
of such 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 other obligor upon the Securities of such series)
in the making of any payment of principal of (or premium,
if any, on) or interest on the Securities of such series;
and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to
the Trustee all sums so held in trust by such Paying
Agent.
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 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 sums.
Except as provided in the Securities of any series, 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 (and premium,
if any, on) or interest on any Security of any series, or any
coupon appertaining thereto, and remaining unclaimed for two years
after such principal (and premium, if any) 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 or coupon 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 pub-
lished once, in an Authorized Newspaper, 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 as to Compliance.
The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year, a brief certificate from the principal
executive officer, principal financial officer or principal
accounting officer as to his or her knowledge of the Company's com-
pliance with all conditions and covenants under this Indenture.
For purposes of this Section 1004, such compliance shall be deter-
mined without regard to any period of grace or requirement of
notice under this Indenture.
SECTION 1005. Additional Amounts.
If any Securities of a series provide for the payment of additional
amounts to any Holder who is not a United States person in respect
of any tax, assessment or governmental charge ("Additional
Amounts"), the Company will pay to the Holder of any Security of
such series or any coupon appertaining thereto such Additional
Amounts as may be specified as contemplated by Section 301. When-
ever in this Indenture there is mentioned, in any context, the
payment of the principal (or premium, if any, on) or interest on,
or in respect of, any Security of a series or payment of any
related coupon or the net proceeds received on the sale or exchange
of any Security of a series, such mention shall be deemed to
include mention of the payment of Additional Amounts provided for
by the terms of such series established pursuant to Section 301 to
the extent that, in such context, Additional Amounts are, were or
would be payable in respect thereof pursuant to such terms and
express mention of the payment of Additional Amounts (if applica-
ble) in any provisions hereof shall not be construed as excluding
Additional Amounts in those provisions hereof where such express
mention is not made.
Except as otherwise specified as contemplated by Section 301, if
the Securities of a series provide for the payment of Additional
Amounts, at least 10 days prior to the first Interest Payment Date
with respect to that series of Securities (or if the Securities of
that series will not bear interest prior to Maturity, the first day
on which a payment or principal (and premium, if any) is made), and
at least 10 days prior to each date of payment of principal (and
premium, if any) or interest if there has been any change with
respect to the matters set forth in the below-mentioned Officers'
Certificate, the Company will furnish the Trustee and the Company's
principal Paying Agent or Paying Agents, if other than the Trustee,
with an Officers' Certificate instructing the Trustee and such
Paying Agent or Paying Agents whether such payment of principal of
(and premium, if any, on) or interest on the Securities of that
series shall be made to Holders of Securities of that series or any
related coupons who are not United States persons without with-
holding for or on account of any tax, assessment or other govern-
mental charge described in the Securities of the series. If any
such withholding shall be required, then such Officers' Certificate
shall specify by country the amount, if any, required to be with-
held on such payments to such Holders of Securities of that series
or related coupons and the Company will pay to the Trustee or such
Paying Agent the Additional Amounts required by the terms of such
Securities. In the event that the Trustee or any Paying Agent, as
the case may be, shall not so receive the above-mentioned certifi-
cate, then the Trustee or such Paying Agent shall be entitled to
(i) assume that no such withholding or deduction is required with
respect to any payment of principal (and premium, if any) or
interest with respect to any Securities of a series or related
coupons until it shall have received a certificate advising other-
wise and (ii) to make all payments of principal (and premium, if
any) and interest with respect to the Securities of a series or
related coupons without withholding or deductions until otherwise
advised. The Company covenants to indemnify the Trustee and any
Paying Agent for, and to hold them harmless against, any loss,
liability or expense reasonably incurred without negligence or bad
faith on their part arising out of or in connection with actions
taken or omitted by any of them in reliance on any Officers'
Certificate furnished pursuant to this Section.
SECTION 1006. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or dis-
charged, before the same shall become delinquent, (1) all material
taxes, assessments and governmental charges levied or imposed upon
the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (2) all material
lawful claims for labor, materials and supplies which, if unpaid,
might by law become a Lien upon any property or assets of the
Company or any Subsidiary that comprise more than 20% of Consoli-
dated Net Tangible Assets; provided, however, that the Company
_________________
shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by
appropriate proceedings.
SECTION 1007. Maintenance of Properties.
The Company will cause all property necessary for the operation of
the business of the Company and its Subsidiaries as a whole to be
maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improve-
ments thereof, all as in the judgment of the Company may be neces-
sary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided,
________
however, that nothing in this Section shall prevent or restrict the
_______
sale, abandonment or other disposition of any of such property if
such action is, in the judgment of the Company, desirable in the
conduct of the business of the Company and its Subsidiaries as a
whole and not disadvantageous in any material respect to the
Holders.
SECTION 1008. Corporate 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 corporate existence and the rights (charter and statutory) and
franchises of the Company and any Subsidiary; provided, however,
_________________
that the Company shall not be required to preserve any such right
or franchise if the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries as a whole.
SECTION 1009. Limitation on Liens.
The Company will not, and will not permit any Subsidiary to,
directly or indirectly, create, incur, issue or assume any Debt
secured by any Lien on any property or assets owned by the Company
or any Subsidiary, and the Company will not, and will not permit
any Subsidiary to, create, incur, issue or assume any Debt secured
by any Lien on any shares of stock or Debt of any Subsidiary (such
shares of stock or Debt of any Subsidiary being called "Restricted
Securities"), unless (i) in the case of Debt which is expressly by
its terms subordinate or junior in right of payment to the applica-
ble series of Securities, such Securities (together with, if the
Company shall so determine, any other Debt of the Company or such
Subsidiary then existing or thereafter created which is not sub-
ordinate to the Securities) are secured by a Lien on such property
or assets that is senior to such other Lien with the same relative
priority as such subordinated Debt has with respect to the applica-
ble series of Securities or (ii) in the case of Liens securing Debt
which is pari passu with the applicable series of Securities, such
__________
Securities are secured by a Lien on such property or assets that is
equal and ratable with (or prior to) such other Lien, except that
any Lien securing such applicable series of Securities may be
junior to any Lien on the Company's accounts receivable, inventory
and related contract rights securing Debt under the Company's Bank
Credit Facility; provided, however, that nothing contained in this
_________________
Section shall prevent, restrict or apply to, and there shall be
excluded from secured Debt in any computation under this Section,
Debt secured by:
(a) Liens on any property or assets or Restricted Securities
of the Company or any Subsidiary existing as of the date
of the first issuance by the Company of the applicable
Securities issued pursuant to this Indenture or such other
date as may be specified in a Prospectus Supplement for an
applicable series of Securities issued pursuant to the
Indenture, subject to the provisions of subsection (h)
below;
(b) Liens on any property or assets or Restricted Securities
of any corporation existing at the time such corporation
becomes a Subsidiary, or arising thereafter (i) otherwise
than in connection with the borrowing of money arranged
thereafter and (ii) pursuant to contractual commitments
entered into prior to and not in contemplation of such
corporation's becoming a Subsidiary;
(c) Liens on any property or assets or Restricted Securities
of the Company or any Subsidiary existing at the time of
acquisition thereof (including acquisition through merger
or consolidation or by a sale, lease or other disposition
of the properties of a corporation as an entirety or sub-
stantially as an entirety to the Company or a Subsidiary)
or securing the payment of all or any part of the purchase
price or construction cost thereof or securing any Debt
incurred prior to, at the time of or within 120 days
after, the acquisition of such property or assets or
Restricted Securities or the completion of any such con-
struction, whichever is later, for the purpose of
financing all or any part of the purchase price or con-
struction cost thereof (provided such Liens are limited to
________
such property or assets or Restricted Securities, to
improvements on such property and to any other property or
assets not then owned by the Company or any Subsidiary or
constituting Restricted Securities);
(d) Liens on any property or assets to secure all or any part
of the cost of development, operation, construction,
alteration, repair or improvement of all or any part of
such property or assets, or to secure debt incurred by the
Company or any Subsidiary prior to, at the time of or
within 120 days after, the completion of such development,
operation, construction, alteration, repair or improve-
ment, whichever is later, for the purpose of financing all
or any part of such cost provided such Liens are limited
________
to such property or assets, improvements thereon and any
other property or assets not then owned by the Company or
a Subsidiary;
(e) Liens in favor of the Trustee for the benefit of the
Holders and subsequent holders of the Securities securing
the Securities;
(f) Liens secured by property or assets of the Company or any
Subsidiary that comprise no more than 20% of Consolidated
Net Tangible Assets;
(g) Liens which secure Debt owing by a Subsidiary to the Com-
pany or to another Subsidiary;
(h) Liens securing the Senior Indebtedness or any part
thereof; and
(i) any extension, renewal, substitution or replacement (or
successive extensions, renewals, substitutions or
replacements), as a whole or in part, of any of the Liens
referred to in paragraphs (a) through (g) above or the
Debt secured thereby; provided that (1) such extension,
________
renewal, substitution or replacement Lien shall be limited
to all or any part of the same property or assets or
Restricted Securities that secured the Lien extended,
renewed, substituted or replaced (plus improvements on
such property, and plus any other property or assets not
then owned by the Company or a Subsidiary or constituting
Restricted Securities) and (2) in the case of paragraphs
(a) through (c) above, the Debt secured by such Lien at
such time is not increased.
For the purposes of this Section 1009, the giving of a guarantee
which is secured by a Lien on any property or assets or Restricted
Securities, and the creation of a Lien on any property or assets or
Restricted Securities to secure Debt which existed prior to the
creation of such Lien, shall be deemed to involve the creation of
Debt in an amount equal to the principal amount guaranteed or
secured by such Lien; but the amount of Debt secured by Liens on
property or assets and Restricted Securities shall be computed
without cumulating the underlying indebtedness with any guarantee
thereof or Lien securing the same.
SECTION 1010. Limitation on Sale and Leaseback Transactions.
Except in respect of Securities issued to a Southern Union Trust or
a trustee of such trust, the Company will not, and will not permit
any Subsidiary to, enter into any arrangement after the date of the
original issuance by the Company of the applicable series of
Securities issued pursuant to the Indenture, or such other date as
may be specified in a Prospectus Supplement for an applicable
series of Securities issued pursuant to the Indenture, with any
Person (other than the Company or another Subsidiary) providing for
the leasing by the Company or any such Subsidiary of any property
(except a lease for a temporary period not to exceed three years by
the end of which it is intended that the use of such property by
the lessee will be discontinued) that was or is owned or leased by
the Company or a Subsidiary and that has been or is to be sold or
transferred by the Company or such Subsidiary to such Person
(herein referred to as a "sale and leaseback transaction") unless
either:
(a) after giving pro forma effect to such transaction, the
_________
Attributable Debt of the Company and its Subsidiaries in
respect of such sale and leaseback transaction and all
other sale and leaseback transactions entered into after
the date of the first issuance by the Company of Securi-
ties issued pursuant to this Indenture (other than such
sale and leaseback transactions as are permitted by para-
graph (b) below) would not exceed 20% of Consolidated Net
Tangible Assets, or
(b) the Company, within 180 days after the sale and leaseback
transaction, applies or causes a Subsidiary to apply an
amount equal to the greater of the net proceeds from the
sale of the property subject to the sale and leaseback
transaction or the fair market value of the property so
sold and leased back at the time of the sale and leaseback
transaction (in either case as determined by any two of
the following: the Chairman, the President, any Vice
President, the Treasurer and the Controller of the Com-
pany) to the retirement of Securities of any series or any
other Debt of the Company (other than Debt subordinated to
the Securities) or Debt of a Subsidiary having a stated
maturity more than 12 months from the date of such appli-
cation or which is extendible at the option of the obligor
thereon to a date more than 12 months from the date of
such application (and, unless otherwise expressly provided
with respect to any one or more series of Securities, any
redemption of Securities pursuant to this provision shall
not be deemed to constitute a refunding operation or
anticipated refunding operation for the purposes of any
provision limiting the Company's right to redeem Securi-
ties of any one or more such series when such redemption
involves a refunding operation or anticipated refunding
operation); provided that the amount to be so applied
________
shall be reduced by (i) the principal amount of Securities
delivered within 180 days after such sale or transfer to
the Trustee for retirement and cancellation and (ii) the
principal amount of any such Debt of the Company or a Sub-
sidiary, other than Securities, voluntarily retired by the
Company or a Subsidiary within 180 days after such sale or
transfer. Notwithstanding the foregoing, no retirement
referred to in this paragraph (b) may be effected by pay-
ment at maturity or pursuant to any mandatory sinking fund
payment or any mandatory prepayment provision.
Notwithstanding the foregoing, where the Company or any Subsidiary
is the lessee in any sale and leaseback transaction, Attributable
Debt shall not include any Debt resulting from the guarantee by the
Company or any other Subsidiary of the lessee's obligation there-
under.
SECTION 1011. Provision of Financial Information.
So long as any of the Securities are outstanding, the Company will
file, to the extent permitted under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), with the Commission the
annual reports, quarterly reports and other documents otherwise
required to be filed with the Commission pursuant to Section 13(a)
or 15(d) of the Exchange Act as if the Company were subject to such
Sections and will also provide to all Holders and file with the
Trustee copies of such reports and documents within 15 days after
it files them with the Commission or, if filing such reports and
documents by the Company with the Commission is not permitted under
the Exchange Act, within 15 days after it would otherwise have been
required to file such reports and documents if permitted, in each
case at the Company's cost.
SECTION 1012. Limitation on Dividends; Transactions with
Affiliates.
(a) In the event Securities are issued and sold to a Southern
Union Trust or a trustee of such trust in connection with
the issuance of Trust Securities by such Southern Union
Trust, the Company will not, and will cause any subsidiary
of the Company not to, declare or pay any dividend on,
make any distributions with respect to, or redeem, pur-
chase, acquire or make a liquidation payment with respect
to, any of its capital stock if at such time (i) there
shall have occurred any Event of Default under this
Indenture, (ii) the Company shall be in default with
respect to its payment or any obligations under the Trust
Securities Guarantee relating to such Trust Securities, or
(iii) the Company shall have given notice of its commence-
ment of an extended interest payment period as provided in
any indenture supplemental hereto and such period, or any
extension thereof, shall be continuing; provided, however,
that the foregoing restrictions does not apply to any
stock dividends paid by the Company where the dividend
stock is the same class as that of the stock already held
by the holders receiving the dividend.
(b) If the Company elects to defer payments of interest by
extending the interest payment period with respect to
Securities issued and sold to Southern Union Trust or a
trustee of such trust, then the Company shall also defer
payments of interest by extending the interest payment
period with respect to Securities issued and sold to all
other Southern Union Trusts or trustees of such trusts
in accordance with the terms of the indentures supplemen-
tal hereto relating to such Securities, and all such
extension periods shall continue until deferred interest
on all Securities issued to all Southern Union Trusts or
trustees of such trusts is simultaneously paid in full by
the Company.
SECTION 1013. Covenants as to Southern Union Trusts.
