<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
________________
Date of Report: October 10, 1996
Date of Earliest Event Reported: October 9, 1996
PANENERGY CORP
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-8157
(Commission File Number)
74-2150460
(I.R.S. Employer Identification Number)
5400 Westheimer Court
P.O. Box 1642
Houston, Texas 77251-1642
(Address, including zip code, of principal executive office)
_________________
Registrant's telephone number, including area code:
(713) 627-5400
<PAGE> 2
Item 5. Other Events.
On October 9, 1996, PanEnergy Corp entered into an underwriting
agreement for the public offering of $150 million principal amount of its 7%
Notes Due 2006. Closing of the transaction is expected to take place on
October 15, 1996.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
1 Underwriting Agreement and Terms Agreement between PanEnergy
Corp and Chase Securities Inc., BA Securities, Inc., Lehman Brothers
and Morgan Stanley & Co. Incorporated, dated October 9, 1996.
4 Resolutions of the Pricing Committee of the Board of Directors
of PanEnergy Corp, adopted on October 9, 1996, establishing the terms
of the Notes and incorporating the form of the Note.
5 Opinion of Sullivan & Cromwell regarding legality of the
Notes, dated October 9, 1996.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PANENERGY CORP
By: /s/ SANDRA P. MEYER
------------------------------------
Sandra P. Meyer
Vice President, Treasurer
and Controller
Date: October 10, 1996
3
<PAGE> 4
INDEX TO EXHIBITS
1 Underwriting Agreement and Terms Agreement between PanEnergy
Corp and Chase Securities Inc., BA Securities, Inc., Lehman Brothers
and Morgan Stanley & Co. Incorporated, dated October 9, 1996.
4 Resolutions of the Pricing Committee of the Board of Directors
of PanEnergy Corp, adopted on October 9, 1996, establishing the terms
of the Notes and incorporating the form of the Note.
5 Opinion of Sullivan & Cromwell regarding legality of the
Notes, dated October 9, 1996.
<PAGE> 1
EXHIBIT 1
October 9, 1996
To: CHASE SECURITIES INC.
BA SECURITIES, INC.
LEHMAN BROTHERS INC.
MORGAN STANLEY & CO. INCORPORATED
c/o Chase Securities Inc.
270 Park Avenue
New York, New York 10017
We accept the offer contained in your letter dated today relating to
$150,000,000 principal amount of our 7% Notes due 2006. We also confirm that
the representations and warranties of the undersigned in the Underwriting
Agreement attached to such letter ("Underwriting Agreement") are true and
correct, no stop order suspending the effectiveness of the Registration
Statement (as defined in the Underwriting Agreement) or of any part thereof has
been issued and no proceedings for that purpose have been instituted or, to the
knowledge of the undersigned, are contemplated by the Securities and Exchange
Commission and, subsequent to the respective dates of the most recent financial
statements in the Prospectus (as defined in the Underwriting Agreement), there
has been no material adverse change in the financial position or results of
operations of the undersigned and its subsidiaries except as set forth in or
contemplated by the Prospectus.
Very truly yours,
PanEnergy Corp
By /s/ PAUL F. FERGUSON, JR.
---------------------------
Paul F. Ferguson, Jr.
Senior Vice President and
Chief Financial Officer
<PAGE> 2
PANENERGY CORP
("COMPANY")
DEBT SECURITIES
TERMS AGREEMENT
October 9, 1996
PanEnergy Corp
5400 Westheimer Court
P. O. Box 1642
Houston, Texas 77251-1642
Dear Sirs:
The undersigned offer to purchase, on and subject to the terms and
conditions of the Underwriting Agreement attached hereto ("Underwriting
Agreement"), the following securities ("Securities") on the following terms:
TITLE: 7% Notes Due 2006
PRINCIPAL AMOUNT: $150,000,000
INTEREST: 7% per annum, from October 15,
1996, payable semiannually on
April 15 and October 15,
commencing April 15, 1997, to
holders of record on the
preceding April 1 or October 1,
as the case may be.
MATURITY: October 15, 2006
OPTIONAL REDEMPTION: None
SINKING FUND: None
DELAYED DELIVERY CONTRACTS: None
PURCHASE PRICE: 98.6% of principal amount, plus
accrued interest, if any, from
October 15, 1996.
EXPECTED REOFFERING PRICE: 99.25% of principal amount,
subject to change by the
undersigned.
BOOK-ENTRY ARRANGEMENTS: Authorized
LISTING REQUIREMENT: None
OTHER TERMS OR CONDITIONS: Per the Indenture
-1-
<PAGE> 3
CLOSING: 9:00 a.m. on October 15, 1996 at
the offices of the Company, 5400
Westheimer Court, Houston,
Texas, with payment in same-day
funds.
NAMES AND ADDRESSES OF THE SEVERAL UNDERWRITERS:
Chase Securities Inc.
BA Securities, Inc.
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
c/o Chase Securities Inc.
270 Park Avenue
New York, New York 10017
The respective principal amounts of the Securities to be purchased by
each of the Underwriters are set forth opposite their names below:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- --------
<S> <C>
Chase Securities Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,500,000
BA Securities, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,500,000
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,500,000
Morgan Stanley & Co. Incorporated.. . . . . . . . . . . . . . . . . . . . $ 37,500,000
------------
Total . . . . . . . . . . . . . . . $150,000,000
============
</TABLE>
It is understood that we may, with your consent, amend this offer to
add one or more additional Underwriters and reduce the aggregate principal
amount of the Securities to be purchased by the Underwriters listed above by
the aggregate principal amount to be purchased by such additional Underwriters.
