Filed Pursuant to Rule 424(b)(3)
Registration No. 333-100338
$750,000,000
KINDER MORGAN, INC.
OFFER TO EXCHANGE
6.50% EXCHANGE SENIOR NOTES DUE 2012
FOR ANY AND ALL OUTSTANDING 6.50% SENIOR NOTES DUE 2012
This prospectus, and accompanying letter of transmittal, relate to our
proposed exchange offer. We are offering to exchange up to $750,000,000
aggregate principal amount of new 6.50% senior notes due 2012, which we call the
exchange notes and which will be freely transferable, for any and all
outstanding 6.50% senior notes due 2012, which we call the original notes,
previously issued in a private offering and which have certain transfer
restrictions.
In this prospectus we sometimes refer to the exchange notes and the
original notes collectively as the notes.
- The exchange offer expires at 5:00 p.m., New York City time, on November
18, 2002, unless extended.
- The terms of the exchange notes are substantially identical to the terms
of the original notes, except that the exchange notes will be freely
transferable and issued free of any covenants regarding exchange and
registration rights.
- All original notes that are validly tendered and not validly withdrawn
will be exchanged.
- Tenders of original notes may be withdrawn at any time prior to
expiration of the exchange offer.
- We will not receive any proceeds from the exchange offer.
- The exchange of original notes for exchange notes will not be a taxable
event for United States federal income tax purposes.
- Holders of original notes do not have any appraisal or dissenters' rights
in connection with the exchange offer.
- Original notes not exchanged in the exchange offer will remain
outstanding and be entitled to the benefits of the indenture, but except
under certain circumstances, will have no further exchange or
registration rights under the registration rights agreement discussed in
this prospectus.
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PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF FACTORS
YOU SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the exchange notes or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
We may amend or supplement this prospectus from time to time by filing
amendments or supplements as required. You should read this entire prospectus,
the accompanying letter of transmittal and related documents and any amendments
or supplements to this prospectus carefully before making your investment
decision.
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The date of this prospectus is October 18, 2002.
TABLE OF CONTENTS
PAGE
----
Summary..................................................... 1
Risk Factors................................................ 6
The Exchange Offer.......................................... 9
Use of Proceeds............................................. 20
Summary Historical Financial Data........................... 21
Consolidated Ratios of Earnings to Fixed Charges............ 23
Capitalization.............................................. 24
Description of Notes........................................ 25
Book-Entry, Delivery and Form............................... 30
Material Federal Income Tax Considerations.................. 32
Validity of the Exchange Notes.............................. 37
Experts..................................................... 37
Where You Can Find More Information......................... 38
Information Regarding Forward-Looking Statements............ 39
Annex A -- Letter of Transmittal............................ A-1
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. THIS PROSPECTUS MAY ONLY BE USED WHERE IT IS LEGAL TO
SELL THE NOTES. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER
THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS. OUR BUSINESS, FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE THOSE
DATES.
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SUMMARY
This summary highlights information appearing in other sections of this
prospectus. It may not contain all of the information that is important to you.
This prospectus includes or incorporates by reference information about the
notes, the exchange offer, our business and our financial and operating data.
Before making an investment decision, we encourage you to read the entire
prospectus carefully, including the "Risk Factors" section and the financial
statements and the footnotes to those statements, which are incorporated by
reference in this prospectus.
KINDER MORGAN, INC.
BUSINESS DESCRIPTION
We are a Kansas corporation incorporated in 1927 with our common stock
listed on the NYSE under the symbol "KMI." We are one of the largest energy
storage and transportation companies in the United States, operating, either for
ourselves or on behalf of Kinder Morgan Energy Partners, L.P., more than 30,000
miles of natural gas and products pipelines. We own and operate Natural Gas
Pipeline Company of America, a major interstate natural gas pipeline system with
approximately 10,000 miles of pipelines and associated storage facilities. We
own and operate a retail natural gas distribution business serving approximately
233,000 customers in Colorado, Nebraska and Wyoming. We construct, operate and,
in some cases, own interests in natural gas-fired electric generation
facilities.
In addition to the businesses described above, we own the general partner
of, and a significant limited partner interest in, Kinder Morgan Energy
Partners, the largest publicly traded limited partnership in the pipeline
industry in terms of market capitalization and the largest independent products
pipeline system in the United States in terms of volumes delivered. Kinder
Morgan Energy Partners also owns and/or operates a diverse group of assets used
in the transportation, storage and processing of energy products, including
refined petroleum products pipeline systems with more than 10,000 miles of
pipeline and over 32 associated terminals. It owns 10,000 miles of natural gas
transportation pipelines and natural gas gathering and storage facilities.
Kinder Morgan Energy Partners also transports by pipeline and markets carbon
dioxide, commonly called CO(2), to oil fields which use CO(2) to increase
production, owns interests in four West Texas oil fields and owns or operates 44
liquid and bulk terminal facilities.
BUSINESS STRATEGY
Our objective is to grow by:
- providing, for a fee, transportation, storage and handling services which
are core to the energy infrastructure of growing markets;
- increasing utilization of assets while controlling costs;
- leveraging economies of scale from incremental acquisitions; and
- maximizing the benefits of our financial structure.
We primarily transport and/or handle products for a fee and generally are
not engaged in the unmatched purchase and resale of commodity products. As a
result, we do not face significant risks relating directly to movements in
commodity prices.
Generally, as utilization of our pipelines and terminals increases, our
fee-based revenues increase. Increases in utilization are principally driven by
increases in demand for gasoline, jet fuel, natural gas and other energy
products transported and handled by us. Increases in demand for these products
are generally driven by demographic growth in markets we serve, including the
rapidly growing western and southeastern United States.
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RECENT DEVELOPMENTS
On July 17, 2002, we reported a 45% increase in our second quarter 2002 net
income as compared to the second quarter of 2001. Our net income for the second
quarter 2002 was $72.5 million, compared to our net income for the second
quarter 2001 of $49.9 million. In addition, our board of directors authorized up
to $50 million of additional share repurchases and increased the quarterly
dividend paid on our common stock to $0.10 per share, or $0.40 annualized, from
the previous quarterly dividend of $0.05 per share, or $0.20 annualized.
On July 23, 2002, the shareholders of Kinder Morgan Management, LLC
approved a proposal to eliminate an exchange feature associated with Kinder
Morgan Management's shares. Before this action was taken, Kinder Morgan
Management's shareholders had the right to exchange one share of Kinder Morgan
Management for one common unit of Kinder Morgan Energy Partners owned by us or
our affiliates or, at our option, cash.
Kinder Morgan Management, LLC is a limited partner in Kinder Morgan Energy
Partners and, pursuant to a delegation of control agreement, manages and
controls its business and affairs, and the business and affairs of its operating
limited partnerships and subsidiaries. On August 6, 2002, Kinder Morgan
Management closed the public offering of 12,478,900 of its shares (including
over-allotment shares) for net proceeds of approximately $328.6 million. Kinder
Morgan Management used all of the net proceeds from that offering to purchase
12,478,900 i-units from Kinder Morgan Energy Partners. Kinder Morgan Energy
Partners, in turn, used all of the net proceeds to reduce short-term debt
incurred principally to finance acquisitions and expansion projects undertaken
since the middle of 2001.
On August 19, 2002, Kinder Morgan Energy Partners sold $250 million
principal amount of its 5.35% notes due 2007 and $375 million principal amount
of its 7.30% notes due 2033. Kinder Morgan Energy Partners used the aggregate
net proceeds of approximately $619.6 million to retire commercial paper debt. On
August 27, 2002, Kinder Morgan Energy Partners sold an additional $125 million
principal amount of its 7.30% notes due 2033. The net proceeds of $123.1 million
were also used to retire commercial paper debt.
On August 16, 2002, we announced that the Garfield County Colorado District
Court issued a decision in the litigation by our subsidiary, KN TransColorado,
Inc., against Questar TransColorado, Inc. The court found that the agreement
between the parties requiring KN TransColorado to purchase Questar
TransColorado's one half interest in the TransColorado Pipeline was valid and
enforceable, but also found that the Questar Pipeline Company had failed to
install compression as promised. As a result, the court offset the amount
required to be paid by KN TransColorado to Questar TransColorado by $21.8
million. As presently structured, the decision would require that KN
TransColorado purchase Questar TransColorado's interest for approximately $110
million, including prejudgment interest.
OFFICES
The address of our principal executive offices is One Allen Center, Suite
1000, 500 Dallas Street, Houston, Texas 77002, and our telephone number at this
address is (713) 369-9000.
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THE EXCHANGE OFFER
Registration Rights
Agreement..................... We sold $750 million in aggregate principal
amount of original notes to qualified
institutional buyers as defined in Rule 144A
under the Securities Act and outside the United
States in accordance with Regulation S under
the Securities Act through Salomon Smith Barney
Inc., Wachovia Securities, Inc., Commerzbank
Capital Markets Corp., Scotia Capital (USA)
Inc., BMO Nesbitt Burns Corp., J.P. Morgan
Securities Inc., RBC Dominion Securities
Corporation, SunTrust Capital Markets, Inc.,
Banc One Capital Markets, Inc., and Credit
Lyonnais Securities (USA) Inc., as initial
purchasers. We entered into a registration
rights agreement with the initial purchasers
which grants the holders of the original notes
certain exchange and registration rights. The
exchange offer made hereby is intended to
satisfy such exchange rights.
The Exchange Offer............ $1,000 principal amount of exchange notes in
exchange for each $1,000 principal amount of
original notes. As of the date hereof, $750
million aggregate principal amount of the
original notes are outstanding. We will issue
exchange notes to holders on the earliest
practicable date following the Expiration Date.
Resales of the Exchange
Notes......................... Based on an interpretation by the staff of the
SEC set forth in no-action letters issued to
third parties, we believe that, except as
described below, the exchange notes issued
pursuant to the exchange offer may be offered
for resale, resold and otherwise transferred by
a holder thereof, other than any such holder
that is an "affiliate" of ours 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 holder's business and that such holder has
no arrangement or understanding with any person
to participate in the distribution of such
exchange notes.
Each broker-dealer that receives exchange notes
pursuant to the exchange offer in exchange for
original notes that such broker-dealer acquired
for its own account as a result of
market-making activities or other trading
activities, other than original notes acquired
directly from us or our affiliates, must
acknowledge that it will deliver a prospectus
in connection with any resale of such exchange
notes. The letter of transmittal states that by
so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the
meaning of the Securities Act.
If we receive certain notices in the letter of
transmittal, this prospectus, as it may be
amended or supplemented from time to time, may
be used for the appropriate time period by a
broker-dealer in connection with resales of
exchange notes received in exchange for
original notes where such original notes were
acquired by such broker-dealer as a result of
market-making activities or other trading
activities and not acquired directly from us.
We have agreed that, if we receive certain
notices in
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the letter of transmittal, we will make this
prospectus available to any such broker-dealer
for use in connection with any such resale.
The letter of transmittal requires
broker-dealers tendering original notes in the
exchange offer to indicate whether such
broker-dealer acquired the original notes for
its own account as a result of market-making
activities or other trading activities, other
than original notes acquired directly from us
or any of our affiliates. If no broker-dealer
indicates that the original notes were so
acquired, we have no obligation under the
registration rights agreement to maintain the
effectiveness of the registration statement
past the consummation of the exchange offer or
to allow the use of this prospectus for such
resales. See "The Exchange Offer --
Registration Rights" and "-- Resale of the
Exchange Notes; Plan of Distribution."
Expiration Date............... The exchange offer expires at 5:00 p.m., New
York City time, on November 18, 2002, unless we
extend the exchange offer in our sole
discretion, in which case the term "Expiration
Date" means the latest date and time to which
the exchange offer is extended.
Conditions to the Exchange
Offer......................... The exchange offer is subject to certain
conditions which we may waive. See "The
Exchange Offer -- Conditions to the Exchange
Offer."
Procedures for Tendering the
Original Notes................ Each holder of original notes wishing to accept
the exchange offer must complete, sign and date
the accompanying letter of transmittal in
accordance with the instructions contained in
this prospectus and in the letter of
transmittal, and mail or otherwise deliver such
letter of transmittal together with the
original notes and any other required
documentation to the exchange agent identified
below under "Exchange Agent" at the address set
forth in this prospectus. By executing the
letter of transmittal, a holder will make
certain representations to us. See "The
Exchange Offer -- Registration Rights" and
"-- Procedures for Tendering Original Notes."
Special Procedures for
Beneficial Owners............. Any beneficial owner whose original notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender should contact the
registered holder promptly and instruct the
registered holder to tender on such beneficial
owner's behalf. See "The Exchange Offer --
Procedures for Tendering Original Notes."
Guaranteed Delivery
Procedures.................... Holders of original notes who wish to tender
their original notes when those securities are
not immediately available or who cannot deliver
their original notes, the letter of transmittal
or any other documents required by the letter
of transmittal to the exchange agent prior to
the Expiration Date must tender their original
notes according to the guaranteed delivery
procedures set forth in "The Exchange
Offer -- Procedures for Tendering Original
Notes -- Guaranteed Delivery."
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Withdrawal Rights............. Tenders of original notes pursuant to the
exchange offer may be withdrawn at any time
prior to the Expiration Date.
Acceptance of Original Notes
and Delivery of Exchange
Notes......................... We will accept for exchange any and all
original notes that are properly tendered in
the exchange offer, and not withdrawn, prior to
the exchange offer's Expiration Date. The
exchange notes issued pursuant to the exchange
offer will be issued on the earliest
practicable date following our acceptance for
exchange of original notes. See "The Exchange
Offer -- Terms of the Exchange Offer."
Exchange Agent................ Wachovia Bank, National Association is serving
as exchange agent in connection with the
exchange offer.
Federal Income Tax
Considerations................ We have received an opinion of counsel advising
that the exchange of original notes for
exchange notes pursuant to the exchange offer
will not be treated as a taxable exchange for
federal income tax purposes. See "Material
Federal Income Tax Considerations."
5
RISK FACTORS
You should carefully consider the risks described below, in addition to
other information contained or incorporated by reference in this prospectus.
Realization of any of the following risks could have a material adverse effect
on our business, financial condition, cash flows and results of operations.
WE ARE HIGHLY DEPENDENT UPON THE EARNINGS AND DISTRIBUTIONS OF KINDER
MORGAN ENERGY PARTNERS, L.P. For 2001, approximately 40% of our income before
interest and income taxes was attributable to our general and limited partner
interests in Kinder Morgan Energy Partners, L.P. A significant decline in Kinder
Morgan Energy Partners' earnings and/or cash distributions would have a
corresponding negative impact on us.
COMPETITION COULD ULTIMATELY LEAD TO LOWER LEVELS OF PROFITS AND ADVERSELY
IMPACT OUR ABILITY TO RECONTRACT FOR EXPIRING TRANSPORTATION CAPACITY AT
FAVORABLE RATES. For 2001, approximately 56% of our income before interest and
income taxes was attributable to the results of operations of Natural Gas
Pipeline Company of America, an interstate pipeline that is a major supplier to
the Chicago, Illinois area. In recent periods, interstate pipeline competitors
of Natural Gas Pipeline Company of America have constructed or expanded pipeline
capacity into the Chicago area, although additional take-away capacity has also
been constructed. To the extent that an excess of supply into this market area
is created and persists, Natural Gas Pipeline Company of America's ability to
recontract for expiring transportation capacity at favorable rates could be
impaired.
OUR LARGE AMOUNT OF FLOATING RATE DEBT MAKES US VULNERABLE TO INCREASES IN
INTEREST RATES. At December 31, 2001, we had approximately $1.6 billion of debt
subject to floating interest rates. Should interest rates increase
significantly, our earnings would be adversely affected.
THE RATES WE CHARGE SHIPPERS ON OUR PIPELINE SYSTEMS ARE SUBJECT TO
REGULATORY APPROVAL AND OVERSIGHT. Regulators and shippers on our pipelines have
rights to challenge the rates we charge under certain circumstances prescribed
by applicable regulations. We can provide no assurance that we will not face
challenges to the rates we receive on our pipeline systems in the future.
SUSTAINED PERIODS OF WEATHER INCONSISTENT WITH NORMAL IN AREAS SERVED BY
OUR NATURAL GAS TRANSPORTATION AND DISTRIBUTION OPERATIONS CAN CREATE VOLATILITY
IN OUR EARNINGS. Weather-related factors such as temperature and rainfall at
certain times of the year affect our earnings in our natural gas transportation
and retail natural gas distribution businesses. Sustained periods of
temperatures and rainfall that differ from normal can create volatility in our
earnings.
