<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-42713
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This preliminary prospectus supplement shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such State.
SUBJECT TO COMPLETION DATED MARCH 4, 1998
PRELIMINARY PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 4, 1998)
6,000,000 TRUST PREFERRED SECURITIES
EL PASO ENERGY CAPITAL TRUST I
% TRUST CONVERTIBLE PREFERRED SECURITIES
(LIQUIDATION AMOUNT $50 PER TRUST PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY,
AND CONVERTIBLE INTO THE COMMON STOCK OF,
EL PASO NATURAL GAS COMPANY
The % Trust Convertible Preferred Securities (the "Trust Preferred
Securities") offered hereby represent preferred undivided beneficial ownership
interests in the assets of El Paso Energy Capital Trust I, a statutory business
trust formed under the laws of the State of Delaware (the "Trust"). El Paso
Natural Gas Company, a Delaware corporation doing business as El Paso Energy
Corporation (the "Company" or "EPG"), will own all the common securities (the
"Trust Common Securities" and, together with the Trust Preferred Securities, the
"Trust Securities") representing undivided subordinated beneficial ownership
interests in the assets of the Trust. The Trust exists for the sole purpose of
issuing the Trust Securities and investing the proceeds as described below and
engaging in activities incidental thereto. The proceeds from the sale of the
Trust Securities (including the proceeds, if any, from the exercise of the
Underwriters' over-allotment option) together with the proceeds from the
issuance to EPG of the Trust Common Securities will be used by the Trust to
purchase % Subordinated Convertible Debentures of EPG due 2028. (the
"Debentures").
Application has been made to list the Trust Preferred Securities for
trading on the New York Stock Exchange, Inc. (the "NYSE"), subject to official
notice of issuance, under the symbol "EPGPrC."
(continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE S-12 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE TRUST
PREFERRED SECURITIES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITERS' PROCEEDS TO
INVESTORS(1) COMMISSIONS(2) TRUST(3)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Trust Preferred Security............................... $ $ (4) $
Total(5)................................................... $ $ (4) $
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accumulated distributions, if any, from , 1998.
(2) The Trust and the Company have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) Before deducting expenses of the offering payable by the Company, estimated
at $ .
(4) In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will be ultimately invested in investment instruments of the
Company, the Underwriting Agreement provides that the Company will pay to
the Underwriters, as compensation for their services, $ per Trust
Preferred Security (or $ in the aggregate) (the "Underwriters'
Compensation"). See "Underwriting."
(5) The Trust has granted the Underwriters an option for 30 days to purchase up
to an additional 900,000 Trust Preferred Securities at the price to
investors solely to cover over-allotments. If such option is exercised in
full, the total price to investors, aggregate Underwriters' Compensation and
proceeds to the Trust will be $ , $ and $ ,
respectively. See "Underwriting."
The Trust Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Trust Preferred Securities will be made only in book-entry
form through the facilities of The Depository Trust Company ("DTC") on or about
, 1998.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
MORGAN STANLEY DEAN WITTER
<PAGE> 2
(continued from cover page)
Holders of the Trust Preferred Securities will be entitled to receive
cumulative cash distributions accumulating from the closing of this offering and
payable quarterly in arrears on each , , and commencing ,
1998, at an annual rate of % of the liquidation amount of $50 per Trust
Preferred Security (equivalent to $ per Trust Preferred Security per annum),
if, as and when the Trust has funds available for payment. See "Description of
the Trust Preferred Securities -- Distributions" included in this Prospectus
Supplement. Distributions not paid on the scheduled payment date will accumulate
and compound quarterly at a rate per annum equal to % and, except to the
extent the context otherwise requires, when used herein the term "distributions"
includes any such additional amounts. The distribution rate and the distribution
payment dates and other payment dates for the Trust Preferred Securities will
correspond to the interest rate and interest payment dates and other payment
dates for the Debentures, which will be the sole assets of the Trust. The
Debentures will provide that payments of interest may be deferred at any time,
and from time to time, by EPG for a period not exceeding 20 consecutive quarters
(referred to herein as an "Extension Period"). Each Trust Preferred Security is
convertible in the manner described herein at the option of the holder at any
time prior to the Conversion Expiration Date (as defined herein), into shares of
common stock, par value $3.00 per share, of EPG ("Common Stock") at the rate of
shares of Common Stock for each Trust Preferred Security (equivalent to a
conversion price of $ per share of Common Stock), subject to adjustment in
certain circumstances. See "Description of the Trust Preferred
Securities -- Conversion Rights" in this Prospectus Supplement and "Description
of Capital Stock" in the accompanying Prospectus. The last reported sale price
of the Common Stock, which is traded under the symbol "EPG" on the NYSE, on
, 1998 was $ per share. See "Price Range of the Common Stock and Dividend
Information" included in this Prospectus Supplement.
The payment of distributions by the Trust and payments on liquidation of the
Trust or the redemption of Trust Preferred Securities, as described below, are
guaranteed on a subordinated basis by the Company (the "Guarantee") to the
extent the Trust has funds available therefor as described under "Description of
the Guarantee" included in this Prospectus Supplement. The Company's obligation
under the Guarantee is subordinate and junior in right of payment to all other
liabilities of the Company (except for the guarantee of the Trust Common
Securities (as defined herein)) and ranks pari passu with the most senior
preferred stock, if any, issued from time to time by the Company. The Company's
obligations under the Debentures are subordinate and junior in right of payment
to all Senior Debt (as defined herein) of the Company. At September 30, 1997,
the Company had outstanding Senior Debt aggregating approximately $2.7 billion,
which would have ranked senior to the Company's obligations under the Guarantee
and the Debentures. See "Risk Factors -- Ranking of Subordinate Obligations
under the Guarantee and the Debentures" included in this Prospectus Supplement.
The term "Senior Debt" means any indebtedness of the Company for money borrowed,
except for trade credit and any such indebtedness that is by its terms
subordinated to or pari passu with the Debentures, as the case may be. See
"Description of the Debentures -- Subordination" included in this Prospectus
Supplement.
The Company has covenanted in the Guarantee that, if (a) for any
distribution period, full distributions on a cumulative basis on any Trust
Preferred Securities have not been paid or declared and set apart for payment,
(b) an event of default has occurred and is continuing under the indenture under
which the Debentures are issued (the "Subordinated Indenture"), (c) the Company
is in default of its obligations under the Guarantee or the guarantee of the
Trust Common Securities, or (d) the Company has given notice of its selection of
an Extension Period, then during such period, subject to certain exceptions, the
Company shall not (i) declare or pay dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock and (ii) make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities of the Company that
rank pari passu with or junior to the Debentures. See "Description of the
Guarantee -- Certain Covenants of EPG" included in this Prospectus Supplement.
Except as provided below, the Trust Preferred Securities may not be redeemed
by the Trust prior to , 2002. The Trust Preferred Securities are subject to
mandatory redemption, in whole or in part, on or after such date, at redemption
prices set forth herein, upon any permitted redemption by EPG of the Debentures.
See "Description of the Trust Preferred Securities -- Optional Redemption" in
this Prospectus Supplement. In addition, the Trust Preferred Securities are
subject to mandatory redemption upon the repayment at maturity or as a result of
acceleration of the Debentures. See "Description of the Trust Preferred
Securities -- Mandatory Redemption" included in this Prospectus Supplement.
Under certain circumstances following the occurrence of a Trust Special
Event (as defined herein), the Trust Preferred Securities are also subject to
(i) exchange, at the option of the Trust in the manner described herein, for the
Debentures (see "Description of the Trust Preferred Securities -- Trust Special
Event Exchange or Redemption" included in this Prospectus Supplement) and (ii)
redemption, in whole or in part, on or after , 2002, if such Trust Special
Event constitutes a Trust Tax Event (as defined herein). At any time, EPG will
have the right to terminate the Trust and cause the Debentures to be distributed
to the holders of the Trust Preferred Securities in liquidation of the Trust.
See "Description of the Trust Preferred Securities -- Mandatory Redemption" and
" -- Distribution of Debentures" included in this Prospectus Supplement.
In the event of any liquidation, dissolution, winding up or termination of
the Trust, the holders of the Trust Preferred Securities will be entitled to
receive (after payment by the Trust of all of its liabilities to the extent
required by applicable law) for each Trust Preferred Security a liquidation
amount of $50 plus accumulated and unpaid distributions thereon, unless the
Debentures are distributed in connection with such liquidation, dissolution,
winding up or termination of the Trust. Upon a default by the Company on any of
its obligations under the Guarantee or the Debentures, the holders of the Trust
Preferred Securities will have a preference over the holders of the Trust Common
Securities with respect to payments upon liquidation of the Trust. See
"Description of the Trust Preferred Securities -- Liquidation Distribution Upon
Dissolution" included in this Prospectus Supplement.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE TRUST PREFERRED
SECURITIES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF TRUST
PREFERRED SECURITIES TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING" INCLUDED
IN THIS PROSPECTUS SUPPLEMENT.
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<PAGE> 3
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus Supplement
and the accompanying Prospectus or incorporated by reference herein or therein.
Capitalized terms used in this Prospectus Supplement but not defined herein have
the meanings assigned to them in the accompanying Prospectus if defined therein.
References herein to "BBtu" mean Billion British thermal units and to "Bcf" mean
Billion cubic feet. Unless otherwise indicated herein, the information in this
Prospectus Supplement assumes that the Underwriters' over-allotment option is
not exercised. See "Underwriting."
THE COMPANY
The Company, which operates under the name El Paso Energy Corporation, owns
and operates one of the nation's largest integrated natural gas systems, with
natural gas pipelines extending from coast to coast. The Company's principal
operations include the interstate and intrastate transportation, gathering and
processing of natural gas; the marketing of natural gas, natural gas liquids,
power, crude oil and refined products; and the development and operation of
energy infrastructure facilities worldwide. EPG owns or has interests in over
28,200 miles of interstate and intrastate pipeline and approximately 8,750 miles
of gathering systems connecting the nation's principal natural gas supply
regions to four of the largest consuming regions in the United States, namely
the Gulf Coast, California, the Northeast and the Midwest. During the 12 months
ended December 31, 1997, the average volumes transported, gathered or treated on
the Company's interstate and intrastate pipeline systems totalled approximately
12,439 BBtu per day of natural gas, or approximately one-fifth of estimated
total U.S. natural gas demand.
EPG's natural gas transmission operations include one of the nation's
largest mainline natural gas transmission systems which is comprised of five
interstate pipeline systems: (i) El Paso Natural Gas, which connects natural gas
supply regions in New Mexico, Texas, Oklahoma and Colorado to markets in
California, Nevada, Arizona, New Mexico, Texas and northern Mexico (the "EPNG
System"); (ii) Tennessee Gas Pipeline, which extends from natural gas supply
regions in Texas and Louisiana, including the Gulf of Mexico, to the
northeastern region of the United States, including the New York City and Boston
metropolitan areas (the "TGP System"); (iii) Midwestern Gas Transmission, which
extends from a connection with the TGP System at Portland, Tennessee to Chicago,
Illinois and principally serves the Chicago metropolitan area (the "Midwestern
System"); (iv) East Tennessee Natural Gas, which extends from the TGP System to
serve the states of Tennessee, Virginia and Georgia (the "East Tennessee
System"); and (v) Mojave Pipeline, which connects the EPNG System in Arizona to
customers in the vicinity of Bakersfield, California (the "Mojave System," and,
collectively with the EPNG System, the TGP System, the Midwestern System and the
East Tennessee System, the "Interstate System"). The Interstate System totals
approximately 26,600 miles of transmission pipeline.
In addition to its interstate transmission services, EPG provides
intrastate transmission services as well as field services including gathering,
products extraction, dehydration, purification and compression. These operations
include approximately 1,600 miles of intrastate transmission pipeline, which
supply natural gas to the Interstate System and support the Company's trading
and marketing operations, approximately 8,750 miles of gathering systems,
240,000 horsepower of compression and ownership interests in 25 natural gas
processing and treating facilities located in the country's most prolific and
active gas production areas, including the San Juan, Anadarko and Permian Basins
and East Texas, South Texas, Louisiana and the Gulf of Mexico. EPG's marketing
activities include the marketing and trading of natural gas, natural gas
liquids, power, crude oil and refined products as well as providing integrated
price risk management services associated with these commodities, and the
participation in the development and ownership of domestic power generating
facilities. EPG gathered, processed or treated an average of 3,161 BBtu per day
of natural gas and sold 355 million gallons of natural gas liquids during the 12
months ended December 31, 1997. During that period, the Company was among the
largest domestic marketers and traders of natural gas, with volumes averaging
6,969 BBtu per day.
S-3
<PAGE> 4
The Company's international activities are focused on the development and
operation of international energy infrastructure projects and include ownership
interests in (i) two major existing natural gas transmission systems in
Australia; (ii) natural gas transmission and power generation assets currently
in operation or under construction in Argentina, Bolivia, Brazil, Chile, Czech
Republic, Hungary, Indonesia, Mexico, Pakistan and Peru; and (iii) three
operating domestic power generation plants.
RECENT EVENTS
PRELIMINARY RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
On January 21, 1998, the Company announced its preliminary results of
operations for the year ended December 31, 1997. The following table presents
certain unaudited preliminary results of operations data for the year ended
December 31, 1997. The Company's consolidated financial statements for this
period have not yet been audited and are not currently available. The results of
operations data set forth below with respect to the year ended December 31, 1996
are derived from, and are qualified by reference to, the audited consolidated
financial statements and notes thereto contained in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996 (the "1996 Form 10-K"), which
is incorporated by reference into the accompanying Prospectus. In the opinion of
the Company's management, the unaudited financial information set forth below
includes all adjusting entries (consisting only of normal recurring adjustments)
necessary to present fairly the information set forth therein.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------
1997 1996
----------- ------
(UNAUDITED)
<S> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE DATA)
Operating revenues.......................................... $5,638 $3,010
Operating expenses:
Employee separation and asset impairment charge........... -- 99
Other operating expenses.................................. 5,117 2,741
------ ------
Operating income............................................ 521 170
Interest and debt expense................................... 238 110
Other (income) expense, net................................. (57) (5)
------ ------
Income before income taxes and minority interest............ 340 65
Income tax expense.......................................... 129 25
------ ------
Income before minority interest............................. 211 40
Minority interest........................................... 25 2
------ ------
Net income available to Common Stock........................ $ 186 $ 38
====== ======
Basic earnings per common share............................. $ 3.27 $ 1.06
------ ------
Diluted earnings per common share........................... $ 3.18 $ 1.04
====== ======
</TABLE>
On January 21, 1998, the Company reported net income available to Common
Stock of $186 million, or $3.27 per share of Common Stock, for the year ended
December 31, 1997, an increase of 15 percent on a per share basis, from an
adjusted $103 million, or $2.85 per share of Common Stock for the year ended
December 31, 1996 after adjusting for a $99 million pre-tax charge taken in the
first quarter of 1996 for employee separation and asset impairment and an $8
million pre-tax charge taken in the fourth quarter for relocating the corporate
headquarters from El Paso to Houston in connection with the acquisition of El
Paso Tennessee Pipeline Co. The reported 1996 earnings were $38 million, or
$1.06 per share of Common Stock. On a diluted earnings per share basis, 1997
earnings increased 13 percent to $3.18 per share of Common Stock from an
adjusted $2.81 in 1996.
S-4
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INCREASE IN QUARTERLY DIVIDEND; PROPOSED STOCK SPLIT
On January 21, 1998, the Company declared a regular quarterly dividend of
$0.3825 per share on the Company's outstanding Common Stock, payable on April 1,
1998 to stockholders of record on March 6, 1998. Such dividend represents a 5
percent increase (on a per share basis), from the former quarterly dividend of
$0.365 per share of Common Stock. The Company also declared a two-for-one stock
split in the form of a 100 percent stock dividend (on a per share basis) to be
paid on April 1, 1998 to stockholders of record on March 13, 1998.
ACQUISITION OF DEEPTECH INTERNATIONAL, INC.
EPG announced on March 2, 1998 that its Board of Directors has approved
definitive agreements providing for a series of transactions as a result of
which DeepTech International Inc. ("DeepTech") will merge with and into EPG and
EPG will thereby acquire DeepTech's combined ownership interest in Leviathan Gas
Pipeline Partners, L.P. ("Leviathan"). Leviathan is a publicly traded
partnership that produces, processes, gathers, transports and markets oil and
gas located in the offshore Gulf of Mexico (the "Gulf"). In connection with the
merger, EPG will acquire the 15% minority equity interest in the holding company
through which DeepTech owns its Leviathan interests. After the transactions, EPG
will own 100% of the general partner of Leviathan and a 27.3% effective
ownership interest in Leviathan. Each Holder of DeepTech common stock will
receive as consideration for the merger $14 per share either in cash or EPG
Common Stock, at such holder's election, subject to a minimum and maximum
exchange ratio of approximately 0.1867 and 0.28 shares of EPG Common Stock,
respectively. The net cost to EPG for the transactions will total approximately
$450 million. Completion of the transactions is subject to various conditions
including the receipt of required regulatory and stockholder approvals and other
customary conditions, and no assurance can be given that the transactions will
be successfully completed.
Leviathan is the largest independent gatherer of natural gas in the Gulf
and has interests in pipeline systems which transported more than 2.8 Bcf per
day in 1997. These pipeline systems, which cover a large portion of the Outer
Continental Shelf and access the prolific Deepwater Trend of the Gulf of Mexico,
include the High Island Offshore system, the U-T Offshore system, the Stingray
Pipeline system, the Nautilus/Manta Ray Offshore system, the Viosca Knoll
Gathering system and the Poseidon Oil Pipeline system. Upon completion of this
transaction, EPG will become one of the largest gatherers of natural gas in the
onshore and offshore United States markets and will own interests in 47 pipeline
systems, 25 natural gas processing and treating plants, and 8 offshore
platforms.
INVESTMENT IN AUSTRALIAN PIPELINE SYSTEM
On March 3, 1998 the Company announced that Epic Energy (WA) Pipeline Trust
venture (the "Venture"), in which a subsidiary of the Company owns a 33.3%
interest, has been awarded the right to purchase the 925-mile AlintaGas
Dampier-to-Bunbury Natural Gas Pipeline in Western Australia for approximately
US$1.64 billion. The AlintaGas Dampier-Bunbury Pipeline is a 24-inch, 550
million cubic feet per day pipeline system that serves a number of West
Australian markets, including industrial end-users such as Wesfarmers, Western
Power, Alcoa Aluminum and Worsley Alumina. The Northwest Shelf Gas Project as
well as Harriet and East Spar Joint Ventures are among the primary natural gas
suppliers on this pipeline system. The Venture will own and operate the pipeline
system through its Perth, Australia office. An expansion of the Dampier-Bunbury
Natural Gas Pipeline is currently underway to supply gas to expansions committed
by Alcoa, Worsley and Wesfarmers. Other partners in the Venture include
Consolidated Natural Gas Company (33.3%), AMP Asset Management (11.1%), Axiom
Funds Management (11.1%) and Hastings Funds Management (11.1%).
S-5
<PAGE> 6
THE OFFERING
The Trust.................. El Paso Energy Capital Trust I, a Delaware
statutory business trust. The sole assets of the
Trust will be the % Subordinated Convertible
Debentures of EPG due 2028.
Securities Offered......... 6,000,000 % Trust Convertible Preferred
Securities (6,900,000 if the Underwriters'
over-allotment option is exercised in full).
Liquidation Amount......... $50 per Trust Preferred Security. See "Description
of the Trust Preferred Securities -- Liquidation
Distribution Upon Dissolution" included in this
Prospectus Supplement.
Distributions.............. Distributions on the Trust Preferred Securities
will accumulate from the closing of this offering
of the Trust Preferred Securities and will be
payable at the annual rate of % of the
liquidation amount of $50 per Trust Preferred
Security (equivalent to $ per Trust Preferred
Security per annum) if, as and when the Trust has
funds available for payment. Distributions will be
payable quarterly in arrears on each ,
, and ,
commencing , 1998. Distributions not made on
the scheduled payment date will accumulate and
compound quarterly at a rate per annum equal to
%.
The ability of the Trust to pay distributions on
the Trust Preferred Securities is entirely
dependent on its receipt of payments with respect
to the Debentures held by the Trust. The Debentures
will provide that payments of interest may be
deferred at any time, and from time to time, by EPG
for a period not exceeding 20 consecutive quarters.
See "-- The Offering -- Debentures," "Risk
Factors -- Restrictions on Certain Payments; Tax
Consequences" and "Description of the Trust
Preferred Securities -- Distributions" included in
this Prospectus Supplement.
Rights Upon Non-Payment of
Distributions and Certain
Defaults; Covenants of
the Company.............. If, at any time, EPG or any successor is in default
on any of its obligations under the Guarantee, then
the Trust Guarantee Trustee (as defined herein), as
the holder of the Guarantee, shall have the right
to enforce such Guarantee, including the right to
enforce the covenant restricting certain payments
by EPG described below.
In the Guarantee, the Company has agreed that if
(a) for any distribution period, full distributions
on a cumulative basis on any Trust Preferred
Securities have not been paid, (b) an event of
default has occurred and is continuing under the
Subordinated Indenture (a "Debenture Event of
Default"), (c) the Company is in default of its
obligations under the Guarantee or the guarantee of
the Trust Common Securities (together with the
Guarantee, the "Guarantees") or (d) notice of an
Extension Period has been given and shall not have
been rescinded or such Extension Period is
continuing, then, during such period the Company
shall not (i) declare or pay dividends on, make
distributions with respect to, or redeem, purchase
or acquire, or make a liquidation payment with
respect to any of its capital stock (except for (x)
dividends or distributions in shares of, or
options, warrants or rights to subscribe for or
purchase shares of, its capital stock and
conversions or
S-6
<PAGE> 7
exchanges of common stock of one class into common
stock of another class and (y) redemptions or
purchases of any rights pursuant to the Amended and
Restated Shareholder Rights Agreement dated July
23, 1997 (the "Rights Agreement") and the issuance
of capital stock pursuant to such rights) or (ii)
make any payments of principal, interest or
premium, if any, on or repay, repurchase or redeem
any debt securities (including guarantees of
indebtedness for money borrowed) of the Company
that rank pari passu with or junior to the
Debentures (other than (u) any redemption,
liquidation, interest, principal or guarantee
payment by the Company where the payment is made by
way of securities (including capital stock) that
rank pari passu with or junior to the securities on
which such redemption, liquidation, interest,
principal or guarantee payment is being made, (v)
payments under the Guarantees, (w) purchases of
Common Stock related to the issuance of Common
Stock under any of the Company's benefit plans for
its directors, officers or employees, (x) as a
result of a reclassification of the Company's
capital stock or the exchange or conversion of one
series or class of the Company's capital stock for
another series or class of the Company's capital
stock, (y) the purchase of fractional interests in
shares of the Company's capital stock pursuant to
the conversion or exchange provisions of such
capital stock or the security being converted or
exchanged and (z) redemptions or purchases of any
rights pursuant to the Rights Agreement and the
issuance of capital stock pursuant to such rights).
See "Description of the Guarantee -- Certain
Covenants of EPG" included in this Prospectus
Supplement.
Conversion into Common
Stock.................... Each Trust Preferred Security is convertible at any
time prior to the close of business on the Business
Day (as defined herein) prior to the date of
redemption (the "Conversion Expiration Date") at
the option of the holder into shares of Common
Stock at the rate of shares of Common Stock
for each Trust Preferred Security (equivalent to a
conversion price of $ per share of Common
Stock), subject to adjustment in certain
circumstances. A holder of Trust Preferred
Securities wishing to exercise its conversion right
shall surrender any or all of such Trust Preferred
Securities, together with an irrevocable conversion
notice (or if Trust Preferred Securities are then
evidenced by a global certificate, such holder must
only deliver a conversion notice), to the person
then serving as the conversion agent acting on
behalf of the holders of Trust Preferred Securities
(in such capacity, the "Conversion Agent"), and the
Conversion Agent will exchange the Trust Preferred
Securities for a portion (the principal amount of
which is equal to the aggregate liquidation amount
of the Trust Preferred Securities being so
converted) of the Debentures held by the Property
Trustee (as defined herein) and immediately convert
such Debentures into Common Stock. Except possibly
to the extent attributable to accumulated and
unpaid interest on the Debentures and cash paid in
lieu of fractional shares of Common Stock, a holder
should not recognize gain or loss upon the exchange
through the Conversion Agent of the Trust Preferred
Securities for a proportionate share of the
Debentures, followed immediately by the conversion
of the Debentures into Common Stock. See "Certain
Federal Income Tax Consequences -- Conversion of
Trust Preferred Securities into Common Stock"
included in this Prospectus Supplement.
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<PAGE> 8
Redemption................. The Trust Preferred Securities will be redeemable
for cash, at the option of the Trust, in whole or
in part, from time to time on or after ,
2002 at the prices specified herein. See
"Description of Trust Preferred
Securities -- Optional Redemption" included in this
Prospectus Supplement. The Trust Preferred
Securities will also be redeemable upon the
repayment either at maturity of the Debentures or
as a result of the acceleration of the Debentures
upon an event of default, at a redemption price of
$50 per Trust Preferred Security together with
accumulated and unpaid distributions thereon to the
date of redemption. See "Description of Trust
Preferred Securities -- Mandatory Redemption." If
at any time prior to the Conversion Expiration
Date, less than 10% of the Debentures remains
outstanding, such Debentures shall be redeemable at
the option of EPG, in whole but not in part, at a
redemption price equal to the aggregate principal
amount thereof, plus accrued and unpaid interest
due thereon, and the proceeds of such redemption
will be applied by the Property Trustee to redeem
outstanding Trust Securities at a redemption price
of $50 per Trust Preferred Security together with
accumulated and unpaid distributions thereon to the
date of redemption. See "Description of the Trust
Preferred Securities -- Events of Default; Notice"
and "-- Mandatory Redemption" included in this
Prospectus Supplement.
Trust Special Event
Exchange or Redemption..... Upon the occurrence of a Trust Tax Event (as
defined herein) or a Trust Investment Company Event
(as defined herein), the Regular Trustees (as
defined herein) shall direct the Conversion Agent
to exchange all outstanding Trust Preferred
Securities for Debentures and to terminate the
Trust, provided that, in the case of a Trust Tax
Event, EPG shall have the right to direct that less
than all of the Trust Preferred Securities be so
exchanged if and for so long as EPG shall have
elected to pay Additional Sums (as defined herein)
such that the amounts received by the holders of
Trust Preferred Securities that remain outstanding
are not reduced thereby and shall not have revoked
any such election or failed to make such payments.
Upon the occurrence of a Trust Tax Event, the
Debentures may be redeemed by EPG on or after
, 2002 at 100% of the principal amount
thereof, plus accrued and unpaid interest thereon.
In the event the Debentures are redeemed by EPG,
the Trust Preferred Securities will be redeemed by
the Regular Trustees at $50 per Trust Preferred
Security plus accumulated and unpaid distributions
thereon through the date of redemption. See
"Description of the Trust Preferred
Securities -- Trust Special Event Exchange or
Redemption" included in this Prospectus Supplement.
Distribution of
Debentures................. At any time, EPG will have the right to dissolve
the Trust and, after satisfaction of the
liabilities of creditors of the Trust as provided
by applicable law, cause the Debentures to be
distributed to the holders of the Trust Preferred
Securities in liquidation of the Trust. See
"Description of the Trust Preferred
Securities -- Distribution of the Debentures"
included in this Prospectus Supplement.
Guarantee.................. Pursuant to the Guarantee, the Company will
irrevocably guarantee, on a subordinated basis, the
payment in full of (i) any accumulated and unpaid
distributions on the Trust Preferred Securities to
the extent of funds of the Trust available
therefor, (ii) the amount payable upon redemption
of the Trust Preferred Securities to the extent of
funds of the Trust available therefor and (iii)
generally, the liquidation amount of the Trust
Preferred Securities to the extent of the assets of
the Trust
S-8
<PAGE> 9
available for distribution to holders of Trust
Preferred Securities. See "Description of the
Guarantee" included in this Prospectus Supplement.
The Company's obligation under the Guarantee is
subordinate and junior in right of payment to all
other liabilities of the Company and ranks pari
passu with the most senior preferred stock, if any,
issued from time to time by the Company.
Voting Rights.............. Holders of Trust Preferred Securities will
generally have limited voting rights relating only
to the modification of the Trust Preferred
Securities. Holders of Trust Preferred Securities
will not be entitled to vote to appoint, remove or
replace the Regular Trustees or the Delaware
Trustee, which voting rights are vested exclusively
in EPG as holder of the Trust Common Securities.
The holders of a majority in aggregate liquidation
amount of the Trust Preferred Securities will,
however, have the right to direct the time, method
and place of conducting any proceeding for any
remedy available to the Property Trustee, or direct
the exercise of any power conferred upon the
Property Trustee under the Declaration, including
the right to direct the Property Trustee as holder
of the Debentures (i) to exercise the remedies
available to it under the Subordinated Indenture as
holder of the Debentures and (ii) to consent to any
amendment, modification or termination of the
Subordinated Indenture or the Debentures, where
such consent shall be required. See "Description of
the Trust Preferred Securities -- Voting Rights;
Amendment of the Declaration" included in this
Prospectus Supplement.
Debentures................. The Debentures will have a maturity of 30 years
from the date of original issuance and will bear
interest at the rate of % per annum payable
quarterly in arrears. EPG has the right from time
to time to select an interest payment period or
periods longer than one quarter (during which
period or periods interest will compound
quarterly), provided that no such Extension Period
will exceed 20 consecutive quarters and provided
further that no such deferral of interest payments
may extend beyond the stated maturity of the
Debentures. Accordingly, distribution payments on
the Trust Preferred Securities may not be deferred
beyond the stated maturity of the Debentures. If
EPG defers interest payments longer than one
quarter, subject to certain exceptions, it will be
prohibited from paying dividends on any of its
capital stock and making certain other restricted
payments until quarterly interest payments are
resumed and all accumulated and unpaid interest on
the Debentures is brought current. EPG will have
the right to make partial payments of such interest
during an Extension Period.
The Debentures are convertible into shares of
Common Stock at the option of the holders thereof
at a conversion rate of shares of Common
Stock for each $50 in principal amount of
Debentures (equivalent to a conversion price of
$ per share of Common Stock) subject to
certain adjustments set forth herein. So long as
Trust Preferred Securities remain outstanding, EPG
will covenant not to convert Debentures except
pursuant to a notice of conversion delivered to the
Conversion Agent by a holder of Trust Preferred
Securities.
In addition, on and after 2002,
the Debentures are redeemable at the option of EPG
at any time, in whole or in part, at the redemption
prices set forth herein, together with accrued and
unpaid interest to the date fixed for redemption.
See "Description of the Debentures -- Optional
Redemption" included in this Prospectus Sup-
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<PAGE> 10
plement. The Debentures are also redeemable, in
whole or in part, upon the occurrence and
continuation of a Trust Tax Event. See "Description
of the Trust Preferred Securities -- Trust Special
Event Exchange or Redemption" and "Description of
the Debentures -- Optional Redemption" included in
this Prospectus Supplement.
The payment of the principal of and interest on the
Debentures will be subordinated in right of payment
to all Senior Debt of EPG. As of September 30,
1997, on a pro forma basis and after giving effect
to this offering of Trust Preferred Securities and
the application of the proceeds therefrom (assuming
the Underwriters' over-allotment option is not
exercised), EPG had outstanding approximately $2.7
billion of Senior Debt. See "Risk
Factors -- Ranking of Subordinate Obligations under
the Guarantee and the Debentures" and
"-- Structural Subordination" included in this
Prospectus Supplement. While the Trust Preferred
Securities are outstanding, the Property Trustee
will not have the right to amend the Subordinated
Indenture or the terms of the Debentures in a way
that adversely affects the holders of the Trust
Preferred Securities or to waive a Debenture Event
of Default without the consent of holders of at
least a majority in aggregate liquidation amount of
the Trust Preferred Securities and, in certain
cases, the Trust Common Securities then
outstanding. See "Description of the Subordinated
Debt Securities -- Modification of the Subordinated
Indenture" included in the accompanying Prospectus.
Use of Proceeds............ All of the proceeds from the sale of the Trust
Preferred Securities will be invested by the Trust
in the Debentures. Such proceeds will be used by
EPG to repay certain of its outstanding
indebtedness and for general corporate purposes,
possibly including acquisitions. See "Use of
Proceeds" included in this Prospectus Supplement.
Form of Trust Preferred
Securities............... The Trust Preferred Securities will be represented
by a global certificate or certificates registered
in the name of Cede & Co., as nominee for DTC.
Beneficial interests in the Trust Preferred
Securities will be evidenced by, and transfers
thereof will be effected only through, records
maintained by the participants in DTC. Except as
described herein, Trust Preferred Securities in
certificated form will not be issued in exchange
for the global certificate or certificates. See
"Description of the Trust Preferred
Securities -- Book-Entry Only Issuance -- The
Depository Trust Company" included in this
Prospectus Supplement.
Listing.................... Application has been made to list the Trust
Preferred Securities for trading on the NYSE.
Proposed Trading Symbol.... "EPGPrC".
Risk Factors............... Prospective purchasers of Trust Preferred
Securities should carefully consider the specific
risk factors relating to an investment in the Trust
Preferred Securities. See "Risk Factors" included
in this Prospectus Supplement.
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<PAGE> 11
SUMMARY FINANCIAL AND OPERATING DATA
The summary historical consolidated financial data set forth below for each
of the three fiscal years ended December 31, 1996 have been derived from the
Company's financial statements. The financial statements for each of the three
fiscal years for the period ended December 31, 1996 have been audited by Coopers
& Lybrand L.L.P., independent public accountants. The summary historical
consolidated financial data set forth below, as of and for each of the interim
nine month periods ended September 30, 1997 and 1996, were derived from the
unaudited interim financial statements of EPG and its consolidated subsidiaries
for those periods. In the opinion of the Company's management, the Company's
summary historical consolidated financial data, as of and for the unaudited
interim nine months ended September 30, 1997 and 1996, include all adjusting
entries (consisting only of normal recurring adjustments) necessary to present
fairly the information set forth therein.
The information presented below should be read in conjunction with the
historical financial statements and notes thereto contained in the 1996 Form
10-K and the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1997, which are incorporated by reference in the accompanying
Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------- -----------------
(UNAUDITED)
-----------------
1996(a) 1995(a) 1994 1997(a) 1996(a)
------- ------- ------ ------- -------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Operating Results Data
Operating revenues............................. $3,010 $1,038 $ 870 $4,061 $1,938
Depreciation, depletion and amortization....... 101 72 65 182 66
Litigation special charge...................... -- -- 15 -- --
Employee separation and asset impairment
charge(b)................................... 99 -- -- -- 99
Operating income............................... 170 212 222 384 94
Income before income taxes and minority
interest.................................... 65 133 148 250 23
Income tax expense............................. 25 48 58 96 9
Minority interest.............................. 2 -- -- 19 --
Net income available to Common Stock........... 38 85 90 135 14
Net income per share of Common Stock(b)........ 1.06 2.47 2.45 2.37 0.40
Cash dividends declared per share of
Common Stock................................ 1.39 1.32 1.21 1.10 1.04
Weighted average shares of Common Stock
outstanding................................. 36.0 34.5 36.6 56.8 35.0
Financial Position Data
Total assets................................... $8,712 $2,535 $2,332 $9,101 $2,774
Short-term debt (including current maturities
of long-term debt).......................... 841 285 114 600 398
Long-term debt................................. 2,215 772 779 2,137 665
Minority interest.............................. 335 -- -- 365 --
Stockholders' equity........................... 1,638 712 710 1,893 708
</TABLE>
- ---------------
(a) Reflects the acquisitions in September 1995 of Eastex Energy Inc., December
1995 of Premier Gas Company, June 1996 of Cornerstone Natural Gas, Inc., and
December 1996 of El Paso Tennessee Pipeline Co.
