AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 13, 2002
REGISTRATION NO. 333-
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CONOCOPHILLIPS DELAWARE 2911 01-0562944
CONOCO INC. DELAWARE 2911 51-0370352
PHILLIPS PETROLEUM COMPANY DELAWARE 2911 73-0400345
(Exact name of each registrant as (State or other jurisdiction (Primary standard industrial (I.R.S. employer
specified in its charter) of incorporation or classification code number) identification number)
organization)
600 NORTH DAIRY ASHFORD RICK A. HARRINGTON
HOUSTON, TEXAS 77079 SENIOR VICE PRESIDENT, LEGAL,
(281) 293-1000 AND GENERAL COUNSEL
(Address, including zip code, and telephone number, including area CONOCOPHILLIPS
code, of each registrant's principal executive offices) 600 NORTH DAIRY ASHFORD
HOUSTON, TEXAS 77079
(281) 293-1000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copy to:
KELLY B. ROSE
BAKER BOTTS L.L.P.
ONE SHELL PLAZA
910 LOUISIANA
HOUSTON, TEXAS 77002
(713) 229-1234
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Securities Act"), check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------------
3.625% Notes due 2007 $400,000,000 100% $400,000,000 $36,800
- -----------------------------------------------------------------------------------------------------------------------------------
4.75% Notes due 2012 $1,000,000,000 100% $1,000,000,000 $92,000
- -----------------------------------------------------------------------------------------------------------------------------------
5.90% Notes due 2032 $600,000,000 100% $600,000,000 $55,200
- -----------------------------------------------------------------------------------------------------------------------------------
Guarantees of the Notes by Conoco Inc. -- -- -- (2)
and Phillips Petroleum Company
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Total $2,000,000,000 $2,000,000,000 $184,000(3)
===================================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f) under the Securities Act.
(2) Pursuant to Rule 457(n) under the Securities Act, no registration fee is
required with respect to the Guarantees.
(3) Pursuant to Rule 457(p) under the Securities Act, ConocoPhillips hereby
offsets the registration fee required in connection with this Registration
Statement by a total of $184,000 previously paid by Phillips Petroleum
Company and certain Delaware trusts of Phillips, each of which are wholly
owned subsidiaries of ConocoPhillips, in connection with the registration
of $696,969,697 aggregate initial offering price of securities of Phillips
and such trusts pursuant to the Registration Statement on Form S-3
(Registration Nos. 333-34336, 333-34336-01, 333-34336-02, 333-34336-03 and
333-34336-04) initially filed with the Securities and Exchange Commission
on April 7, 2000. Accordingly, no filing fee is paid herewith.
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 WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED NOVEMBER 13, 2002
$2,000,000,000
CONOCOPHILLIPS
OFFER TO EXCHANGE
3.625% NOTES DUE 2007 FOR ALL 4.75% NOTES DUE 2012 FOR ALL 5.90% NOTES DUE 2032 FOR ALL
OUTSTANDING 3.625% NOTES DUE 2007 OUTSTANDING 4.75% NOTES DUE 2012 OUTSTANDING 5.90% NOTES DUE 2032
($400,000,000) ($1,000,000,000) ($600,000,000)
FULLY AND UNCONDITIONALLY GUARANTEED BY
CONOCO INC. AND PHILLIPS PETROLEUM COMPANY
THE NEW NOTES YOU SHOULD NOTE THAT
- - will be freely tradeable and otherwise - we will exchange all old notes that are validly
substantially identical to the old notes tendered and not validly withdrawn for an equal
principal amount of new notes that we have
THE EXCHANGE OFFER registered under the Securities Act of 1933
- - expires at 5:00 p.m., New York City time, on - you may withdraw tenders of old notes at any
, , unless extended time prior to the expiration of the exchange offer
- - is not conditioned upon any minimum aggregate - the exchange of old notes for new notes in the
principal amount of old notes being tendered exchange offer should not be a taxable event for
U.S. federal income tax purposes
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NEW NOTES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS ,
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT US THAT IS NOTINCLUDED IN OR DELIVERED WITH THIS DOCUMENT. SEE "WHERE YOU
CAN FIND MORE INFORMATION" ON PAGE 46 FOR A LISTING OF DOCUMENTS WE INCORPORATE
BY REFERENCE. THESE DOCUMENTS ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN OR ORAL
REQUEST DIRECTED TO CONOCOPHILLIPS, SHAREHOLDER RELATIONS DEPARTMENT, P.O. BOX
2197, HOUSTON, TEXAS 77079-2197, TELEPHONE: (281) 293-6800. TO ENSURE TIMELY
DELIVERY OF THESE DOCUMENTS, ANY REQUEST BY STOCKHOLDERS SHOULD BE MADE BY ,
. THE EXHIBITS TO THESE DOCUMENTS WILL GENERALLY NOT BE MADE AVAILABLE
UNLESS THEY ARE SPECIFICALLY INCORPORATED BY REFERENCE IN THE DOCUMENTS.
TABLE OF CONTENTS
Forward-Looking Information 3
Prospectus Summary 4
Private Placement 12
Use of Proceeds 12
Capitalization 13
Ratio of Earnings to Fixed Charges 14
The Exchange Offer 15
Description of the Notes 25
Registration Rights Agreement 40
United States Federal Income Tax Consequences 43
Plan of Distribution 44
Transfer Restrictions on Old Notes 45
Legal Matters 46
Experts 46
Where You Can Find More Information 46
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THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT WE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. YOU SHOULD RELY ONLY ON THE INFORMATION WE
HAVE PROVIDED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH ADDITIONAL OR DIFFERENT INFORMATION. WE
ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER
IS NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS
ACCURATE ONLY AS OF THE DATE ON THE FRONT OF THIS DOCUMENT AND THAT ANY
INFORMATION WE HAVE INCORPORATED BY REFERENCE IS ACCURATE ONLY AS OF THE DATE OF
THE DOCUMENT INCORPORATED BY REFERENCE.
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2
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,"
"anticipates," "intends," "plans," "projects," "believes," "estimates" and
similar expressions.
We have based the forward-looking statements relating to our operations
on our current expectations, estimates and projections about us and the
industries in which we operate 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, our 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:
o fluctuations in crude oil, natural gas and natural gas liquids
prices, refining and marketing margins and margins for our chemicals
business;
o changes in our business, operations, results and prospects;
o the operation and financing of our mid-stream and chemicals joint
ventures;
o potential failure to realize fully or within the expected time frame
the expected cost savings and synergies from the combination of Conoco
and Phillips;
o costs or difficulties related to the integration of the businesses of
Conoco and Phillips, as well as the continued integration of businesses
recently acquired by each of them;
o 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;
o unsuccessful exploratory drilling activities;
o failure of new products and services to achieve market acceptance;
o unexpected cost increases or technical difficulties in constructing
or modifying facilities for exploration and production projects,
manufacturing or refining;
o unexpected difficulties in manufacturing or refining our refined
products, including synthetic crude oil, and chemicals products;
o lack of, or disruptions in, adequate and reliable transportation for
our crude oil, natural gas and refined products;
o inability to timely obtain or maintain permits, comply with
government regulations or make capital expenditures required to
maintain compliance;
o potential disruption or interruption of our facilities due to
accidents, political events or terrorism;
o international monetary conditions and exchange controls;
o liability for remedial actions, including removal and reclamation
obligations, under environmental regulations;
o liability resulting from litigation;
o general domestic and international economic and political conditions,
including armed hostilities and governmental disputes over territorial
boundaries;
o changes in tax and other laws or regulations applicable to our
business; and
o inability to obtain economical financing for exploration and
development projects, construction or modification of facilities and
general corporate purposes.
3
PROSPECTUS SUMMARY
This summary highlights selected information from this prospectus, but does
not contain all information that may be important to you. This prospectus
includes specific terms of the exchange offer and the new notes, information
about our business and financial data, and we encourage you to read it in its
entirety before making an investment decision.
In this prospectus, we refer to ConocoPhillips, its wholly owned and
majority owned subsidiaries (including Conoco Inc. and Phillips Petroleum
Company) and its ownership interest in equity affiliates as "we," "us" or
"ConocoPhillips," unless the context clearly indicates otherwise. Our ownership
interest in equity affiliates includes corporate entities, partnerships, limited
liability companies and other ventures in which we exert significant influence
by virtue of our ownership interest, which is typically between 20% and 50%.
ABOUT CONOCOPHILLIPS
We are an international, integrated energy company. We are the third
largest integrated energy company in the United States, based on market
capitalization and oil and gas reserves and production. Worldwide, we are the
sixth largest publicly owned energy company, based on oil and gas reserves, and
the fifth largest refiner. We were founded in 2002 as a result of the
combination of the businesses of Conoco Inc. and Phillips Petroleum Company.
Combined, the new company has more than 200 years of experience in the energy
industry. Headquartered in Houston, Texas, we operate in 49 countries. We have
approximately 56,000 employees worldwide and, as of June 30, 2002, pro forma
assets of approximately $75 billion.
We have four core activities worldwide:
- petroleum exploration and production;
- petroleum refining, marketing, supply and transportation;
- natural gas gathering, processing and marketing; and
- chemicals and plastics production.
As of December 31, 2001, on a pro forma combined basis, we had proved
worldwide oil and natural gas reserves of 8.4 billion barrels of oil equivalent
("BOE") and tar sands reserves of 0.3 billion BOE. In this prospectus, natural
gas volumes have been converted to BOE using a ratio of six thousand cubic feet
to one barrel of oil. Based on pro forma production figures for 2001, we would
have had average daily production of 1.6 million BOE per day and a reserve life
of approximately 15 years. We conduct exploration and/or production activities
in 30 countries.
After dispositions relating to Federal Trade Commission review of the
ConocoPhillips merger, we will own interests in 18 refineries in six countries
with aggregate net refining capacity of 2,606 thousand barrels per day. In the
United States, we will own and operate 12 refineries with aggregate net refining
capacity of 2,166 thousand barrels per day, making us the largest refiner in the
nation. We will market our products through approximately 19,500 marketing
outlets in 18 countries.
We participate in the chemicals and plastics business through a 50%
interest in Chevron Phillips Chemical Company, a leading producer of olefins,
polyolefins, aromatics and styrenics. We participate in the natural gas
gathering, processing and marketing business through our 30.3% interest in Duke
Energy Field Services and with other directly owned assets.
We have technological expertise in deepwater exploration and production,
reservoir management and exploitation, 3-D seismic, high-grade petroleum coke
upgrading and sulfur removal. In addition, we have three emerging businesses
under development -- carbon fibers, natural gas refining and power generation.
4
Our principal executive office is located at 600 North Dairy Ashford,
Houston, Texas 77079, telephone (281) 293-1000.
ABOUT CONOCO AND PHILLIPS
Conoco Inc. and Phillips Petroleum Company are our wholly owned
subsidiaries. Their principal executive offices are located at 600 North Dairy
Ashford, Houston, Texas 77079, telephone (281) 293-1000.
THE EXCHANGE OFFER
On October 9, 2002, we issued $400 million principal amount of the
outstanding 3.625% Notes due 2007, $1,000 million principal amount of the
outstanding 4.75% Notes due 2012 and $600 million principal amount of the
outstanding 5.90% Notes due 2032. We sold the old notes of each series in
transactions that were exempt from or not subject to the registration
requirements under the Securities Act. Accordingly, the old notes are subject to
transfer restrictions. In general, you may not offer or sell the old notes
unless either they are registered under the Securities Act or the offer or sale
is exempt from or not subject to registration under the Securities Act and
applicable state securities laws.
In connection with the sale of the old notes, we entered into a
registration rights agreement with the initial purchasers of the old notes. We
agreed to use our reasonable best efforts to have the registration statement of
which this prospectus is a part declared effective by the SEC within 180 days
after the issue date of the old notes and to complete the exchange offer for
each series of notes within 45 days after the registration statement becomes
effective. In the exchange offer, you are entitled to exchange your old notes
for new notes with substantially identical terms, except that the existing
transfer restrictions will be removed. You should read the discussion under the
headings "--Terms of the New Notes" beginning on page 8 and "Description of the
Notes" beginning on page 25 for further information about the new notes.
The exchange offer consists of separate, independent exchange offers for
each series of notes. We have summarized the terms of the exchange offer below.
You should read the discussion under the heading "The Exchange Offer" beginning
on page 15 for further information about the exchange offer and resale of the
new notes. IF YOU FAIL TO EXCHANGE YOUR OLD NOTES FOR NEW NOTES IN THE EXCHANGE
OFFER, THE EXISTING TRANSFER RESTRICTIONS WILL REMAIN IN EFFECT AND THE MARKET
VALUE OF YOUR OLD NOTES LIKELY WILL BE ADVERSELY AFFECTED BECAUSE OF A SMALLER
FLOAT AND REDUCED LIQUIDITY.
Expiration Date The exchange offer will expire at 5:00 p.m., New York City time, on ,
, or such later date and time to which we extend it.
Withdrawal of Tenders You may withdraw your tender of old notes at any time prior to the expiration date.
We will return to you, without charge, promptly after the expiration or termination of
the exchange offer, any old notes that you tendered but that were not accepted for
exchange.
Conditions to the Exchange Offer We will not be required to accept old notes for exchange:
- if the exchange offer would be unlawful or would violate any interpretation of
the staff of the SEC; or
- if any legal action has been instituted or threatened that would impair our
ability to proceed with the exchange offer.
The exchange offer is not conditioned upon any minimum aggregate principal amount of
old notes being tendered. Please read "The Exchange Offer--Conditions to the Exchange
Offer" beginning on page 17 for more information about the conditions to the exchange
offer.
5
Procedures for Tendering Old Notes If you wish to participate in the exchange offer, you must complete, sign and date the
letter of transmittal that we are providing with this prospectus and mail or deliver
the letter of transmittal, together with the old notes, to the exchange agent. If
your old notes are held through The Depository Trust Company, you may effect delivery
of the old notes by book-entry transfer.
In the alternative, if your old notes are held through DTC, you may participate in
the exchange offer through DTC's automated tender offer program. If you tender under
this program, you will agree to be bound by the letter of transmittal as though you
had signed it.
By signing or agreeing to be bound by the letter of transmittal, you will represent
to us that, among other things:
- any new notes that you receive will be acquired in the ordinary course of your
business;
- you have no arrangement or understanding with any person to participate in the
distribution of the old notes or the new notes;
- you are not our "affiliate," as defined in Rule 405 of the Securities Act, or,
if you are our affiliate, you will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable;
- if you are not a broker-dealer, you are not engaged in, and do not intend to
engage in, the distribution of the new notes;
- if you are a broker-dealer, you will receive new notes for your own account in
exchange for old notes that you acquired as a result of market-making activities
or other trading activities, and you will deliver a prospectus in connection with
any resale of such new notes;
- if you are a broker-dealer, you did not purchase the old notes to be exchanged
for the new notes from us; and
- you are not acting on behalf of any person who could not truthfully and
completely make the foregoing representations.