The provisions of the Underwriting Agreement are incorporated herein by
reference. Unless otherwise instructed by the Underwriters, the Securities
will be made available for checking and packaging at the office of The
Depository Trust Company or its designated custodian, at least 24 hours prior
to the Closing Date.
-2-
<PAGE> 4
Please signify your acceptance of our offer by signing the enclosed
response to us in the space provided and return it to us.
Very truly yours,
CHASE SECURITIES INC.
BA SECURITIES, INC.
LEHMAN BROTHERS INC.
MORGAN STANLEY & CO. INCORPORATED
By: CHASE SECURITIES INC.
By /s/ WILLIAM D. ROGERS
------------------------------
William D. Rogers
Vice President
-3-
<PAGE> 5
PANENERGY CORP
DEBT SECURITIES
UNDERWRITING AGREEMENT
1. Introductory. PanEnergy Corp, a Delaware corporation ("Company"),
proposes to issue and sell from time to time certain of its debt securities
registered under the Registration Statement referred to in Section 2(a)
("Registered Securities"). The Registered Securities will be issued under an
Indenture, dated as of November 1, 1994 ("Indenture"), between the Company and
State Street Bank and Trust Company, as successor Trustee to The First National
Bank of Boston, in one or more series, which series may vary as to interest
rates, maturities, redemption provisions, selling prices and other terms, with
all such terms for any particular series of the Registered Securities being
determined at the time of sale. Particular series of the Registered Securities
will be sold pursuant to a Terms Agreement referred to in Section 3 for resale
in accordance with the terms of offering determined at the time of sale.
The Registered Securities involved in any such offering are
hereinafter referred to as the "Securities". The firm or firms which agree to
purchase the Securities are hereinafter referred to as the "Underwriters" of
such Securities, and the representative or representatives of the Underwriters,
if any, specified in a Terms Agreement referred to in Section 3 are hereinafter
referred to as the "Representatives"; provided, however, that if the Terms
Agreement does not specify any representative of the Underwriters, the term
"Representatives", as used in this Agreement, shall mean the Underwriters.
2. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each Underwriter that:
(a) A registration statement (No. 333-10219), including a prospectus,
relating to the Registered Securities has been filed with the Securities and
Exchange Commission ("Commission") and has become effective under the
Securities Act of 1933 (the "Act"). Such registration statement, as amended at
the time of any Terms Agreement referred to in Section 3, is hereinafter
referred to as the "Registration Statement", and the prospectus included in
such Registration Statement, as supplemented as contemplated by Section 3 to
reflect the terms of the Securities and the terms of offering thereof, as first
filed with the Commission pursuant to and in accordance with Rule 424(b) ("Rule
424(b)") under the Act, including all material incorporated by reference
therein, is hereinafter referred to as the "Prospectus".
(b) On the effective date of the registration statement relating to
the Registered Securities, such registration statement conformed in all
material respects to the requirements of the Act, the Trust Indenture Act of
1939, as amended ("Trust Indenture Act"), and the rules and regulations of the
Commission ("Rules and Regulations") and did not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and on the
date of each Terms Agreement referred to in Section 3, the Registration
Statement and Prospectus will conform in all material respects to the
requirements of the Act, the Trust Indenture Act and the Rules and Regulations,
and neither of
<PAGE> 6
such documents will include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, except that the foregoing does not apply to
statements in or omissions from any of such documents based upon written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(c) Each of Panhandle Eastern Pipe Line Company, Texas Eastern
Transmission Corporation, Trunkline Gas Company, Algonquin Gas Transmission
Company and PanEnergy Services, Inc., each a Delaware corporation (and
hereinafter called a "Principal Subsidiary"), is a Subsidiary (as defined in
the Indenture).
3. Purchase and Offering of Securities. The obligation of the
Underwriters to purchase the Securities will be evidenced by a Terms Agreement,
which may consist of an exchange of telegraphic or other written communications
("Terms Agreement") at the time the Company determines to sell the Securities.
The Terms Agreement will incorporate by reference the provisions of this
Agreement, except as otherwise provided therein, and will specify the firm or
firms which will be Underwriters, the names of any Representatives, the
principal amount to be purchased by each Underwriter, the purchase price to be
paid by the Underwriters, any compensation or commissions to be paid to the
Underwriters and the terms of the Securities not already specified in the
Indenture, including, but not limited to, interest rate, maturity, any
redemption provisions, and any sinking fund requirements and whether any of the
Securities may be sold to institutional investors pursuant to Delayed Delivery
Contracts (as defined below). The Terms Agreement will also specify the time
and date of delivery and payment (such time and date, or such other time not
later than seven full business days thereafter as the Representatives and the
Company agree as the time for payment and delivery, being herein and in the
Terms Agreement referred to as the "Closing Date"), the place of delivery and
payment and any details of the terms of offering that should be reflected in
the prospectus supplement relating to the offering of the Securities. The
obligations of the Underwriters to purchase the Securities will be several and
not joint. It is understood that the Underwriters propose to offer the
Securities for sale as set forth in the Prospectus. The Securities delivered
to the Underwriters on the Closing Date will be in definitive, fully registered
form, in such denominations and registered in such names as the Underwriters
may request upon not less than forty-eight hours notice to the Company.
If the Terms Agreement provides for sales of Securities pursuant to
delayed delivery contracts, the Company authorizes the Underwriters to solicit
offers to purchase Securities pursuant to delayed delivery contracts
substantially in the form of Annex I attached hereto ("Delayed Delivery
Contracts") with such changes therein as the Company may authorize or approve.
