1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 25, 1999
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
PANHANDLE EASTERN PIPE LINE COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 4924 44-0382470
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
5444 WESTHEIMER COURT
HOUSTON, TEXAS 77056-5306
713-989-7000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
ALAN M. WRIGHT
SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER
PANHANDLE EASTERN PIPE LINE COMPANY
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
313-436-9200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
With copies to:
MICHAEL D. VAN HEMERT, ESQ.
ASSISTANT GENERAL COUNSEL
CMS ENERGY CORPORATION
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
(313) 436-9200
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only 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
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT BEING OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED UNIT(1) PRICE(1) FEE
- -----------------------------------------------------------------------------------------------------------------------
6.125% Senior Notes Due 2004........... $300,000,000 100% $300,000,000 $ 83,400.00
6.500% Senior Notes Due 2009........... 200,000,000 100 200,000,000 55,600.00
7.000% Senior Notes Due 2029........... 300,000,000 100 300,000,000 83,400.00
Total.................................. $800,000,000 100% $800,000,000 $222,400.00
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
(1) Estimated pursuant to Rule 457(f) solely for the purpose of calculating the
registration fee.
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K
SHOWING THE LOCATION IN THE PROSPECTUS OF THE
INFORMATION REQUIRED BY PART I OF FORM S-4
ITEM NUMBER AND CAPTION LOCATION IN THE PROSPECTUS
----------------------- --------------------------
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement
and Outside Front Cover Page of the
Prospectus.......................... Front Cover Page of the Registration
Statement; Outside Front Cover Page
of the Prospectus
2. Inside Front and Outside Back Cover
Pages of the Prospectus............. Inside Front Cover page of the
Prospectus; Outside Back Cover Page
of the Prospectus
3. Risk Factors, Ratio of Earnings to
Fixed Charges and Other
Information......................... Prospectus Summary; Risk Factors;
Selected Consolidated Financial
Data; Ratio of Earnings to Fixed
Charges; Where to Find More
Information
4. Terms of the Transaction............ Prospectus Summary; Use of Proceeds;
The Exchange Offer; Description of
Exchange Notes; Certain United
States Federal Income Tax
Consequences; Plan of Distribution
5. Pro Forma Financial Information..... Selected Historical and Pro Forma
Financial Data; Unaudited Pro Forma
Financial Data
6. Material Contracts with the Company
Being Acquired...................... *
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters........... *
8. Interests of Named Experts and
Counsel............................. Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities......................... *
3
ITEM NUMBER AND CAPTION LOCATION IN THE PROSPECTUS
----------------------- --------------------------
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3
Registrants......................... Where to Find More Information;
Prospectus Summary; The Company;
Selected Consolidated Financial
Data; Use of Proceeds; Ratio of
Earning to Fixed Charges;
Capitalization
11. Incorporation of Certain Information
by Reference........................ Where to Find More Information
12. Information with Respect to S-2 or
S-3 Registrants..................... *
13. Incorporation of Certain Information
by Reference........................ *
14. Information with Respect to
Registrants Other Than S-3 or S-2
Registrants......................... *
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3
Companies........................... *
16. Information with Respect to S-2 or
S-3 Companies....................... *
17. Information with Respect to
Companies Other than S-3 or S-2
Companies........................... *
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be
Solicited........................... *
19. Information if Proxies, Consents or
Authorization are not be Solicited,
or in an Exchange Offer............. The Exchange Offer
- ---------------
* Item is omitted because response is negative or item is inapplicable.
4
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
JULY , 1999
PANHANDLE EASTERN PIPE LINE COMPANY
EXCHANGE OFFER
$300,000,000 6.125% SENIOR NOTES DUE 2004
$200,000,000 6.500% SENIOR NOTES DUE 2009
$300,000,000 7.000% SENIOR NOTES DUE 2029
ISSUED BY CMS PANHANDLE HOLDING COMPANY WHICH HAS MERGED WITH AND INTO
PANHANDLE EASTERN PIPE LINE COMPANY
FOR
$300,000,000 6.125% SENIOR NOTES DUE 2004
$200,000,000 6.500% SENIOR NOTES DUE 2009
$300,000,000 7.000% SENIOR NOTES DUE 2029
ISSUED BY PANHANDLE EASTERN PIPE LINE COMPANY
- --------------------------------------------------------------------------------
PANHANDLE EASTERN PIPE LINE COMPANY ("PANHANDLE" OR THE "COMPANY"):
- - We and our affiliate companies (collectively the "PANHANDLE COMPANIES")
operate one of the largest natural gas pipeline networks in the United States,
providing customers in the Southwest and Midwest with a comprehensive array of
transportation and storage services.
- - Panhandle Eastern Pipe Line Company
5444 Westheimer Court
Houston, Texas 77056-5306
(713) 989-7000
THE OFFERING:
- - We will exchange our notes (the "EXCHANGE NOTES") for the notes issued by CMS
Panhandle Holding Company ("CMS HOLDING") and guaranteed by us (the "NOTES").
Since the Notes were issued, CMS Holding has merged with and into us.
- - We will receive no proceeds from the exchange.
THE EXCHANGE NOTES:
- - Terms: Will be substantially identical to the Notes except that they will be
issued by us instead of CMS Holding and they will be registered under the
Securities Act of 1933.
- - Maturities:
- for the 2004 Exchange Notes, March 15, 2004;
- for the 2009 Exchange Notes, July 15, 2009; and
- for the 2029 Exchange Notes, July 15, 2029.
- - Interest Payments: Interest on all Exchange Notes will be paid semi-annually
in cash in arrears:
- for the 2004 Exchange Notes, on March 15 and September 15, commencing
September 15, 1999; and
- for the 2009 and the 2029 Exchange Notes, on January 15 and July 15,
commencing January 15, 2000.
- - Redemption: Some or all of the Exchange Notes may be redeemed on at least 30
days' notice.
- - Ranking of Exchange Notes: The Exchange Notes will rank equally with all of
our other unsecured and unsubordinated indebtedness.
- --------------------------------------------------------------------------------
THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 10.
- --------------------------------------------------------------------------------
These Securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this Prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is July , 1999
5
TABLE OF CONTENTS
PAGE
Forward-Looking Statements.................................. i
Where to Find More Information.............................. i
Prospectus Summary.......................................... 1
Historical and Pro Forma Selected Financial Information..... 8
Risk Factors................................................ 10
Use of Proceeds............................................. 12
Ratio of Earnings to Fixed Charges.......................... 12
The Company................................................. 13
Description of the Exchange Notes........................... 15
The Exchange Offer.......................................... 32
Certain United States Federal Income Tax Consequences....... 40
Plan of Distribution........................................ 43
Legal Matters............................................... 44
Experts..................................................... 44
Unaudited Pro Forma Financial Information................... F-1
FORWARD-LOOKING STATEMENTS
This Prospectus contains or incorporates by reference forward-looking
statements. The factors identified under "Risk Factors" are important factors
(but not necessarily all important factors) that could cause actual results to
differ materially from those expressed in any forward-looking statement made by,
or on behalf of, us.
Where any such forward-looking statements include a statement of the
assumptions or bases underlying such forward-looking statement, we believe that
the assumed results are reasonable, however, there is no assurance that they
will approximate actual results. Where, in any forward-looking statement, we
express an expectation or belief as to future results, such expectation or
belief is expressed in good faith and is believed to have a reasonable basis,
but there can be no assurance that the statement of expectation or belief will
result or be achieved or accomplished. The words "believe," "expect,"
"estimate," "project" and "anticipate" and similar expressions identify
forward-looking statements.
WHERE TO FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended. Accordingly, we file annual, quarterly and current
reports as well as other information with the SEC. The public may read and copy
any reports or other information that we file at the SEC's public reference room
at Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C. 20549. The public
may obtain information on the operation of the public reference room by calling
the SEC at 1-800-SEC-0330. Our SEC filings are also available to the public from
commercial document retrieval services and at the web site maintained by the SEC
at "http://www.sec.gov."
i
6
We have securities listed on the New York Stock Exchange. You can inspect
and copy reports and other information about us at the NYSE's offices at 20
Broad Street, New York, New York.
We are "incorporating by reference" information into this Prospectus. This
means that we are disclosing important information by referring to another
document filed separately with the SEC. The information incorporated by
reference is deemed to be part of this Prospectus, except for any information
superseded by information in this Prospectus. This Prospectus incorporates by
reference the documents set forth below that we have previously filed with the
SEC. These documents contain important information about us and our finances.
SEC FILINGS (FILE NO. 1-2921) PERIOD/DATE
----------------------------- -----------
-- Annual Report on Form 10-K Year ended December 31, 1998.
-- Quarterly Report on Form 10-Q Quarterly period ended March 31, 1999.
-- Current Reports on Form 8-K Filed January 26, 1999 and April 5, 1999.
The documents we have filed with the SEC pursuant to Sections 13(a), 13(c),
14 and 15 of the Exchange Act after the date of this Prospectus and before the
termination of the offering made by this Prospectus are also incorporated by
reference into this Prospectus.
This Prospectus, which is a part of the exchange offer registration
statement, does not contain all of the information found in the exchange offer
registration statement including various exhibits and schedules. We are
incorporating by reference the exchange offer registration statement.
You may request a copy of these filings and the exchange offer registration
statement at no cost, by writing or telephoning us at the following address:
Panhandle Eastern Pipe Line Company
5444 Westheimer Court
Houston, Texas 77056-5310
(713) 989-7000
Attention: Controller
You should rely only on the information contained or incorporated by
reference in this Prospectus. We have not authorized anyone to provide you with
information that is different from this information.
ii
7
PROSPECTUS SUMMARY
This summary may not contain all the information that may be important to
you. You should read the entire Prospectus, including the financial data and
related notes and the information incorporated by reference into this
Prospectus, before making an investment decision. The terms "OUR," "WE" and "US"
as used in this Prospectus Summary refer to the Panhandle Companies. The term
"YOU" as used in this Prospectus as the context requires refers to a holder of
the Notes or Exchange Notes.
PANHANDLE EASTERN PIPE LINE COMPANY
On March 29, 1999, CMS Energy Corporation ("CMS ENERGY") acquired all of
the outstanding common stock of Panhandle, its principal consolidated
subsidiaries, Trunkline Gas Company ("TRUNKLINE") and Pan Gas Storage Company
("PAN GAS STORAGE"), as well as Panhandle's affiliates, Panhandle Storage
Company ("PANHANDLE STORAGE") and Trunkline LNG Company ("TRUNKLINE LNG"), from
subsidiaries of Duke Energy Corporation. As a result of a corporate
reorganization at that time, Panhandle Storage and Trunkline LNG became direct,
wholly-owned subsidiaries of Panhandle. See "-- Acquisition by CMS Energy
Corporation."
We are primarily engaged in the transportation of natural gas in interstate
commerce. We operate one of the nation's largest natural gas pipeline networks,
providing customers in the Southwest and Midwest with a comprehensive array of
transportation and storage services. This interconnected 10,400 mile system
accesses virtually all major natural gas supply regions in the United States.
Our Panhandle transmission system consists of a system of four
large-diameter parallel pipelines, extending approximately 1,300 miles from
producing areas in the Anadarko Basin of Texas, Oklahoma and Kansas through
Missouri, Illinois, Indiana and Ohio into Michigan.
Our Trunkline transmission system consists of a system of three
large-diameter parallel pipelines, extending approximately 1,400 miles from the
Gulf Coast areas of Texas and Louisiana through Arkansas, Mississippi,
Tennessee, Kentucky, Illinois and Indiana to a point on the Indiana-Michigan
border. We also own and operate two offshore Louisiana natural gas supply
systems consisting of 337 miles of pipeline extending approximately 81 miles
into the Gulf of Mexico.
We own and operate five underground gas storage fields located in Illinois,
Michigan, Kansas, Oklahoma and Louisiana with a combined maximum working storage
capacity of 70 billion cubic feet.
We own a liquified natural gas ("LNG") regasification plant and related LNG
tanker port, unloading facilities and LNG and gas storage facilities located at
Lake Charles, Louisiana. The LNG plant has the capacity to deliver 700 million
cubic feet per day but has been operated on a limited basis for a number of
years.
Our Panhandle transmission system's major customers include approximately
20 utilities located in the Midwest market area that encompasses large portions
of Michigan, Ohio, Indiana, Illinois and Missouri. Our Trunkline transmission
system's major customers include eight utilities located in portions of
Illinois, Indiana, Michigan, Ohio and Tennessee.
1
8
Our rates and operations are subject to regulation by the Federal Energy
Regulatory Commission. For more information on this regulation, please see our
annual report on Form 10-K for the year ended December 31, 1998, which is
incorporated by reference into this Prospectus.
Panhandle is a Delaware corporation organized in 1929. Its principal
offices are located at 5444 Westheimer Court, Houston, Texas 77056-5306, and its
telephone number is 713-989-7000.
The above information about us is not comprehensive. For additional
information about our business and affairs, including our consolidated financial
statements and related notes, management's discussion and analysis, pending
environmental, legal and regulatory proceedings and descriptions of certain laws
and regulations to which we are subject, you should refer to the documents which
are or incorporated by reference in this Prospectus. See "Where to Find More
Information."
ACQUISITION BY CMS ENERGY CORPORATION
On March 29, 1999, CMS Energy acquired all of our outstanding common stock
from Duke Energy Corporation ("DUKE ENERGY"). CMS Energy paid $1.9 billion in
cash to Duke Energy and assumed $300 million of our existing debt.
CMS Energy is a leading diversified energy company operating in the United
States and around the world. CMS Energy's two principal subsidiaries are
Consumers Energy Company ("CONSUMERS") and CMS Enterprises Company
("ENTERPRISES"). Consumers is a public utility that provides natural gas and
electricity to almost six million of the nine and one-half million residents in
Michigan's Lower Peninsula. Enterprises, through subsidiaries, is engaged in
several domestic and international energy businesses including:
- Natural gas transmission, storage and processing;
- Independent power production;
- Oil and gas exploration and production;
- International energy distribution; and
- Energy marketing, services and trading.
Our acquisition by CMS Energy excluded certain of our non-strategic assets.
See "Unaudited Pro Forma Financial Information" for a description of
restructuring, realignment and elimination of certain activities between us and
Duke Energy prior to the closing of the acquisition.
Pursuant to the stock purchase agreement between subsidiaries of Duke
Energy and CMS Energy, Duke Energy has agreed to investigate and remedy
environmental damage to some of our properties. Duke Energy has agreed to
continue its clean-up effort at these properties post acquisition and to defend
and indemnify us against certain future environmental litigation and claims.
2
9
THE NOTE OFFERING
The Notes.................... On March 29, 1999, CMS Holding sold $300 million
principal amount of 6.125% Senior Notes due
2004; $200 million principal amount of 6.500%
Senior Notes Due 2009; and $300 million
principal amount of 7.000% Senior Notes due 2029
(collectively, the "NOTES"). On June 15, 1999,
CMS Holding merged into Panhandle and the
obligations of CMS Holding under the Notes and
the related indenture were assumed by us. The
Notes were offered to qualified institutional
buyers under Rule 144A as well as certain
qualified foreign purchasers pursuant to
Regulation S.
Registration Rights
Agreement.................... We executed a Registration Rights Agreement
which provides that we will grant certain
registration and exchange rights to Note
holders. As a result, we have filed a
registration statement with the SEC which will
permit you to exchange the Notes for new notes
which are registered under the Securities Act of
1933. The transfer restrictions will be removed
from the new notes. We are conducting the
exchange offer to satisfy our obligations with
respect to certain exchange and registration
rights. Except for a few limited circumstances,
these rights will terminate when the exchange
offer ends.
Guarantee.................... All payments under the Notes issued by CMS
Holding were irrevocably and unconditionally
guaranteed by us. This guarantee was terminated
when CMS Holding merged with and into us.
THE EXCHANGE OFFER
Securities Offered........... $300 million principal amount of 6.125% Senior
Notes due 2004; $200 million principal amount of
6.500% Senior Notes due 2009; and $300 million
principal amount of 7.000% Senior Notes due 2029
(individually the "2004 EXCHANGE NOTES," the
"2009 EXCHANGE NOTES" and the "2029 EXCHANGE
NOTES" and collectively the "EXCHANGE NOTES").
Exchange Offer............... The Exchange Notes will be offered for all
outstanding Notes. Currently outstanding are
$300 million aggregate principal amount of
6.125% Senior Notes due 2004; $200 million
principal amount of 6.500% Senior Notes due
2009; and $300 million principal amount of
7.000% Senior Notes due 2029. The Notes may be
tendered only in integral amounts of $1,000.
3
10
Resale of Exchange Notes..... Based on SEC no action letters, we believe that
after the exchange offer you may offer and sell
the Exchange Notes without registration under
the Securities Act of 1933 so long as:
- You acquire the Exchange Notes in the ordinary
course of business.
- When the exchange offer begins you do not have
an arrangement with another person to
participate in a distribution of the Exchange
Notes.
- You are not engaged in a distribution of, nor
do you intend to distribute, the Exchange
Notes.
When you tender the Notes we will ask you to
represent to us that:
- You are not our affiliate.
- You will acquire the Exchange Notes in the
ordinary course of business.
- When the exchange offer begins you are not
engaged in nor do you have plans with another
person to be engaged in a distribution of the
Exchange Notes.
If you are unable to make these representations,
you will be required to comply with the
registration and prospectus delivery
requirements under the Securities Act of 1933 in
connection with any secondary resale
transaction.
If you are a broker-dealer and receive Exchange
Notes for your own account, you must acknowledge
that you will deliver a prospectus if you resell
the Exchange Notes. By acknowledging your intent
and delivering a prospectus you will not be
deemed to admit that your are an "underwriter"
under the Securities Act of 1933. You may use
this Prospectus as it is amended from time to
time when you resell Exchange Notes which were
acquired from market-making or trading
activities. For a year after the Expiration Date
we will make this Prospectus available to any
broker-dealer in connection with such a resale.
See "Plan of Distribution."
If necessary, we will cooperate with you to
register and qualify the Exchange Notes for
offer or sale without any restrictions or
limitations under state "blue sky" laws.
Consequences of Failure to
Exchange Notes............... If you do not exchange your Notes during the
exchange offer you will no longer be entitled to
registration rights. You will not be able to
offer or sell the Notes unless
4
11
they are later registered, sold pursuant to an
exemption from registration or sold in a
transaction not subject to the Securities Act of
1933 or state securities laws. See "The Exchange
Offer--Consequences of Failure to Exchange."
Expiration Date.............. 5:00 p.m., EST, on , 1999 (the
"EXPIRATION DATE"). We may extend the exchange
offer.
Conditions to the Exchange
Offer........................ No minimum principal amount of Notes must be
tendered to complete the exchange offer.
However, the exchange offer is subject to
certain customary conditions which we may waive.
See "The Exchange Offer--Conditions." Other than
United States federal and state securities laws
we do not need to satisfy any regulatory
requirements or obtain any regulatory approval
to conduct the exchange offer.
Procedures for Tendering
Notes........................ If you wish to participate in the exchange offer
you must complete, sign and date the letter of
transmittal or a facsimile copy and mail it or
deliver it to the exchange agent along with any
necessary documentation. Instructions and the
address of the exchange agent will be on the
letter of transmittal and can be found in this
Prospectus. See "The Exchange Offer--Procedures
for Tendering" and "--Exchange Agent." You must
also effect a tender of Notes pursuant to the
procedures for book-entry transfer as described
in this Prospectus. See "The Exchange
Offer--Procedures for Tendering."
Guaranteed Delivery
Procedures................... If you cannot tender the Notes, complete the
letter of transmittal or provide the necessary
documentation prior to the termination of the
exchange offer, you may tender your Notes
according to the guaranteed delivery procedures
set forth in "The Exchange Offer--Guaranteed
Delivery Procedures."
Withdrawal Rights............ You may withdraw tendered Notes at any time
prior to 5:00 p.m. EST on the Expiration Date.
You must send a written or facsimile withdrawal
notice to the Exchange Agent prior to 5:00 p.m.
on the Expiration Date.
Acceptance of Notes and
Delivery of Exchange Notes... All Notes properly tendered to the Exchange
Agent by 5:00 p.m. on the Expiration Date will
be accepted for exchange. The Exchange Notes
will be delivered promptly after the Expiration
Date. See "The Exchange Offer--Acceptance of
Notes for Exchange; Delivery of Exchange Notes."
5
12
Certain United States Tax
Consequences................. Exchanging Notes for the Exchange Notes will not
be a taxable exchange for United States federal
income tax purposes. See "Certain United States
Federal Income Tax Consequences."
Exchange Agent............... Bank One Trust Company, NA is the exchange agent
(the "EXCHANGE AGENT") for the exchange offer.
Fees and Expenses............ We will pay all fees and expenses associated
with the exchange offer and compliance with the
Registration Rights Agreement.
Use of Proceeds.............. We will receive no cash proceeds in connection
with the exchange offer. The net proceeds of
$796 million from the sale of the Notes,
together with funds from CMS Energy, were used
to fund CMS Energy's acquisition of the
Panhandle Companies.
THE EXCHANGE NOTES
Issuer....................... Panhandle Eastern Pipe Line Company
Securities Offered........... $300 million principal amount of 6.125% Senior
Notes due 2004; $200 million principal amount of
6.500% Senior Notes due 2009; and $300 million
principal amount of 7.000% Senior Notes due 2029
(individually the "2004 EXCHANGE NOTES," the
"2009 EXCHANGE NOTES" and "2029 EXCHANGE NOTES"
and collectively the "EXCHANGE NOTES").
Maturities................... For the 2004 Exchange Notes, March 15, 2004; for
the 2009 Exchange Notes, July 15, 2009; and for
the 2029 Exchange Notes, July 15, 2029.
Interest Payment Dates....... Interest on all Exchange Notes will be paid
semi-annually in cash in arrears:
- for the 2004 Exchange Notes, on March 15 and
September 15 of each year, commencing
September 15, 1999; and
- for the 2009 Exchange Notes and the 2029
Exchange Notes, on January 15 and July 15 of
each year, commencing January 15, 2000.
Optional Redemption.......... The Exchange Notes will be redeemable at our
option. The Exchange Notes may be redeemed in
whole or in part, at any time or from time to
time, on not less than 30 days' notice, at the
Make-Whole Price as defined under "Description
of the Exchange Notes--Redemption."
6
13
Ranking...................... The Exchange Notes will be senior unsecured
obligations of Panhandle and will rank equally
in right of payment with Panhandle's other
existing and future senior unsecured debt.
Certain Covenants............ The Indenture will contain covenants that will,
among other things, limit our ability to pay
dividends, repurchase our common stock or make
other payments, incur additional liens, and
engage in sale-leaseback transactions.
Form and Denomination........ The Exchange Notes will be fully registered
under the Securities Act of 1933. The Exchange
Notes will be issued in the form of one or more
global notes and will be held by a custodian and
registered in the name of a designee of the
depositary. Beneficial interests in the global
notes as well as any sales of interests in the
global notes will be shown on records maintained
by the depositary.
Exchange Offer; Registration
Rights....................... To remove the transferability restrictions on
the Notes, we agreed to file a registration
statement with the SEC to permit you to exchange
the Notes for new notes which are registered
under the Securities Act. We agreed to file the
registration statement within 90 days after the
sale of the Notes, which we have done; to use
our best efforts to have it declared effective
within 180 days; and to complete the exchange
offer within 30 days after the registration
statement is effective. If we do not comply with
these requirements, you will receive higher
interest payments until we are in compliance.
7
14
PANHANDLE EASTERN PIPE LINE COMPANY
HISTORICAL AND PRO FORMA SELECTED FINANCIAL INFORMATION
The following summary historical financial information has been derived
from the historical consolidated financial statements of Panhandle. The
financial information set forth below should be read in conjunction with the
consolidated financial statements of Panhandle, related notes and other
financial information incorporated by reference in this Prospectus. See "Where
to Find More Information."
The unaudited pro forma selected financial information illustrates the
effects of:
- various restructuring, realignment, and elimination of activities between
the Panhandle Companies and Duke Energy prior to the closing of the
acquisition of the Panhandle Companies by CMS Energy;
- the adjustments resulting from the acquisition of the Panhandle Companies
by CMS Energy; and
- the application of the net proceeds from the sale of the Notes.
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------------- -----------------------
PRO FORMA PRO FORMA
1996 1997 1998 1998 1998 1999 1999
----- ----- ----- ----------- ---- ---- ---------
(UNAUDITED) (UNAUDITED)
(DOLLARS IN MILLIONS)
INCOME STATEMENT DATA:
Operating revenues.... $ 539 $ 534 $ 496 $ 470 $139 $133 $128
Operating expenses.... 345 339 295 304 69 64 68
----- ----- ----- ----- ---- ---- ----
Operating income...... 194 195 201 166 70 69 60
Other income and
expenses............ 4 6 24 10 6 5 5
----- ----- ----- ----- ---- ---- ----
Earnings before
interest and
taxes............... 198 201 225 176 76 74 65
Interest expense...... 62 73 77 78 19 19 20
----- ----- ----- ----- ---- ---- ----
Income before income
taxes............... 136 128 148 98 57 55 45
Income taxes.......... 48 48 57 40 22 21 18
----- ----- ----- ----- ---- ---- ----
Net income............ $ 88 $ 80 $ 91 $ 58 $ 35 $ 34 $ 27
===== ===== ===== ===== ==== ==== ====
OTHER DATA:
EBITDA(1)............. $ 256 $ 260 $ 281 $ 233 $ 90 $ 88 $ 79
Cash Flow
From operating
activities....... 106 106 174 148 19 21 14
From investing
activities....... (106) (106) (174) (148)(2) (19) (21) (14)(2)
Ratio of EBITDA to
interest expense.... 4.1x 3.6x 3.6x 3.0x 4.7x 4.6x 4.0x
- ----------------------
(1) EBITDA represents earnings before interest, income taxes, depreciation and
amortization. EBITDA is not intended to represent cash flow for the period,
nor is it presented as an alternative to operating income as an indicator of
operating performance, and should not be considered in isolation or as a
substitute for measures of performance
8
15
prepared in accordance with generally accepted accounting principles
("GAAP") in the United States and is not indicative of operating income or
cash flow from operations as determined under GAAP.
(2) Does not include $1.9 billion of cash flow effects associated with the
acquisition of the Panhandle Companies by CMS Energy.
(3) For the purpose of computing the ratio, earnings represent net income before
income tax, net interest charges and the estimated interest portions of
lease rentals.
AS OF DECEMBER 31, AS OF MARCH 31,
-------------------------------------- ---------------------------
PRO FORMA PRO FORMA
1996 1997 1998 1998 1998 1999 1999
------ ------ ------ ----------- ------ ------ ---------
(UNAUDITED) (UNAUDITED) (1)
(DOLLARS IN MILLIONS)
BALANCE SHEET DATA:
Current assets....... $ 169 $ 192 $ 180 $ 168 $ 175 $ 181 $ 181
Investments and other
assets............. 809 751 814 733 755 504 750
Net property, plant
and equipment...... 922 958 979 1,576 960 838 1,543
------ ------ ------ ------ ------ ------ ------
Total assets......... $1,900 $1,901 $1,973 $2,477 $1,890 $1,523 $2,474
====== ====== ====== ====== ====== ====== ======
Current
liabilities........ $ 842 $ 920 $ 914 $ 116 $ 870 $ 121 $ 121
Long-term debt....... 299 299 299 1,118 299 299 1,118
Other liabilities.... 263 181 202 143 186 34 134
Common stockholder's
equity............. 496 501 558 1,100 535 1,069 1,101
------ ------ ------ ------ ------ ------ ------
Total liabilities and
stockholder's
equity............. $1,900 $1,901 $1,973 $2,477 $1,890 $1,523 $2,474
====== ====== ====== ====== ====== ====== ======
- -------------------------
(1) Reflects the merger of Panhandle and CMS Holding.
9
16
RISK FACTORS
In addition to the information set forth in this Prospectus, you should
carefully consider the risks described below before making an investment in the
Exchange Notes. The risks described below are not the only ones facing us.
Additional risks not presently known to us or that we currently deem immaterial
may also impair our business operations.
DOMESTIC COMPETITION AND REGULATORY RESTRUCTURING
Federal and state regulation of natural gas interstate pipelines has
changed dramatically in the last two decades and could continue to change over
the next several years. In general, such regulatory changes have resulted and
will continue to result in increased competition in our business. In order to
meet competitive challenges, we will need to adapt our marketing strategies, the
type of transportation and storage services we offer to our customers and our
pricing and rate responses to competitive forces in order to maintain and grow
our business. We will also need to respond to changes in state regulation in our
market area that allow direct sales to all retail end-user customers or, at
least, broader customer classes than now allowed. We are not able to predict the
financial consequences of these changes at this time, but they could have a
material adverse effect on our financial results.
Federal Energy Regulatory Commission ("FERC") policy allows the issuance of
certificates authorizing the construction of new interstate pipelines which are
competitive with existing pipelines. A number of new pipeline and pipeline
expansion projects have been approved or are pending approval by the FERC in
order to transport large additional volumes of natural gas to the Midwest from
Canada. These pipelines will be able to compete with us. Increased competition
could reduce the volumes of gas transported by us to our existing markets or
cause us to lower rates in order to meet competition. This could have a material
adverse effect on our financial results.
NO PUBLIC MARKET FOR THE EXCHANGE NOTES
There is no active trading market for the Exchange Notes and this market
may never develop. If any of the Exchange Notes are traded after their initial
issuance, they may trade at a discount from their initial offering price.
Factors that could cause the Exchange Notes to trade at a discount are:
- an increase in prevailing interest rates;
- a decline in our credit worthiness;
- a weakness in the market for similar securities; and
- declining general economic conditions.
Although we have entered into a registration rights agreement with the
Donaldson, Lufkin & Jenrette Securities Corporation, Barclays Capital Inc, Chase
Securities Inc. NationsBanc Montgomery Securities LLC, First Chicago Capital
Markets, Inc., Salomon Smith Barney Inc., and SG Cowen Securities Corporation
(collectively the "INITIAL PURCHASERS") under which we are obligated to file a
registration statement and to use our best efforts to have it declared
effective, which would allow you to exchange the Notes for
10
17
Exchange Notes which are registered under the Securities Act of 1933, we cannot
assure you that the registration statement although filed will be declared
effective, that the exchange will occur, or that an active market for the
Exchange Notes will develop. The liquidity of, and trading markets for, the
Exchange Notes may also be adversely affected by declines in the markets for
high-yield securities generally.
RISK OF YEAR 2000 NONCOMPLIANCE
Many existing computer programs were designed and developed without
considering the upcoming change in the century, which could lead to the failure
of computer applications or create erroneous results by or at the year 2000.
This issue is referred to as the "YEAR 2000 ISSUE." The Year 2000 Issue is a
broad business issue, whose impact extends beyond traditional computer hardware
and software to possible failure of automated plant systems and instrumentation
as well as to business third parties. Also, there can be no guarantee that third
parties of business importance to us will successfully reprogram or replace, and
test, all of their own computer hardware, software and process control systems
to ensure such systems are Year 2000 compliant. Failure by us, third parties of
business importance to us and/or other constituents such as governments to
become Year 2000 compliant on a timely basis could have a material adverse
effect on our financial position and results of operations.
RESULTS COULD DIFFER MATERIALLY FROM CERTAIN FORWARD-LOOKING STATEMENTS
From time to time, we may make statements regarding our assumptions,
projections, expectations, intentions or beliefs about future events. These
statements are intended as "forward-looking statements" under the Private
Securities Litigation Reform Act of 1995. We caution that these statements may
and often do vary from actual results and the differences between these
statements and actual results can be material. Accordingly, we cannot assure you
that actual results will not differ materially from those expressed or implied
by the forward-looking statements. Some of the factors that could cause actual
achievements and events to differ materially from those expressed or implied in
any forward-looking statements are:
- entry of competing pipelines into our markets and competitive strategies
of competing pipelines, including rate and other pricing practices;
- state and federal legislative and regulatory initiatives that affect cost
and investment recovery, have an impact on rate structures, and affect
the speed and degree to which competition enters the natural gas
industry;
- the weather and other natural phenomena;
- the timing and extent of changes in prices of commodities (primarily
natural gas and competing fuels) and interest rates;
- changes in environmental and other laws and regulations to which we and
our subsidiaries are subject or other external factors over which we have
no control;
- the results of financing efforts;
- expansion and other growth opportunities; and
11
18
- the effect of accounting policies issued periodically by accounting
standard-setting bodies.
These factors are discussed more completely in our filings with the SEC,
including our annual report on Form 10-K for the year ended December 31, 1998,
and our quarterly report on Form 10-Q for the quarter ended March 31, 1999 which
are incorporated by reference into this Prospectus.
USE OF PROCEEDS
There will be no net proceeds payable to us from the issuance of the
Exchange Notes. The net proceeds from the sale of the Notes, together with funds
from CMS Energy, were used to fund CMS Energy's acquisition of the Panhandle
Companies.
RATIO OF EARNINGS TO FIXED CHARGES
The consolidated ratio of earnings to fixed charges for each of the years
ended December 31, 1994 through 1998 and the three months ended March 31, 1999
is as follows:
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED
-------------------------------- MARCH 31,
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ------------
Ratio of earnings to fixed
charges...................... 4.7 4.8 2.9 2.6 2.7 3.7
For the purpose of computing the ratio, earnings represent net income
before income taxes, net interest charges and the estimated interest portions of
lease rentals.
12
19
THE COMPANY
We are an indirectly wholly owned subsidiary of CMS Energy. We and our
subsidiaries are primarily engaged in the interstate transportation and storage
of natural gas. Our interstate natural gas transmission and storage operations
are subject to the rules and regulations of the FERC. We were incorporated in
Delaware in 1929.
On March 29, 1999, CMS Energy acquired all of our outstanding common stock
and the outstanding common stock of our principal consolidated subsidiaries,
Trunkline and Pan Gas Storage, as well as our affiliates, Panhandle Storage and
Trunkline from subsidiaries of Duke Energy Corporation. Panhandle Storage and
Trunkline LNG became our direct, wholly-owned subsidiaries. CMS Energy paid $1.9
billion in cash to Duke Energy Corporation and assumed $300 million of existing
Panhandle debt.
NATURAL GAS TRANSMISSION
We own approximately 10,400 miles of interstate pipeline systems.
Panhandle's natural gas transmission system, which consists of four
large-diameter parallel pipelines and 13 mainline compressor stations, extends a
distance of approximately 1,300 miles from producing areas in the Anadarko Basin
of Texas, Oklahoma and Kansas through the state of Missouri, Illinois, Indiana
and Ohio into Michigan. Trunkline's transmission system extends approximately
1,400 miles from the Gulf Coast areas of Texas and Louisiana through the states
of Arkansas, Mississippi, Tennessee, Kentucky, Illinois and Indiana to a point
on the Indiana-Michigan border. The system consists principally of three large-
diameter parallel pipelines, 18 mainline compressor stations and one offshore
compressor platform.
Trunkline also owns and operates two offshore Louisiana gas supply systems
consisting of 337 miles of pipeline extending approximately 81 miles into the
Gulf of Mexico.
Our throughput volumes for the years 1994 to 1998 were 1,186 TBtu, 1,182
TBtu, 1,319 TBtu, 1,279 TBtu and 1,141 TBtu, respectively. A substantial
majority of delivered volumes of our interstate pipelines represents gas
transported under long-term service agreements with local distribution company
(LDC) customers in the pipelines' market areas. Firm transportation services are
also provided under contract to gas marketers, producers, other pipelines,
electric power generators and a variety of end-users. In addition, the pipelines
offer both firm and interruptible transportation to customers on a short-term or
seasonal basis. Demand for gas transmission on our pipeline systems is seasonal,
with the highest throughput occurring during the colder periods in the first and
fourth quarters.
YEARS ENDED DECEMBER 31,
-------------------------------------
1994 1995 1996 1997 1998
----- ----- ----- ----- -----
NATURAL GAS TRANSMISSION
Throughput Volumes -- TBtu(a)
Panhandle............................... 626 663 687 659 560
Trunkline............................... 560 519 632 620 581
----- ----- ----- ----- -----
Total........................... 1,186 1,182 1,319 1,279 1,141
===== ===== ===== ===== =====
- -------------------------
(a) Trillion British thermal units
13
20
Panhandle's major customers include 20 utilities located in the Midwest market
area that encompasses large portions of Michigan, Ohio, Indiana, Illinois and
Missouri. Trunkline's major customers include eight utilities located in
portions of Tennessee, Missouri, Illinois, Indiana and Michigan.