In the event Securities are issued and sold to a Southern Union
Trust or a trustee of such trust in connection with the issuance of
Trust Securities by such Southern Union Trust, for so long as such
Trust Securities remain outstanding, the Company will (i) maintain
100% direct or indirect ownership of the Common Securities of such
Southern Union Trust; provided, however, that any permitted succes-
_________________
sor of the Company under the Indenture may succeed to the Company's
ownership of the Common Securities, and (ii) use its reasonable
efforts to cause such Southern Union Trust (a) to remain a statu-
tory business trust, except in connection with a distribution of
Securities as provided in the Declaration of such Southern Union
Trust, the redemption of all of the Trust Securities and in connec-
tion with certain mergers, consolidations or amalgamation permitted
by the Declaration of such Southern Union Trust, and (b) otherwise
continue to be treated as a grantor trust for United States federal
income tax purposes.
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 the terms of such
Securities 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.
The election of the Company to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any
redemption at the election of the Company, the Company shall, at
least 60 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 and of the principal
amount of Securities of such series to be redeemed and shall
deliver to the Trustee such documentation and records as shall
enable the Trustee to select the Securities to be redeemed pursuant
to Section 1103. In the case of any redemption of Securities prior
to the expiration of any restriction on such redemption provided in
the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed,
the particular Securities to be redeemed shall be selected not more
than 60 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 of the principal of Securities of such series;
provided, however, that no such partial redemption shall reduce the
_________________
portion of the principal amount of a Security not redeemed to less
than the minimum authorized denomination for Securities of such
series established pursuant to Section 301.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securi-
ties selected for partial redemption, the principal amount thereof
to be redeemed.
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 Security redeemed or to be
redeemed only in part, to the portion of the principal amount of
such Security which has been or is to be redeemed.
SECTION 1104. Notice of Redemption.
Except as otherwise specified as contemplated by Section 301,
notice of redemption shall be given in the manner provided for in
Section 106 not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed.
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
are to be redeemed, the identification (and, in the case
of partial redemption, the principal amounts) of the par-
ticular Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price (together
with accrued interest, if any, to the Redemption Date pay-
able as provided in Section 1106) will become due and pay-
able upon each such Security, or the portion thereof, 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, together in the
case of Bearer Securities with all coupons appertaining
thereto, if any, maturing after the Redemption Date, are
to be surrendered for payment of the Redemption Price,
(6) that the redemption is for a sinking fund, if such is the
case,
(7) that, unless otherwise specified in such notice, Bearer
Securities of any series, if any, surrendered for redemp-
tion must be accompanied by all coupons maturing subse-
quent to the Redemption Date or the amount of any such
missing coupon or coupons will be deducted from the
Redemption Price unless security or indemnity satisfactory
to the Company, the Trustee and any Paying Agent is fur-
nished, and
(8) if Bearer Securities of any series are to be redeemed and
any Registered Securities of such series are not to be
redeemed, and if such Bearer Securities may be exchanged
for Registered Securities not subject to redemption on
such Redemption Date pursuant to Section 305 or otherwise,
the last date, as determined by the Company, on which such
exchanges may be made.
Notice of redemption of Securities to be redeemed at the election
of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Com-
pany.
SECTION 1105. Deposit of Redemption Price.
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 Sec-
tion 1003) an amount of money in the Currency in which the Securi-
ties of such series are payable (except as otherwise specified pur-
suant to Section 301 for the Securities of such series and except,
if applicable as provided in Sections 312(b), 312(d) and 312(e))
sufficient to pay the Redemption Price of, and accrued interest on,
all the Securities which are to be redeemed on that date.
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 in the Currency
in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of
such series and except, if applicable as provided in Sections
312(b), 312(d) and 312(e)) (together with accrued interest, if any,
to the Redemption Date), and from and after such date (unless the
Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall, if the same were interest-
bearing, cease to bear interest and the coupons for such interest
appertaining to any Bearer Securities so to be redeemed, except to
the extent provided below, shall be void. Upon surrender of any
such Security for redemption in accordance with said notice,
together with all coupons, if any, appertaining thereto maturing
after the Redemption Date, such Security shall be paid by the
Company at the Redemption Price, together with accrued interest, if
any, to the Redemption Date; provided, however, that installments
_________________
of interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only at an office or
agency located outside the United States (except as otherwise pro-
vided in Section 1002) and, unless otherwise specified as contem-
plated by Section 301, only upon presentation and surrender of
coupons for such interest, and provided, further, that installments
_________________
of interest on Registered Securities 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 Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemp-
tion Date, such Security may be paid after deducting from the
Redemption Price an amount equal to the face amount of all such
missing coupons, or the surrender of such missing coupon or coupons
may be waived by the Company and the Trustee if there be furnished
to them such security or indemnity as they may require to save each
of them and any Paying Agent harmless. If thereafter the Holder of
such Security shall surrender to the Trustee or any Paying Agent
any such missing coupon in respect of which a deduction shall have
been made from the Redemption Price, such Holder shall be entitled
to receive the amount so deducted; provided, however, that interest
_________________
represented by coupons shall be payable only at an office or agency
located outside the United States (except as otherwise provided in
Section 1002) and, unless otherwise specified as contemplated by
Section 301, only upon presentation and surrender of those coupons.
If any Security called for redemption or portion thereof shall not
be so paid upon surrender thereof for redemption, the principal
(and premium, if any) shall, until paid, bear interest from the
Redemption Date at the rate of interest or Yield to Maturity (in
the case of Original Issue Discount Securities) set forth in the
Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part (pursuant to the
provisions of this Article or of Article Twelve) shall be sur-
rendered at a Place of Payment therefor (with, if the Company or
the Trustee so requires, due endorsement by, or a written instru-
ment of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or such Holder's
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, 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.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
Retirements of Securities of any series pursuant to any sinking
fund shall be made in accordance with the terms of such Securities
and (except as otherwise specified as contemplated by Section 301
for Securities of any series) in accordance with this Article.
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 mandatory 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.
Subject to Section 1203, in lieu of making all or any part of any
mandatory sinking fund payment with respect to any Securities of a
series in cash, subject to the limitations set forth at Section
1001, the Company may at its option (1) deliver to the Trustee-
Outstanding Securities of a series (other than any previously
called for redemption) theretofore purchased or otherwise acquired
by the Company together in the case of any Bearer Securities of
such series with all unmatured coupons appertaining thereto, and/or
(2) receive credit for the principal amount of Securities of such
series which have been previously delivered to the Trustee by the
Company or for Securities of such 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 mandatory sinking
fund payment with respect to the Securities of the same series
required to be made pursuant to the terms of such Securities as
provided for by the terms of such series; provided, however, that
such Securities have not been previously so credited. Such Securi-
ties 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 manda-
tory sinking fund payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for
any series of Securities, 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
payment of cash in the Currency in which the Securities of such
series are payable (except as otherwise specified pursuant to Sec-
tion 301 for the Securities of such series and except, if applica-
ble, as provided in Sections 312(b), 312(d) and 312(e)) and the
portion thereof, if any, which is to be satisfied by delivering or
crediting Securities of that series pursuant to Section 1202 (which
Securities will, if not previously delivered, accompany such cer-
tificate) and whether the Company intends to exercise its right to
make a permitted optional sinking fund payment with respect to such
series. Such certificate shall be irrevocable and upon its
delivery the Company shall be obligated to make the cash payment or
payments therein referred to, if any, on or before the next suc-
ceeding sinking fund payment date. In the case of the failure of
the Company to deliver such certificate, the sinking fund payment
due on the next succeeding sinking fund payment date for that
series shall be paid entirely in cash and shall be sufficient to
redeem the principal amount of such Securities subject to a
mandatory sinking fund payment without the option to deliver or
credit Securities as provided in Section 1202 and without the right
to make any optional sinking fund payment, if any, with respect to
such series.
Not more than 60 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 Sec-
tion 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.
Prior to any sinking fund payment date, the Company shall pay to
the Trustee or a Paying Agent (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust as provided in Sec-
tion 1103) in cash a sum equal to any interest that will accrue to
the date fixed for redemption of Securities or portions thereof to
be redeemed on such sinking fund payment date pursuant to this
Section 1203.
Notwithstanding the foregoing, with respect to a sinking fund for
any series of Securities, if at any time the amount of cash to be
paid into such sinking fund on the next succeeding sinking fund
payment date, together with any unused balance of any preceding
sinking fund payment or payments for such series, does not exceed
in the aggregate $100,000, the Trustee, unless requested by the
Company, shall not give the next succeeding notice of the redemp-
tion of Securities of such series through the operation of the
sinking fund. Any such unused balance of moneys deposited in such
sinking fund shall be added to the sinking fund payment for such
series to be made in cash on the next succeeding sinking fund
payment date or, at the request of the Company, shall be applied at
any time or from time to time to the purchase of Securities of such
series, by public or private purchase, in the open market or other-
wise, at a purchase price for such Securities (excluding accrued
interest and brokerage commissions, for which the Trustee or any
Paying Agent will be reimbursed by the Company) not in excess of
the principal amount thereof.
ARTICLE THIRTEEN
REPAYMENT AT OPTION OF HOLDERS
SECTION 1301. Applicability of Article.
Repayment of Securities of any series before their Stated Maturity
at the option of Holders thereof shall be made in accordance with
the terms of such Securities and (except as otherwise specified as
contemplated by Section 301 for Securities of any series) in accor-
dance with this Article.
SECTION 1302. Repayment of Securities.
Securities of any series subject to repayment in whole or in part
at the option of the Holders thereof will, unless otherwise pro-
vided in the terms of such Securities, be repaid at a price equal
to the principal amount thereof, together with interest, if any,
thereon accrued to the Repayment Date specified in or pursuant to
the terms of such Securities. The Company covenants that on or
before the Repayment Date it will 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 in the Currency in which the Securities of such
series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series and except, if
applicable, as provided in Sections 312(b), 312(d) and 312(e))
sufficient to pay the principal (or, if so provided by the terms of
the Securities of any series, a percentage of the principal) of,
and (except if the Repayment Date shall be an Interest Payment
Date) accrued interest on, all the Securities or portions thereof,
as the case may be, to be repaid on such date.
SECTION 1303. Exercise of Option.
Securities of any series subject to repayment at the option of the
Holders thereof will contain an "Option to Elect Repayment" form on
the reverse of such Securities. To be repaid at the option of the
Holder, any Security so providing for such repayment, with the
"Option to Elect Repayment" form on the reverse of such Security
duly completed by the Holder (or by the Holder's attorney duly
authorized in writing), must be received by the Company at the
Place of Payment therefor specified in the terms of such Security
(or at such other place or places or which the Company shall from
time to time notify the Holders of such Securities) not earlier
than 45 days nor later than 30 days prior to the Repayment Date.
If less than the entire principal amount of such Security is to
be repaid in accordance with the terms of such Security, the
principal amount of such Security to be repaid, in increments of
the minimum denomination for Securities of such series, and the
denomination or denominations of the Security or Securities to be
issued to the Holder for the portion of the principal amount of
such Security surrendered that is not to be repaid, must be
specified. The principal amount of any Security providing for
repayment at the option of the Holder thereof may not be repaid in
part if, following such repayment, the unpaid principal amount of
such Security would be less than the minimum authorized
denomination of Securities of the series of which such Security to
be repaid is a part. Except as otherwise may be provided by the
terms of any Security providing for repayment at the option of the
Holder thereof, exercise of the repayment option by the Holder
shall be irrevocable unless waived by the Company.
SECTION 1304. When Securities Presented for Repayment Become Due
and Payable.
If Securities of any series providing for repayment at the option
of the Holders thereof shall have been surrendered as provided in
this Article and as provided by or pursuant to the terms of such
Securities, such Securities or the portions thereof, as the case
may be, to be repaid shall become due and payable and shall be paid
by the Company on the Repayment Date therein specified, and on and
after such Repayment Date (unless the Company shall default in the
payment of such Securities on such Repayment Date) such Securities
shall, if the same were interest-bearing, cease to bear interest
and the coupons for such interest appertaining to any Bearer
Securities so to be repaid, except to the extent provided below,
shall be void. Upon surrender of any such Security for repayment
in accordance with such provisions, together with all coupons, if
any, appertaining thereto maturing after the Repayment Date, the
principal amount of such Security so to be repaid shall be paid by
the Company, together with accrued interest, if any, to the Repay-
ment Date; provided, however, that coupons whose Stated Maturity is
_________________
on or prior to the Repayment Date shall be payable only at an
office or agency located outside the United States (except as
otherwise provided in Section 1002) and, unless otherwise specified
pursuant to Section 301, only further that, in the case of Regis-
_______
tered Securities, installments of interest, if any, whose Stated
Maturity is on or prior to the Repayment Date shall be payable to
the Holders of such Securities, or one or more Predecessor Securi-
ties, 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 Bearer Security surrendered for repayment shall not be
accompanied by all appurtenant coupons maturing after the Repayment
Date, such Security may be paid after deducting from the amount
payable therefor as provided in Section 1302 an amount equal to the
face amount of all such missing coupons, or the surrender of such
missing coupon or coupons may be waived by the Company and the
Trustee if there be furnished to them such security or indemnity as
they may require to save each of them and any Paying Agent harm-
less. If thereafter the Holder of such Security shall surrender to
the Trustee or any Paying Agent any such missing coupon in respect
of which a deduction shall have been made as provided in the pre-
ceding sentence, such Holder shall be entitled to receive the
amount so deducted; provided, however, that interest represented by
_________________
coupons shall be payable only at an office or agency located out-
side the United States (except as otherwise provided in Section
1002) and, unless otherwise specified as contemplated by Section
301, only upon presentation and surrender of those coupons.
If the principal amount of any Security surrendered for repayment
shall not be so repaid upon surrender thereof, such principal
amount (together with interest, if any, thereon accrued to such
Repayment Date) shall, until paid, bear interest from the Repayment
Date at the rate of interest Yield to Maturity (in the case of
Original Issue Discount Securities) set forth in such Security.
SECTION 1305. Securities Repaid in Part.
Upon surrender of any Registered Security which is to be repaid in
part only, the Company shall execute and the Trustee shall authen-
ticate and deliver to the Holder of such Security, without service
charge and at the expense of the Company, a new Registered Security
or Securities of the same series, of any authorized denomination
specified by the Holder, in an aggregate principal amount equal to
and in exchange for the portion of the principal of such Security
so surrendered which is not to be repaid.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Company's Option to Effect Defeasance or Covenant
Defeasance.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series of this Section 1401, the provisions of
this Article Fourteen shall apply to each series of Securities, and
the Company may, at its option, effect (i) defeasance of the
Securities of or within a series under Section 1402, except that
the Company shall not effect any such defeasance under Section 1402
in respect of any Securities of which a Southern Union Trust or a
trustee of such Trust is the Holder, or (ii) covenant defeasance of
or within a series under Section 1403 in accordance with the terms
of such Securities and in accordance with this Article.
SECTION 1402. Defeasance and Discharge.
