1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 27, 2001
REGISTRATION NO. 333-57376
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- --------------------------------------------------------------------------------As filed with the Securities and Exchange Commission on May 2, 2002
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO--------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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DUKE ENERGY FIELD SERVICES, LLC
(Exact Namename of Registrantregistrant as Specifiedspecified in Its Charter)its charter)
DUKE ENERGY FIELD SERVICES, LLC DELAWARE 58-2511048
(State or Other JurisdictionDEFS CAPITAL TRUST I DELAWARE 02-6142965
(exact name of Incorporation oreach registrant (state of organization) (I.R.S. Employer Identification No.)
Organization)
JOHN E. JACKSON
VICE PRESIDENT
AND CHIEF FINANCIAL OFFICERas specified in its charter)
Rose M. Robeson
370 17TH STREET17th Street Vice President and
Suite 900 Chief Financial Officer
Denver, Colorado 80202 370 17TH STREET
SUITE 900 SUITE 900
DENVER, COLORADO 80202 DENVER, COLORADO 8020217th Street
(303) 595-3331 Suite 900
(Address, including zip code, and Denver, Colorado 80202
telephone number, including area code, (303) 595-3331
(Address, Including Zip Code,of registrant's principal executive (Name, address, including zip code,
offices) and Telephone Number, (Name, Address, Including Zip Code, and Telephone
Including Area Code,telephone number, including area
code, of Registrant's Principal Number, Including Area Code, of Agentagent for Service)
Executive Offices)service)
Copy to:
JEFFERY B. FLOYD, ESQ. MARTHA B. WYRSCH,BRENT L. BACKES, ESQ.
VINSON & ELKINS L.L.P. DUKE ENERGY FIELD SERVICES, LLC
2300 FIRST CITY TOWER 370 17TH STREET, SUITE 900
HOUSTON, TEXAS 77002-6760 DENVER, COLORADO 80202
(713) 758-2194 (303) 595-3331
(713) 615-5660 (FACSIMILE) (303) 605-1605 (FACSIMILE)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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- ---------------------------------------------------------------------------------------------------------------------------------PROPOSED
PROPOSED MAXIMUM PROPOSED MAXIMUM
OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE PER UNIT OFFERING PRICE AGGREGATE OFFERING AMOUNT OFREGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(3) PRICE(2)(1)(2)(3) REGISTRATION FEEPRICE(1)(2)(3) FEE(4)
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Debt Securities.................. $550,000,000Senior Notes.................
Subordinated Notes.........
Guarantee of Trust Preferred
Securities(5) ............
Trust Preferred Securities.
Total.................. $ 500,000,000 100% $550,000,000 (4)
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- ---------------------------------------------------------------------------------------------------------------------------------$ 500,000,000(6) $ 46,000
(1)Includes $50,000,000 There are being registered hereunder such presently indeterminate
number or principal amount of unsold DebtSenior Notes and Subordinated Notes of
Duke Energy Field Services, LLC and such presently indeterminate number
of Trust Preferred Securities previously registered on Form
S-3 (Registration No. 333-41854) and $500,000,000 of Debt Securities
registered pursuant to this registration statement.
(2)Such amount in U.S. dollars or the equivalent thereof in foreign currencies
as shall result inDEFS Capital Trust I with an aggregate
initial offering price not to exceed $500,000,000. Subordinated Notes
of Duke Energy Field Services, LLC also may be issued to DEFS Capital
Trust I and later distributed upon dissolution and distribution of the
assets thereof, which would include such Subordinated Notes, for which
no separate consideration will be received. Pursuant to Rule 457(o)
under the Securities Act of 1933, which permits the registration fee to
be calculated on the basis of the maximum offering price of all the
securities of
$550,000,000.
(3)listed, the table does not specify by each class information
as to the amount to be registered, proposed maximum offering price per
unit or proposed maximum aggregate offering price.
(2) Estimated solely for the purpose of calculating the registration fee.fee
pursuant to Rule 457(o).
(3) Exclusive of accrued interest and distributions, if any.
(4) Securities registered under Registration Statement No. 333-57376
previously filed by Duke Energy Field Services, LLC having an aggregate
offering price of $200,000,000 remain unsold. In accordance with Rule
457(p), the registration fee of $50,000 associated with such securities
is offset against the total registration fee due in connection with
this Registration Statement. Accordingly, no registration fee is
payable.
(5) Includes the rights of holders of the Trust Preferred Securities of
DEFS Capital Trust I under the guarantee of such securities and back-up
undertakings, consisting of obligations by Duke Energy Field Services,
LLC, as set forth in the declaration of trust, the applicable indenture
and any supplemental indenture thereto, in each case as further
described in the registration statement. No separate consideration will
be received for such guarantee or back-up undertakings. Pursuant to
Rule 429457(n) under the Securities Act of 1933, this registration
statement contains a combined prospectusno separate fee is
payable in respect of such guarantee or back-up undertakings.
(6) The aggregate principal amount of the debt securities may be increased
if any debt securities are issued at an original issue discount by an
amount such that also relatesthe gross proceeds to unsold Debt
Securities registered on Form S-3 (Registration No. 333-41854). The
registration fee of $13,200 related to such unsold Debt Securities was
previously paid. Also,be received by the registrant
previously paid a registration fee of
$125,000 relatedshall be equal to the Debt Securities registeredabove amount to be registered. Any offering of
debt securities denominated other than in U.S. dollars will be treated
as the equivalent of U.S. dollars based on the exchange rate applicable
to the purchase of such debt securities at the time of initial
offering. In no event will the aggregate initial offering price of all
securities issued from time to time pursuant to this registration
statement.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUS
CONTAINED IN THIS REGISTRATION STATEMENT RELATES TO THE REMAINING $50,000,000 OF
DEBT SECURITIES UNSOLD IN PRIMARY OFFERINGS PREVIOUSLY REGISTERED PURSUANT TO
THE FORM S-3 REGISTRATION STATEMENT NO. 333-41854. THIS REGISTRATION STATEMENT
ALSO CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT NO.
333-41854, AND UPON EFFECTIVENESS OF SUCH POST-EFFECTIVE AMENDMENT, THIS
REGISTRATION STATEMENT AND REGISTRATION STATEMENT NO. 333-41854 WILL RELATE TO
AN AGGREGATE OF $550,000,000 OF DEBT SECURITIES.statement exceed $500,000,000, or the equivalent thereof in foreign
currencies or composite currencies.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
FILES A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE 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 IS NOT A SOLICITATION OF AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MARCH 27, 2001MAY 2, 2002
PROSPECTUS
$550,000,000$500,000,000
DUKE ENERGY FIELD SERVICES, LLC
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DEBTSENIOR NOTES
SUBORDINATED NOTES
GUARANTEES OF TRUST PREFERRED SECURITIES
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DEFS CAPITAL TRUST I
TRUST PREFERRED SECURITIES
GUARANTEED, TO THE EXTENT DESCRIBED HEREIN, BY
DUKE ENERGY FIELD SERVICES, LLC
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This prospectus contains summaries of the general terms of these
securities. You will find the specific terms of any securities offered, and the
manner in which they are being offered, in supplements to this prospectus. You
should read this prospectus and any prospectus supplement carefully before you
invest.
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 , 2001.__________ ___, 2002.
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TABLE OF CONTENTS
About This Prospectus....................................... 1Prospectus..........................................................1
Where You Can Find More Information......................... 1Information............................................1
Cautionary Statement About Forward-Looking Statements....... 2Statements..........................1
Our Company................................................. 3Company....................................................................3
DEFS Capital Trust I...........................................................5
Ratio Ofof Earnings Toto Fixed Charges.......................... 5Charges.............................................6
Use Of Proceeds............................................. 5of Proceeds................................................................6
Description Of Debt Securities.............................. 6of The Senior Notes................................................6
Description of the Subordinated Notes.........................................16
Description of the Trust Preferred Securities.................................24
Description of the Guarantee..................................................25
Plan Of Distribution........................................ 15
Experts..................................................... 17of Distribution..........................................................28
Experts.......................................................................29
Validity Of The Securities.................................. 17of the Securities....................................................29
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In this prospectus, references to "we," "us" and "our" mean Duke Energy
Field Services, LLC and its subsidiaries other than DEFS Capital Trust I, unless
the context clearly indicates otherwise, and references to the "Trust" mean DEFS
Capital Trust I.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
any other person to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. We
are not making an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should not assume that the information in
this prospectus, any prospectus supplement or any document incorporated by
reference is accurate as of any date other than the date of those documents. Our
business, financial condition, results of operations and prospects may have
changed since those dates.
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statementsstatement that weDuke Energy
Field Services, LLC and DEFS Capital Trust I filed with the Securities and
Exchange Commission using the "shelf" registration process. Under this shelf
registration process, we may issue the debtsenior notes and junior subordinated
notes and the Trust may issue the trust preferred securities described in
this prospectus in one or more
offerings up to a total dollar amount of $550,000,000$500,000,000 (or its equivalent in
foreign currencies).
This prospectus constitutes part of the registration statements on Form S-3
filed with the SEC under the Securities Act of 1933. It omits some of the information contained in the
registration statements,statement, and reference is made to the registration statementsstatement for
further information with respect to us, the Trust and the securities we and the
Trust are offering. Any statement contained in this prospectus concerning the
provisions of any document filed as an exhibit to the registration statements or
otherwise filed with the SEC is not necessarily complete, and in each instance
reference is made to the copy of the document filed.
This prospectus provides you with a general description of the
debt
securities that we and the trust may offer. Each time we sell debt securities we will provideare sold, a
prospectus supplement that will containprovide specific information about the terms of that
offering and the debt securities to be sold. The prospectus supplement may also add,
update or change information contained in this prospectus. Any statement that we makemade in
this prospectus will be modified or superseded by any inconsistent statement
made by us in a prospectus supplement. The registration statementsstatement filed with the SEC
includes exhibits that provide more details about the matters discussed in this
prospectus. You should read this prospectus, the related exhibits filed with the
SEC and any prospectus supplement, together with the additional information
described under "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a Form 10 for the registration of our member
interests pursuant to Section 12(g) of the Securities Exchange Act of 1934. As a
result, we are now required to comply with the informational requirements of the
Securities Exchange Act of 1934, and, accordingly, we will file annual, quarterly and
special reports, and other information with the SEC (File No. 000-31095). Our
SEC filings are available to the public over the Internet at the SEC's web site
at http://www.sec.gov. You may also read and copy any document we file at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
You may obtain information on the operation of the SEC's Public Reference Room
in Washington, D.C. by calling the SEC at 1-800-SEC-0330.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by referencereference:
o the documents listed belowconsolidated financial statements of Phillips Gas Company for
the year ended December 31, 1999 included in our Form 10, as
amended, initially filed with the SEC on July 20, 2000;
o our Annual Report on Form 10-K for the year ended December 31, 2001
filed with the SEC on March 30, 2002; and
o any future filings made with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 until we sell all of
the securities being registered or until we terminate this
registration statement:
- Our Form 10 filed with the SEC.
- Our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2000
and September 30, 2000 filed with the SEC.
- Our Current Reports on Form 8-K filed with the SEC on August 16, 2000 and
February 1, 2001.statement.
If you ask us by phone or in writing, we will give you a free copy of
any or all of the information incorporated by reference (other than exhibits,
unless they are specifically incorporated by reference). Please direct your
request by mail to Duke Energy Field Services, LLC, Attention: Vice President,
Investor
Relations,Treasurer, 370 17th Street, Suite 900, Denver, Colorado 80202 or by telephone at
(303) 595-3331.
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You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
any other person to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. We
are not making an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should not assume that the information in
this prospectus, any prospectus supplement or any document incorporated by
reference is accurate as of any date other than the date of those documents. Our
business, financial condition, results of operations and prospects may have
changed since those dates.
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
This prospectus contains or incorporates by reference statements that
do not directly or exclusively relate to historical facts. Such statements are
"forward-looking statements."statement" within the meaning of the Private Securities
Litigation Reform Act of 1995. You can typically identify forward-looking
statements by the use of forward-looking words, such as "may," "could,"
"project," "believe," "anticipate," "expect," "estimate," "potential," "plan,"
"forecast" and other similar words.
All statements other than statements of historical facts contained or
incorporated by reference in this prospectus, including statements regarding our
future financial position, business strategy, budgets, projected costs and plans
and objectives of management for future operations, are forward-looking
statements.
The
These forward-looking statements in this prospectus reflect our intentions, plans,
expectations, assumptions and beliefs about future events and are subject to
risks, uncertainties and other factors, many of which are outside our control.
Important factors that could cause actual results to differ materially from the
expectations expressed or implied in the forward-looking statements include
known and unknown risks. Known risks include, but are not limited to, the
following:
- the timing and extent of changes in commodity prices and demand for our
services;
- our use of derivative financial instruments to hedge commodity and
interest rate risks;
-o our ability to access the debt and equity markets, which will
depend on general market conditions and the credit ratings for
our debt obligations;
-o our use of derivative financial instruments to hedge commodity
and interest rate risks;
o the level of creditworthiness of counterparties to
transactions;
o changes in laws and regulations, particularly with regard to
taxes, safety and protection of the environment or the
increased regulation of the gas gathering and processing
industry;
-o the timing and extent of changes in commodity prices and
demand for our services;
o weather and other natural phenomena;
-o industry changes, including the impact of consolidations, and
changes in competition;
-o our ability to obtain required approvals for construction or
modernization of gathering and processing facilities, and the
timing of production from such facilities, which are dependent
on the issuance by federal, state and municipal governments or
agencies thereof, of building, environmental and other
permits, the availability of specialized contractors and work
force and prices of and demand for products; and
-o the effect of accounting policies issued periodically by
accounting standard-setting bodies.
