AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 7, 2003
REGISTRATION NO. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CENTERPOINT ENERGY, INC.
(Exact name of registrant as specified in its charter)
TEXAS 4911 74-0694415
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
RUFUS S. SCOTT
VICE PRESIDENT, DEPUTY GENERAL COUNSEL
1111 LOUISIANA AND ASSISTANT CORPORATE SECRETARY
HOUSTON, TEXAS 77002 1111 LOUISIANA
(713) 207-1111 HOUSTON, TEXAS 77002
(713) 207-1111
(Address, including zip code, and telephone number, including area code, (Name, address, including zip code, and telephone
of registrant's principal executive offices) number, including area code, of agent for service)
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Copy to:
GERALD M. SPEDALE
BAKER BOTTS L.L.P.
910 LOUISIANA, ONE SHELL PLAZA
HOUSTON, TEXAS 77002
(713) 229-1234
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable following the effectiveness of this Registration Statement.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
======================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
OFFERING AGGREGATE AMOUNT OF
AMOUNT TO BE PRICE PER OFFERING PRICE REGISTRATION
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED UNIT (1) (1) FEE (1)
- ----------------------------------------------------------------------------------------------------------------------
$200,000,000 5.875% Senior Notes due 2008, Series B $200,000,000 100% $200,000,000 $ 16,180
- --------------------------------------------------------------------------------------------------------------------
$200,000,000 6.850% Senior Notes due 2015, Series B $200,000,000 100% $200,000,000 $ 16,180
- --------------------------------------------------------------------------------------------------------------------
$200,000,000 7.25% Senior Notes due 2010, Series B $200,000,000 100% $200,000,000 $ 16,180
====================================================================================================================
Total $600,000,000 $600,000,000 $ 48,540
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f)(2) of the Securities Act of 1933. For purposes
of this calculation, the offering price per 5.875% Series B Note, 6.850%
Series B Note and 7.25% Series B Note was assumed to be the stated
principal amount of each 5.875% Series B Note, 6.850% Series B Note and
7.25% Series B Note, respectively, that may be received by the Registrant
in the exchange transaction in which the 5.875% Series B Notes, 6.850%
Series B Notes and 7.25% Series B Notes, as the case may be, will be
offered.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER 7, 2003
PROSPECTUS
$600,000,000
CENTERPOINT ENERGY, INC.
OFFER TO EXCHANGE
5.875% Senior Notes due 2008, 6.850% Senior Notes due 2015, 7.25% Senior Notes due 2010,
Series B Series B Series B
for all outstanding for all outstanding for all outstanding
5.875% Senior Notes due 2008, 6.850% Senior Notes due 2015, 7.25% Senior Notes due 2010,
Series A Series A Series A
THE EXCHANGE OFFER FOR SERIES A NOTES (THE "OLD NOTES") OF EACH SERIES:
- - will expire at 5:00 p.m., New York City time, , 2003, unless extended; and
- - is not conditioned upon any minimum aggregate principal amount of old notes
of that series being tendered for exchange or upon consummation of the
exchange offer for old notes of any other series.
THE SERIES B NOTES (THE "NEW NOTES"):
- - will be freely tradable;
- - are substantially identical to the old notes for which they may be
exchanged; and
- - will not be listed on any securities exchange or on any automated dealer
quotation system, but may be sold in the over-the-counter market, in
negotiated transactions or through a combination of those methods.
YOU SHOULD NOTE THAT:
- - we will exchange all old notes of a series that are validly tendered and
not validly withdrawn for an equal principal amount of new notes of that
series that we have registered under the Securities Act of 1933;
- - you may withdraw tenders of old notes at any time prior to the expiration
of the exchange offer; and
- - the exchange of old notes for new notes in the exchange offer will not be a
taxable event for U.S. federal income tax purposes.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 18 OF THIS
PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 2003.
TABLE OF CONTENTS
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL
INFORMATION ABOUT US THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS PROSPECTUS.
SEE "WHERE YOU CAN FIND MORE INFORMATION" BEGINNING ON PAGE 64 FOR A LISTING OF
DOCUMENTS WE INCORPORATE BY REFERENCE. THESE DOCUMENTS ARE AVAILABLE WITHOUT
CHARGE UPON WRITTEN OR ORAL REQUEST DIRECTED TO CENTERPOINT ENERGY, INC., ATTN:
INVESTOR SERVICES, P.O. BOX 4567, HOUSTON, TEXAS 77210-4567, TELEPHONE: (713)
207-3060. TO ENSURE TIMELY DELIVERY OF ANY OF OUR FILINGS, AGREEMENTS OR OTHER
DOCUMENTS, YOU MUST MAKE YOUR REQUEST TO US NO LATER THAN , 2003, WHICH IS
FIVE DAYS BEFORE THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 2003.
Cautionary Statement Regarding Forward-Looking Information................................... ii
Prospectus Summary........................................................................... 1
Risk Factors................................................................................. 18
Private Placement............................................................................ 31
Use of Proceeds.............................................................................. 31
The Exchange Offer........................................................................... 32
Description of the Notes..................................................................... 41
Registration Rights.......................................................................... 53
Book-Entry Delivery and Settlement........................................................... 55
Certain U.S. Federal Income Tax Considerations............................................... 58
Plan of Distribution......................................................................... 62
Transfer Restrictions........................................................................ 63
Legal Matters................................................................................ 63
Experts...................................................................................... 63
Where You Can Find More Information.......................................................... 64
Each broker-dealer that receives new notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of those new notes. The letters of transmittal state that, by so
acknowledging and delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act of
1933. This prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of new notes received
in exchange for old notes where the old notes were acquired by the broker-dealer
as a result of market-making activities or other trading activities. We have
agreed that, for a period of 180 days after the expiration date of the exchange
offer, we will make this prospectus available to any broker-dealer for use in
connection with the resale of new notes.
i
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
From time to time we make statements concerning our expectations,
beliefs, plans, objectives, goals, strategies, future events or performance and
underlying assumptions and other statements that are not historical facts. These
statements are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Actual results may differ materially
from those expressed or implied by these statements. In some cases, you can
identify our forward-looking statements by the words "anticipate," "believe,"
"continue," "could," "estimate," "expect," "forecast," "goal," "intend," "may,"
"objective," "plan," "potential," "predicts," "projection," "should," "will," or
other similar words.
We have based our forward-looking statements on our management's
beliefs and assumptions based on information available at the time the
statements are made. We caution you that assumptions, beliefs, expectations,
intentions and projections about future events may and often do vary materially
from actual results. Therefore, we cannot assure you that actual results will
not differ materially from those expressed or implied by our forward-looking
statements.
Some of the factors that could cause actual results to differ from
those expressed or implied by our forward-looking statements are described under
"Risk Factors" beginning on page 18 of this prospectus. Other such factors are
described in other documents we file with the SEC and incorporate by reference
into this prospectus.
You should not place undue reliance on forward-looking statements. Each
forward-looking statement speaks only as of the date of the particular
statement.
ii
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus or incorporated by reference herein. This summary is not complete and
does not contain all the information that you should consider before investing
in the new notes. You should read carefully the entire prospectus, including the
risk factors, financial data and financial statements included or incorporated
by reference herein and the other information and documents we have incorporated
by reference in this prospectus.
Unless the context requires otherwise, the terms "CenterPoint Energy,"
"our company," "we," "our," "ours" and "us" refer to CenterPoint Energy, Inc.;
the term "CenterPoint Houston" refers to CenterPoint Energy Houston Electric,
LLC, our electric utility subsidiary; the term "CERC" refers to CenterPoint
Energy Resources Corp., our gas distribution and pipelines and gathering
subsidiary; and the term "Reliant Energy" refers to Reliant Energy,
Incorporated. We refer to our 5.875% Senior Notes due 2008, Series A as the
"2008 old notes," our 6.850% Senior Notes due 2015, Series A as the "2015 old
notes," our 7.25% Senior Notes due 2010, Series A as the "2010 old notes," and
the 2008 old notes, 2015 old notes and 2010 old notes together as the "old
notes." We refer to our 5.875% Senior Notes due 2008, Series B offered by this
prospectus as the "2008 new notes," our 6.850% Senior Notes due 2015, Series B
offered by this prospectus as the "2015 new notes," our 7.25% Senior Notes due
2010, Series B offered by this prospectus as the "2010 new notes," and the 2008
new notes, 2015 new notes and 2010 new notes together as the "new notes." We
sometimes refer to the old notes and the new notes collectively as the "notes."
OUR COMPANY
GENERAL
We are a public utility holding company that became the parent of
Reliant Energy and its subsidiaries on August 31, 2002 as part of a corporate
restructuring of Reliant Energy. Our indirect wholly owned subsidiaries include
(i) CenterPoint Houston, which engages in Reliant Energy's former electric
transmission and distribution business in a 5,000-square mile area of the Texas
Gulf Coast that includes Houston, and (ii) CERC, which owns gas distribution
systems that together form one of the United States' largest natural gas
distribution operations in terms of the number of customers served. Through
wholly owned subsidiaries, CERC also owns two interstate natural gas pipelines
and gas gathering systems and provides various ancillary services. We also have
an approximately 81% ownership interest in Texas Genco Holdings, Inc. ("Texas
Genco"), which owns and operates the Texas generating plants that were formerly
part of the integrated electric utility that was part of Reliant Energy. We
distributed approximately 19% of the outstanding common stock of Texas Genco to
our shareholders on January 6, 2003.
Reliant Energy completed the separation of the generation, transmission
and distribution, and retail sales functions of Reliant Energy's Texas electric
operations (the "Restructuring") in August 2002. To effect the Restructuring,
Reliant Energy:
- conveyed its Texas electric generation assets to Texas Genco,
- became our indirect, wholly owned subsidiary,
- was converted into a Texas limited liability company and renamed
CenterPoint Energy Houston Electric, LLC, and
- distributed the capital stock of its operating subsidiaries to us.
As part of the Restructuring, each share of Reliant Energy common stock
was converted into one share of our common stock. Prior to the Restructuring,
Reliant Energy's subsidiary, Reliant Resources, Inc. ("Reliant Resources"),
conducted non-utility wholesale and retail energy operations. As a result of the
Restructuring, we became the owner of approximately 83% of the stock of Reliant
Resources. On September 30, 2002, we distributed this stock to our shareholders
on a pro rata basis.
We are a registered public utility holding company under the Public
Utility Holding Company Act of 1935 ("1935 Act"). The 1935 Act and related rules
and regulations impose a number of restrictions on our activities and those of
our subsidiaries. The 1935 Act, among other things, limits our ability and the
ability of our subsidiaries, other than Texas Genco, to issue debt and equity
securities without prior authorization, restricts the source of dividend
payments to current and retained earnings without prior authorization, regulates
sales and acquisitions of certain assets and businesses and governs affiliate
transactions.
1
Our general corporate structure is described in the diagram below:
CENTERPOINT ENERGY CORPORATE STRUCTURE
[DIAGRAM OF CORPORATE STRUCTURE]
BUSINESS CONTRIBUTION
[GRAPHS DISPLAYING RESPECTIVE PERCENTAGE CONTRIBUTION OF EACH BUSINESS SEGMENT
TO TOTAL ASSETS AS OF JUNE 30, 2003 AND TOTAL OPERATING INCOME FOR THE TWELVE
MONTHS ENDED JUNE 30, 2003]
2
OUR BUSINESS
CENTERPOINT HOUSTON
Electric Transmission
CenterPoint Houston transports electricity from power plants to
substations and from one substation to another and to retail customers taking
power above 69 kilovolts ("kV") in locations throughout the control area managed
by the Electric Reliability Council of Texas, Inc. ("ERCOT"). ERCOT is an
intrastate network of retail customers, investor and municipally owned electric
utilities, rural electric co-operatives, river authorities, independent
generators, power marketers and retail electric providers, which serves as the
regional reliability coordinating council for member electric power systems in
Texas. The ERCOT market consists of the State of Texas, other than a portion of
the panhandle, a portion of the eastern part of the state bordering on Louisiana
and the area in and around El Paso. The ERCOT market represents approximately
85% of the demand for power in Texas and is one of the nation's largest power
markets. Transmission services are provided under tariffs approved by the Public
Utility Commission of Texas (the "Texas Utility Commission").
Electric Distribution
CenterPoint Houston distributes electricity for retail electric
providers in its certificated service area by carrying lower-voltage power from
the substation to the retail electric customer. Its distribution network
receives electricity from the transmission grid through power distribution
substations and distributes electricity to end users through distribution
feeders. Operations include construction and maintenance of facilities, metering
services, outage response services and other call center operations.
Distribution services are provided under tariffs approved by the Texas Utility
Commission. Texas Utility Commission rules and market protocols govern the
commercial retail operations of distribution companies and other market
participants.
Customers
CenterPoint Houston's customers consist of municipalities, electric
cooperatives, other distribution companies and approximately 31 retail electric
providers in its certificated service area. Each retail electric provider is
licensed by the Texas Utility Commission and must meet creditworthiness criteria
established by the Texas Utility Commission.
Stranded Costs, Regulatory Assets Recovery and Securitization
The Texas Electric Restructuring Law. In June 1999, the Texas
legislature adopted the Texas Electric Choice Plan (the "Texas electric
restructuring law"), which substantially amended the regulatory structure
governing electric utilities in order to allow and encourage retail competition.
The Texas electric restructuring law required the separation of the generation,
transmission and distribution and retail sales functions of electric utilities
into three different units. It also required each electric utility to file a
business separation plan with the Texas Utility Commission detailing its plan to
comply with the Texas electric restructuring law. Under the law, neither the
generation function nor the retail function is subject to traditional cost of
service regulation, and the retail function has been opened to competition. The
transmission and distribution function CenterPoint Houston performs remains
subject to traditional utility rate regulation.
Under the Texas electric restructuring law, transmission and
distribution utilities in Texas whose generation assets were "unbundled,"
including CenterPoint Houston, may recover, following a regulatory proceeding to
be held in 2004:
- "regulatory assets," which consist of the Texas jurisdictional
amount reported by the previously vertically integrated electric
utilities as regulatory assets and liabilities (offset and
adjusted by specified amounts) in their audited financial
statements for 1998,
- "stranded costs," which consist of the positive excess of the net
regulatory book value of generation assets over the market value
of the assets, taking specified factors into account, and
- the excess cost over market for state-mandated capacity auctions
by Texas Genco ("ECOM"), fuel over- or under-recovery and "price
to beat" clawback components.
3
The Texas electric restructuring law permits transmission and
distribution utilities to recover regulatory assets and stranded costs through
transition charges on retail electric customers' bills, to the extent that such
assets and costs are established in certain regulatory proceedings. These
transition charges are non-bypassable, meaning that they must be paid by
essentially all customers and cannot, except in limited circumstances, be
avoided by switching to self-generation.
Final True-Up. Beginning in January 2004, the Texas Utility Commission
will conduct true-up proceedings for each investor-owned utility. The purpose of
the true-up proceeding is to quantify and reconcile the amount of stranded
costs, other regulatory assets associated with the generation assets that were
not previously securitized, the difference in the price of power obtained
through the state mandated capacity auctions and the power costs used in the
Texas Utility Commission's ECOM model, any fuel costs over- or under-recovery
and the "price to beat" clawback. The true-up proceeding will result in either
additional charges being assessed on, or credits being issued to, retail
electric customers taking delivery from us. CenterPoint Houston will make the
filing to initiate its final true-up proceeding on March 31, 2004. The Texas
electric restructuring law requires a final order to be issued by the Texas
Utility Commission not more than 150 days after a proper filing is made by the
regulated utility.
Securitization. The Texas electric restructuring law provides for the
use of special purpose entities to issue transition bonds for the economic value
of generation-related regulatory assets and stranded costs. These transition
bonds will be amortized over a period not to exceed 15 years through
non-bypassable transition charges to customers taking delivery service from
CenterPoint Houston. Any stranded costs not recovered through the transition
bonds will be recovered through a non-bypassable competition transition charge
assessed to customers taking delivery service from CenterPoint Houston. In
October 2001, a special purpose subsidiary of CenterPoint Houston issued $749
million of transition bonds to securitize generation-related regulatory assets.
These transition bonds have a final maturity date of September 15, 2015 and are
non-recourse to us or our subsidiaries other than to the special purpose issuer.
We expect that upon completion of the 2004 true-up proceeding,
CenterPoint Houston will seek to securitize its stranded costs, any regulatory
assets not previously securitized by the October 2001 issuance of transition
bonds and, to the extent permitted by the Texas Utility Commission, the balance
of the other true-up components. Under the Texas electric restructuring law,
CenterPoint Houston is entitled to recover any portion of the true-up balance
not securitized by transition bonds through a non-bypassable competition
transition charge assessed to its customers.
CERC
Natural Gas Distribution
CERC's natural gas distribution business engages in intrastate natural
gas sales to, and natural gas transportation for, residential, commercial and
industrial customers in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma
and Texas. Its operations also include non-rate regulated retail gas sales to
and transportation services for commercial and industrial customers in the six
states listed above as well as several other Midwestern states. CERC currently
conducts intrastate natural gas sales to, and natural gas transportation for,
residential, commercial and industrial customers through three unincorporated
divisions: CenterPoint Energy Arkla ("Arkla"), CenterPoint Energy Entex
("Entex") and CenterPoint Energy Minnegasco ("Minnegasco"). These operations are
regulated as natural gas utility operations in the jurisdictions served by these
divisions.
- Arkla provides natural gas distribution services in over 245
communities in Arkansas, Louisiana, Oklahoma and Texas. The
largest metropolitan areas served by Arkla are Little Rock,
Arkansas and Shreveport, Louisiana.
- Entex provides natural gas distribution services in over 500
communities in Louisiana, Mississippi and Texas. The largest
metropolitan area served by Entex is Houston.
- Minnegasco provides natural gas distribution services in over 240
communities in Minnesota. The largest metropolitan area served by
Minnegasco is Minneapolis. Additionally, Minnegasco provides
unregulated services consisting of
[MAP OF NATURAL GAS DISTRIBUTION SERVICE TERRITORY]
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heating, ventilating and air conditioning ("HVAC") equipment and
appliance sales and repair services, HVAC and hearth equipment
sales and home security monitoring.
Pipelines and Gathering
CERC's pipelines and gathering business operates two interstate natural
gas pipelines as well as gas gathering facilities and also provides pipeline
services.
CERC owns and operates gas transmission lines primarily located in
Arkansas, Illinois, Louisiana, Missouri, Oklahoma and Texas. CERC's pipeline
operations are primarily conducted by two wholly owned interstate pipeline
subsidiaries: CenterPoint Energy Gas Transmission Company ("CEGT") and
CenterPoint Energy -- Mississippi River Transmission Corporation ("MRT").
- CEGT is an interstate pipeline that provides natural gas
transportation, natural gas storage and pipeline services to
customers principally in Arkansas, Louisiana and Oklahoma.
- MRT is an interstate pipeline that provides natural gas
transportation, natural gas storage and pipeline services to
customers principally in Arkansas and Missouri.
[MAP OF PIPELINES AND GATHERING SERVICE TERRITORY]
CERC's gathering operations are conducted by a wholly owned gas
gathering subsidiary, CenterPoint Energy Field Services, Inc. ("CEFS"). CEFS is
a natural gas gathering and processing business serving natural gas fields in
the Midcontinent basin of the United States that interconnect with CEGT and MRT
as well as other interstate and intrastate pipelines. CEFS operates gathering
pipelines, which collect natural gas from more than 300 separate systems located
in major producing fields in Arkansas, Louisiana, Oklahoma and Texas.
TEXAS GENCO
Texas Genco is one of the largest wholesale electric power generating
companies in the United States. Texas Genco owns and operates 60 generating
units at 11 power generation facilities. Texas Genco also owns a 30.8% interest
in the South Texas Project Electric Generating Station ("South Texas Project"),
a nuclear generating station with two 1,250 MW nuclear generating units. As of
June 30, 2003, the aggregate net generating capacity of Texas Genco's combined
portfolio of generating assets was 14,175 MW. Texas Genco sells electric
generation capacity, energy and ancillary services in the ERCOT market.
Collectively, Texas Genco's facilities provide approximately 20% of the
aggregate net generating capacity serving the ERCOT market.
Since January 1, 2002, Texas Genco has sold power to wholesale
purchasers, including retail electric providers, at unregulated rates through
its capacity auctions. In addition to retail electric providers, Texas Genco's
customers in the ERCOT market include municipal utilities, electric
co-operatives, power trading organizations and other power generating companies.
Texas Genco is also a significant provider to the ancillary services market
operated by the ERCOT Independent System Operator. Texas Genco expects its mix
of customers and the mix of participants will change significantly as the ERCOT
market evolves from one dominated by vertically integrated electric utilities to
one with utility-affiliated retail electric providers, new-entrant retail
electric providers, greater participation by unregulated energy merchants, and
more generation capacity from independent generation companies. Subsidiaries of
Reliant Resources purchased entitlements to 63% of Texas Genco's available 2002
capacity and through July 2003 had purchased 71% of Texas Genco's available 2003
capacity.
Based on the results of capacity auctions held, Texas Genco will
continue to have approximately 926 MW temporarily removed from service, or
placed in "mothball" status, through November 2003. Texas Genco is evaluating
the July auction results and determining the need for additional generating
capacity to be placed in mothball status for the remaining months of 2003.
The ERCOT market is highly competitive. Texas Genco has approximately
80 competitors, which include generation companies affiliated with Texas-based
utilities, independent power producers, municipal or co-operative generators and
5
wholesale power marketers. These competitors will compete with Texas Genco and
each other by buying and selling wholesale power in the ERCOT market, entering
into bilateral contracts and/or selling to aggregated retail customers.
Monetization
Reliant Resources has an option that may be exercised between January
10, 2004 and January 24, 2004 to purchase all of the approximately 81% of the
outstanding shares of Texas Genco common stock that we currently own. Reliant
Resources has no obligation to exercise the option. The per share exercise price
under this option will be based on the average daily closing price of Texas
Genco common stock on The New York Stock Exchange over the 30 consecutive
trading days out of the last 120 trading days ending January 9, 2004 which
result in the highest average closing price. In addition, a control premium, up
to a maximum of 10%, will be added to the price to the extent a control premium
is included in the valuation determination made by the Texas Utility Commission
relating to the market value of Texas Genco. If Reliant Resources does not
exercise the option, we will pursue an alternative strategy to monetize Texas
Genco. We are currently evaluating alternatives for doing so. Please read "Risk
Factors --Other Risks --If Reliant Resources does not exercise its option to
purchase the common stock of Texas Genco that we own, we may not be able to
monetize Texas Genco on the same terms or on the same time schedule as provided
by the option."
MISCELLANEOUS
Our principal executive offices are located at 1111 Louisiana, Houston,
Texas 77002, and our telephone number is (713) 207-1111.
6
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
On May 27, 2003 we completed the private offering of the 2008 old notes
and the 2015 old notes, and on September 9, 2003 we completed the private
offering of the 2010 old notes. We received proceeds, after deducting the
discount to the initial purchasers, of approximately $397 million and $198
million from the sales of the old notes in May and in September, respectively.
In connection with the offering of the old notes, we entered into
registration rights agreements with the initial purchasers of the old notes in
which we agreed to deliver to you this prospectus and to use our reasonable
commercial efforts to complete the exchange offer within 315 days after the
respective dates of issuance of the old notes. In the exchange offer, you are
entitled to exchange your old notes of a series for new notes of that series,
with substantially identical terms, that are registered with the SEC. You should
read the discussion under the headings "--Summary of the Terms of the New Notes"
beginning on page 12 and "Description of the Notes" beginning on page 41 for
further information about the new notes. After the exchange offer is complete,
you will no longer be entitled to any exchange or registration rights for your
old notes.
The exchange offer consists of separate, independent offers for each
series of old notes. We have summarized the terms of the exchange offer below.
You should read the discussion under the heading "The Exchange Offer" beginning
on page 32 for further information about the exchange offer and resale of the
new notes.
The Exchange Offer
We are offering to exchange:
- - up to $200,000,000 aggregate principal amount of outstanding 5.875% Senior
Notes due 2008, Series A, for up to $200,000,000 aggregate principal amount
of 5.875% Senior Notes due 2008, Series B;
- - up to $200,000,000 aggregate principal amount of outstanding 6.850% Senior
Notes due 2015, Series A, for up to $200,000,000 aggregate principal amount
of 6.850% Senior Notes due 2015, Series B; and
- - up to $200,000,000 aggregate principal amount of outstanding 7.25% Senior
Notes due 2010, Series A, for up to $200,000,000 aggregate principal amount
of 7.25% Senior Notes due 2010, Series B.
Old notes may be exchanged only in integral multiples of $1,000.
The terms of each series of new notes are identical in all material respects to
those of the old notes for which they may be exchanged except the new notes will
not contain provisions with respect to transfer restrictions, registration
rights or additional interest for failure to fulfil certain obligations under
the applicable registration rights agreement. The new notes of a series will
vote together with outstanding old notes of that series not exchanged on all
matters on which holders of such series of old notes or new notes are entitled
to vote.
OLD NOTES THAT ARE NOT TENDERED FOR EXCHANGE WILL CONTINUE TO BE SUBJECT TO
TRANSFER RESTRICTIONS AND WILL NOT HAVE REGISTRATION RIGHTS. THEREFORE, THE
MARKET FOR SECONDARY RESALES OF OLD NOTES THAT ARE NOT TENDERED FOR EXCHANGE IS
LIKELY TO BE MINIMAL.
Resale
Based on interpretation of the Staff of the Division of Corporation Finance of
the SEC (the "Staff") in no-action letters issued to third parties, we believe
that the new notes issued pursuant to the exchange offer in exchange for old
notes may be offered for resale, resold and otherwise transferred by you without
compliance with the registration and prospectus delivery provisions of the
Securities Act of 1933 if:
- - you are not our "affiliate" within the meaning of Rule 405 under the
Securities Act of 1933;
7
- - you acquire such new notes in the ordinary course of your business; and
- - you are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a
distribution of new notes.
Each participating broker-dealer that receives new notes for its own account
pursuant to the exchange offer in exchange for old notes that were acquired as a
result of market-making or other trading activity must acknowledge that it will
deliver a prospectus in connection with any resale of the new notes. Please read
"Plan of Distribution" beginning on page 62.
Expiration Date
The exchange offer for each series of old notes will expire at 5:00 p.m., New
York City time, on , 2003, or such later date and time to which we may extend it
at our discretion. We may extend the expiration date for each series of old
notes independently. Please read "The Exchange Offer--Extensions, Delay in
Acceptance, Termination or Amendment" beginning on page 33 for more information
about an extension of the expiration date.
Withdrawal of Tenders
You may withdraw your tender of old notes at any time prior to the expiration
date. We will return to you, without charge, promptly after the expiration or
termination of the exchange offer any old notes that you tendered but that were
not accepted for exchange.
Conditions to the Exchange Offer
We will not be required to accept old notes for exchange:
- - if the exchange offer would be unlawful or would violate any interpretation
of the Staff; or
- - if any legal action has been instituted or threatened that would impair our
ability to proceed with the exchange offer.
The exchange offer for old notes of each series is not conditioned upon any
minimum aggregate principal amount of old notes of such series being tendered
for exchange or upon consummation of the exchange offer for old notes of any
other series. The exchange offer is subject to customary conditions, which we
may waive in our sole discretion. Please read "The Exchange Offer--Conditions to
the Exchange Offer" beginning on page 34 for more information about the
conditions to the exchange offer.
Procedures for Tendering Old Notes
If you wish to participate in the exchange offer, you must complete, sign and
date the accompanying letter of transmittal or a facsimile of the letter of
transmittal and mail or deliver the letter of transmittal, together with your
old notes, to the exchange agent. If your old notes are held through The
Depository Trust Company ("DTC") you may effect delivery of the old notes by
book-entry transfer.
In the alternative, if your old notes are held through DTC and you wish to
participate in the exchange offer, you may do so through DTC's automated tender
offer program. If you tender under this program, you will agree to be bound by
the letter of transmittal that we are providing with this prospectus as though
you had signed the letter of transmittal. By signing or agreeing to be bound by
the letter of transmittal, you will represent to us that, among other things:
8
- - any new notes that you receive are being acquired in the ordinary course of
your business;
- - you have no arrangement or understanding with any person to participate in
the distribution (within the meaning of the Securities Act of 1933) of the
old notes or the new notes;
- - you are not our "affiliate," as defined in Rule 405 under the Securities
Act of 1933, or, if you are our affiliate, you will comply with the
registration and prospectus delivery requirements of the Securities Act of
1933 to the extent applicable;
- - if you are not a broker-dealer, you are not engaged in, and do not intend
to engage in, a distribution of the new notes;
- - if you are a broker-dealer, you are not tendering old notes acquired
directly from us or one of our affiliates;
- - if you are a broker-dealer, you will receive the new notes for your own
account in exchange for old notes that you acquired as a result of
market-making activities or other trading activities, and you will deliver
a prospectus in connection with any resale of such new notes; and
- - you are not acting on behalf of any person who could not truthfully and
completely make the foregoing representations.
Special Procedures for Beneficial Owners
If you beneficially own old notes that are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and you wish to tender
the old notes in the exchange offer, please contact the registered holder as
soon as possible and instruct the registered holder to tender on your behalf.
If you wish to tender your old notes on your own behalf, you must either arrange
to have old notes registered in your name or obtain a properly completed bond
power from the registered holder before completing and executing the letter of
transmittal and delivering your old notes. The transfer of registered ownership
may take considerable time.
Guaranteed Delivery Procedures
You must tender your old notes according to the guaranteed delivery procedures
described in "The Exchange Offer--Guaranteed Delivery Procedures" beginning on
page 38 if any of the following apply:
- - you wish to tender your old notes but they are not immediately available;
- - you cannot deliver your old notes, the letter of transmittal or any other
required documents to the exchange agent prior to the expiration date; or
- - you cannot comply with the applicable procedures under DTC's automated
tender offer program prior to the expiration date.
Consequences of Failure to Exchange Your Old Notes
If you do not exchange your old notes in the exchange offer, you will no longer
be entitled to registration rights. You will not be able to offer or sell the
old notes unless they are later registered, sold pursuant to an exemption from
registration or sold in a transaction not subject to the Securities Act of 1933
or state securities laws. Except as specified in the registration rights
agreements, we are not obligated to, nor do we currently anticipate that we will
register the
9
old notes under the Securities Act of 1933. Please read "The Exchange
Offer--Consequences of Failure to Exchange" beginning on page 40.
Certain U.S. Federal Income Tax
Considerations
The exchange of old notes for new notes in the exchange offer will not be a
taxable event for U.S. federal income tax purposes. Please read "Certain U.S.
Federal Income Tax Considerations" beginning on page 58.
Use of Proceeds
We will not receive any cash proceeds from the issuance of new notes in the
exchange offer.
10
THE EXCHANGE AGENT
We have appointed JPMorgan Chase Bank as exchange agent for the
exchange offer. Please direct questions and requests for assistance, requests
for additional copies of this prospectus or of the letter of transmittal and
requests for the notice of guaranteed delivery to the exchange agent. If you are
not tendering under DTC's automated tender offer program, you should send the
letter of transmittal and any other required documents to the exchange agent as
follows:
JPMORGAN CHASE BANK
By Hand Or Overnight Courier:
JPMorgan Chase Bank
2001 Bryan Street, 9th Floor
Registered Bond Processing Dept.
Dallas, Texas 75201
By Mail (Registered Or Certified Mail Recommended):
JPMorgan Chase Bank
P.O. Box 2320
Attn: Registered Bond Processing Dept.
Dallas, Texas 75221-2320
By Facsimile Transmission (Eligible Institutions Only):
(214) 468-6494
Attention: Frank Ivins
Confirm By Telephone:
(800) 275-2048
11
SUMMARY OF THE TERMS OF THE NEW NOTES
Each series of the new notes will be freely tradable and otherwise
substantially identical to the old notes of that series. The new notes will not
have registration rights or provisions for additional interest. Each series of
the new notes will evidence the same debt as the old notes of that series, and
both new notes and old notes are governed by the same indenture. Each series of
new notes will vote together with the old notes of that series not exchanged on
all matters on which holders of each series of old notes and new notes are
entitled to vote.
Notes Offered
$200,000,000 aggregate principal amount of 5.875% Senior Notes due 2008, Series
B;
$200,000,000 aggregate principal amount of 6.850% Senior Notes due 2015, Series
B; and
$200,000,000 aggregate principal amount of 7.25% Senior Notes due 2010, Series
B.
Maturity Dates
June 1, 2008 for the 2008 new notes;
June 1, 2015 for the 2015 new notes; and
September 1, 2010 for the 2010 new notes.
Interest Payment Dates
June 1 and December 1, with the initial interest payment date following the
consummation of the exchange offer being , 200 for the 2008 new notes and the
2015 new notes, and March 1 and September 1, with the initial interest payment
date following the consummation of the exchange offer being , 200 for the 2010
new notes.
Ranking
The new notes will be unsecured and will rank equally in right of payment with
all of our other existing and future unsecured and unsubordinated indebtedness.
The new notes will not have the benefit of collateral granted to all our
existing secured debt and are effectively subordinated to existing and future
indebtedness and other liabilities of our subsidiaries. As discussed in
"Description of the Notes" beginning on page 41, we, on an unconsolidated basis,
had $2.7 billion aggregate principal amount of secured debt outstanding at
October 31, 2003, including $1.8 billion secured by the stock of Texas Genco and
$924 million secured by mortgage bonds of CenterPoint Houston.
Optional Redemption
We may redeem all or a part of the new notes at any time and from time to time
as specified in this prospectus under "Description of the Notes--Optional
Redemption" beginning on page 42.
Significant Covenants
We will issue the new notes under an indenture containing certain restrictive
covenants for your benefit. These covenants, which are described under
"Description of the Notes" beginning on page 41, restrict our ability, with
certain exceptions, to:
- - incur certain debt secured by liens; and
- - merge, consolidate or transfer substantially all of our assets.
Lack of Public Markets for the New Notes
There is no existing market for the new notes. We cannot provide any assurance
about:
- - the liquidity of any markets that may develop for the new notes;
12
- - your ability to sell the new notes; and
- - the prices at which you will be able to sell the new notes.
Future trading prices of the new notes will depend on many factors, including:
- - prevailing interest rates;
- - our operating results;
- - the ratings of the new notes; and
- - the market for similar securities.
We do not intend to apply for listing of the new notes on any securities
exchange or for quotation of the new notes in any automated dealer quotation
system.
Risk Factors
You should consider carefully all of the information set forth in this
prospectus and, in particular, you should evaluate the specific factors set
forth under "Risk Factors" beginning on page 18 before deciding whether to
invest in the new notes.
Governing Law
The indenture and the new notes are governed by, and construed in accordance
with, the laws of the State of New York.
Further Issues
The 2008 new notes are initially limited to $200,000,000 in aggregate principal
amount. The 2015 new notes are initially limited to $200,000,000 in aggregate
principal amount. The 2010 new notes are initially limited to $200,000,000 in
aggregate principal amount. However, we may issue additional notes of each
series from time to time, without the consent of the holders.
13
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table sets forth our summary consolidated financial data
for the years ended December 31, 1998, 1999, 2000, 2001 and 2002 and for the
six-month periods ended June 30, 2002 and 2003. This table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations and Selected Financial Data," the consolidated
financial statements and the related notes and the report of our independent
auditors included in Exhibits 99.1 and 99.2 of our November 7, 2003 Form 8-K and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of CenterPoint Energy and Subsidiaries" and the consolidated
financial statements in our Second Quarter 2003 Form 10-Q.
The selected financial data presented below reflect certain
reclassifications necessary to present Reliant Resources as discontinued
operations as a result of the distribution of all of the shares of Reliant
Resources common stock owned by CenterPoint Energy to its common shareholders on
a pro rata basis, certain reclassifications necessary to present our Latin
America operations which remained at December 31, 2002 as discontinued
operations as a result of the sale of these operations subsequent to December
31, 2002 and certain reclassifications necessary to present CenterPoint Energy
Management Services, Inc. as discontinued operations as a result of the decision
to sell these operations in June 2003. Additionally, the selected financial data
below also reflect certain reclassifications necessary to present the
extraordinary loss on extinguishment of debt recorded in the fourth quarter of
2002 as interest expense in accordance with 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." The selected financial data
also gives effect to the Restructuring.