Upon the Company's exercise of the above option applicable to this
Section with respect to any Securities of or within a series, the
Company shall be deemed to have been discharged from its obliga-
tions with respect to such Outstanding Securities and any related
coupons on the date the conditions set forth in Section 1404 are
satisfied (hereinafter, "defeasance"). For this purpose, such
defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by such Outstanding
Securities and any related coupons, which shall thereafter be
deemed to be "Outstanding" only for the purposes of Section 1405
and the other Sections of this Indenture referred to in (A) and (B)
below, and to have satisfied all its other obligations under such
Securities and any related coupons and this Indenture insofar as
such Securities and any related coupons are concerned (and the
Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following which
shall survive until otherwise terminated or discharged hereunder:
(A) the rights of Holders of such Outstanding Securities and any
related coupons to receive, solely from the trust fund described in
Section 1404 and as more fully set forth in such Section, payments
in respect of the principal of (and premium, if any, on) and
interest on such Securities and any related coupons when such
payments are due, (B) the Company's obligations with respect to
such Securities under Sections 304, 305, 306, 1002 and 1003 and
with respect to the payment of Additional Amounts, if any, on such
Securities as contemplated by Section 1005, (C) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (D) this
Article Fourteen. Subject to compliance with this Article
Fourteen, the Company may exercise its option under this Section
1402 notwithstanding the prior exercise of its option under Section
1403 with respect to such Securities and any related coupons.
SECTION 1403. Covenant Defeasance.
Upon the Company's exercise of the above option applicable to this
Section with respect to any Securities of or within a series, the
Company shall be released from its obligations under Section 803
and Sections 1006 through 1010, and, if specified pursuant to Sec-
tion 301, its obligations under any other covenant, with respect to
such Outstanding securities and any related coupons on and after
the date the conditions set forth in Section 1404 are satisfied
(hereinafter, "covenant defeasance"), and such Securities and any
related coupons shall thereafter be deemed not to be "Outstanding"
for the purposes of any direction, waiver, consent or declaration
or Act of Holders (and the consequences of any thereof) in connec-
tion with such covenants, but shall continue to be deemed "Out-
standing" for all other purposes hereunder. For this purpose, such
covenant defeasance means that, with respect to such Outstanding
Securities and any related coupons, 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 covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of reference in any such covenant 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(4) or Section 501(8) or otherwise, as the case
may be, but, except as specified above, the remainder of this
Indenture and such Securities and any related coupons shall be
unaffected thereby.
SECTION 1404. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Sec-
tion 1402 or Section 1403 to any Outstanding Securities of or
within a series and any related coupons:
(1) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satis-
fying the requirements of Section 607 who shall agree to
comply with the provisions of this Article Fourteen
applicable to it) 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 such Securities and any related coupons, (A) an
amount (in such Currency in which such Securities and any
related coupons are then specified as payable at Stated
Maturity), or (B) Government Obligations applicable to
such Securities (determined on the basis of the Currency
in which such Securities are then specified as payable at
Stated Maturity) which through the scheduled payment of
principal and interest in respect thereof in accordance
with their terms will provide, not later than one day
before the due date of any payment of principal (including
any premium) and interest, if any, under such Securities
and any related coupons, money in an amount, or (C) a com-
bination 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 and discharge, and which
shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge, (i) the principal of (and
premium, if any, on) and interest on such Outstanding
Securities and any related coupons on the Stated Maturity
(or Redemption Date, if applicable) of such principal (and
premium, if any) or installment or interest and (ii) any
mandatory sinking fund payments or analogous payments
applicable to such Outstanding Securities and any related
coupons on the day on which such payments are due and
payable in accordance with the terms of this Indenture and
of such Securities and any related coupons; provided that
________
the Trustee shall have been irrevocably instructed to
apply such money or the proceeds of such Government Obli-
gations to said payments with respect to such Securities
and any related coupons. Before such a deposit, the Com-
pany may give to the Trustee, in accordance with Section
1102 hereof, a notice of its election to redeem all or any
portion of such Outstanding Securities at a future date in
accordance with the terms of the Securities of such series
and Article Eleven hereof, which notice shall be irrevo-
cable. Such irrevocable redemption notice, if given,
shall be given effect in applying the foregoing.
(2) No Default or Event of Default with respect to such
Securities or any related coupons shall have occurred and
be continuing on the date of such deposit or, insofar as
paragraphs (5) and (7) of Section 501 are concerned, at
any time during the period ending on the 91st day after
the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expira-
tion of such period).
(3) Such defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a default under,
this Indenture or any other material agreement or instru-
instrument to which the Company is a party or by which it
is bound.
(4) In the case of an election under Section 1402, the Company
shall have delivered to the Trustee an Opinion of Counsel
stating that (x) the Company has received from, or there
has been published by, the Internal Revenue Service a
ruling, or (y) since the date of execution of this Inden-
ture, there has been a change in the applicable United
States federal income tax law, in either case to the
effect that, and based thereon such opinion shall confirm
that, the Holders of such Outstanding Securities and any
related coupons will not recognize income, gain or loss
for United States federal income tax purposes as a result
of such defeasance and will be subject to United States
federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such
defeasance had not occurred.
(5) In the case of an election under Section 1403, the Company
shall have delivered to the Trustee an Opinion of Counsel
to the effect that the Holders of such Outstanding Securi-
ties and any related coupons will not recognize income,
gain or loss for United States federal income tax purposes
as a result of such covenant defeasance and will be sub-
ject to United States federal income tax on the same
amounts, in the same manner and at the same times as would
have been the case if such covenant defeasance had not
occurred.
(6) Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in
compliance with any additional or substitute terms, condi-
tions or limitations in connection therewith pursuant to
Section 301.
(7) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for
relating to either the defeasance under Section 1402 or
the covenant defeasance under Section 1403 (as the case
may be) have been complied with.
SECTION 1405. Deposited Money and Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003,
all money and Government Obligations (or other property as may be
provided pursuant to Section 301) (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee --
collectively for purposes of this Section 1405, the "Trustee")
pursuant to Section 1404 in respect of such Outstanding Securities
and any related coupons shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and
any related coupons 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
Holders of such Securities and any related coupons of all sums due
and to become due thereon in respect of principal (and premium, if
any) and interest, but such money need not be segregated from other
funds except to the extent required by law.
Unless otherwise specified with respect to any Security pursuant to
Section 301, if, after a deposit referred to in Section 1404(1) has
been made, (a) the Holder of a Security in respect of which such
deposit was made is entitled to, and does, elect pursuant to Sec-
tion 312(b) or the terms of such Security to receive payment in a
Currency other than that in which the deposit pursuant to Section
1404(1) has been made in respect of such Security, or (b) a
Conversion Event occurs as contemplated in Section 312(d) or 312(e)
or by the terms of any Security in respect of which the deposit
pursuant to Section 1404(1) has been made, the indebtedness repre-
sented by such Security and any related coupons shall be deemed to
have been, and will be, fully discharged and satisfied through the
payment of the principal of (premium, if any, on), and interest, if
any, on such Security as they become due out of the proceeds
yielded by converting (from time to time as specified below in the
case of any such election) the amount or other property deposited
in respect of such Security into the Currency in which such
Security becomes payable as a result of such election or Conversion
Event based on the applicable Market Exchange Rate for such Cur-
rency in effect on the third Business Day prior to each payment
date, except, with respect to a Conversion Event, for such Currency
in effect (as nearly as feasible) at the time of the Conversion
Event.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the Government
Obligations deposited pursuant to Section 1404 or the principal and
interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of
such Outstanding Securities and any related coupons.
Anything in this Article Fourteen to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time
upon Company Request any money or Government Obligations (or other
property and any proceeds therefrom) held by it as provided in Sec-
tion 1404 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount
thereof which would then be required to be deposited to effect an
equivalent defeasance or covenant defeasance, as applicable, in
accordance with this Article.
SECTION 1406. Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 1405 by reason of any order or judgment of
any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obliga-
tions under this Indenture and such Securities and any related
coupons shall be revived and reinstated as though no deposit had
occurred pursuant to Section 1402 or 1403, as the case may be,
until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 1405; provided,
________
however, that if the Company makes any payment of principal of (or
_______
premium, if any, on) or interest on any such Security or any
related coupon following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such
Securities and any related coupons to receive such payment from the
money held by the Trustee or Paying Agent.
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called.
If Securities of a series are issuable as Bearer Securities, a
meeting of Holders of Securities of such series may be called at
any time and from time to time pursuant to this Article to make,
give or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
made, given or taken by Holders of Securities of such series.
SECTION 1502. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Sec-
tion 1501, to be held at such time and at such place in
The City of New York or in London as the Trustee shall
determine. Notice of every meeting of Holders of Securi-
ties of any series, setting forth the time and the place
of such meeting and in general terms the action proposed
to be taken at such meeting, shall be given, in the manner
provided for in Section 106, not less than 21 nor more
than 180 days prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board
Resolution, or the Holders of at least 10% in principal
amount of the Outstanding Securities of any series shall
have requested the Trustee to call a meeting of the
Holders of Securities of such series for any purpose
specified in Section 1501, by written request setting
forth in reasonable detail the action proposed to be taken
at the meeting, and the Trustee shall not have made the
first publication of the notice of such meeting within 21
days after receipt of such request or shall not thereafter
proceed to cause the meeting to be held as provided
herein, then the Company or the Holders of Securities of
such series in the amount above specified, as the case may
be, may determine the time and the place in The City of
New York or in London for such meeting and may call such
meeting for such purposes by giving notice thereof as pro-
vided in paragraph (a) of this Section.
SECTION 1503. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities of
any series, a Person shall be (1) a Holder of one or more Out-
standing Securities of such series, or (2) a Person appointed by an
instrument in writing as proxy for a Holder or Holders of one or
more Outstanding Securities of such series by such Holder or
Holders. The only Persons who shall be entitled to be present or
to speak at any meeting of Holders of Securities of any series
shall be the Person entitled to vote at such meeting and their
counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
SECTION 1504. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities of a series shall constitute a quorum for a
meeting of Holders of Securities of such series; provided, however,
_________________
that, if any action is to be taken at such meeting with respect to
a consent or waiver which this Indenture expressly provides may be
given by the Holders of not less than a specified percentage in
principal amount of the Outstanding Securities of a series, the
Persons entitled to vote such specified percentage in principal
amount of the Outstanding Securities of such series shall consti-
tute a quorum. In the absence of a quorum within 30 minutes of the
time appointed for any such meeting, the meeting shall, if convened
at the request of Holders of Securities of such series, be dis-
solved. In any other case the meeting may be adjourned for a
period of not less than 10 days as determined by the chairman of
the meeting prior to the adjournment of such meeting. In the
absence of a quorum at any such adjourned meeting, such adjourned
meeting may be further adjourned for a period of not less than 10
days as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Notice of the reconvening
of any adjourned meeting shall be given as provided in Section
1502(a), except that such notice need be given only once not less
than five days prior to the date on which the meeting is scheduled
to be reconvened. Notice of the reconvening of any adjourned
meeting shall state expressly the percentage, as provided above, of
the principal amount of the Outstanding Securities of such series
which shall constitute a quorum.
Except as limited by the proviso to Section 902, any resolution
presented to a meeting or adjourned meeting duly reconvened at
which a quorum is present as aforesaid may be adopted by the affir-
mative vote of the Holders of not less than a majority in principal
amount of the Outstanding Securities of that series; provided,
________
however, that, except as limited by the proviso to Section 902, any
_______
resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action which this
Indenture expressly provides may be made, given or taken by the
Holders of a specified percentage, which is less than a majority,
in principal amount of the Outstanding Securities of a series may
be adopted at a meeting or an adjourned meeting duly reconvened and
at which a quorum is present as aforesaid by the affirmative vote
of the Holders of not less than such specified percentage in prin-
cipal amount of the Outstanding Securities of that series.
Any resolution passed or decision taken at any meeting of Holders
of Securities of any series duly held in accordance with this Sec-
tion shall be binding on all the Holders of Securities of such
series and the related coupons, whether or not present or repre-
sented at the meeting.
Notwithstanding the foregoing provisions of this Section 1504, if
any action is to be taken at a meeting of Holders of Securities of
any series with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action that this
Indenture expressly provides may be made, given or taken by the
Holders of a specified percentage in principal amount of all Out-
standing Securities affected thereby, or of the Holders of such
series and one or more additional series:
(i) there shall be no minimum quorum requirement for such
meeting; and
(ii) the principal amount of the Outstanding Securities of
such series that vote in favor of such request, demand,
authorization, direction, notice, consent, waiver or
other action shall be taken into account in determining
whether such request, demand, authorization, direction,
notice, consent, waiver or other action has been made,
given or taken under this Indenture.
SECTION 1505. Determination of Voting Rights; Conduct and
Adjournment of Meetings.
(a) Notwithstanding any provisions of this Indenture, the
Trustee may make such reasonable regulations as it may
deem advisable for any meeting of Holders of Securities
of a series in regard to proof of the holding of Securi-
ties of such series and of the appointment of proxies and
in regard to the appointment and duties of inspectors of
votes, the submission and examination of proxies, cer-
tificates and other evidence of the right to vote, and
such other matters concerning the conduct of the meeting
as it shall deem appropriate. Except as otherwise per-
mitted or required by any such regulations, the holding
of Securities shall be proved in the manner specified in
Section 104 and the appointment of any proxy shall be
proved in the manner specified in Section 104 or by
having the signature of the person executing the proxy
witnessed or guaranteed by any trust company, bank or
banker authorized by Section 104 to certify to the
holding of Bearer Securities. Such regulations may pro-
vide that written instruments appointing proxies, regu-
lar on their face, may be presumed valid and genuine
without the proof specified in Section 104 or other
proof.
(b) The Trustee shall, by an instrument in writing appoint a
temporary chairman of the meeting, unless the meeting
shall have been called by the Company or by Holders of
Securities as provided in Section 1502(b), in which case
the Company or the Holders of Securities of the series
calling the meeting, as the case may be, shall in like
manner appoint a temporary chairman. A permanent chair-
man and a permanent secretary of the meeting shall be
elected by vote of the Persons entitled to vote a
majority in principal amount of the Outstanding Securi-
ties of such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series
or proxy shall be entitled to one vote for each $25
principal amount of Outstanding Securities of such series
held or represented by him (determined as specified in
the definition of "Outstanding" in Section 101);
provided, however, that no vote shall be cast or counted
_________________
at any meeting in respect of any Security challenged as
not Outstanding and ruled by the chairman of the meeting
to be not Outstanding. The chairman of the meeting shall
have no right to vote, except as a Holder of a Security
of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly
called pursuant to Section 1502 at which a quorum is
present may be adjourned from time to time by Persons
entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the
meeting; and the meeting may be held as so adjourned
without further notice.
SECTION 1506. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall
be subscribed the signatures of the Holders of Securities of such
series or of their representatives by proxy and the principal
amounts and serial numbers of the Outstanding Securities of such
series held or represented by them. The permanent chairman of the
meeting shall appoint two inspectors of votes who shall count all
votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their veri-
fied written reports in duplicate of all votes cast at the meeting.
A record, at least in duplicate, of the proceedings of each meeting
of Holders of Securities of any series shall be prepared by the
secretary of the meeting and there shall be attached to said record
the original reports of the inspectors of votes on any vote by
ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the
meeting and showing that said notice was given as provided in Sec-
tion 1502 and, if applicable, Section 1504. Each copy shall be
signed and verified by the affidavits of the permanent chairman and
secretary of the meeting and one such copy shall be delivered to
the Company, and another to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at
the meeting. Any record so signed and verified shall be conclusive
evidence of the matters therein stated.
This Indenture may be executed 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
Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first
above written.
