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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 10, 2001
REGISTRATION NO. 333-
REGISTRATION NO. 333- -01
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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<Table>
CONOCO INC. CONOCO FUNDING COMPANY
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
DELAWARE NOVA SCOTIA
(State of incorporation) (State or other jurisdiction of incorporation or
organization)
51-0370352 NOT APPLICABLE
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
C/O CONOCO INC.
600 NORTH DAIRY ASHFORD 600 NORTH DAIRY ASHFORD
HOUSTON, TEXAS 77079 HOUSTON, TEXAS 77079
TEL: (281) 293-1000 TEL: (281) 293-1000
(Address, including zip code, and telephone number, (Address, including zip code, and telephone number,
including including
area code, of registrant's principal executive offices) area code, of registrant's principal executive offices)
</Table>
RICK A. HARRINGTON, ESQ.
SENIOR VICE PRESIDENT, LEGAL, AND GENERAL COUNSEL
CONOCO INC.
600 NORTH DAIRY ASHFORD
HOUSTON, TEXAS 77079
TEL: (281) 293-1000
FAX: (281) 293-1440
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
WALTER J. SMITH, ESQ.
BAKER BOTTS L.L.P.
3000 ONE SHELL PLAZA
910 LOUISIANA
HOUSTON, TEXAS 77002-4995
TEL: (713) 229-1234
FAX: (713) 229-1522
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be 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, as amended (the "Securities Act"), 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, please 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 this prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<Table>
<Caption>
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1)(2)(3) REGISTRATION FEE
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Debt Securities of Conoco Inc...............................
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Debt Securities of Conoco Funding Company...................
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Guarantees by Conoco Inc. of the Debt Securities of Conoco
Funding Company...........................................
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Total.............................................. $6,000,000,000 $1,500,000
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</Table>
(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(o) under the Securities Act. In no event will the aggregate
initial offering price of all securities issued from time to time pursuant
to this Registration Statement exceed $6,000,000,000 or the equivalent
thereof in foreign currencies, foreign currency units or composite
currencies. If any securities are issued at an original issue discount, then
the offering price shall be in such greater principal amount as shall result
in an aggregate initial offering price of up to $6,000,000,000 or the
equivalent thereof in foreign currencies, foreign currency units or
composite currencies, less the dollar amount of any securities previously
issued hereunder.
(2) There is also being registered hereunder an indeterminate principal amount
of Debt Securities of Conoco Inc. and Conoco Funding Company as may be
issuable upon conversion, redemption, exchange or exercise of the securities
registered hereunder, including any applicable antidilution provisions.
(3) Conoco Inc. is registering under this Registration Statement all guarantees
and other obligations that it may have with respect to the Debt Securities
that may be issued by Conoco Funding Company. No separate consideration will
be received for the guarantees or any other such obligations.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities, and it is not soliciting an offer to buy these
securities, in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED SEPTEMBER 10, 2001
PROSPECTUS
[CONOCO LOGO]
$6,000,000,000
CONOCO INC.
DEBT SECURITIES
CONOCO FUNDING COMPANY
DEBT SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED BY
CONOCO INC.
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We will provide the specific terms of the debt securities in supplements to
this prospectus. You should read this prospectus and any supplement carefully
before you invest.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED WHETHER
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 2001
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TABLE OF CONTENTS
<Table>
About This Prospectus....................................... 1
About Conoco................................................ 1
About Conoco Funding........................................ 2
Where You Can Find More Information......................... 2
Forward-Looking Information................................. 3
Use of Proceeds............................................. 4
Ratio of Earnings to Fixed Charges.......................... 4
Description of the Debt Securities.......................... 4
Plan of Distribution........................................ 14
Legal Matters............................................... 15
Experts..................................................... 16
</Table>
ABOUT THIS PROSPECTUS
This prospectus is part of a joint registration statement that we have
filed with the Securities and Exchange Commission using a "shelf" registration
process. Using this process, Conoco may offer the debt securities described in
this prospectus, and Conoco Funding may offer the debt securities fully and
unconditionally guaranteed by Conoco described in this prospectus, in one or
more offerings with a total initial offering price of $6,000,000,000.
Under Rule 3-10 of Regulation S-X promulgated by the SEC, we are not
required to include separate financial statements of Conoco Funding in this
prospectus because:
- Conoco Funding has and will continue to have no assets, operations,
revenues or cash flows other than those related to the issuance,
administration and repayment of the debt securities issued by Conoco
Funding and other securities guaranteed by Conoco;
- all of the voting shares of Conoco Funding are owned by Conoco, either
directly or through wholly owned subsidiaries of Conoco, which files
regular reports with the SEC; and
- Conoco's guarantee of the debt securities issued by Conoco Funding will
be full and unconditional and no other subsidiary of Conoco will
guarantee the debt securities.
This prospectus provides you with a general description of the debt
securities Conoco and Conoco Funding may offer and of Conoco's guarantees. Each
time we use this prospectus to offer securities, we will provide a prospectus
supplement and, if applicable, a pricing supplement that will describe the
specific terms of the offering. The prospectus supplement and any pricing
supplement may also add to, update or change the information contained in this
prospectus. Please carefully read this prospectus, the prospectus supplement and
any pricing supplement, in addition to the information contained in the
documents we refer to under the heading "Where You Can Find More Information."
ABOUT CONOCO
Conoco is a major, integrated, global energy company. Conoco was founded in
1875 and is involved in exploring for and developing, producing and selling
crude oil, natural gas and natural gas liquids, refining crude oil and other
feedstocks into petroleum products, buying and selling crude oil and refined
products and transporting, distributing and marketing petroleum products. Conoco
is also engaged in developing and operating power facilities. Conoco's principal
executive office is located at 600 North Dairy Ashford, Houston, Texas 77079,
telephone (281) 293-1000.
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ABOUT CONOCO FUNDING
Conoco Funding Company is a corporation organized in June 2001 under the
laws of Nova Scotia, Canada. Conoco Funding is a wholly owned special purpose
finance subsidiary of Conoco that engages in financing activities to raise funds
for the business operations of Conoco and its subsidiaries. Conoco Funding's
principal executive office is c/o Conoco, 600 North Dairy Ashford, Houston,
Texas 77079, telephone (281) 293-1000.
WHERE YOU CAN FIND MORE INFORMATION
Conoco files annual, quarterly and current reports, proxy statements and
other information with the SEC. You can read and copy these materials at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549.
You can obtain information about the operation of the SEC's public reference
room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a Web site
that contains information Conoco files electronically with the SEC, which you
can access over the Internet at http://www.sec.gov. You can also obtain
information about Conoco at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
Conoco Funding is not currently subject to the information reporting
requirements of the Securities Exchange Act of 1934 and will be exempt from such
requirements upon the effectiveness of the registration statement of which this
prospectus is a part in reliance upon Rule 12h-5 of the Exchange Act.