PROPOSED RULEMAKING BY THE FEDERAL ENERGY REGULATORY COMMISSION OR OTHER
REGULATORY AGENCIES HAVING JURISDICTION COULD ADVERSELY IMPACT OUR INCOME AND
OPERATIONS. For example, on September 27, 2001, FERC issued a Notice of Proposed
Rulemaking in Docket No. RM01-10. The proposed rule would expand FERC's current
standards of conduct to include a regulated transmission provider and all of its
energy affiliates. It is not known whether FERC will issue a final rule in this
docket and, if it does, whether as a result we could incur increased costs and
increased difficulty in our operations. Generally speaking, new regulations or
different interpretations of existing regulations applicable to our assets could
have a negative impact on our business, financial condition and results of
operations.
ENVIRONMENTAL REGULATION COULD RESULT IN INCREASED OPERATING AND CAPITAL
COSTS FOR US. Our business operations are subject to federal, state and local
laws and regulations relating to environmental protection. If an accidental leak
or spill occurs from our pipelines or at our storage or other facilities, we may
have to pay a significant amount to clean up the leak or spill or pay for
government penalties, liability to government agencies for natural resource
damage, personal injury or property damage to private parties or significant
business interruption. The resulting costs and liabilities could negatively
affect our level of earnings and cash flow. In addition, emission controls
required under federal and state environmental laws could require significant
capital expenditures at our facilities. The impact of Environmental Protection
Agency standards or future environmental measures on us could increase our costs
significantly if
6
environmental laws and regulations become stricter. Since the costs of
environmental regulation are already significant, additional regulation could
negatively affect our business.
We own or operate numerous properties that have been used for many years in
connection with pipeline activities. While we have utilized operating and
disposal practices that were standard in the industry at the time, hydrocarbons
or other wastes may have been released on our properties or on other properties
where such wastes have been taken for disposal. In addition, many of these
properties have been operated by third parties whose management and disposal of
hydrocarbons or other wastes was not under our control. These properties and the
wastes disposed thereon may be subject to laws such as the Comprehensive
Environmental Response, Compensation, and Liability Act, also known as CERCLA or
the Superfund law, which impose joint and several liability without regard to
fault or the legality of the original conduct. Under such laws and implementing
regulations, we could be required to remove or remediate previously disposed
wastes or property contamination, including groundwater contamination caused by
prior owners or operators. Imposition of such liability schemes could have a
material adverse impact our operations and financial position.
THERE IS NO PUBLIC MARKET FOR THE NOTES AND YOU CANNOT BE SURE AN ACTIVE
TRADING MARKET FOR THE NOTES WILL DEVELOP. The original notes have not been
registered under the Securities Act, and may not be resold by purchasers thereof
unless the original notes are subsequently registered or an exemption from the
registration requirements of the Securities Act is available. There can be no
assurance, even following registration or exchange of the original notes for
exchange notes, that an active trading market for the original notes or the
exchange notes will exist. At the time of the private placement of the original
notes, the initial purchasers advised us that they intended to make a market in
the original notes and, if issued, the exchange notes. However, the initial
purchasers are not obligated to make a market in the original notes or the
exchange notes, and any such market-making may be discontinued at any time at
the sole discretion of the initial purchasers. No assurance can be given as to
the liquidity of or trading market for the original notes or the exchange notes.
The liquidity of any market for the notes will depend upon the number of
holders of the notes, our performance, the market for similar securities, the
interest of securities dealers in making a market in the notes and other
factors.
THE MARKET VALUE OF YOUR ORIGINAL NOTES MAY BE LOWER IF YOU DO NOT EXCHANGE
YOUR ORIGINAL NOTES OR FAIL TO PROPERLY TENDER YOUR ORIGINAL NOTES FOR EXCHANGE.
CONSEQUENCES OF FAILURE TO EXCHANGE. To the extent that original notes are
tendered and accepted for exchange pursuant to the exchange offer, the trading
market for original notes that remain outstanding may be significantly more
limited, which might adversely affect the liquidity of the original notes not
tendered for exchange. The extent of the market and the availability of price
quotations for original notes will depend upon a number of factors, including
the number of holders of original notes remaining at such time and the interest
in maintaining a market in such original notes on the part of securities firms.
An issue of securities with a smaller outstanding market value available for
trading, called the "float," may command a lower price than would a comparable
issue of securities with a greater float. Therefore, the market price for
original notes that are not exchanged in the exchange offer may be affected
adversely to the extent that the amount of original notes exchanged pursuant to
the exchange offer reduces the float. The reduced float also may tend to make
the trading price of the original notes that are not exchanged more volatile.
CONSEQUENCES OF FAILURE TO PROPERLY TENDER. Issuance of the exchange notes
in exchange for the original notes pursuant to the exchange offer will be made
following the prior satisfaction, or waiver, of the conditions set forth in "The
Exchange Offer -- Conditions to the Exchange Offer" and only after timely
receipt by the exchange agent of such original notes, a properly completed and
duly executed letter of transmittal and all other required documents. Therefore,
holders of original notes desiring to tender such original notes in exchange for
exchange notes should allow sufficient time to ensure timely delivery of all
required documentation. Neither we, the exchange agent nor any other person is
under any duty to give
7
notification of defects or irregularities with respect to the tenders of
original notes for exchange. Original notes that may be tendered in the exchange
offer but which are not validly tendered will, following the consummation of the
exchange offer, remain outstanding and will continue to be subject to the same
transfer restrictions currently applicable to such original notes.
8
THE EXCHANGE OFFER
REGISTRATION RIGHTS
At the closing of the offering of the original notes, we entered into the
registration rights agreement with the initial purchasers pursuant to which we
agreed, for the benefit of the holders of the original notes, at our cost,
- within 120 days after the date of the original issuance of the original
notes, to file an exchange offer registration statement with the SEC with
respect to the exchange offer for the exchange notes, and
- to use our reasonable efforts to cause the exchange offer registration
statement to be declared effective under the Securities Act within 210
days after the date of original issuance of the original notes.
Upon the exchange offer registration statement being declared effective, we
agreed to offer the exchange notes in exchange for surrender of the original
notes. We agreed to keep the exchange offer open for not less than 30 days, or
longer if required by applicable law.
For each original note surrendered to us pursuant to the exchange offer,
the holder of such original note will receive an exchange note having a
principal amount equal to that of the surrendered original note. Interest on
each exchange note will accrue from the last interest payment date on which
interest was paid on the original note surrendered in exchange therefor or, if
no interest has been paid on such original note, from the date of its original
issue. The registration rights agreement also provides an agreement to include
in the prospectus for the exchange offer certain information necessary to allow
a broker-dealer who holds original notes that were acquired for its own account
as a result of market-making activities or other ordinary course trading
activities (other than original notes acquired directly from us or one of our
affiliates) to exchange such original notes pursuant to the exchange offer and
to satisfy the prospectus delivery requirements in connection with resales of
exchange notes received by such broker-dealer in the exchange offer. We agreed
to maintain the effectiveness of the registration statement for these purposes
for 120 days after the consummation of the exchange offer.
The preceding agreement is needed because any broker-dealer who acquires
original notes for its own account as a result of market-making activities or
other trading activities is required to deliver a prospectus meeting the
requirements of the Securities Act. This prospectus covers the offer and sale of
the exchange notes pursuant to the exchange offer made pursuant to this
prospectus and the resale of exchange notes received in the exchange offer by
any broker-dealer who held original notes acquired for its own account as a
result of market-making activities or other trading activities other than
original notes acquired directly from us or one of our affiliates.
Under existing interpretations of the staff of the SEC contained in several
no-action letters to third parties, the exchange notes will in general be freely
tradeable after the exchange offer without further registration under the
Securities Act. However, any purchaser of original notes who is an "affiliate"
of ours or who intends to participate in the exchange offer for the purpose of
distributing the related exchange notes
- will not be able to rely on the interpretation of the staff of the SEC,
- will not be able to tender its original notes in the exchange offer, and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or transfer of the
original notes unless such sale or transfer is made pursuant to an
exemption from such requirements.
Each holder of the original notes, other than certain specified holders,
who wishes to exchange original notes for exchange notes in the exchange offer
will be required to make certain representations, including that
- it is not an affiliate of ours,
9
- any exchange notes to be received by it were acquired in the ordinary
course of its business, and
- at the time of commencement of the exchange offer, it has no arrangement
with any person to participate in the distribution (within the meaning of
the Securities Act) of the exchange notes.
In the event that any changes in law or the applicable interpretations of
the staff of the SEC do not permit us to effect the exchange offer, or if for
any other reason the exchange offer is not consummated within 210 days of the
date of issuance and sale of the original notes, or the exchange offer is not
available to the initial purchasers based upon an opinion of counsel, we will,
at our cost,
- as promptly as practicable, file a shelf registration statement (which
may be an amendment of the registration statement of which this
prospectus is a part) covering resales of the original notes,
- use all reasonable efforts to cause the shelf registration statement to
be declared effective under the Securities Act, and
- use all reasonable efforts to keep effective the shelf registration
statement until two years after the date of original issuance of the
original notes, or, if Rule 144(k) under the Securities Act is amended to
provide a shorter restricted period, such shorter period, or until all
original notes have been sold.
We will, in the event of the filing of a shelf registration statement,
provide to each holder of the original notes copies of the prospectus which is a
part of the shelf registration statement, notify each such holder when the shelf
registration statement for the original notes has become effective, and take
certain other actions as are required to permit unrestricted resales of the
original notes. A holder of original notes that sells such original notes
pursuant to the shelf registration statement generally will be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the registration rights agreement which are
applicable to such holder, including certain indemnification obligations. In
addition, each holder of the original notes 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 their original
notes included in the shelf registration statement and to benefit from the
provisions regarding liquidated damages set forth in the following paragraph.
We will pay liquidated damages on the original notes upon the occurrence of
any of the following events:
- if the exchange offer registration statement or shelf registration
statement is not filed within 120 days following the date of original
issuance of the original notes, then commencing on the 121st day after
the date of original issuance of the original notes, liquidated damages
shall accrue on the original notes over and above the otherwise
applicable interest rate at a rate of .25% per year;
- if an exchange offer registration statement or a shelf registration
statement is filed and is not declared effective within 210 days
following the date of original issuance of the original notes, then
commencing on the 211th day after the date of original issuance of the
original notes, liquidated damages shall accrue on the original notes
over and above the otherwise applicable interest rate at a rate of .25%
per year; or
- if either:
(A) we have not issued exchange notes for all original notes validly
tendered in accordance with the terms of the exchange offer on or prior to
45 business days after the date on which the exchange offer registration
statement was declared effective; or
10
(B) the shelf registration statement has been declared effective but
such shelf registration statement ceases to be effective at any time:
(1) prior to the expiration of the second anniversary of the date
of original issuance of the original notes, or, if Rule 144(k) is
amended to provide a shorter restrictive period, such shorter period,
and
(2) while any registrable securities are outstanding, then
liquidated damages shall accrue on the original notes over and above the
otherwise applicable interest rate at a rate of .25% per year commencing
on the 46th business day after such effective date, in the case of (A)
above, or the day such shelf registration statement ceases to be
effective, in the case of (B) above.
The foregoing circumstances under which we may be required to pay
liquidated damages are not cumulative. In no event will the liquidated damages
rate on the original notes exceed .25% per year. Further, any liquidated damages
will cease to accrue when all of the events described above have been cured or
upon the expiration of the second anniversary of the date of original issuance
of the original notes, or, if Rule 144(k) is amended to provide a shorter
restrictive period, the shorter period. For purposes of clarifying the foregoing
provisions, the registration rights agreement states that liquidated damages
shall not accrue at any time that there are no registrable securities
outstanding. The receipt of liquidated damages will be the sole monetary remedy
available to a holder if we fail to meet these obligations.
This summary of the material provisions of the registration rights
agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the registration rights
agreement, a copy of which is filed as an exhibit to the registration statement
of which this prospectus is a part.
Except as set forth above, after consummation of the exchange offer,
holders of original notes which are the subject of the exchange offer have no
registration or exchange rights under the registration rights agreement. See
"-- Consequences of Failure to Exchange," and "-- Resale of the Exchange Notes;
Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
The original notes which are not exchanged for exchange notes pursuant to
the exchange offer and are not included in a resale prospectus which, if
required, will be filed as part of an amendment to the registration statement of
which this prospectus is a part, will remain restricted securities and subject
to restrictions on transfer. Accordingly, such original notes may only be resold
(1) to us, upon redemption thereof or otherwise,
(2) so long as the original notes are eligible for resale pursuant to
Rule 144A, to a person whom the seller reasonably believes is a qualified
institutional buyer within the meaning of Rule 144A under the Securities
Act, purchasing for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or
other transfer is being made in reliance on Rule 144A,
(3) in an offshore transaction in accordance with Regulation S under
the Securities Act,
(4) pursuant to an exemption from registration in accordance with Rule
144, if available, under the Securities Act,
(5) in reliance on another exemption from the registration
requirements of the Securities Act, or
(6) pursuant to an effective registration statement under the
Securities Act.
In all of the situations discussed above, the resale must be in accordance
with any applicable securities laws of any state of the United States and
subject to certain requirements of the registrar or co-
11
registrar being met, including receipt by the registrar or co-registrar of a
certification and, in the case of (3), (4) and (5) above, an opinion of counsel
reasonably acceptable to us and the registrar.
To the extent original notes are tendered and accepted in the exchange
offer, the principal amount of outstanding original notes will decrease with a
resulting decrease in the liquidity in the market for the original notes.
Accordingly, the liquidity of the market of the original notes could be
adversely affected. See "Risk Factors -- Consequences of Failure to Exchange."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, a copy of which is attached to this prospectus
as Annex A, we will accept any and all original notes validly tendered and not
withdrawn prior to the Expiration Date. We will issue $1,000 principal amount of
exchange notes in exchange for each $1,000 principal amount of original notes
accepted in the exchange offer. Holders may tender some or all of their original
notes pursuant to the exchange offer. However, original notes may be tendered
only in integral multiples of $1,000 principal amount.
The form and terms of the exchange notes are the same as the form and terms
of the original notes, except that
- the exchange notes will have been registered under the Securities Act and
will not bear legends restricting their transfer pursuant to the
Securities Act, and
- except as otherwise described above, holders of the exchange notes will
not be entitled to the rights of holders of original notes under the
registration rights agreement.
The exchange notes will evidence the same debt as the original notes which
they replace, and will be issued under, and be entitled to the benefits of, the
indenture which governs all of the notes.
Solely for reasons of administration and for no other purpose, we have
fixed the close of business on October 18, 2002 as the record date for the
exchange offer for purposes of determining the persons to whom this prospectus
and the letter of transmittal will be mailed initially. Only a registered holder
of original notes or such holder's legal representative or attorney-in-fact as
reflected on the records of the trustee under the indenture may participate in
the exchange offer. There will be no fixed record date for determining
registered holders of the original notes entitled to participate in the exchange
offer.
Holders of the original notes do not have any appraisal or dissenters'
rights under Kansas law or the indenture in connection with the exchange offer.
We intend to conduct the exchange offer in accordance with the applicable
requirements of the Exchange Act and the rules and regulations of the SEC
thereunder.
We shall be deemed to have accepted validly tendered original notes when,
as and if we have given oral or written notice thereof to the exchange agent.
The exchange agent will act as agent for the tendering holders of the original
notes for the purposes of receiving the exchange notes. The exchange notes
delivered pursuant to the exchange offer will be issued on the earliest
practicable date following our acceptance for exchange of original notes.
If any tendered original notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth in this
prospectus or otherwise, certificates for any such unaccepted original notes
will be returned, without expense, to the tendering holder of the original notes
as promptly as practicable after the Expiration Date.
Holders who tender original notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of the
original notes pursuant to the exchange offer. We will pay all charges and
expenses, other than certain applicable taxes, in connection with the exchange
offer. See "-- Fees and Expenses."
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EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" with respect to the exchange offer shall mean
5:00 p.m., New York City time, on November 18, 2002, unless we, in our sole
discretion, extend the exchange offer, in which case the term "Expiration Date"
shall mean the latest date and time to which the exchange offer is extended.
In order to extend the exchange offer, we will notify the exchange agent of
any extension by oral or written notice and will make a public announcement
thereof, each prior to 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date of the exchange offer.
We reserve the right, in our sole discretion,
- to delay accepting any original notes,
- to extend the exchange offer,
- if any of the conditions set forth below under "-- Conditions to the
Exchange Offer" have not been satisfied, to terminate the exchange
offer, or
- to amend the terms of the exchange offer in any manner.
We may effect any such delay, extension or termination by giving oral or
written notice thereof to the exchange agent.
Except as specified in the second paragraph under this heading, any such
delay in acceptance, extension, termination or amendment will be followed as
promptly as practicable by a public announcement thereof. If the exchange offer
is amended in a manner determined by us to constitute a material change, we will
promptly disclose such amendment by means of a prospectus supplement that will
be distributed to the registered holders of the original notes. The exchange
offer will then be extended for a period of five to 10 business days, as
required by law, depending upon the significance of the amendment and the manner
of disclosure to the registered holders, if the exchange offer would otherwise
expire during such five to 10 business day period.
Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, termination or amendment of the exchange
offer, we shall not have an obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
of the announcement to the Dow Jones News Service.
PROCEDURES FOR TENDERING ORIGINAL NOTES
Tenders of Original Notes. The tender by a holder of original notes
pursuant to any of the procedures set forth below will constitute the tendering
holder's acceptance of the terms and conditions of the exchange offer.
Our acceptance for exchange of original notes tendered pursuant to any of
the procedures described below will constitute a binding agreement between such
tendering holder and us in accordance with the terms and subject to the
conditions of the exchange offer. Only holders are authorized to tender their
original notes. The procedures by which original notes may be tendered by
beneficial owners that are not holders will depend upon the manner in which the
original notes are held.
DTC has authorized DTC participants that are beneficial owners of original
notes through DTC to tender their original notes as if they were holders. To
effect a tender, DTC participants should either (1) complete and sign the letter
of transmittal or a facsimile thereof, have the signature thereon guaranteed if
required by Instruction 1 of the letter of transmittal, and mail or deliver the
letter of transmittal or such facsimile pursuant to the procedures for
book-entry transfer set forth below under "-- Book-Entry Delivery Procedures,"
or (2) transmit their acceptance to DTC through the DTC Automated Tender Offer
Program ("ATOP"), for which the transaction will be eligible, and follow the
procedures for book-entry transfer, set forth below under "-- Book-Entry
Delivery Procedures."
13
Tender of Original Notes Held in Physical Form. To tender effectively
original notes held in physical form pursuant to the exchange offer,
- a properly completed letter of transmittal applicable to such notes (or a
facsimile thereof) duly executed by the holder thereof, and any other
documents required by the letter of transmittal, must be received by the
exchange agent at one of its addresses set forth below, and tendered
original notes must be received by the exchange agent at such address (or
delivery effected through the deposit of original notes into the exchange
agent's account with DTC and making book-entry delivery as set forth
below) on or prior to the Expiration Date of the exchange offer, or
- the tendering holder must comply with the guaranteed delivery procedures
set forth below.
LETTERS OF TRANSMITTAL OR ORIGINAL NOTES SHOULD BE SENT ONLY TO THE
EXCHANGE AGENT AND SHOULD NOT BE SENT TO US.
Tender of Original Notes Held Through a Custodian. To tender effectively
original notes that are held of record by a custodian bank, depository, broker,
trust company or other nominee, the beneficial owner thereof must instruct such
holder to tender the original notes on the beneficial owner's behalf. A letter
of instructions from the record owner to the beneficial owner may be included in
the materials provided along with this prospectus which may be used by the
beneficial owner in this process to instruct the registered holder of such
owner's original notes to effect the tender.
Tender of Original Notes Held Through DTC. To tender effectively original
notes that are held through DTC, DTC participants should either
- properly complete and duly execute the letter of transmittal (or a
facsimile thereof), and any other documents required by the letter of
transmittal, and mail or deliver the letter of transmittal or such
facsimile pursuant to the procedures for book-entry transfer set forth
below, or
- transmit their acceptance through ATOP, for which the transaction will be
eligible, and DTC will then edit and verify the acceptance and send an
Agent's Message to the exchange agent for its acceptance.
Delivery of tendering original notes held through DTC must be made to the
exchange agent pursuant to the book-entry delivery procedures set forth below or
the tendering DTC participant must comply with the guaranteed delivery
procedures set forth below.
THE METHOD OF DELIVERY OF ORIGINAL NOTES AND LETTERS OF TRANSMITTAL, ANY
REQUIRED SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING
DELIVERY THROUGH DTC AND ANY ACCEPTANCE OR AGENT'S MESSAGE TRANSMITTED THROUGH
ATOP, IS AT THE ELECTION AND RISK OF THE PERSON TENDERING ORIGINAL NOTES AND
DELIVERING LETTERS OF TRANSMITTAL. EXCEPT AS OTHERWISE PROVIDED IN THE LETTER OF
TRANSMITTAL, DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE
PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE
MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT
DELIVERY TO THE EXCHANGE AGENT PRIOR TO SUCH DATE.
Except as provided below, unless the original notes being tendered are
deposited with the exchange agent on or prior to the Expiration Date
(accompanied by a properly completed and duly executed letter of transmittal or
a properly transmitted Agent's Message), we may, at our option, reject such
tender. Exchange of exchange notes for original notes will be made only against
deposit of the tendered original notes and delivery of all other required
documents.
Book-Entry Delivery Procedures. The exchange agent will establish accounts
with respect to the original notes at DTC for purposes of the exchange offer
within two business days after the date of this prospectus, and any financial
institution that is a participant in DTC may make book-entry delivery of the
original notes by causing DTC to transfer such original notes into the exchange
agent's account in accordance with DTC's procedures for such transfer. However,
although delivery of original notes may be effected through book-entry at DTC,
the letter of transmittal (or facsimile thereof), with any required
14
signature guarantees or an Agent's Message in connection with a book-entry
transfer, and any other required documents, must, in any case, be transmitted to
and received by the exchange agent at one or more of its addresses set forth in
this prospectus on or prior to the Expiration Date, or compliance must be made
with the guaranteed delivery procedures described below. Delivery of documents
to DTC does not constitute delivery to the exchange agent. The confirmation of a
book-entry transfer into the exchange agent's account at DTC as described above
is referred to herein as a "Book-Entry Confirmation."
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the exchange agent and forming a part of the Book-Entry
Confirmation, which states that DTC has received an express acknowledgment from
each participant in DTC tendering the original notes and that such participant
has received the letter of transmittal and agrees to be bound by the terms of
the letter of transmittal and we may enforce such agreement against such
participant.
Signature Guarantees. Signatures on all letters of transmittal must be
guaranteed by a recognized member of the Medallion Signature Guarantee Program
or by any other "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 promulgated under the Exchange Act (each of the foregoing, an
"Eligible Institution"), unless the original notes tendered thereby are tendered
- by a registered holder of original notes (or by a participant in DTC
whose name appears on a DTC security position listing as the owner of
such original notes) who has not completed either the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on the
letter of transmittal, or
- for the account of an Eligible Institution.
See Instruction 1 of the letter of transmittal. If the original notes are
registered in the name of a person other than the signer of the letter of
transmittal or if original notes not accepted for exchange or not tendered are
to be returned to a person other than the registered holder, then the signatures
on the letter of transmittal accompanying the tendered original notes must be
guaranteed by an Eligible Institution as described above. See Instructions 1 and
5 of the letter of transmittal.
Guaranteed Delivery. If a holder desires to tender original notes pursuant
to the exchange offer and time will not permit the letter of transmittal,
certificates representing such original notes and all other required documents
to reach the exchange agent, or the procedures for book-entry transfer cannot be
completed, on or prior to the Expiration Date of the exchange offer, such
original notes may nevertheless be tendered if all three of the following
conditions are satisfied:
- the tender is made by or through an Eligible Institution;
- a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by us, or an Agent's Message with
respect to guaranteed delivery that is accepted by us, is received by the
exchange agent on or prior to the Expiration Date, as provided below; and
- the certificates for the tendered original notes, in proper form for
transfer (or a Book-Entry Confirmation of the transfer of such original
notes into the exchange agent's account at DTC as described above),
together with the letter of transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees and
any other documents required by the letter of transmittal or a properly
transmitted Agent's Message, are received by the exchange agent within
two business days after the date of execution of the Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be sent by hand delivery, telegram,
facsimile transmission or mail to the exchange agent and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, delivery of exchange notes by
the exchange agent for original notes tendered and accepted for exchange
pursuant to the exchange offer will, in all cases, be made only after timely
receipt by the exchange agent of such original notes (or Book-Entry Confirmation
of the transfer of such original notes into the exchange agent's account at DTC
as described above), and
15
the letter of transmittal (or facsimile thereof) with respect to such original
notes, properly completed and duly executed, with any required signature
guarantees and any other documents required by the letter of transmittal, or a
properly transmitted Agent's Message.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt), acceptance and withdrawal of tendered
original notes will be determined by us in our sole discretion, which
determination will be final and binding. We reserve the absolute right to reject
any and all original notes not properly tendered or any original notes our
acceptance of which, in the opinion of our counsel, would be unlawful.
We also reserve the right to waive any defects, irregularities or
conditions of tender as to particular original notes. The interpretation of the
terms and conditions of our exchange offer (including the instructions in the
letter of transmittal) by us will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of original
notes must be cured within such time as we shall determine.
Although we intend to notify holders of defects or irregularities with
respect to tenders of original notes through the exchange agent, neither we, the
exchange agent nor any other person is under any duty to give such notice, nor
shall they incur any liability for failure to give such notification. Tenders of
original notes will not be deemed to have been made until such defects or
irregularities have been cured or waived.
Any original notes received by the exchange agent that are not validly
tendered and as to which the defects or irregularities have not been cured or
waived, or if original notes are submitted in a principal amount greater than
the principal amount of original notes being tendered by such tendering holder,
such unaccepted or non-exchanged original notes will either be
- returned by the exchange agent to the tendering holders, or
- in the case of original notes tendered by book-entry transfer into the
exchange agent's account at the Book-Entry Transfer Facility pursuant to
the book-entry transfer procedures described below, credited to an
account maintained with such Book-Entry Transfer Facility.
By tendering, each registered holder will represent to us that, among other
things,
(1) the exchange notes to be acquired by the holder and any beneficial
owner(s) of the original notes in connection with the exchange offer are
being acquired by the holder and any beneficial owner(s) in the ordinary
course of business of the holder and any beneficial owner(s),
(2) the holder and each beneficial owner are not participating, do not
intend to participate, and have no arrangement or understanding with any
person to participate, in a distribution of the exchange notes,
(3) the holder and each beneficial owner acknowledge and agree that
(x) any person participating in the exchange offer for the purpose of
distributing the exchange notes must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction with respect to the exchange notes acquired by
such person and cannot rely on the position of the Staff of the SEC set
forth in no-action letters that are discussed herein under "-- Resale of
the Exchange Notes; Plan of Distribution," and (y) any broker-dealer that
receives exchange notes for its own account in exchange for original notes
pursuant to the exchange offer must deliver a prospectus in connection with
any resale of such exchange notes, but by so acknowledging, the holder
shall not be deemed to admit that, by delivering a prospectus, it is an
"underwriter" within the meaning of the Securities Act,
(4) neither the holder nor any beneficial owner is an "affiliate," as
defined under Rule 405 of the Securities Act, of ours except as otherwise
disclosed to us in writing, and
16
(5) the holder and each beneficial owner understands that a secondary
resale transaction described in clause (3) above should be covered by an
effective registration statement containing the selling securityholder
information required by Item 507 of Regulation S-K of the SEC.
Each broker-dealer that receives exchange notes for its own account in
exchange for original notes, where such original notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such exchange notes. See "-- Resale of the Exchange Notes;
Plan of Distribution."
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus and the letter of
transmittal, tenders of original notes pursuant to the exchange offer may be
withdrawn, unless therefore accepted for exchange as provided in the exchange
offer, at any time prior to the Expiration Date of the exchange offer.
To be effective, a written or facsimile transmission notice of withdrawal
must be received by the exchange agent at its address set forth in this
prospectus prior to the Expiration Date of the exchange offer. Any such notice
of withdrawal must
- specify the name of the person having deposited the original notes to be
withdrawn,
- identify the original notes to be withdrawn, including the certificate
number or numbers of the particular certificates evidencing the original
notes (unless such original notes were tendered by book-entry transfer),
and aggregate principal amount of such original notes, and
- be signed by the holder in the same manner as the original signature on
the letter of transmittal (including any required signature guarantees)
or be accompanied by documents of transfer sufficient to have the trustee
under the indenture register the transfer of the original notes into the
name of the person withdrawing such original notes.
If original notes have been delivered pursuant to the procedures for
book-entry transfer set forth in "-- Procedures for Tendering Original
Notes -- Book-Entry Delivery Procedures," any notice of withdrawal must specify
the name and number of the account at the appropriate book-entry transfer
facility to be credited with such withdrawn original notes and must otherwise
comply with such book-entry transfer facility's procedures.
If the original notes to be withdrawn have been delivered or otherwise
identified to the exchange agent, a signed notice of withdrawal meeting the
requirements discussed above is effective immediately upon written or facsimile
notice of withdrawal even if physical release is not yet effected. A withdrawal
of original notes can only be accomplished in accordance with these procedures.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by us in our sole discretion, which
determination shall be final and binding on all parties. No withdrawal of
original notes will be deemed to have been properly made until all defects or
irregularities have been cured or expressly waived. Neither we, the exchange
agent nor any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or revocation, nor shall
we or they incur any liability for failure to give any such notification. Any
original 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 original notes so withdrawn are retendered. Properly
withdrawn original notes may be retendered by following one of the procedures
described above under "-- Procedures for Tendering Original Notes" at any time
prior to the Expiration Date of the exchange offer.
Any original notes which have been tendered but which are not accepted for
exchange due to the rejection of the tender due to uncured defects or the prior
termination of the exchange offer, or which have been validly withdrawn, will be
returned to the holder thereof unless otherwise provided in the letter of
transmittal, as soon as practicable following the Expiration Date of the
exchange offer or, if so requested in the notice of withdrawal, promptly after
receipt by us of notice of withdrawal without cost to such holder.
17
CONDITIONS TO THE EXCHANGE OFFER
The exchange offer shall not be subject to any conditions, other than that
- the SEC has issued an order or orders declaring the indenture governing
the notes qualified under the Trust Indenture Act of 1939,
- the exchange offer, or the making of any exchange by a holder, does not
violate applicable law or any applicable interpretation of the staff of
the SEC,
- no action or proceeding shall have been instituted or threatened in any
court or by or before any governmental agency with respect to the
exchange offer, which, in our judgment, might impair our ability to
proceed with the exchange offer,
- there shall not have been adopted or enacted any law, statute, rule or
regulation which, in our judgment, would materially impair our ability to
proceed with the exchange offer, or
- there shall not have occurred any material change in the financial
markets in the United States or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which on the financial
markets of the United States, in our judgment, would materially impair
our ability to proceed with the exchange offer.
If we determine in our sole discretion that any of the conditions to the
exchange offer are not satisfied, we may
- refuse to accept any original notes and return all tendered original
notes to the tendering holders,
- extend the exchange offer and retain all original notes tendered prior to
the Expiration Date applicable to the exchange offer, subject, however,
to the rights of holders to withdraw such original notes (see
"-- Withdrawal of Tenders"), or
- waive such unsatisfied conditions with respect to the exchange offer and
accept all validly tendered original notes which have not been withdrawn.
If such waiver constitutes a material change to the exchange offer, we will
promptly disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders, and will extend the exchange offer for a
period of five to 10 business days, depending upon the significance of the
waiver and the manner of disclosure to the registered holders, if the exchange
offer would otherwise expire during such five to 10 business day period.
18
EXCHANGE AGENT
Wachovia Bank, National Association, the trustee under the indenture
governing the notes, has been appointed as exchange agent for the exchange
offer. Questions and requests for assistance, requests for additional copies of
this prospectus or of the letter of transmittal and requests for Notices of
Guaranteed Delivery and other documents should be directed to the exchange agent
addressed as follows:
By Mail:
Wachovia Bank, National Association
Customer Information Center
Corporate Trust Operations -- NC1153
1525 West W.T. Harris Boulevard -- 3C3
Charlotte, NC 28288
Attention: Marsha Rice
By Facsimile:
(704) 590-7628
Confirm by
Telephone:
(704) 590-7413
By Hand:
Wachovia Bank, National Association
Customer Information Center
Corporate Trust Operations -- NC1153
1525 West W.T. Harris Boulevard -- 3C3
Charlotte, NC 28262-1153
Attention: Marsha Rice
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, additional solicitation may be made by
telegraph, telecopy, telephone or in person by our officers and regular
employees.
No dealer-manager has been retained in connection with the exchange offer
and no payments will be made to brokers, dealers or others soliciting acceptance
of the exchange offer. However, reasonable and customary fees will be paid to
the exchange agent for its services and it will be reimbursed for its reasonable
out-of-pocket expenses in connection therewith.
We estimate that our out of pocket expenses for the exchange offer will be
approximately $200,000. Such expenses include fees and expenses of the exchange
agent and the trustee under the indenture, accounting and legal fees and
printing costs, among others.
We will pay all transfer taxes, if any, applicable to the exchange of the
original notes pursuant to the exchange offer. If, however, a transfer tax is
imposed for any reason other than the exchange of the original notes pursuant to
the exchange offer, then the amount of any such transfer taxes (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.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the carrying value of the original
notes and no gain or loss for accounting purposes will be recognized. The
expenses of the exchange offer will be amortized over the term of the exchange
notes.