(b) Includes a charge of $99 million pre-tax ($60 million after tax) to reflect
costs associated with the implementation of a workforce reduction plan and
the impairment of certain long-lived assets. Net income per share of Common
Stock for the year ended December 31, 1996 and nine months ended September
30, 1996 before giving effect to this charge and an $8 million pre-tax ($5
million after tax) charge taken in the fourth quarter for relocating the
corporate headquarters from El Paso, Texas to Houston, Texas in connection
with the acquisition of El Paso Tennessee Pipeline Co., would have been
$2.85 and $2.12 (compared to the reported $1.06 and $0.40), respectively.
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<PAGE> 12
RISK FACTORS
Prospective purchasers of the Trust Preferred Securities should consider
carefully the risk factors set forth below, as well as all other information
contained or incorporated by reference in this Prospectus Supplement and the
accompanying Prospectus in evaluating an investment in the Trust Preferred
Securities, including, without limitation, information included in the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 1997 incorporated by
reference in the registration statement of which this Prospectus Supplement is a
part under the caption "Cautionary Statement for Purposes of the 'Safe Harbor'
Provisions of the Private Securities Litigation Reform Act of 1995."
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND THE DEBENTURES
The obligations of EPG under the Guarantee issued by EPG for the benefit of
the holders of Trust Preferred Securities are unsecured and rank subordinate and
junior in right of payment to all other liabilities of EPG and pari passu with
the most senior preferred stock, if any, issued from time to time by EPG. The
obligations of EPG under the Debentures are subordinate and junior in right of
payment to all present and future Senior Debt. As of September 30, 1997, on a
pro forma basis and after giving effect to this Offering and the application of
the proceeds therefrom (assuming the Underwriters' over-allotment option is not
exercised), EPG had outstanding $2.7 billion of Senior Debt (excluding accounts
payable and accrued expenses, deferred income taxes and other liabilities). The
ability of the Trust to pay amounts due on the Trust Preferred Securities is
solely dependent upon EPG making payments on the Debentures as and when
required. None of the Subordinated Indenture, the Guarantee or the Declaration
places any limitation on the amount of secured or unsecured debt, including
Senior Debt, that may be incurred by EPG and its subsidiaries. See "Description
of the Guarantee -- Status of the Guarantee" and "Description of the
Debentures -- Subordination" included in this Prospectus Supplement.
STRUCTURAL SUBORDINATION
The Debentures will be obligations of EPG exclusively. Since a substantial
portion of EPG's operations are conducted through subsidiaries, a significant
portion of EPG's cash flow and, consequently, its ability to service debt,
including the Debentures, is dependent upon the earnings of its subsidiaries and
the transfer of funds by those subsidiaries to EPG in the form of dividends or
other transfers, supplemented with borrowings. The ability of these subsidiaries
to pay dividends to EPG in the future is subject to restrictions contained in
indentures and other financing agreements by which such subsidiaries are bound.
In addition, creditors of EPG's subsidiaries would be entitled to a claim
on the assets of such subsidiaries prior to any claims by EPG. Consequently, in
the event of a liquidation or reorganization of any subsidiary, creditors of
such subsidiary are likely to be paid in full before any distribution is made to
EPG, except to the extent that EPG itself is recognized as a creditor of such
subsidiary, in which case the claims of EPG would still be subordinate to any
security interest in the assets of such subsidiary and any indebtedness of such
subsidiary senior to that held by EPG. On a pro forma basis as of September 30,
1997, the aggregate liabilities of the subsidiaries of EPG were approximately
$1.2 billion. See "Capitalization," "Description of the Trust Preferred
Securities -- Distributions" and "Description of the Debentures -- Option to
Extend Interest Payment Period" included in this Prospectus Supplement.
POSSIBLE CHANGE IN CORPORATE STRUCTURE
The Company intends to adopt, subject to certain conditions, a holding
company structure whereby the Company and its subsidiaries would become direct
and indirect subsidiaries of a newly formed Delaware holding company. Pursuant
to the holding company reorganization, holders of shares of common stock of EPG
would become holders on a share-for-share basis of shares of common stock of the
holding company with the result that the holding company would replace EPG as
the publicly-held corporation, and all stockholders of EPG immediately prior to
such reorganization would own the same number of shares of holding company
common stock immediately after the reorganization as the EPG common stock held
immediately before the reorganization. The change to a holding company structure
would be tax free for federal income tax purposes to stockholders of EPG and may
be effected without a vote of stockholders under applicable Delaware law.
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<PAGE> 13
The holding company reorganization is subject to the satisfaction of certain
conditions, including among other things: (i) approval of the holding company
common stock and preferred stock purchase rights for trading on the New York
Stock Exchange; (ii) a favorable no-action ruling from the SEC concerning the
absence of a requirement for a registration under the Securities Act of 1933 of
the holding company common stock to be issued in the reorganization and certain
other securities law issues; and (iii) a favorable private letter ruling from
the Internal Revenue Service or opinion of counsel, in either case substantially
to the effect that the change to the holding company structure will be tax free
for federal income tax purposes to stockholders. No assurance can be given that
the conditions to forming the holding company structure will be satisfied or, if
satisfied, that the holding company structure will be implemented.
If the Company implements such holding company reorganization, then,
immediately after such implementation (i) the Trust Preferred Securities will
remain outstanding (provided the Trust Preferred Securities are outstanding
immediately prior to such implementation), (ii) the holding company will be
substituted for the Company under the Indenture and the Debentures will become
Debentures of the holding company, (iii) the Trust Securities will be
convertible into shares of holding company common stock (rather than Company
Common Stock) on the same terms as such Trust Securities were convertible
immediately prior to such reorganization and (iv) the holding company will be
substituted for the Company as the guarantor under the Guarantees.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES; TRADING PRICE
So long as there is no continuing event of default under the Debentures,
EPG has the right under the Subordinated Indenture to defer the payment of
interest on the Debentures beyond the regular quarterly period (the "Interest
Payment Period") at any time or from time to time for a period not exceeding 20
consecutive quarters, provided that no such Extension Period may extend beyond
the stated maturity of the Debentures. Upon the termination of any Extension
Period and the payment on the Interest Payment Date (as defined herein)
coinciding with or next following the end of such Extension Period (whichever is
earlier) of all amounts then due to the persons in whose names the Debentures
are registered at the close of business on the regular record date next
preceding such Interest Payment Date, EPG may select a new Extension Period and
terminate the payments of all amounts then due subject to the requirements
described herein. As a consequence of any such deferral, quarterly distributions
on the Trust Preferred Securities by the Trust will be deferred (and the amount
of distributions to which holders of the Trust Preferred Securities are entitled
will accumulate additional distributions) during any such Extension Period.
Should an Extension Period occur, a holder of Trust Preferred Securities
will continue to accrue income (in the form of original issue discount) in
respect of its pro rata share of the deferred interest allowable to the
Debentures held by the Trust for United States federal income tax purposes. As a
result, a holder of Trust Preferred Securities will include such income in gross
income for United States federal income tax purposes in advance of the receipt
of cash, and will not receive the cash related to such income from the Trust if
the holder disposes of the Trust Preferred Securities prior to the record date
for the payment of distributions. See "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount" included in this
Prospectus Supplement. Moreover, if a holder of Trust Preferred Securities
converts its Trust Preferred Securities into Common Stock during an Extension
Period, the holder will not receive any cash related to the deferred
distribution. See "Description of the Trust Preferred
Securities -- Distributions" included in this Prospectus Supplement.
EPG has no current intention of invoking an Extension Period. Should EPG
elect to exercise such right in the future, however, the market price of the
Trust Preferred Securities is likely to be affected. A holder that disposes of
its Trust Preferred Securities during an Extension Period, therefore, might not
receive the same return on its investment as a holder that continues to hold its
Trust Preferred Securities. In addition, as a result of the existence of EPG's
right to invoke an Extension Period, the market price of the Trust Preferred
Securities (which represent preferred undivided beneficial interests in the
Debentures) may be more volatile than the market prices of other securities that
are not subject to such deferrals.
S-13
<PAGE> 14
TRUST SPECIAL EVENT EXCHANGE OR REDEMPTION
Under certain circumstances following the occurrence and continuation of a
Trust Special Event (as defined herein), the Trust Preferred Securities are also
subject to (i) exchange in whole or in part, in the manner described herein, for
the Debentures, which exchange will result in termination of the Trust and (ii)
in the case of a Trust Tax Event (as defined herein), redemption in whole or in
part, on or after , 2002. See "Description of the Trust
Preferred Securities -- Trust Special Event Exchange or Redemption" included in
this Prospectus Supplement.
There can be no assurance as to the market prices for Trust Preferred
Securities or Debentures that may be distributed in exchange for Trust Preferred
Securities if a liquidation of the Trust occurs or if the Trust Preferred
Securities are exchanged for Debentures in connection with a Trust Special
Event. Accordingly, the Trust Preferred Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Debentures that a holder of Trust Preferred Securities may receive on
liquidation of the Trust, may trade at a discount to the price that the investor
paid to purchase the Trust Preferred Securities offered hereby. Because holders
of Trust Preferred Securities may receive Debentures on dissolution of the Trust
or if the Trust Preferred Securities are exchanged for Debentures in connection
with a Trust Special Event, prospective purchasers of Trust Preferred Securities
are also making an investment decision with regard to the Debentures and should
carefully consider all of the information contained herein regarding the
Debentures. See "Description of the Trust Preferred Securities -- Trust Special
Event Exchange or Redemption" and "Description of the Debentures -- General"
included in this Prospectus Supplement.
LIMITATIONS OF THE GUARANTEE
Pursuant to the Guarantee, EPG guarantees on a subordinated basis to the
holders of the Trust Preferred Securities the following payments, to the extent
not paid by the Trust: (i) any accumulated and unpaid distributions required to
be paid on the Trust Preferred Securities, to the extent that the Trust has
funds on hand available therefor at such time; (ii) the redemption price with
respect to any Trust Preferred Securities called for redemption, to the extent
that the Trust has funds on hand available therefor at such time; and (iii) upon
a voluntary or involuntary termination, dissolution, winding-up or liquidation
of the Trust (unless the Debentures are distributed to holders of the Trust
Preferred Securities), the lesser of (a) the aggregate of the liquidation amount
of the Trust Preferred Securities and all accumulated and unpaid distributions
thereon to the date of payment to the extent that the Trust has funds on hand
available therefor at such time and (b) the amount of assets of the Trust
remaining available for distribution to holders of the Trust Preferred
Securities in liquidation of the Trust.
Pursuant to the Guarantee, EPG agrees that it will honor all obligations
described therein relating to the conversion or exchange of the Trust Preferred
Securities into or for Common Stock or Debentures.
The holders of a majority in aggregate liquidation amount of the Trust
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trust Guarantee
Trustee (as defined herein) in respect of the Guarantee or to direct the
exercise of any trust power conferred upon the Trust Guarantee Trustee under the
Guarantee. If the Trust Guarantee Trustee fails to enforce the Guarantee, any
holder of Trust Preferred Securities may institute a proceeding directly against
EPG to enforce its rights under the Guarantee without first instituting a
proceeding against the Trust, the Trust Guarantee Trustee or any other person or
entity. If EPG were to default on its obligation to pay amounts payable under
the Debentures, the Trust would lack funds for the payment of distributions or
amounts payable on redemption of the Trust Preferred Securities or otherwise,
and, in such event, holders of the Trust Preferred Securities would not be able
to rely upon the Guarantee for payment of such amount. Instead, in the event a
Debenture Event of Default shall have occurred and be continuing, a holder of
Trust Preferred Securities would be required to rely on enforcement by the
Property Trustee of its rights as registered holder of Debentures against EPG
pursuant to the terms of the Subordinated Indenture and the Debentures. If,
however, such event is attributable to the failure of EPG to pay interest on or
principal of the Debentures on the payment date on which such payment is due and
payable, then a holder of Trust Preferred Securities may directly institute a
proceeding against EPG for enforcement of payment to such holder of the interest
on or
S-14
<PAGE> 15
principal of such Debentures having a principal amount equal to the aggregate
liquidation amount of the Trust Preferred Securities of such holder (a "Legal
Action"). In connection with such Legal Action, EPG will be subrogated to the
rights of such holder of Trust Preferred Securities under the Declaration to the
extent of any payment made by EPG to such holder of Trust Preferred Securities
in such Legal Action. Except as set forth herein, holders of Trust Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of Debentures or assert directly any other rights in respect of the
Debentures. See "Description of the Trust Preferred Securities -- Trust
Enforcement Events; Notice" and "-- Enforcement of Certain Rights by Holders of
Trust Preferred Securities" and "Description of the Guarantee" included in this
Prospectus Supplement, and "Description of the Subordinated Debt
Securities -- Events of Default" included in the accompanying Prospectus. The
Declaration provides that each holder of Trust Preferred Securities by
acceptance thereof agrees to the provisions of the Guarantee and the
Subordinated Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If a Debenture Event of Default occurs and is continuing, then the holders
of Trust Preferred Securities would rely on the enforcement by the Property
Trustee of its rights as the holder of the Debentures against EPG. In addition,
the holders of a majority in aggregate liquidation preference of the Trust
Preferred Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee or to
direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee to
exercise the remedies available to it as holder of the Debentures. If the
Property Trustee fails to enforce its rights as holder of the Debentures after a
request therefor by a holder of Trust Preferred Securities, such holder may
proceed to enforce such rights directly against EPG. Notwithstanding the
foregoing, if a Debenture Event of Default occurs that results from the failure
of EPG to pay principal of or interest on the Debentures when due (or in the
case of a redemption, on the redemption date), during the continuance of such an
event of default a holder of Trust Preferred Securities may institute a Legal
Action against EPG to obtain payment to such holder of such principal or
interest on Debentures having a principal amount equal to the aggregate
liquidation amount of the Trust Preferred Securities owned of record by such
holder. See "Description of the Trust Preferred Securities -- Trust Enforcement
Events; Notice," "-- Enforcement of Certain Rights by Holders of Trust Preferred
Securities" and "-- Voting Rights; Amendment of the Declaration" included in
this Prospectus Supplement.
LIMITED VOTING RIGHTS
Holders of the Trust Preferred Securities will generally have limited
voting rights primarily in connection with directing the activities of the
Property Trustee as the holder of the Debentures. Holders of the Trust Preferred
Securities will not be entitled to vote to appoint, remove or replace the
Property Trustee, which voting rights are vested exclusively in EPG as holder of
the Trust Common Securities, provided that, upon the occurrence and during the
continuance of a Trust Enforcement Event (as defined herein), the Property
Trustee may be removed and a successor appointed only by the holders of a
majority in liquidation amount of the Trust Preferred Securities. The holders of
a majority in liquidation amount of the Trust Preferred Securities will,
however, have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or direct the
exercise of any power conferred upon the Property Trustee including the right to
direct the Property Trustee as holder of the Debentures, (i) to exercise the
remedies available to it under the Subordinated Indenture as holder of the
Debentures and (ii) to consent to any amendment, modification or termination of
the Subordinated Indenture or the Debentures, where such consent shall be
required. See "Description of the Trust Preferred Securities -- Voting Rights;
Amendment of the Declaration" included in this Prospectus Supplement.
PROPOSED TAX LEGISLATION
As a part of President Clinton's Fiscal 1999 Budget Proposal, the Treasury
Department has proposed legislation (the "Proposed Legislation") that, among
other things, will treat as equity for United States federal income tax purposes
certain debt instruments that are not shown as indebtedness on the consolidated
balance
S-15
<PAGE> 16
sheet of the Trust. A similar proposal was included in President Clinton's
Fiscal 1998 Budget Proposal but was not included in the Taxpayer Relief Act of
1997. No assurance can be given that the Proposed Legislation will not
ultimately be enacted in the future, that such future legislation would not have
a retroactive effective date and that such future legislation would not prevent
EPG from deducting interest on the Debentures. Such an event would constitute a
Trust Tax Event and would permit the Trust to exchange the Trust Preferred
Securities, in whole or in part, for the Debentures or redeem, in whole or in
part, the Trust Preferred Securities and corresponding Debentures.
TRADING PRICE OF TRUST PREFERRED SECURITIES
The Trust Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the underlying
Debentures. A holder disposing of Trust Preferred Securities between record
dates for payments of distributions thereon will be required for United States
federal income tax purposes to include accrued but unpaid interest on the
Debentures through the date of disposition in income as ordinary income (i.e.,
original issue discount), and to add such amount to the adjusted tax basis in
the holder's Trust Preferred Securities. To the extent the selling price is less
than the holder's adjusted tax basis (which will include, in the form of
original issue discount, all accrued but unpaid interest), a holder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences -- Sales of Trust
Preferred Securities" included in this Prospectus Supplement.
NO PRIOR MARKET FOR THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities constitute a new issue of securities with no
established trading market. Application has been made to list the Trust
Preferred Securities on the NYSE. There can be no assurance that an active
market for the Trust Preferred Securities will develop or be sustained in the
future on the NYSE. Although the Underwriters have indicated to the Company that
they intend to make a market in the Trust Preferred Securities, as permitted by
applicable laws and regulations, they are not obligated to do so and may
discontinue any such market-making at any time without notice. Accordingly, no
assurance can be given as to the liquidity of, or trading markets for, the Trust
Preferred Securities.
FORWARD-LOOKING STATEMENTS
This Prospectus Supplement and the accompanying Prospectus (including the
documents incorporated by reference herein) contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Where any such forward-looking statement includes a statement of the assumptions
or bases underlying such forward-looking statement, EPG cautions that, while
such assumptions or bases are believed to be reasonable and are made in good
faith, assumed facts or bases almost always vary from the actual results, and
the differences between assumed facts or bases and actual results can be
material, depending upon the circumstances. Where, in any forward-looking
statement, EPG, including its subsidiaries, or its management expresses an
expectation or belief as to future results, such expectation or belief is
expressed in good faith and is believed to have a reasonable basis, but there
can be no assurance that the statement of expectation or belief will result or
be achieved or accomplished. The words "believe," "expect," "estimate,"
"anticipate" and similar expressions may identify forward-looking statements.
Important factors that could cause actual results to differ materially from
those in the forward-looking statements herein include increasing competition
within EPG's industry, the timing and extent of changes in commodity prices for
natural gas, uncertainties associated with acquisitions and joint ventures,
potential environmental liabilities, political and economic risks associated
with current and future operations in foreign countries, conditions of the
equity and other capital markets during the periods covered by the
forward-looking statements, and other risks, uncertainties and factors discussed
more completely in EPG's other filings with the Securities and Exchange
Commission, including the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 1997.
S-16
<PAGE> 17
THE COMPANY
The Company, which operates under the name El Paso Energy Corporation, owns
and operates one of the nation's largest integrated natural gas systems, with
natural gas pipelines extending from coast to coast. The Company's principal
operations include the interstate and intrastate transportation, gathering and
processing of natural gas; the marketing of natural gas, natural gas liquids,
power, crude oil and refined products; and the development and operation of
energy infrastructure facilities worldwide. EPG owns or has interests in over
28,200 miles of interstate and intrastate pipeline and approximately 8,750 miles
of gathering systems connecting the nation's principal natural gas supply
regions to four of the largest consuming regions in the United States, namely
the Gulf Coast, California, the Northeast and the Midwest. During the 12 months
ended December 31, 1997, the average volumes transported, gathered or treated on
the Company's interstate and intrastate pipeline systems totaled approximately
12,439 BBtu per day of natural gas, or approximately one-fifth of estimated
total U.S. natural gas demand.
EPG's natural gas transmission operations include one of the nation's
largest mainline natural gas transmission systems which is comprised of five
interstate pipeline systems: (i) the EPNG System, which connects natural gas
supply regions in New Mexico, Texas, Oklahoma and Colorado to markets in
California, Nevada, Arizona, New Mexico, Texas and northern Mexico; (ii) the TGP
System, which extends from natural gas supply regions in Texas and Louisiana,
including the Gulf of Mexico, to the northeastern region of the United States,
including the New York City and Boston metropolitan areas; (iii) the Midwestern
System, which extends from a connection with the TGP System at Portland,
Tennessee to Chicago, Illinois and principally serves the Chicago metropolitan
area; (iv) the East Tennessee System, which extends from the TGP System to serve
the states of Tennessee, Virginia and Georgia; and (v) the Mojave System, which
connects the EPNG System in Arizona to customers in the vicinity of Bakersfield,
California. The Interstate System totals approximately 26,600 miles of
transmission pipeline.
In addition to its interstate transmission services, EPG provides
intrastate transmission services as well as field services including gathering,
products extraction, dehydration, purification and compression. These operations
include approximately 1,600 miles of intrastate transmission pipeline, which
supply natural gas to the Interstate System and support the Company's trading
and marketing operations, approximately 8,750 miles of gathering systems,
240,000 horsepower of compression and ownership interests in 25 natural gas
processing and treating facilities located in the country's most prolific and
active gas production areas, including the San Juan, Anadarko and Permian Basins
and East Texas, South Texas, Louisiana and the Gulf of Mexico. EPG's marketing
activities include the marketing and trading of natural gas, natural gas
liquids, power, crude oil and refined products as well as providing integrated
price risk management services associated with these commodities, and the
participation in the development and ownership of domestic power generating
facilities. EPG gathered, processed or treated an average of 3,161 BBtu per day
of natural gas and sold 355 million gallons of natural gas liquids during the 12
months ended December 31, 1997. During that period, the Company was among the
largest domestic marketers and traders of natural gas, with volumes averaging
6,969 BBtu per day.
The Company's international activities are focused on the development and
operation of international energy infrastructure projects and include ownership
interests in (i) two major existing natural gas transmission systems in
Australia, (ii) natural gas transmission and power generation assets currently
in operation or under construction in Argentina, Bolivia, Brazil, Chile, Czech
Republic, Hungary, Indonesia, Mexico, Pakistan and Peru, and (iii) three
domestic power generation plants currently in operation.
EPG's principal executive offices are located at 1001 Louisiana, Houston,
Texas 77002, and its telephone number at that address is (713) 757-2131.
S-17
<PAGE> 18
USE OF PROCEEDS
The proceeds to be received by the Trust from the sale of the Trust
Securities will be used by the Trust to purchase the Debentures. The Company
will use the proceeds from the sale of such Debentures to repay approximately
$ million of short-term indebtedness, and for general corporate purposes,
possibly including acquisitions. Funds not required immediately for such
purposes may be invested in marketable securities and short-term investments.
PRICE RANGE OF COMMON STOCK AND DIVIDEND INFORMATION
As of March 1, 1998, there were 60,093,650 shares of Common Stock
outstanding held by approximately 73,000 holders of record. The Common Stock is
traded on the NYSE under the symbol "EPG." The following table sets forth, for
the periods indicated, the high and low sales price per share for the Common
Stock, as reported on the NYSE Composite Transactions Tape, and quarterly cash
dividends per share declared on shares of Common Stock.
<TABLE>
<CAPTION>
COMMON STOCK PRICES(1)
---------------------- CASH DIVIDENDS
HIGH LOW DECLARED(1)
-------- -------- --------------
<S> <C> <C> <C>
<-> B2(PER SHARE)
1996
First Quarter....................................... $38.1250 $28.6250 $0.3475
Second Quarter...................................... $39.0000 $34.2500 $0.3475
Third Quarter....................................... $45.8750 $37.7500 $0.3475
Fourth Quarter...................................... $53.2500 $44.0000 $0.3475
1997
First Quarter....................................... $57.0000 $48.8750 $0.3650
Second Quarter...................................... $60.6250 $54.2500 $0.3650
Third Quarter....................................... $60.6875 $53.0000 $0.3650
Fourth Quarter...................................... $67.5000 $55.3750 $0.3650
1998
First Quarter (through March 1, 1998)............... $67.7500 $62.2500 $0.3825
</TABLE>
- ---------------
(1) Does not give effect to the two-for-one stock split in the form of a 100
percent stock dividend (on a per share basis) declared by the Company's
Board on January 21, 1998. The record date for such stock split is March 13,
1998, and the payment date of such dividend is April 1, 1998.
Since the Company's initial public offering in the second quarter of 1992,
EPG has paid quarterly cash dividends to the holders of Common Stock. The timing
and amount of future dividends will be (i) dependent on EPG's results of
operations, financial condition, cash requirements and other relevant factors,
(ii) subject to the discretion of the Board of Directors of EPG, and (iii)
subject to restrictions, if any, contained in debt instruments of EPG in effect
from time to time and under the Delaware General Corporation Law.
S-18
<PAGE> 19
CAPITALIZATION
The following table sets forth the consolidated capitalization of EPG as of
September 30, 1997 and as adjusted to reflect the issuance and sale of the Trust
Preferred Securities offered hereby and the application by EPG of the proceeds
from the sale of the Debentures as described in "Use of Proceeds." The table is
unaudited and should be read in conjunction with the 1996 Form 10-K and the
Company's Quarterly Report on Form 10-Q for the period ended September 30, 1997
each of which is incorporated by reference herein. See "Documents Incorporated
by Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
--------------------------
ACTUAL AS ADJUSTED(a)
------ --------------
(DOLLARS IN MILLIONS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Short-term debt:
Current maturities of long-term debt...................... $ 70 $ 70
Commercial paper and bank debt............................ 530 230
------ ------
Total short-term debt.............................. 600 300
------ ------
Long-term debt:
EPG
7.5%-8.625% Debentures due 2012 through 2026............ 475 475
6.75%-9.45% Notes due 2003.............................. 462 462
El Paso Tennessee Pipeline Co.
7.25%-10% Debentures due 2008 through 2025.............. 55 55
6.5%-10.375% Notes due 1998 through 2005................ 87 87
Tennessee Gas Pipeline Company
6.0% Debentures due 2011................................ 75 75
7.5% Debentures due 2017................................ 295 295
7.0% Debentures due 2027................................ 296 296
7.625% Debentures due 2037.............................. 293 293
El Paso Energy Credit Corporation
9.625%-10.125% Senior notes due 1997 through 2001....... 30 30
9.47%-10.05% Subordinated notes due 1998................ 7 7
Mojave Pipeline Company
8.9% Project financing loan, due March 2007............. 126 126
Other debt................................................ 6 6
------ ------
2,207 2,207
Less current maturities................................. 70 70
------ ------
Total long-term debt............................... 2,137 2,137
------ ------
Company-obligated mandatorily redeemable convertible
preferred and common securities of subsidiary............. -- 300(c)
------ ------
Minority interest........................................... 365 365
------ ------
Stockholders' equity:
Common Stock, par value $3 per share; authorized
100,000,000 shares; issued 60,891,492 shares(b)......... 182 182
Additional paid-in capital................................ 1,540 1,540
Retained earnings......................................... 294 294
Less: Treasury stock (at cost) 1,474,076 shares........... 46 46
Deferred compensation............................... 77 77
------ ------
Total stockholders' equity......................... 1,893 1,893
------ ------
Total capitalization............................... $4,995 $4,995
====== ======
</TABLE>
- ---------------
(a) Adjusted to reflect the application of $300 million of the estimated net
proceeds from the sale by EPG of the Debentures to the Trust.
(b) Does not include 4,346,407 shares of Common Stock issuable upon the exercise
of outstanding stock options granted to certain directors and employees of
the Company pursuant to the Company's stock option plans.
(c) Gives effect to the issuance of 6,000,000 Trust Preferred Securities. The
sole assets of the Trust will be the Debentures having an outstanding
principal amount of $309 million and, upon redemption or maturity of the
Debentures, the Trust Preferred Securities will be mandatorily redeemable.
S-19
<PAGE> 20
EL PASO ENERGY CAPITAL TRUST I
El Paso Energy Capital Trust I (the "Trust") is a statutory business trust
formed under Delaware law pursuant to (i) an original declaration of trust, as
amended and restated (the "Declaration") executed by EPG, as sponsor of the
Trust (the "Sponsor"), the Delaware Trustee (as defined herein) and the Regular
Trustees (as defined herein) of the Trust and (ii) the filing of a certificate
of trust with the Secretary of State of the State of Delaware. The Company will
directly or indirectly acquire Trust Common Securities in an aggregate
liquidation amount equal to 3.0% of the total capital of the Trust. The Trust
Common Securities will rank pari passu, and payment will be made thereon pro
rata, with the Trust Preferred Securities, except that, upon the occurrence and
during the continuance of a Debenture Event of Default or a default by EPG under
the Guarantee, the rights of the holders of the Trust Common Securities to
payment in respect of distributions and payments upon liquidation, redemption
and otherwise will be subordinated to the rights of the holders of the Trust
Preferred Securities. The assets of the Trust will consist principally of the
Debentures. The Trust exists for the exclusive purpose of (i) issuing the Trust
Securities representing undivided beneficial interests in the assets of the
Trust, (ii) investing the gross proceeds of the Trust Securities in the
Debentures and (iii) engaging in only those other activities necessary or
incidental thereto.
The Trust initially will have five trustees. A majority of the trustees of
the Trust are individuals who are employees or officers of or who are affiliated
with EPG (the "Administrative Trustees"). Pursuant to the Declaration, the
number of Administrative Trustees initially is three. The fourth trustee is a
financial institution that is unaffiliated with EPG and that acts as property
trustee and indenture trustee (the "Property Trustee" and, together with the
Administrative Trustees, the "Regular Trustees") for purposes of the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The fifth trustee
is an entity that maintains its principal place of business in the State of
Delaware (the "Delaware Trustee"). Initially, The Chase Manhattan Bank, a New
York banking corporation, is the Property Trustee and Chase Manhattan Bank
Delaware, a Delaware banking corporation and an affiliate of The Chase Manhattan
Bank, is the Delaware Trustee until, in each case, removed or replaced by the
Administrative Trustees. The Chase Manhattan Bank will also act as indenture
trustee under the Guarantee (the "Trust Guarantee Trustee") and under the
Subordinated Indenture (the "Subordinated Debt Trustee"). See "Description of
the Guarantee" and "Description of the Trust Preferred Securities" included in
this Prospectus Supplement.
The Property Trustee will hold title to the Debentures for the benefit of
the holders of the Trust Securities, and the Property Trustee will have the
power to exercise all rights, powers and privileges under the Subordinated
Indenture as the holder of the Debentures. In addition, the Property Trustee
will maintain exclusive control of a segregated non-interest bearing bank
account (the "Property Account") to hold all payments made in respect of the
Debentures for the benefit of the holders of Trust Securities. EPG, as the
direct or indirect holder of all of the Trust Common Securities, will have the
right to appoint, remove or replace any of the Regular Trustees and the Delaware
Trustee and to increase or decrease the number of Regular Trustees (except that
upon the occurrence and during the continuance of a Trust Enforcement Event, the
Property Trustee may be removed and a successor appointed only by the holders of
a majority in liquidation amount of the Trust Preferred Securities), provided
that the number of Regular Trustees shall be at least three, the majority of
which shall be Administrative Trustees. EPG will pay all fees and expenses
related to the Trust and the Offering. See "Description of the Debentures"
included in this Prospectus Supplement.
The rights of the holders of the Trust Preferred Securities, including
economic rights, rights to information and voting rights, if any, are as set
forth in the Declaration and the Delaware Business Trust Act, as amended (the
"Trust Act"). See "Description of the Trust Preferred Securities" included in
this Prospectus Supplement. The Declaration, the Subordinated Indenture and the
Guarantee will be qualified under and also incorporate by reference the terms of
the Trust Indenture Act. The Property Trustee will act as indenture trustee for
the Debentures, the Declaration and the Guarantee for purposes of complying with
the Trust Indenture Act.
The place of business and telephone number of the Trust are the principal
executive offices and telephone number of EPG. See "The Company."
S-20
<PAGE> 21
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
This summary of certain provisions of the Trust Preferred Securities and
the Declaration does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Declaration
(a copy of which is incorporated by reference in the registration statement of
which this Prospectus Supplement is a part, and a copy of which may be obtained
from the corporate trust office of the Property Trustee in New York, New York),
the Trust Act and the Trust Indenture Act which is incorporated by reference in
the Declaration. Wherever particular defined terms of the Declaration are
referred to herein, such defined terms are incorporated herein by reference.
GENERAL
Pursuant to the terms of the Declaration, the Administrative Trustees, on
behalf of the Trust, will issue the Trust Preferred Securities and the Trust
Common Securities. The Trust Preferred Securities will represent preferred
undivided beneficial interests in the assets of the Trust and the Trust Common
Securities will represent undivided subordinated beneficial interests in the
assets of the Trust. All of the Trust Common Securities will be owned by EPG.
The Trust Preferred Securities will rank pari passu, and payments will be made
thereon pro rata, with the Trust Common Securities except as described under the
caption "-- Subordination of Trust Common Securities" included in this
Prospectus Supplement. Legal title to the Debentures will be held by the
Property Trustee in trust for the benefit of the holders of the Trust
Securities. The Declaration does not permit the issuance by the Trust of any
securities other than the Trust Securities or the incurrence of any indebtedness
by the Trust. The payment of distributions out of money held by the Trust, and
payments upon redemption of the Trust Preferred Securities or liquidation of the
Trust, are guaranteed by EPG to the extent described under "Description of the
Guarantee" included in this Prospectus Supplement. The Guarantee is held by The
Chase Manhattan Bank, as the Trust Guarantee Trustee, for the benefit of the
holders of the Trust Preferred Securities. The Guarantee does not cover payment
of distributions when the Trust does not have sufficient available funds to pay
such distributions. The remedy of a holder of Trust Preferred Securities in such
an event is as described under the captions "-- Trust Enforcement Events;
Notice," "-- Enforcement of Certain Rights by Holders of Trust Preferred
Securities" and "-- Voting Rights; Amendment of the Declaration" below.
DISTRIBUTIONS
Distributions on the Trust Preferred Securities will be payable at the
annual rate of % of the liquidation amount of $50 per Trust Preferred
Security. Distributions will accumulate from the date of the original issuance
of the Trust Preferred Securities and will be payable quarterly in arrears on
, , and of each year
to holders of record on the applicable record date, commencing ,
1998 when, as and if available for payment by the Property Trustee, except as
otherwise described below. The amount of distributions payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months. In the
event that any date on which distributions are payable on the Trust Preferred
Securities is not a Business Day, the payment of the distributions payable on
such date will be made on the next succeeding day that is a Business Day and
without any additional distributions or other payment in respect of any such
delay, except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such payment date (each
date on which distributions are payable in accordance with the foregoing, a
"Distribution Date"). A "Business Day" shall mean any day other than a Saturday
or a Sunday, or a day on which banking institutions in the City of New York are
authorized or required by law or executive order to remain closed or a day on
which the corporate trust office of the Property Trustee or the Subordinated
Debt Trustee is closed for business.
So long as no Debenture Event of Default has occurred and is continuing,
EPG has the right under the Subordinated Indenture to defer the payment of
interest on the Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Extension Period,
provided that no Extension Period may extend beyond the stated maturity of the
Debentures. As a consequence of any such election, quarterly distributions on
the Trust Preferred Securities will be deferred by the Trust during any such
S-21
<PAGE> 22
Extension Period. Distributions to which holders of the Trust Preferred
Securities are entitled will accumulate additional distributions thereon at the
rate per annum set forth herein, compounded quarterly from the relevant
Distribution Date. The term "distributions" as used herein shall include any
such additional distributions. During any such Extension Period, EPG may not,
and may not cause any of its subsidiaries to, (i) declare or pay any dividends
or distributions on, or redeem, purchase or acquire, or make a liquidation
payment with respect to, any of EPG's capital stock (except for (x) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, its capital stock and conversions or exchanges of common
stock of one class into common stock of another class and (y) redemptions or
purchases of any rights pursuant to the Rights Agreement and the issuance of
capital stock pursuant to such rights) or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees of indebtedness for money borrowed) of EPG that
rank pari passu with or junior to the Debentures (other than (a) any redemption,
liquidation, interest, principal or guarantee payment by EPG where the payment
is made by way of securities (including capital stock) that rank pari passu with
or junior to the securities on which such, redemption, liquidation, interest,
principal or guarantee payment is being made; (b) payments under the Guarantees;
(c) purchases of Common Stock related to the issuance of Common Stock under any
of EPG's benefit plans for its directors, officers or employees; (d) as a result
of a reclassification of EPG's capital stock or the exchange or conversion of
one series or class of EPG's capital stock for another series or class of EPG's
capital stock; (e) the purchase of fractional interests in shares of EPG's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged; and (f) redemptions or
purchases pursuant to the Rights Agreement and the issuance of capital stock
pursuant to such rights). Prior to the termination of any such Extension Period,
EPG may further extend such Extension Period, provided that no Extension Period
may exceed 20 consecutive quarters or extend beyond the stated maturity of the
Debentures. Upon the termination of any such Extension Period and the payment on
the next Interest Payment Date coinciding with or next following the end of such
Extension Period (whichever is earliest) of all amounts then due to the persons
in whose names the Debentures are registered at the close of business on the
regular record date next preceding such Interest Payment Date, EPG may elect to
begin a new Extension Period. See "Description of the Debentures -- Option to
Extend Interest Payment Period" and "Certain Federal Income Tax
Consequences -- Original Issue Discount" included in this Prospectus Supplement.