NATURAL GAS STORAGE AND LNG FACILITY
Our Pan Gas Storage subsidiary also owns and operates three underground
storage fields located in Illinois, Michigan and Oklahoma with working gas
capacity of 31 Bcf. Pan Gas Storage is also the owner and operator of a 26 Bcf
storage field in Kansas. Trunkline owns and operates one 13 Bcf storage field in
Louisiana. Since the implementation of Order 636, Panhandle, Trunkline and Pan
Gas Storage each provide firm and interruptible storage on an open-access basis.
See "Regulation" below. In addition to owning and operating storage fields,
Panhandle also leases storage capacity. Panhandle and Trunkline have retained
the right to use up to 15 Bcf and 10 Bcf, respectively, of their storage
capacity for system needs.
Our subsidiary, Trunkline LNG, owns a LNG regasification plant and related
LNG tanker port, unloading facilities and LNG and gas storage facilities located
at Lake Charles, Louisiana. The LNG plant has the capacity to deliver 700
million cubic feet per day but has been operated on a limited basis for a number
of years.
REGULATION
The FERC has authority to regulate rates and charges for natural gas
transported in or stored for interstate commerce or sold by a natural gas
company in interstate commerce for resale. The FERC also has authority over the
construction and operation of pipeline and related facilities utilized in the
transportation and sale of natural gas in interstate commerce, including the
extension, enlargement or abandonment of such facilities. Panhandle Trunkline
and Pan Gas Storage hold certificates of public convenience and necessity issued
by the FERC, authorizing them to construct and operate the pipelines, facilities
and properties now in operation for which such certificates are required, and to
transport and store natural gas in interstate commerce.
Our pipelines operate as open-access transporters of natural gas. In 1992,
the FERC issued Order 636, which requires open-access pipelines to provide firm
and interruptible transportation services on an equal basis for all gas
supplies, whether purchased from the pipeline or from another gas supplier. To
implement this requirement, Order 636 provided, among other things, for
mandatory unbundling of services that historically had been provided by
pipelines into separate open-access transportation, sales and storage services.
Order 636 allows pipelines to recover eligible costs, known as "transition
costs," resulting from the implementation of Order 636.
Regulation of the importation and exportation of natural gas is vested in
the Secretary of Energy, who has delegated various aspects of this jurisdiction
to Office of Fossil Fuels of the Department of Energy.
We are also subject to the Natural Gas Pipeline Safety Act of 1968, which
regulates gas pipeline safety requirements, and to the Hazardous Liquid Pipeline
Safety Act of 1979, which regulates oil and petroleum pipelines.
14
21
DESCRIPTION OF THE EXCHANGE NOTES
The 2004 Exchange Notes, 2009 Exchange Notes and 2029 Exchange Notes will
be issued as one series of debt securities under an Indenture dated March 29,
1999 (the "BASE INDENTURE") and supplemented by a First Supplemental Indenture,
also dated March 29, 1999 establishing the Exchange Notes (the "SUPPLEMENTAL
INDENTURE") among us, CMS Panhandle Holdings Company ("CMS HOLDING") and Bank
One Trust Company, NA, successor to NBD Bank, as Trustee (the "TRUSTEE"). The
Base Indenture and the Supplemental Indenture are hereinafter referred to
collectively as the "INDENTURE." On June 15, 1999 CMS Holding merged with and
into Panhandle and all obligations of CMS Holding under the Indenture were
assumed by us. The following summaries of certain provisions of the Indenture,
the Exchange Notes and the Registration Rights Agreement (as defined herein) do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all provisions of the respective documents, including
the definitions therein of certain terms. Certain capitalized terms used in this
"Description of the Exchange Notes" shall have the meanings respectively set
forth in the Indenture or the Registration Rights Agreement, as applicable.
Wherever particular defined terms of the Indenture are referred to, such defined
terms are incorporated herein by reference as part of the statement made, and
the statement is qualified in its entirety by such reference. Copies of the
Indenture are available from the Trustee upon request.
The 2004 Exchange Notes will be limited in aggregate principal amount of
$300 million, the 2009 Exchange Notes will be limited in aggregate principal
amount of $200 million and the 2029 Exchange Notes will be limited in aggregate
principal amount of $300 million. The Indenture does not limit the aggregate
principal amount of debt securities that may be issued thereunder and provides
that debt securities may be issued thereunder, from time to time, in one or more
series. The Exchange Notes and all other debt securities hereafter issued under
the Indenture are collectively referred to herein as the "SECURITIES."
GENERAL
The Exchange Notes will be unsecured debt securities of Panhandle and will
rank pari passu with all senior unsecured debt of Panhandle and senior to all
subordinated debt of Panhandle. Panhandle does not currently have any
subordinated debt.
The Exchange Notes will be issued in the form of one or more Global
Exchange Notes, in registered form, without coupons, in denominations of $1,000
or an integral multiple thereof as described under "-- Book-Entry; Delivery;
Form and Transfer." The Global Exchange Notes will be registered in the name of
a nominee of DTC. Each Global Exchange Note (and any Exchange Note issued in
exchange therefor) will be subject to certain restrictions on transfer set forth
therein as described under "-- Book-Entry; Delivery; Form and
Transfer -- Transfers of Interests in Global Exchange Notes for Certificated
Exchange Notes." Except as set forth herein under "-- Book-Entry; Delivery; Form
and Transfer -- Transfers of Interests in Global Exchange Notes for Certificated
Exchange Notes," owners of beneficial interests in a Global Exchange Note will
not be entitled to have Exchange Notes registered in their names, will not
receive or be entitled to receive physical delivery of any such Exchange Note
and will not be considered the registered holder thereof under the Indenture.
Because the 2004 Exchange Notes, the 2009 Exchange Notes and the 2029
Exchange Notes are treated as one series and one class of securities for the
purposes of the
15
22
Indenture, certain actions to be taken by the holders of the Exchange Notes
pursuant to the terms of the Indenture may be taken by the holders of the
specified percentage of the aggregate principal amount of all the Exchange Notes
then outstanding, combined. As a result of voting together as holders of one
series of Securities with respect to matters covered by the Indenture, the
holders of one or two of the three tranches of the Exchange Notes (i.e., the
2004 Exchange Notes, the 2009 Exchange Notes and the 2029 Exchange Notes) will
likely be able to determine the outcome of holder actions without obtaining the
consent of holders of the other tranche(s) of Exchange Notes. Future issuances
of Securities under the Indenture may be aggregated with the Exchange Notes for
voting purposes and could further affect the ability of the holders of the
Exchange Notes to effect the outcome of holder actions.
PAYMENT AND MATURITY
The 2004 Exchange Notes will mature on March 15, 2004, the 2009 Exchange
Notes will mature on July 15, 2009 and the 2029 Exchange Notes will mature on
July 15, 2029, in each case unless redeemed earlier by Panhandle as described
below, and will bear interest at the rate of 6.125%, 6.500% and 7.000%,
respectively, per annum. At the relevant maturity date, Panhandle will pay the
aggregate principal amount of the then outstanding Exchange Notes which have
come due.
Each Exchange Note will bear interest from the original date of issue of
the Notes. Interest on the 2004 Exchange Notes will be payable semiannually in
arrears on March 15 and September 15, commencing September 15, 1999, and at
maturity. Interest on the 2009 Exchange Notes and the 2029 Exchange Notes will
be payable semiannually in arrears on January 15, and July 15, commencing
January 15, 2000, and at maturity. So long as Exchange Notes are held in the
form of one or more Global Exchange Notes, payments of principal, premium,
interest and Liquidated Damages (as defined herein), if any, will be payable
through the facilities of DTC.
Payment of any interest due on the Exchange Notes will be made to the
Persons in whose name the Exchange Notes are registered at the close of business
on the Record Date for such interest payments. The record dates for the 2004
Exchange Notes shall be the March 1 or September 1 preceding the applicable
payment date, and the record dates for the 2009 Exchange Notes and the 2029
Exchange Notes shall be the January 1 or July 1 preceding the applicable payment
date. In any case where any interest payment date, repurchase date or maturity
of any Exchange Note will not be a Business Day (as hereinafter defined) at any
place of payment, then payment of interest or principal (and premium, if any)
need not be made on that date, but may be made on the next succeeding Business
Day at such place of payment with the same force and effect as if made on the
interest payment date, repurchase date or at maturity; and no interest will
accrue on the amount so payable for the period from and after such interest
payment date, redemption date, repurchase date or maturity, as the case may be,
to such Business Day.
REDEMPTION
Each of the Exchange Notes will be redeemable at the option of Panhandle at
any time and from time to time, in whole or in part, upon not less than 30 nor
more than 45 days notice to each holder of such Exchange Notes, at a redemption
price equal to the Make-Whole Price of such Exchange Notes. "MAKE-WHOLE PRICE"
means an amount equal to the greater of (1) 100% of the principal amount of the
Exchange Notes to be
16
23
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 discounted to the date of redemption on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate,
plus, in each case, accrued and unpaid interest thereon to the date of
redemption. Unless there is a default in the payment of the redemption price, on
and after the date of redemption, interest will cease to accrue on Exchange
Notes or portions thereof called for redemption.
"ADJUSTED TREASURY RATE" means, with respect to any date of redemption, the
rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price at such date of redemption, plus 15 basis points
(0.15%) in the case of the 2004 Exchange Notes, 25 basis points (0.25%) in
the case of the 2009 Exchange Notes and 40 basis points (0.40%) in the case
of the 2029 Exchange 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 2004 Exchange Notes, 2009 Exchange
Notes or 2029 Exchange Notes, as the case may be, to be redeemed, that
would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of such Exchange
Notes.
"COMPARABLE TREASURY PRICE" means, with respect to any date of redemption,
(1) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on
the third Business Day preceding such date of redemption, as set forth in
the daily statistical release (or any successor release) published by the
Federal Reserve Bank of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Securities," or (2) if such release (or any
successor release) is not published or does not contain such prices on such
Business Day, (A) the average of the Reference Treasury Dealer Quotations
for such date of redemption, after excluding the highest and lowest such
Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer
than three such Reference Treasury Dealer Quotations, the average of both
such Reference Treasury Dealer Quotations.
"INDEPENDENT INVESTMENT BANKER" means one of the Reference Treasury Dealers
appointed by the Trustee after consultation with Panhandle.
"REFERENCE TREASURY DEALER" means, for the Exchange Notes, each of
Donaldson, Lufkin & Jenrette Securities Corporation, Barclays Capital Inc.,
Chase Securities Inc., NationsBanc Montgomery Securities LLC, First Chicago
Capital Markets, Inc., Salomon Smith Barney Inc. and SG Cowen Securities
Corporation and their respective successors; provided, however, that if any
of the foregoing shall not be a primary U.S. Government securities dealer
in New York City (a "PRIMARY TREASURY DEALER"), Panhandle shall substitute
therefor another Primary Treasury Dealer.
"REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to each
Reference Treasury Dealer and any date of redemption, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the trustee by
17
24
such Reference Treasury Dealer at 5:00 p.m. on the third Business Day
preceding such date of redemption.
Panhandle may purchase the Exchange Notes in the open market, by tender or
otherwise. Exchange Notes so purchased may be held, resold or surrendered to the
Trustee for cancellation. If applicable, Panhandle will comply with the
requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), and other securities laws and regulations in connection
with any such purchase.
No sinking fund is provided for the Exchange Notes.
CERTAIN DEFINITIONS
"Adjusted Consolidated Net Income" means, for any period, the net income of
Panhandle and its consolidated Subsidiaries, plus (1) depreciation and
amortization expense of Panhandle and its consolidated Subsidiaries, (2) income
taxes and deferred taxes of Panhandle and its consolidated Subsidiaries and (3)
other non-cash charges, in each case, determined on a consolidated basis in
accordance with generally accepted accounting principles; provided, however,
that there shall not be included in such Adjusted Consolidated Net Income (1)
any net income of any Person if such Person is not a Subsidiary, except that (A)
Panhandle's equity in the net income of any such Person for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to Panhandle or a
consolidated Subsidiary as a dividend or other distribution and (B) Panhandle's
equity in a net loss of any such Person for such period shall be included in
determining such Adjusted Consolidated Net Income; and (2) any net income of any
Person acquired by Panhandle or a Subsidiary in a pooling-of-interests
transaction for any period prior to the date of such acquisition.
"Business Day" means a day on which banking institutions in the Borough of
Manhattan, New York, New York are not authorized or required by law or
regulation to close.
"Capital Stock" means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in
(however designated) corporate stock, including any Preferred Stock or letter
stock; provided that Hybrid Preferred Securities are not considered Capital
Stock for purposes of this definition.
"Consolidated Debt" means the total Debt of Panhandle and its consolidated
Subsidiaries, as set forth on the consolidated balance sheet of Panhandle and
its consolidated Subsidiaries for Panhandle's most recently completed fiscal
quarter, prepared in accordance with generally accepted accounting principles.
"Consolidated Interest Expense" means, for any period, the total interest
expense in respect of Consolidated Debt of Panhandle and its consolidated
Subsidiaries, including, without duplication, (1) interest expense attributable
to capital leases; (2) amortization of debt discount; (3) capitalized interest;
(4) cash and noncash interest payments; (5) commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; (6) net costs under Interest Rate Protection Agreements (including
amortization of discount); and (7) interest expense in respect of obligations of
other Persons that constitutes Debt of Panhandle or any of its consolidated
Subsidiaries, provided, however, that Consolidated Interest Expense shall
exclude any costs otherwise included in interest expense recognized on early
retirement of debt.
18
25
"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
Panhandle and its consolidated Subsidiaries for Panhandle's most recently
completed fiscal quarter, prepared in accordance with generally accepted
accounting principles. "Intangible assets" does not include any value write-up
of tangible assets (other than in connection with the acquisition of the
Panhandle Companies by CMS Energy) in connection with acquisition transactions
accounted for on a purchase method.
"Debt" means any obligation created or assumed by any Person for the
repayment of money borrowed and any purchase money obligation created or assumed
by such Person.
"Exchangeable Stock" means any Capital Stock of a corporation that is
exchangeable or convertible into another security (other than Capital Stock of
such corporation that is neither Exchangeable Stock nor Redeemable Stock).
"Fixed Charge Coverage Ratio" means the ratio of Adjusted Consolidated Net
Income plus Consolidated Interest Expense to Consolidated Interest Expense, for
the four fiscal quarters of Panhandle ending immediately prior to the date of
determination (or, in respect of any such determination occurring on or prior to
December 31, 1999, the number of full fiscal quarters that shall have elapsed
from the date of issuance of the Exchange Notes).
"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.
"Leverage Ratio" means 100% multiplied by the ratio of Consolidated Debt to
Total Capital at the end of the most recent fiscal quarter preceding the date of
determination.
"Lien" means any mortgage, pledge, security interest, charge, lien or other
encumbrance of any kind, whether or not filed, recorded or perfected under
applicable law.
"Loan" means any direct or indirect advance (other than advances to
customers in the ordinary course of business that are recorded as receivables on
the balance sheet of the Person making such advances), loan or other extension
of credit (including by way of guarantee or similar arrangement) to another
Person or any purchase of Debt issued by another Person, where such advance,
loan, extension of credit or Debt is subordinated in right of payment to the
senior creditors of the borrower.
"Moody's" means Moody's Investors Service, Inc., and any successor thereto
which is a nationally recognized statistical rating organization, or if such
entity shall cease to rate the Exchange Notes or shall cease to exist and there
shall be no such successor thereto, any other nationally recognized statistical
rating organization selected by Panhandle which is acceptable to the Trustee.
19
26
"Non-Convertible Capital Stock" means, with respect to any corporation, any
non-convertible Capital Stock of such corporation and any Capital Stock of such
corporation convertible solely into non-convertible Capital Stock other than
Preferred Stock of such corporation; provided, however, that Non-Convertible
Capital Stock shall not include any Redeemable Stock or Exchangeable Stock.
"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
for taxes and assessments which are (A) for the then current year, (B) not at
the time delinquent, or (C) delinquent but the validity of which is being
contested at the time by Panhandle or any Subsidiary in good faith; (5) Liens
of, or to 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 Panhandle or any Restricted Subsidiary 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
Panhandle or any Restricted Subsidiary in connection with the exporting of goods
to, or between, or the marketing of goods in, or the importing of goods from,
foreign countries; or (10) any Lien in favor of the United States of America or
any state thereof, or any other country, or any political subdivision of any of
the foregoing, to secure partial, progress, advance or other payments pursuant
to any contract or statute, or any Lien securing industrial development,
pollution control or similar revenue bonds.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, other
entity, unincorporated organization, or government or any agency or political
subdivision thereof.
"Principal Property" means any natural gas pipeline system, natural gas
gathering system or natural gas storage facility located in the United States,
except any such property that in the opinion of the Board of Directors is not of
material importance to the business conducted by Panhandle and its consolidated
Subsidiaries taken as a whole.
"Redeemable Stock" means any Capital Stock that by its terms or otherwise
is required to be redeemed prior to the 90th day before the stated maturity of
any of the outstanding Exchange Notes or is redeemable at the option of the
holder thereof at any time prior to the 90th day before the stated maturity of
any of the outstanding Exchange Notes.
"Restricted Subsidiary" means any Subsidiary of Panhandle owning or leasing
any Principal Property.
"Standard & Poor's" means Standard & Poor's Ratings Group, a division of
McGraw Hill Inc., and any successor thereto which is a nationally recognized
statistical
20
27
rating organization, or if such entity shall cease to rate the Exchange Notes or
shall cease to exist and there shall be no such successor thereto, any other
nationally recognized statistical rating organization selected by Panhandle
which is acceptable to the Trustee.
"Sale-Leaseback Transaction" means, with respect to Panhandle or any
Restricted Subsidiary, the sale or transfer by Panhandle or such Restricted
Subsidiary of any Principal Property to a Person (other than Panhandle or a
Subsidiary) and the taking back by Panhandle or such Restricted Subsidiary, as
the case may be, of a lease of such Principal Property. With respect to
Panhandle, "Sale-Leaseback Transaction" means the sale or transfer by Panhandle
of any assets or property to another Person and the taking back by Panhandle of
a lease of such assets or property.
"Total Capital" means the sum of (1) Consolidated Debt and (2) Capital
Stock, Hybrid Preferred Securities, premium on Capital Stock, capital surplus,
capital in excess of par value and retained earnings (however the foregoing may
be designated), less, to the extent not otherwise deducted, the cost of shares
of Capital Stock of Panhandle held in treasury, all as set forth on the
consolidated balance sheet of Panhandle and its consolidated Subsidiaries for
Panhandle's most recently completed fiscal quarter, prepared in accordance with
generally accepted accounting principles.
LIMITATION ON RESTRICTED PAYMENTS
The Indenture provides that, so long as any of the Exchange Notes are
outstanding and until either:
(1) such Exchange Notes are rated Baa1 (or an equivalent rating) or higher
by Moody's and BBB+ (or an equivalent rating) or higher by Standard &
Poor's; or
(2) so long as Panhandle is a Subsidiary of CMS Energy, the long-term
senior unsecured debt rating of CMS Energy is rated Baa3 (or an equivalent
rating) or higher by Moody's and BBB- (or an equivalent rating) or higher
by Standard & Poor's;
in each case at which time Panhandle will be permanently released from the
provisions described in this "Limitation on Restricted Payments," Panhandle will
not, and will not permit any of its Restricted Subsidiaries, directly or
indirectly, to:
(1) declare or pay any dividend or make any distribution on the Capital
Stock of Panhandle to the direct or indirect holders of its Capital Stock
(except dividends or distributions payable solely in its Non-Convertible
Capital Stock or in options, warrants or other rights to purchase such
Non-Convertible Capital Stock and except dividends or distributions payable
to Panhandle or a Subsidiary);
(2) purchase, redeem or otherwise acquire or retire for value any Capital
Stock of Panhandle; or
(3) make any Loan to CMS Energy or any of its affiliates that is not a
Subsidiary of Panhandle;
(any such dividend, distribution, purchase, redemption, other acquisition or
retirement described in (1) through (3) above being hereinafter referred to as a
"RESTRICTED
21
28
PAYMENT"), unless at the time Panhandle or such Restricted Subsidiary makes such
Restricted Payment and after giving effect thereto:
(1) no Event of Default, and no event that with the lapse of time or the
giving of notice or both would constitute an Event of Default, shall have
occurred and be continuing (or would result therefrom);
(2) Panhandle's Fixed Charge Coverage Ratio is greater than or equal to
2.2; and
(3) Panhandle's Leverage Ratio is less than or equal to 55%
Notwithstanding the foregoing, Panhandle or any of its Restricted
Subsidiaries may declare, make or pay any Restricted Payment, if at the time
Panhandle or such Restricted Subsidiary makes such Restricted Payment and after
giving effect thereto:
(1) no Event of Default, and no event that with the lapse of time or the
giving of notice or both would constitute an Event of Default, shall have
occurred and be continuing (or would result therefrom); and
(2) the aggregate amount of such Restricted Payment and all other
Restricted Payments made since the date of issuance of the Exchange Notes
would not exceed the sum of:
(a) $50 million;
(b) 75% of Adjusted Consolidated Net Income accumulated since the date
of issuance of the Exchange Notes to the end of the most recent fiscal
quarter ending at least 45 days prior to the date of such Restricted
Payment; and
(c) the aggregate net cash proceeds received by Panhandle after the date
of issuance of the Exchange Notes from capital contributions or the
issuance of Capital Stock of Panhandle to a person who is not a
Subsidiary of Panhandle, or from the issuance to such a person of
options, warrants or other rights to acquire such Capital Stock of
Panhandle.
None of the foregoing provisions will prohibit:
(1) dividends or other distributions paid in respect of any class of
Capital Stock issued by Panhandle in connection with the acquisition of any
business or assets by Panhandle or a Restricted Subsidiary where the
dividends or other distributions with respect to such Capital Stock are
payable solely from the net earnings of such business or assets;
(2) any purchase or redemption of Capital Stock of Panhandle made by
exchange for, or out of the proceeds of the substantially concurrent sale
of, Non-Convertible Capital Stock of Panhandle; or
(3) dividends paid within 60 days after the date of declaration thereof if
at such date of declaration such dividends would have complied with this
covenant.
LIMITATION ON LIENS
The Indenture provides that Panhandle will not, nor will it permit any
Restricted Subsidiary to, create, assume, incur or suffer to exist any Lien upon
any Principal Property, whether owned or leased on the date of the Indenture or
thereafter acquired, to
22
29
secure any Debt of Panhandle or any other Person (other than the Exchange
Notes), without in any such case making effective provision whereby all of the
Exchange Notes outstanding shall be secured equally and ratably with, or prior
to, such Debt so long as such Debt shall be so secured. There is excluded from
this restriction:
(1) any Lien upon any property or assets of Panhandle or any Restricted
Subsidiary in existence on the date of the Indenture or created pursuant to
an "after-acquired property" clause or similar term in existence on the
date of the Indenture or any mortgage, pledge agreement, security agreement
or other similar instrument in existence on the date of the Indenture;
(2) any Lien upon any property or assets created at the time of acquisition
of such property or assets by Panhandle or any Restricted Subsidiary or
within 18 months after such time to secure all or a portion of the purchase
price for such property or assets or Debt incurred to finance such purchase
price, whether such Debt was incurred prior to, at the time of or within 18
months of such acquisition;
(3) any Lien upon any property or assets existing thereon at the time of
the acquisition thereof by Panhandle or any Restricted Subsidiary (whether
or not the obligations secured thereby are assumed by Panhandle or any
Restricted Subsidiary);
(4) any Lien upon any property or assets of a Person existing thereon at
the time such Person becomes a Restricted Subsidiary by acquisition, merger
or otherwise (whether or not such Lien was created in anticipation of such
acquisition);
(5) any Lien securing obligations assumed by Panhandle or any Restricted
Subsidiary existing at the time of the acquisition by Panhandle or any
Restricted Subsidiary of the property or assets subject to such Lien or at
the time of the acquisition of the Person which owns such property or
assets;
(6) any Lien on property to secure all or part of the cost of construction
or improvements thereon or to secure Debt incurred prior to, at the time
of, or within 18 months after completion of such construction or making of
such improvements, to provide funds for any such purpose;
(7) any Lien in favor of Panhandle or any Restricted Subsidiary;
(8) any Lien created or assumed by Panhandle or any Restricted Subsidiary
in connection with the issuance of Debt the interest on which is excludable
from gross income of the holder of such Debt pursuant to the Internal
Revenue Code of 1986, as amended, or any successor statute, for the purpose
of financing, in whole or in part, the acquisition or construction of
property or assets to be used by Panhandle or any Subsidiary;
(9) any Lien upon property or assets of any foreign Restricted Subsidiary
to secure Debt of that foreign Restricted Subsidiary;
(10) Permitted Liens;
(11) any Lien created by any program providing for the financing, sale or
other disposition of trade or other receivables classified as current
assets in accordance with United States generally accepted accounting
principles entered into by Panhandle or by a Subsidiary of Panhandle,
provided that such program is on terms customary for similar transactions,
or any document executed by any Subsidiary in connection
23
30
therewith, provided that such Lien is limited to the trade or other
receivables in respect of which such program is created or exists, and the
proceeds thereof;
(12) any Lien upon any additions, improvements, replacements, repairs,
fixtures, appurtenances or component parts thereof attaching to or required
to be attached to property or assets pursuant to the terms of any mortgage,
pledge agreement, security agreement or other similar instrument, creating
a Lien upon such property or assets permitted by clauses (1) through (11),
inclusive, above; or
(13) any extension, renewal, refinancing, refunding or replacement (or
successive extensions, renewals, refinancing, refundings or replacements)
of any Lien, in whole or in part, that is referred to in clauses (1)
through (6), inclusive, above (and liens related thereto referred to in
clause (12)), or of any Debt secured thereby; provided, however, that the
principal amount of Debt secured thereby shall not exceed the greater of
the principal amount of Debt so secured at the time of such extension,
renewal, refinancing, refunding or replacement and the original principal
amount of Debt so secured (plus in each case the aggregate amount of
premiums, other payments, costs and expenses paid or incurred in connection
with such extension, renewal, refinancing, refunding or replacement);
provided further, however, that such extension, renewal, refinancing,
refunding or replacement shall be limited to all or a part of the property
(including improvements, alterations and repairs on such property) subject
to the encumbrance so extended, renewed, refinanced, refunded or replaced
(plus improvements, alterations and repairs on such property).
Notwithstanding the foregoing, under the Indenture, Panhandle may, and may
permit any Restricted Subsidiary to, create, assume, incur, or suffer to exist
any Lien upon any Principal Property to secure Debt of Panhandle or any Person
(other than the Exchange Notes) that is not otherwise excepted by clauses (1)
through (8), inclusive, above without securing the Exchange Notes issued under
the Indenture, provided that the aggregate principal amount of all Debt then
outstanding secured by such Lien and all similar Liens, together with all net
sale proceeds from Sale-Leaseback Transactions (excluding Sale-Leaseback
Transactions permitted by clauses (1) through (4), inclusive, of the first
paragraph of the restriction on sale-leasebacks covenant described below) does
not exceed the greater of 15% of Consolidated Net Tangible Assets or 15% of
Total Capital.
RESTRICTION ON SALE-LEASEBACKS
The Indenture provides that Panhandle will not, nor will it permit any
Restricted Subsidiary to, engage in a Sale-Leaseback Transaction, unless:
(1) such Sale-Leaseback Transaction occurs within 18 months from the date
of acquisition of the Principal Property subject thereto or the date of the
completion of construction or commencement of full operations on such
Principal Property, whichever is later;
(2) the Sale-Leaseback Transaction involves a lease for a period, including
renewals, of not more than four years;
(3) Panhandle 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 Exchange Notes; or
24
31
(4) Panhandle or such Restricted Subsidiary, within an 18-month period
after such Sale-Leaseback Transaction, applies or causes to be applied an
amount not less than the net sale proceeds from such Sale-Leaseback
Transaction to (A) the repayment, redemption or retirement of Funded Debt
of Panhandle or any Subsidiary, or (B) investment in another Principal
Property or in a Subsidiary of Panhandle which owns another Principal
Property.
Notwithstanding the foregoing, under the Indenture, Panhandle may, and may
permit any Restricted Subsidiary to, effect any Sale-Leaseback Transaction that
is not otherwise excepted by clauses (1) through (4), inclusive, of the above
paragraph, provided that the net sale proceeds from such Sale-Leaseback
Transaction, together with the aggregate principal amount of outstanding Debt
(other than the Exchange Notes) secured by Liens upon Principal Properties not
excepted by clauses (1) through (13), inclusive, of the first paragraph of the
limitation on liens covenant described above, do not exceed the greater of 15%
of the Consolidated Net Tangible Assets or 15% of Total Capital.
EVENTS OF DEFAULT
Any one of the following events constitutes an Event of Default under the
Indenture with respect to the Exchange Notes:
(1) default in the payment of the principal of, or premium, if any, on any
Exchange Note at its maturity;
(2) default in the payment of any interest or Liquidated Damages on any
Exchange Note when it becomes due and payable and continuance of such
default for a period of 60 days;
(3) default in the performance, or breach, of any term, covenant or
warranty contained in the Indenture with respect to the Exchange Notes for
a period of 90 days upon giving written notice as provided in the
Indenture; or
(4) the occurrence of certain events of bankruptcy.
If an Event of Default with respect to the Exchange Notes occurs and is
continuing, either the Trustee or the holders of at least 33% in aggregate
principal amount of the outstanding Exchange Notes by notice as provided in the
Indenture may declare the principal amount of all the Exchange Notes to be due
and payable immediately. At any time after a declaration of acceleration with
respect to the Exchange Notes has been made, but before a judgment or decree for
payment of money has been obtained by the Trustee, the holders of a majority in
aggregate principal amount of the outstanding Exchange Notes, under certain
circumstances, may rescind and annul such acceleration.
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be
under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the holders, unless such
holders shall have offered to the Trustee reasonable indemnity. Subject to
such provisions for the indemnification of the Trustee, the holders of a
majority in aggregate principal amount of the outstanding Exchange Notes
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, with respect to the Exchange Notes;
provided, however, that
25
32
the Trustee shall not be obligated to take any action unduly prejudicial to
holders not joining in such direction or involving the Trustee in personal
liability.
The holders of a majority in aggregate principal amount of the outstanding
Exchange Notes may, on behalf of all holders of Exchange Notes, waive any past
default under the Indenture with respect to any Exchange Notes, except a
default:
(1) in the payment of principal of, or premium, if any, or any interest on
any Exchange Note; or
(2) in respect of a covenant or provision of the Indenture which cannot be
modified or amended without the consent of the holder of each outstanding
Exchange Note affected.
Panhandle is required to furnish to the Trustee annually a statement as to
the performance by it of its obligations under the Indenture and as to any
default in such performance.
LEGAL AND COVENANT DEFEASANCE
The Indenture provides that Panhandle will be discharged from any and all
obligations in respect of the outstanding Exchange Notes (excluding, however,
certain obligations, such as the obligation to register the transfer or exchange
of such outstanding Exchange Notes, to replace stolen, lost, mutilated or
destroyed certificates, and to maintain paying agencies) on the 123rd day
following the deposit referred to in the following clause (1), subject to the
following conditions: (1) the irrevocable deposit, in trust, of cash or U.S.
Government Obligations (or a combination thereof) which through the payment of
interest and principal thereof in accordance with their terms will provide cash
in an amount sufficient to pay the principal and interest and premium, if any,
on the outstanding Exchange Notes and any mandatory sinking fund payments, in
each case, on the stated maturity of such payments in accordance with the terms
of the Indenture and the outstanding Exchange Notes or on any redemption date
established pursuant to clause (3) below; (2) receipt by Panhandle of an Opinion
of Counsel based on the fact that (A) Panhandle has received from, or there has
been published by, the Internal Revenue Service a ruling, or (B) since the date
of the Indenture, there has been a change in the applicable federal income tax
law, in either case, to the effect that, and confirming that, the holders of the
Exchange Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance and will be subject to
federal income tax on the same amount and in the same manner and at the same
times, as would have been the case if such deposit and defeasance had not
occurred; (3) if any Exchange Notes are to be redeemed prior to stated maturity
(other than from mandatory sinking fund payments or analogous payments), notice
of such redemption shall have been duly given pursuant to the Indenture or
provision therefor satisfactory to the Trustee shall have been made; (4) no
Event of Default or event which with notice or lapse of time or both would
become an Event of Default will have occurred and be continuing on the date of
such deposit; and (5) Panhandle's delivery to the Trustee of an Officers'
Certificate and an Opinion of Counsel, each stating that the conditions
precedent under the Indenture have been complied with.
Under the Indenture, Panhandle also may discharge its obligations referred
to above under "-- Limitation on Restricted Payments," "-- Limitation on Liens,"
"-- Restriction on Sale-Leasebacks," "-- Limitation on Other Business
Activities" and "-- Consolidation,
26
33
Merger and Sale of Assets," as well as certain of their obligations relating to
reporting obligations under the Indenture, in respect of the Exchange Notes on
the 123rd day following the deposit referred to in clause (1) in the immediately
preceding paragraph, subject to satisfaction of the conditions described in
clauses (1), (3), (4) and (5) in the immediately preceding paragraph with
respect to the Exchange Notes and the delivery of an Opinion of Counsel
confirming that the holders of the Exchange Notes will not recognize income,
gain or loss for Federal income tax purposes as a result of such deposit and
covenant defeasance and will be subject to Federal income tax on the same amount
and in the same manner and at the same times, as would have been the case if
such deposit and covenant defeasance had not occurred.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by Panhandle and
the Trustee with the consent of the holders of a majority in aggregate principal
amount of the outstanding Exchange Notes, provided, however, that no such
modification or amendment may, without consent of the holder of each outstanding
Exchange Note affected thereby:
(1) change the Stated Maturity of the principal of, or the time of payment
of any installment of principal of or interest on, any Exchange Note;
(2) reduce the principal amount of, or premium or interest on, any Exchange
Note;
(3) change the coin or currency in which any Exchange Note or any premium
or interest thereon is payable;
(4) reduce the percentage in principal amount of outstanding Exchange
Notes, the consent of whose holders is required for modification or
amendment of the Indenture or for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults; or
(5) modify any of the above provisions.
The holders of a majority in aggregate principal amount of the outstanding
Exchange Notes may, on behalf of the holders of all Exchange Notes, waive,
insofar as the Exchange Notes are concerned, compliance by Panhandle with
certain restrictive provisions of the Indenture.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Panhandle, without the consent of the holders of any of the outstanding
Exchange Notes, may consolidate with or merge into, or convey, transfer or lease
its assets substantially as an entirety to, any Person which is a corporation,
partnership or trust organized and validly existing under the laws of any
domestic jurisdiction, provided that any successor Person assumes Panhandle's
obligations on the Exchange Notes and under the Indenture, that after giving
effect to the transaction no Event of Default, and no event which, after notice
or lapse of time, would become an Event of Default, shall have occurred and be
continuing, and that certain other conditions are met.
GOVERNING LAW
The Indenture and the Exchange Notes will be governed by, and construed in
accordance with, the laws of the State of New York.
27
34
REGARDING THE TRUSTEE
Panhandle and certain of its affiliates from time to time borrow money
from, and maintain deposit accounts and conduct certain banking transactions
with, the Trustee or its affiliates in the ordinary course of their business.
BOOK-ENTRY; DELIVERY; FORM AND TRANSFER
The Exchange Notes which are exchanged for Notes which were sold to
qualified institutional buyers ("QIB'S") will be issued initially in the form of
one or more registered global Exchange Notes without interest coupons
(collectively the "GLOBAL EXCHANGE NOTES"). Upon issuance, the U.S. Global
Exchange Notes will be deposited with the Trustee, as custodian for DTC, and
registered in the name of DTC or its nominee, in each case for credit to the
accounts of DTC's Direct and Indirect Participants (as defined below).