Special Procedures for Beneficial Owners If you own a beneficial interest in old notes that are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and you wish to
tender the old notes in the exchange offer, please contact the registered holder as
soon as possible and instruct it to tender on your behalf and to comply with our
instructions described in this prospectus.
Guaranteed Delivery Procedures You must tender your old notes according to the guaranteed delivery procedures
described in "The Exchange Offer--Guaranteed Delivery Procedures" beginning on
page 21 if any of the following apply:
- you wish to tender your old notes but they are not immediately available;
6
- you cannot deliver your old notes, the letter of transmittal or any other
required documents to the exchange agent prior to the expiration date; or
- you cannot comply with the applicable procedures under DTC's automated tender
offer program prior to the expiration date.
United States Federal Income Tax The exchange of old notes for new notes in the exchange offer should not be a
Consequences taxable event for U.S. federal income tax purposes. Please read "United States Federal
Income Tax Consequences" beginning on page 43.
Use of Proceeds We will not receive any cash proceeds from the issuance of new notes in the exchange
offer.
THE EXCHANGE AGENT
We have appointed The Bank of New York as exchange agent for the exchange
offer. Please direct questions and requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal and
requests for the notice of guaranteed delivery to the exchange agent. If you are
not tendering under DTC's automated tender offer program, you should send the
letter of transmittal and any other required documents to the exchange agent as
follows:
THE BANK OF NEW YORK
(212) 815-2742
BY OVERNIGHT DELIVERY, COURIER OR
MAIL (REGISTERED OR CERTIFIED MAIL
RECOMMENDED):
The Bank of New York
101 Barclay Street - 7 East Floor
New York, New York 10286
Attention: Enrique Lopez
Reorganization Unit - 7E
BY FACSIMILE TRANSMISSION (ELIGIBLE INSTITUTIONS ONLY):
(212) 298-1915
Attention: Enrique Lopez
Confirm by Telephone:
(212) 815-2742
7
TERMS OF THE NEW NOTES
The new notes will be freely tradeable and otherwise substantially
identical to the old notes. The new notes will not have registration rights or
provisions for additional interest. The new notes will evidence the same debt as
the old notes, and the old notes and the new notes will be governed by the same
indenture. The old notes of a series and the new notes of that series will vote
together as a single separate class under the indenture.
Notes Offered $400 million principal amount of 3.625% Notes due 2007
$1,000 million principal amount of 4.75% Notes due 2012
$600 million principal amount of 5.90% Notes due 2032
Maturity Date October 15, 2007 for the 3.625% Notes due 2007
October 15, 2012 for the 4.75% Notes due 2012
October 15, 2032 for the 5.90% Notes due 2032
Interest Payment Dates April 15 and October 15 of each year, commencing April 15, 2003
Optional Redemption At any time, ConocoPhillips may elect to redeem any or all of the new notes of a
series in principal amounts of $1,000 or any integral multiple of $1,000.
ConocoPhillips will pay an amount equal to the principal amount of notes redeemed
plus a make-whole premium, which is described under the heading "Description of the
Notes--Redemption" beginning on page 26. ConocoPhillips will also pay accrued
interest to the redemption date.
Guarantee Conoco and Phillips 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 new notes when and as it becomes due and payable, whether at maturity or
otherwise.
Ranking The new notes will constitute senior debt of ConocoPhillips and will rank:
- equally with its senior unsecured debt from time to time outstanding, including
its guarantees of the debt of Conoco and Phillips;
- senior to its subordinated debt from time to time outstanding; and
- effectively junior to its secured debt and to all debt and other liabilities of
its subsidiaries other than Conoco and Phillips from time to time outstanding.
Covenants We will issue the new notes under an indenture containing covenants for your benefit.
These covenants restrict our ability, with certain exceptions, to:
- incur debt secured by liens;
- engage in sale/leaseback transactions; and
- merge, consolidate or transfer all or substantially all of our assets.
8
Rights under Registration Rights
Agreement If we fail to complete the exchange offer as required by the registration rights
agreement, we may be obligated to pay additional interest to holders of the old notes.
Please read "Registration Rights Agreement" beginning on page 40 for more information
regarding your rights as a holder of old notes.
Lack of a Public Market for the New Notes There is no existing trading market for the new notes, and there can be no assurance
regarding:
- any future development or liquidity of a trading market for the new notes;
- your ability to sell your new notes at all; or
- the price at which you may be able to sell your new notes.
Future trading prices of the new notes will depend on many factors, including:
- prevailing interest rates;
- our operating results and financial condition; and
- the market for similar securities.
Although we have applied to list the notes on the Luxembourg Stock Exchange, we do not
currently intend to apply for the listing of the notes on any other securities
exchange or for quotation of the notes in any dealer quotation system. We cannot
guarantee that listing will be obtained on the Luxembourg Stock Exchange.
Further Issues The 3.625% Notes due 2007 are limited to $400 million in aggregate principal amount,
the 4.75% Notes due 2012 are limited to $1,000 million in aggregate principal amount
and the 5.90% Notes due 2032 are limited to $600 million in aggregate principal
amount. We may, however, "reopen" each series of notes and issue an unlimited
principal amount of additional notes of that series in the future without the consent
of the holders.
9
SUMMARY PRO FORMA COMBINED FINANCIAL DATA
We have provided in the table below summary pro forma combined financial
data of ConocoPhillips. The data have been derived from, and should be read
together with, the pro forma combined financial statements and related notes
incorporated by reference in this prospectus. This information is based on the
historical consolidated balance sheets and related adjusted historical
consolidated statements of income of Conoco and Phillips, and gives effect to
the August 2002 combination of Conoco and Phillips using the purchase method of
accounting for business combinations. Conoco's and Phillips' income statements
for the year ended December 31, 2001 have been adjusted to reflect the pro forma
impact of the acquisition of Gulf Canada Resources Limited, effective July 1,
2001, and the acquisition of Tosco Corporation on September 14, 2001,
respectively, as if both transactions had occurred on January 1, 2001.
The companies may have performed differently had they always been combined.
You should not rely on the summary pro forma combined financial data as being
indicative of the historical results that would have been achieved had the
companies always been combined or of our future results.
SIX MONTHS ENDED YEAR ENDED
JUNE 30 DECEMBER 31
2002 2001
----------------- -----------
(IN MILLIONS)
STATEMENT OF INCOME DATA:
Sales and other operating revenues $37,832 85,857
Income before extraordinary items and cumulative effect
of changes in accounting principles 544 3,940
AT
JUNE 30
2002
-------------
(IN MILLIONS)
BALANCE SHEET DATA:
Total assets $74,822
Long-term debt 17,179
10
SUMMARY HISTORICAL FINANCIAL DATA
We have provided in the tables below summary consolidated historical
financial data of Conoco and Phillips. We have derived the statement of income
data for each of the years in the five-year period ended December 31, 2001, and
the historical balance sheet data as of December 31, 2001, 2000, 1999, 1998 and
1997, from audited consolidated financial statements of Conoco and Phillips. We
have derived the statement of income data for the six-month periods ended June
30, 2002 and 2001, and the balance sheet data as of June 30, 2002, from
unaudited consolidated financial statements of Conoco and of Phillips, which, in
our management's opinion, include all adjustments necessary for the fair
presentation of the financial position of each company at such date and the
results of operations of each company for such periods. Results of operations of
each company for the six-month period ended June 30, 2002 are not necessarily
indicative of the results of operations that may be achieved for the entire
year. You should read the following financial data in conjunction with the pro
forma combined financial statements and related notes, the consolidated
financial statements and related notes and the other financial information that
we have incorporated by reference in this prospectus.
SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA OF CONOCO
SIX MONTHS
ENDED
JUNE 30 YEARS ENDED DECEMBER 31
----------------- --------------------------------------------
2002 2001 2001 2000 1999 1998 1997
------- ------ ------ ------ ------ ------ ------
(IN MILLIONS)
STATEMENT OF INCOME DATA:
Sales and other operating revenues $17,556 21,002 38,737 38,737 27,039 22,796 25,796
Income before extraordinary item and cumulative effect
of change in accounting principle 214 1,168 1,596 1,902 744 450 1,097
Net income 234 1,205 1,589 1,902 744 450 1,097
OTHER DATA:
Cash provided by operations 1,283 1,623 3,141 3,438 2,216 1,373 2,876
Cash used in investing activities 1,339 859 6,347 2,472 1,706 1,598 2,037
Cash provided by (used in) financing activities (43) (473) 3,362 (920) (552) (555) (499)
Capital expenditures and investments 1,448 971 2,835 2,796 1,787 2,516 3,114
Cash exploration expense 128 78 262 191 139 217 286
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets 29,754 27,904 18,127 16,375 16,075 17,062
Long-term debt 8,240 8,267 4,138 4,080 4,689 1,556
SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA OF PHILLIPS
SIX MONTHS
ENDED
JUNE 30 YEARS ENDED DECEMBER 31
----------------- --------------------------------------------
2002 2001 2001 2000 1999 1998 1997
------- ------ ------ ------ ------ ------ ------
(IN MILLIONS)
STATEMENT OF INCOME DATA:
Sales and other operating revenues $20,930 10,593 26,729 22,690* 15,396* 13,208* 16,545*
Income before extraordinary item and cumulative effect
of change in accounting principle 264 1,107 1,643 1,862 609 237 959
Net income 249 1,135 1,661 1,862 609 237 959
Pro forma income before extraordinary item assuming the
turnaround accounting method was applied
retroactively** 264 1,107 1,643 1,851 609 242 971
Pro forma net income assuming the turnaround accounting
method was applied retroactively** 249 1,135 1,633 1,851 609 242 971
OTHER DATA:
Cash provided by operations 1,109 1,948 3,562 4,014 1,941 1,630 2,245
Cash used in investing activities 1,460 1,190 2,770 5,762 1,482 1,984 2,056
Cash provided by (used in) financing activities 354 (820) (799) 1,759 (418) 288 (641)
Capital expenditures and investments 1,543 1,414 3,085 2,022 1,690 2,052 2,043
Cash exploration expense 88 90 207 168 133 165 151
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets 36,823 35,217 20,509 15,201 14,216 13,860
Long-term debt 8,576 8,645 6,622 4,271 4,106 2,775
Mandatorily redeemable preferred securities of Phillips
66 Capital Trusts I and II 350 650 650 650 650 650
- ----------
* Restated to include excise taxes on the sale of petroleum products.
** Effective January 1, 2001, Phillips changed its accounting method for major
maintenance turnarounds from the accrue-in-advance method to the
expense-as-incurred method. Amounts reflect the pro forma effects of
retroactive application to all periods presented.
11
PRIVATE PLACEMENT
On October 9, 2002, we issued the $400 million principal amount of the
outstanding 3.625% Notes due 2007, the $1,000 million principal amount of the
outstanding 4.75% Notes due 2012 and the $600 million principal amount of the
outstanding 5.90% Notes due 2032 to the initial purchasers of those notes and
received proceeds, after deducting the discount to the initial purchasers, equal
to 99.545%, 99.550% and 97.877%, respectively, of the principal amount.
We issued the old notes of each series to the initial purchasers in
transactions exempt from or not subject to registration under the Securities Act
of 1933. The initial purchasers then offered and resold the notes to qualified
institutional buyers, institutional accredited investors and non-U.S. persons
initially at the following prices:
- 99.895% of the principal amount of 3.625% Notes due 2007;
- 100.000% of the principal amount of 4.75% Notes due 2012; and
- 98.752% of the principal amount of 5.90% Notes due 2032.
We received aggregate net proceeds of $1,980 million from the sale of the
old notes. We used those proceeds to repay Conoco's Floating Rate Notes due
October 15, 2002, to reduce outstanding commercial paper and for general
corporate purposes.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new notes.
In consideration for issuing the new notes of each series, we will receive in
exchange a like principal amount of old notes of that series. The old notes
surrendered in exchange for the new notes will be retired and canceled and
cannot be reissued. Accordingly, issuance of the new notes will not result in
any change in our capitalization.
12
CAPITALIZATION
We have provided in the table below, as of June 30, 2002, the consolidated
capitalization of Conoco and of Phillips on an historical basis and of
ConocoPhillips (1) on a pro forma basis giving effect to the August 2002
combination of Conoco and Phillips as if it had occurred on June 30, 2002, and
(2) as further adjusted to give effect to the issuance of the old notes and the
application of all the net proceeds to repay Conoco's floating rate notes and to
reduce outstanding commercial paper.
JUNE 30, 2002
--------------------------------------------------------------
CONOCOPHILLIPS
CONOCO PHILLIPS CONOCOPHILLIPS PRO FORMA
HISTORICAL HISTORICAL PRO FORMA AS ADJUSTED
---------- ---------- -------------- --------------
(IN MILLIONS)
Short-term debt:
Notes payable and long-term debt due within
one year $ 1,782 1,059 2,841 861
------- ------ ------ ------
Long-term debt:
3.625% Notes due 2007 -- -- -- 400
4.75% Notes due 2012 -- -- -- 1,000
5.90% Notes due 2032 -- -- -- 600
Other long-term debt 8,240 8,576 17,179 17,179
------- ------ ------ ------
Total long-term debt 8,240 8,576 17,179 19,179
------- ------ ------ ------
Company-obligated mandatorily redeemable preferred
securities -- 350 350 350
------- ------ ------ ------
Total common stockholders' equity 7,145 14,456 29,513 29,513
------- ------ ------ ------
Total capitalization $17,167 24,441 49,883 49,903
======= ====== ====== ======
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RATIO OF EARNINGS TO FIXED CHARGES
The following table presents the historical ratios of earnings to fixed
charges of each of Conoco and Phillips for the six-month period ended June 30,
2002, and for each of the years in the five-year period ended December 31, 2001.
The following table also presents the unaudited pro forma ratio of earnings to
fixed charges of ConocoPhillips for the six-month period ended June 30, 2002,
and for the year ended December 31, 2001, giving effect to the combination of
Conoco and Phillips using the purchase method of accounting, as if the
combination had occurred on January 1, 2001.
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31
JUNE 30 -------------------------------------
2002 2001 2000 1999 1998 1997
---------- ---- ---- ---- ---- -----
RATIO OF EARNINGS TO FIXED CHARGES:
Conoco 2.4x 6.4x 8.5x 3.9x 3.2x 12.9x
Phillips 2.7x 5.4x 6.6x 3.7x 2.1x 5.5x
ConocoPhillips (pro forma) 2.8x 5.8x
For purposes of this table, "earnings" consist of income before income
taxes, extraordinary items and cumulative effect of accounting changes, plus
fixed charges (excluding capitalized interest and the portion of the preferred
dividend requirement of a subsidiary not previously deducted from pretax income,
but including amortization of amounts previously capitalized), less
undistributed earnings of equity investees of Conoco, Phillips or
ConocoPhillips, as applicable. "Fixed charges" consist of interest (including
capitalized interest) on all debt, amortization of debt discounts and expenses
incurred on issuance, and that portion of rental expense believed to represent
interest.
