AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 9, 2002
REGISTRATION NO. 333-96621
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------------
EL PASO CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 4922 76-0568816
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
------------------------------------
EL PASO CORPORATION PEGGY A. HEEG, ESQ.
EL PASO BUILDING EL PASO CORPORATION
1001 LOUISIANA STREET EL PASO BUILDING
HOUSTON, TEXAS 77002 1001 LOUISIANA STREET
(713) 420-2600 HOUSTON, TEXAS 77002
(Address, including zip code, and telephone (713) 420-2600
number, including area code, of registrant's (Name, address, including zip code, and telephone
principal executive officer) number, including area code, of agent for service)
------------------------------------
COPIES TO:
DAVID F. TAYLOR KELLY J. JAMESON, ESQ.
LOCKE LIDDELL & SAPP LLP EL PASO CORPORATION
3400 JPMORGAN CHASE TOWER EL PASO BUILDING
600 TRAVIS STREET 1001 LOUISIANA STREET
HOUSTON, TEXAS 77002 HOUSTON, TEXAS 77002
(713) 226-1200 (713) 420-2600
------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this registration statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective Amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------------------
CALCULATION OF REGISTRATION FEE
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
------------------------------------------------------------------------------------------------------------------------
7 7/8% Notes due June 15, 2012...... $500,000,000 100% $500,000,000 $46,000(1)
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
(1) Calculated in accordance with Rule 457(f)(2). For purposes of this
calculation, the Offering Price per Note was assumed to be the stated
principal amount of each original note that may be received by the
Registrant in the exchange transaction in which the Notes will be offered.
------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES, AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER 9, 2002
PROSPECTUS
EL PASO CORPORATION
OFFER TO EXCHANGE
REGISTERED 7 7/8% NOTES DUE JUNE 15, 2012
FOR
ALL OUTSTANDING 7 7/8% NOTES DUE JUNE 15, 2012
($500,000,000 IN PRINCIPAL AMOUNT OUTSTANDING)
We are offering to exchange all of our outstanding 7 7/8% Notes due June
15, 2012 for our registered 7 7/8% Notes due June 15, 2012. In this prospectus,
we will call the original notes the "Old Notes" and the registered notes the
"New Notes." The Old Notes and New Notes are collectively referred to in this
prospectus as the "notes."
THE EXCHANGE OFFER
- Expires 5:00 p.m., New York City time, , 2002, unless
extended.
- Subject to certain customary conditions, which we may waive, the exchange
offer is not conditioned upon a minimum aggregate principal amount of Old
Notes being tendered.
- All outstanding Old Notes validly tendered and not withdrawn will be
exchanged.
- The exchange offer is not subject to any condition other than that the
exchange offer not violate applicable law or any applicable
interpretation of the staff of the Securities and Exchange Commission.
THE NEW NOTES
- The terms of the New Notes to be issued in the exchange offer are
substantially identical to the Old Notes, except that we have registered
the New Notes with the Securities and Exchange Commission. In addition,
the New Notes will not be subject to certain transfer restrictions.
- Interest on the New Notes will accrue from June 10, 2002 at the rate of
7 7/8% per annum, payable semi-annually in arrears on each June 15 and
December 15, beginning December 15, 2002.
- The New Notes will not be listed on any securities exchange or the NASDAQ
Stock Market.
---------------------
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 9 OF THIS
PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The letter of transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of New Notes
received in exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. We have agreed that, for a period of 180 days after the Expiration
Date (as defined herein), we will make this prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
The date of this prospectus is , 2002.
---------------------
TABLE OF CONTENTS
PAGE
----
Prospectus Summary.......................................... 1
Risk Factors................................................ 9
Cautionary Statement Regarding Forward-Looking Statements... 11
Where You Can Find More Information......................... 12
Ratio of Earnings to Fixed Charges.......................... 14
Use of Proceeds............................................. 15
Capitalization.............................................. 15
The Exchange Offer.......................................... 16
Description of the Notes.................................... 24
United States Federal Income Tax Consequences............... 32
ERISA Considerations........................................ 35
Global Securities; Book-Entry System........................ 38
Exchange Offer and Registration Rights...................... 41
Plan of Distribution........................................ 43
Legal Matters............................................... 44
Experts..................................................... 44
------------------
UNTIL , ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNUSED
ALLOTMENTS OR SUBSCRIPTIONS.
This prospectus incorporates important business and financial information
about El Paso that is not included in or delivered with this prospectus. See
"Where You Can Find More Information" for more information about these matters.
i
PROSPECTUS SUMMARY
This summary highlights some basic information appearing in other sections
of this prospectus. It is not complete and does not contain all the information
that you should consider before exchanging Old Notes for New Notes. You should
carefully read this prospectus and the documents incorporated by reference to
understand fully the terms of the exchange offer and the New Notes, as well as
the tax and other considerations that may be important to you. You should pay
special attention to the "Risk Factors" section beginning on page 9 of this
prospectus, as well as the section entitled "Risk Factors and Cautionary
Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities
Litigation Reform Act of 1995" included in our Annual Report on Form 10-K for
the year ended December 31, 2001, and the other documents incorporated by
reference. You should rely only on the information contained in this document or
to which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document. For purposes of this prospectus, unless the
context otherwise indicates, when we refer to "El Paso," "us," "we," "our," or
"ours," we are describing El Paso Corporation, together with its subsidiaries.
OUR BUSINESS
We are an energy company originally founded in 1928 in El Paso, Texas. Our
principal operations include:
- natural gas transportation, gathering, processing and storage;
- natural gas and oil exploration, development and production;
- energy and energy-related commodities and product marketing;
- power generation;
- energy infrastructure facility development and operation;
- petroleum refining; and
- chemicals production.
Our operations are segregated into four primary business segments:
Pipelines, Production, Merchant Energy and Field Services. These segments are
strategic business units that provide a variety of energy products and services.
We manage each segment separately, and each segment requires different
technology and marketing strategies.
Our Pipelines segment owns or has interests in approximately 60,000 miles
of interstate natural gas pipelines in the U.S. and internationally. In the
U.S., our systems connect the nation's principal natural gas supply regions to
the five largest consuming regions in the U.S.: the Gulf Coast, California, the
Northeast, the Midwest and the Southeast. These pipelines represent one of the
largest integrated coast-to-coast mainline natural gas transmission systems in
the U.S. Our U.S. pipeline systems also own or have interests in over 430
billion cubic feet (Bcf) of storage capacity used to provide a variety of
services to our customers and own and operate a liquefied natural gas (LNG)
terminal at Elba Island, Georgia that was reactivated in 2001. Our international
pipeline operations include access between our U.S. based systems and Canada and
Mexico as well as interests in three major operating natural gas transmission
systems in Australia.
Our Production segment leases approximately 5 million net acres in 19
states, including Colorado, Louisiana, Oklahoma, Texas, Utah, West Virginia and
Wyoming, and in the Gulf of Mexico. We also have exploration and production
rights in Australia, Bolivia, Brazil, Canada, Hungary, Indonesia and Turkey.
During 2001, daily equivalent natural gas production exceeded 1.7 billion cubic
feet of gas equivalents per day (Bcfe/d), and our reserves at December 31, 2001,
were approximately 6.7 trillion cubic feet of gas equivalents (Tcfe).
1
Our Merchant Energy segment is involved in a broad range of energy-related
activities including asset ownership, customer origination, marketing and
trading and financial services. We buy, sell and trade natural gas, power, crude
oil, refined products and other energy commodities in the U.S. and
internationally. We are also a significant owner of electric generating capacity
and own or have interests in 95 facilities in 20 countries. The three refineries
we operate have the capacity to process approximately 438 thousand barrels
(MBbls) of crude oil per day and produce a variety of petroleum products. We
also produce agricultural and industrial chemicals at five facilities in the
U.S. Our financial services businesses manage investments in the North American
energy industry. Most recently, Merchant Energy has announced its expansion into
the LNG business.
Our Field Services segment provides natural gas gathering, products
extraction, fractionation, dehydration, purification, compression and intrastate
transmission services. These services include gathering natural gas from more
than 15,000 natural gas wells with approximately 21,000 miles of natural gas
gathering and natural gas liquids pipelines, and approximately 30 natural gas
processing, treating and fractionation facilities located in some of the most
active production areas in the U.S., including the San Juan Basin, east and
south Texas, Louisiana, the Gulf of Mexico and the Rocky Mountains. We conduct
our intrastate transmission operations through interests in six intrastate
systems, which serve a majority of the metropolitan areas and industrial load
centers in Texas as well as markets in Louisiana. Our primary vehicle for growth
and development of midstream energy assets is El Paso Energy Partners, L.P., a
publicly traded master limited partnership of which our subsidiary serves as the
general partner. El Paso Energy Partners provides natural gas, natural gas
liquids and oil gathering and transportation, storage and other related
services.
Our principal executive offices are located in the El Paso Building,
located at 1001 Louisiana Street, Houston, Texas 77002, and our telephone number
at that address is (713) 420-2600.
RECENT DEVELOPMENTS
Since November of 2001, the wholesale energy industry has experienced
significant changes, including:
- The bankruptcy of Enron Corp.;
- The tightening of credit and the capital markets;
- Recent investigations of trading strategies used by several wholesale
market participants; and
- The focus by ratings agencies on a more conservative balance between the
business risk and the financial profile of wholesale energy market
participants.
In response to these industry changes, we announced in December 2001 a plan
to strengthen our capital structure and enhance our liquidity. More recently, in
May 2002, we announced a strategic repositioning plan to limit our investment in
and exposure to energy trading and to increase our investment in core natural
gas businesses. The key elements of our strategic repositioning plan include the
following:
- Restructuring our Merchant Energy segment, including:
- Downsizing our trading and risk management activities;
- Reducing our trading personnel and achieving $150 million of annualized
cost savings;
- Limiting our working capital investment in our trading activities to
$1.0 billion; and
- Realigning the activities in Merchant Energy under three areas: Power,
Petroleum and LNG and Energy Trading.
2
- Further enhancing our credit beyond the plan announced in December 2001
by:
- Issuing $1.5 billion of equity securities;
- Selling a series of midstream assets to El Paso Energy Partners for an
estimated $782 million;
- Reducing our company-wide annual operating expenses by at least $300
million (inclusive of the savings in Merchant Energy);
- Decreasing our net debt to total capitalization to approximately 49%,
including almost $2.0 billion of guarantees related to unconsolidated
debt in the Electron and Gemstone investments; and
- Reducing our non-cash earnings to approximately 5% of 2003 net income.
- Increasing our investment in core natural gas assets by:
- Increasing capital spending in our Production segment to $2.3 billion;
- Pursuing an LNG strategy; and
- Continuing an active infrastructure investment program.
In June 2002, we issued approximately 51.8 million shares of our common
stock at a public offering price of $19.95 per share and 11.5 million of our 9%
equity security units at a public offering price of $50 per unit. Net proceeds
from the offerings totaled approximately $1.6 billion and have been used to
repay short-term borrowings and other financing obligations and for general
corporate purposes.
Also in June 2002, our Board of Directors authorized the sale of our coal
mining operations. These operations consist of fifteen active underground and
two surface mines located in Kentucky, Virginia and West Virginia. We expect to
complete the sale of these operations before the end of 2002.
We have prepared a pro forma presentation of the impact on our historical
financial statements of our announced sale of the San Juan gathering and
processing businesses, Typhoon Gas Pipeline, Typhoon Oil Pipeline and the
Coastal Liquids Partners' NGL business to El Paso Energy Partners, as well as
our sale of Texas and New Mexico midstream assets to El Paso Energy Partners
completed in April 2002. This presentation has been included in a Form 8-K filed
with the SEC on October 9, 2002, and is incorporated by reference into this
prospectus.
Our strategy has been, and continues to be, the ownership and control of a
flexible portfolio of assets across the natural gas value chain. We will also
continue to use this flexible portfolio to reallocate capital to those business
segments which offer the best available returns. The ability to respond
comprehensively and expeditiously to changing market conditions demonstrates the
power of our vertically integrated natural gas franchise, the breadth of our
assets and the scope of our portfolio of investment opportunities. We believe
the successful implementation of our strategic repositioning plan will better
enable us to participate in the significant growth opportunities available in
our industry under existing market conditions.
On September 23, 2002, a Federal Energy Regulatory Commission (FERC)
Administrative Law Judge issued a recommended decision in which he concluded
that our wholly-owned subsidiary, El Paso Natural Gas Company (EPNG), withheld
pipeline capacity from the California market during the period from November 1,
2000 to March 31, 2001. We believe that the recommended decision is contrary to
the facts and the law, and we will challenge the decision before the FERC and,
if necessary, the United States Court of Appeals. A more detailed outline of our
opinion of the errors in the decision is included in a Form 8-K filed with the
SEC on September 25, 2002. It has been reported that the Chairman of the FERC
has stated that he is hopeful that the FERC will act on this case by the end of
the 2002. On October 4, 2002, EPNG filed a motion with the FERC requesting oral
argument before the full FERC after all briefs on exceptions and opposing
exceptions have been filed and urging the FERC to issue its decision by the end
of the year.
On October 2, 2002, Moody's Investors Service reduced our senior unsecured
debt rating to Baa3, Moody's lowest investment grade rating, and stated that it
may further reduce our ratings in light of the current downturn in the merchant
energy sector.
3
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
The Exchange Offer............ We are offering to exchange up to $500,000,000
of the New Notes for up to $500,000,000 of the
Old Notes. Old Notes may be exchanged only in
$1,000 increments.
The terms of the New Notes are identical in all
material respects to the Old Notes except that
the New Notes will not contain terms with
respect to transfer restrictions, registration
rights and payments of additional interest that
relate to the Old Notes. The New Notes and the
Old Notes will be governed by the same
indenture.
Registration Rights
Agreement..................... We sold the Old Notes on June 10, 2002 to
Credit Suisse First Boston Corporation, the
initial purchaser, under a purchase agreement
dated June 4, 2002. Pursuant to the purchase
agreement, we and Credit Suisse First Boston
Corporation entered into a registration rights
agreement that granted the holders of the Old
Notes certain exchange and registration rights.
Specifically, we agreed to file, on or prior to
90 days after the closing of the offering of
the Old Notes, this exchange offer registration
statement with respect to a registered offer to
exchange the Old Notes for the New Notes. We
also agreed to use our commercial reasonable
efforts to have this exchange offer
registration statement declared effective by
the SEC within 220 days after the closing of
the offering of the Old Notes and to consummate
the exchange offer within 30 business days
thereafter. If we fail to fulfill our
obligations under the registration rights
agreement, additional interest will accrue on
the Old Notes at an annual rate of 0.25% for
the first 90 days and will increase by an
additional 0.25% for each subsequent 90-day
period up to a maximum additional annual rate
of 0.75%. See "Exchange Offer and Registration
Rights."
Resale........................ We believe that you will be able to freely
transfer the New Notes without registration or
any prospectus delivery requirement; however,
certain broker-dealers and certain of our
affiliates may be required to deliver copies of
this prospectus if they resell any New Notes.
Expiration Date............... 5:00 p.m., New York City time, on ,
2002, unless the exchange offer is extended.
You may withdraw Old Notes you tender pursuant
to the exchange offer at any time prior to
, 2002. See "The Exchange
Offer -- Expiration Date; Extensions;
Termination; Amendments."
Conditions to the Exchange
Offer......................... The exchange offer is not subject to any
conditions other than that it does not violate
applicable law or any applicable interpretation
of the staff of the SEC.
Procedures for Tendering Old
Notes......................... If you wish to accept the exchange offer, sign
and date the letter of transmittal that was
delivered with this prospectus in accordance
with the instructions, and deliver the letter
of transmittal, along with the Old Notes and
any other required documentation, to the
exchange agent. Alternatively, you can tender
your outstanding Old Notes by following the
procedures
4
for book-entry transfer, as described in this
prospectus. By executing the letter of
transmittal or by transmitting an agent's
message in lieu thereof, you will represent to
us that, among other things:
- the New Notes you receive will be acquired in
the ordinary course of your business,
- you are not participating, and you have no
arrangement with any person to participate,
in the distribution of the New Notes, and
- you are not our "affiliate," as defined in
Rule 405 under the Securities Act, or a
broker-dealer tendering Old Notes acquired
directly from us for resale pursuant to Rule
144A or any other available exemption under
the Securities Act; and
- if you are not a broker-dealer, that you are
not engaged in and do not intend to engage in
the distribution of the New Notes.