14
CONSOLIDATED INCOME STATEMENT DATA
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1998(1) 1999(2) 2000(3) 2001(4) 2002
------- ------- ------- ------- ----
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Revenues ............................................. $ 7,537 $ 7,511 $ 10,283 $ 10,559 $ 7,898
Income (loss) from continuing operations before
extraordinary item and cumulative effect of
accounting change .................................. (170) 1,631 245 499 369
Discontinued Operations:
Income from Reliant Resources, net of tax ......... 23 23 225 475 82
Income (loss) from Other Operations, net of tax ... 6 11 (23) (53) --
Loss on disposal of Reliant Resources ............. -- -- -- -- (4,371)
Loss on disposal of Other Operations, net of tax... -- -- -- -- --
Extraordinary item, net of tax ....................... -- (183) -- -- --
Cumulative effect of accounting change, net of tax ... -- -- -- 59 --
--------- --------- ---------- ---------- ---------
Net income (loss) attributable to common
shareholders ....................................... $ (141) $ 1,482 $ 447 $ 980 $ (3,920)
========= ========= ========== ========== =========
Basic earnings (loss) per common share:
Income (loss) from continuing operations before
extraordinary item and cumulative effect of
accounting change ................................. $ (0.60) $ 5.72 $ 0.86 $ 1.72 $ 1.24
Discontinued Operations:
Income from Reliant Resources, net of tax ......... 0.08 0.08 0.79 1.64 0.27
Income (loss) from Other Operations, net of tax ... 0.02 0.04 (0.08) (0.18) --
Loss on disposal of Reliant Resources ............. -- -- -- -- (14.67)
Loss on disposal of Other Operations, net of tax... -- -- -- -- --
Extraordinary item, net of tax ....................... -- (0.64) -- -- --
Cumulative effect of accounting change, net of tax ... -- -- -- 0.20 --
--------- --------- ---------- ---------- ---------
Basic earnings (loss) per common share ............... $ (0.50) $ 5.20 $ 1.57 $ 3.38 $ (13.16)
========= ========= ========== ========== =========
Diluted earnings (loss) per common share:
Income (loss) from continuing operations before
extraordinary item and cumulative effect of
accounting change ................................. $ (0.60) $ 5.70 $ 0.85 $ 1.71 $ 1.23
Discontinued Operations:
Income from Reliant Resources, net of tax ......... 0.08 0.08 0.79 1.62 0.27
Income (loss) from Other Operations, net of tax ... 0.02 0.04 (0.08) (0.18) --
Loss on disposal of Reliant Resources ............. -- -- -- -- (14.58)
Loss on disposal of Other Operations, net of tax... -- -- -- -- --
Extraordinary item, net of tax ....................... -- (0.64) -- -- --
Cumulative effect of accounting change, net of tax ... -- -- -- 0.20 --
--------- --------- ---------- ---------- ---------
Diluted earnings (loss) per common share ............. $ (0.50) $ 5.18 $ 1.56 $ 3.35 $ (13.08)
========= ========= ========== ========== =========
Cash dividends paid per common share ................. $ 1.50 $ 1.50 $ 1.50 $ 1.50 $ 1.07
Dividend payout ratio from continuing operations ..... -- 26% 176% 88% 87%
Return from continuing operations on average
common equity ..................................... (3.7)% 30.1% 4.6% 9.1% 9.0%
SIX MONTHS ENDED
JUNE 30,
---------------------
2002 2003
---- ----
Revenues ............................................ $ 3,876 $ 4,991
Income (loss) from continuing operations before
extraordinary item and cumulative effect of
accounting change ................................. 231 165
Discontinued Operations:
Income from Reliant Resources, net of tax ........ 34 --
Income (loss) from Other Operations, net of tax .. 2 (1)
Loss on disposal of Reliant Resources ............ -- --
Loss on disposal of Other Operations, net of tax -- (12)
Extraordinary item, net of tax ...................... -- --
Cumulative effect of accounting change, net of tax .. -- 80
--------- ---------
Net income (loss) attributable to common
shareholders ...................................... $ 267 $ 232
========= =========
Basic earnings (loss) per common share:
Income (loss) from continuing operations before
extraordinary item and cumulative effect of
accounting change ................................ $ 0.78 $ 0.54
Discontinued Operations:
Income from Reliant Resources, net of tax ........ 0.11 --
Income (loss) from Other Operations, net of tax .. 0.01 --
Loss on disposal of Reliant Resources ............ -- --
Loss on disposal of Other Operations, net of tax.. -- (0.04)
Extraordinary item, net of tax ...................... -- --
Cumulative effect of accounting change, net of tax .. -- 0.27
--------- ---------
Basic earnings (loss) per common share .............. $ 0.90 $ 0.77
========= =========
Diluted earnings (loss) per common share:
Income (loss) from continuing operations before
extraordinary item and cumulative effect of
accounting change ................................ $ 0.78 $ 0.54
Discontinued Operations:
Income from Reliant Resources, net of tax ........ 0.11 --
Income (loss) from Other Operations, net of tax .. 0.01 --
Loss on disposal of Reliant Resources ............ -- --
Loss on disposal of Other Operations, net of tax -- (0.04)
Extraordinary item, net of tax ...................... -- --
Cumulative effect of accounting change, net of tax .. -- 0.26
--------- ---------
Diluted earnings (loss) per common share ............ $ 0.90 $ 0.76
========= =========
Cash dividends paid per common share ................ $ 0.75 $ 0.20
Dividend payout ratio from continuing operations .... 96% 37%
Return from continuing operations on average
common equity .................................... 3.4% 17.0%
(1) 1998 net income includes a non-cash, unrealized loss on our indexed debt
securities of $764 million (after-tax), or $2.69 loss per basic and
diluted share. For additional information on the indexed debt securities,
please read Note 7 to our consolidated financial statements in Exhibit
99.2 to our November 7, 2003 Form 8-K.
(2) 1999 net income includes an aggregate non-cash, unrealized gain on our
indexed debt securities and our Time Warner, Inc. (now AOL Time Warner
Inc.) investment, of $1.2 billion (after-tax), or $4.09 earnings per basic
share and $4.08 earnings per diluted share. For additional information on
the indexed debt securities and AOL Time Warner investment, please read
Note 7 to our consolidated financial statements in Exhibit 99.2 to our
November 7, 2003 Form 8-K. The extraordinary item in 1999 is a loss
related to an accounting impairment of certain generation related
regulatory assets of our Electric Generation business segment. For
additional information regarding the impairment, please read Note 4 to our
consolidated financial statements in Exhibit 99.2 to our November 7, 2003
Form 8-K.
(3) 2000 net income includes an aggregate non-cash loss on our indexed debt
securities and our AOL Time Warner investment of $67 million (after-tax),
or a $0.24 loss per basic share and a $0.23 loss per diluted share. 2000
net income also includes a
15
$200 million (after-tax) charge (net of a tax benefit of $108 million), or
a $0.69 loss per basic share and $0.68 loss per diluted share, to reflect
the loss on disposal of our Latin America equity investments. For
additional information on the indexed debt securities and AOL Time Warner
investment, please read Note 7 to our consolidated financial statements in
Exhibit 99.2 to our November 7, 2003 Form 8-K. For additional information
regarding our investments in Latin America, please read Note 2 to our
consolidated financial statements in Exhibit 99.2 to our November 7, 2003
Form 8-K.
(4) 2001 net income includes the cumulative effect of an accounting change
resulting from the adoption of SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ($59 million after-tax gain, or $0.20
earnings per basic and diluted share). For additional information related
to the cumulative effect of accounting change, please read Note 5 to our
consolidated financial statements in Exhibit 99.2 to our November 7, 2003
Form 8-K.
SEGMENT DATA
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------ ----------------------
2000 2001 2002 2002 2003
---- ---- ---- ---- ----
(IN MILLIONS)
ELECTRIC TRANSMISSION & DISTRIBUTION
Revenues ........................... $ 2,160 $ 2,100 $ 2,222 $ 1,096 $ 929
Operating Income ................... 934 863 1,097 528 440
ELECTRIC GENERATION
Revenues ........................... $ 3,334 $ 3,411 $ 1,493 $ 739 $ 937
Operating Income (Loss) ............ 330 265 (133) (81) 33
NATURAL GAS DISTRIBUTION
Revenues ........................... $ 4,504 $ 4,742 $ 3,960 $ 1,977 $ 3,015
Operating Income ................... 118 130 198 118 151
PIPELINES AND GATHERING
Revenues ........................... $ 384 $ 415 $ 374 $ 194 $ 231
Operating Income ................... 137 137 153 76 85
OTHER OPERATIONS
Revenues ........................... $ 6 $ 4 $ 8 $ 14 $ 18
Operating Income (Loss) ............ (72) (46) 19 -- (2)
ELIMINATIONS/OTHER
Revenues ........................... $ (105) $ (113) $ (159) $ (144) $ (139)
Operating Income (Loss) ............ (33) (25) (1) -- --
CONSOLIDATED
Revenues ........................... $ 10,283 $ 10,559 $ 7,898 $ 3,876 $ 4,991
Operating Income ................... 1,414 1,324 1,333 641 707
BALANCE SHEET AND OTHER FINANCIAL DATA
AS OF DECEMBER 31,
----------------------------------------------------------- AS OF
1998 1999 2000 2001 2002 JUNE 30, 2003
------- ------- ------- ------- ------- -------------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Book value per common share ...................... $ 15.16 $ 18.70 $ 19.10 $ 22.77 $ 4.74 $ 4.76
Market price per common share .................... 32.06 22.88 43.31 26.52 8.01 8.15
Assets of discontinued operations ................ 1,819 6,095 14,323 12,392 63 28
Total assets ..................................... 19,959 28,658 35,225 31,266 19,634 19,889
Short-term borrowings ............................ 1,813 3,015 4,886 3,529 347 --
Long-term debt obligations, including current
maturities ..................................... 7,195 8,883 5,756 5,552 10,005 10,381
Trust preferred securities ....................... 342 705 705 706 706 706
Cumulative preferred stock ....................... 10 10 10 -- -- --
Capitalization:
Common stock equity ............................ 36% 36% 46% 52% 12% 11%
Trust preferred securities ..................... 3% 5% 6% 5% 6% 6%
Long-term debt, including current maturities ... 61% 59% 48% 43% 82% 83%
Capital expenditures, excluding discontinued
operations ..................................... $ 673 $ 865 $ 905 $ 1,211 $ 846 $ 297
16
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth ratios of earnings to fixed charges for
each of the periods indicated, calculated pursuant to SEC rules. Earnings from
continuing operations in 2002 and the six months ended June 30, 2002 and 2003
include $697 million, $311 million and $233 million, respectively, of non-cash
ECOM true-up.
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- ------------------
1998 1999 2000 2001 2002 2002 2003
---- ---- ---- ---- ---- ---- ----
Ratio of earnings from continuing
operations to fixed charges... (1) 5.38 1.80 2.18 1.70 2.13 1.52
(1) In 1998, earnings were inadequate to cover fixed charges by approximately
$232 million. This deficiency results from the $1.2 billion non-cash,
unrealized loss recorded for our 7% Automatic Common Exchange Securities.
Excluding the effect of the non-cash, unrealized loss, the ratio of
earnings from continuing operations to fixed charges would have been 3.29.
17
RISK FACTORS
There are many risks that may affect your investment in the new notes.
Some of these risks, but not all of them, are listed below. You should carefully
consider these risks as well as the other information included or incorporated
by reference in this prospectus before exchanging your old notes.
RISK FACTORS RELATING TO THE EXCHANGE OFFER
IF YOU FAIL TO EXCHANGE YOUR OLD NOTES, THE EXISTING TRANSFER RESTRICTIONS
WILL REMAIN IN EFFECT AND THE MARKET VALUE OF YOUR OLD NOTES MAY BE
ADVERSELY AFFECTED BECAUSE THEY MAY BE MORE DIFFICULT TO SELL.
If you do not exchange your old notes for new notes under the exchange
offer, then you will continue to be subject to the existing transfer
restrictions on the old notes. In general, the old notes may not be offered or
sold unless they are registered or exempt from registration under the Securities
Act of 1933 and applicable state securities laws. Except in connection with this
exchange offer or as required by the registration rights agreements, we do not
intend to register resales of the old notes under the Securities Act of 1933.
Tenders of old notes under the exchange offer will reduce the aggregate
principal amount of the unregistered notes outstanding. This may have an adverse
effect upon, and increase the volatility of, the market price of any old notes
that you continue to hold following completion of the exchange offer due to a
reduction in liquidity.
PRINCIPAL RISK FACTORS ASSOCIATED WITH OUR BUSINESSES
We are a holding company that conducts all of our business operations
through subsidiaries, primarily CenterPoint Houston, CERC and Texas Genco. The
following summarizes the principal risk factors associated with the businesses
conducted by each of these subsidiaries:
RISK FACTORS AFFECTING OUR ELECTRIC TRANSMISSION & DISTRIBUTION BUSINESS
CENTERPOINT HOUSTON MAY NOT BE SUCCESSFUL IN RECOVERING THE FULL VALUE OF
ITS STRANDED COSTS AND REGULATORY ASSETS RELATED TO GENERATION.
CenterPoint Houston is entitled to recover its stranded costs (the
excess of regulatory net book value of generation assets, as defined by the
Texas electric restructuring law, over the market value of those assets) and its
regulatory assets related to generation. CenterPoint Houston expects to make a
filing on March 31, 2004 in a true-up proceeding provided for by the Texas
electric restructuring law. The purpose of this proceeding will be to quantify
and reconcile:
- the amount of stranded costs,
- regulatory assets that were not previously recovered through the
issuance of transition bonds by a subsidiary,
- differences in the prices achieved in the state mandated auctions
of Texas Genco's generation capacity and Texas Utility Commission
estimates,
- fuel over- or under-recovery, and
- the "price to beat" clawback.
CenterPoint Houston will be required to establish and support the
amounts of these costs in order to recover them. CenterPoint Houston expects
these costs to be substantial. We cannot assure you that CenterPoint Houston
will be able to successfully establish and support its estimates of the value of
these costs. CenterPoint Houston's $1.3 billion collateralized term loan that
matures in November 2005 is expected to be repaid or refinanced with the
proceeds from the issuance of transition bonds to recover its stranded costs and
the balance of its regulatory assets. If CenterPoint Houston does not receive
the proceeds on or before the maturity date, its ability to repay or refinance
this term loan will be adversely affected.
18
The Texas Utility Commission's ruling that the true-up proceeding
filing will be made on March 31, 2004 means that the calculation of the market
value of a share of Texas Genco common stock for purposes of the Texas Utility
Commission's stranded cost determination might be more or less than the per
share purchase price calculated under the option held by Reliant Resources to
purchase our 81% ownership interest in Texas Genco. The purchase price under the
option will be based on market prices during the 120 trading days ending on
January 9, 2004, but under the filing schedule prescribed by the Texas Utility
Commission, the value of that ownership interest for the stranded cost
determination will be based on market prices during the 120 trading days ending
on March 30, 2004. If Reliant Resources exercises its option at a lower price
than the market value used by the Texas Utility Commission, CenterPoint Houston
would be unable to recover the difference.
CENTERPOINT HOUSTON'S RECEIVABLES ARE CONCENTRATED IN A SMALL NUMBER OF
RETAIL ELECTRIC PROVIDERS.
CenterPoint Houston's receivables from the distribution of electricity
are collected from retail electric providers that supply the electricity
CenterPoint Houston distributes to their customers. Currently, CenterPoint
Houston does business with approximately 31 retail electric providers. Adverse
economic conditions, structural problems in the new ERCOT market or financial
difficulties of one or more retail electric providers could impair the ability
of these retail providers to pay for CenterPoint Houston's services or could
cause them to delay such payments. CenterPoint Houston depends on these retail
electric providers to remit payments timely to it. Any delay or default in
payment could adversely affect CenterPoint Houston's cash flows, financial
condition and results of operations. Approximately 78% of CenterPoint Houston's
$119 million in receivables from retail electric providers at June 30, 2003 was
owed by subsidiaries of Reliant Resources. CenterPoint Houston's financial
condition may be adversely affected if Reliant Resources is unable to meet these
obligations. Reliant Resources, through its subsidiaries, is CenterPoint
Houston's largest customer. Pursuant to the Texas electric restructuring law,
Reliant Resources may be obligated to make a large "price to beat" clawback
payment to CenterPoint Houston in 2004. CenterPoint Houston expects the
clawback, if any, to be applied against any stranded cost recovery to which
CenterPoint Houston is entitled or, if no stranded costs are recoverable, to be
refunded to retail electric providers.
RATE REGULATION OF CENTERPOINT HOUSTON'S BUSINESS MAY DELAY OR DENY
CENTERPOINT HOUSTON'S FULL RECOVERY OF ITS COSTS.
CenterPoint Houston's rates are regulated by certain municipalities and
the Texas Utility Commission based on an analysis of its invested capital and
its expenses incurred in a test year. Thus, the rates CenterPoint Houston is
allowed to charge may not match its expenses at any given time. While rate
regulation in Texas is premised on providing a reasonable opportunity to recover
reasonable and necessary operating expenses and to earn a reasonable return on
its invested capital, there can be no assurance that the Texas Utility
Commission will judge all of CenterPoint Houston's costs to be reasonable or
necessary or that the regulatory process in which rates are determined will
always result in rates that will produce full recovery of CenterPoint Houston's
costs.
DISRUPTIONS AT POWER GENERATION FACILITIES OWNED BY THIRD PARTIES COULD
INTERRUPT CENTERPOINT HOUSTON'S SALES OF TRANSMISSION AND DISTRIBUTION
SERVICES.
CenterPoint Houston depends on power generation facilities owned by
third parties to provide retail electric providers with electric power which it
transmits and distributes. CenterPoint Houston does not own or operate any power
generation facilities. If power generation is disrupted or if power generation
capacity is inadequate, CenterPoint Houston's services may be interrupted, and
its results of operations, financial condition and cash flows may be adversely
affected.
CENTERPOINT HOUSTON'S REVENUES AND RESULTS OF OPERATIONS ARE SEASONAL.
A portion of CenterPoint Houston's revenues is derived from rates that
it collects from each retail electric provider based on the amount of
electricity it distributes on behalf of each retail electric provider. Thus,
CenterPoint Houston's revenues and results of operations are subject to
seasonality, weather conditions and other changes in electricity usage, with
revenues being higher during the warmer months.
19
RISK FACTORS AFFECTING OUR ELECTRIC GENERATION BUSINESS
TEXAS GENCO'S REVENUES AND RESULTS OF OPERATIONS ARE IMPACTED BY MARKET
RISKS THAT ARE BEYOND ITS CONTROL.
Texas Genco sells electric generation capacity, energy and ancillary
services in the ERCOT market. The ERCOT market consists of the majority of the
population centers in the State of Texas and represents approximately 85% of the
demand for power in the state. Under the Texas electric restructuring law, Texas
Genco and other power generators in Texas are not subject to traditional
cost-based regulation and, therefore, may sell electric generation capacity,
energy and ancillary services to wholesale purchasers at prices determined by
the market. As a result, Texas Genco is not guaranteed any rate of return on its
capital investments through mandated rates, and its revenues and results of
operations depend, in large part, upon prevailing market prices for electricity
in the ERCOT market. Market prices for electricity, generation capacity, energy
and ancillary services may fluctuate substantially. Texas Genco's gross margins
are primarily derived from the sale of capacity entitlements associated with its
large, solid fuel base-load generating units, including its coal and lignite
fueled generating stations and the South Texas Project. The gross margins
generated from payments associated with the capacity of these units are directly
impacted by natural gas prices. Since the fuel costs for Texas Genco's base-load
units are largely fixed under long-term contracts, they are generally not
subject to significant daily and monthly fluctuations. However, the market price
for power in the ERCOT market is directly affected by the price of natural gas.
Because natural gas is the marginal fuel for facilities serving the ERCOT market
during most hours, its price has a significant influence on the price of
electric power. As a result, the price customers are willing to pay for
entitlements to Texas Genco's solid fuel-fired base-load capacity generally
rises and falls with natural gas prices.
Market prices in the ERCOT market may also fluctuate substantially due
to other factors. Such fluctuations may occur over relatively short periods of
time. Volatility in market prices may result from:
- oversupply or undersupply of generation capacity,
- power transmission or fuel transportation constraints or
inefficiencies,
- weather conditions,
- seasonality,
- availability and market prices for natural gas, crude oil and
refined products, coal, enriched uranium and uranium fuels,
- changes in electricity usage,
- additional supplies of electricity from existing competitors or
new market entrants as a result of the development of new
generation facilities or additional transmission capacity,
- illiquidity in the ERCOT market,
- availability of competitively priced alternative energy sources,
- natural disasters, wars, embargoes, terrorist attacks and other
catastrophic events, and
- federal and state energy and environmental regulation and
legislation.
THERE IS CURRENTLY A SURPLUS OF GENERATING CAPACITY IN THE ERCOT MARKET AND
WE EXPECT THE MARKET FOR WHOLESALE POWER TO BE HIGHLY COMPETITIVE.
The amount by which power generating capacity exceeded peak demand
(reserve margin) in the ERCOT market has exceeded 20% since 2001, and the Texas
Utility Commission and the ERCOT Independent System Operator (ISO) have
forecasted the reserve margin for 2003 to continue to exceed 20%. The
commencement of commercial operation of new facilities in the ERCOT market will
increase the competitiveness of the wholesale power market, which could have a
material adverse effect on Texas Genco's results of operations, financial
condition, cash flows and the market value of Texas Genco's assets.
20
Texas Genco's competitors include generation companies affiliated with
Texas-based utilities, independent power producers, municipal and co-operative
generators and wholesale power marketers. The unbundling of vertically
integrated utilities into separate generation, transmission and distribution,
and retail businesses pursuant to the Texas electric restructuring law could
result in a significant number of additional competitors participating in the
ERCOT market. Some of Texas Genco's competitors may have greater financial
resources, lower cost structures, more effective risk management policies and
procedures, greater ability to incur losses, greater potential for profitability
from ancillary services, and greater flexibility in the timing of their sale of
generating capacity and ancillary services than Texas Genco does.
TEXAS GENCO IS SUBJECT TO OPERATIONAL AND MARKET RISKS ASSOCIATED WITH ITS
CAPACITY AUCTIONS.
Texas Genco is obligated to sell substantially all of its available
capacity and related ancillary services through 2003 pursuant to capacity
auctions. In these auctions, Texas Genco sells firm entitlements on a forward
basis to capacity and ancillary services dispatched within specified operational
constraints. Although Texas Genco has reserved a portion of its aggregate net
generation capacity from its capacity auctions for planned or forced outages at
its facilities, unanticipated plant outages or other problems with its
generation facilities could result in its firm capacity and ancillary services
commitments exceeding its available generation capacity. As a result, Texas
Genco could be required to obtain replacement power from third parties in the
open market to satisfy its firm commitments that could result in significant
additional costs. In addition, an unexpected outage at one of Texas Genco's
lower cost facilities could require it to run one of its higher cost plants in
order to satisfy its obligations even though the energy payments for the
dispatched power are based on the cost at the lower-cost facility.
The mechanics, regulations and agreements governing Texas Genco's
capacity auctions are complex. The state mandated auctions require, among other
things, Texas Genco's capacity entitlements to be sold in pre-determined
amounts. The characteristics of the capacity entitlements Texas Genco sells in
state mandated auctions are defined by rules adopted by the Texas Utility
Commission and, therefore, cannot be changed to respond to market demands or
operational requirements without approval by the Texas Utility Commission.
THE OPERATION OF TEXAS GENCO'S POWER GENERATION FACILITIES INVOLVES RISKS
THAT COULD ADVERSELY AFFECT ITS REVENUES, COSTS, RESULTS OF OPERATIONS,
FINANCIAL CONDITION AND CASH FLOWS.
Texas Genco is subject to various risks associated with operating its
power generation facilities, any of which could adversely affect its revenues,
costs, results of operations, financial condition and cash flows. These risks
include:
- operating performance below expected levels of output or
efficiency,
- breakdown or failure of equipment or processes,
- disruptions in the transmission of electricity,
- shortages of equipment, material or labor,
- labor disputes,
- fuel supply interruptions,
- limitations that may be imposed by regulatory requirements,
including, among others, environmental standards,
- limitations imposed by the ERCOT ISO,
- violations of permit limitations,
- operator error, and
- catastrophic events such as fires, hurricanes, explosions,
floods, terrorist attacks or other similar occurrences.
21
A significant portion of Texas Genco's facilities were constructed many
years ago. Older generation equipment, even if maintained in accordance with
good engineering practices, may require significant capital expenditures to keep
it operating at high efficiency and to meet regulatory requirements. This
equipment is also likely to require periodic upgrading and improvement. Any
unexpected failure to produce power, including failure caused by breakdown or
forced outage, could result in increased costs of operations and reduced
earnings.
TEXAS GENCO RELIES ON POWER TRANSMISSION FACILITIES THAT IT DOES NOT OWN OR
CONTROL AND THAT ARE SUBJECT TO TRANSMISSION CONSTRAINTS WITHIN THE ERCOT
MARKET. IF THESE FACILITIES FAIL TO PROVIDE TEXAS GENCO WITH ADEQUATE
TRANSMISSION CAPACITY, IT MAY NOT BE ABLE TO DELIVER WHOLESALE ELECTRIC
POWER TO ITS CUSTOMERS AND IT MAY INCUR ADDITIONAL COSTS.
Texas Genco depends on transmission and distribution facilities owned
and operated by CenterPoint Houston and by others to deliver the wholesale
electric power it sells from its power generation facilities to its customers,
who in turn deliver power to the end users. If transmission is disrupted, or if
transmission capacity infrastructure is inadequate, Texas Genco's ability to
sell and deliver wholesale electric energy may be adversely impacted.
The single control area of the ERCOT market is currently organized into
four congestion zones. Transmission congestion between the zones could impair
Texas Genco's ability to schedule power for transmission across zonal
boundaries, which are defined by the ERCOT ISO, thereby inhibiting Texas Genco's
efforts to match its facility scheduled outputs with its customer scheduled
requirements. In addition, power generators participating in the ERCOT market
could be liable for congestion costs associated with transferring power between
zones.
TEXAS GENCO'S RESULTS OF OPERATIONS, FINANCIAL CONDITION AND CASH FLOWS
COULD BE ADVERSELY IMPACTED BY A DISRUPTION OF ITS FUEL SUPPLIES.
Texas Genco relies primarily on natural gas, coal, lignite and uranium
to fuel its generation facilities. Texas Genco purchases its fuel from a number
of different suppliers under long-term contracts and on the spot market. Under
Texas Genco's capacity auctions, it sells firm entitlements to capacity and
ancillary services. Therefore, any disruption in the delivery of fuel could
prevent Texas Genco from operating its facilities, or force Texas Genco to enter
into alternative arrangements at higher than prevailing market prices, to meet
its auction commitments, which could adversely affect its results of operations,
financial condition and cash flows.
TO DATE, TEXAS GENCO HAS SOLD A SUBSTANTIAL PORTION OF ITS AUCTIONED
CAPACITY ENTITLEMENTS TO SUBSIDIARIES OF RELIANT RESOURCES. ACCORDINGLY,
TEXAS GENCO'S RESULTS OF OPERATIONS, FINANCIAL CONDITION AND CASH FLOWS
COULD BE ADVERSELY AFFECTED IF RELIANT RESOURCES DECLINED TO PARTICIPATE IN
TEXAS GENCO'S FUTURE AUCTIONS OR FAILED TO MAKE PAYMENTS WHEN DUE UNDER
RELIANT RESOURCES' PURCHASED ENTITLEMENTS.
Subsidiaries of Reliant Resources purchased entitlements to 63% of
Texas Genco's available 2002 capacity and through July 2003 had purchased 71% of
Texas Genco's available 2003 capacity. Reliant Resources made these purchases
either through the exercise of its contractual rights to purchase 50% of the
entitlements Texas Genco auctions in its contractually mandated auctions or
through the submission of bids. In the event Reliant Resources declined to
participate in Texas Genco's future auctions or failed to make payments when
due, Texas Genco's results of operations, financial condition and cash flows
could be adversely affected. As of June 30, 2003, Reliant Resources' securities
ratings are below investment grade. Texas Genco has been granted a security
interest in accounts receivable and/or securitization notes associated with the
accounts receivable of certain subsidiaries of Reliant Resources to secure up to
$250 million in purchase obligations.
TEXAS GENCO MAY INCUR SUBSTANTIAL COSTS AND LIABILITIES AS A RESULT OF ITS
OWNERSHIP OF NUCLEAR FACILITIES.
Texas Genco owns a 30.8% interest in the South Texas Project, a nuclear
powered generation facility. As a result, Texas Genco is subject to risks
associated with the ownership and operation of nuclear facilities. These risks
include:
- the potential harmful effects on the environment and human health
resulting from the operation of nuclear facilities and the
storage, handling and disposal of radioactive materials,
22
- limitations on the amounts and types of insurance commercially
available to cover losses that might arise in connection with
nuclear operations, and
- uncertainties with respect to the technological and financial
aspects of decommissioning nuclear plants at the end of their
licensed lives.
The NRC has broad authority under federal law to impose licensing and
safety-related requirements for the operation of nuclear generation facilities.
In the event of non-compliance, the NRC has the authority to impose fines, shut
down a unit, or both, depending upon its assessment of the severity of the
situation, until compliance is achieved. Revised safety requirements promulgated
by the NRC could necessitate substantial capital expenditures at nuclear plants.
In addition, although we have no reason to anticipate a serious nuclear incident
at the South Texas Project, if an incident did occur, it could have a material
adverse effect on Texas Genco's results of operations, financial condition and
cash flows.
TEXAS GENCO'S OPERATIONS ARE SUBJECT TO EXTENSIVE REGULATION, INCLUDING
ENVIRONMENTAL REGULATION. IF TEXAS GENCO FAILS TO COMPLY WITH APPLICABLE
REGULATIONS OR OBTAIN OR MAINTAIN ANY NECESSARY GOVERNMENTAL PERMIT OR
APPROVAL, IT MAY BE SUBJECT TO CIVIL, ADMINISTRATIVE AND/OR CRIMINAL
PENALTIES THAT COULD ADVERSELY IMPACT ITS RESULTS OF OPERATIONS, FINANCIAL
CONDITION AND CASH FLOWS.
Texas Genco's operations are subject to complex and stringent energy,
environmental and other governmental laws and regulations. The acquisition,
ownership and operation of power generation facilities require numerous permits,
approvals and certificates from federal, state and local governmental agencies.
These facilities are subject to regulation by the Texas Utility Commission
regarding non-rate matters. Existing regulations may be revised or
reinterpreted, new laws and regulations may be adopted or become applicable to
Texas Genco or any of its generation facilities or future changes in laws and
regulations may have a detrimental effect on its business.
Operation of the South Texas Project is subject to regulation by the
NRC. This regulation involves testing, evaluation and modification of all
aspects of plant operation in light of NRC safety and environmental
requirements. Continuous demonstrations to the NRC that plant operations meet
applicable requirements are also required. The NRC has the ultimate authority to
determine whether any nuclear powered generating unit may operate.
Water for certain of Texas Genco's facilities is obtained from public
water authorities. New or revised interpretations of existing agreements by
those authorities or changes in price or availability of water may have a
detrimental effect on Texas Genco's business.
Texas Genco's business is subject to extensive environmental regulation
by federal, state and local authorities. Texas Genco is required to comply with
numerous environmental laws and regulations and to obtain numerous governmental
permits in operating its facilities. Texas Genco may incur significant
additional costs to comply with these requirements. If Texas Genco fails to
comply with these requirements or with any other regulatory requirements that
apply to its operations, it could be subject to administrative, civil and/or
criminal liability and fines, and regulatory agencies could take other actions
seeking to curtail its operations. These liabilities or actions could adversely
impact its results of operations, financial condition and cash flows.
Existing environmental regulations could be revised or reinterpreted,
new laws and regulations could be adopted or become applicable to Texas Genco or
its facilities, and future changes in environmental laws and regulations could
occur, including potential regulatory and enforcement developments related to
air emissions. If any of these events occurs, Texas Genco's business, results of
operations, financial condition and cash flows could be adversely affected.
Texas Genco may not be able to obtain or maintain from time to time all
required environmental regulatory approvals. If there is a delay in obtaining
any required environmental regulatory approvals or if Texas Genco fails to
obtain and comply with them, it may not be able to operate its facilities or it
may be required to incur additional costs. Texas Genco is generally responsible
for all on-site liabilities associated with the environmental condition of its
power generation facilities, regardless of when the liabilities arose and
whether the liabilities are known or unknown. These liabilities may be
substantial.
23
RISK FACTORS AFFECTING OUR NATURAL GAS DISTRIBUTION AND PIPELINES AND GATHERING
BUSINESSES
CERC'S BUSINESSES MUST COMPETE WITH ALTERNATIVE ENERGY SOURCES, AND ITS
PIPELINES AND GATHERING BUSINESSES MUST COMPETE DIRECTLY WITH OTHERS IN THE
TRANSPORTATION AND STORAGE OF NATURAL GAS.
CERC competes primarily with alternate energy sources such as
electricity and other fuel sources. In some areas, intrastate pipelines, other
natural gas distributors and marketers also compete directly with CERC for
natural gas sales to end-users. In addition, as a result of federal regulatory
changes affecting interstate pipelines, natural gas marketers operating on these
pipelines may be able to bypass CERC's facilities and market, sell and/or
transport natural gas directly to commercial and industrial customers. Any
reduction in the amount of natural gas marketed, sold or transported by CERC as
a result of competition may have an adverse impact on CERC's results of
operations, financial condition and cash flows.
CERC's two interstate pipelines and its gathering systems compete with
other interstate and intrastate pipelines and gathering systems in the
transportation and storage of natural gas. The principal elements of competition
are rates, terms of service, and flexibility and reliability of service. They
also compete indirectly with other forms of energy, including electricity, coal
and fuel oils. The primary competitive factor is price. The actions of CERC's
competitors could lead to lower prices, which may have an adverse impact on
CERC's results of operations, financial condition and cash flows.
CERC'S NATURAL GAS DISTRIBUTION BUSINESS IS SUBJECT TO FLUCTUATIONS IN
NATURAL GAS PRICING LEVELS.
CERC is subject to risk associated with price movements of natural gas.
Movements in natural gas prices might affect CERC's ability to collect balances
due from its customers and could create the potential for uncollectible accounts
expense to exceed the recoverable levels built into CERC's tariff rates. In
addition, a sustained period of high natural gas prices could apply downward
demand pressure on natural gas consumption in CERC's service territory.
Additionally, increasing gas prices could create the need for CERC to provide
collateral in order to purchase gas.
CERC MAY INCUR CARRYING COSTS ASSOCIATED WITH PASSING THROUGH CHANGES IN
THE COSTS OF NATURAL GAS.
Generally, the regulations of the states in which CERC operates allow
it to pass through changes in the costs of natural gas to its customers through
purchased gas adjustment provisions in the applicable tariffs. There is,
however, a timing difference between its purchases of natural gas and the
ultimate recovery of these costs. Consequently, CERC may incur carrying costs as
a result of this timing difference that are not recoverable from its customers.
The failure to recover those additional carrying costs may have an adverse
effect on CERC's results of operations, financial condition and cash flows.
IF CERC FAILS TO EXTEND CONTRACTS WITH TWO OF ITS SIGNIFICANT INTERSTATE
PIPELINES' CUSTOMERS, THERE COULD BE AN ADVERSE IMPACT ON ITS OPERATIONS.
Contracts with two of our interstate pipelines' significant customers,
CenterPoint Energy Arkla and Laclede Gas Company, are currently scheduled to
expire in 2005 and 2007, respectively. To the extent the pipelines are unable to
extend these contracts or the contracts are renegotiated at rates substantially
different than the rates provided in the current contracts, there could be an
adverse effect on CERC's results of operations, financial condition and cash
flows.
CERC'S INTERSTATE PIPELINES ARE SUBJECT TO FLUCTUATIONS IN THE SUPPLY OF
GAS.
CERC's interstate pipelines largely rely on gas sourced in the various
supply basins located in the Midcontinent region of the United States. To the
extent the availability of this supply is substantially reduced, it could have
an adverse effect on CERC's results of operations, financial condition and cash
flows.
CERC'S REVENUES AND RESULTS OF OPERATIONS ARE SEASONAL.
A portion of CERC's revenues are derived from natural gas sales and
transportation. Thus, CERC's revenues and results of operations are subject to
seasonality, weather conditions and other changes in natural gas usage, with
revenues being higher during the winter months.
24
RISK FACTORS ASSOCIATED WITH OUR CONSOLIDATED FINANCIAL CONDITION
IF WE ARE UNABLE TO ARRANGE FUTURE FINANCINGS ON ACCEPTABLE TERMS, OUR
ABILITY TO FUND FUTURE CAPITAL EXPENDITURES AND REFINANCE EXISTING
INDEBTEDNESS COULD BE LIMITED.
As of June 30, 2003, we had $11.1 billion of outstanding indebtedness
and trust preferred securities, including approximately $157 million of debt
that must be refinanced in 2003. In addition, the capital constraints and other
factors currently impacting our businesses may require our future indebtedness
to include terms that are more restrictive or burdensome than those of our
current or historical indebtedness. These terms may negatively impact our
ability to operate our business, adversely affect our financial condition and
results of operations or severely restrict or prohibit distributions from our
subsidiaries. The success of our future financing efforts may depend, at least
in part, on:
- general economic and capital market conditions,
- credit availability from financial institutions and other
lenders,
- investor confidence in us and the market in which we operate,
- maintenance of acceptable credit ratings,
- market expectations regarding our future earnings and probable
cash flows,
- market perceptions of our ability to access capital markets on
reasonable terms,
- our exposure to Reliant Resources in connection with its
indemnification obligations arising in connection with its
separation from us,
- provisions of relevant tax and securities laws, and
- our ability to obtain approval of financing transactions under
the 1935 Act.
As of the date of this prospectus, our CenterPoint Houston subsidiary
has $3.1 billion of general mortgage bonds outstanding. It may issue additional
general mortgage bonds on the basis of retired bonds, 70% of property additions
or cash deposited with the trustee. Although approximately $380 million (after
taking into account CenterPoint Houston's issuance of $300 million aggregate
principal amount of general mortgage bonds on September 9, 2003) of additional
general mortgage bonds could be issued on the basis of retired bonds and
property additions existing as of June 30, 2003, CenterPoint Houston has agreed
under the $1.3 billion collateralized term loan maturing in 2005, as amended, to
not issue, subject to certain exceptions, any incremental secured or unsecured
debt in excess of $200 million. However, we would be required to use, subject to
certain exceptions, the net cash proceeds of any such issuance to repay loans
under our credit facility. In addition, CenterPoint Houston is contractually
prohibited, subject to certain exceptions, from issuing additional first
mortgage bonds.
Our current credit ratings are discussed in "Management's Discussion
and Analysis of Financial Condition and Results of Operations of CenterPoint
Energy and Subsidiaries--Liquidity and Capital Resources--Future Sources and
Uses of Cash Flows--Impact on Liquidity of a Downgrade in Credit Ratings" in
Item 2 of Part I of our Second Quarter 2003 Form 10-Q. On October 7, 2003,
Moody's Investors Services, Inc. placed our senior unsecured credit rating on
review for downgrade, reflecting concerns that may lead to a downgrade. We
cannot assure you that these credit ratings will remain in effect for any given
period of time or that one or more of these ratings will not be lowered or
withdrawn entirely by a rating agency. We note that these credit ratings are not
recommendations to buy, sell or hold our securities. Each rating should be
evaluated independently of any other rating. Any future reduction or withdrawal
of one or more of our credit ratings could have a material adverse impact on our
ability to access capital on acceptable terms.
25
AS A HOLDING COMPANY WITH NO OPERATIONS OF OUR OWN, WE WILL DEPEND ON
DISTRIBUTIONS FROM OUR SUBSIDIARIES TO MEET OUR PAYMENT OBLIGATIONS, AND
PROVISIONS OF APPLICABLE LAW OR CONTRACTUAL RESTRICTIONS COULD LIMIT THE
AMOUNT OF THOSE DISTRIBUTIONS.
We derive substantially all our operating income from, and hold
substantially all our assets through, our subsidiaries. As a result, we will
depend on distributions from our subsidiaries in order to meet our payment
obligations. In general, these subsidiaries are separate and distinct legal
entities and will have no obligation to provide us with funds for our payment
obligations, whether by dividends, distributions, loans or otherwise. In
addition, provisions of applicable law, such as those limiting the legal sources
of dividends and those under the 1935 Act, limit their ability to make payments
or other distributions to us, and they could agree to contractual restrictions
on their ability to make distributions.
Our right to receive any assets of any subsidiary, and therefore the
right of our creditors to participate in those assets, will be effectively
subordinated to the claims of that subsidiary's creditors, including trade
creditors. In addition, even if we were a creditor of any subsidiary, our rights
as a creditor would be subordinated to any security interest in the assets of
that subsidiary and any indebtedness of the subsidiary senior to that held by
us.
AN INCREASE IN SHORT-TERM INTEREST RATES COULD ADVERSELY AFFECT OUR CASH
FLOWS.
As of June 30, 2003, we had $3.7 billion of outstanding floating-rate
debt owed to third parties. Because of capital constraints impacting our
business at the time some of this floating-rate debt was entered into, the
interest rates are substantially above our historical borrowing rates. In
addition, any floating-rate debt issued by us in the future could be at interest
rates substantially above our historical borrowing rates. While we may seek to
use interest rate swaps in order to hedge portions of our floating-rate debt, we
may not be successful in obtaining hedges on acceptable terms. Any increase in
short-term interest rates would result in higher interest costs and could
adversely affect our results of operations, financial condition and cash flows.
OTHER RISKS
WE AND CENTERPOINT HOUSTON COULD INCUR LIABILITIES ASSOCIATED WITH
BUSINESSES AND ASSETS THAT WE HAVE TRANSFERRED TO OTHERS.