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RESALE OF THE EXCHANGE NOTES; PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of exchange notes. This prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of exchange notes received in exchange
for original notes where such original notes were acquired as a result of
market-making activities or other trading activities. We have agreed that we
will make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In addition, until
January 16, 2003 (90 days after the date of this prospectus), all dealers
effecting transactions in the exchange notes, whether or not participating in
this distribution, may be required to deliver a prospectus. This requirement is
in addition to the obligation of dealers to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. 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 transactions,
- through the writing of options on the exchange notes or a combination of
such methods of resale,
- at market prices prevailing at the time of resale,
- at prices related to such prevailing market prices, or
- at negotiated prices.
Any such resale may be made directly to purchasers or to or through brokers
or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such 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 on any
such resale of exchange notes and any commission on concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The letter of transmittal states that, by acknowledging that it will
deliver a prospectus 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.
We have agreed to pay all expenses incident to the exchange offer
(including the expenses of one counsel for the holders of the notes approved in
writing by the holders of a majority in aggregate principal amount of the notes)
other than commissions or concessions of any brokers or dealers and will
indemnify the holders of the notes (including any broker-dealers) required to
use this prospectus in connection with their resale of exchange notes as
described above against certain liabilities, including civil liabilities under
the Securities Act.
USE OF PROCEEDS
The exchange offer is intended to satisfy our obligations under the
registration rights agreement. We will not receive any cash proceeds from the
issuance of the exchange notes offered by this prospectus. In consideration for
issuing the exchange notes as contemplated in this prospectus, we will receive
in exchange original notes in like principal amount, the form and terms of which
are the same as the form and terms of the exchange notes, except as otherwise
described in this prospectus under "The Exchange Offer -- Terms of the Exchange
Offer." The original notes surrendered in exchange for the exchange notes will
be retired and canceled and cannot be reissued. Accordingly, issuance of the
exchange notes will not result in any increase in our indebtedness.
20
SUMMARY HISTORICAL FINANCIAL DATA
The following sets forth our summary financial data as presented in Item 6
of our Annual Report on Form 10-K for the year ended December 31, 2001 as filed
with the SEC on February 20, 2002, together with unaudited data for June 30,
2002 and the six months ended June 30, 2002 and 2001. The following should be
read in conjunction with Management's Discussion and Analysis of Financial
Condition and Results of Operations and the financial statements and the related
notes thereto incorporated by reference in this prospectus.
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------- ------------------------------------------------------------
2002 2001 2001 2000 1999(1) 1998(2) 1997
-------- -------- ---------- ---------- ---------- ---------- --------
(IN THOUSANDS)
Operating Revenues........................... $505,135 $544,066 $1,054,918 $2,679,722 $1,836,368 $1,660,259 $340,685
Gas Purchases and Other Costs of Sales....... 154,557 192,594 339,353 1,926,068 1,050,250 836,614 134,476
-------- -------- ---------- ---------- ---------- ---------- --------
Gross Margin................................. 350,578 351,472 715,565 753,654 786,118 823,645 206,209
Other Operating Expenses..................... 165,352 158,225 331,246 358,511 490,416 427,953 128,059
-------- -------- ---------- ---------- ---------- ---------- --------
OPERATING INCOME............................. 185,226 193,247 384,319 395,143 295,702 395,692 78,150
Other Income and (Expenses)(3)............... 90,004 (13,493) 22,917 (87,977) (81,151) (172,787) (21,039)
-------- -------- ---------- ---------- ---------- ---------- --------
Income From Continuing Operations Before
Income Taxes............................... 275,230 179,754 407,236 307,166 214,551 222,905 57,111
Income Taxes................................. 114,390 73,052 168,601 123,017 79,124 82,710 12,777
-------- -------- ---------- ---------- ---------- ---------- --------
INCOME FROM CONTINUING OPERATIONS............ 160,840 106,702 238,635 184,149 135,427 140,195 44,334
Gain (Loss) From Discontinued Operations, Net
of Tax..................................... -- -- -- (31,734) (395,319) (77,984) 33,163
-------- -------- ---------- ---------- ---------- ---------- --------
Income (Loss) Before Extraordinary Item...... 160,840 106,702 238,635 152,415 (259,892) 62,211 77,497
Extraordinary Item -- Loss on Early
Extinguishment of Debt, Net of Income
Taxes(4)................................... -- (12,119) (13,565) -- -- -- --
-------- -------- ---------- ---------- ---------- ---------- --------
NET INCOME (LOSS)............................ 160,840 94,583 225,070 152,415 (259,892) 62,211 77,497
Less-Preferred Dividends..................... -- -- -- -- 129 350 350
Less-Premium Paid on Preferred Stock
Redemption................................. -- -- -- -- 350 -- --
-------- -------- ---------- ---------- ---------- ---------- --------
EARNINGS (LOSS) AVAILABLE FOR COMMON STOCK... $160,840 $ 94,583 $ 225,070 $ 152,415 $ (260,371) $ 61,861 $ 77,147
======== ======== ========== ========== ========== ========== ========
CAPITAL EXPENDITURES(5)...................... $ 77,720 $ 33,383 $ 124,171 $ 85,654 $ 92,841 $ 120,881 $230,814
OTHER DATA
EBITDA(6).................................... $406,586 $360,641 $ 757,370 $ 686,079 $ 621,739 $ 584,108 $109,997
---------------
(1) Reflects the acquisition of Kinder Morgan Delaware on October 7, 1999. See
Note 3 of the Notes to Consolidated Financial Statements included in our
Annual Report on Form 10-K for the year ended December 31, 2001.
(2) Reflects the acquisition of MidCon Corp. on January 30, 1998.
(3) Includes significant impacts from sales of assets. See Note 1 (N) of the
Notes to Consolidated Financial Statements included in our Annual Report on
Form 10-K for the year ended December 31, 2001.
(4) Statement of Financial Accounting Standards No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections, which is required to be implemented for fiscal years
beginning after May 15, 2002, will result in the reclassification to income
from continuing operations of gains or losses on extinguishment of debt that
were previously reported as extraordinary items.
(5) Capital Expenditures shown are for continuing operations only.
(6) EBITDA has been calculated as the sum of income from continuing operations
plus (a) income tax expense, (b) interest expense and (c) depreciation and
amortization expense, including amortization of our excess investment in
Kinder Morgan Energy Partners, L.P. which began with its acquisition in
October 1999 and ended with our adoption of Statement of Financial
Accounting Standards No. 142 effective January 1, 2002. EBITDA is not a
measure recognized by generally accepted accounting principles and should
not be considered in isolation or as a substitute for measures of income,
performance, net cash provided by operations or liquidity prepared in
accordance with generally accepted accounting principles. EBITDA as
presented may not be comparable to other similarly titled financial measures
of other companies.
AS OF AS OF DECEMBER 31,
JUNE 30, ------------------------------------------------------
2002 2001 2000 1999
---------- ---------- ---------- ----------
(IN THOUSANDS)
TOTAL ASSETS..................... $9,685,539 $9,540,775 $8,386,989 $9,393,834
========== ========== ========== ==========
CAPITALIZATION:
Common Equity.................... $2,281,792 43% $2,259,997 39% $1,777,624 39% $1,649,615 32%
Preferred Stock.................. -- -- -- -- -- --
Preferred Capital Trust
Securities...................... 275,000 5% 275,000 5% 275,000 6% 275,000 5%
Minority Interests............... 801,500 15% 817,513 14% 4,910 -- 9,523 --
Long-term Debt................... 1,931,696 37% 2,404,967 42% 2,478,983 55% 3,293,326 63%
---------- --- ---------- --- ---------- --- ---------- ---
Total Capitalization............. $5,289,988 100% $5,757,477 100% $4,536,517 100% $5,227,464 100%
========== === ========== === ========== === ========== ===
AS OF DECEMBER 31,
-----------------------------------
1998 1997
---------- ----------
(IN THOUSANDS)
TOTAL ASSETS..................... $9,623,779 $2,305,805
========== ==========
CAPITALIZATION:
Common Equity.................... $1,219,043 25% $ 606,132 46%
Preferred Stock.................. 7,000 -- 7,000 --
Preferred Capital Trust
Securities...................... 275,000 6% 100,000 8%
Minority Interests............... 63,354 1% 47,303 4%
Long-term Debt................... 3,300,025 68% 553,816 42%
---------- --- ---------- ---
Total Capitalization............. $4,864,422 100% $1,314,251 100%
========== === ========== ===
21
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets,
referred to in the following discussion as "SFAS 142." SFAS 142, which
superceded Accounting Principles Board Opinion No. 17, Intangible Assets,
addresses financial accounting and reporting for (1) intangible assets acquired
individually or with a group of other assets (but not those acquired in a
business combination) at acquisition and (2) goodwill and other intangible
assets subsequent to their acquisition. SFAS 142 is required to be applied
starting with fiscal years beginning after December 15, 2001. As previously
disclosed in our Form 10-Q for the period ended March 31, 2002 as filed with the
SEC on May 10, 2002, we adopted SFAS 142 effective January 1, 2002.
Had the provisions of SFAS 142 been in effect during the periods prior to
January 1, 2002 presented above, goodwill amortization would have been
eliminated, increasing net income and associated per share amounts as follows:
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------------------------------
2002 2001 2001 2000 1999 1998 1997
-------- -------- -------- -------- --------- ------- -------
(IN THOUSANDS)
Reported Income (Loss) Before Extraordinary
Item.......................................... $160,840 $106,702 $238,635 $152,415 $(259,892) $62,211 $77,497
Add Back: Goodwill Amortization, Net of Related
Tax Benefit................................... -- 8,369 16,198 17,368 5,449 292 --
-------- -------- -------- -------- --------- ------- -------
Adjusted Income (Loss) Before Extraordinary
Item.......................................... 160,840 115,071 254,833 169,783 (254,443) 62,503 77,497
Extraordinary Item.............................. -- (12,119) (13,565) -- -- -- --
-------- -------- -------- -------- --------- ------- -------
Adjusted Net Income (Loss)...................... $160,840 $102,952 $241,268 $169,783 $(254,443) $62,503 $77,497
======== ======== ======== ======== ========= ======= =======
Reported Earnings per Diluted Share............. $ 1.30 $ 0.78 $ 1.86 $ 1.33 $ (3.24) $ 0.96 $ 1.63
======== ======== ======== ======== ========= ======= =======
Earnings per Diluted Share, as Adjusted......... $ 1.30 $ 0.84 $ 1.99 $ 1.48 $ (3.17) $ 0.97 $ 1.63
======== ======== ======== ======== ========= ======= =======
22
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The historical ratios of earnings to fixed charges of us and our
consolidated subsidiaries for the periods indicated are as follows:
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED JUNE 30, --------------------------------
2002 2001 2000 1999 1998 1997
-------------- ---- ---- ---- ---- ----
3.56 2.58 2.08 1.58 1.62 1.62
In all cases, earnings are determined by adding:
- income before income taxes, extraordinary items, income or loss from
equity investees and minority interest; plus
- fixed charges, amortization of capitalized interest and distributed
income of equity investees; less
- capitalized interest.
In all cases, fixed charges include:
- interest, including capitalized interest; plus
- amortization of debt issuance costs; plus
- the estimated interest portion of rental expenses.
23
CAPITALIZATION
The following table sets forth our historical consolidated capitalization
as of June 30, 2002, and our consolidated capitalization as adjusted to give
effect to:
- the sale on August 6, 2002 of 12,478,900 shares representing limited
liability company interests by Kinder Morgan Management, our consolidated
subsidiary, in an underwritten public offering, and
- the receipt and use of the net proceeds from the sale of the original
notes to retire short-term debt, including current maturities of
long-term debt.
See "Use of Proceeds." You should read this table in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations and our historical financial statements and notes thereto that are
incorporated by reference in this prospectus.
HISTORICAL AS
JUNE 30, 2002 ADJUSTED
------------- ----------
(UNAUDITED)
(THOUSANDS OF DOLLARS)
Cash and cash equivalents................................... $ 17,356 $ 17,356
========== ==========
Current maturities of long-term debt........................ $ 706,267 $ 617,534
---------- ----------
Notes payable............................................... 654,012 --
---------- ----------
Long-term debt:
Debentures:
8.35% Series, due 2022.................................. 35,000 35,000
6.50% Series, due 2013.................................. 50,000 50,000
7.85% Series, due 2022.................................. 24,022 24,022
8.75% Series, due 2024.................................. 75,000 75,000
7.35% Series, due 2026.................................. 125,000 125,000
6.67% Series, due 2027.................................. 150,000 150,000
7.25% Series, due 2028.................................. 493,000 493,000
7.45% Series, due 2098.................................. 150,000 150,000
Senior Notes:
6.65% Series, due 2005.................................. 500,000 500,000
6.80% Series, due 2008.................................. 300,000 300,000
6.50% Series, due 2012.................................. -- 750,000
Other..................................................... 7,389 134
Market value of interest rate swaps....................... 22,285 22,285
---------- ----------
Total long-term debt............................... 1,931,696 2,674,441
---------- ----------
Capital Trust Securities.................................... 275,000 275,000
---------- ----------
Minority Interest........................................... 801,500 1,130,059 (1)
Stockholders' Equity:
Common stock, 121,769,051 shares issued and outstanding... 648,578 648,578
Additional paid-in capital................................ 1,676,115 1,676,115
Retained earnings......................................... 368,530 368,530
Treasury stock............................................ (399,070) (399,070)
Other..................................................... (12,361) (12,361)
---------- ----------
Total stockholders' equity......................... 2,281,792 2,281,792
---------- ----------
Total capitalization........................................ $6,650,267 $6,978,826
========== ==========
---------------
(1) On August 6, 2002, Kinder Morgan Management sold 12,478,900 shares in an
underwritten public offering at a price of $27.50 per share. The net
proceeds of $328.6 million, after underwriting discount and offering
expenses, which has the effect of increasing the minority interest in
Kinder Morgan Management, was used by Kinder Morgan Management to purchase
additional i-units of Kinder Morgan Energy Partners. Kinder Morgan Energy
Partners used the proceeds of that purchase to reduce short-term debt.
24
DESCRIPTION OF NOTES
GENERAL
The original notes were issued, and the exchange notes will be issued,
under an indenture dated as of August 27, 2002. The indenture is a contract
between us and Wachovia Bank, National Association, which acts as trustee. The
indenture and the notes contain the full legal text of the matters described in
this section. The indenture and the notes are governed by New York law. A copy
of the indenture is filed as an exhibit to the registration statement of which
this prospectus is a part.
The following description of the material provisions of the notes and the
indenture is a summary only. Because this section is a summary, it does not
describe every aspect of those documents. You should read the indenture because
it, and not this summary, controls your rights as a holder of beneficial
interests in the notes. This summary is subject to and qualified in its entirety
by reference to all the provisions of the indenture, including definitions of
terms referenced in this prospectus. The summary contains references to the
described sections of the indenture.
PRINCIPAL AND MATURITY
The notes are unsecured obligations of Kinder Morgan, Inc. Although only
$750 million aggregate principal amount of the notes were originally issued, so
long as no Event of Default under the indenture has occurred and is continuing,
we may issue and sell additional notes of the same series and with the same
terms, without the consent of holders of the notes. Any additional notes,
together with these notes, will constitute a single series of notes under the
indenture. The notes will mature on September 1, 2012, unless sooner redeemed.
The notes are not entitled to the benefits of a sinking fund.
All of the notes are held initially in the form of one or more global
notes. See "Book-Entry, Delivery and Form" for a general description of the
global notes.
INTEREST
The notes bear interest from August 27, 2002 at the annual rate set forth
on the cover page of this prospectus, payable semi-annually in arrears on March
1 and September 1 of each year to noteholders in whose name the notes are
registered at the close of business on February 15 or August 15 (whether or not
a business day) preceding the applicable interest payment date. We refer to each
of those days as an interest payment date. If an interest payment date or a
redemption date occurs on a date which is not a business day, payment will be
made on the next business day and no additional interest will accrue. Interest
payments shall commence on March 1, 2003.
Interest on the notes is computed on the basis of a 360-day year comprised
of twelve 30-day months.
RANKING
The notes will rank equally with any of our other unsecured and
unsubordinated indebtedness from time to time outstanding. Holders of the notes
will generally have a junior position to claims of creditors and holders of
preferred securities of our subsidiaries.
The indenture does not limit our ability to incur additional indebtedness
or contain provisions that would afford holders of notes protection in the event
of a sudden and significant decline in our credit quality or a takeover,
recapitalization or highly leveraged or similar transaction. Accordingly, we
could in the future enter into transactions that could increase the amount of
indebtedness outstanding at that time or otherwise adversely affect our capital
structure or credit rating.