Delayed Delivery Contracts are to be with institutional investors, including
commercial and savings banks, insurance companies, pension funds, investment
companies and educational and charitable institutions. On the Closing Date,
the Company will pay, as compensation, to the Representatives for the accounts
of the Underwriters, the fee set forth in such Terms Agreement in respect of
the principal amount of Securities to be sold pursuant to Delayed Delivery
Contracts ("Contract Securities"). The Underwriters will not have any
responsibility in respect of the validity or the performance of Delayed
Delivery Contracts. If the Company executes and delivers
-2-
<PAGE> 7
Delayed Delivery Contracts, the Contract Securities will be deducted from the
Securities to be purchased by the several Underwriters and the aggregate
principal amount of Securities to be purchased by each Underwriter will be
reduced pro rata in proportion to the principal amount of Securities set forth
opposite each Underwriter's name in such Terms Agreement, except to the extent
that the Representatives determine that such reduction shall be otherwise than
pro rata and so advise the Company. The Company will advise the
Representatives no later than the business day prior to the Closing Date of the
principal amount of Contract Securities.
4. Certain Agreements of the Company. The Company agrees with the
several Underwriters that it will furnish to Vinson & Elkins L.L.P., counsel
for the Underwriters, two copies of the registration statement relating to the
Registered Securities, including all exhibits, in the form it became effective
and of all amendments thereto and that, in connection with each offering of
Securities:
(a) The Company will file the Prospectus with the Commission pursuant
to and in accordance with Rule 424(b)(2) (or, if applicable and if consented to
by the Representatives, subparagraph (5)), not later than the second business
day following the execution and delivery of the Terms Agreement.
(b) The Company will advise the Representatives promptly of any
proposal to amend or supplement the Registration Statement or the Prospectus
and will afford the Representatives a reasonable opportunity to comment on any
such proposed amendment or supplement; and the Company will also advise the
Representatives promptly of the filing of any such amendment or supplement and
of the institution by the Commission of any stop order proceedings in respect
of the Registration Statement or of any part thereof and will use its best
efforts to prevent the issuance of any such stop order and to obtain as soon as
possible its lifting, if issued. The terms "supplements" and "amendments" as
used in this Agreement shall include, without limitation, all documents filed
by the Company with the Commission subsequent to the date of the Prospectus
included in the Registration Statement which are deemed to be incorporated by
reference in the Prospectus.
(c) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Act, the Company promptly will advise the
Representatives of such event and will prepare and file with the Commission an
amendment or supplement which will correct such statement or omission or an
amendment which will effect such compliance. Neither the Representatives'
consent to, nor the Underwriters' delivery of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in Section 5.
(d) As soon as practicable, but not later than 16 months, after the
date of each Terms Agreement, the Company will make generally available to its
securityholders an earnings
-3-
<PAGE> 8
statement covering a period of at least 12 months beginning after the later of
(i) the effective date of the registration statement relating to the Registered
Securities, (ii) the effective date of the most recent post-effective amendment
to the Registration Statement to become effective prior to the date of such
Terms Agreement and (iii) the date of the Company's most recent Annual Report
on Form 10-K filed with the Commission prior to the date of such Terms
Agreement, which will satisfy the provisions of Section 11(a) of the Act.
(e) The Company will furnish, without charge, to the Representatives
copies of the Registration Statement, including all exhibits, any related
preliminary prospectus, any related preliminary prospectus supplement, the
Prospectus and all amendments and supplements to such documents, in each case
as soon as available and in such quantities as are reasonably requested.
(f) The Company will arrange for the qualification of the Securities
for sale and the determination of their eligibility for investment under the
laws of such jurisdictions in the United States as the Representatives
designate and will continue such qualifications in effect so long as required
for the distribution; provided that the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction.
(g) For so long as any Securities are outstanding, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, (i) as soon as available, a copy of each report or definitive
proxy statement of the Company filed with the Commission under the Exchange Act
or mailed to securityholders (other than reports on Form 11-K), (ii) copies of
any registration statements which the Company or any of its subsidiaries shall
file with the Commission under the Act (other than registration statements on
Form S-8) and (iii) from time to time, such other information concerning the
Company as the Representatives may reasonably request.
(h) The Company will pay all expenses incident to the performance of
its obligations under this Agreement and will reimburse the Underwriters for
any expenses (including reasonable fees and disbursements of counsel) incurred
by them in connection with the qualification of the Registered Securities for
sale under the laws of such jurisdictions in the United States as the
Representatives may designate and the printing of memoranda relating thereto,
for any fees charged by investment rating agencies for the rating of the
Securities and for expenses incurred in distributing the Prospectus, any
preliminary prospectuses and any preliminary prospectus supplements to the
Underwriters.
(i) Between the date of the applicable Terms Agreement and 10 days
after the Closing Date, the Company will not, nor will the Company permit any
subsidiary to, without the prior consent of the Representatives, offer or sell,
or enter into any agreement to sell, any debt securities of the Company or of
any subsidiary with a maturity of more than one year, including, without
limitation, any additional Securities.
(j) The Company will advise the Representatives at the time of
entering into the Terms Agreement, and during the period from that time through
the time of purchase, to the best of the
-4-
<PAGE> 9
Company's knowledge and belief, of any material decreases in operating revenues
or net operating income of the Company and its subsidiaries on a consolidated
basis for the period from the date of the latest available interim unaudited
consolidated financial statements of the Company until and including the date
of the Terms Agreement.
5. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Securities will be
subject to the accuracy of the representations and warranties on the part of
the Company herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(a) On or prior to the Closing Date, the Representatives shall have
received a letter, addressed to the Underwriters and dated the date of delivery
thereof, of KPMG Peat Marwick LLP, in the form previously approved by the
Representatives.