14
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We sold the old notes of each series in transactions that were exempt from
or not subject to the registration requirements under the Securities Act.
Accordingly, the old notes are subject to transfer restrictions. In general, you
may not offer or sell the old notes unless either they are registered under the
Securities Act or the offer or sale is exempt from or not subject to
registration under the Securities Act and applicable state securities laws.
In connection with the sale of the old notes, we entered into a
registration rights agreement with the initial purchasers of the old notes. In
that agreement, we agreed to use our reasonable best efforts to file a
registration statement relating to an offer to exchange each series of old notes
for new notes of the same series and to have that registration statement
declared effective by the SEC within 180 days after the issue date of the old
notes. We also agreed to use our reasonable best efforts to complete the
exchange offer for each series within 45 days after the registration statement
becomes effective. We are offering the new notes of each series under this
prospectus in a separate, independent exchange offer for the old notes of that
series to satisfy our obligations under the registration rights agreement. We
sometimes refer to these separate, independent exchange offers as the "exchange
offer."
RESALE OF NEW NOTES
Based on interpretations of the SEC staff in "no action letters" issued to
third parties, we believe that each new note issued in the exchange offer may be
offered for resale, resold and otherwise transferred by you without compliance
with the registration and prospectus delivery provisions of the Securities Act
if:
- you are not our "affiliate" within the meaning of Rule 405 under the
Securities Act;
- you acquire such new notes in the ordinary course of your business;
and
- you are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a
distribution of new notes.
The SEC has not, however, considered the legality of our exchange offer in
the context of a "no action letter," and there can be no assurance that the
staff of the SEC would make a similar determination with respect to our exchange
offer as it has in other interpretations to other parties.
If you tender your old notes in the exchange offer with the intention of
participating in any manner in a distribution of the new notes, you:
- cannot rely on such interpretations by the SEC staff; and
- must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale
transaction of the new notes.
Unless an exemption from registration is otherwise available, the resale by
any securityholder intending to distribute new notes should be covered by an
effective registration statement under the Securities Act containing the selling
securityholder's information required by Item 507 or Item 508, as applicable, of
Regulation S-K under the Securities Act. This prospectus may be used for an
offer to resell, resale or other retransfer of new notes only as specifically
described in this prospectus. Failure to comply with the registration and
prospectus delivery requirements by a holder subject to these requirements could
result in that holder incurring liability for which it is not indemnified by us.
With respect to broker-dealers, only those that acquired the old notes for their
own account as a result of market-making activities or other trading activities
may participate in the exchange offer. Each broker-dealer that receives new
notes for its own account in exchange for old notes acquired as a result of
market-making activities or other trading activities may be deemed to be an
"underwriter" within the meaning of the Securities Act
15
and must deliver a prospectus in connection with any resale of such new notes.
Please read the section captioned "Plan of Distribution" for more details
regarding the transfer of new notes.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions described in this prospectus
and in the letter of transmittal, we will accept for exchange any old notes of a
series properly tendered and not withdrawn prior to the expiration date of the
exchange offer for notes of that series. We will issue $1,000 principal amount
of new notes of a series in exchange for each $1,000 principal amount of old
notes of that series surrendered under the applicable exchange offer. Old notes
may be tendered only in integral multiples of $1,000.
No exchange offer for notes of a series is conditioned upon any minimum
aggregate principal amount of old notes of that series being tendered for
exchange or upon the consummation of any other exchange offer.
As of the date of this prospectus, $400 million principal amount of 3.625%
Notes due 2007, $1,000 million principal amount of 4.75% Notes due 2012 and $600
million principal amount of 5.90% Notes due 2032 are outstanding. This
prospectus and the letter of transmittal are being sent to all registered
holders of old notes. There will be no fixed record date for determining
registered holders of old notes entitled to participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the provisions
of the registration rights agreement, the applicable requirements of the
Securities Act and the Securities Exchange Act of 1934 and the rules and
regulations of the SEC. Old notes that are not tendered for exchange in the
exchange offer:
- will remain outstanding;
- will continue to accrue interest; and
- will be entitled to the rights and benefits that holders have under
the indenture relating to the notes and, if applicable, the
registration rights agreement.
We will be deemed to have accepted for exchange properly tendered old notes
when we have given oral or written notice of the acceptance to the exchange
agent and complied with the applicable provisions of the registration rights
agreement. The exchange agent will act as agent for the tendering holders for
the purposes of receiving the new notes from us.
If you tender old notes in the exchange offer, you will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange of old notes. We
will pay all charges and expenses, other than certain applicable taxes described
below, in connection with the exchange offer. It is important that you read the
section "--Fees and Expenses" for more details about fees and expenses incurred
in the exchange offer.
We will return any old notes that we do not accept for exchange for any
reason without expense to the tendering holder as promptly as practicable after
the expiration or termination of the applicable exchange offer.
EXPIRATION DATE
Each exchange offer will expire at 5:00 p.m., New York City time, on ,
, unless in our sole discretion we extend it.
EXTENSIONS, DELAY IN ACCEPTANCE, TERMINATION OR AMENDMENT
We expressly reserve the right, at any time or at various times, to extend
the period of time during which an exchange offer for notes of a series is open.
We may extend that period for each series independently. We may
16
delay acceptance for exchange of any old notes of a series by giving oral or
written notice of the extension to their holders. During any such extensions,
all old notes of that series you have previously tendered will remain subject to
the exchange offer for that series, and we may accept them for exchange.
To extend an exchange offer, we will notify the exchange agent orally or in
writing of any extension. We also will make a public announcement of the
extension no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
If any of the conditions described below under "--Conditions to the
Exchange Offer" have not been satisfied with respect to an exchange offer for
notes of a series, we reserve the right, in our sole discretion:
- to delay accepting for exchange any old notes of that series;
- to extend that exchange offer; or
- to terminate that exchange offer.
We will give oral or written notice of such delay, extension or termination to
the exchange agent. Subject to the terms of the registration rights agreement,
we also reserve the right to amend the terms of that exchange offer in any
manner.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
registered holders of old notes of the series affected. If we amend the exchange
offer in a manner that we determine to constitute a material change, we will
promptly disclose that amendment by means of a prospectus supplement. We will
distribute the supplement to the registered holders of the old notes of the
series affected. Depending upon the significance of the amendment and the manner
of disclosure to the registered holders, we will extend the exchange offer if
the exchange offer would otherwise expire during such period.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exchange offer, we have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
CONDITIONS TO THE EXCHANGE OFFER
Despite any other term of the exchange offer, we will not be required to
accept for exchange, or exchange any new notes of a series for, any old notes of
that series, and we may terminate the exchange offer for that series as provided
in this prospectus before accepting any old notes of that series for exchange,
if in our reasonable judgment:
- the exchange offer for that series, or the making of any exchange by a
holder of old notes of that series, would violate any applicable law
or any applicable interpretation of the staff of the SEC; or
- any action or proceeding has been instituted or threatened in any
court or by or before any governmental agency with respect to the
exchange offer for that series that, in our judgment, would reasonably
be expected to impair our ability to proceed with that exchange offer.
In addition, we will not be obligated to accept for exchange the old notes
of any holder that has not made to us:
- the representations described under "--Procedures for Tendering" and
in the letter of transmittal; and
17
- - such other representations as may be reasonably necessary under applicable
SEC rules, regulations or interpretations to make available to us an
appropriate form for registering the new notes under the Securities Act.
We expressly reserve the right to amend or terminate each exchange offer,
and to reject for exchange any old notes not previously accepted for exchange in
that exchange offer, upon the occurrence of any of the conditions to that
exchange offer specified above. We will give oral or written notice of any
extension, amendment, non-acceptance or termination to the holders of the old
notes of the series affected as promptly as practicable.
These conditions are for our sole benefit, and we may assert them or waive
them in whole or in part at any time or at various times in our sole discretion.
Our failure at any time to exercise any of these rights will not mean that we
have waived our rights. Each right will be deemed an ongoing right that we may
assert at any time or at various times.
In addition, we will not accept for exchange any old notes tendered, and
will not issue new notes in exchange for any such old notes, if at that time any
stop order has been threatened or is in effect with respect to the registration
statement of which this prospectus constitutes a part or the qualification of
the indenture relating to the notes under the Trust Indenture Act of 1939.
PROCEDURES FOR TENDERING
HOW TO TENDER GENERALLY
Only a holder of old notes may tender such old notes in the exchange offer.
To tender in the exchange offer, a holder must either (1) comply with the
procedures for physical tender or (2) comply with the automated tender offer
program procedures of The Depository Trust Company, or DTC, described below.
To complete a physical tender, a holder must:
- complete, sign and date the letter of transmittal or a facsimile of
the letter of transmittal;
- have the signature on the letter of transmittal guaranteed if the
letter of transmittal so requires;
- mail or deliver the letter of transmittal or facsimile to the exchange
agent prior to the expiration date; and
- deliver the old notes to the exchange agent prior to the expiration
date or comply with the guaranteed delivery procedures described
below.
To be tendered effectively, the exchange agent must receive any physical
delivery of the letter of transmittal and other required documents at its
address provided above under "Prospectus Summary--The Exchange Agent" prior to
the expiration date. To complete a tender through DTC's automated tender offer
program, the exchange agent must receive, prior to the expiration date, a timely
confirmation of book-entry transfer of such old notes into the exchange agent's
account at DTC according to the procedure for book-entry transfer described
below and a properly transmitted agent's message.
The tender by a holder that is not withdrawn prior to the expiration date
and our acceptance of that tender will constitute an agreement between the
holder and us in accordance with the terms and subject to the conditions
described in this prospectus and in the letter of transmittal.
THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK.
RATHER THAN MAIL THESE ITEMS, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR HAND
DELIVERY SERVICE. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE
DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. YOU SHOULD NOT SEND
THE LETTER OF TRANSMITTAL OR OLD NOTES TO US.
18
YOU MAY REQUEST YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER
NOMINEE TO EFFECT THE ABOVE TRANSACTIONS FOR YOU.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the old notes at DTC for purposes of the exchange offer promptly after the
date of this prospectus. Any financial institution participating in DTC's system
may make book-entry delivery of old notes by causing DTC to transfer such old
notes into the exchange agent's account at DTC in accordance with DTC's
procedures for transfer. If you are unable to deliver confirmation of the
book-entry tender of your old notes into the exchange agent's account at DTC or
all other documents required by the letter of transmittal to the exchange agent
on or prior to the expiration date, you must tender your old notes according to
the guaranteed delivery procedures described below.
TENDERING THROUGH DTC'S AUTOMATED TENDER OFFER PROGRAM
The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may use DTC's automated tender offer
program to tender its old notes. Accordingly, participants in the program may,
instead of physically completing and signing the letter of transmittal and
delivering it to the exchange agent, transmit their acceptance of the exchange
offer electronically. They may do so by causing DTC to transfer the old notes to
the exchange agent in accordance with its procedures for transfer. DTC will then
send an agent's message to the exchange agent.
An "agent's message" is a message transmitted by DTC to and received by the
exchange agent and forming part of the book-entry confirmation, stating that:
- DTC has received an express acknowledgment from a participant in DTC's
automated tender offer program that is tendering old notes that are
the subject of such book-entry confirmation;
- the participant has received and agrees to be bound by the terms of
the letter of transmittal or, in the case of an agent's message
relating to guaranteed delivery, the participant has received and
agrees to be bound by the applicable notice of guaranteed delivery;
and
- we may enforce the agreement against the participant.
HOW TO TENDER IF YOU ARE A BENEFICIAL OWNER
If you beneficially own old notes that are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and you wish to
tender those notes, you should contact the registered holder as soon as possible
and instruct the registered holder to tender on your behalf. If you are a
beneficial owner and wish to tender on your own behalf, you must, prior to
completing and executing the letter of transmittal and delivering your old
notes, either:
- make appropriate arrangements to register ownership of the old notes
in your name; or
- obtain a properly completed bond power from the registered holder of
your old notes.
The transfer of registered ownership may take considerable time and may not
be completed prior to the expiration date.
SIGNATURES AND SIGNATURE GUARANTEES
You must have signatures on a letter of transmittal or a notice of
withdrawal described below guaranteed by an "eligible institution" unless the
old notes are tendered:
19
- by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the
letter of transmittal and the new notes are being issued directly to
the registered holder of the old notes tendered in the exchange offer
for those new notes; or
- for the account of an eligible institution.
An "eligible institution" is a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States, or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act, in each case that is a member of one of the
recognized signature guarantee programs identified in the letter of transmittal.
WHEN ENDORSEMENTS OR BOND POWERS ARE NEEDED
If a person other than the registered holder of any old notes signs the
letter of transmittal, the old notes must be endorsed or accompanied by a
properly completed bond power. The registered holder must sign the bond power as
the registered holder's name appears on the old notes. An eligible institution
must guarantee that signature.
If the letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, those
persons should so indicate when signing. Unless we waive this requirement, they
also must submit evidence satisfactory to us of their authority to deliver the
letter of transmittal.
DETERMINATIONS UNDER THE EXCHANGE OFFER
We will determine in our sole discretion all questions as to the validity,
form, eligibility, time of receipt, acceptance of tendered old notes and
withdrawal of tendered old notes. Our determination will be final and binding.
We reserve the absolute right to reject any old notes not properly tendered or
any old notes our acceptance of which, in the opinion of our counsel, might be
unlawful. We also reserve the right to waive any defects, irregularities or
conditions of the exchange offer as to particular old notes. Our interpretation
of the terms and conditions of the exchange offer, including the instructions in
the letter of transmittal, will be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of
old notes must be cured within the time we determine. Neither we, the exchange
agent nor any other person will be under any duty to give notification of
defects or irregularities with respect to tenders of old notes, nor will we or
those persons incur any liability for failure to give such notification. Tenders
of old notes will not be deemed made until such defects or irregularities have
been cured or waived. Any old notes received by the exchange agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned to the tendering holder, unless otherwise
provided in the letter of transmittal, as soon as practicable following the
expiration date.
WHEN WE WILL ISSUE NEW NOTES
In all cases, we will issue new notes for old notes that we have accepted
for exchange in the exchange offer only after the exchange agent timely
receives:
- old notes or a timely book-entry confirmation of such old notes into
the exchange agent's account at DTC; and
- a properly completed and duly executed letter of transmittal and all
other required documents or a properly transmitted agent's message.