Under some circumstances, we and CenterPoint Houston could incur
liabilities associated with assets and businesses we and CenterPoint Houston no
longer own. These assets and businesses were previously owned by Reliant Energy
directly or through subsidiaries and include:
- those transferred to Reliant Resources or its subsidiaries in
connection with the organization and capitalization of Reliant
Resources prior to its initial public offering in 2001,
- those transferred to Texas Genco in connection with its
organization and capitalization, and
- those transferred to CenterPoint Energy in connection with the
Restructuring.
In connection with the organization and capitalization of Reliant
Resources, Reliant Resources and its subsidiaries assumed liabilities associated
with various assets and businesses Reliant Energy transferred to them. Reliant
Resources also agreed to indemnify, and cause the applicable transferee
subsidiaries to indemnify, us and our subsidiaries, including CenterPoint
Houston, with respect to liabilities associated with the transferred assets and
businesses. The indemnity provisions were intended to place sole financial
responsibility on Reliant Resources and its subsidiaries for all liabilities
associated with the current and historical businesses and operations of Reliant
Resources, regardless of the time those liabilities arose. If Reliant Resources
is unable to satisfy a liability that has been so assumed in circumstances in
which Reliant Energy has not been released from the liability in connection with
the transfer, we or CenterPoint Houston could be responsible for satisfying the
liability.
Reliant Resources reported in its Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2003 that as of June 30, 2003 it had $7.7
billion of total debt and its unsecured debt ratings are currently below
investment grade. If Reliant Resources is unable to meet its obligations, it
would need to consider, among various options, restructuring under the
bankruptcy laws, in which event Reliant Resources might not honor its
26
indemnification obligations and claims by Reliant Resources' creditors might be
made against us as its former owner.
Reliant Energy and Reliant Resources are named as defendants in a
number of lawsuits arising out of power sales in California and other West Coast
markets and financial reporting matters. Although these matters relate to the
business and operations of Reliant Resources, claims against Reliant Energy have
been made on grounds that include the effect of Reliant Resources' financial
results on Reliant Energy's historical financial statements and liability of
Reliant Energy as a controlling shareholder of Reliant Resources. We or
CenterPoint Houston could incur liability if claims in one or more of these
lawsuits were successfully asserted against us or CenterPoint Houston and
indemnification from Reliant Resources were determined to be unavailable or if
Reliant Resources were unable to satisfy indemnification obligations owed with
respect to those claims.
In connection with the organization and capitalization of Texas Genco,
Texas Genco assumed liabilities associated with the electric generation assets
Reliant Energy transferred to it. Texas Genco also agreed to indemnify, and
cause the applicable transferee subsidiaries to indemnify, us and our
subsidiaries, including CenterPoint Houston, with respect to liabilities
associated with the transferred assets and businesses. In many cases the
liabilities assumed were held by CenterPoint Houston and CenterPoint Houston was
not released by third parties from these liabilities. The indemnity provisions
were intended generally to place sole financial responsibility on Texas Genco
and its subsidiaries for all liabilities associated with the current and
historical businesses and operations of Texas Genco, regardless of the time
those liabilities arose. If Texas Genco were unable to satisfy a liability that
had been so assumed or indemnified against, and provided Reliant Energy had not
been released from the liability in connection with the transfer, CenterPoint
Houston could be responsible for satisfying the liability.
IF RELIANT RESOURCES DOES NOT EXERCISE ITS OPTION TO PURCHASE THE COMMON
STOCK OF TEXAS GENCO THAT WE OWN, WE MAY NOT BE ABLE TO MONETIZE TEXAS
GENCO ON THE SAME TERMS OR ON THE SAME TIME SCHEDULE AS PROVIDED BY THE
OPTION.
Reliant Resources reported in its Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2003 that as of June 30, 2003 it had $7.7
billion of total debt and its unsecured debt ratings are currently below
investment grade. It is not clear whether Reliant Resources will exercise its
option to purchase the common stock of Texas Genco that we own. If Reliant
Resources does not exercise its option, we will have to pursue an alternative
strategy to monetize Texas Genco. We may not be able to monetize our interest in
Texas Genco under any alternative strategy on terms as favorable as those
provided by the Reliant Resources option or as quickly as under the option. In
addition, delays in monetization may increase the risk that the value of the
ownership interest used in the stranded cost determination, which is to be based
on market prices for Texas Genco common stock during the 120 trading days ending
on March 30, 2004, will be higher than the proceeds received in the monetization
process.
IF THE ERCOT MARKET DOES NOT FUNCTION IN THE MANNER CONTEMPLATED BY THE
TEXAS ELECTRIC RESTRUCTURING LAW, TEXAS GENCO'S AND CENTERPOINT HOUSTON'S
BUSINESS, PROSPECTS, RESULTS OF OPERATIONS, FINANCIAL CONDITION AND CASH
FLOWS COULD BE ADVERSELY IMPACTED.
The competitive electric market in Texas became fully operational in
January 2002, and none of CenterPoint Houston, Texas Genco, the Texas Utility
Commission, ERCOT or other market participants has any significant operating
history under the market framework created by the Texas electric restructuring
law. The initiatives under the Texas electric restructuring law have had a
significant impact on the nature of the electric power industry in Texas and the
manner in which participants in the ERCOT market conduct their business. These
changes are ongoing, and we cannot predict the future development of the ERCOT
market or the ultimate effect that this changing regulatory environment will
have on the businesses of CenterPoint Houston or Texas Genco.
Some restructured markets in other states have experienced supply
problems and extreme price volatility. If the ERCOT market does not function as
intended by the Texas electric restructuring law, Texas Genco's and CenterPoint
Houston's results of operations, financial condition and cash flows could be
adversely affected. In addition, any market failures could lead to revisions or
reinterpretations of the Texas electric restructuring law, the adoption of new
laws and regulations applicable to Texas Genco or CenterPoint Houston or their
respective facilities and other future changes in laws and regulations that may
have a detrimental effect on Texas Genco's and CenterPoint Houston's businesses.
27
WE, TOGETHER WITH OUR SUBSIDIARIES, OTHER THAN TEXAS GENCO, ARE SUBJECT TO
REGULATION UNDER THE 1935 ACT. THE 1935 ACT AND RELATED RULES AND
REGULATIONS IMPOSE A NUMBER OF RESTRICTIONS ON OUR ACTIVITIES.
We and our subsidiaries, other than Texas Genco, are subject to
regulation by the SEC under the 1935 Act. The 1935 Act, among other things,
limits the ability of a holding company and its subsidiaries to issue debt and
equity securities without prior authorization, restricts the source of dividend
payments to funds from current and retained earnings without prior
authorization, regulates sales and acquisitions of certain assets and businesses
and governs affiliate transactions.
We received an order from the SEC under the 1935 Act on June 30, 2003
relating to our financing activities, which is effective until June 30, 2005. We
must seek a new order before the expiration date. Although authorized levels of
financing, together with current levels of liquidity, are believed to be
adequate during the period the order is effective, unforeseen events could
result in capital needs in excess of authorized amounts, necessitating further
authorization from the SEC. Approval of filings under the 1935 Act can take
extended periods.
The United States Congress is currently considering legislation which
has a provision that would repeal the 1935 Act. We cannot predict at this time
whether this legislation or any variation thereof will be adopted or, if
adopted, the effect of any such law on our business.
OUR INSURANCE COVERAGE MAY NOT BE SUFFICIENT. INSUFFICIENT INSURANCE
COVERAGE AND INCREASED INSURANCE COSTS COULD ADVERSELY IMPACT OUR RESULTS
OF OPERATIONS, FINANCIAL CONDITION AND CASH FLOWS.
We currently have general liability and property insurance in effect to
cover certain of our facilities in amounts that we consider appropriate. Such
policies are subject to certain limits and deductibles and do not include
business interruption coverage. We cannot assure you that insurance coverage
will be available in the future on commercially reasonable terms or that the
insurance proceeds received for any loss of or any damage to any of our
facilities will be sufficient to restore the loss or damage without negative
impact on our results of operations, financial condition and cash flows. The
costs of our insurance coverage have increased significantly in recent months
and may continue to increase in the future.
Texas Genco and the other owners of the South Texas Project maintain
nuclear property and nuclear liability insurance coverage as required by law and
periodically review available limits and coverage for additional protection. The
owners of the South Texas Project currently maintain $2.75 billion in property
damage insurance coverage, which is above the legally required minimum, but is
less than the total amount of insurance currently available for such losses.
Under the federal Price Anderson Act, the maximum liability to the public of
owners of nuclear power plants was $9.3 billion as of June 30, 2003. Owners are
required under the Price Anderson Act to insure their liability for nuclear
incidents and protective evacuations. Texas Genco and the other owners of the
South Texas Project currently maintain the required nuclear liability insurance
and participate in the industry retrospective rating plan. In addition, the
security procedures at this facility have recently been enhanced to provide
additional protection against terrorist attacks. All potential losses or
liabilities associated with the South Texas Project may not be insurable, and
the amount of insurance may not be sufficient to cover them. In particular,
Texas Genco's insurance policies are subject to certain limits and deductibles
and do not include business interruption coverage.
In common with other companies in its line of business that serve
coastal regions, CenterPoint Houston does not have insurance covering its
transmission and distribution system because CenterPoint Houston believes it to
be cost prohibitive. If CenterPoint Houston were to sustain any loss of or
damage to its transmission and distribution properties, it would be entitled to
seek to recover such loss or damage through a change in its regulated rates,
although there is no assurance that CenterPoint Houston ultimately would obtain
any such rate recovery or that any such rate recovery would be timely granted.
Therefore, we cannot assure you that CenterPoint Houston will be able to restore
any loss of or damage to its transmission and distribution properties without
negative impact on our results of operations, financial condition and cash
flows.
CHANGES IN TECHNOLOGY MAY ADVERSELY AFFECT OUR REVENUES AND RESULTS OF
OPERATIONS.
A significant portion of Texas Genco's generation facilities were
constructed many years ago and rely on older technologies. Some of Texas Genco's
competitors may have newer generation facilities and technologies that
28
allow them to produce and sell power more efficiently, which could adversely
affect Texas Genco's results of operations, financial condition and cash flows.
In addition, research and development activities are ongoing to improve
alternate technologies to produce electricity, including fuel cells,
microturbines, windmills and photovoltaic (solar) cells. It is possible that
advances in these or other technologies will reduce the current costs of
electricity production utilizing newer facilities to a level that is below that
of Texas Genco's generation facilities. If this occurs, Texas Genco's generation
facilities will be less competitive and the value of its power plants could be
significantly impaired. Also, electricity demand could be reduced by increased
conservation efforts and advances in technology that could likewise
significantly reduce the value of Texas Genco's power generation facilities.
The continuous process of technological development may result in the
introduction to retail customers of economically attractive alternatives to
purchasing electricity through CenterPoint Houston's distribution facilities.
Manufacturers of self-generation facilities continue to develop smaller-scale,
more-fuel-efficient generating units that can be cost-effective options for some
retail customers with smaller electric energy requirements. Any reduction in the
amount of electric energy CenterPoint Houston distributes as a result of these
technologies may have an adverse impact on its results of operations, financial
condition and cash flows in the future.
OUR REVENUES AND RESULTS OF OPERATIONS ARE SUBJECT TO RISKS THAT ARE BEYOND
OUR CONTROL, INCLUDING BUT NOT LIMITED TO FUTURE TERRORIST ATTACKS OR
RELATED ACTS OF WAR.
The cost of repairing damage to our operating subsidiaries' facilities
due to storms, natural disasters, wars, terrorist acts and other catastrophic
events, in excess of reserves established for such repairs, may adversely impact
our results of operations, financial condition and cash flows. The occurrence or
risk of occurrence of future terrorist activity may impact our results of
operations, financial condition and cash flows in unpredictable ways. These
actions could also result in adverse changes in the insurance markets and
disruptions of power and fuel markets. In addition, our electric transmission
and distribution, electric generation, natural gas distribution and pipeline and
gathering facilities could be directly or indirectly harmed by future terrorist
activity. The occurrence or risk of occurrence of future terrorist attacks or
related acts of war could also adversely affect the United States economy. A
lower level of economic activity could result in a decline in energy
consumption, which could adversely affect our revenues and margins and limit our
future growth prospects. Also, these risks could cause instability in the
financial markets and adversely affect our ability to access capital.
RISKS RELATED TO THE NEW NOTES
WE CANNOT ASSURE YOU THAT AN ACTIVE TRADING MARKET WILL DEVELOP FOR THE NEW
NOTES.
The new notes will be new securities for which currently there is no
established trading market. We cannot assure you that a trading market will
develop for each series of new notes. Even if a market for each series of new
notes does develop, we cannot assure you that there will be liquidity in that
market, or that each series of new notes might not trade for less than their
original value or face amount. If a liquid market for each series of new notes
does not develop, you may be unable to resell such new notes for a long period
of time, if at all. This means you may not be able to readily convert your new
notes into cash, and the new notes may not be accepted as collateral for a loan.
Even if a market for each series of new notes develops, trading prices
could be higher or lower than the initial offering prices. The prices of each
series of new notes will depend on many factors, including prevailing interest
rates, our operating results and the market for similar securities. Declines in
the market prices for debt securities generally may also materially and
adversely affect the liquidity of each series of new notes, independent of our
financial performance.
THE NEW NOTES WILL BE EFFECTIVELY SUBORDINATED TO EXISTING AND FUTURE
INDEBTEDNESS AND OTHER LIABILITIES OF OUR SUBSIDIARIES.
We derive substantially all our operating income from, and hold
substantially all our assets through, our subsidiaries. As a result, we will
depend on distributions from our subsidiaries in order to meet our payment
obligations under any debt securities, including the new notes and our other
obligations. In general, these subsidiaries are separate and distinct legal
entities and will have no obligation to pay any amounts due on our debt
securities or to provide us with funds for our payment obligations, whether by
dividends, distributions, loans or otherwise. In addition, provisions of
applicable law, such as those limiting the legal sources of dividends and those
29
under the 1935 Act, limit their ability to make payments or other distributions
to us, and they could agree to contractual restrictions on their ability to make
distributions. For a discussion of restrictions under the 1935 Act, please read
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of CenterPoint Energy and Subsidiaries--Liquidity and Capital
Resources--Future Sources and Uses of Cash Flows--Capitalization" in Item 2 of
Part I of our Second Quarter 2003 Form 10-Q.
Our right to receive any assets of any subsidiary, and therefore the
right of our creditors to participate in those assets, will be effectively
subordinated to the claims of that subsidiary's creditors, including trade
creditors. In addition, even if we were a creditor of any subsidiary, our rights
as a creditor would be subordinated to any security interest in the assets of
that subsidiary and any indebtedness of the subsidiary senior to that held by
us. As of June 30, 2003, our subsidiaries, excluding subsidiaries issuing trust
preferred securities and transition bonds, had $4.7 billion of external
indebtedness, $2.4 billion of which was secured.
30
PRIVATE PLACEMENT
We issued $200,000,000 aggregate principal amount of the 2008 old notes
and $200,000,000 aggregate principal amount of the 2015 old notes on May 27,
2003 and $200,000,000 aggregate principal amount of the 2010 old notes on
September 9, 2003 to the initial purchasers of those respective series of old
notes. We issued each series of old notes to the initial purchasers in
transactions exempt from or not subject to registration under the Securities Act
of 1933. The initial purchasers then offered and resold the old notes to
qualified institutional buyers or non-U.S. persons in compliance with Regulation
S under the Securities Act of 1933 initially at the following prices:
- 99.969% of the principal amount of the 2008 old notes;
- 99.958% of the principal amount of the 2015 old notes; and
- 99.782% of the principal amount of the 2010 old notes.
We received net proceeds, after deducting the discount to the initial
purchasers, of approximately $397 million from the offering and sale of the 2008
old notes and 2015 old notes and approximately $198.1 million from the offering
and sale of the 2010 old notes. The net proceeds from the offering of the old
notes were used to repay a portion of the outstanding borrowings under our bank
facility, which, at the time they were paid, bore interest at a weighted average
interest rate of approximately 5.7% and matured on June 30, 2005.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new
notes. In consideration for issuing the new notes of each series, we will
receive in exchange a like principal amount of old notes of that series. The old
notes surrendered in exchange for the new notes will be retired and canceled and
cannot be reissued. Accordingly, issuance of the new notes will not result in
any change in our capitalization.
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THE EXCHANGE OFFER
Participation in the exchange offer is voluntary, and you should
carefully consider whether to accept. You are urged to consult your financial
and tax advisors in making your own decision on what action to take.
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of each series of old notes, we entered
into a registration rights agreement with the initial purchasers of such series
of old notes. In each such agreement, we agreed to file a registration statement
relating to an offer to exchange each series of old notes for the new notes of
that series. We also agreed to use our reasonable commercial efforts to complete
the exchange offer within 315 days after the date of issuance of each series of
old notes. We are offering each series of the new notes under this prospectus in
an exchange offer for the old notes of that series to satisfy our obligations
under the registration rights agreements. We refer to our offer to exchange each
series of the new notes for the old notes of that series as the "exchange
offer."
The exchange offer consists of separate, independent offers for each
series of old notes. The new notes of a series will have terms substantially
identical to the old notes of that series, except that the new notes will not
contain terms with respect to transfer restrictions, registration rights and
additional interest for failure to observe certain obligations under the
relevant registration rights agreement. The new notes of a series will vote
together with the old notes of that series not exchanged on all matters on which
holders of the old notes and new notes of such series are entitled to vote. The
2008 old notes and the 2015 old notes were issued on May 27, 2003, and the 2010
old notes were issued on September 9, 2003.
RESALE OF NEW NOTES
Based on interpretations of the Staff in "no-action letters" to third
parties, we believe that each new note issued in the exchange offer may be
offered for resale, resold and transferred by you without compliance with the
registration and prospectus delivery provisions of the Securities Act of 1933
if:
- you are not our "affiliate" within the meaning of Rule 405 under
the Securities Act of 1933,
- you acquire such new notes in the ordinary course of your
business, and
- you are not engaged in, and do not intend to engage in, and have
no arrangement or understanding with any person to participate
in, a distribution of new notes.
The SEC has not, however, considered the legality of our exchange offer
in the context of a "no-action letter," and there can be no assurance that the
staff of the SEC would make a similar determination with respect to our new
notes as it has in other interpretations to other parties.
If you tender your old notes with the intention of participating in any
manner in a distribution of the new notes, you:
- cannot rely on the interpretations of the Staff, and
- must comply with the registration and prospectus delivery
requirements of the Securities Act of 1933 in connection with a
secondary resale transaction of the old notes.
Unless an exemption from registration is otherwise available, the
resale by any noteholder intending to distribute new notes should be covered by
an effective registration statement under the Securities Act of 1933 containing
the selling noteholder's information required by Item 507 or Item 508, as
applicable, of Regulation S-K under the Securities Act of 1933. This prospectus
may be used for an offer to resell, resale or other retransfer of new notes only
as specifically described in this prospectus. Failure to comply with the
registration and prospectus delivery requirements by a holder subject to these
requirements should result in that holder incurring liability for which it is
not indemnified by us. With respect to broker-dealers, only those that acquired
the old notes for their own account as a result of market-making activities or
other trading activities may participate in the exchange offer. Each
broker-dealer that receives new notes for its own account in exchange for old
notes, where such old notes were
32
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 new notes. Please read "Plan of
Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions described in this
prospectus and in the letter of transmittal, we will accept for exchange any old
notes of a series properly tendered and not withdrawn prior to the expiration
date of the exchange offer for new notes of that series. We will issue $1,000
principal amount of new notes of the relevant series in exchange for each $1,000
principal amount of old notes of that series surrendered under the exchange
offer. Old notes may be tendered only in integral multiples of $1,000.
The exchange offer for old notes of each series is not conditioned upon
any minimum aggregate principal amount of old notes being tendered for exchange
or upon the consummation of the exchange offer for old notes of any other
series.
As of the date of this prospectus, there is approximately $600 million
principal amount of old notes. This prospectus and the letter of transmittal are
being sent to all registered holders of old notes. There will be no fixed record
date for determining registered holders of old notes entitled to participate in
the exchange offer.
We intend to conduct the exchange offer in accordance with the
provisions of the registration rights agreements, the applicable requirements of
the Securities Act of 1933 and the Securities Exchange Act of 1934 and the rules
and regulations of the SEC. Old notes that are not tendered for exchange in the
exchange offer:
- will remain outstanding,
- will continue to accrue interest, and
- will be entitled to the rights and benefits that holders have
under the indenture and, if applicable, the relevant registration
rights agreement.
However, these old notes will not be freely tradable. Except as specified in the
registration rights agreements, we are not obligated to, nor do we currently
anticipate that we will register the old notes under the Securities Act of 1933.
Please read "--Consequences of Failure to Exchange" below.
We will be deemed to have accepted for exchange properly tendered old
notes when we have given oral or written notice of the acceptance to the
exchange agent and complied with the applicable provisions of the relevant
registration rights agreement. The exchange agent will act as agent for the
tendering holders for the purposes of receiving the new notes from us.
If you tender old notes in the exchange offer, you will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
letter of transmittal, transfer taxes with respect to the exchange of old notes.
We will pay all charges and expenses, other than certain applicable taxes
described below, in connection with the exchange offer. It is important that you
read "--Fees and Expenses" for more details about fees and expenses incurred in
the exchange offer.
We will return any old notes that we do not accept for exchange for any
reason without expense to the tendering holder as promptly as practicable after
the expiration or termination of the exchange offer.
EXPIRATION DATE
The exchange offer for old notes of each series will expire at 5:00
p.m., New York City time, on , 2003, unless in our sole discretion we extend
it.
EXTENSIONS, DELAY IN ACCEPTANCE, TERMINATION, OR AMENDMENT
We expressly reserve the right, at any time or from time to time, at
our discretion, to extend the period of time during which the exchange offer for
any series of old notes is open. We may extend that period for each series
independently. We may delay acceptance for exchange of any old notes of a series
by giving oral or written notice
33
of the extension to their holders. During any such extensions, all old notes of
that series you have previously tendered will remain subject to the exchange
offer for that series, and we may accept them for exchange.
To extend the exchange offer, we will notify the exchange agent orally
or in writing of any extension. We also will make a public announcement of the
extension no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
If any of the conditions described below under "--Conditions to the
Exchange Offer" has not been satisfied with respect to the exchange offer for
any series of old notes, we reserve the right, in our sole discretion:
- to delay accepting for exchange any old notes of that series,
- to extend the exchange offer for that series, or
- to terminate the exchange offer for that series.
We will give oral or written notice of such delay, extension or
termination to the exchange agent. Subject to the terms of the registration
rights agreements, we also reserve the right to amend the terms of the exchange
offer for any series in any manner.
Any such delay in acceptance, extension, termination or amendment will
be followed as promptly as practicable by oral or written notice thereof to the
registered holders of old notes of the series affected. If we amend the exchange
offer in a manner that we determine to constitute a material change, we will
promptly disclose that amendment by means of a prospectus supplement. We will
distribute the supplement to the registered holders of the old notes of the
series affected. Depending upon the significance of the amendment and the manner
of disclosure to the registered holders, we will extend the exchange offer if
the exchange offer would otherwise expire during such period.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exchange offer, we have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
CONDITIONS TO THE EXCHANGE OFFER
Despite any other term of the exchange offer, we will not be required
to accept for exchange, or exchange any new notes of a series for, any old notes
of that series, and we may terminate the exchange offer for that series as
provided in this prospectus before accepting any old notes of that series for
exchange, if in our reasonable judgment:
- the exchange offer for that series, or the making of any exchange
by a holder of old notes of that series, would violate any
applicable law or any applicable interpretation of the Staff, or
- any action or proceeding has been instituted or threatened in any
court or by or before any governmental agency with respect to the
exchange offer for that series that, in our judgment, would
reasonably be expected to impair our ability to proceed with that
exchange offer.
In addition, we will not be obligated to accept for exchange the old
notes of any holder that has not made to us:
- the representations described under "--Procedures for Tendering"
and "Plan of Distribution" and in the letter of transmittal, and
- such other representations as may be reasonably necessary under
applicable SEC rules, regulations or interpretations to make
available to us an appropriate form for registering the new notes
under the Securities Act of 1933.
We expressly reserve the right to amend or terminate the exchange offer
for any series of old notes, and to reject for exchange any old notes not
previously accepted for exchange in that exchange offer, upon the occurrence
34
of any of the conditions to that exchange offer specified above. We will give
oral or written notice of any extension, amendment, non-acceptance or
termination to the holders of the old notes of the series affected as promptly
as practicable.
These conditions are for our sole benefit, and we may assert them or
waive them in whole or in part at any time or at various times in our sole
discretion. Our failure at any time to exercise any of these rights will not
mean that we have waived our rights. Each right will be deemed an ongoing right
that we may assert at any time or at various times.
In addition, we will not accept for exchange any old notes tendered,
and will not issue new notes in exchange for any such old notes, if at such time
any stop order has been threatened or is in effect with respect to the
registration statement of which this prospectus forms a part or the
qualification of the indenture relating to the new notes under the Trust
Indenture Act of 1939.
PROCEDURES FOR TENDERING
HOW TO TENDER GENERALLY
Only a holder of old notes may tender such old notes in the exchange
offer. To tender in the exchange offer, a holder must either (1) comply with the
procedures for physical tender or (2) comply with the automated tender offer
program procedures of The Depository Trust Company, or DTC, described below.
To complete a physical tender, a holder must:
- complete, sign and date the letter of transmittal or a facsimile
of the letter of transmittal,
- have the signature on the letter of transmittal guaranteed if the
letter of transmittal so requires,
- mail or deliver the letter of transmittal or facsimile to the
exchange agent prior to the expiration date, and
- deliver the old notes to the exchange agent prior to the
expiration date or comply with the guaranteed delivery procedures
described below.
To be tendered effectively, the exchange agent must receive any
physical delivery of the letter of transmittal and other required documents at
its address provided above under "Prospectus Summary--The Exchange Agent" prior
to the expiration date.
To complete a tender through DTC's automated tender offer program, the
exchange agent must receive, prior to the expiration date, a timely confirmation
of book-entry transfer of such old notes into the exchange agent's account at
DTC according to the procedure for book-entry transfer described below or a
properly transmitted agent's message.
The tender by a holder that is not withdrawn prior to the expiration
date and our acceptance of that tender will constitute an agreement between the
holder and us in accordance with the terms and subject to the conditions
described in this prospectus and in the letter of transmittal.
THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK.
RATHER THAN MAIL THESE ITEMS, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR HAND
DELIVERY SERVICE. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE
DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. YOU SHOULD NOT SEND
THE LETTER OF TRANSMITTAL OR OLD NOTES TO US. YOU MAY REQUEST YOUR BROKER,
DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO EFFECT THE ABOVE
TRANSACTIONS FOR YOU.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with
respect to the old notes at DTC for purposes of the exchange offer promptly
after the date of this prospectus. Any financial institution participating in
35
DTC's system may make book-entry delivery of old notes by causing DTC to
transfer such old notes into the exchange agent's account at DTC in accordance
with DTC's procedures for transfer. If you are unable to deliver confirmation of
the book-entry tender of your old notes into the exchange agent's account at DTC
or all other documents required by the letter of transmittal to the exchange
agent on or prior to the expiration date, you must tender your old notes
according to the guaranteed delivery procedures described below.
TENDERING THROUGH DTC'S AUTOMATED TENDER OFFER PROGRAM
The exchange agent and DTC have confirmed that any financial
institution that is a participant in DTC's system may use DTC's automated tender
offer program to tender its old notes. Accordingly, participants in the program
may, instead of physically completing and signing the letter of transmittal and
delivering it to the exchange agent, transmit their acceptance of the exchange
offer electronically. They may do so by causing DTC to transfer the old notes to
the exchange agent in accordance with its procedures for transfer. DTC will then
send an agent's message to the exchange agent.
An "agent's message" is a message transmitted by DTC to and received by
the exchange agent and forming part of the book-entry confirmation, stating
that:
- DTC has received an express acknowledgment from a participant
in DTC's automated tender offer program that is tendering old
notes that are the subject of such book-entry confirmation,
- the participant has received and agrees to be bound by the
terms of the letter of transmittal or, in the case of an
agent's message relating to guaranteed delivery, the
participant has received and agrees to be bound by the
applicable notice of guaranteed delivery, and
- we may enforce the agreement against such participant.
HOW TO TENDER IF YOU ARE A BENEFICIAL OWNER
If you beneficially own old notes that are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and you wish to
tender those old notes, you should contact the registered holder as soon as
possible and instruct the registered holder to tender on your behalf. If you are
a beneficial owner and wish to tender on your own behalf, you must, prior to
completing and executing the letter of transmittal and delivering your old
notes, either:
- make appropriate arrangements to register ownership of the old
notes in your name, or
- obtain a properly completed bond power from the registered
holder of your old notes.
The transfer of registered ownership may take considerable time and may
not be completed prior to the expiration date.
SIGNATURES AND SIGNATURE GUARANTEES
You must have signatures on a letter of transmittal or a notice of
withdrawal described below under "--Withdrawal of Tenders" guaranteed by an
eligible institution unless the old notes are tendered:
- by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal and the new notes
are being issued directly to the registered holder of the old
notes tendered in the exchange offer for those new notes, or
- for the account of an eligible institution.
An "eligible institution" is a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States, or an eligible guarantor institution within the meaning of Rule 17Ad-15
under the Securities Exchange Act of 1934, in each case, that is a member of one
of the recognized signature guarantee programs identified in the letter of
transmittal.
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WHEN ENDORSEMENTS OR BOND POWERS ARE NEEDED
If a person other than the registered holder of any old notes signs the
letter of transmittal, the old notes must be endorsed or accompanied by a
properly completed bond power. The registered holder must sign the bond power as
the registered holder's name appears on the old notes. An eligible institution
must guarantee that signature.
If the letter of transmittal or any old notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, or
officers of corporations or others acting in a fiduciary or representative
capacity, those persons should so indicate when signing. Unless we waive this
requirement, they also must submit evidence satisfactory to us of their
authority to deliver the letter of transmittal.
DETERMINATIONS UNDER THE EXCHANGE OFFER
We will determine in our sole discretion all questions as to the
validity, form, eligibility, time of receipt, acceptance of tendered old notes
and withdrawal of tendered old notes. Our determination will be final and
binding. We reserve the absolute right to reject any old notes not properly
tendered or any old notes our acceptance of which, in the opinion of our
counsel, might be unlawful. We also reserve the right to waive any defects,
irregularities or conditions of the exchange offer as to particular old notes.
Our interpretation of the terms and conditions of the exchange offer, including
the instructions in the letter of transmittal, will be final and binding on all
parties.
Unless waived, any defects or irregularities in connection with tenders
of old notes must be cured within such time as we determine. Neither we, the
exchange agent nor any other person will be under any duty to give notification
of defects or irregularities with respect to tenders of old notes, nor will we
or those persons incur any liability for failure to give such notification.
Tenders of old notes will not be deemed made until such defects or
irregularities have been cured or waived. Any old notes received by the exchange
agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned to the tendering
holder, unless otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date.
WHEN WE WILL ISSUE NEW NOTES
In all cases, we will issue new notes of the relevant series for
similar old notes that we have accepted for exchange in the exchange offer only
after the exchange agent timely receives:
- such old notes or a timely book-entry confirmation of transfer
of such old notes into the exchange agent's account at DTC,
and
- a properly completed and duly executed letter of transmittal
and all other required documents or a properly transmitted
agent's message.
RETURN OF OLD NOTES NOT ACCEPTED OR EXCHANGED
If we do not accept any tendered old notes of a series for exchange for
any reason described in the terms and conditions of the exchange offer or if old
notes are submitted for a greater principal amount than the holder desires to
exchange, we will return the unaccepted or non-exchanged old notes of that
series without expense to their tendering holder. In the case of old notes of a
series tendered by book-entry transfer into the exchange agent's account at DTC
according to the procedures described below, such non-exchanged old notes will
be credited to an account maintained with DTC. These actions will occur as
promptly as practicable after the expiration or termination of the exchange
offer.
YOUR REPRESENTATIONS TO US
By signing or agreeing to be bound by the letter of transmittal, you
will represent to us that, among other things:
- any new notes that you receive are being acquired in the
ordinary course of your business,
- you have no arrangement or understanding with any person to
participate in the distribution (within the meaning of the
Securities Act of 1933) of the old notes or the new notes,
37
- you are not our "affiliate," as defined in Rule 405 under the
Securities Act of 1933, or, if you are our affiliate, you will
comply with the registration and prospectus delivery
requirements of the Securities Act of 1933 to the extent
applicable,
- if you are not a broker-dealer, you are not engaged in, and do
not intend to engage in, a distribution of the new notes,
- if you are a broker-dealer, you are not tendering old notes
acquired directly from us or one of our affiliates,
- if you are a broker-dealer, you will receive the new notes for
your own account in exchange for old notes that you acquired
as a result of market-making activities or other trading
activities, and you will deliver a prospectus in connection
with any resale of such new notes, and
- you are not acting on behalf of any person who could not
truthfully and completely make the foregoing representations.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your old notes but they are not immediately
available or if you cannot deliver your old notes, the letter of transmittal or
any other required documents to the exchange agent or comply with the applicable
procedures under DTC's automated tender offer program prior to the expiration
date, you may tender if:
- the tender is made through an eligible institution,
- prior to the expiration date, the exchange agent receives from
such eligible institution either a properly completed and duly
executed notice of guaranteed delivery by facsimile
transmission, mail or hand delivery or a properly transmitted
agent's message and notice of guaranteed delivery:
- stating your name and address, the registered
number(s) of your old notes and the principal amount
of old notes tendered,
- stating that the tender is being made thereby, and
- guaranteeing that, within three New York Stock
Exchange- trading days after the expiration date, the
letter of transmittal or facsimile thereof or agent's
message in lieu thereof, together with the old notes
or a book-entry confirmation, and any other documents
required by the letter of transmittal will be
deposited by such eligible institution with the
exchange agent, and
- the exchange agent receives such properly completed and
executed letter of transmittal or facsimile or agent's
message, as well as all tendered old notes in proper form for
transfer or a book-entry confirmation, and all other documents
required by the letter of transmittal, within three New York
Stock Exchange trading days after the expiration date.
If you wish to tender old notes pursuant to the guaranteed delivery
procedures described in the letter of transmittal, you must ensure that the
exchange agent receives the notice of guaranteed delivery prior to 5:00 p.m.,
New York City time, on the applicable expiration date. Upon request to the
exchange agent, the exchange agent will send a notice of guaranteed delivery to
you if you wish to tender your old notes according to the guaranteed delivery
procedures described above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw your
tender at any time prior to 5:00 p.m., New York City time, on the expiration
date.
For a withdrawal to be effective:
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- the exchange agent must receive a written notice of withdrawal
at one of the addresses listed above under "Prospectus
Summary--The Exchange Agent," or
- the withdrawing holder must comply with the appropriate
procedures of DTC's automated tender offer program.
Any notice of withdrawal must:
- specify the name of the person who tendered the old notes to
be withdrawn,
- identify the old notes to be withdrawn, including the
registration number or numbers and the principal amount of
such old notes,
- be signed by the person who tendered the old notes in the same
manner as the original signature on the letter of transmittal
used to deposit those old notes or be accompanied by documents
of transfer sufficient to permit the trustee to register the
transfer in the name of the person withdrawing the tender, and
- specify the name in which such old notes are to be registered,
if different from that of the person who tendered the old
notes.
If old notes have been tendered under the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn old notes and
otherwise comply with the procedures of DTC.
We will determine all questions as to the validity, form, eligibility
and time of receipt of notice of withdrawal, and our determination shall be
final and binding on all parties. We will deem any old notes so withdrawn not to
have been validly tendered for exchange for purposes of the exchange offer.
Any old notes that have been tendered for exchange but that are not
exchanged for any reason will be returned to their holder without cost to the
holder or, in the case of old notes tendered by book-entry transfer into the
exchange agent's account at DTC according to the procedures described above,
such old notes will be credited to an account maintained with DTC for the old
notes. This return or crediting will take place as soon as practicable after
withdrawal. You may retender properly withdrawn old notes by following one of
the procedures described under "--Procedures for Tendering" above at any time on
or prior to 5:00 p.m., New York City time, on the expiration date.
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal
solicitation is being made by mail; however, we may make additional solicitation
by facsimile, e-mail, telephone or in person by our officers and regular
employees and those of our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses. We may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this prospectus, letters of transmittal
and related documents to the beneficial owners of the old notes and in handling
or forwarding tenders for exchange.
We will pay the cash expenses to be incurred in connection with the
exchange offer. They include:
- SEC registration fees for the new notes,
- fees and expenses of the exchange agent and trustee,
- accounting and legal fees,
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- printing costs, and
- related fees and expenses.
TRANSFER TAXES
If you tender your old notes for exchange, you will not be required to
pay any transfer taxes. We will pay or cause to be paid all transfer taxes, if
any, applicable to the exchange of old notes in the exchange offer. The
tendering holder will, however, be required to pay any transfer taxes, whether
imposed on the registered holder or any other person, if:
- certificates representing new notes or old notes for principal
amounts not tendered or accepted for exchange are to be
delivered to, or are to be issued in the name of, any person
other than the registered holder of old notes tendered,
- tendered old notes are registered in the name of any person
other than the person signing the letter of transmittal, or
- a transfer tax is imposed for any reason other than the
exchange of old notes for new notes in the exchange offer.
If satisfactory evidence of payment of any transfer taxes payable by a
tendering holder is not submitted with the letter of transmittal, the amount of
such transfer taxes will be billed directly to that tendering holder. The
exchange agent will retain possession of new notes with a face amount equal to
the amount of the transfer taxes due until it receives payment of the taxes.
CONSEQUENCES OF FAILURE TO EXCHANGE
If you do not exchange your old notes for new notes in the exchange
offer, or if you tender your old notes but subsequently withdraw them, you will
remain subject to the existing restrictions on transfer of the old notes. In
general, you may not offer or sell the old notes unless either the offer and
sale is registered under the Securities Act of 1933 or the offer or sale is
exempt from or not subject to registration under the Securities Act of 1933 and
applicable state securities laws. Except as required by the registration rights
agreements, we do not intend to register resales of the old notes under the
Securities Act of 1933.
The tender of old notes of a series in the exchange offer will reduce
the outstanding principal amount of the old notes of that series. Due to the
corresponding reduction in liquidity, this may have an adverse effect upon, and
increase the volatility of, the market price of any old notes of that series
which you continue to hold.
ACCOUNTING TREATMENT
We will amortize our expenses of the exchange offer relating to each
series of old notes over the term of the new notes of that series under
generally accepted accounting principles.
OTHER
Participation in the exchange offer is voluntary, and you should
carefully consider whether to accept. You are urged to consult your financial
and tax advisors in making your decision on what action to take. In the future,
we may seek to acquire untendered old notes in open market or privately
negotiated transactions, through subsequent exchange offers or otherwise. We
have no present plan to acquire any old notes that are not tendered in the
exchange offer or to file a registration statement to permit resales of any
untendered old notes, except as required by the registration rights agreements.