In light of these risks, uncertainties and assumptions, the
forward-looking events referred to in this prospectus or in any prospectus
supplement might not occur or might occur to a different extent or at a
different time than described
in this prospectus or in any prospectus supplement.described. Except as otherwise required by law, we undertake
no obligation to update or revise our forward-looking statements, whether as a
result of new information, future events or otherwise.
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OUR COMPANY
Duke Energy Field Services, LLC is a company formed in 1999 that holds
the combined North American midstream natural gas gathering, processing,
marketing and natural gas liquids ("NGL") businesses of Duke Energy Corporation
("Duke Energy") and Phillips Petroleum Company ("Phillips"). The transaction in
which those businesses were combined on March 31, 2000 is referred to in this prospectus as the
"Combination." Our limited liability company agreement limits the scope of our
business to the midstream natural gas industry in the United States and Canada,
the marketing of natural gas liquidsNGLs in Mexico and the transportation, marketing and storage of
other petroleum products, unless otherwise approved by our Board of Directors.
Unless the context otherwise requires, descriptions of assets, operations
and results in this prospectus give effect to the Combination and related
transactions, the transfer to us of additional midstream natural gas assets
acquired by Duke Energy or Phillips prior to the Combination and the transfer to
us of the general partner of TEPPCO Partners, L.P. In this prospectus, the terms
"we," "us" and "our" refer to Duke Energy Field Services, LLC and our
subsidiaries, giving effect to the Combination and related transactions.
The midstream natural gas industry is the link between the exploration
and production of raw natural gas and the delivery of its components to end-use
markets. We operate in the two principal business segments of the midstream
natural gas industry:
-o natural gas gathering, processing, transportation, marketing
and storage; and
- natural gas liquids ("NGLs")o NGL fractionation, transportation, marketing and trading.
We believe that we are one of the largest gatherers of raw natural gas,
based on wellhead volume, in North America. We are the largest producer, and we
believe that we are one of the largest marketers, of NGLs in North America. In
2000:
-2001:
o we gathered and/or transportedhandled an average of approximately 7.68.6 trillion British
thermal units per day of raw natural gas;
-o we produced an average of approximately 360,000397,000 barrels per
day of NGLs; and
-o we marketed and traded an average of approximately 500,000565,000
barrels per day of NGLs.
We gather raw natural gas through gathering systems located in seven
major natural gas producing regions: Permian Basin, Mid-Continent, East Texas --
Austin Chalk -- North Louisiana, Onshore Gulf of Mexico, Rocky Mountains,
Offshore Gulf of Mexico and Western Canada. Our gathering systems consist of
approximately 57,000 miles of gathering pipe, with approximately 35,00040,000 active
connections to producing wells.
Our natural gas processing operations involve the separation of raw
natural gas gathered both by our gathering system and by third party systems
into NGLs and residue gas. We process the raw natural gas at our 6864 owned and
operated plants and at 1112 third-party operated facilities in which we hold an
equity interest.
The NGLs separated from the raw natural gas by our processing
operations are either sold and transported as "NGLNGL raw mix"mix or further separated
through a process known as fractionation into their individual components
(ethane, propane, butanes and natural gasoline) and then sold as components. We
fractionate NGL raw mix at our 12 owned and operated processing facilities and
at two third-party operated fractionators in which we hold an equity interest.
We sell NGLs to a variety of customers ranging from large,
multi-national petrochemical and refining companies to small regional retail
propane distributors. Substantially all of our NGL sales are made at
market-based prices, including the approximately 40% of our NGL production that
is committed to Phillips and Chevron Phillips Chemical Company LLC under an
existing 15-year contract of which 14 years remain.
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7expires December 31, 2014. In addition, we use trading
and storage to manage our price risk and provide additional services to our
customers.
The residue gas that results from our processing is sold at
market-based prices to marketers or end usersend-users, including large industrial
customers and natural gas and electric utilities serving individual consumers.
We market residue gas through our wholly owned gas marketing company. We also
store residue gas at our 8.59.0 billion cubic foot natural gas storage facility.
On March 31, 2000, we combined the gas gathering, processing, marketing
and NGLs businesses of Duke Energy and Phillips. In connection with the
Combination, Duke Energy and Phillips transferred all of their
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respective interests in their subsidiaries that conducted their midstream
natural gas business to us. Concurrent with the Combination, on March 31, 2000,
we obtained by transfer from Duke Energy the general partner of TEPPCO Partners,
L.P. ("TEPPCO"), a publicly traded limited partnership which owns and operates a
network of pipelines and storage and terminal facilities for refined products,
liquefied petroleum gases, liquefied natural gas, petrochemicals, natural gas
gathering and crude oil. The general partner is responsible for the management
and operations of TEPPCO. We believe that our ownership of the general partner
of TEPPCO improves our business position in the transportation sector of the
midstream natural gas industry and provides additional flexibility in pursuing
our disciplined acquisition strategy by providing an alternative acquisition
vehicle. It also provides us with an opportunity to sell appropriate assets
currently held by our company to TEPPCO.
Through our ownershipUnless the context otherwise requires, descriptions of assets,
operations and results in this prospectus give effect to the Combination and
related transactions, the transfer to us of additional midstream natural gas
assets acquired by Duke Energy or Phillips prior to the Combination and the
transfer to us of the general partner of TEPPCO we have the right to receive from TEPPCO incentive cash
distributions in addition to a 2% share of distributions based on our general
partner interest. At TEPPCO's 2000 per unit distribution level, the general
partner:
- receives approximately 20% of the cash distributed by TEPPCO to its
partners, which consists of 18% from the incentive cash distribution and
2% from the general partner interest; and
- under the incentive cash distribution provisions, receives 50% of any
increase in TEPPCO's per unit cash distributions.TEPPCO.
Our principal executive offices are located at 370 17th Street, Suite
900, Denver, Colorado 80202, and our telephone number is (303) 595-3331.
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8DEFS CAPITAL TRUST I
We formed DEFS Capital Trust I as a statutory business trust under
Delaware law. The Trust's business is defined in a trust agreement executed by
us, as depositor, and Chase Manhattan Bank USA, National Association. The trust
agreement will be amended and restated when Trust Preferred Securities are
issued under it. A form of the amended and restated trust agreement is filed as
an exhibit to the registration statement of which this prospectus is a part. We
refer to the trust agreement, as so amended and restated, as the "Trust
Agreement" in this prospectus.
The Trust exists for the exclusive purposes of:
o issuing and selling Trust Preferred Securities and Trust
Common Securities;
o using the proceeds from the sale of Trust Preferred Securities
and Trust Common Securities to acquire from us Junior
Subordinated Notes; and
o engaging in only those other activities necessary, incidental,
appropriate or convenient to these purposes.
The Trust Preferred Securities and the Trust Common Securities
represent undivided beneficial interests in the assets of the Trust. The Trust
Preferred Securities and the Trust Common Securities together are sometimes
called the "Trust Securities" in this prospectus.
We will, directly or indirectly, acquire all of the Trust Common
Securities, which will have an aggregate liquidation amount equal to at least 3
percent of the total capital of the Trust.
The trustees of the Trust will conduct the Trust's business and
affairs. Unless otherwise indicated in the applicable prospectus supplement, at
the time of the issuance of Trust Preferred Securities, the initial trustees of
the Trust will consist of:
o two of our officers, as Administrative Trustees;
o JPMorgan Chase Bank as Property Trustee; and
o Chase Manhattan Bank USA, National Association as Delaware
Trustee.
We, as the holder of the Trust Common Securities, or, if an event of default
under the Subordinated Indenture has occurred and is continuing, the holders of
not less than a majority in liquidation amount of the Trust Preferred
Securities, will be entitled to appoint, remove or replace the Property Trustee
and the Delaware Trustee. In no event will the holders of the Trust Preferred
Securities have the right to vote to appoint, remove or replace the
Administrative Trustees. Such voting rights will be vested exclusively in us as
the holder of the Trust Common Securities. The Trust will have no assets other
than the Junior Subordinated Notes. The Trust will have no revenue other than
payments under the Junior Subordinated Notes. We will pay all expenses of the
Trust.
The rights of the holders of the Trust Preferred Securities are set
forth in the Trust Agreement and the Delaware Business Trust Act. The term of
the Trust and other information regarding the Trust will be provided in the
applicable prospectus supplement relating to the Trust Preferred Securities.
No separate financial statements of the Trust are included in this
prospectus. We consider that such statements would not be material to holders of
the Trust Preferred Securities because the Trust has no independent operations
and the sole purpose of the Trust is investing the proceeds of the sale of its
Trust Securities in our Junior Subordinated Notes. We do not expect that the
Trust will file annual, quarterly or special reports with the SEC.
The principal executive offices of the Trust will be c/o Duke Energy
Field Services, LLC, 370 17th Street, Suite 900, Denver, Colorado 80202,
telephone (303) 595-3331.
The Trust will be treated as our subsidiary for financial reporting
purposes. Accordingly, our consolidated financial statements will include the
accounts of the Trust. The Trust Preferred Securities, along with any other
trust
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preferred securities that we guarantee on an equivalent basis, will be presented
as a separate line item in our consolidated balance sheets, entitled "Guaranteed
Preferred Beneficial Interests in Subordinated Notes on Duke Energy Field
Services, LLC or Subsidiaries." We will record distributions that the Trust pays
on the Trust Preferred Securities as an expense in our consolidated statement of
income.
RATIO OF EARNINGS TO FIXED CHARGES
The following table contains our consolidated ratio of earnings to
fixed charges for the periods indicated. From a financial reporting perspective,
we are the successor to Duke Energy's North American midstream natural gas
business. The subsidiaries of Duke Energy that conducted this business were
contributed to us in March 2000 immediately prior to the combination of these
subsidiaries with the North American midstream natural gas business of Phillips
Petroleum Company. For periods prior to the Combination, Duke Energy Field
Services, LLC and these former subsidiaries of Duke Energy collectively are
referred to as the "Predecessor Company."
COMPANY
-------------
NINE MONTHS
PREDECESSOR COMPANY ENDED
-------------------------------- SEPTEMBER 30,
1995 1996COMPANY
---------------------------------------- --------------------------
1997 1998 1999 2000
---- ---- ---- ---- ---- -------------2000(1) 2001
----------- ---------- ----------- ----------- -----------
RATIO OF EARNINGS TO FIXED CHARGES................ 4.10 9.11Ratio of Earnings to Fixed Charges......... 2.52 1.07 2.33 3.383.46 3.24
For purposes of calculating the ratios of earnings to fixed charges: (1)
"earnings" means income before extraordinary changescharges plus income taxes and fixed
charges, and (2) "fixed charges" include interest on indebtedness, amortization
of deferred financing costs, and that portion of lease expense that is deemed to
be representative of an interest factor. The ratio includes amounts from our
company, all of our majority-owned subsidiaries and our proportionate share of
distributed amounts from 50% owned investments accounted for using the equity
method.
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(1) Includes the results of operations of Phillips' gas gathering,
processing, marketing and NGL business for the nine months ended
December 31, 2000. Phillips' gas gathering, processing, marketing and
NGL business was acquired by the Predecessor Company on March 31, 2000.
USE OF PROCEEDS
Unless the applicable prospectus supplement states otherwise, we will
use the net proceeds from the sale of the debt securitiesour Senior Notes or Junior Subordinated
Notes offered by this prospectus and any prospectus supplement for general
corporate purposes, which may include repayment of indebtedness, capital
expenditures, future acquisitions, advances to subsidiaries and additions to our
working capital. If we do not use the net proceeds immediately, we may
temporarily invest them in short-term interest-bearing obligations or deposit
them with banks.
5
9The proceeds from the sale of Trust Preferred Securities will be
invested in Junior Subordinated Notes issued by us. Except as we may otherwise
describe in the related prospectus supplement, we expect to use the net proceeds
from the sale of such Junior Subordinated Notes to the Trust for the purposes
described above.
DESCRIPTION OF DEBT SECURITIESTHE SENIOR NOTES
Any debt securitiessenior notes issued using this prospectus ("Debt Securities"Senior Notes") will be
our direct unsecured general obligations. The Debt SecuritiesSenior Notes will be senior debt
securities.
The Debt SecuritiesSenior Notes will be issued under an Indenture (the "Indenture")
between us and
TheJPMorgan Chase Manhattan Bank (the "Trustee""Senior Indenture Trustee") dated as of August 16,
2000, as amended and supplemented from time to time (the "Senior Indenture").
The Debt SecuritiesSenior Notes may be issued from time to time in one or more series.
The particular terms of each series that is offered by a prospectus supplement
will be described in the prospectus supplement.
We have summarized selected provisions of the Senior Indenture below.
The summary is not complete.complete and contains only a general description of the
Senior Notes. Any of the following terms may be changed, as set forth in the
applicable prospectus supplement. The form of the Senior Indenture has been
filed as an exhibit to the registration statement of which this prospectus is a
part, and you should read the Senior Indenture for provisions that may be
important to you. A definitive supplemental indenture will be filed with the SEC
when we issue Senior
6
Notes. The Senior Indenture has been qualified under the Trust Indenture Act.