The Global Exchange Notes may be transferred, in whole and not in part,
only to another nominee of DTC or to a successor of DTC or its nominee in
certain limited circumstances. Beneficial interests in the Global Exchange Notes
may be exchanged for Exchange Notes in certificated form in certain limited
circumstances. See "-- Transfer of Interests in Global Exchange Notes for
Certificated Exchange Notes."
DEPOSITARY PROCEDURES
DTC has advised Panhandle that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Direct Participants") and to facilitate the clearance and settlement of
transactions in those securities between Direct Participants through electronic
book-entry changes in accounts of Participants. The Direct Participants include
securities brokers and dealers (including the Initial Purchasers), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities that clear through or maintain
a direct or indirect, custodial relationship with a Direct Participant
(collectively, the "Indirect Participants"). DTC may hold securities
beneficially owned by other persons only through the Direct Participants or
Indirect Participants, and such other persons' ownership interest and transfer
of ownership interest will be recorded only on the records of the appropriate
Direct Participant and/or Indirect Participant, and not on the records
maintained by DTC.
DTC has also advised Panhandle that, pursuant to DTC's procedures, (1) upon
deposit of the Global Exchange Notes, DTC will credit the accounts of the Direct
Participants designated by the Initial Purchasers with portions of the principal
amount of the Global Exchange Notes allocated by the Initial Purchasers to such
Direct Participants, and (2) DTC will maintain records of the ownership
interests of such Direct Participants in the Global Exchange Notes and the
transfer of ownership interests by and between Direct Participants. DTC will not
maintain records of the ownership interests of, or the transfer of ownership
interests by and between, Indirect Participants or other owners of beneficial
interests in the Global Exchange Notes. Direct Participants and Indirect
Participants must maintain their own records of the ownership interests of, and
the transfer of ownership interests by and between, Indirect Participants and
other owners of beneficial interests in the Global Exchange Notes.
28
35
The laws of some states require that certain persons take physical delivery
in definitive, certificated form, of securities that they own. This may limit or
curtail the ability to transfer beneficial interests in a Global Exchange Note
to such persons. Because DTC can act only on behalf of Direct Participants,
which in turn act on behalf of Indirect Participants and others, the ability of
a person having a beneficial interest in a Global Exchange Note to pledge such
interest to persons or entities that are not Direct Participants in DTC, or to
otherwise take actions in respect of such interests, may be affected by the lack
of physical certificates evidencing such interests. For certain other
restrictions on the transferability of the Exchange Notes see "-- Transfers of
Interests in Global Exchange Notes for Certificated Exchange Notes."
EXCEPT AS DESCRIBED IN "-- TRANSFERS OF INTERESTS IN GLOBAL EXCHANGE NOTES
FOR CERTIFICATED EXCHANGE NOTES," OWNERS OF BENEFICIAL INTERESTS IN THE GLOBAL
EXCHANGE NOTES WILL NOT HAVE EXCHANGE NOTES REGISTERED IN THEIR NAMES, WILL NOT
RECEIVE PHYSICAL DELIVERY OF EXCHANGE NOTES IN CERTIFICATED FORM AND WILL NOT BE
CONSIDERED THE REGISTERED OWNERS OR HOLDERS THEREOF UNDER THE INDENTURE FOR ANY
PURPOSE.
Under the terms of the Indenture, Panhandle and the Trustee will treat the
persons in whose names the Exchange Notes are registered (including Exchange
Notes represented by Global Exchange Notes) as the owners thereof for the
purpose of receiving payments and for any and all other purposes whatsoever.
Payments in respect of the principal, premium, Liquidated Damages, if any, and
interest on Global Exchange Notes registered in the name of DTC or its nominee
will be payable by the Trustee to DTC or its nominee as the registered holder
under the Indenture. Consequently, neither Panhandle, the Trustee nor any agent
of Panhandle or the Trustee has or will have any responsibility or liability for
(1) any aspect of DTC's records or any Direct Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Exchange Notes or for maintaining, supervising
or reviewing any of DTC's records or any Direct Participant's or Indirect
Participant's records relating to the beneficial ownership interests in any
Global Exchange Note or (2) any other matter relating to the actions and
practices of DTC or any of its Direct Participants or Indirect Participants.
DTC has advised Panhandle that its current payment practice (for payments
of principal, interest and the like) with respect to securities such as the
Exchange Notes is to credit the accounts of the relevant Direct Participants
with such payment on the payment date in amounts proportionate to such Direct
Participant's respective ownership interests in the Global Exchange Notes as
shown on DTC's records. Payments by Direct Participants and Indirect
Participants to the beneficial owners of the Exchange Notes will be governed by
standing instructions and customary practices between them and will not be the
responsibility of DTC, the Trustee or Panhandle. Neither Panhandle nor the
Trustee will be liable for any delay by DTC or its Direct Participants or
Indirect Participants in identifying the beneficial owners of the Exchange
Notes, and Panhandle and the Trustee may conclusively rely on and will be
protected in relying on instructions from DTC or its nominee as the registered
owner of the Exchange Notes for all purposes.
The Global Exchange Notes will trade in DTC's Same-day Funds Settlement
System and, therefore, transfers between Direct Participants in DTC will be
effected in accordance with DTC's procedures, and will be settled in immediately
available funds. Transfers between Indirect Participants who hold an interest
through a Direct Participant will be effected in accordance with the procedures
of such Direct Participant but generally will settle in immediately available
funds.
29
36
DTC has advised Panhandle that it will take any action permitted to be
taken by a holder of Exchange Notes only at the direction of one or more Direct
Participants to whose account interests in the Global Exchange Notes are
credited and only in respect of such portion of the aggregate principal amount
of the Exchange Notes as to which such Direct Participant or Direct Participants
has or have given direction. However, if there is an Event of Default with
respect to the Exchange Notes, DTC reserves the right to exchange Global
Exchange Notes (without the direction of one or more of its Direct Participants)
for legended Exchange Notes in certificated form, and to distribute such
certificated forms of Exchange Notes to its Direct Participants. See
"-- Transfers of Interests in Global Exchange Notes for Certificated Exchange
Notes."
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in Global Exchange Notes among Direct Participants, they are under
no obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. None of the Initial Purchasers or
the Trustee will have any responsibility for the performance by DTC or its
respective Direct and Indirect Participants of their respective obligations
under the rules and procedures governing any of their operations.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that Panhandle believes to be reliable, but
Panhandle does not take any responsibility for the accuracy thereof.
TRANSFERS OF INTERESTS IN GLOBAL EXCHANGE NOTES FOR CERTIFICATED EXCHANGE
NOTES
An entire Global Exchange Note may be exchanged for Certificated Exchange
Notes if (1) (a) DTC notifies Panhandle that it is unwilling or unable to
continue as Depositary for the Global Exchange Notes or Panhandle determines
that DTC is unable to act as such Depositary and Panhandle thereupon fails to
appoint a successor depositary within 90 days or (b) DTC has ceased to be a
clearing agency registered under the Exchange Act, (2) Panhandle at its option,
notifies the Trustee in writing that it elects to cause the issuance of
Certificated Exchange Notes or (3) there shall have occurred and be continuing a
Default or an Event of Default with respect to the Exchange Notes. In any such
case, Panhandle will notify the Trustee in writing that, upon surrender by the
Direct and Indirect Participants of their interest in such Global Exchange Note,
Certificated Exchange Notes will be issued to each person that such Direct and
Indirect Participants and the DTC identify as being the beneficial owner of the
related Exchange Notes.
Beneficial interests in Global Exchange Notes held by any Direct or
Indirect Participant may be exchanged for Certificated Exchange Notes upon
request to DTC, by such Direct Participant (for itself or on behalf of an
Indirect Participant), to the Trustee in accordance with customary DTC
procedures. Certificated Exchange Notes delivered in exchange for any beneficial
interest in any Global Exchange Note will be registered in the names, and issued
in any approved denominations, requested by DTC on behalf of such Direct or
Indirect Participants (in accordance with DTC's customary procedures).
Neither Panhandle nor the Trustee will be liable for any delay by the
holder of the Global Exchange Notes or DTC in identifying the beneficial owners
of Exchange Notes, and Panhandle and the Trustee may conclusively rely on, and
will be protected in relying on, instructions from the holder of the Global
Exchange Note or DTC for all purposes.
30
37
CERTIFICATED EXCHANGE NOTES
Certificated Exchange Notes may be exchangeable for other Certificated
Exchange Notes of any authorized denominations and of a like aggregate principal
amount and tenor. Certificated Exchange Notes may be presented for exchange, and
may be presented for registration of transfer (duly endorsed, or accompanied by
a duly executed written instrument of transfer), at the designated office of the
Trustee in Detroit, Michigan (the "SECURITY REGISTRAR"). The Security Registrar
will not charge a service charge for any registration of transfer or exchange of
Exchange Notes; however, Panhandle may require payment by a holder of a sum
sufficient to cover any tax, assessment or other governmental charge payable in
connection therewith, as described in the Indenture. Such transfer or exchange
will be effected upon the Security Registrar or such other transfer agent, as
the case may be, being satisfied with the documents of title and identity of the
person making the request. Panhandle may at any time designate additional
transfer agents with respect to the Exchange Notes.
Panhandle shall not be required to (a) issue, exchange or register the
transfer of any Certificated Exchange Note for a period of 15 days next
preceding the mailing of notice of redemption of such Exchange Note or (b)
exchange or register the transfer of any Certificated Exchange Note or portion
thereof selected, called or being called for redemption, except in the case of
any Certificated Exchange Note to be redeemed in part, the portion thereof not
so to be redeemed.
If a Certificated Exchange Note is mutilated, destroyed, lost or stolen, it
may be replaced at the office of the Security Registrar upon payment by the
holder of such expenses as may be incurred by Panhandle and the Security
Registrar in connection therewith and the furnishing of such evidence and
indemnity as Panhandle and the Security Registrar may require. Mutilated
Exchange Notes must be surrendered before new Exchange Notes will be issued.
SAME DAY SETTLEMENT
Payments in respect of the Exchange Notes represented by the Global
Exchange Notes (including principal, premium, if any, interest and Liquidated
Damages, if any) will be made by wire transfer of immediately available same day
funds to the accounts specified by the holder of interests in such Global
Exchange Note. Principal, premium, if any, and interest and Liquidated Damages,
if any, on all Certificated Exchange Notes in registered form will be payable at
the office or agency of the Trustee in The City of New York, except that, at the
option of Panhandle, payment of any interest and Liquidated Damages, if any, may
be made (1) by check mailed to the address of the Person entitled thereto as
such address shall appear in the security register or (2) by wire transfer to an
account maintained by the Person entitled thereto as specified in the security
register.
31
38
THE EXCHANGE OFFER
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Notes were sold by CMS Holding on March 29, 1999, pursuant to the
Purchase Agreement dated March 23, 1999 (the "PURCHASE AGREEMENT") by and among
CMS Holding, Panhandle and the Initial Purchasers and were subsequently offered
by the Initial Purchasers to qualified institutional buyers pursuant to Rule
144A that are accredited investors in a manner exempt from registration under
the Securities Act as well as to purchasers pursuant to Regulation S under the
Securities Act.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and reference is made to the
provisions of the Registration Rights Agreement which has been filed as an
exhibit to the Exchange Offer Registration Statement and a copy of which is
available as set forth in "Where to Find More Information."
CMS Holding, Panhandle and the Initial Purchasers entered into the
Registration Rights Agreement pursuant to which CMS Holding and Panhandle agreed
to file with the SEC a registration statement (the "EXCHANGE OFFER REGISTRATION
STATEMENT") on the appropriate form under the Securities Act with respect to the
offer to exchange the 2004 Notes, 2009 Notes and 2029 Notes for a new series of
notes (the "EXCHANGE NOTES"), registered under the Securities Act with terms
substantially identical to those of the 2004 Notes, 2009 Notes and 2029 Notes
(the "EXCHANGE OFFER") (except that the Exchange Notes will not contain terms
with respect to transfer restrictions). On June 15, 1999 CMS Holding merged with
and into Panhandle and all obligations of CMS Holding under the Registration
Rights Agreement were assumed by Panhandle. Upon the effectiveness of the
Exchange Offer Registration Statement, Panhandle will offer Exchange Notes
pursuant to the Exchange Offer in exchange for Transfer Restricted Securities
(as defined herein) to the holders of Transfer Restricted Securities who are
able to make certain representations. If (1) Panhandle is not required to file
the Exchange Offer Registration Statement or permitted to consummate the
Exchange Offer because the Exchange Offer is not permitted by applicable law or
SEC policy or (2) any holder of Transfer Restricted Securities notifies
Panhandle that (A) it is prohibited by law or SEC policy from participating in
the Exchange Offer or (B) it may not resell the Exchange Notes acquired by it in
the Exchange Offer to the public without delivering a prospectus and the
prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales or (C) it is a broker-dealer and owns
Notes acquired directly from CMS Holding or Panhandle or an affiliate of CMS
Holding or Panhandle, Panhandle will file with the SEC a shelf registration
statement (the "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. Panhandle will
use its best 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 until (1) the date
on which such Note has been exchanged by a person other than a broker-dealer for
an Exchange Note in the Exchange Offer, (2) following the exchange by a
broker-dealer in the Exchange Offer of a Note for an Exchange Note, the date on
which such an Exchange 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 this
Prospectus, (3) the date on which such Note has been effectively registered
under the Securities Act and disposed of in accordance with the
32
39
Shelf Registration Statement, or (4) the date on which such Note is eligible to
be distributed to the public pursuant to Rule 144 under the Securities Act.
On June 15, 1999, CMS Holding merged with and into Panhandle and all
obligations of CMS Holding under the Registration Rights Agreement were assumed
by Panhandle. Therefore, the following description of the Registration Rights
Agreement which describes joint obligations of CMS Holding and Panhandle refers
only to Panhandle's obligations since pursuant to its merger with CMS Holding it
has assumed all of CMS Holding's obligations under the Registration Rights
Agreement. The Registration Rights Agreement provides that (1) Panhandle will
file an Exchange Offer Registration Statement with the SEC on or prior to 90
days after the Closing, (2) Panhandle will use its best efforts to have the
Exchange Offer Registration Statement declared effective by the SEC on or prior
to 180 days after the Closing Date, (3) unless the Exchange Offer would not be
permitted by applicable law or SEC policy, Panhandle will commence the Exchange
Offer and use its best efforts to issue on or prior to 30 business days after
the date on which the Exchange Offer Registration Statement was declared
effective by the SEC, Exchange Notes in exchange for all Notes tendered prior
thereto in the Exchange Offer and (4) if obligated to file the Shelf
Registration Statement, Panhandle will file the Shelf Registration Statement
with the SEC on or prior to 60 days after such filing obligation arises and to
use its best efforts to cause the Shelf Registration to be declared effective by
the SEC on or prior to 120 days after the date on which Panhandle becomes
obligated to file such Shelf Registration Statement. Except as provided in the
next paragraph, if (a) Panhandle fails to file any of the Registration
Statements required by the Registration Rights Agreement on or before the date
specified for such filing, (b) any of such Registration Statements are not
declared effective by the SEC on or prior to the date specified for such
effectiveness (the "EFFECTIVENESS TARGET DATE"), (c) Panhandle fails to
consummate the Exchange Offer within 30 business days after the Registration
Statement is first declared effective with respect to the Exchange Offer
Registration Statement or (d) the Shelf Registration Statement or the Exchange
Offer Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted Securities
during the periods specified in the Registration Rights Agreement (each such
event referred to in clauses (a) through (d) above being a "Registration
Default"), then Panhandle will pay liquidated damages to each holder of Notes,
with respect to the first 90-day period immediately following the occurrence of
the first Registration Default in an amount equal to $0.05 per week per $1,000
principal amount of Notes held by such holder. The amount of the Liquidated
Damages will increase by an additional $0.05 per week per $1,000 principal
amount of Notes with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of Liquidated
Damages of $0.25 per week per $1,000 principal amount of Notes. All accrued
Liquidated Damages will be paid by Panhandle on each interest payment date to
the Depositary by wire transfer of immediately available funds or by federal
funds check and to holders of certificated securities by mailing checks to their
registered addresses. Following the cure of all Registration Defaults the
accrual of Liquidated Damages will cease.
Holders of Notes will be required to make certain representations to
Panhandle (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 in order to have
33
40
their Notes included in the Shelf Registration Statement and benefit from the
provisions regarding Liquidated Damages set forth above.
Any Notes that remain outstanding after the consummation of the Exchange
Offer, together with all Exchange Notes issued in connection with the Exchange
Offer, will be treated as a single series of securities under the Indenture.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The term "EXPIRATION DATE" shall mean , 1999, unless
Panhandle, in its sole discretion, extends the Exchange Offer, in which case the
term "Expiration Date" shall mean the latest date to which the Exchange Offer is
extended.
To extend the Expiration Date, Panhandle will notify the Exchange Agent of
any extension by oral or written notice and will notify the holders of the
Exchange Notes by means of a press release or other public announcement prior to
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Such announcement may state that Panhandle is
extending the Exchange Offer for a specified period of time.
Panhandle reserves the right (i) to delay acceptance of any Notes, to
extend the Exchange Offer or to terminate the Exchange Offer and not permit
acceptance of Notes not previously accepted if any of the conditions set forth
herein under "-- Conditions" shall have occurred and shall not have been waived
by Panhandle, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent, or (ii) to amend the terms of the Exchange
Offer in any manner deemed by it to be advantageous to the holders of the Notes.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
Exchange Agent. If the Exchange Offer is amended in a manner determined by
Panhandle to constitute a material change, Panhandle will promptly disclose such
amendment in a manner reasonably calculated to inform the holders of the Notes
of such amendment.
Without limiting the manner in which Panhandle may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, Panhandle shall have no obligations to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will accrue interest for the 2004 Exchange Notes at a
rate of 6.125% per annum, for the 2009 Exchange Notes at a rate of 6.500% per
annum and for the 2029 Exchange Notes at a rate of 7.000% per annum. Interest on
the Exchange Notes will accrue from the last date on which interest was paid on
the Notes, or, if no interest has been paid on such Notes, from March 29, 1999,
the date of issuance of the Notes for which the Exchange Offer is being made.
Interest on the 2004 Exchange Notes is payable semiannually on March 15 and
September 15, commencing on September 15, 1999. Interest on the 2009 and 2029
Exchange Notes is payable semiannually on January 15 and July 15 each year
commencing January 15, 2000.
34
41
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
medallion guaranteed if required by the Letter of Transmittal, and mail or
otherwise deliver such Letter of Transmittal or such facsimile, together with
any other required documents, to the Exchange Agent prior to 5:00 p.m., New York
City time, on the Expiration Date. In addition, either (i) a timely confirmation
of a book-entry transfer (a "BOOK-ENTRY CONFIRMATION") of such Notes into the
Exchange Agent's account at The Depositary (the "BOOK-ENTRY TRANSFER FACILITY")
pursuant to the procedure for book-entry transfer described below, must be
received by the Exchange Agent prior to the Expiration Date or (ii) the holder
must comply with the guaranteed delivery procedures described below. THE METHOD
OF DELIVERY OF LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE
EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS
BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN
RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ASSURE TIMELY DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTERS OF TRANSMITTAL OR OTHER REQUIRED DOCUMENTS SHOULD BE SENT TO PANHANDLE.
Delivery of all documents must be made to the Exchange Agent at its address set
forth below. Holders may also request their respective brokers, dealers,
commercial banks, trust companies or nominees to effect such tender for such
holders.
The tender by a holder of Notes will constitute an agreement between such
holder and Panhandle in accordance with the terms and subject to the conditions
set forth herein and in the Letter of Transmittal. Any beneficial owner whose
Notes are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender should contact such registered
holder promptly and instruct such registered holder to tender on his behalf.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be medallion guaranteed by any member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or 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 (each an "ELIGIBLE
INSTITUTION") unless the Notes tendered pursuant thereto are tendered for the
account of an Eligible Institution.
If the Letter of Transmittal is signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations, or
others acting in a fiduciary or representative capacity, such person should so
indicate when signing, and unless waived by Panhandle, evidence satisfactory to
Panhandle of their authority to so act must be submitted with the Letter of
Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt) and withdrawal of the tendered Notes will be determined by Panhandle,
in its sole discretion, which determination will be final and binding. Panhandle
reserves the absolute right to reject any and all Notes not properly tendered or
any Notes which, if accepted, would, in the opinion of counsel for Panhandle, be
unlawful. Panhandle also reserves the absolute right to waive any irregularities
or conditions of tender as to particular Notes. Panhandle's interpretation of
the terms and conditions of the Exchange Offer (including the
35
42
instructions in the Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Notes must be cured within such time as Panhandle shall determine. Neither
Panhandle, the Exchange Agent nor any other person shall be under any duty to
give notification of defects or irregularities with respect to tenders of Notes,
nor shall any of them incur any liability for failure to give such notification.
Tenders of Notes will not be deemed to have been made until such irregularities
have been cured or waived. Any Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned without cost to such holder by the Exchange
Agent, unless otherwise provided in the Letter of Transmittal, as soon as
practicable following the Expiration Date.
In addition, Panhandle reserves the right, in its sole discretion, subject
to the provisions of the Indenture, to purchase or make offers for any Notes
that remain outstanding subsequent to the Expiration Date or, as set forth under
"-- Conditions," to terminate the Exchange Offer in accordance with the terms of
the Registration Rights Agreement, and to the extent permitted by applicable
law, purchase Notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers could differ from the terms
of the Exchange Offer.
ACCEPTANCE OF NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
all Notes properly tendered will be accepted promptly after the Expiration Date,
and the Exchange Notes will be issued promptly after acceptance of the Notes.
See "-- Conditions." For purposes of the Exchange Offer, Notes shall be deemed
to have been accepted as validly tendered for exchange when, as and if Panhandle
has given oral or written notice thereof to the Exchange Agent.
In all cases, issuance of Exchange Notes for Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of a Book-Entry Confirmation of such Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility, a properly
completed and duly executed Letter of Transmittal and all other required
documents. If any tendered Notes are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer, such unaccepted or such
nonexchanged Notes will be credited to an account maintained with such Book-
Entry Transfer Facility as promptly as practicable after the expiration or
termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Notes at the Book-Entry Transfer Facility for purposes of the Exchange
Offer within two business days after the date of this Prospectus. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry delivery of Notes by causing the Book-Entry Transfer
Facility to transfer such Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for transfer. However, the Letter of Transmittal (or
facsimile) thereof with any required signature guarantees and any other required
documents must, in any case, be transmitted to and received by the Exchange
Agent at
36
43
one of the addresses set forth under "-- Exchange Agent" on or prior to the
Expiration Date or the guaranteed delivery procedures described below must be
complied with.
GUARANTEED DELIVERY PROCEDURES
If the procedures for book-entry transfer cannot be completed on a timely
basis, a tender may be effected if (i) the tender is made through an Eligible
Institution, (ii) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by Panhandle (by facsimile transmission, mail
or hand delivery), setting forth the name and address of the holder of Notes and
the amount of Notes tendered, stating that the tender is being made thereby and
guaranteeing that within three New York Stock Exchange, Inc. ("NYSE') trading
days after the date of execution of the Notice of Guaranteed Delivery, a Book-
Entry Confirmation and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent, and (iii)
a Book-Entry Confirmation and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within three NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL OF TENDERS
Tenders of Notes may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date at one of the addresses set forth under "-- Exchange Agent." Any
such notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility from which the Notes were tendered, identify the
principal amount of the Notes to be withdrawn, and specify the name and number
of the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Notes and otherwise comply with the procedures of such Book-Entry
Transfer Facility. All questions as to the validity, form and eligibility
(including time of receipt) of such notice will be determined by Panhandle,
whose determination shall be final and binding on all parties. Any Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Notes which have been tendered for exchange
but which are not exchanged for any reason will be credited to an account
maintained with such Book-Entry Transfer Facility for the Notes as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Notes may be retendered by following one of the
procedures described under "-- Procedures for Tendering" and "-- Book-Entry
Transfer" at any time on or prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, Notes will not be
required to be accepted for exchange, nor will Exchange Notes be issued in
exchange for any Notes, and Panhandle may terminate or amend the Exchange Offer
as provided herein before the acceptance of such Notes, if, because of any
change in law, or applicable interpretations thereof by the SEC, Panhandle
determines that it is not permitted to effect the Exchange Offer. Panhandle has
no obligation to, and will not knowingly, permit acceptance of
37
44
tenders of Notes from affiliates of Panhandle or from any other holder or
holders who are not eligible to participate in the Exchange Offer under
applicable law or interpretations thereof by the Staff of the SEC, or if the
Exchange Notes to be received by such holder or holders of Notes in the Exchange
Offer, upon receipt, will not be tradable by such holder without restriction
under the Securities Act and the Exchange Act and without material restrictions
under the "blue sky" or securities laws of substantially all of the states of
the United States.
EXCHANGE AGENT
Bank One Trust Company, NA has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
By Mail (Certified, Registered, Overnight or First Class) or Hand Delivery:
Bank One Trust Company, NA
c/o First Chicago Trust Company of New York
14 Wall Street
8th Floor, Window 2
New York, New York 10005
By Facsimile
(For Eligible Institutions Only)
(212) 240-8938
Telephone Number
(212) 240-8801
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by Panhandle. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitations may be
made by telegraph, telephone, telecopy or in person by officers and regular
employees of Panhandle.
Panhandle will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. Panhandle, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in connection
therewith.
The expenses to be incurred in connection with the Exchange Offer will be
paid by Panhandle, including fees and expenses of the Exchange Agent and the
Trustee, and accounting, legal, printing and related fees and expenses.
Panhandle will pay all transfer taxes, if any, applicable to the exchange
of Notes pursuant to the Exchange Offer. If, however, Exchange Notes or Notes
for principal amounts not tendered or accepted for exchange are to be registered
or issued in the name of any person other than the registered holder of the
Notes tendered, or if tendered Notes are registered in the name of any person
other than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Notes pursuant to the Exchange
Offer, then the amount of any such transfer taxes
38
45
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering holder.
RESALE OF EXCHANGE NOTES
Based on an interpretation by the staff of the SEC set forth in no-action
letters issued to third parties, Panhandle believes that Exchange Notes issued
pursuant to the Exchange Offer in exchange for Notes may be offered for resale,
resold and otherwise transferred by any owner of such Exchange Notes (other than
any such owner which is an "affiliate" of Panhandle within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such owner's business and
such owner does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of such
Exchange Notes. Any owner of Notes who tenders in the Exchange Offer with the
intention to participate, or for the purpose of participating, in a distribution
of the Exchange Notes may not rely on the position of the staff of the SEC
enunciated in Exxon Capital Holdings Corporation (available May 13, 1998, as
interpreted in the SEC's letter to Shearman & Sterling dated July 2, 1993),
Morgan Stanley & Co., Incorporated (available June 5, 1991), Warnaco, Inc.
(available June 5, 1991), and Epic Properties, Inc. (available October 21, 1991)
or similar no-action letters (collectively the "NO-ACTION LETTERS") but rather
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. In addition, any such
resale transaction should be covered by an effective registration statement
containing the selling security holders information required by Item 507 of
Regulation S-K of the Securities Act. Each broker-dealer that receives Exchange
Notes for its own account in exchange for Notes, where such Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, may be a statutory underwriter and must acknowledge that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes.
By tendering in the Exchange Offer, each Holder (or DTC participant, in the
case of tenders of interests in the Global Notes held by DTC) will represent to
Panhandle (which representation may be contained the Letter of Transmittal) to
the effect that (A) it is not an affiliate of Panhandle, (B) it is not engaged
in, and does not intend to engage in, and has no arrangement or understanding
with any person to participate in, a distribution of the Exchange Notes to be
issued in the Exchange Offer and (C) it is acquiring the Exchange Notes in its
ordinary course of business. Each Holder will acknowledge and agree that any
broker-dealer and any such Holder using the Exchange Offer to participate in a
distribution of the Exchange Notes acquired in the Exchange Offer (1) could not
under SEC policy as in effect on the date of the Registration Rights Agreement
rely on the position of the SEC enunciated in the No-Action Letters, and (2)
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 if the resales are of Exchange
Notes obtained by such Holder in exchange for Notes acquired by such Holder
directly from Panhandle or an affiliate thereof.
39
46
To comply with the securities laws of certain jurisdictions, it may be
necessary to qualify for sale or to register the Exchange Notes prior to
offering or selling such Exchange Notes. Panhandle has agreed, pursuant to the
Registration Rights Agreement and subject to certain specified limitations
therein, to cooperate with selling Holders or underwriters in connection with
the registration and qualification of the Exchange Notes for offer or sale under
the securities or "blue sky" laws of such jurisdictions as may be necessary to
permit the holders of Exchange Notes to trade the Exchange Notes without any
restrictions or limitations under the securities laws of the several states of
the United States.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Notes who do not exchange their Notes for Exchange Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Notes as set forth in the legend thereon as a consequence of
the issuance of the Notes pursuant to exemptions from, or in transactions not
subject to, the registration requirements of the Securities Act and applicable
state securities laws. In general, the Notes may not be registered under the
Securities Act, except pursuant a transaction not subject to, the Securities Act
and applicable state securities laws. Panhandle does not currently anticipate
that it will register the Notes under the Securities Act. To the extent that
Notes are tendered and accepted in the Exchange Offer, the trading market for
untendered and tendered but unaccepted Notes could be adversely affected.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
DESCRIPTION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OF NOTES
FOR EXCHANGE NOTES
The following summary describes the principal United States federal income
tax consequences to holders who exchange Notes for Exchange Notes pursuant to
the Exchange Offer. This summary is intended to address the beneficial owners of
Notes that are citizens or residents of the United States, corporations,
partnerships or other entities created or organized in or under the laws of the
United States or any State or the District of Columbia, or estates or trusts
that are not foreign estates or trusts for United States federal income tax
purposes, in each case, that hold the Notes as capital assets.
The exchange of Notes for Exchange Notes pursuant to the Exchange Offer
will not constitute a taxable exchange for United States federal income tax
purposes. As a result, a holder of a Note whose Note is accepted in the Exchange
Offer will not recognize gain or loss on the exchange. A tendering holder's tax
basis in the Exchange Notes received pursuant to the Exchange Offer will be the
same as such holder's tax basis in the Notes surrendered therefor. A tendering
holder's holding period for the Exchange Notes received pursuant to the Exchange
Offer-will include its holding period for the Notes surrendered therefor.
ALL HOLDERS OF NOTES ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF THE
EXCHANGE OF NOTES FOR EXCHANGE NOTES, AND OF THE OWNERSHIP AND DISPOSITION OF
40
47
EXCHANGE NOTES RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
DESCRIPTION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF AN INVESTMENT IN THE
EXCHANGE NOTES
The following is a summary of the material United States federal income tax
consequences of the acquisition, ownership and disposition of the Notes or the
Exchange Notes by a United States Holder (as defined below). This summary deals
only with the United States Holders that will hold the Notes or the Exchange
Notes as capital assets. The discussion does not cover-all aspects of federal
taxation that may be relevant to, or the actual tax effect that any of the
matters described herein will have on, the acquisition, ownership or disposition
of the Notes or the Exchange Notes by particular investors, and does not address
state, local, foreign or other tax laws. In particular, this summary does not
discuss all of the tax considerations that may be relevant to certain types of
investors subject to special treatment under the federal income tax laws (such
as banks, insurance companies, investors liable for the alternative minimum tax,
individual retirement accounts and other tax-deferred accounts, tax-exempt
organizations, dealers in securities or currencies, investors that will hold the
Notes or the Exchange Notes as part of straddles, hedging transactions or
conversion transactions for federal tax purposes or investors whose functional
currency is not United States Dollars). Furthermore, the discussion below is
based on provisions of the Internal Revenue Code of 1986, as amended, and
regulations, rulings, and judicial decisions thereunder as of the date hereof,
and such authorities may be repealed, revoked or modified so as to result in
U.S. federal income tax consequences different from those discussed below.
PERSONS CONSIDERING THE PURCHASE, OWNERSHIP, OR DISPOSITION OF EXCHANGE
NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME
TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR INTERNATIONAL TAXING
JURISDICTION.
As used herein, the term "UNITED STATES HOLDER" means a beneficial owner of
the Notes or the Exchange Notes that is (i) a citizen or resident of the United
States for United States federal income tax purposes, (ii) a corporation created
or organized under the laws of the United States or any State thereof, (iii) a
person or entity that is otherwise subject to United States federal income tax
on a net income basis in respect of income derived from the Notes or the
Exchange Notes, or (iv) a partnership to the extent the interest therein is
owned by a person who is described in clause (i), (ii) or (iii) of this
paragraph.
INTEREST
Interest paid on a Note or an Exchange Note will be taxable to a United
States Holder as ordinary income at the time it is received or accrued,
depending on the holder's method of accounting for tax purposes.
41
48
PURCHASE, SALE, EXCHANGE, RETIREMENT AND REDEMPTION OF THE EXCHANGE NOTES
In general (with certain exceptions described below) a United States
Holder's tax basis in an Exchange Note will equal the price paid for the Notes
for which such Exchange Note was exchanged pursuant to the Exchange Offer. A
United States Holder generally will recognize gain or loss on the sale,
exchange, retirement, redemption or other disposition of a Note or an Exchange
Note (or portion thereof) equal to the difference between the amount realized on
such disposition and the United States Holder's tax basis in the Note or the
Exchange Note (or portion thereof). Except to the extent attributable to accrued
but unpaid interest, gain or loss recognized on such disposition of a Note or an
Exchange Note will be capital gain or loss. Under the "Taxpayer Relief Act of
1997" (the "TAXPAYER ACT") the maximum rate applicable to long-term capital
gains of individuals has been reduced to 20%. However, the Taxpayer Act also
extends the holding period for long-term capital gains to 18 months for capital
assets disposed of after July 28, 1997. Gain on capital assets held between 12
months and 18 months are subject to tax at a maximum rate of 28%. Any such gain
will generally be United States source gain.
BOND PREMIUM
If a United States Holder acquires an Exchange Note or has acquired a Note,
in each case, for an amount more than its redemption price, the Holder may elect
to amortize such bond premium on a yield to maturity basis. Once made, such an
election applies to all bonds (other than bonds the interest on which is
excludable from gross income) held by the United States Holder at the beginning
of the first taxable year to which the election applies or thereafter acquired
by the United States Holder, unless the IRS consents to a revocation of the
election. The basis of an Exchange Note will be reduced by any amortizable bond
premium taken as a deduction.
MARKET DISCOUNT
The purchase of an Exchange Note or the purchase of a Note other than at
original issue may be affected by the market discount provisions of the Code.
These rules generally provide that, subject to a statutorily defined de minimis
exception, if a United States Holder purchases an Exchange Note (or purchased a
Note) at a "market discount," as defined below, and thereafter recognizes gain
upon a disposition of the Exchange Note (including dispositions by gift or
redemption), the lesser of such gain (or appreciation, in the case of a gift) or
the portion of the market discount that has accrued ("ACCRUED MARKET DISCOUNT")
while the Exchange Note (and its predecessor Note, if any) was held by such
United States Holder will be treated as ordinary interest income at the time of
disposition rather than as capital gain. For an Exchange Note or a Note, "MARKET
DISCOUNT" is the excess of the stated redemption price at maturity over the tax
basis immediately after its acquisition by a United States Holder. Market
discount generally will accrue ratably during the period from the date of
acquisition to the maturity date of the Exchange Note, unless the United States
Holder elects to accrue such discount on the basis of the constant yield method.
Such an election applies only to the Exchange Note with respect to which it is
made and is irrevocable.
In lieu of including the accrued market discount income at the time of
disposition, a United States Holder of an Exchange Note acquired at a market
discount (or acquired in exchange for a Note acquired at a market discount) may
elect to include the accrued market discount in income currently either ratably
or using the constant yield method.