(b) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 4(a) of this Agreement.
The Registration Statement shall be effective and no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceedings for that purpose shall have been instituted or, to
the knowledge of the Company or any Underwriter, shall be contemplated by the
Commission.
(c) Subsequent to the execution of the Terms Agreement, there shall
not have occurred (i) any change or any development involving a prospective
change, in or affecting particularly the business or properties of the Company
or its subsidiaries which, in the judgment of a majority in interest of the
Underwriters, including any Representatives, materially impairs the investment
quality of the Securities or the Registered Securities; (ii) any downgrading in
the rating of any debt securities of the Company by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Act), or any public announcement that any such organization has under
surveillance or review its rating of any debt securities of the Company (other
than an announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any suspension or
limitation of trading in securities generally on the New York Stock Exchange,
or any setting of minimum prices for trading on such exchange, or any
suspension of trading of any securities of the Company on any exchange or in
the over-the-counter market; (iv) any banking moratorium declared by Federal or
New York authorities; or (v) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or any
other substantial national or international calamity or emergency if, in the
judgment of a majority in interest of the Underwriters, including any
Representatives, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Securities.
(d) The Representatives shall have received an opinion or opinions,
dated the Closing Date, of Sullivan & Cromwell, special counsel for the
Company, to the effect that:
-5-
<PAGE> 10
(i) Each of the Company and the Principal Subsidiaries has
been duly incorporated and is an existing corporation in good standing
under the laws of the State of Delaware and has the corporate power
and authority to own, lease and operate its properties and conduct its
business as described in the Registration Statement and Prospectus.
(ii) This Agreement, the Terms Agreement and any Delayed
Delivery Contracts with respect to the Securities have been duly
authorized, executed and delivered by the Company.
(iii) The Indenture has been duly authorized, executed and
delivered by the Company and duly qualified under the Trust Indenture
Act; the Securities have been duly authorized; the Securities other
than any Contract Securities have been duly executed, authenticated,
issued and delivered; and the Indenture and the Securities other than
any Contract Securities constitute, and any Contract Securities, when
executed, authenticated, issued and delivered in the manner provided
in the Indenture and sold pursuant to Delayed Delivery Contracts, will
constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(iv) The Securities other than any Contract Securities
conform, and any Contract Securities, when so issued and delivered and
sold, will conform, in all material respects, to the description
thereof contained in the Prospectus.
(v) The Registration Statement is effective under the Act and,
to the best of their knowledge and information, no stop order
suspending the effectiveness of the Registration Statement or any part
thereof has been issued under the Act and no proceedings therefor have
been initiated or threatened by the Commission.
(vi) All regulatory consents, authorizations, approvals and
filings required to be obtained or made by the Company or any direct
or indirect subsidiary of the Company under the Federal laws of the
United States, the laws of the State of New York and the General
Corporation Law of the State of Delaware for the issuance, sale and
delivery of the Securities by the Company to the Underwriters have
been obtained or made and, to the best of the knowledge and
information of such counsel, remain in full force and effect.
(vii) The issuance of the Securities and the sale of the
Securities by the Company pursuant to this Agreement, the Terms
Agreement and any Delayed Delivery Contracts do not, and the
execution, delivery and performance by the Company of its obligations
under the Indenture, this Agreement, the Terms Agreement, any Delayed
Delivery Contracts and the Securities will not, (A) violate the
Company's certificate of incorporation or by-laws, (B) result in a
default under or breach of, or result in the creation or imposition of
any lien, charge or encumbrance (except as permitted by the Indenture)
upon the property or assets of the Company or any of its subsidiaries
by virtue of, any indenture, mortgage or
-6-
<PAGE> 11
other agreement or instrument relating to the borrowing of money known
to such counsel to which the Company or any direct or indirect
subsidiary of the Company is a party or by which any of them or any of
their property is bound, or (C) violate any federal law of the United
States or law of the State of New York applicable to the Company or
any direct or indirect subsidiary of the Company or the Delaware
General Corporation Law; provided, however, that, for the purposes of
this subparagraph (vii), such counsel need express no opinion with
respect to Federal or state securities laws, other anti-fraud laws and
fraudulent transfer laws; and provided, further, that insofar as
performance by the Company of its obligations under the Indenture,
this Agreement, the Terms Agreement, any Delayed Delivery Contracts
and the Securities is concerned, such counsel need express no opinion
as to bankruptcy, insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights.
(viii) Each part of the Registration Statement, when such part
became effective, and the Prospectus, as of the date of the
Prospectus, and any amendment or supplement thereto, as of its date,
appeared on its face to be appropriately responsive, in all material
respects relevant to the offering of the Securities, to the
requirements of the Act, the Trust Indenture Act and the applicable
rules and regulations of the Commission thereunder. Nothing which
came to the attention of such counsel in the course of their review of
the Registration Statement or their prior representation of the
Company and its subsidiaries has caused them to believe that, insofar
as relevant to the offering of the Securities, any part of the
Registration Statement, when such part became effective, or the
Prospectus, as of the date of the Prospectus, contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, or the Prospectus, as amended or supplemented
on the Closing Date, contained any untrue statement of a material fact
or omitted to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. Such opinion shall also state that such
counsel do not know of any documents that are required to be filed as
exhibits to the Registration Statement and are not so filed or of any
documents that are required to be summarized in the Prospectus and are
not so summarized. Such opinion may state that such counsel do not
assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement and
Prospectus except as otherwise expressly provided in such opinion and
for those made under the captions relating to the description of the
Securities insofar as they relate to provisions of documents therein
described, and do not express any opinion or belief as to the
financial statements or other financial data contained in the
Registration Statement and the Prospectus or as to the statement of
the eligibility and qualification of the Trustee.