You should also refer to the Trust Indenture Act for provisions that apply to
the Senior Notes. Whenever we refer in this prospectus or in any prospectus
supplement to particular sections or defined terms of the Senior Indenture, such
sections or defined terms are incorporated by reference herein or therein, as
applicable. Capitalized terms used in this summary have the meanings specified
in the Senior Indenture.
GENERAL
The Senior Indenture providesdoes not limit the amount of Senior Notes that Debt Securities in separate serieswe
may be
issuedissue under it. We may issue Senior Notes from time to time without limitation as to aggregate principal amount.under the Senior
Indenture in one or more series by entering into supplemental indentures or by
our Board of Directors or a duly authorized committee authorizing the issuance.
We may specify a maximum aggregate principal amount for the Debt SecuritiesSenior Notes of any
series. We will determine the terms and conditions of each series of the Debt Securities,Senior
Notes, including the maturity, principal and interest but those terms must be
consistent with the Indenture. Debt Securities of a seriessuch series. Senior
Notes need not be issued at the same time, bear interest at the same rate or
mature on the same date.
Each series of Debt SecuritiesSenior Notes will rank equally with every other series
of Debt SecuritiesSenior Notes and with all of our other unsecured and unsubordinated debt.
The Senior Indenture does not protect the holders of Senior Notes if we
engage in a highly leveraged transaction.
PROVISIONS APPLICABLE TO PARTICULAR SERIES
A prospectus supplement relating to any series of Debt SecuritiesSenior Notes being
offered will include specific terms related to the offering, including the price
or prices at which the Debt SecuritiesSenior Notes to be offered will be issued. These terms
will include some or all of the following:
-o the title of the Debt Securities;
-Senior Notes;
o the total principal amount of the Debt Securities;
-Senior Notes;
o the date or dates on which the principal of the Debt SecuritiesSenior Notes
will be payable or the method for determining the date or
dates, and any right that we have to change the date on which
principal is payable;
-o the interest rate or rates of the Debt Securities,Senior Notes, if any, or the
method for determining the rate or rates, and the date or
dates from which interest will accrue;
-o any interest payment dates and the regular record date for the
interest payable on each interest payment date, if any;
-o whether we may extend the interest payment periods and, if so,
the terms of the extension;
-o the places where payments on the Debt SecuritiesSenior Notes will be payable;
-o whether we have the option to redeem the Debt SecuritiesSenior Notes and, if
so, the terms of our redemption option;
-o any obligation we have to redeem the Debt SecuritiesSenior Notes through a
sinking fund or to purchase the Debt SecuritiesSenior Notes through a
purchase fund or at the option of the holder;
-o whether the Debt SecuritiesSenior Notes are defeasible;
-o the currency in which payments will be made if other than U.S.
dollars, and the manner of determining the equivalent of those
amounts in U.S. dollars;
67
10
-o if payments may be made, at our election or at the holder's
election, in a currency other than that in which the Debt SecuritiesSenior
Notes are stated to be payable, then the currency in which
those payments may be made, the terms and conditions of the
election and the manner of determining those amounts;
-o the portion of the principal payable upon acceleration of
maturity, if other than the entire principal;
-o whether the Debt SecuritiesSenior Notes will be issuable as global securities
and, if so, the securities depositary;
-o any index or formula used for determining principal, premium
or interest;
-o if the principal payable on the maturity date will not be
determinable on one or more dates prior to the maturity date,
the amount which will be deemed to be such principal amount or
the manner of determining it;
-o any addition to or change in the events of default in the
Senior Indenture;
-o any addition to or change in the covenants in the Senior
Indenture; and
-o any other terms of the Debt SecuritiesSenior Notes not inconsistent with the
provisions of the Senior Indenture.
Unless we state otherwise in the prospectus supplement, we will issue
the Debt SecuritiesSenior Notes only in fully registered form, without coupons, and there will
be no service charge for any registration of transfer or exchange of the Debt
Securities.Senior
Notes. We may, however, require payment to cover any tax or other governmental
charge payable in connection with any transfer or exchange. Subject to the terms
of the Senior Indenture and the limitations applicable to global securities,
Debt SecuritiesSenior Notes may be transferred or exchanged at the corporate trust office of
the Senior Indenture Trustee or at any other office or agency maintained by us
for such purpose.
The Debt SecuritiesSenior Notes of each series will be issuable in denominations of
$1,000 and any integral multiples of $1,000, unless we state otherwise in the
prospectus supplement.
We may offer and sell Debt Securities,Senior Notes, including original issue discount
Debt Securities,Senior Notes, at a substantial discount below their principal amount. The
applicable prospectus supplement will describe special U.S. federal income tax
and any other considerations applicable to those securities. In addition, the
applicable prospectus supplement may describe certain special U.S. federal
income tax or other considerations, if any, applicable to any Debt SecuritiesSenior Notes that
are denominated in a currency other than U.S. dollars.
RANKING
Each series of Debt SecuritiesSenior Notes will be unsecured senior obligations and
will rank equally with every other series of Debt SecuritiesSenior Notes and with all of our
other unsecured and unsubordinated debt. The Debt SecuritiesSenior Notes will, however, be
effectively subordinated in right of payment to any secured indebtedness to the
extent of the value of the assets securing that indebtedness.indebtedness and to the
indebtedness and liabilities of our subsidiaries. Except as provided in the
Senior Indenture or specified in any authorizing resolution or supplemental
indenture relating to a series of Debt SecuritiesSenior Notes to be issued, the Senior
Indenture will not limit the amount of additional indebtedness that may rank
equally with the Debt SecuritiesSenior Notes or the amount of indebtedness, secured or
otherwise, that may be incurred or preferred stock that may be issued by any of
our subsidiaries.
GLOBAL SECURITIES
We may issue some or all of the Debt SecuritiesSenior Notes as book-entry securities.
Any such book-entry securities will be represented by one or more fully
registered global certificates. We will register each global security with, or
on behalf of, a securities depositary identified in the applicable prospectus
supplement. Each global certificate will be deposited with the securities
depositary or its nominee or a custodian for the securities depositary.
7
11
As long as the securities depositary or its nominee is the registered
holder of a global security representing Debt Securities,Senior Notes, that person will be
considered the sole owner and holder of the global security and the Debt
SecuritiesSenior Notes
it represents for all purposes. Except in limited circumstances, owners of
beneficial interests in a global security:
-8
o may not have the global security or any Debt SecuritiesSenior Notes it
represents registered in their names;
-o may not receive or be entitled to receive physical delivery of
certificated Debt SecuritiesSenior Notes in exchange for the global security;
and
-o will not be considered the owners or holders of the global
security or any Debt SecuritiesSenior Notes it represents for any purposes
under the Debt
SecuritiesSenior Notes or the Senior Indenture.
We will make all payments of principal and any premium and interest on
a global security to the securities depositary or its nominee as the holder of
the global security. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of securities in definitive
form. These laws may impair the ability to transfer beneficial interests in a
global security.
Ownership of beneficial interests in a global security will be limited
to institutions having accounts with the securities depositary or its nominee,
which are called "participants" in this discussion, and to persons that hold
beneficial interests through participants. When a global security representing
Debt SecuritiesSenior Notes is issued, the securities depositary will credit on its book-entry,
registration and transfer system the principal amounts of Debt
SecuritiesSenior Notes the
global security represents to the accounts of its participants. Ownership of
beneficial interests in a global security will be shown only on, and the
transfer of those ownership interests will be effected only through, records
maintained by:
-o the securities depositary, with respect to participants'
interests; and
-o any participant, with respect to interests the participant
holds on behalf of other persons.
Payments participants make to owners of beneficial interests held
through those participants will be the responsibility of those participants. The
securities depositary may from time to time adopt various policies and
procedures governing payments, transfers, exchanges and other matters relating
to beneficial interests in a global security. None of the following will have
any responsibility or liability for any aspect of the securities depositary's or
any participant's records relating to beneficial interests in a global security
representing Debt Securities,Senior Notes, for payments made on account of those beneficial
interests or for maintaining, supervising or reviewing any records relating to
those beneficial interests:
-o our company;
-o the Senior Indenture Trustee under the Senior Indenture; or
-o an agent of either our company or the Senior Indenture
Trustee.
REDEMPTION
Any provisions relating to the redemption of Debt SecuritiesSenior Notes will be set
forth in the applicable prospectus supplement. Unless we state otherwise in the
applicable prospectus supplement, we may redeem Debt SecuritiesSenior Notes only upon notice
mailed at least 30 but not more than 60 days before the date fixed for
redemption. Unless we state otherwise in the applicable prospectus supplement,
that notice may state that the redemption will be conditional upon the Senior
Indenture Trustee or the paying agent receiving sufficient funds to pay the
principal, premium and interest on those Debt SecuritiesSenior Notes on the date fixed for
redemption and that if the Senior Indenture Trustee or the paying agent does not
receive those funds, the redemption notice will not apply, and we will not be
required to redeem those Debt
Securities.
8
12Senior Notes.
We will not be required to:
-o issue, register the transfer of, or exchange any Debt SecuritiesSenior Notes
of a series during the period beginning 15 days before the
date the notice is mailed identifying the Debt SecuritiesSenior Notes of that
series that have been selected for redemption; or
-9
o register the transfer of, or exchange any Debt SecuritySenior Note of that
series selected for redemption except the unredeemed portion
of a Debt SecuritySenior Note being partially redeemed.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
The Senior Indenture provides that we may consolidate or merge with or
into, or convey or transfer all or substantially all of our properties and
assets to, another corporation or other entity. Any successor must, however,
assume our obligations under the Senior Indenture and the Debt Securities,Senior Notes, and we
must deliver an
officers' certificateto the Senior Indenture Trustee a statement by certain of our
officers and an opinion of counsel to the Trustee that affirmsaffirm compliance with all conditions in
the Indenture.Senior Indenture relating to the transaction. When those conditions are
satisfied, the successor will succeed to and be substituted for us under the
Senior Indenture, and we will be relieved of our obligations under the Senior
Indenture and the Debt Securities.Senior Notes.
EVENTS OF DEFAULT
UnlessThe following are events of default under the Senior Indenture with
respect to any series of Senior Notes, unless we state otherwise specified in the
applicable prospectus supplement, each of
the following will constitute an event of default under the Indenture:
-supplement:
o failure to pay principal of or any premium on any Debt SecuritySenior Note
of that series when due;
-o failure to pay when due any interest on any Debt SecuritySenior Note of
that series that continues for 60 days; for this purpose, the
date on which interest is due is the date on which we are
required to make payment following any deferral of interest
payments by us under the terms of Debt SecuritiesSenior Notes that permit
such deferrals;
-o failure to make any sinking fund payment when required for any
Debt
SecuritySenior Note of that series that continues for 60 days;
-o failure to perform any covenant in the Senior Indenture (other
than a covenant expressly included solely for the benefit of
other series) that continues for 90 days after the Senior
Indenture Trustee or the holders of at least 33% in principal
amount of the outstanding Debt SecuritiesSenior Notes of that series give us
written notice of the default; -and
o certain events of bankruptcy, insolvency or reorganization
affecting us;
and
- any other event of default that may be provided with respect to Debt
Securities of that series.us.
In the case of the fourth event of default listed above, the Senior
Indenture Trustee may extend the grace period. In addition, if holders of a
particular series have given a notice of default, then holders of at least the
same percentage of Debt
SecuritiesSenior Notes of that series, together with the Senior
Indenture Trustee, may also extend the grace period. The grace period will be
automatically extended if we have initiated and are diligently pursuing
corrective action.
We may establish additional events of default for a particular series
of Senior Notes. If established, any such events of default will be described in
the applicable prospectus supplement.
If an event of default with respect to Debt SecuritiesSenior Notes of a series occurs
and is continuing, then the Senior Indenture Trustee or the holders of at least
33% in principal amount of the outstanding Debt SecuritiesSenior Notes of that series may
declare the principal amount of all Debt SecuritiesSenior Notes of that series to be
immediately due and payable. However, that event of default will be considered
waived at any time after the declaration but before a judgment for payment of
the money due has been obtained if:
-o we have paid or deposited with the Senior Indenture Trustee
all overdue interest, the principal and any premium due
otherwise than by the declaration and any interest on such
amounts, and any interest on overdue 9
13
interest, to the extent
legally permitted, in each case with respect to that series,
and all amounts due to the Senior Indenture Trustee; and
-o all events of default with respect to that series, other than
the nonpayment of the principal that became due solely by
virtue of the declaration, have been cured or waived.
10
The Senior Indenture Trustee is under no obligation to exercise any of
its rights or powers at the request or direction of any holders of Debt SecuritiesSenior Notes
unless those holders have offered the Senior Indenture Trustee security or
indemnity against the costs, expenses and liabilities that it might incur as a
result. The holders of a majority in principal amount of the outstanding Debt SecuritiesSenior
Notes of any series have, with certain exceptions, the right to direct the time,
method and place of conducting any proceedings for any remedy available to the
Senior Indenture Trustee or the exercise of any power of the Senior Indenture
Trustee with respect to those Debt Securities.Senior Notes. The Senior Indenture Trustee must
give the holders notice of any default. However, the Senior Indenture Trustee
may withhold notice of any default, except a default in the payment of principal
or interest, from the holders of any series if the Senior Indenture Trustee in
good faith considers it in the interest of the holders to do so.