This prospectus is part of a joint registration statement we have filed
with the SEC relating to the debt securities of Conoco and Conoco Funding and
Conoco's guarantees. As permitted by SEC rules, this prospectus does not contain
all of the information we have included in the registration statement and the
accompanying exhibits and schedules we file with the SEC. You may refer to the
registration statement, exhibits and schedules for more information about us,
the debt securities and the guarantees. The registration statement, exhibits and
schedules are available at the SEC's public reference room or through its Web
site.
The SEC allows us to "incorporate by reference" the information Conoco
files with them, which means that we can disclose important information to you
by referring you to those documents. The information we incorporate by reference
is an important part of this prospectus, and later information that Conoco files
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings
Conoco makes with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act until all the offered debt securities are sold. The documents we
incorporate by reference are:
- Conoco's annual report on Form 10-K for the year ended December 31, 2000;
- Conoco's quarterly reports on Form 10-Q for the quarter ended March 31,
2001, as filed with the SEC on May 10, 2001, and for the quarter ended
June 30, 2001, as filed with the SEC on August 8, 2001; and
- Conoco's current reports on Form 8-K as filed with the SEC on February
22, 2001, February 23, 2001, July 17, 2001 and July 31, 2001 (as amended
by a Form 8-K/A filed with the SEC on September 10, 2001, which includes,
among other financial statements, updated historical financial statements
of Conoco as of December 31, 2000 and 1999 and for each of the three
years in the period ended December 31, 2000).
You may request a copy of these filings, other than an exhibit to these
filings unless we have specifically incorporated that exhibit by reference into
the filing, at no cost, by writing or telephoning Conoco at the following
address:
Conoco Inc.
Shareholder Relations Department
P. O. Box 2197
Houston, Texas 77079-2197
Telephone: (281) 293-6800
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, THE PROSPECTUS SUPPLEMENT AND ANY PRICING
SUPPLEMENT. WE HAVE NOT AUTHORIZED ANY PERSON, INCLUDING ANY SALESMAN OR BROKER,
TO PROVIDE INFORMATION OTHER THAN THAT PROVIDED IN THIS PROSPECTUS, THE
PROSPECTUS SUPPLEMENT OR ANY PRICING SUPPLEMENT. WE HAVE NOT AUTHORIZED ANYONE
TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD
ASSUME THAT THE INFORMATION IN THIS PROSPECTUS, THE PROSPECTUS SUPPLEMENT AND
ANY PRICING SUPPLEMENT IS ACCURATE ONLY AS OF THE DATE ON ITS COVER PAGE AND
THAT ANY INFORMATION WE HAVE INCORPORATED BY REFERENCE IS ACCURATE ONLY AS OF
THE DATE OF THE DOCUMENT INCORPORATED BY REFERENCE.
FORWARD-LOOKING INFORMATION
This prospectus, including the information we incorporate by reference,
includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
You can identify our forward-looking statements by the words "expects,"
"intends," "plans," "projects," "believes," "estimates" and similar expressions.
We have based the forward-looking statements relating to Conoco's
operations on its current expectations, estimates and projections about Conoco
and the petroleum industry in general. We caution you that these statements are
not guarantees of future performance and involve risks, uncertainties and
assumptions that we cannot predict. In addition, we have based many of these
forward-looking statements on assumptions about future events that may prove to
be inaccurate. Accordingly, Conoco's actual outcomes and results may differ
materially from what we have expressed or forecast in the forward-looking
statements. Any differences could result from a variety of factors, including
the following:
- fluctuations in crude oil and natural gas prices and refining and
marketing margins;
- potential failure or delays in achieving expected reserve or production
levels from existing and future oil and gas development projects due to
operating hazards, drilling risks and the inherent uncertainties in
predicting oil and gas reserves and oil and gas reservoir performance;
- unsuccessful exploratory drilling activities;
- failure of new products and services to achieve market acceptance;
- unexpected cost increases or technical difficulties in constructing or
modifying company manufacturing and refining facilities;
- unexpected difficulties in manufacturing, transporting or refining
synthetic crude oil;
- ability to meet government regulations;
- potential disruption or interruption of Conoco's production facilities
due to accidents or political events;
- international monetary conditions and exchange controls;
- liability for remedial actions under environmental regulations;
- liability resulting from litigation;
- general domestic and international economic and political conditions; and
- changes in tax and other laws applicable to Conoco's business.
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USE OF PROCEEDS
Unless we inform you otherwise in the prospectus supplement, the net
proceeds from the sale of the debt securities will be used, first, for repayment
or refinancing of debt, including a portion of the debt outstanding under the
credit agreement used to fund the acquisition by Conoco of Gulf Canada Resources
Limited in July 2001 and, second, for general corporate purposes, including
acquisitions, working capital, capital expenditures and repurchases and
redemptions of securities. Pending any specific application, we may initially
invest funds in short-term marketable securities or apply them to the reduction
of other short-term indebtedness.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth Conoco's ratio of earnings to fixed charges
for each of the indicated periods.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ----------------------------------
2001 2000 1999 1998 1997 1996
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Ratio of earnings to fixed charges..... 12.7x 8.5x 3.9x 3.2x 12.9x 11.6x
</Table>
Conoco has computed the ratios of earnings to fixed charges by dividing
earnings by fixed charges. For this purpose, "earnings" consist of income before
income taxes and extraordinary items and fixed charges. "Fixed charges" consist
of interest expense, capitalized interest, amortization of debt expense and that
portion of annual rental expense Conoco has deemed to represent the interest
factor.
DESCRIPTION OF THE DEBT SECURITIES
The debt securities of Conoco covered by this prospectus will be Conoco's
general unsecured obligations and will be issued under the Indenture, dated as
of April 15, 1999, between Conoco and Bank One, N.A., as trustee. We refer to
this indenture as the Conoco indenture. The debt securities of Conoco Funding
covered by this prospectus will be Conoco Funding's general unsecured
obligations, and Conoco will fully and unconditionally guarantee the debt
securities on a senior unsecured basis. Conoco Funding's debt securities will be
issued under an indenture between Conoco, as guarantor, Conoco Funding and a
trustee that we will name in the prospectus supplement. We refer to this
indenture as the Conoco Funding indenture. We refer to the Conoco indenture and
the Conoco Funding indenture collectively as the indentures.
We have summarized selected provisions of the indentures, the debt
securities and the guarantee below. This summary is not complete. We have filed
the Conoco indenture and the form of Conoco Funding indenture with the SEC as
exhibits to the registration statement, and you should read the indentures for
provisions that may be important to you.
In this summary description of the debt securities, unless we state
otherwise or the context clearly indicates otherwise, all references to Conoco
mean Conoco Inc. only and all references to Conoco Funding mean Conoco Funding
Company only.