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DESCRIPTION OF THE NOTES
We will issue the new notes, and we issued the old notes, under an
indenture, dated as of May 19, 2003, as supplemented (the "indenture"), between
us and JPMorgan Chase Bank, as trustee. We sometimes refer to the old notes and
the new notes in this prospectus collectively as the "notes." The descriptions
under this heading are summaries of the material provisions of the notes and the
indenture. Such summaries do not purport to be complete and are qualified in
their entirety by reference to the indenture and the notes. For a complete
description of the notes, you should refer to the indenture and the supplemental
indentures establishing the terms of the notes, which we have filed with the
SEC. References to article and section numbers in this prospectus, unless
otherwise indicated, are references to article and section numbers of the
indenture. For purposes of this summary, the terms "we," "our," "ours" and "us"
refer only to CenterPoint Energy, Inc. and not to any of our subsidiaries.
We may issue debt securities from time to time in one or more series
under the indenture. There is no limitation on the amount of debt securities we
may issue under the indenture. Our 2008 old notes ($200,000,000 outstanding as
of September 30, 2003), 2015 old notes ($200,000,000 outstanding as of September
30, 2003), 2010 old notes ($200,000,000 outstanding as of September 30, 2003)
and 3.75% Convertible Senior Notes due 2023 ($575,000,000 outstanding as of
September 30, 2003) are currently outstanding under the indenture.
The old notes of a series and the new notes of that series will
constitute a single series of debt securities under the indenture. If the
exchange offer for notes of a series is consummated, holders of old notes of
that series who do not exchange their old notes for new notes of that series
will vote together with holders of new notes of that series for all relevant
purposes under the indenture. Accordingly, in determining whether the required
holders have given any notice, consent or waiver or taken any other action
permitted under the indenture, any old notes of a series that remain outstanding
after the applicable exchange offer will be aggregated with the new notes of
that series, and the holders of those old notes and new notes will vote together
as a single series. All references in this prospectus to specified percentages
in aggregate principal amount of old notes of a series means, at any time after
the applicable exchange offer is consummated, the percentages in aggregate
principal amount of the old notes of that series and the new notes of that
series collectively then outstanding.
GENERAL
The 2008 new notes will mature on June 1, 2008 and are initially
limited to $200 million in aggregate principal amount. The 2015 new notes will
mature on June 1, 2015 and are initially limited to $200 million in aggregate
principal amount. The 2010 new notes will mature on September 1, 2010 and are
initially limited to $200 million in aggregate principal amount. However, we may
issue additional notes of each series from time to time, without the consent of
the holders of the notes. The new notes will be issued only in denominations of
$1,000 principal amount and integral multiples of $1,000 principal amount.
The new notes will:
- be general unsecured obligations,
- rank equally in right of payment with all of our other
existing and future unsecured and unsubordinated indebtedness,
and
- with respect to the assets and earnings of our subsidiaries,
effectively rank below all of the liabilities of our
subsidiaries.
As of October 31, 2003, CenterPoint Energy, on an unconsolidated basis,
had approximately $5.3 billion aggregate principal amount of outstanding
indebtedness, including approximately $924 million of obligations relating to
pollution control bonds issued on our behalf that are secured by general
mortgage bonds or first mortgage bonds of CenterPoint Houston. We have granted
the lenders under our credit facility a security interest in the stock of Texas
Genco. Excluding subsidiaries issuing trust preferred securities and transition
bonds, as of October 31, 2003, our subsidiaries had approximately $5.1 billion
aggregate principal amount of external indebtedness, of which approximately $2.7
billion is secured, as well as other liabilities.
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STRUCTURAL SUBORDINATION
We are a holding company that conducts substantially all of our
operations through our subsidiaries. Our only significant assets are the capital
stock of our subsidiaries, and our subsidiaries generate substantially all of
our operating income and cash flow. As a result, dividends or advances from our
subsidiaries are the principal source of funds necessary to meet our debt
service obligations. Contractual provisions or laws, including the 1935 Act, as
well as our subsidiaries' financial condition and operating requirements, may
limit our ability to obtain cash from our subsidiaries that we may require to
pay our debt service obligations, including payments on the notes. In addition,
the notes will be effectively subordinated to all of the liabilities of our
subsidiaries with regard to the assets and earnings of our subsidiaries.
INTEREST
Interest on the new notes will:
- accrue at the respective rates shown on the cover page of this
prospectus from the latest date to which interest shall have
been paid on the old note surrendered in exchange therefor or,
if no interest has been paid on such old note, from the date
of original issuance of such old note,
- be payable semi-annually in arrears on each June 1 and
December 1, with the initial interest payment date following
the consummation of the exchange offer being 1, 200 ,
for the 2008 new notes and the 2015 new notes, and on each
March 1 and September 1, with the initial interest payment
date following the consummation of the exchange offer
being 1, 200 , for the 2010 new notes,
- be payable to the person in whose name the notes are
registered at the close of business on the May 15 and November
15, for the 2008 new notes and the 2015 new notes, and on the
February 15 and August 15, for the 2010 new notes, immediately
preceding the applicable interest payment date, which we refer
to with respect to the notes as "regular record dates,"
- be computed on the basis of a 360-day year comprised of twelve
30-day months, and
- be payable on overdue interest to the extent permitted by law
at the same rate as interest is payable on principal.
If any interest payment date, the maturity date or any redemption date
falls on a day that is not a business day, the required payment will be made on
the next succeeding business day with the same force and effect as if made on
the relevant interest payment date, maturity date or redemption date and no
additional amounts will accrue on that payment for the period from and after the
interest payment date, maturity date or redemption date, as the case may be, to
the date of that payment on the next succeeding business day. The term "business
day" means, with respect to any note, any day other than a Saturday, a Sunday or
a day on which banking institutions in The City of New York are authorized or
required by law, regulation or executive order to close.
OPTIONAL REDEMPTION
We may redeem each series of notes, in whole or in part, at our option
exercisable at any time and from time to time upon not less than 30 and not more
than 60 days' notice as provided in the indenture, on any date prior to their
maturity at a redemption price equal to:
- 100% of the principal amount of the notes redeemed, plus
- accrued and unpaid interest thereon, if any, and additional
interest (as described in "Registration Rights") thereon, if
any, to, but excluding, the redemption date, plus
- the make-whole premium described below, if any.
The redemption price will never be less than 100% of the principal
amount of the notes redeemed plus accrued and unpaid interest thereon, if any,
to, but excluding, the redemption date.
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The amount of the make-whole premium with respect to any 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 such redemption, would
have been payable on the note or portion thereof being
redeemed on each interest payment date occurring after the
redemption date (excluding any accrued and unpaid interest for
the period prior to the redemption date), and
- the principal amount that, but for such redemption, would have
been payable at the final maturity of the note or portion
thereof being redeemed, over
(2) the principal amount of the note being redeemed.
The present values of interest and principal payments referred to in
clause (1) above will be determined in accordance with generally accepted
principles of financial analysis. These 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 comparable treasury yield (as
defined below) plus 50 basis points.
The make-whole premium will be calculated by an independent investment
banking institution of national standing appointed by us. If we fail to appoint
an independent investment banking institution at least 45 days prior to the
redemption date, or if the independent investment banking institution we appoint
is unwilling or unable to calculate the make-whole premium, the calculation will
be made by Citigroup Global Markets Inc. for the 2008 notes and the 2015 notes
and by Deutsche Bank Securities Inc. for the 2010 notes. If Citigroup Global
Markets Inc. or Deutsche Bank Securities Inc., as applicable, is unwilling or
unable to make the calculation, we will appoint a different independent
investment banking institution of national standing to make the calculation.
For purposes of determining the make-whole premium, "comparable
treasury yield" means a rate of interest per annum equal to the weekly average
yield to maturity of United States Treasury Securities that have a constant
maturity that corresponds to the remaining term to maturity of the notes to be
redeemed, calculated to the nearest 1/12th of a year. The comparable 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 Securities 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. If this statistical release sets forth a weekly
average yield for United States Treasury Securities having a constant maturity
that is the same as the remaining term calculated as set forth above, then the
comparable treasury yield will be equal to such weekly average yield. In all
other cases, the comparable treasury yield will be calculated by interpolation
on a straight-line basis, between the weekly average yields on the United States
Treasury Securities that have a constant maturity closest to and greater than
the remaining term and the United States Treasury Securities 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 or any successor release). Any weekly
average yields calculated by interpolation will be rounded to the nearest
1/100th of 1%, with any figure of 1/200th of 1% or above being rounded upward.
If weekly average yields for United States Treasury Securities are not available
in the H.15 statistical release or otherwise, then the comparable treasury yield
will be calculated by interpolation of comparable rates selected by an
independent investment banking institution selected in the manner described in
the second preceding paragraph.
If we redeem any series of notes in part, the trustee will select the
notes for redemption on a pro rata basis, by lot or by such other method as the
trustee in its sole discretion deems fair and appropriate. We will only redeem
notes in multiples of $1,000 in original principal amount. If any note is to be
redeemed in part only, the notice of redemption will state the portion of the
principal amount to be redeemed. A note in principal amount equal to the
unredeemed portion of the original note will be issued upon the cancellation of
the original note.
43
CONSOLIDATION, MERGER AND SALE OF ASSETS
Under the indenture, we may not consolidate with or merge into, or
convey, transfer or lease our properties and assets substantially as an entirety
to, any person, referred to as a "successor person" unless:
- the successor person is a corporation, partnership, trust or
other entity organized and validly existing under the laws of
the United States of America or any state thereof or the
District of Columbia,
- the successor person expressly assumes our obligations with
respect to the notes and the indenture,
- immediately after giving effect to the transaction, no event
of default, and no event which, after notice or lapse of time
or both, would become an event of default, would occur and be
continuing, and
- we have delivered to the trustee the certificates and opinions
required under the indenture. (Section 801)
EVENTS OF DEFAULT
Each of the following will be an event of default under the indenture
with respect to the notes of a series:
- our failure to pay the principal of or premium, if any, on the
notes of that series when due, including at maturity or upon
redemption,
- our failure to pay any interest, including additional
interest, if any, on the notes of that series for 30 days
after the interest becomes due,
- our failure to perform, or our breach, in any material
respect, of any other covenant or warranty in the indenture,
other than a covenant or warranty included in the indenture
solely for the benefit of another series of debt securities
issued under the indenture, for 90 days after either the
trustee or holders of at least 25% in principal amount of the
outstanding notes of that series have given us written notice
of the breach in the manner required by the indenture,
- the default by us, CERC or CenterPoint Houston in a scheduled
payment at maturity, upon redemption or otherwise in the
aggregate principal amount of $50 million or more, after the
expiration of any applicable grace period, of any
Indebtedness, or the acceleration of any Indebtedness of us,
CERC or CenterPoint Houston in such aggregate principal
amount, so that it becomes due and payable prior to the date
on which it would otherwise have become due and payable and
such payment default is not cured or such acceleration is not
rescinded within 30 days after notice to us in accordance with
the terms of the Indebtedness; provided that such payment
default or acceleration of CERC or CenterPoint Houston shall
not be an event of default if, at the time such event occurs,
CERC or CenterPoint Houston, as the case may be, shall not be
affiliated with us, and
- specified events involving bankruptcy, insolvency or
reorganization of us, CERC or CenterPoint Houston; provided
that any specified event involving CERC or CenterPoint Houston
shall not be an event of default if, at the time such event
occurs, CERC or CenterPoint Houston, as the case may be, shall
not be affiliated with us,
provided, however, that no event described in the third bullet point above will
be an event of default until an officer of the trustee, assigned to and working
in the trustee's corporate trust department, has actual knowledge of the event
or until the trustee receives written notice of the event at its corporate trust
office. (Section 501)
If an event of default occurs and is continuing with respect to notes
of a series, either the trustee or the holders of at least 25% in principal
amount of the outstanding notes of that series may declare the principal amount
of the notes of that series due and immediately payable. In order to declare the
principal amount of the notes of that series due and immediately payable, the
trustee or the holders must deliver a notice that satisfies the requirements of
the indenture. Upon a declaration by the trustee or the holders, we will be
obligated to pay the principal amount of the notes of that series plus accrued
and unpaid interest, including additional interest, if any.
44
This right does not apply if an event of default described in the fifth
bullet point above occurs. If one of the events of default described in the
fifth bullet point above occurs and is continuing, the notes then outstanding
under the indenture shall be due and payable immediately.
At any time after any declaration of acceleration of the notes of any
series, but before a judgment or decree for payment of the money due has been
obtained by the trustee, the event of default giving rise to the declaration of
acceleration will, without further act, be deemed to have been waived, and such
declaration and its consequences will, without further act, be deemed to have
been rescinded and annulled if:
- we have paid or deposited with the trustee a sum sufficient to
pay:
- all overdue installments of interest on the notes of
that series,
- the principal of (and premium, if any, on) the notes
of that series which have become due otherwise than
by such declaration of acceleration and any interest
thereon at the rate or rates prescribed therefor,
- to the extent lawfully permitted, interest upon
overdue interest, and
- all sums paid or advanced by, and certain sums owed
to, the trustee under the indenture, and
- all events of default, other than the non-payment of the
principal amount of the notes of that series which became due
solely by such declaration of acceleration, have been cured or
waived as provided in the indenture. (Section 502) See
"--Modification and Waiver" below.
If an event of default occurs and is continuing, the trustee will
generally have no obligation to exercise any of its rights or powers under the
indenture at the request or direction of any of the holders, unless the holders
offer reasonable indemnity to the trustee. (Section 603) The holders of a
majority in principal amount of the outstanding notes of any series will
generally have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee for the notes, provided that:
- the direction is not in conflict with any law or the
indenture,
- the trustee may take any other action it deems proper which is
not inconsistent with the direction, and
- the trustee will generally have the right to decline to follow
the direction if an officer of the trustee determines, in good
faith, that the proceeding would involve the trustee in
personal liability or would otherwise be contrary to
applicable law. (Section 512)
A holder of a note of any series may only pursue a remedy under the
indenture if:
- the holder has previously given the trustee written notice of
a continuing event of default for the notes of that series,
- holders of at least 25% in principal amount of the outstanding
notes of that series have made a written request to the
trustee to pursue that remedy,
- the holders have offered reasonable indemnity to the trustee,
- the trustee fails to pursue that remedy within 60 days after
receipt of the request, and
- during that 60-day period, the holders of a majority in
principal amount of the notes of that series do not give the
trustee a direction inconsistent with the request. (Section
507)
However, these limitations do not apply to a suit by a holder of a note
demanding payment of the principal, premium, if any, or interest on a note on or
after the date the payment is due. (Section 508)
45
We will be required to furnish to the trustee annually a statement by
some of our officers regarding our performance or observance of any of the terms
of the indenture and specifying all of our known defaults, if any. (Section
1004)
MODIFICATION AND WAIVER
We may enter into one or more supplemental indentures with the trustee
without the consent of the holders of any of the notes in order to:
- evidence the succession of another person to us, or successive
successions and the assumption of our covenants, agreements
and obligations by a successor,
- add to our covenants for the benefit of the holders of any
series of debt securities issued under the indenture or to
surrender any of our rights or powers,
- add events of default for any series of debt securities issued
under the indenture,
- add or change any provision of the indenture to the extent
necessary to issue any series of debt securities in bearer
form,
- add to, change or eliminate any provision of the indenture
applying to one or more series of debt securities issued under
the indenture, provided that if such action adversely affects
the interests of any holder of debt securities of any series,
the addition, change or elimination will become effective with
respect to that series only when no security of that series
remains outstanding,
- convey, transfer, assign, mortgage or pledge any property to
or with the trustee or to surrender any right or power
conferred upon us by the indenture,
- establish the form or terms of any series of debt securities
issued under the indenture,
- provide for uncertificated securities in addition to
certificated securities,
- evidence and provide for successor trustees or to add or
change any provisions to the extent necessary to appoint a
separate trustee or trustees for a specific series of debt
securities,
- correct any ambiguity, defect or inconsistency under the
indenture, provided that such action does not adversely affect
the interests of the holders of debt securities of any series,
- supplement any provisions of the indenture necessary to
defease and discharge any series of debt securities, provided
that such action does not adversely affect the interests of
the holders of any series of debt securities,
- comply with the rules or regulations of any securities
exchange or automated quotation system on which any debt
securities are listed or traded, or
- add, change or eliminate any provisions of the indenture in
accordance with any amendments to the Trust Indenture Act of
1939, provided that the action does not adversely affect the
rights or interests of any holder of debt securities. (Section
901)
We may enter into one or more supplemental indentures with the trustee
in order to add to, change or eliminate provisions of the indenture or to modify
the rights of the holders of one or more series of debt securities, including
the notes, if we obtain the consent of the holders of a majority in principal
amount of the outstanding debt securities of each series affected by the
supplemental indenture, treated as one class. However, without the consent of
the holders of each outstanding debt security affected by the supplemental
indenture, we may not enter into a supplemental indenture that:
- changes the stated maturity of the principal of, or any
installment of principal of or interest on, any debt security,
except to the extent permitted by the indenture,
46
- reduces the principal amount of, or any premium or interest
on, any debt security,
- reduces the redemption price of the notes or changes the terms
applicable to redemption in a manner adverse to the holder,
- reduces the amount of principal of an original issue discount
security or any other debt security payable upon acceleration
of the maturity thereof,
- changes the place or currency of payment of principal,
premium, if any, or interest,
- impairs the right to institute suit for the enforcement of any
payment on any debt security,
- reduces the percentage in principal amount of outstanding debt
securities of any series, the consent of whose holders is
required for modification or amendment of the indenture,
- reduces the percentage in principal amount of outstanding debt
securities of any series necessary for waiver of compliance
with certain provisions of the indenture or for waiver of
certain defaults,
- makes certain modifications to such provisions with respect to
modification and waiver,
- makes any change that adversely affects the right to convert
or exchange any debt security, including the notes, or
decreases the conversion or exchange rate or increases the
conversion price of any convertible or exchangeable debt
security,
- in the case of any series of the notes, alters the manner of
calculation or rate of additional interest payable on any note
or extend the time for payment of any such amount, or
- changes the terms and conditions pursuant to which any series
of debt securities that is secured in a manner adverse to the
holders of the debt securities. (Section 902)
Holders of a majority in principal amount of the outstanding notes of a
series may waive past defaults or noncompliance with restrictive provisions of
the indenture with respect to that series. However, the consent of holders of
each outstanding note of a series is required to:
- waive any default in the payment of principal, premium, if
any, or interest on any note of that series, or
- waive any covenants and provisions of the indenture that may
not be amended without the consent of the holder of each
outstanding note of that series. (Sections 513 and 1006)
In order to determine whether the holders of the requisite principal
amount of the outstanding debt securities have taken an action under the
indenture as of a specified date:
- the principal amount of an "original issue discount security"
that will be deemed to be outstanding will be the amount of
the principal that would be due and payable as of such date
upon acceleration of the maturity to such date,
- if, as of such date, the principal amount payable at the
stated maturity of a debt security is not determinable, for
example, because it is based on an index, the principal amount
of such debt security deemed to be outstanding as of such date
will be an amount determined in the manner prescribed for such
debt security,
- the principal amount of a debt security denominated in one or
more foreign currencies or currency units that will be deemed
to be outstanding will be the $U.S. equivalent, determined as
of such date in the manner prescribed for such debt security,
of the principal amount of such debt security or, in the case
of a debt security described in the two preceding bullet
points, of the amount described above, and
- debt securities owned by us or any other obligor upon the debt
securities or any of our or their affiliates will be
disregarded and deemed not to be outstanding.
47
An "original issue discount security" means a debt security issued under the
indenture which provides for an amount less than the principal amount thereof to
be due and payable upon a declaration of acceleration of maturity. Some debt
securities, including those for whose payment or redemption money has been
deposited or set aside in trust for the holders and those that have been fully
defeased pursuant to Section 1402 of the indenture, will not be deemed to be
outstanding. (Section 101)
We will generally be entitled to set any day as a record date for
determining the holders of outstanding notes of a series entitled to give or
take any direction, notice, consent, waiver or other action under the indenture.
In limited circumstances, the trustee will be entitled to set a record date for
action by holders of outstanding notes of a series. If a record date is set for
any action to be taken by holders, the action may be taken only by persons who
are holders of outstanding notes of the relevant series on the record date. To
be effective, the action must be taken by holders of the requisite principal
amount of notes of that series within a specified period following the record
date. For any particular record date, this period will be 180 days or such
shorter period as we may specify, or the trustee may specify, if it set the
record date. This period may be shortened or lengthened by not more than 180
days. (Section 104)
DEFEASANCE
The provisions of the indenture relating to defeasance and discharge of
indebtedness, or defeasance of restrictive covenants, will apply to the notes of
each series. (Section 1401)
DEFEASANCE AND DISCHARGE. We will be discharged from all of our
obligations with respect to the notes of a series, except for certain
obligations to exchange or register the transfer of notes of that series, to
replace stolen, lost or mutilated notes of that series, to maintain paying
agencies and to hold moneys for payment in trust, upon the deposit in trust for
the benefit of the holders of the notes of that series of money or U.S.
government obligations, or both, which, through the payment of principal and
interest in respect thereof in accordance with their terms, will provide money
in an amount sufficient to pay the principal, premium, if any, and interest on
the notes of that series to the stated maturity of such notes in accordance with
the terms of the indenture and such notes. Such defeasance or discharge may
occur only if, among other things, we have delivered to the trustee an opinion
of counsel to the effect that we have received from, or there has been published
by, the United States Internal Revenue Service a ruling, or there has been a
change in tax law, in either case to the effect that holders of the notes of
that series will not recognize gain or loss for federal income tax purposes as a
result of such deposit, defeasance and discharge and will be subject to federal
income tax on the same amount, in the same manner and at the same times as would
have been the case if such deposit, defeasance and discharge were not to occur.
(Sections 1402 and 1404)
DEFEASANCE OF CERTAIN COVENANTS. In certain circumstances, we may omit
to comply with specified restrictive covenants, and that in those circumstances
the occurrence of certain events of default, which are described in the third
bullet point under "--Events of Default" above, with respect to such restrictive
covenants, and those described in the fourth bullet point under "--Events of
Default" above, will be deemed not to be or result in an event of default, in
each case with respect to the notes of a series. We, in order to exercise such
option, will be required to deposit, in trust for the benefit of the holders of
the notes of that series, money or U.S. government obligations, or both, which,
through the payment of principal and interest in respect thereof in accordance
with their terms, will provide money in an amount sufficient to pay the
principal, premium, if any, and interest on such notes to the stated maturity in
accordance with the terms of the indenture and such notes. We will also be
required, among other things, to deliver to the trustee an opinion of counsel to
the effect that holders of the notes of that series will not recognize gain or
loss for federal income tax purposes as a result of such deposit and defeasance
of certain obligations and will be subject to federal income tax on the same
amount, in the same manner and at the same times as would have been the case if
such deposit and defeasance were not to occur. In the event we exercise this
option with respect to any notes of a series and such notes were declared due
and payable because of the occurrence of any event of default, the amount of
money and U.S. government obligations so deposited in trust would be sufficient
to pay amounts due on such notes at the time of their stated maturity, but might
not be sufficient to pay amounts due on such notes upon any acceleration
resulting from the event of default. In such case, we would remain liable for
those payments. (Sections 1403 and 1404)
SATISFACTION AND DISCHARGE
We may discharge our obligations under the indenture while notes remain
outstanding if (1) all outstanding
48
debt securities issued under the indenture have become due and payable, (2) all
outstanding debt securities issued under the indenture have or will become due
and payable at their scheduled maturity within one year, or (3) all outstanding
debt securities issued under the indenture are scheduled for redemption in one
year, and in each case, we have deposited with the trustee an amount sufficient
to pay and discharge all outstanding debt securities issued under the indenture
on the date of their scheduled maturity or the scheduled date of redemption.
SINKING FUND
We are not obligated to make mandatory redemption or sinking fund
payments with respect to the notes.
RESTRICTIVE COVENANT
Other than the covenant described below, the indenture does not contain
financial covenants and does not restrict us from paying dividends, incurring
additional indebtedness or issuing or repurchasing any of our other securities.
The indenture also does not protect holders in the event of a highly leveraged
transaction, except to the extent described under "--Consolidation, Merger and
Sale of Assets."
LIMITATIONS ON LIENS. So long as any of the notes are outstanding, we
will not pledge, mortgage, hypothecate or grant a security interest in, or
permit any mortgage, pledge, security interest or other lien upon, any capital
stock or other equity interests now or hereafter owned by us in any Significant
Subsidiary to secure any Indebtedness, without making effective provision
whereby the outstanding notes shall be equally and ratably secured. This
restriction shall not apply to:
- any mortgage, pledge, security interest, lien or encumbrance
upon the capital stock of Texas Genco Holdings, Inc. to secure
obligations under our credit facility existing in May 2003 or
any extension, renewal, refunding, amendment or replacement
thereof,
- any mortgage, pledge, security interest, lien or encumbrance
upon the capital stock or other equity interests of
CenterPoint Energy Transition Bond Company, LLC or any other
special purpose subsidiary hereafter created by us in
connection with the issuance of securitization bonds for the
economic value of generation-related regulatory assets and
stranded costs,
- any mortgage, pledge, security interest, lien or encumbrance
upon any capital stock or other equity interests in an entity
which was not affiliated with us prior to one year before the
grant of such mortgage, pledge, security interest, lien or
encumbrance (or the capital stock or other equity interests of
a holding company formed to acquire or hold such capital stock
or other equity interests) created at the time of our
acquisition of the capital stock or other equity interests or
within one year after such time to secure all or a portion of
the purchase price for such capital stock or other equity
interests; provided that the principal amount of any
Indebtedness secured by such mortgage, pledge, security
interest, lien or encumbrance does not exceed 100% of such
purchase price and the fees, expenses and costs incurred in
connection with such acquisition and acquisition financing,
- any mortgage, pledge, security interest, lien or encumbrance
existing upon capital stock or other equity interests in an
entity which was not affiliated with us prior to one year
before the grant of such mortgage, pledge, security interest,
lien or encumbrance at the time of our acquisition of such
capital stock or other equity interests (whether or not the
obligations secured thereby are assumed by us or such
subsidiary becomes a Significant Subsidiary); provided that
(i) such mortgage, pledge, security interest, lien or
encumbrance existed at the time such entity became a
Significant Subsidiary and was not created in anticipation of
the acquisition and (ii) any such mortgage, pledge, security
interest, lien or encumbrance does not by its terms secure any
Indebtedness other than Indebtedness existing or committed
immediately prior to the time such entity becomes a
Significant Subsidiary,
- liens for taxes, assessments or governmental charges or levies
to the extent not past due or which are being contested in
good faith by appropriate proceedings diligently conducted and
for which we have provided adequate reserves for the payment
thereof in accordance with generally accepted accounting
principles,
49
- pledges or deposits in the ordinary course of business to
secure obligations under workers' compensation laws or similar
legislation,
- materialmen's, mechanics', carriers', workers' and repairmen's
liens imposed by law and other similar liens arising in the
ordinary course of business for sums not yet due or currently
being contested in good faith by appropriate proceedings
diligently conducted,
- attachment, judgment or other similar liens, which have not
been effectively stayed, arising in connection with court
proceedings; provided that such liens, in the aggregate, shall
not secure judgments which exceed $50,000,000 aggregate
principal amount at any one time outstanding; provided further
that the execution or enforcement of each such lien is
effectively stayed within 30 days after entry of the
corresponding judgment (or the corresponding judgment has been
discharged within such 30 day period) and the claims secured
thereby are being contested in good faith by appropriate
proceedings timely commenced and diligently prosecuted,
- other liens not otherwise referred to in the above bullets,
provided that the Indebtedness secured by such liens in the
aggregate, shall not exceed 1% of consolidated gross assets
appearing in our most recent audited consolidated financial
statements at any one time outstanding,
- any mortgage, pledge, security interest, lien or encumbrance
on the capital stock or other equity interests of any
subsidiary that was otherwise permitted hereunder if such
subsidiary subsequently becomes a Significant Subsidiary, or
- any extension, renewal or refunding of Indebtedness secured by
any mortgage, pledge, security interest, lien or encumbrance
described in the above bullets; provided that the principal
amount of any such Indebtedness is not increased by an amount
greater than the fees, expenses and costs incurred in
connection with such extension, renewal or refunding.
DEFINED TERMS
An "affiliate" of, or a person "affiliated" with, a specific person is
a person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the person
specified.
The term "control" (including the terms "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting shares, by contract, or otherwise.
"Indebtedness," as applied to any person, means bonds, debentures,
notes and other instruments or arrangements representing obligations created or
assumed by such person, in respect of:
- obligations for money borrowed, other than unamortized debt
discount or premium,
- obligations evidenced by a note or similar instrument given in
connection with the acquisition of any business, properties or
assets of any kind,
- obligations as lessee under a capital lease, and
- any amendments, renewals, extensions, modifications and
refundings of any such indebtedness or obligations listed in
the three immediately preceding bullet points.
All indebtedness of such type secured by a lien upon property owned by such
person, although such person has not assumed or become liable for the payment of
such indebtedness, is also deemed to be indebtedness of such person. All
indebtedness for borrowed money incurred by any other persons which is directly
guaranteed as to payment of principal by such person will for all purposes of
the indenture be deemed to be indebtedness of such person, but no other
contingent obligation of such person in respect of indebtedness incurred by any
other persons shall be deemed indebtedness of such person.
50
"Significant Subsidiary" means CERC, CenterPoint Houston and Texas
Genco, and any other subsidiary which, at the time of the creation of a pledge,
mortgage, security interest or other lien upon any capital stock or other equity
interests of such subsidiary, has consolidated gross assets (having regard to
our beneficial interest in the shares, or the like, of that subsidiary) that
represent at least 25% of our consolidated gross assets appearing in our most
recent audited consolidated financial statements.
A "subsidiary" of any entity means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (i) the issued and outstanding capital stock or comparable interests
having ordinary voting power to elect a majority of the board of directors or
comparable governing body of such entity (irrespective of whether at the time
capital stock or comparable interests of any other class or classes of such
entity shall or might have voting power upon the occurrence of any contingency),
(ii) the interest in the capital or profits of such limited liability company,
partnership, joint venture or other entity or (iii) the beneficial interest in
such trust or estate, is at the time directly or indirectly owned or controlled
by such entity, by such entity and one or more of its other subsidiaries or by
one or more of such entity's other subsidiaries.
PAYMENT AND PAYING AGENT
We will pay interest on the notes to the persons in whose names the
notes are registered at the close of business on the applicable record date for
each interest payment. However, we will pay the interest payable on the notes at
their stated maturity to the persons to whom we pay the principal amount of the
notes. (Section 307)
We will pay principal, premium, if any, and interest on the notes at
the offices of the paying agents we designate. However, except in the case of a
global security, we may pay interest by:
- check mailed to the address of the person entitled to the
payment as it appears in the security register, or
- wire transfer in immediately available funds to the place and
account designated in writing by the person entitled to the
payment as specified in the security register.
We have designated the trustee as the sole paying agent for the notes. At any
time, we may designate additional paying agents or rescind the designation of
any paying agents. However, we are required to maintain a paying agent in each
place of payment for the notes at all times. (Sections 307 and 1002)
Any money deposited with the trustee or any paying agent or then held
by us for the payment of principal, premium, if any, and interest on the notes
that remains unclaimed for two years after the date the payments became due, may
be repaid to us upon our request. After we have been repaid, holders entitled to
those payments may only look to us for payment as our unsecured general
creditors. The trustee and any paying agents will not be liable for those
payments after we have been repaid. (Section 1003)
EXCHANGE AND TRANSFER OF THE NOTES
We will issue the notes in registered form, without coupons. We will
only issue notes in denominations of integral multiples of $1,000.
Holders may present notes for exchange or for registration of transfer
at the office of the security registrar or at the office of any transfer agent
we designate for that purpose. The security registrar or designated transfer
agent will exchange or transfer the notes if it is satisfied with the documents
of title and identity of the person making the request. We will not charge a
service charge for any exchange or registration of transfer of notes. However,
we may require payment of a sum sufficient to cover any tax or other
governmental charge payable for the registration of transfer or exchange. The
trustee will serve as the security registrar for the notes. (Section 305) At any
time we may:
- designate additional transfer agents,
- rescind the designation of any transfer agent, or
- approve a change in the office of any transfer agent.
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However, we are required to maintain a transfer agent in each place of payment
for the notes at all times. (Sections 305 and 1002)
If the notes of any series are to be redeemed in part, neither we nor
the trustee will be required to register the transfer or exchange of notes of
that series:
- during the period beginning at the opening of business 15 days
before the day we mail the notice of redemption for such notes
and ending at the close of business on the day the notice is
mailed, or
- if we have selected such notes for redemption, in whole or in
part, except for the unredeemed portion of such notes.
(Section 305)
GOVERNING LAW
New York law will govern the indenture and the notes. (Section 112)
THE TRUSTEE
JPMorgan Chase Bank is the trustee, security registrar and paying agent
under the indenture for the notes. We maintain banking relationships in the
ordinary course of business with the trustee and its affiliates. As of November
3, 2003, the trustee served as trustee for $2.0 billion aggregate principal
amount of our outstanding debt securities and pollution control bonds issued on
our behalf aggregating $1.0 billion outstanding. In addition, the trustee serves
as trustee for debt securities of some of our subsidiaries. The trustee and its
affiliates are also parties to credit agreements under which we and our
affiliates have bank lines of credit. We and our affiliates also maintain
depository and other banking, investment banking and investment management
relationships with the trustee and its affiliates. The trustee also serves as
rights agent under our shareholder rights plan.
NOTICES
Except as otherwise described herein, notice to holders of the notes
will be given by mail to the addresses as they appear in the security register.
52
REGISTRATION RIGHTS
In connection with the sale of each series of old notes, we entered
into a registration rights agreement with the initial purchasers of each series
of old notes pursuant to which we agreed, for the benefit of the holders of such
series of old notes at our cost, to use our reasonable commercial efforts:
- to file with the SEC a registration statement under the
Securities Act of 1933 relating to an exchange offer for each
series of old notes within 180 days after the date of issuance
of the relevant series of old notes,
- to cause the exchange offer registration statement to be
declared effective under the Securities Act of 1933 within 270
days after the date of issuance of the relevant series of old
notes and to keep the exchange offer registration statement
effective until the expiration of the exchange offer, and
- unless the exchange offer would not be permitted by applicable
law or SEC policy, to cause the exchange offer to be
consummated within 315 days after the date of issuance of the
relevant series of old notes.
We agreed that upon the registration statement of which this prospectus
forms a part being declared effective, we would offer the new notes of a series
in exchange for surrender of the old notes of that series. We agreed to keep the
exchange offer open for not less than 20 business days (or longer if required by
applicable law) after the date on which notice of the exchange offer is mailed
to the registered holders of the old notes. For each old note of a series
validly tendered to us pursuant to the exchange offer for that series and not
withdrawn by the holder thereof, the holder of such old note will receive a new
note of that series having a principal amount equal to that of the surrendered
old note. Interest on each new note will accrue from the last interest payment
date on which interest was paid on the old note surrendered in exchange therefor
or, if no interest has been paid on an old note, from the date of the issuance
of the old notes. The new notes of a series will vote together with the old
notes of that series which are not exchanged on all matters on which holders of
such series of old notes and new notes of such series are entitled to vote.
Each holder, other than certain specified holders, who wishes to
exchange its old notes of a series for new notes of that series pursuant to the
exchange offer for that series will be required to make to us the
representations described under "The Exchange Offer--Your Representations to Us"
to participate in that exchange offer.
In addition, in connection with any resales of new notes, any
broker-dealer who acquired notes 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 of 1933. Please read "The
Exchange Offer--Resale of New Notes."
In the event that:
- we reasonably determine that changes in law or the applicable
interpretations of the Staff do not permit us to effect the
exchange offer,
- the exchange offer for any series of notes is not consummated
on or prior to the 315th day following the issuance of the old
notes of that series, or
- any initial purchaser notifies us within 20 business days
following consummation of the exchange offer (i) that it is
not permitted by applicable law or SEC policy to participate
in the exchange offer, (ii) that it may not resell new notes
with this prospectus, or (iii) that it is a broker-dealer and
owns old notes acquired directly from us or one of our
affiliates,
then we will at our cost in lieu of effecting (or, in the case of such a request
by an initial purchaser, in addition to effecting) the registration of the new
notes of the affected series pursuant to the registration statement of which
this prospectus forms a part:
- as promptly as practicable, file with the SEC a "shelf"
registration statement to cover resales of the old notes of
the affected series,
53
- use our reasonable commercial efforts to cause the shelf
registration statement to be declared effective under the
Securities Act of 1933 no later than 345 days after the date
of issuance of the affected series of old notes, and
- use our reasonable commercial efforts to keep effective the
shelf registration statement until two years after the date of
the issuance of the affected series of old notes or until all
of the old notes covered by the shelf registration statement
have been sold.
We will have the ability to suspend the availability of the shelf
registration statement during certain "black out" periods.
In the event of the filing of the shelf registration statement, we will
provide to each relevant holder of old notes copies of the prospectus which
forms a part of the shelf registration statement and notify each such holder
when the shelf registration statement has become effective. A holder of old
notes that sells old 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 of 1933 in
connection with such sales and will be bound by the provisions of the respective
registration rights agreement that is applicable to such a holder (including
certain indemnification obligations). In addition, each holder of old notes will
be required to deliver to us information to be used in connection with the shelf
registration statement and to provide comments to us on the shelf registration
statement in order to have such holder's old notes included in the shelf
registration statement and to benefit from the provisions regarding the increase
in the interest rate borne by the old notes described in the following
paragraph.
In the event that:
- the registration statement of which this prospectus forms a
part is not declared effective by the SEC on or prior to the
270th day following the date of issuance of the relevant
series of old notes,
- the exchange offer is not consummated or the shelf
registration statement with respect to the old notes is not
declared effective on or prior to the 315th day following the
date of issuance of the relevant series of old notes, or
- any required exchange offer registration statement or shelf
registration statement relating to the old notes is filed and
declared effective but shall thereafter either be withdrawn by
us or becomes subject to an effective stop order suspending
the effectiveness of such registration statement (except as
specifically permitted in the registration rights agreements)
without being succeeded within 30 days by an amendment thereto
or an additional registration statement filed and declared
effective, each such event listed in the three bullet points
above, referred to as a "registration default",
then the interest rate borne by the affected series of old notes will be
increased by .25% per annum upon the occurrence of each registration default,
which rate will increase by an additional .25% per annum if such registration
default has not been cured within 90 days after the occurrence thereof and
continuing until all registration defaults for such series of old notes have
been cured, provided that the aggregate amount of any such increase in the
interest rate on such series of old notes shall in no event exceed .50% per
annum; and provided, further, that if the registration statement of which this
prospectus forms a part is not declared effective on or prior to the 270th day
following the date of issuance of any series of old notes, and we shall request
holders of old notes of the affected series to provide the information called
for by the relevant registration rights agreement for inclusion in the shelf
registration statement, then old notes of the affected series owned by holders
who do not deliver such information to us or who do not provide comments to us
on the shelf registration statement when required pursuant to the relevant
registration rights agreement will not be entitled to any such increase in the
interest rate for any day after the 315th day following the date of issuance of
such series of old notes. All accrued additional interest will be paid to
holders of old notes in the same manner and at the same time as regular payments
of interest on the old notes. Following the cure of all registration defaults
for the affected series of old notes, the accrual of additional interest on such
series will cease and the interest rate of such series will revert to the
original rate.