The holder of any Debt SecuritySenior Note will have an absolute and unconditional
right to receive payment of the principal, any premium and, within certain
limitations, any interest on that Debt SecuritySenior Note on its maturity date or redemption
date and to enforce those payments.
If certain payments on a series of Debt SecuritiesSenior Notes are insured by a
financial guaranty insurance policy or other policy, terms other than those that
are described in the preceding three paragraphs may apply to that series.
We will be required to furnish each year to the Senior Indenture
Trustee annually a statement by certain of our officers to the effect that we are not in
default under the Senior Indenture, or if there has been a default, specifying
the default and its status.
PAYMENTS; PAYING AGENT
The paying agent will pay the principal of any Debt SecuritiesSenior Notes only if
those Debt SecuritiesSenior Notes are surrendered to it. The paying agent will pay interest on
Senior Notes issued as global securities by wire transfer to the holder of those
global securities. Unless we state otherwise in the applicable prospectus
supplement, the paying agent will pay interest on Debt
Securities, subject to such surrender, where applicable,Senior Notes that are not in
global form at its office or, at our option:
-o by wire transfer to an account at a banking institution in the
United States that is designated in writing to the Senior
Indenture Trustee at least 16 days prior to the date of
payment by the person entitled to that interest; or
-o by check mailed to the address of the person entitled to that
interest as that address appears in the security register for
those Debt Securities.Senior Notes.
Unless we state otherwise in the applicable prospectus supplement, the
Senior Indenture Trustee will act as paying agent for that series of Debt Securities,Senior
Notes, and the principal corporate trust office of the Senior Indenture Trustee
will be the office through which the paying agent acts. We may, however, change
or add paying agents or approve a change in the office through which a paying
agent acts.
Any money that we have paid to a paying agent for principal or interest
on any Debt SecuritiesSenior Notes that remains unclaimed at the end of two years after that
principal or interest has become due will be repaid to us at our request. After
repayment to us, holders should look only to us for those payments.
NEGATIVE PLEDGE
While any of the Debt SecuritiesSenior Notes remain outstanding, we will not, and will
not permit any Principal Subsidiary (as defined below) to, create, or permit to
be created or to exist, any mortgage, lien, pledge, security interest or other
encumbrance upon any Principal Property (as defined below) of ours or of a
Principal Subsidiary, or upon any shares of stock of any Principal Subsidiary,
whether such Principal Property is, or shares of stock are, owned on or acquired
after the date of the Senior Indenture, to secure any of
10
14 our indebtedness for
borrowed money, unless the Debt SecuritiesSenior Notes then outstanding are equally and ratably
secured for so long as any such indebtedness is so secured.
11
The foregoing restriction does not apply with respect to, among other
things:
-o purchase money mortgages, or other purchase money liens,
pledges, security interests or encumbrances upon property that
we or any Principal Subsidiary acquired after the date of the
Senior Indenture; mortgages, liens, pledges, security
interests or other encumbrances existing on any property or
shares of stock at the time we or any Principal Subsidiary
acquired it or them, including those which exist on any
property or shares of stock of an entity with which we or any
Principal Subsidiary are consolidated or merged or which
transfers or leases all or substantially all of its properties
to us or any Principal Subsidiary; or conditional sales
agreements or other title retention agreements and leases in
the nature of title retention agreements with respect to any
property that we or any Principal Subsidiary acquired after
the date of the Senior Indenture; provided, however, that no
such mortgage, lien, pledge, security interest or other
encumbrance shall extend to or cover any other property that
we or any Principal Subsidiary owns;
-o mortgages, liens, pledges, security interests or other
encumbrances upon any of our property or the property of any
Principal Subsidiary or shares of stock of any Principal
Subsidiary that existed on the date of the initial issuance of
Debt SecuritiesSenior Notes or upon the property or shares of stock of any
corporation existing at the time that entity became a
Principal Subsidiary;
-o pledges or deposits to secure performance in connection with
bids, tenders, contracts (other than contracts for the payment
of money) or leases to which we are, or any Principal
Subsidiary is, a party;
-o liens created by or resulting from any litigation or
proceeding which at the time is being contested in good faith
by appropriate proceedings;
-o liens incurred in connection with repurchase, swap or other
similar agreements (including commodity price, currency
exchange and interest rate protection agreements);
-o mortgages, liens, pledges, security interests or other
encumbrances on any property arising in connection with any
defeasance, covenant defeasance or in-substance defeasance of
our or any Principal Subsidiary's indebtedness, including the
Debt Securities;
-Senior Notes;
o mortgages, liens, pledges, security interests or other
encumbrances in favor of the United States of America, any
State, any foreign country or any department, agency or
instrumentality or political subdivision of any such
jurisdiction, to secure partial, progress, advance or other
payments pursuant to any contract or statute or to secure any
indebtedness incurred for the purpose of financing all or any
part of the purchase price or the cost of constructing or
improving the property subject to such mortgages, including,
without limitation, mortgages to secure indebtedness of the
pollution control or industrial revenue bond type;
-o indebtedness which may be issued by us or any of our Principal
Subsidiaries in connection with our consolidation or merger or
the consolidation or merger of any of our Principal
Subsidiaries with or into any other entity in exchange for or
otherwise in substitution for secured indebtedness of that
entity ("Third Party Debt") which by its terms (1) is secured
by a mortgage on all or a portion of the property of that
entity, (2) prohibits secured indebtedness from being incurred
by that entity, unless the Third Party Debt is secured equally
and ratably with such secured indebtedness, or (3) prohibits
secured indebtedness from being incurred by that entity;
-o indebtedness of any entity which we or any Principal
Subsidiary are required to assume in connection with a
consolidation or merger of that entity, with respect to which
any of our or any Principal Subsidiary's property is subjected
to a mortgage, lien, pledge, security interest or other
encumbrance;
11
15
-o mortgages, liens, pledges, security interests or other
encumbrances on property held or used by us or any Principal
Subsidiary in connection with the gathering, processing,
transportation or marketing of natural gas, oil or other
minerals;
-12
o mortgages, liens, pledges, security interests or other
encumbrances in favor of us, one or more Principal
Subsidiaries, one or more wholly owned Subsidiaries (as
defined below) or any of the foregoing in combination;
-o mortgages, liens, pledges, security interests or other
encumbrances upon any property acquired, constructed,
developed or improved by us or any Principal Subsidiary after
the date of the Senior Indenture which are created before, at
the time of, or within 18 months after such acquisition (or in
the case of property constructed, developed or improved, after
the completion of the construction, development or improvement
and commencement of full commercial operation of that
property, whichever is later) to secure or provide for the
payment of any part of its purchase price or cost; provided
that, in the case of such construction, development or
improvement, the mortgages, liens, pledges, security interests
or other encumbrances shall not apply to any property that we
or any Principal Subsidiary own other than real property that
is unimproved until that time; and
-o the replacement, extension or renewal of any mortgage, lien,
pledge, security interest or other encumbrance described above
or the replacement, extension or renewal (not exceeding the
principal amount of indebtedness so secured together with any
premium, interest, fee or expense payable in connection with
any such replacement, extension or renewal) of the
indebtedness so secured; provided that such replacement,
extension or renewal is limited to all or a part of the same
property that secured the mortgage, lien, pledge, security
interest or other encumbrance replaced, extended or renewed,
plus improvements on it or additions or accessions to it.
In addition, we or any Principal Subsidiary may create or assume any other
mortgage, lien, pledge, security interest or other encumbrance not excepted in
the Senior Indenture without us equally and ratably securing the Debt Securities,Senior Notes,
if immediately after that creation or assumption, our principal amount of
indebtedness for borrowed money that all such other mortgages, liens, pledges,
security interests and other encumbrances secure does not exceed an amount equal
to 10% of our Consolidated Adjusted Net Assets as shown on our consolidated
balance sheet for the accounting period occurring immediately before the
creation or assumption of that mortgage, lien, pledge, security interest or
other encumbrance.
For purposes of the preceding paragraphs, the following terms have
these meanings: "Principal Property" means any natural gas pipeline, natural gas
gathering system, natural gas storage facility, natural gas processing plant or
other plant or facility located in the United States that in the opinion of our
Board of Directors or our management is of material importance to our business
and the business of our consolidated subsidiaries taken as a whole; "Principal
Subsidiary" means any of our Subsidiaries that owns a Principal Property; and
"Subsidiary" means, as to any entity, an entity of which more than 50% of the
outstanding capital stock having ordinary voting power (other than capital stock
having such power only by reason of contingency) is at the time owned, directly
or indirectly, through one or more intermediaries, or both, by such entity.
LIMITATION ON SALES AND LEASEBACKS
Neither we nor any Principal Subsidiary may enter into any Sale and
Leaseback Transaction unless:
-o we or that Principal Subsidiary would be entitled to incur
indebtedness in a principal amount equal to the Attributable
Debt with respect to such Sale and Leaseback Transaction,
secured by a mortgage, lien, pledge, security interest or
other encumbrance on the property subject to such Sale and
Leaseback Transaction without equally and ratably securing the
Debt SecuritiesSenior Notes pursuant to the covenant described above under
"Negative Pledge";
-o after the date on which the Debt SecuritiesSenior Notes are originally issued
and within a period beginning 12 months prior to the
consummation of such Sale and Leaseback Transaction and ending 12
12
16 months after the consummation of such Sale and Leaseback
Transaction, we or any Subsidiary shall have expended for
property used or to be used in our business or the business
our Subsidiaries an amount equal to all or a portion of the
net proceeds from such Sale and Leaseback Transaction and we
shall have elected to designate such amount as a credit
against such Sale and Leaseback Transaction (with any amount
not being so designated to be applied as set forth in the
following bullet point);
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o during the 12-month period after the effective date of such
Sale and Leaseback Transaction, we shall have applied to the
voluntary defeasance or retirement of Debt SecuritiesSenior Notes or any
other indebtedness an amount equal to the greater of the net
proceeds of the sale or transfer of the property leased in
such Sale and Leaseback Transaction and the fair value, as
determined by our Board of Directors, of such property at the
time such Sale and Leaseback Transaction was entered into (in
either case adjusted to reflect the remaining term of the
lease and any amount we expend as set forth in the preceding
bullet point), less an amount equal to the principal amount of
such Debt SecuritiesSenior Notes or other indebtedness voluntarily defeased
or retired within such 12-month period and not designated as a
credit against any other Sale and Leaseback Transaction that
we or any of our Subsidiaries enter into during such period;
or
-o such Sale and Leaseback Transaction is with one of our
Affiliates.
This restriction will not apply to certain Sale and Leaseback Transactions
between us and a Principal Subsidiary or between Principal Subsidiaries.
For purposes of the preceding paragraph, the following terms have these
meanings: "Sale and Leaseback Transaction" means an arrangement with any lender
or investor or to which such lender or investor is a party providing for the
leasing for a term of greater than three years of any property or asset which
has been or is being sold or transferred more than 18 months after its
acquisition or the completion of construction or beginning of operation thereof
to such lender or investor or to any entity to whom funds have been or are to be
advanced by such lender or investor on the security of the property or asset;
"Affiliate" of a specified person or entity means any other person or entity
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person or entity; "Attributable Debt" means
the total net amount of rent (discounted at the rate per year indicated in the
Senior Indenture) required to be paid during the remaining term of any lease;
and "Consolidated Adjusted Net Assets" means the total amount of assets after
deducting:
-o all current liabilities (excluding any which are by their
terms extendible or renewable at the option of the obligor to
a time more than 12 months after the time as of which the
amount is being computed); and
-o total prepaid expenses and deferred charges.
MODIFICATION AND WAIVER
TheWe may modify the Senior Indenture may be modified with the consent of the holders of a
majority in principal amount of the outstanding Debt SecuritiesSenior Notes of all series
affected by the modification, (votingvoting as one class).class. The consent of the holder of
each outstanding Debt SecuritySenior Note affected is, however, required to:
-o change the maturity date of the principal of , or any
installment of principal of or interest on that Debt Security;
-Senior Note;
o reduce the principal amount, the interest rate or any premium
payable upon redemption of that Debt Security;
-Senior Note;
o reduce the amount of principal due and payable upon
acceleration of maturity;
-o change the currency of payment of principal, premium or
interest on that Debt Security;
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17
-Senior Note;
o impair the right to institute suit to enforce any such payment
on or after the maturity date or redemption date;
-o reduce the percentage in principal amount of Debt SecuritiesSenior Notes of
any series required to amend or modify the Senior Indenture,
waive compliance with certain restrictive provisions of the
Senior Indenture or waive certain defaults; or
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o with certain exceptions, modify the provisions of the Senior
Indenture governing amendments of the Senior Indenture or
governing waiver of covenants or past defaults.
In addition, we may supplement the Senior Indenture to create new
series of Debt
SecuritiesSenior Notes and for certain other purposes, including to correct any
ambiguous, defective or inconsistent provisions of the Senior Indenture, without
the consent of any holders of Debt Securities.Senior Notes.