GENERAL
The debt securities of Conoco and Conoco Funding will constitute senior
debt of the issuer and will rank equally with all of its unsecured and
unsubordinated debt. Neither indenture limits the amount of debt that may be
issued under the indenture, and neither limits the amount of other unsecured
debt or securities that may be issued by Conoco or Conoco Funding. Conoco and
Conoco Funding may issue debt securities under the applicable indenture from
time to time in one or more series, each in an amount authorized prior to
issuance.
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Conoco currently conducts substantially all its operations through
subsidiaries, and Conoco's subsidiaries generate substantially all its operating
income and cash flow. As a result, distributions or advances from Conoco's
subsidiaries are the principal source of funds necessary to meet its debt
service obligations. Contractual provisions or laws, as well as the
subsidiaries' financial condition and operating requirements, may limit Conoco's
ability to obtain cash from its subsidiaries that it requires to pay its debt
service obligations, including any payments required to be made under any debt
securities it issues and under its guarantee of Conoco Funding's debt
securities. In addition, holders of the debt securities will have a junior
position to the claims of creditors of Conoco's subsidiaries or their assets and
earnings.
Conoco Funding is a special purpose financing subsidiary formed solely as a
financing vehicle for Conoco and its subsidiaries. The ability of Conoco Funding
to pay its debt service obligations, including any payments required to be made
under its debt securities, is dependent upon its receipt of payments from Conoco
and its subsidiaries. If Conoco and its subsidiaries were not to make such
payments for any reason, the holders of the debt securities would have to rely
on the enforcement of Conoco's guarantee described below.
Other than the restrictions on liens and sale/leaseback transactions
described below, the indentures do not contain any covenants or other provisions
designed to protect holders of the debt securities in the event Conoco
participates in a highly leveraged transaction. The indentures also do not
contain provisions that give holders the right to require Conoco or Conoco
Funding to repurchase their securities in the event of a decline in Conoco's
credit ratings resulting from a takeover, recapitalization or similar
restructuring or otherwise.
The prospectus supplement relating to any series of debt securities being
offered will include specific terms relating to the offering. These terms will
include some or all of the following:
- the issuer of the debt securities;
- the title of the debt securities;
- the total principal amount of the debt securities;
- whether the debt securities will be issued in individual certificates to
each holder or in the form of temporary or permanent global securities
held by a depository on behalf of holders;
- the date or dates on which the principal of and any premium on the debt
securities will be payable;
- any interest rate, the date from which interest will accrue, interest
payment dates and record dates for interest payments;
- whether and under what circumstances any additional amounts with respect
to the debt securities will be payable;
- the place or places where payments on the debt securities will be
payable;
- any provisions for optional redemption or early repayment;
- any provisions that would obligate the redemption, purchase or repayment
of debt securities;
- the denominations in which the debt securities will be issued;
- whether payments on the debt securities will be payable in foreign
currency or currency units or another form and whether payments will be
payable by reference to any index or formula;
- the portion of the principal amount of debt securities that will be
payable if the maturity is accelerated, if other than the entire
principal amount;
- any additional means of defeasance of the debt securities, any additional
conditions or limitations to defeasance of the debt securities or any
changes to those conditions or limitations;
- any changes or additions to the events of default or covenants described
in this prospectus;
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- any restrictions or other provisions relating to the transfer or exchange
of debt securities; and
- any terms for the conversion or exchange of the debt securities for other
securities of Conoco, Conoco Funding or any other entity.
We may sell the debt securities at a discount (which may be substantial)
below their stated principal amount. These debt securities may bear no interest
or interest at a rate that at the time of issuance is below market rates. We
will describe in the prospectus supplement any material United States federal
income tax consequences and other special considerations.
If we sell any of the debt securities for any foreign currency or currency
unit or if payments on the debt securities are payable in any foreign currency
or currency unit, we will describe in the prospectus supplement the
restrictions, elections, tax consequences, specific terms and other information
relating to those debt securities and the foreign currency or currency unit.
GUARANTEE
Conoco will fully and unconditionally guarantee on a senior unsecured basis
the due and punctual payment of the principal of and any premium and interest on
the debt securities issued by Conoco Funding when and as it becomes due and
payable, whether at maturity or otherwise. The guarantees will rank equally with
all of Conoco's other unsecured and unsubordinated debt. The guarantees provide
that in the event of a default in payment of principal of or any premium or
interest on a debt security issued by Conoco Funding, the holder of the debt
security may institute legal proceedings directly against Conoco to enforce the
guarantees without first proceeding against Conoco Funding. The Conoco Funding
indenture provides that Conoco may under certain circumstances assume all rights
and obligations of Conoco Funding under the indenture with respect to a series
of debt securities.
RESTRICTIVE COVENANTS
Conoco has agreed to two principal restrictions on its activities for the
benefit of holders of the debt securities. The restrictive covenants summarized
below will apply to a series of debt securities (unless waived or amended) as
long as any of those debt securities are outstanding, unless the prospectus
supplement for the series states otherwise. We have used in this summary
description capitalized terms that we have defined below under "-- Glossary." In
this description of the covenants only, all references to Conoco mean Conoco
Inc. and its principal domestic subsidiaries, unless the context clearly
indicates otherwise. Conoco's principal domestic subsidiaries are those that
have substantially all their assets in the United States and that own a
Principal Property.
Limitation on Liens
Conoco has agreed that it will issue, assume or guarantee debt for borrowed
money secured by a lien upon a Principal Property or shares of stock or debt of
any of Conoco's principal domestic subsidiaries only if it secures the
outstanding debt securities issued by Conoco and the outstanding guarantees of
debt securities issued by Conoco Funding equally and ratably with or prior to
the debt secured by that lien. If Conoco so secures the debt securities and the
guarantees, it has the option to secure any of its other debt or obligations
equally and ratably with or prior to the debt secured by the lien and,
accordingly, equally and ratably with its debt securities and the guarantees.
This covenant has exceptions that permit:
(a) liens existing on the date Conoco or Conoco Funding first issues a
series of debt securities under the applicable indenture;
(b) liens on the property, assets, stock, equity or debt of any entity
existing at the time Conoco acquires that entity or its property or at the
time the entity becomes a principal domestic subsidiary;
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(c) liens on assets either:
- existing at the time Conoco acquires the assets,
- securing all or part of the cost of acquiring, constructing,
improving, developing or expanding the assets, or
- securing debt to finance the purchase price of the assets or the
cost of constructing, improving, developing or expanding the assets
that was incurred before, at or within 12 months after the
acquisition or completion of the assets or their commencing
commercial operation;
(d) liens on specific assets to secure debt incurred to provide funds
for the cost of exploration, drilling or development of those assets;
(e) intercompany liens in favor of Conoco;
(f) liens securing industrial development, pollution control or other
revenue bonds of a domestic government entity;
(g) statutory or other liens arising in the ordinary course of
Conoco's business and relating to amounts that are not yet delinquent or
that Conoco is contesting in good faith; and
(h) any extensions, substitutions, replacements or renewals of the
above-described liens or any debt secured by these liens if both:
- the new lien is limited to the property (plus any improvements)
secured by the original lien, and
- the amount of debt secured by the new lien and not otherwise
permitted does not materially exceed the amount of debt refinanced
plus any costs incurred to refinance the debt.