[Seal] SOUTHERN UNION COMPANY
Attest:
__________________________ By:_____________________________
Name:___________________________
Title:__________________________
[Seal] THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
Attest:
__________________________ By:_____________________________
Name:___________________________
Title:__________________________
<PAGE>
EXHIBIT C
COMMON SECURITIES GUARANTEE AGREEMENT
<PAGE>
EXHIBIT C
COMMON SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of
_____________, 1995, is executed and delivered by Southern Union
Company, a Delaware corporation (the "Guarantor"), for the
benefit of the Holders (as defined herein) from time to time of
the Common Securities (as defined in the Declaration) of Southern
Union Company Financing I, a Delaware business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of _________, 1995, among the
Trustees of the Issuer named therein, the Guarantor as Sponsor
and the holders from time to time of undivided beneficial
interests in the assets of the Issuer, the Issuer is issuing on
the date hereof $__________ aggregate stated liquidation amount
of Common Securities designated the ____% Trust Originated Common
Securities;
WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires to irrevocably and uncondi-
tionally to agree, to the extent set forth in this Guarantee
Agreement, to pay to the Holders of the Common Securities the
Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement in substantially identical terms to this
Guarantee Agreement for the benefit of the holders of the
Preferred Securities (the "Preferred Securities Guarantee")
except that if an Event of Default (as defined in the Indenture),
has occurred and is continuing, the rights of holders of the Common
Securities to receive Guarantee Payments under this Guarantee
Agreement are subordinated to the rights of Holders of Preferred
Securities to receive Guarantee Payments under the Preferred
Securities Guarantee Agreement.
NOW, THEREFORE, in consideration of the purchase by each Holder
of Common Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers
this Guarantee Agreement for the benefit of the Holders.
ARTICLE I
In this Guarantee Agreement, unless the context otherwise
requires, the terms set forth below shall have the following
meanings. Terms defined in the Declaration as at the date of
execution of this Guarantee Agreement have the same meaning when
used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement. The singular includes the plural and vice
versa.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Common
Securities, to the extent not paid or made by the Issuer: (i)
any accrued and unpaid Distributions which are required to be
paid on such Common Securities to the extent the Issuer shall
have funds available therefore, (ii) the redemption price,
including all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price") to the extent the Issuer has
funds available therefor, with respect to any Common Securities
called for redemption by the Issuer, and (iii) upon a voluntary
or involuntary dissolution, winding-up or termination of the
Issuer (other than in connection with the distribution of
Debentures to the Holders in exchange for Common Securities as
provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all accrued and unpaid Distributions
on the Common Securities to the date of payment, and (b) the
amount of assets of the Issuer remaining available for distribution
to Holders in liquidation of the Issuer (in either case, the
"Liquidation Distribution"). If an Event of Default (as defined
in the Indenture), has occurred and is continuing, the rights of
Holders of the Common Securities to receive Guarantee Payments
under this Guarantee Agreement are subordinated to the rights of
Holders of Common Securities to receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Common Securities; provided,
however, that in determining whether the holders of the requisite
percentage of Common Securities have given any request, notice,
consent or waiver hereunder, "Holder" shall not include the
Guarantor or any entity directly or indirectly controlling or
controlled by or under direct or indirect common control with the
Guarantor.
ARTICLE II
SECTION 2.1. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments
(without duplication of amounts theretofore paid by the Issuer),
as and when due, regardless of any defense, right of set-off or
counterclaim which the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.
SECTION 2.2. The Guarantor hereby waives notice of acceptance of
this Guarantee Agreement and of any liability to which it applies
or may apply, presentment, demand for payment, any right to
require a proceeding first against the Issuer or any other Person
before proceeding against the Guarantor, protest, notice of non-
payment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 2.3. The obligations, covenants, agreements and duties
of the Guarantor under this Guarantee Agreement shall in no way
be affected or impaired by reason of the happening from time to
time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any
express or implied agreement, covenant, term or condition
relating to the Common Securities to be performed or
observed by the Issuer;
(b) the extension of time for the payment by the Issuer of
all or any portion of the Distributions, Redemption
Price, Liquidation Distribution or any other sums payable
under the terms of the Common Securities or the extension
of time for the performance of any other obligation
under, arising out of, or in connection with, the Common
Securities (other than an extension of time for payment
of Distributions, Redemption Price, Liquidation Distri-
bution or other sum payable that results from the exten-
sion of any interest payment period on the Debentures or
any extension of the maturity date of the Debentures
permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any
right, privilege, power or remedy conferred on the
Holders pursuant to the terms of the Common Securities,
or any action on the part of the Issuer granting indul-
gence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bank-
ruptcy, assignment for the benefit of creditors, reor-
ganization, arrangement, composition or readjustment of
debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in the Com-
mon Securities;
(f) the settlement or compromise of any obligation guaran-
teed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of
a guarantor, it being the intent of this Section 2.3 that
the obligations of the Guarantor hereunder shall be abso-
lute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of
any of the foregoing.
SECTION 2.4. The Guarantor expressly acknowledges that any Holder
of Common Securities may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee
Agreement, without first instituting a legal proceeding against the
Issuer or any other Person.
SECTION 2.5. This Guarantee Agreement creates a guarantee of
payment and not of collection.
SECTION 2.6. The Guarantor shall be subrogated to all (if any)
rights of the Holders of Common Securities against the Issuer in
respect of any amounts paid to such Holders by the Guarantor
under this Guarantee Agreement; provided, however, that the
________ _______
Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights
which it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of
payment under this Guarantee Agreement, if, at the time of any
such payment, any amounts are due and unpaid under this Guarantee
Agreement. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 2.7. The Guarantor acknowledges that its obligations
hereunder are independent of the obligations of the Issuer with
respect to the Common Securities and that the Guarantor shall be
liable as principal and as debtor hereunder to make Guarantee
Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.3 hereof.
ARTICLE III
SECTION 3.1. So long as any Common Securities remain out-
standing, Southern Union Company will not and will cause any sub-
sidiary of Southern Union Company which is not a wholly-owned
subsidiary of Southern Union Company, not to declare or pay any
dividend on, or make any distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to,
any of its capital stock, or make any guarantee payments with re-
spect thereto, if at such time (i) the Guarantor shall be in
default with respect to its Guarantee Payments or other obligations
hereunder, (ii) there shall have occurred any Event of Default
under the Indenture; provided that, however, the foregoing
restriction does not apply to any stock dividends paid the
Guarantor where the dividend class is of the same class as that of
the stock held by the holders receiving the dividend.
SECTION 3.2. This Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank (i)
subordinate and junior in right of payment to all other
liabilities of the Guarantor, including the Debenture Guarantee,
(ii) pari passu with the most senior preferred or preference
stock now or hereafter issued by the Guarantor and with any
guarantee now or hereafter entered into by the Guarantor in
respect of any preferred or preference stock of any Affiliate of
the Guarantor, and (iii) senior to the Guarantor's common stock.
ARTICLE IV
SECTION 4.1. This Guarantee Agreement shall terminate upon full
payment of the Redemption Price of all Securities, upon the
distribution of the Debentures to the Holder's of all of the
Common Securities or upon full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Issuer.
Notwithstanding the foregoing, this Guarantee Agreement will
continue to be effective or will be reinstated, as the case may
be, if at any time any Holder of Common Securities must restore
payment of any sums paid under the Common Securities or under
this Common Securities Guarantee.
ARTICLE V
SECTION 5.1 All guarantees and agreements contained in this
Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and
shall inure to the benefit of the Holders of the Common
Securities then outstanding.
SECTION 5.2 Except with respect to any changes which do not
adversely affect the rights of Holders (in which case no consent
of Holders will be required), this Guarantee Agreement may only
be amended with the prior approval of the Holders of at least
66-2/3% in liquidation amount of all the outstanding Common
Securities. The provisions of Section 12.2 of the Declaration
with respect to meetings of Holders of the Securities apply to
the giving of such approval.
SECTION 5.3. All notices provided for in this Guarantee
Agreement shall be in writing, duly signed by the party giving
such notice, and shall be delivered, telecopied or mailed by
registered or certified mail, as follows:
(a) if given to the Issuer, in care of the Regular Trustees
at the Issuer's mailing address set forth below (or such other
address as the Issuer may give notice of to the Holders of the
Common Securities):
SOUTHERN UNION FINANCING I
504 Lavaca Street, Suite 800
Austin, Texas 78701
(b) if given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the
Guarantor may give notice of to the Holders of the Common
Securities):
SOUTHERN UNION FINANCING I
504 Lavaca Street, Suite 800
Austin, Texas 78701
(c) if given to any Holder of Common Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a
changed address of which no notice was given, such notice or
other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 5.4. This Guarantee Agreement is solely for the benefit
of the Holders and is not separately transferable from the Common
Securities.
SECTION 5.5. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
SOUTHERN UNION COMPANY
By:_______________________
Name:
Title:
<PAGE>
EXHIBIT 4-H
FORM OF SUPPLEMENTAL INDENTURE
to be used in connection with the issuance of
SUBORDINATED DEBT SECURITIES AND PREFERRED SECURITIES
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of _________, 1995 (the
"First Supplemental Indenture"), between Southern Union Company,
a Delaware corporation (the "Company"), The Chase Manhattan Bank,
National Association, as trustee (the "Trustee") under the Inden-
ture dated as of ________, 1995 between the Company and the
Trustee (the "Indenture").
WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the future issuance of the Company's
unsecured subordinated debt securities to be issued from time to
time in one or more series as might be determined by the Company
under the Indenture, in an unlimited aggregate principal amount
which may be authenticated and delivered as provided in the
Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Company
desires to provide for the establishment of a new series of its
Securities to be known as its ___% Subordinated Deferrable
Interest Notes due 2025 (the "Notes"), the form and substance of
such Notes and the terms, provisions and conditions thereof to be
set forth as provided in the Indenture and this First Supple-
mental Indenture;
WHEREAS, Southern Union Financing I, a Delaware statutory busi-
ness trust (the "Trust"), has offered to the public $[ ]
aggregate liquidation amount of its ___% Trust Originated Pre-
ferred Securities (the "Preferred Securities"), representing
undivided beneficial interests in the assets of the Trust and
proposes to invest the proceeds from such offering in $[ ]
aggregate principal amount of the Notes; and
WHEREAS, the Company has requested that the Trustee execute and
deliver this First Supplemental Indenture and all requirements
necessary to make this First Supplemental Indenture a valid
instrument in accordance with its terms and to make the Notes,
when executed by the Company and authenticated and delivered by
the Trustee, the valid obligations of the Company have been per-
formed, and the execution and delivery of this First Supplemental
Indenture has been duly authorized in all respects:
NOW THEREFORE, in consideration of the purchase and acceptance of
the Notes by the Holders thereof, and for the purpose of setting
forth, as provided in the Indenture, the form and substance of
the Notes and the terms, provisions and conditions thereof, the
Company covenants and agrees with the Trustee as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definition of Terms.
Unless the context otherwise requires:
(a) a term defined in the Indenture has the same meaning
when used in this First Supplemental Indenture;
(b) a term defined anywhere in this First Supplemental
Indenture has the same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section or
Article of this First Supplemental Indenture;
(e) headings are for convenience of reference only and do
not affect interpretation;
(f) the following terms have the meanings given to them in
the Declaration: (i) Business Day; (ii) Clearing
Agency; (iii) Delaware Trustee; (iv) Dissolution Tax
Opinion; (v) No Recognition Opinion; (vi) Property
Trustee; (vii) Preferred Security Certificate; (viii)
Regular Trustees; and (ix) Tax Event; and
(g) the following terms have the meanings given to them in
this Section 1.1(g):
"Declaration" means the Amended and Restated Declaration of Trust
of Southern Union Financing I, a Delaware statutory business
trust, dated as of ____________________ 1995.
"Dissolution Event" means that as a result of the occurrence and
continuation of a Tax Event, the Trust is to be dissolved in
accordance with the Declaration, and the Notes held by the
Property Trustee are to be distributed to the holders of the
Trust Securities issued by the Trust pro rata in accordance with
the Declaration.
"Extended Maturity Date" means, if the Company elects to extend
the Maturity Date in accordance with Section 2.2(b), the date
selected by the Company which is after the Scheduled Maturity
Date but before _________, 2044.
"Maturity Date" means the date on which the Notes mature and on
which the principal shall be due and payable together with all
accrued and unpaid interest thereon including Compounded Interest
and Additional Interest, if any.
"Scheduled Maturity Date" means ______________, 2025.
"Senior Indebtedness" means with respect to the Company, (i) the
principal, premium, if any, and interest in respect of (A)
indebtedness of such obligor for money borrowed and (B) indebted-
ness evidenced by securities, debentures, bonds or other similar
instruments issued by such obligor, including, without limita-
tion, all obligations under its 7.60% Senior Notes due 2024; (ii)
all capital lease obligations of such obligor; (iii) all obliga-
tions of such obligor issued or assumed as the deferred purchase
price of property, all conditional sale obligations of such obli-
gor and all obligations of such obligor under any title retention
agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations of such
obligor for the reimbursement on any letter of credit, banker's
acceptance, security purchase facility or similar credit
transaction; (v) all obligations of the type referred to in
clauses (i) through (iv) of other persons for the payment of
which such obligor is responsible or liable as obligor, guarantor
or otherwise; and (vi) all obligations of the type referred to in
clauses (i) through (v) of other persons secured by any lien on
any property or asset of such obligor (whether or not such
obligation is assumed by such obligor), except for (1) any such
indebtedness that is by its terms subordinated to or pari passu
with the Notes, as the case may be, including all other debt
securities and guarantees in respect of those debt securities,
issued to (y) any other Southern Union Trusts or (z) any other
trusts, partnerships or any other entity affiliated with the
Company which is a financing vehicle of the Company ("Financing
Entity") in connection with an issuance of preferred securities
by such Financing Entity, and (2) any indebtedness between or
among such obligor and its Affiliates.
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE NOTES
SECTION 2.1. Designation and Principal Amount.
There is hereby authorized a series of Securities designated the
"_____% Subordinated Deferrable Interest Notes due 2025", limited
in aggregate principal amount to $[ million], which amount
shall be as set forth in any written Company Order for the
authentication and delivery of Notes pursuant to Section 2.4 of
the Indenture.
SECTION 2.2. Maturity.
(a) The Maturity Date will be either:
(i) the Scheduled Maturity Date; or
(ii) if the Company elects to extend the Maturity Date
beyond the Scheduled Maturity Date in accordance
with Section 2.2(b), the Extended Maturity Date;
(b) the Company may at any time before the day which is 90
days before the Scheduled Maturity Date, elect to
extend the Maturity Date only once to the Extended
Maturity Date, provided that the following conditions
________ ____
in this Section 2.2(b) are satisfied both at the date
the Company gives notice in accordance with Section
2.2(c) of its election to extend the Maturity Date and
at the Scheduled Maturity Date:
(i) the Company is not in bankruptcy or otherwise
insolvent;
(ii) the Company is not in default on any Securities
issued to any Southern Union Trust or any trustee
of such Southern Union Trust in connection with
the issuance of Trust Securities by such Southern
Union Trust;
(iii) the Company has made timely payments on the
Debenture for the immediately preceding 18 months
without deferrals;
(iv) the Trust is not in arrears on payments of Dis-
tributions on the Trust Securities issued by it;
and
(v) the Notes are rated Investment grade or the
equivalent by any one of Standard & Poor's
Corporation, Moody's Investors Service, Inc.,
Fitch Investor Services, Duff & Phelps Credit
Rating Company or any other nationally recognized
statistical rating organization; and
(c) if the Company elects to extend the Maturity Date in
accordance with Section 2.2(b), the Company shall give
notice to Holders of the Notes, the Property Trustee
and the Trust of the extension of the Maturity Date and
the Extended Maturity Date at least 90 days before the
Scheduled Maturity Date.