20
RETURN OF OLD NOTES NOT ACCEPTED OR EXCHANGED
If we do not accept any tendered old notes for exchange for any reason
described in the terms and conditions of the exchange offer or if old notes are
submitted for a greater principal amount than the holder desires to exchange, we
will return the unaccepted or non-exchanged old notes without expense to their
tendering holder. In the case of old notes tendered by book-entry transfer into
the exchange agent's account at DTC according to the procedures described above,
such non-exchanged old notes will be credited to an account maintained with DTC.
These actions will occur as promptly as practicable after the rejection of
tender or the expiration or termination of the exchange offer.
YOUR REPRESENTATIONS TO US
By signing or agreeing to be bound by the letter of transmittal, you will
represent to us that, among other things:
- any new notes that you receive will be acquired in the ordinary course
of your business;
- you have no arrangement or understanding with any person to
participate in the distribution of the old notes or the new notes;
- you are not our "affiliate," as defined in Rule 405 of the Securities
Act, or, if you are our affiliate, you will comply with the
registration and prospectus delivery requirements of the Securities
Act to the extent applicable;
- if you are not a broker-dealer, you are not engaged in, and do not
intend to engage in, the distribution of the new notes;
- if you are a broker-dealer, you will receive new notes for your own
account in exchange for old notes that you acquired as a result of
market-making activities or other trading activities, and you will
deliver a prospectus in connection with any resale of such new notes;
- if you are a broker-dealer, you did not purchase the old notes to be
exchanged for the new notes from us; and
- you are not acting on behalf of any person who could not truthfully
and completely make the foregoing representations.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your old notes but they are not immediately available
or if you cannot deliver your old notes, the letter of transmittal or any other
required documents to the exchange agent or comply with the applicable
procedures under DTC's automated tender offer program prior to the expiration
date, you may tender if:
- the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States, or an eligible guarantor
institution;
- prior to the expiration date, the exchange agent receives from that
firm, bank, trust company or institution either a properly completed
and duly executed notice of guaranteed delivery by facsimile
transmission, mail or hand delivery or a properly transmitted agent's
message relating to a notice of guaranteed delivery:
- stating your name and address, the registration number or numbers
of your old notes and the principal amount of old notes tendered;
21
- stating that the tender is being made thereby; and
- guaranteeing that, within three New York Stock Exchange trading
days after the expiration date, the letter of transmittal or
facsimile thereof or agent's message in lieu thereof, together
with the old notes or a book-entry confirmation, and any other
documents required by the letter of transmittal will be deposited
by the eligible guarantor institution with the exchange agent;
- the exchange agent receives such properly completed and executed
letter of transmittal or facsimile or agent's message, as well as all
tendered old notes in proper form for transfer or a book-entry
confirmation, and all other documents required by the letter of
transmittal, within three New York Stock Exchange trading days after
the expiration date.
Upon request to the exchange agent, the exchange agent will send a notice
of guaranteed delivery to you if you wish to tender your old notes according to
the guaranteed delivery procedures described above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw your
tender at any time prior to 5:00 p.m., New York City time, on the expiration
date.
For a withdrawal to be effective:
- the exchange agent must receive a written notice of withdrawal at one
of the addresses listed above under "Prospectus Summary--The Exchange
Agent"; or
- the withdrawing holder must comply with the appropriate procedures of
DTC's automated tender offer program.
Any notice of withdrawal must:
- specify the name of the person who tendered the old notes to be
withdrawn;
- identify the old notes to be withdrawn, including the registration
number or numbers and the principal amount of such old notes;
- be signed by the person who tendered the old notes in the same manner
as the original signature on the letter of transmittal used to deposit
those old notes, or be accompanied by documents of transfer sufficient
to permit the trustee to register the transfer into the name of the
person withdrawing the tender; and
- specify the name in which such old notes are to be registered, if
different from that of the person who tendered the old notes.
If old notes have been tendered under the procedure for book-entry transfer
described above, any notice of withdrawal must specify the name and number of
the account at DTC to be credited with the withdrawn old notes and otherwise
comply with the procedures of DTC.
We will determine in our sole discretion all questions as to the validity,
form, eligibility and time of receipt of notice of withdrawal, and our
determination will be final and binding on all parties. We will deem any old
notes so withdrawn not to have been validly tendered for exchange for purposes
of the exchange offer.
Any old notes that have been tendered for exchange but that are not
exchanged for any reason will be returned to their holder without cost to the
holder or, in the case of old notes tendered by book-entry transfer into the
22
exchange agent's account at DTC according to the procedures described above,
such old notes will be credited to an account maintained with DTC for the old
notes. This return or crediting will take place as soon as practicable after
withdrawal. You may retender properly withdrawn old notes by following one of
the procedures described under "--Procedures for Tendering" above at any time on
or prior to the expiration date.
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, we may make additional solicitation by
facsimile, email, telephone or in person by our officers and regular employees
and those of our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses. We may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this prospectus, letters of transmittal
and related documents to the beneficial owners of the old notes and in handling
or forwarding tenders for exchange.
We will pay the cash expenses to be incurred in connection with the
exchange offer. They include:
- SEC registration fees;
- fees and expenses of the exchange agent and trustee;
- accounting and legal fees and printing costs; and
- related fees and expenses.
TRANSFER TAXES
We will pay all transfer taxes, if any, applicable to the exchange of old
notes in the exchange offer. The tendering holder will, however, be required to
pay any transfer taxes, whether imposed on the registered holder or any other
person, if:
- certificates representing new notes or old notes for principal amounts
not tendered or accepted for exchange are to be delivered to, or are
to be issued in the name of, any person other than the registered
holder of old notes tendered;
- tendered old notes are registered in the name of any person other than
the person signing the letter of transmittal; or
- a transfer tax is imposed for any reason other than the exchange of
old notes in the exchange offer.
If satisfactory evidence of payment of any transfer taxes payable by a tendering
holder is not submitted with the letter of transmittal, the amount of such
transfer taxes will be billed directly to that tendering holder. The exchange
agent will retain possession of new notes with a face amount equal to the amount
of the transfer taxes due until it receives payment of the taxes.
CONSEQUENCES OF FAILURE TO EXCHANGE
If you do not tender your old notes for new notes in the exchange offer, or
if you tender your old notes but subsequently withdraw them, your old notes will
remain outstanding and continue to accrue interest, but will not retain any
rights under the registration rights agreement (except in limited circumstances
involving the initial purchasers and specified broker-dealers) or accrue
additional interest under that agreement. IN ADDITION, YOU WILL
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REMAIN SUBJECT TO THE EXISTING RESTRICTIONS ON TRANSFER OF THE OLD NOTES. IN
GENERAL, YOU MAY NOT OFFER OR SELL THE OLD NOTES UNLESS EITHER THEY ARE
REGISTERED UNDER THE SECURITIES ACT OR THE OFFER OR SALE IS EXEMPT FROM OR NOT
SUBJECT TO REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS. Except as required by the registration rights agreement, we do not intend
to register resales of the old notes under the Securities Act.
THE TENDER OF OLD NOTES OF A SERIES IN THE EXCHANGE OFFER WILL REDUCE THE
PRINCIPAL AMOUNT OF THE OLD NOTES OF THAT SERIES OUTSTANDING. DUE TO THE
CORRESPONDING REDUCTION IN LIQUIDITY, THIS MAY HAVE AN ADVERSE EFFECT UPON, AND
INCREASE THE VOLATILITY OF, THE MARKET PRICE OF ANY OLD NOTES OF THAT SERIES
THAT YOU CONTINUE TO HOLD.
ACCOUNTING TREATMENT
We will not recognize a gain or loss for accounting purposes upon the
consummation of the exchange offer. We will amortize our expenses of each
exchange offer over the term of the applicable series of new notes under U.S.
generally accepted accounting principles.
OTHER
Participation in the exchange offer is voluntary, and you should carefully
consider whether to accept. You are urged to consult your financial and tax
advisors in making your decision on what action to take. In the future, we may
seek to acquire untendered old notes in open market or privately negotiated
transactions, through subsequent exchange offers or otherwise. We have no
present plan to acquire any old notes that are not tendered in the exchange
offer or to file a registration statement to permit resales of any untendered
old notes, except as required by the registration rights agreement.
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DESCRIPTION OF THE NOTES
We will issue the new notes, and we issued the old notes, under an
indenture, dated as of October 9, 2002, among ConocoPhillips, as issuer, Conoco
and Phillips, as guarantors, and The Bank of New York, as trustee. The notes are
ConocoPhillips' general unsecured obligations and are fully and unconditionally
guaranteed by Conoco and Phillips on a senior unsecured basis. We have
summarized material provisions of the indenture, the notes and the guarantees
below. This summary is not complete. We have filed the indenture as an exhibit
to the registration statement, and you should read the indenture for provisions
that may be important to you.
The old notes of a series, the new notes of that series issued in the
exchange offer and any debt securities of that series issued in the private
exchange described below under "Registration Rights Agreements" will together
constitute a separate single series of securities under the indenture. If the
exchange offer for notes of a series is consummated, holders of old notes of
that series who do not exchange their old notes for either new notes of that
series in the exchange offer or debt securities of that series in the private
exchange will vote together with holders of that series of new notes and private
exchange notes for all relevant purposes under the indenture. Accordingly, in
determining whether the required holders have given any notice, consent or
waiver or taken any other action permitted under the indenture, any old notes
that remain outstanding after the applicable exchange offer or private exchange
will be aggregated with the applicable series of new notes and private exchange
notes, and the holders of those old notes, new notes and private exchange notes
will vote together as a single series.
In this summary description of the notes, unless we state otherwise or the
context clearly indicates otherwise, all references to ConocoPhillips mean
ConocoPhillips only, all references to Conoco mean Conoco Inc. only and all
references to Phillips mean Phillips Petroleum Company only.
GENERAL
The 3.625% Notes due 2007 will mature on October 15, 2007, and will bear
interest at 3.625% per year. The 4.75% Notes due 2012 will mature on October 15,
2012, and will bear interest at 4.75% per year. The 5.90% Notes due 2032 will
mature on October 15, 2032, and will bear interest at 5.90% per year. Interest
on the notes will accrue from October 9, 2002. ConocoPhillips:
- will pay interest semiannually on April 15 and October 15 of each
year, commencing April 15, 2003;
- will pay interest to the person in whose name a note is registered at
the close of business on the April 1 or October 1 immediately
preceding the interest payment date;
- will compute interest on the basis of a 360-day year consisting of
twelve 30-day months;
- will make payments on the notes at the offices of the trustee and any
paying agent; and
- may make payments by wire transfer for notes held in book-entry form
or by check mailed to the address of the person entitled to the
payment as it appears in the security register.
ConocoPhillips will issue the notes only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple of $1,000. The
notes will not be subject to any sinking fund or mandatory redemption
provisions.
The 3.625% Notes due 2007 are limited to $400 million in aggregate
principal amount, the 4.75% Notes due 2012 are limited to $1,000 million in
aggregate principal amount and the 5.90% Notes due 2032 are limited to $600
million in aggregate principal amount. We may, however, "reopen" each series of
notes and issue an unlimited principal amount of additional notes of that series
in the future without the consent of the holders. We may reopen a series of
notes only if the additional notes issued will be fungible with the original
notes of the series for United States federal income tax purposes.
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The indenture does not limit the amount of debt that ConocoPhillips may
issue under the indenture, nor the amount of other unsecured debt or securities
that ConocoPhillips may issue. ConocoPhillips may issue debt securities under
the indenture from time to time in one or more series, each in an amount
authorized prior to issuance. Other than the restrictions on liens and
sale/leaseback transactions described below under "-- Restrictive Covenants,"
the indenture does not contain any covenants or other provisions designed to
protect holders of the notes in the event ConocoPhillips participates in a
highly leveraged transaction or upon a change of control. The indenture also
does not contain provisions that give holders the right to require
ConocoPhillips to repurchase their notes in the event of a decline in
ConocoPhillips' credit ratings for any reason, including as a result of a
takeover, recapitalization or similar restructuring or otherwise.
REDEMPTION
The notes of each series will be redeemable at ConocoPhillips' option, in
whole or in part, at any time and from time to time, in principal amounts of
$1,000 or any integral multiple of $1,000 for an amount equal to:
- 100% of the principal amount of the notes of that series to be
redeemed; and
- a premium equal to the amount, if any, by which the sum of the present
values of the Remaining Scheduled Payments on the notes being
redeemed, discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus 15 basis points for the 3.625% Notes due 2007, 20
basis points for the 4.75% Notes due 2012 and 20 basis points for the
5.90% Notes due 2032, exceeds the principal amount of the notes to be
redeemed.
In each case, ConocoPhillips will pay accrued interest to the date of
redemption.
"Treasury Rate" means the rate per year equal to:
- the yield, under the heading that represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15 (519)" or any successor
publication which is published weekly by the Board of Governors of the
Federal Reserve System and which establishes yields on actively traded
United States Treasury securities adjusted to constant maturity under
the caption "Treasury Constant Maturities," for the maturity
corresponding to the Comparable Treasury Issue; provided that if no
maturity is within three months before or after the maturity date for
the applicable series of notes, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue
will be determined and the Treasury Rate will be interpolated or
extrapolated from those yields on a straight line basis rounding to
the nearest month; or
- if that release, or any successor release, is not published during the
week preceding the calculation date or does not contain such yields,
the rate per year equal to the semiannual equivalent yield to maturity
of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for that redemption
date.
The Treasury Rate will be calculated on the third business day preceding
the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker that would be used, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the applicable series of notes. "Independent Investment Banker" means one of
the Reference Treasury Dealers that we appoint.
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"Comparable Treasury Price" means (a) the average of the Reference Treasury
Dealer Quotations for the redemption date, after excluding the highest and
lowest of such Reference Treasury Dealer Quotations, or (b) if the trustee
obtains fewer than four such Reference Treasury Dealer Quotations, the average
of all quotations obtained.
"Reference Treasury Dealer" means each of Banc of America Securities LLC
(and its successors), J.P. Morgan Securities Inc. (and its successors), Salomon
Smith Barney Inc. (and its successors) and one other nationally recognized
investment banking firm that is a primary U.S. Government securities dealer
specified from time to time by us. If, however, any of them shall cease to be a
primary U.S. Government securities dealer, we will substitute another nationally
recognized investment banking firm that is such a dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by such Reference Treasury Dealer as of 3:30 p.m., New
York time, on the third business day preceding the redemption date.
"Remaining Scheduled Payments" means the remaining scheduled payments of
the principal of and interest on each note to be redeemed that would be due
after the related redemption date but for such redemption. If the redemption
date is not an interest payment date with respect to the note being redeemed,
the amount of the next succeeding scheduled interest payment on the note will be
reduced by the amount of interest accrued thereon to that redemption date.
We will mail notice of a redemption not less than 30 days nor more than 60
days before the redemption date to holders of notes to be redeemed. As long as
those notes are listed on the Luxembourg Stock Exchange, we also will publish
notice in the Luxemburger Wort or another newspaper of general circulation in
Luxembourg.