Effect of Not Tendering....... Old Notes that are not tendered or that are
tendered but not accepted will, following the
completion of the exchange offer, continue to
be subject to the existing restrictions upon
transfer thereof.
Special Procedures for
Beneficial Owners............. If you are a beneficial owner whose Old Notes
are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and wish to tender such Old Notes in the
exchange offer, please contact the registered
holder as soon as possible and instruct them to
tender on your behalf and comply with our
instructions set forth elsewhere in this
prospectus.
Guaranteed Delivery
Procedures.................... If you wish to tender your Old Notes, you may,
in certain instances, do so according to the
guaranteed delivery procedures set forth
elsewhere in this prospectus under "The
Exchange Offer -- Procedure for Tendering Old
Notes -- Guaranteed Delivery."
Withdrawal Rights............. You may withdraw Old Notes that you tender
pursuant to the exchange offer by furnishing a
written or facsimile transmission notice of
withdrawal to the exchange agent containing the
information set forth in "The Exchange
Offer -- Withdrawal of Tenders" at any time
prior to the expiration date.
Acceptance of Old Notes and
Delivery of New Notes......... We will accept for exchange any and all Old
Notes that are properly tendered in the
exchange offer prior to the expiration date.
See "The Exchange Offer -- Procedures for
Tendering Old Notes." The New Notes issued
pursuant to the exchange offer will be
delivered promptly following the expiration
date.
Broker-Dealers................ Each broker-dealer that receives New Notes for
its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a
prospectus in connection with any resale of
such New Notes. The letter of transmittal
states that by so acknowledging and by
delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an
"underwriter" within
5
the meaning of the Securities Act. This
prospectus, as it may be amended or
supplemented from time to time, may be used by
a broker-dealer in connection with resales of
New Notes received in exchange for Old Notes
where such Old Notes were acquired by such
broker-dealer as a result of market-making
activities or other trading activities. We have
agreed that, for a period of 180 days after the
Expiration Date (as defined herein), we will
make this prospectus available to any
broker-dealer for use in connection with any
such resale. See "Plan of Distribution."
6
SUMMARY OF TERMS OF NEW NOTES
Issuer........................ El Paso Corporation
New Notes..................... $500,000,000 aggregate principal amount of
7 7/8% Notes due June 15, 2012.
Maturity Date................. June 15, 2012.
Interest Rate................. 7 7/8% per annum, accruing from June 10, 2002.
Interest Payment Dates........ June 15 and December 15 of each year, beginning
December 15, 2002.
Optional Redemption........... We may redeem some or all of the New Notes, at
any time or from time to time, at the
redemption price described in the section
entitled "Description of the Notes -- Optional
Redemption of Notes."
Ranking....................... As of June 30, 2002, we had total long-term
capital market debt, bank debt and other
financing obligations (excluding the Old Notes)
of approximately $17.1 billion, including
approximately $9.3 billion of debt of our
subsidiaries. We also have guarantees of
approximately $3.9 billion and preferred
securities and minority interest financings of
approximately $4.2 billion. The New Notes are
structurally subordinated to approximately
$13.3 billion, and rank equally with
approximately $11.6 billion, of our debt,
guarantees and preferred securities and
minority interest financings.
Certain Covenants............. The indenture governing the New Notes contains
covenants, including covenants limiting (i) the
creation of liens securing indebtedness, and
(ii) sale-leaseback transactions.
Use of Proceeds............... We will not receive any proceeds from the
exchange of the New Notes for the outstanding
Old Notes.
Risk Factors.................. You should read the "Risk Factors" section
beginning on page 9, as well as the other
cautionary statements throughout this
prospectus, to ensure you understand the risks
involved with the exchange of the New Notes for
the outstanding Old Notes.
7
SUMMARY FINANCIAL INFORMATION
The following summary financial information should be read in conjunction
with our consolidated financial statements and related notes thereto, which are
incorporated herein by reference. The operating results data for each of the
years in the five-year period ended December 31, 2001, and the financial
position data as of the end of each fiscal year during such period include
reclassifications to conform to the presentation in our June 30, 2002 Form 10-Q.
The audited consolidated financial statements in our December 31, 2001 Form 10-K
are incorporated by reference in this prospectus. The summary financial
information for the six months ended June 30, 2002 and 2001, is derived from our
unaudited consolidated financial statements for the respective periods included
in our June 30, 2002 Form 10-Q which is incorporated by reference in this
prospectus. This historical information is not necessarily indicative of the
results to be expected in the future and does not give effect to our announced
strategic repositioning plan described under "Prospectus Summary -- Recent
Developments" beginning on page 2.
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
----------------------------------------------- -----------------
2001 2000 1999 1998 1997 2002 2001
------- ------- ------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER COMMON SHARE AMOUNTS)
Operating Results Data:(1)(2)
Operating revenues(3)............... $13,699 $13,071 $ 9,902 $ 9,627 $12,856 $ 6,742 $ 7,724
Restructuring and merger-related
costs and asset impairments(4).... 1,841 117 557 15 50 405 1,760
Ceiling test charge(5).............. 135 -- 352 1,035 -- 267 --
Income (loss) from continuing
operations before preferred stock
dividends......................... 72 1,246 251 176 796 256 (522)
Income (loss) from continuing
operations available to common
stockholders...................... 72 1,246 251 170 779 256 (522)
Basic earnings (loss) per common
share from continuing
operations........................ $ 0.14 $ 2.52 $ 0.51 $ 0.35 $ 1.58 $ 0.48 $ (1.04)
Diluted earnings (loss) per common
share from continuing
operations........................ $ 0.14 $ 2.45 $ 0.51 $ 0.34 $ 1.57 $ 0.48 $ (1.04)
Cash dividends declared per common
share............................. $ 0.85 $ 0.82 $ 0.80 $ 0.76 $ 0.73 $ 0.44 $ 0.43
Basic average common shares
outstanding....................... 505 494 490 487 492 529 504
Diluted average common shares
outstanding....................... 516 513 497 495 497 531 504
AS OF DECEMBER 31, AS OF JUNE 30,
----------------------------------------------- -----------------
2001 2000 1999 1998 1997 2002 2001
------- ------- ------- ------- ------- ------- -------
(IN MILLIONS)
Financial Position Data:(2)
Total assets(3)..................... $48,171 $46,320 $32,090 $26,759 $26,424 $50,003 $45,968
Long-term debt and other financing
obligations....................... 12,816 11,603 10,021 7,691 7,067 16,375 12,601
Non-current notes payable to
unconsolidated affiliates......... 368 343 -- -- -- 200 418
Company-obligated preferred
securities of consolidated
trusts............................ 925 925 625 625 -- 925 925
Preferred stock of consolidated
subsidiaries...................... 3,088 2,782 1,819 374 380 3,229 2,793
Stockholders' equity................ 9,356 8,119 6,884 6,913 7,203 10,018 7,820
---------------
(1) Our coal mining operations are classified as discontinued operations in all
periods presented above.
(2) Our operating results and financial position data reflect the acquisitions
of PG&E's Texas Midstream operations in December 2000 and DeepTech
International (the company that owns the general partner of El Paso Energy
Partners, L.P.) in August 1998. These acquisitions were accounted for as
purchases, and therefore operating results are included in our results
prospectively from the purchase date.
(3) In June 2002, we elected to adopt the Emerging Issues Task Force (EITF)
Issue No. 02-3 and reported all physical sales of energy commodities in our
trading operations on a net basis as a component of revenues. We applied
this guidance to all prior periods, which had no impact on previously
reported net income or stockholders' equity. Our operating revenues and
total assets reflect the significant growth in our Merchant Energy
operations during 2001 and 2000 as well as the consolidation of the U.S.
operations of Coastal Merchant Energy in September 2000.
(4) Our 2002 costs relate primarily to our writedown of investments in Argentina
and organizational restructuring costs, our 2001 costs relate primarily to
our merger with The Coastal Corporation, and our 1999 costs relate primarily
to our merger with Sonat, Inc.
(5) Ceiling test charges are reductions in earnings that result when capitalized
costs of natural gas and oil properties exceed the upper limit, or ceiling,
on the value of these properties.
8
RISK FACTORS
Before you decide to participate in the exchange offer, you should read the
risks, uncertainties and factors that may adversely affect us that are discussed
under the captions "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Risk Factors and Cautionary Statement For
Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation
Reform Act of 1995" in our Annual Report on Form 10-K for the year ended
December 31, 2001, which is incorporated by reference in this prospectus, as
well as the following additional risk factors.
WE ARE A HOLDING COMPANY THAT DEPENDS ON CASH FLOW FROM OUR SUBSIDIARIES TO MEET
OUR DEBT SERVICE OBLIGATIONS.
As a holding company, we conduct all of our operations exclusively through
our subsidiaries and our only significant assets are our investment in these
subsidiaries. This means that we are dependent on dividends or other
distributions of funds from our subsidiaries to meet our debt service and other
obligations, including the payment of principal and interest on the New Notes.
Our subsidiaries are separate and distinct legal entities and have no obligation
to pay any amounts due on these New Notes or to provide us with funds for our
payment obligations, whether by dividends, distributions, loans or other
payments. In addition, any payment of dividends, distributions, loans or
advances by our subsidiaries to us could be subject to statutory or contractual
restrictions. Payments to us by our subsidiaries will also be contingent upon
our subsidiaries' earnings and business considerations. Furthermore, our right
to receive cash or other assets of one of our subsidiaries upon the liquidation
or reorganization of that subsidiary (and thus the ability of the holders of the
New Notes to benefit indirectly from these assets) is generally subject to the
prior claims of creditors, including trade creditors, of that subsidiary. Even
if we are recognized as a creditor of that subsidiary, our claims would still be
subject to any security interest of that subsidiary's other creditors.
Therefore, the New Notes will be structurally subordinated to creditors,
including trade creditors, of our subsidiaries. This may impact your ability to
be repaid.
The indenture governing the New Notes permits us to incur additional
secured indebtedness and permits our subsidiaries to incur additional secured
and unsecured indebtedness, which would in effect be senior to the New Notes.
The indenture also permits certain of our subsidiaries to pledge assets in order
to secure our indebtedness and to agree with lenders under any secured
indebtedness to restrictions on repurchase of the New Notes and on the ability
of such subsidiaries to make distributions, loans, other payments or asset
transfers to us.
As of June 30, 2002, we had total long-term capital market debt, bank debt
and other financing obligations (excluding the Old Notes) of approximately $17.1
billion, including approximately $9.3 billion of subsidiary debt. We also have
guarantees of approximately $3.9 billion and preferred securities and minority
interest financings of approximately $4.2 billion. The New Notes are
structurally subordinated to approximately $13.3 billion, and rank equally with
approximately $11.6 billion, of our debt, guarantees and preferred securities
and minority interest financings.
WE MAY HAVE DIFFICULTY ACCESSING CAPITAL ON ATTRACTIVE TERMS OR AT ALL.
In response to the occurrence of several recent events, including the
September 11, 2001 terrorist attack on the United States, the ongoing war
against terrorism by the United States, and the bankruptcy of Enron Corp., one
of our major competitors, the financial markets have been disrupted in general,
and the availability and cost of capital for our business and that of our
competitors has been adversely affected. In addition, the bankruptcy of Enron
and other issues affecting the energy industry have caused the credit ratings
agencies to review the capital structure and earnings power of energy companies,
including ours. Our credit ratings are important to us. In December 2001, we
announced our balance sheet enhancement plan to strengthen our capital structure
and enhance our liquidity. In May 2002, we announced our strategic repositioning
plan to limit our investment in and exposure to energy trading and to increase
our investment in our core natural gas businesses. These plans were specifically
designed to maintain or even improve our credit ratings. On October 2, 2002,
Moody's Investors Service reduced our senior unsecured
9
debt rating to Baa3, Moody's lowest investment grade rating, and stated that it
may further reduce our ratings in light of the downturn in the merchant energy
sector. We will continue to implement the various elements of our balance sheet
enhancement plan and strategic repositioning plan and will continue to pursue
additional asset sales to further strengthen our financial position. If our
credit ratings are further downgraded, we could be required to post additional
margin or provide additional collateral to operate our businesses. Our business
is capital intensive, and achievement of our growth targets is dependent, at
least in part, upon our ability to access capital at rates and on terms we
determine to be attractive. If our ability to access capital becomes
significantly constrained, our financial condition and future results of
operations could be significantly adversely affected.
IF WE BREACH ANY OF THE MATERIAL FINANCIAL COVENANTS UNDER OUR VARIOUS
INDENTURES, CREDIT FACILITIES OR GUARANTEES, OUR DEBT SERVICE OBLIGATIONS COULD
BE ACCELERATED.
If we or any of our consolidated subsidiaries breach any of the material
financial covenants under our various indentures, credit facilities or
guarantees, our substantial debt service obligations could be accelerated.
Furthermore, any breach of any of the material financial covenants under our
subsidiaries' indentures or credit facilities could result in the acceleration
of the indebtedness of all of our subsidiaries. In the event of any such
simultaneous acceleration, we would not be able to repay all of the
indebtedness.
THE RESTRICTIONS CONTAINED IN OUR VARIOUS INDENTURES DO NOT LIMIT OUR ABILITY TO
ISSUE ADDITIONAL INDEBTEDNESS.
We could enter into acquisitions, recapitalizations or other transactions
that could increase our outstanding indebtedness. The restrictions contained in
our various indentures do not limit our ability to incur such additional
indebtedness. However, our revolving credit facility requires that our
consolidated debt and guarantees to total capitalization ratio, as calculated
pursuant to the terms of the facility, not exceed 70%. Furthermore, the
incurrence of any additional indebtedness is inconsistent with our goals under
our balance sheet enhancement plan and strategic repositioning plan.
FAILURE OF OUR ENERGY TRADING COUNTERPARTIES TO FULFILL THEIR COMMITMENTS COULD
SIGNIFICANTLY ADVERSELY AFFECT OUR ENERGY MARKETING AND TRADING BUSINESS.
Since the bankruptcy of Enron Corp., the energy marketing and trading
industry has come under heightened scrutiny by regulatory and rating agencies,
resulting in a reduction in the credit available to companies in the industry.
Consequently, a number of industry participants could have liquidity constraints
on their trading activities, could reduce the size of their trading businesses
or could discontinue their trading operations altogether. If the counterparties
in our energy marketing and trading business continue to face liquidity
constraints, or are otherwise unable or unwilling to continue their trading
activities, the financial results and liquidity of our energy marketing and
trading business could be significantly adversely affected.
WE MAY NOT ACHIEVE ALL OF THE OBJECTIVES SET FORTH IN OUR STRATEGIC
REPOSITIONING PLAN IN A TIMELY MANNER OR AT ALL.
Our ability to achieve the stated objectives of our strategic repositioning
plan, as well as the timing of their achievement, if at all, is subject to
factors beyond our control, including our ability to raise cash from asset
sales, which may be impacted by our ability to locate potential buyers in a
timely fashion and obtain a reasonable price or by competing assets sales
programs by our competitors.
10
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
We have made statements in this document and the documents that are
incorporated by reference into this document that constitute forward-looking
statements, as that term is defined in the Private Securities Litigation Reform
Act of 1995. These statements are subject to risks and uncertainties.
Forward-looking statements include information concerning our possible or
assumed future results of operations. These statements may relate to, but are
not limited to, information or assumptions about earnings per share, capital and
other expenditures, dividends, financing plans, capital structure, cash flow,
pending legal and regulatory proceedings and claims, including environmental
matters, future economic performance, operating income, cost savings,
management's plans, goals and objectives for future operations and growth and
markets for our stock. These forward-looking statements generally are
accompanied by words such as "intend," "anticipate," "believe," "estimate,"
"expect," "should" or similar expressions. You should understand that these
forward-looking statements are estimates that reflect the best judgment of our
senior management and are not guarantees of future performance. They are subject
to a number of assumptions, risks and uncertainties that could cause actual
results to differ materially from those expressed or implied in the
forward-looking statements.