The holders of a majority in principal amount of the outstanding Debt
SecuritiesSenior
Notes of any series may waive, for that series, our compliance with certain
restrictive provisions of the Senior Indenture, including the covenants
described under "Negative Pledge" and "Limitation on Sales and Leasebacks".Leasebacks." The
holders of a majority in principal amount of the outstanding Debt SecuritiesSenior Notes of all
series with respect to which a default has occurred and is continuing, voting as
one class, may waive that default for all those series, except a default in the
payment of principal or any premium or interest on any Debt SecuritySenior Note or a default
with respect to a covenant or provision that cannot be amended or modified
without the consent of the holder of each outstanding Debt SecuritySenior Note of the series
affected.
If certain payments on a series of Debt SecuritiesSenior Notes are insured by a
financial guaranty insurance policy or other policy, terms other than those that
are described in the preceding paragraph may apply to that series.
DEFEASANCE AND COVENANT DEFEASANCE
If, and to the extent, indicated in the applicable prospectus supplement,
we may elect, at our option at any time, to have the provisions of the Indenture
relating to defeasance or covenant defeasance applied to the Debt Securities of
any series or to any part of a series. The Senior Indenture provides that we may be:
-o discharged from our obligations, with certain limited
exceptions, with respect to any series of Debt Securities,Senior Notes, as
described in the Senior Indenture, such a discharge being
called a "defeasance" in this prospectus; and
-o released from our obligations under the covenants described in
"Negative Pledge" and "Limitations on Sales and Leasebacks"
and any restrictive covenants that may be especially
established with respect to any series of Debt Securities,Senior Notes, such a
release being called a "covenant defeasance" in this
prospectus.
We must satisfy certain conditions to effect a defeasance or covenant
defeasance. Those conditions include the irrevocable deposit with the Senior
Indenture Trustee, in trust, of money or government obligations that through
their scheduled payments of principal and interest would provide sufficient
money to pay the principal and any premium and interest on those Debt SecuritiesSenior Notes on
the maturity dates of those payments or upon redemption.
Additional conditions, if any, to
exercising defeasance or covenant defeasance with respect to any series of Debt
Securities will be described in the applicable prospectus supplement.
Following a defeasance, payment of the Debt SecuritiesSenior Notes defeased may not be
accelerated because of an event of default. Following a covenant defeasance,default under the payment of Debt Securities may not be accelerated by reference to the covenants
from which we have been released.Senior Indenture. A
defeasance may occur after a covenant defeasance.
Under current U.S.United States federal income tax laws, a defeasance would
be treated as an exchange of the relevant Debt SecuritiesSenior Notes in which holders of those
Debt
SecuritiesSenior Notes might recognize gain or loss. In addition, the amount, timing and
character of amounts that holders would thereafter be required to include in
income might be different from that which would be includible in the absence of
that defeasance. We 14
18
urge investors to consult their own tax advisors as to the
specific consequences of a defeasance, including the applicability and effect of
tax laws other than U.S.United States federal income tax laws.
Under current U.S.United States federal income tax laws, unless accompanied
by other changes in the terms of the Debt Securities,Senior Notes, a covenant defeasance should
not be treated as a taxable exchange.
SATISFACTION AND DISCHARGE
The Senior Indenture provides that when, among other things, all Senior
Notes not previously cancelled or delivered to the Senior Indenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at maturity or called for redemption within one year, and we deposit or cause to
be deposited with the Senior Indenture Trustee funds, in trust, for the purpose
and in an amount sufficient to pay on the stated maturity date or upon
redemption of all the Senior Notes not previously delivered to the Senior
Indenture Trustee for
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cancellation, the principal (and premium, if any) and interest due or to become
due on the stated maturity date, or the redemption date, as the case may be,
then the Senior Indenture will cease to be of further effect (with limited
exceptions).
CONCERNING THE SENIOR INDENTURE TRUSTEE
JPMorgan Chase Bank is the Senior Indenture Trustee and is also the
Subordinated Indenture Trustee. We and certain of our affiliates maintain
deposit accounts and banking relationships with JPMorgan Chase Bank. JPMorgan
Chase Bank also serves as trustee or agent under other indentures and agreements
pursuant to which securities of Duke Energy Field Services, LLC and of certain
of our affiliates are outstanding.
The Senior Indenture Trustee will perform only those duties that are
specifically set forth in the Senior Indenture unless an event of default occurs
and is continuing. In case an event of default occurs and is continuing, the
Senior Indenture Trustee will exercise the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs.
Subject to those provisions, the Trustee is under no obligation
to exercise any of its powers under the Indenture at the request of any holder
of Debt Securities unless that holder offers reasonable indemnity to the Trustee
against the costs, expenses and liabilities that it might incur as a result.
NOTICE
Notice to holders of Debt SecuritiesSenior Notes will be given by mail to such holders
as they may appear in the security register.
TITLE
We, the Senior Indenture Trustee and any agent of our company or of the
Senior Indenture Trustee may treat the person in whose name a Debt SecuritySenior Note is
registered as the absolute owner of the Debt Security,Senior Note, whether or not such Debt SecuritySenior
Note may be overdue, for the purpose of making payment and for all other
purposes.
GOVERNING LAW
The Senior Indenture and the DebtSenior Notes will be governed by, and
construed in accordance with, the laws of the State of New York.
DESCRIPTION OF THE SUBORDINATED NOTES
Any subordinated notes issued using this prospectus ("Subordinated
Notes") will be our direct unsecured general obligations. The Subordinated Notes
will be junior in right of payment to our "Senior Indebtedness." Subordinated
Notes that we issue to the Trust ("Junior Subordinated Notes") may also be
junior in right of payment to any other Subordinated Notes that we issue (other
than any Subordinated Notes issued in connection with the issuance of trust
preferred securities). You will find a description of the subordination
provisions of the Subordinated Notes, including a description of our Senior
Indebtedness, under "Subordination."
The Subordinated Notes will be issued under an Indenture between us and
JPMorgan Chase Bank (the "Subordinated Indenture Trustee"), as supplemented from
time to time (the "Subordinated Indenture").
The Subordinated Notes may be issued from time to time in one or more
series. The particular terms of each series that is offered by a prospectus
supplement will be described in the prospectus supplement.
The Subordinated Indenture is an exhibit to the registration statement
of which this prospectus is a part.
We have summarized selected provisions of the Subordinated Indenture
below. The summary is not complete and contains only a general description of
the Subordinated Notes. Any of the following terms may be changed, as set forth
in the applicable prospectus supplement. The form of the Subordinated Indenture
has been filed as an exhibit to the registration statement of which this
prospectus is a part, and you should read the Subordinated Indenture for
provisions that may be important to you. A definitive supplemental indenture
will be filed with the SEC when we issue Subordinated Notes. The Subordinated
Indenture will be qualified under the Trust Indenture Act. You should also refer
to the Trust Indenture Act for provisions that apply to the Subordinated Notes.
Whenever we refer in this prospectus or in any prospectus supplement to
particular sections or defined terms of the
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Subordinated Indenture, such sections or defined terms are incorporated by
reference herein or therein, as applicable. Capitalized terms used in this
summary have the meanings specified in the Subordinated Indenture.
GENERAL
The Subordinated Indenture does not limit the amount of Subordinated
Notes, including Junior Subordinated Notes, that we may issue under it. We may
issue Subordinated Notes, including Junior Subordinated Notes, from time to time
under the Subordinated Indenture in one or more series by entering into
supplemental indentures or by our Board of Directors or a duly authorized
committee authorizing the issuance. We will determine the terms and conditions
of each series of the Subordinated Notes, including the maturity, principal and
interest, any or all of which may vary by series. Subordinated Notes need not be
issued at the same time, bear interest at the same rate or mature on the same
date.
The Trust will invest the proceeds obtained from any issuance of its
Trust Preferred Securities, together with the consideration paid by us for its
Trust Common Securities, in Junior Subordinated Notes issued by us. Such Junior
Subordinated Notes will bear interest at the same rate as the distribution rate
of the Trust Preferred Securities specified in the applicable prospectus
supplement, and interest on such Junior Subordinated Notes and the Trust
Preferred Securities will accrue from the same date. It is anticipated that,
until the liquidation, if any, of the Trust, each such Junior Subordinated Note
will be held in the name of the Property Trustee in trust for the benefit of the
holders of the Trust Preferred Securities.
The Subordinated Indenture does not protect the holders of Subordinated
Notes if we engage in a highly leveraged transaction.
PROVISIONS APPLICABLE TO PARTICULAR SERIES
The prospectus supplement for a particular series of Subordinated Notes
being offered will disclose the specific terms related to the offering,
including the price or prices at which the Subordinated Notes to be offered will
be issued. Those terms may include some or all of the following:
o the title of the series;
o the total principal amount of the Subordinated Notes of the
series;
o the date or dates on which principal is payable or the method
for determining the date or dates, and any right that we have
to change the date on which principal is payable;
o the interest rate or rates, if any, or the method for
determining the rate or rates, and the date or dates from
which interest will accrue;
o any interest payment dates and the regular record date for the
interest payable on each interest payment date, if any;
o whether we may extend the interest payment periods and, if so,
the terms of the extension;
o the place or places where payments will be made;
o whether we have the option to redeem the Subordinated Notes
and, if so, the terms of its redemption option;
o any obligation that we have to redeem the Subordinated Notes
through a sinking fund or to purchase the Subordinated Notes
through a purchase fund or at the option of the holder;
o whether the provisions described under "Defeasance and
Covenant Defeasance" will not apply to the Subordinated Notes;
17
o the currency in which payments will be made if other than U.S.
dollars, and the manner of determining the equivalent of those
amounts in U.S. dollars;
o if payments may be made, at our election or at the holder's
election, in a currency other than that in which the
Subordinated Notes are stated to be payable, then the currency
in which those payments may be made, the terms and conditions
of the election and the manner of determining those amounts;
o the portion of the principal payable upon acceleration of
maturity, if other than the entire principal;
o whether the Subordinated Notes will be issuable as global
securities and, if so, the securities depositary;
o any changes in the events of default or covenants with respect
to the Subordinated Notes;
o any index or formula used for determining principal, premium
or interest;
o if the principal payable on the maturity date will not be
determinable on one or more dates prior to the maturity date,
the amount which will be deemed to be such principal amount or
the manner of determining it;
o the subordination of the Subordinated Notes to any of our
other indebtedness, including other series of Subordinated
Notes; and
o any other terms.
The interest rate and interest and other payment dates of Junior
Subordinated Notes issued to the Trust will correspond to the rate at which
distributions will be paid and the distribution and other payment dates of the
Trust Preferred Securities.
Unless we state otherwise in the applicable prospectus supplement, we
will issue the Subordinated Notes only in fully registered form without coupons,
and there will be no service charge for any registration of transfer or exchange
of the Subordinated Notes. We may, however, require payment to cover any tax or
other governmental charge payable in connection with any transfer or exchange.
Subject to the terms of the Subordinated Indenture and the limitations
applicable to global securities, transfers and exchanges of the Subordinated
Notes may be made at JPMorgan Chase Bank, 450 West 33rd Street, New York, New
York 10001 or at any other office maintained by us for such purpose.
The Subordinated Notes will be issuable in denominations of $1,000 and
any integral multiples of $1,000, unless we states otherwise in the applicable
prospectus supplement.
We may offer and sell the Subordinated Notes, including original issue
discount Subordinated Notes, at a substantial discount below their principal
amount. The applicable prospectus supplement will describe special United States
federal income tax and any other considerations applicable to those securities.
In addition, the applicable prospectus supplement may describe certain special
United States federal income tax or other considerations, if any, applicable to
any Subordinated Notes that are denominated in a currency other than U.S.
dollars.
SUBORDINATION
Each series of Subordinated Notes will be subordinate and junior in
right of payment, to the extent set forth in the Subordinated Indenture, to all
Senior Indebtedness (as defined below). If:
o we make a payment or distribution of any of our assets to
creditors upon our dissolution, winding-up, liquidation or
reorganization, whether in bankruptcy, insolvency or
otherwise;
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o a default beyond any grace period has occurred and is
continuing with respect to the payment of principal, interest
or any other monetary amounts due and payable on any Senior
Indebtedness; or
o the maturity of any Senior Indebtedness has been accelerated
because of a default on that Senior Indebtedness,
then the holders of Senior Indebtedness generally will have the right to receive
payment, in the case of the first bullet point above, of all amounts due or to
become due upon that Senior Indebtedness, and, in the case of the second and
third bullet points above, of all amounts due on the Senior Indebtedness, or we
will make provision for those payments, before the holders of any Subordinated
Notes have the right to receive any payments of principal or interest on their
Subordinated Notes.
"Senior Indebtedness" means, with respect to any series of Subordinated
Notes, the principal, premium, interest and any other payment in respect of any
of the following:
o all of our indebtedness that is evidenced by notes,
debentures, bonds or other securities we sell for money or
other obligations for money borrowed;
o all indebtedness of others of the kinds described in the
preceding category which we have assumed or guaranteed or
which we have in effect guaranteed through an agreement to
purchase, contingent or otherwise; and
o all renewals, extensions or refundings of indebtedness of the
kinds described in either of the preceding two categories.
Any such indebtedness, renewal, extension or refunding, however, will
not be Senior Indebtedness if the instrument creating or evidencing it or the
assumption or guarantee of it provides that it is junior to or equal in right of
payment with the Subordinated Notes. Senior Indebtedness will be entitled to the
benefits of the subordination provisions in the Subordinated Indenture
irrespective of the amendment, modification or waiver of any term of the Senior
Indebtedness.