If ConocoPhillips is redeeming less than all the notes of a series, the
trustee will select the particular notes of the series to be redeemed pro rata,
by lot or by another method the trustee deems fair and appropriate. Unless there
is a default in payment of the redemption amount, on and after the redemption
date, interest will cease to accrue on the notes or portions thereof called for
redemption. If ConocoPhillips redeems less than all the notes of a series,
ConocoPhillips will notify the Luxembourg Stock Exchange of the aggregate
principal amount of the notes of that series that remains outstanding after the
redemption. ConocoPhillips will pay 100% of the principal amount of the notes of
each series at the maturity of those notes.
Except as described above, the notes will not be redeemable by
ConocoPhillips prior to maturity and will not be entitled to the benefit of any
sinking fund.
GUARANTEE
Conoco and Phillips will each fully and unconditionally guarantee on a
senior unsecured basis the full and prompt payment of the principal of and any
premium and interest on the notes when and as the payment becomes due and
payable, whether at maturity or otherwise. The guarantees provide that in the
event of a default in the payment of principal of or any premium or interest on
a note, the holder of the note may institute legal proceedings directly against
Conoco and Phillips to enforce the guarantees without first proceeding against
ConocoPhillips.
RANKING
In connection with the combination of Conoco and Phillips, and to simplify
the companies' credit structure, ConocoPhillips and Conoco have fully and
unconditionally guaranteed the payment obligations of Phillips with respect to
its publicly held debt securities, and ConocoPhillips and Phillips have fully
and unconditionally guaranteed the payment obligations of Conoco and Conoco
Funding Company, Conoco's wholly owned finance subsidiary, with respect to the
publicly held debt securities of Conoco and the publicly held debt securities of
Conoco Funding Company fully and unconditionally guaranteed by Conoco.
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The notes will constitute senior debt of ConocoPhillips and will rank
equally with its senior unsecured debt from time to time outstanding, including
its guarantees of the debt of Conoco and Phillips; senior to its subordinated
debt from time to time outstanding; and effectively junior to its secured debt
and to all debt and other liabilities of its subsidiaries other than Conoco and
Phillips from time to time outstanding. Each of Conoco's and Phillips'
guarantees will rank equally with all of its senior unsecured debt from time to
time outstanding, including its guarantee of the debt of the other; senior to
its subordinated debt from time to time outstanding; and effectively junior to
its secured debt and to all debt and other liabilities of its subsidiaries from
time to time outstanding.
Each of ConocoPhillips and Conoco conducts substantially all its operations
through subsidiaries, and those subsidiaries generate substantially all its
operating income and cash flow. As a result, distributions or advances from
those subsidiaries are the principal source of funds necessary to meet the debt
service obligations of ConocoPhillips and Conoco. Contractual provisions or
laws, as well as the subsidiaries' financial condition and operating
requirements, may limit the ability of each of ConocoPhillips and Conoco to
obtain cash from its subsidiaries that it requires to pay its debt service
obligations, including any payments required to be made under the notes and
Conoco's related guarantee.
As of June 30, 2002, on a pro forma basis giving effect to the combination
of Conoco and Phillips and as further adjusted to give effect to the issuance of
the notes and the application of all the net proceeds to repay Conoco's floating
rate notes and to reduce outstanding commercial paper, ConocoPhillips would have
had an aggregate of $19.2 billion of consolidated long-term debt. Approximately
$14.8 billion would have ranked equally in right of payment with the notes.
Approximately $2.4 billion would have been secured or owed by subsidiaries other
than Conoco or Phillips and therefore effectively senior to the notes with
respect to the assets securing the debt or the assets of the subsidiary obligor.
RESTRICTIVE COVENANTS
ConocoPhillips has agreed to two principal restrictions on its activities
for the benefit of holders of the notes. The restrictive covenants summarized
below will apply to the notes of each series (unless waived or amended) as long
as the notes of that series are outstanding. We have used in this summary
description capitalized terms that we have defined below under "-- Glossary."
LIMITATION ON LIENS
ConocoPhillips has agreed that it and its Principal Domestic Subsidiaries
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 Principal Domestic
Subsidiary only if the outstanding notes and all other debt securities issued
under the indenture are secured equally and ratably with or prior to the Debt
secured by that lien. If the notes and such other debt securities are so
secured, ConocoPhillips has the option to secure any of its and its
Subsidiaries' other Debt or obligations equally and ratably with or prior to the
Debt secured by the lien and, accordingly, equally and ratably with the notes.
This covenant has exceptions that permit:
(a) liens existing on the date we first issued the notes;
(b) liens on the property, assets, stock, equity or Debt of any entity
existing at the time ConocoPhillips or a Subsidiary acquires that entity or
its property or at the time the entity becomes a Subsidiary or a Principal
Domestic Subsidiary;
(c) liens on assets either:
- existing at the time of acquisition of the assets;
- securing all or part of the cost of acquiring, constructing,
improving, developing or expanding the assets; or
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- securing Debt incurred to finance all or part of the purchase
price of the assets or the cost of constructing, improving,
developing or expanding the assets that was incurred before, at
the time of or within two years after the later of the
acquisition, the completion of construction, improvement,
development or expansion or the commencement of commercial
operation of the assets;
(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;
(f) liens securing industrial development, pollution control or other
revenue bonds of a domestic government entity;
(g) liens on personal property, other than shares of stock or debt of
any Principal Domestic Subsidiary, securing loans maturing in less than one
year;
(h) liens on a Principal Property arising in connection with the sale
of accounts receivable resulting from the sale of oil or gas at the
wellhead;
(i) statutory or other liens arising in the ordinary course of
business and relating to amounts that are not yet delinquent or are being
contested in good faith; and
(j) 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 premium or fee payable in connection with any
such extension, substitution, replacement or renewal.
In addition, without securing the notes and all other debt securities
issued under the indenture as described above, ConocoPhillips and its Principal
Domestic Subsidiaries may issue, assume or guarantee Debt that this covenant
would otherwise restrict in a total principal amount that, when added to all
other outstanding Debt of ConocoPhillips and its Principal Domestic Subsidiaries
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 Adjusted Net Assets. When calculating this total
principal amount, we exclude from the calculation Attributable Debt from
Sale/Leaseback Transactions in connection with which ConocoPhillips or a
Subsidiary has purchased property or retired or defeased Debt as described in
clause (b) below under "Limitation on Sale/Leaseback Transactions."
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
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(b) the mortgage or pledge of any property of ConocoPhillips or a
Subsidiary 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.
LIMITATION ON SALE/LEASEBACK TRANSACTIONS
ConocoPhillips has agreed that it and any of its Principal Domestic
Subsidiaries will enter into a Sale/Leaseback Transaction only if at least one
of the following applies:
(a) ConocoPhillips or that Principal Domestic Subsidiary 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 notes.
(b) Within the period beginning one year before the closing of the
Sale/Leaseback Transaction and ending one year after the closing,
ConocoPhillips or any Subsidiary applies the net proceeds of the
Sale/Leaseback Transaction either:
- to the voluntary defeasance or retirement of the notes, any other
debt securities issued under the indenture or any Funded Debt; or
- to the acquisition, exploration, drilling, development,
construction, improvement or expansion of one or more Principal
Properties.
Any net proceeds that are not applied 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
ConocoPhillips' board of directors).
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, we use a discount rate equal to the lease rate of
the Sale/Leaseback Transaction. For these purposes, rental payments do not
include any amounts required to be paid 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 the lessee may terminate by paying a penalty, if the net amount (including
payment of the penalty) would be reduced if the lessee terminated the lease on
the first date that it could be terminated, then this lower net amount will be
used.
"Consolidated Adjusted Net Assets" means the total amount of assets of
ConocoPhillips and its consolidated subsidiaries less:
- all current liabilities (excluding liabilities that are extendable or
renewable at ConocoPhillips' option to a date more than 12 months
after the date of calculation and excluding current maturities of
long-term debt); and
- total prepaid expenses and deferred charges.
ConocoPhillips will calculate its Consolidated Adjusted Net Assets based on its
most recent quarterly balance sheet.
"Debt" means all notes, bonds, debentures or similar evidences of debt for
money borrowed.
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"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 each of Conoco, Phillips and any
Subsidiary (1) that has substantially all its assets in the United States, (2)
that owns a Principal Property and (3) in which ConocoPhillips' capital
investment, together with any intercompany loans to that Subsidiary and any debt
of that Subsidiary guaranteed by ConocoPhillips or any other Subsidiary, exceeds
$100 million.
"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 property, refinery or plant
that in the opinion of ConocoPhillips' board of directors is not materially
important to the total business conducted by ConocoPhillips 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
ConocoPhillips or a Subsidiary leases any Principal Property that ConocoPhillips
or that Subsidiary has sold or transferred 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;
- leases of a Principal Property executed by the time of or within 12
months after the latest of 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.
"Subsidiary" means an entity at least a majority of the outstanding voting
stock of which is owned, directly or indirectly, by ConocoPhillips or by one or
more other Subsidiaries, or by ConocoPhillips and one or more other
Subsidiaries.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The indenture generally permits a consolidation or merger involving
ConocoPhillips, Conoco or Phillips. It also permits ConocoPhillips, Conoco or
Phillips to lease, transfer or dispose of all or substantially all of its
assets. Each of ConocoPhillips, Conoco and Phillips has agreed, however, that it
will not consolidate with or merge into any entity (other than ConocoPhillips,
Conoco or Phillips, as applicable) or lease, transfer or dispose of all or
substantially all of its assets to any entity (other than ConocoPhillips, Conoco
or Phillips, as applicable) unless:
- it is the continuing corporation; or
- if it is not the continuing corporation, the resulting entity or
transferee is organized and existing under the laws of any United
States jurisdiction and assumes the performance of its covenants and
obligations under the indenture and, in the case of ConocoPhillips,
the due and punctual payments on the notes or, in the case of Conoco
or Phillips, the performance of the related guarantee; 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.
Upon any such consolidation, merger or asset lease, transfer or
disposition, the resulting entity or transferee will be substituted for
ConocoPhillips, Conoco or Phillips, as applicable, under the indenture and
notes. In the case
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of an asset transfer or disposition other than a lease, ConocoPhillips, Conoco
or Phillips, as applicable, will be released from the indenture.
EVENTS OF DEFAULT
The following are events of default with respect to a series of notes:
- failure to pay interest on that series of notes for 30 days when due;
- failure to pay principal of or any premium on that series of notes
when due;
- failure to comply with any covenant or agreement in that series of
notes or the indenture (other than an agreement or covenant that has
been included in the indenture solely for the benefit of other series
of debt securities issued under the indenture) for 90 days after
written notice by the trustee or by the holders of at least 25% in
principal amount of the outstanding debt securities issued under the
indenture that are affected by that failure;
- specified events involving bankruptcy, insolvency or reorganization of
ConocoPhillips, Conoco or Phillips.
A default under one series of notes will not necessarily be a default under
the other series or any other series of debt securities issued under the
indenture. The trustee may withhold notice to the holders of the notes of any
default or event of default (except in any payment on the notes) if the trustee
considers it in the interest of the holders to do so.
If an event of default for any series of notes occurs and is continuing,
the trustee or the holders of at least 25% in principal amount of the
outstanding notes of the series affected by the default (or, in some cases, 25%
in principal amount of all debt securities issued under the indenture that are
affected, voting as one class) may declare the principal of and all accrued and
unpaid interest on those notes (or 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 indenture, including the notes, 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 notes of the series
affected by the default (or, in some cases, of all debt securities issued under
the indenture that are affected, voting as one class) may in some cases rescind
this accelerated payment requirement.
A holder of a note of any series may pursue any remedy under the 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
notes of that series make a written request to the trustee to pursue
the remedy;
- the holders offer to the trustee indemnity satisfactory to the
trustee;
- the trustee fails to act for a period of 60 days after receipt of the
request and offer of indemnity; and
- during that 60-day period, the holders of a majority in principal
amount of the notes of that series do not give the trustee a direction
inconsistent with the request.
This provision does not, however, affect the right of a holder of a note 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
notes of a series (or of all debt securities issued under the 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 relating to or
arising as a result of an event of default.
The indenture requires ConocoPhillips, Conoco and Phillips to file each
year with the trustee a written statement as to their compliance with the
covenants contained in the indenture.
MODIFICATION AND WAIVER
The indenture may be amended or supplemented if the holders of a majority
in principal amount of the outstanding notes and all other series of debt
securities issued under the indenture that are affected by the amendment or
supplement (acting as one class) consent to it. Without the consent of each
holder of a note, however, no modification may:
- reduce the amount of notes whose holders must consent to an amendment,
supplement or waiver;
- reduce the rate of or change the time for payment of interest on the
note;
- reduce the principal of the note or change its stated maturity;
- reduce any premium payable on the redemption of the note or change the
time at which the note may be redeemed;
- make payments on the notes payable in currency other than U.S.
dollars;
- impair the holder's right to institute suit for the enforcement of any
payment on or with respect to the note;
- make any change in the percentage of principal amount of notes
necessary to waive compliance with certain provisions of the indenture
or to make any change in the provision related to modification; or
- waive a continuing default or event of default regarding any payment
on the notes.
The indenture may be amended or supplemented or any provision of the
indenture may be waived without the consent of any holders of notes in certain
circumstances, including:
- to cure any ambiguity, omission, defect or inconsistency;
- to provide for the assumption of the obligations under the indenture
of ConocoPhillips, Conoco or Phillips by a successor upon any merger,
consolidation or asset transfer permitted under the indenture;
- to provide for uncertificated notes in addition to or in place of
certificated notes or to provide for bearer notes;
- to provide any security for, any guarantees of or any additional
obligors on any series of the notes or the related guarantees;
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- to comply with any requirement to effect or maintain the qualification
of the indenture under the Trust Indenture Act of 1939;
- to add covenants that would benefit the holders of any series of notes
or to surrender any rights ConocoPhillips, Conoco or Phillips has
under the indenture;
- to add events of default with respect to any series of notes; and
- to make any change that does not adversely affect any outstanding
notes of any series in any material respect.
The holders of a majority in principal amount of the outstanding notes of
any series (or, in some cases, of all debt securities issued under the indenture
that are affected, voting as one class) may waive any existing or past default
or event of default with respect to those notes (or debt securities). Those
holders may not, however, waive any default or event of default in any payment
on any note 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 indenture. If any combination of funds or government
securities are deposited with the trustee sufficient to make payments on the
notes of a series on the dates those payments are due and payable, then, at
ConocoPhillips' option, either of the following will occur:
- ConocoPhillips, Conoco and Phillips will be discharged from their
obligations with respect to the notes of that series and the related
guarantees ("legal defeasance"); or
- ConocoPhillips, Conoco and Phillips will no longer have any obligation
to comply with the restrictive covenants, the merger covenant and
other specified covenants under the indenture, and the related events
of default will no longer apply ("covenant defeasance").