In rendering the foregoing opinion or opinions, Sullivan & Cromwell
may state that such opinion or opinions are limited to the Federal laws of the
United States, the laws of the State of New York and the General Corporation
Law of the State of Delaware, and that they are expressing no opinion as to the
effect of the laws of any other jurisdiction. In addition, such counsel may
state that they have relied as to certain matters on information obtained from
public officials,
-7-
<PAGE> 12
officers of the Company and other sources believed by them to be responsible,
and that they have assumed that the Indenture has been duly authorized,
executed and delivered by the Trustee, that the Securities conform or will
conform to the specimen thereof examined by them, that the Trustee's
certificates of authentication of the Securities have been or will be manually
signed by one of the Trustee's authorized officers, and that the signatures on
all documents examined by them are genuine, assumptions which such counsel have
not independently verified.
(e) The Representatives shall have received an opinion or opinions,
dated the Closing Date, of Carl B. King, General Counsel of the Company, to the
effect that:
(i) Each of the Company and the Principal Subsidiaries is duly
qualified to do business in each jurisdiction in which the ownership
or leasing of its property or the conduct of its business requires
such qualification, except where the failure to so qualify,
considering all such cases in the aggregate, does not have a material
adverse effect on the business, properties, financial position or
results of operations of the Company and its subsidiaries taken as a
whole.
(ii) The issuance of the Securities and the sale of the
Securities by the Company pursuant to this Agreement, the Terms
Agreement and any Delayed Delivery Contracts do not, and the
performance by the Company of its obligations under the Indenture,
this Agreement, the Terms Agreement, any Delayed Delivery Contracts
and the Securities will not, conflict with or constitute or result in
a breach of, or default under, (A) any judgment, order or decree known
to such counsel of any domestic government, governmental
instrumentality or court having jurisdiction over the Company or its
subsidiaries, or any of their respective property, or (B) any
agreement or instrument (other than agreements or instruments referred
to in paragraph (vii) of the opinion of Sullivan & Cromwell) known to
such counsel to which the Company or any of its subsidiaries is a
party or by which any of them or their respective property is bound,
in either case which is material to the Company and its subsidiaries
taken as a whole.
(iii) Such counsel does not know of any litigation or any
governmental proceeding instituted or threatened against the Company
or any of its subsidiaries that would be required to be disclosed in
the Prospectus and is not so disclosed.
Such counsel shall also state that nothing has come to his attention
that has caused him to believe that any part of the Registration Statement,
when such part became effective, or the Prospectus, as of the date of the
Prospectus, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or the Prospectus, as amended or
supplemented on the Closing Date, contained any untrue statement of a material
fact or omitted to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Such counsel may also state that he does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and
-8-
<PAGE> 13
the Prospectus and does not express any opinion or belief as to the financial
statements or other financial data contained in the Registration Statement and
the Prospectus.
In rendering the foregoing opinion or opinions, such counsel may rely,
to the extent recited therein, upon opinions of local counsel. Such counsel
may also state that he has relied as to certain factual matters on information
obtained from public officials, officers of the Company and other sources
believed by him to be responsible.
(f) The Representatives shall have received from Vinson & Elkins
L.L.P., counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the incorporation of the Company, the validity of
the Securities, the Registration Statement, the Prospectus and other related
matters as the Representatives may require, and the Company shall have
furnished to such counsel such documents as they may request for the purpose of
enabling them to pass upon such matters.
(g) The Representatives shall have received a certificate, dated the
Closing Date, of the President or any Vice President and a principal financial
or accounting officer of the Company in which such officers, to the best of
their knowledge after reasonable investigation, shall state that the
representations and warranties of the Company in this Agreement are true and
correct, that the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Date, that no stop order suspending the effectiveness of the
Registration Statement or of any part thereof has been issued and no
proceedings for that purpose have been instituted or are contemplated by the
Commission and that, subsequent to the date of the most recent financial
statements in the Prospectus, there has been no material adverse change in the
financial position or results of operation of the Company and its subsidiaries
except as set forth in or contemplated by the Prospectus or as described in
such certificate.
The Company will furnish the Representatives with such conformed
copies of such opinions, certificates, letters and documents as the
Representatives reasonably request.
6. Indemnification and Contribution. (a) The Company will
indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus or preliminary prospectus
supplement, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue
-9-
<PAGE> 14
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives specifically for use
therein; and provided further that the indemnity agreement contained in this
Section 6 with respect to any preliminary prospectus shall not inure to the
benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) from whom a person asserting any such damage, loss, expense,
liability or claim purchased the Securities if (i) the Prospectus corrected any
untrue statement or alleged untrue statement or omission or alleged omission in
such preliminary prospectus and (ii) such Underwriter failed to send or give a
copy of the Prospectus (excluding documents incorporated by reference) to such
person at or prior to the written confirmation of the sale of such Securities
to such person provided that such corrected Prospectus was made available by
the Company prior thereto.
(b) Each Underwriter will, severally but not jointly, indemnify and
hold harmless the Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus,
or any amendment or supplement thereto, or any related preliminary prospectus
or preliminary prospectus supplement, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
-10-
<PAGE> 15
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Underwriters on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). The Company and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to in this subsection (d). Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each director of the Company, to each officer of the
Company who has signed the Registration Statement and to each person, if any,
who controls the Company within the meaning of the Act.