OPTIONAL REDEMPTION
The notes are redeemable, at our option, at any time in whole, or from time
to time in part, upon not less than 30 and not more than 60 days notice mailed
to each holder of notes to be redeemed at the holder's address appearing in the
note register, at a price equal to 100% of the principal amount of the
25
notes to be redeemed plus accrued interest to the redemption date, subject to
the right of holders of record on the relevant record date to receive interest
due on an interest payment date that is on or prior to the redemption date, plus
a make-whole premium, if any. In no event will the redemption price ever be less
than 100% of the principal amount of the notes to be redeemed plus accrued
interest to the redemption date.
The amount of the make-whole premium on any note, or portion of a note, to
be redeemed will be equal to the excess, if any, of:
(1) the sum of the present values, calculated as of the redemption
date, of:
- each interest payment that, but for the redemption, would have been
payable on the note, or portion of a note, being redeemed on each
interest payment date occurring after the redemption date,
excluding any accrued interest for the period prior to the
redemption date; and
- the principal amount that, but for the redemption, would have been
payable at the stated maturity of the note, or portion of a note,
being redeemed;
over
(2) the principal amount of the note, or portion of a note, being
redeemed.
The present value of interest and principal payments referred to in clause
(1) above will be determined in accordance with generally accepted principles of
financial analysis. The present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the redemption date
at a discount rate equal to the Treasury Yield, as defined below, plus 0.30%.
The make-whole premium will be calculated by an independent investment
banking institution of national standing appointed by us. It could be one of the
initial purchasers. If we fail to make that appointment at least 30 business
days prior to the redemption date, or if the institution so appointed is
unwilling or unable to make the calculation, the financial institution named in
the notes will make the calculation. If the financial institution named in the
notes is unwilling or unable to make the calculation, an independent investment
banking institution of national standing appointed by the trustee will make the
calculation.
For purposes of determining the make-whole premium, Treasury Yield refers
to an annual rate of interest equal to the weekly average yield to maturity of
United States Treasury Notes that have a constant maturity that corresponds to
the remaining term to maturity of the notes, calculated to the nearer 1/12 of a
year, which we call the remaining term. The Treasury Yield will be determined as
of the third business day immediately preceding the applicable redemption date.
The weekly average yields of United States Treasury Notes will be
determined by reference to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15(519) Selected Interest
Rates" or any successor release, which we call the H.15 Statistical Release. If
the H.15 Statistical Release sets forth a weekly average yield for United States
Treasury Notes having a constant maturity that is the same as the remaining term
of the notes to be redeemed, then the Treasury Yield will be equal to that
weekly average yield. In all other cases, the Treasury Yield will be calculated
by interpolation, on a straight-line basis, between the weekly average yields on
the United States Treasury Notes that have a constant maturity closest to and
greater than the remaining term of the notes to be redeemed and the United
States Treasury Notes that have a constant maturity closest to and less than the
remaining term, in each case as set forth in the H.15 Statistical Release. Any
weekly average yields so calculated by interpolation will be rounded to the
nearer 0.01%, with any figure of 0.0050% or more being rounded upward. If weekly
average yields for United States Treasury Notes are not available in the H.15
Statistical Release or otherwise, then the Treasury Yield will be calculated by
interpolation of comparable rates selected by the independent investment banking
institution.
26
If less than all of the notes are to be redeemed, the trustee will select
the notes to be redeemed by a method that the trustee deems fair and
appropriate. The trustee may select for redemption notes and portions of notes
in amounts of $1,000 or whole multiples of $1,000.
SAME DAY SETTLEMENT
The original notes trade in, and the exchange notes will trade in, The
Depository Trust Company's settlement system until maturity. As a result, The
Depository Trust Company will require secondary trading activity in the notes to
be settled in immediately available funds. So long as the notes continue to
trade in The Depository Trust Company's settlement system, all payments of
principal and interest on the global notes will be made by us in immediately
available funds.
CERTAIN COVENANTS
LIMITATIONS ON LIENS
For purposes of this covenant, the following definitions are applicable:
"Net Tangible Assets" means the total amount of assets appearing on our
consolidated balance sheet less, without duplication:
- all current liabilities (excluding any thereof which are extendible or
renewable by their terms or replaceable or refundable pursuant to
enforceable commitments at the option of the obligor thereon without
requiring the consent of the obligee to a time more than 12 months after
the time as of which the amount thereof is being computed and excluding
current maturities of long-term debt and preferred stock);
- all reserves for depreciation and other asset valuation reserves but
excluding reserves for deferred federal income taxes arising from
accelerated depreciation or otherwise;
- all goodwill, trademarks, trade names, patents, unamortized debt discount
and expense and other like intangible assets carried as an asset; and
- all appropriate adjustments on account of minority interests of other
Persons holding common stock in any Subsidiary.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Principal Property" means any natural gas pipeline, natural gas
distribution 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 us and our consolidated Subsidiaries taken as a whole.
"Principal Subsidiary" means any Subsidiary which owns a Principal
Property.
"Subsidiary" means, with respect to any person:
- any entity of which more than 50% of the total voting power of the equity
interests entitled, without regard to the occurrence of any contingency,
to vote in the election of directors, managers or trustees thereof; or
- any partnership of which more than 50% of the partners' equity interests,
considering all partners' equity interests as a single class, is at the
time owned or controlled, directly or indirectly, by that person or one
or more of the other subsidiaries of that person or combination thereof.
We shall not, nor shall we permit any Subsidiary to, issue, assume or
guarantee any debt for money borrowed ("Debt") if such Debt is secured by a
mortgage, pledge, security interest or lien (a "mortgage" or "mortgages") upon
any Principal Property of ours or any Principal Subsidiary or upon any shares of
stock or indebtedness of any Principal Subsidiary (whether such Principal
Property, shares or indebtedness
27
was owned on the date of the initial issuance of the notes or thereafter
acquired) without in any such case effectively providing that the notes and any
other indebtedness chosen by us shall be secured equally and ratably with (or
prior to) such Debt, except that the foregoing restrictions shall not apply to:
(a) mortgages on any property acquired, constructed or improved by us or
any Principal Subsidiary after the date of the initial issuance of
notes which are created or assumed contemporaneously with, or within
180 days after, such acquisition (or in the case of property
constructed or improved, after the completion and commencement of
commercial operation of such property, whichever is later) to secure
or provide for the payment of any part of the purchase price or cost
thereof; provided that if a commitment for such a financing is
obtained prior to or within such 180-day period, the applicable
mortgage shall be deemed to be included in this clause (a) whether or
not such mortgage is created within such 180-day period; and provided
further that in the case of such construction or improvement the
mortgages shall not apply to any property theretofore owned by us or
any Subsidiary other than theretofore unimproved real property;
(b) existing mortgages on property acquired (including mortgages on any
property acquired from a Person which is consolidated with or merged
with or into us or a Subsidiary) and mortgages outstanding at the time
any corporation becomes a Subsidiary;
(c) mortgages in favor of us or any Principal Subsidiary;
(d) mortgages in favor of a domestic or foreign government or governmental
body to secure advances or other payments pursuant to any contract or
statute or to secure indebtedness incurred to finance the purchase
price or cost of constructing or improving the property subject to
such mortgages, including mortgages to secure Debt of the pollution
control or industrial revenue bond type; and
(e) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any mortgage
referred to in any of the foregoing clauses (a)-(d).
Notwithstanding the foregoing, we and any Subsidiary may, without securing
the notes, issue, assume or guarantee secured Debt (which would otherwise be
subject to the foregoing restrictions) in an aggregate amount which, together
with all other such Debt, does not exceed 10% of the Net Tangible Assets, as
shown on a consolidated balance sheet as of a date not more than 90 days prior
to the proposed transaction prepared by us in accordance with generally accepted
accounting principles. (Section 1006)
CONSOLIDATION, MERGER AND SALE OF ASSETS
We shall not consolidate with or merge into, or convey, transfer or lease
our properties and assets substantially as any entirety to, any Person, unless
the Person is a corporation, partnership or trust organized under the laws of
the United States, any State thereof or the District of Columbia, the Person
assumes by supplement or amendment to the indenture all of our obligations under
the indenture and the notes and, after giving effect thereto, no Event of
Default, and no event which, after notice or lapse of time or both, would be an
Event of Default, has occurred and is continuing. The surviving transferee or
lessee Person will be our successor and we, except in the case of a lease, will
be relieved of all obligations under the indenture and the notes. (Section 801
and 802)
MODIFICATION OF THE INDENTURE
Under the indenture, generally we and the trustee may modify our rights and
obligations, any guarantors' rights and obligations and the rights of the
holders with the consent of the holders of a majority in aggregate principal
amount of the outstanding notes affected by the modification. No modification of
the principal or interest payment terms, and no modification reducing the
percentage required for modifications, is effective against any holder without
its consent. In addition, we and the
28
trustee may amend the indenture without the consent of any holder of the notes
to make certain technical changes, such as:
- amending the indenture to reopen the series represented by the notes and
issue additional notes of that series having the same terms;
- correcting errors;
- providing for a successor trustee; or
- qualifying the indenture under the Trust Indenture Act. (Sections 901 and
902)
EVENTS OF DEFAULT AND REMEDIES
In the indenture, Event of Default will mean any of the following:
- failure to pay the principal of or any premium on any note when due;
- failure to pay interest on any note for 30 days;
- failure to perform any other covenant in the indenture that continues for
90 days after being given written notice; or
- our bankruptcy, insolvency or reorganization. (Section 501)
If an Event of Default with respect to the notes occurs and is continuing,
the trustee or the holders of at least 25% in principal amount of all of the
outstanding notes may declare the principal of all the notes and accrued, but
unpaid interest to be due and payable. When such declaration is made, such
amounts will be immediately due and payable. The holders of a majority in
principal amount of the outstanding notes may rescind such declaration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived (other than
nonpayment of principal or interest that has become due solely as a result of
acceleration). (Section 502)
Holders of notes may not enforce the indenture or the notes, except as
provided in the indenture or the notes. The trustee may require indemnity
satisfactory to it before it enforces the indenture or the notes. (Section 603)
Subject to certain limitations, the holders of a majority in principal amount of
the outstanding notes may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power of the trustee. An Event of Default under the notes will not necessarily
constitute an event of default under our other indebtedness or vice versa. The
trustee may withhold from holders of notes notice of any continuing default
(except a default in the payment of principal or interest) if it determines that
withholding notice is in their interests. (Section 602)
MINIMUM DENOMINATIONS
The notes will be issued in registered form in amounts of $1,000 each or
multiples of $1,000.
NO PERSONAL LIABILITY OF OFFICERS, DIRECTORS, EMPLOYEES OR SHAREHOLDERS
Our directors, officers, employees and shareholders will not have any
liability for our obligations under the indenture or the notes. Each holder of
notes by accepting a note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the notes.
DISCHARGING OUR OBLIGATIONS
We may choose either to discharge our obligations on the notes in a legal
defeasance, or to release ourselves from our covenant restrictions on the notes
in a covenant defeasance. We may do so at any time on the 91st day after we
deposit with the trustee sufficient cash or government securities to pay the
principal, interest, any premium and any other sums due to the stated maturity
date or a redemption date of the notes. If we choose this legal defeasance
option, the holders of the notes will not be entitled to the
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benefits of the indenture except for registration of transfer and exchange of
notes, replacement of lost, stolen or mutilated notes, conversion or exchange of
notes and receipt of principal and interest on the original stated due dates or
specified redemption dates. (Section 1302)
We may discharge our obligations under the indenture or release ourselves
from covenant restrictions only if we meet certain requirements. Among other
things, we must deliver an opinion of our legal counsel that the discharge will
not result in holders having to recognize taxable income or loss or subject them
to different tax treatment. In the case of legal defeasance, this opinion must
be based on either an IRS letter ruling or change in federal tax law. We may not
have a default on the notes discharged on the date of deposit. The discharge may
not violate any of our agreements. The discharge may not result in our becoming
an investment company in violation of the Investment Company Act of 1940, as
amended.
THE TRUSTEE
Wachovia Bank, National Association, 12 East 49th Street, 37th Floor, New
York, New York 10017 is initially named to act as trustee under the indenture.
The trustee may resign or be removed by us with respect to the notes and a
successor trustee may be appointed to act with respect to the notes. The holders
of a majority in aggregate principal amount of the notes may remove the trustee.
(Section 610)
LIMITATIONS ON TRUSTEE IF IT IS A CREDITOR OF KINDER MORGAN, INC.
The indenture contains certain limitations on the right of the trustee, in
the event that it becomes our creditor, to obtain payment of claims in some
cases, or to realize on property received in respect of any such claim, as
security or otherwise. (Section 613)
ANNUAL TRUSTEE REPORT TO HOLDERS OF NOTES
The trustee is required to submit an annual report to the holders of the
notes regarding, among other things, the trustee's eligibility to so serve, the
priority of the trustee's claims regarding certain advances made by it, and any
action taken by the trustee materially affecting the notes.
CERTIFICATES AND OPINIONS TO BE FURNISHED TO TRUSTEE
The indenture provides that, in addition to other certificates or opinions
that may be specifically required by other provisions of the indenture, every
application by us for action by the trustee shall be accompanied by a
certificate of our officers and an opinion of counsel, who may be our counsel,
stating that, in the opinion of the signers, we have complied with all
applicable conditions precedent to the action. (Section 102)
BOOK-ENTRY, DELIVERY AND FORM
Generally, the notes will be issued in the form of global notes registered
in the name of The Depository Trust Company or its nominee.
Beneficial interests in the global notes may not be exchanged for notes in
certificated form except in the limited circumstances described below. Payment
of the principal of and interest on certificated notes is subject to the
indenture and will be made at the corporate trust office of the trustee or such
other office or agency as may be designated by it for such purpose in New York
City. Payment of interest on certificated notes will be made to the person in
whose name such note is registered at the close of business on the applicable
record date. All other terms of the certificated notes are governed by the
indenture. Outstanding notes issued in certificated form may be exchanged in the
exchange offer for new notes in certificated form.
Except as described below, the global 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.
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Initially, the trustee will act as paying agent and registrar for the
notes.
DEPOSITARY PROCEDURES
DTC is a limited-purpose trust company created to hold securities for its
participating organizations and to facilitate the clearance and settlement of
transactions in those securities between participants through electronic
book-entry changes in accounts of participants. The 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 such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly. Persons who are not participants
may beneficially own securities held by or on behalf of DTC only through the
participants or indirect participants. The ownership interest and transfer of
ownership interest of each actual purchaser of each security held by or on
behalf of DTC are recorded on the records of the participants and indirect
participants.
Pursuant to DTC's procedures, (a) upon deposit of the global notes, DTC
will credit the accounts of participants designated by the initial purchasers
with portions of the principal amount of global notes and (b) ownership of such
interests in the global notes will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by DTC (with respect
to participants) or by participants and the indirect participants (with respect
to other owners of beneficial interests in the global notes).
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interest in a global note to such persons may be limited to
that extent. Because DTC can act only on behalf of participants, which in turn
act on behalf of indirect participants and certain banks, the ability of a
person having a beneficial interest in a global note to pledge such interest to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of such interests, may be affected by the lack of physical
certificates evidencing such interest. For certain other restrictions on the
transferability of the notes, see "-- Certificated Notes."
Under the terms of the indenture, we and the trustee will treat the persons
in whose names the notes, including the global notes, are registered as the
owners thereof for the purpose of receiving payments of principal and premium
and liquidated damages, if any, and interest and for any and all other purposes
whatsoever. Payments in respect of the principal and premium and liquidated
damages, if any, and interest on a global note registered in the name of DTC or
its nominee will be payable by the trustee to DTC or its nominee in its capacity
as the registered holder under the indenture. Consequently, none of us, the
trustee nor any of our agents or the trustee's agents has or will have any
responsibility or liability for (a) any aspect of DTC's records or any
participant's or indirect participant's records relating to or payments made on
account of beneficial ownership interests in the global notes, or for
maintaining, supervising or reviewing any of DTC's records or any participant's
or indirect participant's records relating to the beneficial ownership interests
in the global notes or (b) any other matter relating to the actions and
practices of DTC or any of its participants or indirect participants.
DTC's current practices for payments of principal, interest, liquidated
damages and the like with respect to securities such as the notes are to credit
the accounts of the relevant participants with the payment on the payment date,
in amounts proportionate to their respective holdings in principal amount of
beneficial interests in the relevant security such as the global notes as shown
on the records of DTC. Payments by participants and the indirect participants to
the beneficial owners of notes will be governed by standing instructions and
customary practices and will not be the responsibility of DTC, the trustee or
us. Neither we nor the trustee will be liable for any delay by DTC or its
participants in identifying the beneficial owners of the notes, and we 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 notes for
all purposes.