In addition, without securing the debt securities or the guarantees as
described above, Conoco may issue, assume or guarantee debt that this covenant
would otherwise restrict in a total principal amount that, when added to all of
Conoco's other outstanding debt that this covenant would otherwise restrict and
the total amount of Attributable Debt outstanding for Sale/Leaseback
Transactions, does not exceed a "basket" equal to 10% of Consolidated Net
Tangible Assets. When calculating this total principal amount, we exclude from
the calculation Attributable Debt from Sale/Leaseback Transactions in connection
with which Conoco has purchased property or retired or defeased debt as
described in clause (b) below under "Limitation on Sale/Leaseback Transactions."
For these purposes, "debt" includes all notes, bonds, debentures or similar
evidences of debt for money borrowed. The following types of transactions do not
create "debt" secured by "liens" within the meaning of this covenant:
(a) the sale or other transfer of either:
- oil, gas or other minerals in place for a period of time until, or
in an amount such that, the purchaser will realize from those
minerals a specified amount of money or a specified amount of those
minerals, or
- any other interest in property commonly referred to as a
"production payment"; and
(b) the mortgage or pledge of Conoco's property in favor of the United
States, any state of the United States or any department, agency or
instrumentality of either, to secure payments under any contract or
statute.
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Limitation on Sale/Leaseback Transactions
Conoco has agreed that it will enter into a Sale/Leaseback Transaction only
if at least one of the following applies:
(a) Conoco could incur debt in a principal amount equal to the
Attributable Debt for that Sale/ Leaseback Transaction and, without
violating the "Limitation on Liens" covenant, could secure that debt by a
lien on the property to be leased without equally and ratably securing the
guarantees.
(b) Within the period beginning six months before the closing of the
Sale/Leaseback Transaction and ending six months after the closing, Conoco
applies the net proceeds of the Sale/ Leaseback Transaction either:
- to the voluntary defeasance or retirement of any debt securities or
Funded Debt, or
- to the acquisition, exploration, drilling, development,
construction, improvement or expansion of one or more Principal
Properties.
Any amount of the net proceeds Conoco does not apply for the purposes
described in (b) will be subject to the limitation described in (a). For
purposes of these calculations, the net proceeds of the Sale/Leaseback
Transaction means the net proceeds of the sale or transfer of the property
leased in the Sale/Leaseback Transaction (or, if greater, the fair value of
that property at the time of the Sale/ Leaseback Transaction as determined
by Conoco's board of directors) adjusted to reflect the remaining term of
the lease.
Glossary
"Attributable Debt" means the present value of the rental payments during
the remaining term of the lease included in the Sale/Leaseback Transaction. To
determine that present value, Conoco uses a discount rate equal to the lease
rate of the Sale/Leaseback Transaction. For these purposes, rental payments do
not include any amounts Conoco is required to pay for taxes, maintenance,
repairs, insurance, assessments, utilities, operating and labor costs and other
items that do not constitute payments for property rights. In the case of any
lease that Conoco may terminate by paying a penalty, if the net amount would be
reduced if Conoco terminated the lease on the first date that it could be
terminated, then this lower net amount will be used.
"Consolidated Net Tangible Assets" means the total amount of assets (after
deducting applicable accumulated depreciation, depletion and amortization and
other reserves and other properly deductible items) less
- all current liabilities (excluding liabilities that are extendable or
renewable at our option to a date more than 12 months after the date of
calculation and excluding current maturities of long-term debt), and
- all goodwill, trade names, trademarks, patents, unamortized debt discount
and expense and other like intangible assets.
Conoco will calculate its Consolidated Net Tangible Assets based on its most
recent quarterly balance sheet.
The term "debt" means all notes, bonds, debentures or similar evidences of
debt for money borrowed.
"Funded Debt" means all debt that matures on or is renewable to a date more
than one year after the date the debt is incurred.
"Principal domestic subsidiary" means a subsidiary that has substantially
all its assets in the United States and that owns a Principal Property.
"Principal Property" means any oil or gas producing property located
onshore or offshore of the United States or any refinery or manufacturing plant
located in the United States. This term excludes any
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property, refinery or plant that in the opinion of Conoco's board of directors
is not materially important to the total business conducted by Conoco and its
consolidated subsidiaries. This term also excludes any transportation or
marketing facilities or assets.
"Sale/Leaseback Transaction" means any arrangement with anyone under which
Conoco leases any Principal Property that Conoco has or will sell or transfer to
that person. This term excludes the following:
- temporary leases for a term of not more than three years;
- intercompany leases between Conoco and one of its subsidiaries or between
two or more of its subsidiaries;
- leases of a Principal Property executed by the time of or within 12
months after the acquisition, the completion of construction or
improvement, or the commencement of commercial operation of the Principal
Property; and
- arrangements under any provision of law with an effect similar to the
former Section 168(f)(8) of the Internal Revenue Code of 1954.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Conoco
The indentures generally permit a consolidation or merger involving Conoco.
They also permit the sale by Conoco of all or substantially all of its assets.
Conoco has agreed, however, that it will consolidate with or merge into any
entity or transfer or dispose of all or substantially all of its assets to any
entity only if:
- Conoco is the continuing corporation; or
- if Conoco is not the continuing corporation, the resulting entity is
organized and existing under the laws of any United States jurisdiction
and assumes the performance of Conoco's covenants and obligations under
the indentures and, with respect to debt securities issued under the
Conoco indenture, the due and punctual payments on the debt securities;
and
- in either case, immediately after giving effect to the transaction, no
default or event of default would occur and be continuing or would result
from the transaction.
Conoco Funding
Conoco Funding may assign all its rights and obligations under the Conoco
Funding indenture and its debt securities to:
- another entity with which Conoco Funding is consolidated or merged or
which acquires by conveyance or transfer any of Conoco Funding's
properties or assets;
- Conoco; or
- another subsidiary of Conoco.
Any successor to Conoco Funding must be organized and existing under the
laws of any United States or Canadian jurisdiction. In connection with any
assignment other than to Conoco, Conoco will continue to guarantee the debt
securities as described above. If Conoco Funding assigns all of its rights and
obligations under the Conoco Funding indenture and its debt securities to
Conoco, Conoco's covenants regarding consolidations, mergers and sales of
assets, its covenants described above under "-- Restrictive Covenants" and any
other covenants for the benefit of any series of debt securities issued under
the Conoco Funding indenture will remain in effect.