If a series of notes is defeased, the holders of the notes of that series
will not be entitled to the benefits of the indenture, except for obligations to
register the transfer or exchange of notes, replace stolen, lost or mutilated
notes or maintain paying agencies and hold moneys for payment in trust. In the
case of covenant defeasance, the obligation of ConocoPhillips to pay principal,
premium and interest on the notes and Conoco's and Phillips' guarantees of the
payments will also survive.
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 notes to
recognize income, gain or loss for U.S. federal income tax purposes. If we elect
legal defeasance, that opinion of counsel must be based upon a ruling from the
U.S. Internal Revenue Service or a change in law to that effect.
GOVERNING LAW
New York law will govern the indenture and the notes.
TRUSTEE
The Bank of New York is the trustee under the indenture. The Bank of New
York also serves as trustee or custodian relating to approximately $2.7 billion
of debt, trust preferred securities and other long-term repayment obligations of
subsidiaries of ConocoPhillips as of June 30, 2002. The Bank of New York and its
affiliates perform certain commercial banking services for us for which they
receive customary fees and are lenders under various outstanding credit
facilities of subsidiaries of ConocoPhillips.
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If an event of default occurs under the indenture and is continuing, the
trustee will be required to use the degree of care and skill of a prudent person
in the conduct of that person's own affairs. The trustee will become obligated
to exercise any of its powers under the indenture at the request of any of the
holders of the notes only after those holders have offered the trustee indemnity
reasonably satisfactory to it.
The indenture contains limitations on the right of the trustee, if it
becomes a creditor of ConocoPhillips, Conoco or Phillips, 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 ConocoPhillips, Conoco and Phillips. 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 indenture, unless the default has been cured, waived or
otherwise eliminated within the 90-day period.
EXCHANGE, REGISTRATION AND TRANSFER
Notes of any series will be exchangeable for other notes of the same
series, the same total principal amount and the same terms but in different
authorized denominations in accordance with the indenture. Holders may present
notes for registration of transfer at the office of the security registrar or
any transfer agent ConocoPhillips designates, including any transfer agent in
Luxembourg. The security registrar or transfer agent will effect the transfer or
exchange if its requirements and the requirements of the indenture are met.
There will be no service charge for any registration of transfer or exchange of
the notes. However, payment of any transfer tax or similar governmental charge
payable for that registration may be required.
The trustee has been appointed as security registrar for the notes.
ConocoPhillips is required to maintain an office or agency for transfers and
exchanges in each place of payment. In addition, as long as a series of notes is
listed on the Luxembourg Stock Exchange, ConocoPhillips will maintain a transfer
agent for that series in Luxembourg. ConocoPhillips may at any time designate
additional transfer agents for any series of notes.
In the case of any redemption, ConocoPhillips will not be required to
register the transfer or exchange of:
- any note during a period beginning 15 business days prior to the
mailing of the relevant notice of redemption or repurchase and ending
on the close of business on the day of mailing of such notice; or
- any note that has been called for redemption in whole or in part,
except the unredeemed portion of any note being redeemed in part.
NOTICES
We will mail notices and communications to the holder's address shown on
the register of the notes. In addition, as long as a series of notes is listed
on the Luxembourg Stock Exchange, we will publish notices for that series in the
Luxemburger Wort or another newspaper of general circulation in Luxembourg.
PAYMENT AND PAYING AGENTS
The trustee has been appointed as paying agent for the notes. As long as a
series of notes is listed on the Luxembourg Stock Exchange, ConocoPhillips also
will maintain a paying agent for that series in Luxembourg. Payments on the
notes will be made in U.S. dollars at the office of the trustee and any paying
agent, including any paying agent in Luxembourg. At ConocoPhillips' option,
however, payments may be made by wire transfer for notes held in book-entry form
or by check mailed to the address of the person entitled to the payment as it
appears in the security register. ConocoPhillips 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.
If the principal of or any premium or interest on the notes is payable on a
day that is not a business day, the payment will be made on the following
business day. For these purposes, a "business day" is any day that is not a
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Saturday, a Sunday or a day on which banking institutions in any of New York,
New York; Houston, Texas or a place of payment on the notes is authorized or
obligated by law, regulation or executive order to remain closed.
Subject to the requirements of any applicable abandoned property laws, the
trustee and paying agent will pay to us upon written request any money held by
them for payments on the notes that remains 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.
OTHER
We will make all payments on the notes without withholding or deducting any
taxes or other governmental charges imposed by a United States jurisdiction,
unless we are required to do so by applicable law. If we are required to
withhold taxes, we will not pay any additional, or gross up, amounts with
respect to the withholding or deduction.
We may at any time purchase notes on the open market or otherwise at any
price. We will surrender all notes that we redeem or purchase to the trustee for
cancellation. We may not reissue or resell any of these notes.
At any meeting of holders of the notes, the trustee may make reasonable
rules for action by or at that meeting. The registrar and any paying agent for
the notes also may make reasonable rules and set reasonable requirements for its
functions.
BOOK-ENTRY DELIVERY AND SETTLEMENT
We will issue the new notes of each series in the form of one or more
permanent global notes in definitive, fully registered, book-entry form. The
global notes will be deposited with or on behalf of The Depository Trust Company
and registered in the name of Cede & Co., as nominee of DTC, or will remain in
the custody of the trustee in accordance with the FAST Balance Certificate
Agreement between DTC and the trustee.
Beneficial interests in the global notes will be represented through
book-entry accounts of financial institutions acting on behalf of beneficial
owners as direct and indirect participants in DTC. Investors may elect to hold
interests in the global notes through either DTC (in the United States) or
Clearstream Banking, societe anonyme, Luxembourg, or Euroclear Bank S.A./N.V.
(the "Euroclear Operator"), as operator of the Euroclear System (in Europe),
either directly if they are participants of such systems or indirectly through
organizations that are participants in such systems. Clearstream and Euroclear
will hold interests on behalf of their participants through customers'
securities accounts in Clearstream's and Euroclear's names on the books of their
U.S. depositaries, which in turn will hold such interests in customers'
securities accounts in the U.S. depositaries' names on the books of DTC.
Citibank, N.A. will act as the U.S. depositary for Clearstream, and JPMorgan
Chase Bank will act as the U.S. depositary for Euroclear.
DTC has advised us as follows:
- DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered under Section 17A of the
Securities Exchange Act of 1934.
- DTC holds securities that its participants deposit with DTC and
facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in participants'
accounts, thereby eliminating the need for physical movement of
securities certificates.
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- Direct participants include securities brokers and dealers, banks,
trust companies, clearing corporations and other organizations.
- DTC is owned by a number of its direct participants and by The New
York Stock Exchange, Inc., the American Stock Exchange LLC and the
National Association of Securities Dealers, Inc.
- Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a direct
participant, either directly or indirectly.
- The rules applicable to DTC and its direct and indirect participants
are on file with the SEC.
Clearstream has advised us that it is incorporated under the laws of
Luxembourg as a professional depositary. Clearstream holds securities for its
customers and facilitates the clearance and settlement of securities
transactions between its customers through electronic book-entry changes in
accounts of its customers, thereby eliminating the need for physical movement of
certificates. Clearstream provides to its customers, among other things,
services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing.
Clearstream interfaces with domestic markets in several countries. As a
professional depositary, Clearstream is subject to regulation by the Luxembourg
Commission for the Supervision of the Financial Section. Clearstream customers
are recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and other organizations. Indirect access to Clearstream is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Clearstream customer either directly
or indirectly.
Euroclear has advised us that it was created in 1968 to hold securities for
participants of Euroclear and to clear and settle transactions between Euroclear
participants through simultaneous electronic book-entry delivery against
payment, thereby eliminating the need for physical movement of certificates and
any risk from lack of simultaneous transfers of securities and cash. Euroclear
provides various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries. Euroclear is operated by
the Euroclear Operator under contract with Euroclear Clearance Systems S.C., a
Belgian cooperative corporation (the "Cooperative"). All operations are
conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for Euroclear on behalf
of Euroclear participants. Euroclear participants include banks (including
central banks), securities brokers and dealers and other professional financial
intermediaries. Indirect access to Euroclear is also available to other firms
that clear through or maintain a custodial relationship with a Euroclear
participant, either directly or indirectly.
The Euroclear Operator has advised us that it is licensed by the Belgian
Banking and Finance Commission to carry out banking activities on a global
basis. As a Belgian bank, it is regulated and examined by the Belgian Banking
Commission.
We have provided the descriptions of the operations and procedures of DTC,
Clearstream and Euroclear in this prospectus solely as a matter of convenience.
These operations and procedures are solely within the control of those
organizations and are subject to change by them from time to time. None of
ConocoPhillips, Conoco, Phillips or the trustee takes any responsibility for
these operations or procedures, and you are urged to contact DTC, Clearstream
and Euroclear or their participants directly to discuss these matters.
We expect that under procedures established by DTC:
- upon deposit of the global notes with DTC or its custodian, DTC will
credit on its internal system the accounts of direct participants
exchanging old notes for new notes with portions of the principal
amounts of the global notes; and
37
- ownership of the notes will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by DTC or
its nominee, with respect to interests of direct participants, and the
records of direct and indirect participants, with respect to interests
of persons other than participants.
The laws of some jurisdictions may require that purchasers of securities
take physical delivery of those securities in definitive form. Accordingly, the
ability to transfer interests in the notes represented by a global note to those
persons may be limited. In addition, because DTC can act only on behalf of its
participants, who in turn act on behalf of persons who hold interests through
participants, the ability of a person having an interest in notes represented by
a global note to pledge or transfer those interests to persons or entities that
do not participate in DTC's system, or otherwise to take actions in respect of
such interest, may be affected by the lack of a physical definitive security in
respect of such interest.
So long as DTC or its nominee is the registered owner of a global note, DTC
or that nominee will be considered the sole owner or holder of the notes
represented by that global note for all purposes under the indenture and under
the notes. Except as provided below, owners of beneficial interests in a global
note will not be entitled to have notes represented by that global note
registered in their names, will not receive or be entitled to receive physical
delivery of certificated notes and will not be considered the owners or holders
thereof under the indenture or under the notes for any purpose, including with
respect to the giving of any direction, instruction or approval to the trustee.
Accordingly, each holder owning a beneficial interest in a global note must rely
on the procedures of DTC and, if that holder is not a direct or indirect
participant, on the procedures of the participant through which that holder owns
its interest, to exercise any rights of a holder of notes under the indenture or
the global note.
Neither ConocoPhillips, Conoco, Phillips nor the trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of notes by DTC, Clearstream or Euroclear, or for
maintaining, supervising or reviewing any records of those organizations
relating to the notes.
Payments on the notes represented by the global notes will be made to DTC
or its nominee, as the case may be, as the registered owner thereof. We expect
that DTC or its nominee, upon receipt of any payment on the notes represented by
a global note, will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the global note as
shown in the records of DTC or its nominee. We also expect that payments by
participants to owners of beneficial interests in the global note held through
such participants will be governed by standing instructions and customary
practice as is now the case with securities held for the accounts of customers
registered in the names of nominees for such customers. The participants will be
responsible for those payments.
Distributions on the notes held beneficially through Clearstream will be
credited to cash accounts of its customers in accordance with its rules and
procedures, to the extent received by the U.S. depositary for Clearstream.
Securities clearance accounts and cash accounts with the Euroclear Operator are
governed by the Terms and Conditions Governing Use of Euroclear and the related
Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear participants and has no record of or relationship with persons holding
through Euroclear participants.
Distributions on the notes held beneficially through Euroclear will be
credited to the cash accounts of its participants in accordance with the Terms
and Conditions, to the extent received by the U.S. depositary for Euroclear.
CLEARANCE AND SETTLEMENT PROCEDURES
Secondary market trading between DTC participants will occur in the
ordinary way in accordance with DTC rules and will be settled in immediately
available funds. Secondary market trading between Clearstream
38
customers and/or Euroclear participants will occur in the ordinary way in
accordance with the applicable rules and operating procedures of Clearstream and
Euroclear and will be settled using the procedures applicable to conventional
eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream
customers or Euroclear participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by the U.S. depositary; however, such cross-market transactions
will require delivery of instructions to the relevant European international
clearing system by the counterparty in such system in accordance with its rules
and procedures and within its established deadlines (European time). The
relevant European international clearing system will, if the transaction meets
its settlement requirements, deliver instructions to the U.S. depositary to take
action to effect final settlement on its behalf by delivering or receiving the
notes in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Clearstream
customers and Euroclear participants may not deliver instructions directly to
their U.S. depositaries.
Because of time-zone differences, credits of the notes received in
Clearstream or Euroclear as a result of a transaction with a DTC participant
will be made during subsequent securities settlement processing and dated the
business day following the DTC settlement date. Such credits or any transactions
in the notes settled during such processing will be reported to the relevant
Clearstream customers or Euroclear participants on such business day. Cash
received in Clearstream or Euroclear as a result of sales of the notes by or
through a Clearstream customer or a Euroclear participant to a DTC participant
will be received with value on the DTC settlement date but will be available in
the relevant Clearstream or Euroclear cash account only as of the business day
following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures to facilitate transfers of the notes among participants of DTC,
Clearstream and Euroclear, they are under no obligation to perform or continue
to perform such procedures and such procedures may be changed or discontinued at
any time.
CERTIFICATED NOTES
We will issue certificated notes to each person that DTC identifies as the
beneficial owner of the notes represented by the global notes upon surrender by
DTC of the global notes if either:
- DTC notifies us that it is no longer willing or able to act as a
depositary for the global notes, and we have not appointed a successor
depositary within 90 days of that notice;
- an event of default has occurred and is continuing, and DTC requests
the issuance of certificated notes; or
- we determine not to have the notes represented by a global note.
Neither we nor the trustee will be liable for any delay by DTC, its nominee
or any direct or indirect participant in identifying the beneficial owners of
the related notes. We and the trustee may conclusively rely on, and will be
protected in relying on, instructions from DTC or its nominee for all purposes,
including with respect to the registration and delivery, and the respective
principal amounts, of the notes to be issued.
If we issue certificated notes of a series listed on the Luxembourg Stock
Exchange, holders in Luxembourg may obtain certificates at the offices of the
paying agent and transfer agent for that series in Luxembourg. We will make
those certificates available in Luxembourg at the time we deliver certificates
to the trustee. If the notes are no longer represented by a global note and are
no longer deposited with a clearing system such as DTC, the Luxembourg Stock
Exchange has informed us that they will no longer list the notes.
39
REGISTRATION RIGHTS AGREEMENT
We have summarized material provisions of the registration rights agreement
below. This summary is not complete. We have filed the registration rights
agreement as an exhibit to the registration statement, and you should read the
agreement for provisions that may be important to you.