New York law governs each of the registration rights agreements. The
foregoing is a summary description of material provisions of each of the
registration rights agreements. Because it is a summary, it does not purport to
54
be complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the registration rights agreements, copies of which are
filed as exhibits to the registration statement of which this prospectus forms a
part. You should read the relevant registration rights agreement carefully and
in its entirety because it, and not this description, defines your rights as a
holder of the relevant series of old notes.
The information set forth above concerning certain interpretations of
and positions taken by the SEC staff is not intended to constitute legal advice,
and prospective investors should consult their own legal advisors with respect
to these matters.
BOOK-ENTRY DELIVERY AND SETTLEMENT
We will issue the new notes in the form of one or more permanent global
notes in definitive, fully registered, book-entry form. The global notes will be
deposited with or on behalf of DTC and registered in the name of Cede & Co., as
nominee of DTC, or will remain in the custody of the trustee in accordance with
the FAST Balance Certificate Agreement between DTC and the trustee. The global
notes will be deposited on behalf of the acquirors of the new notes for credit
to the respective accounts of the acquirors or to such other accounts as they
may direct at DTC. Please read "The Exchange Offer--Book-Entry Transfer."
CERTIFICATED NOTES
Certificated notes will be issued to each person that DTC identifies as
the beneficial owner of the old notes represented by the global notes, upon
surrender by DTC of the global notes, if (i) we notify the trustee in writing
that DTC or any successor depositary (the "depositary") is no longer willing or
able to act as a depositary for the global notes or DTC ceases to be registered
as a clearing agency under the Securities Exchange Act of 1934 and a successor
depositary is not appointed within 90 days of such notice or cessation, (ii) we,
at our option, notify the trustee in writing that we elect to cause the issuance
of new notes in definitive form under the indenture or (iii) upon the occurrence
of certain other events as provided pursuant to the indenture.
BOOK-ENTRY PROCEDURES FOR THE GLOBAL NOTES
The descriptions of the operations and procedures of DTC, Euroclear
Bank, S.A./N.V., as operator of the Euroclear System ("Euroclear"), and
Clearstream Banking, societe anonyme ("Clearstream Banking"), set forth below
are provided solely as a matter of convenience. These operations and procedures
are solely within the control of the respective settlement systems and are
subject to change by them from time to time. Neither we nor the initial
purchasers take any responsibility for these operations or procedures, and
investors are urged to contact the relevant system or its participants directly
to discuss these matters.
Regarding DTC. According to DTC, the following information with respect
to DTC has been provided to the industry for informational purposes only and is
not intended to serve as a representation, warranty, or contract modification of
any kind. We have obtained the information in this section concerning DTC and
the DTC's book-entry system from sources that we believe are reliable. However,
we take no responsibility for the accuracy of this information.
DTC is:
- a limited-purpose trust company organized under the New York
Banking Law,
- a "banking organization" within the meaning of the New York
Banking Law,
- a member of the Federal Reserve System,
- a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and
- a "clearing agency" registered under Section 17A of the
Securities Exchange Act of 1934.
DTC holds and provides asset servicing for over 2 million issues of
U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money
market instruments from over 85 countries that DTC's participants
55
("direct participants") deposit with DTC. DTC also facilitates the post-trade
settlement among direct participants of sales and other securities transactions
in deposited securities, through electronic computerized book-entry transfers
and pledges between direct participants' accounts. This eliminates the need for
physical movement of securities certificates. Direct participants include:
- both U.S. and non-U.S. securities brokers and dealers,
- banks,
- trust companies,
- clearing corporations, and
- certain other organizations.
DTC is a wholly owned subsidiary of The Depository Trust & Clearing
Corporation, which is owned by a number of direct participants of DTC and
members of the National Securities Clearing Corporation, Government Securities
Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing
Corporation, as well as by the New York Stock Exchange, Inc., the American Stock
Exchange LLC, and the National Association of Securities Dealers, Inc. Access to
the DTC system is also available to others such as both U.S. and non-U.S.
securities brokers and dealers, banks, trust companies, and clearing
corporations that clear through or maintain a custodial relationship with a
direct participant, either directly or indirectly ("indirect participants"). DTC
has Standard & Poor's highest rating: AAA. The DTC rules applicable its
participants are on file with the SEC. More information about DTC can be found
at http://www.dtcc.com.
Purchases of new notes under the DTC system must be made by or through
direct participants, which will receive a credit for the new notes on DTC's
records. The ownership interest of each actual purchaser of each new note,
referred to as a beneficial owner, is in turn to be recorded on the direct and
indirect participants' records. Beneficial owners will not receive written
confirmation from DTC of their purchase. Beneficial owners are, however,
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the direct or indirect
participant through which the beneficial owner entered into the transaction.
Transfers of ownership interests in the new notes are to be accomplished by
entries made on the books of participants acting on behalf of beneficial owners.
Beneficial owners will not receive certificates representing their ownership
interests in new notes, except in the event that use of the book-entry system
for the new notes is discontinued. The laws of some states require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such laws may impair the ability to transfer beneficial interests in a
global security.
Neither we nor the trustee shall be liable for any delay by the
depositary, its nominee or any direct or indirect participant in identifying the
beneficial owners of the related new notes, and each such person may
conclusively rely on, and shall be protected in relying on, instructions from
the depositary or nominee for all purposes (including with respect to the
registration and delivery, and the respective principal amounts, of the new
notes to be issued).
So long as the depositary for the global notes, or its nominee, is the
registered owner of the global notes, the depositary or its nominee, as the case
may be, will be considered the sole owner or holder of the new notes represented
by the global notes for all purposes under the indenture. Except as described
above, beneficial owners will not:
- be entitled to have new notes represented by the global notes
registered in their names,
- receive or be entitled to receive physical delivery of new
notes in definitive form, and
- be considered the owners or holders thereof under the
indenture.
To facilitate subsequent transfers, all new notes deposited by direct
participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co., or such other name as may be requested by an authorized
representative of DTC. The deposit of new notes with DTC and their registration
in the name of Cede & Co. or such
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other DTC nominee do not effect any change in beneficial ownership. DTC has no
knowledge of the actual beneficial owners of the new notes. DTC's records
reflect only the identity of the direct participants to whose accounts the new
notes are credited, which may or may not be the beneficial owners. The direct
and indirect participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or
vote with respect to new notes unless authorized by a direct participant in
accordance with DTC's procedures. Under its usual procedures, DTC mails an
omnibus proxy to us as soon as possible after the record date. The omnibus proxy
assigns Cede & Co.'s consenting or voting rights to those direct participants to
whose accounts the new notes are credited on the record date (identified in a
listing attached to the omnibus proxy).
Redemption proceeds, distributions, and dividend payments on the new
notes will be made to Cede & Co. or such other nominee as may be requested by an
authorized representative of DTC. DTC's practice is to credit direct
participants' accounts upon DTC's receipt of funds and corresponding detail
information from us on the payment date in accordance with their respective
holdings shown on DTC's records. Payments by participants to beneficial owners
will be governed by standing instructions and customary practices, as is the
case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such participant
and not of DTC, its nominee or us, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of redemption
proceeds, distributions, and dividend payments to Cede & Co. (or such other
nominee as may be requested by an authorized representative of DTC) is our
responsibility, disbursement of such payments to direct participants will be the
responsibility of DTC, and disbursement of such payments to the beneficial
owners will be the responsibility of direct and indirect participants.
DTC may discontinue providing its services as depositary with respect
to the new notes at any time by giving us reasonable notice. Under such
circumstances, in the event that we do not obtain a successor securities
depositary, certificates for the new notes are required to be printed and
delivered.
We may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depositary). In that event, certificates
for the new notes will be printed and delivered.
We cannot assure you that DTC will distribute payments on the new notes
made to DTC or its nominee as the registered owner or any redemption or other
notices to the participants, or that the participants or others will distribute
the payments or notices to the beneficial owners, or that they will do so on a
timely basis, or that DTC will serve and act in the manner described in this
prospectus. Beneficial owners should make appropriate arrangements with their
broker or dealer regarding distribution of information regarding the new notes
that may be transmitted by or through DTC.
Procedures for DTC and Cross Market Transfer. Transfers between
participants in DTC will be effected in accordance with DTC's procedures and
will be settled in same-day funds. Transfers between participants in Euroclear
or Clearstream Banking will be effected in the ordinary way in accordance with
their respective rules and operating procedures.
Cross-market transfers between the participants in DTC, on the one
hand, and Euroclear or Clearstream Banking participants, on the other hand, will
be effected through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream Banking, as the case may be, by its respective depositary; however,
such cross-market transactions will require delivery of instructions to
Euroclear or Clearstream Banking, as the case may be, by the counterparty in
such system in accordance with the rules and procedures and within the
established deadlines (Brussels time) of such system. Euroclear or Clearstream
Banking, as the case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its respective depositary to take action
to effect final settlement on its behalf by delivering or receiving interests in
the relevant global notes in DTC, and making or receiving payment in accordance
with normal procedures for same day funds settlement applicable to DTC.
Euroclear participants and Clearstream Banking participants may not deliver
instructions directly to the depositaries for Euroclear or Clearstream Banking.
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Because of time zone differences, the new notes account of a Euroclear
or Clearstream Banking participant purchasing an interest in a global note from
a participant in DTC will be credited, and any such crediting will be reported
to the relevant Euroclear or Clearstream Banking participant, during the new
notes settlement processing day (which must be a business day for Euroclear and
Clearstream Banking) immediately following the settlement date of DTC. Cash
received in Euroclear or Clearstream Banking as a result of sales of interests
in a global note by or through a Euroclear or Clearstream Banking participant to
a participant in DTC will be received with value on the settlement date of DTC
but will be available in the relevant Euroclear or Clearstream Banking cash
account only as of the business day for Euroclear or Clearstream Banking
following DTC's settlement date.
Although DTC, Euroclear and Clearstream Banking have agreed to the
foregoing procedures to facilitate transfers of interests in the global notes
among participants in DTC, Euroclear and Clearstream Banking, they are 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 will have
any responsibility for the performance by DTC, Euroclear or Clearstream Banking
or their respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain United States federal
income tax consequences associated with the exchange of old notes for new notes
and the beneficial ownership and disposition of the new notes.
This discussion is based on the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury regulations promulgated thereunder and
administrative and judicial interpretations thereof, all as in effect on the
date hereof and all of which are subject to change, possibly with retroactive
effect, or different interpretations. This discussion only addresses tax
considerations for beneficial owners of the notes that hold the notes as
"capital assets," within the meaning of the Code. Moreover, this discussion is
for general information only and does not address all of the tax consequences
that may be relevant to specific beneficial owners of the notes in light of
their particular circumstances or to beneficial owners of the notes subject to
special treatment under U.S. federal income tax laws (such as banks, insurance
companies, tax-exempt entities, retirement plans, dealers in securities,
brokers, expatriates, partnerships or other pass-through entities, persons who
hold their notes as part of a straddle, hedge, conversion transaction or other
integrated investment, persons whose functional currency is not the U.S. dollar,
persons subject to the alternative minimum tax or persons deemed to sell the
notes under the constructive sale provisions of the Code). This discussion does
not address any U.S. state and local or non-U.S. tax considerations relating to
the purchase, ownership and disposition of the notes.
As used in this discussion, the term "U.S. Holder" means a beneficial
owner of a note that is, for U.S. federal income tax purposes:
- an individual who is a citizen or resident of the U.S.,
- a corporation created or organized in or under the laws of the
U.S. or of any State or political subdivision thereof or
therein, including the District of Columbia,
- an estate the income of which is subject to U.S. federal
income tax regardless of the source thereof, or
- a trust with respect to which a court within the U.S. is able
to exercise primary supervision over its administration and
one or more U.S. persons have the authority to control all of
its substantial decisions, or certain electing trusts that
were in existence on August 19, 1996 and were treated as
domestic trusts on that date.
The term "Non-U.S. Holder" means a beneficial owner of a note that is,
for U.S. federal income tax purposes, a nonresident alien or a corporation,
trust or estate that is not a U.S. Holder. Purchasers of notes that are
partnerships or that would hold the notes through a partnership or similar
pass-through entity should consult their tax advisors regarding the U.S. federal
income tax consequences to them of holding the notes.
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EXCHANGE OF NOTES
The exchange of new notes of a series for old notes of that series
pursuant to the exchange offer for that series will not constitute a taxable
event for U.S. federal income tax purposes. Consequently, no gain or loss will
be recognized by a holder of an old note of a series upon receipt of a new note
of that series. A holder's adjusted tax basis in the new note will be the same
as the adjusted tax basis in the old note exchanged therefor. A holder's holding
period of the new note will include the holding period of the old note exchanged
therefor.
U.S. HOLDERS
PAYMENT OF INTEREST
In general, interest payable on a note will be taxable to a U.S. Holder
as ordinary interest income at the time it is received or accrued, in accordance
with such U.S. Holder's method of accounting for U.S. federal income tax
purposes.
MARKET DISCOUNT
Under the market discount rules of the Code, a U.S. Holder who
purchases a note at a market discount will generally be required to treat any
gain recognized on the sale, exchange, retirement or other taxable disposition
of the note as ordinary income to the extent of the accrued market discount that
has not been previously included in income. Market discount is generally defined
as the amount by which a U.S. Holder's purchase price for a note is less than
the note's stated redemption price at maturity (generally, the note's principal
amount) on the date of purchase, subject to a statutory de minimis exception. In
general, market discount accrues on a ratable basis over the remaining term of
the note unless a U.S. Holder makes an irrevocable election to accrue market
discount on a constant yield to maturity basis.
A U.S. Holder who acquires a note at a market discount may be required
to defer a portion of any interest expense that otherwise may be deductible on
any indebtedness incurred or continued to purchase or carry such note until the
U.S. Holder disposes of the note in a taxable transaction. A U.S. Holder who has
elected under the applicable Code provision to include market discount in income
annually as such discount accrues will not, however, be required to treat any
gain recognized as ordinary income or to defer any deductions for interest
expense under these rules. This election to include market discount in income
currently, once made, applies to all market discount obligations acquired on or
after the first day of the taxable year to which the election applies and may
not be revoked without the consent of the IRS.
Holders should consult their tax advisors as to the portion of any gain
that would be taxable as ordinary income under the market discount rules and any
other consequences of the market discount rules that may apply to them in
particular.
AMORTIZABLE BOND PREMIUM
A U.S. Holder who purchases a note for an amount in excess of its
principal amount will be considered to have purchased the note at a premium. A
U.S. Holder may elect to amortize the premium over the remaining term of the
note on a constant yield method. The amount amortized in any year will be
treated as a reduction of the U.S. Holder's interest income from the note. A
U.S. Holder who elects to amortize the premium on a note must reduce its tax
basis in the note by the amount of the premium amortized in any year. An
election to amortize bond premium applies to all taxable debt obligations then
owned and thereafter acquired by the U.S. Holder and may be revoked only with
the consent of the IRS. Bond premium on a note held by a U.S. Holder who does
not make such an election will decrease the capital gain or increase the capital
loss otherwise recognized on the disposition of the note.
SALE, EXCHANGE, RETIREMENT OR OTHER DISPOSITION OF THE NOTES
Upon the sale, exchange, retirement or other disposition of a note, a
U.S. Holder will generally recognize taxable gain or loss equal to the
difference between the sum of cash plus the fair market value of all other
property received on such disposition (except to the extent such cash or
property is attributable to accrued and unpaid interest, which will be taxable
as interest income (as described above)) and such U.S. Holder's adjusted tax
basis in the note.
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Subject to the market discount rules summarized above, such gain or loss
generally will be capital gain or loss and will be long-term capital gain or
loss if, at the time of the disposition, the U.S. Holder's holding period for
the note is more than one year. Long-term capital gains recognized by an
individual or non-corporate U.S. Holder are generally subject to a reduced U.S.
federal income tax rate. Capital losses are subject to limits on deductibility.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, payments made on the notes and proceeds from the sale or
other disposition of the notes may be subject to backup withholding, currently
at a rate of 28% (increased to 31% beginning in 2011). In general, backup
withholding will apply to a non-corporate U.S. Holder if such U.S. Holder:
- fails to furnish, under penalties of perjury, its Taxpayer
Identification Number, or TIN (which for an individual is the
holder's Social Security number),
- furnishes an incorrect TIN,
- is notified by the IRS that it has failed to properly report
payments of interest and dividends, or
- under certain circumstances, fails to certify, under penalties
of perjury, that it has furnished a correct TIN and is a U.S.
person and has not been notified by the IRS that it is subject
to backup withholding due to underreporting of interest or
dividends, or otherwise fails to comply with applicable
requirements of the backup withholding rules.
Any amounts withheld under the backup withholding rules from a payment
to a U.S. Holder generally will be allowed as a refund or a credit against such
U.S. Holder's U.S. federal income tax liability, provided that the required
procedures are followed.
A U.S. Holder will also be subject to information reporting with
respect to payments on the notes and proceeds from the sale or other disposition
of the notes, unless such U.S. Holder is a corporation or other exempt recipient
and appropriately establishes an exemption.
NON-U.S. HOLDERS
For purposes of the following discussion, interest on the notes, and
gain on the sale, exchange, retirement or other disposition of the notes, will
be considered "U.S. trade or business income" of a Non-U.S. Holder if such
income or gain is effectively connected with the conduct of a trade or business
in the United States by such Non-U.S. Holder.
PAYMENT OF INTEREST
Subject to the discussion below concerning backup withholding, a
Non-U.S. Holder will not be subject to U.S. federal income or withholding tax in
respect of interest paid on the notes if the interest qualifies for the
"portfolio interest exemption." This will be the case if each of the following
requirements is satisfied:
- the interest is not U.S. trade or business income,
- the Non-U.S. Holder does not actually or constructively own
10% or more of the voting stock of the issuer,
- the Non-U.S. Holder is not a controlled foreign corporation,
within the meaning of the Code, that is actually or
constructively related to the issuer, and
- the Non-U.S. Holder provides the withholding agent with the
appropriate certification.
The certification requirement generally will be satisfied if the
Non-U.S. Holder provides the withholding agent with a statement on IRS Form
W-8BEN (or suitable substitute or successor form), together with all appropriate
attachments, signed under penalties of perjury, identifying the Non-U.S. Holder
and stating, among
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other things, that the Non-U.S. Holder is not a U.S. person. Non-U.S. Holders
should consult their tax advisors regarding alternative methods for satisfying
the certification requirement.
If the portfolio interest exemption is not satisfied with respect to a
Non-U.S. Holder, a 30% withholding tax will apply to interest paid on the notes
to such Non-U.S. Holder, unless another exemption is applicable. For example, an
applicable income tax treaty may reduce or eliminate such tax, in which event a
Non-U.S. Holder claiming the benefit of such treaty must provide the withholding
agent with a properly executed IRS Form W-8BEN (or suitable substitute or
successor form). Alternatively, an exemption applies if the interest is U.S.
trade or business income and the Non-U.S. Holder provides an appropriate
statement to that effect on IRS Form W-8ECI (or suitable substitute or successor
form). In the latter case, such Non-U.S. Holder generally will be subject to
U.S. federal income tax with respect to all income from the notes in the same
manner as U.S. Holders, as described above, unless an applicable income tax
treaty provides otherwise. Additionally, Non-U.S. Holders that are corporations
could be subject to a branch profits tax with respect to any such U.S. trade or
business income at a rate of 30% (or at a reduced rate under an applicable
income tax treaty).
SALE, EXCHANGE, RETIREMENT OR OTHER DISPOSITION OF THE NOTES
Generally, a Non-U.S. Holder will not be subject to U.S. federal income
tax on gain realized upon the sale, exchange, retirement or other disposition of
a note, unless (i) such Non-U.S. Holder is an individual present in the United
States for 183 days or more in the taxable year of the sale, exchange,
retirement or other disposition and certain other conditions are met or (ii) the
gain is U.S. trade or business income. If the first exception applies, the
Non-U.S. Holder generally will be subject to U.S. federal income tax at a rate
of 30% (or at a reduced rate under an applicable income tax treaty) on the
amount by which capital gains allocable to U.S. sources (including gains from
the sale, exchange, retirement or other disposition of the note) exceed capital
losses allocable to U.S. sources. If the second exception applies, the Non-U.S.
Holder generally will be subject to U.S. federal income tax with respect to such
gain in the same manner as U.S. Holders, as described above, unless an
applicable income tax treaty provides otherwise. Additionally, Non-U.S. Holders
that are corporations could be subject to a branch profits tax with respect to
gain that is U.S. trade or business income at a rate of 30% (or at a reduced
rate under an applicable income tax treaty).
INFORMATION REPORTING AND BACKUP WITHHOLDING
Certain Non-U.S. Holders may be subject to information reporting and
backup withholding with respect to interest payments on the notes. Treasury
regulations provide that such information reporting and backup withholding
generally will not apply to interest payments on the notes to a Non-U.S. Holder
if such Non-U.S. Holder certifies that it is not a U.S. person under penalties
of perjury or otherwise establishes an exemption.
Additional information reporting and backup withholding requirements
with respect to the payment of the proceeds from the disposition of a note
(including a redemption) by a Non-U.S. Holder are as follows:
- If the proceeds are paid to or through the U.S. office of a
broker, they generally will be subject to information reporting
and backup withholding unless the Non-U.S. Holder certifies that
it is not a U.S. person under penalties of perjury or otherwise
establishes an exemption.
- If the proceeds are paid to or through a non-U.S. office of a
broker that is not a U.S. person and is not a foreign person with
certain specified U.S. connections (a "U.S. related person"),
they will not be subject to information reporting or backup
withholding.
- If the proceeds are paid to or through a non-U.S. office of a
broker that is a U.S. person or a U.S. related person, they
generally will be subject to information reporting (but not
backup withholding) unless the Non-U.S. Holder certifies that it
is not a U.S. person under penalties of perjury or otherwise
establishes an exemption.
Any amounts withheld under the backup withholding rules from a payment
to a Non-U.S. Holder generally will be allowed as a refund or a credit against
such Non-U.S. Holder's U.S. federal income tax liability, provided that the
required procedures are followed.
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In addition to the foregoing, the amount of interest paid on or with
respect to the notes held by each Non-U.S. Holder during each calendar year and
the amount of tax, if any, withheld from such payments must be reported to such
Non-U.S. Holder and the IRS. Copies of the information returns reporting such
interest and withholding also may be made available by the IRS to the tax
authorities in the country in which a Non-U.S. Holder is a resident under the
provisions of an applicable income tax treaty.
THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF U.S. FEDERAL
INCOME TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER IN LIGHT OF ITS
PARTICULAR CIRCUMSTANCES AND TAX SITUATION. A HOLDER SHOULD CONSULT SUCH
HOLDER'S TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE
OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE APPLICATION AND EFFECT OF
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
PLAN OF DISTRIBUTION
Based on interpretations by the Staff in no-action letters issued to
third parties, we believe that you may transfer new notes issued in the exchange
offer in exchange for old notes if:
- you acquire such new notes in the ordinary course of your
business, and
- you are not engaged in, and do not intend to engage in, and have
no arrangement or understanding with any person to participate
in, a distribution of new notes.
We believe that you may not transfer new notes issued in the exchange
offer in exchange for old notes if you are:
- our affiliate within the meaning of Rule 405 under the Securities
Act of 1933,
- a broker-dealer that acquired old notes directly from us or one
of our affiliates, or
- a broker-dealer that acquired old notes as a result of
market-making or other trading activities without compliance with
the registration and prospectus delivery provisions of the
Securities Act of 1933.
The information described above concerning interpretations of and
positions taken by the Staff is not intended to constitute legal advice, and
broker-dealers should consult their own legal advisors with respect to these
matters.
If you wish to exchange your old notes for new notes in the exchange
offer, you will be required to make representations to us as described in "The
Exchange Offer -- Your Representations to Us" and in the letter of transmittal.
In addition, if a broker-dealer receives new notes for its own account in
exchange for old notes that it acquired as a result of market-making activities
or other trading activities, it will be required to acknowledge that it will
deliver a prospectus in connection with any resale by it of such new notes. A
broker-dealer may use this prospectus, as we may amend or supplement it, in
connection with these resales. We have agreed that, for a period of 180 days
after the expiration of the exchange offer, 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 , 200 , all dealers effecting
transactions in the new notes may be required to deliver a prospectus.
We will not receive any proceeds from any sale of the new notes by
broker-dealers. New notes that broker-dealers receive for their own account in
the exchange offer may be sold from time to time:
- in one or more transactions in the over-the-counter market,
- in negotiated transactions,
- through the writing of options on the new notes, or
- through a combination of such methods of resale,
62
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 new notes. Any broker-dealer that resells new
notes that it received for its own account in the exchange offer and any broker
or dealer that participates in a distribution of the new notes may be deemed to
be an "underwriter" within the meaning of the Securities Act of 1933, and any
profit on any such resale of new notes and any commission or concessions that
these persons receive may be deemed to be underwriting compensation under the
Securities Act of 1933. The letter of transmittal states that, by acknowledging
that it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act of 1933.
For a period of 180 days after the expiration of the exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal. We have agreed to pay all expenses incident to the
exchange offer, including the expenses of one counsel for the noteholders, other
than commissions or concessions of any brokers or dealers. We will indemnify the
noteholders, including any broker-dealers, against certain liabilities,
including liabilities under the Securities Act of 1933.
TRANSFER RESTRICTIONS
The offer and sale of old notes of each series were not registered
under the Securities Act of 1933. Accordingly, we offered and sold the old notes
only in private sales exempt from or not subject to the registration
requirements of the Securities Act of 1933:
- to qualified institutional buyers under Rule 144A under the
Securities Act of 1933, or
- to non-U.S. persons outside the United States in compliance with
Regulation S under the Securities Act of 1933.
You may not offer or sell those old notes in the United States or to,
or for the account or benefit of, U.S. persons except in transactions exempt
from or not subject to the registration requirements of the Securities Act of
1933.
LEGAL MATTERS
The validity of the new notes of each series will be passed upon for us
by Baker Botts L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements of CenterPoint Energy and its
subsidiaries as of December 31, 2001 and 2002, and for each of the three years
in the period ended December 31, 2002 and the related financial statement
schedules, incorporated by reference in this prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports (which
reports express an unqualified opinion and includes explanatory paragraphs
referring to the distribution of Reliant Resources, Inc. and the change in
method of accounting for goodwill and certain intangible assets), which are
included in CenterPoint Energy's Current Report on Form 8-K filed November 7,
2003 that is incorporated herein by reference, and has been so incorporated in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
We file reports and other information with the SEC. 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. You may obtain
further information regarding the operation of the SEC's public reference room
by calling the SEC at 1-800-SEC-0330. Our filings are also available to the
public on the SEC's Internet site located at http://www.sec.gov.
We have obtained a no-action letter from the SEC which provides that we
will be treated as the successor of Reliant Energy, Incorporated for financial
reporting purposes under the Securities Exchange Act of 1934. We are
"incorporating by reference" into this prospectus information we file with the
SEC. This means we are disclosing important information to you by referring you
to the documents containing the information. The information we incorporate by
reference is considered to be part of this prospectus. Information that we file
later with the SEC that is deemed incorporated by reference into this prospectus
(but not information filed with or furnished to the SEC and not deemed
incorporated) will automatically update and supersede information previously
included.
We are incorporating by reference into this prospectus the documents
listed below and any subsequent filings we make with the SEC under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (excluding
information deemed to be furnished and not filed with the SEC) until the date
the offering made in this prospectus terminates. The documents we incorporate by
reference are:
- our Annual Report on Form 10-K for the year ended December 31,
2002 (referred to in this prospectus as our "2002 Form 10-K"),
- Item 5 of our Current Report on Form 8-K filed January 7, 2003,
- Item 5 of our Current Report on Form 8-K filed February 13, 2003,
- our Current Report on Form 8-K filed March 3, 2003,
- our Current Reports on Form 8-K filed March 27, 2003,
- our Quarterly Report on Form 10-Q for the period ended March 31,
2003,
- our Current Report on Form 8-K filed April 23, 2003,
- Item 5 of our Current Report on Form 8-K filed April 24, 2003,
- Item 5 of our Current Report on Form 8-K filed May 1, 2003,
- our Current Report on Form 8-K filed May 12, 2003,
- our Current Report on Form 8-K filed May 16, 2003,
- our Current Report on Form 8-K filed May 30, 2003,
- our Current Report on Form 8-K filed June 3, 2003,
- our Current Reports on Form 8-K filed June 20, 2003,
- our Quarterly Report on Form 10-Q for the period ended June 30,
2003 (referred to in this prospectus as our "Second Quarter 2003
Form 10-Q"),
- Item 5 of our Current Report on Form 8-K filed July 29, 2003,
- Item 5 of our Current Report on Form 8-K filed September 3, 2003,
- our Current Reports on Form 8-K filed September 10, 2003,
- Item 5 of our Current Report on Form 8-K filed September 18,
2003,
64
- our Current Report on Form 8-K filed September 25, 2003,
- Item 5 of our Current Report on Form 8-K filed October 21, 2003,
- our Current Report on Form 8-K filed November 5, 2003, and
- our Current Report on Form 8-K filed November 7, 2003 (referred
to in this prospectus as our "November 7, 2003 Form 8-K").
Our November 7, 2003 Form 8-K contains the Selected Financial Data,
Management's Discussion and Analysis of Financial Condition and Results of
Operations and Financial Statements and Supplementary Data of CenterPoint Energy
from our May 12, 2003 Form 8-K with revisions for certain reclassifications and
other items.
You may also obtain a copy of our filings with the SEC at no cost by
writing to or telephoning us at the following address:
CenterPoint Energy, Inc.
Attn: Investor Services
P.O. Box 4567
Houston, Texas 77210-4567
(713) 207-3060
This prospectus is part of a registration statement that we have filed
with the SEC relating to the new notes. As permitted by SEC rules, this
prospectus does not contain all of the information included in the registration
statement and the accompanying exhibits and schedules we file with the SEC. You
should read the registration statement and the exhibits and schedules for more
information about us and the new notes.
65
$600,000,000
CENTERPOINT ENERGY, INC.
OFFER TO EXCHANGE
5.875% Senior Notes due 6.850% Senior Notes due 7.25% Senior Notes due
2008, Series B 2015, Series B 2010, Series B
for all outstanding for all outstanding for all outstanding
5.875% Senior Notes due 6.850% Senior Notes due 7.25% Senior Notes due
2008, Series A 2015, Series A 2010, Series A
PROSPECTUS
, 2003
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.02.A.(16) and Article 2.02-1 of the Texas Business
Corporation Act and Article V of the Amended and Restated Bylaws of CenterPoint
Energy, Inc., a Texas corporation ("CenterPoint"), provide CenterPoint with
broad powers and authority to indemnify its directors and officers and to
purchase and maintain insurance for such purposes. Pursuant to such statutory
and Bylaw provisions, CenterPoint has purchased insurance against certain costs
of indemnification that may be incurred by it and by its officers and directors.
Additionally, Article IX of CenterPoint's Amended and Restated Articles
of Incorporation provides that a director of CenterPoint is not liable to
CenterPoint or its shareholders for monetary damages for any act or omission in
the director's capacity as director, except that Article IX does not eliminate
or limit the liability of a director for (i) any breach of such director's duty
of loyalty to CenterPoint or its shareholders, (ii) any act or omission not in
good faith that constitutes a breach of duty of such director to CenterPoint or
an act or omission that involves intentional misconduct or a knowing violation
of law, (iii) a transaction from which such director received an improper
benefit, whether or not the benefit resulted from an action taken within the
scope of the director's office or (iv) an act or omission for which the
liability of a director is expressly provided for by statute.
Article IX also provides that any subsequent amendments to Texas
statutes that further limit the liability of directors will inure to the benefit
of the directors, without any further action by shareholders. Any repeal or
modification of Article IX shall not adversely affect any right of protection of
a director of CenterPoint existing at the time of the repeal or modification.
See "Item 22. Undertakings" for a description of Securities and
Exchange Commission's, or the SEC's, position regarding such indemnification
provisions.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
INDEX TO EXHIBITS
REPORT OR SEC FILE OR
EXHIBIT REGISTRATION REGISTRATION EXHIBIT
NUMBER DOCUMENT DESCRIPTION STATEMENT STATEMENT REFERENCE
- ------- -------------------------------- ---------------------------------- ------------ ---------
3.1 Amended and Restated Articles of Registration Statement on Form S-4 333-69502 3.1
Incorporation of CenterPoint of CenterPoint Energy, Inc.
Energy, Inc.
3.1.1 Articles of Amendment to the Form 10-K of CenterPoint Energy, 1-31447 3.1.1
Amended and Restated Articles of Inc. for the year ended December 31,
Incorporation of CenterPoint 2001
Energy, Inc.
3.2 Amended and Restated Bylaws of Form 10-K of CenterPoint Energy, 1-31447 3.2
CenterPoint Energy, Inc. Inc. for the year ended December 31,
2001
4.1 Indenture, dated as of May 19, Current Report on Form 8-K of 1-31447 4.1
2003, between CenterPoint Energy, CenterPoint Energy, Inc. filed June
Inc. and JPMorgan Chase Bank as 3, 2003
trustee (the "Trustee")
II-1
4.2 Supplemental Indenture No. 2, Current Report on Form 8-K of 1-31447 4.2
dated as of May 27, 2003, between CenterPoint Energy, Inc. filed June
CenterPoint Energy, Inc. and the 3, 2003
Trustee, with respect to
$200,000,000 aggregate principal
amount of 5.875% Senior Notes due
2008 and $200,000,000 aggregate
principal amount of 6.850% Senior
Notes due 2015 (including the form
of Note)
4.3 Supplemental Indenture No. 3 dated Current Report on Form 8-K of 1-31447 4.2
as of September 9, 2003, between CenterPoint Energy, Inc. filed
CenterPoint Energy, Inc. and the September 10, 2003
Trustee, with respect to
$200,000,000 aggregate principal
amount of 7.25% Senior Notes due
2010 (including the form of Note)
4.4 Registration Rights Agreement, Form 10-Q of CenterPoint Energy, 1-31447 4.5.5
dated as of May 27, 2003, among Inc. for the quarter ended June 30,
CenterPoint Energy, Inc., 2003
Citigroup Global Markets Inc.,
Deutsche Bank Securities Inc. and
Wachovia Securities, Inc., as
representatives of the initial
purchasers
4.5 Registration Rights Agreement,
dated as of September 9, 2003,
among CenterPoint Energy, Inc.,
Bank of America Securities LLC,
Deutsche Bank Securities Inc. and
Wachovia Capital Markets, LLC, as
representatives of the initial
purchasers
5.1* Opinion of Baker Botts L.L.P.
12.1 Statement Regarding Computation
of Ratios of Earnings to Fixed
Charges for the twelve-month
periods ended December 31, 2002 and
the six-month periods ended June
30, 2002 and 2003
23.1 Consent of Deloitte & Touche LLP
23.2* Consent of Baker Botts L.L.P.
(contained in Exhibit 5.1)
24.1 Power of Attorney (included on the
signature page of the Registration
Statement)
II-2
25.1 Statement of Eligibility and
Qualifications under the Trust
Indenture Act of 1939, as amended,
of JPMorgan Chase Bank, as trustee
under the Indenture
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed
Delivery
99.3 Form of Letter to Depository
Trust Company Participants
99.4 Form of Letter to Clients
- --------------------------------------
* To be filed by amendment
(b) Financial Statement Schedules
Not applicable.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933, as amended
(the "Securities Act");
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) under the Securities Act if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8 and the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
II-3
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless, in
the opinion of its counsel, the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
(e) The undersigned Registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
the State of Texas, on November 7, 2003.
CENTERPOINT ENERGY, INC.
By: /s/ David M. McClanahan
-------------------------------------
David M. McClanahan
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints David M. McClanahan, Scott E. Rozzell and
Rufus S. Scott, and each of them severally, his true and lawful attorney or
attorneys-in-fact and agents, with full power to act with or without the others
and with full power of substitution and resubstitution, to execute in his name,
place and stead, in any and all capacities, any or all amendments (including
pre-effective and post-effective amendments) to this Registration Statement and
any registration statement for the same offering filed pursuant to Rule 462
under the Securities Act of 1933, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents and each of
them full power and authority, to do and perform in the name and on behalf of
the undersigned, in any and all capacities, each and every act and thing
necessary or desirable to be done in and about the premises, to all intents and
purposes and as fully as they might or could do in person, hereby ratifying,
approving and confirming all that said attorneys-in-fact and agents or their
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ David M. McClanahan President, November 7, 2003
- -------------------------------------- Chief Executive Officer and Director
David M. McClanahan (Principal Executive Officer)
/s/ Gary L. Whitlock Executive Vice President November 7, 2003
- -------------------------------------- and Chief Financial Officer
Gary L. Whitlock (Principal Financial Officer)
/s/ James S. Brian Senior Vice President and November 7, 2003
- -------------------------------------- Chief Accounting Officer
James S. Brian (Principal Accounting Officer)
/s/ Milton Carroll Director November 7, 2003
- --------------------------------------
Milton Carroll
/s/ Derrill Cody Director November 7, 2003
- --------------------------------------
Derrill Cody
II-5
/s/ John T. Cater Director November 7, 2003
- --------------------------------------
John T. Cater
/s/ O. Holcombe Crosswell Director November 7, 2003
- --------------------------------------
O. Holcombe Crosswell
/s/ Thomas F. Madison Director November 7, 2003
- --------------------------------------
Thomas F. Madison
/s/ Michael E. Shannon Director November 7 , 2003
- --------------------------------------
Michael E. Shannon
II-6
INDEX TO EXHIBITS
REPORT OR SEC FILE OR
EXHIBIT REGISTRATION REGISTRATION EXHIBIT
NUMBER DOCUMENT DESCRIPTION STATEMENT STATEMENT REFERENCE
- ------- -------------------------------- ---------------------------------- ------------ ---------
3.1 Amended and Restated Articles of Registration Statement on Form S-4 333-69502 3.1
Incorporation of CenterPoint of CenterPoint Energy, Inc.
Energy, Inc.
3.1.1 Articles of Amendment to the Form 10-K of CenterPoint Energy, 1-31447 3.1.1
Amended and Restated Articles of Inc. for the year ended December 31,
Incorporation of CenterPoint 2001
Energy, Inc.