For a description of certain risks relating to us and our business, see
"Risk Factors" beginning on page 9 of this document and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Risk Factors
and Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995" in our 2001 Annual Report on
Form 10-K, which is incorporated herein by reference. In addition, we can give
you no assurance that:
- we have correctly identified and assessed all of the factors affecting
our businesses;
- the publicly available and other information with respect to these
factors on which we have based our analysis is complete or correct;
- our analysis is correct; or
- our strategies, which are based in part on this analysis, will be
successful.
Accordingly, you should not place undue reliance on forward-looking
statements, which speak only as of the date of this document, or, in the case of
documents incorporated by reference, the date of those documents.
All subsequent written and oral forward-looking statements attributable to
us or any person acting on our behalf are expressly qualified in their entirety
by the cautionary statements contained or referred to in this section and any
other cautionary statements that may accompany such forward-looking statements.
We do not undertake any obligation to release publicly any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this document or to reflect the occurrence of unanticipated events, unless the
securities laws require us to do so.
11
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement with the SEC under the Securities
Act of 1933 that registers the securities offered by this prospectus. The
registration statement, including the attached exhibits, contains additional
relevant information about us. The rules and regulations of the SEC allow us to
omit some information included in the registration statement from this
prospectus.
In addition, we file reports, proxy statements and other information with
the SEC under the Securities Exchange Act of 1934. You may read and copy this
information at the SEC's public reference room, Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549.
You may also obtain copies of this information by mail from the public
reference section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. The SEC also maintains an
Internet world wide web site that contains reports, proxy statements and other
information about issuers, including El Paso, who file electronically with the
SEC. The address of that site is http://www.sec.gov. You can also inspect
reports, proxy statements and other information about us at the offices of the
New York Stock Exchange, Inc., located at 20 Broad Street, New York, New York
10005 and the Pacific Exchange, located at 115 Sansome Street, San Francisco,
California 94104.
We "incorporate by reference" information into this prospectus, which means
that we disclose important information to you by referring you to another
document filed separately with the SEC. This important information is not
included in or delivered with this prospectus. The information incorporated by
reference is deemed to be part of this prospectus, except for any information
superseded by information contained directly in this prospectus. The documents
listed below and incorporated by reference into this prospectus contain
important information about El Paso and its financial condition. Some of these
filings have been amended by later filings, which are also listed.
- Annual Report on Form 10-K for the year ended December 31, 2001;
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002,
and June 30, 2002, and a Quarterly Report on Form 10-Q/A for the
quarter ended March 31, 2002;
- Current Reports on Form 8-K, dated January 4, 2002, January 11, 2002,
March 28, 2002, April 12, 2002, May 31, 2002, June 14, 2002, June 19,
2002, June 26, 2002, July 15, 2002, July 22, 2002, September 24, 2002,
September 25, 2002, September 30, 2002, and October 9, 2002 and a
Current Report on Form 8-K/A dated January 8, 2002;
- Definitive Proxy Statement relating to the 2002 Annual Meeting of
Stockholders.
We also disclose information about us through current reports on Form 8-K
that are furnished to the SEC to comply with Regulation FD. This information
disclosed in these reports is not considered to be "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, is not subject to the
liabilities of that section and is not incorporated by reference herein.
All documents filed by us with the SEC from the date of this prospectus to
the end of the offering of the notes under this prospectus shall also be deemed
to be incorporated herein by reference.
You can obtain any of the documents listed above or any additional
documents that we may file with the SEC, including Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy
statements, through us or from the SEC through the SEC's web site at the address
provided above. Documents incorporated by reference are available from us
without charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference as an
12
exhibit in this document. You can obtain documents incorporated by reference in
this prospectus by requesting them in writing or by telephone from us at the
following address:
El Paso Corporation
Office of Investor Relations
El Paso Building
1001 Louisiana Street
Houston, Texas 77002
Telephone No.: (713) 420-2600
TO OBTAIN TIMELY DELIVERY OF ANY REQUESTED DOCUMENTS, YOU MUST REQUEST THE
INFORMATION NO LATER THAN FIVE BUSINESS DAYS BEFORE YOU MAKE YOUR INVESTMENT
DECISION. PLEASE MAKE ANY SUCH REQUESTS ON OR BEFORE , 2002.
WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION THAT DIFFERS FROM, OR ADDS TO, THE INFORMATION IN THIS DOCUMENT
OR IN OUR DOCUMENTS THAT ARE PUBLICLY FILED WITH THE SEC. THEREFORE, IF ANYONE
DOES GIVE YOU DIFFERENT OR ADDITIONAL INFORMATION, YOU SHOULD NOT RELY ON IT.
IF YOU ARE IN A JURISDICTION WHERE IT IS UNLAWFUL TO OFFER TO EXCHANGE OR
SELL, OR TO ASK FOR OFFERS TO EXCHANGE OR BUY, THE SECURITIES OFFERED BY THIS
DOCUMENT, OR IF YOU ARE A PERSON TO WHOM IT IS UNLAWFUL TO DIRECT THESE
ACTIVITIES, THEN THE OFFER PRESENTED BY THIS DOCUMENT DOES NOT EXTEND TO YOU.
THE INFORMATION CONTAINED IN THIS DOCUMENT SPEAKS ONLY AS OF ITS DATE
UNLESS THE INFORMATION SPECIFICALLY INDICATES THAT ANOTHER DATE APPLIES.
13
RATIO OF EARNINGS TO FIXED CHARGES
The following table presents the ratio of earnings to fixed charges for El
Paso and its consolidated subsidiaries for the periods indicated:
SIX MONTHS
ENDED
YEAR ENDED JUNE 30,
------------------------------------ ------------
2001 2000 1999 1998 1997 2002 2001
---- ---- ---- ---- ---- ---- ----
Ratio of earnings to fixed
charges(1)(2)(3)......................... 1.0x 2.1x 1.2x 1.0x 2.4x 1.3x 0.0x
---------------
(1) Our ratio of earnings to fixed charges during the periods presented was
impacted by the following significant items:
- 2001 -- Merger with The Coastal Corporation and approximately $135
million of ceiling test charges;
- 1999 -- Merger with Sonat, Inc. and approximately $352 million of ceiling
test charges; and
- 1998 -- Approximately $1,035 million of ceiling test charges.
(2) In the second quarter of 2002, we reclassified our coal mining operations to
discontinued operations. This reclassification had an immaterial impact on
our historical ratios of earnings to fixed charges.
(3) Earnings were inadequate to cover fixed charges by $23 million and $10
million for the year ended December 31, 2001 and 1998 and by $755 million
for the six months ended June 30, 2001.
For the purposes of computing these ratios, earnings means pre-tax income (loss)
from continuing operations before:
- adjustment for minority interest in consolidated subsidiaries;
- income from equity investees, adjusted to reflect actual distributions
from equity investments; and
- fixed charges;
less:
- capitalized interest; and
- preferred returns on consolidated subsidiaries.
Fixed charges means the sum of the following:
- interest costs, not including interest on rate refunds;
- amortization of debt costs;
- that portion of rental expense which we believe represents an interest
factor; and
- preferred returns on consolidated subsidiaries.
14
USE OF PROCEEDS
We received net proceeds of $495 million from the issuance of the Old Notes
which we used to repay outstanding commercial paper and other short-term
indebtedness. We will not receive any cash proceeds from the issuance of the New
Notes. We will exchange outstanding Old Notes for New Notes in like principal
amount as contemplated in this prospectus. The terms of the New Notes are
identical in all material respects to the existing Old Notes except as otherwise
described herein under "Description of the Notes." The Old Notes surrendered in
exchange for the New Notes will be retired and canceled and cannot be reissued.
Accordingly, issuance of the New Notes will not result in a change in our total
debt and other financing obligations.
CAPITALIZATION
The following table sets forth our historical unaudited consolidated
capitalization as of June 30, 2002, and our capitalization as adjusted to
reflect the issuance of $500 million of Old Notes on June 10, 2002, and our
application of the net proceeds of $495 million to reduce our short-term
indebtedness. The exchange of the Old Notes for the New Notes will not impact
our overall capitalization. This table is unaudited and should be read in
conjunction with our consolidated financial statements and related notes
contained in our 2001 Annual Report on Form 10-K and our Quarterly Report on
Form 10-Q for the quarter ended June 30, 2002, each of which is incorporated
herein by reference.
AS OF JUNE 30, 2002
-----------------------
EL PASO AS
HISTORICAL ADJUSTED
---------- ----------
(IN MILLIONS)
(UNAUDITED)
Debt and other financing obligations:
Notes payable to unconsolidated affiliates................ $ 355 $ 355
Short-term borrowings and other financing obligations..... 1,545 1,050
------- -------
Total current debt and other financing obligations..... 1,900 1,405
Notes payable to unconsolidated affiliates................ 200 200
Long-term debt and other financing obligations............ 16,375 16,875
------- -------
Total debt and other financing obligations............. 18,475 18,480
------- -------
Securities of subsidiaries:
Company-obligated preferred securities of consolidated
trusts................................................. 925 925
Minority interests........................................ 3,229 3,229
------- -------
Total securities of subsidiaries....................... 4,154 4,154
------- -------
Stockholders' equity:
Common stock, par value $3 per share; 1,500,000,000 shares
authorized; 592,257,717 shares issued as of June 30,
2002................................................... 1,777 1,777
Additional paid-in capital................................ 3,973 3,973
Retained earnings......................................... 5,007 5,007
Treasury stock and other, net............................. (739) (739)
------- -------
Total stockholders' equity............................. 10,018 10,018
------- -------
Total capitalization................................... $32,647 $32,652
======= =======
The historical and as adjusted amounts presented in this table do not
include the issuance on July 2, 2002 by a consolidated subsidiary of
approximately $829 million principal amount of long-term debt, with net proceeds
of approximately $822 million. We used the net proceeds from this transaction to
pay related transaction fees, to repay short-term indebtedness, for payments to
minority interest shareholders and for general corporate purposes.
15
THE EXCHANGE OFFER
EXCHANGE TERMS
Old Notes in an aggregate principal amount of $500,000,000 are currently
issued and outstanding. The maximum aggregate principal amount of New Notes that
will be issued in exchange for Old Notes is $500,000,000. The terms of the New
Notes and the Old Notes are substantially the same in all material respects,
except that the New Notes will not contain terms with respect to transfer
restrictions, registration rights and payments of additional interest.
The New Notes will bear interest at a rate of 7.875% per year, payable
semi-annually on June 15 and December 15 of each year, beginning on December 15,
2002. Holders of New Notes will receive interest from the date of the original
issuance of the Old Notes or from the date of the last payment of interest on
the Old Notes, whichever is later. Holders of New Notes will not receive any
interest on Old Notes tendered and accepted for exchange. In order to exchange
your Old Notes for transferable New Notes in the exchange offer, you will be
required to make the following representations, which are included in the letter
of transmittal:
- any New Notes that you receive will be acquired in the ordinary course of
your business;
- you are not participating, and have no arrangement or understanding with
any person or entity to participate, in the distribution of the New
Notes;
- you are not our "affiliate," as defined in Rule 405 of the Securities
Act, or a broker-dealer tendering Old Notes acquired directly from us for
resale pursuant to Rule 144A or any other available exemption under the
Securities Act; and
- if you are not a broker-dealer, that you are not engaged in and do not
intend to engage in the distribution of the New Notes.
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept for exchange any Old Notes
properly tendered in the exchange offer, and the exchange agent will deliver the
New Notes promptly after the expiration date of the exchange offer.
If you tender your Old Notes, you will not be required to pay brokerage
commissions or fees or, subject to the instructions in the letter of
transmittal, transfer taxes with respect to the exchange of the Old Notes in
connection with the exchange offer. We will pay all charges, expenses and
transfer taxes in connection with the exchange offer, other than the taxes
described below under "-- Transfer Taxes."
WE MAKE NO RECOMMENDATION TO YOU AS TO WHETHER YOU SHOULD TENDER OR REFRAIN
FROM TENDERING ALL OR ANY PORTION OF YOUR EXISTING OLD NOTES INTO THIS EXCHANGE
OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE THIS RECOMMENDATION. YOU
MUST MAKE YOUR OWN DECISION WHETHER TO TENDER INTO THIS EXCHANGE OFFER AND, IF
SO, THE AGGREGATE AMOUNT OF OLD NOTES TO TENDER AFTER READING THIS PROSPECTUS
AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH YOUR ADVISORS, IF ANY, BASED
ON YOUR FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS
The exchange offer expires at 5:00 p.m., New York City time, on ,
2002, unless we extend the exchange offer, in which case the expiration date
will be the latest date and time to which we extend the exchange offer.
We expressly reserve the right, so long as applicable law allows:
- to delay our acceptance of Old Notes for exchange;
- to terminate the exchange offer if any of the conditions set forth under
"-- Conditions of the Exchange Offer" exist;
- to waive any condition to the exchange offer;
16
- to amend any of the terms of the exchange offer; and
- to extend the expiration date and retain all Old Notes tendered in the
exchange offer, subject to your right to withdraw your tendered Old Notes as
described under "-- Withdrawal of Tenders."
Any waiver or amendment to the exchange offer will apply to all Old Notes
tendered, regardless of when or in what order the Old Notes were tendered. If
the exchange offer is amended in a manner that we think constitutes a material
change, or if we waive a material condition of the exchange offer, we will
promptly disclose the amendment or waiver by means of a prospectus supplement
that will be distributed to the registered holders of the Old Notes, and we will
extend the exchange offer to the extent required by Rule 14e-1 under the
Exchange Act.
We will promptly follow any delay in acceptance, termination, extension or
amendment by oral or written notice of the event to the exchange agent, followed
promptly by oral or written notice to the registered holders. Should we choose
to delay, extend, amend or terminate the exchange offer, we will have no
obligation to publish, advertise or otherwise communicate this announcement,
other than by making a timely release to an appropriate news agency.
In the event we terminate the exchange offer, all Old Notes previously
tendered and not accepted for payment will be returned promptly to the tendering
holders.
In the event that the exchange offer is withdrawn or otherwise not
completed, New Notes will not be given to holders of Old Notes who have validly
tendered their Old Notes.
RESALE OF NEW NOTES
Based on interpretations of the SEC staff set forth in no action letters
issued to third parties, we believe that New Notes issued under the exchange
offer in exchange for Old Notes may be offered for resale, resold and otherwise
transferred by you without compliance with the registration and prospectus
delivery requirements of the Securities Act, if:
- you are acquiring New Notes in the ordinary course of your business;
- you are not participating, and have no arrangement or understanding with
any person to participate, in the distribution of the New Notes;
- you are not our "affiliate" within the meaning of Rule 405 under the
Securities Act;
- you are not a broker-dealer who purchased Old Notes directly from us for
resale pursuant to Rule 144A or any other available exemption under the
Securities Act; and
If you tender Old Notes in the exchange offer with the intention of
participating in any manner in a distribution of the New Notes:
- you cannot rely on those interpretations by the SEC staff, and
- you must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction and that such a secondary resale transaction must be covered
by an effective registration statement containing the selling security
holder information required by Item 507 or 508, as applicable, of
Regulation S-K.
Only broker-dealers that acquired the Old Notes as a result of
market-making activities or other trading activities may participate in the
exchange offer. Each broker-dealer that receives New Notes for its own account
in exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of the New Notes. Please read the section captioned "Plan of
Distribution" for more details regarding the transfer of New Notes.
17
ACCEPTANCE OF OLD NOTES FOR EXCHANGE
We will accept for exchange Old Notes validly tendered pursuant to the
exchange offer, or defectively tendered, if such defect has been waived by us.
We will not accept Old Notes for exchange subsequent to the expiration date of
the exchange offer. Tenders of Old Notes will be accepted only in denominations
of $1,000 and integral multiples thereof.