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EVENTS OF DEFAULT
Unless we inform you otherwise in the prospectus supplement, the following
are events of default with respect to a series of debt securities issued by
Conoco or Conoco Funding under the applicable indenture:
- failure to pay interest on that series of debt securities for 30 days;
- failure to pay principal of or any premium on that series of debt
securities when due;
- failure to redeem, purchase or repay debt securities of that series;
- failure to comply with any covenant or agreement in that series of debt
securities or the applicable indenture (other than an agreement or
covenant that has been included in the indenture solely for the benefit
of other series of debt securities) for 90 days after written notice by
the trustee or by the holders of at least 25% in principal amount of all
outstanding debt securities issued under that indenture and affected by
that failure;
- certain events involving bankruptcy, insolvency or reorganization of
Conoco or, with respect to the Conoco Funding indenture, Conoco Funding;
and
- any other event of default provided for that series of debt securities.
A default under one series of debt securities will not necessarily be a
default under another series. The trustee may withhold notice to the holders of
the debt securities of any default or event of default (except in any payment on
the debt securities) if the trustee considers it in the interest of the holders
of the debt securities to do so.
If an event of default for any series of debt securities occurs and is
continuing, the trustee or the holders of at least 25% in principal amount of
the outstanding debt securities of the series affected by the default (or, in
some cases, 25% in principal amount of all debt securities issued under the
applicable indenture that are affected, voting as one class) may declare the
principal of and all accrued and unpaid interest on those debt securities to be
due and payable. If an event of default relating to certain events of
bankruptcy, insolvency or reorganization occurs, the principal of and interest
on all the debt securities issued under the applicable indenture will become
immediately due and payable without any action on the part of the trustee or any
holder. The holders of a majority in principal amount of the outstanding debt
securities of the series affected by the default (or of all debt securities
issued under the applicable indenture that are affected, voting as one class)
may in some cases rescind this accelerated payment requirement.
A holder of a debt security of any series may pursue any remedy under the
applicable indenture only if:
- the holder gives the trustee written notice of a continuing event of
default for that series;
- the holders of at least 25% in principal amount of the outstanding debt
securities of that series make a written request to the trustee to pursue
the remedy;
- the holder offers to the trustee indemnity reasonably satisfactory to the
trustee;
- the trustee fails to act for a period of 60 days after receipt of notice
and offer of indemnity; and
- during that 60-day period, the holders of a majority in principal amount
of the debt securities of that series do not give the trustee a direction
inconsistent with the request.
- This provision does not, however, affect the right of a holder of a debt
security to sue for enforcement of any overdue payment.
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In most cases, holders of a majority in principal amount of the outstanding
debt securities of a series (or of all debt securities issued under the
applicable indenture that are affected, voting as one class) may direct the
time, method and place of:
- conducting any proceeding for any remedy available to the trustee; and
- exercising any trust or power conferred on the trustee not relating to or
arising under an event of default.
The Conoco indenture requires Conoco, and the Conoco Funding indenture
requires Conoco and Conoco Funding, to file each year with the trustee a written
statement as to their compliance with the covenants contained in the applicable
indenture.
MODIFICATION AND WAIVER
Each indenture may be amended or supplemented if the holders of a majority
in principal amount of the outstanding debt securities of all series issued
under that indenture that are affected by the amendment or supplement (acting as
one class) consent to it. Without the consent of the holder of each debt
security affected, however, no modification may:
- reduce the amount of debt securities whose holders must consent to an
amendment, supplement or waiver;
- reduce the rate of or change the time for payment of interest on the debt
security;
- reduce the principal of the debt security or change its stated maturity;
- reduce any premium payable on the redemption of the debt security or
change the time at which the debt security may or must be redeemed;
- change any obligation to pay additional amounts on the debt security;
- make payments on the debt security payable in currency other than as
originally stated in the debt security;
- impair the holder's right to institute suit for the enforcement of any
payment on or with respect to the debt security;
- make any change in the percentage of principal amount of debt securities
necessary to waive compliance with certain provisions of the indenture or
to make any change in this provision for modification;
- waive a continuing default or event of default regarding any payment on
the debt securities; or
- with respect to the Conoco Funding indenture, modify or affect Conoco's
obligations under the guarantees in any manner adverse to the holders of
any debt security issued under that indenture.
Each indenture may be amended or supplemented or any provision of that
indenture may be waived without the consent of any holders of debt securities
issued under that indenture in certain circumstances, including:
- to cure any ambiguity, omission, defect or inconsistency;
- to provide for the assumption of the obligations of Conoco or Conoco
Funding under that indenture by a successor upon any merger,
consolidation or asset transfer;
- to provide for uncertificated debt securities in addition to or in place
of certificated debt securities or to provide for bearer debt securities;
- to provide any security for any series of debt securities or the
guarantees;
- with respect to the Conoco indenture, to provide for any guarantees of
any series of debt securities issued under that indenture;
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- to comply with any requirement to effect or maintain the qualification of
that indenture under the Trust Indenture Act of 1939;
- to add covenants that would benefit the holders of any debt securities or
to surrender any rights Conoco or Conoco Funding has under that
indenture;
- to add events of default with respect to any debt securities; and
- to make any change that does not adversely affect any outstanding debt
securities of any series issued under that indenture in any material
respect.
The holders of a majority in principal amount of the outstanding debt
securities of any series (or of all debt securities issued under the applicable
indenture that are affected, voting as one class) may waive any existing or past
default or event of default with respect to those debt securities. Those holders
may not, however, waive any default or event of default in any payment on any
debt security or compliance with a provision that cannot be amended or
supplemented without the consent of each holder affected.
DEFEASANCE
When we use the term defeasance, we mean discharge from some or all of our
obligations under the indentures. If funds or government securities are
deposited with the trustee sufficient to make payments on the debt securities of
a series on the dates those payments are due and payable, then, at Conoco's
option, either of the following will occur:
- Conoco and, if applicable, Conoco Funding will be discharged from its or
their obligations with respect to the debt securities of that series and,
if applicable, the related guarantees ("legal defeasance"); or
- Conoco will no longer have any obligation to comply with the restrictive
covenants under the applicable indenture, and the related events of
default will no longer apply to Conoco ("covenant defeasance").
If a series of debt securities is defeased, the holders of the debt
securities of the series affected will not be entitled to the benefits of the
applicable indenture, except for obligations to register the transfer or
exchange of debt securities, replace stolen, lost or mutilated debt securities
or maintain paying agencies and hold moneys for payment in trust. In the case of
covenant defeasance, the obligation of Conoco or Conoco Funding, as applicable,
to pay principal, premium and interest on the debt securities and, if
applicable, Conoco's guarantee of the payments will also survive.