The global notes will trade in DTC's Same-Day Funds Settlement System and,
therefore, transfers between 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
31
participant will be effected in accordance with the procedures of such
participant but generally will settle in immediately available funds.
DTC will take any action permitted to be taken by a holder of notes only at
the direction of one or more participants to whose account interests in the
global notes are credited and only in respect of such portion of the aggregate
principal amount of the notes to which such participant or participants has or
have given direction. However, if there is an event of default under the notes,
DTC reserves the right to exchange global notes (without the direction of one or
more of its participants) for legended notes in certificated form, and to
distribute such certificated forms of notes to its participants.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests notes among participants, it is under no obligation to perform or
to continue to perform such procedures, and such procedures may be discontinued
at any time. Neither we nor the trustee shall have any responsibility for the
performance by DTC or its participants and indirect participants of their
respective obligations under the rules and procedures governing any of their
operations.
Certificated Notes. Subject to certain conditions, any person having a
beneficial interest in the global note may, upon request to the trustee,
exchange such beneficial interest for notes in the form of certificated notes.
Upon any such issuance, the trustee is required to register such certificated
notes in the name of, and cause the same to be delivered to, such person or
persons (or the nominee of any thereof). In addition, if
- we notify the trustee in writing that DTC is no longer willing or able to
act as a depositary and we are unable to locate a qualified successor
within 90 days,
- we, at our option, notify the trustee in writing that we elect to cause
the issuance of notes in the form of certificated notes under the
indenture, or
- DTC will not continue to hold the book-entry interests related to the
global notes or is no longer a clearing agency registered under the
Exchange Act and we do not replace DTC within 120 days,
then, upon surrender by the global note holder of its global note, notes in such
form will be issued to each person that the global note holder and DTC identify
as being the beneficial owner of the related notes.
Neither we nor the trustee will be liable for any delay by the global note
holder or DTC in identifying the beneficial owners of notes and we and the
trustee may conclusively rely on, and will be protected in relying on,
instructions from the global note holder or DTC for all purposes.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material United States federal
income tax consequences relevant to the purchase, ownership and disposition of
the notes and reflects the opinion provided by Bracewell & Patterson, L.L.P.,
our counsel as to these matters. This discussion is for general information only
and does not address all aspects of federal income taxation that may be relevant
to particular investors in light of their personal investment circumstances, nor
does it address the federal income tax consequences which may be relevant to
certain types of investors subject to special treatment under the federal income
tax laws, such as certain financial institutions, insurance companies,
tax-exempt entities, broker-dealers, and taxpayers subject to the alternative
minimum tax. In addition, this discussion does not discuss any aspects of state,
local, or foreign tax laws. This discussion assumes that investors will hold
their notes as "capital assets" (generally, property held for investment),
within the meaning of Section 1221 of the Internal Revenue Code, and not as part
of an integrated investment, such as a hedge, straddle or conversion
transaction.
No ruling from the Internal Revenue Service (the "IRS") will be requested
with respect to any of the matters discussed herein. There can be no assurance
that the IRS will not take different positions concerning the matters discussed
below and that such positions would not be sustained. BECAUSE INDIVIDUAL
CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF NOTES SHOULD
32
CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT TO HIS OR HER PARTICULAR TAX
SITUATION AND AS TO ANY FEDERAL, FOREIGN, STATE, LOCAL OR OTHER TAX
CONSIDERATIONS (INCLUDING ANY POSSIBLE CHANGES IN TAX LAW) AFFECTING THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES.
This discussion is based on the provisions of the Internal Revenue Code,
existing and proposed Treasury regulations promulgated thereunder, judicial
authority interpreting the Internal Revenue Code, and current administrative
rulings and pronouncements of the IRS now in effect, all of which are subject to
change at any time by legislative, judicial or administrative action. Any such
changes may be retroactively applied in a manner that could result in federal
income tax consequences different from those discussed below and could adversely
affect a holder of notes.
EXCHANGE OF ORIGINAL NOTES FOR EXCHANGE NOTES
The exchange of original notes for exchange notes should not constitute a
significant modification of the terms of the original notes, and, accordingly,
will not be treated as a taxable exchange for United States federal income tax
purposes. Consequently, no gain or loss will be recognized by holders of
original notes upon receipt of the exchange notes. A holder will have the same
adjusted basis in an exchange note as the holder had in the original note
exchanged therefor. In addition, a holder's holding period for an exchange note
will include the holding period for the original note exchanged therefor.
The remaining summary of federal income considerations relates to owning
and disposing of exchange notes, and also applies to holders of original notes
who do not accept the exchange offer.
UNITED STATES FEDERAL INCOME TAXATION OF UNITED STATES HOLDERS
As used herein, the term "United States Holder" means a holder of a note
that is for United States federal income tax purposes
- an individual citizen or resident of the United States,
- a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision thereof,
- an estate the income of which is subject to United States federal income
taxation regardless of source, or
- a trust that has validly elected to be treated as a United States person
or whose administration is subject to the primary supervision of a United
States court and which has one or more United States persons who have the
authority to control all substantial decisions of the trust.
Stated Interest. Stated interest on the notes generally will be taxable to
a United States Holder as ordinary income from domestic sources at the time it
is paid or accrued in accordance with the United States Holder's method of
accounting for tax purposes.
Amortizable Bond Premium. If a United States Holder purchases a note for
an amount that is greater than the sum of all payments payable on the note after
the purchase date, other than qualified stated interest, such United States
Holder will be considered to have purchased such note at a premium. A United
States Holder may elect to amortize such bond premium over the remaining term of
such note (or if it results in a smaller amount of amortizable bond premium,
until an earlier call date, and in such case by reference to the amount payable
on that date).
If bond premium is amortized, the amount of interest on the note included
in the United States Holder's income for each accrual period ending on an
interest payment date or on the stated maturity of the note, as the case may be,
will be reduced by a portion of the bond premium allocable to such accrual
period based on the note's yield to maturity (or earlier call date, if reference
to such call date produces a smaller amount of amortizable bond premium). If the
amortizable bond premium allocable to such accrual period exceeds the amount of
interest allocable to such accrual period, such excess would be allowed as a
33
deduction for such accrual period, but only to the extent of the United States
Holder's prior inclusion in income of interest payments on the note. Any excess
above such prior interest inclusions is generally carried forward to the next
accrual period. A United States Holder who elects to amortize bond premium must
reduce such United States Holder's tax basis in the notes as described under
"-- Disposition of Notes." If such an election to amortize bond premium is not
made, a United States Holder must include the full amount of each interest
payment on the note in income in accordance with its regular method of
accounting and will receive a tax benefit from the bond premium only in
computing such United States Holder's gain or loss upon disposition of the note.
An election to amortize bond premium will apply to all taxable debt
obligations then held or subsequently acquired by the electing United States
Holder on or after the first day of the first taxable year to which the election
applies and may not be revoked without the consent of the IRS. A United States
Holder should consult with its tax advisor with respect to the general
applicability of the amortizable bond premium rules and whether it should make
an election under these rules.
Market Discount. If a United States Holder purchases a note for an amount
that is less than its stated redemption price at maturity (i.e., the sum of all
payments on the note other than stated interest payments), the amount of the
difference will be treated as "market discount" for federal income tax purposes,
unless such difference is less than a de minimis amount as specified by the
Internal Revenue Code. Under the market discount rules, a United States Holder
will be required to treat any principal payment on, or any gain on the sale,
exchange, retirement or other disposition of a note as ordinary income to the
extent of the market discount which has not previously been included in income
and is treated as having accrued on such note at the time of such payment or
disposition. In addition, the United States Holder may be required to defer,
until maturity of the note or its earlier disposition in a taxable transaction,
the deduction of all or a portion of the interest expense on any indebtedness
incurred or maintained to purchase or carry such note.
The notes provide for optional redemption, in whole or in part, prior to
maturity. If the notes are redeemed, a United States Holder generally will be
required to include in gross income as ordinary income the portion of the gain
recognized on the redemption attributable to accrued market discount, if any.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the notes, unless the
United States Holder elects to accrue market discount on a constant interest
method. A United States Holder of a note may elect to include market discount in
income currently as it accrues (under either a ratable or constant interest
method). This election to include currently, once made, applies to all market
discount obligations acquired in or after the first taxable year to which the
election applies and may not be revoked without the consent of the IRS. If a
United States Holder of notes makes such an election, the foregoing rules with
respect to the recognition of ordinary income on sales and other dispositions of
instruments, and with respect to the deferral of interest deductions incurred or
maintained to purchase or carry such notes, would not apply.
Disposition of Notes. Upon the sale, exchange, retirement, redemption or
other disposition of a note, a United States Holder will recognize taxable gain
or loss equal to the difference between (1) the amount of cash and the fair
market value of property received in exchange therefor (except to the extent
such amount is attributable to accrued but unpaid interest, which amount will
generally be taxable as ordinary income) and (2) the United States Holder's
adjusted tax basis in the note. A United States Holder's adjusted tax basis in a
note will generally equal the United States Holder's purchase price for such
note, increased by any market discount previously included in income by the
United States Holder and decreased by any principal payments received by the
United States Holder, and any amortizable bond premium deducted over the term of
the note. Any gain or loss recognized on the sale, exchange, retirement or other
disposition of a note will generally be capital gain or loss (except to the
extent of any accrued market discount). Capital gains of individuals derived in
respect of capital assets held for more than one year are eligible for reduced
rates of taxation which may vary depending upon the holding period of such
capital assets. The deduction of capital losses is subject to certain
limitations. A United States
34
Holder should consult such United States Holder's tax advisor regarding the
treatment of capital gains or losses.
Backup Withholding. Certain non-corporate United States Holders of notes
may be subject to backup withholding at the rate of 30% with respect to interest
payments on the notes and cash payments received in certain circumstances upon
the disposition of such notes. Generally, backup withholding is applied only
when the taxpayer
- fails to furnish or certify its correct taxpayer identification number to
the payor in the manner required,
- is notified by the IRS that it has failed to report payments of interest
and dividends properly, or
- under certain circumstances, fails to certify that it has not been
notified by the IRS that it is subject to backup withholding for failure
to report interest and dividend payments.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or credit against a United States Holder's United States federal income
tax liability, provided that such United States Holder furnished the required
information to the IRS.
Further, failure to provide the information required on a Substitute Form
W-9 may subject the tendering United States Holder, or other payee, to a penalty
of $50 imposed by the IRS as well as backup withholding at the 30% rate.
UNITED STATES FEDERAL INCOME TAXATION OF NON-UNITED STATES HOLDERS
This section discusses certain special rules applicable to a holder of
notes that is a Non-United States Holder. For purposes of this discussion, a
"Non-United States Holder" means a holder of notes that is not a United States
Holder.
Receipt of Stated Interest by Non-United States Holder. Subject to the
discussion below under "-- Information Reporting Backup Withholding," with
respect to any Non-United States Holder of the notes, no United States federal
withholding tax under Sections 1441 and 1442 of the Internal Revenue Code will
be imposed with respect to any payment of principal, premium, if any, or
interest on a note owned by a Non-United States Holder (the "Portfolio Interest
Exception") provided that
- the Non-United States Holder or the Financial Institution holding the
note on behalf of the Non-United States holder provides a statement,
which may be provided on IRS Form W-8BEN, IRS Form W-8EXP or IRS Form
W-8IMY, as applicable (an "Owner's Statement") to us, or to the person
who would otherwise be required to withhold tax, certifying under
penalties of perjury, that such Non-United States Holder is not a United
States person and providing the name and address of the Non-United States
Holder,
- such interest is treated as not effectively connected with the Non-United
States Holder's United States trade or business,
- such interest payments are not made to a Non-United States Holder within
a foreign country that the IRS has listed on a list of countries as
having provisions deemed inadequate to prevent United States tax evasion,
- interest payable with respect to the notes is not contingent interest
within the meaning of Section 871(h)(4) of the Internal Revenue Code,
- such Non-United States Holder does not actually or constructively own ten
percent or more of the total combined voting power of all classes of our
stock entitled to vote,
- such Non-United States Holder is not a controlled foreign corporation
with the meaning of Section 957 of the Internal Revenue Code that is
related to us, within the meaning of Section 864(d)(4) of the Internal
Revenue Code, and
35
- such Non-United States Holder is not a bank whose receipt of interest on
a note is described in Section 881(c)(3)(A) of the Internal Revenue Code.
As used herein, the term "Financial Institution" means a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business.
A Non-United States Holder who does not qualify for the Portfolio Interest
Exception would, under current law, generally be subject to United States
federal withholding tax at a flat rate of thirty percent (30%) (or lower
applicable treaty rate) on interest payments. However, a Non-United States
Holder will not be subject to the thirty percent (30%) withholding tax if such
Non-United States Holder provides us with a properly executed IRS Form W-8BEN
(or other applicable form) claiming an exemption from or reduction in
withholding under the provisions of a tax treaty, or a properly executed IRS
Form W-8ECI (or substitute form) stating that the interest paid on the notes is
not subject to withholding tax because it is effectively connected with the
beneficial owner's conduct of a trade or business in the United States.
If a Non-United States Holder is engaged in a trade or business in the
United States and if the interest on a note is effectively connected with the
conduct of such trade or business, the Non-United States Holder, although exempt
from United States federal withholding tax as discussed above, will be subject
to United States federal income tax on such interest on a net income basis in
the same manner as if the holder were a United States Holder. In addition, if
such Non-United States Holder is a foreign corporation, it may be subject to a
branch profits tax equal to thirty percent (30%), or applicable lower tax treaty
rate, of its effectively connected earnings and profits for the taxable year,
subject to adjustments. For this purpose, interest on a note will be included in
such foreign corporation's effectively connected earnings and profits.
Gain on Disposition of Notes. In general, a Non-United States Holder will
not be subject to United States federal income tax on any amount received (other
than amounts in respect of accrued but unpaid interest) upon retirement or
disposition of a note unless such Non-United States Holder is an individual
present in the United States for 183 days or more in the taxable year of the
retirement or disposition and certain other requirements are met, or unless the
gain is effectively connected with the conduct of a United States trade or
business. In the latter event, Non-United States Holders generally will be
subject to United States federal income tax with respect to such gain at regular
rates applicable to United States taxpayers. Additionally, in such event,
Non-United States Holders that are corporations could be subject to a branch
profits tax on such gain.
Information Reporting and Backup Withholding. Under certain circumstances,
the Internal Revenue Code requires "information reporting" annually to the IRS
and to each holder of notes, and "backup withholding" at a rate of 30% with
respect to certain payments made on or with respect to the notes. Backup
withholding generally does not apply with respect to certain holders of notes,
including corporations.
A Non-United States Holder that provides an IRS Forms W-8ECI, W-8BEN,
W-8EXP or W-8IMY, together will all appropriate attachments, signed under
penalties of perjury, identifying the Non-United States Holder and stating that
the Non-United States Holder is not a United States person for United States
federal income tax purposes, will not be subject to IRS reporting requirements
and United States backup withholding. IRS Forms W-8BEN will generally be
required from the beneficial owners of interests in a Non-United States Holder
that is treated as a partnership for United States federal income tax purposes.
The payment of proceeds on the disposition of a note to or through the
United States office of a broker generally will be subject to information
reporting and backup withholding at a rate of 30% unless the Non-United States
Holder either certifies its status as a Non-United States Holder under penalties
of perjury on IRS Form W-8BEN (as described above) or otherwise establishes an
exception. The payment of the proceeds on the disposition of a note by a
Non-United States Holder to or through a non-United States office of a
non-United States broker will not be subject to backup withholding or
information reporting unless the non-United States broker is a "United States
related person" (as defined below). The
36
payment of proceeds on the disposition of a note by a Non-United States Holder
to or through a non-United States office of a United States broker or a United
States related person generally will not be subject to backup withholding but
will be subject to information reporting unless the Non-United States Holder
certifies its status as a Non-United States Holder under penalties of perjury or
the broker has certain documentary evidence in its files as to the Non-United
States Holder's foreign status and the broker has no actual knowledge to the
contrary.
For this purpose, a "United States related person" is
- a "controlled foreign corporation" as specifically defined for United
States federal income tax purposes,
- a foreign person 50% or more of whose gross income from all sources for
the three-year period ending with the close of its taxable year preceding
the payment (or for such part of the period that the broker has been in
existence) is derived from activities that are effectively connected with
the conduct of a United States trade or business, or
- a foreign partnership if at any time during its tax year one or more of
its partners are United States persons who, in the aggregate, hold more
than 50% of the income or capital interest of the partnership or if, at
any time during its taxable year, the partnership is engaged in the
conduct of a United States trade or business.