EPG has no current intention of invoking an Extension Period.
Distributions with respect to the Trust Preferred Securities must be paid
on the dates payable to the extent that the Trust has funds available for the
payment of such distributions in the Property Account. The funds of the Trust
available for distribution to holders of the Trust Preferred Securities will be
limited to payments under the Debentures in which the Trust will invest the
proceeds from the issuance and sale of the Trust Securities. See "Description of
the Debentures" included in this Prospectus Supplement. If EPG does not make
interest payments on such Debentures, the Property Trustee will not have funds
available to pay distributions on the Trust Preferred Securities. The payment of
distributions (if and to the extent the Trust has funds on hand available for
the payment of such distributions) is guaranteed by EPG as set forth herein
under the caption "Description of the Guarantee" included in this Prospectus
Supplement.
Distributions on the Trust Preferred Securities will be payable to the
holders thereof as they appear on the register of the Trust on the relevant
record dates, which shall be the fifteenth day (whether or not a Business Day)
of the month of the relevant Distribution Date. As long as the Trust Preferred
Securities remain in book-entry form, subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment will be
made as described under the caption "-- Book-Entry Only Issuance -- The
Depository Trust Company" included in this Prospectus Supplement.
CONVERSION RIGHTS
The Trust Preferred Securities will be convertible at any time prior to the
maturity date of the Debentures (or, in the case of Trust Preferred Securities
called for redemption, prior to the close of business on the Business Day prior
to the Redemption Date) (the "Conversion Expiration Date") at the option of the
holder thereof and in the manner described below, into shares of Common Stock at
an initial conversion rate
S-22
<PAGE> 23
of shares of Common Stock for each Trust Preferred Security
(equivalent to a purchase price of $ per share of Common Stock),
subject to adjustment as described under the caption "-- Conversion Price
Adjustments" below.
A holder of Trust Preferred Securities wishing to exercise its conversion
right shall surrender such Trust Preferred Securities, together with an
irrevocable conversion notice to the Property Trustee, as Conversion Agent, or
to such other agent appointed for such purpose, which shall, on behalf of such
holder, exchange the Trust Preferred Securities for a portion of the Debentures
and immediately convert such Debentures into Common Stock. So long as a
book-entry system for the Trust Preferred Securities is in effect, however, the
procedures for converting the Trust Preferred Securities that are in the form of
Global Certificates into shares of Common Stock will be as described under the
caption "-- Form, Transfer, Exchange and Book-Entry Procedures" included in this
Prospectus Supplement. EPG's delivery upon conversion of the fixed number of
shares of Common Stock into which the Debentures are convertible (together with
the cash payment, if any, in lieu of any fractional shares) shall be deemed to
satisfy EPG's obligation to pay the principal amount at maturity of the portion
of the Debentures so converted and any unpaid interest accrued on such
Debentures at the time of such conversion. For a discussion of the taxation of
such an exchange to holders, including the possibility that holders who exchange
their Trust Preferred Securities for Common Stock may be subject to additional
income tax to the extent of accrued but unpaid interest on the Debentures upon a
conversion into Common Stock, see "Certain Federal Income Tax
Consequences -- Conversion of Trust Preferred Securities into Common Stock"
included in this Prospectus Supplement. Holders of book-entry interests in Trust
Preferred Securities may obtain copies of the required form of the conversion
notice from the Conversion Agent. With respect to certificated Trust Securities,
the form of Notice of Conversion is included in the certificate.
Accumulated distributions will not be paid on Trust Preferred Securities
that are converted; provided, however, that holders of Trust Preferred
Securities at the close of business on a distribution payment record date will
be entitled to receive the distribution payable, in cash, on such Trust
Preferred Securities on the corresponding Distribution Date notwithstanding the
conversion of such Trust Preferred Securities on or subsequent to such
distribution record date but prior to such Distribution Date. Except as provided
in the immediately preceding sentence, the Trust will make no payment or
allowance for accumulated and unpaid distributions, whether or not in arrears,
on converted Trust Preferred Securities. EPG will make no payment or allowance
for dividends on the shares of Common Stock issued upon such conversion. Each
conversion will be deemed to have been effected immediately prior to the close
of business on the day on which proper notice was received by the Conversion
Agent.
Shares of Common Stock issued upon conversion of Trust Preferred Securities
will be validly issued, fully paid and non-assessable and will include a
preferred share purchase right issued under the Rights Agreement, unless such
shares are issued after the Distribution Date (as defined in the Rights
Agreement), the redemption of the Rights or the termination of the Rights
Agreement. No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof such fractional interest will be paid in cash.
See "Description of Capital Stock of the Company" included in the accompanying
Prospectus.
CONVERSION PRICE ADJUSTMENTS
General. The conversion price will be subject to adjustment in certain
events including, without duplication: (i) the payment of dividends (and other
distributions) payable exclusively in Common Stock on Common Stock; (ii) the
issuance to all holders of Common Stock of rights or warrants entitling holders
of such rights or warrants (for a period not exceeding 45 days) to subscribe for
or purchase Common Stock at less than the then Current Market Price (as defined
herein); (iii) subdivisions and combinations of its outstanding Common Stock
into a smaller number of shares; (iv) reclassification of the Common Stock into
shares of Common Stock and securities other than shares of Common Stock not
constituting a Fundamental Change; (v) the payment of dividends (and other
distributions) to all holders of Common Stock consisting of evidences of
indebtedness of EPG, securities or capital stock, cash or assets (but excluding
those rights or warrants referred to above in clause (ii) and dividends and
distributions paid exclusively in cash); (vi) the payment of dividends (and
other distributions) on Common Stock paid exclusively in cash, excluding
S-23
<PAGE> 24
(A) quarterly cash dividends that do not exceed the per share amount of the
immediately preceding regular quarterly cash dividend (as adjusted to reflect
any of the events referred to in clauses (i) through (vii) of this sentence),
and (B) cash dividends if the annualized per share amount thereof does not
exceed 10% of the last sale price of Common Stock, as reported on the NYSE, on
the trading day immediately preceding the date of declaration of such dividend
(such adjustment being limited to the amount in excess of 10% of such Current
Market Price); and (vii) payment in respect of a tender or exchange offer (other
than an odd-lot offer) by EPG or any subsidiary of EPG for Common Stock in
excess of 110% of the Current Market Price of Common Stock on the trading day
next succeeding the last date tenders or exchanges may be made pursuant to such
tender or exchange offer.
EPG from time to time may reduce the conversion price of the Debentures
(and thus the conversion price of the Trust Preferred Securities) by any amount
selected by EPG (and determined by EPG's Board of Directors to be in EPG's best
interests) for any period of at least 20 days, in which case EPG shall give at
least 15 days' notice of such reduction. EPG may, at its option, also make such
reductions in the conversion price, in addition to those set forth above, as the
Board of Directors of EPG deems advisable to avoid or diminish any income tax to
holders of Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income tax
purposes. See "Certain Federal Income Tax Consequences -- Adjustment of
Conversion Price" included in this Prospectus Supplement.
No adjustment of the conversion price will be made upon the issuance of any
shares of Common Stock pursuant to any present or future plan providing for the
reinvestment of dividends or interest payable on securities of EPG and the
investment of additional optional amounts in shares of Common Stock under any
such plan, or the issuance of any shares of Common Stock or options or rights to
purchase such shares pursuant to any present or future employee benefit plan or
program of EPG or pursuant to any option, warrant, right, or exercisable,
exchangeable or convertible security which does not constitute an issuance to
all holders of Common Stock (or a class thereof) of rights or warrants entitling
holders of such rights or warrants to subscribe for or purchase Common Stock at
less than the Current Market Price. There shall also be no adjustment of the
conversion price in case of the issuance of any Common Stock (or securities
convertible into or exchangeable for Common Stock), except as specifically
described above. If any action would require adjustment of the conversion price
pursuant to more than one of the anti-dilution provisions, only one adjustment
shall be made and such adjustment shall be the amount of adjustment that has the
highest absolute value to holders of the Trust Preferred Securities. No
adjustment in the conversion price will be required unless such adjustment would
require an increase or decrease of at least 1% of the conversion price, but any
adjustment that would otherwise be required to be made shall be carried forward
and taken into account in any subsequent adjustment.
Merger, Consolidation or Sale of Assets of EPG. In the event that EPG is a
party to any transaction (including, without limitation, a merger other than a
merger that does not result in a reclassification, conversion, exchange or
cancellation of Common Stock), consolidation, continuance, sale of all or
substantially all of the assets of EPG, recapitalization, holding company
reorganization (whether pursuant to Section 251(g) of the Delaware General
Corporation Law or otherwise) or reclassification of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value or as a result of a subdivision or combination of Common Stock) or any
compulsory share exchange (each of the foregoing being referred to as a
"Transaction"), in each case, as a result of which shares of Common Stock shall
be converted into the right to receive, or shall be exchanged for, (i) in the
case of any Transaction other than a Transaction involving a Stock Fundamental
Change (as defined herein) (and subject to funds being legally available for
such purpose under applicable law at the time of such conversion), securities,
cash or other property, each Trust Preferred Security shall thereafter be
convertible into the kind and, in the case of a Transaction which does not
involve a Fundamental Change (as defined herein), amount of securities, cash and
other property receivable upon the consummation of such Transaction by a holder
of that number of shares of Common Stock into which a Trust Preferred Security
was convertible immediately prior to such Transaction (and subject to funds
being legally available for such purpose under applicable law at the time of
such conversion), or (ii) in the case of a Transaction involving a Stock
Fundamental Change, each Trust Preferred Security shall thereafter be
convertible (in the manner described herein) into common stock of the
S-24
<PAGE> 25
kind received by holders of Common Stock (but in each case after giving effect
to any adjustment discussed below relating to a Fundamental Change if such
Transaction constitutes a Fundamental Change). The holders of Trust Preferred
Securities will have no voting rights with respect to any Transaction described
in this section.
If any Fundamental Change occurs, then the conversion price in effect will
be adjusted immediately after such Fundamental Change as described below. In
addition, in the event of a Stock Fundamental Change, each Trust Preferred
Security shall be convertible solely into common stock of the kind received by
holders of Common Stock as a result of such Stock Fundamental Change.
The conversion price in the case of any Fundamental Change will be adjusted
immediately after such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change (as defined herein),
the conversion price of the Trust Preferred Securities immediately
following such Non-Stock Fundamental Change will be the lower of (A) the
conversion price in effect immediately prior to such Non-Stock Fundamental
Change (after giving effect to any other adjustments effected pursuant to
the preceding paragraphs) and (B) the product of (1) the greater of the
Applicable Price (as defined herein) and the then applicable Reference
Market Price (as defined herein) and (2) a fraction, of which the numerator
is 100 and of which the denominator will be an amount based on the date
such Non-Stock Fundamental Change occurs. For the 12-month period beginning
, 1998 the denominator will be , and the denominator
will decrease by during each successive 12-month period; provided, that
the denominator shall in no event be less than 100.0.
(ii) in the case of a Stock Fundamental Change (as defined herein),
the conversion price of the Trust Preferred Securities immediately
following such Stock Fundamental Change will be the conversion price in
effect immediately prior to such Stock Fundamental Change (after giving
effect to any adjustments effected pursuant to the preceding paragraphs) as
adjusted by multiplying such conversion price by a fraction, of which the
numerator will be the Purchaser Stock Price (as defined herein) and of
which the denominator will be the Applicable Price; provided, however, that
in the event of a holding company reorganization of the Company (whether
affected in accordance with Section 251(g) of the Delaware General
Corporation Law or otherwise) or in the event of a Stock Fundamental Change
in which (A) 100% of the value of the consideration received by a holder of
Common Stock is common stock of the successor, acquiror, or other third
party (and cash, if any, is paid only with respect to any fractional
interests in such common stock resulting from such Stock Fundamental
Change) and (B) all Common Stock will have been exchanged for, converted
into, or acquired for common stock (and cash with respect to fractional
interests) of the successor, acquiror, or other third party, the conversion
price of the Trust Preferred Securities immediately following such Stock
Fundamental Change will be the conversion price in effect immediately prior
to such Stock Fundamental Change as adjusted by multiplying such conversion
price by a fraction, of which the numerator will be one and of which the
denominator will be the number of shares of common stock of the successor,
acquiror, or other third party received by a holder of one share of Common
Stock as a result of such Stock Fundamental Change.
In the absence of the Fundamental Change provisions, in the case of a
Transaction each Trust Preferred Security would become convertible into the
securities, cash, or property receivable by a holder of the number of shares of
Common Stock into which such Trust Preferred Security was convertible
immediately prior to such Transaction. A failure to apply the Fundamental Change
conversion price adjustments described above could substantially lessen or
eliminate the value of the conversion privilege associated with the Trust
Preferred Securities. For example, if EPG were acquired in a cash merger, each
Trust Preferred Security would become convertible solely into cash and would no
longer be convertible into securities whose value would vary depending on the
future prospects of EPG and other factors.
The foregoing conversion price adjustments are designed, in certain
circumstances, to reduce the conversion price that would be applicable in a
Fundamental Change where all or substantially all the Common Stock is converted
into securities, cash or property and not more than 50% of the value received by
the holders
S-25
<PAGE> 26
of Common Stock consists of stock listed or admitted for listing subject to
notice of issuance on a national securities exchange or quoted on the Nasdaq
National Market. Such reduction would result in an increase in the amount of the
securities, cash, or property into which each Trust Preferred Security is
convertible over that which would have been obtained in the absence of such
conversion price adjustments.
In a Non-Stock Fundamental Change where the initial value received per
share of Common Stock (measured as described in the definition of Applicable
Price) is lower than the then applicable conversion price of a Trust Preferred
Security but greater than or equal to the Reference Market Price, the conversion
price will be adjusted as described above with the effect that each Trust
Preferred Security will be convertible into securities, cash or property of the
same type received by the holders of Common Stock in the Transaction but in an
amount per Trust Preferred Security that would at the time of the Transaction
have had a value equal to the then applicable redemption price per Trust
Preferred Security set forth under the caption "-- Optional Redemption" below.
In a Non-Stock Fundamental Change where the initial value received per
share of Common Stock (measured as described in the definition of Applicable
Price) is lower than both the conversion price of a Trust Preferred Security in
effect prior to any adjustment described above and the Reference Market Price,
the conversion price will be adjusted as described above but calculated as
though such initial value had been the Reference Market Price.
In a Stock Fundamental Change, the foregoing adjustments are designed to
provide in effect that (a) where Common Stock is converted partly into such
common stock and partly into other securities, cash, or property, each Trust
Preferred Security will be convertible solely into a number of shares of such
common stock determined so that the initial value of such shares (measured as
described in the definition of Purchaser Stock Price) equals the value of the
shares of Common Stock into which such Trust Preferred Security was convertible
immediately before the Transaction (measured as aforesaid) and (b) where the
Common Stock is converted solely into such common stock, each Trust Preferred
Security will be convertible into the same number of shares of such common stock
receivable by a holder of the number of shares of Common Stock into which such
Trust Preferred Security was convertible immediately before such Transaction.
The term "Applicable Price" means (i) in the case of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by the holder of one share of Common Stock and (ii)
in the event of any other Non-Stock Fundamental Change or any Stock Fundamental
Change, the average of the Closing Prices (as defined herein) for the Common
Stock during the 10 trading days prior to the record date for determination of
the holders of Common Stock entitled to receive such securities, cash, or other
property in connection with such Non-Stock Fundamental Change or Stock
Fundamental Change or, if there is no such record date, the date upon which the
holders of the Common Stock shall have the right to receive such securities,
cash, or other property (such record date or distribution date being hereinafter
referred to as the "Entitlement Date"), in each case as adjusted in good faith
by EPG to appropriately reflect any of the events referred to in clauses (i)
through (vi) of the first paragraph under "-- Conversion Price
Adjustments -- General."
The term "Closing Price" means on any day the reported last sale price on
such day or, in case no sale takes place on such day, the average of the
reported closing bid and asked prices in each case on the NYSE Composite Tape
or, if the stock is not traded on the NYSE, on the principal national securities
exchange or quotation system on which such stock is listed or admitted to
trading, or, if not listed or admitted to trading or quoted on any national
securities exchange or quotation system, the average of the closing bid and
asked prices of such stock in the over-the-counter market on the day in question
as reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or, if not so available in such manner, as
furnished by the NASD member firm, selected by the Board of Directors of EPG for
that purpose or, if not so available in such manner, as otherwise determined in
good faith by the Board of Directors of EPG.
The term "Current Market Price" of Common Stock means the average of the
last reported sale prices, regular way, for the 10-day period ending on the date
of such determination, or if no sale takes place on any such day, the average of
the reported closing bid and asked prices on such days, regular way, in either
case as reported on the NYSE Composite Tape, or, if the Common Stock is not
listed or admitted to trading on the
S-26
<PAGE> 27
NYSE on such day, on the principal national securities exchange or quotation
system on which the Common Stock is listed or admitted to trading, or, if not
listed or admitted to trading or quoted on any national securities exchange or
quotation system, the average closing bid and asked prices of the Common Stock
in the over-the-counter market for such 10-day period as reported by the
National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or, if not so available, in such manner, as furnished by the
NASD member firm selected from time to time by the Board of Directors of EPG for
that purpose or, if not so available in such manner, as otherwise determined in
good faith by the Board of Directors of EPG.
The term "Fundamental Change" means the occurrence of any Transaction or
event in connection with a plan pursuant to which all or substantially all of
the Common Stock shall be exchanged for, converted into, acquired for, or
constitute solely the right to receive securities, cash or other property
(whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, continuance, combination, reclassification,
recapitalization, or otherwise), provided that, in the case of a plan involving
more than one such Transaction or event, for purposes of adjustment on the
conversion price, such Fundamental Change shall be deemed to have occurred when
substantially all of the Common Stock shall be exchanged for, converted into, or
acquired for or constitute solely the right to receive securities, cash or other
property, but the adjustment shall be based upon the consideration that a holder
of Common Stock received in such Transaction or event as a result of which more
than 50% of the Common Stock shall have been exchanged for, converted into, or
acquired for or constitute solely the right to receive securities, cash, or
other property.
The term "Non-Stock Fundamental Change" means any Fundamental Change other
than a Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any Stock
Fundamental Change, the average of the Closing Prices for the common stock
received in such Stock Fundamental Change for the 10 consecutive trading days
prior to and including the Entitlement Date, as adjusted in good faith by EPG to
appropriately reflect any of the events referred to in clauses (i) through (vi)
of the first paragraph under "-- Conversion Price Adjustments -- General."
The term "Reference Market Price" shall initially mean $ (which is
an amount equal to 66 2/3% of the last reported sale price for Common Stock on
the NYSE on , 1998) and in the event of any adjustment of the conversion price
other than as a result of a Non-Stock Fundamental Change, the Reference Market
Price shall also be adjusted so that the ratio of the Reference Market Price to
the conversion price after giving effect to any such adjustment shall always be
the same as the ratio of the initial Reference Market Price to the initial
conversion price of the Debentures.
The term "Stock Fundamental Change" means either (i) any Fundamental Change
that is a holding company reorganization (whether effected in accordance with
Section 251(g) of the Delaware General Corporation Law or otherwise) provided
that immediately after such Fundamental Change the Common Stock of the holding
company in such Transaction is admitted for listing on a national securities
exchange or for quotation on the Nasdaq National Market or (ii) any Fundamental
Change in which more than 50% of the value (as determined in good faith by the
Board of Directors of EPG) of the consideration received by holders of Common
Stock consists of common stock that for each of the 10 consecutive trading days
prior to the Entitlement Date has been admitted for listing or admitted for
listing subject to notice of issuance on a national securities exchange or
quoted on the Nasdaq National Market; provided, however, a Fundamental Change
that is not a holding company reorganization described in clause (i) above shall
not be a Stock Fundamental Change if either (a) EPG continues to exist after the
occurrence of such Fundamental Change and the outstanding Trust Preferred
Securities continue to exist as outstanding Trust Preferred Securities or (b)
not later than the occurrence of such Fundamental Change, the outstanding Trust
Preferred Securities are converted into or exchanged for shares of convertible
preferred stock of an entity succeeding to the business of EPG or a subsidiary
thereof, which convertible preferred stock has powers, preferences, and
relative, participating, optional, or other rights, and qualifications,
limitations, and restrictions, substantially similar to those of the Trust
Preferred Securities.
S-27
<PAGE> 28
TRUST SPECIAL EVENT EXCHANGE OR REDEMPTION
At any time following the occurrence and the continuation of a Trust Tax
Event or a Trust Investment Company Event (each as defined herein), the Regular
Trustees shall direct the Conversion Agent to exchange all outstanding Trust
Preferred Securities for Debentures and to dissolve the Trust, provided that, in
the case of a Trust Tax Event, EPG shall have the right to (a) direct that less
than all, or none, of the Trust Preferred Securities be so exchanged if and for
so long as EPG shall have elected to pay any Additional Sums such that the net
amounts received by the holders of Trust Preferred Securities not so exchanged
in respect of distributions are not reduced as a result of such Trust Tax Event,
and shall not have revoked any such election or failed to make such payments or
(b) redeem the Trust Preferred Securities in the manner set forth below.
If a Trust Tax Event shall occur or be continuing, EPG shall have the
right, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures, in whole or in part, for cash upon the later of (i) 90 days
following the occurrence of such Trust Tax Event and (ii) , 2002. Promptly
following such redemption, Trust Securities with an aggregate liquidation amount
equal to the aggregate unpaid principal amount of the Debentures so redeemed
will be redeemed by the Trust at the liquidation amount thereof plus accrued and
unpaid distributions thereon to the redemption date on a pro rata basis. The
Trust Common Securities will be redeemed on a pro rata basis with the Trust
Preferred Securities, except that if a Debenture Event of Default has occurred
and is continuing, the Trust Preferred Securities will have a priority over the
Trust Common Securities with respect to the payment of amounts on redemption.
A "Trust Special Event" means a Trust Tax Event or a Trust Investment
Company Event. A "Trust Tax Event" means the delivery to the Property Trustee,
on behalf of the Trust, of an opinion of counsel, rendered by a law firm having
a national tax and securities practice (which opinion shall not have been
rescinded by such law firm), to the effect that, as a result of any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of the original
issuance of the Trust Preferred Securities, there is more than an insubstantial
risk in each case after the date hereof that (i) the Trust is, or will be within
90 days of the date thereof, subject to United States federal income tax with
respect to income received or accrued on the Debentures; (ii) the Trust is, or
will be within 90 days of the date thereof, subject to more than a de minimis
amount of other taxes, duties or other governmental charges; or (iii) interest
payable by EPG on such Debentures is not, or within 90 days of the date thereof
will not be, deductible by EPG, in whole or in part, for United States federal
income tax purposes. A "Trust Investment Company Event" means the receipt by the
Property Trustee, on behalf of the Trust, of an opinion of counsel, rendered by
a law firm having a recognized national tax and securities practice and
experienced in matters under the Investment Company Act of 1940, as amended (the
"Investment Company Act") (which opinion shall not have been rescinded by such
law firm), to the effect that, as a result of the occurrence of a change in law
or regulation or a change in interpretation or application of law or regulation
by any legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law"), there is more than an insubstantial risk that the
Trust is or will be within 90 days of the date thereof considered an "investment
company" that is required to be registered under the Investment Company Act,
which Change in 1940 Act Law becomes effective on or after the date of the
original issuance of the Trust Preferred Securities.
"Additional Sums" means the additional amounts (which shall constitute part
of the distributions on the Debentures) as may be necessary in order that the
amount of distributions then due and payable by the Trust on the outstanding
Trust Securities shall not be reduced as a result of any additional taxes,
duties and other governmental charges to which the Trust has become subject as a
result of a Trust Tax Event.
Holders of Trust Preferred Securities, by purchasing such Trust Preferred
Securities, will be deemed to have agreed to be bound by these exchange
provisions in regard to the exchange of such Trust Preferred Securities for
Debentures on the terms described above. See "Risk Factors -- Special Event
Exchange or Redemption."
S-28
<PAGE> 29
DISTRIBUTION OF DEBENTURES
At any time, EPG will have the right to dissolve the Trust and, after
satisfaction of the liabilities of creditors of the Trust as provided by
applicable law, cause the Debentures to be distributed to the holders of the
Trust Preferred Securities in liquidation of the Trust. There can be no
assurance as to the market price for the Debentures distributed to the holders
of the Trust Preferred Securities after such a termination of the Trust. Under
current United States federal income tax law and interpretations and assuming,
as expected, the Trust is treated as a grantor trust, a distribution of the
Debentures should not be a taxable event to the Trust and holders of the Trust
Preferred Securities. Should there be a change in law, a change in legal
interpretation, a Trust Special Event or other circumstances, however, the
distribution could be a taxable event to holders of the Trust Preferred
Securities. See "Certain Federal Income Tax Consequences -- Redemption of Trust
Preferred Securities for Debentures or Cash" included in this Prospectus
Supplement.
After the liquidation date fixed for any distribution of Debentures for
Trust Preferred Securities (i) such Trust Preferred Securities will no longer be
deemed to be outstanding, (ii) DTC or its nominee, as the record holder of such
Trust Preferred Securities, will receive a registered Global Certificate or
certificates representing the Debentures to be delivered upon such distribution
and (iii) any certificates representing such Trust Preferred Securities not held
by DTC or its nominee will be deemed to represent the Debentures having a
principal amount equal to the liquidation amount of such Trust Preferred
Securities, and bearing accrued and unpaid interest in an amount equal to the
accrued and unpaid distributions on such Trust Preferred Securities until such
certificates are presented to the Property Trustee for transfer or reissuance.
OPTIONAL REDEMPTION
Except as provided under the caption "-- Mandatory Redemption" below, the
Trust Preferred Securities may not be redeemed by the Trust prior to
, 2002.
On and after such date, upon any permitted redemption by EPG of Debentures,
the Trust Preferred Securities are subject to redemption, in whole or in part,
at the following percentages of the liquidation amount thereof plus accrued and
unpaid distributions, if any, to the date fixed for redemption if redeemed
during the twelve-month period commencing on , in each of the
following years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2002..................... %
2003..................... %
2004..................... %
2005..................... %
</TABLE>
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2006.......................... %
2007.......................... %
2008 and thereafter........... 100.00%
</TABLE>
The Trust may not redeem the Trust Preferred Securities in part unless all
accumulated and unpaid distributions have been paid in full on all outstanding
Trust Preferred Securities. If fewer than all the outstanding Trust Preferred
Securities are to be redeemed, the Trust Preferred Securities to be so redeemed
will be selected as described under the captions "-- Book-Entry Only
Issuance -- Depository Trust Company" and "-- Redemption Procedures" included in
this Prospectus Supplement.
In the event EPG redeems the Debentures in certain circumstances upon the
occurrence of a Trust Tax Event as described under the caption "-- Trust Special
Event Exchange or Redemption" included in this Prospectus Supplement, the
appropriate amount of the Trust Preferred Securities will be redeemed at 100% of
the principal amount thereof together with accumulated and unpaid distributions
to the redemption date.
If at any time prior to the Conversion Expiration Date, less than 10% of
the Debentures offered hereby remain outstanding, such Debentures shall be
redeemable at the option of EPG, in whole but not in part, at a redemption price
equal to the aggregate unpaid principal amount thereof, plus accrued and unpaid
interest due thereon, and the proceeds of such redemption will be applied by the
Property Trustee to redeem outstanding Trust Securities at a redemption price of
$50 per Trust Security and all accumulated and unpaid distributions thereon to
the date of redemption.
S-29
<PAGE> 30
MANDATORY REDEMPTION
Upon repayment of the Debentures at maturity or as a result of the
acceleration of the Debentures upon the occurrence of a Debenture Event of
Default, the proceeds from such repayment will be applied to redeem Trust
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of Debentures so repaid at a price equal to the respective
liquidation amount of the Trust Securities together with accumulated and unpaid
distributions on the Trust Securities to the date of redemption. In the case of
acceleration of the Debentures, the Trust Preferred Securities will be redeemed
only when repayment of the Debentures has actually been received by the Trust.
In addition, as described above under the caption "-- Trust Special Event
Exchange or Redemption," upon the occurrence of a Trust Special Event, Trust
Preferred Securities shall be exchanged for Debentures unless, in the case of a
Trust Tax Event, EPG shall have elected to (a) pay any Additional Sums such that
the net amounts of distributions received by the holders of any Trust Preferred
Securities not so exchanged are not reduced as a result of such Tax Event and
shall not have revoked any such election or failed to make such payments or (b)
redeem the Trust Preferred Securities as further set forth under "-- Trust
Special Event Exchange or Redemption" above.
REDEMPTION PROCEDURES
Trust Preferred Securities redeemed on the date fixed for redemption shall
be redeemed at the redemption price with the applicable proceeds from the
contemporaneous redemption of the Debentures. Redemptions of the Trust Preferred
Securities shall be made and the redemption price shall be payable on the
redemption date only to the extent that the Trust has funds on hand available
for the payment of such redemption price. See also "-- Subordination of Trust
Common Securities" included in this Prospectus Supplement.
Notice of any redemption (optional or mandatory) of Trust Preferred
Securities (which notice will be irrevocable) will be given by the Property
Trustee to each record holder of Trust Preferred Securities that are being
redeemed not fewer than 30 nor more than 60 days prior to the redemption date.
If the Property Trustee or the organization then serving as the depository for
the Trust Preferred Securities (the "Clearing Agency")gives a notice of
redemption in respect of the Trust Preferred Securities and the Property Trustee
has received for deposit available funds sufficient for such redemption by 10:00
a.m., New York City time, on the redemption date, then, by 12:00 noon, New York
City time, on the redemption date, to the extent funds are available, the
Property Trustee will deposit irrevocably with DTC or the Clearing Agency, as
the case may be, funds sufficient to pay the applicable redemption price and
will give DTC or the Clearing Agency, as the case may be, irrevocable
instructions and authority to pay the redemption price to the holders of such
Trust Preferred Securities. See "-- Book-Entry Only Issuance -- Depository Trust
Company Procedures" included in this Prospectus Supplement. If such Trust
Preferred Securities are no longer in book-entry form, the Property Trustee, to
the extent funds are available, will irrevocably deposit with the entity
designated as paying agent (the "Paying Agent") funds sufficient to pay the
applicable redemption price and will give the Paying Agent irrevocable
instructions and authority to pay the redemption price to the holders thereof
upon surrender of their certificates evidencing such Trust Preferred Securities.
Notwithstanding the foregoing, distributions payable on or prior to the
redemption date for any Trust Preferred Securities called for redemption shall
be payable to the holders of such Trust Preferred Securities as of the relevant
record date for the related Distribution Date. If notice of redemption shall
have been given and funds deposited as required, then upon the date of such
deposit, all rights of the holders of such Trust Preferred Securities so called
for redemption will cease (including the accumulation of distributions and
conversion rights of the Trust Preferred Securities), except the right of the
holders of such Trust Preferred Securities to receive the redemption price, but
without interest on such redemption price, and such Trust Preferred Securities
will cease to be outstanding. In the event that any date fixed for redemption of
Trust Preferred Securities is not a Business Day, then payment of the redemption
price on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day. In the event that
payment of the redemption price in respect of Trust Preferred Securities called
for redemption is improperly withheld or refused and not paid either by the
Trust or by EPG pursuant to
S-30
<PAGE> 31
the Guarantee as described under "Description of the Guarantee" included in this
Prospectus Supplement, distributions on such Trust Preferred Securities will
continue to accumulate at the then applicable rate, from the redemption date
originally established by the Trust to the date such redemption price is
actually paid, in which case the actual payment date will be the date fixed for
redemption for purposes of calculating the redemption price.
Subject to applicable law (including, without limitation, United States
federal securities law), EPG, or its subsidiaries, may at any time and from time
to time purchase outstanding Trust Preferred Securities by tender, in the open
market or by private agreement.
Payment of the redemption price on the Trust Preferred Securities and any
distribution or exchange of Debentures to holders of Trust Preferred Securities
shall be made to the applicable record holders thereof as they appear on the
register for such Trust Preferred Securities on the relevant record date, which
shall be the fifteenth day (whether or not a Business Day) prior to the
redemption date or liquidation date, as applicable.
If less than all of the Trust Securities are to be redeemed on a redemption
date, then the aggregate liquidation amount of such Trust Securities to be
redeemed shall be allocated pro rata among the Trust Securities. The particular
Trust Preferred Securities to be redeemed shall be selected not more than 60
days prior to the redemption date by the Property Trustee from the outstanding
Trust Preferred Securities not previously called for redemption, by lot or by
such method as the Property Trustee shall deem fair and appropriate and which
may provide for the selection for redemption of portions (equal to $50 or an
integral multiple of $50 in excess thereof) of the liquidation amount of the
Trust Preferred Securities. The Property Trustee shall promptly notify the
Conversion Agent in writing of the Trust Preferred Securities selected for
redemption and, in the case of any Trust Preferred Securities selected for
partial redemption, the liquidation amount thereof to be redeemed; it being
understood that, in the case of Trust Preferred Securities held by DTC (or any
successor) or its nominee, the distribution of the proceeds of such redemption
will be made in accordance with the procedures of DTC or its nominee. For all
purposes of the Declaration, unless the context otherwise requires, all
provisions relating to the redemption of Trust Preferred Securities shall
relate, in the case of any Trust Preferred Securities redeemed or to be redeemed
only in part, to the portion of the aggregate liquidation amount of Trust
Preferred Securities which has been or is to be redeemed.
Notice of any redemption of Debentures will be mailed at least 30 days but
not more than 60 days before the redemption date to each holder of Debentures to
be redeemed at its registered address. Unless EPG defaults in payment of the
redemption price, on and after the redemption date interest ceases to accrue on
such Debentures or portions thereof called for redemption.
SUBORDINATION OF TRUST COMMON SECURITIES
Payment of distributions on, and the redemption price of, the Trust
Securities, as applicable, shall be made pro rata based on the liquidation
amount of such Trust Securities; provided, however, that if on any Distribution
Date or redemption date, a Debenture Event of Default or an event of default
under the Guarantee shall have occurred and be continuing, no payment of any
distribution on, or redemption price of, any of the Trust Common Securities, and
no other payment on account of the redemption, liquidation or other acquisition
of such Trust Common Securities, shall be made unless payment in full in cash of
all accumulated and unpaid distributions on all of the outstanding Trust
Preferred Securities for all distribution periods terminating on or prior
thereto, or in the case of payment of the redemption price the full amount of
such redemption price on all of the outstanding Trust Preferred Securities then
called for redemption, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all distributions on, or redemption price of, the Trust Preferred
Securities then due and payable.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary dissolution of the Trust
(each, a "Liquidation"), the holders of the Trust Preferred Securities at that
time will be entitled to receive out of the assets of the Trust, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, distributions in an amount
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equal to the aggregate of the stated liquidation amount of $50 per Trust
Preferred Security plus accumulated and unpaid distributions thereon to the date
of payment (the "Liquidation Distribution"), unless, in connection with such
Liquidation, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, Debentures in an aggregate unpaid principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the distribution rate of, and accrued and unpaid interest equal to
accumulated and unpaid distributions on, the Trust Preferred Securities, have
been distributed on a pro rata basis to the holders of Trust Preferred
Securities in exchange for such Trust Preferred Securities. See "-- Distribution
of Debentures" included in this Prospectus Supplement.