Unless we inform you otherwise in the prospectus supplement, we will be
required to deliver to the trustee an opinion of counsel that the deposit and
related defeasance would not cause the holders of the debt securities to
recognize income, gain or loss for federal income tax purposes. If we elect
legal defeasance, that opinion of counsel must be based upon a ruling from the
United States Internal Revenue Service or a change in law to that effect.
GOVERNING LAW
New York law will govern the indentures and the debt securities.
TRUSTEE
Bank One, N.A. is the trustee under the Conoco indenture. Bank One also
serves as the trustee relating to approximately $4.0 billion of Conoco's
unsecured senior notes as of June 30, 2001. Affiliates of Bank One are the
transfer agent for Conoco's common stock and a lender under Conoco's primary
bank credit facility. Bank One and its affiliates also perform certain
commercial banking services for us for which they receive customary fees. We
will name the trustee under the Conoco Funding indenture in the applicable
prospectus supplement.
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If an event of default occurs and is continuing, the trustee will be
required to use the degree of care and skill of a prudent man in the conduct of
his own affairs. The trustee will become obligated to exercise any of its powers
under the applicable indenture at the request of any of the holders of any debt
securities issued under that indenture only after those holders have offered the
trustee indemnity reasonably satisfactory to it.
The indentures contain limitations on the right of the trustee, if it
becomes a creditor of Conoco or Conoco Funding, to obtain payment of claims or
to realize on certain property received for any such claim, as security or
otherwise. The trustee is permitted to engage in other transactions with Conoco
and Conoco Funding. If, however, it acquires any conflicting interest, it must
eliminate that conflict or resign within 90 days after ascertaining that it has
a conflicting interest and after the occurrence of a default under the
applicable indenture, unless the default has been cured, waived or otherwise
eliminated within the 90-day period.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
The debt securities will be issued in registered form, without interest
coupons. There will be no service charge for any registration of transfer or
exchange of the debt securities. However, payment of any tax or other
governmental charge payable for that registration may be required.
Debt securities of any series will be exchangeable for other debt
securities of the same series, the same total principal amount and the same
terms but in different authorized denominations in accordance with the
applicable indenture. Holders may present debt securities for registration of
transfer at the office of the security registrar or any transfer agent we
designate. The security registrar or transfer agent will effect the transfer or
exchange when it is satisfied with the documents of title and identity of the
person making the request.
The trustee has been appointed as security registrar for the debt
securities. If a prospectus supplement refers to any transfer agents we
initially designate, we may at any time rescind that designation or approve a
change in the location through which any transfer agent acts. We are required to
maintain an office or agency for transfers and exchanges in each place of
payment. We may at any time designate additional transfer agents for any series
of debt securities.
In the case of any redemption, neither the security registrar nor the
transfer agent will be required to register the transfer or exchange of any debt
security either:
- during a period beginning 15 business days prior to the mailing of the
relevant notice of redemption and ending on the close of business on the
day of mailing of such notice; or
- the debt security has been called for redemption in whole or in part,
except the unredeemed portion of any debt security being redeemed in
part.
PAYMENT AND PAYING AGENTS
Unless we inform you otherwise in a prospectus supplement, payments on the
debt securities will be made in U.S. dollars at the office of the trustee. At
our option, however, payments may be made by check mailed to the holder's
registered address or, with respect to global debt securities, by wire transfer.
Unless we inform you otherwise in a prospectus supplement, interest payments may
be made to the person in whose name the debt security is registered at the close
of business on the record date for the interest payment.
Unless we inform you otherwise in a prospectus supplement, the trustee will
be designated as the paying agent for payments on debt securities issued under
the indenture. We may at any time designate additional paying agents or rescind
the designation of any paying agent or approve a change in the office through
which any paying agent acts.
Subject to the requirements of any applicable abandoned property laws, the
trustee and paying agent shall pay to us upon written request any money held by
them for payments on the debt securities that
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remain unclaimed for two years after the date upon which that payment has become
due. After payment to us, holders entitled to the money must look to us for
payment. In that case, all liability of the trustee or paying agent with respect
to that money will cease.
BOOK-ENTRY DEBT SECURITIES
The debt securities of a series may be issued in the form of one or more
global debt securities that would be deposited with a depositary or its nominee
identified in the prospectus supplement. Global debt securities may be issued in
either temporary or permanent form. We will describe in the prospectus
supplement the terms of any depositary arrangement and the rights and
limitations of owners of beneficial interests in any global debt security.
PLAN OF DISTRIBUTION
We may sell the offered debt securities in and outside the United States
through underwriters or dealers, directly to purchasers or through agents. The
prospectus supplement will include the following information:
- the terms of the offering;
- the names of any underwriters or agents;
- the purchase price of the securities from us;
- the net proceeds to us from the sale of the securities;
- any delayed delivery arrangements;
- any underwriting discounts, commissions and other items constituting
underwriters' compensation;
- the initial public offering price;
- any discounts or concessions allowed or reallowed or paid to dealers; and
- any commissions paid to agents.
SALE THROUGH UNDERWRITERS OR DEALERS
If we use underwriters in the sale, the underwriters will acquire the debt
securities for their own account. The underwriters may resell the securities
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Underwriters may offer securities to the public either
through underwriting syndicates represented by one or more managing underwriters
or directly by one or more firms acting as underwriters. Unless we inform you
otherwise in the prospectus supplement, the obligations of the underwriters to
purchase the debt securities will be subject to conditions, and the underwriters
will be obligated to purchase all the debt securities if they purchase any of
them. The underwriters may change from time to time any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers.
During and after an offering through underwriters, the underwriters may
purchase and sell the securities in the open market. These transactions may
include overallotment and stabilizing transactions and purchases to cover
syndicate short positions created in connection with the offering. The
underwriters may also impose a penalty bid, whereby selling concessions allowed
to syndicate members or other broker-dealers for the offered securities sold for
their account may be reclaimed by the syndicate if such offered securities are
repurchased by the syndicate in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
offered securities, which may be higher than the price that might otherwise
prevail in the open market. If commenced, these activities may be discontinued
at any time.
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If we use dealers in the sale of securities, we will sell the securities to
them as principals. They may then resell those securities to the public at
varying prices determined by the dealers at the time of resale. The dealers
participating in any sale of the debt securities may be deemed to be
underwriters within the meaning of the Securities Act of 1933 with respect to
any sale of those securities. We will include in the prospectus supplement the
names of the dealers and the terms of the transaction.
DIRECT SALES AND SALES THROUGH AGENTS
We may sell the debt securities directly. In that event, no underwriters or
agents would be involved. We may also sell the securities through agents we
designate from time to time. In the prospectus supplement, we will name any
agent involved in the offer or sale of the debt securities, and we will describe
any commissions payable by us to the agent. Unless we inform you otherwise in
the prospectus supplement, any agent will agree to use its reasonable best
efforts to solicit purchases for the period of its appointment.