SECTION 2.3. Form and Payment.
Except as provided in Section 2.4, the Notes shall be issued as
Registered Securities in fully registered certificated form with-
out interest coupons. Principal and interest on the Notes issued
in certificated form will be payable, the transfer of such Notes
will be registrable and such Notes will be exchangeable for Notes
bearing identical terms and provisions at the office or agency of
the Trustee; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the Holder
at such address as shall appear in the Security Register. Not-
withwithstanding the foregoing, so long as the Holder of any
Notes is the Property Trustee, the payment of the principal of
and interest (including Compounded Interest and Additional Inter-
est, if any) on such Notes held by the Property Trustee will be
made at such place and to such account as may be designated by
the Property Trustee.
SECTION 2.4. Global Note.
(a) In connection with a Dissolution Event;
(i) the Notes in certificated form may be presented to
the Trustee by the Property Trustee in exchange
for a global Note in an aggregate principal amount
equal to all Outstanding Notes (a "Global Note"),
to be registered in the name of the Depository, or
its nominee, and delivered by the Trustee to the
Depository for crediting to the accounts of its
participants pursuant to the instructions of the
Regular Trustees. The Company upon any such
presentation shall execute a Global Note in
such aggregate principal amount and deliver the
same to the Trustee for authentication and deliv-
ery in accordance with the Indenture and this
First Supplemental Indenture. Payments on the
Notes issued as a Global Note will be made to the
Depository; and
(ii) if any Preferred Securities are held in non book-
entry certificated form, the Notes in certificated
form may be presented to the Trustee by the
Property Trustee and any Preferred Security Cer-
tificate which represents Preferred Securities
other than Preferred Securities held by the
Clearing Agency or its nominee ("Non Book-Entry
Preferred Securities") will be deemed to represent
beneficial interests in Notes presented to the
Trustee by the Property Trustee having an aggre-
gate principal amount equal to the aggregate
liquidation amount of the Non Book-Entry Preferred
Securities until such Preferred Security Certifi-
cates are presented to the Security Registrar for
transfer or reissuance at which time such Pre-
ferred Security Certificates will be cancelled and
a Note registered in the name of the holder of the
Preferred Security Certificate or the transferee
of the holder of such Preferred Security Certifi-
cate, as the case may be, with an aggregate prin-
cipal amount equal to the aggregate liquidation
amount of the Preferred Security Certificate
cancelled will be executed by the Company and
delivered to the Trustee for authentication and
delivery in accordance with the Indenture and this
First Supplemental Indenture. On issue of such
Notes, Notes with an equivalent aggregate princi-
pal amount that were presented by the Property
Trustee to the Trustee will be deemed to have been
cancelled.
(b) A Global Note may be transferred, in whole but not in
part only to another nominee of the Depositary, or to a
successor Depositary selected or approved by the Com-
pany or to a nominee of such successor Depositary.
(c) If at any time the Depositary notifies the Company that
it is unwilling or unable to continue as Depositary or
if at any time the Depositary for such series shall no
longer be registered or in good standing under the
Securities Exchange Act of 1934, as amended, or other
applicable statute or regulation, and a successor
Depositary for such series is not appointed by the
Company within 90 days after the Company receives such
notice or becomes aware of such condition, as the case
may be, the Company will execute, and, subject to
Article Two of the Indenture, the Trustee will
authenticate and deliver the Notes in definitive
registered form without coupons, in authorized denomi-
nations, and in an aggregate principal amount equal to
the principal amount of the Global Note in exchange for
such Global Note. In addition, the Company may at any
time determine that the Notes shall no longer be repre-
sented by a Global Note. In such event the Company
will execute and subject to Certificate evidencing such
determination by the Company, will authenticate and
deliver the Notes in definitive registered form without
coupons, in authorized denominations, and in an aggre-
gate principal amount equal to the principal amount of
the Global Note in exchange for such Global Note. Upon
the exchange of the Global Note for such Notes in
definitive registered form without coupons, in autho-
rized denominations, the Global Note shall be cancelled
by the Trustee. Such Notes in definitive registered
form issued in exchange for the Global Note shall be
registered in such names and in such authorized denomi-
nations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver
such Securities to the Depositary for delivery to the
Persons in whose names such Securities are so regis-
tered.
SECTION 2.5. Interest.
(a) Each Note will bear interest at the rate of ___% per
annum (the "Coupon Rate") from the original date of
issuance until the principal thereof becomes due and
payable, and on any overdue principal and (to the
extent that payment of such interest is enforceable
under applicable law) on any overdue installment of
interest at the Coupon Rate, compounded quarterly,
payable (subject to the provisions of Article Four)
quarterly in arrears on March 31, June 30, September 30
and December 31 of each year (each, an "Interest Pay-
ment Date", commencing on __________, 1995), to the
Person in whose name such Note or any predecessor Note
is registered, at the close of business on the regular
record date for such interest installment, which, in
respect of any Notes of which the Property Trustee is
the Holder of or a Global Note, shall be the close of
business on the Business Day next preceding that Inter-
est Payment Date. If the Notes are not represented by
a Global Note, the Company may select a regular record
date for such interest installment which shall be any
date at least fifteen days before an Interest Payment
Date.
(b) The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-
day months. Except as provided in the following
sentence, the amount of interest payable for any period
shorter than a full quarterly period for which interest
in computed, will be computed on the basis of the
actual number of days elapsed in such a 30-day month.
In the event that any date on which interest is payable
on the Notes is not a Business Day, then payment of
interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any
interest or other payment in respect of any such
delay), except that, if such Business Day is in the
next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such
date.
(c) If at any time while the Property Trustee is the Holder
of any Notes, the Trust or the Property Trustee is
required to pay any taxes, duties assessments or
governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any
other taxing authority, then, in any case, the Company
will pay as additional interest ("Additional Interest")
on the Notes held by the Property Trustee, such addi-
tional amounts as shall be required so that the net
amounts received and retained by the Trust and the
Property Trustee after paying such taxes, duties
assessments or other governmental charges will be equal
to the amounts the Trust and the Property Trustee would
have received had no such taxes, duties, assessments or
other government charges been imposed.
ARTICLE III
REDEMPTION OF THE NOTES
SECTION 3.1. Special Event Redemption.
If a Tax Event has occurred and is continuing and:
(a) the Company has received a Redemption Tax Opinion; or
(b) after receiving a Dissolution Tax Opinion, the Regular
Trustees shall have been informed by tax counsel ren-
dering the Dissolution Tax Opinion that a No Recogni-
tion Opinion cannot be delivered to the Trust, then,
notwithstanding Section 3.2(a) but subject to Section
3.2(b), the Company shall have the right upon not less
than 30 days nor more than 60 days notice to the
Holders of the Notes to redeem the Notes in whole or in
part for cash within 90 days following the occurrence
of such Tax Event (the "90 Day Period"), provided that,
if at the time there is available to the Company the
opportunity to eliminate within the 90 Day Period, the
Tax Event by taking some ministerial action ("Minis-
terial Action"), such as filing a form or making an
election, or pursuing some other similar reasonable
measure which has no adverse effect on the Company, the
Trust or the Holders of the Trust Securities issued by
the Trust, the Company shall pursue such Ministerial
Action in lieu of redemption, and provided, further,
that the Company shall have no right to redeem the
Notes while the Trust is pursuing any Ministerial
Action pursuant to its obligations under the Declara-
tion.
SECTION 3.2. Optional Redemption by Company.
(a) Subject to the provisions of Section 3.2(b) and to the
provisions of Article Eleven of the Indenture, except
as otherwise may be specified in this First Supplemen-
tal Indenture, the Company shall have the right to
redeem the Notes, in whole or in part, from time to
time, on or after ____________, 2000, at a redemption
price equal to 100% of the principal amount to be re-
deemed plus any accrued and unpaid interest thereon to
the date of such redemption (the "Optional Redemption
Price"). Any redemption pursuant to this paragraph
will be made upon not less than 30 nor more than 60
days' notice to the Holder of the Notes, at the
Optional Redemption Price. If the Notes are only
partially redeemed pursuant to this Section 3.2, the
Notes will be redeemed pro rata or by lot or by any
other method utilized by the Trustee; provided that, if
at the time of redemption the Notes are registered as a
Global Note, the Depository shall determine by lot the
principal amount of such Notes held by each Holder of
Note to be redeemed.
(b) If a partial redemption of the Notes would result in
the delisting of the Preferred Securities issued by the
Trust from any national securities exchange or other
organization on which the Preferred Securities are then
listed, the Company shall not be permitted to effect
such partial redemption and may only redeem the Notes
in whole.
SECTION 3.3. No Sinking Fund.
The Notes are not entitled to the benefit of any sinking fund.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period.
The Company shall have the right, at any time during the term of
the Notes, from time to time to defer payments of interest by
extending the interest payment period of such Notes for up to 20
consecutive quarters (the "Extended Interest Payment Period").
To the extent permitted by applicable law, interest, the payment
of which has been deferred because of the extension of the
interest payment period pursuant to this Section 4.1, will bear
interest thereon at the Coupon Rate compounded quarterly for each
quarter of the Extended Interest Payment Period ("Compounded
Interest"). At the end of the Extended Interest Payment Period
the Company shall pay all interest accrued and unpaid on the
Notes, including any Additional Interest and Compounded Interest
("Deferred Interest") that shall be payable, to the Holders of
the Notes in whose names the Notes are registered in the Security
Register on the first record date after the end of the Extended
Interest Payment Period. Before the termination of any Extended
Interest Payment Period, the Company may further extend such
period, provided that such period together with all such further
extensions thereof shall not exceed 20 consecutive quarters.
Upon the termination of any Extended Interest Payment Period and
upon the payment of all Deferred Interest then due, the Company
may commence a new Extended Interest Payment Period, subject to
the foregoing requirements. No interest shall be due and payable
during an Extended Interest Payment Period, except at the end
thereof.
SECTION 4.2. Notice of Extension.
(a) If the Property Trustee is the only registered Holder
of the Notes at the time the Company selects an
Extended Interest Payment Period, the Company shall
give written notice to both the Regular Trustees and
the Property Trustee of its selection of such Extended
Interest Payment Period one Business Day before the
earlier of (a) the next succeeding date on which Dis-
tributions on the Trust Securities issued by the Trust
are payable, or (b) the date the Trust is required to
give notice of the record date or the date such Dis-
tributions are payable to the New York Stock Exchange
or other applicable self-regulatory organization or to
holders of the Preferred Securities issued by the
Trust, but in any event at least one Business Day
before such record date.
(b) If the Property Trustee is not the only Holder of the
Notes at the time the Company selects an Extended In-
terest Payment Period, the Company shall give the
Holders of the Notes written notice of its selection of
such Extended Interest Payment Period 10 Business Days
before the earlier of (i) the next succeeding Interest
Payment Date, or (ii) the date the Company is required
to give notice of the record or payment date of such
interest payment to the New York Stock Exchange or
other applicable self-regulatory organization or to
Holders of the Notes.
(c) The quarter in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 4.2 shall be
counted as one of the 20 quarters permitted in the
maximum Extended Interest Payment Period permitted
under Section 4.1.
ARTICLE V
EXPENSES
SECTION 5.1. Payment of Expenses.
In connection with the offering, sale and issuance of the Notes
to the Property Trustee in connection with the sale of the Trust
Securities by the Trust, the Company shall:
(a) pay for all costs and expenses relating to the
offering, sale and issuance of the Notes, including
commissions to the underwriters payable pursuant to the
Underwriting Agreement and the Pricing Agreement and
compensation of the Trustee under the Indenture in
accordance with the provisions of Section 7.06 of the
Indenture;
(b) pay for all costs and expenses of the Trust (including,
but not limited to, costs and expenses relating to the
organization of the Trust, the offering, sale and
issuance of the Trust Securities (including commissions
to the underwriters in connection therewith), the fees
and expenses of the Property Trustee and the Delaware
Trustee, the costs and expenses relating to the opera-
tion of the Trust, including without limitation, costs
and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and
engraving and computing or accounting equipment, paying
agent(s), registrar(s), transfer agent(s), duplicating,
travel and telephone and other telecommunications ex-
penses and costs and expenses incurred in connection
with the acquisition, financing, and disposition of
Trust assets); and
(c) pay any and all taxes (other than United States with-
holding taxes attributable to the Trust or its assets)
and all liabilities, costs and expenses with respect to
such taxes of the Trust.
ARTICLE VI
SUBORDINATION
SECTION 6.1. Agreement to Subordinate.
The Company covenants and agrees, and each Holder of Notes issued
hereunder by such Holder's acceptance thereof likewise covenants
and agrees, that all Notes shall be issued subject to the provi-
sions of this Article Six; and each Holder of a Note, whether
upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions.
The payment by the Company of the principal of, premium, if any,
and interest on all Notes issued hereunder shall, to the extent
and in the manner hereinafter set forth, be subordinated and
junior in right of payment to the prior payment in full of all
Senior Indebtedness of the Company, whether outstanding at the
date of this Indenture or thereafter incurred.
No provision of this Article Six shall prevent the occurrence of
any default or Event of Default hereunder.
SECTION 6.2. Default on Senior Indebtedness.
In the event and during the continuation of any default by the
Company in the payment of principal, premium, interest or any
other payment due on any Senior Indebtedness of the Company, as
the case may be, or in the event that the maturity of any Senior
Indebtedness of the Company, as the case may be, has been
accelerated because of a default, then, in either case, no
payment shall be made by the Company with respect to the princi-
pal (including redemption and sinking fund payments) of, or
premium, if any, or interest on the Notes.
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee when such payment is prohibited
by the preceding paragraph of this Section 6.2, such payment
shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Senior Indebtedness or their
respective representatives, or to the trustee or trustees under
any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear,
but only to the extent that the holders of the Senior Indebted-
ness (or their representative or representatives or a trustee)
notify the Trustee within 90 days of such payment of the amounts
then due and owing on the Senior Indebtedness and only the
amounts specified in such notice to the Trustee shall be paid
to the holders of Senior Indebtedness.