We expressly reserve the right, in our sole discretion, to:
- delay acceptance for exchange of Old Notes tendered under the exchange
offer, subject to Rule 14e-1 under the Exchange Act, which requires that
an offeror pay the consideration offered or return the securities
deposited by or on behalf of the holders promptly after the termination
or withdrawal of a tender offer, or
- terminate the exchange offer and not accept for exchange any Old Notes
not theretofore accepted for exchange, if any of the conditions set forth
below under "-- Conditions of the Exchange Offer" have not been satisfied
or waived by us or in order to comply in whole or in part with any
applicable law. In all cases, New Notes will be issued only after timely
receipt by the exchange agent of certificates representing Old Notes, or
confirmation of book-entry transfer, a properly completed and duly
executed letter of transmittal, or a manually signed facsimile thereof,
and any other required documents. For purposes of the exchange offer, we
will be deemed to have accepted for exchange validly tendered Old Notes,
or defectively tendered Old Notes with respect to which we have waived
such defect, if, as and when we give oral, confirmed in writing, or
written notice to the exchange agent. Promptly after the expiration date,
we will deposit the New Notes with the exchange agent, who will act as
agent for the tendering holders for the purpose of receiving the New
Notes and transmitting them to the holders. The exchange agent will
deliver the New Notes to holders of Old Notes accepted for exchange after
the exchange agent receives the New Notes.
If, for any reason, we delay acceptance for exchange of validly tendered
Old Notes or we are unable to accept for exchange validly tendered Old Notes,
then the exchange agent may, nevertheless, on our behalf, retain tendered Old
Notes, without prejudice to our rights described under "-- Expiration Date;
Extensions; Termination; Amendments", "-- Conditions of the Exchange Offer" and
"-- Withdrawal of Tenders", subject to Rule 14e-1 under the Exchange Act, which
requires that an offeror pay the consideration offered or return the securities
deposited by or on behalf of the holders thereof promptly after the termination
or withdrawal of a tender offer.
If any tendered Old Notes are not accepted for exchange for any reason, or
if certificates are submitted evidencing more Old Notes than those that are
tendered, certificates evidencing Old Notes that are not exchanged will be
returned, without expense, to the tendering holder, or, in the case of Old Notes
tendered by book-entry transfer into the exchange agent's account at a
book-entry transfer facility under the procedure set forth under "-- Procedures
for Tendering Old Notes -- Book-Entry Transfer", such Old Notes will be credited
to the account maintained at such book-entry transfer facility from which such
Old Notes were delivered, unless otherwise requested by such holder under
"Special Delivery Instructions" in the letter of transmittal, promptly following
the expiration date or the termination of the exchange offer.
Tendering holders of Old Notes exchanged in the exchange offer will not be
obligated to pay brokerage commissions or transfer taxes with respect to the
exchange of their Old Notes other than as described in "Transfer Taxes" or in
Instruction 7 to the letter of transmittal. We will pay all other charges and
expenses in connection with the exchange offer.
PROCEDURES FOR TENDERING OLD NOTES
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee or held through
a book-entry transfer facility and who wishes to tender Old Notes should contact
such registered holder promptly and instruct such registered holder to tender
Old Notes on such beneficial owner's behalf.
18
TENDER OF OLD NOTES HELD THROUGH DEPOSITORY TRUST COMPANY
The exchange agent and Depository Trust Company ("DTC") have confirmed that
the exchange offer is eligible for the DTC's automated tender offer program.
Accordingly, DTC participants may electronically transmit their acceptance of
the exchange offer by causing DTC to transfer Old Notes to the exchange agent in
accordance with DTC's automated tender offer program procedures for transfer.
DTC will then send an agent's message to the exchange agent.
The term "agent's message" means a message transmitted by DTC, received by
the exchange agent and forming part of the book-entry confirmation, which states
that DTC has received an express acknowledgment from the participant in DTC
tendering Old Notes that are the subject of that book-entry confirmation that
the participant has received and agrees to be bound by the terms of the letter
of transmittal, and that we may enforce such agreement against such participant.
In the case of an agent's message relating to guaranteed delivery, the term
means a message transmitted by DTC and received by the exchange agent which
states that DTC has received an express acknowledgment from the participant in
DTC tendering Old Notes that they have received and agree to be bound by the
notice of guaranteed delivery.
TENDER OF OLD NOTES HELD IN CERTIFICATED FORM
For a holder to validly tender Old Notes held in certificated form:
- the exchange agent must receive at its address set forth in this
prospectus a properly completed and validly executed letter of
transmittal, or a manually signed facsimile thereof, together with any
signature guarantees and any other documents required by the instructions
to the letter of transmittal, and
- the exchange agent must receive certificates for tendered Old Notes at
such address, or such Old Notes must be transferred pursuant to the
procedures for book-entry transfer described below. A confirmation of
such book-entry transfer must be received by the exchange agent prior to
the expiration date of the exchange offer. A holder who desires to tender
Old Notes and who cannot comply with the procedures set forth herein for
tender on a timely basis or whose Old Notes are not immediately available
must comply with the procedures for guaranteed delivery set forth below.
LETTERS OF TRANSMITTAL AND OLD NOTES SHOULD BE SENT ONLY TO THE EXCHANGE
AGENT, AND NOT TO US OR TO DTC.
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER TENDERING OLD NOTES. DELIVERY OF SUCH DOCUMENTS WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, WE
SUGGEST THAT THE HOLDER USE PROPERTY INSURED, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE
EXPIRATION DATE OF THE EXCHANGE OFFER TO PERMIT DELIVERY TO THE EXCHANGE AGENT
PRIOR TO SUCH DATE. NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS OF OLD
NOTES WILL BE ACCEPTED.
SIGNATURE GUARANTEE
Signatures on the letter of transmittal must be guaranteed by an eligible
institution unless:
- the letter of transmittal is signed by the registered holder of the Old
Notes tendered therewith, or by a participant in one of the book-entry
transfer facilities whose name appears on a security position listing it
as the owner of those Old Notes, or if any Old Notes for principal
amounts not tendered are to be issued directly to the holder, or, if
tendered by a participant in one of the book-entry transfer facilities,
any Old Notes for principal amounts not tendered or not accepted for
exchange are to be credited to the participant's account at the
book-entry transfer facility, and neither the "Special Issuance
Instructions" nor the "Special Delivery Instructions" box on the letter
of transmittal has been completed, or
- the Old Notes are tendered for the account of an eligible institution.
19
An eligible institution is a firm that is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or a trust company having an office or correspondent in the
United States or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act.
BOOK-ENTRY TRANSFER
The exchange agent will seek to establish a new account or utilize an
existing account with respect to the Old Notes at DTC promptly after the date of
this prospectus. Any financial institution that is a participant in the DTC
system and whose name appears on a security position listing as the owner of the
Old Notes may make book-entry delivery of Old Notes by causing DTC to transfer
such Old Notes into the exchange agent's account. HOWEVER, ALTHOUGH DELIVERY OF
OLD NOTES MAY BE EFFECTED THROUGH BOOK-ENTRY TRANSFER INTO THE EXCHANGE AGENT'S
ACCOUNT AT DTC, A PROPERLY COMPLETED AND VALIDLY EXECUTED LETTER OF TRANSMITTAL,
OR A MANUALLY SIGNED FACSIMILE THEREOF, MUST BE RECEIVED BY THE EXCHANGE AGENT
AT ONE OF ITS ADDRESSES SET FORTH IN THIS PROSPECTUS ON OR PRIOR TO THE
EXPIRATION DATE OF THE EXCHANGE OFFER, OR ELSE THE GUARANTEED DELIVERY
PROCEDURES DESCRIBED BELOW MUST BE COMPLIED WITH. The confirmation of a
book-entry transfer of Old Notes into the exchange agent's account at DTC is
referred to in this prospectus as a "book-entry confirmation." Delivery of
documents to DTC in accordance with DTC's procedures does not constitute
delivery to the exchange agent.
GUARANTEED DELIVERY
If you wish to tender your Old Notes and:
(1) certificates representing your Old Notes are not lost but are not
immediately available,
(2) time will not permit your letter of transmittal, certificates
representing your Old Notes and all other required documents to reach the
exchange agent on or prior to the expiration date of the exchange offer, or
(3) the procedures for book-entry transfer cannot be completed on or
prior to the expiration date of the exchange offer, you may nevertheless
tender if all of the following conditions are complied with:
- your tender is made by or through an eligible institution; and
- on or prior to the expiration date of the exchange offer, the exchange
agent has received from the eligible institution a properly completed
and validly executed notice of guaranteed delivery, by manually signed
facsimile transmission, mail or hand delivery, in substantially the
form provided with this prospectus. The notice of guaranteed delivery
must:
(a) set forth your name and address, the registered number(s) of
your Old Notes and the principal amount of Old Notes tendered;
(b) state that the tender is being made thereby;
(c) guarantee that, within three New York Stock Exchange trading
days after the expiration date, the letter of transmittal or facsimile
thereof properly completed and validly executed, together with
certificates representing the Old Notes, or a book-entry confirmation,
and any other documents required by the letter of transmittal and the
instructions thereto, will be deposited by the eligible institution with
the exchange agent; and
(d) the exchange agent receives the properly completed and validly
executed letter of transmittal or facsimile thereof with any required
signature guarantees, together with certificates for all Old Notes in
proper form for transfer, or a book-entry confirmation, and any other
required documents, within three New York Stock Exchange trading days
after the expiration date.
20
OTHER MATTERS
New Notes will be issued in exchange for Old Notes accepted for exchange
only after timely receipt by the exchange agent of:
- certificates for (or a timely book-entry confirmation with respect to)
your Old Notes,
- a properly completed and duly executed letter of transmittal or facsimile
thereof with any required signature guarantees, or, in the case of a
book-entry transfer, an agent's message, and
- any other documents required by the letter of transmittal.
We will determine, in our sole discretion, all questions as to the form of
all documents, validity, eligibility, including time of receipt, and acceptance
of all tenders of Old Notes. Our determination will be final and binding on all
parties. ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS OF OLD NOTES WILL NOT BE
CONSIDERED VALID. WE RESERVE THE ABSOLUTE RIGHT TO REJECT ANY OR ALL TENDERS OF
OLD NOTES THAT ARE NOT IN PROPER FORM OR THE ACCEPTANCE OF WHICH, IN OUR
OPINION, WOULD BE UNLAWFUL. WE ALSO RESERVE THE RIGHT TO WAIVE ANY DEFECTS,
IRREGULARITIES OR CONDITIONS OF TENDER AS TO PARTICULAR OLD NOTES.
Our interpretation of the terms and conditions of the exchange offer,
including the instructions in the letter of transmittal, will be final and
binding.
Any defect or irregularity in connection with tenders of Old Notes must be
cured within the time we determine, unless waived by us. We will not consider
the tender of Old Notes to have been validly made until all defects and
irregularities have been waived by us or cured. Neither we, the exchange agent,
or any other person will be under any duty to give notice of any defects or
irregularities in tenders of Old Notes, or will incur any liability to holders
for failure to give any such notice.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw your
tender of Old Notes at any time prior to the expiration date.
For a withdrawal to be effective:
- the exchange agent must receive a written notice of withdrawal at one of
the addresses set forth below under "-- Exchange Agent", or
- you must comply with the appropriate procedures of DTC's automated tender
offer program system.
Any notice of withdrawal must:
- specify the name of the person who tendered the Old Notes to be withdrawn
and
- identify the Old Notes to be withdrawn, including the principal amount of
the Old Notes.
If Old Notes have been tendered pursuant to the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn Old Notes and
otherwise comply with the procedures of DTC.
We will determine all questions as to validity, form, eligibility and time
of receipt of any withdrawal notices. Our determination will be final and
binding on all parties. We will deem any Old Notes so withdrawn not to have been
validly tendered for exchange for purposes of the exchange offer.
Any Old Notes that have been tendered for exchange but that are not
exchanged for any reason will be returned to their holder without cost to the
holder or, in the case of Old Notes tendered by book-entry transfer into the
exchange agent's account at DTC according to the procedures described above,
such Old Notes will be credited to an account maintained with DTC for the Old
Notes. This return or crediting will take place as soon as practicable after
withdrawal, rejection of tender or termination of the exchange offer. You may
retender properly withdrawn Old Notes by following one of the procedures
described under "-- Procedures for Tendering Old Notes" at any time on or prior
to the expiration date.
21
CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other provisions of the exchange offer, if, on or prior
to the expiration date, we determine, in our reasonable judgment, that the
exchange offer, or the making of an exchange by a holder of Old Notes, would
violate applicable law or any applicable interpretation of the staff of the SEC,
we will not be required to accept for exchange, or to exchange, any tendered Old
Notes. We may also terminate, waive any conditions to or amend the exchange
offer or, subject to Rule 14e-1 under the Exchange Act, which requires that an
offeror pay the consideration offered or return the securities deposited by or
on behalf of the holders thereof promptly after the termination or withdrawal of
the exchange offer, or postpone the acceptance for exchange of tendered Old
Notes.
TRANSFER TAXES
We will pay all transfer taxes applicable to the transfer and exchange of
Old Notes pursuant to the exchange offer. If, however:
- delivery of the New Notes and/or certificates for Old Notes for principal
amounts not exchanged, are to be made to any person other than the record
holder of the Old Notes tendered;
- tendered certificates for Old Notes are recorded in the name of any
person other than the person signing any letter of transmittal; or
- a transfer tax is imposed for any reason other than the transfer and
exchange of Old Notes to us or our order,
the amount of any such transfer taxes, whether imposed on the record holder or
any other person, will be payable by the tendering holder prior to the issuance
of the New Notes.
CONSEQUENCES OF FAILING TO EXCHANGE
If you do not exchange your Old Notes for New Notes in the exchange offer,
you will remain subject to the restrictions on transfer of the Old Notes:
- as set forth in the legend printed on the Old Notes as a consequence of
the issuance of the Old Notes pursuant to the exemptions from, or in
transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws; and
- otherwise set forth in the offering circular distributed in connection
with the private offering of the Old Notes.
In general, you may not offer or sell the Old Notes unless they are
registered under the Securities Act, or if the offer or sale is exempt from
registration under the Securities Act and applicable state securities laws.
Except as required by the registration rights agreement, we do not intend to
register resales of the Old Notes under the Securities Act.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
as reflected in our accounting records on the date of the exchange. Accordingly,
we will not recognize any gain or loss for accounting purposes upon the
consummation of the exchange offer. We will amortize the expenses of the
exchange offer over the term of the exchange notes.
EXCHANGE AGENT
Deutsche Bank Trust Company Americas has been appointed as exchange agent
for the exchange offer. You should direct questions and requests for assistance,
requests for additional copies of this prospectus, the letter of transmittal or
any other documents to the exchange agent. You should send
22
certificates for Old Notes, letters of transmittal and any other required
documents to the exchange agent addressed as follows:
DEUTSCHE BANK TRUST COMPANY AMERICAS
By Overnight, By Mail: By Hand in New York:
Registered or Certified Mail DB Services Tennessee, Inc. Deutsche Bank Trust Company
or Overnight Courier: Reorganization Unit Americas
DB Services Tennessee, Inc. P.O. Box 292737 C/O The Depository Trust
Corporate Trust & Agency Nashville, Tennessee 37229-2737 Clearing Corporation
Services By Facsimile: 55 Water Street, 1st Floor
Reorganization Unit (for eligible institutions Jeanette Park Entrance
648 Grassmere Park Road only) New York, New York 10041
Nashville, Tennessee 37211 (615) 835-3701 Information: (800) 735-7777
Confirm by telephone:
(615) 835-3572
23
DESCRIPTION OF THE NOTES
The New Notes will be issued, and the Old Notes were issued, under an
indenture between us and JPMorgan Chase Bank (formerly known as The Chase
Manhattan Bank), as indenture trustee, as supplemented through June 10, 2002.
You may obtain a copy of the indenture from the trustee at its corporate trust
office in New York, New York. The terms of the notes include those stated in the
indenture and made a part thereof by reference to the Trust Indenture Act in
effect on the date of the indenture. This summary of the material terms of the
notes and the indenture does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, the indenture, including the
definitions of terms therein, and the Trust Indenture Act. We have included at
the end of this section a summary of capitalized terms used in this section.
Terms used in this section and not otherwise defined in this section have the
respective meanings assigned to them in the indenture.
GENERAL
The notes:
- are our general unsecured obligations;
- rank equally with all of our other existing and future senior, unsecured
and unsubordinated debt;
- rank senior to all of our existing and future subordinated debt; and
- constitute a new series of our senior unsecured obligations under the
indenture.