-11-
<PAGE> 16
7. Default of Underwriters. If any Underwriter or Underwriters
default in their obligations to purchase Securities under the Terms Agreement
and the aggregate principal amount of the Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10%
of the total principal amount of the Securities, the Representatives may make
arrangements satisfactory to the Company for the purchase of such Securities by
other persons, including any of the Underwriters, but if no such arrangements
are made by the Closing Date, the non-defaulting Underwriters shall be
obligated severally, in proportion to their respective commitments under this
Agreement and the Terms Agreement, to purchase the Securities that such
defaulting Underwriters agreed but failed to purchase. If any Underwriter or
Underwriters so default and the aggregate principal amount of the Securities
with respect to which such default or defaults occur exceeds 10% of the total
principal amount of the Securities and arrangements satisfactory to the
Representatives and the Company for the purchase of such Securities by other
persons are not made within 36 hours after such default, such Terms Agreement
will terminate without liability on the part of any non-defaulting Underwriter
or the Company, except as provided in Section 8. As used in this Agreement,
the term "Underwriter" includes any person substituted for an Underwriter under
this Section. Nothing herein will relieve a defaulting Underwriter from
liability for its default. The respective commitments of the several
Underwriters for the purposes of this Section shall be determined without
regard to reduction in the respective Underwriters' obligations to purchase the
principal amounts of the Securities set forth opposite their names in the Terms
Agreement as a result of Delayed Delivery Contracts entered into by the
Company.
The foregoing obligations and agreements set forth in this Section
will not apply if the Terms Agreement specifies that such obligations and
agreements will not apply.
8. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results
thereof, made by or on behalf of any Underwriter, the Company or any of their
respective representatives, officers or directors or any controlling person,
and will survive delivery of and payment for the Securities. If the Terms
Agreement is terminated pursuant to Section 7 or if for any reason the purchase
of the Securities by the Underwriters under the Terms Agreement is not
consummated, the Company shall remain responsible for the expenses to be paid
or reimbursed by it pursuant to Section 4 and the respective obligations of the
Company and the Underwriters pursuant to Section 6 shall remain in effect. If
the purchase of the Securities by the Underwriters is not consummated for any
reason other than solely because of the termination of this Agreement pursuant
to Section 7 or the occurrence of any event specified in clause (iii), (iv) or
(v) of Section 5(c), the Company will reimburse the Underwriters for all
out-of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Securities.
9. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or faxed and confirmed to
them at their addresses furnished to the Company in writing for the purpose of
communications hereunder or, if sent to
-12-
<PAGE> 17
the Company, can be mailed, delivered or faxed and confirmed at PanEnergy Corp,
5400 Westheimer Court, Houston, Texas 77251-1642 (telecopy number (713)
627-4603; confirm (713) 627-4612), Attention: Paul F. Ferguson, Jr., Senior
Vice President and Chief Financial Officer.
10. Successors. This Agreement will inure to the benefit of and be
binding upon the Company and such Underwriters as are identified in Terms
Agreements and their respective successors and the officers and directors and
controlling persons referred to in Section 6, and no other person will have any
right or obligation hereunder.
11. Applicable Law. This Agreement and the Terms Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
12. Consent to Representation. The Company and the Underwriters
acknowledge that Sullivan & Cromwell, which will be acting as special counsel
to the Company in connection with the offer and sale of the Securities, also
acts as counsel from time to time to one or more of the Underwriters in
connection with unrelated matters. The Company and the Underwriters consent to
Sullivan & Cromwell so acting as special counsel to the Company. The Company
and the Underwriters also acknowledge that Vinson & Elkins L.L.P., which is
acting as counsel to the Underwriters in connection with the offer and sale of
the Securities, also acts as counsel from time to time to the Company and
certain of its affiliates in connection with unrelated matters. The Company
and Underwriters consent to Vinson & Elkins L.L.P. so acting as counsel to the
Underwriters.
-13-
<PAGE> 18
ANNEX I
(Three copies of this Delayed Delivery Contract should be
signed and returned to the address shown below so as
to arrive not later than 9:00 A.M., New York time,
on ______________________ _____, 199__)
DELAYED DELIVERY CONTRACT
PanEnergy Corp
c/o Chase Securities Inc.
270 Park Avenue
New York, New York 10017
Attention: _________________
Gentlemen:
The undersigned hereby agrees to purchase from PanEnergy Corp, a
Delaware corporation ("Company"), and the Company agrees to sell to the
undersigned, [if one delayed closing--as of the date hereof, for delivery on
____________, 199___ ("Delivery Date")], $ ____________ principal amount of
the Company's ______________ ("Securities"), offered by the Company's
Prospectus dated August 22, 1996 and a Prospectus Supplement dated ____________
____, 199___, relating thereto, receipt of copies of which is hereby
acknowledged, at _____% of the principal amount thereof plus accrued interest,
if any, and on the further terms and conditions set forth in this Delayed
Delivery Contract ("Contract").
[If two or more delayed closings:
The undersigned will purchase from the Company as of the date hereof,
for delivery on the dates set forth below, Securities in the principal amounts
set forth below:
<TABLE>
<CAPTION>
Delivery Date Principal Amount
------------- ----------------
<S> <C>
_____________ ____________
_____________ ____________
</TABLE>
Each of such delivery dates is hereinafter referred to as a Delivery Date.]
Payment for the Securities that the undersigned has agreed to purchase
for delivery on the Delivery Date shall be made to the Company or its order in
same-day funds at the office of ______________ _________________ at _________
___. M. on the [such] Delivery Date upon delivery to the undersigned of the
Securities to be purchased by the undersigned [for delivery on
-1-
<PAGE> 19
such Delivery Date] in definitive fully registered form and in such
denomination and registered in such names as the undersigned may designate by
written or telegraphic communication addressed to the Company not less than
five full business days prior to the [such] Delivery Date.