3.2 Amended and Restated Bylaws of Form 10-K of CenterPoint Energy, 1-31447 3.2
CenterPoint Energy, Inc. Inc. for the year ended December 31,
2001
4.1 Indenture, dated as of May 19, Current Report on Form 8-K of 1-31447 4.1
2003, between CenterPoint Energy, CenterPoint Energy, Inc. filed June
Inc. and JPMorgan Chase Bank as 3, 2003
trustee (the "Trustee")
4.2 Supplemental Indenture No. 2, Current Report on Form 8-K of 1-31447 4.2
dated as of May 27, 2003, between CenterPoint Energy, Inc. filed June
CenterPoint Energy, Inc. and the 3, 2003
Trustee, with respect to
$200,000,000 aggregate principal
amount of 5.875% Senior Notes due
2008 and $200,000,000 aggregate
principal amount of 6.850% Senior
Notes due 2015 (including the form
of Note)
4.3 Supplemental Indenture No. 3 dated Current Report on Form 8-K of 1-31447 4.2
as of September 9, 2003, between CenterPoint Energy, Inc. filed
CenterPoint Energy, Inc. and the September 10, 2003
Trustee, with respect to
$200,000,000 aggregate principal
amount of 7.25% Senior Notes due
2010 (including the form of Note)
4.4 Registration Rights Agreement, Form 10-Q of CenterPoint Energy, 1-31447 4.5.5
dated as of May 27, 2003, among Inc. for the quarter ended June 30,
CenterPoint Energy, Inc., 2003
Citigroup Global Markets Inc.,
Deutsche Bank Securities Inc. and
Wachovia Securities, Inc., as
representatives of the initial
purchasers
4.5 Registration Rights Agreement,
dated as of September 9, 2003,
among CenterPoint Energy, Inc.,
Bank of America Securities LLC,
Deutsche Bank Securities Inc. and
Wachovia Capital Markets, LLC, as
representatives of the initial
purchasers
5.1* Opinion of Baker Botts L.L.P.
12.1 Statement Regarding Computation
of Ratios of Earnings to Fixed
Charges for the twelve-month
periods ended December 31, 2002 and
the six-month periods ended June
30, 2002 and 2003
23.1 Consent of Deloitte & Touche LLP
23.2* Consent of Baker Botts L.L.P.
(contained in Exhibit 5.1)
24.1 Power of Attorney (included on the
signature page of the Registration
Statement)
25.1 Statement of Eligibility and
Qualifications under the Trust
Indenture Act of 1939, as amended,
of JPMorgan Chase Bank, as trustee
under the Indenture
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed
Delivery
99.3 Form of Letter to Depository
Trust Company Participants
99.4 Form of Letter to Clients
- ----------------------------
* To be filed by amendment.
EXHIBIT 4.5
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into this 9th day of September, 2003 among CenterPoint Energy, Inc., a
Texas corporation (the "Company"), Banc of America Securities LLC, Deutsche Bank
Securities Inc. and Wachovia Capital Markets, LLC, as representatives (the
"Representatives") of the initial purchasers (the "Initial Purchasers") listed
on Schedule I to the Purchase Agreement (defined below).
This Agreement is made pursuant to the Purchase Agreement dated
September 3, 2003, among the Company and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by the Company to the Initial
Purchasers of an aggregate of $200,000,000 principal amount of the Company's
7.25% Senior Notes due 2010 (the "Securities"). In order to induce the Initial
Purchasers to enter into the Purchase Agreement, the Company has agreed to
provide to the Initial Purchasers and their direct and indirect transferees the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended
from time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in The City
of New York are authorized or obligated by law or executive order to close and
which shall be a "business day" as defined under Rule 14d-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"Depositary" shall mean The Depository Trust Company, or any
other depositary for the Securities appointed by the Company; provided, however,
that such depositary must have an address in the Borough of Manhattan, in the
City of New York.
"Exchange Offer" shall mean the exchange offer by the Company
of Exchange Securities for Registrable Securities pursuant to Section 2.1
hereof.
"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such registration
statement, including the Prospectus contained therein, all exhibits thereto and
all documents incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section
2.1 hereof.
"Exchange Securities" shall mean the notes issued by the
Company under the Indenture containing terms identical to the Securities in all
material respects (except for references to certain interest rate provisions,
restrictions on transfers and restrictive legends), to be offered to Holders of
Securities in exchange for Registrable Securities pursuant to the Exchange
Offer.
"Expiration Date" shall mean the date on which all the
Participating Broker-Dealers have sold all Exchange Securities held by them.
"Holder" shall mean an Initial Purchaser, for so long as it
owns any Registrable Securities, and each of its successors, assigns and direct
and indirect transferees who become owners of Registrable Securities under the
Indenture and each Participating Broker-Dealer that holds Exchange Securities
for so long as such Participating Broker-Dealer is required to deliver a
prospectus meeting the requirements of the 1933 Act in connection with any
resale of such Exchange Securities.
"Indenture" shall mean the Indenture, dated as of May 19, 2003
between the Company and JPMorgan Chase Bank, as trustee, as supplemented by a
Supplemental Indenture No. 3, dated as of September 9, 2003, as the same may be
amended, supplemented, waived or otherwise modified from time to time in
accordance with the terms thereof.
"Initial Purchaser" or "Initial Purchasers" shall have the
meaning set forth in the preamble.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of Outstanding (as defined in the Indenture)
Registrable Securities or such smaller amount of Registrable Securities for
which action is to be taken; provided that whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company and other obligors on the
Securities or any Affiliate (as defined in the Indenture) of the Company shall
be disregarded in determining whether such consent or approval was given by the
Holders of such required percentage amount.
"Participating Broker-Dealer" shall mean any Initial
Purchaser, and any other broker-dealer who acquired the Registrable Securities
for its own account as a result of market-making or other trading activities and
exchanges Registrable Securities in the Exchange Offer for Exchange Securities.
"Person" shall mean any individual, corporation, partnership,
joint venture, trust, limited liability company, unincorporated organization or
government or any agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement, including
any such prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Shelf Registration
2
Statement, and by all other amendments and supplements to a prospectus,
including post-effective amendments, and in each case including all material
incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble.
"Registrable Securities" shall mean the Securities; provided,
however, that Securities shall cease to be Registrable Securities when (i) a
Registration Statement with respect to such Securities shall have been declared
effective under the 1933 Act and such Securities shall have been disposed of
pursuant to such Registration Statement, (ii) such Securities have been sold to
the public pursuant to Rule 144 under the 1933 Act or may be sold pursuant to
Rule 144(k) (or any similar provision then in force, but not Rule 144A) under
the 1933 Act, (iii) such Securities shall have ceased to be outstanding or (iv)
the Exchange Offer is consummated (except in the case of Securities purchased
from the Company and continued to be held by the Initial Purchasers).
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance by the Company with this Agreement,
including, without limitation: (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. ("NASD") registration and filing fees,
including, if applicable, the reasonable fees and expenses of any "qualified
independent underwriter" (and its counsel) that is required to be retained by
any holder of Registrable Securities in accordance with the rules and
regulations of the NASD, (ii) all fees and expenses incurred in connection with
compliance with state securities or blue sky laws and compliance with the rules
of the NASD (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of any of the
Exchange Securities or Registrable Securities and any filings with the NASD),
(iii) all expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any underwriting agreements,
securities sales agreements and other documents relating to the performance of
and compliance with this Agreement, (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable Securities on any
securities exchange or exchanges, (v) all rating agency fees, (vi) the fees and
disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance, (vii) the fees and expenses of the Trustee, and any escrow agent or
custodian, (viii) the reasonable fees and disbursements of one firm, at any one
time, of legal counsel selected by the Representatives or the Majority Holders
to represent the Holders of Registrable Securities and (ix) any reasonable fees
and disbursements of the underwriters customarily required to be paid by issuers
or sellers of securities and the fees and expenses of any special experts
retained by the Company in connection with any Registration Statement, but
excluding underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement
of the Company which covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
3
"SEC" shall mean the United States Securities and Exchange
Commission or any successor agency or governmental body performing the functions
currently performed by the United States Securities and Exchange Commission.
"Securities" shall have the meaning set forth in the preamble.
"Shelf Registration" shall mean a registration effected
pursuant to Section 2.2 hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of Section 2.2
of this Agreement which covers all of the Registrable Securities on an
appropriate form under Rule 415 under the 1933 Act, or any similar rule that may
be adopted by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"TIA" shall mean the Trust Indenture Act of 1939, as amended.
"Trustee" shall mean the trustee with respect to the
Securities under the Indenture.
2. Registration Under the 1933 Act.
2.1 Exchange Offer. The Company shall, for the benefit of
the Holders, at the Company's cost, use its reasonable commercial efforts (A) to
file with the SEC the Exchange Offer Registration Statement not later than 180
days following the original issuance of the Securities with respect to a
proposed Exchange Offer and the issuance and delivery to the Holders, in
exchange for the Registrable Securities, of a like principal amount of Exchange
Securities, (B) to cause the Exchange Offer Registration Statement to be
declared effective under the 1933 Act within 270 days of the original issuance
of the Securities, (C) to keep the Exchange Offer Registration Statement
effective until the closing of the Exchange Offer and (D) unless the Exchange
Offer would not be permitted by applicable law or SEC policy, to cause the
Exchange Offer to be consummated within 315 days following the original issuance
of the Securities. The Exchange Securities will be issued under the Indenture.
Upon the effectiveness of the Exchange Offer Registration Statement, the Company
shall promptly commence the Exchange Offer, it being the objective of such
Exchange Offer to enable each Holder eligible and electing to exchange
Registrable Securities for Exchange Securities (assuming that such Holder (A) is
not an affiliate of the Company within the meaning of Rule 405 under the 1933
Act (an "Affiliate"), (B) is not a broker-dealer tendering Registrable
Securities acquired directly from the Company or one of its Affiliates for its
own account, (C) acquired the Exchange Securities in the ordinary course of such
Holder's business and (D) at the time of the consummation of the Exchange Offer
has no arrangements or understandings with any Person to participate in the
Exchange Offer for the purpose of distributing the Exchange Securities) to
transfer such Exchange Securities from and after their receipt without any
limitations or restrictions under the 1933 Act and without material restrictions
under the securities laws of a substantial portion of the several states of the
United States.
In connection with the Exchange Offer, the Company will:
4
(A) as promptly as practicable after the Exchange Offer
Registration Statement has been declared effective by the SEC, mail to
each Holder a copy of the Prospectus forming part of the Exchange Offer
Registration Statement, together with an appropriate letter of
transmittal and related documents;
(B) keep the Exchange Offer open for acceptance for a
period of not less than 20 Business Days after the date notice thereof
is mailed to the Holders (or longer if required by applicable law)
(such period referred to herein as the "Exchange Period");
(C) utilize the services of the Depositary for the
Exchange Offer;
(D) notify each Holder that any Holder electing to have a
Registrable Security exchanged pursuant to the Exchange Offer will be
required to surrender such Registrable Security, together with the
appropriate letters of transmittal, to the institution and at the
address and in the manner specified in the notice prior to 5:00 p.m.
(Eastern Time) on the last Business Day of the Exchange Period;
(E) permit Holders to (i) withdraw tendered Registrable
Securities at any time prior to 5:00 p.m. (Eastern Time) on the last
Business Day of the Exchange Period, by sending to the institution
specified in the notice a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of
Registrable Securities delivered for exchange and a statement that such
Holder is withdrawing such Holder's election to have such Securities
exchanged and (ii) tender Registrable Securities according to customary
guaranteed delivery procedures if such Holder cannot deliver such
Registrable Securities or complete the procedures relating thereto on a
timely basis prior to 5:00 p.m. (Eastern Time) on the last Business Day
of the Exchange Period;
(F) notify each Holder that any Registrable Security not
tendered will remain outstanding and continue to accrue interest, but
will not retain any rights under this Agreement (except in the case of
the Initial Purchasers and Participating Broker Dealers as provided
herein); and
(G) otherwise comply in all material respects with all
applicable laws relating to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer the
Company shall:
(A) accept for exchange all Registrable Securities duly
tendered and not validly withdrawn pursuant to the Exchange Offer in
accordance with the terms of the Exchange Offer Registration Statement
and the letter of transmittal which shall be an exhibit thereto;
(B) deliver or cause to be delivered all Registrable
Securities accepted for exchange to the Trustee for cancellation; and
(C) cause the Trustee promptly to authenticate and
deliver Exchange Securities, to each Holder of Registrable Securities
so accepted for exchange in a
5
principal amount equal to the principal amount of the Registrable
Securities of such Holder so accepted for exchange.
Interest on each Exchange Security will accrue from the last date on
which interest was paid on the Registrable Securities surrendered in exchange
therefor or, if no interest has been paid on the Registrable Securities, from
the date of original issuance. The Exchange Offer shall not be subject to any
conditions, other than (A) that 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, (B) the valid tendering of Registrable
Securities in accordance with the Exchange Offer, (C) that each Holder of
Registrable Securities exchanged in the Exchange Offer shall have represented
that (i) it is not an affiliate of the Company within the meaning of Rule 405
under the 1933 Act, (ii) it is not a broker-dealer tendering Registrable
Securities acquired directly from the Company or one of its Affiliates for its
own account, (iii) all of the Exchange Securities to be received by it shall be
acquired in the ordinary course of its business and (iv) at the time of the
consummation of the Exchange Offer it shall have no arrangement or understanding
with any Person to participate in the distribution (within the meaning of the
1933 Act) of the Exchange Securities, and shall have made such other
representations as may be reasonably necessary under applicable SEC rules,
regulations or interpretations to render the use of Form S-4 or other
appropriate form under the 1933 Act available and (D) that 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 the
Company's judgment, would reasonably be expected to impair the ability of the
Company to proceed with the Exchange Offer. The Company shall use its reasonable
commercial efforts to inform the Initial Purchasers of the names and addresses
of the Holders to whom the Exchange Offer is made, and the Initial Purchasers
shall have the right, subject to applicable securities laws, to contact such
Holders and otherwise facilitate the tender of Registrable Securities in the
Exchange Offer.
The Company shall use its reasonable commercial efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein, in order to permit such Prospectus to be lawfully
delivered by all persons subject to the prospectus delivery requirements of the
1933 Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Securities; provided, however, that
(i) in the case where such prospectus and any amendment or supplement thereto
must be delivered by a Participating Broker-Dealer, such period shall terminate
at the earlier to occur of (i) the expiration of 180 days following the Exchange
Offer and (ii) the Expiration Date.
The Company shall not be obligated to keep the Exchange Offer
Registration Statement effective or to permit the use of any Prospectus forming
a part of the Exchange Offer Registration Statement if (i) the Company
determines, in its reasonable judgment, upon advice of counsel that the
continued effectiveness and use of the Exchange Offer Registration Statement
would (x) require the disclosure of material information which the Company has a
bona fide business reason for preserving as confidential or (y) interfere with
any financing, acquisition, corporate reorganization or other material
transaction involving the Company or any of its subsidiaries; and provided,
further, that the failure to keep the Exchange Offer Registration Statement
effective and usable for offers and sales of Registrable Securities for such
reasons shall last no longer than 45 consecutive calendar days or no more than
an aggregate of 90 calendar days during any consecutive twelve-month period
(whereafter a Registration Default, as
6
hereinafter defined, shall occur) and (ii) the Company promptly thereafter
complies with the requirements of Section 3(L) hereof, if applicable; any such
period during which the Company is excused from keeping the Exchange Offer
Registration Statement effective and usable for offers and sales of Registrable
Securities is referred to herein as a "Exchange Offer Suspension Period"; an
Exchange Offer Suspension Period shall commence on and include the date that the
Company gives notice to the Holders that the Exchange Offer Registration
Statement is no longer effective or the Prospectus included therein is no longer
usable for offers and sales of Registrable Securities as a result of the
application of the proviso of the foregoing sentence, stating the reason
therefor, and shall end on the earlier to occur of the date on which each seller
of Registrable Securities covered by the Exchange Offer Registration Statement
either receives the copies of the supplemented or amended Prospectus or is
advised in writing by the Company that use of the Prospectus may be resumed.
The Company acknowledges that pursuant to current interpretations by
the SEC's staff of Section 5 of the 1933 Act, in the absence of applicable
exemption therefrom, (i) each Holder which is a broker-dealer electing to
exchange Securities for Exchange Securities (an "Exchanging Dealer"), is
required to deliver a prospectus containing information substantially in the
form set forth in (a) Annex A hereto, (b) Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section, (c) Annex C
hereto in the "Plan of Distribution" section of such prospectus in connection
with a sale of any such Exchange Securities received by such Exchanging Dealer
pursuant to the Exchange Offer and to include in the Letter of Transmittal
delivered pursuant to the Exchange Offer, the information set forth in Annex D
hereto and (ii) an Initial Purchaser that elects to sell Exchange Securities
acquired in an exchange for Securities constituting any portion of an unsold
allotment, is required to deliver a prospectus containing the information
required by Item 507 or Item 508 of Regulation S-K under the 1933 Act, as
applicable, in connection with such sale.
2.2 Shelf Registration. In the event that (A) the Company
reasonably determines that changes in law, SEC rules or regulations or
applicable interpretations thereof by the staff of the SEC do not permit the
Company to effect the Exchange Offer as contemplated by Section 2.1 hereof, (B)
for any other reason, the Exchange Offer is not consummated within 315 days
after the original issuance of the Securities or (C) an Initial Purchaser
notifies the Company within 20 Business Days following the consummation of the
Exchange Offer that (i) it is not permitted by applicable law, SEC rules or
regulations or applicable interpretations thereof by the staff of the SEC to
participate in the Exchange Offer, (ii) it may not resell Exchange Securities
with the Prospectus included as part of the Exchange Offer Registration
Statement or (iii) it is a broker-dealer and owns Registrable Securities
acquired directly from the Company or one of the Company's Affiliates, then in
case of each of clauses (A) through (C) the Company shall, at its cost, in lieu
of effecting (or, in the case of clause (C), in addition to effecting) the
registration of the Exchange Securities pursuant to the Exchange Offer
Registration Statement:
(A) as promptly as practicable, file with the SEC, and
thereafter shall use its reasonable commercial efforts to cause to be
declared effective no later than 345 days after the original issuance
of the Securities, a Shelf Registration Statement relating to the offer
and sale of the Registrable Securities by the Holders from time to time
in accordance with the methods of distribution elected by the Majority
Holders participating in the Shelf Registration and set forth in such
Shelf Registration Statement;
7
(B) use its reasonable commercial efforts to keep the
Shelf Registration Statement continuously effective in order to permit
the Prospectus forming a part thereof to be usable by Holders for a
period of two years from the date of the original issuance of the
Securities (plus the number of days in any Suspension Period), or until
all of the Registrable Securities have been sold pursuant thereto;
provided, however, that the Company shall not be obligated to keep the
Shelf Registration Statement effective or to permit the use of any
Prospectus forming a part of the Shelf Registration Statement if (i)
the Company determines, in its reasonable judgment, upon advice of
counsel that the continued effectiveness and use of the Shelf
Registration Statement would (x) require the disclosure of material
information which the Company has a bona fide business reason for
preserving as confidential or (y) interfere with any financing,
acquisition, corporate reorganization or other material transaction
involving the Company or any of its subsidiaries; and provided,
further, that the failure to keep the Shelf Registration Statement
effective and usable for offers and sales of Registrable Securities for
such reasons shall last no longer than 45 consecutive calendar days or
no more than an aggregate of 90 calendar days during any consecutive
twelve-month period (whereafter a Registration Default, as hereinafter
defined, shall occur) and (ii) the Company promptly thereafter complies
with the requirements of Section 3(L) hereof, if applicable; any such
period during which the Company is excused from keeping the Shelf
Registration Statement effective and usable for offers and sales of
Registrable Securities is referred to herein as a "Suspension Period";
a Suspension Period shall commence on and include the date that the
Company gives notice to the Holders that the Shelf Registration
Statement is no longer effective or the Prospectus included therein is
no longer usable for offers and sales of Registrable Securities as a
result of the application of the proviso of the foregoing sentence,
stating the reason therefor, and shall end on the earlier to occur of
the date on which each seller of Registrable Securities covered by the
Shelf Registration Statement either receives the copies of the
supplemented or amended Prospectus or is advised in writing by the
Company that use of the Prospectus may be resumed.
The Company shall not permit any securities other than Registrable
Securities to be included in the Shelf Registration Statement. The Company
further agrees, if necessary, to supplement or amend the Shelf Registration
Statement, as required by Section 3(B) below, and to furnish to the Holders of
Registrable Securities copies of any such supplement or amendment promptly after
its being used or filed with the SEC.
2.3 Expenses. The Company shall pay all Registration
Expenses in connection with the registration pursuant to Section 2.1 or 2.2
hereof. Each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration Statement.
2.4 Effectiveness.
(A) The Company will be deemed not to have used its
reasonable commercial efforts to cause the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, to
become, or to remain, effective during the requisite period if the
Company voluntarily takes any action that would, or omits to take any
action (other than any action specifically permitted by the last
paragraph of Section 2.1 or by
8
Section 2.2(B) hereof) which omission would, result in any such
Registration Statement not being declared effective or in the Holders
of Registrable Securities covered thereby not being able to exchange or
offer and sell such Registrable Securities during that period as and to
the extent contemplated hereby, unless such action is required by
applicable law.
(B) An Exchange Offer Registration Statement pursuant to
Section 2.1 hereof or a Shelf Registration Statement pursuant to
Section 2.2 hereof will not be deemed to have become effective unless
it has been declared effective by the SEC; provided, however, that if,
after it has been declared effective, the offering of Registrable
Securities pursuant to an Exchange Offer Registration Statement or a
Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other
governmental agency or court, such Registration Statement will be
deemed not to have become effective during the period of such
interference, until the offering of Registrable Securities pursuant to
such Registration Statement may legally resume.
2.5 Interest. In the event that (A) the Exchange Offer
Registration Statement is not filed with the SEC on or prior to the 180th day
following the date of original issuance of the Securities, (B) the Exchange
Offer Registration Statement is not declared effective on or prior to the 270th
calendar day following the date of original issuance of the Securities, (C) the
Exchange Offer is not consummated or a Shelf Registration Statement is not
declared effective, in either case, on or prior to the 315th calendar day
following the date of original issuance of the Securities or (D) the Exchange
Offer Registration Statement or the Shelf Registration Statement is filed and
declared effective but shall thereafter either be withdrawn by the Company or
becomes subject to an effective stop order suspending the effectiveness of such
registration statement, except as specifically permitted by the last paragraph
of Section 2.1 or Section 2.2(B) hereof, in each case without being succeeded
within 30 days by an amendment thereto or an additional registration statement
filed and declared effective (each such event referred to in clauses (A) through
(D) above, a "Registration Default"), the interest rate borne by the Registrable
Securities shall be increased ("Additional Interest") by one-fourth of one
percent (0.25%) per annum upon the occurrence of each Registration Default,
which rate will increase by an additional one-fourth of one percent (0.25%) per
annum if such Registration Default has not been cured within 90 days after
occurrence thereof and continuing until all Registration Defaults have been
cured, provided that the aggregate amount of any such increase in the interest
rate on the Registrable Securities shall in no event exceed one-half of one
percent (0.50%) per annum; and provided, further, that if the Exchange Offer
Registration Statement is not declared effective on or prior to the 270th
calendar day following the original issuance of the Securities and the Company
shall request Holders of Securities to provide information required by the
applicable rules of the SEC for inclusion in the Shelf Registration Statement,
then Registrable Securities owned by Holders who do not deliver such information
to the Company or who do not provide comments on the Shelf Registration
Statement when reasonably requested by the Company will not be entitled to any
such increase in the interest rate for any day after the 315th day following the
date of original issuance of the Securities. All accrued Additional Interest
shall be paid to Holders of Registrable Securities in the same manner and at the
same time as regular payments of interest on the Registrable Securities.
Following the cure of all Registration Defaults, the accrual of Additional
Interest will cease and the interest rate on the Registrable Securities will
revert to the original rate.
9
3. Registration Procedures. In connection with the obligations of
the Company with respect to Registration Statements pursuant to Sections 2.1 and
2.2 hereof, the Company shall:
(A) prepare and file with the SEC a Registration
Statement, within the relevant time period specified in Section 2, on
the appropriate form under the 1933 Act, which form shall (i) be
selected by the Company, (ii) in the case of a Shelf Registration, be
available for the sale of the Registrable Securities by the selling
Holders thereof and (iii) comply as to form in all material respects
with the requirements of the applicable form and include or incorporate
by reference all financial statements required by the SEC to be filed
therewith or incorporated by reference therein, and use its reasonable
commercial efforts to cause such Registration Statement to become
effective and remain effective in accordance with Section 2 hereof;
(B) use reasonable commercial efforts to cause (i) any
Registration Statement and any amendment thereto, when it becomes
effective, not to contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (ii)
subject to the last paragraph of Section 2.1 and Section 2.2(B), any
Prospectus forming part of any Registration Statement, and any
supplement to such Prospectus (as amended or supplemented from time to
time), not to include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(C) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary under applicable law to keep such Registration Statement
effective for the applicable period; and cause each Prospectus to be
supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provision
then in force) under the 1933 Act and comply with the provisions of the
1933 Act, the 1934 Act and the rules and regulations thereunder
applicable to them with respect to the disposition of all securities
covered by each Registration Statement during the applicable period in
accordance with the intended method or methods of distribution
reasonably requested by the selling Holders thereof (including sales by
any Participating Broker-Dealer);
(D) in the case of a Shelf Registration, (i) notify each
Holder of Registrable Securities, at least fifteen (15) calendar days
prior to filing, that a Shelf Registration Statement with respect to
the Registrable Securities is being filed and advising such Holders
that the distribution of Registrable Securities will be made in
accordance with the methods reasonably requested by the Majority
Holders participating in the Shelf Registration, (ii) furnish to each
Holder of Registrable Securities and to each underwriter of an
underwritten offering of Registrable Securities, if any, without
charge, as many copies of each Prospectus, including each preliminary
Prospectus, and any amendment or supplement thereto, and such other
documents as such Holder or underwriter may reasonably request,
including financial statements and schedules and, if the Holder so
requests, all exhibits in order to facilitate the public sale or other
disposition of the Registrable Securities and (iii) hereby consent to
the use of the Prospectus or any
10
amendment or supplement thereto by each of the selling Holders of
Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or
supplement thereto, save and except during any Suspension Period;
(E) use its reasonable commercial efforts to register or
qualify the Registrable Securities under such state securities or blue
sky laws of such jurisdictions as any Holder of Registrable Securities
covered by a Registration Statement and each underwriter of an
underwritten offering of Registrable Securities shall reasonably
request by the time the applicable Registration Statement is declared
effective by the SEC, and do any and all other acts and things which
may be reasonably necessary or advisable to enable each such Holder and
underwriter to consummate the disposition in each such jurisdiction of
such Registrable Securities owned by such Holder; provided, however,
that the Company shall not be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(E) or
(ii) take any action which would subject it to general service of
process or taxation in any such jurisdiction where it is not then so
subject;
(F) notify promptly each Holder of Registrable Securities
under a Shelf Registration or any Participating Broker-Dealer who has
notified the Company that it is utilizing the Prospectus contained in
the Exchange Offer Registration Statement as provided in Section 3(G)
hereof and, if requested by such Holder or Participating Broker-Dealer,
confirm such advice in writing promptly (i) when a Registration
Statement has become effective and when any post-effective amendments
and supplements thereto become effective, (ii) of any request by the
SEC or any state securities authority for post-effective amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) in the case of a Shelf Registration, if, between the
effective date of the Shelf Registration Statement and the closing of
any sale of Registrable Securities covered thereby, the representations
and warranties of the Company contained in any underwriting agreement,
securities sales agreement or other similar agreement, if any, relating
to the offering cease to be true and correct in all material respects,
(v) of the happening of any event or the discovery of any facts during
the period the Shelf Registration Statement is effective which makes
any statement made in such Registration Statement or the related
Prospectus untrue in any material respect or which requires the making
of any changes in such Registration Statement or Prospectus in order to
make the statements therein not misleading, (vi) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Registrable Securities or the Exchange Securities,
as the case may be, for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose and (vii) of any
determination by the Company that a post-effective amendment to a
Registration Statement would be appropriate;
(G) (1) in the case of the Exchange Offer Registration
Statement (a) include in the Exchange Offer Registration Statement a
section entitled "Plan of Distribution,"
11
which section shall be reasonably acceptable to the Representatives on
behalf of the Participating Broker-Dealers, and which shall contain a
summary statement of the positions taken or policies made by the staff
of the SEC with respect to the potential "underwriter" status of any
broker-dealer that holds Registrable Securities acquired for its own
account as a result of market-making activities or other trading
activities and that will be the beneficial owner (as defined in Rule
13d-3 under the 1934 Act) of Exchange Securities to be received by such
broker-dealer in the Exchange Offer, including a statement that any
such broker-dealer who receives Exchange Securities for Registrable
Securities pursuant to the Exchange Offer may be deemed a statutory
underwriter and must deliver a prospectus meeting the requirements of
the 1933 Act in connection with any resale of such Exchange Securities,
(b) furnish to each Participating Broker-Dealer who has delivered to
the Company the notice referred to in Section 3(F), without charge, as
many copies of each Prospectus included in the Exchange Offer
Registration Statement, including any preliminary prospectus, and any
amendment or supplement thereto, as such Participating Broker-Dealer
may reasonably request, (c) hereby consent to the use of the Prospectus
forming part of the Exchange Offer Registration Statement or any
amendment or supplement thereto, by any Person subject to the
prospectus delivery requirements of the SEC, including all
Participating Broker-Dealers, in connection with the sale or transfer
of the Exchange Securities covered by the Prospectus or any amendment
or supplement thereto for up to 180 days following the Exchange Offer
except during any Exchange Offer Suspension Period, and (d) include in
the transmittal letter or similar documentation to be executed by an
exchange offeree in order to participate in the Exchange Offer (i) the
following provision:
"If the exchange offeree is a broker-dealer holding
Registrable Securities acquired for its own account as a
result of market-making activities or other trading
activities, it will deliver a prospectus meeting the
requirements of the 1933 Act in connection with any resale of
Exchange Securities received in respect of such Registrable
Securities pursuant to the Exchange Offer,"
and (ii) a statement to the effect that a broker-dealer by making the
acknowledgment described in clause (i) and by delivering a Prospectus
in connection with the exchange of Registrable Securities, the
broker-dealer will not be deemed to admit that it is an underwriter
within the meaning of the 1933 Act; and (2) in the case of any Exchange
Offer Registration Statement, the Company agrees to deliver to any
Participating Broker-Dealers upon the effectiveness of the Exchange
Offer Registration Statement (a) an opinion of counsel or opinions of
counsel substantially in the form attached hereto as Annex E, (b)
officers' certificates substantially in the form customarily delivered
by the Company in its public offerings of debt securities and (c) a
comfort letter or comfort letters in customary form to the extent
permitted by Statement on Auditing Standards No. 72 of the American
Institute of Certified Public Accountants (or if such a comfort letter
is not permitted, an agreed upon procedures letter in customary form)
from the Company's independent certified public accountants (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company
for which financial statements are, or are required to be, included in
the Registration Statement) at least as broad in scope and coverage as
the
12
comfort letter or comfort letters delivered to the Initial Purchasers
in connection with the initial sale of the Securities to the Initial
Purchasers;
(H) (i) in the case of an Exchange Offer, furnish counsel
for the Initial Purchasers and (ii) in the case of a Shelf
Registration, furnish counsel for the Holders of Registrable
Securities, copies of any comment letters received from the SEC or any
other request by the SEC or any state securities authority for
amendments or supplements to a Registration Statement and Prospectus or
for additional information;
(I) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of a Registration Statement
as soon as practicable and provide prompt notice to legal counsel for
the Holders of the withdrawal of any such order;
(J) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities, and each underwriter, if any, without
charge, at least one conformed copy of each Registration Statement and
any post-effective amendment thereto, including financial statements
and schedules (without documents incorporated therein by reference and
all exhibits thereto, unless requested);
(K) in the case of a Shelf Registration, cooperate with
the selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold to the extent not held with the Depositary
through Cede & Co., to remove any restrictive legends, and enable such
Registrable Securities to be in such denominations (consistent with the
provisions of the Indenture) and registered in such names as the
selling Holders or the underwriters, if any, may reasonably request at
least three Business Days prior to the closing of any sale of
Registrable Securities;
(L) upon the occurrence of any event or the discovery of
any facts, each as contemplated by Sections 3(F)(ii), (iii), (v), (vi)
and (vii) hereof and subject to the provisions of the second paragraph
immediately following Section 3(U) hereof, as promptly as practicable
after the occurrence of such an event, use its reasonable commercial
efforts to prepare a supplement or post-effective amendment to the
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities or Participating Broker-Dealers, such Prospectus will not
contain at the time of such delivery any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading or will remain so qualified. At such time as such public
disclosure is otherwise made or the Company determines that such
disclosure is not necessary, in each case to correct any misstatement
of a material fact or to include any omitted material fact, the Company
agrees promptly to notify each Holder of such determination and to
furnish each Holder such number of copies of the Prospectus as amended
or supplemented, as such Holder may reasonably request;
13
(M) obtain a CUSIP number for all Exchange Securities or
Registrable Securities, as the case may be, not later than the
effective date of a Registration Statement, and provide the Trustee
with certificates for the Exchange Securities or the Registrable
Securities, as the case may be, in a form eligible for deposit with the
Depositary;
(N) unless the Indenture, as its relates to the Exchange
Securities or the Registrable Securities, as the case may be, has
already been so qualified, use its reasonable commercial efforts to (i)
cause the Indenture to be qualified under the TIA in connection with
the registration of the Exchange Securities or Registrable Securities,
as the case may be, (ii) cooperate with the Trustee and the Holders to
effect such changes to the Indenture as may be required for the
Indenture to be so qualified in accordance with the terms of the TIA
and (iii) execute, and use its reasonable commercial efforts to cause
the Trustee to execute, all documents as may be required to effect such
changes, and all other forms and documents required to be filed with
the SEC to enable the Indenture to be so qualified in a timely manner;
(O) in the case of a Shelf Registration, enter into
agreements (including underwriting agreements) and take all other
customary and appropriate actions in order to expedite or facilitate
the disposition of such Registrable Securities and in such connection
whether or not an underwriting agreement is entered into and whether or
not the registration is an underwritten registration:
(i) make such representations and warranties to
the Holders of such Registrable Securities and the
underwriters, if any, in form, substance and scope as has been
customarily made by the Company to underwriters in similar
offerings of debt securities of the Company;
(ii) obtain opinions of counsel of the Company
and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and the Holders of a majority
in principal amount of the Registrable Securities being sold)
addressed to each selling Holder and the underwriters, if any,
covering the matters customarily covered in opinions requested
in sales of securities or underwritten offerings of the
Company;
(iii) obtain "cold comfort" letters and updates
thereof from the Company's independent certified public
accountants (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company
or of any business acquired by the Company for which financial
statements are, or are required to be, included in the
Registration Statement) addressed to the underwriters, if any,
and use reasonable efforts to have such letter addressed to
the selling Holders of Registrable Securities (to the extent
consistent with Statement on Auditing Standards No. 72 of the
American Institute of Certified Public Accounts), such letters
to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters to underwriters
in connection with similar underwritten offerings of the
Company;
14
(iv) if an underwriting agreement is entered
into, cause the same to set forth indemnification provisions
and procedures substantially equivalent to the indemnification
provisions and procedures set forth in Section 4 hereof with
respect to the underwriters and all other parties to be
indemnified pursuant to said Section; and
(v) deliver such documents and certificates as
may be reasonably requested and as are customarily delivered
in similar offerings to the Holders of a majority in principal
amount of the Registrable Securities being sold and the
managing underwriters, if any;
the above shall be done at (i) the effectiveness of such Registration
Statement (and each post-effective amendment thereto) and (ii) each
closing under any underwriting or similar agreement as and to the
extent required thereunder;
(P) in the case of a Shelf Registration or if a
Prospectus is required to be delivered by any Participating
Broker-Dealer in the case of an Exchange Offer, make available for
inspection by representatives of the Holders of the Registrable
Securities, any underwriters participating in any disposition pursuant
to a Shelf Registration Statement, any Participating Broker-Dealer and
any counsel or accountant retained by any of the foregoing, all
financial and other records, pertinent corporate documents and
properties of the Company reasonably requested by any such persons, and
cause the respective officers, directors, employees and any other
agents of the Company to supply all information reasonably requested by
any such representative, underwriter, special counsel or accountant in
connection with a Registration Statement, and make such representatives
of the Company available for discussion of such documents as shall be
reasonably requested by the Initial Purchasers in order to enable such
persons to conduct a reasonable investigation within the meaning of
Section 11 of the 1933 Act; provided, however, that such persons shall
first agree in writing with the Company that any information that is
reasonably and in good faith designated by the Company in writing as
confidential at the time of delivery of such information shall be kept
confidential by such persons, unless (i) disclosure of such information
is required by court or administrative order or is necessary to respond
to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure requirements
pursuant to federal securities laws in connection with the filing of
the Shelf Registration Statement or the use of any Prospectus), (iii)
such information becomes generally available to the public other than
as a result of a disclosure or failure to safeguard such information by
such persons or (iv) such information becomes available to such persons
from a source other than the Company and its subsidiaries and such
source is not known by such persons to be bound by a confidentiality
agreement; and provided, further, that the foregoing inspection and
information gathering shall be coordinated by (x) the managing
underwriter in connection with any underwritten offering pursuant to a
Shelf Registration, (y) the Holder or Holders designated by the
participating Majority Holders in connection with any nonunderwritten
offering pursuant to a Shelf Registration or (z) the Participating
Broker-Dealer holding the largest amount of Registrable Securities in
the case of use of a Prospectus included in the Exchange Offer
Registration Statement, together with one counsel designated by and on
behalf of such persons;
15
(Q) (i) in the case of an Exchange Offer Registration
Statement, within a reasonable time prior to the filing of any Exchange
Offer Registration Statement, any Prospectus forming a part thereof,
any amendment to an Exchange Offer Registration Statement or amendment
or supplement to such Prospectus, provide copies of such document to
the Initial Purchasers and to counsel to the Holders of Registrable
Securities and make such changes in any such document prior to the
filing thereof as the Initial Purchasers or counsel to the Holders of
Registrable Securities may reasonably request and, except as otherwise
required by applicable law, not file any such document in a form to
which the Initial Purchasers on behalf of the Holders of Registrable
Securities and counsel to the Holders of Registrable Securities shall
not have previously been advised and furnished a copy of or to which
the Initial Purchasers on behalf of the Holders of Registrable
Securities or counsel to the Holders of Registrable Securities shall
reasonably object (which objection shall be made within a reasonable
period of time), and make the representatives of the Company available
for discussion of such documents as shall be reasonably requested by
the Initial Purchasers; and (ii) in the case of a Shelf Registration, a
reasonable time prior to filing any Shelf Registration Statement, any
Prospectus forming a part thereof, any amendment to such Shelf
Registration Statement or amendment or supplement to such Prospectus,
provide copies of such document to the Holders of Registrable
Securities, to the Initial Purchasers, to counsel for the Holders and
to the underwriter or underwriters of an underwritten offering of
Registrable Securities, if any, make such changes in any such document
prior to the filing thereof as the Initial Purchasers, the counsel to
the Holders or the underwriter or underwriters reasonably request and
not file any such document in a form to which the Majority Holders, the
Initial Purchasers on behalf of the Holders of Registrable Securities,
counsel for the Holders of Registrable Securities or any underwriter
shall not have previously been advised and furnished a copy of or to
which the Majority Holders, the Initial Purchasers on behalf of the
Holders of Registrable Securities, counsel to the Holders of
Registrable Securities or any underwriter shall reasonably object
(which objection shall be made within a reasonable period of time), and
make the representatives of the Company available for discussion of
such document as shall be reasonably requested by the Holders of
Registrable Securities, the Initial Purchasers on behalf of such
Holders, counsel for the Holders of Registrable Securities or any
underwriter;
(R) use its reasonable commercial efforts to (a) if the
Securities have been rated prior to the initial sale of such
Securities, confirm such ratings will apply to the Securities covered
by a Registration Statement, or (b) if the Securities were not
previously rated, cause the Securities covered by a Registration
Statement to be rated with the appropriate rating agencies, if so
requested by Holders of a majority in aggregate principal amount of
Securities covered by such Registration Statement, or by the managing
underwriters, if any.