We may sell the debt securities directly to institutional investors or
others who may be deemed to be underwriters within the meaning of the Securities
Act of 1933 with respect to any sale of those securities. We will describe the
terms of any such sales in the prospectus supplement.
DELAYED DELIVERY CONTRACTS
If we so indicate in the prospectus supplement, we may authorize agents,
underwriters or dealers to solicit offers from certain types of institutions to
purchase securities from us at the public offering price under delayed delivery
contracts. These contracts would provide for payment and delivery on a specified
date in the future. The contracts would be subject only to those conditions
described in the prospectus supplement. The prospectus supplement will describe
the commission payable for solicitation of those contracts.
GENERAL INFORMATION
We may have agreements with the agents, dealers and underwriters to
indemnify them against civil liabilities, including liabilities under the
Securities Act of 1933, or to contribute with respect to payments that the
agents, dealers or underwriters may be required to make. Agents, dealers and
underwriters may engage in transactions with us or perform services for us in
the ordinary course of their businesses.
LEGAL MATTERS
R. A. Harrington, Conoco's Senior Vice President, Legal, and General
Counsel, or another of Conoco's lawyers, or Baker Botts L.L.P., Houston, Texas,
our outside counsel, will issue opinions about the validity of the debt
securities of Conoco and Conoco Funding and the validity of Conoco's guarantees
of debt securities issued by Conoco Funding. Any of those counsel will rely as
to matters of Canadian law on McInnes Cooper, Halifax, Nova Scotia. Any
underwriters will be advised about other issues relating to any offering by
their own legal counsel.
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EXPERTS
The historical financial statements of Conoco as of December 31, 2000 and
1999 and for each of the three years in the period ended December 31, 2000
incorporated in this prospectus by reference to the Current Report on Form 8-K/A
of Conoco filed with the SEC on September 10, 2001 and the financial statement
schedule incorporated in this prospectus by reference to the Annual Report on
Form 10-K of Conoco for the year ended December 31, 2000 have been so
incorporated in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of Gulf Canada Resources Limited at
December 31, 2000 and 1999, and for each of the three years in the period ended
December 31, 2000, incorporated in this prospectus by reference to Conoco's
Current Report on Form 8-K/A filed with the SEC on September 10, 2001, have been
audited by Ernst & Young LLP, independent chartered accountants, as set forth in
their report included therein, and are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth expenses payable by Conoco Funding Company
and Conoco Inc. in connection with the issuance and distribution of the
securities being registered. All the amounts shown are estimates, except for the
SEC registration fee.
<Table>
SEC registration fee........................................ $1,500,000
Printing expenses........................................... *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Fees and expenses of Trustee and counsel.................... *
Rating agency fees.......................................... *
Miscellaneous............................................... *
----------
Total............................................. $ *
==========
</Table>
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* To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Conoco
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation -- a "derivative action"),
if they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including
attorneys' fees) incurred in connection with the defense or settlement of such
action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. The statute provides that it is not exclusive of other
indemnification that may be granted by a corporation's charter, by-laws,
disinterested director vote, stockholder vote, agreement or otherwise.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability for any of the following:
- any breach of the director's duty of loyalty to the corporation or its
stockholders,
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
- payments of unlawful dividends or unlawful stock repurchases or
redemptions, or
- any transaction from which the director derived an improper personal
benefit.
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Article 5E(2) of the certificate of incorporation of Conoco provides that
no director shall be personally liable to Conoco or any of its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability for any of the following:
- any breach of the director's duty of loyalty to Conoco or its
stockholders,
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
- liabilities pursuant to section 174 of the Delaware General Corporation
Law, or
- any transaction from which the director derived an improper personal
benefit.
Any repeal or modification of such Article 5E(2) shall not adversely affect
any right or protection of a director of Conoco for or with respect to any acts
or omissions of such director occurring prior to such amendment or repeal.
Conoco's by-laws provide for indemnification of directors and officers to the
maximum extent permitted by Delaware law.
Conoco has entered into indemnification agreements with each of its
directors. Such agreements provide that, to the fullest extent permitted by
applicable law, Conoco shall indemnify and hold each director harmless from and
against any and all losses and expenses whatsoever (i) arising out of any event
or occurrence related to the fact that such director is or was a director or
officer of Conoco, is or was serving in another capacity with Conoco, consented
to be named as a person to be elected as a director of Conoco in connection with
Conoco's initial public offering of common stock, or by reason of anything done
or not done by such director in such capacity and (ii) incurred in connection
with any threatened, pending or completed legal proceeding.
Conoco Funding
As permitted by section 20(2) of the Companies Act (Nova Scotia), section
133 of the articles of association of Conoco Funding provides that every
director, manager, secretary, treasurer and other officer or servant of Conoco
Funding shall be indemnified by Conoco Funding against all costs, losses and
expenses which any director, manager, secretary, treasurer or other officer may
incur by reason of any contract entered into or act or thing done by him as an
officer or servant or in the discharge of his duties. The amount for which
indemnity is proved shall immediately attach as a lien on the property of Conoco
Funding and have priority against the members over all other claims. In
addition, section 134 of Conoco Funding's articles of association provides that,
unless caused by his own dishonesty, no director or officer of Conoco Funding
shall be liable for:
- acts, receipts, neglects or defaults of any other officer or director;
- any loss or expense happening to Conoco Funding through the insufficiency
or deficiency of title to any property acquired by order of the directors
for or on behalf of Conoco Funding;
- the insufficiency or deficiency of any security in or upon which any of
the moneys of Conoco Funding shall be invested;
- any loss or damage arising from the bankruptcy, insolvency or tortious
act of any person with whom any money, securities or effects shall be
deposited;
- any loss occasioned by error of judgment or oversight by any director or
officer; or
- any other loss, damage or misfortune that occurs in the execution of the
duties of an officer or director's office.
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ITEM 16. EXHIBITS*
<Table>
<Caption>
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 -- Indenture, dated as of April 15, 1999, between Conoco, as
issuer, and Bank One, N.A., as trustee (the "Conoco
Trustee"), relating to the debt securities of Conoco.
+4.2 -- Form of Indenture between Conoco, as guarantor, Conoco
Funding, as issuer, and the trustee thereunder (the
"Conoco Funding Trustee") relating to the debt securities
of Conoco Funding.
+5.1 -- Opinion of Baker Botts L.L.P. with respect to legality of
the securities offered hereby.
12.1 -- Computation of ratio of earnings to fixed charges.
23.1 -- Consent of PricewaterhouseCoopers LLP.
23.2 -- Consent of Ernst & Young LLP.
+23.3 -- Consent of Baker Botts L.L.P. (contained in Exhibit 5.1).
24.1 -- Powers of Attorney (included on the signature page of the
Registration Statement).
+25.1 -- Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939, as amended, of the Conoco
Trustee.