Subordinated Notes that are not Junior Subordinated Notes may rank
senior to the Junior Subordinated Notes and would constitute Senior Indebtedness
with respect to the Junior Subordinated Notes.
The Subordinated Indenture does not limit the amount of Senior
Indebtedness that we may issue. As of March 31, 2002, our Senior Indebtedness
totaled approximately $2.5 billion.
GLOBAL SECURITIES
We may issue some or all of the Subordinated Notes as book-entry
securities. Any such book-entry securities will be represented by one or more
fully registered global certificates. We will register each global security with
or on behalf of a securities depositary identified in the applicable prospectus
supplement. Each global security will be deposited with the securities
depositary or its nominee or a custodian for the securities depositary.
As long as the securities depositary or its nominee is the registered
holder of a global security representing Subordinated Notes, that person will be
considered the sole owner and holder of the global security and the Subordinated
Notes it represents for all purposes. Except in limited circumstances, owners of
beneficial interests in a global security:
o may not have the global security or any Subordinated Notes it
represents registered in their names;
o may not receive or be entitled to receive physical delivery of
certificated Subordinated Notes in exchange for the global
security; and
o will not be considered the owners or holders of the global
security or any Subordinated Notes it represents for any
purposes under the Subordinated Notes or the Subordinated
Indenture.
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We will make all payments of principal and any premium and interest on
a global security to the securities depositary or its nominee as the holder of
the global security. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of securities in definitive
form. These laws may impair the ability to transfer beneficial interests in a
global security.
Ownership of beneficial interests in a global security will be limited
to institutions having accounts with the securities depositary or its nominee,
which are called "participants" in this discussion, and to persons that hold
beneficial interests through participants. When a global security representing
Subordinated Notes is issued, the securities depositary will credit on its
book-entry, registration and transfer system the principal amounts of
Subordinated Notes the global security represents to the accounts of its
participants. Ownership of beneficial interests in a global security will be
shown only on, and the transfer of those ownership interests will be effected
only through, records maintained by:
o the securities depositary, with respect to participants'
interests; and
o any participant, with respect to interests the participant
holds on behalf of other persons.
Payments participants make to owners of beneficial interests held
through those participants will be the responsibility of those participants. The
securities depositary may from time to time adopt various policies and
procedures governing payments, transfers, exchanges and other matters relating
to beneficial interests in a global security. None of the following will have
any responsibility or liability for any aspect of the securities depositary's or
any participant's records relating to beneficial interests in a global security
representing Subordinated Notes, for payments made on account of those
beneficial interests or for maintaining, supervising or reviewing any records
relating to those beneficial interests:
o our company;
o the Subordinated Indenture Trustee under the Subordinated
Indenture;
o the Trust (if Junior Subordinated Notes are issued to the
Trust); or
o any agent of any of them.
REDEMPTION
Any provisions relating to the redemption of Subordinated Notes will be
set forth in the applicable prospectus supplement. Unless we state otherwise in
the applicable prospectus supplement, we may redeem Subordinated Notes only upon
notice mailed at least 30 but not more than 60 days before the date fixed for
redemption. Unless we state otherwise in the applicable prospectus supplement,
that notice may state that the redemption will be conditional upon the
Subordinated Indenture Trustee or the paying agent receiving sufficient funds to
pay the principal, premium and interest on those Subordinated Notes on the date
fixed for redemption and that if the Subordinated Indenture Trustee or the
paying agent does not receive those funds, the redemption notice will not apply,
and we will not be required to redeem those Subordinated Notes.
We will not be required to:
o issue, register the transfer of, or exchange any Subordinated
Notes of a series during the period beginning 15 days before
the date the notice is mailed identifying the Subordinated
Notes of that series that have been selected for redemption;
or
o register the transfer of or exchange any Subordinated Note of
that series selected for redemption except the unredeemed
portion of a Subordinated Note being partially redeemed.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
The Subordinated Indenture provides that we may consolidate or merge
with or into, or convey or transfer all or substantially all of our properties
and assets to, another corporation or other entity. Any successor must,
20
however, assume our obligations under the Subordinated Indenture and the
Subordinated Notes, and we must deliver to the Subordinated Indenture Trustee a
statement by certain of our officers and an opinion of counsel that affirm
compliance with all conditions in the Subordinated Indenture relating to the
transaction. When those conditions are satisfied, the successor will succeed to
and be substituted for us under the Subordinated Indenture, and we will be
relieved of our obligations under the Subordinated Indenture and any
Subordinated Notes.
EVENTS OF DEFAULT
The following are events of default under the Subordinated Indenture
with respect to any series of Subordinated Notes, unless we state otherwise in
the applicable prospectus supplement:
o failure to pay principal of or any premium on any Subordinated
Note of that series when due;
o failure to pay when due any interest on any Subordinated Note
of that series that continues for 60 days; for this purpose,
the date on which interest is due is the date on which we are
required to make payment following any deferral of interest
payments by us under the terms of Subordinated Notes that
permit such deferrals;
o failure to make any sinking fund payment when required for any
Subordinated Note of that series that continues for 60 days;
o failure to perform any covenant in the Subordinated Indenture
(other than a covenant expressly included solely for the
benefit of other series) that continues for 90 days after the
Subordinated Indenture Trustee or the holders of at least 33%
of the outstanding Subordinated Notes of that series give us
written notice of the default; and
o certain bankruptcy, insolvency or reorganization events with
respect to us.
In the case of the fourth event of default listed above, the
Subordinated Indenture Trustee may extend the grace period. In addition, if
holders of a particular series have given a notice of default, then holders of
at least the same percentage of Subordinated Notes of that series, together with
the Subordinated Indenture Trustee, may also extend the grace period. The grace
period will be automatically extended if we have initiated and are diligently
pursuing corrective action.
We may establish additional events of default for a particular series
and, if established, any such events of default will be described in the
applicable prospectus supplement.
If an event of default with respect to Subordinated Notes of a series
occurs and is continuing, then the Subordinated Indenture Trustee or the holders
of at least 33% in principal amount of the outstanding Subordinated Notes of
that series may declare the principal amount of all Subordinated Notes of that
series to be immediately due and payable. However, that event of default will be
considered waived at any time after the declaration but before a judgment for
payment of the money due has been obtained if:
o we have paid or deposited with the Subordinated Indenture
Trustee all overdue interest, the principal and any premium
due otherwise than by the declaration and any interest on such
amounts, and any interest on overdue interest, to the extent
legally permitted, in each case with respect to that series,
and all amounts due to the Subordinated Indenture Trustee; and
o all events of default with respect to that series, other than
the nonpayment of the principal that became due solely by
virtue of the declaration, have been cured or waived.
In the case of Junior Subordinated Notes issued to the Trust, a holder
of Trust Preferred Securities may institute a legal proceeding directly against
us, without first instituting a legal proceeding against the Property Trustee of
the Trust or any other person or entity, for enforcement of payment to that
holder of principal or interest on an equivalent amount of Junior Subordinated
Notes of the related series on or after the due dates specified in those Junior
Subordinated Notes.
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The Subordinated Indenture Trustee is under no obligation to exercise
any of its rights or powers at the request or direction of any holders of
Subordinated Notes unless those holders have offered the Subordinated Indenture
Trustee security or indemnity against the costs, expenses and liabilities that
it might incur as a result. The holders of a majority in principal amount of the
outstanding Subordinated Notes of any series have, with certain exceptions, the
right to direct the time, method and place of conducting any proceedings for any
remedy available to the Subordinated Indenture Trustee or the exercise of any
power of the Subordinated Indenture Trustee with respect to those Subordinated
Notes. The Subordinated Indenture Trustee must give the holders notice of any
default. However, the Subordinated Indenture Trustee may withhold notice of any
default, except a default in the payment of principal or interest, from the
holders of any series if the Subordinated Indenture Trustee in good faith
considers it in the interest of the holders to do so.
The holder of any Subordinated Note will have an absolute and
unconditional right to receive payment of the principal, any premium and, within
certain limitations, any interest on that Subordinated Note on its maturity date
or redemption date and to enforce those payments.
We are required to furnish each year to the Subordinated Indenture
Trustee a statement by certain of our officers to the effect that we are not in
default under the Subordinated Indenture or, if there has been a default,
specifying the default and its status.
PAYMENTS; PAYING AGENT
The paying agent will pay the principal of any Subordinated Notes only
if those Subordinated Notes are surrendered to it. The paying agent will pay
interest on Subordinated Notes issued as global securities by wire transfer to
the holder of those global securities. Unless we state otherwise in the
applicable prospectus supplement, the paying agent will pay interest on
Subordinated Notes that are not in global form at its office or, at our option:
o by wire transfer to an account at a banking institution in the
United States that is designated in writing to the
Subordinated Indenture Trustee at least 16 days prior to the
date of payment by the person entitled to that interest; or
o by check mailed to the address of the person entitled to that
interest as that address appears in the security register for
those Subordinated Notes.
Unless we state otherwise in the applicable prospectus supplement, the
Subordinated Indenture Trustee will act as paying agent for that series of
Subordinated Notes, and the principal corporate trust office of the Subordinated
Indenture Trustee will be the office through which the paying agent acts. We
may, however, change or add paying agents or approve a change in the office
through which a paying agent acts.
Any money that we have paid to a paying agent for principal or interest
on any Subordinated Notes that remains unclaimed at the end of two years after
that principal or interest has become due will be repaid to us at our request.
After repayment to us, holders should look only to us for those payments.
MODIFICATION AND WAIVER
We may modify the Subordinated Indenture with the consent of the
holders of a majority in principal amount of the outstanding Subordinated Notes
of all series that are affected by the modification, voting as one class. The
consent of the holder of each outstanding Subordinated Note affected is,
however, required to:
o change the maturity date of the principal or any installment
of principal or interest on that Subordinated Note (except in
connection with an exercise of deferral rights);
o reduce the principal amount, the interest rate or any premium
payable upon redemption on that Subordinated Note;
o reduce the amount of principal due and payable upon
acceleration of maturity;
o change the currency of payment of principal, premium or
interest on that Subordinated Note;
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o impair the right to institute suit to enforce any such payment
on or after the maturity date or redemption date;
o reduce the percentage in principal amount of Subordinated
Notes of any series required to modify the Subordinated
Indenture, waive compliance with certain restrictive
provisions of the Subordinated Indenture or waive certain
defaults; or
o with certain exceptions, modify the provisions of the
Subordinated Indenture governing modifications of the
Subordinated Indenture or governing waiver of covenants or
past defaults.
In addition, we may supplement the Subordinated Indenture to create new
series of Subordinated Notes and for certain other purposes, including to
correct any ambiguous, defective or inconsistent provisions of the Subordinated
Indenture, without the consent of any holders of Subordinated Notes.
The holders of a majority in principal amount of the outstanding
Subordinated Notes of any series may waive, for that series, our compliance with
certain restrictive provisions of the Subordinated Indenture. The holders of a
majority in principal amount of the outstanding Subordinated Notes of all series
under the Subordinated Indenture with respect to which a default has occurred
and is continuing, voting as one class, may waive that default for all those
series, except a default in the payment of principal or any premium or interest
on any Subordinated Note or a default with respect to a covenant or provision
which cannot be modified without the consent of the holder of each outstanding
Subordinated Note of the series affected.
We may not amend the Subordinated Indenture to change the subordination
of any outstanding Subordinated Notes without the consent of each holder of
Senior Indebtedness that the amendment would adversely affect.
DEFEASANCE AND COVENANT DEFEASANCE
The Subordinated Indenture provides that we may be:
o discharged from our obligations, with certain limited
exceptions, with respect to any series of Subordinated Notes,
as described in the Subordinated Indenture, such a discharge
being called a "defeasance" in this prospectus; and
o released from our obligations under certain restrictive
covenants especially established with respect to a series of
Subordinated Notes, as described in the Subordinated
Indenture, such a release being called a "covenant defeasance"
in this prospectus.
We must satisfy certain conditions to effect a defeasance or covenant
defeasance. Those conditions include the irrevocable deposit with the
Subordinated Indenture Trustee, in trust, of money or government obligations
which through their scheduled payments of principal and interest would provide
sufficient money to pay the principal and any premium and interest on those
Subordinated Notes on the maturity dates of those payments or upon redemption.
Following a defeasance, payment of the Subordinated Notes defeased may
not be accelerated because of an event of default under the Subordinated
Indenture. A defeasance may occur after a covenant defeasance.
Under current United States federal income tax laws, a defeasance would
be treated as an exchange of the relevant Subordinated Notes in which holders of
those Subordinated Notes might recognize gain or loss. In addition, the amount,
timing and character of amounts that holders would thereafter be required to
include in income might be different from that which would be includible in the
absence of that defeasance. We urge investors to consult their own tax advisors
as to the specific consequences of a defeasance, including the applicability and
effect of tax laws other than United States federal income tax laws.
Under current United States federal income tax laws, unless accompanied
by other changes in the terms of the Subordinated Notes, a covenant defeasance
should not be treated as a taxable exchange.
Junior Subordinated Notes issued to the Trust will not be subject to
covenant defeasance.