SECTION 6.3. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities, to creditors upon any dissolution or winding-up or
liquidation or reorganization of the Company, whether voluntary
or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof
provided for in money in accordance with its terms, before any
payment is made by the Company on account of the principal (and
premium, if any) or interest on the Notes; and upon any such
dissolution or winding-up or liquidation or reorganization, any
payment by the Company, or distribution of assets of the Company
of any kind or character, whether in cash, property or securi-
ties, to which the Holders of the Note or the Trustee would be
entitled to receive from the Company, except for the provisions
of this Article Six, shall be paid by the Company or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or
other Person making such payment or distribution, or by the
Holders of the Notes or by the Trustee under this Indenture if
received by them or it, directly to the holders of Senior
Indebtedness of the Company (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by
such holders, as calculated by the Company) or their represen-
tative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay such Senior
Indebtedness in full, in money or money's worth, after giving
effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or dis-
tribution is made to the Holders of Notes or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, prohibited by the
foregoing, shall be received by the Trustee before all Senior
Indebtedness of the Company is paid in full, or provision is made
for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of
and shall be paid over or delivered to the holders of such Senior
Indebtedness or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any
instruments evidencing such Senior Indebtedness may have been
issued, and their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior
Indebtedness of the Company, as the case may be, remaining unpaid
to the extent necessary to pay such Senior Indebtedness in full
in money in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the holders of such
Senior Indebtedness.
For purposes of this Article Six, the words "cash, property or
securities" shall not be deemed to include shares of stock of the
Company as reorganized or readjusted, or securities of the Com-
pany or any other corporation provided for by a plan of reorgani-
zation or readjustment, the payment of which is subordinated at
least to the extent provided in this Article Six with respect to
the Notes to the payment of all Senior Indebtedness of the Com-
pany, as the case may be, that may at the time be outstanding,
provided that (i) such Senior Indebtedness is assumed by the new
corporation, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of such Senior
Indebtedness are not, without the consent of such holders,
altered by such reorganization or readjustment. The consolida
tion of the Company with, or the merger of the Company into,
another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as
an entirety, or substantially as an entirety, to another corpora-
tion upon the terms and conditions provided for in Article Eight
of the Indenture shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section
6.3 if such other corporation shall, as a part of such consolida-
dation, merger, conveyance or transfer, comply with the condi-
tions stated in Article Eight of the Indenture. Nothing in
Section 6.2 or in this Section 6.3 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 606 of the
Indenture.
SECTION 6.4. Subrogation.
Subject to the payment in full of all Senior Indebtedness of the
Company, the rights of the Holders of the Notes shall be
subrogated to the rights of the holders of such Senior Indebted-
ness to receive payments or distributions of cash, property or
securities of the Company, as the case may be, applicable to such
Senior Indebtedness until the principal of (and premium, if any)
and interest on the Notes shall be paid in full; and, for the
purposes of such subrogation, no payments or distributions to the
holders of such Senior Indebtedness of any cash, property or
securities to which the Holders of the Notes or the Trustee would
be entitled except for the provisions of this Article Six, and no
payment over pursuant to the provisions of this Article Six to or
for the benefit of the holders of such Senior Indebtedness by
Holders of the Notes or the Trustee, shall, as between the Com-
pany, its creditors other than Holders of Senior Indebtedness of
the Company, and the holders of the Notes shall be deemed to be a
payment by the Company to or on account of such Senior Indebted-
ness. It is understood that the provisions of this Article Six
are and are intended solely for the purposes of defining the
relative rights of the Holders of the Notes, on the one hand, and
the holders of such Senior Indebtedness on the other hand.
Nothing contained in this Article Six or elsewhere in this Inden-
ture or in the Notes is intended to or shall impair, as between
the Company, its creditors other than the holders of Senior
Indebtedness of the Company, and the Holders of the Notes, the
obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Notes the principal of (and premium,
if any) and interest on the Notes as and when the same shall
become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders of
the Notes and creditors of the Company, as the case may be, other
than the holders of Senior Indebtedness of the Company, as the
case may be, nor shall anything herein or therein prevent the
Trustee or the Holder of any Note from exercising all remedies
otherwise permitted by applicable law upon default under the
Indenture, subject to the rights, if any, under this Article Six
of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company, as the case may be,
received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article Six, the Trustee, subject to the
provisions of Section 602 of the Indenture, and the Holders of
the Notes shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction in which such dissolution,
winding-up, liquidation or reorganization proceedings are
pending, or a certificate of the receiver, trustee in bankruptcy,
liquidation trustee, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders of the
Notes, for the purposes of ascertaining the Persons entitled to
participate in such distribution, the holders of Senior Indebted-
ness and other indebtedness of the Company, as the case may be,
the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or
to this Article Six.
SECTION 6.5. Trustee to Effectuate Subordination.
Each Holder of Notes by such Holder's acceptance thereof
authorizes and directs the Trustee on such Holder's behalf to
take such action as may be necessary or appropriate to effectuate
the subordination provided in this Article Six and appoints the
Trustee such Holder's attorney-in-fact for any and all such
purposes.
SECTION 6.6. Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company that
would prohibit the making of any payment of monies to or by the
Trustee in respect of the Notes pursuant to the provisions of
this Article Six. Notwithstanding the provisions of this Article
Six or any other provision of the Indenture and this First Sup-
plemental Indenture, the Trustee shall not be charged with knowl-
edge of the existence of any facts that would prohibit the making
of any payment of monies to or by the Trustee in respect of the
Notes pursuant to the provisions of this Article Six, unless and
until a Responsible Officer of the Trustee shall have received
written notice thereof from the Company or a holder or holders of
Senior Indebtedness or from any trustee therefor; and before the
receipt of any such written notice, the Trustee, subject to the
provisions of Section 602 of the Indenture, shall be entitled in
all respects to assume that no such facts exist; provided,
________
however, that, if the Trustee shall not have received the notice
_______
provided for in this Section 6.6 at least two Business Days prior
to the date upon which by the terms hereof any money may become
payable for any purpose (including, without limitation, the pay-
ment of the principal of (or premium, if any) or interest on any
Note), then, anything herein contained to the contrary notwith-
standing, the Trustee shall have full power and authority to
receive such money and to apply the same to the purposes for
which they were received, and shall not be affected by any notice
to the contrary that may be received by it within two Business
Days prior to such date.
The Trustee, subject to the provisions of Section 602 of the
Indenture, shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself to be a holder of
Senior Indebtedness of the Company, as the case may be (or a
trustee on behalf of such holder) to establish that such notice
has been given by a holder of such Senior Indebtedness or a
trustee on behalf of any such holder or holders. In the event
that the Trustee determines in good faith that further evidence
is required with respect to the right of any Person as a holder
of such Senior Indebtedness to participate in any payment or
distribution pursuant to this Article Six, the Trustee may
request such Person to furnish evidence to the reasonable satis-
faction of the Trustee as to the amount of such Senior Indebted-
ness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this
Article Six, and, if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determina-
tion as to the right of such Person to receive such payment.
SECTION 6.7. Rights of the Trustee; Holders of Senior Indebted-
ness.
The Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article Six in respect of any Senior
Indebtedness at any time held by it, to the same extent as any
other holder of Senior Indebtedness, and nothing in this Inden-
ture shall deprive the Trustee of any of its rights as such
holder.
With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only
such of its covenants and obligations as are specifically set
forth in this Article Six, and no implied covenants or obliga-
tions with respect to the holders of such Senior Indebtedness
shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the
holders of such Senior Indebtedness and, subject to the provi-
sions of Section 602 of the Indenture, the Trustee shall not be
liable to any holder of such Senior Indebtedness if it shall pay
over or deliver to Holders of Notes, the Company or any other
Person money or assets to which any holder of such Senior
Indebtedness shall be entitled by virtue of this Article Six or
otherwise.
SECTION 6.8. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebted-
ness of the Company to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act
or failure to act on the part of the Company, as the case may be,
or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by the Company, as the case may
be, with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may have
or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may,
at any time and from time to time, without the consent of or
notice to the Trustee or the Holders of the Notes, without incur-
ring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article
Six or the obligations hereunder of the Holders of the Notes to
the holders of such Senior Indebtedness, do any one or more the
following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, such Senior
Indebtedness, or otherwise amend or supplement in any manner such
Senior Indebtedness or any instrument evidencing the same or any
agreement under which such Senior Indebtedness is outstanding;
(ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such Senior Indebted-
ness; (iii) release any Person liable in any manner for the col-
lection of such Senior Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company, as the
case may be, and any other Person.
ARTICLE VII
COVENANT TO LIST ON EXCHANGE
SECTION 7.1. Listing on an Exchange.
If the Notes are to be issued as a Global Note in connection with
the distribution of the Notes to the holders of the Preferred
Securities issued by the Trust upon a Dissolution Event, the Com-
pany will use its best efforts to list such Notes on the New York
Stock Exchange or on such other exchange as the Preferred Securi-
ties are then listed.
ARTICLE VIII
FORM OF NOTE
SECTION 8.1. Form of Note.
The Notes and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the following forms:
(FORM OF FACE OF NOTE)
[IF THE NOTE IS TO BE A GLOBAL NOTE, INSERT - This Note is a
Global Note within the meaning of the Indenture hereinafter
referred to and is registered in the name of a Depository or a
nominee of a Depository. This Note is exchangeable for Notes
registered in the name of a person other than the Depository or
its nominee only in the limited circumstances described in the
Indenture, and no transfer of this Note (other than a transfer of
this Note as a whole by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or
another nominee of the Depository) may be registered except in
limited circumstances.
Unless this Note is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer,
exchange or payment, and any Note issued is registered in the
name of Cede & Co. or such other name as requested by an autho-
rized representative of The Depository Trust Company and any
payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL
since the registered owner hereof, Cede & Co., has an interest
herein.]
No. __________________ $_____________
CUSIP No._____________
[ ]
____% SUBORDINATED DEFERRABLE INTEREST NOTE
DUE 2025
Southern Union Company, a Delaware corporation (the "Company",
which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to
pay to _______________, or registered assigns, the principal sum
of _____________ Dollars on ____________, 2025, (or on such later
date before ______, 2044, if the Company elects to extend the
maturity date as further described herein), and to pay interest
on said principal sum from ____________, 1995, or from the most
recent interest payment date (each such date, an "Interest
Payment Date") to which interest has been paid or duly provided
for, quarterly (subject to deferral as set forth herein) in
arrears on March 31, June 30, September 30 and December 31 of
each year commencing _____________, 1995, at the rate of _____%
per annum until the principal hereof shall have become due and
payable, and on any overdue principal and premium, if any, and
(without duplication and to the extent that payment of such
interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum compounded
quarterly. The amount of interest payable on any Interest
Payment Date shall be computed on the basis of a 360-day year of
twelve 30-day months. In the event that any date on which
interest is payable on this Note is not a Business Day, then
payment of interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay), except that, if
such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on such
date. The interest installment so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the person in whose name
this Note (or one or more Predecessor Notes, as defined in said
Indenture) is registered at the close of business on the regular
record date for such interest installment, which shall be the
close of business on the business day next preceding such
Interest Payment Date. [IF PURSUANT TO THE PROVISIONS OF THE
INDENTURE THE NOTES ARE NO LONGER REPRESENTED BY A GLOBAL NOTE --
which shall be the close of business on the ____ business day
next preceding such Interest Payment Date.] Any such interest
installment not punctually paid or duly provided for shall
forthwith cease to be payable to the registered Holders on such
regular record date and may be paid to the Person in whose name
this Note (or one or more Predecessor Notes) is registered at the
close of business on a special record date to be fixed by the
Trustee for the payment of such defaulted interest, notice
whereof shall be given to the registered Holders of this series
of Notes not less than 10 days prior to such special record date,
or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which the Notes may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the
Indenture. The principal of (and premium, if any) and the
interest on this Note shall be payable at the office or agency of
the Trustee maintained for that purpose in any coin or currency
of the United States of America that at the time of payment is
legal tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of
the Company by check mailed to the registered Holder at such
address as shall appear in the Security Register. Notwith-
standing the foregoing, so long as the Holder of this Note is the
Property Trustee, the payment of the principal of (and premium,
if any) and interest on this Note will be made at such place and
to such account as may be designated by the Property Trustee.
The indebtedness evidenced by this Note is, to the extent
provided in the Indenture, subordinate and junior in right of
payment to the prior payment in full of all Senior Indebtedness,
and this Note is issued subject to the provisions of the
Indenture with respect thereto. Each Holder of this Note, by
accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her
behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination so provided and (c)
appoints the Trustee his or her attorney-in-fact for any and all
such purposes. Each Holder hereof, by his or her acceptance
hereof, hereby waives all notice of the acceptance of the subor-
dination provisions contained herein and in the Indenture by each
holder of Senior Indebtedness, whether now outstanding or here-
after incurred, and waives reliance by each such holder upon
said provisions.
This Note shall not be entitled to any benefit under the Inden-
ture Indenture hereinafter referred to, be valid or become
obligatory for any purpose until the Certificate of Authentica-
cation hereon shall have been signed by or on behalf of the
Trustee.
Unless the Certificate of Authentication hereon has been executed
by the Trustee referred to on the reverse side hereof, this Note
shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
The provisions of this Note are continued on the reverse side
hereof and such continued provisions shall for all purposes have
the same effect as though fully set forth at this place.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated___________________
[ ]
By______________________
[ ]
Attest:
By_____________________
Secretary
<PAGE>
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series of Notes described in the
within-mentioned Indenture.
[ ]
NATIONAL ASSOCIATION
_________________________ _______________________
as Trustee or as Authentication Agent
By_______________________ By_____________________
Authorized Signatory Authorized Signatory
(FORM OF REVERSE OF NOTE)
This Note is one of a duly authorized series of Notes of the
Company (herein sometimes referred to as the "Notes"), specified
in the Indenture, all issued or to be issued in one or more
series under and pursuant to an Indenture dated as of
______________, 1995, duly executed and delivered between the
Company and [ ], National Association, as Trustee
(the "Trustee"), as supplemented by the First Supplemented Inden-
ture dated as of ____________, 1995, between the Company and the
Trustee (the Indenture as so supplemented, the "Indenture"), to
which Indenture and all indentures supplemental thereto reference
is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders of the Notes. By the terms
of the Indenture, the Notes are issuable in series that may vary
as to amount, date of maturity, rate of interest and in other
respects as provided in the Indenture. This series of Notes is
limited in aggregate principal amount as specified in said First
Supplemental Indenture.
Because of the occurrence and continuation of a Tax Event, in
certain circumstances, this Note will become due and payable at
the principal amount together with any interest accrued thereon
(the "Redemption Price"). The Redemption Price shall be paid
prior to 12:00 noon, New York time, on the date of such redempt-
tion or at such earlier time as the Company determines. The
Company shall have the right to redeem this Note at the option of
the Company, without premium or penalty, in whole or in part at
any time on or after _____________, 2000 (an "Optional Redemp-
tion") or at any time in certain circumstances upon the
occurrence of a Tax Event, at a redemption price equal to 100% of
the principal amount plus any accrued but unpaid interest, to the
date of such redemption (the "Optional Redemption Price"). Any
redemption pursuant to this paragraph will be made upon not less
than 30 nor more than 60 days' notice, at the Optional Redemption
Price. If the Notes are only partially redeemed by the Company
pursuant to an Optional Redemption, the Notes will be redeemed
pro rata or by lot or by any other method utilized by the
Trustee; provided that if, at the time of redemption, the Notes
are registered as a Global Note, the Depository shall determine
by lot the principal amount of such Notes held by each Noteholder
to be redeemed.