42
49
Once made, such an election applies to all other obligations that the United
States Holder purchases at a market discount during the taxable year for which
the election is made and in all subsequent taxable years of the United States
Holder, unless the Internal Revenue Service consents to a revocation of the
election. If an election is made to include accrued market discount in income
currently, the basis of an Exchange Note (or, where applicable, a predecessor
Note) in the hands of the United States Holder will be increased by the accrued
market discount thereon as it is includible in income. A United States Holder of
a market discount Exchange Note who does not elect to include market discount in
income currently generally will be required to defer deductions for interest on
borrowings allocable to such Exchange Note, if any, in an amount not exceeding
the accrued market discount on such Exchange Note until the maturity or
disposition of such Exchange Note.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of interest and principal on, and the proceeds of sale or other
disposition of the Notes or the Exchange Notes payable to a United States
Holder, may be subject to information reporting requirements and backup
withholding at a rate of 31% will apply to such payments if the United States
Holder fails to provide an accurate taxpayer identification number or to report
all interest and dividends required to be shown on its federal income tax
returns. Certain United States Holders (including, among others, corporations)
are not subject to backup withholding. United States Holders should consult
their tax advisors as to their qualification for exemption from backup
withholding and the procedure for obtaining such an exemption.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant the Exchange Offer must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Notes. This Prospectus, as it may
be amended or supplemented from time to time, may be used by a broker-dealer in
connections with resales of the Exchange Notes received in exchange for the
Notes where such Notes were acquired as a result of market-making activities or
other trading activities. Panhandle has agreed that, starting on the Expiration
Date and ending on the close of business on the first anniversary of the
Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale.
Panhandle will not receive any proceeds from any sale of the Exchange Notes
by broker-dealers. The Exchange 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 transaction,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at 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 and/or the purchasers of any such Exchange Notes. Any
broker-dealer that resells Exchange 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 Exchange Notes may be deemed to be an
"UNDERWRITER" within the meaning of the Securities Act and any profit of any
such resale of Exchange Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that
43
50
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 one year after the Expiration Date, Panhandle 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. Panhandle has agreed to pay all expenses incident to the
Exchange Offer and will indemnify the holders of the Exchange Notes against
certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Opinions as to the legality of the Exchange Notes will be rendered for
Panhandle by Michael D. Van Hemert, Assistant General Counsel for CMS Energy. As
of March 31, 1999, Mr. Van Hemert beneficially owned approximately 2,889 shares
of CMS Energy Common Stock.
EXPERTS
The financial statements incorporated in this Prospectus by reference from
Panhandle's Annual Report on Form 10-K have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is incorporated
herein by reference, and have been so incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of Panhandle, for the year ended
December 31, 1996, incorporated by reference in this Prospectus, have been
audited by KPMG LLP, independent certified public accountants, as indicated in
their report thereon. Such financial statements have been incorporated by
reference in reliance upon the reports of KPMG LLP.
With respect to the unaudited interim consolidated financial information
for the period ended March 31, 1999 Arthur Andersen LLP has applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate report thereon states that they did not
audit and they did not express an opinion on that interim consolidated financial
information. Accordingly, the degree of reliance on their report on that
information should be restricted in light of the limited nature of the review
procedures applied. In addition, the accountants are not subject to the
liability provisions of Section 11 of the Securities Act, for their reports on
the unaudited interim consolidated financial information because those reports
are not a "REPORT" or "PART" of the registration statement prepared or certified
by the accountants within the meaning of Sections 7 and 11 of the Securities
Act.
Future consolidated financial statements of Panhandle and the reports
thereon of Arthur Andersen LLP also will be incorporated by reference in this
Prospectus in reliance upon the authority of that firm as experts in giving
those reports to the extent that said firm has audited said consolidated
financial statements and consented to the use of their reports thereon.
44
51
UNAUDITED PRO FORMA FINANCIAL INFORMATION
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
OF PANHANDLE EASTERN PIPE LINE COMPANY
The following Unaudited Pro Forma Combined Financial Statements (the "PRO
FORMA FINANCIAL STATEMENTS") of Panhandle Eastern Pipe Line Company illustrate
the effects of: (1) various restructuring, realignment, and elimination of
activities between the Panhandle Companies (as defined below) and Duke Energy
Corporation and its subsidiaries ("DUKE ENERGY") prior to the closing of the
acquisition (the "ACQUISITION") of Panhandle Eastern Pipe Line Company
("PANHANDLE") and its principal subsidiaries, Trunkline Gas Company and Pan Gas
Storage Company, and its affiliates Panhandle Storage Company and Trunkline LNG
Company (collectively, the "PANHANDLE COMPANIES") by CMS Energy Corporation
("CMS Energy"); (2) the adjustments resulting from the Acquisition by CMS
Energy; and (3) the public issuance of $800 million of Notes by CMS Panhandle
Holding Company (the "NOTES") ("CMS HOLDING") which were completed to facilitate
the Acquisition (the "Financing Transaction"). The $1.1 billion balance of the
cash purchase price was paid with an equity contribution from CMS Energy. The
Unaudited Pro Forma Combined Balance Sheets have been prepared as if such
transactions occurred on the balance sheet date; the Unaudited Pro Forma
Combined Income Statements have been prepared as if such transactions occurred
as of January 1, 1998.
The Pro Forma Financial Statements reflect CMS Energy acquiring all of the
common stock of the Panhandle Companies. The Pro Forma Financial Statements also
reflect, prior to the Acquisition, the transfer of Panhandle's interest in
Northern Border Pipeline Company and certain non-operating assets to other
subsidiaries of Duke Energy, and the elimination of certain intercompany
accounts, including advances, between Panhandle and Duke Energy. The purchase
price for the common stock of the Panhandle Companies was $1.9 billion in cash.
The Panhandle Companies will have approximately $1.1 billion of debt outstanding
after the closing of the Acquisition. This indebtedness includes approximately
$300 million of existing debt and the debt incurred in the Financing
Transaction. CMS Energy's acquisition of the Panhandle Companies was accounted
for under the purchase method.
A final determination of required purchase accounting adjustments,
including the allocation of the purchase price to the assets acquired and
liabilities assumed based on their respective fair values, and the final
determination of estimated remaining useful lives of the acquired property,
plant and equipment, have not yet been made. Accordingly, the pro forma
accounting adjustments made in connection with the development of the Pro Forma
Financial Statements are preliminary and have been made solely for purposes of
developing the pro forma combined financial information. However, CMS Energy
management believes that the pro forma adjustments and the underlying
assumptions reasonably present the significant effects of the Acquisition and
the Financing Transactions. In addition, CMS Energy will undertake studies to
determine the fair value of assets and liabilities and estimated remaining
useful lives of the acquired property, plant and equipment of the Panhandle
Companies and will revise the accounting adjustments upon completion of those
studies. The actual financial position and results of operations of the combined
entity will differ, perhaps significantly, from the pro forma amounts reflected
herein because of a variety of factors, including access to additional
information, changes in value and changes in operating results between the dates
of the Pro Forma Financial Statements and the Acquisition date. The Pro Forma
Financial Statements are not
F-1
52
necessarily indicative of actual operating results or financial position had the
Acquisition and the Financing Transactions occurred as of the dates indicated
above, nor do they purport to indicate operating results or financial position
which may be attained in the future.
The significant adjustments to pro forma net income reflect (1) higher
depreciation and amortization expense to give effect to the allocation of excess
purchase price amortized over 40 years and the fair value of net assets acquired
related to property, plant and equipment prospectively depreciated over a
revised estimated average remaining life of 40 years, (2) elimination of pension
and rental income, and (3) lower interest expense from the cancellation of
certain indebtedness between Panhandle and Duke Energy and additional interest
expense reflecting the new debt issuance of CMS Holding.
The significant adjustments to the pro forma financial position reflect (1)
elimination of the advances to Duke Energy and the notes payable to Duke Energy,
(2) increases to property, plant and equipment and accrued liabilities for the
purchase price allocation, (3) recognition of goodwill in the fair value
calculation, (4) decreases in taxes and other liabilities assumed by Duke
Energy, and (5) increases in long-term debt and common stockholder's equity in
connection with the Acquisition and the Financing Transactions.
The Panhandle Companies' financial statements utilized in the preparation
of the Pro Forma Financial Statements are based upon financial statements and
information obtained from Duke Energy and Panhandle.
The Pro Forma Financial Statements should be read in conjunction with the
historical financial statements and notes thereto of Panhandle included in
Panhandle's annual report on Form 10-K for the year ended December 31, 1998
delivered with this Prospectus and the documents incorporated by reference
herein, and the notes to the Pro Forma Financial Statements included elsewhere
herein. The pro forma adjustments do not reflect any potential operating
efficiencies or cost savings which management believes may be achievable with
respect to the combined companies.
F-2
53
PANHANDLE EASTERN PIPE LINE COMPANY
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(DOLLARS IN MILLIONS)
PANHANDLE EASTERN PIPE LINE COMPANY
PRE-ACQUISITION PRO FORMA PRO FORMA ACQUISITIONS
----------------------------------------------------------- --------------------------------------
PANHANDLE RESTRUCTURING ELIMINATION OF PANHANDLE PANHANDLE
CONSOLIDATED AND DUKE ENERGY COMPANIES ACQUISITION FINANCING EASTERN
HISTORICAL REALIGNMENT ACTIVITIES AS ADJUSTED ADJUSTMENTS TRANSACTIONS PRO FORMA
------------ ------------- -------------- ----------- ----------- ------------ ---------
Operating revenues......... $133 $ 1 (a) $ (4)(b) $130 $(2)(g) $ -- $128
Operating expenses:
Operations and
maintenance............ 43 (1)(a) 4 (c) 46 46
Depreciation and
amortization........... 14 (2)(d) 12 2 (h) 14
Property and other
taxes.................. 7 1 (a) 8 8
---- --- ---- ---- --- ---- ----
64 -- 2 66 2 -- 68
---- --- ---- ---- --- ---- ----
Pretax operating income.... 69 1 (6) 64 (4) -- 60
Other income and
expenses................. 5 5 5
---- --- ---- ---- --- ---- ----
Earnings before interest
and taxes................ 74 1 (6) 69 (4) -- 65
Interest expense........... 19 (13)(e) 6 14 (j) 20
---- --- ---- ---- --- ---- ----
Income before income
taxes.................... 55 1 7 63 (4) (14) 45
Income taxes............... 21 3 (f) 24 (1)(i) (5)(k) 18
---- --- ---- ---- --- ---- ----
Net income................. $ 34 $ 1 $ 4 $ 39 $(3) $ (9) $ 27
==== === ==== ==== === ==== ====
See accompanying notes to Unaudited Pro Forma Combined Income Statement.
F-3
54
PANHANDLE EASTERN PIPE LINE COMPANY
NOTES TO UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1999
RESTRUCTURING AND REALIGNMENT:
(a) To reflect the results of operations of Panhandle Storage Company and
Trunkline LNG Company, both acquired by CMS Energy, and the transfer of
Panhandle's interest in Northern Border Pipeline Company and certain
non-operating assets to other subsidiaries of Duke Energy under the provisions
of the Stock Purchase Agreement dated as of October 31, 1998, between CMS Energy
and subsidiaries of Duke Energy (the "STOCK PURCHASE AGREEMENT").
ELIMINATION OF DUKE ENERGY ACTIVITIES:
(b) To reflect the elimination of rental income earned by Panhandle on an
office building, which was transferred to Duke Energy under the provisions of
the Stock Purchase Agreement.
(c) To reflect the elimination of pension income recognized by Panhandle on
the overfunded pension plans of Duke Energy. Under the provisions of the Stock
Purchase Agreement, Duke Energy transferred to CMS Energy an amount of pension
assets equivalent to the Panhandle Companies' liabilities assumed by CMS Energy.
(d) To reflect the elimination of depreciation associated with an office
building and certain other assets, which were transferred to Duke Energy under
the provisions of the Stock Purchase Agreement.
(e) To reflect a reduction in interest expense relating to the settlement
of certain short-term notes payable to Duke Energy under the provisions of the
Stock Purchase Agreement.
(f) To reflect the income tax expense effects of pro forma adjustments (b)
through (e) at an estimated rate of 35%.
ACQUISITION ADJUSTMENTS:
(g) To reflect the elimination of non-cash amortization of deferred credits
associated with a Trunkline LNG Company rate settlement.
(h) To reflect depreciation expense on the fair value of property, plant
and equipment prospectively depreciated over a revised estimated average
remaining life of 40 years. Also reflects amortization expense over a 40-year
period of the estimated goodwill recognized in the Acquisition.
(i) To reflect the income tax expense effects of pro forma adjustments (g)
and (h) at an estimated rate of 35%.
FINANCING TRANSACTIONS:
(j) To reflect the increase of interest expense relating to the public
issuance of $800 million of Notes with a weighted average interest rate of 6.9%.
(k) To reflect the income tax expense effects of pro forma adjustment (j)
at an estimated rate of 35%.
F-4
55
PANHANDLE EASTERN PIPE LINE COMPANY
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 1999
(DOLLARS IN MILLIONS)
ASSETS
PRO FORMA ACQUISITION
PANHANDLE -------------------------- PANHANDLE
CONSOLIDATED ACQUISITION FINANCING EASTERN
HISTORICAL ADJUSTMENTS TRANSACTIONS PRO FORMA
------------ ----------- ------------ ---------
Current Assets:
Receivables................... $ 88 $ -- $ -- $ 88
Other current assets.......... 93 93
------ ------ ------- ------
$ 181 -- -- $ 181
------ ------ ------- ------
Investments:
Advances and note
receivable--parent......... -- -- -- --
Investment in affiliates and
other...................... 8 8
------ ------ ------- ------
8 -- -- 8
------ ------ ------- ------
Net property, plant and
equipment..................... 838 705(a) -- 1,543
------ ------ ------- ------
Other non-current assets........ 700(b)
496 (454)(c) -- 742
------ ------ ------- ------
Total Assets.......... $1,523 $ 951 $ -- $2,474
====== ====== ======= ======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable.............. $ 8 $ -- $ -- $ 8
Notes payable--parent......... -- --
Other current liabilities..... 113 113
------ ------ ------- ------
$ 121 -- -- $ 121
------ ------ ------- ------
Long-term Debt.................. 299 19(b) 800(e) 1,118
------ ------ ------- ------
Deferred Credits and Other
Liabilities:
Deferred income taxes......... -- --
Other non-current
liabilities................ 34 100(b) 134
------ ------ ------- ------
34 100 -- 134
------ ------ ------- ------
Common Stockholder's Equity:
Common stock.................. 1 1
1,387(d) 1,100(f)
Paid-in capital............... 966 (454)(c) (1,900)(g) 1,099
Retained earnings............. 102 (101)(d) 1
------ ------ ------- ------
$1,069 $ 832 $ (800) $1,101
------ ------ ------- ------
Total Liabilities and
Stockholder's
Equity............. $1,523 $ 951 $ -- $2,474
====== ====== ======= ======
See accompanying notes to Unaudited Pro Forma Combined Balance Sheet.
F-5
56
PANHANDLE EASTERN PIPE LINE COMPANY
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 1999
ACQUISITION ADJUSTMENTS:
(a) To reflect the increase in property, plant and equipment to adjust the
historical value of these assets to their estimated fair values. The allocation
reflects CMS Energy's internal evaluation of the excess purchase price and is
subject to the completion of a study to determine the fair value of the
property. Should the study not support such allocation to property, plant and
equipment, the excess of total purchase price over the fair value of the net
assets acquired will be reflected as an adjustment to the preliminary estimate
of goodwill.
(b) To reflect the preliminary estimated acquisition adjustments under the
purchase method of accounting to record assets acquired and liabilities assumed
at estimated fair value for (i) the preliminary estimate of goodwill, (ii) the
increase of certain other assets, (iii) the elimination of previously recorded
regulatory assets assuming Panhandle ceases to apply Statement of Financial
Accounting Standards No. 71 accounting for its regulated assets, (iv) the
long-term debt assumed, (v) the assumption of benefit plan obligations by the
Panhandle Companies, previously assumed by Duke Energy, and (vi) the accrual of
certain obligations of the Panhandle Companies which are expected to be paid
after completion of the transaction. The following adjustments reflect CMS
Energy management's intended business strategies and outlook which may differ
from the business strategies and outlook of Duke Energy management prior to the
Acquisition:
(DOLLARS IN MILLIONS)
---------------------
Other assets including goodwill............................. $700
Other non-current liabilities............................... 100
(c) To reflect the elimination of deferred tax assets and associated
paid-in-capital which resulted from the temporary book basis to tax basis
difference upon acquisition.
(d) To reflect the increase in paid-in capital and the elimination in
retained earnings as a result of pro forma adjustments (a) through (c).
FINANCING TRANSACTIONS:
(e) To reflect the public issuance of $800 million of Notes.
(f) To reflect a $1.1 billion equity contribution by CMS Energy.
(g) To reflect the payment of $1.9 billion in cash to Duke Energy for the
acquisition of the Panhandle Companies.
F-6
57
PANHANDLE EASTERN PIPE LINE COMPANY
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN MILLIONS)
PANHANDLE COMPANIES
PRE-ACQUISITION PRO FORMA PRO FORMA ACQUISITION
----------------------------------------------------------- --------------------------------------
PANHANDLE RESTRUCTURING ELIMINATION PANHANDLE PANHANDLE
CONSOLIDATED AND OF DUKE ENERGY COMPANIES ACQUISITION FINANCING EASTERN
HISTORICAL REALIGNMENT ACTIVITIES AS ADJUSTED ADJUSTMENTS TRANSACTIONS PRO FORMA
------------ ------------- -------------- ----------- ----------- ------------ ---------
Operating revenues......... $496 $(3)(a) $(14)(b) $479 $ (9)(i) $ -- $470
Operating expenses:
Operations and
maintenance............ 213 (2)(a) 9(c) 220 220
Depreciation and
amortization........... 56 (2)(a) (4)(d) 50 7(j) 57
Property and other
taxes.................. 26 2(a) (1)(e) 27 27
---- --- ---- ---- ---- ---- ----
295 (2) 4 297 7 -- 304
---- --- ---- ---- ---- ---- ----
Pretax operating income.... 201 (1) (18) 182 (16) -- 166
Other income and
expenses................. 24 (14)(f) 10 10
---- --- ---- ---- ---- ---- ----
Earnings before interest
and taxes................ 225 (1) (32) 192 (16) -- 176
Interest expense........... 77 (1)(a) (54)(g) 22 56 (l) 78
---- --- ---- ---- ---- ---- ----
Income before income
taxes.................... 148 -- 22 170 (16) (56) 98
Income taxes............... 57 1 (a) 7 (h) 65 (6)(k) (19)(m) 40
---- --- ---- ---- ---- ---- ----
Net income................. $ 91 $(1) $ 15 $105 $(10) $(37) $ 58
==== === ==== ==== ==== ==== ====
See accompanying notes to Unaudited Pro Forma Combined Income Statement.
F-7
58
PANHANDLE EASTERN PIPE LINE COMPANY
NOTES TO UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1998
RESTRUCTURING AND REALIGNMENT:
(a) To reflect the results of operations of Panhandle Storage Company and
Trunkline LNG Company, both acquired by CMS Energy, and the transfer of
Panhandle's interest in Northern Border Pipeline Company and certain
non-operating assets to other subsidiaries of Duke Energy under the provisions
of the Stock Purchase Agreement dated as of October 31, 1998, between CMS Energy
and subsidiaries of Duke Energy (the "STOCK PURCHASE AGREEMENT").
ELIMINATION OF DUKE ENERGY ACTIVITIES:
(b) To reflect the elimination of rental income earned by Panhandle on an
office building, which was transferred to Duke Energy under the provisions of
the Stock Purchase Agreement.
(c) To reflect the elimination of pension income recognized by Panhandle on
the overfunded pension plans of Duke Energy. Under the provisions of the Stock
Purchase Agreement, Duke Energy transferred to CMS Energy an amount of pension
assets equivalent to the Panhandle Companies' liabilities assumed by CMS Energy.
(d) To reflect the elimination of depreciation associated with an office
building and certain other assets, which were transferred to Duke Energy under
the provisions of the Stock Purchase Agreement.
(e) To reflect the elimination of ad valorem taxes associated with an
office building, which was transferred to Duke Energy under the provisions of
the Stock Purchase Agreement.
(f) To reflect the elimination of a December 1998 gain on the sale of
Panhandle's general partnership interest in Northern Border Pipeline Company.
(g) To reflect a reduction in interest expense relating to the settlement
of certain short-term notes payable to Duke Energy under the provisions of the
Stock Purchase Agreement.
(h) To reflect the income tax expense effects of pro forma adjustments (b)
through (g) at an estimated rate of 35%.
ACQUISITION ADJUSTMENTS:
(i) To reflect the elimination of non-cash amortization of deferred credits
associated with a Trunkline LNG Company rate settlement.
(j) To reflect depreciation expense on the fair value of property, plant
and equipment prospectively depreciated over a revised estimated average
remaining life of 40 years. Also reflects amortization expense over a 40-year
period of the estimated goodwill recognized in the Acquisition.
F-8
59
(k) To reflect the income tax expense effects of pro forma adjustments (i)
and (j) at an estimated rate of 35%.
FINANCING TRANSACTIONS:
(l) To reflect the increase of interest expense relating to the public
issuance of $800 million of Notes with a weighted average interest rate of 6.9%.
(m) To reflect the income tax expense effects of pro forma adjustment (l)
at an estimated rate of 35%.
F-9
60
PANHANDLE EASTERN PIPE LINE COMPANY
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1998
(DOLLARS IN MILLIONS)
ASSETS
PANHANDLE COMPANIES
PRE-ACQUISITION PRO FORMA PRO FORMA ACQUISITION
----------------------------------------------------------- --------------------------------------
PANHANDLE RESTRUCTURING ELIMINATION OF PANHANDLE PANHANDLE
CONSOLIDATED AND DUKE ENERGY COMPANIES ACQUISITION FINANCING EASTERN
HISTORICAL REALIGNMENT ACTIVITIES AS ADJUSTED ADJUSTMENTS TRANSACTIONS PRO FORMA
------------ ------------- -------------- ----------- ----------- ------------ ---------
Current Assets:
Receivables................ $ 94 $ (3)(a) $ (1)(b) $ 90 $ -- $ -- $ 90
Other current assets....... 86 (2)(a) (6)(c) 78 78
------ ---- ----- ------ ------ ------- ------
180 (5) (7) 168 -- -- 168
------ ---- ----- ------ ------ ------- ------
Investments:
Advances and note
receivable -- parent..... 738 (738)(b) -- --
Investment in affiliates
and other................ 50 (41)(a) 9 9
------ ---- ----- ------ ------ ------- ------
788 (41) (738) 9 -- -- 9
------ ---- ----- ------ ------ ------- ------
Net property, plant and
equipment.................. 979 101 (a) (72)(d) 1,008 603 (h) 1,576
(35)(i)
------ ---- ----- ------ ------ ------- ------
Other non-current assets.... 26 -- (2)(c) 24 700 (j) -- 724
------ ---- ----- ------ ------ ------- ------
Total Assets......... $1,973 $ 55 $(819) $1,209 $1,268 $ -- $2,477
====== ==== ===== ====== ====== ======= ======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable........... $ 56 $(48)(a) $ -- $ 8 $ -- $ -- $ 8
Notes payable -- parent.... 675 (675)(e) -- --
Other current
liabilities.............. 183 3 (a) (68)(f) 108 108
(10)(c)
------ ---- ----- ------ ------ ------- ------
914 (45) (753) 116 -- -- 116
------ ---- ----- ------ ------ ------- ------
Long-term Debt.............. 299 (3)(a) 3 (b) 299 19 (j) 800 (l) 1,118
------ ---- ----- ------ ------ ------- ------
Deferred Credits and Other
Liabilities:
Deferred income taxes...... 99 51 (a) (150)(f) -- --
Other non-current
liabilities.............. 103 36 (a) (61)(c) 78 100 (j) 143
(35)(i)
------ ---- ----- ------ ------ ------- ------
202 87 (211) 78 65 -- 143
------ ---- ----- ------ ------ ------- ------
Common Stockholder's Equity:
Common stock............... 1 1 1
Paid-in capital............ 466 16 (a) 142 (g) 624 1,275 (k) 1,100 (m) 1,099
(1,900)(n)
Retained earnings.......... 91 91 (91)(k) --
------ ---- ----- ------ ------ ------- ------
558 16 142 716 1,184 (800) 1,100
------ ---- ----- ------ ------ ------- ------
Total Liabilities and
Stockholder's
Equity.............. $1,973 $ 55 $(819) $1,209 $1,268 $ -- $2,477
====== ==== ===== ====== ====== ======= ======
See accompanying notes to Unaudited Pro Forma Combined Balance Sheet.
F-10
61
PANHANDLE EASTERN PIPE LINE COMPANY
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1998
RESTRUCTURING AND REALIGNMENT:
(a) To reflect the financial position of Panhandle Storage Company and
Trunkline LNG Company, both acquired by CMS Energy, and the transfer of
Panhandle's interest in Northern Border Pipeline Company and certain
non-operating assets to other subsidiaries of Duke Energy under the provisions
of the Stock Purchase Agreement.
ELIMINATION OF DUKE ENERGY ACTIVITIES:
(b) To reflect the settlement of the advances and notes receivable from
Duke Energy under the provisions of the Stock Purchase Agreement.
(c) To reflect the transfer from the Panhandle Companies to Duke Energy of
certain environmental and litigation liabilities and the related assets under
the provisions of the Stock Purchase Agreement.
(d) To reflect the transfer to Duke Energy of certain assets, primarily an
office building, under the provisions of the Stock Purchase Agreement.
(e) To reflect the settlement of certain short-term notes payable to Duke
Energy under the provisions of the Stock Purchase Agreement.
(f) To reflect the transfer from the Panhandle Companies to Duke Energy of
all tax liabilities under the provisions of the Stock Purchase Agreement.
(g) To reflect the settlement and transfer of certain assets and
liabilities described in pro forma adjustments (b) through (f).
ACQUISITION ADJUSTMENTS:
(h) To reflect the increase in property, plant and equipment to adjust the
historical value of these assets to their estimated fair values. The allocation
reflects CMS Energy's internal evaluation of the excess purchase price and is
subject to the completion of a study to determine the fair value of the
property. Should the study not support such allocation to property, plant and
equipment, the excess of total purchase price over the fair value of the net
assets acquired will be reflected as an adjustment to the preliminary estimate
of goodwill.
(i) To reflect the elimination of deferred credits associated with a
Trunkline LNG Company rate settlement.
(j) To reflect the preliminary estimated acquisition adjustments under the
purchase method of accounting to record assets acquired and liabilities assumed
at estimated fair value for (i) the preliminary estimate of goodwill, (ii) the
increase of certain other assets, (iii) the elimination of previously recorded
regulatory assets, assuming Panhandle ceases to apply Statement of Financial
Accounting Standards No. 71 accounting for its regulated assets, (iv) the
long-term debt assumed, (v) the assumption of benefit plan obligations by the
Panhandle Companies, previously assumed by Duke Energy, and (vi) the accrual of
certain obligations of the Panhandle Companies which are expected to be paid
after
F-11
62
completion of the transaction. The following adjustments reflect CMS Energy
management's intended business strategies and outlook which may differ from the
business strategies and outlook of Duke Energy management prior to the
Acquisition:
(DOLLARS IN MILLIONS)
---------------------
Other assets including goodwill............................. $700
Other non-current liabilities............................... 100
(k) To reflect the increase in paid-in capital and the elimination in
retained earnings as a result of pro forma adjustments (h) through (j).
FINANCING TRANSACTIONS:
(l) To reflect the public issuance of $800 million of Notes.
(m) To reflect a $1.1 billion equity contribution by CMS Energy.
(n) To reflect the payment of $1.9 billion in cash to Duke Energy for the
acquisition of the Panhandle Companies.
F-12
63
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE,
SUCH INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PANHANDLE,
THE INITIAL PURCHASERS OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY THE EXCHANGE NOTES BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
PAGE
----
Forward-Looking Statements............ i
Where to Find More Information........ i
Prospectus Summary.................... 1
Historical and Pro Forma Selected
Financial Information............... 8
Risk Factors.......................... 10
Use of Proceeds....................... 12
Ratio of Earnings to Fixed Charges.... 12
The Company........................... 13
Description of the Exchange Notes..... 15
The Exchange Offer.................... 32
Certain United States Federal Income
Tax Consequences.................... 40
Plan of Distribution.................. 43
Legal Matters......................... 44
Experts............................... 44
Unaudited Pro Forma Financial
Information......................... F-1
------------------------------------------------------
------------------------------------------------------
OFFER TO EXCHANGE
$300,000,000 6.125% SENIOR NOTES DUE 2004
$200,000,000 6.500% SENIOR NOTES DUE 2009
$300,000,000 7.000% SENIOR NOTES DUE 2029
ISSUED BY PANHANDLE EASTERN
PIPE LINE COMPANY
WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933,
AS AMENDED
FOR ANY AND ALL OF THE OUTSTANDING
$300,000,000 6.125% SENIOR NOTES DUE 2004
$200,000,000 6.500% SENIOR NOTES DUE 2009
$300,000,000 7.000% SENIOR NOTES DUE 2029
ISSUED BY CMS PANHANDLE HOLDING COMPANY
WHICH WAS MERGED WITH AND INTO
PANHANDLE EASTERN PIPE LINE COMPANY
PANHANDLE EASTERN
PIPE LINE COMPANY
------------------------------------------------------
------------------------------------------------------
64
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The following resolution was adopted by the Board of Directors of Panhandle
Eastern Pipe Line Company on March 29, 1999:
RESOLVED: That effective upon adoption of this resolution, the Company
shall indemnify to the full extent permitted by law every person (including the
estate, heirs and legal representatives of such person in the event of the
decease, incompetency, insolvency or bankruptcy of such person) who is or was a
director, officer, partner, trustee, employee or agent of the Company, or is or
was serving at the request of the Company as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against all liability, costs, expenses, including
attorneys' fees, judgments, penalties, fines and amounts paid in settlement,
incurred by or imposed upon the person in connection with or resulting from any
claim or any threatened, pending or completed action, suit or proceeding whether
civil, criminal, administrative, investigative or of whatever nature, arising
from the person's service or capacity as, or by reason of the fact that the
person is or was, a director, officer, partner, trustee, employee or agent of
the Company or is or was serving at the request of the Company as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. Such right of
indemnification shall not be deemed exclusive of any other rights to which the
person may be entitled under statute, bylaw, agreement, vote of shareholders or
otherwise.
PANHANDLE'S BYLAWS PROVIDE:
The Company may purchase and maintain liability insurance, to the full
extent permitted by law, on behalf of any person who is or was a director,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any such capacity.
Article SEVENTH of the Articles of Incorporation reads:
A director shall not be personally liable to the Corporation or its
shareholders for monetary damages for breach of duty as a director except to the
extent such exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Law as presently in effect or as the same
may hereafter be amended.
No amendment, modification or repeal of this Article SEVENTH shall
adversely affect any right or protection that exists at the time of such
amendment, modification or repeal.
Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity
II-1
65
may include expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding, provided that such officer or director
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the corporation's best interests, and, for criminal proceedings,
had no reasonable cause to believe his or her conduct was illegal. A Delaware
corporation may indemnify officers and directors against expenses (including
attorneys' fees) in connection with the defense or settlement of an action by or
in the right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him or her against the
expenses which such officer or director actually and reasonably incurred.
Officers and directors are covered within the specified monetary limits by
insurance against certain losses arising from claims made by reason of their
being directors or officers of Panhandle or of Panhandle's subsidiaries and
Panhandle's officers and directors are indemnified against such losses by reason
of their being or having been directors of officers or another corporation,
partnership, joint venture, trust or other enterprise at Panhandle's request.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT NO. DESCRIPTION
- ----------- -----------
*3(a) -- Restated Articles of Incorporation of Panhandle. (Designated
in Panhandle's Form 10-K for the year ended December 31,
1998, File No. 1-2921, as Exhibit 3.01.)
3(b) -- By-Laws of Panhandle.
*4(a) -- Indenture dated as of February 1, 1993 between Panhandle and
Morgan Guaranty Trust Company of New York. (Designated in
Panhandle's Form S-4 dated February 19, 1993, File No.
33-58552, as Exhibit 4.)
*4(b) -- Letter, dated February 24, 1994, from Nations Bank of Texas,
National Association accepting its appointment as successor
Trustee with respect to all securities issued or to be
issued under the Indenture dated as of February 1, 1993.
(Designated in Panhandle's Form 10-K for the year ended
December 31, 1993, File No. 1-2921, as Exhibit 4.01.)
*4(c) -- Indenture dated as of March 29, 1999, among CMS Panhandle
Holding Company, Panhandle and Bank One Trust Company, NA,
successor to NBD Bank, as Trustee. (Designated in
Panhandle's Form 10-Q for the quarterly period ended March
31, 1999, File No. 1-2921, as Exhibit (4)(a).)
*4(d) -- First Supplemental Indenture dated as of March 29, 1999,
among CMS Panhandle Holding Company, Panhandle and Bank One
Trust Company, NA, successor to NBD Bank, as Trustee,
including a form of Guarantee by Panhandle of the
obligations of CMS Panhandle Holding Company. (Designated in
Panhandle's Form 10-Q for the quarterly period ended March
31, 1999, File No. 1-2921, as Exhibit (4)(b).)
II-2
66
EXHIBIT NO. DESCRIPTION
- ----------- -----------
*4(e) -- Form of Exchange Note. (Designated in Panhandle's Form 10-Q
for the quarterly period ended March 31, 1999, File No.
1-2921, as Exhibit (4)(b).)
4(f) -- Registration Rights Agreement dated as of March 29, 1999 by
and among CMS Panhandle Holding Company, and Panhandle, and
Donaldson, Lufkin & Jenrette Securities Corporation,
NationsBanc Montgomery Securities LLC, Chase Securities
Inc., Barclays Capital Inc., First Chicago Capital Markets,
Inc., SG Cowen Securities Corporation, and Salomon Smith
Barney Inc.
5 -- Opinion of Michael D. Van Hemert, Assistant General Counsel
for CMS Energy.
8 -- Opinion of Jay M. Silverman, Tax Counsel for CMS Energy,
regarding tax matters.
*10(a) -- Contract for Firm Transportation of Natural Gas between
Consumers Power Company and Trunkline Gas Company, dated
November 1, 1989, and Amendment, dated November 1, 1989.
(Designated in PanEnergy Corp's Form 10-K for the year ended
December 31, 1989, File No. 1-8157, as Exhibit 10.41.)
*10(b) -- Contract for Firm Transportation of Natural Gas between
Consumers Power Company and Trunkline Gas Company, dated
November 1, 1991. (Designated in PanEnergy Corp's Form 10-K
for the year ended December 31, 1989, File No. 1-8157, as
Exhibit 10.47.)
*10(c) -- Contract for Firm Transportation of Natural Gas between
Consumers Power Company, dated September 1, 1993.
(Designated in Panhandle's Form 10-K for the year ended
December 31, 1989, File No. 1-2921, as Exhibit 10.3.)
*10(d) -- Stock Purchase Agreement between PanEnergy Corp, Texas
Eastern Corporation and CMS Energy Corporation, dated
October 31, 1998. (Designated in Duke Energy Corporation's
Form 8-K, filed November 5, 1998, File No. 1-4928, as
Exhibit 10.3.)
*10(e) -- Purchase Agreement between the Underwriter named therein and
CMS Panhandle Holding Company dated March 23, 1999.
(Designated in Panhandle's Form 10-Q for the quarterly
period ended March 31, 1999, File No. 1-2921, as Exhibit
10(a).)
12 -- Statement re: computation of Ratios of Earnings to Fixed
Charges.
15 -- Letter re: unaudited interim financial information.
23(a) -- Consent of Michael D. Van Hemert, Assistant General Counsel
for CMS Energy (included in Exhibit 5 above).
23(b) -- Consent of Jay M. Silverman, Tax Counsel for CMS Energy
(included in Exhibit 8 above).
23(c) -- Consent of KPMG LLP.
23(d) -- Consent of Deloitte & Touche LLP.
25 -- Statement of Eligibility and Qualification of Bank One Trust
Company, NA (Trustee under the Supplemental Indenture).
II-3
67
EXHIBIT NO. DESCRIPTION
- ----------- -----------
99(a) -- Form of Letter of Transmittal for the 6.125% Senior Notes
due 2004, 6.500% Senior Notes due 2009 and 7.000% Senior
Notes due 2029.
99(b) -- Certification of Taxpayer Identification Number on
Substitute Form W-9.
99(c) -- Form of Notice of Guaranteed Delivery.