23
SATISFACTION AND DISCHARGE
The Subordinated Indenture provides that when, among other things, all
Subordinated Notes not previously cancelled or delivered to the Subordinated
Indenture Trustee for cancellation (i) have become due and payable or (ii) will
become due and payable at maturity or called for redemption within one year, and
we deposit or cause to be deposited with the Subordinated Indenture Trustee
funds, in trust, for the purpose and in an amount sufficient to pay on the
stated maturity date or upon redemption of all the Subordinated Notes not
previously delivered to the Subordinated Indenture Trustee for cancellation, the
principal (and premium, if any) and interest due or to become due on the stated
maturity date, or the redemption date, as the case may be, then the Subordinated
Indenture will cease to be of further effect (with limited exceptions).
CONCERNING THE SUBORDINATED INDENTURE TRUSTEE
JPMorgan Chase Bank is the Subordinated Indenture Trustee and is also
the Senior Indenture Trustee. We and certain of our affiliates maintain deposit
accounts and banking relationships with JPMorgan Chase Bank. JPMorgan Chase Bank
also serves as trustee or agent under other indentures and agreements pursuant
to which securities of Duke Energy Field Services, LLC and of certain of our
affiliates are outstanding.
The Subordinated Indenture Trustee will perform only those duties that
are specifically set forth in the Subordinated Indenture unless an event of
default under the Subordinated Indenture occurs and is continuing. In case an
event of default occurs and is continuing, the Subordinated Indenture Trustee
will exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs.
NOTICE
Notice to holders of Subordinated Notes will be given by mail to such
holders as they may appear in the security register.
TITLE
We, the Subordinated Trustee and any agent of our company or of the
Subordinated Trustee may treat the person in whose name a Subordinated Note is
registered as the absolute owner of the Subordinated Note, whether or not such
Subordinated Note may be overdue, for the purpose of making payment and for all
other purposes.
GOVERNING LAW
The Subordinated Indenture and the Subordinated Notes will be governed
by, and construed in accordance with, the laws of the State of New York.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The Trust may issue Trust Preferred Securities and Trust Common
Securities, which we refer to collectively as the "Trust Securities," under the
terms of the Trust Agreement. The Trust Preferred Securities will represent
undivided beneficial interests in the assets of the Trust. We will own all of
the Trust Common Securities.
The Trust may issue only one series of Trust Preferred Securities. The
Trust Agreement will authorize the Administrative Trustees to issue the Trust
Preferred Securities on behalf of the Trust. The form of Trust Agreement is an
exhibit to the registration statement of which this prospectus is a part, and
you should read the Trust Agreement for provisions that may be important to you.
A definitive Trust Agreement will be filed with the SEC when the Trust issues
Trust Preferred Securities. The Trust Agreement will be qualified under the
Trust Indenture Act. You should also refer to the Trust Indenture Act for
provisions that apply to the Trust Preferred Securities.
The prospectus supplement for the series of Trust Preferred Securities
being offered will disclose the specific terms related to the offering,
including the price or prices at which the Trust Preferred Securities to be
offered will be issued. Those terms will include some or all of the following:
o the title of the series;
24
o the number of Trust Preferred Securities of the series;
o the yearly distribution rate, or the method of determining
that rate, and the date or dates on which distributions will
be payable;
o the date or dates, or method of determining the date or dates,
from which distributions will be cumulative;
o the amount that will be paid out of the assets of the Trust to
the holders of the Trust Preferred Securities upon the
voluntary or involuntary dissolution, winding-up or
termination of the Trust;
o any right or obligation that the Trust has to purchase or
redeem the Trust Preferred Securities, and the price at which,
the period within which, and the terms and conditions upon
which the Trust will purchase or redeem them;
o any voting rights of the Trust Preferred Securities that are
in addition to those legally required, including any right
that the holders of the Trust Preferred Securities have to
approve certain actions under or amendments to the Trust
Agreement;
o any right that the Trust has to defer distributions on the
Trust Preferred Securities in the event that we extend the
interest payment period on the related Junior Subordinated
Notes; and
o any other rights, preferences, privileges, limitations or
restrictions upon the Trust Preferred Securities.
We will guarantee the payment of distributions on, the redemption price
of and the liquidation amount of the Trust Preferred Securities, as applicable,
to the extent described below under the caption "Description of the Guarantee."
However, the Guarantee will not guarantee payment of distributions or amounts
payable on redemption of the Trust Preferred Securities or liquidation of the
Trust when the Trust does not have funds on hand legally available for such
payments. In such event, a remedy of a holder of Trust Preferred Securities is
to direct the Property Trustee to enforce its rights under the Junior
Subordinated Notes. In addition, a holder of the Trust Preferred Securities may
institute a legal proceeding directly against us for enforcement of payment to
such holder of principal of, premium, if any, or interest on the Junior
Subordinated Notes having a principal amount equal to the aggregate liquidation
amount of the Trust Preferred Securities of such holder on or after the due date
specified in the Junior Subordinated Notes.
The applicable prospectus supplement will describe any material United
States federal income tax considerations that apply to the Trust Preferred
Securities.
DESCRIPTION OF THE GUARANTEE
We will execute a guarantee (the "Guarantee") for the benefit of the
holders from time to time of the Trust Preferred Securities. JPMorgan Chase Bank
will act as Guarantee Trustee under the Guarantee. The Guarantee Trustee will
hold the Guarantee for the benefit of the holders of the Trust Preferred
Securities.
The following description of the Guarantee is only a summary and is not
intended to be comprehensive. The form of Guarantee is an exhibit to the
registration statement of which this prospectus is a part, and you should read
the Guarantee for provisions that may be important to you. A definitive
Guarantee will be filed with the SEC when the Trust issues Trust Preferred
Securities. The Guarantee will be qualified under the Trust Indenture Act. You
should also refer to the Trust Indenture Act for provisions that apply to the
Guarantee. Whenever we refer in this prospectus or in any prospectus supplement
to particular sections or defined terms of the Guarantee, such sections or
defined terms are incorporated by reference herein or therein, as applicable.
GENERAL
We will irrevocably and unconditionally agree under the Guarantee to
pay the Guarantee Payments that are defined below, to the extent specified in
the Guarantee, to the holders of the Trust Preferred Securities, to the extent
25
that the Guarantee Payments are not paid by or on behalf of the Trust. We are
required to pay the Guarantee Payments to the extent specified in the Guarantee
regardless of any defense, right of set-off or counterclaim that we may have or
may assert against any person.
The following payments and distributions on the Trust Preferred
Securities are Guarantee Payments:
o any accrued and unpaid distributions required to be paid on
the Trust Preferred Securities, but only to the extent that
the Trust has funds legally and immediately available for
those distributions;
o the redemption price for any Trust Preferred Securities that
the Trust calls for redemption, including all accrued and
unpaid distributions to the redemption date, but only to the
extent that the Trust has funds legally and immediately
available for the payment; and
o upon a dissolution, winding-up or termination of the Trust,
other than in connection with the distribution of Junior
Subordinated Notes to the holders of Trust Securities or the
redemption of all the Trust Preferred Securities, the lesser
of:
o the sum of the liquidation amount and all accrued and
unpaid distributions on the Trust Preferred
Securities to the payment date, to the extent that
the Trust has funds legally and immediately available
for the payment; and
o the amount of assets of the Trust remaining available
for distribution to holders of the Trust Preferred
Securities in liquidation of the Trust.
We may satisfy our obligation to make a Guarantee Payment by making
that payment directly to the holders of the Trust Preferred Securities or by
causing the Trust to make the payment to those holders.
The Guarantee, the Trust Agreement, the Junior Subordinated Notes, the
Subordinated Indenture and the Agreement as to Expenses and Liabilities, taken
together, will constitute the full, irrevocable and unconditional guarantee of
all of the Trust's obligations under the Trust Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations under the Trust Preferred
Securities.
If we do not make the required payments on the Junior Subordinated
Notes that the Property Trustee holds under the Trust, the Trust will not make
the related payments on the Trust Preferred Securities.
SUBORDINATION
Our obligations under the Guarantee will be our unsecured obligation.
That obligation will rank:
o subordinate and junior in right of payment to all Senior
Indebtedness in the same manner as the Junior Subordinated
Notes; and;
o equal in priority with all guarantees issued by us after the
issue date of the Guarantee with respect to trust preferred
securities, if any, issued by other trusts.
The Guarantee will be a guarantee of payment and not of collection.
This means that the guaranteed party may institute a legal proceeding directly
against us, as guarantor, to enforce its rights under the Guarantee without
first instituting a legal proceeding against any other person or entity.
The terms of the Trust Preferred Securities will provide that each
holder of the Trust Preferred Securities, by accepting the Trust Preferred
Securities, agrees to the subordination provisions and other terms of the
Guarantee.
26
AMENDMENTS AND ASSIGNMENT
We may amend the Guarantee without the consent of any holder of the
Trust Preferred Securities if the amendment does not materially and adversely
affect the rights of those holders. We may otherwise amend the Guarantee with
the approval of the holders of at least 66 2/3% of the outstanding Trust
Preferred Securities.
TERMINATION
The Guarantee will terminate and be of no further effect when:
o the redemption price of the Trust Preferred Securities is
fully paid;
o we distribute the related Junior Subordinated Notes to the
holders of the Trust Preferred Securities upon the termination
and dissolution of the Trust; or
o the amounts payable upon liquidation of the Trust are fully
paid.
The Guarantee will remain in effect or will be reinstated if at any
time any holder of the Trust Preferred Securities must restore payment of any
sums paid to that holder with respect to the Trust Preferred Securities or under
the Guarantee.
EVENTS OF DEFAULT
An event of default will occur under the Guarantee if we fail to
perform any of our payment obligations under the Guarantee. The holders of a
majority of the Trust Preferred Securities may waive any such event of default
and its consequences on behalf of all of the holders of the Trust Preferred
Securities. The Guarantee Trustee is obligated to enforce the Guarantee for the
benefit of the holders of the Trust Preferred Securities if an event of default
occurs under the Guarantee.
The holders of a majority of the Trust Preferred Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee with respect to the Guarantee or to
direct the exercise of any trust or power that the Guarantee Trustee holds under
the Guarantee. Any holder of the Trust Preferred Securities may institute a
legal proceeding directly against us to enforce that holder's rights under the
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee or any other person or entity.
CONCERNING THE GUARANTEE TRUSTEE
JPMorgan Chase Bank will be the Guarantee Trustee. It is also the
Property Trustee, the Subordinated Indenture Trustee and the Senior Indenture
Trustee. We and certain of our affiliates maintain deposit accounts and banking
relationships with JPMorgan Chase Bank. JPMorgan Chase Bank also serves as
trustee or agent under other indentures and agreements pursuant to which
securities of Duke Energy Field Services, LLC and certain of our affiliates are
outstanding.
The Guarantee Trustee will perform only those duties that are
specifically set forth in the Guarantee unless an event of default under the
Guarantee occurs and is continuing. In case an event of default occurs and is
continuing, the Guarantee Trustee will exercise the same degree of care as a
prudent individual would exercise in the conduct of his or her own affairs.
AGREEMENTS AS TO EXPENSES AND LIABILITIES
We will enter into an Agreement as to Expenses and Liabilities under
the Trust Agreement. The Agreement as to Expenses and Liabilities will provide
that we will, with certain exceptions, irrevocably and unconditionally guarantee
the full payment of any indebtedness, expenses or liabilities of the Trust to
each person or entity to whom the Trust becomes indebted or liable. The
exceptions are the obligations of the Trust to pay to the holders of the Trust
Preferred Securities or other similar interests in the Trust the amounts due to
the holders under the terms of the Trust Preferred Securities or those similar
interests.
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GOVERNING LAW
The Guarantee will be governed by, and construed in accordance with,
the laws of the State of New York.
PLAN OF DISTRIBUTION
We and the Trust may sell the Debt Securities:
-securities:
o through underwriters or dealers;
-o through agents;
-o directly to a limited number of institutional purchasers or to
a single purchaser; or
-o through a combination of any of these methods of sale.
The applicable prospectus supplement will describe the terms under
which the offered Debt Securitiessecurities are offered, including:
-o the names of any underwriters, dealers or agents;
-o the purchase price and the net proceeds to us or the Trust
from the sale;
-o any underwriting discounts and other items constituting
underwriters' compensation;
-o any initial public offering price; and
-o any discounts or concessions allowed, re-allowed or paid to
dealers.
Any underwriters or dealers may from time to time change any initial
public offering price and any discounts or concessions allowed, re-allowed or
paid to dealers.
15
19
If underwriters participate in the sale of the offered Debt Securities,securities,
those underwriters will acquire the Debt Securitiessecurities for their own account and may
resell them in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of the
sale.
If the Debt Securities are sold through underwriters, the applicable
prospectus supplement will state the names and any compensation that may be paid
to the underwriters.
Unless we state otherwise in the applicable prospectus supplement, the
obligations of any underwriter to purchase the offered Debt Securitiessecurities will be
subject to conditions, and the underwriter will be obligated to purchase all the
Debt Securitiessecurities offered, except that in some cases involving a default by an
underwriter, less than all of the Debt Securitiessecurities offered may be purchased.
If the offered Debt Securitiessecurities are sold through an agent, the applicable
prospectus supplement will state the name and any compensation that may be paid
to the agent. Unless we state otherwise in the applicable prospectus supplement,
that agent will be acting on a best-efforts basis for the period of its
appointment.
We may haveUnder agreements entered into with us or the Trust, underwriters dealers and
agents may be entitled to indemnify themindemnification against certain civil liabilities,
including liabilities under the Securities Act, or to contributecontribution with respect
to payments that the underwriters dealers or agents may be required to make.