Backup withholding is not an additional tax and may be refunded (or
credited against the Non-United States Holder's United States federal income tax
liability, if any), provided that certain required information is furnished. The
information reporting requirements may apply regardless of whether withholding
is required. Copies of the information returns reporting such interest and
withholding also may be made available to the tax authorities in the country in
which a Non-United States Holder is a resident under the provisions of an
applicable income tax treaty or agreement.
VALIDITY OF THE EXCHANGE NOTES
The validity of the exchange notes being offered hereby will be passed upon
for us by Bracewell & Patterson, L.L.P., Houston, Texas.
EXPERTS
The financial statements of Kinder Morgan, Inc. incorporated in this
prospectus by reference to our Annual Report on Form 10-K for the year ended
December 31, 2001 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
37
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC.
The SEC allows us to "incorporate by reference" the information we filed
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference into
this prospectus is an important part of this prospectus, and information that we
file later with the SEC will automatically update and supersede this information
as well as the information included in this prospectus. We incorporate by
reference in this prospectus the following documents:
- Annual Report on Form 10-K for the fiscal year ended December 31, 2001;
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002 and
June 30, 2002; and
- Current Reports on Form 8-K dated June 19, 2002, July 23, 2002 and August
27, 2002.
We also incorporate by reference any filings made with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as
amended, between the date of this prospectus and the completion of the exchange
offer.
Should you want more information regarding Kinder Morgan Energy Partners,
L.P. or Kinder Morgan Management, LLC, please refer to the annual, quarterly and
special reports and proxy statements, as applicable, filed with the SEC
regarding those entities.
You may read and copy any document we file with the SEC at the SEC's public
reference room located at:
- 450 Fifth Street, N.W.
Washington, D.C. 20549
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference room and its copy charges. Our SEC filings are also available to the
public on the SEC's Web site at http://www.sec.gov and through the New York
Stock Exchange, 20 Broad Street, New York, New York 10005, on which our common
stock is listed.
We will provide a copy of any document incorporated by reference into this
prospectus and any exhibit specifically incorporated by reference in these
documents without charge, by request directed to us at the following address and
telephone number:
Kinder Morgan, Inc.
Investor Relations Department
One Allen Center, Suite 1000
500 Dallas Street
Houston, Texas 77002
(713) 369-9000
38
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated in this prospectus by
reference include forward-looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act. These forward-looking
statements are identified as any statement that does not relate strictly to
historical or current facts. They use words such as "anticipate," "believe,"
"intend," "plan," "projection," "forecast," "strategy," "position," "continue,"
"estimate," "expect," "may," "will," or the negative of those terms or other
variations of them or by comparable terminology. In particular, statements,
express or implied, concerning future actions, conditions or events, future
operating results or the ability to generate sales, income or cash flow or to
pay dividends are forward-looking statements. Forward-looking statements are not
guarantees of performance. They involve risks, uncertainties and assumptions.
Future actions, conditions or events and future results of operations may differ
materially from those expressed in these forward-looking statements. Many of the
factors that will determine these results are beyond our ability to control or
predict. Specific factors which could cause actual results to differ from those
in the forward-looking statements include:
- price trends and overall demand for natural gas liquids, refined
petroleum products, oil, carbon dioxide, natural gas, coal and other bulk
materials in the United States; economic activity, weather, alternative
energy sources, conservation and technological advances may affect price
trends and demand;
- changes in our tariff rates or those of Kinder Morgan Energy Partners
implemented by the Federal Energy Regulatory Commission or another
regulatory agency or, with respect to Kinder Morgan Energy Partners, the
California Public Utilities Commission;
- Kinder Morgan Energy Partners' ability to integrate any acquired
operations into its existing operations;
- Kinder Morgan Energy Partners' ability and our ability to acquire new
businesses and assets and to make expansions to our respective
facilities;
- difficulties or delays experienced by railroads, barges, trucks, ships or
pipelines in delivering products to Kinder Morgan Energy Partners' bulk
terminals;
- Kinder Morgan Energy Partners' ability and our ability to successfully
identify and close acquisitions and make cost-saving changes in
operations;
- shut-downs or cutbacks at major refineries, petrochemical or chemical
plants, utilities, military bases or other businesses that use or supply
our services;
- changes in laws or regulations, third party relations and approvals,
decisions of courts, regulators and governmental bodies may adversely
affect our business or our ability to compete;
- our ability to offer and sell equity securities and debt securities or
obtain debt financing in sufficient amounts to implement that portion of
our business plan that contemplates growth through acquisitions of
operating businesses and assets and expansions of our facilities;
- our indebtedness could make us vulnerable to general adverse economic and
industry conditions, limit our ability to borrow additional funds, place
us at competitive disadvantages compared to our competitors that have
less debt or have other adverse consequences;
- interruptions of electric power supply to facilities due to natural
disasters, power shortages, strikes, riots, terrorism, war or other
causes;
- acts of sabotage, terrorism or other similar acts causing damage greater
than our insurance coverage limits;
- the condition of the capital markets and equity markets in the United
States;
- the political and economic stability of the oil producing nations of the
world;
39
- national, international, regional and local economic, competitive and
regulatory conditions and developments;
- the ability to achieve cost savings and revenue growth;
- rates of inflation;
- interest rates;
- the pace of deregulation of retail natural gas and electricity;
- the timing and extent of changes in commodity prices for oil, natural
gas, electricity and certain agricultural products; and
- the timing and success of business development efforts.
You should not put undue reliance on any forward-looking statements.
When considering forward-looking statements, please review the risk factors
described under "Risk Factors" in this prospectus.
40
ANNEX A
KINDER MORGAN, INC.
LETTER OF TRANSMITTAL
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
6.50% SENIOR NOTES DUE 2012
OF
KINDER MORGAN, INC.
PURSUANT TO THE PROSPECTUS DATED OCTOBER 18, 2002
THIS OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON NOVEMBER 18, 2002
UNLESS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION (THE "EXPIRATION DATE").
TENDERS OF NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
WACHOVIA BANK, NATIONAL ASSOCIATION
By Mail: By Facsimile: By Hand:
Wachovia Bank, National Association (704) 590-7628 Wachovia Bank, National Association
Customer Information Center Customer Information Center
Corporate Trust Operations -- NC1153 Confirm by Telephone: Corporate Trust Operations -- NC1153
1525 West W.T. Harris Boulevard -- 3C3 (704) 590-7413 1525 West W.T. Harris Boulevard -- 3C3
Charlotte, NC 28288 Charlotte, NC 28262-1153
Attention: Marsha Rice Attention: Marsha Rice
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN
AS LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE NOTES PURSUANT TO THE
EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR ORIGINAL NOTES TO
THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
This Letter of Transmittal is to be used by holders ("Holders") of 6.50%
Senior Notes due 2012 (the "Original Notes") of Kinder Morgan Inc. (the
"Company") to receive 6.50% Exchange Notes (the "Exchange Notes") if: (i)
certificates representing Original Notes are to be physically delivered to the
Exchange Agent herewith by such Holders; (ii) tender of Original Notes is to be
made by book-entry transfer to the Exchange Agent's account at The Depository
Trust Company ("DTC") pursuant to the procedures set forth under the caption
"The Exchange Offer -- Procedures for Tendering Original Notes -- Book-Entry
Delivery Procedures" in the Prospectus dated October 18, 2002 (the
"Prospectus"); or (iii) tender of Original Notes is to be made according to the
guaranteed delivery procedures set forth under the caption "The Exchange
Offer -- Procedures for Tendering Original Notes -- Guaranteed Delivery" in the
Prospectus, and, in each case, instructions are not being transmitted through
the DTC Automated Tender Offer Program ("ATOP"). The undersigned hereby
acknowledges receipt of the Prospectus. All capitalized terms used herein and
not defined shall have the meanings ascribed to them in the Prospectus.
Holders of Original Notes that are tendering by book-entry transfer to the
Exchange Agent's account at DTC can execute the tender through ATOP, for which
the transaction will be eligible. DTC participants that are accepting the
exchange offer as set forth in the Prospectus and this Letter of Transmittal
(together, the "Exchange Offer") must transmit their acceptance to DTC which
will edit and verify the acceptance and execute a book-entry delivery to the
Exchange Agent's account at DTC. DTC will then send an Agent's Message to the
Exchange Agent for its acceptance. Delivery of the Agent's Message by DTC will
satisfy the terms of the Offer as to execution and delivery
A-1
of a Letter of Transmittal by the participant identified in the Agent's Message.
DTC participants may also accept the Exchange Offer by submitting a notice of
guaranteed delivery through ATOP.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
If a Holder desires to tender Original Notes pursuant to the Exchange Offer
and time will not permit this Letter of Transmittal, certificates representing
such Original Notes and all other required documents to reach the Exchange
Agent, or the procedures for book-entry transfer cannot be completed, on or
prior to the Expiration Date, then such Holder must tender such Original Notes
according to the guaranteed delivery procedures set forth under the caption "The
Exchange Offer -- Procedures for Tendering Original Notes -- Guaranteed
Delivery" in the Prospectus. See Instruction 2.
The undersigned should complete, execute and deliver this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
TENDER OF ORIGINAL NOTES
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
--------------------------------------------
Account Number:
-----------------------------------------------------------
Transaction Code Number:
--------------------------------------------------
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
------------------------------------------
Window Ticker Number (if any):
--------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------
Name of Eligible Institution that Guaranteed Delivery:
--------------------
A-2
List below the Original Notes to which this Letter of Transmittal relates.
The name(s) and address(es) of the registered Holder(s) should be printed, if
not already printed below, exactly as they appear on the Original Notes tendered
herewith. The Original Notes and the principal amount of Original Notes that the
undersigned wishes to tender should be indicated in the appropriate boxes. If
the space provided is inadequate, list the certificate number(s) and principal
amount(s) on a separately executed schedule and affix the schedule to this
Letter of Transmittal.
-----------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF ORIGINAL NOTES
-----------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES)
OF REGISTERED HOLDER(S) AGGREGATE PRINCIPAL
(PLEASE FILL IN IF BLANK) SEE CERTIFICATE AMOUNT PRINCIPAL AMOUNT
INSTRUCTION 3. NUMBER(S)* REPRESENTED** TENDERED**
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
TOTAL PRINCIPAL
AMOUNT OF ORIGINAL NOTES
-----------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer.
** Unless otherwise specified, the entire aggregate principal amount represented by the Original Notes described above will
be deemed to be tendered. See Instruction 4.
-----------------------------------------------------------------------------------------------------------------------------
A-3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Kinder Morgan, Inc. (the "Company"), upon
the terms and subject to the conditions set forth in its Prospectus dated
October 18, 2002 (the "Prospectus"), receipt of which is hereby acknowledged,
and in accordance with this Letter of Transmittal (which together constitute the
"Exchange Offer"), the principal amount of Original Notes indicated in the
foregoing table entitled "Description of Original Notes" under the column
heading "Principal Amount Tendered." The undersigned represents that it is duly
authorized to tender all of the Original Notes tendered hereby which it holds
for the account of beneficial owners of such Original Notes ("Beneficial
Owner(s)") and to make the representations and statements set forth herein on
behalf of such Beneficial Owner(s).
Subject to, and effective upon, the acceptance for purchase of the
principal amount of Original Notes tendered herewith in accordance with the
terms and subject to the conditions of the Exchange Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Company, all
right, title and interest in and to all of the Original Notes tendered hereby.
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 the Exchange Agent also acts as the agent of the Company) with
respect to such Original Notes, with full powers of substitution and revocation
(such power of attorney being deemed to be an irrevocable power coupled with an
interest) to (i) present such Original Notes and all evidences of transfer and
authenticity to, or transfer ownership of, such Original Notes on the account
books maintained by DTC to, or upon the order of, the Company, (ii) present such
Original Notes for transfer of ownership on the books of the Company, and (iii)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Original Notes, all in accordance with the terms and conditions of the
Exchange Offer as described in the Prospectus.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that:
(1) the Exchange Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being
acquired by the undersigned and any Beneficial Owner(s) in the ordinary
course of business of the undersigned and any Beneficial Owner(s),
(2) the undersigned and each Beneficial Owner are not participating,
do not intend to participate, and have no arrangement or understanding with
any person to participate, in the distribution of the Exchange Notes,
(3) except as indicated below, neither the undersigned nor any
Beneficial Owner is an "affiliate," as defined in Rule 405 under the
Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act"), of the Company, and
(4) the undersigned and each Beneficial Owner acknowledge and agree
that (x) any person participating in the Exchange Offer with the intention
or for the purpose of distributing the Exchange Notes must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale of the Exchange Notes acquired by such
person with a registration statement containing the selling securityholder
information required by Item 507 of Regulation S-K of the Securities and
Exchange Commission (the "SEC") and cannot rely on the interpretation of
the Staff of the SEC set forth in the no-action letters that are noted in
the section of the Prospectus entitled "The Exchange Offer -- Registration
Rights" and (y) any broker-dealer that pursuant to the Exchange Offer
receives Exchange Notes for its own account in exchange for Original Notes
which it acquired for its own account as a result of market-making
activities or other trading activities must deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of
such Exchange Notes.
If the undersigned is a broker-dealer that will receive Exchange Notes for
its own account in exchange for Original Notes that were acquired as the result
of market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
By so acknowledging and by
A-4
delivering a prospectus, a broker-dealer shall not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
The undersigned understands that tenders of Original Notes may be withdrawn
by written notice of withdrawal received by the Exchange Agent at any time prior
to the Expiration Date in accordance with the Prospectus. In the event of a
termination of the Exchange Offer, the Original Notes tendered pursuant to the
Exchange Offer will be returned to the tendering Holders promptly (or, in the
case of Original Notes tendered by book-entry transfer, such Original Notes will
be credited to the account maintained at DTC from which such Original Notes were
delivered). If the Company makes a material change in the terms of the Exchange
Offer or the information concerning the Exchange Offer or waives a material
condition of such Exchange Offer, the Company will disseminate additional
Exchange Offer materials and extend such Exchange Offer, if and to the extent
required by law.
The undersigned understands that the tender of Original Notes pursuant to
any of the procedures set forth in the Prospectus and in the instructions hereto
will constitute the undersigned's acceptance of the terms and conditions of the
Exchange Offer. The Company's acceptance for exchange of Original Notes tendered
pursuant to any of the procedures described in the Prospectus will constitute a
binding agreement between the undersigned and the Company in accordance with the
terms and subject to the conditions of the Exchange Offer. For purposes of the
Exchange Offer, the undersigned understands that validly tendered Original Notes
(or defectively tendered Original Notes with respect to which the Company has,
or has caused to be, waived such defect) will be deemed to have been accepted by
the Company if, as and when the Company gives oral or written notice thereof to
the Exchange Agent.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Original Notes
tendered hereby, and that when such tendered Original Notes are accepted for
purchase by the Company, the Company will acquire good title thereto, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim or right. The undersigned and each Beneficial Owner will, upon
request, execute and deliver any additional documents deemed by the Exchange
Agent or by the Company to be necessary or desirable to complete the sale,
assignment and transfer of the Original Notes tendered hereby.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall not be affected by, and shall survive the death or incapacity
of the undersigned and any Beneficial Owner(s), and any obligation of the
undersigned or any Beneficial Owner(s) hereunder shall be binding upon the
heirs, executors, administrators, trustees in bankruptcy, personal and legal
representatives, successors and assigns of the undersigned and such Beneficial
Owner(s).
The undersigned understands that the delivery and surrender of any Original
Notes is not effective, and the risk of loss of the Original Notes does not pass
to the Exchange Agent or the Company, until receipt by the Exchange Agent of
this Letter of Transmittal, or a manually signed facsimile hereof, properly
completed and duly executed, together with all accompanying evidences of
authority and any other required documents in form satisfactory to the Company.
All questions as to form of all documents and the validity (including time of
receipt) and acceptance of tenders and withdrawals of Original Notes will be
determined by the Company, in its sole discretion, which determination shall be
final and binding.
Unless otherwise indicated herein under "Special Issuance Instructions,"
the undersigned hereby requests that any Original Notes representing principal
amounts not tendered or not accepted for exchange be issued in the name(s) of
the undersigned (and in the case of Original Notes tendered by book-entry
transfer, by credit to the account of DTC), and Exchange Notes issued in
exchange for Original Notes pursuant to the Exchange Offer be issued to the
undersigned. Similarly, unless otherwise indicated herein under "Special
Delivery Instructions," the undersigned hereby requests that any Original Notes
representing principal amounts not tendered or not accepted for exchange and
Exchange Notes issued in exchange for Original Notes pursuant to the Exchange
Offer be delivered to the undersigned at the address shown below the
undersigned's signature(s). In the event that the "Special Issuance
Instructions" box or the "Special Delivery Instructions" box is, or both are,
completed, the undersigned hereby requests that any Original Notes representing
principal amounts not tendered or not accepted for purchase be issued in the
name(s) of, certificates for such Original Notes be delivered to, and Exchange
Notes issued in exchange for Original Notes pursuant to the Exchange Offer be
issued in the name(s) of, and be delivered to, the person(s) at the address(es)
so indicated, as applicable. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance Instructions" box or "Special
Delivery Instructions" box to transfer any Original Notes from
A-5
the name of the registered Holder(s) thereof if the Company does not accept for
exchange any of the principal amount of such Original Notes so tendered.