- -------------------------
* Previously filed
Exhibits listed above which have been filed with the Securities and
Exchange Commission are incorporated herein by reference with the same effect as
if filed with this Registration Statement.
ITEM 22. UNDERTAKINGS.
The undersigned registrants hereby undertake:
(1) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(2) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 20 above, or
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 Act and is, therefore, unenforceable. In the event that as
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 Act and
be governed by the final adjudication of such issue.
(3) To respond to requests for information that is incorporated by
reference in to the prospectus pursuant to Item 4, 10(b), 11, or 13 of this
form, 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.
(4) 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
68
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 Dearborn, and State of
Michigan, on June 24, 1999.
PANHANDLE EASTERN PIPE LINE COMPANY
By: /s/ ALAN M. WRIGHT
-----------------------------------
Alan M. Wright
Senior Vice President, Chief
Financial Officer, Treasurer and
Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on June 24, 1999.
NAME TITLE
---- -----
(I) PRINCIPAL EXECUTIVE OFFICER:
/s/ WILLIAM J. HAENER Vice Chairman, Chief Executive Officer and
- --------------------------------------------- Director
William J. Haener
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ A. M. WRIGHT Senior Vice President, Chief Financial
- --------------------------------------------- Officer, Treasurer and Director
Alan M. Wright
(III) CONTROLLER OR PRINCIPAL ACCOUNTING OFFICER:
/s/ GARY W. LEFELAR Controller
- ---------------------------------------------
Gary W. Lefelar
/s/ WILLIAM T. MCCORMICK, JR. Director
- ---------------------------------------------
William T. McCormick, Jr.
II-5
69
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
*3(a) -- Restated Articles of Incorporation of Panhandle. (Designated
in Panhandle's Form 10-K for the year ended December 31,
1998, File No. 1-2921, as Exhibit 3.01.)
3(b) -- By-Laws of Panhandle.
*4(a) -- Indenture dated as of February 1, 1993 between Panhandle and
Morgan Guaranty Trust Company of New York. (Designated in
Panhandle's Form S-4 dated February 19, 1993, File No.
33-58552, as Exhibit 4.)
*4(b) -- Letter, dated February 24, 1994, from Nations Bank of Texas,
National Association accepting its appointment as successor
Trustee with respect to all securities issued or to be
issued under the Indenture dated as of February 1, 1993.
(Designated in Panhandle's Form 10-K for the year ended
December 31, 1993, File No. 1-2921, as Exhibit 4.01.)
*4(c) -- Indenture dated as of March 29, 1999, among CMS Panhandle
Holding Company, Panhandle and Bank One Trust Company, NA,
successor to NBD Bank, as Trustee. (Designated in
Panhandle's Form 10-Q for the quarterly period ended March
31, 1999, File No. 1-2921, as Exhibit (4)(a).)
*4(d) -- First Supplemental Indenture dated as of March 29, 1999,
among CMS Panhandle Holding Company, Panhandle and Bank One
Trust Company, NA, successor to NBD Bank, as Trustee,
including a form of Guarantee by Panhandle of the
obligations of CMS Panhandle Holding Company. (Designated in
Panhandle's Form 10-Q for the quarterly period ended March
31, 1999, File No. 1-2921, as Exhibit (4)(b).)
*4(e) -- Form of Exchange Note. (Designated in Panhandle's Form 10-Q
for the quarterly period ended March 31, 1999, File No.
1-2921, as Exhibit (4)(b).)
4(f) -- Registration Rights Agreement dated as of March 29, 1999 by
and among CMS Panhandle Holding Company, and Panhandle, and
Donaldson, Lufkin & Jenrette Securities Corporation,
NationsBanc Montgomery Securities LLC, Chase Securities
Inc., Barclays Capital Inc., First Chicago Capital Markets,
Inc., SG Cowen Securities Corporation, and Salomon Smith
Barney Inc.
5 -- Opinion of Michael D. Van Hemert, Assistant General Counsel
for CMS Energy.
8 -- Opinion of Jay M. Silverman, Tax Counsel for CMS Energy,
regarding tax matters.
*10(a) -- Contract for Firm Transportation of Natural Gas between
Consumers Power Company and Trunkline Gas Company, dated
November 1, 1989, and Amendment, dated November 1, 1989.
(Designated in PanEnergy Corp's Form 10-K for the year ended
December 31, 1989, File No. 1-8157, as Exhibit 10.41.)
70
EXHIBIT NO. DESCRIPTION
- ----------- -----------
*10(b) -- Contract for Firm Transportation of Natural Gas between
Consumers Power Company and Trunkline Gas Company, dated
November 1, 1991. (Designated in PanEnergy Corp's Form 10-K
for the year ended December 31, 1989, File No. 1-8157, as
Exhibit 10.47.)
*10(c) -- Contract for Firm Transportation of Natural Gas between
Consumers Power Company, dated September 1, 1993.
(Designated in Panhandle's Form 10-K for the year ended
December 31, 1989, File No. 1-2921, as Exhibit 10.3.)
*10(d) -- Stock Purchase Agreement between PanEnergy Corp, Texas
Eastern Corporation and CMS Energy Corporation, dated
October 31, 1998. (Designated in Duke Energy Corporation's
Form 8-K, filed November 5, 1998, File No. 1-4928, as
Exhibit 10.3.)
*10(e) -- Purchase Agreement between the Underwriter named therein and
CMS Panhandle Holding Company dated March 23, 1999.
(Designated in Panhandle's Form 10-Q for the quarterly
period ended March 31, 1999, File No. 1-2921, as Exhibit
10(a).)
12 -- Statement re: computation of Ratios of Earnings to Fixed
Charges.
15 -- Letter re: unaudited interim financial information.
23(a) -- Consent of Michael D. Van Hemert, Assistant General Counsel
for CMS Energy (included in Exhibit 5 above).
23(b) -- Consent of Jay M. Silverman, Tax Counsel for CMS Energy
(included in Exhibit 8 above).
23(c) -- Consent of KPMG LLP.
23(d) -- Consent of Deloitte & Touche LLP.
25 -- Statement of Eligibility and Qualification of Bank One Trust
Company, NA (Trustee under the Supplemental Indenture).
99(a) -- Form of Letter of Transmittal for the 6.125% Senior Notes
due 2004, 6.500% Senior Notes due 2009 and 7.000% Senior
Notes due 2029.
99(b) -- Certification of Taxpayer Identification Number on
Substitute Form W-9.
99(c) -- Form of Notice of Guaranteed Delivery.
- -------------------------
* Previously filed
1
EXHIBIT 3(b)
1
PANHANDLE EASTERN PIPE LINE COMPANY
BYLAWS
ARTICLE I: LOCATION OF OFFICES
Section 1 - Registered Office: The registered office of Panhandle
Eastern Pipe Line Company ("the Company") shall be at such place in the
City of Wilmington, County of New Castle, Delaware, or elsewhere in the
State of Delaware, as the Board of Directors may from time to time
designate.
Section 2 - Other Offices: The Company may have and maintain other
offices within or without the State of Delaware.
ARTICLE II: CORPORATE SEAL
Section 1 - Corporate Seal: The Company shall have a corporate seal
bearing the name of the Company. The form of the corporate seal may be
altered by the Board of Directors.
ARTICLE III: FISCAL YEAR
Section 1 - Fiscal Year: The fiscal year of the Company shall begin with
the first day of January and end with the thirty-first day of December
of each year.
ARTICLE IV: SHAREHOLDERS' MEETINGS
Section 1 - Annual Meetings: An annual meeting of the shareholders for
election of Directors and for such other business as may come before the
meeting shall be held at the registered office of the Company or at such
other place within or without the State of Delaware, at 10:00 A.M.,
Eastern Standard Time, or at such other time on the first Wednesday in
June of each year or upon such other date as the Board of Directors may
designate, but in no event shall such date be more than ninety (90) days
after the first Wednesday in June of each year.
Section 2 - Special Meetings: Special meetings of the shareholders may
be called by the Board of Directors, by the Chairman of the Board, or by
the President. Such meetings shall be held at the registered office of
the Company or at such other place within or without the State of
Delaware as the Board of Directors may designate.
Section 3 - Notices: Except as otherwise provided by law, written notice
of any meeting of the shareholders shall be given, either personally or
by mail to each shareholder of record entitled to vote at such meeting,
not less than ten (10) days nor more than sixty (60) days prior to the
date of the meeting, at their last known address as the same appears on
the stock records of the Company. Written notice shall be considered
given when deposited, with postage thereon prepaid, in a post office or
official depository under the control of the United States postal
service. Such notice shall specify the time and place of holding the
meeting, the purpose or purposes for which such meeting is called, and
the record date fixed for the determination of shareholders entitled to
notice of and to vote at such meeting. The Board of Directors shall fix
a record date for determining shareholders entitled to notice of and to
vote at a meeting of shareholders, which record date shall not be more
than sixty (60) days nor less than ten (10) days before the date of the
meeting. Such record date shall apply to any adjournment of the meeting
unless the Board of Directors shall fix a new record date for purposes
of the adjourned meeting.
2
2
No notice of an adjourned meeting shall be necessary if the time and
place to which the meeting is adjourned are announced at the meeting at
which the adjournment is taken. At the adjourned meeting only such
business may be transacted as might have been transacted at the original
meeting. If, after an adjournment, the Board of Directors shall fix a
new record date for the adjourned meeting, a notice of the adjourned
meeting shall be mailed, in conformity with the provisions of the first
paragraph of this Section 3, to each shareholder of record on the new
record date entitled to vote at the adjourned meeting.
Section 4 - Quorum: Except as otherwise provided by law or by the
Articles of Incorporation of the Company, the holders of the shares of
stock of the Company entitled to cast a majority of the votes at a
meeting shall constitute a quorum for the transaction of business at the
meeting, but a lesser number may convene any meeting and by a majority
vote of the shares present at the meeting, may adjourn the same from
time to time until a quorum shall be present.
Section 5 - Voting: Shareholders may vote at all meetings in person or
by proxy in writing, but all proxies shall be filed with the Secretary
of the meeting before being voted upon.
Subject to the provisions of the Articles of Incorporation of the
Company, at all meetings of the shareholders of the Company, each holder
of Common Stock shall be entitled on all questions to one vote for each
share of stock held by such holder, and a majority of the votes cast by
the holders of shares entitled to vote thereon shall be sufficient for
the adoption of any question presented, unless otherwise provided by law
or by the Articles of Incorporation of the Company.
Section 6 - Participation by Communications Equipment: Shareholders may
participate in a meeting of shareholders by means of conference
telephone or similar communications equipment by which all persons
participating in the meeting can hear each other. Participation in a
meeting by such means shall constitute presence in person at the
meeting.
Section 7 - Action Without Meeting: Any action required or permitted
under law to be taken at an annual or special meeting of shareholders
may be taken without a meeting, without prior notice and without a vote,
if all the shareholders entitled to vote thereon consent thereto in
writing.
ARTICLE V: DIRECTORS
Section 1 - Number: The Board of Directors of the Company shall consist
of one (1) member, or as many members as shall be fixed from time to
time by resolution of the Board of Directors.
Section 2 - Election: The Directors shall be elected annually at the
annual meeting of the shareholders or at any adjournment thereof.
Section 3 - Term of Office: Subject to the provisions of the Articles of
Incorporation of the Company and unless otherwise provided by law, the
Directors shall hold office from the date of their election until the
next succeeding annual meeting and until their successors are elected
and shall qualify.
Section 4 - Vacancies: Any vacancy or vacancies in the Board of
Directors arising from any cause may be filled by the affirmative vote
of a majority of the Directors then in office although less than a
quorum. An increase in the number of members shall be construed as
creating a vacancy.
3
3
Section 5 - Fees: Except as otherwise provided by law, the Board of
Directors, by affirmative vote of a majority of Directors then in
office, may establish reasonable compensation for Directors for services
to the Company as Directors, and may from time to time review and adjust
such compensation in an amount the Board may deem reasonable.
ARTICLE VI: DIRECTORS' MEETINGS
Section 1 - Organization Meeting: As soon as possible after their
election, the Board of Directors shall meet and organize and may also
transact other business.
Section 2 - Other Meetings: Meetings of the Board of Directors may be
held at any time upon call of the Secretary or an Assistant Secretary
made at the direction of the Chairman of the Board, the President or two
Directors.
Section 3 - Place of Meeting: All meetings of Directors shall be held at
such place within or without the State of Delaware as may be designated
in the call therefor.
Section 4 - Notice: A reasonable notice of all meetings, in writing or
otherwise, shall be given to each Director or sent to the Director's
residence or place of business; provided, however, that no notice shall
be required for an organization meeting if held on the same day as the
shareholders' meeting at which the Directors were elected.
No notice of the holding of an adjourned meeting shall be
necessary.
Notice of all meetings shall specify the time and place of
holding the meeting and unless otherwise stated any and all business may
be transacted at any such meeting.
Notice of the time, place and purpose of any meeting may be
waived in writing either before or after the holding thereof.
Section 5 - Quorum: At all meetings of the Board of Directors a majority
of the Board then in office shall constitute a quorum but a majority of
the Directors present may convene and adjourn any such meeting from time
to time until a quorum shall be present.
Section 6 - Voting: All questions coming before any meeting of the Board
of Directors for action shall be decided by a majority vote of the
Directors present at such meeting, unless otherwise provided by law, the
Articles of Incorporation of the Company or by these Bylaws.
Section 7 - Participation by Communications Equipment: A Director or a
member of a Committee designated by the Board of Directors may
participate in a meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a meeting by such
means shall constitute presence in person at the meeting.
Section 8 - Action Without Meeting: Any action required or permitted to
be taken pursuant to authorization voted at a meeting of the Board of
Directors or a Committee thereof, may be taken without a meeting if,
before or after the action, all members of the Board or of the Committee
consent thereto in writing. The written consents shall be filed with the
minutes of the proceedings of the Board or Committee, and the consents
shall have the same effect as a vote of the Board or Committee for all
purposes.
4
4
ARTICLE VII: EXECUTIVE AND OTHER COMMITTEES
Section 1 - Number and Qualifications: By resolution passed by a
majority of the whole Board, the Board of Directors may from time to
time designate one or more of their number to constitute an Executive or
any other Committee of the Board, as the Board of Directors may from
time to time determine to be desirable, and may fix the number of and
designate the Chairman of each such Committee. Except as otherwise
provided by law, the powers of each such Committee shall be as defined
in the resolution or resolutions of the Board of Directors relating to
the authorizations of such Committee, and may include, if such
resolution or resolutions so provide, the power and authority to declare
a dividend or to authorize issuance of shares of stock of the Company.
Section 2 - Appointment: The appointment of members of each such
Committee, or other action respecting any Committee, may take place at
any meeting of the Directors.
Section 3 - Term of Office: The members of each Committee shall hold
office at the pleasure of the Board of Directors.
Section 4 - Vacancies: Any vacancy or vacancies in any such Committee
arising from any cause shall be filled by resolution passed by a
majority of the whole Board of Directors. By like vote the Board may
designate one or more Directors to serve as alternate members of a
Committee, who may replace an absent or disqualified member at a meeting
of a Committee; provided, however, in the absence or disqualification of
a member of a Committee, the members of the Committee present at a
meeting and not disqualified from voting, whether or not constituting a
quorum, may unanimously appoint another member of the Board of Directors
to act in the place of the absent or disqualified member.
Section 5 - Fees: Except as otherwise provided by law, the Board of
Directors, by affirmative vote of a majority of Directors then in
office, may establish reasonable compensation of Directors for services
to the Company on Committees of the Board, and may from time to time
review and adjust such compensation in an amount the Board may deem
reasonable.
Section 6 - Minutes: Except as provided in Section 2 of Article IX
hereof or as otherwise determined by the Board of Directors, each such
Committee shall make a written report or recommendation following its
meetings or keep minutes of all its meetings.
Section 7 - Quorum: At all meetings of any duly authorized Committee of
the Board of Directors, a majority of the members of such Committee
shall constitute a quorum but a majority of the members present may
convene and adjourn any such meeting from time to time until a quorum
shall be present; provided, that with respect to any Committee of the
Board other than the Executive Committee, if the membership of such
Committee is four (4) or less, then two (2) members of such Committee
shall constitute a quorum and one member may convene and adjourn any
such meeting from time to time until a quorum shall be present.
ARTICLE VIII: OFFICERS
Section 1 - Election: The officers shall be chosen by the Board of
Directors. The Company shall have a President, a Secretary and a
Treasurer, and such other officers as the Board of Directors may from
time to time determine, who shall have respectively such duties and
authority as may be provided by these Bylaws or as may be provided by
resolution of the Board of Directors not inconsistent herewith. Any two
(2) or more of such offices may be held by the same person but no
officer shall execute, acknowledge or verify any instrument in more than
one capacity if such
5
5
instrument is required by law, by the Articles of Incorporation of the
Company or by these Bylaws to be executed, acknowledged or verified by
two (2) or more officers.
Section 2 - Qualifications: The Chairman of the Board and a Vice
Chairman, if any, shall be chosen from among the Board of Directors, but
the other officers need not be members of the Board.
Section 3 - Vacancies: Any vacancy or vacancies among the officers
arising from any cause shall be filled by the Board of Directors. In
case of the absence of any officer of the Company or for any other
reason that the Board of Directors may deem sufficient, the Board of
Directors may delegate, for the time being, the powers or duties, or any
of them, of any officer to any other officer or to any Director.
Section 4 - Term of Office: Each officer of the Company shall hold
office until a successor is chosen and qualified, or until the officer's
resig nation or removal. Any officer appointed by the Board of Directors
may be removed at any time by the Board with or without cause.
Section 5 - Compensation: The compensation of the officers shall be
fixed by the Board of Directors.
ARTICLE IX: AGENTS
Section 1 - Resident Agent: The Company shall have and continuously
maintain a resident agent, which may be either an individual resident in
the State of Delaware whose business office is identical with the
Company's registered office or a Delaware corporation or a foreign
corporation authorized to transact business in Delaware and having a
business office identical with the Company's registered office. The
Board of Directors shall appoint the resident agent.
Section 2 - Other Agents: The Board of Directors may appoint such other
agents as may in their judgement be necessary for the proper conduct of
the business of the Company.
ARTICLE X: POWERS AND DUTIES
Section 1 - Directors: The business and affairs of the Company shall be
managed by the Board of Directors which shall have and exercise all of
the powers and authority of the Company except as otherwise provided by
law, by the Articles of Incorporation of the Company or by these Bylaws.
Section 2 - Executive Committee: In the interim between meetings of the
Board of Directors, the Executive Committee shall have and exercise all
the powers and authority of the Board of Directors except as otherwise
provided by law. The Executive Committee shall meet from time to time on
the call of the Chairman of the Board, the President, or the Chairman of
the Committee. The Secretary shall keep minutes in sufficient detail to
advise fully the Board of Directors of the actions taken by the
Committee and shall submit copies of such minutes to the Board of
Directors for its approval or other action at its next meeting.
Section 3 - Chairman of the Board: The Chairman of the Board shall be
subject to the supervision of the Board of Directors and of the
Executive Committee; shall have general charge of the business and
affairs of the Company; shall preside at all meetings of Directors and
shareholders; shall perform and do all acts and things incident to the
position of Chairman of the Board; and shall perform such other duties
as may be assigned from time to time by the Board of Directors or the
Executive Committee.
6
6
Unless otherwise provided by the Board or the Executive
Committee, the Chairman of the Board shall have full power and authority
on behalf of the Company to execute any shareholders' consents and to
attend and act and to vote in person or by proxy at any meetings of
shareholders of any corporation in which the Company may own stock and
at any such meeting shall possess and may exercise any and all the
rights and powers incident to the ownership of such stock and which, as
the owner thereof, the Company might have possessed and exercised if
present. If the Chairman of the Board shall not exercise such powers, or
in the absence or inability to act of the Chairman, the President may
exercise such powers. In the absence or inability to act of the
President, a Vice Chairman, if any, may exercise such powers. The Board
of Directors or Executive Committee by resolution from time to time may
confer like powers upon any other person or persons.
Section 4 - President: The President shall be the chief executive
officer and chief operating officer of the Company. The President shall
perform and do all acts and things incident to such positions; and shall
perform such other duties as may be assigned from time to time by the
Board of Directors, the Executive Committee or the Chairman of the
Board. In the absence of the Chairman of the Board and a Vice Chairman,
the President shall preside at meetings of Directors. In the absence of
the Chairman of the Board, the President shall preside at meetings of
shareholders.
Section 5 - Vice Chairman: A Vice Chairman, if any, shall perform such
of the duties of the Chairman of the Board or the President on behalf of
the Company as may be respectively assigned from time to time by the
Board of Directors, the Executive Committee, the Chairman of the Board
or the President. In the absence of the Chairman of the Board, the Vice
Chairman shall preside at meetings of Directors. In the absence of the
Chairman of the Board and the President, the Vice Chairman shall preside
at meetings of shareholders.
Section 6 - Vice Presidents: Vice Presidents, if any, shall perform such
of the duties of the Chairman of the Board, the President or the Vice
Chairman, if any, on behalf of the Company as may be respectively
assigned from time to time by the Board of Directors, the Executive
Committee, the Chairman of the Board, the President or a Vice Chairman,
if any. The Board of Directors or Executive Committee may designate one
or more of the Vice Presidents as Executive Vice President or Senior
Vice President.
Section 7 - Controller: Subject to the control of the Board of
Directors, the Executive Committee, the Chairman of the Board, the
President, a Vice Chairman, if any, and the Vice President having
general charge of accounting, the Controller, shall have charge of the
supervision of the accounting system of the Company, including the
preparation and filing of all tax returns and financial reports required
by law to be made to any and all public authorities and officials. The
Controller shall perform such other duties as may be assigned, from time
to time, by the Board of Directors, the Executive Committee, the
Chairman of the Board, the President, a Vice Chairman, if any, or the
Vice President having general charge of accounting.
Section 8 - Treasurer: It shall be the duty of the Treasurer to have the
care and custody of all the funds and securities, including the
investment thereof, of the Company which may come into the Treasurer's
hands, and to endorse checks, drafts and other instruments for the
payment of money for deposit or collection when necessary or proper and
to deposit the same to the credit of the Company in such bank or banks
or depository as the Treasurer may designate; endorse all commercial
documents requiring endorsements for or on behalf of the Company; sign
all receipts and vouchers for the payments made to the Company; render
an account of transactions to the Board of Directors or the Executive
Committee as often as the Board or the Committee shall require; and
perform all acts incident
7
7
to the position of Treasurer, subject to the control of the Board of
Directors, the Executive Committee, the Chairman of the Board, the
President or a Vice Chairman, if any.
Section 9 - Secretary: The Secretary shall act as custodian of and keep
the minutes of all meetings of the Board of Directors, of the Executive
Committee, of the shareholders and of any Committees of the Board of
Directors which keep formal minutes; attend to the giving and serving of
all notices of the Company; and prepare or cause to be prepared the list
of shareholders required to be produced at any meeting. The Secretary
shall have charge of the stock records of the Company and such other
books and papers as the Board of Directors, the Executive Committee, the
Chairman of the Board, the President or a Vice Chairman, if any, may
direct, and in general, perform all the duties of Secretary, subject to
the control of the Board of Directors, the Executive Committee, the
Chairman of the Board, the President or a Vice Chairman, if any.
Section 10 - General Counsel: The General Counsel, if any, shall have
charge of all matters of a legal nature involving the Company.
Section 11 - Assistant Controllers,
Assistant Secretaries and
Assistant Treasurers: An Assistant Controller, an Assistant
Secretary or an Assistant Treasurer, if any, shall, in the absence or
inability to act or at the request of the Controller, Secretary or
Treasurer, respectively, perform the duties of the Controller or
Secretary or Treasurer, respectively, and shall perform such other
duties as may from time to time be assigned by the Board of Directors,
the Executive Committee, the Chairman of the Board, the President or a
Vice Chairman, if any. The performance of any such duty shall be
conclusive evidence of their right to act.
Section 12 - Principal Financial Officer and
Principal Accounting Officer: The Board of Directors or the
Executive Committee may from time to time designate officers of the
Company to be the Principal Financial Officer and the Principal
Accounting Officer of the Company.
ARTICLE XI: STOCK
Section 1 - Stock Certificates: The shares of stock of the Company shall
be represented by certificates which shall be numbered and shall be
entered on the stock records of the Company and registered as they are
issued. Each certificate shall state on its face that the Company is
formed under the laws of Delaware, the name of the person or persons to
whom issued, the number and class of shares and the designation of the
series the certificate represents; and shall be signed by the Chairman
of the Board, a Vice Chairman, if any, the President or a Vice President
and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary. When such certificates are countersigned by a
transfer agent or registered by a registrar, the signatures of any such
Chairman of the Board, Vice Chairman, President, Vice President,
Treasurer, Assistant Treasurer, Secretary or Assistant Secretary may be
facsimiles. In the case any officer, who shall have signed or whose
facsimile signature shall have been placed on any such certificate,
shall cease to be such officer of the Company before such certificate
shall have been issued by the Company, such certificate may nevertheless
be issued by the Company with the same effect as if the person, who
signed such certificate or whose facsimile signature shall have been
placed thereon, were such officer of the Company at the date of issue.
8
8
Each certificate shall set forth on its face or back or state
that the Company will furnish to a shareholder upon request and without
charge a full statement of the designations, relative rights,
preferences and limitations of the shares of stock of each class
authorized to be issued and of each series so far as the same have been
prescribed and the authority of the Board of Directors to designate and
prescribe the relative rights, preferences and limitations of other
series.
Section 2 - Stock Records: The shares of stock of the Company shall be
transferable on the stock records of the Company in person or by proxy
duly authorized and upon surrender and cancellation of the old
certificates therefor.
The Board of Directors may fix a date preceding the date fixed
for any meeting of the shareholders or any dividend payment date or the
date for the allotment of rights or the date when any change, conversion
or exchange of stock shall go into effect or the date for any other
action, as the record date for the determination of the shareholders
entitled to notice of and to vote at such meeting or to receive payment
of such dividend or to receive such allotment of rights or to exercise
such rights in respect of any such change, conversion or exchange of
stock or to take such other action, as the case may be, notwithstanding
any transfer of shares on the records of the Company or otherwise after
any such record date fixed as aforesaid. The record date so fixed by the
Board shall not be more than sixty (60) nor less than ten (10) days
before the date of the meeting of the shareholders, nor more than sixty
(60) days before any other action. If the Board of Directors does not
fix a date of record, as aforesaid, the record date shall be as provided
by law.
Section 3 - Stock: The designations, relative rights, preferences,
limitations and voting powers, or restrictions, or qualifications of the
shares of the Company's stock shall be as set forth in the Articles of
Incorporation of the Company.
Section 4 - Replacing Certificates: In case of the alleged loss, theft
or destruction of any certificate of shares of stock and the submission
of proper proof thereof, a new certificate may be issued in lieu thereof
upon delivery to the Company by the owner or their legal representative
of a bond of indemnity against any claim that may be made against the
Company on account of such alleged lost, stolen or destroyed certificate
or such issuance of a new certificate.
ARTICLE XII: DIVIDENDS AND DISTRIBUTIONS
Section 1 - Declaration and Payment: Subject to the provisions of
applicable law and the Articles of Incorporation of the Company, the
Board of Directors may from time to time declare and pay dividends, or
make other distributions, on its outstanding shares of stock.
ARTICLE XIII: AUTHORIZED SIGNATURES
Section 1 - Authorized Signatures: All checks, drafts and other
negotiable instruments issued by the Company shall be made in the name
of the Company and shall be signed manually or signed by facsimile
signature by such one of the officers of the Company or such other
person as the President or Treasurer may from time to time designate.
9
9
Section 2 - Contracts, Conveyances, etc.: The Board of Directors shall
have the power to designate the officers and agents who shall have
authority to execute any instrument on behalf of the Company. When the
execution of any contract, conveyance or other instrument has been
authorized without specification of the executing officers, the
President or any Vice President may execute the same in the name of and
on behalf of the Company.
ARTICLE XIV: INSURANCE
Section 1 - Insurance: The Company may purchase and maintain liability
insurance, to the full extent permitted by law, on behalf of any person
who is or was a director, officer, employee or agent of the Company, or
is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity.
ARTICLE XV: AMENDMENTS OF BYLAWS
Section 1 - Amendments, How Effected: These Bylaws may be amended or
repealed, or new Bylaws may be adopted, either by the majority vote of
the votes cast by the shareholders entitled to vote thereon or by the
majority vote of the Directors then in office at any meeting of the
Directors.
March 29, 1999
1
EXHIBIT 4(f)
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of March 29, 1999
by and among
CMS Panhandle Holding Company
Panhandle Eastern Pipe Line Company
and
Donaldson, Lufkin & Jenrette Securities Corporation
NationsBanc Montgomery Securities LLC
Chase Securities Inc.
Barclays Capital Inc.
First Chicago Capital Markets, Inc.
SG Cowen Securities Corporation
Salomon Smith Barney Inc.
================================================================================
2
This Registration Rights Agreement (this "Agreement") is made and
entered into as of March 29, 1999, by and among CMS Panhandle Holding Company, a
Michigan corporation, ("CMS Holding"), Panhandle Eastern Pipe Line Company, a
Delaware corporation ("Panhandle"), and Donaldson, Lufkin & Jenrette Securities
Corporation, NationsBanc Montgomery Securities LLC, Chase Securities Inc.,
Barclays Capital Inc., First Chicago Capital Markets, Inc., SG Cowen Securities
Corporation and Salomon Smith Barney Inc., (each an "Initial Purchaser" and,
collectively, the "Initial Purchasers"), each of whom has agreed to purchase CMS
Holding's $300,000,000 6.125% Senior Notes due 2004 (the "2004 Notes"),
$200,000,000 6.500% Senior Notes due 2009 (the "2009 Notes"), and $300,000,000
7.000% Senior Notes due 2029 (the "2029 Notes") (and collectively, the "Senior
Notes") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated March
23, 1999 (the "Purchase Agreement"), by and among CMS Holding and the Initial
Purchasers. In order to induce the Initial Purchasers to purchase the Senior
Notes, each of CMS Holding and Panhandle has agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this Agreement
is a condition to the obligations of the Initial Purchasers set forth in Section
10(f) of the Purchase Agreement.
It is expected that, after issuance of the Senior Notes, CMS Holding
will merge with and into Panhandle (the "Merger") and Panhandle shall be the
surviving entity. Until CMS Holding merges with and into Panhandle, Panhandle
will irrevocably and unconditionally guarantee all payments under the Senior
Notes, pursuant to the terms of the Indenture, dated as of March 29, 1999, by
and among CMS Holding, Panhandle and NBD Bank, as trustee (the "Trustee"), as
supplemented by a First Supplemental Indenture, dated March 29, 1999. Once CMS
Holding has merged with and into Panhandle, all of the obligations of CMS
Holding under this Agreement shall be assumed by Panhandle.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Business Day: Any day except a Saturday, Sunday or other day in the
City of New York, or in the city of the primary corporate trust office of the
Trustee, on which banks are authorized to close.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
2
3
Broker-Dealer Transfer Restricted Securities: Exchange Notes that are
acquired by a Broker/Dealer in the Exchange Offer in exchange for Senior Notes
that such Broker-Dealer acquired for its own account as a result of market
making activities or other trading activities (other than Senior Notes acquired
directly from the Company or any of its affiliates).
Certificated Securities: As defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Company: Company shall mean CMS Holding until such time as the Merger
is consummated, and then Company shall mean Panhandle.
Consummate: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Exchange Notes to be issued in the Exchange Offer, (b) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof and (c) the delivery by the Company to
the Registrar under the Indenture of the Exchange Notes in the same aggregate
principal amount as the aggregate principal amount of the Senior Notes tendered
by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Senior Notes, each Interest
Payment Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Notes: The Company's 6.125% Senior Notes due 2004, 6.500%
Senior Notes due 2009, and 7.000% Senior Notes due 2029, to be issued pursuant
to the Indenture (i) in the Exchange Offer or (ii) upon the request of any
Holder of Senior Notes covered by a Shelf Registration Statement, in exchange
for such Senior Notes.
Exchange Offer: The registration by the Company under the Act of the
Exchange Notes pursuant to the Exchange Offer Registration Statement pursuant to
which the Company shall offer the Holders of all outstanding Transfer Restricted
Securities the opportunity to exchange all such outstanding Transfer Restricted
Securities for Exchange Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
3
4
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Senior Notes to certain "qualified institutional buyers," as
such term is defined in Rule 144A under the Act, and to persons permitted to
purchase the Senior Notes in offshore transactions in reliance upon Regulation S
under the Act.
Global Noteholder: As defined in the Indenture.
Holders: As defined in Section 2 hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Interest Payment Date: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
Notes: The Senior Notes and the Exchange Notes.
Person: An individual, partnership, corporation, trust, limited
liability company, unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Record Holder: With respect to any Damages Payment Date, each Person
who is a Holder of Notes on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company
relating to (a) an offering of Exchange Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case, (i) which is filed pursuant to
the provisions of this Agreement and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
4
5
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S. C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur
of (a) the date on which such Senior Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Act, (b) the date on which such
Senior Note has been disposed of in accordance with a Shelf Registration
Statement, (c) the date on which such Senior Note is disposed of by a
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including delivery of the Prospectus
contained therein) or (d) the date on which such Senior Note is distributed to
the public pursuant to Rule 144 under the Act.
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company shall (i) cause to be filed with the Commission as
soon as practicable after the Closing Date, but in no event later than 90 days
after the Closing Date, the Exchange Offer Registration Statement, (ii) use its
best efforts to cause such Exchange Offer Registration Statement to become
effective at the earliest possible time, but in no event later than 180 days
after the Closing Date, (iii) in connection with the foregoing, (A) file all
preeffective amendments to such Exchange Offer Registration Statement as may be
necessary in order to cause such Exchange Offer Registration Statement to become
effective, (B) file, if applicable, a post-effective amendment to such Exchange
Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause
all necessary filings, if any, in connection with the registration and
qualification of the Exchange Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the Exchange Notes to be offered in
exchange for the Senior Notes that are Transfer Restricted Securities and to
permit sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers as contemplated by Section 3(c) below.
5
6
(b) The Company shall use its best efforts to cause the Exchange Offer
Registration Statement to be effective continuously, and shall keep the Exchange
Offer open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer;
provided, however, that in no event shall such period be less than 20 Business
Days. The Company shall cause the Exchange Offer to comply with all applicable
federal and state securities laws. No securities other than the Notes shall be
included in the Exchange Offer Registration Statement. The Company shall use its
best efforts to cause the Exchange Offer to be Consummated on the earliest
practicable date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Restricted Broker-Dealer who holds Senior Notes that are
Transfer Restricted Securities and that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Senior Notes (other than Transfer Restricted
Securities acquired directly from the Company or any Affiliate of the Company)
pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be
an "underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of each Exchange Note received by such Broker-Dealer in the Exchange Offer,
which prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers that the Commission may require in order
to permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Notes held by any such
Broker-Dealer, except to the extent required by the Commission as a result of a
change in policy after the date of this Agreement.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers, and to ensure that such Registration
Statement conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period of one year from the date on which the Exchange Offer is
Consummated.
The Company shall promptly provide sufficient copies of the latest
version of such Prospectus to such Restricted Broker-Dealers promptly upon
request, and in no event later than one day after such request, at any time
during such one-year period in order to facilitate such sales.