Underwriters, dealers, agents and their affiliates may engage in
transactions with us or our affiliates, and may from time to time perform
services for us or our affiliates in the ordinary course of their business.
We may authorize agents, underwriters or dealers to solicit offers by
certain institutional investors to purchase offered Debt Securitiessecurities providing for
payment and delivery on a future date specified in the applicable prospectus
supplement. Institutional investors to which such offers may be made, when
authorized, include commercial and savings banks, insurance companies, pension
funds, investment companies, education and charitable institutions and such
other institutions as may be approved by us. The obligations of any such
purchasers under such delayed delivery and payment arrangements will be subject
to the condition that the purchase of the
28
offered Debt Securitiessecurities will not at the time of delivery be prohibited under
applicable law. The underwriters and such agents will not have any
responsibility with respect to the validity or performance of such contracts.
The Debt Securitiessecurities may or may not be listed on a national securities
exchange.
16
20
EXPERTS
The combinedconsolidated financial statements of Duke Energy Field Services,
LLC and AffiliatesSubsidiaries as of December 31, 19982001 and 19992000, and for each of the three
years in the period ended December 31, 1999 and the 1997 combined statements of operations
and cash flows for UPFuels Division2001, incorporated in this prospectus by
reference and appearing infrom our Annual Report on Form 10-K for the Form 10 of the Company filed on July 20, 2000year ended December 31,
2001 have been audited by Deloitte & Touche LLP, independent auditors, as stated
in their reportsreport which areis also incorporated herein by reference (which report
expresses an unqualified opinion and includes an explanatory paragraph relating
to our change in method of accounting for derivative instruments to conform to
Statement of Financial Accounting Standard No. 133 described in Note 2), and
have been so incorporated in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.
The consolidated financial statements of Phillips Gas Company as of
December 31, 1999 and 1998 and for each of the
three years in the periodyear ended December 31, 1999 included in theour Form 10, of the Companyas amended, initially
filed on July 20, 2000, which are incorporated herein by reference, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
which is also incorporated herein by reference, and hashave been so incorporated in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
The combined statements of income and cash flows of the UPFuels Division of
Union Pacific Resources Group, Inc. for the year ended December 31, 1998 and the
three months ended March 31, 1999 included in the Form 10 of the Company filed
on July 20, 2000, which are incorporated herein by reference, have been audited
by Arthur Andersen LLP, independent public accountants, as stated in their
report on such financial statements in reliance upon the report of such firm
given upon their authority as experts in auditing and accounting.
VALIDITY OF THE SECURITIES
Our legal counsel, Vinson & Elkins L.L.P., Houston, Texas, will pass
upon certain legal matters in connection with the validity ofoffered securities for us.
Richards, Layton & Finger, P.A., special Delaware counsel to us and the Debt Securities on our behalf. Counsel named in any
applicable prospectus supplementTrust,
will pass upon the validity of the DebtTrust Preferred Securities on behalf offor us and the
Trust. Legal counsel to any underwriters dealers or agents.
17named in the applicable prospectus
supplement will pass upon certain legal matters in connection with the offered
securities for such underwriters.
29
21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses payable by Duke
Energy Field Services, LLC (the "Company") in connection with the issuance and
distribution of the securities covered by this registration statement.
SEC Registration fee........................................fee....................................................... $ 125,00046,000*
Legal fees and expenses.....................................expenses.................................................... 200,000
Accounting fees and expenses................................ 200,000expenses............................................... 100,000
Rating Agency fees..........................................fees......................................................... 200,000
Trustee fees................................................ 20,000fees............................................................... 50,000
Printing expenses........................................... 300,000
Miscellaneous............................................... 100,000
----------
Total............................................. $1,145,000
==========expenses.......................................................... 200,000
Miscellaneous.............................................................. 54,000
-------------
Total............................................................. $ 850,000
=============
- -----------
* Actual.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 18-108 of the Delaware Limited Liability Company Act provides:
Subject to such standards and restrictions, if any, as are set forth in its
limited liability company agreement, a limited liability company may, and shall
have the power to, indemnify and hold harmless any member or manager or any
other person from and against any and all claims and demands whatsoever. The
limited liability company agreement of the Company permits the Company to
indemnify any of its directors or officers against liabilities to the fullest
extent permitted by law. In addition, the Company carries insurance policies
covering its directors and officers.
Some of the Company's directors and officers may also be indemnified by
Duke Energy Corporation or Phillips Petroleum Company for liabilities incurred
as a result of serving as an officer or director of the Company, which may
include liabilities under the Securities Act of 1933.
ITEM 16. EXHIBITS.
The following documents are filed as exhibits to this registration
statement, including those exhibits incorporated herein by reference to a prior
filing of the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934 as indicated in parentheses:
EXHIBIT
NUMBER DESCRIPTION
------- -----------Exhibit
Number Description
-------- -------------
*1.1 -- Form of Underwriting Agreement.
**Agreement relating to Senior Notes.
*1.2 Form of Underwriting Agreement relating to Subordinated Notes.
*1.3 Form of Underwriting Agreement relating to Trust Preferred
Securities.
4.1 --Form of Senior Indenture between Duke Energy Field Services, LLC
and TheJPMorgan Chase Manhattan Bank, as trustee,Senior Indenture Trustee, dated as of
August 16, 2000 (incorporated by reference to Exhibit 4.1 to the
Company's registration statement on Form S-3 (Commission File No.
333-41854)).
*4.2 -- Form of Debt Securities.Senior Note
4.3 Form of Subordinated Indenture between Duke Energy Field
Services, LLC and JPMorgan Chase Bank, as Subordinated Indenture
Trustee.
*4.4 Form of Junior Subordinated Note.
4.5 Trust Agreement of DEFS Capital Trust I.
4.6 Form of Amended and Restated Trust Agreement of DEFS Capital
Trust I.
4.7 Certificate of Trust of DEFS Capital Trust I.
4.8 Form of Trust Preferred Security of DEFS Capital Trust I
(included in Exhibit 4.6).
II-1
Exhibit
Number Description
-------- -------------
4.9 Form of Guarantee Agreement.
4.10 Form of Agreement as to Expenses and Liabilities.
***5.1 -- Opinion of Vinson & Elkins L.L.P.
**5.2 Opinion of Richards, Layton & Finger, P.A. relating to DEFS
Capital Trust I.
12.1 -- Calculation of Ratio of Earnings to Fixed Charges.
**23.1 --Consent of Deloitte & Touche LLP.
23.2 Consent of Ernst & Young LLP.
**23.2 -- Consent of Deloitte & Touche LLP (Denver).
**23.3 -- Consent of Deloitte & Touche LLP (Fort Worth).
**23.4 -- Consent of Arthur Andersen LLP.
***23.5 -- Consent of Vinson & Elkins L.L.P. (included in Exhibit 5.1).
**23.4 Consent of Richards, Layton & Finger, P.A. (included in Exhibit
5.2).
25.1 -- Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of JPMorgan Chase Bank, as Senior Indenture
Trustee.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of JPMorgan Chase Bank, as Subordinated
Indenture Trustee.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of JPMorgan Chase Bank, as Property Trustee
under the Indenture.Amended and Restated Trust Agreement of DEFS Capital
Trust I.
25.4 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of JPMorgan Chase Bank, as Guarantee Trustee
with respect to DEFS Capital Trust I.
II-1
22
- --------------------------
* The Company will file as an exhibit to a Current Report on Form 8-K (i)
any form of Debt SecuritiesSenior Notes or Junior Subordinated Notes and (ii) any form
of underwriting agreement to be used in connection with an offering of
such securities.
** Previously filed.
*** Filed herewith.To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(a) The 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;
(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 the 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) 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;
II-2
provided, however, that the undertakings set forth in clauses (i) and (ii) above
do not apply if the information required to be included in a post-effective
amendment by those clauses 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 that are incorporated by reference
in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(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 registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of a registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of
1933 shall be deemed to be part of this registration statement as of
the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus 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.
II-2
23
(c) The registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) 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.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions set forth in Item 15, or
otherwise, the registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the 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 Act and will be governed by the final adjudication of
such issue.
(e) The registrant hereby undertakes to file an application for the purpose
of determining the eligibility of the trustee to act under subsection (a) of
section 310 of the Trust Indenture Act ("Act") in accordance with the rules and
regulations prescribed by the Commission under section 305(b)(2) of the Act.
II-3
24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Denver, State of Colorado, on March 26, 2001.April 30, 2002.
DUKE ENERGY FIELD SERVICES, LLC
By: /s/ JIM W. MOGG
------------------------------------------------------------------------------
Jim W. Mogg
Chairman of the Board, President and Chief
Executive Officer
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John E. JacksonJim W. Mogg, Rose M. Robeson and Martha B. Wyrsch,Brent L.
Backes, or eitherany of them, his true and lawful attorney-in-fact and agent, with
full power of substitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement and any additional registration
statement pursuant to Rule 462(b), and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated on the 26th30th day of March, 2001.April, 2002.
SIGNATURE TITLE
--------- -----
/s/ JIM W. MOGG Chairman of the Board, President and Chief Executive
- ---------------------------------------------------------------------------------------------------------------- Officer (Principal Executive Officer)
Jim W. Mogg
/s/ JOHN E. JACKSONROSE M. ROBESON Chief Financial Officer
- ----------------------------------------------------------- (Principal Financial and Accounting - ----------------------------------------------------- Officer)
John E. JacksonRose M. Robeson
/s/ FRED J. FOWLER Director
- ----------------------------------------------------------------------------------------------------------------
Fred J. Fowler
/s/ JOHN E. LOWE Director
- ----------------------------------------------------------------------------------------------------------------
John E. Lowe
/s/ J.J. MULVAMICHAEL J. PANATIER Director
- -----------------------------------------------------
J.J. Mulva-----------------------------------------------------------
Michael J. Panatier
/s/ RICHARD B. PRIORY Director
- ----------------------------------------------------------------------------------------------------------------
Richard B. Priory
II-4
25Pursuant to the requirements of the Securities Act of 1933, DEFS
Capital Trust I certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement or amendment thereto to be signed on its behalf by the
undersigned, thereunto duly authorized, in Denver, Colorado, on the 30th day of
April, 2002.
DEFS CAPITAL TRUST I
By: DUKE ENERGY FIELD SERVICES, LLC,
DEPOSITOR
By: /s/ JIM W. MOGG
-----------------------------------------------
Jim W. Mogg
Chairman of the Board, President and Chief
Executive Officer
II-5
INDEX TO EXHIBITS
EXHIBIT
NO. EXHIBIT
------- -------NUMBER DESCRIPTION
-------- -------------
*1.1 -- Form of Underwriting Agreement.
**Agreement relating to Senior Notes.
*1.2 Form of Underwriting Agreement relating to Subordinated Notes.
*1.3 Form of Underwriting Agreement relating to Trust Preferred
Securities.
4.1 --Form of Senior Indenture between Duke Energy Field Services, LLC
and TheJPMorgan Chase Manhattan Bank, as trustee,Senior Indenture Trustee, dated as of
August 16, 2000 (incorporated by reference to Exhibit 4.1 to the
Company's registration statement on Form S-3 (Commission File No.
333-41854)).
*4.2 -- Form of Debt Securities.Senior Note
4.3 Form of Subordinated Indenture between Duke Energy Field
Services, LLC and JPMorgan Chase Bank, as Subordinated Indenture
Trustee.
*4.4 Form of Junior Subordinated Note.
4.5 Trust Agreement of DEFS Capital Trust I.
4.6 Form of Amended and Restated Trust Agreement of DEFS Capital
Trust I.
4.7 Certificate of Trust of DEFS Capital Trust I.
4.8 Form of Trust Preferred Security of DEFS Capital Trust I
(included in Exhibit 4.6).
4.9 Form of Guarantee Agreement.
4.10 Form of Agreement as to Expenses and Liabilities.
***5.1 -- Opinion of Vinson & Elkins L.L.P.
**5.2 Opinion of Richards, Layton & Finger, P.A. relating to DEFS
Capital Trust I.
12.1 -- Calculation of Ratio of Earnings to Fixed Charges.
**23.1 --Consent of Deloitte & Touche LLP.
23.2 Consent of Ernst & Young LLP.
**23.2 -- Consent of Deloitte & Touche LLP (Denver)
**23.3 -- Consent of Deloitte & Touche LLP (Fort Worth)
**23.4 -- Consent of Arthur Andersen LLP.
***23.5 -- Consent of Vinson & Elkins L.L.P. (included in Exhibit 5.1).
**23.4 Consent of Richards, Layton & Finger, P.A. (included in Exhibit
5.2).
25.1 -- Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of JPMorgan Chase Bank, as Senior Indenture
Trustee.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of JPMorgan Chase Bank, as Subordinated
Indenture Trustee.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of JPMorgan Chase Bank, as Property Trustee
under the Indenture.Amended and Restated Trust Agreement of DEFS Capital
Trust I.
25.4 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of JPMorgan Chase Bank, as Guarantee Trustee
with respect to DEFS Capital Trust I.
- --------------------------
* The Company will file as an exhibit to a Current Report on Form 8-K (i)
any form of Debt SecuritiesSenior Notes or Junior Subordinated Notes and (ii) any form
of underwriting agreement to be used in connection with an offering of
such securities.
** Previously filed.
*** Filed herewith.To be filed by amendment.