</Table>
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* Conoco will file as an exhibit to a Current Report on Form 8-K (i) any
underwriting agreement relating to the securities offered hereby, (ii) the
instruments setting forth the terms of any debt securities, (iii) any required
opinion of counsel to Conoco and Conoco Funding as to certain tax matters
relative to the securities offered hereby and (iv) the Statement of
Eligibility and Qualification under the Trust Indenture Act of 1939, as
amended, of the Conoco Funding Trustee.
+ To be filed by amendment.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that the undertakings set forth in paragraphs (a)(1)(i)
and (a)(1)(ii) above do not apply if the information required to be
included in a post-effective amendment by those
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paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, each Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by a Registrant of expenses
incurred or paid by a director, officer or controlling person of such 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, such Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(d) The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act 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, 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.
(e) The undersigned Registrants hereby undertake to file an application for
the purpose of determining the eligibility of the Conoco Funding Trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act of 1939 (the
"Act") in accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Act.
II-4
23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
undersigned 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 Houston, State of Texas on September 10, 2001.
CONOCO INC.
By: /s/ ROBERT W. GOLDMAN
----------------------------------
Name: Robert W. Goldman
Title: Senior Vice President,
Finance, and Chief
Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints Archie W. Dunham,
Chairman, President and Chief Executive Officer of Conoco, Robert W. Goldman,
Senior Vice President, Finance, and Chief Financial Officer of Conoco, and Rick
A. Harrington, Senior Vice President, Legal, and General Counsel of Conoco, and
each of them, severally, as his or her true and lawful attorney or
attorneys-in-fact and agent or agents, each of whom shall be authorized to act
with or without the other, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead in his or her capacity as
a director or officer or both, as the case may be, of Conoco, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement and any registration statement of the type contemplated by Rule 462(b)
under the Securities Act of 1933, as amended (the "Securities Act"), and all
documents or instruments necessary or appropriate to enable Conoco to comply
with the Securities Act, and to file the same with the Securities and Exchange
Commission, with full power and authority to each of said attorneys-in-fact and
agents to do and perform in the name and on behalf of each such director or
officer, or both, as the case may be, each and every act whatsoever that is
necessary, appropriate or advisable in connection with any or all of the
above-described matters and to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them or their substitutes, may lawfully do or cause to be done
by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON SEPTEMBER 10, 2001.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ ARCHIE W. DUNHAM Chairman, President and Chief Executive
- --------------------------------------------- Officer (Principal Executive Officer)
Archie W. Dunham
/s/ ROBERT W. GOLDMAN Senior Vice President, Finance, and Chief
- --------------------------------------------- Financial Officer (Principal Financial
Robert W. Goldman Officer)
/s/ W. DAVID WELCH Controller (Principal Accounting Officer)
- ---------------------------------------------
W. David Welch
/s/ KENNETH M. DUBERSTEIN Director
- ---------------------------------------------
Kenneth M. Duberstein
</Table>
II-5
24
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ RUTH R. HARKIN Director
- ---------------------------------------------
Ruth R. Harkin
/s/ CHARLES C. KRULAK Director
- ---------------------------------------------
Charles C. Krulak
/s/ FRANK A. MCPHERSON Director
- ---------------------------------------------
Frank A. McPherson
/s/ WILLIAM K. REILLY Director
- ---------------------------------------------
William K. Reilly
Director
- ---------------------------------------------
William R. Rhodes
/s/ A.R. SANCHEZ, JR. Director
- ---------------------------------------------
A.R. Sanchez, Jr.
/s/ FRANKLIN A. THOMAS Director
- ---------------------------------------------
Franklin A. Thomas
</Table>
II-6
25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
undersigned 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 Houston, State of Texas, on September 10, 2001.
CONOCO FUNDING COMPANY
By: /s/ ROBERT W. GOLDMAN
----------------------------------
Name: Robert W. Goldman
Title: Vice President and
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints Archie W. Dunham,
Chairman, President and Chief Executive Officer of Conoco Inc., Robert W.
Goldman, Senior Vice President, Finance, and Chief Financial Officer of Conoco
Inc., and Rick A. Harrington, Senior Vice President, Legal, and General Counsel
of Conoco Inc., and each of them, severally, as his or her true and lawful
attorney or attorneys-in-fact and agent or agents, each of whom shall be
authorized to act with or without the other, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead in his or
her capacity as a director or officer or both, as the case may be, of Conoco
Funding Company, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and any registration statement of the
type contemplated by Rule 462(b) under the Securities Act of 1933, as amended
(the "Securities Act"), and all documents or instruments necessary or
appropriate to enable Conoco Funding Company to comply with the Securities Act,
and to file the same with the Securities and Exchange Commission, with full
power and authority to each of said attorneys-in-fact and agents to do and
perform in the name and on behalf of each such director or officer, or both, as
the case may be, each and every act whatsoever that is necessary, appropriate or
advisable in connection with any or all of the above-described matters and to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them or their
substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON SEPTEMBER 10, 2001.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ ROBERT E. MCKEE, III Senior Director and President (Principal
- --------------------------------------------- Executive Officer)
Robert E. McKee, III
/s/ ROBERT W. GOLDMAN Director, Vice President and Chief Financial
- --------------------------------------------- Officer (Principal Financial Officer)
Robert W. Goldman
/s/ W. DAVID WELCH Controller (Principal Accounting Officer)
- ---------------------------------------------
W. David Welch
/s/ PHILIP L. FREDERICKSON Director
- ---------------------------------------------
Philip L. Frederickson
</Table>
II-7
26
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 -- Indenture, dated as of April 15, 1999, between Conoco, as
issuer, and Bank One, N.A., as trustee (the "Conoco
Trustee"), relating to the debt securities of Conoco.
+4.2 -- Form of Indenture between Conoco, as guarantor, Conoco
Funding, as issuer, and the trustee thereunder (the
"Conoco Funding Trustee") relating to the debt securities
of Conoco Funding.
+5.1 -- Opinion of Baker Botts L.L.P. with respect to legality of
the securities offered hereby.
12.1 -- Computation of ratio of earnings to fixed charges.
23.1 -- Consent of PricewaterhouseCoopers LLP.
23.2 -- Consent of Ernst & Young LLP.
+23.3 -- Consent of Baker Botts L.L.P. (contained in Exhibit 5.1).
24.1 -- Powers of Attorney (included on the signature page of the
Registration Statement).
+25.1 -- Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939, as amended, of the Conoco
Trustee.
</Table>
- ---------------
* Conoco will file as an exhibit to a Current Report on Form 8-K (i) any
underwriting agreement relating to the securities offered hereby, (ii) the
instruments setting forth the terms of any debt securities, (iii) any required
opinion of counsel to Conoco and Conoco Funding as to certain tax matters
relative to the securities offered hereby and (iv) the Statement of
Eligibility and Qualification under the Trust Indenture Act of 1939, as
amended, of the Conoco Funding Trustee.
+ To be filed by amendment.