(S) otherwise comply with all applicable rules and
regulations of the SEC and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering at least
12 months which shall satisfy the provisions of Section 11(a) of the
1933 Act and Rule 158 thereunder;
16
(T) cooperate and assist in any filings required to be
made with the NASD and, in the case of a Shelf Registration, in the
performance of any due diligence investigation by any underwriter and
its counsel (including any "qualified independent underwriter" that is
required to be retained in accordance with the rules and regulations of
the NASD); and
(U) upon consummation of an Exchange Offer, obtain a
customary opinion of counsel to the Company addressed to the Trustee
for the benefit of all Holders of Registrable Securities participating
in the Exchange Offer, and which includes an opinion substantially to
the effect that (i) the Company has duly authorized, executed and
delivered the Exchange Securities and the related supplemental
indenture and (ii) each of the Exchange Securities and related
indenture constitute a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its
respective terms (with customary exceptions).
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require each
Holder of Registrable Securities to furnish to the Company such information
regarding the Holder and the proposed distribution by such Holder of such
Registrable Securities as the Company may from time to time reasonably require
for inclusion in the Shelf Registration Statement and request in writing.
In the case of a Shelf Registration Statement, each Holder agrees, and
in the case of the Exchange Offer Registration Statement, each Participating
Broker-Dealer agrees, that, upon receipt of any notice from the Company of (a)
the happening of any event or the discovery of any facts, each of the kind
described in Sections 3(F)(ii), (iii) or (v) hereof or (b) the Company's
determination, in its reasonable judgment, upon advice of counsel, that the
continued effectiveness and use of the Shelf Registration Statement or the
Prospectus included in the Shelf Registration Statement or the Exchange Offer
Registration Statement would (x) require the disclosure of material information,
which the Company has a bona fide business reason for preserving as
confidential, or (y) interfere with any financing, acquisition, corporate
reorganization or other material transaction involving the Company or any of its
subsidiaries, such Holder or Participating Broker-Dealer, as the case may be,
will forthwith discontinue disposition of Registrable Securities pursuant to
such Registration Statement or Prospectus until the receipt by such Holder or
Participating Broker-Dealer, as the case may be, of either copies of the
supplemented or amended Prospectus contemplated by Section 3(L) hereof, and, if
so directed by the Company, such Holder or Participating Broker-Dealers will
deliver to the Company (at its expense) all copies in its possession of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice, or notice in writing from the Company that such Holder or
Participating Broker-Dealers may resume disposition of Registrable Securities
pursuant to such Registration Statement or Prospectus. If the Company shall give
any such notice described in clause (a) above to suspend the disposition of
Registrable Securities pursuant to a Registration Statement as a result of the
happening of any event or the discovery of any facts, each of the kind described
in Section 3(F)(ii), (iii) and (v) hereof, the Company shall be deemed to have
used its reasonable commercial efforts to keep such Registration Statement
effective during such Suspension Period provided that the Company shall use its
reasonable commercial efforts to file and have declared effective (if an
amendment) as soon as practicable an amendment or supplement to such
Registration Statement. The Company shall extend the
17
period during which such Registration Statement shall be maintained effective or
the Prospectus used pursuant to this Agreement by the number of days during the
period from and including the date of the giving of the notice described in
clauses (a) and (b) above to and including the date when the Holders or
Participating Broker-Dealers shall have received copies of the supplemented or
amended Prospectus necessary to resume such dispositions or notification that
they may resume such disposition under an existing Prospectus.
If any of the Registrable Securities covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the underwriter or
underwriters and manager or managers that will manage such offering will be
selected by the Majority Holders of such Registrable Securities included in such
offering and shall be reasonably acceptable to the Company. No Holder of
Registrable Securities may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
4. Indemnification; Contribution.
(A) In the event of a Shelf Registration Statement or in
connection with any prospectus delivery pursuant to an Exchange Offer
Registration Statement by an Initial Purchaser or Participating Broker-Dealer,
the Company agrees to indemnify and hold harmless the Initial Purchasers, each
Holder, each Participating Broker-Dealer, each Person who participates as an
underwriter (any such Person being an "Underwriter") and each Person, if any,
who controls any Initial Purchaser, Holder, Participating Broker-Dealer or
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act (collectively, the "Section 4 Persons"), against any losses,
claims, damages, liabilities or expenses (including the reasonable cost of
investigating and defending against any claims therefore and counsel fees
incurred in connection therewith as such expenses are incurred), joint or
several, which may be based upon either the 1933 Act, or the 1934 Act, or any
other statute or at common law, on the ground or alleged ground that any
Registration Statement (or any amendment or supplement thereto) pursuant to
which Exchange Securities or Registrable Securities were registered under the
1933 Act or any Prospectus included therein (or any amendment or supplement
thereto) included or allegedly included an untrue statement of material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, unless such statement or
omission was made in reliance upon, and in conformity with, written information
furnished to the Company by any such Section 4 Person specifically for use in
the preparation thereof; provided that in no case is the Company to be liable
with respect to any claims made against any Section 4 Person unless such Section
4 Person shall have notified the Company in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Section 4 Person, but failure to
notify the Company of any such claim shall not relieve it from any liability
which it may have to such Section 4 Person otherwise than on account of the
indemnity agreement contained in this paragraph; and provided, further, that the
foregoing indemnity with respect to any Prospectus, including any preliminary
prospectus or preliminary prospectus supplement, shall not inure to the benefit
of any Section 4 Person if a copy of the Prospectus (as amended or
18
supplemented, exclusive of the material incorporated by reference) had not been
sent or given by or on behalf of such Section 4 Person to the Person asserting
any such losses, claims, damages or liabilities concurrently with or prior to
delivery of the written confirmation of the sale of Exchange Securities or
Registrable Securities, as the case may be, to such Person and the untrue
statement or omission of a material fact contained in any such Prospectus was
corrected in the Prospectus (as amended or supplemented) if the Company had
previously furnished copies thereof to such Section 4 Persons.
The Company will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but, if the Company elects to assume the defense,
such defense shall be conducted by counsel chosen by it. In the event that the
Company elects to assume the defense of any such suit and retains such counsel,
each Section 4 Person may retain additional counsel but shall bear the fees and
expenses of such counsel unless (i) the Company shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include the Section 4 Person or Section 4 Persons and such persons have been
advised by such counsel that one or more legal defenses may be available to it
or them which may not be available to the Company, in which case the Company
shall not be entitled to assume the defense of such suit on behalf of such
Section 4 Person, notwithstanding its obligation to bear the reasonable fees and
expenses of such counsel, it being understood, however, that the Company shall
not, in connection with any one such suit or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for all such Section 4 Persons, which firm shall be designated in writing
by the Initial Purchasers. The Company shall not be liable to indemnify any
Person for any settlement of any such claim effected without the Company's prior
written consent. This indemnity agreement will be in addition to any liability,
which the Company might otherwise have.
(B) Each Section 4 Person agrees severally and not jointly to
indemnify and hold harmless the Company, each of the Company's directors, each
of the Company's officers who have signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the 1933 Act or
the 1934 Act, against any losses, claims, damages, liabilities or expenses
(including the reasonable cost of investigating and defending against any claims
therefor and counsel fees incurred in connection therewith as such expenses are
incurred), joint or several, which may be based upon the 1933 Act, or any other
statute or at common law, on the ground or alleged ground that any Registration
Statement (or any amendment or supplement thereto) pursuant to which Exchange
Securities or Registrable Securities were registered under the 1933 Act or any
Prospectus included therein (or any amendment or supplement thereto) included or
allegedly included an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, but only insofar as any such statement or
omission was made in reliance upon, and in conformity with, written information
furnished to the Company by such Section 4 Person specifically for use in the
preparation thereof; provided that in no case is such Section 4 Person to be
liable with respect to any claims made against the Company or any such director,
officer or controlling person unless the Company or any such director, officer
or controlling person shall have notified such Section 4 Person in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall
19
have been served upon the Company or any such director, officer or controlling
person, but failure to notify such Section 4 Person of any such claim shall not
relieve it from any liability which it may have to the Company or any such
director, officer or controlling person otherwise than on account of the
indemnity agreement contained in this paragraph. Notwithstanding any other
provision of this subsection (B), with respect to any amount due to an
indemnified person under this subsection (B), such Section 4 Person shall not be
liable for any amount in excess of the amount by which the net proceeds received
by such Section 4 Person from the sale of Exchange Securities or Registrable
Securities pursuant to a Registration Statement exceeds the amount of damages
which such Section 4 Person has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
Such Section 4 Person will be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense of any suit
brought to enforce any such liability, but, if such Section 4 Person elects to
assume the defense, such defense shall be conducted by counsel chosen by it. In
the event that such Section 4 Person elects to assume the defense of any such
suit and retain such counsel, the Company or such director, officer or
controlling person, defendant or defendants in the suit, may retain additional
counsel but shall bear the fees and expenses of such counsel unless (i) such
Section 4 Person shall have specifically authorized the retaining of such
counsel or (ii) the parties to such suit include the Company or any such
director, officer, trustee or controlling person and such Section 4 Person and
the Company or such director, officer, trustee or controlling person have been
advised by such counsel that one or more legal defenses may be available to it
or them which may not be available to such Section 4 Person, in which case such
Section 4 Person shall not be entitled to assume the defense of such suit on
behalf of the Company or such director, officer, trustee or controlling person,
notwithstanding its obligation to bear the reasonable fees and expenses of such
counsel, it being understood, however, that such Section 4 Person shall not, in
connection with any one such suit or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one a separate firm of attorneys at any time for
all of the Company and any such director, officer or controlling person, which
firm shall be designated in writing by the Company. Such Section 4 Person shall
not be liable to indemnify any person for any settlement of any such claim
effected without such Section 4 Person's prior written consent. This indemnity
agreement will be in addition to any liability which such Section 4 Person might
otherwise have.
(C) If the indemnification provided for in this Section 4 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (A) or (B) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (A) or (B) above in such proportion as is appropriate to reflect the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof) as well as any other relevant equitable considerations. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or such Holder or such other indemnified
party, as the case may be, on the other, and the parties' relative
20
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid by an indemnified party as a result
of the losses, claims, damages or liabilities referred to in the first sentence
of this subsection (C) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (C).
Notwithstanding any other provision of this subsection (C), the Holders of the
Securities and the Exchange Securities shall not be required to contribute any
amount in excess of the amount by which the net proceeds received by such
Holders from the sale of such securities pursuant to a Registration Statement
exceeds the amount of damages which such Holders have otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. The obligations of the Holders of the Securities and Exchange
Securities in this subsection (C) to contribute are several in proportion to the
net proceeds received from the sale of such securities by such Holder and not
joint. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
subsection (C), each person, if any, who controls such indemnified party within
the meaning of the 1933 Act or the 1934 Act shall have the same rights to
contribution as such indemnified party and each person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act shall have the same
rights to contribution as the Company.
5. Miscellaneous.
5.1 Rule 144 and Rule 144A. For so long as the Company is
subject to the reporting requirements of Section 13 or 15 of the 1934 Act, the
Company covenants that it will file the reports required to be filed by it under
the 1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules and
regulations adopted by the SEC thereunder. If the Company ceases to be so
required to file such reports, the Company covenants that it will upon the
request of any Holder of Registrable Securities (A) make publicly available such
information as is necessary to permit sales pursuant to Rule 144 under the 1933
Act, (B) deliver such information to a prospective purchaser as is necessary to
permit sales pursuant to Rule 144A under the 1933 Act and (C) take such further
action that is reasonable in the circumstances, in each case, to the extent
required from time to time to enable such Holder to sell its Registrable
Securities without registration under the 1933 Act within the limitation of the
exemptions provided by (i) Rule 144 under the 1933 Act, as such Rule may be
amended from time to time, (ii) Rule 144A under the 1933 Act, as such Rule may
be amended from time to time or (iii) any similar rules or regulations hereafter
adopted by the SEC. Upon the request of any Holder of Registrable Securities,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
5.2 No Inconsistent Agreements. The Company has not
entered into and the Company will not after the date of this Agreement enter
into any agreement which is inconsistent with the rights granted to the Holders
of Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not and will
not for the term of this Agreement in any way conflict with the rights granted
to the holders of the Company's other issued and outstanding securities under
any such agreements.
21
5.3 Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or departure; provided that in the event the Company
increases the aggregate principal amount of, and issues additional Securities
pursuant to Section 202 of the Supplemental Indenture No. 3 dated September 9,
2003, such additional Securities issued shall be deemed to be included in the
definition of Securities hereunder, and any initial purchasers named in any
purchase agreement executed in connection with such additional Securities issued
shall be deemed to be included in the definition of Initial Purchasers
hereunder, and provided further that the Company may amend, modify or supplement
the provisions hereof to reflect the increase in the aggregate principal amount
of the Securities, including any modification of the Initial Purchasers and any
other changes deemed by the Company to be necessary, advisable or appropriate to
reflect such increase, without the written consent of the Holders to the extent
such amendment, modification or supplement does not have a material adverse
effect on the Holders. Without the consent of the Holder of each Security
however, no modification may change the provisions relating to the payment of
Additional Interest.
5.4 Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand delivery,
registered first-class mail, telex, telecopier, or any courier guaranteeing
overnight delivery (a) if to a Holder, at the most current address given by such
Holder to the Company by means of a notice given in accordance with the
provisions of this Section 5.4, which address initially is the address set forth
in the Purchase Agreement with respect to the Initial Purchasers; and (b) if to
the Company, initially at the Company's address set forth in the Purchase
Agreement, and thereafter at such other address of which notice is given in
accordance with the provisions of this Section 5.4.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; two Business Days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt is acknowledged, if telecopied; and on the next
Business Day if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the person giving the same to the Trustee under the
Indenture, at the address specified in such Indenture.
5.5 Successor and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors, assigns and transferees of
each of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement or the Indenture.
If any transferee of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities such person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and
22
provisions of this Agreement, including the restrictions on resale set forth in
this Agreement and, if applicable, the Purchase Agreement, and such person shall
be entitled to receive the benefits hereof.
5.6 Third Party Beneficiaries. The Initial Purchasers
(even if the Initial Purchasers are not Holders of Registrable Securities) shall
be third party beneficiaries to the agreements made hereunder between the
Company, on the one hand, and the Holders, on the other hand, and shall have the
right to enforce such agreements directly to the extent they deem such
enforcement necessary or advisable to protect their rights or the rights of
Holders hereunder. Each Holder of Registrable Securities shall be a third party
beneficiary to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights hereunder.
5.7 Specific Performance. Without limiting the remedies
available to the Initial Purchasers and the Holders, the Company acknowledges
that any failure by the Company to comply with its obligations under Sections
2.1 through 2.4 hereof may result in material irreparable injury to the Initial
Purchasers or the Holders for which there is no adequate remedy at law, that it
would not be possible to measure damages for such injuries precisely and that,
in the event of any such failure, the Initial Purchasers or any Holder may
obtain such relief as may be required to specifically enforce the Company's
obligations under Sections 2.1 through 2.4 hereof.
5.8 Restriction on Resales. Until the expiration of two
years after the original issuance of the Securities, the Company will not, and
will cause its "affiliates" (as such term is defined in Rule 144(a)(1) under the
1933 Act) not to, resell any Securities which are "restricted securities" (as
such term is defined under Rule 144(a)(3) under the 1933 Act) that have been
reacquired by any of them and shall immediately upon any purchase of any such
Securities submit such Securities to the Trustee for cancellation.
5.9 Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed signature page of this Agreement by facsimile or any other rapid
transmission device designed to produce a written record of the communication
transmitted shall be as effective as delivery of a manually executed counterpart
thereof.
5.10 Headings. The headings in this Agreement are for the
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
5.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
5.12 Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable,
23
the validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be affected
or impaired thereby.
5.13 Entire Agreement. This Agreement and the Purchase
Agreement represent the entire agreement among the parties hereto with respect
to the subject matter hereof and supercedes and replaces any and all prior
agreements and understandings, whether oral or written, with respect thereto.
24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CENTERPOINT ENERGY, INC.
By: /s/ Gary L. Whitlock
---------------------------------------
Name: Gary L. Whitlock
Title: Executive Vice President and CFO
CONFIRMED AND ACCEPTED
AS OF THE DATE FIRST ABOVE WRITTEN:
BANC OF AMERICA SECURITIES LLC, for itself and
as a representative of the Initial Purchasers
By: /s/ Robert D. Craig
------------------------------------------
Name: Robert D. Craig
Title: Managing Director
DEUTSCHE BANK SECURITIES INC., for itself and
as a representative of the Initial Purchasers
By: /s/ Matt Siracuse
------------------------------------------
Name: Matt Siracuse
Title: Director
By: /s/ Charles W. Chigas
-----------------------------------------
Name: Charles W. Chigas
Title: Managing Director
WACHOVIA CAPITAL MARKETS, LLC, for itself and
as a representative of the Initial Purchasers
By: /s/ James T. Williams, Jr.
-----------------------------------------
Name: James T. Williams, Jr.
Title: Director
25
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. 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 1933 Act. This Prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales of
Exchange Securities received in exchange for Securities where such Securities
were acquired by such broker-dealer as a result of market-making activities or
other trading activities. The Company has agreed that, for a period of 180 days
after the Expiration Date (as defined herein), it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities 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 Securities. See "Plan of Distribution."
2
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. 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 Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 200 , all dealers
effecting transactions in the Exchange Securities may be required to deliver a
prospectus.(1)
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities 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 Securities 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 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
Securities. Any broker-dealer that resells Exchange Securities 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 Securities may be
deemed to be an "underwriter" within the meaning of the 1933 Act and any profit
on any such resale of Exchange Securities and any commission or concessions
received by any such persons may be deemed to be underwriting compensation under
the 1933 Act. The Letter of Transmittal states that, by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the 1933 Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
1933 Act.
- --------------
(1) In addition, the legend required by Item 502(b) of Regulation S-K will
appear on the inside front cover page of the Exchange Offer prospectus below the
Table of Contents.
3
ANNEX D
[ ]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name: _______________________________________
Address: ____________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a 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 Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the 1933 Act.
4
ANNEX E
FORM OF OPINION OF COUNSEL
The Indenture has been duly qualified under the Trust Indenture Act of
1939, as amended.
The Registration Statement has become effective under the 1933 Act,
and, to the best of our knowledge, no stop order suspending the effectiveness of
the Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted and are pending or are
threatened by the SEC under the 1933 Act.
The Exchange Offer Registration Statement and the Prospectus (except
for (A) the financial statements, including the notes and schedules, if any
thereto (except to the extent such notes describe legal and governmental
proceedings to which the Company is a party and are incorporated by reference
into one or more items of a report that is incorporated by reference or included
in therein other than an item that requires financial statements to be provided)
or the auditor's reports on the audited portions thereof, (B) the other
accounting, financial and statistical data, and (C) the exhibits thereto, as to
which we have not been asked to comment) comply as to form in all material
respects with the applicable requirements of the 1933 Act and the applicable
rules and regulations promulgated under the 1933 Act.
We have participated in conferences with certain officers and other
representatives of the Company, representatives of the independent public
accountants of the Company, representatives of the [Initial Purchasers]
[Holders] and counsel for the [Initial Purchasers] [Holders], at which the
contents of the Registration Statement and the Prospectus and related matters
were discussed. Although we have not undertaken to determine independently, and
do not assume any responsibility for, the accuracy, completeness or fairness of
the statements contained in or incorporated by reference in the Registration
Statement or the Prospectus, we advise you that, on the basis of the foregoing
(relying as to materiality to a large extent upon statements and other
representations of officers and other representatives of the Company), no facts
have come to our attention that lead us to believe that the Registration
Statement and any amendment made thereto prior to the date hereof (except for
(A) the financial statements, including the notes and schedules, if any thereto
or the auditor's reports on the audited portions thereof, (B) the other
accounting, financial and statistical data, and (C) the exhibits thereto, as to
which we have not been asked to comment), as of the time the Registration
Statement became effective or such amendment was filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus, and any amendment or supplement thereto made prior to the
date hereof (except for (A) the financial statements, including the notes and
schedules, if any thereto or the auditor's reports on the audited portions
thereof, (B) the other accounting, financial and statistical data, and (C) the
exhibits thereto, as to which we have not been asked to comment), as of the date
of the Prospectus or such amendment or supplement contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
2
Exhibit 12.1
CENTERPOINT ENERGY, INCORPORATED AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(THOUSANDS OF DOLLARS)
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1998 1999 2000 2001 2002
----------- ----------- ----------- ----------- ------------
Income (loss) from
continuing operations.. $ (170,618) $ 1,631,697 $ 245,516 $ 499,378 $ 368,827
Income taxes (benefit) for
continuing operations.. (49,652) 885,528 236,084 257,378 198,540
Capitalized interest....... (12,148) (14,675) (10,803) (9,125) (11,620)
----------- ----------- ----------- ----------- -----------
(232,418) 2,502,550 470,797 747,631 555,747
----------- ----------- ----------- ----------- -----------
Fixed charges, as defined:
Interest and distribution
on trust preferred
securities............. 567,655 540,088 564,131 606,896 764,256
Capitalized interest..... 12,148 14,675 10,803 9,125 11,620
Preference security
dividend requirements
of subsidiary.......... 503 599 762 1,304 --
Interest component of
rentals charged to
operating expense...... 10,963 15,680 15,243 15,114 14,281
----------- ----------- ----------- ----------- -----------
Total fixed charges...... 591,269 571,042 590,939 632,439 790,157
----------- ----------- ----------- ----------- -----------
Earnings, as defined:....... $ 358,851 $ 3,073,592 $ 1,061,736 $ 1,380,070 $ 1,345,904
=========== =========== =========== =========== ===========
Ratio of earnings to fixed
charges................ -- 5.38 1.80 2.18 1.70
=========== =========== =========== =========== ===========
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2002 JUNE 30, 2003
---------------- ----------------
Income (loss) from
continuing operations.. $ 231,012 $ 164,437
Income taxes (benefit) for
continuing operations.. 113,914 85,455
Capitalized interest....... (6,358) (3,892)
----------- ----------
338,568 246,000
----------- ----------
Fixed charges, as defined:
Interest and distribution
on trust preferred
securities............. 285,348 466,878
Capitalized interest..... 6,358 3,892
Preference security
dividend requirements
of subsidiary.......... -- --
Interest component of
rentals charged to
operating expense...... 7,230 6,865
----------- ----------
Total fixed charges...... 298,936 477,635
----------- ----------
Earnings, as defined:....... $ 637,504 $ 723,635
=========== ==========
Ratio of earnings to fixed
charges................ 2.13 1.52
=========== ==========
In 1998 earnings were inadequate to cover fixed charges by
approximately $232 million. This deficiency results from the $1.2 billion
non-cash, unrealized accounting loss recorded for the ACES. Excluding the effect
of the non-cash, unrealized accounting loss, the ratio of earnings from
continuing operations to fixed charges would have been 3.29.
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
CenterPoint Energy, Inc. (the "Company") on Form S-4 of our reports dated
February 28, 2003, May 9, 2003 as to the "Certain Reclassifications and Other
Items" described in Note 1(b) (i) through (iv), and November 7, 2003 as to the
"Certain Reclassifications and Other Items" described in Note 1(b) (v) (which
reports express an unqualified opinion and include explanatory paragraphs
relating to the distribution of Reliant Resources, Inc. and the change in the
Company's method of accounting for goodwill and certain intangible assets
pursuant to the adoption of Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets"), appearing in the Company's Current
Report on Form 8-K filed November 7, 2003, and to the reference to us under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.
/s/ DELOITTE & TOUCHE LLP
Houston Texas
November 7, 2003
EXHIBIT 25.1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
------------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
---------------------------------------------
JPMORGAN CHASE BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
WILLIAM H. MCDAVID
GENERAL COUNSEL
270 PARK AVENUE
NEW YORK, NEW YORK 10017
TELEPHONE: (212) 270-2611
(Name, address and telephone number of agent for service)
CENTERPOINT ENERGY, INC.
(Exact name of obligor as specified in its charter)
TEXAS 74-0694415
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1111 LOUISIANA
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
5.875% SENIOR NOTES DUE 2008, SERIES B
6.850% SENIOR NOTES DUE 2015, SERIES B
7.25% SENIOR NOTES DUE 2010, SERIES B
(Title of indenture securities)
================================================================================
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551.
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR AND GUARANTORS.
IF THE OBLIGOR OR ANY GUARANTOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE
EACH SUCH AFFILIATION.
None.
ITEMS 3 THROUGH 15, INCLUSIVE, ARE NOT APPLICABLE BY VIRTUE OF T-1 GENERAL
INSTRUCTION B.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
ITEM 16. LIST OF EXHIBITS
LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A copy of the Restated Organization Certificate of the Trustee dated
March 25, 1997 and the Certificate of Amendment dated October 22, 2001 (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-76894, which exhibit is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which exhibit is incorporated by reference). On November
11, 2001, in connection with the merger of The Chase Manhattan Bank and Morgan
Guaranty Trust Company of New York, the surviving corporation was renamed
JPMorgan Chase Bank.
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-76894, which exhibit
is incorporated by reference.)
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which exhibit is incorporated by reference). On November 11, 2001, in
connection with the merger of The Chase Manhattan Bank and Morgan Guaranty Trust
Company of New York, the surviving corporation was renamed JPMorgan Chase Bank.
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, JPMorgan Chase Bank, a corporation organized and existing under the
laws of the State of New York, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Houston and State of Texas, on the 6th day of November, 2003.
JPMORGAN CHASE BANK
By: /s/ Carol Logan
------------------------
Carol Logan
Vice President
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
JPMorgan Chase Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 2003,
in accordance with a call made by the Federal
Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ......................................................... $ 22,657
Interest-bearing balances ................................................. 10,600
Securities:
Held to maturity securities..................................................... 268
Available for sale securities................................................... 76,771
Federal funds sold and securities purchased under
agreements to resell ......................................................
Federal funds sold in domestic offices 3,844
Securities purchased under agreements to resell 86,290
Loans and lease financing receivables:
Loans and leases held for sale............................................. 31,108
Loans and leases, net of unearned income $ 166,046
Less: Allowance for loan and lease losses 3,735
Loans and leases, net of unearned income and
allowance ................................................................. 162,311
Trading Assets ................................................................. 186,546
Premises and fixed assets (including capitalized leases)........................ 6,142
Other real estate owned......................................................... 133
Investments in unconsolidated subsidiaries and
associated companies....................................................... 696
Customers' liability to this bank on acceptances
outstanding................................................................ 225
Intangible assets
Goodwill................................................................... 2,201
Other Intangible assets.................................................... 3,058
Other assets.................................................................... 68,983
TOTAL ASSETS ................................................................... $ 661,833
==========
LIABILITIES
Deposits
In domestic offices ....................................................... $189,571
Noninterest-bearing ........................... $ 82,747
Interest-bearing .............................. 106,824
In foreign offices, Edge and Agreement
subsidiaries and IBF's .................................................... 125,990
Noninterest-bearing.............................. $ 6,025
Interest-bearing .............................. 119,965
Federal funds purchased and securities sold under agreements to repurchase:
Federal funds purchased in domestic offices 4,978
Securities sold under agreements to repurchase 114,181
Trading liabilities ............................................................ 129,299
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases).................................. 10,186
Bank's liability on acceptances executed and outstanding........................ 225
Subordinated notes and debentures .............................................. 8,202
Other liabilities .............................................................. 41,452
TOTAL LIABILITIES .............................................................. 624,084
Minority Interest in consolidated subsidiaries.................................. 104
EQUITY CAPITAL
Perpetual preferred stock and related surplus................................... 0
Common stock ................................................................... 1,785
Surplus (exclude all surplus related to preferred stock)....................... 16,304
Retained earnings............................................................... 18,426
Accumulated other comprehensive income.......................................... 1,130
Other equity capital components................................................. 0
TOTAL EQUITY CAPITAL ........................................................... 37,645
--------
TOTAL LIABILITIES, MINORITY INTEREST, AND EQUITY CAPITAL $661,833
========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WILLIAM B. HARRISON, JR. )
HANS W. BECHERER )
FRANK A. BENNACK, JR. )
EXHIBIT 99.1
LETTER OF TRANSMITTAL
FOR
TENDER OF ALL OUTSTANDING
CENTERPOINT ENERGY, INC.
5.875% SENIOR NOTES DUE 2008, 6.850% SENIOR NOTES DUE 2015, 7.25% SENIOR NOTES DUE 2010,
SERIES A SERIES A SERIES A
IN EXCHANGE FOR REGISTERED IN EXCHANGE FOR REGISTERED IN EXCHANGE FOR REGISTERED
5.875% SENIOR NOTES DUE 2008, 6.850% SENIOR NOTES DUE 2015, 7.25% SENIOR NOTES DUE 2010,
SERIES B SERIES B SERIES B
THE EXCHANGE OFFER FOR EACH SERIES OF OLD NOTES WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 2003, UNLESS EXTENDED (THE "EXPIRATION DATE").
OLD NOTES OF A SERIES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY
TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE FOR THAT
SERIES.
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal
should be completed, signed and submitted to the Exchange Agent.
The Exchange Agent for the Exchange Offer is:
JPMORGAN CHASE BANK
For delivery by hand or overnight courier:
JPMorgan Chase Bank
2001 Bryan Street, 9th Floor
Registered Bond Processing Dept.
Dallas, TX 75201
For delivery by mail (registered or certified mail recommended):
JPMorgan Chase Bank
P.O. Box 2320
Attention: Registered Bond Processing Dept.
Dallas, TX 75221-2320
By facsimile transmission (eligible institutions only):
(214) 468-6494
Attention: Frank Ivins
Confirm by telephone:
(800) 275-2048
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SHOWN ABOVE OR
TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF
TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED.
The undersigned hereby acknowledges receipt and review of the prospectus
dated , 2003 (the "Prospectus") of CenterPoint Energy, Inc. (the
"Company") and this Letter of Transmittal. These two documents together
constitute the Company's offer to exchange its 5.875% Senior Notes due 2008,
Series B, 6.850% Senior Notes due 2015, Series B, and 7.25% Senior Notes due
2010, Series B (collectively, the "New Notes"), the issuance of which has been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
for like principal amounts of the Company's issued and outstanding 5.875% Senior
Notes due 2008, Series A, 6.850% Senior Notes due 2015, Series A, and 7.25%
Senior Notes due 2010, Series A (collectively, the "Old Notes"), respectively,
which offer consists of separate, independent offers to exchange the New Notes
of each series for Old Notes of that series (each, an "Exchange Offer," and
sometimes collectively, the "Exchange Offer"). Capitalized terms used but not
defined herein have the respective meanings given to them in the Prospectus.
The Exchange Offer for Old Notes of each series is not conditioned upon any
minimum aggregate principal amount of Old Notes of that series being tendered
for exchange or upon the consummation of the Exchange Offer for Old Notes of any
other series.
The Company reserves the right, at any time or from time to time, to extend
the period of time during which the Exchange Offer for any series of Old Notes
is open, at its discretion, in which event the term "Expiration Date" with
respect to such series shall mean the latest date to which such Exchange Offer
is extended. The Company reserves the right to extend such period for each
series of Old Notes independently. The Company shall notify JPMorgan Chase Bank
(the "Exchange Agent") of any extension by oral or written notice and shall make
a public announcement thereof no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date.
This Letter of Transmittal is to be used by a holder of Old Notes of a
series if:
- certificates of Old Notes of such series are to be forwarded herewith; or
- delivery of Old Notes of such series is to be made by book-entry transfer
to the account maintained by the Exchange Agent at The Depository Trust
Company ("DTC") pursuant to the procedures set forth in the Prospectus
under the caption "The Exchange Offer -- Procedures for
Tendering -- Book-Entry Transfer" and an "agent's message" is not
delivered as described in the Prospectus under the caption "The Exchange
Offer -- Procedures for Tendering -- Tendering Through DTC's Automated
Tender Offer Program."
Tenders by book-entry transfer may also be made by delivering an agent's
message pursuant to DTC's Automated Tender Offer Program ("ATOP") in lieu of
this Letter of Transmittal. Holders of Old Notes of a series whose Old Notes are
not immediately available, or who are unable to deliver their Old Notes, this
Letter of Transmittal and all other documents required hereby to the Exchange
Agent or to comply with the applicable procedures under DTC's ATOP on or prior
to the Expiration Date for the Exchange Offer for that series, must tender their
Old Notes according to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures." See Instruction 2 of this Letter of Transmittal. DELIVERY OF
DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The term "holder" with respect to the Exchange Offer for Old Notes of a
series means any person in whose name such Old Notes are registered on the books
of the security registrar for such series of Old Notes, any person who holds
such Old Notes and has obtained a properly completed bond power from the
registered holder or any participant in the DTC system whose name appears on a
security position listing as the holder of such Old Notes and who desires to
deliver such Old Notes by book-entry transfer at DTC. The undersigned has
completed, executed and delivered this Letter of Transmittal to indicate the
action the undersigned desires to take with respect to such Exchange Offer.
Holders who wish to tender their Old Notes must complete this Letter of
Transmittal in its entirety (unless such Old Notes are to be tendered by
book-entry transfer and an agent's message is delivered in lieu hereof pursuant
to DTC's ATOP).
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW. THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF
TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR
ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE
DIRECTED TO THE EXCHANGE AGENT.
2
List below the Old Notes of each series tendered under this Letter of
Transmittal. If the space below is inadequate, list the title of the series, the
registered numbers and principal amounts on a separate signed schedule and affix
the list to this Letter of Transmittal.
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES TENDERED
- ----------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S) ON OLD NOTES (Please fill in, if blank)
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
OLD NOTE(S) TENDERED
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL PRINCIPAL
REGISTERED AMOUNT REPRESENTED AMOUNT
TITLE OF SERIES NUMBER(S)* BY OLD NOTE(S) TENDERED**
- ----------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------
5.875% Senior Notes due 2008, Series A
---------------------------------------------------------
---------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------
6.850% Senior Notes due 2015, Series A
---------------------------------------------------------
---------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------
7.25% Senior Notes due 2010, Series A
---------------------------------------------------------
---------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Total
- ----------------------------------------------------------------------------------------------------------------------
* Need not be completed by book-entry holders.
** Unless otherwise indicated, any tendering holder of Old Notes will be deemed to have tendered the entire aggregate
principal amount represented by such Old Notes. All tenders must be in integral multiples of $1,000.
- ----------------------------------------------------------------------------------------------------------------------
3
[ ] CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED OLD NOTES ARE BEING
DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE
EXCHANGE AGENT WITH THE DTC (FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name of Tendering
Institution:
-------------------------------------------------------------
DTC Account
Number(s):
---------------------------------------------------------------------
Transaction Code
Number(s):
---------------------------------------------------------------
[ ] CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED OLD NOTES ARE BEING
DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY EITHER ENCLOSED
HEREWITH OR PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT (COPY ATTACHED) (FOR
USE BY ELIGIBLE INSTITUTIONS ONLY):
Name(s) of Registered Holder(s)
of Old Notes: ------------------------------------------------------------
Date of Execution of Notice of
Guaranteed Delivery: ----------------------------------------------------
Window Ticket Number
(if available): ----------------------------------------------------------
Name of Eligible Institution that
Guaranteed Delivery: ------------------------------------------------------
DTC Account Number(s) (if delivered
by book-entry transfer): ------------------------------------------------
Transaction Code Number (if delivered
by book-entry transfer): ------------------------------------------------
Name of Tendering Institution (if
delivered by book-entry transfer): --------------------------------------
[ ] CHECK HERE AND COMPLETE THE FOLLOWING IF YOU ARE A BROKER-DEALER AND WISH
TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO:
Name:
-----------------------------------------------------------------
Address:
-----------------------------------------------------------------
4
SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company for exchange the principal amount of Old Notes
indicated above. Subject to and effective upon the acceptance for exchange of
the principal amount of Old Notes of any series tendered in accordance with this
Letter of Transmittal, the undersigned hereby exchanges, assigns and transfers
to, or upon the order of, the Company all right, title and interest in and to
such Old Notes tendered for exchange hereby, including all rights to accrued and
unpaid interest thereon as of the Expiration Date. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent the true and lawful
agent and attorney-in-fact for the undersigned (with full knowledge that said
Exchange Agent also acts as the agent for the
Company in connection with the Exchange Offer) with respect to the tendered Old
Notes with full power of substitution to:
- deliver such Old Notes, or transfer ownership of such Old Notes on the
account books maintained by DTC, to the Company and deliver all
accompanying evidences of transfer and authenticity; and
- present such Old Notes for transfer on the books of the Company and
receive all benefits and otherwise exercise all rights of beneficial
ownership of such Old Notes, all in accordance with the terms of the
Exchange Offer.
The power of attorney granted in this paragraph shall be deemed to be
irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign and transfer the Old Notes
tendered hereby and to acquire the New Notes issuable upon the exchange of such
tendered Old Notes, and that the Company will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim, when the same are accepted
for exchange by the Company as contemplated herein.
The undersigned acknowledges that the Exchange Offer is being made in
reliance upon interpretations set forth in no-action letters issued to third
parties by the staff of the Securities and Exchange Commission (the "SEC"),
including Exxon Capital Holdings Corporation (available May 13, 1988), Morgan
Stanley & Co. Incorporated (available June 5, 1991), Mary Kay Cosmetics, Inc.
(available June 5, 1991), Shearman & Sterling (available July 2, 1993) and
similar no-action letters (the "Prior No-Action Letters"), that the New Notes
issued in exchange for Old Notes pursuant to the Exchange Offer may be offered
for resale or resold and otherwise transferred by holders thereof (other than
any such holder that is an "affiliate" of the Company 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 New
Notes are acquired in the ordinary course of such holders' business and that
such holders are not engaged in, do not intend to engage or participate in, and
have no arrangement or understanding with any person to engage or participate
in, a distribution of such New Notes. The SEC has not, however, considered the
Exchange Offer in the context of a no-action letter and there can be no
assurance that the staff of the SEC would make a similar determination with
respect to the Exchange Offer as it has in other interpretations to other
entities.
The undersigned hereby further represents to the Company that:
- any New Notes to be received are being acquired in the ordinary course of
business of the person receiving such New Notes, whether or not the
undersigned;
- neither the undersigned nor any such other person has an arrangement or
understanding with any person to participate in the distribution (within
the meaning of the Securities Act) of the Old Notes or the New Notes; and
- neither the holder nor any such other person is an "affiliate," as
defined in Rule 405 under the Securities Act, of the Company or, if it is
such an affiliate, it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable.