If such Liquidation Distribution can be paid only in part because the Trust
has insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Trust on the Trust
Preferred Securities shall be paid on a pro rata basis. EPG, as holder of the
Trust Common Securities, will be entitled to receive Liquidation Distributions
upon any such liquidation pro rata with the holders of the Trust Preferred
Securities, except that if a Debenture Event of Default or an event of default
under the Guarantee has occurred and is continuing, the Trust Preferred
Securities shall have a priority over the Trust Common Securities.
Pursuant to the Declaration, the Trust shall automatically dissolve upon
expiration of its term and shall dissolve on the first to occur of: (i) certain
events of bankruptcy, dissolution or liquidation of EPG; (ii) upon receipt by
the Property Trustee of written direction from EPG, as sponsor of the Trust, to
dissolve the Trust (which direction is optional and wholly within the discretion
of EPG, as sponsor); (iii) the redemption, conversion or exchange of all of the
Trust Securities; (iv) the entry by a court of competent jurisdiction of an
order for the dissolution of the Trust; and (v) the occurrence of a Trust
Special Event except in the case of a Trust Tax Event following which EPG has
elected to pay any Additional Sums such that the net amount received by holders
of Trust Preferred Securities in respect of distributions is not reduced as a
result of such Trust Tax Event and EPG has not revoked any such election or
failed to make such payment.
TRUST ENFORCEMENT EVENTS; NOTICE
Within 90 days after the occurrence of any Trust Enforcement Event (that
is, the occurrence of a Debenture Event of Default) or a default by EPG in
respect of any of its obligations under the Guarantee actually known to the
Property Trustee, the Property Trustee shall transmit notice of such event to
the holders of the Trust Preferred Securities, the Administrative Trustees and
EPG, as sponsor, unless such event shall have been cured or waived. EPG, as
sponsor, and the Administrative Trustees, on behalf of the Trust, are required
to file annually with the Property Trustee a certificate as to whether or not
they are in compliance with all the conditions and covenants applicable to them
under the Declaration.
If a Debenture Event of Default or a default under the Guarantee has
occurred and is continuing, the Trust Preferred Securities shall have a
preference over the Trust Common Securities upon dissolution of the Trust as
described above. See "-- Liquidation Distribution Upon Dissolution" included in
this Prospectus Supplement. The existence of a Debenture Event of Default does
not entitle the holders of Trust Preferred Securities to accelerate the maturity
thereof except to the extent described below under the caption "-- Enforcement
of Certain Rights by Holders of Trust Preferred Securities."
In the case of any Debenture Events of Default, EPG as holder of the Trust
Common Securities will be deemed to have waived any right to act with respect to
any such Debenture Events of Default until such Debenture Events of Default with
respect to the Trust Preferred Securities have been cured, waived or otherwise
eliminated. Until any such Debenture Events of Default with respect to the Trust
Preferred Securities have been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the holders of the Trust
Preferred Securities and not on behalf of EPG as holder of the Trust Common
Securities, and only the holders of the Trust Preferred Securities will have the
right to direct the Property Trustee to act on their behalf.
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ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing, the
Property Trustee, as the sole holder of the Debentures, shall have the right
under the Subordinated Indenture to declare the principal of, premium, if any,
on and interest on the Debentures immediately due and payable, and, accordingly,
the holders of Trust Preferred Securities would rely on the enforcement by the
Property Trustee of its rights as a holder of the Debentures against EPG. In
addition, the holders of a majority in aggregate liquidation amount of the Trust
Preferred Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee or to
direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee to
exercise the remedies available to it as a holder of the Debentures. If the
Property Trustee fails to enforce its rights as holder of the Debentures after a
request therefor by a holder of Trust Preferred Securities, such holder may
proceed to enforce such rights directly against EPG. Notwithstanding the
foregoing, if a Debenture Event of Default has occurred and is continuing and
such event is attributable to the failure of EPG to pay interest or principal on
the Debentures on the date such interest or principal is otherwise payable (or
in the case of redemption, on the redemption date), then a holder of Trust
Preferred Securities may directly institute a Legal Action against EPG for
enforcement of payment to such holder of the principal of or interest on the
Debentures having a principal amount equal to the aggregate liquidation amount
of the Trust Preferred Securities of such holder on or after the respective due
date specified in the Debentures. In connection with such Legal Action, EPG will
be subrogated to the rights of such holder of Trust Preferred Securities under
the Declaration to the extent of any payment made by EPG to such holder of Trust
Preferred Securities in such Legal Action. The holders of Trust Preferred
Securities will not be able to exercise directly against EPG any other remedy
available to the Property Trustee unless the Property Trustee first fails to do
so.
MERGER OR CONSOLIDATION OF TRUSTEES
Any corporation into which the Property Trustee, Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Property Trustee, Delaware
Trustee or any Administrative Trustee shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of such
Trustee, shall be the successor of such Trustee under the Declaration, provided
such corporation shall be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other person, except as
described below. The Trust may, with the consent of the Administrative Trustees
and without the consent of the Property Trustee or the holders of the Trust
Preferred Securities, merge with or into, consolidate, amalgamate, be replaced
by or convey, transfer or lease its properties and assets substantially as an
entirety to a trust organized as such under the laws of any state, provided that
(i) if the Trust is not the survivor of such transaction, such successor entity
either (a) expressly assumes all of the obligations of the Trust with respect to
the Trust Securities or (b) substitutes for the Trust Preferred Securities other
securities having substantially the same terms as the Trust Preferred Securities
(the "Successor Securities") so long as the Successor Securities rank the same
as the Trust Preferred Securities rank in priority with respect to distributions
and payments upon liquidation, redemption and otherwise; (ii) EPG expressly
appoints a trustee of such successor entity possessing the same powers and
duties as the Property Trustee as the holder of the Debentures; (iii) the
Successor Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Trust Preferred Securities are then listed, if any;
(iv) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not cause the Trust Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization; (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Trust Preferred Securities (including any
Successor Securities) in any material
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respect (other than with respect to any dilution of the holders' interest in the
new entity); (vi) such successor entity has a purpose identical to that of the
Trust; (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, EPG has received an opinion from nationally
recognized independent counsel to the Trust experienced in such matters to the
effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease will not adversely affect the rights, preferences
and privileges of the holders of the Trust Preferred Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Trust nor such successor entity will be required to register as an
investment company under the Investment Company Act, and (c) following such
merger, consolidation, amalgamation or replacement, the Trust (or such successor
entity) will not be taxable as a corporation for United States federal income
tax purposes; and (viii) EPG or any permitted successor or assignee owns all of
the trust common securities of such successor entity and guarantees the
obligations of such successor entity under the Successor Securities at least to
the extent provided by the Guarantees. Notwithstanding the foregoing, the Trust
shall not, except with the consent of holders of 100% in aggregate liquidation
amount of the Trust Preferred Securities, consolidate, amalgamate, merge with or
into, be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Trust or the successor entity to be taxable as a corporation for
United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE DECLARATION
Except as provided below and under the caption "Description of the
Guarantee -- Amendments and Assignment" included in this Prospectus Supplement
and as otherwise required by law and the Declaration, the holders of the Trust
Preferred Securities will have no voting rights.
The Declaration may be amended from time to time by a majority of the
Administrative Trustees (and in certain circumstances, the Property Trustee and
the Delaware Trustee), without the consent of the holders of the Trust Preferred
Securities (i) to cure any ambiguity or to correct or supplement any provisions
in the Declaration that may be defective or inconsistent with any other
provision, or to amend any other provisions with respect to matters or questions
arising under the Declaration that shall not be inconsistent with the other
provisions of the Declaration; (ii) to add to the covenants, restrictions or
obligations of EPG; (iii) to conform to any change in the Investment Company Act
or written change in interpretation or application of the rules and regulations
promulgated thereunder by any legislative body, court, government agency or
regulatory authority; (iv) to conform to any change in the Trust Indenture Act
or written change in interpretation or application of the rules and regulations
promulgated thereunder by any legislative body, court, government agency or
regulatory authority; or (v) to modify, eliminate and add to any provision of
the Declaration to such extent as may be necessary; provided, however, that such
amendments do not have a material adverse effect on the rights, preferences or
privileges of any holder of Trust Securities, and any amendments of the
Declaration shall become effective when notice thereof is given to the holders
of Trust Securities. Notwithstanding the foregoing, if any proposed amendment
provides for, or the Administrative Trustees otherwise propose to effect, (i)
any action that would adversely affect the powers, preferences or special rights
of the Trust Securities, whether by way of amendment to the Declaration or
otherwise, or (ii) the dissolution, winding-up or termination of the Trust other
than pursuant to the terms of the Declaration, then the holders of the Trust
Securities voting together as a single class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of at least a majority in aggregate liquidation amount
of the Trust Securities affected thereby; provided that if any amendment or
proposal referred to in clause (i) above would adversely affect only the Trust
Preferred Securities or the Trust Common Securities, then only the affected
class will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of a majority in
aggregate liquidation amount of such class of the Trust Securities.
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No amendment or modification may be made to the Declaration if such
amendment or modification would (i) cause the Trust to fail to be classified as
a grantor trust for United States federal income tax purposes, (ii) cause the
Trust to be taxable as a corporation for such purposes, (iii) reduce or
otherwise adversely affect the powers of the Property Trustee in contravention
of the Trust Indenture Act or (iv) cause the Trust to be deemed an "investment
company" which is required to be registered under the 1940 Act.
Subject to the requirement of the Property Trustee obtaining the opinion
described in the last sentence of this paragraph, the holders of a majority in
aggregate liquidation amount of Trust Preferred Securities will have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee or to direct the exercise of any trust or
power conferred upon the Property Trustee under the Declaration, including the
right to direct the Property Trustee, as holder of the Debentures, (i) to
exercise the remedies available to it under the Subordinated Indenture as holder
of the Debentures and (ii) to consent to any amendment, modification, or
termination of the Subordinated Indenture or the Debentures where such consent
shall be required; provided, however, that where a consent or action under the
Subordinated Indenture would require the consent or act of the holders of more
than a majority of the aggregate principal amount of Debentures affected
thereby, only the holders of the percentage of the aggregate liquidation amount
of the Trust Preferred Securities which is at least equal to the percentage
required under the Subordinated Indenture may direct the Property Trustee to
give such consent or take such action on behalf of the Trust; provided, further,
however, that under certain circumstances the Property Trustee shall have the
right to decline to follow any such direction. The Property Trustee shall notify
all holders of the Trust Preferred Securities of any notice of any Trust
Enforcement Event received from EPG with respect to the Debentures. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy as described above, the Property Trustee shall be under no obligation to
take any of the actions described in clauses (i) or (ii) above unless the
Property Trustee has obtained an opinion of independent tax counsel to the
effect that as a result of such action, the Trust will not be taxable as a
corporation for United States federal income tax purposes and that after such
action each holder of Trust Securities will continue to be treated as owning an
undivided beneficial ownership interest in the Debentures.
A waiver of a Debenture Event of Default will constitute a waiver of the
corresponding Trust Enforcement Event. Any required approval or direction of
holders of Trust Preferred Securities may be given at a separate meeting of
holders of Trust Preferred Securities convened for such purpose, at a meeting of
all of the holders of Trust Securities or pursuant to written consent. The
Administrative Trustees will cause a notice of any meeting at which holders of
Trust Preferred Securities are entitled to vote, or of any matter upon which
action by written consent of such holders is to be taken, to be mailed to each
holder of record of Trust Preferred Securities. Each such notice will include a
statement setting forth the following information: (i) the date of such meeting
or the date by which such action is to be taken; (ii) a description of any
resolution proposed for adoption at such meeting on which such holders are
entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the holders of Trust Preferred Securities will be
required for the Trust to redeem and cancel the Trust Preferred Securities in
accordance with the Declaration.
Notwithstanding that holders of Trust Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the Trust
Preferred Securities that are beneficially owned at such time by EPG or any
entity directly or indirectly controlled by, or under direct or indirect common
control with, EPG shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Trust Preferred
Securities were not outstanding, except for Trust Preferred Securities purchased
or acquired by EPG or its affiliates in connection with transactions effected by
or for the account of customers of EPG or any of its subsidiaries or in
connection with the distribution or trading of such Trust Preferred Securities;
provided, however, that persons (other than affiliates of EPG) to whom EPG or
any of its subsidiaries have pledged Trust Preferred Securities may vote or
consent with respect to such pledged Trust Preferred Securities pursuant to the
terms of such pledge.
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The procedures by which holders of Trust Preferred Securities may exercise
their voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company" included in this Prospectus Supplement.
Holders of the Trust Preferred Securities will have no rights to appoint or
remove the Regular Trustees or the Delaware Trustee, who may be appointed,
removed or replaced solely by EPG, as the holder of all the Trust Common
Securities, provided that, upon the occurrence and during the continuance of a
Trust Enforcement Event, the Property Trustee may be removed and a successor
appointed only by the holders of a majority in aggregate liquidation amount of
the Trust Preferred Securities.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depository (the
"Depository") for the Trust Preferred Securities. The Trust Preferred Securities
will be issued only as fully-registered securities registered in the name of
Cede & Co. (DTC's nominee). One or more fully-registered global Trust Preferred
Securities certificates ("Global Certificates"), representing the total
aggregate number of Trust Preferred Securities, will be issued and will be
deposited with DTC.
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 pursuant to the provisions of section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also 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. Participants in DTC
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of its
Participants and by the NYSE, the American Stock Exchange, Inc., 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
Participant, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Commission.
Purchases of Trust Preferred Securities within the DTC system must be made
by or through Participants, which will receive a credit for the Trust Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
Trust Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Participants' and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Participants or Indirect Participants through which the Beneficial Owners
purchased Trust Preferred Securities. Transfers of ownership interests in the
Trust Preferred Securities are to be accomplished by entries made on the books
of Participants and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Trust Preferred Securities, except in the event that use of the
book-entry system for the Trust Preferred Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Trust Preferred
Securities; DTC's records reflect only the identity of the Participants to whose
accounts such Trust Preferred Securities are credited, which may or may not be
the Beneficial Owners. The Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Trust Preferred Securities represented thereby
for all purposes under the Declaration and the Trust Preferred Securities. No
Beneficial Owner of an interest in a Global Certificate will be able to transfer
that interest except in accordance with DTC's applicable procedures, in addition
to those provided for under the Declaration.
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DTC has advised the Company that it will take any action permitted to be
taken by a holder of Trust Preferred Securities (including the presentation of
Trust Preferred Securities for exchange as described below) only at the
direction of one or more Participants to whose account the DTC interests in the
Global Certificates are credited and only in respect of such portion of the
aggregate liquidation amount of Trust Preferred Securities as to which such
Participant or Participants has or have given such direction. Also, if there is
a Trust Enforcement Event under the Trust Preferred Securities, DTC will
exchange the Global Certificates for Certificated Securities, which it will
distribute to its Participants in accordance with its customary procedures.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices in respect of the Trust Preferred Securities held in
book-entry form will be sent to Cede & Co. If less than all of the Trust
Preferred Securities are being redeemed, DTC will determine the amount of the
interest of each Participant to be redeemed in accordance with its procedures.
Although voting with respect to the Trust Preferred Securities is limited,
in those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Trust Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Participants to whose accounts the Trust Preferred
Securities are allocated on the record date (identified in a listing attached to
the Omnibus Proxy).
Distributions on the Trust Preferred Securities held in book-entry form
will be made to DTC in immediately available funds. DTC's practice is to credit
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payments on such payment date. Payments by Participants and
Indirect Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participants and Indirect Participants and not of DTC, the Trust or the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of any distributions to DTC is the responsibility of the
Trust, disbursement of such payments to Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Participants and Indirect Participants.
Except as described, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of Trust Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Trust Preferred Securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Company nor the
Trust will have any responsibility for the performance by DTC or its
Participants or Indirect Participants under the rules and procedures governing
DTC. DTC may discontinue providing its services as securities depository with
respect to the Trust Preferred Securities at any time by giving notice to the
Trust. Under such circumstances in the event that a successor securities
depository is not obtained, Trust Preferred Security certificates are required
to be printed and delivered to the Property Trustee. Additionally, the Trust
(with the consent of the Company) may decide to discontinue use of the system of
book-entry transfers through DTC or any successor depository. In that event,
certificates for the Trust Preferred Securities will be printed and delivered to
the Property Trustee. In each of the above circumstances, the Company will
appoint a Paying Agent with respect to the Trust Preferred Securities.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Trust
Preferred Securities as represented by a Global Certificate.
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PAYMENT
Payments in respect of the Trust Preferred Securities represented by the
Global Certificates shall be made to DTC, which shall credit the relevant
accounts at DTC on the scheduled payment dates or, in the case of certificated
securities, if any, such payments shall be made by check mailed to the address
of the holder entitled thereto as such address shall appear on the register. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days written
notice to the Administrative Trustees. In the event that The Chase Manhattan
Bank shall no longer be the Paying Agent, the Administrative Trustees shall
appoint a successor to act as Paying Agent (which shall be a bank or trust
company).
REGISTRAR, TRANSFER AGENT, AND PAYING AGENT
The Property Trustee will act as Registrar, Transfer Agent and Paying Agent
for the Trust Preferred Securities.
Registration of transfers of Trust Preferred Securities will be effected
without charge by or on behalf of the Trust, but upon payment (with the giving
of such indemnity as the Trust may require) in respect of any tax or other
government charges which may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer of Trust Preferred Securities after such Trust Preferred Securities
have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities, undertakes to perform only such duties as are specifically
set forth in the Declaration and, after default, shall exercise the same degree
of care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Property Trustee is under no obligation
to exercise any of the powers vested in it by the Declaration at the request of
any holder of Trust Preferred Securities, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities which might be incurred
thereby. The holders of Trust Preferred Securities will not be required to offer
such indemnity in the event such holders, by exercising their voting rights,
direct the Property Trustee to take any action following a Trust Enforcement
Event.
GOVERNING LAW
The Declaration and the Trust Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to conduct the affairs of
and to operate the Trust in such a way that the Trust will not be deemed to be
an "investment company" required to be registered under the 1940 Act or
characterized as other than a grantor trust for United States federal income tax
purposes. In this connection, the Regular Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust or the
Declaration that the Regular Trustees determine in their discretion to be
necessary or desirable for such purposes as long as such action does not
adversely affect the interests of the holders of the Trust Preferred Securities.
Holders of the Trust Preferred Securities have no preemptive rights.
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DESCRIPTION OF THE GUARANTEE
The Guarantee will be executed and delivered by EPG concurrently with the
issuance by the Trust of the Trust Preferred Securities for the benefit of the
holders from time to time of such Trust Preferred Securities. The Chase
Manhattan Bank will act as trustee ("Trust Guarantee Trustee") under the
Guarantee. This summary of certain provisions of the Guarantee does not purport
to be complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of the Guarantee (a copy of which is incorporated by
reference in the registration statement of which this Prospectus Supplement is a
part, and a copy of which may be obtained from the Trust Guarantee Trustee in
New York, New York). The Trust Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Trust Preferred Securities.
GENERAL
EPG will irrevocably agree to pay in full on a subordinated basis, to the
extent set forth herein, the Guarantee Payments (as defined herein) to the
holders of the Trust Preferred Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust may have or assert
other than the defense of payment. The following payments with respect to the
Trust Preferred Securities, to the extent not paid by or on behalf of the Trust
(the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid distributions required to be paid on the Trust Preferred
Securities, to the extent that the Trust has funds on hand available therefor at
such time, (ii) the redemption price with respect to any Trust Preferred
Securities called for redemption to the extent that the Trust has funds on hand
available therefor at such time, or (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of the Trust (unless the Debentures are
distributed to holders of the Trust Preferred Securities), the lesser of (a) the
Liquidation Distribution, to the extent that the Trust has funds on hand
available therefor at such time, and (b) the amount of assets of the Trust
remaining available for distribution to holders of Trust Preferred Securities.
EPG's obligation to make a Guarantee Payment may be satisfied by direct payment
of the required amounts by EPG to the holders of the Trust Preferred Securities
or by causing the Trust to pay such amounts to such holders.
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Trust's obligations under the Trust Preferred Securities, but will apply
only to the extent that the Trust has funds sufficient to make such payments,
and is not a guarantee of collection. If EPG does not make interest payments on
the Debentures held by the Trust, the Trust will not be able to pay
distributions on the Trust Preferred Securities and will not have funds legally
available therefor.
EPG has, through the Guarantee, the Declaration, the Debentures and the
Subordinated Indenture, taken together, fully, irrevocably and unconditionally
guaranteed all of the Trust's obligations under the Trust Preferred Securities.
No single document standing alone or operating in conjunction with fewer than
all of the other documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations under the
Trust Preferred Securities. See "Relationship Among the Trust Preferred
Securities, the Subordinated Debt Securities and the Guarantee" included in the
accompanying Prospectus.
The Company has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to the Trust Common
Securities to the same extent as the Guarantee, except that upon the occurrence
and during the continuation of a Trust Enforcement Event or a default under the
Guarantee, holders of Trust Preferred Securities shall have priority over
holders of Trust Common Securities with respect to distributions and payments on
liquidation, redemption or otherwise.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of EPG and will rank
subordinate and junior in right of payment to all other liabilities of EPG
(except the guarantee of the Trust Common Securities) and will rank pari passu
with the most senior preferred stock, if any, issued from time to time by EPG
and senior to the Common Stock of EPG. The terms of the Trust Preferred
Securities provide that each holder by acceptance thereof, consents and agrees
to the subordination and other provisions of the Guarantee.
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The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held for the benefit of the holders of the Trust Preferred
Securities. The Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Trust or upon
distribution of the Debentures to the holders of the Trust Preferred Securities.
The Guarantee does not place a limitation on the amount of additional
indebtedness that may be incurred by EPG or any of its subsidiaries.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Trust Preferred Securities (in which case no vote
will be required), the Guarantee may not be amended without the prior approval
of the holders of not less than a majority in aggregate liquidation amount of
the outstanding Trust Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of the Trust Preferred
Securities -- Voting Rights; Amendment of the Declaration" included in this
Prospectus Supplement." All guarantees and agreements contained in the Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
EPG and shall inure to the benefit of the holders of the Trust Preferred
Securities then outstanding.
CERTAIN COVENANTS OF EPG
EPG will covenant in the Guarantee that if and so long as (i) the Trust is
the holder of all the Debentures, (ii) a Trust Tax Event in respect of the Trust
has occurred and is continuing, and (iii) EPG has elected, and has not revoked
such election, to pay Additional Sums in respect of the Trust Securities, EPG
will pay to the Trust such Additional Sums. EPG will also covenant that it will
not, and it will not cause any of its subsidiaries to, (I) declare or pay any
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of EPG's capital
stock (except for (x) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, its capital stock and
conversions or exchanges of common stock of one class into common stock of
another class and (y) redemptions or purchases of any rights pursuant to the
Rights Agreement and the issuance of capital stock pursuant to such rights) or
(II) make any payments of principal, interest or premium, if any, on or repay or
repurchase or redeem any debt securities (including guarantees of indebtedness
for money borrowed) of EPG that rank pari passu with or junior to the Debentures
(other than (a) any redemption, liquidation, interest, principal or guarantee
payment by EPG where the payment is made by way of securities (including capital
stock) that rank pari passu with or junior to the securities on which such
dividend, redemption, interest, principal or guarantee payment is being made;
(b) payments under the Guarantees; (c) purchases of Common Stock related to the
issuance of Common Stock under any of EPG's benefit plans for its directors,
officers or employees; (d) as a result of a reclassification of EPG's capital
stock or the exchange or conversion of one series or class of EPG's capital
stock for another series or class of EPG's capital stock; (e) the purchase of
fractional interests in shares of EPG's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted or
exchanged; and (f) redemptions or purchases of any rights pursuant to the Rights
Agreement and the issuance of capital stock pursuant to such rights) if at such
time (i) for any distribution period, full distributions on a cumulative basis
on any Trust Securities have not been paid, (ii) there shall have occurred and
be continuing any Debenture Event of Default or any event of which EPG has
actual knowledge that, with the giving of notice or the lapse of time, or both,
would constitute a Debenture Event of Default, (iii) EPG shall be in default of
any obligations under the Guarantees, or (iv) EPG shall have given notice of its
selection of an Extension Period as provided in the Subordinated Indenture with
respect to the Debentures and shall not have rescinded such notice, or such
Extension Period, or any extension thereof, shall be continuing. EPG will also
covenant (a) to maintain the reservation for issuance of the number of shares of
Common Stock that would be required from time to time upon the conversion of all
of the Debentures then outstanding and (b) to deliver shares of Common Stock
upon an election by the holders of the Trust Securities to convert such Trust
Securities into Common Stock.
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For so long as Trust Preferred Securities are outstanding, EPG will
covenant (i) not to convert Debentures except pursuant to a notice of conversion
delivered to the Conversion Agent by a holder of Trust Securities, (ii) to
maintain directly or indirectly 100% ownership of the Trust Common Securities,
provided that certain successors which are permitted pursuant to the
Subordinated Indenture may succeed to EPG's ownership of the Trust Common
Securities and (iii) not to voluntarily terminate, wind-up or liquidate the
Trust, except in connection with (a) a distribution of the Debentures to the
holders of the Trust Securities in liquidation of the Trust, (b) the redemption
of all Trust Securities or (c) certain mergers, consolidations or amalgamations
permitted by the Declaration. EPG will also covenant to use its commercially
reasonable efforts, consistent with the terms and provisions of the Declaration,
to cause the Trust to remain classified as a grantor trust and not taxable as a
corporation for United States federal income tax purposes. As part of the
Guarantee, EPG will agree that it will honor all obligations described therein
relating to the conversion or exchange of the Trust Securities into or for
Common Stock or Debentures.
GUARANTEE EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of EPG
to perform any of its payment or other obligations thereunder. The holders of a
majority in aggregate liquidation amount of the Trust Preferred Securities have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trust Guarantee Trustee in respect of the Guarantee
or to direct the exercise of any trust or power conferred upon the Trust
Guarantee Trustee under the Guarantee.
If the Trust Guarantee Trustee fails to enforce the Guarantee, any holder
of the Trust Preferred Securities may institute a legal proceeding directly
against EPG to enforce its rights under the Guarantee without first instituting
a legal proceeding against the Trust, the Trust Guarantee Trustee or any other
person or entity. In addition, any record holder of Trust Preferred Securities
shall have the right, which is absolute and unconditional, to proceed directly
against EPG to obtain Guarantee Payments, without first waiting to determine if
the Trust Guarantee Trustee has enforced the Guarantee or instituting a legal
proceeding against the Trust, the Trust Guarantee Trustee or any other person or
entity. EPG has waived any right or remedy to require that any action be brought
just against the Trust, or any other person or entity before proceeding directly
against EPG.
EPG, as guarantor, is required to file annually with the Trust Guarantee
Trustee a certificate as to whether or not EPG is in compliance with all the
conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE TRUST GUARANTEE TRUSTEE
The Trust Guarantee Trustee, other than during the occurrence and
continuance of a default by EPG in performance of the Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to the Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use under the circumstances
in the conduct of his or her own affairs. Subject to this provision, the Trust
Guarantee Trustee is under no obligation to exercise any of the powers vested in
it by the Guarantee at the request of any holder of Trust Preferred Securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect (i) upon
full payment of the redemption price of the Trust Preferred Securities, (ii)
upon distribution of Debentures to the holders of all of the Trust Preferred
Securities in exchange for all of the Trust Preferred Securities, (iii) upon the
conversion of all Trust Preferred Securities pursuant to the Declaration or (iv)
upon full payment of the amounts payable upon liquidation of the Trust. The
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Trust Preferred Securities must restore payment
of any sums under such Trust Preferred Securities or the Guarantee.
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GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
DESCRIPTION OF THE DEBENTURES
The Debentures are to be issued under a Subordinated Indenture, as
supplemented by the First Supplemental Indenture (collectively, the
"Subordinated Indenture"), between EPG and The Chase Manhattan Bank, as trustee
(the "Subordinated Debt Trustee"), copies of which are incorporated by reference
in the registration statement of which this Prospectus Supplement is a part, and
copies of which may be obtained from Subordinated Debt Trustee at its corporate
trust office in New York, New York. The terms of the Debentures include those
stated in the Subordinated Indenture and made a part thereof by reference to the
Trust Indenture Act in effect on the date of the Subordinated Indenture. This
summary and the summary included under the caption "Description of the
Subordinated Debt Securities" in the accompanying Prospectus of certain terms of
the Debentures and the Subordinated Indenture do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, the
Subordinated Indenture, including the definitions of certain terms therein, and
the Trust Indenture Act. Capitalized terms used in this section and not
otherwise defined in this section have the respective meanings assigned to them
in the Subordinated Indenture.
Reference is made to the section entitled "Description of the Subordinated
Debt Securities" in the accompanying Prospectus for a more complete summary of
the provisions of the Subordinated Indenture.
GENERAL
The Debentures will be unsecured and will rank junior and be subordinate in
right of payment to all Senior Debt of EPG. The Debentures will be limited in
aggregate principal amount to $ million ($ million if the Underwriters'
over-allotment option is exercised in full), such amount being the sum of the
aggregate stated liquidation amount of the Trust Preferred Securities and
capital contributed by EPG in exchange for the Trust Common Securities. The
Subordinated Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of EPG, whether under the Subordinated Indenture or
any existing or other indenture that EPG may enter into in the future or
otherwise. See "-- Subordination" below.
Concurrently with the issuance of the Trust Preferred Securities, the Trust
will invest the proceeds thereof and the consideration paid by EPG for the Trust
Common Securities in the Debentures. The Debentures will be in the principal
amount equal to the aggregate stated liquidation amount of the Trust.
The Debentures are not subject to any sinking fund provision. The entire
principal amount of the Debentures will mature, and become due and payable,
together with any accrued and unpaid interest thereon, on , 2028.
INTEREST
The Debentures will bear interest at the annual rate of % per annum,
payable quarterly in arrears on , , and
of each year, commencing on , 1998 (each, an "Interest
Payment Date"), to the person in whose name each Debenture is registered at the
close of business on the fifteenth day (whether or not a Business Day) of the
month of such Interest Payment Date (the "Regular Record Date"), subject to
certain exceptions. It is anticipated that, until the Liquidation, if any, of
the Trust, each Debenture will be held in the name of the Property Trustee in
trust for the benefit of the holders of the Trust Preferred Securities and the
Trust Common Securities. The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months. In the event
that any date on which interest is payable on the Debentures is not a Business
Day, then payment of the interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), except that if such Business Day is in the next
succeeding calendar year, then such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such Interest Payment Date. Accrued interest that is not paid on
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the applicable Interest Payment Date will bear additional interest on the amount
thereof (to the extent permitted by law) at % per annum, compounded quarterly.
The term "interest" as used herein shall include quarterly interest payments,
interest on quarterly interest payments not paid on the applicable Interest
Payment Date and Additional Sums, as applicable.
GLOBAL SECURITIES
If distributed to holders of the Trust Preferred Securities in connection
with the involuntary or voluntary dissolution, winding-up or liquidation of the
Trust as a result of the occurrence of a Trust Special Event, the Debentures
will be issued in the same form as the Trust Preferred Securities that such
Debentures replace. Any Global Certificate will be replaced by one or more
global securities (each, a "Global Security") registered in the name of the
depositary or its nominee. Except under the limited circumstances described
below, the Debentures represented by the Global Security will not be
exchangeable for, and will not otherwise be issuable as, Debentures in
definitive form. The Global Securities described above may not be transferred
except by the depository to a nominee of the depository or by a nominee of the
depository to the depository or another nominee of the depository or to a
successor depository or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in a Global Security.
Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to receive physical delivery of Debentures in
definitive form and will not be considered the holders thereof for any purpose
under the Subordinated Indenture, and no Global Security representing Debentures
shall be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the depository or its nominee or to a
successor depository or its nominee. Accordingly, each beneficial owner of Trust
Preferred Securities must rely on the procedures of DTC, or if such person is
not a participant, on the procedures of the participant through which such
person owns its interest to exercise any rights of a holder under the
Subordinated Indenture.
If Debentures are distributed to holders of Trust Preferred Securities in
liquidation of such holders' interests in the Trust and a Global Security is
issued, DTC will act as securities depository for the Debentures represented by
such Global Security. For a description of DTC and the specific terms of the
depository arrangements, see "Description of the Trust Preferred
Securities -- Book-Entry Only Issuance -- Depository Trust Company" included in
this Prospectus Supplement. As of the date of this Prospectus Supplement, the
description therein of DTC's book-entry system and DTC's practices as they
relate to purchases, transfers, notices and payments with respect to the Trust
Preferred Securities apply in all material respects to any debt obligations
represented by one or more Global Securities held by DTC. EPG may appoint a
successor to DTC or any successor depository in the event DTC or such depository
is unable or unwilling to continue as a depository for the Global Securities.
None of EPG, the Subordinated Debt Trustee, any Paying Agent or the
Securities Registrar will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of the Global Security representing such Debentures or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
A Global Security shall be exchangeable for Debentures registered in the
names of persons other than DTC or its nominee only if (i) DTC notifies EPG that
it is unwilling or unable to continue as a depository for such Global Debenture
and no successor depositary shall have been appointed by EPG within 90 days, or
if at any time DTC ceases to be a "clearing agency" registered under the
Exchange Act at a time when DTC is required to be so registered to act as such
depository and no such successor depositary has been appointed within 90 days by
the Company, (ii) EPG in its sole discretion determines that such Global
Security shall be so exchangeable, or (iii) there shall have occurred and be
continuing an Event of Default with respect to such Global Security. Any Global
Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for definitive certificates registered in such names as DTC shall
direct. It is expected that such instructions will be based upon directions
received by DTC from its Participants with respect to ownership of
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beneficial interests in such Global Security. In the event that Debentures are
issued in definitive form, such Debentures will be in denominations of $50 and
integral multiples thereof and may be transferred or exchanged at the offices
described in "-- Payment and Paying Agents" below.
PAYMENT AND PAYING AGENT
Payments on Debentures represented by a Global Security will be made to
DTC, as the depositary for the Debentures. In the event Debentures are issued in
definitive form, principal of and premium, if any, and any interest on
Debentures will be payable, the transfer of the Debentures will be registrable,
and the Debentures will be exchangeable for Debentures of other denominations of
a like aggregate principal amount at the corporate office of the Subordinated
Debt Trustee in the City of New York or at the office of such Paying Agent or
Paying Agents as EPG may designate, except that at the option of EPG payment of
any interest may be made (i) by check mailed to the address of the Person
entitled thereto as such address shall appear in the Securities Register or (ii)
by wire transfer to an account maintained by the Person entitled thereto as
specified in the Securities Register, provided that proper transfer instructions
have been received by the Regular Record Date. Payment of any interest on
Debentures will be made to the Person in whose name such Debentures are
registered at the close of business on the Regular Record Date for such
interest, except in the case of Defaulted Interest. The Regular Record Date for
the interest payable on any Interest Payment Date shall be the fifteenth day
(whether or not a Business Day) of the month of such Interest Payment Date. EPG
may at any time designate additional Paying Agents or rescind the designation of
any Paying Agent.
Any monies deposited with the Subordinated Debt Trustee or any Paying
Agent, or then held by EPG in trust, for the payment of the principal of and
premium, if any, or interest on any Debentures and remaining unclaimed for two
years after such principal and premium, if any, or interest has become due and
payable shall, at the request of EPG, be repaid to EPG and the holder of such
Debentures shall thereafter look, as a general unsecured creditor, only to EPG
for payment thereof.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Debenture Event of Default has occurred and is continuing,
EPG has the right under the Subordinated Indenture to defer the payment of
interest on the Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Extension Period,
provided that no Extension Period may extend beyond the stated maturity of the
Debentures. At the end of such Extension Period, EPG must pay all interest then
accrued and unpaid (together with interest thereon at the stated annual rate,
compounded quarterly, to the extent permitted by applicable law) on the Interest
Payment Date coinciding with or next following the end of such Extension Period
(whichever is earliest) to the persons in whose names the Debentures are
registered at the close of business on the regular record date next preceding
such Interest Payment Date. During an Extension Period, interest will continue
to accrue and holders of Debentures (or holders of Trust Preferred Securities
while the Trust Preferred Securities are outstanding) will be required to accrue
interest income (in the form of original issue discount) for United States
federal income tax purposes. See "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount" included in this
Prospectus Supplement.