As of June 30, 2002, we had total long-term capital market debt, bank debt
and other financing obligations (excluding the Old Notes) of approximately $17.1
billion, including approximately $9.3 billion of debt of our subsidiaries. We
also have guarantees of approximately $3.9 billion and preferred securities and
minority interest financings of approximately $4.2 billion. The New Notes are
structurally subordinated to approximately $13.3 billion, and rank equally with
approximately $11.6 billion, of our debt, guarantees and preferred securities
and minority interest financings. Furthermore, there are no contractual
limitations on the issuance of additional indebtedness that could rank equal
with the notes or the issuance of additional indebtedness at our subsidiaries,
to which the notes would be structurally subordinated.
PRINCIPAL, MATURITY AND INTEREST
The notes will mature on June 15, 2012. We may issue additional notes of
this series from time to time in the future which would contain the same terms
and the same CUSIP numbers as the notes offered hereby, without the consent of
the holders of the notes, in compliance with the covenants of the indenture.
Interest on the notes will:
- accrue at the rate of 7.875% per year;
- be payable semiannually on each June 15 and December 15, commencing
December 15, 2002;
- be payable to the person in whose name the notes are registered at the
close of business on the relevant June 1 and December 1 preceding the
applicable interest payment date;
- be computed on the basis of a 360-day year comprised of twelve 30-day
months; and
- be payable on overdue interest to the extent permitted by law at the same
rate as interest is payable on principal.
If any interest payment date, maturity date or redemption date falls on a
day that is not a business day, the payment will be made on the next business
day (and without any interest or other payment in respect of such delay) with
the same force and effect as if made on the relevant interest payment date,
maturity date or redemption date. Unless we default on a payment, no interest
will accrue for the period from and after the applicable maturity date or
redemption date.
24
DENOMINATIONS
The notes will be issued in registered form in denominations of $1,000 each
or integral multiples thereof.
OPTIONAL REDEMPTION OF NOTES
The notes will be redeemable, in whole or in part, at our option at any
time in whole, or from time to time in part, prior to their maturity date, at
the Make-Whole Price, on not less than 30 calendar days nor more than 60
calendar days notice prior to the date of redemption and in accordance with the
provisions of the indenture.
The notice of redemption will set forth the manner of calculation of the
Make-Whole Price, but not necessarily its amount. We will notify the trustee of
the amount of the Make-Whole Price, and the Trustee will not be responsible for
the accuracy of the calculation.
SINKING FUND
We are not required to make mandatory redemption or sinking fund payments
with respect to the notes.
CONSOLIDATION, MERGER OR SALE
Under the indenture, we may not consolidate with or merge into any other
person or entity or sell, lease or transfer all or substantially all of our
properties and assets to any other person or entity unless:
- in the case of a merger, we are the surviving entity, or the entity
formed by the consolidation or into which we are merged expressly
assumes, by execution and delivery to the trustee of a supplemental
indenture, the due and punctual payment of the principal, any premium and
interest on the notes and the performance of every covenant and condition
in the indenture;
- in the case of the sale, lease or transfer of all or substantially all of
our properties and assets, the person or entity which acquires our
properties and assets expressly assumes, by execution and delivery to the
Trustee of a supplemental indenture, the due and punctual payment of the
principal, any premium and interest on the notes and the performance of
every covenant and condition in the indenture;
- immediately after giving effect to the transaction, no default or event
of default under the indenture exists; and
- we have delivered to the trustee an officer's certificate and an opinion
of counsel each stating that the consolidation, merger, sale, transfer or
lease and the supplemental indenture required in connection with the
transaction comply with the terms of the indenture and that we have
complied with all conditions precedent.
After any consolidation or merger or any sale, lease or transfer of our
properties and assets, the successor person or entity formed by such
consolidation or into which we are merged or to which such sale, lease or
transfer is made shall succeed to and be substituted for us under the indenture
as if the successor person or entity had been originally named in the indenture
and may exercise every one of our rights and powers under the indenture.
Thereafter, except in the case of a lease, we shall be relieved of all
obligations and covenants under the indenture and the notes.
25
MODIFICATION OF INDENTURE
At any time and without the consent of the holders of the notes, we and the
trustee may modify the indenture for any of the following purposes:
- to secure the notes;
- to evidence the succession of another person or entity under the
indenture and the assumption by the succeeding person or entity of our
covenants;
- to add to our covenants or events of default for the benefit of the
holders of the notes or to surrender any of our rights and powers under
the indenture;
- to add to, change or eliminate any of the provisions of the indenture
provided there is no outstanding security entitled to the benefit of such
provision;
- to establish the general forms and terms of securities of any series as
permitted under the indenture;
- to cure any ambiguity, to correct or supplement any provision which may
be inconsistent with any other provision; to comply with any applicable
mandatory provisions of law, provided that any such actions shall not
materially adversely affect the interest of the holders of the notes;
- to evidence and provide for the acceptance of the appointment of a
successor trustee and to add to or change any provisions necessary to
provide for or facilitate the administration of the trusts by more than
one trustee; and
- to modify, eliminate or add to the provisions of this indenture to the
extent necessary to comply with the Trust Indenture Act.
With the consent of the holders of a majority in aggregate principal amount
of the outstanding notes, we and the trustee may add, change or eliminate any
provision of the indenture or modify in any manner the rights of the holders of
the notes; provided, however, we and the trustee may not, without the consent of
each holder of the notes:
- change the stated maturity of the principal of, or any installment of
principal or interest on, the notes, or reduce the principal amount of,
the premium on or the rate of interest on the notes;
- reduce the percentage in principal amount of the notes required to
consent to any supplemental indenture or waive compliance with the
indenture or waive defaults under it;
- change our obligation to maintain an office or agency as specified in the
indenture; or
- modify any provisions of the indenture governing modifications, waiver of
past defaults and waiver of certain covenants, except to increase any
percentages required under such provisions or to provide that other
provisions of the indenture cannot be modified without the consent of
each holder of the notes.
EVENTS OF DEFAULT
"Event of default" when used in the indenture will mean any of the
following:
- failure to pay the principal of or any premium on any note when due;
- failure to pay interest on any note for 30 days;
- failure to perform any other covenant in the indenture that continues for
60 days after being given written notice;
- if we commence a voluntary case in bankruptcy, consent to the entry of
any order of relief against us in an involuntary bankruptcy base, consent
to the appointment of a custodian over us or all or substantially all of
our assets or make a general assignment for the benefit of creditors; or
26
- if a court of competent jurisdiction enters a bankruptcy order either for
relief against us in an involuntary case, or appointing a custodian over
us or all or substantially all of our assets, or ordering our
liquidation; and the order or decree remains unstayed and in effect for
90 days.
An event of default for the notes does not necessarily constitute an event
of default for any other series of debt securities issued under the indenture.
The trustee may withhold notice to the holders of the notes of any default,
except in the payment of principal or interest, if it considers such withholding
of notice to be in the best interests of the holders.
If an event of default for the notes occurs and continues, the trustee or
the holders of at least 25% in the aggregate principal amount of the notes of
the series may declare the entire principal of the notes to be due and payable
immediately. If this happens, subject to certain conditions, the holders of a
majority of the aggregate principal amount of the notes can void the
declaration.
Other than its duties in the case of a default, a trustee is not obligated
to exercise any of its rights or powers under the indenture at the request,
order or direction of any holders, unless the holders offer the trustee
reasonable indemnity. If they provide this reasonable indemnification, the
holders of a majority in principal amount of the notes may direct the time,
method and place of conducting any proceeding or any remedy available to the
trustee, or exercising any power conferred upon the trustee, for the notes.
COVENANTS
Under the indenture, we will:
- pay the principal of, and interest and any premium on, the notes when
due;
- maintain a place of payment;
- deliver a report to the trustee at the end of each fiscal year reviewing
our obligations under the indenture; and
- deposit sufficient funds with any paying agent on or before the due date
for any principal, interest or premium.
Limitation on Liens. The indenture provides that we will not, nor will we
permit any restricted subsidiary to, create, assume, incur or suffer to exist
any lien upon any principal property, whether owned or leased on the date of the
indenture or thereafter acquired, to secure any of our debt or of any other
person (other than the senior debt securities issued under the indenture),
without causing all of the senior debt securities (including the notes)
outstanding under the indenture to be secured equally and ratably with, or prior
to, the new debt so long as the new debt is so secured. This restriction does
not, however, prohibit us from creating the following:
- liens existing on the date of the indenture or created under an
"after-acquired property" clause;
- purchase price liens created within one year after purchase;
- liens already existing on newly acquired property or assets;
- liens already existing on the property or assets of a new restricted
subsidiary;
- liens already on property or assets when acquired by us or a restricted
subsidiary, or when we or a restricted subsidiary acquire the owner of
the property or asset;
- liens securing construction or improvement incurred prior to or up to one
year after completion;
- liens on oil, gas, mineral and processing and other plant properties to
secure costs associated with the properties and their exploration,
development, maintenance or operation;
- liens connected with our conveyance (including conveyances by our
restricted subsidiaries) of a production payment relating to oil, gas,
natural gas or other natural resources;
- liens in favor of us or our restricted subsidiaries;
27
- liens connected to the issuance of a tax-exempt debt to acquire or
construct property or assets;
- liens of a foreign restricted subsidiary to secure its debt;
- permitted liens (as defined below);
- liens upon additions, improvements, replacements, repairs, fixtures,
appurtenances or component parts attaching to or required to be attached
to property or assets under the terms of any mortgage, pledge agreement,
security agreement or other similar instrument, creating a lien upon such
property or assets permitted above; or
- any extension, renewal, refinancing, refunding or replacement (or
successive extensions, renewals, refinancing, refundings or replacements)
of any lien, in whole or in part, that is referred to above, or of any
debt which it secures; provided, that the principal amount of the debt
secured shall not exceed the greater of the principal amount of debt
secured at the time of such extension, renewal, refinancing, refunding or
replacement and the original principal amount of debt secured (plus in
each case the aggregate amount of premiums, other payments, costs and
expenses required to be paid or incurred in connection with such
extension, renewal, refinancing, refunding or replacement); and further
provided, that such extension, renewal, refinancing, refunding or
replacement shall be limited to all or a part of the property (including
improvements, alterations and repairs on such property) subject to the
encumbrance so extended, renewed, refinanced, refunded or replaced (plus
improvements, alterations and repairs on such property).
In addition, this limitation on liens does not apply to other liens, not
otherwise excepted above, provided that the aggregate principal amount of all
debt then outstanding secured by such other liens together will all net sale
proceeds from sale-leaseback transactions (other than the permitted sale-
leaseback transactions discussed below) does not exceed 15% or our Consolidated
Net Tangible Assets (as defined below).
Limitation on Sale-Leaseback Transactions. The indenture also provides
that we will not, nor will we permit any restricted subsidiary to, engage in a
sale-leaseback transaction, unless:
- such sale-leaseback transaction occurs within one year from the date of
acquisition of the principal property subject thereto or the date of the
completion of construction or commencement of full operations on such
principal property, whichever is later;
- the sale-leaseback transaction involves a lease for a period, including
renewals, of not more than three years;
- we or such restricted subsidiary would be entitled to incur debt secured
by a lien on the principal property subject thereto in a principal amount
equal to or exceeding the net sale proceeds from such sale-leaseback
transaction without securing the senior debt securities; or
- we or such restricted subsidiary, within a one-year period after such
sale-leaseback transaction, applies or causes to be applied an amount not
less than the net sale proceeds from such sale-leaseback transaction to
(A) the repayment, redemption or retirement of our funded debt or funded
debt of such restricted subsidiary, or (B) investment in another
principal property.
In addition, this limitation on sale-leaseback transactions does not apply
to other sale-leaseback transactions, not otherwise excepted above, provided
that the net sale proceeds from such other sale-leaseback transactions together
with the aggregate principal amount of outstanding debt secured by liens upon
any principal property (other than that debt secured by liens excepted from the
limitation on liens as discussed above) does not exceed 15% of our Consolidated
Net Tangible Assets (as defined below).
28
DEFINITIONS
The following is a summary of capitalized terms used in this summary
description of the notes:
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the notes.
"Comparable Treasury Price" means, with respect to any redemption date, (1)
the average of four Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or (2) if the trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such Reference Treasury Dealer
Quotations.
"Consolidated net tangible assets" means, at any date of determination, the
total amount of assets after deducting therefrom (1) all current liabilities
(excluding (A) any current liabilities that by their terms are extendable or
renewable at the option of the obligor thereon to a time more than 12 months
after the time as of which the amount thereof is being computed, and (B) current
maturities of long-term debt), and (2) the value (net of any applicable
reserves) of all goodwill, trade names, trademarks, patents and other like
intangible assets, all as set forth on the consolidated balance sheet of us and
our consolidated subsidiaries for our most recently completed fiscal quarter,
prepared in accordance with generally accepted accounting principles.
"Funded debt" means all debt maturing one year or more from the date of the
creation thereof, all debt directly or indirectly renewable or extendible, at
the option of the debtor, by its terms or by the terms of any instrument or
agreement relating thereto, to a date one year or more from the date of the
creation thereof, and all debt under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more.
"Independent Investment Banker" means Credit Suisse First Boston
Corporation and its successors, or, if such firm or the successors, if any, to
such firm, as the case may be, are unwilling or unable to select the Comparable
Treasury Issue, an independent investment banking institution of national
standing appointed by the trustee after consultation with us.
"Make-Whole Price" means an amount equal to the greater of:
(1) 100% of the principal amount of the notes to be redeemed; and
(2) as determined by an Independent Investment Banker, the sum of the
present values of the remaining scheduled payments of principal and
interest thereon (not including any portion of such payments of interest
accrued as of the redemption date) discounted back to the redemption date
on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 50 basis points,
plus, in the case of both (1) and (2), accrued and unpaid interest to the
redemption date. Unless we default in payment of the Make-Whole Price, on and
after the applicable redemption date, interest will cease to accrue on the notes
to be redeemed. If we redeem a note in part only, a new note of like tenor for
the unredeemed portion thereof and otherwise having the same terms as the note
partially redeemed will be issued in the name of the holder of the note upon the
presentation and surrender thereof.
"Permitted liens" means (1) liens upon rights-of-way for pipeline purposes;
(2) any governmental lien, mechanics', materialmen's, carriers' or similar lien
incurred in the ordinary course of business which is not yet due or which is
being contested in good faith by appropriate proceedings and any undetermined
lien which is incidental to construction; (3) the right reserved to, or vested
in, any municipality or public authority by the terms of any right, power,
franchise, grant, license, permit or by any provision of law, to purchase or
recapture or to designate a purchaser of, any property; (4) liens of taxes and
assessments which are (a) for the then current year, (b) not at the time
delinquent, or (c) delinquent but the validity of which is being contested at
the time by us or any of our subsidiaries in good faith; (5) liens of, or to
29
secure performance of, leases; (6) any lien upon, or deposits of, any assets in
favor of any surety company or clerk of court for the purpose of obtaining
indemnity or stay of judicial proceedings; (7) any lien upon property or assets
acquired or sold by us or any of our restricted subsidiaries resulting from the
exercise of any rights arising out of defaults on receivables; (8) any lien
incurred in the ordinary course of business in connection with workmen's
compensation, unemployment insurance, temporary disability, social security,
retiree health or similar laws or regulations or to secure obligations imposed
by statute or governmental regulations; (9) any lien upon any property or assets
in accordance with customary banking practice to secure any debt incurred by us
or any of our restricted subsidiaries in connection with the exporting of goods
to, or between, or the marketing of goods in, or the importing of goods from,
foreign countries; or (10) any lien in favor of the United States or any state
thereof, or any other country, or any political subdivision of any of the
foregoing, to secure partial, progress, advance, or other payments pursuant to
any contract or statute, or any lien securing industrial development, pollution
control, or similar revenue bonds.