6
7
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement with respect to the Exchange Notes because
the Exchange Offer is not permitted by applicable law or Commission policy
(after the procedures set forth in Section 6(a)(i) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities shall notify the
Company within 20 Business Days following the Consummation of the Exchange Offer
that (A) such Holder was prohibited by law or Commission policy from
participating in the Exchange Offer or (B) such Holder may not resell the
Exchange Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder or (C) such Holder is a Broker-Dealer and holds Senior Notes acquired
directly from the Company or one of its affiliates, then the Company shall (x)
cause to be filed on or prior to 60 days after the date on which the Company
determines that it is not required to file the Exchange Offer Registration
Statement pursuant to clause (i) above or 60 days after the date on which the
Company receives the notice specified in clause (ii) above a shelf registration
statement pursuant to Rule 415 under the Act (which may be an amendment to the
Exchange Offer Registration Statement (in either event, the "Shelf Registration
Statement")), relating to all Transfer Restricted Securities the Holders of
which shall have provided the information required pursuant to Section 4(b)
hereof, and shall (y) use its best efforts to cause such Shelf Registration
Statement to become effective on or prior to 120 days after the date on which
the Company becomes obligated to file such Shelf Registration Statement. If,
after the Company has filed an Exchange Offer Registration Statement which
satisfies the requirements of Section 3(a) above, the Company is required to
file and make effective a Shelf Registration Statement solely because the
Exchange Offer shall not be permitted under applicable federal law, then the
filing of the Exchange Offer Registration Statement shall be deemed to satisfy
the requirements of clause (x) above. Such an event shall have no effect on the
requirements of clause (y) above. The Company shall use its best efforts to keep
the Shelf Registration Statement discussed in this Section 4(a) continuously
effective, supplemented and amended as required by and subject to the provisions
of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a), and to ensure that it conforms
with the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of at
least two years (as extended pursuant to Section 6(c)(i)) following the date on
which such Shelf Registration Statement first becomes effective under the Act.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, such
information specified in item 507 of Regulation S-K under the Act for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have used its best
7
8
efforts to provide all such information. Each Holder as to which any Shelf
Registration Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the date specified for such filing in
this Agreement, (ii) any such Registration Statement has not been declared
effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement, (iii) the Exchange Offer has not been
Consummated within 30 Business Days after the Exchange Offer Registration
Statement is first declared effective by the Commission or (iv) any Registration
Statement required by this Agreement is filed and declared effective but shall
thereafter cease to be effective or fail to be usable for its intended purpose
without being succeeded within fifteen business days by a post-effective
amendment to such Registration Statement that cures such failure and that is
itself declared effective within five business days (each such event referred to
in clauses (i) through (iv), a "Registration Default"), then the Company agrees
to pay liquidated damages to each Holder of Transfer Restricted Securities with
respect to the first 90-day period immediately following the occurrence of such
Registration Default, in an amount equal to $.05 per week per $1,000 principal
amount of Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues. The amount of the
liquidated damages shall increase by an additional $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of liquidated damages of $.25 per week per $1,000 principal
amount of Transfer Restricted Securities. Notwithstanding anything to the
contrary set forth herein, (1) upon filing of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (i) above, (2) upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii)
above, or (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration Statement)
to again be declared effective or made usable in the case of (iv) above, the
liquidated damages payable with respect to the Transfer Restricted Securities as
a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Global Note Holder
by wire transfer of immediately available funds or by federal funds check and to
Holders of Certificated Securities by mailing checks to their registered
addresses on each Damages Payment Date. All obligations of the Company set forth
in the preceding paragraph that are outstanding with respect to any Transfer
Restricted Security at the time such security ceases to be a Transfer Restricted
Security shall survive until such time as all such obligations with respect to
such security shall have been satisfied in full.
8
9
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company shall comply with all applicable provisions of
Section 6(c) below, shall use its best efforts to effect such exchange and to
permit the sale of Broker-Dealer Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:
(i) If, following the date hereof, there has been published a
change in Commission policy with respect to exchange offers such as the
Exchange Offer, such that in the reasonable opinion of counsel to the
Company there is a substantial question as to whether the Exchange
Offer is permitted by applicable federal law, the Company hereby agrees
to seek a no-action letter or other favorable decision from the
Commission allowing the Company to Consummate an Exchange Offer for
such Senior Notes. The Company hereby agrees to pursue the issuance of
such a decision to the Commission staff level. In connection with the
foregoing, the Company hereby agrees to take all such other actions as
are reasonably requested by the Commission or otherwise required in
connection with the issuance of such decision, including without
limitation (A) participating in telephonic conferences with the
Commission, (B) delivering to the Commission staff an analysis prepared
by counsel to the Company setting forth the legal bases, if any, upon
which such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursuing a resolution (which need not be
favorable) by the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish upon the request of the Company,
prior to the Consummation of the Exchange Offer, a written
representation to the Company (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement)
to the effect that (A) it is not an affiliate of the Company, (B) it is
not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the Exchange Notes to be issued in the Exchange Offer
and (C) it is acquiring the Exchange Notes in its ordinary course of
business. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be acquired in the
Exchange Offer (1) could not under Commission policy as in effect on
the date of this Agreement rely on the position of the Commission
enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and
Exxon Capital Holdings Corporation (available May 13, 1988), as
interpreted in the Commission's letter to Shearman & Sterling dated
July 2, 1993, and similar no- action letters (including, if applicable,
any no-action letter obtained pursuant to clause (i) above), and (2)
must comply with the registration and prospectus delivery requirements
of the Act in connection with a secondary resale transaction and that
such a secondary
9
10
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 if the resales are
of Exchange Notes obtained by such Holder in exchange for Senior Notes
acquired by such Holder directly from the Company or an affiliate
thereof.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company shall provide a supplemental letter
to the Commission (A) stating that the Company is registering the
Exchange Offer in reliance on the position of the Commission enunciated
in Exxon Capital Holding Corporation (available May 13, 1988), Morgan
Stanley and Co., Inc. (available June 5, 1991) and, if applicable, any
no-action letter obtained pursuant to clause (i) above, (B) including a
representation that the Company has not entered into any arrangement or
understanding with any Person to distribute the Exchange Notes to be
received in the Exchange Offer and that, to the best of the Company's
information and belief, each Holder participating in the Exchange Offer
is acquiring the Exchange Notes in its ordinary course of business and
has no arrangement or understanding with any Person to participate in
the distribution of the Exchange Notes received in the Exchange Offer
and (C) any other undertaking or representation required by the
Commission as set forth in any no-action letter obtained pursuant to
clause (i) above.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) below and shall use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof within the time periods and otherwise in accordance with
the provisions hereof.
(c) General Provisions. In connection with any Registration Statement
and any related Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Exchange Offer Registration Statement and the related Prospectus, to the extent
that the same are required to be available to permit sales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers), the Company shall:
(i) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements
for the period specified in Section 3 or 4 of this Agreement, as
applicable. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to
contain a material misstatement or omission or (B) not to be effective
and usable for resale of Transfer
10
11
Restricted Securities during the period required by this Agreement, the
Company shall file promptly an appropriate amendment to such
Registration Statement, (1) in the case of clause (A), correcting any
such misstatement or omission, and (2) in the case of clauses (A) and
(B), use its best efforts to cause such amendment to be declared
effective and such Registration statement and the related Prospectus to
become usable for their intended purpose(s) as soon as practicable
thereafter.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, or such shorter
period as will terminate when all Transfer Restricted Securities
covered by such Registration Statement have been sold; cause the
Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the Act,
and to comply fully with Rules 424, 430A and 462, as applicable, under
the Act in a timely manner; and comply with the provisions of the Act
with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with
the intended method or methods of distribution by the sellers thereof
set forth in such Registration Statement or supplement to the
Prospectus;
(iii) advise the underwriter(s) if any, and selling Holders
promptly and, if requested by such Persons, confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information relating thereto, (C)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the happening
of any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement
thereto or any document incorporated by reference therein untrue, or
that requires the making of any additions to or changes in the
Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes
in the Prospectus in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws,
the Company shall use its best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
11
12
(iv) furnish to the Initial Purchaser(s) each selling Holder
named in any Registration Statement or Prospectus and each of the
underwriter(s) in connection with such sale, if any, before filing with
the Commission, copies of any Registration Statement or any Prospectus
included therein or any amendments or supplements to any such
Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Registration
Statement), which documents will be subject to the review and comment
of such Holders and underwriter(s) in connection with such sale, if
any, for a period of at least five Business Days, and the Company will
not file any such Registration Statement or Prospectus or any amendment
or supplement to any such Registration Statement or Prospectus
(including all such documents incorporated by reference) to which the
selling Holders of the Transfer Restricted Securities covered by such
Registration Statement or the underwriter(s) in connection with such
sale, if any, shall reasonably object within five Business Days after
the receipt thereof;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s) in connection with such sale, if any, make the Company's
representatives available for discussion of such document and other
customary due diligence matters, and include such information in such
document prior to the filing thereof as such selling Holders or
underwriter(s) if any, reasonably may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any managing underwriter participating in any
disposition pursuant to such Registration Statement and any attorney or
accountant retained by such selling Holders or any of such
underwriter(s), all financial and other records, material corporate
documents and properties of the Company and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such Holder, underwriter, attorney or accountant in
connection with such Registration Statement or any posteffective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness;
(vii) if requested by any selling Holders or the
underwriter(s) in connection with such sale, if any, promptly include
in any Registration Statement or Prospectus, pursuant to a supplement
or post-effective amendment if necessary, such information as such
selling Holders and underwriter(s) if any, may reasonably request to
have included therein, including, without limitation, information
relating to the "Plan of Distribution" of the Transfer Restricted
Securities, information with respect to the principal amount of
Transfer Restricted Securities being sold to such underwriter(s) the
purchase price being paid therefor and any other terms of the offering
of the Transfer Restricted Securities to be sold in such offering; and
make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Company is
notified of the matters to be included in such Prospectus supplement or
post-effective amendment;
(viii) furnish to each selling Holder and each of the
underwriter(s) in connection
12
13
with such sale, if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by
reference);
(ix) deliver to each selling Holder and each of the
underwriter(s) if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Company hereby
consents to the use (in accordance with law) of the Prospectus and any
amendment or supplement thereto by each of the selling Holders and each
of the underwriter(s), if any, in connection with the offering and the
sale of the Transfer Restricted Securities covered by the Prospectus or
any amendment or supplement thereto;
(x) enter into such agreements (including an underwriting
agreement) and make such representations and warranties and take all
such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities
pursuant to any Registration Statement contemplated by this Agreement
as may be reasonably requested by any Holder of Transfer Restricted
Securities or underwriter in connection with any sale or resale
pursuant to any Registration Statement contemplated by this Agreement,
and in such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an Underwritten
Registration, the Company shall:
(A) furnish (or in the case of paragraphs (2) and
(3), use its best efforts to furnish) to each selling Holder
and each underwriter, if any, upon the effectiveness of the
Shelf Registration Statement and to each Restricted Broker-
Dealer upon Consummation of the Exchange Offer:
(1) a certificate, dated the date of Consummation
of the Exchange Offer or the date of effectiveness of
the Shelf Registration Statement, as the case may be,
signed on behalf of the Company by (x) the President
or any Vice President and (y) a principal financial
or accounting officer of the Company, confirming, as
of the date thereof, the matters set forth in
paragraphs (a) through (d) of Section 9 of the
Purchase Agreement and such other similar matters as
the Holders, underwriter(s) and/or Restricted Broker
Dealers may reasonably request;
(2) an opinion, dated the date of Consummation of
the Exchange Offer or the date of effectiveness of
the Shelf Registration Statement, as the case may be,
of counsel for the Company covering matters similar
to those set forth in paragraph (f) of Section 9 of
the Purchase Agreement and such other matters as the
Holders, underwriters and/or Restricted Broker
Dealers may reasonably request, and in any event
13
14
including a statement to the effect that such counsel
has participated in conferences with officers and
other representatives of the Company, representatives
of the independent public accountants for the Company
and have considered the matters required to be stated
therein and the statements contained therein,
although such counsel has not independently verified
the accuracy, completeness or fairness of such
statements; and that such counsel advises that, on
the basis of the foregoing (relying as to materiality
to a large extent upon facts provided to such counsel
by officers and other representatives of the Company
and without independent check or verification), no
facts came to such counsel's attention that caused
such counsel to believe that the applicable
Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto
became effective and, in the case of the Exchange
Offer Registration Statement, as of the date of
Consummation of the Exchange Offer, contained an
untrue statement of a material fact or omitted to
state a material fact required to be stated therein
or necessary to make the statements therein not
misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the
case of the opinion dated the date of Consummation of
the Exchange Offer, as of the date of Consummation,
contained an untrue statement of a material fact or
omitted to state a material fact necessary in order
to make the statements therein, in the light of the
circumstances under which they were made, not
misleading. Without limiting the foregoing, such
counsel may state further that such counsel assumes
no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of
the financial statements, notes and schedules and
other financial data included in any Registration
Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated as of the
date of effectiveness of the Shelf Registration
Statement or the date of Consummation of the Exchange
Offer, as the case may be, from the Company's
independent accountants, in the customary form and
covering matters of the type customarily covered in
comfort letters to underwriters in connection with
primary underwritten offerings, and affirming the
matters set forth in the comfort letters delivered
pursuant to Section 10 of the Purchase Agreement,
without exception.
(B) set forth in full or incorporate by reference in
the underwriting agreement, if any, in connection with any
sale or resale pursuant to any Shelf Registration Statement,
the indemnification provisions and procedures of Section 8
hereof with respect to all parties to be indemnified pursuant
to said Section; and
14
15
(C) deliver such other documents and certificates as
may be reasonably requested by the selling Holders, the
underwriter(s) if any, and Restricted Broker Dealers, if any,
to evidence compliance with clause (A) above and with any
customary conditions contained in the underwriting agreement
or other agreement entered into by the Company pursuant to
this clause (C).
The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any time
the representations and warranties of the Company contemplated in (A)(1) above
cease to be true and correct, the Company shall so advise the underwriter(s), if
any, the selling Holders and each Restricted Broker-Dealer promptly and, if
requested by such Persons, shall confirm such advice in writing;
(xi) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s) if
any, and their respective counsel in connection with the registration
and qualification of the Transfer Restricted Securities under the
securities or Blue Sky laws of such jurisdictions as the selling
Holders or underwriter(s), if any, may request and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that the Company
shall not be required to register or qualify as a foreign corporation
where it is not now so qualified or to take any action that would
subject it to the service of process in suits or to taxation, other
than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
(xii) issue, upon the request of any Holder of Senior Notes
covered by any Shelf Registration Statement contemplated by this
Agreement, Exchange Notes having an aggregate principal amount equal to
the aggregate principal amount of Senior Notes surrendered to the
Company by such Holder in exchange therefor or being sold by such
Holder; such Series B Notes to be registered in the name of such Holder
or in the name of the purchaser(s) of such Notes, as the case may be;
in return, the Senior Notes held by such Holder shall be surrendered to
the Company for cancellation;
(xiii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and to register such
Transfer Restricted Securities in such denominations and such names as
the Holders or the underwriter(s), if any, may request at least two
Business Days prior to such sale of Transfer Restricted Securities;
(xiv) use its best efforts to cause the disposition of the
Transfer Restricted Securities covered by the Registration Statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller
15
16
or sellers thereof or the underwriter(s), if any, to consummate the
disposition of such Transfer Restricted Securities, subject to the
proviso contained in clause (xi) above;
(xv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(xvi) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide the
Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company;
(xvii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation
by any underwriter (including any "qualified independent underwriter")
that is required to be retained in accordance with the rules and
regulations of the NASD, and use its best efforts to cause such
Registration Statement to become effective and approved by such
governmental agencies or authorities as may be necessary to enable the
Holders selling Transfer Restricted Securities to consummate the
disposition of such Transfer Restricted Securities;
(xviii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be
audited) covering a twelve-month period beginning after the effective
date of the Registration Statement (as such term is defined in
paragraph (c) of Rule 158 under the Act);
(xix) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith, cooperate with
the Trustee and the Holders of Notes to effect such changes to the
Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use its best
efforts to cause the Trustee to execute, all documents that may be
required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be
so qualified in a timely manner; and
(xx) provide promptly to each Holder upon request each
document filed with the
16
17
Commission pursuant to the requirements of Section 13 or Section 15(d)
of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(i) or any notice from the Company of the existence of any fact of
the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof,
or until it is advised in writing by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus (the "Advice"). If
so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of either such notice. In the
event the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section 6(c)(i)
or Section 6(c)(iii)(D) hereof to and including the date when each selling
Holder covered by such Registration Statement shall have received the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof
or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees; (ii) all fees and expenses of compliance with
federal securities and state Blue Sky or securities laws; (iii) all expenses of
printing (including printing certificates for the Exchange Notes to be issued in
the Exchange Offer and printing of Prospectuses), messenger and delivery
services and telephone; (iv) all fees and disbursements of counsel for the
Company and (other than in connection with the Exchange Offer) the Holders of
Transfer Restricted Securities; (v) all application and filing fees, if any, in
connection with listing the Notes on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (vi) all fees and
disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
(b) In connection with the Shelf Registration Statement, the Company
will reimburse the
17
18
Holders of Transfer Restricted Securities registered pursuant to the Shelf
Registration Statement, for the reasonable fees and disbursements of not more
than one counsel, who shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit the Shelf
Registration Statement is being prepared in consultation with the Company.
SECTION 8. INDEMNIFICATION AND CONTRIBUTION
Indemnification. (a) The Company agrees, to the extent permitted by
law, to indemnify and hold harmless each Holder and each person, if any, who
controls any Holder within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the Act
or otherwise ("Indemnified Holder"), and to reimburse the Holders and such
controlling person or persons, if any, for any legal or other expenses incurred
by them in connection with defending any action, suit or proceeding (including
governmental investigations) as provided in Section 8(c) hereof, insofar as such
losses, claims, damages, liabilities or actions, suits or proceedings (including
governmental investigations) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement, or, if any Registration Statement shall be amended or supplemented,
in the Registration Statement as so amended or supplemented, or arise out of or
are based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
actions arise out of or are based upon any such untrue statement or alleged
untrue statement or omission or alleged omission which was made in the
Registration Statement or in the Registration Statement as so amended or
supplemented, in reliance upon and in conformity with information furnished in
writing to the Company by, any Holder expressly for use therein.
The Company's indemnity agreement contained in this Section 8(a), and
the covenants, representations and warranties of the Company contained in this
Agreement, shall remain in full force and effect regardless of any investigation
made by or on behalf of any person, and the indemnity agreement contained in
this Section 8 shall survive any termination of this Agreement. The liabilities
of the Company in this Section 8(a) are in addition to any other liabilities of
the Company under this Agreement or otherwise.
(b) Each Holder agrees, severally and not jointly, to the extent
permitted by law, to indemnify, hold harmless and reimburse the Company and each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, to the same extent and upon the same
terms as the indemnity agreement of the Company set forth in Section 8(a)
hereof, but only with respect to alleged untrue statements or omissions made in
the Registration Statement or in the Registration Statement, as amended or
supplemented, (if applicable) in reliance upon and in conformity with
information furnished in writing to the Company by such Holder expressly for use
therein.
18
19
The indemnity agreement on the part of each Holder contained in this
Section 8(b) shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any other person, and the
indemnity agreement contained in this Section 8(b) shall survive any termination
of this Agreement.
(c) If a claim is made or an action, suit or proceeding (including
governmental investigations) is commenced or threatened against any person as to
which indemnity may be sought under Section 8(a) or 8(b), such person (the
"Indemnified Person") shall notify the person against whom such indemnity may be
sought (the "Indemnifying Person ") promptly after any assertion of such claim
threatening to institute an action, suit or proceeding or if such an action,
suit or proceeding is commenced against such Indemnified Person, promptly after
such Indemnified Person shall have been served with a summons or other first
legal process, giving information as to the nature and basis of the claim.
Failure to so notify the Indemnifying Person shall not, however, relieve the
Indemnifying Person from any liability which it may have on account of the
indemnity under Section 8(a) or 8(b) if the Indemnifying Person has not been
prejudiced in any material respect by such failure. Subject to the immediately
succeeding sentence, the Indemnifying Person shall assume the defense of any
such litigation or proceeding, including the employment of counsel and the
payment of all expenses, with such counsel being designated, subject to the
immediately succeeding sentence, in writing by a majority in principal amount of
the Holders in the case of parties indemnified pursuant to Section 8(b) and by
the Company in the case of parties indemnified pursuant to Section 8(a). Any
Indemnified Person shall have the right to participate in such litigation or
proceeding and to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include (x) the Indemnifying Person and (y)
the Indemnified Person and, in the written opinion of counsel to such
Indemnified Person, representation of both parties by the same counsel would be
inappropriate due to actual or likely conflicts of interest between them, in
either of which cases the reasonable fees and expenses of counsel (including
disbursements) for such Indemnified Person shall be reimbursed by the
Indemnifying Person to the Indemnified Person. If there is a conflict as
described in clause (ii) above, and the Indemnified Persons have participated in
the litigation or proceeding utilizing separate counsel whose fees and expenses
have been reimbursed by the Indemnifying Person and the Indemnified Persons, or
any of them, are found to be such fees and expenses of such separate counsel as
the Indemnifying Person shall have reimbursed. It is understood that the
Indemnifying Person shall not, in connection with any litigation or proceeding
or related litigation or proceedings in the same jurisdiction as to which the
Indemnified Persons are entitled to such separate representation, be liable
under this Agreement for the reasonable fees and out-of-pocket expenses of more
than one separate firm (together with not more than one appropriate local
counsel) for all such Indemnified Persons. Subject to the next paragraph, all
such fees and expenses shall be reimbursed by payment to the Indemnified Persons
of such reasonable fees and expenses of counsel promptly after payment thereof
by the Indemnified Persons.
19
20
In furtherance of the requirement above that fees and expenses of any
separate counsel for the Indemnified Persons shall be reasonable, the Holders
and the Company agree that the Indemnifying Person's obligations to pay such
fees and expenses shall be conditioned upon the following:
(1) in case separate counsel is proposed to be retained by the
Indemnified Persons pursuant to clause (ii) of the preceding paragraph,
the Indemnified Persons shall in good faith fully consult with the
Indemnifying Person in advance as to the selection of such counsel;
(2) reimbursable fees and expenses of such separate counsel
shall be detailed and supported in a manner reasonably acceptable to
the Indemnifying Person (but nothing herein shall be deemed to require
the furnishing to the Indemnifying Person of any information, including
without limitation, computer print-outs of lawyers' daily time entries,
to the extent that, in the judgment of such counsel, furnishing such
information might reasonably be expected to result in a waiver of any
attorney-client privilege); and
(3) the Company and the Holders shall cooperate in monitoring
and controlling the fees and expenses of separate counsel for
Indemnified Persons for which the Indemnifying Person is liable
hereunder, and the Indemnified Person shall use every reasonable effort
to cause such separate counsel to minimize the duplication of
activities as between themselves and counsel to the Indemnifying
Person.
The Indemnifying Person shall not be liable for any settlement of any
litigation or proceeding effected without the written consent of the
Indemnifying Person, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees, subject to the
provisions of this Section 8, to indemnify the Indemnified Person from and
against any loss, damage, liability or expenses by reason of such settlement or
judgment. The Indemnifying Person shall not, without the prior written consent
of the Indemnified Persons, effect any settlement of any pending or threatened
litigation, proceeding or claim in respect of which indemnity has been properly
sought by the Indemnified Persons hereunder, unless such settlement includes an
unconditional release by the claimant of all Indemnified Persons from all
liability with respect to claims which are the subject matter of such
litigation, proceeding or claim.
Contribution. If the indemnification provided for in this Section 8
is unavailable to or insufficient to hold harmless an Indemnified Person under
this Section 8 in respect of any losses, claims, damages or liabilities (or
actions, suits or proceedings (including governmental investigations) in
respect thereof) referred to therein, then each Indemnifying Person under this
Section 8 shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Indemnifying Person on the one hand and the
Indemnified Person on the other from the sale of the Transfer Restricted
Securities. If,
20
21
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law, then each Indemnifying Person shall contribute to
such amount paid or payable by such Indemnified Person in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of each Indemnifying Person, if any, on the one hand and the Indemnified
Person on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions, suits or
proceedings (including governmental investigations) in respect thereof), as well
as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Holders on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
(even if the Holders were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this Section 8. The amount paid or payable
by an Indemnified Person as a result of the losses, claims, damages or
liabilities (or actions, suits or proceedings (including governmental
proceedings) in respect thereof) referred to above in this Section 8 shall be
deemed to include any legal or other expenses reasonably incurred by such
Indemnified Person in connection with investigating or defending any such
action, suits or proceedings (including governmental proceedings) or claim,
provided that the provisions of Section 8 have been complied with (in all
material respects) in respect of any separate counsel for such Indemnified
Person. Notwithstanding the provisions of this Section 8, no Holder shall be
required to contribute any amount greater than the excess of the amount by which
the total received by such Holder with respect to the sale of its Transfer
Restricted Securities pursuant to a Registration Statement exceeds the sum of
(A) the amount paid by such Holder for such Transfer Restricted Securities plus
(B) the amount of any damages which such Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Holders'
obligations in this Section 8 to contribute are several in proportion to their
respective underwriting obligations and not joint.
The agreement with respect to contribution contained in this Section 8
hereof shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any Holder, and shall survive any
termination of this Agreement.
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company is not subject to Section 13 or 15(d) of the Securities Exchange Act, to
make available, upon request of any Holder of Transfer Restricted Securities, to
any Holder or beneficial owner of Transfer Restricted
21
22
Securities in connection with any sale thereof and any prospective purchaser of
such Transfer Restricted Securities designated by such Holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, and other documents required under the terms
of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
For any Underwritten Offering, the investment banker or investment
bankers and manager or managers for any Underwritten Offering that will
administer such offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company. The Holders of Transfer Restricted
Securities included in any such Underwritten Offering shall be responsible for
paying all underwriting or placement fees charged, or costs or expenses
incurred, by such investment bankers and managers in connection with such
Underwritten Offering. Such investment bankers and managers are referred to
herein as the "underwriters."
SECTION 12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to exercise
all rights provided herein, in the Indenture, the Purchase Agreement or granted
by law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by them of the provisions of this Agreement and hereby agree
to waive the defense in any action for specific performance that a remedy at law
would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not previously
entered into any agreement granting any registration rights with respect to its
securities to any Person. The rights granted to the Holders hereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of the Company's securities under any agreement in effect on the date
hereof.
22
23
(c) Adjustments Affecting the Notes. The Company will not take any
action, or voluntarily permit any change to occur, with respect to the Notes
that would materially and adversely affect the ability of the Holders to
Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 12(d)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities. Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof that relates exclusively to the rights of
Holders whose securities are being tendered pursuant to the Exchange Offer and
that does not affect directly or indirectly the rights of other Holders whose
securities are not being tendered pursuant to such Exchange Offer may be given
by the Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities subject to such Exchange Offer.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under
the Indenture; and
(ii) if to CMS Holding or Panhandle:
c/o CMS Energy Corporation
Fairlane Plaza South, Suite 1100
330 Towne Center Drive
Dearborn, Michigan 48126
Telecopier No.: (313) 436-9258,
Attention: Alan M. Wright
With a copy to:
Michael D. VanHemert, Esq.
Telecopier No.: (313) 436-9225
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
23
24
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities directly from such Holder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
24
25
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CMS PANHANDLE HOLDING COMPANY
By: /s/ Alan M. Wright
----------------------------------------
Name: Alan M. Wright
Title. Vice President and
Chief Financial Officer
PANHANDLE EASTERN PIPE LINE COMPANY
By: /s/ Alan M. Wright
----------------------------------------
Name: Alan M. Wright
Title. Senior Vice President and
Chief Financial Officer
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
NATIONSBANC MONTGOMERY SECURITIES LLC
CHASE SECURITIES INC.
BARCLAYS CAPITAL INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
SG COWEN SECURITIES CORPORATION
SALOMON SMITH BARNEY INC.
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Gavin H. Wolfe
----------------------------------------
Name: Gavin H. Wolfe
Title: Vice President
1
EXHIBIT 5
June 23, 1999
Panhandle Eastern Pipe Line Company
5444 Westheimer Court
Houston, Texas 77056-5306
Ladies and Gentlemen:
I am the Assistant General Counsel of CMS Energy Corporation, a
Michigan corporation ("CMS Energy"), and have acted as special counsel to
Panhandle Eastern Pipe Line Company ("Panhandle"), an indirect wholly owned
subsidiary of CMS Energy, in connection with the Registration Statement on Form
S-4 (the "Registration Statement") being filed by Panhandle with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), relating to the registration of $300 million of
6.125% Senior Notes Due 2004; $200 million of 6.500% Senior Notes Due 2009; and
$300 million of 7.000% Senior Notes Due 2029 (collectively, the "Exchange
Notes"). The Exchange Notes will be issued under the Indenture dated as of March
29, 1999 between Panhandle and Bank One Trust Company, NA, successor to, NBD
Bank, as trustee (the "Trustee"), as further supplemented by a First
Supplemental Indenture also dated as of March 29, 1999 (collectively, the
"Indenture"). The Exchange Notes are being exchanged for all of the outstanding
$300 million of 6.125% Senior Notes Due 2004; $200 million of 6.500% Senior
Notes Due 2009; and $300 million of 7.00% Senior Notes Due 2029 issued by CMS
Panhandle Holding Company which has merged with and into Panhandle
(collectively, the "Notes") pursuant to an Exchange Offer. Capitalized terms not
otherwise defined herein have the respective meanings specified in the
Registration Statement.
In rendering this opinion, I have examined and relied upon a copy of
the Registration Statement. I have also examined, or have arranged for the
examination by an attorney or attorneys under my general supervision, originals,
or copies of originals certified to my satisfaction, of such agreements,
documents, certificates and other statements of governmental officials and other
instruments, and have examined such questions of law and have satisfied myself
as to such matters of fact, as I have considered relevant and necessary as a
basis for this opinion. I have assumed the authenticity of all documents
submitted to me as originals, the genuineness of all signatures, the legal
capacity of all natural persons and the conformity with the original documents
of any copies thereof submitted to me for examination.
2
Based on the foregoing it is my opinion that:
1. Panhandle is duly incorporated and validly existing under the
laws of the State of Delaware.
2. Panhandle has the corporate power and authority to authorize and
deliver the Exchange Notes pursuant to the Indenture.
3. The Exchange Notes will be legally issued and binding obligations
of Panhandle (except to the extent enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws affecting the
enforcement of creditors' rights generally and by the effect of
general principles of equity, regardless of whether
enforceability is considered in a proceeding in equity or at law)
when (i) the Registration Statement, as finally amended
(including any necessary post-effective amendments) shall have
become effective under the Securities Act, and the Indenture
shall have been qualified under the Trust Indenture Act; (ii) an
appropriate prospectus with respect to the Exchange Notes shall
have been filed with the Commission pursuant to Rule 424 under
the Securities Act; and (iii) the Exchange Notes shall be duly
authenticated by the Trustee and the Exchange Notes shall have
been delivered to those holders of Notes in exchange for such
Notes pursuant to the Exchange Offer.
For purposes of this opinion, I have assumed that there will be no
changes in the laws currently applicable to Panhandle and that such laws will be
the only laws applicable to Panhandle.
I do not find it necessary for the purposes of this opinion to cover,
and accordingly I express no opinion as to, the application of the securities or
blue sky laws of the various states to the issuance of the Exchange Notes.
I am a member of the bar of the State of Michigan and I express no
opinion as to the laws of any jurisdiction other than the State of Michigan and
the federal law of the United States of America.
I hereby consent to the filing of this opinion as an exhibit to
Panhandle's Registration Statement relating to the Exchange Notes and to all
references to me included in or made apart of the Registration Statement.
Very truly yours,
/s/ Michael D. Van Hemert
1
EXHIBIT 8
[CMS ENERGY CORPORATION LETTERHEAD]
June 23, 1999
Panhandle Eastern Pipe Line Company
5444 Westheimer Court
Houston, Texas 77056-5306
Ladies and Gentlemen:
Reference is made to the prospectus, (the "Prospectus"), which
constitutes part of the registration statement on Form S-4 (the "Registration
Statement"), to be filed by Panhandle Eastern Pipe Line Company with the
Securities and Exchange Commission on or about the date hereof pursuant to the
Securities Act of 1933, as amended, for the registration of 6.125% Senior Notes
Due 2004; 6.500% Senior Notes Due 2009; and 7.000% Senior Notes Due 2029
(collectively the "Exchange Notes").
I am of the opinion that the statements set forth under the
caption "Certain United States Federal Income Tax Consequences" in the
Prospectus constitute an accurate description, in general terms, of certain
United States federal income tax consideration that may be relevant to the
prospective holders of the Exchange Notes.
I hereby consent to the filing of this opinion as an exhibit
to the Registration Statement.
Very truly yours,
/s/ Jay M. Silverman
1
EXHIBIT 12
PANHANDLE EASTERN PIPE LINE COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
YTD March Years Ended December 31,
------------ -----------------------------------------------------------------
1999 1998 1997 1996 1995 1994
------------ ---------- ----------- ----------- ----------- -----------
Earnings Before Income Taxes $ 55 $ 148 $ 129 $ 136 $ 160 $ 194
Fixed Charges 20 86 80 72 42 53
------------ ---------- ----------- ----------- ----------- -----------
Total $ 75 $ 234 $ 209 $ 208 $ 202 $ 247
============ ========== =========== =========== =========== ===========
Fixed Charges
Interest on debt $ 19 $ 82 $ 76 $ 63 $ 37 $ 47
Interest component of rentals 1 4 4 9 5 6
------------ ---------- ----------- ----------- ----------- -----------
Fixed Charges $ 20 $ 86 $ 80 $ 72 $ 42 $ 53
============ ========== =========== =========== =========== ===========
Ratio of Earnings to Fixed Charges 3.7 2.7 2.6 2.9 4.8 4.7
1
EXHIBIT 15
To: Panhandle Eastern Pipe Line Company:
We are aware that Panhandle Eastern Pipe Line Company has incorporated by
reference in this Registration Statement its Form 10-Q for the quarter ended
March 31, 1999, which includes our report dated May 11, 1999 covering the
unaudited interim financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933, that report is not considered a part
of the Registration Statement prepared or certified by our Firm or a report
prepared or certified by our Firm within the meaning of Sections 7 and 11 of the
Act.
ARTHUR ANDERSEN LLP
Houston, Texas
June 22, 1999
1
EXHIBIT 23(C)
Board of Directors
Panhandle Eastern Pipe Line Company
We consent to the use of our report incorporated herein by reference and
the reference to our firm under the heading "Experts" in the Prospectus.
KPMG LLP
Houston, Texas
June 22, 1999
1
EXHIBIT 23(D)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Panhandle Eastern Pipe Line Company on Form S-4 of our report dated February 12,
1999, appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
DELOITTE & TOUCHE LLP
Charlotte, North Carolina
June 22, 1999
1
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
----
-------------------------
BANK ONE TRUST COMPANY, NA
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 31-0838515
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
100 EAST BROAD STREET, COLUMBUS, OHIO 43271-0181
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
BANK ONE TRUST COMPANY, NA
100 EAST BROAD STREET
COLUMBUS, OHIO 43271-0181
ATTN: LINDA J. PATTERSON, SENIOR MANAGING DIRECTOR, (614) 248-5193
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-------------------------------------
[PANHANDLE EASTERN PIPE LINE COMPANY]
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
[DELAWARE] [44-0382470]
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
[5400 WESTHEIMER COURT]
[HOUSTON, TEXAS] [77056-5310]
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
DEBT SECURITIES
(SENIOR NOTES)
2
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
Comptroller of Currency, Washington, D.C.; Federal Deposit
Insurance Corporation, Washington, D.C.; The Board of
Governors of the Federal Reserve System, Washington D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR
IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART
OF THIS STATEMENT OF ELIGIBILITY.
1. A copy of the articles of association of the trustee now
in effect.
2. A copy of the certificates of authority of the trustee to
commence business.
3. A copy of the authorization of the trustee to exercise
corporate trust powers.
4. A copy of the existing by-laws of the trustee.
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of
the Act.
2
3
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bank One Trust Company, NA, a national banking
association organized and existing under the laws of the United States
of America, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the
City of Detroit and State of Michigan, on the 24th day of June 1999.
BANK ONE TRUST COMPANY, NA,
TRUSTEE
BY /s/ N. Packard
---------------------------------
[NAME] Nan L. Packard
[TITLE] Vice President
3
4
EXHIBIT 1
A COPY OF THE ARTICLES OF ASSOCIATION OF THE
TRUSTEE NOW IN EFFECT
AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
OF
BANK ONE TRUST COMPANY, NA
FIRST. The title of this Association shall be BANK ONE TRUST COMPANY, NA.
SECOND. The main office of the Association shall be in the City of Columbus,
County of Franklin, State of Ohio.
The business of the Association will be limited to the fiduciary powers and the
support of activities incidental to the exercise of those powers. The
Association will not expand or alter its business beyond that stated in this
article without the prior approval of the Comptroller of the Currency.