During any such Extension Period, any default under either of the
Guarantees or any Debenture Event of Default (or there shall have occurred and
be continuing any event of which EPG has actual knowledge that, with the giving
of notice or lapse of time, or both, would constitute a Debenture Event of
Default), EPG shall not, and shall not permit any subsidiary to, (i) declare or
pay any dividends or distributions on, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of EPG's capital stock (except for (x)
dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, its capital stock and conversions or
exchanges of common stock of one class into common stock of another class and
(y) redemptions or purchases of any rights pursuant to the Rights Agreement and
the issuance of capital stock pursuant to such rights) or (ii) make any payment
of principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees of indebtedness for money borrowed) of EPG
that rank pari passu with or junior to the Debentures (other than (a) any
redemption, liquidation, interest, principal or guarantee payment by EPG where
the payment is made by way of securities (including
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capital stock) that rank pari passu with or junior to the securities on which
such dividend, redemption, interest, principal or guarantee payment is being
made; (b) payments under the Guarantees; (c) purchases of Common Stock related
to the issuance of Common Stock under any of EPG's benefit plans for its
directors, officers or employees; (d) as a result of a reclassification of EPG's
capital stock or the exchange or conversion of one series or class of EPG's
capital stock for another series or class of EPG's capital stock; (e) the
purchase of fractional interests in shares of EPG's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged; and (f) redemptions or purchases pursuant to the
Rights Plan and the issuance of capital stock pursuant to such rights).
Prior to the termination of any such Extension Period, EPG may further
extend the Interest Payment Period, provided that no Extension Period may exceed
20 consecutive quarters or extend beyond the stated maturity of the Debentures.
Upon the termination of any such Extension Period and the payment of all amounts
then due on any Interest Payment Date, EPG may elect to begin a new Extension
Period subject to the above requirements. No interest shall be due and payable
during an Extension Period, except at the end thereof. EPG shall give the
Property Trustee and the Subordinated Debt Trustee notice of its election to
begin any Extension Period at least one Business Day prior to the earlier of (i)
the record date for the date distributions on the Trust Preferred Securities
(or, if no Trust Preferred Securities are outstanding, for the date interest on
the Debentures) would have been payable except for the election to begin such
Extension Period and (ii) the date the Property Trustee is (or, if no Trust
Preferred Securities are outstanding, the Subordinated Debt Trustee is) required
to give notice to the NYSE or other applicable self-regulatory organization or
to holders of such Trust Preferred Securities (or, if no Trust Preferred
Securities are outstanding, to the holders of such Debentures) of such election.
The Subordinated Debt Trustee and the Property Trustee shall give notice of
EPG's election to begin an Extension Period to the holders of the Debentures and
the Trust Preferred Securities, respectively.
MANDATORY REPAYMENT
Upon repayment of the Debentures at maturity or as a result of acceleration
upon the occurrence of a Debenture Event of Default, EPG will pay a price equal
to 100% of the principal amount of the Debentures, together with any accrued and
unpaid interest thereon. Any payment pursuant to this provision shall be made
prior to 12:00 noon, New York City time, on the date of maturity or acceleration
or at such other time on such earlier date as the parties thereto shall agree.
The Debentures are not entitled to the benefit of any sinking fund or, except as
set forth above or as a result of acceleration, any other provision for
mandatory prepayment.
OPTIONAL REDEMPTION
On and after , 2002, and subject to the next succeeding
sentence, EPG will have the right, at any time and from time to time, to redeem
the Debentures, in whole or in part, upon notice given as provided below, during
the twelve-month periods beginning on in each of the following years
and at the indicated redemption prices (expressed as a percentage of the
principal amount of the Debentures being redeemed), together with any accrued
but unpaid interest on the portion being redeemed.
<TABLE>
<CAPTION>
REDEMPTION REDEMPTION
YEAR PRICE YEAR PRICE
---- ---------- ---- ----------
<S> <C> <C> <C>
2002.......................... % 2006.......................... %
2003.......................... % 2007.......................... %
2004.......................... % 2008 and thereafter........... 100%
2005.......................... %
</TABLE>
For so long as the Trust is the holder of all the outstanding Debentures,
the proceeds of any such redemption will be used by the Trust to redeem Trust
Securities in accordance with their terms. EPG may not redeem the Debentures in
part unless all accrued and unpaid interest has been paid in full on all
outstanding Debentures. See "Description of the Trust Preferred
Securities -- Optional Redemption" included in this Prospectus Supplement.
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<PAGE> 46
EPG also shall have the right to redeem the Debentures at any time after
, 2002 within 90 days of the occurrence of a Trust Tax Event as
described in "Description of the Trust Preferred Securities -- Trust Special
Event Exchange or Redemption" included in this Prospectus Supplement at a
redemption price equal to the unpaid principal amount thereof, plus any accrued
and unpaid interest due thereon to such redemption date.
If at any time following the Conversion Expiration Date, less than 10% of
the original aggregate principal amount of the Debentures remains outstanding,
such Debentures shall be redeemable at the option of EPG, in whole but not in
part, at a redemption price equal to the unpaid principal amount thereof, plus
any accrued and unpaid interest.
If, at the time of any optional redemption or mandatory repayment of the
Debentures, the Trust Securities remain outstanding, the redemption or repayment
proceeds shall be used to redeem the Trust Securities.
REDEMPTION PROCEDURES
Notices of any redemption of the Debentures and the procedures for such
redemption shall be as provided with respect to the Trust Preferred Securities
under the caption "Description of the Trust Preferred Securities -- Redemption
Procedures" included in this Prospectus Supplement. Notice of any redemption
will be mailed at least 30 days but not more than 60 days before the redemption
date to each holder of Debentures to be redeemed at its registered address.
Unless EPG defaults in payment of the redemption price, on and after the
redemption date interest ceases to accrue and conversion rights cease on such
Debentures or portions thereof called for redemption.
DISTRIBUTION OF DEBENTURES
At any time, EPG will have the right to dissolve the Trust and cause the
Debentures to be distributed to the holders of the Trust Preferred Securities in
liquidation of the Trust after satisfaction of liabilities to creditors of the
Trust as provided by applicable law. If distributed to holders of Trust
Preferred Securities in liquidation, the Debentures will initially be issued in
the form of one or more Global Securities and DTC, or any successor depositary
for the Trust Preferred Securities, will act as depositary for the Debentures.
It is anticipated that the depositary arrangements for the Debentures would be
substantially identical to those in effect for the Trust Preferred Securities.
There can be no assurance as to the market price of any Debentures that may be
distributed to the holders of Trust Preferred Securities. For a description of
DTC and the terms of the depositary arrangement, see "Description of the Trust
Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company" included in this Prospectus Supplement.
CONVERSION OF THE DEBENTURES
The Debentures will be convertible at the option of the holders of the
Debentures into Common Stock, at any time prior to redemption, maturity or the
Conversion Expiration Date, initially at the rate of shares of Common
Stock for each $50 in principal amount of Debentures (equivalent to a conversion
price of $ per share of Common Stock), subject to the conversion price
adjustments described under the caption "Description of the Trust Preferred
Securities -- Conversion Rights" included in this Prospectus Supplement. EPG
will covenant for so long as the Trust Preferred Securities are outstanding not
to convert Debentures except pursuant to a notice of conversion delivered to the
Conversion Agent by a holder of Trust Preferred Securities. Upon surrender of
such Trust Preferred Securities to the Conversion Agent for conversion, the
Trust will distribute the commensurate principal amount of the Debentures to the
Conversion Agent on behalf of the holder of every Trust Preferred Security so
converted, whereupon the Conversion Agent will convert such Debentures into
Common Stock on behalf of such holder. EPG's delivery to the holders of the
Debentures (through the Conversion Agent) of the fixed number of shares of
Common Stock into which the Debentures are convertible (together with the cash
payment, if any, in lieu of fractional shares) will be deemed to satisfy EPG's
obligation to pay the principal amount of the Debentures, and the accrued and
unpaid interest attributable to the period from the last date to which interest
has been paid or duly provided
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for; provided, however, that if any Debenture is converted on or after a Regular
Record Date for payment of interest, the interest payable on the related
Interest Payment Date with respect to such Debenture shall be paid to the Trust
(which will distribute such interest to the holder) or other holder of
Debentures, as the case may be, despite such conversion; provided, further, that
if a redemption date falls between such Regular Record Date and the related
Interest Payment Date, the amount of such payment shall include interest accrued
to, but excluding, such redemption date. Holders of book-entry interests in
Debentures may obtain copies of the required form of the conversion notice from
the Conversion Agent. With respect to certificated Debentures, the form of
Notice of Conversion is included in the certificate.
CERTAIN COVENANTS
For a description of certain covenants by EPG that apply if (a) a Debenture
Event of Default has occurred and is continuing (or there shall have occurred
and be continuing any event of which EPG has actual knowledge that, with the
giving of notice or lapse of time, or both, would constitute a Debenture Event
of Default), (b) EPG is in default of its obligations under the Guarantee or the
guarantee of the Trust Common Securities or (c) EPG shall have given notice of
its election to defer payments of interest on the Debentures by extending the
Interest Payment Period, then, during such period, see "-- Option to Extend
Interest Payment Period."
So long as Trust Preferred Securities remain outstanding EPG will covenant
(i) not to convert Debentures except pursuant to a notice of conversion
delivered to the Conversion Agent by a holder of Trust Securities; (ii) to
maintain directly or indirectly 100% ownership of the Trust Common Securities,
provided that certain successors which are permitted pursuant to the
Subordinated Indenture may succeed to EPG's ownership of the Trust Common
Securities; and (iii) not to voluntarily terminate, wind-up or liquidate the
Trust, except in connection with (A) a distribution of the Debentures to the
holders of Trust Securities in liquidation of the Trust, (B) the redemption of
all Trust Securities or (C) certain mergers, consolidations or amalgamations
permitted by the Declaration. EPG will also covenant (a) to use its commercially
reasonable efforts, consistent with the terms and provisions of the Declaration,
to cause the Trust to remain a grantor trust and not taxable as a corporation
for United States federal income tax purposes, (b) to maintain the reservation
for issuance of the number of shares of Common Stock that would be required from
time to time upon the conversion of all the Debentures then outstanding, (c) to
deliver shares of Common Stock upon an election by a holder of the Debentures to
convert such Debentures into Common Stock and (d) to honor all obligations
relating to the conversion or exchange of the Trust Securities into or for
Common Stock.
DEBENTURE EVENTS OF DEFAULT
In addition to the Events of Default described under the caption
"Subordinated Debt Securities -- Events of Default" in the accompanying
Prospectus, a Debenture Event of Default will occur under the Subordinated
Indenture upon (i) the failure by EPG to convert Debentures into Common Stock in
accordance with the Subordinated Indenture and (ii) the voluntary or involuntary
dissolution, winding-up or termination of the Trust, except in connection with
the distribution of the Debentures to the holders of Trust Securities in
liquidation of the Trust, the redemption or conversion of all of the Trust
Securities, or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration.
EXPIRATION OF CONVERSION RIGHTS
The conversion rights of any Debentures held by the Trust shall expire on
the Conversion Expiration Date, as described under the caption "Description of
the Trust Preferred Securities -- Conversion Rights" included in this Prospectus
Supplement.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of EPG to pay interest, premium, if any, or
principal on the Debentures on the date such interest or principal is otherwise
payable, a holder of Trust Preferred Securities may institute a Legal Action for
payment after the respective due date specified in the Debentures. EPG may not
amend the Subordinated Indenture to
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remove the foregoing right to bring a Legal Action without the prior written
consent of the holders of all of the Trust Preferred Securities. Notwithstanding
any payment made to such holder of Trust Preferred Securities by EPG in
connection with a Legal Action, EPG shall remain obligated to pay the principal
of or interest on the Debentures held by the Trust or the Property Trustee and
EPG shall be subrogated to the rights of the holder of such Trust Preferred
Securities with respect to payments on the Trust Preferred Securities to the
extent of any payments made by EPG to such holder in any Legal Action.
SUBORDINATION
In the Subordinated Indenture, EPG has covenanted and agreed that any
Debentures issued thereunder will be subordinate and junior in right of payment
to all Senior Debt of EPG whether now existing or hereafter incurred. Upon any
payment or distribution of assets to creditors upon any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of EPG, the holders of Senior Debt will first be entitled
to receive payment in full of principal of and premium, if any, and interest, if
any, on such Senior Debt before the Property Trustee, on behalf of the holders
of the Debentures, will be entitled to receive or retain any payment in respect
of the principal of and premium, if any, or interest, if any, on the Debentures.
In the event of the acceleration of the maturity of any Debentures, the
holders of all Senior Debt outstanding at the time of such acceleration will
first be entitled to receive payment in full of all amounts due thereon
(including any amounts due upon acceleration) before the holders of Debentures
will be entitled to receive or retain any payment in respect of the principal of
or premium, if any, or interest, if any, on the Debentures.
No payment on account of principal (or premium, if any) or interest, if
any, in respect of the Debentures may be made if there shall have occurred and
be continuing a default in any payment with respect to Senior Debt, or an event
of default with respect to any Senior Debt resulting in the acceleration of the
maturity thereof, or if any judicial proceeding shall be pending with respect to
any such default.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain of the material United States federal
income tax consequences of the purchase, ownership and disposition of the Trust
Preferred Securities. Unless otherwise stated, this summary deals only with
Trust Preferred Securities held as capital assets by holders who purchase the
Trust Preferred Securities upon original issuance. It does not deal with special
classes of holders such as banks, thrifts, real estate investment trusts,
regulated investment companies, insurance companies, dealers in securities or
currencies, tax-exempt investors, foreign corporations and persons who are not
citizens or residents of the United States (except to the extent discussed under
the heading "-- Certain United States Tax Consequences to Non-United States
Holders") or persons that will hold the Trust Preferred Securities as a position
in a "straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the United States Dollar.
Further, it does not include any description of any alternative minimum tax
consequences or the tax laws of any state or local government or of any foreign
government that may be applicable to the Trust Preferred Securities. This
summary is based on the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury regulations thereunder and administrative and judicial interpretations
thereof, as of the date hereof, all of which are subject to change, possibly on
a retroactive basis.
INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF
TRUST PREFERRED SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL
AS THE EFFECT OF ANY STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND OF POTENTIAL
CHANGES IN APPLICABLE TAX LAWS.
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CLASSIFICATION OF THE DEBENTURES
EPG has taken the position that the Debentures will be classified for
United States federal income tax purposes as indebtedness of EPG under current
law and, by acceptance of Trust Preferred Securities, each holder covenants to
treat the Debentures as indebtedness and the Trust Preferred Securities as
evidence of an indirect beneficial ownership interest in the Debentures. No
assurance can be given, however, that such position of EPG will not be
challenged by the Internal Revenue Service ("IRS") or, if challenged, that such
a challenge will not be successful. The remainder of this discussion assumes
that the Debentures will be classified as indebtedness of EPG for United States
federal income tax purposes.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Trust Preferred Securities, Andrews
& Kurth L.L.P., United States tax counsel to the Trust and EPG, will render its
opinion generally to the effect that, under then current law and assuming full
compliance with the terms of the Declaration and the Subordinated Indenture (and
certain other documents), based on certain facts and assumptions contained in
such opinion, the Trust will be classified for United States federal income tax
purposes as a grantor trust and not as an association taxable as a corporation.
Accordingly, for United States federal income tax purposes, each holder of Trust
Preferred Securities generally will be considered the owner of an undivided
interest in the Debentures, and each holder will be required to include in its
gross income any stated interest or original issue discount (as noted below)
with respect to its allocable share of those Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Except as described below, stated interest on the Debentures generally will
be taxable to a holder as ordinary income at the time it is accrued or paid in
accordance with the holder's regular method of tax accounting.
Under current Treasury regulations applicable to debt instruments issued on
or after August 13, 1996 (the "Regulations"), a "remote" contingency that stated
interest will not be timely paid will be ignored in determining whether such
stated interest is "qualified stated interest" and whether a debt instrument is
issued with OID. The Company believes that the likelihood of its exercising its
option to defer payments of interest is remote. Based on the foregoing, the
Company believes that stated interest on the Debentures will constitute
qualified stated interest and that the Debentures will not be considered to be
issued with OID at the time of their original issuance and, accordingly, a
holder should include in gross income such holder's allocable share of stated
interest on the Debentures in accordance with such holder's regular method of
tax accounting.
Under the Regulations, if the Company exercised its option to defer any
payment of interest, the Debentures would at that time be treated as having been
reissued with OID, and all stated interest on the Debentures would thereafter be
treated as OID as long as the Debentures remained outstanding. In such event,
all of a holder's interest income with respect to the Debentures would be
accounted for as OID on an economic accrual basis regardless of such holder's
method of tax accounting, and actual distributions of stated interest would not
be reported as income. Consequently, a holder would be required to include
stated interest on the Debentures in gross income, as OID, even though the
Company would not make any actual cash payments with respect to such interest
during an Extension Period.
The Regulations have not been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to the interpretation herein.
Subsequent use of the term "interest" in this summary includes income in
the form of OID.
Because income on the Debentures will constitute interest or original issue
discount, corporate holders will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Debentures.
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REDEMPTION OF TRUST PREFERRED SECURITIES FOR DEBENTURES OR CASH UPON LIQUIDATION
OF THE TRUST
Under certain circumstances, the Debentures may be distributed to holders
in exchange for the Trust Preferred Securities. Under current law, such a
distribution to holders, for United States federal income tax purposes, would be
treated as a nontaxable event to each holder, and each holder would receive an
aggregate tax basis in the Debentures distributed equal to such holder's
aggregate tax basis in its Trust Preferred Securities exchanged therefor. A
holder's holding period in the Debentures so received would include the period
during which the Trust Preferred Securities were held by such holder. If,
however, the exchange is caused by a Trust Tax Event which results in the Trust
being treated as an association taxable as a corporation, the distribution would
likely constitute a taxable event to the Trust and holders of the Trust
Preferred Securities.
Under certain circumstances described herein (see "Description of the Trust
Preferred Securities -- Trust Special Event Exchange or Redemption"), the
Debentures may be redeemed for cash and the proceeds of such redemption
distributed to holders in redemption of their Trust Preferred Securities. Under
current law, such a redemption would, for United States federal income tax
purposes, constitute a taxable disposition of the redeemed Trust Preferred
Securities, and a holder would recognize gain or loss in the same manner as if
it sold such redeemed Trust Preferred Securities for cash. See "-- Sales of
Trust Preferred Securities" below.
SALES OF TRUST PREFERRED SECURITIES
A holder that sells Trust Preferred Securities will recognize gain or loss
equal to the difference between the amount realized on the sale of the Trust
Preferred Securities and the holder's adjusted tax basis in-such Trust Preferred
Securities. A holder's adjusted tax basis in the Trust Preferred Securities
generally will be its initial purchase price increased by any original issue
discount previously includible in such holder's gross income to the date of
disposition and decreased by payments "other than qualified stated interest"
received on the Trust Preferred Securities to the date of disposition. In
general, such gain or loss will be a capital gain or loss. Any capital gain will
be (a) long-term capital gain if the holder held the Trust Preferred Securities
for more than 18 months, (b) mid-term capital gain if the holder held the Trust
Preferred Securities more than 12 months but not more than 18 months or (c)
short-term capital gain if the holder held the Trust Preferred Securities for 12
months or less as of the effective date of the Merger. Long-term capital gain of
individuals currently is taxed at a maximum rate or 20%. Mid-term capital gain
of individuals is currently taxed at a maximum rate of 28%. Short-term capital
gain of individuals is taxed as ordinary income. Ordinary income of individuals
is currently taxed at a maximum rate of 39.6%.
The Trust Preferred Securities may trade at a price that does not
accurately reflect the value of accrued but unpaid interest with respect to the
underlying Debentures. A holder who disposes of or converts his Trust Preferred
Securities between record dates for payments of distributions thereon will be
required to include accrued but unpaid interest on the Debenture through the
date of disposition or conversion in income as ordinary income, and to add such
amount to his adjusted tax basis in his pro rata share of the underlying
Debentures deemed disposed of or converted. To the extent the selling price is
less than the holder's adjusted tax basis (which basis will include, in the form
of original issue discount, all accrued but unpaid interest), a holder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes.
MARKET DISCOUNT AND BOND PREMIUM
Holders that purchase the Trust Preferred Securities at a price that is
greater or less than the adjusted issue price of such holder's proportionate
share of the Debentures (which generally should approximate the face amount plus
accrued but unpaid interest on the Debentures) may be considered to have
acquired their undivided interests in the Debentures with market discount or
acquisition premium as such phrases are defined for United States federal income
tax purposes. Such holders are advised to consult their tax advisors as to the
income tax consequences of the acquisition, ownership and disposition of the
Trust Preferred Securities.
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CONVERSION OF TRUST PREFERRED SECURITIES INTO COMMON STOCK
Except possibly to the extent attributable to accrued and unpaid interest
on the Debentures, a holder of Trust Preferred Securities will not recognize
income, gain or loss upon the conversion of the Trust Preferred Securities into
Common Stock through the Conversion Agent. A holder of Trust Preferred
Securities will, however, recognize gain upon the receipt of cash in lieu of a
fractional share of Common Stock equal to the amount of cash received less such
holder's tax basis in such fractional share. Such a holder's tax basis in the
Common Stock received upon conversion should generally be equal to such holder's
tax basis in the Trust Preferred Securities delivered to the Conversion Agent
for exchange less the basis allocated to any fractional share for which cash is
received and such holder's holding period in the Common Stock received upon
conversion should generally begin on the date such holder acquired the Trust
Preferred Securities delivered to the Conversion Agent for exchange.
Holders of Trust Preferred Securities should not recognize gain or loss
upon expiration of the conversion rights. Such expiration should not affect a
significant modification of the underlying Debentures within the meaning of
applicable Treasury Regulations, and thus will not be considered a sale or
exchange for purposes of federal income taxation.
ADJUSTMENT OF CONVERSION PRICE
Treasury Regulations promulgated under Section 305 of the Code would treat
holders of Trust Preferred Securities as having received a constructive
distribution from EPG in the event the conversion price of the Debentures were
adjusted if (i) as a result of such adjustment, the proportionate interest
(measured by the quantum of Common Stock into or for which the Debentures are
convertible or exchangeable) of the holders of the Trust Preferred Securities in
the assets or earnings and profits of EPG were increased, and (ii) the
adjustment was not made pursuant to a bona fide, reasonable antidilution
formula. An adjustment in the conversion price would not be considered made
pursuant to such a formula if the adjustment was made to compensate for certain
taxable distributions with respect to the Common Stock. Thus, under certain
circumstances, a reduction in the conversion price for the holders may result in
deemed dividend income to holders to the extent of the current or accumulated
earnings and profits of EPG. Holders of the Trust Preferred Securities would be
required to include their allocable share of such deemed dividend income in
gross income but would not receive any cash related thereto.
INFORMATION REPORTING TO HOLDERS
The Trust will report the original issue discount, if any, that accrued
during the year with respect to the Debentures, and any gross proceeds received
by the Trust from the retirement or redemption of the Debentures, annually to
the holders of record of the Trust Preferred Securities and the IRS. The Trust
currently intends to deliver such reports to holders of record prior to January
31, following each calendar year. It is anticipated that persons who hold Trust
Preferred Securities as nominees for Beneficial Owners will report the required
tax information to Beneficial Owners on Form 1099.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, Trust Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will generally be
allowed as a credit against the holder's federal income tax provided the
required information is timely filed with the IRS.
POSSIBLE TAX LEGISLATION
As a part of President Clinton's Fiscal 1999 Budget Proposal, the Treasury
Department has proposed legislation (the "Proposed Legislation") that, among
other things, will treat as equity for United States federal income tax purposes
certain debt instruments that are not shown as indebtedness on the consolidated
balance sheet of the Trust. A similar proposal was included in President
Clinton's Fiscal 1998 Budget Proposal but was not included in the Taxpayer
Relief Act of 1997. No assurance can be given that the Proposed Legislation will
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not ultimately be enacted in the future, that such future legislation will not
have a retroactive effective date and that such future legislation will not
prevent EPG from deducting interest on the Debentures. Such an event would
constitute a Trust Tax Event and would permit the Trust to exchange the Trust
Preferred Securities, in whole or in part, for the Debentures or redeem, in
whole or in part, the Trust Preferred Securities and corresponding Debentures.
CERTAIN UNITED STATES TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS
General. The following is a general discussion of certain United States
federal income and estate tax consequences of the acquisition, ownership and
disposition of Trust Preferred Securities by a "Non-United States Holder" and
does not deal with tax consequences arising under the laws of any foreign,
state, or local jurisdiction. As used herein, a "Non-United States Holder" is a
person or entity that, for United States federal income tax purposes, is not a
citizen or resident of the United States, a corporation, partnership, or other
entity created or organized under the laws of the United States or a political
subdivision thereof, or an estate or trust, the income of which is subject to
United States federal income taxation regardless of its source, or that
otherwise is subject to United States federal income taxation on a net basis in
respect of the Trust Preferred Securities. The tax treatment of the holders of
the Trust Preferred Securities may vary depending upon their particular
situations. Certain holders (including insurance companies, tax exempt
organizations, financial institutions and broker-dealers) may be subject to
special rules not discussed below. Prospective investors who are Non-United
States Holders are urged to consult their tax advisors regarding the United
States Federal tax consequences of acquiring, holding and disposing of Trust
Preferred Securities and Common Stock, as well as any tax consequences that may
arise under the laws of any foreign, state, local or other taxing jurisdiction.
Interest. Interest (including original issue discount) received or accrued
by a Non-United States Holder of Trust Preferred Securities will not be subject
to United States federal income or withholding tax if such interest is not
effectively connected with the conduct of a trade or business within the United
States by such Non-United States Holder and (i) the Non-United States Holder
does not actually or constructively own 10% or more of the total voting power of
all voting stock of EPG and is not a controlled foreign corporation with respect
to which EPG is a "related person" within the meaning of the Code and (ii) the
beneficial owner of the Trust Preferred Securities certifies, under penalty of
perjury, that the beneficial owner is not a United States person and provide the
beneficial owner's name and address.
Gain on Disposition of Trust Preferred Securities. A Non-United States
Holder will generally not be subject to United States federal income tax on gain
recognized on a sale, redemption or other disposition of a Trust Preferred
Security unless (i) the gain is effectively connected with the conduct of a
trade or business within the United States by the Non-United States Holder and
(ii) in the case of a Non-United States Holder who is a nonresident alien
individual and holds the Trust Preferred Security as a capital asset, such
holder is present in the United States for 183 or more days in the taxable year
and certain other requirements are met.
Dividends on Common Stock. In the event that dividends are paid on Common
Stock, except as described below, such dividends paid to a Non-United States
Holder of Common Stock will be subject to withholding of United States federal
income tax at a 30% rate or such lower rate as may be specified by an applicable
income tax treaty, unless the dividends are effectively connected with the
conduct of a trade or business of the Non-United States Holder within the United
States. If the dividend is effectively connected with the conduct of a trade or
business of the Non-United States Holder within the United States, the dividend
would be subject to United States federal income tax on a net income basis of
applicable graduated individual or corporate rates and would be exempt from the
30% withholding tax described above. Any such effectively connected dividends
received by a foreign corporation may, under certain circumstances, be subject
to an additional "branch profits tax" at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty.
Under current United States Treasury regulations, dividends paid to an
address outside the United States are presumed to be paid to a resident of such
country for purposes of the withholding discussed above, and, under the current
interpretation of United States Treasury regulations, for purposes of
determining the applicability of a tax treaty rate. Under recently finalized
United States Treasury regulations applicable to
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dividends paid after December 31, 1998, however, a Non-United States Holder of
Common Stock who wishes to claim the benefit of an applicable treaty rate would
be required to satisfy applicable certification and other requirements. Certain
certification and disclosure requirements must be complied with in order to be
exempt from withholding under the effectively connected income exemption
discussed above.
A Non-United States Holder of Common Stock that is eligible for a reduced
rate of United States withholding tax pursuant to a tax treaty may obtain a
refund of any excess amounts currently withheld by filing an appropriate claim
for refund with the IRS.
Gain on Disposition of Common Stock. A Non-United States Holder generally
will not be subject to United States income tax on any gain recognized on a
disposition of the Common Stock unless (i) EPG is or has been a "United States
real property holding corporation" (a "USRPHC") within the meaning of Section
897(c)(2) of the Code at any time within the shorter of the five-year period
preceding such disposition or such Non-United States Holder's holding period,
(ii) the gain is effectively connected with the conduct of a trade or business
within the United States of the Non-United States Holder and, if a tax treaty
applies, attributable to a permanent establishment maintained by the Non-United
States Holder, (iii) the Non-United States Holder is an individual who holds the
Common Stock as a capital asset and is present in the United States for 183 days
or more in the taxable year of the disposition and either (a) such individual
has a "tax home" (as defined for United States federal income tax purposes) in
the United States or (b) the gain is attributable to an office or other fixed
place of business maintained in the United States by such individual, or (iv)
the Non-United States Holder is subject to tax pursuant to the Code provisions
applicable to certain United States expatriates. If an individual Non-United
States Holder falls under clauses (ii) or (iv) above, he or she will be taxed on
his or her net gain derived from the sale under regular United States federal
income tax rates. If the individual Non-United States Holder falls under clause
(iii) above, he or she will be subject to a flat 30% tax on the gain derived
from the sale which may be offset by United States capital losses
(notwithstanding the fact that he or she is not considered a resident of the
United States). If a Non-United States Holder that is a foreign corporation
falls under clause (ii) above, it will be taxed on its gain under regular
graduated United States federal income tax rates and, in addition, will under
certain circumstances be subject to the branch profits tax equal to 30% of its
"effectively connected earnings and profits" within the meaning of the Code for
the taxable year, as adjusted for certain items, unless it qualifies for a lower
rate under an applicable income tax treaty.
A corporation is generally a USRPHC if the fair amount value of its United
States real property interests equals or exceeds 50% of the sum of the fair
market value of its worldwide real property interests plus its other assets used
or held for use in a trade or business. EPG believes that it currently is not a
USRPHC.
Federal Estate Taxes. A Trust Preferred Security beneficially owned by an
individual who is a Non-United States Holder at the time of his or her death
generally will not be subject to United States Federal estate tax as a result of
such individual's death, provided that (i) such individual does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of EPG entitled to vote within the meaning of section 871(h)(3) of the
Code, and (ii) interest payments (including payments of original issue discount)
with respect to the Debentures would not have been, if received at the time of
such individual's death, effectively connected with the conduct of a U.S. trade
or business by such individual. Common Stock of EPG owned, or treated as owned,
by an individual Non-United States Holder at the time of his or her death will
be included in such holder's gross estate for United States federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise.
Information Reporting and Backup Withholding. EPG must report annually to
the IRS and to each Non-United States Holder the amount of interest and
dividends paid to such holder and the amount of any tax withheld. These
information reporting requirements apply regardless of whether withholding is
required. Copies of the information returns reporting such interest and
dividends and withholding may also be made available to the tax authorities in
the country in which the Non-United States Holder resides under the provisions
of an applicable income tax treaty.
In the case of payments of interest to Non-United States Holders, temporary
Treasury regulations provide that the 31% backup withholding tax and certain
information reporting will not apply to such
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payments with respect to which either the requisite certification, as described
above, has been received or an exemption has otherwise been established;
provided that neither EPG nor its payment agent has actual knowledge that the
holder is a United States person or that the conditions of any other exemption
are not in fact satisfied. Under temporary Treasury regulations, these
information reporting and backup withholding requirements will apply, however,
to the gross proceeds paid to a Non-United States Holder on the disposition of
the Trust Preferred Securities by or through a United States office of a United
States or foreign broker, unless the holder certifies to the broker under
penalty of perjury as to its name, address and status as a foreign person or the
holder otherwise establishes an exemption. Information reporting requirements,
but not backup withholding, will also apply to a payment of the proceeds of a
disposition of the Trust Preferred Securities by or through a foreign office of
a United States broker or foreign brokers with certain types of relationships to
the United States. Neither information reporting nor backup withholding
generally will apply to a payment of the proceeds of a disposition of the Trust
Preferred Securities by or through a foreign office or foreign broker not
subject to the preceding sentence.
United States backup withholding tax generally will not apply to (a) the
payment of dividends paid on Common Stock to a Non-United States Holder at an
address outside the United States or (b) the payment of the proceeds of the sale
of Common Stock to or through the foreign office of a broker. In the case of the
payment of proceeds from such a sale of Common Stock through a foreign office of
a broker that is a United States person or a "U.S. related person," however,
information reporting (but not backup withholding) is required with respect to
the payment unless the broker has documentary evidence in its files that the
owner is a Non-United States Holder and certain other requirements are met or
the holder otherwise establishes an exemption. For this purpose, a "U.S. related
person" is (i) a controlled foreign corporation for United States federal income
tax purposes, (ii) a foreign person 50% or more of whose gross income from all
sources for the three-year period ending with the close of its taxable year
preceding the payment (or for such part of the period that the broker has been
in existence) is derived from activities that are effectively connected with the
conduct of a United States trade or business or (iii) for taxable years
beginning after December 31, 1998, a foreign partnership in which one or more
U.S. Persons own more than 50% of the income or capital interests in the
partnership or which is engaged in a trade or business in the United States. The
payment of the proceeds of a sale of Common Stock to or through a United States
office of a broker is subject to information reporting and possible backup
withholding unless the owner certifies its non-United States status under
penalty of perjury or otherwise establishes an exemption.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the Non-United
States Holder's United States federal income tax liability, provided that the
required information is furnished to the IRS.
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<PAGE> 55
ERISA CONSIDERATIONS
The Employee Retirement and Income Security Act of 1974, as amended
("ERISA"), imposes certain requirements on pension, profit-sharing and other
employee benefit plans to which it applies (the "Plans") and on those persons
who are fiduciaries with respect to such Plans. Employee benefit plans that are
governmental plans (as defined in Section 3(32) of ERISA) and certain church
plans (as defined in Section 3(33) of ERISA) are not subject to ERISA
requirements.
A fiduciary of a Plan should consider the fiduciary standards of ERISA in
the context of the Plan's particular circumstances before authorizing an
investment in the Trust Preferred Securities. Among other factors, such
fiduciary should consider (i) whether the investment satisfies the prudence
requirements of Section 404(a)(1)(B) of ERISA, (ii) whether the investment
satisfies the diversification requirements of Section 404(a)(1)(C) of ERISA and
(iii) whether the investment is in accordance with the documents and instruments
governing the Plan as required by Section 404(a)(1)(D) of ERISA.
A fiduciary of a Plan must also consider whether the acquisition of Trust
Preferred Securities and/or the operation of the Trust might result in direct or
indirect prohibited transactions under Section 406 ERISA and Section 4975 of the
Code. In order to determine whether there are such prohibited transactions, a
fiduciary must determine the "plan assets" involved in the transaction. The
Department of Labor has promulgated regulations (the "Regulations") concerning
whether or not a Plan's assets would be deemed to include an interest in the
underlying assets of an entity for purposes of the reporting and disclosure and
fiduciary responsibility provisions of ERISA if the Plan acquires an "equity
interest" in such entity (such as by acquiring Trust Preferred Securities). The
Regulations state that the underlying assets of an entity such as the Trust will
not be considered "plan assets" if the Trust Preferred Securities are publicly
offered. For this purpose, the Trust Preferred Securities are "publicly offered"
if they are part of a class of securities that is (1) widely held, (2) freely
transferable, and (3) registered under Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended. It is expected that all of these requirements
will be satisfied with respect to the Trust Preferred Securities offered
hereunder and that the ongoing operations of the Trust do not involve nonexempt
prohibited transactions; there can be no assurance, however, that such
expectations will prove to be true. Due to the complexity of these rules and the
penalties imposed upon persons involved in prohibited transactions, it is
particularly important that potential Plan investors consult with their counsel
regarding the consequences under ERISA of their acquisition and ownership of
Trust Preferred Securities.
S-55
<PAGE> 56
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
relating to the Trust Preferred Securities, the Trust has agreed to sell to each
of the underwriters named below (the "Underwriters"), and each of the
Underwriters, for whom Donaldson, Lufkin & Jenrette Securities Corporation,
Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated are acting as
representatives (the "Representatives"), has severally agreed to purchase from
the Trust an aggregate of Trust Preferred Securities. The number of
Trust Preferred Securities that each Underwriter has agreed to purchase is set
forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
TRUST PREFERRED
UNDERWRITER SECURITIES
----------- ---------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.........