"Principal property" means (1) any pipeline assets owned by us or any of
our subsidiaries, including any related facilities employed in the
transportation, distribution or marketing of natural gas, that are located in
the United States or Canada, and (2) any processing or manufacturing plant owned
or leased by us or any of our subsidiaries that are located within the United
States or Canada, except, in the case of either clause (1) or (2), any such
assets or plant which, in the opinion of our board of directors, is not material
in relation to the activities of us and our subsidiaries as a whole.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
"Reference Treasury Dealer" means Credit Suisse First Boston Corporation
and three additional primary U.S. government securities dealers in New York City
selected by the trustee after consultation with us, and their respective
successors (provided, however, that if any such firm or any such successor shall
cease to be a primary U.S. government securities dealer in New York City, the
trustee, after consultation with us, shall substitute therefor another dealer).
"Restricted subsidiary" means any of our subsidiaries owning or leasing any
principal property.
"Sale-leaseback transaction" means the sale or transfer by us or any of our
restricted subsidiaries of any principal property to a person (other than us or
a subsidiary) and the taking back by us or any of our restricted subsidiaries,
as the case may be, of a lease of such principal property.
"Treasury Rate" means, with respect to any redemption date, (1) the yield,
under the heading which represents the average for the immediately preceding
week, appearing in the most recently published statistical release designated
"H.15(519)" or any successor publication that is published weekly by the Board
of Governors of the Federal Reserve System and that establishes yields on
actively traded United States Treasury securities adjusted to constant maturity
under the caption "Treasury Constant Maturities," for the maturity corresponding
to the Comparable Treasury Issue (if no maturity is within three months before
or after the stated maturity, yields for the two published maturities most
closely corresponding to the Comparable Treasury Issue shall be determined, and
the Treasury Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month) or (2) if the release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date. The Treasury Rate will be calculated on the third Business
Day preceding the redemption date.
30
DEFEASANCE
We will be discharged from our obligations on the notes at any time if we
deposit with the trustee sufficient cash or government securities to pay the
principal, interest, any premium and any other sums due to the stated maturity
date or a redemption date of the notes. If this happens, the holders of the
notes will not be entitled to the benefits of the indenture except for
registration of transfer and exchange of notes and replacement of lost, stolen
or mutilated notes.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a holder has given wire transfer instructions to us, we will make all
payments of principal of, premium, if any, and interest and liquidated damages
(as defined below under the caption "Exchange Offer and Registration Rights"),
if any, on the notes in accordance with those instructions. All other payments
on these notes will be made at the office or agency of the paying agent and
registrar within the City and State of New York unless we elect to make interest
payments by check mailed to the holders at their address set forth in the
security register.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The trustee will initially act as paying agent and registrar. We may change
the paying agent or registrar without prior notice to the holders of the notes,
and we may act as paying agent or registrar.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the notes will be made in immediately available funds. So
long as DTC continues to make its settlement system available to us, all
payments of principal of and premium, if any, interest and liquidated damages,
if any, on the global securities will be made by us in immediately available
funds.
TRANSFER AND EXCHANGE
Subject to the restrictions set forth under the caption "Transfer
Restrictions," a holder may transfer or exchange notes in accordance with the
indenture. The registrar and the trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and we may
require a holder to pay any taxes and fees required by law or permitted by the
indenture. In addition, we are not required to transfer or exchange any note
between a record date and the next succeeding interest payment date.
The registered holder of a note will be treated as its owner for all
purposes.
GOVERNING LAW
The indenture and the notes will be governed by and construed in accordance
with the laws of the State of New York.
NOTICES
Notices to holders of the notes will be given by mail to the addresses of
such holders as they appear in the security register. No periodic evidence is
required to be furnished as to the absence of default or as to compliance with
the terms of the indenture.
NO PERSONAL LIABILITY OF OFFICERS, DIRECTORS, EMPLOYEES OR STOCKHOLDERS
No director, officer, employee or stockholder, as such, of El Paso or any
of our affiliates will have any personal liability in respect of our obligations
under the indenture or the notes by reason of his, her or its status as such.
31
CONCERNING THE TRUSTEE
JPMorgan Chase Bank is the trustee under the Indenture. In the ordinary
course of business, JPMorgan Chase Bank and its affiliates have provided and may
in the future continue to provide investment banking, commercial banking and
other financial services to us and our subsidiaries for which they have received
and will receive compensation.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
It is the opinion of Locke Liddell & Sapp LLP that the following discussion
addresses the material United States federal income tax consequences of
exchanging Old Notes for New Notes and owning and disposing of New Notes. This
discussion is not a complete discussion of all the potential tax consequences
that may be relevant to you. This discussion is based upon the Internal Revenue
Code of 1986, as amended (the Code), its legislative history, existing and
proposed regulations thereunder, published rulings, and court decisions, all as
in effect on the date of this document, and all of which are subject to change,
possibly on a retroactive basis. This discussion deals only with notes held as a
capital asset by a holder who is a United States person and purchased the Old
Notes upon original issuance at their original issue price. A "United States
person" is:
- a citizen or resident of the United States or any political subdivision
thereof;
- a corporation, or a partnership or other entity that is treated as a
corporation or partnership for United States federal income tax purposes,
that is created or organized in the United States or under the laws of
the United States or of any state thereof including the District of
Columbia;
- an estate whose income is subject to United States federal income
taxation regardless of its source; or
- a trust if a U.S. court is able to exercise primary supervision over the
administration of the trust and one or more United States persons have
the authority to control all substantial decisions of the trust or it was
in existence on August 19, 1996, and has elected to be treated as a
United States person.
Your tax treatment may vary depending on your particular situation. This
summary does not address all of the tax consequences that may be relevant to
holders that are subject to special tax treatment, such as:
- dealers in securities or currencies;
- financial institutions;
- tax-exempt investors;
- traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings;
- persons liable for alternative minimum tax;
- insurance companies;
- real estate investment trusts;
- regulated investment companies;
- persons holding notes as part of a hedging, conversion, integrated or
constructive sale transaction or a straddle; or
- United States persons whose functional currency is not the United States
dollar.
32
If a partnership holds notes, the tax treatment of a partner will generally
depend on the status of the partner and on the activities of the partnership.
Partners of partnerships holding notes should consult their tax advisors.
We urge you to consult your own tax advisors regarding the particular
United States federal tax consequences of exchanging, holding and disposing of
notes, as well as any tax consequences that may arise under the laws of any
relevant foreign, state, local, or other taxing jurisdiction or under any
applicable tax treaty.
RECEIPT OF NEW NOTES
Your exchange of Old Notes for New Notes under the exchange offer will not
constitute a taxable exchange of the Old Notes. As a result:
- you will not recognize taxable gain or loss when you receive New Notes in
exchange for Old Notes;
- your holding period in the New Notes will include your holding period in
the Old Notes; and
- your basis in the New Notes will equal your adjusted basis in the Old
Notes at the time of the exchange.
TAXATION OF INTEREST
Interest paid on the New Notes generally will be taxable to you as ordinary
interest income at the time payments are accrued or received in accordance with
your regular method of accounting for United States federal income tax purposes.
SALE OR OTHER TAXABLE DISPOSITION OF NEW NOTES
You must recognize taxable gain or loss on the sale, exchange, redemption,
retirement or other taxable disposition of a New Note. The amount of your gain
or loss equals the difference between the amount you receive for the New Note in
cash or other property, valued at the fair market value, minus the amount
attributable to accrued qualified stated interest on the New Note, if any, and
your adjusted tax basis in the New Note. Your initial tax basis in a New Note
equals the price you paid for the Old Note that you exchanged for the New Note
increased by any amount previously includable in income as original issue
discount and reduced by any payments other than payments of qualified stated
interest made on the notes.
Your gain or loss will generally be a long-term capital gain or loss if
your holding period in the New Note is more than one year. Otherwise, it will be
a short-term capital gain or loss. Payments attributable to accrued qualified
stated interest that you have not yet included in income will be taxed as
ordinary interest income.
NON-UNITED STATES HOLDERS
The following discussion applies to Non-United States Holders. You are a
"Non-United States Holder" if you are not a United States person. Special rules
may apply to you if you are a controlled foreign corporation, foreign personal
holding company, a corporation that accumulates earnings to avoid United States
federal income tax or, in certain circumstances, a United States expatriate.
Exchange of Old Notes
Your exchange of Old Notes for New Notes under the exchange offer will not
constitute a taxable exchange of the Old Notes, and the consequences of the
exchange to you will be the same as those of a United States person described
above under the heading "-- Receipt of New Notes."
33
Interest
Interest that we pay to you will not be subject to United States federal
income tax and withholding of United States federal income tax will not be
required on interest payments if you:
- do not actually or constructively own 10% or more of the total combined
voting power of all classes of our stock;
- are not a controlled foreign corporation with respect to which we are a
related person;
- are not a bank whose receipt of interest is described in Section
881(c)(3)(A) of the Code; and
- you certify to us, our payment agent, or the person who would otherwise
be required to withhold United States tax, on Form W-8BEN (or applicable
substitute form), under penalties of perjury, that you are not a United
States person and provide your name and address.
If you do not satisfy the preceding requirements, your interest on a note would
generally be subject to United States withholding tax at a flat rate of 30% (or
a lower applicable treaty rate).
If you are engaged in trade or business in the United States, and if
interest on a note is effectively connected with the conduct of that trade or
business (or in the case of an applicable tax treaty, is attributable to a
permanent establishment maintained by you in the United States), you will be
exempt from United States withholding tax but will be subject to regular United
States federal income tax on the interest in the same manner as if you were a
United States person. See "-- Taxation of Interest." In order to establish an
exemption from United States withholding tax, you may provide to us, our payment
agent or the person who would otherwise be required to withhold United States
tax, a properly completed and executed IRS Form W-8ECI (or applicable substitute
form). In addition to regular United States federal income tax, if you are a
foreign corporation, you may be subject to a United States branch profits tax.
Gain on Disposition
You generally will not be subject to United States federal income tax with
respect to gain recognized on a sale, redemption, exchange or other disposition
of a note unless:
- the gain is effectively connected with the conduct by you of a trade or
business within the United States, or, under an applicable tax treaty, is
attributable to a permanent establishment maintained by you in the United
States; or
- if you are an individual, you are present in the United States for 183 or
more days in the taxable year and certain other requirements are met.
Applicable Tax Treaties
You should consult with your own tax advisor as to any applicable income
tax treaties that may provide for a lower rate of withholding tax, exemption
from, or a reduction of, branch profits tax, or other rules different from the
general rules under United States federal income tax laws.
INFORMATION REPORTING AND BACKUP WITHHOLDING
United States Persons
In general, information reporting requirements may apply to payments made
to you and to the proceeds of a disposition of the notes, unless you are an
exempt recipient such as a corporation. Backup withholding may apply if you fail
to supply an accurate taxpayer identification number or otherwise fail to comply
with applicable United States information reporting or certification
requirements. Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against your United States federal income tax
liability provided the required information is furnished to the Internal Revenue
Service.
34
Non-United States Holders
Backup withholding and information reporting will not apply to payments of
principal or interest on the notes by us or our paying agent to you if you
certify as to your status as a Non-United States Holder under penalties of
perjury or otherwise establish an exemption (provided that neither we nor our
paying agent has actual knowledge that you are a United States person or that
the conditions of any other exemptions are not in fact satisfied).
The payment of the proceeds of the disposition of notes to or through the
United States office of a United States or foreign broker will be subject to
information reporting and backup withholding unless you provide the
certification described above or otherwise establish an exemption. The proceeds
of a disposition effected outside the United States by you of notes to or
through a foreign office of a broker generally will not be subject to backup
withholding or information reporting. However, if that broker is a United States
person, a controlled foreign corporation for United States tax purposes, a
foreign person 50% or more of whose gross income from all sources for certain
periods is effectively connected with a trade or business in the United States,
or a foreign partnership that is engaged in the conduct of a trade or business
in the United States or that has one or more partners that are United States
persons who in the aggregate hold more than 50% of the income or capital
interests in the partnership, information reporting requirements will apply
unless that broker has documentary evidence in its files of your status as a
Non-United States Holder and has no actual knowledge to the contrary or unless
you otherwise establish an exemption.
You should consult your tax advisors regarding the application of
information reporting and backup withholding to your particular situation, the
availability of an exemption therefrom, and the procedure for obtaining such an
exemption, if available. Any amounts withheld from a payment to you under the
backup withholding rules will be allowed as a credit against your United States
federal income tax liability and may entitle you to a refund, provided you
furnish the required information to the Internal Revenue Service.
ERISA CONSIDERATIONS
If you intend to use plan assets to exchange for any of the New Notes
offered by this prospectus, you should consult with counsel on the potential
consequences of your investment under the fiduciary responsibility provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
the prohibited transaction provisions of ERISA. If you intend to use
governmental or church plan assets to exchange for any of the New Notes, you
should consult with counsel on the potential consequences of your investment
under similar provisions applicable under laws governing governmental and church
plans.
The following summary is based on the provisions of ERISA and the Code and
related guidance in effect as of the date of this prospectus. This summary does
not attempt to be a complete summary of these considerations. Future
legislation, court decisions, administrative regulations or other guidance will
change the requirements summarized in this section. Any of these changes could
be made retroactively and could apply to transactions entered into before the
change is enacted.
FIDUCIARY RESPONSIBILITIES
ERISA imposes requirements on (1) employee benefit plans subject to ERISA,
(2) entities whose underlying assets include employee benefit plan assets, for
example, collective investment funds and insurance company general accounts, and
(3) fiduciaries of employee benefit plans. Under ERISA, fiduciaries generally
include persons who exercise discretionary authority or control over plan
assets. Before investing any employee benefit plan assets in any note offered in
connection with this prospectus, you should determine whether the investment:
(1) is permitted under the plan document and other instruments
governing the plan; and
(2) is appropriate for the plan in view of its overall investment
policy and the composition and diversification of its portfolio, taking
into account the limited liquidity of the notes.
35
You should consider all factors and circumstances of a particular
investment in the notes, including, for example, the risk factors discussed in
"Risk Factors" and the fact that in the future there may not be a market in
which you will be able to sell or otherwise dispose of your interest in the
notes.
We are not making any representation that the sale of any notes to a plan
meets the fiduciary requirements for investment by plans generally or any
particular plan or that such an investment is appropriate for plans generally or
any particular plan.
PROHIBITED TRANSACTIONS
ERISA and the Code prohibit a wide range of transactions involving (1)
employee benefit plans and arrangements subject to ERISA and/or the Code, and
(2) persons who have specified relationships to the plans. These persons are
called "parties in interest" under ERISA and "disqualified persons" under the
Code. The transactions prohibited by ERISA and the Code are called "prohibited
transactions." If you are a party in interest or disqualified person who engages
in a prohibited transaction, you may be subject to excise taxes and other
penalties and liabilities under ERISA and/or the Code. As a result, if you are
considering using plan assets to invest in any of the notes offered for sale in
connection with this prospectus, you should consider whether the investment
might be a prohibited transaction under ERISA and/or the Code.
Prohibited transactions may arise, for example, if the notes are acquired
by a plan with respect to which we, or any of our affiliates, are a party in
interest or a disqualified person. Exemptions from the prohibited transaction
provisions of ERISA and the Code may apply depending in part on the type of plan
fiduciary making the decision to acquire a note and the circumstances under
which such decision is made. Some of these exemptions include:
(1) Prohibited transaction class exemption or "PTCE" exemptions 75-1
(relating to specified transactions involving employee benefit plans and
broker-dealers, reporting dealers and banks).
(2) PTCE 84-14 (relating to specified transactions directed by
independent qualified professional asset managers);
(3) PTCE 90-1 (relating to specified transactions involving insurance
company pooled separate accounts);
(4) PTCE 91-38 (relating to specified transactions by bank collective
investment funds);
(5) PTCE 95-60 (relating to specified transactions involving insurance
company general accounts); and
(6) PTCE 96-23 (relating to specified transactions directed by
in-house asset managers);
These exemptions do not, however, provide relief from the self-dealing
prohibitions under ERISA and the Code. In addition, there is no assurance that
any of these class exemptions or other exemption will be available with respect
to any particular transaction involving the notes.