THIRD. The Board of Directors of this Association shall consist of not less than
five nor more than twenty-five persons, the exact number to be fixed and
determined from time to time by resolution of a majority of the full Board of
Directors or by resolution of a majority of the shareholders at any annual or
special meeting thereof. Each director shall own common or preferred stock of
the Association, or of a holding company owning the Association, with an
aggregate par, fair market or equity value of not less than $1,000, as of either
(i) the date of purchase, (ii) the date the person became a director, or (iii)
the date of that person's most recent election to the Board of Directors,
whichever is more recent. Any combination of common or preferred stock of the
Association or holding company may be used.
Any vacancy in the Board of Directors may be filled by action of a majority of
the remaining directors between meetings of shareholders. The Board of Directors
may not increase the number of directors between meetings of shareholders to a
number which: (1) exceeds by more than two the number of directors last elected
by shareholders where the number was 15 or less; or (2) exceeds by more than
four the number of directors last elected by shareholders where the number was
16 or more, but in no event shall the number of directors exceed 25.
Terms of directors, including directors selected to fill vacancies, shall expire
at the next regular meeting of shareholders at which directors are elected,
unless the directors resign or are removed from office.
Despite the expiration of a director's term, the director shall continue to
serve until his or her successor is elected and qualifies or until there is a
decrease in the number of directors and his or her position is eliminated.
4
5
Honorary or advisory members of the Board of Directors, without voting power or
power of final decision in matters concerning the business of the Association,
may be appointed by resolution of a majority of the full Board of Directors, or
by resolution of shareholders at any annual or special meeting. Honorary or
advisory directors shall not be counted to determine the number of directors of
the Association or the presence of a quorum in connection with any board action,
and shall not be required to own qualifying shares.
FOURTH. There shall be an annual meeting of the shareholders to elect directors
and transact whatever other business may be brought before the meeting. It shall
be held at the main office or any other convenient place the Board of Directors
may designate, on the day of each year specified therefor in the Bylaws or, if
that day falls on a legal holiday in the state in which the Association is
located, on the next following banking day. If no election is held on the day
fixed or in the event of a legal holiday on the following banking day, an
election may be held on any subsequent day within 60 days of the day fixed, to
be designated by the Board of Directors or, if the directors fail to fix the
day, by shareholders representing two-thirds of the shares issued and
outstanding. In all cases at least 10 days advance notice of the meeting shall
be given to the shareholders by first class mail.
In all elections of directors, the number of votes each common shareholder may
cast will be determined by multiplying the number of shares such shareholder
owns by the number of directors to be elected. Those votes may be cumulated and
cast for a single candidate or may be distributed among two or more candidates
in the manner selected by the shareholder. On all other questions, each common
shareholder shall be entitled to one vote for each share of stock held by such
shareholder. If the issuance of preferred stock with voting rights has been
authorized by a vote of shareholders owning a majority of the common stock of
the association, preferred shareholders will have cumulative voting rights and
will be included within the same class as common shareholders, for purposes of
elections of directors.
A director may resign at any time by delivering written notice to the Board of
Directors, its chairperson, or to the Association, which resignation shall be
effective when the notice is delivered unless the notice specifies a later
effective date.
A director may be removed by shareholders at a meeting called to remove him or
her, when notice of the meeting stating that the purpose or one of the purposes
is to remove him or her is provided, if there is a failure to fulfill one of the
affirmative requirements for qualification, or for cause, provided, however,
that a director may not be removed if the number of votes sufficient to elect
him or her under cumulative voting is voted against his or her removal.
FIFTH. The authorized amount of capital stock of this Association shall be
eighty thousand shares of common stock of the par value of ten dollars ($10.00)
each; but said capital stock may be increased or decreased from time to time,
according to the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the Association shall
have any preemptive or preferential right of subscription to any shares of any
class of stock of the Association, whether now or hereafter authorized, or to
any obligations convertible into stock of the Association, issued or sold, nor
any right of subscription to any thereof other than such, if any, as the Board
of Directors, in its discretion, may from time to time
5
6
determine and at such price as the Board of Directors may from time to time fix.
Unless otherwise specified in the Articles of Association or required by law,
(1) all matters requiring shareholder action, including amendments to the
Articles of Association, must be approved by shareholders owning a majority
voting interest in the outstanding voting stock, and (2) each shareholder shall
be entitled to one vote per share.
Unless otherwise specified in the Articles of Association or required by law,
all shares of voting stock shall be voted together as a class on any matters
requiring shareholder approval. If a proposed amendment would affect two or more
classes or series in the same or a substantially similar way, all the classes or
series so affected must vote together as a single voting group on the proposed
amendment.
Shares of the same class or series may be issued as a dividend on a pro rata
basis and without consideration. Shares of another class or series may be issued
as share dividends in respect of a class or series of stock if approved by a
majority of the votes entitled to be cast by the class or series to be issued
unless there are no outstanding shares of the class or series to be issued.
Unless otherwise provided by the Board of Directors, the record date for
determining shareholders entitled to a share dividend shall be the date the
Board of Directors authorizes the share dividend.
Unless otherwise provided in the Bylaws, the record date for determining
shareholders entitled to notice of and to vote at any meeting is the close of
business on the day before the first notice is mailed or otherwise sent to the
shareholders, provided that in no event may a record date be more than 70 days
before the meeting.
If a shareholder is entitled to fractional shares pursuant to preemptive rights,
a stock dividend, consolidation or merger, reverse stock split or otherwise, the
Association may: (a) issue fractional shares or; (b) in lieu of the issuance of
fractional shares, issue script or warrants entitling the holder to receive a
full share upon surrendering enough script or warrants to equal a full share;
(c) if there is an established and active market in the Association's stock,
make reasonable arrangements to provide the shareholder with an opportunity to
realize a fair price through sale of the fraction, or purchase of the additional
fraction required for a full share; (d) remit the cash equivalent of the
fraction to the shareholder; or (e) sell full shares representing all the
fractions at public auction or to the highest bidder after having solicited and
received sealed bids from at least three licensed stock brokers, and distribute
the proceeds pro rata to shareholders who otherwise would be entitled to the
fractional shares. The holder of a fractional share is entitled to exercise the
rights for shareholder, including the right to vote, to receive dividends, and
to participate in the assets of the Association upon liquidation, in proportion
to the fractional interest. The holder of script or warrants is not entitled to
any of these rights unless the script or warrants explicitly provide for such
rights. The script or warrants may be subject to such additional conditions as:
(1) that the script or warrants will become void if not exchanged for full
shares before a specified date; and (2) that the shares for which the script or
warrants are exchangeable may be sold at the option of the Association and the
proceeds paid to scriptholders.
6
7
The Association, at any time and from time to time, may authorize and issue debt
obligations, whether or not subordinated, without the approval of the
shareholders. Obligations classified as debt, whether or not subordinated, which
may be issued by the Association without the approval of shareholders, do not
carry voting rights on any issue, including an increase or decrease in the
aggregate number of the securities, or the exchange or reclassification of all
or part of securities into securities of another class or series.
SIXTH. The Board of Directors shall appoint one of its members president of this
Association, and one of its members chairperson of the board and shall have the
power to appoint one or more vice presidents, a secretary who shall keep minutes
of the directors' and shareholders' meetings and be responsible for
authenticating the records of the Association, and such other officers and
employees as may be required to transact the business of this Association. A
duly appointed officer may appoint one or more officers or assistant officers if
authorized by the Board of Directors in accordance with the Bylaws. The Board of
Directors shall have the power to:
(1) Define the duties of the officers, employees, and agents of the
Association.
(2) Delegate the performance of its duties, but not the responsibility for
its duties, to the officers, employees, and agents of the Association.
(3) Fix the compensation and enter into employment contracts with its
officers and employees upon reasonable terms and conditions consistent
with applicable law.
(4) Dismiss officers and employees.
(5) Require bonds from officers and employees and to fix the penalty
thereof.
(6) Ratify written policies authorized by the Association's management or
committees of the board.
(7) Regulate the manner in which any increase or decrease of the capital of
the Association shall be made, provided that nothing herein shall
restrict the power of shareholders to increase or decrease the capital
of the association in accordance with law, and nothing shall raise or
lower from two-thirds the percentage for shareholder approval to
increase or reduce the capital.
(8) Manage and administer the business and affairs of the Association.
(9) Adopt initial Bylaws, not inconsistent with law or the Articles of
Association, for managing the business and regulating the affairs of
the Association.
(10) Amend or repeal Bylaws, except to the extent that the Articles of
Association reserve this power in whole or in part to shareholders.
(11) Make contracts.
(12) Generally perform all acts that are legal for a Board of Directors to
perform.
7
8
SEVENTH. The Board of Directors shall have the power to change the location of
the main office of this Association to any other place within the limits of the
City of Columbus, State of Ohio, without the approval of the shareholders; and
shall have the power to change the location of the main office of this
Association to any other place outside the limits of the City of Columbus, State
of Ohio, but not more than thirty miles beyond such limits, with the affirmative
vote of shareholders owning two-thirds of the stock of the Association, subject
to receipt of a certificate of approval from the Comptroller of the Currency.
The Board of Directors shall have the power to establish or change the location
of any branch or branches of the Association to any other location permitted
under applicable law without the approval of the shareholders, subject to
approval by the Office of the Comptroller of the Currency. The Board of
Directors shall have the power to establish or change the location of any
nonbranch office or facility of the Association without the approval of the
shareholders.
EIGHTH. The corporate existence of this Association shall continue until
termination according to the laws of the United States.
NINTH. The Board of Directors of this Association, or any shareholders owning,
in the aggregate, not less than 20 percent of the stock of this Association, may
call a special meeting of shareholders at any time. Unless otherwise provided by
the Bylaws or the laws of the United States, or waived by shareholders, a notice
of the time, place, and purpose of every annual and special meeting of the
shareholders shall be given by first-class mail, postage prepaid, mailed at
least 10, and no more than 60, days prior to the date of the meeting to each
shareholder of record at his/her address as shown upon the books of this
Association. Unless otherwise provided by the Bylaws, any action requiring
approval of shareholders must be effected at a duly called annual or special
meeting.
TENTH. The Association shall provide indemnification as set forth below:
Every person who is or was a Director, officer or employee of the Association or
of any other corporation which he served as a Director, officer or employee at
the request of the Association as part of his regularly assigned duties may be
indemnified by the Association in accordance with the provisions of this Article
against all liability (including, without limitation, judgments, fines,
penalties, and settlements) and all reasonable expenses (including, without
limitation, attorneys' fees and investigative expenses) that may be incurred or
paid by him in connection with any claim, action, suit or proceeding, whether
civil, criminal or administrative (all referred to hereafter in this Article as
"Claims") or in connection with any appeal relating thereto in which he may
become involved as a party or otherwise or with which he may be threatened by
reason of his being or having been a Director, officer or employee of the
Association or such other corporation, or by reason of any action taken or
omitted by him in his capacity as such Director, officer or employee, whether or
not he continues to be such at the time such liability or expenses are incurred;
provided that nothing contained in this Article shall be construed to permit
indemnification of any such person who is adjudged guilty of, or liable for,
willful misconduct, gross neglect of duty or criminal acts, unless, at the time
such indemnification is sought, such indemnification in such instance is
permissible under applicable law and regulations, including published rulings of
the Comptroller of the Currency or other appropriate
8
9
supervisory or regulatory authority; and provided further that there shall be no
indemnification of Directors, officers, or employees against expenses,
penalties, or other payments incurred in an administrative proceeding or action
instituted by an appropriate regulatory agency which proceeding or action
results in a final order assessing civil money penalties or requiring
affirmative action by an individual or individuals in the form of payments to
the Association.
Every person who may be indemnified under the provisions of this Article and who
has been wholly successful on the merits with respect to any Claim shall be
entitled to indemnification as of right. Except as provided in the preceding
sentence, any indemnification under this Article shall be at the sole discretion
of the Board of Directors and shall be made only if the Board of Directors or
the Executive Committee acting by a quorum consisting of Directors who are not
parties to such Claim shall find or if independent legal counsel (who may be the
regular counsel of the Association) selected by the Board of Directors or
Executive Committee whether or not a disinterested quorum exists shall render
their opinion that in view of all of the circumstances then surrounding the
Claim, such indemnification is equitable and in the best interests of the
Association. Among the circumstances to be taken into consideration in arriving
at such a finding or opinion is the existence or non-existence of a contract of
insurance or indemnity under which the Association would be wholly or partially
reimbursed for such indemnification, but the existence or non-existence of such
insurance is not the sole circumstance to be considered nor shall it be wholly
determinative of whether such indemnification shall be made. In addition to such
finding or opinion, no indemnification under this Article shall be made unless
the Board of Directors or the Executive Committee acting by a quorum consisting
of Directors who are not parties to such Claim shall find or if independent
legal counsel (who may be the regular counsel of the Association) selected by
the Board of Directors or Executive Committee whether or not a disinterested
quorum exists shall render their opinion that the Directors, officer or employee
acted in good faith in what he reasonably believed to be the best interests of
the Association or such other corporation and further in the case of any
criminal action or proceeding, that the Director, officer or employee reasonably
believed his conduct to be lawful. Determination of any Claim by judgment
adverse to a Director, officer or employee by settlement with or without Court
approval or conviction upon a plea of guilty or of nolo contendere or its
equivalent shall not create a presumption that a Director, officer or employee
failed to meet the standards of conduct set forth in this Article. Expenses
incurred with respect to any Claim may be advanced by the Association prior to
the final disposition thereof upon receipt of an undertaking satisfactory to the
Association by or on behalf of the recipient to repay such amount unless it is
ultimately determined that he is entitled to indemnification under this Article.
The rights of indemnification provided in this Article shall be in addition to
any rights to which any Director, officer or employee may otherwise be entitled
by contract or as a matter of law. Every person who shall act as a Director,
officer or employee of this Association shall be conclusively presumed to be
doing so in reliance upon the right of indemnification provided for in this
Article.
9
10
ELEVENTH. These Articles of Association may be amended at any regular or special
meeting of the shareholders by the affirmative vote of the holders of a majority
of the stock of this Association, unless the vote of the holders of a greater
amount of stock is required by law, and in that case by the vote of the holders
of such greater amount. The Association's Board of Directors may propose one or
more amendments to the Articles of Association for submission to the
shareholders. .
10
11
EXHIBIT 2
A COPY OF THE CERTIFICATE OF AUTHORITY OF THE
TRUSTEE TO COMMENCE BUSINESS
CERTIFICATE
I, John D. Hawke, Jr., Comptroller of the Currency, do hereby certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq.,
as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and
control of all records pertaining to the chartering of all National Banking
Associations.
2. "Bank One Trust Company, National Association," Columbus, Ohio, (Charter No.
16235) is a National Banking Association formed under the laws of the United
States and is authorized thereunder to transact the business of banking on the
date of this Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents at the
Treasury Department in the City of
Washington and District of Columbia, this
24th day of March, 1999.
/s/ John D. Hawke, Jr.
------------------------------------------
Comptroller of the Currency
11
12
EXHIBIT 3
A COPY OF THE AUTHORIZATION OF THE TRUSTEE
TO EXERCISE CORPORATE TRUST POWERS
CERTIFICATE
I, John D. Hawke, Jr., Comptroller of the Currency, do hereby certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq.,
as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and
control of all records pertaining to the chartering of all National Banking
Associations.
2. "Bank One Trust Company, National Association," Columbus, Ohio, (Charter No.
16235) was granted, under the hand and seal of the Comptroller, the right to act
in all fiduciary capacities authorized under the provisions of the Act of
Congress approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a, and that the
authority so granted remains in full force and effect on the date of this
Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents at the
Treasury Department in the City of
Washington and District of Columbia, this
24th day of March, 1999.
/s/ John D. Hawke, Jr.
---------------------------------------
Comptroller of the Currency
12
13
EXHIBIT 4
A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE
BANK ONE TRUST COMPANY, N.A.
BY-LAWS
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1.01. ANNUAL MEETING. The regular annual meeting of the shareholders of
the Bank for the election of Directors and for the transaction of such business
as may properly come before the meeting shall be held at its main office, or
other convenient place duly authorized by the Board of Directors, on the same
day upon which any regular or special Board meeting is held from and including
the first Monday of January to, and including, the fourth Monday of February of
each year, or on the next succeeding banking day, if the day fixed falls on a
legal holiday. If from any cause, an election of Directors is not made on the
day fixed for the regular meeting of the shareholders or, in the event of a
legal holiday, on the next succeeding banking day, the Board of Directors shall
order the election to be held on some subsequent day, as soon thereafter as
practicable, according to the provisions of law; and notice thereof shall be
given in the manner herein provided for the annual meeting. Notice of such
annual meeting shall be given by or under the direction of the Secretary, or
such other officer as may be designated by the Chief Executive Officer, by
first-class mail, postage prepaid, to all shareholders of record of the Bank at
their respective addresses as shown upon the books of the Bank mailed not less
than ten days prior to the date fixed for such meeting.
SECTION 1.02. SPECIAL MEETINGS. A special meeting of the shareholders of the
Bank may be called at any time by the Board of Directors or by any three or more
shareholders owning, in the aggregate, not less than ten percent of the stock of
the Bank. Notice of any special meeting of the shareholders called by the Board
of Directors, stating the time, place and purpose of the meeting, shall be given
by or under the direction of the Secretary, or such other officer as is
designated by the Chief Executive Officer, by first-class mail, postage prepaid,
to all shareholders of record of the Bank at their respective addresses as shown
upon the books of the Bank mailed not less than ten days prior to the date fixed
for such meeting. Any special meeting of shareholders shall be conducted and its
proceedings recorded in the manner prescribed in these By-Laws for annual
meetings of shareholders.
13
14
SECTION 1.03. SECRETARY OF MEETING OF SHAREHOLDERS. The Board of Directors may
designate a person to be the secretary of the meeting of shareholders. In the
absence of a presiding officer, as designated by these By-Laws, the Board of
Directors may designate a person to act as the presiding officer. In the event
the Board of Directors fails to designate a person to preside at a meeting of
shareholders and a secretary of such meeting, the shareholders present or
represented shall elect a person to preside and a person to serve as secretary
of the meeting. The secretary of the meeting of shareholders shall cause the
returns made by the judges of election and other proceedings to be recorded in
the minute books of the Bank. The presiding officer shall notify the
Directors-elect of their election and to meet forthwith for the organization of
the new Board of Directors. The minutes of the meeting shall be signed by the
presiding officer and the secretary designated for the meeting.
SECTION 1.04. JUDGES OF ELECTION. The Board of Directors may appoint as many as
three shareholders to be judges of the election, who shall hold and conduct the
same, and who shall, after the election has been held, notify, in writing over
their signatures, the secretary of the meeting of shareholders of the result
thereof and the names of the Directors elected; provided, however, that upon
failure for any reason of any judge or judges of election, so appointed by the
Directors, to serve, the presiding officer of the meeting shall appoint other
shareholders or their proxies to fill the vacancies. The judges of election, at
the request of the chairman of the meeting, shall act as tellers of any other
vote by ballot taken at such meeting, and shall notify, in writing over their
signature, the secretary of the Board of Directors of the result thereof.
SECTION 1.05. PROXIES. In all elections of Directors, each shareholder of
record, who is qualified to vote under the provisions of Federal Law, shall have
the right to vote the number of shares of record in such shareholder's name for
as many persons as there are Directors to be elected, or to cumulate such shares
as provided by Federal Law. In deciding all other questions at meetings of
shareholders, each shareholder shall be entitled to one vote on each share of
stock of record in such shareholder's name. Shareholders may vote by proxy duly
authorized in writing. All proxies used at the annual meeting shall be secured
for that meeting only, or any adjournment thereof, and shall be dated, if not
dated by the shareholder, as of the date of the receipt thereof. No officer or
employee of this Bank may act as proxy.
SECTION 1.06. QUORUM. Holders of record of a majority of the shares of the
capital stock of the Bank, eligible to be voted, present either in person or by
proxy, shall constitute a quorum for the transaction of business at any meeting
of shareholders, but shareholders present at any meeting and constituting less
than a quorum may, without further notice, adjourn the meeting from time to time
until a quorum is obtained. A majority of the votes cast shall decide every
question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
ARTICLE II
DIRECTORS
SECTION 2.01. QUALIFICATIONS. Each Director shall have the qualifications
prescribed by law. No person elected as a Director may exercise any of the
powers of office until such Director has taken the oath of such office.
SECTION 2.02. VACANCIES. Directors of the Bank shall hold office for one year or
until their successors are elected and qualified. Any vacancy in the Board shall
be filled by
14
15
appointment of the remaining Directors, and any Director so appointed shall hold
office until the next election.
SECTION 2.03. ORGANIZATION MEETING. The Directors elected by the shareholders
shall meet for organization of the new Board of Directors at the time and place
fixed by the presiding officer of the annual meeting. If at the time fixed for
such meeting there is no quorum present, the Directors in attendance may adjourn
from time to time until a quorum is obtained. A majority of the number of
Directors elected by the shareholders shall constitute a quorum for the
transaction of business.
SECTION 2.04. REGULAR MEETINGS. The regular meetings of the Board of Directors
shall be held at such date, time and place as the Board may previously
designate, or should the Board fail to so designate, at such date, time and
place as the Chairman of the Board, Chief Executive Officer, or President may
fix. Whenever a quorum is not present, the Directors in attendance shall adjourn
the meeting to a time not later than the date fixed by the By-Laws for the next
succeeding regular meeting of the Board. Members of the Board of Directors may
participate in such meetings through use of conference telephone or similar
communications equipment, so long as all members participating in such meetings
can hear one another.
SECTION 2.05. SPECIAL MEETINGS. Special meetings of the Board of Directors shall
be held at the call of the Chairman of the Board, Chief Executive Officer, or
President, or at the request of two or more Directors. Any special meeting may
be held at such place and at such time as may be fixed in the call. Written or
oral notice shall be given to each Director not later than the day next
preceding the day on which the special meeting is to be held, which notice may
be waived in writing. The presence of a Director at any meeting of the Board of
Directors shall be deemed a waiver of notice thereof by such Director. Whenever
a quorum is not present, the Directors in attendance shall adjourn the special
meeting from day to day until a quorum is obtained. Members of the Board of
Directors may participate in such meetings through use of conference telephone
or similar communications equipment, so long as all members participating in
such meetings can hear one another.
SECTION 2.06. QUORUM. A majority of the Directors shall constitute a quorum at
any meeting, except when otherwise provided by law; but a lesser number may
adjourn any meeting, from time-to-time, and the meeting may be held, as
adjourned, without further notice. When, however, less than a quorum as herein
defined, but at least one-third and not less than two of the authorized number
of Directors are present at a meeting of the Directors, business of the Bank may
be transacted and matters before the Board approved or disapproved by the
unanimous vote of the Directors present.
SECTION 2.07. COMPENSATION. Each member of the Board of Directors shall receive
such fees for attendance at Board and Board committee meetings and such fees for
service as a Director, irrespective of meeting attendance, as from time to time
are fixed by resolution of the Board; provided, however, that payment hereunder
shall not be made to a Director for meetings attended and/or Board service which
are not for the Bank's sole
15
16
benefit and which are concurrent and duplicative with meetings attended or Board
service for an affiliate of the Bank for which the Director receives payment;
and provided further that fees hereunder shall not be paid in the case of any
Director in the regular employment of the Bank or of one of its affiliates. Each
member of the Board of Directors, whether or not such Director is in the regular
employment of the Bank or of one of its affiliates, shall be reimbursed for
travel expenses incident to attendance at Board and Board committee meetings.
SECTION 2.08. EXECUTIVE COMMITTEE. There may be a standing committee of the
Board of Directors known as the Executive Committee which shall possess and
exercise, when the Board is not in session, all the powers of the Board that may
lawfully be delegated. The Executive Committee shall consist of at least three
Board members, one of whom shall be the Chairman of the Board, Chief Executive
Officer or the President. The other members of the Executive Committee shall be
appointed by the Chairman of the Board, the Chief Executive Officer, or the
President, with the approval of the Board, and who shall continue as members of
the Executive Committee until their successors are appointed, provided, however,
that any member of the Executive Committee may be removed by the Board upon a
majority vote thereof at any regular or special meeting of the Board. The
Chairman, Chief Executive Officer, or President shall fill any vacancy in the
Executive Committee by the appointment of another Director, subject to the
approval of the Board of Directors. The Executive Committee shall meet at the
call of the Chairman, Chief Executive Officer, or President or any two members
thereof at such time or times and place as may be designated. In the event of
the absence of any member or members of the Executive Committee, the presiding
member may appoint a member or members of the Board to fill the place or places
of such absent member or members to serve during such absence. Two members of
the Executive Committee shall constitute a quorum. When neither the Chairman of
the Board, the Chief Executive Officer, nor President are present, the Executive
Committee shall appoint a presiding officer. The Executive Committee shall
report its proceedings and the action taken by it to the Board of Directors.
SECTION 2.09. OTHER COMMITTEES. The Board of Directors may appoint such special
committees from time to time as are in its judgment necessary in the interest of
the Bank.
ARTICLE III
OFFICERS, MANAGEMENT STAFF AND EMPLOYEES
SECTION 3.01. OFFICERS AND MANAGEMENT STAFF.
(a) The executive officers of the Bank shall include a Chairman of the Board,
Chief Executive Officer, President, Chief Financial Officer, Secretary, Security
Officer, and may include one or more Senior Managing Directors or Managing
Directors. The Chairman of the Board, Chief Executive Officer, President, any
Senior Managing Director, any Managing Director, Chief Financial Officer,
Secretary, and Security Officer shall be elected by the Board. The Chairman of
the Board, Chief Executive Officer, and the President shall be elected by the
Board from their own number. Such officers as the Board shall elect from their
own number shall hold office from the date of their election as officers until
the organization meeting of the Board of Directors following the next annual
meeting of shareholders, provided, however, that such officers may be relieved
of their duties at any time by action of the Board of Directors, in which event
all the powers incident to their office shall immediately terminate. The
Chairman of the Board, Chief Executive Officer, or the President shall preside
at all meetings of shareholders and meetings of the Board of Directors.
16
17
(b) The management staff of the Bank shall include officers elected by the
Board, officers appointed by the Chairman of the Board, the Chief Executive
Officer, the President, any Senior Managing Director, any Managing Director, the
Chief Financial Officer, and such other persons in the employment of the Bank
who, pursuant to authorization by a duly authorized officer of the Bank, perform
management functions and have management responsibilities. Any two or more
offices may be held by the same person except that no person shall hold the
office of Chairman of the Board, Chief Executive Officer and/or President and at
the same time also hold the office of Secretary.
(c) Except as provided in the case of the elected officers who are members of
the Board, all officers and employees, whether elected or appointed, shall hold
office at the pleasure of the Board. Except as otherwise limited by law or these
By-Laws, the Board assigns to the Chairman of the Board, the Chief Executive
Officer, the President, any Senior Managing Director, any Managing Director, the
Chief Financial Officer, and/or each of their respective designees the authority
to control all personnel, including elected and appointed officers and employees
of the Bank, to employ or direct the employment of such officers and employees
as he or she may deem necessary, including the fixing of salaries and the
dismissal of such officers and employees at pleasure, and to define and
prescribe the duties and responsibilities of all officers and employees of the
Bank, subject to such further limitations and directions as he or she may from
time to time deem appropriate.
(d) The Chairman of the Board, the Chief Executive Officer, the President, any
Senior Managing Director, any Managing Director, the Chief Financial Officer,
and any other officer of the Bank, to the extent that such officer is authorized
in writing by the Chairman of the Board, the Chief Executive Officer, the
President, any Senior Managing Director, any Managing Director, or the Chief
Financial Officer may appoint persons other than officers who are in employment
of the Bank to serve in management positions and in connection therewith, the
appointing officer may assign such title, salary, responsibilities and functions
as are deemed appropriate, provided, however, that nothing contained herein
shall be construed as placing any limitation on the authority of the Chairman of
the Board, the Chief Executive Officer, the President, any Senior Managing
Director, any Managing Director, or the Chief Financial Officer as provided in
this and other sections of these By-Laws.
(e) The Senior Managing Directors and the Managing Directors of the Bank shall
have general and active authority over the management of the business of the
Bank, shall see that all orders and resolutions of the Board of Directors are
carried into effect, and shall do or cause to be done all things necessary or
proper to carry on the business of the Bank in accordance with provisions of
applicable law and regulations. Each Senior Managing Director and Managing
Director shall perform all duties incident to his or her office and such other
and further duties, as may from time to time be required by the Chief Executive
Officer, the President, the Board of Directors, or the shareholders. The
specification of authority in these By-Laws wherever and to whomever granted
shall not be construed to limit in any manner the general powers of delegation
granted to a Senior Managing Director or a Managing Director in conducting the
business of the Bank. In the absence of a Senior Managing Director or a Managing
Director, such officer as is designated by the Senior Managing Director or the
Managing Director shall be vested with all the powers and perform all the duties
of the Senior Managing Director or the Managing Director as defined by these
By-Laws.
17
18
(f) Each Managing Director who is assigned oversight of one or more trust
service offices shall appoint a management committee known as the Investment
Management and Trust Committee consisting of the Managing Director of the trust
service offices and at least three other members who shall be capable and
experienced officers of the Bank appointed from time to time by the Managing
Director and who shall continue as members of the Investment Management and
Trust Committee until their successors are appointed, provided, however, that
any member of the Investment Management and Trust Committee may be removed by
the Managing Director as provided in this and other sections of these By-Laws.
The Managing Director shall fill any vacancy in the Investment Management and
Trust Committee by the appointment of another capable and experienced officer of
the Bank. Each Investment Management and Trust Committee shall meet at such
date, time and place as the Managing Director shall fix. In the event of the
absence of any member or members of the Investment Management and Trust
Committee, the Managing Director may, in his or her discretion, appoint another
officer of the Bank to fill the place or places of such absent member or members
to serve during such absence. A majority of each Investment Management and Trust
Committee shall constitute a quorum. Each Investment Management and Trust
Committee shall carry out the policies of the Bank, as adopted by the Board of
Directors, which shall be formulated and executed in accordance with State and
Federal Law, Regulations of the Comptroller of the Currency, and sound fiduciary
principles. In carrying out the policies of the Bank, each Investment Management
and Trust Committee is hereby authorized to establish management teams whose
duties and responsibilities shall be specifically set forth in the policies of
the Bank. Each such management team shall report such proceedings and the
actions taken thereby to the Investment Management and Trust Committee. Each
Managing Director shall then report such proceedings and the actions taken
thereby to the Board of Directors.
SECTION 3.02. POWERS AND DUTIES OF MANAGEMENT STAFF. Pursuant to the fiduciary
powers granted to this Bank under the provisions of Federal Law and Regulations
of the Comptroller of the Currency, the Chairman of the Board, the Chief
Executive Officer, the President, the Senior Managing Directors, the Managing
Directors, the Chief Financial Officer, and those officers so designated and
authorized by the Chairman of the Board, the Chief Executive Officer, the
President, the Senior Managing Directors, the Managing Directors, or the Chief
Financial Officer are authorized for and on behalf of the Bank, and to the
extent permitted by law, to make loans and discounts; to purchase or acquire
drafts, notes, stocks, bonds, and other securities for investment of funds held
by the Bank; to execute and purchase acceptances; to appoint, empower and direct
all necessary agents and attorneys; to sign and give any notice required to be
given; to demand payment and/or to declare due for any default any debt or
obligation due or payable to the Bank upon demand or authorized to be declared
due; to foreclose any mortgages; to exercise any option, privilege or election
to forfeit, terminate, extend or renew any lease; to authorize and direct any
proceedings for the collection of any money or for the enforcement of any right
or obligation; to adjust, settle and compromise all claims of every kind and
description in favor of or against the Bank, and to give receipts, releases and
discharges therefor; to borrow money and in connection therewith to make,
execute and deliver notes, bonds or other evidences of indebtedness; to pledge
or hypothecate any securities or any stocks, bonds, notes or any property real
or personal held or owned by the Bank, or to rediscount any notes or other
obligations held or owned by the Bank, whenever in his or her judgment it is
reasonably necessary for the operation of the Bank; and in furtherance of and in
addition to the powers hereinabove set forth to do all such acts and to take all
such proceedings as in his or her judgment are necessary and incidental to the
operation of the Bank.
18
19
SECTION 3.03. SECRETARY. The Secretary or such other officers as may be
designated by the Chief Executive Officer shall have supervision and control of
the records of the Bank and, subject to the direction of the Chief Executive
Officer, shall undertake other duties and functions usually performed by a
corporate secretary. Other officers may be designated by the Secretary as
Assistant Secretary to perform the duties of the Secretary.
SECTION 3.04. EXECUTION OF DOCUMENTS. Any member of the Bank's management staff
or any employee of the Bank designated as an officer on the Bank's payroll
system is hereby authorized for and on behalf of the Bank to sell, assign,
lease, mortgage, transfer, deliver and convey any real or personal property,
including shares of stock, bonds, notes, certificates of indebtedness (including
the assignment and redemption of registered United States obligations) and all
other forms of intangible property now or hereafter owned by or standing in the
name of the Bank, or its nominee, or held by the Bank as collateral security, or
standing in the name of the Bank, or its nominee, in any fiduciary capacity or
in the name of any principal for whom this Bank may now or hereafter be acting
under a power of attorney or as agent, and to execute and deliver such partial
releases from any discharges or assignments of mortgages and assignments or
surrender of insurance policies, deeds, contracts, assignments or other papers
or documents as may be appropriate in the circumstances now or hereafter held by
the Bank in its own name, in a fiduciary capacity, or owned by any principal for
whom this Bank may now or hereafter be acting under a power of attorney or as
agent; provided, however, that, when necessary, the signature of any such person
shall be attested or witnessed in each case by another officer of the Bank. Any
member of the Bank's management staff or any employee of the Bank designated as
an officer on the Bank's payroll system is hereby authorized for and on behalf
of the Bank to execute any indemnity and fidelity bonds, trust agreements,
proxies or other papers or documents of like or different character necessary,
desirable or incidental to the appointment of the Bank in any fiduciary
capacity, the conduct of its business in any fiduciary capacity, or the conduct
of its other banking business; to sign and issue checks, drafts, orders for the
payment of money and certificates of deposit; to sign and endorse bills of
exchange, to sign and countersign foreign and domestic letters of credit, to
receive and receipt for payments of principal, interest, dividends, rents, fees
and payments of every kind and description paid to the Bank, to sign receipts
for money or other property acquired by or entrusted to the Bank, to guarantee
the genuineness of signatures on assignments of stocks, bonds or other
securities, to sign certifications of checks, to endorse and deliver checks,
drafts, warrants, bills, notes, certificates of deposit and acceptances in all
business transactions of the Bank; also to foreclose any mortgage, to execute
and deliver receipts for any money or property; also to sign stock certificates
for and on behalf of this Bank as transfer agent or registrar, and to
authenticate bonds, debentures, land or lease trust certificates or other forms
of security issued pursuant to any indenture under which this Bank now or
hereafter is acting as trustee or in any other fiduciary capacity; to execute
and deliver various forms of documents or agreements necessary to effectuate
certain investment strategies for various fiduciary or custody customers of the
Bank, including, without limitation, exchange funds, options, both listed and
over-the-counter, commodities trading, futures trading, hedge funds, limited
partnerships, venture capital funds, swap or collar transactions and other
similar investment vehicles for which the Bank now or in the future may deem
appropriate for investment of fiduciary customers or in which non-fiduciary
customers may direct investment by the Bank.
19
20
Without limitation on the foregoing, the Chief Executive Officer, Chairman of
the Board, or President of the Bank shall have the authority from time to time
to appoint officers of the Bank as Vice President for the sole purpose of
executing releases or other documents incidental to the conduct of the Bank's
business in any fiduciary capacity where required by state law or the governing
document. In addition, other persons in the employment of the Bank or its
affiliates may be authorized by the Chief Executive Officer, Chairman of the
Board, President, Senior Managing Directors, Managing Directors, or Chief
Financial Officer to perform acts and to execute the documents described in the
paragraph above, subject, however, to such limitations and conditions as are
contained in the authorization given to such person.
SECTION 3.05. PERFORMANCE BOND. All officers and employees of the Bank shall be
bonded for the honest and faithful performance of their duties for such amount
as may be prescribed by the Board of Directors.