EXCHANGE OFFER REGISTRATION STATEMENT
In connection with the issuance of the old notes, we entered into a
registration rights agreement with the initial purchasers of the old notes. This
agreement provides that we will use our reasonable best efforts to:
- file a registration statement relating to an exchange offer for each
series of old notes with the SEC and cause the SEC to declare the
registration statement effective under the Securities Act no later
than the 180th day after the issue date of the old notes;
- cause the registation statement to remain effective until the closing
of the exchange offer; and
- complete the exchange offer within 45 days after the registration
statement becomes effective.
We will keep the exchange offer open for at least 20 business days (or
longer, if required by applicable law or otherwise extended by us at our option)
after the date notice of the exchange offer is mailed to the holders of the old
notes. During the exchange offer, we will offer to all holders of old notes who
are legally eligible to participate in the exchange offer the opportunity to
exchange their old notes for new notes.
If any holder holds any old notes acquired by it that have the status of an
unsold allotment in the initial distribution of the old notes or if any holder
is not entitled to participate in the exchange offer because of applicable law
or interpretations by the staff of the SEC, we will issue and deliver to that
holder in a private exchange, upon request and in exchange for the old notes
held by that holder, a like aggregate principal amount of our debt securities
that are identical in all material respects to the new notes. These private
exchange notes will, however, be subject to transfer restrictions.
The registration rights agreement also provides that we will:
- use our reasonable best efforts to make available, for at least 180
days after the consummation of the exchange offer, a prospectus for
use in connection with any resale of the new notes received by
broker-dealers in exchange for old notes acquired as a result of
market-making activities or other trading activities, as described
under "Plan of Distribution"; and
- pay certain expenses incident to the exchange offer and indemnify
specified holders of the new notes (including broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
A broker-dealer that delivers this prospectus to purchasers in connection with
resales of new notes will be subject to civil liability provisions under the
Securities Act in connection with those sales and will be bound by the
applicable provisions of the registration rights agreement, including the
indemnification obligations.
If you desire to tender your old notes, you will be required to make to us
the representations described under "The Exchange Offer--Procedures for
Tendering--Your Representations to Us" to participate in the exchange offer.
SHELF REGISTRATION
We may be required to file a shelf registration statement to permit certain
holders of "registrable notes" (as defined under "--Additional Interest") who
were not eligible to participate in the exchange offer to resell the
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registrable notes periodically without being limited by transfer restrictions
applicable to the old notes. We will be required to file a shelf registration
statement only if:
- there is a change in law or applicable interpretations of the law by
the staff of the SEC and, as a result, we are not permitted to effect
the exchange offer as contemplated by this prospectus;
- the exchange offer is not consummated within 45 days after the
exchange offer registration statement is declared effective, but we
may terminate the shelf registration statement at any time, without
penalty, after the exchange offer is consummated;
- any holder of the old notes, other than an initial purchaser holding
old notes acquired directly from us as part of the initial
distribution, is not eligible to participate in the exchange offer
because of any change in applicable law or interpretations thereof or
elects to participate in the exchange offer but does not receive
freely transferable new notes; or
- any of the initial purchasers so requests before the date that is 90
days after the consummation of the exchange offer with respect to old
notes not eligible to be exchanged in the exchange offer and held by
it following consummation of the exchange offer.
If a shelf registration statement is required, we will:
- file the shelf registration statement with the SEC no later than (a)
the 180th day after the issue date of the old notes or (b) the 60th
day after that filing obligation arises, whichever is later;
- use our reasonable best efforts to cause the shelf registration
statement to be declared effective by the SEC no later than the 60th
day after the date on which we are required to file such shelf
registration; and
- use our reasonable best efforts to keep the shelf registration
statement effective for a period of two years after the latest date on
which any old notes are originally issued or, if earlier, until all
the registrable notes covered by the shelf registration statement are
sold thereunder, become eligible for resale pursuant to Rule 144(k)
under the Securities Act or cease to be registrable notes.
We may suspend the availability of a shelf registration statement and the
use of the related prospectus if:
- the SEC or any state securities authority requests an amendment or
supplement to the shelf registration statement or the related
prospectus or additional information;
- the SEC or any state securities authority issues any stop order
suspending the effectiveness of the shelf registration statement or
initiates proceedings for that purpose;
- we receive notification of the suspension of the qualification of the
registrable notes subject to the shelf registration statement for sale
in any U.S. jurisdiction or the initiation or threatening of any
proceeding for that purpose;
- the suspension is required by applicable law;
- the suspension is taken by us in good faith and for valid business
reasons, including the possible acquisition or divestiture of assets
or a material corporate transaction or event; or
- the happening of any event or the discovery of any fact makes any
statement made in the shelf registration statement or the related
prospectus untrue in any material respect or constitutes an omission
to state a material fact in the shelf registration statement or the
related prospectus.
41
The period for which we are obligated to keep the shelf registration statement
effective will be extended by the period of such suspension.
Each holder of registrable notes will be required to discontinue
disposition of registrable notes under that registration statement upon receipt
from us of notice of any events described in the preceding paragraph.
The shelf registration statement will permit only certain holders to resell
their notes from time to time. In particular, these holders must:
- provide specified information in connection with the shelf
registration statement; and
- agree in writing to be bound by all provisions of the registration
rights agreement, including the indemnification obligations.
A holder who sells notes under the shelf registration statement will be
required to be named as a selling securityholder in the prospectus and to
deliver a copy of the prospectus to purchasers. If we are required to file a
shelf registration statement, we will provide to each holder of the registrable
notes copies of the prospectus that is a part of the shelf registration
statement and notify each of these holders when the shelf registration statement
becomes effective. These holders will be subject to civil liability provisions
under the Securities Act in connection with those sales and will be bound by the
provisions of the registration rights agreement applicable to these holders,
including the indemnification obligations.
ADDITIONAL INTEREST
If a "registration default" occurs with respect to a series of registrable
notes, we will be required to pay additional interest to each holder of
registrable notes of that series. During the first 90-day period that such a
registration default occurs and is continuing, we will pay additional interest
on the registrable notes of that series at a rate of 0.25% per year. If a
registration default occurs and is continuing for a period of more than 90 days,
then the amount of additional interest we are required to pay on the registrable
notes of that series will increase, effective from and after the 91st day in
that period, by an additional 0.25% per year until all registration defaults
with respect to that series have been cured. However, in no event will the rate
of additional interest exceed 0.50% per year, and we will not be required to pay
additional interest for more than one registration default at a time. This
additional interest will accrue only for those days that a registration default
occurs and is continuing. All accrued additional interest will be paid to the
holders of the registrable notes in the same manner as interest payments on the
notes, with payments being made on the interest payment dates for notes.
Following the cure of all registration defaults with respect to a series of
registrable notes, no more additional interest will accrue for that series
unless a subsequent registration default occurs with respect to that series.
Additional interest will not be payable on any notes other than registrable
notes. You will not be entitled to receive any additional interest on any
registrable notes if you were, at any time while the exchange offer was pending,
eligible to exchange, and did not validly tender or withdrew, registrable notes
for new notes in the exchange offer.
A "registration default" will occur if:
- we fail to file any of the registration statements required by the
registration rights agreement on or before the date specified for that
filing;
- any such registration statement is not declared effective by the SEC
on or prior to the date specified for its effectiveness;
- we fail to complete the exchange offer on or prior to the date
specified for completion; or
42
- the shelf registration statement is declared effective but thereafter
ceases to be effective or usable in connection with resales of the
registrable notes covered thereby during the periods specified in the
registration rights agreement, except during limited periods as a
result of the exercise by us of our right to suspend use of the shelf
registration statement and the related prospectus as described under
"-- Shelf Registration" above.
The term "registrable notes" means the old notes. However, any old notes
will cease to be registrable notes when:
- a shelf registration statement with respect to those notes has been
declared effective under the Securities Act and those notes have been
disposed of under the shelf registration statement;
- those notes have been sold pursuant to Rule 144 under the Securities
Act or are saleable pursuant to Rule 144(k) under the Securities Act;
- those notes have ceased to be outstanding; or
- those notes have been exchanged for new notes in the exchange offer.
New notes received by broker-dealers in exchange for old notes acquired as a
result of market-making activities or other trading activities and private
exchange notes received in the private exchange described above will continue to
registrable notes until they are sold to purchasers in whose hands those notes
are freely tradeable without restriction under the Securities Act.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
We have based the following discussion on the current provisions of the
Internal Revenue Code of 1986, applicable Treasury regulations, judicial
authority and administrative rulings. We have not obtained an opinion of counsel
and have not sought a ruling from the Internal Revenue Service, and we can give
you no assurance that the IRS will agree with the following discussion. Changes
in the applicable law may occur that may be retroactive and could affect the tax
consequences to you of the receipt of new notes in exchange for old notes in the
exchange offer. We do not discuss the effect of special rules such as those that
apply to insurance companies, tax-exempt organizations, financial institutions,
broker-dealers, foreign corporations, and a person who is not a citizen or
resident of the United States. WE RECOMMEND THAT YOU CONSULT YOUR OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF RECEIVING NEW NOTES IN EXCHANGE
FOR OLD NOTES IN THE EXCHANGE OFFER, INCLUDING THE APPLICABILITY AND EFFECT OF
ANY STATE, LOCAL OR FOREIGN TAX LAW.
We believe that the receipt of new notes in exchange for old notes in the
exchange offer should not be treated as an exchange for United States federal
income tax purposes because the new notes and the old notes are not materially
different in kind or in extent, and as a result on the receipt of new notes in
exchange for old notes in the exchange offer you should not recognize gain or
loss, your initial tax basis in the new notes should be the same as your
adjusted tax basis in the old notes immediately before such exchange, and your
holding period for the new notes should include your holding period for the old
notes.
43
PLAN OF DISTRIBUTION
Based on interpretations by the staff of the SEC in no-action letters
issued to third parties, we believe that you may transfer new notes issued in
the exchange offer in exchange for the old notes if:
- you acquire the new notes in the ordinary course of your business; and
- you are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a
distribution of new notes.
We believe that you may not transfer new notes issued in the exchange offer
in exchange for the old notes if you are:
- our "affiliate" within the meaning of Rule 405 under the Securities
Act;
- a broker-dealer that acquired old notes directly from us; or
- a broker-dealer that acquired old notes as a result of market-making
activities or other trading activities, unless you comply with the
registration and prospectus delivery provisions of the Securities Act.
If you wish to exchange your old notes for new notes in the exchange offer,
you will be required to make representations to us as described in "The Exchange
Offer -- Procedures for Tendering -- Your Representations to Us" of this
prospectus and in the letter of transmittal. In addition, each broker-dealer
that receives new notes for its own account in the exchange offer must
acknowledge that it will deliver a prospectus in connection with any resale of
those new notes. This prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer for resales of new notes received in
exchange for old notes that had been acquired as a result of market-making or
other trading activities. We have agreed that, for a period of 180 days after
the expiration date of the exchange offer, we will make this prospectus, as it
may be amended or supplemented, available to any broker-dealer for use in
connection with any such resale. Any broker-dealers required to use this
prospectus and any amendments or supplements to this prospectus for resales of
the new notes must notify us of this fact by checking the box on the letter of
transmittal requesting additional copies of these documents.
We are entitled under the registration rights agreement to suspend the use
of this prospectus by broker-dealers under specified circumstances. For example,
we may suspend the use of this prospectus if:
- the SEC or any state securities authority requests an amendment or
supplement to this prospectus or the related registration statement or
additional information;
- the SEC or any state securities authority issues any stop order
suspending the effectiveness of the registration statement or
initiates proceedings for that purpose;
- we receive notification of the suspension of the qualification of the
new notes for sale in any U.S. jurisdiction or the initiation or
threatening of any proceeding for that purpose;
- the suspension is required by law;
- the suspension is taken by us in good faith and for valid business
reason, including the possible acquisition or divestiture of assets or
a material corporate transaction or event; or
- the happening of any event or the discovery of any fact makes any
statement made in this prospectus untrue in any material respect or
constitutes an omission to state a material fact in this prospectus.
44
If we suspend the use of this prospectus, the 180-day period referred to above
will be extended by a number of days equal to the period of the suspension.
We will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by broker-dealers for their own account under
the exchange offer may be sold from time to time in one or more transactions:
- in the over-the-counter market;
- in negotiated transactions;
- through the writing of options on those notes; or
- a combination of those methods of resale.
The prices at which these sales occur may be:
- at market prices prevailing at the time of resale;
- at prices related to prevailing market prices; or
- at negotiated prices.
Any resales may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from the selling broker-dealer or the purchasers of the new notes. Any
broker-dealer that resells new notes received by it for its own account under
the exchange offer and any broker or dealer that participates in a distribution
of the new notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any resale of new notes and any commissions or
concessions received by these persons may be deemed to be underwriting
compensation under the Securities Act. The letter of transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
We have agreed to pay all expenses incidental to the exchange offer,
including the expenses of one counsel for the holders of old notes, other than
commissions and concessions of any broker or dealer. We also have agreed that we
will indemnify specified holders of the new notes, including broker-dealers,
against certain liabilities, including liabilities under the Securities Act, or
contribute to payments that they may be required to make in respect thereof.
TRANSFER RESTRICTIONS ON OLD NOTES
The old notes were not registered under the Securities Act. Accordingly, we
offered and sold the old notes only in private sales exempt from or not subject
to the registration requirements of the Securities Act:
- to "qualified institutional buyers" under Rule 144A under the
Securities Act;
- to a limited number of institutional "accredited investors"; and
- outside the United States in compliance with Regulation S under the
Securities Act.
You may not offer or sell those old notes in the United States or to, or for the
account or benefit of, U.S. persons except in transactions exempt from or not
subject to the Securities Act registration requirements.
45
LEGAL MATTERS
Baker Botts L.L.P., Houston, Texas, our outside legal counsel, has issued
an opinion about the legality of the new notes.
EXPERTS
The financial statements and the financial statement schedule incorporated
in this prospectus by reference to Conoco's Annual Report on Form 10-K for the
year ended December 31, 2001, 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.
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements and schedule of Phillips included in Phillips' Annual
Report on Form 10-K for the year ended December 31, 2001, as amended, as set
forth in their report, which is incorporated by reference in this prospectus.
Phillips' financial statements and schedule are incorporated by reference in
reliance on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
ConocoPhillips files, and Conoco and Phillips have filed, 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 an Internet site that contains
information ConocoPhillips, Conoco and Phillips have filed electronically with
the SEC, which you can access over the Internet at http://www.sec.gov. You can
also obtain information about ConocoPhillips at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005. Conoco and Phillips
are not subject to the information reporting requirements of the Securities
Exchange Act of 1934.