Goldman, Sachs & Co. .......................................
Morgan Stanley & Co. Incorporated...........................
---------
Total............................................. 6,000,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Trust Preferred
Securities offered hereby are subject to the approval of certain legal matters
by counsel and to certain other conditions. If any of the Trust Preferred
Securities are purchased by the Underwriters pursuant to the Underwriting
Agreement, all such Trust Preferred Securities (other than the Trust Preferred
Securities covered by the over-allotment option described below) must be so
purchased.
The Company has been advised that the Underwriters propose to offer the
Trust Preferred Securities to the public initially at the price to the public
set forth on the cover page of this Prospectus Supplement and to certain dealers
(who may include the Underwriters) at such price less a concession not to exceed
$ per Trust Preferred Security. The Underwriters may allow, and such
dealers may reallow, a discount not in excess of $ per Trust Preferred
Security to any other Underwriter and certain other dealers. After the
completion of the Offering, the offering price and other selling terms may be
changed by the Underwriters.
In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will ultimately be used to purchase the Debentures of the Company,
the Underwriting Agreement provides that the Company will pay as Underwriters'
Compensation to the Underwriters, an amount in immediately available funds of
$ per Trust Preferred Security (or $ in the aggregate) for the
accounts of the several Underwriters.
The Trust has granted to the Underwriters an option to purchase up to
900,000 additional Trust Preferred Securities at the public offering price set
forth on the cover page hereof solely to cover over-allotments for which the
Underwriters will receive additional Underwriters' compensation as described
above. Such option may be exercised once at any time until 30 days after the
date of this Prospectus Supplement. To the extent that the Underwriters exercise
such option, each of the Underwriters will be committed, subject to certain
conditions, to purchase a number of option shares proportionate to such
Underwriter's initial commitment as indicated in the preceding table.
The Company and the Trust have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments that the Underwriters may be required to make in respect
thereof. Such indemnification provisions would require the Company and the Trust
to hold the Underwriters harmless from and against any and all losses, claims,
damages, liabilities and judgments caused by any untrue statement contained in
this Prospectus Supplement or by any omission to state a material fact herein,
except for untrue statements or omissions based upon information relating to any
Underwriter furnished in writing to the Company and the Trust by such
Underwriter expressly for use in this Prospectus Supplement and subject to
certain other limitations.
The Trust and EPG have agreed that, subject to certain exceptions, without
the prior written consent of the Representatives, they will not, during the
period ending 90 days after the date hereof, (i) offer, pledge, sell,
S-56
<PAGE> 57
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or (ii) enter into any swap or other agreement that transfers all or a portion
of the economic consequences associated with the ownership of any Common Stock,
regardless of whether any such transaction described in clause (i) or (ii) above
is to be settled by the delivery of Common Stock or such other securities, in
cash or otherwise. However, during such 90-day period EPG may (i) grant stock
options, rights or warrants pursuant to its director or employee benefit or
compensation plans or arrangements; (ii) issue shares of Common Stock upon the
exercise of an option, right or warrant or the conversion of a security pursuant
to such plans or arrangements; (iii) issue shares of Common Stock in connection
with any business combination or other acquisition by EPG or any of its
subsidiaries; and (iv) make limited transfers of shares of Common Stock to
charitable organizations.
Other than in the United States, no action has been taken in any
jurisdiction by the Company, the Trust or the Underwriters that would permit a
public offering of the Trust Preferred Securities offered hereby in any
jurisdiction where action for that purpose is required. The distribution of this
Prospectus Supplement and the offering or sale of the Trust Preferred Securities
offered hereby in certain jurisdictions may be restricted by law. Accordingly,
the Trust Preferred Securities offered hereby may not be offered or sold,
directly or indirectly, and neither this Prospectus Supplement nor any other
offering material or advertisements in connection with the Trust Preferred
Securities may be distributed or published, in or from any jurisdiction, except
under circumstances that will result in compliance with applicable rules and
regulations of any such jurisdiction. Persons into whose possession this
Prospectus Supplement comes are required by the Company, the Trust and the
Underwriters to inform themselves about and to observe any applicable
restrictions. This Prospectus Supplement does not constitute an offer of, or an
invitation to subscribe for purchase of, any Trust Preferred Securities and may
not be used for the purpose of an offer to, or solicitation by, anyone in any
jurisdiction or in any circumstances in which such offer or solicitation is not
authorized or is unlawful.
The Representatives have advised the Company that the Underwriters will not
confirm sales of Trust Preferred Securities to accounts over which they exercise
discretionary authority.
In connection with this offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the Trust
Preferred Securities. Specifically, the Underwriters may bid for an purchase
Trust Preferred Securities in the open market to cover syndicate short
positions. In addition, the Underwriters may bid for and purchase Trust
Preferred Securities in the open market to stabilize the price of the Trust
Preferred Securities. These activities may stabilize or maintain the market
price of the Trust Preferred Securities above independent market levels. The
Underwriters are not required to engage in these activities and may end these
activities at any time.
Prior to this offering, there has been no public market for the Trust
Preferred Securities. The Company and the Trust have been advised by the
Underwriters that the Underwriters intend to make a market in the Trust
Preferred Securities; however, they are not obligated to do so, and they may
discontinue any such market making at any time without notice. Therefore, no
assurance can be given as to the liquidity of the trading market for the Trust
Preferred Securities or that an active public market will develop.
From time to time, Donaldson, Lufkin & Jenrette Securities Corporation,
Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated have engaged in
investment and/or commercial banking activities with the Company and may
continue to do so in the future.
Application has been made to list the Trust Preferred Securities on the
NYSE under the symbol "EPGPrC."
S-57
<PAGE> 58
LEGAL MATTERS
Certain matters of Delaware law relating to the legality of the Trust
Preferred Securities, the validity of the Declaration, the formation of the
Trust and the legality under state law of the Trust Preferred Securities are
being passed upon by Potter Anderson & Corroon LLP, Wilmington, Delaware,
special Delaware counsel to the Trust and EPG. The legality under state law of
the Trust Guarantee and the Debentures will be passed upon on behalf of the
Trust and EPG by Andrews & Kurth L.L.P., Houston, Texas. Certain United States
federal income taxation matters will be passed upon on behalf of the Trust and
EPG by Andrews & Kurth L.L.P. Certain legal matters will be passed upon on
behalf of the Underwriters by Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.,
Houston, Texas, counsel to the Underwriters.
EXPERTS
The consolidated financial statements and related financial statement
schedules of the Company and its subsidiaries included or incorporated by
reference in the Company's 1996 Annual Report on Form 10-K, and incorporated by
reference in this Prospectus Supplement, have been audited by Coopers & Lybrand
L.L.P., independent auditors, as stated in their report included therein and
incorporated by reference herein. Such financial statements and schedule are
incorporated by reference herein in reliance upon such reports of Coopers &
Lybrand L.L.P. given upon the authority of such firm as experts in accounting
and auditing.
S-58
<PAGE> 59
PROSPECTUS
EL PASO NATURAL GAS COMPANY
SENIOR DEBT SECURITIES
SUBORDINATED DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
---------------------
EL PASO ENERGY CAPITAL TRUST I
EL PASO ENERGY CAPITAL TRUST II
EL PASO ENERGY CAPITAL TRUST III
TRUST PREFERRED SECURITIES
(GUARANTEED TO THE EXTENT SET FORTH HEREIN BY EL PASO NATURAL GAS COMPANY)
El Paso Natural Gas Company, a Delaware corporation doing business as El
Paso Energy Corporation ("EPG" or the "Company") may offer and sell from time to
time in one or more series its (i) unsecured debt securities which may be senior
(the "Senior Debt Securities") or subordinated (the "Subordinated Debt
Securities") consisting of notes, debentures or other evidences of indebtedness,
(ii) shares of preferred stock, par value $.01 per share (the "Preferred
Stock"), and (iii) shares of common stock, par value $3.00 per share (the
"Common Stock").
El Paso Energy Capital Trust I, El Paso Energy Capital Trust II and El Paso
Energy Capital Trust III (individually, an "EPE Trust" and collectively, the
"EPE Trusts"), each a statutory business trust formed under the laws of the
State of Delaware, may offer and sell, from time to time, trust preferred
securities, representing undivided beneficial interests in the assets of the
respective EPE Trusts ("Trust Preferred Securities"). EPG will be the beneficial
owner of all the beneficial ownership interests represented by common securities
of each of the EPE Trusts (the "Trust Common Securities" and, together with the
Trust Preferred Securities, the "Trust Securities"). Holders of the Trust
Preferred Securities will be entitled to receive preferential cumulative cash
distributions accumulating from the date of original issuance and payable
periodically as specified in the applicable supplement to this prospectus (a
"Prospectus Supplement"). Subordinated Debt Securities may be issued and sold by
EPG from time to time in one or more series to an EPE Trust, or a trustee of
such EPE Trust, in connection with the investment of the proceeds from the
offering of Trust Securities of such EPE Trust. The Subordinated Debt Securities
purchased by an EPE Trust may be subsequently distributed pro rata to holders of
Trust Securities in connection with the dissolution of such EPE Trust upon the
occurrence of certain events as may be described in a related Prospectus
Supplement. The payment of distributions with respect to Trust Preferred
Securities of each of the EPE Trusts out of monies held by each of the EPE
Trusts, and payment on liquidation, redemption or otherwise with respect to such
Trust Preferred Securities, will be guaranteed by EPG to the extent described
herein (each a "Trust Guarantee"). See "Description of the Trust Guarantees."
EPG's obligations under the Trust Guarantees will be subordinate and junior in
right of payment to all other liabilities of EPG and rank pari passu with the
most senior preferred stock, if any, issued from time to time by EPG.
The Senior Debt Securities, the Subordinated Debt Securities, the Preferred
Stock and the Common Stock offered hereby are collectively hereinafter referred
to as the "EPG Securities" and, together with the Trust Securities, the
"Securities." The Securities (excluding Trust Preferred Securities) will be
limited to an aggregate initial public offering price not to exceed
approximately $900 million (an aggregate not to exceed $650 million in Trust
Preferred Securities), or, in the case of Senior Debt Securities and
Subordinated Debt Securities, the equivalent thereof in one or more foreign
currencies, including composite currencies. The Securities may be offered,
separately or together, in separate series, in amounts, at prices and on terms
to be determined at the time of sale and set forth in a related Prospectus
Supplement.
Certain specific terms of the particular Securities for which this
Prospectus is being delivered will be set forth in a related Prospectus
Supplement, including, where applicable, (i) in the case of Senior Debt
Securities or Subordinated Debt Securities, the specific designation, aggregate
principal amount, authorized denominations, maturities, interest rate or rates
(which may be fixed or variable), the date or dates on which interest, if any,
shall be payable, the place or places where principal of and premium, if any,
and interest, if any, on such Senior Debt Securities or Subordinated Debt
Securities of the series will be payable, terms of optional or mandatory
redemption or any sinking fund or analogous provisions, currency or currencies,
or currency unit or currency units of denomination and payment if other than
U.S. dollars, the initial public offering price, terms relating to temporary or
permanent global securities, provisions regarding convertibility or
exchangeability, if any, provisions regarding registration of transfer or
exchange, the proceeds to EPG and other special terms; (ii) in the case of
Preferred Stock, the specific designations, the number of shares, dividend
rights (including, if applicable, the manner of calculation thereof), and any
liquidation, redemption, conversion, exchange, voting and other rights, the
initial public offering price and other special terms; (iii) in the case of
Common Stock, the terms of the offering and sales thereof; and (iv) in the case
of the Trust Preferred Securities or the related Trust Guarantees, the specific
designation, aggregate offering amount, denomination, term, coupon rate, time of
payment of distributions, terms of redemption at the option of EPG or repayment
at the option of the holder, provisions regarding conversion or exchange for
capital stock of EPG, the designation of the Trustee(s) acting under the
applicable Indenture or Trust Guarantee and the public offering price.
The Securities may be offered and sold to or through underwriters, dealers,
or agents as designated from time to time, or through a combination of such
methods, and also may be offered and sold directly to one or more other
purchasers. See "Plan of Distribution." The names of, and the principal amounts
or number of shares to be purchased by, underwriters, dealers or agents, and the
compensation of such underwriters, dealers or agents, including any applicable
fees, commissions, and discounts, will be set forth in the related Prospectus
Supplement. No Securities may be sold without delivery of a Prospectus
Supplement describing such series or issue of Securities and the method and
terms of offering thereof.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is March 4, 1998
<PAGE> 60
AVAILABLE INFORMATION
EPG is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: 7 World Trade Center,
Suite 1300, New York, New York 10048; and Northwestern Atrium, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material also
may be obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Such material also
may be accessed electronically by means of the Commission's home page on the
Internet at http://www.sec.gov. EPG's Common Stock is listed for trading on the
New York Stock Exchange (the "NYSE") under the trading symbol "EPG," and
reports, proxy statements and other information concerning EPG may be inspected
at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
This Prospectus does not contain all of the information set forth in the
Registration Statement, of which this Prospectus is a part, filed with the
Commission under the Securities Act of 1933, as amended (the "Securities Act").
Reference is made to such Registration Statement for further information with
respect to EPG and the Securities offered hereby. Statements contained herein
concerning the provisions of documents are necessarily summaries of such
documents, and each statement is qualified in its entirety by reference to the
copy of the applicable document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission by EPG
pursuant to the Exchange Act are incorporated herein by reference:
1. EPG's Annual Report on Form 10-K for the fiscal year ended December
31, 1996 (the "1996 Form 10-K");
2. EPG's Quarterly Reports on Form 10-Q for the quarterly periods
ended March 31, 1997, June 30, 1997 and September 30, 1997;
3. The portions of EPG's definitive Proxy Statement for the Annual
Meeting of Stockholders held on April 22, 1997 that have been incorporated
by reference into the 1996 Form 10-K;
4. EPG's Current Reports on Form 8-K dated February 5, 1997, August
29, 1997 and November 3, 1997;
5. EPG's Registration Statement on Form 8-A, as amended to date, filed
with respect to the Common Stock; and
6. EPG's Registration Statement on Form 8-A, as amended to date, filed
with respect to the Preferred Stock Purchase Rights.
All documents filed by EPG pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities offered hereby shall be deemed to
be incorporated by reference in this Prospectus and to be part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained therein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
EPG will provide without charge to each person, including any beneficial
owner of a Security, to whom a copy of this Prospectus is delivered, upon
written or oral request of such person, a copy of any or all documents
2
<PAGE> 61
incorporated by reference in this Prospectus (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference into
such documents). Written requests for such copies should be directed to the Vice
President, Investor and Public Relations, El Paso Energy Corporation, 1001
Louisiana, Houston, Texas 77002, (telephone (713) 757-2131).
CERTAIN FORWARD-LOOKING STATEMENTS
This Prospectus and the accompanying Prospectus Supplement (including the
documents incorporated by reference herein) contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Where any such forward-looking statement includes a statement of the assumptions
or bases underlying such forward-looking statement, EPG cautions that, while
such assumptions or bases are believed to be reasonable and are made in good
faith, assumed facts or bases almost always vary from the actual results, and
the differences between assumed facts or bases and actual results can be
material, depending upon the circumstances. Where, in any forward-looking
statement, EPG, including its subsidiaries, or its management expresses an
expectation or belief as to future results, such expectation or belief is
expressed in good faith and is believed to have a reasonable basis, but there
can be no assurance that the statement of expectation or belief will result or
be achieved or accomplished. The words "believe," "expect," "estimate,"
"anticipate" and similar expressions may identify forward-looking statements.
Important factors that could cause actual results to differ materially from
those in the forward-looking statements herein include increasing competition
within EPG's industry, the timing and extent of changes in commodity prices for
natural gas, uncertainties associated with acquisitions and joint ventures,
potential environmental liabilities, political and economic risks associated
with current and future operations in foreign countries, conditions of the
equity and other capital markets during the periods covered by the
forward-looking statements, and other risks, uncertainties and factors discussed
more completely in the EPG's other filings with the Securities and Exchange
Commission, including the 1996 Form 10-K.
3
<PAGE> 62
THE COMPANY
EPG is a Delaware corporation which was incorporated in 1928. EPG's
principal operations include the interstate and intrastate transportation,
gathering and processing of natural gas; the marketing of natural gas and other
commodities; and the development and operation of energy infrastructure
facilities worldwide. In recognition of changes in the natural gas industry and
the manner in which EPG manages its businesses, and in order to facilitate a
more detailed understanding of the various activities in which it engages, EPG
is conducting business under the name El Paso Energy Corporation.
The Company owns or has interests in over 28,200 miles of interstate and
intrastate pipeline connecting the nation's principal natural gas supply regions
to four of the largest consuming regions in the United States, namely the Gulf
Coast, California, the Northeast and the Midwest. The Company's natural gas
transmission operations include one of the nation's largest mainline natural gas
transmission systems which is comprised of five interstate pipeline systems: El
Paso Natural Gas, Tennessee Gas Pipeline, Midwestern Gas Transmission, East
Tennessee Natural Gas, and Mojave Pipeline. Intrastate transmission operations
are conducted through EPG's interests in Oasis Pipe Line Company, Channel
Industries Gas Pipeline Company, and Gulf States Pipeline Company.
In addition to its interstate and intrastate transmission services, EPG
provides field services including gathering, products extraction, dehydration,
purification and compression. These operations include approximately 8,750 miles
of gathering systems, 240,000 horsepower of compression and ownership interests
in 25 natural gas processing and treating facilities located in the most
prolific and active production areas of the United States (including the San
Juan, Anadarko and Permian Basins and in East Texas, South Texas, Louisiana and
the Gulf of Mexico). EPG's marketing activities include the purchasing,
marketing and trading of natural gas, natural gas liquids, power and other
energy commodities as well as providing integrated price risk management
services associated with these commodities, and the participation in the
development and ownership of domestic power generating facilities.
The Company's international activities are focused on the development and
operation of international energy infrastructure projects and include ownership
interests in and operations of (i) two major existing natural gas transmission
systems in Australia, (ii) natural gas transmission and power generation
facilities currently in operation or under construction in Argentina, Bolivia,
Brazil, Chile, Czech Republic, Hungary, Indonesia, Mexico, Pakistan and Peru,
and (iii) three operating domestic power generation plants.
EPG's principal executive offices are located at 1001 Louisiana, Houston,
Texas 77002, and its telephone number at that address is (713) 757-2131.
THE EPE TRUSTS
Each of EPE Trust I, EPE Trust II and EPE Trust III is a statutory business
trust created under Delaware law pursuant to (i) a separate original declaration
of trust, each of which will be amended and restated (as so amended and
restated, each a "Declaration") executed by EPG, as sponsor for such EPE Trust
(the "Sponsor"), and the Trustees (as defined herein) for such EPE Trust and
(ii) the filing of a certificate of trust with the Delaware Secretary of State.
Each Declaration will be qualified as an indenture under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). Each EPE Trust exists for the
exclusive purposes of (i) issuing and selling the Trust Securities, (ii)
investing the gross proceeds from the sale of the Trust Securities in
Subordinated Debt Securities issued by EPG, and (iii) engaging in only those
other activities necessary or incidental thereto.
All of the Trust Common Securities issued by each of the EPE Trusts will be
directly or indirectly owned by EPG. The Trust Common Securities will rank pari
passu, and payments will be made thereon pro rata, with the Trust Preferred
Securities except that upon an event of default under the applicable
Declaration, the rights of the holders of the Trust Common Securities to payment
in respect of distributions and payments upon liquidation, redemption, and
otherwise will be subordinated to the rights of the holders of the Trust
Preferred Securities. EPG will, directly or indirectly, acquire Trust Common
Securities in an aggregate liquidation amount equal to 3% of the total capital
of each EPE Trust. A majority of the Trustees (the
4
<PAGE> 63
"Administrative Trustees") of each EPE Trust will be persons who are employees
or officers of or affiliated with EPG. One trustee of each EPE Trust will be a
financial institution that will be unaffiliated with EPG and that will act as
property trustee and as indenture trustee for purposes of the Trust Indenture
Act, pursuant to the terms set forth in a Prospectus Supplement (the "Property
Trustee"). In addition, unless the Property Trustee maintains a principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law, one trustee of each EPE Trust will have its principal place of
business or reside in the State of Delaware (the "Delaware Trustee" and,
together with the Administrative Trustees and the Property Trustee, the
"Trustees"). Each EPE Trust's business and affairs will be conducted by the
Trustees appointed by the Company, as the direct or indirect holder of all the
Trust Common Securities. Except in certain limited circumstances, the holder of
the Trust Common Securities will be entitled to appoint, remove or replace any
of, or increase or reduce the number of, the Trustees of an EPE Trust. The
duties and obligations of the Trustees shall be governed by the Declaration of
each EPE Trust. The Company will pay all fees and expenses related to the EPE
Trusts and the offering of Trust Securities, the payment of which will be
guaranteed by the Company. The office of the Delaware Trustee for each EPE Trust
in the State of Delaware is 1201 Market Street, Wilmington, Delaware 19801. The
principal place of business of each EPE Trust shall be c/o El Paso Energy
Corporation, 1001 Louisiana, Houston, Texas 77002, and its telephone number is
(713) 757-2131.
USE OF PROCEEDS
Unless otherwise specified in a Prospectus Supplement, the net proceeds
received by the Company from the sale of Senior Debt Securities, Subordinated
Debt Securities, Preferred Stock and Common Stock will be used for general
corporate purposes. Funds not required immediately for such purposes may be
invested in marketable securities and short-term investments. The EPE Trusts
will use all proceeds received from the sale of the Trust Preferred Securities
to purchase Subordinated Debt Securities from the Company.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF
EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED AND PREFERENCE STOCK DIVIDEND REQUIREMENTS
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, -----------------------------------------
1997(2) 1996 1995 1994 1993 1992
------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges
and Ratio of Earnings to Combined
Fixed Charges and Preferred and
Preference Stock Dividend
Requirements(1).................... 2.24x 1.59x 2.51x 2.87x 3.04x 2.73x
</TABLE>
- ---------------
(1) The ratio of earnings to combined fixed charges and preferred and preference
stock dividend requirements for the periods presented is the same as the
ratio of earnings to fixed charges since EPG has no outstanding preferred
stock or preference stock and, therefore, no dividend requirements.
(2) Because of the seasonal nature of EPG's business, the ratio for the nine
month period may not necessarily be indicative of the ratio that will result
for the full year 1997.
For purposes of calculating these ratios: (i) "fixed charges" represent
interest expense (exclusive of interest on rate refunds), amortization of debt
costs, the portion of rental expense representing the interest factor, and
preferred stock dividend requirements of majority-owned subsidiaries; and (ii)
"earnings" represent the aggregate of income from continuing operations before
income taxes, interest expense (exclusive of interest on rate refunds),
amortization of debt costs, the portion of rental expense representing the
interest factor, and the actual amount of any preferred stock dividend
requirements of majority owned subsidiaries.
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DESCRIPTION OF THE SENIOR DEBT SECURITIES
The Senior Debt Securities offered hereby will represent unsecured
obligations of EPG. The Senior Debt Securities offered hereby will be issued
under an indenture (the "Senior Indenture"), between EPG and The Chase Manhattan
Bank, as trustee (the "Senior Debt Trustee"). The Senior Indenture does not
limit the aggregate principal amount of Senior Debt Securities that may be
issued thereunder from time to time in one or more series.
The terms of the Senior Debt Securities include those stated in the Senior
Indenture and those made part of the Senior Indenture by reference to the Trust
Indenture Act. The Senior Debt Securities are subject to all such terms, and
holders of Senior Debt Securities are referred to the Senior Indenture and the
Trust Indenture Act for a statement of those terms.
The statements set forth below in this section are brief summaries of
certain provisions contained in the Senior Indenture, do not purport to be
complete, and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Senior Indenture, including the definitions
therein of certain terms, a copy of which Senior Indenture is incorporated by
reference as an exhibit to the Registration Statement of which this Prospectus
is a part. Capitalized terms used in this section and not otherwise defined in
this section have the respective meanings assigned to them in the Senior
Indenture.
GENERAL
Reference is made to the Prospectus Supplement relating to the particular
series offered thereby for the terms of such Senior Debt Securities, including
where applicable: (a) the form and title of the Senior Debt Securities; (b) the
aggregate principal amount of the Senior Debt Securities; (c) the date or dates
on which the Senior Debt Securities may be issued; (d) the date or dates on
which the principal of and premium, if any, on the Senior Debt Securities shall
be payable; (e) the rate or rates (which may be fixed or variable) at which the
Senior Debt Securities shall bear interest, if any, and the date or dates from
which such interest shall accrue; (f) the dates on which interest, if any, shall
be payable and the record dates for the interest payment dates; (g) the place or
places where the principal of and premium, if any, and interest, if any, on the
Senior Debt Securities of the series will be payable; (h) the period or periods,
if any, within which, the price or prices at which, and the terms and conditions
upon which, the Senior Debt Securities may be redeemed at the option of EPG or
otherwise; (i) any optional or mandatory redemption or any sinking fund or
analogous provisions; (j) if other than denominations of $1,000 and integral
multiples thereof, the denominations in which the Senior Debt Securities of the
series shall be issuable; (k) if other than the principal amount thereof, the
portion of the principal amount of the Senior Debt Securities which shall be
payable upon declaration of the acceleration of the maturity thereof in
accordance with the provisions of the Senior Indenture; (l) whether payment of
the principal of and premium, if any, and interest, if any, on the Senior Debt
Securities shall be without deduction for taxes, assessments, or governmental
charges paid by the holders; (m) the currency or currencies, or currency unit or
currency units, in which the principal of and premium, if any, and interest, if
any, on the Senior Debt Securities shall be denominated, payable, redeemable or
purchasable, as the case may be; (n) any Events of Default (as defined below)
with respect to the Senior Debt Securities that differ from those set forth in
the Senior Indenture; (o) whether the Senior Debt Securities will be
convertible; (p) whether the Senior Debt Securities of such series shall be
issued as a global certificate or certificates and, in such case, the identity
of the depositary for such series; (q) provisions regarding the convertibility
or exchangeability of the Senior Debt Securities; and (r) any other terms not
inconsistent with the Senior Indenture.
If any Senior Debt Securities offered hereby are sold for foreign
currencies or foreign currency units or if the principal of and premium, if any,
or interest, if any, on any series of Senior Debt Securities is payable in
foreign currencies or foreign currency units, the restrictions, elections, tax
consequences, specific terms and other information with respect to such issue of
Senior Debt Securities and such currencies and currency units will be set forth
in the Prospectus Supplement relating thereto.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Senior Debt Securities offered hereby will be issued only in fully
registered form in denominations of $1,000 or any integral multiple
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thereof. The Senior Debt Securities of a series may be issuable in the form of
one or more global certificates, which will be denominated in an amount equal to
all or a portion of the aggregate principal amount of such Senior Debt
Securities. See "-- Global Senior Debt Securities."
One or more series of Senior Debt Securities offered hereby may be sold at
a substantial discount below their stated principal amount, bearing no interest
or interest at a rate that at the time of issuance is below market rates. The
federal income tax consequences and special considerations applicable to any
such series of Senior Debt Securities will be described generally in the
Prospectus Supplement relating thereto.
FORM, EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
No service charge will be made for any transfer or exchange of the Senior
Debt Securities, but the Company or the Senior Debt Trustee may require payment
of a sum sufficient to cover any tax or other government charge payable in
connection therewith. Where Senior Debt Securities of any series are issued in
bearer form, the special restrictions and considerations, including special
offering restrictions and special U.S. federal income tax considerations,
applicable to any such Senior Debt Securities and to payment on and transfer and
exchange of such Senior Debt Securities will be described in the applicable
Prospectus Supplement. Bearer Senior Debt Securities will be transferrable by
delivery.
Unless otherwise provided in the applicable Prospectus Supplement,
principal and premium, if any, or interest, if any, will be payable and the
Senior Debt Securities may be surrendered for payment or transferred at the
offices of the Senior Debt Trustee as paying and authenticating agent, provided
that payment of interest on registered securities may be made at the option of
the Company by check mailed to the address of the person entitled thereto as it
appears in the Security Register, or by transfer to an account maintained by the
person entitled thereto, provided that the proper wire transfer instructions
have been received by the Company prior to the Record Date. Payment of Senior
Debt Securities in bearer form will be made at such paying agencies outside of
the United States as the Company may appoint.
GLOBAL SENIOR DEBT SECURITIES
The Senior Debt Securities of a series may be issued in whole or in part in
the form of one or more global certificates that will be deposited with, or on
behalf of, a depositary (the "Depositary"), or its nominee, identified in the
Prospectus Supplement relating to such series. Unless and until such global
certificate or certificates are exchanged in whole or in part for Senior Debt
Securities in individually certificated form, a global Senior Debt Security may
not be transferred or exchanged except as a whole to a nominee of the Depositary
for such global Senior Debt Security, or by a nominee for the Depositary to the
Depositary, or to a successor of the Depositary or a nominee of such successor,
except in the circumstances described in the applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to a series
of Senior Debt Securities and the rights of, and limitations on, owners of
beneficial interests in a global Senior Debt Security representing all or a
portion of a series of Senior Debt Securities will be described in the
Prospectus Supplement relating to such series.
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CERTAIN COVENANTS
Limitations on Liens. The Senior Indenture provides that EPG will not, nor
will it permit any Restricted Subsidiary (as defined below) to, create, assume,
incur or suffer to exist any Lien (as defined below) upon any Principal Property
(as defined below), whether owned or leased on the date of the Senior Indenture
or thereafter acquired, to secure any Debt (as defined below) of EPG or any
other Person (as defined below) (other than the Senior Debt Securities issued
thereunder), without in any such case making effective provision whereby all of
the Senior Debt Securities Outstanding thereunder shall be secured equally and
ratably with, or prior to, such Debt so long as such Debt shall be so secured.
There is excluded from this restriction:
(i) any Lien upon any property or assets of EPG or any Restricted
Subsidiary in existence on the date of the Senior Indenture or created
pursuant to an "after-acquired property" clause or similar term in
existence on the date of the Senior Indenture or any mortgage, pledge
agreement, security agreement or other similar instrument in existence on
the date of the Senior Indenture;
(ii) any Lien upon any property or assets created at the time of
acquisition of such property or assets by EPG or any Restricted Subsidiary
or within one year after such time to secure all or a portion of the
purchase price for such property or assets or Debt incurred to finance such
purchase price, whether such Debt was incurred prior to, at the time of or
within one year of such acquisition;
(iii) any Lien upon any property or assets existing thereon at the
time of the acquisition thereof by EPG or any Restricted Subsidiary
(whether or not the obligations secured thereby are assumed by EPG or any
Restricted Subsidiary);
(iv) any Lien upon any property or assets of a Person existing thereon
at the time such Person becomes a Restricted Subsidiary by acquisition,
merger or otherwise;
(v) the assumption by EPG or any Restricted Subsidiary of obligations
secured by any Lien existing at the time of the acquisition by EPG or any
Restricted Subsidiary of the property or assets subject to such Lien or at
the time of the acquisition of the Person which owns such property or
assets;
(vi) any Lien on property to secure all or part of the cost of
construction or improvements thereon or to secure Debt incurred prior to,
at the time of, or within one year after completion of such construction or
making of such improvements, to provide funds for any such purpose;
(vii) any Lien on any oil, gas, mineral and processing and other plant
properties to secure the payment of costs, expenses or liabilities incurred
under any lease or grant or operating or other similar agreement in
connection with or incident to the exploration, development, maintenance or
operation of such properties;
(viii) any Lien arising from or in connection with a conveyance by EPG
or any Restricted Subsidiary of any production payment with respect to oil,
gas, natural gas, carbon dioxide, sulphur, helium, coal, metals, minerals,
steam, timber or other natural resources;
(ix) any Lien in favor of EPG or any Restricted Subsidiary;
(x) any Lien created or assumed by EPG or any Restricted Subsidiary in
connection with the issuance of Debt the interest on which is excludable
from gross income of the holder of such Debt pursuant to the Internal
Revenue Code of 1986, as amended, or any successor statute, for the purpose
of financing, in whole or in part, the acquisition or construction of
property or assets to be used by EPG or any Subsidiary;
(xi) any Lien upon property or assets of any foreign Restricted
Subsidiary to secure Debt of that foreign Restricted Subsidiary;
(xii) Permitted Liens (as defined below);
(xiii) any Lien upon any additions, improvements, replacements,
repairs, fixtures, appurtenances or component parts thereof attaching to or
required to be attached to property or assets pursuant to the
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terms of any mortgage, pledge agreement, security agreement or other
similar instrument, creating a Lien upon such property or assets permitted
by clauses (i) through (xii), inclusive, above; or
(xiv) any extension, renewal, refinancing, refunding or replacement
(or successive extensions, renewals, refinancing, refundings or
replacements) of any Lien, in whole or in part, that is referred to in
clauses (i) through (xiii), inclusive, above, or of any Debt secured
thereby; provided, however, that the principal amount of Debt secured
thereby shall not exceed the greater of the principal amount of Debt so
secured at the time of such extension, renewal, refinancing, refunding or
replacement and the original principal amount of Debt so secured (plus in
each case the aggregate amount of premiums, other payments, costs and
expenses required to be paid or incurred in connection with such extension,
renewal, refinancing, refunding or replacement); provided further, however,
that such extension, renewal, refinancing, refunding or replacement shall
be limited to all or a part of the property (including improvements,
alterations and repairs on such property) subject to the encumbrance so
extended, renewed, refinanced, refunded or replaced (plus improvements,
alterations and repairs on such property).
Notwithstanding the foregoing, under the Senior Indenture, EPG may, and may
permit any Restricted Subsidiary to, create, assume, incur, or suffer to exist
any Lien upon any Principal Property to secure Debt of EPG or any Person (other
than the Senior Debt Securities) that is not excepted by clauses (i) through
(xiv), inclusive, above without securing the Senior Debt Securities issued under
the Senior Indenture, provided that the aggregate principal amount of all Debt
then outstanding secured by such Lien and all similar Liens, together with all
net sale proceeds from Sale-Leaseback Transactions (as defined below) (excluding
Sale-Leaseback Transactions permitted by clauses (i) through (iv), inclusive, of
the first paragraph of the restriction on sale-leasebacks covenant described
below) does not exceed 15% of Consolidated Net Tangible Assets (as defined
below).
Restriction on Sale-Leasebacks. The Senior Indenture provides that EPG will
not, nor will it permit any Restricted Subsidiary to, engage in a Sale-Leaseback
Transaction, unless: (i) such Sale-Leaseback Transaction occurs within one year
from the date of acquisition of the Principal Property subject thereto or the
date of the completion of construction or commencement of full operations on
such Principal Property, whichever is later; (ii) the Sale-Leaseback Transaction
involves a lease for a period, including renewals, of not more than three years;
(iii) EPG or such Restricted Subsidiary would be entitled to incur Debt secured
by a Lien on the Principal Property subject thereto in a principal amount equal
to or exceeding the net sale proceeds from such Sale-Leaseback Transaction
without securing the Senior Debt Securities; or (iv) EPG or such Restricted
Subsidiary, within a one-year period after such Sale-Leaseback Transaction,
applies or causes to be applied an amount not less than the net sale proceeds
from such Sale-Leaseback Transaction to (A) the repayment, redemption or
retirement of Funded Debt (as defined below) of EPG or any such Restricted
Subsidiary, or (B) investment in another Principal Property.
Notwithstanding the foregoing, under the Senior Indenture EPG may, and may
permit any Restricted Subsidiary to, effect any Sale-Leaseback Transaction that
is not excepted by clauses (i) through (iv), inclusive, of the above paragraph,
provided that the net sale proceeds from such Sale-Leaseback Transaction,
together with the aggregate principal amount of outstanding Debt (other than the
Senior Debt Securities) secured by Liens upon Principal Properties not excepted
by clauses (i) through (xiv), inclusive, of the first paragraph of the
limitation on liens covenant described above, do not exceed 15% of the
Consolidated Net Tangible Assets.