It is expressly agreed that the provisions for delayed delivery and
payment are for the sole convenience of the undersigned; that the purchase
hereunder of Securities is to be regarded in all respects as a purchase as of
the date of this Contract; that the obligation of the Company to make delivery
of and accept payment for, and the obligation of the undersigned to take
delivery of and make payment for, Securities on the [each] Delivery Date shall
be subject only to the conditions that (1) investment in the Securities shall
not at the [such] Delivery Date be prohibited under the laws of any
jurisdiction in the United States to which the undersigned is subject and (2)
the Company shall have sold to the Underwriters the total principal amount of
the Securities less the principal amount thereof covered by this and other
similar Contracts. The undersigned represents that its investment in the
Securities is not, as of the date hereof, prohibited under the laws of any
jurisdiction to which the undersigned is subject and which governs such
investment.
Promptly after completion of the sale to the Underwriters the Company
will mail or deliver to the undersigned at its address set forth below notice
to such effect, accompanied by a copy of the opinions of counsel for the
Company relating to the validity of the Securities delivered to the
Underwriters in connection therewith.
This Contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.
-2-
<PAGE> 20
It is understood that the acceptance of any such Contract is in the
Company's sole discretion and, without limiting the foregoing, need not be on a
first-come, first-served basis. If this Contract is acceptable to the Company,
it is requested that the Company sign the form of acceptance below and mail or
deliver one of the counterparts between the Company and the undersigned when
such counterpart is so mailed or delivered.
Yours very truly,
____________________________________
(Name of Purchaser)
By _________________________________
____________________________________
____________________________________
(Title of Signatory)
____________________________________
____________________________________
(Address of Purchaser)
Accepted, as of the above date.
PanEnergy Corp
By ____________________________________
[insert title]
-3-
<PAGE> 1
RESOLUTIONS ADOPTED BY PRICING COMMITTEE
AT MEETING HELD ON OCTOBER 9, 1996
RESOLVED, that pursuant to the authority delegated to this
Pricing Committee by the Board of Directors of PanEnergy Corp (the
"Company") by Resolutions adopted on July 24, 1996, unsecured debt
securities of the Company referred to in such Resolutions shall be
issued and designated as the Company's 7% Notes Due 2006 (the
"Notes"); and
FURTHER RESOLVED, that in addition to the terms provided in
the Indenture dated as of November 1, 1994 (the "Indenture"), between
the Company and State Street Bank and Trust Company as successor
Trustee, the terms of the Notes shall be as follows:
(1) The aggregate principal amount of the Notes shall be $150
million;
(2) The Stated Maturity of the principal of the Notes shall be
October 15, 2006;
(3) The Notes shall bear interest at the rate of 7% per annum
from October 15, 1996, or from the most recent Interest
Payment Date to which interest has been paid or duly
provided for;
(4) The Interest Payment Dates with respect to the Notes shall
be April 15 and October 15 in each year, commencing April
15, 1997, and the Regular Record Dates for interest
payable on any such Interest Payment Date shall be April 1
or October 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date;
(5) Principal of and interest on the Notes shall be payable,
and the Notes will be exchangeable and transfers thereof
will be registrable, at the Corporate Trust Office of the
Trustee in Boston, Massachusetts, or at any other office
or agency of the Company designated as a Place of Payment;
provided, however, that, at the option of the Company, in
the event the Notes do not remain in book-entry form,
payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address
shall appear in the Security Register;
<PAGE> 2
-2-
(6) The Notes shall not be redeemable prior to maturity and
shall not be subject to a sinking fund;
(7) The Notes shall be subject to defeasance and discharge and
to defeasance of certain obligations as described in the
Indenture;
(8) The Notes will be originally issued in the form of one or
more fully registered Book-Entry Notes, which will be
deposited with, or on behalf of, The Depository Trust
Company, the Depositary for the Notes, and registered in
the name of the Depositary's nominee;
(9) None of the Company, the Trustee, any Paying Agent or the
Security Registrar will have any responsibility or
liability for any aspect of the Depositary's or any
participant's records relating to, or payments made on
account of, beneficial interests in the Book-Entry Notes,
or for maintaining, supervising or reviewing any records
relating to such beneficial
interests; and
FURTHER RESOLVED, that the Notes shall be issuable in
denominations of $1,000 and integral multiples thereof; and
FURTHER RESOLVED, that the form of the Notes set forth in
Exhibit A to these resolutions be, and hereby is, approved; and
FURTHER RESOLVED, that Chase Securities Inc., BA Securities,
Inc., Lehman Brothers Inc., and Morgan Stanley & Co. Incorporated are
selected as the several underwriters (the "Underwriters") to which the
Notes will be sold; that the purchase price to be paid to the Company
by the Underwriters shall be 98.6% of the principal amount of the
Notes; and that the initial public offering price shall be 99.25% of
the principal amount of the Notes; and
FURTHER RESOLVED, that the proposed Terms Agreement and the
proposed Underwriting Agreement attached thereto and made a part
thereof between the Company and the Underwriters be, and such
agreements hereby are, approved in the form presented to this Pricing
Committee.
<PAGE> 3
FACE OF SECURITY
CUSIP No. 697926 AC 7
THIS SECURITY IS A BOOK-ENTRY SECURITY 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 SECURITY IS EXCHANGEABLE FOR SECURITIES
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 SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY 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 SUCH LIMITED CIRCUMSTANCES.