ARTICLE IV
STOCKS AND STOCK CERTIFICATES
SECTION 4.01. STOCK CERTIFICATES. The shares of stock of the Bank shall be
evidenced by certificates which shall bear the signature of the Chairman of the
Board, the Chief Executive Officer, or the President (which signature may be
engraved, printed or impressed), and shall be signed manually by the Secretary,
or any other officer appointed by the Chief Executive Officer for that purpose.
In case any such officer who has signed or whose facsimile signature has been
placed upon such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Bank with the same effect as if
such officer had not ceased to be such at the time of its issue. Each such
certificate shall bear the corporate seal of the Bank, shall recite on its face
that stock represented thereby is transferable only upon the books of the Bank
when properly endorsed and shall recite such other information as is required by
law and deemed appropriate by the Board. The corporate seal may be facsimile
engraved or printed.
SECTION 4.02. STOCK ISSUE AND TRANSFER. The shares of stock of the Bank shall be
transferable only upon the stock transfer books of the Bank and, except as
hereinafter provided, no transfer shall be made or new certificates issued
except upon the surrender for cancellation of the certificate or certificates
previously issued therefor. In the case of the loss, theft, or destruction of
any certificate, a new certificate may be issued in place of such certificate
upon the furnishing of an affidavit setting forth the circumstances of such
loss, theft, or destruction and indemnity satisfactory to the Chairman of the
Board, the Chief Executive Officer, or the President. The Board of Directors or
the Chairman of the Board, Chief Executive Officer, or the President may
authorize the issuance of a new certificate therefor without the furnishing of
indemnity. Stock transfer books, in which all transfers of stock shall be
recorded, shall be provided. The stock transfer books may be closed for a
reasonable period and under such conditions as the Board of Directors may at
20
21
any time determine, for any meeting of shareholders, the payment of dividends or
any other lawful purpose. In lieu of closing the transfer books, the Board of
Directors may, in its discretion, fix a record date and hour constituting a
reasonable period prior to the day designated for the holding of any meeting of
the shareholders or the day appointed for the payment of any dividend, or for
any other purpose at the time as of which shareholders entitled to notice of and
to vote at any such meeting or to receive such dividend or to be treated as
shareholders for such other purpose shall be determined, and only shareholders
of record at such time shall be entitled to notice of or to vote at such meeting
or to receive such dividends or to be treated as shareholders for such other
purpose.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.01. SEAL. The seal of the Bank shall be circular in form with "SEAL"
in the center, and the name "BANK ONE TRUST COMPANY, NA" located clockwise
around the upper half of the seal.
SECTION 5.02. MINUTE BOOK. The organization papers of this Bank, the Articles of
Association, the returns of judges of elections, the By-Laws and any amendments
thereto, the proceedings of all regular and special meetings of the shareholders
and of the Board of Directors, and reports of the committees of the Board of
Directors shall be recorded in the minute books of the Bank. The minutes of each
such meeting shall be signed by the presiding officer and attested by the
secretary of the meeting.
SECTION 5.03. CORPORATE POWERS. The corporate existence of the Bank shall
continue until terminated in accordance with the laws of the United States. The
purpose of the Bank shall be to carry on the general business of a commercial
bank trust department and to engage in such activities as are necessary,
incident, or related to such business. The Articles of Association of the Bank
shall not be amended, or any other provision added elsewhere in the Articles
expanding the powers of the Bank, without the prior approval of the Comptroller
of the Currency.
SECTION 5.04. AMENDMENT OF BY-LAWS. The By-Laws may be amended, altered or
repealed, at any regular or special meeting of the Board of Directors, by a vote
of a majority of the Directors.
21
22
As amended April 24, 1991 Section 3.01 (Officers and Management Staff)
Section 3.02 (Chief Executive Officer)
Section 3.03 (Powers and Duties of Officers
and Management Staff)
Section 3.05 (Execution of Documents)
As amended January 27, 1995 Section 2.04 (Regular Meetings)
Section 2.05 (Special Meetings)
Section 3.01(f) (Officers and Management
Staff)
Section 3.03(e) (Powers and Duties of
Officers and Management Staff)
Section 5.01 (Seal)
Amended and restated in its entirety effective May 1, 1996
As amended August 1, 1996 Section 2.09 (Trust Examining Committee)
Section 2.10 (Other Committees)
As amended October 16, 1997 Section 3.01 (Officers and Management Staff)
Section 3.02 (Powers and Duties of Officers
and Management Staff)
Section 3.04 (Execution of Documents)
As amended January 1, 1998 Section 1.01 (Annual Meeting)
22
23
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
June 24, 1999
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between Panhandle Eastern
Pipe Line Company and Bank One Trust Company, NA, as Trustee, the undersigned,
in accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, hereby consents that the reports of examinations of the undersigned,
made by Federal or State authorities authorized to make such examinations, may
be furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.
Very truly yours,
BANK ONE TRUST COMPANY, NA
BY: N. Packard
----------------------------------
Nan L. Packard
Vice President
23
24
EXHIBIT 7
Legal Title of Bank: Bank One Trust Company, N.A. Call Date: 12/31/98
Address: 100 Broad Street ST-BK: 17-1630
City, State Zip: Columbus, OH 43271 FFIEC 032
FDIC Certificate No.: 0/3/6/1/8 Page RC-1
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
DOLLAR AMOUNTS IN THOUSANDS C300
RCON BIL MIL THOU ------
---- ------------
ASSETS
1. Cash and balances due from depository institutions (from Schedule
RC-A): RCON
a. Noninterest-bearing balances and currency and coin(1).................... 0081 159,911 1.a
b. Interest-bearing balances(2)............................................. 0071 16,874 1.b
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)................ 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D)............. 1773 7,403 2.b
3. Federal funds sold and securities purchased under agreements to
resell...................................................................... 1350 576,473 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RCON
RC-C)....................................................................... 2122 32,603 4.a
b. LESS: Allowance for loan and lease losses................................ 3123 10 4.b
c. LESS: Allocated transfer risk reserve.................................... 3128 0 4.c
d. Loans and leases, net of unearned income, allowance, and RCON
reserve (item 4.a minus 4.b and 4.c)..................................... 2125 32,593 4.d
5. Trading assets (from Schedule RD-D)......................................... 3545 0 5.
6. Premises and fixed assets (including capitalized leases).................... 2145 18,685 6.
7. Other real estate owned (from Schedule RC-M)................................ 2150 0 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).............................................. 2130 0 8.
9. Customers' liability to this bank on acceptances outstanding 2155 0 9.
10. Intangible assets (from Schedule RC-M)...................................... 2143 31,392 10.
11. Other assets (from Schedule RC-F)........................................... 2160 127,322 11.
12. Total assets (sum of items 1 through 11).................................... 2170 970,653 12.
- ------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
25
Legal Title of Bank: Bank One Trust Company, N.A. Call Date: 12/31/98
Address: 100 Broad Street ST-BK: 17-1630
City, State Zip: Columbus, OH 43271 FFIEC 032
FDIC Certificate No.: 0/3/6/1/8 Page RC-2
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
THOUSANDS
---------
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C RCON
from Schedule RC-E, part 1)......................................... 2200 802,791 13.a
(1) Noninterest-bearing(1).......................................... 6631 727,720 13.a1
(2) Interest-bearing.................................................. 6636 75,071 13.a2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)..................................
(1) Noninterest bearing.............................................
(2) Interest-bearing................................................
14. Federal funds purchased and securities sold under agreements
to repurchase: RCFD 2800 0 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 0 15.a
b. Trading Liabilities(from Sechedule RC-D).......................... RCFD 3548 0 15.b
16. Other borrowed money: RCON
a. With original maturity of one year or less.......................... 2332 0 16.a
b. With original maturity of more than one year....................... A547 0 16.b
c. With original maturity of more than three years .................... A548 0 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding ............... 2920 0 18.
19. Subordinated notes and debentures...................................... 3200 0 19.
20. Other liabilities (from Schedule RC-G)................................. 2930 64,642 20.
21. Total liabilities (sum of items 13 through 20)......................... 2948 867,433 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.......................... 3838 0 23.
24. Common stock........................................................... 3230 800 24.
25. Surplus (exclude all surplus related to preferred stock)............... 3839 35,157 25.
26. a. Undivided profits and capital reserves.............................. 3632 67,207 26.a
b. Net unrealized holding gains (losses) on available-for-sale
securities.......................................................... 8434 56 26.b
27. Cumulative foreign currency translation adjustments.................... 3284 0 27.
28. Total equity capital (sum of items 23 through 27)...................... 3210 103,220 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28).................................. 3300 970,653 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed
for the bank by independent external auditors as of any date during Number
1996...................................................................RCFD 6724 ..... N/A M.1.
1 = Independent audit of the bank conducted in accordance performed by other
with generally accepted auditing standards by a certified required by state
chartering public accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company statements by
external conducted in accordance with generally accepted auditing standards
by a certified public accounting firm which financial statements by
external submits a report on the consolidated holding company (but not on
the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4. = Directors' examination of the bank external auditors (may be authority)
5 = Review of the bank's financial
6 = Compilation of the bank's auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ------------------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
1
EXHIBIT 99(A)
LETTER OF TRANSMITTAL
PANHANDLE EASTERN PIPE LINE COMPANY
OFFER TO EXCHANGE
$300,000,000 6.125% SENIOR NOTES DUE 2004
$200,000,000 6.500% SENIOR NOTES DUE 2009
$300,000,000 7.000% SENIOR NOTES DUE 2029
ISSUED BY CMS PANHANDLE HOLDING COMPANY WHICH HAS MERGED WITH AND INTO
PANHANDLE EASTERN PIPE LINE COMPANY
FOR
$300,000,000 6.125% SENIOR NOTES DUE 2004
$200,000,000 6.500% SENIOR NOTES DUE 2009
$300,000,000 7.000% SENIOR NOTES DUE 2029
ISSUED BY PANHANDLE EASTERN PIPE LINE COMPANY
THIS EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON , 1999
UNLESS THE OFFER IS EXTENDED
BANK ONE TRUST COMPANY, NA
(THE "EXCHANGE AGENT")
By Mail, (Certified, Registered, Overnight or First Class) or Hand Delivery:
Bank One Trust Company, NA
c/o First Chicago Trust Company of New York
14 Wall Street
8th Floor, Window 2
New York, New York 10005
By Facsimile:
(For Eligible Institutions Only)
(212) 240-8938
Telephone Number
(212) 240-8801
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONES LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
2
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1999 (the "Prospectus") of Panhandle Eastern Pipe Line Company (the
"Company") and this Letter of Transmittal, which together constitute the
Company's offer (the "Exchange Offer") to exchange $1,000 principal amount of
its 6.125% Senior Notes due 2004; 6.500% Senior Notes due 2009; and 7.000%
Senior Notes due 2029 (the "Exchange Notes"), which have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which the Prospectus is a part, for each $1,000
principal amount 6.125% Senior Notes due 2004; 6.500% Senior Notes due 2009; and
7.000% Senior Notes due 2029 issued by CMS Panhandle Holding Company which has
merged into the company (the "Notes"), respectively. The term "Expiration Date"
shall mean 5:00 p.m., New York City time, on , 1999 unless the
Company, in its reasonable judgment, extends the Exchange Offer, in which case
the term shall mean the latest date and time to which the Exchange Offer is
extended. Capitalized terms used but not defined herein have the meaning given
to them in the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List on the next page the Notes to which this Letter of Transmittal
relates. If the space indicated is inadequate, the Certificate of Registration
Numbers and Principal Amounts should be listed on a separately signed schedule
affixed hereto.
- -------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF NOTES TENDERED HEREBY
- -------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES)
OF REGISTERED OWNER(S)
(PLEASE FILL IN)
- -------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE AGGREGATE
OR PRINCIPAL AMOUNT PRINCIPAL
REGISTRATION REPRESENTED AMOUNT
NUMBER(S)* BY NOTES TENDERED**
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total
- -------------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Book-Entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have tendered the
Full Aggregate Principal Amount represented by such Notes. All Tenders must
be in integral multiples of $1,000.
- -------------------------------------------------------------------------------------------------------------------------------
This Letter of Transmittal is to be used (i) if certificates of Notes are
to be forwarded herewith, (ii) if delivery of Notes is to be made by book-entry
transfer to an account maintained by the Exchange Agent at The Depository Trust
Company (the "Depository"), pursuant to the procedures set forth in "The
Exchange Offer -- Procedures for Tendering Notes" in the Prospectus or (iii) if
tender of the Notes is to be made according to the guaranteed delivery
procedures described in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 2. DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE
EXCHANGE AGENT.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Notes are registered on the books of the Company or any other person
who has obtained a properly completed bond power from the registered holder. The
undersigned has completed, executed and delivered this Letter of Transmittal to
indicate the action the undersigned desires to take with respect to the Exchange
Offer. Holders who wish to tender their Notes must complete this letter in its
entirety.
2
3
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DEPOSITORY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution
-------------------------------------------------
[ ] The Depository Trust Company
Account Number
----------------------------------------------------------------
Transaction Code Number
-------------------------------------------------------
Holders whose Notes are not immediately available or who cannot deliver
their Notes and all other documents required hereby to the Exchange Agent on or
prior to the Expiration Date must tender their Notes according to the guaranteed
delivery procedure set forth in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 2.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)
--------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery
-------------------------
If delivery by book-entry transfer:
Account Number
----------------------------------------------------------------
Transaction Code Number
-------------------------------------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name
--------------------------------------------------------------------------
Address
-----------------------------------------------------------------------
3
4
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of the Notes
indicated above. Subject to, and effective upon, the acceptance for exchange of
such Notes tendered hereby, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to such Notes as are being tendered hereby, including all rights to accrued
and unpaid interest thereon as of the Expiration Date. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent the true and lawful
agent and attorney-in-fact of the undersigned (with full knowledge that said
Exchange Agent acts as the agent of the Company in connection with the Exchange
Offer) to cause the Notes to be assigned, transferred and exchanged. The
undersigned represents and warrants that it has full power and authority to
tender, exchange, assign and transfer the Notes and to acquire Exchange Notes
issuable upon the exchange of such tendered Notes, and that when the same are
accepted for exchange, the Company will acquire good and unencumbered title to
the tendered Notes, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim.
The undersigned represents to the Company that (A) it is not an affiliate
of the Company, (B) it is not engaged in, and does not intend to engage in, and
has no arrangement or understanding with any person to participate in, a
distribution of the Exchange Notes to be issued in the Exchange Offer and (C) it
is acquiring the Exchange Notes in its ordinary course of business. If the
undersigned or the person receiving the Exchange Notes covered hereby is a
broker-dealer that is receiving the Exchange Notes for its own account in
exchange for Notes that were acquired as a result of market-making activities or
other trading activities, the undersigned acknowledges that it or such other
person will deliver a prospectus in connection with any resale of such Exchange
Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. The undersigned and any such other person
acknowledges that, if they are participating in the Exchange Offer for the
purpose of distributing the Exchange Notes, (i) they cannot rely on the position
of the staff of the Securities and Exchange Commission enunciated in Exxon
Capital Holdings Corporation (available May 13, 1988) as interpreted in the
Securities and Exchange Commission's letter to Shearman & Sterling dated July 2,
1993, Morgan Stanley & Co., Incorporated (available June 5, 1991), Warnaco, Inc.
(available June 5, 1991), and Epic Properties, Inc. (available October 21, 1991
or similar no-action letters and, in the absence of an exemption therefrom, must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with the resale transaction and (ii) failure to
comply with such requirements in such instance could result in the undersigned
or any such other person incurring liability under the Securities Act for which
such persons are not indemnified by the Company. If the undersigned or the
person receiving the Exchange Notes covered by this letter is an affiliate (as
defined under Rule 405 of the Securities Act) of the Company, the undersigned
represents to the Company that the undesigned understands and acknowledges that
such Exchange Notes may not be offered for resale, resold or otherwise
transferred by the undersigned or such other person without registration under
the Securities Act or an exemption therefrom.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable to complete the exchange, assignment and transfer of
tendered Notes or transfer ownership of such Notes on the account books
maintained by a book-entry facility. The undersigned further agrees that
acceptance of any tendered Notes by the Company and the issuance of Exchange
Notes in exchange therefor shall constitute performance in full by the Company
of its obligations under the Registration Rights Agreement and that the Company
shall have no further obligations or liabilities thereunder for the registration
of the Notes or the Exchange Notes.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions." The undersigned
recognizes that as a result of these conditions (which may be waived, in whole
or in part, by the Company), as more particularly set forth in the Prospectus,
the Company may not be required to exchange any of the Notes tendered hereby
and, in such event, the Notes not exchanged will be returned to the undersigned
at the address shown below the signature of the undersigned.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Tendered Notes may be withdrawn at any time
prior to the Expiration Date.
4
5
Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" in this Letter
of Transmittal, certificates for all Exchange Notes delivered in exchange for
tendered Notes, and any Notes delivered herewith but not exchanged, will be
registered in the name of the undersigned and shall be delivered to the
undersigned at the address shown below the signature of the undersigned. If an
Exchange Note is to be issued to a person other than the person(s) signing this
Letter of Transmittal, or if the Exchange Note is to be mailed to someone other
than the person(s) signing this Letter of Transmittal or to the person(s)
signing this Letter of Transmittal at an address different than the address
shown on this Letter of Transmittal, the appropriate boxes of this Letter of
Transmittal should be completed. If Notes are surrendered by Holder(s) that have
completed either the box entitled "Special Registration Instructions" or the box
entitled "Special Delivery Instructions" in this Letter of Transmittal,
signature(s) on this Letter of Transmittal must be Medallion Guaranteed by an
Eligible Institution (defined in Instruction 2).
----------------------------------------------------------------------------
SPECIAL REGISTRATION
INSTRUCTIONS
To be completed ONLY if the Exchange Notes are to be issued in the
name of someone other than the undersigned.
Name:
-----------------------------------------------------------------------
Address:
--------------------------------------------------------------------
----------------------------------------------------------------------------
Book-Entry Transfer Facility Account:
---------------------------------------
----------------------------------------------------------------------------
Employee Identification or Social Security Number:
----------------------------------------------------------------------------
(PLEASE PRINT OR TYPE)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SPECIAL DELIVERY
INSTRUCTIONS
To be completed ONLY if the Exchange Notes are to be sent to someone
other than the undersigned, or to the undersigned at an address other than
that shown under "Description of Notes Tendered Hereby."
Name:
-----------------------------------------------------------------------
Address:
--------------------------------------------------------------------
(PLEASE PRINT OR TYPE)
----------------------------------------------------------------------------
5
6
(REGISTERED HOLDER(S) OF NOTES SIGN HERE)
(IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF REGISTERED HOLDER(S))
Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Notes or on a security position listing as the owner of the Notes or by
person(s) authorized to become registered holder(s) by properly completed bond
powers transmitted herewith. If signature is by attorney-in-fact, trustee,
executor, administrator, guardian, officer of a corporation or other person
acting in a fiduciary capacity, please provide the following information.
(Please print or type):
Name and Capacity (full title):
-------------------------------------------------
Address (including zip code):
---------------------------------------------------
Area Code and Telephone Number:
------------------------------------------------
Taxpayer Identification or Social Security No.:
--------------------------------
Dated:
---------------------------------
MEDALLION GUARANTEE
(IF REQUIRED -- SEE INSTRUCTION 4)
Authorized Signature:
----------------------------------------------------------
(SIGNATURE OF REPRESENTATIVE OF MEDALLION GUARANTOR)
Name and Title:
-----------------------------------------------------------------
Name of Plan:
------------------------------------------------------------------
Area Code and Telephone Number:
------------------------------------------------
(PLEASE PRINT OR TYPE)
Dated:
------------------------------
6
7
- ---------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: BANK ONE TRUST COMPANY, NA
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I -- Please provide your TIN in the box at
FORM W-9 right and certify by signing and dating below. ------------------------------------------
Social Security Number
or
------------------------------------------
Employer Identification Number
(If awaiting TIN write "Applied For")
-------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART II -- For Payees exempt from backup withholding, see the enclosed Guidelines for
INTERNAL REVENUE SERVICE Certification of Taxpayer Identification Number on Substitute Form W-9 and complete as
instructed therein.
-------------------------------------------------------------------------------------------
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or a
Taxpayer Identification Number has not been issued to me) and either (a) I have mailed
PAYER'S REQUEST FOR or delivered an application to receive a Taxpayer Identification Number to the
TAXPAYER IDENTIFICATION appropriate Internal Revenue Service ("IRS") or Social Security Administration office
NUMBER (TIN) or (b) I intend to mail or deliver an application in the near future. I understand
that if I do not provide a Taxpayer Identification Number within 60 days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a number,
and
(2) I am not subject to backup withholding either because (a) I am exempt from backup
withholding, (b) I have not been notified by the IRS that I am subject to backup
withholding as a result of a failure to report all interest or dividends, or (c) the
IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified
by the IRS that you are subject to backup withholding because of underreporting interest
or dividends on your tax return. However, if after being notified by the IRS that you were
subject to backup withholding you received another notification from the IRS that you are
no longer subject to backup withholding, do not cross out item (2). (Also see instructions
in the enclosed Guidelines.)
Signature Date , 1999
--------------------------------- -----------------
- ---------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
7
8
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Certificates. All physically
delivered Notes or confirmations of any book-entry transfer to the Exchange
Agent's account at a book-entry transfer facility of Notes tendered by
book-entry transfer, as well as a properly completed and duly executed copy of
this Letter of Transmittal or facsimile thereof, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at the address set forth herein on or prior to the Expiration Date (as defined
in the Prospectus). The method of delivery of this Letter of Transmittal, the
Notes and any other required documents is at the election and risk of the
Holder, and except as otherwise provided below, the delivery will be deemed made
only when actually received by the Exchange Agent. If such delivery is by mail,
it is suggested that registered mail with return receipt requested, properly
insured, be used.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Notes for exchange.
Delivery to an address other than as set forth herein, or instructions via
a facsimile number other than the ones set forth herein, will not constitute a
valid delivery.
2. Guaranteed Delivery Procedures. Holders who wish to tender their Notes,
but whose Notes are not immediately available and thus cannot deliver their
Notes, the Letter of Transmittal or any other required documents to the Exchange
Agent (or comply with the procedures for book-entry transfer) on or prior to the
Expiration Date, may effect a tender if:
(a) the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., a commercial bank or 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 (an "Eligible Institution");
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the registration
number(s) of such Notes and the principal amount of Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within three
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof), together with the Notes (or a
confirmation of book-entry transfer of such Notes into the Exchange Agent's
account at the Depository) and any other documents required by the Letter
of Transmittal, will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Notes in proper form for
transfer (or a confirmation of book-entry transfer of such Notes into the
Exchange Agent's account at the Depository) and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within three New York Stock Exchange trading days after the Expiration
Date.
Any Holder who wishes to tender Notes pursuant to the guaranteed delivery
procedures described above must ensure that the Exchange Agent receives the
Notice of Guaranteed Delivery relating to such Notes prior to the Expiration
Date. Failure to complete the guaranteed delivery procedures outlined above will
not, of itself, affect the validity or effect a revocation of any Letter of
Transmittal form properly completed and executed by a Holder who attempted to
use the guaranteed delivery procedures.
3. Partial Tenders; Withdrawals. If less than the entire principal amount
of Notes evidenced by a submitted certificate is tendered, the tendering Holder
should fill in the principal amount tendered in the column entitled "Principal
Amount Tendered" of the box entitled "Description of Notes Tendered Hereby." A
newly issued Note for the principal amount of Notes submitted but not tendered
will be sent to such Holder as soon as practicable after the Expiration Date.
All Notes delivered to the Exchange Agent will be deemed to have been tendered
in full unless otherwise indicated.
Notes tendered pursuant to the Exchange Offer may be withdrawn at any time
prior to the Expiration Date, after which tenders of Notes are irrevocable. To
be effective, a written telegraphic or facsimile transmission notice of
8
9
withdrawal must be timely received by the Exchange Agent. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Notes to
be withdrawn (the "Depositor"), (ii) identify the Notes to be withdrawn
(including the registration number(s) and principal amount of such Notes or, in
the case of Notes transferred by book-entry transfer, the name and number of the
account at the Depository to be credited), (iii) be signed by the Holder in the
same manner as the original signature on this Letter of Transmittal (including
any required Medallion Guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Notes register the transfer
of such Notes into the name of the person withdrawing the tender and (iv)
specify the name in which any such Notes are to be registered, if different from
that of the Depositor. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no Exchange Notes will be issued with respect thereto unless
the Notes so withdrawn are validly retendered. Any Notes which have been
tendered but which are not accepted for exchange, will be returned to the Holder
thereof without cost to such Holder, or will be credited to an account
maintained with the Depository, as soon as practicable after withdrawal,
rejection of tender or termination of Exchange Offer.
4. Signature on this Letter of Transmittal; Written Instruments and
Endorsements; Medallion Guarantee. If this Letter of Transmittal is signed by
the registered Holder(s) of the Notes tendered hereby, the signature must
correspond with the name(s) as written on the face of the certificates without
alteration or enlargement or any change whatsoever. If this Letter of
Transmittal is signed by a participant in the Depository, the signature must
correspond with the name as it appears on the security position listing as the
owner of the Notes.
If any of the Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of Notes registered in different names is tendered, it will be
necessary to complete, sign and submit as many separate copies of this Letter of
Transmittal as there are different registrations of Notes.
Signatures on this Letter of Transmittal or on a notice of withdrawal, as
the case may be, must be Medallion Guaranteed by an Eligible Institution unless
the Notes tendered hereby are tendered (i) by a registered Holder who has not
completed the box entitled "Special Registration Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution.
If this Letter of Transmittal is signed by the registered Holder or Holders
of Notes (which term, for the purposes described herein, shall include a
participant in the Depository whose name appears on a security listing as the
owner of the Notes) listed and tendered hereby, no endorsements of the tendered
Notes or separate written instruments of transfer or exchange are required. In
any other case, the registered Holder (or acting Holder) must either properly
endorse the Notes or transmit properly completed bond powers with this Letter of
Transmittal (in either case, executed exactly as the name(s) of the registered
Holder(s) appear(s) on the Notes, and, with respect to a participant in the
Depository whose name appears on a security position listing as the owner of
Notes, exactly as the name of the participant appears on such security position
listing), with the signature on the Notes or bond power guaranteed by an
Eligible Institution (except where the Notes are tendered for the account of an
Eligible Institution).
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority to so act must be submitted.
5. Special Registration and Delivery Instructions. Tendering Holders
should indicate, in the applicable box, the name and address (or account at the
Depository) in which the Exchange Notes or substitute Notes for principal
amounts not tendered or not accepted for exchange are to be issued (or
deposited), if different from the names and addresses or accounts of the person
signing this Letter of Transmittal. In the case of issuance in a different name,
the employer identification number or social security number of the person named
must also be indicated and the tendering Holder should complete the applicable
box.
If no instructions are given, the Exchange Notes (and any Notes not
tendered or not accepted) will be issued in the name of and sent to the acting
Holder of the Notes or deposited at such Holder's account at the Depository.
9
10
6. Transfer Taxes. The Company shall pay all transfer taxes, if any,
applicable to the transfer and exchange of Notes to it or its order pursuant to
the Exchange Offer. If a transfer tax is imposed for any other reason other than
the transfer and exchange of Notes to the Company or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
registered Holder or any other person) will be payable by the tendering Holder.
If satisfactory evidence of payment of such taxes or exception therefrom is not
submitted herewith, the amount of such transfer taxes will be collected from the
tendering Holder by the Exchange Agent.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the Notes listed in this Letter of Transmittal.
7. Waiver of Conditions. The Company reserves the right, in its reasonable
judgment, to waive, in whole or in part, any of the conditions to the Exchange
Offer set forth in the Prospectus.
8. Mutilated, Lost, Stolen or Destroyed Notes. Any Holder whose Notes have
been mutilated, lost, stolen or destroyed should contact the Exchange Agent at
the address indicated above for further instructions.
9. Requests for Assistance or Additional Copies. Questions relating to the
procedure for tendering as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent
at the address and telephone number set forth above. In addition, all questions
relating to the Exchange Offer, as well as requests for assistance or additional
copies of the Prospectus and this Letter of Transmittal, may be directed to
Panhandle Eastern Pipe Line Company, 5444 Westheimer Court, Houston, Texas
77056-5306, Attention: Controller, telephone (713) 989-7000.
10. Validity and Form. All questions as to the validity, form, eligibility
(including time of receipt), acceptance of tendered Notes and withdrawal of
tendered Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute right
to reject any and all Notes not properly tendered or any Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right, in its reasonable judgment, to
waive any defects, irregularities or conditions of tender as to particular
Notes. The Company's interpretation of the terms and conditions of the Exchange
Offer (including the instructions in this Letter of Transmittal) will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Notes must be cured within such time as the Company
shall determine. Although the Company intends to notify Holders of defects or
irregularities with respect to tenders of Notes, neither the Company, the
Exchange Agent nor any other person shall incur any liability for failure to
give such notification. Tenders of Notes will not be deemed to have been made
until such defects or irregularities have been cured or waived. Any Notes
received by the Exchange Agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned by
the Exchange Agent to the tendering Holder as soon as practicable following the
Expiration Date.
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering Notes is required to
provide the Exchange Agent with such Holder's correct TIN on Substitute Form W-9
above. If such Holder is an individual, the TIN is the Holder's social security
number. The Certificate of Awaiting Taxpayer Identification Number should be
completed if the tendering Holder has not been issued a TIN and has applied for
a number or intends to apply for a number in the near future. If the Exchange
Agent is not provided with the correct TIN, the Holder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that are
made to such Holder with respect to tendered Notes may be subject to backup
withholding of 31%.
Certain Holders (including, among others, all domestic corporations and
certain foreign individuals and foreign entities) are not subject to these
backup withholding and reporting requirements. In order for a foreign individual
to qualify as an exempt recipient, such individual must submit a statement,
signed under penalties of perjury, attesting to such individual's exempt status.
Forms of such statements can be obtained from the Depositary. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any amounts otherwise payable to the Holder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding
10
11
will be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue
Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a Holder with
respect to Notes tendered for exchange, the Holder is required to notify the
Exchange Agent of his or her correct TIN by completing the form herein
certifying that the TIN provided on Substitute Form W-9 is correct (or that such
Holder is awaiting a TIN) and that (i) each Holder is exempt, (ii) such Holder
has not been notified by the Internal Revenue Service that he or she is subject
to backup withholding as a result of failure to report all interest or dividends
or (iii) the Internal Revenue Service has notified such Holder that he or she is
no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
Each Holder is required to give the Exchange Agent the social security
number or employer identification number of the record Holder(s) of the Notes.
If Notes are in more than one name or are not in the name of the actual Holder,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
If the tendering Holder has not been issued a TIN and has applied for a number
or intends to apply for a number in the near future, the stockholder should
write "Applied For" in the space provided for in the TIN in Part I, and sign and
date the Substitute Form W-9. If "Applied For" is written in Part I and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% of all payments of the purchase price to such stockholder until a
TIN is provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS)
OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR
PRIOR TO THE EXPIRATION DATE.
11
1
EXHIBIT 99(b)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
- ------------------------------------------------------------
GIVE THE SOCIAL SE-
FOR THIS TYPE OF ACCOUNT: CURITY
NUMBER OF--
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
1. Individual The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
5. Sole proprietorship The owner(3)
- ------------------------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or pension The legal entity(4)
trust
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational, or other
tax-exempt organization account
10. Partnership The partnership
11. A broker or registered nominee The broker or
nominee
12. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter you business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate or pension trust.
(Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5. Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), an individual
retirement plan or a custodial account under section 403(b)(7) if the
account satisfies the requirements of section 401(f)(2).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
political subdivision or instrumentality thereof.
- A foreign government or any political subdivision, agency or instrumentality
thereof.
- An international organization or any agency or instrumentality thereof.
- A dealer in securities or commodities registered in the U.S. or a possession
of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one non-resident alien partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Section 404(k) payments made by an ESOP.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid to you.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART II OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the number whether or not recipients are required
to file tax returns. Beginning January 1, 1993, payers must generally withhold
31% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. Certain penalties
may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
underpayment attributable to that failure unless there is a clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false state with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
1
EXHIBIT 99(C)
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
6.125% SENIOR NOTES DUE 2004
6.500% SENIOR NOTES DUE 2009
7.000% SENIOR NOTES DUE 2029
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
CMS HOLDING COMPANY
WHICH HAS MERGED WITH AND INTO
PANHANDLE EASTERN PIPE LINE COMPANY
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Panhandle Eastern Pipe Line Company (the "Company") made
pursuant to the Prospectus, dated , 1999 (the "Prospectus"), if
certificates for the outstanding 6.125% Senior Notes due 2004; 6.500% Senior
Notes due 2009; 7.000% Senior Notes due 2029 issued by CMS Holding Company which
has merged with and into the company (the "Notes") are not immediately available
or if the procedure for book-entry transfer cannot be completed on a timely
basis or time will not permit all required documents to reach the Exchange Agent
prior to 5:00 p.m., New York time, on the Expiration Date of the Exchange Offer.
Such form may be delivered or transmitted by telegram, telex, facsimile
transmission, mail or hand delivery to Bank One Trust Company, NA, successor to
NBD Bank (the "Exchange Agent") as set forth below. In addition, in order to
utilize the guaranteed delivery procedure to tender Notes pursuant to the
Exchange Offer, a completed, signed and dated Letter of Transmittal (or
facsimile thereof) as well as all tendered Notes in proper form for transfer (or
a confirmation of book-entry transfer of such Notes into the Exchange Agent's
account at the Depository Trust Company) and all other documents required by the
Letter of Transmittal must also be received by the Exchange Agent within three
New York Stock Exchange trading days after the Expiration Date. Capitalized
terms not defined herein are defined in the Prospectus.
BANK ONE TRUST COMPANY, NA, EXCHANGE AGENT
By Mail, (Certified, Registered, Overnight or First Class) or Hand Delivery:
Bank One Trust Company, NA
c/o First Chicago Trust Company of New York
14 Wall Street
8th Floor, Window 2
New York, New York 10005
By Facsimile:
(For Eligible Institutions Only)
(212) 240-8938
Telephone Number
(212) 240-8801
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
2
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Notes set forth below, pursuant to the
guaranteed delivery procedure described in "The Exchange Offer -- Guaranteed
Delivery Procedures" section of the Prospectus.
Principal Amount of Notes Tendered: (1)
$
--------------------------------------------------
(1) Must be in denominations of principal amount of $1,000 and any integral
multiple thereof
Certificate Nos. (if available):
------------------------------------------------------------------
Total Principal Amount Represented by Certificate(s):
$
------------------------------------------------------------------
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
PLEASE SIGN HERE
x
- ------------------------------------------------------------ ---------------------------------------
- ------------------------------------------------------------ ---------------------------------------
DATE
SIGNATURE(S) OF OWNER(S) OR AUTHORIZED SIGNATORY
Area Code and Telephone Number:
----------------------------------------------
2
3
Must be signed by the holder(s) of Notes as their name(s) appear(s) on
certificates for Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below. If Notes will be delivered by book-entry
transfer to The Depository Trust Company, provide account number.
Please print name(s) and address(es)
Name(s) -----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Capacity: -----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Address(es): -----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Account Number: -----------------------------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the undersigned will deliver to the Exchange Agent the certificates
representing the Notes being tendered hereby or confirmation of book-entry
transfer of such Notes into the Exchange Agent's account at The Depository Trust
Company, in proper form for transfer, together with any other documents required
by the Letter of Transmittal within three New York Stock Exchange trading days
after the Expiration Date.
Name of Firm
--------------------------------- Authorized Signature
--------------------------
Address
---------------------------------------
Name
----------------------------------------------
(PLEASE TYPE OR PRINT)
- ---------------------------------------------- Title
-----------------------------------------
Area Code & Date
-----------------------------------------
Telephone No.
----------------------------------
NOTE: DO NOT SEND CERTIFICATES OF NOTES WITH THIS FORM. CERTIFICATES OF NOTES
SHOULD BE SENT ONLY WITH A COPY OF THE PREVIOUSLY EXECUTED LETTER OF
TRANSMITTAL.
3