Certain Defined Terms. As used herein:
"Consolidated Net Tangible Assets" means, at any date of determination, the
total amount of assets after deducting therefrom (i) all current liabilities
(excluding (A) any current liabilities that by their terms are extendable or
renewable at the option of the obligor thereon to a time more than 12 months
after the time as of which the amount thereof is being computed, and (B) current
maturities of long-term debt), and (ii) the value (net of any applicable
reserves) of all goodwill, trade names, trademarks, patents and other like
intangible assets, all as set forth on the consolidated balance sheet of EPG and
its consolidated subsidiaries for EPG's most recently completed fiscal quarter,
prepared in accordance with generally accepted accounting principles.
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"Debt" means any obligation created or assumed by any Person for the
repayment of money borrowed and any purchase money obligation created or assumed
by such Person.
"Funded Debt" means all Debt maturing one year or more from the date of the
creation thereof, all Debt directly or indirectly renewable or extendible, at
the option of the debtor, by its terms or by the terms of any instrument or
agreement relating thereto, to a date one year or more from the date of the
creation thereof, and all Debt under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more.
"Lien" means any mortgage, pledge, security interest, charge, lien or other
encumbrance of any kind, whether or not filed, recorded or perfected under
applicable law.
"Permitted Liens" means (i) Liens upon rights-of-way for pipeline purposes;
(ii) any governmental Lien, mechanics', materialmen's, carriers' or similar Lien
incurred in the ordinary course of business which is not yet due or which is
being contested in good faith by appropriate proceedings and any undetermined
Lien which is incidental to construction; (iii) the right reserved to, or vested
in, any municipality or public authority by the terms of any right, power,
franchise, grant, license, permit or by any provision of law, to purchase or
recapture or to designate a purchaser of, any property; (iv) Liens of taxes and
assessments which are (A) for the then current year, (B) not at the time
delinquent, or (C) delinquent but the validity of which is being contested at
the time by EPG or any Subsidiary in good faith; (v) Liens of, or to secure
performance of, leases; (vi) any Lien upon, or deposits of, any assets in favor
of any surety company or clerk of court for the purpose of obtaining indemnity
or stay of judicial proceedings; (vii) any Lien upon property or assets acquired
or sold by EPG or any Restricted Subsidiary resulting from the exercise of any
rights arising out of defaults on receivables; (viii) any Lien incurred in the
ordinary course of business in connection with workmen's compensation,
unemployment insurance, temporary disability, social security, retiree health or
similar laws or regulations or to secure obligations imposed by statute or
governmental regulations; (ix) any Lien upon any property or assets in
accordance with customary banking practice to secure any Debt incurred by EPG or
any Restricted Subsidiary in connection with the exporting of goods to, or
between, or the marketing of goods in, or the importing of goods from, foreign
countries; or (x) any Lien in favor of the U.S. or any state thereof, or any
other country, or any political subdivision of any of the foregoing, to secure
partial, progress, advance, or other payments pursuant to any contract or
statute, or any Lien securing industrial development, pollution control, or
similar revenue bonds.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, other
entity, unincorporated organization, or government or any agency or political
subdivision thereof.
"Principal Property" means (a) any pipeline assets of EPG or any
Subsidiary, including any related facilities employed in the transportation,
distribution or marketing of natural gas, that are located in the U.S. or
Canada, and (b) any processing or manufacturing plant owned or leased by EPG or
any Subsidiary that is located within the U.S. or Canada, except, in the case of
either clause (a) or (b), any such assets or plant which, in the opinion of
EPG's Board of Directors, is not material in relation to the activities of EPG
and its Subsidiaries as a whole.
"Restricted Subsidiary" means any Subsidiary of EPG owning or leasing any
Principal Property.
"Sale-Leaseback Transaction" means the sale or transfer by EPG or any
Restricted Subsidiary of any Principal Property to a Person (other than EPG or a
Subsidiary) and the taking back by EPG or any Restricted Subsidiary, as the case
may be, of a lease of such Principal Property.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Senior Indenture provides that EPG may, without the consent of the
Senior Debt Trustee or the holders of any Senior Debt Securities issued
thereunder, consolidate or merge with, or sell, lease or transfer its properties
and assets as, or substantially as, an entirety to, any Person, provided that
(i) either EPG is the surviving entity or such successor Person shall expressly
assume the due and punctual payment of the principal of, and any premium and
interest on, all the Senior Debt Securities and the performance or observance of
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every covenant and condition of the Senior Indenture on the part of EPG to be
performed or observed, (ii) immediately after giving effect to the transaction,
no Default or Event of Default exists, and (iii) EPG has delivered the Officer's
Certificate and Opinion of Counsel required by the Senior Indenture. Any such
successor Person shall succeed to and be substituted for, and may exercise every
right and power of, EPG under the Senior Indenture with the same effect as if it
had been named a party in the Senior Indenture and EPG shall, except in the case
of a lease, be released and discharged from all its obligations under the Senior
Debt Securities and the Senior Indenture. Notwithstanding the foregoing, EPG
currently anticipates that it will provide in any supplemental Senior Indenture,
including with respect to existing issuances of Senior Debt Securities, that the
predecessor Person may, in the alternative, elect not to be so released from
such obligations, provided that the predecessor Person and the successor Person
shall agree, pursuant to such supplemental Senior Indenture, to be co-obligors
jointly and severally with respect to all such obligations.
EVENTS OF DEFAULT
An "Event of Default" will occur under the Senior Indenture with respect to
Senior Debt Securities of a particular series issued thereunder upon: (a)
default in the payment of the principal of, or premium, if any, on, any Senior
Debt Security of such series at its maturity; (b) default in the payment of any
interest on any Senior Debt Security of such series when it becomes due and
payable and continuance of such default for a period of 30 days; (c) default in
the performance, or breach, of any term, covenant or warranty contained in the
Senior Indenture with respect to such series for a period of 60 days upon giving
written notice as provided in the Senior Indenture; (d) the occurrence of
certain events of bankruptcy; or (e) any other Event of Default applicable to
such series.
The Senior Indenture provides that if an Event of Default with respect to a
series of Senior Debt Securities issued thereunder shall have occurred and be
continuing, either the Senior Debt Trustee or the holders of not less than 25%
in principal amount of Senior Debt Securities of such series then outstanding
may declare the principal amount of all Senior Debt Securities of such series to
be due and payable immediately upon giving written notice as provided in the
Senior Indenture. The Senior Indenture provides that the holders of a majority
in principal amount of Senior Debt Securities then outstanding of such series
may rescind and annul such declaration and its consequences under certain
circumstances.
The holders of a majority in principal amount of Senior Debt Securities of
a series then outstanding may waive past defaults under the Senior Indenture
with respect to such series and its consequences (except a continuing default in
the payment of principal of or premium, if any, or interest on any series of
Senior Debt Securities or a default in respect of any covenant or provision of
the Senior Indenture which cannot be modified or amended by a supplemental
Senior Indenture without the consent of the holder of each outstanding Senior
Debt Security affected thereby).
Pursuant to the Senior Indenture, the holders of a majority in aggregate
principal amount of all affected series of Senior Debt Securities then
outstanding may direct with respect to such series the time, method, and place
of conducting any proceeding for any remedy available to the Senior Debt Trustee
or exercising any trust or power conferred on the Senior Debt Trustee, provided
that such direction shall not be in conflict with any rule of law or the Senior
Indenture. Before proceeding to exercise any right or power under the Senior
Indenture at the direction of any holders, the Senior Debt Trustee shall be
entitled to receive from such holders reasonable security or indemnity against
the costs, expenses, and liabilities which might be incurred by it in compliance
with any such direction.
Under the terms of the Senior Indenture, EPG is required to furnish to the
Senior Debt Trustee annually an Officer's Certificate to the effect that to the
best of such officer's knowledge, EPG is not in default in the performance and
observance of the terms, provisions and conditions of the Senior Indenture or,
if such officer has knowledge that EPG is in default, specifying such default.
The Senior Indenture requires the Senior Debt Trustee to give to all holders of
Senior Debt Securities outstanding thereunder notice of any Default by EPG in
the manner provided in the Senior Indenture, unless such Default shall have been
cured or waived; however, except in the case of a default in the payment of
principal of and premium, if any, or interest, if any, on any Senior Debt
Securities outstanding thereunder, the Senior Debt Trustee is entitled to
withhold such
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notice in the event that the board of directors, the executive committee, or a
trust committee of directors or certain officers of the Senior Debt Trustee in
good faith determine that withholding such notice is in the interest of the
holders of such outstanding Senior Debt Securities.
SATISFACTION AND DISCHARGE; LEGAL AND COVENANT DEFEASANCE
Under the terms of the Senior Indenture, EPG may satisfy and discharge
certain obligations to holders of Senior Debt Securities of any series which
have not already been delivered to the Senior Debt Trustee for cancellation and
which have either become due and payable or are by their terms due and payable
within one year or are to be called for redemption within one year by (i)
depositing or causing to be deposited with the Senior Debt Trustee funds in an
amount sufficient to pay the principal and any premium and interest to the date
of such deposit (in case of Senior Debt Securities of such series which have
become due and payable) or to the Stated Maturity or Redemption Date, as the
case may be, (ii) paying or causing to be paid all other sums payable under the
Senior Indenture with respect to such Senior Debt Securities, and (iii)
delivering to the Senior Debt Trustee an Officer's Certificate and Opinion of
Counsel relating to such satisfaction and discharge.
The Senior Indenture also provides that EPG and any other obligor, if any,
will be discharged from any and all obligations in respect of any series of
Senior Debt Securities issued thereunder (excluding, however, certain
obligations, such as the obligation to register the transfer or exchange of such
outstanding Senior Debt Securities of such series, to replace stolen, lost,
mutilated or destroyed certificates, to pay principal and interest on the
original stated due dates or specified redemption date, to make any sinking fund
payments, and to maintain paying agencies) on the 91st day following the deposit
referred to in the following clause (i), subject to the following conditions:
(i) the irrevocable deposit, in trust, of cash or U.S. Government Obligations
(or a combination thereof) which through the payment of interest and principal
thereof in accordance with their terms will provide cash in an amount sufficient
to pay the principal and interest and premium, if any, on the outstanding Senior
Debt Securities of such series and any mandatory sinking fund payments, in each
case, on the stated maturity of such payments in accordance with the terms of
the Senior Indenture and the outstanding Senior Debt Securities of such series
or on any Redemption Date established pursuant to clause (iii) below, (ii) EPG's
receipt of an Opinion of Counsel based on the fact that (A) EPG has received
from, or there has been published by, the Internal Revenue Service a ruling, or
(B) since the date of the Senior Indenture, there has been a change in the
applicable federal income tax law, in either case, to the effect that, and
confirming that, the holders of the Senior Debt Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such deposit
and defeasance and will be subject to federal income tax on the same amount and
in the same manner and at the same times, as would have been the case if such
deposit and defeasance had not occurred, (iii) if the Senior Debt Securities are
to be redeemed prior to Stated Maturity (other than from mandatory sinking fund
payments or analogous payments), notice of such redemption shall have been duly
given pursuant to the Senior Indenture or provision therefor satisfactory to the
Senior Debt Trustee shall have been made, (iv) no Event of Default or event
which with notice or lapse of time or both would become an Event of Default will
have occurred and be continuing on the date of such deposit, and (v) EPG's
delivery to the Senior Debt Trustee of an Officer's Certificate and an Opinion
of Counsel, each stating that the conditions precedent under the Senior
Indenture have been complied with.
Under the Senior Indenture, EPG also may discharge its obligations referred
to above under the captions "-- Certain Covenants" and "-- Consolidation, Merger
and Sale of Assets" included in this Prospectus, as well as certain of its
obligations relating to reporting obligations under the Senior Indenture, in
respect of any series of Senior Debt Securities on the 91st day following the
deposit referred to in clause (i) in the immediately preceding paragraph,
subject to satisfaction of the conditions described in clauses (i), (iii), (iv)
and (v) in the immediately preceding paragraph with respect to such series of
Senior Debt Securities and the delivery of an Opinion of Counsel confirming that
the holders of the Senior Debt Securities will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit and covenant
defeasance and will be subject to federal income tax on the same amount and in
the same manner and at the same times, as would have been the case if such
deposit and covenant defeasance had not occurred.
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CHANGES IN CONTROL AND HIGHLY LEVERAGED TRANSACTIONS
The Senior Indenture does not contain provisions requiring redemption of
the Senior Debt Securities issued thereunder, or adjustment to any terms of such
Senior Debt Securities, upon any change in control of EPG.
Other than the limitations on Liens and the restriction on Sale-Leaseback
Transactions described above under the caption "-- Certain Covenants" included
in this Prospectus, the Senior Indenture does not contain any covenant or other
provisions designed to afford holders of the Senior Debt Securities issued
thereunder protection in the event of a highly leveraged transaction involving
EPG.
MODIFICATION OF THE SENIOR INDENTURE
The Senior Indenture provides that EPG and the Senior Debt Trustee may
enter into supplemental indentures without the consent of the holders of Senior
Debt Securities issued thereunder to: (a) secure any of such Senior Debt
Securities, (b) evidence the succession of another Person to EPG under the
Senior Indenture and the Senior Debt Securities and the assumption by such
successor Person of the obligations of EPG thereunder; (c) add covenants and
Events of Default for the benefit of the holders of all or any series of such
Senior Debt Securities or to surrender any right or power conferred by the
Senior Indenture upon EPG; (d) add to, change or eliminate any of the provisions
of the Senior Indenture, provided that any such addition, change or elimination
shall become effective only after there are no such Senior Debt Securities of
any series entitled to the benefit of such provision outstanding; (e) establish
the forms or terms of the Senior Debt Securities of any series issued
thereunder; (f) cure any ambiguity or correct any inconsistency in the Senior
Indenture; (g) evidence the acceptance of appointment by a successor Senior Debt
Trustee; and (h) qualify the Senior Indenture under the Trust Indenture Act.
The Senior Indenture also contains provisions permitting EPG and the Senior
Debt Trustee, with the consent of the holders of a majority in aggregate
principal amount of all outstanding Senior Debt Securities affected by such
supplemental Senior Indenture (voting as one class), to add any provisions to,
or change in any manner or eliminate any of the provisions of, the Senior
Indenture, or modify in any manner the rights of the holders of such Senior Debt
Securities; provided that EPG and the Senior Debt Trustee may not, without the
consent of the holder of each outstanding Senior Debt Security affected thereby,
(a) change the stated maturity of the principal of or any installment of
principal of or interest, if any, on, any Senior Debt Security, or reduce the
principal amount thereof or premium, if any, on or the rate of interest thereon,
(b) reduce the percentage in principal amount of Senior Debt Securities required
for any such supplemental Senior Indenture or for any waiver provided for in the
Senior Indenture, (c) change EPG's obligation to maintain an office or agency
for payment of Senior Debt Securities and the other matters specified therein,
or (d) modify any of the provisions of the Senior Indenture relating to the
execution of supplemental indentures with the consent of holders of Senior Debt
Securities which are discussed in this paragraph or modify any provisions
relating to the waiver by holders of past defaults and certain covenants, except
to increase any required percentage or to provide that certain other provisions
of the Senior Indenture cannot be modified or waived without the consent of the
holder of each outstanding Senior Debt Security affected thereby.
NO PERSONAL LIABILITY OF OFFICERS, DIRECTORS, EMPLOYEES OR STOCKHOLDERS
No director, officer, employee or stockholder, as such, of EPG or any of
its affiliates shall have any personal liability in respect of the obligations
of EPG under the Senior Indenture or the Senior Debt Securities by reason of
his, her or its status as such.
APPLICABLE LAW
The Senior Indenture is, and the Senior Debt Securities offered hereby will
be, governed by, and construed in accordance with, the laws of the State of New
York.
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CONCERNING THE SENIOR DEBT TRUSTEE
The Senior Indenture provides that, except during the continuance of an
Event of Default, the Senior Debt Trustee will perform only such duties as are
specifically set forth in the Senior Indenture. If an Event of Default has
occurred and is continuing, the Senior Debt Trustee will use the same degree of
care and skill in its exercise of the rights and powers vested in it by the
Senior Indenture as a prudent person would exercise under the circumstances in
the conduct of such person's own affairs.
The Senior Indenture contains limitations on the rights of the Senior Debt
Trustee, should it become a creditor of EPG, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of
such claims, as security or otherwise. The Senior Debt Trustee is permitted to
engage in other transactions; provided, however, that if it acquires any
conflicting interest, it must eliminate such conflict or resign.
The Chase Manhattan Bank, a New York banking corporation, is the Senior
Debt Trustee under the Senior Indenture, and is also the Subordinated Debt
Trustee (as defined below) under the Subordinated Debt Indenture (as defined
below). EPG maintains banking and other commercial relationships with The Chase
Manhattan Bank in the ordinary course of business.
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
Subordinated Debt Securities may be issued from time to time in one or more
series under an indenture (the "Subordinated Indenture"), to be entered into
between the Company and The Chase Manhattan Bank, as Trustee (the "Subordinated
Debt Trustee"), the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The terms of the Subordinated Debt
Securities will include those stated in the Subordinated Indenture and those
made part of the Subordinated Indenture by reference to the Trust Indenture Act.
The Subordinated Debt Securities are subject to all such terms, and holders of
Subordinated Debt Securities are referred to the Subordinated Indenture and the
Trust Indenture Act for those terms.
The statements set forth below in this section are brief summaries of
certain provisions contained in the Subordinated Indenture, do not purport to be
complete and are subject in all respects to the provisions of, and are qualified
in their entirety by reference to, the Subordinated Indenture, including the
definitions of certain terms therein, and the Trust Indenture Act. Capitalized
terms used in this section and not otherwise defined in this section have the
respective meanings assigned to them in the Subordinated Indenture.
GENERAL
The Subordinated Debt Securities will be unsecured, subordinated
obligations of the Company. The Subordinated Indenture does not limit the
aggregate principal amount of Subordinated Debt Securities which may be issued
thereunder and provides that the Subordinated Debt Securities may be issued from
time to time in one or more series. The Subordinated Debt Securities are
issuable in one or more series pursuant to an Subordinated Indenture
supplemental to the Subordinated Indenture or a resolution of the Company's
Board of Directors or a special committee appointed thereby (each, a
"Supplemental Subordinated Indenture").
In the event Subordinated Debt Securities are issued to an EPE Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
such EPE Trust, such Subordinated Debt Securities subsequently may be
distributed pro rata to the holders of such Trust Securities in connection with
the dissolution of such EPE Trust upon the occurrence of certain events
described in the Prospectus Supplement relating to such Trust Securities. Only
one series of Subordinated Debt Securities will be issued to an EPE Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
such EPE Trust.
Reference is made to the Prospectus Supplement relating to the particular
Subordinated Debt Securities being offered thereby for the following terms: (a)
the designation of such Subordinated Debt Securities; (b) the aggregate
principal amount of such Subordinated Debt Securities; (c) the percentage of
their principal amount at which such Subordinated Debt Securities will be
issued; (d) the date or dates on which
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such Subordinated Debt Securities will mature and the right, if any, to extend
such date or dates; (e) the rate or rates, if any, per annum, at which such
Subordinated Debt Securities will bear interest, or the method of determination
of such rate or rates; (f) the date or dates from which such interest shall
accrue, the interest payment dates on which such interest will be payable or the
manner of determination of such interest payment dates and the record dates for
the determination of holders to whom interest is payable on any such interest
payment dates; (g) the right, if any, to extend the interest payment periods and
the duration of such extension; (h) provisions for a sinking purchase or other
analogous fund, if any; (i) the period or periods, if any, within which, the
price or prices of which, and the terms and conditions upon which such
Subordinated Debt Securities may be redeemed, in whole or in part, at the option
of the Company or the holder; (j) the form of such Subordinated Debt Securities;
(k) provisions regarding convertibility or exchangeability for capital stock of
EPG (if any); and (l) any other terms not inconsistent with the Subordinated
Indenture. Principal, premium, if any, and interest, if any, will be payable,
and the Subordinated Debt Securities offered hereby will be transferable, at the
corporate trust office of the Subordinated Debt Trustee in New York, New York,
provided that payment of interest, if any, may be made at the option of the
Company by check mailed to the address of the person entitled thereto as it
appears in the Security Register, or by transfer to an account maintained by the
person entitled thereto, provided that proper wire transfer instructions have
been received by the Company prior to the Record Date.
If any Subordinated Debt Securities offered hereby are sold for foreign
currencies or foreign currency units or if the principal of and premium, if any,
or interest, if any, on any series of Subordinated Debt Securities is payable in
foreign currencies or foreign currency units, the restrictions, elections, tax
consequences, specific terms and other information with respect to such issue of
Subordinated Debt Securities and such currencies and currency units will be set
forth in the Prospectus Supplement relating thereto.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Subordinated Debt Securities offered hereby will be issued only in fully
registered form without coupons and in denominations of $1,000 or any integral
multiple thereof. The Subordinated Debt Securities of a series may be issuable
in the form of one or more global certificates, which will be denominated in an
amount equal to all or a portion of the aggregate principal amount of such
Subordinated Debt Securities. See "-- Global Subordinated Debt Securities."
One or more series of Subordinated Debt Securities offered hereby may be
sold at a substantial discount below their stated principal amount, bearing no
interest or interest at a rate that at the time of issuance is below market
rates. The federal income tax consequences and special considerations applicable
to any such series of Subordinated Debt Securities will be described generally
in the Prospectus Supplement relating thereto.
FORM, EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
No service charge will be made for any transfer or exchange of the
Subordinated Debt Securities, but the Company or the Subordinated Debt Trustee
may require payment of a sum sufficient to cover any tax or other government
charge payable in connection therewith. Where Subordinated Debt Securities of
any series are issued in bearer form, the special restrictions and
considerations, including special offering restrictions and special U.S. federal
income tax considerations, applicable to any such Subordinated Debt Securities
and to payment on and transfer and exchange of such Subordinated Debt Securities
will be described in the applicable Prospectus Supplement. Bearer Subordinated
Debt Securities will be transferrable by delivery.
Unless otherwise provided in the applicable Prospectus Supplement,
principal and premium, if any, or interest, if any, will be payable and the
Subordinated Debt Securities may be surrendered for payment or transferred at
the offices of the Subordinated Debt Trustee as paying and authenticating agent,
provided that payment of interest on registered securities may be made at the
option of the Company by check mailed to the address of the person entitled
thereto as it appears in the Security Register, or by transfer to an account
maintained by the person entitled thereto, provided that the proper wire
transfer instructions have been received by the Company prior to the Record
Date. Payment of Subordinated Debt Securities in bearer form will be made at
such paying agencies outside of the United States as the Company may appoint.
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GLOBAL SUBORDINATED DEBT SECURITIES
The Subordinated Debt Securities of a series may be issued in whole or in
part in the form of one or more global certificate(s) that will be deposited
with, or on behalf of, a depositary (the "Subordinated Depositary"), or its
nominee, identified in the Prospectus Supplement relating to such series. In
such a case, one or more global certificate(s) will be issued in a denomination
or aggregate denomination equal to the portion of the aggregate principal amount
of outstanding Subordinated Debt Securities of the series to be represented by
such global certificate(s). Unless and until such global certificate(s)
exchanged in whole or in part for Subordinated Debt Securities in individually
certificated form, a global Subordinated Debt Security may not be transferred or
exchanged except as a whole to a nominee of the Subordinated Depositary for such
global Subordinated Debt Security, or by a nominee for the Subordinated
Depositary to the Subordinated Depositary or to a successor of the Subordinated
Depositary or a nominee of such successor, except in the circumstances described
in the applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to a series
of Subordinated Debt Securities and the rights of, and limitations on, owners of
beneficial interests in a global Subordinated Debt Security representing all or
a portion of a series of Subordinated Debt Securities will be described in the
Prospectus Supplement relating to such series.
SUBORDINATION
The Subordinated Debt Securities will be subordinated and junior in right
of payment to all other Debt of EPG, except for such Debt that is by its terms
subordinate to or pari passu with the Subordinated Debt Securities ("Senior
Debt"), and such other indebtedness of the Company to the extent set forth in
the applicable Prospectus Supplement.
CERTAIN COVENANTS
If Subordinated Debt Securities are issued to an EPE Trust or a Trustee of
such trust in connection with the issuance of Trust Securities by such EPE Trust
and (i) there shall have occurred any event that would constitute an Event of
Default (as defined herein), (ii) the Company shall be in default with respect
to its payment of any obligations under the related Trust Guarantee or the
guarantee of the Trust Common Securities (together with the Trust Guarantee, the
"Guarantees") or (iii) the Company shall have given notice of its election to
defer payments of interest on such Subordinated Debt Securities by extending the
interest payment period as provided in the Subordinated Indenture and such
period, or any extension thereof, shall be continuing, then the Company will be
subject to certain restrictions regarding (a) the declaration or payment of
dividends on, and the making of guarantee payments with respect to, any of its
capital stock; and (b) the making of any payment of interest, principal or
premium, if any, on or the repayment, repurchase or redemption of any debt
securities (including guarantees) issued by the Company which rank pari passu
with or junior to such Subordinated Debt Securities. Such restrictions will be
more fully described in the Prospectus Supplement applicable to such
Subordinated Debt Securities.
In the event Subordinated Debt Securities are issued to an EPE Trust or a
Trustee of such trust in connection with the issuance of Trust Securities of
such EPE Trust, for so long as such Trust Securities remain outstanding, the
Company will covenant in the Declaration, the Guarantees or the indenture
supplemental to the Subordinated Debt Indenture with respect to such EPE Trust
(i) to directly or indirectly maintain 100% ownership of the Common Securities
of such EPE Trust; provided, however, that any permitted successor of the
Company under the Subordinated Indenture may succeed to the Company's ownership
of such Trust Common Securities and (ii) not to voluntarily terminate, wind-up
or liquidate such EPE Trust, except in connection with (a) the distribution of
Subordinated Debt Securities to the holders of Trust Securities in liquidation
of such EPE Trust, (b) the redemption of all of the Trust Securities of such EPE
Trust or (c) certain mergers, consolidations or amalgamations, each as permitted
by the Declaration of such EPE Trust. The Company will also covenant to use its
commercially reasonable efforts, consistent with the terms and provisions of the
Declaration of such EPE Trust, to cause such EPE Trust to remain classified as a
grantor trust and not taxable as a corporation for U.S. federal income tax
purposes.
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CONSOLIDATION, MERGER AND SALE OF ASSETS
The Subordinated Indenture provides that EPG may, without the consent of
the Subordinated Debt Trustee or the holders of any Subordinated Debt Securities
issued thereunder, consolidate or merge with, or sell, lease or transfer its
properties and assets as, or substantially as, an entirety to, any Person,
provided that (i) either EPG is the surviving entity or such successor Person
expressly assumes or becomes a co-obligor jointly and severally liable with
respect to the due and punctual payment of the principal of, and any premium and
interest on, all the Subordinated Debt Securities and the performance or
observance of every covenant and condition of the Subordinated Indenture on the
part of EPG to be performed or observed, (ii) immediately after giving effect to
the transaction, no Default or Event of Default exists, and (iii) EPG has
delivered the Officer's Certificate and Opinion of Counsel required by the
Subordinated Indenture. Any such successor Person shall succeed to and be
substituted for, and may exercise every right and power of, EPG under the
Subordinated Indenture with the same effect as if it had been named a party in
the Subordinated Indenture and EPG shall, except in the case of a lease, be
released and discharged from all its obligations under the Subordinated Debt
Securities and the Subordinated Indenture. Notwithstanding the foregoing, the
predecessor Person may, in the alternative, elect not to be so released from
such obligations, provided that the predecessor Person and the successor Person
shall agree, pursuant to a supplemental Subordinated Indenture, to be
co-obligors jointly and severally with respect to all such obligations.
EVENTS OF DEFAULT
An "Event of Default" will occur under the Subordinated Indenture with
respect to Subordinated Debt Securities of a particular series issued thereunder
upon: (a) default in the payment of the principal of, or premium, if any, on,
any Subordinated Debt Security of such series at its maturity (whether or not
prohibited by the subordination provisions thereof); (b) default in the payment
of any interest on any Subordinated Debt Security of such series when it becomes
due and payable and continuance of such default for a period of 30 days (whether
or not prohibited by the subordination provisions thereof); (c) default in the
performance, or breach, of any term, covenant or warranty contained in the
Subordinated Indenture with respect to such series for a period of 60 days upon
giving written notice as provided in the Subordinated Indenture; or (d) the
occurrence of certain events of bankruptcy.
The Subordinated Indenture provides that if an Event of Default with
respect to a series of Subordinated Debt Securities issued thereunder shall have
occurred and be continuing, either the Subordinated Debt Trustee or the holders
of not less than 25% in principal amount of Subordinated Debt Securities of such
series then outstanding may declare the principal amount of all Subordinated
Debt Securities of such series to be due and payable immediately upon giving
written notice as provided in the Subordinated Indenture. The Subordinated
Indenture provides that the holders of a majority in principal amount of
Subordinated Debt Securities then outstanding of such series may rescind and
annul such declaration and its consequences under certain circumstances.
The holders of a majority in principal amount of Subordinated Debt
Securities of a series then outstanding may waive past defaults under the
Subordinated Indenture with respect to such series and its consequences (except
a continuing default in the payment of principal of or premium, if any, or
interest on any series of Subordinated Debt Securities or a default in respect
of any covenant or provision of the Subordinated Indenture which cannot be
modified or amended by a supplemental Subordinated Indenture without the consent
of the holder of each outstanding Subordinated Debt Security affected thereby).
Pursuant to the Subordinated Indenture, the holders of a majority in
aggregate principal amount of all affected series of Subordinated Debt
Securities then outstanding may direct with respect to such series the time,
method, and place of conducting any proceeding for any remedy available to the
Subordinated Debt Trustee or exercising any trust or power conferred on the
Subordinated Debt Trustee, provided that such direction shall not be in conflict
with any rule of law or the Subordinated Indenture. Before proceeding to
exercise any right or power under the Subordinated Indenture at the direction of
any holders, the Subordinated Debt Trustee shall be entitled to receive from
such holders reasonable security or indemnity against the costs, expenses, and
liabilities which might be incurred by it in compliance with any such direction.
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Under the terms of the Subordinated Indenture, EPG is required to furnish
to the Subordinated Debt Trustee annually an Officer's Certificate to the effect
that to the best of such officer's knowledge, EPG is not in default in the
performance and observance of the terms, provisions and conditions of the
Subordinated Indenture or, if such officer has knowledge that EPG is in default,
specifying such default. The Subordinated Indenture requires the Subordinated
Debt Trustee to give to all holders of Subordinated Debt Securities outstanding
thereunder notice of any Default by EPG in the manner provided in the
Subordinated Indenture, unless such Default shall have been cured or waived;
however, except in the case of a default in the payment of principal of and
premium, if any, or interest, if any, on any Subordinated Debt Securities
outstanding thereunder, the Subordinated Debt Trustee is entitled to withhold
such notice in the event that the board of directors, the executive committee,
or a trust committee of directors or certain officers of the Subordinated Debt
Trustee in good faith determine that withholding such notice is in the interest
of the holders of such outstanding Subordinated Debt Securities.
CHANGE IN CONTROL AND HIGHLY LEVERAGED TRANSACTIONS
The Subordinated Indenture contains no covenants or other provisions to
afford protection to holders of the Subordinated Debt Securities in the event of
a highly leveraged transaction or a change in control of the Company.
MODIFICATION OF THE SUBORDINATED INDENTURE
The Subordinated Indenture provides that EPG and the Subordinated Debt
Trustee may enter into supplemental indentures without the consent of the
holders of Subordinated Debt Securities issued thereunder to: (a) evidence the
succession of another Person to EPG under the Subordinated Indenture and the
Subordinated Debt Securities and the assumption by such successor Person of the
obligations of EPG thereunder; (b) evidence another Person's becoming a
co-obligor with respect to the obligations of EPG under the Subordinated
Indenture and the Subordinated Debt Securities; (c) add covenants and Events of
Default for the benefit of the holders of all or any series of such Subordinated
Debt Securities or to surrender any right or power conferred by the Subordinated
Indenture upon EPG; (d) add to, change or eliminate any of the provisions of the
Subordinated Indenture, provided that any such addition, change or elimination
shall become effective only after there are no such Subordinated Debt Securities
of any series entitled to the benefit of such provision outstanding; (e)
establish the forms or terms of the Subordinated Debt Securities of any series
issued thereunder; (f) cure any ambiguity or correct any inconsistency in the
Subordinated Indenture; (g) evidence the acceptance of appointment by a
successor (including as a co-obligor) Subordinated Debt Trustee; and (h) qualify
the Subordinated Indenture under the Trust Indenture Act.
The Subordinated Indenture also provides that EPG and the Subordinated Debt
Trustee, with the consent of the holders of a majority in aggregate principal
amount of all outstanding Subordinated Debt Securities of all series affected by
such modification (voting as one class), to modify the Subordinated Indenture or
the rights of the holders of such Subordinated Debt Securities; provided that
EPG and the Subordinated Debt Trustee may not, without the consent of the holder
of each outstanding Subordinated Debt Security affected thereby: (a) change the
stated maturity of the principal of or any installment of principal of or
interest, if any, on, any Subordinated Debt Security, or reduce the principal
amount thereof or premium, if any, on or the rate of interest thereon, (b)
reduce the percentage in principal amount of Subordinated Debt Securities
required for any such supplemental Subordinated Indenture or for any waiver
provided for in the Subordinated Indenture, (c) change EPG's obligation to
maintain an office or agency for payment of Subordinated Debt Securities and the
other matters specified therein, or (d) modify any of the provisions of the
Subordinated Indenture relating to the execution of supplemental indentures with
the consent of holders of Subordinated Debt Securities which are discussed in
this paragraph or modify any provisions relating to the waiver by holders of
past defaults and certain covenants, except to increase any required percentage
or to provide that certain other provisions of the Subordinated Indenture cannot
be modified or waived without the consent of the holder of each outstanding
Subordinated Debt Security affected thereby.
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SATISFACTION AND DISCHARGE; LEGAL AND COVENANT DEFEASANCE
Under the terms of the Subordinated Indenture, EPG may satisfy and
discharge certain obligations to holders of Subordinated Debt Securities of any
series which have not already been delivered to the Subordinated Debt Trustee
for cancellation and which have either become due and payable or are by their
terms due and payable within one year or are to be called for redemption within
one year by (i) depositing or causing to be deposited with the Subordinated Debt
Trustee funds in an amount sufficient to pay the principal and any premium and
interest to the date of such deposit (in case of Subordinated Debt Securities of
such series which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be, (ii) paying or causing to be paid all other
sums payable under the Subordinated Indenture with respect to such Subordinated
Debt Securities, and (iii) delivering to the Subordinated Debt Trustee an
Officer's Certificate and Opinion of Counsel relating to such satisfaction and
discharge.
The Subordinated Indenture also provides that EPG and any other obligor, if
any, will be discharged from any and all obligations in respect of any series of
Subordinated Debt Securities issued thereunder (excluding, however, certain
obligations, such as the obligation to register the transfer or exchange of such
outstanding Subordinated Debt Securities of such series, to replace stolen,
lost, mutilated or destroyed certificates, to pay principal and interest on the
original stated due dates or specified redemption date, to make any sinking fund
payments, and to maintain paying agencies) on the 91st day following the deposit
referred to in the following clause (i), subject to the following conditions:
(i) the irrevocable deposit, in trust, of cash or U.S. Government Obligations
(or a combination thereof) which through the payment of interest and principal
thereof in accordance with their terms will provide cash in an amount sufficient
to pay the principal and interest and premium, if any, on the outstanding
Subordinated Debt Securities of such series and any mandatory sinking fund
payments, in each case, on the stated maturity of such payments in accordance
with the terms of the Subordinated Indenture and the outstanding Subordinated
Debt Securities of such series or on any Redemption Date established pursuant to
clause (iii) below; (ii) EPG's receipt of an Opinion of Counsel based on the
fact that (A) EPG has received from, or there has been published by, the
Internal Revenue Service a ruling, or (B) since the date of the Subordinated
Indenture, there has been a change in the applicable federal income tax law, in
either case, to the effect that, and confirming that, the holders of the
Subordinated Debt Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and defeasance and will be
subject to federal income tax on the same amount and in the same manner and at
the same times, as would have been the case if such deposit and defeasance had
not occurred; (iii) if the Subordinated Debt Securities are to be redeemed prior
to Stated Maturity (other than from mandatory sinking fund payments or analogous
payments), notice of such redemption shall have been duly given pursuant to the
Subordinated Indenture or provision therefor satisfactory to the Subordinated
Debt Trustee shall have been made; (iv) no Event of Default or event which with
notice or lapse of time or both would become an Event of Default will have
occurred and be continuing on the date of such deposit; and (v) EPG's delivery
to the Subordinated Debt Trustee of an Officer's Certificate and an Opinion of
Counsel, each stating that the conditions precedent under the Subordinated
Indenture have been complied with.