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Company
or its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
PANENERGY CORP
7% Notes Due 2006
No. 1 $150,000,000
PanEnergy Corp, a corporation duly organized and existing under the
laws of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture referred to on the reverse hereof), for
value received, hereby promises to pay to Cede & Co., or registered assigns,
the principal sum of One Hundred Fifty Million Dollars ($150,000,000) on
October 15, 2006 and to pay interest thereon from October 15, 1996 or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, semi-annually in
<PAGE> 4
arrears on April 15 and October 15 in each year, commencing April 15, 1997, at
the rate of 7% per annum, until the principal hereof is paid or made available
for payment. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the April 1 or October 1 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Except as otherwise provided in the Indenture, any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Securities of this series not less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.
Payment of the principal of and interest on this Security will be made at the
Corporate Trust Office of the Trustee, or such other office or agency of the
Company as may be designated by it for such purpose in funds available on the
due date of such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof, directly or through an
Authenticating Agent, by manual signature of an authorized signatory, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
-2-
<PAGE> 5
IN WITNESS WHEREOF, the Company has caused this instrument to be
signed in its name by its Chairman of the Board, President or a Vice President,
manually or by a facsimile of his signature, and its corporate seal (or a
facsimile thereof) to be hereunto affixed and the same to be attested by its
Secretary or an Assistant Secretary, all either manually or in facsimile.
Dated: October 15, 1996
PANENERGY CORP
By
--------------------------------
Vice President, Controller
and Treasurer
[Seal]
Attest:
___________________________
Secretary
-3-
<PAGE> 6
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By
--------------------------------
Authorized Officer
-4-
<PAGE> 7
REVERSE OF SECURITY
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under an Indenture, dated as of November 1, 1994 (herein called the
"Indenture"), between Panhandle Eastern Corporation, now the Company, and The
First National Bank of Boston, as Trustee succeeded by State Street Bank and
Trust Company (herein called the "Trustee", which term includes any other
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is a
Book-Entry Security representing the entire principal amount of the series
designated on the face hereof, limited in aggregate principal amount to
$150,000,000.
The Securities of this series are not subject to redemption prior to
maturity and shall not be subject to a sinking fund requirement.
The Indenture contains provisions for defeasance of (a) the entire
indebtedness of this Security and (b) certain restrictive covenants upon
compliance by the Company with certain conditions set forth therein.
If an Event of Default with respect to the Securities of this series
shall occur and be continuing, the principal hereof may be declared due and
payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in principal amount of the Securities
at the time Outstanding of each series to be affected. The Indenture also
contains provisions permitting the
-5-
<PAGE> 8
Holders of specified percentages in principal amount of the Securities of each
series at the time Outstanding, on behalf of the Holders of all Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and
of any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
As set forth in, and subject to, the provisions of the Indenture, no
Holder of any Security of this series will have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default with respect to this series, the Holders of not
less than 25% in principal amount of the Outstanding Securities of this series
shall have made written request, and offered reasonable indemnity, to the
Trustee to institute such proceeding as trustee, and the Trustee shall not have
received from the Holders of a majority in principal amount of the Outstanding
Securities of this series a direction inconsistent with such request and shall
have failed to institute such proceeding within 60 days; provided, however,
that such limitations do not apply to a suit instituted by the Holder hereof
for the enforcement of payment of the principal of or interest on this Security
on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed.
This Security shall be exchangeable for Securities of this series
registered in the names of Persons other than the Depository with respect to
such series or its nominee only as provided in this paragraph. This Security
shall be so
-6-
<PAGE> 9
exchangeable if (x) such Depository notifies the Company that it is unwilling
or unable to continue as Depository for this Security or if at any time such
Depository ceases to be a clearing agency registered as such under the
Securities Exchange Act of 1934, (y) the Company executes and delivers to the
Trustee a written order providing that this Security shall be so exchangeable
or (z) there shall have occurred and be continuing an Event of Default with
respect to the Securities of this series. Securities so issued in exchange for
this Security shall be of the same series and of like tenor, in authorized
denominations and in the aggregate having the same unpaid principal amount of
this Security and registered in such names as such Depository shall direct.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
No service charge shall be made for any such exchange or registration
of transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security is overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
-7-
<PAGE> 10
The Indenture and this Security shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used in this Security which are defined in the Indenture
shall have the same meanings assigned to them in the Indenture.
-8-
<PAGE> 1
[SULLIVAN & CROMWELL LETTERHEAD]
October 9, 1996
PanEnergy Corp,
5400 Westheimer Court,
Houston, TX 77056.
Dear Sirs:
In connection with the registration under the Securities Act of 1933
(the "Act") of $150,000,000 principal amount of 7% Notes Due 2006 (the
"Securities") of PanEnergy Corp, a Delaware corporation (the "Company"), we, as
your special counsel, have examined such corporate records, certificates and
other documents, and such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion.
Upon the basis of such examination, we advise you that, in our opinion,
when the Securities have been duly executed and authenticated in accordance
with the Indenture relating to the Securities and issued and sold as
contemplated in the Registration Statement, the Securities will constitute
valid and legally binding obligations of the
<PAGE> 2
PanEnergy Corp -2-
Company, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
The foregoing opinion is limited to the Federal laws of the United
States, the laws of the State of New York and the General Corporation Law of
the State of Delaware, and we are expressing no opinion as to the effect of the
laws of any other jurisdiction.
We have relied as to certain matters on information obtained from
public officials, officers of the Company and other sources believed by us to
be responsible, and we have assumed that the Indenture has been duly
authorized, executed and delivered by the initial Trustee thereunder, an
assumption which we have not independently verified.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Validity
of Securities" in the Prospectus. In giving such consent, we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act.
Very truly yours,
/s/ SULLIVAN & CROMWELL