This prospectus is part of a joint registration statement we have filed
with the SEC relating to the notes and the related 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 and these securities. The
registration statement, exhibits and schedules are available at the SEC's public
reference room or through its Internet site.
The SEC allows us to "incorporate by reference" the information
ConocoPhillips, Conoco and Phillips have filed with it, 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 ConocoPhillips, Conoco or Phillips files with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings ConocoPhillips,
Conoco or Phillips makes with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act until the offering made by this prospectus terminates. The
documents we incorporate by reference are:
- Conoco's Annual Report on Form 10-K for the year ended December 31,
2001, as filed with the SEC on March 15, 2002;
- Phillips' Annual Report on Form 10-K for the year ended December 31,
2001, as filed with the SEC on March 20, 2002, and as amended by Form
10-K/A filed with the SEC on June 24, 2002;
- Conoco's Quarterly Reports on Form 10-Q for the quarter ended March
31, 2002, as filed with the SEC on May 8, 2002, and for the quarter
ended June 30, 2002, as filed with the SEC on August 9, 2002;
46
- Phillips'Quarterly Reports on Form 10-Q for the quarter ended March
31, 2002, as filed with the SEC on May 14, 2002, and for the quarter
ended June 30, 2002, as filed with the SEC on August 12, 2002;
- ConocoPhillips' Current Reports on Form 8-K as filed with the SEC on
August 30, 2002 (as amended by Form 8-K/A filed with the SEC on
October 1, 2002) and October 8, 2002;
- Conoco's Current Reports on Form 8-K as filed with the SEC on February
25, 2002; February 26, 2002; March 12, 2002; August 16, 2002 and
August 30, 2002; and
- Phillips' Current Reports on Form 8-K as filed with the SEC on
February 25, 2002; February 26, 2002; March 12, 2002 and August 30,
2002.
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 ConocoPhillips at the
following address:
ConocoPhillips
Shareholder Relations Department
P. O. Box 2197
Houston, Texas 77079-2197
Telephone: (281) 293-6800
47
[LOGO]
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware law permits a corporation to adopt a provision in its certificate
of incorporation eliminating or limiting the personal liability of a director,
but not an officer in his or her capacity as such, to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except that such provision shall not limit the liability of a director for (1)
any breach of the director's duty of loyalty to the corporation or its
stockholders, (2) acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (3) liability under
section 174 of the Delaware General Corporation Law for unlawful payment of
dividends or stock purchases or redemptions, or (4) any transaction from which
the director derived an improper personal benefit. ConocoPhillips' restated
certificate of incorporation provides that, to the fullest extent of Delaware
law, no ConocoPhillips director shall be liable to ConocoPhillips or
ConocoPhillips' stockholders for monetary damages for breach of fiduciary duty
as a director. Each of Conoco's and Phillips' certificate of incorporation has
similar provisions with respect to its directors.
Under Delaware law, a corporation may indemnify any individual made a party
or threatened to be made a party to any type of proceeding, other than an action
by or in the right of the corporation, because he or she is or was an officer,
director, employee or agent of the corporation or was serving at the request of
the corporation as an officer, director, employee or agent of another
corporation or entity against expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such proceeding:
(1) if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation; or
(2) in the case of a criminal proceeding, he or she had no reasonable cause to
believe that his or her conduct was unlawful. A corporation may indemnify any
individual made a party or threatened to be made a party to any threatened,
pending or completed action or suit brought by or in the right of the
corporation because he or she was an officer, director, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or other entity,
against expenses actually and reasonably incurred in connection with such action
or suit if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation,
provided that such indemnification will be denied if the individual is found
liable to the corporation unless, in such a case, the court determines the
person is nonetheless entitled to indemnification for such expenses. A
corporation must indemnify a present or former director or officer who
successfully defends himself or herself in a proceeding to which he or she was a
party because he or she was a director or officer of the corporation against
expenses actually and reasonably incurred by him or her. Expenses incurred by an
officer or director, or any employees or agents as deemed appropriate by the
board of directors, in defending civil or criminal proceedings may be paid by
the corporation in advance of the final disposition of such proceedings upon
receipt of an undertaking by or on behalf of such director, officer, employee or
agent to repay such amount if it shall ultimately be determined that he or she
is not entitled to be indemnified by the corporation. The Delaware law regarding
indemnification and expense advancement is not exclusive of any other rights
which may be granted by our restated certificate of incorporation or bylaws, a
vote of stockholders or disinterested directors, agreement or otherwise.
Under the Delaware General Corporation Law, termination of any proceeding
by conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that such person is prohibited from being
indemnified.
ConocoPhillips' bylaws provide for the indemnification and advancement of
expenses of any individual made, or threatened to be made, a party to an action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was a director or officer of
ConocoPhillips or is or was a director or officer of ConocoPhillips serving as
an officer, director, employee or agent of any other enterprise at the request
of ConocoPhillips. Phillips' bylaws have similar provisions. Conoco's bylaws
provide for such indemnification and advancement of expenses if such officer or
director acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of Conoco and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. However, neither
49
ConocoPhillips, Conoco nor Phillips will indemnify a director or officer who
commences any proceeding (except for proceedings to enforce rights of
indemnification), unless the commencement of that proceeding was authorized or
consented to by the respective company's board of directors.
ConocoPhillips has agreed to indemnify each present and former director and
officer of Conoco, Phillips or any of their subsidiaries, against all costs or
expenses, judgments, fines, losses, claims, damages or liabilities in connection
with any claim, action, suit, proceeding or investigation brought within six
years of the closing of the mergers of Conoco and Phillips with subsidiaries of
ConocoPhillips (collectively, the "merger") for acts or omissions, existing or
occurring before the merger, to the fullest extent permitted under applicable
law.
Subject to a cap on premiums, for a period of six years after the merger,
ConocoPhillips has agreed to maintain a policy of directors' and officers'
liability insurance for acts and omissions occurring before the merger with
coverage in an amount and scope at least as favorable as Conoco's and Phillips'
existing directors' and officers' liability insurance coverage.
Notwithstanding any other provision, the treatment of past and present
directors, officers and employees of either Conoco or Phillips and their
respective subsidiaries with respect to elimination of liability,
indemnification, advancement of expenses and liability insurance under the
merger agreement shall be, in the aggregate, no less advantageous to intended
beneficiaries thereof than the corresponding treatment of the past and present
directors, officers and employees of the other company and its subsidiaries.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
The following instruments and documents are included as Exhibits to this
Registration Statement. Exhibits incorporated by reference are so indicated by
parenthetical information.
EXHIBIT NO. EXHIBIT
- ----------- -------
4.1 -- Indenture, dated as of October 9, 2002, among ConocoPhillips, as issuer, Conoco Inc.
and Phillips Petroleum Company, as guarantors, and The Bank of New York, as trustee
(incorporated by reference to Exhibit 4.5 to the Registration Statement on Form S-3 of
ConocoPhillips, Conoco Inc., Phillips Petroleum Company, ConocoPhillips Trust I and
ConocoPhillips Trust II filed on the date hereof).
4.2 -- Registration Rights Agreement dated October 9, 2002 between ConocoPhillips and Banc of
America Securities LLC, J.P. Morgan Securities Inc., Salomon Smith Barney Inc. and the
other initial purchasers named therein.
4.3 -- Terms of 3.625% Notes due 2007, 4.75% Notes due 2012 and 5.90% Notes due 2032,
including the form of note.
5.1 -- Opinion of Baker Botts L.L.P. as to the legality of the securities.
+12.1 -- Computation of ratio of earnings to fixed charges of Conoco Inc.
+12.2 -- Computation of ratio of earnings to fixed charges of Phillips Petroleum Company.
+12.3 -- Computation of pro forma ratio of earnings to fixed charges of ConocoPhillips.
23.1 -- Consent of PricewaterhouseCoopers LLP.
23.2 -- Consent of Ernst & Young LLP.
50
EXHIBIT NO. EXHIBIT
- ----------- -------
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 Bank of New York, as trustee under the Indenture, on Form T-1.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Form of Letter to Depository Trust Company Participants.
99.4 -- Form of Letter to Clients.
- ------------------
+ To be filed by amendment.
(b) Financial Statement Schedules
Not applicable.
ITEM 22. UNDERTAKINGS
(a) The undersigned 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) under the
Securities Act 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 paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8 and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities
51
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
respective 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, the Registrants
have been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrants of expenses incurred or paid by a director, officer or controlling
person of the Registrants 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 Registrants 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 to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
(e) The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
52
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
undersigned Registrant 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 November 12, 2002.
CONOCOPHILLIPS
By: /s/ John A. Carrig
--------------------------------------
John A. Carrig
Executive Vice President, Finance, and
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints John A. Carrig, Rick A.
Harrington and Rand C. Berney, 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
ConocoPhillips, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and all documents or instruments
necessary or appropriate to enable ConocoPhillips to comply with the Securities
Act of 1933, as amended, 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 or she 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 NOVEMBER 12, 2002.
SIGNATURE TITLE
--------- -----
/s/ J. J. Mulva
- ------------------------------------------------------- Chief Executive Officer, President and Director
J. J. Mulva (Principal Executive Officer)
/s/ John A. Carrig
- ------------------------------------------------------- Executive Vice President, Finance, and
John A. Carrig Chief Financial Officer
(Principal Financial Officer)
/s/ Rand C. Berney
- ------------------------------------------------------- Vice President and Controller
Rand C. Berney (Principal Accounting Officer)
/s/ Archie W. Dunham
- ------------------------------------------------------- Chairman of the Board and Director
Archie W. Dunham
/s/ Richard A. Auchinleck
- ------------------------------------------------------- Director
Richard A. Auchinleck
/s/ Norman R. Augustine
- ------------------------------------------------------- Director
Norman R. Augustine
/s/ David L. Boren
- ------------------------------------------------------- Director
David L. Boren
SIGNATURE TITLE
--------- -----
/s/ Kenneth M. Duberstein
- ------------------------------------------------------- Director
Kenneth M. Duberstein
/s/ Ruth R. Harkin
- ------------------------------------------------------- Director
Ruth R. Harkin
/s/ Larry D. Horner
- ------------------------------------------------------- Director
Larry D. Horner
/s/ Charles C. Krulak
- ------------------------------------------------------- Director
Charles C. Krulak
/s/ Frank A. McPherson
- ------------------------------------------------------- Director
Frank A. McPherson
/s/ William K. Reilly
- ------------------------------------------------------- Director
William K. Reilly
/s/ William R. Rhodes
- ------------------------------------------------------- Director
William R. Rhodes
/s/ J. Stapleton Roy
- ------------------------------------------------------- Director
J. Stapleton Roy
/s/ Randall L. Tobias
- ------------------------------------------------------- Director
Randall L. Tobias
/s/ Victoria J. Tschinkel
- ------------------------------------------------------- Director
Victoria J. Tschinkel
/s/ Kathryn C. Turner
- ------------------------------------------------------- Director
Kathryn C. Turner
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
undersigned Registrant 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 November 12, 2002.
CONOCO INC.
By: /s/ John A. Carrig
--------------------------------------
John A. Carrig
Executive Vice President, Finance, and
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints John A. Carrig, Rick A.
Harrington and Rand C. Berney, 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 Inc., to sign any and all amendments (including post-effective
amendments) to this Registration Statement and all documents or instruments
necessary or appropriate to enable Conoco Inc. to comply with the Securities Act
of 1933, as amended, 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 or she 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 NOVEMBER 12, 2002.
SIGNATURE TITLE
--------- -----
/s/ J. J. Mulva
- -------------------------------------------- President and Chief Executive Officer
J. J. Mulva (Principal Executive Officer)
/s/ John A. Carrig
- -------------------------------------------- Executive Vice President, Finance,
John A. Carrig and Chief Financial Officer and Director
(Principal Financial Officer)
/s/ Rand C. Berney
- -------------------------------------------- Vice President and Controller
Rand C. Berney (Principal Accounting Officer)
/s/ Rick A. Harrington
- -------------------------------------------- Director
Rick A. Harrington
/s/ Thomas C. Knudson
- -------------------------------------------- Director
Thomas C. Knudson
/s/ John E. Lowe
- -------------------------------------------- Director
John E. Lowe
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
undersigned Registrant 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 November 12, 2002.
PHILLIPS PETROLEUM COMPANY
By: /s/ John A. Carrig
--------------------------------------
John A. Carrig
Executive Vice President, Finance, and
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints John A. Carrig, Rick A.
Harrington and Rand C. Berney, 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
Phillips Petroleum Company, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and all documents or
instruments necessary or appropriate to enable Phillips Petroleum Company to
comply with the Securities Act of 1933, as amended, 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 or she
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 NOVEMBER 12, 2002.
SIGNATURE TITLE
--------- -----
/s/ J. J. Mulva
- -------------------------------------------- President and Chief Executive Officer
J. J. Mulva (Principal Executive Officer)
/s/ John A. Carrig
- -------------------------------------------- Executive Vice President, Finance,
John A. Carrig and Chief Financial Officer and Director
(Principal Financial Officer)
/s/ Rand C. Berney
- -------------------------------------------- Vice President and Controller
Rand C. Berney (Principal Accounting Officer)
/s/ Rick A. Harrington
- -------------------------------------------- Director
Rick A. Harrington
/s/ Thomas C. Knudson
- -------------------------------------------- Director
Thomas C. Knudson
/s/ John E. Lowe
- -------------------------------------------- Director
John E. Lowe
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
- ----------- -------
4.1 -- Indenture, dated as of October 9, 2002, among ConocoPhillips, as issuer, Conoco Inc.
and Phillips Petroleum Company, as guarantors, and The Bank of New York, as trustee
(incorporated by reference to Exhibit 4.5 to the Registration Statement on Form S-3 of
ConocoPhillips, Conoco Inc., Phillips Petroleum Company, ConocoPhillips Trust I and
ConocoPhillips Trust II filed on the date hereof).
4.2 -- Registration Rights Agreement dated October 9, 2002 between ConocoPhillips and Banc of
America Securities LLC, J.P. Morgan Securities Inc., Salomon Smith Barney Inc. and the
other initial purchasers named therein.
4.3 -- Terms of 3.625% Notes due 2007, 4.75% Notes due 2012 and 5.90% Notes due 2032,
including the form of note.
5.1 -- Opinion of Baker Botts L.L.P. as to the legality of the securities.
+12.1 -- Computation of ratio of earnings to fixed charges of Conoco Inc.
+12.2 -- Computation of ratio of earnings to fixed charges of Phillips Petroleum Company.
+12.3 -- Computation of pro forma ratio of earnings to fixed charges of ConocoPhillips.
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 Bank of New York, as trustee under the Indenture, on Form T-1.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Form of Letter to Depository Trust Company Participants.
99.4 -- Form of Letter to Clients.
- ------------------
+ To be filed by amendment.