Under the Subordinated Indenture, EPG also may discharge its obligations
referred to above under the captions "-- Certain Covenants" and
"-- Consolidation, Merger and Sale of Assets" included in this Prospectus, as
well as certain of its obligations relating to reporting obligations under the
Subordinated Indenture, in respect of any series of Subordinated Debt Securities
on the 91st day following the deposit referred to in clause (i) in the
immediately preceding paragraph, subject to satisfaction of the conditions
described in clauses (i), (iii), (iv) and (v) in the immediately preceding
paragraph with respect to such series of Subordinated Debt Securities and the
delivery of an Opinion of Counsel confirming that the holders of the
Subordinated Debt Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and covenant defeasance and will
be subject to federal income tax on the same amount and in the same manner and
at the same times, as would have been the case if such deposit and covenant
defeasance had not occurred.
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NO PERSONAL LIABILITY OF OFFICERS, DIRECTORS, EMPLOYEES OR STOCKHOLDERS
No director, officer, employee or stockholder, as such, of EPG or any of
its affiliates shall have any personal liability in respect of the obligations
of EPG under the Subordinated Indenture or the Subordinated Debt Securities by
reason of his, her or its status as such.
APPLICABLE LAW
The Subordinated Indenture is, and the Subordinated Debt Securities offered
hereby will be, governed by, and construed in accordance with, the laws of the
State of New York.
CONCERNING THE SUBORDINATED DEBT TRUSTEE
The Subordinated Indenture provides that, except during the continuance of
an Event of Default, the Subordinated Debt Trustee will perform only such duties
as are specifically set forth in the Subordinated Indenture. If an Event of
Default has occurred and is continuing, the Subordinated Debt Trustee will use
the same degree of care and skill in its exercise of the rights and powers
vested in it by the Subordinated Indenture as a prudent person would exercise
under the circumstances in the conduct of such person's own affairs.
The Subordinated Indenture contains limitations on the rights of the
Subordinated Debt Trustee, should it become a creditor of EPG, to obtain payment
of claims in certain cases or to realize on certain property received by it in
respect of such claims, as security or otherwise. The Subordinated Debt Trustee
is permitted to engage in other transactions; provided, however, that if it
acquires any conflicting interest, it must eliminate such conflict or resign.
The Chase Manhattan Bank, a New York banking corporation, is the
Subordinated Debt Trustee under the Subordinated Indenture, and is also the
Senior Debt Trustee under the Senior Indenture. EPG maintains banking and other
commercial relationships with The Chase Manhattan Bank in the ordinary course of
business.
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
The statements under this caption are brief summaries, do not purport to be
complete, and are subject to, and are qualified in their entirety by reference
to, the more complete descriptions contained in (a) EPG's Restated Certificate
of Incorporation, as amended (the "EPG Charter"), and the Shareholder Rights
Agreement, dated as of July 7, 1992, as amended, between EPG and The First
National Bank of Boston, as Rights Agent (the "Shareholder Rights Agreement"),
copies of which are incorporated by reference as exhibits to the Registration
Statement of which this Prospectus is a part, and (b) the certificate of
designation relating to each series of Preferred Stock, which will be filed with
the Commission at, or prior to, the time of the offering of such series of
Preferred Stock.
GENERAL
EPG currently is authorized by the EPG Charter to issue up to 100,000,000
shares of Common Stock and up to 25,000,000 shares of Preferred Stock. As of
November 30, 1997 there were issued and outstanding 59,797,452 shares of Common
Stock and no shares of Preferred Stock.
COMMON STOCK
EPG currently is authorized by the EPG Charter to issue up to 100,000,000
shares of Common Stock. The holders of Common Stock are entitled to one vote for
each share held of record on all matters submitted to a vote of stockholders.
Subject to preferences that may be applicable to any outstanding Preferred
Stock, holders of Common Stock are entitled to receive ratably such dividends as
may be declared by the Board of Directors of EPG out of funds legally available
therefor. In the event of a liquidation, dissolution, or winding up of EPG,
holders of Common Stock are entitled to share ratably in all assets remaining
after payment of liabilities and liquidation preference of any outstanding
Preferred Stock. Holders of Common Stock have no
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preemptive rights and have no rights to convert their Common Stock into any
other securities. There are no redemption provisions with respect to any shares
of Common Stock. All of the outstanding shares of Common Stock are, and the
Common Stock offered hereby will be, upon issuance against full payment of the
purchase price therefor, fully paid and nonassessable.
The transfer agent and registrar for EPG's Common Stock is The First National
Bank of Boston.
PREFERRED STOCK
EPG's Board of Directors, without any further action by the stockholders of
EPG, is authorized to issue up to 25,000,000 shares of Preferred Stock, and to
divide the Preferred Stock into one or more series, and to fix by resolution or
resolutions any of the designations, powers, preferences and rights, and the
qualifications, limitations, or restrictions of the shares of each such series,
including, but not limited to, dividend rates, conversion rights, voting rights,
terms of redemption and liquidation preferences, and the number of shares
constituting each such series. The issuance of Preferred Stock may have the
effect of delaying, deterring, or preventing a change in control of EPG.
Preferred Stock, upon issuance against full payment of the purchase price
therefor, will be fully paid and nonassessable. The specific terms of a
particular series of Preferred Stock will be described in the Prospectus
Supplement relating to that series. The description of Preferred Stock set forth
below and the description of the terms of the particular series of Preferred
Stock set forth in the related Prospectus Supplement do not purport to be
complete and are qualified in their entirety by reference to the certificate of
designation relating to the particular series of Preferred Stock.
The designations, powers, preferences and rights, and the qualifications,
limitations, or restrictions of the Preferred Stock of each series will be fixed
by the certificate of designation relating to such series. The Prospectus
Supplement relating to each series will specify the terms of the Preferred Stock
as follows:
(a) The maximum number of shares to constitute such series and the
distinctive designation thereof;
(b) The annual dividend rate, if any, on shares of such series,
whether such rate is fixed or variable or both, the date or dates from
which dividends will begin to accrue or accumulate, and whether dividends
will be cumulative;
(c) The price at which, and the terms and conditions on which, the
shares of such series may be redeemed, including the time during which
shares of such series may be redeemed and any accumulated dividends thereon
that the holders of shares of such series shall be entitled to receive upon
the redemption thereof;
(d) The liquidation preference, if any, and any accumulated dividends
thereon, that the holders of shares of such series shall be entitled to
receive upon the liquidation, dissolution, or winding up of the affairs of
EPG;
(e) Whether or not the shares of such series will be subject to
operation of a retirement or sinking fund, and, if so, the extent and
manner in which any such fund shall be applied to the purchase or
redemption of the shares of such series for retirement or for other
corporate purposes, and the terms and provisions relating to the operation
of such fund;
(f) The terms and conditions, if any, on which the shares of such
series shall be convertible into, or exchangeable for, debt securities,
shares of any other class or classes of capital stock of EPG, or any series
of any other class or classes, or of any other series of the same class,
including the price or prices or the rate or rates of conversion or
exchange and the method, if any, of adjusting the same;
(g) The voting rights, if any, on the shares of such series; and
(h) Any or all other preferences and relative, participating,
operational, or other special rights, qualifications, limitations, or
restrictions thereof
The federal income tax consequences and special considerations applicable
to any such series of Preferred Stock will be generally described in the
Prospectus Supplement relating thereto.
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As of the date of this Prospectus, no shares of Preferred Stock are
outstanding. Pursuant to the Shareholder Rights Agreement (as defined below),
the Board of Directors of EPG has designated the Series A Preferred Stock (as
defined below).
SHAREHOLDER RIGHTS AGREEMENT
In July 1992, EPG's Board of Directors declared a dividend distribution of
one right (a "Right") for each share of Common Stock then outstanding. In July
1997, the Board amended the Shareholders Rights Agreement pursuant to which the
Rights were issued. All shares of Common Stock issued subsequent to July 1992
also include these Rights. Under certain conditions, each Right may be exercised
to purchase from EPG one one-hundredth of a share of a series of EPG's Preferred
Stock, designated as Series A Junior Participating Preferred Stock, $.01 par
value (the "Series A Preferred Stock"), at a price of $150 per one one-
hundredth of a share, subject to adjustment.
The EPG Charter provides that the holders of Series A Preferred Stock are
entitled to 100 votes per share on all matters submitted to a vote of the
stockholders of EPG, subject to adjustment. In addition, during any period that
dividends on the Series A Preferred Stock are in arrears in an amount equal to
six quarterly dividend payments, the holders of Series A Preferred Stock will
have the right to vote together as a class to elect two directors of EPG as
described above.
The Rights are exercisable only if, without the prior consent of EPG's
Board of Directors, a person or group acquires or obtains the right to acquire
beneficial ownership of 15% or more of the voting power of all outstanding
voting securities of EPG or commences or announces a tender or exchange offer,
after consummation of which such person or group would beneficially own 15% or
more of EPG's voting securities. If, after the Rights become exercisable, EPG is
involved in a merger or other business combination transaction in which its
Common Stock is exchanged or changed, or it sells 50% or more of its assets or
earning power, each Right will entitle the holder thereof to purchase, at the
Right's then-current exercise price, common stock of the acquiring company
having a value of twice the exercise price of the Right. If a person becomes the
beneficial owner of securities having 15% or more of the voting power of all
then-outstanding voting securities of EPG, or if, during any period of such
ownership, there shall be any reclassification of securities or recapitalization
of EPG, or any merger or consolidation of EPG with any of its subsidiaries or
any other transaction or series of transactions which has the effect, directly
or indirectly, of increasing by more than 1% the proportionate share of the
outstanding shares of any class of equity securities of EPG or any of its
subsidiaries which is directly or indirectly owned by such person, then for a
60-day period thereafter each Right not owned by such person will entitle the
holder thereof to purchase, at the Right's then-current exercise price, shares
of Common Stock (or in certain circumstances other equity securities of EPG with
at least the same economic value as the Common Stock) having a market value of
twice the Right's then-current exercise price. The Rights, which have no voting
rights, expire no later than July 7, 2002. The Rights may be redeemed by EPG
under certain circumstances prior to their expiration date at a purchase price
of $.01 per Right. It is possible that the existence of the Rights may have the
effect of delaying, deterring or preventing a takeover of EPG.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
EPG is subject to Section 203 of the Delaware General Corporation Law
("Section 203") which restricts certain transactions and business combinations
between a corporation and an interested stockholder (defined in Section 203,
generally, as a person owning 15% or more of a corporation's outstanding voting
stock) for a period of three years from the time such person becomes an
interested stockholder. Subject to certain exceptions, unless the transaction is
approved by the board of directors and the holders of at least 66 2/3% of the
outstanding voting stock of the corporation (excluding voting stock held by the
interested stockholder), Section 203 prohibits certain business transactions,
such as a merger with, disposition of assets to, or receipt of disproportionate
financial benefits by the interested stockholder, or any other transaction that
would increase the interested stockholder's proportionate ownership of any class
or series of the corporation's stock for a period of three years after such
person becomes an interested stockholder. The statutory ban does not apply if,
upon consummation of the transaction in which any person becomes an interested
stockholder, the interested
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stockholder owns at least 85% of the outstanding voting stock of the corporation
(excluding voting stock held by persons who are both directors and officers or
by certain employee stock plans) or if either the proposed transaction or the
transaction by which the interested stockholder became such is approved by the
board of directors of the corporation prior to the time such stockholder becomes
an interested stockholder.
EPG'S RESTATED CERTIFICATE OF INCORPORATION
The EPG Charter contains provisions applicable to a merger, consolidation,
asset sale, liquidation, recapitalization, or certain other business
transactions, including the issuance of stock of EPG ("Business Combinations").
The EPG Charter requires the affirmative vote of 51% or more of the voting stock
of EPG, excluding any voting stock held by an interested stockholder (defined in
the EPG Charter as any person who owns 10% or more of the voting stock and
certain defined affiliates), with respect to all Business Combinations involving
the interested stockholder, unless directors who served as such prior to the
time the interested stockholder became an interested stockholder determine by a
two-thirds vote that (i) the proposed consideration meets certain minimum price
criteria, or (ii)(A) the interested stockholder holds 80% or more of the voting
stock and (B) the interested stockholder has not received (other than
proportionately as a stockholder) the benefit of any financial assistance from
EPG, whether in anticipation of or in connection with such Business Combination.
To meet the minimum price criteria, all stockholders must receive consideration
or retain value per share after the transaction which is not less than the price
per share paid by the interested stockholder. The EPG Charter also requires the
dissemination to stockholders of a proxy or information statement describing the
Business Combination.
The EPG Charter also prohibits the taking of any action by written
stockholder consent in lieu of a meeting and the subsequent amendment of the EPG
Charter to repeal or alter the above provisions without the affirmative vote of
51% of EPG's voting stock, excluding voting stock held by any interested
stockholder.
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DESCRIPTION OF THE TRUST PREFERRED SECURITIES
Each EPE Trust may issue, from time to time, only one series of Trust
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each EPE Trust authorizes the
Administrative Trustees of such EPE Trust to issue on behalf of such EPE Trust
one series of Trust Preferred Securities. The Declaration will be qualified as
an indenture under the Trust Indenture Act. The Trust Preferred Securities will
have such terms, including distributions, redemption, voting, conversion,
exchange, liquidation rights and such other preferred, deferred or other special
rights or such restrictions as shall be set forth in the Declaration or made
part of the Declaration by the Trust Indenture Act. Reference is made to the
Prospectus Supplement relating to the Trust Preferred Securities of the EPE
Trust for specific terms, including (a) the distinctive designation of such
Trust Preferred Securities; (b) the number of Trust Preferred Securities issued
by such EPE Trust; (c) the annual distribution rate (or method of determining
such rate) for Trust Preferred Securities issued by such EPE Trust and the date
or dates upon which such distributions shall be payable; provided, however, that
distributions on such Trust Preferred Securities shall be payable on a quarterly
basis to holders of such Trust Preferred Securities as of a record date in each
quarter during which such Trust Preferred Securities are outstanding; (d)
whether distributions on Trust Preferred Securities issued by such EPE Trust
shall be cumulative, and, in the case of Trust Preferred Securities having such
cumulative distribution rights, the date or dates or method of determining the
date or dates from which distributions on Trust Preferred Securities issued by
such EPE Trust shall be cumulative; (e) the amount or amounts which shall be
paid out of the assets of such EPE Trust to the holders of Trust Preferred
Securities of such EPE Trust upon voluntary or involuntary dissolution,
winding-up or termination of such EPE Trust; (f) the obligation, if any, of such
EPE Trust to purchase or redeem Trust Preferred Securities issued by such EPE
Trust and the price or prices at which, the period or periods within which, and
the terms and conditions upon which, Trust Preferred Securities issued by such
EPE Trust shall be purchased or redeemed, in whole or in part, pursuant to such
obligation; (g) the voting rights, if any, of Trust Preferred Securities issued
by such EPE Trust in addition to those required by law, including the number of
votes per Trust Preferred Security and any requirement for the approval by the
holders of Trust Preferred Securities, or of Trust Preferred Securities issued
by one or more EPE Trusts, or of both, as a condition to specified action or
amendments to the Declaration of such EPE Trust; (h) the terms and conditions,
if any, upon which the assets of such EPE Trust may be distributed to holders of
Trust Preferred Securities; (i) provisions regarding convertibility or
exchangeability of the Trust Preferred Securities for capital stock of EPG; (j)
if applicable, any securities exchange upon which the Trust Preferred Securities
shall be listed; and (k) any other relevant rights, preferences, privileges,
limitations or restrictions of Trust Preferred Securities issued by such EPE
Trust not inconsistent with the Declaration of such EPE Trust or with applicable
law. All Trust Preferred Securities offered hereby will be guaranteed by the
Company to the extent set forth below under "Description of the Trust
Guarantees." Any U.S. federal income tax considerations applicable to any
offering of Trust Preferred Securities will be described in the Prospectus
Supplement relating thereto.
In connection with the issuance of Trust Preferred Securities, each EPE
Trust will issue one series of Trust Common Securities. The Declaration of each
EPE Trust authorizes the Administrative Trustees of such trust to issue on
behalf of such EPE Trust one series of Trust Common Securities having such terms
including distributions, redemption, voting, liquidation rights or such
restrictions as shall be set forth therein. The terms of the Trust Common
Securities issued by an EPE Trust will be substantially identical to the terms
of the Trust Preferred Securities issued by such EPE Trust, and the Trust Common
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Trust Preferred Securities except that, upon an event of default under
the Declaration, the rights of the holders of the Trust Common Securities to
payment in respect of distributions and payments upon liquidation, redemption
and otherwise will be subordinated to the rights of the holders of the Trust
Preferred Securities. Except in certain limited circumstances, the Trust Common
Securities will also carry the right to vote to appoint, remove or replace any
of the Trustees of an EPE Trust. All of the Trust Common Securities of each EPE
Trust will be directly or indirectly owned by the Company.
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DESCRIPTION OF THE TRUST GUARANTEES
Set forth below is a summary of information concerning the Trust Guarantees
which will be executed and delivered by EPG from time to time for the benefit of
the holders of the Trust Preferred Securities. Each Trust Guarantee will be
qualified as an indenture under the Trust Indenture Act. The Chase Manhattan
Bank will act as indenture trustee under each Trust Guarantee (the "Trust
Guarantee Trustee"). The terms of each Trust Guarantee will be those set forth
in such Trust Guarantee and those made part of such Trust Guarantee by the Trust
Indenture Act. The summary does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by reference to,
the form of Trust Guarantee, which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and the Trust Indenture Act.
Each Trust Guarantee will be held by the Trust Guarantee Trustee for the benefit
of the holders of the Trust Preferred Securities of the applicable EPE Trust.
GENERAL
Pursuant to each Trust Guarantee, EPG will irrevocably and unconditionally
agree, to the extent set forth therein, to pay in full, to the holders of the
Trust Preferred Securities issued by an EPE Trust, the Trust Guarantee Payments
(as defined herein) (except to the extent paid by such EPE Trust), as and when
due, regardless of any defense, right of set-off or counterclaim which such EPE
Trust may have or assert. The following payments with respect to Trust Preferred
Securities issued by an EPE Trust to the extent not paid by such EPE Trust (the
"Trust Guarantee Payments"), will be subject to the Trust Guarantee thereon
(without duplication): (i) any accrued and unpaid distributions which are
required to be paid on such Trust Preferred Securities, to the extent such EPE
Trust shall have funds available therefor; (ii) the redemption price, including
all accrued and unpaid distributions (the "Redemption Price"), to the extent
such EPE Trust has funds available therefor with respect to any Trust Preferred
Securities called for redemption by such EPE Trust; and (iii) upon a voluntary
or involuntary dissolution, winding-up or termination of such EPE Trust (other
than in connection with the distribution of the assets of such EPE Trust to the
holders of Trust Preferred Securities or the redemption of all of the Trust
Preferred Securities), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on such Trust Preferred Securities to
the date of payment, to the extent such EPE Trust has funds available therefor
and (b) the amount of assets of such EPE Trust remaining available for
distribution to holders of such Trust Preferred Securities in liquidation of
such EPE Trust. EPG's obligation to make a Trust Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of Trust Preferred Securities or by causing the applicable EPE Trust to
pay such amounts to such holders.
Each Trust Guarantee will be a full and unconditional guarantee with
respect to the Trust Preferred Securities issued by the applicable EPE Trust,
but will not apply to any payment of distributions except to the extent such EPE
Trust shall have funds available therefor. If EPG does not make interest
payments on the Subordinated Debt Securities purchased by an EPE Trust, such EPE
Trust will not pay distributions on the Trust Preferred Securities issued by
such EPE Trust and will not have funds available therefor. See "Description of
the Subordinated Debt Securities -- Certain Covenants" included in the
Prospectus.
EPG has also agreed separately to irrevocably and unconditionally guarantee
the obligations of the EPE Trusts with respect to the Trust Common Securities
(the "Trust Common Securities Guarantees") to the same extent as the Trust
Guarantees, except that upon an event of default under the Subordinated
Indenture, holders of Trust Preferred Securities shall have priority over
holders of Trust Common Securities with respect to distributions and payments on
liquidation, redemption or otherwise.
CERTAIN COVENANTS
In each Trust Guarantee, EPG will covenant that, so long as any Trust
Preferred Securities issued by the applicable EPE Trust remain outstanding, if
there shall have occurred any event that would constitute an event of default
under such Trust Guarantee or the Declaration of such EPE Trust, then (a) EPG
shall not declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase or make any liquidation payment with respect to, any of
its capital stock (other than (i) purchases or acquisitions of shares
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of EPG Common Stock in connection with the satisfaction by EPG of its
obligations under any employee benefit plans or the satisfaction by EPG of its
obligations pursuant to any contract or security requiring EPG to purchase
shares of Company Common Stock or, (ii) the purchase of fractional interests in
shares of Company capital stock as a result of a reclassification of Company
capital stock or the exchange or conversion of one class or series of Company
capital stock for another class or series of Company capital stock or make any
guarantee payments with respect to the foregoing and (b) EPG shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees) issued by EPG which rank pari
passu with or junior to the Subordinated Debt Securities.
MODIFICATION OF THE TRUST GUARANTEES; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Trust Preferred Securities (in which case no vote will be
required), each Trust Guarantee may be amended only with the prior approval of
the holders of not less than a majority in liquidation amount of the outstanding
Trust Preferred Securities issued by the applicable EPE Trust. The manner of
obtaining any such approval of holders of such Trust Preferred Securities will
be as set forth in an accompanying Prospectus Supplement. All guarantees and
agreements contained in a Trust Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of EPG and shall inure to the benefit of
the holders of the Trust Preferred Securities of the applicable EPE Trust then
outstanding.
TERMINATION
Each Trust Guarantee will terminate as to the Trust Preferred Securities
issued by the applicable EPE Trust upon the first to occur of (a) full payment
of the Redemption Price of all Trust Preferred Securities of such EPE Trust, (b)
distribution of the assets of such EPE Trust to the holders of the Trust
Preferred Securities of such EPE Trust, and (c) full payment of the amounts
payable upon liquidation of such EPE Trust in accordance with the Declaration of
such EPE Trust. Each Trust Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of Trust Preferred
Securities issued by the applicable EPE Trust must restore payment of any sums
paid under such Trust Preferred Securities or such Trust Guarantee.
EVENTS OF DEFAULT
An event of default under a Trust Guarantee will occur upon the failure of
EPG to perform any of its payment or other obligations thereunder.
The holders of a majority in liquidation amount of the Trust Preferred
Securities relating to such Trust Guarantee have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trust Guarantee Trustee in respect of the Trust Guarantee or to direct the
exercise of any trust or power conferred upon the Trust Guarantee Trustee under
such Trust Preferred Securities. If the Trust Guarantee Trustee fails to enforce
such Trust Guarantee, any holder of Trust Preferred Securities relating to such
Trust Guarantee may institute a legal proceeding directly against EPG to enforce
the Trust Guarantee Trustee's rights under such Trust Guarantee, without first
instituting a legal proceeding against the relevant EPE Trust, the Trust
Guarantee Trustee or any other person or entity. Notwithstanding the foregoing,
if EPG has failed to make a guarantee payment, a holder of Trust Preferred
Securities may directly institute a proceeding against EPG for enforcement of
the Trust Guarantee for such payment. EPG waives any right or remedy to require
that any action be brought first against such EPE Trust or any other person or
entity before proceeding directly against EPG.
STATUS OF THE TRUST GUARANTEES
The Trust Guarantees will constitute unsecured obligations of EPG and will
rank (i) subordinate and junior in right of payment to all other liabilities of
EPG; (ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by EPG and with any guarantee now or hereafter entered into by
EPG in respect of any preferred or preference stock of any affiliate of EPG; and
(iii) senior to the EPG
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Common Stock. The terms of the Trust Preferred Securities provide that each
holder of Trust Preferred Securities issued by the applicable EPE Trust, by
acceptance thereof, agrees to the subordination provisions and other terms of
the Trust Guarantee relating thereto.
The Trust Guarantees will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may institute a legal proceeding
directly against the guarantor to enforce its rights under the Trust Guarantee
without instituting a legal proceeding against any other person or entity).
INFORMATION CONCERNING THE TRUST GUARANTEE TRUSTEE
The Trust Guarantee Trustee, prior to the occurrence of a default with
respect to a Trust Guarantee, undertakes to perform only such duties as are
specifically set forth in such Trust Guarantee and, after default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provisions, the Trust
Guarantee Trustee is under no obligation to exercise any of the powers vested in
it by a Trust Guarantee at the request of any holder of Trust Preferred
Securities, unless offered reasonable indemnity against the costs, expenses and
liabilities which might be incurred thereby.
The Company and certain of its affiliates may, from time to time, maintain
a banking relationship with the Trust Guarantee Trustee.
GOVERNING LAW
The Trust Guarantees will be governed by, and construed in accordance with,
the laws of the State of New York.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES,
THE SUBORDINATED DEBT SECURITIES AND THE GUARANTEES
As long as EPG makes payments of interest and other payments when due on
the Subordinated Debt Securities, such payments will be sufficient to cover
distributions and other payments due on the Trust Preferred Securities,
primarily because (i) the aggregate principal amount of the Subordinated Debt
Securities will be equal to the sum of the aggregate stated liquidation
preference of the Trust Securities; (ii) the interest rate and interest and
other payment dates of the Subordinated Debt Securities will match the
distribution rate and distribution and other payment dates for the Trust
Preferred Securities; (iii) EPG shall pay for all and any costs, expenses and
liabilities of the EPE Trusts except the EPE Trusts' obligations to holders of
the Trust Preferred Securities under the Trust Preferred Securities of the EPE
Trusts; and (iv) the Declaration of each EPE Trust further provides that such
EPE Trust will not engage in any activity that is not consistent with the
limited purposes of such EPE Trust.
Payments of distributions and other amounts due on the Trust Preferred
Securities of an EPE Trust (to the extent such EPE Trust has funds available for
the payment of such distributions) are irrevocably guaranteed by EPG as and to
the extent set forth under "Description of Trust Guarantees." Taken together,
EPG's obligations under the Subordinated Debt Securities, the Subordinated
Indenture, the Declarations of the EPE Trusts and the Trust Guarantees provide a
full, irrevocable and unconditional guarantee of payments of distributions and
other amounts due on the Trust Preferred Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guarantee
of each of the EPE Trust's obligations under the Trust Preferred Securities. If
and to the extent that EPG does not make payments on the Subordinated Debt
Securities, the EPE Trusts will not pay distributions or other amounts due on
the Trust Preferred Securities. The Trust Guarantees do not cover payment of
distributions when an EPE Trust does not have sufficient funds to pay such
distributions. In such event, the remedies of a holder of the Trust Preferred
Securities of such EPE Trust are described herein under "Description of the
Trust Guarantees -- Events of Default." The obligations of EPG under the Trust
Guarantees are unsecured and are subordinate and junior in right of payment to
all other liabilities of EPG.
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Notwithstanding anything to the contrary in the Subordinated Indenture and
to the extent set forth therein, EPG has the right to set-off any payment it is
otherwise required to make thereunder with and to the extent EPG has theretofore
made, or is concurrently on the date of such payment making, a payment under a
Trust Guarantee.
A holder of Trust Preferred Securities of an EPE Trust may institute a
legal proceeding directly against EPG to enforce its rights under the Trust
Guarantee with respect to such EPE Trust without first instituting a legal
proceeding against the Trust Guarantee Trustee, such EPE Trust or any other
person or entity.
The Trust Preferred Securities of an EPE Trust evidence a beneficial
interest in such EPE Trust. The EPE Trusts exist for the sole purpose of issuing
the Trust Securities and investing the proceeds thereof in Subordinated Debt
Securities. A principal difference between the rights of a holder of Trust
Preferred Securities and a holder of Subordinated Debt Securities is that a
holder of Subordinated Debt Securities is entitled to receive from EPG the
principal amount of and interest accrued on Subordinated Debt Securities held,
while a holder of Trust Preferred Securities is entitled to receive
distributions from an EPE Trust (or from EPG under the Trust Guarantee) if and
to the extent such EPE Trust has funds available for the payment of such
distributions.
Upon any voluntary or involuntary termination, winding-up or liquidation of
an EPE Trust involving the liquidation of the Subordinated Debt Securities, the
holders of the Trust Preferred Securities of such EPE Trust will be entitled to
receive, out of assets held by such EPE Trust and after satisfaction of
liabilities to creditors of such EPE Trust as provided by applicable law, the
liquidation distribution in cash. See "Description of Trust Preferred
Securities." Upon any voluntary or involuntary liquidation or bankruptcy of EPG,
the Property Trustee of an EPE Trust, as holder of the Subordinated Debt
Securities of such Trust, would be a subordinated creditor of EPG, subordinated
in right of payment to all Senior Debt of EPG, but entitled to receive payment
in full of principal and interest, before any shareholders of EPG receive
payments or distributions. Since EPG is the guarantor under the Trust Guarantees
and has agreed to pay for all costs, expenses and liabilities of the EPE Trusts
(other than the EPE Trusts' obligations to the holders of the Trust Preferred
Securities), the positions of a holder of Trust Preferred Securities and a
holder of Subordinated Debt Securities relative to other creditors and to
shareholders of EPG in the event of liquidation or bankruptcy of EPG would be
substantially the same.
A default or event of default under any Senior Debt of EPG will not
constitute a default or Event of Default under the Subordinated Indenture.
However, in the event of payment defaults under, or acceleration of, Senior Debt
of EPG, the subordination provisions of the Subordinated Indenture provide that
no payments may be made in respect of the Subordinated Debt Securities until
Senior Debt has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on the Subordinated Debt
Securities would constitute an Event of Default under the Subordinated Indenture
with respect thereto.
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PLAN OF DISTRIBUTION
EPG and any EPE Trust may offer or sell the EPG Securities and the Trust
Preferred Securities, respectively, to or through one or more underwriters,
dealers or agents as designated from time to time, or through a combination of
such methods and also may offer or sell the EPG Securities and the Trust
Preferred Securities, respectively, directly to one or more other purchasers.
EPG and any EPE Trust may sell the EPG Securities and the Trust Preferred
Securities, respectively, as soon as practicable after effectiveness of the
Registration Statement of which this Prospectus is a part.
A Prospectus Supplement will set forth the terms of the offering of the
particular series of Securities offered thereby, including: (i) the name or
names of any underwriters or agents; (ii) the initial public offering or
purchase price of such series of Securities; (iii) any underwriting discounts,
commissions, and other items constituting underwriters' compensation and any
other discount, concessions, or commissions allowed or reallowed or paid by any
underwriters to other dealers; (iv) any commissions paid to any agents; (v) the
net proceeds to EPG from the sales; (vi) the net proceeds to an EPE Trust from
the sales; and (vii) any securities exchanges or markets on which the Securities
may be listed.
Unless otherwise set forth in the Prospectus Supplement relating to a
particular series of Securities, the obligations of the underwriters to purchase
such series of Securities will be subject to certain conditions precedent and
each of the underwriters with respect to such series of Securities will be
obligated to purchase all of the Securities of such series allocated to it if
any such Securities are purchased. Any initial public offering price and any
discounts or concessions allowed, reallowed, or paid to dealers may be changed
from time to time.
The EPG Securities and the Trust Securities may be offered and sold by EPG
or any EPE Trust, respectively, directly or through agents designated by EPG or
any EPE Trust from time to time. Unless otherwise indicated in the related
Prospectus Supplement, each such agent will be acting on a best efforts basis
for the period of its appointment. Any agent participating in the distribution
of Securities may be deemed to be an "underwriter," as that term is defined in
the Securities Act, of the Securities so offered and sold. The Securities also
may be sold to dealers at the applicable price to the public set forth in the
Prospectus Supplement relating to such series of Securities. Such dealers may be
deemed to be "underwriters" within the meaning of the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements entered into
with EPG or an EPE Trust, to indemnification by EPG or such EPE Trust against
certain civil liabilities, including liabilities under the Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be customers of, EPG in the ordinary course of
business.
Other than Common Stock, Preferred Stock and Senior Debt Securities, all
Securities offered will be a new issue of securities with no established trading
market. Any underwriter to whom Securities are sold by EPG or any EPE Trust for
public offering and sale may make a market in such Securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. The Securities may or may not be listed on a
national securities exchange or a foreign securities exchange, except that the
Common Stock is listed for trading on the NYSE. Any Common Stock sold pursuant
to a Prospectus Supplement will be listed for trading on the NYSE, subject to
official notice of issuance. No assurance can be given as to the liquidity of or
the trading markets for any Securities.
LEGAL MATTERS
The validity of the Common Stock, Preferred Stock, Senior Debt Securities,
Subordinated Debt Securities and Trust Guarantees will be passed upon for EPG
and the EPE Trusts by Andrews & Kurth L.L.P., Houston, Texas. The validity of
the Trust Preferred Securities under Delaware Law will be passed upon for the
EPE Trusts by Potter Anderson & Corroon, Wilmington, Delaware, as special
Delaware counsel. If the Securities are being distributed in an underwritten
offering, the validity of the Securities will be passed upon for the
underwriters by counsel identified in the related Prospectus Supplement.
29
<PAGE> 88
EXPERTS
The consolidated financial statements and financial statement schedule of
EPG as of December 31, 1996 and 1995, and for the years ended December 31, 1996,
1995, and 1994, incorporated by reference in this Prospectus, have been
incorporated herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of such firm as experts in
accounting and auditing.
30
<PAGE> 89
======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE UNDERWRITERS OR ANY OTHER PERSON. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES OFFERED
HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
---------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Supplement Summary............ S-3
Risk Factors............................. S-12
The Company.............................. S-17
Use of Proceeds.......................... S-18
Price Range of Common Stock and Dividend
Information............................ S-18
Capitalization........................... S-19
El Paso Energy Capital Trust I........... S-20
Description of the Trust Preferred
Securities............................. S-21
Description of the Guarantee............. S-39
Description of the Debentures............ S-42
Certain Federal Income Tax
Consequences........................... S-48
ERISA Considerations..................... S-55
Underwriting............................. S-56
Legal Matters............................ S-58
Experts.................................. S-58
PROSPECTUS
Available Information.................... 2
Incorporation of Certain Documents by
Reference.............................. 2
Certain Forward-Looking Statements....... 3
The Company.............................. 4
The EPE Trusts........................... 4
Use of Proceeds.......................... 5
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed
Charges and Preferred and Preference
Stock Dividend Requirements............ 5
Description of the Senior Debt
Securities............................. 6
Description of the Subordinated Debt
Securities............................. 14
Description of Capital Stock of the
Company................................ 20
Description of the Trust Preferred
Securities............................. 24
Description of the Trust Guarantees...... 25
Relationship Among the Trust Preferred
Securities, the Subordinated Debt
Securities and the Guarantees.......... 27
Plan of Distribution..................... 29
Legal Matters............................ 29
Experts.................................. 30
</TABLE>
======================================================
======================================================
6,000,000 TRUST PREFERRED SECURITIES
EL PASO ENERGY CAPITAL TRUST I
% TRUST CONVERTIBLE
PREFERRED SECURITIES
Guaranteed to the Extent
Set Forth Herein by, and Convertible into Common Stock of,
EL PASO NATURAL GAS COMPANY
Liquidation Amount
$50 per Trust Preferred Security
------------------------------------------
PROSPECTUS SUPPLEMENT
------------------------------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
MORGAN STANLEY DEAN WITTER
MARCH , 1998
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