TREATMENT OF NOTES AS DEBT INSTRUMENTS
Some transactions involving our operations could give rise to prohibited
transactions under ERISA and the Code if our assets were deemed to be plan
assets. Pursuant to Department of Labor Regulations Section 2510.3-101 (which we
refer to as the "plan assets regulations"), in general, when a plan acquires an
"equity interest" in an entity such as El Paso, the plan's assets include both
the equity interest and an undivided interest in each of the underlying assets
of the entity unless exceptions set forth in the plan assets regulations apply.
In general, an "equity interest" is defined under the plan assets
regulations as any interest in an entity other than an instrument which is
treated as indebtedness under applicable local law and which has no substantial
equity features. Although there is very little published authority concerning
the application of this definition, we believe that the notes should be treated
as debt rather than equity interest under the
36
plan assets regulations because the notes (1) should be treated as indebtedness
under applicable local law and debt, rather than equity, for United States tax
purposes and (2) should not be deemed to have any "substantial equity features."
However, no assurance can be given that the notes will be treated as debt for
purposes of ERISA. If the notes were to be treated as an equity interest under
the plan assets regulations, the purchase of the notes using plan assets could
cause our assets to become subject to the fiduciary and prohibited transaction
provisions of ERISA and the Code unless investment in the notes by "benefit plan
investors" is not "significant," as determined under the plan assets
regulations. We cannot assure you that the criteria for this exception will be
satisfied at any particular time and no monitoring or other measures will be
taken to determine whether such criteria are met. This means that, if the notes
are treated as equity interests under the plan asset regulations and investment
in the notes by benefit plan investors is significant, our assets could be
treated as plan assets subject to ERISA and a non-exempt prohibited transaction
could arise in connection with our operating activities.
Any insurance company proposing to invest assets of its general account in
the notes should consider the implications of the U.S. Supreme Court's decision
in John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank, 510
U.S. 86, 114 S. Ct. 517 (1993), which, in some circumstances, treats such
general account as including the assets of a plan that owns a policy or other
contract with such insurance company, as well as the effect of Section 401(c) of
ERISA, as interpreted by regulations proposed by the Department of Labor.
GOVERNMENT AND CHURCH PLANS
Governmental plans and some church plans, while not subject to the
fiduciary responsibility provisions of ERISA or the prohibited transactions
provisions of ERISA or the Code, may be subject to state or other federal laws
that are very similar to the provisions of ERISA and the Code. If you are a
fiduciary of a governmental or church plan, you should consult with counsel
before purchasing any notes offered for sale in connection with this prospectus.
FOREIGN INDICIA OF OWNERSHIP
ERISA also prohibits plan fiduciaries from maintaining the indicia of
ownership of any plan assets outside the jurisdiction of the United States
district courts except in specified cases. Before investing in any note offered
for sale in connection with this prospectus, you should consider whether the
acquisition, holding or disposition of a note would satisfy such indicia of
ownership rules.
REPRESENTATIONS AND WARRANTIES
If you acquire or accept a note offered in connection with this prospectus,
you will be deemed to have represented and warranted that either:
(1) you have not used plan assets to acquire such note; or
(2) your acquisition and holding of a note (A) is exempt from the
prohibited transaction restrictions of ERISA and the Code under one or more
prohibited transaction class exemptions or does not constitute a prohibited
transaction under ERISA and the Code, and (B) meets the fiduciary
requirements of ERISA.
37
GLOBAL SECURITIES; BOOK-ENTRY SYSTEM
THE GLOBAL SECURITIES
The notes will initially be represented by one or more permanent global
notes in definitive, fully registered book-entry form (the "global securities")
which will be registered in the name of Cede & Co., as nominee of DTC and
deposited on behalf of purchasers of the notes represented thereby with a
custodian for DTC for credit to the respective accounts of the purchasers (or to
such other accounts as they may direct) at DTC.
We expect that pursuant to procedures established by DTC (a) upon deposit
of the global securities, DTC or its custodian will credit on its internal
system portions of the global securities which will contain the corresponding
respective amount of the global securities to the respective accounts of persons
who have accounts with such depositary and (b) ownership of the notes will be
shown on, and the transfer of ownership thereof will be affected only through,
records maintained by DTC or its nominee (with respect to interests of
participants (as defined below) and the records of participants (with respect to
interests of persons other than participants). Such accounts initially will be
designated by or on behalf of Credit Suisse First Boston Corporation, the
initial purchaser, and ownership of beneficial interests in the global
securities will be limited to persons who have accounts with DTC (the
"participants") or persons who hold interests through participants. Noteholders
may hold their interests in a global security directly through DTC if they are
participants in such system, or indirectly through organizations which are
participants in such system.
So long as DTC or its nominee is the registered owner or holder of any of
the notes, DTC or such nominee will be considered the sole owner or holder of
such notes represented by such global securities for all purposes under the
indenture and under the notes represented thereby. No beneficial owner of an
interest in the global securities will be able to transfer such interest except
in accordance with the applicable procedures of DTC in addition to those
provided for under the indenture and, if applicable, those of the Euroclear
System ("Euroclear") and Clearstream Banking, societe anonyme, Luxembourg
("Clearstream Luxembourg").
CERTAIN BOOK-ENTRY PROCEDURES FOR THE GLOBAL SECURITIES
The descriptions of the operations and procedures of DTC, Euroclear and
Clearstream Luxembourg set forth below are provided solely as a matter of
convenience. These operations and procedures are solely within the control of
the respective settlement systems and are subject to change by them from time to
time. Investors are urged to contact the relevant system or its participants
directly to discuss these matters.
DTC has advised us that it is:
- a limited-purpose trust company organized under the laws of the State of
New York;
- 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, as amended; and
- a "clearing agency" registered pursuant to Section 17A of the Securities
Exchange Act of 1934.
DTC was created to hold securities for its participants (collectively, the
"participants") and to facilitate the clearance and settlement of securities
transactions, such as transfers and pledges, between participants through
electronic book-entry changes to the accounts of its participants, thereby
eliminating the need for physical transfer and delivery of certificates. DTC's
participants include securities brokers and dealers (including Credit Suisse
First Boston Corporation), banks and trust companies, clearing corporations and
certain other organizations. DTC is owned by a number of its direct participants
and by the New York Stock Exchange, Inc., the American Stock Exchange LLC and
the National Association of
38
Securities Dealers, Inc. Indirect access to DTC's system is also available to
other entities such as banks, brokers, dealers and trust companies
(collectively, the "indirect participants") that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Investors who are not participants may beneficially own securities held by or on
behalf of DTC only through participants or indirect participants. The rules
applicable to DTC and its participants are on file with the SEC.
The laws of some jurisdictions may require that some purchasers of
securities take physical delivery of those securities in definitive form.
Accordingly, the ability to transfer beneficial interests in notes represented
by a global security to those persons may be limited. In addition, because DTC
can act only on behalf of its participants, who in turn act on behalf of persons
who hold interests through participants, the ability of a person holding a
beneficial interest in a global security to pledge or transfer that interest to
persons or entities that do not participate in DTC's system, or to otherwise
take actions in respect of that interest, may be affected by the lack of a
physical security in respect of that interest.
So long as DTC or its nominee is the registered owner of a global security,
DTC or that nominee, as the case may be, will be considered the sole legal owner
or holder of the notes represented by that global security for all purposes of
the notes and the Indenture. Except as provided below, owners of beneficial
interests in a global security will not be entitled to have the notes
represented by that global security registered in their names, will not receive
or be entitled to receive physical delivery of certificated securities, and will
not be considered the owners or holders of the notes represented by that
beneficial interest under the Indenture for any purpose, including with respect
to the giving of any direction, instruction or approval to the trustee. To
facilitate subsequent transfers, all global securities that are deposited with,
or on behalf of, DTC will be registered in the name of DTC's nominee, Cede & Co.
The deposit of global securities with, or on behalf of, DTC and their
registration in the name of Cede & Co. effect no change in beneficial ownership.
We understand that DTC has no knowledge of the actual beneficial owners of the
securities. Accordingly, each holder owning a beneficial interest in a global
security must rely on the procedures of DTC and, if that holder is not a
participant or an indirect participant, on the procedures of the participant
through which that holder owns its interest, to exercise any rights of a holder
of notes under the Indenture or that global security. We understand that under
existing industry practice, in the event that we request any action of holders
of notes, or a holder that is an owner of a beneficial interest in a global
security desires to take any action that DTC, as the holder of that global
security, is entitled to take, DTC would authorize the participants to take that
action and the participants would authorize holders owning through those
participants to take that action or would otherwise act upon the instruction of
those holders.
Conveyance of notices and other communications by DTC to its direct
participants, by its direct participants to indirect participants and by its
direct and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the global
securities. Under its usual procedures, DTC will mail an omnibus proxy to us as
soon as possible after the applicable record date. The omnibus proxy assigns
Cede & Co.'s consenting or voting rights to those direct participants of DTC to
whose accounts the securities are credited on the applicable record date, which
are identified in a listing attached to the omnibus proxy.
Neither we nor the trustee will have any responsibility or liability for
any aspect of the records relating to or payments made on account of notes by
DTC, or for maintaining, supervising or reviewing any records of DTC relating to
the notes.
Payments with respect to the principal of and premium, if any, and interest
on a global security will be payable by the trustee to or at the direction of
DTC or its nominee in its capacity as the registered holder of the global
security under the Indenture. Under the terms of the Indenture, we and the
trustee may treat the persons in whose names the notes, including the global
securities, are registered as the owners thereof for the purpose of receiving
payment thereon and for any and all other purposes whatsoever. Accordingly,
neither we nor the trustee has or will have any responsibility or liability for
the
39
payment of those amounts to owners of beneficial interests in a global security.
It is our understanding that DTC's practice is to credit direct its
participants' accounts on the applicable payment date in accordance with their
respective holdings shown on DTC's records, unless DTC has reason to believe
that it will not receive payment on that date. Payments by the participants and
the indirect participants to the owners of beneficial interests in a global
security will be governed by standing instructions and customary industry
practice and will be the responsibility of the participants and indirect
participants and not of DTC, us or the trustee, subject to statutory or
regulatory requirements in effect at the time. None of us, the trustee or any
paying agent will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial interests in the
global securities or for maintaining, supervising or reviewing any records
relating to those beneficial interests.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Clearstream Luxembourg will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
notes, cross-market transfers between the participants in DTC, on the one hand,
and Euroclear or Clearstream Luxembourg participants, on the other hand, will be
effected through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream Luxembourg, as the case may be, by its respective depositary;
however, those crossmarket transactions will require delivery of instructions to
Euroclear or Clearstream Luxembourg, as the case may be, by the counterparty in
that system in accordance with the rules and procedures and within the
established deadlines (Brussels time) of that system. Euroclear or Clearstream
Luxembourg, as the case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its respective depositary to take action
to effect final settlement on its behalf by delivering or receiving interests in
the relevant global securities in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Euroclear participants and Clearstream Luxembourg participants may not
deliver instructions directly to the depositaries for Euroclear or Clearstream
Luxembourg.
Because of time zone differences, the securities account of a Euroclear or
Clearstream Luxembourg participant purchasing an interest in a global security
from a participant in DTC will be credited, and any such crediting will be
reported to the relevant Euroclear or Clearstream Luxembourg participant, during
the securities settlement processing day (which must be a business day for
Euroclear and Clearstream Luxembourg) immediately following the settlement date
of DTC. Cash received in Euroclear or Clearstream Luxembourg as a result of
sales of interests in a global security by or through a Euroclear or Clearstream
Luxembourg participant to a participant in DTC will be received with value on
the settlement date of DTC but will be available in the relevant Euroclear or
Clearstream Luxembourg cash account only as of the business day for Euroclear or
Clearstream Luxembourg following DTC's settlement date.
Although we understand that DTC, Euroclear and Clearstream Luxembourg have
agreed to the foregoing procedures to facilitate transfers of interests in the
global securities among participants in DTC, Euroclear and Clearstream
Luxembourg, they are under no obligation to perform or to continue to perform
those procedures, and those procedures may be discontinued at any time. Neither
we nor the trustee will have any responsibility for the performance by DTC,
Euroclear or Clearstream Luxembourg or their respective participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
DTC, Euroclear or Clearstream Luxembourg may discontinue providing its
services as securities depositary with respect to the global securities at any
time by giving reasonable notice to us or the trustee. Under such circumstances,
if a successor securities depositary is not obtained, certificates for the
securities are required to be printed and delivered.
We may decide to discontinue use of the system of book-entry transfers
through DTC or a successor securities depositary. In that event, certificates
for the securities will be printed and delivered.
40
We have provided the foregoing information with respect to DTC to the
financial community for information purposes only. We obtained the information
in this section and elsewhere in this prospectus concerning DTC, Euroclear and
Clearstream Luxembourg and their respective book-entry systems from sources that
we believe are reliable. Although we expect DTC, Euroclear or Clearstream
Luxembourg and their participants to follow the foregoing procedures in order to
facilitate transfers of interests in global securities among their respective
participants, they are under no obligation to perform or continue to perform
such procedures and such procedures may be discontinued at any time.
EXCHANGE OFFER AND REGISTRATION RIGHTS
In connection with the issuance of the Old Notes, we entered into a
registration rights agreement with Credit Suisse First Boston Corporation, the
initial purchaser. The following summary of selected provisions of the
registration rights agreement is not complete and is subject to all the
provisions of the registration rights agreement. Copies of the registration
rights agreement are available from us upon request as described under "Where
You Can Find More Information."
Pursuant to the registration rights agreement, we agreed to file with the
SEC this exchange offer registration statement with respect to a registered
offer to exchange the Old Notes for New Notes, which have terms identical to the
Old Notes in all material respects except that such notes will not contain terms
with respect to transfer restrictions, registration rights and payment of
additional interest. Upon the effectiveness of this exchange offer registration
statement, pursuant to the exchange offer we will offer to the holders of
Transfer Restricted Securities (as defined below) who are able to make certain
representations, the opportunity to exchange their Transfer Restricted
Securities for New Notes. If, upon consummation of the exchange offer, Credit
Suisse First Boston Corporation holds notes acquired by it as part of the Old
Notes' initial distribution, we, simultaneously with the delivery of the New
Notes pursuant to the exchange offer, will issue and deliver to Credit Suisse
First Boston Corporation, in a private exchange for the notes held by Credit
Suisse First Boston Corporation, a like principal amount of our New Notes issued
under the indenture and identical in all material respects to the New Notes
issued in the exchange offer, except such notes issued in the private exchange
shall include restrictions on transfer under the Securities Act and the
securities laws of the several states of the United States.
If:
- we are not permitted to file this exchange offer registration statement
or consummate the exchange offer because the exchange offer is not
permitted by applicable law or SEC policy;
- Credit Suisse First Boston Corporation so requests with respect to notes,
including New Notes acquired in a private exchange, not eligible to be
exchanged for New Notes in the exchange offer and held by it following
consummation of the exchange offer;
- any holder of Transfer Restricted Securities notifies us in writing prior
to the consummation of the exchange offer that, based upon an opinion of
counsel, it is not eligible to participate in the exchange offer, or, in
the case of any holder, other than a broker-dealer, that participates in
the exchange offer, such holder does not receive freely tradeable New
Notes, or
- the exchange offer is not consummated within 260 days of the closing of
the offering of the Old Notes, then we will file with the SEC a shelf
registration statement to cover resales of the notes by the holders
thereof who satisfy certain conditions relating to the provision of
information in connection with the shelf registration statement.
We also agreed to use our reasonable commercial efforts to cause the
applicable registration statement to be declared effective as promptly as
possible by the SEC. For purposes of the foregoing, "Transfer Restricted
Securities" means each note, including notes acquired in a private exchange,
until the earlier to occur of:
- the date on which such note has been exchanged by a person other than a
broker-dealer for a freely tradeable New Note in the exchange offer;
41
- following the exchange by a broker-dealer in the exchange offer of an Old
Note for a New Note, the date on which such New Note is sold to a
purchaser who receives from such broker-dealer on or prior to the date of
such sale a copy of the prospectus contained in this exchange offer
registration statement;
- the date on which such note, including a note acquired in a private
exchange, has been effectively registered under the Securities Act and
disposed of in accordance with the shelf registration statement; or
- the date on which such note, including a note acquired in a private
exchange, is distributed to the public pursuant to Rule 144 under the
Securities Act or is saleable pursuant to Rule 144(k) under the
Securities Act.