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage or participate in, a
distribution of New Notes. If the undersigned is a broker-dealer, the
undersigned represents that it is not tendering Old Notes acquired directly from
us or one of our affiliates. If the undersigned is a broker-dealer, the
undersigned represents that it will receive New Notes for its own account in
exchange for Old Notes that were
5
acquired as a result of market-making activities or other trading activities,
and it acknowledges that it will deliver a prospectus in connection with any
resale of such New Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Additionally, the
undersigned represents that it is not acting on behalf of any person who could
not truthfully and completely make the foregoing representations and the
representations in the immediately preceding paragraph.
The undersigned acknowledges that if the undersigned is tendering Old Notes
in the Exchange Offer with the intention of participating in any manner in a
distribution of the New Notes:
- the undersigned cannot rely on the position of the staff of the SEC set
forth in the Prior No-Action Letters and, in the absence of an exemption
therefrom, must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a resale
transaction of the New Notes, in which case the registration statement
must contain the selling security holder information required by Item 507
or Item 508, as applicable, of Regulation S-K; and
- failure to comply with such requirements in such instance could result in
the undersigned incurring liability for which the undersigned is not
indemnified by the Company.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of the Old Notes
tendered hereby, including the transfer of such Old Notes on the account books
maintained by DTC.
For purposes of an Exchange Offer for Old Notes of a series, the Company
shall be deemed to have accepted for exchange validly tendered Old Notes of such
series when, as and if the Company gives oral or written notice thereof to the
Exchange Agent. Any tendered Old Notes that are not accepted for exchange
pursuant to such Exchange Offer for any reason will be returned, without
expense, to the undersigned as promptly as practicable after the Expiration Date
for such Exchange Offer.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives.
This tender may be withdrawn only in accordance with the procedures set forth in
the section of the Prospectus entitled "The Exchange Offer -- Withdrawal of
Tenders."
The undersigned acknowledges that the Company's acceptance of properly
tendered Old Notes pursuant to the procedures described under the caption "The
Exchange Offer -- Procedures for Tendering" in the Prospectus and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Exchange
Offer.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions to the Exchange
Offer." The undersigned recognizes that as a result of these conditions (which
may be waived, in whole or in part, by the Company), the Company may not be
required to exchange any of the Old Notes tendered hereby.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the New Notes issued in exchange for the Old Notes accepted for exchange
and return any Old Notes not tendered or not exchanged, in the name(s) of the
undersigned (or, in the case of a book-entry delivery of Old Notes, please
credit the account indicated above maintained at DTC). Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail or
deliver the New Notes issued in exchange for the Old Notes accepted for exchange
and any Old Notes not tendered or not exchanged (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s). In the event that both "Special Issuance Instructions" and
"Special Delivery Instructions" are completed, please issue the New Notes issued
in exchange for the Old Notes accepted for exchange in the name(s) of, and
return any Old Notes not tendered or not exchanged to, the person(s) (or
account(s)) so indicated. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Old Notes from the name of the registered
holder(s) thereof if the Company does not accept for exchange any of the Old
Notes so tendered for exchange.
6
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY (i) if Old Notes in a principal amount not tendered,
or New Notes issued in exchange for Old Notes accepted for exchange, are to be
issued in the name of someone other than the undersigned, or (ii) if Old Notes
tendered by book-entry transfer which are not exchanged are to be returned by
credit to an account maintained at DTC other than the DTC Account Number set
forth above. Issue New Notes and/or Old Notes to:
Name:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- --------------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(Please Type or Print)
[ ] Credit unexchanged Old Notes delivered by book-entry transfer to the DTC
account number set forth below:
- --------------------------------------------------------------------------------
(DTC ACCOUNT NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY if Old Notes in a principal amount not tendered, or
New Notes issued in exchange for Old Notes accepted for exchange, are to be
mailed or delivered to someone other than the undersigned, or to the undersigned
at an address other than that shown below the undersigned's signature. Mail or
deliver New Notes and/or Old Notes to:
Name:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- --------------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(Please Type or Print)
7
IMPORTANT
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 BELOW)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF REGISTERED HOLDER(S) OF OLD NOTES)
Dated ------------------------------
(The above lines must be signed by the registered holder(s) of Old Notes as
your/their name(s) appear(s) on the Old Notes or on a security position listing,
or by person(s) authorized to become registered holder(s) by a properly
completed bond power from the registered holder(s), a copy of which must be
transmitted with this Letter of Transmittal. If Old Notes to which this Letter
of Transmittal relate are held of record by two or more joint holders, then all
such holders must sign this Letter of Transmittal. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, then such person
must (i) set forth his or her full title below and (ii) unless waived by the
Company, submit evidence satisfactory to the Company of such person's authority
so to act. See Instruction 5 regarding the completion of this Letter of
Transmittal, printed below.)
Name(s):
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity (Full Title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
-----------------------------------------------
Taxpayer Identification or Social Security Number:
- --------------------------------------------------------------------------------
MEDALLION SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 5)
Certain signatures must be guaranteed by an Eligible Guarantor Institution.
Signature(s) Guaranteed by an
Eligible Guarantor Institution:
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------------
(TITLE)
- --------------------------------------------------------------------------------
(NAME OF FIRM)
- --------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
- --------------------------------------------------------------------------------
(AREA CODE AND TELEPHONE NUMBER)
Dated: ------------------------------
8
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Old Notes or Agent's Message
and Book-Entry Confirmations. All physically delivered Old Notes of a series or
any confirmation of a book-entry transfer to the Exchange Agent's account at DTC
of Old Notes of a series tendered by book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof (or an agent's message in lieu hereof
pursuant to DTC's ATOP), and any other documents required by this Letter of
Transmittal must be received by the Exchange Agent at its address set forth
herein prior to 5:00 p.m., New York City time, on the Expiration Date for the
Exchange Offer for such series, or the tendering holder must comply with the
guaranteed delivery procedures set forth below. Old Notes tendered hereby must
be in denominations of principal amount of $1,000 and any integral multiple
thereof. THE METHOD OF DELIVERY OF THE TENDERED OLD NOTES, THIS LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND RISK OF THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE
EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT THE HOLDER
USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD
BE ALLOWED TO ENSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE.
NEITHER THIS LETTER OF TRANSMITTAL NOR OLD NOTES SHOULD BE SENT TO THE COMPANY.
2. Guaranteed Delivery Procedures. Holders who wish to tender their Old
Notes and (a) whose Old Notes are not immediately available, (b) who cannot
deliver their Old Notes, this Letter of Transmittal or any other documents
required hereby to the Exchange Agent prior to the applicable Expiration Date or
(c) who are unable to comply with the applicable procedures under DTC's ATOP
prior to the applicable Expiration Date, must tender their Old Notes according
to the guaranteed delivery procedures set forth in the Prospectus. Pursuant to
such procedures:
- such tender must be made by or through a firm which is a member of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an
office or correspondent in the United States or an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (an "Eligible Institution");
- prior to the applicable Expiration Date, the Exchange Agent must have
received from the Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery (by facsimile transmission, mail,
overnight or hand delivery) or a properly transmitted agent's message and
Notice of Guaranteed Delivery setting forth the name and address of the
holder of the Old Notes, the registration number(s) of such Old Notes and
the total principal amount of Old Notes tendered, stating that the tender
is being made thereby and guaranteeing that, within three New York Stock
Exchange trading days after such Expiration Date, this Letter of
Transmittal (or facsimile hereof or an agent's message in lieu hereof)
together with the Old Notes in proper form for transfer (or a Book-Entry
Confirmation) and any other documents required by this Letter of
Transmittal will be deposited by the Eligible Institution with the
Exchange Agent; and
- this Letter of Transmittal (or a facsimile hereof or an agent's message
in lieu hereof) together with the certificates for all physically
tendered Old Notes in proper form for transfer (or Book-entry
Confirmation, as the case may be) and all other documents required hereby
are received by the Exchange Agent within three New York Stock Exchange
trading days after such Expiration Date.
Any holder of Old Notes who wishes to tender Old Notes pursuant to the
guaranteed delivery procedures described above must ensure that the Exchange
Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m., New York
City time, on the applicable Expiration Date. Upon request of the Exchange
Agent, a Notice of Guaranteed Delivery will be sent to holders who wish to
tender their Old Notes according to the guaranteed delivery procedures set forth
above.
See "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus.
3. Tender by Holder. Only a registered holder of Old Notes may tender such
Old Notes in the Exchange Offer. Any beneficial holder of Old Notes who is not
the registered holder and who wishes to tender should arrange with the
registered holder to execute and deliver this Letter of Transmittal on his
behalf or must, prior to completing and executing this Letter of Transmittal and
delivering his Old Notes, either make appropriate arrangements to register
ownership of the Old Notes in such holder's name or obtain a properly completed
bond power from the registered holder.
9
4. Partial Tenders. Tenders of Old Notes will be accepted only in integral
multiples of $1,000. If less than the entire principal amount of any Old Notes
is tendered, the tendering holder should fill in the principal amount tendered
in the third column of the box entitled "Description of Old Notes Tendered"
above. The entire principal amount of Old Notes delivered to the Exchange Agent
will be deemed to have been tendered unless otherwise indicated. If the entire
principal amount of all Old Notes is not tendered, then Old Notes for the
principal amount of Old Notes not tendered and New Notes issued in exchange for
any Old Notes accepted will be returned to the holder as promptly as practicable
after the Old Notes are accepted for exchange.
5. Signatures on this Letter of Transmittal; Bond Powers and Endorsements;
Medallion Guarantee of Signatures. If this Letter of Transmittal (or facsimile
hereof) is signed by the record holder(s) of the Old Notes tendered hereby, the
signature(s) must correspond exactly with the name(s) as written on the face of
the Old Notes without alteration, enlargement or any change whatsoever. If this
Letter of Transmittal (or facsimile hereof) is signed by a participant in DTC,
the signature must correspond with the name as it appears on the security
position listing as the holder of the Old Notes.
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter of Transmittal.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered holder(s) of the Old Notes listed and tendered hereby and the New
Notes issued in exchange therefor are to be issued (or any untendered principal
amount of the Old Notes is to be reissued) to the registered holder(s), then
said holder(s) need not and should not endorse any tendered Old Notes, nor
provide a separate bond power. In any other case, such holder(s) must either
properly endorse the Old Notes tendered or transmit a properly completed
separate bond power with this Letter of Transmittal, with the signatures on the
endorsement or bond power guaranteed by an Eligible Institution that is a member
in good standing of a recognized Medallion Program approved by the Securities
Transfer Association, Inc., including the Security Transfer Agent Medallion
Program, the New York Stock Exchange, Inc. Medallion Signature Program or the
Stock Exchanges Medallion Program (an "Eligible Guarantor Institution").
If this Letter of Transmittal (or facsimile hereof) or any Old Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, evidence satisfactory to the Company of their
authority to act must be submitted with this Letter of Transmittal.
NO SIGNATURE GUARANTEE IS REQUIRED IF (I) THIS LETTER OF TRANSMITTAL (OR
FACSIMILE HEREOF) IS SIGNED BY THE REGISTERED HOLDER(S) OF THE OLD NOTES
TENDERED HEREIN (OR BY A PARTICIPANT IN DTC WHOSE NAME APPEARS ON A SECURITY
POSITION LISTING AS THE OWNER OF THE TENDERED OLD NOTES) AND THE NEW NOTES ARE
TO BE ISSUED DIRECTLY TO SUCH REGISTERED HOLDER(S) (OR, IF SIGNED BY A
PARTICIPANT IN DTC, DEPOSITED TO SUCH PARTICIPANT'S ACCOUNT AT DTC) AND NEITHER
THE BOX ENTITLED "SPECIAL DELIVERY INSTRUCTIONS" NOR THE BOX ENTITLED "SPECIAL
REGISTRATION INSTRUCTIONS" HAS BEEN COMPLETED, OR (II) SUCH OLD NOTES ARE
TENDERED FOR THE ACCOUNT OF AN ELIGIBLE INSTITUTION. IN ALL OTHER CASES, ALL
SIGNATURES ON THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) MUST BE
GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION.
6. Special Issuance and Delivery Instructions. Tendering holders should
indicate, in the applicable box or boxes, the name and address to which New
Notes or substitute Old Notes for principal amounts not tendered or not accepted
for exchange are to be issued or sent, if different from the name and address of
the person signing this Letter of Transmittal. In the case of issuance in a
different name, the taxpayer identification or social security number of the
person named must also be indicated. Holders tendering Old Notes by book-entry
transfer may request that Old Notes not exchanged be credited to such account
maintained at DTC as such noteholder may designate hereon. If no such
instructions are given, such Old Notes not exchanged will be returned to the
name and address (or account number) of the person signing this Letter of
Transmittal.
7. Transfer Taxes. The Company will pay or cause to be paid all transfer
taxes, if any, applicable to the exchange of Old Notes pursuant to the Exchange
Offer. If, however, New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be registered or issued
in the name of, any person other than the registered holder of the Old Notes
tendered hereby, or if tendered Old Notes are registered in the name of any
person other than the person signing this Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on
10
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 this Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder and the Exchange Agent
will retain possession of an amount of New Notes with a face amount at least
equal to the amount of such transfer taxes due by such tendering holder pending
receipt by the Exchange Agent of the amount of such taxes.
8. Tax Identification Number. Federal income tax law requires that a
holder of any Old Notes or New Notes must provide the Company (as payor) with
its correct taxpayer identification number ("TIN"), which, in the case of a
holder who is an individual, is his or her social security number. If the
Company is not provided with the correct TIN, the holder or payee may be subject
to a $50 penalty imposed by the Internal Revenue Service and backup withholding,
currently at a rate of 28%, on interest payments on the New Notes.
To prevent backup withholding, each tendering holder must provide such
holder's correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN), that the holder is a U.S. person (including a U.S. resident alien), and
that (i) the holder has not been notified by the Internal Revenue Service that
such holder is subject to backup withholding as a result of failure to report
all interest or dividends or (ii) the Internal Revenue Service has notified the
holder that such holder is no longer subject to backup withholding. If the New
Notes will be registered in more than one name or will not be in the name of the
actual owner, consult the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 included with this Letter of
Transmittal (the "Guidelines") for information on which TIN to report.
If such holder does not have a TIN, such holder should consult the
Guidelines concerning applying for a TIN, check the box in Part 3 of the
Substitute Form W-9, write "applied for" in lieu of its TIN and sign and date
the form and the Certificate of Awaiting Taxpayer Identification Number.
Checking this box, writing "applied for" on the form and signing such
certificate means that such holder has already applied for a TIN or that such
holder intends to apply for one in the near future. If such holder does not
provide its TIN to the Company within 60 days, backup withholding will begin and
continue until such holder furnishes its TIN to the Company.
Certain holders are not subject to the backup withholding and reporting
requirements. These holders, which we refer to as exempt holders, include
certain foreign persons (other than U.S. resident aliens) and persons listed in
the Guidelines as payees exempt from backup withholding. Exempt holders (other
than certain foreign persons) should indicate their exempt status on Substitute
Form W-9. A foreign person (other than a U.S. resident alien) may qualify as an
exempt holder by submitting to the Exchange Agent a properly completed Internal
Revenue Service Form W-8BEN, signed under penalties of perjury, attesting to
that holder's exempt status. A disregarded domestic entity that has a foreign
owner should file an Internal Revenue Service Form W-8BEN rather than a
Substitute Form W-9. An Internal Revenue Service Form W-8BEN may be obtained
from the Exchange Agent.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligations regarding backup
withholding.
9. Validity of Tenders. All questions as to the validity, form,
eligibility, time of receipt, acceptance and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which might, in the opinion of the Company or its counsel, be
unlawful. The Company also reserves the absolute right to waive any conditions
of the Exchange Offer or defects or irregularities of tenders as to particular
Old Notes. The Company's interpretation of the terms and conditions of the
Exchange Offer (including this Letter of Transmittal and the instructions
hereto) shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be cured within such
time as the Company shall determine. Neither the Company, the Exchange Agent nor
any other person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Old Notes nor shall any of them incur
any liability for failure to give such notification.
10. Waiver of Conditions. The Company reserves the absolute right to
waive, in whole or part, any of the conditions to the Exchange Offer set forth
in the Prospectus.
11. No Conditional Tender. No alternative, conditional, irregular or
contingent tender of Old Notes will be accepted.
11
12. Mutilated, Lost, Stolen or Destroyed Old Notes. Any holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions. This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, stolen or destroyed Old Notes have been followed.
13. Requests for Assistance or Additional Copies. Requests for assistance
or for additional copies of the Prospectus or this Letter of Transmittal may be
directed to the Exchange Agent at the address or telephone number set forth on
the cover page of this Letter of Transmittal. Holders may also contact their
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Exchange Offer.
14. Withdrawal. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer -- Withdrawal of Tenders."
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF OR
AN AGENT'S MESSAGE IN LIEU HEREOF (TOGETHER WITH THE OLD NOTES DELIVERED BY
BOOK-ENTRY TRANSFER OR IN ORIGINAL HARD COPY FORM) MUST BE RECEIVED BY THE
EXCHANGE AGENT, OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE
EXCHANGE AGENT, PRIOR TO THE APPLICABLE EXPIRATION DATE.
12
- --------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX ---------------------------------
FORM W-9 AT RIGHT (OR COMPLETE PART 3) AND CERTIFY BY Social Security Number
SIGNING AND DATING BELOW or
---------------------------------
Employer ID Number
- --------------------------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 2 -- CERTIFICATION -- Under penalties of PART 3 --
INTERNAL REVENUE SERVICE perjury, I certify that: Awaiting TIN [ ]
PAYOR'S REQUEST FOR (1) The number shown on this form is my Please complete the Certificate of
TAXPAYER IDENTIFICATION correct Taxpayer Identification Number Awaiting Taxpayer Identification
NUMBER (TIN) (or I have checked the box in part 3 and Number below.
- -------------------------- executed the certificate of Awaiting
NAME Taxpayer Identification Number below),
- -------------------------- and
ADDRESS (NUMBER AND (2) I am not subject to backup withholding
STREET) because (a) I am exempt from backup
- -------------------------- withholding, or (b) I have not been
CITY, STATE AND ZIP CODE notified by the Internal Revenue Service
("IRS") that I am subject to backup
withholding as a result of failure to
report all interest or dividends, or (c)
the IRS has notified me that I am no
longer subject to backup withholding, and
(3) I am a U.S. person (including a U.S.
resident alien).
Signature
----------------------------------------------
Date
----------------------------------------------
----------------------------------------------------------------------------------
CERTIFICATE INSTRUCTIONS -- You must cross out item (2) in Part 2 above if you
have been notified by the IRS that you are subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you are subject to backup withholding you received
another notification from the IRS stating that you are no longer subject to backup
withholding, do not cross out item (2).
- --------------------------------------------------------------------------------------------------------------
FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF A PORTION (CURRENTLY 28%) OF ANY PAYMENTS MADE TO YOU WITH
RESPECT TO THE NEW NOTES.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF THE SUBSTITUTE FORM W-9
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 (a) 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 (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number, a portion (currently 28%)
of all reportable payments made to me thereafter will be withheld until I
provide a number.
- ---------------------------------------------- ----------------------------------------------
Signature Date
13
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF ALL OUTSTANDING
CENTERPOINT ENERGY, INC.
5.875% SENIOR NOTES DUE 2008, 6.850% SENIOR NOTES DUE 2015, 7.25% SENIOR NOTES DUE 2010,
SERIES A SERIES A SERIES A
IN EXCHANGE FOR REGISTERED IN EXCHANGE FOR REGISTERED IN EXCHANGE FOR REGISTERED
5.875% SENIOR NOTES DUE 2008, 6.850% SENIOR NOTES DUE 2015, 7.25% SENIOR NOTES DUE 2010,
SERIES B SERIES B SERIES B
This form, or one substantially equivalent hereto, must be used by a holder
to accept the Exchange Offer of CenterPoint Energy, Inc. (the "Company"), and to
tender outstanding 5.875% Senior Notes due 2008, Series A, 6.850% Senior Notes
due 2015, Series A, and 7.25% Senior Notes due 2010, Series A (collectively, the
"Old Notes"), to JPMorgan Chase Bank, as exchange agent (the "Exchange Agent"),
pursuant to the guaranteed delivery procedures described in "The Exchange
Offer -- Guaranteed Delivery Procedures" section of the Company's prospectus
dated , 2003 (the "Prospectus") and in Instruction 2 to the related
Letter of Transmittal. Any holder who wishes to tender Old Notes of a series
pursuant to such guaranteed delivery procedures must ensure that the Exchange
Agent receives this Notice of Guaranteed Delivery, properly completed and duly
executed, prior to the Expiration Date (as defined below) of the Exchange Offer
for such series. Capitalized terms used but not defined herein have the meanings
ascribed to them in the Letter of Transmittal.
THE EXCHANGE OFFER FOR EACH SERIES OF OLD NOTES WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 2003, UNLESS EXTENDED (THE "EXPIRATION DATE").
OLD NOTES OF A SERIES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY
TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE FOR THAT
SERIES.
The Exchange Agent for the Exchange Offer is:
JPMORGAN CHASE BANK
For delivery by hand or overnight courier:
JPMorgan Chase Bank
2001 Bryan Street, 9th Floor
Registered Bond Processing Dept.
Dallas, TX 75201
For delivery by mail (registered or certified mail recommended):
JPMorgan Chase Bank
P.O. Box 2320
Attention: Registered Bond Processing Dept.
Dallas, TX 75221-2320
By facsimile transmission (eligible institutions only):
(214) 468-6494
Attention: Frank Ivins
Confirm by telephone:
(800) 275-2048
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT
CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS NOTICE OF
GUARANTEED DELIVERY SHOULD BE READ CAREFULLY BEFORE THE NOTICE OF GUARANTEED
DELIVERY IS COMPLETED.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE IN THE BOX PROVIDED ON
THE LETTER OF TRANSMITTAL FOR GUARANTEE OF SIGNATURES.
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, in accordance with its
offer, upon the terms and subject to the conditions set forth in the Prospectus
and the related Letter of Transmittal, receipt of which is hereby acknowledged,
the principal amount of Old Notes of a series set forth below pursuant to the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer -- Guaranteed Delivery Procedures" and in Instruction 2 of
the Letter of Transmittal.
The undersigned hereby tenders the Old Notes of the series listed below:
- ------------------------------------------------------------------------------------------------------------
CERTIFICATE NUMBERS(S) AGGREGATE AGGREGATE
(IF KNOWN) OF OLD NOTES PRINCIPAL PRINCIPAL
TITLE OF OR ACCOUNT NUMBER AT AMOUNT AMOUNT
SERIES THE DEPOSITORY TRUST COMPANY REPRESENTED TENDERED
- ------------------------------------------------------------------------------------------------------------
5.875% Senior Notes due 2008, Series A
- ------------------------------------------------------------------------------------------------------------
6.850% Senior Notes due 2015, Series A
- ------------------------------------------------------------------------------------------------------------
7.25% Senior Notes due 2008, Series A
- ------------------------------------------------------------------------------------------------------------
PLEASE SIGN AND COMPLETE
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
NAME(S) OF REGISTERED HOLDER(S) SIGNATURES OF REGISTERED HOLDER(S)
OR AUTHORIZED SIGNATORY
-----------------------------------
-----------------------------------
ADDRESS
----------------------------------- DATED
AREA CODE AND TELEPHONE NUMBER(S) -----------------------------
- ------------------------------------------------------------------------------------------------------------
2
THIS NOTICE OF GUARANTEED DELIVERY MUST BE SIGNED BY THE REGISTERED
HOLDER(S) OF OLD NOTES EXACTLY AS THE NAME(S) OF SUCH PERSON(S) APPEAR(S) ON
CERTIFICATES FOR OLD NOTES OR ON A SECURITY POSITION LISTING AS THE OWNER OF OLD
NOTES, OR BY PERSON(S) AUTHORIZED TO BECOME HOLDER(S) BY ENDORSEMENTS AND
DOCUMENTS TRANSMITTED WITH THIS NOTICE OF GUARANTEED DELIVERY. IF SIGNATURE IS
BY A TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OR
OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, SUCH PERSON MUST
PROVIDE THE FOLLOWING INFORMATION:
Please print name(s) and address(es)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States, or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees
deposit with the Exchange Agent of the Letter of Transmittal (or facsimile
thereof or agent's message in lieu thereof), together with the Old Notes of the
series tendered hereby in proper form for transfer (or confirmation of the
book-entry transfer of such Old Notes into the Exchange Agent's account at DTC
described in the Prospectus under the caption "The Exchange Offer -- Procedures
for Tendering -- Book-Entry Transfer" and in the Letter of Transmittal) and any
other required documents, all by 5:00 p.m., New York City time, within three New
York Stock Exchange trading days following the Expiration Date for such series.
Name of Firm: -----------------------------------
- ----------------------------------- (Authorized Signature)
Address: Name:
- ----------------------------------- -----------------------------------
(Include Zip Code)
Title:
-----------------------------------
(Please Type or Print)
Area Code and Telephone Number:
- -----------------------------------
Date: , 2003
--------------------
DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF OLD NOTES MUST
BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY
EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
3
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery (or facsimile
hereof or an agent's message and notice of guaranteed delivery in lieu hereof)
and any other documents required by this Notice of Guaranteed Delivery with
respect to the Old Notes of a series must be received by the Exchange Agent at
its address set forth herein prior to the Expiration Date of the Exchange Offer
for that series. Delivery of this Notice of Guaranteed Delivery may be made by
facsimile transmission, mail, hand or overnight courier. THE METHOD OF DELIVERY
OF THIS NOTICE OF GUARANTEED DELIVERY AND ANY OTHER REQUIRED DOCUMENTS TO THE
EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK OF THE HOLDER, AND THE DELIVERY
WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. If
delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. As an alternative to delivery by mail, holders may wish
to consider using an overnight or hand delivery service. In all cases,
sufficient time should be allowed to ensure timely delivery. For a description
of the guaranteed delivery procedures, see Instruction 2 of the Letter of
Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery (or facsimile hereof) is signed by the registered holder(s)
of the Old Notes referred to herein, the signature(s) must correspond exactly
with the name(s) written on the face of the Old Notes without alteration,
enlargement or any change whatsoever. If this Notice of Guaranteed Delivery (or
facsimile hereof) is signed by a participant of DTC whose name appears on a
security position listing as the owner of the Old Notes, the signature must
correspond with the name shown on the security position listing as the owner of
the Old Notes.
If this Notice of Guaranteed Delivery (or facsimile hereof) is signed by a
person other than the registered holder(s) of any Old Notes listed or a
participant of DTC, this Notice of Guaranteed Delivery must be accompanied by
appropriate bond powers, signed as the name(s) of the registered holder(s)
appear(s) on the Old Notes or signed as the name(s) of the participant shown on
the DTC's security position listing.
If this Notice of Guaranteed Delivery (or facsimile hereof) is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation, or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing and submit with the Letter of
Transmittal evidence satisfactory to the Exchange Agent of such person's
authority to so act.
3. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus and this
Notice of Guaranteed Delivery may be directed to the Exchange Agent at the
address set forth on the cover page hereof. Holders may also contact their
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Exchange Offer.
4
EXHIBIT 99.3
LETTER TO DEPOSITORY TRUST
COMPANY PARTICIPANTS
FOR
TENDER OF ALL OUTSTANDING
CENTERPOINT ENERGY, INC.
5.875% SENIOR NOTES DUE 2008, 6.850% SENIOR NOTES DUE 2015, 7.25% SENIOR NOTES DUE 2010,
SERIES A IN EXCHANGE FOR SERIES A IN EXCHANGE FOR SERIES A IN EXCHANGE FOR
REGISTERED 5.875% SENIOR NOTES REGISTERED 6.850% SENIOR NOTES REGISTERED 7.25% SENIOR NOTES
DUE 2008, SERIES B DUE 2015, SERIES B DUE 2010, SERIES B
THE EXCHANGE OFFER FOR EACH SERIES OF OLD NOTES WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 2003, UNLESS EXTENDED (THE "EXPIRATION DATE").
OLD NOTES OF A SERIES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY
TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE FOR THAT
SERIES.
To Depository Trust Company Participants:
We are enclosing herewith the materials listed below relating to the offer
by CenterPoint Energy, Inc. (the "Company") to exchange its 5.875% Senior Notes
due 2008, Series B, 6.850% Senior Notes due 2015, Series B, and 7.25% Senior
Notes due 2010, Series B (collectively, the "New Notes"), the issuance of which
has been registered under the Securities Act of 1933, as amended (the
"Securities Act"), for like principal amounts of the Company's issued and
outstanding 5.875% Senior Notes due 2008, Series A, 6.850% Senior Notes due
2015, Series A, and 7.25% Senior Notes due 2010, Series A (collectively, the
"Old Notes"), respectively, which offer consists of separate, independent offers
to exchange the New Notes of each series for Old Notes of the respective series
(each, an "Exchange Offer," and sometimes collectively, the "Exchange Offer"),
upon the terms and subject to the conditions set forth in the Company's
prospectus dated , 2003 and the related Letter of Transmittal.
We are enclosing copies of the following documents:
1. Prospectus dated , 2003;
2. Letter of Transmittal (together with accompanying Substitute Form
W-9 Guidelines);
3. Notice of Guaranteed Delivery; and
4. Letter that may be sent to your clients for whose account you hold
Old Notes in your name or in the name of your nominee, with space provided
for obtaining such client's instructions with regard to the Exchange Offer.
We urge you to contact your clients promptly. Please note that each
Exchange Offer will expire at 5:00 p.m., New York City time, on ,
2003, unless extended.
The Exchange Offer for Old Notes of each series is not conditioned upon any
minimum aggregate principal amount of Old Notes of that series being tendered
for exchange or upon the consummation of the Exchange Offer for Old Notes of any
other series.
Under the Letter of Transmittal, each holder of Old Notes will represent to
the Company that:
- any New Notes received are being acquired in the ordinary course of
business of the person receiving such New Notes;
- such person does not have an arrangement or understanding with any person
to participate in the distribution (within the meaning of the Securities
Act) of the Old Notes or the New Notes;
- such person is not an "affiliate," as defined in Rule 405 under the
Securities Act, of the Company, or, if it is such an affiliate, it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable;
- if such person is not a broker-dealer, it is not engaged in, and does not
intend to engage in, a distribution of the New Notes;
- if such person is a broker-dealer, it is not tendering Old Notes acquired
directly from the Company or one of the Company's affiliates;
- if such person is a broker-dealer, it will receive New Notes for its own
account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, and it will deliver
a prospectus in connection with any resale of such New Notes; however, by
so acknowledging and by delivering a prospectus, such person will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act; and
- such person is not acting on behalf of any person who could not
truthfully and completely make the foregoing representations.
The enclosed Letter to Clients contains an authorization by the beneficial
owners of the Old Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer or
to any other person (other than the Exchange Agent) in connection with the
solicitation of tenders of Old Notes pursuant to the Exchange Offer. The Company
will pay or cause to be paid any transfer taxes payable on the transfer of Old
Notes to it, except as otherwise provided in Instruction 7 of the enclosed
Letter of Transmittal.
Additional copies of the enclosed material may be obtained from us upon
request.
Very truly yours,
JPMORGAN CHASE BANK
2
EXHIBIT 99.4
LETTER TO CLIENTS
FOR
TENDER OF ALL OUTSTANDING
CENTERPOINT ENERGY, INC.
5.875% SENIOR NOTES DUE 2008, 6.850% SENIOR NOTES DUE 2015, 7.25% SENIOR NOTES DUE 2010,
SERIES A SERIES A SERIES A
IN EXCHANGE FOR REGISTERED IN EXCHANGE FOR REGISTERED IN EXCHANGE FOR REGISTERED
5.875% SENIOR NOTES DUE 2008, 6.850% SENIOR NOTES DUE 2015, 7.25% SENIOR NOTES DUE 2010,
SERIES B SERIES B SERIES B
THE EXCHANGE OFFER FOR EACH SERIES OF OLD NOTES WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 2003, UNLESS EXTENDED (THE "EXPIRATION DATE").
OLD NOTES OF A SERIES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY
TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE FOR THAT
SERIES.
To Our Clients:
We are enclosing with this letter a prospectus dated , 2003 of
CenterPoint Energy, Inc. (the "Company") and the related Letter of Transmittal.
These two documents together constitute the Company's offer to exchange its
5.875% Senior Notes due 2008, Series B, 6.850% Senior Notes due 2015, Series B,
and 7.25% Senior Notes due 2010, Series B (collectively, the "New Notes"), the
issuance of which has been registered under the Securities Act of 1933, as
amended (the "Securities Act"), for like principal amounts of the Company's
issued and outstanding 5.875% Senior Notes due 2008, Series A, 6.850% Senior
Notes due 2015, Series A, and 7.25% Senior Notes due 2010, Series A
(collectively, the "Old Notes"), respectively, which offer consists of separate,
independent offers to exchange the New Notes of each series for Old Notes of the
respective series (each, an "Exchange Offer," and sometimes collectively, the
"Exchange Offer").
The Exchange Offer for Old Notes of each series is not conditioned upon any
minimum aggregate principal amount of Old Notes of that series being tendered
for exchange or upon the consummation of the Exchange Offer for Old Notes of any
other series.
We are the holder of record of Old Notes held by us for your own account. A
tender of your Old Notes held by us can be made only by us as the record holder
according to your instructions. The Letter of Transmittal is furnished to you
for your information only and cannot be used by you to tender Old Notes held by
us for your account.
We request instructions as to whether you wish to tender any or all of the
Old Notes held by us for your account under the terms and conditions of the
Exchange Offer. We also request that you confirm that we may, on your behalf,
make the representations contained in the Letter of Transmittal.
Under the Letter of Transmittal, each holder of Old Notes will represent to
the Company that:
- any New Notes received are being acquired in the ordinary course of
business of the person receiving such New Notes;
- such person does not have an arrangement or understanding with any person
to participate in the distribution (within the meaning of the Securities
Act) of the Old Notes or the New Notes;
- such person is not an "affiliate," as defined in Rule 405 under the
Securities Act, of the Company, or, if it is such an affiliate, it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable;
- if such person is not a broker-dealer, it is not engaged in, and does not
intend to engage in, a distribution of the New Notes;
- if such person is a broker-dealer, it is not tendering Old Notes acquired
directly from the Company or one of the Company's affiliates;
- if such person is a broker-dealer, it will receive New Notes for its own
account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, and it will deliver
a prospectus in connection with any resale of such New Notes; however, by
so acknowledging and by delivering a prospectus, such person will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act; and
- such person is not acting on behalf of any person who could not
truthfully and completely make the foregoing representations.
Very truly yours,
2
PLEASE RETURN YOUR INSTRUCTIONS TO US IN THE ENCLOSED ENVELOPE WITHIN AMPLE TIME
TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF BEFORE THE APPLICABLE EXPIRATION
DATE.
INSTRUCTION TO
DTC PARTICIPANT
To Participant of The Depository Trust Company:
The undersigned hereby acknowledges receipt and review of the prospectus
dated , 2003 (the "Prospectus") of CenterPoint Energy, Inc. (the
"Company") and the related Letter of Transmittal. These two documents together
constitute the Company's offer to exchange its 5.875% Senior Notes due 2008,
Series B, 6.850% Senior Notes due 2015, Series B, and 7.25% Senior Notes due
2010, Series B (collectively, the "New Notes"), the issuance of which has been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
for like principal amounts of the Company's issued and outstanding 5.875% Senior
Notes due 2008, Series A, 6.850% Senior Notes due 2015, Series A, and 7.25%
Senior Notes due 2010, Series A (collectively, the "Old Notes"), respectively,
which offer consists of separate, independent offers to exchange the New Notes
of each series for Old Notes of that series (each, an "Exchange Offer," and
sometimes collectively, the "Exchange Offer").
This will instruct you, the registered holder and DTC participant, as to
the action to be taken by you relating to the Exchange Offer for the Old Notes
held by you for the account of the undersigned.
The aggregate principal amount of the Old Notes of each series held by you
for the account of the undersigned is (fill in amount):
- --------------------------------------------------------------------------------------------------
TITLE OF SERIES PRINCIPAL AMOUNT
- --------------------------------------------------------------------------------------------------
5.875% Senior Notes due 2008, Series A
- --------------------------------------------------------------------------------------------------
6.850% Senior Notes due 2015, Series A
- --------------------------------------------------------------------------------------------------
7.25% Senior Notes due 2010, Series A
- --------------------------------------------------------------------------------------------------
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
[ ] TO TENDER ALL OLD NOTES HELD BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED.
[ ] TO TENDER THE FOLLOWING AMOUNT OF OLD NOTES HELD BY YOU FOR THE ACCOUNT OF
THE UNDERSIGNED:
- --------------------------------------------------------------------------------------------------
TITLE OF SERIES PRINCIPAL AMOUNT TENDERED
- --------------------------------------------------------------------------------------------------
5.875% Senior Notes due 2008, Series A
- --------------------------------------------------------------------------------------------------
6.850% Senior Notes due 2015, Series A
- --------------------------------------------------------------------------------------------------
7.25% Senior Notes due 2010, Series A
- --------------------------------------------------------------------------------------------------
[ ] NOT TO TENDER ANY OLD NOTES HELD BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED.
IF NO BOX IS CHECKED, A SIGNED AND RETURNED INSTRUCTION TO DTC PARTICIPANT
WILL BE DEEMED TO INSTRUCT YOU TO TENDER ALL OLD NOTES HELD BY YOU FOR THE
ACCOUNT OF THE UNDERSIGNED.
3
If the undersigned instructs you to tender the Old Notes of a series held
by you for the account of the undersigned, it is understood that you are
authorized to make, on behalf of the undersigned (and the undersigned, by its
signature below, hereby makes to you), the representations contained in the
Letter of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including, but not limited to, the representations that:
- any New Notes received are being acquired in the ordinary course of
business of the undersigned;
- the undersigned does not have an arrangement or understanding with any
person to participate in the distribution (within the meaning of the
Securities Act) of the Old Notes or the New Notes;
- the undersigned is not an "affiliate," as defined in Rule 405 under the
Securities Act, of the Company, or, if it is such an affiliate, it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable;
- if the undersigned is not a broker-dealer, it is not engaged in, and does
not intend to engage in, a distribution of the New Notes;
- if the undersigned is a broker-dealer, it is not tendering Old Notes
acquired directly from the Company or one of the Company's affiliates;
- if the undersigned is a broker-dealer, it will receive New Notes for its
own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, and it will deliver
a prospectus in connection with any resale of such New Notes; however, by
so acknowledging and by delivering a prospectus, the undersigned will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act; and
- the undersigned is not acting on behalf of any person who could not
truthfully and completely make the foregoing representations.
SIGN HERE
NAME OF BENEFICIAL OWNER(S):
---------------------------------------------------
SIGNATURE(S):
------------------------------------------------------------------
NAME(S) (PLEASE PRINT):
--------------------------------------------------------
ADDRESS:
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TELEPHONE NUMBER:
--------------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER:
-----------------------------
DATE:
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4