[ ] CHECK HERE IF YOU OR ANY BENEFICIAL OWNER FOR WHOM YOU HOLD ORIGINAL NOTES
IS AN AFFILIATE OF THE COMPANY.
[ ] CHECK HERE IF YOU OR ANY BENEFICIAL OWNER FOR WHOM YOU HOLD ORIGINAL NOTES
TENDERED HEREBY IS A BROKER-DEALER WHO ACQUIRED SUCH NOTES DIRECTLY FROM THE
COMPANY OR AN AFFILIATE OF THE COMPANY.
[ ] CHECK HERE AND COMPLETE THE LINES BELOW IF YOU OR ANY BENEFICIAL OWNER FOR
WHOM YOU HOLD ORIGINAL NOTES TENDERED HEREBY IS A BROKER-DEALER WHO ACQUIRED
SUCH NOTES IN MARKET-MAKING OR OTHER TRADING ACTIVITIES. IF THIS BOX IS
CHECKED, THE COMPANY WILL SEND 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10
COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO TO YOU OR SUCH BENEFICIAL
OWNER AT THE ADDRESS SPECIFIED IN THE FOLLOWING LINES.
Name:
--------------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
A-6
================================================================================
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Original Notes in a principal amount not
tendered or not accepted for exchange are to be issued in the name of, or
Exchange Notes are to be issued in the name of, someone other than the
person(s) whose signature(s) appear(s) within this Letter of Transmittal
or issued to an address different from that shown in the box entitled
"Description of Original Notes" within this Letter of Transmittal.
Issue: [ ] Original Notes
[ ] Exchange Notes
(check as applicable)
Name
-----------------------------------------------------------------------------
(PLEASE PRINT)
Address
-----------------------------------------------------------------------------
(PLEASE PRINT)
-----------------------------------------------------------------------------
(ZIP CODE)
-----------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 HEREIN)
================================================================================
================================================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Original Notes in a principal amount not
tendered or not accepted for exchange or Exchange Notes are to be sent to
someone other than the person(s) whose signature(s) appear(s) within this
Letter of Transmittal or to an address different from that shown in the
box entitled "Description of Original Notes" within this Letter of
Transmittal.
Issue: [ ] Original Notes
[ ] Exchange Notes
(check as applicable)
Name
-----------------------------------------------------------------------------
(PLEASE PRINT)
Address
-----------------------------------------------------------------------------
(PLEASE PRINT)
-----------------------------------------------------------------------------
(ZIP CODE)
-----------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 HEREIN)
================================================================================
A-7
================================================================================
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF ORIGINAL NOTES
REGARDLESS OF WHETHER ORIGINAL NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the registered Holder(s) exactly as
name(s) appear(s) on certificate(s) for Original Notes or, if tendered by a
participant in DTC, exactly as such participant's name appears on a security
position listing as owner of Original Notes, or by the person(s) authorized to
become registered Holder(s) by endorsements and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, please set forth full title and see Instruction 5.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Signature(s) of Registered Holder(s) or Authorized Signatory
(See guarantee requirement below)
Dated:
--------------------------------------------------------------------------------
Name(s):
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please Print)
Capacity (Full Title):
--------------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone Number:
--------------------------------------------------------------------------------
Tax Identification or Social Security Number:
--------------------------------------------------------------------------------
(Complete Accompanying Substitute Form W-9)
SIGNATURE GUARANTEE
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
--------------------------------------------------------------------------------
Name of Firm
--------------------------------------------------------------------------------
[PLACE SEAL HERE]
================================================================================
A-8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Signature Guarantees. Signatures of this Letter of Transmittal must be
guaranteed by a recognized member of the Medallion Signature Guarantee Program
or by any other "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 promulgated under the Exchange Act (each of the foregoing, an
"Eligible Institution"), unless the Original Notes tendered hereby are tendered
(i) by a registered Holder of Original Notes (or by a participant in DTC whose
name appears on a security position listing as the owner of such Original Notes)
that has not completed either the box entitled "Special Issuance Instructions"
or the box entitled "Special Delivery Instructions" on this Letter of
Transmittal, or (ii) for the account of an Eligible Institution. If the Original
Notes are registered in the name of a person other than the signer of this
Letter of Transmittal, if Original Notes not accepted for exchange or not
tendered are to be returned to a person other than the registered Holder or if
Exchange Notes are to be issued in the name of or sent to a person other than
the registered Holder, then the signatures on this Letter of Transmittal
accompanying the tendered Original Notes must be guaranteed by an Eligible
Institution as described above. See Instruction 5.
2. Delivery of Letter of Transmittal and Original Notes. This Letter of
Transmittal is to be completed by Holders if (i) certificates representing
Original Notes are to be physically delivered to the Exchange Agent herewith by
such Holders; (ii) tender of Original Notes is to be made by book-entry transfer
to the Exchange Agent's account at DTC pursuant to the procedures set forth
under the caption "The Exchange Offer -- Procedures for Tendering Original
Notes -- Book-Entry Delivery Procedures" in the Prospectus; or (iii) tender of
Original Notes is to be made according to the guaranteed delivery procedures set
forth under the caption "The Exchange Offer -- Procedures for Tendering Original
Notes -- Guaranteed Delivery" in the Prospectus. All physically delivered
Original Notes, or a confirmation of a book-entry transfer into the Exchange
Agent's account at DTC of all Original Notes delivered electronically, as well
as a properly completed and duly executed Letter of Transmittal (or manually
signed facsimile thereof), any required signature guarantees and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at one of its addresses set forth on the cover page hereto on or
prior to the Expiration Date, or the tendering Holder must comply with the
guaranteed delivery procedures set forth below. DELIVERY OF DOCUMENTS TO DTC
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
If a Holder desires to tender Original Notes pursuant to the Exchange Offer
and time will not permit this Letter of Transmittal, certificates representing
such Original Notes and all other required documents to reach the Exchange
Agent, or the procedures for book-entry transfer cannot be completed, on or
prior to the Expiration Date, such Holder must tender such Original Notes
pursuant to the guaranteed delivery procedures set forth under the caption "The
Exchange Offer -- Procedures for Tendering Original Notes -- Guaranteed
Delivery" in the Prospectus. Pursuant to such procedures, (i) such tender must
be made by or through an Eligible Institution; (ii) a properly completed and
duly executed Notice of Guaranteed Delivery, substantially in the form provided
by the Company, or an Agent's Message with respect to guaranteed delivery that
is accepted by the Company, must be received by the Exchange Agent, either by
hand delivery, mail, telegram, or facsimile transmission, on or prior to the
Expiration Date; and (iii) the certificates for all tendered Original Notes, in
proper form for transfer (or confirmation of a book-entry transfer or all
Original Notes delivered electronically into the Exchange Agent's account at DTC
pursuant to the procedures for such transfer set forth in the Prospectus),
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) and any other documents required by this
Letter of Transmittal, or in the case of a book-entry transfer, a properly
transmitted Agent's Message, must be received by the Exchange Agent within two
business days after the date of the execution of the Notice of Guaranteed
Delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE ORIGINAL NOTES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC AND ANY
ACCEPTANCE OR AGENT'S MESSAGE DELIVERED THROUGH ATOP, IS AT THE ELECTION AND
RISK OF THE TENDERING HOLDER AND, EXCEPT AS OTHERWISE PROVIDED IN THIS
A-9
INSTRUCTION 2, DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE
PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE
MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT
DELIVERY TO THE EXCHANGE AGENT PRIOR TO SUCH DATE.
No alternative, conditional or contingent tenders will be accepted. All
tendering Holders, by execution of this Letter of Transmittal (or a facsimile
thereof), waive any right to receive any notice of the acceptance of their
Original Notes for exchange.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the principal amount represented by Original Notes
should be listed on separate signed schedule attached hereto.
4. Partial Tenders. (Not applicable to Holders who tender by book-entry
transfer). If Holders wish to tender less than the entire principal amount
evidenced by an Original Note submitted, such Holders must fill in the principal
amount that is to be tendered in the column entitled "Principal Amount
Tendered." The minimum permitted tender is $1,000 in principal amount of
Original Notes. All other tenders must be in integral multiples of $1,000 in
principal amount. In the case of a partial tender of Original Notes, as soon as
practicable after the Expiration Date, new certificates for the remainder of the
Original Notes that were evidenced by such Holder's old certificates will be
sent to such Holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal. The entire principal amount that is represented by
Original Notes delivered to the Exchange Agent will be deemed to have been
tendered, unless otherwise indicated.
5. Signatures on Letter of Transmittal, Instruments of Transfer and
Endorsements. If this Letter of Transmittal is signed by the registered
Holder(s) of the Original Notes tendered hereby, the signatures must correspond
with the name(s) as written on the face of the certificate(s) without
alteration, enlargement or any change whatsoever. If this Letter of Transmittal
is signed by a participant in DTC whose name is shown as the owner of the
Original Notes tendered hereby, the signature must correspond with the name
shown on the security position listing as the owner of the Original Notes.
If any of the Original Notes tendered hereby are registered in the name of
two or more Holders, all such Holders must sign this Letter of Transmittal. If
any of the Original Notes tendered hereby are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Original Note or instrument of
transfer is signed by a trustee, executor, administrator, guardian,
attorney-in-fact, agent, officer of a corporation or other person acting in a
fiduciary or representative capacity, such person should so indicate when
signing, and proper evidence satisfactory to the Company of such person's
authority to so act must be submitted.
When this Letter of Transmittal is signed by the registered Holder(s) of
the Original Notes listed herein and transmitted hereby, no endorsements of
Original Notes or separate instruments of transfer are required unless Exchange
Notes are to be issued, or Original Notes not tendered or exchanged are to be
issued, to a person other than the registered Holder(s), in which case
signatures on such Original Notes or instruments of transfer must be guaranteed
by an Eligible Institution.
IF THIS LETTER OF TRANSMITTAL IS SIGNED OTHER THAN BY THE REGISTERED
HOLDER(S) OF THE ORIGINAL NOTES LISTED HEREIN, THE ORIGINAL NOTES MUST BE
ENDORSED OR ACCOMPANIED BY APPROPRIATE INSTRUMENTS OF TRANSFER, IN EITHER CASE
SIGNED EXACTLY AS THE NAME(S) OF THE REGISTERED HOLDER(S) APPEAR ON THE ORIGINAL
NOTES AND SIGNATURES ON SUCH ORIGINAL NOTES OR INSTRUMENTS OF TRANSFER ARE
REQUIRED AND MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION, UNLESS THE SIGNATURE
IS THAT OF AN ELIGIBLE INSTITUTION.
6. Special Issuance and Delivery Instructions. If certificates for Exchange
Notes or unexchanged or untendered Original Notes are to be issued in the name
of a person other than the signer of this Letter of Transmittal, or if Exchange
Notes or such Original Notes are to be sent to someone other than the signer of
this Letter of Transmittal or to an address other than that shown herein, the
appropriate boxes on this
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Letter of Transmittal should be completed. All Original Notes tendered by
book-entry transfer and not accepted for payment will be returned by crediting
the account at DTC designated herein as the account for which such Original
Notes were delivered.
7. Transfer Taxes. Except as set forth in this Instruction 7, the Company
will pay or cause to be paid any transfer taxes with respect to the transfer and
sale of Original Notes to it, or to its order, pursuant to the Exchange Offer.
If Exchange Notes, or Original Notes not tendered or exchanged are to be
registered in the name of any persons other than the registered owners, or if
tendered Original Notes are registered in the name of any persons other than the
persons signing this Letter of Transmittal, the amount of any transfer taxes
(whether imposed on the registered Holder or such other person) payable on
account of the transfer to such other person must be paid to the Company or the
Exchange Agent (unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted) before the Exchange Notes will be issued.
8. Waiver of Conditions. The conditions of the Exchange Offer may be
amended or waived by the Company, in whole or in part, at any time and from time
to time in the Company's sole discretion, in the case of any Original Notes
tendered.
9. Substitute Form W-9. Each tendering owner of a Note (or other payee) is
required to provide the Exchange Agent with a correct taxpayer identification
number ("TIN"), generally the owner's social security or federal employer
identification number, and with certain other information, on Substitute Form
W-9, which is provided hereafter under "Important Tax Information," and to
certify that the owner (or other payee) is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
tendering owner (or other payee) to a $50 penalty imposed by the Internal
Revenue Service and 30% federal income tax withholding. The box in Part 3 of the
Substitute Form W-9 may be checked if the tendering owner (or other payee) has
not been issued a TIN and has applied for a TIN or intends to apply for a TIN in
the near future. If the box in Part 3 is checked and the Exchange Agent is not
provided with a TIN within 60 days of the date on the Substitute Form W-9, the
Exchange Agent will withhold 30% until a TIN is provided to the Exchange Agent.
10. Broker-dealers Participating in the Exchange Offer. If no broker-dealer
checks the last box on page 7 of this Letter of Transmittal, the Company has no
obligation under the Registration Rights Agreement to allow the use of the
Prospectus for resales of the Exchange Notes by broker-dealers or to maintain
the effectiveness of the Registration Statement of which the Prospectus is a
part after the consummation of the Exchange Offer.
11. Requests for Assistance or Additional Copies. Any questions or requests
for assistance or additional copies of the Prospectus, this Letter of
Transmittal or the Notice of Guaranteed Delivery may be directed to the Exchange
Agent at the telephone numbers and location listed above. A Holder or owner may
also contact such Holder's or owner's broker, dealer, commercial bank or trust
company or nominee for assistance concerning the Exchange Offer.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER
WITH CERTIFICATES REPRESENTING THE ORIGINAL NOTES AND ALL OTHER REQUIRED
DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE EXCHANGE
AGENT ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, an owner of Original Notes whose tendered
Original Notes are accepted for exchange is required to provide the Exchange
Agent with such owner's current TIN on Substitute Form W-9 below. If such owner
is an individual, the TIN is his or her social security number. If the Exchange
Agent is not provided with the correct TIN, the owner or other recipient of
Exchange Notes may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, any interest on Exchange Notes paid to such owner or other
recipient may be subject to 30% backup withholding tax.
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Certain owners of Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that owner must submit to the Exchange Agent a properly
completed Internal Revenue Service Forms W-8ECI, W-8BEN, W-8EXP or W-8IMY
(collectively, a "Form W-8"), signed under penalties of perjury, attesting to
that individual's exempt status. Failure to provide the information required by
Form W-8 may subject the tendering owner (or other payee) to a $50 penalty
imposed by the Internal Revenue Service and 30% federal income tax withholding.
A Form W-8 can be obtained from the Exchange Agent.
Backup withholding is not an additional tax. Rather, the federal income tax
liability of persons subject to backup withholding 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 the owner is required to notify the Exchange
Agent of the owner's current TIN (or the TIN of any other payee) by completing
the following form, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such owner is awaiting a TIN), and that (i) the owner is exempt
from withholding, (ii) the owner has not been notified by the Internal Revenue
Service that the owner is subject to backup withholding as a result of failure
to report all interest or dividends or (iii) the Internal Revenue Service has
notified the owner that the owner is no longer subject to backup withholding.
See the enclosed "Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9" for additional instructions.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the owner of the Original
Notes. If the Original Notes are registered in more than one name or are not
registered in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9", for
additional guidance on which number to report.
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PAYEE'S NAME:
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SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE Social Security Number(s)
FORM W-9 BOX AT THE RIGHT AND CERTIFY BY SIGNING or
AND DATING BELOW. Employer Identification Number(s)
------------------------------
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DEPARTMENT OF THE TREASURY PART 2 -- Certifications -- Under penalties of perjury, I certify that:
INTERNAL REVENUE SERVICE
(1) The number shown on this form is my correct taxpayer identification number (or I
PAYER'S REQUEST FOR am waiting for a number to be issued to me) and
TAXPAYER IDENTIFICATION
NUMBER ("TIN") (2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
("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.
(3) I am a U.S. person (including a U.S. resident alien).
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because of
under-reporting interest or dividends on your tax return.
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Signature
-------------------------------- PART 3 --
Date
------------------------------------- Awaiting TIN [ ]
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NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND BACKUP WITHHOLDING OF 30%.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
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CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (2)
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 of the date
in this form, 30% of all reportable cash payments made to me will be withheld
until I provide a taxpayer identification number.
Signature Date
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