The registration rights agreement also provides that:
- we will file this exchange offer registration statement with the SEC on
or prior to 90 days after the closing of the offering of the Old Notes;
- we will use our reasonable commercial efforts to have this exchange offer
registration statement declared effective by the SEC within 220 days
after the closing of the offering of the Old Notes;
- unless the exchange offer would not be permitted by applicable law or SEC
policy, we will commence the exchange offer and use our reasonable
commercial efforts to issue on or prior to 30 business days after the
date on which this exchange offer registration statement is declared
effective by the SEC, New Notes in exchange for all notes properly
tendered and not withdrawn prior thereto in the exchange offer; and
- if obligated to file the shelf registration statement, we will use our
reasonable commercial efforts to file the shelf registration statement
with the SEC as promptly as practicable but in no event more than 30
business days after such filing obligation arises and to thereafter cause
the shelf registration statement to be declared effective by the SEC as
promptly as practicable thereafter. We are permitted to suspend use of
the prospectus that is part of the shelf registration statement during
certain periods of time and in certain circumstances relating to pending
corporate developments and public filings with the SEC and similar
events.
Additional interest with respect to the Old Notes shall be assessed as
follows if any of the following events occur:
- if on or prior to the 90 days following the closing of the offering of
the Old Notes, neither this exchange offer registration statement nor a
shelf registration statement has been filed with the SEC; or
- if on or prior to the 220 days following the closing of the offering of
the Old Notes, this exchange offer registration statement has not been
declared effective by the SEC or, if required to be filed in lieu
thereof, the shelf registration statement has not been declared effective
by the SEC; or
- if the exchange offer has not been consummated within 30 business days
after this exchange offer registration statement has been declared
effective by the SEC; or
- if after either this exchange offer registration statement or the shelf
registration statement is declared effective:
- such registration statement thereafter ceases to be effective; or
- such registration statement or the related prospectus ceases to be
usable, except as permitted in the registration rights agreement, in
connection with the exchanges of the notes or resales of Transfer
Restricted Securities, as applicable, during the periods specified
therein because either any event occurs as a result of which the related
prospectus forming part of such registration statement would include an
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they
42
were made, not misleading, or it shall be necessary to amend such
registration statement or supplement the related prospectus to comply
with the Securities Act or the Securities Exchange Act or the respective
rules thereunder.
Additional interest shall accrue on the Transfer Restricted Securities over
and above the interest set forth in the title of the notes at an annual rate of
0.25% for the first 90-day period from and including the date on which any of
the previous events shall occur, and such annual rate will increase by an
additional 0.25% with respect to each subsequent 90-day period until all such
events have been cured, up to a maximum additional annual rate of 0.75%.
Holders of notes will be required to make certain representations to us, as
described in the registration rights agreement, in order to participate in the
exchange offer and will be required to deliver information to be used in
connection with the shelf registration statement and to provide comments on the
shelf registration statement within the time periods set forth in the
registration rights agreement and will be named as a selling security holder in
such shelf registration statement in order to have their notes included in the
shelf registration statement and benefit from the provisions regarding
additional interest set forth above. Any holders, other than Credit Suisse First
Boston Corporation, who are eligible to participate in the exchange offer but
fail to, or elect not to, participate therein will continue to hold Transfer
Restricted Securities and will have no further rights to exchange their Transfer
Restricted Securities or have such securities registered under the registration
rights agreement.
PLAN OF DISTRIBUTION
Based on interpretations by the staff of the SEC set forth in no action
letters issued to third parties, we believe that you may transfer New Notes
issued under the exchange offer in exchange for Old Notes unless you are:
- our "affiliate" within the meaning of Rule 405 under the Securities Act;
- a broker-dealer that acquired Old Notes directly from us; or
- a broker-dealer that acquired Old Notes as a result of market-making or
other trading activities without compliance with the registration and
prospectus delivery provisions of the Securities Act;
provided that you acquire the New Notes in the ordinary course of your business
and you are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a distribution
of the New Notes. Broker-dealers receiving New Notes in the exchange offer will
be subject to a prospectus delivery requirement with respect to resales of the
New Notes.
To date, the staff of the SEC has taken the position that participating
broker-dealers may fulfill their prospectus delivery requirements with respect
to transactions involving an exchange of securities such as this exchange offer,
other than a resale of an unsold allotment from the original sale of the Old
Notes, with the prospectus contained in the exchange offer registration
statement.
Each broker-dealer that receives New Notes for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. We have agreed that, for a period of 180 days after the
expiration date, we will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until , 2002, all dealers effecting transactions in the
New Notes may be required to deliver a prospectus.
We will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the
43
time of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such New Notes.
Any broker-dealer that resells New Notes that were received by it for its own
account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The letter of transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the expiration date, we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests such documents in the letter of
transmittal. We have agreed to pay all expenses incident to the exchange offer
(including the expenses of one counsel for the holders of the notes), other than
commissions or concessions of any brokers or dealers, and will indemnify the
holders of the notes (including any broker-dealers) against specified
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity and enforceability of the notes offered hereby and certain
United States federal income taxation matters will be passed upon for El Paso by
Locke Liddell & Sapp LLP, Houston, Texas.
EXPERTS
The consolidated financial statements and financial statement schedule
incorporated in this prospectus by reference to the Annual Report on Form 10-K
of El Paso for the year ended December 31, 2001, except as they relate to El
Paso CGP Company (formerly The Coastal Corporation) as of December 31, 2000 and
for each of the two years in the period then ended, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
The consolidated financial statements and financial statement schedule of
El Paso CGP Company (formerly The Coastal Corporation) and subsidiaries as of
December 31, 2000 and for the two years ended December 31, 2000 not separately
incorporated herein by reference have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report incorporated herein by
reference, and is included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
Information related to our estimated proved natural gas and oil reserves as
of December 31, 2001 incorporated in this prospectus by reference to our Annual
Report on Form 10-K for the year then ended, have been so incorporated in
reliance on a reserve report dated January 1, 2002, generated by us and reviewed
by Huddleston & Co., Inc., independent petroleum engineers.
44
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE YOU
WRITTEN INFORMATION OTHER THAN THIS PROSPECTUS OR TO MAKE REPRESENTATIONS AS TO
MATTERS NOT STATED IN THIS PROSPECTUS. YOU MUST NOT RELY ON UNAUTHORIZED
INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL THE NOTES OR OUR
SOLICITATION OF YOUR OFFER TO BUY THE NOTES IN ANY JURISDICTION WHERE THAT WOULD
NOT BE PERMITTED OR LEGAL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALES
MADE HEREUNDER AFTER THE DATE OF THIS PROSPECTUS SHALL CREATE AN IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN OR THE AFFAIRS OF THE COMPANY HAVE NOT
CHANGED SINCE THE DATE OF THIS PROSPECTUS.
UNTIL , ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNUSED
ALLOTMENTS OR SUBSCRIPTIONS.
EL PASO CORPORATION
$500,000,000
OFFER TO EXCHANGE
REGISTERED 7 7/8% NOTES DUE JUNE 15, 2012
FOR
ALL OUTSTANDING 7 7/8% NOTES DUE JUNE 15, 2012
-------------------------
PROSPECTUS
-------------------------
, 2002
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a corporation may indemnify directors and officers as well as other
employees and individuals against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement in connection with specified
actions, suits, proceedings whether civil, criminal, administrative, or
investigative (other than action by or in the right of the corporation -- a
"derivative action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with the
defense or settlement of such action, and the statute requires court approval
before there can be any indemnification where the person seeking indemnification
has been found liable to the corporation. The statute provides that it is not
exclusive of other indemnification that may be granted by a corporation's
charter, by-laws, disinterested director vote, stockholder vote, agreement, or
otherwise.
Article X of the by-laws of El Paso requires indemnification to the full
extent permitted under Delaware law as from time to time in effect. Subject to
any restrictions imposed by Delaware law, the by-laws of El Paso provide an
unconditional right to indemnification for all expense, liability, and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes, or penalties
and amounts paid in settlement) actually and reasonably incurred or suffered by
any person in connection with any actual or threatened proceeding (including, to
the extent permitted by law, any derivative action) by reason of the fact that
such person is or was serving as a director or officer or employee of El Paso,
such person or is or was serving at the request of El Paso as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust, or other enterprise, including service with respect to an
employee benefit plan. The by-laws of El Paso also provide that El Paso may, by
action of its board of directors, provide indemnification to its agents with the
same scope and effect as the foregoing indemnification of directors and
officers.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability for (i) any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) acts of omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) payment of unlawful dividends or unlawful
stock purchases or redemptions, or (iv) any transaction from which the director
derived an improper personal benefit.
Article 10 of El Paso's restated certificate of incorporation, as amended,
provides that to the full extent that the DGCL, as it now exists or may
hereafter be amended, permits the limitation or elimination of the liability of
directors, a director of El Paso shall not be liable to El Paso or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Any amendment to or repeal of such Article 10 shall not adversely affect any
right or protection of a director of El Paso for or with respect to any acts or
omissions of such director occurring prior to such amendment or repeal.
El Paso maintains directors' and officers' liability insurance which
provides for payment, on behalf of the directors and officers of El Paso and its
subsidiaries, of certain losses of such persons (other than matters uninsurable
under law) arising from claims, including claims arising under the Securities
Act of 1933, as amended ("Securities Act") for acts or omissions by such persons
while acting as directors or officers of El Paso and/or its subsidiaries, as the
case may be.
II-1
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
------- -----------
**1.1 -- Purchase Agreement dated as of June 4, 2002, between El Paso
and Credit Suisse First Boston Corporation.
4.1 -- Indenture dated as of May 10, 1999, by and between El Paso
and JPMorgan Chase Bank (formerly known as The Chase
Manhattan Bank), as Trustee (incorporated by reference to El
Paso's Current Report on Form 8-K filed May 10, 1999).
**4.2 -- Seventh Supplemental Indenture dated as of June 10, 2002, by
and between El Paso and JPMorgan Chase Bank (formerly known
as The Chase Manhattan Bank), as Trustee, including the form
of 7 7/8% Note Due June 15, 2012.
**4.3 -- Registration Rights Agreement dated as of June 10, 2002,
between El Paso and Credit Suisse First Boston Corporation.
**5.1 -- Opinion of Locke Liddell & Sapp LLP as to the legality of
the New Notes.
**8.1 -- Opinion of Locke Liddell & Sapp LLP regarding tax matters.
12.1 -- Computation of Ratio of Earnings to Fixed Charges.
23.1 -- Consent of PricewaterhouseCoopers LLP.
23.2 -- Consent of Deloitte & Touche LLP.
**23.3 -- Consent of Locke Liddell & Sapp LLP (included in Exhibit
5.1).
23.4 -- Consent of Huddleston & Co., Inc.
**24.1 -- Power of Attorney (included on signature page).
**99.1 -- Form of Letter to Holder of Old Notes.
**99.2 -- Form of Letter of Transmittal (with accompanying Substitute
Form W-9 and related Guidelines).
**99.3 -- Form of Notice of Guaranteed Delivery.
**99.4 -- Form of Letter to Registered Holders and Depository Trust
Company Participants.
**99.5 -- Form of Letter to Clients (with form of Instructions to
Registered Holder and/or Depository Trust Company
Participant).
**99.6 -- Form of Exchange Agent Agreement.
---------------
** Previously filed.
All supporting schedules have been omitted because they are not required or
the information required to be set forth therein is included in the consolidated
financial statements or in the notes thereto.
ITEM 22. UNDERTAKINGS.
(A) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(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 this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
II-2
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b)
under the Securities Act, if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table
in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration statement
or any material change to such information in this Registration
Statement; provided, however, that the undertakings set forth in
paragraphs (1)(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 the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") that are incorporated 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 securities at that time 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.
(B) The undersigned Registrant hereby undertakes, that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of 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.
(C) The undersigned Registrant hereby undertakes:
(1) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Exchange Act; and, where interim financial information
required to be presented by Article 3 of Regulation S-X are not set forth
in the prospectus, to deliver, or cause to be delivered to each person to
whom the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.
(D) The undersigned Registrant hereby undertakes:
(1) That, prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes 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 securities at that time shall be
deemed to be the initial bona fide offering thereof.
(E) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or
II-3
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant 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 Registrant will, unless
in the opinion of its 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
Securities Act and will be governed by the final adjudication of such issue.
(G) The undersigned Registrant hereby undertakes:
(1) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, 13 of this
Form S-4, within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent to
the effective date of the Registration Statement through the date of
responding to the request.
(2) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when
it became effective.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on October 9, 2002.
EL PASO CORPORATION
By: /s/ H. BRENT AUSTIN
-----------------------------------
H. Brent Austin
President and Chief Operating
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates as indicated.
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman of the Board, October 9, 2002
------------------------------------------------ Chief Executive Officer and
William A. Wise Director
(Principal Executive Officer)
/s/ H. BRENT AUSTIN President and October 9, 2002
------------------------------------------------ Chief Operating Officer
H. Brent Austin
/s/ D. DWIGHT SCOTT Executive Vice President and October 9, 2002
------------------------------------------------ Chief Financial Officer
D. Dwight Scott (Principal Financial Officer)
/s/ JEFFREY I. BEASON Senior Vice President and October 9, 2002
------------------------------------------------ Controller (Principal
Jeffrey I. Beason Accounting Officer)
* Director October 9, 2002
------------------------------------------------
Byron Allumbaugh
* Director October 9, 2002
------------------------------------------------
John M. Bissell
* Director October 9, 2002
------------------------------------------------
Juan Carlos Braniff
* Director October 9, 2002
------------------------------------------------
James F. Gibbons
* Director October 9, 2002
------------------------------------------------
Anthony W. Hall, Jr.
II-5
SIGNATURE TITLE DATE
--------- ----- ----
* Director October 9, 2002
------------------------------------------------
Ronald L. Kuehn, Jr.
* Director October 9, 2002
------------------------------------------------
J. Carleton MacNeil, Jr.
* Director October 9, 2002
------------------------------------------------
Thomas R. McDade
* Director October 9, 2002
------------------------------------------------
Malcom Wallop
* Director October 9, 2002
------------------------------------------------
Joe B. Wyatt
*/s/ H. BRENT AUSTIN
------------------------------------------------
H. Brent Austin
Attorney-in-fact
II-6
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
**1.1 -- Purchase Agreement dated as of June 4, 2002, between El Paso
and Credit Suisse First Boston Corporation.
4.1 -- Indenture dated as of May 10, 1999, by and between El Paso
and JPMorgan Chase Bank (formerly known as The Chase
Manhattan Bank), as Trustee (incorporated by reference to El
Paso's Current Report on Form 8-K filed May 10, 1999).
**4.2 -- Seventh Supplemental Indenture dated as of June 10, 2002, by
and between El Paso and JPMorgan Chase Bank (formerly known
as The Chase Manhattan Bank), as Trustee, including the form
of 7 7/8% Note Due June 15, 2012.
**4.3 -- Registration Rights Agreement dated as of June 10, 2002,
between El Paso and Credit Suisse First Boston Corporation.
**5.1 -- Opinion of Locke Liddell & Sapp LLP as to the legality of
the New Notes.
**8.1 -- Opinion of Locke Liddell & Sapp LLP regarding tax matters.
12.1 -- Computation of Ratio of Earnings to Fixed Charges.
23.1 -- Consent of PricewaterhouseCoopers LLP.
23.2 -- Consent of Deloitte & Touche LLP.
**23.3 -- Consent of Locke Liddell & Sapp LLP (included in Exhibit
5.1).
23.4 -- Consent of Huddleston & Co., Inc.
**24.1 -- Power of Attorney (included on signature page).
**99.1 -- Form of Letter to Holder of Old Notes.
**99.2 -- Form of Letter of Transmittal (with accompanying Substitute
Form W-9 and related Guidelines).
**99.3 -- Form of Notice of Guaranteed Delivery.
**99.4 -- Form of Letter to Registered Holders and Depository Trust
Company Participants.
**99.5 -- Form of Letter to Clients (with form of Instructions to
Registered Holder and/or Depository Trust Company
Participant).
**99.6 -- Form of Exchange Agent Agreement.
---------------
** Previously filed.
II-7