In the event of redemption of this Note in part only, a new Note
or Notes of this series for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation
hereof.
In case an Event of Default, as defined in the Indenture, shall
have occurred and be continuing, the principal of all of the
Notes may be declared, and upon such declaration shall become,
due and payable, in the manner, with the effect and subject to
the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a
majority in aggregate principal amount of the Notes of each
series affected at the time outstanding, as defined in the
Indenture, to execute supplemental indentures for the purpose of
adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders
of the Notes; provided, however, that no such supplemental inden-
ture shall (i) extend the fixed maturity of any Notes of any
series, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon, or reduce
any premium payable upon the redemption thereof, without the
consent of the Holder of each Note so affected, or (ii) reduce
the aforesaid percentage of Notes, the Holders of which are
required to consent to any such supplemental indenture, without
the consent of the Holders of each Note then outstanding and
affected thereby. The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal
amount of the Notes of any series at the time outstanding
affected thereby, on behalf of all of the Holders of the Notes of
such series, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established
pursuant to the Indenture with respect to such series, and its
consequences, except a default in the payment of the principal of
or premium, if any, or interest on any of the Notes of such
series. Any such consent or waiver by the registered Holder of
this Note (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such Holder and upon all future
Holders and owners of this Note and of any Note issued in
exchange herefor or in place hereof (whether by registration of
transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the
principal of and premium, if any, and interest on this Note at
the time and place and at the rate and in the money herein
prescribed.
The Company shall have the right at any time during the term of
the Notes from time to time to extend the interest payment period
of such Notes to up to 20 consecutive quarters (an "Extended
Interest Payment Period"), at the end of which period the Company
shall pay all interest then accrued and unpaid (together with
interest thereon at the rate specified for the Notes to the
extent that payment of such interest is enforceable under
applicable law). Before the termination of any such Extended
Interest Payment Period, the Company may further extend such
Extended Interest Payment Period, provided that such Extended
Interest Payment Period together with all such further extensions
thereof shall not exceed 20 consecutive quarters. At the
termination of any such Extended Interest Payment Period and upon
the payment of all accrued and unpaid interest and any additional
amounts then due, the Company may commence a new Extended
Interest Payment Period.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is transferable by the registered
Holder hereof on the Security Register of the Company, upon
surrender of this Note for registration of transfer at the office
or agency of the Company in the borough of Manhattan, the City
and State of New York accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company or
the Trustee duly executed by the registered Holder hereof or his
attorney duly authorized in writing, and thereupon one or more
new Notes of authorized denominations and for the same aggregate
principal amount and series will be issued to the designated
transferee or transferees. No service charge will be made for
any such transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable
in relation thereto.
Prior to due presentment for registration of transfer of this
Note, the Company, the Trustee, any paying agent and any Security
Registrar may deem and treat the registered holder hereof as the
absolute owner hereof (whether or not this Note shall be overdue
and notwithstanding any notice of ownership or writing hereon
made by anyone other than the Security Registrar) for the purpose
of receiving payment of or on account of the principal hereof and
premium, if any, and interest due hereon and for all other pur-
poses, and neither the Company nor the Trustee nor any paying
agent nor any Note Registrar shall be affected by any notice to
the contrary.
No recourse shall be had for the payment of the principal of or
the interest on this Note, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the
Indenture, against any incorporator, stockholder, officer or
director, past, present or future, as such, of the Company or of
any predecessor or successor corporation, whether by virtue of
any constitution, statute or rule of law, or by the enforcement
of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration
for the issuance hereof, expressly waived and released.
The debentures of this series are issuable only in registered
form without coupons in denominations of $25 and any integral
multiple thereof. This Global Note is exchangeable for Notes in
definitive form only under certain limited circumstances set
forth in the Indenture. Notes of this series so issued are
issuable only in registered form without coupons in denominations
of $25 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations [herein and] therein
set forth, Notes of this series [so issued] are exchangeable for
a like aggregate principal amount of Notes of this series of a
different authorized denomination, as requested by the Holder
surrendering the same.
All terms used in this Note that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
ARTICLE IX
ORIGINAL ISSUE OF NOTES
SECTION 9.1. Original Issue of Notes.
Notes in the aggregate principal amount of $________ may, upon
execution of this First Supplemental Indenture, be executed by
the Company and delivered to the Trustee for authentication, and
the Trustee shall thereupon authenticate and deliver said Notes
to or upon the written order of the Company, signed by its
Chairman, its President, or any Vice President and its Treasurer
or an Assistant Treasurer, without any further action by the
Company.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Ratification of Indenture.
The Indenture, as supplemented by this First Supplemental Inden-
ture, is in all respects ratified and confirmed, and this First
Supplemental Indenture shall be deemed part of the Indenture in
the manner and to the extent herein and therein provided.
SECTION 10.2. Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Company and not by
the Trustee, and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representation as to
the validity or sufficiency of this First Supplemental Indenture.
SECTION 10.3. Governing Law.
This First Supplemental Indenture and each Note shall be deemed
to be a contract made under the internal laws of the State of New
York, and for all purposes shall be construed in accordance with
the laws of said State.
SECTION 10.4. Separability.
In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Notes shall for any reason be
held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any
other provisions of this First Supplemental Indenture or of the
Notes, but First Supplemental Indenture and the Notes shall be
construed as if such invalid or illegal or unenforceable provi-
sion had never been contained herein or therein.
SECTION 10.5. Counterparts.
This First Supplemental Indenture may be executed in any number
of counterparts each of which shall be an original; but such
counterparts shall together constitute but one and the same
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective
corporate seals to be hereunto affixed and attested, on the date
or dates indicated in the acknowledgements and as of the day and
year first above written.
[ ]
By___________________________
Attest:
________________________
Secretary
[ ]
as Trustee
By_____________________________
Attest:
__________________________________
Secretary
<PAGE>
STATE OF )
COUNTY OF ) ss.:
On the _______ day of_______________, 1995, before me personally
came ____________________________ to be known, who, being by me
duly sworn, did depose and say that he is the _______________
_____________________ of Southern Union Company, one of the
corporations described in and which executed the above instru-
ment; that he knows the corporate seal of said corporation; that
the seal affixed to the said instrument is such corporation seal;
that it was so affixed by authority of the Board of Directors of
said corporation, and that he signed his name thereto by like
authority.
_______________________________
NOTARY PUBLIC
[seal] Commission expires
STATE OF )
COUNTY OF ) SS.:
On the ______ day of _____________, 1995, before me personally
came _____________________________ to be known, who, being by me
duly sworn, did depose and say that he is the ________________
_____________________ of [ ], one of the
corporations described in and which executed the above instru-
ment; that he knows the corporate seal of said corporation; that
the seal affixed to the said instrument is such corporation seal;
that it was so affixed by authority of the Board of Directors of
said corporation, and that he signed his name thereto by like
authority.
_____________________________________
NOTARY PUBLIC
[seal] Commission expires
<PAGE>
EXHIBIT 4-K
PREFERRED SECURITIES GUARANTEE AGREEMENT
<PAGE>
====================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
[ ]
Dated as of __________, 1995
====================================
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of
_____________, 1995, is executed and delivered by Southern Union
Company, a Delaware corporation (the "Guarantor"), and
_____________________________________________________, as trustee
(the "Preferred Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of Southern Union Financing [ ],
a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of __________, 1995, among the
trustees of the Issuer named therein, the Guarantor as Sponsor
and the holders from time to time of undivided beneficial
interests in the assets of the Issuer, the Issuer is issuing on
the date hereof $__________ aggregate stated liquidation amount
of Preferred Securities designated the ____% Trust Originated
Preferred Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally
to agree, to the extent set forth in this Guarantee Agreement, to
pay to the Holders of the Preferred Securities the Guarantee Pay-
ments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein.
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee Agreement")
in substantially identical terms to this Guarantee Agreement for
the benefit of the holders of the Common Securities (as defined
herein) except that if an Event of Default (as defined in the
Indenture (as defined herein)), has occurred and is continuing,
the rights of holders of the Common Securities to receive
Guarantee Payments under the Common Securities Guarantee are
subordinated to the rights of Holders of Preferred Securities to
receive Guarantee Payments under this Guarantee Agreement.
NOW, THEREFORE, in consideration of the purchase by each Holder
of Preferred Securities, which purchase the Guarantor hereby
agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Guarantee Agreement for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions and Interpretation
In this Guarantee Agreement, unless the context otherwise
requires:
(a) Capitalized terms used in this Guarantee Agreement but
not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has
the same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as
modified, supplemented or amended from time to time;
(d) all references in this Guarantee Agreement to Articles
and Sections are to Articles and Sections of this
Guarantee Agreement unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee Agreement unless
otherwise defined in this Guarantee Agreement or unless
the context otherwise requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor
rule thereunder.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Covered Person" means any Holder of Preferred Securities.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement.
"Guarantee Payments" means the following payments or distribu-
tions, without duplication, with respect to the Preferred Securi-
ties, to the extent not paid or made by the Issuer: (i) any
accrued and unpaid Distributions (as defined in the Declaration)
that are required to be paid on such Preferred Securities to the
extent the Issuer shall have funds available therefore, (ii) the
redemption price, including all accrued and unpaid Distributions
to the date of redemption (the "Redemption Price") to the extent
the Issuer has funds available therefor, with respect to any Pre-
ferred Securities called for redemption by the Issuer, and (iii)
upon a voluntary or involuntary dissolution, winding-up or termi-
nation of the Issuer (other than in connection with the distribu-
tion of Debentures to the Holders in exchange for Preferred
Securities as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Preferred Securities to the date of payment,
and (b) the amount of assets of the Issuer remaining available
for distribution to Holders in liquidation of the Issuer (in
either case, the "Liquidation Distribution"). If an event of
default under the Indenture has occurred and is continuing, the
rights of holders of the Common Securities to receive payments
under the Common Securities Guarantee Agreement are subordinated
to the rights of Holders of Preferred Securities to receive
Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Preferred Securities; provided,
however, that, in determining whether the holders of the
requisite percentage of Preferred Securities have given any
request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, represen-
tatives or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of April __, 1995, among
the Guarantor (the "Debenture Issuer") and The Chase Manhattan
Bank, N. A., as trustee and any indenture supplemental thereto
pursuant to which certain subordinated debt securities of the
Debenture Issuer are to be issued to the Property Trustee of the
Issuer.
"Majority in liquidation amount of the Securities" means, except
as provided by the Trust Indenture Act, a vote by Holder(s) of
Preferred Securities, voting separately as a class, of more than
50% of the liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person.
Any Officers' Certificate delivered with respect to compliance
with a condition or covenant provided for in this Guarantee
Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the
definition relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer
in rendering the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's
opinion, is necessary to enable such officer to express
an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied
with.
"Person" means a legal person, including any individual, corpora-
tion, estate, partnership, joint venture, association, joint
stock company, limited liability company, trust, unincorporated
association, or government or any agency or political subdivision
thereof, or any other entity of whatever nature.
"Preferred Guarantee Trustee" means Wilmington Trust Company
until a Successor Preferred Guarantee Trustee has been appointed
and has accepted such appointment pursuant to the terms of this
Guarantee Agreement and thereafter means each such Successor Pre-
ferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred Guar-
antee Trustee, the chairman of the board of directors, the presi-
dent, any vice-president, any assistant vice-president, the
secretary, any assistant secretary, the treasurer, any assistant
treasurer, any trust officer or assistant trust officer or any
other officer of the Preferred Guarantee Trustee customarily per-
forming functions similar to those performed by any of the above
designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity
with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor Pre-
ferred Guarantee Trustee possessing the qualifications to act
as Preferred Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions
of the Trust Indenture Act that are required to be part
of this Guarantee Agreement and shall, to the extent
applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Guaran-
tee Agreement limits, qualifies or conflicts with the
duties imposed by Section 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties shall control;
SECTION 2.2. Lists of Holders of Securities.
(a) The Guarantor shall provide the Preferred Guarantee
Trustee with a list, in such form as the Preferred
Guarantee Trustee may reasonably require, of the names
and addresses of the Holders of the Preferred Securi-
ties ("List of Holders") as of such date, (i) within 14
days after January 1 and June 30 of each year, and (ii)
at any other time within 30 days of receipt by the
Guarantor of a written request for a List of Holders as
of a date no more than 14 days before such List of
Holders is given to the Preferred Guarantee Trustee
provided that the Guarantor shall not be obligated to
provide such List of Holders at any time the List of
Holders does not differ from the most recent List of
Holders given to the Preferred Guarantee Trustee by the
Guarantor. The Preferred Guarantee Trustee may destroy
any List of Holders previously given to it on receipt
of a new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Section 311(a), 311(b) and Section
312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Preferred Guarantee Trustee.
Within 60 days after May 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders of the Preferred Securities
such reports as are required by Section 313 of the Trust Inden-
ture Act, if any, in the form and in the manner provided by Sec-
tion 313 of the Trust Indenture Act. The Preferred Guarantee
Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.
SECTION 2.4. Periodic Reports to Preferred Guarantee Trustee.
The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as required by Section
314 (if any) and the compliance certificate required by Section
314 of the Trust Indenture Act in the form, in the manner and at
the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if
any, provided for in this Guarantee Agreement that relate to any
of the matters set forth in Section 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) may be given in the form of
an Officers' Certificate.
SECTION 2.6. Events of Default; Waiver.
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the
Preferred Securities, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Guarantee
Agreement, but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7. Event of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail,
first class postage prepaid, to the Holders of the Preferred
Securities, notices of all Events of Default known to the
Preferred Guarantee Trustee, unless such defaults have been cured
before the giving of such notice, provided, that, the Preferred
________ ____
Guarantee Trustee shall be protected in withholding such notice
if and so long as the board of directors, the executive com-
mittee, or a trust committee of directors and/or Responsible
Officers of the Preferred Guarantee Trustee in good faith deter-
mines that the withholding of such notice is in the interests of
the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to
have knowledge of any Event of Default unless the Preferred Guar-
antee Trustee shall have received written notice, or a Responsi-
ble Officer charged with the administration of the Declaration
shall have obtained written notice, of such Event of Default.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture
Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Preferred Guarantee
Trustee.
(a) This Guarantee Agreement shall be held by the Preferred
Guarantee Trustee for the benefit of the Holders of the
Preferred Securities, and the Preferred Guarantee
Trustee shall not transfer this Guarantee Agreement to
any Person except a Holder of Preferred Securities
exercising his or her rights pursuant to Section 5.4(b)
or to a Successor Preferred Guarantee Trustee on
acceptance by such Successor Preferred Guarantee
Trustee of its appointment to act as Successor Pre-
Preferred Guarantee Trustee. The right, title and
interest of the Preferred Guarantee Trustee shall auto-
matically vest in any Successor Preferred Guarantee
Trustee, and such vesting and cessation of title shall
be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment
of such Successor Preferred Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing,
the Preferred Guarantee Trustee shall enforce this
Guarantee Agreement for the benefit of the Holders of
the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence
of any Event of Default and after the curing of all
Events of Default that may have occurred, shall under-
undertake to perform only such duties as are specifi-
cally set forth in this Guarantee Agreement, and no im-
plied covenants shall be read into this Guarantee
Agreement against the Preferred Guarantee Trustee. In
case an Event of Default has occurred (that has not
been cured or waived pursuant to Section 2.6), the
Preferred Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Guarantee Agree-
ment, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or
use under the circumstances in the conduct of his or
her own affairs.
(d) No provision of this Guarantee Agreement shall be con-
strued to relieve the Preferred Guarantee Trustee from
liability for its own negligent action, its own negli-
negligent failure to act, or its own willful miscon-
duct, except that:
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of all such
Events of Default that may have occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely
by the express provisions of this Guarantee
Agreement, and the Preferred Guarantee
Trustee shall not be liable except for the
performance of such duties and obligations
as are specifically set forth in this Guar-
antee Agreement, and no implied covenants or
obligations shall be read into this Guaran-
tee Agreement against the Preferred Guaran-
tee Trustee; and
(B) in the absence of bad faith on the part of
the Preferred Guarantee Trustee, the Pre-
ferred Guarantee Trustee may conclusively
rely, as to the truth of the statements and
the correctness of the opinions expressed
therein, upon any certificates or opinions
furnished to the Preferred Guarantee Trustee
and conforming to the requirements of this
Guarantee Agreement; but in the case of any
such certificates or opinions that by any
provision hereof are specifically required
to be furnished to the Preferred Guarantee
Trustee, the Preferred Guarantee Trustee
shall be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Declaration;
(ii) the Preferred Guaranty Trustee shall not be
liable for any error of judgment made in good
faith by a Responsible Officer of the Preferred
Guarantee Trustee, unless it shall be proved that
the Preferred Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such
judgment was made;
(iii) the Preferred Guarantee Trustee shall not be
liable with respect to any action taken or
omitted to be taken by it in good faith in
accordance with the direction of the Holders
of not less than a Majority in liquidation amount
of the Preferred Securities relating to the time,
method and place of conducting any proceeding for
any remedy available to the Preferred Guarantee
Trustee, or exercising any trust or power con-
ferred upon the Preferred Guarantee Trustee under
this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall
require the Preferred Guarantee Trustee to expend
or risk its own funds or otherwise incur personal
financial liability in the performance of any of
its duties or in the exercise of any of its
rights or powers, if the Preferred Guarantee
Trustee shall have reasonable grounds for be-
lieving that the repayment of such funds or lia-
bility is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate in-
demnity against such risk or liability is not
reasonably assured to it.
SECTION 3.2. Certain Rights of Preferred Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may rely and
shall be fully protected in acting or refraining
from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, deben-
ture, note, other evidence of indebtedness or
other paper or document believed by it to be
genuine and to have been signed, sent or pre-
sented by the proper party or parties.
(ii) Any direction or act of the Guarantor contem-
plated by this Guarantee Agreement shall be suf-
ficiently evidenced by a Direction or an
Officers' Certificate.
(iii) Whenever, in the administration of this Guaran-
tee Agreement, the Preferred Guarantee Trustee
shall deem it desirable that a matter be proved
or established before taking, suffering or
omitting any action hereunder, the Preferred
Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the ab-
sence of bad faith on its part, request and rely
upon an Officers' Certificate which, upon
receipt of such request, shall be promptly de-
livered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no
duty to see to any recording, filing or regis-
tration of any instrument (or any rerecording,
refiling or registration thereof).
(v) The Preferred Guarantee Trustee may consult with
counsel, and the written advice or opinion of
such counsel with respect to legal matters shall
be full and complete authorization and protec-
tion in respect of any action taken, suffered or
omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such
counsel may be counsel to the Guarantor or any
of its Affiliates and may include any of its
employees. The Preferred Guarantee Trustee
shall have the right at any time to seek
instructions concerning the administration of
this Guarantee Agreement from any court of com-
petent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under
no obligation to exercise any of the rights or
powers vested in it by this Guarantee Agreement
at the request or direction of any Holder, un-
less such Holder shall have provided to the Pre-
ferred Guarantee Trustee such adequate security
and indemnity as would satisfy a reasonable per-
son in the position of the Preferred Guarantee
Trustee, against the costs, expenses (including
attorneys' fees and expenses) and liabilities
that might be incurred by it in complying with
such request or direction, including such rea-
sonable advances as may be requested by the Pre-
ferred Guarantee Trustee; provided that, nothing
contained in this Section 3.2(a)(vi) shall be
taken to relieve the Preferred Guarantee
Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the
rights and powers vested in it by this Guarantee
Agreement.
(vii) The Preferred Guarantee Trustee shall not be
bound to make any investigation into the facts
or matters stated in any resolution, certifi-
cate, statement, instrument, opinion, report,
notice, request, direction, consent, order,
bond, debenture, note, other evidence of
indebtedness or other paper or document, but the
Preferred Guarantee Trustee, in its discretion,
may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Preferred Guarantee 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 Preferred
Guarantee 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.
(ix) Any action taken by the Preferred Guarantee
Trustee or its agents hereunder shall bind the
Holders of the Preferred Securities, and the
signature of the Preferred Guarantee Trustee or
its agents alone shall be sufficient and effec-
tive to perform any such action. No third party
shall be required to inquire as to the authority
of the Preferred Guarantee Trustee to so act or
as to its compliance with any of the terms and
provisions of this Guarantee Agreement, both of
which shall be conclusively evidenced by the
Preferred Guarantee Trustee's or its agent's
taking such action.
(x) Whenever in the administration of this Guarantee
Agreement the Preferred Guarantee Trustee shall
deem it desirable to receive instructions with
respect to enforcing any remedy or right or
taking any other action hereunder, the Preferred
Guarantee Trustee (i) may request instructions
from the Holders of the Preferred Securities,
(ii) may refrain from enforcing such remedy or
right or taking such other action until such
instructions are received, and (iii) shall be
protected in acting in accordance with such in-
structions.
(b) No provision of this Guarantee Agreement shall be
deemed to impose any duty or obligation on the Pre-
ferred Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred
or imposed on it in any jurisdiction in which it shall
be illegal, or in which the Preferred Guarantee Trustee
shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to
exercise any such right, power, duty or obligation. No
permissive power or authority available to the Pre-
ferred Guarantee Trustee shall be construed to be a
duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of
Guarantee.
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee
does not assume any responsibility for their correctness. The
Preferred Guarantee Trustee makes no representation as to the
validity or sufficiency of this Guarantee Agreement.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1. Preferred Guarantee Trustee; Eligibility.
(a) There shall at all times be a preferred Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or
any State or Territory thereof or of the District
of Columbia, or a corporation or Person permitted
by the Securities and Exchange Commission to act
as an institutional trustee under the Trust Inden-
ture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital
and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or
District of Columbia authority. If such corpora-
tion publishes reports of condition at least
annually, pursuant to law or to the requirements
of the supervising or examining authority referred
to above, then, for the purposes of this Section
4.1(a)(ii), the combined capital and surplus of
such corporation shall be deemed to be its com-
bined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a),
the Preferred Guarantee Trustee shall immediately
resign in the manner and with the effect set out in
Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire
any "conflicting interest" within the meaning of Sec-
tion 310(b) of the Trust Indenture Act, the Preferred
Guarantee Trustee and Guarantor shall in all respects
comply with the provisions of Section 310(b) of the
Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of Preferred
Guarantee Trustees.
(a) Subject to Section 4.2(b), the Preferred Guarantee
Trustee may be appointed or removed without cause at
any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed
in accordance with Section 4.2(b) until a Successor
Preferred Guarantee Trustee has been appointed and has
accepted such appointment by written instrument exe-
cuted by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office
shall hold office until a Successor Preferred Guarantee
Trustee shall have been appointed or until its removal
or resignation. The Preferred Guarantee Trustee may
resign from office (without need for prior or subse-
quent accounting) by an instrument in writing executed
by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect
until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by instru-
ment in writing executed by such Successor Preferred
Guarantee Trustee and delivered to the Guarantor and
the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have
been appointed and accepted appointment as provided in
this Section 4.2 within 60 days after delivery to the
Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition any
court of competent jurisdiction for appointment of a
Successor Preferred Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Preferred Guaran-
tee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by the Issuer), as and when due,
regardless of any defense, right of set-off or counterclaim that
the Issuer may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.
SECTION 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this
Guarantee Agreement and of any liability to which it applies or
may apply, presentment, demand for payment, any right to require
a proceeding first against the Issuer or any other Person before
proceeding against the Guarantor, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices
and demands.
SECTION 5.3. Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee Agreement shall in no way be
affected or impaired by reason of the happening from time to time
of any of the following:
(a) the release or waiver, by operation of law or other-
wise, of the performance or observance by the Issuer of
any express or implied agreement, covenant, term or
condition relating to the Preferred Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer
of all or any portion of the Distributions, Redemption
Price, Liquidation Distribution or any other sums
payable under the terms of the Preferred Securities or
the extension of time for the performance of any other
obligation under, arising out of, or in connection
with, the Preferred Securities (other than an extension
of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that re-
sults from the extension of any interest payment period
on the Debentures or any extension of the maturity date
of the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise
any right, privilege, power or remedy conferred on the
Holders pursuant to the terms of the Preferred Securi-
ties, or any action on the part of the Issuer granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bank-
ruptcy, assignment for the benefit of creditors, reor-
ganization, arrangement, composition or readjustment of
debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in the Pre-
ferred Securities;
(f) the settlement or compromise of any obligation guaran-
teed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of
a guarantor, it being the intent of this Section 2.3
that the obligations of the Guarantor hereunder shall
be absolute and unconditional under any and all circum-
stances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of
any of the foregoing.
SECTION 5.4. Rights of Holders.
(a) The Holders of a Majority in liquidation amount of the
Preferred Securities have the right to direct the time,
method and place of conducting of any proceeding for
any remedy available to the Preferred Guarantee Trustee
in respect of this Guarantee Agreement or exercising
any trust or power conferred upon the Preferred Guaran-
tee Trustee under this Guarantee Agreement.
(b) If the Preferred Guarantee Trustee fails to enforce
this Guarantee Agreement, any Holder of Preferred
Securities may, after a period of 30 days has elapsed
from such Holder's written request to the Preferred
Guarantee Trustee to enforce this Guarantee Agreement,
institute a legal proceeding directly against the Guar-
antor to enforce its rights under this Guarantee Agree-
ment, without first instituting a legal proceeding
against the Issuer, the Preferred Guarantee Trustee or
any other Person.
SECTION 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not
of collection.
SECTION 5.6. Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of
any amounts paid to such Holders by the Guarantor under this
Guarantee Agreement; provided, however, that the Guarantor shall
________ _______
not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this
Guarantee Agreement, if, at the time of any such payment, any
amounts are due and unpaid under this Guarantee Agreement. If
any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the
Preferred Securities, and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments
pursuant to the terms of this Guarantee Agreement notwithstanding
the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1. Limitation of Transactions.
So long as any Preferred Securities remain outstanding, the
Guarantor will not, and will cause any subsidiary of the Guar-
antor which is not a wholly-owned subsidiary of the Guarantor
not to, declare or pay any dividend on, or make any distributions
with respect to, or redeem, purchase, acquire or make a liquida-
tion payment with respect to, any of its capital stock, or make
any guarantee payments with respect thereto, if at such time (i)
the Guarantor shall be in default with respect to its Guarantee
Payments or other obligations hereunder, or (ii) there shall have
occurred any event of default under the Indenture; provided that,
however, the foregoing restriction does not apply to any stock
dividends paid by the Guarantor where the dividend stock is of
the same class as that of the stock held by the recipients of the
dividend.
SECTION 6.2. Ranking.
This Guarantee Agreement will constitute an unsecured obligation
of the Guarantor and will rank (i) subordinate and junior in
right of payment to all other liabilities of the Guarantor, (ii)
pari passu with the most senior preferred or preference stock now
or hereafter issued by the Guarantor and with any guarantee now
or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor,
and (iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1. Termination.
This Guarantee Agreement shall terminate upon (i) full payment of
the Redemption Price of all Securities, (ii) upon the distribu-
tion of the Debentures to the Holder's of all of the Preferred
Securities or (iii) upon full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Issuer.
Notwithstanding the foregoing, this Guarantee Agreement will
continue to be effective or will be reinstated, as the case may
be, if at any time any Holder of Preferred Securities must
restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any
Covered Person for any loss, damage or claim incurred by reason
of any act or omission performed or omitted by such Indemnified
Person in good faith in accordance with this Guarantee Agreement
and in a manner that such Indemnified Person reasonably believed
to be within the scope of the authority conferred on such
Indemnified Person by this Guarantee Agreement or by law, except
that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Guarantor and upon
such information, opinions, reports or statements presented to
the Guarantor by any Person as to matters the Indemnified Person
reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable
care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts perti-
nent to the existence and amount of assets from which Distribu-
tions to Holders of Preferred Securities might properly be paid.
SECTION 8.2. Indemnification.
(a) To the fullest extent permitted by applicable law, the
Guarantor shall indemnify and hold harmless each
Indemnified Person from and against any loss, damage or
claim incurred by such Indemnified Person by reason of
any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with
this Guarantee Agreement and in a manner such Indemni-
fied Person reasonably believed to be within the scope
of authority conferred on such Indemnified Person by
this in accordance with this Guarantee Agreement,
except that no Indemnified Person shall be entitled to
be indemnified in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of negli-
gence or willful misconduct with respect to such acts
or omissions.
(b) To the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by an Indemni-
fied Person in defending any claim, demand, action,
suit or proceeding shall, from time to time, be
advanced by the Guarantor prior to the final disposi-
tion of such claim, demand, action, suit or proceeding
upon receipt by the Guarantor of an undertaking by or
on behalf of the Indemnified Person to repay such
amount if it shall be determined that the Indemnified
Person is not entitled to be indemnified as authorized
in Section 8.2(a).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee
Agreement shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the bene-
fit of the Holders of the Preferred Securities then outstanding.
SECTION 9.2. Amendments.
Except with respect to any changes that do not adversely affect
the rights of Holders (in which case no consent of Holders will
be required), this Guarantee Agreement may only be amended with
the prior approval of the Holders of at least 66-2/3% in liquida-
tion amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are
determined) of all the outstanding Preferred Securities. The
provisions of Section 12.2 of the Declaration with respect to
meetings of Holders of the Securities apply to the giving of such
approval.
SECTION 9.3. Notices.
All notices provided for in this Guarantee Agreement shall be in
writing, duly signed by the party giving such notice, and shall
be delivered, telecopied or mailed by registered or certified
mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the
Preferred Guarantee Trustee's mailing address set forth
below (or such other address as the Preferred Guarantee
Trustee may give notice of to the Holders of the Pre-
ferred Securities):
[ ]
(b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the
Guarantor may give notice of to the Holders of the Pre-
ferred Securities):
Southern Union Company
504 Lavaca Street, Suite 800
Austin, Texas 78701
(c) If given to any Holder of Preferred Securities, at the
address set forth on the books and records of the
Issuer.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a
changed address of which no notice was given, such notice or
other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders
of the Preferred Securities and, subject to Section 3.1(a), is
not separately transferable from the Preferred Securities.
SECTION 9.5. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
Southern Union Company
By:_________________________
Name:
Title:
[ ]
as Preferred Guarantee Trustee
By:__________________________
Name:
Title:
